First Sentinel PLC Half-year Report

28 September 2017

 

First Sentinel plc

(“First Sentinel” or the “Company”)

Interim Report for the nine months ended 30 June 2017

 

The Chairman’s Report

I am delighted to present the results for First Sentinel plc, for the nine months ended 30 June 2017. The Company has raised GBP0.7m during the period and additionally raised another GBP0.7m shortly after the period end. The proceeds of the placings will be used to assist the Company in the implementation of its investment strategy where the Company provides growth capital (equity, mezzanine debt and senior debt) for public and private company investments across a number of different market sectors. The Company has also admitted its shares to trading on NEX Exchange and has made two key director appointments as we move to the next stage of the Company’s development. The loss of GBP143,000 for the period represents two months of trade following the IPO and includes the costs of listing the Company on NEX Exchange.

The appointment of additional board members will be made to assist us in our investment strategy and we remain focused on creating long-term sustainable value for our shareholders.

Investments

The following investments have been made by First Sentinel plc during the period:

Red Rock Resources plc (AIM: RRR)

Red Rock Resources plc (“Red Rock”) is a natural resource development company with interests in gold, manganese and oil production. On 23 June 2017, it announced that it had entered into financing agreements to acquire an interest of between 16% to 30% in Steelmin Limited (“Steelmin”) and provide a loan of approximately EUR3.9million (the “Loan”) to fund Steelmin to complete the refurbishment and recommissioning of a ferrosilicon smelter in Jajce, Bosnia. Production from Steelmin is expected in Q1 2018 with target annual revenues on initial production levels of EUR36m and EBITDA of EUR7m.

Steelmin’s plant consists of two electric arc furnaces with a combined annual capacity of 48,720 tonnes ferrosilicon (FeSi 75) and 9,700 tonnes of microsilica and expected initial capacity from Furnace V of 29,000t of ferrosilicon p.a. and 5,800t of microsilica.

To fund the Loan, Red Rock has borrowed from YA 11 PN Ltd, on behalf of a group of institutional investors, $4,230,750 on a secured basis for a term of one year bearing interest at 13% p.a. with a renewal option for a further 8 months for a fee (the “Note”). First Sentinel participated $300,000 in this Note. The Note carries warrants in Red Rock with a two-year life and exercisable at a price of 2.2p per share. The Note is secured against Red Rock’s holding in Jupiter Mines and the loan to Steelmin.

Phoenix Global Mining plc (AIM: PGM)

Phoenix Global Mining plc (“Phoenix”) is a US focussed base metal explorer and developer focussed on advancing the Empire Mine in Idaho, into open pit copper oxide production with additional upside available from potential underground development. The shares of Phoenix were admitted to trading on AIM on 28 June 2017.

First Sentinel subscribed for 2,032,520 ordinary shares at the placing price on IPO of 4p per share (a subscription for approximately GBP81,000).

*Milamber Ventures plc (NEX: MLVP)

MilamberVentures plc is a growth accelerator focussed on Media, Technology and education. Milamber partners with entrepreneurs and ambitious management teams to develop high value, innovative, growing businesses.

First Sentinel subscribed for 500,000 new ordinary shares in Milamber at a price of 7p per share for a total of GBP35,000.

*Note: First Sentinel Corporate Finance, a FCA registered firm wholly owned by a director of First Sentinel, Brian Stockbridge, acted as broker/ introductory agent in connection with this fundraise.

Outlook

The nine months to 30 June 2017 has been a very successful period for First Sentinel. The success of the fund raising, investments made and the appointment of new experienced directors have positioned the Company very well for the next stage of its development. Our short-term strategy remains at increasing value by providing growth capital for public and private company investments. I am very optimistic about the Company’s growth potential and we look to the future with significant confidence.

Brian Stockbridge

About First Sentinel

First Sentinel is an alternative investment company, registered with the FCA as a small authorised UK AIFM, which provides growth capital for public and private company investments.  First Sentinel invests in a range of debt and equity instruments in target portfolio companies.

The Company’s website is www.first-sentinel.com

For further corporate information, please contact:

 

Mr. Kris Kottmeier

VP Corporate Development

UK/Euro Tel: +44 (0) 20 3637 6522

North America Tel: +1 (604) 506-2502

Email:  Kris@first-sentinel.com

 

Mr. Brian Stockbridge

CEO

First Sentinel Plc

Tel: + 44 (0) 7876 888 011

 

NEX Corporate Advisor

Beaumont Cornish Limited

James Biddle / Roland Cornish

Tel: +44(0)20 7628 3396

 

Financial PR Advisor

Felicity Winkles / Joe Burgess

Tel: +44(0) 776 932 5254

____________________________________________

Interim Condensed Statement of Comprehensive Income

 
                                                              From 17 
                                             9 months        May 2016 
                                                Ended              to 
                                   Notes      30 June    30 September 
                                                 2017            2016 
                                            Unaudited         Audited 
                                --------  -----------  -------------- 
                                              GBP'000         GBP'000 
 Continuing operations                              -               - 
 Administrative expenses            4           (143)            (12) 
                                          -----------  -------------- 
 Operating loss                                 (143)            (12) 
 Loss on ordinary activities 
  before taxation                               (143)            (12) 
 Tax on loss on ordinary 
  activities                                        -               - 
                                          -----------  -------------- 
 Loss after taxation                            (143)            (12) 
 
 Total comprehensive 
  loss for the period 
  attributable to the 
  owners of the company                         (143)            (12) 
                                          -----------  -------------- 
 
 Basic and diluted 
  loss per share (expressed 
  in pence per share)               5         (5.32p)        (GBP120) 

Interim Condensed Statement of Changes in Equity

 
                                    Share      Share   Accumulated     Total 
                                  Capital    Premium       Deficit    Equity 
                                ---------  ---------  ------------  -------- 
                                  GBP'000    GBP'000       GBP'000   GBP'000 
 Incorporation                          -          -             -         - 
 Issue of shares                        -          -             -         - 
 Loss and total comprehensive 
  loss for the period                   -          -          (12)      (12) 
 Balance at 30 September 
  2016                                  -          -          (12)      (12) 
 Issue of shares                       71        645             -       716 
 Share issue costs                      -      (117)             -     (117) 
 Loss and total comprehensive 
  loss for the period                   -          -         (143)     (143) 
                                ---------  ---------  ------------  -------- 
 Balance at 30 June 
  2017                                 71        528         (155)       444 
                                ---------  ---------  ------------  -------- 

Share capital is the amount subscribed for shares at nominal value.

Share premium is the amount subscribed for shares in excess of nominal value.

Accumulated deficit represents the cumulative loss of the Company attributable to equity shareholders.

Interim Condensed Statement of the Financial Position

 
                                                At 30        At 30 
                                   Notes         June    September 
                                                 2017         2016 
                                            Unaudited      Audited 
                                --------  -----------  ----------- 
                                              GBP'000      GBP'000 
 Assets 
 Current assets 
 Other Receivables                  6             229            3 
 Financial assets at 
  fair value through profit 
  or loss                           6             112            - 
 Cash and Cash Equivalents                        147            3 
  Total Current Assets                            488            6 
                                          -----------  ----------- 
 Total Assets                                     488            6 
                                          -----------  ----------- 
 
 Equity and Liabilities 
 Share Capital                      7              71            - 
 Share Premium                      7             528            - 
 Accumulated deficit                            (155)         (12) 
 Total Equity                                     444         (12) 
                                          -----------  ----------- 
 
 Current Liabilities 
 Other Payables                                    44           18 
 Total Liabilities                                 44           18 
                                          -----------  ----------- 
 Total Equity and Liabilities                     488            6 
                                          -----------  -----------

Interim Condensed Cash Flow Statement

 
                                                            From 17 
                                              9 Months     May 2016 
                                                 Ended        to 30 
                                   Notes       30 June    September 
                                                  2017         2016 
                                             Unaudited      Audited 
                                ---------  -----------  ----------- 
                                               GBP'000      GBP'000 
 Cash flows from 
  operating activities 
 Operating loss                                  (143)         (12) 
 Changes in working 
  capital 
 (Increase) / decrease 
  in receivables                                     3          (3) 
 Increase / (decrease) 
  in payables                                       27           18 
 Net cash flow from 
  operating activities                           (113)            3 
                                           -----------  ----------- 
 
 Investing Activities 
 Decrease / (Increase) 
  in financial assets                6           (112)            - 
 Decrease / (Increase) 
  in Loans                           6           (229)            - 
 Net cash flow from investing 
  activities                                     (341)            - 
                                           -----------  ----------- 
 
 Cash flows from financing 
  activities: 
 Net proceeds from issue 
  of shares                          7             598            - 
 Net cash flow from financing 
  activities                                       598            - 
                                           -----------  ----------- 
 
 Net cash flow for the 
  period                                           144            3 
 Opening Cash and cash 
  equivalents                                        3            - 
                                           -----------  ----------- 
 Closing Cash and cash 
  equivalents                                      147            3 
                                           ===========  =========== 
 

Notes to the Interim Condensed Financial Statements

   1.            General Information

First Sentinel plc (‘the Company’) is an investment company incorporated in the United Kingdom with company number 10183367 and quoted on the NEX Exchange Growth Market.

   2.            Basis of Preparation

The annual financial statements of the Company are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The condensed set of financial statements included in this interim financial report has been prepared in accordance with IAS 34 ‘Interim Financial Reporting’, as adopted by the European Union. The accounting policies and methods of computation used are consistent with those used in the Company’s latest audited financial statements for the period ended 30 September 2016.

A copy of the statutory accounts for the period ended 30 September 2016 has been delivered to the Registrar of Companies. The auditor’s report on these accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

   3.            Segmental Reporting

In the opinion of the Directors, the Company has one class of business, being that of an investment company. The Company’s primary reporting format is determined by the geographical segment according to the location of its establishments. There is currently only one geographic reporting segment, which is the UK. All revenues and costs are derived from the single segment.

   4.            Company Result for the period

The current period operating loss incorporated the following main items:

 
                                                        From 17 
                                       9 Months        May 2016 
                                          Ended              to 
                                        30 June    30 September 
                                           2017            2016 
                                      Unaudited         Audited 
                                        GBP'000         GBP'000 
 
 Accounting and administration 
  fees                                        3               2 
 Foreign Exchange debits                     11               - 
 Directors' Remuneration and Fees            22               - 
 Legal and professional fees                 97              10 
 Other expenses                              10               - 
                                    -----------  -------------- 
                                            143              12 
                                    -----------  -------------- 
 
 
   5.            Loss per Share

Loss per share data is based on the Company result for the nine months and the weighted average number of shares in issue.

Basic loss per share is calculated by dividing the loss attributable to equity shareholders by the weighted average number of ordinary shares in issue during the period:

 
                                                              From 
                                                            17 May 
                                          9 Months            2016 
                                             Ended              to 
                                           30 June    30 September 
                                              2017            2016 
                                         Unaudited         Audited 
                                           GBP            GBP 
 Loss after tax                          (143,000)        (12,000) 
 Weighted average number of ordinary 
  shares in issue                        2,695,464             100 
                                       -----------  -------------- 
 Basic and diluted loss per share          (5.32p)        (GBP120) 
  (pence) 
                                       -----------  -------------- 

Basic and diluted earnings per share are the same, since where a loss is incurred the effect of outstanding share options and warrants is considered anti-dilutive and is ignored for the purpose of the loss per share calculation. There were 8,736,524 potential dilutive shares in issue during the period for share options and warrants.

   6.            Financial assets

During the period the Company had the following movements in investments:

 
 
                                           At 30         At 30 
                                            June     September 
                                            2017          2016 
                                       Unaudited       Audited 
                                         GBP'000       GBP'000 
 Included within other receivables: 
  Secured loan notes                         229             - 
 Financial assets through profit 
  and loss:                                  112             - 
  UK AIM listed equity securities 
                                     -----------  ------------ 
 Total financial assets                      341             - 
                                     -----------  ------------ 

The financial assets within other receivables relate to secured loan notes for a term of one year bearing interest at 13% per annum in Red Rock Resources plc.

   7.            Share Capital

Ordinary shares are classified as equity. Proceeds from issuance of ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares are deducted against share capital.

 
 Allotted, called up and            Number      Share      Share 
  fully paid ordinary shares     of shares    Capital    Premium 
  of 0.01p each 
                                                  GBP        GBP 
 Balance at 17 May 2016                100          1          - 
 Balance at 30 June 2016               100          1          - 
 Share issue at GBP0.10 
  - 15 March 2017                6,309,794     63,098    567,882 
 Share issue at GBP0.10 
  - 24 March 2017                   50,000        500      4,500 
 Share issue at GBP0.10 
  - 18 April 2017                  727,273      7,273     72,727 
                               -----------  ---------  --------- 
 Balance at 30 June 2017         7,087,167     70,872    645,109 
 
 
   8.            Related Party Transactions

As at the period end the company owed GBP5,000 (2016: GBPnil) to First Sentinel Corporate Finance Limited, a company controlled by the director, Brian Stockbridge, for an interest free current account balance.

As at the period end the company owed GBP15,000 (2016: GBP15,000) to the director, Brian Stockbridge, for an interest free current account balance.

   9.            Events Subsequent to 30 June 2017

On the 5 July 2017 the company raised GBP700,000 by issuing 6,363,636 new shares.