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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Regency Mines Plc | LSE:RGM | London | Ordinary Share | GB00BKM69866 | ORD 0.01P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.90 | 0.85 | 0.95 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMRGM
RNS Number : 6074L
Regency Mines PLC
27 December 2018
Regency Mines Plc
("Regency Mines" or the "Company")
Final Audited Results for the Year Ended 30 June 2018
27 December 2018
A copy of the Company's annual report and financial statements for 2018 - extracts from which are set out below - will be made available on the Company's website www.regency-mines.com shortly and at the Annual General Meeting to be held on 25 January 2019.
Chairman's Review
Dear Shareholders,
Overview
Everyone invested in the mineral exploration and development sector of the market knows what the broad picture has been. After a multi-year decline from 2010 in commodity prices, which reached its nadir at the very beginning of 2016, and a corresponding decline in the liquidity of, and level of interest in, listed companies in the sector, a sharp recovery took place in the Spring of 2016.
Expanding economies worldwide consumed more natural resources, and in retrospect the 2015-16 prices, although an unsustainable aberration, had created expectations so low that the first stages of recovery saw significant price increases in oil and bulk cargo minerals, with base metals generally following behind.
Some easy money was made last year, and the setback in 2018 to date has been the first significant pullback in prices, affecting both commodities and share prices, and so in part a normal and healthy reaction. It has been amplified however by signs of a global slowdown, and by the strains on global liquidity as a result of the US reversal of quantitative easing, that has impacted economies outside the US through the dollar exchange rate.
There are two main views of future developments. One would hold that China will slow, other economies will decline under the pressure of dollar debts, the Euro area will face a crisis of slow growth exacerbating banking instability, the US economy is reaching full capacity and higher interest rates are inevitable, and the global economic expansion will end with either a short sharp shock or a decline into stagnation. The other would hold that Asia will continue to see managed growth, that intra-Asian trade will increase, and that the US economy will continue to grow adequately under the influence of tax cuts and renewed infrastructure investment.
We must prudently be prepared for either scenario. Any commodity-based business is to some extent a creature of the cycle, as stocking and destocking affect demand faster than production can adjust. What we can hope to do in order to manage our long-term strategies through periods of short-term volatility is, first, to create cash flow and revenue from cheap production, secondly, to build into our production some protections against price and demand declines, and thirdly to position ourselves in minerals and sectors seeing secular growth throughout the cycle.
Our high-quality metallurgical coal production at MET meets many of these requirements. We expect it to provide us with cash flows from cheap production of a relatively scarce commodity, that serves primarily the robust U.S. market and its recovering steel industry, where demand is underpinned by a fixed price supply contract for significant quantities of coal to a specialist biomass power station.
Our nickel-cobalt joint venture at Mambare in Papua New Guinea meets one, in that we are deliberately positioned in nickel because of the expected secular trend of demand growth for stainless steel, and in that the use of both metals in electric car and other battery technologies is growing and significant. We are currently studying the options for some DSO (direct shipping ore) production in order to generate near-term cash flows from this project.
The headline statement of this section of the Annual Report last year read "Our base metal interests can now be seen to be entirely composed of the cathode materials that are key for the new green car and energy storage revolution that is under way." A year later, that remains equally true.
Indeed, we have given form to the division set up last year to study and develop our interests in the technologies and services that will serve the electric car and battery sectors with the incorporation of ESTEQ Limited, which has invested in Whitecar Ltd, the leading electric vehicle rental company in the UK, and which has helped set up Allied Energy Services to provide power generation, grid back up and electricity storage from several identified sites.
With our investment in Curzon Energy plc, where we now have a seat on the board, we target the generation of cash flows from gas in the US, as this cleaner energy source progressively gains market share from coal in the US power generation mix. As this occurs, and related LNG distribution infrastructure expands to support rising production levels, we believe the US will continue to export LNG on an ever-wider scale to Asian and other overseas markets.
Leaving aside the possibility of capital transactions, the focus for cash flow from operations must be primarily metallurgical coal for the present, as this will be relatively resistant to any downturn. DSO nickel production depends on strong nickel prices, and so will be more likely short term in a benign environment in which economies grow and increased demand supports a rising nickel price.
Review of the year
The earlier part of the year to 30 June 2018 saw Regency make profitable disposals of its interest in Horse Hill Developments, increase its stake in Curzon Energy plc at that company's IPO, establish its new energy metal technologies arm ESTEQ Limited make a maiden investment there in Whitecar Ltd.
On 30 January 2018, the Company's entire outstanding loan facility of USD835,115 was repaid, following a fundraising at 0.55p a share to raise GBP1,055,000, of which Directors contributed GBP100,000.
The purpose of the financing was stated to be to repay the loan, to expand the Company's coal footprint in the US, and to recommence activity at Mambare.
The announcement on 5 December 2017 of a MOU with Legacy Hill Resources Ltd ("LHR"), was then followed on 27 February by the announcement of a joint venture, and on 6 June by the incorporation and funding of a joint venture company, Mining Equity Trust, LLC ("MET"), to which Regency contributed USD2,000,000, taking out for the purpose a new loan of USD1,600,000. On 2 August, after the financial year end, MET took over the metallurgical coal operations and assets of Omega Holdings, LLC and other companies in Virginia, U.S.A.
At the Mambare nickel-cobalt project, Regency put forward a revised work plan incorporating initial ground penetrating radar work in order to provide a conceptual expansion of the deposit envelope and discussed with the contractor the cost and timings of that work. The settlement of certain partner issues was another post year end development, finally occurring in November 2018, and so allowing detailed preparation for work on site to begin.
In both cases, it was not until after the year end that real progress could be made and it was as disappointing to us as to other investors who sought a more aggressive timeline.
However, both the coal and the nickel-cobalt are strategic long-term projects central to our future, so thorough due diligence and proper structuring with appropriate partners were considered to be essential to achieve the best results.
We drilled out a major maiden Resource at Mambare at the beginning of the decade, and have made the painful effort to retain this asset through a bear market in nickel that began two years earlier than in other commodities and has scarcely ended now. We did this because of our confidence that when the nickel and cobalt market recovered, this would become a world class asset. We are not therefore now going to compromise our interests by taking any ill-thought-out actions.
In coal, we identified the potential for recovery in the metallurgical sector of the market near the bottom of the coal bear market, but finding an entry point that was going to work and be within our means has been difficult. Our initial partners proved a poor choice, but when we found that LHR with whom we shared an office had the same vision and very relevant expertise, we realised we had a desirable partner on hand. From that point to production of coal was less than a year. At the time these delays seemed frustrating, but in retrospect progress seems quite rapid. Our joint strategic vision is a larger roll-up strategy, followed by the listing of a North American company worth several hundred million dollars; Omega is just the first step. Both parties also intend that as cash is generated through operations, as much of it as possible should be returned to the partners, something that will soon feed into Regency's bottom-line.
Discussion of the Results
In this transition year, the balance sheet at year end looked fairly similar to that at the beginning, despite the inflows and outflows that occurred during the year.
The reported loss increased from GBP634,267 to GBP1,549,619, as aGBP1,482,609 gain on sale of investments was more than offset by an impairment of our interests in joint venture activities with our former coal partner. We shall expect to reverse some of this impairment in time, and will aggressively pursue various avenues to do so. A further factor was that administration costs increased by GBP271,076 as despite a reduction in payroll costs, the one-off costs associated with downsizing our offices caused a temporary increase in rental and general administrative costs, while finance and legal costs increased as a result of the arrangements connected with financing the MET investment.
Principally as a result of this reported loss, total assets declined from GBP6,450, 885 to GBP5,840,692 over the year, and total equity declined from GBP5,278,164 to GBP4,446,340.
Prospects
Our objective for the current year is to restructure our balance sheet from short-term to longer-term liabilities, so that the impact of expected cash flows from coal production at MET can strengthen the financing capability of our developing nickel-cobalt operations at Mambare, and make us financially self-sufficient. To this end, we will control further our central overhead, and lay off some of our costs on to partner or investee enterprises, and pursue recoveries where we can.
We look to our joint venture operations at both MET and Mambare to progress, and will seek external funding where appropriate. We will look to issuing new capital to external investors at ESTEQ with a view to eventually listing that entity in London. We expect a rapid development in the business of Allied Energy Services.
We look to providing the market with profit guidance for MET as soon as reasonably possible, as we believe that when we do so that will have significant market impact.
We propose to strengthen and refresh the Board with new appointments as appropriate in the coming year.
The measures we have already begun to take to create market awareness and a steady flow of information will continue and intensify, in order both to increase engagement with existing shareholders, and to project to a new audience the identity and vision of the Company.
Success on the ground and success in the market will, we believe, be closely linked for us in the coming period, and so we must and will achieve both.
Andrew Bell
Chairman and CEO
21 December 2018
Results and Dividends
The Group made a loss after taxation of GBP1,549,619 (2017: GBP534,267). The Directors do not recommend the payment of a dividend. The following financial statements are extracted from the audited financial statements which were approved by the Board of Directors and authorised for issuance on 21 December 2018.
For further information contact:
Andrew Bell 0207 747 9960 Chairman Regency Mines Plc
Scott Kaintz 0207 747 9960 Executive Director Regency Mines Plc
Roland Cornish/Rosalind Hill Abrahams 0207 628 3396 NOMAD Beaumont Cornish Ltd
Jason Robertson 0207 374 2212 Broker First Equity Limited
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2018
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30 June 30 June
Notes 2018 2017
GBP GBP
============================================= ======= ============ =============
ASSETS
Non-current assets
Property, plant and equipment 10 195 15,520
Investments in associates and joint ventures 12 3,161,002 3,585,757
Goodwill 42,471 -
Available for sale financial assets 13 1,099,572 1,443,707
Exploration assets 14 - 40,402
Trade and other receivables 15 1,274,569 1,239,779
============================================= ======= ============ =============
Total non-current assets 5,577,809 6,325,165
============================================= ======= ============ =============
Current assets
Cash and cash equivalents 20 126,125 9,176
Trade and other receivables 15 136,758 116,544
============================================= ======= ============ =============
Total current assets 262,883 125,720
============================================= ======= ============ =============
Total assets 5,840,692 6,450,885
============================================= ======= ============ =============
EQUITY AND LIABILITIES
Equity attributable to owners of the
Parent
Called up share capital 18 1,926,407 1,904,933
Share premium account 20,379,728 19,272,873
Other reserves 440,693 895,947
Retained earnings (18,339,478) (16,795,589)
============================================= ======= ============ =============
Total equity attributable to owners of
the Parent 4,407,350 5,278,164
============================================= ======= ============ =============
Non-controlling interests 38,990 -
============================================= ======= ============ =============
Total equity 4,446,340 5,278,164
============================================= ======= ============ =============
LIABILITIES
Current liabilities
Trade and other payables 16 296,752 401,634
Short-term borrowings 16 1,097,600 771,087
============================================= ======= ============ =============
Total current liabilities 1,394,352 1,172,721
============================================= ======= ============ =============
Total equity and liabilities 5,840,692 6,450,885
============================================= ======= ============ =============
These financial statements on pages 34 to 75 were approved by the Board of Directors and authorised for issue on 21 December 2018 and are signed on its behalf by:
Andrew Bell
Chairman and CEO
The accompanying notes form an integral part of these financial statements.
CONSOLIDATED INCOME STATEMENT
FOR THE YEARED 30 JUNE 2018
Year to Year to
30 June 30 June
Notes 2018 2017
GBP GBP
=============================================== ======= ================ ================
REVENUE
Management services - 113,350
=============================================== ======= ================ ================
Total revenue - 113,350
=============================================== ======= ================ ================
Gain on sale of available for sale investments 13 1,482,609 -
Gain on sale of tenements - 55,183
Impairment of available for sale financial
assets (215,372) -
Exploration expenses 643 (930)
Impairment of exploration assets (40,403) (229,262)
Administrative expenses (net) 4 (735,697) (464,621)
Foreign currency (loss)/gain (3,312) 49,678
Other income 47,257 -
Impairment of investments in joint ventures 12 (1,943,132) -
Finance costs, net 5 (142,212) (57,665)
=============================================== ======= ================ ================
Loss for the year before taxation 3 (1,549,619) (534,267)
Tax credit 6 - -
=============================================== ======= ================ ================
Loss for the year (1,549,619) (534,267)
=============================================== ======= ================ ================
Loss per share attributable to:
Equity holders of the Parent (1,543,889) (534,267)
Non-controlling interest (5,730) -
=============================================== ======= ================ ================
(1,549,619) (534,267)
=============================================== ======= ================ ================
Loss per share attributable to owners
of the Parent
Loss per share - basic 9 (0.23) (0.13)
pence pence
Loss per share - diluted 9 (0.23) (0.13)
pence pence
=============================================== ======= ================ ================
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 30 JUNE 2018
30 June 30 June
2018 2017
GBP GBP
========================================================= =========== ============
Loss for the year (1,549,619) (534,267)
Other comprehensive income
Items that will be reclassified subsequently to
profit or loss
Decrease in AFS reserve in relation to disposals (322,507) -
Surplus on revaluation of available for sale financial
assets (163,111) 110,242
Unrealised foreign currency gain on translation
of foreign operations 20,367 58,865
========================================================= =========== ============
Other comprehensive income for the year (465,251) 169,107
========================================================= =========== ============
Total comprehensive expense for the year attributable
to owners of the Parent (2,014,870) (365,160)
========================================================= =========== ============
All of the Group's operations are considered to be continuing.
The accompanying notes form an integral part of these financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2018
The movements in equity during the year were as follows:
Share Share Retained Other attributable Non-controlling Total
capital premium earnings reserves to owners interests equity
GBP account GBP GBP of the GBP GBP
GBP Parent
GBP
============== ============== ================ =============== ============== ============== =============== ==============
As at 1 July
2016 1,872,522 17,399,710 (15,902,032) 324,638 3,694,838 - 3,694,838
Changes in
equity
for 2017
Loss for the
year - - (534,267) - (534,267) - (534,267)
Other
comprehensive
income
for the year - - (359,290) 528,397 169,107 - 169,107
Transactions
with
owners
Issue of
shares 32,411 1,918,253 - - 1,950,664 - 1,950,664
Share issue
and
fundraising
costs - (45,090) - - (45,090) - (45,090)
Share-based
payment
transfer - - - 42,912 42,912 - 42,912
============== ============== ================ =============== ============== ============== =============== ==============
Total
transactions
with owners 32,411 1,873,163 - 42,912 1,948,486 - 1,948,486
============== ============== ================ =============== ============== ============== =============== ==============
As at 30 June
2017 1,904,933 19,272,873 (16,795,589) 895,947 5,278,164 - 5,278,164
============== ============== ================ =============== ============== ============== =============== ==============
Changes in
equity
for 2018
Loss for the
year - - (1,543,889) - (1,543,889) (5,730) (1,549,619)
Other
comprehensive
income
for the year - - - (465,251) (465,251) - (465,251)
Acquisition of
new
subsidiary - - - - - 44,720 44,720
Transactions
with
owners
Issue of
shares 21,474 1,158,855 - - 1,180,329 - 1,180,329
Share issue
and
fundraising
costs - (52,000) - - (52,000) - (52,000)
Share-based
payment
transfer - - - 9,997 9,997 - 9,997
============== ============== ================ =============== ============== ============== =============== ==============
Total
transactions
with owners 21,474 1,106,855 - 9,997 1,138,326 - 1,138,326
============== ============== ================ =============== ============== ============== =============== ==============
As of 30 June
2018 1,926,407 20,379,728 (18,339,478) 440,693 4,407,350 38,990 4,446,340
-------------- -------------- ---------------- --------------- -------------- -------------- --------------- --------------
Available
for sale Foreign
financial Share-based Associate currency Total
asset payment investments translation other
reserve reserve reserve reserve reserves
Other reserves GBP GBP GBP GBP GBP
------------------------------------------------ --------------- -------------- -------------- --------------- ----------------
As at 1 July 2016 267,004 22,945 (410,439) 445,128 324,638
Changes in equity for 2017
Other comprehensive income for the
year 110,242 - - 58,865 169,107
Transfer to retained earnings (51,149) - 410,439 - 359,290
Share based payment transfer - 42,912 - - 42,912
As at 30 June 2017 326,097 65,857 - 503,993 895,947
------------------------------------------------ --------------- -------------- -------------- --------------- ----------------
Changes in equity for 2018
Other comprehensive(expense) / income
for the year
Decrease in available for sale asset
reserve in relation to disposals (322,507) - - - (322,507)
Change in available for sale asset
reserve due to revaluation (163,111) - - (163,111)
Unrealised foreign currency gain
on translation of foreign operations - - - 20,367 20,367
Total Other comprehensive (expense)
/ income for the year (485,618) - - 20,367 (465,251)
Share based payment transfer - 9,997 - - 9,997
As at 30 June 2018 (159,521) 75,854 - 524,360 440,693
------------------------------------------------ --------------- -------------- -------------- --------------- ----------------
See note 17 for a description of each reserve included above.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 30 JUNE 2018
Year to 30 June Year to
2018 30 June
GBP 2017
GBP
==================================================== ============================================== ================
Cash flows from operating activities
Loss before taxation (1,549,619) (534,267)
(Increase)/decrease in receivables (108,653) 1,501
Increase/(decrease) in payables 44,000 (217,503)
Depreciation 15,325 6,197
Impairment of exploration properties 40,403 229,262
Share-based payments 35,017 91,359
Currency adjustments 3,313 (49,679) Finance cost, net 142,212 57,665 Agents fees settled in Curzon's shares, recorded as Other income (28,000) - Gain on sale of investments (1,482,609) - Gain on sale of tenements - (55,183) Impairment of available for sale financial assets 215,372 - Impairment of investments in joint ventures 1,943,132 - Impairment of loans and receivables 95,033 - ==================================================== ============================================== ================ Net cash outflow from operations (635,074) (470,648) ==================================================== ============================================== ================ Cash flows from investing activities Proceeds from sale of available for sale investments 1,791,758 - Proceeds from sale of tenements - 58,837 Purchase of available for sale financial assets (800,000) (75,000) Payments for exploration costs - (594) Payments for investments in associates and joint ventures (443,034) (1,531,778) ==================================================== ============================================== ================ Net cash inflow/(outflow) from investing activities 548,724 (1,548,535) ==================================================== ============================================== ================ Cash flows from financing activities Proceeds from issue of shares 1,124,310 1,576,701 Transaction costs of issue of shares (59,500) (45,090) Interest paid (136,730) (72,048) Proceeds of new borrowings - 771,087 Repayment of borrowings (724,781) (210,251) ==================================================== ============================================== ================ Net cash inflow from financing activities 203,299 2,020,399 ==================================================== ============================================== ================ Net (decrease)/increase in cash and cash equivalents 116,949 1,216 Cash and cash equivalents at the beginning of period 9,176 7,960 ==================================================== ============================================== ================ Cash and cash equivalents at end of period 126,125 9,176 ==================================================== ============================================== ================
The accompanying notes and accounting policies form an integral part of these financial statements.
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2018
30 June 30 June
Notes 2018 2017
GBP GBP
==================================== ======= ============ ============
ASSETS
Non-current assets
Property, plant and equipment 10 195 15,520
Investments in subsidiaries 11 483 482
Investments in associates and joint
ventures 12 3,277,662 3,702,417
Available for sale financial assets 13 694,423 1,433,858
Exploration assets 14 - 40,402
Trade and other receivables 15 2,745,016 2,045,053
==================================== ======= ============ ============
Total non-current assets 6,717,779 7,237,732
==================================== ======= ============ ============
Current assets
Cash and cash equivalents 20 6,505 8,125
Trade and other receivables 15 124,346 116,286
==================================== ======= ============ ============
Total current assets 130,851 124,411
==================================== ======= ============ ============
Total assets 6,848,630 7,362,143
==================================== ======= ============ ============
EQUITY AND LIABILITIES
Called up share capital 18 1,926,407 1,904,933
Share premium account 20,379,728 19,272,873
Other reserves (79,453) 496,514
Retained earnings (16,755,707) (15,474,628)
==================================== ======= ============ ============
Total equity 5,470,975 6,199,692
==================================== ======= ============ ============
LIABILITIES
Current liabilities
Trade and other payables 16 280,055 391,364
Short-term borrowings 16 1,097,600 771,087
==================================== ======= ============ ============
Total current liabilities 1,377,655 1,162,451
==================================== ======= ============ ============
Total equity and liabilities 6,848,630 7,362,143
==================================== ======= ============ ============
These financial statements on pages 34 to 75 were approved by the Board of Directors and authorised for issue on 21 December 2018 and are signed on its behalf by:
Andrew Bell
Chairman and CEO
The accompanying notes form an integral part of these financial statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2018
The movements in reserves during the year were as follows:
Share
Share premium Retained Other Total
capital account earnings reserves equity
GBP GBP GBP GBP GBP
================= ========================== ================ ================ ================= ================
As at 30 June
2016 1,872,522 17,399,710 (15,148,556) 240,772 4,364,448
Changes in equity
for 2017
Loss for the year - - (326,072) - (326,072)
Other
comprehensive
income
for the year - - - 212,830 212,830
Transactions with
owners
Issue of shares 32,411 1,918,253 - - 1,950,664
Share issue and
fundraising
costs - (45,090) - - (45,090)
Share-based
payment transfer - - - 42,912 42,912
================= ========================== ================ ================ ================= ================
Total
transactions
with owners 32,411 1,873,163 - 42,912 1,948,486
================= ========================== ================ ================ ================= ================
As at 30 June
2017 1,904,933 19,272,873 (15,474,628) 496,514 6,199,692
================= ========================== ================ ================ ================= ================
Changes in equity
for 2018
Loss for the year - - (1,352,545) - (1,352,545)
Other
comprehensive
income
for the year - - 71,466 (585,965) (514,499)
Transactions with
owners
Issue of shares 21,474 1,158,855 - - 1,180,329
Share issue and
fundraising
costs - (52,000) - - (52,000)
Share-based
payment transfer - - - 9,997 9,997
================= ========================== ================ ================ ================= ================
Total
transactions
with owners 21,474 1,106,855 - 9,997 1,138,326
================= ========================== ================ ================ ================= ================
As at 30 June
2018 1,926,407 20,379,728 (16,755,707) (79,454) 5,470,974
================= ========================== ================ ================ ================= ================
Available
for sale Share-based Total
financial payment Currency other
Other reserves asset reserve reserve reserve reserves
GBP GBP GBP GBP
================================ ======================== ==================== =============== ===================
As at 30 June 2016 215,855 22,945 1,972 240,772
Changes in equity for 2017
Other comprehensive income for
the year 110,242 - 102,588 212,830
Share-based payment transfer - 42,912 - 42,912
================================ ======================== ==================== =============== ===================
As at 30 June 2017 326,097 65,857 104,560 496,514
================================ ======================== ==================== =============== ===================
Changes in equity for 2018
Other comprehensive income for
the year
Decrease in available for sale
asset
reserve in relation to
disposals (355,602) - - (355,602)
Change in available for sale
asset reserve
due to revaluation (158,898) - - (158,898)
Transfer between reserves 33,095 - (104,560) 71,466
Total Other comprehensive
(expenses)/income (481,405) - (104,560) (585,965)
Share-based payment transfer - 9,997 - 9,997
================================ ======================== ==================== =============== ===================
As at 30 June 2018 (155,308) 75,854 - (79,454)
================================ ======================== ==================== =============== ===================
See note 17 for a description of each reserve included above.
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEARED 30 JUNE 2018
Year to 30 June Year to
2018 30 June
GBP 2017
GBP
=================================================== =============================================== ================
Cash flows from operating activities
Loss before taxation (1,352,545) (326,072)
(Increase)/decrease in receivables (668,028) 54,214
(Decrease)/increase in payables 44,000 (223,661)
Depreciation 15,325 6,197
Agents fees settled in Curzon's shares, recorded
as Other income (28,000) -
Share-based payments 35,017 91,359
Finance (income)/costs, net 27,590 (47,771)
Currency gains/(losses) (38,124) 33,612
Gain on sale of investments (1,482,818) -
Impairment of associate 1,943,132 -
Debtors write off 95,033 -
Impairment of available for sale investment 215,372 -
Impairment of exploration expenses 40,403 -
=================================================== =============================================== ================
Net cash outflow from operations (1,153,643) (412,122)
=================================================== =============================================== ================
Cash flows from investing activities
Payments for investments in associates and
joint ventures (443,034) (1,531,778)
Purchase of available for sale financial assets (400,000) (75,000)
Proceeds from sale of available for sale
investments 1,791,758 -
=================================================== =============================================== ================
Net cash inflow/(outflow) from investing activities 948,724 (1,606,778)
=================================================== =============================================== ================
Cash flows from financing activities
Proceeds from issue of shares 1,124,310 1,576,701
Transaction costs of issue of shares (59,500) (45,090)
Interest paid (136,730) (72,048)
Proceeds of new borrowings - 771,087
Repayments of borrowings (724,781) (210,251)
=================================================== =============================================== ================
Net cash inflow from financing activities 203,299 2,020,399
=================================================== =============================================== ================
Net (decrease)/increase in cash and cash
equivalents (1,620) 1,499
Cash and cash equivalents at the beginning
of period 8,125 6,626
=================================================== =============================================== ================
Cash and cash equivalents at end of period 6,505 8,125
=================================================== =============================================== ================
The accompanying notes and accounting policies form an integral part of these financial statements.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2018
1. Principal accounting policies
1.1 Authorisation of financial statements and statement of compliance with IFRS
The Group financial statements of Regency Mines plc ("the Company" or "Regency") for the year ended 30 June 2018 were authorised for issue by the Board on 21 December 2018 and signed on the Board's behalf by Andrew Bell and Scott Kaintz. Regency Mines plc
is a public limited company incorporated and domiciled in England and Wales. The Company's ordinary shares are traded on AIM.
1.2 Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards and IFRIC interpretations as endorsed by the EU ("IFRS") and the requirements of the Companies Act applicable to companies reporting under IFRS.
The financial statements have been prepared on the historical cost basis, except for the revaluation of certain financial instruments. The principal accounting policies adopted are set out below.
Going concern
The consolidated entity has incurred a loss before tax of GBP1,549,619 for the year ended 30 June 2018 (2017: loss of GBP534,267) and had a net cash outflow of GBP86,351 (2017: GBP2,019,183) from operating and investing activities. At that date there was a net current liability of
GBP1,131,469 (2017: GBP1,047,003). The loss resulted mainly from the impairment of the Group's investment in joint ventures GBP1,943,132 (2017: loss resulted mainly from impairment of exploration and available for sale assets totalling GBP229,262).
During the reporting year the Company has made significant strides in achieving financial stability through the acquisition of the first producing asset in its history. To acquire these producing metallurgical coal interests, the Company completed a Joint Venture Agreement with Legacy Hill Resources and established Mining Equity Trust ("MET").
On 2 August 2018, MET purchased the metallurgical coal interests of Omega Holdings in Cedar Bluffs, Virginia. The Company has a 47% stake in the associate and has forecasted revenues of USD30,468,239 for the 10 months to June 2019.
The Company completed its deleveraging process through the repayment of the convertible loan with YA PN Ltd on 30 January 2018. The Directors remain confident in the Company's ability to raise new finance from stock markets if it is required in 2019 and the Group has demonstrated a consistent ability to do so. On 11 January 2018, the Company raised GBP1,050,000 through the issue of 190,909,090 new ordinary shares at 0.01p each at a price of 0.55 per share.
Regency owns liquid assets that it can sell to fund operations, the most significant being its 8.9% stake in Curzon Energy Plc, listed on the Standard List of the London Stock Exchange. The value of this holding in Q4 2018 was approximately GBP120k. The Company also has a 5.584% interest in Whitecar Ltd, and an 80% ownership interest in Allied Energy Ltd. During the past year the Company has disposed of its interest in Alba Resources plc for gross proceeds of GBP299k.
The Group has demonstrated the ability to raise debt as required, as most recently demonstrated by the Omega Holdings acquisition, where the Company raised USD1.6m from a group of institutional investors in May 2018.
The Directors believe that based on the forecasts and projections prepared, sufficient resources will be available for the Company to continue to operate as a going concern for the foreseeable future, and that the Company will be able to access adequate debt and equity capital to supplement income from its US metallurgical coal operations.
Company Statement of Comprehensive Income
As permitted by Section 408 Companies Act 2006, the Company has not presented its own Statement of Comprehensive Income. The Company's loss for the financial year was GBP1,352,545 (2017: loss of GBP324,423). The Company's other comprehensive loss for the financial year was GBP481,405 (2017: income GBP110,242).
Amendments to published standards effective for the year ended 30 June 2018.
New standards, amendments and interpretations effective for the periods from 1 July 2017
The following new standards, amendments and interpretations are effective for the first time in these financial statements. However, none have a material effect on the Group and Company:
-- Amendments to IAS 12 Deferred Tax relating to recognition of deferred tax assets for unrealised losses, effective for the periods beginning on or after 1 January 2017.
-- Amendments to IAS 7 Financial Instruments: Disclosures, effective for accounting periods beginning on or after 1 January 2017.
-- Annual Improvements to IFRSs (2014-2016 cycle), Amendments to IFRS 12, effective for accounting periods beginning on or after 1 January 2017.
There were no new standards or interpretations effective for the first time for periods beginning on or after 1 July 2017 that had a significant effect on the Group's financial statements.
New standards, amendments and interpretations not yet adopted
At the date of authorisation of these financial statements, the following standards and interpretations which have not been applied in these financial statements were in issue but not yet effective for the year presented:
IASB mandatory
Issued date effective date,
for the periods
beginning on or
after
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New Standards and interpretations
================================================= ============= ========================
IFRS 9 Financial Instruments Various 01-Jan-18
IFRS 15 Revenue from contracts with customers 28-May-14 01-Jan-18
Clarifications to IFRS 15 Revenue from contracts 12-Apr-16 01-Jan-18
with customers
Amendments to IFRS 15: Effective date of IFRS 15-Sep-15 01-Jan-18
15
IFRS 16 Leases 13-Jan-16 01-Jan-19
IFRIC 23 Uncertainty over Income Tax Treatments 07-Jun-17 01-Jan-19
IFRS 17 Insurance contracts1 18-May-17 01-Jan-21
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Amendments to Existing Standards
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Classification and Measurement of Share-based
Payment Transactions (Amendments to IFRS 2) 20-Jun-16 01-Jan-18
Annual Improvements to IFRSs (2014-2016 Cycle) 08-Dec-16 01-Jan-17 and
01-Jan-18
IFRIC 22 Foreign Currency Transactions and 08-Dec-16 01-Jan-18
Advance Consideration
Amendments to IFRS 9: Prepayment features 12-Oct-17 01-Jan-19
with negative compensation
Amendments to IAS 40: Transfers of investment 08-Dec-16 01-Jan-18
property
Amendments to IAS 28: Long-term interests 12-Oct-17 01-Jan-19
in associates and joint ventures1
Annual improvements to IFRSs (2015-2017 Cycle)1 12-Dec-17 01-Jan-19
Amendments to IAS 19: Plan amendment, curtailment 07-Feb-18 01-Jan-19
or settlement1
Amendments to References to the conceptual 29-Mar-18 01-Jan-20
framework in IFRSs1
Amendments to IAS 1 and IAS 8: Definition 31-Dec-18 01-Jan-20
of Material1
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1 Not yet endorsed for use in the EU at the time these accounts were authorised for issue.
1. Principal accounting policies continued
1.2 Basis of preparation continued
The Directors do not expect that the adoption of these standards will have a material impact on the financial information of the Group in future periods, except for IFRS 9 as detailed below.
IFRS 9 "Financial Instruments" will impact both the measurement and disclosures of financial instruments. The Group is planning to
first apply this standard at the beginning of the next reporting year to 30 June 2019. The Group will not retrospectively re-state prior period but will recognise any difference between the previous carrying amount and the carrying amount at 1 July 2018 in the opening retained earnings at 1 July 2018 for the assets that have not been disposed of at the date of initial application. All the investments in equity instruments, that are held by the Group at 30 June 2018 are currently included in available for sale financial assets line in the Statement of Financial Position. The Group is analysing its investments in equity instruments on an investment-by-investment basis and in respect of each one plans to make an irrevocable election to present subsequent changes in the fair value either in profit and loss (FVTPL)
or in other comprehensive income (FVTOCI). For equity instruments designated at FVTOCI under IFRS 9, only dividend income will be recognised in profit or loss, all other gains and losses will be recognised in OCI without reclassification on derecognition. This differs from the current treatment of AFS equity instruments under IAS 39 where gains and losses recognised in OCI are reclassified on derecognition or impairment.
IFRS 15 "Revenue from Contracts with Customers" - the Company is pre-revenue hence the adoption would have no impact on the reported results.
Adoption of IFRS 16 will result in the Group recognising right of use of assets and lease liabilities for all contracts that are, or contain,
a lease. For leases currently classified as operating leases, under current accounting requirements the Group does not recognise related assets or liabilities, and instead spreads the lease payments on a straight-line basis over the lease term, disclosing in its annual financial statements the total commitment. Since the Group currently only has short-term (less than 12 months) operating leases, IFRS 16 will not have an impact on the results or balance sheet of the Group.
IFRS 17 establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts within the scope of the Standard. The Group does not have any contract that falls within the scope of this standard and therefore it would have no impact on the reported results.
IFRIC 23 is to be applied to the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under IAS 12. This interpretation is unlikely to have a material effect on the reported results.
Standards adopted early by the Group
The Group has not adopted any standards or interpretations early in either the current or the preceding financial year.
1.3 Basis of consolidation
The consolidated financial statements of the Group incorporate the financial statements of the Company and entities controlled by the Company, its subsidiaries, made up to 30 June each year.
Subsidiaries
Subsidiaries are entities over which the Group has the power to govern the financial and operating policies so as to obtain economic benefits from their activities. Subsidiaries are consolidated from the date on which control is obtained, the acquisition date, until the date that control ceases.
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued, contingent consideration and liabilities incurred or assumed at the date of exchange. Costs directly attributable to the acquisition are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are initially measured at fair value at the acquisition date.
Provisional fair values are adjusted against goodwill if additional information is obtained within one year of the acquisition date about facts or circumstances existing at the acquisition date. Other changes in provisional fair values are recognised through profit or loss.
Intra-group transactions, balances and unrealised gains and losses on transactions between Group companies are eliminated on consolidation, except to the extent that intra-group losses indicate an impairment.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:
-- derecognises the assets (including goodwill) and liabilities of the subsidiary;
-- derecognises the carrying amount of any non-controlling interest;
-- derecognises the cumulative translation differences recorded in equity;
-- recognises the fair value of the consideration received;
-- recognises the fair value of any investment retained;
-- recognises any surplus or deficit in profit or loss; and
-- reclassifies the Parent's share of components previously recognised in other comprehensive income to profit or loss or retained earnings, as appropriate.
Non-controlling interests
Profit or loss and each component of other comprehensive income are allocated between the aims of the Parent and non-controlling interests, even if this results in the non-controlling interest having a deficit balance.
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions. Any differences between the adjustment for the non-controlling interest and the fair value of consideration paid or received are recognised in equity.
1.4 Summary of significant accounting policies 1.4.1 Investment in associates
An associate is an entity over which the Company is in a position to exercise significant influence, but not control or joint control, through participation in the financial and operating policy decisions of the investee.
Investments in associates are recognised in the consolidated financial statements using the equity method of accounting. The Group's share of post-acquisition profits or losses is recognised in profit or loss and its share of post-acquisition movements in other comprehensive income are recognised directly in other comprehensive income. The carrying value of the investment, including goodwill, is tested for impairment when there is objective evidence of impairment. Losses in excess of the Group's interest in those associates are not recognised unless the Group has incurred obligations or made payments on behalf of the associate.
Where a Group company transacts with an associate of the Group, unrealised gains are eliminated to the extent of the Group's interest in the relevant associate. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred in which case appropriate provision is made for impairment.
Where the Company's holding in an associate is diluted, the Company recognises a gain or loss on dilution in profit and loss. This is calculated as the difference between the Company's share of proceeds received for the dilutive share issue and the value of the Company's effective disposal.
In the Company accounts investments in associates are recognised and held at cost. The carrying value of the investment is tested for impairment when there is objective evidence of impairment.
1.4.2 Interests in joint ventures
A joint venture is a joint arrangement whereby the partners who have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of the joint arrangement, which exists only when decisions on relevant activities require the unanimous consent of the parties sharing control. The Group recognises its interest in the entity's assets and liabilities using the equity method of accounting. Under the equity method, the interest in the joint venture is carried in the balance sheet at cost plus post-acquisition changes in the Group's share of its net assets, less distributions received and less any impairment in value of individual investments. The Group Income Statement reflects the share of the jointly controlled entity's results after tax.
Any goodwill arising on the acquisition of a jointly controlled entity is included in the carrying amount of the jointly controlled entity and is not amortised. To the extent that the net fair value of the entity's identifiable assets, liabilities and contingent liabilities is greater than the cost of the investment, a gain is recognised and added to the Group's share of the entity's profit or loss in the period in which the investment is acquired.
1. Principal accounting policies continued
1.4 Summary of significant accounting policies continued 1.4.2 Interests in joint ventures continued
Financial statements of the jointly controlled entity will be prepared for the same reporting period as the Group. Where necessary, adjustments are made to bring the accounting policies used into line with those of the Group and to reflect impairment losses where appropriate. Adjustments are also made in the Group's financial statements to eliminate the Group's share of unrealised gains and losses on transactions between the Group and its jointly controlled entity. The Group ceases to use the equity method on the date from which it no longer has joint control over, or significant influence in, the joint venture.
At 30 June 2018, the Group had following contractual arrangements:
-- Oro Nickel Limited, a contractual arrangement with Direct Nickel Projects Pty Ltd, which represents a joint venture established through an interest in a jointly controlled entity, in order to develop and exploit the Mambare nickel project;
-- Mining Equity Trust, LLC ("MET"), a new Delaware-incorporated limited liability company, this is a contractual arrangement with Legacy Hill Resources Ltd ("LHR"), a privately-owned mining company, (as majority shareholder) and the Company (as minority shareholder) will hold their interests in MET joint venture. More details are disclosed in note 12.
1.4.3 Taxation
Corporation tax payable is provided on taxable profits at the current rate. The tax expense represents the sum of the current tax expense and deferred tax expense.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from accounting profit as reported in the Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is measured using tax rates that have been enacted or substantively enacted by the reporting date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.
Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition, other than in a business combination, of other assets and liabilities in a transaction which affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled based upon tax rates that have been enacted or substantively enacted by the reporting date.
Deferred tax is charged or credited in profit or loss, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity, or items charged or credited directly to other comprehensive income, in which case the deferred tax is also recognised in other comprehensive income.
Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax relates to income tax levied by the same tax authorities on either:
-- the same taxable entity; or
-- different taxable entities which intend to settle current tax assets and liabilities on a net basis or to realise and settle them simultaneously in each future period when the significant deferred tax assets and liabilities are expected to be realised or settled.
1.4.4 Property, plant and equipment
Property, plant and equipment acquired and identified as having a useful life that exceeds one year is capitalised at cost and is depreciated on a straight-line basis at annual rates that will reduce book values to estimated residual values over their anticipated useful lives as follows:
-- Office furniture, fixtures and fittings - 33% per annum -- Leasehold improvements - 5% per annum 1.4.5 Foreign currencies
Both the functional and presentational currency of Regency Mines plc is Sterling (GBP). Each Group entity determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.
The functional currencies of the foreign subsidiaries and joint ventures are the Australian Dollar ("AUD"), the Papua New Guinea Kina ("PNG") and the US Dollar ("USD").
Transactions in currencies other than the functional currency of the relevant entity are initially recorded at the exchange rate prevailing on the dates of the transaction. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the exchange rate prevailing at the reporting date. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Gains and losses arising on retranslation are included in profit or loss for the period, except for exchange differences on non-monetary assets and liabilities, which are recognised directly in other comprehensive income when the changes in fair value are recognised directly in other comprehensive income.
On consolidation, the assets and liabilities of the Group's overseas operations are translated into the Group's presentational currency at exchange rates prevailing at the reporting date. Income and expense items are translated at the average exchange rates for the period unless exchange rates have fluctuated significantly during the year, in which case the exchange rate at the date of the transaction is used. All exchange differences arising, if any, are recognised as other comprehensive income and are transferred to the Group's foreign currency translation reserve.
1.4.6 Revenue
Revenue is the gross inflow of economic benefits during the period arising in the course of the ordinary activities of the Group and the Company, when those inflows result in increases in equity.
Revenue is measured at the fair value of the consideration received or receivable for investment asset disposals in the normal course
of business and is recognised when revenue and associated costs can be measured reliably, and future economic benefits are probable.
In addition, revenue from management services is recognised on an accruals basis when the services have been delivered and any associated costs have been incurred.
1.4.7 Exploration assets
Exploration assets comprise exploration and development costs incurred on prospects at an exploratory stage. These costs include the cost of acquisition, exploration, determination of recoverable reserves, economic feasibility studies and all technical and administrative overheads directly associated with those projects. These costs are carried forward in the Statement of Financial Position as non-current intangible assets less provision for identified impairments.
Recoupment of exploration and development costs is dependent upon successful development and commercial exploitation of each area of interest and will be amortised over the expected commercial life of each area once production commences. The Group and the Company currently have no exploration assets where production has commenced.
The Group adopts the "area of interest" method of accounting whereby all exploration and development costs relating to an area of interest are capitalised and carried forward until abandoned. In the event that an area of interest is abandoned, or if the Directors consider the expenditure to be of no value, accumulated exploration costs are written off in the financial year in which the decision is made. All expenditure incurred prior to approval of an application is expensed with the exception of refundable rent which is raised as a receivable.
Upon disposal, the difference between the fair value of consideration receivable for exploration assets and the relevant cost within non-current assets is recognised in the Income Statement.
1. Principal accounting policies continued
1.4 Summary of significant accounting policies continued 1.4.8 Share-based payments
Share options
The Group operates an equity-settled share-based payment arrangement whereby the fair value of services provided is determined indirectly by reference to the fair value of the instrument granted.
The fair value of options granted to Directors and others in respect of services provided is recognised as an expense in the Income Statement with a corresponding increase in equity reserves - the share-based payment reserve until the award has been settled and then make a transfer to share capital.
On exercise or lapse of share options, the proportion of the share-based payment reserve relevant to those options is transferred to retained earnings. On exercise, equity is also increased by the amount of the proceeds received.
The fair value is measured at grant date and charged over the vesting period during which the option becomes unconditional.
The fair value of options is calculated using the Black-Scholes model taking into account the terms and conditions upon which the options were granted. The exercise price is fixed at the date of grant.
Non-market conditions are performance conditions that are not related to the market price of the entity's equity instruments. They are not considered when estimating the fair value of a share-based payment. Where the vesting period is linked to a non-market performance condition, the Group recognises the goods and services it has acquired during the vesting period based on the best available estimate
of the number of equity instruments expected to vest. The estimate is reconsidered at each reporting date based on factors such as a shortened vesting period, and the cumulative expense is 'trued up' for both the change in the number expected to vest and any change in the expected vesting period.
Market conditions are performance conditions that relate to the market price of the entity's equity instruments. These conditions are included in the estimate of the fair value of a share-based payment. They are not taken into account for the purpose of estimating the number of equity instruments that will vest. Where the vesting period is linked to a market performance condition, the Group estimates the expected vesting period. If the actual vesting period is shorter than estimated, the charge is accelerated in the period that the
entity delivers the cash or equity instruments to the counterparty. When the vesting period is longer, the expense is recognised over the originally estimated vesting period.
For other equity instruments granted during the year (i.e. other than share options), fair value is measured on the basis of an observable market price.
When a share-based payment is modified, the Group determines whether the modification affects the fair value of the instruments granted, affects the number of equity instruments granted or is otherwise beneficial to the employee. In cases where the exercise price of options granted to employees is reduced, the Group recognises the incremental change in fair value (along with the original fair value determined at grant date) over the remaining vesting period as an expense and an increase in equity. Decreases in the fair value are not considered. To determine if an increase has occurred, management compares the fair value of the modified award with the fair value of the original award at the modification date. Any other benefit to the employee is taken into account in estimating the number of equity instruments that are expected to vest.
Share Incentive Plan
Where the shares are granted to the employees under the Share Incentive Plan, the fair value of services provided is determined indirectly by reference to the fair value of the free, partnership and matching shares granted on the grant date. Fair value of shares is measured on the basis of an observable market price, i.e. share price as at grant date and is recognised as an expense in the Income Statement on the date of the grant. For the partnership shares the charge is calculated as the excess of the mid-market price on the date of grant over the employee's contribution.
1.4.9 Pension
The Group operates a defined contribution pension plan which requires contributions to be made to a separately administered fund. Contributions to the defined contribution scheme are charged to the profit and loss account as they become payable.
1.4.10 Finance costs/revenue
Borrowing costs are recognised on an accruals basis using the effective interest method.
Finance income is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.
1.4.11 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets and financial liabilities are recognised where the Group has become party to the contractual provisions of the instrument.
Investments
Investments in subsidiary companies are classified as non-current assets and included in the Statement of Financial Position of the Company at cost at the date of acquisition less any identified impairments.
For acquisitions of subsidiaries or associates achieved in stages, the Company re-measures its previously held equity interests in the acquiree at its acquisition-date fair value and recognises the resulting gain or loss, if any, in profit or loss. Any gains or losses previously recognised in other comprehensive income are transferred to profit and loss.
Investments in associates and joint ventures are classified as non-current assets and included in the Statement of Financial Position of the Company at cost at the date of acquisition less any identified impairment.
Financial assets
The Group classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired. The Group has not classified any of its financial assets as held to maturity or fair value through profit and loss.
Loans and receivables
These are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise through the provision of goods or services (trade receivables), but also incorporate other types of contractual monetary asset. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried
at amortised cost using the effective interest rate method, less provision for impairment.
Impairment provision is recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the Group will be unable to collect all of the amounts due under the terms receivable, the amount of such provision being the difference between the net carrying amount and the net present value of the future expected cash flows associated with the impaired receivable.
The Group's loans and receivables comprise trade and other receivables and cash and cash equivalents in the Consolidated Statement of Financial Position.
Cash and cash equivalents
Cash and short-term deposits in the Statement of Financial Position comprise cash at bank and in hand and short-term deposits.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.
1. Principal accounting policies continued
1.4 Summary of significant accounting policies continued
Restricted cash
Cash which is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period is not considered cash and cash equivalents and is classified as restricted cash.
Trade and other receivables
Trade receivables, which generally have 30-day terms, are recognised at original invoice amount less an allowance for any uncollectable amounts. An allowance for impairment is made when there is objective evidence that the Group will not be able to collect the debts.
Bad debts are written off when identified.
Available for sale financial assets
Non-derivative financial assets not included in the above categories are classified as available for sale and comprise principally the Group's strategic investments in entities not qualifying for subsidiaries, associates or jointly controlled entities. These equity investments are intended to be held by the Group for an indefinite period of time. They are carried at fair value, where this can be reliably measured, with movements in fair value recognised in other comprehensive income and debited or credited to the available for sale trade investments reserve. Where the fair value cannot be reliably measured, the investment is carried at cost or a lower valuation where the Directors consider the value of the investment to be impaired.
Available for sale investments are included within non-current assets. On disposal, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had previously been recognised directly in reserves is recognised in the Income Statement, the cost of such disposed of investments is written off on a first in first out method.
Income from available for sale investments is accounted for in the Income Statement when the right to receive it has been established.
The Group assesses at each reporting date whether there is objective evidence that an investment is impaired. When there is evidence of impairment, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognised in the Income Statement - is removed from other comprehensive income and
recognised in the Income Statement. Impairment losses on equity investments are not reversed through the Income Statement; increases in their fair value after impairment are recognised directly in other comprehensive income.
Financial liabilities and equity
The Group classifies its financial liabilities into one of the two categories: fair value through profit and loss or other financial liabilities. The Group has not classified any of its financial liabilities as fair value through profit and loss.
Other financial liabilities comprise trade and other payables and borrowings.
Warrants
Derivative contracts that only result in the delivery of a fixed amount of cash or other financial assets for a fixed number of an entity's own equity instruments are classified as equity instruments. Warrants relating to equity finance and issued together with ordinary shares placement are valued by residual method and treated as directly attributable transaction costs and recorded as a reduction of share premium account based on the fair value of the warrants. Warrants classified as equity instruments are not subsequently re-measured (i.e., subsequent changes in fair value are not recognised).
Trade and other payables
Trade and other payables are initially recognised at fair value and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services.
Borrowings
Borrowings are recorded initially at their fair value, plus directly attributable transaction costs. Such instruments are subsequently carried at their amortised cost and finance charges, including premiums payable on settlement or redemption, are recognised in the Income Statement over the term of the instrument using an effective rate of interest.
Deferred and contingent consideration
Where it is probable that deferred or contingent consideration is payable on the acquisition of a business based on an earn out arrangement, an estimate of the amount payable is made at the date of acquisition and reviewed regularly thereafter, with any change in the estimated liability being reflected in the Income Statement. Where deferred consideration is payable after more than one year the estimated liability is discounted using an appropriate rate of interest.
1.5 Significant accounting judgements, estimates and assumptions
The preparation of the Group's consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.
Significant judgements in applying the accounting policies
In the process of applying the Group's accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the consolidated financial statements:
Impairment of investments in joint ventures
The carrying amount of investments in joint ventures is tested for impairment annually; in addition, assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amounts for those assets may not be recoverable. During the year, investments into two joint ventures, Vali Carbon Corporation and Carbon Minerals Corporation, were fully impaired. The Directors have taken the view that insufficient management controls and a lack of efficacy by the Company's JV partner and operator in the United States has led to an inability to bring these businesses into metallurgical coal production along the timelines originally envisioned.
Efforts to assist in correcting these operating deficiencies were ultimately unsuccessful and as such the Directors feel an impairment of these assts is appropriate.
Significant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period are:
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value of share options is determined using the Black-Scholes model.
Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
-- in the principal market for the asset or liability; or
-- in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the Group.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
-- Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities;
-- Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and
-- Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
1. Principal accounting policies continued
1.5 Significant accounting judgements, estimates and assumptions continued
Impairment of available for sale financial assets
The Group follows the guidance of IAS 39 to determine when an available for sale financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred "loss event") and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. This determination requires significant judgement. In making this judgement, the Group evaluates, among other factors, the duration and extent to which fair value of an investment is less than its cost.
In the case of equity investments classified as available for sale, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. "Significant" is evaluated against the original cost of the investment and "prolonged" against the period in which the fair value has been below its original cost. Mining share prices typically have more volatility than most other shares and this is taken into account by management when considering if a significant decline in the fair value of its mining investments has occurred. Management would consider that there is a prolonged decline in the fair value of an equity investment when the period
of decline in fair value has extended to beyond the expectation management have for the equity investment. This expectation will be influenced particularly by the company development cycle of the investment.
As a result of the Group's evaluation, impairment of GBP215,372 (2017: GBPnil) on available for sale investments was recognised in the income statement.
2. Segmental analysis
As with all natural resource exploration and development ventures yet to generate cash from operations, ensuring adequate cash is available to meet operational obligations and to provide for investment opportunities is critical. This is therefore the main focus of management information presented to the chief operational decision makers, being the Executive Chairman and the Board of Directors.
The only sources of funds are issues of new equity and sales of exploration rights, investments or other assets. Therefore, in addition to monitoring the current market perception of the Company to shareholders, brokers and other possible providers of equity finance, constant attention is paid to:
-- available cash; and -- the market value of the Group's listed investments.
At 30 June 2018 the Group had cash and cash equivalents of GBP126,125 (2017: GBP9,176).
Once the Group's main focus of operations becomes production of natural resources, the nature of management information examined by the Board will alter to reflect the need to monitor revenues, margins, overheads and trade balances, as well as cash.
2. Segmental analysis continued
IFRS 8 requires the reporting of information about the revenues derived from the various areas of activity and the countries in which revenue is earned, regardless of whether this information is used by management in making operating decisions.
Battery
Australian storage, Other Corporate
Year to 30 June exploration battery investments and Total
2018 GBP metals, GBP unallocated GBP
and energy GBP
storage
GBP
=================== ====================== =========== ===================== ====================== =============
Revenue
Management services - - - - -
=================== ====================== =========== ===================== ====================== =============
Impairment of
investment in
joint ventures - - (1,943,132) - (1,943,132)
Gain on sale of
available for
sale investments - - 1,482,609 - 1,482,609
Exploration
expenses 643 - - - 643
Administrative
expenses1 (715) (54,216) - (680,766) (735,697)
Currency
(loss)/gain (40,414) - - 37,102 (3,312)
Share of profits in - - - - -
associates
Impairment of
exploration assets - - (40,403) - (40,403)
Impairment of
available for
sale investments - - (215,372) - (215,372)
Other income - 12,250 - 35,007 47,257
Finance cost - net - - - (142,212) (142,212)
=================== ====================== =========== ===================== ====================== =============
Net (loss) before
tax from
continuing
operations (40,486) (41,966) (716,298) (750,869) (1,549,619)
=================== ====================== =========== ===================== ====================== =============
Battery Corporate
Australian storage, Other and
Year to 30 June 2017 exploration battery investments unallocated Total
GBP metals, GBP GBP GBP
and energy
storage
GBP
===================== ===================== =========== ===================== ====================== ============
Revenue
Management services - - - 113,350 113,350
===================== ===================== =========== ===================== ====================== ============
- - - 113,350 113,350
Gain on sale of
tenements 55,183 - - - 55,183
Gain/(loss) on sale - - - - -
of investments
Exploration expenses (930) - - - (930) Administrative expenses1 (278) - - (464,343) (464,621) Impairment of exploration assets (229,262) - - - (229,262) Impairment of - - - - - available for sale investments Finance cost - net - - - (57,665) (57,665) ===================== ===================== =========== ===================== ====================== ============ Net (loss) before tax from continuing operations (91,997) - - (442,270) (534,267) ===================== ===================== =========== ===================== ====================== ============
1 Included in administrative expenses is a depreciation charge of GBP15,325 (2017: GBP6,197) under Corporate and unallocated.
Information by geographical area
Presented below is certain information by the geographical area of the Group's activities. Investment sales revenue and exploration property sales revenue are allocated to the location of the asset sold.
Papua New
Year to 30 June 2018 UK Australia Guinea USA Total
GBP GBP GBP GBP GBP
============================== ========= =========== ================== ========= =========
Revenue - - - - -
Gain on sale of investments 1,482,609 - - - 1,482,609
============================== ========= =========== ================== ========= =========
Total segment revenue and
other gains 1,482,609 - - - 1,482,609
============================== ========= =========== ================== ========= =========
Non-current assets
Investments in associates
and joint ventures - - 1,657,625 1,503,377 3,161,002
Goodwill 42,471 - - - 42,471
Property, plant and equipment 195 - - - 195
Available for sale financial
assets 583,350 47,328 - 468,894 1,099,572
============================== ========= =========== ================== ========= =========
Total segment non-current
assets 626,017 47,328 1,657,625 1,972,270 4,303,240
============================== ========= =========== ================== ========= =========
UK Australia Papua New USA Total
Year to 30 June 2017 GBP GBP Guinea GBP GBP
GBP
============================== ========= ========= ================= ======= =========
Revenue
Management services 113,350 - - - 113,350
Gain on sale of tenements - 55,183 - - 55,183
============================== ========= ========= ================= ======= =========
Total segment revenue and
other gains 113,350 55,183 - - 168,533
============================== ========= ========= ================= ======= =========
Non-current assets
Investments in associates
and joint ventures 15,811 - 1,622,302 828,160 2,466,273
Property, plant and equipment 15,520 - - - 15,520
Available for sale financial
assets 1,183,025 260,682 - - 1,443,707
Exploration assets - - - 40,402 40,402
============================== ========= ========= ================= ======= =========
Total segment non-current
assets 1,214,356 260,682 1,622,302 868,562 3,965,902
============================== ========= ========= ================= ======= =========
3. Loss on ordinary activities before taxation 2018 2017
Group GBP GBP
========================================================= ======= =======
Loss on ordinary activities before taxation is stated
after charging:
Auditor's remuneration:
- fees payable to the Company's auditor for the audit
of consolidated and Company financial statements 16,200 16,000
- fees payable to subsidiary auditors for the audit of - -
subsidiary financial statements
Depreciation 15,352 6,197
Directors' emoluments (note 8) 204,689 257,967
Share-based payments - Directors 9,997 87,340
Share-based payments - Staff - 4,019
========================================================= ======= =======
As declared in note 8, Directors are remunerated in part by third parties with whom the Company and Group have contractual arrangements.
4. Administrative expenses Group Group Company Company
2018 2017 2018 2017
GBP GBP GBP GBP
Staff costs
Payroll 197,329 269,472 195,829 269,472
Pension 11,953 - 11,953 -
Consultants 24,800 15,000 15,000 15,000
Employer's NI 12,436 11,970 12,436 11,970
Professional services
Accounting 55,628 45,176 55,628 45,176
Legal 46,106 9,376 43,977 9,376
Marketing 14,256 1,375 14,256 1,375
Other 37,856 9,213 37,856 9,213
Regulatory compliance 61,844 69,109 61,844 69,109
Travel 26,394 16,939 26,172 16,939
Office and admin
General 164,419 (34,491) 123,139 (34,769)
IT-related costs 11,489 19,223 11,489 19,223
Rent 65,742 28,489 65,742 28,489
Insurance 5,477 3,771 5,477 3,771
Total administrative
expenses 735,697 464,621 680,766 464,343
-------------------------------- -------- --------- -------- ---------
5. Finance costs, net 2018 2017
Group GBP GBP
======================= ========= ========
Interest expense (142,212) (57,665)
Interest income - -
======================= ========= ========
(142,212) (57,665)
======================= ========= ========
6. Taxation 2018 2017
GBP GBP
================================================== =========== =========
Current period taxation of the Group
UK corporation tax at 19.00% (2017: 19.75%) on - -
profits for the period
Deferred tax
Origination and reversal of temporary differences - -
Deferred tax assets derecognised - -
================================================== =========== =========
Tax (credit) - -
================================================== =========== =========
Factors affecting the tax charge for the year
Loss on ordinary activities before taxation (1,549,619) (534,267)
================================================== =========== =========
Loss on ordinary activities at the average UK
standard rate of 19% (2017: 19.75%) (294,428) (105,518)
Effect of non-deductible expense 382,207 45,279
Indexation allowance on gains (5,529) -
Effect of tax benefit of losses carried forward 37,445 60,239
Tax losses brought forward (119,695) -
================================================== =========== =========
Current tax (credit) - -
================================================== =========== =========
The Finance Act 2013 set the main rate of corporation tax at 20% from 1 April 2016 and at 19% from 1 April 2017.
Deferred tax amounting to GBPnil (2017: GBPnil) relating to the Group's investments was recognised in the Statement of Comprehensive Income. No deferred tax charge has been made due to the availability of trading losses, which are estimated circa GBP3,204 thousand (2017: GBP2,266 thousand), and capital losses estimated circa GBPnil (2017: GBP30,000).
7. Staff costs
The aggregate employment costs of staff (including 2018 GBP 2017 GBP
Directors) for the year was:
Wages and salaries 165,700 163,900
Pension 11,953 10,201
Social security costs 12,436 15,189
Employee share-based payment charge 35,017 91,359
Total staff costs 225,106 280,649
------------------------------------------------------ ------------ ------------
The average number of Group employees (including 2018 Number 2017 Number
Directors) during the year was:
---------------------------------------------------- ------------ ------------
Executives 3 3
Administration 1 1
4 4
---------------------------------------------------- ------------ ------------
The Company's staff are employed both by the Company and Red Rock Resources plc ("Red Rock"). During the year, staff costs of
GBPnil (2017: nil) were recharged to Red Rock. Such recharges are offset against administration expenses in the Income Statement.
During the year, for all Directors and employees who have been employed for more than three months, the Company contributed to
a defined contributions pension scheme as described under Directors' remuneration in the Directors' Report and a Share Incentive Plan ("SIP") as described under Management incentives in the Directors' Report.
8. Directors' emoluments
Share-based Social
Directors' Consultancy Share payments Pension security Total
2018 fees fees Incentive options contributions costs GBP
GBP GBP Plan GBP GBP GBP
GBP
============ ============ ============ ============ ============= ===================== =============== =======
Executive
Directors
A R M Bell 50,400 15,000 7,200 5,199 3,835 4,571 86,205
S Kaintz 67,400 - 7,200 4,799 4,726 7,146 91,271
============ ============ ============ ============ ============= ===================== =============== =======
Non-executive Directors
E Bugnosen 18,000 - 7,020 - 1,204 989 27,213
============ ============ ============ ============ ============= ===================== =============== =======
135,800 15,000 21,420 9,997 9,766 12,706 204,689
============ ============ ============ ============ ============= ===================== =============== =======
Directors' Consultancy Share Share-based Social
fees fees Incentive payments Pension security Total
2017 GBP GBP Plan options contributions costs GBP
GBP GBP GBP GBP
=========== ========== =========== ================ ============= ===================== =============== =======
Executive
Directors
A R M Bell 49,800 15,000 15,141 21,935 3,700 4,227 109,803
S Kaintz 66,800 - 15,141 20,217 3,907 7,196 113,261
=========== ========== =========== ================ ============= ===================== =============== =======
Non-executive Directors
E Bugnosen 18,000 - 14,564 333 1,002 1,005 34,904
=========== ========== =========== ================ ============= ===================== =============== =======
134,600 15,000 44,846 42,485 8,609 12,428 257,968
=========== ========== =========== ================ ============= ===================== =============== =======
The number of Directors who exercised share options in the year was nil (2017: nil).
During the year, the Company contributed to a Share Incentive Plan more fully described in the Directors' Report on pages 26 to 28. 2,304,000 free shares (2017: 1,371,428) were issued to each employee, including Directors, making a total of 4,539,788
(2017: 3,870,248) free and matching shares issued in relation to services provided by those employees during the reporting year.
The Company also operates a contributory pension scheme more fully described in the remuneration details on page 27.
.
9. Loss per share
The basic earnings/(loss) per share is derived by dividing the loss for the year attributable to ordinary shareholders of the Parent by the weighted average number of shares in issue. Diluted earnings/(loss) per share is derived by dividing the loss for the year attributable to ordinary shareholders of the Parent by the weighted average number of shares in issue plus the weighted average number of ordinary shares that would be issued on conversion of all dilutive potential ordinary shares into ordinary shares.
2018 2017
GBP GBP
======================================================== ============ ===========
(Loss) attributable to equity holders of the Parent
Company (1,543,889) (534,267)
Weighted average number of ordinary shares of GBP0.0001
in issue, used for basic EPS 672,554,882 398,184,727
======================================================== ============ ===========
Earnings/(loss) per share - basic (0.23) pence (0.13)
pence
======================================================== ============ ===========
Earnings/(loss) per share - fully diluted (0.23) pence (0.13)
pence
======================================================== ============ ===========
At 30 June 2018 and at 30 June 2017, the effect of all the instruments in issue is anti-dilutive as it would lead to a further reduction of loss per share, therefore they were not included in the diluted loss per share calculation.
Options and warrants with conditions not met at the end of the period, that could potentially dilute basic EPS in the future, but were not included in the calculation of diluted EPS for the periods presented:
2018 2017
GBP GBP
========================================================= ============= =============
(a) Number of convertible potential shares - convertible
loans, assume converted at the most beneficial price
for the holder. More details are disclosed in this
note below - 147,717,876
(b) Share options granted to employees - total, of
them 27,060,000 27,060,000
- Vested at the end of reporting period 25,330,000 15,330,000
- Not vested at the end of the reporting period 1,730,000 11,730,000
(c) Number of warrants given to shareholders as a
part of placing equity instruments 434,665,467 236,685,670
========================================================= ============= =============
Total number of contingently issuable shares that
could potentially dilute basic earnings per share
in future and anti-dilutive potential ordinary shares
that were not included into the fully diluted EPS
calculation 461,725,467 411,463,546
========================================================= ============= =============
Convertible loans
On 29 May 2018, the Company took a loan of GBP1,060,343, net of arrangement fees, (USD1,600,000 gross of arrangement fees in original currency of borrowing) from institutional investors to fund its 47% interest in a joint venture Mining Equity Trust, LLC ("MET").
More information on this loan is disclosed in note 16. The loan's initial term is six months with an extension option. If extended, the loan may be converted by the noteholder at a fixed price equal to 130% of the 10-day VWAP prior to the initial repayment date/date of the available six-month extension period (the "Fixed Price"). If paid in shares, the payment amount will be convertible at the lower of (i) the Fixed Price, or (ii) a price equal to 90 per cent of the lowest daily VWAP over the five trading days immediately preceding the date of the relevant payment date.
On 5 April 2017, the Company raised an unsecured USD1,000,000 (USD900,000 net of fees) one-year convertible loan bearing interest at 12%. The lender had an option to convert any part of the loan at any time during the twelve months into the Company's ordinary shares at the lower of a fixed conversion price of 1.155 pence per share and a variable conversion price of 90 per cent. of the lowest daily VWAP at which the shares have traded in the five trading days prior to each conversion. This loan was repaid in cash in full on 30 January 2018.
For the purposes of the inclusion into this disclosure, the conversion price most beneficial for the lender was applied, which is 90% of the VWAP for five days before 30 June 2017.
There were no ordinary share transactions after 30 June 2018, that could have changed the EPS calculations significantly if those transactions had occurred before the end of the reporting period.
10. Property, plant and equipment
Office furniture
and
Leasehold improvements equipment Total
Group and Company GBP GBP GBP
------------------------------------ ------------------------ ---------------- ---------
Cost
At 1 July 2016 32,822 126,712 159,534
Additions - - -
Disposals - - -
At 30 June 2017 and at 30 June 2018 32,822 126,712 159,534
------------------------------------ ------------------------ ---------------- ---------
Depreciation
At 1 July 2016 (15,422) (122,395) (137,817)
Charge (3,900) (2,297) (6,197)
At 30 June 2017 (19,322) (124,692) (144,014)
Charge (13,500) (1,825) (15,325)
At 30 June 2018 (19,322) (124,692) (144,014)
------------------------------------ ------------------------ ---------------- ---------
Net book value
At 30 June 2018 - 195 195
------------------------------------ ------------------------ ---------------- ---------
At 30 June 2017 13,500 2,020 15,520
------------------------------------ ------------------------ ---------------- ---------
11. Investments in subsidiaries and goodwill
Company GBP ============================ ==== Cost At 1 July 2016 and 30 June 2017 482 Additions 1 At 30 June 2018 483 ================================= ==== Impairment At 1 July 2016, 30 June - 2017 and 30 June 2018 ============================ ==== Net book amount at 30 June 2018 483 Net book amount at 1 July 2016 and 30 June 2017 482 ================================= ====
The Parent Company of the Group holds more than 50% of the share capital of the following companies, the results of which are consolidated:
Proportion
Company Country Class held by Nature
of Group of
registration business
================= ================== ========= ================= =====================================================
Regency Mines Australia Ordinary 100% Mineral exploration
Australasia
Pty Limited
Regency Resources USA Ordinary 100% Natural resources
Inc
ESTEQ Limited UK Ordinary 100% Holding company
Allied Energy
Services UK Ordinary 80% Energy storage, trading
Ltd (indirectly and grid backup
owned
through ESTEQ
Limited)
================= ================== ========= ================= =====================================================
Goodwill
On 10 November 2017, RGM formed a new 100% owned subsidiary, ESTEQ Limited, to act as the vehicle for development of opportunities in the battery and storage technology sector. On 15 March 2018, ESTEQ Limited committed to investing GBP250,000 into newly issued shares of Allied Energy Services Limited, representing 80% interest in that entity. Non-controlling shareholders brought with them land rights and connections for seven projects where combined battery and gas fired generation plants could be connected to the UK national grid. These seven projects had a combined export capacity potential of 140MW. They also have engaged in discussions with multi-national technology and equipment manufacturers to supply the plant required for the construction of the projects. Further advanced contractual discussions have occurred with several approved engineering, procurement and construction contractors to construct, connect and commission each generation plant. Allied Energy had also previously negotiated a five-year framework agreement with a major network player to develop grid services, to tender for services on Allied Energy's behalf, and to manage the resulting revenue contracts. Further, the existing management team offers many years of experience in renewable energy, from procuring finance to finding key partners and in constructing multiple anaerobic digestion plants across the United Kingdom.
12. Investments in associates and joint ventures
Group Company
Carrying Balance GBP GBP
---------------------------------------- ---- ------------ ------------
At 1 July 2016 1,638,113 1,754,776
Additions 1,928,134 1,928,131
Transferred to available for
sale investments (40,881) (40,881)
Gain on re-translation from functional
into Group presentation currency 60,391 60,391
------------------------------------------ --- ------------ ------------
At 30 June 2017 3,585,757 3,702,417
Additions 1,503,377 1,503,377
Impairment of investment in joint
ventures (1,928,132) (1,928,132)
Net book amount at 30 June 2018 3,161,002 3,277,662
------------------------------------------------- ------------ ------------
On 11 June 2017, the Company signed a shareholders' agreement with Legacy Hill Resources Ltd, in accordance with which the Company will hold 47% of Mining Equity Trust, LLC ("MET"), a new Delaware-incorporated limited liability company in and through which Legacy Hill Resources Ltd ("LHR"), a privately-owned mining company, (as majority shareholder) and the Company (as minority shareholder)
will hold their interests in the MET joint venture. This 47% stake represents Regency's proportionate share of cash and non-cash contributions to the establishment of the JV. The contribution of Regency to the JV has been funded in part by a USD1,600,000 loan provided by Cuart Investments PCC Ltd and YA II PN Ltd; the loan details are further described in the note 16.
During the year, investments in Vali Carbon Corporation and Carbon Minerals Corporation were impaired. The Directors have taken the view that insufficient management controls and a lack of efficacy by the Company's JV partner and operator in the United States have led to an inability to bring these businesses into metallurgical coal production along the timelines originally envisioned. Efforts to assist in correcting these operating deficiencies were ultimately unsuccessful and as such the Directors feel an impairment of these assets is appropriate.
At 30 June 2018, the Parent Company of the Group had a significant influence by virtue other than a shareholding of over 20% or had joint control through a joint venture contractual arrangement in the following companies:
Proportion
Name Country of Class held by Status Accounting
registration Group at year end
30
June
2018
=========== ================================ ======== ================= ================= =========================
Direct
Mining USA Ordinary 47% Active 31 December
Equity 2018
Trust,
LLC
("MET")1
Carbon USA Ordinary 20% Fully impaired 31 December Minerals 2018 Corporation Vali Carbon USA Ordinary 20% Fully impaired 31 December Corporation 2018 Oro Nickel Papua New Guinea Ordinary 50% Active 30 June 2018 Limited1 =========== ================================ ======== ================= ================= =========================
1 These entities have not yet completed financial statements at the time of preparation of the financial statements of Regency Mines plc. Financial statements will be available after the accounting year end of the entities.
12. Investments in associates and joint ventures continued
At 30 June 2017, the Parent Company of the Group had a significant influence by virtue other than a shareholding of over 20% or had joint control through a joint venture contractual arrangement in the following companies:
Proportion
Name Country of Class held by Accounting
registration Group year end
=============== ============================================= ======== ================= =========================
Direct
Carbon Minerals USA Ordinary 20% 31 December
Corporation1 2017
Vali Carbon USA Ordinary 20% 31 December
Corporation1 2017
Oro Nickel Papua New Guinea Ordinary 50% 30 June 2017
Limited1
=============== ============================================= ======== ================= =========================
1 These entities have not yet completed financial statements at the time of preparation of the financial statements of Regency Mines plc. Financial statements will be available after the accounting year end of the entities.
As of 1 July 2017, a decision was taken that Red Rock Resources, an AIM listed company, accounted as associate up until 30 June 2016, should be carried in the accounts as available for sale financial asset. Market value of shares at 1 July 2017 was GBP40,881.
13. Available for sale financial assets
Group Company
==============================================
GBP GBP
============================================== ============ ============
Carrying value
At 1 July 2017 1,147,460 1,147,460
Additions during the year 145,127 135,278
Transfer from investment in associates (note
12) 40,881 40,881
Revaluation 110,239 110,239
Value at 30 June 2017 1,443,707 1,433,858
----------------------------------------------- ------------ ------------
Additions during the year 1,336,502 936,502
Disposals during the year (1,318,181) (1,318,181)
Revaluation (163,597) (158,897)
Impairment (215,372) (215,372)
Impairment reversal 16,513 16,513
=============================================== ============ ============
Value at 30 June 2018 1,099,572 694,423
=============================================== ============ ============
Market value of investments
The market value as at 30 June 2018 of the available for sale listed and unlisted investments was as follows:
Group Company
================== =========
2018 2017 2018 2017
GBP GBP GBP GBP
======================================== ================== ========= ========== ===========
Quoted on London AIM 183,349 80,758 183,349 80,758
Quoted on Standard List of LSE 468,894 - 468,894 -
Quoted on other foreign stock exchanges 42,179 47,577 42,179 37,728
Unquoted investments at fair value 405,150 1,315,372 - 1,315,372
======================================== ================== ========= ========== ===========
At 30 June 1,099,572 1,443,707 694,422 1,433,858
======================================== ================== ========= ========== ===========
In August 2017 the Company disposed of 1.9% of its stake in Horse Hill Development Ltd ("HHDL") to UK Oil and Gas ("UKOG"). For this interest the Company received GBP54,498 in obligations assumed by the buyer as well as GBP268,502 of value in UKOG shares. These shares were subsequently sold for gross proceeds of GBP1.3m.
On 29 November 2017, the Company completed a sale of its remaining 3.1% interest in HHDL for GBP630,000, of which GBP315,000 was delivered in cash and 50% in shares of the buyer, Alba Mineral Resources plc ("Alba"). These shares were subsequently sold for gross proceeds of
GBP299,286.
Total gain recognised on sale of available for sale investments during the reporting year was GBP1,482,609, of which gain on sale of HHDL shares amounted to GBP453,502 and gain on sale of UKOG shares GBP1,029,185.
During the reporting year the Company sold part of its shares in Alba, recognising a loss on sale of those shares in the amount of GBP21,481. Gain on sale of shares in Greatland Gold plc, that were also sold by the Company during the year, was recorded in the amount of GBP21,403.
On 4 October 2017, Curzon Energy Plc, classified under unquoted investments at fair value in the comparative period in the table above, listed its shares at the Standard Listing segment of the Official List, to trade on London Stock Exchange's main market for listed securities.
On 22 December 2017, ESTEQ Ltd, the Company's 100% owned subsidiary, made an initial investment of GBP200,000 in Whitecar Ltd.,
a company currently operating electric vehicle rental car services in several UK locations. It was followed by another GBP200,000 investment in Whitecar by ESTEQ in February 2018. These two tranches gave ESTEQ an initial holding of 5.8% in Whitecar Ltd. Whitecar has continued its European expansion during and after the year end, opening a new operating branch in Oslo, Norway and preparing for its first two operating locations in Germany, while significantly increasing the size of its operating fleet in the United Kingdom. Whitecar closed its most recent fundraise during Q3 2018 at a share price of GBP0.04, implying a valuation of the Company's holdings of GBP462,160. With this in consideration, the Directors believe that the value of the contribution paid for the original investment represents fair value of the residual 5.59% investment at the year end and no impairment is required.
14. Exploration assets
Group Company
------------------------
2018 2017 2018 2017
GBP GBP GBP GBP
Cost
At 30 June 2,894,837 2,785,118 1,050,372 1,050,372
Additions during
the year - 594 - -
Disposals in the
year - (2,321) - -
Exchange gains - 111,446 - -
At 30 June 2,894,837 2,894,837 1,050,372 1,050,372
Impairment
At 30 June (2,854,435) (2,551,218) (1,009,970) (1,009,970)
Impairments recognised
in the year (40,402) (229,262) (40,402) -
Exchange gains - (73,955) - -
At 30 June (2,894,837) (2,854,435) (1,050,372) (1,009,970)
Net book value
At 30 June - 40,402 - 40,402
15. Trade and other receivables
Company
Group
2018 2017 2018 2017
GBP GBP GBP GBP
Non-current
Amounts owed by Group
undertakings - - 1,470,447 805,274
Amounts owed by related
parties
- due from associates
and joint ventures 1,274,569 1,239,779 1,274,569 1,239,779
Total 1,274,569 1,239,779 2,745,016 2,045,053
Current
Sundry debtors 105,686 66,170 98,674 65,912
Prepayments 24,809 44,111 19,409 44,111
Amounts owed by related
parties
- due from key management 6,263 6,263 6,263 6,263
Total 136,758 116,544 124,346 116,286
16. Trade and other payables
Group Company
2018 2017 2018 2017
GBP GBP GBP GBP
Trade and other payables 59,754 212,164 43,057 201,892
Amounts due to related
parties:
- due to Red Rock Resources plc 203,498 118,015 203,498 118,015
Accruals 33,500 71,455 33,500 71,457
Trade and other payables 296,752 401,634 280,055 391,364
Short-term borrowings (note 22) 1,097,600 771,087 1,097,600 771,087
Total 1,394,352 1,172,721 1,377,655 1,162,451
Trade and other payables include a balance of GBP203,498 (2017: GBP118,015) owing to Red Rock Resources plc, a related party entity as a result of same directorships.
Loan from Cuart and YA II PN to fund MET JV
On 29 May 2018, the Company took a loan of GBP1,060,343, net of arrangement fees, (USD1,600,000 gross original value) from institutional investors to fund its 47% interest in a joint venture Mining Equity Trust, LLC ("MET"). The loan carries a 10% interest rate and is for
an initial term of six months and is subject to an implementation fee of USD96,000. A further six-month extension is available for a 5% fee. If extended, the loan may be converted by the noteholder at a fixed price equal to 130% of the 10-day VWAP prior to the initial repayment date of the available six-month extension period (the "Fixed Price"). If paid in shares, the payment amount will be convertible at the lower of (i) the Fixed Price, or (ii) a price equal to 90 per cent of the lowest daily VWAP over the five trading days immediately preceding
the date of the relevant payment date. The Company has the right to prepay the loan at any time in full for a 3% redemption fee, provided that after the First Repayment Date the Company may only prepay the loan if the stock price is trading below the Fixed Price at the time of prepayment.
YA II PN Limited
A short-term loan of GBPnil (2017: GBP771,087) was provided by YA II PN Limited. Interest on the balance of this loan is charged at a rate of 12% per annum. This loan and all accumulated interest was repaid in full on 30 January 2018.
17. Reserves
Share premium
The share premium account represents the excess of consideration received for shares issued above their nominal value net of transaction costs.
Foreign currency translation reserve
The translation reserve represents the exchange gains and losses that have arisen on the retranslation of overseas operations.
Retained earnings
Retained earnings represent the cumulative profit and loss net of distributions to owners.
Available for sale financial asset reserve
The available for sale financial asset reserve represents the cumulative revaluation gains and losses in respect of available for sale trade investments.
Associate investments reserve
The associate investments reserve represents the cumulative share of gains/losses of associates recognised in the Statement of Other Comprehensive Income.
Share-based payment reserve
The share-based payment reserve represents the cumulative charge for options granted, still outstanding and not exercised.
18. Share capital of the Company
The share capital of the Company is as follows:
2018 2017
Issued and fully paid GBP GBP
791,239,654 (2017: 576,491,064) ordinary shares
of GBP0.0001 each 79,124 57,650
1,788,918,926 deferred shares of GBP0.0009
each 1,610,027 1,610,027
2,497,434,980 A deferred shares of GBP0.000095
each 237,256 237,256
As at 30 June 1,926,407 1,904,933
Nominal
Movement in ordinary shares Number GBP
As at 1 July 2016 - ordinary shares of GBP0.0001
each 252,384,571 25,239
Issued 30 August 2016 at GBP0.004 per share 65,625,000 6,563
Issued 13 October 2016 at GBP0.004 per share 9,375,000 937
Issued 20 December 2016 at GBP0.004 per share 52,500,000 5,250
Issued 18 January 2017 at GBP0.004 per share 15,000,000 1,500
Issued 20 January 2017 at GBP0.004 per share 12,500,000 1,250
Issued 08 February 2017 at GBP0.005 per share 21,000,000 2,100
Issued 22 February 2017 at GBP0.0065 per share 11,538,461 1,154
Issued 28 February 2017 at GBP0.008 per share 18,125,000 1,812
Issued 01 March 2017 at GBP0.0039 per share 17,898,183 1,790
Issued 13 March 2017 at GBP0.013 per share 576,923 58
Issued 20 March 2017 at GBP0.008 per share 625,000 63
Issued 21 March 2017 at GBP0.008 per share 4,000,000 400
Issued 27 March 2017 at GBP0.008 per share 3,750,000 375
Issued 03 April 2017 at GBP0.01 per share 32,020,493 3,202
Issued 04 April 2017 at GBP0.0105 per share 5,119,658 512
Issued 10 April 2017 at GBP0.008 per share 500,000 50
Issued 21 April 2017 at GBP0.008 per share 2,175,000 217
Issued 03 May 2017 at GBP0.009 per share 33,999,996 3,400
Issued 05 May 2017 at GBP0.009 per share 17,777,779 1,778
As at 30 June 2017 - ordinary shares of GBP0.0001
each 576,491,064 57,650
Issued 06 Dec 2017 at GBP0.00625 per share 2,304,000 230
Issued 11 Jan 2018 at GBP0.0055 per share 190,909,090 19,091
Issued 29 Jan 2018 at GBP0.0055 per share 18,181,818 1,818
Issued 06 Apr 2018 at GBP0.00475 per share 3,353,682 335
As at 30 June 2018 - ordinary shares of GBP0.0001
each 791,239,654 79,124
18. Share capital of the Company continued
Share re-organisation
The Company's share capital consists of three classes of shares, being:
-- Ordinary shares with a nominal value of 0.01 pence, which are the Company's listed securities.
-- Deferred shares with a value of 0.09 pence. -- A Deferred shares with a value of 0.0095 pence.
Subject to the provisions of the Companies Act 2006, the deferred shares may be cancelled by the Company, or bought back for
GBP1 and then cancelled. These deferred shares are not quoted and carry no rights whatsoever.
Warrants
At 30 June 2018, the Company had 434,665,467 warrants in issue (2017: 236,685,670) with exercise price ranging GBP0.008-GBP0.018 (2017: GBP0.0039-GBP0.018). Out of those, 264,090,904 (2017: 54,999,996) have market performance conditions that accelerate the expiry date. Weighted average remaining life of the warrants at 30 June 2018 was 395 days (2017: 637 days). All the warrants are issued by the Group to its shareholders in the capacity of shareholders and therefore are outside of IFRS 2 scope.
2018 2017
Group and Company number of number
warrants of warrants
Outstanding at the beginning of the
period 236,685,670 11,111,111
Granted during the period 209,090,908 255,326,482
Exercised during the period - -
Lapsed during the period (11,111,111) (29,751,923)
Outstanding at the end of the period 434,665,467 236,685,670
At 30 June 2018 the Company had the following warrants to subscribe for shares in issue:
Grant Expiry date Warrant exercise Number
price of warrants
GBP
30 Aug 2016 11 Mar 2019 0.008 64,137,500
19 Oct 2016 11 Mar 2019 0.008 9,375,000
20 Dec 2016 19 Dec 2018 0.013 26,062,500
18 Jan 2017 17 Jan 2019 0.013 13,750,000
19 Jan 2017 18 Jan 2019 0.008 12,500,000
10 Feb 2017 20 Feb 2019 0.010 21,000,000
22 Feb 2017 27 Aug 2018 0.013 10,961,538
10 Apr 2017 20 Oct 2018 0.013 16,010,246
05 May 2017 07 May 2019 0.018 17,777,779
08 May 2017 07 May 2019 0.018 33,999,996
23 Jan 2018 22 Jan 2020 0.010 190,909,090 12 Feb 2018 11 Feb 2020 0.010 18,181,818 Total warrants in issue at 30 June 2018 434,665,467
The aggregate fair value related to the share warrants granted during the reporting period was GBPnil (2017: GBPnil).
Capital management
Management controls the capital of the Group in order to control risks, provide the shareholders with adequate returns and ensure that the Group can fund its operations and continue as a going concern.
The Group's debt and capital includes ordinary share capital and financial liabilities, supported by financial assets. There are no externally imposed capital requirements.
Management effectively manages the Group's capital by assessing the Group's financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders and share issues.
There have been no changes in the strategy adopted by management to control the capital of the Group since the prior year.
19. Share-based payments
Employee share options
In prior years, the Company established an employee share option plan to enable the issue of options as part of the remuneration of key management personnel and Directors to enable them to purchase ordinary shares in the Company. Under IFRS 2 "Share-based Payments", the Company determines the fair value of the options issued to Directors and employees as remuneration and recognises the amount as an expense in the Income Statement with a corresponding increase in equity.
At 30 June 2018 and at 30 June 2017, the Company had outstanding options to subscribe for ordinary shares as follows:
Options issued 14 June Options issued
2016 exercisable at 0.45 9 September 2016 Total
pence per share expiring exercisable at number
29 January 2022 0.8p per share
Number expiring 9 September
2022
Number
A R M Bell 2,960,000 10,400,000 13,360,000
S Kaintz 2,820,000 9,600,000 12,420,000
E Bugnosen 560,000 - 560,000
Employees 720,000 - 720,000
Total 7,060,000 20,000,000 27,060,000
2018 2017
Weighted Weighted
Number of average Number of average
Company and Group options exercise options exercise
Number price Number price
Pence Pence
Outstanding at the beginning of the period 27,060,000 0.71 7,060,000 0.45
Granted during the year - - 20,000,000 0.80
Cancelled during the year - - - -
===========================================
Outstanding at the end of the period 27,060,000 0.71 27,060,000 0.71
===========================================
No options were granted during the reporting year. During the financial year ended 30 June 2017, 20,000,000 options were issued
at an exercise price of 0.8 pence and they expire on 9 September 2022. The options were granted in four tranches, first tranche vested immediately and the other three tranches had time vesting conditions attached.
The weighted average fair value of each option granted during the year was 0.244 pence (2017: 0.244 pence).
The exercise price of options outstanding at 30 June 2018 and 30 June 2017 ranged between 0.45p and 0.8p. Their weighted average contractual life was 4.014 years (2017: 5.014 years).
Of the total number of options outstanding at 30 June 2018, 25,330,000 (2017: 15,330,000) had vested and were exercisable.
The weighted average share price (at the date of exercise) of options exercised during the year was nil (2017: nil) as no options were exercised.
19. Share-based payments continued
The following information is relevant in the determination of the fair value of options granted under equity-settled share-based remuneration schemes:
Granted on 9 Granted on
September 14 June 2016
2016
Black-Scholes model Black-Scholes
Option pricing model used model
Weighted average shares price at grant
date, pence 0.55 0.35
Exercise price, pence 0.80 0.45
Weighted average contractual life, months 62.00 55.00
Expected volatility, % 58.843 61.986
Expected dividend growth rate, % 0 0
Risk-free interest rate, % 0.309 0.679
Share-based remuneration expense related to the share options grant is included in the administrative expenses line in the Consolidated Income Statement in the amount of GBP9,997 (2017: GBP42,912).
Share Incentive Plan
In January 2012 the Company implemented a tax efficient Share Incentive Plan, a government approved scheme, the terms of which provide for an equal reward to every employee, including Directors, who have served for three months or more at the time of issue. The terms of the plan provide for:
-- each employee to be given the right to subscribe any amount up to GBP150 per month with Trustees who invest the monies in the Company's shares;
-- the Company to match the employee's investment by contributing an amount equal to double the employee's investment ("matching shares"); and
-- the Company to award free shares to a maximum of GBP3,600 per employee per annum. The subscriptions remain free of taxation and national insurance if held for five years.
All such shares are held by SIP Trustees and the ordinary shares cannot be released to participants until five years after the date of the award.
During the financial year, a total of 5,657,682 free, matching and partnership shares were awarded (2017: 6,491,086) with a fair value ranging between 0.475 to 0.625 pence (2017: fair value ranging between 0.425 pence to 1.05 pence) resulting in a share-based payment charge of GBP25,020 (2017: GBP48,446), included in the administrative expenses line in the Consolidated Income Statement.
20. Cash and cash equivalents 30 June 30 June
Group 2018 2017
GBP GBP
Cash in hand and at bank 126,125 9,176
30 June 30 June
Company 2018 2017
GBP GBP
Cash in hand and at bank 6,505 8,125
21. Financial instruments
21.1 Categories of financial instruments
The Group and Company hold a number of financial instruments, including bank deposits, short-term investments, loans and receivables and trade payables.
The carrying amounts for each category of financial instrument, measured in accordance with IAS 39 as detailed in the accounting policies, are as follows:
30 June 30 June
Group 2018 2017
GBP GBP
===========
FINANCIAL ASSETS
Available for sale financial assets at fair value through other comprehensive
income
Quoted equity shares 694,422 128,332
Unquoted equity shares 405,150 1,315,375
===========
Total available for sale financial assets
carried at fair value 1,099,572 1,443,707
Cash and cash equivalents 126,125 9,176
Loans and receivables
Trade and other receivables 1,411,327 1,356,323
===========
Total financial assets held at amortised cost 1,411,327 1,356,323
Total financial assets 2,637,025 2,809,206
===========
Total current 262,883 125,720
Total non-current 2,374,141 2,683,486
30 June 30 June
Company 2018 2017
GBP GBP
===========
FINANCIAL ASSETS
Available for sale financial assets at fair value through other comprehensive
income
Quoted equity shares 694,422 118,485
Unquoted equity shares - 1,315,375
===========
Total available for sale financial assets 694,422 1,433,860
Cash and cash equivalents 6,505 8,125
Loans and receivables
Trade and other receivables 2,869,362 2,161,339
===========
Total financial assets held at amortised
cost 2,869,362 2,161,339
Total financial assets 3,570,290 3,595,199
===========
Total current 130,851 116,286
Total non-current 3,439,439 3,478,913
21. Financial instruments continued
21.1 Categories of financial instruments continued
Available for sale financial assets carried at fair value using valuation techniques other than observable market value
As at 30 June 2018, GBP405,150 (2017: GBP1,315,372) of the Group's available for sale financial assets are valued using valuation techniques other than observable market price due to the investment being privately held and no quoted market price information is available. Financial instruments valued using other valuation techniques can be reconciled from beginning to ending balances as follows:
Group Company
================== =========
Company and Group 2018 2017 2018 2017
GBP GBP GBP GBP
====================================== ================== =========
Brought forward 1,315,372 1,139,873 1,315,372 1,139,873
Additions 753,000 75,000 353,000 75,000
Disposals (850,000) - (850,000) -
Revaluation 5,150 100,499 - 100,499
Reclassified to listed (Curzon Energy
Plc) (603,000) - (603,000) -
Impairment (215,372) - (215,372) -
====================================== ================== =========
405,150 1,315,372 - 1,315,372
====================================== ================== =========
During the year the Group made an additional cash investment of GBP353,000 in Curzon Energy Plc (formerly Westport Energy Plc), which brought the value of its investment to GBP603,000 (2017: GBP250,000). This investment was held at cost until its shares were admitted to trading on Standard Listing of the LSE on 4 October 2017, since then it has been carried at observable market value.
The Group's investment in Direct Nickel Ltd was further impaired to zero value during the year. At 30 June 2017 it was carried at cost less impairment and valued at GBP215,372. There is currently no intention to dispose of this investment in the foreseeable future.
In the comparative year, the Group made a cash and share investment of GBP445,000 in Horse Hill Developments Ltd, that was further re-valued to GBP850,000. During the reporting period, all the shares in Horse Hill Developments Ltd. were sold.
During the reporting period, the Company's 100% owned subsidiary ESTEQ Limited invested GBP400,000 into shares of Whitecar Ltd ("Whitecar"), a company currently operating electric vehicle rental car services out of Heathrow and several UK locations; this represented 5.8% of Whitecar Ltd issued share capital at 30 June 2018.
30 June 30 June
Group 2018 2017
GBP GBP
Financial liabilities
Loans and borrowings
Trade and other payables 296,753 401,634
Short-term borrowings 1,097,600 771,087
=========
Total financial liabilities 1,394,353 1,172,721
=========
Total current 1,394,353 1,172,721
Total non-current - -
Trade receivables and trade payables
Management assessed that other receivables and trade and other payables approximate their carrying amounts largely due to the short-term maturities of these instruments.
Borrowings
The carrying value of interest-bearing loans and borrowings is determined by calculating present values at the reporting date, using the issuer's borrowing rate.
21.2 Fair values
Financial assets and financial liabilities measured at fair value in the Statement of Financial Position are grouped into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:
-- Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities;
-- Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and
-- Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
The carrying amount of the Group and Company's financial assets and liabilities is not materially different to their fair value. The fair value of financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Where a quoted price in an active market is available, the fair value is based on the quoted price at the end of the reporting period. In the absence of a quoted price in an active market, the Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
The following table provides the fair value measurement hierarchy of the Group's assets and liabilities:
Group Level 1 Level 2 Level Total
GBP GBP 3 GBP
GBP
30 June 2018
Available for sale financial assets at fair value through other comprehensive
income
- Quoted equity shares 694,422 - - 694,422
- Unquoted equity investments - 405,150 - 405,150
30 June 2017
Available for sale financial assets at fair value through other comprehensive
income
- Quoted equity shares 128,332 - - 128,332
- Unquoted equity investments - 1,315,375 - 1,315,375
Company Level 1 Level 2 Level Total
GBP GBP 3 GBP
GBP
30 June 2018
Available for sale financial assets at fair value through other comprehensive
income
- Quoted equity shares 694,422 - - 694,422
- Unquoted equity investments - - - -
30 June 2017
Available for sale financial assets at fair value through other comprehensive
income
- Quoted equity shares 118,485 - - 118,485
- Unquoted equity investments - 1,315,375 - 1,315,375
21. Financial instruments continued
21.3 Financial risk management policies
The Directors monitor the Group's financial risk management policies and exposures and approve financial transactions.
The Directors' overall risk management strategy seeks to assist the consolidated Group in meeting its financial targets, while minimising potential adverse effects on financial performance. Its functions include the review of credit risk policies and future cash flow requirements.
Specific financial risk exposures and management
The main risks the Group is exposed to through its financial instruments are credit risk and market risk, consisting of interest rate risk, liquidity risk, equity price risk and foreign exchange risk.
Credit risk
Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract obligations that could lead to a financial loss for the Group.
Credit risk is managed through the maintenance of procedures (such procedures include the utilisation of systems for the approval, granting and renewal of credit limits, regular monitoring of exposures against such limits and monitoring of the financial liability of significant customers and counterparties), ensuring, to the extent possible, that customers and counterparties to transactions are of sound creditworthiness. Such monitoring is used in assessing receivables for impairment.
Risk is also minimised through investing surplus funds in financial institutions that maintain a high credit rating or in entities that the Directors have otherwise cleared as being financially sound.
Trade and other receivables that are neither past due nor impaired are considered to be of high credit quality. Aggregates of such amounts are as detailed in note 15.
There are no amounts of collateral held as security in respect of trade and other receivables.
The consolidated Group does not have any material credit risk exposure to any single receivable or group of receivables under financial instruments entered into by the consolidated Group.
Liquidity risk
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The Group manages this risk through the following mechanisms:
-- monitoring undrawn credit facilities; -- obtaining funding from a variety of sources; and -- maintaining a reputable credit profile.
The Directors are confident that adequate resources exist to finance operations to commercial exploration and that controls over expenditure are carefully managed. All financial liabilities are due to be settled within the next twelve months.
Market risk
Interest rate risk
The Company is not exposed to any material interest rate risk because interest rates on loans are fixed in advance.
Equity price risk
Price risk relates to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices largely due to demand and supply factors for commodities, but also include political, economic, social, technical, environmental and regulatory factors.
Foreign exchange risk
The Group's transactions are carried out in a variety of currencies, including Australian Dollar, Papua New Guinea Kina and UK Sterling. To mitigate the Group's exposure to foreign currency risk, non-Sterling cash flows are monitored.
22. Reconciliation of liabilities arising from financing activities
Non cash
flow loan Non cash
funds Non cash flow interest
30 June Cash flows transferred flow forex and arrangement 30 June
2017 loan directly movement fees accreted 2018
GBP repayment to MET JV GBP GBP GBP
GBP escrow by
the
lender
GBP
Cuart and YA II PN
loan
to finance MET - - 1,060,343 9,719 27,537 1,097,600
YA II PN loan 771,087 (861,511) - (24,251) 114,675 -
========= ==================
771,087 (861,511) 1,060,343 (14,532) 142,212 1,097,600
========= ==================
Significant non cash flow transactions
During the year a loan from a group of institutional investors in the amount of GBP1,060,343, net of arrangement fees of GBP146,156, (USD1,407,287 net of arrangement fees of USD192,713 in the original loan currency), was paid directly to the MET JV escrow account as Regency's share of investment into MET JV.
23. Operating lease commitments
On 5 April 2013, Red Rock Resources plc entered into a joint lease agreement with Regency Mines plc and Greatland Gold plc at Ivybridge House, 1 Adam Street, London WC2N 6LE. The lease was non-cancellable until 1 December 2017. The Company let the lease expire on
1 December 2017 and moved into new offices.
On 21 August 2017, the Company entered into a new lease agreement for office space with WeWork Aldwych House. The initial lease runs from 1 October 2017 through 30 September 2019 and is non-cancellable during this period. Thereafter the lease can be terminated by giving one full calendar month notice.
The Group and Company's total of future minimum lease payments under non-cancellable operating leases are as presented in the table below:
Group Company
2018 2017 2018 2017
GBP GBP GBP GBP
Not later than one year 86,638 12,069 86,638 12,069
Later than one year and not later
than five years 21,750 - 21,750 -
Later than five years - - - -
Total non-cancellable operating
leases commitments at 30 June 108,388 12,069 108,388 12,069
24. Significant agreements and transactions
-- Financing
-- On 11 January 2018, the Company raised GBP1,050,000 through the issue of 190,909,090 new ordinary shares at 0.01p each at a price
-- of 0.55 per share. Directors Andrew Bell and Scott Kaintz invested an aggregate of GBP100,000 cash in the strategic financing to acquire 18,181,818 shares. Each share issued had an attached warrant to subscribe for a further share at 1.0p. The warrants were issued with the Company being able to accelerate warrant conversion if the volume weighted average price of shares equalled or exceeded 3.5p for 10 consecutive days.
-- Further to this, on 29 January 2018 Regency Mines announced that it had successfully closed an additional GBP100,000 fundraise through the Teathers mobile application, which was fully subscribed. 18,181,818 new ordinary shares of 0.01p each were issued under the fundraise at a price of 0.55p per ordinary share on the same terms as described in the announcement dated 11 January 2018.
-- On 30 January 2018, the Company announced that it had repaid its convertible loan with YA PN Ltd. The final pay-out amounted to USD835,115. It included USD725,647 of principal and USD33,548 of accrued interest with a reduced pre-payment fee of 10%.
-- On 6 June 2018 the Company announced that it had agreed to borrow gross proceeds of USD1,600,000 from institutional investors in order to fund a portion of its obligations under the MET coal joint venture. The loan will carry a 10% interest rate and be for an initial term of six months, subject to an implementation fee of USD96,000. A further six-month extension would be available for a 5% fee and if extended the loan may be converted by the noteholder at a fixed price equal to 130% of the 10 day VWAP prior to the date of the extension period. If extended beyond six months the loan is subject to a repayment schedule with payments to be paid in cash or shares at the discretion of the Company. If paid in shares the payment amounts will be convertible at the lower of the fixed price noted above, or a price equal to 90% of the lowest daily VWAP over the five trading days immediately proceeding the date of the relevant repayment date. The Company has the right to repay the loan at any time for a 3% redemption fee provided that the Company may only repay the loan if the stock is trading below the fixed price at the time of prepayment. The lender was also to receive three performance bonuses of USD50,000 if the Company's share price traded above either GBP0.008, GBP0.01 and GBP0.0125 for ten consecutive days.
--
Sale of interests
-- On 10 July 2017, the Company announced the sale of 1.9% of its interest in Horse Hill Developments Ltd, to UK Oil and Gas Plc ("UKOG") for total consideration of GBP323,000. GBP268,502 of the total was delivered in UKOG shares and the balance was a cash payment that was applied to Regency's proportionate share of outstanding Horse Hill cash calls. UKOG was also granted a right of first refusal for 18 months over Regency's remaining 3.1% stake in Horse Hill Developments Ltd. The sale was announced as completed on 24 August 2017.
-- On 18 October 2017, the Company announced the conditional sale of the remainder of its 3.1% interest in Horse Hill Developments Ltd, to Alba Mineral Resources Plc ("Alba") for total consideration of GBP630,000. Of the consideration 50% was expected to be paid in cash,
GBP315,000, and the balance in Alba shares at a price equal to the volume weighted average price of Alba shares in the 15 days prior to completion. On 29 November 2017, Regency Mines announced that it had completed the sale.
US metallurgical coal interests
-- On 24 November 2017 the Company announced that it had paid a refundable advance of GBP34,800 giving the Company the option to buy the 80% balance of the Rosa Metallurgical Coal Mine owned by Carbon Minerals Corporation, that the Company did not currently own.
Regency had a sixty-day period in which to carry out due diligence on the mine and complex. Should due diligence have proven favourable Regency would have been able to acquire the mine, wash plant and other property rights, rights of action, leases, licences, permits, shareholdings, and other rights including ownership of MCoal Corporation, the direct holder of the assets, for the sum of GBP250,000.
This option was subsequently allowed to lapse.
-- On 6 December 2017, Regency Mines plc announced that it had entered into a Memorandum of Understanding with Legacy Hill Resources Ltd for co-operation in structuring, financing and owning coal investments in the US. On 27 February 2018, Regency Mines plc announced the execution of a Joint Venture Agreement with Legacy Hill Resources. According to the terms of the agreement,
LHR would own 30% of the JV initially and would subsequently contribute a further USD1m in cash. Regency was to contribute a further USD2m and equity contributions were capped at USD3m cash.
-- On 6 June 2018, the Company announced that it had deposited USD2,000,000 in an escrow towards its joint venture funding and 47% holding of Mining Equity Trust. Mining Equity Trust is the limited liability company in and through which Legacy Hill Resources and Regency Mines hold their interests in the metallurgical coal joint venture. Regency agreed to borrow gross proceeds of USD1,600,000 from institutional investors to fund a portion of its obligations under the JV. The loan carried an interest rate of 10% and was subject to an implementation fee of USD96,000.
Curzon Energy Plc investment
-- On 28 September 2017 the Company announced Curzon Energy Plc's intention to raise gross proceeds of GBP2.3m and to seek admission of its shares to the Standard Listing segment of the Official list to trade on the London Stock Exchange. Regency further announced its intention to follow its pre-IPO investment with a further GBP400,000 as part of the IPO fundraising.
-- On 4 October 2017 Curzon's shares were admitted to trading on the London Stock Exchange and Regency received 6,467,500 new Curzon shares, including a 7% broking fee on its IPO subscription rebated in Curzon shares, and post IPO held a 8.91% stake in Curzon.
Battery and Storage Technologies Division (ESTEQ)
-- On 14 November 2017, Regency Mines announced the creation of a new Battery and Storage Technologies Division. A new company, ESTEQ Limited, was formed to act as the vehicle for development of opportunities in the battery and storage technology sector.
-- On 22 December 2017, ESTEQ agreed terms for an investment in the battery storage and technology space. An initial investment of
GBP200,000 was planned in Whitecar Ltd, a company operating electric vehicle rental car services out of Heathrow and several UK locations. Following the initial investment, it was decided that ESTEQ will subscribe for a further GBP200,000 in February 2018 on the condition that Whitecar successfully closes a Crowdcube funding of at least GBP650,000. Initial investment gave ESTEQ 3.3% of Whitecar and a Regency representative joined the Whitecar board. On February 2018, ESTEQ had a fully diluted holding of 5.8% in Whitecar following the subsequent investment of GBP200,000.
-- ESTEQ also committed to investing up to a maximum of GBP250,000 in developing a new project in energy storage and grid backup, under the name Allied Energy Services Ltd. The Company received 80% of the share capital of Allied Energy Services Ltd following its investment.
Change of broker
-- On 1 November 2017 the Company announced the appointment of First Equity Limited as broker to the Company with immediate effect.
Change of registered office
-- On 28 March 2018 the Company announced that its registered office had changed to Salisbury House, London Wall, London, EC2M 5PS.
24. Commitments
As at 30 June 2018, the Company had entered into the following commitments:
-- Exploration commitments: Ongoing exploration expenditure is required to maintain title to the Group mineral exploration permits. No provision has been made in the financial statements for these amounts as the expenditure is expected to be fulfilled in the normal course of the operations of the Group.
-- On 21 August 2017, the Company entered into a new lease agreement for office space with WeWork Aldwych House. The initial lease runs from 1 October 2017 through 30 September 2019 and is non-cancellable during this period. Thereafter the lease can be terminated by giving one full calendar month notice.
25. Pledged assets
-- On 6 June 2018 the Company announced a USD1,600,000 loan had been agreed in order to fund Regency's commitments to the MET coal joint venture in the United States. As part of this loan facility the Company agreed to pledge the 470 shares of capital stock in Mining Equity Trust and to allow the shares to be held in escrow for the duration of the loan.
26. Related party transactions
-- On 5 April 2013, Regency Mines plc, Red Rock Resources plc, where Andrew Bell currently is a Director, and Greatland Gold plc, where Andrew Bell previously was a Director, entered into a joint lease at Ivybridge House, 1 Adam Street, London WC2N 6LE. The total cost to the Company for these expenses during the year was GBP17,397 (2017: GBP121,046), of which GBP14,497 represented the Company's share of the office rent and the balance is services provided (2017: GBP60,523). The Company let this agreement lapse at expiration on 1 December 2017.
-- The costs incurred on behalf of the Company by Red Rock Resources plc are invoiced at each month end and settled on a quarterly basis. By agreement, the Company pays interest at the rate of 0.5% per month on all balances outstanding at each month end until they are settled. The total charged to Red Rock Resources plc for the year was GBP42,200 (2017: GBP15,869). Of this, GBP13,376 was outstanding at 30 June 2018.
-- The costs incurred by the Company on behalf of Red Rock Resources plc were GBP45,699 (2017: GBP44,646). Of this, GBP14,096 was outstanding at 30 June 2018.
-- Related party receivables and payables are disclosed in notes 15 and 16, respectively.
-- The Company held 9,084,760 shares (1.91%) in Red Rock Resources plc as at 30 June 2018 and at 30 June 2017.
-- The key management personnel are the Directors and their remuneration is disclosed within note 8.
27. Events after the reporting period
-- On 2 August 2018, Mining Equity Trust completed its purchase of the metallurgical coal operations at Cedar Bluff, Southwest Virginia of Omega Holdings LLC.
-- On 19 October 2018 Regency announced that its 47% owned subsidiary MET had sold 44,020 tonnes of coal in September and had achieved total revenues of USD1.96m. For the ten months to June 2019 the Company announced forecasts of 691,192 tonnes of coal sales and revenues of USD30.5m.
-- On 14 November 2018 Regency announced an update regarding its Mambare nickel-cobalt project in Papua New Guinea. Regency announced that it had reached a new framework agreement with its 50% JV partner, Direct Nickel Projects Limited, in which Regency consented to a change of control and anticipated a further change where DNi Projects would move its 50% JV interest into a separate special purpose vehicle. The parties further agreed that Regency would act as the main information hub of the JV and would be responsible for budgets and work programmes. All decisions on budgets, personnel, programmes and strategy would be taken jointly. Regency further announced that it had been approached by third parties interested in co-operating on the Mambare project.
-- On 20 December 2018, Curzon Energy announced that it had suspended well testing operations at Coos Bay, and would conduct a comprehensive review of its strategy to determine the optimal way forward. Curzon indicated that it was considering joint venture partners for the project, and that the ultimate commerciality would only be determined through additional appraisal drilling. Curzon also announced that negotiations with Pared Energy regarding a potential multi-TCF Texas gas project were proceeding constructively.
28. Control
There is considered to be no controlling related party.
30. These results are audited, however the information does not constitute statutory accounts as defined under section 434 of the Companies Act 2006. The consolidated statement of financial position at 30 June 2018 and the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and the consolidated cash flow statement for the year then ended have been extracted from the Group's 2018 statutory financial statements. Their report was unqualified and contained no statement under sections 498(2) or (3) of the Companies Act 2006. The financial statements for 2018 will be delivered to the Registrar of Companies by 31 December 2018.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
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December 27, 2018 11:52 ET (16:52 GMT)
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