REG - GCM Resources PLC - Final Results for the year ended 30 June 2023
29/01/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240129:nRSc1343Ba&default-theme=true
RNS Number : 1343B GCM Resources PLC 29 January 2024
29 January 2024
GCM Resources plc
("GCM" or the "Company")
(AIM:GCM)
Final Results for the year ended 30 June 2023
Notice of Annual General Meeting
GCM Resources plc announces the publication of its final audited results for
the year ended 30 June 2023 (the "Annual Report and Accounts") and that the
Company's 2023 Annual General Meeting will be held at 10.00 a.m. on Thursday
29 February 2024, at QEII Centre, Broad Sanctuary, Westminster, London, SW1P
3EE.
The Annual Report and Accounts and the Notice of Annual General Meeting will
be posted to shareholders on Tuesday 30th January 2024. Copies are available
on request from the Company and will be available on the Company's website
(www.gcmplc.com (http://www.gcmplc.com) ). The Annual Report & Financial
Statements are also available on the 'Financial Reports' page of the Company's
website.
Further to the RNS dated 28 December 2023, the Company's shares are currently
temporarily suspended from trading on AIM. The Company's shares will remain
suspended until the settlement and completion of subscription to raise
£500,000, previously announced on 26 January 2024.
For further information:
GCM Resources plc WH Ireland Ltd
Keith Fulton James Joyce
Finance Director James Bavister
+44 (0) 20 7290 1630 Andrew De Andrade
+44 (0) 20 7220 1666
GCM Resources plc
Tel: +44 (0) 20 7290 1630
info@gcmplc.com;
Executive Chairman's Statement
Non-Executive Chairman's Statement
The Board presents the Company's Annual Report and Accounts for the year ended
30 June 2023, which once again has been a challenging period for new
large-scale project development in Bangladesh. As the first half of the
reporting period unfolded there was optimism regarding Bangladesh making moves
to refocus its energy supply strategy away from an almost total dependence on
imports to embracing a strategic balance, with coal supply coming from its
significant, largely unexploited domestic coal resources. The State Minister
for Power, Energy and Mineral Resources even spoke in parliament on the
extraction of these coal resources, citing that the Phulbari coal deposit is
the country's only realistic open pit coal mine option, implying its potential
for delivering significant long-term coal production for power generation.
Whilst indications are the momentum swing towards domestic energy resource
extraction is on the rise, physical progress was stymied as political focus
swung towards the 7 January 2024 National Election (outside the reporting
period), i.e., from the second half of the reporting period the country
entered its election year.
We have previously commented on the extremely detrimental effects that high
commodity prices (particularly for energy products) are having on Least
Developed Countries. Unfortunately, this situation has worsened as the world's
supply chain not only was not keeping pace with demand from the post-COVID
awakening of industries, but has been further affected by the protracted
Ukraine conflict and more recent conflict in the Middle East. In the case of
Bangladesh, the past couple of years have seen its foreign exchange reserves
plummet by 50%, its currency devalue against the US Dollar by over 30% and
inflation pushing 10%. In short, this has caused an even deeper austerity move
with the central bank imposing certain restrictions on imports, which also
caused disruption to imported coal supply, impacting power supply from
recently commissioned large-scale coal-fired power plants.
Our Dhaka team maintains contact with government agencies and has seen
evidence that the forementioned momentum towards developing the country's
known domestic coal resources and increasing exploration to identify new gas
fields is waxing. The downturn in key economic indicators has seemingly been
an awakening and it is most fortunate that the country has such a world class
energy resource as the Phulbari coal deposit that can easily be developed and
help insulate against the vagaries of the world energy market.
GCM has patiently been working to be in the best position to present the
Project Proposal to the Bangladesh Government and would welcome its
participation as a partner in the Project. With the apparent move towards
finally realising the potential of domestic energy resources, now that the
National Election has been completed and the Awami League government returned,
we are targeting Project Proposal delivery once the new government has settled
in.
To reiterate, the Project Proposal focusses on development of the Phulbari
coal mine which will have an annual production of over 15 million tonnes,
capable of supporting some 6,600MW based on the latest highly energy efficient
coal-fired power plant systems for more than 30 years. The Project area can
also support over 2,000MW of installed Solar Power Capacity throughout the
life of the Project and this is an adjunct to the Proposal. It is aimed to
supply power from the Solar Power Park to both the national grid and the
Phulbari coal mining operation, enabling the mine to attain carbon emission
neutrality and "Green Mine" status.
During this last Financial Year, our team continued to work closely with
development partner, Power Construction Corporation of China, Ltd.
("PowerChina"). They are a diverse and extremely experienced organisation with
the capabilities to support all aspects of the Project. Apart from an MOU
focused on coal mine development and Joint Venture Agreements for power plants
of 4,000MW (two 2,000MW Stages), as indicated below, PowerChina has also shown
interest in the proposed Phulbari mine site Solar Power Park.
Other steps taken in Financial Year 2023 include:
· On 22 August 2022, the Company announced that it had agreed a
further extension of the consultancy agreement with DG Infratech Pte Ltd
("DGI"), a Bangladeshi controlled company, for an additional two years. DGI's
prime role is to provide advisory and lobbying services in relation to the
Company's business, namely to achieve project approval.
· On 12 December 2022, the Company announced that the MOU with
PowerChina, focused on coal mine development, has been extended for a further
12-months to 6 December 2023.
· On 9 January 2023, the Company announced a Joint Development
Agreement ("JDA") for the proposed Solar Power Park to be developed as an
adjunct to the Phulbari Coal and Power Project. Under the terms of the JDA,
GCM would hold 50%, Dyani Corporation 30% and PowerChina 20%, with the
intention of also being appointed the EPC Contractor.
· On 14 June 2023, the Company announced it had successfully raised
£0.5 million through the placement of 20,000,000 new ordinary shares of 1
pence (the "issue price") with professional investors at a price of 2.5 pence
per share.
Non-Executive Chairman's Statement
Outside the Reporting Period:
· On 15 September 2023, the Company announced the resignation of
its Independent Non-Executive Director, Mr Mohd Najib Bin Abdul Aziz. And that
Independent Non-Executive Director, Mr Christian Taylor-Wilkinson, would act
as interim Non-Executive Chairman.
· On 28 November 2023, the Company announced that further to its
announcements of 23 November 2021, June 2021 and 12 December 2022, Power
Construction Corporation of China, Ltd. ("PowerChina") it had agreed an
extension for a period of a further 12 months from 6 December 2023 to 6
December 2024 on the same terms as the previous memorandum of understanding
("MoU") which is primarily focused on the Phulbari coal mine development. This
will allow PowerChina and GCM to continue to work on determining the modality
for PowerChina to become a Mine Development Partner, subject to the approval
of PowerChina internal compliance and all other relevant regulatory agencies.
· On 28 November 2023, the Company announced in relation to the
Loan Facility with Polo Resources Ltd ("Polo") as announced on 26 March 2021
and as amended and announced on 3 March 2022, it had requested to drawn down a
further £300,000 in accordance with the terms announced thereon. The Company
on receipt of this further drawdown will have then utilised the full
£3.5million of the £3.5million facility. This current drawdown request along
with existing cash balances will be sufficient to fund the Company through to
the end of March 2024, to which the Company will require to raise additional
funds prior to the end of March 2024, for Working Capital thereafter.
· On 20 December 2023 and on 28 December 2023, the Company
announced in relation to the final drawdown request of 28 November 2023, it
was still awaiting receipt of the £300,000 funds from Polo Resources Ltd. The
Company also stated it was considering alternative funding options.
· On 28 December 2023, the Company announced it was still in the
process of completing its 2022-2023 audit; the delay is due to finalising an
ongoing funding event. Therefore, as it was unable to publish its audited
financial statements for the year end 30 June 2023 by 31 December 2023, the
Company's shares were therefore temporarily suspended from trading on
AIM. The suspension would occur from 7.30am on 2 January 2024.
· On 24 January 2024, the Company announced that it received a
notice from Polo Investments Limited ("Polo"), pursuant to Section 168 of the
Companies Act 2006, requesting that a resolution to remove Christian
Taylor-Wilkinson be tabled, as an ordinary resolution, at the forthcoming
Annual General Meeting of the Company or a general meeting of GCM to be
convened as soon as practicable. Polo currently holds 43,328,003 shares
representing 20.9% of the Company's total voting.
· On 25 January 2024, the Company announced that it had
successfully raised gross proceeds of £0.5m by means of a direct subscription
(the "Subscription") of new Ordinary Shares (the "Subscription Shares") at a
price of 1.65 pence per share (the "Subscription Price"). The Company will
need to carry out an additional fundraise before the end of May 2024 to fund
its working capital for the next 12 months. The Subscription Price represents
a discount of 37.7 per cent to the Closing Price of 2.65 pence per Ordinary
Share on 23 January 2024, being the latest practicable business day prior to
the publication of this announcement.
Overarching Operating Environment:
Bangladesh is pursuing a balanced energy mix with coal-fired power a
significant contributor. This was reinforced by the Honourable Prime Minister
for Bangladesh stating in the national parliament on 14 September 2023
(outside the reporting period) that her government was working towards
generating 40,000 MW of electricity by 2030 and 60,000 MW by 2041. In that
address it was highlighted that her government is implementing "new plans" for
coal, diesel/furnace oil, nuclear and renewable energy-based power generation.
Bangladesh currently has 6,035 MW of installed or very soon to be commissioned
coal-fired power generating capacity with a demand for some 16 million tonnes
of coal per annum, i.e., equivalent to the Phulbari coal mine's planned
production. These power plants include:
· Existing Barapukuria plants 525 MW
· Payra 1,320 MW
· Rampal 1,320
· Matarbari 1,200 MW
· S ALAM Banshkhali 1,320 MW
· Barisal 350 MW
However, the long-term plan is to increase coal-fired power to 11,830 MW which
would require some 36 million tonnes of coal per annum.
The United Nations Climate Change Conference COP28 was held in the period 30
November to 12 December 2023 (outside the reporting period). On 1 December
2023, the COP28 President announced the first major milestone being a historic
agreement to action the Loss and Damage Fund aimed at assisting vulnerable
developing countries combat the effects of climate change. Bangladesh had
previously announced that it would be promoting such a fund at the conference.
The Bangladesh Environment Minister is leading the Bangladesh COP28 delegation
and announced that Bangladesh strongly urged developed countries to fulfil
their commitment of $100 billion in climate finance. He expressed
Bangladesh's disappointment with progress on climate finance and stated that
commitment of developed countries to provide US$100 billion per year has not
been met yet, and that Bangladesh had strong reservations on how the climate
financing would be calculated.
The Bangladesh COP28 delegation also observed that there is a huge distinction
between developed countries and developing countries regarding the ability to
phase out fossil fuels. The country is pursuing renewable energy, however, as
solar and wind are not suitable for base-load power, thermal and nuclear
remain the main options for providing base-load power to support its economic
development.
Once again, I thank our shareholders and stakeholders for their incredible
patience and on-going support. With the much-anticipated swing towards
bringing domestic energy resources (both existing coal resources and
potentially new gas discoveries) into the energy mix, we are now reaching the
point of most relevance for the Project and look forward to moving with the
Project Proposal once the newly elected Awami League government is in place
and fully functional.
Christian Taylor-Wilkinson
Non-Executive Chairman
29 January 2024
Group Strategic Report
Strategy and Business Model
GCM's Objective remains the development of the Phulbari coal deposit as a
captive, large-scale, open pit mining operation supporting some 6,600MW of
highly energy-efficient Ultra-Supercritical power generation. As important
adjunct to this Objective is the implementation of a large-scale, Solar Power
Park (in stages to at least 2,000MW capacity) within the Project area, to be
initiated within the first two years of gaining land access. The Solar Power
Park is planning to deliver power both to the national grid and to the
Phulbari coal mine which will enable it to attain "Green Mine" status.
Our Strategy is to firstly obtain approval from the Bangladesh Government for
the comprehensive Project Proposal and with our Development Partner,
PowerChina, finance, develop and operate all facets of the Project over its
35+ years life. The Strategy has several key components including inviting the
Bangladesh Government to be partner in the Project, under mutually agreed
terms yet to be finalised; and to establish Joint Ventures ("JVs") for key
business units required to ensure efficient, economically sustainable mining
operations and delivery of coal to customers.
Our business model has two business units covering the core aspects of the
Project:
· "MINING COMPANY" to develop and operate the coal mine; and
· "POWER COMPANY" to develop and operate the proposed 4,000 MW
Ultra-Supercritical power plants already covered in JVs with our Development
Partner, PowerChina, and to develop and operate the mine-site Solar Power
Park. Note that the business model relies on establishing a reliable domestic
market for the Phulbari coal mine's full production. This is vital to underpin
the Project's economic sustainability and it is an important consideration
when pursuing project financing. At present Bangladesh has installed
coal-fired power plant with 6,035 MW capacity, requiring some 16 million
tonnes of coal per annum, i.e., basically the Phulbari coal mine's nameplate
production. However, the Bangladesh Government plans show a total coal-fired
capacity of 11,830 MW and it remains probable that with approval of the
Project's coal mine, the proposed 4,000 MW plants proposed by GCM and
PowerChina will become attractive alternatives (located on or near the mine
site would deliver cheapest coal-fired thermal power).
Our business model also proposes two JVs covering associated crucial areas:
· "Coal Transport JV Company" to be responsible for delivering coal
to market by arranging finance for and facilitating any necessary transport
infrastructure upgrades; arranging any necessary rolling stock and barges
(river and ocean-going); and managing the coal transport system to ensure
timely and lowest cost delivery to customers; and
· "Industrial Mineral Co-Product JV Company" to manage the extraction
and delivery of large-volume valuable Industrial Mineral Co-Products that can
be recovered from the overburden material removed to access coal, i.e.,
available ahead of reaching first coal. These Co-Products consist of
gravels, aggregate, sands, glass sands, ceramic and pottery clay and
potentially bottled water. This is potentially a very large business
opportunity with the value of Co-Products available over the life of the
Project estimated at over ten Billion Dollars. Also, the Industrial Mineral
Co-Products are in great demand in Bangladesh, so this JV Company will also
add great value to industries and the economy, and importantly will deliver
cashflow to the MINING COMPANY well ahead of first coal.
GCM remains confident its Strategy and Business Model will deliver project
approval and enable the Project to: reduce the Country's exposure to the
volatile energy market; deliver a long-term positive impact on Foreign
Exchange Reserves; deliver the lowest coal-based energy price and cheapest
electricity, enabling expansion and competitiveness of industries; produce new
higher paying jobs; and grow the economy. It potentially will be a catalyst
for a "step-jump" in the Bangladesh economy, supporting its move a Developing
Country status by 2026 and helping achieve its Vision 2041 to:
· End absolute poverty and to be graduated into higher
middle-income status by 2031; and
· Eradicate poverty on way to becoming a developed nation by 2041
Progress in-line with the strategy
The Company's "Feasibility Study and Scheme of Development" for the coal mine
component of the Project is pending approval from the Bureau of Mineral
Development (an entity under the Energy and Mineral Resources Division of the
Ministry of Power, Energy and Mineral Resources).
Progress during the reporting period has been impacted by the political and
bureaucratic focus being distracted in the lead-up to the National Election
which was held on 7 January 2024. Nevertheless, GCM's Dhaka-based team
continued to work with contacts within the government agencies to ensure the
Company is in the very best position to engage with the new government once it
is in place and fully functional within the 1(st) Quarter 2024. This
communication is two-way and an overview of what would be expected in the
Project Proposal has been shared. Indication are the government is now
expecting the Ministry of Power, Energy and Mineral Resources to deliver a
"new plan" that address how the country can negate the economic stress caused
by being almost totally dependent on imported energy products. It is
understood this "new plan" is to prioritise both development of the country's
known coal reserves and exploration in the anticipation of defining new gas
reserves.
The Project also now plans to have an associated Solar Power Park of up to at
least 2,000 MW that could be installed within a couple of years of Project
approval and gaining land access. This is an exciting adjunct to the Proposal
and could be operating before the mining operation reached coal, i.e., would
provide an early cashflow. To facilitate the Solar Power Park, on 9 January
2023, the Company announced a JDA for the proposed Solar Power Park whereby
GCM would hold 50%, Dyani Corporation 30% and PowerChina 20%, with the
intention of also being appointed the EPC Contractor.
Year in review
For the 1(st) half of the reporting period there were indications the
Bangladesh Government would be making a move towards bringing its domestic
energy resources into its energy mix which is almost totally dependent on
imports. The State Minister for the Ministry of Power, Energy and Mineral
Resources even spoke at length in parliament (on the record) regarding the
country's known coal resources and specifically cited the Phulbari coal
deposit as the only one that could practically be open pit mined (and deliver
the coal production volume that would make a difference). Unfortunately, this
initiative became stalled as the country entered the 2023 election year.
As 2023 progressed, the country's exposure to the world energy market and
rampant price reinforced the dire economic trajectory it was following, i.e.,
foreign exchange reserves had halved and reported to be dropping at some US$1
Billion per month, the local currency had devalued by some 30% and inflation
pushing 10%.
Civil Society have become unrelenting in their promotion of the country moving
to develop its own energy resources and endeavour to move away from the total
import situation, as well as expressing concerns over the continued use of
liquid fuel rental power plants and their associated very high power tariffs.
Then in September 2023 (outside the reporting period), the Honourable Prime
Minister of Bangladesh addressed parliament and stated that her government
were implementing "new plans" for coal, diesel/furnace oil, nuclear and
renewable energy-based power generation.
Throughout the reporting period and beyond, the Company's Dhaka-based team has
maintained contact with the relevant government agencies and there is credible
evidence that the "new plans" cited by the Honourable Prime Minister are being
framed and that such plans are addressing domestic coal extraction and
exploration efforts for new gas. This is exciting news for the Company, the
Project and its Shareholders and efforts are being made to ensure we are in
the strongest position to engage with the newly elected government within the
1(st) Quarter 2024 and deliver the Project Proposal which includes a
large-scale Solar Power Park as an adjunct.
The Company's relationship with its Development Partner, PowerChina, continues
favourably evolve and they are now also involved in the proposed Solar Power
Park via a JDA signed in January 2023.
GCM's field team continued its close contact with the local community and
local authorities to ensure they remain fully informed on the Project. The 67
"Community Liaison Assistants", recruited from across the Project area, play a
vital role in our two-way community communication strategy.
WH Ireland Limited continues as the Company's Nominated Advisor and Broker
since their appointment on 11 January 2021.
Finance review
The Group recorded a loss of £1,320,000 during the year ended 30 June 2023
compared to a loss of £1,679,000 during the previous year. The loss decreased
from the comparative year principally due to a decrease in non-cash,
share-based payments accrued in accordance with the Group's agreements with
Dyani & DG in relation to pre-development expenditure. The decrease was
from £414,000 in 2022 to £180,000 this year as a result of natural reduction
in payment to the consultants, but their continuing partnership allows the
Group to continue its progress in-line with GCM's strategy of developing power
generation as a new business stream, with no slow-down in pursuing continuing
project progress.
The Group recorded a net decrease in cash at the end of the year to £543,000
(2022: £961,000). Net cash used in operations for the year was £627,000
(2022: £846,000), cash used in investing activities was £656,000 (2022:
£520,000), and cash inflow from financing was £865,000 (2022: £1,610,000).
The Group has continued its aim to maintain tight control of expenditure
incurred during the year: Administrative expenses were down by 2.9% to
£728,000 for the year ended 30 June 2023 (2022: £750,000) which included
£10,000 non-cash expenditure, and finance costs remained stable at £480,000
(2022: £480,000). Capitalised expenditure in relation to the mine proposal
was £625,000 for the year ended 30 June 2023 compared to £563,000 in the
previous year.
To finance its operations during the year, GCM completed a successful Placing
in conjunction with WH Ireland Ltd, raising Gross proceeds of £500,000 in
June 2023. In addition, GCM continued to have available, the short-term loan
facility with Polo Resources Limited ("Polo") (the "Polo Loan Facility"). A
drawdown of £300,000 on the Polo Loan Facility was made during November 2023
and if the drawdown was received, the full facility of £3,500,000, would be
utilised. At the date of this report, the drawn down funds had not been
received. The terms of the loan facility were amended in March 2022 as
part of the completed placing and subscriptions, such that the lender may
request conversion by the issuance of new ordinary shares in the Company at
5.14 pence per share (being the Issue Price) subject to any necessary
regulatory approvals. All other terms of the agreement remained unchanged.
(See Note 12 for detailed terms).
As GCM does not yet generate any revenue, the Board expects that the Group's
operations will continue to be funded by a combination of equity and debt
financing.
Continuing for the foreseeable future, the Company's cash expenditure is not
expected to increase and, as far as possible, obligations to key stakeholders
will be primarily satisfied by the issue of new ordinary shares in the capital
of the Company ("Ordinary Shares"), to both incentivise those stakeholders and
preserve cash.
As at the date of this report, the Company had drawn down £3,200,000 of the
Polo Loan Facility and the Company currently has approximately £42,000 in
available cash resources, which is not sufficient to meet the Company's
immediate cash requirements, assuming the Company's currently forecast cash
costs. The Company has explored other financing options, and at the date of
this report has secured £500,000 gross equity funds by way of a subscription
for ordinary Shares with Clear Capital markets, as announced on 26 January
2024 at 1.65p per share.
Corporate Social Responsibility
The Company appreciates that the Project is not a 'one go' process like other
large development projects. The Project's Social Licence to Operate ("SOL")
will require a concerted effort over the life of the Project. Key to
maintaining the SOL is the ability to listen to the communities within which
we will be operating, deal with their concerns, keep them fully informed,
improve livelihoods and, not only minimise environmental impacts, but improve
the local environment.
GCM is committed to developing the Project in accordance with highest
international and national environmental and social standards as defined in:
· International Finance Corporation (World Bank) policies and
standards;
· Equator Principles;
· Asian Development Bank's (ADB) Safeguard Policies; and
· Prevailing policies and laws of Bangladesh.
GCM continues to be a signatory of UN Global Compact, the World's largest
voluntary corporate responsibility initiative, and embraces the core values
pertaining to human rights, labour standards, the environment and
anti-corruption.
Feedback from government agencies indicates the desire for the local people to
be stakeholders and to be motivated to support projects, i.e., offer
employment, provide education and fairly compensate for land required and
people displaced. The Project's Resettlement Action Plan ("RAP")
comprehensively deals with the government's desires for the local people and
was prepared as part of the coal mine's all-encompassing Environmental and
Social Impact Assessment. The specific requirements of the local people were
captured in surveys covering families within and immediately adjacent to the
Project Area. A demographic survey was also carried out in 2019 to update the
population and household trends. GCM is committed to lift the amenity of its
local community and will ensure the RAP will deliver:
· Full and fair compensation prior to displacement;
· Fairness, transparency and choice;
· Higher living standards (town/village sites improved amenities);
· Financial grants to enhance livelihoods;
· Training and preferential employment; and
· Support of farmers to enhance agricultural production.
GCM maintains facilities in the Project area and its resident field team is in
close contact with the community and local authorities. The field team is
assisted by 67 Community Liaison Assistants ("CLA's"), recruited from across
the Project Area.
Risks and uncertainties
The predominant risks and uncertainties faced by the Company are set out
below:
`
Political and economic - risk that the recently completed National Election is
not deemed to be free and fair, leading to a protracted period of civil unrest
and US led sanctions that affect economic development. However, to offset this
risk, Bangladesh is receiving significant diplomatic support by its large
neighbours being Indian and China. Also, the Bangladesh President has set a
precedent by allowing the Bangladesh army to be deployed to assist in
quelling any such civil unrest. In this situation, business development was
able to continue.
- risk that the Project Proposal is not approved, however, the country's
exposure to the world energy market has caused severe economic stress leading
to austerity measures that have interrupted the flow of energy products for
power generation which in turn impacts business and industrial productivity.
However, Indications are the government is working to offset this risk with
"new plans" in the energy and power sector aimed at reducing imports by
developing its domestic energy reserves, principally coal and also undertaking
exploration programs to grow the severely depleted gas reserves. The Company
operates in Bangladesh through its wholly owned subsidiary, Asia Energy
Corporation, and all activity is covered under the terms and conditions of its
Contract with the Bangladesh Government for "Exploring and Mining of Coal in
Northern Bangladesh". Under this Contract, approval is assured, although there
may be several iterations involved to clarify issues ahead of the approval.
Strategic - risk that the strategic partnership with the Chinese
state-owned-enterprise PowerChina does not proceed, thus undermining the
Company's strategy of presenting the Project as a captive coal mine with
reliable market options for its full coal mine production and jeopardising the
mine's economic sustainability. However to offset this risk, the Project
Proposal invites the Bangladesh Government to become a partner in the Project
and the Proposal promote all or part of the Phulbari captive open pit coal
mine production being sold in the first instance to the Government's own power
plants, thus reducing or eliminating the dependency on having mine-mouth power
plants as the sole market for the Phulbari coal. The current and prolonged
world energy crisis with escalated coal and LNG prices (increasing pressure of
Bangladesh's Foreign Exchange Reserves) also makes the proposition of the
Government using Phulbari coal for its power plants much more attractive.
The Company has also taken steps to further reduce this risk by its Bangladesh
team working with contacts within key government agencies to ensure the
Project Proposal is aligned with the "new plans" in the energy and power
sector (as noted in the Political and economic risk discussion) and that the
Company is in the best position to engage with the newly elected government
following the 7 January 2024 National Election.
Financing - risk that the Company will not be able to raise necessary working
capital to sustain its activities ahead of presenting the Project Proposal to
the government or the funding required to take the Project through the
government approval process to implementation stage. The former financing
risk is off-set by the Company's track-record of being able to raise funds
through the equity market. The latter financing risk is offset by agreements
in place with our Development Partner, PowerChina, whereby in return for being
awarded EOC Contracts, PowerChina has expressed a willingness to assist with
project financing. The Directors are confident that the necessary funds will
be obtained as and when required. For further details refer to the Directors'
Report.
Commercial - risk that the Project's economic viability is undermined by
sustained adverse movement of coal price and key cost elements. This risk is
offset by the current and prolonged world energy crisis with escalated coal
and LNG prices makes the proposition of the Government using Phulbari coal for
its power plants much more attractive. Analysts predict the supply/demand
forces will support continuing high coal prices in the medium term, thus using
Phulbari coal will give the Government some protection against supply and cost
escalation risk and save billions of dollars in Foreign Exchange. To further
reduce economic viability risk there will be a rise and cost provision for the
coal mine with the coal supply agreements for the power plants. Bangladesh
currently has 6,035 MW of coal-fired power capacity installed that requires
some 16 million tonnes of coal per annum, i.e., the nameplate production for
the Phulbari coal mine. In addition, the Bangladesh Government's plan is to
increase the coal-fired power capacity to 11,830 MW which will require some 36
million tonnes per annum.
Legal - risk that the mining lease and exploration licences are revoked. The
Group continues to comply with all terms of the Contract with the Government
for "Exploration and Mining of Coal in Northern Bangladesh" and is careful to
ensure that all ongoing conditions of the Contract and the associated mining
lease and exploration licences are met. GCM has received a recent
comprehensive legal opinion that the Contract is enforceable under Bangladesh
and International law.
Health and safety, social and environmental risks - The Group remains
committed to developing the Project and meeting the highest international
social and environmental standards as detailed in the Corporate Social
Responsibility section within this Strategic Report.
Climate Change risk - Increased awareness and action against climate change
will put pressure on governments and financing organisations to reduce
exposure to fossil fuel related power generation. This could affect future
Bangladeshi Government policy towards coal fired generation and limit funding
appetite for the Project. Bangladesh is scheduled to officially become a
developing country in 2026 as the UN committee recommended that the country
should get five years, instead of three, to prepare for the transition due to
the impact of Covid-19 on its economy. Until 2026, the country will continue
to enjoy the trade benefits as an LDC. The Bangladesh Government has also
recently adopted its Vision 2041 which aims to end absolute poverty and to be
graduated into higher middle-income status by 2031 and eradicate poverty on
way to becoming a developed nation by 2041.
Bangladesh has minimal emissions and is far behind the developed countries in
terms of GDP and power generation per capita. Considering the year 2019
(immediately prior to the COVID pandemic and the worldwide economic slowdown)
published figures indicate its contribution to the world's CO(2) production
was some 0.25 percent, i.e. Bangladesh is not a significant emitter.
Vision 2041 identifies two fundamental energy and power sector pillars
necessary to support the Vision: (i) Adopting a least-cost power generation
expansion path; and (ii) Promoting supply of low-cost primary energy. To
achieve this, it needs to steadily grow its power generation capacity
(efficient low-cost power) to drive industrial development and create
sustainable new well-paying jobs. To this end, even if the Phulbari full coal
production was consumed in over 6,600MW of power being generated Bangladesh's
contribution to the world's CO(2) production would still be minimal.
The Bangladesh Government recognises the importance of commercial fuel
diversity for its power generation; however, it remains heavily reliant on
imported fuels, which exposes the country to inherent world-market risks in
terms of maintaining supply and controlling cost. The world-wide protracted
energy crisis has raised serious questions over Bangladesh's dependence on
imported energy products. It has forced the Government to adopt an austerity
approach involving restricting energy imports and cutting back on power
generation, principally driven by falling Foreign Exchange Reserves. Civil
society and many political figures are now calling for a rapid move to develop
the country's domestic coal land gas resources to ensure energy security and
save on Foreign Exchange. As noted in the Political and economic risk
discussion, indications are the Bangladesh Government is working on "new
plans" for the energy and power sector which aim to reduce dependency on
expensive imported energy products by developing its domestic energy
resources, principally the known domestic coal reserves and to encourage
exploration for new gas fields.
The Phulbari Project remains focused entirely on serving Bangladesh's domestic
requirements, adhering to its policies and laws and supporting its development
goals. The Project will assist Bangladesh achieve its NDC targets as it
balances issues to achieve its development goals. By using Phulbari's high
quality coal high energy efficient low emission Ultra-Supercritical power
plants the country will not only eliminate greenhouse emissions associated
with coal shipping and handling, but importantly it will realise a large
amount of clean coal technology produced power at tariffs that will make its
industries more competitive. This will help drive Bangladesh economic
development and ability to deal with the effects of climate change.
Board engagement with stakeholders
This section serves as our section 172 statement and should be read in
conjunction with the rest of the Strategic Report and the Company's Corporate
Governance Statement.
Section 172 of the Companies Act 2006 requires a Director of a company to act
in the way he or she considers, in good faith, and would be most likely to
promote the success of the company for the benefit of its members as a whole.
In doing this, section 172 requires a Director to have regard, among other
matters, to: the likely consequences of any decision in the long term; the
interests of the company's employees; the need to foster the company's
business relationships with suppliers, governments, local communities, and
others; the impact of the company's operations on the community and the
environment; the desirability of the company maintaining a reputation for high
standards of business conduct; and the need to act fairly with members of the
company.
The Directors uses its Board meetings as a mechanism for giving careful
consideration to the factors set out above in discharging their duties under
section 172.
Stakeholder engagement
Key stakeholder groups we engage with are listed below, together with an
explanation of why we focus on them and how we engage them.
Employees
The success of the Group is dependent upon the hard work and dedication of all
our employees. The Board ensures a continuing investment in existing employees
who are supported through professional, technical and on-the-job training
relevant to their functional areas, as well as other relevant role-specific
training. The Board directs executives and senior managers to keep staff
informed of the progress and development of the Company on a regular basis
through formal and informal meetings and regular communications. In addition,
the Board ensures funds are provided for regular events to encourage employee
participation in local community initiatives.
Government Agencies & Local Communities
The Group operates in the regulated mining sector in Bangladesh. The Board
ensures the Company adopts a positive focus on maintaining productive
relations with local communities and all levels of government. As a result,
the Chief Executive Officer and Chief Operating Officer regularly conduct
consultations with multi-levels of government agencies to ensure that all
regulatory approvals and permits remain in good order. Development of local
community improvement programmes are undertaken with consultation of local
government and community representatives to maintain positive and productive
relationships necessary to advance the Phulbari project.
As a mining exploration Group, the Board takes seriously its ethical
responsibilities to the communities and environment in which it works.
Wherever possible, local communities are engaged in the geological operations
and support functions required for field operations. The regions in which the
Group operates have native title laws. The Company is respectful of native
title rights and engages proactively with local communities. In addition, we
are careful to manage the environmental obligations of our work, and undertake
site rehabilitation programmes, and prepare mine management plans, in
accordance with local laws and regulations. Our goal is to meet or exceed
standards, to ensure we maintain our social licence to operate from the
communities with which we interact.
Contractors & Suppliers
Our proposed Joint Venture associates, consultants and suppliers are key
business partners, and the quality of goods and services we receive are
essential to supporting operations and to enhance the project process with our
goal to successfully submit our project proposal to the Bangladesh Government
for approval.
During the year, the Board committed significant resources into fostering
improved relationships with our key partners. As directed by the Board,
management collaborates and continually works with our partners and the full
supply chain, sharing best practice and seeking out synergies to improve.
Lender
For the entire reporting period the Chairman, CEO and FD, on behalf of the
Board have been in regular contact with its lender. An extension to the loan
agreement was agreed during the year, which enabled the Group to continue on a
stable financial platform.
Investors
Investors are considered key stakeholders, and consequently investor relations
are a focus area for Directors. Where possible the Board engages investors on
Group performance following project updates and results announcements with
face-to-face meetings or scheduled calls.
On behalf of the Board,
Datuk Michael Tang PJN
Chief Executive Officer
29 January 2024
Board of Directors
Executive Directors
Datuk Michael Tang PJN (Executive Chairman) is Chairman of the Company's
largest shareholder, Polo Resources Limited, and is the principal of Mettiz
Capital Limited, an investment company. Datuk Tang has significant corporate
and financial experience in natural resources, power generation, healthcare,
technology, manufacturing and real estate. Datuk Tang qualified as a barrister
at Lincoln's Inn and holds a Bachelor of Law degree from the London School of
Economics and Political Science. Datuk Tang was conferred the Distinguished
Order for Meritorious Service ("Panglima Jasa Negara") which carries the
honorific title of "Datuk" by His Majesty King of Malaysia. The award was in
recognition of his invaluable service and contribution to the nation.
Keith Fulton (Finance Director) is the Finance Director of GCM and has over 25
years accounting and finance experience and was a partner at the audit firm
Chapman Davis for over fourteen years. He began his career at Badger Hakim,
where he qualified as a Chartered Accountant, following which he held various
financial advisory and leadership positions at a number of corporates,
including Finance Director at IDG UK Holdings Ltd. Keith is a member of the
Institute of Chartered Accountants in England and Wales.
Gary Lye (Chief Operating Officer) is the Chief Operating Officer of GCM and
Chief Executive Officer of GCM's subsidiary, Asia Energy Corporation
(Bangladesh) Pty Ltd. He has been with the Phulbari Coal and Power Project
(the Project) since January 2004 and led the exploration programme and
Feasibility Study. He is a qualified geologist and geotechnical engineer with
a Master's Degree in Rock Mechanics from the Royal School of Mines, London and
a Diploma of the Imperial College (DIC), London and has over 45 years'
international experience in the mining industry. Gary previously held senior
mining positions with several leading mining companies. This included roles as
Strategic Mine Development Manager with Kalgoorlie Consolidated Gold Mines at
their Super Pit operations in Kalgoorlie, Western Australia, and as Manager of
Mining Research for CRA in Perth, Western Australia.
Non-Executive Directors
Mohd. Najib Abdul Aziz (Non-Executive Chairman) has over 25 years corporate
and finance experience in a number of industries, including property,
construction and manufacturing. He began his career at KPMG in Perth and later
worked at Arthur Andersen & Co. in Kuala Lumpur. Najib has significant
experience in both Executive and Non-Executive Director roles in Malaysia. In
addition to his current executive roles at Corporate-Pacific Holdings Sdn Bhd
and Pentas Flora Environmental Services Sdn Bhd, he is also an Independent
Non-Executive Director of Bina Puri Holdings Bhd and Tropicana Corporation
Bhd, the latter where he is also the Chairman of the Audit Committee. Najib is
a member of the Malaysian Institute of Accountants and a member of Chartered
Accountants Australia and New Zealand. Najib resigned from the Board on 11
October 2023.
Christian Taylor-Wilkinson (Non-Executive Chairman) has spent his working life
in the City and has over 30 years' experience advising and working alongside
companies across many sectors and geographies. Christian's background spans
investment banking, investor relations and financial PR, which gives him a
broad perspective on the capital markets landscape as well as a deep
understanding of the needs of businesses, their boards and their shareholders.
He has worked with a wide range of companies - from global European and Asian
telecommunications businesses to smaller AIM companies. He founded Leander PR
Ltd, a small cap focused financial public relations agency in April 2009. He
was appointed as a Non-Executive Director of Altona Energy plc, a Rare Earths
mining exploration company, in January 2019, and was made CEO in November
2020, until his resignation as Chief Executive in June 2023, and continues in
a Business Development role for the Company.
Corporate Governance Report
Corporate Governance Statement
The Board of Directors ("Board") aims to adhere to industry good practice in
relation to corporate governance of the Company. The Board approved the
adoption of the Quoted Companies Alliance Corporate Governance Code 2018 ("QCA
Code") on 9 July 2018.
The QCA Code sets out 10 principles which should be applied. These are listed
below together with a short explanation of how the Group applies each of the
principles. Where the Group does not fully comply with each principle an
explanation as to why has also been provided:
Principle One: Strategy and business model
The Board has developed and implemented a strategy which it believes will
achieve long term value for shareholders. This strategy is set out in the
Strategic Report. The Company believes that this strategy is appropriate to
protect the Company from unnecessary risk and optimise its long-term future.
Principle Two: Understanding shareholder needs and expectations.
The Board is committed to maintaining good communications and seeks to
understand and meet shareholder needs and expectations by engaging with them
across a range of platforms. All shareholders are encouraged to attend the
Company's Annual General Meetings where they can meet and directly communicate
with the Board. After the close of business at the Annual General Meeting, the
Chairman opens the floor to questions from shareholders. The Company provides
phone numbers on all its updates and RNS announcements where shareholders can
contact the appropriate senior Company representatives directly. Shareholders
also have access to information through the Company's website, www.gcmplc.com
(http://www.gcmplc.com/) .
Shareholders are also welcome to contact the Company via email at
info@gcmplc.com with any specific queries.
Principle Three: Stakeholder responsibilities
The Board recognises that the long-term success of the Company is reliant upon
strong positive relationships with the Government of Bangladesh, local
potentially affected communities, its partners, customers, contractors,
suppliers, employees and other stakeholders.
The Company is committed to developing any project under its control to the
highest international social and environmental standards. In addition to
compliance with applicable national laws, GCM has committed to comply with the
Equator Principles, the International Finance Corporation's Performance
Standards on Social and Environmental Sustainability and the principles of the
UN Global Compact.
At this stage in the Company's development, the Board has not adopted a
specific written policy on Corporate Social Responsibility as the standards it
has committed to gives sufficient guidance at the Company's current stage of
development.
The Company engages positively with local communities, regulatory authorities
and stakeholders in its project locations and encourages feedback through this
engagement. Through this process the Company identifies the key resources and
fosters the relationships on which the business relies.
Principle Four: Risk management
The Board periodically reviews the risks to which the Group is exposed
including on all significant new transactions, and ensures that these risks
are minimised as far as possible whilst recognising that its business
opportunities carry an inherently high level of risk. The principal risks and
uncertainties facing the Group at this stage in its development and in the
foreseeable future are detailed within the Strategic Report together with risk
mitigation strategies employed by the Board.
Principle Five: A well-functioning Board of Directors
The Non-Executive Chairman (Christian Taylor-Wilkinson) has overall
responsibility for the Corporate Governance of the Company. The Board is
responsible for formulating, reviewing and approving the Group's strategy,
budget, major transactions and monitoring achievement of its business
objectives. An agenda and supporting documentation are circulated to the
directors before each Board meeting. Open and timely access to all information
is provided to directors to enable them to bring independent judgement on
issues affecting the Group and facilitate them in discharging their duties.
The Board meets formally periodically during the year for these purposes and
holds additional meetings when necessary to transact other business. The Board
receives reports for consideration on all significant strategic, operational
and financial matters.
The Board currently consists of the Non-Executive Chairman (Christian
Taylor-Wilkinson), the Chief Executive Officer (Datuk Michael Tang PJN), the
Finance Director (Keith Fulton), and the Chief Operating Officer (Gary Lye).
The Board considers that its composition is satisfactory and complies with the
QCA Code, however, is currently actively recruiting one or two further
non-executive directors to improve its Board composition.
The roles of Chairman and Chief Executive Officer are split per best practice.
The Chairman has the responsibility of ensuring that the Board discharges its
responsibilities. The Chairman is responsible for the leadership and effective
working of the Board, for setting the Board agenda, and ensuring that
Directors receive accurate, timely and clear information. No one individual
has unfettered powers of decision. The Finance Director works full time for
the Company.
The non-executive director is considered independent of management and free
from any business or other relationship which could materially interfere with
the exercise of their independent judgement.
The Board is supported by the audit, remuneration and the nomination
committees, details of which can be found below.
Principle Six: Appropriate skills and experience of the Directors
For the current size and stage of development of the Company, the Board
considers the current balance of sector, financial and public market skills
and experience present on the Board is appropriate to execute the Company's
strategy and business plan and discharge its duties effectively. As the
Company evolves, the Board will be reviewed and expanded as necessary to
ensure appropriate expertise is always in place to support its business
activities. Details of the current Board of Directors' biographies are set out
within the Board of Directors section.
All Directors have access to the Company Secretary who is responsible for
ensuring that Board procedures and applicable rules and regulations are
observed.
Principle Seven: Evaluation of Board performance
Due to GCM's size and available resources, and the status of the Company's
operations, the Company has yet to set in in place a formal evaluation system
for its Board, Directors and employees. The appropriateness of performance
review will be reassessed as the Company's corporate governance evolves in
line with development of its business. The board shall monitor requirements
for succession planning on an ongoing basis.
Principle Eight: Corporate culture
The Company operates in the United Kingdom and Bangladesh. It is committed to
upholding all laws relevant to countering bribery and corruption in all
jurisdictions in which it operates and remains bound by the laws of the United
Kingdom, including the Bribery Act 2010, in respect of conduct both at home
and abroad.
The Company takes a zero-tolerance approach to bribery and corruption and is
committed to acting professionally, fairly and with integrity in all its
business dealings and relationships wherever we operate, implementing and
enforcing effective systems to counter bribery.
The Group gives full and fair consideration to applications for employment
received regardless of age, gender, colour, ethnicity, disability,
nationality, religious beliefs, transgender status or sexual orientation. The
Board takes account of employees' interests when making decisions, and
suggestions from employees aimed at improving the Group's performance are
welcomed.
The Company has adopted a Share Dealing Code for directors' and employees'
dealings in securities which is appropriate for a company whose securities are
traded on AIM and is in accordance with the requirements of the Market Abuse
Regulation which came into effect in 2016.
Principle Nine: Maintenance of governance structures and processes
Ultimate authority for all aspects of the Company's activities rests with the
Board. The Non-Executive Chairman is responsible for the effectiveness of the
Board, ensuring that no individual or group dominates the Board's
decision-making, and that the Non-Executive Directors are properly briefed on
all operational and financial matters. The Non-Executive Chairman has overall
responsibility for corporate governance matters in the Group. The Chief
Executive Officer has the responsibility for implementing the strategy of the
Board and managing the day-to-day business activities of the Group. The
Company Secretary is responsible for ensuring that Board procedures are
followed, and applicable rules and regulations are complied with. Key
operational and financial decisions are reserved for the Board through
periodic Board meetings.
In accordance with the Companies Act 2006, the Board complies with: a duty to
act within their powers; a duty to promote the success of the Company; a duty
to exercise independent judgement; a duty to exercise reasonable care, skill
and diligence; a duty to avoid conflicts of interest; a duty not to accept
benefits from third-parties and a duty to declare any interest in a proposed
transaction or arrangement.
Principle Ten: Shareholder communication
The Company encourages communication with both private and institutional
shareholders. The Company's website is regularly updated and users, including
all stakeholders, can register to be alerted via email when material
announcements are made. The Company's contact details are on the website for
investor relations enquiries.
Shareholders are encouraged to attend the Company's Annual General Meeting.
Notices of General Meetings are posted to shareholders and copies for at least
the past five years are contained within the Annual Reports, copies of which
are available on the website.
The results of voting on all resolutions in future general meetings will be
posted to the Company's website, including any actions to be taken as a result
of resolutions for which votes against have been received from at least 20 per
cent of independent votes.
Board and Committees
The Board consists of three executive directors and one non-executive director
(including the Chairman). The Board considers that this composition is
satisfactory, considering the size and scale of the Group's activities and
that no one individual or group dominates the decision-making process. The
composition of the Board, including the balance between executive and
non-executive directors will continue to be reviewed to ensure that the Board
continues to have the appropriate structure and skills to meet the needs of
the Group as its business develops. The Board will continue to monitor and
actively recruit additional independent non-executive directors.
The Board meets regularly through the year, providing effective leadership and
overall management of the Group's affairs through the schedule of matters
reserved for its decision. This includes the approval of the Group's forecast
and budget, major capital expenditure, risk management policies and approval
of the financial statements. Formal agendas, papers and reports are sent to
the Directors in a timely manner prior to Board meetings. The Board delegates
certain of its responsibilities to the Board Committees which have clearly
defined terms of reference and are listed below.
All directors have access to the advice and services of the Group's
solicitors, Nominated Adviser and the Company Secretary. Any Director may take
independent professional advice at the Group's expense in the furtherance of
their duties.
Retirement by rotation
One third of directors are required to retire at every Annual General Meeting
(AGM) of the Company by rotation and may be re-elected by ordinary resolution.
The Audit Committee
The Audit Committee considers the Group's financial reporting (including
accounting policies) and internal financial controls.
The Audit Committee is responsible for ensuring that the financial performance
of the Group is properly monitored and reported on. Mr Christian
Taylor-Wilkinson is Chair of the Audit Committee, supported by Keith Fulton,
the Finance Director and Company Secretary, and the full board who are not
formally members of the committee. The membership of the committee will be
reviewed annually and upon any changes to the composition of the Board. During
the year the Audit Committee met twice and was active in assessing the
adequacy of the interim and annual financial statements, including conducting
meetings with the auditors of the Company.
The Remuneration Committee
The Remuneration Committee is responsible for making recommendations to the
Board of Directors' and senior executives' remuneration. Non-Executive
Directors' remuneration is considered by the Board. Financial packages for the
Executive Directors are established by reference to those prevailing in the
employment market for executives of equivalent status both in terms of level
of responsibility of the position and their job qualifications and skills. The
Committee will also have regard to the terms which may be required to attract
an equivalent experienced executive to join the Board from another Company. Mr
Christian Taylor-Wilkinson is Chair of the Remuneration Committee, supported
by Keith Fulton, the Finance Director and Company Secretary, and the full
board who are not formally members of the committee. The membership of the
committee will be reviewed annually and upon any changes to the composition of
the Board. The Committee met once during the year to conduct a review of
executive remuneration, including benchmarking to market and making
appropriate recommendations to the Board.
The Nominations Committee
The Nominations Committee makes recommendations to the Board for the
recruitment of Directors and senior executives. Mr Christian Taylor-Wilkinson
is Chair of the Nominations Committee, supported by Keith Fulton, the Finance
Director and Company Secretary, and the full board who are not formally
members of the committee. The membership of the committee will be reviewed
annually and upon any changes to the composition of the Board. During the year
the Nominations Committee did not meet formally but has been involved in the
assessment of prospective candidates for non-executive positions as requested
by the Board.
Christian Taylor-Wilkinson
Non-Executive Chairman
29 January 2024
Directors' Report
The Directors present their annual report and the audited accounts for the
year ended 30 June 2023.
Principal activities
GCM Resources plc (GCM) was incorporated as a Public Limited Company (Company
register number 04913119) on 26 September 2003 and admitted to the London
Stock Exchange Alternative Investment Market (AIM) on 19 April 2004.
The Company's principal activity, through its subsidiaries, is the development
of the Phulbari Coal and Power Project in Bangladesh.
Business review
Phulbari Coal and Power Project
A detailed review of progress on the Phulbari Coal and Power Project is
included in the Group Strategic Report.
Financial resources
As at 30 June 2023, GCM held £543,000 in cash (2022: £961,000 cash).
Corporate responsibility
GCM is committed to undertaking its activities in accordance with the highest
international social, environmental and operational standards. For detailed
information please refer to the Group Strategic Report.
Financial review
The Group recorded a loss after tax of £1,320,000 for the year ended 30 June
2023 (2022: loss after tax of £1,679,000). Non-cash expenses of £180,000
were incurred during the year (2022: £414,000).
Capitalised evaluation expenditure relating to the Phulbari Coal and Power
Project was £625,000 for the year ended 30 June 2023 (2022: £563,000).
Events after the end of the reporting period
The events which took place subsequent to 30 June 2023, are fully disclosed in Note 21 to the Consolidated Financial Statements.
Dividends
The Directors do not recommend the payment of a dividend (2022: nil).
Going concern
As at 30 June 2023, the Group had £543,000 in cash and £805,000 of net
current liabilities. The directors and management have prepared a cash flow
forecast to March 2025, which shows that the Group will require further funds
to cover operating costs to advance the Phulbari Coal and Power Project and
meet its liabilities as and when they fall due. Based on current forecasts,
additional funding will need to be either raised from third parties or the
short-term loan facility with Polo Resources Limited ("Polo Loan Facility")
increased and extended by the end of March 2024, in order to meet current
operating cost projections. The Directors also note that, under the amended
terms of the existing Polo Loan Facility, the lender agreed not to serve a
repayment request in cash for 5 years from the date of amended terms, 26 March
2021, or alternatively convert to shares at 5.14 pence per share at the
lender's option (as amended on 1 March 2022). The Company does not currently
have secured funding arrangements in place to cover this loan or further
potential expenditure which may be needed to advance the Project and,
accordingly, should Polo request repayment of the Polo Loan Facility (under
certain terms of the Loan Facility), GCM will need to raise funds in a short
amount of time, which may not be available on terms acceptable to the Board or
on a workable timeframe.
The Company currently has utilised £3,200,000 of the Polo Loan Facility at
the date of this report (at the date of this report, the Company is awaiting
receipt of the final drawdown of £300,000 from Polo), and based on projected
future cash expenditure, at the date of this report this facility would be
required to be increased, or additional funds raised through equity placing or
other debt facilities in order to be sufficient to support the Company's
operations for the twelve months from the date of this report. As announced by
the Company on 25 January 2024, the Company has completed a Gross equity fund
raise of £500,000 by way of subscription for Ordinary Shares with Clear
Capital Markets, at a price of 1.65p per share. At the current run rates, the
Company's existing cash resources, is expected to provide sufficient capital
for the next five months. The Company intends to explore alternative funding
options over the second quarter of 2024, with the aim to complete and secure
the necessary third-party funding by the end of June 2024.
In forming the conclusion that it is appropriate to prepare the financial
statements on a going concern basis the Directors have made the following
assumptions that are relevant to the next twelve months:
- Sufficient additional funding can be obtained for working
capital purposes; and
- In the event that operating expenditure increases significantly
as a result of successful progress with regards to the Phulbari Coal and Power
Project, sufficient funding can be obtained.
While the Directors remain confident that necessary funds will be available as
and when required, as at the date of this report these funding arrangements
are not secured, the above conditions and events represent material
uncertainties that may cast significant doubt over the Group's ability to
continue as a going concern. The financial statements have been prepared on a
going concern basis. The financial statements do not include the adjustments
that would result if the Group was unable to continue as a going concern.
Upon achieving approval of the Phulbari Coal and Power Project, significant
additional financial resources will be required to proceed to development.
Future outlook
The Group is fully committed to the Phulbari Coal and Power Project and is
directly engaging with the Government of Bangladesh and other stakeholders to
move the Project forward. A detailed review of progress on the Phulbari Coal
and Power Project is included in the Group Strategic Report.
Principal risks and uncertainties
Details of the Group's principal risks and uncertainties can be found within
the Group Strategic Report .
Financial instruments
Details of the financial risk management objectives and policies of the Group
and information on the Group's exposure to financial risks can be found in
note 18 to the financial statements.
Directors
The Directors who served during the year:
Appointed Resigned
Executive Directors
Datuk Michael Tang PJN
Keith Fulton
Gary Lye
Non-Executive Directors
Mohd. Najib Abdul Aziz 11 October 2023
Christian Taylor-Wilkinson
Amounts paid for services of Directors for the year ended 30 June 2023 were:
Share based payments 2023 2022
Salary & fees Total Total
£ £ £ £
Executive Directors
Datuk Michael Tang PJN (*) 303,600 - 303,600 303,600
Keith Fulton 90,000 10,000 100,000 120,000
Gary Lye 173,828 - 173,828 170,540
Non-Executive Directors
Mohd. Najib Abdul Aziz (resigned 11 October 2023) 6,000 - 6,000 6,000
Christian Taylor-Wilkinson 6,000 - 6,000 6,000
James Hobson(resigned 1 December 2021) - - - 5,000
579,428 10,000 589,428 611,140
(*) Michael Tang's remuneration remains partially unpaid as at 30 June 2023,
see Note 20 also.
The Directors who held office at 30 June 2023, or on date of resignation, had
the following interests in the ordinary shares and options of the Group:
2023 2023 2023 2022 2022 2022
Shares Conditional shares ((1)) Options Shares Conditional shares Options
Executive Directors
Datuk Michael Tang PJN - - 7,250,000 ((2)) - - 7,250,000
Keith Fulton 1,023,343 - - ( ) 705,883 - -
Gary Lye 2,000 170,000 825,000 ( ) 2,000 170,000 825,000
( ) ( )
Non-Executive Directors ( ) ( )
Mohd. Najib Abdul Aziz - - - ( ) - - - ( )
Christian Taylor-Wilkinson - - - ( ) - - - ( )
James Hobson - - - ( ) 200 - - ((3))
( )
((1) Shares awarded in the event of key milestones being
reached. Refer to Note 17 to the financial statements.)
((2) Options with an exercise price of £0.11, vested on 1
January 2016 and an expiry date of 31 May 2020. On 29 May 2020, these
options were extended on the same terms until 31 May 2024.)
((3) James Hobson resigned on 1 December 2021.)
Internal controls
The Directors acknowledge their responsibility for the Group's systems of
internal controls and for reviewing their effectiveness. These internal
controls are designed to safeguard the assets of the Group and to ensure the
reliability of financial information for both internal use and external
publication. Further reviews of internal controls will be undertaken as the
Group develops to ensure that they remain adequate and effective.
Risk management
The Board considers risk assessment to be important in achieving its strategic
objectives. There is a process of evaluation and monitoring risks through
regular reviews by senior management.
Business risk
The Board regularly evaluates and reviews business risks when reviewing
project timelines. The types of risks reviewed include:
· Regulatory and compliance obligations
· Political and economic risks - refer to note 1 for further
information
· Environmental requirements
· Legal risks relating to contracts, licences and agreements
· Insurance risks - the Group holds insurance coverage for
potential employee and liability claims
· Political risks arising from operating in Bangladesh - refer to
note 1 for further information
· Climate Change Risk - refer to Risks and Uncertainties within the
Strategic Report
Treasury policy
The Group currently finances its operations through equity and debt financing
and holds its cash to fund the obligations of the Group. Decisions regarding
the management of these assets are approved by the Board. Refer to note 18 for
liquidity risk.
Capital management
Capital comprises of cash only. The Group holds a loan facility of £3,500,000
of which £3,200,000 had been fully utilised as at 30 June 2023. The Group
does not hold other loans, financial leases, or other non-current finance
obligations.
2023 2022
£000 £000
Cash 543 961
Borrowing facilities undrawn (*) 300 300
Unpaid share capital (**) - 400
Capital 843 1,661
(*) £300,000 of the available facility, was requested to be drawn down on 28
November 2023, and the Company at the date of this report is awaiting receipt
of the funds
(**) The unpaid share capital of £400,000 was received on 5 July 2022
Upon approval of the Phulbari Coal and Power Project funding will be sought
from a mix of equity and debt sources to finance development. The objective of
the Group's capital management will be to manage gearing levels and capital
ratios in order to support its business, maximise shareholder value and
maintain a healthy capital position. The Group incurs expenditure in a number
of currencies including UK Pounds, Bangladesh Taka, US Dollars and Australian
dollars. The Group has a policy of not hedging currency exposures.
Qualifying third party indemnity provisions
The Company has put in place qualifying third party indemnity provisions for
all of the directors of the Company which was in force at the date of approval
of this report.
Political contributions
No payments to political parties have been made during the year (2022: nil).
Relations with shareholders
The Board attaches great importance to maintaining good relationships with its
shareholders. The Group's activities are detailed in the Annual Report and
Financial Statements, the Interim Report and market announcements. Market
sensitive information is always released to all shareholders concurrently in
accordance with stock exchange rules. The AGM provides an opportunity for all
shareholders to communicate with and to question the Board on any aspect of
the Group's activities. The Group maintains a corporate website where
information on the Group is regularly updated and all announcements are
posted.
Website disclosure
The Group has a website www.gcmplc.com (http://www.gcmplc.com) on which
statutory information, press releases and background information on the Group
and its operations can be found.
Annual General Meeting (AGM)
Full details of the resolutions to be proposed at the Company's AGM will be
included in the Notice of Meeting which will be distributed to shareholders
along with the Annual Report.
Auditors
The auditors to the Group, PKF Littlejohn LLP, have expressed their
willingness to continue in office as auditors and a resolution proposing their
reappointment will be submitted at the AGM.
Directors' statement as to disclosure of information to auditors
All of the current Directors have taken all the steps that they ought to have
taken to make themselves aware of any information needed by the Company's
auditors for the purposes of their audit and to establish that the auditors
are aware of that information. The Directors are not aware of any relevant
audit information of which the auditors are unaware.
Statement of Directors' responsibilities
The Directors are responsible for preparing the Annual Report and the Group
financial statements in accordance with applicable United Kingdom law and
regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law, the Directors have elected to prepare Group
financial statements under UK-adopted international accounting standards.
Under Company Law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Group and Parent Company and of the profit or loss of the Group
for that period.
The Directors are also required to prepare financial statements in accordance
with the rules of the London Stock Exchange for companies trading securities
on AIM. In preparing the financial statements the directors are required to:
· select suitable accounting policies and then apply them
consistently;
· make judgements and accounting estimates that are reasonable and
prudent;
· state whether they have been prepared in accordance with
UK-adopted international accounting standards and with the requirements of the
Companies Act 2006, subject to any material departures disclosed and explained
in the financial statements;
· prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and Parent Company will
continue in business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group's and Parent Company's transactions
and disclose with reasonable accuracy at any time the financial position of
the Group and Parent Company and enable them to ensure that the financial
statements comply with the requirements of the Companies Act 2006. They are
also responsible for safeguarding the assets of the Company and hence for
taking reasonable steps for the prevention and detection of fraud and other
irregularities.
Website publication
The directors are responsible for ensuring the annual report and the financial
statements are made available on a website. Financial statements are
published on the Company's website in accordance with legislation in the
United Kingdom governing the preparation and dissemination of financial
statements, which may vary from legislation in other jurisdictions. The
maintenance and integrity of the Company's website is the responsibility of
the directors. The directors' responsibility also extends to the ongoing
integrity of the financial statements contained therein.
On behalf of the Board,
Keith Fulton
Executive Director
29 January 2024
Independent Auditor's Report
Independent auditor's report to the members of GCM Resources Plc
Opinion
We have audited the financial statements of GCM Resources Plc (the 'parent
company') and its subsidiaries (the 'group') for the year ended 30 June 2023
which comprise the Consolidated Statement of Comprehensive Income, the
Consolidated and Parent Company Balance Sheets, the Consolidated and Parent
Company Statements of Changes in Equity, the Consolidated Cash Flow Statement
and notes to the financial statements, including significant accounting
policies. The financial reporting framework that has been applied in the
preparation of the group financial statements is applicable law and UK-adopted
international accounting standards. The financial reporting framework that has
been applied in the preparation of the parent company financial statements is
applicable law and United Kingdom Accounting Standards, including FRS 101
Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting
Practice) and as applied in accordance with the provisions of the Companies
Act 2006.
In our opinion:
· the financial statements give a true and fair view of the state
of the group's and the parent company's affairs as at 30 June 2023, and of the
group's loss for the year then ended;
· the group financial statements have been properly prepared in
accordance with UK-adopted international accounting standards;
· the parent company financial statements have been properly
prepared in accordance with United Kingdom Generally Accepted Accounting
Practice and as applied in accordance with the provisions of the Companies Act
2006; and
· the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report. We are independent of
the group and parent company in accordance with the ethical requirements that
are relevant to our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed entities, and we have fulfilled
our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 1 in both the group and parent company financial
statements, which indicates that the group's and the parent company's ability
to continue as a going concern is dependent on the ability to secure
additional funding through financing arrangements or the issue of equity. As
stated in note 1, these events or conditions, along with the other matters as
set forth in note 1, indicate that a material uncertainty exists that may cast
significant doubt on the group's and parent company's ability to continue as a
going concern. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the director's
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors'
assessment of the group's and parent company's ability to continue to adopt
the going concern basis of accounting included:
• Challenging the directors' forecasts prepared to assess the
group's and parent company's ability to meet its financial obligations as they
fall due for a period of at least 12 months from the date of approval of the
financial statements. We have reviewed the consistency of committed cash flows
against contractual arrangements and compared general overheads to current run
rates. The forecasts demonstrated that the group and parent company will
require additional funding during the going concern period to meet its
liabilities as and when they fall due.
• The forecasts indicate that the current funding will not be
sufficient with further funding being required to meet increased expenditure
on the mine and power plant project. We have discussed with the directors
the strategies that they are pursuing to secure further funding if and when
required. We note that the Company have successfully raised funds from issuing
equity in the past but at the date of this report there are no legally binding
agreements in place to cover a funding deficit in these scenarios.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Our application of materiality
The scope of our audit was influenced by our application of materiality. We
set certain quantitative thresholds for materiality. These, together with
qualitative considerations, helped us to determine the scope of our audit and
the nature, timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and on the financial statements as a whole.
Based on our professional judgement, we consider 1.5% of total assets to be
the most significant determinant of the group's financial performance used by
shareholders as the group continues to bring its mining assets through to
development. Materiality of the parent company was based upon the loss before
tax in order to achieve sufficient coverage of expenditure in our testing.
Whilst materiality for the financial statements as a whole was £659,000 (2022
- £662,000), each significant component of the group was audited to a lower
level of materiality. The parent company materiality was £66,000 (2022 -
£82,000) with the other components being audited to a materiality of
£329,000 (2022 - £331,000). These materiality levels were used to determine
the financial statement areas that are included within the scope of our audit
work and the extent of sample sizes during the audit.
Performance materiality is the application of materiality at the individual
account or balance level set at an amount to reduce to an appropriately low
level the probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality. Performance materiality was set at 70% of
the above materiality levels for both group and parent company, equating to
£461,000 (2022 - £463,000) and £46,000 (2022 - £57,400) respectively,
based upon our assessment of the risk of misstatement.
We agreed with management that we would report to the audit committee all
individual audit differences identified during the course of our audit in
excess of £32,000 (2022 - £33,000) for the financial statements as a whole
and £3,300 (2022 - £4,100) for the parent company. We also agreed to report
differences below these thresholds that, in our view warranted reporting on
qualitative grounds.
Our approach to the audit
Our group audit scope focused on the group's principal operating location
being Bangladesh which was subject to a full scope audit together with the
parent company, which was also subject to a full scope audit. These represent
the significant components of the group.
The remaining components of the group were considered non-significant and
these components were principally subject to analytical review procedures.
Entities subject to full scope audits account for 99% of the total assets.
The audits of each of the significant components were performed in the United
Kingdom. All of the audits were conducted by PKF Littlejohn LLP.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those
which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. In addition to the matter
described in the Material uncertainty related to going concern section we
have determined the matters described below to be the key audit matters to be
communicated in our report.
Key Audit Matter How our scope addressed this matter
Carrying value of intangible asset (Group) and Carrying value of investment in
subsidiary (Parent Company)
As disclosed in note 9 to the group financial Statements, the group's Our work included:
intangible asset represents capitalised exploration and evaluation expenditure
on the Phulbari Coal Project. The balance is £43.4m as at 30 June 2023.
The parent company holds an investment in Asia Energy Corporation (Bangladesh)
Pty Limited which is the entity that holds the underlying Phulbari asset. The · Evaluating the Directors' assessment of the group's right to
value of the investment on the parent company balance sheet is £47.9m, as tenure over the Phulbari Coal licence area by reviewing historical agreements
disclosed in note 6 to the parent company financial statements. and the external legal opinion obtained by the group on the status of the
overriding contract. We obtained the legal opinions from the group's
external solicitor and assessed the solicitor's competence and independence to
give such opinions. A discussion was held with the lawyer providing those
The group has a contract with the Government of Bangladesh to explore, develop opinions.
and mine on the Phulbari Coal licence area. In 2005 the Group submitted a
feasibility study and mine development plan, in line with the terms of the
contract, in order to obtain approval to move forward with development. To
date the government has not provided the necessary approval. As a result, · Gaining an understanding of the strategy the directors are
there is continued uncertainty regarding if and when such approval will be pursuing to progress the project given the continued delays in securing
obtained. The parent company has received a legal opinion confirming that development approval and reviewing the partnership agreements the parent
the group retains legal title to the asset despite the delays in approval, and company has entered into historically and during the period.
that the contract with the Government of Bangladesh is enforceable under
Bangladesh and International law. The recoverability of the investment in Asia
Energy Corporation (Bangladesh) Pty Limited is reliant on the successful
development of the Phulbari asset and is therefore subject to the same · Evaluating management's impairment assessment and underlying
uncertainties regarding recoverability. economic model against the original feasibility study submitted in 2005,
including the approved coal reserves study. We critically challenged the key
estimates and assumptions used including their continued appropriateness
including assessment of the price inputs to market data and forecasts;
The directors consider that the delay in obtaining the approval represents an re-calculation of discount rates; and review of the forecast costs. We
indicator of impairment under IFRS 6 Exploration for and Evaluation of Mineral performed our own sensitivity analysis over individual key inputs, together
Resources. As part of the impairment assessment the directors concluded that with a combination of sensitivities over such inputs.
the value of the intangible asset and investment in subsidiary continues to be
appropriately supported by the original definitive feasibility study submitted
in 2005. As such, the carrying value is dependent upon the ultimate approval
of the feasibility study and mine development plan. The directors remain · Reviewing the minutes of meeting of GCM's board and RNS
satisfied that approval will ultimately be obtained and concluded that no announcements for indicators of a potential trigger for impairment.
impairment is required at 30 June 2023. The directors have disclosed their
key judgements, together with the uncertainties in this regard, in note 1 to
the financial statements. Given the level of judgement applied, and the
ongoing delays in obtaining government approvals, we consider this to be a · Evaluating the disclosures given in the notes to the financial
significant audit risk and a key audit matter. statements, including the judgments and the uncertainties regarding the
ultimate approval by the Government of Bangladesh.
Other information
The other information comprises the information included in the annual report,
other than the financial statements and our auditor's report thereon. The
directors are responsible for the other information contained within the
annual report. Our opinion on the group and parent company financial
statements does not cover the other information and, except to the extent
otherwise explicitly stated in our report, we do not express any form of
assurance conclusion thereon. Our responsibility is to read the other
information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge
obtained in the course of the audit, or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a
material misstatement in the financial statements themselves. If, based on the
work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by 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 the directors'
report for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
· the strategic report and the directors' report have been prepared
in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent
company and their environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the directors'
report.
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 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.
Responsibilities of directors
As explained more fully in the statement of directors' responsibilities, the
directors are responsible for the preparation of the group and parent company
financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is necessary to
enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the group and parent company financial statements, the directors
are responsible for assessing the group's and parent company's ability to
continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or the parent company or to
cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
· We obtained an understanding of the group and parent company and
the sector in which they operate to identify laws and regulations that could
reasonably be expected to have a direct effect on the financial statements. We
obtained our understanding in this regard through discussions with management
and our experience of the resource exploration sector.
· We determined the principal laws and regulations relevant to the
group and parent company in this regard to be those arising from
o Companies Act 2006;
o AIM listing rules
o Quoted Companies Alliance Code; and
o Local laws and regulations in Bangladesh where the group operates.
· We designed our audit procedures to ensure the audit team
considered whether there were any indications of non-compliance by the group
and parent company with those laws and regulations. These procedures included,
but were not limited to:
o Enquiries of management
o Review of Board minutes
o Review of legal expenses including inquiry of the group's legal
representative
o Review of RNS announcements
· We also identified the risks of material misstatement of the
financial statements due to fraud. We considered, in addition to the
non-rebuttable presumption of a risk of fraud arising from management override
of controls, that the estimates, judgements and assumptions applied by
management in the assessment of impairment of intangible assets gave the
greatest potential for management bias. Refer to the Key audit matter section
above.
· As in all of our audits, we addressed the risk of fraud arising
from management override of controls by performing audit procedures which
included, but were not limited to: the testing of journals; reviewing
accounting estimates for evidence of bias; and evaluating the business
rationale of any significant transactions that are unusual or outside the
normal course of business.
Because of the inherent limitations of an audit, there is a risk that we will
not detect all irregularities, including those leading to a material
misstatement in the financial statements or non-compliance with regulation.
This risk increases the more that compliance with a law or regulation is
removed from the events and transactions reflected in the financial
statements, as we will be less likely to become aware of instances of
non-compliance. The risk is also greater regarding irregularities occurring
due to fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities
(http://www.frc.org.uk/auditorsresponsibilities) . This description forms part
of our auditor's report.
Use of our report
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.
Nicholas Joel
(Senior Statutory Auditor)
15
Westferry Circus
For and on behalf of PKF Littlejohn
LLP Canary Wharf
Statutory Auditor
London
E14 4HD
29 January 2024
Consolidated Financial Statements
Consolidated Statement of Comprehensive Income
For year ended 30 June
Notes 2023 2022
£000 £000
Operating expenses
Pre-development expenditure 16 (180) (414)
Exploration and evaluation costs 68 (35)
Administrative expenses (728) (750)
Operating loss 3 (840) (1,199)
Finance costs (480) (480)
Loss before tax (1,320) (1,679)
Taxation 6 - -
Loss for the year (1,320) (1,679)
Other comprehensive income - -
Total comprehensive expense for the year (1,320) (1,679)
Loss per share
Basic (pence per share) 7 (0.7p) (1.1p)
Diluted (pence per share) 7 (0.7p) (1.1p)
The notes below form an integral part of these financial statements.
Consolidated Statement of Changes in Equity
For year ended 30 June
Share capital Share premium account Share based payments not settled Accumulated losses Total
£000 £000 £000 £000 £000
Balance at 1 July 2021 12,048 55,611 583 (30,953) 37,289
Total comprehensive loss - - - (1,679) (1,679)
Share issuances 447 2,086 (372) - 2,161
Share issuance costs - (121) - - (121)
Shares to be issued - - 414 - 414
Share based payments - - 17 - 17
Balance at 30 June 2022 12,495 57,576 642 (32,632) 38,081
Total comprehensive loss - - - (1,320) (1,320)
Share issuances 253 513 (255) - 511
Share issuance costs - (35) - - (35)
Shares to be issued - - 180 - 180
Share based payments - - 2 - 2
Balance at 30 June 2023 12,748 58,054 569 (33,952) 37,419
The notes below form an integral part of these financial statements.
Consolidated Balance Sheet Company number 04913119
As at 30 June
Notes 2023 2022
£000 £000
Current assets
Cash and cash equivalents 543 961
Other receivables 8 25 436
Total current assets 568 1,397
Non-current assets
Property, plant and equipment - 3
Right of use assets 13 42 19
Intangible assets 9 43,367 42,742
Total non-current assets 43,409 42,764
Total assets 43,977 44,161
Current liabilities
Payables 11 (1,353) (1,369)
Lease liabilities 13 (20) (27)
Total current liabilities (1,373) (1,396)
Non-current liabilities
Lease liabilities 13 (22) (1)
Borrowings 12 (5,163) (4,683)
Total non-current liabilities (5,185) (4,684)
Total liabilities (6,558) (6,080)
Net assets 37,419 38,081
Equity
Share capital 14 12,748 12,495
Share premium account 14 58,054 57,576
Other reserves 14 569 642
Accumulated losses (33,952) (32,632)
Total equity 37,419 38,081
These financial statements were approved by the Board of Directors and were
signed on their behalf by:
Keith Fulton
Executive Director
29 January 2024
The notes below form an integral part of these financial statements.
Consolidated Cash Flow Statement
For year ended 30 June
2023 2022
£000 £000
Cash flows used in operating activities
(Loss) before tax (1,320) (1,679)
Adjusted for:
Pre-development expenditure 16 180 414
Finance costs 15 480 480
Other non-cash expenses 10 30
(650) (755)
Movements in working capital:
Decrease in operating receivables 12 2
Increase in operating payables 11 354
Cash used in operations (627) (846)
Net cash used in operating activities (627) (846)
Cash flows used in investing activities
Payments for intangible assets (656) (520)
Net cash used in investing activities (656) (520)
Cash flows from financing activities
Issue of ordinary share capital 900 1,731
Share issue costs (35) (121)
Net cash from financing activities 865 1,610
Total (decrease)/increase in cash and cash equivalents (418) 244
Cash and cash equivalents at the start of the year 961 717
Cash and cash equivalents at the end of the year 15 543 961
The notes below form an integral part of these financial statements.
Notes to the Consolidated Financial Statements
1. Accounting policies
GCM Resources plc is domiciled in England and Wales, was incorporated in
England and Wales as a Public Limited Company on 26 September 2003 and
admitted to the London Stock Exchange Alternative Investment Market ("AIM") on
19 April 2004.
The financial report was authorised for issue by the Directors on 29 January
2024, and the Consolidated Balance Sheet was signed on the Board's behalf by
Keith Fulton.
Basis of preparation
The consolidated financial statements have been prepared in accordance with
UK-adopted international accounting standards and applied in accordance with
the Companies Act 2006. The accounting policies which follow set out those
policies which apply in preparing the financial statements for the year ended
30 June 2023.
The consolidated financial statements have been prepared under the historical
cost convention unless otherwise stated.
The functional and presentational currency of each of the entities in the
Group is pounds sterling, and all values are rounded to the nearest thousand
pounds (£000) except where otherwise indicated.
Political and economic risks - carrying value of intangible asset
The principal asset is in Bangladesh and accordingly subject to the political,
judicial, fiscal, social and economic risks associated with operating in that
country.
The Group's principal project relates to thermal coal and semi-soft coking
coal, the markets for which are subject to international and regional supply
and demand factors, and consequently future performance will be subject to
variations in the prices for these products.
GCM, through its subsidiaries, is party to a Contract with the Government of
Bangladesh which gives it the right to explore, develop and mine in respect of
the licence areas. The Group holds a mining lease and exploration licences in
the Phulbari area covering the prospective mine site. The mining lease has a
30-year term from 2004 and may be renewed for further periods of 10 years
each, at GCM's option.
In accordance with the terms of the Contract, GCM submitted a combined
Feasibility Study and Scheme of Development report on 2 October 2005 to the
Government of Bangladesh. Approval of the Scheme of Development from the
Government of Bangladesh is necessary to proceed with development of the mine.
GCM continues to await approval.
The Group has received no notification from the Government of Bangladesh (the
"Government") of any changes to the terms of the Contract. GCM has received
legal opinion that the Contract is enforceable under Bangladesh and
International law, and will consequently continue to endeavour to receive
approval for development.
Accordingly, the Directors believe that the Phulbari Coal and Power Project
(the "Project") will ultimately receive approval, although the timing of
approval remains in the hands of the Government. To enhance the prospects of
the Project, GCM has engaged in a strategy to align the Project with the needs
and objectives of the Government. This includes the option to supply coal to
both the Government's commissioned and in the pipeline power plants, which
total 11,755MW. The Government is seeking to grow its economy and deliver
electricity at prices that will ensure competitiveness of its industries. The
Group's strategy of developing the Phulbari coal deposit as a captive,
large-scale, open pit mining operation supporting some 6,600MW of highly
energy-efficient Ultra-Supercritical power generation will enable cheaper
coal-fired electricity than imported coal options. This evolving strategy has
been enhanced to include installation of a large-scale Solar Power Park (up to
2,500MW) within the Project area, to be installed within the first two years
of gaining land access; operating the Phulbari coal mine as a "Net Zero
Carbon" or "Green Mine"; and participation modalities for Government.
Until approval of the Scheme of Development from the Government of Bangladesh
is received there is continued uncertainty over the recoverability of the
intangible mining assets. The Directors consider that it is appropriate to
continue to record the intangible mining assets at cost, however if for
whatever reason the Scheme of Development is not ultimately approved the Group
would impair all of its intangible mining assets, totalling £43,367,000 as at
30 June 2023.
Going concern
As at 30 June 2023, the Group had £543,000 in cash and £805,000 of net
current liabilities. The directors and management have prepared a cash flow
forecast to March 2025, which shows that the Group will require further funds
to cover operating costs to advance the Phulbari Coal and Power Project and
meet its liabilities as and when they fall due. Based on current forecasts,
additional funding will need to be either raised from third parties or the
short-term loan facility with Polo Resources Limited ("Polo Loan Facility")
increased and extended by the end of March 2024, in order to meet current
operating cost projections. The Directors also note that, under the amended
terms of the existing Polo Loan Facility, the lender agreed not to serve a
repayment request in cash for 5 years from the date of amended terms, 26 March
2021, or alternatively convert to shares at 5.14 pence per share at the
lender's option (as amended on 1 March 2022). The Company does not currently
have secured funding arrangements in place to cover this loan or further
potential expenditure which may be needed to advance the Project and,
accordingly, should Polo request repayment of the Polo Loan Facility (under
certain terms of the Loan Facility), GCM will need to raise funds in a short
amount of time, which may not be available on terms acceptable to the Board or
on a workable timeframe.
The Company currently has utilised £3,200,000 of the Polo Loan Facility at
the date of this report (at the date of this report, the Company is awaiting
receipt of the final drawdown of £300,000 from Polo), and based on projected
future cash expenditure, at the date of this report this facility would be
required to be increased, or additional funds raised through equity placing or
other debt facilities in order to be sufficient to support the Company's
operations for the twelve months from the date of this report. As announced by
the Company on 26 January 2024, the Company has completed a Gross equity fund
raise of £500,000 by way of subscription for Ordinary Shares with Clear
Capital Markets, at a price of 1.65p per share. At the date of this report the
Company is not yet in receipt of these funds, however they are expected to be
received on 2 February 2024. At the current run rates, the Company's existing
cash resources, is expected to provide sufficient capital for the next five
months. The Company intends to explore alternative funding options over the
second quarter of 2024, with the aim to complete and secure the necessary
third-party funding by the end of June 2024.
In forming the conclusion that it is appropriate to prepare the financial
statements on a going concern basis the Directors have made the following
assumptions that are relevant to the next twelve months:
- Sufficient additional funding can be obtained for working
capital purposes; and
- In the event that operating expenditure increases significantly
as a result of successful progress with regards to the Phulbari Coal and Power
Project, sufficient funding can be obtained.
While the Directors remain confident that necessary funds will be available as
and when required, as at the date of this report these funding arrangements
are not secured, the above conditions and events represent material
uncertainties that may cast significant doubt over the Group's and Company's
ability to continue as a going concern. The financial statements have been
prepared on a going concern basis. The financial statements do not include the
adjustments that would result if the Group and Company were unable to continue
as a going concern.
Upon achieving approval of the Phulbari Coal and Power Project, significant
additional financial resources will be required to proceed to development.
Use of judgements, estimates and assumptions
The preparation of the consolidated financial statements 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 underlying assumptions are reviewed on an on-going basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period or in the period
of revision and future periods if the revision affects both current and future
periods.
Intangibles - Note 9
In assessing the recoverability of intangible assets, if an impairment trigger
under IFRS 6 is identified then intangibles are tested for impairment.
Management has identified impairment triggers to be the market capitalisation
of the Company compared to the recognised amount on the balance sheet and the
delay in obtaining approval of the Scheme of Development. To assess for
recoverability, estimates are used to determine the expected net return on
investment. The estimated return on investment takes into account estimated
recoverable reserves, coal prices, development and production costs, capital
investment requirements, discount rates and environmental and social costs
among other things. Management has considered the estimated return on
investment to be significantly higher than the current carrying value and
therefore no impairment has been accounted for. The headroom in the value in
use calculation compared to the carrying value is not sensitive to probable
changes in the key underlying assumptions. Refer to "Political and economic
risks - carrying value of intangible asset" section within Note 1 for further
details in respect of the recoverability of intangible mining assets and the
Board's judgement regarding the ultimate approval of the project being
secured.
Power plant development costs
Power project expenditure is expensed as pre-development expenditure until it
is probable that future economic benefits associated with the Project will
flow to the Group and the costs can be measured reliably. To assess whether
it is probable that future economic benefits will arise from the power plant
development costs, management judgement was required and considered: objective
evidence that the power plant is technically and economically feasible, and
objective evidence that the appropriate authorities of the Government of
Bangladesh have, or are likely to approve power plant development. All power
project expenditure were accordingly expensed in the year.
Basis of consolidation
Where the Company has control over an investee, it is classified as a
subsidiary. The company controls an investee if all three of the following
elements are present: power over the investee, exposure to variable returns
from the investee, and the ability of the investor to use its power to affect
those variable returns. Control is reassessed whenever facts and circumstances
indicate that there may be a change in any of these elements of control.
The consolidated financial statements present the results of the Company and
its subsidiaries (the "Group") as if they formed a single entity. Intercompany
transactions and balances between group companies are therefore eliminated in
full. The consolidated financial statements incorporate the results of
business combinations using the acquisition method. In the statement of
financial position, the acquiree's identifiable assets, liabilities and
contingent liabilities are initially recognised at their fair values at the
acquisition date. The results of acquired operations are included in the
consolidated statement of comprehensive income from the date on which control
is obtained. They are deconsolidated from the date on which control ceases.
Property, plant and equipment
Items of property, plant and equipment are stated at cost less accumulated
depreciation and impairment losses. Such cost includes costs directly
attributable to making the asset capable of operating as intended.
Depreciation is charged to the income statement on a straight-line basis over
the estimated useful lives of each part of an item of property, plant and
equipment. The estimated useful lives in the current and comparative periods
are as follows:
· buildings 7 - 40 years
· plant and equipment 3 - 15 years
· vehicles 5 - 7 years
The residual value, the useful life and the depreciation method applied to an
asset are reassessed at least annually.
Power project development costs
Power project expenditure is expensed as pre-development expenditure until it
is probable that future economic benefits associated with the project will
flow to the Group and the costs can be measured reliably. When it is probable
that future economic benefits will flow to the Group, all costs associated
with developing a power plant project are capitalised as power project
expenditure within property, plant and equipment category of tangible
non-current assets. The capitalised expenditure will include appropriate
technical and administrative expenses but not general overheads. Power
project assets are not depreciated until the asset is ready and available for
use.
Intangible assets
Acquired intangible assets, are measured initially at cost and are amortised
on a straight-line basis over their estimated useful lives.
Exploration and evaluation costs are capitalised as exploration and evaluation
assets on an area of interest basis in accordance with IFRS 6. Costs such as
geological and geophysical surveys, drilling and commercial appraisal costs,
and other directly attributable costs of exploration and appraisal including
technical and administrative costs, are capitalised as intangible exploration
and evaluation assets.
Exploration and evaluation assets are only recognised if the rights of the
area of interest are current and either:
(i) the expenditures are expected to be recouped through
successful development and mining of the area of interest, or by its sale; or
(ii) activities in the area of interest have not reached a
stage which permits a reasonable assessment of the existence or otherwise of
economically recoverable reserves and active and significant operations in, or
in relation to, the area of interest are continuing or planned for the future.
Exploration and evaluation assets are assessed for impairment if sufficient
data exists to determine technical feasibility and commercial viability, and
facts and circumstances suggest that the Group should test for impairment. In
the event that there is an indicator of impairment, the Group performs an
impairment test in accordance with its policy on impairment as stated below.
For the purposes of impairment testing, exploration and evaluation assets are
allocated to cash-generating units to which the exploration activity relates.
Once the technical feasibility and commercial viability of the extraction of
mineral resources in an area of interest are demonstrable, exploration and
evaluation assets attributable to that area of interest are first tested for
impairment and then reclassified from intangible assets to mining property and
development assets within property, plant and equipment.
Impairment
The Group assesses at each reporting date whether there is an indication that
an asset may be impaired. If any such indication exists, or when annual
impairment testing for an asset is required, the Group makes an estimate of
the asset's recoverable amount. An asset's recoverable amount is the higher of
an asset's or cash-generating unit's fair value less costs to sell and its
value in use and is determined for an individual asset, unless the asset does
not generate cash inflows that are largely independent of those from other
assets or groups of assets. Where the carrying amount of an asset exceeds its
recoverable amount, the asset is considered impaired and is written down to
its recoverable amount. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks
specific to the asset. Impairment losses of continuing operations are
recognised in the income statement in those expense categories consistent with
the function of the impaired asset.
An assessment is made at each reporting date as to whether there is any
indication that previously recognised impairment losses may no longer exist or
may have decreased. If such indication exists, the recoverable amount is
estimated. A previously recognised impairment loss is reversed only if there
has been a change in the estimates used to determine the asset's recoverable
amount since the last impairment loss was recognised. If that is the case the
carrying amount of the asset is increased to its recoverable amount. That
increased amount cannot exceed the carrying amount that would have been
determined, net of depreciation, had no impairment loss been recognised for
the asset in prior years. Such reversal is recognised in profit or loss. After
such a reversal the depreciation charge is adjusted in future periods to
allocate the asset's revised carrying amount, less any residual value, on a
systematic basis over its remaining useful life.
Financial Instruments
Financial instruments are recognised when the Group becomes a party to the
contractual provisions of the instrument and are subsequently measured at
amortised cost.
Classification and measurement of financial assets
The initial classification of a financial asset depends upon the Group's
business model for managing its financial assets and the contractual terms of
the cash flows. The Group's financial assets are measured at amortised costs
and are held within a business model whose objective is to hold assets to
collect contractual cash flows and its contractual terms give rise on
specified dates to cash flows that represent solely payments of principal and
interest.
The Group's cash and cash equivalents and other receivables are measured at
amortised cost. Other receivables are initially measured at fair value. The
Group holds other receivables with the objective to collect the contractual
cash flows and therefore measures them subsequently at amortised cost.
Cash and cash equivalents
Cash includes cash on hand and demand deposits with any bank or other
financial institution. Cash equivalents are short-term, highly liquid
investments that are readily convertible to known amounts of cash which are
subject to an insignificant risk of changes in value.
Impairment of financial assets
The Group recognises loss allowances for expected credit losses ("ECL's") on
its financial assets measured at amortised cost. Due to the nature of its
financial assets, the Group measures loss allowances at an amount equal to the
lifetime ECLs. Lifetime ECLs are the anticipated ECLs that result from all
possible default events over the expected life of a financial asset. ECLs are
a probability-weighted estimate of credit losses.
Classification and measurement of financial liabilities
A financial liability is initially classified as measured at amortised cost or
FVTPL. A financial liability is classified as measured at FVTPL if it is
held-for-trading, a derivative or designated as FVTPL on initial recognition.
The Group's accounts payable, accrued liabilities and short-term debt are
measured at amortised cost.
Accounts payable and accrued liabilities are initially measured at fair value
and subsequently measured at amortised cost. Accounts payable and accrued
liabilities are presented as current liabilities unless payment is not due
within 12 months after the reporting period.
Short-term debt is initially measured at fair value, net of transaction costs
incurred. Subsequently they are measured at amortised cost using the effective
interest rate method. Short-term debt is classified as current when payment is
due within 12 months after the reporting period.
The Group has no financial liabilities measured at FVTPL.
Where there is a modification to a financial liability, the financial original
liability is de-recognised and a new financial liability is recognised at fair
value in accordance with the Group's policy.
Other loans and borrowings
All loans and borrowings which are financial instruments are initially
recognised at the present value of cash payable to the lender (including
interest). After initial recognition they are measured at amortised cost using
the effective interest rate method. The effective interest rate amortisation
is included in finance costs in the income statement.
Income tax
Income tax on the profit or loss for the year comprises current and deferred
tax. Income tax is recognised in the income statement except to the extent
that it relates to items recognised outside profit and loss, in which case it
is recognised in other comprehensive income or directly in equity as
appropriate.
Current tax is the expected tax payable on the taxable income for the year,
using tax rates enacted or substantially enacted at the balance sheet date,
and any adjustment to tax payable in respect of previous years.
Deferred income tax is recognised on all temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the
financial statements, with the following exceptions:
· where the temporary difference arises from the initial
recognition of goodwill or of an asset or liability in a transaction that is
not a business combination that at the time of the transaction affects neither
accounting nor taxable profit or loss;
· in respect of taxable temporary differences associated with
investments in subsidiaries, associates and joint ventures, where the timing
of the reversal of the temporary differences can be controlled and it is
probable that the temporary differences will not reverse in the foreseeable
future; and
· deferred income tax assets are recognised only to the extent that
it is probable that taxable profit will be available against which the
deductible temporary differences, carried forward tax credits or tax losses
can be utilised.
Deferred income tax assets and liabilities are measured on an undiscounted
basis at the tax rates that are expected to apply when the related asset is
realised or liability is settled, based on tax rates and laws enacted or
substantively enacted at the balance sheet date.
Foreign currency transactions
Transactions in currencies other than pounds sterling are recorded at the
foreign exchange rate ruling at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies at the balance sheet date
are translated at the foreign exchange rate ruling at that date. Foreign
exchange differences arising on translation are recognised in the income
statement. Non-monetary assets and liabilities that are measured in terms of
historical cost in a foreign currency are translated using the exchange rate
at the date of the transaction.
Share based payments
The cost of equity-settled transactions is measured by reference to the fair
value at the date at which they are granted and is recognised as an expense
over the vesting period, which ends on the date on which the recipients become
fully entitled to the award. Fair value is determined using an appropriate
pricing model. In valuing equity-settled transactions, no account is taken of
any vesting conditions, other than conditions linked to the price of the
shares of the Company (market conditions) or to conditions not related to
performance or service (non-vesting conditions).
Where equity settled share based payments are made to non-employees the cost
of equity-settled transactions is measured by reference to fair value of the
goods or services received and measured at the date the entity obtains the
goods or the counterparty renders the service.
Where the fair value of the goods or services received cannot be estimated
reliably, the entity measures the goods or services received, and the
corresponding increase in equity, indirectly, by reference to the fair value
of the equity instruments granted, measured at the date the entity obtains the
goods or the counterparty renders service.
At each balance sheet date before vesting, the cumulative expense is
calculated, representing the extent to which the vesting period has expired
and management's best estimate of the achievement or otherwise of non-market
conditions, number of equity instruments that will ultimately vest or in the
case of an instrument subject to a market condition or non-vesting condition,
be treated as vesting as described above. This includes any award where
non-vesting conditions within the control of the Group or the employee are not
met. Where the equity-settled share based payment is directly attributable to
exploration and evaluation activities, the movement in cumulative expense
since the previous balance sheet date is capitalised, with a corresponding
entry in equity. Otherwise, the movement in cumulative expense is recognised
in the income statement, with a corresponding entry in equity.
Where the terms of an equity-settled award are modified or a new award is
designated as replacing a cancelled or settled award, the cost based on the
original award terms continues to be recognised over the original vesting
period. In addition, an expense is recognised over the remainder of the new
vesting period for the incremental fair value of any modification, based on
the difference between the fair value of the original award and the fair value
of the modified award, both as measured on the date of the modification. No
reduction is recognised if this difference is negative.
Where an equity-settled award is cancelled, it is treated as if it had vested
on the date of cancellation, and any cost not yet recognised in the income
statement for the award is expensed immediately. Any compensation paid up to
the fair value of the award at the cancellation or settlement date is deducted
from equity, with any excess over fair value being treated as an expense in
the income statement.
New standards and interpretations applied
The Group has adopted all of the amended standards and interpretations during the year that are relevant to its operations, none of which had a material impact on the financial statements.
New standards and interpretations not applied
IASB and IFRIC have issued a number of new standards and interpretations with
an effective date after the date of these financial statements. These will be
adopted in the period that they become mandatory, unless otherwise indicated.
Information on the new standards which could impact the Group is presented
below
Effective date Adoption date
International Accounting Standards (IAS / IFRSs)
Amendments to IAS 8 Definition of Accounting Estimates 1 January 2023 1 January 2023
Amendments to IAS 1 Disclosure of Accounting Policies 1 January 2023 1 January 2023
Amendments to IAS 12Deferred Tax Related to Assets and Liabilities Arising 1 January 2023 1 January 2023
from a Single Transaction
Amendments to IFRS 17 -Insurance Contracts 1 January 2023 1 January 2023
Based on the current and foreseeable operations, the adoption of the above
standards and interpretations will not have a material impact on the Group's
financial statements in the period of initial application.
2. Segment analysis
The Group operates in one segment being the exploration and evaluation of
energy related projects. The only significant project within this segment is
the Phulbari Coal and Power Project (the Project) in Bangladesh.
3. Operating loss
2023 2022
£000 £000
The operating loss is stated after charging:
Directors' remuneration 589 611
Other staff costs ((1)) 9 10
Operating lease rentals ((2)) 16 12
Depreciation of property, plant and equipment ((3)) - -
((1) Other staff costs for 2023 financial year were £221,000 of which £9,000
was expensed in administrative expenses, £nil expensed in exploration and
evaluation costs and £212,000 capitalised (2022 £10,000 expensed in
administrative expenses, £nil expensed in exploration and evaluation costs
and £176,000 capitalised).)
((2) Operating lease rental costs for 2023 financial year were £25,000 of
which £9,000 was expensed and £8,000 capitalised (2022: £20,000 of which
£12,000 was expensed and £8,000 capitalised).)
((3) Total depreciation for 2023 was £3,000 which was capitalised to
intangibles (2022: £5,000 capitalised).)
During the year Phulbari-related exploration and evaluation costs amounting to
£68,000, primarily related to Foreign Exchange gains were credited in
accordance with the Group's accounting policy on exploration and evaluation
costs (2022: expensed £35,000).
4. Auditor's remuneration
The Group paid the following amounts to its auditors in respect of the audit
of the financial statements and for other services provided to the Group.
2023 2022
£000 £000
Audit of the group and company financial statements 41 34
Audit of subsidiaries - -
Total audit 41 34
Total fees 41 34
5. Amounts paid for Directors' services, and staff costs
2023 2022
£000 £000
Amounts paid for Directors' services
Amounts paid for Directors' services 589 611
The amounts paid for Directors' services during the year are disclosed in further detail in the Directors' Report . The aggregated remuneration of the highest paid director is £303,600 (2022: £303,600).
Staff costs
Wages and salaries((1)) 212 176
Social security costs 9 10
221 186
((1) Excludes amounts paid for Directors' services.)
The average monthly number of employees during the year was: 2023 2022
Number Number
Exploration and evaluation 14 14
Administration 3 3
17 17
6. Taxation
Reconciliation of the tax charge in the income statement
2023 2022
£000 £000
Loss on ordinary activities before tax (1,320) (1,679)
UK corporation tax @ 25/19% (2022:19%) (251) (319)
Unrecognised deferred tax assets during the year 252 301
Non-deductible expenditure (1) 18
Total tax (credit)/expense reported in the income statement - -
Unrecognised deferred tax assets
2023 2022
£000 £000
Deferred tax asset
Tax losses carried forward 4,663 4,411
Impairment 891 891
Other 1 1
5,555 5,303
Less: deferred tax assets de-recognised (5,555) (5,303)
- -
At 30 June 2023 tax losses for which a deferred tax asset was not recognised was estimated to be £24,536,000 (2022: £23,216,000). Deferred tax assets are only recognised at UK Corporation Tax Rate of 25/19% (2022: 19%) should it become more likely than not that taxable profit or timing differences, against which they may be deducted, will arise.
7. Loss per share
2023 2022
£000 £000
(Loss) for the year (1,320) (1,679)
Thousands Thousands
Weighted average number of shares
Basic and diluted weighted average number of shares 184,480 121,733
(Loss) per share
Basic (pence per share) (0.7p) (1.1p)
Diluted (pence per share) (0.7p) (1.1p)
There are 9,300,000 potentially dilutive options, and 702,333 warrants along
with 2,391,818 potentially dilutive shares to be issued at 30 June 2022 which
are not included in the calculation of diluted earnings per share because they
were anti‑dilutive for the period as their conversion to Ordinary Shares
would decrease the loss per share.
8. Other Receivables
2023 2022
£000 £000
Current
Prepayments 20 29
Other receivables 5 7
Share Capital Unpaid (1) - 400
25 436
(1) The Company received full receipt of the outstanding funds for
the share subscription on 5 July 2022.
9. Intangible assets
Exploration & evaluation expenditure Mineral rights Total
£000 £000 £000
At 1 July 2021 41,032 1,147 42,179
Additions - exploration & evaluation 563 - 563
At 30 June 2022 41,595 1,147 42,742
Additions - exploration & evaluation 625 - 625
Cost and net book value at 30 June 2023 42,220 1,147 43,367
Cost and net book value at 30 June 2022 41,595 1,147 42,742
The mineral rights will be amortised over the licence period (including
extensions) once commercial production commences at the Phulbari Coal and
Power Project.
The exploration and evaluation expenditure will have an indefinite useful life
until approval is obtained for the Phulbari Coal and Power Project. At that
time, the asset will be transferred to mining property and development assets
within property, plant and equipment in accordance with accounting policy.
10. Investments
Principal undertakings
Investments in which the Group holds 20% or more of the nominal value of any
class of share capital are as follows:
Country of Ownership interest
Incorporation 2023 2022
Subsidiaries
South African Coal Limited England and Wales 100% 100%
Asia Energy Corporation Pty Limited Australia 100% 100%
Asia Energy Corporation (Bangladesh) Pty Limited Australia 100% 100%
Asia Energy (Bangladesh) Pvt Ltd Bangladesh 100% 100%
Fair Value Through Other Comprehensive Income
Peoples Telecommunication and Information Services Ltd (PeoplesTel) Bangladesh 37% 37%
The investment in PeoplesTel has been accounted for as financial asset at Fair
Value Through Other Comprehensive Income as GCM does not have significant
influence. The investment was fully impaired during the year ended 30 June
2010.
11. Payables
2023 2022
£000 £000
Trade payables 559 575
Related party accrued payable 794 794
1,353 1,369
Refer to note 20 for details of the related party accrued payable.
12. Borrowings (Non-current liabilities)
2023 2022
£000 £000
Loan from related party
Balance as at 1 July 4,683 4,203
Loan instalments drawn down - -
Interest charges 480 480
Balance as at 30 June 5,163 4,683
Refer to note 20 for details of the loan from related party.
The Company on 1 March 2022, as part of the completed placing and
subscriptions, amended the terms of the loan facility, such that the lender
may request conversion by the issuance of new ordinary shares in the Company
at 5.14 pence per share (being the Issue Price) subject to any necessary
regulatory approvals. All other terms of the agreement remained unchanged.
The Company on 26 March 2021, as part of the completed placing, extended and
amended the terms of the loan facility provided by Polo Resources Limited (the
"Facility") of which, as was announced on 7 January 2021, there was at 30 June
2023, £300,000 of the initial £3.5 million facility remaining undrawn. The
lender has agreed that it will not serve a repayment request on the company
for 5 years from the date of the agreement replacing the previous provision
that it was payable on demand with 90 days' notice. The Company and Polo
Resources Limited have agreed an increase in the interest rate from 12% to 15%
per annum rising by 1.5% on the third anniversary and by a subsequent 1.5% on
each anniversary thereafter. Furthermore, the lender may request conversion by
the issuance of new ordinary shares in the Company at 7.5 pence per share
(being the Issue Price) subject to any necessary regulatory approvals. The
Company may elect to repay all or part of the outstanding loan at any time
giving 60 days' notice and with the agreement of Polo Resources Limited. Any
share issue to the Lender is conditional upon the Lender's interest, together
with the interest of any parties with which it is in concert, remaining below
30% of the Company's issued capital. All other principal terms of the loan
facility remain unchanged. Refer to the Group accounting policies for details
of Management judgement used in accounting for the loan amendment.
13. Leases and Commitments
Right of use assets
The statement of financial position shows the following amounts relating to
leases:
2023 2022
£000 £000
Buildings 42 19
Vehicles - -
42 19
Lease liabilities
2023 2022
£000 £000
Classified as;
Current 20 27
Non-current 22 1
42 28
The interest expense incurred on lease liabilities was £5,000 (2022:
£3,000), and capitialised in accordance with the Group's policy on
exploration and evaluation assets. Cash outflows in respect of right of use
assets were £41,000 (2022: £47,000).
Other commitments
In addition, under the terms of the Prospecting License agreement with the
Bangladesh authorities for contract licence areas B, G and H respectively, an
annual fee of 500 Taka (£3.70 at year-end exchange rate) is payable for each
hectare within the licence area. The Group currently leases 5,480 hectares
within these licence areas. The licence has a 30 year term from 2004 and may
be renewed for further periods of 10 years each, at GCM's option.
14. Issued share capital
Ordinary Shares Deferred A Shares Total share capital
Thousands Thousands £000
Allotted, called up and fully paid:
At 1 July 2021 137,593 118,582 12,048
Shares issued 44,712 - 447
At 30 June 2022 182,305 118,582 12,495
Shares issued 25,217 - 253
At 30 June 2023 207,522 118,582 12,748
Share issues
On 1 March 2022, 25,291,828 placing shares and 16,171,777 subscription shares
were issued on the completion of a successful fund raise at 5.14p per share,
raising gross cash proceeds of £2,130,000.
On 7 April 2022, 3,248,740 shares were issued to consultants and a director in
accordance with the terms of their agreements, at prices from 4.25p to 18p,
for total non cash consideration of £402,000.
14. Issued share capital (continued)
On 5 April 2023, 5,216,810 shares were issued to consultants and a director in
accordance with the terms of their agreements, at prices from 3.15p to 14p,
for total non cash consideration of £265,000.
On 14 June 2023, 20,000,000 placing shares were issued on the completion of a
successful fund raise at 2.5p per share, raising gross cash proceeds of
£500,000.
Ordinary shares have the right to receive dividends as declared and, in the
event of winding up the Company, to participate in the proceeds from sale of
all surplus assets in proportion to the number of and amounts paid up on
shares held. Ordinary shares entitle their holder to one vote, either in
person or by proxy, at a meeting of the Company.
The Deferred Shares have no voting rights and do not carry any entitlement to
attend general meetings of the Company; nor will they be admitted to AIM or
any other market. They carry only a priority right to participate in any
return of capital to the extent of £1 in aggregate over the class. In
addition, they carry only a priority right to participate in any dividend or
other distribution to the extent of £1 in aggregate over the class. In each
case a payment to any one holder of Deferred Shares shall satisfy the payment
required. The Company will be authorised at any time to effect a transfer of
the Deferred Shares without reference to the holders thereof and for no
consideration pursuant to and in accordance with the Act. Accordingly, the
Deferred Shares will, for all practical purposes, be valueless and it is the
Board's Intention, at an appropriate time, to have the Deferred Shares
cancelled, whether through an application to the Companies Court or otherwise
in accordance with the Act.
Reserves
Share capital
The balance held in share capital relates to the nominal net proceeds on issue
of the Company's equity share capital, comprising £0.01 ordinary shares, and
£0.09 deferred A shares.
Share premium account
The share premium account represents the premium received over the nominal
value of ordinary shares on issue of the Company's equity. The share premium
account has been reduced by expenditure associated with issuing shares such as
listing costs.
Other reserves
This reserve records the fair value of conditional shares awarded but not
settled, and consultants service payments to be also settled by way of share
issues.
2023 2022
£000 £000
Share based payments not settled 569 642
569 642
15. Notes supporting statement of cashflows
Cash and cash equivalents for the purposes of the statement of cash flows
comprises:
2023 2022
£000 £000
Cash at bank available on demand 543 961
543 961
Non-cash transactions from financing activities are shown in the
reconciliation of liabilities from financing transactions:
Current loans and borrowings Total
£000 £000
Balance at 1 July 2021 4,203 4,203
Cash flows - -
Non-cash flows: Interest accrued 480 480
Balance at 30 June 2022 4,683 4,683
Balance at 1 July 2022 4,683 4,683
Cash flows - -
Non-cash flows: Interest accrued 480 480
Balance at 30 June 2023 5,163 5,163
16. Significant non-cash transactions
The significant non-cash transactions during the year were as follows:
· £180,000 of expenses were incurred by a consultant for their
services. The consulting payment included £180,000 (4,363,636 shares at
4.125p per share) for a consultant retainer. These retainer fee shares which
had not been issued to the consultants at year end have been included in other
reserves for shares to be issued.
17. Share based payments
The charge/(credit) for share based payments during the year is shown in the
following table:
2023 2022
£000 £000
Charged/(credited) to intangibles
Conditional shares 2 17
2 17
Share Warrants
During the year ended 30 June 2023, the Company granted nil warrants to
subscribe for ordinary shares (2022: 30,000). No warrants were exercised or
lapsed during the year (2022: nil). As at 30 June 2023, 702,333 warrants were
in issue (2022: 702,333).
17. Share based payments (continued)
Options
The following table illustrates the number and weighted average exercise
prices (WAEP) of, and movements in, share options during the year.
2023 2023 2022 2022
Options WAEP Options WAEP
Thousands Thousands
At 1 July 9,300 £0.11 9,300 £0.11
Exercised during the year - - - -
Outstanding at 30 June 9,300 £0.11 9,300 £0.11
Exercisable at 30 June 9,300 £0.11 9,300 £0.11
The options outstanding at 30 June 2023 have an exercise price of £0.11
(2022: £0.11) and a weighted average contractual life of 0.9 years (2022: 1.9
years), including those granted options whose term was extended during the
year. No options were exercised during the year.
Conditional shares scheme
GCM has a conditional share scheme for Directors, employees, associates,
consultants and contractors. Ordinary shares will be issued for nil cash
consideration, conditional upon the Group achieving milestones including
approval by the Government of Bangladesh of the Scheme of Development for the
Phulbari Coal and Power Project. The awards granted are classified as
equity-settled, and therefore the fair value is determined by reference to the
share price at the date of the grant, as required by IFRS 2.
Movement in non-vested conditional shares:
2023 2022
Thousands Thousands
At 1 July 210 210
Conditional shares lapsed - -
At 30 June 210 210
The grant details of the conditional shares outstanding as at 30 June 2023 are
as follows:
Share price at Conditional shares
grant date Thousands
£
Grant date
25 August 2005 £6.32 40
9 March 2006 £4.99 30
46 July 2009 £0.84 140
210
The cumulative cost recognised in equity in relation to the conditional shares
as at 30 June 2023 is £478,000 (2022: £476,000) after taking into account:
· Expected timeframe for milestones to be achieved
· Probability of successful completion of milestones
· The conditional shares awarded to employees are subject to their
employment at the time milestones are reached
The increase in the cost of conditional shares of £2,000 for the year ended
30 June 2023 is directly attributable to the Phulbari Coal and Power Project,
and accordingly capitalised to intangibles on this basis (2022: expensed
£17,000).
18. Financial Instruments
The Group holds cash as a liquid resource to fund the obligations of the
Group.
The Group's strategy for managing cash is to maximise interest income whilst
ensuring its availability to match the profile of the Group's expenditure.
This is achieved by regular monitoring of interest rates and periodic review
of expenditure forecasts.
The Group has a policy of not hedging and therefore takes market rates in
respect of foreign exchange risk; however it does review its currency
exposures on a regular basis. The Group has no significant monetary assets or
liabilities that are denominated in a foreign currency.
The financial liabilities of the Group include trade payables and a short-term
loan from a related party. Trade payables are recognised at fair value on
initial recognition and subsequently measured at amortised cost. The
short-term loan was recognised based on the present value of cash payable to
the lender. As the short-term loan is payable within 12 months, the present
value of the cash payable was equal to the principal value of the loan.
Interest rate risk
The interest rate maturity profile of the financial assets of the Group is as
follows:
2023 2022
£000 £000
Floating rate - within 1 year
Cash and cash equivalents - -
Other interest bearing financial instruments which are subject to fixed rate
interest charges are the Group's borrowings as disclosed in Note 12.
Other financial instruments of the Group which are non-interest bearing and
are therefore not subject to interest rate risk, are, non-interest-bearing
cash and cash equivalents as at 30 June 2023 was £543,000 (2022: £961,000).
Credit risk
The Group considers the credit ratings of banks in which it holds funds in
order to manage exposure to credit risk and counterparty risk. Funds are held
in banks with credit ratings ranging from AAA -AA. The maximum credit risk at
30 June 2023 was as follows:
2023 2022
£000 £000
Cash and cash equivalents 543 961
Liquidity risk
The Group ensures that it has sufficient cash to meet all its commitments when
required, through equity and short term loan funding, please refer to the
accounting policies for further detail. The table below summarises the
contractual maturity profile of the Group's financial liabilities as at 30
June 2023 and 2022.
Within 1 to 3 3 to 12 2 - 5 years Total &
30 days months months Carrying value
£000 £000 £000 £000 £000
2023
Payables 1,272 2 79 - 1,353
Lease liabilities 1 4 15 22 42
Borrowings - - - 5,163 5,163
1,273 6 94 5,185 6,558
2022
Payables 1,296 1 72 - 1,369
Lease liabilities 3 9 15 1 28
Borrowings - - - 4,683 4,683
1,299 10 87 4,684 6,080
Currency risk
The Group has no significant monetary assets or liabilities that are
denominated in a foreign currency.
Fair values of financial assets and liabilities
Financial instrument classification Book value Fair value
2023 2022 2023 2022
£000 £000 £000 £000
Financial assets
Cash and cash equivalents Amortised cost 543 961 543 961
Receivables Amortised cost 25 436 25 436
Financial liabilities
Creditors Amortised cost 1,353 1,369 1,353 1,369
Borrowings Amortised cost 5,163 4,683 5,163 4,683
Management have assessed that the fair value of cash, current receivables and
current payables approximate their carrying amounts due to the short-term
maturities of these instruments.
19. Contingent liabilities
Royalty
The Group is obliged to pay Deepgreen Minerals Corporation Pty Limited US$1
per tonne of coal produced and sold from the Phulbari mine. The Directors are
of the opinion that a provision is not required in respect of these matters,
as coal has not yet been produced at Phulbari.
Consultant success fees
The Group is obliged to pay a consultant, DG Infratech PTE. Limited, success
fees conditional upon achieving key milestones relating to the advancement of
the proposed Phulbari Coal and Power Project, in North-West Bangladesh. As at
30 June 2023 the outstanding milestones were as follows:
Success Fee - Coal Project's Scheme of Development
· a one-time fee equal to 5% of Issued Capital, to be paid within
five business days following GCM'S receipt of the written approval of the Coal
Project's Scheme of Development.
Success Fee - Power Plants
· a one-time fee equal to 2% of Issued Capital, to be paid within
five business days following GCM'S receipt of the written approval in respect
of each group of Power Plants.
Success Fee - Commencement of Development
· a one-time fee equal to 4% of Issued Capital, to be paid within
five business days following GCM'S commencement of development of the Coal
Project.
The Directors are of the opinion that a provision is not required in respect
of these success fees, as the milestones had not been met as at 30 June 2023.
20. Related Party Transactions
Key management personnel
2023 2022
£000 £000
Short-term benefits 686 643
Share based payments 12 39
698 682
Related party loan
GCM is beneficiary to a £3.5 million loan facility from its largest
shareholder, with a current interest rate of 15% per annum. As at 30 June 2023
the Group had utilised £3.2 million of the loan facility (2022: £3,200,000)
and an interest accrual of £1,963,000 (2022: £1,483,000). The terms of the
loan were amended in March 2022 & March 2021, refer to note 12 of the
Company Financial Statements. Note Polo Resources Ltd is a related party by
way of Michael Tang being a Director of both Companies.
Management services company
As disclosed in the Directors' Report, for the year ended 30 June 2023, the
remuneration for the services of Datuk Michael Tang PJN, Executive Chairman of
the Company, was £303,600, which comprised of directors fees amounting to
£6,000 (2022: £6,000) and management services of £297,600 paid to a
management services company (2022: £297,600).
For the period September 2018 to March 2021 Datuk Michael Tang PJN offered to
defer the payments due to his management services company until further notice
in order to assist the Company. The total debt as a result of the deferment of
£769,000 has not been paid and is being accrued accordingly.
As at 30 June 2023 the amount owing to the management services company of
Datuk Michael Tang PJN was £793,600 (2022: £793,600).
21. Events after the end of the reporting period
The following events took place subsequent to 30 June 2023, for which there has been no adjustment to the 30 June 2023 financial statements:
- On 15 September 2023, the Company announced that for personal
reasons Mohd Najib Bin Abdul Aziz had reluctantly tendered his resignation
from his position as Independent Non-Executive Chairman. Najib's resignation
took effect from 11 October 2023. As a result of Najib's resignation, the
Company is pleased that Independent Non-Executive Director, Christian
Taylor-Wilkinson, has agreed to act as interim Non-Executive Chairman until
such time that new NEDs are appointed and the board makes its final decision
on the Chairman role.
- On 28 November 2023, the Company announced that, further to its
announcements of 23 November 2021, June 2021 and 12 December 2022, Power
Construction Corporation of China, Ltd. ("PowerChina") it had agreed an
extension for a period of a further 12 months from 6 December 2023 to 6
December 2024 on the same terms as the previous memorandum of understanding
("MoU") which is primarily focused on the Phulbari coal mine development. This
will allow PowerChina and GCM to continue to work on determining the modality
for PowerChina to become a Mine Development Partner, subject to the approval
of PowerChina internal compliance and all other relevant regulatory agencies.
- On 28 November 2023, the Company announced in relation to the
Loan Facility with Polo Resources Ltd ("Polo") as announced on 26 March 2021
and as amended and announced on 3 March 2022, it had requested to drawn down a
further £300,000 in accordance with the terms announced thereon. The Company
on receipt of this further drawdown will have then utilised the full
£3.5million of the £3.5million facility. This current drawdown request along
with existing cash balances will be sufficient to fund the Company through to
the end of March 2024, to which the Company will require to raise additional
funds prior to the end of March 2024, for Working Capital thereafter.
- On 20 December 2023, the Company announced in relation to the
final drawdown request of 28 November 2023, it was still awaiting receipt of
the £300,000 funds from Polo Resources Ltd.
21. Events after the end of the reporting period
- On 24 January 2024, the Company announced that it received a
notice from Polo Investments Limited ("Polo"), pursuant to Section 168 of the
Companies Act 2006, requesting that a resolution to remove Christian
Taylor-Wilkinson be tabled, as an ordinary resolution, at the forthcoming
Annual General Meeting of the Company or a general meeting of GCM to be
convened as soon as practicable. Polo currently holds 43,328,003 shares
representing 20.9% of the Company's total voting.
- On 26 January 2024, the Company announced that it had
successfully raised gross proceeds of £0.5m by means of a direct subscription
(the "Subscription") of new Ordinary Shares (the "Subscription Shares") at a
price of 1.65 pence per share (the "Subscription Price"). The Company will
need to carry out an additional fundraise before the end of May 2024 to fund
its working capital for the next 12 months. The Subscription Price represents
a discount of 37.7 per cent to the Closing Price of 2.65 pence per Ordinary
Share on 23 January 2024, being the latest practicable business day prior to
the publication of this announcement.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR QKFBNKBKBODBRecent news on GCM Resources
See all newsREG - AIM - AIM Notice - 19/04/2024
AnnouncementREG - GCM Resources PLC - Subscription to raise £2.0 million
AnnouncementREG - GCM Resources PLC - Warrants Exercised
AnnouncementREG - GCM Resources PLC - Interim Results for the 6 months ended 31 Dec 2023
AnnouncementREG - GCM Resources PLC - Appointment of Independent Non-executive Directors
Announcement