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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Regency Mines Plc | LSE:RGM | London | Ordinary Share | GB00BKM69866 | ORD 0.01P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.90 | 0.85 | 0.95 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMRGM
RNS Number : 7779X
Regency Mines PLC
29 November 2017
Regency Mines Plc
("Regency Mines" or the "Company")
Final Audited Results for the Year Ended 30 June 2017
29 November 2017
A copy of the Company's annual report and financial statements for 2017 - extracts from which are set out below - will be made available on the Company's website www.regency-mines.com shortly and at the Annual General Meeting to be held on 29 December 2017.
Chairman's Review
Dear Shareholders,
Overview
The world looks quite different now from the way it looked a year ago. Then we were looking back at a calendar year that had seen the final sell-off of a commodity bear market and an ensuing sharp recovery. Sentiment was still fragile, and many investors were unsure whether the recovery would last or whether the Chinese economy might suffer a slowdown or a financial crisis. Now, we have the prospect of a broad-based recovery, with global growth rising from 3% in 2016 to 3.6% in 2017 and 3.7% in 2018, global trade accelerating, and inflation worldwide trending below expectations. Encouraging aspects of this picture are the broadening of growth to include most regions, with stable growth in China, a synchronised recovery in Japan, Europe and Russia, and strong growth in Asian and emerging European economies.
The oil price and those of other industrial commodities have broadly advanced, although the current levels still seem modest compared with those of the boom years.
Developments During 2016-2017
Regency began its 2016-17 financial year with a share price of 0.35 pence, and ended it 63% higher at 0.57 pence. It began the year with a market value of GBP883,000 and ended it 272% higher at GBP3,286,000. It began the year just holding on to its stake in its Mambare nickel/cobalt project without being able to raise money for or justify exploration in a still unfavourable price environment for nickel. In a search for potential cash-flow generating businesses it had acquired a 5% stake in UK onshore oil explorer Horse Hill Developments Ltd, and made a GBP175,000 pre-IPO investment in U.S. coal bed methane developer, Curzon Energy plc.
During the year there was news flow in relation to Horse Hill, and a small residual Australian investment was disposed of for A$100,000. As coal prices rose and later in the year a new U.S. President committed to allowing the coal industry to survive took office, an investment was made in metallurgical coal projects in the Appalachian belt of the United States. These US investments in coal have taken longer to mature than hoped, however the fundamental investment case for metallurgical coal remains a strong one.
We ended the year with a clearer identity, holding coal, coal bed methane and oil interests, where prices were rising, on the one hand and our historic industrial metal interests in nickel and cobalt interests, where we still had to wait for real price recovery, on the other. We already knew that our Horse Hill interest was non-core due to our lack of influence or control over the asset's development, and that there was strong interest from potential buyers, and we planned to and in fact invested these proceeds in our hydrocarbon division, ultimately into Curzon Energy.
Although we had a strong belief in the importance of our lateritic nickel/cobalt deposit at Mambare in Papua New Guinea, having drilled out a major Resource there at the beginning of the decade, we had no idea when the nickel price would follow manganese, coal and selected other commodities and show a significant rise. We therefore were keeping expenditure on our licences to a minimum. Nickel had been the first metal to see its price rise on the China boom in the early 2000s, but had also been the earliest to fall. The nickel price has often been volatile, and has sometimes followed a different course from other metals. Two thirds of use is in stainless steel, demand for which has grown at about 6% p.a. historically and it appears to be reverting towards this rate after several years of slower growth and oversupply.
Subsequent Developments
Since the end of our reporting year, which runs to 30 June 2017, the nickel price has shown growing strength. Cobalt, which accounts for a significant percentage of our potential revenues from any development of Mambare, had already risen in price since the beginning of 2016, and in the last few months this EV battery cathode material has followed lithium, the main anode material, in seeing increasing investor attention as analysts focus on the demand impact of growing EV battery use as the electric car industry accelerates. Some EV batteries use five times as much nickel as cobalt in the cathodes, and projections of nickel demand for this use mean that nickel, with only 2.25m tons of worldwide primary production in 2016, will be the next metal market to be significantly impacted by this new demand source.
These price rises however, though significant and possibly only at an early stage, are not what interest us principally at Mambare. What matters most for a huge Resource like ours, which is itself derived from only the small part of the deposit target already drilled, is that the growth in demand should be there. For it is that which will ensure the willingness of investors, industry partners, and banks to finance major new sources of supply such as ours. Now that the focus has just begun to switch to nickel, our cobalt/nickel deposit becomes once again, after several years, an asset which we can advance and actively take steps to develop and promote.
In July 2017, shortly after the year end we announced the sale of 1.9% out of our 5% shareholding in Horse Hill Developments Ltd ("Horse Hill"). Of the GBP323,000 consideration, we took GBP268,502 in the form of listed shares which we were able to sell within two months for aggregate proceeds of GBP1,297,700. In October 2017 we agreed to sell the balance of 3.1% of Horse Hill for GBP630,000, and we expect this transaction to complete shortly.
In September 2017 we paid down $350,000 of current liabilities and added GBP400,000 to our existing GBP175,000 investment in coal bed methane developer Curzon Energy plc as it listed its shares on the London Stock Exchange. The initial reports regarding operational progress on the existing wells at Curzon's assets in Oregon is expected in the near term.
We continue to take steps to advance and rationalise our interests and involvement in metallurgical coal in the U.S., where prices remain attractive and where we expect to introduce further developments, the first of which, recently announced, is the option to buy out our partners at the Rosa Coal Mine in Alabama.
Discussion of the Results
Losses reported for the year to 30 June 2017 fell from GBP1,965,722 to GBP534,267. This was the result primarily of a reduction in impairments taken against exploration assets, where the only impairment this year was an exploration tenement in Queensland, but also reflected a reduction in other losses and in administrative expenses and an increase in revenues.
The sales made since year end of Horse Hill Developments Ltd shares lead us to expect a move back into profit in the current year.
It was the knowledge that our available for sale financial assets, which ended the year at GBP1,443,707, were reasonably liquid, and the expectation that we would shortly sell part or all of our Horse Hill holding to one buyer or another, that allowed us to expand our current liabilities to considerably in excess of current assets by restructuring and increasing our short term liabilities through a $1m convertible loan in April, of which $750k remains outstanding.
Total shareholders' equity rose by 41.8% from GBP3,694,838 to GBP5,238,265. This largely resulted from equity fundraising during the year. We began the year raising money at 0.4 pence per share, but by May 2017 were raising new money at 0.9 pence a share. The higher share price later in the year meant that the equity funding total included some GBP310,000 from the exercise of warrants; a clear demonstration of our investors looking to follow up on their initial investments.
The Company's larger balance sheet, greater spread of assets and higher market value, created over the course of the year the critical mass needed to support a listing and ensure the long-term viability of the business, while laying the foundation for internally generated growth."
Prospects
The last few months, which are the first few months of the current financial year, have seen the Company able to realise profits from its portfolio of interests by the sale of interests in Horse Hill, and as a result both strengthen its balance sheet and increase its significant investment in Curzon Energy plc to 8.91%. Gas prices and demand in the U.S. are likely to continue their advance as a greener and less polluting form of energy as the essential distribution infrastructure is installed and Curzon operates in a regional market where gas has long sold at a premium price. Further proceeds are expected from Horse Hill, and these should enable the Company to increase its metallurgical coal footprint as well as continue to pay down short term borrowings.
The improvement in cobalt and nickel prices, and the developing EV, home and industrial battery story, where the structure and scale of demand for the different metals is becoming clearer, mean that Regency finds itself now in an enviable position. It has through difficult times held on to what is now a 50% interest in one of the potentially major assets in a fast-moving area of the mineral sector. This is a strength we can build on. We expect interest in battery metals to increase,
and have announced the setting up of a separate division to develop our interests in the technologies and services that will serve the electric car and battery sectors more generally.
We look forward to an exciting year. With early profits banked from Horse Hill sales, it looks to be a profitable one. We will remain active in the development of our old energy, or hydrocarbon, interests, and our base metal interests can now be seen to be entirely composed of the cathode materials that are key for the new green car and energy storage revolution that is under way. This offers us access to the investment and development opportunities that will drive industry and metals demand for the foreseeable future to the clear benefit of our stakeholders. As always, we thank you for your support during the past year, we maintain our sharp focus on the creation of meaningful value for our investors and shareholders.
Andrew Bell
Chairman and CEO
27 November 2017
Results and Dividends
The Group made a loss after taxation of GBP534,267 (2016: GBP1,965,722). The Directors do not recommend the payment of a dividend. The following financial statements are extracted from the audited financial statements which were approved by the Board of Directors and authorised for issue on 27 November 2017.
For further information contact:
Andrew Bell 0207 747 9960 Chairman Regency Mines Plc
Scott Kaintz 0207 747 9960 Executive Director Regency Mines Plc
Roland Cornish/Rosalind Hill Abrahams 0207 628 3396 NOMAD Beaumont Cornish Ltd
Jason Robertson 0207 374 2212 Broker First Equity Ltd.
Consolidated statement of financial position
As at 30 June 2017
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Premium
30 June 30 June
2017 2016
Notes GBP GBP
-------------------- ----- ------------ ------------
ASSETS
-------------------- ----- ------------ ------------
Non-current
assets
-------------------- ----- ------------ ------------
Property,
plant and
equipment 9 15,520 21,716
-------------------- ----- ------------ ------------
Investments
in associates
and joint
ventures 11 3,585,757 1,638,113
-------------------- ----- ------------ ------------
Available
for sale financial
assets 12 1,443,707 1,147,460
-------------------- ----- ------------ ------------
Exploration
assets 13 40,402 233,900
-------------------- ----- ------------ ------------
Trade and
other receivables 14 1,239,779 1,202,312
-------------------- ----- ------------ ------------
Total non-current
assets 6,325,165 4,243,501
-------------------- ----- ------------ ------------
Current assets
-------------------- ----- ------------ ------------
Cash and cash
equivalents 19 9,176 7,960
-------------------- ----- ------------ ------------
Trade and
other receivables 14 116,544 344,815
-------------------- ----- ------------ ------------
Total current
assets 125,720 352,775
-------------------- ----- ------------ ------------
Total assets 6,450,885 4,596,276
-------------------- ----- ------------ ------------
EQUITY AND
LIABILITIES
-------------------- ----- ------------ ------------
Equity attributable
to owners
of the Parent
-------------------- ----- ------------ ------------
Called up
share capital 18 1,904,933 1,872,523
-------------------- ----- ------------ ------------
Share premium
account 19,272,873 17,399,710
-------------------- ----- ------------ ------------
Other reserves 895,947 324,638
-------------------- ----- ------------ ------------
Retained earnings (16,795,589) (15,902,031)
-------------------- ----- ------------ ------------
Total equity 5,278,164 3,694,838
-------------------- ----- ------------ ------------
LIABILITIES
-------------------- ----- ------------ ------------
Current liabilities
-------------------- ----- ------------ ------------
Trade and
other payables 15 401,634 619,139
-------------------- ----- ------------ ------------
Short-term
borrowings 15 771,087 282,299
-------------------- ----- ------------ ------------
Total current
liabilities 1,172,721 901,438
-------------------- ----- ------------ ------------
Total equity
and liabilities 6,450,885 4,596,276
-------------------- ----- ------------ ------------
These financial statements were approved by the Board of Directors and authorised for issue on 27 November 2017 and are signed on its behalf by:
Andrew Bell
Chairman and CEO
The accompanying notes form an integral part of these financial statements.
Consolidated income statement
For the year ended 30 June 2017
Year to Year to
30 June 30 June
2017 2016
Notes GBP GBP
--------------------------- ----- ------------ ------------
Revenue
--------------------------- ----- ------------ ------------
Management services 113,350 24,910
--------------------------- ----- ------------ ------------
Total revenue 113,350 24,910
--------------------------- ----- ------------ ------------
Gain/(loss) on
dilution of interest
in associate - 19,325
--------------------------- ----- ------------ ------------
Loss on sales of
investments - (86,735)
--------------------------- ----- ------------ ------------
Gain on sale of
tenements 55,183 (48,049)
--------------------------- ----- ------------ ------------
Impairment of
available for
sale financial
assets - (547,068)
--------------------------- ----- ------------ ------------
Exploration expenses (930) (611)
--------------------------- ----- ------------ ------------
Impairment of exploration
assets (229,262) (658,281)
--------------------------- ----- ------------ ------------
Administrative
expenses (net) (414,943) (594,733)
--------------------------- ----- ------------ ------------
Share of losses
of associates and
joint ventures
(net of tax) - (48,430)
--------------------------- ----- ------------ ------------
Finance costs,
net 4 (57,665) (26,050)
--------------------------- ----- ------------ ------------
Loss for the year
before taxation 3 (534,267) (1,965,722)
--------------------------- ----- ------------ ------------
Tax credit 5 - -
--------------------------- ----- ------------ ------------
Loss for the year
attributable to
owners of the Parent (534,267) (1,965,722)
--------------------------- ----- ------------ ------------
Loss per share
attributable to
owners of the Parent
--------------------------- ----- ------------ ------------
Loss per share
- basic 8 (0.13) pence (1.20) pence
--------------------------- ----- ------------ ------------
Loss per share
- diluted 8 (0.13) pence (1.20) pence
--------------------------- ----- ------------ ------------
All of the Group's operations are considered to be continuing.
The accompanying notes form an integral part of these financial statements.
Consolidated statement of comprehensive income
For the year ended 30 June 2017
30 June 30 June
2017 2016
GBP GBP
------------------------- --------- -----------
Loss for the year (534,267) (1,965,722)
------------------------- --------- -----------
Other comprehensive
income
------------------------- --------- -----------
Items that will
be reclassified
subsequently to
profit or loss
------------------------- --------- -----------
Surplus on revaluation
of available for
sale financial assets 110,242 184,297
------------------------- --------- -----------
Share of other
comprehensive income
of associates - 6,364
------------------------- --------- -----------
Unrealised foreign
currency gain 58,865 50,892
------------------------- --------- -----------
Other comprehensive
income for the
year 169,107 241,553
------------------------- --------- -----------
Total comprehensive
expense for the year
attributable to owners
of the Parent (365,160) (1,724,169)
------------------------- --------- -----------
The accompanying notes form an integral part of these financial statements.
Consolidated statement of changes in equity
For the year ended 30 June 2017
The movements in equity during the year were as follows:
Share
Share premium Retained Other Total
capital account earnings reserves equity
GBP GBP GBP GBP GBP
-------------------- --------- ---------- ------------ --------- -----------
As at
30 June
2015 1,815,326 16,700,261 (13,936,310) 60,140 4,639,417
-------------------- --------- ---------- ------------ --------- -----------
Changes
in equity
for 2016
-------------------- --------- ---------- ------------ --------- -----------
Loss for
the year - - (1,965,722) - (1,965,722)
-------------------- --------- ---------- ------------ --------- -----------
Other
comprehensive
income
for the
year - - - 241,553 241,553
-------------------- --------- ---------- ------------ --------- -----------
Transactions
with owners
-------------------- --------- ---------- ------------ --------- -----------
Issue
of shares 57,196 749,449 - - 806,645
-------------------- --------- ---------- ------------ --------- -----------
Share issue
and fundraising
costs - (50,000) - - (50,000)
-------------------- --------- ---------- ------------ --------- -----------
Share-based
payment transfer - - - 22,945 22,945
-------------------- --------- ---------- ------------ --------- -----------
Total transactions
with owners 57,196 699,449 - 22,945 779,590
-------------------- --------- ---------- ------------ --------- -----------
As at
30 June
2016 1,872,522 17,399,710 (15,902,032) 324,638 3,694,838
-------------------- --------- ---------- ------------ --------- -----------
Changes
in equity
for 2017
-------------------- --------- ---------- ------------ --------- -----------
Loss for
the year - - (534,267) - (534,267)
-------------------- --------- ---------- ------------ --------- -----------
Other comprehensive
income for
the year - - (359,290) 528,397 169,107
-------------------- --------- ---------- ------------ --------- -----------
Transactions
with owners
-------------------- --------- ---------- ------------ --------- -----------
Issue
of shares 32,411 1,918,253 - - 1,950,664
-------------------- --------- ---------- ------------ --------- -----------
Share issue
and fundraising
costs - (45,090) - - (45,090)
-------------------- --------- ---------- ------------ --------- -----------
Share-based
payment transfer - - - 42,912 42,912
-------------------- --------- ---------- ------------ --------- -----------
Total transactions
with owners 32,411 1,873,163 - 42,912 1,948,486
-------------------- --------- ---------- ------------ --------- -----------
As at
30 June
2017 1,904,933 19,272,873 (16,795,589) 895,947 5,278,164
-------------------- --------- ---------- ------------ --------- -----------
Available
for sale Foreign
financial Share-based Associate currency Total
asset payment investments translation other
reserve reserve reserve reserve reserves
GBP GBP GBP GBP GBP
--------------- ---------- ------------- ------------ ------------ ---------
As at
30 June
2015 82,707 - (416,803) 394,236 60,140
--------------- ---------- ------------- ------------ ------------ ---------
Changes
in equity
for 2016
--------------- ---------- ------------- ------------ ------------ ---------
Other
comprehensive
income
for the
year 184,297 - 6,364 50,892 241,553
--------------- ---------- ------------- ------------ ------------ ---------
Share-based
payment
transfer - 22,945 - - 22,945
--------------- ---------- ------------- ------------ ------------ ---------
As at
30 June
2016 267,004 22,945 (410,439) 445,128 324,638
--------------- ---------- ------------- ------------ ------------ ---------
Changes
in equity
for 2017
--------------- ---------- ------------- ------------ ------------ ---------
Other
comprehensive
income
for the
year 110,242 - - 58,865 169,107
--------------- ---------- ------------- ------------ ------------ ---------
Transfer
to retained
earnings (51,149) - 410,439 - 359,290
--------------- ---------- ------------- ------------ ------------ ---------
Share-based
payment
transfer - 42,912 - - 42,912
--------------- ---------- ------------- ------------ ------------ ---------
As at
30 June
2017 326,097 65,857 - 503,993 895,947
--------------- ---------- ------------- ------------ ------------ ---------
See note 16 for a description of each reserve included above.
Consolidated statement of cash flows
For the year ended 30 June 2017
Year to Year to
30 June 30 June
2017 2016
GBP GBP
------------------------- ----------- -----------
Cash flows from
operating activities
------------------------- ----------- -----------
Loss before taxation (534,267) (1,965,722)
------------------------- ----------- -----------
Decrease/(increase)
in receivables 1,501 283,555
------------------------- ----------- -----------
Increase/(decrease)
in payables (217,503) 225,453
------------------------- ----------- -----------
Depreciation 6,197 7,453
------------------------- ----------- -----------
Impairment of
exploration properties 229,262 658,281
------------------------- ----------- -----------
Share-based payments 91,359 47,995
------------------------- ----------- -----------
Currency adjustments (49,679) (26,871)
------------------------- ----------- -----------
Finance cost,
net 57,665 26,050
------------------------- ----------- -----------
Share of losses
of associate - 48,430
------------------------- ----------- -----------
Loss on sale of
investments - 86,735
------------------------- ----------- -----------
Gain on sale of
tenements (55,183) 48,049
------------------------- ----------- -----------
Impairment of
available for
sale financial
assets - 547,068
------------------------- ----------- -----------
(Gain)/loss on
dilution of interest
in associate - (19,325)
------------------------- ----------- -----------
Net cash outflow
from operations (470,648) (32,849)
------------------------- ----------- -----------
Cash flows from
investing activities
------------------------- ----------- -----------
Interest received - 15,869
------------------------- ----------- -----------
Proceeds from
sale of investments - 124,158
------------------------- ----------- -----------
Proceeds from
sale of tenements 58,837 -
------------------------- ----------- -----------
Purchase of property,
plant and equipment - (20,343)
------------------------- ----------- -----------
Purchase of available
for sale financial
assets (75,000) (674,498)
------------------------- ----------- -----------
Payments for exploration
costs (594) (37,771)
------------------------- ----------- -----------
Payments for investments
in associates and
joint ventures (1,531,778) -
------------------------- ----------- -----------
Net cash outflow
from investing
activities (1,548,535) (592,585)
------------------------- ----------- -----------
Cash inflows from
financing activities
------------------------- ----------- -----------
Proceeds from
issue of shares 1,576,701 781,595
------------------------- ----------- -----------
Transaction costs
of issue of shares (45,090) (50,000)
------------------------- ----------- -----------
Interest paid (72,048) (41,919)
------------------------- ----------- -----------
Proceeds of new
borrowings 771,087 -
------------------------- ----------- -----------
Repayment of borrowings (210,251) (59,847)
------------------------- ----------- -----------
Net cash inflow
from financing
activities 2,020,399 629,829
------------------------- ----------- -----------
Net (decrease)/increase
in cash and cash
equivalents 1,216 4,395 ------------------------- ----------- ----------- Cash and cash equivalents at beginning of period 7,960 3,565 ------------------------- ----------- ----------- Cash and cash equivalents at end of period 9,176 7,960 ------------------------- ----------- -----------
The accompanying notes and accounting policies form an integral part of these financial statements.
Company statement of financial position
For the year ended 30 June 2017
30 June 30 June
2017 2016
Notes GBP GBP
-------------------- ----- ------------ ------------
ASSETS
-------------------- ----- ------------ ------------
Non-current
assets
-------------------- ----- ------------ ------------
Property,
plant and
equipment 9 15,520 21,716
-------------------- ----- ------------ ------------
Investments
in subsidiaries 10 482 482
-------------------- ----- ------------ ------------
Investments
in associates
and joint ventures 11 3,702,417 1,754,773
-------------------- ----- ------------ ------------
Available
for sale financial
assets 12 1,433,858 1,147,460
-------------------- ----- ------------ ------------
Exploration
assets 13 40,402 40,402
-------------------- ----- ------------ ------------
Trade and
other receivables 14 2,045,053 2,003,858
-------------------- ----- ------------ ------------
Total non-current
assets 7,237,732 4,968,691
-------------------- ----- ------------ ------------
Current assets
-------------------- ----- ------------ ------------
Cash and cash
equivalents 19 8,125 6,626
-------------------- ----- ------------ ------------
Trade and
other receivables 14 116,286 286,455
-------------------- ----- ------------ ------------
Total current
assets 124,411 293,081
-------------------- ----- ------------ ------------
Total assets 7,362,143 5,261,772
-------------------- ----- ------------ ------------
EQUITY AND
LIABILITIES
-------------------- ----- ------------ ------------
Called up
share capital 18 1,904,933 1,872,522
-------------------- ----- ------------ ------------
Share premium
account 19,272,873 17,399,710
-------------------- ----- ------------ ------------
Other reserves 496,514 240,772
-------------------- ----- ------------ ------------
Retained earnings (15,474,628) (15,148,556)
-------------------- ----- ------------ ------------
Total equity 6,199,692 4,364,448
-------------------- ----- ------------ ------------
LIABILITIES
-------------------- ----- ------------ ------------
Current liabilities
-------------------- ----- ------------ ------------
Trade and
other payables 15 391,364 615,025
-------------------- ----- ------------ ------------
Short-term
borrowings 15 771,087 282,299
-------------------- ----- ------------ ------------
Total current
liabilities 1,162,451 897,324
-------------------- ----- ------------ ------------
Total equity
and liabilities 7,362,143 5,261,772
-------------------- ----- ------------ ------------
These financial statements were approved by the Board of Directors and authorised for issue on 27 November 2017 and are signed on its behalf by:
Andrew Bell
Chairman and CEO
The accompanying notes form an integral part of these financial statements.
Company statement of changes in equity
For the year ended 30 June 2017
The movements in reserves during the year were as follows:
Share
Share premium Retained Other Total
capital account earnings reserves equity
GBP GBP GBP GBP GBP
-------------------- --------- ---------- ------------ --------- -----------
As at 30 June
2015 1,815,326 16,700,261 (13,267,690) 33,530 5,281,427
-------------------- --------- ---------- ------------ --------- -----------
Changes in
equity for
2016
-------------------- --------- ---------- ------------ --------- -----------
Loss for the
year - - (1,880,866) - (1,880,866)
-------------------- --------- ---------- ------------ --------- -----------
Other comprehensive
expense for
the year - - - 184,297 184,297
-------------------- --------- ---------- ------------ --------- -----------
Transactions
with owners
-------------------- --------- ---------- ------------ --------- -----------
Issue of shares 57,196 749,449 - - 806,645
-------------------- --------- ---------- ------------ --------- -----------
Share issue
and fundraising
costs - (50,000) - - (50,000)
-------------------- --------- ---------- ------------ --------- -----------
Share-based
payment transfer - - - 22,945 22,945
-------------------- --------- ---------- ------------ --------- -----------
Total transactions
with owners 57,196 699,449 - 22,945 779,590
-------------------- --------- ---------- ------------ --------- -----------
As at 30 June
2016 1,872,522 17,399,710 (15,148,556) 240,772 4,364,448
-------------------- --------- ---------- ------------ --------- -----------
Changes in
equity for
2017
-------------------- --------- ---------- ------------ --------- -----------
Loss for the
year - - (326,072) - (326,072)
-------------------- --------- ---------- ------------ --------- -----------
Other comprehensive
income for
the year - - - 212,830 212,830
-------------------- --------- ---------- ------------ --------- -----------
Transactions
with owners
-------------------- --------- ---------- ------------ --------- -----------
Issue of shares 32,411 1,918,253 - - 1,950,664
-------------------- --------- ---------- ------------ --------- -----------
Share issue
and fundraising
costs - (45,090) - - (45,090)
-------------------- --------- ---------- ------------ --------- -----------
Share-based
payment transfer - - - 42,912 42,912
-------------------- --------- ---------- ------------ --------- -----------
Total transactions
with owners 32,411 1,873,163 - 42,912 1,948,486
-------------------- --------- ---------- ------------ --------- -----------
As at 30 June
2017 1,904,933 19,272,873 (15,474,628) 496,514 6,199,692
-------------------- --------- ---------- ------------ --------- -----------
Available
for sale
financial Share-based Total
asset payment Currency other
reserve reserve reserve reserves
GBP GBP GBP GBP
-------------------- ---------- ----------- -------- ---------
As at 30 June
2015 31,558 - 1,972 33,530
-------------------- ---------- ----------- -------- ---------
Changes in
equity for
2016
-------------------- ---------- ----------- -------- ---------
Other comprehensive
expense for
the year 184,297 - - 184,297
-------------------- ---------- ----------- -------- ---------
Share-based
payment transfer - 22,945 - 22,945
-------------------- ---------- ----------- -------- ---------
As at 30 June
2016 215,855 22,945 1,972 240,772
-------------------- ---------- ----------- -------- ---------
Changes in
equity for
2017
-------------------- ---------- ----------- -------- ---------
Other comprehensive
income for
the year 110,242 - 102,588 212,830
-------------------- ---------- ----------- -------- ---------
Share-based
payment transfer - 42,912 - 42,912
-------------------- ---------- ----------- -------- ---------
As at 30 June
2017 326,097 65,857 104,560 496,514
-------------------- ---------- ----------- -------- ---------
See note 16 for a description of each reserve included above.
Company statement of cash flows
For the year ended 30 June 2017
Year to Year to
30 June 30 June
2017 2016
GBP GBP
------------------------- ----------- -----------
Cash flows from
operating activities
------------------------- ----------- -----------
Loss before taxation (326,072) (1,880,866)
------------------------- ----------- -----------
(Increase)/Decrease
in receivables 54,214 258,294
------------------------- ----------- -----------
(Decrease)/Increase
in payables (223,661) 231,509
------------------------- ----------- -----------
Depreciation 6,197 7,453
------------------------- ----------- -----------
Share-based payments 91,359 47,995
------------------------- ----------- -----------
Finance (income)/costs,
net (47,771) 26,050
------------------------- ----------- -----------
Currency loss 33,612 47,156
------------------------- ----------- -----------
Loss on sale of
investments - 18,474
------------------------- ----------- -----------
Impairment of
associate - 72,678
------------------------- ----------- -----------
Impairment of
available for
sale investment - 478,454
------------------------- ----------- -----------
Impairment of
exploration expenses - 658,281
------------------------- ----------- -----------
Net cash outflow
from operations (412,122) (34,522)
------------------------- ----------- -----------
Cash flows from
investing activities
------------------------- ----------- -----------
Interest received - 15,869
------------------------- ----------- -----------
Payments for exploration
costs - (36,299)
------------------------- ----------- -----------
Payments for investments
in associates
and joint ventures (1,531,778) -
------------------------- ----------- -----------
Purchase of property,
plant and equipment - (20,343)
------------------------- ----------- -----------
Purchase of available
for sale financial
assets (75,000) (674,498)
------------------------- ----------- -----------
Proceeds from
sale of investments - 124,158
------------------------- ----------- -----------
Net cash outflow
from investing
activities (1,606,778) (591,113)
------------------------- ----------- -----------
Cash inflows from
financing activities
------------------------- ----------- -----------
Proceeds from
issue of shares 1,576,701 781,595
------------------------- ----------- -----------
Transaction costs
of issue of shares (45,090) (50,000)
------------------------- ----------- -----------
Interest paid (72,048) (41,919)
------------------------- ----------- -----------
Proceeds of new
borrowings 771,087 -
------------------------- ----------- -----------
Repayments of
borrowings (210,251) (59,847)
------------------------- ----------- -----------
Net cash inflow
from financing
activities 2,020,399 629,829
------------------------- ----------- -----------
Net (decrease)/increase
in cash and cash
equivalents 1,499 4,194
------------------------- ----------- -----------
Cash and cash
equivalents at
beginning of period 6,626 2,432
------------------------- ----------- -----------
Cash and cash
equivalents at
end of period 8,125 6,626
------------------------- ----------- -----------
The accompanying notes and accounting policies form an integral part of these financial statements.
Notes to financial statements
For the year ended 30 June 2017
1. Principal accounting policies
1.1 Authorisation of financial statements and statement of compliance with IFRS
The Group financial statements of Regency Mines plc ("the Company" or "Regency") for the year ended 30 June 2017 were authorised for issue by the Board on 27 November 2017 and signed on the Board's behalf by Andrew Bell and Scott Kaintz. Regency Mines plc is a public limited company incorporated and domiciled in England and Wales. The Company's ordinary shares are traded on AIM.
1.2 Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards and IFRIC interpretations as endorsed by the EU ("IFRS") and the requirements of the Companies Act applicable to companies reporting under IFRS.
The financial statements have been prepared on the historical cost basis, except for the revaluation of certain financial instruments. The principal accounting policies adopted are set out below.
Going concern
The consolidated entity has incurred a loss before tax of GBP534,267 for the year ended 30 June 2017 (2016: loss of GBP1,965,722), and had a net cash outflow of GBP2,019,183 (2016: GBP625,434) from operating and investing activities. At that date there was a net current liability of GBP1,047,001 (2016: GBP548,663). The loss resulted mainly from the impairment of the Group's exploration and available for sale assets totalling GBP229,262 (2016: GBP1,205,349).
In August 2017 the Company disposed of 1.9% of its stake in Horse Hill Developments Ltd ("HHDL") to UK Oil and Gas ("UKOG"). For this interest the Company received GBP54,498 in obligations assumed by the buyer as well as GBP268,502 of value in UKOG shares. These shares were subsequently sold for gross proceeds of GBP1.3m. On 18 October 2017, Regency announced a conditional sale to dispose of its remaining 3.1% interest in HHDL for GBP630,000, of which 50% would be delivered in cash and 50% in shares of the buyer, Alba Mineral Resources plc.
These two transactions together represent a material amount of capital injected into the business and should provide adequate funding at current operational rates well into 2018.
The Directors are confident in the Company's ability to raise new finance from stock markets if this is required during 2018 and the Group has demonstrated a consistent ability to do so. This includes a share issuance of 318.9 million shares for total consideration of GBP1.89 million since the 2016 financial year-end.
The Group has also demonstrated the ability to raise debt capital when required and on 5 April 2017 announced that it had raised an unsecured US$1.0 million convertible loan note, bearing interest of 12% and convertible into the Company's ordinary shares. The loan is convertible into shares at either a fixed price of GBP0.01155 or a variable price based on the volume weighted average price of the five trading days prior to conversion.
Regency further owns liquid assets that it can sell in order to fund operations, as demonstrated in the past year, with the most significant being its 8.9% stake in Curzon Energy Plc, listed on the Standard List of the London Stock Exchange. The value of this holding following Curzon's IPO in September 2017 was approximately GBP600k.
As the natural resource space continues to improve in the second half of 2017 and beyond, the Directors feel strongly that the value of Regency's project portfolio, from the Mambare Nickel Project in Papua New Guinea, to Curzon Energy and its US coal assets, will start to be more fully recognised in the share price and market capitalisation of the business. With this positive move in the markets and the associated developments in batteries and energy storage technologies in particular, the Directors are confident in their ability to access capital and fund the business adequately for the next year.
Company Statement of Comprehensive Income
As permitted by Section 408 Companies Act 2006, the Company has not presented its own Statement of Comprehensive Income. The Company's loss for the financial year was GBP324,423 (2016: GBP1,880,866). The Company's other comprehensive income for the financial year was GBP110,242 (2016: GBP184,297).
Amendments to published standards effective for the year ended 30 June 2017.
New standards, amendments and interpretations effective for the periods from 1 January 2016
The following new standards, amendments and interpretations are effective for the first time in these financial statements. However, none have a material effect on the Group and Company:
-- Annual Improvements to IFRSs (2012-2014 cycle): IAS 19 Employee Benefits, IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations, IFRS 7 Financial Instruments: Disclosures;
-- Amendments to IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of Interest in Other Entities and IAS 28 Investments in Associates and Joint Venture (2011);
-- Amendments to IFRS 11 Joint Arrangements in relation to accounting for acquisition of interests in joint operations.
There were no new standards or interpretations effective for the first time for accounting periods beginning on or after 1 July 2016 that had a significant effect on the Group's financial statements.
New standards, amendments and interpretations not yet adopted
At the date of authorisation of these financial statements, the following standards and interpretations, which have not been applied in these financial statements, were in issue but not yet effective for the year presented:
-- IFRS 9 Financial Instruments, effective for accounting periods beginning on or after 1 January 2018;
-- IFRS 15 Revenue from Contracts with Customers, effective for accounting periods beginning on or after 1 January 2017;
-- Amendments to IAS 12 Deferred Tax relating to recognition of deferred tax assets for unrealised losses, effective for accounting periods beginning on or after 1 January 2017 (not yet endorsed in the EU);
-- Amendments to IAS 7 Financial Instruments: Disclosures, effective for accounting periods beginning on or after 1 January 2017 (not yet endorsed in the EU);
-- Annual Improvements to IFRSs (2014-2016 cycle), Amendments to IFRS 12, effective for accounting periods beginning on or after 1 January 2017 (not yet endorsed in the EU).
The effects of IFRS 15 Revenues from Contracts with Customers and IFRS 9 Financial Instruments are still being assessed, but it is not expected that these new standards and the amendments mentioned above will have a significant effect on the Group or Company's future financial statements.
Standards adopted early by the Group
The Group has not adopted any standards or interpretations early in either the current or the preceding financial year.
1.3 Basis of consolidation
The consolidated financial statements of the Group incorporate the financial statements of the Company and entities controlled by the Company, its subsidiaries, made up to 30 June each year.
Subsidiaries
Subsidiaries are entities over which the Group has the power to govern the financial and operating policies so as to obtain economic benefits from their activities. Subsidiaries are consolidated from the date on which control is obtained, the acquisition date, until the date that control ceases.
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued, contingent consideration and liabilities incurred or assumed at the date of exchange. Costs directly attributable to the acquisition are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are initially measured at fair value at the acquisition date.
Subsidiaries continued
Provisional fair values are adjusted against goodwill if additional information is obtained within one year of the acquisition date about facts or circumstances existing at the acquisition date. Other changes in provisional fair values are recognised through profit or loss.
Intra-group transactions, balances and unrealised gains and losses on transactions between Group companies are eliminated on consolidation, except to the extent that intra-group losses indicate an impairment.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:
-- derecognises the assets (including goodwill) and liabilities of the subsidiary; -- derecognises the carrying amount of any non-controlling interest; -- derecognises the cumulative translation differences recorded in equity; -- recognises the fair value of the consideration received; -- recognises the fair value of any investment retained; -- recognises any surplus or deficit in profit or loss; and
-- reclassifies the Parent's share of components previously recognised in other comprehensive income to profit or loss or retained earnings, as appropriate.
For the years ended 30 June 2017, the consolidated financial statements combine those of the Company with its subsidiary, Regency Mines Australasia Pty Limited and Regency Resources Inc.
1.4 Summary of significant accounting policies
1.4.1 Investment in associates
An associate is an entity over which the Company is in a position to exercise significant influence, but not control or joint control, through participation in the financial and operating policy decisions of the investee.
Investments in associates are recognised in the consolidated financial statements using the equity method of accounting. The Group's share of post-acquisition profits or losses is recognised in profit or loss and its share of post-acquisition movements in other comprehensive income are recognised directly in other comprehensive income. The carrying value of the investment, including goodwill, is tested for impairment when there is objective evidence of impairment. Losses in excess of the Group's interest in those associates are not recognised unless the Group has incurred obligations or made payments on behalf of the associate.
Where a Group company transacts with an associate of the Group, unrealised gains are eliminated to the extent of the Group's interest in the relevant associate. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred in which case appropriate provision is made for impairment.
Where the Company's holding in an associate is diluted, the Company recognises a gain or loss on dilution in profit and loss. This is calculated as the difference between the Company's share of proceeds received for the dilutive share issue and the value of the Company's effective disposal.
In the Company accounts investments in associates are recognised and held at cost. The carrying value of the investment is tested for impairment when there is objective evidence of impairment.
1.4.2 Interests in joint ventures
The Group has a contractual arrangement with Direct Nickel Pty Ltd which represents a joint venture established through an interest in a jointly controlled entity, Oro Nickel Limited in order to develop and exploit the Mambare nickel project. The Group also has a contractual arrangement with Carbon Minerals Corporation, a Delaware company which has entered into an agreement to acquire and develop the Rosa metallurgical coal mine. The Group has a further contractual agreement with Vali Carbon Corporation, a Delaware based company set up to pursue metallurgical coal investments in the Appalachian region of the United States. Further, the Company has signed a memorandum of agreement with Mr Stephen Moscicki to conduct due diligence over a metallurgical coal property of 6,500 acres in north-eastern Alabama.
The Group recognises its interest in the entity's assets and liabilities using the equity method of accounting. Under the equity method, the interest in the joint venture is carried in the balance sheet at cost plus post-acquisition changes in the Group's share of its net assets, less distributions received and less any impairment in value of individual investments. The Group Income Statement reflects the share of the jointly controlled entity's results after tax.
1.4.2 Interests in joint ventures continued
Any goodwill arising on the acquisition of a jointly controlled entity is included in the carrying amount of the jointly controlled entity and is not amortised. To the extent that the net fair value of the entity's identifiable assets, liabilities and contingent liabilities is greater than the cost of the investment, a gain is recognised and added to the Group's share of the entity's profit or loss in the period in which the investment is acquired.
Financial statements of the jointly controlled entity will be prepared for the same reporting period as the Group. Where necessary, adjustments are made to bring the accounting policies used into line with those of the Group and to reflect impairment losses where appropriate. Adjustments are also made in the Group's financial statements to eliminate the Group's share of unrealised gains and losses on transactions between the Group and its jointly controlled entity. The Group ceases to use the equity method on the date from which it no longer has joint control over, or significant influence in, the joint venture.
1.4.3 Taxation
Corporation tax payable is provided on taxable profits at the current rate. The tax expense represents the sum of the current tax expense and deferred tax expense.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from accounting profit as reported in the Statement of Comprehensive Income 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 measured using tax rates that have been enacted or substantively enacted by the reporting date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount 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 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 which affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled based upon tax rates that have been enacted or substantively enacted by the reporting date.
Deferred tax is charged or credited in profit or loss, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity, or items charged or credited directly to other comprehensive income, in which case the deferred tax is also recognised in other comprehensive income.
Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax relates to income tax levied by the same tax authorities on either:
the same taxable entity; or
different taxable entities which intend to settle current tax assets and liabilities on a net basis or to realise and settle them simultaneously in each future period when the significant deferred tax assets and liabilities are expected to be realised or settled.
1.4.4 Property, plant and equipment
Property, plant and equipment acquired and identified as having a useful life that exceeds one year is capitalised at cost and is
depreciated on a straight line basis at annual rates that will reduce book values to estimated residual values over their anticipated
useful lives as follows:
Office furniture, fixtures and fittings - 33% per annum Leasehold improvements - 5% per annum
1.4.5 Foreign currencies
Both the functional and presentational currency of Regency Mines plc is Sterling (GBP). Each Group entity determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.
The functional currencies of the foreign subsidiaries and joint ventures are the Australian Dollar ("AUD"), the Papua New Guinea Kina ("PNG") and the US Dollar ("USD").
Transactions in currencies other than the functional currency of the relevant entity are initially recorded at the exchange rate prevailing on the dates of the transaction. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the exchange rate prevailing at the reporting date. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Gains and losses arising on retranslation are included in profit or loss for the period, except for exchange differences on non-monetary assets and liabilities, which are recognised directly in other comprehensive income when the changes in fair value are recognised directly in other comprehensive income.
On consolidation, the assets and liabilities of the Group's overseas operations are translated into the Group's presentational currency at exchange rates prevailing at the reporting date. Income and expense items are translated at the average exchange rates for the period unless exchange rates have fluctuated significantly during the year, in which case the exchange rate at the date of the transaction is used. All exchange differences arising, if any, are recognised as other comprehensive income and are transferred to the Group's foreign currency translation reserve.
1.4.6 Revenue
Revenue is the gross inflow of economic benefits during the period arising in the course of the ordinary activities of the Group and the Company, when those inflows result in increases in equity.
Revenue is measured at the fair value of the consideration received or receivable for investment asset disposals in the normal course of business and is recognised when revenue and associated costs can be measured reliably and future economic benefits are probable.
In addition, revenue from management services is recognised on an accruals basis when the services have been delivered and any associated costs have been incurred.
1.4.7 Exploration assets
Exploration assets comprise exploration and development costs incurred on prospects at an exploratory stage. These costs include the cost of acquisition, exploration, determination of recoverable reserves, economic feasibility studies and all technical and administrative overheads directly associated with those projects. These costs are carried forward in the Statement of Financial Position as non-current intangible assets less provision for identified impairments.
Recoupment of exploration and development costs is dependent upon successful development and commercial exploitation of each area of interest and will be amortised over the expected commercial life of each area once production commences. The Group and the Company currently have no exploration assets where production has commenced.
The Group adopts the "area of interest" method of accounting whereby all exploration and development costs relating to an area of interest are capitalised and carried forward until abandoned. In the event that an area of interest is abandoned, or if the Directors consider the expenditure to be of no value, accumulated exploration costs are written off in the financial year in which the decision is made. All expenditure incurred prior to approval of an application is expensed with the exception of refundable rent which is raised as a receivable.
Upon disposal, the difference between the fair value of consideration receivable for exploration assets and the relevant cost within non-current assets is recognised in the Income Statement.
1.4.8 Share-based payments
Share options
The Group operates an equity-settled share-based payment arrangement whereby the fair value of services provided is determined indirectly by reference to the fair value of the instrument granted.
The fair value of options granted to Directors and others in respect of services provided is recognised as an expense in the income statement with a corresponding increase in equity reserves - the share-based payment reserve until the award has been settled and
then a transfer is made to share capital.
On exercise or lapse of share options, the proportion of the share-based payment reserve relevant to those options is transferred to retained earnings. On exercise, equity is also increased by the amount of the proceeds received.
The fair value is measured at grant date and charged over the vesting period during which the option becomes unconditional.
The fair value of options is calculated using the Black-Scholes model taking into account the terms and conditions upon which the options were granted. The exercise price is fixed at the date of grant.
Non-market conditions are performance conditions that are not related to the market price of the entity's equity instruments. They are not considered when estimating the fair value of a share-based payment. Where the vesting period is linked to a non-market performance condition, the Group recognises the goods and services it has acquired during the vesting period based on the best available estimate of the number of equity instruments expected to vest. The estimate is reconsidered at each reporting date based on factors such as a shortened vesting period, and the cumulative expense is "trued up" for both the change in the number expected to vest and any change in the expected vesting period.
Market conditions are performance conditions that relate to the market price of the entity's equity instruments. These conditions are included in the estimate of the fair value of a share-based payment. They are not taken into account for the purpose of estimating the number of equity instruments that will vest. Where the vesting period is linked to a market performance condition, the Group estimates the expected vesting period. If the actual vesting period is shorter than estimated, the charge is be accelerated in the period that the entity delivers the cash or equity instruments to the counterparty. When the vesting period is longer, the expense is recognised over the originally estimated vesting period.
For other equity instruments granted during the year (i.e. other than share options), fair value is measured on the basis of an observable market price.
When a share-based payment is modified, the Group determines whether the modification affects the fair value of the instruments granted, affects the number of equity instruments granted or is otherwise beneficial to the employee. In case where the exercise price of options granted to employees is reduced, the Group recognises the incremental change in fair value (along with the original fair value determined at grant date) over the remaining vesting period as an expense and an increase in equity. Decreases in the fair value are not considered. To determine if an increase has occurred, management compares the fair value of the modified award with the fair value of the original award at the modification date. Any other benefit to the employee is taken into account in estimating the number of equity instruments that are expected to vest.
Share Incentive Plan
Where the shares are granted to the employees under the Share Incentive Plan, the fair value of services provided is determined indirectly by reference to the fair value of the free, partnership and matching shares granted on the grant date. Fair value of shares is measured on the basis of an observable market price, i.e. share price as at grant date, and is recognised as an expense in the income statement on the date of the grant. For the partnership shares the charge is calculated as the excess of the mid-market price on the date of grant over the employee's contribution.
1.4.9 Pension
The Group operates a defined contribution pension plan which requires contributions to be made to a separately administered fund. Contributions to the defined contribution scheme are charged to the profit and loss account as they become payable.
1.4.10 Finance costs/revenue
Borrowing costs are recognised on an accruals basis using the effective interest method.
Finance income is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.
1.4.11 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets and financial liabilities are recognised where the Group has become party to the contractual provisions of the instrument.
Investments
Investments in subsidiary companies are classified as non-current assets and included in the Statement of Financial Position of the Company at cost at the date of acquisition less any identified impairments.
For acquisitions of subsidiaries or associates achieved in stages, the Company re-measures its previously held equity interests in the acquiree at its acquisition-date fair value and recognises the resulting gain or loss, if any, in profit or loss. Any gains or losses previously recognised in other comprehensive income are transferred to profit and loss.
Investments in associates and joint ventures are classified as non-current assets and included in the Statement of Financial Position of the Company at cost at the date of acquisition less any identified impairment.
Financial assets
The Group classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired. The Group has not classified any of its financial assets as held to maturity or fair value through profit and loss.
Loans and receivables
These are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise through the provision of goods or services (trade receivables), but also incorporate other types of contractual monetary asset. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.
Impairment provision is recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the Group will be unable to collect all of the amounts due under the terms receivable, the amount of such provision being the difference between the net carrying amount and the net present value of the future expected cash flows associated with the impaired receivable.
The Group's loans and receivables comprise trade and other receivables and cash and cash equivalents in the Consolidated Statement of Financial Position.
Cash and cash equivalents
Cash and short-term deposits in the Statement of Financial Position comprise cash at bank and in hand and short-term deposits.
For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.
Restricted cash
Cash which is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period is not considered cash and cash equivalents and is classified as restricted cash.
Trade and other receivables
Trade receivables, which generally have 30 day terms, are recognised at original invoice amount less an allowance for any uncollectable amounts. An allowance for impairment is made when there is objective evidence that the Group will not be able to collect the debts. Bad debts are written off when identified.
Available for sale financial assets
Non-derivative financial assets not included in the above categories are classified as available for sale and comprise principally the Group's strategic investments in entities not qualifying for subsidiaries, associates or jointly controlled entities. These equity investments are intended to be held by the Group for an indefinite period of time. They are carried at fair value, where this can be reliably measured, with movements in fair value recognised in other comprehensive income and debited or credited to the available for sale trade investments reserve. Where the fair value cannot be reliably measured, the investment is carried at cost or a lower valuation where the Directors consider the value of the investment to be impaired.
Available for sale investments are included within non-current assets. On disposal, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had previously been recognised directly in reserves is recognised in the Income Statement; the costs of such disposed off investments are written off on a first in first out method.
Income from available for sale investments is accounted for in the Income Statement when the right to receive it has been established.
The Group assesses at each reporting date whether there is objective evidence that an investment is impaired. When there is evidence of impairment, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognised in the Income Statement - is removed from other comprehensive income and recognised in the Income Statement. Impairment losses on equity investments are not reversed through the Income Statement; increases in their fair value after impairment are recognised directly in other comprehensive income.
Financial liabilities and equity
The Group classifies its financial liabilities into one of two categories: fair value through profit and loss or other financial liabilities. The Group has not classified any of its financial liabilities as fair value through profit and loss.
Other financial liabilities comprise trade and other payables and borrowings.
Trade and other payables
Trade and other payables are initially recognised at fair value and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services.
Borrowings
Borrowings are recorded initially at their fair value, plus directly attributable transaction costs. Such instruments are subsequently carried at their amortised cost and finance charges, including premiums payable on settlement or redemption, are recognised in the Income Statement over the term of the instrument using an effective rate of interest.
Deferred and contingent consideration
Where it is probable that deferred or contingent consideration is payable on the acquisition of a business based on an earn out arrangement, an estimate of the amount payable is made at the date of acquisition and reviewed regularly thereafter, with any change in the estimated liability being reflected in the Income Statement. Where deferred consideration is payable after more than one year the estimated liability is discounted using an appropriate rate of interest.
1.5 Significant accounting judgements, estimates and assumptions
The preparation of the Group's consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.
Significant judgements in applying the accounting policies
In the process of applying the Group's accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the consolidated financial statements:
Recognition of holdings less than 20% as an associate
The Directors have classified, as an associate, an equity investment where the Company is in a position to exercise significant influence, but not control or joint control, through participation in the financial and operating policy decisions of the investee.
Significant influence is presumed when the Company holds greater than 20% of the voting power of the investee, unless it can be clearly demonstrated that this is not the case. Conversely, if the Company holds less than 20% of the voting power of an investee, it is presumed that the Company does not have significant influence, unless such influence can be clearly demonstrated.
The Company owns 1.91% (2016: 2.32%) of the issued share capital of Red Rock Resources plc. Andrew Bell, Chairman and Chief Executive Officer of the Company, is also a member of the Board and the Executive Chairman of Red Rock Resources plc. In accordance with IAS 28, the Directors of the Company consider this to provide the Group with significant influence as defined by the standard. As such, it continued to recognise Red Rock Resources plc as an associate for the year ended 30 June 2016 despite its shareholding being below 20%. The effect of recognising Red Rock Resources as an available for sale financial asset in the year ended 30 June 2016 would be to decrease the loss by GBP9,878 and decrease other comprehensive income by GBP6,364.
As of 1 July 2017, due to dilution of the percentage of shareholding it was decided that Red Rock Resources should be accounted as an available for sale financial asset. Details of such transfer are disclosed in note 12.
Significant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period are:
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value of share options is determined using the Black-Scholes model.
Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
-- In the principal market for the asset or liability; or
-- In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Group.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
-- Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities;
-- Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and
-- Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
Impairment of available for sale financial assets
The Group follows the guidance of IAS 39 to determine when an available for sale financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred "loss event") and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. This determination requires significant judgement. In making this judgement, the Group evaluates, among other factors, the duration and extent to which fair value of an investment is less than its cost.
In the case of equity investments classified as available for sale, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. "Significant" is evaluated against the original cost of the investment and "prolonged" against the period in which the fair value has been below its original cost. Mining share prices typically have more volatility than most other shares and this is taken into account by management when considering if a significant decline in the fair value of its mining investments has occurred. Management would consider that there is a prolonged decline in the fair value of an equity investment when the period of decline in fair value has extended to beyond the expectation management have for the equity investment. This expectation will be influenced particularly by the company development cycle of the investment.
As a result of the Group's evaluation, no impairment (2016: GBP547,068) on available for sale investments was recognised in the Income Statement.
2. Segmental analysis
As with all natural resource exploration and development ventures yet to generate cash from operations, ensuring adequate cash is available to meet operational obligations and to provide for investment opportunities is critical. This is therefore the main focus of management information presented to the chief operational decision makers, being the Executive Chairman and the Board of Directors.
The only sources of funds are issues of new equity and sales of exploration rights, investments or other assets. Therefore, in addition to monitoring the current market perception of the Company to shareholders, brokers and other possible providers of equity finance, constant attention is paid to:
-- available cash; -- the market value of the Group's listed investments.
At 30 June 2017 the Group had cash and cash equivalents of GBP9,176 (2016: GBP7,960).
The market value of the most significant of the Group's listed investments, Red Rock Resources plc, at 30 June 2017 was GBP70,407
(2016: GBP40,881).
Once the Group's main focus of operations becomes production of natural resources, the nature of management information examined
by the Board will alter to reflect the need to monitor revenues, margins, overheads and trade balances, as well as cash.
IFRS 8 requires the reporting of information about the revenues derived from the various areas of activity and the countries in which revenue is earned, regardless of whether this information is used by management in making operating decisions.
Investment
in
Red
Rock Corporate
Resources Other Australian and
Year to 30 June plc investments exploration unallocated Total
2017 GBP GBP GBP GBP GBP
------------------------ ---------- ------------ ------------ ------------ ---------
Revenue
------------------------ ---------- ------------ ------------ ------------ ---------
Management services - - - 113,350 113,350
------------------------ ---------- ------------ ------------ ------------ ---------
- - - 113,350 113,350
------------------------ ---------- ------------ ------------ ------------ ---------
Gain on dilution
of interest
in associate - - - - -
------------------------ ---------- ------------ ------------ ------------ ---------
Gain on sale
of tenements - - 55,183 - 55,183
------------------------ ---------- ------------ ------------ ------------ ---------
Gain/(loss)
on sale of investments - - - - -
------------------------ ---------- ------------ ------------ ------------ ---------
Exploration
expenses - - (930) - (930)
------------------------ ---------- ------------ ------------ ------------ ---------
Administrative
expenses* - - (278) (464,343) (464,621)
------------------------ ---------- ------------ ------------ ------------ ---------
Currency (loss)/gain - - 83,290 (33,612) 49,678
------------------------ ---------- ------------ ------------ ------------ ---------
Share of profits
in associates - - - - -
------------------------ ---------- ------------ ------------ ------------ ---------
Impairment of
exploration
assets - - (229,262) - (229,262)
------------------------ ---------- ------------ ------------ ------------ ---------
Impairment of
available for
sale investments - - - - -
------------------------ ---------- ------------ ------------ ------------ ---------
Finance cost
- net - - - (57,665) (57,665)
------------------------ ---------- ------------ ------------ ------------ ---------
Net (loss) before
tax from continuing
operations - - (91,997) (442,270) (534,267)
------------------------ ---------- ------------ ------------ ------------ ---------
Investment
in
Red
Rock Corporate
Resources Other Australian and
Year to 30 plc investments exploration unallocated Total
June 2016 GBP GBP GBP GBP GBP
---------------------- ---------- ------------ ------------ ------------ -----------
Revenue
---------------------- ---------- ------------ ------------ ------------ -----------
Management
services - - - 24,910 24,910
---------------------- ---------- ------------ ------------ ------------ -----------
- - - 24,910 24,910
---------------------- ---------- ------------ ------------ ------------ -----------
Gain on dilution
of interest
in associate 19,325 - - - 19,325
---------------------- ---------- ------------ ------------ ------------ -----------
Gain on sale
of tenements - - (48,049) - (48,049)
---------------------- ---------- ------------ ------------ ------------ -----------
Gain/(loss)
on sale of
investments - 17,880 (104,616) - (86,736)
---------------------- ---------- ------------ ------------ ------------ -----------
Exploration
expenses - (658,281) (611) - (658,892)
---------------------- ---------- ------------ ------------ ------------ -----------
Administrative
expenses* - - 84,526 (679,257) (594,732)
---------------------- ---------- ------------ ------------ ------------ -----------
Share of profits
in associates (48,430) - - - (48,430)
---------------------- ---------- ------------ ------------ ------------ -----------
Impairment
of available
for sale investments - (547,067) - - (547,067)
---------------------- ---------- ------------ ------------ ------------ -----------
Finance cost
- net - - - (26,050) (26,050)
---------------------- ---------- ------------ ------------ ------------ -----------
Net (loss)
before tax
from continuing
operations (29,105) (1,187,468) (68,750) (680,397) (1,965,722)
---------------------- ---------- ------------ ------------ ------------ -----------
* Included in administrative expenses is depreciation charge of GBP6,197 (2016: GBP7,453) under Corporate and unallocated.
Information by geographical area
Presented below is certain information by the geographical area of the Group's activities. Investment sales revenue and exploration property sales revenue are allocated to the location of the asset sold.
Year to Papua
30 June UK Australia New Guinea Other Total
2017 GBP GBP GBP GBP GBP
-------------------- ---------- --------- ----------- -------- ----------
Revenue
-------------------- ---------- --------- ----------- -------- ----------
Management
services 113,350 - - - 113,350
-------------------- ---------- --------- ----------- -------- ----------
Gain on
sale of
tenements - 55,183 - - 55,183
-------------------- ---------- --------- ----------- -------- ----------
Loss on
sale of
investments - - - - -
-------------------- ---------- --------- ----------- -------- ----------
Total
segment
revenue 113,350 55,183 - - 168,533
-------------------- ---------- --------- ----------- -------- ----------
Non-current
assets
-------------------- ---------- --------- ----------- -------- ----------
Investments
in associates
and joint ventures 15,811 - 1,622,302 828,160 2,466,273
-------------------- ---------- --------- ----------- -------- ----------
Property,
plant
and equipment 15,520 - - - 15,520
-------------------- ---------- --------- ----------- -------- ----------
Available
for sale
financial
assets 1,183,025 260,682 - - 1,443,707
-------------------- ---------- --------- ----------- -------- ----------
Exploration
assets - - - 40,402 40,402
-------------------- ---------- --------- ----------- -------- ----------
Total segment
non-current
assets 1,214,356 260,682 1,622,302 868,562 3,965,902
-------------------- ---------- --------- ----------- -------- ----------
Papua
Year to 30 June UK Australia New Guinea Other Total
2016 GBP GBP GBP GBP GBP
-------------------- -------- --------- ----------- ------- ----------
Revenue
-------------------- -------- --------- ----------- ------- ----------
Management
services 24,910 - - - 24,910
-------------------- -------- --------- ----------- ------- ----------
Gain on sale
of tenements - (48,049) - - (48,049)
-------------------- -------- --------- ----------- ------- ----------
Loss on sale
of investments - (74,526) - - (74,526)
-------------------- -------- --------- ----------- ------- ----------
Total segment
revenue 24,910 (122,575 - - (97,665)
-------------------- -------- --------- ----------- ------- ----------
Non-current
assets
-------------------- -------- --------- ----------- ------- ----------
Investments
in associates
and joint ventures 15,811 - 1,622,302 - 1,638,113
-------------------- -------- --------- ----------- ------- ----------
Property, plant
and equipment 21,717 - - - 21,717
-------------------- -------- --------- ----------- ------- ----------
Available for
sale financial
assets 932,085 215,375 - - 1,147,460
-------------------- -------- --------- ----------- ------- ----------
Exploration
assets - 175,527 - 58,375 233,901
-------------------- -------- --------- ----------- ------- ----------
Total segment
non-current
assets 969,613 390,902 1,622,302 58,375 3,041,191
-------------------- -------- --------- ----------- ------- ----------
3. Loss on ordinary activities before taxation
2017 2016
Group GBP GBP
----------------------------------------- ------- -------
Loss on ordinary activities
before taxation is stated after
charging:
----------------------------------------- ------- -------
Auditor's remuneration:
----------------------------------------- ------- -------
fees payable to the Company's
auditor for the audit of consolidated
and Company financial statements 16,000 15,000
----------------------------------------- ------- -------
fees payable to subsidiary
auditors for the audit of subsidiary
financial statements - 2,294
----------------------------------------- ------- -------
Depreciation 6,197 7,453
----------------------------------------- ------- -------
Directors' emoluments (note
7) 257,967 214,955
----------------------------------------- ------- -------
Share-based payments - Directors 87,340 39,392
----------------------------------------- ------- -------
Share-based payments - staff 4,019 8,603
----------------------------------------- ------- -------
As declared in note 7, Directors are remunerated in part by third parties with whom the Company and Group have
contractual arrangements.
4. Finance costs, net
2017 2016
GBP GBP
----------------- -------- --------
Interest expense (57,665) (41,919)
----------------- -------- --------
Interest income - 15,869
----------------- -------- --------
(57,665) (26,050)
----------------- -------- --------
5. Taxation
2017 2016
GBP GBP
--------------------------------- --------- -----------
Current period taxation
of the Group
--------------------------------- --------- -----------
UK corporation tax at 20.00%
(2016: 20.00%) on profits
for the period - -
--------------------------------- --------- -----------
Deferred tax
--------------------------------- --------- -----------
Origination and reversal
of temporary differences - -
--------------------------------- --------- -----------
Deferred tax assets derecognised - -
--------------------------------- --------- -----------
Tax (credit) - -
--------------------------------- --------- -----------
Factors affecting the tax
charge for the year
--------------------------------- --------- -----------
Loss on ordinary activities
before taxation (534,267) (1,965,722)
--------------------------------- --------- -----------
Loss on ordinary activities at the average UK standard rate of 19.75% (2016: 20.00%) (105,518) (393,144) --------------------------------- --------- ----------- Impact of subsidiaries and associates - 5,943 --------------------------------- --------- ----------- Effect of non-deductible expense 45,279 241,070 --------------------------------- --------- ----------- Effect of tax benefit of losses carried forward 60,239 146,131 --------------------------------- --------- ----------- Current tax (credit) - - --------------------------------- --------- -----------
Finance Act 2013 set the main rate of corporation tax at 20% from 1 April 2016 and at 19% from 1 April 2017.
6. Staff costs
The aggregate employment costs of staff (including Directors) for the year was:
2017 2016
GBP GBP
--------------------- ------- -------
Wages and salaries 163,900 211,646
--------------------- ------- -------
Severance costs - 14,679
--------------------- ------- -------
Pension 10,201 12,704
--------------------- ------- -------
Social security
costs 15,189 17,953
--------------------- ------- -------
Employee share-based
payment charge 91,359 47,995
--------------------- ------- -------
Total staff costs 280,649 304,977
--------------------- ------- -------
The average number of Group employees (including Directors) during the year was:
2017 2016
Number Number
--------------- ------- -------
Executives 3 3
--------------- ------- -------
Administration 1 1
--------------- ------- -------
Exploration - -
--------------- ------- -------
4 4
--------------- ------- -------
The Company's staff are employed both by the Company and Red Rock Resources plc ("Red Rock"). During the year, staff costs of GBPnil (2016: GBP34,151) were recharged to Red Rock. Such recharges are offset against administration expenses in the Income Statement.
During the year, for all Directors and employees who have been employed for more than three months, the Company contributed to a defined contributions pension scheme as described under Directors' remuneration in the Directors' Report and a Share Incentive Plan ("SIP") as described under Management incentives in the Directors' Report.
7. Directors' emoluments
Share Share-based Social
Directors' Consultancy Incentive payments Pension security
fees fees Plan (options) contributions costs Total
2017 GBP GBP GBP GBP GBP GBP GBP
-------------- ---------- ----------- ---------- ----------- --------------- --------- -------
Executive
Directors
-------------- ---------- ----------- ---------- ----------- --------------- --------- -------
A R M
Bell 49,800 15,000 15,141 21,935 3,700 4,227 109,803
-------------- ---------- ----------- ---------- ----------- --------------- --------- -------
S Kaintz 66,800 - 15,141 20,217 3,907 7,196 113,261
-------------- ---------- ----------- ---------- ----------- --------------- --------- -------
Non-executive
Directors
-------------- ---------- ----------- ---------- ----------- --------------- --------- -------
E Bugnosen 18,000 - 14,564 333 1,002 1,005 34,904
-------------- ---------- ----------- ---------- ----------- --------------- --------- -------
134,600 15,000 44,846 42,485 8,609 12,428 257,968
-------------- ---------- ----------- ---------- ----------- --------------- --------- -------
Share-based Social
Directors' Consultancy Share-based payments Pension security
fees fees payments (options) contributions costs Total
2016 GBP GBP GBP GBP GBP GBP GBP
-------------- ---------- ----------- ----------- ----------- --------------- --------- -------
Executive
Directors
-------------- ---------- ----------- ----------- ----------- --------------- --------- -------
A R M Bell 48,000 15,000 7,200 9,433 3,485 3,156 86,274
-------------- ---------- ----------- ----------- ----------- --------------- --------- -------
S Kaintz 65,000 - 7,200 9,433 3,284 6,468 91,385
-------------- ---------- ----------- ----------- ----------- --------------- --------- -------
Non-executive
Directors
-------------- ---------- ----------- ----------- ----------- --------------- --------- -------
E Bugnosen 18,000 - 7,050 1,785 934 1,006 28,775
-------------- ---------- ----------- ----------- ----------- --------------- --------- -------
J M E Lee
(resigned
30 Sept
16) 4,500 - - - - (156) 4,344
-------------- ---------- ----------- ----------- ----------- --------------- --------- -------
J Watkins
(resigned
15 Sept
16) 4,500 - - - - (322) 4,178
-------------- ---------- ----------- ----------- ----------- --------------- --------- -------
140,000 15,000 21,450 20,651 7,703 10,152 214,956
-------------- ---------- ----------- ----------- ----------- --------------- --------- -------
The number of Directors who exercised share options in the year was nil (2016: nil).
During the year, the Company contributed to a Share Incentive Plan more fully described in the Directors' Report. 1,371,428 free shares (2016: 2,850,416 free shares) were issued to each employee, including Directors, making a total of 3,870,248 (2016: 5,356,296) free and matching shares issued in relation to services provided by those employees during the reporting year.
The Company also operates a contributory pension scheme more fully described in the remuneration.
8. Loss per share
The basic loss per share is derived by dividing the loss for the year attributable to ordinary shareholders of the Parent by the weighted average number of shares in issue.
Diluted loss per share is derived by dividing the loss for the year attributable to ordinary shareholders of the Parent by the weighted average number of shares in issue plus the weighted average number of ordinary shares that would be issued on conversion of all dilutive potential ordinary shares into ordinary shares.
The following reflects the loss and share data used in the basic and diluted loss per share computations:
2017 2016
---------------------------------------------------------------------------------------- ------------ --------------
Loss attributable to equity holders of the Parent GBP(534,267) GBP(1,965,722)
---------------------------------------------------------------------------------------- ------------ --------------
Weighted average number of ordinary shares of GBP0.0001 (2016: GBP0.001) in issue 398,184,727 163,621,119
---------------------------------------------------------------------------------------- ------------ --------------
(0.13) (1.20)
Loss per share - basic pence pence
---------------------------------------------------------------------------------------- ------------ --------------
Weighted average number of ordinary shares of GBP0.0001 (2016: GBP0.001) in issue
inclusive
of dilutive outstanding options 398,184,727 163,621,119
---------------------------------------------------------------------------------------- ------------ --------------
(0.13) (1.20)
Loss per share - fully diluted pence pence
---------------------------------------------------------------------------------------- ------------ --------------
The weighted average number of shares issued for the purposes of calculating diluted earnings per share reconciles to the number used to calculate basic earnings per share as follows:
2017 2016
GBP GBP
-------------------- ----------- -----------
Loss per share
denominator 398,184,727 163,621,119
-------------------- ----------- -----------
Weighted average
number of dilutive
share options - -
-------------------- ----------- -----------
Diluted loss per
share denominator 398,184,727 163,621,119
-------------------- ----------- -----------
In accordance with IAS 33, the diluted EPS is calculated by adjusting the earnings and number of shares for the effects of dilutive options and other dilutive potential ordinary shares. The effects of all the instruments in issue by the Group at 30 June 2017 are anti-dilutive (2016: all anti-dilutive) and all anti-dilutive potential ordinary shares are ignored in calculating diluted EPS. The details of all anti-dilutive warrants and options in issue are disclosed in note 17 and note 18 respectively.
9. Property, plant and equipment
Office furniture
Leasehold and
Group and improvements equipment Total
Company GBP GBP GBP
------------------ -------------- ---------------- ---------
Cost
------------------ -------------- ---------------- ---------
At 1 July
2015 14,822 124,370 139,192
------------------ -------------- ---------------- ---------
Additions 18,000 2,342 20,342
------------------ -------------- ---------------- ---------
Disposals - - -
------------------ -------------- ---------------- ---------
Currency exchange - - -
------------------ -------------- ---------------- ---------
At 30 June
2016 32,822 126,712 159,534
------------------ -------------- ---------------- ---------
Additions - - -
------------------ -------------- ---------------- ---------
At 30 June
2017 32,822 126,712 159,534
------------------ -------------- ---------------- ---------
Depreciation
------------------ -------------- ---------------- ---------
At 1 July
2015 (14,822) (115,542) (130,364)
------------------ -------------- ---------------- ---------
Charge (600) (6,853) (7,453)
------------------ -------------- ---------------- ---------
Currency exchange - - -
------------------ -------------- ---------------- ---------
At 30 June
2016 (15,422) (122,395) (137,817)
------------------ -------------- ---------------- ---------
Charge (3,900) (2,297) (6,197)
------------------ -------------- ---------------- ---------
At 30 June
2017 (19,322) (124,692) (144,014)
------------------ -------------- ---------------- ---------
Net book value
------------------ -------------- ---------------- ---------
At 30 June
2017 13,500 2,020 15,520
------------------ -------------- ---------------- ---------
At 30 June
2016 17,400 4,317 21,717
------------------ -------------- ---------------- ---------
10. Investments in subsidiaries
Company GBP ------------------------- --- Cost ------------------------- --- At 30 June 2017 and 2016 482 ------------------------- --- Impairment ------------------------- --- At 30 June 2017 and 2016 - ------------------------- --- Net carrying value ------------------------- --- Net book amount at 30 June 2017 and 2016 482 ------------------------- ---
The Parent Company of the Group holds more than 50% of the share capital of the following companies, the results of which are consolidated:
Country Proportion
of held by Nature of
Company registration Class Group business
------------- --------------- ---------- ------------ --------------
Regency Mines
Australasia Mineral
Pty Limited Australia Ordinary 100% exploration
--------------- --------------- ---------- ------------ ------------
Regency
Resources Natural
Inc USA Ordinary 100% resources
------------- --------------- ---------- ------------ --------------
11. Investments in associates and joint ventures
Group Company
Carrying balance GBP GBP
----------------------- --------- ---------
At 30 June 2015 1,660,854 1,827,454
----------------------- --------- ---------
Additions - -
----------------------- --------- ---------
Impairment - (72,678)
----------------------- --------- ---------
Loss on dilution
of interest 19,325 -
----------------------- --------- ---------
Share of total
comprehensive
loss for the year (42,066) -
----------------------- --------- ---------
At 30 June 2016 1,638,113 1,754,776
----------------------- --------- ---------
Additions 1,928,134 1,928,131
----------------------- --------- ---------
Impairment - -
----------------------- --------- ---------
Transferred to
available for
sale investments (40,881) (40,881)
----------------------- --------- ---------
Gain on re-translation
from functional into
Group presentation
currency 60,391 60,391
----------------------- --------- ---------
Net book amount
at 30 June 2017 3,585,757 3,702,417
----------------------- --------- ---------
The Parent Company of the Group, as at 30 June 2017, had a significant influence by virtue other than a shareholding of over 20% or had joint control through a joint venture contractual arrangement in the following companies:
Country Proportion
of held by Accounting
Name registration Class Group year end
--------------- --------------- ---------- ---------- ---------------- -------------
Direct
--------------- --------------- ---------- ---------- ---------------- -------------
Carbon Minerals 31 December
Corporation* USA Ordinary 20% 2017
--------------- --------------- ---------- ------------ --------------
Vali Carbon 31 December
Corporation* USA Ordinary 20% 2017
--------------- --------------- -------------------- -------------- -------------
Oro Nickel Papua
Limited* New Guinea Ordinary 50% 30 June 2017
--------------- --------------- ---------- ------------ --------------
*These entities have not yet completed financial statements at the time of preparation of the financial statements of Regency Mines Plc. Financial statements will be available after the accounting year end of the entities.
The Parent Company of the Group, as at 30 June 2016, had a significant influence by virtue other than a shareholding of over 20% or had joint control through a joint venture contractual arrangement in the following companies:
Country Proportion Proportion
of held by held by Accounting
Name registration Class Group 2017 Group 2016 year end
----------- -------------- --------- ----------- ----------- ----------
Direct
----------- -------------- --------- ----------- ----------- ----------
Red Rock
Resources England 30 June
plc and Wales Ordinary 1.91% 2.32% 2017
----------- -------------- --------- ----------- ----------- ----------
Oro Nickel Papua 30 June
Limited New Guinea Ordinary 50.00% 50.00% 2017
----------- -------------- --------- ----------- ----------- ----------
As of 1 July 2017, a decision was taken that Red Rock Resources, an AIM listed company, accounted as associate up until 30 June 2016, should be carried in the accounts as available for sale financial asset. The market value of shares at the date of transfer was GBP40,881.
Summarised financial information for the Company's associates and joint ventures, where available, as at 30 June 2017 is given below:
For the year
ended 30 As at 30 June
June 2017 2017
-------------------- ------------------------------ -------------------------
Total comprehensive
Revenue Loss expense Assets Liabilities
Name GBP GBP GBP GBP GBP
----------- ------- --------- ------------------- ---------- -----------
Red Rock
Resources
plc - (283,280) (106,089) 10,538,727 (1,911,492)
----------- ------- --------- ------------------- ---------- -----------
12. Available for sale financial assets
Group Company
GBP GBP
------------------- --------- ---------
Carrying value
------------------- --------- ---------
At 30 June 2015 995,011 909,749
------------------- --------- ---------
Additions during
the year 674,498 674,498
------------------- --------- ---------
Disposals during
the year (227,894) (142,632)
------------------- --------- ---------
Impairments during
the year (478,452) (478,452)
------------------- --------- ---------
Revaluation 184,297 184,297
------------------- --------- ---------
Value at 30 June
2016 1,147,460 1,147,460
------------------- --------- ---------
Additions during
the year 145,127 135,278
------------------- --------- ---------
Transfer from
investment in
associates (note
11) 40,881 40,881
------------------- --------- ---------
Revaluation 110,239 110,239
------------------- --------- ---------
Value at 30 June
2017 1,443,707 1,433,858
------------------- --------- ---------
The value of the Company's investment in Horse Hill Developments Ltd ("HHDL") has been increased during the year based on transactions that occurred in shares of the entity during the year. However, it is important to note that shares in HHDL remain unlisted and thus valuations are based on a relatively small number of transactions between arm's length buyers. See note 20 for additional details of listed and unlisted AFS assets.
13. Exploration assets
Group Company
-------------------------- -----------
2017 2016 2017 2016
GBP GBP GBP GBP
-------------- ----------- ----------- ----------- -----------
Cost
-------------- ----------- ----------- ----------- -----------
At 30 June 2,785,118 2,540,744 1,050,372 1,014,073
-------------- ----------- ----------- ----------- -----------
Additions
during the
year 594 37,771 - 36,299
-------------- ----------- ----------- ----------- -----------
Disposals
in the year (2,321) - - -
-------------- ----------- ----------- ----------- -----------
Exchange
gains 111,446 206,603 - -
-------------- ----------- ----------- ----------- -----------
At 30 June 2,894,837 2,785,118 1,050,372 1,050,372
-------------- ----------- ----------- ----------- -----------
Impairment
-------------- ----------- ----------- ----------- -----------
At 30 June (2,551,218) (1,711,593) (1,009,970) (351,689)
-------------- ----------- ----------- ----------- -----------
Impairments
recognised
in the year (229,262) (658,281) - (658,281)
-------------- ----------- ----------- ----------- -----------
Disposals
in the year - - - -
-------------- ----------- ----------- ----------- -----------
Exchange
gains (73,955) (181,344) - -
-------------- ----------- ----------- ----------- -----------
At 30 June (2,854,435) (2,551,218) (1,009,970) (1,009,970)
-------------- ----------- ----------- ----------- -----------
Net book
value
-------------- ----------- ----------- ----------- -----------
At 30 June
2017 40,402 233,900 40,402 40,402
-------------- ----------- ----------- ----------- -----------
At 30 June
2016 233,900 829,151 40,402 40,402
-------------- ----------- ----------- ----------- -----------
14. Trade and other receivables
Group Company
-------------------- --------- ---------
2017 2016 2017 2016
GBP GBP GBP GBP
-------------------- --------- --------- --------- ---------
Non-current
-------------------- --------- --------- --------- ---------
Amounts
owed by
Group undertakings - - 805,274 801,546
-------------------- --------- --------- --------- ---------
Amounts
owed by
related
parties
-------------------- --------- --------- --------- ---------
due from
associates
and joint
ventures 1,239,779 1,202,312 1,239,779 1,202,312
-------------------- --------- --------- --------- ---------
Total 1,239,779 1,202,312 2,045,053 2,003,858
-------------------- --------- --------- --------- ---------
Current
-------------------- --------- --------- --------- ---------
Sundry
debtors 66,170 222,617 65,912 164,257
-------------------- --------- --------- --------- ---------
Prepayments 44,111 35,232 44,111 35,232
-------------------- --------- --------- --------- ---------
Amounts
owed by
related
parties
-------------------- --------- --------- --------- ---------
due from
associates
and joint
ventures - 86,966 - 86,966
-------------------- --------- --------- --------- ---------
due from
key management 6,263 - 6,263 -
-------------------- --------- --------- --------- ---------
Total 116,544 344,815 116,286 286,455
-------------------- --------- --------- --------- ---------
15. Trade and other payables
Group Company
------------------------- --------- ------------------ ---------
2017 2016 2017 2016
GBP GBP GBP GBP
------------------------- --------- ------- --------- -------
Trade and other payables 330,179 387,467 319,907 383,353
------------------------- --------- ------- --------- -------
Accruals 71,455 221,663 71,457 221,663
------------------------- --------- ------- --------- -------
Amounts due to related
parties:
------------------------- --------- ------- --------- -------
due to associates - - - -
------------------------- --------- ------- --------- -------
due to key management - 10,009 - 10,009
------------------------- --------- ------- --------- -------
Trade and other payables 401,634 619,139 391,364 615,025
------------------------- --------- ------- --------- -------
Short-term borrowings 771,087 282,299 771,087 282,299
------------------------- --------- ------- --------- -------
Total 1,172,721 901,438 1,162,451 897,324
------------------------- --------- ------- --------- -------
Trade and other payables include a balance of GBP118,015 (2016: nil) owing to Red Rock Resources Plc, a related party entity as a result of same directorship.
YA II PN Limited
A short-term loan of GBP771,087 (2016: nil) was provided by YA II PN Limited. Interest on the balance of this loan is charged at a rate of 12% per annum. Repayments are made either in cash or by issue of shares in the Company in line with the terms of the agreement.
16. Reserves
Share premium
The share premium account represents the excess of consideration received for shares issued above their nominal value net of transaction costs.
Foreign currency translation reserve
The translation reserve represents the exchange gains and losses that have arisen on the retranslation of overseas operations.
Retained earnings
Retained earnings represent the cumulative profit and loss net of distributions to owners.
Available for sale financial asset reserve
The available for sale financial asset reserve represents the cumulative revaluation gains and losses in respect of available for sale trade investments.
Associate investment reserve
The associate investments reserve represents the cumulative share of gains/losses of associates recognised in the Statement of Other Comprehensive Income.
Share-based payment reserve
The share-based payment reserve represents the cumulative charge for options granted, still outstanding and not exercised.
17. Share capital of the Company
The share capital of the Company is as follows:
2017 2016
Issued and fully paid GBP GBP
------------------------------- --------------- ---------
124,871,749 ordinary shares
of GBP0.01 each 12,487 12,487
------------------------------- --------------- ---------
1,788,918,926 deferred shares
of GBP0.09 each 1,610,027 1,610,027
------------------------------- --------------- ---------
2,497,434,980 A deferred
shares of GBP0.0095 each 237,256 237,256
------------------------------- --------------- ---------
127,512,822 ordinary shares
of GBP0.01 each 12,752 12,752
------------------------------- --------------- ---------
324,106,493 ordinary shares
pf GBP0.01 each 32,411 -
------------------------------- --------------- ---------
As at 30 June 1,904,933 1,872,522
------------------------------- --------------- ---------
Nominal
Movement in share capital Number GBP
------------------------------- --------------- ---------
Ordinary shares of GBP0.001
each
------------------------------- --------------- --------- As at 30 June 2015 2,052,990,373 1,815,326 ------------------------------- --------------- --------- Issued 20 August 2015 at 0.00045 pence per share 444,444,600 44,444 ------------------------------- --------------- --------- As at 23 December 2015, pre-share re-organisation 2,497,434,973 1,859,770 ------------------------------- --------------- --------- 23 December 2015, share re-organisation (see below) ------------------------------- --------------- --------- Issue of deferred shares of GBP0.0095 each (2,497,434,973) (237,256) ------------------------------- --------------- --------- Issue of new ordinary shares of GBP0.0005 each (2,497,434,973) (12,487) ------------------------------- --------------- --------- Share consolidation: 1 new ordinary share of GBP0.01 for 20 ordinary shares of GBP0.0005 124,871,749 249,743 ------------------------------- --------------- --------- Issued 06 January 2016 at GBP0.000525 per share 2,285,712 229 ------------------------------- --------------- --------- Issued 22 February 2016 at GBP0.00325 per share 54,236,919 5,424 ------------------------------- --------------- --------- Issued 10 March 2016 at GBP0.006 per share 66,666,667 6,667 ------------------------------- --------------- --------- Issued 01 April 2016 at GBP0.00425 per share 4,323,524 432 ------------------------------- --------------- --------- As at 30 June 2016 - ordinary shares of GBP0.01 each 252,384,571 1,872,522 ------------------------------- --------------- --------- Issued 30 August 2016 at GBP0.004 per share 65,625,000 6,563 ------------------------------- --------------- --------- Issued 13 October 2016 at GBP0.004 per share 9,375,000 937 ------------------------------- --------------- --------- Issued 20 December 2016 at GBP0.004 per share 52,500,000 5,250 ------------------------------- --------------- --------- Issued 18 January 2017 at GBP0.004 per share 15,000,000 1,500 ------------------------------- --------------- --------- Issued 20 January 2017 at GBP0.004 per share 12,500,000 1,250 ------------------------------- --------------- --------- Issued 08 February 2017 at GBP0.005 per share 21,000,000 2,100 ------------------------------- --------------- --------- Issued 22 February 2017 at GBP0.0065 per share 11,538,461 1,154 ------------------------------- --------------- --------- Issued 28 February 2017 at GBP0.008 per share 18,125,000 1,812 ------------------------------- --------------- --------- Issued 01 March 2017 at GBP0.0039 per share 17,898,183 1,790 ------------------------------- --------------- --------- Issued 13 March 2017 at GBP0.013 per share 576,923 58 ------------------------------- --------------- --------- Issued 20 March 2017 at GBP0.008 per share 625,000 63 ------------------------------- --------------- --------- Issued 21 March 2017 at GBP0.008 per share 4,000,000 400 ------------------------------- --------------- --------- Issued 27 March 2017 at GBP0.008 per share 3,750,000 375 ------------------------------- --------------- --------- Issued 03 April 2017 at GBP0.01 per share 32,020,493 3,202 ------------------------------- --------------- --------- Issued 04 April 2017 at GBP0.0105 per share 5,119,658 512 ------------------------------- --------------- --------- Issued 10 April 2017 at GBP0.008 per share 500,000 50 ------------------------------- --------------- --------- Issued 21 April 2017 at GBP0.008 per share 2,175,000 217 ------------------------------- --------------- --------- Issued 03 May 2017 at GBP0.009 per share 33,999,996 3,400 ------------------------------- --------------- --------- Issued 05 May 2017 at GBP0.009 per share 17,777,779 1,778 ------------------------------- --------------- --------- As at 30 June 2017 - ordinary shares of GBP0.01 each 576,491,064 1,904,933 ------------------------------- --------------- ---------
Change in nominal value/share re-organisation
The nominal value of shares in the Company was originally 0.1 pence. At a shareholders' meeting on 23 December 2015, the Company's shareholders approved a re-organisation of the Company's shares which resulted in the creation of three classes of shares, being:
-- Ordinary shares with a nominal value of 0.01 pence, which will continue as the Company's listed securities
-- Deferred shares with a value of 0.09 pence -- A Deferred shares with a value of 0.0095 pence
Subject to the provisions of the Companies Act 2006, the deferred shares may be cancelled by the Company, or bought back for GBP1 and then cancelled. These deferred shares are not quoted and carry no rights whatsoever.
At 30 June 2017, the Company had 236,685,670 warrants in issue (2016: 11,111,111) with exercise price ranging GBP0.0039-GBP0.018 (2016: GBP0.01-GBP0.013). All the warrants are issued by the Group to its shareholders in the capacity of shareholders and therefore are outside of IFRS 2 scope. Details on warrant issues during the year are disclosed in note 21.
Capital management
Management controls the capital of the Group in order to control risks, provide the shareholders with adequate returns and ensure that the Group can fund its operations and continue as a going concern.
The Group's debt and capital includes ordinary share capital and financial liabilities, supported by financial assets.
There are no externally imposed capital requirements.
Management effectively manages the Group's capital by assessing the Group's financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders and share issues.
There have been no changes in the strategy adopted by management to control the capital of the Group since the prior year.
18. Share-based payments
Employee share options
In prior years, the Company established an employee share option plan to enable the issue of options as part of the remuneration of key management personnel and Directors to enable them to purchase ordinary shares in the Company. Under IFRS 2 "Share-based Payments", the Company determines the fair value of the options issued to Directors and employees as remuneration and recognises the amount as an expense in the Income Statement with a corresponding increase in equity.
At 30 June 2017, the Company had outstanding options to subscribe for ordinary shares as follows:
Options issued Options issued
14 June 2016 9 September
exercisable 2016 exercisable
at 0.45 pence at 0.8p per
per share share,
expiring expiring
29 January on 9 September
2022 2022 Total
Number Number number
----------- -------------- ----------------- ----------
A R M Bell 2,960,000 10,400,000 13,360,000
----------- -------------- ----------------- ----------
S Kaintz 2,820,000 9,600,000 12,420,000
----------- -------------- ----------------- ----------
E Bugnosen 560,000 - 560,000
----------- -------------- ----------------- ----------
Employees 720,000 - 720,000
----------- -------------- ----------------- ----------
Total 7,060,000 20,000,000 27,060,000
----------- -------------- ----------------- ----------
2017 2016
------------------ --------------------- -------------------------
Weighted Weighted
Number average average
of exercise Number of exercise
Company and options price options price
Group Number Pence Number Pence
------------------ ---------- --------- ------------ ---------
Outstanding
at the beginning
of the period 7,060,000 0.45 13,200,000 3.00
------------------ ---------- --------- ------------ ---------
Granted during
the year 20,000,000 0.80 7,060,000 0.45
------------------ ---------- --------- ------------ ---------
Cancelled
during the
year - - (13,200,000) 3.00
------------------ ---------- --------- ------------ ---------
Outstanding
at the end
of the period 27,060,000 0.71 7,060,000 0.45
------------------ ---------- --------- ------------ ---------
During the financial year 20,000,000 options were issued at an exercise price of 0.8 pence and they expire on 9 September 2022. The options were granted in four tranches; the first tranche vested immediately and the other three tranches had time and market performance vesting conditions (2016: 7,060,000 options at an exercise price of 0.45 pence, expiring on 29 January 2022, granted in four tranches; the first vested immediately and the other three had time and market vesting conditions).
The weighted average fair value of each option granted during the year was 0.244 pence (2016: 0.169 pence).
The exercise price of options outstanding at 30 June 2017 ranged between 0.45p and 0.8p (2016: 0.45p). Their weighted average contractual life was 5.014 years (2016: 5.63 years).
Of the total number of options outstanding at 30 June 2017, 15,330,000 (2016: 1,800,000) had vested and were exercisable.
The weighted average share price (at the date of exercise) of options exercised during the year was nil (2016: nil) as no options were exercised.
The following information is relevant in the determination of the fair value of options granted during the year under equity-settled share based remuneration schemes:
Granted on Granted on
9 September 2017 14 June 2017
--------------------- ------------------ -------------
Option pricing Black-Scholes Black-Scholes
model used model model
--------------------- ------------------ -------------
Weighted average
share price at
grant date, pence 0.55 0.35
--------------------- ------------------ -------------
Exercise price,
pence 0.80 0.45
--------------------- ------------------ -------------
Weighted average
contractual life,
months 62.00 55.00
--------------------- ------------------ -------------
Expected volatility,
% 58.843 61.986
--------------------- ------------------ -------------
Expected dividend
growth rate, % 0 0
--------------------- ------------------ -------------
Risk-free interest
rate, % 0.309 0.679
--------------------- ------------------ -------------
Share-based remuneration expense related to the share options grant is included in the administrative expenses line in the Consolidated Income Statement in the amount of GBP42,912 (2016: GBP22,945).
Share Incentive Plan
In January 2012 the Company implemented a tax efficient Share Incentive Plan, a government approved scheme, the terms of which provide for an equal reward to every employee, including Directors, who has served for three months or more at the time of issue. The terms of the plan provide for:
-- each employee to be given the right to subscribe any amount up to GBP150 per month with Trustees who invest the monies in the Company's shares;
-- the Company to match the employee's investment by contributing an amount equal to double the employee's investment ("matching shares"); and
-- the Company to award free shares to a maximum of GBP3,600 per employee per annum.
The subscriptions remain free of taxation and national insurance if held for five years.
All such shares are held by SIP Trustees and the ordinary shares cannot be released to participants until five years after the date
of the award.
During the financial year, a total of 3,870,248 free and matching shares were awarded (2016: 5,356,296) with a fair value of 1.05 pence (2016: 0.425-0.525 pence) resulting in a share-based payment charge of GBP48,446 (2016: GBP25,050), included in the administrative expenses line in the Consolidated Income Statement.
19. Cash and cash equivalents
30 June 30 June
2017 2016
Group GBP GBP
----------------- ------- -------
Cash in hand and
at bank 9,176 7,960
----------------- ------- -------
30 June 30 June
2017 2016
Company GBP GBP
----------------- ------- -------
Cash in hand and
at bank 8,125 6,626
----------------- ------- -------
20. Financial instruments
20.1 Categories of financial instruments
The Group and Company holds a number of financial instruments, including bank deposits, short-term investments, loans and receivables and trade payables.
The carrying amounts for each category of financial instrument, measured in accordance with IAS 39 as detailed in the accounting policies, are as follows:
30 June 30 June
2017 2016
Group GBP GBP
------------------------------ --------- ---------
Financial assets
------------------------------ --------- ---------
Available for sale financial
assets at fair value through
other comprehensive income
------------------------------ --------- ---------
Quoted equity shares 128,332 7,587
------------------------------ --------- ---------
Unquoted equity shares 1,315,375 1,139,873
------------------------------ --------- ---------
Total available for sale
financial assets 1,443,707 1,147,460
------------------------------ --------- ---------
Loans and receivables
------------------------------ --------- ---------
Trade and other receivables 1,356,323 1,547,127
------------------------------ --------- ---------
Total financial assets 2,800,030 2,694,587
------------------------------ --------- ---------
Total current 116,544 344,815
------------------------------ --------- ---------
Total non-current 2,683,486 2,349,772
------------------------------ --------- ---------
30 June 30 June
2017 2016
Company GBP GBP
------------------------------ --------- ---------
Financial assets
------------------------------ --------- ---------
Available for sale financial
assets at fair value through
other comprehensive income
------------------------------ --------- ---------
Quoted equity shares 118,485 7,587
------------------------------ --------- ---------
Unquoted equity shares 1,315,375 1,139,873
------------------------------ --------- ---------
Total available for sale
financial assets 1,433,860 1,147,460
------------------------------ --------- ---------
Loans and receivables
------------------------------ --------- ---------
Trade and other receivables 2,161,339 2,290,313
------------------------------ --------- ---------
Total financial assets 3,595,199 3,437,773
------------------------------ --------- ---------
Total current 116,286 286,455
------------------------------ --------- ---------
Total non-current 3,478,913 3,151,318
------------------------------ --------- ---------
Available for sale financial assets valued at cost or using valuation techniques other than observable market value
As at 30 June 2017, GBP1,315,372 (2016: GBP1,139,873) of the Group's available for sale financial assets are valued at cost less impairment due to the investment being privately held and no quoted market price information is available, or valued using valuation techniques other than observable market price.
The Group's investment in Direct Nickel Ltd at 30 June 2017 was carried at cost less impairment and valued at GBP215,375 (2016: GBP215,375). There is currently no intention to dispose of this investment in the foreseeable future.
In the comparative year the Group made a cash and share investment of GBP445,000 in Horse Hill Developments. At the year end, and based on the most recent transactions, this investment has been revalued to GBP850,000 (2016: revalued to GBP749,498). The revaluation was done base on a single sale transaction of 1.9% shares in Horse Hill Developments on 10 July 2017 with all the details available on the Company's website.
During the year the Group made an additional cash investment of GBP75,000 in Westport Energy Plc, which brought the value of its investment to GBP250,000 (2016: GBP175,000). This investment is currently held at cost. The investee was renamed during the year into Curzon Energy Plc, and its shares were admitted to trading on the Standard Listing of the LSE on 4 October 2017.
Financial instruments held at cost less impairment or valued using other valuation techniques can be reconciled from beginning to ending balances as follows:
Unlisted investments
at cost
------------------ ---------------------- ---------
2017 2016
Group and Company GBP GBP
------------------ ---------------------- ---------
Brought forward 1,139,873 762,439
------------------ ---------------------- ---------
Additions 75,000 671,590
------------------ ---------------------- ---------
Revaluation 100,499 184,297
------------------ ---------------------- ---------
Impairment - (478,453)
------------------ ---------------------- ---------
Carried forward 1,315,372 1,139,873
------------------ ---------------------- ---------
30 June 30 June
2017 2016
Group GBP GBP
---------------------- --------- -------
Financial liabilities
---------------------- --------- -------
Loans and borrowings
---------------------- --------- ------- Trade and other payables 401,634 619,139 ---------------------- --------- ------- Short-term borrowings 771,087 282,299 ---------------------- --------- ------- Total financial liabilities 1,172,721 901,438 ---------------------- --------- ------- Total current 1,172,721 901,438 ---------------------- --------- ------- Total non-current - - ---------------------- --------- -------
Current financial liabilities in the Company are lower than those of the Group, due to trade and other payables in subsidiary companies.
Trade receivables and trade payables
Management assessed that other receivables and trade and other payables approximate their carrying amounts largely due to the short-term maturities of these instruments.
Borrowings
The carrying value of interest-bearing loans and borrowings is determined by calculating present values at the reporting date, using the issuer's borrowing rate.
20. Financial instruments continued
20.2 Fair values
Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:
-- Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities;
-- Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and
-- Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
The carrying amount of the Group and Company's financial assets and liabilities is not materially different to their fair value. The fair value of financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Where a quoted price in an active market is available, the fair value is based on the quoted price at the end of the reporting period. In the absence of a quoted price in an active market, the Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
The following table provides the fair value measurement hierarchy of the Group's assets and liabilities:
Level
1 Level 2 Level 3 Total
Group GBP GBP GBP GBP
--------------------- ------- --------- ------- ---------
30 June 2017
--------------------- ------- --------- ------- ---------
Available for
sale financial
assets at fair
value through
other comprehensive
income
--------------------- ------- --------- -------
Quoted equity
shares 128,332 - - 128,332
--------------------- ------- --------- ------- ---------
Unquoted equity
shares - 1,315,375 - 1,315,375
--------------------- ------- --------- ------- ---------
30 June 2016
--------------------- ------- --------- ------- ---------
Available for
sale financial
assets at fair
value through
other comprehensive
income
--------------------- ------- --------- -------
Quoted equity
shares 7,587 - - 7,587
--------------------- ------- --------- ------- ---------
Unquoted equity
shares - 1,139,873 - 1,139,873
--------------------- ------- --------- ------- ---------
Level
1 Level 2 Level 3 Total
Company GBP GBP GBP GBP
--------------------- ------- --------- ------- ---------
30 June 2017
--------------------- ------- --------- ------- ---------
Available for
sale financial
assets at fair
value through
other comprehensive
income
--------------------- ------- --------- -------
Quoted equity
shares 118,485 - - 118,485
--------------------- ------- --------- ------- ---------
Unquoted equity
shares - 1,315,375 - 1,315,375
--------------------- ------- --------- ------- ---------
30 June 2016
--------------------- ------- --------- ------- ---------
Available for
sale financial
assets at fair
value through
other comprehensive
income
--------------------- ------- --------- -------
Quoted equity
shares 7,587 - - 7,587
--------------------- ------- --------- ------- ---------
Unquoted equity
shares - 1,139,873 - 1,139,873
--------------------- ------- --------- ------- ---------
20.3 Financial risk management policies
The Directors monitor the Group's financial risk management policies and exposures and approve financial transactions.
The Directors' overall risk management strategy seeks to assist the consolidated Group in meeting its financial targets, while minimising potential adverse effects on financial performance. Its functions include the review of credit risk policies and future cash flow requirements.
Specific financial risk exposures and management
The main risks the Group is exposed to through its financial instruments are credit risk and market risk consisting of interest rate risk, liquidity risk, equity price risk and foreign exchange risk.
Credit risk
Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract obligations that could lead to a financial loss to the Group.
Credit risk is managed through the maintenance of procedures (such procedures include the utilisation of systems for the approval, granting and renewal of credit limits, regular monitoring of exposures against such limits and monitoring of the financial liability of significant customers and counterparties), ensuring, to the extent possible, that customers and counterparties to transactions are of sound creditworthiness. Such monitoring is used in assessing receivables for impairment.
Risk is also minimised through investing surplus funds in financial institutions that maintain a high credit rating or in entities that the Directors have otherwise cleared as being financially sound.
Trade and other receivables that are neither past due nor impaired are considered to be of high credit quality. Aggregates of such amounts are as detailed in note 14.
There are no amounts of collateral held as security in respect of trade and other receivables.
The consolidated Group does not have any material credit risk exposure to any single receivable or group of receivables under financial instruments entered into by the consolidated Group.
Liquidity risk
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The Group manages this risk through the following mechanisms:
-- monitoring undrawn credit facilities; -- obtaining funding from a variety of sources; and -- maintaining a reputable credit profile.
The Directors are confident that adequate resources exist to finance operations to commercial exploration and that controls over expenditure are carefully managed. All financial liabilities are due to be settled within the next 12 months.
Market risk
Interest rate risk
The Company is not exposed to any material interest rate risk because interest rates on loans are fixed in advance.
Equity price risk
Price risk relates to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices largely due to demand and supply factors for commodities, but also include political, economic, social, technical, environmental and regulatory factors.
Foreign exchange risk
The Group's transactions are carried out in a variety of currencies, including Australian Dollar, Canadian Dollar, Papua New Guinea Kina and UK Sterling.
To mitigate the Group's exposure to foreign currency risk, non-Sterling cash flows are monitored.
21. Significant agreements and transactions
Financing
-- On 30 August 2016, the Company raised GBP300,000 by way of an issue of 75,000,000 new ordinary shares at a price per share of 0.4 pence. Paul Johnson participated in GBP75,000 of this placing. The Company has also granted Paul Johnson the right to join the Board of the Company upon completion of the full placing. For every one share, each subscriber will be issued with one warrant exercisable at 0.8 pence per share and expiring on 11 March 2019.
-- On 14 October 2016 the Company raised GBP37,500 from the issuance of 9,375,000 new ordinary shares at a price per share of 0.4 pence through the completion of a second tranche of funding to Paul Johnson. Paul Johnson also received 9,375,000 new warrants exercisable at 0.8 pence per share and expiring on 11 March 2019.
-- On 20 December 2016 the Company raised GBP210,000 through the issuance of 52,500,000 shares at a price per share of 0.4 pence. Each participant in the placing received for every share purchased one warrant exercisable at a price of 0.8 pence per share until 19 December 2018.
-- On 18 January 2017 the Company raised GBP60,000 through the issuance of 15,000,000 shares at a price per share of 0.4 pence. Each participant in the placing received for every share purchased one warrant exercisable at a price of 0.8 pence per share until 17 January 2019.
-- On 19 January 2017 the Company raised GBP50,000 through the issuance of 12,500,000 shares at a price per share of 0.4 pence via the Teathers mobile application, which gives qualified private investors access to placings and initial public offerings. Each participant in the placing received for every share purchased one warrant exercisable at a price of 0.8 pence per share until 17 January 2019.
-- On 08 February 2017 the Company raised GBP105,000 through the issuance of 21,000,000 shares at a price per share of 0.5 pence. Each participant in the placing received for every share purchased one warrant exercisable at a price of 0.8 pence per share until 7 February 2019.
-- On 22 February 2017 the Company raised GBP75,000 through the issuance of 11,538,461 shares to Value Generation Limited at a price per share of 0.65 pence. This fundraising was in consideration for an option given to Value Generation Limited to purchase the Company's exploration assets at Motzfeldt, Greenland. Value Generation Limited received for every share purchased one warrant exercisable at a price of 1.3 pence per share until 22 August 2018.
-- On 4 April 2017 the Company raised GBP320,204.93 through the issuance of 32,020,493 shares to Stephen Moscicki at a price per share of 1.0 pence. Stephen Moscicki received for every one share purchased one half warrant exercisable at a price of 1.3 pence per share until 4 October 2018.
-- On 2 May 2017 the Company raised GBP306,000 through the issuance of 33,999,996 shares at a price per share of 0.9 pence. Each participant in the placing received for every share purchased one warrant exercisable at a price of 1.8 pence per share until 1 May 2019. The Company may give notice that should the volume weighted average share price of Regency exceed 10 pence for 10 trading days Regency may give warrant holders 10 days' notice that the warrants must be exercised within a further 24 days or will otherwise lapse.
-- On 8 May 2017 the Company raised GBP160,000 through the issuance of 17,777,779 shares at a price per share of 0.9 pence via the Teathers mobile application, which gives qualified private investors access to placings and initial public offerings. Each participant in the placing received for every share purchased one warrant exercisable at a price of 1.8 pence per share until 07 May 2019.
Sale of interests
-- On 20 September 2016, the Company announced the sale of its remaining direct interest of 4% in the tenements comprising the Fraser Range Project in Western Australia to Ram Resource ltd for a total consideration of AUD100,000. Additionally, the Company was issued the option to purchase 16,666,666 new ordinary shares in Ram Resource ltd at a price of AUD0.006 per share expiring on 20 September 2020. Regency retains its performance shares and a 1% gross revenue royalty over the tenements.
Restructured investment in Direct Nickel
On 21 October 2016, the Company was informed of a restructuring of the Direct Nickel Group. Previously, the Company held a 6.78% direct stake in Direct Nickel Ltd ("DNiL"), which held 100% of Direct Nickel Holding Pty Ltd ("DNiH"), which held 100% shares in Direct Nickel Projects Pty Ltd ("DNiP"). After the restructuring, the Company owns a 6.78% direct stake in DNiH which in turn holds 40% of DNiP and 40% of Direct Nickel Technologies ("DNiT"), which holds the technology patents and licences. In addition, the Company also owns 0.339% of Planet Minerals Ltd.
21. Significant agreements and transactions continued
US metallurgical coal investments
-- On 25 November 2016 the Company announced a heads of terms to acquire a 20% shareholding in Carbon Minerals Corporation, a Delaware Company, which has entered into an agreement to acquire the Rosa metallurgical coal mine, located in Alabama in the United States. Regency paid an initial non-refundable deposit of GBP50,000 with a further GBP200,000 due after completion of due diligence and a shareholders' agreement. On 20 December 2016 the Company announced a fundraising, the purpose of which was to provide funding toward the completion of this acquisition with completion scheduled for 23 December 2016. A further announcement on 10 January 2017 confirmed the completion of the investment.
-- On 6 February 2017 the Company announced a further coal investment in the form of an agreement to invest USD150,000 to receive a 20% shareholding in Vali Carbon Corporation, a new Delaware company set up to pursue metallurgical coal investments in the Appalachians in the United States. The co-venturers in Vali Carbon Corporation have agreed to sign a definitive shareholder agreement with normal shareholder protections and an agreed budget for the coming year. Regency retains a put right to UK Carbon Resolutions should this not occur. On 9 March 2017 the Company announced that this investment had been completed and that a new metallurgical coal opportunity within the target Appalachian area had been identified and secured and would be transferred into Vali Carbon Corporation.
-- On 16 March 2017 the Company announced a memorandum of agreement for a new coal joint venture in Alabama, in the United States. The memorandum established a joint venture 25% Regency and 75% Mr Stephen Moscicki, to conduct due diligence over a metallurgical coal property of approximately 6,500 acres in north-eastern Alabama. Mr Moscicki had signed an agreement with the vendor of the property and made an initial payment. The two parties will co-operate on a basis of exclusivity while conducting due diligence and finalising detailed terms. Each party would meet its share of costs. On 4 April 2017 the Company announced that a supplementary agreement had been signed between the parties pursuant to which Regency has contributed USD400,000 to the costs of acquisition, permitting and preparation of the property.
-- On 28 March 2017 the Company announced the acquisition for nominal consideration of a 20% interest in the Black Creek coal property located in Alabama, in the United States.
Grant of option over Motzfeldt project
On 22 February 2017 the Company announced that it had granted a four-month option to Value Generation Limited ("VGL"), a private company, to acquire 100% interest in licence 2014/01 covering the Motzfeldt intrusive complex in Southern Greenland. As consideration for the option VGL agreed to subscribe for GBP75,000 of Regency's shares at a price of 0.65 pence with 1 for 1 warrants exercisable at a price of 1.3 pence.
During the option period VGL has the right at any time within the four-month option period to exercise the option for consideration of GBP350,000 payable in cash. In the event that the option is exercised and Motzfeldt is sold on within the next 18 months Regency is to be granted a 1.25% gross revenue royalty over future production from the licence. If the sale value exceeds GBP5m, Regency will be paid an additional consideration of GBP500k and if the sale consideration exceeds GBP10m, Regency will be paid an additional consideration of GBP1m.
Share Incentive Plan
On 6 April 2017, the Board of Directors approved the issue of 5,119,658 ordinary shares of 0.01 pence each in the Company under the Company's Share Incentive Plan ("SIP") for the 2016/17 tax year. 1,371,428 free shares, 1,249,410 partnership shares and 2,498,820 matching shares have been awarded with reference to the mid-market closing price of 0.425 pence on 1 April 2016.
22. Commitments
As at 30 June 2017, the Company had entered into the following commitments:
-- Exploration commitments: Ongoing exploration expenditure is required to maintain title to the Group mineral exploration permits. No provision has been made in the financial statements for these amounts as the expenditure is expected to be fulfilled in the normal course of the operations of the Group.
-- The Company has an existing joint lease agreement with Red Rock Resources plc and Greatland Gold plc relating to Ivybridge House, 1 Adam Street, London WC2N 6LE. The lease is non-cancellable until 1 December 2017 and will be allowed to lapse on that date.
23. Related party transactions
-- On 5 April 2013, Regency Mines plc, Red Rock Resources plc, where Andrew Bell currently is a Director, and Greatland Gold plc, where Andrew Bell previously was a Director, entered into a joint lease at Ivybridge House, 1 Adam Street, London WC2N 6LE. The total cost to the Company for these expenses during the year was GBP121,046 (2016: GBP110,918), of which GBP60,523 represented the Company's share of the office rent and the balance services provided (2016: GBP44,979). The Company planned to let this agreement lapse at expiration on 1 December 2017.
-- The costs incurred on behalf of the Company by Regency Mines plc are invoiced at each month end and settled on a quarterly basis. By agreement, the Company pays interest at the rate of 0.5% per month on all balances outstanding at each month end until they are settled. The total charged to Red Rock Resources plc for the year was GBP15,869 (2015: GBP16,865).
-- Related party receivables and payables are disclosed in notes 14 and 15, respectively. -- The Company held 9,084,760 shares (1.91%) in Red Rock Resources plc as at 30 June 2016.
-- The key management personnel are the Directors and their remuneration is disclosed within note 7.
24. Events after the reporting period
Sale of interest
On 10 July 2017, the Company announced the sale of 1.9% of its interest in Horse Hill Developments Ltd, to UK Oil and Gas Plc ("UKOG") for total consideration of GBP323,000. GBP268,502 of the total were delivered in UKOG shares and the balance was a cash payment that was applied to Regency's proportionate share of outstanding Horse Hill cash calls. UKOG was also granted a right of first refusal for 18 months over Regency's remaining 3.1% stake in Horse Hill Developments Ltd. The sale was announced as completed on 24 August 2017.
On 18 October 2017, the Company announced the conditional sale of the remainder of its 3.1% interest in Horse Hill Developments Ltd, to Alba Mineral Resources Plc ("Alba") for total consideration of GBP630,000. Of the consideration 50% was expected to be paid in cash, GBP315,000 and the balance in Alba shares at a price equal to the volume weighted average price of Alba shares in the 15 days prior to completion.
Completion of the sale was contingent on the satisfaction or waiver by Alba of certain conditions precedent including due diligence in respect of the sale interest and receipt of all required third party consents, approvals and waivers. In particular, UK Oil and Gas retain a first right of refusal which they must exercise within 25 business days of being notified of the proposed sale.
Curzon Energy Plc investment (ex Westport Energy Plc)
On 26 May 2016, the Company announced an investment in Curzon Energy Plc ("Curzon"), a company formed to acquire natural gas operations in the United States. The Company agreed to subscribe for 21,875 new ordinary shares of GBP1.00 per share of Westport at a price of GBP8.00 per share for a total consideration of GBP175,000 in a pre-IPO funding.
On 28 September 2017 the Company announced Curzon Energy Plc's intention to raise gross proceeds of GBP2.3m and to seek admission of its shares to the Standard Listing segment of the Official List to trade on the London Stock Exchange. Regency further announced its intention to follow its pre-IPO investment with a further GBP400,000.
On 4 October 2017 Curzon's shares were admitted to trading on the London Stock Exchange and Regency received 6,467,500 new Curzon shares, including a 7% broking fee on its IPO subscription rebated in Curzon shares, and post IPO held a 8.91% stake in Curzon.
Change of broker
On 1 November 2017 the Company announced the appointment of First Equity Limited as broker to the Company with immediate effect.
US Metallurgical Coal Investments
On 24 November 2017 the Company announced that it has paid a refundable advance of GBP34,800 giving the Company the option to buy the 80% balance of the Rosa Metallurgical Coal Mine owned by Carbon Minerals Corporation, that the Company does not currently own. Regency has a sixty day period in which to carry out due diligence on the mine and complex. Should due diligence prove favourable Regency would be able to acquire the mine, wash plant and other property rights, rights of action, leases, licenses, permits, shareholdings, and other rights including ownership of MCoal Corporation, the direct holder of the assets, for the sum of GBP250,000.
25. Control
There is considered to be no controlling related party.
26. These results are audited, however the information does not constitute statutory accounts as defined under section 434 of the Companies Act 2006. The consolidated statement of financial position at 30 June 2017 and the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and the consolidated cash flow statement for the year then ended have been extracted from the Group's 2017 statutory financial statements. Their report was unqualified and contained no statement under sections 498(2) or (3) of the Companies Act 2006. The financial statements for 2017 will be delivered to the Registrar of Companies by 31 December 2017.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BPBRTMBJTBMR
(END) Dow Jones Newswires
November 29, 2017 02:00 ET (07:00 GMT)
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