REG - Red Rock Resources - Final Results <Origin Href="QuoteRef">RRR.L</Origin> - Part 2
01/12/2016 07:45
- Part 2: For the preceding part double click ID:nRSA6269Qa
goodwill or
from the initial recognition (other than in a business combination) of other
assets and liabilities in a transaction which affects neither the taxable
profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates, and interests in joint
ventures, except where the Group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
Deferred tax is calculated at the tax rates that are expected to apply to the
period when the asset is realised or the liability is settled based upon tax
rates that have been enacted or substantively enacted by the reporting date.
Deferred tax is charged or credited in profit or loss, except when it relates
to items credited or charged directly to equity, in which case the deferred
tax is also dealt with in equity, or items charged or credited directly to
other comprehensive income, in which case the deferred tax is also recognised
in other comprehensive income.
Deferred tax assets and liabilities are offset where there is a legally
enforceable right to offset current tax assets and liabilities and the
deferred tax relates to income tax levied by the same tax authorities on
either:
· the same taxable entity; or
· different taxable entities which intend to settle current tax assets
and liabilities on a net basis or to realise and settle them simultaneously in
each future period when the significant deferred tax assets and liabilities
are expected to be realised or settled.
1.4.6 Foreign currencies
Both the functional and presentational currency of Red Rock Resources plc is
Sterling (£). Each Group entity determines its own functional currency and
items included in the financial statements of each entity are measured using
that functional currency.
The functional currency of the foreign subsidiaries are Australian Dollars
(AUD), Kenyan Shillings, US Dollars (USD) and West Africa Franc (CFA)
Transactions in currencies other than the functional currency of the relevant
entity are initially recorded at the exchange rate prevailing on the dates of
the transaction. At each reporting date, monetary assets and liabilities that
are denominated in foreign currencies are retranslated at the exchange rate
prevailing at the reporting date. Non-monetary assets and liabilities carried
at fair value that are denominated in foreign currencies are translated at the
rates prevailing at the date when the fair value was determined. Gains and
losses arising on retranslation are included in profit or loss for the period,
except for exchange differences on non-monetary assets and liabilities, which
are recognised directly in other comprehensive income when the changes in fair
value are recognised directly in other comprehensive income.
On consolidation, the assets and liabilities of the Group's overseas
operations are translated into the Group's presentational currency at exchange
rates prevailing at the reporting date. Income and expense items are
translated at the average exchange rates for the period unless exchange rates
have fluctuated significantly during the year, in which case the exchange rate
at the date of the transaction is used. All exchange differences arising, if
any, are recognised as other comprehensive income and are transferred to the
Group's foreign currency translation reserve.
1.4.7 Share-based payments
The Group operates an equity-settled share-based payment arrangement whereby
the fair value of services provided is determined indirectly by reference to
the fair value of the instrument granted.
The fair value of options granted to Directors and others in respect of
services provided is recognised as an expense in the statements of income with
a corresponding increase in equity reserves - the share-based payment
reserve.
On exercise or lapse of share options, the proportion of the share-based
payment reserve relevant to those options is transferred to retained earnings.
On exercise, equity is also increased by the amount of the proceeds received.
The fair value is measured at grant date and charged over the vesting period
during which the option becomes unconditional.
The fair value of options is calculated using the Black-Scholes model taking
into account the terms and conditions upon which the options were granted.
There are no market vesting conditions. The exercise price is fixed at the
date of grant.
For other equity instruments granted during the year (i.e. other than share
options), fair value is measured on the basis of an observable market price.
1.4.8 Pension
The Group operates a defined contribution pension plan which requires
contributions to be made to a separately administered fund. Contributions to
the defined contribution scheme are charged to the profit and loss account as
they become payable.
1.4.9 Finance costs/revenue
Borrowing costs are recognised on an accruals basis using the effective
interest method.
Finance revenue is recognised as interest accrues using the effective interest
method. This is a method of calculating the amortised cost of a financial
asset and allocating the interest income over the relevant period using the
effective interest rate, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial asset to the
net carrying amount of the financial asset.
1.4.10 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of
one entity and a financial liability or equity instrument of another entity.
Financial assets and financial liabilities are recognised where the Group has
become party to the contractual provisions of the instrument.
Financial assets
Investments
Investments in subsidiary companies are classified as non-current assets and
included in the statement of financial position of the Company at cost at the
date of acquisition less any identified impairments.
Investments in associate companies are classified as non-current assets and
included in the statement of financial position of the Company at cost at the
date of acquisition less any identified impairments.
Available for sale financial assets
Equity investments intended to be held for an indefinite period of time are
classified as available for sale investments. They are carried at fair value,
where this can be reliably measured, with movements in fair value recognised
in other comprehensive income and debited or credited to the available for
sale trade investments reserve. Where the fair value cannot be reliably
measured, the investment is carried at cost or a lower valuation where the
Directors consider the value of the investment to be impaired.
Available for sale investments are included within non-current assets. On
disposal, the difference between the carrying amount and the sum of the
consideration received and any cumulative gain or loss that had previously
been recognised directly in reserves is recognised in the statement of
income.
Income from available for sale investments is accounted for in the statement
of income when the right to receive it has been established.
The Group assesses at each reporting date whether there is objective evidence
that an investment is impaired. When there is evidence of impairment, the
cumulative loss - measured as the difference between the acquisition cost and
the current fair value, less any impairment loss on that investment previously
recognised in the income statement - is removed from other comprehensive
income and recognised in the income statement. Impairment losses on equity
investments are not reversed through the income statement; increases in their
fair value after impairment are recognised directly in other comprehensive
income.
Cash and cash equivalents
Cash and short-term deposits in the statement of financial position comprise
cash at bank and in hand and short-term deposits.
For the purposes of the statement of cash flows, cash and cash equivalents
consist of cash and cash equivalents as defined above, net of outstanding bank
overdrafts.
Restricted cash
Cash which is restricted from being exchanged or used to settle a liability
for at least twelve months after the reporting period is not considered cash
and cash equivalents and is classified as restricted cash.
Trade and other receivables
Trade receivables, which generally have 30 day terms, are recognised and
carried at original invoice amount less an allowance for any uncollectable
amounts.
An allowance for impairment is made when there is objective evidence that the
Group will not be able to collect the debts. Bad debts are written off when
identified.
After initial recognition these assets are measured at amortised cost using
the effective interest method less provision for impairment.
Financial liabilities and equity
Trade and other payables
Trade and other payables are initially recognised at fair value and represent
liabilities for goods and services provided to the Group prior to the end of
the financial year that are unpaid and arise when the Group becomes obliged to
make future payments in respect of the purchase of these goods and services.
Borrowings
Borrowings are recorded initially at their fair value, plus directly
attributable transaction costs. Such instruments are subsequently carried at
their amortised cost and finance charges, including premiums payable on
settlement or redemption, are recognised in profit or loss over the term of
the instrument using an effective rate of interest.
Deferred and contingent consideration
Where it is probable that deferred or contingent consideration is payable on
the acquisition of a business based on an earn out arrangement, an estimate of
the amount payable is made at the date of acquisition and reviewed regularly
thereafter, with any change in the estimated liability being reflected in the
income statement. Where deferred consideration is payable after more than one
year the estimated liability is discounted using an appropriate rate of
interest.
Equity instruments
Equity instruments issued by the Company are recorded at fair value at initial
recognition net of issue costs.
1.5 Significant accounting judgements, estimates and assumptions
The preparation of the Group's consolidated financial statements requires
management to make judgements, estimates and assumptions that affect the
reported amounts of revenues, expenses, assets and liabilities at the end of
the reporting period. However, uncertainty about these assumptions and
estimates could result in outcomes that require a material adjustment to the
carrying amount of the asset or liability affected in future periods.
Significant judgements in applying the accounting policies
In the process of applying the Group's accounting policies, management has
made the following judgements, which have the most significant effect on the
amounts recognised in the consolidated financial statements:
Going concern
The Group has incurred a loss of £283,280 for the year ended 30 June 2016. At
that date there was a net current liability of £945,000. The loss resulted
mainly from the £1.5m impairment of the Company's iron exploration assets in
Greenland.
During the fiscal year the Company has continued to receive proceeds from the
sale of its gold interests in Colombia. Fixed cash payments have now occurred
with a total of $1m paid in three tranches. In addition, the Company has a
three-year convertible promissory note of US$1.0m secured over the assets of
its former gold mine and associated plant and bearing interest of 5% per annum
due in 2018. The Company believes that the conversion rights associated with
this note have been triggered as of early 2016, and it has announced the
intention to pursue realization of these rights via international
arbitration.
Additional payments of up to $2.0m will be paid in the form of a 3% net
smelter royalty payable quarterly on gold production and have commenced as of
August 2016. The Company estimates that approximately £360k will be paid out
towards the initial $1m royalty during 2017. A final royalty stream of up to
$1.0m will be paid following the payment in full of the initial net smelter
royalty in the form of a 0.5% net smelter royalty.
On 21 November 2016, Jupiter Mines Ltd, where the Company holds a 1.2% stake
announced that it plans to initiate a share buyback in March 2017. The Company
calculates that this should provide cash inflows of approximately £530k and
will likely be followed by a second buyback later in 2017. In the longer term
Jupiter may look to dispose of its main production asset, the Tshipi Manganese
Mine in South Africa, which would likely result in a significant dividend
pay-out to the Company.
Income streams from the Company's investment in oil production at Shoat's
Creek, LA, in the United States are expected to increase in 2017 as
operational efficiencies improve and additional wells are drilled and reworked
and come onstream.
Further the Company has since the first quarter of 2016 begun to receive
revenue from the subletting of its offices in downtown London. With a reduced
requirement for space the Company moved to monetize its existing lease and has
been able to realize meaningful income from its excess office space. The
Company's lease currently extends through to December 2017.
In September 2016, the Company paid off the balance of its £250,000
convertible from YA Global Master SPV, Ltd removing all corporate debt from
the balance sheet and completing the deleveraging efforts started in 2014.
The Group's cash outflow reduction and restructuring programme came to
fruition as corporate headcount was reduced to three individuals by February
2016 and functions including geological and accounting services were
outsourced. This has led to total corporate overhead reductions of 60% and
the Group has ultimately exceeded anticipated monthly cost reduction targets
by 1.8%.
The Directors are confident in the Company's ability to raise new finance from
stock markets if this is required during 2017 and the Group has demonstrated a
consistent ability to do so. This includes share issuance of 234 million
(post-consolidation) shares for a total consideration of £1.26 million since
the 2015 financial year-end.
Going concern continued
The Directors have concluded that the combination of these circumstances that
preparation of the Group's financial statements on a going concern basis is
appropriate. The Company's income has increased due to multiple revenue
streams as well the return on prior investments such as Jupiter Mines. The
Group expects to receive ongoing cashflows from its Shoats Creek oil
investments, the Colombia disposal royalty stream and ongoing office
subletting revenue. Thanks to the improving financial and market situation
the Company does not anticipate difficulty raising new finance from equity
markets if this is required during 2017.
Recognition of holdings less than 20% as an associate
The Company owns 15% of the issued share capital of Mid Migori Mining Company
Limited ("MMM"). Andrew Bell is a member of the board of MMM. In accordance
with IAS 28, the Directors of the Company consider this, and the input of
resource by the Company in respect of drilling and analytical activities, to
provide the Group with significant influence as defined by the standard. As
such, MMM has been recognised as an associate for the year ended 30 June
2016.
The effect of recognising MMM as an available for sale financial asset would
be to decrease the loss by £8,245.
Significant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined
based on estimates and assumptions of future events. The key estimates and
assumptions that have a significant risk of causing a material adjustment to
the carrying amounts of certain assets and liabilities within the next annual
reporting period include the impairment determinations, the selling price of
assets held for sale, the useful lives of property plant and equipment, the
bad debt provision and the fair values of our financial assets and
liabilities.
Fair value measurement
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date. The fair value measurement is based on the presumption
that the transaction to sell the asset or transfer the liability takes place
either:
· In the principal market for the asset or liability; or
· In the absence of a principal market, in the most advantageous market
for the asset or liability
The principal or the most advantageous market must be accessible by the
Group.
The fair value of an asset or a liability is measured using the assumptions
that market participants would use when pricing the asset or liability,
assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market
participant's ability to generate economic benefits by using the asset in its
highest and best use or by selling it to another market participant that would
use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances
and for which sufficient data are available to measure fair value, maximising
the use of relevant observable inputs and minimising the use of unobservable
inputs.
All assets and liabilities for which fair value is measured or disclosed in
the financial statements are categorised within the fair value hierarchy,
described as follows, based on the lowest level input that is significant to
the fair value measurement as a whole:
· Level 1 - Quoted (unadjusted) market prices in active markets for
identical assets or liabilities
· Level 2 - Valuation techniques for which the lowest level input that is
significant to the fair value measurement is directly or indirectly
observable
· Level 3 - Valuation techniques for which the lowest level input that is
significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on
a recurring basis, the Group determines whether transfers have occurred
between levels in the hierarchy by re-assessing categorisation (based on the
lowest level input that is significant to the fair value measurement as a
whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Group has determined classes of
assets and liabilities on the basis of the nature, characteristics and risks
of the asset or liability and the level of the fair value hierarchy as
explained above.
For unquoted equity investments, we have based our valuation on the weighted
average share price of actual sale transactions which we consider as level 2
of the fair value hierarchy as they are based on indirectly observable inputs.
In the absence of a quoted liquid market for Jupiter shares directly
determining their value, the Company applied two different methodologies to
estimate the fair value of its holding. These included an Adjusted Net Asset
Method and a Market Approach. Under the Adjusted Net Asset method, the final
results of Jupiter for the year ended 28 February 2015 announced on 26th June
2015, as well as the independent business valuation on the Tshipi asset by
Venmyn Deloitte were used to provide relevant data points. Taking the net
asset value, an adjusted hard asset only net asset value, and a further
adjusted asset value modified using figures from Venmyn Deloitte, management
arrived at an average value of 19.8 cents per share and a total valuation of
AUD 5.40m (£2.63m).
Applying a discount of 40% to this for illiquidity would reduce the fair value
to 11.88 cents per share or AUD 3.24m (£1.58m). Under the Market Approach, the
Company considered all the transactions involving Jupiter shares since
de-listing. A total of thirty five transactions occurred between the
de-listing date in January 2014 and the 2015 financial year-end, at an average
price of 9.8 cents per share. This period is determined to be representative
of the fair value at year end since there were no significant changes to the
business and the transactions were considered orderly. After careful
consideration of all the facts and circumstances that existed at the year-end
date, Management believes that greater weight should be given to the actual
transactions between buyers and sellers rather than the net asset value
figures. Thus, the market value approach was determined to be more suitable,
and the corresponding 9.8 cents per share value implies that the Company's
holding in Jupiter Mines is valued at AUD 2.68m (£1.30m). The Company
reviewed the above handling of the Jupiter Mines investment at the year end 30
June 2016 and after inquiring with Jupiter regarding whether additional
transactions of Jupiter shares had occurred and upon learning that none had
transpired, the decision was made to continue to use the available market
value approach data to value the Jupiter investment.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by
reference to the fair value of the equity instruments at the date at which
they are granted. The fair value of share options is determined using the
Black-Scholes model.
Impairment of financial assets
The Group follows the guidance of IAS 39 to determine when a financial asset
or a group of financial assets is impaired. A financial asset or a group of
financial assets is deemed to be impaired if, and only if, there is objective
evidence of impairment as a result of one or more events that has occurred
after the initial recognition of the asset (an incurred "loss event") and that
loss event has an impact on the estimated future cash flows of the financial
asset or the group of financial assets that can be reliably estimated. This
determination requires significant judgement. In making this judgement, the
Group evaluates, among other factors, the duration and extent to which fair
value of an investment is less than its cost.
In the case of equity investments classified as available for sale, objective
evidence would include a significant or prolonged decline in the fair value of
the investment below its cost. "Significant" is evaluated against the original
cost of the investment and "prolonged" against the period in which the fair
value has been below its original cost. Mining share prices typically have
more volatility than most other shares and this is taken into account by
management when considering if a significant decline in the fair value of its
mining investments has occurred. Management would consider that there is a
prolonged decline in the fair value of an equity investment when the period of
decline in fair value has extended to beyond the expectation management have
for the equity investment. This expectation will be influenced particularly by
the company development cycle of the investment.
As a result of the Group's evaluation, no impairment on available for sale
financial assets was recognised in the income statement for the year ended 30
June 2016.
Impairment of non-financial assets
The Group follows the guidance of IAS 36 to determine when a non-financial
asset is impaired. The Group assesses, at each reporting date, whether there
is an indication that an asset may be impaired. If any indication exists, or
when annual impairment testing for an asset is required, the Group estimates
the asset's recoverable amount. An asset's recoverable amount is the higher of
an asset's or cash-generating unit's (CGU) fair value less costs to sell and
its value in use. Recoverable amount is determined for an individual asset,
unless the asset does not generate cash inflows that are largely independent
of those from other assets or groups of assets. When the carrying amount of an
asset or CGU exceeds its recoverable amount, the asset is considered impaired
and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset. In
determining fair value less costs to sell, recent market transactions are
taken into account. If no such transactions can be identified, an appropriate
valuation model is used. These calculations are corroborated by valuation
multiples, quoted share prices for publicly traded companies or other
available fair value indicators.
The Group bases its impairment calculation on detailed projections, which are
prepared separately for each of the Group's CGUs to which the individual
assets are allocated. These projections generally cover a period of five years
with a terminal value or salvage value applied.
Impairment losses of continuing operations are recognised in the income
statement in expense categories consistent with the function of the impaired
asset.
For investments in associates and joint ventures, the Group assesses
impairment after the application of the equity method.
Amounts due from associates
As a result of the Group's evaluation of its non-financial assets, an
impairment loss of £1,500,000 on investments in associates and joint ventures
was recognised in the income statement (2015: £1,349,245) This relates to the
Company's iron ore assets in Greenland. Management recognises that the ongoing
price weaknesses of iron ore and global growth rates, are all factors which
indicate a further impairment may be required in the Greenland asset. In
estimating the level of this impairment, management have considered factors
such as the outlook for the iron ore market and the infrastructure which would
be required to produce iron ore for the Greenland asset. It was decided that a
valuation based on the income approach would not be appropriate due to the
relative infancy of the project, and an inability to accurately project
cash-flows in a meaningful way. After extensive review and analysis, a final
impairment value of £1.5m (2015: 1.349m) for the year was thus determined to
be most appropriate.
The Company conducted a review of the carrying value of the amount receivable
from Mid Migori Mining Company Limited in relation to the Kenya asset. For the
purpose of impairment review, the company views this receivable as part of its
net investment in the associate and hence followed the guidance of IAS 36.
Management recognise that the recent variability in gold prices, change in
market fundamentals based on demand from key consumers, concerns around the
global macroeconomic environment in general, and the key uncertainty relating
to the renewals of licences can all have an effect on the value of this
project. The Company is currently engaged via its local partner in Kenya, Mid
Migori Mining, in a legal challenge of the purported termination of its
Special License numbers 122 and 202. In May 2015 the Company was granted a
leave to institute judicial review proceedings and a stay on the
implementation of the Ministry of Mines revocation decision, which is
currently ongoing. Red Rock has also applied via a local affiliate, Red Rock
Kenya, for the same ground covered by the existing licenses. While the
Company feels it has a strong and quite valid case for retention of the
licenses and the existing JORC resource the ongoing legal process makes the
timing of any resolution unclear and difficult to project.
2 Segmental analysis
The Group considered its mining and exploration activities as separate
segments. These are in addition to the investment activities which continue to
form a significant segment of the business. Its mining segment, which has now
been sold, is currently presented as discontinued operations on the face of
the income statement and is excluded from the continuing operations segmental
analysis below.
The Group has made a strategic decision to concentrate on two commodities,
gold and iron ore. However, as the Group was only in the production phase of
gold during the year, a further segmental analysis by commodity has not been
presented.
Investment Exploration Other
Year to 30 June 2016 JupiterMinesLimited£ Otherinvestments£ Australianexploration£ Africanexploration£ Corporateandunallocated£ Total£
Gain on sales of investments - - - - - -
Impairment of amounts due from associates and ventures - - - - - -
Impairment of investments in associates and joint ventures - (1,500,000) - - - (1,500,000)
Exploration expenses - (51,321) 1,277 (51,942) (15,228) (119,768)
Administration expenses (excl. other income)* - - (1,176) (12,669) (744,505) (758,350)
Currency gain/(loss) - - 26,800 - 319,355 346,155
(Provision for)/Reversal of provision for bad debts - (57,769) - - - (57,769)
Share of losses in associates - - - - (9,240) (9,240)
Other income - - - - 1,517,992 1,517,992
Finance (cost)/income, net - - - (954) 298,654 297,700
Net profit/(loss) before tax from continuing operations - (1,609,090) 24,347 (65,566) 1,367,029 (283,280)
* Included in administration expenses is a depreciation charge of £867.
Investment Exploration Other
Year to 30 June 2015 JupiterMinesLimited£ Otherinvestments£ Australianexploration£ Africanexploration£ Corporateandunallocated£ Total£
Gain on sales of investments - 4,308 - - - 4,308
Impairment of available for sale investments - - - (5,280,000) - (5,280,000)
Impairment of investments in associates and joint ventures - (1,349,245) - - - (1,349,245)
Exploration expenses - (65,960) 16,710 (81,409) (8,562) (139,221)
Administration expenses (excl. other income)* - - (2,895) (11,677) (937,613) (952,185)
Currency loss - - (35,648) - (346,571) (382,219)
(Provision for)/Reversal of provision for bad debts - (222,830) - - - (222,830)
Share of losses in associates - - - - (1,183) (1,183)
Other income - - - - 30,033 30,033
Finance income, net - - - (1,872) 567,042 565,170
Net profit/(loss) before tax from continuing operations - (1,633,727) (21,833) (5,374,958) (696,854) (7,727,372)
* Included in administration expenses is a depreciation charge of £4,834.
Information by geographical area
Presented below is certain information by the geographical area of the Group's
activities. Revenue from investment sales and the sale of exploration assets
is allocated to the location of the asset sold.
Year ended 30 June 2016 UK£ USA£ Greenland£ Africa£ Total £
Revenue
Gain on sales of investments - - - - -
Total segment revenue and other gains - - - - -
Non-current assets
Property, plant and equipment 17,400 - - - 17,400
Investments in associates and joint ventures - - 1,496,550 963,089 2,459,639
Exploration assets - 280,460 - - 280,460
Total segment non-current assets 17,400 280,460 1,496,550 963,089 2,757,499
Available for sale financial assets 1,976,552
Non-current receivables 4,838,558
Total non-current assets 9,572,609
Year ended 30 June 2015 UK£ Australia£ Greenland£ Africa£ Total £
Revenue
Gain on sales of investments 4,308 - - - 4,308
Total segment revenue and other gains 4,308 - - - 4,308
Non-current assets
Property, plant and equipment 266 - - - 266
Investments in associates and joint ventures - - 2,997,060 971,818 3,968,878
Total segment non-current assets 266 - 2,997,060 971,818 3,969,144
Available for sale financial assets 1,331,766
Non-current receivables 3,634,270
Total non-current assets 8,935,180
3 Loss for the year before taxation
Loss for the year before taxation is stated after charging:
2016£ 2015£
Auditor's remuneration:
- fees payable to the Company's auditor for the audit of consolidated and Company financial statements 20,000 20,000
Directors' emoluments 270,873 157,169
Share-based payments - Directors 82,470 24,000
Share-based payments - staff 8,543 48,170
Depreciation - continuing operations 867 4,834
Other income and currency gain on MFP receivable 918,767 30,033
Other currency gain/(loss) (346,155) 382,219
4 Finance income/(costs), net
2016£ 2015£
Interest income 323,229 668,438
Interest expense (24,575) (103,267)
298,654 565,171
Interest income comes mainly from non-current receivables from an associate.
Please refer to note 16.
5 Taxation
Note 2016£ 2015£
Current period taxation on the Group
UK corporation tax at 20% (2015: 20.75%) on profits for the period - -
- -
Deferred tax
Origination and reversal of temporary differences - -
Deferred tax assets not recognised - -
Tax credit - -
Factors affecting the tax charge for the year
Loss on ordinary activities before taxation (283,280) (8,411,542)
Loss on ordinary activities at the average UK standard rate of 20% (2015: 20.75%) (56,656) (1,745,395)
Impact of gain on disposal of associates and subsidiaries (117,997) 74,738
Effect of expenditure not deductible 324,381 1,358,309
Effect of non-taxable income - -
Utilisation of prior year losses (149,728) 312,348
Tax charge - -
Tax credit arising from continuing operations - -
Tax credit arising from discontinued operations 8 - -
Total tax credit - -
Deferred tax amounting to £nil (2015: £nil) relating to the Group's
investments was recognised in the statement of comprehensive income.
Finance Act 2013 set the main rate of corporation tax at 20% from 1 April 2015
and at 20% from 1 April 2016. Therefore deferred tax assets/(liabilities) are
calculated at 20% (2015: 20%).
6 Staff costs
The aggregate employment costs of staff (including Directors) for the year in
respect of the Group was:
2016£ 2015£
Wages and salaries 284,473 546,749
Pension 15,637 19,083
Social security costs 21,692 60,174
Severance costs 14,679 -
Employee share-based payment charge 91,013 72,170
Total staff costs 427,494 698,176
The average number of Group employees (including Directors) during the year
was:
2016Number 2015Number
Executives 4 4
Administration 1 12
Exploration - 5
5 21
The Company's staff also work for Regency Mines plc and staff costs of £24,687
(2015: £44,031) were recharged during the year. Such charges are offset
against administration expenses in the income statement.
The key management personnel are the Directors and their remuneration is
disclosed within note 7.
7 Directors' emoluments
2016 Directors'fees£ Consultancyfees£ ShareIncentive Plan£ Pensioncontributions£ Socialsecurity costs£ Total£
Executive Directors
A R M Bell 88,750 15,000 8,813 6,443 7,655 126,661
S Kaintz 65,000 - 8,813 3,284 6,468 83,565
Other Directors
J F Ladner 9,000 - - - 651 9,651
M C Nott 18,000 - 8,632 909 1,027 28,568
S Quinn 18,069 - 3,412 - 945 22,426
198,819 15,000 29,670 10,636 16,746 270,871
2015 Directors'fees£ Consultancyfees£ ShareIncentive Plan£ Pensioncontributions£ Socialsecurity costs£ Total£
Executive Directors
A R M Bell 61,750 15,000 6,000 3,361 5,384 91,495
Other Directors
J F Ladner 16,500 8,500 6,000 - 956 31,956
M C Nott 16,500 8,500 6,000 795 905 32,700
J Watkins 16,500 1,500 6,000 - 1,018 25,018
111,250 33,500 24,000 4,156 8,263 181,169
The number of Directors who exercised share options in the year was nil (2015:
nil).
During the year, the Company contributed to a Share Incentive Plan more fully
described in the Directors' Report. 4,550,000 (2015: 3,529,411) free shares
were issued to each employee, including Directors, making a total of 8,822,000
(2015: 14,117,644) free shares issued.
8 Assets classified as held for sale at 30 June 2015
Four Points Mining SAS
On 13 May 2015 the transaction to sell, and Colombia Milling Limited ("CML")
to buy, (a) a 100% interest in American Gold Mines Limited ("AGM"), which owns
a 50.002% interest in Four Points Mining SAS ("FPM"), the owner of the El
Limón mine, and (b) its loans to FPM, for a total consideration of
USD5,000,000, was completed.Payment of the unchanged consideration of
USD5,000,000 will occur in tranches. The initial payment of USD100,000 was
previously made in respect of CML's due diligence review. The first tranche of
USD450,000 was paid at the closing of the transaction ("Completion"). The
second tranche of USD225,000 was paid in February 2016 and the third tranche
of USD225,000 was paid in August 2016. A further payment of USD1,000,000 will
be satisfied by the issuance by CML to Red Rock at Completion of a three year
convertible 5% promissory note ("PN"), secured on the acquired shares in AGM
and providing that during the duration of the loan, CML will procure that AGM
does not alienate or dispose of its interest in FPM. Security for the PN will
be held in the form of a charge over 100% of the shares in AGM and conversion
is possible following any listing of CML or transfer of the assets into a
public vehicle.
Additional payments of up to USD2,000,000 will be paid in the form of a 3% net
smelter return royalty ("First NSR") payable quarterly on gold production from
FPM commencing on the earlier of (a) 9 months from Completion; and (b) the
achievement of commercial gold production and processing through the El Limon
plant of at least 100 tons per day for 30 consecutive calendar days. A final
royalty stream of up to USD1,000,000 will be paid following the payment in
full of the First NSR in the form of a 0.5% net smelter return royalty
("Second NSR") payable quarterly on gold production from FPM. A 7% commission
is payable to Ariel Partners on the transaction.
9 Loss per share
The basic loss per share is derived by dividing the loss for the year
attributable to ordinary shareholders of the Parent by the weighted average
number of shares in issue.
Diluted loss per share is derived by dividing the loss for the year
attributable to ordinary shareholders of the Parent by the weighted average
number of shares in issue plus the weighted average number of Ordinary shares
that would be issued on conversion of all dilutive potential Ordinary shares
into Ordinary shares.
The following reflects the loss and share data used in the basic and diluted
earnings per share computations:
2016 2015 (restated)
Loss attributable to equity holders of the parent from continuing operations £(275,035) £(7,721,880)
Loss attributable to equity holders of the parent from discontinued operations - £(370,071)
Loss attributable to equity holders of the Parent £(275,035) £(8,091,951)
Weighted average number of Ordinary shares of £0.0001 (2015: £0.001) in issue 263,154,543 115,363,741
Loss per share - basic (0.10) pence (7.00) pence
Weighted average number of Ordinary shares of £0.0001 (2015: £0.001) in issue inclusive of outstanding dilutive options* 263,154,543 115,363,741
Loss per share - fully diluted (0.10) pence (7.00) pence
The weighted average number of shares issued for the purposes of calculating
diluted earnings per share reconciles to the number used to calculate basic
earnings per share as follows:
2016 2015 (restated)
Loss per share denominator 263,154,543 115,363,741
Weighted average number of exercisable share options - -
Diluted loss per share denominator* 263,154,543 115,363,741
*In accordance with IAS 33, the diluted earnings per share denominator takes
into account the difference between the average market price of Ordinary
shares in the year and the weighted average exercise price of the outstanding
options. The Group has weighted average share options of 2,169,727 (2015:
7,265,753). These were not included in the calculation of diluted earnings per
share because all the options are not likely to be exercised given that even
the lowest exercise price is substantially higher than the market price and
are therefore non-dilutive for the period presented.
The 2015 loss per share has been restated to reflect the capital
reorganisation on 21 December 2015. The impact of this reorganisation would be
to increase the loss per share from 0.28 pence to 7 pence per share.
10 Property, plant and equipment
Group Mines£ Field equipmentand machinery£ Fixtures andfittings£ Assets underconstruction£ Total£
Cost
At 1 July 2014 - 34,607 28,649 - 63,256
Additions - - - - -
Disposals - - (842) - (842)
Currency exchange - - - - -
At 30 June 2015 - 34,607 27,807 - 62,414
Additions - - 18,000 - 18,000
Disposals - - - - -
At 30 June 2016 - 34,607 45,807 - 80.414
Depreciation and impairment
At 1 July 2014 - (31,980) (26,176) - (58,156)
Depreciation charge - (2,627) (2,207) - (4,834)
Disposal - - 842 - 842
Currency exchange - - - - -
At 30 June 2015 - (34,607) (27,541) - (62,148)
Depreciation charge - - (866) - (866)
Disposals - - - - -
At 30 June 2016 - (34,607) (28,407) - (63,014)
Net book value
At 30 June 2016 - - 17,400 - 17,400
At 30 June 2015 - - 266 - 266
Of the depreciation charge, £866 (2015: £4,834) is included within other
expenses in the income statement.
Company Fieldequipmentandmachinery£ Fixturesandfittings£ Total£
Cost
At 1 July 2014 34,607 28,649 63,256
Additions - - -
Disposals - (842) (842)
At 30 June 2015 34,607 27,807 62,414
Additions - 18,000 18,000
Disposals - - -
At 30 June 2016 34,607 45,807 80,414
Depreciation
At 1 July 2014 (31,980) (26,176) (58,156)
Charge (2,627) (2,207) (4,834)
At 30 June 2015 (34,607) (27,541) (62,148)
Charge - (866) (866)
Disposals - - -
At 30 June 2016 (34,607) (28,407) (63,014)
Net book value
At 30 June 2016 - 17,400 17,400
At 30 June 2015 - 266 266
11 Investments in subsidiaries
Company 2016£ 2015£
Cost
At 1 July 2015 613 482
Investment in subsidiary 810 131
Reclassification to assets held for sale - -
At 30 June 2016 1,423 613
Impairment
At 1 July 2015 (482) (482)
Charge in the year - -
Reclassification to assets held for sale - -
At 30 June 2016 (482) (482)
Net book value 941 131
As at 30 June 2016, the Company held interests in the following subsidiary
companies:
Company Country ofregistration Class Proportionheld Nature of business
Intrepid Resources Limited Zambia Ordinary 100% Dormant
Red Rock Australasia Pty Limited Australia Ordinary 100% Mineral exploration
Red Rock Kenya Limited Kenya Ordinary 87% Mineral exploration
Red Rock Inc. USA Ordinary 100% Mining exploration
Red Rock Cote D'Ivoire sarl Ivory Coast Ordinary 100% Mineral exploration
Basse Terre sarl Ivory Coast Ordinary 100% Mineral exploration
12 Investments in associates and joint ventures
Group Company
2016 £ 2015£ 2016 £ 2015£
Cost
At 30 June 2015 9,108,304 9,108,304 8,951,460 8,951,460
Additions during the year - - - -
Disposals during the year (1,709,735) - (1,709,735) -
Transfer from assets held for sale - - - -
At 30 June 2016 7,398,569 9,108,304 7,241,725 8,951,460
Impairment
At 30 June 2015 (5,139,426) (3,788,998) (4,652,038) (3,257,587)
Losses during the year (9,240) (1,183) - -
Disposals during the year 1,709,735 - 1,455,079 -
Impairment in the year (1,500,000) (1,349,245) (1,500,000) (1,394,451)
At 30 June 2016 (4,938,931) (5,139,426) (4,696,959) (4,652,038)
Net book amount 2,459,638 3,968,878 2,544,766 4,299,422
The Company, at 30 June 2016, had holdings amounting to 20% or more of the
issued share capital of the following companies which amounted to significant
influence or joint control:
Company Country ofincorporation Class ofshares held
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