DJ Block Commodities Ltd: Interim Results
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Block Commodities Ltd (BLCC)
Block Commodities Ltd: Interim Results
29-March-2019 / 16:19 GMT/BST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
Block Commodities Limited / Epic: BLCC / Sector: Mining
29 March 2019
Block Commodities Limited ('Block Commodities' or 'the Company')
Interim Results
Chairman's Statement
During the period 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.
Trading
During the period the Company prepared to roll out its commodities
eco-system in a Zambian pilot, as an alternative to the Government's limited
e-voucher scheme. 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, with work expected to commence in the final quarter.
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'). 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. The Company continues
to await formal approval of its application to extend the term of the
licence for the third term permitted under the mining code of the Republic
of Congo.
Financial results
The results for the period showed an operating loss of $0.5m (HY18: loss
$0.7m). Finance charges increased to $0.2m (HY18: $0.1m) resulting in a loss
before tax of $0.6m (HY18: $0.8m). Cash balances at 31 December 2018 were
$1,000, (2017: $206,000).
At 31 December 2018, the Group is reporting Net Liabilities of $427,000. The
Company is currently in negotiations with the lender of the loan note with a
view to the conversion of the loan note into equity. This would both return
the Group balance sheet to a net asset position, as well as eliminate the
accruing finance costs going forward.
New commodity opportunity: entry into the cannabis market
The Board has identified a n opportunity to enter the fast-growing legal
medical cannabis market as the operator of medical cannabis production in
jurisdictions where this is legally permitted.
The global legal medicinal cannabis market [1] is expected to reach USD
146.4 billion by end of 2025, according to Grand View Research, Inc. The CBD
market has huge potential and now with growing awareness of its beneficial
nature, has rapidly increasing usage. The European medical cannabis market
alone is expected to be worth 55 billion euros a year by 2028, according to
London-based cannabis industry market intelligence firm Prohibition Partners
[2]. It reckons the total legal market in Europe, including CBD, will be
worth 123 billion euros by then.
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.
Over the last six months, the Company has worked to develop a number of
opportunities to access the development of medicinal cannabis in low-cost
jurisdictions.
To date, Block Commodities has signed an option 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 a minimum of GBP400,000
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.
Scientific Advisory Board and collaboration agreement with Hexis Lab Limited
To help deliver our strategy to enter the medicinal cannabis market, we
announced earlier today a collaboration agreement with Hexis Lab Limited and
the formation of a Scientific Advisory board (SAB). We welcome Dr. Olusola
Idowu the CEO of Hexis Lab and Ian C. Tordoff, an advisor and strategist
specialised in health sector innovation to the SAB.
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 remainder
of the current year
Chris Cleverly
Executive Chairman
29 March 2019
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2018
Unaudited Consolidated Income Statement
For the half year to 31 December 2018
Unaudited Unaudited Audited
6 months to 6 months to Year ended
31 December 31 December 30 June
2018 2017 2018
Note $'000 $'000 $'000
Other trading - - (12)
income / (loss)
Operating (453) (263) (948)
expenses
Impairment of:
- exploration - (271) -
assets
(50) - (100)
- loan to
unquoted company
- - (86)
- fixed assets
- (101) -
- investment in
associate
Other gains 97 (44) (20)
/(losses)
Operating loss (406) (679) (1,166)
Net finance (158) (103) (357)
expense
Loss before (564) (782) (1,523)
taxation
Income tax - - -
expense
Loss for the (564) (782) (1,523)
period
attributable to
owners of the
parent company
Loss per share: 5 (0.01 cents) (0.04 cents) (0.05 cents)
basic and
diluted
All results relate to continuing activities
Unaudited Consolidated Comprehensive Income Statement
For the half year to 31 December 2018
Unaudited Unaudited Audited
6 months to 6 months to Year ended
31 December 31 December 30 June
2018 2017 2018
$'000 $'000 $'000
Loss for the period (564) (782) (1,523)
Other comprehensive income
Exchange translation (12) 89 4
differences on foreign
operations
Total comprehensive income (576) (693) (1,519)
for the period attributable
to owners of the parent
company
Unaudited Consolidated Statement of Financial Position
As at 31 December 2018
Unaudited Unaudited Audited
31 31 30 June
December December
2018
2018 2017
Note $'000 $'000 $'000
Non-current
assets
Intangible assets: exploration 3,000 3,000 3,000
activities 6
Property plant and equipment 3 82 6
Total non-current 3,003 3,082 3,006
assets
Current assets
Inventory - 68 10
Trade and other 1 109 92
receivables
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DJ Block Commodities Ltd: Interim Results -2-
Cash and cash 1 206 153
equivalents
Total current 2 383 255
assets
Total assets 3,005 3,465 3,261
Current
liabilities
Trade and other (1,797) (1,613) (1,719)
payables
Loan note 7 (1,635) (1,412) (1,423)
Net (427) 440 119
(liabilities)/ass
ets
Equity
Issued capital 8 19,345 19,192 19,314
Share based 2,882 2,633 2,882
payment reserve
Foreign exchange translation (586) (488) (573)
reserve
Retained earnings (22,068) (20,897) (21,504)
Total equity (427) 440 119
attributable to
equity holders
Statement of Changes in Equity
Share Foreign
based exchange
payment translatio
reserve n reserve
Ordinary $'000 $'000
share
capital
Retained
earnings
$'000
Total
$'000
$'000
Balance at 1 18,551 2,633 (577) (20,115) 492
July 2017
Loss for the - - - (782) (782)
period
Other
comprehensive
income
Exchange - - 89 - 89
translation
differences on
foreign
operations
Total - - 89 (782) (693)
comprehensive
income for the
period
Transactions
with owners
Issue of shares 641 - - - 641
Total 641 - - - 641
transactions
with owners
Balance at 31 19,192 2,633 (488) (20,897) 440
December 2017
Loss for the - - - (741) (741)
period
Other
comprehensive
income
Exchange - - (85) - (85)
translation
differences on
foreign
operations
Total - - (85) (741) (826)
comprehensive
income for the
period
Transactions
with owners
Issue of shares 122 - - - 122
Issue of - 383 - - 383
options and
warrants
Lapse / - (134) - 134 -
exercise of
share-based
payments
Total 122 249 - 134 505
transactions
with owners
Balance at 1 19,314 2,882 (573) (21,504) 119
July 2018
Loss for the - - - (564) (564)
period
Other
comprehensive
income
Exchange - - (13) - (13)
translation
differences on
foreign
operations
Total - - (13) (564) (577)
comprehensive
income for the
period
Transactions
with owners
Issue of shares 31 - - - 31
Total 31 - - - 31
transactions
with owners
Balance at 31 19,345 2,882 (586) (22,068) (427)
December 2018
Unaudited Consolidated Statement of Cash Flows
For the half year to 31 December Unaudited Unaudited Audited
2018
6 months 6 months year
to to ended
31 31 30 June
December December
2018
2018 2017
Operating $'000 $'000 $'000
activities
Loss before tax (564) (782) (1,523)
Adjustments for:
Impairment of evaluation and - 271 -
exploration assets
Impairment of investment in - 101 -
associate
Impairment of property plant and - - 86
equipment
Impairment of loan to unquoted 50 - 100
company
Profit on disposal of investment - - (24)
Share based payment change - 7 334
Depreciation 3 5 7
Movements in exchange (106) 48 65
Net interest 158 103 357
expense
Operating cash flow before (460) (247) (598)
movements in working capital
Working capital adjustments:
- Decrease / (increase) in 10 (68) (10)
inventory
- Decrease / (increase) in 26 (9) -
receivables
- Increase / (decrease) in 226 (41) 159
payables
Cash used in (198) (365) (449)
operations
Net interest paid - (1) (42)
Net cash outflow from operating (198) (366) (491)
activities
Investing
activities
Loan to unquoted company (50) (100)
Net cash flow from investing (50) - (100)
activities
Financing activities
Issue of shares 96 561 733
Net cash flow from financing 96 561 733
activities
Net (decrease) / increase in (152) 195 142
cash and cash equivalents
Cash and cash equivalents at 153 11 11
start of the period
Effect of foreign exchange rates - - -
Cash and cash equivalents at end 1 206 153
of the period
Notes to the Unaudited Interim Financial Statements
1. General information
During the period 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. The Company was also preparing its entry into the
medicinal cannabis market as announced on 27 March 2019.
Block Commodities is a public limited company incorporated and domiciled in
the Guernsey. The address of its registered office is Richmond House, St
Julian's Avenue, St Peter Port, Guernsey GY1 1GZ.
The Company is admitted to trading on the NEX Exchange Growth market.
The unaudited interim financial statements for the 6 months ended 31
December 2018 were approved for issue by the board on 29 March 2019.
The interim financial statements for the 6 months ended 31 December 2018 and
the 6 months ended 31 December 2017 are unaudited and do not constitute full
accounts. The comparative figures for the year ended 30 June 2018 are
extracts from the annual report and do not constitute statutory accounts.
The unaudited interim financial statements have been prepared in US Dollars
as this is the currency of the primary economic environment in which the
Group operates.
2. Basis of preparation
The condensed consolidated financial statements of the Group for the six
months ended 31 December 2018, which are unaudited and have not been
reviewed by the Company's auditor, have been prepared in accordance with the
International Financial Reporting Standards ('IFRS'), as adopted by the
European Union, accounting policies adopted by the Group and set out in the
annual report for the year ended 30 June 2018 (available at
www.blockcommodities.com [3]). The Group does not anticipate any additional
significant change in these accounting policies for the year ended 30 June
2019. References to 'IFRS' hereafter should be construed as references to
IFRSs as adopted by the EU.
While the financial figures included in this report have been computed in
accordance with IFRSs applicable to interim periods, this report does not
contain sufficient information to constitute an interim financial report as
that term is defined in IFRSs.
The financial information contained in this report also does not constitute
statutory accounts under the Companies (Guernsey) Law 2008, as amended.
3. Significant accounting policies
Basis of accounting
The unaudited interim financial statements have been prepared on the
historical cost basis except for financial instruments measured at fair
value. The principal accounting policies adopted are consistent with those
of the financial statements for the year ended 30 June 2018.
4. Segment reporting
The directors consider that the Group's activities comprise the segments of
fertiliser trading and potash exploration and other unallocated expenditure
in one Geographical segment, Africa.
Revenue represents sales to external customers. Unallocated expenditure
relates to central costs and any items of expenditure that cannot be
directly attributed to an individual segment.
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6 months ending Trading Exploration Unallocated Total
31 December 2018
$'000 $'000 $'000 $'000
Revenue - - - -
Segment results
- Operating loss (105) - (251) (356)
- Impairment - - (50) (50)
- Interest expense - - (158) (158)
Loss before tax (105) - (459) (564)
Income tax - - - -
Loss after tax (105) - (459) (564)
6 months ending Trading Exploration Unallocated Total
31 December 2017
$'000 $'000 $'000 $'000
Revenue - - - -
Segment results
- Operating loss (122) - (185) (307)
- Impairment (101) (271) - (372)
- Interest expense - - (103) (103)
Loss before tax (223) (271) (288) (782)
Income tax - - - -
Loss after tax (223) (271) (288) (782)
Year ending 30 June Trading Exploration Unallocated Total
2018
$'000 $'000 $'000 $'000
Revenue - - - -
Segment results
- Operating loss (402) (14) (563) (979)
- Impairment - (87) (100) (187)
- Interest expense - - (357) (357)
Loss before tax (402) (101) (1,020) (1523)
Income tax - - - -
Loss after tax (402) (101) (1,020) (1,523
)
Year ending 30 June Trading Exploration Unallocated Total
2017
$'000 $'000 $'000 $'000
Revenue - - - -
Segment results
- Operating loss (806) - (438) (1,244)
- Share of loss of (24) - - (24)
associate
- Impairment - (719) - (719)
- Interest expense - - (286) (286)
Loss before tax (830) (719) (724) (2,273)
Income tax - - - -
Loss after tax (830) (719) (724) (2,273)
Segment assets consist primarily of intangible assets, property, plant and
equipment, other receivables and cash and cash equivalents. Segment
liabilities comprise operating liabilities.
Capital expenditure comprises of additions to property, plant and equipment
and intangibles.
The segment assets and liabilities at 31 December 2018 and capital
expenditure for the year then ended are as follows:
Trading Exploration Unallocated Total
$'000 $'000 $'000 $'000
Assets 4 3,000 1 3,005
Liabilities - (955) (2,477) (3,432)
Capital expenditure - - - -
Segment assets and liabilities are reconciled to Group assets and
liabilities as follows:
At 31 December 2018 Assets Liabilities
$'000 $'000
Segment assets and liabilities 3,004 955
Unallocated:
Cash 1 -
Trade and other payables - 842
Loan Note - 1,635
Total 3,005 3,432
The segment assets and liabilities at 31 December 2017 and capital
expenditure for the period then ended are as follows:
Trading Exploration Unallocated Total
$'000 $'000 $'000 $'000
Assets 78 3,089 299 3,465
Liabilities - (1,117) (1,908) (3,025)
Capital expenditure - 132 - 132
Segment assets and liabilities are reconciled to Group assets and
liabilities as follows:
At 31 December 2017 Assets Liabilities
$'000 $'000
Segment assets and liabilities 3,167 1,117
Unallocated:
Other receivables 94 -
Cash 205 -
Trade and other payables - 496
Loan Note - 1,412
Total 3,465 3,025
The segment assets and liabilities at 30 June 2018 and capital expenditure
for the year then ended are as follows:
Trading Exploration Unallocated Total
$'000 $'000 $'000 $'000
Assets 18 3,000 243 3,261
Liabilities - 942 2,188 3,130
Capital expenditure - - - -
Segment assets and liabilities are reconciled to Group assets and
liabilities as follows:
At 30 June 2018 Assets Liabilities
$'000 $'000
Segment assets and liabilities 3,018 942
Unallocated:
Other receivables 90 -
Cash 153 -
Trade and other payables - 765
Loan Note - 1,423
Total 3,261 3,130
5. Earnings per share
The calculation of basic and diluted earnings per share is based on the
following data:
Unaudited Unaudited Unaudited
6 months 6 months year
to to ended
31 31 30 June
December December
2018
2018 2017
$'000 $'000 $'000
Loss for the purpose of basic
loss per share
(564) (782) (1,523)
Number of shares
Weighted average number of 4,826,314 2,209,126 3,112,078
ordinary shares for the purposes ,237 ,360 ,626
of calculating basic and diluted
loss per share
Basic and diluted loss per share (0.01c) (0.04c) (0.05c)
(cents)
-attributable to equity holders
6. Intangible assets Unaudited Unaudited Unaudited
6 months to 6 months to year ended
31 December 31 December 30 June
2018 2017 2018
$'000 $'000 $'000
3,000 3,000 3,000
Evaluation and exploration costs are capitalised in accordance with IFRS6
The asset comprises the Lac Dinga exploration licence in the Republic of
Congo held by La Societé des Potasses et des Mines SA ("SPM") in which the
Group has a 70% interest. The second term of the licence expired in April
2018. Under the Mining Code of the republic of Congo, an application has
been made to extend it for a third two year term. SPM is awaiting formal
approval from the government.
In order to develop the asset and issue a maiden resource statement, the
Group announced on 19 July 2017 that it has entered an agreement with
African Agronomix Limited ("AAX"), whereby AAX has the right to acquire up
to 100% of the Company's interest in Lac Dinga project structured over four
distinct phases. The agreement was effective 17 October 2017 and AAX are
acting as the operator of the project on behalf of SPM. AAX have delayed
commencement of the next phase of exploration work pending receipt of the
license renewal.
7. Loan Note
$'000
At 1 July 2017 1,170
Unpaid interest capitalised 190
Exchange rate adjustment 52
At 31 December 2017 1,412
Exchange rate adjustment 11
At 30 June 2018 1,423
Unpaid interest capitalised 306
Exchange rate adjustment (94)
At 31 December 2018 1,625
On 1 September 2017, the Company, with agreement of the lender, renewed the
term of the loan for a further 2 years. Unpaid interest of GBP145,669 was
rolled into the principal outstanding. The loan is repayable on the earlier
of:
· 1 September 2019;
· completion by the Company of equity financing which (in aggregate)
raises more than GBP2.0m; and
· completion of any non-trade finance debt financing.
In addition, the lender has the right at any time to convert any amount of
the loan outstanding at a conversion price of 0.025p per ordinary share or,
if lower, at a price per share at which shares are issued for cash following
the renewal of the loan.
Subject to certain trigger events the lender agreed to reduce the interest
on the loan note to 10% per annum, payable monthly. In this context, the
Company was required to make a minimum monthly payment to the lender of at
least GBP5,000 in respect of accruing interest, and any balance of such
accruing but unpaid interest shall be rolled-up as additional loan capital.
Interest will be charged on the additional loan capital on 1 September 2018
and 1 September 2019 only.
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