REG - Red Rock Resources - Annual Financial Report <Origin Href="QuoteRef">RRR.L</Origin> - Part 2
23/11/2017 16:00
- Part 2: For the preceding part double click ID:nRSW3965Xa
considered when
estimating the fair value of a share-based payment. Where the vesting period
is linked to a non-market performance condition, the Group recognises the
goods and services it has acquired during the vesting period based on the best
available estimate of the number of equity instruments expected to vest. The
estimate is reconsidered at each reporting date based on factors such as a
shortened vesting period, and the cumulative expense is 'trued up' for both
the change in the number expected to vest and any change in the expected
vesting period.
Market conditions are performance conditions that relate to the market price
of the entity's equity instruments. These conditions are included in the
estimate of the fair value of a share-based payment. They are not taken into
account for the purpose of estimating the number of equity instruments that
will vest. Where the vesting period is linked to a market performance
condition, the Group estimates the expected vesting period. If the actual
vesting period is shorter than estimated, the charge is accelerated in the
period that the entity delivers the cash or equity instruments to the
counterparty. When the vesting period is longer, the expense is recognised
over the originally estimated vesting period.
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.
When a share-based payment is modified, the Group determines whether the
modification affects the fair value of the instruments granted, affects the
number of equity instruments granted or is otherwise beneficial to the
employee. In cases where the exercise price of options granted to employees is
reduced, the Group recognises the incremental change in fair value (along with
the original fair value determined at grant date) over the remaining vesting
period as an expense and an increase in equity. Decreases in the fair value
are not considered. To determine if an increase has occurred, management
compares the fair value of the modified award with the fair value of the
original award at the modification date. Any other benefit to the employee is
taken into account in estimating the number of equity instruments that are
expected to vest.
Share Incentive Plan
Where shares are granted to employees under the Share Incentive Plan, the fair
value of services provided is determined indirectly by reference to the fair
value of the free, partnership and matching shares granted on the grant date.
Fair value of shares is measured on the basis of an observable market price,
i.e. share price as at grant date, and is recognised as an expense in the
income statement on the date of the grant. For the partnership shares the
charge is calculated as the excess of the mid-market price on the date of
grant over the employee's contribution.
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 income and expense
Finance expense is recognised on an accruals basis using the effective
interest method.
Finance income 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.
Dividends received from available for sale investments are recognised as
finance income in the period when they are declared by the investee. In case
of distributions made by way of equal rights share buyback by an investee, the
funds received as a part of such distribution are shown by the Company and by
the Group in the period when right to receive them becomes established and
presented in the dividends received of the income statement.
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.
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 impairment.
Investments in associates and joint ventures 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 impairment.
Financial assets
The Group classifies its financial assets into one of the categories discussed
below, depending on the purpose for which the asset was acquired. The Group
has not classified any of its financial assets as held to maturity or fair
value through profit and loss.
Loans and receivables
These are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. They arise through the provision of
goods or services (trade receivables), but also incorporate other types of
contractual monetary asset. They are initially recognised at fair value plus
transactions costs that are directly attributable to their acquisition or
issue, and are subsequently carried at amortised cost using effective interest
rate method, less provision for impairment.
Impairment provision is recognised when there is objective evidence (such as
significant financial difficulties on the part of the counterparty or default
or significant delay in payment) that the Group will be unable to collect all
of the amounts due under the terms receivable, the amount of such provision
being the difference between the net carrying amount and the net resent value
of the future expected cash flows associated with the impaired receivable.
The Group's loans and receivables comprise trade and other receivables and
cash and cash equivalents in the consolidated statement of financial
position.
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 12 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 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.
Available for sale financial assets
Non-derivative financial assets not included in the above categories are
classified as available for sale and comprise principally the Group's
strategic investments in entities not qualifying as subsidiaries, associates
or jointly controlled entities. These equity investments are intended to be
held by the Group for an indefinite period of time. 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 income statement,
and the cost of such disposed of investments is written off on a first in
first out method.
Income from available for sale investments is accounted for in the income
statement 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.
Financial liabilities and equity
The Group classifies its financial liabilities into one of two categories:
fair value through profit and loss or other financial liabilities. The Group
has not classified any of its financial liabilities as fair value through
profit and loss.
Other financial liabilities comprise trade and other payables and borrowings.
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 the income statement 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.
1.4.11 Dividend income
Dividends received from strategic investments are recognised when they become
legally receivable. In case of interim dividends, this is when declared. In
case of final dividends, this is when approved by the shareholders at the
AGM.
1.4.12 Share capital
Financial instruments issued by the Group are classified as equity only to the
extent that they do not meet the definition of a financial liability or
financial asset. The Group's ordinary shares are classified as equity
instruments.
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 £1,114,213 for the year ended 30 June 2017.
At that date there was a net current assets of £299,702 (2016: net current
liability of £945,374). The loss resulted mainly from further £1.49m
impairment of the Company's iron exploration assets in Greenland. Cash and
cash equivalents were £909,094 (2016: 26,564) at year end.
During the reporting year the Company has continued to receive proceeds from
the sale of its gold interests in Colombia. The Company has a three-year
convertible promissory note of USD1.0m secured over the assets of its former
gold mine and associated plant and bearing interest of 5% per annum due in
2018. A partial pre-payment of this note occurred on 09 June 2017, whereby
USD250,000 was paid as part of a settlement agreement involving waiver of the
potential conversion rights, with the balance of the note plus interest,
estimated at USD783k, due in 2018.
Additional payments of up to USD2.0m will be paid in the form of a 3% net
smelter royalty payable quarterly on gold production and these payments
continued in 2017 and totalled USD36,747 to 30 June 2017. The Company
estimates that approximately £400k will be paid out towards the initial USD2m
royalty during 2018 based on updated projections from the operator in
Colombia. A final royalty stream of up to USD1.0m 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 make a cash distribution to its shareholders, which
it completed in March 2017. In announcements on 31 July 2017, 11 September
2017 and 28 September 2017 Jupiter announced its intentions to buy back a
further 4% of its outstanding share capital as part of a USD25m distribution
expected to complete in December 2017. Red Rock announced its intention to
accept this second buyback and the Company expects the total proceeds of these
two buybacks to be over USD950,000 for the calendar year.
In the longer term, Jupiter may look to re-list or to dispose of its main
production asset, the Tshipi Manganese Mine in South Africa, which would
likely result in a significant value crystallisation event for the Company. If
a strategic exit or IPO does not happen the Company expects to receive
dividend or buyback payments in roughly the same quantity in 2018 as it did in
2017 provided manganese pricing levels are stable.
Income streams from the Company's investment in Steelmin are set to begin with
smelter recommissioning in Q1 2018. Currently the Company sits in a positive
net debt position relative to its loans made into Steelmin and its outstanding
loans of over £1.3m. Give the differences in loan duration the Company would
have expected to reduce its outstandings to under USD3m by the end of January
2018, whereas the amount due to be repaid by Steelmin in February 2018 will
sit at E4.32m. The repayment of this loan on schedule should, once borrowings
are repaid, net the Company approximately £1.5m in surplus cash.
The Group retains a very lean operating structure, with three employees and
both accounting and geological services remaining outsourced. The Company is
continuing these cost control efforts by downsizing its offices following the
end of its lease in Q4 2017.
The Directors are confident in the Company's ability to raise new finance from
equity and debt markets when required, as demonstrated by the USD4.4m in debt
taken on in 2017 to invest in Steelmin Ltd, as well as the £300,000 in new
equity raised during this period. 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 cashflows from
its ongoing disposal and debt repayment in Colombia, debt repayment and
potential revenues from its investment in Steelmin, and either a complete exit
or ongoing distributions from its holdings in Jupiter Mines.
As sentiment in natural resource investment and development continues to
improve, driven in large part by expectations for rapid development of
electric vehicles, home battery storage, and grid level storage and associated
infrastructure, the Directors feel strongly that they will be able to access
capital as required during 2018.
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 years ended 30 June 2017
and 30 June 2016.
The effect of recognising MMM as an available for sale financial asset would
be to decrease the loss by £8 (2016: £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 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 relied on the single share buy-back that
occurred during 2017.
Using the preferred Market Approach the Company has taken the price used in
the proposed in September 2017 Jupiter Mines share buyback of 134,190,158
shares at USD0.29, and this gives a total valuation for Red Rock's Jupiter
holdings of USD7,448,625, relied on the single share buy back.
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. The model has its strengths and weaknesses and requires
six inputs as a minimum: 1. The share price; 2. The exercise price; 3. The
risk free rate of return; 4. The expected dividends or dividend yield; 5. The
life of the option; and 6. The volatility of the expected return. The first
three inputs are normally, but not always, straightforward. The last three
involve greater judgement and have the greatest impact on the fair value.
Impairment of financial assets
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, the Group partially reversed £4,260,421
of prior year's impairment (2016: nil). No additional impairment on available
for sale financial assets was recognised in the income statement for the year
ended 30 June 2017 (2016: nil).
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 £1,496,550 on investments in associates and joint ventures
was recognised in the income statement (2016: £1,500,000), which related to
the Company's iron ore assets in Greenland). During the year in question the
Company let lapse its iron ore exploration licenses in Greenland and so has
chosen to fully impair the residual exploration assets.
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 Licence numbers 122 and 202. In May 2015 the Company was granted 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 licences. While the Company feels it has a
strong and quite valid case for retention of the licences 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 2017 Jupiter Other Australian African Corporate Total
Mines investments exploration exploration and £
Limited £ £ £ unallocated
£ £
Loss on sale of available for sale investments - (60,785) - - - (60,785)
Impairment of investments in associates and joint ventures - (1,496,550) - - - (1,496,550)
Exploration expenses - (29,103) - (13,087) - (42,190)
Administration expenses* - - - - (644,687) (644,687)
Currency gain - - 41,430 - 81,050 122,480
(Provision for)/Reversal of provision for bad debts - (140,178) - - - (140,178)
Share of losses in associates - - - - (8) (8)
Finance income, net 538,740 - - - 608,965 1,147,705
Net profit/(loss) before tax from continuing operations 538,740 (1,726,616) 41,430 (13,087) 45,320 (1,114,213)
Investment Exploration Other
Year to 30 June 2016 Jupiter Other Australian African Corporate Total
Mines investments exploration exploration and £
Limited £ £ £ unallocated
£ £
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 - - - - 599,225 599,225
Finance (cost)/income, net - - - (954) 1,217,421 1,216,467
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 £1,800
(2016: £867).
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 2017 UK USA Greenland Africa Total
£ £ £ £ £
Revenue - - - - -
(Loss) on sale of available for sale investments (60,785) - - - (60,785)
Total segment revenue and other gains (60,785) - - - (60,785)
Non-current assets
Property, plant and equipment 15,601 - - - 15,601
Investments in associates and joint ventures - - - 963,080 963,080
Exploration assets - 280,460 - - 280,460
Total segment non-current assets 15,601 280,460 - 963,080 1,259,141
Available for sale financial assets 6,080,146
Non-current receivables 4,543,755
Total non-current assets 11,883,042
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
3 Loss for the year before taxation
Loss for the year before taxation is stated after charging:
2017 2016
£ £
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 (note 7) 343,681 324,421
- Share-based payments - Directors 83,746 82,470
- Share-based payments - staff 22,130 8,543
Depreciation - continuing operations 1,800 867
Other income and currency gain on MFP receivable 351,944 918,767
Other currency gain 47,658 346,155
4 Finance income/(costs), net
2017 2016
£ £
Interest income (other than MFP finance income) 342,932 323,229
Dividend income 538,740 -
Interest expense (11,088) (24,575)
Total finance income (other than MFP finance income) 870,584 298,654
MFP finance income 277,121 918,767
Total finance income 1,147,705 1,217,461
Interest income (other than MFP finance income) comes mainly from non-current
receivables from an associate. Please refer to note 15.
Dividend income represents the money received from the Group's 1.2% holding in
Jupiter Mines, full details are disclosed in note 22.
5 Taxation
Notes 2017 2016
£ £
Current period taxation on the Group
UK corporation tax at 19.75% (2016: 20%) 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 (1,114,213) (283,280)
Loss on ordinary activities at the average UK standard rate of 19.75% (2016: 20%) (220,057) (56,656)
Impact of gain on disposal of associates and subsidiaries - (117,997)
Effect of expenditure not deductible 329,364 324,381
Utilisation of prior year losses (109,307) (149,728)
Tax charge - -
Tax credit arising from discontinued operations - -
Total tax credit - -
Deferred tax amounting to £nil (2016: £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% (2016: 20%).
6 Staff costs
The aggregate employment costs of staff (including Directors) for the year in
respect of the Group was:
2017 2016
£ £
Wages and salaries 210,500 284,473
Pension 12,632 15,637
Social security costs 16,536 21,692
Severance costs - 14,679
Employee share-based payment charge 142,732 91,013
Total staff costs 382,400 427,494
The average number of Group employees (including Directors) during the year
was:
2017 2016
Number Number
Executives 4 4
Administration 1 1
Exploration - -
5 5
The key management personnel are the Directors and their remuneration is
disclosed within note 7.
7 Directors' emoluments
2017 Directors' Consultancy Share Share based Payments £ Pension Social Total
fees fees Incentive Plan contributions security costs £
£ £ £ £ £
Executive Directors
A R M Bell 82,000 13,750 10,440 35,115 6,091 7,847 155,243
S Kaintz 65,000 - 10,440 31,358 3,797 6,967 117,562
Other Directors
M C Nott 18,000 - 10,212 1,245 976 1,175 31,608
S Quinn 18,000 - 10,440 8,031 275 2,522 39,268
183,000 13,750 41,532 75,749 11,139 18,511 343,681
2016 Directors' Consultancy Share Share based Payments £ Pension Social Total
fees fees Incentive Plan contributions security costs £
£ £ £ £ £
Executive Directors
A R M Bell 88,750 15,000 7,200 27,360 6,443 7,655 152,408
S Kaintz 65,000 - 7,200 22,230 3,284 6,468 104,182
Other Directors
J F Ladner 9,000 - - - - 651 9,651
M C Nott 18,000 - 7,080 4,275 909 1,027 31,291
S Quinn 18,069 - 3,600 4,275 - 945 26,889
198,819 15,000 25,080 58,140 10,636 16,746 324,421
The number of Directors who exercised share options in the year was nil (2016:
nil).
During the year, the Company contributed to a Share Incentive Plan more fully
described in the Directors' Report.
3,000,000 (2016: 4,550,000) free shares were issued to each employee,
including Directors, making a total of 8,712,000 (2016: 8,822,000) free shares
issued.
8 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:
2017 2016
Loss attributable to equity holders of the parent from continuing operations £(1,114,213) £(275,035)
Loss attributable to equity holders of the parent from discontinued operations - -
Loss attributable to equity holders of the Parent £(1,114,213) £(275,035)
Weighted average number of Ordinary shares of £0.0001 (2016: £0.0001) in issue 458,077,061 263,154,543
Loss per share - basic (0.24) pence (0.10) pence
Weighted average number of Ordinary shares of £0.0001 (2016: £0.0001) in issue inclusive of outstanding dilutive options* 458,077,061 263,154,543
Loss per share - fully diluted (0.24) pence (0.10) 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:
2017 2016
Loss per share denominator 458,077,061 263,154,543
Weighted average number of exercisable share options - -
Diluted loss per share denominator* 458,077,061 263,154,543
* In accordance with IAS 33, the diluted EPS is calculated by adjusting the
earnings and number of shares for the effects of dilutive options and other
dilutive potential ordinary shares. The effects of all the instruments in
issue by the Group at 30 June 2017 is anti-dilutive (2016: all anti-dilutive)
and all anti-dilutive potential ordinary shares are ignored in calculating
diluted EPS. The details of all anti-dilutive warrants and options in issue
are disclosed in note 18 and note 20 respectively.
9 Property, plant and equipment
Group and Company Field equipment Fixtures and Total
and machinery fittings £
£ £
Cost
At 1 July 2015 34,607 27,807 62,414
Additions - 18,000 18,000
Disposals - - -
At 30 June 2016 34,607 45,807 80,414
Additions - - -
Disposals - - -
At 30 June 2017 34,607 45,807 80,414
Depreciation and impairment
At 1 July 2015 (34,607) (27,541) (62,148)
Depreciation charge - (866) (866)
Disposals - - -
At 30 June 2016 (34,607) (28,407) (63,014)
Depreciation charge - (1,800) (1,800)
Disposals - - -
At 30 June 2017 (34,607) (30,207) (64,814)
Net book value
At 30 June 2017 - 15,600 15,600
At 30 June 2016 - 17,400 17,400
Of the depreciation charge, £1,800 (2016: £866) is included within other
expenses in the income statement.
10 Investments in subsidiaries
Company 2017 2016
£ £
Cost
At 1 July 2016 1,423 613
Investment in subsidiary - 810
At 30 June 2017 1,423 1,423
Impairment
At 1 July 2016 (482) (482)
Charge in the year - -
At 30 June 2017 (482) (482)
Net book value 941 941
As at 30 June 2017, the Company held interests in the following subsidiary
companies:
Company Country of Class Proportion Nature of business
registration held
Red Rock Australasia Pty Limited Australia Ordinary 100% Mineral exploration
Red Rock Kenya Limited Kenya Ordinary 87% Mineral exploration
RRR Kenya Limited Kenya Ordinary 100% Dormant
Red Rock Inc. USA Ordinary 100% Natural resources
Red Rock Cote D'Ivoire sarl Ivory Coast Ordinary 100% Dormant
Basse Terre sarl Ivory Coast Ordinary 100% Dormant
As at 30 June 2016, the Company held interests in the following subsidiary
companies:
Company Country of Class Proportion Nature of business
registration held
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
11 Investments in associates and joint ventures
Group Company
2017 2016 2017 2016
£ £ £ £
Cost
At 30 June 7,398,569 9,108,304 7,241,725 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 7,398,569 7,398,569 7,241,725 7,241,725
Impairment
At 30 June (4,938,931) (5,139,426) (4,696,959) (4,652,038)
Losses during the year (8) (9,240) - -
Disposals during the year - 1,709,735 - 1,455,079
Impairment in the year (1,496,550) (1,500,000) (1,496,550) (1,500,000)
At 30 June (6,435,489) (4,938,931) (6,193,509) (4,696,959)
Net book amount at 30 June 963,080 2,459,638 1,048,216 2,544,766
The Company, at 30 June 2017, 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 of Class of Percentage of Accounting year ended
incorporation shares held issued capital
Melville Bay Limited (formerly "NAMA Greenland Limited") England Ordinary 60.00% 30 November 2016
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 of Class of Percentage of Accounting year ended
incorporation shares held issued capital
Melville Bay Limited (formerly "NAMA Greenland Limited") England Ordinary 60.00% 30 November 2015
* Financial information was not available for this company.
The Company, at 30 June 2017 and 30 June 2016, had significant influence by
virtue other than shareholding over 20% over the
following companies:
Company Country of Class of Percentage of Accounting year ended
incorporation shares held issued capital
Mid Migori Mining Company Limited Kenya Ordinary 15.00% 30 September 2016
Summarised financial information for the Company's associates and joint
ventures, where available, is given below:
For the year as at 30 June 2017:
Company Revenue Loss Assets Liabilities
£ £ £ £
Mid Migori Mining Company Limited - (51) 2,763,865 (3,434,865)
Melville Bay Limited - (4,146,034) 37,211 (228,025)
For the year as at 30 June 2016:
Company Revenue Loss Assets Liabilities
£ £ £ £
Mid Migori Mining Company Limited - (58,197) 2,753,364 (3,411,111)
Melville Bay Limited - (1,760,272) 4,178,640 (223,420)
Mid Migori Red Rock Melville Total
Mining Company Zambia Bay £
Limited Limited Limited
£ £ £
Cost
At 30 June 2016 1,044,766 140,596 6,213,207 7,398,569
Additions during the year - - - -
Disposals during the year - - - -
At 30 June 2017 1,044,766 140,596 6,213,207 7,398,569
Impairment and losses during the year
At 30 June 2016 (81,677) (140,596) (4,716,657) (4,938,930)
(Losses) during the year (8) - - (8)
Impairment in period - - (1,496,550) (1,496,550)
Disposals during the year - - - -
At 30 June 2017 (81,685) (140,596) (6,213,207) (6,435,488)
Carrying amount
At 30 June 2017 963,081 - - 963,081
At 30 June 2016 963,089 - 1,496,550 2,459,639
Mid Migori Mining Company Limited
The Company owns 15% of the issued share capital of Mid Migori Mining Company
Limited ("MMM"). The Company has entered into an agreement whereby it manages
and funds a number of MMM's development projects and has representation on the
MMM board.
In accordance with IAS 28, the involvement with MMM meets the definition of
significant influence and therefore has been accounted for as an associate
(note 1.5).
Melville Bay Limited
In consideration for funding the 2012 exploration programme of North Atlantic
Mining Associates Limited ("NAMA"), the Company earned 60% interest in
Melville Bay Limited ("MBL"). The Company does not have control over MBL but
has joint control along with North Atlantic Mining Associates Limited and
International Media Projects Ltd through a contractual joint venture
arrangement making MBL a jointly controlled entity. The book value of MBL has
been fully written off in the current financial year.
12 Exploration assets
Group 2017 2016
£ £
Cost
At 1 July 2016 280,460 -
Additions - 280,460
Disposals - -
At 30 June 2017 280,460 280,460
Impairment
At 1 July 2016 - -
Charge in the year - -
At 30 June 2017 - -
Net book value 280,460 280,460
13 Available for sale financial assets
Group and Company
2017 2016
£ £
Opening balance 1,976,552 1,331,766
Additions 96,435 487,500
Disposals (210,594) -
Revaluations (42,668) 157,286
Reversal of previous impairment 4,260,421 -
Closing balance 6,080,146 1,976,552
Market value of investments
The market value as at 30 June 2017 of the Company's available for sale listed
and unlisted investments was as follows:
2017 2016
£ £
Quoted on London AIM 61,607 218,433
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