DJ Block Commodities Ltd: Final Results
Block Commodities Ltd (BLCC)
Block Commodities Ltd: Final Results
03-Dec-2019 / 07:00 GMT/BST
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3 December 2019
BLOCK COMMODITIES LIMITED
("Block Commodities" or the "Company")
Block Commodities Limited / Epic: BLCC / Sector: Mining
Final Results
Block Commodities Limited is pleased to announce its final audited results
for the year ended 30 June 2019 (the "Annual Report and Accounts 2019").
Copies of the Annual Report and Accounts 2019 will be made available on the
Company's website at www.blockcommodities.com [1].
Chairman's Statement
During the year under review, the Company continued its evolution from
solely 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.
Farmer 3.0 Eco system
Leveraging its connections in Africa, the Company has worked on 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 loans are repaid by the delivery of
outputs, either direct to a contracted off-taker or to Company warehouses
where a system of warehouse receipts will enable SSF produce to be
consolidated and traded on local commodities exchanges, further enhancing
the return to the SSF and the Company. Over time, 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.
During the year, the key partnerships to build this platform were put in
place and pilot projects in Zambia and Uganda were established. However
delays in procuring inputs lead to these being postponed. No trading has
been possible in the year under review.
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.
After extensive delays, the licence was formally renewed for a further two
year period in July 2019. The renewal of the license was the key condition
precedent to moving forward with the project. With the rainy season
commencing in October, no significant work was able to be undertaken by our
farm-in partner, African Agronomix limited ("AAX"). Preliminary planning
work for a 10,000 m drilling campaign has been carried out. 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 AAX would mobilise to
start the work set out in the agreement.
Financial Results
The trading result for the year showed a net trading loss of $nil (2018:
$12,000) as existing inventory and receivables were unwound. Operating
expenses were reduced to $0.7m (2018: $1.0m). After other gains of $0.1m,
and the impairment charge in respect of the Company's investment in Vipa of
$0.1m (2018: impairment charges of $0.2m) the loss before interest fell to
$0.7m (2018: 1.1m). Finance charges for the period were $0.4m (2018: $0.4m)
which led to the Group reporting a loss before and after tax of $1.1m (2017:
$1.5m). During the year the Company raised $27,000 in equity and $333,000 in
new convertible debt. Accordingly, the Group is reporting net liabilities of
$0.9m (2018: net assets $0.1m). This includes current liabilities of $4m
(2018: $3m) which includes $1.2m of accrued expenses (2018: $0.8m).
Subsequent to the year end, the convertible notes have converted
automatically into equity and additional equity has been raised. In
addition, the Company is in negotiation to restructure its $1.6m loan
facility with its lender and should the loan be converted into shares then
shareholders holding will be diluted accordingly. Cash balances at 30 June
2019 were $80,000 (2018: $153,000).
Going concern
The Group's business activities, together with the factors likely to affect
its future development, performance and position are set out above and the
risks facing the business are outlined within the Corporate Governance
report.. Note 4 to the financial statements include the Group's objectives,
policies and processes for managing its capital; its financial risk
management objectives; details of its financial instruments and hedging
activities; and its exposures to credit risk and liquidity risk.
The board has detailed its considerations relating to Going Concern in note
1 of the financial statements. The Group's forecast cash-flows are dependent
on the negotiation and fulfillment of new contracts that are not yet
finalised and the successful conclusion of related financing lines. Without
these cash-flows the Group will need to raise additional finance either
through borrowing or the issue of new equity. In addition, the bridge loan
facility (see note 17) fell due for repayment on 1 September 2019.
Negotiations to restructure the facility are being held with the lender.
Notwithstanding this uncertainty, the directors are confident that, with an
anticipated equity raise, renegotiation of the loan facility and current
cash there will be sufficient cash resources to enable the Group to pay
debts as they fall due and to continue the development of its operations for
the foreseeable future and thus they continue to adopt the going concern
basis of accounting in preparing the annual financial statements. The
auditors have made reference to going concern as a material uncertainty
within their audit report.
Outlook
With the renewal of the Lac Dinga, license and the farm in agreement with
AAX, the Group and its partners are in a position to progress the project
and establish a stake in a potash resource, a key agricultural input. The
farm-in agreement provides that AAX will both manage and fund the work
program, with no significant demand on the Group's financial or management
resources in the initial two phases of the project through to the initial
publication of a resource estimate. Should a commercial resource be
confirmed, then the Group has a right to participate or bring in additional
partners as the project progresses.
In addition the board are aiming to expand the company's current investment
focus, which aims to maximise the value of African agricultural commodities
through the deployment of blockchain technology, to enable the Company to
invest in projects in the developing market for producing and/or
distributing Medicinal Cannabis, derivatives of it and/or related products.
The Company has sent a circular to shareholders today asking them to
consider whether the Company should make investments in the Medicinal
Cannabis sector. These products could include but would not be limited to
nutraceuticals, dietary supplements and cosmetic products which contain
cannabis or hemp (cannabis which contains less than 0.2%
tetrahydrocannabinol ("THC") and THC derived cannabinoids.
The board has already taken legal advice on the new strategy and the
countries where it initially intends to operate. This advice has confirmed
that, in principle, the intended strategy of the Company does not breach the
United Kingdom's Proceeds of Crime Act 2002.
On 21 November 2019, the Board was strengthened with the appointment of Ian
Tordoff as Chief Executive Officer of the Company. He has extensive
experience in tracking the evidence base for the efficacy of cannabidiol
(CBD) and tetrahydrocannabinol (THC), two natural compounds found in
cannabis plants and their associated treatments. Furthermore, he has built
strong relationships through this work with relevant producers,
laboratories, "brands" and customers.
In addition to Ian's appointment, the Company is looking to build a strong
Scientific Advisory Team of external consultants to assist the board in
implementing this investment strategy if approved by shareholders at the
coming General Meeting.
The Board, in addition to its Lac Dinga asset, believe that the Company now
has a firm foundation upon which to build a growing revenue generating
business and look forward to reporting continued progress in the current
year.
Chris Cleverly
Chairman
2 December 2019
DIRECTORS' REPORT for the year ended 30 June 2019
The directors of Block Commodities Limited ("Block Commodities" or the
"Company") hereby present their report together with the audited
Consolidated Financial Statements for the year ended 30 June 2019.
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Principal activities, business review and future developments
A review of the Group's activity and prospects is given in the Chairman's
Statement on pages 2 to 3. During the year under review the Group's
principle activities were the continued development of a trading platform
for agricultural inputs using blockchain technology and working to renew the
Lac Dinga potash exploration licence. The Group also announced it was
looking to invest into the Medicinal Cannabis and Wellness market, where it
is envisaged that the blockchain will be influential. A review of the risks
and uncertainties impacting on the Group's long term performance is included
in the Corporate Governance report on pages 7 to 9. Details of the Group's
exposure to foreign exchange and other financial risks are included in note
4.
Results and dividend
The Group results show a loss after taxation for the year attributable to
the equity holders of the Company of $1.1m (2018 loss $1.5m). The directors
do not recommend payment of a dividend (2018: $nil).
Post balance sheet events
On 12 July 2019, the Lac Dinga exploration license was formally renewed by
the government of the republic of Congo (see note 11).
On 15 November 2019, the group announced that it had raised GBP388,000 through
the issue of GBP133,000 new ordinary shares at a price of 0.02p and GBP255,000
of Convertible Loan Notes with a conversion price of GBP0.0002 per ordinary
share These convert automatically into equity once the necessary authorities
had been obtained at the Annual general meeting held on 13 May 2019 and were
formally issued on 15 November 2019.
Directors
The directors who served since 1 July 2018 were as follows:
CJ Cleverly Chairman
I C Tordoff Chief Executive appointed 21 November 2019
E Pungong* Non-Executive Director *
M Simmonds * Non-Executive Director *
* member of the audit and remuneration committees
Directors' interests
The directors serving during the year had the following beneficial interests
in the shares of the Company:
Ordinary shares
30 June 2019 30 June 2018
or date of appointment
C J Cleverly 181,909,909 181,909,909
I C Tordoff - -
E Pungong 12,500,000 12,500,000
M Simmonds 52,500,000 52,500,000
The following share options and warrants have been granted to directors and
remain unexercised at the year end:
Options:
Director Date of Number of Exercise Date Expiry
grant options price from date
which
Exercisa
ble
CJ Cleverly 27 1,000,000 0.90p 27 27 August
February August 2020
2015 2016
CJ Cleverly 11 10,000,000 0.55p 11 11 August
August August 2020
2015 2015
CJ Cleverly 29 March 50,000,000 0.055p 29 March 28 March
2019 2019 2023
CJ Cleverly 29 March 40,000,000 0.125p 29 March 28 March
2019 2019 2023
CJ Cleverly 29 March 25,000,000 0.2p 29 March 28 March
2019 2019 2023
E Pungong 29 March 10,000,000 0.055p 29 March 28 March
2019 2019 2023
E Pungong 29 March 8,000,000 0.125p 29 March 28 March
2019 2019 2023
E Pungong 29 March 5,000,000 0.2p 29 March 28 March
2019 2019 2023
M Simmonds 29 March 20,000,000 0.055p 29 March 28 March
2019 2019 2023
M Simmonds 29 March 16,000,000 0.125p 29 March 28 March
2019 2019 2023
M Simmonds 29 March 10,000,000 0.2p 29 March 28 March
2019 2019 2023
Warrants:
Director Date Exercise Date from which Expiry
of price date
grant
Number Exercisable
E Pungong 19 2,500,000 3p 19 October 2015 30 June
Octobe 2020
r 2015
E Pungong 19 15,000,000 5p 19 October 2015 30 June
Octobe 2020
r 2015
E Pungong 19 15,000,000 8p 19 October 2015 30 June
Octobe 2020
r 2015
M Simmonds 10 3,750,000 3p 10 November 2015 30 June
Novemb 2020
er
2015
M Simmonds 10 15,000,000 5p 10 November 2015 30 June
Novemb 2020
er
2015
M Simmonds 10 17,500,000 8p 10 November 2015 30 June
Novemb 2020
er
2015
M Simmonds 10 10,000,000 10p 10 November 2015 30 June
Novemb 2020
er
2015
No share options or warrants were exercised by directors during the year
(2018: $nil).
On 15 November 2019 CJ Cleverley was allotted a further 379,144,700 shares
as payment of fees and settlement of arrears, reducing creditors by $90,000.
On appointment on 21 November IC Tordoff held 300,000,000 zero cost options
to subscribe for new ordinary shares, of which 150,000,000 have vested and
150,000,000 will vest when the Company's share price is in excess of GBP0.002
for a period of 14 consecutive days.
There have been no other changes in directors' interests in shares or
options between 1 July 2019 and the date of this report.
Substantial shareholdings
To the best of the knowledge of the board, except as set out in the table
below, there are no persons who, as of the date of this report, are the
direct or indirect beneficial owners of, or exercise control or direction
over 3% or more of the Ordinary Shares in issue of the Company.
Number of Ordinary Shares % Holding
Grainways Inc 973,480,000 13.22%
Chris Cleverly 561,054,609 7.62%
John Glendenning 250,000,000 3.40%
Employee involvement policies
The Group places considerable value on the awareness and involvement of its
employees in the Group's performance. Within bounds of commercial
confidentiality, information is disseminated to all levels of staff about
matters that affect the progress of the Group and that are of interest and
concern to them as employees.
DIRECTORS' REPORT for the year ended 30 June 2019 (continued)
Creditors' payment policy and practice
The Group's policy is to ensure that, in the absence of dispute, all
suppliers are dealt with in accordance with its standard payment policy to
abide by the terms of payment agreed with suppliers when agreeing the terms
of each transaction. Suppliers are made aware of the terms of payment.
Social and community issues
The Group recognises the value of employment and training to the continued
economic growth in the countries in which it operates. The Group is
developing policies to ensure its expertise and specialist skills and
facilities are made available to the broader community.
Environmental issues
The Group places great emphasis upon good environmental practice and respect
for local community values.
African empowerment
As its ambitions for growth and diversification are realised, the Group will
seek to empower, upskill and recruit local African staff, providing new
opportunities for jobs of all skills including senior management.
Provision of information to auditor
The directors who were in office on the date of approval of these financial
statements have confirmed that, as far as they are aware, there is no
relevant audit information of which the auditor is unaware. Each of the
directors have confirmed that they 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 it has been communicated to the
auditor.
Auditors
PKF Littlejohn LLP has indicated its willingness to continue in office and a
resolution to reappoint them will be presented to the annual general
meeting.
Electronic communications
Additional information on the Company can be found on the Company's website
at www.blockcommodities.com [1].
The maintenance and integrity of the Company's website is the responsibility
of the directors; the work carried out by the auditor does not involve
consideration of these matters and accordingly, the auditor accepts no
responsibility for any changes that may have occurred to the financial
statements since they were initially presented on the website.
The Company's website is maintained in compliance with NEX exchange rule 75.
On behalf of the Board
CJ Cleverly
Chairman
2 December 2019
CORPORATE GOVERNANCE
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