Starvest plc
Company No. 03981468
Starvest plc
Report and Financial Statements
For The Year Ended 30 September 2017
Starvest plc
2017 annual report and financial statements
CONTENTS
Page
Officers and professional advisers
Chairman’s statement
Investing policy statement
Review of Trading Portfolio
Board of directors
Strategic report
Directors’ report
Directors’ responsibilities statement
Independent auditor’s report
Income statement
Statement of financial position
Statement of changes in equity
Statement of Cash flows
Notes to the financial statements
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2
4
5
13
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19
22
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26
Starvest plc
2017 annual report and financial statements
Officers and professional advisers
Directors
Callum N Baxter – Chairman and Chief Executive
Gemma Cryan – Executive Director
John Watkins, FCA – Non-Executive Director
Secretary and
registered office
Business address
Auditor
Stephen Ronaldson
55 Gower Street
London, WC1E 6HQ
67 Park Road
Woking
Surrey, GU22 7DH
info@starvest.co.uk
Tel: 01483 771 992
Chapman Davis LLP
2 Chapel Court
London SE1 1HH
Registered number
03981468
Solicitors
Ronaldsons LLP
55 Gower Street
London WC1E 6HQ
Nominated adviser Grant Thornton UK LLP
Banker
Broker
Registrars
30 Finsbury Square
London, EC2P 2YU
Allied Irish Bank (GB)
10 Berkeley Square
London, W1J 6AA
SI Capital Limited
46 Bridge Street
Godalming
Surrey, GU7 1HL
Share Registrars Limited
The Courtyard
17 West Street
Farnham
Surrey, GU9 7DR
Tel: 01252 821390
Listing
AIM Market of the London Stock Exchange (AIM)
Ticker: SVE
Website
www.starvest.co.uk
1
Starvest plc
2017 annual report and financial statements
Chairman’s Statement
I am pleased to present my annual statement to Shareholders for the year ended 30 September 2017 and the
seventeenth since the Company was formed in 2000.
Results for the year
The natural resource sector continues to make an encouraging recovery with the AIM basic resource index
companies out-performing both gold and copper commodities and the FTSE 100 over the year. Our portfolio value
and cash generation through trading profits reflects this.
Improvements in the sector and a more favourable global economic outlook have provided confidence to global
markets. While the number of AIM listed mining companies has decreased, a sustained recovery in the sector is
apparent with total market cap up from £3.8bn in June 2016 to £5bn year on year and secondary fundraising
proceeds more than doubling in the same period.
Following the improved conditions, we have seen a year on year positive move in net asset value of approximately
48%. The majority of our investee companies saw significant share price increases during the period but have
more recently settled to within 10% of their share price year on year. The biggest gain was made through our
holding in Greatland Gold plc which has risen from 0.17p to 0.595p (3rd Oct 2016 – 29th Sept 2017); a company
which has seen a significant agreement with Newmont and strategic project acquisitions during the past year.
Other companies performing well are Ariana Resources plc which saw its first gold and silver pour in March of this
year, and continues to develop its near mine and regional exploration prospects, and KEFI Minerals plc has
secured significant funding to progress towards production at its Tulu Kapi gold project.
Improvement in our portfolio value has been reflected in the Company’s share price over the past 12 months.
Recently we have been experiencing an increased interest in our portfolio positions and upside potential from the
improving market. As such our year on year rise in market capitalisation is at around 270%.
During this opportune time we continue to evaluate very good investment opportunities and look to enhance our
portfolio. There still remains, we believe, many undervalued opportunities. It is at this time we can benefit by
employing our sector knowledge and market experience in sourcing compelling investments.
Investing policy
The Company’s investing policy is reproduced on page 4 of this report and made available on our website,
www.starvest.co.uk. At our AGM this year we will put before shareholders a proposal to add Direct Investment in
mining projects to our Investing Policy which will, if approved, see the company take ownership of its own mining
projects and utilise these for stock positions in new and existing investee companies.
Trading portfolio valuation
A brief review of the major portfolio companies follows from page 5; other investee companies are listed with the
websites from which further information may be obtained.
Shareholder information
The Company’s shares are traded on AIM.
Announcements made
www.starvest.co.uk where historic reports and announcements are also available.
the London Stock Exchange are available
to
from
the Company’s website,
2
Starvest plc
2017 annual report and financial statements
Chairman’s Statement, continued
Annual general meeting
We will hold our annual general meeting at 11.00 am on Friday 1st December at the City office of Grant Thornton
UK LLP, our Nominated Adviser, when we look forward to meeting those Shareholders able to attend.
Callum N Baxter
Chairman and Chief Executive
6 November 2017
3
Starvest plc
2017 annual report and financial statements
Investing policy statement
About us
The Board, under the leadership of the previous Chairman, Bruce Rowan, had managed the Company as an
investment company since January 2002. Collectively, the current Board has significant experience over many
years of investing in small company new issues and pre-IPO opportunities in the natural resources and mineral
exploration sectors.
Following the appointment as Chairman of Callum Baxter, the Board continues with a similar investment strategy,
that is, with a focus on the natural resources sector.
Company objective
The Company is established as a source of early stage finance to fledgling businesses, to maximise the capital
value of the Company and to generate benefits for Shareholders in the form of capital growth and modest
dividends.
Investing strategy
Natural resources: Whilst the Company has no exclusive commitment to the natural resources sector, the Board
sees this as having considerable growth potential in the medium term. Historically, investments were generally
made immediately prior to an initial public offering, on AIM or ISDX/NEX as well as in the aftermarket. As the
nature of the market has changed since 2008, it is more likely that the future investment portfolio will include a
spread of companies that generally have moved beyond the IPO stage but remain in the early stages of identifying
a commercial resource and/or moving towards development with the appropriate finance.
Direct Project: The Company’s investing policy is to hold shares in companies. However, the Company believes
there may be opportunities to acquire shares in companies on favourable terms by taking a direct interest in mining
projects and using these projects as consideration for shares in such companies; those companies would therefore
become Starvest investee companies. The projects will be operated by the investee company; Starvest will not
manage any project. Prior to selling any projects to corporate entities, Starvest may therefore have an interest in
a number of projects. The addition of the Direct Project strategy to the Company’s Investing Policy will be put
before shareholders for approval at the AGM of the Company to be held 1st December 2017.
Investment size: Initial investments are for varying amounts but usually in the range of up to £100,000. These
companies are invariably not generating cash, but rather they have a constant requirement to raise new equity in
order to continue exploration and development. Therefore, after appropriate due diligence, the Company may
provide further funding support and make later market purchases, so that the total investment may be greater than
£100,000.
High risk: The business is inherently high risk and of a cyclical nature dependent upon fluctuations in world
economic activity which impacts on the demand for minerals. However, it offers the investor a spread of
investments in an exciting sector, which the Board believes will continue to offer the potential of significant returns
for the foreseeable future.
Lack of liquidity: The investee companies, being small, almost invariably lack share market liquidity, even if they
are quoted on AIM, NEX, ASX, or TSX-V. Therefore, in the early years it is rarely possible to sell an investment at
the quoted market price with the result that extreme patience is required whilst the investee company develops
and ultimately attracts market interest. If and when an explorer finds a large exploitable resource, it may become
the object of a third party bid, or otherwise become a much larger entity; either way an opportunity to realise cash
is expected to follow.
Success rate: Of the 25 to 30 investments held at any one time, it is expected that no more than five will prove
to be ‘winners’; from half of the remainder we may expect to see modest share price improvements. Overall, the
expectation is that in time Shareholder returns will be acceptable if not substantial. Accordingly, the Board is
unable to give any estimate of the quantum or timing of returns.
Profit distribution: When profits have been realised and adequate cash is available, it is the intention of the
Board to recommend the distribution of up to half the profits realised.
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Starvest plc
2017 annual report and financial statements
Investing policy statement, continued
Investing strategy, continued
Other matters: The Company currently has investments in the following companies, which themselves are
investment companies: Equity Investors plc and Equity Resources Limited.
The Company takes no part in the active management of investee companies, although directors of the Company
are, or have been, non-executive directors on the boards of several such companies. Callum Baxter, Chairman,
is also an Executive Director of one such company.
Review of trading portfolio
Introduction
During the year to 30 September 2017, the portfolio comprised interests in the companies commented on below.
In addition, several other active companies were included but not commented on in this review.
Market sentiment improved during the period and the Company focussed attention on the changing opportunities
which resulted in the adjustment of several positions. Overall we trimmed marginal stock holdings to increase our
cash reserves which were supplemented by a modest placing at the prevailing market price. Net asset value
increased 48% year on year while market capitalisation increased 270%. The largest element of the increase in
value is in gold where there has been much activity of late.
Transactions
During the year the Company raised £170,000 through a placing and subscription. 8,500,000 new ordinary shares
of 1.0p each were issued in the capital of Starvest at a subscription price of 2.0p. The same number of warrants
were issued at an exercise price of 4.0p per warrant within a 24 month exercise period.
The Company exercised warrants held in Greatland Gold, acquiring 50 million shares at 0.2p per share. These
replaced 50 million Greatland Gold shares that Starvest sold in the market, thus retaining the Company’s share
holding in Greatland Gold while also returning a profit.
The Company disposed of all its holdings in Kryptonite 1 plc. Minor share sales were completed in Alba Mineral
Resources plc, Ariana Resources plc, BMR Group plc, Kefi Minerals plc, Oracle Coalfields plc, Saltlake Potash
plc, Sunrise Resources plc, Block Energy plc and Marechale plc which raised cash adding to the Company’s
working capital.
Trading portfolio valuation
An improved economic climate and increasing investor confidence has been reflected in share price valuations
throughout the year. Since the lows of early 2016 we have seen a marked improvement in stock levels and our
portfolio valuation. The increase in portfolio value was approximately 25% since 30 September 2016 and up by
more than 45% over the two years since 30 September 2015.
Against this background we continue to value our portfolio of investments conservatively at the lower of cost or
bid price or lower directors’ valuation, where we believe those facts of which we are aware cast doubt on the
market prices or where the Company’s interest is of such a size as to inhibit selling into a depressed market. With
one exception, we attribute no value to those of our investments that do not enjoy a market quote. The exception
is our holding in Kuwait Energy plc where we use a value provided by that company’s broker based on actual
trades in the company’s stock.
The Directors are satisfied that this is the only significant management estimate made within the financial
statements.
This cautious approach has proved to be appropriate; net provisions made in previous years totalling £311,211
were released during the year (2016: £260,967).
A review of the leading portfolio companies follows. As last year, we are not commenting on the smaller
companies, although they are listed at the end of the review.
5
Starvest plc
2017 annual report and financial statements
Review of trading portfolio, continued
Trading portfolio valuation, continued
Raising new finance, an essential requirement for any mineral exploration business, has become less difficult over
the past year but has resulted in significant dilution of existing shareholders.
As the net asset value has increased during the year to 30 September 2017 to £1.88m, the Company has achieved
a profit of £302,329 as compared with the modest profit of £81,113 in the previous year. In addition, the Company:
• has no debt other than a convertible loan from a shareholder and a bank overdraft facility only;
•
continues to believe that it is in a strong position to benefit from the emerging upturn in markets; and
• believes that the fundamentals have not changed: the world is becoming more affluent with an increasing
number of people expecting refrigerators, motor cars, air conditioning, laptop computers and all other tools
of 21st Century living which all require natural resources in order to both produce and power.
Company statistics
The Company considers the following statistics to be its Key Performance Indicators (KPIs) and is satisfied with
the results achieved in the year given the uncertain market conditions.
30 September
2017
at BID values
as adjusted
30 September
2016
at BID values
as adjusted
Change
%
• Trading portfolio value
• Company asset value net of debt
• Net asset value per share
• Closing share price
• Share price premium to net asset value
£1.52 m
£1.88 m
3.56 p
4.62 p
32%
£1.37 m
£1.32 m
3.21 p
2.25 p
-30 %
• Market capitalisation
£2.44 m
£0.89 m
11%
48%
11%
205%
207%
274%
Since the year end, values have improved; as at the close of business on 31 October 2017, the asset value net of
debt was £2.67m.
6
Starvest plc
2017 annual report and financial statements
Portfolio review, continued
Review of the current market
Improvements in the natural resource sector and a more favourable global economic outlook have provided
confidence to global markets over the last year. And while demand for raw materials continues to fluctuate it is
likely to increase steadily over the next 5 years.
The gold price has seen highs of US$1,350 and lows of US$1,125 per oz, still some way off its peak in 2011 but
similar to where it was a year ago at approximately US$1,300 per oz. Other metals such as copper, lead, nickel
and zinc have all seen increases over the year, while crude oil prices have risen from an average of US$44/bbl to
over US$50/bbl and coal up from an average of US$65/mt to US$87/mt (World Bank 2017).
We and our investee companies have benefited from this upturn in the commodities market over the past year
with a recovery in the sector expected and indeed a ‘super-cycle’ being forecast by some in the industry.
While the number of AIM listed mining companies has decreased, a sustained recovery in the sector is apparent
with total market cap up from £3.8bn in June 2016 to £5bn year on year and secondary fundraising proceeds more
than doubling in the same period.
The previous super-cycle in the early 2000’s saw a slow response to a dramatic increase in demand from the
Chinese market, the current upturn is forecast to stem from a falling Chinese supply and once again a slow
response from global mining companies.
Industry majors have been focused on returning capital and providing dividends to shareholders rather than putting
investment into exploration and development of new mines; over 60% of the global top 100 mining assets were
commissioned in the last century (Goldman Sachs 2017 report).
This lack of investment into exploration and development of world-class mines opens the field to junior explorers
and developers to realise value and generate cash flow through increasing interest in the sector and from majors
in need of replenishing diminishing reserves. While we are not yet seeing this in the market, there has been an
increase in investor interest in the sector, with the AIM basic resource index companies out-performing both gold
and copper commodities and the FTSE 100 over the year.
The current market conditions allow for strategic investment in undervalued, early stage natural resource projects.
Interests in Gold exploration
Our interests in gold exploration have improved during the period.
Following a gold price of below US$1,100 per ounce in late 2015, we have seen an increase to current levels of
around US$1,300.
Amongst the Starvest investments, there are six with interests in gold. Of these, we comment on four:
Ariana Resources plc (www.arianaresources.com)
Ariana Resources plc (Ariana) is a United Kingdom-based company engaged in the exploration development and
mining of epithermal gold-silver and porphyry copper-gold deposits in Turkey.
Ariana’s Kiziltepe mine (Red Rabbit JV) delivered its first gold-silver pour in March 2017 and continued
commissioning and production ramp-up between March and June. During the commissioning phase to end June
a total of 1,929oz gold and 14,519oz silver were reported generating a maiden revenue for the JV company.
Commercial production was declared in July with the mine operational for two complete quarters and running in
line with management forecasts.
The company is focusing exploration efforts on a number of areas in Turkey. As well as extending the area
currently under development at Kiziltepe (near mine exploration) they are also looking at potential satellite open-
pittable prospects slightly further afield but still within range to utilise the mine infrastructure.
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Starvest plc
2017 annual report and financial statements
Portfolio review, continued
Interests in Gold exploration, continued
Ariana Resources plc (www.arianaresources.com), continued
The Tavsan project which is part of the Red Rabbit JV was expanded during the last year with several mineralised
zones and high-grade drill intercepts reported adding considerable scope to increasing resources at the project.
Current resources stand at 204,000oz gold indicated and inferred. The company are targeting 300,000oz gold with
over 60% of this open-pittable and will be undertaking feasibility-related work to advance the project toward
production.
The Karakavak prospect also returned encouraging results with initial drill testing on just 180m of a 2.15km strike
length of outcropping gold-bearing veins retuning up to 4m at 1.72g/t gold within 10m of surface; showing potential
in the area for several shallow open-pittable resources as satellites to the Kiziltepe mine operations.
Work is continuing on exploration and advancement of the 100% owned Salinbas project. A recent scoping study
reported a JORC compliant resource of 1.09M oz gold averaging 2.0g/t Au and 10.2g/t Ag. A mine life of 10 years
is estimated with a 50,000 oz Au equivalent per annum and a IRR of 28% with 3.3 years payback period.
The company is well funded for the next year to 18 months after a placement of approximately £2m during the
year.
Kefi Minerals plc (www.kefi-minerals.com)
Kefi Minerals is an exploration and development company focused on gold and copper deposits in the Arabian-
Nubian Shield. Its main projects are Tulu Kapi in Ethiopia and the Jibal Qutman project in Saudi Arabia.
Kefi and the Government of Ethiopia have established a new company to hold the Tulu Kapi mine project, Tulu
Kapi Gold Mines Share Company ltd (TKGM). This sees Kefi maintaining a 75-80% stake in the project, based on
capital spending and contributions, with four of the six board members from Kefi. Kefi retains 100% ownership of
licence areas outside the mine project area. TKGM have been engaged in mine construction preparations, with
licence applications from local and regional authorities for power, waste and road works submitted as well as
resolving resettlement infrastructure and compensation plans.
Construction of the 1M oz gold resource open pit at Tulu Kapi has been pushed back to late 2019. In July 2017
the company signed a mandate and heads of terms for US$135m of project funding with Oryx Management Ltd
to finance and operate all the onsite infrastructure at the Tulu Kapi project. The finance deal proposes a 9-year
tenor for repayment from drawdown, including a 30 month grace period during construction and ramp-up.
In Saudi Arabia work is on-going on the open-pit heap leach gold operation. Kefi’s JV partner Gold and Minerals
Ltd have submitted mining licence applications to the Saudi Government and a staged development plan has been
established on a low capex start-up which will be expanded in modular stages as additional mineralisation is
delineated.
The Company has made substantial progress towards mine development during the year and should continue to
do so over the coming 12 months.
Greatland Gold plc (www.greatlandgold.com)
The AIM listed exploration company expanded its portfolio of projects during the last year to six with the acquisition
of the Paterson gold project and Panorama cobalt and gold project both in the Pilbara region of Western Australia.
The company also increased its land holdings of the Ernest Giles project to over 2,000 square kilometres in the
under-explored large greenstone belt.
In May 2017, Greatland Gold announced it had reached an agreement with Newmont Exploration, a subsidiary of
Newmont Mining Corporation (NYSE:NEM), to grant access to the tenements and exploration database for the
Ernest Giles project for 6 months. Newmont will be using industry leading proprietary exploration techniques over
the project area to further evaluate the project’s potential to be a multi-million-ounce gold province.
During the year the company has also continued to develop this and its other projects.
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Starvest plc
2017 annual report and financial statements
Portfolio review, continued
Interests in Gold exploration
Greatland Gold plc (www.greatlandgold.com), continued
Drilling at its Tasmanian Warrentinna project encountered gold mineralisation in all holes highlighting the potential
to extend the zone of mineralisation to the north and east at the Derby North prospect. Bromus drilling intersected
silver, zinc and other elements consistent with Volcanogenic Massive Sulphide ("VMS") style systems, with a strike
of 1.5 kilometres through the area.
Historical data for the Havieron prospect of the Paterson Project reports grades of up to 15.45g/t Au and 2.5% Cu.
Regional geophysics highlighted a new potential iron-oxide-copper-gold district with multiple regional targets
similar to the Havieron prospect, prompting the company to acquire a further tenement to the north. This is a
welcome addition to the Greatland pipeline of projects and sits in an area attracting increasing interest from major
mining companies such as Rio Tinto. On ground exploration activities are scheduled to commence in Q4 2017.
Regional investigations of historic data highlighted a large area anomalous in cobalt at its Panorama project in the
Pilbara region of Western Australia. Given the projected increase in demand for this commodity, Greatland Gold
staked the area and early stage exploration activities are underway over the licences. Greatland has recently
confirmed the project is prospective for conglomerate hosted gold deposits which are attracting much interest.
The company is well funded for the next year to 18 months with many warrants exercised on the back of an
increasing share price and the potential of the Ernest Giles project area in particular. We look forward to continued
positive news about exploration developments from the company over the next year.
Cora Gold Limited (www.coragold.com)
Post 30 September 2017 Starvest acquired a stake in AIM listed Cora Gold Limited. Cora are a gold exploration
company focussed on advanced projects in the Yanfolila and Kenieba areas of Mali and Senegal in West Africa.
The projects are in a highly prospective region with several relatively recent discoveries including Sadiola (14Moz),
Loulou (12Moz), Fekola (4.5Moz), Sabodala (4.4Moz), and Kobada (2.4Moz). The region has attracted much
interest from several larger global gold miners.
Cora's projects cover more than 1,000 square kilometres with many licences displaying multiple highly prospective
drill ready gold targets and a number of early grades over 40g/t gold.
Initial work includes drilling at Cora's Sanankoro gold discovery in Mali to establish a mineral resource estimate
over a section of the 14km long mineralised zone. Additional exploration activities include drilling across other
licences, located adjacent to existing gold mines, which have the potential to host significant new gold discoveries.
Cora has a highly experienced and successful management team with proven track records in multi-million ounce
gold discoveries in Africa, many of which have been developed into profitable mines. With £3.45m raised at their
admission to AIM, Cora Gold are well funded for the next year to 18 months and have already engaged drilling
contractors to begin work. We look forward to following their progress.
Interests in energy
We have three companies in the energy sector on which we comment as follows:
Alba Mineral Resources plc (www.albamineralresources.com)
An explorer focused on oil and gas, graphite, uranium and base metals with holdings in Greenland (graphite and
heavy minerals), Mauritania (uranium), UK (oil and gas) and Ireland (base metals).
The Company’s UK oil and gas focus is on Horse Hill-1 project where Alba hold a stake in the HHDL consortium
developing the project, effectively giving them 9.75% stake in the project. During 2017 the licences were extended
to 2021 and a planning application for long term production testing and additional appraisal drilling was to be
determined during Sept 2017. As of 30 September 2017 no determination had been made public. Alba also holds
a 5% interest in the Brockham oil and gas project just 5 miles from Horse Hill-1. Operators, Angus Energy, intend
9
Starvest plc
2017 annual report and financial statements
Portfolio review, continued
Interests in energy, continued
Alba Mineral Resources plc (www.albamineralresources.com), continued
to bring well BR-X4Z into production as soon as Oil and Gas Authority approval is in place and Field Development
Plans have been submitted for production at the PL235 site.
Their graphite project encompasses a former graphite mine with additional exploration ground in Greenland. Alba
increased its holding to 90% in the Amitsoq project earlier this year. Exploration work during the period has
identified a total strike length of 12km with potential for graphite. Metallurgical tests, aimed at reopening the mine,
reported a head grade of +25% graphite and simple processing achieved +99% recovery of graphite from gangue
material, with the bulk of the flake graphite being recovered in the medium range, essential for suppling the lithium-
ion battery market. The company also acquired heavy mineral licence areas in Greenland during the year with a
focus on ilmenite. The projects are in early stage exploration with limited windows for ground work given their
northern location but the company plans to advance the projects at the earliest opportunity and has already carried
out preliminary ground work.
Alba continued work on the Ireland base metal project with a microgravity study and portable XRF programme on
soil samples being carried out. Results returned a Cu-Ag-As anomaly which the company plans to follow up. Alba
has reviewed data on the Mauritania uranium project and relinquished ground outside the identified uranium
anomalies.
With a strong management team, the continued development of its UK oil and gas assets and the addition of new
licences we look forward to continued positive news from Alba over the next few years.
Kuwait Energy plc (www.kuwaitenergy.co)
Kuwait Energy are an independent oil and gas company involved in exploration appraisal, development and
production of hydrocarbons. It was established in 2005 and maintains a diverse portfolio of projects in Iraq, Egypt,
Yemen and Oman. Of the ten exploration, development and production assets they hold, Kuwait Energy directly
operates seven.
Operationally the Company is increasing production rapidly and are developing reserves in excess of 800M barrels
oil (equivalent), up approximately 10% year-on-year and anticipates a first gas flow from its Siba project (Iraq) in
Q1 2018 where its gas plant engineering, procurement and constructions works are ongoing and near completion.
In Iraq the company has continued with oil production from Block-9 wells Faihaa-1 and 2. Faihaa- 3 well was
spudded in August 2016 and commenced production in February 2017 with 5,200 barrels of oil per day (bopd).
This increase in production in their Block-9 licences brings Kuwait Energy’s total working interest to approximately
10,000 bopd, where it holds a 60% interest and is operator. Well 4 was spudded in April 2017 and as of June was
at 60% of target depth.
The Company received a second Iraqi cargo payment of 350,000 barrels of Basra Light Crude Oil. The payment
covers Block 9 production for 2H 2016 with a value of approximately US$17m. In light of the 2H payment the
company received a second drawdown of US$20m from its Vitol Forward Sales Agreement (established in 2016
for a total of US$100m).
Funds will be used primarily to develop the Block-9 concessions Faihaa wells 4 and 5, as well as continuing with
the exploration and development of wells at the Abu Sennan concessions in Egypt.
During the year Kuwait Energy announced its intension to become a public company via listing on the London
Stock Exchange but did not meet its target date of June 2017. However, Kuwait Energy have stated that in light
of positive feedback from potential investors the Company remains committed to a London listing and continues
to explore its options. The Company is increasing production and expanding its operations and is in a strong
financial position. We look forward to further positive news in the coming year.
10
Starvest plc
2017 annual report and financial statements
Portfolio review, continued
Interests in energy, continued
Oracle Power plc (www.oraclepower.co.uk)
Oracle Power, previously Oracle Coalfields plc, continued to develop its 529M tonne JORC compliant resource of
lignite coal in SE Pakistan. The company remains focused on development of the mine for first production by end
2018 with the intension of supplying a new 660MW mine-mouth power plant.
Work over the last 12 months has seen formal agreement for allocation of water access with the Sindh government
to it’s almost complete reservoir and pipeline. The Central Power Purchasing Agency of Pakistan has issued a
‘Letter of No Objection’ for the 660MW power plant and the National Grid has confirmed that power from the project
will be accommodated in planned high voltage transmission lines.
A loan agreement for £1m was agreed with Brandon Hill Capital Ltd, allowing Oracle to move forward with
negotiations for full funding of the project without equity dilution and a recently announced MOU has been agreed
in principle with two Chinese State-owned Enterprises for the full development and funding of the Thar project.
As indicated by its change of name during the year, the Company is also looking at diversification opportunities in
the power sector overall.
We expect the Company to continue its path towards mining and power generation during the year and look
forward to possible new opportunities being brought on board.
Interests in Base Metals and Agricultural Products
BMR Group plc (www.bmrplc.com)
BMR’s principal project is the historic Kabwe lead/zinc mine in Zambia. The mine closed in the 1990’s and BMR
intends to process tailings through an acid/brine leach.
The company expects the plant to be commissioned by the end of 2017, after minor delays in some supplies.
Once in full production it is expected the plant will produce 3,100 tonnes of zinc (equivalent to 15,000 tonnes zinc
sulphate heptahydrate) and 2,300 tonnes lead sponge per annum. The company hopes to be able to recover
vanadium from the tailing as a by-product with 250-300 tonnes per annum anticipated.
The operating costs are currently estimated at US$120/tonne of tailing processed. There is a 5% royalty payment
and 30% corporation tax levied. Given the offtake agreement BMR hold with African Compass International,
profits are calculated to be at least US$750,000 per month at current prices once in production. Once fully
operational the Company plans two further stages of development. The first in late 2018 and again in 2020 both
to increase the plant feed tonnage.
Exploration of the Kashitu area has been ongoing with a view to the potential exploitation of near surface ore which
could be processed at the Kabwe facilities. Three distinct surface mineralised zones were delineated through
auger soil sampling with zinc associated in upper alluvial material and anomalous silver, up to 16.8g/t, also
reported in 10% of the holes.
BMR is continuing discussions with the Zambia Environmental Management Agency regarding its Waelz Kiln Slag
with the intention of suppling the material for local road construction as well as planning a JORC compliant survey
for recovery of zinc and vanadium from its Imperial Smelting Furnace Slag.
Away from Africa, BMR has an 80% interest in a tin-tungsten project in Portugal with gold and silver reported in
historic workings. Field work highlighted five high-priority areas with vein-style tungsten mineralisation plus
possible gold, silver and lithium credits. Future work includes detailed sampling of large mine dumps to establish
in-situ grades and detailed mineralogical examination of rock samples as well as a structural survey of the licence
to aid future field exploration work.
Once plant commissioning is complete for the Zambia project BMR Group should make strong headway towards
increasing production in the next 12 to 18 months.
11
Starvest plc
2017 annual report and financial statements
Portfolio review, continued
Interests in Base Metals and Agricultural Products, continued
Salt Lake Potash Limited (www.saltlakepotash.com.au)
Salt Lake Potash has concentrated on its Goldfields Salt Lake Project, in Western Australia, over the past year.
The company aims to construct a pilot plant, the first salt-lake brine Sulphate of Potash (SOP) production operation
in Australia.
A scoping study on the Lake Wells prospect was completed which confirmed the potential of a low-cost SOP by
solar evaporation of lake brines for domestic and international fertiliser markets. The study outlined a two-stage
development plan and an all-in capital cost of A$268m for 400,000tpa production.
The company has now completed a surface aquifer exploration programme and a deeper paleochannel aquifer
drill programme. The company has commenced construction of a number of test evaporation ponds of differing
design with the aim of developing a model for a cost-effective on-lake evaporation pond. Process development
test work is also on-going and the company has commenced work on a pre-feasibility study for Lake Wells and
continues to explore the potential of other brine lakes in the area.
Salt Lake potash has made significant progress towards mine development over the past year and we expect this
to continue over the next 12 months.
Sunrise Resources plc (www.sunriseresourcesplc.com)
Sunrise Resources holds ground in Nevada (USA), Ireland and Australia with commodities ranging from gold,
silver and diamonds through to copper, barite and diatomite. Sunrise Resources’ objectives are to generate cash
flow from more advanced projects and to add value through mineral discovery by drill testing more speculative
exploration targets.
The company is currently focusing on the development of its CS Pozzolan-Perlite project in Nevada USA. Internal
concept studies were undertaken which envisage surface mining and a simple production process and low capex
and opex costs. Drilling in recent months has confirmed commercial quality perlite and pozzolan present in thick
intervals and extensions of the main zone towards a northeast zone. Meetings with domestic customers in the
USA were held and cooperative test programmes are in the planning stages. The company is moving towards a
feasibility study and starting the mine permitting process.
The board are committed to concentrate both management time and expenditure on the CS project and advance
it towards production as soon as possible. As a result they are looking to unlock value from their other projects
through JVs or other sale arrangements. Any funds released will be used to progress the CS project towards
production.
The company’s Junction Gold project in Nevada was recently sold to VR Resources, a TSX-V listed company for
a modest cash payment and shares in VR Resources, with additional shares allocated should drilling and
compliant resource reports be undertaken as well as a net smelter deal in place.
We look forward to continuing news on the development of their CS project as well as strategic fund generation
from their non-core projects in the coming year.
Other investments
The remaining non-core investments are available for sale when the conditions are deemed to be right. These
include: Marechale Capital plc (www.marechalecapital.com), and Regency Mines plc (www.regency-
mines.com). In addition, there are a number of failed or almost failed ventures to which we attribute no value,
although we always hope and seek to crystallise value where possible.
12
Starvest plc
2017 annual report and financial statements
Board of directors
Callum N Baxter – Chairman and Chief Executive
Callum is an experienced geologist and investor. He is also an executive director of AIM quoted company
Greatland Gold plc, a Starvest investee company.
Gemma Cryan – Executive Director
Gemma holds formal qualifications in geology (BSc Hons) and has over 15 years industry experience in the oil
and gas industry, followed by mineral exploration, in both private and public companies throughout North America,
Europe, Australasia and Africa. Her time has been spent in the field, and in management roles assisting with
corporate matters. Gemma is well versed in pre-IPO activities and early stage mineral exploration ventures.
John Watkins, FCA – Non-Executive Director
John is a chartered accountant in practice and formerly a non-executive director of other companies, including
investee companies.
13
Starvest plc
2017 annual report and financial statements
Strategic report
Principal activities and business review
Since Bruce Rowan was appointed Chief Executive on 31 January 2002, the Company’s principal trading activity
was the use of his expertise to identify and, where appropriate, support small company new issues, pre-IPO and
on-going fundraising opportunities with a view to realising profit from disposals as the businesses mature in the
medium term. The directors expect this to continue in the future under the leadership of Callum Baxter, appointed
Chief Executive in September 2015.
The Company’s investing policy is stated on page 4.
The Company’s key performance indicators and developments during the year are given in the Chairman’s
statement and in the trading portfolio review, all of which form part of the Directors’ report.
Finance Review
Over the past 12 months the Company recorded a profit of £302,329, equating to a profit of 0.64 pence per share
with net cash inflow for the year of £422,926. This compares to a profit of £81,113 in the previous year that equated
to a profit of 0.21 pence per share. The Company’s cash deposits stood at £432,782 at the period end.
Starvest plc successfully raised £162,500 of new equity (net of costs) during the year. These funds will be used to
take advantage of the exciting opportunities that we believe exist in the market at this time, whilst maintaining a
disciplined approach towards capital allocation.
Key risks and uncertainties
This business carries with it a high level of risk and uncertainty, although the rewards can be outstanding. The
risk arises from the very nature of early stage mineral exploration where there can be no certainty of outcome. In
addition, often there is a lack of liquidity in the Company’s trading portfolio, most of which is, or in the case of pre-
IPO commitments is expected to be, quoted on AIM or NEX, formerly ISDX, such that the Company may have
difficulty in realising the full value in a forced sale. Accordingly, a commitment is only made after thorough research
into both the management and the business of the target, both of which are closely monitored thereafter.
Furthermore, the Company limits the amount of each commitment, both as to the absolute amount and percentage
of the target company.
By order of the Board
Callum Baxter
Chairman and Chief Executive
6 November 2017
Company registration number: 03981468
14
Starvest plc
2017 annual report and financial statements
Directors’ report
The Directors present their seventeenth annual report on the affairs of the Company, together with the financial
statements for the year ended 30 September 2017.
Results and dividends
The Company’s results are set out in the income statement on page 22. The audited financial statements for the
year ended 30 September 2017 are set out on pages 22 to 35.
The Directors do not recommend the payment of a dividend for the year (2016: £nil).
Directors
The Directors who served during the year are as follows:
Callum N Baxter
Gemma Cryan
John Watkins
Substantial shareholdings
At the close of business on 30 September 2017, the following were registered as being interested in 3% or more
of the Company’s ordinary share capital:
Ordinary shares of
£0.01 each
Percentage of
issued share
capital
Ronald Bruce Rowan
Barclays Direct Investing Nominees Limited
Rock Nominees Limited, (of which 3,707,570 representing 7.01% are
beneficially owned by Callum N Baxter)
TD Direct Investing Nominees (Europe) Limited
Hargreaves Lansdown (Nominees) Limited
HSDL Nominees Limited
12,670,000
4,627,679
4,311,522
3,832,336
3,502,414
1,975,804
23.95%
8.75%
8.15%
7.24%
6.62%
3.74%
At 30 September 2017 Mr John Watkins and his spouse hold a total of 2,575,143 (4.87%) (2016: 1,917,142 or
4.84%) shares in the Company of which 595,737 (2016: nil) are indirectly held by TD Direct Investing Nominees
Limited.
Charitable and political donations
During the year there were no charitable or political contributions (2016: £nil).
Payment of suppliers
The Company’s policy is to settle terms of payment with suppliers when agreeing terms of business, to ensure
that suppliers are aware of the terms of payment and to abide by them. It is usual for suppliers to be paid within
14 days of receipt of invoice. At 30 September 2017, the Company’s trade creditors were equal to costs incurred
in 55 days (2016: 42 days).
Events after the end of the Reporting Period
There are no other material events to disclose other than those included in Note 21.
15
Starvest plc
2017 annual report and financial statements
Directors’ report, continued
Auditor
A resolution to reappoint Chapman Davis LLP as auditor for the coming year will be proposed at the forthcoming
AGM in accordance with section 489 Companies Act 2006.
Remuneration
The remuneration of the Directors has been fixed by the Board as a whole. The Board seeks to provide appropriate
reward for the skill and time commitment required so as to retain the right calibre of director without paying more
than is necessary.
Details of Directors’ fees and of payments made for professional services rendered are set out in Note 7 to the
financial statements.
Management incentives
The Company has no share purchase, share option or other management incentive scheme.
As required by legislation, the Company has introduced a stakeholders' pension plan for the benefit of any future
employees.
Going concern
The Company's day to day financing is from its available cash resources or via a bank overdraft and, on occasion,
by the use of short term loans. The continuation of the Company's formal overdraft facility was last confirmed by
the bank in early 2017.
Whilst the Directors fully expect a sufficient overdraft facility to remain in place for the foreseeable future, they are
confident that adequate funding can be raised as required to meet the Company's current and future liabilities
without resorting to this facility, which has been confirmed within the cash flow forecast prepared by the Board for
the 12 months ending 30 November 2018. In the very unlikely event that such finance could not be raised, the
Directors could raise sufficient funds by disposal of certain of its current asset trade investments, although such a
'forced' sale is to be avoided if at all possible.
To assist the Company with its financing obligations, a shareholder provided a loan of £100,000. In January 2017,
£50,000 of this loan was satisfied by the issue of 2,500,000 new Ordinary shares with the remaining balance
carried forward.
For the reasons outlined above, the Directors are satisfied that the Company will be able to meet its current and
future liabilities, and continue trading, for the foreseeable future and, in any event, for a period of not less than
twelve months from the date of approving the financial statements. The preparation of the financial statements on
a going concern basis is therefore considered to remain appropriate.
Management of capital
The Company's objectives when managing capital are:
•
•
to safeguard its 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 by trading its current asset investments.
The Company sets the level of capital in proportion to risk. The Company manages the capital structure and makes
adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.
Control procedures
The Board has approved financial budgets and cash forecasts; in addition, it has implemented procedures to
ensure compliance with applicable accounting standards and effective reporting.
Financial instruments
The Company uses financial instruments, comprising cash, bank overdraft, short term loan, trade investments and
trade creditors, which arise directly from its operations. The main purpose of these instruments is to further the
company’s operations.
16
Starvest plc
2017 annual report and financial statements
Directors’ report, continued
Short term debtors and creditors
Short term debtors and creditors have been excluded from all the following disclosures.
Trade investments
Trade investments are stated at market/fair value less any provision for impairment. The movements between fair
and book value are set out in Note 11. The Board meets quarterly to consider investment strategy in respect of
the Company’s portfolio.
Interest rate risk
The Company finances its operations through retained profits and new investment funds raised. The Board utilises
short term floating rate interest bearing accounts to ensure adequate working capital is available whilst maximising
returns on deposits.
Liquidity risk
The Company seeks to manage financial risk, to ensure sufficient liquidity is available to meet foreseeable needs
and to invest cash assets safely and profitably. More information about the company’s liquidity risk, and the
management of that risk, is given under ‘going concern’ in Note 2 to the financial statements.
Borrowing facilities
As at 30 September 2017, the Company had an overdraft facility of £100,000 arranged with its bankers (2016:
£100,000) secured on certain investments with a market value at 30 September 2017 of £237,000. The overdraft
facility is renewable annually with the next review due in March 2018.
Currency risk
The Company trades substantially within the United Kingdom and all transactions are denominated in Sterling.
Consequently, the Company is not significantly exposed to currency risk.
Fair values
Except where shown above, the fair values of the Company’s financial instruments are considered equal to the
book value.
Price and credit risk
Management do not consider price or credit risk to be material to the Company.
By order of the Board
Callum Baxter
Chairman and Chief Executive
6 November 2017
Company registration number: 03981468
17
Starvest plc
2017 annual report and financial statements
Statement of directors' responsibilities
Directors' responsibilities for the financial statements
The Directors are responsible for preparing the Directors’ report, the Strategic report and the financial statements
in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the
Directors have elected to prepare financial statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors
must not approve the financial statements unless they are satisfied that they give a true and fair view of the state
of affairs and profit or loss of the company for that period. In preparing those financial statements, the directors
are required to:
select suitable accounting policies and then apply them consistently;
•
• make judgments and estimates that are reasonable and prudent;
•
state whether applicable UK accounting standards have been followed, subject to any material departures
disclosed and explained in the financial statements;
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company
and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The Directors confirm that so far as each of the Directors is aware:
•
•
there is no relevant audit information of which the Company’s auditor is unaware; and
the Directors have taken all the steps that they ought to have taken as directors in order to make
themselves aware of any relevant audit information and to establish that the auditors are aware of that
information.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included
on the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
18
Starvest plc
2017 annual report and financial statements
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF STARVEST PLC
OPINION
We have audited the financial statements of Starvest plc (the ‘Company’) for the year ended 30 September 2017 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 a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the company financial statements is
applicable law and UK Generally Accepted Accounting Standards (UK GAAP).
In our opinion:
•
•
•
the financial statements give a true and fair view of the state of the Company’s affairs as at 30 September 2017
and of the Company’s profits for the year then ended;
the Company financial statements have been properly prepared in accordance with UK GAAP;
the financial statements 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
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to
you where:
•
•
the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not
appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties that may cast
significant doubt about the company’s ability to continue to adopt the going concern basis of accounting for a
period of at least twelve months from the date when the financial statements are authorised for issue.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial report of the current period. These matters were addressed in the context of our audit of the financial report as
a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have
determined the matters described below to be the key audit matters to be communicated in our report.
CARRYING VALUE OF TRADE INVESTMENTS
The Company’s Trade Investment assets (‘Trade assets’) represent the most significant asset on its statement of
financial position totalling £1.52m as at 30 September 2017, of which unlisted investments represented £0.14m of the
total Trade assets.
19
Starvest plc
2017 annual report and financial statements
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF STARVEST PLC - CONTINUED
The carrying value of Trade assets represents significant assets of the company and assessing whether facts or
circumstances exist to suggest that impairment indicators were present, and if present, whether the carrying amount of
these asset may exceed its recoverable amount was considered key to the audit. This assessment involves significant
judgement applied by management to the Company’s unlisted investments.
We considered it necessary to assess whether facts and circumstances existed to suggest that impairment indicators
were present, and if present, whether the carrying amount of these assets may exceed its recoverable amount.
How the Matter was addressed in the Audit
The procedures included, but were not limited to, assessing and evaluating management's assessment of whether any
impairment indicators have been identified across the Company’s Trade assets, the indicators being:
• Expiring, or imminently expiring, rights to licences/assets held by the investee Companies
• A lack of flow of information in regards to the investee companies exploration activities and/or production
• Discontinuation of, or a plan to discontinue, exploration activities in the areas of interest by the Investee
Companies
• Sufficient data exists to suggest carrying value of exploration and evaluation assets is unlikely be recovered in
full through successful development or sale by the Investee Companies.
We also reviewed Stock Exchange RNS announcements and Board meeting minutes for the year and subsequent to
year end for activity to identify any indicators of impairment.
We also assessed the disclosures included in the financial statements.
OTHER INFORMATION
The Directors are responsible for the other information. The other information comprises the information included in the
annual report, other than the financial statements and our auditor’s report thereon. 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.
In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or
apparent material misstatements, we are required to determine whether there is a material misstatement in the financial
statements or a material misstatement of the other information. 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.
20
Starvest plc
2017 annual report and financial statements
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF STARVEST PLC - CONTINUED
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 by the Company, 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.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the Directors’ responsibilities statement, 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
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.
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) or ISA IAASB 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.
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.
Keith Fulton
(Senior Statutory Auditor)
For and on behalf of Chapman Davis LLP, Statutory Auditor
London
Chapman Davis LLP is a limited liability partnership registered in England and Wales (with registered number
OC306037).
6 November 2017
21
Starvest plc
2017 annual report and financial statements
INCOME STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2017
Revenue
Cost of sales
Gross profit
Administrative expenses
Amounts written off against trade investments
Amounts written back against trade investments
Operating profit
Interest receivable
Profit on ordinary activities before tax
Tax on profit on ordinary activities
Profit for the financial year attributable to
Equity holders of the Company
Earnings per ordinary share
Basic
Diluted
Note
Year ended 30
September 2017
£
Year ended 30
September 2016
£
526,595
(266,466)
260,129
(274,506)
(277,277)
588,398
296,744
5,585
302,329
-
302,329
117,920
(72,670)
45,250
(231,499)
(382,594)
643,561
74,718
6,395
81,113
-
81,113
0.64 pence
0.54 pence
0.21 pence
0.21 pence
11
11
5
6
8
9
9
There are no other recognised gains and losses in either year other than the result for the year.
All operations are continuing.
The accompanying accounting policies and notes form an integral part of these financial statements.
22
Starvest plc
2017 annual report and financial statements
STATEMENT OF FINANCIAL POSITION
30 SEPTEMBER 2017
Current assets
Trade and other receivables
Trade investments
Cash and cash equivalents
Total current assets
Current liabilities
Trade and other payables
Total current liabilities
Net current assets
Capital and reserves
Called up share capital
Share premium account
Profit and loss account
Equity reserve
Total equity shareholders’ funds
Note
10
11
12
13
Year ended 30
September 2017
Year ended 30
September 2016
£
£
29,589
71,667
1,519,983
1,372,616
432,782
9,856
1,982,354
1,454,139
(101,613)
(101,613)
(132,227)
(132,227)
1,880,741
1,321,912
528,982
1,640,876
(291,617)
2,500
396,185
1,514,673
(593,946)
5,000
1,880,741
1,321,912
These financial statements were approved and authorised for issue by the Board of Directors on 6 November
2017.
Signed on behalf of the Board of Directors
Callum N Baxter
Chairman and Chief Executive
Company No. 03981468
Gemma M Cryan
Executive Director
The accompanying accounting policies and notes form an integral part of these financial statements.
23
Starvest plc
2017 annual report and financial statements
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2017
At 1 October 2015
Share
capital
£
394,173
Share
premium
£
2,118,396
Equity
reserve
£
5,000
Profit and loss
account
£
Total Equity
attributable to
shareholders
£
(1,326,270)
1,191,299
Profit for the period
Total recognised income and
expenses for the period
-
-
-
-
Shares issued
Cancellation of treasury shares
Total contributions by and
distributions to owners
25,012
(23,000)
24,488
(628,211)
2,012
(603,723)
-
-
-
-
-
81,113
81,113
-
651,211
651,211
81,113
81,113
49,500
-
49,500
At 30 September 2016
396,185
1,514,673
5,000
(593,946)
1,321,912
Profit for the period
Total recognised income and
expenses for the period
-
-
-
-
Shares issued
Cost of issue
Equity component of
convertible loan
Total contributions by and
distributions to owners
132,797
-
133,703
(7,500)
-
-
(2,500)
132,797
126,203
(2,500)
-
-
-
-
302,329
302,329
-
-
-
-
302,329
302,329
266,500
(7,500)
(2,500)
256,500
At 30 September 2017
528,982
1,640,876
2,500
(291,617)
1,880,741
24
Starvest plc
2017 annual report and financial statements
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
Cash flows from operating activities
Operating profit
Net interest receivable
Share based payment charge
Increase/(decrease) in debtors
Increase in creditors
Net cash used in operating activities
Cash flows from investing activities
Purchase of current asset investments
Sale of current asset investments
Loan converted into shares
Profit on sale of current asset investments
Increase in investment provisions
Decrease in investment provisions
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Transaction costs of issue of shares
Net cash flows from financing activities
Note
30 September
30 September
2017
£
2016
£
11
11
296,744
5,585
46,500
42,078
16,886
407,793
74,718
6,395
49,500
(16,627)
7,072
121,058
(100,000)
(140,390)
523,883
-
(260,129)
277,277
(588,398)
(147,367)
170,000
(7,500)
162,500
117,300
(10,000)
(45,463)
382,594
(643,561)
(339,520)
-
-
-
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of year
15
422,926
(218,462)
9,856
432,782
228,318
9,856
The accompanying notes and accounting policies form an integral part of these financial statements.
25
Starvest plc
2017 annual report and financial statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
1.
Company Information
Starvest plc is a Public Limited Company incorporated in England & Wales. The registered office is 55 Gower
Street, London, WC1E 6HQ. The Company's shares are listed on the AIM market of the London Stock Exchange.
These Financial Statements (the "Financial Statements") have been prepared and approved by the Directors on
6 November 2017 and signed on their behalf by Callum Baxter and Gemma Cryan.
2.
Basis of Preparation
These financial statements have been prepared in accordance with applicable United Kingdom accounting
standards, including Financial Reporting Standard 102 – ‘The Financial Reporting Standard applicable in the
United Kingdom and Republic of Ireland’ (‘FRS102’), and with the Companies Act 2006. The financial statements
have been prepared on the historical cost basis. There are no fair value adjustments other than to the carrying
value of the Company’s trade investments.
Going concern
The Company's day to day financing is via a bank overdraft and, on occasion, by the use of short term loans. The
Company's formal overdraft facility was last confirmed by the bank in early 2017.
Whilst the Directors fully expect a sufficient overdraft facility to remain in place for the foreseeable future, they are
confident that sufficient funding can be raised as required to meet the Company's current and future liabilities,
which has been confirmed within the cash flow forecast prepared by the Board for the 12 months ending 30
November 2018. In the very unlikely event that such finance could not be raised, the Directors could raise sufficient
funds by disposal of certain of its current asset trade investments, although such a 'forced' sale is to be avoided if
at all possible.
For the reasons outlined above, the Directors are satisfied that the Company will be able to meet its current and
future liabilities, and continue trading, for the foreseeable future and, in any event, for a period of not less than
twelve months from the date of approving the financial statements. The preparation of the financial statements on
a going concern basis is therefore considered to remain appropriate.
3.
Principal Accounting Policies
Revenue
Revenue represents amounts receivable for trade investment sales. Revenue is recognised on the date of sale
contract.
Cost of sales
Direct costs include the book cost of investments sold during the year.
Administrative expenses
All administrative expenses are stated inclusive of VAT, where applicable, as the company is not eligible to reclaim
VAT incurred on its costs.
Taxation
Corporation tax payable is provided on taxable profits at the current rates enacted or substantially enacted at the
balance sheet date.
Deferred tax
Deferred tax is provided on an undiscounted full provision basis on all timing differences which have arisen but
not reversed at the balance sheet date using rates of tax enacted or substantively enacted at the balance sheet
date.
Deferred tax assets are only recognised to the extent that it is probable that they will be recovered against the
reversal of deferred tax liabilities or other future taxable profits, and are recognised within debtors. The deferred
tax assets and liabilities all relate to the same legal entity and being due to or from the same tax authority are
offset on the balance sheet.
26
Starvest plc
2017 annual report and financial statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
3.
Accounting Policies and Basis of Preparation, continued
Trade Investments
Current asset trade investments are stated at the lower of cost and net realisable value, excluding Kuwait Energy
plc which has been valued based on the value advised by the brokers to Kuwait Energy plc. Net realisable value
is the lower of bid price and Directors' valuation. The lower Directors’ valuation is applied where the Company’s
interest in the investee company amounts to typically 3% or more of the investee Company’s issued share capital
or more than 7% of the investment portfolio or where there are factors of which the Directors are aware which call
for some further adjustment. At 30 September 2017, these provisions totalled £143,000 (2016: £131,000).
Investments in unlisted company shares, are remeasured to available market values, or directors’ valuations at
each balance sheet date. Gains and losses on remeasurement are recognised in the income statement for the
period.
Investments in listed company shares, are remeasured to market value at each balance sheet date. Gains and
losses on remeasurement are recognised in the income statement for the period.
Financial instruments:
Trade and other receivables
Trade and other receivables are not interest bearing and are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method less provision for impairment.
Cash and cash equivalents
Cash and cash equivalents include cash on hand and deposits held at call with banks.
Trade and other payables
Trade and other payables are not interest bearing and are recognised initially at fair value and subsequently
measured at amortised cost.
Convertible debt
The proceeds received on issue of the convertible debt are allocated into their liability and equity components and
presented separately in the balance sheet. The amount initially attributed to the debt component equals the
discounted cash flows using a market rate of interest that would be payable on a similar debt instrument that did
not include an option to convert.
The difference between the net proceeds of the convertible debt and the amount allocated to the debt component
is credited direct to equity and is not subsequently re-measured. On conversion, the debt and equity elements
are credited to share capital and share premium as appropriate.
Financial liabilities
All financial liabilities are recognised initially at fair value and are subsequently measured at amortised cost. There
are no financial liabilities classified as being at fair value through the income statement.
Share capital
The Company’s ordinary shares are classified as equity.
Treasury shares
Where the Company acquired its own shares (‘treasury shares’) these are deducted from retained profits. No profit
or loss is recognised on purchase or subsequent sale of treasury shares. On cancellation of treasury shares, the
original purchase costs are deducted from share capital and profit and loss account by a reserve transfer within
equity.
The share premium account
Represents premiums received on the initial issuing of the share capital. Any transaction costs associated with
the issuing of shares are deducted from share premium, net of any related income tax benefits.
27
Starvest plc
2017 annual report and financial statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
4.
Turnover and Segmental Analysis
Turnover
Turnover represents the sales of trade investments on recognised listed stock exchanges. Turnover for the year
to 30 September 2017 was £526,595 (2016: £117,920).
Segmental information
An operating segment is a distinguishable component of the Company that engages in business activities from
which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the Company’s
chief operating decision maker to make decisions about the allocation of resources and assessment of
performance and about which discrete financial information is available.
The Company is to continue to operate as a single UK based segment with a single primary activity to invest in
businesses so as to generate a return for the shareholders. No segmental analysis has been disclosed as the
Company has no other operating segments. The Directors will review the segmental analysis on a regular basis,
and update accordingly.
The Company has not generated any revenues from external customers during the period.
5.
Operating Profit
This is stated after charging:
Auditor’s remuneration
- audit services
Director’s emoluments – note 7
6. Interest receivable
Bank interest receivable
Interest on short term loans to related parties
Year ended 30
September
Year ended 30
September
2017
£
2016
£
14,400
15,600
128,500
135,000
Year ended
30 September
2017
£
85
5,500
5,585
Year ended
30 September
2016
£
242
6,153
6,395
28
Starvest plc
2017 annual report and financial statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
7.
Directors’ Emoluments
There were no employees during the period apart from the directors. No directors had benefits accruing under
money purchase pension schemes.
Year ended 30 September 2017
C Baxter
J Watkins
G Cryan
Year ended 30 September 2016
C Baxter
A C R Scutt
J Watkins
G Cryan
Amounts
paid to
third parties
– see note
£
57,000
14,000
6,500
77,500
Shares
issued in
lieu of
fees – see
note
£
20,000
9,000
3,000
32,000
Amounts
paid to
third parties –
see note
£
40,000
-
-
3,000
43,000
Shares
issued in
lieu of fees
– see note
£
40,000
8,000
18,000
-
66,000
Fees
£
3,000
9,000
7,000
19,000
Fees
£
-
8,000
18,000
-
26,000
Total
£
80,000
32,000
16,500
128,500
Total
£
80,000
16,000
36,000
3,000
135,000
Amounts paid to third parties and shares issued in lieu of fees
Included in the above are the following amounts paid to third parties:
•
•
•
In respect of the management services of Callum Baxter, £77,000 (2016: £80,000) is payable to Baxter
Geological, a company of which he is a director and shareholder. Of this amount, £20,000 was settled in
shares in the Company. At 30 September 2017, £19,000 (2016: £10,000) was outstanding.
In respect of the professional services of John Watkins, FCA, £23,000 (2016: £18,000) of the above
remuneration was payable through his personal business of which £9,000 was settled by way of shares
in the Company. At 30 September 2017, £2,500 (2016: £4,500) was outstanding.
In respect of the professional services of Gemma Cryan, £9,500 (2016: £3,000) was payable to her
personal business. At 30 September 2017 £2,500 (2016: £nil) remained outstanding.
29
Starvest plc
2017 annual report and financial statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
8.
Income Taxes
a) Analysis of charge in the period
United Kingdom corporation tax at 19/20% (2016: 20.00%)
Deferred taxation
Year ended 30
September
Year ended 30
September
2017
2016
£
-
-
-
£
-
-
-
b) Factors affecting tax charge for the period
The tax assessed on the loss on ordinary activities for the year differs from the standard rate of corporation tax in
the UK of 19/20% (2016: 20.00%). The differences are explained below:
Profit on ordinary activities before tax
Year ended 30
September
Year ended 30
September
2017
£
302,329
2016
£
81,113
Profit multiplied by standard rate of tax
59,710
16,223
Effects of:
Utilised against carried forward losses
(59,710)
(16,223)
Losses carried forward not recognised as deferred tax assets
-
-
-
-
9.
Earnings Per Share
The basic earnings per share is derived by dividing the profit for the year attributable to ordinary shareholders by
the weighted average number of shares in issue.
Profit for the year
Weighted average number of Ordinary shares of £0.01 in issue
Earnings per share – basic
Warrants in issue
Weighted average number of Diluted Ordinary shares of £0.01 in issue
Earnings per share – diluted
30
Year ended
30 September
2017
£
302,329
Year ended
30 September
2016
£
81,113
47,287,952
0.64 pence
8,500,000
55,787,952
0.54 pence
38,876,323
0.21 pence
-
38,876,323
0.21 pence
Starvest plc
2017 annual report and financial statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
10.
Trade and Other Receivables
Prepayments
Short term loans to related parties
Year ended
30 September
2017
£
29,589
-
29,589
Year ended
30 September
2016
£
28,014
43,653
71,667
Short term loans to related parties
• At 30 September 2017 loans to Equity Resources ltd (“EQR”) totalling £20,000 remain unpaid. The
purpose of the loans was to assist EQR meet its necessary operational costs during a period when it
seemed inappropriate that EQR should realise cash from its investments. The advances were approved
at 0% interest with no formal agreement as to repayment date. The Company holds 28.41% of the equity
in EQR. However, the Company has made a full provision for these loans, totalling £20,000.
• At 30 September 2017, loans totalling £27,500 advanced to Block Energy plc (“BEP”) (formerly Goldcrest
Resources plc (“GCRP”)) at 20% pa interest in order to assist BEP in funding its necessary operational
costs prior to an expected AIM listing remain unpaid. Interest totalling £11,653 has been accrued on these
loans at the year end. However, the Company has made a full provision for these loans, totalling £39,153.
In 2014 a loan of £20,000 was advanced to Kryptonite 1 plc, formerly Guild Acquisitions plc (“Guild”) at
12% pa interest to assist Guild in funding its necessary operational costs. In June 2016, Guild issued
25,000,000 new Ordinary shares in part settlement of the loan; the remaining balance of £10,000 was
repaid in March 2017. In September 2016, the company was renamed ‘Kryptonite 1 plc’ to reflect its
change of business to investing in blockchain technology.
•
11. Current Trade Investments
Cost
At 30 September 2016
Additions at cost
Disposals
At 30 September 2017
Market value movement & provisions
At 30 September 2016
Released during the year
Provided during the year
At 30 September 2017
Fair value amount
At 30 September 2017 & 2016
The fair value carrying values of the investments above were as follows:
Quoted on AIM
Quoted on NEX
Quoted on foreign stock exchanges
Unquoted at Directors’ valuation
31
30 September
2017
£
30 September
2016
£
5,686,328
100,000
(263,754)
5,522,574
4,313,712
(588,398)
277,277
4,002,591
5,607,775
150,390
(71,837)
5,686,328
4,574,679
(643,561)
382,594
4,313,712
1,519,983
1,372,616
1,370,565
10,692
1,782
136,944
1,519,983
1,257,985
44,424
1,735
68,472
1,372,616
Starvest plc
2017 annual report and financial statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
11.
Current Trade Investments, continued
The Company has holdings in the companies described in the review of portfolio on pages 5 to 12. Of these, the
Company has holdings amounting to 20% or more of the issued share capital of the following companies:
Name
Equity Resources
Limited – see note [1]
Country of
incorporation
England &
Wales
Treslow Limited –
see note [2]
England &
Wales
Class of
shares
held
Percentage
of issued
capital
(Loss) for the
last financial
year
Capital and
reserves at
last
balance
sheet date
Ordinary
28.41%
£(8,860)
£(34,648)
Ordinary
30.1%
-
-
Accounting
year end
31 May
2016
30 April
2017
Note [1]: Equity Resources Limited is considered to be an associated undertaking. Equity accounting has not been
used as Equity Resources Limited has a written down value of £nil.
Note [2]: During 2008, the Company agreed to support Treslow Limited through its pre-IPO processes. The
Company has no representation on the Board of Directors so it does not exert significant influence over Treslow
Limited and so it is not considered to be an associated undertaking despite the holding being in excess of 20% of
the issued share capital. The carrying value is £nil.
The Company’s share of the gross liabilities of its Associates at 30 September 2017 is £9,127. The share of gross
assets has been derived from the latest available financial information in respect of the Associates. The company’s
share of the items making up the profit and loss account and cash flow statements of its Associates has not been
disclosed as the numbers are not considered material.
12.
Trade and Other Payables: Amounts falling due within one year
Trade creditors
Accruals
Loans
30 September
2017
£
33,243
20,870
47,500
101,613
30 September
2016
£
20,242
16,985
95,000
132,227
A bank overdraft facility is secured by a charge over certain of the Company’s investments having a market value
at the balance sheet date of £237,141.
In September 2015, the Company received a loan of £100,000 from a shareholder repayable in 12 months with
an interest rate of 0% and with a conversion option at 3 pence per share. On 5 January 2017, £50,000 of the loan
was satisfied by the issue of 2,500,000 new Ordinary shares at a price of 2 pence per share. In September 2017
the Company agreed with Mr Rowan to extend the existing loan term to 1 November 2018.
32
Starvest plc
2017 annual report and financial statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
13.
The Called up share capital of the Company was as follows:
Share Capital
Called up, allotted, issued and fully paid
As at 30 September 2015
Issued 7 January 2016 in lieu of fees
Treasury shares cancelled 15 March 2016
Issued 12 May 2016 in lieu of fees
Issued 8 July 2016 in lieu of fees
As at 30 September 2016
Issued 17 October 2016 in lieu of fees
Issued 5 January 2017 on conversion of loan
Issued 5 January 2017 in lieu of fees
Issued 11 May 2017 for cash placing
Issued 17 May 2017 in lieu of fees
As at 30 September 2017
Number of Shares
39,417,259
825,000
(2,300,000)
733,332
942,855
39,618,446
725,000
2,500,000
800,000
8,500,000
754,717
52,898,163
£
394,173
8,250
(23,000)
7,333
9,429
396,185
7,250
25,000
8,000
85,000
7,547
528,982
Shares held in treasury
On 15 March 2016, the Company cancelled the 2.3 million treasury shares held since 2007/8. The balance of the
treasury shares was accounted for via a reserve transfer as shown on the statement of changes in equity.
Share Warrants
On 11 May 2017, as part of the Placing, the Company issued 8,500,000 warrants to subscribe for new Ordinary
Shares in Starvest at an exercise price of 4.0p per warrant, within a 24 month exercise period. As at 30 September
2017, 8,500,000 warrants remain outstanding (2016: nil).
14. Share options
The Company’s share option scheme, established on 14 February 2005, expired on 31 January 2015. During the
year ended 30 September 2017 no new options were granted.
15. Cash and Cash Equivalents
Cash at bank
Net cash and cash equivalents
Year ended 30
September 2016
Cash flow
£
£
422,926
9,856
9,856 422,926
Year ended 30
September 2017
£
432,782
432,782
Capital Commitments
16.
As at 30 September 2017 and 30 September 2016, the Company had no commitments other than for expenses
incurred in the normal course of business.
17.
There were no contingent liabilities at 30 September 2017 (2016: £nil).
Contingent Liabilities
18.
There were no related party transactions during the year other than those disclosed in notes 7 and 10.
Related Party Transactions
The key management of the Company are considered to be the Directors, the compensation for whom was
£128,500 (2016: £135,000).
33
Starvest plc
2017 annual report and financial statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
Financial Instruments
19.
The Company’s financial instruments comprise investments, cash at bank and various items such as other
debtors, loans and creditors. The Company has not entered into derivative transactions nor does it trade financial
instruments as a matter of policy.
Credit Risk
The Company’s credit risk arises primarily from short term loans to related parties and the risk the counterparty
fails to discharge its obligations. At 30 September 2017, these loans included £59,153 (2016: £30,000) which have
been provided for in full.
Liquidity Risk
Liquidity risk arises from the management of cash funds and working capital. The risk is that the Company will fail
to meet its financial obligations as they fall due. The Company operates within the constraints of available funds
and cash flow projections are produced and regularly reviewed by management.
Interest rate risk profile of financial assets
The only financial assets (other than short term debtors) are cash at bank and in hand, which comprises money
at call. The interest earned in the year was negligible. The directors believe the fair value of the financial
instruments is not materially different to the book value.
Foreign currency risk
The Company has no material exposure to foreign currency fluctuations.
Market risk
The Company is exposed to market risk in that the value of its investments would be expected to vary depending
on trading activity of its shares.
Categories of financial instruments
Financial assets
Trade investments
Loans and receivables
Financial liabilities
Loans and payables
Year ended 30
September
Year ended 30
September
2017
£
2016
£
1,519,983
1,372,616
29,589
71,667
1,549,572
1,444,283
101,613
101,613
132,227
132,227
Capital Management
20.
The Company’s objective when managing capital is to safeguard the entity’s ability to continue as a going concern
and develop its investment activities to provide returns for shareholders. The Company’s funding comprises equity
and debt. The directors consider the Company’s capital and reserves to be capital. When considering the future
capital requirements of the Company and the potential to fund specific investment activities, the directors consider
the risk characteristics of all of the underlying assets in assessing the optimal capital structure.
34
Starvest plc
2017 annual report and financial statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
Events After the End of the Reporting Period
21.
On 16 October 2017, the Company took part in the IPO of Cora Gold Limited, an exploration company focused on
West Africa. 303,030 new ordinary shares were purchased at a cost of 16.5p equivalent to £50,000.
22.
There is no ultimate controlling party.
Ultimate controlling party
35