REG - Horizonte Minerals - Final Results <Origin Href="QuoteRef">HZM.L</Origin> - Part 2

Horizonte MineralsAnnouncement

25/02/2015 07:00

- Part 2: For the preceding part double click  ID:nRSY7672Fa 

is classified as equity is not remeasured,
and its subsequent settlement is accounted for within equity. 
 
The excess of the consideration transferred and the acquisition date fair
value of any previous equity interest in the acquiree over the fair value of
the Group's share of the identifiable net assets acquired is recorded as
goodwill. If this is less than the fair value of the net assets of the
subsidiary acquired in the case of a bargain purchase, the difference is
recognised directly in profit or loss. 
 
Inter-company transactions, balances and unrealised gains on transactions
between Group companies are eliminated. Accounting policies of subsidiaries
have been changed where necessary to ensure consistency with policies adopted
by the Group. 
 
Investments in subsidiaries are accounted for at cost less impairment. 
 
The following 100% owned subsidiaries have been included within the
consolidated Financial Statements: 
 
 Subsidiary undertaking          Parent company                   Country of incorporation  Nature of business   
 Horizonte Exploration Ltd       Horizonte Minerals Plc           England                   Mineral Exploration  
 Horizonte Minerals (IOM) Ltd    Horizonte Exploration Ltd        Isle of Man               Holding company      
 HM Brazil (IOM) Ltd             Horizonte Minerals (IOM) Ltd     Isle of Man               Holding company      
 HM Peru (IOM) Ltd               Horizonte Minerals (IOM) Ltd     Isle of Man               Holding company      
 Horizonte Nickel (IOM) Ltd      Horizonte Minerals (IOM) Ltd     Isle of Man               Holding company      
 HM do Brasil Ltda               HM Brazil (IOM) Ltd              Brazil                    Mineral Exploration  
 Araguaia Niquel Mineração Ltda  Horizonte Nickel (IOM) Ltd       Brazil                    Mineral Exploration  
 Lontra Empreendimentos e        Araguaia Niquel Mineração Ltda/                                                 
 Participações Ltda              Horizonte Nickel (IOM) Ltd       Brazil                    Mineral Exploration  
 Mineira El Aguila SAC           HM Peru (IOM) Ltd                Peru                      Mineral Exploration  
 Mineira Cotahusi SAC            Mineira El Aguila SAC            Peru                      Mineral Exploration  
 
 
2.4 Going concern 
 
The Group's business activities together with the factors likely to affect its
future development, performance and position are set out in the Chairman's
Statement on pages 4 and 5; in addition note 3 to the Financial Statements
includes the Group's objectives, policies and processes for managing its
capital; its financial risk management objectives; details of its financial
instruments and its exposure to credit and liquidity risk. 
 
The Financial Statements have been prepared on a going concern basis. Although
the Group's assets are not generating revenues and an operating loss has been
reported, the Directors consider that the Group has sufficient funds to
undertake its operating activities for a period of at least the next 12 months
including any additional payments required in relation to its current
exploration projects. The Group has considerable financial resources which
will be sufficient to fund the Group's committed expenditure both
operationally and on its exploration projects for the foreseeable future.
However, as additional projects are identified and the Araguaia project moves
towards production, additional funding will be required. The amount of
additional funding is estimated without any certainty at the point of approval
of these Financial Statements and the Group will be required to raise
additional funds either via an issue of equity or through the issuance of
debt. The Directors are confident that funds will be forthcoming if and when
they are required. 
 
The Directors have a reasonable expectation that the Group and Company have
adequate resources to continue in operational existence for the foreseeable
future. Thus they continue to adopt the going concern basis of accounting in
preparing these Financial Statements. 
 
2.5 Intangible Assets 
 
(a) Goodwill 
 
Goodwill represents the excess of the cost of an acquisition over the fair
value of the Group's share of the net identifiable assets, liabilities and
contingent liabilities of the acquired subsidiary at the date of acquisition.
Goodwill arising on the acquisition of subsidiaries is included in 'intangible
assets'. Goodwill is tested annually for impairment and carried at cost less
accumulated impairment losses. Impairment losses on goodwill are not reversed.
Gains and losses on the disposal of an entity include the carrying amount of
goodwill relating to the entity sold. 
 
Goodwill is allocated to cash generating units for the purpose of impairment
testing. The allocation is made to those cash-generating units or groups of
cash-generating units that are expected to benefit from the business
combination in which the goodwill arose, identified according to operating
segment. 
 
(b) Exploration and evaluation assets 
 
The Group recognises expenditure as exploration and evaluation assets when it
determines that those assets will be successful in finding specific mineral
resources. Expenditure included in the initial measurement of exploration and
evaluation assets and which are classified as intangible assets relate to the
acquisition of rights to explore, topographical, geological, geochemical and
geophysical studies, exploratory drilling, trenching, sampling and activities
to evaluate the technical feasibility and commercial viability of extracting a
mineral resource. Capitalisation of pre-production expenditure ceases when the
mining property is capable of commercial production. 
 
Exploration and evaluation assets arising on business combinations are
included at their acquisition-date fair value in accordance with IFRS 3
(revised) 'Business combinations'. Other exploration and evaluation assets and
all subsequent expenditure on assets acquired as part of a business
combination are recorded and held at cost. 
 
Exploration and evaluation assets are assessed for impairment when facts and
circumstances suggest that the carrying amount of an asset may exceed its
recoverable amount. The assessment is carried out by allocating exploration
and evaluation assets to cash generating units, which are based on specific
projects or geographical areas. 
 
Whenever the exploration for and evaluation of mineral resources in cash
generating units does not lead to the discovery of commercially viable
quantities of mineral resources or the Company has decided to discontinue such
activities of that unit, the associated expenditures are written off to profit
or loss. 
 
2.6 Property, plant and equipment 
 
All property, plant and equipment is stated at historic cost less accumulated
depreciation. Historic cost includes expenditure that is directly attributable
to the acquisition of the items. 
 
Subsequent costs are included in the asset's carrying amount or recognised as
a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Group and the cost
of the item can be measured reliably. All repairs and maintenance costs are
charged to profit or loss during the financial period in which they are
incurred. 
 
Depreciation is charged on a straight-line basis so as to write off the cost
of assets, over their estimated useful lives, using the straight-line method,
on the following bases: 
 
 Office equipment                    25%        
 Vehicles and other field equipment  25% - 33%  
 
 
The asset's residual values and useful lives are reviewed, and adjusted if
appropriate, at the end of each reporting period. 
 
An asset's carrying amount is written down immediately to its recoverable
amount if the assets carrying amount is greater than its estimated recoverable
amount. 
 
Gains and losses on disposal are determined by comparing the proceeds with the
carrying amount and are recognised within 'Other (losses)/gains' in the
Statement of Comprehensive Income. 
 
2.7 Impairment of non-financial assets 
 
Assets that have an indefinite useful life, such as goodwill or intangible
exploration assets not ready to use, are not subject to amortisation and are
tested annually for impairment. Intangible assets that are subject to
amortisation and property, plant and equipment are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for the amount by
which the asset's carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset's fair value less costs to sell
and value in use. For the purposes of assessing impairment, assets are grouped
at the lowest levels for which there are separately identifiable cash flows
(cash generating units). Non-financial assets other than goodwill that
suffered an impairment are reviewed for possible reversal of the impairment at
each reporting date. 
 
2.8 Foreign currency translation 
 
(a) Functional and presentation currency 
 
Items included in the Financial Statements of the Group's entities are
measured using the currency of the primary economic environment in which the
entity operates (the 'functional currency'). The functional currency of the UK
and Isle of Man entities is Sterling and the functional currency of the
Brazilian and Peruvian entities is Brazilian Real and Peruvian Nuevo Sol
respectively. The Consolidated Financial Statements are presented in Pounds
Sterling, rounded to the nearest pound, which is the Company's functional and
Group's presentation currency. 
 
(b) Transactions and balances 
 
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions or
valuation where such items are re-measured. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in profit or loss. 
 
(c) Group companies 
 
The results and financial position of all the Group's entities (none of which
has the currency of a hyperinflationary economy) that have a functional
currency different from the presentation currency are translated into the
presentation currency as follows: 
 
(1)       assets and liabilities for each statement of financial position
presented are translated at the closing rate at the date of that statement of
financial position; 
 
(2)       each component of profit or loss is translated at average exchange
rates during the accounting period (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on the
transaction dates, in which case income and expenses are translated at the
dates of the transactions); and 
 
(3)       all resulting exchange differences are recognised in other
comprehensive income. 
 
On consolidation, exchange differences arising from the translation of the net
investment in foreign entities, and of monetary items receivable from foreign
subsidiaries for which settlement is neither planned nor likely to occur in
the foreseeable future are taken to other comprehensive income. When a foreign
operation is sold, such exchange differences are recognised in profit or loss
as part of the gain or loss on sale. 
 
Goodwill and fair value adjustments arising on the acquisition of a foreign
entity are treated as assets and liabilities of the foreign entity and
translated at the closing rate. 
 
2.9 Financial assets 
 
The Group classifies its financial assets in the foregoing categories: loans
and receivables; and available-for-sale financial assets, as appropriate. The
Group determines the classification of its financial assets at initial
recognition, depending on the purpose for which the financial assets were
acquired. 
 
(a) Available-for-sale financial assets 
 
Available-for-sale financial assets consist of equity investments that are
neither classified as held for trading nor designated at fair value through
profit or loss. After initial recognition, available-for-sale financial assets
are subsequently measured at fair value with unrealised gains or losses
recognised as other comprehensive income in the available-for-sale reserve
until the investment is derecognised, at which time the cumulative gain or
loss is recognised in other operating income, or the investment is determined
to be impaired, when the cumulative loss is reclassified from the
available-for-sale reserve to the Income Statement in finance costs. The fair
value of financial instruments that are traded in active markets at each
reporting date is determined by reference to quoted market prices. 
 
(b) Loans and receivables 
 
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. After initial
measurement, such financial assets are subsequently measured at amortised cost
using the effective interest rate method, less impairment. The Group's loans
and receivables comprise 'trade and other receivables' in the Statement of
Financial Position. 
 
Derecognition 
 
A financial asset is derecognised when the rights to receive cash flows from
the asset have expired. 
 
2.10 Cash and cash equivalents 
 
In the Statement of Cash Flows, cash and cash equivalents comprise cash at
bank and in hand and demand deposits with banks and other financial
institutions, that are readily convertible into known amounts of cash and
which are subject to an insignificant risk of changes in value. 
 
2.11 Taxation 
 
The tax credit or expense for the period comprises current and deferred tax.
Tax is recognised in the Income Statement, except to the extent that it
relates to items recognised in other comprehensive income or directly in
equity. In this case, the tax is also recognised in other comprehensive income
or directly in equity, respectively. 
 
The charge for current tax is calculated on the basis of the tax laws enacted
or substantively enacted by the end of the reporting period in the countries
where the company and its subsidiaries operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect
to situations in which applicable tax regulation is subject to interpretation.
It establishes provisions where appropriate on the basis of amounts expected
to be paid to the tax authorities. 
 
Deferred tax is accounted for using the liability method in respect of
temporary differences arising from differences between the carrying amount of
assets and liabilities in the financial statements and the corresponding tax
bases used in the computation of taxable profit. However, deferred tax
liabilities are not recognised if they arise from the initial recognition of
goodwill; deferred tax is not accounted for if it arises from initial
recognition of an asset or liability in a transaction other than a business
combination that at the time of the transaction affects neither accounting nor
taxable profit or loss. 
 
In principle, deferred tax liabilities are recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised. Deferred tax assets are
recognised on tax losses carried forward to the extent that the realisation of
the related tax benefit through future taxable profits is probable. 
 
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates, and interests in joint
ventures, except where the Company is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future. 
 
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets against current tax liabilities
and when the deferred tax assets and liabilities relate to taxes levied by the
same taxation authority on either the same taxable entity or different taxable
entities where there is an intention to settle the balances on a net basis. 
 
Deferred tax is calculated at the tax rates (and laws) that have been enacted
or substantively enacted by the balance sheet date and are expected to apply
to the period when the asset is realised or the liability is settled. 
 
Deferred tax assets and liabilities are not discounted. 
 
2.12 Share capital 
 
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new ordinary shares or options are shown in
equity as a deduction, net of tax, from the proceeds. 
 
2.13 Trade payables 
 
Trade payables are obligations to pay for goods or services that have been
acquired in the ordinary course of business from suppliers. Accounts payable
are classified as current liabilities if payment is due within one year or
less. If not, they are presented as non-current liabilities. 
 
Trade payables are initially recognised at fair value and subsequently
measured at amortised cost using the effective interest method. 
 
2.14 Operating leases 
 
Leases of assets under which a significant amount of the risks and benefits of
ownership are effectively retained by the lessor are classified as operating
leases. Operating lease payments are charged to the Income Statement on a
straight-line basis over the period of the respective leases. 
 
2.15 Share-based payments and incentives 
 
The Group operates equity-settled, share-based compensation plans, under which
the entity receives services from employees as consideration for equity
instruments (options) of the Group. The fair value of employee services
received in exchange for the grant of share options are recognised as an
expense. The total expense to be apportioned over the vesting period is
determined by reference to the fair value of the options granted: 
 
>          including any market performance conditions; 
 
>          excluding the impact of any service and non-market performance
vesting conditions; and 
 
>          including the impact of any non-vesting conditions. 
 
Non-market performance and service conditions are included in assumptions
about the number of options that are expected to vest. The total expense is
recognised over the vesting period, which is the period over which all of the
specified vesting conditions are to be satisfied. At the end of each reporting
period