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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Bmr Group | LSE:BMR | London | Ordinary Share | GB00BWV0F181 | ORD GBP0.01 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1.90 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMBMR
RNS Number : 3425J
BMR Mining PLC
17 December 2015
BMR Mining PLC
("BMR" or the "Company")
2015 Final Results and AGM Notice
The Company releases its full year results for the year ended 30 June 2015 ("Results"). The Results are being made available to shareholders from today and will be available on the Company's website, www.bmrplc.com, shortly.
BMR also announces that notice of its annual general meeting ("AGM") has today been made available to shareholders and will also shortly be available to view on the Company's website.
The AGM will be held at 10:30 a.m. on 10 February 2016 at the offices of WH Ireland, 24 Martin Lane, London, EC4R 0DR.
For further information:
BMR Mining PLC 020 7734 6252
Alex Borrelli, CEO and Chairman
WH Ireland Limited 020 7220 1666
Chris Fielding, Head of Corporate Finance
CHAIRMAN'S STATEMENT
I am pleased to present below the financial statements of the Company for the year ended 30 June 2015.
Results for the year
The Company reported a loss before taxation for the year ended 30 June 2015 of GBP1.59 million (2014: GBP9.27 million after adjusting for impairment write-downs and provisions of GBP4.57 million). Administrative expenses amounted to GBP2.41 million (2014: GBP3.04 million) including foreign exchange losses of GBP0.76 million (2014: GBP1.79 million). Adjustments for share-based payments were GBP0.05 million (2014: GBP1.65 million). Loss per ordinary share was 1.19p (2014: 7.74p).
Consolidated net assets at 30 June 2015 amounted to GBP8.06 million (2014: GBP8.09 million). Cash balances at the year end amounted to GBP0.79 million (2014: GBP0.75 million). Current cash balances, following the GBP0.75 million placing in October 2015, amount to approximately GBP0.90 million.
Background
Following my appointment, the Company instructed independent accountants to investigate material concerns that had come to light and accordingly the Company's share trading on AIM was suspended from 4 November 2014 until it resumed on 1 May 2015. The investigation resulted in write-downs and provisions of GBP10.30 million, of which GBP4.57 million was in respect of the year ended 30 June 2014, GBP4.03 million in respect of prior years and the balance of GBP1.70 million attributable to both depreciation not previously provided and foreign exchange differences during the periods.
On 18 February 2015, the Company entered into a settlement agreement with certain parties relating to matters underlying certain of these write-downs of assets, as a result of which the Company received GBP0.96 million in cash.
The Directors have continued to consider areas where further recoveries can be sought having regard to the likelihood of success, the cost of taking action and the opportunity for recovery within a reasonable timescale. The Company has instructed lawyers and accountants to prepare particulars of claim against certain entities not party to the settlement agreement where the Directors are confident of success.
Kabwe operations
The Directors have focused extensively on the opportunities arising from the planned conversion of the tailings held at Kabwe into zinc ("Zn") and lead ("Pb") metals and metal compounds and currently expect the Company to commence pilot plant operations once the upgraded pilot plant has been constructed following the receipt of ZEMA approval.
On 25 June 2015, the Company announced that the metallurgical test programme on the Wash Plant Tailings ("WPT") and Leach Plant Residue Tailings ("LPR") using an acid/brine leaching process to recover Zn and Pb had been successful. The objective of the metallurgical test programme was to confirm the technical viability of the acid/brine leach process for the extraction of Zn and Pb from the WPT and LPR. The process was successfully peer reviewed, as announced on 22 September 2015.
On 31 July 2015, the Company announced that, following laboratory testing, the proposed acid/brine leach process had been enhanced.
The WPT was estimated by Mineral Corporation Consultancy (Pty), in its March 2012 report, to contain 573,458 dry tonnes (JORC compliant) at a mean grade of 10.66% Zn and 7.21% Pb (61.4kt contained Zn and 41.3kt contained Pb).
The potential recoveries that have been achieved into a Pregnant Liquor Solution (PLS) are 94.2% Pb and 79.6% Zn. Proving the commercial viability of scaling this new process will be the next stage of our evaluation.
The Company also announced the successful recovery in testing by precipitation and electro winning from the PLS of the following products:
-- a lead sponge with a grade of 96.0% Pb; and -- a refined zinc cathode with a grade of 99.6% Zn.
Liquid residue discharges from the process were non-toxic.
The Company is now able to establish the mass, pulp and water parameters required for the construction of the planned pilot plant at Kabwe. It is therefore focussing on the optimum design and construction of the pilot plant and intends to source the majority of requisite equipment in-country.
The Company has engaged the services of Edward Musonda, an experienced metallurgist, to work with the Company on the process design of the pilot plant, which it has continued to enhance since the placing in October.
The Company has determined that the treatment rate for the planned pilot plant will be a minimum of 5 tonnes per hour and that the plant will operate on a 24/7 basis, initially processing the WPT. The principal objectives of the pilot plant are to generate revenues and to finalise the design parameters of the proposed main plant, which the Directors plan to come into operation in 2017, to enable it to process different combinations of tailings. Nevertheless, BMR's intention is to operate the pilot plant as a semi-production unit to simulate actual operating conditions, thereby enabling the Company to generate revenues from sales of the end product.
The Board intends to announce to shareholders the expected cost and revenue generating capacity of the pilot plant with a peer review thereof, once these have been finalised.
The Company has also engaged JA Consultancy, an environmental specialist organisation based in Lusaka, Zambia, to prepare, present and assist in securing approval for a further Environmental and Social Impact Assessment (ESIA) from ZEMA (the Zambia Environmental Management Agency). BMR believes that JA Consultancy is particularly well qualified to secure ZEMA's approval for the planned pilot plant within the requisite time frame, having successfully secured approvals from ZEMA for similar projects.
Having obtained ZEMA's approval of the terms of reference and scoping study for the full ESIA, the Board anticipates submitting the full ESIA in the near future.
During the year, the Company sold its copper leach plant and certain items of equipment at Kabwe for the sum of $70,000. This had been impaired as at 30 June 2014 hence the sale, which represents a good achievement by local management, generated a gross profit of $70,000 in the full year results.
Imperial Smelting Furnace Slag (ISF Slag)
The Company was advised last year that the effective economic recovery of Zn from the ISF slag would prove difficult, being brittle and hard to process, and consequently the value of this resource was written off in the 2014 Annual Report. The ISF slag had been estimated by Mineral Corporation Consultancy (Pty), in its March 2012 report to contain 1,481,563 dry tonnes, as surveyed on a JORC compliant basis, at a mean grade of 8.07% Zn (119.6kt contained Zn).
As the ISF slag comprises a significant unexploited Zn resource, the Directors decided to re-examine the potential for the recovery of Zn from this source and have been working closely with BMR's consultants in order to assess commercial feasibility. Following recent mineralogical and exploratory metallurgical test work, the Company is pleased to announce that, in conjunction with its Mineral Processing Partner, a recovery of 77.2% Zn has been successfully achieved in laboratory analysis.
Further work is being undertaken to optimise this recovery and to establish if it can also be processed by the pilot plant. In the event that this further work concludes positively, the Company will commission a full JORC compliant survey of the ISF slag.
Waelz Kiln Slag ("WKS")
BMR's assets at Kabwe, Zambia, include approximately 1.1 million tonnes of WKS, as surveyed on a JORC compliant basis by Mineral Corporation Consultancy (Pty). The WKS was written down to GBP201,000 in the accounts for the year ended 30 June 2014 due to it being brittle and hard, and of too low a grade and too difficult to process on a commercial basis.
However, BMR has now identified, from studies undertaken by the Building Research Establishment UK, that the WKS, being a ferro-silicate zinc slag (smelter slag), could be applied in the construction of building blocks and road construction. As part of its analysis and in conjunction with a local block making company, BMR has manufactured a test batch of concrete blocks, using an 80:20 ratio of WKS to building sand, which were then subjected to testing. Importantly, there was no evidence of leaching of Pb or Zn.
BMR has therefore instructed its Environmental Consultants to prepare a submission, including BMR's test results, to seek approval from ZEMA to sell the WKS for incorporation in block and concrete making. Approval will be sought in the form of an Environmental Project Brief ("EPB") which involves a separate and less onerous application process than an Environmental Impact Study. Application for this is now expected to be made before the end of 2015.
In the event that ZEMA approval is given, BMR intends to commence local sales of WKS, which would involve limited costs and could realise modest but meaningful revenues over several years. Disposing of the WKS in this manner would also provide an elegant solution to environmental issues associated therewith.
Pilot Plant Processes and Intellectual Property
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December 17, 2015 02:00 ET (07:00 GMT)
The metallurgical processes that have been developed to achieve the recoveries and final products above, certain of which are being incorporated into the design of the Kabwe pilot plant, are proprietary to BMR and your Directors are planning to take the appropriate steps to protect this intellectual property.
The Company intends to commence pilot plant operations as soon as practicable once the upgraded pilot plant has been constructed following the receipt of ZEMA approval. It is also the intention of the Company to process first the higher-grade, higher-recovery WPT to generate initial returns from the Company's asset base.
Joint Ventures (JVs) and Investments
We had entered into discussions during the year for the sale of the Company's majority interests in the five dormant JVs and have since commenced their liquidation which we expect to conclude shortly.
On 24 August 2015, the Company entered into a technical co-operation agreement with Mineralfields Group Limited ("MFG") and New Resource Management Services Ltd, a company connected with Jeremy Hawke, for an initial period of three years to provide services for securing permits for mining projects for industrial minerals (primarily rutile) in the Republic of Cameroon in consideration for an interest of 7.5% in MFG. The Directors believe the value of MFG at the time of entering the agreement was de minimis as MFG had no permit or licence for the projects and negligible assets while there is limited cost to BMR associated with its provision of services. Jeremy Hawke and I are each directors, of and shareholders in, MFG.
VAT
We previously announced that the Company was in discussions with HMRC, having received notice that BMR is to be de-registered together with an assessment for back VAT and interest thereon amounting to GBP268,491 at 30 June 2014 (such sum now exceeding GBP374,350 after taking into account recent VAT recoveries following our submission of VAT returns). We are in continued discussions with HMRC with our advisers and are appealing against the HMRC notice.
Fund raisings
On 28 October 2015, the Company announced that it had raised GBP750,000 before expenses, by way of a placing of 18,750,000 new ordinary shares at 4.0p per share. Each placee received for each share subscribed a warrant to subscribe for a further new ordinary share at 7.0p per share in the 42 days following publication of BMR's results for the year ending 30 June 2016.
Following an undertaking to offer any new issued shares to shareholders on the same terms, the Company will be making an offer to shareholders of new shares with warrants on the same headline terms, which the Directors expect to implement in early 2016.
Directors, management and consultants
During the year, there were a number of changes in the composition of the Board largely as a result of financial irregularities that had come to light.
I succeeded the former Chairman on 23 October 2014.
On 2 February 2015, Jeremy Hawke, a chartered engineer with significant mining expertise, was appointed Mining and Operations Director.
Following the Annual General Meeting on 28 May 2015, Antony Gardner-Hillman, with significant corporate experience and a legal background, was appointed as a non-executive Director and, at the same time, Horacio Furman and Mark Wainwright resigned as Directors.
The Directors recognise that, for good corporate governance, an additional non-executive director should be appointed and intend to do so when such a candidate has been identified.
I am supported by Dennis Bailey, senior consultant, who was appointed Company Secretary on 15 June 2015 and by Norman Lott, our chief financial officer, each of whom joined the Company as consultants in the financial year.
In addition, the Company is well-supported by its management and staff in Zambia who continue to maintain and protect our interests at Kabwe and who are fundamental to our planned development of our activities for establishing the pilot plant and commencing operations.
Overheads
The Directors have sought to limit the Company's monthly expenditure in the UK and to align the cost base more closely to our considerations of operational requirements.
On 2 February 2015, I announced substantial reductions in the headcount at the Company's head office, from where many companies had been administered with financial support from the Company, which was highly inappropriate.
We have also had to meet the significant cost of the lease of premises at 6 Derby Street, London W1J 7AD, which had served as the Company's former registered office, and related costs of repairs and dilapidations arising at the end of the lease on 24 December 2015. On 9 November 2015, the Company announced that it had entered into an agreement for the surrender of the lease to the landlord with a settlement for the cost of dilapidations and no further rental obligations from the end of the lease period.
Since July 2015, the Company has been operating from a small serviced office at 35 Piccadilly, London W1J 0DW, which now also serves as the registered office.
As a result of these changes, we expect that normalised central costs in the UK will have fallen from approximately GBP250,000 per month in the year ended 30 June 2014 to approximately GBP65,000 per month (assuming no foreign exchange losses) from January 2016.
AGM and Resolutions
The resolutions for the forthcoming Annual General Meeting are contained in a separate Notice which will be made available, together with a circular relating to the open offer referred to above, to shareholders and on the website www.bmrplc.com. The Directors recommend shareholders to vote in favour of the resolutions and a form of proxy is being despatched to all shareholders for this purpose. The AGM will be held at 10.30 a.m. on Wednesday 10 February 2016 at the offices of WH Ireland Limited, 24 Martin Lane, London EC4R 0DR.
In addition to the customary resolutions and authorities to be sought for issuing new ordinary shares, the Directors will be seeking approval for the change of the Company's name from BMR Mining PLC to BMR Group PLC to reflect the ongoing evolution of the Company's activities from mining to concentration on the processing of tailings and recycling of metals.
Outlook
I believe we have made considerable advances at BMR and that our positioning as a tailings processor represents a low risk business, requiring less capital, outside of the challenges faced by mining companies in general. We will seek to expand the business further where opportunities arise for the acquisition of other tailings which we can process efficiently.
We have a number of exciting prospects underway and we expect to submit a final application to ZEMA for establishing the pilot plant in the near future; to seek approval from ZEMA for the sale of the WKS which we expect to generate revenues from early 2016; and to launch in early 2016 an open offer to shareholders on the same headline terms as the issue in October 2015.
The Company then intends to commence pilot plant operations as soon as practicable once the upgraded pilot plant has been constructed following the receipt of ZEMA approval.
Overall, I am confident that the Company now has a viable future with a solid asset base and I look forward to updating shareholders as we progress within this new chapter under the new management team.
Alex Borrelli
Chairman
16 December 2015
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF
BMR MINING PLC
We have audited the financial statements of BMR Mining PLC for the year ended 30 June 2015 which comprise the Consolidated and Parent Company Statements of Financial Position, the Consolidated and Parent Company Statements of Comprehensive Income, the Consolidated and Company Cash Flow Statements, the Consolidated and Parent Company Statement of Changes in Equity and the related notes numbered 1 to 26.
The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Statement of Directors' Responsibilities, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements.
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December 17, 2015 02:00 ET (07:00 GMT)
In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on financial statements
In our opinion:
-- the financial statements give a true and fair view of the state of the group's and of the parent company's affairs as at 30 June 2015 and of the group's loss for the year then ended;
-- the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
-- the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union as applied in accordance with the provisions of the Companies Act 2006; and
-- the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Emphasis of matter - going concern
In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosure made in note 3 to the financial statements concerning the company's ability to continue as a going concern. The financial statements have been prepared on the going concern basis, which depends on the ability to raise further financing. These conditions, along with the other matters explained in note 3 to the financial statements, indicate the existence of a material uncertainty which may cast significant doubt about the company's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the company was unable to continue as a going concern.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
-- adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
-- the financial statements are not in agreement with the accounting records and returns; or -- certain disclosures of directors' remuneration specified by law are not made; or -- we have not received all the information and explanations we require for our audit.
Leo Malkin
Senior Statutory Auditor
For and on behalf of
Crowe Clark Whitehill LLP
Statutory Auditor
St Bride's House
10 Salisbury Square
London EC4Y 8EH
16 December 2015
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended 30 June 2015
Hot Features
Premium
2015 2014
Notes GBP GBP
Continuing operations
Administrative expenses 6 (2,414,281) (3,043,518)
Impairment provision charge/(write
back) 6 (83,272) (4,570,064)
Share based payment 19 (52,786) (1,650,828)
Total administrative expenses (2,550,339) (9,264,410)
Other income 6 960,000 -
Finance expense 6 (1,937) (4,868)
Finance income 6 1,614 583
Loss before tax (1,590,662) (9,268,695)
Taxation 9 - -
Loss for the year (1,590,662) (9,268,695)
Other comprehensive loss
Items that may be reclassified
subsequently to profit and
loss:
Exchange translation differences
on foreign operations 705,218 (636,005)
Total comprehensive loss
for the year attributable
to equity holders of the
parent company (885,444) (9,904,700)
Loss per ordinary share
Basic and diluted (pence) 10 (1.19)p (7.74)p
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2015
Company No. 02401127
2015 2014
Notes GBP GBP
Assets
Non-current assets
Intangible exploration
and evaluation assets 11 9,811,527 9,829,462
Property, plant and equipment 12 65,924 135,243
9,877,451 9,964,705
Current assets
Trade and other receivables 14 199,911 118,121
Cash and cash equivalents 15 785,881 750,695
985,792 868,816
Total assets 10,863,243 10,833,521
Liabilities
Current liabilities
Trade and other payables 17 752,136 891,136
Total current liabilities 752,136 891,136
Non current liabilities
Deferred tax 16 1,906,525 1,855,145
Total non current liabilities 1,906,525 1,855,145
Total liabilities 2,658,661 2,746,281
Net assets 8,204,582 8,087,240
Equity
Share capital 18 20,892,288 20,178,002
Share premium 18 20,697,815 20,462,101
Share based payment reserve 19 52,786 -
Merger reserve 1,824,000 1,824,000
Translation reserve (263,486) (968,704)
Retained earnings (34,998,821) (33,408,159)
Total equity 8,204,582 8,087,240
The financial statements were approved by the Board of Directors and authorised for issue on 16 December 2015 and were signed on its behalf by
M A Borrelli
Chairman
CONSOLIDATED STATEMENT OF CASH FLOW
Year ended 30 June 2015
2015 2014
GBP GBP
Cash flows from operating
activities
Loss before tax (1,590,662) (9,268,695)
Adjustments to reconcile
net losses to cash utilised
:
Amortisation of exploration
and evaluation assets 73,707 370,045
Impairment of exploration
and evaluation assets - 3,586,478
Depreciation of property,
plant and equipment 40,409 68,880
Impairment of property, plant
and equipment - 59,006
Other impairment of write
down and provision - 924,580
Loss on disposal of fixed
asset 34,995 758
Loss on disposal of intangible
asset 80,313 -
Finance income (1,614) (583)
Share based payments 52,786 1,650,828
Operating cash outflows before
movements in working capital (1,310,066) (2,608,703)
Changes in:
Trade and other receivables (83,345) (276,571)
Trade and other payables (337,894) 898,897
Net cash outflow from operating
activities (1,731,305) (1,986,377)
Investing activities
Interest received 1,614 583
Purchases of property, plant
and equipment (9,311) (73,263)
Disposals of property, plant
and equipment 44,538 -
Purchases of intangible exploration
and evaluation assets (159,530) (359,591)
Advance payment for purchase
of non-current assets - (36,970)
Net cash inflow/(outflow)
from investing activities: (122,689) (469,241)
Cash flows from financing
activities
Proceeds from settlement
agreement 960,000 -
Proceeds from issue of shares
and warrants 1,000,000 3,028,062
Share issues costs (50,000) (126,605)
Net cash inflow from financing
activities 1,910,000 2,901,457
Net increase in cash and
cash equivalents 56,006 445,839
Effect of foreign exchange
rate changes (20,820) 7,563
Cash and cash equivalents
at beginning of year 750,695 297,293
Cash and cash equivalents
at end of year 785,881 750,695
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
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December 17, 2015 02:00 ET (07:00 GMT)
Year ended 30 June 2015
Share Share Share Merger Translation Retained Total
capital premium based reserve reserve earnings equity
payment
reserve
GBP GBP GBP GBP GBP GBP GBP
As at 1 July
2013 18,281,348 17,169,957 2,287,342 1,824,000 (332,699) (25,790,292) 13,439,656
Total comprehensive
loss for the
year - - 1,650,828 - (636,005) (9,268,695) (8,253,872)
Issue of shares 1,896,654 1,131,407 - - - - 3,028,061
Share issue
costs - (126,605) - - - - (126,605)
Adjustment
of reserves
on warrants
exercised
and lapsed - 2,287,342 (3,938,170) - - 1,650,828 -
As at 30 June
2014 20,178,002 20,462,101 - 1,824,000 (968,704) (33,408,159) 8,087,240
Total comprehensive
loss for the
year - - - - 705,218 (1,590,662) (885,444)
Issue of shares 714,286 285,714 - - - - 1,000,000
Share issue
costs - (50,000) - - - - (50,000)
Share based
payment - - 52,786 - - - 52,786
As at 30 June
2015 20,892,288 20,697,815 52,786 1,824,000 (263,486) (34,998,821) 8,204,582
Reserves Description and purpose
Share capital - amount subscribed for share capital at nominal value
Share premium - amounts subscribed for share capital in excess of nominal value
Share based payment reserve - amount arising on the issue of warrants and share options during the year
Merger reserve - amount arising from the issue of shares for non-cash consideration
Translation reserve - amounts arising on re-translating the net assets of overseas operations into the presentational currency
Retained earnings - cumulative net gains and losses recognised in the consolidated income statement
COMPANY STATEMENT OF FINANCIAL POSITION
As at 30 June 2015
Company No. 02401127
2015 2014
Notes GBP GBP
Assets
Non-current assets
Property, plant and equipment 12 20,865 71,348
Investment in subsidiaries 13 7,969,380 7,955,774
7,990,245 8,027,122
Current assets
Trade and other receivables 14 182,022 100,107
Cash and cash equivalents 15 714,281 685,795
896,303 785,902
Total assets 8,886,548 8,813,024
Liabilities
Current liabilities
Trade and other payables 17 733,230 877,399
Total liabilities 733,230 877,399
Net assets 8,153,318 7,935,625
Equity
Share capital 18 20,892,288 20,178,002
Share premium 18 20,697,815 20,462,101
Share based payment reserve 19 52,786 -
Merger reserve 1,824,000 1,824,000
Retained earnings (35,313,571) (34,528,478)
Total equity 8,153,318 7,935,625
The financial statements were approved by the Board of Directors and authorised for issue on 16 December 2015 and were signed on its behalf by
M A Borrelli
Chairman
COMPANY CASH FLOW STATEMENT
for the year ended 30 June 2015
2015 2014
GBP GBP
Cash flows from operating
activities
Profit/(Loss) before tax (785,093) (11, 112,242)
Adjustments to reconcile
net losses to cash utilised
:
Depreciation of property,
plant and equipment 16,465 17,816
Impairment of investment
in subsidiaries 1,000,000 6,250,000
Finance income (1,614) (583)
Share based payments 52,786 1,650,828
Other impairment write down
and provision 105,859 36,970
Operating cash outflows before
movements in working capital 388,403 (3,157,211)
Changes in:
Trade and other receivables (81,915) 86,354
Trade and other payables (1,210,026) 654,664
Net cash outflow from operating
activities (903,538) (2,416,193)
Investing activities
Interest received 1,614 583
Movement in intercompany
accounts (1,013,608) 23,006
Purchases of property, plant
and equipment - (45,896)
Disposals of property, plant
and equipment 34,018 -
Advance payment for purchase
of non-current assets - (36,970)
Net cash outflow from investing
activities: (977,976) (59,277)
Cash flows from financing
activities
Proceeds from settlement
agreement 960,000 -
Proceeds from issue of shares
and warrants 1,000,000 3,028,062
Share issue costs (50,000) (126,605)
Net cash inflow from financing
activities 1,910,000 2,901,457
Net (decrease)/increase in
cash and cash equivalents 28,486 425,987
Cash and cash equivalents
at beginning of year 685,795 259,808
Cash and cash equivalents
at end of year 714,281 685,795
COMPANY STATEMENT OF CHANGES IN EQUITY
Year ended 30 June 2015
Share Share premium Share based Merger Retained Total
capital payment reserve earnings equity
reserve
GBP GBP GBP GBP GBP GBP
As at 1 July
2013 18,281,348 17,169,957 2,287,342 1,824,000 (25,067,064) 14,495,583
Total comprehensive
loss for the
year - - 1,650,828 - (11,112,242) (9,461,414)
Issue of shares 1,896,654 1,131,407 - - - 3,028,061
Share issue
costs - (126,605) - - - (126,605)
Adjustment
of reserve
on warrants
exercised
and lapsed - 2,287,342 (3,938,170) - 1,650,828 -
As at 30 June
2014 20,178,002 20,462,101 - 1,824,000 (34,528,478) 7,935,625
Total comprehensive
profit for
the year - - - - (785,093) (785,093)
Issue of shares 714,286 285,714 - - - 1,000,000
Share issue
costs - (50,000) - - - (50,000)
Share based
payment - - 52,786 - - 52,786
As at 30 June
2015 20,892,288 20,697,815 52,786 1,824,000 (35,313,571) 8,153,318
Reserves Description and purpose
Share capital - amount subscribed for share capital at nominal value
Share premium - amounts subscribed for share capital in excess of nominal value
Share based payment reserve - amount arising on the issue of warrants and share options during the year
Merger reserve - amount arising from the issue of shares for non-cash consideration
Translation reserve - amounts arising on re-translating the net assets of overseas operations into the presentational currency
Retained earnings - cumulative net gains and losses recognised in the consolidated income statement
NOTES TO THE ACCOUNTS
Year ended 30 June 2015
1. GENERAL INFORMATION
Berkeley Mineral Resources PLC (the 'Company') is incorporated and domiciled in the United Kingdom. The address of the registered office is 35 Piccadilly, London W1J 0DW.
On 28 May 2015, the Company was renamed BMR Mining PLC.
The nature of the Group's operations and its principal activity is that of the acquisition, evaluation and development of mineral stockpiles in particular tailings. The Group's projects are located in Zambia.
2. ADOPTION OF NEW AND REVISED STANDARDS
The directors have considered those Standards and Interpretations, which have not been applied in the financial information but are relevant to the Group's operations, that are in issue but not yet effective and do not consider that any will have a material impact on the future results of the Group.
3. SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
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The financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS') as issued by the International Accounting Standards Board ('IASB') and as adopted by the European Union ('EU') and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The principal accounting policies adopted are set out below.
The Group financial information is presented in Pounds Sterling ("GBP"). For reference the year end exchange rate from Pounds Sterling to US Dollar was 1.5717 (2014: 1.7048) and Pounds Sterling to Zambian Kwacha was 11.5449 (2014: 10.5483).
As permitted by Section 408 of the Companies Act 2006, the Company has elected not to present its Income Statement for the year. The Company reported a loss for the financial year ended 30 June 2015 of GBP785,094 (2014: loss of GBP11,112,242).
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 30 June each year. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
The results of subsidiaries acquired of or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring accounting policies used into line with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation.
Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision maker has been identified as the Board of Directors.
Going concern
After making enquiries, the Directors have a reasonable expectation that the Company has adequate resources with its cash balances to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.
The operational requirements of the Company comprise maintaining a Head Office in the UK with a Board comprising two executive directors and one non-executive Director with two consultants for, amongst other things, determining and implementing strategy and managing operations. In addition, the Company has a team in Kabwe, Zambia for establishing facilities for the processing of the Company's tailings into zinc and lead concentrates under the direction of the Board. The Directors have considered the current level of cash balances and the operational requirements of the Company in both the UK and Zambia over the next 12 months and the commencement of the establishment of a pilot plant, subject to the approval of a final report, expected to be submitted in the near future, to the Zambian Environmental Management Agency ("ZEMA"). The Directors believe that the process methodology being developed by the Company working with technical partners is capable of being patented. The Directors expect the plant to be capable of processing at the rate of five tonnes per hour and operating on a 24/7 basis once fully operational.
In addition, the Directors expect the Company to generate revenues from the sale locally of its Waelz kiln slag for building blocks in the construction sector, subject to the approval of ZEMA for which an application will be made in the near future. The Directors therefore believe that the current cash resources which include the net proceeds of the October placing to raise GBP750,000, and assuming no current liability in respect of VAT, are sufficient for the Group's current operations and, with expected revenues from the sale of the Waelz kiln slag, for establishing the enhanced pilot plant and commencing preparations for the planned main plant.
However, there can be no guarantee that the required funds will be raised within the necessary timeframe, consequently a material uncertainty exists that may cast doubt on the Group's ability to continue to operate as planned and to be able to meet its commitments and discharge its liabilities in the normal course of business for a period not less than twelve months from the date of this report. The financial statements do not include the adjustments that would result if the Group was unable to continue in operation.
Foreign currencies
The individual financial statements of each Group company are presented in the currency of the primary economic environment in which it operates (its functional currency).For the purpose of the consolidated financial statements, the results and financial position of each Group company are expressed in upon GBP, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.
In preparing the financial statements of the individual companies, transactions in currencies other than the functional currency of each Group company ('foreign currencies') are recorded in the functional currency at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated into the functional currency at the rates prevailing on the balance sheet 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. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences are recognised in the income statement in the period in which they arise except for exchange differences on monetary items receivable from or payable to a
foreign operation for which settlement is neither planned nor likely to occur, which form part of the net investment in a foreign operation, and which are recognised in the foreign currency translation reserve and recognised in the income statement on disposal of the net investment.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are classified as equity and transferred to the Group's translation reserve. Such translation differences are recognised as income or as expenses in the period in which the operation is disposed of.
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax 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.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
Property, plant and equipment
Property, plant and equipment are carried at cost less accumulated depreciation and any recognised impairment loss.
Depreciation and amortisation is charged so as to write off the cost or valuation of assets, other than land, over their estimated useful lives, using the straight-line method, on the following bases:
Motor vehicles 25% Other 25%
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The gain or loss arising on disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in income.
Impairment of property, plant and equipment
At each balance sheet date, the Group reviews the carrying amounts of its property, plant and equipment to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash f lows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of the fair value less costs to sell and value in use. In assessing value in use, the estimated future cash f lows are discounted to their present value using a pre-tax discount rate that ref lects current market assessments of the time value for money and the risks specific to the asset for which the estimates of future cash f lows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
Intangible exploration and evaluation assets
Intangibles exploration and evaluation assets comprise of land use rights, mining licences and Exploration and Evaluation ("E&E") costs.
The land use rights and mining licences are stated at cost less accumulated amortization and impairment losses. They are amortised using the straight line basis over the unexpired period of the rights.
The Group applies the full cost method of accounting for E&E costs, having regard to the requirements of IFRS 6 Exploration for and Evaluation of Mineral Resources. Under the full cost method of accounting, costs of exploring for and evaluating mineral resources are accumulated by reference to appropriate cost centres being the appropriate licence area, but are tested for impairment on a cost pool basis as described below.
E&E assets comprise costs of (i) E&E activities that are ongoing at the balance sheet date, pending determination of whether or not commercial reserves exist and (ii) costs of E&E activities associated with adding to the commercial reserves of an established cost pool, did not result in the discovery of commercial reserves.
Costs incurred prior to having obtained the legal rights to explore an area are expensed directly to the income statement as they are incurred.
Exploration and evaluation costs
All costs of E&E are initially capitalised as E&E assets. Payments to acquire the legal right to explore, costs of technical services and studies, seismic acquisition, exploratory drilling and testing are capitalised as intangible E&E assets.
Such costs include directly attributable overheads, including the depreciation of property, plant and equipment utilised in E&E activities, together with the cost of other materials consumed during the exploration and evaluation phases.
Treatment of E&E assets at conclusion of appraisal activities
Intangible E&E assets related to each exploration licence/prospect are carried forward, until the existence (or otherwise) of commercial reserves has been determined. If commercial reserves have been discovered, the related E&E assets are assessed for impairment on a cost pool basis as set out below and any impairment loss, of the relevant E&E assets is the reclassified as development and production assets.
Impairment of E&E assets
E&E assets are assessed for impairment when facts and circumstances suggest that the carrying amount may exceed its recoverable amount. Such indicators include, but are not limited to, those situations outlined in paragraph 20 of IFRS 6 Exploration for and Evaluation of Mineral Resources and include the point at which a determination is made as to whether or not commercial reserves exist.
Where there are indications of impairment, the E&E assets concerned are tested for impairment. Where the E&E assets concerned fall within the scope of an established full cost pool, the E&E assets are tested for impairment together with all development and production assets associated with that cost pool, as a single cash generating unit.
The aggregate carrying value is compared against the expected recoverable amount of the pool, generally by reference to the present value of the future net cash f lows expected to be derived from production of commercial reserves. Where the E&E assets to be tested fall outside the scope of any established cost pool, there will generally be no commercial reserves and the E&E assets concerned will generally be written off in full.
Any impairment loss is recognised in the income statement as additional depreciation and amortisation, and separately disclosed.
The Group considers the whole of Zambia to be one cost pool and therefore aggregates all Zambian assets for the purpose of determining whether an impairment of E&E assets has occurred.
Investment in subsidiaries
In the Company's financial statements, investment in subsidiaries are stated at cost and reviewed for impairment if there are any indications that the carrying value may not be recoverable.
Related party transactions
IAS 24, 'Related Party Disclosures', requires the disclosure of the details of transactions between the reporting entity and related parties which are disclosed in Note 23. In the consolidated financial statements, all transactions between Group companies are eliminated.
Financial instruments
Recognition of financial assets and financial liabilities
Financial assets and financial liabilities are recognised on the Group's balance sheet when
the Group becomes a party to the contractual provisions of the instrument.
De-recognition of financial assets and financial liabilities
The Group derecognises a financial asset only when the contractual rights to cash f lows from the asset expire; or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for the amount it June have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received. The Group derecognises financial liabilities when the Group's obligations are discharged, cancelled or expired.
Trade and other receivables
Trade and other receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost less any provision for impairment.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash with three months or less remaining to maturity and are subject to an insignificant risk of changes in value.
Impairment of financial assets
The Group assesses at each reporting date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of a financial asset classified as available for sale, a significant or prolonged decline in the fair value of the financial asset below its cost is considered as an indicator that the financial asset is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss - is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on financial assets are not reversed through the income statement.
Trade and other payables
Trade and other payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.
Assets under hire purchase
Assets acquired under hire purchase are capitalised in the financial statements and are depreciated in accordance with the policy set out as above. Each hire purchase payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. Finance charges are recognised in profit or loss over the period of the respective hire purchase agreements.
Hire purchases are classified as finance leases as the terms of the lease transfer substantially all of the risk and rewards of ownership to the lessee
Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic resource will result and that outflow can be reliably measured.
Rehabilitation
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Provisions are made for the estimated rehabilitation costs relating to areas disturbed during exploration activities up to reporting date but not yet rehabilitated. Changes in estimate are dealt with on a prospective basis as they arise.
Share-based payments
The Group has applied IFRS 2 Share-based Payment for all grants of equity instruments.
The Group issues equity-settled share-based payments to its employees. Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of the shares that will eventually vest.
Fair value is measured using the Black Scholes model. 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 inputs to the model include: the share price at the date of grant, exercise price expected volatility, risk free rate of interest.
Share capital
Financial instruments issued by the Group are treated as equity only to the extent that they do not meet the definition of a financial liability. The Groups ordinary shares are classified as equity instruments.
For the purposes of the disclosures given in note 18, the Group considers its capital to be total equity. There have been no changes in what the Group considers to be capital since the previous period.
The Group is not subject to any externally imposed capital requirements.
4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Group's accounting policies, which are described in note 3, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of the assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both the current and future periods.
The following are the critical judgements and estimations that the Directors have made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in the financial statements:
i) Recoverability of exploration and evaluation assets
Determining whether an exploration and evaluation asset is impaired requires an assessment of whether there are any indicators of impairment, including by reference to specific impairment indicators prescribed in IFRS 6 Exploration for and Evaluation of Mineral Resources. If there is any indication of potential impairment, an impairment test is required based on value in use of the asset. The value in use calculation requires the entity to estimate the future cash ows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. The carrying amount of the Group's exploration and evaluation assets at the balance sheet date was GBP9,613,911 (2014: GBP9,829,462). No impairments were made during the year (2014: GBP3,586,479).
The methods and key assumptions in relation to the calculation of the estimates are detailed in note 11.
ii) Going concern
As disclosed in note 3 the Directors have a reasonable expectation that the Company has adequate resources through its cash balances to continue in operational existence for the foreseeable future. For this reason, the Company continues to adopt the going concern basis in preparing the financial statements.
iii) Provisions for liabilities
As a result of exploration activities the Group is required to make provision for rehabilitation. Signi cant uncertainty exists as to the amount of rehabilitation obligations which may be incurred due to the impact of possible changes in environmental legislation. Due to the early stage of exploration activity no signi cant damage has been caused and, therefore, no provision has been recognised at 30 June 2015 (2014: GBPnil) in the Group and the Company balance sheets.
iv) Share based compensation
In order to calculate the charge for share-based compensation as required by IFRS 2, the Group makes estimates principally relating to the assumptions used in its option-pricing model as set out in note 19.
5. SEGMENTAL REPORTING
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments and making strategic decision, has been identified as the Board of Directors. The Board of Directors considers there to be only one operating
segment, the exploitation and development of mineral resources and only two geographical
segments being Zambia and the UK.
The geographical split of loss and assets and liabilities are as follows:
UK Zambia Total
GBP GBP GBP
2015
Profit/(loss) before
tax 214,906 (1,805,568) (1,590,662)
Non-current assets
Intangible exploration
and evaluation assets - 9,811,527 9,811,527
Property, plant and equipment 20,865 45,059 65,924
20,865 9,856,586 9,877,451
Current assets
Trade and other receivables 182,022 17,889 199,911
Cash and cash equivalents 714,281 71,600 785,881
896,303 89,489 985,792
Total assets 917,168 9,946,075 10,863,243
Current liabilities 733,232 18,904 752,136
Non-current liabilities - 1,906,525 1,906,525
Net assets 183,936 8,020,646 8,204,582
UK Zambia Total
GBP GBP GBP
2014
Loss before tax (5,112,241) (4,156,454) (9,268,695)
Non-current assets
Intangible exploration
and evaluation assets - 9,829,462 9,829,462
Property, plant and
equipment 71,348 63,895 135,243
71,348 9,893,357 9,964,705
Current assets
Trade and other receivables 100,107 18,014 118,121
Cash and cash equivalents 685,795 64,900 750,695
785,902 82,914 868,816
Total assets 857,250 9,976,271 10,833,521
Current liabilities 877,398 13,738 891,136
Non-current liabilities - 1,855,145 1,855,145
Net assets (20,148) 8,107,388 8,087,240
6. LOSS FOR THE YEAR
The loss for the year has been arrived at after charging / (crediting):
2015 2014
GBP GBP
Depreciation of property, plant
and equipment (note12) 40,409 68,880
Loss on disposal of property,
plant and equipment 34,995 758
Gain on disposal of property,
plant and equipment 44,538 -
Loss on disposal of intangibles 80,313 -
Amortisation of intangibles 73,707 370,045
Impairment provision (write
back) /charge ** 83,272 4,570,064
Settlement monies received as
compensation (960,000) -
Operating lease costs (Office
rental costs) 166,709 130,613
Staff costs (note 8) 272,534 284,142
Share based payment charge 52,786 1,650,828
Net foreign exchange loss 759,571 1,786,929
Finance income (1,614) (583)
---------- ----------
**Impairment provision (write
back)/ charge arising from:-
* Other payable write back (22,587)
* Intangibles exploration and evaluation assets
impairment write down (note 11) - 3,623,448
* Property, plant and machinery impairment write down
(note 12) - 59,006
* Other receivables write off - 619,119
* Increase in VAT provision 105,859 268,491
---------- ----------
83,272 4,570,064
---------- ----------
7. AUDITORS' REMUNERATION
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The remuneration of the auditors can be analysed as follows:
2015 2014
GBP GBPr
Fees payable to the company's
auditor for the audit of the
company and group's financial
statements 22,000 30,000
Fees payable to the company's
auditor for other services:
Other services relating to forensic
investigation work 62,603 -
82,603 30,000
------- -------
8. STAFF COSTS
2015 2014
Number Number
Directors 4 3
Consultant 2 1
Support staff (including Zambia
employees) 33 30
------- -------
The average monthly number of
employees 39 34
------- -------
Their aggregate remuneration
comprised:- GBP GBP
Fees 97,080 -
Wages and salaries 162,807 290,045
Pension 8,100 12,000
Social security costs 4,547 (17,903)
-------- ---------
272,534 284,142
-------- ---------
Included within staff costs GBP124,662 (2014: GBP162,511) relates to amounts in respect of Directors.
9. TAXATION
2015 2014
GBP GBP
Current tax
UK corporation tax - -
Overseas taxation - -
----- -----
- -
----- -----
Deferred tax
UK corporation tax - -
Overseas taxation - -
----- -----
- -
----- -----
The taxation credit for each year can be reconciled to the loss per the consolidated income statement as follows:
2015 2014
GBP GBP
Loss before tax (1,590,662) (9,268,695)
------------ ------------
Tax credit at the standard rate
of tax in the UK 318,132 1,853,739
Tax effect of non-deductible
expenses (15,058) (135,488)
Deferred tax asset not recognized (303,074) (1,718,251)
------------ ------------
Tax for the year - -
------------ ------------
The standard rate of corporation tax in the UK applied during the year was 20% (2014: 20%).
10. LOSS PER SHARE
Basic loss per ordinary share is calculated by dividing the consolidated net loss for the year attributable to ordinary equity holders of the parent company by the weighted average number of ordinary
shares outstanding during the year. The calculation of the basic and diluted loss per share is based on the following data:
2015 2014
GBP GBP
Loss before tax
Loss for the purpose of basic
loss per share being consolidation
net loss attributable to equity
holders of the Company 1,590,662 9,268,695
------------ ------------
2015 2014
Number Number
Number of shares
Weighted average number of ordinary
shares for the purpose of basic
loss per shares
(2014 restated to allow for
the share consolidation) 133,631,260 119,732,225
------------ ------------
Loss per ordinary share
Basic and diluted 1.19p 7.74p
------------ ------------
At the balance sheet date there were 20,339,403 (2014: 57,520,979) potentially dilutive Ordinary Shares. Potentially dilutive ordinary shares relate to warrants and share options issued to directors, consultants and third parties. In 2015 and the prior year, the potential Ordinary shares are anti-dilutive and therefore the diluted loss per share has not been calculated.
11. INTANGIBLE EXPLORATION AND EVALUATION ASSETS
Land Small Large Exploration Total
use Rights scale scale and evaluation GBP
GBP licence licence assets
GBP GBP GBP
GROUP
Cost
At 30 June 2013 3,753,727 664,359 2,037,187 8,601,940 15,057,213
Additions - - - 408,824 408,824
Foreign exchange
difference (746,604) (94,196) (340,703) (73,232) (1,254,735)
At 30 June 2014 3,007,123 570,163 1,696,484 8,937,532 14,211,302
Additions - - - 159,530 159,530
Disposals (89,029) - - - (89,029)
Foreign exchange
difference (148,176) (70,322) - 195,053 (23,445)
At 30 June 2015 2,769,918 499,841 1,696,484 9,292,115 14,258,358
Accumulated depreciation
At 30 June 2013 - (171,109) (254,208) - (425,317)
Charge for the year (125,787) (53,348) (190,910) - (370,045)
Impairment (1,811,112) - (1,251,366) (524,000) (3,586,478)
At 30 June 2014 (1,936,899) (224,457) (1,696,484) (524,000) (4,381,840)
Charge for the year (25,696) (48,011) - - (73,707)
Impairment - - - - -
Disposals 8,716 - - - 8,716
At 30 June 2015 (1,953,879) (272,468) (1,696,484) (524,000) (4,446,831)
Carrying amount
At 30 June 2015 816,039 227,373 - 8,768,115 9,811,527
At 30 June 2014 1,070,224 345,706 - 8,413,532 9,829,462
At 30 June 2013 3,753,727 493,250 1,782,979 8,601,940 14,631,896
Depreciation of the small scale license is applied by reference to the period of the licence granted and the large scale license has been fully impaired.
Incorporated in the Exploration and Evaluation assets is a fair value adjustment of GBP6,885,175 as a result of the acquisition of Enviro Mining Limited on 20 June 2011 and its two subsidiary companies, Enviro Processing Limited and Enviro Props Limited (together "Enviro Group"). The Enviro Group owns the leasehold rights and title to Stand 5187 containing the stockpiles at Kabwe and the contents of the washplant and leachplant tailings. No impairment has been made on the fair value this year on the basis that third party reports and internal evaluation of future income streams allied with the associated production costs generate net present values, using conservative discount rates, which are well in excess of the costs capitalised as intangible assets in the balance sheet.
Net Book Fair Value Fair Value
Value Adjustment GBP
of Assets GBP
Acquired
GBP
Exploration and evaluation
assets 1,802,357 7,135,175 8,937,532
159,530 159,530
Other net assets acquired - 195,053
Foreign exchange difference (2,563) 197,616
----------- ------------ -----------
1,959,324 7,332,791 9,292,115
Impairment provision (274,000) (250,000) (524,000)
----------- ------------ -----------
1,685,324 7,082,791 8,768,115
Deferred tax (note 16) - (1,906,525) (1,906,525)
1,685,324 5,176,266 6,861,590
The fair value adjustment of GBP7,135,175 arising from the acquisition of the EML group as outlined above was impaired by GBP250,000 in 2014 in relation to the NLL facilitation fee paid as part of the cash consideration at the time of the acquisition. The value now included in the exploration and evaluation assets amounts to GBP7,082,791. On the basis of third party reports incorporating values derived from JORC classifications and internal evaluation of future income streams allied with the associated production costs, net present values, using conservative discount rates, have been generated which are well in excess of this figure and the overall costs capitalised as intangible assets in the balance sheet. The impairment assessment carried out relates to the exploitation and development of mineral resources, as the one cash generating unit ("CGU") representing the only operating segment. The recoverable amount is determined from value in use calculations based on cash flow projections from revenue and expenditure forecasts covering a 5 year period to 2020, the
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expiry date of the small scale license. The growth rate is assumed to be zero and the level of production is constant on the basis the main plant is assumed to be at the most efficient capacity over the period of extraction., The key assumptions used are as follows:
2015 2014
Discount rate 20% 20%
Prevailing Metal prices**
(per tonne)
* Zinc $1,745 $2,060
* Lead $1,760 $1,725
Metal recovery rate from
processing as follow:
* Zinc 50/80% 55/60%
* Lead 85% 60/80%
Estimated monthly tonnage
of Zinc and Lead (JORC
Compliant) 29,200 31,025
** Prevailing metal prices extracted from London Metal Exchange as at 21 October 2015
The discount rate is based on the specific circumstances of the Group and its operating segments and is derived from its WACC, with appropriate adjustments made to reflect the risks specific to the CGU and to determine the pre-tax rate. In considering the discount rates applying to the CGUs, the directors have considered the relative sizes, risks and the inter-dependencies of its CGUs. No reasonably possible change in a key assumption would produce a significant movement in the carrying value of the CGUs and therefore no sensitivity analysis is presented.
12. PROPERTY PLANT AND EQUIPMENT
Land and Motor
Buildings Vehicles Other Total
GBP GBP GBP GBP
GROUP
Cost
At 30 June 2013 16,402 79,880 161,231 257,513
Additions 14,474 46,652 41,071 102,197
Disposals - - (1,516) (1,516)
Foreign exchange difference (4,775) (16,107) (21,033) (41,915)
At 30 June 2014 26,101 110,425 179,753 316,279
Additions - 6,929 2,382 9,311
Disposals - (46,654) (103,753) (150,407)
Foreign exchange difference (2,394) (5,503) (1,778) (9,675)
At 30 June 2015 23,707 65,197 76,604 165,508
Accumulated depreciation
At 30 June 2013 - (28,713) (42,131) (70,844)
Charge for the year - (24,633) (44,247) (68,880)
Impairment - - (59,006) (59,006)
Disposals - - 758 758
Foreign exchange difference - 7,677 9,259 16,936
At 30 June 2014 - (45,669) (135,367) (181,036)
Charge for the year - (23,901) (16,508) (40,409)
Impairment - - - -
Disposals - 12,636 102,776 115,412
Foreign exchange difference - 5,124 1,325 6,449
At 30 June 2015 - (51,810) (47,774) (99,584)
Carrying amount
At 30 June 2015 23,707 13,387 28,830 65,924
At 30 June 2014 26,101 64,756 44,386 135,243
At 30 June 2013 16,402 51,167 119,100 186,669
The carrying amount of motor vehicles held under finance lease amounted to GBPnil (2014: GBP39,850).
Motor
Vehicles Other Total
GBP GBP GBP
COMPANY
Cost
At 30 June 2013 - 56,919 56,919
Additions 46,654 - 46,654
Disposals - (1,516) (1,516)
At 30 June 2014 46,654 55,403 102,057
Additions - - -
Disposals (46,654) - (46,654)
At 30 June 2015 - 55,403 55,403
Accumulated depreciation
At 30 June 2013 - (13,651) (13,651)
Charge for the year (6,804) (11,012) (17,816)
Disposals - 758 758
At 30 June 2014 (6,804) (23,905) (30,709)
Charge for the year (5,832) (10,633) (16,465)
Disposals 12,636 - 12,636
At 30 June 2015 - (34,538) (34,538)
Carrying amount
At 30 June 2015 - 20,865 20,865
At 30 June 2014 39,850 31,498 71,348
At 30 June 2013 - 43,268 43,268
The carrying amount of motor vehicles held under finance lease amounted to GBPnil (2014: GBP39,850).
13. INVESTMENT IN SUBSIDIARIES
Cost of Long Term
Investment Loans Total
GBP GBP GBP
COMPANY
Cost at 30 June 2013 4,926,701 9,302,079 14,228,780
Advance to subsidiary
undertakings - 801,811 801,811
Effect of forex exchange
rate charges - (824,817) (824,817)
Impairment (250,000) (6,000,000) (6,250,000)
At 30 June 2014 4,676,701 3,279,073 7,955,774
Advance to subsidiary
undertakings - 321,438 321,438
Effect of forex exchange
rate charges 692,168 692,168
Impairment - (1,000,000) (1,000,000)
At 30 June 2015 4,676,701 3,292,679 7,969,380
The Company had investment in the following subsidiary undertakings at 30 June 2015 and 30 June 2014:
Country of Ordinary Ordinary
incorporation Shares shares
held held
Name Activity and operation Company Group
Enviro Mining Holding Company
Limited Mauritius 100% 100%
Enviro Processing Tailings processing
Limited Zambia - 100%
Enviro Props Property holding
Limited Zambia - 100%
The Group holding of 100% in the Zambian subsidiaries is held as to 99% by Enviro Mining Limited and 1% by a nominee on behalf of the Company.
As at 30 June 2015, the Company had investments in the following subsidiaries all of which were non-trading:
Name Activity Country Ordinary
of incorporation shares
held by
Group
and Company
------------------------- --------------- ------------------- -------------
Mukuba Chemical
Enterprises Ltd Asset holding Zambia 74%
------------------------- --------------- ------------------- -------------
Ndola Mineral Resources Tailings
Ltd processing Zambia 100%
------------------------- --------------- ------------------- -------------
Sensele Mineral Tailings
Resources Ltd processing Zambia 80%
------------------------- --------------- ------------------- -------------
Tailings
Mfubu Mineral Ltd processing Zambia 80%
------------------------- --------------- ------------------- -------------
Butale Mineral Tailings
Resources Ltd processing Zambia 80%
------------------------- --------------- ------------------- -------------
For further detail please refer to note 24. The joint venture operations have remained inactive although the Group still retains effective full control over the 5 dormant subsidiary companies.
14. TRADE AND OTHER RECEIVABLE
Group Company
2015 2014 2015 2014
GBP GBP GBP GBP
Group and Company
Prepayment 101,795 47,492 98,556 32,537
Other receivables 1,727 63,059 - 60,000
Vat receivable 96,389 7,570 83,466 7,570
199,911 118,121 182,022 100,107
========= ========= ========= =========
As outlined in note 17, a provision has been made in respect of a VAT assessment received from HM Revenue & Customs ("HMRC").
The fair value of trade and other receivables is not significantly different from the carrying value and none of the balances are past due.
15 CASH AND CASH EQUIVALENTS
The Group's cash and cash equivalents as at 30 June 2015 of GBP785,881 (2014: GBP750,695) comprise cash at bank and in hand.
The Company's cash and cash equivalents as at 30 June 2015 of GBP714,281 (2014: GBP685,795) comprise cash at bank and in hand.
The Directors consider that the carrying amount of these assets approximates their fair value.
16. DEFERRED TAX
Differences between IFRS and statutory tax rules (in the United Kingdom and elsewhere) give rise to temporary differences between the carrying values of certain assets and liabilities for financial reporting purposes and for income tax purposes.
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At 30 June 2015, the Company and Group are carrying forward estimated tax losses of GBP12.5m (2014: GBP10.9m) in respect of various activities over the years. No deferred tax asset was recognized in respect to these accumulated tax losses as there is insufficient evidence that the amount will be recovered in future years.
GBP
Deferred tax liabilities
At 30 June 2014 and 1 July
2014 1,855,145
Foreign exchange difference 51,380
At 30 June 2015 1,906,525
The deferred tax liabilities arose on the acquisition of exploration and evaluation assets in 2011. These will be released to the income statement as the fair value of the related exploration and evaluation assets is amortised.
17. TRADE AND OTHER PAYABLES
Group Company
2015 2014 2015 2014
GBP GBP GBP GBP
Trade payables 151,330 87,243 144,749 984,612
Other taxes and
social security 3,424 21,601 - 21,601
Other payables 164 329,394 - 329,395
Vat payable 374,350 268,491 374,350 268,491
Accruals 222,868 184,407 214,131 173,300
--------- --------- --------- ---------
752,136 891,136 733,230 877,399
========= ========= ========= =========
BMR is currently registered for VAT but HMRC has given notice that BMR is to be de-registered on the basis there was no effective consideration for any services provided as no invoices had been raised by BMR and issued to its subsidiaries and that management services were not considered supplies for VAT purposes. A provision has been made for GBP374,350 (2014 - GBP268,491) in relation to VAT previously claimed including interest and this amount has been provided in full. The Company has appealed and submitted its case for continued registration after having sought professional advice.
18. SHARE CAPITAL AND SHARE PREMIUM
As permitted by the Companies Act 2006, the Company does not have an authorised share capital (2014: nil)
2015 2014
Issued equity share
capital Number GBP Number GBP
Issued and fully
paid
Ordinary shares
of GBP0.001 each
(2014: Ordinary
shares of GBP0.01
each)
(see movements
below) 131,965,451 1,319,654 1,272,705,316 12,727,053
Deferred shares
of GBP0.009 each 1,346,853,817 12,121,684 - -
Non-equity deferred
shares
of GBP0.01 each 19,579,925 195,799 19,579,925 195,799
Deferred shares
of GBP0.04 each 181,378,766 7,255,151 181,378,766 7,255,151
============ ============
20,892,288 20,178,003
============ ============
Conversion of settlement shares into deferred shares
Pursuant to the settlement agreement dated 18 February 2015, Masoud Alikhani, Barbara Alikhani and Lakeshore Trading Limited, formerly Swan Logistics Limited agreed, which was subsequently approved by shareholders at the Annual General Meeting on 28 May 2015, to convert their interest in (before the consolidation) 24,479,376 of GBP0.01 ordinary shares of the Company into (before the consolidation) 27,199,307 GBP0.009 deferred shares with no economic value or voting rights.
Re-organisation of share capital
At the Annual General Meeting on 28 May 2015 a resolution was passed and the Company completed a share re-organisation to reduce the par value of the existing ordinary shares comprising a sub division of 1,319,654,510 ordinary shares into 1,319,654,510 new GBP0.01 ordinary shares and a further 1,319,654,510 GBP0.009 deferred shares with no economic value or voting rights and the consolidation of those new ordinary shares into a new class of ordinary shares (New Ordinary Shares of GBP0.001 each) such that each existing holding of 10 ordinary shares will convert into 1 New Ordinary Share.
The deferred 1p shares confer no rights to vote at a general meeting of the Company or to a dividend. On a winding-up the holders of the deferred shares are only entitled to the paid up value of the shares after the repayment of the capital paid on the ordinary shares and GBP5,000,000 on each ordinary share.
The deferred shares of 4p each have no rights to vote or to participate in dividends and carry limited rights on return of capital.
Deferred shares of GBP0.009 issued during the year:
Number of Nominal
shares value
GBP
At 30 June 2014 - -
Conversion of ordinary
shares into deferred
shares following the
settlement agreement
on 18 February 2015 27,199,307 244,794
Deferred shares issued
arising from
Consolidation and subdivision
of shares on 28 May 2015 1,319,654,510 11,876,890
At 30 June 2015 1,346,853,817 12,121,684
-------------- -----------
Shares issued during the year
Number of Nominal Share Premium
shares value
GBP GBP
At 30 June 2013 1,083,039,792 10,830,398 17,169,957
Ordinary shares
issued during the
year 189,665,524 1,896,655 1,131,407
Share issue costs - - (126,605)
Warrants exercised - - 1,941,742
Warrants lapsed - - 345,600
At 30 June 2014 1,272,705,316 12,727,053 20,462,101
Ordinary shares
issued during the
year 71,428,570 714,286 285,714
Share issue costs - - (50,000)
Conversion of ordinary
shares into deferred
shares following
the settlement
agreement on 18
February 2015 (24,479,376) (244,794) -
-------------- ----------- --------------
At 28 May 2015 1,319,654,510 13,196,545 20,697,815
-------------- ----------- --------------
Consolidation and
subdivision of
shares on 28 May
2015 (see note
above) 131,965,451 1,319,654 20,697,815
-------------- ----------- --------------
At 30 June 2015 131,965,451 1,319,654 20,697,815
-------------- ----------- --------------
Shares Issued Number of Shares Nominal Value Share Premium
27 August 2013 at GBP0.01 each 29,441,061 294,411 294,410
28 August 2013 at GBP0.01 each 18,250,000 182,500 182,500
30 August 2013 at GBP0.01 each 3,959,326 39,593 39,594
2 September 2013 at GBP0.01 each 2,538,026 25,380 25,380
24 October 2013 at GBP0.01 each 507,605 5,076 5,076
2 December 2013 at GBP0.01 each 12,500,000 125,000 125,000
12 December 2013 at GBP0.01 each 7,852,797 78,528 78,528
13 December 2013 at GBP0.01 each 7,614,082 76,141 76,141
2 January 2014 at GBP0.01 each 3,147,149 31,472 31,471
28 January 2014 at GBP0.01 each 2,045,645 20,456 20,457
3 February 2014 at GBP0.01 each 670,000 6,700 -
7 April 2014 at GBP0.01 each 24,047,596 240,476 60,119
28 April 2014 at GBP0.01 each 54,250,000 542,500 135,625
1 May 2014 at GBP0.01 each 22,842,237 228,422 57,106
At 30 June 2014 189,665,524 1,896,655 1,131,407
8 July 2014 at GBP0.01 each 35,714,285 357,143 142,857
19 August 2014 at GBP0.01 each 35,714,285 357,143 142,857
At 28 May 2015 71,428,570 714,286 285,714
19. SHARE BASED PAYMENTS
Equity settled share-based payments
The Company has a share option scheme for directors, employees and consultants.
SHARE OPTIONS
30 June 30 June
2014 or Cancelled Granted Exercised 2015 or
date of or during during date of
appointment Lapsed the year the year resignation
Name Price Note Number Number Number Number Number
----------------- ----- ---- ------------ ------------ ---------- --------- ------------
SHARE OPTIONS
M Alikhani 3p 5,000,000 (5,000,000) - - -
M Alikhani 9p 3,597,000 (3,597,000) - - -
M Wainwright 3p 2,000,000 (2,000,000) - - -
M Wainwright 9p 1,000,000 (1,000,000) - - -
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H Furman 3p 2,000,000 (2,000,000) - - - H Furman 9p 1,000,000 (1,000,000) - - - Other staff and consultants 3p 28,625,000 (28,625,000) - - - Other staff and consultants 9p 14,298,979 (14,298,979) - - - M A Borrelli 6p A - - 6,070,411 - 6,070,411 J N Hawke 6p A - - 2,903,240 - 2,903,240 Consultants 6p A - - 4,222,895 - 4,222,895 Total options 57,520,979 (57,520,979) 13,196,546 - 13,196,546 SHARE WARRANTS Novum Securities 28p B - - 7,142,857 - 7,142,857 Total Share Warrants - - 7,142,857 - 7,142,857 Total Share Options and Warrants 57,520,979 (57,520,979) 20,339,403 - 20,339,403
Note: all shares cancelled or lapsed were pre-consolidation.
SHARE OPTIONS AND WARRANTS
NOTE:
Note A - Exercisable at any time before 12 June 2020
Note B - Exercisable at any time before 7 July 2017
During the year 15,438,400 share options (pre the share consolidation) lapsed as a result of the staff and consultants no longer working for the Company. In addition, on 29 March 2015, Mr Furman and Mr Wainwright agreed to the cancellation of their options amounting to 6,000,000 and the remaining 36,082,579 share options were cancelled on 18 February 2015 as part of the settlement agreement.
Warrants
On 8 July 2014, the Company issued 35,714,285 warrants to Novum Securities of 1p each at an exercise price of 2.8p. Following the consolidation of shares these warrants are converted in to 3,571,428 warrants at an exercise price of 28p.
On 19 August 2014 the Company issued a further 35,714,285 warrants of 1p each at an exercise price of 2.8p. Following the consolidation of shares these warrants are converted in to 3,571,428 warrants at an exercise price of 28p.
Share Options
On the 12 June 2015, the Company granted 13,196,546 share options of 1p to directors and senior executives at an exercise price of 6p exercisable before 12 June 2020. 25% of the options vested immediately and 3 further tranches of 25% will vest on the achievement of various milestones in the future. As a result of this the fair value of the share options was determined at the date of the grant using the Black Scholes model, using the following inputs:
Share price at the date of amendment 4p Strike price 6p Volatility 60% Expected life 1,825 days Risk free rate 0.5%
The resultant fair value of the share options was determined to be GBP52,786, which was recognised in the income statement.
20. FINANCIAL INSTRUMENTS
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern, while maximising the return to shareholders.
The capital resources of the Group comprises issued capital, reserves and retained earnings as disclosed in the Consolidated Statement of Changes in Equity. The Group's primary objective is to provide a return to its equity shareholders through capital growth. Going forward the Group will seek to maintain a yearly ratio that balances risks and returns of an acceptable level and also to maintain a sufficient funding base to the Group to meet its working capital and strategic investment needs.
Categories of financial instruments
2015 2014
Group GBP GBP
Financial assets
Cash and cash equivalents 785,881 750,695
Other receivables classified
as loan
--------- ---------
and receivables at amortised
cost 98,116 70,628
--------- ---------
883,997 821,323
========= =========
Financial liabilities classified
as held at amortised cost
Trade and other payables 529,268 706,729
--------- ---------
529,268 706,729
========= =========
Company
Financial assets
Cash and cash equivalents 714,281 685,795
Other receivables classified
as loan
--------- ---------
and receivables at amortised
cost 83,466 67,570
--------- ---------
797,747 753,365
========= =========
Financial liabilities classified
as held at amortised cost
Trade and other payables 519,099 704,009
519,099 704,009
========= =========
Fair value of financial assets and liabilities
Fair value is the amount at which a financial instrument could be exchanged in an arm's length transaction between informed and willing parties, other than a forced or liquidation sale and excludes accrued interest. Where available, market values have been used to determine fair values.
Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments which are measured at fair value by valuation technique:
Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities
Level 2: Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly;
Level 3: Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data
Management assessed that the fair values of cash and short-term deposits, trade receivables, trade payables, bank overdrafts and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
The directors' assessment of the E&E assets at fair value, are disclosed in note 12.
Financial risk management objectives
Management provides services to the business, co-ordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Group through internal risks reports which analyse exposures by degree and magnitude of risks. These risks include foreign currency risk, credit risk, liquidity risk and cash f low interest rate risk. The Group does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.
As the Group has no committed borrowings, the Group is not exposed to any risks associated with fluctuations in interest rates on loans. Fluctuation in interest rates applied to cash balances held at the 2015 balance sheet date would have minimal impact on the Group.
Foreign exchange risk and foreign currency risk management
Foreign currency exposures are monitored on a monthly basis. Funds are transferred between the Sterling and US Dollar accounts in order to minimise foreign exchange risk. The Group holds the majority of its funds in Sterling.
The carrying amounts of the Group's and Company's foreign currency denominated financial assets and monetary liabilities at the reporting date are as follows:
Financial liabilities Financial assets
2015 2014 2015 2014
Group GBP GBP GBP GBP
Zambian Kwacha 10,169 2,351 50,592 37,504
US Dollars - 279 105,782 280,971
Company
Zambian Kwacha - - -
US Dollars - 279 105,782 250,517
Foreign currency sensitivity analysis
The Group is exposed primarily to movements in Sterling against the US Dollar. Sensitivity analyses have been performed to indicate how the profit or loss would have been affected by changes in the exchange rate between the US Dollar and Sterling. The analysis is based on a weakening and strengthening of Sterling by 10 per cent against the US Dollar in which the Group has assets and liabilities at the end of each respective period.
A movement of 10 per cent reflects a reasonably possible sensitivity when compared to historical movements over a three to five year timeframe. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a ten per cent change in foreign currency rates.
A positive number below indicates an increase in profit where the US Dollar strengthens ten per cent. against Sterling. For a ten per cent. weakening of the US Dollar against Sterling, there would be an equal and opposite impact on the profit, and the balance below would be negative.
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The following table details the Group's sensitivity to a ten per cent. strengthening in the US Dollar and Zambian Kwacha against Sterling
2015 2014
GBP GBP
(Decrease)/increase in income
statement and net assets (US $) (9,117) (22,373)
(Decrease)/increase in income
statement and net assets (Kwacha) (3,635) (3,305)
========= ==========
Credit risk management
Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Group. The Group does not have any significant credit risk exposure on trade receivables.
The Group makes allowances for impairment of receivables where there is an identified event which, based on previous experience, is evidence of a reduction in the recoverability of cash f lows.
The credit risk on liquid funds (cash) is considered to be limited because the counterparties are financial institutions with high credit ratings assigned by international credit-rating agencies.
The carrying amount of financial assets recorded in the financial statements represents the Group's maximum exposure to credit risk.
Liquidity risk management
Liquidity risk is the risk that the Group and Company will not be able to meet its financial obligations as they fall due. Management monitor forecasts of the Group's liquidity reserve, comprising cash and cash equivalent, on the basis of expected cash flow. At 30 June 2015, the Group held cash and cash equivalent of GBP785,881 (2014: GBP750,695) and the directors assess the liquidity risk as part of their going concern assessment (see note 3)
The Group and Company aim to maintain appropriate cash balances in order to meet its liabilities as they fall due.
Maturity analysis
Group Between Between Between
2015 On In 1 and 6 6 and 12 1 and
3
Total demand 1 month months months years
GBP GBP GBP GBP GBP GBP
Trade and
other payables 752,136 48,250 59,981 152,556 491,350 -
Company Between Between Between
2015 On In 1 and 6 6 and 12 1 and
3
Total demand 1 month months months years
GBP GBP GBP GBP GBP GBP
============= =============== ============== ============ ============ =============
Trade and
other payables 733,232 48,250 49,812 143,820 491,350 -
============= =============== ============== ============ ============ =============
Group
2014
Between Between Between
On In 1 and 6 6 and 12 1 and
Total demand 1 month months months 3
years
GBP GBP GBP GBP GBP GBP
Trade and
other payables 891,136 218,350 218,121 126,509 302,342 25,814
Company
2014 Between Between Between
On In 1 and 6 6 and 12 1 and
3
Total demand 1 month months months years
GBP GBP GBP GBP GBP GBP
Trade and
other payables 877,398 204,612 218,121 126,509 302,342 25,814
============= =============== ============== ============ ============ =============
21. OPERATING LEASE ARRANGEMENT
At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2015 2014
GBP GBP
Land and buildings
Within one year 64,500 120,000
Within 2-5 years - 60,000
------- --------
Total 64,500 180,000
======= ========
Operating lease payments represent rentals payable by the Company for its office properties.
22. FINANCE LEASE PAYABLES
2015 2014
GBP GBP
Minimum hire purchase payables:
not later than one year - 7,702
Later than one year and not
later than five years - 29,607
------- --------
Total - 37,309
Less: future finance charges - (3,793)
------- --------
Present value of hire purchase
payable - 33,516
======= ========
Current asset - 33,516
Non current assets - -
------ --------
Present value of hire purchase
payable - 33,516
======= ========
The leased asset was disposed of during the year.
23. RELATED PARTY TRANSACTIONS
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
The Directors consider that the following parties are related parties for the purposes of the disclosure of related party transactions:
Mr Masoud Alikhani, director during the year;
Mr Said Alikhani and Africa Consulting Services;
Ms Anita Carr, A.E.C.C.S.S. and Lakeshore Trading Limited, formerly Swan Logistics Limited;
Mr Kishor Sodha and Harrison Reeds; and
Mr Mark Wainwright, director, and Turner and Townsend (Pty) Limited.
Settlement agreement
On 18 February 2015, the Company entered into a settlement agreement with, amongst others, Mr Masoud Alikhani. The Settlement Agreement represented a related party transaction in accordance with Rule 13 of the AIM Rules for Companies and the Directors considered, having consulted with the Company's nominated adviser, that the terms of the Settlement Agreement were fair and reasonable insofar as its shareholders are concerned.
The settlement agreement was with Masoud Alikhani (the former Chairman) via an interim deputy, Mrs Barbara Alikhani (wife of Masoud Alikhani), Said Alikhani (a brother of Masoud Alikhani), Alberg Mining & Minerals Exploration Limited (a vendor of assets sold to BMR), Dominion Energy PLC (a company in which Masoud Alikhani was interested), ESV Group PLC (a further company in which Masoud Alikhani was interested), Ms Anita Carr (a former contractor of BMR) and Lakeshore Trading Limited, formerly Swan Logistics Limited (a company controlled by Ms Anita Carr) (together, the "Settlement Parties"), and Heathley Limited (a company of which Masoud Alikhani's son is an authorised signatory) and the Company received the sum of GBP960,000 from Mrs Alikhani.
On 18 February 2015, 36,082,579 options (pre the share consolidation) were cancelled as part of the settlement agreement. On 29 March 2015, H Furman and M Wainwright sacrificed their outstanding options. As noted in Note 19 above, on 29 March 2015, all then outstanding options were cancelled.
Transactions with Lakeshore Trading Limited, formerly Swan Logistics Limited ("Swan")
The Company made significant transfers to Swan, a related party, which in turn paid the Company's employees, contractors and external service providers Various matters regarding the conduct of Swan are the subject of the Settlement Agreement outlined above (which agreement contains confidentiality obligations).
During the early part of the year ended 30 June 2015 Swan acted as an agent of the Group and were engaged to provide office services. Swan charged GBP105,456 (2014: GBP234,535) to the Company for these services and were paid GBP345,456 (2014: GBP498,388). At the year end no balances were owed to the Company (2014: amounts owed to Swan GBP240,000).
Swan was financed entirely by the Company and it generated no revenue or income in its own capacity.
Transactions with Turner and Townsend (Pty) Limited ("T&T")
T&T is a related party of the Group because Mark Wainwright (the previous non-executive Director) is part of the key management personnel of Turner and Townsend (Pty) Limited's parent company where he holds a position of the managing director of its Natural Resources division.
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December 17, 2015 02:00 ET (07:00 GMT)
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