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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Creat Res Ld | LSE:CRHL | London | Ordinary Share | AU000XINAAD8 | ORD NPV (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.18 | 0.00 | 00:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Jan 2020 to Jan 2025
TIDMCRHL
RNS Number : 3180Q
Creat Resources Holdings Ltd
05 November 2012
5 November 2012
Creat Resources Holdings Limited
("CRHL" or "the Company")
Final Results for year ended 30 June 2012
Creat Resources Holdings Limited ("CRHL") (AIM: CRHL) is pleased to announce its final results for the year ended 30 June 2012 as shown below. The full Annual Report and Accounts will be available on the Company's website (www.creatresources.com) shortly.
The notice of the Annual General Meeting and posting of the Annual Report and Accounts will be announced in due course.
For further information please visit www.creatresources.com or contact:
Creat Resources Holdings Limited
Morris R. Hansen, Company Secretary: Tel +613 6471 6228
Daniel Stewart & Company
Paul Shackleton, Emma Earl, Jamie Barklem: Tel +44 20 7776 6550
Chairman's Statement
Dear Shareholders:
I am pleased to present to you the Annual Report of Creat Resources Holdings Limited for the year ended 30 June 2012.
The year just ended was, and the year ahead will be, filled with challenges. The European financial crisis deepening, rather than easing; the American economy remaining sluggish and the slowing down of developing countries, all contributed to the weak demand for lower end resources. Extraction of resources from our tenements would only be economically viable when such situations dramatically improve, and the low commodity prices rebound.
During the year, as with other similar exploration companies, development at Creat Resources had been hindered by the shortage of working capital. The financial crisis worldwide made it difficult, if at all possible, to raise funds from the capital market. Despite the support we received from our major shareholder, Creat Group Company Limited, we have no alternative but to keep our exploration work to a level we could manage to best balance input and output.
Towards the end of the financial year, your Board of Directors reconsidered the way forward for our exploration activities. By now, you would note that the Board has recommended for your approval the disposal of all the tenements we hold at Zeehan, Tasmania, Australia. By such move, I trust that it allows your Company to start afresh. Myself, and the rest of the Board, have long begun our search for new and even better opportunities to enhance the return on your investment.
At the same time, our other major investment in Galaxy Resources Limited has made milestone progress. In March 2012, Jiangsu Lithium Carbonate Plant which is wholly owned by Galaxy and situated in the Zhangjiagang Free Trade Zone in China's Jiangsu Province was officially opened. Jiangsu Plant is the largest-capacity battery grade lithium carbonate plant in the Asia Pacific region and is one of the most technologically advanced plants of its kind in the world.
Also in March 2012, Galaxy announced the merger with Lithium One Inc., Canada, which when completed, resulted in Galaxy becoming a much larger lithium resource supplier worldwide demonstrating Galaxy's understanding of the importance of this strategic green energy source. Following the merger, the effective shareholding of Galaxy by Creat Resources was inevitably diluted but we remain one of the substantial shareholders of Galaxy, leaving us, CRHL, set to realize a high return on our investment when the potential of Galaxy is unleashed.
Please join me in expressing our gratitude to the Board, the management team and all the staff, in this time of challenge, their dedication is the envy of our competitors.
We thank you for, and we look forward to receiving, your continuing support for a brighter future for your company.
Derek Leung Executive Chairman
Excerpts from Directors report
Principal activities
The principal activities of the Consolidated Entity during the financial year were minerals exploration and the acquisition, exploration and operation of mineral properties in both Australia and overseas.
The Company was admitted to trading on AIM on 6 March 2007. The Company initially focused on zinc, lead and silver deposits in Western Tasmania, Australia. Since July 2009 the Company has pursued a strategy of acquisitions and other transactions that has resulted in expansion of its mining operations within and outside Australia and resource diversification (including gold, nickel, and a continued focus on lead, zinc and silver) in order to spread the risk of commodity fluctuations and take advantage of the deals on offer.
Operating results
The loss of the Consolidated Entity for the year after providing for income tax amounted to $13,673,981 (2011 loss: $20,439,089).
Review of operations
The Company is pursuing a dual strategy of acquiring interests in strategic resource companies, the first of which is Galaxy Resources Limited, and resource diversification through its exploration activities.
Galaxy Resources Ltd Investment
Galaxy Resources Limited ("Galaxy") is a Western Australian S&P / ASX 300 Index company which plans to become one of the world's leading producers of lithium compounds - the essential component for powering the world's fast expanding fleet of hybrid and electric cars. Galaxy's Mt Cattlin mine aims to be the world's second largest producer of lithium mineral concentrate globally, and through the development of its 17,000 tpa lithium carbonate plant in Jiangsu province, Galaxy expects to be one of the largest and lowest cost lithium compound producers in China. Lithium compounds such as lithium carbonate are forecast to be in short supply against high future demand due to advances in long life batteries and sophisticated electronics including mobile phones and computers. Galaxy has positioned itself to meet this lithium future by not only mining the lithium, but also by downstream processing to supply lithium carbonate to the expanding Asian market.
The Company's shareholding in Galaxy remains at 38,091,616 shares. Whilst there has been no change in the number of shares held by the Company during the reporting period, as a result of the placement of shares to raise capital for the financing of the merger of Lithium One of Canada and Galaxy Resources, the Company's holding was diluted and is 10.45% as at 30 June 2012.
Mt Cattlin
Mt. Cattlin production continued throughout the year until July 2012 when Galaxy announced a temporary halt to production due to the large stockpiles of ore destined to Jiangsu plant in China which was in its early stages of ramping up to full production. It is expected that production at Mt. Cattlin will continue once Jiangsu is near full production.
Jiangsu Lithium Carbonate Project in Jiangsu, PRC.
The Jiangsu Lithium Carbonate plant continues to progress with lithium carbonate production in August totalling 350 tonnes, (25% of design output), slightly ahead of the ramp-up schedule according to the Galaxy announcement in September 2012.
Galaxy announced that August sales totalled 268 tonnes generating revenue in excess of A$1.6 million (RMB10.5 million) for the month. Galaxy commenced battery grade lithium carbonate sales with overall product acceptance. August sales were still based predominantly on technical grade product. Going forward, battery grade sales revenue is expected to increase as more customer product qualifications are completed.
Battery grade lithium carbonate samples were sent to over 30 potential customers in China for product qualification. Product testing continues and feedback regarding product quality to date has been extremely positive according to Galaxy.
Product quality at Jiangsu continues to achieve at least the 99.5% purity criteria required to class the lithium carbonate as battery grade, with the product meeting all of the prescribed tolerances for impurities required by Galaxy's cathode producing customers.
Exploration Activities
This section should be read in conjunction with the Subsequent Events note and in note 33 to the financial statements.
Retention Licences
Creat Resources Holdings Limited ("CRHL") and its wholly owned subsidiary, ZZ Exploration Pty Ltd, hold three (3) Retention Licences (RL) as a portion of its tenement package situated in the mineral rich area around Zeehan in Western Tasmania. Re-assessment of the existing mineral resources and development of programs to increase reserves and/or extract ore grade material for all three licences has been ongoing over the last 12 months. Selective rehabilitation is being completed at the Comstock mine site and surrounding works in consultation with the EPA of Tasmania.
Comstock
RL4/2009 Comstock was granted on 01/02/2010 for an initial period of 2 years. This term was extended for a further 2 years and will expire on the1st February 2014 unless extended.
Mineral Resources Tasmania (MRT) has for several years held an environmental bond of $2.5 million from CRHL to cover the decommissioning and rehabilitation of the Comstock site. Further to this, CRHL will be entitled to reimbursement in full, of the bond amount, upon successful completion of the decommissioning and rehabilitation process.
Environmental Protection Notice (EPN) 7977/1 states that CRHL must develop and implement a Decommissioning and Rehabilitation Plan (DRP) for the site. A draft DRP has been developed by CRHL and has been submitted to the Environment Protection Authority (EPA) for review. This was done in September 2011. The current version of the DRP resides with the EPA. The version as it exists is only partially acceptable to the EPA and CRHL has been informed that further work is required for resubmission of the DRP after addressing the issues of concern to the EPA.
Minimal rehabilitation work was completed during the year. A clay deposit was located and samples taken for analysis. The samples were analysed and now require review by an environmental consultant to report on the soil compatibility for the purposes required by the EPA in the capping of the Swansea Waste Rock dump and the now partially infilled dirty water dam.
Quarterly water quality testing continues as well as continuous lime dosing to maintain water quality control on site as per our obligations with regard to the site and the EPA.
Oceana
RL3/2009 Oceana was granted on 01/02/2010 for an initial period of 2 years. An application was made and granted for an extension of term. This licence now expires on the 1(st) February 2014 unless extended.
There has been no development activity in the 12 months to 30 June 2012, however, quarterly water quality control samples continue to be carried out and assessment of the mineral resource potential continues.
Mariposa
There has been no development activity in the 12 months to 30 June 2012. Retention Licence RL1/2008 was renewed in February 2011 for a further period of 2 years, with the term of the licence extending until 1st February 2013.Continued assessment of the mineral resource potential was carried out during the term.
Exploration Licences
CRHL with its wholly owned subsidiary, ZZ Exploration Pty Ltd holds four (4) current and active Exploration Licences (EL) in the Zeehan area covering a total area of 109 square kilometres. Geological work programs, including drilling were completed on the various tenements during the year ended 30 June 2012.
EL30
The primary focus at EL30/2002, Tenth Legion Prospect has been to evaluate the extent and quality of the long-known magnetite mineralisation present to determine the suitability as a Direct Shipping Ore (DSO). This work continues and will require further drilling to delineate a resource. Work was also undertaken to determine the continuity of strike from Comstock to the southeast of the RL within EL30 during the year with two of three planned diamond drill holes being completed. SY159 & SY160 were drilled to completion during the period. SY159 Intersected one minor mineralised zone at depth and SY160 intersected two minor mineralised zones. The results did not warrant the completion of the third diamond hole planned further to the southeast.
Table 1 - Collar Information
Hot Features
Premium
Hole No. Easting Northing Azimuth Dip Depth
---------- -------- --------- -------- ---- ------
SY159 359008 5360418 205 -50 213.6
---------- -------- --------- -------- ---- ------
SY160 359235 5360354 205 -50 244.6
---------- -------- --------- -------- ---- ------
EL20
Two further diamond drill holes, AU002 and AU003 were completed during the period as a follow-up to AUD001 drilled in the previous year. AU002 was designed to test the continuity of the mineralised zone confirmed in AU001. AU002 was drilled to the northeast and from the opposite side of the structure as AU001. The results confirmed the extension of a broad low grade mineralised zone from AU001. A fourth diamond hole, AU004 was planned approved and awaits drilling.
AU003 was designed to test a small historical zone above AU001. The drill results were disappointing and no further work was completed.
Table 2 - Collar Coordinates
Hole No Easting Northing Azimuth Dip Depth --------- -------- --------- -------- ---- ------ AU002 362271 5358975 250 -55 349.5 --------- -------- --------- -------- ---- ------ AU003 362036 5358886 250 -45 239.5 --------- -------- --------- -------- ---- ------
EL18
The geochemical grid was sampled during the period and the samples were subjected to onsite handheld XRF analysis. Results were mixed with no follow-up work planned in this area at present.
During the period it was decided to plan and carry out a diamond drilling program in the southeast corner of the northern block of EL18. This section is due west of Zinc mineralisation located in the south portion of the Tenth Legion prospect on EL30. Three diamond drill holes were planned of which one has been completed. These drill holes were planned to test the western extent of the Zinc mineralisation of previous drilling programs carried out on the adjacent EL30.
TLC44 was the first of the holes to be drilled and was completed at a depth of 201.9m. TLC43 and TLC45 are prepared, approved and await drilling.
EL21
The company has committed to reviewing the existing data relating to the two tin prospects within the tenement. A pre-JORC resource exists on the Razorback mine and work is ongoing with regard to planning and completing further exploration that could lead to an up grading of the resource to JORC compliance.
Consolidated statement of comprehensive income
Year Ended Year Ended
30-Jun-12 30-Jun-11
Note $ $
Continuing Operations
Revenue 6 275,196 211,627
Other Gains and Losses 7 (747,241) (364,768)
Share of Loss of Associate 14 - (5,108,536)
Exploration and Evaluation Costs
Expensed 8 (325,448) (1,374,883)
Depreciation Expense 8 (249,217) (310,977)
Finance Costs 8 (9,693,129) (6,746,616)
Administration Expenses (682,945) (547,557)
Employee Expenses (1,372,422) (2,878,924)
Site Operations (105,537) (117,942)
Site Operations - Environment (605,083) (2,999,835)
Other Expenses (168,155) (200,678)
-------------
Loss before Income tax (13,673,981) (20,439,089)
------------- -------------
Income Tax Benefit 10 - -
-------------
Loss for the Period (13,673,981) (20,439,089)
============= =============
Other Comprehensive Income
Share of Other Comprehensive Income
of Associate - 739,166
Other Comprehensive Income for
the Period (Net of Tax) - -
------------- -------------
Total Comprehensive Income for
the Period (13,673,981) (19,699,923)
============= =============
Earnings Per Share
Basic (cents per share) (2.05) (3.06)
Diluted (cents per share) (2.05) (3.06)
The accompanying notes form part of these financial statements
Consolidated statement of financial position as at 30 June 2012
30 Jun 12 30-Jun-11
Note $ $
Assets
Current Assets
Cash and Cash Equivalents 24 92,797 263,714
Trade and Other Receivables 11 61,269 28,043
Other Current Assets 12 103,497 126,542
------------- ------------
Total Current Assets 257,563 418,299
------------- ------------
Non-Current Assets
Property, Plant and Equipment 16 867,598 1,164,990
Exploration and Evaluation
Asset 250,000 250,000
Investment in Associate 14 - -
Other Non-Current Assets 15 22,283,595 28,568,712
Other Financial Assets 13 2,500,000 2,500,000
------------- ------------
Total Non-Current Assets 25,901,193 32,483,702
------------- ------------
Total Assets 26,158,756 32,902,001
------------- ------------
Liabilities
Current Liabilities
Trade and Other Payables 17 396,857 435,458
Financial Liabilities 18 43,605,795 32,533,017
Provisions 19 1,279,380 1,450,954
------------- ------------
Total Current Liabilities 45,282,032 34,419,429
------------- ------------
Non-Current Liabilities
Financial Liabilities 18 - 4,225,628
Provisions 19 1,610,136 1,316,375
Total Non-Current Liabilities 1,610,136 5,542,003
------------- ------------
Total Liabilities 46,892,168 39,961,432
------------- ------------
Net Liabilities (20,733,412) (7,059,431)
------------- ------------
30 Jun 12 30-Jun-11
Note $ $
Equity
Issued Capital 20 69,408,416 69,408,416
Reserves 21 344,531 344,531
Accumulated Losses (90,486,359) (76,812,378)
------------- -------------
Equity attributable to owners
of the Company (20,733,412) (7,059,431)
------------- -------------
Total Deficiency (20,733,412) (7,059,431)
============= =============
The accompanying notes form part of these financial statements
Consolidated statement of cash flows for the year ended 30 June 2012
30-Jun-12 30-Jun-11
Note $ $
Cash Flows from Operating Activities
Receipts from Customers 99,369 137,772
Payments to Suppliers and Employees (3,401,005) (6,336,365)
------------
Net Cash used in Operating Activities 24 (3,301,636) (6,198,593)
============ ============
Cash Flows from Investing Activities
Purchase of Property, Plant &
Equipment - (123,693)
Proceeds from Sale of Property,
Plant & Equipment 145,427 -
Interest Received 142,601 220,857
------------
Net Cash generated by Investment
Activities 288,028 97,164
============ ============
Cash Flows from Financing Activities
Interest Paid (7,309) (136,042)
Proceeds from Borrowings 2,850,000 3,882,666
Repayment of Borrowings - (378,588)
Net Cash generated by Financing
Activities 2,842,691 3,368,036
============ ============
Net Decrease in Cash and Cash
Equivalents (170,917) (2,733,393)
Cash and Cash Equivalents at
Beginning of the Period 263,714 2,997,107
------------
Cash and Cash Equivalents at
the End of the Period 24 92,797 263,714
============ ============
The accompanying notes form part of these financial statements
Issued Accumulated Share of Other Total
Capital Losses Associate's Reserves
Reserve
$ $ $ $ $
Balance at 1 July 2010 69,408,416 (56,373,289) 462,415 344,531 13,842,073
Loss for the Period - (20,439,089) - - (20,439,089)
----------- ------------- --------------- --------- -----------------
Total comprehensive income
for the period - (20,439,089) - - (20,439,089)
Share of Associate's Reserves - - 739,166 - 739,166
Reclassification to AFS
Investment - - (1,201,581) - (1,201,581)
Balance at 30 June 2011 69,408,416 (76,812,378) - 344,531 (7,059,431)
=========== ============= =============== ========= =================
Issued Accumulated Share of Associate's Other Total
Capital Losses Reserve Reserves
$ $ $ $ $
Balance at 1 July 2011 69,408,416 (76,812,378) - 344,531 (7,059,431)
Loss for the Period - (13,673,981) - - (13,673,981)
----------- ------------- --------------------- ---------- -------------
Total comprehensive income for the
period - (13,673,981) - - (13,673,981)
Balance at 30 June 2012 69,408,416 (90,486,359) - 344,531 (20,733,412)
=========== ============= ===================== ========== =============
The accompanying notes form part of these financial statements
Note 1: General Information
Creat Resources Holdings Limited (CRHL) is a company incorporated in Australia. The address of its registered office and principal place of business is disclosed in note 32 to the financial statements. The principal activities of CRHL and its subsidiaries (the 'Consolidated Entity' or the 'Company') during the financial year were minerals exploration and the acquisition, exploration and operation of mineral properties in Australia.
Going Concern
The financial report has been prepared on a going concern basis, which assumes continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.
The Company is in a development stage and in the course of its activities has sustained operating losses. It expects such losses to continue for at least the next 12 months. The Company will finance its operations primarily through cash and cash equivalents on hand, future financing from the issuance of debt or equity instruments and through the generation of revenues once commercial operations get underway. However, the Company has yet to generate any significant revenues and has no assurance of future revenues.
Based on the Company's forecasted cash flows through to 31 December 2013, further funding of $400,000 is required, of which there is a further $150,000 available in a facility with the Company's parent entity, Creat Group. As disclosed in note 33, the Company has entered into an agreement to dispose of all the existing mining assets currently held in Tasmania, together with all associated plant and equipment, for a total consideration of AUD $4million in cash.
The following plan is in place by Management to support the going concern basis of the Company and the consolidated entity.
On 31 October 2012 the Company received an undertaking from Creat Group in that, for the purposes of assisting the company in achieving its working capital forecast to 31 December 2013:
-- Creat Group will continue to provide further funding to CRHL as required with interest rates to be charged based on market interest rates; and
-- Creat Group will not call for or cause repayment of any loans or convertible notes, including the payment of accrued interest on such loans or convertible notes, held by Creat Group at 30 June 2012 or entered into/acquired by Creat Group subsequent to that date, and interest that will be due and payable on such loans or convertible notes through to 31 December 2013.
At the date of this report and having considered the above factors, the directors are confident that the Company and the consolidated entity will be able to continue as going concerns.
Note 2: New Accounting Standards for Application in Future Periods
The AASB has issued a number of new and amended Accounting Standards and Interpretations that have mandatory application dates for future reporting periods, some of which are relevant to the Consolidated Entity. The Consolidated Entity has decided not to early adopt any of the new and amended pronouncements. The new and amended pronouncements that are relevant to the Consolidated Entity and applicable in future reporting periods are set out below:
Note 2: Adoption of new and revised Accounting Standards (cont).
Standard/Interpretation Effective for annual Expected to be
reporting periods initially applied
beginning on or in the financial
after year ending
------------------------------------------- -------------------- ------------------
AASB 2011-9 Amendments to Australian 1 July 2012 30 June 2013
Accounting Standards - Presentation
of Items of Other Comprehensive Income
------------------------------------------- -------------------- ------------------
AASB 2011-4 Amendments to Australian 1 July 2013 30 June 2014
Accounting Standards to Remove Individual
Key Management Personnel Disclosure
Requirements
------------------------------------------- -------------------- ------------------
AASB 9 Financial Instruments 1 January 2015 30 June 2016
------------------------------------------- -------------------- ------------------
AASB 10 Consolidated Financial Statements 1 January 2013 30 June 2013
------------------------------------------- -------------------- ------------------
AASB 11 Joint Arrangements 1 January 2013 30 June 2013
------------------------------------------- -------------------- ------------------
AASB 12 Disclosure of Interests 1 January 2013 30 June 2013
in Other Entities
------------------------------------------- -------------------- ------------------
AASB 13 Fair Value Measurement, 1 January 2013 30 June 2013
AASB 2011-8 Amendments to Australian
Accounting Standards arising from
AASB 13
------------------------------------------- -------------------- ------------------
AASB 119 Employee Benefits 1 January 2013 30 June 2013
------------------------------------------- -------------------- ------------------
AASB 2012-2 Amendments to Australian 1 January 2013 30 June 2013
Accounting Standards - Disclosures
- Offsetting Financial Assets and
Financial Liabilities
------------------------------------------- -------------------- ------------------
AASB 2012-3 Amendments to Australian 1 January 2014 30 June 2014
Accounting Standards - Offsetting
Financial Assets and Financial Liabilities
------------------------------------------- -------------------- ------------------
AASB 127 'Separate Financial Statements' 1 January 2013 30 June 2014
(2011)
------------------------------------------- -------------------- ------------------
AASB 128 'Investments in Associates 1 January 2013 30 June 2014
and Joint Ventures' (2011)
------------------------------------------- -------------------- ------------------
AASB 2011-7 'Amendments to Australian 1 January 2013 30 June 2014
Accounting Standards arising from
the Consolidation and Joint Arrangements
standards'
------------------------------------------- -------------------- ------------------
AASB 2012-5 Amendments to Australian 1 January 2013 30 June 2014
Accounting Standards arising from
Annual Improvements 2009-2011 Cycle
------------------------------------------- -------------------- ------------------
Consolidated Financial Statements, 1 January 2013 30 June 2014
Joint Arrangements and Disclosure
of Interests in Other Entities: Transition
Guidance (Amendments to IFRS 10,
IFRS 11 and IFRS 12)
------------------------------------------- -------------------- ------------------
Note 3: Significant Accounting Policies
a) Statement of Compliance
These financial statements are general purpose financial statements which have been prepared in accordance with the Corporations Act 2001, Accounting Standards and Interpretations, and comply with other requirements of the law.
The financial statements comprise the consolidated financial statements of Creat Resources Holdings Limited and its subsidiaries (the 'Company' or 'Consolidated Entity'). For the purposes of preparing this report, the Company is a for-profit entity.
Accounting Standards include Australian Accounting Standards. Compliance with Australian Accounting Standards ensures that the financial statements and notes of the Company and the Consolidated Entity comply with International Financial Reporting Standards ('IFRS').
The financial statements were authorised for issue by the directors on 31 October 2012.
The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial report includes separate financial statements for Creat Resources Holdings Limited as an individual entity (the 'Company' or 'Parent Entity') and the consolidated entity consisting of Creat Resources Holdings Limited and its subsidiaries (the 'Group' or 'Consolidated Entity').
b) Basis of Preparation
The financial report has been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for the assets. All amounts are in Australian dollars, unless otherwise noted.
c) Basis of Consolidation
A subsidiary is any entity Creat Resources Holdings Limited has the power to control the financial and operating policies of, so as to obtain the benefit from its activities. All controlled entities have a June financial year end.
All intercompany balances and transactions between entities in the Consolidated Entity, including any unrealised profits or losses, have been eliminated on consolidation. Where controlled entities have entered or left the Consolidated Entity during the year, their operating results have been included/excluded from the date control was obtained or until control ceased.
d) Business Combinations
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each acquisition is measured at the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.
Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the cost of acquisition where they qualify as measurement period adjustments (see below). All other subsequent changes in the fair value of contingent consideration classified as an asset or liability are accounted for in accordance with relevant Standards. Changes in the fair value of contingent consideration classified as equity are not recognised.
Note 3: Significant Accounting Policies (cont).
Where a business combination is achieved in stages, the Group's previously held interests in the acquired entity are remeasured to fair value at the acquisition date (i.e. the date the Group attains control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of.
The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under AASB 3(2008) are recognised at their fair value at the acquisition date, except that:
-- deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measured in accordance with AASB 112 Income Taxes and AASB 119 Employee Benefits respectively;
-- liabilities or equity instruments related to the replacement by the Group of an acquiree's share-based payment awards are measured in accordance with AASB 2 Share-based Payment; and
-- assets (or disposal groups) that are classified as held for sale in accordance with AASB 5 Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see below), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.
The measurement period is the period from the date of acquisition to the date the Group obtains complete information about facts and circumstances that existed as of the acquisition date - and is subject to a maximum of one year.
e) Investments in Associates
An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.
The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance with AASB 5 Non-current Assets Held for Sale and Discontinued Operations. Under the equity method, investments in associates are carried in the consolidated statement of financial position at cost as adjusted for post-acquisition changes in the Group's share of the net assets of the associate, less any impairment in the value of individual investments. Losses of an associate in excess of the Group's interest in that associate (which includes any long-term interests that, in substance, form part of the Group's net investment in the associate) are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.
Any excess of the cost of acquisition over the Group's share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate recognised at the date of acquisition is recognised as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of that investment. Any excess of the Group's share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognised immediately in profit or loss.
Note 3: Significant Accounting Policies (cont).
When a group entity transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group's interest in the relevant associate.
f) Revenue
Revenue from the sale of goods is recognised upon the delivery of goods to customers. Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. Rental revenue is recognised when the right to receive the rent has been established. Revenue from the rendering of a service is recognised upon the delivery of the service to the customers.
g) Income Tax
The charge for current income tax expenses is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by the balance sheet date.
Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences:
-- except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
-- in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised:
-- except where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
-- in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in the income statement.
Note 3: Significant Accounting Policies (cont).
Tax consolidation
The company and all its wholly-owned Australian resident entities are part of a tax consolidated group under Australian taxation law. Creat Resources Holdings Limited is the head entity in the tax-consolidated group. Tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of the tax-consolidated group are recognised in the separate financial statements of the members of the tax-consolidated group using the 'separate taxpayer within group' approach by reference to the carrying amounts in the separate financial statements of each entity and the tax values applying under tax consolidation. Current tax liabilities and assets and deferred tax assets arising from unused tax losses and relevant tax credits of the members of the tax-consolidated group are recognised by the company (as head entity in the tax-consolidated group). Due to the existence of a tax funding arrangement between the entities in the tax-consolidated group, amounts are recognised as payable to or receivable by the company and each member of the group in relation to the tax contribution amounts paid or payable between the parent entity and the other members of the tax-consolidated group in accordance with the arrangement. Further information about the tax funding arrangement is detailed in note 10. Where the tax contribution amount recognised by each member of the tax-consolidated group for a particular period is different to the aggregate of the current tax liability or asset and any deferred tax asset arising from unused tax losses and tax credits in respect of that period, the difference is recognised as a contribution from (or distribution to) equity participants.
h) Foreign Currencies Transactions and Balances
The individual financial statements of each group entity are presented in its functional currency being the currency of the primary economic environment in which the entity operates. For the purpose of the consolidated financial statements, the results and financial position of each entity are expressed in Australian dollars, which is the functional currency of Creat Resources Holdings Limited and the presentation currency for the consolidated financial statements.
Foreign currency transactions during the year are converted to Australian currency at the rates of exchange applicable at the dates of the transactions. Amounts payable and receivable in foreign currencies at balance date are converted at the rates of exchange ruling at that date. The gains and losses from conversion of short term assets and liabilities, whether realised or unrealised are included in the profit from ordinary activities as they arise.
i) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Tax Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown inclusive of GST. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or current liability in the balance sheet. Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.
Note 3: Significant Accounting Policies (cont).
j) Cash and Cash Equivalents
Cash and Cash Equivalents includes cash on hand, deposits held at call with financial institutions (net of bank overdrafts), other short-term highly liquid investments which are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
k) Financial Instruments
Investments are recognised and derecognised on trade date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, net of transaction costs except for those financial assets classified as at fair value through profit or loss which are initially measured at fair value. Subsequent to initial recognition, investments in subsidiaries are measured at cost in the company financial statements.
Other financial assets are classified into the following specified categories: financial assets 'at fair value through profit or loss', 'held-to-maturity investments', 'available-for-sale' financial assets, and 'loans and receivables'. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period.
Income is recognised on an effective interest rate basis for debt instruments other than those financial assets 'at fair value through profit or loss'.
Financial assets at fair value through profit or loss
Financial assets are classified as financial assets at fair value through profit or loss (FVTPL) where the financial asset:
-- has been acquired principally for the purpose of selling in the near future;
-- is a part of an identified portfolio of financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or
-- is a derivative that is not designated and effective as a hedging instrument.
Loans and receivables
Receivables are recorded at fair value based on estimated amounts due less any provision for doubtful debts. Provision for doubtful debts is established when there is evidence that the Consolidated Entity will not be able to collect all amounts due according to the original term of receivables.
Available-for-sale Financial Assets
Available-for-sale (AFS) financial assets include any financial assets not included in the above categories. AFS financial assets are reflected at fair value. Unrealised gains and losses arising from changes in fair value are taken directly to equity.
Note 3: Significant Accounting Policies (cont).
Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.
For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group's past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period of 60 days, as well as observable changes in national or local economic conditions that correlate with default on receivables.
For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.
When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognised in other comprehensive income are reclassified to profit or loss in the period.
With the exception of AFS equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.
In respect of AFS equity securities, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognised in other comprehensive income.
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
Financial Liabilities
Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal payments and amortisation.
Note 3: Significant Accounting Policies (cont).
Derivative Instruments
Derivative instruments are measured at fair value. Gains and losses arising from changes in fair value are taken to the profit or loss statement unless they are designated as hedges.
Fair Value
Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm's length transactions, reference to similar instruments and option pricing models.
l) Property, Plant and Equipment
Recognition and Measurement
Land and buildings are carried at valuation. Other items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses. All property, plant and equipment are initially recorded at their cost of acquisition at the date of acquisition, being the fair value of the consideration provided plus incidental costs directly attributable to the acquisition.
The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use.
When parts of an item property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
Subsequent Costs
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that future economic benefits associated within the part will flow to the Consolidated Entity and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the Statement of Comprehensive Income during the financial period in which they are incurred.
Depreciation
Depreciation where applicable, has been charged in the accounts so as to write off each asset over the estimated useful life of the asset concerned. Leased assets are depreciated over the shorter of the lease term and their useful lives. Land is not depreciated. The straight-line method of depreciation is used. The depreciation rates used for each class of depreciable assets are:
Depreciation Rate Class of Fixed Assets Buildings 1.5-2.5% Plant and equipment, leasehold improvements 6-33% Leased plant and equipment 13-20%
Depreciation methods, useful lives and residual values are reassessed at the reporting date.
For mine properties the economic benefits from the asset are consumed in a pattern which is linked to the production level. Except as noted above, such assets are depreciated on a unit of production basis.
Note 3: Significant Accounting Policies (cont).
m) Exploration and Evaluation Expenditure
The Company holds current rights of tenure over any undiscovered resources in the areas of interest. Significant amounts have been expensed to progress this work. Exploration and evaluation expenditures in relation to each separate area of interest are recognised as an exploration and evaluation asset in the year in which they are incurred where the following conditions are satisfied:
(i) the rights to tenure of the area of interest are current; and
(ii) at least one of the following conditions is also met:
(a) the exploration and evaluation expenditures are expected to be recouped through successful development and exploration of the area of interest, or alternatively, by its sale; or
(b) exploration and evaluation activities in the area of interest have not, at the reporting date, reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing.
Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies, exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation and amortisation of assets used in exploration and evaluation activities. General and administrative costs are only included in the measurement of exploration and evaluation costs where they are related directly to operational activities in a particular area of interest.
Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. The recoverable amount of the exploration and evaluation asset (or the cash-generating unit(s) to which it has been allocated, being no larger than the relevant area of interest) is estimated to determine the extent of the impairment loss (if any). Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in previous years.
Where a decision is made to proceed with development in respect of a particular area of interest, the relevant exploration and evaluation asset is tested for impairment and the balance is then reclassified to development.
n) Mine Development Expenditure
Mine Development expenditure incurred by or on behalf of the Consolidated Entity is accumulated separately for each area of interest in which economically recoverable reserves have been identified to the satisfaction of the directors. Such expenditure comprises net direct costs and an appropriate portion of related overhead expenditure having a specific nexus with the development property.
Once a development decision has been taken, any deferred exploration and evaluation expenditure is transferred to "Development Expenditure".
All expenditure incurred prior to the commencement of commercial levels of production from each development property, is carried forward to the extent to which recoupment out of revenue to be derived from the sale of production from the relevant development property, or from the sale of that property, is reasonably assured.
Note 3: Significant Accounting Policies (cont).
Mine Development expenditure is capitalised only if development costs can be measured reliably, the mining and production process is technically and commercially feasible, future economic benefits probable and the Consolidated Entity has sufficient resources to complete development and to use or sell the asset. The expenditure capitalised includes the cost of materials, direct labour and overhead costs that are directly attributable to preparing the asset for its intended use. Other development expenditure is recognised in the profit or loss statement when incurred.
No amortisation is provided in respect of mine development properties until they are reclassified as "Mine Properties" following a decision to commence mining.
o) Mine Properties
Mine properties represent the accumulation of all development expenditure incurred by or on behalf of the Consolidated Entity in relation to areas of interest in which mining of a mineral resource has commenced. When further development expenditure is incurred in respect of a mine property after the commencement of production, such expenditure is carried forward as part of the mine property only when it is probable that the associated future economic benefits will flow to the Consolidated Entity, otherwise such expenditure is classified as part of the cost of production.
Amortisation is provided on either a unit-of-production basis so as to write off the cost in proportion to the depletion of the proven and probable mineral reserves.
Changes in factors such as estimates of proved and probable reserves that affect unit-of-production calculations are dealt with on a prospective basis.
p) Rehabilitation and Mine Closure Costs
The Consolidated Entity has certain obligations to restore and rehabilitate mine properties. A non-transferable bond is held by Mineral Resources Tasmania and is included under Other Financial Assets.
q) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cashflows estimated to settle the present obligation, its carrying amount is the present value of those cashflows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Provision for restoration and rehabilitation
A provision for restoration and rehabilitation is recognised when there is a present obligation as a result of exploration, development, production, transportation or storage activities undertaken, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the provision can be measured reliably. The estimated future obligations include the costs of restoring the affected areas. The provision for future restoration costs is the best estimate of the present value of the expenditure required to settle the restoration obligation at the reporting date, based on current legal and other requirements and technology. Future restoration costs are reviewed annually and any changes in the estimate are reflected in the present value of the restoration provision at each reporting date.
Note 3: Significant Accounting Policies (cont).
r) Impairment of Assets (excluding Goodwill)
At each reporting date, the Group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset's fair value less costs to sell and value in use, is compared to the asset's carrying value. Any excess of the asset's carrying value over its recoverable amount is expensed to the Income Statement. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at revalued amount, in which case the impairment loss is treated as a revaluation decrease (refer note 2(l)).
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an
impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at fair value, in which case the reversal of the impairment loss is treated as a revaluation increase
For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).
s) Leased Assets
Leases of fixed assets, where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership, are transferred to entities in the Consolidated Entity are classified as finance leases. Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period. Leased assets are depreciated on a straight-line basis over their estimated useful lives where it is likely that the Consolidated Entity will obtain ownership of the asset or over the term of the lease.
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred on a straight line basis over the life of the lease.
t) Trade and Other Payables
These amounts represent liabilities for goods and services provided to the Consolidated Entity prior to the end of the financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.
Note 3: Significant Accounting Policies (cont).
u) Employee Entitlements
Provision is made for employee entitlements arising from services rendered by employees to balance sheet date. Employee entitlements expected to be settled within one year together with entitlements arising from wages and salaries, annual leave and any accumulating sick leave which will be settled after one year, have been measured at amounts expected to be paid when the liability is to be settled plus related on-costs. Other employee entitlements payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those entitlements. Contributions are made by the Consolidated Entity to an employee superannuation fund and are charged as expenses when incurred.
Defined contribution plans
Contributions to defined contribution superannuation plans are expensed when employees have rendered service entitling them to the contributions.
Equity-settled compensation
The Consolidated Entity operates a share option scheme, which enables directors and employees to be granted options to acquire ordinary shares in the share capital of the Company. The Share Option Plan provides the directors with a means to attract, retain and reward directors and employees. The bonus element over the exercise price of the employee services rendered in exchange for the grant of options is recognised as an expense in the Income Statement. The total amount to be expensed over the vesting period is determined by reference to the fair value of the shares of the options granted.
v) Borrowing Costs
Borrowing costs include interest, amortisation of discounts or premiums relating to borrowings and amortisation of ancillary costs incurred in connection with arrangement of borrowings. Ancillary costs incurred in connection with the arrangement of borrowings are capitalised and amortised over the life of the borrowings. Borrowing costs are expensed as incurred unless they relate to qualifying assets. Qualifying assets are assets which take more than 12 months to get ready for their intended use or sale. In these circumstances, borrowing costs are capitalised to the cost of the assets. Where funds are borrowed specifically for the acquisition, construction or production of a qualifying asset, the amount of borrowing costs capitalised is that incurred in relation to that borrowing, net of any interest earned on those borrowings. Where funds are borrowed generally, borrowing costs are capitalised using a weighted average capitalisation rate.
w) Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.
Note 4: Critical Accounting Judgments and Key Sources of Estimation Uncertainty
In the application of the Group's accounting policies, which are described in note 3, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date.
A provision for restoration and rehabilitation has been provided for. Management has commissioned expert consulting reports on its rehabilitation and decommissioning objectives from which the current estimate of total expected rehabilitation expenses is $2,854,474 over approximately 3 years. Expenditure in 2013 is projected to be around $1.2 million. The assumptions are that Comstock will be decommissioned and rehabilitated in 2 phases and across 6 zones, in such a way that the cost of water quality management will decrease completely over that time. Environmental factors such as weather conditions and rate of decommissioning prevent more accurate modelling of these cost estimates.
Note 5: Segment Information
AASB 8 required operating segments to be identified on the basis of internal reports about components of the Company that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance.
The chief decision maker of the Company is its Board of Directors, and the system of internal reporting is such that there is only one reportable segment under AASB 8, being mineral exploration within Tasmania, Australia.
Note 6: Revenue
--------------------------------------- --------- -----
2012 2011
$ $
Revenue
Rent 11,878 -
Interest Income 142,601 181,165
Sundry Income 120,717 30,462
Total Revenue 275,196 211,627
============ ================
Note 7: Other Gains and Losses
--------------------------------------- --------- -----
2012 2011
$ $
Foreign Currency Gain/(loss) (515,085) 4,274,612
Change in fair value of derivative
liability 5,955,709 (2,994,209)
Gain/(loss) on sale of Assets 97,252 (5,872)
Gain/(loss) on Reclassification of Investment - 25,122,491
Impairment of Investment (6,285,117) (26,761,790)
(747,241) (364,768)
============ ================
Note 8: Expenses
--------------------------------------- --------- -----
2012 2011
$ $
Loss from ordinary activities has been
determined after:
Finance Costs:
Interest Expense - Related
Parties 9,504,711 2,826,649
Interest Expense - Other
Persons 105,135 3,798,055
Finance Charges on Finance
Leases - 6,747
Amortisation of Deferred
Finance Costs 83,283 83,283
Interest Expense - Provision
for Rehabilitation - 31,882
9,693,129 6,746,616
------------ ----------------
Employee Benefit Expenses:
Post employment benefits:
Defined contribution plan 69,281 132,970
Rental Expense relating to
Operating Leases 115,528 151,897
Note 8: Expenses (cont.)
------------------------------------------ ------- -----------
2012 2011
$ $
Depreciation of Non Current
Assets:
Property, Plant & Equipment 249,217 310,977
Exploration and Evaluation
costs expensed 325,448 1,374,883
Decommissioning and rehabilitation
provision 569,615 2,282,040
-------- ----------
Note 9: Remuneration of Auditors
------------------------------------------ ------- -----------
2012 2011
$ $
Auditor of the Parent Entity
Audit or review of the financial
report 77,699 130,479
Other non-audit services (as
below) 5,000 46,600
82,699 177,079
======== ==========
- Deloitte Corporate Finance Pty Limited (a
Member of Deloitte Touche Tohmatsu) prepared
an independent expert's report in connection
with advising CRHL Shareholders on proposed
transactions considered at an Extraordinary
General Meeting. - 39,750
- Deloitte Growth Solutions Pty Limited (a
Member of Deloitte Touche Tohmatsu) prepared
an income tax return and provided professional
advice on tax issues. 5,000 6,850
No other benefits were received
by the Auditor.
The auditor of Creat Resources Holdings Limited
is Deloitte Touche Tohmatsu.
Note 10: Income Taxes
----------------------------------------------------------------------------------------
2012 2011
$ $
(a) Income tax recognised in loss:
Tax (benefit)/expense/ relating to continuing operations - -
------------- -------------
(b) Numerical reconciliation of income tax expense to prima facie income tax
payable
Accounting loss before income tax (13,673,981) (20,439,089)
------------- -------------
Income tax benefit calculated at 30% (4,102,194) (6,131,727)
Future income tax benefit not brought to account 4,102,194 6,131,727
Income tax (benefit)/expense - -
============= =============
The potential future income tax benefit at year end not brought to account is: 25,729,240 21,627,046
------------- -------------
The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by
Australian corporate entities on taxable profits under Australian tax law. There has been
no change in the corporate tax rate when compared with the previous reporting period.
The Company and its wholly owned Australian resident entities have formed a tax consolidated
group with effect from 1 July 2004 and are therefore taxed as a single entity from that date.
The head entity within the tax-consolidated group is Creat Resources Holdings Limited. The
members of the tax-consolidated group are identified at note 31.
The benefit of tax losses will only be obtained if:
- the Company and its subsidiaries derive future assessable income of a nature and of an amount
sufficient to enable the benefit from the deductions for the losses to be realised;
- the Company and its subsidiaries continue to comply with the conditions for deductibility
imposed by the law; and
- no changes in tax legislation adversely affect the Company and its subsidiaries in realising
the benefit from the deduction for the losses.
(c) Tax assets and liabilities
Non-Current tax liabilities
Tax allowances relating to land and buildings revaluation adjustment taken directly to
equity. - -
------------- -------------
Reconciliation of movement
Opening balance - -
Revaluation of liability - -
------------- -------------
Closing balance - -
============= =============
Note 11: Trade and Other Receivables
--------------------------------------------------------- ---------------- ----------
2012 2011
$ $
Current
Debtors (i) (ii) 60,900 27,543
Advances to other parties or persons 369 500
61,269 28,043
================= =======
Ageing of past due but not impaired
60-90 days - -
90-120 days - -
120 + days 8,725 9,725
8,725 9,725
================= =======
Movement in allowance for doubtful
debts
Balance at the beginning of the
year - -
Impairment losses recognised on
receivables - -
Amounts written off as uncollectible - -
Balance at the end of the year - -
================= =======
(i) Impaired receivables
The consolidated entity has no impaired receivables
at 30 June 2012 (2011: nil).
(ii) Past due but not impaired
Where financial assets are past due but not impaired, the consolidated
entity has assessed that the credit quality of these amounts has
not changed and the amounts are still considered recoverable.
Note 12: Other Current Assets
-------------------------------------------------- ----------------- ----
2012 2011
$ $
Deposits and advances 109,241 112,660
GST recoverable/(payable) (5,744) 13,882
103,497 126,542
============= ============
Note 13: Other Financial Assets
-------------------------------------------------- ----------------- ----
2012 2011
$ $
Non-Current
Security Bond - at cost
Non-transferable bond (held by Mineral
Resources Tasmania) (i) 2,500,000 2,500,000
2,500,000 2,500,000
============= ============
(i) A $2,500,000 bond was paid to Mineral Resources Tasmania for the
Mining Licences in March 2007. This is expected to cover costs
for decommissioning and rehabilitating the mine site and disturbed
areas and is expected to apply if the operation ceases at any time
up to the end of the expected mine life.
Note 14: Investments in Associates
--------------------------------------- -------------------- ------------------
On 15 February 2011, Galaxy Resources Limited ("Galaxy"), an S&P/ASX300
emerging mining and chemical company focusing on lithium and tantalum
production, completed fundraising issuing 21,582,733 shares to Fengli
Group (Hong Kong) Co Limited, which diluted the company's holding
to 17.78%. Further equity raisings diluted the company's holding to
11.78% by 23 May 2011. As a result, the company no longer believed
it had the ability to significantly influence the financial and operating
policy decisions of Galaxy and equity accounting ceased effective
28 February 2011.
Summarised financial information in respect of the Company's
associate is set out below (i):
2011
$
Financial position (ii)
Total assets 276,902,815
Total liabilities 161,175,029
------------------
Net assets 115,727,786
==================
Company's share of associate's
net assets 22,911,546
==================
Financial performance (iii)
Total revenue for the period 8,114,825
==================
Total loss for the period (25,803,560)
==================
Company's share of associate's
loss (5,108,536)
==================
Company's share of associate's movement in
reserves 739,166
==================
Company's share of associate's comprehensive
income -
==================
Associate's financial information
(i) is unaudited.
(ii) 2012: N/A (2011: as at 28 February 2011).
(iii) 2012: N/A (2011: for the 8 months to 28 February 2011).
Dividends received from associate
The Company received no dividends from its associate during
the 2011 financial year.
Note 15: Other Non-Current
Assets
--------------------------------------- -------------------- ------------------
As at 30 June 2012, the Company holds 10.45% (2011: 11.78%) of the ordinary
share capital of Galaxy Resources Limited ("Galaxy"), an S&P/ASX300
emerging mining and chemical company focusing on lithium and tantalum
production. The principal assets are the Mt Cattlin Lithium Project,
near Ravensthorpe, Western Australia and a wholly owned plant in Jiangsu,
China.
2012 2011
Available-for-sale investments carried
at fair value $ $
Quoted shares (i) 22,283,595 28,568,712
============= =============
(i) An impairment expense was recognised on the company's investment
in Galaxy at 30 June 2012 as the fair value of the company's holding,
as measured by reference to Galaxy's listed share price, continued
to decline significantly during the 2012 financial year.
Note 16:
Property,
Plant and
Equipment
--------------
Land & Leasehold Plant & Leased Mine Mine Total
Buildings Improvements Equipment Assets Development Properties
(i)
Consolidated $ $ $ $ $ $ $
Entity
Gross
carrying
amount
Balance at 1
July 2010 225,475 50,667 4,260,497 519,531 146,167 9,236,409 14,438,746
Additions - - 126,664 - - - 126,664
Disposals - - (1,991) (39,743) - - (41,734)
------------- ------------- ------------- ------------- ------------- ------------ -------------
Balance at 1
July 2011 225,475 50,667 4,385,170 479,788 146,167 9,236,409 14,523,676
Additions - - - - - - -
Disposals - - - (316,884) - - (316,884)
------------- ------------- ------------- ------------- ------------- ------------ -------------
Balance at 30
June 2012 225,475 50,667 4,385,170 162,904 146,167 9,236,409 14,206,792
------------- ------------- ------------- ------------- ------------- ------------ -------------
Accumulated depreciation/ amortisation and
impairment
Balance at 1
July 2010 (15,501) (9,833) (3,384,377) (288,315) (146,167) (9,236,409) (13,080,602)
Disposals - - 1,090 31,803 - - 32,893
Depreciation
expense (4,430) (5,067) (201,409) (100,071) - - (310,977)
------------- ------------- ------------- ------------- ------------- ------------ -------------
Balance at 1
July 2011 (19,931) (14,900) (3,584,696) (356,583) (146,167) (9,236,409) (13,358,686)
Disposals - - - 268,709 - - 268,709
Depreciation
expense (4,430) (9,413) (166,952) (68,422) - - (249,217)
------------- ------------- ------------- ------------- ------------- ------------ -------------
Balance at 30
June 2012 (24,361) (24,313) (3,751,648) (156,296) (146,167) (9,236,409) (13,339,194)
------------- ------------- ------------- ------------- ------------- ------------ -------------
Net book
value
As at 30 June
2011 205,544 35,767 800,474 123,205 - - 1,164,990
============= ============= ============= ============= ============= ============ =============
As at 30 June
2012 201,114 26,354 633,522 6,608 - - 867,598
============= ============= ============= ============= ============= ============ =============
(i) Mine Properties: A $9,236,409 asset was recognised at 30 June 2008. Following cessation
of mining operations and significant uncertainty as to when commercial mining will recommence,
an impairment loss of the full amount has been recognised. The directors have assessed that
this now reflects the recoverable amount of the asset. The asset may have value in the future
if further resource definition and exploration work supports the recommencement of commercial
mining operations.
Note 17: Trade and Other Payables
--------------------------------------
2012 2011
$ $
Current
Trade payables (i) 343,062 358,318
Sundry accruals 53,795 77,140
396,857 435,458
===================================== =====================================
(i) The average credit period on purchases is 30 days. No interest is charged on
the trade payables
for the first 60 days from the date of the invoice. The Company has
financial risk management
policies in place to ensure that all payables are paid within the credit
timeframe.
Note 18: Financial Liabilities
--------------------------------------
2012 2011
$ $
Current
Unsecured convertible notes (ii) 35,460,977 27,625,363
Loans from related party: secured and
unsecured (i) 8,133,803 4,662,843
Withholding tax payable on
convertible notes 11,015 244,811
43,605,795 32,533,017
===================================== =====================================
Non-Current
Unsecured convertible notes (ii) - 4,225,628
- 4,225,628
===================================== =====================================
Convertible Notes
Proceeds from issue of convertible
notes 28,405,978 28,405,978
Transaction costs (401,302) (401,302)
Net proceeds 28,004,676 28,004,676
Amortisation of deferred finance
costs 348,663 265,380
Accreted interest 17,219,857 8,133,901
Change in option value (7,959,426) (2,003,717)
FX (gain)/loss (2,152,793) (2,549,249)
-------------------------------------
Carrying amount of liability at 30
June 35,460,977 31,850,991
===================================== =====================================
Note 18: Financial Liabilities
(cont.)
-------------------------------------- ----------------- --- -----------
2012 2011
$ $
Components of the liability are:
Loan held at amortised cost 35,513,617 26,053,018
Derivative held at fair value through profit and loss - 5,933,895
Deferred finance costs (52,640) (135,922)
Carrying amount of liability at 30 June 35,460,977 31,850,991
============= =============
Summary of borrowing arrangements
(i) Amount repayable to related party of the Company. Loans have a weighted average interest of
8.19% p.a. charged on the outstanding loan balance (2011: 6.46%.). Repayment of these loans
has been deferred through the continuing financial support of Creat Group Company Limited
("Creat Group").
(ii) In December 2007, the Company entered into an agreement with Creat Group through subsidiaries
of Creat Group, to raise GBP4,275,000 (A$9,966,308) by way of a convertible loan. The
Convertible
Loan is in the form of two convertible loan notes which have a term of five years and carry
a coupon of 6% per annum and a conversion price of 15p. Interest will be compounded if the
Company opts not to meet the interest payments on the relevant dates, such interest to be
payable at maturity. The first Note has a maturity date of 15 February 2013 and the second
Note has a maturity date of 15 April 2013. Funds from the first Note were received in full.
Funds from the second Note have been received in part, with GBPGBP529,134 (A$1,085,848)
outstanding.
Following a request from Creat Group, the Board agreed to the early repayment of
GBPGBP1,250,000
principal plus accrued interest (A$2,918,214) provided under the first Note convertible loan
agreement in January 2009.
In July 2011, Time Wise Limited exercised a put option relating to their convertible note.
Under that put option, Creat Group acquired a further 222,222,222 unsecured convertible loan
notes issued by the company.
In April 2010, the Company issued 100,000,000 CLNs with a face value of 4.5p to Create Group
(HK) Ltd to raise GBPGBP4,500,000 (A$7,307,580). Each CLN is convertible into one share in
the Company, has a term of one year and carry a coupon rate of 10% per annum and the interest
will be payable in cash on the maturity date, or upon repayment in full, if earlier. As
described
in Note 1, Creat Group has undertaken to financially support the Company and indicated they
will not call on repayment of the convertible note in the next 12 months.
The value of the conversion options has been recognised at fair value through profit and loss.
Refer to note 18 which shows the balance of the above liability that relates to the amortised
cost value of the loans and the fair value through profit and loss value of the options. The
fair value of the convertible options has been determined using the following inputs in to
the Black-Scholes Binomial Option Pricing Model:
- Contractual expiry date as described above;
- Contractual strike price as described above;
- Risk free rate of UK Government bonds adjusted for the risk profile of the company as
determined
based on similar mining development companies; and
- Current volatility calculated based on the Company's most recent share price for a period
equal to the remaining term of the option.
Consolidated statement of changes in equity for the year ended 30 June 2012
Note 19: Provisions
------------------------------------ -------------- -----------------
2012 2011
$ $
Current
Employee benefits (i) 35,042 134,579
Mine rehabilitation (ii) 1,244,338 1,316,375
------------------ --------------
1,279,380 1,450,954
================== ==============
Non-Current
Mine rehabilitation (ii) 1,610,136 1,316,375
1,610,136 1,316,375
================== ==============
Total 2,889,516 2,767,329
================== ==============
(i) The current provision for employee benefits relates to accrued annual
leave. There are no vested long service leave entitlements accrued
but not taken.
(ii) In accordance with State Government legislative requirements, a
provision for rehabilitation of the Comstock mine site has been
recognised. The basis for accounting is set out in Note 3(q) of
the significant accounting policies. Management's estimate of the
total expected rehabilitation expenses is $2,854,474. Estimated
time until rehabilitation is 3 years.
Mine Rehabilitation Employee Total
Benefits
Movement in provisions $ $ $
Balance at 1 July 2011 2,632,750 134,579 2,767,329
Additional provisions recognised 569,615 24,541 594,156
Unwinding of the discount - - -
Payments made (347,891) (124,078) (471,969)
Balance as at 30 June 2012 2,854,474 35,042 2,889,516
================= ================ ==============
Note 20: Contributed Equity
----------------------------------------- --- --------
2012 2011
$ $
(a) Issued and Paid-up Capital
667,276,674 Ordinary Shares Fully
Paid
(2011: 667,276,674) 69,408,416 69,408,416
========================= ====================
Changes to the then Corporations Law abolished the authorised capital
and par value concept in relation to share capital from 1 July 1998.
Therefore, the company does not have a limited amount of authorised
capital and issued shares do not have a par value.
(b) Terms and Conditions of Contributed Equity
Ordinary shares participate in dividends and the proceeds on winding up of the Parent Entity
in proportion to the number of shares held.
At shareholders meeting each Ordinary share is entitled to 1 vote when a poll is called, otherwise
each shareholder has 1 vote on a show of hands.
Note 20: Contributed Equity (cont.)
------------------------------------------------ ---------- ---- ---------
(c) Movements in Fully Paid Ordinary Share Capital
2012 2012 2011 2011
Number of Ordinary $ Number of $
Shares Ordinary
Shares
Balance at beginning of financial
year 667,276,674 69,408,416 667,276,674 69,408,416
Balance at end of financial year 667,276,674 69,408,416 667,276,674 69,408,416
==================== =============== ============ =================
Note 21: Reserves
--------------------------------------------------------------------- ---
2012 2011
$ $
Asset revaluation reserve 112,000 112,000
Share-based payments reserve 232,531 232,531
344,531 344,531
======== ==============
Movements in reserves
(i) Asset revaluation reserve
Balance at 1 July 112,000 112,000
Balance at 30 June 112,000 112,000
======== ==============
(ii) Share-based payments reserve
Balance at 1 July 232,531 232,531
Balance at 30 June 232,531 232,531
======== ==============
(iii) Share of Associate's Reserves
Balance at 1 July - 462,415
Share of Associate's Reserves movements charged to Income Statement - 739,166
-------- --------------
- 1,201,581
Derecognition of investment in associate (note 14) - (1,201,581)
-------- --------------
Balance at 30 June - -
======== ==============
Nature and purpose of reserves
(i) Asset revaluation reserve
The Asset Revaluation Reserve records revaluations of non-current assets. Under certain
circumstances
dividends can be declared from the Reserve.
(ii) Share-based payments reserve
The share-based payments reserve is used to recognise the fair value of options issued but
not exercised. Further information about Share Based Payments is provided in Note 29.
(iii) Share of Associate's Reserves
The share of associate's reserves records the Company's share of movements in the associate's
reserves.
Note 22: Commitments for Expenditure
--------------------------------------- ------- -------
(a) Exploration expenditure
commitments
In order to maintain current rights of tenure to exploration tenements, the Company is required to perform minimum exploration work to meet the minimum expenditure requirements specified by Mineral Resources Tasmania (MRT). These obligations are subject to renegotiation when application for lease renewal is made and at other times. These obligations are not provided for in the financial report and are payable within 1 year. All of the below obligations are subject to renegotiation upon expiry of the mineral tenements.
EL20/2002 and EL30/2002 have been granted an extension until 31 January 2013. The Company has committed to fulfil certain conditions in connection with this renewal including committing an aggregate of approximately $400,000 to an exploration program including drilling on the tenements. EL18/2003 expires 10 February 2013 and has an expenditure commitment of approximately $60,000. All are held by subsidiary company ZZ Exploration Pty Ltd. All previous commitments to spend under these licences were met or exceeded by ZZ Exploration Pty Ltd. EL21/2004 expires 26 June 2013 and has an expenditure commitment of approximately $90,000.
RL1/2008, RL3/2009 and RL4/2009 have been granted an extension until February 2013 and have an aggregate commitment of approximately $50,000.
2012 2011
$ $
Outstanding exploration expenditure commitment at the end of the financial year:
* January 2013 and June 2013 606,919 2,029,543
(b) Lease commitments
Finance lease liabilities and non-cancellable operating lease commitments
are disclosed in note 23.
(c) Capital expenditure commitments
There are no capital expenditure commitments
as at 30 June 2012 (2011: nil).
Note 23: Leasing Commitments
-------------------------------------------------------------------------------
2012 2011
$ $
(a) Operating lease commitments
Office and car parking rental
- Not later than 1 year 39,267 94,240
- Later than 1 year and not Later than 5 years - 39,267
-----------
Total minimum lease payments 39,267 133,507
=========== ===========
Minimum future lease payments include the aggregate of all lease payments and any guaranteed
(i) residual.
Note 24: Notes to the Consolidated Statement
of Cash Flows
---------------------------------------------------------------
For the purposes of the statement of cash flows, cash and cash
equivalents include cash on hand and in banks and investments
in money market instruments, net of outstanding bank overdrafts.
Cash and cash equivalents at the end of the reporting period as
shown in the statement of cash flows can be reconciled to the
related items in the statement of financial position as follows:
2012 2011
$ $
Cash and bank balances 92,797 253,714
Short term bank deposits - 10,000
92,797 263,714
======== =================
Reconciliation of cash flows from operations with operating result
Operating Loss for the
Period (13,673,981) (20,439,089)
Income Tax (Benefit)/Expense
Recognised in Loss -
Non-Cash Flows in Loss
After Tax
Share of Loss of Associate - 5,108,536
Foreign Exchange on Convertible Notes
& Loans 515,085 (4,274,612)
Depreciation 249,217 310,977
Interest Expense 9,606,174 6,700,404
Amortisation of Deferred
Finance Costs 83,283 83,283
(Gain)/Loss on Disposal
of Assets (97,252) 5,872
Net Impairment Loss on
Investment 6,285,117 1,639,301
Change in Fair Value of Convertible
Notes (5,955,709) 2,994,209
Interest Received Investing
Activity (142,601) (181,165)
Income Tax Benefit Recognised
in Loss - -
(Increase)/Decrease in
Assets
Receivables (33,226) 136,056
Other Current Assets 23,045 40,124
Increase/(Decrease) in
Liabilities
Payables (38,601) (555,735)
Provisions for Employees (99,537) 51,749
Financial Liabilities - (18,884)
Other Liabilities (22,650) 2,200,381
Net Cash used in Operating
Activities (3,301,636) (6,198,593)
============= =============
Note 25: Earnings Per Share
------------------------------------- --------------- ---- ------------
Basic and diluted earnings per share amounts are calculated by dividing the loss attributable
to the ordinary equity holders of the parent by the weighted average number of ordinary shares
outstanding during the financial year.
The following reflects the information used in the basic and diluted earnings per share computations:
2012 2011
(a) Basic earnings per share
(Loss) attributable to the ordinary equity holders of the Company (cents per
share) (2.05) (3.06)
(b) Diluted earnings per share
(Loss) attributable to the ordinary equity holders of the Company (cents per
share) (2.05) (3.06)
(c) Earnings used in calculating earnings per share
Basic and Diluted earnings per
share
(Loss) attributable to the ordinary equity holders of the Company
($) (13,673,981) (20,439,089)
(d) Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator
in calculating basic and
diluted earnings per share 667,276,674 667,276,674
Instruments that could potentially dilute basic earnings per share in the future but were
not included in the calculation of diluted earnings per share because they were anti-dilutive
for the periods presented.
Convertible notes - refer Note 18; Share options - refer Note 29.
Note 26: Key Management Personnel
Compensation
(a) Details of key management
personnel
The directors and other members of key management personnel of
the Company during and since the end of the financial year were:
Yuewen Zheng Executive Chairman, Managing Director
& Chief Executive Officer (resigned 10
July 2012)
Derek An Loy Leung Executive Chairman, (appointed 10 July
2012)
Tad Ballantyne Deputy Chairman & Non-Executive
Director
Xiaojian Non-Executive Director,
Ren (resigned 10 July
2012)
Stephen Powell Non-Executive Director,
(resigned 26 June
2012)
Philip Simpson Non-Executive Director
Henry Lau Non-Executive Director, (resigned
5 December 2011)
Morris Hansen Non-Executive Director, (appointed
26 June 2012)
Rex Chow Chief Operations Officer
Mei Chen Chief Financial Officer
Executive Director (appointed
10 July 2012)
Jianping He Chief Geologist, (resigned
26 April 2012)
Huan Liu General Manager, (resigned
15 September 2011)
Michael McIntyre Acting Chief Financial Officer
& Company Secretary, (resigned
1 July 2011)
Yasmine Healy Company Secretary, (resigned
19 August 2011)
Allan Branch General Manager and Company
Secretary (appointed 22 August
2011 and resigned 4 April
2012)
Morris Hansen General Manager and Company
Secretary (appointed 15 April
2012)
(b) Key management personnel compensation
The aggregate compensation made to key management personnel of the Group is set out below:
2012 2011
$ $
Short-term employee benefits 640,406 1,268,047
Post-employment benefits 7,506 26,193
Other long-term benefits - -
Termination benefits - -
Share-based payment - -
647,912 1,294,240
Note 26: Key Management Personnel Compensation
(cont.)
The compensation of each member of the key management personnel of the
Company for the current year is set out below:
2012 Short-term benefits Post Share Based Termination Total
Employment Payments Benefit
Salary Non-monetary Bonus Other Super- Other Options &
& Fees benefits annuation rights
$ $ $ $ $ $ $ $
Directors
Yuewen Zheng
(resigned 10 July 2012) 125,000 - - - - - - - 125,000
Xiaojin Ren
(resigned 10 July 2012) 30,698 - - - - - - - 30,698
Tad Ballantyne 30,698 - - - - - - - 30,698
Stephen Powell
(resigned 26 June 2012) 30,363 - - - 2,733 - - - 33,096
Philip Simpson 30,698 - - - 2,763 - - - 33,461
Henry Lau
(resigned 5 December
2011) 13,252 - - - - - - - 13,252
Executive Management
Morris Hansen 22,332 - - - 2,010 - - - 24,342
Allan Branch
(resigned 4 April 2012) 115,500 - - - - - - - 115,500
Mei Chen 45,000 - - - - - - - 45,000
Rex Chow 100,000 - - - - - - - 100,000
Huan Liu
(resigned 15 September
2011) 4,979 15,797 - - - - - - 20,776
Jianping He
(resigned 26 April 2012) 76,089 - - - - - - - 87,122
Total 624,609 15,797 - - 7,506 - - - 647,912
Note 26: Key Management Personnel Compensation
(cont.)
The compensation of each member of the key management personnel of the Company for the
current year is set out below:
2011 Short-term benefits Post Share Termination Total
Employment Based Benefit
Payments
Salary & Non-monetary Bonus Other Super- Other Options
Fees benefits annuation & rights
$ $ $ $ $ $ $ $
Directors
Yuewen Zheng (i) 250,000 - - - - - - - 250,000
Xiaojin Ren (ii) 32,904 - - - - - - - 32,904
Tad Ballantyne (ii) 32,757 - - - - - - - 32,757
Stephen Powell (ii) 32,904 - - - 2,961 - - - 35,865
Philip Simpson (ii) 32,904 - - - 2,961 - - - 35,865
Henry Lau (ii) 32,304 - - - - - - - 32,304
Executive Management (v)
Yasmine Healy 94,247 - - - 8,515 - - - 102,762
Mei Chen (iii) 18,750 - - - - - - - 18,750
Rex Chow 200,000 - - - - - - - 200,000
Michael McIntyre 130,625 5,433 - - 11,756 - - - 147,814
Huan Liu (iv) 182,596 39,240 - - - - - - 221,836
Jianping He (iv) 182,596 787 - - - - - - 183,383
Total 1,222,587 45,460 - - 26,193 - - - 1,294,240
(i) includes director fee accrual of $20,833 as at 30 June 2011.
(ii) includes director fee accrual of $2,644 as at 30 June 2011.
(iii) contractor arrangement through Creat Group Ltd, Mei Chen's services as CFO accrued
as
at 30 June 2011.
(iv) includes wages accrual of $7,788 as at 30 June 2011.
(v) due to size and nature of operations, the Group only has these people to
disclose.
Note 27: Related Party Transactions
The parent entity within the Consolidated Entity is Creat Resources
Holdings Limited (ABN 43 089 093 943). The ultimate parent and
controlling entity is Creat Group Company Limited, a company established
under the laws of the People's Republic of China.
Significant influence is exercised directly through Creat Group
Company Limited ("Creat Group" or "Creat Group (HK) Ltd") with
two senior executive directors on the Creat Resources Holdings
Limited Board and indirectly through its nominees Marvel Link Group
Limited and Kingwealth Finance Limited.
Creat Group Co. Limited and its controlled bodies corporate ("Subsidiaries"
or "Nominees") are:
Name Address
B21 Floor, Lead International,
Jia No 2 Wangjing Zhong
Huan South Road Chaoyang
Creat Group Co., Limited District Beijing PRC
Marvel Link Group Limited Rm 2805, 28/F, The Center,
99 Queen's Road, Central,
Hong Kong
Kingwealth Finance Limited Rm 2805, 28/F, The Center,
99 Queen's Road, Central,
Hong Kong
Create Group (HK) Limited Rm 2805, 28/F, The Center,
99 Queen's Road, Central,
Hong Kong
Balances and transactions between the Company and its subsidiaries,
which are related parties of the Company, have been eliminated
on consolidation and are not disclosed in this note. Details of
transactions between the Company and other related parties are
disclosed below.
Controlled entities made payments and received funds on behalf
of Creat Resources Holdings Limited by way of inter-company loan
accounts.
Transactions between related parties are on normal commercial terms
and conditions no more favourable than those available to other
parties unless otherwise stated.
(a) Loans with Related parties
2012 2011
$ $
The following related parties have made loans
to the Consolidated Entity. These loans are
in the form of fixed rate secured and unsecured
convertible notes with interest rates ranging
from 0% to 12%.
Create Group (HK) Ltd (and through its nominees
Marvel Link Group Limited and Kingwealth
Finance Limited) 35,460,977 13,567,125
Creat Group Bridge Loan (Unsecured GBP 500K,
10%, original term 1/3/10 extended approx
30 mths) 977,934 876,456
Creat Group Bridge Loan January 2011 (unsecured
GBP 1.2 million, 0%, original term 1/5/11
extended over 18 mths) 1,837,954 1,754,698
Creat Group Bridge Loan April & May 2011
(unsecured A$ 2 million, 10%, term one year) 2,231,680 2,031,690
Creat Group Bridge Loan July & August 2011
(unsecured A$ 2 million, 12%, term one year) 2,207,410 -
Creat Group Bridge Loan December 2011, February,
March, May & June 2012 (unsecured A$ 0.85
million, 10%, term one year) 878,824 -
43,594,779 18,229,969
On 31 October 2012, the Company received an undertaking from Creat Group in that Creat Group will not call on their loans when they become due for repayment.
Note 27: Related Party Transactions
(cont.)
(b) Key management personnel
equity holdings
Number of Number of
shares shares
2012 2011
Directors
Dr Yuewen Zheng (1) 689,161,326 469,939,106
Mr Xiaojian Ren (1) 689,161,326 469,939,106
Mr Derek An Loy Leung - -
Mr Tad Ballantyne - -
Mr Stephen Powell (2) 160,000 360,000
Mr Morris Hansen - -
Ms Mei Chen - -
Mr Phillip Simpson (3) 6,000,000 10,000,000
Mr Henry Lau - 222,222,222
1,384,482,652 1,172,460,434
(1) Beneficial interest in shares held through Creat Group (353,300,000
shares) and beneficial interest in convertible notes held directly
or indirectly through Marvel Link Group Limited and Kingwealth Limited
(nominees of Creat Group) (335,861,326 shares).
(2) Interest at date of resignation from the Board of Directors.
(3) Beneficial interest in shares held directly or indirectly through
Terralinna Pty Ltd and Kingdom Securities Pty Ltd (6,000,000 shares).
(c) Transactions with related
parties
There were no other transactions with related parties.
Note 28: Financial Instruments
Capital risk management
The Group manages its capital to ensure that entities in the Group will
be able to continue as a going concern while maximising the returns
to stakeholders through the optimisation of the debt and equity balance.
The Group's overall strategy remained unchanged from 2011.
The capital structure of the Group consists of debt, which includes
convertible notes disclosed in note 18, cash and cash equivalents and
equity attributable to equity holders of the parent, comprising issued
capital, reserves and accumulated losses as disclosed in notes 20 and
21 , or the Statement of Changes in Equity.
Operating cash flows are used to maintain and expand the Group's mining
activities, as well as to make the routine outflows of repayments of
maturing debt.
Note 28: Financial Instruments
(cont.)
Gearing ratio
The Board of Directors review the capital
structure on an ongoing basis.
2012 2011
$ $
Debt (i) 43,594,780 36,758,645
Cash and cash equivalents (92,797) (263,714)
Net debt 43,501,983 36,494,931
Equity (ii) (20,733,412) (7,059,431)
Net debt to equity ratio (210%) (517%)
(i) Debt is defined as financial liabilities (loans and
convertible notes) per Note 18.
(ii) Equity includes all capital
and reserves.
Categories of financial instruments 2012 2011
Financial Assets $ $
Cash and Cash Equivalents 92,797 263,714
Loans and Receivables 61,269 28,043
Security Bond 2,500,000 2,500,000
AFS Investment 22,283,595 28,568,712
24,937,661 31,360,469
Financial Liabilities
Amortised cost 35,513,617 26,053,018
Derivative at Fair value
through profit and loss - 5,933,895
Less Deferred Finance Costs (52,640) (135,922)
35,460,977 31,850,991
Financial risk management
objectives
The main risks the Group is exposed to through its financial instruments
are liquidity risk, credit risk and foreign currency risk.
Credit risk
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to the
Group. The maximum exposure to credit risk, excluding the value
of any collateral or other security, at balance date to recognised
financial assets, is the carrying amount, net of any provisions
for impairment of those assets, as disclosed in the Consolidated
Statement of Financial Position and notes to the financial statements.
Note 28: Financial Instruments
(cont.)
---------------
Foreign Currency Risk
The Group undertakes transactions denominated in foreign currencies.
The Group manages exposures to fluctuations in foreign currencies
as they arise. Current exposure is reviewed regularly.
The carrying amount of the Group's foreign currency denominated
monetary assets and monetary liabilities at the reporting date
is as follows:
2012 2011 2012 2011
Liabilities Liabilities Assets Assets
$ $ $ $
GBP 38,276,865 34,482,145 - -
Foreign Currency Sensitivity
Analysis
The Group is mainly exposed to GBP as the convertible notes are
denominated in GBP. The following table details the Group's sensitivity
to a 10% increase and decrease in the Australian Dollar against
the GBP impacting the profit of the company. The sensitivity analysis
includes only outstanding foreign currency denominated monetary
items and adjusts their translation at the period end for a 10%
change in foreign currency rates.
2012 2011 2012 2011
Liabilities Liabilities Assets Assets
$ $ $ $
GBP 3,479,715 2,280,477 - -
Liquidity Risk
Ultimate responsibility for liquidity risk management rests with
the board of directors, which has established an appropriate liquidity
risk management framework for the management of the Group's short-,
medium- and long-term funding and liquidity management requirements.
The Group manages exposures to fluctuations in foreign currencies
as they arise. Current exposure is reviewed regularly. The Group
manages liquidity risk by monitoring forecast cash flows and ensuring
that adequate unutilised borrowing facilities are maintained. The
following table details the company's and the Group's remaining
contractual maturity for its non-derivative financial liabilities.
The tables have been drawn up based on the undiscounted cash flows
of financial liabilities based on the earliest date on which the
Group can be required to pay. The table includes both interest
and principal cash flows.
Weighted
average
effective Less 3 months
interest than 1 - to 1 1 - 5 5+
rate 1 month 3 months year years years
% $ $ $ $ $
2012
Loan from related party:
unsecured 0% 1,837,954 - - - -
Loan from related party:
unsecured 11% 4,324,641 1,122,384 - - -
Loan from related
party: secured 9% - - 914,099
Unsecured convertible
notes 6% - - 4,661,524 - -
Unsecured convertible
notes 10% 30,978,742 - - - -
37,141,337 1,122,384 5,575,623 - -
Note 28: Financial Instruments
(cont.)
Weighted
average
effective
interest Less than 1 - 3 3 months 1 - 5
rate 1 month months to 1 year years 5+ years
% $ $ $ $ $
2011
Loan from related party:
unsecured 0% 1,754,698 - - - -
Loan from related party:
unsecured 10% 3,198,960 - - - -
Unsecured convertible
notes 6% - - - 4,647,427 -
Unsecured convertible
notes 10% - - 30,387,899 - -
4,953,658 - 30,387,899 4,647,427 -
Fair Value of Financial Instruments
Valuation techniques and assumptions applied for the purposes of measuring
fair value
The fair values of financial assets and financial liabilities are determined
as follows.
The fair values of financial assets and financial liabilities with standard
terms and conditions and traded on active liquid markets are determined
with reference to quoted market prices (includes listed redeemable notes,
bills of exchange, debentures and perpetual notes).
The fair values of other financial assets and financial liabilities (excluding
derivative instruments) are determined in accordance with generally accepted
pricing models based on discounted cash flow analysis using prices from
observable current market transactions and dealer quotes for similar instruments.
The fair values of derivative instruments are calculated using quoted prices.
Where such prices are not available, a discounted cash flow analysis is
performed using option pricing models for optional derivatives.
Fair value measurements recognised in the statement of
financial position
The following table provides an analysis of financial instruments that are
measured subsequent to initial recognition at fair value, grouped into Levels
1 to 3 based on the degree to which the fair value is observable.
Level 1 fair value measurements are those derived from quoted prices (unadjusted)
in active markets for identical assets or liabilities.
Level 2 fair value measurements are those derived from inputs other than
quoted prices included within Level 1 that are observable for the asset
or liability, either directly (i.e. as prices) or indirectly (i.e. derived
from prices).
Level 3 fair value measurements are those derived from valuation techniques
that include inputs for the asset or liability that are not based on observable
market data (unobservable inputs).
Level 1 Level Level Total
2 3
2012
$ $ $ $
Financial assets at fair value
Available for sale financial assets 22,283,595 - - -
2011
Financial assets at fair value
Available for sale financial assets 28,568,712 - - -
Note 28: Financial Instruments
(cont.)
Level 1 Level 2 Level Total
3
2012
$ $ $ $
Financial liabilities at FVTPL
Financial liabilities designated
at fair value through profit
or loss - - - -
2011
Financial liabilities at FVTPL
Financial liabilities designated
at fair value through profit
or loss - (5,933,895) - (5,933,895)
Note 29: Share Based Payments
--------------------------------
The Company established a Share Option Plan in 2006 which enables
directors and employees of the Company to be granted options to
acquire ordinary shares in the share capital of the Company. The
Share Option Plan provides the directors with a means to attract,
retain and reward directors and employees. The key provisions of
the Share Option Plan are as follows:
Options are granted under the Share Option Plan for no consideration,
and are granted at the discretion of the Board. The options cannot
be transferred and can be exercised at any time between the date
the option is granted and the expiry date, subject to the imposition
of any specified vesting date which is at the discretion of the
Board. Each option is convertible into one ordinary share.
During the financial year there were no options granted
under the Company's Share Option Plan.
The number and weighted average exercise prices
of share options is as follows:
2012 2012 2011 2011
Number weighted Number weighted
of options average of options average
exercise exercise
price price
$ $
Options outstanding at 1
July 300,000 0.3243 300,000 0.3243
Expired during the year 300,000 0.3175 - -
Options outstanding at 30
June - - 300,000 0.3243
Options exercisable at 30
June - - 300,000 0.3243
There are no options outstanding at 30 June 2012.
There were no share options granted during the year, therefore
no fair value of each share option granted during the period (2011:
nil).
Note 30: Parent Entity Disclosures
-----------------------
Summarised financial information in respect of the Parent entity is set out below:
(a) Financial Position
2012 2011
$ $
Assets
Current assets 465,517 485,968
Non-current assets 22,852,150 29,166,570
Total assets 23,317,667 29,652,538
Liabilities
Current Liabilities (i) 44,538,864 4,645,577
Non-current Liabilities (i) - 33,191,785
Total Liabilities 44,538,864 37,837,362
Equity
Issued capital 69,408,416 69,408,416
Accumulated losses (i) (90,974,144) (77,937,771)
Reserves
Asset Revaluation - Buildings 112,000 112,000
Reserves - Share Options 232,531 232,531
Total Deficiency (21,221,197) (8,184,824)
(b) Financial performance
Year Ended Year Ended
30 June 2012 30 June 2011
$ $
Loss for the year (i) (13,036,373) (18,083,560)
Other comprehensive income - -
Total comprehensive income (i) (13,036,373) (18,083,560)
(i) The above comparatives have been altered due to an error in the prior year's parent entity
disclosure. The provision for rehabilitation was incorrectly disclosed in the parent entity
last year. This has resulted in the loss for the prior year being reduced by $2,282,038, and
liabilities reduced by the same amount.
(c) Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
No formal guarantees are in place.
(d) Commitments for the acquisition of property, plant and equipment by the parent entity
There are no capital expenditure commitments as at 30 June 2012 (also refer note 22).
End of account excerpts.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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