TIDMZEST
RNS Number : 4685W
Zest Group PLC
19 November 2010
Zest Group plc
Final Results
for the twelve months ended 30 September 2010
Chairman's Statement
I present the results of the Group for the year ended 30
September 2010.
Zest Group Plc ("Zest" or the "Company") announced on 12
November 2010 that it was proposing to change its name and adopt a
new Investing Policy ("Proposed Investing Policy"). A Circular to
Shareholders setting out details of a proposed change in its
Investing Policy and proposed Name Change was sent to all company
shareholders.
The General Meeting ("GM") is to be held on 29 November 2010 to
adopt the Proposed Investing Policy, as set out below, and change
the Company's name to Rare Earth Minerals Plc.
Background
The Company was formed to build a music business by acquiring
new artists together with their music publishing rights and
acquiring recording and publishing companies. The Company has made
progress in developing its business objectives as set out in its
Admission Document. However, in the six months to 31 March 2010 the
Company reported a loss before taxation of GBP194,000 and further
reported that it was reliant on external funding. The Directors
have therefore come to the conclusion that whilst Zest's existing
business may be able to deliver some value (and will be retained)
it does not form the basis of a sustainable business for a publicly
traded company. Accordingly, the Directors believe that it is in
the Company's interests to adopt a new strategy for the development
of the Company as an investing company and to take advantage of
opportunities outside of the music industry and also draw on the
experience and success of Mr Lenigas in the natural resources
sector as a means of establishing greater shareholder value,
further details of which are set out below.
As an investing company, Zest will be required to make an
acquisition or acquisitions which constitute a reverse takeover
under the AIM Rules or otherwise implement its Proposed Investing
Policy on or before the date falling twelve months from the
adoption of the Proposed Investing Policy failing which, the
Company's Ordinary Shares would then be suspended from trading on
AIM. In the event the Company's Ordinary Shares are so suspended
and the Company fails to obtain Shareholders' consent to renew such
policy, the admission to trading on AIM of the Ordinary Shares
would be cancelled six months from the date of suspension and the
Directors will convene a general meeting of the Shareholders to
consider whether to continue seeking investment opportunities or to
wind up the Company and distribute any surplus cash back to
Shareholders. In making the assessment of whether or not an
investing company has substantially implemented its investing
policy, this is normally considered to mean that the investing
company has invested a substantial portion (usually at least in
excess of 50 per cent.) of all funds available to it , including
funds available through agreed debt facilities, in accordance with
its investing policy.
Proposed Investing Policy
The Company's proposed change in strategy and Proposed Investing
Policy, which is subject to shareholder approval, is to acquire a
diverse portfolio of direct and indirect interests in exploration
and producing Rare Earth Minerals and/or Metals projects and
assets. In light of the nature of the assets and projects which
will be the focus of the Proposed Investing Policy, the Company
will consider investment opportunities anywhere in the world.
The Directors have considerable experience investing, both in
structuring and executing deals and in raising funds. Further
details of the Directors' expertise are set out below. The
Directors will use this experience to identify and investigate
investment opportunities, and to negotiate acquisitions. Wherever
necessary the Company will engage suitably qualified technical
personnel to carry out specialist due diligence prior to making an
acquisition or an investment. For the acquisitions which they
expect the Company to make, the Directors may adopt earn-out
structures, with specific performance targets being set for the
sellers of the businesses acquired, and with suitable metrics
applied.
The Company may invest by way of outright acquisition or by the
acquisition of assets, including the intellectual property, of a
relevant business, partnerships or joint venture arrangements. Such
investments may result in the Company acquiring the whole or part
of a company or project (which in the case of an investment in a
company may be private or listed on a stock exchange, and which may
be pre-revenue), and such investments may constitute a minority
stake in the company or project in question. The Company's
investments may take the form of equity, joint venture, debt,
convertible instruments, licence rights, or other financial
instruments as the Directors deem appropriate.
The Company may be both an active and a passive investor
depending on the nature of the individual investments in its
portfolio. Although the Company intends to be a long-term investor,
the Directors will place no minimum or maximum limit on the length
of time that any investment may be held.
There is no limit on the number of projects into which the
Company may invest, nor the proportion of the Company's gross
assets that any investment may represent at any time and the
Company will consider possible opportunities anywhere in the
world.
The Directors may offer new Ordinary Shares by way of
consideration as well as cash, thereby helping to preserve the
Company's cash for working capital and as a reserve against
unforeseen contingencies including by way of example, and without
limit, delays in collecting accounts receivable, unexpected changes
in the economic environment and unforeseen operational problems.
The Company may in appropriate circumstances, issue debt securities
or otherwise borrow money to complete an investment. There are no
borrowing limits in the Articles. The Directors do not intend to
acquire any cross-holdings in other corporate entities that have an
interest in the Ordinary Shares.
There are no restrictions in the type of investment that the
Company might make nor on the type of opportunity that may be
considered other than set out above.
As the Ordinary Shares are traded on AIM this provides a
facility for Shareholders to realise their investment in the
Company. The attention of Shareholders is drawn to "Risk Factors"
set out below. In addition, the Directors may consider from time to
time other means of facilitating returns to Shareholders including
dividends, share repurchases, demergers, and schemes of
arrangements or liquidation.
The Company will provide an update on its investing activities
at the same time that it publishes its audited annual results for
the year ending 30 September 2011 and as otherwise required by the
AIM Rules. The Company has no current plans to publish any regular
estimate of net asset value or updates on the investments.
Name Change
In accordance with article 104 of the Articles, the Directors
have passed a resolution to change the name of the Company to Rare
Earth Minerals Plc conditional upon the passing of the Resolution
by the Shareholders to adopt the Proposed Investing Policy.
Subject to the change of name of the Company becoming effective,
the new website address of the Company will be
www.rareearthmineralsplc.com.
Risk Factors
Any investment by the Company as part of the Proposed Investing
Policy will carry a high degree of risk. These risks and
uncertainties are not the only ones facing the Company and
additional risks and uncertainties not presently known or which are
currently deemed immaterial may also have a material adverse effect
on the Company's business, results of operations or financial
condition.
If any or a combination of the risks materialise, the Company's
business financial condition, operational performance and share
price could be materially and adversely affected to the detriment
of the Company and the Shareholders.
GM Business
The business to be considered at the GM is as follows:
Adoption of the Proposed Investing Policy - to be proposed as an
Ordinary Resolution
We are asking Shareholders to approve and adopt the Proposed
Investing Policy. In particular, the Company is seeking the
authority of Shareholders to acquire direct and indirect interests
in exploration, development and producing Rare Earth Minerals
and/or Metals projects and assets. In light of the nature of the
assets and projects which will be the focus of the Proposed
Investing Policy the Company will consider investment opportunities
anywhere in the world. The intention is to acquire a widely
distributed mix of Rare Earth Minerals and Metals development and
producing assets.
If the Resolution is passed and the Proposed Investing Policy is
adopted the name of the Company will change to Rare Earth Minerals
Plc.
FINANCIAL RESULTS
The Group's loss for the year is GBP284,000 (2009:
GBP283,000).
OUTLOOK
The Board considers that the Resolution for the adoption of the
Proposed Investing Policy is in the best interests of the Company
and its Shareholders as a whole. The Board will be voting in favour
of the Resolution and they unanimously recommend that Shareholders
should vote in favour of it as well.
The Board acknowledges this exciting period for the Company as
it proceeds to change its investment strategy this year and
commence evaluating new investment opportunities as they arise.
The Directors would like to take this opportunity to thank our
shareholders for their continued support.
Richard Griffiths
Executive Chairman 19 November 2010
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2010 2009
Note GBP'000 GBP'000
Administrative expenses
- (impairment) / reversal of
impairment of
advance payments to artists (1) 60
- other administrative expenses (283) (347)
-------- --------
Total administrative expenses (284) (287)
Loss from operations (284) (287)
Finance income - 4
-------- --------
Loss before taxation (284) (283)
Taxation 2 - -
Loss for the year from continuing
activities (284) (283)
Loss after taxation and loss
attributable to the equity
holders of the company (284) (283)
Other comprehensive income - -
Total comprehensive expenditure
for the period (284) (283)
======== ========
Loss per ordinary share (pence) 3 (0.06)p (0.2)p
======== ========
Basic and diluted
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
Share
based
Share Share payment Retained Total
capital premium reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 October 2008 434 3,598 166 (4,059) 139
Share based payments - - 11 - 11
-------- -------- -------- --------- -------
Transactions with owners - - 11 - 11
Loss for the year - - - (283) (283)
-------- -------- -------- --------- -------
Total comprehensive
expenditure for the year - - - (283) (283)
-------- -------- -------- --------- -------
At 30 September 2009 434 3,598 177 (4,342) (133)
Share based payments - - 38 - 38
Issue of share capital 30 270 - - 300
-------- -------- -------- --------- -------
Transactions with owners 30 270 38 - 338
Loss for the year - - - (284) (284)
-------- -------- -------- --------- -------
Total comprehensive
expenditure for the year - - - (284) (284)
At 30 September 2010 464 3,868 215 (4,626) (79)
======== ======== ======== ========= =======
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
2010 2009
GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment - 1
------- -------
- 1
------- -------
Current assets
Trade and other receivables 17 12
Cash and cash equivalents 306 5
Total current assets 323 17
Total assets 323 18
======= =======
LIABILITIES
Current liabilities
Trade and other payables 402 151
------- -------
Total liabilities 402 151
------- -------
EQUITY
Share capital 464 434
Share premium 3,868 3,598
Share based payment reserve 215 177
Retained earnings (4,626) (4,342)
Total capital deficiency attributable
to equity holders of the Company (79) (133)
Total equity and liabilities 323 18
======= =======
CONSOLIDATED CASH FLOW STATEMENT
2010 2009
GBP'000 GBP'000
Cash flows from operating activities
Loss after taxation (284) (283)
Adjustments for:
Depreciation of property plant
and equipment 1 -
Equity settled share based payments 38 11
Finance income - (4)
(Increase)/decrease in trade
and other receivables (5) 121
Increase in trade and other payables 251 94
------- -------
Net cash inflow/(outflow) from
operating activities from 1 (61)
Cash flows from investing activities
Finance income - 4
------- -------
Net cash inflow from investing
activities - 4
Cash flows from financing activities
Proceeds from issue of share
capital 300 -
------- -------
Net cash inflow from financing
activities 300 -
------- -------
Net change in cash and cash equivalents 301 (57)
Cash and cash equivalents at
1 October 5 62
Cash and cash equivalents at
30 September 306 5
======= =======
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 bAsis of preparation
The Group financial statements have been prepared under the
historical cost convention and in accordance with International
Financial Reporting Standards as adopted by the European Union
(IFRS). The Company's shares are listed on the AIM market of the
London Stock Exchange.
The principal accounting policies of the Group, which have been
applied consistently, are set out in the annual report and
financial statements.
2 segmental information
An operating segment is a distinguishable component of the Group
that engages in business activities from which it may earn revenues
and incur expenses, whose operating results are regularly reviewed
by the Group's chief operating decision maker to make decisions
about the allocation of resources and assessment of performance and
about which discrete financial information is available.
The chief operating decision maker reviews financial information
for and makes decisions about the Group's performance as a whole,
as the Group has not traded during the period.
Subject to further acquisitions the Group expects to further
review its segmental information during the forthcoming financial
year.
3 Taxation - continuing operations
There is no tax credit on the loss for the current or prior
year.
The tax assessed for the year differs from the standard rate of
corporation tax in the UK as follows:
2010 2009
GBP'000 GBP'000
Loss before tax ` (284) (283)
======= =======
Loss multiplied by standard rate of corporation
tax in the UK of 28% (2009: 28%) (80) (79)
Effect of:
Disallowable expenses 1 1
Deferred tax asset not recognised 79 78
Current tax charge for year - -
======= =======
The Group has tax losses in the UK, subject to Her Majesty's
Revenue and Customs approval, of approximately GBP3,763,000 (2009:
GBP3,482,000) available for offset against future operating
profits. The Group has not recognised any deferred tax asset in
respect of these losses, which would amount to GBP1,016,000 (2009:
GBP974,000) due to there being insufficient certainty regarding its
recovery.
4 LOSS PER SHARE
The calculation of the basic loss per share is calculated by
dividing the consolidated loss attributable to the equity holders
of the Company by the weighted average number of ordinary shares in
issue during the year.
2010 2009
GBP'000 GBP'000
Loss attributable to equity holders
of the Group
Continuing operations (284) (283)
Discontinued operations - -
(284) (283)
======= =======
2010 2009
Number Number
Weighted average number of shares
for calculating loss per share 443,208,091 173,619,050
=========== ===========
5 POST BALANCE SHEET EVENT
On 7 October 2010 the Company issued 420,000,000 ordinary shares
of 0.01p each for GBP630,000 proceeds before share issue costs of
GBP2,500, GBP300,000 of these proceeds had been received before 30
September 2010.
6 publication of non-statutory accounts
The financial information set out in this preliminary
announcement does not constitute statutory accounts as defined in
section 434 of the Companies Act 2006.
The summarised consolidated statement of financial position at
30 September 2010 and the summarised consolidated statement of
comprehensive income, consolidated statement of changes in equity,
consolidated cash flow statement and associated notes for the year
then ended have been extracted from the Group's 2010 statutory
financial statements upon which the auditor's opinion is
unqualified and does not include any statement under Section 498 of
the Companies Act 2006.
The accounts for the year ended 30 September 2010 will be posted
shortly to shareholders and laid before the company at the Annual
General Meeting the date of which will be advised shortly. Copies
will also be available from Zest Group plc's Registered Office:
Princes House Suite 3B, 38 Jermyn Street, London, SW1Y 6DN and via
the website (www.zestmusic.com) in accordance with AIM Rule 26.
Enquiries:
Zest Group Plc
David Lenigas
+44 (0)207 440 0640
W.H. Ireland
James Joyce
+44 (0) 207 220 1666
This information is provided by RNS
The company news service from the London Stock Exchange
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