REG - GCM Resources PLC - Final Results for the year ended 30 June 2024
19/11/2024 07:00
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RNS Number : 6968M GCM Resources PLC 19 November 2024
19 November 2024
GCM Resources plc
("GCM" or the "Company")
Final Results for the year ended 30 June 2024
Notice of Annual General Meeting
GCM Resources plc (AIM: GCM), the AIM traded mining and energy company,
announces the publication of its final audited results for the year ended 30
June 2024 (the "Annual Report and Accounts") and that the Company's 2024
Annual General Meeting will be held at 10.00 a.m. on Friday 13 December 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 today. 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.
For further information please contact:
GCM Resources plc Tel: +44 (0) 20 7290 1630
Keith Fulton, Finance Director info@gcmplc.com
www.gcmplc.com (http://www.gcmplc.com)
Allenby Capital Limited Tel: +44 (0)20 3328 5656
Nominated Adviser and Joint Broker info@allenbycapital.com (mailto:info@allenbycapital.com)
John Depasquale / Vivek Bhardwaj
Axis Capital Markets Limited Tel: +44 (0) 203 026 0320
Joint Broker
Ben Tadd / Lewis Jones
About GCM Resources plc
GCM Resources plc (LON: GCM), the AIM traded mining and energy company, has
identified a high-quality coal resource of 572 million tonnes (JORC 2004
compliant) at the Phulbari Coal and Power Project ("the Project") in
north-west Bangladesh.
Utilising the latest highly energy efficient power generating technology the
Phulbari coal mine can support some 6,600MW. The Project site can also support
over 2,000MW of Solar Power capacity throughout the Project life span. GCM
requires approval from the Government of Bangladesh to develop the Project.
GCM requires approval from the Government of Bangladesh to develop the
Project. The Company has a strategy of linking the Company's mine proposal to
supplying coal to the Government of Bangladesh's existing and in the pipeline
coal-fired power plants and / or power plants implemented with its development
partner. Together with its credible, internationally recognised strategic
development partner, GCM aims to deliver a practical power solution to provide
the cheapest coal-fired electricity in the country, in a manner amenable to
the Government of Bangladesh.
Non-Executive Chairman's Statement
The Board presents the Company's Annual Report and Accounts for the year ended
30 June 2024, which unfortunately was a period that did not meet business
development expectation. The first half of the reporting year was dominated by
the run-up to the Bangladesh national election held on 7 January 2024, which
saw the Awami League government return to power. This outcome gave the
appearance of political stability and, as noted at the Annual General Meeting
held on 29 February this year, the Ministry for Power, Energy and Mineral
Resources was widely reported to be preparing a presentation for the then
Prime Minister, Sheikh Hasina, focusing on strategies and challenges related
to the country's coal-based energy sector. The Phulbari coal mine was
recognised as part of the solution and key issues expected to be discussed
included Bangladesh's growing reliance on imported coal for its power plants,
which has led to financial and logistical challenges.
With the time taken for that the newly elected government to become
operational and given the fact that the former Prime Minister was away from
the country for approximately five weeks after the election, the opportunity
for delivery of that presentation did not arise before student led protests
started in June this year. These protests which initially were demands for
public service job quota reforms, quickly escalated into a larger
anti-government demonstration, that on 5 August ultimately led to the collapse
of the Awami League government (after consecutively being 15 years in power)
and caused the former Prime Minister to depart Bangladesh.
An interim government led by Nobel laureate Dr Muhammad Yunus now governs
Bangladesh (the "Interim Government"), focusing on restoring peace and
implementing institutional reforms in preparation for fair elections. This
government, while widely supported for its commitment to democratic change,
faces challenges with economic disruptions, price hike of essentials, ongoing
unrest among garment workers, restoring law and order and difficulties in
restoring trust in public institutions. While the International Community is
also supportive of the reform agenda and appreciates it will take time to
achieve, the political parties that have arisen to fill the political void are
increasingly pushing for early elections.
The Company believes a new and exciting opportunity has been created to work
directly with the Interim Government in moving the Phulbari Coal and Power
Project (the "Project") forward. It is recognised that we will need to
reassess our proposal and ensure it still aligns with national interests,
economic priorities, and environmental considerations. This work is underway
and with the initial aim being to brief key decision-makers in the Interim
Government and receive their feedback. However, timing the delivery of the
Project needs careful consideration, given the Interim Government has been in
power a matter of months and is awaiting reports from various commissions and
committees it has established to advise on the true state of key sectors
driving the economy and necessary reforms.
On March 11 this year, the Company announced that it had signed a contract
with development partner, Power Construction Corporation of China, Ltd.
("PowerChina") for "Phulbari Coal Mining Infrastructure Construction and
Overburden Stripping". The scope of works under this Mine Construction
Contract includes design, procurement, installation, construction and
commissioning of mine infrastructure and overburden removal, dewatering and
drainage. It also includes selective mining and stockpiling of valuable
industrial mineral co-products that occur in the overburden. These co-products
are expected to deliver considerable cashflow for the Project ahead of coal
extraction.
The Company continues to work closely with PowerChina on improvements to the
Project and recently we engaged consultants that previously worked on the
Project's feasibility study to update the economic model. This will enable a
better understanding of the impact of contract mining on the initial capital
requirements and the split of cost and revenue between local currency and
foreign currency. Ultimately, we want to emphasise in our Proposal how the
Phulbari coal source will decrease the need for expensive imports and show how
coal supply agreements negotiated largely in local currency will be
advantageous for the Interim Government, with this revenue covering the
Project's significant local costs.
Other steps taken in Financial Year 2024 include:
· On 15 September 2023, the Company announced its Independent
Non-Executive Chairman, Mohd Najib Bin Abdul Aziz resigned from his position,
and that Independent Non-Executive Director ("NED"), Christian Taylor
Wilkinson, agreed to act as interim Non-Executive Chairman until such time
that new NEDs were appointed, and the board makes its final decision on the
Chairman role.
· On 28 November 2023, the Company announced that the MOU with
PowerChina, focused on coal mine development, had been extended for a further
12-months to 6 December 2024.
· On 28 November 2023, the Company announced that it had requested
to drawdown an amount of £300,000 being the final tranche available under the
Loan Facility with Polo Resources Limited ("Polo") as announced 26 March 2021
and as amended and announced 3 March 2022.
· On 28 December 2023, the Company announced that it was unable to
complete the 2022-23 audit of its accounts due to a delay in receipt of funds
requested under the Loan Facility with Polo. Consequently, the audited
financial accounts for year end 30 June 2023 could not be published by 31
December 2023 and therefore the Company's shares would be temporarily
suspended from trading from 2 January 2024.
· On 24 January 2024, the Company announced that it had received
notice from Polo, pursuant to Section 168 of the Companies Act 2006, that a
resolution to remove Independent Non-Executive Chairman, Christian Taylor
Wilkinson, be tabled at the forthcoming Annual General Meeting.
· On 26 January 2024, the Company announced that it had raised
£500,000 by means of a direct subscription of ordinary shares and that the
Company planned to raise additional funds by the end of May 2024 to ensure it
had 12-months working capital.
· On 29 January 2024, the Company announced the publication of its
final accounts for year end 30 June 2023 and that its 2023 Annual General
Meeting would be held on 29 February 2024.
· On 2 February 2024, the Company announced that trading in its
shares had been Restored.
· On 2 February 2024, the Company announced that Independent
Non-Executive Chairman, Christian Taylor Wilkinson, had tendered his
resignation, leaving on 28 February 2024.
· On 25 March 2024, the Company announced that it had appointed two
Independent Non-Executive Directors being Paul Shackleton taking the role of
Acting Chairman and Charlie Green.
· On 16 April 2024, the Company announced that it had raised £2m
by means of a direct subscription of ordinary shares.
Outside the Reporting Period:
· On 15 July 2024, the Company announced the appointment of Zeus
Capital Limited as Nominated Adviser and Joint Broker. This change followed
the acquisition of WH Ireland Capital Markets Division by Zeus Capital
Limited. The Company subsequently notified the change of Nominated Adviser and
Joint Broker to Allenby Capital Limited on 5 November 2024.
Overarching Operating Environment:
Although the former Bangladesh government had expanded the country's power
generating capacity, it did so by relying on imported fuel and not promoting
extraction of its domestic coal and gas resources. Bangladesh's installed
coal-fired power capacity currently stands at 8,175MW (commissioned and soon
to be commissioned). This represents an investment of some US$20 - 30 billion,
predominantly in the latest High Efficiency - Low Emission (HELE)
ultra-supercritical coal fired power plant technology with an annual coal
supply demand of some 19 million tonnes of coal of the quality of the Phulbari
reserves.
The combined effect of the post-COVID energy demand surge and the ongoing
conflicts in Ukraine and the Middle East has severely impacted world-wide
supply chains, particularly for energy products. For Bangladesh, with its
heavy dependance on imported energy, the effect on its economy has been
dramatic. Over the past 3-years, its Taka currency has devalued by some 40%
and the foreign exchange reserves have dropped by some 50%. Consequently, the
Interim Government is confronting outstanding energy import and power supplier
payments of some US$3 billion. Assuming it can clear this debt, it also needs
to obtain ongoing financial support to maintain imported energy supply while
it urgently defines the strategy and action plans to move away from imported
energy to a more affordable and secure balanced energy supply.
The Phulbari coal mine could supply enough coal to support up to 6,600MW or
about 80% of the beforementioned coal demand. Apart from reliability of
long-term coal supply at attractive terms and greatly reduced foreign exchange
outflow, the added advantages for Bangladesh include employment, taxes and
royalties which otherwise would occur in the foreign country exporting the
coal.
Through the implementation of large-scale solar power in conjunction with the
mine development schedule and the utilisation of emerging electric mining
equipment, the Phulbari coal mine can achieve a Net Zero carbon emission
"green" status and deliver an estimated 30% reduction in greenhouse gases
versus the equivalent imported coal scenario.
While efforts to increase renewable energy sources are underway, the
transition is proving complex and slow. China and India, which together
consume around 70% of the world's coal, are heavily reliant on coal to sustain
their rapid industrial growth and energy needs. Other Southeast Asian
countries, such as Indonesia, Vietnam, and Bangladesh, have in recent years
expanded their coal capacity due to the pressing need for reliable and
cost-effective electricity.
There remains a large gap between developed countries and developing countries
regarding the ability to phase out fossil fuels. While Bangladesh is pursuing
solar and wind based renewable energy projects, these are far from being able
to provide base-load power. For the foreseeable future, thermal and nuclear
remain the main options for providing base-load power to support Bangladesh's
industrial growth and economic development.
The United Nations Climate Change Conference COP29 was held in Baku,
Azerbaijan from 11 to 22 November, 2024. It is understood the Chief Advisor of
Bangladesh's Interim Government, Dr. Muhammad Yunus, participated and
delivered speeches at various forums and held meetings with other key
participants. The priority of Bangladesh as a Least Developed Country ("LDC"),
was once again reported to be advocacy for significantly increased climate
finance to combat the effects of climate change and assistance with the energy
transition.
Once again, I thank our shareholders and stakeholders for their on-going
support. We are working tirelessly to make the Project fit the Interim
Government's energy supply expectations and gain their approval to move the
Project forward together with our development partner, PowerChina.
Paul Shackleton
Non-Executive Chairman
18 November 2024
Group Strategic Report
Strategy and Business Model
GCM's primary objective is to develop the Phulbari coal deposit into a
large-scale open-pit mining operation. The core plan supports up to 6,600MW of
highly energy-efficient, low-emission Ultra-Supercritical (HELE) power
generation. However, given the current economic conditions in
Bangladesh-including pressures on foreign reserves and currency
devaluation-the Company is revising the Project's economic model. The updated
approach emphasises domestic thermal coal sales primarily in local currency,
with foreign currency requirements supported by Semi-Soft Coking Coal (SSCC)
sales on the international market. SSCC will be extracted through a wash
plant, which will also produce a low-ash, high-energy thermal coal product for
the domestic market. Thermal coal sales in local currency are a 'win-win' in
that a significant proportion of the Project's costs are in local currency,
including land acquisition and resettlement costs.
The development of a large-scale solar park, with a phased capacity expansion
of at least 2,000MW, is an integral component of GCM's objectives. The solar
park will supply power both to the national grid and the Phulbari coal mine,
supporting the goal of achieving "Green Mine" status for the project.
Strategic Goals:
1. Project Approval and Development: The priority is obtaining approval from
the Bangladesh Government for the comprehensive Project Proposal. With our
Development Partner, PowerChina, GCM aims to finance, develop, and operate all
project aspects over a 35+ year lifespan.
2. Government Needs: GCM intends to maximise the benefits for the Bangladesh
Government by delivering an affordable, high energy, large volume, low risk
thermal coal supply to greatly reduce dependence on imported energy and
exposure to the international market's supply and cost vagaries.
3. Joint Ventures: To ensure efficient and economically sustainable mining
operations, GCM will establish Joint Ventures (JVs) for essential business
units that support coal delivery and overall project success.
This strategy aligns with GCM's vision of balancing economic viability with
sustainable, energy-efficient power generation for Bangladesh.
Business Model Overview:
Our business model is structured around two primary business units, each
addressing a core aspect of the Project:
1. Mining Company
Purpose: To develop and operate the Phulbari coal mine.
Objective: To establish a reliable domestic market for the mine's full
production, supporting the Project's economic sustainability and facilitating
project financing.
2. Power Company
Purpose: To develop and operate a proposed near mine-site 4,000 MW
Ultra-Supercritical power plant in partnership with PowerChina, depending on
the Bangladesh government's evolving Energy and Power Master Plan. This
includes a large scale mine-site Solar Power Park, planned to be implemented
in conjunction with the mine development and production plan.
Context: Bangladesh currently has 8,175 MW installed and soon to be
commissioned capacity of coal-fired power plants, requiring about 19 million
tonnes of Phulbari quality coal annually. The Project's proposed additional
4,000 MW plant could still be an attractive, cost-effective additional power
supply as being located near the mine-site would greatly reduce the coal
handling and transport costs, delivering the lowest cost and most reliable
coal-fired power for Bangladesh. The large-scale Solar Power Park will off-set
the power demands of the Phulbari coal mine and underpin its "green mine"
credentials with net zero carbon emissions.
Joint Ventures (JVs) for Critical Areas:
Our business model also includes two additional joint ventures to address
essential operational areas:
1. Coal Transport JV Company
Responsibilities: To ensure efficient coal delivery to market by arranging
funding and overseeing necessary transport infrastructure upgrades, including
rolling stock and barges.
Objective: To manage the coal transport system for timely and cost-effective
delivery to customers.
2. Industrial Mineral Co-Product JV Company
Responsibilities: To manage the extraction and delivery of high-demand
industrial mineral co-products, such as gravel, aggregate, sands, glass sands,
ceramic and pottery clay, and bottled water. These are recoverable from the
overburden removed to access coal.
Opportunity: The potential value of these co-products is estimated at over ten
billion dollars, providing significant early cash flow to the Mining Company
ahead of first coal production and supporting local industry demand in
Bangladesh.
Strategic Impact:
GCM's strategy and business model are designed to secure project approval and
deliver long-term benefits, including:
Energy Security: Reducing Bangladesh's exposure to volatile global energy
markets.
Economic Benefits: Enhancing foreign exchange reserves and providing low-cost
coal-based energy to drive industrial growth and economic competitiveness.
Job Creation: Generating higher-paying jobs and contributing to economic
development.
National Growth Catalyst: Acting as a catalyst for Bangladesh's economic
growth, supporting the nation's goal of attaining developing country status by
2026.
Alignment with Bangladesh's Vision 2041:
The Project aligns with Bangladesh's development goals, supporting Vision 2041
by assisting to eradicate poverty and achieving higher middle-income status by
2031, paving the way for Bangladesh to become a developed nation by 2041.
Progress Aligned with Strategic Objectives
The Company's Feasibility Study and Scheme of Development for the coal mine
component of the Project is currently awaiting approval from the Bureau of
Mineral Development, part of the Energy and Mineral Resources Division under
the Ministry of Power, Energy and Mineral Resources.
During the reporting period, progress was affected by the political focus
shifting toward the National Election, held on 7 January 2024. GCM's
Dhaka-based team continued to engage actively with government agency contacts,
especially within the Ministry for Power, Energy and Mineral Resources ("the
Ministry"), to position the Company for effective collaboration with the new
government, expected to be fully operational by Q1 2024. In these discussions,
GCM shared an outline of the Project Proposal and detailed information on the
Phulbari coal mine development, to assist the Ministry with a presentation for
the then Prime Minister, focussed on domestic coal solutions to reduce
economic pressures brought on by the growing reliance on imported coal.
The Company achieved a significant project milestone with the signing of the
Mine Construction and Overburden Stripping contract with PowerChina in March
this year. This takes the Project in the direction of contract mining which
significantly reduces start-up capital requirement and reduces risk. It was
intended to deliver the Phulbari coal mine development proposal, highlighting
the PowerChina contract mining arrangements, once the Ministry had made its
presentation and achieved a political sign-off for domestic coal sector.
The former Prime Minister spent considerable time away from Bangladesh
post-election and the Ministry had not made the coal sector presentation
before the student led protests began in June this year. These protests
escalated and on August 5 this year, just outside the reporting period, the
Awami League government of some 15 years tenure collapsed and the Prime
Minister departed the country. An Interim Government was appointed with a
reform agenda principally aimed at eliminating corruption, overhauling the
political process and kick-starting the economy.
The Interim Government is looking for solutions to drive the economy and this
represents a good opportunity for the Company to deliver the Project's
proposal. However, there still needs to be careful preparation, given the
government is not long in power and has a very large reform workload.
Year in review
Despite clear signs the Bangladesh Government was considering incorporating
domestic energy resources into its heavily import-dependent energy mix,
momentum was lost as the 1(st) half of the reporting year became dominated by
preparations for the January 2024 national election. The Company's Dhaka team
maintained contact with Ministry officials and were advised that a formal
presentation on domestic coal sector development was being prepared for the
Prime Minister.
Following the election, Ministry officials confirmed they had been instructed
to complete the presentation and the Company assisted with detailed
information regarding the Phulbari coal mine. The Ministry's efforts were
widely reported in the media and these reports also cited the importance of
developing the Phulbari coal mine in securing a significant supply of coal to
off-set import dependence.
In March this year, the Company signed a contract with PowerChina for Mine
Construction and Overburden Stripping. This EPC contract would effectively
cover all mining activity required to expose coal and is a clear demonstration
of the Company's capability of delivering the Project. Significant progress
has also been made towards securing finance.
In June this year, student protests began with a focus on getting the
government to remove its quota system for public service jobs, which
effectively had over 60% of the jobs reserved. Given that youth unemployment
is a growing problem, there was considerable support for the student movement.
By July, just outside the reporting period, the student movement took on a
very different complexion with a new focus being the Prime Minister to resign
and removal of the government. Clashes with law enforcement officials were
extreme and despite heavy casualties, the protests continued and on 5 August
this year the government collapsed and the Prime Minister left the country. An
Interim Government with a reform agenda is now in power.
The political upheaval has impacted Business development; however, the Interim
Government era does represent an opportunity for direct engagement and
presentation of the benefits of moving the Project forward. This is supported
by the fact that there is over US$3 billion outstanding debt for power and
energy supply; suppliers have begun to curtail further supply until that debt
is settled; and some independent power plants have been forced to shut down
units due to an inability to pay for imported coal. In the long-term,
solutions will need to be found that are affordable, sustainable and reduce
Bangladesh's exposure to the international energy market.
Zeus Capital Limited became the Company's Nominated Adviser and Joint Broker
on 13 July this year, following their acquisition of WH Ireland's Capital
Market Division. Following that, on 5 November this year the Company appointed
Allenby Capital Limited as Nominated Adviser and Joint Broker.
Finance review
The Group recorded a loss of £1,388,000 during the year ended 30 June 2024
compared to a loss of £1,320,000 during the previous year. The loss increased
from the comparative year principally due to an increase in Board personnel,
and also exchange rate losses between the Pound and Bangladesh Taka, which
compare to a £68,000 gain for the year ended 30 June 2023. There was a
decrease from £180,000 in 2023 to £90,000 this year as a result of natural
reductions 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 and continuing with the Project.
The Group recorded a net increase in cash at the end of the year to
£1,658,000 (2023: £543,000 decrease). Net cash used in operations for the
year was £763,000 (2023: £627,000), cash used in investing activities was
£444,000 (2023: £656,000), and cash inflow from financing was £2,322,000
(2023: £865,000).
The Group has continued its aim to maintain tight control of expenditure
incurred during the year, however the revision of the Board composition, was a
contributing factor to the administrative expenses increasing by 10.8% to
£807,000 for the year ended 30 June 2024 (2023: £728,000) which included
£15,000 non-cash expenditure, and finance costs remained stable at £494,000
(2023: £480,000). Capitalised expenditure in relation to the mine proposal
was £443,000 for the year ended 30 June 2024 compared to £625,000 in the
previous year.
To finance its operations during the year, GCM completed two successful
Subscriptions in conjunction raising Gross proceeds of £500,000 in January
2024 with Clear Capital Ltd, and £2,000,000 with Axis Capital Markets Ltd in
April 2024. 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 requested during November
2023, but not completed. Of the full facility of £3,500,000, £3,200,000 has
currently been utilised. 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 £1,200,000 in
available cash resources, which is sufficient to meet the Company's immediate
cash requirements until July 2025, assuming the Company's currently forecast
cash costs. The Company will further explore additional funding during the
first six months of 2025.
Corporate Social Responsibility (CSR)
GCM recognizes that the Project is a continuous, community-centred effort,
rather than a one-off initiative typical of other large developments.
Sustaining the Project's Social License to Operate (SLO) requires consistent
engagement throughout its lifespan. Essential to this is our commitment to
listen to the communities we serve, address their concerns, keep them fully
informed, support local livelihoods, and not only mitigate environmental
impacts but actively improve the surrounding ecosystem.
Commitment to High Standards:
GCM is dedicated to developing the Project in alignment with leading national
and international environmental and social standards, specifically:
International Finance Corporation (World Bank) policies and standards;
The Equator Principles;
The Asian Development Bank's (ADB) Safeguard Policies; and
The prevailing laws and policies of Bangladesh.
As a signatory of the UN Global Compact, the world's largest voluntary
corporate responsibility initiative, GCM upholds core values in human rights,
labour standards, environmental stewardship, and anti-corruption.
Community Engagement and Stakeholder Inclusion:
Feedback from government agencies reflects the importance of making local
communities active stakeholders who are incentivised to support the Project.
This includes offering employment, access to education, and fair compensation
for land and relocation needs. In response, GCM's Resettlement Action Plan
(RAP) was developed as part of the comprehensive Environmental and Social
Impact Assessment for the coal mine, and reflects the specific requirements
identified through extensive community surveys within and adjacent to the
Project Area. A demographic survey conducted in 2019 further updated
population and household data to guide our approach.
Through the RAP, GCM is committed to uplifting the local community and will
ensure the following:
Fair, transparent, and fully compensated relocation;
Enhanced living standards with improved town and village amenities;
Financial grants to improve livelihoods;
Training programs and preferential employment opportunities;
Support for agricultural development to bolster local farming.
On-the-Ground Engagement:
To maintain strong community ties, GCM has a permanent field presence within
the Project Area. Our field team, supported by 71 Community Liaison Assistants
(CLAs) recruited from within the community, actively engages with local
residents and authorities. This presence ensures continuous dialogue,
transparency, and responsiveness, fostering trust and collaboration throughout
the Project's development.
Risks and uncertainties
The predominant risks and uncertainties faced by the Company are set out
below:
Political and Economic Risks:
The political landscape has become dominated by the fall of the past Awami
League government of former Prime Minister Shaikh Hasina on 5 August 2024 and
the appointment of an Interim Government, on 8 August 2024. The Interim
Government consists of Chief Adviser Dr Yunus (Nobel Laureate) and 24 Advisers
covering key ministries. The student led protests that caused the government
to fall had mobilised enormous support for eliminating corruption and
undertaking political and economic reforms and this has become the Interim
Government's mandate.
Chief Adviser Dr Yunus is well respected both in Bangladesh and the
international community and it seems all are keen that the reform agenda runs
to its conclusion. At this juncture, there appears to be no timeline to
achieve this end and consensus seems that this could take a couple of years,
after which there would be a free and fair election. The election may happen
before, though no one is sure about the timeline as no roadmap has been
declared.
The early months of the Interim Government has exposed well organised
wide-spread corruption, estimated to have cost the Bangladesh economy some
US12-15 billion annually. It is not surprising that early actions have seen
many bureaucratic and corporate personnel changes with many arrests and cases
filed.
The period of reform carries inherent risks with the major one being that the
Interim Government remains in power for several years but fails to take
long-term decisions; the re-emerging political parties become frustrated with
the protracted timeline towards an election resulting in further street
protests and uncertainty. However, there are mitigating factors given the
Interim Government continues to enjoy support of the international community
allowing its confidence to grow; the Bangladesh people by and large want to
see the reforms implemented; and the Bangladesh military has pledged its
support and is integrated with the police force to maintain law and order.
Strategic Risk:
There is a risk that the strategic partnership with the Chinese state-owned
enterprise, PowerChina, may not proceed, which would impact the Company's plan
to position the Project as a secure, captive coal mine with dependable market
outlets for its full production. This could threaten the economic viability of
the mine. However, mitigating circumstances have arisen with the signing of
the Mine Construction and Overburden Stripping EPC contract with PowerChina in
March 2024. This demonstrates commitment by both companies to move the Project
forward. It also carries with it the pathway to securing project financing.
PowerChina is also a partner in several independent coal-fired power plants in
Bangladesh which are keen to secure coal supply from the Phulbari coal mine,
helping to underpin the Project's revenue stream. The remaining revenue is
planned to come from coal supply agreements with government-owned power
plants. The risk of not achieving the latter is mitigated by the fact the
government has US$20 - 30 billion worth of latest HELE power plants that it is
unable to fuel from imported coal and the fact that the Project could supply
coal paid for in local currency.
Additionally, the Company's Bangladesh team has begun working with key Interim
Government contacts to both promote the Project and determine the best timing
to present the Project Proposal, given the early stage of the Interim
Government and its immediate focus being to establish commissions and
committees to facilitate its reform agenda.
Financing Risk:
There is a risk that the Company may face challenges in raising the necessary
working capital to sustain operations before submitting the Project Proposal
to the government, as well as the additional funds required to guide the
Project through government approvals and into the implementation stage. The
first financing risk is mitigated by the Company's strong track record of
successfully raising capital through equity markets. The second financing risk
is addressed through existing agreements with our Development Partner,
PowerChina, who has expressed a willingness to support project financing in
exchange for being awarded EPC (Engineering, Procurement, and Construction)
contracts. The signing of the US$1 billion Mine Construction and Overburden
Stripping EPC contract with PowerChina in March 2024 is a demonstration of the
commitment of both companies to move the Project forward.
The Directors remain confident that the Company will secure the necessary
funds when needed. For further details, refer to the Directors' Report.
Commercial Risk:
The primary commercial risk for the Project in Bangladesh stems from potential
adverse movements in coal prices and associated cost factors. However, the
ongoing global energy supply uncertainty, with increased coal and LNG prices
has positively shifted the Project's viability outlook. The newly appointed
Interim Government is going through an initial phase of reviewing existing
energy and power arrangements, given that it has exposed huge corruption in
this sector. The fact that the country has accrued US$3 billion for imported
energy and power and that suppliers have begun to curtail further supply until
that debt is serviced, that independent power plants have idle capacity
because the government has a foreign currency crisis and cannot support the
required fuel import, and the country cannot afford to continue with an import
all energy strategy, all support the need for cost-effective and locally
sourced energy solutions. Phulbari coal presents an attractive alternative to
imported fuel sources. The Project offers a hedge against global supply chain
disruptions and escalating energy import costs, potentially saving Bangladesh
billions of dollars in foreign exchange reserves with thermal coal supply
contracts able to be set up with local currency payments.
Analysts suggest the supply and demand dynamics will likely sustain elevated
energy prices in the medium term. This trend strengthens the economic case for
utilising Phulbari coal, as it provides stability in energy costs and reduces
dependency on volatile international markets. To mitigate further economic
risks, coal supply agreements for power plants will include escalation
clauses, adjusting for rising costs and ensuring the mine's financial
resilience.
Bangladesh's installed (and to be commissioned) coal-fired power generation
capacity currently stands at 8,175 MW, requiring an estimated 19 million
tonnes of Phulbari quality coal annually. The Phulbari coal mine could satisfy
up to 80% of this coal demand, underscoring the strategic role of Phulbari
coal in supporting the country's energy security goals.
Legal Risk:
The primary legal risk facing the project is the potential revocation of the
mining lease and exploration licenses. Should this occur, it could jeopardise
the project's viability. To mitigate this risk, the Company strictly adheres
to all terms and conditions of the "Exploration and Mining of Coal in Northern
Bangladesh" Contract with the Government. This includes ensuring that all
ongoing requirements related to the mining lease and exploration licenses are
fully met. The Group remains vigilant in maintaining compliance with these
terms. Recently, GCM obtained a comprehensive legal opinion confirming that
the Contract is legally enforceable under both Bangladeshi and international
law. This assurance strengthens the project's legal foundation and mitigates
the risk of potential revocation.
Health and Safety, Social and Environmental Risks:
The Company is firmly dedicated to advancing the Project while upholding the
highest international standards for health, safety, social, and environmental
responsibility. In alignment with its Corporate Social Responsibility (CSR)
objectives, the Company actively adheres to rigorous social and environmental
guidelines, as outlined in this Strategic Report. These standards ensure that
the Project's development aligns with globally recognised best practices,
minimizing potential health, safety, and environmental impacts. Through
continuous monitoring and improvement, the Company strives to mitigate risks
to local communities and the environment, reinforcing its commitment to
sustainable and responsible development.
Climate Change Risks:
The global push for climate action has placed increased pressure on
governments and financial institutions to reduce reliance on fossil fuel-based
energy. In Bangladesh, this trend may impact future policy directions,
especially concerning coal-fired power generation. Climate-aware financing may
become more restricted, limiting the funding and viability of projects that
depend heavily on fossil fuels. This situation prompts Bangladesh to consider
alternative, lower-emission energy sources and emphasizes the need for policy
adjustments aligned with sustainable development.
Bangladesh still is expected to officially transition from a Least Developed
Country ("LDC") to a Developing Country by 2026, following the United Nations'
recommendation for an extended preparation period due to COVID-19's economic
impact. Until then, Bangladesh will retain its trade privileges as an LDC. In
tandem, the government has set ambitious targets through its Vision 2041,
which outlines goals to eradicate absolute poverty, achieve upper
middle-income status by 2031, and progress towards developed-nation status by
2041. These goals necessitate a robust energy strategy to support industrial
growth and employment, which must also be aligned with sustainability
objectives.
Bangladesh contributes minimally to global greenhouse gas emissions, at less
than 0.35% and far lower than those of developed economies. Its per capita GDP
and power generation levels also remain modest, underscoring the limited role
it plays in global emissions.
Vision 2041 highlights two critical pillars to drive energy and power sector
development:
1. Adopting a Least-Cost Power Generation Pathway: Bangladesh aims to expand
power generation capacity in a cost-effective manner, prioritizing low-cost
solutions to ensure industrial competitiveness and economic growth.
2. Securing Affordable Primary Energy Supply: The government seeks reliable
and low-cost energy sources to support ongoing development.
To fulfil these goals, Bangladesh must significantly increase its power
generation capacity with a focus on efficient, low-cost energy. Even with
substantial coal usage, such as the full production capacity from the Phulbari
coal mine, the country's CO(2) contribution would still be minimal in the
global context. This underscores the need to balance development priorities
with climate commitments.
The Bangladesh government acknowledges the strategic importance of fuel
diversification for energy security. However, the nation remains heavily
dependent on imported fuels, making it vulnerable to global energy price
fluctuations and supply chain disruptions. The recent global energy crisis has
highlighted the risks associated with a high dependence on imported fuels,
prompting the government to implement austerity measures and explore options
to strengthen domestic energy resilience.
In conclusion, while Bangladesh's role in global emissions remains small, it
faces the dual challenge of expanding its energy sector to support economic
growth while also adapting to the global shift towards greener energy.
Strategic diversification, efficient power generation, and responsible coal
use within a framework of minimal emissions are likely to be key aspects of
Bangladesh's evolving energy policy.
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
18 November 2024
Directors' Report
The Directors present their annual report and the audited accounts for the
year ended 30 June 2024.
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 2024, GCM held £1,658,000 in cash (2023: £543,000 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 £1,388,000 for the year ended 30 June
2024 (2023: loss after tax of £1,320,000). Non-cash expenses of £90,000 were
incurred during the year (2023: £180,000).
Capitalised evaluation expenditure relating to the Phulbari Coal and Power
Project was £443,000 for the year ended 30 June 2024 (2023: £625,000).
Events after the end of the reporting period
The events which took place subsequent to 30 June 2024, are fully disclosed in
Note 21 to the Consolidated Financial Statements.
Dividends
The Directors do not recommend the payment of a dividend (2023: nil).
Going concern
As at 30 June 2024, the Group had £1,658,000 in cash and £285,000 of net
current assets. The directors and management have prepared a cash flow
forecast to 31 December 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 July 2025, 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 £300,000 available for drawdown under the Polo Loan
Facility at the date of this report, and based on projected future cash
expenditure, the remaining amount available for drawdown under the Polo Loan
Facility at the date of this report is not expected to be sufficient to
support the Company's operations for the twelve months from the date of this
report. At the current run rates, along with the Company's existing cash
resources, this is only expected to provide sufficient capital for the next
seven/eight months. The Company intends to explore alternative funding
options over the first half of 2025, with the aim to complete and secure the
necessary third-party funding by the end of June 2025.
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
Paul Shackleton 22 March 2024 -
Charlie Green 22 March 2024 -
Mohd. Najib Abdul Aziz - 11 October 2023
Christian Taylor-Wilkinson - 28 February 2024
Amounts paid for services of Directors for the year ended 30 June 2024 were:
Share based payments 2024 2023
Salary & fees Total Total
£ £ £ £
Executive Directors
Datuk Michael Tang PJN (*) 303,600 - 303,600 303,600
Keith Fulton 90,000 15,000 105,000 100,000
Gary Lye 133,800 - 133,800 173,828
Non-Executive Directors
Paul Shackleton (appointed 22 March 2024) 8,192 - 8,192 -
Charlie Green (appointed 22 March 2024) 7,510 - 7,510 -
Mohd. Najib Abdul Aziz (resigned 11 October 2023) 1,700 - 1,700 6,000
Christian Taylor-Wilkinson (resigned 28 February 2024) 4,000 - 4,000 6,000
548,802 15,000 563,802 589,428
(*) Michael Tang's remuneration remains partially unpaid as at 30 June 2024,
see Note 20 also.
The Directors who held office at 30 June 2024, or on date of resignation, had
the following interests in the ordinary shares and options of the Group:
2024 2024 2024 2023 2023 2023
Shares Conditional shares ((1)) Options Shares Conditional shares Options
Executive Directors
Datuk Michael Tang PJN - - - ((2)) - - 7,250,000
Keith Fulton 1,400,702 - - ( ) 1,023,343 - -
Gary Lye 2,000 170,000 - ((2)) 2,000 170,000 825,000
( ) ( )
Non-Executive Directors ( ) ( )
Paul Shackleton (4) - - - ( ) - - - ( )
Charlie Green (4) 7,000 - - ( ) - - - ( )
Mohd. Najib Abdul Aziz (3) - - - ( ) - - - ( )
Christian Taylor-Wilkinson (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, and these options
have now expired.)
((3) Christian Taylor-Wilkinson resigned on 28 February 2024,
and Mohd. Najib Abdul Aziz resigned on 11 October 2023.)
((4) Paul Shackleton and Charlie Green were appointed on 22
March 2024.)
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.
Business risk
The Board regularly evaluates and reviews business risks when reviewing
project timelines. The types of risks reviewed include (refer to Note 1 and
the Strategic Report for further detailed information):
· Regulatory and compliance obligations
· Political and economic risks
· 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
· Climate Change Risk
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.
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 2024. The Group
does not hold other loans, financial leases, or other non-current finance
obligations.
2024 2023
£000 £000
Cash 1,658 543
Borrowing facilities undrawn (*) 300 300
Capital 1,958 843
(*) £300,000 of the available facility, was requested to be drawn down on 28
November 2023, however has not been received by the Company, and the Company
at the date of this report has not further requested the drawdown funds.
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 (2023: 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
18 November 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 2024
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 2024, 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.
• Reviewing the consistency of committed cash flows against
contractual arrangements and compared general overheads to current run rates.
• Comparing actual results for the year to past budgets to
assess the forecasting ability/accuracy of management.
• Verifying the latest post year end cash position in comparison
to budgeted.
• Reviewing post year end information such as board meeting
minutes and Regulatory News Services (RNS).
• Discussions with the directors the strategies that they are
pursuing to secure further funding if and when required.
• Reviewing the adequacy of the disclosures in respect of going
concern including the uncertainty over the ability to raise additional funds.
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 (2023:
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 5% of the loss before tax (2023: 5% of 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 £682,000
(2023: £659,000), each significant component of the group was audited to a
lower level of materiality. The parent company materiality was £66,000 (2023:
£66,000) with the other components being audited to a materiality of
£341,000 (2023: £329,000). 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%
(2023: 70%) of the above materiality levels for both group and parent company,
equating to £477,400 (2023: £461,000) and £46,000 (2023: £46,000)
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 £34,100 (2023: £32,000) for the financial statements as a whole
and £3,300 (2023: £3,300) 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% (2023: 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 exploration and evaluation asset
(Group)
· As disclosed in note 9 to the group financial · Our work included:
Statements, the group's intangible asset represents capitalised exploration
and evaluation expenditure on the Phulbari Coal Project. The balance is · Evaluating the Directors' assessment of the group's right to
£43.8m as at 30 June 2024 (2023: £43.4m). tenure over the Phulbari Coal licence area by reviewing historical agreements
and the external legal opinion obtained by the group on the status of the
overriding contract. We obtained legal opinions from the group's external
solicitor and assessed the solicitor's competence and independence to give
· The group has a contract with the Government of such opinions. A discussion was held with the lawyer providing those opinions.
Bangladesh to explore, develop 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 · Gaining an understanding of the strategy the directors are
necessary approval. As a result, there is continued uncertainty regarding if pursuing to progress the project given the continued delays in securing
and when such approval will be obtained. The parent company has received a development approval and reviewing the partnership agreements the parent
legal opinion confirming that the group retains legal title to the asset company has entered into historically and during the period.
despite the delays in approval, and that the contract with the Government of
Bangladesh is enforceable under Bangladesh and International law.
· · Evaluating management's assessment of impairment indicators and
underlying economic model against the original feasibility study submitted in
· The directors consider that the delay in 2005, including the approved coal reserves study. We critically challenged the
obtaining the approval does not represent an indicator of impairment under key estimates and assumptions used including their continued appropriateness
IFRS 6 Exploration for and Evaluation of Mineral Resources. As part of the including assessment of the price inputs to market data and forecasts;
impairment assessment the directors concluded that the value of the intangible re-calculation of discount rates; and review of the forecast costs. We
asset and investment in subsidiary continues to be appropriately supported by performed our own sensitivity analysis over individual key inputs, together
the original definitive feasibility study submitted in 2005. As such, the with a combination of sensitivities over such inputs.
carrying value is dependent upon the ultimate approval of the feasibility
study and mine development plan. The directors remain satisfied that approval
will ultimately be obtained and concluded that no impairment is required at 30
June 2024. · Reviewing the minutes of meeting of GCM's board and RNS
announcements for indicators of a potential trigger for impairment.
· The directors have disclosed their key
judgements, together with the uncertainties in this regard, in note 1 to the · Evaluating the disclosures given in the notes to the financial
financial statements. Given the level of judgement applied, and the ongoing statements, including the judgments and the uncertainties regarding the
delays in obtaining government approvals, we consider this to be a significant ultimate approval by the Government of Bangladesh.
audit risk and a key audit matter.
· Key observation:
· We draw attention to Note 1 in the financial
statements, which describes the significant uncertainty related to the
issuance of the relevant approval and license by the government of Bangladesh.
The entity holds an exploration and evaluation asset valued at £43.8m, the
value of which is linked to the receipt of this approval. As of the date of
this report, the government has not yet provided the relevant approval, and
there is no assurance that it will be granted. Should this approval not be
granted, this would indicate that the exploration and evaluation asset may be
impaired.
· Carrying value of investment in subsidiaries
(Parent Company)
· The parent company holds an investment in Asia · Our work included:
Energy Corporation (Bangladesh) Pty Limited which is the entity that holds the
underlying Phulbari asset. The value of the investment on the parent company
balance sheet is £48.5m (2023: £49.7m), as disclosed in note 6 to the parent
company financial statements. · Obtaining evidence of ownership for all investments held within
the group;
·
· The recoverability of the investment in Asia
Energy Corporation (Bangladesh) Pty Limited is reliant on the successful · Obtaining the impairment review for all investments held from
development of the Phulbari asset and is therefore subject to the same management and corroborating the assumptions made to third party evidence; and
uncertainties regarding recoverability.
·
· Reviewing the value of the net investment in subsidiaries against
· Given the level of judgement applied, and the the underlying assets and verifying and corroborating the judgements/estimates
ongoing delays in obtaining government approvals, we consider this to be a used by management to assess the recoverability of investments.
significant audit risk and a key audit matter.
·
· Key observation:
· We note that carrying value of the investment is
inherently linked to the Phulbari asset amounting to £43.8m, and any
impairment on the asset would also give rise to an impairment in the value of
the investment.
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, valuation of
investments have 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
18 November 2024
Consolidated Financial Statements
Consolidated Statement of Comprehensive Income
For year ended 30 June
Notes 2024 2023
Continuing operations £000 £000
Operating expenses
Pre-development expenditure 16 (90) (180)
Exploration and evaluation costs (2) 68
Administrative expenses (807) (728)
Operating loss 3 (899) (840)
Finance revenue 5 -
Finance costs (494) (480)
Loss before tax (1,388) (1,320)
Taxation 6 - -
Loss for the year (1,388) (1,320)
Other comprehensive income - -
Total comprehensive expense for the year (1,388) (1,320)
Loss per share
Basic (pence per share) 7 (0.6p) (0.7p)
Diluted (pence per share) 7 (0.6p) (0.7p)
The notes on pages 34 to 51 form an integral part of these financial
statements.
Consolidated Statement of Changes in Equity
For year ended 30 June
Share capital Share premium account Other Accumulated losses Total
Reserves
£000 £000 £000 £000 £000
Balance at 1 July 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
Total comprehensive loss - - - (1,388) (1,388)
Share issuances 689 2,052 (180) - 2,561
Share issuance costs - (228) - - (228)
Shares to be issued - - 90 - 90
Share based payments - - 2 - 2
Balance at 30 June 2024 13,437 59,878 481 (35,340) 38,456
The notes on pages 34 to 51 form an integral part of these financial
statements.
Consolidated Balance
Sheet
Company number 04913119
As at 30 June
Notes 2024 2023
£000 £000
Current assets
Cash and cash equivalents 1,658 543
Other receivables 8 22 25
Total current assets 1,680 568
Non-current assets
Right of use assets 13 21 42
Intangible assets 9 43,810 43,367
Total non-current assets 43,831 43,409
Total assets 45,511 43,977
Current liabilities
Payables 11 (1,380) (1,353)
Lease liabilities 13 (15) (20)
Total current liabilities (1,395) (1,373)
Non-current liabilities
Lease liabilities 13 (3) (22)
Borrowings 12 (5,657) (5,163)
Total non-current liabilities (5,660) (5,185)
Total liabilities (7,055) (6,558)
Net assets 38,456 37,419
Equity
Share capital 14 13,437 12,748
Share premium account 14 59,878 58,054
Other reserves 14 481 569
Accumulated losses (35,340) (33,952)
Total equity 38,456 37,419
These financial statements were approved by the Board of Directors and were
signed on their behalf by:
Keith Fulton
Executive Director
18 November 2024
The notes on pages 34 to 51 form an integral part of these financial
statements.
Consolidated Cash Flow Statement
For year ended 30 June
2024 2023
£000 £000
Cash flows used in operating activities
(Loss) before tax (1,388) (1,320)
Adjusted for:
Pre-development expenditure 16 90 180
Finance costs 15 494 480
Other non-cash expenses 8 10
(796) (650)
Movements in working capital:
Decrease in operating receivables 2 12
Increase in operating payables 31 11
Cash used in operations (763) (627)
Net cash used in operating activities (763) (627)
Cash flows used in investing activities
Payments for intangible assets (444) (656)
Net cash used in investing activities (444) (656)
Cash flows from financing activities
Issue of ordinary share capital 2,550 900
Share issue costs (228) (35)
Net cash from financing activities 2,322 865
Total increase/(decrease) in cash and cash equivalents 1,115 (418)
Cash and cash equivalents at the start of the year 543 961
Cash and cash equivalents at the end of the year 15 1,658 543
The notes on pages 34 to 51 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 18 November
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 2024.
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 privately owned and the Government's own commissioned and in the pipeline
power plants, which currently totals 8,175MW. 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 2,000MW) 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 £43,810,000 as at
30 June 2024.
Going concern
As at 30 June 2024, the Group had £1,658,000 in cash and £285,000 of net
current assets. The directors and management have prepared a cash flow
forecast to December 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 July 2025, 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 £300,000 available for drawdown under the Polo Loan
Facility at the date of this report, and based on projected future cash
expenditure, the remaining amount available for drawdown under the Polo Loan
Facility at the date of this report is not expected to be sufficient to
support the Company's operations for the twelve months from the date of this
report. At the current run rates, along with the Company's existing cash
resources, this is only expected to provide sufficient capital for the next
seven/eight months. The Company intends to explore alternative funding
options over the first half of 2025, with the aim to complete and secure the
necessary third-party funding by the end of June 2025.
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 have assessed various factors as impairment triggers including but
not limited to, the delay in obtaining approval of the Scheme of Development,
however have concluded that these do not meet the definition of an impairment
indicator under IFRS 6. However, management have undertaken a further
assessment to remain prudent to assess for recoverability, of which 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.
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
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)
Amendment to IAS 1 - Non-current liabilities with covenants 1 January 2024 1 January 2024
Amendment to IFRS 16 - Leases on sale and leaseback 1 January 2024 1 January 2024
Amendment to IAS 7 and IFRS 7 - Supplier finance 1 January 2024 1 January 2024
Amendments to IAS 21 - Lack of Exchangeability 1 January 2025 1 January 2025
Amendment to IFRS 9 and IFRS 7 - Classification and Measurement of Financial 1 January 2026 1 January 2026
Instruments
IFRS 18 Presentation and Disclosure in Financial Statements 1 January 2027 1 January 2027
IFRS 19 Subsidiaries without Public Accountability: Disclosures 1 January 2027 1 January 2027
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
2024 2023
£000 £000
The operating loss is stated after charging:
Directors' remuneration 564 589
Other staff costs ((1)) 8 9
Operating lease rentals ((2)) 19 16
Depreciation of property, plant and equipment ((3)) - -
((1) Other staff costs for 2024 financial year were £192,000 of which £8,000
was expensed in administrative expenses, £nil expensed in exploration and
evaluation costs and £184,000 capitalised (2023 £9,000 expensed in
administrative expenses, £nil expensed in exploration and evaluation costs
and £212,000 capitalised).)
((2) Operating lease rental costs for 2024 financial year were £23,000 of
which £19,000 was expensed and £4,000 capitalised (2023: £25,000 of which
£16,000 was expensed and £9,000 capitalised).)
((3) Total depreciation for 2024 was £nil which was capitalised to
intangibles (2023: £3,000 capitalised).)
During the year Phulbari-related exploration and evaluation costs amounting to
£2,000, primarily related to Foreign Exchange losses were expensed in
accordance with the Group's accounting policy on exploration and evaluation
costs (2023: credited £68,000).
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.
2024 2023
£000 £000
Audit of the group and company financial statements 43 41
Audit of subsidiaries - -
Total audit 43 41
Total fees 43 41
5. Amounts paid for Directors' services, and staff costs
2024 2023
£000 £000
Amounts paid for Directors' services
Amounts paid for Directors' services 564 589
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 (2023: £303,600).
Staff costs
Wages and salaries((1)) 184 212
Social security costs 8 9
192 221
((1) Excludes amounts paid for Directors' services.)
The average monthly number of employees during the year was: 2024 2023
Number Number
Exploration and evaluation 12 14
Administration 3 3
15 17
6. Taxation
Reconciliation of the tax charge in the income statement
2024 2023
£000 £000
Loss on ordinary activities before tax (1,388) (1,320)
UK corporation tax @ 25% (2023:25/19%) (347) (251)
Unrecognised deferred tax assets during the year 331 252
Non-deductible expenditure 16 (1)
Total tax (credit)/expense reported in the income statement - -
Unrecognised deferred tax assets
2024 2023
£000 £000
Deferred tax asset
Tax losses carried forward 6,467 4,663
Impairment 1,173 891
Other 1 1
7,641 5,555
Less: deferred tax assets de-recognised (7,641) (5,555)
- -
At 30 June 2024 tax losses for which a deferred tax asset was not recognised
was estimated to be £25,861,000 (2023: £24,536,000). Deferred tax assets
are only recognised at UK Corporation Tax Rate of 25% (2023: 25/19%) 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
2024 2023
£000 £000
(Loss) for the year (1,388) (1,320)
Thousands Thousands
Weighted average number of shares
Basic and diluted weighted average number of shares 228,271 121,733
(Loss) per share
Basic (pence per share) (0.6p) (0.7p)
Diluted (pence per share) (0.6p) (0.7p)
There are no potentially dilutive options, and 30,000 warrants along with
210,000 potentially dilutive shares to be issued at 30 June 2024 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
2024 2023
£000 £000
Current
Prepayments 18 20
Other receivables 4 5
22 25
9. Intangible assets
Exploration & evaluation expenditure Mineral rights Total
£000 £000 £000
At 1 July 2022 41,595 1,147 42,742
Additions - exploration & evaluation 625 - 625
At 30 June 2023 42,220 1,147 43,367
Additions - exploration & evaluation 443 - 443
Cost and net book value at 30 June 2024 42,663 1,147 43,810
Cost and net book value at 30 June 2023 42,220 1,147 43,367
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 2024 2023
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
2024 2023
£000 £000
Trade payables 586 559
Related party accrued payable 794 794
1,380 1,353
Refer to note 20 for details of the related party accrued payable.
12. Borrowings (Non-current liabilities)
2024 2023
£000 £000
Loan from related party
Balance as at 1 July 5,163 4,683
Loan instalments drawn down - -
Interest charges 494 480
Balance as at 30 June 5,657 5,163
Refer to note 20 for details of the loan from related party.
As a result of the amendment in terms noted below, the interest rate on the
loan facility increased from 15% to 16.5% effective 25 March 2024.
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
2024, £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:
2024 2023
£000 £000
Buildings 21 42
Vehicles - -
21 42
Lease liabilities
2024 2023
£000 £000
Classified as;
Current 15 20
Non-current 3 22
18 42
The interest expense incurred on lease liabilities was £2,000 (2023:
£5,000), and capitialised in accordance with the Group's policy on
exploration and evaluation assets. Cash outflows in respect of right of use
assets were £24,000 (2023: £41,000).
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 (£3.40 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 2022 182,305 118,582 12,495
Shares issued 25,217 - 253
At 30 June 2023 207,522 118,582 12,748
Shares issued 68,844 - 689
At 30 June 2024 276,366 118,582 13,437
Share issues
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.
On 2 February 2024, 30,303,040 subscription shares were issued on the
completion of a successful fundraise at 1.65p per share, raising gross cash
proceeds of £500,000.
On 11 March 2024, 606,060 shares were issued on exercising of warrants in
accordance with the terms of the agreement at a price of 1.65p, for total cash
consideration of £10,000.
On 11 March 2024, 4,740,995 shares were issued to consultants and a director
in accordance with the terms of their agreements, at prices from 2.65p to
4.125p, for total non cash consideration of £190,000.
On 8 April 2024, 2,424,243 shares were issued on exercising of warrants in
accordance with the terms of the agreement at a price of 1.65p, for total cash
consideration of £40,000.
On 19 April 2024, 30,769,230 subscription shares were issued on the completion
of a successful fund raise at 6.5p per share, raising gross cash proceeds of
£2,000,000.
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.
2024 2023
£000 £000
Share based payments not settled 481 569
481 569
15. Notes supporting statement of cashflows
Cash and cash equivalents for the purposes of the statement of cash flows
comprises:
2024 2023
£000 £000
Cash at bank available on demand 1,658 543
1,658 543
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 2022 4,683 4,683
Cash flows - -
Non-cash flows: Interest accrued 480 480
Balance at 30 June 2023 5,163 5,163
Balance at 1 July 2023 5,163 5,163
Cash flows - -
Non-cash flows: Interest accrued 494 494
Balance at 30 June 2024 5,657 5,657
16. Significant non-cash transactions
The significant non-cash transactions during the year were as follows:
· £90,000 of expenses were incurred by a consultant for their
services. The consulting payment included £90,000 (2,181,818 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:
2024 2023
£000 £000
Charged/(credited) to intangibles
Conditional shares 2 2
2 2
Share Warrants
During the year ended 30 June 2024, the Company granted 3,030,303 warrants to
subscribe for ordinary shares (2023: nil). 3,030,303 warrants were exercised
and 672,333 warrants lapsed during the year (2023: nil). As at 30 June 2024,
30,000 warrants were in issue (2023: 702,333).
Options
The following table illustrates the number and weighted average exercise
prices (WAEP) of, and movements in, share options during the year.
2024 2024 2023 2023
Options WAEP Options WAEP
Thousands Thousands
At 1 July 9,300 £0.11 9,300 £0.11
Expired during the year (9,300) (£0.11) - -
Outstanding at 30 June - - 9,300 £0.11
Exercisable at 30 June - - 9,300 £0.11
The options which expired during the year to 30 June 2024 had an exercise
price of £0.11 (2023: £0.11) and a weighted average contractual life of 0
years (2023: 0.9 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:
2024 2023
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 2024 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 2024 is £481,000 (2023: £479,000) 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 2024 is directly attributable to the Phulbari Coal and Power Project,
and accordingly capitalised to intangibles on this basis (2023: expensed
£2,000).
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:
2024 2023
£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 2024 was £1,658,000 (2023:
£543,000).
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 2024 was as follows:
2024 2023
£000 £000
Cash and cash equivalents 1,658 543
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 2024 and 2023.
Within 1 to 3 3 to 12 2 - 5 years Total &
30 days months months Carrying value
£000 £000 £000 £000 £000
2024
Payables 1,291 2 87 - 1,380
Lease liabilities 1 2 12 3 18
Borrowings - - - 5,657 5,657
1,292 4 99 5,660 7,055
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
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
2024 2023 2024 2023
£000 £000 £000 £000
Financial assets
Cash and cash equivalents Amortised cost 1,658 543 1,658 543
Receivables Amortised cost 22 25 22 25
Financial liabilities
Creditors Amortised cost 1,380 1,353 1,380 1,353
Borrowings Amortised cost 5,657 5,163 5,657 5,163
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.
20. Related Party Transactions
Key management personnel
2024 2023
£000 £000
Short-term benefits 685 686
Share based payments 12 12
697 698
Related party loan
GCM is beneficiary to a £3.5 million loan facility from its largest
shareholder, with a current interest rate of 16.5% per annum. As at 30 June
2024 the Group had utilised £3.2 million of the loan facility (2023:
£3,200,000) and an interest accrual of £2,457,000 (2023: £1,963,000). 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 as well as
Polo Resources Limited being a substantial shareholder of the Company.
Management services company
As disclosed in the Directors' Report, for the year ended 30 June 2024, 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 (2023: £6,000) and management services of £297,600 paid to a
management services company (2023: £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 2024 the amount owing to the management services company of
Datuk Michael Tang PJN was £793,600 (2023: £793,600).
21. Events after the end of the reporting period
The following events took place subsequent to 30 June 2024, for which there
has been no adjustment to the 30 June 2024 financial statements:
- On 15 July 2024, the Company announced its Nominated Adviser and
Joint Broker has changed to Zeus Capital Limited with immediate effect. This
change follows completion of the acquisition by Zeus Capital Limited of the WH
Ireland Capital Markets Division (from WH Ireland Limited), as announced.
- On 5 November 2024, announced the appointment of Allenby Capital
Limited as the Company's Nominated Adviser and Joint Broker with immediate
effect.
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AnnouncementREG - AIM - AIM Notice - 10/04/2025
AnnouncementREG - GCM Resources PLC - Issue of Equity and PDMR dealing
AnnouncementREG - GCM Resources PLC - Interim Results for the 6 months ended 31 Dec 2024
AnnouncementREG - GCM Resources PLC - Placing to raise £1.0 million
Announcement