Gunsynd Plc
Annual Report 2023

Plain-text annual report

Gunsynd plc Annual Report and Accounts 2023 Company Number: 05656604 CONTENTS COMPANY INFORMATION ........................................................................................................................................ 1 CHAIRMAN’S REPORT (INCORPORATING THE STRATEGIC REVIEW) ....................................................................... 2 DIRECTORS’ REPORT ................................................................................................................................................. 9 INFORMATION ON THE BOARD OF DIRECTORS ..................................................................................................... 14 CORPORATE GOVERNANCE STATEMENT ............................................................................................................... 15 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF GUNSYND PLC ........................................................... 21 FINANCIAL STATEMENTS ........................................................................................................................................ 26 STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 JULY 2023 ............................................... 26 STATEMENT OF FINANCIAL POSITION AS AT 31 JULY 2023 ................................................................................... 27 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 JULY 2023 ......................................................... 28 STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 JULY 2023 ..................................................................... 29 NOTES TO THE FINANCIAL STATEMENTS ............................................................................................................... 30 COMPANY INFORMATION DIRECTORS REGISTERED OFFICE COMPANY WEBSITE Hamish Harris Donald Strang Peter Ruse (Executive Chairman) (Executive Director) (Non-Executive Director) 78 Pall Mall, St James’s London SW1Y 5ES 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 9th Floor 107 Cheapside London EC2V 6DN Peterhouse Capital Limited 3rd floor, 80 Cheapside London EC2V 6EE PKF Littlejohn LLP Statutory Auditor 15 Westferry Circus London E14 4HD Hill Dickinson LLP The Broadgate Tower 20 Primrose Street London EC2A 2EW Barclays Bank plc 1 Churchill Place London E14 5HP Neville Registrars Limited Neville House 18 Laurel Lane Halesowen B63 3DA 1 CHAIRMAN’S REPORT (INCORPORATING THE STRATEGIC REVIEW) I present the annual report and financial statements for the year ended 31 July 2023. The Company made a loss for the year to 31 July 2023 of £1,706,000 (2022: loss £2,426,000) after taxation. The loss was a result of unrealised losses on the value of investments held. The Company had net assets of £2,145,000 (2022: £3,851,000) at 31 July 2023, and cash balances of £164,000 (2022: £824,000). Review of Investments 1. NATURAL RESOURCES INVESTMENTS Charger Metals Limited (“Charger”) Gunsynd currently holds 2.5m shares in Charger representing approximately 4% of Charger’s issued share capital. Charger (ASX: CHR) is a Western Australian ("WA") focussed base metals (Ni,Cu,Co-PGE) and lithium exploration company which currently holds three highly prospective projects in WA and the Northern Territory (”NT”) in Australia. Highlights to 30 September 2023 for its current projects: Bynoe Lithium Project, NT (Charger 70%) • Maiden reverse circulation (RC) drill programme and diamond drill programme commenced. • Initial ~2,000m RC drill programme completed as first-pass test of high priority targets including the Megabucks, Old Bucks and Enterprise prospects. • Assays confirm significant lithium mineralisation in spodumene-bearing pegmatites at the Enterprise Prospect, with results including: - - 7m @ 0.96% Li2O from 107m, including 5m @1.13% Li2O from 108m (CBYRC023); and 16m @ 0.65% Li2O from 185m, including 1m @1.91% Li2O from 198m (CBYRC024) • First hole of 1,500m diamond drill programme intersected 19.25m of spodumene-bearing pegmatite at the Enterprise Prospect – assays pending • 5,000m RC drill programme commenced early July (post reporting period) with two drill rigs operating concurrently with the diamond rig Lake Johnston Lithium Project, WA (Charger 70%-100%) • Assay results received for the maiden RC drill programme completed at the Medcalf Spodumene Prospect, which totalled 41 holes for 7,199 metres and: - Delineated a swarm of stacked spodumene-bearing pegmatites up to 13m thick (down-hole) within a 100m wide corridor along 700m of strike and 250m down-dip Confirmed numerous high-grade lithium results returned from spodumene-bearing pegmatites - • Priority targets have been identified for follow-up drilling to test for extensions to the high-grade lithium mineralisation 2 CHAIRMAN’S REPORT (INCORPORATING THE STRATEGIC REVIEW) CONTINUED Rincon Resources Pty Ltd (“Rincon”) Gunsynd holds 11.1 million shares representing approximately 6.5% of Rincon’s issued share capital. Rincon (ASX: RCR) is a Western Australian (“WA”) focussed gold and base metals exploration company quoted on the ASX. It holds the rights to three highly prospective gold and copper projects in WA, with its main focus on the South Telfer Project, covering 50,000-hectares in Paterson province. Each project has been subject to historical exploration, which has identified prospective mineralised systems. Rincon is systematically exploring these projects, aiming to delineate economic resources. Highlights to 30 September 2023 for its current projects: South Telfer Copper-Gold Project - - - - 3,000m reverse circulation (“RC”) drilling program at Mammoth underway. 29m zone of quartz-sulphide mineralisation intersected down-dip of historic ‘Westin’ high grade gold intercept Successful application for Exploration Incentive Scheme (“EIS”2) co-funding grant of up to $180,000 for Recurve RC drilling program. The final report for the Hasties technical review now received with planning for next steps underway. West Arunta Project (formerly Kiwirrkurra project) - Heritage survey completed ahead of diamond drilling program at Pokali. - - 1,000m diamond drilling program at Pokali set to commence as soon as site works are completed. Site reconnaissance completed with a further 46 rock-chip samples collected for analysis. Laverton Project - The final report for the Laverton Project assessment, target generation and prioritisation process now received with planning for next steps underway. Pacific Nickel Limited ("Pacific Nickel") Gunsynd currently holds 2.78m shares in Pacific Nickel representing approximately 0.66% of its issued capital. Highlights to 30 September 2023 for its current projects: Kolosori Nickel Project (PNM 80%) • Final drawdown of US$19m from the Glencore International AG (Glencore) Financing Facility • Execution of a Barging Agreement with Marinepia Shipping Company Limited for the Transfer of Nickel Ore • Mining Contractor HBS PNG Pty Ltd (HBS) delivered two tranches of mining equipment to site from PNG. • HBS commenced major development activities (working 24 hours, two shift operations) including: - - - - - - Construction of the haul road and access roads to the stockpile area. Commenced major earth works and removal of overburden from the first higher-grade ore blocks. Backfill for the wharf. Construction of site laboratory. Construction of mining contractors workshop area. Construction of a 250 man camp. Subsequent to the reporting period, commencement of mining and stock piling of nickel ore for shipment forecast for November 2023. Jejevo Nickel Project (PNM 80%) • Subsequent to the Quarter, the Company has entered into a Surface Access Rights Agreement (SARA) for a Mining Lease with landowners in respect of the Jejevo Nickel Project. Corporate: • Cash of $23.075 million at 30 September 2023 3 CHAIRMAN’S REPORT (INCORPORATING THE STRATEGIC REVIEW) CONTINUED Eagle Mountain Mining Limited (“Eagle Mountain”) Gunsynd holds 2.5 million shares in Eagle Mountain representing approximately 1% of its issued share capital. Eagle Mountain Mining Limited (ASX: EM2), is a copper focused exploration and development company with a key objective of becoming a low emission producer at its high-grade Oracle Ridge project in Arizona, USA, to supply the rapidly growing green energy market. Highlights to 30 September 2023 for its current projects: - Further positive drilling and channel sampling results confirmed potential upside to the mineral resource estimate (MRE) - Underground channel sampling assays were some of the strongest to date including: − 15.3m at 4.02% Cu, 18.71g/t Ag and 0.14g/t Au − 19.2m at 3.32% Cu, 37.66g/t Ag and 0.31g/t Au − 35.7m at 2.60% Cu, 14.86g/t Ag and 0.08g/t Au − 32.6m at 2.23% Cu, 26.13g/t Ag and 0.28g/t Au including 1.6m at 9.47% Cu, 100g/t Ag and 1.01g/t Au - Drill core assays are expected to increase both the resource size and quality of the MRE. Results received during the Quarter include: 11.4m at 2.29% Cu, 16.45g/t Ag and 0.14g/t Au; 4.4m at 2.23% Cu, 23.41g/t Ag and 0.39g/t Au; and 63.9m at 1.11% Cu, 10.14g/t Ag and 0.09g/t Au -Various metallurgical test work programs progressed including Ore sorting; Concentrate variability testwork including locked cycle tests; Flash floatation testwork; High pressure grind roll comminution tests; Mineral speciation testwork; and Magnetic separation testwork to recover magnetite or garnets -Assessment of sulphide leaching processes commenced which could reduce capital and operating costs for the Project - New MRE update on track for completion in the December 2023 quarter incorporating drilling and channel sampling undertaken since the previous MRE in October 2022 and extensive new knowledge gained from the underground mapping program -$1.6 million in cash available at the end of the Quarter Aberdeen Minerals Limited (“Aberdeen”) Gunsynd subscribed for 2,000,000 shares at 7.5 pence per ordinary share for a total consideration of £150,000 as part of the fundraising announced on 16 January 2023. Recent update from Aberdeen: -Aberdeen has been awarded £294,000 in grant funding by the UK Government through the Automotive Transformation Fund ("ATF"). -Aberdeen expects the ATF grant will meet 70% of the cost of a feasibility study into innovative methods to process the minerals at the company's Arthrath Nickel-Copper-Cobalt Project in Aberdeenshire. This study will investigate the potential to accelerate the production of cathode raw materials in North East Scotland for UK battery manufacturing, using more environmentally sustainable and socially acceptable approaches than the carbon-intensive, overseas supply chains on which UK industry currently relies. -Innovations to be tested include Glycine Leaching Technology, a technique patented by Draslovka, which uses glycine, a non- toxic amino acid often used as a food additive or nutritional supplement in humans and animals, as an environmentally sustainable and cost-effective way to produce critical minerals. -The ATF is delivered by the Advanced Propulsion Centre ("APC") in collaboration with the Department for Business and Trade and Innovate UK to support large-scale industrialisation and the transition to net zero. The ATF grant awarded to Aberdeen is part of a broader package of funding announced by APC. 4 CHAIRMAN’S REPORT (INCORPORATING THE STRATEGIC REVIEW) CONTINUED Omega Oil & Gas Limited (“Omega”) Gunsynd subscribed for 450,000 shares at AUD 20 cents per ordinary share for a total consideration of AUD$90,000 (approximately £50,000) as part of the IPO fundraising announced on 25 October 2022. Omega Oil and Gas Limited ("Omega") is an ASX listed Australian energy and resources company focused on natural gas exploration and oil production (ASX: OMA), on its Basin-Centred Gas drilling campaign. Recent update from Omega: • • • • • • • Estimated maiden gross 2C contingent resources of 1.73 trillion cubic feet ("TCF") and 3C contingent resources of 4.5 TCF across Omega Oil and Gas' 100% owned ATPs 2037 and 2038 in Queensland's Taroom Trough. Net 2C contingent resources comprise 1.51 TCF Gas and 68.6 million barrels (MMBBLS) of condensate. The independent resource assessment, based on the Canyon drilling campaign results, was conducted by Netherland, Sewell & Associates, Inc., a global leader in petroleum property analysis. Allocated resources based on a modelled average reservoir thickness of 27m in the Kianga Formation which is 221m thick at the site of the Canyon 2 well. Strong growth potential, with further assessment to be considered on other hydrocarbon-bearing reservoirs within the Kianga Formation and the Back Creek Group, which are highly prospective. The next phase of exploration and appraisal includes an innovative horizontal well targeting the Kianga Formation and a multi-stage stimulation. The $21 million capital raising completed on 8 August 2023 fully funds the next stage of exploration and appraisal. First Tin Limited (“First Tin”) Gunsynd currently holds 618,000 shares in First Tin representing approximately 0.3% of its issued capital. First Tin (LSE:1SN) successfully completed its IPO on the Standard List of the London Stock Exchange in April 2022, raising £20 million (before expenses) of new equity capital, positioning it to invest into and add value to its advanced portfolio of tin assets. As part of the IPO, First Tin acquired the Taronga tin asset in NSW Australia, the 5th largest undeveloped tin reserve globally. Taronga will now be developed alongside First Tin’s other lead asset of Tellerhäuser which is located in Saxony in Germany. First Tin recently commenced Definitive Feasibility Studies (“DFS”) at Taronga and Tellerhäuser, which are both scheduled to be completed in Q4 2023. During the period, the management team focused on advancing both assets through their respective DFS. Strong operational progress was made at the Taronga asset, successfully completing all drilling and exploration work and publishing an updated JORC compliant Mineral Resource Estimate (“MRE”) which increased the size of the Taronga resource by over 240% to 133 million tonnes. This updated JORC MRE statement demonstrates the true scale of the Taronga asset and there remains plenty of scope to further increase the size of total resource both from the Taronga asset itself and from its satellite orebodies. Oyster Oil and Gas Limited ("Oyster") Gunsynd has a holding valued at £130,000, and there has been no material change since year end. The oil price gives the Company some confidence of restoring value to this investment. Gunsynd will update the market as and when material developments occur. 5 CHAIRMAN’S REPORT (INCORPORATING THE STRATEGIC REVIEW) CONTINUED 2. OTHER INVESTMENTS Rogue Baron PLC (“Rogue Baron”) Rogue Baron PLC (AQSE: SHNJ) is a leading company in the premium spirit sector listed on the Access segment of the AQSE Growth Market. Gunsynd currently holds 21,543,563 ordinary shares in Rogue Baron, representing approximately 24% of its issued share capital. Gunsynd also retains a balance of £111,464 of Convertible Loan Notes consisting of accrued interest. Rogue Baron’s flagship Shinju Whisky won two medals in October 2021 including a double gold with a perfect score of 100 when voted best whisky at the 2021 Santé International Spirit Competition. In November 2021 Shinju won another gold medal, this time at the prestigious John Barleycorn awards. Following the successful completion of transitioning to our new USA distributor in September 2022, Rogue Baron resumed full- scale sales operations in October. During the fourth quarter of 2022, Rogue Baron sold around 930 cases of Shinju whisky worldwide, marking an impressive growth of approximately 100% compared to the corresponding period in 2021. Sales of Shinju whisky decreased during the first quarter of 2023 as Q1 tends to be the slowest quarter in the spirits industry. While this slowdown may impact our short-term sales figures, Rogue Baron projects an increase in sales as they move further into the Spring and Summer months. Rogue Baron anticipates a favourable outlook for sales and margins in the second half of 2023. This positive projection is primarily attributed to the resolution of shipping issues that have arisen in recent years, but maintaining proper inventory levels will be necessary to continue the growth. Additionally, there is potential for significant growth as Rogue Baron intends to launch the 8- year-old Shinju expression into the United States market for the first time, projected in late 2023. With an established distribution network in both Europe and the US, Rogue Baron is confident that securing the required capital would enable it to achieve a substantial increase in revenue within the short to medium term. At the time of releasing these accounts, they are actively engaged in discussions with multiple potential investors. There is an optimistic outlook that the necessary funds can be raised, leading to higher levels of revenue and profitability in the future. Low 6 Limited (“Low6”) The Company invested approximately £265,000 in Low6 of which £152,000 was impaired during the year to reflect the most recent valuation of Low6 share price. We hold 0.66% of Low6's issued share capital. Recent update from Low6: Low 6 has reached a significant milestone by generating revenue of just under £1m (unaudited) for the quarter ended 30 September 2023, and expects to continue its current trajectory during Q2. Its financial year runs from 1 July 2023 to 30 June 2024. Audited revenue for the year ended 30 June 2022 was £854,851 and loss before tax was £18,350,342. Low 6 was successful in a Request for Proposal (RFP) process with 'OPTA' Stats Perform. Its work with OPTA focuses on the launch of multiple games based on Premier League statistics. Low6 also successfully launched products with Oddschecker for the new English Premier League season and signed a significant contract extension with Rush Street Interactive in North America for product development over the next 18 months. Oscillate plc (“Oscillate”; formerly DiscovOre plc) Oscillate is an investment company listed on the AQSE Growth Market Exchange with the ticker, AQSE: MUSH. In April 2021, Gunsynd invested £200,000 into Oscillate being 10 million shares at 2p representing circa 4.5% of Oscillate. Oscillate underwent internal repositioning and restructuring during what has been a difficult year. Other unlisted investments The Company has various other minor stakes in unlisted public company investments totalling £124,000. These have been impaired by £62,000 during the year to reflect the downturn in economic markets. 6 CHAIRMAN’S REPORT (INCORPORATING THE STRATEGIC REVIEW) CONTINUED Finance Review As noted above, the Company made a loss for the year of £1,706,000 (2022: loss £2,426,000) after taxation. Most of the loss generated was from decrease in value of the Company’s investment portfolio. The Company had net assets of £2,145,000 (2022: £3,851,000) at 31 July 2023, and cash balances of £164,000 (2022: £824,000). Outlook Whilst good progress was made by a number of companies in our portfolio this unfortunately hasn’t been as yet reflected in their share price performance. The board took the decision to take profits on some of our listed investments at prices much higher than they are today which has allowed the Company to maintain a healthy cash balance. Gunsynd has not raised money since 2020. Gunsynd maintains a low fixed cost structure and this will continue through volatile and uncertain conditions across global markets. We maintain a level of diversification in our portfolio with positions in natural resources, gaming and beverages. The Board continues to look at investments in line with its investment policy as highlighted on the Company’s website. This could potentially include increasing a stake(s) in investments already held. Such investment(s) may or may not lead to a reverse takeover. The Board would also like to take this opportunity to thank shareholders for their continued support. s172 Statement The Directors continue to act in a way that they consider, in good faith, to be most likely to promote the success of the Company for the benefits of the members as a whole. This section serves as the Directors’ Section 172 statement and should be read in conjunction with the Director’s Statement and Strategic Report and the Report from the Company’s Corporate Governance Committee. This disclosure describes how the Directors have had regard to the matters set out in section 172(1)(a) to (f) and forms the Directors’ statement required under section 414CZA of The Companies Act 2006. The matters set out in Section 172(1) (a) to (f) are that a Director must act in the way they consider, in good faith, which would be most likely to promote the success of the Company for the benefit of its stakeholders as a whole, and in doing so have regard (amongst other matters) to: • Consider the likely consequences of any decision in the long term, • Act fairly between the members of the Company, • Maintain a reputation for high standards of business conduct, • Consider the interests of the Company's employees, • Foster the Company's relationships with suppliers, customers and others, and • Consider the impact of the Company's operations on the community and the environment. In the above Chairman’s Report, the Company has set out the short to long term strategic priorities, and described the plans to support their achievement. The Company is an early-stage investment company quoted on a minor exchange and its members will be fully aware, through detailed announcements, shareholder meetings and financial communications, of the Board's broad and specific intentions and the rationale for its decisions. The Company pays its employees and creditors promptly and keeps its costs to a minimum to protect shareholders’ funds. When selecting investments, issues such as the impact on the community and the environment have actively been taken into consideration; as is clear from the portfolio set out in the Chairman's report. 7 CHAIRMAN’S REPORT (INCORPORATING THE STRATEGIC REVIEW) CONTINUED s172 Statement continued The application of the s172 requirements during the year can be demonstrated through the choice of investments made in the year, as described in the Chairman’s report, all of which have been chosen to maximise profits for our members, whilst ensuring they meet our requirements on their impact on the local communities and environment. Stakeholder mapping and engagement activities within the reporting period. The Company continuously interacts with a variety of stakeholders important to its success, such as equity investors, business partners, workforce, government bodies, suppliers and advisors. The Company strives to strike the right balance between engagement and communication. Furthermore, the Company works within the limitations of what can be disclosed to the various stakeholders with regards to maintaining confidentiality of market and/or commercially sensitive information. The table below acts as our Section 172 statement by setting out the key stakeholder Groups and how the Group has engaged with them over the reporting year. Who: Key Stakeholder Groups Why: why is it important to engage this group of stakeholders How: how Gunsynd engaged with the stakeholder group and outcomes Equity Investors and Business Partners Access to capital is of vital importance to the Group to ensure long-term success. The Company’s long-term success is predicated on the commitment of our workforce to our vision and the demonstration of our values on a daily basis. A good relationship with key suppliers is essential to ensure timely supplies so as to not interrupt the smooth running of the business. Key advisors are essential to ensure we maintain good governance in all areas. Workforce Key suppliers and Advisors Hamish Harris Chairman 20 December 2023 The Board engages with investors at the AGM, through RNS releases and maintains regular dialogue with key investors, and business partners. The Company has few employees, and has in place appropriate policies to reward key personnel. Regular communication takes place with all staff, and the Company has not experienced any problems. Regular communication takes place with all key advisors and suppliers. The Company has not experienced any problems with suppliers or corporate governance issues during the year. 8 DIRECTORS’ REPORT The Directors present their annual report on the Company and its audited financial statements for the year ended 31 July 2023. Principal activity As at 31 July 2023 the principal activity of the Company was that of seeking to invest in and/or acquire companies and/or projects within the natural resources sector, life sciences sector (concentrating on but not being limited to, plant-based nutrition and environmentally friendly alternatives to food sources) and the alcoholic beverage sector, (concentrating on but not being limited to, ingredients used within the production of such beverages including sugar cane, agave, and molasses) which the Board considers, in its opinion, have 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 geographic focus will primarily be Europe, Australia, the US and the Caribbean, however investments may also be considered in other regions to the extent the Board considers that potential value can be achieved. Results and dividends The statement of comprehensive income is set out on page 26 and has been prepared in Pounds 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 £1,706,000 (2022: loss £2,426,000). No dividends have been paid or proposed. Key Performance Indicators The Key Performance Indicators ("KPIs") for the Company are listed as follows: (Loss)earnings per share (Loss) before tax (Loss) on investments Value of financial investments held Cash at bank and in hand 2023 (0.361)p £(1,706,000) £(1,078,000) £1,891,000 £164,000 2022 (0.540)p £(2,426,000) £(1,947,000) £2,934,000 £824,000 % Change n/a n/a 44.63% (33.55)% (80.10)% 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). Principal risks and uncertainties 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 principal risks and uncertainties, including financial risk management policies, are set out in the Corporate Governance Statement and in Note 18. Loss of key employees Loss of knowledge and skills to the Company is a key risk. In response to this risk, remuneration policies are designed to incentivise, motivate and retain key employees. Investment risk The Company is dependent upon the success of its investee companies, and there is a risk that the Company may invest in companies that fail to perform. Management research potential investments and the market in which they operate and consider both the short and long term prospects. The Company continually monitors its investments’ progress, share prices and news information. 9 DIRECTORS’ REPORT CONTINUED Financial risk management objectives and policies The Company’s principal financial instruments are available for sale assets, trade receivables, trade payables, loans and cash at bank. The main purpose of these financial instruments is to fund the Company's operations. It is, and has been throughout the period under review, the Company’s policy that no trading in financial instruments shall be undertaken. The main risks arising from the Company’s financial instruments are liquidity risk and interest rate risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below. Further information is available in Note 18 to the financial statements. Liquidity risk The Company's objective is to maintain a balance between continuity of funding and flexibility through the use of equity and its cash resources. Market risk The Company is subject to market risk in relation to its investments in listed companies held as available for sale assets. The Company is exposed to fluctuating commodity prices in respect of the underlying assets. The Company seeks to manage this risk by carrying out appropriate due diligence in respect of the projects in which it invests. The Company is exposed to the volatility of the stock markets around the world, on which it holds shares in various listed entities, and the fluctuation of share prices of these underlying companies. The Company manages this risk through constant monitoring of its investments share prices and news information, but does not hedge against these investments. Foreign exchange risk The foreign currency transactions the Company enters into are either denominated in USD, AUD and or CAD. These are all in relation to the Company’s investments in non-current assets. These are not considered to hold a separate currency risk as movements in foreign currencies form part of the market price risk covered above. Directors and their interests The Directors who served during the year were: H Harris D Strang P Ruse The interests of the serving Directors as at 31 July 2023 or at date of resignation, in the ordinary share capital of the Company (all beneficially held) were as follows 31 July 2023 No. shares No. of options Hamish Harris Donald Strang Peter Ruse 3,161,476 12,820,211 4,164,706 8,000,000 8,000,000 - No. of warrants - - - 31 July 2022 No. shares No. of options 3,161,476 12,820,211 4,164,706 8,000,000 8,000,000 6,350,000 No. of warrants - - - 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 2023 are set out in Note 6 to the financial statements. 10 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 12 December 2023 exceeded 3% of the Company’s issued share capital. Hargreaves Lansdown (Nominees) Limited (Des:HLNOM) Hargreaves Lansdown (Nominees) Limited (Des:15942) Interactive Investor Services Nominees Limited (Des:SMKTNOMS) Link Market Services Trustees (Nominees)Limited (Des:GUNLGCCN) Pershing Nominees Limited (Des:WRCLT) Barnard Nominees Limited Thomas Grant And Company Nominees Limited (Des:TGNOMS) Interactive Investor Services Nominees Limited (Des:SMKTISAS) Thomas Grant And Company Nominees Limited (Des:PETERH) Hargreaves Lansdown (Nominees) Limited (Des:VRA) Vidacos Nominees Limited (Des:IGUKCLT) Barclays Direct Investing Nominees Limited (Des:CLIENT1) Winterflood Securities Limited (Des:WINSCREP) Barnard Nominees Limited (Des:OBNOMDIS) Employees The Company has only one direct employee. Creditor payment policy The policy of the Company is to: Number of ordinary shares held % of issued share capital 46,948,992 40,574,447 33,642,889 30,000,000 25,078,847 25,000,000 24,150,583 23,530,910 21,500,000 20,802,058 20,709,150 19,358,393 18,278,266 16,950,000 8.46% 7.31% 6.06% 5.41% 4.52% 4.51% 4.35% 4.24% 3.88% 3.75% 3.73% 3.49% 3.29% 3.06% (a) (b) (c) Agree the terms of payment with suppliers when settling the terms of each transaction; Ensure that suppliers are made aware of the terms of payment by inclusion of the relevant terms in contracts; and 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 (2022: £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. 11 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 PKF Littlejohn LLP as auditor for the coming year. Corporate Governance Gunsynd is committed to undertaking its activities in accordance with the highest international social, environmental and operational standards. For detailed information please refer to the corporate governance statement on page 15. Going concern The financial statements have been prepared on a going concern basis, notwithstanding the loss for the year ended 31 July 2023. 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 £1,706,000 (2022: loss £2,426,000) after taxation. The Company had net assets of £2,145,000 (2022: £3,851,000) and cash balances of £164,000 (2022: £824,000) at 31 July 2023. The Directors have prepared financial forecasts which cover a period of at least 12 months from the date that these financial statements are approved to 31 December 2024. These forecasts show that the Company expects to have sufficient financial resources to continue to operate as a going concern. In forming the conclusion that it is appropriate to prepare the financial statements on a going concern basis the Directors have made the following assumptions that are relevant to the next twelve months: – in the event that the Company’s investments require further funding, sufficient funding from the sale of investments or through a capital raise can be obtained; and in the event that operating expenditure increases significantly as a result of successful progress with regards to the Company’s investments, sufficient funding from the sale of investments or through a capital raise can be obtained. – 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 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. The Company has previously constantly demonstrated its ability to raise further cash by way of completing placings during the prior years and are confident of further equity fund raising should the company require such cash injection. Therefore, they are confident that existing cash balances, along with the any new funding would be adequate to ensure that costs can be covered. The Directors are therefore of the opinion that the Company has adequate financial resources to enable it to continue in operation for the foreseeable future. For this reason, it continues to adopt the going concern basis in preparing the financial statements. The Company's employee can carry out their duties remotely, via the network infrastructure in place. As a result, there was no disruption to the operational activities of the Company during the COVID-19 social distancing and working from home restrictions. All key business functions continue to operate at normal capacity. Within the Company’s portfolio are investments that have experienced a slowdown within their own operations during the COVID-19 crisis, however the operating performance of those investments is not expected to have any material impact on the Company’s cash flows. 12 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 UK adopted International Accounting Standards (IAS) and applicable law. International Accounting Standards require 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 UK adopted International Accounting Standards. 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 UK adopted International Accounting Standards 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 Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. 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 20 December 2023 13 INFORMATION ON THE BOARD OF DIRECTORS Hamish Harris – Executive Chairman Hamish holds a Bachelor of Commerce and has held positions within market risk management at numerous financial institutions including Nomura Group, Deutsche Bank AG and BZW plc in Singapore, Hong Kong and London. Hamish is also a Director on an AQSE listed company. Hamish is a member of both the Audit and Remuneration committees. Donald Strang – Executive Director Donald is a member of the Australian Institute of Chartered Accountants and has been in business for 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 also a director of Cadence Minerals plc and a director of an ASX listed company. Donald is a member of both the Audit and Remuneration committees. Peter Ruse – Non-Executive Director Peter is a finance professional with over 12 years of extensive experience in Equity Funds Management and Private/Institutional Wealth Management specialising in Mining/Minerals and Industrial related sectors. Peter is a member of both the Audit and Remuneration committees. He is currently also a director of other ASX listed companies. 14 CORPORATE GOVERNANCE STATEMENT All members of the Board believe strongly in the value and importance of good corporate governance and in our accountability to all stakeholders including staff, shareholders and clients. In order to meet the requirements of AIM Rule 26 we have chosen to follow the Quoted Companies Alliance’s (“QCA”) Corporate Governance Code for Small and Mid-Size Quoted Companies. As Chairman, I lead the Board and take ultimate responsibility for ensuring that there is absolute clarity in our strategy and our quantitative and qualitative objectives and the collective and individual responsibilities of the Directors. Importantly my responsibilities include ensuring that the Company maintains its strong values of delivery, integrity, trust, client service and good corporate governance and in so doing deliver value for shareholders over the medium to long term. In the following statement we give a summary of how our Board and its committees operate and how we are applying the ten principles of the QCA Code. 1. Principle One Business Model and Strategy The Board has concluded that the highest medium and long term value can be delivered to its shareholders by the adoption of an investing strategy for the Company. Gunsynd plc is an investing company with a focus to acquire a diverse portfolio of direct and indirect interests in exploration and producing projects and assets in the natural resources sector in addition to seeking any acquisition in other sectors as they arise if the Board considers there is an opportunity to generate potential value for Shareholders. The geographical focus will primarily be Europe, Australia, the US and the Caribbean, 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. 2. Principle Two Understanding Shareholder Needs and Expectations The Board is committed to maintaining good communication and having constructive dialogue with its shareholders. The Company has close ongoing relationships with its private shareholders and analysts have the opportunity to discuss issues and provide feedback at meetings with the Company. In addition, all shareholders are encouraged to attend the Company's Annual General Meeting. Investors also have access to current information on the Company though its website, www.gunsynd.com, and via Hamish Harris, Executive Chairman, who is available to answer investor relations enquiries. 3. Principle Three Considering wider stakeholder and social responsibilities The Board recognises that the long term success of the Company is reliant upon the efforts of the directors of the Company and its investors, investee companies, regulators and other stakeholders. The Board has regular discussions and meetings with shareholders, regulators and investee companies to ensure that there is close oversight and contact. For example, the Company conducts an AGM each year and other general meetings with shareholders whereby they are able to voice any concerns they have with the Company. These feedback processes help to ensure that the Company can respond to new issues and opportunities that arise to further the success of the Company. The Company has close ongoing relationships with a broad range of its stakeholders and provides them with the opportunity to raise issues and provide feedback to the Company. 4. Principle Four Risk Management In addition to its other roles and responsibilities, the Audit Committee is responsible to the Board for ensuring that procedures are in place and are being implemented effectively to identify, evaluate and manage the significant risks faced by the Company. The risk assessment matrix below sets out those risks, and identifies their ownership and the controls that are in place. This matrix is updated as changes arise in the nature of risks or the controls that are implemented to mitigate them. The Audit and Compliance Committee reviews the risk matrix and the effectiveness of scenario testing on a regular basis. The following principal risks and controls to mitigate them, have been identified: 15 CORPORATE GOVERNANCE STATEMENT CONTINUED Activity Financial Risk Liquidity, market and credit risk Impact Inability to continue as going concern Control(s) Robust capital management policies and procedures Reduction in asset values Inappropriate controls and accounting policies Incorrect reporting of assets and/or loss through theft or fraud The board agrees and signs all annual reports which details accounting policies. Covid-19 Affect continuing operations of investee companies Possible effect on carrying investments values the of Regulatory adherence Breach of rules Censure Strategic Damage to reputation Inability to capital or investments secure new Investment Poor investment choices Reduction in asset values Due to size of the company - The board discusses and agrees all payments. Regular impairment review investments and of all interaction with regular investee as appropriate. companies The health and safety of our staff and associates is of major concern and we have taken steps to mitigate this risk by avoiding face to face meetings and through the greater adoption of video- conferencing services and when absolutely required, socially distanced meetings. This year’s AGM format will reflect the current business environment. Strong compliance regime instilled at all levels of the Company. Effective communications with shareholders coupled with consistent messaging to potential investees. research Management potential investments and the market in which they operate, and consider both the short and long term prospects. The Company continually monitors its investments’ progress, share prices news and information. 16 CORPORATE GOVERNANCE STATEMENT CONTINUED Activity Management Risk Recruitment and retention of key staff and reliance on small team Impact Reduction capability in operating Control(s) Stimulating and safe working environment Balancing salary with longer term incentive plans The Directors have established procedures, as represented by this statement, for the purpose of providing a system of internal control. An internal audit function is not considered necessary or practical due to the size of the Company and the close day to day control exercised by the Executive Director. However, the Board will continue to monitor the need for an internal audit function. The Board works closely with and has regular ongoing dialogue with the Company financial controller and has established appropriate reporting and control mechanisms to ensure the effectiveness of its control systems. 5. Principle Five A Well Functioning Board of Directors As at the date hereof, the Board comprised a Chairman, Hamish Harris, an Executive Director, Donald Strang, and one Independent Non-Executive Director, Peter Ruse. Biographical details of the current Directors are set out within Principle Six below. Executive and Non-Executive Directors are subject to re-election at intervals of no more than 3 years. The Directors are considered to be part time but are expected to provide as much time to the Company as is required. The Board elects a Chairman to chair every meeting. The Board meets formally at least 3 times per annum, but regular contact is maintained to deal with relevant matters as they arise. It has established an Audit Committee and a Remuneration Committee, particulars of which appear hereafter. The Board has agreed that appointments to the Board are made by the Board as a whole and so has not created a Nominations Committee. The Non-Executive Director is part time and is expected to provide as much time to the Company as is required. The Board considers that this is appropriate given the Company's current stage of operations. It shall continue to monitor the need to match resources to its operational performance and costs and the matter will be kept under review going forward. Peter Ruse is considered to be an Independent Director. The Board notes that the QCA recommends a balance between executive and non-executive directors and recommends that there be two independent non-executives. As it has only one independent non-executive director, the Board does not currently fully comply with this requirement and will consider making further appointments as the scale and complexity of the Company grows, which is expected to be when the Company achieves a market capitalisation of over £10 million. Attendance at Board and Committee Meetings The Board met five times in the period. The remuneration committee did not meet, and the audit committee met twice during the year. Meetings Hamish Harris Don Strang Peter Ruse Board Attendance at meetings Remuneration Committee - - - 5 4 5 Audit Committee 2 2 2 17 CORPORATE GOVERNANCE STATEMENT CONTINUED 6. Principle Six Appropriate Skills and Experience of the Directors The Board currently consists of three Directors. The Company believes that the current balance of skills in the Board as a whole reflects a very broad range of commercial and professional skills across geographies and industries, and each of the Directors has experience in public markets. The Board recognises that it currently has limited diversity, and this will form a part of any future recruitment consideration if the Board concludes that replacement or additional directors are required. At this stage due to the current size of the Company this is not seen as a material point. The Board reviews annually the appropriateness and opportunity for continuing professional development whether formal or informal. Currently each of the Board are involved in financial markets and increase their awareness and skills via reading and participation in commercial transactions from time to time. Mr Hamish Harris Chairman and Executive Director Hamish holds a Bachelor of Commerce and has held positions within market risk management at numerous financial institutions including Nomura Group, Deutsche Bank AG and BZW plc in Singapore, Hong Kong and London. Hamish is also a Director on an AQSE listed company. Mr Donald Strang Executive Finance Director Donald is a member of the Australian Institute of Chartered Accountants and has been in business for 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 a director of other AIM and ASX companies. Mr Peter Ruse Independent Non-Executive Director Peter is a finance professional with over 12 years of extensive experience in Equity Funds Management and Private/Institutional Wealth Management specialising in Mining/Minerals and Industrial related sectors. Peter is a member of both the Audit and Remuneration committees. He is currently a director of other ASX companies. 7. Principle Seven Evaluation of Board Performance Internal evaluation of the Board, the Committee and individual Directors is undertaken on an annual basis in the form of discussions. Due to the current size of the Company, these discussions and the criteria for assessment are general and brief. The annual report details the progress which the board and Company has made for the year. No succession planning is deemed necessary at this point due to the current size of the Company. Each Director is also assessed by shareholders at AGM on a three-year rotating basis when their re-appointment is due. 8. Principle Eight Corporate Culture The Board recognises that its decisions regarding strategy and risk will impact the corporate culture of the Company as a whole and that this will impact the performance of the Company. The Board is aware that the tone and culture set by the Board will greatly impact all aspects of the Company as a whole and the way that employees behave. The corporate governance arrangements that the Board has adopted are designed to ensure that the Company delivers long term value to its shareholders and that shareholders have the opportunity to express their views and expectations for the Company in a manner that encourages open dialogue with the Board. 18 CORPORATE GOVERNANCE STATEMENT CONTINUED Most of the Company's activities are centred upon what needs to be an open and respectful dialogue with investee companies and investors and other stakeholders. Therefore, the importance of sound ethical values and behaviours is crucial to the ability of the Company to successfully achieve its corporate objectives. The Board places great import on this aspect of corporate life and seeks to ensure that this flows through all that the Company does. The Directors consider that at present the Company has an open culture facilitating comprehensive dialogue and feedback and enabling positive and constructive challenge. The Company has adopted a code for Directors' and employees' dealings in securities which is appropriate for a company whose securities are traded on AIM and is in accordance with the requirements of the Market Abuse Regulation which came into effect in 2016. 9. Principle Nine Maintenance of Governance Structures and Processes Ultimate authority for all aspects of the Company's activities rests with the Board, the respective responsibilities of the Chairman and Executive Director arising because of delegation by the Board. The Board has adopted appropriate delegations of authority which set out matters which are reserved to the Board. The Chairman is responsible for the effectiveness of the Board, while management of the Company's business and primary contact with shareholders has been delegated by the Board to the Executive Directors. Audit Committee The Audit Committee is comprised of Hamish Harris (Chairman), Peter Ruse and Donald Strang. This committee has primary responsibility for monitoring the quality of internal controls and ensuring that the financial performance of the Company is properly measured and reported. It receives reports from the executive management and auditors relating to the interim and annual accounts and the accounting and internal control systems in use throughout the Company. The Audit Committee shall meet not less than once in each financial year and it has unrestricted access to the Company's auditors. Remuneration Committee The Remuneration Committee is comprised of Hamish Harris (Chairman), Peter Ruse and Donald Strang, excluding whichever relevant Director whose performance, remuneration and employment terms are being discussed. The Remuneration Committee reviews the performance of the executive directors and makes recommendations to the Board on matters relating to their remuneration and terms of employment. The Remuneration Committee also considers and approves the granting of share options pursuant to the share option plan and the award of shares in lieu of bonuses pursuant to the Company's Remuneration Policy. Nominations Committee The Board has agreed that appointments to the Board will be made by the Board as a whole and so has not created a Nominations Committee. Non-Executive Directors The Board has appointed a Non-Executive Director. As stated above, due to the current size of the Company, it is deemed not necessary to appoint further independent non- executive directors until the Company’s market capitalisation reaches £10 million. In accordance with the Companies Act 2006, the Board complies with: a duty to act within its powers; a duty to promote the success of the Company; a duty to exercise independent judgement; a duty to exercise reasonable care, skill and diligence; a duty to avoid conflicts of interest; a duty not to accept benefits from third parties and a duty to declare any interest in a proposed transaction or arrangement. All matters pertaining to the Company are reserved for the Board. There are no plans at this stage to increase the governance framework until the Company achieves a minimum market capitalisation of £10 million. 19 CORPORATE GOVERNANCE STATEMENT CONTINUED 10. Principle Ten Shareholder Communication The Board is committed to maintaining good communication and having constructive dialogue with its shareholders. The Company has close ongoing relationships with its private shareholders and analysts have the opportunity to discuss issues and provide feedback at meetings with the Company. In addition, all shareholders are encouraged to attend the Company's Annual General Meeting. Investors also have access to current information on the Company though its website, www.gunsynd.com, and via Hamish Harris, Chairman, who is available to answer investor relations enquiries. The Company’s website details various information: annual reports, AGM notice of meetings and RNS announcements detailing results of meetings and other relevant information. Hamish Harris Director 20 December 2023 20 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF GUNSYND PLC Opinion We have audited the financial statements of Gunsynd Plc (the ‘company’) for the year ended 31 July 2023 which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity, the Statement of Cash Flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK-adopted international accounting standards. In our opinion, the financial statements: • give a true and fair view of the state of the company’s affairs as at 31 July 2023 and of its loss for the year then ended; • have been properly prepared in accordance with UK-adopted international accounting standards; and • have been prepared in accordance with the requirements of the Companies Act 2006. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Conclusions relating to going concern In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the company’s ability to continue to adopt the going concern basis of accounting included a review of budgets for 12 months from authorised for issue date including checking the mathematical accuracy of the budgets and discussion of significant assumptions used by the management and comparing these with current year and post year end performance. We have also reviewed the latest available post year general ledgers, bank statements, regulatory announcements, board minutes and assessed any external industry wide factors which might affect the company. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. Emphasis of matter paragraph – recoverability of Loan to Human Brand International Inc We draw attention to note 12 in the financial statements, which includes a balance of £126k (2022: £126k) receivable from Human Brand International Inc. Recovery of this balance is dependent upon successful Initial public offering (IPO) by Rogue One, Inc (Parent Company of Human Brand International Inc). Management have explained their assessment over the recoverability within the critical accounting estimates and conclude this to be recoverable. The financial statements do not include the adjustment that would result if the Company was unable to fully recover this. Our opinion is not modified in this respect. 21 Our application of materiality The scope of our audit was influenced by our application of materiality. The quantitative and qualitative thresholds for materiality determine the scope of our audit and the nature, timing and extent of our audit procedures. We applied the concept of materiality both in planning and performing the audit, and in evaluating the effect of misstatement. The overall materiality applied to the financial statements was set at £66,190 (2022: £115,000), with performance materiality set at £52,952 (2022: £92,000). Materiality has been calculated as 3% of net assets, which we have determined, in our professional judgement, to be one of the principal benchmarks within the financial statements relevant to members of the company in assessing financial performance. We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £3,310 (2022: £5,750). Our approach to the audit In designing our audit, we determined materiality and assessed the risk of material misstatement in the financial statements. In particular, we considered the areas involving significant accounting estimates and judgements by those charged with governance including future events that are inherently uncertain and as such, the valuation, of investments was considered to constitute a Key Audit Matter. We also addressed the risk of management override of internal controls, including among other matters, consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud. The company’s accounting function is based in the United Kingdom and our audit was performed remotely with regular contact with the company throughout. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key Audit Matter How our scope addressed this matter Carrying value and classification of investments (See Note 11 in the financial statements) Investments are the largest asset on the company’s books. Recoverability depends of management’s assumptions regarding their future performance, which is in turn dependant on the successful recoverability of resources from assets held by its investments. There is a risk that these investments may be impaired. The company holds investments with a carrying value of £1,891k (2022: £2,944k) as at 31 July 2023. The portfolio consists of listed and unlisted investments. Listed investments are valued under Level 1 of the fair value hierarchy. Unlisted to management valuation, and thus are exposed to significant levels of judgement and estimation. investments are subject As a result of the value of the investments held at the year end, and those subject to management judgement, this has been determined to be a Key Audit Matter. Our audit work included: • Obtaining the agreements underpinning investments/share certificates for new investments in the year; are they • Reviewing the accounting treatment to appropriately ensure classified in accordance with IFRS 9; • Reviewing management’s impairment assessment for unlisted investments the and providing challenge judgements and estimates made; • Verifying values of listed investments to with relevant share prices; • Reviewing the accounting for additions and disposals in the year, ensuring they are in line with the appropriate accounting standard and that any 22 gain/loss on disposal has been correctly calculated; and • Checking the appropriate disclosures surrounding the estimates made in respect of any valuations are included in the financial statements. We have reviewed management’s assessment that supports the carrying value of Oyster Oil and Gas Ltd (unquoted investment of 130k) and note that the carrying value is dependent on the ability of Oyster Oil and Gas Ltd to realise the potential of their Oil and Gas business to maintain their targeted growth strategy with a view to generate sufficient economic benefits to ultimately support the carrying value. If the Oyster Oil and Gas Ltd are unable to successfully implement their growth strategy over the short to medium term, then this may ultimately lead to an impairment of its carrying value. Other information The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Opinions on other matters prescribed by the Companies Act 2006 In our opinion, based on the work undertaken in the course of the audit: • • the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements. Matters on which we are required to report by exception In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us 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. 23 Responsibilities of directors 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, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: • We obtained an understanding of the company and the sector in which it operates to identify laws and regulations that could reasonably be expected to have a direct effect on the financial statements. We obtained our understanding in this regard through discussions with management, industry research, application of cumulative audit knowledge and experience in the investment company sector. • We determined the principal laws and regulations relevant to the company in this regard to be those arising from Companies Act 2006, AIM listing rules, UK-adopted International Accounting Standards, UK tax legislation, GDPR, Anti-Bribery Act and Money Laundering Regulations. • We designed our audit procedures to ensure the audit team considered whether there were any indications of non-compliance by the company with those laws and regulations. These procedures included, but were not limited to: o Review of company’s meeting minutes o Review of legal and professional expenditure • We also identified the risks of material misstatement of the financial statements due to fraud. We considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls, that the potential for management bias was in the valuation of investments (see Key Audit Matter above). We addressed the risk by challenging the key assumptions and judgements made. • As in all of our audits, we addressed the risk of fraud arising from management override of controls by performing audit procedures which included, but were not limited to: the testing of journals; reviewing accounting estimates for evidence of bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business. Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. 24 Use of our report 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. Zahir Khaki (Senior Statutory Auditor) For and on behalf of PKF Littlejohn LLP Statutory Auditor 2023 15 Westferry Circus Canary Wharf London E14 4HD 25 FINANCIAL STATEMENTS STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 JULY 2023 Continuing operations Income Unrealised (loss) on financial investments Realised (loss)/gain on financial investments Administrative expenses Salaries and other staff costs Other costs Total administrative expenses Impairment of financial investments Other income Finance income (Loss) before tax Taxation (Loss) for the period attributable to equity shareholders of the Company Other comprehensive income / (expenditure) for the period net of tax Total comprehensive earnings for the period attributable to shareholders Earnings per ordinary share Basic (pence) Diluted (pence) 2023 £000 2022 £000 Note 11 11 6 8 11 7 9 10 10 (1,043) (35) (1,078) (305) (263) (568) (212) 149 3 (1,706) - (1,706) - (1,706) (2,168) 221 (1,947) (300) (224) (524) - 15 30 (2,426) - (2,426) - (2,426) (0.379) (0.379) (0.540) (0.540) The notes form an integral part of these financial statements. 26 STATEMENT OF FINANCIAL POSITION AS AT 31 JULY 2023 ASSETS Non-current assets Financial investments at fair value through profit or loss 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 Investment in own shares Share based payments reserve Retained earnings Total equity Note 11 12 17 13 14 14 14 15 2023 £000 1,891 1,891 194 164 358 2022 £000 2,944 2,944 163 824 987 2,249 3,931 (104) (104) (104) (80) (80) (80) 2,145 3,851 382 2,299 13,459 (26) 24 (13,993) 2,145 382 2,299 13,459 (26) 39 (12,302) 3,851 The financial statements were approved and authorised for issue by the Board of Directors on 20 December 2023 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. 27 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 JULY 2023 Share capital £000 382 Deferred Share capital £ 000 2,299 Share premium reserve £000 13,459 Investment Share-based payments reserve £000 131 in own shares £000 - Retained earnings £000 (9,968) Total £000 6,303 - - - - - - - - - - - - - - (26) - - - - (92) (2,426) (2,426) (2,426) (2,426) - 92 (26) - 382 2,299 13,459 (26) 39 (12,302) 3,851 - - - - - - - - - - - - - - (1,706) (1,706) (1,706) (1,706) (15) 15 - 382 2,299 13,459 (26) 24 (13,993) 2,145 At 31 July 2021 Loss for the year Total comprehensive Loss for the period Transactions with owners: Adjustment for shares held in Trust Transfer within Equity on lapse of share options At 31 July 2022 Loss for the year Total comprehensive Loss for the period Transactions with owners: Transfer within Equity on lapse of share options At 31 July 2023 Details of the nature of each component of equity are set out in Note 15. The notes form an integral part of these financial statements. 28 STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 JULY 2023 2023 2022 Note £000 £000 Cash flow from operating activities (Loss) after tax Tax on losses Finance income net of finance costs Unrealised loss on revaluation of financial investments Realised loss/(gain) on sale of financial investments Other income Impairment provision Adjustment for issue of own shares Foreign exchange movements Changes in working capital: Decrease in trade and other receivables Increase in trade and other payables Cash outflow from operations Taxation received Net cash outflow from operating activities Cash flow from investing activities Payments for financial investments Disposal proceeds from sale of financial investments Unsecured loans to investee company Net cash inflow/(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 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 (1,706) - (3) 1,043 35 (124) 212 - 1 4 24 (514) - (514) (405) 294 (35) (146) - - - (2,426) - (10) 2,168 (221) - - (26) 1 11 14 (489) - (489) (158) 400 - 242 - - - (660) 824 164 (247) 1,071 824 11 11 14 17 18 During the year, there were share for share exchanges involving Pacific Nickel Limited that resulted in additional non cash investment of £124,154. The notes form an integral part of these financial statements. 29 NOTES TO THE FINANCIAL STATEMENTS 1 Presentation of the financial statements Description of business & Investing Policy Gunsynd plc is public limited company domiciled in the United Kingdom. The Company’s registered office is 78 Pall Mall, London SW1Y 5ES. The Company’s Investing Policy is to invest in and/or acquire companies and/or projects within the natural resources sector, life sciences sector (concentrating on but not being limited to, plant-based nutrition and environmentally friendly alternatives to food sources) and the alcohol beverage sector, (concentrating on but not being limited to, ingredients used within the production of such beverages including sugar cane, agave, and molasses) which the Board considers, in its opinion, have 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 geographic focus will primarily be Europe, Australia, the US and the Caribbean, however investments may also be considered in other regions to the extent the Board considers that 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 an 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 IAS The financial statements have been prepared in accordance with UK adopted International Accounting Standards (IAS) and the Companies Act 2006. Composition of the financial statements The Company financial statements are drawn up in Sterling, the functional currency of Gunsynd plc and in accordance with IFRS accounting presentation. The level of rounding for financial information is the nearest thousand pounds. 30 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. 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 £1,706,000 (2022: loss £2,426,000) after taxation. The Company had net assets of £2,145,000 (2022: £3,851,000) and cash balances of £164,000 (2022: £824,000) at 31 July 2023. The Directors have prepared financial forecasts which cover a period of at least 12 months from the date that these financial statements are approved to 31 December 2024. These forecasts show that the Company expects to have sufficient financial resources to continue to operate as a going concern. In forming the conclusion that it is appropriate to prepare the financial statements on a going concern basis the Directors have made the following assumptions that are relevant to the next twelve months: – In the event that the Company’s investments require further funding, sufficient funding can be obtained by the various investee companies; and In the event that operating expenditure increases significantly as a result of successful progress with regards to the Company’s investments, sufficient funding can be obtain by selling level 1 investments. – 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 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. The Company has previously constantly demonstrated its ability to raise further cash by way of completing placings during the prior years, and are confident of further equity fund raising should the company require such cash injection. Therefore, they are confident that existing cash balances, along with the any new funding would be 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 2022 to 31 July 2023, with comparative figures for the financial year from 1 August 2021 to 31 July 2022. 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. 31 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 2 Accounting principles and policies Revenue and other income Revenue is recognised when persuasive evidence of an arrangement exists, profit has been derived from investments or services have been rendered, prices are fixed or determinable and there is a probability that economic benefits will flow to the Company. Realised profits or losses are recognised at the time in which a contract is entered into to sell and investment. Unrealised profits or losses are recognised when the fair value of financial investments is measured at each period end. Other income relates to services provided and is recognised at the time the service is delivered. 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 and deferred shares are classified as equity instruments. The deferred shares have no voting rights and are not eligible for dividends. 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. Foreign exchange Transactions in currencies other than Sterling are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Gains and losses arising on retranslation are included in the income statement for the period. Fair value measurement IFRS 13 establishes a single source of guidance for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. The resulting calculations under IFRS 13 affected the principles that the Company uses to assess the fair value, but the assessment of fair value under IFRS 13 has not materially changed the fair values recognised or disclosed. IFRS 13 mainly impacts the disclosures of the Company. It requires specific disclosures about fair value measurements and disclosures of fair values, some of which replace existing disclosure requirements in other standards. Financial instruments Financial assets The Group classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired. The Group's accounting policy for each category is as follows: Fair Value through Profit or Loss (FVTPL) This category comprises in-the-money derivatives and out-of-money derivatives where the time value offsets the negative intrinsic value. They are carried in the statement of financial position at fair value with changes in fair value recognised in the consolidated statement of comprehensive income in the finance income or expense line. Other than derivative financial instruments, which are not designated as hedging instruments, the Group does not have any assets held for trading nor does it voluntarily classify any financial assets as being at fair value through profit or loss. 32 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 2 Accounting principles and policies continued Financial instruments continued Financial assets continued Amortised Cost These assets comprise the types of financial assets where the objective is to hold these assets in order to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment. Impairment provisions for current and non-current trade receivables are recognised based on the simplified approach within IFRS 9 using a provision matrix in the determination of the lifetime expected credit losses. During this process the probability of the non-payment of the trade receivables is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For the receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised in the consolidated statement of comprehensive income. On confirmation that the receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision. Impairment provisions for receivables from related parties and loans to related parties are recognised based on a forward- looking expected credit loss model. The methodology used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset, based on analysis of internal or external information. For those where the credit risk has not increased significantly since initial recognition of the financial asset, twelve month expected credit losses along with gross interest income are recognised. For those for which credit risk has increased significantly, lifetime expected credit losses along with the gross interest income are recognised. For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised. The Group considers a financial asset in default when contractual payments are 180 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows. The Group's financial assets measured at amortised cost comprise trade and other receivables and cash and cash equivalents in the consolidated statement of financial position. Cash and cash equivalents include cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less, and – for the purpose of the statement of cash flows - bank overdrafts. Bank overdrafts are shown within loans and borrowings in current liabilities on the consolidated statement of financial position. Financial investments Non-derivative financial assets comprising the Company’s strategic financial investments in entities not qualifying as subsidiaries, associates or jointly controlled entities. These assets are classified as financial assets at fair value through profit or loss. They are carried at fair value with changes in fair value recognised through the income statement. Where there is a significant or prolonged decline in the fair value of a financial investment (which constitutes objective evidence of impairment), the full amount of the impairment is recognised in the income statement. Listed investments are valued at closing bid price on 31 July 2023. Unlisted investments that are not publicly traded and whose fair value cannot be measured reliably, are measured at fair value through profit and loss, or if this cannot be reliably measured at cost less impairment. 33 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 2 Accounting principles and policies continued Fair Value Measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either: • • In the principal market for the asset or liability; or In the absence of a principal market, in the most advantageous market for the asset or liability The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: • • Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable • For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy, as explained above. Convertible Loans Convertible Loans made to companies are classified as financial assets. The embedded derivative asset, relating to a convertible loan where the carrying asset converts into a variable number of shares, is held at “fair value through profit or loss”. The carrying value of the loan is measured at fair value through profit and loss. Trade and other receivables Trade receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method. 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. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss in accordance with the expected credit loss model under IFRS 9. For trade and other receivables which do not contain a significant financing component, the Company applies the simplified approach. This approach requires the allowance for expected credit losses to be recognised at an amount equal to lifetime expected credit losses. For other debt financial assets, the Company applies the general approach to providing for expected credit losses as prescribed by IFRS 9, which permits for the recognition of an allowance for the estimated expected loss resulting from default in the subsequent 12-month period. Exposure to credit loss is monitored on a continual basis and, where material, the allowance for expected credit losses is adjusted to reflect the risk of default during the lifetime of the financial asset should a significant change in credit risk be identified. 34 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 2 Accounting principles and policies continued The majority of the Company's financial assets are expected to have a low risk of default. A review of the historical occurrence of credit losses indicates that credit losses are insignificant due to the size of the Company's clients and the nature of its activities. The outlook for the natural resources industry is not expected to result in a significant change in the Company's exposure to credit losses. As lifetime expected credit losses are not expected to be significant the Company has opted not to adopt the practical expedient available under IFRS 9 to utilise a provision matrix for the recognition of lifetime expected credit losses on trade receivables. Allowances are calculated on a case-by-case basis based on the credit risk applicable to individual counterparties. 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. 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-current 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. Employee Benefit Trusts Employee Benefit Trusts (“EBTs”) are accounted for under IFRS 10 and are consolidated on the basis that the parent has control, thus the assets and liabilities of the EBT are included on the Company balance sheet and shares held by the EBT in the Company are presented as a deduction from equity. Although shares were issued to the EBT in prior years, the prior year accounts have not been re-stated for the adjustment as the amounts relating to the prior period was not material. 35 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 2023 are set out below: Unlisted investments The Company is required to make judgments over the carrying value of investments in unquoted companies where fair values cannot be readily established and evaluate the size of any impairment required. It is important to recognise that the carrying value of such investments cannot always be substantiated by comparison with independent markets and, in many cases, may not be capable of being realised immediately. Management’s significant judgement in this regard is that the value of their investment represents their cost less impairment. Further details relating to management’s assessment of the carrying value of unlisted investments can be found in the Chairman’s Report (incorporating the Strategic Review). Recoverability of receivables The Company makes assumptions when implementing the forward-looking ECL model under IFRS 9. The model is used to assess material loans receivable for impairment. Estimates are made regarding the credit risk and underlying probability of default in each of the relevant credit loss scenarios. The Directors makes judgements on the expected likelihood and outcome of each of the scenarios and these expected values are applied to the loan balances. Fair value of convertible loans The Company makes assumptions when measuring the fair value of convertible loans. At the year end the Company held a balance on its convertible loan with Rogue Baron plc relating to accrued interest. The Directors expect this balance to be repaid in cash and, having considered the valuation and the value of the derivative option to convert, have concluded that the difference is not material. The fair value of the loan is therefore considered to be the same as the carrying value of the loan. 4 New accounting requirements These financial statements have been prepared in accordance with UK-adopted international accounting standards and in accordance with the requirements of the Companies Act 2006. The financial statements have been prepared under the historical cost convention or at fair value as appropriate. 36 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 4 New accounting requirements continued Adoption of new and revised standards: During the financial year, the Company has adopted the following new IFRSs (including amendments thereto) and IFRIC interpretations that became effective for the first time. Standard Amendments to IFRS 3: References to the Conceptual Framework Amendments to IAS 16: Proceeds before intended use Effective date, annual period beginning on or after 1 January 2022 1 January 2022 Amendments to IAS 37: Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37) IFRS 1, IFRS 9, IFRS 16 and IAS 41: Annual Improvements to IFRS Standards 2018-2020 Cycle - 1 January 2022 1 January 2022 1 January 2022 Their adoption has not had any material impact on the disclosures or amounts reported in the financial statements. Standards issued but not yet effective: At the date of authorisation of these financial statements, the following standards and interpretations relevant to the Company and which have not been applied in these financial statements, were in issue but were not yet effective. Standard Amendments to IAS 1: Presentation of Financial Statements: Disclosure of Accounting Policies Amendments to IAS 1:Presentation of Financial Statements: Classification of Liabilities as Current or Non-current Amendments to IAS 8: Accounting policies, Changes in Accounting Estimates and Errors – Definition of Accounting Estimates Amendments to IAS 12: Income Taxes –Deferred Tax related to Assets and Liabilities arising from a Single Transaction Amendments to IFRS 17 Insurance: Insurance contracts Effective date, annual period beginning on or after 1 January 2023 1 January 2023 1 January 2023 1 January 2023 1 January 2023 The adoption of these standards is not expected to have any material impact on the financial statements of the Company. 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. The Board will continually review the segmental analysis of the business on an ongoing basis and at each reporting date. 37 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 6 Information regarding Directors and employees Included within continuing operations Fees and salaries Social security costs Share based payments Post- employment payments to defined contribution pension scheme 2023 £000 264 20 - 21 305 2022 £000 254 29 - 17 300 2023 Number 2022 Number Average number of persons employed by the Company (including Directors) during the year Directors Administrative staff Total The compensation of the Directors, in aggregate, was as follows: Fees and salaries Social security costs Share based payments Post- employment payments to defined contribution pension scheme 3 1 4 2023 £000 240 18 - 20 278 Full details of the remuneration of individual directors, including the highest paid director, are set out below: Directors Mr H Harris Mr D Strang Mr P Ruse Fees and salaries £000 96 96 48 240 Social security costs £000 12 - 6 18 Pension contributions £000 10 10 - 20 Total 2023 £000 118 106 54 278 £9,600 Directors fees have been accrued (2022: £Nil) and £9,600 remain unpaid at 31 July 2023 (2022: £8,269). 7 Other income Allotment of deferred consideration Other fees & services Total other income 2023 £000 124 25 149 3 1 4 2022 £000 231 27 - 15 273 Total 2022 £000 114 108 51 273 2022 £000 - 15 15 38 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 8 Profit/(Loss) for the year The following items have been included in operating profit/(loss): Fees payable to the Company’s auditors: Audit and assurance services: - Audit of parent Company financial statements Total auditor’s fees Analysis of other costs: Legal and professional fees Foreign exchange losses Other general overheads 9 Taxation Taxation charge based on profit/losses for the year UK Corporation tax Deferred taxation Total tax expense Factors affecting the tax charge for the year: (Loss) on ordinary activities before taxation 2023 £000 2022 £000 27 27 3 3 257 263 2023 £000 - - - 24 24 8 1 215 224 2022 £000 - - - (1,706) (2,426) (Loss) on ordinary activities at the average UK standard rate of 21.01% (2022: 19%) Effect of: Expenses not deductible for tax purposes Chargeable gains/(losses) Remeasurement of deferred tax for changes in tax rates Movement in deferred tax not recognised Current tax charge Deferred tax asset/(liability) not recognised 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. 243 18 (18) 115 - 783 372 42 (15) 62 - 678 (358) (461) 10 Earnings per share (Loss)/profit attributable to ordinary shareholders 2023 2022 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: (Loss) from operations (£000) Total (£000) Number of shares Weighted average number of ordinary shares for the purposes of basic (loss) per share (millions) Weighted average number of ordinary shares for the purposes of diluted (loss) per share (millions) Basic (loss) per share (expressed in pence) Diluted (loss) per share (expressed in pence) (1,706) (1,706) (2,426) (2,426) 449.80 449.80 475.30 (0.379) (0.379) 533.84 (0.540) (0.540) 39 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 11 Financial investments Financial assets at fair value through profit or loss: Fair Value at 31 July 2021 Additions Fair value changes Gains/(loss) on disposals Transfer to level 1 Disposal Impairment provision Foreign Exchange Fair Value at 31 July 2022 Additions Fair value changes Gains/(loss) on disposals Transfer to level 1 Disposal Impairment provision Foreign Exchange Fair Value at 31 July 2023 The 2023 financial assets splits are as below: Non-current assets – listed Non-current assets – unlisted Non-current assets – unlisted convertible loans* Total The 2022 financial assets splits are as below: Non-current assets – listed Non-current assets – unlisted Non-current assets – unlisted convertible loans* Total £000 Level 1 4,413 114 (2,168) 221 125 (400) - (1) 2,304 379 (1,043) (25) - (294) - 1 1,322 1,322 - - 1,322 2,304 - - 2,304 *£111,000 of the convertible loans is an unlisted convertible loan held in a listed security. Loss on investments held at fair value through profit or loss at 31 July 2022 Fair value loss on investments Realised gain on disposal of investments Net loss on investments held at fair value through profit or loss (2,168) 221 (1,947) Loss on investments held at fair value through profit or loss at 31 July 2023 Fair value loss on investments Realised loss on disposal of investments Net loss on investments held at fair value through profit or loss (1,043) (25) (1,068) £000 Level 2 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - £000 Level 3 711 54 - - (125) - - - 640 150 - (10) - - (212) 1 569 - 458 111 569 - 454 186 640 £000 Total 5,124 168 (2,168) 221 - (400) - (1) 2,944 529 (1,043) (35) - (294) (212) 2 1,891 1,322 458 111 1,891 2,304 454 186 2,944 - - - (2,168) 221 (1,947) - (10) (10) (1,043) (35) (1,078) Level 1 Level 2 Level 3 represents those assets, which are measured using unadjusted quoted prices for identical assets. applies inputs other than quoted prices that are observable for the assets either directly (as prices) or indirectly (derived from prices). applies inputs, which are not based on observable market data. The Directors carried out an impairment review as at 31 July 2023 and determined a further impairment charge of £212,000 (2022: £Ni) was required. 40 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 11 Financial investments continued Financial 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 their respective Stock Exchanges, at 31 July 2023. Level 3 investments are reviewed for impairment and an impairment is recorded if management believe there has been a reduction in the economic value of the asset. 12 Trade and other receivables Current assets Other receivables Prepayments The carrying value of receivables approximates their fair value. 13 Trade and other payables Amounts due within one year Trade payables Other creditors Accruals and deferred income 14 Share capital and share premium account 2023 £000 168 26 194 2023 £000 60 - 44 104 2022 £000 131 32 163 2022 £000 52 1 27 80 Share capital issued and fully paid At 31 July 2021 No Activity At 31 July 2022 No Activity At 31 July 2023 Number of shares 449,796,506 - 449,796,506 - 449,796,506 Ordinary share capital £000 382 - 382 - 382 Deferred share capital £000 2,299 - 2,299 - 2,299 Share premium £000 13,459 - 13,459 - 13,459 41 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 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 deferred shares have no voting rights and are not eligible for dividends. 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’. Investment in Own Shares represents shares held in trust. As at 31 July 2023 the Company held in Trust 30,000,000 (2022: 30,000,000) of its own shares with a nominal value of £25,500 (2022: £25,500). The Trust has waived any entitlement to the receipt of dividends in respect of its holding of the Company’s ordinary shares. The market value of these shares at 31 July 2023 was £105,000 (2022: £150,000). In the current period nil were repurchased (2022: nil) and nil were transferred into the Trust (2022: £nil), with nil reissued on award of shares to directors. Retained earnings are the cumulative net losses recognised in the income statement and other comprehensive income. Movements on these reserves are set out in the statement of changes in equity. 16 Related party transactions The Company had the following transactions made at arm’s length with related parties: The Company charged rent of £25,000 to Cadence Minerals Plc, a company of which Don Strang is a director (2022: £15,000). The Company held a convertible loan of £111,000 with Rogue Baron Plc, a company of which Hamish Harris is a director (2022: £111,000). Additionally, the Company holds 21,543,653 shares in Rogue Baron plc (2022: 21,543,653). During the year a loan of £35,000 bearing interest at 8% interest was issued to Rogue Baron Plc during the year. 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. 42 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 17 Reconciliation of net cash flow to movement in net funds Net funds at beginning of the year (Decrease)/increase in cash Net funds at end of the year Analysis of changes in net funds Cash and cash equivalents Net funds Significant non-cash transactions 2023 £000 824 (660) 164 Cash Flow £000 (660) (660) 2022 £000 1,071 (247) 824 At 31 July 2023 £000 164 164 At 31 July 2022 £000 824 824 During the year the significant non-cash transactions during the year were as follows: • £1,195,000 of unrealised losses in movement in the market value of the Company’s listed financial investments were revalued through the income statement 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 NEX-listed company. 43 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 18 Financial instruments and related disclosures continued 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 £164,000 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. 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 financial investment portfolio in the face of market movements, which was a maximum of £1,780,000 (2022: £2,761,000). The investments in equity of 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 Listed financial investments held at 31 July 2023. 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) 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) 2023 Other comprehensive income and Net assets 2022 Other comprehensive income and Net assets £000 (264) £000 (461) (0.001)p (0.001)p 264 0.001p 461 0.001p 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 foreign currency transactions which the Company enters into are either denominated in USD, AUD and or CAD. These are all in relation to the Company’s investments in Non-Current Assets. These are not considered to hold a separate currency risk as movements in foreign currencies form part of the market price sensitivity risk covered above. 44 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 18 Financial instruments and related disclosures continued 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 2023 £000 164 194 358 2022 £000 824 163 987 The Company’s cash balances are held in accounts with Barclays Bank plc, and with its Investment Broker accounts. Fair value of financial assets and liabilities Financial assets and liabilities are carried in the Statement of Financial Position at either their fair value (financial 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 The following table sets out the fair values of financial assets within Trade and other receivables. Financial assets (Note 12) Trade and other receivables - Non interest earning Trade and other receivables - Interest earning 2023 £000 156 38 2022 £000 163 - 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 The following table sets out financial liabilities within Trade and other payables. 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. Financial liabilities (Note 13) Trade and other payables 2023 £000 104 2022 £000 80 45 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 19 Share schemes 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 issued, cancelled, & outstanding for the year ended 31 July 2023 At 31 July 2021 Lapsed At 31 July 2022 Lapsed At 31 July 2023 Range of exercise prices Weighted average remaining contractual life Options outstanding & exercisable at 31 July 2022 Date of grant 26 August 2020 Total Number 29,232,353 (3,529,412) 25,702,941 (6,702,941) 19,000,000 Weighted average exercise price 1.43p 4.25p 1.04p 1.17p 1.00p 1.00p 0.07 years Number 19,000,000 19,000,000 Exercise price (p) 1.00 Expiry date 26/08/2023 All options outstanding as of July 31, 2023, have lapsed as of August 26, 2023. No additional options have been issued. A modified Black-Scholes model has been used to determine the fair value of the share options on the date of grant. The fair value is expensed to the income statement on a straight-line basis over the vesting period, which is determined annually. The model assesses a number of factors in calculating the fair value. These include the market price on the date of grant, the exercise price of the share options, the expected share price volatility of the Company’s share price, the expected life of the options, the risk-free rate of interest and the expected level of dividends in future periods. For those options granted where IFRS 2 "Share-Based Payment" is applicable, the fair values were calculated using the Black- Scholes model. The inputs into the model were as follows: 26 August 2020 Risk free rate 1.3% Share price volatility 27.52% Expected life 3 years Share price at date of grant £0.00875 Expected volatility was determined by calculating the historical volatility of the Company's share price for 12 months prior to the date of grant. The expected life used in the model is the term of the options. Charges to the statement of comprehensive income Share based payment charges 2023 £000 - 2022 £000 - 46 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 19 Share schemes continued Warrants issued, cancelled, & outstanding for the year ended 31 July 2023 At 31 July 2021 Lapsed At 31 July 2022 No Activity At 31 July 2023 20 Commitments and contingencies Weighted average exercise price 1.88p 1.88p - - - Number 64,724,388 (64,724,388) - - - The Company announced it has agreed binding heads of terms with Metals One Plc ("Metals One") to farm into the Black Schist Projects in Finland (the "Projects"), containing a nickel-zinc-copper-cobalt deposit proximal, and analogous, to the large Talvivaara mine. The Company has agreed to provide funding to Metals One of £1 million for the development of the Project (the "Investment"), for which it will be issued such number of shares in the capital of Finnaust Mining Northern OY ("Finnaust", which holds the Projects), which equal 25% of the voting rights in Finnaust (the "Farm-in"). Gunsynd will provide the £1 million funding and receive the 25% of Finnaust over a period of 21 months in four equal tranches, beginning 90 days after Metals One's Admission to AIM market on 31 July 2023 and thereafter at six-monthly intervals, to be invested in the development of the Projects. Whilst it is the intention of the Company to make the six-monthly interval payments, the funding is not binding, and the Company may delay further payments to Metals One subject to cashflow and can also agree a future variation agreement with them if required. The Company had a rental commitment under a short term lease totalling £27,000 at 31 July 2023, which is due within one year. 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 16 November 2023, the Company advised it had made payment of the first tranche of £250,000 to Metals One as referenced in Note 20. On 5 December 2023, the Company advised it had raised gross proceeds of £210,000 through the issue of 105 million shares at 0.2p each. 47 

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