REG-ECR Minerals plc Final Results and Notice of Annual General Meeting <Origin Href="QuoteRef">ECRE.L</Origin> - Part 2
31/03/2017 15:15
- Part 2: For the preceding part double click ID:nBw9djqzVa
Year ended Year ended Year ended Year ended
30 September 2016 30 September 2015 30 September 2016 30 September 2015
£ £ £ £
Net cash flow used in operations (494,118) (654,704) (483,553) (595,822)
Investing activities
Purchase of property, plant & equipment – – – –
Increase in exploration assets (319,580) (719,108) (257,818) (632,398)
Cash introduced with re-admission of subsidiary – 10,125 – –
Investment in subsidiaries – – (79,535) (79,732)
Proceeds from sale of available for sale investments – 68,022 – 68,022
Investment in available for sale investments – (39,276) – (39,276)
Interest income 484 28 35 28
Net cash used in investing activities (319,096) (680,209) (337,318) (683,356)
Financing activities
Proceeds from issue of share capital 1,100,000 295,000 1,100,000 295,000
Proceeds from issue of convertible loan notes 418,463 494,774 418,463 494,774
Repayment of convertible loan notes (248,332) – (248,332) –
Finance costs on fundraising (55,750) (38,956) (55,750) (38,956)
Interest paid and other financing costs (31,385) (1,384) (31,385) –
Net cash from financing activities 1,182,996 749,434 1,182,996 750,818
Net change in cash and cash equivalents 369,782 (585,479) 362,125 (528,360)
Cash and cash equivalents at beginning of the year 90,398 642,056 81,040 609,400
Effect of changes in foreign exchange rates 11,629 33,821 – –
Cash and cash equivalents at end of the year 471,809 90,398 443,165 81,040
Notes to the Financial Statements
For the year ended 30 September 2016
1 General 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
Unit 117, Chester House, 81-83 Fulham High Street, Fulham Green, London SW6
3JA. The Company is listed on the Alternative Investment Market (AIM) of the
London Stock Exchange.
2 Accounting 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.
New Accounting Standards and Interpretations
Effective during the year
During the year the Group has adopted the following standards and amendments:
* Annual Improvements to IFRSs 2010–2012 Cycle
* Annual Improvements to IFRSs 2011–2013 Cycle
* Amendments to IAS 19: Defined Benefit Plans: Employee Contributions
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:
* 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
* Amendments to IFRS 10, IFRS 12 and IAS 28: Investment Entities: Applying the
Consolidation Exception
* IFRS 15 Revenue from Contracts with Customers including amendments to IFRS 15
* IFRS 9 Financial Instruments
In addition to the above there are also the following standards and amendments
that have not yet been endorsed by the EU:
* IFRS 14 Regulatory Deferral Accounts
* Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an
Investor and its Associate or Joint Venture (effective date postponed
indefinitely by IASB)
* Amendments to IAS 12: Recognition of Deferred Tax Assets for Unrealised Losses
* Amendments to IAS 7: Disclosure Initiative
* Clarifications to IFRS 15 Revenue from Contracts with Customers
* Amendments to IFRS 2: Classification and Measurement of Share-based Payment
Transactions
* Annual Improvements to IFRS Standards 2014-2016 Cycle
* IFRIC Interpretation 22 Foreign Currency Transactions and Advance
Consideration
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 2016.
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, and
continue to be consolidated until the date such control ceases.
The Group controls an entity when the Group 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.
Going concern
It is the prime responsibility of the Board to ensure the Group and Company
remains going concern. At 30 September 2016, the Group had cash and cash
equivalents of £471,809 and no borrowings. The Group’s financial
projections and cash flow forecasts covering a period of at least twelve
months from the date of approval of these financial statements show that,
provided the terms of the subscription by Shenyang are fulfilled in accordance
with the terms set out in the Subscription Agreement dated 26 February 2017,
the Group will have sufficient available funds in order to meet its contracted
and committed expenditure. Whilst the Directors are confident the conditional
terms of the Subscription Agreement will be met satisfactorily, these had not
been entirely fulfilled at the date of approval of the financial statements.
The Group has to date received the non-refundable deposit of £100,000 from
Shenyang in connection with the conditional subscription. In addition, the
Directors are confident in the ability of the Group to raise additional
funding, if required, from the issue of equity and/or the sale of assets.
On the basis of their assessment of the financial position, the Directors have
a reasonable expectation that the Group will be able to continue in
operational existence for the next 12 months and continue to adopt the going
concern basis of accounting in preparing these Financial Statements.
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 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.
Intangible exploration assets are not subject to amortisation and are tested
annually for impairment.
Provisions
A provision is recognised in the Statement of Financial Position when the
Group or Company 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 or Company
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
There is no current tax payable in view of the losses to date.
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 pounds sterling 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 the
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 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.
A gain or loss is recognised in profit or loss when a financial liability is
settled through the issuance of the Company’s own equity instruments. The
amount of the gain or loss is calculated as the difference between the
carrying value of the financial liability extinguished and the fair value of
the equity instrument issued.
Financial instruments
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.
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 profit or loss. 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 the 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.
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
* Share-based payments 3
Operating loss
Year ended Year ended
30 September 30 September
The operating loss is stated after charging: 2016 2015
£ £
Depreciation of property, plant and equipment 1,468 3,111
Operating lease expenses 14,126 13,583
Share–based payments 123,737 288,831
Auditors' remuneration – fees payable to the Company’s auditor for 22,000 24,750
the audit of the parent company and consolidated financial statements
4 Earnings per share
Basic and Diluted Year ended Year ended
30 September 30 September
2016 2015
Weighted number of shares in issue during the year 9,181,895,384 3,744,400,803
£ £
Loss from continuing operations attributable to owners of the (919,706) (4,720,222)
parent
Basic earnings per share has been calculated by dividing the loss attributable
to equity holders of the company after taxation by the weighted average number
of shares in issue during the year. There is no difference between the basic
and diluted earnings per share as the effect on the exercise of options and
warrants would be to decrease the earnings per share.
PLEASE NOTE THAT THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE
ATTENTION. If you are in any doubt as to what action you should take, please
consult your stockbroker or other independent adviser authorised under the
Financial Services and Markets Act 2000 immediately. If you have recently sold
or transferred all of your ordinary shares in ECR Minerals PLC, please forward
this document, together with the accompanying documents, as soon as possible
either to the purchaser or transferee or to the person who arranged the sale
or transfer so they can pass these documents to the person who now holds the
shares.
ECR MINERALS PLC
(the “Company”)
(Registered in England and Wales No 05079979)
NOTICE OF ANNUAL GENERAL MEETING
NOTICE is hereby given that the Annual General Meeting of the Company will be
held at the offices of Charles Russell Speechlys LLP, 5 Fleet Place, London
EC4M 7RD on 24 April 2017 at 10.00 a.m. for the purpose of considering and, if
thought fit, passing Resolutions 1 to 5 as ordinary resolutions, and
Resolution 6 as a special resolution:
Ordinary Resolutions
1 To receive, consider and adopt the annual accounts of the Company for the
year ended 30 September 2016, together with the reports of the directors and
auditors thereon.
2 That Craig William Brown, a director retiring in accordance with article 29
of the Company’s articles of association, be and is hereby re-elected as a
director of the Company.
3 That Ivor William Osborne Jones, a director retiring in accordance with
article 29 of the Company’s articles of association, be and is hereby
re-elected as a director of the Company.
4 That Christian Gabriel St. John-Dennis, a director retiring in accordance
with article 29 of the Company’s articles of association, be and is hereby
re-elected as a director of the Company.
5 To appoint PKF Littlejohn LLP as auditors of the Company and to authorise
the directors to determine their remuneration.
Special Resolution
6 That the articles of association in the form presented to the meeting be
adopted as the new articles of association of the Company in substitution for,
and to the exclusion of, the existing articles of association of the Company.
By Order of the Board
Craig Brown
Director and Company Secretary
Registered Office:
Unit 117, Chester House
81-83 Fulham High Street
Fulham Green
London, SW6 3JA
31 March 2017
NOTES ON RESOLUTIONS
The following paragraphs explain, in summary, the Resolutions to be proposed
at the Annual General Meeting (the “Meeting”).
Resolution 1: Receipt of the annual accounts
Resolution 1 proposes that the Company’s annual accounts for the period
ended 30 September 2016, together with the reports of the directors and
auditors on these accounts, be received, considered and adopted.
Resolutions 2 to 4: Re-election of directors
Mr Craig Brown, Mr Ivor Jones and Mr Christian St. John-Dennis who were all
appointed since the last Annual General Meeting of the Company are retiring in
accordance with article 29 of the Company’s articles of association. Each Mr
Craig Brown, Mr Ivor Jones and Mr Christian St. John-Dennis is offering
himself for re-election by the members.
Resolution 5: Appointment and remuneration of auditor
Resolution 5 proposes to appoint PKF Littlejohn LLP as the Company’s
auditors and to authorise the directors to set the auditors’ remuneration.
Resolutions 6: Adoption of new articles of association
It is proposed that the Company adopts new articles of association (“New
Articles”).
The Company’s articles of association were adopted in 2009 and have not been
substantially revised since then. The principal change introduced by the New
Articles is the removal of the provisions relating to the regulations
applicable to the Company which would be relevant only if the Company had a
secondary listing on the ASX and the directors do not consider that there are
any advantages to seeking a secondary listing on the ASX. Otherwise, the
provisions in the New Articles are broadly similar to those in the current
articles of association of the Company.
A copy of the proposed New Articles will be available for inspection during
normal business hours (Saturdays, Sundays and public holidays excepted) at the
Company’s registered office up until the close of the Meeting. Copies will
also be available on the day of the Meeting at the offices of Charles Russell
Speechlys LLP, 5 Fleet Place, London EC4M 7RD from 9.45 a.m. until the
conclusion of the Meeting.
A copy of the New Articles will also be found in the Investor Relations
section of the Company’s website at www.ecrminerals.com
(http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.ecrminerals.com&esheet=51534593&newsitemid=20170331005471&lan=en-US&anchor=www.ecrminerals.com&index=2&md5=92d4835c48d568c58e006beeeaaa268d)
from the passing of the resolution onwards.
View source version on businesswire.com:
http://www.businesswire.com/news/home/20170331005471/en/
(http://www.businesswire.com/news/home/20170331005471/en/)
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