REG-Anglesey Mining PLC: Annual Report and Notice of AGM <Origin Href="QuoteRef">AYM.L</Origin> - Part 2
31/07/2017 07:05
- Part 2: For the preceding part double click ID:nPRrV294Fa
alternative sources of funding. Whilst discussions with shareholders and financial institutions are ongoing the ability of the group to raise sufficient finance to complete development of its various projects is not certain. These conditions indicate the
existence of an uncertainty which may cast doubt about the group and company’s ability to ultimately continue as a going concern. However, as funding is sufficient to meet current liabilities for the foreseeable future we concur with the directors’
assessment that the accounts should be prepared on the going concern basis.
Potential impairment of capitalised costs associated with the exploration and evaluation of the Parys Mountain mine site The group has held rights to explore and mine the site for a number of years but has not completed exploration and evaluation activities or feasibility assessments to an extent where the site has been confirmed as being commercially viable and mining activities commenced. There is a risk that accounting criteria associated with the capitalisation of exploration and evaluation expenditure may no longer be appropriate and that capitalised costs exceed the value in use. Any assessment of the value in use is highly judgemental and is based on the directors’ assessment of a number of factors, including: long term metal commodity prices; the estimated mineral deposits from independent experts’ studies; costs associated with mineral extraction and sale; discount rates; and exchange rate factors. Our audit work included, but was not restricted to, a review of the directors’ assessment of the criteria for the capitalisation of exploration and evaluation expenditure and whether there are any indicators of impairment to capitalised costs. The
directors concluded that there was an indicator of potential impairment. As a result, the directors’ carried out an impairment review based on value in use methodology to determine the recoverable amount of the Parys Mountain project. Their assessment
based on the net present value of the future cash flows did not indicate that an impairment of the asset was required. Our work included an audit of the integrity of the discounted cash flow model used by the directors to make an assessment as to whether
impairment had occurred, as well as using our professional scepticism to challenge and test the key assumptions including their sensitivity to the model. These key assumptions included the expected future revenue and costs associated with the extraction
and sale of the mineral deposits, future metal prices, currency exchange rates, demand for the minerals and the discount rate utilised in the financial model. Our work did not indicate that impairment to exploration and evaluation assets was required.
Potential impairment of the investment in the subsidiary, Parys Mountain Mines Limited, in the parent company financial statements The cost of the investment in and loan due from the subsidiary, Parys Mountain Mines Limited, held in the balance sheet of the company, is supported by the future cash flows associated with the recovery of the exploration and evaluation assets following the development of the Parys Mountain site held by Parys Mountain Mines Limited. If there were impairment in the exploration and evaluation assets, this would have a direct impact on the carrying value of the investment in and loan due from the subsidiary, which may need to be written down in the company’s accounts. In conjunction with our work associated with the potential impairment of the exploration and evaluation assets held within Parys Mountain Mine Limited, we considered directors’ assessment on whether there was an indication that the cost of the investment
in and loan due from the subsidiary required writing down in the company. As there was no impairment of the asset held by Parys Mountain Mines Limited, we concur with management’s view that there is no indicator of impairment in the carrying value of the
investment in and loan due from the company was not recoverable.
The Audit Committee’s consideration of these risks is set out on page 20.
The audit procedures relating to the above mentioned matters were designed in
the context of our audit of the financial statements as a whole. Our opinion
on the financial statements is not modified with respect to any of these risks
and we do not express an opinion on these individual risks.
Going concern
Other than the matters highlighted above under the risk entitled ‘Going
concern’ within our assessment of the risks of material misstatement, we
have nothing further to add or draw attention to in relation to:
*
the directors’ confirmation on page 8 of the Annual Report, that they have
carried out a robust assessment of the principal risks facing the entity,
including those that would threaten its business model, future performance,
solvency or liquidity;
*
the disclosures in the Annual Report that describe those risks and explain how
they are being managed or mitigated;
*
the directors’ statement on page 10 of the Annual Report about whether they
have considered it appropriate to adopt the going concern basis of accounting
in preparing the financial statements and their identification of any material
uncertainties to the Group’s ability to continue to do so over a period of
at least twelve months from the date of approval of the financial statements;
*
the directors’ explanation on pages 10 & 31 of the Annual Report as to how
they have assessed the prospects of the entity, over what period they have
done so and why they consider that period to be appropriate, and their
statement as to whether they have a reasonable expectation that the Group will
be able to continue in operation and meet its liabilities as they fall due
over the period of their assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
Our assessment and application of materiality
We apply the concept of materiality both in planning and performing our audit,
and in evaluating the effect of misstatements on the financial statements and
our audit. Materiality is used so we can plan and perform our audit to obtain
reasonable, rather than absolute, assurance about whether the financial
statements are free from material misstatement. The level of materiality we
set is based on our assessment of the magnitude of misstatements that
individually or in aggregate, could reasonably be expected to have influence
on the economic decisions the users of the financial statements may take based
on the information included in the financial statements.
Based on our professional judgement the level of overall materiality we set
for the financial statements is outlined below:
Overall Group materiality: £368,000
Benchmark applied: This has been calculated with reference to the group’s net assets, of which it represents approximately 3%.
Basis for chosen benchmark: Net assets represents shareholders’ funds and we have determined it to be the principal benchmark within the financial statements relevant to shareholders, as the group has no revenues and is still exploring and evaluating mineral sites in which it retains an interest. 3% has been chosen to reflect the level of understanding of the stakeholders of the Group in relation to the inherent uncertainties around accounting estimates and judgements.
We agreed with the Audit Committee that we would report to the Committee all
audit differences in excess of £11,000, as well as differences below that
threshold that, in our view, warranted reporting on qualitative grounds. We
also report to the Audit Committee on disclosure matters that we identified
during the course of assessing the overall presentation of the financial
statements.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the
financial statements sufficient to give reasonable assurance that the
financial statements are free from material misstatement, whether caused by
fraud or error. This includes an assessment of: whether accounting policies
are appropriate to the group’s and parent company’s circumstances and have
been consistently applied and adequately disclosed; the reasonableness of
significant accounting estimates made by the directors; and the overall
presentation of the financial statements. In addition, we read all the
financial and non-financial information in the annual report to identify
material inconsistencies with the audited financial statements and to identify
any information that is apparently incorrect based on, or materially
inconsistent with, the knowledge acquired by us in the course of performing
the audit. If we become aware of any apparent material misstatements or
inconsistencies we consider the implications for our report.
There are 7 legal entities accounting for 100% of the group’s operating
loss, 100% of net assets and 100% of total assets, all of which were subject
to full scope audits for the year ended 31 March 2017. The audit of all the
entities within the group was undertaken by the group audit team.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion, the part of the Directors’ Remuneration Report to be audited
has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
*
the information given in the Strategic Report and Directors’ Report for the
financial year for which the financial statements are prepared is consistent
with the financial statements and those reports have been prepared in
accordance with applicable legal requirements;
*
the information given in the Corporate Governance Statement about internal
control and risk management systems in relation to financial reporting
processes and about share capital structures, in compliance with rules 7.2.5
and 7.2.6 in the Disclosure Rules and Transparency Rules sourcebook made by
the Financial Conduct Authority (the FCA Rules), is consistent with the
financial statements and has been prepared in accordance with applicable legal
requirements; and
*
the information given in the Corporate Governance Statement about the
company’s corporate governance code and practices and about its
administrative, management and supervisory bodies and their committees
complies with rules 7.2.2, 7.2.3 and 7.2.7 of the FCA Rules.
Matters on which we are required to report by exception
Companies Act 2006
In light of the knowledge and understanding of the group and the parent
company and its environment obtained in the course of the audit, we have not
identified material misstatements in:
*
the Strategic Report or the Directors’ Report; or
*
the information about internal control and risk management systems in relation
to financial reporting processes and about share capital structures, given in
compliance with rules 7.2.5 and 7.2.6 of the FCA Rules.
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
*
adequate accounting records have not been kept by the parent company, or
returns adequate for our audit have not been received from branches not
visited by us; or
*
the parent company financial statements and the part of the Directors’
Remuneration Report to be audited are not in agreement with the accounting
records and returns; or
*
certain disclosures of directors’ remuneration specified by law are not
made; or
*
we have not received all the information and explanations we require for our
audit.
ISAs (UK and Ireland)
Under the ISAs (UK and Ireland), we are required to report to you if, in our
opinion, information in the annual report is:
*
materially inconsistent with the information in the audited financial
statements; or
*
apparently materially incorrect based on, or materially inconsistent with, our
knowledge of the company acquired in the course of performing our audit; or
*
is otherwise misleading.
In particular we are required to consider whether we have identified any
inconsistencies between our knowledge acquired during the audit and the
directors’ statement that they consider the annual report is fair, balanced
and understandable and whether the annual report appropriately discloses those
matters that we communicated to the audit committee which we consider should
have been disclosed.
We have no exceptions to report arising from these responsibilities.
Listing Rules
Under the Listing Rules we are required to review:
*
the directors’ statement, set out on page 10, in relation to going concern
and longer-term viability; and
*
the part of the Corporate Governance Statement relating to the company’s
compliance with certain provisions of the UK Corporate Governance Code
specified for our review.
We have nothing to report having performed our review.
Respective responsibilities of directors and auditor
As explained more fully in the Directors’ Responsibilities Statement set out
on page 11, the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the financial
statements in accordance with applicable law and ISAs (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board’s Ethical
Standards for Auditors.
This report is made solely to the company’s members as a body in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company’s members those matters we
are required to state to them in an auditor’s report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company’s members as
a body for our audit work, for this report, or for the opinions we have
formed.
Robert Neate (Senior Statutory Auditor)
for and on behalf of Mazars LLP
Chartered Accountants and Statutory Auditor
Tower Bridge House, St. Katharine’s Way, London, E1W 1DD
Date: 28 July 2017
Financial statements
Group income statement
All attributable to equity holders of the company
Notes Year ended 31 March 2017 Year ended 31 March 2016
All operations are continuing £ £
Revenue - -
Expenses (141,022) (112,279)
Equity-settled employee benefits 22 (9,479) -
Investment income 6 146 335
Finance costs 7 (157,791) (142,467)
Foreign exchange gain/(loss) 178 (2,039)
Loss before tax 4 (307,968) (256,450)
Taxation 8 - -
Loss for the period (307,968) (256,450)
Loss per share
Basic - pence per share 9 (0.2)p (0.2)p
Diluted - pence per share 9 (0.2)p (0.2)p
Group statement of comprehensive income
Loss for the period (307,968) (256,450)
Other comprehensive income
Items that may subsequently be reclassified to profit or loss:
Exchange difference on translation of foreign holding (35,053) (7,294)
Total comprehensive loss (343,021) (263,744)
for the period
Statement of financial position of the group
31 March 2017 31 March 2016
Notes £ £
Assets
Non-current assets
Mineral property exploration and evaluation 10 15,010,822 14,926,626
Property, plant and equipment 11 204,687 204,687
Investments 14 86,660 86,660
Deposit 15 123,118 123,078
15,425,287 15,341,051
Current assets
Other receivables 16 23,603 32,759
Cash and cash equivalents 17 392,293 11,504
415,896 44,263
Total assets 15,841,183 15,385,314
Liabilities
Current liabilities
Trade and other payables 18 (114,557) (136,259)
17
(114,557) (136,259)
Net current assets/(liabilities) 301,339 (91,996)
Non-current liabilities
Loans 19 (3,415,738) (3,097,662)
Long term provision 20 (50,000) (50,000)
(3,465,738) (3,147,662)
Total liabilities (3,580,295) (3,283,921)
Net assets 12,260,888 12,101,393
Equity
Share capital 21 7,286,914 7,116,914
Share premium 10,171,986 9,848,949
Currency translation reserve (73,510) (38,457)
Retained losses (5,124,502) (4,826,013)
Total shareholders' equity 12,260,888 12,101,393
The financial statements of Anglesey Mining plc were approved by the board of
directors, authorised
for issue on 28 July 2017 and signed on its behalf by:
John F. Kearney, Chairman
Danesh Varma, Finance Director
Statement of financial position of the company
31 March 2017 31 March 2016
Notes £ £
Assets
Non-current assets
Investments 13 14,228,552 14,144,127
14,228,552 14,144,127
Current assets
Other receivables 16 12,759 15,433
Cash and cash equivalents 17 388,880 7,867
401,639 23,300
Total assets 14,630,191 14,167,427
Liabilities
Current liabilities
Trade and other payables 18 (107,571) (117,435)
(107,571) (117,435)
Net current assets/(liabilities) 294,068 (94,135)
Non-current liabilities
Loan 19 (3,118,168) (2,852,201)
(3,118,168) (2,852,201)
Total liabilities (3,225,739) (2,969,636)
Net assets 11,404,452 11,197,791
Equity
Share capital 21 7,286,914 7,116,914
Share premium 10,171,986 9,848,949
Retained losses (6,054,448) (5,768,072)
Shareholders' equity 11,404,452 11,197,791
The company reported a loss for the year ended 31 March 2017 of £295,855
(2016 - £242,692). The financial statements of Anglesey Mining plc registered
number 1849957 were approved by the board of directors and authorised for
issue on 28 July 2017 and signed on its behalf by:
John F. Kearney, Chairman
Danesh Varma, Finance Director
Statements of changes in equity
All attributable to equity holders of the company.
Group Share Share Currency translation reserve Retained losses Total
capital premium
£ £ £ £ £
Equity at 1 April 2015 7,116,914 9,848,949 (31,163) (4,569,563) 12,365,137
Total comprehensive loss for the year:
Loss for the year - - - (256,450) (256,450)
Exchange difference on translation of foreign holding - - (7,294) - (7,294)
Total comprehensive loss for the year - - (7,294) (256,450) (263,744)
Equity at 31 March 2016 7,116,914 9,848,949 (38,457) (4,826,013) 12,101,393
Total comprehensive loss for the year:
Loss for the year - - - (307,968) (307,968)
Exchange difference on translation of foreign holding - - (35,053) - (35,053)
Total comprehensive loss for the year - - (35,053) (307,968) (343,021)
Shares issued 170,000 365,200 - - 535,200
Share issue expenses - (42,163) - - (42,163)
Equity-settled employee benefits - - - 9,479 9,479
Equity at 31 March 2017 7,286,914 10,171,986 (73,510) (5,124,502) 12,260,888
Company Share Share Retained Total
capital premium losses
£ £ £ £
Equity at 1 April 2015 7,116,914 9,848,949 (5,525,380) 11,440,483
Total comprehensive loss for the year:
Loss for the year - - (242,692) (242,692)
Total comprehensive loss for the year - - (242,692) (242,692)
Equity at 31 March 2016 7,116,914 9,848,949 (5,768,072) 11,197,791
Total comprehensive loss for the year:
Loss for the year - - (295,855) (295,855)
Total comprehensive loss for the year - - (295,855) (295,855)
Shares issued 170,000 365,200 - 535,200
Share issue expenses - (42,163) - (42,163)
Equity-settled employee benefits - - 9,479 9,479
Equity at 31 March 2017 7,286,914 10,171,986 (6,054,448) 11,404,452
Statement of cash flows of the group
Notes Year ended 31 March 2017 Year ended 31 March 2016
£ £
Operating activities
Loss for the period (307,968) (256,450)
Adjustments for:
Investment income 6 (146) (335)
Finance costs 7 157,791 142,467
Equity-settled employee benefits 9,479 -
Foreign exchange movement (178) 2,039
(141,022) (112,279)
Movements in working capital
Decrease/(increase) in receivables 9,156 (1,782)
(Decrease)/increase in payables (9,632) 14,775
Net cash used in operating activities (141,498) (99,286)
Investing activities
Investment income 106 63
Mineral property exploration and evaluation (96,034) (49,506)
Net cash used in investing activities (95,928) (49,443)
Financing activities
Loans 125,000 65,399
Share issue proceeds net of expenses 493,037 -
Net cash generated from financing activities 618,037 65,399
Net increase/(decrease) in cash and cash equivalents 380,611 (83,330)
Cash and cash equivalents at start of period 11,504 96,873
Foreign exchange movement 178 (2,039)
Cash and cash equivalents at end of period 17 392,293 11,504
Statement of cash flows of the company
Notes Year ended 31 March 2017 Year ended 31 March 2016
£ £
Operating activities
Loss for the period 23 (295,855) (242,692)
Adjustments for:
Equity-settled employee benefits 9,479 -
Finance costs 140,967 127,718
(145,409) (114,974)
Movements in working capital
Decrease/(increase) in receivables 2,674 (1,488)
(Decrease)/increase in payables (9,864) 14,775
Net cash used in operating activities (152,599) (101,687)
Investing activities
Investments and long term loans (84,425) (27,101)
Net cash used in investing activities (84,425) (27,101)
Financing activities
Loans 125,000 64,567
Share issues net of expenses 493,037 -
Net cash generated from financing activities 618,037 64,567
Net increase/(decrease) in cash and cash equivalents 381,013 (64,221)
Cash and cash equivalents at start of period 7,867 72,088
Cash and cash equivalents at end of period 17 388,880 7,867
Notes to the financial statements
1 General information
Anglesey Mining plc is domiciled and incorporated in England and Wales under
the Companies Act. The nature of the group’s operations and its principal
activities are set out in note 3 and in the strategic report. The registered
office address is as shown on the rear cover.
These financial statements are presented in pounds sterling because that is
the currency of the primary economic environment in which the group has been
operating. Foreign operations are included in accordance with the policies set
out in note 2.
2 Significant accounting policies
Basis of Accounting
The group and company financial statements have been prepared in accordance
with International Financial Reporting Standards (IFRS) as adopted by the
European Union and therefore the group financial statements comply with
Article 4 of the EU IAS Regulation.
The financial statements have been prepared on the historical cost basis
except for the fair valuation of certain financial assets. The principal
accounting policies adopted are set out below.
Going concern
The financial statements are prepared on a going concern basis. The validity
of the going concern basis is dependent on finance being available for the
continuing working capital requirements of the group for the foreseeable
future, being a period of at least twelve months from the date of approval of
the accounts. Whilst the group has such working capital, the long term
operations of the group are dependent on its ability to raise adequate
financing. The group relies on equity financing and support from its
shareholders to fund its working capital requirements. The group will need to
generate additional financial resources in the future in order to meet its
planned business objectives and continue as a going concern. Additional
financing will be required to continue the development of the group’s
properties and in the longer term to put the Parys Mountain Mine into
production.
The directors recognise that the long term continuing operations of the group
are dependent upon its ability to raise adequate financing and that this
represents an uncertainty which may cast doubt about the group’s ability to
continue as s going concern. The directors have a reasonable expectation that
the required financing will be raised and are actively pursuing various
financing options with certain shareholders and financial institutions
regarding proposals for financing. The directors have reasonable expectations
that these financing discussions will be successful and therefore the
financial statements have been prepared on the going concern basis.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the company and entities controlled by the company (its subsidiaries) made up
to 31 March each year. Control is achieved where the company has the power to
govern the financial and operating policies of an investee entity so as to
obtain benefits from its activities.
On acquisition, the assets and liabilities and contingent liabilities of a
subsidiary are measured at their fair values at the date of acquisition. Any
excess of the cost of acquisition over the fair values of the identifiable net
assets acquired is recognised as goodwill. Any deficiency of the cost of
acquisition below the fair values of the identifiable net assets acquired
(i.e. discount on acquisition) is credited to the income statement in the
period of acquisition. The results of subsidiaries acquired or disposed of
during the year are included in the group income statement from the effective
date of acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used into line with those used
by the group. All intra-group transactions, balances, income and expenses are
eliminated on consolidation.
Revenue recognition
Interest income is accrued on a time basis, by reference to the principal
outstanding and at the effective interest rate applicable, which is the rate
that exactly discounts estimated future cash receipts through the expected
life of the financial asset to that asset’s net carrying amount.
Foreign currencies
Transactions in currencies other than pounds sterling are recorded at the
rates of exchange prevailing on the dates of the transactions. At the end of
each reporting period, monetary assets and liabilities that are denominated in
foreign currencies are retranslated at the rates prevailing on the period end
date. Non-monetary assets and liabilities carried at fair value that are
denominated in foreign currencies are translated at the rates prevailing at
the date when the fair value was determined. Gains and losses arising on
retranslation are included in net profit or loss for the period.
On consolidation, the assets and liabilities of the group’s overseas
operations are translated at exchange rates prevailing on the period end date.
Exchange differences arising, if any, are classified as items of other
comprehensive income and transferred to the group’s translation reserve
within equity.
Such translation differences are reclassified to profit or loss, and
recognised as income or as expense, in the period in which there is a
disposition of the operation.
Segmental analysis
Operating segments are identified on the basis of internal reports about
components of the group that are regularly reviewed by the chief operating
decision-maker.
Retirement benefit costs
Payments to defined contribution retirement benefit schemes are charged as an
expense as they fall due. There are no defined benefit retirement schemes.
Equity-settled employee benefits
The group provides equity-settled benefits to certain employees.
Equity-settled employee benefits are measured at fair value at the date of
grant. The fair value determined at the grant date is expensed on a
straight-line basis over the vesting period, based on the group’s estimate
of shares that will eventually vest and adjusted for the effect of non-market
based vesting conditions.
Fair value is measured by use of a Black-Scholes model.
Taxation
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the period end liability method. Deferred
tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from goodwill or from the initial recognition
(other than in a business combination) of other assets and liabilities in a
transaction that affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates, and interests in joint
ventures, except where the group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
The carrying
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