REG-ECR Minerals plc Annual Financial Report <Origin Href="QuoteRef">ECRE.L</Origin> - Part 2
07/03/2016 07:01
- Part 2: For the preceding part double click ID:nBw13djgja
7 (321,180) (21,586)
Finance income and costs 7 (321,152) (20,932)
Loss for the year before taxation (1,502,738) (1,746,397)
Income tax 5 (3,217,484) -
Loss for the year from continuing operations (4,720,222) (1,746,397)
Loss for the year - all attributable to owners of the parent (4,720,222) (1,746,397)
Loss per share - basic and diluted 4
On continuing operations (0.13)p (0.05)p
The loss for the Parent Company for the year was £4,674,506 (2014: £1,669,949)
Consolidated Statement of Comprehensive Income
For the year ended 30 September 2015
Year ended Year ended
30 September 2015 30September 2014
Note £ £
Loss for the year (4,720,222) (1,746,397)
Items that may be reclassified subsequently to profit or loss
Reclassification to profit and loss on disposal of available for sale assets 9 14,750 (14,750)
Gain/(loss) on exchange translation 22,193 (96,893)
Other comprehensive income/(expense) for the year 36,943 (111,643)
Total comprehensive expense for the year (4,683,279) (1,858,040)
Attributable to:-
Owners of the parent (4,683,279) (1,858,040)
Consolidated & Company Statement of Financial Position
At 30 September 2015
Group Company
30 September 30 September 30 September 30 September
2015 2014 2015 2014
Note £ £ £ £
Assets
Non-current assets
Property, plant and equipment 8 7,705 10,820 7,705 10,642
Investments in subsidiaries 9 - - 703,740 624,008
Exploration assets 10 2,132,224 1,422,493 1,797,460 1,165,062
Other receivables 11 - 3,228,390 10,907 3,228,390
2,139,929 4,661,703 2,519,812 5,028,102
Current assets
Trade and other receivables 11 74,233 174,051 35,674 147,154
Available for sale financial assets 9 39,277 178,866 39,277 178,866
Other financial assets 9 - 26,196 - 26,196
Taxation 2,514 2,380 1,837 2,380
Other current assets 2,672 2,672 2,672 2,672
Cash and cash equivalents 12 90,398 642,056 81,040 609,400
209,094 1,026,221 160,500 966,668
Total assets 2,349,023 5,687,924 2,680,312 5,994,770
Current liabilities
Trade and other payables 14 351,850 284,819 349,990 282,039
Interest bearing liabilities 15 451,104 794,061 451,104 794,061
802,954 1,078,880 801,094 1,076,100
Total liabilities 802,954 1,078,880 801,094 1,076,100
Net assets 1,546,069 4,609,044 1,879,218 4,918,670
Equity attributable to owners of the parent
Share capital 13 11,071,602 10,483,166 11,071,602 10,483,166
Share premium 13 40,802,469 40,131,118 40,802,469 40,131,118
Exchange reserve (69,649) (91,842) - -
Other reserves 845,677 485,160 845,677 485,160
Retained losses (51,104,030) (46,398,558) (50,840,530) (46,180,774)
Total equity 1,546,069 4,609,044 1,879,218 4,918,670
The notes on are an integral part of these consolidated financial statements.
The financial statements were approved and authorised for issue by the Directors
on 4 March 2016 and were signed on their behalf by:
Bill Howell Stephen Clayson
Non-Executive Chairman Director & Chief Executive Officer
Consolidated Statement of Changes in Equity
For the year ended 30 September 2015
Share Share Exchange Other Retained
capital premium reserve reserves reserves
(Note 13) (Note 13) Total
Group £ £ £ £ £ £
Balance at 1 October 2013 10,453,946 40,096,112 5,051 351,760 (44,637,411) 6,269,458
Loss for the year - - - - (1,746,397) (1,746,397)
Reclassification of fair value movements to Income
Statement on disposal of available for sale assets - - - - (14,750) (14,750)
Loss on exchange translation - - (96,893) - - (96,893)
Total comprehensive expense - - (96,893) - (1,761,147) (1,858,040)
Conversion of loan notes 28,066 33,625 - - - 61,691
Warrants issued in lieu of finance cost - - - 133,400 - 133,400
Shares issued in payment of creditors 1,154 1,381 - - - 2,535
Balance at 30 September 2014 10,483,166 40,131,118 (91,842) 485,160 (46,398,558) 4,609,044
Loss for the year - - - - (4,720,222) (4,720,222)
Reclassification of fair value movements to Income
Statement on disposal of available for sale assets - - - - 14,750 14,750
Gain on exchange translation - - 22,193 - - 22,193
Total comprehensive expense - - 22,193 - (4,705,472) (4,683,279)
Conversion of loan notes 548,544 357,055 - - - 905,599
Shares issued 6,556 288,444 - - - 295,000
Share based payments - - - 288,831 - 288,831
Warrants issued in lieu of finance cost - - - 71,686 - 71,686
Share issued in payment of creditors 33,336 25,852 - - - 59,188
Balance at 30 September 2015 11,071,602 40,802,469 (69,649) 845,677 (51,104,030) 1,546,069
Company Statement of Changes in Equity
For the year ended 30 September 2015
Share Share Retained Other
capital premium reserves reserves
(Note 13) (Note 13) Total
Company £ £ £ £ £
Balance at 1 October 2013 10,453,946 40,096,112 (44,496,075) 351,760 6,405,743
Loss for the year - - (1,669,949) - (1,669,949)
Reclassification of fair value movements to Income
Statement on disposal of available for sale assets - - (14,750) - (14,750)
Total comprehensive expense - - (1,684,699) - (1,684,699)
Conversion of loan notes 28,066 33,625 - - 61,691
Warrants issued in lieu of finance cost - - - 133,400 133,400
Shares issued in payment of creditors 1,154 1,381 - - 2,535
Balance at 30 September 2014 10,483,166 40,131,118 (46,180,774) 485,160 4,918,670
Loss for the year - - (4,674,506) - (4,674,506)
Reclassification of fair value movements to Income
Statement on disposal of available for sale assets - - 14,750 - 14,750
Total comprehensive expense - - (4,659,756) - (4,659,756)
Conversion of loan notes 548,544 357,055 - - 905,599
Shares issued 6,556 288,444 - - 295,000
Share based payments - - - 288,831 288,831
Warrants issued in lieu of finance cost - - - 71,686 71,686
Shares issued in payment of creditors 33,336 25,852 - - 59,188
Balance at 30 September 2015 11,071,602 40,802,469 (50,840,530) 845,677 1,879,218
Consolidated & Company Cash Flow Statement
For the year ended 30 September 2015
Group Company
Year ended Year ended Year ended Year ended
30 September 2015 30 September 2014 30 September 2015 30 September 2014
Note £ £ £ £
Net cash flow used in operations 23 (654,704) (846,274) (595,822) (782,833)
Investing activities
Purchase of property, plant & equipment 8 - (10,642) - (10,642)
Increase in exploration assets 10 (719,108) (624,142) (632,398) (561,989)
Cash introduced with re-admission of subsidiary 10,125 - - -
Investment in subsidiaries 9 - - (79,732) (172,115)
Proceeds from sale of available for sale investments 68,022 66,988 68,022 66,988
Investment in available for sale investments (39,276) - (39,276) -
Interest income 28 654 28 654
Net cash used in investing activities 680,209) (567,142) 683,356) (677,104)
Financing activities
Proceeds from issue of share capital 295,000 - 295,000 -
Proceeds from issue of convertible loan notes 494,774 830,909 494,774 830,909
Finance costs on fundraising (38,956) - (38,956) -
Interest paid and other financing costs 7 (1,384) - - -
Net cash from financing activities 749,434 830,909 750,818 830,909
Net change in cash and cash equivalents (585,479) (582,507) (528,359) (629,028)
Cash and cash equivalents at beginning of the year 642,056 1,238,562 609,400 1,238,428
Effect of changes in foreign exchange rates 33,821 (13,999) - -
Cash and cash equivalents at end of the year 12 90,398 642,056 81,040 609,400
Notes to the Financial Statements
For the year ended 30 September 2015
1General information
The Company and the Group operated mineral exploration and development projects.
The Group`s principal interests are located in Argentina, the Philippines and
Australia.
The Company is a public limited company incorporated and domiciled in England.
The registered office of the Company and its principal place of business is 2nd
Floor, Peek House, 20 Eastcheap, London EC3M 1EB. The Company is listed on the
Alternative Investment Market (AIM) of the London Stock Exchange.
2Accounting policies
Overall considerations
The principal accounting policies that have been used in the preparation of
these consolidated financial statements are set out below. The policies have
been consistently applied unless otherwise stated.
Basis of preparation
The financial statements of both the Group and the Parent Company have been
prepared in accordance with International Financial Reporting Standards (IFRSs)
and Interpretations issued by the IFRS Interpretations Committee (IFRIC) as
adopted by the European Union and with those parts of the Companies Act 2006
applicable to companies reporting under IFRS. These are the standards,
subsequent amendments and related interpretations issued and adopted by the
International Accounting Standard Board (IASB) that have been endorsed by the
European Union at the year end. The consolidated financial statements have been
prepared under the historical cost convention, as modified by the revaluation of
certain financial instruments. The Directors have taken advantage of the
exemption available under Section 408 of the Companies Act 2006 and have not
prepared an Income Statement or a Statement of Comprehensive Income for the
Company alone.
The subsidiary Mercator Gold Australia Pty Ltd ("MGA") has a 30 June year end as
this is in line with the Australian fiscal year end.
Going concern
The Group and Parent Company financial statements have been prepared on a going
concern basis as explained herein.
Based on a review of the Company`s budgets and cash flow forecasts and the
expected sources of financing available to it, the Directors are satisfied that
the Company will be able to obtain sufficient resources to continue its
operations and to meet its commitments for the foreseeable future. The Directors
have considered the present economic and financial climate as specifically
pertaining to the Company and its peer group, and are confident in the ability
of the Company to raise funding as required to sustain and develop the
operations of the Group. Means of raising finance potentially available to the
Company include the issue of equity and the sale of assets. In addition, in
September 2014 the Company entered into an agreement in relation to a
convertible loan facility (the "Facility") of up to US$10 million to be made
available by YA Global Master SPV Ltd ("YA Global"). The Facility, which will be
available to the Company for three years, provided for an initial loan tranche
of principal amount US$1.5 million (the "Initial Tranche"), which was drawn down
by ECR in September 2014. A further loan under the facility, in three tranches
totaling US$750,000 in principal amount, was agreed in February 2015, and the
three tranches were drawn down as envisaged. The Directors believe further loans
are likely to be available under the facility in future, should they be
required, although neither the Company nor YA Global is under any obligation to
agree to any further loan. Further information regarding the Facility is
disclosed in Note 15Error! Reference source not found..
New Accounting Standards and Interpretations
Effective during the year
During the year the Group has adopted the following standards and amendments:
* Amendments to IAS 32 Financial Instruments: Presentation - Offsetting
Financial Assets and Financial Liabilities
* IFRS 10 Consolidated Financial Statements
* IFRS 11 Joint Arrangements
* IFRS 12 Disclosure of Interests in Other Entities
* IAS 27 Separate Financial Statements
* IAS 28 Investments in Associates and Joint Ventures
* Amendments to IFRS 10, IFRS 11 and IFRS 12: Consolidated Financial Statements,
Joint Arrangements and Disclosure of Interests in Other Entities - Transition
Guidance
* Amendments to IAS 36: Recoverable Amount Disclosures for Non-Financial Assets
* IFRIC Interpretation 21 Levies
The adoption of these standards and amendments did not have any impact on the
financial position or performance of the Group.
Not yet effective
At the date of authorisation of these Group Financial Statements and the Parent
Company Financial Statements, the following Standards, amendments and
interpretations were endorsed by the EU but not yet effective:
* Annual Improvements to IFRSs 2010-2012 Cycle
* Annual Improvements to IFRSs 2011-2013 Cycle
* Amendments to IAS 19: Defined Benefit Plans: Employee Contributions
* Amendments to IFRS 11: Accounting for Acquisitions of Interests in Joint
Operations
* Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of
Depreciation and Amortisation
* Annual Improvements to IFRSs 2012-2014 Cycle
* Amendments to IAS 1: Disclosure Initiative
* Amendments to IAS 27: Equity Method in Separate Financial Statements
In addition to the above there are also the following standards and amendments
that have not yet been endorsed by the EU:
* IFRS 9 Financial Instruments
* IFRS 14 Regulatory Deferral Accounts
* IFRS 15 Revenue from Contracts with Customers
* IFRS 16 Leases
* Amendments to IFRS 10, IFRS 12 and IAS 28: Investment Entities: Applying the
Consolidation Exception
* Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an
Investor and its Associate or Joint Venture
* Amendments to IFRS 10 and Statement of Cash Flows: Disclosure Initiative
* Amendments to IAS 12: Recognition of Deferred Tax Assets for unrealised losses
* Amendments to IAS 7: Statement of Cash Flows Disclosure Initiative
The Group intends to adopt these standards when they become effective. The
introduction of these new standards and amendments is not expected to have a
material impact on the Group or Company.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and two of its subsidiaries made up to 30 September 2015. Subsidiary
undertakings acquired during the period are recorded under the acquisition
method of accounting and their results consolidated from the date of
acquisition, being the date on which the Company obtains control, or the date
control re-acquired from administrators, and continue to be consolidated until
the date such control ceases. Two subsidiaries have not been consolidated on the
grounds of immateriality.
Cash and cash equivalents
Cash includes petty cash and cash held in current bank accounts. Cash
equivalents include short-term investments that are readily convertible to known
amounts of cash and which are subject to insignificant risk of changes in value.
Property, plant and equipment
Property, plant and equipment are stated at cost, less accumulated depreciation
and any provision for impairment losses.
Depreciation is charged on each part of an item of property, plant and equipment
so as to write off the cost or valuation of assets less the residual value over
their estimated useful lives, using the straight-line method. Depreciation is
charged to the Income Statement. The estimated useful lives are as follows:
Office equipment 3 years
Furniture and fittings 5 years
Machinery and equipment 5 years
Expenses incurred in respect of the maintenance and repair of property, plant
and equipment are charged against income when incurred. Refurbishments and
improvements expenditure, where the benefit is expected to be long lasting, is
capitalised as part of the appropriate asset.
An item of property, plant and equipment ceases to be recognised upon disposal
or when no future economic benefits are expected from its use or disposal. Any
gain or loss arising on cessation of recognition of the asset (calculated as the
difference between the net disposal proceeds and the carrying amount of the
asset) is included in the Income Statement in the year the asset ceases to be
recognised.
Exploration and development costs
All costs associated with mineral exploration and investments are capitalised on
a project-by-project basis, pending determination of the feasibility of the
project. Costs incurred include appropriate technical and administrative
expenses but not general overheads. If an exploration project is successful, the
related expenditures will be transferred to mining assets and amortised over the
estimated life of the commercial ore reserves on a unit of production basis.
Where a licence is relinquished or a project abandoned, the related costs are
written off in the period in which the event occurs. Where the Group maintains
an interest in a project, but the value of the project is considered to be
impaired, a provision against the relevant capitalised costs will be raised.
The recoverability of all exploration and development costs is dependent upon
the discovery of economically recoverable reserves, the ability of the Company
to obtain necessary financing to complete the development of reserves and future
profitable production or proceeds from the disposition thereof.
Impairment testing
Individual assets are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may exceed its
recoverable amount, being the higher of net realisable value and value in use.
Any such excess of carrying value over recoverable amount or value in use is
taken as a debit to the Income Statement.
Provisions
A provision is recognised in the Statement of Financial Position when the Group
has a present legal or constructive obligation as a result of a past event, and
it is probable that an outflow of economic benefits will be required to settle
the obligation. If the effect is material, provisions are determined by
discounting the expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money and, where appropriate,
the risks specific to the liability.
Leased assets
In accordance with IAS 17, leases in terms of which the Group assumes
substantially all the risks and rewards of ownership are classified as finance
leases. All other leases are regarded as operating leases and the payments made
under them are charged to the income statement on a straight line basis over the
lease term.
Taxation
Current tax is the tax currently payable based on taxable profit for the period.
Deferred income taxes are calculated using the Statement of Financial Position
liability method on temporary differences. Deferred tax is generally provided on
the difference between the carrying amounts of assets and liabilities and their
tax bases. However, deferred tax is not provided on the initial recognition of
goodwill or on the initial recognition of an asset or liability unless the
related transaction is a business combination or affects tax or accounting
profit. Deferred tax on temporary differences associated with shares in
subsidiaries and joint ventures is not provided if reversal of these temporary
differences can be controlled by the Company and it is probable that reversal
will not occur in the foreseeable future. In addition, tax losses available to
be carried forward as well as other income tax credits to the Company are
assessed for recognition as deferred tax assets.
Deferred tax liabilities are provided in full, with no discounting. Deferred tax
assets are recognised to the extent that it is probable that the underlying
deductible temporary differences will be able to be offset against future
taxable income. Current and deferred tax assets and liabilities are calculated
at tax rates that are expected to apply to their respective period of
realisation, provided they are enacted or substantively enacted at the Statement
of Financial Position date.
Changes in deferred tax assets or liabilities are recognised as a component of
tax expense in the Income Statement, except where they relate to items that are
charged or credited directly to equity, in which case the related current or
deferred tax is also charged or credited directly to equity.
Investments in subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity
when it is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power
over the entity.
The investments in subsidiaries held by the Company are valued at cost less any
provision for impairment that is considered to have occurred, the resultant loss
being recognised in the Income Statement.
Equity
Equity comprises the following:
• "Share capital" represents the nominal value of equity shares, both ordinary
and deferred.
• "Share premium" represents the excess over nominal value of the fair value of
consideration received for equity shares, net of expenses of the share issues.
• "Other reserves" represent the equity component of convertible debentures
issued, plus the fair values of share options and warrants issued.
• "Retained reserves" include all current and prior year results, including fair
value adjustments on available for sale financial assets, as disclosed in the
Consolidated Statement of Comprehensive Income.
• "Exchange reserve" includes the amounts described in more detail in the
following note on foreign currency below.
Foreign currency translation
The consolidated financial statements are presented in GB pounds which is the
functional and presentational currency representing the primary economic
environment of the Group.
Foreign currency transactions are translated into the respective functional
currencies of the Company and its subsidiaries using the exchange rates
prevailing at the date of the transaction or at an average rate where it is not
practicable to translate individual transactions. Foreign exchange gains and
losses are recognised in the Income Statement.
Monetary assets and liabilities denominated in a foreign currency are translated
at the rates ruling at the Statement of Financial Position date.
The assets and liabilities of the Group`s foreign operations are translated at
exchange rates ruling at the Statement of Financial Position date. Income and
expense items are translated at the average rates for the period. Exchange
differences are classified as equity and transferred to the Group`s exchange
reserve. Such differences are recognised in the Income Statement in the periods
in which the operation is disposed of.
Share-based payments
The Company operates equity-settled share-based remuneration plans for
remuneration of some of its employees. The Company awards share options to
certain Company Directors and employees to acquire shares of the Company.
Additionally, the Company has issued warrants to providers of loan finance.
All goods and services received in exchange for the grant of any share-based
payment which vested after the Company`s transition to IFRSs are measured at
their fair values. Where employees are rewarded using share-based payments, the
fair values of employees` services are determined indirectly by reference to the
fair value of the instrument granted to the employee.
The fair value is appraised at the grant date and excludes the impact of
non-market vesting conditions. Fair value is measured by use of the Black
Scholes model. The expected life used in the model has been adjusted, based on
management`s best estimate, for the effects of non-transferability, exercise
restrictions, and behavioural considerations.
All equity-settled share-based payments are ultimately recognised as an expense
in the Income Statement with a corresponding credit to "Other reserves".
If vesting periods or other non-market vesting conditions apply, the expense is
allocated over the vesting period, based on the best available estimate of the
number of share options expected to vest. Estimates are subsequently revised if
there is any indication that the number of share options expected to vest
differs from previous estimates. Any cumulative adjustment prior to vesting is
recognised in the current period. No adjustment is made to any expense
recognised in prior years if share options ultimately exercised are different to
that estimated on vesting.
Upon exercise of share options the proceeds received net of attributable
transaction costs are credited to share capital and, where appropriate, share
premium.
The Group`s financial assets comprise cash and cash equivalents, investments and
loans and receivables. Financial assets are assigned to the respective
categories on initial recognition, depending on the purpose for which they were
acquired. This designation is re-evaluated at every reporting date at which a
choice of classification or accounting treatment is available.
Financial instruments
The Group`s loans, investments and receivables are non-derivative financial
assets with fixed or determinable payments that are not quoted in an active
market. Loans and receivables are measured at fair value on initial recognition.
After initial recognition they are measured at amortised cost using the
effective interest rate method, less any provision for impairment. Any change in
their value is recognised in the Income Statement. The Group`s receivables fall
into this category of financial instruments. Discounting is omitted where the
effect of discounting is immaterial. All receivables are considered for
impairment on a case-by-case basis when they are past due at the Statement of
Financial Position date or when objective evidence is received that a specific
counterparty will default.
Investments that are held as available for sale financial assets are financial
assets that are not classified in any other categories. After initial
recognition, available for sale financial assets are measured at fair value. Any
gains or losses from changes in fair value of the financial asset are recognised
in equity, except that impairment losses, foreign exchange gains and losses on
monetary items and interest calculated using the effective interest method are
recognised in the Income Statement.
Where there is a significant or prolonged decline in the fair value of an
available for sale financial asset (which constitutes objective evidence of
impairment), the full amount of the impairment, including any amount previously
charged to equity, is recognised in the Consolidated Income Statement. The
Directors consider a significant decline to be one in which the fair value is
below the weighted average cost by more than 25%. A prolonged decline is
considered to be one in which the fair value is below the weighted average cost
for a period of more than twelve months.
If an available for sale equity security is impaired, any further declines in
the fair value at subsequent reporting dates are recognised as impairments.
Reversals of impairments of available for sale equity securities are not
recorded through the Income Statement. Upon sale, accumulated gains or losses
are recycled through the Income Statement.
Other financial assets comprise warrants. After initial recognition, other
financial assets are measured at fair value. Any gains or losses from changes in
fair value of the other financial asset are recognised in the Income Statement.
Financial liabilities, which are measured at amortised cost, and equity
instruments are classified according to the substance of the contractual
arrangements entered into. An equity instrument is any contract that evidences a
residual interest in the assets of the entity after deducting all of its
financial liabilities. Any instrument that includes a repayment obligation is
classified as a liability.
Where the contractual liabilities of financial instruments (including share
capital) are equivalent to a similar debt instrument, those financial
instruments are classed as financial liabilities, and are presented as such in
the Statement of Financial Position. Finance costs and gains or losses relating
to financial liabilities are included in the Income Statement. Finance costs are
calculated so as to produce a constant rate of return on the outstanding
liability.
Where the contractual terms of share capital do not have any features meeting
the definition of a financial liability then such capital is classed as an
equity instrument. Dividends and distributions relating to equity instruments
are debited direct to equity.
Compound financial instruments
Compound financial instruments comprise both liability and either equity
components or embedded derivatives.
For compound instruments including equity components, at issue date the fair
value of the liability component is estimated by discounting its future cash
flows at an interest rate that would have been payable on a similar debt
instrument without any equity conversion option. The liability component is
accounted for as a financial liability. The difference between the net issue
proceeds and the liability component, at the time of issue, is the residual or
equity component, which is accounted for as an equity reserve.
Embedded derivatives included within compound instruments are calculated using
the Black Scholes model and are also included within liabilities, but are
measured at fair value in the Statement of Financial Position, with changes in
the fair value of the derivative component recognised in the consolidated income
statement. The amounts attributable to the liability components equal the
discounted cash flows.
Transaction costs that relate to the issue of a compound financial instrument
are allocated to the liability and equity components of the instrument in
proportion to the allocation of the proceeds.
The interest expense on the liability component is calculated by applying the
effective interest rate for the liability component of the instrument. The
difference between any repayments and the interest expense is deducted from the
carrying amount of the liability.
Upon conversion of loan note debt the corresponding carrying value of loan note
liability and equity reserve is released, and the difference between these and
the nominal value of the shares issued on conversion is recognised as a share
premium.
Critical accounting estimates and judgements
The preparation of financial statements in conformity with IFRSs requires
management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets and liabilities, income
and expenses. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis of making the judgements
about carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an on-going basis.
Revisions to accounting estimates are recognised in the year in which the
estimate is revised if the revision affects only that year or in the year of the
revision and future years if the revision affects both current and future years.
The most critical accounting policies and estimates in determining the financial
condition and results of the Group are those requiring the greater degree of
subjective or complete judgement. These relate to:
• capitalisation of exploration costs (Note 10);
• share-based payments (Note 6) & (Note 13);
• conversion of YA Global loan into ordinary shares (Note 15).
3Operating loss
Year ended Year ended
30 September 30 September
The operating loss is stated after charging: 2015 2014
£ £
Depreciation of property, plant and equipment 2,937 358
Operating lease expenses 13,583 13,815
Share-based payments 288,831 -
Auditor`s remuneration:
Fees payable to current auditor and its associates for audit of the Group`s annual financial statements (including £15,000 (2014: £15,000) in respect of the Company and £9,750 (2014: £9,000) in respect of subsidiary undertakings) 24,750 24,000
4Loss per share
Year ended Year ended
30 September 30 September
2015 2014
Weighted number of shares in issue during the year 3,744,400,803 3,260,089,969
£ £
(Loss) from continuing operations (4,720,222) (1,746,397)
Profit from discontinued operations attributable to owners of the parent - -
(Loss) from continuing and discontinued operations attributable to owners of the parent (4,720,222) (1,746,397)
The diluted loss per share is the same as the basic loss per share as the
conversion of share options decreases the basic loss per share thus being
anti-dilutive.
5Corporation tax expense
The relationship between the expected tax expense based on the corporation tax
rate of 20.5% for the year ended 30 September 2015 (2014: 22%) and the tax
expense actually recognised in the income statement can be reconciled as
follows:
Year ended Year ended
30 September 30 September
2015
2014
£ £
Group loss for the year (1.502,738) (1,746,397)
Loss on activities at effective rate of corporation tax of 20.5% (2014: 22%) (308,061) (384,207)
Expenses not deductible for tax purposes 96,977 205,045
Income not taxable (6) (144)
Depreciation in excess of capital allowances 638 79
Loss carried forward 210,452 179,227
Current tax expense -
Deferred tax (3,217,484) -
Total Income tax expense (3,217,484) -
Deferred tax (timing differences)
The movement in the deferred tax asset in the year is as follows:
2015 2014
£ £
At 1 October - -
On re-acquisition of subsidiary 3,217,484 -
Impairment of asset (3,217,484) -
At 30 September - -
The Company has unused tax losses of £3,200,000 (2014: £2,600,000) and other
temporary differences amounting to losses of £Nil (2014: £ Nil). The related
deferred tax asset has not been recognised in respect of these losses as there
is no certainty in regards to the level and timing of future profits. No
deferred tax adjustment arises on the fair value movements on the available for
sale investments as any gain/loss on disposal will be exempt from tax.
6Staff numbers and costs
Year ended Year ended
30 September 30 September
2015 2014
Number Number
Directors 3 3
Administration 2 2
Total 5 5
The aggregate payroll costs of these persons were as follows:
£ £
Staff wages and salaries 68,249 48,468
Directors` cash based emoluments 226,200 333,315
Share-based payments 288,831 -
583,280 381,783
The remuneration of the directors, who are the key management personnel of the
Group, in aggregate for each of the categories specified in IAS 24 `Related
Party Disclosures` was as follows:
£ £
Directors` cash based emoluments 226,200 333,315
Employer`s national insurance contributions 25,678 34,561
Short-term employment 251,878 367,876
Share-based payments 182,697 -
434,575 367,876
Directors` remuneration
As required by AIM Rule 19, details of remuneration earned in respect of the
financial year ended 30 September 2015 by each Director are set out below:
Year ended 30 September 2015
Director Salary Bonus Share-based payments Total
Paid Accrued
£ £ £ £ £
S Clayson 50,000 100,000 - 98,224 248,224
P Johnson 37,500 - - 49,112 86,612
R Watts 13,200 10,500 - 35,361 59,061
W Howell - 15,000 - - 15,000
100,700 125,500 - 182,697 408,897
Year ended 30 September 2014
Director Salary Bonus Share-based payments Total
Paid Accrued
£ £ £ £ £
S Clayson 141,667 - 35,799 - 177,466
P Johnson 70,833 - 17,900 - 88,733
R Watts 54,229 - 12,887 - 67,116
266,729 - 66,586 - 333,315
The highest paid Director is due to receive remuneration of £150,000 (2014:
£177,466), excluding share-based payments. R Watts received remuneration
totalling £5,700 (2014 £67,116) via a service company. W Howell received
remuneration totalling £5,928 prior to being appointed as a director for
consulting services.
The amounts in the year ended 30 September 2015 described as share-based
payments represent the deemed cost of share options granted under the Company`s
unapproved share option plan. The share options concerned vested immediately on
the grant date, and are exercisable at £0.00275 (0.275p), which is approximately
11 times the closing mid-market price of the Company`s ordinary shares on AIM on
the day prior to the approval of these financial statements. Details of each
Director`s share options and interests in the Company`s shares are shown in the
Directors` Report. Refer to Note 13 for further information.
7Finance income and costs
Year ended Year ended
30 September 30 September
2015 2014
Finance costs £ £
Issue costs of convertible loans amortised 93,698 -
Interest on convertible loans 63,466 11,353
Fair value of warrants issued under the loan finance agreement (Note 13) 162,632 10,233
Other interest payable 1,384 -
321,180 21,586
2,015 2,014
Finance income £ £
Interest on cash and cash equivalents 28 654
Net finance costs 321,152 20,932
8Property, plant and equipment
Group Furniture
& Office Machinery and
fittings equipment equipment Total
Cost £ £ £ £
At 1 October 2014 3,445 17,869 4,307 25,621
Additions - - - -
Exchange differences arising on translation - (17) (16) (33)
At 30 September 2015 3,445 17,852 4,291 25,588
Depreciation
At 1 October 2014 2,740 11,766 295 14,801
Depreciation for the year 140 2,054 918 3,111
Exchange differences arising on translation - (16) (14) (29)
At 30 September 2015 2,880 13,804 1,199 17,883
Net book value
At 1 October 2014 705 6,103 4,012 10,820
At 30 September 2015 565 4,048 3,092 7,705
Company
Furniture and Office Machinery and
fittings equipment equipment Total
Cost £ £ £ £
At 1 October 2014 3,445 17,414 3,865 24,724
Additions - - - -
At 30 September 2015 3,445 17,414 3,865 24,724
Depreciation
At 1 October 2014 2,740 11,342 - 14,082
Depreciation for the year 140 2,024 773 2,937
At 30 September 2015 2,880 13,366 773 17,019
Net book value
At 1 October
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