Tectonic Gold Plc - Half-year Report
PR Newswire
London, June 29
30 June 2020
TECTONIC GOLD PLC
("Tectonic Gold" or the "Company")
Unaudited Interim Results to 31 December 2019
MANAGING DIRECTOR'S STATEMENT
Dear Shareholder,
I am pleased to present the unaudited financial results for ("Tectonic Gold" and/or "the Company") and its controlled entities (the Group) for the half year ended 31 December 2019.
During the period, management's focus was on progressing the South African projects and finding a partner to commercialise the diamond mining contract. The Company also investigated heavy mineral sands coincident with the alluvial diamond ores and submitted an application for a mining tenement to extract and process heavy mineral sands. The diamond project attracted investor interest and is now being funded into production by London listed specialist resources investment company, Kazera Global Investments Plc. Tectonic has retained a non-diluting 10% interest in the diamond mining subsidiary, Deep Blue Minerals Pty Ltd, as announced on 4 June 2020.
Tectonic Gold's Australian subsidiary, Signature Gold Pty Ltd, has submitted an application for Queensland State Government funding assistance for a drilling program at the company's Mount Cassidy project. A decision on this is expected by the end of July 2020 and if successful it is intended to undertake drilling in the October quarter.
On 11 March 2020, the World Health Organisation ("WHO") declared the Coronavirus disease 2019 (COVID-19) a pandemic. The pandemic has adversely affected the global economy, including an increase in unemployment, decrease in consumer demand, interruptions in supply chains, and tight liquidity and credit conditions. Consequently, governments around the world have announced monetary and fiscal stimulus packages to minimise the adverse economic impact. However, the COVID-19 situation is still evolving, and its full economic impact remains uncertain.
The Company has several assets where the value may be impacted by COVID-19. At the date these financial statements were approved by the Directors the extent of the impact COVID-19 on the Company's assets cannot be reasonably estimated at this time.
The pandemic has impacted the Company's operations with Government mandated bans on mass gatherings and social distancing measures resulting in disruption to the Company's operations, this disruption is expected to negatively impact the ability for the Company to conduct drilling and its parent entity's ability to raise capital, refer Going Concern Note 2.
The Directors and management are continually monitoring and managing the Company's operations closely in response to COVID-19 however the extent of the impact COVID-19 may have on the Company's future liquidity, financial performance and position and operations is uncertain and cannot be reasonably estimated at the date these financial statements were issued.
RESULTS AND COMPARITIVE INFORMATION
The Group incurred a profit after tax for the reporting period of £23,569 (31 Dec 2018: £102,888 profit as restated).
During the reporting period Signature Gold received a Research and Development (R&D) Tax Incentive Rebate of approximately £152,163 (2018: £$ 330,248) for the financial year ended 30 June 2019.
The R&D Tax Incentive Rebate is an Australian Government program under which eligible companies receive cash refunds of up to 45% of eligible expenditure on research and development.
Comparative period adjustments
The 2018 balances were restated in the 2019 financial statements as the Company's auditor, PKF Littlejohn LLP found an error in the accounting treatment for the reverse acquisition during the 2019 audit. The 2018 balances were also restated to account for certain costs amounting to £45,250 that were not accrued for at the time and the fair value of options that were issued on 25 June 2018 which amount to £68,900. Accordingly, comparative information for the reporting period ended 31 December 2018 in this report has been re-stated.
For and on behalf of the Board.
Brett Boynton
Director
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 31 DECEMBER 2019
The accompanying notes form part of these financial statements.
| NOTE | 6 MONTHS TO 31 DEC 2019 UNAUDITED | 6 MONTHS TO 31 DEC 2018 UNAUDITED Restated | 12 MONTHS TO 30 JUNE 2019 AUDITED | |
| GBP | GBP | GBP | ||
| Revenue from continuing operations | 47,513 | - | 31,862 | |
| Expenses from continuing operations: | ||||
| Accounting and audit fees | (12,629) | (37,567) | (88,673) | |
| Administration and office costs | (9,656) | (20,314) | (27,077) | |
| Corporate costs | (33,564) | (52,541) | (115,806) | |
| Amortisation and depreciation | (882) | (588) | (1,338) | |
| Employee benefits, management fees and on costs | (22,824) | (59,995) | (89,777) | |
| Exploration and tenement costs | (25,922) | (18,629) | (36,388) | |
| Insurance | - | (7,796) | (17,233) | |
| Legal expenses | - | 400 | - | |
| Options fee and associated costs | - | - | 396 | |
| Impairment of exploration costs | - | - | (703,936) | |
| Business Development costs | (9,257) | - | - | |
| Bad debt expense | - | - | (64,173) | |
| Other expenses | (61,373) | (30,330) | (38,945) | |
| (Loss) from continuing operations before income tax | (128,594) | (227,360) | (1,151,088) | |
| Income tax benefit | 152,163 | 330,248 | 326,214 | |
| Net profit/(loss) for the reporting period | 23,569 | 102,888 | (824,874) | |
| Other comprehensive income, net of tax | (46,344) | (23,837) | (34,430) | |
| Total comprehensive (loss)/income for the year | 22,775 | 79,051 | (859,304) | |
| Earnings per share attributable to owners of the company | ||||
| Basic and diluted (pence per share) | ||||
| From continuing operations | 5 | 0.003 | 0.015 | (0.120) |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2019
| 31 DEC 2019 | 31 DEC 2018 | 30-JUN-19 | |||
| GROUP UNAUDITED | GROUP UNAUDITED Restated | GROUP AUDITED | |||
| NOTE | GBP | GBP | GBP | ||
| ASSETS | |||||
| NON-CURRENT ASSETS | |||||
| Plant and equipment | 5,504 | 7,398 | 6,603 | ||
| Exploration and evaluation expenditure | 2,604,751 | 3,285,833 | 2,663,707 | ||
| TOTAL NON-CURRENT ASSETS | 2,610,255 | 3,293,231 | 2,670,310 | ||
| CURRENT ASSETS | |||||
| Cash and cash equivalents | 130,224 | 177,009 | 34,875 | ||
| Trade and other receivables | 105 | 14,142 | 7,913 | ||
| Investments | - | 40,122 | 40,122 | ||
| Other assets | 6 | 339,485 | 358,498 | 360,412 | |
| TOTAL CURRENT ASSETS | 469,814 | 589,771 | 443,322 | ||
| TOTAL ASSETS | 3,080,069 | 3,883,002 | 3,113,632 | ||
| EQUITY | |||||
| Share capital | 6,100,615 | 6,099,615 | 6,100,615 | ||
| Warrant reserves | 60,146,216 | 60,117,216 | 60,146,216 | ||
| RTO Reserve | (57,976,182) | (57,976,182) | (57,976,182) | ||
| Warrant Reserves | 95,098 | 95,098 | 95,098 | ||
| Foreign exchange translation reserves | (139,025) | (82,088) | (92,681) | ||
| Accumulated losses | (5,739,788) | (4,835,595) | (5,763,357) | ||
| TOTAL EQUITY | 2,486,934 | 3,418,064 | 2,509,709 |
| 31 DEC 2019 | 31 DEC 2018 | 30-JUN-19 | |||
| GROUP UNAUDITED | GROUP UNAUDITED Restated | GROUP AUDITED | |||
| NOTE | GBP | GBP | GBP | ||
| LIABILITIES | |||||
| NON-CURRENT LIABILITIES | |||||
| Trade and other payables | 15,358 | - | 15,913 | ||
| Borrowings | 228,664 | 166,741 | 236,793 | ||
| Employee benefits | - | 10,713 | 11,363 | ||
| TOTAL NON-CURRENT LIABILITIES | 244,022 | 177,454 | 264,069 | ||
| CURRENT LIABILITIES | |||||
| Trade and other payables | 249,113 | 272,218 | 275,680 | ||
| Borrowings | 100,000 | - | 50,000 | ||
| Employee benefits | - | 15,266 | 14,174 | ||
| TOTAL CURRENT LIABILITIES | 349,113 | 287,484 | 339,853 | ||
| TOTAL LIABILITIES | 593,135 | 464,938 | 603,923 | ||
| TOTAL EQUITY AND LIABILITIES | 3,080,069 | 3,883,002 | 3,113,632 |
The accompanying notes form part of these financial statements.
These financial statements were approved by the Board of Directors on 30 June 2020.
Signed on behalf of the Board by:
Brett Boynton
Managing Director
Company number: 05173250
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 31 DECEMBER 2018
| GROUP - UNAUDITED 31 DEC 2019 | ISSUED CAPITAL | SHARE PREMIUM | WARRANT RESERVE | RTO RESERVE | FOREIGN CURRENCY RESERVE | ACCUMULATED LOSSES | TOTAL |
| GBP | GBP | GBP | GBP | GBP | GBP | GBP | |
| Balance at 1 July 2019 | 6,100,615 | 60,146,216 | 95,098 | (57,976,182) | (92,681) | (5,763,357) | 2,509,709 |
| Total comprehensive loss for the period | (46,344) | 23,569 | (22,775) | ||||
| Transactions with owners, recorded directly in equity: | |||||||
| Shares Issued | - | - | - | - | - | - | - |
| Balance as at 31 December 2019 | 6,100,615 | 60,146,216 | 95,098 | (57,976,182) | (139,025) | (5,739,788) | 2,486,934 |
GROUP - UNAUDITED 31 DEC 2018 | ISSUED CAPITAL | SHARE PREMIUM | WARRANT RESERVE | RTO RESERVE | FOREIGN CURRENCY RESERVE | ACCUMULATED LOSSES | TOTAL |
| GBP | GBP | GBP | GBP | GBP | GBP | GBP | |
| Balance at 1 July 2018 | 8,266,848 | - | - | - | (58,251) | (4,824,334) | 3,384,263 |
| Prior year adjustment | (2,167,233) | 60,117,216 | 95,098 | (57,976,182) | - | (114,149) | (45,250) |
| Balance at 1 July 2018 (restated) | 6,099,615 | 60,117,216 | 95,098 | (57,976,182) | (58,251) | (4,938,483) | 3,339,013 |
| Total comprehensive loss for the period | (23,837) | 102,888 | 79,051 | ||||
| Transactions with owners, recorded directly in equity: | |||||||
| Shares Issued | - | - | - | - | - | - | - |
| Balance as at 31 December 2018 | 6,100,615 | 60,146,216 | 95,098 | (57,976,182) | (82,088) | (4,835,595) | 3,418,064 |
| GROUP - AUDITED 30 JUNE 2019 | ISSUED CAPITAL | SHARE PREMIUM | WARRANT RESERVE | RTO RESERVE | FOREIGN CURRENCY RESERVE | ACCUMULATED LOSSES | TOTAL |
| GBP | GBP | GBP | GBP | GBP | GBP | GBP | |
| Balance at 1 July 2018 | 8,266,848 | - | - | - | (58,251) | (4,824,334) | 3,384,263 |
| Prior year adjustment | (2,167,233) | 60,117,216 | 95,098 | (57,976,182) | - | (114,149) | (45,250) |
| Balance at 1 July 2018 (restated) | 6,099,615 | 60,117,216 | 95,098 | (57,976,182) | (58,251) | (4,938,483) | 3,339,013 |
| Total comprehensive loss for the period | (34,430) | (824,874) | (859,304) | ||||
| Transactions with owners, recorded directly in equity: | |||||||
| Shares Issued - 1 June 2019 | 1,000 | 29,000 | - | - | - | - | 30,000 |
| Balance as at 30 June 2019 | 6,100,615 | 60,146,216 | 95,098 | (57,976,182) | (92,681) | (5,763,357) | 2,509,709 |
The accompanying notes form part of these financial statements
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2019
| 6 MONTHS TO 31 DEC 2019 UNAUDITED | 6 MONTHS TO 31 DEC 2018 UNAUDITED | 12 MONTHS TO 30 JUNE 2019 AUDITED | |||
| GBP | GBP | GBP | |||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||
| Cash receipts in the course of operations | - | 38,301 | 62.832 | ||
| Cash payments in the course of operations | (131,029) | (402,490) | (586.464) | ||
| Research and Development Tax Incentive Claim | 152,163 | 330,249 | 326.214 | ||
| Interest received | 761 | - | - | ||
| Net cash used in operating activities | 21,895 | (33,940) | (197,418) | ||
| CASH FLOWS USED IN INVESTING ACTIVITIES | |||||
| Payments for exploration and evaluation expenditure | (63,341) | (212,352) | (279,351) | ||
| Payments for property, plant and equipment | - | (5,456) | (6,911) | ||
| Payment for security deposit | (272) | - | (276) | ||
| Proceeds from refund of security deposits | 2,720 | - | - | ||
| Proceeds from sale of investment | 86,844 | - | - | ||
| Net cash used in investing activities | 25,951 | (217,808) | (286,538) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||
| Proceeds from issue of shares | - | 280,000 | 280,000 | ||
| Proceeds from borrowings | 50,000 | - | 89,418 | ||
| Repayment of borrowings | - | - | - | ||
| Net cash provided by financing activities | 50,000 | 280,000 | 369,418 | ||
| Net (decrease)/increase in cash held and cash equivalents | 97,846 | 28,252 | (114,539) | ||
| Cash and cash equivalents at the beginning of the period | 34,875 | 149,397 | 149,397 | ||
| Effects of exchange rate changes on cash and cash equivalents | (2,497) | (640) | 17 | ||
| Cash and cash equivalents at the end of the period | 130,224 | 177,009 | 34,875 | ||
The accompanying notes form part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2019
1. GENERAL INFORMATION
Tectonic Gold Plc is a company incorporated in the United Kingdom under the Companies Act 2006. The consolidated entity (the "Group") consists of Tectonic Gold Plc (the "Company") and the entities it controlled at the end of, or during, the six months ended 31 December 2019. The principal activity of the Group during the financial period was mineral exploration.
2. BASIS OF PREPARATION
These condensed interim consolidated financial statements ("the interim financial statements") of the Group are for the six months ended 31 December 2019 and are presented in Sterling which is the Company's presentational currency. These interim financial statements have not been reviewed or audited.
The interim financial statements have been prepared in accordance with the recognition and measurement principles of IFRS as adopted by the European Union (EU) and on the same basis and using the same accounting policies as applied in the Company's 2019 Annual Report and statutory accounts for the year ended 30 June 2019.
The statutory accounts for the year ended 30 June 2019 have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
The interim financial statements have been prepared on a going concern basis under the historical cost convention. The Directors believe that the going concern basis is appropriate for the preparation of these interim financial statements as the Company is in a position to meet all its liabilities as they fall due.
The interim financial statements for the six months ended 31 December 2019 were approved by the Board on 30 June 2019.
3. DIVIDEND
The Board is not recommending the payment of an interim dividend for the period ended 31 December 2019.
4. PRIOR YEAR ADJUSTMENT
The consolidated statement of profit and loss and other comprehensive income as at 31 December 2018 has been restated to account for certain costs amounting to £45,250 that were not accrued for on completion of the reverse takeover by Signature Gold Pty Ltd on 25 June 2018 and the fair value of options that were issued on 25 June 2018 which amount to £68,900. Details are set out below.
| CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME (extract) | Signed 31 Dec 2018 accounts | 2018 Loss Decrease | Restated for 31 Dec 2018 | |
| Note | GBP | GBP | GBP | |
| Expenses from continuing operations: | ||||
| Administration and office costs | (i) | (34,064) | 13,750 | (20,314) |
| Corporate costs | (i) | (84,041) | 31,500 | (52,541) |
| Fair value of warrants issued and vested | (ii) | (68,900 | 68,900 | - |
| (118,105) | 114,150 | (72,855) |
(i) The prior year adjustments are comprised of printing costs amounting to £13,750 and consulting fees of £31,500 that were incurred in connection with the reverse takeover by Signature Gold Pty Ltd.
(ii) The prior year adjustment of £68,900 represents the fair value of options that were issued on 25 June 2018 and not recorded as at 30 June 2018.
Basic and diluted earnings per share for the prior year have also been restated. Refer to Note 5.
4. PRIOR YEAR ADJUSTMENT (CONTINUED)
| GROUP STATEMENT OF FINANCIAL POSITION | Signed accounts at 31 Dec 2018 | Adjustments | Restated as at 31 Dec 2018 | |
| Note | GBP | GBP | GBP | |
| ASSETS | ||||
| NON-CURRENT ASSETS | ||||
| Plant and equipment | 7,398 | - | 7,398 | |
| Exploration and evaluation expenditure | 3,285,833 | - | 3,285,833 | |
| TOTAL NON-CURRENT ASSETS | 3,293,231 | - | 3,293,231 | |
| CURRENT ASSETS | ||||
| Cash and cash equivalents | 177,009 | - | 177,009 | |
| Trade and other receivables | 14,142 | - | 14,142 | |
| Investments | 40,122 | - | 40,122 | |
| Other assets | 3,584,988 | - | 3,584,988 | |
| TOTAL CURRENT ASSETS | 3,816,261 | - | 3,816,261 | |
| TOTAL ASSETS | 7,109,492 | - | 7,109,492 | |
| EQUITY | ||||
| Share capital | (i) | 8,266,848 | (2,167,233) | 6,099,615 |
| Share premium | (i) | - | 60,117,216 | 60,117,216 |
| RTO reserve | (i) | - | (57,976,182) | (57,976,182) |
| Warrant reserve | (ii) | 68,900 | 26,198 | 95,098 |
| Foreign exchange translation reserves | (82,088) | - | (82,088) | |
| Accumulated losses | (4,835,596) | - | (4,835,596) | |
| TOTAL EQUITY | 3,418,064 | - | 3,418,064 | |
| LIABILITIES | ||||
| NON-CURRENT LIABILITIES | ||||
| Borrowings | 166,741 | - | 166,741 | |
| Employee benefits | 10,713 | - | 10,713 | |
| TOTAL NON-CURRENT LIABILITIES | 177,454 | - | 177,454 | |
| CURRENT LIABILITIES | ||||
| Trade and other payables | 272,218 | - | 272,218 | |
| Employee benefits | 15,266 | - | 15,266 | |
| TOTAL CURRENT LIABILITIES | 287,484 | - | 287,484 | |
| TOTAL LIABILITIES | 464,938 | - | 464,938 | |
| TOTAL EQUITY LIABILITIES | 3,883.002 | - | 3,883,002 | |
(i) The 2018 balances have been restated in the 2019 financial statements due to an error in the accounting treatment for the reverse acquisition identified during the 2019 audit.
(ii) The prior period adjustment to warrant reserves of £26,198 is the recycling of the share-based payment expense in respect of warrants and share options that had either lapsed or been exercised prior to completion of the reverse takeover on 25 June 2018.
5.EARNINGS PER SHARE
The basic earnings per share is based on the profit/(loss) for the year divided by the weighted average number of shares in issue during the reporting period. The weighted average number of ordinary shares for the reporting period assumes that all shares have been included in the computation based on the weighted average number of days since issue.
| 6 MONTHS TO 31 DEC 2019 UNAUDITED | 6 MONTHS TO 31 DEC 2018 UNAUDITED Restated | 12 MONTHS TO 30 JUNE 2019 AUDITED | ||
| GBP | GBP | GBP | ||
| Profit/(Loss) for the year attributable to owners of the Company | 23,569 | 102,888 | (824,874) | |
| Weighted average number of ordinary shares in issue for basic earnings* | 656,562,746 | 687,562,746 | 688,357,267 | |
| Weighted average number of ordinary shares in issue for fully diluted earnings* | 710,562,746 | 700,562,746 | 688,357,267 | |
| (Loss)/gain per share (pence per share) | ||||
| Basic | 0.003 | 0.015 | (0.12) | |
| Diluted | 0.003 | 0.015 | (0.12) |
6. OTHER ASSETS
| 31 DEC 2019 UNAUDITED | 31 DEC 2018 UNAUDITED | 30 JUNE 2019 AUDITED | ||
| GBP | GBP | GBP | ||
| Prepayments(i) | 333,956 | 347,902 | 346,151 | |
| Other prepayments | 2,325 | 3,014 | 6,440 | |
| Security deposits | 3,204 | 7,582 | 7,821 | |
| 339,485 | 358,498 | 360,412 |
(i) In June 2018, the Company paid Titeline Drilling Pty Ltd ACN 096 640 201 (Titeline) for future drilling services in accordance with the heads of agreement dated 28 March 2018 between Titeline, Signature and StratMin.
Titeline has been engaged to complete 10,000 metres of diamond drilling on a 50:50 cash and equity basis to produce core samples for analysis, assay and metallogenic studies from the Company's Queensland Project sites. A review to be completed after 2,500 metres of drilling has been completed and the remaining 7,500 metres is in planning for the second half of 2019. The cash component of the drilling contract is expected to be met from revenues generated by the diamond mining joint venture with VAST Mineral Sands Pty Ltd announced on February 18, 2019.
As at 30 June 2018, the prepayment of GBP 633,825(A$1,125,000) to Titeline was comprised of:
-GBP 126,765 (A$225,000 excluding GST) paid in cash; and
- pre-paid technical services amounting to GBP 507,060($A90,000) settled with the issue of 5,544,484 fully paid ordinary shares issued in the Company at an issue price of A$0.162 per share.
As at 31 December 2019, GBP 333,956($A625,386) remains prepaid to Titeline
7. EVENTS AFTER THE REPORTING PERIOD
On 11 March 2020, the World Health Organisation ("WHO") declared the Coronavirus disease 2019 (COVID-19) a pandemic. The pandemic has adversely affected the global economy, including an increase in unemployment, decrease in consumer demand, interruptions in supply chains, and tight liquidity and credit conditions. Consequently, governments around the world have announced monetary and fiscal stimulus packages to minimise the adverse economic impact. However, the COVID-19 situation is still evolving, and its full economic impact remains uncertain.
The Company has several assets where the value may be impacted by COVID-19. At the date that these financial statements were approved by the Directors the extent of the impact COVID-19 on the Company's assets cannot be reasonably estimated at this time.
The pandemic has impacted the Company's operations with Government mandated bans on mass gatherings and social distancing measures resulting in disruption to the Company's operations, this disruption is expected to negatively impact the ability for the Company to conduct drilling and its parent entity's ability to raise capital, refer Going Concern Note 2 of the Company 20919 annual report.
The Directors and management are continually monitoring and managing the Company's operations closely in response to COVID-19 however the extent of the impact COVID-19 may have on the Company's future liquidity, financial performance and position and operations is uncertain and cannot be reasonably estimated at the date these financial statements were issued.
Other than as stated elsewhere in this report, Directors are not aware of any other matters or circumstances at the date of this report that have significantly affected or may significantly affect the operations, the results of the operations or the state of affairs of the Company in subsequent financial years.
8. DISTRIBUTION
Copies of these interim financial statements are available on the Aquis Exchange website, the Company website (www.tectonicgold.com) or directly from the Company at its registered address.
The Directors of the Company accept responsibility for the contents of this announcement.
For further information, please contact:
| Tectonic Gold plc Brett Boynton Sam Quinn www.tectonicgold.com @tectonic_gold | +61292417665 |
Ends
