REG - PYX Resources Ltd. - Final Results
16/03/2022 07:00
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RNS Number : 9463E PYX Resources Limited 16 March 2022
PYX Resources Limited / EPIC: PYX / Market: Standard Listing / Sector: Mining
16 March 2022
PYX Resources Limited
2021 Full Year Results and Publication of Annual Report
Strong Revenue Growth, Debt Free with Solid Fundamentals
HIGHLIGHTS
· Strong revenue growth on the back of solid business fundamentals
· Year ended with PYX's zircon prices at US$2,465 per tonne
· Premium zircon revenue growth of 39% amid price and volume increase
· 2% zircon sales volume growth and strong production increase (10%
year on year)
· Robust customer demand across PYX's end markets
· Limited negative operating cash flow as a result of tight control on
general and administrative expenses (Underlying EBITDA negative US$794k)
· Debt free, with a closing cash position of US$6.6 million
· 2022 is projected to be another very strong commodity up-cycle. This
represents a great opportunity for PYX to boost capacity and grow market
share.
PYX Resources Ltd (PYX or the Company) (NSX: PYX | LSE: PYX) the
second-largest publicly listed zircon producing mining company globally by
zircon resources, announces its full-year results for 12 months ending 31
December 2021 (Financial Year 2021).
It has been a truly transformational year for the Company. In 2021, PYX
delivered on its ambitious plans to expand - and meet increasing customer
demand - by boosting capacity at its strategically located projects.
At the beginning of the year, PYX completed the acquisition of a second
deposit in Indonesia, the Tisma tenement. Following the acquisition, PYX
became the 2nd largest publicly traded producing mineral sands company by
zircon resources globally. In June, the Company completed a successful
placement raising AU$11.2m/£6.1m (gross of expenses), with the goal of
accelerating production growth, it subsequently increased capacity at its
Mandiri's Minerals Separation Plant (MSP) by 33% to 24,000 tpa, allowing also
for future production of rutile, leucoxene and ilmenite.
In November PYX successfully dual-listed on the Main Market of the London
Stock Exchange, a move that was strategically timed given the strong upcycle
premium zircon is experiencing. The LSE is a leading destination for natural
resources companies and has a strong network of brokers, analysts and
institutional investors with a deep knowledge of the global mineral sands
market. Accordingly, the LSE listing will provide a platform to broaden our
investor base to include institutional and other mining focused investors,
while increasing the liquidity of the Company's shares.
Triggered by increased demand, lack of supply and low inventories, PYX
delivered four premium zircon price rises during 2021, with the latest pricing
exceeding US$2,800 per tonne. The Australian Critical Minerals Prospectus 2021
publication classified zircon and titanium (rutile and ilmenite) as vital for
the economic well-being of the world's major and emerging economies - the
supply of which, is at risk due to geological, geopolitical issues, trade
policy or other factors.1 The Company also signed a third offtake agreement
with Indian based Microtech for 3,600 tonnes per annum and started supplying
the fused zirconia industry for high tech applications.
Full year 2021 sales increased 2% to 6,855 tonnes from 6,737 tonnes in 2020
and production volumes rose by 10% to 7,233 tonnes from 6,555 tonnes with a
goods inventory of just 18 days.
PYX also performed strongly in the final quarter thanks to an uplift in
premium zircon production and sales volume growth, supported by ongoing price
increases. In Q4 2021, PYX produced 2,192 tonnes and sold 2,105 tonnes of
premium zircon - resulting in a year-on-year increases of 33% and 13%,
respectively.
Production wise, the year also ended on a very positive note, with December
achieving a step-changing 1,219 tonnes, representing a very impressive year on
year production growth of 124%. This major growth spurt was attributable to
the higher feed of heavy mineral concentrate, in combination with the expanded
processing capacity during the reporting period.
The Company also recorded strong revenue growth of 39% to US$12.4 million
resulting from a steady production ramp-up. This was accompanied by sales
volume growth of 7k tonnes during FY21, thanks to improved workforce
productivity and our expanded customer base.
Zircon demand remained strong during 2021 with PYX's order book reaching the
highest levels since production started in 2015, as a result of PYX's superior
quality, the unique whiteness of Kalimantan zircon, and rapid growth in the
Chinese market.
PYX's underlying EBITDA was negative US$794k, compared to a negative of US$1.2
million in FY20, marking a significant achievement considering the jump in in
general administrative costs resulting from growing the Company.
The Company's net loss after tax for the period totalled US$4.3million
compared to US$13.8 million in 2020, mainly as a result of an improved
operations result and less non-recurring items.
The resulting cash and cash equivalent balance for the period was US$6.6
million, up from US$3.5 million in the previous year. The increase was due
mainly to June's fundraise less expenses related to the acquisition of Tisma,
LSE listing costs plus the CAPEX required to bring the installed plant
capacity at Mandiri up to 24kt per annum. PYX remains debt free, as planned.
The Company also continued with its PYX Cares program, approaching
sustainability with five overarching principals: people, planet, prosperity,
peace and partnership. During 2021, PYX focused on contributing to quality
education, clean water and sanitation, decent work, responsible consumption
and production, climate action, and building partnerships to furthering these
goals.
PYX's total recordable injury frequency rate since 24 January 2020 is zero.
Sadly, we reported some COVID-19 cases among our personnel during FY'21. Our
staff were all cared for during their recovery from the illness and we
reported no COVID-19 fatalities. In partnership with the local health
authorities PYX took the initiative in October 2021 of leading a vaccination
campaign to protect all staff employed at all levels of the company including
the office, factory and mine in Kalimantan. 100% of PYX employees have now
received their second dose of the COVID-19 vaccine.
Commenting on the Company's achievements in FY21, PYX Resources' Chairman and
Chief Executive Officer, Oliver B. Hasler, said: "I am very pleased with the
strong progress made in such a challenging year as 2021, setting the base for
strong growth in the coming years. Set against the ongoing challenges of a
global pandemic, everyone in the Company has worked tirelessly, and I would
like to sincerely thank our shareholders for their continuous support.
The Annual Report and Financial Statements for the year ended 31 December 2021
has been published today and is available for inspection
at https://pyxresources.com/investors-reports
(https://pyxresources.com/investors-reports) .
1 Australian Critical Minerals prospectus 2021
(https://www.austrade.gov.au/news/publications/australian-critical-minerals-prospectus-2021)
2021 Full Year Results Conference Call
A conference call for equity market participants will take place on Friday 18
March 2022 at 7pm AEDT / 8am GMT. All participants wishing to listen in to the
call must pre-register at https://bit.ly/3I4aFTv (https://bit.ly/3I4aFTv)
before they can receive the dial-in number.
** ENDS ***
For more information:
PYX Resources Limited
Oliver B. Hasler, Chairman and Chief Executive Officer T: +852 3519 2860
E: ir@pyxresources.com
VSA Capital Limited (Financial Adviser and Broker)
Andrew Raca (Corporate Finance)
Andrew Monk / David Scriven (Corporate Broking) T: +44 (0)20
3005 5000
St Brides Partners Ltd (Financial PR)
Isabel de Salis /Ana Ribeiro/ Oonagh Reidy E:
pyx@stbridespartners.co.uk
Pyx Resources Limited ACN 073 099 171 and Controlled Entities
Financial report for the year ended 31 December 2021
CONSOLIDATED STATEMENT of Profit or Loss FOR THE YEAR ENDED 31 DECEMBER 2021
Note Consolidated Group
2021 2020
US$
US$
Revenue 3 12,417,086 8,956,694
Cost of sales 4 (10,511,342) (7,630,173)
Gross Profit 1,905,744 1,326,521
Other income 3 1,089 110,576
Selling and distribution expenses (950,745) (492,248)
Corporate and administrative expenses (4,195,750) (7,731,742)
Foreign exchange loss (350,011) (29,376)
Listing costs (928,147) (1,889,237)
Acquisition costs - (5,356,997)
Interest expense 4 (11,934) (20,961)
Loss before income tax (4,529,754) (14,083,464)
Income tax benefit 6 208,524 262,861
Net loss for the year (4,321,230) (13,820,603)
Net loss attributable to:
Owners of the Parent Entity (3,678,882) (12,775,441)
Non-controlling interests (642,348) (1,045,162)
Net loss for the year (4,321,230) (13,820,603)
Other comprehensive income
Items that will be reclassified subsequently to profit or loss when specific
conditions are met:
Exchange differences on translating foreign operations, net of tax 18,634 (40,046)
Total comprehensive income for the year (4,302,596) (13,860,649)
Total comprehensive income attributable to:
Owners of the Parent Entity (3,681,005) (12,797,525)
Non-controlling interests (621,591) (1,063,124)
(4,302,596) (13,860,649)
Loss per share
Basic loss per share (cents) 9 (1.1) (6)
Diluted loss per share (cents) 9 (1) (5.5)
The accompanying notes form part of these financial statements.
The accompanying notes form part of these financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2021
Note Consolidated Group
2021 2020
US$ US$
ASSETS
CURRENT ASSETS
Cash and cash equivalents 10 6,624,364 3,509,395
Trade and other receivables 11 968,915 368,627
Advances to suppliers 337,214 352,062
Prepayments and deposits 68,484 41,100
Prepaid tax 19 210,513 36,216
Inventories 12 530,716 122,703
TOTAL CURRENT ASSETS 8,740,206 4,430,103
NON-CURRENT ASSETS
Property, plant and equipment 14 2,228,372 1,317,834
Intangible assets 15 73,334,566 92,309
Right of use assets 16 21,595 60,361
Deferred tax assets 471,811 265,597
TOTAL NON-CURRENT ASSETS 76,056,344 1,736,101
TOTAL ASSETS 84,796,550 6,166,204
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 17 1,758,140 1,626,802
Lease liabilities 18 1,759 1,780
TOTAL CURRENT LIABILITIES 1,759,899 1,628,582
NON-CURRENT LIABILITIES
Lease liabilities 18 - 16,773
TOTAL NON-CURRENT LIABILITIES - 16,773
TOTAL LIABILITIES 1,759,899 1,645,355
NET ASSETS 83,036,651 4,520,849
EQUITY
Issued capital 20 96,651,080 14,873,158
Reserves 24 3,882,761 2,782,451
Accumulated losses (16,555,930) (12,877,048)
Equity attributable to owners of the Parent Entity 83,977,911 4,778,561
Non-controlling interest (941,260) (257,712)
TOTAL EQUITY 83,036,651 4,520,849
The accompanying notes form part of these financial statements.
consolidated STATEMENT OF CHANGES IN EQUITY
FOR the YEAR ENDED 31 DECEMBER 2021
Ordinary Shares Share Based Payment Reserve Foreign Exchange Translation Reserve Accumulated losses Subtotal Non-controlling Interests Total
US$ US$ US$ US$ US$ US$ US$
Balance at 1 January 2020 1,178 - - (101,607) (100,429) 805,412 704,983
Comprehensive income
Loss for the year - - - (12,775,441) (12,775,441) (1,045,162) (13,820,603)
Other comprehensive income for the year - - (22,084) - (22,084) (17,962) (40,046)
Total comprehensive income for the year - - (22,084) (12,775,441) (12,797,525) (1,063,124) (13,860,649)
Transactions with owners, in their capacity as owners, and other transfers
Shares issued during the year 14,296,456 - - - 14,296,456 - 14,296,456
Share issue costs (558,519) - - - (558,519) - (558,519)
Share based payments - 3,938,578 - - 3,938,578 - 3,938,578
Issue of shares to employees 1,134,043 (1,134,043) - - - - -
Total transactions with owners and other transfers 14,871,980 2,804,535 - - 17,676,515 - 17,676,515
Balance at 31 December 2020 14,873,158 2,804,535 (22,084) (12,877,048) 4,778,561 (257,712) 4,520,849
Ordinary Shares Share Based Payment Reserve Foreign Exchange Translation Reserve Accumulated losses Subtotal Non-controlling Interests Total
US$ US$ US$ US$ US$ US$ US$
Balance at 1 January 2021 14,873,158 2,804,535 (22,084) (12,877,048) 4,778,561 (257,712) 4,520,849
Comprehensive income
Loss for the year - - - (3,678,882) (3,678,882) (642,348) (4,321,230)
Other comprehensive income for the year - - (2,123) - (2,123) 20,757 18,634
Total comprehensive income for the year - - (2,123) (3,678,882) (3,681,005) (621,591) (4,302,596)
Transactions with owners, in their capacity as owners, and other transfers
Shares issued during the year 80,818,748 - - - 80,818,748 - 80,818,748
Share based payments - 2,061,607 - - 2,061,607 - 2,061,607
Issue of shares to employees 959,174 (959,174) - - - - -
Non-controlling interests on acquisitions - - - - - (61,957) (61,957)
Total transactions with owners and other transfers 81,777,922 1,102,433 - - 82,880,355 (61,957) 82,818,398
Balance at 31 December 2021 96,651,080 3,906,968 (24,207) (16,555,930) 83,977,911 (941,260) 83,036,651
The accompanying notes form part of these financial statements.
CONSOLIDATED STATEMENT of cash flows FOR THE YEAR ENDED 31 DECEMBER 2021
Note Consolidated Group
2021 2020
US$
US$
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 11,879,327 8,731,354
Payments to suppliers and employees (13,982,760) (10,769,835)
Other income 1,089 110,576
Interest received 2,007 376
Finance costs (13,941) (21,338)
Income tax paid (168,896) (137,844)
Net cash used in operating activities 21 (2,283,174) (2,086,711)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (1,041,853) (748,923)
Payments for acquisitions, net of cash acquired (24,179) 311
Renewal of mining license - (88,984)
Net cash used in investing activities (1,066,032) (837,596)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares 8,447,656 9,378,600
Payments of LSE listing costs (895,461) -
Payments of capital raising costs (769,914) (2,618,065)
Repayment of short-term borrowings - (432,575)
Repayments of lease liabilities (16,794) (52,575)
(Payments)/Receipts of employee loans (6,395) 2,732
Net cash provided by financing activities 6,759,092 6,278,117
Net increase in cash and cash equivalents 3,409,886 3,353,810
Cash and cash equivalents at the beginning of financial year 3,509,395 93,071
Effect of foreign exchange rate changes (294,917) 62,514
Cash and cash equivalents at the end of financial year 10 6,624,364 3,509,395
The accompanying notes form part of these financial statements.
NOTES TO THE Consolidated FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
Note 1: Summary of Significant Accounting Policies
Basis of Preparation
These general-purpose consolidated financial statements have been prepared in
accordance with the Corporations Act 2001, Australian Accounting Standards and
Interpretations of the Australian Accounting Standards Board and in compliance
with International Financial Reporting Standards as issued by the
International Accounting Standards Board. The Group is a for-profit entity for
financial reporting purposes under Australian Accounting Standards. Material
accounting policies adopted in the preparation of these financial statements
are presented below and have been consistently applied unless stated
otherwise.
Except for cash flow information, the financial statements have been prepared
on an accrual basis and are based on historical costs, modified, where
applicable, by the measurement at fair value of selected non-current assets,
financial assets and financial liabilities.
Going Concern
During the year ended 31 December 2021 the Group incurred a loss after tax of
US$4,321,230 and had negative cash flows from operations of US$2,283,174.
Management has considered it is appropriate to prepare the financial
statements on a going concern basis. The year-end net cash position of the
Group was US$6,624,364. The losses were partly because of the non-operating
and non-cash items of US$3,536,315. The major non-operating item in the
period were non-capitalized listing expenses of US$928,147 of which US$895,461
was paid during the year. The main non-cash item was an accrual of
management's share-based payments of US$2,061,607. Therefore, the underlying
EBITDA for the period was negative US$793,628. Management has a detailed
plan to increase the mining and production capacity which is expected to
generate profit and positive cash flows from operations in the forthcoming
years.
These financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts, nor to the
amounts or classification of liabilities that might be necessary should the
Group not be able to continue as a going concern.
a. Principles of Consolidation
The consolidated financial statements incorporate all of the assets,
liabilities and results of the Parent (Pyx Resources Limited) and all of the
subsidiaries (including any structured entities). Subsidiaries are entities
the Parent controls. The Parent controls an entity when it is exposed to, or
has rights to, variable returns from its involvement with the entity and has
the ability to affect those returns through its power over the entity. A list
of the subsidiaries is provided in Note 13.
The assets, liabilities and results of all subsidiaries are fully consolidated
into the financial statements of the Group from the date on which control is
obtained by the Group. The consolidation of a subsidiary is discontinued from
the date that control ceases. Intercompany transactions, balances and
unrealised gains or losses on transactions between Group entities are fully
eliminated on consolidation. Accounting policies of subsidiaries have been
changed and adjustments made where necessary to ensure uniformity of the
accounting policies adopted by the Group.
Equity interests in a subsidiary not attributable, directly or indirectly, to
the Group are presented as "non-controlling interests". The Group initially
recognises non-controlling interests that are present ownership interests in
subsidiaries and are entitled to a proportionate share of the subsidiary's net
assets on liquidation at either fair value or at the non-controlling
interests' proportionate share of the subsidiary's net assets. Subsequent to
initial recognition, non-controlling interests are attributed their share of
profit or loss and each component of other comprehensive income.
Non-controlling interests are shown separately within the equity section of
the statement of financial position and statement of comprehensive income.
Business combinations
Business combinations occur where an acquirer obtains control over one or more
businesses.
A business combination is accounted for by applying the acquisition method,
unless it is a combination involving entities or businesses under common
control. The business combination will be accounted for from the date that
control is obtained, whereby the fair value of the identifiable assets
acquired and liabilities (including contingent liabilities) assumed is
recognised (subject to certain limited exemptions).
When measuring the consideration transferred in the business combination, any
asset or liability resulting from a contingent consideration arrangement is
also included. Subsequent to initial recognition, contingent consideration
classified as equity is not remeasured and its subsequent settlement is
accounted for within equity. Contingent consideration classified as an asset
or liability is remeasured in each reporting period to fair value, recognising
any change to fair value in profit or loss, unless the change in value can be
identified as existing at acquisition date.
All transaction costs incurred in relation to business combinations, other
than those associated with the issue of a financial instrument, are recognised
as expenses in profit or loss when incurred.
The acquisition of a business may result in the recognition of goodwill or a
gain from a bargain purchase.
Goodwill
Goodwill is carried at cost less any accumulated impairment losses. Goodwill
is calculated as the excess of the sum of:
(i) the consideration transferred at fair value;
(ii) any non-controlling interest (determined under either the fair value or
proportionate interest method); and
(iii) the acquisition date fair value of any previously held equity interest;
over the acquisition date fair value of any identifiable assets acquired and
liabilities assumed.
The acquisition date fair value of the consideration transferred for a
business combination plus the acquisition date fair value of any previously
held equity interest shall form the cost of the investment in the separate
financial statements.
Changes in the Group's ownership interests in subsidiaries that do not result
in the Group losing control over the subsidiaries are accounted for as equity
transactions. The carrying amounts of the Group's interests and the
non-controlling interests are adjusted to reflect the changes in their
relative interests in the subsidiaries. Any difference between the amount by
which the non-controlling interests are adjusted and the fair value of the
consideration paid or received is recognised directly in equity and attributed
to owners of the Company.
When the Group loses control of a subsidiary, a gain or loss is recognised in
profit or loss and is calculated as the difference between (i) the aggregate
of the fair value of the consideration received and the fair value of any
retained interest and (ii) the previous carrying amount of the assets
(including goodwill), and liabilities of the subsidiary and any
non-controlling interests. All amounts previously recognised in other
comprehensive income in relation to that subsidiary are accounted for as if
the Group had directly disposed of the related assets or liabilities of the
subsidiary (ie reclassified to profit or loss or transferred to another
category of equity as specified/permitted by applicable Accounting Standards).
The fair value of any investment retained in the former subsidiary at the date
when control is lost is regarded as the fair value on initial recognition for
subsequent accounting under AASB 139: Financial Instruments: Recognition and
Measurement, when applicable, the cost on initial recognition of an investment
in an associate or a joint venture.
The amount of goodwill recognised on acquisition of each subsidiary in which
the Group holds less than 100% interest will depend on the method adopted in
measuring the non-controlling interest. The Group can elect in most
circumstances to measure the non-controlling interest in the acquiree either
at fair value (full goodwill method) or at the non-controlling interest's
proportionate share of the subsidiary's identifiable net assets (proportionate
interest method). In such circumstances, the Group determines which method to
adopt for each acquisition and this is stated in the respective note to the
financial statements disclosing the business combination.
Under the full goodwill method, the fair value of the non-controlling interest
is determined using valuation techniques which make the maximum use of market
information where available.
Goodwill on acquisition of subsidiaries is included in intangible assets.
Goodwill on acquisition of associates is included in investments in
associates.
Goodwill is tested for impairment annually and is allocated to the Group's
cash-generating units or groups of cash-generating units, representing the
lowest level at which goodwill is monitored and not larger than an operating
segment. Gains and losses on the disposal of an entity include the carrying
amount of goodwill related to the entity disposed of.
Changes in the ownership interests in a subsidiary that do not result in a
loss of control are accounted for as equity transactions and do not affect the
carrying amounts of goodwill.
Prior Year Reverse Acquisition Accounting
On 31 January 2020, Pyx Resources Limited ("PYX") completed a Reverse Takeover
("RTO") with Takmur Pte. Ltd. ("Takmur"). In accordance with accounting
standards, this RTO has been accounted for as a reverse acquisition business
combination, described in this financial report as an RTO.
In applying the requirements of AASB 3 Business Combinations:
a) PYX became the legal parent entity to the Group; and
b) Takmur, which is neither the legal parent nor legal acquirer, is
deemed to be the accounting acquirer.
Asset Acquisition Accounting
On 15 February 2021, Pyx Resources Limited ("PYX") completed an acquisition of
100% of the issued capital of Tisma Development (HK) Limited (the company). In
accordance with accounting standards, through acquiring 100% of the issued
capital of Tisma Development (HK) Limited, the Group has obtained control of
the company.
The consolidated financial information incorporated the assets and liabilities
of all entities deemed to be acquired by Tisma and its controlled entities and
the results of these entities for the period from which those entities are
accounted for as being acquired by PYX. The assets and liabilities of Tisma
acquired by PYX were recorded at fair value whilst the assets and liabilities
of PYX were maintained at their book value. The impact of all transactions
between entities in the Group were eliminated in full. The impact on equity of
treating the formation of the Group as a Business acquisition is disclosed in
more detail in note 5.
AASB 3 Business Combinations requires that consolidated financial statements
prepared following a business acquisition shall be issued under the name of
the legal parent (i.e. PYX), but be a continuation of the financial statements
of the legal subsidiary (i.e. Takmur. the acquirer for accounting purposes).
The implications of applying AASB 3 on each of the attached financial
statements comparatives are as follows:
Statement of financial position
The consolidated statement of financial position as at 31 December 2021
represents the consolidated financial position of Pyx Resources Limited and
its controlled entities as at 31 December 2021.
Statement of profit or loss and other comprehensive income
The consolidated statement of profit or loss for the year ended 31 December
2021 represents the consolidated results of PYX and Takmur and its controlled
entities for the year ended 31 December 2021 and the consolidated results of
Tisma and its controlled entities, PT Tisma Investasi Abadi and PT Tisma
Global Nusantara, for the period from 16 February 2021 (date of the asset
acquisition) to 31 December 2021. The comparative information for the period
ended 31 December 2020 represents the consolidated results of Takmur and its
controlled entities for the period from 1 January 2020 to 31 December 2020 and
the consolidated results of PYX for the period from 1 February 2020 (date of
the RTO) to 31 December 2020.
b. Income Tax
The income tax expense (income) for the year comprises current income tax
expense (income) and deferred tax expense (income).
Current income tax expense charged to profit or loss is the tax payable on
taxable income for the current period. Current tax liabilities (assets) are
measured at the amounts expected to be paid to (recovered from) the relevant
taxation authority using tax rates (and tax laws) that have been enacted or
substantively enacted by the end of the reporting period.
Deferred tax expense reflects movements in deferred tax asset and deferred tax
liability balances during the year as well as unused tax losses.
Current and deferred income tax expense (income) is charged or credited
outside profit or loss when the tax relates to items that are recognised
outside profit or loss or arising from a business combination.
A deferred tax liability shall be recognised for all taxable temporary
differences, except to the extent that the deferred tax liability arises from:
(a) the initial recognition of goodwill; or (b) the initial recognition of an
asset or liability in a transaction which: (i) is not a business combination;
and (ii) at the time of the transaction, affects neither accounting profit nor
taxable profit (tax loss).
Deferred tax assets and liabilities are calculated at the tax rates that are
expected to apply to the period when the asset is realised or the liability is
settled and their measurement also reflects the manner in which management
expects to recover or settle the carrying amount of the related asset or
liability. With respect to non-depreciable items of property, plant and
equipment measured at fair value and items of investment property measured at
fair value, the related deferred tax liability or deferred tax asset is
measured on the basis that the carrying amount of the asset will be recovered
entirely through sale. When an investment property that is depreciable is
held by the entity in a business model whose objective is to consume
substantially all of the economic benefits embodied in the property through
use over time (rather than through sale), the related deferred tax liability
or deferred tax asset is measured on the basis that the carrying amount of
such property will be recovered entirely through use.
Deferred tax assets relating to temporary differences and unused tax losses
are recognised only to the extent that it is probable that future taxable
profit will be available against which the benefits of the deferred tax asset
can be utilised, unless the deferred tax asset relating to temporary
differences arises from the initial recognition of an asset or liability in a
transaction that:
-- is not a business combination; and
- at the time of the transaction, affects neither accounting profit nor taxable
profit (tax loss).
Where temporary differences exist in relation to investments in subsidiaries,
branches, associates, and joint ventures, deferred tax assets and liabilities
are not recognised where the timing of the reversal of the temporary
difference can be controlled and it is not probable that the reversal will
occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable
right of set-off exists and it is intended that net settlement or simultaneous
realisation and settlement of the respective asset and liability will occur.
Deferred tax assets and liabilities are offset where: (i) a legally
enforceable right of set-off exists; and (ii) the deferred tax assets and
liabilities relate to income taxes levied by the same taxation authority on
either the same taxable entity or different taxable entities where it is
intended that net settlement or simultaneous realisation and settlement of the
respective asset and liability will occur in future periods in which
significant amounts of deferred tax assets or liabilities are expected to be
recovered or settled.
c. Inventories
Inventories are measured at the lower of cost and net realisable value. The
cost of manufactured products includes direct materials, direct labour and an
appropriate proportion of variable and fixed overheads. Overheads are applied
on the basis of normal operating capacity. Costs are assigned on the first-in,
first-out basis.
d. Property, Plant and Equipment
Each class of property, plant and equipment is carried at cost or fair value
as indicated less, where applicable, any accumulated depreciation and
impairment losses.
Property, plant and equipment are measured on the cost basis and therefore
carried at cost less accumulated depreciation and any accumulated impairment.
In the event the carrying amount of plant and equipment is greater than the
estimated recoverable amount, the carrying amount is written down immediately
to the estimated recoverable amount and impairment losses are recognised. A
formal assessment of recoverable amount is made when impairment indicators are
present (refer to Note 1(g) for details of impairment).
The carrying amount of plant and equipment is reviewed annually by directors
to ensure it is not in excess of the recoverable amount from these assets. The
recoverable amount is assessed on the basis of the expected net cash flows
that will be received from the asset's employment and subsequent disposal. The
expected net cash flows have been discounted to their present values in
determining recoverable amounts.
The cost of fixed assets constructed within the Consolidated Group includes
the cost of materials, direct labour, borrowing costs and an appropriate
proportion of fixed and variable overheads.
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 other repairs and maintenance are
recognised as expenses in profit or loss during the financial period in which
they are incurred.
Depreciation
The depreciable amount of all fixed assets including buildings and capitalised
leased assets, but excluding freehold land, is depreciated on a straight-line
basis over the asset's useful life to the Consolidated Group commencing from
the time the asset is held ready for use. Leasehold improvements are
depreciated over the shorter of either the unexpired period of the lease or
the estimated useful lives of the improvements.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset Depreciation Rate
Buildings 5%
Plant and Equipment 20%
Furniture and Fittings 25%
Motor Vehicle 25%
The assets' 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 asset's carrying amount is greater than its estimated
recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the
carrying amount. These gains and losses are recognised in profit or loss in
the period in which they arise. Gains shall not be classified as revenue. When
revalued assets are sold, amounts included in the revaluation surplus relating
to that asset are transferred to retained earnings.
e. Leases (the Group as lessee)
The Group as lessee
At inception of a contract, the Group assesses if the contract contains or is
a lease. If there is a lease present, a right-of-use asset and a corresponding
lease liability is recognised by the Group where the Group is a lessee.
However all contracts that are classified as short-term leases (lease with
remaining lease term of 12 months or less) and leases of low value assets are
recognised as an operating expense on a straight-line basis over the term of
the lease.
Initially the lease liability is measured at the present value of the lease
payments still to be paid at commencement date. The lease payments are
discounted at the interest rate implicit in the lease. If this rate cannot be
readily determined, the Group uses the incremental borrowing rate.
Lease payments included in the measurement of the lease liability are as
follows:
- fixed lease payments less any lease incentives;
- variable lease payments that depend on an index or rate, initially measured
using the index or rate at the commencement date;
- the amount expected to be payable by the lessee under residual value
guarantees
- the exercise price of purchase options, if the lessee is reasonably certain to
exercise the options;
- lease payments under extension options if lessee is reasonably certain to
exercise the options; and
- payments of penalties for terminating the lease, if the lease term reflects
the exercise of an option to terminate the lease.
The right-of-use assets comprise the initial measurement of the corresponding
lease liability as mentioned above, any lease payments made at or before the
commencement date as well as any initial direct costs. The subsequent
measurement of the right-of-use assets is at cost less accumulated
depreciation and impairment losses.
Right-of-use assets are depreciated over the lease term or useful life of the
underlying asset whichever is the shortest.
Where a lease transfers ownership of the underlying asset or the cost of the
right-of-use asset reflects that the Group anticipates to exercise a purchase
option, the specific asset is depreciated over the useful life of the
underlying asset.
f. Financial Instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the Group
becomes a party to the contractual provisions to the instrument. For financial
assets, this is the date that the Group commits itself to either the purchase
or sale of the asset (i.e. trade date accounting is adopted).
Financial instruments (except for trade receivables) are initially measured at
fair value plus transaction costs, except where the instrument is classified
"at fair value through profit or loss", in which case transaction costs are
expensed to profit or loss immediately. Where available, quoted prices in an
active market are used to determine fair value. In other circumstances,
valuation techniques are adopted.
Trade receivables are initially measured at the transaction price if the trade
receivables do not contain a significant financing component or if the
practical expedient was applied as specified in AASB 15.63.
Classification and subsequent measurement
Financial liabilities
Financial instruments are subsequently measured at:
-- amortised cost; or
-- fair value through profit or loss.
A financial liability is measured at fair value through profit and loss if the
financial liability is:
-- a contingent consideration of an acquirer in a business combination to which
AASB 3: Business Combinations applies;
-- held for trading; or
-- initially designated as at fair value through profit or loss.
All other financial liabilities are subsequently measured at amortised cost
using the effective interest method.
The effective interest method is a method of calculating the amortised cost of
a debt instrument and of allocating interest expense in profit or loss over
the relevant period. The effective interest rate is the internal rate of
return of the financial asset or liability. That is, it is the rate that
exactly discounts the estimated future cash flows through the expected life of
the instrument to the net carrying amount at initial recognition.
A financial liability is held for trading if:
-- it is incurred for the purpose of repurchasing or repaying in the near term;
-- part of a portfolio where there is an actual pattern of short-term profit
taking; or
-- a derivative financial instrument (except for a derivative that is in a
financial guarantee contract or a derivative that is in an effective hedging
relationships).
Any gains or losses arising on changes in fair value are recognised in profit
or loss to the extent that they are not part of a designated hedging
relationship are recognised in profit or loss.
The change in fair value of the financial liability attributable to changes in
the issuer's credit risk is taken to other comprehensive income and are not
subsequently reclassified to profit or loss. Instead, they are transferred to
retained earnings upon derecognition of the financial liability. If taking the
change in credit risk in other comprehensive income enlarges or creates an
accounting mismatch, then these gains or losses should be taken to profit or
loss rather than other comprehensive income.
A financial liability cannot be reclassified.
Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make
specified payments to reimburse the holder for a loss it incurs because a
specified debtor fails to make payment when due in accordance with the terms
of a debt instrument.
Financial guarantee contracts are initially measured at fair values (and if
not designated as at fair value through profit or loss and do not arise from a
transfer of a financial asset) and subsequently measured at the higher of:
-- the amount of loss allowance determined in accordance with AASB 9.3.25.3; and
-- the amount initially recognised less the accumulative amount of income
recognised in accordance with the revenue recognition policies.
Financial assets
Financial assets are subsequently measured at:
-- amortised cost;
-- fair value through other comprehensive income; or
-- fair value through profit or loss.
Measurement is on the basis of two primary criteria:
-- the contractual cash flow characteristics of the financial asset; and
-- the business model for managing the financial assets.
A financial asset that meets the following conditions is subsequently measured
at amortised cost:
-- the financial asset is managed solely to collect contractual cash flows; and
-- the contractual terms within the financial asset give rise to cash flows that
are solely payments of principal and interest on the principal amount
outstanding on specified dates.
A financial asset that meets the following conditions is subsequently measured
at fair value through other comprehensive income:
-- the contractual terms within the financial asset give rise to cash flows that
are solely payments of principal and interest on the principal amount
outstanding on specified dates;
-- the business model for managing the financial assets comprises both
contractual cash flows collection and the selling of the financial asset.
By default, all other financial assets that do not meet the measurement
conditions of amortised cost and fair value through other comprehensive income
are subsequently measured at fair value through profit or loss.
The Group initially designates a financial instrument as measured at fair
value through profit or loss if:
-- it eliminates or significantly reduces a measurement or recognition
inconsistency (often referred to as "accounting mismatch") that would
otherwise arise from measuring assets or liabilities or recognising the gains
and losses on them on different bases;
-- it is in accordance with the documented risk management or investment
strategy, and information about the groupings was documented appropriately, so
that the performance of the financial liability that was part of a group of
financial liabilities or financial assets can be managed and evaluated
consistently on a fair value basis;
-- it is a hybrid contract that contains an embedded derivative that
significantly modifies the cash flows otherwise required by the contract.
The initial designation of the financial instruments to measure at fair value
through profit or loss is a one-time option on initial classification and is
irrevocable until the financial asset is derecognised.
Equity instruments
At initial recognition, as long as the equity instrument is not held for
trading and not a contingent consideration recognised by an acquirer in a
business combination to which AASB 3: Business Combinations applies, the Group
made an irrevocable election to measure any subsequent changes in fair value
of the equity instruments in other comprehensive income, while the dividend
revenue received on underlying equity instruments investment will still be
recognised in profit or loss.
Regular way purchases and sales of financial assets are recognised and
derecognised at settlement date in accordance with the Group's accounting
policy.
Derecognition
Derecognition refers to the removal of a previously recognised financial asset
or financial liability from the statement of financial position.
Derecognition of financial liabilities
A liability is derecognised when it is extinguished (i.e. when the obligation
in the contract is discharged, cancelled or expires). An exchange of an
existing financial liability for a new one with substantially modified terms,
or a substantial modification to the terms of a financial liability is treated
as an extinguishment of the existing liability and recognition of a new
financial liability.
The difference between the carrying amount of the financial liability
derecognised and the consideration paid and payable, including any non-cash
assets transferred or liabilities assumed, is recognised in profit or loss.
Derecognition of financial assets
A financial asset is derecognised when the holder's contractual rights to its
cash flows expires, or the asset is transferred in such a way that all the
risks and rewards of ownership are substantially transferred.
All of the following criteria need to be satisfied for derecognition of
financial asset:
-- the right to receive cash flows from the asset has expired or been
transferred;
-- all risk and rewards of ownership of the asset have been substantially
transferred; and
-- the Group no longer controls the asset (i.e. the Group has no practical
ability to make a unilateral decision to sell the asset to a third party).
On derecognition of a financial asset measured at amortised cost, the
difference between the asset's carrying amount and the sum of the
consideration received and receivable is recognised in profit or loss.
On derecognition of a debt instrument classified as at fair value through
other comprehensive income, the cumulative gain or loss previously accumulated
in the investment revaluation reserve is reclassified to profit or loss.
On derecognition of an investment in equity which was elected to be classified
under fair value through other comprehensive income, the cumulative gain or
loss previously accumulated in the investment revaluation reserve is not
reclassified to profit or loss, but is transferred to retained earnings.
Impairment
The Group recognises a loss allowance for expected credit losses on:
-- financial assets that are measured at amortised cost or fair value through
other comprehensive income;
-- lease receivables;
-- contract assets (e.g. amounts due from customers under construction
contracts);
-- loan commitments that are not measured at fair value through profit or loss;
and
-- financial guarantee contracts that are not measured at fair value through
profit or loss.
Loss allowance is not recognised for:
-- financial assets measured at fair value through profit or loss; or
-- equity instruments measured at fair value through other comprehensive income.
Expected credit losses are the probability-weighted estimate of credit losses
over the expected life of a financial instrument. A credit loss is the
difference between all contractual cash flows that are due and all cash flows
expected to be received, all discounted at the original effective interest
rate of the financial instrument.
The Group uses the following approaches to impairment, as applicable under
AASB 9: Financial Instruments:
-- the general approach
-- the simplified approach
General approach
Under the general approach, at each reporting period, the Group assesses
whether the financial instruments are credit-impaired, and if:
-- the credit risk of the financial instrument has increased significantly since
initial recognition, the Group measures the loss allowance of the financial
instruments at an amount equal to the lifetime expected credit losses; or
-- there is no significant increase in credit risk since initial recognition, the
Group measures the loss allowance for that financial instrument at an amount
equal to 12-month expected credit losses.
Simplified approach
The simplified approach does not require tracking of changes in credit risk at
every reporting period, but instead requires the recognition of lifetime
expected credit loss at all times. This approach is applicable to:
-- trade receivables or contract assets that result from transactions within the
scope of AASB 15: Revenue from Contracts with Customers and which do not
contain a significant financing component; and
-- lease receivables.
In measuring the expected credit loss, a provision matrix for trade
receivables was used taking into consideration various data to get to an
expected credit loss (i.e. diversity of customer base, appropriate groupings
of historical loss experience, etc).
Recognition of expected credit losses in financial statements
At each reporting date, the Group recognises the movement in the loss
allowance as an impairment gain or loss in the statement of profit or loss and
other comprehensive income.
The carrying amount of financial assets measured at amortised cost includes
the loss allowance relating to that asset.
Assets measured at fair value through other comprehensive income are
recognised at fair value, with changes in fair value recognised in other
comprehensive income. Amounts in relation to change in credit risk are
transferred from other comprehensive income to profit or loss at every
reporting period.
For financial assets that are unrecognised (e.g. loan commitments yet to be
drawn, financial guarantees), a provision for loss allowance is created in the
statement of financial position to recognise the loss allowance.
g. Impairment of Assets
At the end of each reporting period, the Group assesses whether there is any
indication that an asset may be impaired. The assessment will include the
consideration of external and internal sources of information including
dividends received from subsidiaries, associates or joint ventures deemed to
be out of pre-acquisition profits. If such an indication exists, an impairment
test is carried out on the asset by comparing the recoverable amount of the
asset, being the higher of the asset's fair value less costs of disposal and
value in use, to the asset's carrying amount. Any excess of the asset's
carrying amount over its recoverable amount is recognised immediately in
profit or loss, unless the asset is carried at a revalued amount in accordance
with another Standard (e.g. in accordance with the revaluation model in AASB
116: Property, Plant and Equipment). Any impairment loss of a revalued asset
is treated as a revaluation decrease in accordance with that other Standard.
Where it is not possible to estimate the recoverable amount of an individual
asset, the Group estimates the recoverable amount of the cash-generating unit
to which the asset belongs.
Impairment testing is performed annually for goodwill, intangible assets with
indefinite lives and intangible assets not yet available for use.
When an impairment loss subsequently reverses, the carrying amount of the
asset (or cash-generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had no impairment loss
been recognised for the asset (or cash-generating unit) in prior years. A
reversal of an impairment loss is recognised immediately in profit or loss,
unless the relevant asset is carried at a revalued amount, in which case the
reversal of the impairment loss is treated as a revaluation increase.
h. Foreign Currency Transactions and Balances
Functional and presentation currency
The functional currency of each of the Group's entities is the currency of the
primary economic environment in which that entity operates. The consolidated
financial statements are presented in United States dollars, which is the
Parent Entity's functional currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the date of the transaction. Foreign
currency monetary items are translated at the year-end exchange rate.
Non-monetary items measured at historical cost continue to be carried at the
exchange rate at the date of the transaction. Non-monetary items measured at
fair value are reported at the exchange rate at the date when fair values were
determined.
Exchange differences arising on the translation of monetary items are
recognised in profit or loss, except exchange differences that arise from net
investment hedges.
Exchange differences arising on the translation of non-monetary items are
recognised directly in other comprehensive income to the extent that the
underlying gain or loss is recognised in other comprehensive income; otherwise
the exchange difference is recognised in profit or loss.
Group companies
The financial results and position of foreign operations, whose functional
currency is different from the Group's presentation currency, are translated
as follows:
- assets and liabilities are translated at exchange rates prevailing at the end
of the reporting period;
- income and expenses are translated at exchange rates on the date of
transaction; and
- all resulting exchange differences are recognised in other comprehensive
income.
Exchange differences arising on translation of foreign operations with
functional currencies other than US dollars are recognised in other
comprehensive income and included in the foreign exchange translation reserve
in the statement of change in equity and allocated to non-controlling interest
where relevant. The cumulative amount of these differences is reclassified
into profit or loss in the period in which the operation is disposed of.
i. Employee Benefits
Short-term employee benefits
Provision is made for the Group's obligation for short-term employee benefits.
Short-term employee benefits are benefits (other than termination benefits)
that are expected to be settled wholly before 12 months after the end of the
annual reporting period in which the employees render the related service,
including wages, salaries and sick leave. Short-term employee benefits are
measured at the (undiscounted) amounts expected to be paid when the obligation
is settled.
The Group's obligations for short-term employee benefits such as wages,
salaries and sick leave are recognised as part of current trade and other
payables in the statement of financial position. The Group's obligations for
employees' annual leave and long service leave entitlements are recognised as
provisions in the statement of financial position.
Other long-term employee benefits
Provision is made for employees' long service leave and annual leave
entitlements not expected to be settled wholly within 12 months after the end
of the annual reporting period in which the employees render the related
service. Other long-term employee benefits are measured at the present value
of the expected future payments to be made to employees. Expected future
payments incorporate anticipated future wage and salary levels, durations of
service and employee departures and are discounted at rates determined by
reference to market yields at the end of the reporting period on government
bonds that have maturity dates that approximate the terms of the obligations.
Any remeasurements for changes in assumptions of obligations for other
long-term employee benefits are recognised in profit or loss in the periods in
which the changes occur.
The Group's obligations for long-term employee benefits are presented as
non-current provisions in its statement of financial position, except where
the Group does not have an unconditional right to defer settlement for at
least 12 months after the end of the reporting period, in which case the
obligations are presented as current provisions.
Equity-settled compensation
The Group operates an employee performance rights plan. Share-based payments
to employees are measured at the fair value of the instruments at grant date
and amortised over the vesting periods. The corresponding amounts are
recognised in the share-based payment reserve and statement of profit and loss
respectively. The fair value of rights is determined by reference to the share
price of the Company. The number of rights expected to vest is reviewed and
adjusted at the end of each reporting period such that the amount recognised
for services received as consideration for the equity instruments granted is
based on the number of equity instruments that eventually vest.
j. Provisions
Provisions are recognised when the Group has a legal or constructive
obligation, as a result of past events, for which it is probable that an
outflow of economic benefits will result and that outflow can be reliably
measured.
Provisions are measured using the best estimate of the amounts required to
settle the obligation at the end of the reporting period.
k. Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits available on demand
with banks, other short-term highly liquid investments with original
maturities of 3 months or less, and bank overdrafts. Bank overdrafts are
reported within borrowings in current liabilities on the statement of
financial position.
l. Revenue and Other Income
Revenue from sales of zircon is recognised either when the customer takes
possession of and accepts the products or when the products are ready for
shipment, according to the sales contract terms. If the products are a partial
fulfilment of a contract covering other goods and/or services, then the amount
of revenue recognised is an appropriate proportion of the total transaction
price under the contract, allocated between all the goods and services
promised under the contract on a relative stand-alone selling price basis.
Interest income is recognised using the effective interest method.
j. Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or
production of assets that necessarily take a substantial period of time to
prepare for their intended use or sale are added to the cost of those assets,
until such time as the assets are substantially ready for their intended use
or sale.
All other borrowing costs are recognised in profit or loss in the period in
which they are incurred.
k. Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted
to conform to changes in presentation for the current financial year.
l. Segment Information
AASB 8 requires operating segments to be identified on the basis of internal
reports about components of the Company that are regularly reviewed by the
chief operating decision maker in order to allocate resources to the segment
and to assess its performance.
The Group engages in one business segment, being premium zircon production,
activities from which it incurs costs. Consequently, the results of the Group
are analysed as a whole by the chief operating decision maker.
m. Critical Accounting Estimates and Judgements
The directors evaluate estimates and judgements incorporated into the
financial statements based on historical knowledge and best available current
information. Estimates assume a reasonable expectation of future events and
are based on current trends and economic data, obtained both externally and
within the Group.
Key estimates
(i) Impairment
The Group assesses impairment at the end of each reporting period by
evaluating the conditions and events specific to the Group that may be
indicative of impairment triggers. Recoverable amounts of relevant assets are
reassessed using value-in-use calculations which incorporate various key
assumptions.
Key judgements
(i) Performance obligations under AASB 15
To identify a performance obligation under AASB 15, the promise must be
sufficiently specific to be able to determine when the obligation is
satisfied. Management exercises judgement to determine whether the promise is
sufficiently specific by taking into account any conditions specified in the
arrangement, explicit or implicit, regarding the promised goods or services.
In making this assessment, management includes the nature/ type, cost/ value,
quantity and the period of transfer related to the goods or services promised.
(ii) Lease term and Option to Extend under AASB 16
The lease term is defined as the non-cancellable period of a lease together
with both periods covered by an option to extend the lease if the lessee is
reasonably certain to exercise that option; and also periods covered by an
option to terminate the lease if the lessee is reasonably certain not to
exercise that option. The decision on whether or not the options to extend are
reasonably going to be exercised is a key management judgement that the entity
will make. The Group determines the likeliness to exercise on a lease-by-lease
basis looking at various factors such as which assets are strategic and which
are key to future strategy of the entity.
(iii) Impact of COVID-19 on the Group
Demand remained strong during the year of 2021, with our order book reaching
the highest level since production in 2015 and exceeding our maximum operation
capacity. Even with the global economic fallout caused by the COVID-19
outbreak, prices in 2021 have so far been higher than the 2020 average
pricing. The reasons are: (i) zircon is a concentrated industry with a few
suppliers accounting for a large share of the supply base (ii) expectations
that a structural supply deficit would persist, buoying zircon prices.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECMEBER 2021
Note 2: Parent
Information
2021 2020
US$
US$
The following information has been extracted from the books and records of the
financial information of the Parent Entity set out below and has been prepared
in accordance with Australian Accounting Standards.
Statement of Financial Position
ASSETS
Current assets 12,335,955 6,133,005
Non-current assets 78,058,861 4,917,856
TOTAL ASSETS 90,394,816 11,050,861
LIABILITIES
Current liabilities 1,093,863 1,162,006
Non-current liabilities - -
TOTAL LIABILITIES 1,093,863 1,162,006
EQUITY
Issued capital 103,921,565 22,143,644
Accumulated losses (18,866,644) (15,398,389)
Share-based payment reserve 4,246,032 3,143,600
Non-controlling interest - -
TOTAL EQUITY 89,300,953 9,888,855
Statement of Profit or Loss and Other Comprehensive Income
Net loss (3,468,255) (8,841,676)
Total comprehensive income - -
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEmBER 2021
Note 3: Revenue and Other Income
The Group has recognised the following amounts relating to revenue in the
statement of profit or loss.
Note 2021 2020
US$
US$
Revenue from contracts with customers 3a 12,417,086 8,956,694
Other income 3b 1,089 110,576
a. Revenue from contracts with customers
Revenue from contracts with customers represents the amounts received and
receivable for production and distribution of premium Zircon has recognised at
a period in time or overtime.
2021 2020
US$
US$
b. Other income
Other income 1,089 110,576
Note 4: LOSS for the Year
Consolidated Group
2021 2020
US$
US$
Loss before income tax from continuing operations includes the following
specific expenses:
a. Expenses
Cost of sales 10,511,342 7,630,173
Interest expense on financial liabilities not classified as at fair value
through profit or loss:
- unrelated parties 12,162 14,029
Finance charges 1,779 7,308
Less: Interest income (2,007) (376)
Net interest expense 11,934 20,961
Employee benefits expense:
- Staff salaries and benefits 302,339 265,885
- Share based payments 2,061,607 3,938,578
Rental expense on operating leases
- short- term lease expense 5,509 100,366
Depreciation and amortisation 187,877 129,173
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 5: ASSET ACQUISITION
On 16 February 2021, the Group acquired 100% of the issued capital of Tisma
Development (HK) Limited
(the company) which holds a tenement with 137 million tonnes of
JORC-complaint inferred resources,
including 4% heavy minerals, approximately 4.5 million tonnes of zircon and
valuable by-products, including titanium minerals (rutile and ilmenite). The
consideration paid was US$73,141,005.
Through acquiring 100% of the issued capital of Tisma Development (HK)
Limited, the Group has obtained control of the Company
The purchase was satisfied by the issue of 147,277,370 ordinary shares at an
issue price of US$0.49662 each. The issue price was based on the market price
on the date of purchase.
Fair Value
US$
Purchase consideration:
Equity issued 73,141,005
Less:
Cash and cash equivalents 1,613
Other asset 1,794
Intangible asset - exploration asset 73,260,053
Non-controlling interest 61,957
Payables (184,412)
Identifiable assets acquired and liabilities assumed 73,141,005
The impact of the acquisition on the results and cash flow of the Group for
the period is insignificant.
Note 6: Tax Expense
Consolidated Group
2021 2020
US$
US$
a. The components of tax benefit
income comprise:
Deferred tax 208,524 262,861
208,524 262,861
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 6: TAX EXPENSE (CONTINUED)
Consolidated Group
2021 2020
US$
US$
b. The prima facie tax on (loss) from ordinary activities before income tax is
reconciled to income tax as follows:
(Loss) before income tax expense (4,529,754) (14,083,464)
Prima facie tax payable on (loss) from ordinary activities before income tax
at 25% (2020: 27.5%)
1,132,439 3,872,953
Effect of different tax rate of subsidiaries (33,973) (213,012)
Add:
Tax effect of:
- non-allowable items (1,119) (1,606)
- Tax losses and temporary differences not recognised as deferred tax assets
- -
- Tax credit (888,823) (3,395,474)
Income tax benefit 208,524 262,861
Note 7: Key Management Personnel Compensation
Refer to the remuneration report contained in the directors' report for
details of the remuneration paid or payable to each member of the Group's key
management personnel (KMP) for the year ended 31 December 2021. The total
remuneration paid to KMP of the Company and the Group during the year are as
follows:
Consolidated Group
2021 2020
US$
US$
Short-term employee benefits 739,133 27,603
Share-based payments 2,061,607 3,938,578
Total KMP compensation 2,800,740 3,966,181
Note 8: Auditor's Remuneration
Consolidated Group
2021 2020
US$
US$
Remuneration of the auditor for:
- Audit or review of financial statement
Hall Chadwick (NSW) 58,346 58,359
Pitcher Partners BA & A Pty Limited - 8,847
- Other services
T.K. Lo (HK) 14,500 -
Hall Chadwick (NSW) 52,361 755
125,207 67,961
The impact of the acquisition on the results and cash flow of the Group for
the period is insignificant.
Note 6: Tax Expense
Consolidated Group
2021
US$
2020
US$
a.
The components of tax benefit
income comprise:
Deferred tax
208,524
262,861
208,524
262,861
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 6: TAX EXPENSE (CONTINUED)
Consolidated Group
2021
US$
2020
US$
b.
The prima facie tax on (loss) from ordinary activities before income tax is
reconciled to income tax as follows:
(Loss) before income tax expense
(4,529,754)
(14,083,464)
Prima facie tax payable on (loss) from ordinary activities before income tax
at 25% (2020: 27.5%)
1,132,439
3,872,953
Effect of different tax rate of subsidiaries
(33,973)
(213,012)
Add:
Tax effect of:
-
non-allowable items
(1,119)
(1,606)
-
Tax losses and temporary differences not recognised as deferred tax assets
-
-
-
Tax credit
(888,823)
(3,395,474)
Income tax benefit
208,524
262,861
Note 7: Key Management Personnel Compensation
Refer to the remuneration report contained in the directors' report for
details of the remuneration paid or payable to each member of the Group's key
management personnel (KMP) for the year ended 31 December 2021. The total
remuneration paid to KMP of the Company and the Group during the year are as
follows:
Consolidated Group
2021
US$
2020
US$
Short-term employee benefits
739,133
27,603
Share-based payments
2,061,607
3,938,578
Total KMP compensation
2,800,740
3,966,181
Note 8: Auditor's Remuneration
Consolidated Group
2021
US$
2020
US$
Remuneration of the auditor for:
-
Audit or review of financial statement
Hall Chadwick (NSW)
58,346
58,359
Pitcher Partners BA & A Pty Limited
-
8,847
-
Other services
T.K. Lo (HK)
14,500
-
Hall Chadwick (NSW)
52,361
755
125,207
67,961
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 december 2021
NOTE 9: LOSS PER SHARE
Consolidated Group
2021 2020
US$
US$
a. Reconciliation of losses to profit or loss:
Loss attributable to non-controlling equity interest (4,321,230) (13,820,603)
Loss used to calculate basic and dilutive EPS (4,321,230) (13,820,603)
No. No.
Weighted average number of ordinary shares on issue used in the calculating of
basic loss per share
404,902,836 237,772,257
Weighted average number of dilutive options outstanding 537,500 537,500
Weighted average number of dilutive performance rights outstanding 19,349,303 13,971,527
Weighted average number of ordinary shares outstanding during the year used in
calculating dilutive loss per share
424,789,639 252,281,284
Loss per share
Basic loss per share (cents) (1.1) (6)
Diluted loss per share (cents) (1) (5.5)
NOTE 10: CASH AND CASH EQUIVALENTS
Consolidated Group
2021 2020
US$
US$
Cash at bank and on hand 6,624,364 3,509,395
6,624,364 3,509,395
Reconciliation of cash
Cash and cash equivalents at the end of the financial year as shown in the
statement of cash flows is reconciled to items in the statement of financial
position as follows:
Cash and cash equivalents 6,624,364 3,509,395
6,624,364 3,509,395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 december 2021
Note 11: Trade and Other Receivables
Note Consolidated Group
2021 2020
US$
US$
CURRENT
Trade receivables 945,425 148,000
Amount due from a unrelated entity - -
945,425 148,000
Other receivables 10,002 205,355
GST/VAT receivable 14,666 16,450
Provision for impairment 11a(i) (1.178) (1,178)
23,490 220,627
Total current trade and other receivables 968,915 368,627
The following table shows the movement in lifetime expected credit loss that
has been recognised for trade and other receivables in accordance with the
simplified approach set out in AASB 9: Financial Instruments.
Opening balance Net measure- Amounts written off Closing balance
ment of loss allowance
1 January 2020 31 December 2020
US$ US$ US$ US$
a. Lifetime Expected Credit Loss: Credit Impaired
(i) Current other receivables 1,178 - - 1,178
1,178 - - 1,178
Opening balance Net measure- Amounts written off Closing balance
ment of loss allowance
1 January 2021 31 December 2021
US$ US$ US$ US$
(i) Current other receivables 1,178 - - 1,178
1,178 - - 1,178
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 11: TRADE AND OTHER RECEIVABLE (CONTINUED)
The Group applies the simplified approach to providing for expected credit
losses prescribed by AASB 9, which permits the use of the lifetime expected
loss provision for all trade receivables. To measure the expected credit
losses, trade receivables have been grouped based on shared credit risk
characteristics and the days past due. The loss allowance provision as at 31
December 2021 is determined as follows; the expected credit losses also
incorporate forward-looking information.
The "amounts written off" are all due to customers declaring bankruptcy, or
term receivables that have now become unrecoverable.
Credit risk
The Group has no significant concentration of credit risk with respect to any
single counterparty or group of counterparties other than those receivables
specifically provided for and mentioned within Note 11. The class of assets
described as "trade and other receivables" is considered to be the main source
of credit risk related to the Group.
The Group always measures the loss allowance for trade receivables at an
amount equal to lifetime expected credit loss. The expected credit losses on
trade receivables are estimated using a provision matrix by reference to past
default experience of the debtor and an analysis of the debtor's current
financial position, adjusted for factors that are specific to the debtor,
general economic conditions of the industry in which the debtor operates and
an assessment of both the current and the forecast direction of conditions at
the reporting date.
There has been no change in the estimation techniques used or significant
assumptions made during the current reporting period.
The Group writes off a trade receivable when there is information indicating
that the debtor is in severe financial difficulty and there is no realistic
prospect of recovery; for example, when the debtor has been placed under
liquidation or has entered into bankruptcy proceedings, or when the trade
receivables are over two years past due, whichever occurs earlier. None of the
trade receivables that have been written off are subject to enforcement
activities.
b. Collateral Held as Security
The Group does not hold any collateral over the trade and other receivables.
c. Financial Assets Measured at Amortised Cost
Consolidated Group
Note 2021 2020
US$
US$
Trade and other receivables:
- total current 968,915 368,627
- total non-current - -
Total financial assets measured at amortised cost 23 968,915 368,627
d. Collateral Pledged
The Group does not hold any collateral over the trade and other receivables.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 12: INVENTORIES
Consolidated Group
2021 2020
US$
US$
CURRENT
At cost:
Raw materials 18,147 88,935
Finished goods 512,569 33,768
530,716 122,703
Note 13: Interests in Subsidiaries
a. Information about Principal Subsidiaries
The subsidiaries listed below have share capital consisting solely of ordinary
shares, which are held directly or indirectly by the Group. The proportion of
ownership interests held equals the voting rights held by the Group. Each
subsidiary's principal place of business is also its country of incorporation.
Name of Subsidiary Principal Place of Business Ownership Interest Held by the Group Proportion of Non-Controlling Interests
2021 2020 2021 2020
% % % %
Takmur Pte Limited Singapore 100 100 - -
PT Andary Usaha Makmur Indonesia 99 99 1 1
PT Investasi Mandiri* Indonesia - - 100 100
Tisma Development (HK) Ltd. Hong Kong 100 - - -
PT Tisma Investasi Abadi Indonesia 99 - 1 -
PT Tisma Global Nusantara** Indonesia - - 100 -
* This entity is accounted for as a controlled entity on the basis that
control was obtained through the
execution of an exclusive operations and management agreement between PT
Andary Usaha Makmur and
PT Investasi Mandiri and was for nil purchase consideration.
** This entity is accounted for as a controlled entity on the basis that
control was obtained through the
execution of an exclusive operations and management agreement between PT Tisma
Investasi Abadi and
PT Tisma Global Nusantara and was for nil purchase consideration.
The non-controlling interests in PT Andary Usaha Makmur and PT Tisma Investasi
Abadi are not material to the Group.
Subsidiary financial statements used in the preparation of these consolidated
financial statements have
also been prepared as at the same reporting date as the Group's financial
statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 13: INTEREST IN SUBSIDIARIES (CONTINUED)
c. Summarised Financial Information of Subsidiaries with Material Non-controlling
Interests
Set out below is the summarised financial information for each subsidiary that
has non-controlling interests that are material to the Group, before any
intragroup eliminations.
PT Investasi Mandiri
2021 2020
US$
US$
Summarised Financial Position
Current assets 3,073,202 1,046,766
Non-current assets 1,464,608 1,362,019
Current liabilities (5,410,355) (2,652,214)
Non-current liabilities - (16,773)
NET ASSETS (872,545) (260,202)
Carrying amount of non-controlling interests (872,545) (260,202)
Summarised Financial Performance
Revenue 12,417,086 8,956,694
Loss after income tax (633,165) (1,044,970)
Other comprehensive income after tax 20,822 (17,739)
Total comprehensive income (612,343) (1,062,709)
Loss attributable to non-controlling interests (612,343) (1,062,709)
Distributions paid to non-controlling interests - -
Summarised Cash Flow Information
Net cash used in operating activities (2,134,642) (1,036,099)
Net cash used in investing activities (615,776) (469,219)
Net cash from financing activities 2,724,907 1,608,935
Net (decrease)/increase in cash and cash equivalents
(25,511) 103,617
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 13: INTEREST IN SUBSIDIARIES (CONTINUED)
PT Tisma Global Nusantura
2021
US$
Summarised Financial Position
Current assets 14,057
Non-current assets -
Current liabilities (147,942)
Non-current liabilities -
NET ASSETS (133,885)
Carrying amount of non-controlling interests (133,885)
Summarised Financial Performance
Revenue -
Loss after income tax (3,383)
Other comprehensive income after tax -
Total comprehensive income (3,383)
Loss attributable to non-controlling interests (3,383)
Distributions paid to non-controlling interests -
Summarised Cash Flow Information
Net cash used in operating activities (13,876)
Net cash used in investing activities -
Net cash from financing activities 13,705
Net decrease in cash and cash equivalents (171)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 december 2021
Note 14: Property, Plant and Equipment
Consolidated Group
2021 2020
US$
US$
Land and Buildings
Freehold land at cost 196,989 194,542
Total land 196,989 194,542
Buildings at cost 826,936 635,825
Accumulated depreciation (176,542) (139,161)
Total buildings 650,394 496,664
Total land and buildings 847,383 691,206
Construction in Progress at cost 695,605 166,645
Total Construction in Progress 695,605 166,645
Plant and Equipment
Plant and equipment at cost 818,856 520,385
Accumulated depreciation (183,903) (106,687)
Total plant and equipment 634,953 413,698
Motor Vehicles
Motor vehicles at cost 79,758 22,894
Accumulated depreciation (15,777) (3,816)
Total motor vehicles 63,981 19,078
Furniture and Fittings
Furniture and fittings at cost 30,668 30,668
Accumulated depreciation (8,218) (3,461)
Total furniture and fittings 22,450 27,207
Total property, plant and equipment 2,228,372 1,317,834
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 14: PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
a. Movements in Carrying Amounts
Movements in the carrying amounts for each class of property, plant and
equipment between the beginning and the end of the current financial year:
Freehold Land Buildings Construction in Progress Plant and Equipment Motor Vehicles Furniture and Fittings Total
US$ US$ US$ US$ US$ US$ US$
Consolidated Group:
Balance at 1 Jan 2020 57,053 505,998 48,047 43,653 - - 654,751
Additions 137,489 22,152 118,598 417,122 22,894 30,668 748,923
Depreciation expense - (31,486) - (47,077) (3,816) (3,461) (85,840)
Balance at 31 Dec 2020 194,542 496,664 166,645 413,698 19,078 27,207 1,317,834
Balance at 1 Jan 2021 194,542 496,664 166,645 413,698 19,078 27,207 1,317,834
Additions 2,447 191111 645,702 298,471 56,864 - 1,041,853
Transfer (152,742)
Depreciation expense - (37,381) - (77,216) (11,961) (4,757) (131,315)
Balance at 31 Dec 2021 196,989 650,394 659,605 634,953 63,981 22,450 2,228,372
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
Note 15: Intangible Assets
Consolidated Group
2021 2020
US$
US$
Goodwill:
Cost 7,774 7,774
Accumulated impairment losses - -
Net carrying amount 7,774 7,774
Mining License Renewal:
Cost 88,984 88,984
Accumulated amortization (22,245) (4,449)
Net carrying amount 66,739 84,535
Exploration asset
Carrying value on acquisition 73,260,053 -
Accumulated amortization - -
Net carrying amount 73,260,053 -
Total intangible assets 73,334,566 92,309
Goodwill Mining Licenses Exploration assets Total
US$ US$ US$ US$
Consolidated Group:
Year ended 31 December 2020 7,774 - - 7,774
Balance at the beginning of the year - 88,984 - 88,984
Acquisitions through business combinations - (4,449) - (4,449)
Closing value at 31 December 2020 7,774 84,535 - 92,309
Year ended 31 December 2021
Balance at the beginning of the year 7,774 84,535 - 92,309
Additions through business combinations - - 73,260,053 73,260,053
Amortisation - (17,796) - (17,796)
Closing value at 31 December 2021 7,774 66,739 73,260,053 73,334,566
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 16: RIGHT OF USE ASSETS
The Group's lease portfolio includes motor vehicles & Office Building.
These leases have an average of 4 years for the vehicle and 2 years for Office
Building as their lease term.
i) AASB 16 related amounts recognised in the balance sheet
Right of use assets Consolidated Group
2021 2020
US$ US$
Leased Buildings 11,187 11,187
Accumulated depreciation (9,320) (3,736)
1,867
7,451
Leased Motor Vehicles 140,484 140,484
Accumulated depreciation (120,756) (87,574)
19,728
52,910
Total Right of use assets 21,595 60,361
Movement in carrying amounts:
Leased Buildings:
Opening balance 7,451 -
Additions - 11,187
Depreciation expense (5,584) (3,736)
Net Carrying Amount 1,867 7,451
Leased Motor Vehicles:
Opening balance 52,910 88,058
Additions - -
Disposals - -
Depreciation expense (33,182) (35,148)
Net Carrying Amount 19,728 52,910
Total Right of use assets 21,595 60,361
ii) AASB 16 related amounts recognised in the statement of profit or loss
Consolidated Group
2021 2020
US$ US$
Depreciation charge related to right-of-use assets 38,766 38,884
Interest expense on lease liabilities 1,779 7,308
Short term lease expenses 5,509 100,366
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 december 2021
Note 17: Trade and Other Payables
Note Consolidated Group
2021 2020
US$
US$
CURRENT
Unsecured liabilities:
Trade payables 225,797 311,647
Sundry payables and accrued expenses 1,532,343 1,315,155
1,758,140 1,626,802
a. Financial liabilities at amortised cost classified as trade and other payables
Trade and other payables:
- total current 1,758,140 1,626,802
Financial liabilities as trade and other payables 24 1,758,140 1,626,802
NOTE 18: LEASE LIABILITIES
Consolidated Group
2021 2020
US$
US$
Current 1,759 1,780
Non-current - 16,773
1,759 18,553
Note 19: Tax
Consolidated Group
2021 2020
US$
US$
CURRENT
Income tax recoverable 210,513 36,216
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 december 2021
Note 20: Issued Capital
Consolidated Group
2021 2020
US$
US$
429,520,222 (2020: 267,777,037) fully paid ordinary shares 96,651,080 14,873,158
Consolidated Group
2021 2020
No. of Contributed No. of Contributed
shares equity Shares equity
US$ US$
a. Ordinary Shares
At the beginning of the reporting period 267,777,037 14,873,158 2,500 1,178
Elimination of Takmur Pte Ltd. - - (2,500) -
Movement :
- Year 2020 - - 267,777,037 14,871,980
- 15 February 2021 147,277,370 73,141,006 - -
- 25 March 2021 1,627,477 437,531 - -
- 9 April 2021 1,940,350 521,644 - -
- 23 June 2021 10,897,988 8,447,656 - -
- Share issue costs - (769,915) - -
At the end of the reporting period 429,520,222 96,651,080 267,777,037 14,873,158
On 15 February 2021, the Company completed acquisition of Tisma Development
(HK) Limited. Essentially the business of Tisma and its controlled entities is
the main undertaking of the Group going forward. As part of the acquisition of
Tisma, the Company issued 147,277,370 shares to the vendors of Tisma;
On 25 March 2021, 1,627,477 shares were issued on conversion of 2,257,127
Performance Rights to Shares on achievement of milestones.
On 9 April 2021, 1,940,350 shares were issued on conversion of 1,940,350
Performance Rights to Shares on achievement of milestones.
On 23 June 2021, the Company completed a successful capital raise of
US$8,447,656 million, with 10,897,988 shares issued at US$0.77516 per share;
At the shareholders' meetings each ordinary share is entitled to one vote when
a poll is called; otherwise, each shareholder has one vote on a show of hands.
b. Capital Management
Management controls the capital of the Group in order to maintain a
sustainable debt to equity ratio, generate long-term shareholder value and
ensure that the Group can fund its operations and continue as a going concern.
The Group's debt and capital include ordinary share capital, redeemable
preference shares, convertible preference shares and financial liabilities,
supported by financial assets.
The Group is not subject to any externally imposed capital requirements.
Management effectively manages the Group's capital by assessing the Group's
financial risks and adjusting its capital structure in response to changes in
these risks and in the market. These responses include the management of debt
levels, distributions to shareholders and share issues.
There have been no changes in the strategy adopted by management to control
the capital of the Group since the prior year.
Note Consolidated Group
2021 2020
US$
US$
Total borrowings 1,759 18,553
Less cash and cash equivalents 10 6,624,364 3,509,395
Net cash/(debt) 6,622,605 3,490,842
Total equity 83,036,651 4,520,849
Total capital 83,036,651 4,520,849
Gearing ratio 0.002% 0.4%
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DCEMBER 2021
Note 21: Cash Flow Information
Consolidated Group
2021 2020
US$
US$
a. Reconciliation of Cash Flows from Operating Activities with Loss after Income
Tax
Loss after income tax (4,321,230) (13,820,603)
Non-cash flows in (loss):
- depreciation 187,877 129,173
- listing and acquisition costs 25,793 7,015,780
- share-based payments 2,061,607 3,938,578
- exchange differences 313,552 (102,560)
Changes in assets and liabilities:
- (increase)/decrease in trade and other receivables (666,381) 99,896
- decrease/(increase) in advances to suppliers 14,848 (235,024)
- (increase)/decrease in inventories (408,013) 161,320
- increase in prepayments and deposits (25,588) (41,100)
- increase in deferred tax assets (206,215) (264,212)
- decrease in trade and other payables 16,320 1,170,343
- increase in LSE listing costs 895,461 -
- increase in current tax liabilities (171,205) (138,302)
Net cash generated by operating activities (2,283,174) (2,086,711)
b. Changes in Liabilities arising from Financing Activities
b.
Changes in Liabilities arising from Financing Activities
Non-cash changes
1 January 2021 Cash flows Acquisition Re-classification 31 December 2021
US$ US$ US$ US$ US$
Short term borrowings - - - -
Lease liabilities 18,553 (16,794) - - 1,759
Total 18,553 (16,794) - - 1,759
c. Non-cash Financing and Investing Activities
(i) Share issue:
Refer to note 20 for details of non-cash financing activities arising from
shares issued.
(ii) Asset acquisition:
Refer to note 5 for details of non-cash financing activities arising from
business acquisition.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 22: RELATED PARTY TRANSACTIONS
Phoenician Management Services Limited, a related party of Mr. Hasler,
provided management support, general administration and IT services to PT
Investasi Mandiri, after acquisition. For the year ended 31 December 2021,
Phoenician Management Services Limited was paid US$1,150,602 (2020:
US$494,008) and expenses recognised during the year totaled US$1,155,006
(2020: US$494,008). A total of US$4,404 (2020: Nil) remains payable at year
end.
Note 23: Financial Risk Management
The Group's financial instruments consist mainly of deposits with banks,
accounts receivable and payable, loan and leases.
The totals for each category of financial instruments, measured in accordance
with AASB 9: Financial Instruments as detailed in the accounting policies to
these financial statements, are as follows:
Note Consolidated Group
2021 2020
US$
US$
Financial assets
Financial assets at amortised cost
- cash and cash equivalents 10 6,624,364 3,509,395
- trade and other receivables 11c 968,915 368,627
Total financial assets 7,593,279 3,878,022
Financial liabilities
Financial liabilities at amortised cost:
- trade and other payables 17 1,758,140 1,626,802
- Lease liabilities
Current 18 1,759 1,780
Non-current 18 - 16,773
Total financial liabilities 1,759,899 1,645,355
Financial Risk Management Policies
The Finance and Operations Committee (FOC) has been delegated responsibility
by the Board of Directors for, among other issues, managing financial risk
exposures of the Group. The FOC monitors the Group's financial risk management
policies and exposures and approves financial transactions within the scope of
its authority. It also reviews the effectiveness of internal controls relating
to commodity price risk, counterparty credit risk, foreign currency risk,
liquidity risk, and interest rate risk. The FOC meets on a bi-monthly basis
and minutes of the FOC are reviewed by the Board.
The FOC's overall risk management strategy seeks to assist the Consolidated
Group in meeting its financial targets, while minimising potential adverse
effects on financial performance. Its functions include the review of the use
of hedging derivative instruments, credit risk policies and future cash flow
requirements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 23: FINANCIAL RISK MANAGEMENT (CONTINUED)
Specific financial risk exposures and management
The main risks the Group is exposed to through its financial instruments are
credit risk, liquidity risk, and market risk consisting of interest rate risk,
foreign currency risk and other price risk (commodity and equity price risk).
There have been no substantive changes in the types of risks the Group is
exposed to, how these risks arise, or the Board's objectives, policies and
processes for managing or measuring the risks from the previous period.
a. Credit risk
Exposure to credit risk relating to financial assets arises from the potential
non-performance by counterparties of contract obligations that could lead to a
financial loss to the Group.
Credit risk is managed through the maintenance of procedures (such as the
utilisation of systems for the approval, granting and renewal of credit
limits, regular monitoring of exposures against such limits and monitoring of
the financial stability of significant customers and counterparties), ensuring
to the extent possible that customers and counterparties to transactions are
of sound credit worthiness. Such monitoring is used in assessing receivables
for impairment. Depending on the division within the Group, credit terms are
generally 14 to 30 days from the invoice date.
Trade and other receivables that are neither past due nor impaired are
considered to be of high credit quality. Aggregates of such amounts are
detailed in Note 11.
b. Liquidity risk
Liquidity risk arises from the possibility that the Group might encounter
difficulty in settling its debts or otherwise meeting its obligations related
to financial liabilities. The Group manages this risk through the following
mechanisms:
- preparing forward-looking cash flow analyses in relation to its operating,
investing and financing activities;
- obtaining funding from a Parent Group;
- maintaining a reputable credit profile;
- managing credit risk related to financial assets; and
- comparing the maturity profile of financial liabilities with the realisation
profile of financial assets.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 23: FINANCIAL RISK MANAGEMENT (CONTINUED)
The following table reflects an undiscounted contractual maturity analysis for
financial assets and financial liabilities.
Cash flows realised from financial assets reflect management's expectation as
to the timing of realisation. Actual timing may therefore differ from that
disclosed. The timing of cash flows presented in the table to settle financial
liabilities reflects the earliest contractual settlement dates and does not
reflect management's expectations that banking facilities will be rolled
forward.
Financial liability and financial asset maturity analysis Within 1 Year 1 to 5 Years Total
2021 2020 2021 2020 2021 2020
Consolidated Group US$ US$ US$ US$ US$ US$
Financial liabilities due for payment
Trade and other payables 1,758,140 1,626,802 - - 1,758,140 1,626,802
Lease liabilities 1,759 1,780 - 16,773 1,759 18,553
Total expected outflows 1,759,899 1,628,582 - 16,773 1,759,899 1,645,355
Financial assets - cash flows realisable
Cash and cash equivalents 6,624,364 3,509,395 - - 6,624,364 3,509,395
Trade and other receivables 968,915 368,627 - - 968,915 368,627
Total anticipated inflows 7,593,279 3,878,022 - - 7,593,279 3,878,022
Net inflow/ (outflow) on financial instruments 5,833,380 2,249,440 - (16,773) 5,833,380 2,232,667
c. (i) Other price risk
Other price risk relates to the risk that the fair value or future cash flows
of a financial instrument will fluctuate because of changes in market prices
for Zircon largely due to demand and supply factors (other than those arising
from interest rate risk or foreign currency risk) for sand minerals.
The Group is exposed to commodity price risk through the operations of its
Zircon Produce. Contracts for the sale and physical delivery of Zircons are
executed whenever possible on a pricing basis intended to achieve a relevant
index target. Where pricing terms deviate from the index, derivative commodity
contracts may be used when available to return realised prices to the index.
Contracts for the physical delivery of Zircon are generally not financial
instruments and are carried in the statement of financial position at cost
(typically at nil). There were no hedges in place at the end of the reporting
period.
(ii) Foreign currency risk
Exposure to foreign currency risk may result in the fair value or future cash
flows of a financial instrument fluctuating due to movement in foreign
exchange rates of currencies in which the Group holds financial instruments
which are other than the USD functional and presentation currency of the
Group.
With instruments being held by overseas operations, fluctuations in the IDR
and AUD may impact on the Group's financial results unless those exposures are
appropriately hedged.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 december 2021
NOTE 23: FINANCIAL RISK MANAGEMENT (CONTINUED)
The following table shows foreign currency risk on the financial assets and
liabilities of the Group's operations denominated in currencies other than the
functional currency of the Group's operations. The foreign currency risk in
the books of the Parent Entity is considered immaterial and is therefore not
shown.
2021 Net Financial Assets/(Liabilities) in USD
Consolidated Group USD AUD Total USD
Functional currency of entity:
US dollar - 5,975,070 5,975,070
Indonesian Rupiah 857,364 - 857,364
Statement of financial position exposure 857,364 5,975,070 6,832,434
2020 Net Financial Assets/(Liabilities) in USD
Consolidated Group USD AUD Total USD
Functional currency of entity:
US Dollar - 970,376 970,376
Indonesian Rupiah 265,679 - 265,679
Statement of financial position exposure 265,679 970,376 1,236,055
Fair Values
Fair value estimation
The fair values of financial assets and financial liabilities are presented in
the following table and can be compared to their carrying amounts as presented
in the statement of financial position.
Differences between fair values and carrying amounts of financial instruments
with fixed interest rates are due to the change in discount rates being
applied by the market since their initial recognition by the Group.
2021 2020
Consolidated Group Note Carrying Amount Fair Carrying Amount Fair
US$
Value
US$
Value
US$
US$
Financial assets
Financial assets at amortised cost:
Cash and cash equivalents((i)) 10 6,624,364 6,624,364 3,509,395 3,509,395
Trade and other receivables((i)) 11 968,915 968,915 368,627 368,627
Total financial assets 7,593,279 7,593,279 3,878,022 3,878,022
Financial liabilities at amortised cost
Trade and other payables((i)) 17 1,758,140 1,758,140 1,626,802 1,626,802
Lease liabilities((i)) 18 1,759 1,759 18,553 18,553
Total financial liabilities 1,759,899 1,759,899 1,645,355 1,645,355
(i) The carrying amounts of cash and cash equivalents, trade and other
receivables, trade and other
payables and lease liabilities are equivalent to their fair values.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 december 2021
Note 24: Reserves
a. Share-Based Payment Reserve
The share-based payment reserve records items recognised as expenses on
valuation of share-based payments.
b. Foreign Currency Translation Reserve
The foreign currency translation reserve records exchange differences arising
on translation of the foreign controlled subsidiaries.
c. Analysis of Each Class of Reserve
Consolidated Group
2021 2020
US$
US$
Share Based Payment Reserve
At the beginning of the reporting period 2,804,535 -
Share based payments 2,061,607 3,938,578
Issue of shares to employees (959,174) (1,134,043)
Closing balance in share-based payment reserve 3,906,968 2,804,535
Foreign Currency Translation Reserve
At the beginning of the reporting period (22,084) -
Exchange differences on translation of foreign operations (2,123) (22,084)
Closing balance in foreign currency translation reserve (24,207) (22,084)
Total 3,882,761 2,782,451
NOTE 25: EVENTS AFTER THE REPORTING PERIOD
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 december 2021
Note 24: Reserves
a.
Share-Based Payment Reserve
The share-based payment reserve records items recognised as expenses on
valuation of share-based payments.
b.
Foreign Currency Translation Reserve
The foreign currency translation reserve records exchange differences arising
on translation of the foreign controlled subsidiaries.
c.
Analysis of Each Class of Reserve
Consolidated Group
2021
US$
2020
US$
Share Based Payment Reserve
At the beginning of the reporting period
2,804,535
-
Share based payments
2,061,607
3,938,578
Issue of shares to employees
(959,174)
(1,134,043)
Closing balance in share-based payment reserve
3,906,968
2,804,535
Foreign Currency Translation Reserve
At the beginning of the reporting period
(22,084)
-
Exchange differences on translation of foreign operations
(2,123)
(22,084)
Closing balance in foreign currency translation reserve
(24,207)
(22,084)
Total
3,882,761
2,782,451
NOTE 25: EVENTS AFTER THE REPORTING PERIOD
The Company notes that as at 31 December 2021, 2,182,894 performance rights
held by Mr Hasler had vested on the achievement of their milestone. The
2,182,894 shares relating to these performance rights were not issued until 7
January 2022.
On 11 March 2022, the Company announced a placement to a US-based
institutional investor. The share placement consists of an initial
investment of US$4.5 million by L1 Capital Global Opportunities Master Fund
("L1" or "Investor"). A further two investments of US$4.5 million each
(totalling US$9.0 million) may be made by L1 subject to mutual agreement
between PYX and L1.
The receipt of these funds will allow PYX to accelerate its previously
announced plans to grow its production volume at its Mandiri deposit and start
planning operations at the Tisma deposit. The placement will be used for
CAPEX and working capital.
Details of the placement are contained in the Company's announcement dated 11
March 2022.
No other significant events are noted by management since the end of the
reporting period.
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