Gunsynd plc
(Formerly Evocutis plc)
Annual Report and Accounts 2016
Company Number: 05656604
CONTENTS
COMPANY INFORMATION ........................................................................................................................................ 1
CHAIRMAN’S REPORT (INCORPORATING THE STRATEGIC REVIEW) ....................................................................... 2
DIRECTORS’ REPORT ................................................................................................................................................. 5
INFORMATION ON THE BOARD OF DIRECTORS ....................................................................................................... 9
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF GUNSYND PLC .......................................................... 10
FINANCIAL STATEMENTS ........................................................................................................................................ 11
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 JULY 2016 ........................................... 11
STATEMENT OF FINANCIAL POSITION AS AT 31 JULY 2016 ............................................................................... 12
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 JULY 2016 ..................................................... 13
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 JULY 2016 ................................................................. 14
NOTES TO THE FINANCIAL STATEMENTS ........................................................................................................... 15
COMPANY INFORMATION
DIRECTORS
REGISTERED OFFICE
Hamish Harris
Donald Strang
Christopher Gordon
(Executive Chairman)
(Executive Director)
(Non-Executive Director)
2 Chapel Court
London
SE1 1HH
COMPANY WEBSITE
www.gunsynd.com
COMPANY REGISTRATION NUMBER
05656604 (England and Wales)
NOMINATED ADVISER AND JOINT BROKER
JOINT BROKER
AUDITOR
SOLICITOR
BANKERS
REGISTRAR
Cairn Financial Advisers LLP
Cheyne House, Crown Court
62-63 Cheapside
London
EC2V 6AX
Peterhouse Corporate Finance
3rd floor, New Liverpool House
15 Eldon Street
London
EC2M 7LD
Chapman Davis LLP
Chartered Accountants and Registered Auditor
2 Chapel Court
London
SE1 1HH
Hill Dickinson LLP
The Broadgate Tower
20 Primrose Street
London
EC2A 2EW
Barclays Bank plc
1 Churchill Place
London
E14 5HP
Capita Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
1
CHAIRMAN’S REPORT (INCORPORATING THE STRATEGIC REVIEW)
I am pleased to present the annual report and financial statements for the year ended 31 July 2016.
Review of Investments
Investment in Brazil Tungsten Holdings Limited (“BTHL”):
The Company maintains its circa 10% equity interest in BTHL. BTHL has advised the Company that it continues to focus on
its ongoing capital expenditure and development plan at the flagship Bodó mine in the Currais Novos regions of Rio
Grande do Norte state, Brazil with the aim of significantly increasing the output of high grade scheelite concentrate
during the remainder of 2016 and beyond.
BTHL has advised that it continues to operate in a difficult tungsten price environment and it has also experienced some
delays in reaching its Phase I target of 150 tonnes per day of high grade run of mine (“ROM”) ore from the three
underground shafts largely due to the ground conditions encountered being far more difficult than expected. This has
been countered with the investment in new support equipment and the weekly development rates have now improved
significantly. A total of 7 working faces have now been activated in the Central and Pajeu shafts and this has led to
increased production rates from underground. Work has commenced on developing a new decline at Feijão from
surface which when completed shortly will further increase ROM production. Plans are in place to connect the Feijao
decline with Central to improve ventilation and allow greater flexibility for ore extraction.
BTHL has advised that licensing for the new mine at Tarantula is also well advanced with all the relevant reports
submitted to the Mines Department and Environmental Agencies and are now awaiting final approval. Once approvals
are in place a crew will commence work opening up the small exploratory decline at Tarantula and prepare it for ore
extraction. Crushed ore will be trucked 4 km from the mine to the existing plant at Bodó and could contribute upwards
of 60 tonnes per day in the initial stages. Previous drilling at Tarantula has shown it to have ore grades similar to Bodó.
The plant continued to operate at a reduced rate until the end of July 2016 treating at total of 2,166 tonnes of run of
mine ore and 3,486 tonnes of rejects producing a total of 14.6 tonnes of concentrate. In August 2016, production rates
rose significantly with 1,646 tonnes of ROM ore extracted from the Central shaft producing 4.8 tonnes of WO3
(tungsten trioxide) concentrate. September and October have seen further increases with production of 7.0 tonnes
and 11.80 tonnes of WO3 concentrate respectively. Based on current improvements in production rates and plans to
increase daily operating hours for the treatment plant it is expect that the Phase I target will be achieved in the near
future. BTHL continues to maintain its focus on reducing costs.
Investment in Horse Hill Developments Limited (“HHDL”):
The Company maintains its circa 2% interest in HHDL. HHDL is a special purpose company which is the operator and
65% interest holder in two Petroleum Exploration and Development Licences (“PEDL”) PEDL 137 and 246 in the
northern Weald Basin between Gatwick Airport and London. The PEDL137 licence covers 99.29 square kilometres
(24,525 acres) to the north of Gatwick Airport in Surrey and contains the Horse Hill-1 (“HH-1”) discovery and several
other exploration leads. PEDL246 covers an area of 43.58 square kilometres (10,769 acres) and lies immediately
adjacent and to the east of PEDL137.
The HH-1 well is located approximately 7.5 kilometres southeast of the producing Brockham oil field and approximately
15 kilometres southwest of the Palmers Wood oil field. The pre-drill primary target reservoir horizons were the Portland
Sandstone, which is productive in the Brockham oil field, and the Corallian Formation, which is the producing horizon
in the Palmers Wood oil field. Secondary targets for the well included the Triassic, which is productive in the nearby
Wessex Basin and has previously tested gas in the Weald Basin, and the Greater Oolite Formation.
The HH-1 well commenced drilling operations in September 2014 and reached total depth at 8,770 feet MD in
November 2014. Evaluation of electric logs and other data collected from the well resulted in the announcement on
24 October 2014 of a conventional Upper Portlandian Sandstone oil discovery. Subsequent analysis of the Kimmeridge,
Oxfordian and Liassic sections in the well indicated that there was also substantial in place oil in the naturally fractured
Kimmeridge Limestones and associated mudstones.
2
CHAIRMAN’S REPORT (INCORPORATING THE STRATEGIC REVIEW) - CONTINUED
Approval for the testing of all three oil bearing zones was granted in late 2015 and the tests commenced in early
February 2016. Tests led to naturally flowing oil rates of the Kimmeridge Limestones at 460 bopd from the Lower
interval and 900 bopd from the upper interval. The Portland Sandstone was placed on pump to stimulate flow and
achieved a maximum stable rate in excess of 300 bopd. These flow rates substantially exceeded the expectations for
the well and rank alongside some of the highest rates ever achieved on test for any UK onshore well.
Following the testing of the Portland Sandstone, when higher productivity and a lower than expected water cut were
both observed, further analysis on the electric logs has led to a 200% increase in the anticipated oil in place at this
stratigraphic level. Previous estimates of oil in place within the Portland Sandstone were 7.7 mmbbls per square mile
and were increased to 22.9 mmbbls.
Based on analysis of published reports from all significant UK onshore discovery wells, the 1,688 bbl per day flow rate
is likely the highest aggregate stable rate from any onshore UK discovery well.
The relevant licences have been extended to permit further work and HHDL has indicated that it hopes to perform long
term testing on all three zones as part of a wider appraisal program that includes 3D seismic and further drilling.
Planning permission is presently being sought for the next phase of testing which will establish the parameters of any
development scheme and the commerciality of production from the various oil bearing intervals.
All of the reviews and reports mentioned above state that the OIP volumes estimated should not be construed as
recoverable resources or reserves.
Investment in Alba Minerals Resources Plc (“Alba”):
The Company has a circa 5% equity interest in Alba. Alba is a UK AIM listed company which is an explorer with a
commodity focus on oil & gas, graphite, gold, uranium and base metals. Alba holds interests in the UK oil & gas
exploration sector, plus hard rock exploration assets in Greenland (Graphite and Gold), Ireland (Base Metals and Gold)
and Mauritania (Uranium).
Alba’s overall technical and corporate strategy is to identify and acquire natural resource projects it believes to have
good potential and to advance them expediently. This will be achieved by controlled design and execution of a cost-
effective generative process utilising data acquisition, GIS data analysis and exploration programme planning, led by
their internal technical team and, where appropriate, through the support of external technical consultants.
Investment in Georgian Mining Corporation (“Georgian”) (formerly known as Noricum Gold Limited):
The Company has a circa 0.6 % equity interest in Georgian. Georgian is an AIM listed copper & gold development and
exploration company. Georgian, along with its 50% joint venture partner, Caucasian Mining Group, operates in Georgia
on the prolific Tethyan Belt, a well-known geological region and host to many high-grade copper-gold deposits and
producing mines. Georgian is committed to creating shareholder value by focusing on advancing the Company’s core
asset at Kvemo Bolnisi as well as other prospective targets within its portfolio. Georgian’s tenure covers an area of 860
sq. km, benefits from a 30 year mining licence and is proximal to existing mining operations, owned by its supportive
joint venture partner. Georgian Mining Corporation is well positioned to deliver on its objective of becoming a copper
and gold producer.
3
CHAIRMAN’S REPORT (INCORPORATING THE STRATEGIC REVIEW) - CONTINUED
Finance Review
The Company made a loss for the year of £510,000 (2015: £376,000) after taxation. This loss included an impairment
provision of £301,000 for available-for sale assets. (2015: reversal of £72,000). The Company had net assets of
£1,307,000 (2015: £1,568,000) including cash balances of £358,000 (2015: £452,000) at 31 July 2016.
On 23 February 2016, the Company announced it had raised £350,000 through the issue of 500 million new shares at
a placing price of 0.07 pence per share. The funds were used for general working capital purposes and to assist in
seeking further investment opportunities.
On 6 October 2015, the Company announced that it had applied to ISDX for admission of its issued share capital to
trading on the ISDX Growth Market, and on 19 October 2015 it announced that its ordinary shares had commenced
trading on the ISDX Growth Market and that its ordinary shares also continued to be traded on AIM.
Outlook
The Company has made good progress with its current portfolio.
We are awaiting proposals from HHDL on the next phase of operations at Horse Hill. The Company sees significant
potential for commercial development of both the Portland and Kimmeridge intervals.
Likewise we are very enthusiastic about the nearby and soon to be spudded Brockham side track well which we
have exposure to via our investment in Alba Mineral Resources.
BTHL after some issues with ground conditions has made significant progress over the last few months with
production increasing from 4.8tonnes of Wo3 concentrate in August to 11.86 tonnes in October. Licensing for the
new mine at Tarantula is also well advanced with all the relevant reports submitted to the Mines Department and
Environmental Agencies and are now awaiting final approval. Previous drilling at Tarantula has shown it to have
ore grades similar to Bodó.
The Company also has a stake in Georgian Mining Company which has multiple (gold and copper) near term
production targets identified at its Bolnisi project in Georgia. We look forward to the drilling results there over
the coming months.
In November the company invested £100,000 in Zenith Energy by way of a convertible bond. Zenith’s main asset
is three licences in Azerbaijan currently producing just over 300 barrels of oil per day. Upside potential exists via
both working over existing wells and drilling new wells.
In addition the Company has been very active in reviewing additional investments in the natural resources sector
and hopefully one or more can be concluded in the near term. We also see opportunities in the short term trading
of assets where liquidity and value provide potential for very good returns.
The Board would like to take this opportunity to thank our shareholders for their continued support and I look forward
to reporting further progress over the next period and beyond.
Hamish Harris
Executive Chairman
21 November 2016
4
DIRECTORS’ REPORT
The directors present their annual report on the Company and its audited financial statements for the year ended 31 July
2016.
Principal activity
As at 31 July 2016 the principal activity of the Company is that of investing by seeking to acquire companies and/or projects
within the natural resources sector which the Board considers, in its opinion, have potential for growth. The Company will
consider opportunities in all relevant sectors as they arise if the Board considers there is an opportunity to generate potential
value for Shareholders. The geographical focus will primarily be in Europe, however, investments may also be considered in
other regions to the extent that the Board considers that valuable opportunities exist and potential value can be achieved.
Results and dividends
The income statement is set out on page 11 and has been prepared in Sterling, the functional and reporting currency of the
Company.
The Company’s net loss after taxation attributable to equity holders of Gunsynd plc for the year was £510,000 (2015 -
£376,000 loss).
No dividends have been paid or proposed.
Review of the business and future developments
A full review of the Company’s performance, financial position and future prospects is given in the Chairman’s Report
(Incorporating the Strategic Review).
Directors and their interests
The Directors who served during the year were:
H Harris
D Strang
C Gordon - appointed 21 April 2016
D Lenigas - resigned 21 December 2015
The interests of the serving Directors at 31 July 2016 or at date of resignation, in the ordinary share capital of the Company
(all beneficially held) were as follows
Hamish Harris
Donald Strang
Christopher Gordon
David Lenigas
31 July 2016
No.
1,666,667
10,000,000
-
67,500,000
31 July 2015
No.
1,667,667
10,000,000
-
67,500,000
In addition to the issued shares shown above, each director with the exception of Christopher Gordon, holds options over
10,000,000 ordinary shares, exercisable at 0.22p at any time up to 1 April 2020.
Directors’ remuneration
The remuneration of the Executive Directors paid during the year was fixed on the recommendation of the Remuneration
Committee. The remuneration of the Non-executive Director paid during the year was fixed on the recommendation of the
Executive Directors. This has been achieved acknowledging the need to maximise the effectiveness of the Company’s limited
resources during the year.
Fees paid to each Director for the year ended 31 July 2016 are set out in note 6 to the financial statements.
5
DIRECTORS’ REPORT - CONTINUED
Substantial shareholdings
Other than as summarised below, the Directors have not been advised of any individual interest, or group or interests held
by persons acting together, which at 21 November 2016 exceeded 3% of the Company’s issued share capital.
Number of ordinary
shares held
% of issued
share capital
149,697,858
90,000,000
80,320,873
69,673,223
67,500,000
62,250,000
60,000,000
8.46%
5.10%
4.54%
3.94%
3.81%
3.52%
3.39%
Jim Nominees Limited
Neil Scott
TD Direct Investing Nominees
HSDL Nominees Limited
HSBC Global Custody Nominee (UK)
Greenhair Services Limited
Academy Minerals Limited
Employees
The Company has only one directly employed personnel.
Creditor payment policy
The policy of the Company is to:
(a)
Agree the terms of payment with suppliers when settling the terms of each transaction;
(b)
Ensure that suppliers are made aware of the terms of payment by inclusion of the relevant terms in contracts; and
(c)
Pay in accordance with its contractual and other legal obligations provided suppliers comply with the terms and
conditions of supply.
Directors’ liability
As permitted by the Companies Act 2006, the Company has purchased insurance cover for the Directors against liabilities in
relation to the Company.
Charitable donations
During the period, the Company made no charitable donations (2015 - £Nil).
Financial reporting
The Board has ultimate responsibility for the preparation of the annual audited accounts. A detailed review of the
performance of the Company is contained in the Chairman’s report (incorporating Strategic Review). Presenting the
Chairman’s report (incorporating Strategic Review) and Director’s Report, the Board seeks to present a balanced and
understandable assessment of the Company’s position, performance and prospects.
Internal control
A key objective of the Directors is to safeguard the value of the business and assets of the Company. This requires the
development of relevant policies and appropriate internal controls to ensure proper management of the Company’s
resources and the identification and mitigation of risks which might serve to undermine them. The Directors are responsible
for the Company’s system of internal control and for reviewing its effectiveness. It should, however, be recognised that such
a system can provide only reasonable and not absolute assurance against material misstatement or loss.
6
DIRECTORS’ REPORT - CONTINUED
Events after the reporting period
Events after the reporting period are set out in note 22 to the financial statements.
Auditor
The Directors will place a resolution before the Annual General Meeting to re-appoint Chapman Davis LLP as auditor for the
coming year.
Risk management
The directors have in place a process of regularly reviewing risks to the business and monitoring associated controls, actions
and contingency plans.
The Company’s financial risk management policies are set out in Note 18.
Website publication
The directors are responsible for the maintenance and integrity of the company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Corporate Governance
Audit and Remuneration Committees have been established and comprise Christopher Gordon (Chairman) and Donald Strang
(audit) and Chris Gordon (chairman) and Hamish Harris (renumeration)
The role of the Remuneration Committee is to review the performance of the executive Directors and to set the scale and
structure of their remuneration, including bonus arrangements. The Remuneration Committee also administers and
establishes performance targets for the Company’s employee share schemes and executive incentive schemes for key
management. In exercising this role, the terms of reference of the Remuneration Committee require it to comply with the
Code of Best Practice published in the Combined Code.
The Audit Committee is responsible for making recommendations to the Board on the appointment of the auditors and the
audit fee, and receives and reviews reports from management and the Company’s auditors on the internal control systems
in use throughout the Company and its accounting policies.
Going concern
The Directors note the losses that the Company has made for the Year Ended 31 July 2016. The directors have prepared cash
flow forecasts for the period ending 30 November 2017 which take account of the current cost and operational structure of
the Company.
The cost structure of the Company comprises a high proportion of discretionary spend and therefore in the event that cash
flows become constrained, costs can be quickly reduced to enable the Company to operate within its available funding. As a
junior investment exploration company, the Directors are aware that the Company must go to the marketplace to raise cash
to meet its investment plans, and/or consider liquidation of its investments and/or assets as is deemed appropriate, and the
Company demonstrated its ability to raise further cash by way of a completed placing on 12 October 2016 raising £300,000.
These forecasts demonstrate that the Company has sufficient cash funds available to allow it to continue in business for a
period of at least twelve months from the date of approval of these financial statements. Accordingly, the financial
statements have been prepared on a going concern basis.
7
DIRECTORS’ REPORT - CONTINUED
Statement of directors’ responsibilities
Company law requires the directors to keep reliable accounting records which correctly explain the transactions of the
Company, enable the financial position of the Company to be determined with reasonable accuracy at any time and allow
financial statements to be prepared. The shareholders have resolved, in accordance with the Companies Act 2006 and the
Articles of Association, that the directors prepare financial statements for each financial period which give a true and fair view
of the state of affairs of the Company and of its profit or loss for that period.
On this basis the directors have elected to prepare the financial statements for the Company in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European Union.
International Accounting Standard 1 requires that accounts present fairly for each financial period the company’s financial
position, financial performance and cash flows. This requires the faithful representation of the effects of transactions, other
events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses
set out in the International Accounting Standards Board’s ‘Framework for the preparation and presentation of accounts’. In
virtually all circumstances, a fair presentation will be achieved by compliance with all applicable IFRSs. However, directors
are also required to:
select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
state whether applicable IFRSs have been followed, subject to any material departures disclosed and explained in the
accounts; and
prepare the accounts on the going concern basis unless it is inappropriate to presume that the company will continue in
business.
The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the
financial position of the company and to enable them to ensure that the accounts comply with the Companies Act 2006. They
have a general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the company
and to prevent and detect fraud and other irregularities. Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other jurisdictions.
Website publication
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the
Company’s website.
Statement of disclosure to auditors
So far as the directors are aware, there is no relevant audit information of which the Company’s auditors are unaware.
Additionally, the directors have taken all the necessary steps that they ought to have taken as directors in order to make
themselves aware of all relevant audit information and to establish that the Company’s auditors are aware of that
information.
By order of the Board of Directors
Hamish Harris
Director
21 November 2016
8
INFORMATION ON THE BOARD OF DIRECTORS
Hamish Harris, Executive Chairman
Hamish holds a Bachelor of Commerce from the University of Tasmania. He has held positions within market risk management
at a number of financial institutions including Nomura Group, Dresdner Kleinwort Wasserstein, Deutsche Bank AG and Lloyds
Banking Group plc in Singapore, Hong Kong and London. Hamish currently holds a position with Nivalis Capital a private equity
vehicle which looks for opportunities in mining and agriculture in Eastern Europe. Hamish is currently a director of Polemos
Plc, AfriAg Plc and Doriemus plc. Hamish is a member of the Remuneration Committee.
Donald Strang – Executive Director
Donald is a member of the Australian Institute of Chartered Accountants and has been in business over 20 years, holding
senior financial and management positions in both publicly listed and private enterprises in Australia, Europe and Africa. He
has considerable corporate and international expertise and over the past decade has focussed on mining and exploration
activities. He is currently the Finance Director of Rare Earth Minerals plc and is Non-executive director of Doriemus plc, Stellar
Resources plc, and Solo Oil plc. Donald is a member of both the Audit and Remuneration committees.
Christopher Gordon - Non-Executive Director
Christopher has a Bachelor of Economics degree awarded by the University of London and over 8 years’ experience in the
financial services sector in London, working in dealing and trading roles with a focus on raising capital for listed companies.
Mr Gordon is the Chairman of both the Audit and Remuneration committees.
9
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF GUNSYND PLC
We have audited the Financial Statements of Gunsynd Plc for the year ended 31 July 2016 which comprise the Statement of
Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity, the Statement of Cash Flows
and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by the European Union.
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are
required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone, other than the Company and the Company's members as a body, for our audit
work, for this report, or for the opinions we have formed.
Respective Responsibilities of Directors and Auditor
As explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for the preparation of
the Financial Statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express
an opinion on the Financial Statements in accordance with applicable law and International Standards on Auditing (UK and
Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the Audit of the Financial Statements
A description of the scope of an audit of
www.frc.org.uk/apb/scope/private.cfm.
Opinion on Financial Statements
In our opinion the Financial Statements:
financial statements
is provided on the APB's website at
give a true and fair view of the state of the Company’s affairs as at 31 July 2016 and of its loss for the year then
ended;
have been properly prepared in accordance with IFRSs as adopted by the European Union; and
have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and Directors’ Report for the financial year for which the Financial
Statements are prepared is consistent with the Financial Statements.
Matters on which we are required to Report by Exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from
branches not visited by us; or
the Financial Statements are not in agreement with the accounting records and returns; or
certain disclosures of Directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Keith Fulton
Senior Statutory Auditor
for and on behalf of Chapman Davis LLP
Statutory Auditor, Chartered Accountants
LONDON
21 November 2016
10
FINANCIAL STATEMENTS
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 JULY 2016
Note
6
7
19
11
8
9
Continuing operations
Administrative expenses
Salaries and other staff costs
Other costs
Share based payment charge
Total administrative expenses
(Impairment)/reversal of available-for-sale asset
Loss on disposal of available for sale asset
Finance income
Loss before tax
Taxation
Loss for the period from continuing operations
Discontinued operations:
Loss for the period from discontinued operations
Loss for the period attributable to equity shareholders of the
parent Company
Other comprehensive income
(Decrease)/increase in value of available for sale asset
Other comprehensive (expenditure)/income for the period net of
tax
2016
£000
(23)
(186)
-
(209)
(301)
-
-
(510)
-
(510)
2015
£000
(128)
(185)
(60)
(373)
72
(66)
-
(367)
-
(367)
-
(9)
(510)
(376)
(54)
(54)
21
21
Total comprehensive income/(expenditure) for the period
(564)
(355)
Loss per ordinary share
Basic and diluted – continuing operations (pence)
10
(0.054)
(0.069)
The notes form an integral part of these financial statements.
11
STATEMENT OF FINANCIAL POSITION AS AT 31 JULY 2016
ASSETS
Non-current assets
Available-for-sale investments
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Total current liabilities
Total liabilities
Net assets
Equity attributable to equity holders of the company
Ordinary share capital
Deferred share capital
Share premium reserve
Share based payments reserve
Revaluation reserve
Retained earnings
Total equity
Note
11
12
17
13
14
14
14
2016
£000
1,009
1,009
102
358
460
2015
£000
1,219
1,219
51
452
503
1,469
1,722
(162)
(162)
(162)
1,307
123
1,729
9,439
174
(33)
(10,125)
1,307
(154)
(154)
(154)
1,568
73
1,729
9,186
174
21
(9,615)
1,568
The financial statements were approved and authorised for issue by the Board of Directors on 21 November 2016 and were
signed on its behalf by:
Hamish Harris
Chairman
Company number: 05656604
Donald Strang
Director
The notes form an integral part of these financial statements.
12
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 JULY 2016
At 1 August 2014
Increase in value of available for sale assets
Loss for the year
Total comprehensive loss for the period
Transactions with owners:
Reorganisation of share capital
Issue of share capital
Share issue costs
Share-based payment charge
At 31 July 2015
At 1 August 2015
(Decrease) in value of available for sale assets
Loss for the year
Total comprehensive loss for the period
Transactions with owners:
Issue of share capital
Share issue costs
At 31 July 2016
Share
capital
£000
1,747
-
-
-
(1,729)
55
-
-
73
73
-
-
-
50
-
123
Deferred
Share
capital
£ 000
-
-
-
-
1,729
-
-
-
1,729
1,729
-
-
-
-
-
1,729
Share
premium
reserve
£000
7,634
-
-
-
Share-based
payments
reserve
£000
114
-
-
-
-
1,655
(103)
-
9,186
9,186
-
-
-
300
(47)
9,439
-
-
-
60
174
174
-
-
-
-
-
174
Revaluation
reserve
£000
-
21
-
21
-
-
-
-
21
21
(54)
-
(54)
-
-
(33)
Retained
earnings
£000
(9,239)
-
(376)
(376)
-
-
-
-
(9,615)
(9,615)
-
(510)
(510)
-
-
(10,125)
Details of the nature of each component of equity are set out in Notes 15
The notes form an integral part of these financial statements.
Total
£000
256
21
(376)
(355)
-
1,710
(103)
60
1,568
1,568
(54)
(510)
(564)
350
(47)
1,307
13
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 JULY 2016
Cash flow from operating activities
Loss after tax
Tax on losses
Finance income net of finance costs
Loss on sale of AFS Asset
Impairment/(reversal) of available-for-sale asset
Share-based payment charges
Changes in working capital:
(Increase) in trade and other receivables
Increase/(decrease) in trade and other payables
Cash outflow from operations
Taxation received
Net cash outflow from operating activities
Cash flow from investing activities
Payments for investments in AFS assets
Disposal proceeds from sale of AFS Asset
Finance income
Net cash (outflow) from investing activities
Cash flows from financing activities
Proceeds on issuing of ordinary shares
Cost of issue of ordinary shares
Net cash inflow from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Note
11
19
11
11
14
17
17
2016
£000
(510)
-
-
-
301
-
(51)
8
(252)
-
(252)
(145)
-
-
(145)
350
(47)
303
(94)
452
358
The notes form an integral part of these financial statements.
2015
£000
(376)
-
-
66
(72)
60
(36)
133
(225)
-
(225)
(1,198)
144
-
(1,054)
1,710
(103)
1,607
328
124
452
14
NOTES TO THE FINANCIAL STATEMENTS
1 Presentation of the financial statements
Description of business & Investing Policy
Gunsynd plc (formerly Evocutis plc) is public limited company domiciled in the United Kingdom. On 2 August 2016, the
Company changed its name to Gunsynd Plc from Evocutis Plc, by statutory notice of change filed at Companies House. The
Company’s registered office is 2 Chapel Court, London SE1 1HH.
The Company's Investing Policy is to invest in and/or acquire companies and/or projects within the natural resources sector
which the Board considers, in its opinion, has potential for growth. The Company will consider opportunities in all sectors as
they arise if the Board considers there is an opportunity to generate potential value for Shareholders. The geographical focus
will primarily be in Europe, however, investments may also be considered in other regions to the extent that the Board
considers that valuable opportunities exist and potential value can be achieved.
Where appropriate, the Board may seek to invest in businesses where it may influence the business at a board level, add their
expertise to the management of the business, and utilise their industry relationships and access to finance.
The Company’s interests in a investment and/or acquisition may range from a minority position to full ownership and may
comprise one investment or multiple investments. The investments may be in either quoted or unquoted companies; be
made by direct acquisitions or farm-ins; and may be in companies, partnerships, earn-in joint ventures, debt or other loan
structures, joint ventures or direct or indirect interests in assets or projects. The Board may focus on investments where
intrinsic value may be achieved from the restructuring of investments or merger of complementary businesses.
The Board expects that investments will typically be held for the medium to long term, although short term disposal of assets
cannot be ruled out if there is an opportunity to generate a return for Shareholders. The Board will place no minimum or
maximum limit on the length of time that any investment may be held. The Company may be both an active and a passive
investor depending on the nature of the individual investment. There is no limit on the number of projects into which the
Company may invest, and the Company’s financial resources may be invested in a number of propositions or in just one
investment, which may be deemed to be a reverse takeover under the AIM Rules. The Board intends to mitigate risk by
appropriate due diligence and transaction analysis. Any transaction constituting a reverse takeover under the AIM Rules will
also require Shareholder approval. The Board considers that, as investments are made and new investment opportunities
arise, further funding of the Company may also be required.
Where the Company builds a portfolio of related assets, it is possible that there may be cross holdings between such assets.
The Company does not currently intend to fund any investments with debt or other borrowings but may do so if appropriate.
Investments in early stage assets are expected to be mainly in the form of equity, with debt potentially being raised later to
fund the development of such assets. Investments in later stage assets are more likely to include an element of debt to equity
gearing. The Board may also offer New Ordinary Shares by way of consideration as well as cash, thereby helping to preserve
the Company’s cash for working capital and as a reserve against unforeseen contingencies including, for example, delays in
collecting accounts receivable, unexpected changes in the economic environment and operational problems.
Investments may be made in all types of assets and there will be no investment restrictions on the type of investment that
the Company might make or the type of opportunity that may be considered. The Company may consider possible
opportunities anywhere in the world.
The Board will conduct initial due diligence appraisals of potential business or projects and, where they believe further
investigation is warranted, intend to appoint appropriately qualified persons to assist. The Board believes its expertise will
enable it to determine quickly which opportunities could be viable and so progress quickly to formal due diligence. The
Company will not have a separate investment manager.
Compliance with applicable law and IFRS
The financial statements have been prepared in accordance with the Companies Act 2006 and International Accounting
Standards (IAS) and International Financial Reporting Standards (IFRS) and related interpretations, as adopted by the
European Union.
Composition of the financial statements
The Company financial statements are drawn up in Sterling, the functional currency of Gunsynd plc (formerly Evocutis plc)
and in accordance with IFRS accounting presentation. The level of rounding for financial information is the nearest thousand
pounds.
15
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
1 Presentation of the financial statements continued
Accounting convention
The financial statements have been prepared using the historical cost convention, as modified by the revaluation of certain
items, as stated in the accounting policies.
Basis of preparation – Going concern
The financial statements have been prepared on a going concern basis, notwithstanding the loss for the year ended 31 July
2016. This basis assumes that the company will have sufficient funding to enable it to continue to operate for the foreseeable
future and the Directors have taken steps to ensure that they believe that the going concern basis of preparation remains
appropriate.
The Company made a loss for the year of £510,000 (2015: £376,000) after taxation. The Company had net assets of
£1,307,000 (2015: £1,568,000) and cash balances of £358,000 (2015: £452,000) at 31 July 2016. The Directors have prepared
financial forecasts which cover a period of at least 12 months from date that these financial statements are approved to 30
November 2017. These forecasts show that the Company expects to have sufficient financial resources to continue to operate
as a going concern.
The cost structure of the Company comprises a high proportion of discretionary spend and therefore in the event that cash
flows become constrained, costs can be quickly reduced to enable the Company to operate within its available funding. As a
junior investment exploration company, the Directors are aware that the Company must go to the marketplace to raise cash
to meet its investment plans, and/or consider liquidation of its investments and/or assets as is deemed appropriate, and the
Company demonstrated its ability to raise further cash by way of a completed placing on 12 October 2016 raising £300,000.
Therefore they are confident that existing cash balances, along with the new funding, are adequate to ensure that costs can
be covered.
Consequently, the Directors have a reasonable expectation that the Company has adequate resources to continue to operate
for the foreseeable future and that it remains appropriate for the financial statements to be prepared on a going concern
basis.
Financial period
These financial statements cover the financial year from 1 August 2015 to 31 July 2016, with comparative figures for the
financial year from 1 August 2014 to 31 July 2015.
Accounting principles and policies
The preparation of the financial statements in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
The financial statements have been prepared in accordance with the Company’s accounting policies approved by the Board
and signed on their behalf by Hamish Harris and Donald Strang, and described in Note 2, ‘Accounting principles and policies’.
Information on the application of these accounting policies, including areas of estimation and judgement is given in Note 3,
‘Key accounting judgements and estimates’. Where appropriate, comparative figures are reclassified to ensure a consistent
presentation with current year information.
16
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
2 Accounting principles and policies
Discontinued operations
The results of the disposed of research services operation, which was disposed of during the year 31 July 2014 and 31 July
2015, have been classified as a discontinued operation and the comparative statement of comprehensive income has been
presented in the current and prior year to show the discontinued operation separately from continuing operations. Further
details are set out in note 9.
Revenue
Revenue is recognised when persuasive evidence of an arrangement exists, delivery of products has occurred or services have
been rendered, prices are fixed or determinable and there is a probability that economic benefits will flow to the Company.
Royalty income is recognised on an accruals basis in accordance with the economic substance of the agreement and is
reported as part of revenue. Other revenues are recorded as earned or as the services are performed. As part of the disposal
of assets agreement in March 2014, the Company retains a right to receive contingent consideration in the form of royalties
arising on any revenues generated by those assets during the 3 year period ending 18 March 2017 or from the sale or licence
of the SYN1113 asset at any time.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker has been identified as the Board of Directors. Further details are set out in Note
5.
Share capital
Financial instruments issued by the Company are treated as equity only to the extent that they do not meet the definition of
a financial liability. The Company’s ordinary shares are classified as equity instruments.
Share-based payments
Where equity settled share options are awarded to employees, the fair value of the options at the date of grant is charged to
the statement of comprehensive income over the vesting period. Non-market vesting conditions are taken into account by
adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative
amount recognised over the vesting period is based on the number of options that eventually vest.
Market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are
satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not
adjusted for failure to achieve a market vesting condition.
Financial instruments
Available-for-sale investments
Non-derivative financial assets comprising the Company’s strategic investments in entities not qualifying as subsidiaries,
associates or jointly controlled entities. They are carried at fair value with changes in fair value recognised directly in a
separate component of equity (available-for-sale reserve). Where there is a significant or prolonged decline in the fair value
of an available-for-sale financial asset (which constitutes objective evidence of impairment), the full amount of the
impairment, including any amount previously charged to equity, is recognised in the statement of comprehensive income.
On sale, the amount held in the available-for-sale reserve associated with that asset is removed from equity and recognised
in the statement of comprehensive income.
Trade and other receivables
Trade and other receivables are accounted for at original invoice amount less any provisions for doubtful debts. Provisions
are made where there is evidence of a risk of non-payment, taking into account the age of the debt, historical experience and
general economic conditions. If a trade debt is determined to be uncollectable, it is written off, firstly against any provisions
already held and then to the statement of comprehensive income. Subsequent recoveries of amounts previously provided
for are credited to the statement of comprehensive income.
17
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
2 Accounting principles and policies continued
Trade and other payables
Trade and other payables are held at amortised cost which equates to nominal value.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, current balances with banks and similar institutions and liquid investments
generally with maturities of 3 months or less. They are readily convertible into known amounts of cash and have an
insignificant risk of changes in values.
Financial investments
Listed investments are valued at closing bid price on 31 July. For measurement purposes, financial investments are designated
at fair value through statement of comprehensive income. Gains and losses on the realisation of financial investments are
recognised in the statement of comprehensive income for the period and taken to retained earnings. The difference between
the market value of financial instruments and book value to the Company is shown as a gain or loss in the income for the
period and taken to the revaluation reserve.
Taxation
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the
extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also
recognised in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet
date in the countries where the company’s subsidiaries and associates operate and generate taxable income. Management
periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to
interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax
authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax
is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination
that at the time of the transaction affects neither accounting nor taxable profit nor loss. Deferred income tax is determined
using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to
apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against
which the temporary differences can be utilised. Deferred income tax is provided on temporary differences arising on
disallowed expenses, expect where the timing of the reversal of the temporary difference is controlled by the company and
it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same
taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances
on a net basis.
Impairment of non-current assets
The carrying values of all non-currents assets are reviewed for impairment when there is an indication that the assets might
be impaired. Any provision for impairment is charged to the statement of comprehensive income in the year concerned.
Impairment losses on other non-current assets are only reversed if there has been a change in estimates used to determine
recoverable amounts and only to the extent that the revised recoverable amounts do not exceed the carrying values that
would have existed, net of depreciation or amortisation, had no impairments been recognised.
18
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
3 Key accounting judgements and estimates
The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and
assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. 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 estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision only affects that
period, or in the period of the revision and future periods if the revision affects both current and future periods.
Significant estimates and assumptions that may have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities at 31 July 2016 are set out below:
Fair value of contingent consideration
The consideration for the sale of intellectual property assets to Venn Life Science Holdings plc in March 2014 included an
element of contingent consideration that is based on a future royalty stream from commercialisation of those assets by Venn.
An estimate of the fair value of the contingent consideration has not been included in these financial statements. However
the actual amounts of royalties receivable in future years is dependent upon a number of factors, all of which are outside the
Company’s control. These include Venn’s ability to be able to generate commercial revenues from the intellectual property
assets, the demand for those products and other economic factors, and as such, the Company has taken a prudent basis and
not accounted for any potential future royalties.
Share Based Payments
The Company made awards of nil million options over its unissued share capital to the directors during the year to 31 July
2016. (2015: 30 million share options issued)
The fair value of share based payments is calculated by reference to Black Scholes model. Inputs into the model are based on
management's best estimates of appropriate volatility, dividend yields, discount rate and share price. During the year, the
Company incurred £nil share based payment charge (2015: £60,000 charge).
4 New accounting requirements
At the date of authorisation of these financial statements, the following IFRSs, IASs and Interpretations were in issue but not
yet effective. Their adoption is not expected to have a material effect on the financial statements unless otherwise indicated:
IFRS 9 Financial Instruments (effective date 1 January 2018);
IFRS 15 Revenue from Contracts with Customers (effective date 1 January 2017);
Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38) (effective
date 1 January 2016);
Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11) (effective date 1 January 2016);
and
IFRS 14 Regulatory Deferral Accounts (effective date 1 January 2016).
Amendments to IAS 1 in respect of determining what information to disclose in annual financial statements which
will be effective for accounting periods beginning on or after 1 January 2016.
5 Segmental analysis
Segmental analysis is not applicable as there is only one operating segment of the continuing business – investment activities.
The performance measure of investment activities is considered by the Board to be profitability and is disclosed on the face
of the statement of comprehensive Income. An analysis of the Company’s previous trading activities, which were
discontinued during the previous year to 31 July 2015, is set out in note 9.
19
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
6 Information regarding Directors and employees
Included within continuing operations
Wages and salaries
Social security costs
Share based payment expense
Included within discontinued operations
Wages and salaries
2016
£000
22
1
-
23
-
-
2015
£000
128
-
60
188
15
15
2016
Number
2015
Number
Average number of persons employed by the Company (including Directors) during the year
Continuing operations - Directors
Discontinued operations – Research and administrative staff
Total
The compensation of the Directors, in aggregate, was as follows:
Wages and salaries
Social security costs
Share based payment expense
3
-
3
2016
£000
20
1
-
21
Full details of the remuneration of individual directors, including the highest paid director, are set out below:
Continuing Activities
Directors
D Lenigas (resigned 21 December 2015)
D Strang
Mr H Harris
Mr C Gordon (appointed 21 April 2016)
Fees &
salary
£000
Share Based
Payments
£000
2
6
6
6
20
-
-
-
-
-
Total
2016
£000
2
6
6
6
20
Directors fees totalling £27,000 have been accrued and remain unpaid at 31 July 2016. (2015: £128,000)
3
-
3
2015
£000
128
-
60
188
Total
2015
£000
64
64
60
-
188
20
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
7 Loss for the year – continuing operations
The following items have been included in operating loss:
Fees payable to the company’s auditors in relation to the Company:
Audit and assurance services:
- Audit of parent Company financial statements
- Other services
Total auditor’s fees
Analysis of other costs:
Legal and professional fees
Other general overheads
2016
£000
2015
£000
12
-
12
99
87
186
10
-
10
94
91
185
At 31 July 2016, the amount due to Chapman Davis LLP for fees yet to be invoiced was £12,000, comprising statutory audit
of £12,000.
8 Taxation
Taxation charge based on losses for the year
UK Corporation tax
Deferred taxation
Tax expense from continuing operations
Tax credit from discontinued operations
Total tax expense
Factors affecting the tax charge for the year:
Loss on ordinary activities before taxation
Loss on ordinary activities at the average UK standard rate of 20% (2015: 20.67%)
Effect of non-deductible expenses
Future income tax benefit not brought to account
Other deductions for tax purposes
Current tax charge
2016
£000
-
-
-
-
-
(510)
(102)
60
42
-
-
2015
£000
-
-
-
-
-
(376)
(78)
12
66
-
-
As set out in Note 2, the Company has not recognised a deferred tax asset in the financial statements as there is no certainty
that taxable profits will be available against which these assets could be utilised.
Factors affecting the tax charge in future years
Changes to tax legislation could impact on the Company’s effective tax rate. The UK Government has in recent years proposed
some significant changes to the UK taxation system. The UK Government announced a phased reduction in the main rate of
corporation tax to 20% and the deferred tax balances reflect that reduction in the UK tax rate, as is appropriate to the
Company’s circumstances.
21
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
9 Discontinued operations
In December 2013, the Company and the disposed of Group ceased its research services operation and all intellectual
property assets and residual property, plant and equipment were disposed to Venn Life Science Holding plc on 19 March 2014.
The results of the research services operation have been classified as a discontinued operation and the comparative statement
of profit or loss and other comprehensive income has been presented in the current and prior year to show the discontinued
operation separately from continuing operations. The effect of results of operations discontinued during the years ended 31
July 2015 and 31 July 2016 are as follows:
Revenues
Expenses
Results from operating activities
Income tax
Results from operating activities, net of tax
Gain on sale of discontinued operation – see below
Tax on gain on sale of discontinued operation
Loss from discontinued operations for the year
2016
£000
-
-
-
-
-
-
-
-
2015
£000
10
(19)
(9)
-
(9)
-
-
(9)
Basic and diluted loss per shares (pence)
-
(0.001p)
The loss from discontinued operation of £nil (2015: loss of £9,000) is attributable entirely to the owners of the Company.
Cash flows used in discontinued operations
Net cash used in operating activities
Net cash from investing activities
Net cash flows for the year
10 Loss per share
Loss attributable to ordinary shareholders
The calculation of loss per share is based on the loss after taxation divided by the
weighted average number of shares in issue during the period:
Continuing operations (£000)
Discontinued operations (£000)
Total (£000)
Number of shares
Weighted average number of ordinary shares for the purposes of basic loss per share
(millions)
Basic and diluted loss per share (expressed in pence) - Continuing operations
Basic and diluted loss per share (expressed in pence) - Discontinued operations
Basic and diluted loss per share (expressed in pence)
2016
£000
-
-
-
2015
£000
(9)
-
(9)
2016
2015
(510)
-
(510)
(367)
(9)
(376)
941.9
569.1
(0.054)
-
(0.054)
(0.069)
(0.001)
(0.07)
As inclusion of the potential ordinary shares would result in a decrease in the earnings per share they are considered to be
anti-dilutive, as such, the diluted earnings per share is not included.
22
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
11 Available-for-sale investments
Fair Value at 31 July 2014
Addition
Reversal of Impairment on disposal
Revaluation
Disposals
Fair Value at 31 July 2015
Addition
Revaluation
Impairment provision
Fair Value at 31 July 2016
The available for sale investments splits are as below:
Non-current assets - listed
Non-current assets - unlisted
£000
138
1,198
72
21
(210)
1,219
145
(54)
(301)
1,009
84
925
1,009
The Directors have carried out an impairment review as at 31 July 2016 on the unlisted investments, and determined that
an impairment charge of £301,000 is required against its investment in Brazil Tungsten Holdings Ltd ("BTH"), a BVI based
company focused solely on the producing Bodo Tungsten Mine in Rio Grande do Norte, Brazil. The Directors have
considered it prudent in light of lower commodity prices.
Available-for-sale investments comprise investments in listed and unlisted Companies, of which the listed investments are
traded on stock markets throughout the world, and are held by the Company as a mix of strategic and short term
investments. The listed investments have been valued at bid price, as quoted on the London Stock Exchange, at 31 July
2016. The market value of the listed investments at 17 November 2016 was £95,940.
12 Trade and other receivables
Trade receivables
Other receivables
Prepayments
13 Trade and other payables
Amounts due within one year
Trade payables
Accruals and deferred income
2016
£000
-
82
20
102
2016
£000
48
114
162
2015
£000
-
38
13
51
2015
£000
4
150
154
23
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
14 Share capital and share premium account
Number
of shares
Ordinary
share
capital
Deferred
share
capital
Share
premium
£000
£000
£000
Share capital issued and fully paid
At 31 July 2014
Subdivision of ordinary share capital on 2 September 2014
Issue of new ordinary shares on 15 September 2014
Issue of new ordinary shares on 8 December 2014
At 31 July 2015
Issue of new ordinary shares on 23 February 2016
Less: costs of share placing
At 31 July 2016
174,675,828
-
175,000,000
375,000,000
724,675,828
500,000,000
-
1,224,675,828
1,747
(1,729)
17
38
73
50
-
123
-
1,729
-
-
1,729
-
-
1,729
7,634
-
193
1,359
9,186
300
(47)
9,439
On the 12 September 2014, at the Annual General Meeting the shareholders approved the sub-division of the existing
ordinary shares of 1p each into new ordinary shares of 0.01p each and deferred shares of 0.99p each. The rights attached to
the new ordinary shares are in all material aspects the same as the rights attaching to the existing ordinary shares.
The Deferred Shares have no voting rights and do not carry any entitlement to attend general meetings of the Company; nor
will they be admitted to AIM or any other market. They carry only a priority right to participate in any return of capital to the
extent of £1 in aggregate over the class. In addition, they carry only a priority right to participate in any dividend or other
distribution to the extent of £1 in aggregate over the class. In each case a payment to any one holder of Deferred Shares shall
satisfy the payment required. The Company will be authorised at any time to effect a transfer of the Deferred Shares without
reference to the holders thereof and for no consideration pursuant to and in accordance with the Act. Accordingly, the
Deferred Shares will, for all practical purposes, be valueless and it is the Board's intention, at an appropriate time, to have
the Deferred Shares cancelled, whether through an application to the Companies Court or otherwise in accordance with the
Act.
On 15 September 2014, 175,000,000 ordinary shares of 0.01p each were issued fully paid for gross cash consideration at 0.12
pence per share to raise £210,000.
On 8 December 2014, 375,000,000 ordinary shares of 0.01p each were issued fully paid for gross cash consideration at 0.40
pence per share to raise £1,500,000.
On 23 February 2016, 500,000,000 ordinary shares of 0.01p each were issued fully paid for gross cash consideration at 0.07
pence per share to raise £350,000.
15 Movements in equity
Share capital represents the nominal value of the amount subscribed for shares. Share premium represents the amount
subscribed for shares in excess of their nominal value less costs of subscription. Ordinary shares carry the rights to one vote
per share at general meetings of the Company and the rights to share in any distributions of profits or returns of capital and
to share in any residual assets available for distribution in the event of a winding up.
The share-based payment reserve represents amounts arising from the requirement to expense the fair value of share-based
remuneration in accordance with IFRS 2 ‘Share-based Payments’.
Retained earnings are the cumulative net losses recognised in the income statement and other comprehensive income.
Revaluation reserve represents the unrealised gains or losses on the company’s available for sale investments, on fair/market
value revaluation.
Movements on these reserves are set out in the statement of changes in equity.
24
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
16 Related party transactions
The Company had the following transactions with related parties:
Name of related party
Relationship
Nature of transaction
Transactions with
related party
Amounts owed from
related party
At 31 July At 31 July At 31 July At 31 July
2015
£000
2015
£000
2016
£000
2016
£000
Atraxa Consulting Ltd
Common
directorship of
Mr J D Bamforth
Provision of
accountancy services
to the company
Cash call Loan to
HHDL
-
82
6
-
-
82
-
-
Horse Hill Developments
Ltd (“HHDL”)
Note: Mr J D Bamforth resigned as a director of Gunsynd on 15 September 2014.
Investee Company
Terms and conditions of transactions with related parties
Outstanding balances that relate to trading balances are unsecured, interest free and settlement occurs in cash. There have
been no guarantees provided or received for any related party receivables or payables. The Company only has the outstanding
amounts due from HHDL as at 31 July 2016. The loan outstanding is included within trade and other receivables, Note 12.
The loan to HHDL has been made in accordance with the terms of the investment agreement whereby it accrues interest daily
at the Bank of England base rate and is repayable out of future cashflows.
Compensation of key management personnel of the Company
The Company considers the directors to be its key management personnel. Full details of the remuneration of the directors
are shown in Note 6.
17 Reconciliation of net cash flow to movement in net funds
Net funds at beginning of the year
Increase/(decrease) in cash
Net funds at end of the year
Analysis of changes in net funds
Cash and cash equivalents
Net funds
2016
£000
452
(94)
358
Cash
Flow
£000
(94)
(94)
2015
£000
124
328
452
At 31
July
2016
£000
358
358
At 31
July
2015
£000
452
452
25
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
18 Financial instruments and related disclosures
General objectives, policies and processes
The Board has overall responsibility for the determination of the Company’s risk management objectives and policies and,
whilst retaining ultimate responsibility for them, it has delegated authority for designing and operating processes that ensure
the effective implementation of the objectives and policies to the Company’s finance function. The Board receives monthly
reports through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives
and policies it sets.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the
Company’s competitiveness and flexibility.
The Company reports in Sterling. Internal and external funding requirements and financial risks are managed based on
policies and procedures adopted by the Board of Directors. The Company does not use derivative financial instruments such
as forward currency contracts, interest rate and currency swaps or similar instruments. The Company does not issue or use
financial instruments of a speculative nature.
Capital management
The Company’s objectives when maintaining capital are:
to safeguard the entity’s ability to continue as a going concern, so that it can continue to provide returns for
shareholders and benefits for other stakeholders; and
to provide an adequate return to shareholders.
The capital structure of the Company consists of total shareholders’ equity as set out in the ‘Statement of changes in equity’.
All working capital requirements are financed from existing cash resources.
Capital is managed on a day to day basis to ensure that all entities in the Company are able to operate as a going concern.
Operating cash flow is primarily used to cover the overhead costs associated with operating as an AIM and ISDX-listed
company.
Liquidity risk
Liquidity risk arises from the Company’s management of working capital. It is the risk that the Company will encounter
difficulty in meeting its financial obligations as they fall due.
The directors consider that there is no significant liquidity risk faced by the Company. The Company maintains sufficient
balances in cash to pay accounts payable and accrued expenses.
The Board receives forward looking cash flow projections at periodic intervals during the year as well as information regarding
cash balances. At the balance sheet date the Company had cash balances of £358,000 and the financial forecasts indicated
that the Company expected to have sufficient liquid resources to meet its obligations under all reasonably expected
circumstances and will not need to establish overdraft or other borrowing facilities.
Interest rate risk
As the Company has no borrowings, it only has limited interest rate risk. The impact is on income and operating cash flow
and arises from changes in market interest rates. Cash resources are held in current, floating rate accounts.
26
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
18 Financial instruments and related disclosures continued
Market risk
Market price risk arises from uncertainty about the future valuations of financial instruments held in accordance with the
Company’s investment objectives. These future valuations are determined by many factors but include the operational and
financial performance of the underlying investee companies, as well as market perceptions of the future of the economy and
its impact upon the economic environment in which these companies operate. This risk represents the potential loss that the
Company might suffer through holding its available-for-sale investment portfolio in the face of market movements, which was
a maximum of £1,009,000 (2015: £1,219,000).
The investments in equity of AIM-quoted companies that the Company holds are less frequently traded than shares in more
widely traded securities. Consequently, the valuations of these investments can be more volatile.
Market price risk sensitivity
The table below shows the impact on the return and net assets of the Company if there were to be a 20% movement in overall
share prices of the available-for-sale investments held at 31 July 2016.
Decrease if overall share price falls by 20%, with all other variables held constant
Decrease in other comprehensive earnings and net asset value per Ordinary share (in
pence)
2016
Other
comprehensive
income and
Net assets
£000
(201.8)
2015
Other
comprehensive
income and
Net assets
£000
(243.8)
(0.02p)
(0.04p)
Increase if overall share price rises by 20%, with all other variables held constant
Increase in other comprehensive earnings and net asset value per Ordinary share (in
pence)
201.8
0.02p
243.8
0.04p
The impact of a change of 20% has been selected as this is considered reasonable given the current level of volatility observed,
and assumes a market value is attainable for the Company’s unlisted investments.
Currency risk
The directors consider that there is no significant currency risk faced by the Company. The only current foreign currency
transactions the Company enters into in are denominated in US$ in relation to transactions with or relating to its investment
in Brazil Tungsten Holdings Ltd, and no balances at 31 July 2016 are denominated in foreign currencies.
Credit risk
Credit risk is the risk that a counterparty will fail to discharge an obligation or commitment that it has entered into with the
Company. The Company’s maximum exposure to credit risk is:
Cash at bank
Other receivables
The Company’s cash balances are held in accounts with Barclays Bank plc.
2016
£000
358
102
460
2015
£000
452
51
503
27
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
18 Financial instruments and related disclosures continued
Fair value of financial assets and liabilities
Financial assets and liabilities are carried in the Statement of Financial Position at either their fair value (available-for-sale
investments) or at a reasonable approximation of the fair value (trade and other receivables, trade and other payables and
cash at bank).
The fair values are included at the amount at which the instrument could be exchanged in a current transaction between
willing parties, other than in a forced or liquidation sale.
Trade and other receivables in scope of IAS 39
The following table sets out financial assets within Trade and other receivables which fall within the scope of IAS39. These
assets are non-interest earning.
Financial assets in scope of IAS39
Trade and other receivables (Note 12)
2016
£000
102
2015
£000
51
There are no financial assets which are past due and for which no provision for bad or doubtful debts has been made.
Trade and other payables in scope of IAS39
The following table sets out financial liabilities within Trade and other payables which fall within the scope of IAS39. These
financial liabilities are predominantly non-interest bearing. Other liabilities include tax and social security payables and
provisions which do not constitute contractual obligations to deliver cash or other financial assets, which are outside the
scope of IAS39.
Financial liabilities in scope of IAS39
Total trade and other payables (Note 13)
19 Share schemes
2016
£000
162
2015
£000
154
The Company has a share option scheme for all employees (including Directors). Options are exercisable at a price agreed at
the date of grant. The vesting period is usually between zero and five years. The exercise of options is dependent upon
eligible employees meeting performance criteria. The options are settled in equity once exercised.
If the options remain unexercised after their expiry date, the options expire. Options lapse if the employee leaves the
Company before the options vest.
Options outstanding
At 31 July 2014
Options granted
At 31 July 2015
Options granted
At 31 July 2016
Range of exercise prices
Weighted average remaining contractual life
Weighted
average
exercise
price
6.57p
0.22p
0.60p
Number
2,650,840
30,000,000
32,650,840
-
32,650,840
-
0.60p
0.22p – 8.65p
3.60 years
28
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
19 Share schemes continued
Options outstanding at 31 July 2016
Date of grant
6 August 2008
1 October 2010
1 April 2015
Total
Options exercisable
At 31 July 2015
At 31 July 2016
Charges to the statement of comprehensive income
Share based payment charges
Warrants in issue
Exercise
price (p)
8.65p
5.25p
Expiry
date
06/08/2018
30/11/2020
0.22p
01/04/2020
Number
1,031,990
1,618,850
30,000,000
32,650,840
Number
32,650,840
32,650,840
2016
£000
-
Weighted
exercise
price (p)
0.60p
0.60p
2015
£000
60
On 8 December 2014 subscribers to the share issue were awarded one warrant per share at an exercise price of 0.40 pence,
resulting in the issue of 375,000,000 warrants. All of these warrants expired on 31 December 2015.
As at 31 July 2016, no warrants remained outstanding, 375,000,000 warrants expired on 31 December 2015. (2015:
375,000,000 outstanding)
20 Commitments and contingencies
The directors have confirmed that there were no contingent liabilities or capital commitments which should be disclosed at
31 July 2016.
21 Ultimate controlling party
There is not considered to be an ultimate controlling party of the company.
22 Events after the end of the reporting period
On 3 August 2016, the Company changed its name to Gunsynd Plc from Evocutis Plc, by statutory notice of change filed at
Companies House.
On 19 September 2016, the Company announced it had subscribed for a further 60million shares in Alba Minerals Resources
Plc, increasing its holding to 82million shares. The Company acquired a further 10million shares in Alba on 22 September
2016, resulting in a holding of 92million shares, representing a 5.08% interest therein, at a total cost of approximately
£140,000.
On 12 October 2016, the Company announced it had raised £300,000 gross proceeds through the issue of 545,454,545 new
ordinary shares of 0.01p each in the Company at a placing price of 0.055pence per share with certain private investors.
On 21 November 2016, the Company announced it had signed a subscription agreement with Zenith Energy Limited, a junior
oil and gas E&P company quoted on the Toronto Venture Exchange in Canada with an oil production company based in
Azerbaijan, to invest GBP100,000 by way of a convertible loan note, and as part of a wider fundraising from other investors
of up to GBP500,000.
29