REG - Tertiary Minerals - Audited Results for the year to 30 September 2016 <Origin Href="QuoteRef">TYM.L</Origin> - Part 3
13/12/2016 07:05
- Part 3: For the preceding part double click ID:nRSM6175Rb
2016£ 2015£
Tax reconciliation
Loss before income tax (473,506) (674,991)
Tax at hybrid rate 20% (2015: 20.5%) (94,701) (138,373)
Differences between capital allowances and depreciation (4,218) (549)
Pre-trading expenditure no longer deductible for tax purposes 125,770 85,476
Tax effect at 20% (2015: 20.5%) 24,310 17,410
Unrelieved tax losses carried forward (70,391) (120,963)
Tax recognised on loss - -
Total losses carried forward for tax purposes (5,351,834) (4,999,880)
Factors that may affect future tax charges
The Group has total losses carried forward of £5,351,834 (2015: £4,999,880).
This amount would be charged to tax, thereby reducing tax liability, if
sufficient profits were made in the future. The deferred tax asset has not
been recognised as the future recovery is uncertain given the exploration
status of the Group. The carried tax loss is adjusted each year for amounts
that can no longer be carried forward.
8. Intangible assets
Group Deferredexplorationexpenditure2016£ Deferredexplorationexpenditure2015£
CostAt start of year 4,799,087 4,309,680
Additions 473,527 560,250
Exchange adjustments 419,125 (70,843)
At 30 September 5,691,739 4,799,087
Impairment lossesAt start of year (1,262,478) (1,257,956)
Charge during year - (4,522)
At 30 September (1,262,478) (1,262,478)
Carrying amounts
At 30 September 4,429,261 3,536,609
At start of year 3,536,609 3,051,724
9. Property, plant & equipment
GroupFixtures and fittings2016£ Companyfixturesand fittings2016£ GroupFixturesand fittings2015£ Companyfixturesand fittings2015£
CostAt start of year 53,422 36,046 50,544 33,006
Additions 9,322 9,322 3,040 3,040
Disposals (11,224) (11,224) (162) -
At 30 September 51,520 34,144 53,422 36,046
DepreciationAt start of year (46,126) (29,085) (41,688) (25,202)
Charge for the year (6,833) (6,647) (4,600) (3,883)
Disposals 11,224 11,224 162 -
At 30 September (41,735) (24,508) (46,126) (29,085)
Net Book Value
At 30 September 9,785 9,636 7,296 6,961
At start of year 7,296 6,961 8,856 7,804
10. Investments
Subsidiary undertakings
Company Country of incorporation/registration Type and percentage of shares held at 30 September 2016 Principal activity
Tertiary Gold Limited England & Wales 100% of ordinary shares Mineral exploration
Tertiary (Middle East) Limited England & Wales 100% of ordinary shares Mineral exploration
Tertiary Minerals US Inc. Nevada, USA 100% of ordinary shares Mineral exploration
Investment in subsidiary undertakings Company2016£ Company2015£
Ordinary shares - Tertiary (Middle East) Limited 1 1
Ordinary shares - Tertiary Gold Limited 224,888 224,888
Ordinary shares - Tertiary Minerals US Inc. 1 1
Loan - Tertiary (Middle East) Limited 683,586 682,301
Less - Provision for impairment (683,372) (682,301)
Loan - Tertiary Gold Limited 5,158,075 5,045,884
Loan - Tertiary Minerals US Inc. 1,450,976 1,120,781
At 30 September 6,834,155 6,391,555
Available for sale investment
Company Country of incorporation/registration Type and percentage of shares held at 30 September 2016 Principal activity
Sunrise Resources plc England & Wales 9.13% of ordinary shares Mineral exploration
Available for sale investment Group2016£ Company2016£ Group2015£ Company2015£
Value at start of year 148,222 148,222 239,626 239,626
Additions to available for sale investment 86,273 86,273 21,298 21,298
Movement in valuation of available for sale investment (30,025) (30,025) (112,702) (112,702)
At 30 September 204,470 204,470 148,222 148,222
The additions to available for sale investment are shares issued in lieu of a
cash payment for settlement of outstanding invoices for management fees.
The fair value of the available for sale investment is equal to the market
value of the shares in Sunrise Resources plc at 30 September 2016, based on
the closing mid-market price of shares on the AIM Market.
These are level one inputs for the purpose of the IFRS 13 fair value
hierarchy.
11. Receivables
Group2016£ Company2016£ Group2015£ Company2015£
Trade receivables 64,902 64,902 53,906 53,906
Other receivables 22,683 676 15,102 524
Prepayments 17,447 15,799 21,301 20,327
At 30 September 105,032 81,377 90,309 74,757
The Group aged analysis of trade receivables is as follows:
Not impaired £ 30 days or less £ Over 30 days £ Total carrying amount£
2016 Trade receivables 64,902 64,902 - 64,902
2015 Trade receivables 53,906 53,906 - 53,906
12. Cash and cash equivalents
Group2016 £ Company 2016 £ Group2015 £ Company 2015 £
Cash at bank and in hand 43,756 16,574 91,227 26,552
Short-term bank deposits 404,718 404,718 218,588 218,588
At 30 September 448,474 421,292 309,815 245,140
13. Trade and other payables
Group2016 £ Company 2016 £ Group2015 £ Company 2015 £
Trade payables 33,471 16,214 32,027 13,042
Other taxes and social security costs 10,358 10,358 5,684 5,684
Accruals 38,324 16,517 59,866 25,644
Other payables 10,335 10,335 5,203 5,203
At 30 September 92,488 53,424 102,780 49,573
14. Issued capital and reserves
2016 No. 2016£ 2015 No. 2015£
Allotted, called up and fully paid
Ordinary shares of 1p each
Balance at start of year 187,859,217 1,878,592 174,302,034 1,743,020
Shares issued in the year 79,084,996 790,850 13,557,183 135,572
Balance at 30 September 266,944,213 2,669,442 187,859,217 1,878,592
During the year to 30 September 2016 the following share issues took place:
An issue of 28,888,889 1.0p ordinary shares at 2.25p per share, by way of
placing, for a total consideration of £592,412 net of expenses (6 October
2015).
An issue of 97,170 1.0p ordinary shares at 1.40p per share to a director, in
satisfaction of directors fees, for a total consideration of £1,360 (11 March
2016).
An issue of 50,000,000 1.0p ordinary shares at 1.00p per share, by way of
placing, for a total consideration of £450,000 net of expenses (25 May 2016).
An issue of 98,937 1.0p ordinary shares at 1.375p per share to a director, in
satisfaction of directors fees, for a total consideration of £1,361 (2 August
2016).
During the year to 30 September 2015 a total of 13,557,183 1.0p ordinary
shares were issued, at an average price of 2.654p, for a total consideration
of £324,795 net of expenses.
The total amount of transaction fees debited to the Share Premium account in
the year was £107,588 (2015: £34,745).
Nature and purpose of reserves
Foreign currency reserve
Exchange differences relating to the translation of the net assets of the
Group's foreign operations, which relate to subsidiaries only, from their
functional currency into the Parent's functional currency, being Sterling, are
recognised directly in the foreign currency reserve.
Share option reserve
The share option reserve is used to recognise the fair value of share based
payments provided to employees, including key management personnel, by means
of share options and share warrants issued as part of their remuneration.
Refer to Note 15 for further details.
15. Warrants and options granted
Warrants not exercised at 30 September 2016
Issue date Exerciseprice Number Exercisable Expirydates
26/01/2012 9.75p 2,300,000 Any time before expiry 26/01/2017
26/01/2012 9.75p 200,000 Any time before expiry 26/01/2017
10/01/2013 7.63p 1,700,000 Any time before expiry 10/01/2018
10/01/2013 7.63p 300,000 Any time before expiry 10/01/2018
14/01/2014 11.25p 1,050,000 Any time before expiry 14/01/2019
14/01/2014 11.25p 300,000 Any time before expiry 14/01/2019
01/10/2014 9.00p 600,000 Any time before expiry 30/09/2019
01/10/2014 12.00p 600,000 Any time from 01/10/2016 30/09/2019
01/10/2014 15.00p 600,000 Any time from 01/10/2017 30/09/2019
01/10/2014 18.00p 600,000 Any time from 01/10/2018 30/09/2019
01/10/2014 21.00p 600,000 Any time from 01/10/2018 30/09/2019
20/02/2015 4.00p 1,200,000 Any time before expiry 20/02/2020
20/02/2015 4.00p 500,000 Any time before expiry 20/02/2020
11/03/2016 1.40p 200,000 Any time from 11/03/2017 11/03/2021
11/03/2016 1.40p 800,000 Any time from 11/03/2017 11/03/2021
Warrants and options are issued for nil consideration and are exercisable as
disclosed above. They are exchangeable on a one for one basis for each
ordinary share of 1.0p at the exercise price on the date of conversion.
Share based payments
The Company has an Inland Revenue approved share option scheme for all
employees. Options are exercisable at a price equal to the market price of the
Company's shares on the date of grant. The vesting period is three years. If
the options remain unexercised after a period of ten years from the date of
grant the options expire. Options may be forfeited if the employee leaves the
Company.
In addition, the Company issues warrants to directors and employees, outside
of the approved scheme, on varying terms and conditions.
Details of the share warrants outstanding during the year are as follows:
2016 2015
Number ofshare warrants Weighted averageexercisepricePence Number ofshare warrantsand shareoptions WeightedaverageexercisepricePence
Outstanding at start of year 15,050,000 9.259 13,700,000 7.422
Granted during the year 1,000,000 1.400 4,700,000 11.02
Exercised during the year - - (200,000) 2.375
Forfeited during the year - - - -
Expired during the year (4,500,000) 7.272 (3,150,000) 4.337
Outstanding at 30 September 11,550,000 9.353 15,050,000 9.259
Exercisable at 30 September 8,150,000 8.224 10,350,000 8.459
The warrants outstanding at 30 September 2016 had a weighted average exercise
price of £0.08 (2015: £0.09), a weighted average fair value of £0.03 (2015:
£0.03) and a weighted average remaining contractual life of 2.22 years.
There were no warrants exercised in the year ended 30 September 2016. Warrants
exercised in the year ended 30 September 2015 had a weighted average exercise
price of £0.02.
In the year ended 30 September 2016, warrants were granted on 11 March 2016.
The aggregate of the estimated fair values of the warrants granted on this
date is £4,603. In the year ended 30 September 2015, warrants were granted on
1 October 2014 and 20 February 2015. The aggregate of the estimated fair
values of the warrants granted on these dates is £76,354.
No share options were outstanding at 30 September 2016.
No share options were granted in the year ended 30 September 2016 or the year
ended 30 September 2015.
The inputs into the Black-Scholes-Merton Pricing Model were as follows:
2016 2015
Weighted average share price 1.40p 5.43p
Weighted average exercise price 1.40p 11.02p
Expected volatility 75% 80%
Expected life 4 years 4 years
Risk-free rate 0.80% 1.75%
Expected dividend yield 0% 0%
Expected volatility was determined by calculating the historical volatility of
the Company's share price over the previous four years. The expected life used
in the model has been adjusted based on management's best estimate for the
effects of non-transferability, exercise restrictions and behavioural
considerations.
The Company recognised total expenses of £25,785 and £63,278 related to
equity-settled share based payment transactions in 2016 and 2015
respectively.
16. Operating lease commitments
The Company rents office premises under an operating lease agreement. The
current lease term is for one year expiring on 30 November 2016. No contingent
rent is payable. The lease is eligible for renewal on expiry.
Future minimum lease payments under non-cancellable operating leases are:
2016 Land & buildings £ 2015 Land & buildings £
Office accommodation:
Within one year 3,299 3,234
The Company does not sub-lease any of its leased premises.
Lease payments recognised in loss for the period amounted to £19,727 (2015:
£19,290).
17. Related party transactions
Key management personnel
The Directors holding office in the period and their warrants held in the
share capital of the Company are:
At 30 September 2016 At 30 September 2015
Warrants
Shares number Number Exercise price Expiry date Shares number Warrants number
P L Cheetham* 11,876,913 1,500,000 9.750p 26/01/2017 11,876,913 5,000,000
500,000 7.630p 10/01/2018
500,000 11.250p 14/01/2019
1,000,000 4.000p 20/02/2020
D A R McAlister 453,894 300,000 9.750p 26/01/2017 257,787 600,000
D Whitehead 414,900 300,000 9.750p 26/01/2017 414,900 600,000
R H Clemmey 504,037 1,000,000 7.630p 10/01/2018 6,333 5,350,000
350,000 11.250p 14/01/2019
600,000 9.000p 30/09/2019
600,000 12.000p 30/09/2019
600,000 15.000p 30/09/2019
600,000 18.000p 30/09/2019
600,000 21.000p 30/09/2019
* Includes 2,843,625 shares held by K E Cheetham, wife of P L Cheetham.
The Directors have no beneficial interests in the shares of the Company's
subsidiary undertakings as at 30 September 2016. The Directors of the Company
are the Directors of all Group companies.
Details of the Parent Company's investment in subsidiary undertakings are
shown in Note 10.
Sunrise Resources plc
During the year the Company charged costs of £190,124 (2015: £181,598) to
Sunrise Resources plc being shared overheads of £23,488 (2015: £22,809), costs
paid on behalf of Sunrise Resources plc of £4,288 (2015: £6,312), staff salary
costs of £61,866 (2015: £55,454) and directors' salary costs of £100,482
(2015: £97,023), comprising P L Cheetham £99,775 (2015: £96,972) and R H
Clemmey £707 (2015: £51). The salary costs in Notes 4 and 5 include these
charges.
At the balance sheet date an amount of £64,724 (2015: £53,888) was due from
Sunrise Resources plc.
P L Cheetham, a director of Tertiary Minerals plc, is also a director of
Sunrise Resources plc.
Shares and warrants held in Sunrise Resources plc by the Tertiary Minerals plc
Directors are as follows:
At 30 September 2016 At 30 September 2015
Warrants
Shares number Number Exercise price Expiry date Shares number Warrants number
P L Cheetham* 75,776,599 2,000,000 1.250p 24/02/2017 22,725,951 13,222,222
2,000,000 0.850p 19/03/2018
2,000,000 0.550p 14/01/2019
3,000,000 0.275p 05/02/2020
D A R McAlister 550,000 - - - 550,000 -
D Whitehead 250,000 - - - 250,000 -
R H Clemmey - 500,000 1.250p 24/02/2017 - 2,250,000
500,000 0.850p 19/03/2018
500,000 0.550p 14/01/2019
750,000 0.275p 05/02/2020
500,000 0.160p 18/02/2021
* Includes 5,500,000 shares held by K E Cheetham, wife of P L Cheetham.
18. Capital management
The Group's capital requirements are dictated by its project and overhead
funding requirements from time to time. Capital requirements are reviewed by
the Board on a regular basis.
The Group manages its capital to ensure that entities within the Group will be
able to continue as going concerns, to increase the value of the assets of the
business and to provide an adequate return to shareholders in the future when
exploration assets are taken into production.
The Group manages the capital structure and makes adjustments to it in the
light of changes in economic conditions and the risk characteristics of its
assets. In order to maintain or adjust the capital structure the possibilities
open to the Group in future include issuing new shares, consolidating shares,
returning capital to shareholders, taking on debt, selling assets and
adjusting the amount of dividends paid to the shareholders.
19. Financial instruments
At 30 September 2016, the Group's and Company's financial assets consisted of
available for sale investments, trade receivables and cash and cash
equivalents. At the same date, the Group and Company had no financial
liabilities other than trade and other payables due within one year and had no
agreed borrowing facilities as at this date. There is no material difference
between the carrying and fair values of the Group and Company's financial
assets and liabilities.
The carrying amounts for each category of financial instruments held at 30
September 2016, as defined in IAS 39, are as follows:
Group 2016 £ Company 2016 £ Group 2015 £ Company 2015£
Loans & receivables 536,846 487,652 379,845 300,510
Available for sale investments 204,470 204,470 148,222 148,222
Financial liabilities at amortised cost 81,449 42,385 96,416 43,209
Risk management
The principal risks faced by the Group and Company resulting from financial
instruments are liquidity risk, foreign currency risk and, to a lesser extent,
interest rate risk and credit risk. The Directors review and agree policies
for managing each of these risks as summarised below. The policies have
remained unchanged from previous periods as these risks remain unchanged.
Liquidity risk
The Group holds cash balances in Sterling, US Dollars, Swedish Kronor, Euros
and Saudi Riyals to provide funding for exploration and evaluation activity,
whilst the Company holds cash balances in Sterling, US Dollars and Euros. The
Group and Company are dependent on equity fundraising through private placings
which the Directors regard as the most cost-effective method of fundraising.
The Directors monitor cash flow in the context of their expectations for the
business to ensure sufficient liquidity is available to meet foreseeable
needs.
Currency risk
The Group's financial risk management objective is broadly to seek to make
neither profit nor loss from exposure to currency risk. The Group is exposed
to transactional foreign exchange risk and takes profits and losses as they
arise as, in the opinion of the Directors, the cost of hedging against
fluctuations would be greater than the related benefit from doing so.
Bank and cash balances were held in the following denominations:
Group Company
2016£ 2015 £ 2016 £ 2015 £
United Kingdom Sterling 415,860 225,795 409,535 221,972
United States Dollar 19,240 71,543 11,641 23,140
Swedish Krona 553 2,373 - -
European Euro 12,777 9,200 116 28
Canadian Dollar - 866 - -
Saudi Riyal 44 38 - -
448,474 309,815 421,292 245,140
Surplus Sterling funds are placed with NatWest bank on short-term treasury
deposits at variable rates of interest.
The Company and the Group are exposed to changes in the US Dollar/UK Sterling
exchange rate mainly in the Sterling value of US Dollar denominated financial
assets.
Sensitivity analysis shows that the Sterling value of its US Dollar
denominated financial assets at
30 September 2016 would increase or decrease by £962 for each 5% increase or
decrease in the value of Sterling against the Dollar.
Neither the Company nor the Group is exposed to material transactional
currency risk.
Interest rate risk
The Group and Company finance their operations through equity fundraising and
therefore do not carry borrowings.
Fluctuating interest rates have the potential to affect the loss and equity of
the Group and the Company insofar as they affect the interest paid on
financial instruments held for the benefit of the Group. The Directors do not
consider the effects to be material to the reported loss or equity of the
Group or the Company presented in the financial statements.
Credit risk
The Company has exposure to credit risk through receivables such as VAT
refunds, invoices issued to related parties and its joint arrangements for
management charges. The amounts outstanding from time to time are not material
other than for VAT refunds which are considered by the Directors to be low
risk.
The Company has exposure to credit risk in respect of its cash deposits with
NatWest bank and this exposure is considered by the Directors to be low.
20. Event after the Balance Sheet date
Kaaresselkä and Kiekerömaa Gold Projects, Finland
On 5 December 2016 the Company announced the sale of the two legacy gold
assets in Finland to TSX-V listed Aurion Resources Ltd. £100,000 initial
consideration to be paid by Aurion: £15,000 in cash and £85,000 in Aurion
shares. The Company will retain a royalty interest in the projects. The sale
is conditional upon successful transfer of the Exploration Licences for each
project from Tertiary to Aurion and exchange approval by the TSX-V. For
further detail please refer to the Non-Core Projects section of the Operating
Review
This information is provided by RNS
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