DJ Block Commodities Ltd: Full Year Results
(Editor's note: This item was supposed to be published at 1016 GMT on March 28).
Block Commodities Ltd (BLCC)
Block Commodities Ltd: Full Year Results
28-March-2019 / 10:15 GMT/BST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
28 March 2019
Full Year Results
Block Commodities Limited (NEX: BLCC), the innovative commodity trader
operating in Africa, is pleased to announce its audited results for the year
ended 30 June 2018. The publication has been delayed pending progress on the
proposed acquisition of the Company by The Eelleet Network Corp. ("TEN") and
the subsequent entry of the Company into the medicinal cannabis market.
Chairman's Statement
During the year under review, the Company continued its evolution from a
junior exploration company with its Lac Dinga potash exploration licence, to
a forward-thinking agri-tech company in sub-Saharan Africa, deploying new
technologies to maximise value in African agriculture. Leveraging its
connections in Africa, the Company is developing a platform to empower small
scale farmers ("SSF") to raise productivity and secure better returns for
produce, while establishing African communities as significant future global
agricultural players. The platform uses blockchain technology to provide
loans of utility tokens to the SSF which are then used to procure inputs
from the Company.
Change of Name
On 12 February 2018, the Company changed its name from African Potash
Limited to Block Commodities Limited in order to reflect this evolution in
strategy.
Farmer 3.0 Ecosystem
On 22nd March 2018, the Company entered an agreement with Wala, a
blockchain-powered financial services platform, and Dala, a crypto-currency
token issuer that will support the further development of scalable,
blockchain-enabled financial platforms for developing markets. Initially the
Wala platform will provide loans of Dala tokens to the SSF. These tokens can
only be used to purchase inputs from Block Commodities Limited. The loans
will bear interest at rates significantly lower than local market rates.
Close relationships with the SSF are maintained throughout the growing
season through on-the ground teams monitoring crop development and providing
advice. The loans are repaid by the delivery of outputs, either direct to a
contracted off-taker or to Company warehouses where, together with our
partner FinComEco, a system of warehouse receipts will enable SSF produce to
be consolidated and traded on local commodities exchanges developed by
FinComEco, further enhancing the return to the SSF and the Company.
Overtime, as the volume of commodities traded on the local and regional
exchanges scales up, the purchase of inputs will be secured with derivatives
traded on these exchanges. The blockchain will be fundamental to the
development of this Ecosystem.
Vipa Acquisition
After extensive due diligence, the Board has determined that the proposed
acquisition of Vipa Holdings (Pty) limited ("Vipa"), a South African
wholesaler of commodity and speciality fertilisers, announced on 14 March
2018 will no longer proceed as originally envisaged. The Company continues
to work with the Vipa management team to explore the possibility of forming
the fertiliser procurement arm of the Ecosystem.
Trading
The focus during the period was on sales to farmers registered under the
Zambian Government's e-voucher scheme. There were significant delays in
funding the e-vouchers and, in many areas, no vouchers were loaded. This
limited our ability to turn inventory rapidly enough to meet our targeted
volumes. All inventory has now been sold. This experience showed that there
is indeed a pressing need for our blockchain based commodities eco-system.
Subsequent to the year end, the Company prepared to roll out its commodities
eco-system in a Zambian pilot. An off-taker was secured and a group of local
farmers engaged to run a pilot over 300ha. However, with the seasonal rains
arriving earlier than forecast and delays in procuring inputs, the pilot has
had to be postponed.
Uganda
Work continues with our off-take partner Pure Grow Africa Limited, to
develop a pilot program for the Farmer 3.0 Ecosystem. It was initially
envisaged to engage with up to 1,000 farmers, however delays in obtaining
the necessary product import licences, mean that the initial pilot will be
of a smaller scale using product procured in country. This is now ready to
be rolled out.
Lac Dinga
The Company retains its interest in the exploration side of the fertiliser
industry through its 70% interest in La Société des Potasses et des Mines
S.A. ('SPM'), which holds the exclusive right to conduct exploration
activities for potash salts over the Lac Dinga Project Area ('Lac Dinga' or
the 'Project') in highly prospective Kouilou region in the Republic of
Congo. The second term of the Project license expired on 25 April 2018. SPM
applied for a renewal of the license for a further two years in early 2018
in line with the provisions set out in the Mining Code and is now awaiting
formal cabinet approval by the Government of the Republic of Congo. The farm
out agreement with African Agronomix limited ("AAX") signed in July 2017,
states that the licence must be in good standing before AAX can commence
work on the Project. As set out in note 11 to the financial statements, the
Company undertook an impairment review of the Project and a key assumption
was that the licence is renewed and AAX would mobilise to start the work set
out in the agreement. No additional impairment is considered necessary.
Potash Market Outlook
Over the last year, we have also seen a positive move in the potash market
as agriculture commodities grow stronger. Over the past 12-months, the price
of potash has risen by close to 25%, reaching $350 a ton and experts believe
the amount will keep increasing. This scenario is sparked by a tight balance
in the supply-demand scale: Demand is expected to grow about 1 million
metric tons this year, prompted by wheat, corn and soy - while net
incremental supply changes add up to an increase of about 700,000 metric
tons. Potash is a fertiliser which helps crops retain water while also
improving their taste and overall quality.
Joint Venture with SG Inc.
Block Commodities and SG Inc. have undertaken an initial prefeasibility
study into a project to develop mineral opportunities and downstream
resources in the Republic of Congo. The Company is seeking additional
investment partners to enable this project to move forward.
Financial Results
The trading result for the year showed a net loss of $12,000 (2017: profit
$9,000). Operating expenses were reduced to $1.1m (2017: $ 1.3m). After the
impairment charge in respect of fixed assets of $0.1m and the impairment of
the Company's initial investment in Vipa of $0.1m (2017: impairment charge
in respect of exploration expenses of $0.7m) the loss before interest fell
to $1.1m (2017:2.0m). Finance charges for the period were $0.4m (2017:
$0.3m) which led to the Group reporting a loss before and after tax of $1.5m
(2017: $2.3m). Cash balances at 30 June 2018 were $153,000 (2016: $11,000).
Outlook
On 21 September 2018, the Company announced that it had signed a Letter of
Intent in connection with the proposed acquisition of the Company by The
Eelleet Network Corp. ("TEN") with a view to having the Company's shares
listed on the Canadian Securities Exchange and requested that the Company's
shares be suspended. The Company is no longer pursuing this transaction as,
Over the past few months, during our suspension from NEX Exchange Growth
Market, there have been some key developments which lead the Board to
believe that the Company can continue to raise additional capital on NEX
Exchange Growth Market to develop its blockchain platform with the addition
of medicinal cannabis to the output product portfolio.
New Commodity Opportunity: Entry into the Cannabis Market
The Board has identified a significant opportunity to enter the fast-growing
legal cannabis market in a prime position as the operator of cannabis
production in jurisdictions where this is legally permitted.
The global legal marijuana market [1] is expected to reach USD 146.4 billion
by end of 2025, according to Grand View Research, Inc. In 2018, more than
six new countries announced legislation with patient numbers growing by 40%
month on month. Cannabis-based medicine [2] is now legal in 22 countries in
Europe, with a further 12 decriminalising the recreational use of personal
amounts of the drug.
The potential number of medicinal cannabis patients in the UK is estimated
to reach as high as 2.9 million, underlining the growing long-term
opportunities available in this industry. Europe is poised to become one of
the world's largest cannabis, hemp and cannabidiol (CBD) importers as the
European medical cannabis market [3] could be worth over EUR55bn by 2028.
Entering the cannabis market represents a strategic move for Block
Commodities. Leveraging on its existing connections in Africa, the Board
believes that the use of blockchain technology can add significant value to
the production and distribution of cannabis products.
The Company has worked to develop a number of opportunities to access the
(MORE TO FOLLOW) Dow Jones Newswires
March 28, 2019 17:48 ET (21:48 GMT)
development of medicinal cannabis in low-cost jurisdictions. This includes
options to acquire interests in cannabis licences in Sierra Leone, Lesotho,
Niger, and Malta, all of which will be formalised once capital is raised.
To date, Block Commodities has signed a Heads of Agreement with shareholders
of Greenbelt Company Limited to acquire a 100% interest ("Sale Shares").
Greenbelt was granted a licence by the Sierra Leone Minister of Agriculture
and Forestry for medical cannabis production and processing in November
2018. Block Commodities plans to fast-track and streamline operations in
Sierra Leone as soon as the acquisition is finalised.
Financing
As announced on 27 March 2019 the company has raised £400,000 to enable it
to acquire an option to acquire an exclusive licence to produce, process and
market medicinal cannabis and for general working capital purposes.
In addition, the Company will now press ahead with its Uganda pilot as a
proof of concept for the commodities eco-system platform.
The Board believe that the Company now has a firm foundation upon which to
build a growing revenue generating business built around our blockchain
platform and look forward to reporting continued progress in the current
year.
Chris Cleverly
Executive Chairman
28 March 2019
CONSOLIDATED INCOME STATEMENT
For the year ended 30 June 2018
2018 2017
$'000 $'000
Other trading (loss) / income (12) 9
Operating expenses (948) (1,251)
Share of loss of associate - (24)
Impairment of loan to unquoted company (100) -
Impairment of evaluation and exploration - (719)
costs
Impairment of fixed assets (86) -
Other losses (20) (2)
Operating loss (1,166) (1,987)
Finance expense (357) (286)
Loss before taxation (1,523) (2,273)
Income tax - -
Loss for the year attributable to the
owners of the parent company
(1,523) (2,273)
Earnings per share - attributable to the
owners of the parent company: - basic and
diluted (cents)
(0.05c) (0.17c)
All results relate to continuing activities.
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2018
2018 2017
$'000 $'000
Loss for the year (1,523) (2,273)
Other comprehensive (loss) / income for the
year
Items that may be reclassified subsequently
to profit or loss
- Foreign exchange translation differences 4 46
Total comprehensive loss for the year
attributable to the owners of the parent
company
(1,519) (2,227)
There is no taxation arising on other comprehensive income.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June 2018 30 June 2017
Note $'000 $'000
ASSETS
Non-current assets
Intangible assets: 3,000 3,000
exploration
activities
Investment in - 101
associate
Property, plant 6 99
and equipment
Total non-current 3,006 3,200
assets
Current assets
Inventory 10 -
Trade and other 92 25
receivables
Cash and cash 153 11
equivalents
Total current 255 36
assets
TOTAL ASSETS 3,261 3,236
LIABILITIES
Current
liabilities
Trade and other (1,719) (1,574)
payables
Loan note (1,423) (1,170)
Total current (3,142) (2,744)
liabilities
NET ASSETS 119 492
EQUITY
Share capital 19.314 18,551
Share based 2,882 2,633
payment reserve
Foreign exchange (573) (577)
translation
reserve
Retained losses (21,504) (20,115)
Total equity
attributable to
the owners of the
parent company
119 492
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 June 2018
2018 2017
Note $'000 $'000
Operating activities
Loss before tax (1,52 (2,27
3) 3)
Adjustments for:
- Depreciation 7 -
- Profit on disposal of (24) (37)
investments
- - 719
Impairm
ent of
evaluat
ion and
explora
tion
assets
- Impairment of property, plant 86 -
and equipment
- Impairment of loan to 100 -
unquoted company
- Share of loss of associate - 24
- Foreign exchange 65 (4)
- Share based payment 334 98
- Finance expense 357 286
Operating cash flow before movements in (598) (2,16
working capital 6)
Working capital
adjustments:
- Increase in 10 -
inventory
- Decrease in - 51
receivables
- Increase in 158 659
payables
Cash used in (449) (478)
operations
Finance expense (42) (152)
Net cash used in (491) (630)
operating
activities
Investing
activities
Purchase of - (626)
evaluation and
exploration assets
Sale of quoted - 80
investments
Purchase of - (14)
property, plant and
equipment
Loan to unquoted (100) -
company
Net cash used in (100) (560)
investing
activities
Financing
activities
Proceeds from issue 733 713
of share capital
Drawdown of loan - 190
note
Net cash from 733 903
financing
activities
Net increase / (decrease in cash and 142 (287)
cash equivalents
Cash and cash 11 298
equivalents at
start of the year
Cash and cash 153 11
equivalents at end
of the year
Non cash transactions
The principal non cash transactions relate to:
2018 2017
Shares issued in settlement of: $'000 $'000
- Advisory and consultancy and directors' fees 232 182
- Acquisition of associate - 125
Share based payments 334 98
566 405
The Directors of the Company accept responsibility for the content of this
announcement.
For further information, please contact:
Block Commodities Limited
Chris Cleverly info@blockcommodities.com
NEX Exchange Corporate Adviser:
Alexander David Securities Limited
David Scott - Corporate Finance +44 (0) 20 7448 9820
James Dewhurst - Corporate Broking +44 (0) 20 7448 9820
Public and Investor Relations:
Cassiopeia Services - Stefania stefania@cassiopeia-ltd.com
Barbaglio
ISIN: GG00B4QYTJ50
Category Code: FR
TIDM: BLCC
Sequence No.: 7979
EQS News ID: 792953
End of Announcement EQS News Service
(END) Dow Jones Newswires
March 28, 2019 17:48 ET (21:48 GMT)
