TIDMTSTR
Certain information contained in this announcement would have been deemed
inside information for the purposes of Article 7 of Regulation (EU) No. 596/
2014 until the release of this announcement
TRI-STAR RESOURCES PLC
("TSTR, Tri-Star" or the "Company")
Interim Results for the six month period ended 30 June 2020
Tri-Star (AIM: TSTR), the mining and minerals processing company, is pleased to
announce its unaudited results for the six months ended 30 June 2020.
The Company does not have anything further to update shareholders on given the
recent settlement agreement and annual results announcement.
**S**
Enquiries:
Tri-Star Resources plc
David Facey, CEO/ CFO ceo@tri-starresources.com
St Brides Partners Ltd Tel +44 (0)20 7236 1177
Isabel de Salis/Beth Melluish
SP Angel Corporate Finance (Nominated Adviser)
Robert Wooldridge/Jeff Keating/Caroline Rowe Tel: +44 (0)20 3470 0470
FinnCap Ltd (Broker)
Christopher Raggett/Camille Gochez Tel: +44 (0)20 7220 0500
TRI-STAR RESOURCES PLC
STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 30 JUNE 2020
Notes Unaudited Unaudited Audited Year
Period ended Period ended ended 31
30 June 2020 30 June 2019 December 2019
GBP'000 GBP'000 GBP'000
Share based payment charge (18) (211) (224)
Administrative expenses (425) (325) (486)
Total administrative expenses and (443) (536) (710)
loss from operations
Movement in the fair value of 2,100 1,657 (5,404)
financial asset
Finance income - 1 1
Finance cost (268) (85) (313)
Profit/(loss) before taxation 1,389 1,037 (6,426)
Taxation 4 - - 18
Profit/(loss) after taxation, and 1,389 1,037 (6,408)
loss attributable to the equity
holders of the Company
Other comprehensive (expenditure)/
income
Items that will be reclassified
subsequently to profit and loss
Other comprehensive (expenditure)/ - - -
income for the period, net of tax
Total comprehensive profit/(loss) 1,389 1,037 (6,408)
for the year, attributable to
owners of the company
Loss per share
Basic profit/(loss) per share 1.46 1.10 (6.79)
(pence)
Diluted profit/(loss) per share 5 1.42 1.07 (6.60)
(pence)
STATEMENT OF FINANCIAL POSITION
AT 30 JUNE 2020
Unaudited Unaudited Audited
30 June 2020 30 June 2019 31 December
2019
Assets Notes GBP'000 GBP'000 GBP'000
Non-current
Investment in associates 6 3,893 3,893 3,893
Loan to associate 7 13,500 18,462 11,400
17,393 22,355 15,293
Current
Cash and cash equivalents 58 160 284
Trade and other receivables 107 110 85
Total current assets 165 270 369
Total assets 17,558 22,625 15,662
Liabilities
Current
Trade and other payables 210 102 92
Short term loans 7 1,767 1,223 1,396
Total current liabilities 1,977 1,325 1,488
Liabilities due after one year
Deferred tax liability 93 111 93
Total liabilities 2,070 1,436 1,581
Equity
Issued share capital 6,941 6,884 6,936
Share premium 45,117 44,819 45,104
Share based payment reserve 1,811 1,867 1,811
Retained earnings (38,381) (32,381) (39,770)
Total equity 15,488 21,189 14,081
Total equity and liabilities 17,558 22,625 15,662
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHSED 30 JUNE 2020
Unaudited Unaudited Audited Year
Period ended Period ended ended
30 June 2020 30 June 2019 31 December
2019
GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Profit/(loss) after tax 1,389 1,037 (6,408)
Finance income - (1) (1)
Finance cost 268 85 313
Fees paid by shares 18 3 28
Movement in the fair value of (2,100) (1,657) 5,404
financial asset
Equity settled share-based - 196 196
payments
Increase in trade and other (22) (5) 20
receivables
Increase/(decrease) in trade and 118 12 (18)
other payables
Net cash outflow from operating (329) (330) (466)
activities
Cash flows from investing
activities
Loans made to associate - (76) (76)
Proceeds from sale of subsidiary - 247 247
Finance income - 1 1
Net cash (outflow)/inflow from - 172 172
investing activities
Cash flows from financing
activities
Proceeds from issue of share - - 316
capital
Share issue costs - - (4)
Net cash inflow from financing - - 312
activities
Net increase/(decrease) in cash (329) (158) 18
and cash equivalents
Cash and cash equivalents at 284 312 312
beginning of period
Exchange differences on cash and 103 6 (46)
cash equivalents
Cash and cash equivalents at end 58 160 284
of period
STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHSED 30 JUNE 2020
Share Share-based
Share premium payment Retained Total
capital account reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 6,884 44,816 1,671 (33,418) 19,953
December 2018
(audited)
Issue of share - 3 - - 3
capital
Share based payments - - 196 - 196
Transactions with 3
owners - 196 - 199
Loss for the period - - - 1,037 1,037
Total comprehensive - - - 1,037 1,037
loss for the period
Balance at 30 June 6,884 44,819 1,867 (32,381) 21,189
2019 (unaudited)
Issue of share 52 289 - - 341
capital
Share issue costs - (4) - - (4)
Transfer on lapse of - - (56) 56 -
warrants
Transactions with 52 285 56
owners (56) 337
Loss for the period - - - (7,445) (7,445)
Total comprehensive - - - (7,445) (7,445)
loss for the period
Balance at 31 6,936 45,104 1,811 (39,770) 14,081
December 2019
(audited)
Issue of share 5 13 - - 18
capital
Transactions with 13 - -
owners 5 18
Loss for the period - - - 1,389 1,389
Total comprehensive - - - 1,389 1,389
loss for the period
Balance at 30 June 6,941 45,117 1,811 (38,381) 15,488
2020 (unaudited)
NOTES TO THE INTERIM REPORT
FOR THE SIX MONTHSED 30 JUNE 2020
1. GENERAL INFORMATION
The financial information set out in this interim report for the Company does
not constitute statutory accounts as defined in Section 434 of the Companies
Act 2006. The Company's statutory financial statements for the year ended 31
December 2019 have been completed and filed at Companies House. The auditor's
report on the annual financial statements was unqualified and did not contain
statements under section 498(2) or section 498(3) of the Companies Act 2006.
The Company has taken advantage of the exemption under S402-405 of the
Companies Act, to not prepare Group accounts as the subsidiary companies are
considered to be immaterial. The comparative accounts for 31 December 2019 and
30 June 2019 also relate to the Company only.
2. ACCOUNTING POLICIES
BASIS OF PREPARATION
The Company's ordinary shares are quoted on the AIM market of the London Stock
Exchange and the Company applies the Companies Act 2006 when preparing its
annual financial statements.
The annual financial statements for the year ended 31 December 2020 will be
prepared under International Financial Reporting Standards as adopted by the
European Union (IFRS) and the principal accounting policies adopted remain
unchanged from those adopted in preparing its financial statements for the year
ended 31 December 2019.
The accounting policies have been applied consistently throughout the Group for
the purposes of preparation of these condensed consolidated interim financial
statements.
GOING CONCERN
The Directors have prepared cash flow forecasts for the period ending December
2021. Subsequent to the signing of the agreement with the shareholders of SPMP
as discussed in the Chairman's statement the Company is due to receive USD
$600,000, and the holders of the secured loan notes have agreed to extend the
term of the notes to 31 December 2021. With the significant reduction in costs
as a result of delisting (and taking the company private), the cash flow
forecasts indicate that the Company will require approximately GBP350,000 to meet
its liabilities as they fall due in the period. The Directors' have considered
the possible effects of Covid-19 but do not expect any significant impact from
this.
Accordingly, the Directors believe that it is appropriate to prepare the
financial statements on a going concern basis.
However, there is an outstanding guarantee from the Company in favour of local
banks in respect of a loan to SPMP, and although the Directors are confident
that this will not be called upon, there is no certainty of this. Whilst
Tri-Star's potential liability has been reduced as a result of signing the
recent agreement, if the guarantee is called upon, it could render the Company
unable to pay its debts as they fall due and the existence of this guarantee
therefore presents a material uncertainty which may cast significant doubt on
the Company's ability as a going concern.
3. SEGMENTAL REPORTING
An operating segment is a distinguishable component of the Company 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 has defined that the Group's
only reportable operating segment during the period is its investment in SPMP.
In respect of the non-current assets as at 30 June 2020 of GBP17,393,000, GBP
15,293,000 arise in the UK (30 June 2019: GBP22,355,000, 31 December 2019: GBP
15,293,000), and GBPNil arise in the rest of the world (30 June 2019: GBPNil, 31
December 2019: GBPNil).
4. TAXATION
As at 31 December 2019 Tri-Star Resources plc had unrelieved tax losses of
approximately GBP11.9m. The Directors expect these losses to be available to
offset against future taxable trading profits.
The Group has not recognised a deferred tax asset at 30 June 2020 (30 June and
31 December 2019: GBPnil) in respect of these losses on the grounds that it is
uncertain when taxable profits will be generated by the Group to utilise any
such losses.
5. PROFIT/(LOSS) PER SHARE
The calculation of the basic profit/(loss) per share is based on the profit/
(loss) attributable to ordinary shareholders divided by the weighted average
number of shares in issue during the period.
Unaudited Unaudited Audited
period ended period ended year ended
30 June 2020 30 June 2019 31 December 2019
GBP'000 GBP'000 GBP'000
Profit/(loss) on ordinary 1,389 1,037 (6,408)
activities after tax (GBP'000)
Weighted average number of shares
for calculating basic loss per 95,200,848 94,122,723 94,318,114
share
Basic profit/(loss) per share 1.46 1.10 (6.79)
(pence)
Weighted average number of shares
for calculating diluted loss per 98,141,518 96,682,764 97,105,422
share
Diluted profit/(loss) per share 1.42 1.07 (6.60)
(pence)
The weighted average number of ordinary shares excludes deferred shares which
have no voting rights and no entitlement to a dividend.
6. INVESTMENT IN ASSOCIATES
SPMP was incorporated in the Sultanate of Oman in 2014. Tri-Star had a 40%
interest in the company at 30 June 2020, 30 June 2019 and 31 December 2019.
Having reviewed SPMP forecasts, the Director's considered that no impairment of
the value of the investment in SPMP was required.
Additionally, Tri-Star has issued loans to SPMP as detailed in Note 7.
7. LOAN NOTES
SPMP Mezzanine loan notes
Loans receivable represent the US$6m mezzanine loan which the Company advanced
to SPMP as announced on 29 November 2017, the further US$2.8m advanced as
announced on 24 January 2018, and the $12m advanced between July 2018 and
January 2019.
The principal terms of the loan are as follows:
* An interest rate of 15% per annum compounded, payable in full on redemption
of the loan;
* Ranks pari passu with the existing mezzanine loans already in place at
SPMP;
* Loan term of five years with SPMP having the option to redeem (with accrued
interest to date) from the third anniversary of drawdown.
* All repayments made by SPMP to each of its three shareholders will be pari
passu in proportion to the respective total loan amounts outstanding.
* There is an option to convert the loan into shares if it remains
outstanding for 12 months after the due date.
The loan has been measured at fair value. In accordance with IFRS 9, the fair
value of the mezzanine loan from TSTR to SPMP (the "SPMP Mezzanine Loan") has
been derived using a net present value calculation in which an effective
discount rate of 23% has been applied. The Mezzanine Loan is assumed to be
converted to equity in December 2023. The fair value at 31 December 2019 was GBP
11,400,000, a fair value movement of GBP2,100,000 was recorded giving a fair
value of GBP13,500,000 at 30 June 2020. The key judgements used in this
assessment were the reliance on SPMP forecasts and market EBITDA multiples.
Having confirmed that conversion at the earliest possible date, which is
December 2023, was comfortably the most suitable route for the valuation, the
key judgement was the effective discount rate of 23% which has been applied.
The fair value is based on the Principal and rolled up interest of GBP21.7m as
set out in the Mezzanine Loan Agreement dated 30 November 2017. The terms of
the loan have been changed since the period end as described in the Chairman's
statement.
Odey Loan Notes
Loan Notes payable comprise short-dated secured loan notes issued to Odey
European Inc. ("OEI") and OEI MAC Inc. ("OMI"), two of the three OAM Funds that
were equity shareholding funds as of 30 June 2020. The Loan Notes are secured
on a debenture comprising a fixed and floating charge over all the assets of
Tri-Star Resources plc.
The Loan Notes carried an annual interest rate of 25% and had an original
repayment date of 30 June 2018 or equity placement whichever is earlier. As an
equity placement took place in January 2018, the loans technically fell due,
but OEI and OMI have now agreed to extend repayment to 31 December 2021 or
earlier at the Company's discretion. On signing the settlement agreement on 1
November 2020, the interest payable was reduced to 5%.
The US$6,000,000 Loan Notes were issued in November 2017. On 19 January 2018,
US$2,681,000 of the principal and interest was repaid and a further
US$2,639,000 was repaid on 10 July 2018. As at the period end, the outstanding
balance of the Loan Notes was US$2,180,000 including accrued interest.
8. CONTINGENT ASSET
Under the agreement to sell the Roaster intellectual property to SPMP, there is
a balance of US$2m due to be paid to Tri-Star. This payment is contingent upon
the successful commissioning of the plant in its pilot phase. The Directors
have determined not to accrue this deferred income. Therefore, there is a
contingent asset of US$2m as at 30 June 2020 (30 June and 31 December 2019:
US$2m). As part of the Settlement Agreement $1.5m of this will form part of our
investment in SPMP and $0.5m will be paid in cash.
END
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