TIDMGCM
RNS Number : 4081W
GCM Resources PLC
22 December 2021
2 2 Dec ember 20 2 1
GCM Resources plc
("GCM" or the "Company")
(AIM:GCM)
Final Results for the year ended 30 June 20 2 1
Notice of Annual General Meeting
GCM Resources plc announces the publication of its final audited
results for the year ended 30 June 20 2 1 (the "Annual Report and
Accounts") and that the Company's 20 21 Annual General Meeting will
be held at 10.00 a.m. on
Thurs day 20 January 20 22 , at QEII Centre, Broad Sanctuary, Westminster, London, SW1P 3EE .
The Annual Report and Accounts and the Notice of Annual General
Meeting will be posted to shareholders today. Copies are available
on request from the Company and will be available on the Company's
website ( www.gcmplc.com ). The Annual Report & Financial
Statements are also available on the 'Financial Reports' page of
the Company's website.
For further information:
GCM Resources plc WH Ireland Ltd
Keith Fulton James Joyce
Finance Director Andrew De Andrade
+44 (0) 20 7290 1630 +44 (0) 20 7220 1666
GCM Resources plc
Tel: +44 (0) 20 7290 1630
info@gcmplc.com; www.gcmplc.com
Executive Chairman's Statement
The Board presents the Company's Annual Report and Accounts for
the year ended 30 June 2021, in a year where progress has not met
our expectations, primarily due to the effects of the Coronavirus
Pandemic. Consider that towards the end of 2020, it appeared the
world was emerging from the pandemic, with countries slowly opening
up their borders and re-emerging from national lockdowns. However,
this momentum was arrested by the rapid emergence of the "Delta
Variant", which completely stifled business activity for the
majority of 2021. For instance, in Bangladesh rolling lockdowns
from March to August 2021 severely restricted movement and kept
government and private business offices mostly closed. It has been
an extremely frustrating period for GCM and on behalf of the Board,
I once more extend our appreciation for the continued support of
our shareholders.
We have remained focussed on delivering returns on shareholder
investment through packaging the Project in its best possible form
with the key step still being approval from the Bangladesh
Government. It is worth reflecting, however, on what actually
constitutes the Project. Firstly, and most importantly, the
Project's core asset is the proposed Phulbari open-pit coal mine
development, which would deliver over 15 Mtpa high quality thermal
coal for at least 30 years. Based on the latest, highly
energy-efficient Ultra-Supercritical power plant technology, the
Phulbari coal mine's full production would support 6,600MW.
Secondly, to ensure the mine's economic sustainability, we have put
in place arrangements with development partner Power Construction
Corporation of China, Ltd. ("PowerChina") to establish a minimum
power plant output totalling 4,000MW. This would ensure a reliable
market for the bulk of the Phulbari coal and provide time to
determine the best market for the remaining production.
During this last Financial Year, we secured a strategic coal
mine development partner with the signing of a Framework Agreement
on 12 October 2020 with China Nonferrous Metal Industry's Foreign
Engineering and Construction Co., Ltd. ("NFC"). On 6 December 2020,
PowerChina agreed to an extension of the original memorandum of
understanding ("MoU") established with NFC and PowerChina relating
to coal mine development, to allow formal continuing discussions in
regards to PowerChina taking a higher level of participation in the
Project. This MoU was extended for six months on 6 June 2021 and
again extended on 22 November 2021 to run through to 6 December
2022. Also, on 19 January 2021 the Joint Venture Agreements with
PowerChina for the initial 4,000MW (two 2,000MW Stages) were
extended to 15 March 2022.
Other steps taken in Financial Year 2021 include:
-- On 8 January 2021, we undertook a Board reorganisation with
the aim of increasing the level of Non-Executive Director
participation. This saw myself (Mohd. Najib Bin Abdul Aziz) being
appointed Non-Executive Chairman and expansion of the Board to now
include two Non-Executive Directors. Datuk Michael Tang PJN
continues as Executive Director and Chief Executive Officer. Also,
to enhance the Board's working knowledge of the Project and
Bangladesh, on 22 January 2021 Gary Lye was appointed Executive
Director while continuing in roles as GCM's Chief Operating Officer
and Chief Executive Officer of our subsidiary, Asia Energy
Corporation (Bangladesh) Pty Ltd.
-- On 26 March 2021, the Company successfully placed 13,446,661
new ordinary shares of 1 pence each with institutional and
professional investors at a price of 7.5 pence per share (the
"Issue Price") via an accelerated bookbuild (the "Placing"). The
Placing raised gross proceeds of GBP1.01 million and the Issue
Price was a discount of approximately 19 per cent to the mid-market
closing price on 25 March 2021.
Outside the Reporting Period there were a number of other
developments:
-- On 31 August 2021, an MoU was signed with Sion Corporation of
Japan ("SION"), Versatech Energy Innovation Limited and AC Biode
Co. Ltd for providing a suitable and effective environmental
solution for the management of the fly-ash waste product that will
be produced by the Project. This will include investigations into
the production of SION's composite material CircuLite from fly-ash
and the application of CircuLite to various environmental and
agricultural improvements within Bangladesh.
-- On 22 September 2021, the Chinese President Xi Jinping
delivered a pre-recorded address to the United Nations General
Assembly where he stated as the world emerged from this pandemic,
efforts to revitalise economies would also include the pursuit of
"greener", more balanced development and a need for inclusive
growth. In this regard he stated China would step up efforts to
assist Developing Countries access "green" and "low carbon" energy,
and that China would not build new coal-fired power projects
abroad.
It is noted that no further details were provided, there has
been no immediate change in China's policy and the impact on
China's future financing of coal-fired power projects would not
really be understood until a policy is framed and it is seen how
that policy is implemented.
It is also noted that since that UN Meeting the world entered a
deepening energy crisis, reminiscent of the 1970's energy shortage.
Although there's been some drop from "sky-high" fuel prices,
supply/demand issues are expected to keep prices high. Lessons from
this are clear: the Renewable Energy Pathway is not
straightforward, even in Developed Countries; Renewable Energy
systems at this juncture are not reliable for Base Load Power;
Countries having their own energy resources are scrambling to lift
production of existing fossil fuel operations and
are looking to develop greenfield opportunities; and a Strategic
Mix of "own fuels" and "imported fuels" provides the best energy
security as countries move towards integrating Renewable Energy
systems.
-- The COP 26 UN Climate Change Conference took place from 31
October to 12 November 2021. Although the Conference announced a
Global Coal to Clean Power Transition initative whereby countries
were invited to make their commitments on how to phase out
coal-based energy in the form of political non-binding statements,
the response varied, with key countries such as China, Australia,
India, Japan and the USA not signing up. It was reported Bangladesh
also did not participate in this initiative.
Being the Chair of the Climate Vulnerable Forum (CVF) that represents the interests of the 48 climate-vulnerable Least Developed and Developing Countries, Bangladesh's major statements at the COP 26 were directed at how these countries would deal with loss and damage caused by the effects of climate change. A principal focus was to obtain commitment from the Developed Countries to fulfil their commitments of providing US$100 billion annually to be directed at adaptation and mitigation measures.
With 11,775MW coal-fired power plants commissioned or in the
pipeline, the Bangladesh Government demonstrates coal-fired power
will remain significant in its own strategic energy mix for several
decades as it moves to integrate Renewable Energy. Whilst the
option remains to install power plants at the Phulbari coal mine
site, there is also the potential to supply coal to the country's
already commissioned and under construction coal-fired plants. We
have amended our Proposal to Government accordingly and in this
scenario, Greenhouse Gas emissions (CO (2) ) from large-scale
shipping of that quantity of coal to Bangladesh would be eliminated
(replaced by rail / barging over far less distance). This, coupled
with Phulbari coal's higher energy enabling "more power for less
coal", will directly reduce Bangladesh's Greenhouse Gas Emissions
(CO (2) ) by over 30% compared to imported coal.
It is recognised that social and economic development is also
necessary for the Least Developed and Developing Countries to be
better prepared and more capable to combat the effects of Climate
Change. An important component is access to expansive low-cost
energy and power. In addition to the aforementioned Greenhouse Gas
Emissions (CO (2) ) reduction, utilising Phulbari's coal will not
only potentially save the Bangladesh Government many Billions of
Dollars on its fuel and power generation costs but also would
enable power to be delivered at a lower tariff, thus helping to
drive economic development.
On 19 October 2021, the Company announced it was pursuing
extension of the Framework Agreement with NFC for mine development
(which expired on 12 October 2021) and we remain confident of
agreeing such an extension, however, noting there are additional
procedures required to complete the extension as a result of recent
and as yet unclarified guidance from the Chinese Government in
regards to such agreements.
Our team in Bangladesh has been pursuing how the Phulbari coal
mine could become a "Net Zero Carbon" or "Green Mine" operation
through:
-- Utilising electrically powered mining equipment;
-- Developing a large-scale Solar Power Park (Carbon-Offsetting)
within the Project area which would supply to the grid and also
power the Phulbari mining operation; and
-- Additional Carbon Offsetting through progressive development
of an extensive forest plantation as part of the land
rehabilitation plant.
This is an exciting development both for GCM and the Project as
the Carbon Offsetting amounts to almost five times the calculated
mine Greenhouse Gas Emission (CO (2) ) and clearly establishes the
Phulbari coal mine can be a Net Zero Carbon "Green Mine" operation.
This opens up new opportunities and we have begun discussions with
our NFC and PowerChina development partners.
Unfortunately, Financial Year 2021, like 2020 will also be
remembered for the Coronavirus Pandemic and its negative effect on
business. GCM has maintained its business, ensured the safety of
its staff (all of our Bangladesh staff eligible for vaccinations
were vaccinated in March this year) and also managed to position
the Project for presentation to the Bangladesh Government in a form
that is well suited to the times. We believe the Project is
potentially Bangladesh's "Energy Security Pathway for its Renewable
Energy Transition".
Finally, I would like to once again thank the shareholders and
all our stakeholders, for your continued commitment and support for
GCM and its prospects. I also extend my appreciation to the Board
and staff for their hard work, and I extend mine and the Board's
thanks to James Hobson whom was a valuable addition to the Board
during 2021, but unfortunately on 30 November 2021 resigned from
the Board to concentrate on his new personal venture.
Mohd. Najib Abdul Aziz
Non-Executive Chairman
21 December 2021
Group Strategic Report
Strategy and business model
GCM Resources plc ("GCM") remains committed to a strategy of
developing the Phulbari coal deposit as a captive, large-scale,
open pit mining operation supporting over 6,000MW of highly
energy-efficient Ultra-Supercritical power generation (the
"Project"). In fact, based on a power plant feasibility study
undertaken in conjunction with our development partner, PowerChina,
the Phulbari coal mine annual production would support some
6,600MW.
GCM's strategy and business model is based on forming
partnerships with various internationally renowned companies,
specifically Chinese State-owned enterprises, to assist with
obtaining the necessary government approvals, the requisite
financing and developing the coal mine and power plants. The
business model incorporates consultants to provide crucial guidance
and lobbying support both in Bangladesh and Internationally.
A fundamental pillar of our business model has always been the
establishment of a reliable domestic market for the Phulbari coal
mine's full production, i.e., to ensure it is economically
sustainable and be able to secure project finance. The market
solution we have been promoting with our development partner has
been to set up new power plants (in stages) matching the mine's
ramp-up to 15Mtpa nameplate production. This resulted in Joint
Venture Agreements covering 4,000MW, leaving flexibility in
marketing the remaining coal mine production.
While this business model essentially remains valid, it has been
modified, taking into account an element of uncertainty regarding
financing of new coal-fired power projects. This uncertainty became
evident from the Chinese President's recent address to the United
Nations General Assembly which cast doubt over China financing new
coal-fired power projects abroad. Although there has been no
further clarification or policy statement, the business model has
been expanded to include a large part or all of the Phulbari coal
production being marketed to the Bangladesh Government coal-fired
power plants. This market is growing and, according to recent
reports, will reach in excess of 10,000MW power generating
capacity, i.e., some 40% more than the Phulbari's production can
support. It also is a 'Win - Win" as the Project would have a
secure market and the Bangladesh Government would secure a high
quality coal supply with reduced supply and cost risks, save
billions of dollars on excessive coal tonnage imports and power
generating costs and at the same time be able to supply power at
lower tariffs.
GCM believes its strategy and business model will deliver the
project approval. The Project in turn will deliver the Bangladesh
Government the lowest coal-based energy price and cheapest
electricity which will underpin expansion and competitiveness of
its industries, produce new higher paying jobs and grow its
economy. This will greatly support the Government in realising its
Vision 2041 being to:
-- End absolute poverty and to be graduated into higher middle-income status by 2031; and
-- Eradicate poverty on way to becoming a developed nation by 2041
Progress in-line with the strategy
The Company delivered a "Feasibility Study and Scheme of
Development" for the coal mine component of the Project in October
2005. This mine development proposal remains robust, having been
fully evaluated through the Definitive Feasibility Study ("DFS").
The DFS combines over two hundred individual studies by a team of
international and national experts, with a view to delivering a
world-class mining project plan, based on proven international best
mining practices.
With the assistance of Hong Kong based Dyani Corporation Limited
("Dyani"), the Company developed close working relationships with
the Chinese state-owned-enterprises China Gezhouba Group
International Engineering Co Limited ("CGGC"), Power Construction
Corporation of China Ltd ("PowerChina") and China Nonferrous Metal
Industry's Foreign Engineering and Construction Co., Ltd. ("NFC").
Currently the following agreements are in place to support GCM's
strategy for delivering the Project:
-- Joint Venture Agreements with PowerChina for 4,000MW of mine-mouth power plants.
-- Framework Agreement with NFC for developing the open pit coal
mining operation based on the Phulbari coal basin's world class 572
million tonnes (JORC 2004 compliant) high quality thermal and
semi-soft coking coal resource. Noting that this Agreement expired
in October 2021 and discussions are actively underway to extend the
arrangement.
Power Proposal documents required by the Government for approval
of the initial 4,000MW power plants have been prepared and the
overall Project Proposal has been expanded to include:
-- Significant benefits of supplying coal directly to the Government's own power plants;
-- Large-scale Solar Power Park (up to 2,330MW) on the Project
area within the first couple of years;
-- "Green Mine" with Carbon Offsetting (including forest)
resulting in Net Carbon Zero mining operation; and
-- Very significant reduction in Green House Gas Emissions (CO
(2) ) of over 30% using Phulbari coal vs. Imported Coal
As GCM does not yet generate any revenue, the Board expects that
the Group's operations will continue to be funded by a combination
of equity and debt financing.
Continuing for the foreseeable future, the Company's cash
expenditure is not expected to increase and, as far as possible,
obligations to key stakeholders will be primarily satisfied by the
issue of new ordinary shares in the capital of the Company
("Ordinary Shares"), to both incentivise those stakeholders and
preserve cash.
Year in review
GCM began the reporting year in lock-downs with international
borders largely closed due to the Coronavirus pandemic (exacerbated
by the virulent "Delta Variant"). Government offices were closed
with face-to-face meetings not possible. To put it in perspective,
in Bangladesh movement of people and opening of government and
private business offices did not happen until mid-August 2021
(outside the reporting period) and a "business as usual" situation
is still evolving.
Despite the pandemic, GCM managed to remain in close contact
with its development partners. On 12 October 2020, arrangements
with mine development partner NFC progressed to signing a Framework
Agreement. It was agreed to jointly develop the Project's proposed
coal mine and that a Joint Venture would be established with NFC
acquiring a 5% interest from GCM, based on a valuation. NFC agreed
to arrange financing and in return would be appointed EPC
contractor for mine development. Discussions are currently underway
with NFC and other Chinese Government officials to extend this
Agreement.
On 6 December 2020, PowerChina agreed to an extension of the
original memorandum of understanding ("MoU") established with NFC
and PowerChina relating to coal mine development, to allow
continuing discussions aimed at PowerChina taking a higher level of
participation in the Project. This MoU was further extended on 6
June 2021, and 23 November 2021 and now runs through to 6 December
2022. Also, on 19 January 2021 the Joint Venture Agreements with
PowerChina for the initial 4,000MW (two Stages) power plants were
extended to 15 March 2022.
Outside the reporting period, on 31 August 2021, GCM signed an
MoU with a consortium of Sion Corporation of Japan ("SION"),
Versatech Energy Innovation Limited and AC Biode Co. Ltd for
providing management of the Project's power plant fly-ash waste
product. SION has developed a multifunctional material, CircuLite,
which can be manufactured from fly-ash and would have wide
application in Bangladesh for environmental pollution control and
in agricultural for soil conditioning.
GCM's team in Bangladesh has strengthened the Project Proposal
by bolstering the case for Phulbari coal being supplied to the
Government's own coal-fired power plants (expected to exceed
10,000MW). There is a compelling case with huge monetary savings
for the Government in terms of coal purchases and power generation.
The Proposal also now includes a large Solar Power Park within the
Project area, which could be operational within the first two years
of Project approval and would supply power to the mine as well as
the National Grid. The Project's Agricultural Improvement and Land
Rehabilitation Plans also create significant additional Carbon
Offsetting. The net result is the Project could have a Carbon Zero
"Green Mine" and the Government could reduce its Greenhouse Gas
Emissions (CO (2) ) by over 30% by using Phulbari's coal instead of
Imported.
The Company remains committed to ensuring the local community
and local authorities remain fully informed on the Project. Our
social licence ultimately is built upon a successful relationship
with the local community. Our field teams continued to work with
the local community, maintaining social distancing, wearing masks
and complying with other necessary health safety guidelines to
exchange information regarding the Project. We are pleased to
report the positive trend in the level of local community support
continues. The Project's Resettlement Action Plan remains valid
with our field teams having completed an update of village
populations and households in the Project area throughout 2019 and
recently completed a land price study.
The Board is pleased to have delivered against its strategy of
forming development partnerships covering coal mine and power
plants and to have now expanded the Project Proposal to showcase
coal being supplied to the Government's own coal-fired power plants
and to include the huge reduction in Greenhouse Gas Emissions (CO
(2) ) and exciting prospect of a large-scale Solar Power Park.
These features have been discussed with Government officials in
preparation for presenting the Proposal for the Bangladesh
Government's approval.
The Company appointed WH Ireland Limited as it Nominated Advisor
and Broker on 11 January 2021.
Finance review
The Group recorded a loss of GBP1,874,000 during the year ended
30 June 2021 compared to a loss of GBP1,515,000 during the previous
year. The loss increased from the comparative year principally due
to an increase in non-cash, share-based payments accrued in
accordance with the Group's agreements with Dyani in relation to
pre-development expenditure. The increase was from GBP420,000 in
2020 to GBP809,000 this year, as a result of a milestone payment to
the consultant being reached in 2021, but their continuing
partnership allows the Group to continue its progress in-line with
GCM's strategy of developing power generation as a new business
stream, with no slow-down in pursuing continuing project
progress.
The Group recorded a net increase in cash at the end of the year
to GBP717,000 (2020: GBP69,000). Net cash used in operations for
the year was GBP326,000 (2020: GBP572,000), cash used in investing
activities was GBP557,000 (2020: GBP366,000), and cash inflow from
financing was GBP1,531,000 (2020: GBP622,000).
The Group has continued its aim to maintain tight control of
expenditure incurred during the year: Administrative expenses were
down by 21.7% to GBP717,000 for the year ended 30 June 2021 (2020:
GBP916,000) as a result of a one-off consulting expense in the
prior year, however, finance costs increased by 201.6% to
GBP383,000 (2020: GBP127,000). Capitalised expenditure in relation
to the mine proposal was GBP552,000 for the year ended 30 June 2021
compared to GBP377,000 in the previous year. Overall costs
excluding pre-development expenditure decreased by 29.5% to
GBP682,000 from GBP968,000 in the prior year, as noted above.
To finance its operations during the year, GCM drew down
GBP600,000 from the short-term loan facility with Polo Resources
Limited ("Polo") (the "Polo Loan Facility"). The Polo Loan has not
been increased during the year and remains at a facility of
GBP3,500,000. The terms of the loan facility were amended in March
2021, with two of the salient amendments being an increase in the
interest rate to 15%, but also Polo has agreed that it will not
serve a repayment request on the company for 5 years from the date
of the agreement, replacing the previous provision that it was
payable on demand with 90 days' notice. (See Note 12 for detailed
terms). In addition to the funding from Polo, GCM also completed a
successful Placing in conjunction with WH Ireland Ltd, raising
Gross proceeds of GBP1,009,000 in April 2021.
As at the date of this report, the Company had drawn down
GBP3,200,000 of the Polo Loan Facility and the Company currently
has approximately GBP167,000 in available cash resources, which
along with the remaining GBP300,000 of the Loan Facility the
Director's believe will only be sufficient to fund the Company's
cash requirements for the next four months, assuming the Company's
currently forecast cash costs. The Company is exploring other
financing options, and is confident of securing additional funding
by the end of January 2022 (the "Additional Funding").
Corporate Social Responsibility
GCM's vision, goal and planned actions are in line with the
basic values of integrity and fairness for all stakeholders. GCM's
social licence to operate requires an on-going acceptance of the
Project with its proposed mining operation and the Company (and
subsidiary Asia Energy) by community stakeholders and the general
public. For any large mining project to be successful it is crucial
to develop and maintain a partnership with all concerned
stakeholders, particularly at the local level.
Physical activity in the Project area during 2020-21 was
restricted due to the Coronavirus pandemic and the Bangladesh
Government's Coronavirus management plans which resulted in
lockdowns with restricted movement. However, GCM's field teams
still managed to work with the local community, maintaining social
distancing, wearing masks and complying with other necessary health
safety guidelines to exchange information regarding the Project.
The network of over 60 local grass-roots community liaison
assistants, selected from across the Project area, were invaluable
in maintaining two-way communication with the local community. The
trend in local community support continues to rise.
Field teams have also completed an update of the Resettlement
Action Plan's population database and number of potentially
'project affected people' and also completed a land price
survey.
The Project will improve the economic and social well-being of
people in the Project area. Community feedback delivers consistent
messages that the majority want development of their area (rated as
one of the poorest in Bangladesh) and stress the importance of job
opportunities and other benefits. Some 17,000 jobs are expected to
be directly and indirectly created as a consequence of developing
the mine and associated infrastructure. However, many thousands of
additional jobs would be created by having an expansive reliable
power supply enabling new industrial development. One such
industrial opportunity would come through industrial mineral
co-products that can be extracted from the mine overburden material
removed to access the coal. These co-products (in very large
quantities) include clay for bricks and pottery, China Clay for
ceramics, silica sand for glass manufacturing and a range of sand,
gravels and rock aggregates for the construction industry.
Conservative estimates of the value of these co-products amounts to
some US$17 Billion over the life of the Project.
GCM is conscious of the fact that the Project would be developed
within an area that is over 80% open farm land. The Project's
Agricultural Improvement Plan aims to off-set the impact of mining
on agriculture by providing year-round irrigation water to the
adjacent farms and providing farmers with improved inputs, training
and marketing assistance all aimed at increasing agricultural
output in the region.
The Project will require resettlement of approximately 40,000
people, with 12,000 people moving to a new town extension and the
remainder moving to new village sites or electing to use the
opportunity to move to other areas in Bangladesh. This resettlement
is to occur in six phases over a period of approximately 10-12
years from commencement of development and is intended to be
carried out under international scrutiny.
The Resettlement Action Plan details the compensation packages
which include range of measures such as long-term livelihood
restoration support, replacement homes, retraining, employment and
various financial assistance allowances. Apart from new housing
there will be religious centres, schools, health centres,
electricity, reticulated water supply and improved sanitation. The
Company also intends to provide skills training and offer
preferential employment opportunities to the Project affected
people and will establish community reference groups so the local
community can have input to planning and implementation.
GCM further reiterates its commitment to developing the Project
in accordance with the highest international and national
environmental and social standards. The Company remains to be a
signatory of the UN Global Compact, the world's largest voluntary
corporate responsibility initiative, and is committed to complying
with the social and environmental policies and standards of the
International Finance Corporation (World Bank), the Equator
Principles, the Asian Development Bank's (ADB) Safeguard Policies
as well as the current policies and laws of Bangladesh.
Risks and uncertainties
The predominant risks and uncertainties faced by the Company are
set out below:
Political and economic - risk that the Company's new approach,
being to establish the Phulbari open pit coal mine as being captive
to and packaged to supply either: (a) up to 6,000 MW of
state-of-the-art highly energy efficient Ultra-Supercritical power
plants, or (b) to supply all or in part of the Phulbari captive
open pit coal mine production to the Government's own power plants
(the "Project"), is not approved by the Government of Bangladesh.
However, the Project has also been expanded and enhanced with the
addition of a large-scale Solar Power Park (supplying the mine and
National Grid) and a range of Carbon Offsetting measures that would
enable the coal mine to be Carbon Net Zero (a "Green Mine"). The
use of Phulbari coal instead of imported coal would also reduce
Bangladesh's Greenhouse Gas Emissions (CO (2) ) by over 30%, save
the Government Billions of Dollars in energy and power generation
cost and allow a reduced power tariff supplying cheaper power
allowing industries to both expand and become more competitive. The
Board has also embarked on a strategy which involves bringing in
strategic development partners as it believes this will be an
attractive proposition for the Government and does provide the best
opportunity for realising the huge benefits the Project is capable
of delivering. The Company's Bangladesh team is also in contact
with Government officials to prepare for delivery of the expanded
Proposal. The Company has also endeavoured to reduce this risk by
employing the services of credible consultants / lobbyists,
however, it recognises that the timing of approval remains in the
hands of the Government. The Company retains its right to seek
legal redress in accordance with the terms of the Contract with the
Government in the event approval is not ultimately forthcoming.
Refer to Note 1 of the consolidated financial statements for
further information.
Strategic - risk that the strategic partnership with the Chinese
state-owned-enterprises PowerChina and NFC do not proceed and thus
undermining the Company's strategy of presenting the Project as a
captive coal mine with 6,000MW power generation that would take
sufficient thermal coal production to ensure the mine's economic
sustainability. As explained in the "Political and economic risk"
section, the Company has already expanded the Proposal to promote
all or part of the Phulbari captive open pit coal mine production
being sold to the Government's own power plants, thus reducing or
eliminating the dependency on having mine-mouth power plants as the
sole market for the Phulbari coal. The current and prolonged world
energy crisis with escalated coal and LNG prices also makes the
proposition of the Government using Phulbari coal for its power
plants much more attractive. The Company has also taken steps to
further reduce this risk through recent signed agreements and is
continuing dialogue with the development partners aimed at further
strengthening these strategic partnerships; and has in place
incentive-based schemes with Dyani to enhance the relationships
with the Chinese government organisations and with the Bangladeshi
controlled entity, DGI, to assist with taking the Project through
the government approval process to implementation. The Company's
Bangladesh team is also in contact with Government officials to
prepare for delivery of the expanded Proposal.
Financing - risk that the Company will not be able to raise
necessary funds as and when required to take the Project through
the government approval process to implementation stage. The
Directors are confident that the necessary funds will be obtained
as and when required. For further details refer to the Directors'
Report.
Commercial - risk that the Project's economic viability is
undermined by sustained adverse movement of coal price and key cost
elements. The current and prolonged world energy crisis with
escalated coal and LNG prices makes the proposition of the
Government using Phulbari coal for its power plants much more
attractive. Analysts predict the supply/demand forces will support
continuing high coal prices in the medium term, thus using Phulbari
coal will give the Government some protection against supply and
cost escalation risk, making the Project more attractive. To
further reduce economic viability risk there will be a rise and
cost provision for the coal mine with the coal supply agreements
for the power plants. Bangladesh has several new power projects
under construction and others in the pipeline with the full
capacity set out in a recent Government report to be in excess of
10,000MW, i.e., some 40% more than can be supported by the Phulbari
coal mine's full production.
Legal - risk that the mining lease and exploration licences are
revoked. The Group continues to comply with all terms of the
Contract with the Government for "Exploration and Mining of Coal in
Northern Bangladesh" and is careful to ensure that all ongoing
conditions of the Contract and the associated mining lease and
exploration licences are met. GCM has received legal opinion that
the Contract is enforceable under Bangladesh and International
law.
Health and safety, social and environmental risks - The Group
remains committed to developing the Project and meeting the highest
international social and environmental standards as detailed in the
Corporate Social Responsibility section within this Strategic
Report.
Climate Change risk - Increased awareness and action against
climate change will put pressure on governments and financing
organisations to reduce exposure to fossil fuel related power
generation. This could affect future Bangladeshi Government policy
towards coal fired generation and limit funding appetite for the
Project. Bangladesh is scheduled to officially become a developing
country in 2026 as the UN committee recommended that the country
should get five years, instead of three, to prepare for the
transition due to the impact of Covid-19 on its economy. Until
2026, the country will continue to enjoy the trade benefits as an
LDC. The Bangladesh Government has also recently adopted its Vision
2041 which aims to end absolute poverty and to be graduated into
higher middle-income status by 2031 and eradicate poverty on way to
becoming a developed nation by 2041.
Bangladesh has minimal emissions and is far behind the developed
countries in terms of GDP and power generation per capita.
Considering the year 2019 (immediately prior to the COVID pandemic
and the worldwide economic slowdown) published figures indicate its
contribution to the world's CO (2) production was some 0.25
percent, i.e. Bangladesh is not a significant emitter.
Vision 2041 identifies two fundamental energy and power sector
pillars necessary to support the Vision: (i) Adopting a least-cost
power generation expansion path; and (ii) Promoting supply of
low-cost primary energy. To achieve this, it needs to steadily grow
its power generation capacity (efficient low cost power) to drive
industrial development and create sustainable new well-paying jobs.
To this end, even if the Phulbari full coal production was consumed
in over 6,000MW of power being generated in the year 2019,
Bangladesh's contribution to the world's CO (2) production would
still have been minimal at less than 0.35%.
The Bangladesh Government recognises the importance of
commercial fuel diversity for its power generation, however, at
present it is heavily reliant on imported fuels, which exposes the
country to inherent world-market risks in terms of maintaining
supply and controlling cost.
The Phulbari Project remains focused entirely on serving
Bangladesh's domestic requirements, adhering to its policies and
laws and supporting its development goals. The Project will assist
Bangladesh achieve its NDC targets as it balances issues to achieve
its Development goals. By using Phulbari's high quality coal high
energy efficient low emission Ultra-Supercritical power plants the
country will not only eliminate greenhouse emissions associated
with coal shipping and handling, but importantly it will realise a
large amount of clean coal technology produced power at tariffs
that will make its industries more competitive. This will help
drive Bangladesh economic development and ability to deal with the
effects of climate change.
Board engagement with stakeholders
This section serves as our section 172 statement and should be
read in conjunction with the rest of the Strategic Report and the
Company's Corporate Governance Statement.
Section 172 of the Companies Act 2006 requires a Director of a
company to act in the way he or she considers, in good faith, and
would be most likely to promote the success of the company for the
benefit of its members as a whole. In doing this, section 172
requires a Director to have regard, among other matters, to: the
likely consequences of any decision in the long term; the interests
of the company's employees; the need to foster the company's
business relationships with suppliers, governments, local
communities, and others; the impact of the company's operations on
the community and the environment; the desirability of the company
maintaining a reputation for high standards of business conduct;
and the need to act fairly with members of the company.
The Directors uses its Board meetings as a mechanism for giving
careful consideration to the factors set out above in discharging
their duties under section 172.
Stakeholder engagement
Key stakeholder groups we engage with are listed below, together
with an explanation of why we focus on them and how we engage
them.
Employees
The success of the Group is dependent upon the hard work and
dedication of all our employees. The Board ensures a continuing
investment in existing employees who are supported through
professional, technical and on-the-job training relevant to their
functional areas, as well as other relevant role-specific training.
The Board directs executives and senior managers to keep staff
informed of the progress and development of the Company on a
regular basis through formal and informal meetings and regular
communications. In addition, the Board ensures funds are provided
for regular events to encourage employee participation in local
community initiatives.
Government Agencies & Local Communities
The Group operates in the regulated mining sector in Bangladesh.
The Board ensures the Company adopts a positive focus on
maintaining productive relations with local communities and all
levels of government. As a result, the Chief Executive Officer and
Chief Operating Officer regularly conduct consultations with
multi-levels of government agencies to ensure that all regulatory
approvals and permits remain in good order. Development of local
community improvement programmes are undertaken with consultation
of local government and community representatives in order to
maintain positive and productive relationships necessary to advance
the Phulbari project.
As a mining exploration Group, the Board takes seriously its
ethical responsibilities to the communities and environment in
which it works. Wherever possible, local communities are engaged in
the geological operations & support functions required for
field operations. The regions in which the Group operates have
native title laws. The Company is respectful of native title rights
and engages proactively with local communities. In addition, we are
careful to manage the environmental obligations of our work, and in
particular undertake site rehabilitation programmes, and prepare
mine management plans, in accordance with local laws and
regulations. Our goal is to meet or exceed standards, in order to
ensure we maintain our social licence to operate from the
communities with which we interact.
Contractors & Suppliers
Our proposed Joint Venture associates, consultants and suppliers
are key business partners, and the quality of goods and services we
receive are essential to supporting operations and to enhance the
project process with our goal to successfully submit our project
proposal to the Bangladesh Government for approval.
During the year, the Board committed significant resources into
fostering improved relationships with our key partners. As directed
by the Board, management collaborates and continually works with
our partners and the full supply chain, sharing best practice and
seeking out synergies to improve .
Lender
For the entire reporting period the Chairman, CEO and FD, on
behalf of the Board have been in regular contact with its lender.
An extension to the loan agreement was agreed during the year,
which enabled the Group to continue on a stable financial
platform.
Investors
Investors are considered key stakeholders, and consequently
investor relations are a focus area for Directors. Where possible
the Board engages investors on Group performance following project
updates and results announcements with face to face meetings or
scheduled calls. Over the past year however these consultations
have been severely impacted by the legal & country specific
restrictions placed upon Directors given the world economic climate
under the Covid-19 pandemic.
On behalf of the Board,
Datuk Michael Tang PJN
Chief Executive Officer
21 December 2021
Consolidated Financial Statements
Consolidated Statement of Comprehensive Income
For year ended 30 June
Notes 2021 2020
GBP000 GBP000
Operating expenses
Pre-development expenditure 16 (809) (420)
Exploration and evaluation costs 35 (52)
Administrative expenses (717) (916)
Operating loss 3 (1,491) (1,388)
Finance costs (383) (127)
Loss before tax (1,874) (1,515)
Taxation 6 - -
Loss for the year (1,874) (1,515)
Other comprehensive income - -
Total comprehensive expense for
the year (1,874) (1,515)
------- --------
Loss per share
Basic (pence per share) 7 (1.5p) (1.45p)
Diluted (pence per share) 7 (1.5p) (1.45p)
Consolidated Statement of Changes in Equity
For year ended 30 June
Share Share premium Share based Accumulated Total
capital account payments losses
not settled
GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 July
2019 9,864 50,497 5,835 (27,564) 38,632
Total comprehensive
loss - - - (1,515) (1,515)
Share issuances
(net of costs)
(1) 1,392 3,037 (4,348) - 81
Shares to be issued - - 420 - 420
Share based payments - - (201) - (201)
Balance at 30
June 2020 11,256 53,534 1,706 (29,079) 37,417
Total comprehensive
loss - - - (1,874) (1,874)
Share issuances 792 2,155 (1,938) - 1,009
Share issuance
costs - (78) - - (78)
Shares to be issued - - 809 - 809
Share based payments - - 6 - 6
Balance at 30
June 2021 12,048 55,611 583 (30,953) 37,289
-------- ------------- ------------ ----------- -------
Consolidated Balance Sheet Company number 04913119
As at 30 June
Notes 2021 2020
GBP000 GBP000
Current assets
Cash and cash equivalents 717 69
Other receivables 8 13 16
Total current assets 730 85
Non-current assets
Property, plant and equipment 8 13
Right of use assets 13 59 33
Intangible assets 9 42,179 41,627
Total non-current assets 42,246 41,673
Total assets 42,976 41,758
-------- ---------
Current liabilities
Payables 11 (1,422) (1,073)
Lease liabilities 13 (40) (27)
Borrowings 12 - (3,220)
Total current liabilities (1,462) (4,320)
Non-current liabilities
Lease liabilities 13 (22) (21)
Borrowings 12 (4,203) -
-------- ---------
Total non-current liabilities (4,225) (21)
Total liabilities (5,687) (4,341)
-------- ---------
Net assets 37,289 37,417
-------- ---------
Equity
Share capital 14 12,048 11,256
Share premium account 14 55,611 53,534
Other reserves 14 583 1,706
Accumulated losses (30,953) (29,079)
Total equity 37,289 37,417
-------- ---------
These financial statements were approved by the Board of
Directors and were signed on their behalf by:
Keith Fulton
Executive Director
21 December 2021
Consolidated Cash Flow Statement
For year ended 30 June
2021 2020
GBP000 GBP000
Cash flows from/(used in) operating
activities
(Loss) before tax (1,874) (1,515)
Adjusted for:
Pre-development expenditure 16 809 420
Finance costs 383 127
Other non-cash expenses - 18
(682) (950)
Movements in working capital:
Decrease in operating receivables 2 13
Increase in operating payables 354 219
Cash used in operations (326) (572)
Net cash used in operating activities (326) (572)
Cash flows used in investing
activities
Payments for property, plant - -
and equipment
Payments for intangible assets (557) (366)
Net cash used in investing activities (557) (366)
Cash flows from financing activities
Issue of ordinary share capital 1,009 22
Share issue costs (78) -
Proceeds from borrowing 600 600
Net cash from financing activities 1,531 622
Total increase/(decrease) in
cash and cash equivalents 648 (316)
Cash and cash equivalents at
the start of the year 69 385
Cash and cash equivalents at
the end of the year 717 69
------- --------
Notes to the Consolidated Financial Statements
1. Accounting policies
GCM Resources plc is domiciled in England and Wales, was
incorporated in England and Wales as a Public Limited Company on 26
September 2003 and admitted to the London Stock Exchange
Alternative Investment Market ("AIM") on 19 April 2004.
The financial report was authorised for issue by the Directors
on 21 December 2021, and the Consolidated Balance Sheet was signed
on the Board's behalf by Keith Fulton.
Basis of preparation
The consolidated financial statements have been prepared in
accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006 and applied in
accordance with the Companies Act 2006. The accounting policies
which follow set out those policies which apply in preparing the
financial statements for the year ended 30 June 2021.
The functional and presentational currency of each of the
entities in the Group is pounds sterling, and all values are
rounded to the nearest thousand pounds (GBP000) except where
otherwise indicated.
Political and economic risks - carrying value of intangible
asset
The principal asset is in Bangladesh and accordingly subject to
the political, judicial, fiscal, social and economic risks
associated with operating in that country.
The Group's principal project relates to thermal coal and
semi-soft coking coal, the markets for which are subject to
international and regional supply and demand factors, and
consequently future performance will be subject to variations in
the prices for these products.
GCM, through its subsidiaries, is party to a Contract with the
Government of Bangladesh which gives it the right to explore,
develop and mine in respect of the licence areas. The Group holds a
mining lease and exploration licences in the Phulbari area covering
the prospective mine site. The mining lease has a 30-year term from
2004 and may be renewed for further periods of 10 years each, at
GCM's option.
In accordance with the terms of the Contract, GCM submitted a
combined Feasibility Study and Scheme of Development report on 2
October 2005 to the Government of Bangladesh. Approval of the
Scheme of Development from the Government of Bangladesh is
necessary to proceed with development of the mine. GCM continues to
await approval.
The Group has received no notification from the Government of
Bangladesh (the "Government") of any changes to the terms of the
Contract. GCM has received legal opinion that the Contract is
enforceable under Bangladesh and International law, and will
consequently continue to endeavour to receive approval for
development.
Accordingly, the Directors believe that the Phulbari Coal and
Power Project (the "Project") will ultimately receive approval,
although the timing of approval remains in the hands of the
Government. To enhance the prospects of the Project, GCM has
engaged in a strategy to align the Project with the needs and
objectives of the Government. This includes the option to supply
coal to both the Government's commissioned and in the pipeline
power plants, which total 11,755MW. The Government is seeking to
grow its economy and deliver electricity at prices that will ensure
competitiveness of its industries. Utilising Phulbari's coal will
enable cheaper electricity than imported coal options. The Group's
strategy is to combine the planned coal mine with 6,000MW power
plants in conjunction with large Chinese State-owned engineering
enterprises. The last twelve months progress which has been made in
pursuit of this strategy is highlighted with the Group Strategic
Report.
Until approval of the Scheme of Development from the Government
of Bangladesh is received there is continued uncertainty over the
recoverability of the intangible mining assets. The Directors
consider that it is appropriate to continue to record the
intangible mining assets at cost, however if for whatever reason
the Scheme of Development is not ultimately approved the Group
would impair all of its intangible mining assets, totalling
GBP42,179,000 as at 30 June 2021.
Going concern
As at 30 June 2021, the Group had GBP717,000 in cash and
GBP732,000 in net current liabilities. The directors and management
have prepared a cash flow forecast to December 2022, which shows
that the Group will require further funds to cover operating costs
to advance the Phulbari Coal and Power Project and meet its
liabilities as and when they fall due. Based on current forecasts,
additional funding will need to be either raised from third parties
or drawn down under the short-term loan facility with Polo
Resources Limited ("Polo Loan Facility") by the end of January
2022, in order to meet current operating cost projections. The
Directors also note that, under the amended terms of the existing
Polo Loan Facility, the lender agreed not to serve a repayment
request in cash for 5 years from the date of amended terms, 26
March 2021, or alternatively convert to shares at 7.5 pence per
share at the lender's option. The Company does not currently have
secured funding arrangements in place to cover this loan or further
potential expenditure which may be needed to advance the Project
and, accordingly, should Polo request repayment of the Polo Loan
Facility, GCM will need to raise funds in a short amount of time,
which may not be available on terms acceptable to the Board or on a
workable timeframe.
The Company currently has GBP300,000 available for drawdown
under the Polo Loan Facility at the date of this report, and based
on projected future cash expenditure, the remaining amount
available for drawdown under the Polo Loan Facility at the date of
this report is not expected to be sufficient to support the
Company's operations for the twelve months from the date of this
report. At the current run rates, along with the Company's existing
cash resources, this is only expected to provide sufficient capital
for the next four months. The Company intends to explore
alternative funding options over the next two months, with the aim
to complete and secure the necessary third-party funding by the end
of January 2022.
In forming the conclusion that it is appropriate to prepare the
financial statements on a going concern basis the Directors have
made the following assumptions that are relevant to the next twelve
months:
- Sufficient additional funding can be obtained for working capital purposes; and
- In the event that operating expenditure increases
significantly as a result of successful progress with regards to
the Phulbari Coal and Power Project, sufficient funding can be
obtained.
While the Directors remain confident that necessary funds will
be available as and when required, as at the date of this report
these funding arrangements are not secured, the above conditions
and events represent material uncertainties that may cast
significant doubt over the Group's ability to continue as a going
concern. The financial statements have been prepared on a going
concern basis. The financial statements do not include the
adjustments that would result if the Group was unable to continue
as a going concern.
Upon achieving approval of the Phulbari Coal and Power Project,
significant additional financial resources will be required to
proceed to development.
Use of judgements, estimates and assumptions
The preparation of the consolidated financial statements
requires management to make judgements, estimates and assumptions
that affect the application of policies and reported amounts of
assets and liabilities, income and expenses.
The estimates and underlying assumptions are reviewed on an
on-going basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period or in the period of revision and future periods if
the revision affects both current and future periods.
Intangibles
In assessing the recoverability of intangible assets, if an
impairment trigger under IFRS 6 is identified then intangibles are
tested for impairment. Management has identified impairment
triggers to be the market capitalisation of the Company compared to
the recognised amount on the balances sheet and the delay in
obtaining approval of the Scheme of Development. To assess for
recoverability estimates are used to determine the expected net
return on investment. The estimated return on investment takes into
account estimated recoverable reserves, coal prices, development
and production costs, capital investment requirements, discount
rates and environmental and social costs among other things.
Management has considered the estimated return on investment to be
significantly higher than the current carrying value and therefore
no impairment has been accounted for. The headroom in the value in
use calculation compared to the carrying value is not sensitive to
probable changes in the key underlying assumptions. Refer to
"Political and economic risks - carrying value of intangible asset"
section within Note 1 for further details in respect of the
recoverability of intangible mining assets and the boards judgement
regarding the ultimate approval of the project being secured.
Power plant development costs
Power project expenditure is expensed as pre-development
expenditure until it is probable that future economic benefits
associated with the Project will flow to the Group and the costs
can be measured reliably. To assess whether it is probable that
future economic benefits will arise from the power plant
development costs, management judgement was required and
considered: objective evidence that the power plant is technically
and economically feasible, and objective evidence that the
appropriate authorities of the Government of Bangladesh have, or
are likely to approve power plant development. All power project
expenditure were accordingly expensed in the year.
Amendments to the short-term loan
Judgement was required in determining the accounting for the
Group's short-term loan which was restructured during the year. The
restructure was considered to represent a significant modification
with the loan restructured to allow the lender the continuing right
to convert the outstanding loan balance and accrued interest to new
ordinary shares, but to defer the repayment period. Previous
judgement was required in assessing whether the restructured
facility represented a compound financial instrument in accordance
with IAS32 Financial Instruments: Presentation or a prima facie on
demand loan facility. Management concluded that as the loan has no
maturity date and must be repaid within 14 days of receiving a
request, it is in effect a rolling 14-day short term loan, however
as a further amendment has been claused as such the lender would
not serve a repayment request on the Borrower for 5 years from
March 2021, the loan is now in the current year being classed as a
non-current liability. Accordingly, the loan continues to be
categorised as an on demand loan facility with no value attributed
to the conversion feature and the loan carried forward at its face
value.
Basis of consolidation
Where the Company has control over an investee, it is classified
as a subsidiary. The company controls an investee if all three of
the following elements are present: power over the investee,
exposure to variable returns from the investee, and the ability of
the investor to use its power to affect those variable returns.
Control is reassessed whenever facts and circumstances indicate
that there may be a change in any of these elements of control.
The consolidated financial statements present the results of the
Company and its subsidiaries (the "Group") as if they formed a
single entity. Intercompany transactions and balances between group
companies are therefore eliminated in full. The consolidated
financial statements incorporate the results of business
combinations using the acquisition method. In the statement of
financial position, the acquiree's identifiable assets, liabilities
and contingent liabilities are initially recognised at their fair
values at the acquisition date. The results of acquired operations
are included in the consolidated statement of comprehensive income
from the date on which control is obtained. They are deconsolidated
from the date on which control ceases.
Property, plant and equipment
Items of property, plant and equipment are stated at cost less
accumulated depreciation and impairment losses. Such cost includes
costs directly attributable to making the asset capable of
operating as intended.
Depreciation is charged to the income statement on a
straight-line basis over the estimated useful lives of each part of
an item of property, plant and equipment. The estimated useful
lives in the current and comparative periods are as follows:
-- buildings 7 - 40 years
-- plant and equipment 3 - 15 years
-- vehicles 5 - 7 years
The residual value, the useful life and the depreciation method
applied to an asset are reassessed at least annually.
Power project development costs
Power project expenditure is expensed as pre-development
expenditure until it is probable that future economic benefits
associated with the project will flow to the Group and the costs
can be measured reliably. When it is probable that future economic
benefits will flow to the Group, all costs associated with
developing a power plant project are capitalised as power project
expenditure within property, plant and equipment category of
tangible non-current assets. The capitalised expenditure will
include appropriate technical and administrative expenses but not
general overheads. Power project assets are not depreciated until
the asset is ready and available for use.
Intangible assets
Acquired intangible assets, are measured initially at cost and
are amortised on a straight-line basis over their estimated useful
lives.
Exploration and evaluation costs are capitalised as exploration
and evaluation assets on an area of interest basis in accordance
with IFRS 6. Costs such as geological and geophysical surveys,
drilling and commercial appraisal costs, and other directly
attributable costs of exploration and appraisal including technical
and administrative costs, are capitalised as intangible exploration
and evaluation assets.
Exploration and evaluation assets are only recognised if the
rights of the area of interest are current and either:
(i) the expenditures are expected to be recouped through
successful development and mining of the area of interest, or by
its sale; or
(ii) activities in the area of interest have not reached a stage
which permits a reasonable assessment of the existence or otherwise
of economically recoverable reserves and active and significant
operations in, or in relation to, the area of interest are
continuing or planned for the future.
Exploration and evaluation assets are assessed for impairment if
sufficient data exists to determine technical feasibility and
commercial viability, and facts and circumstances suggest that the
Group should test for impairment. In the event that there is an
indicator of impairment, the Group performs an impairment test in
accordance with its policy on impairment as stated below. For the
purposes of impairment testing, exploration and evaluation assets
are allocated to cash-generating units to which the exploration
activity relates.
Once the technical feasibility and commercial viability of the
extraction of mineral resources in an area of interest are
demonstrable, exploration and evaluation assets attributable to
that area of interest are first tested for impairment and then
reclassified from intangible assets to mining property and
development assets within property, plant and equipment.
Impairment
The Group assesses at each reporting date whether there is an
indication that an asset may be impaired. If any such indication
exists, or when annual impairment testing for an asset is required,
the Group makes an estimate of the asset's recoverable amount. An
asset's recoverable amount is the higher of an asset's or
cash-generating unit's fair value less costs to sell and its value
in use and is determined for an individual asset, unless the asset
does not generate cash inflows that are largely independent of
those from other assets or groups of assets. Where the carrying
amount of an asset exceeds its recoverable amount, the asset is
considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and the risks specific to the asset. Impairment losses of
continuing operations are recognised in the income statement in
those expense categories consistent with the function of the
impaired asset.
An assessment is made at each reporting date as to whether there
is any indication that previously recognised impairment losses may
no longer exist or may have decreased. If such indication exists,
the recoverable amount is estimated. A previously recognised
impairment loss is reversed only if there has been a change in the
estimates used to determine the asset's recoverable amount since
the last impairment loss was recognised. If that is the case the
carrying amount of the asset is increased to its recoverable
amount. That increased amount cannot exceed the carrying amount
that would have been determined, net of depreciation, had no
impairment loss been recognised for the asset in prior years. Such
reversal is recognised in profit or loss. After such a reversal the
depreciation charge is adjusted in future periods to allocate the
asset's revised carrying amount, less any residual value, on a
systematic basis over its remaining useful life.
Financial Instruments
Financial instruments are recognised when the Group becomes a
party to the contractual provisions of the instrument and are
subsequently measured at amortised cost.
Classification and measurement of financial assets
The initial classification of a financial asset depends upon the
Group's business model for managing its financial assets and the
contractual terms of the cash flows. The Group's financial assets
are measured at amortised costs and are held within a business
model whose objective is to hold assets to collect contractual cash
flows and its contractual terms give rise on specified dates to
cash flows that represent solely payments of principal and
interest.
The Group's cash and cash equivalents and other receivables are
measured at amortised cost. Other receivables are initially
measured at fair value. The Group holds other receivables with the
objective to collect the contractual cash flows and therefore
measures them subsequently at amortised cost.
Cash and cash equivalents
Cash includes cash on hand and demand deposits with any bank or
other financial institution. Cash equivalents are short-term,
highly liquid investments that are readily convertible to known
amounts of cash which are subject to an insignificant risk of
changes in value.
Impairment of financial assets
The Group recognises loss allowances for expected credit losses
("ECL's") on its financial assets measured at amortised cost. Due
to the nature of its financial assets, the Group measures loss
allowances at an amount equal to the lifetime ECLs. Lifetime ECLs
are the anticipated ECLs that result from all possible default
events over the expected life of a financial asset. ECLs are a
probability-weighted estimate of credit losses.
Classification and measurement of financial liabilities
A financial liability is initially classified as measured at
amortised cost or FVTPL. A financial liability is classified as
measured at FVTPL if it is held-for-trading, a derivative or
designated as FVTPL on initial recognition.
The Group's accounts payable, accrued liabilities and short-term
debt are measured at amortised cost.
Accounts payable and accrued liabilities are initially measured
at fair value and subsequently measured at amortised cost. Accounts
payable and accrued liabilities are presented as current
liabilities unless payment is not due within 12 months after the
reporting period.
Short-term debt is initially measured at fair value, net of
transaction costs incurred. Subsequently they are measured at
amortised cost using the effective interest rate method. Short-term
debt is classified as current when payment is due within 12 months
after the reporting period.
The Group has no financial liabilities measured at FVTPL.
Where there is a modification to a financial liability, the
financial original liability is de-recognised and a new financial
liability is recognised at fair value in accordance with the
Group's policy.
Other loans and borrowings
All loans and borrowings which are financial instruments are
initially recognised at the present value of cash payable to the
lender (including interest). After initial recognition they are
measured at amortised cost using the effective interest rate
method. The effective interest rate amortisation is included in
finance costs in the income statement.
Cash and cash equivalents
Cash and short-term deposits in the balance sheet comprise cash
at banks and in hand.
Income tax
Income tax on the profit or loss for the year comprises current
and deferred tax. Income tax is recognised in the income statement
except to the extent that it relates to items recognised outside
profit and loss, in which case it is recognised in other
comprehensive income or directly in equity as appropriate.
Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantially enacted at
the balance sheet date, and any adjustment to tax payable in
respect of previous years.
Deferred income tax is recognised on all temporary differences
arising between the tax bases of assets and liabilities and their
carrying amounts in the financial statements, with the following
exceptions:
-- where the temporary difference arises from the initial
recognition of goodwill or of an asset or liability in a
transaction that is not a business combination that at the time of
the transaction affects neither accounting nor taxable profit or
loss;
-- in respect of taxable temporary differences associated with
investments in subsidiaries, associates and joint ventures, where
the timing of the reversal of the temporary differences can be
controlled and it is probable that the temporary differences will
not reverse in the foreseeable future; and
-- deferred income tax assets are recognised only to the extent
that it is probable that taxable profit will be available against
which the deductible temporary differences, carried forward tax
credits or tax losses can be utilised.
Deferred income tax assets and liabilities are measured on an
undiscounted basis at the tax rates that are expected to apply when
the related asset is realised or liability is settled, based on tax
rates and laws enacted or substantively enacted at the balance
sheet date.
Foreign currency transactions
Transactions in currencies other than pounds sterling are
recorded at the foreign exchange rate ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign
currencies at the balance sheet date are translated at the foreign
exchange rate ruling at that date. Foreign exchange differences
arising on translation are recognised in the income statement.
Non-monetary assets and liabilities that are measured in terms of
historical cost in a foreign currency are translated using the
exchange rate at the date of the transaction.
Share based payments
The cost of equity-settled transactions is measured by reference
to the fair value at the date at which they are granted and is
recognised as an expense over the vesting period, which ends on the
date on which the recipients become fully entitled to the award.
Fair value is determined using an appropriate pricing model. In
valuing equity-settled transactions, no account is taken of any
vesting conditions, other than conditions linked to the price of
the shares of the Company (market conditions) or to conditions not
related to performance or service (non-vesting conditions).
Where equity settled share based payments are made to
non-employees the cost of equity-settled transactions is measured
by reference to fair value of the goods or services received and
measured at the date the entity obtains the goods or the
counterparty renders the service.
Where the fair value of the goods or services received cannot be
estimated reliably, the entity measures the goods or services
received, and the corresponding increase in equity, indirectly, by
reference to the fair value of the equity instruments granted,
measured at the date the entity obtains the goods or the
counterparty renders service.
At each balance sheet date before vesting, the cumulative
expense is calculated, representing the extent to which the vesting
period has expired and management's best estimate of the
achievement or otherwise of non-market conditions, number of equity
instruments that will ultimately vest or in the case of an
instrument subject to a market condition or non-vesting condition,
be treated as vesting as described above. This includes any award
where non-vesting conditions within the control of the Group or the
employee are not met. W here the equity-settled share based payment
is directly attributable to exploration and evaluation activities,
the movement in cumulative expense since the previous balance sheet
date is capitalised, with a corresponding entry in equity.
Otherwise, the movement in cumulative expense is recognised in the
income statement, with a corresponding entry in equity.
Where the terms of an equity-settled award are modified or a new
award is designated as replacing a cancelled or settled award, the
cost based on the original award terms continues to be recognised
over the original vesting period. In addition, an expense is
recognised over the remainder of the new vesting period for the
incremental fair value of any modification, based on the difference
between the fair value of the original award and the fair value of
the modified award, both as measured on the date of the
modification. No reduction is recognised if this difference is
negative.
Where an equity-settled award is cancelled, it is treated as if
it had vested on the date of cancellation, and any cost not yet
recognised in the income statement for the award is expensed
immediately. Any compensation paid up to the fair value of the
award at the cancellation or settlement date is deducted from
equity, with any excess over fair value being treated as an expense
in the income statement.
New standards and interpretations applied
The Group has adopted all of the amended standards and
interpretations during the year that are relevant to its
operations, none of which had a material impact on the financial
statements.
The application of the new and amended standards and
interpretations during the year did not have any impact on the
accounting policies, financial position or performance of the
Group, with the following noted below;
IFRS 16 Leases - Accounting policy from 1 July 2019 applied
Leased assets are capitalised on inception of the lease as
right-of-use assets. A corresponding lease liability, representing
the present value of the lease payments is also recognised and
split between current and non-current liabilities accordingly.
The lease liability includes; fixed payments, variable lease
payments dependent on an index or rate (initially measured using
the index or rate on the lease commencement date) and in substance
fixed payments. The variable aspect of variable payments is
recognised when the rate or index takes effect resulting in an
adjustment to the liability and right-of-use asset. Currently the
Group's lease portfolio does not contain variable or in substance
lease payments.
The discounted lease liability is calculated where possible
using the interest rate implicit in the lease or where this is not
attainable the incremental borrowing rate is utilised. The
incremental borrowing rate is the rate the Group would have to pay
to borrow the funds necessary to obtain a similar asset under
similar conditions. The Group calculates the incremental borrowing
rate using risk free rate of the country where the asset is held,
adjusted for length of the lease and a risk premium.
Lease payments are allocated against the principal and finance
cost. Finance costs, representing the unwinding of the discount on
the lease liability are charged to the income statement to produce
a constant periodic rate of interest on the remaining
liability.
Right-of-use assets are measured at cost including; the
discounted initial lease liability, lease payments made at or
before the commencement date, any initial direct costs reduced any
lease incentives received.
New standards and interpretations not applied
IASB and IFRIC have issued a number of new standards and
interpretations with an effective date after the date of these
financial statements. These will be adopted in the period that they
become mandatory, unless otherwise indicated. Information on the
new standards which could impact the Group is presented below
Effective Adoption
date date
International Accounting Standards (IAS
/ IFRSs)
Amendments to IAS 16 Property Plant and tbc tbc
Equipment
Amendments to IAS 37 Provisions, Contingent tbc tbc
Assets and Contingent Liabilities
Annual Improvements to IFRS 2018-20 Cycle tbc tbc
Amendments to IAS 1 Presentation of Financial tbc tbc
Statements - classification of Liabilities
as Current or Non-current
Amendments to IAS 8 Accounting Policies,
Changes to Accounting Estimates and Errors
tbc: still subject to UK endorsement
Based on the current and foreseeable operations, the adoption of
the above standards and interpretations will not have a material
impact on the Group's financial statements in the period of initial
application.
2. Segment analysis
The Group operates in one segment being the exploration and
evaluation of energy related projects. The only significant project
within this segment is the Phulbari Coal and Power Project (the
Project) in Bangladesh.
3. Operating loss
2021 2020
GBP000 GBP000
The operating loss is stated after charging:
Directors' remuneration 488 391
Other staff costs (1) 7 6
Operating lease rentals (2) 4 11
Depreciation of property, plant and equipment - -
(3)
(1) Other staff costs for 2020 financial year were GBP367,000 of
which GBP7,000 was expensed in administrative expenses, GBPnil
expensed in exploration and evaluation costs and GBP360,000
capitalised (20120 GBP6,000 expensed in administrative expenses,
GBPnil expensed in exploration and evaluation costs and GBP393,000
capitalised).
(2) Operating lease rental costs for 2021 financial year were
GBP44,000 of which GBP4,000 was expensed and GBP40,000 capitalised
(2020: GBP80,000 of which GBP11,000 was expensed and GBP69,000
capitalised).
(3) Total depreciation for 2021 was GBP5,000 which was
capitalised to intangibles (2020: GBP6,000 capitalised).
During the year Phulbari-related exploration and evaluation
costs amounting to (GBP35,000) were (credited)/expensed in
accordance with the Group's accounting policy on exploration and
evaluation costs (2020:expensed GBP52,000).
4. Auditor's remuneration
The Group paid the following amounts to its auditors in respect
of the audit of the financial statements and for other services
provided to the Group.
2021 2020
GBP000 GBP000
Audit of the group and company financial
statements 32 32
Audit of subsidiaries - -
-------- --------
Total audit 32 32
-------- --------
Total fees 32 32
-------- --------
5. Amounts paid for Directors' services, and staff costs
2021 2020
GBP000 GBP000
Amounts paid for Directors' services
Amounts paid for Directors' services 488 391
-------- --------
The amounts paid for Directors' services during the year are
disclosed in further detail in the Directors' Report . The
aggregated remuneration of the highest paid director is GBP303,600
(2020: GBP303,600).
Staff costs
Wages and salaries
(1) 360 393
Social security costs 7 6
367 399
---- ----
(1) Excludes amounts paid for Directors' services.
The average monthly number of employees 2021 2020
during the year was: Number Number
Exploration and evaluation 14 14
Administration 3 3
17 17
-------- --------
6. Taxation
Reconciliation of the tax charge in the income statement
2021 2020
GBP000 GBP000
Loss on ordinary activities before tax (1,874) (1,515)
-------- --------
UK corporation tax @ 19% (2021) and 19%
(2020) (356) (288)
Unrecognised deferred tax assets during
the year 351 297
Non-deductible expenditure 5 (9)
Total tax (credit)/expense reported in - -
the income statement
-------- --------
Unrecognised deferred tax assets
2021 2020
GBP000 GBP000
Deferred tax asset
Tax losses carried forward 4,110 3,760
Impairment 891 891
Other 1 1
5,002 4,652
Less: deferred tax assets de-recognised (5,002) (4,652)
- -
-------- --------
At 30 June 2021 tax losses for which a deferred tax asset was
not recognised amounted to GBP21,701,000 (2020: GBP19,792,000).
Deferred tax assets are only recognised should it become more
likely than not that taxable profit or timing differences, against
which they may be deducted, will arise.
7. Loss per share
2021 2020
GBP000 GBP000
(Loss) for the year (1,874) (1,515)
--------- ----------
Thousands Thousands
Weighted average number
of shares
Basic and diluted weighted average number
of shares 121,733 104,676
(Loss) per share
Basic (pence per share) (1.5p) (1.45p)
Diluted (pence per share) (1.5p) (1.45p)
There are 9,300,000 potentially dilutive options along with
1,012,378 potentially dilutive shares to be issued at 30 June 2021
which are not included in the calculation of diluted earnings per
share because they were anti -- dilutive for the period as their
conversion to Ordinary Shares would decrease the loss per
share.
8. Other Receivables
2021 2020
GBP000 GBP000
Current
Prepayments 9 12
Other receivables 4 4
13 16
-------- --------
9. Intangible assets
Exploration Mineral Total
& evaluation rights
expenditure
GBP000 GBP000 GBP000
At 1 July 2019 40,103 1,147 41,250
Additions - exploration & evaluation 377 - 377
At 30 June 2020 40,480 1,147 41,627
Additions - exploration & evaluation 552 - 552
Cost and net book value at 30
June 2021 41,032 1,147 42,179
-------------- -------- -------
Cost and net book value at 30
June 2020 40,480 1,147 41,627
-------------- -------- -------
The mineral rights will be amortised over the licence period
(including extensions) once commercial production commences at the
Phulbari Coal and Power Project.
The exploration and evaluation expenditure will have an
indefinite useful life until approval is obtained for the Phulbari
Coal and Power Project. At that time, the asset will be transferred
to mining property and development assets within property, plant
and equipment in accordance with accounting policy.
10. Investments
Principal undertakings
Investments in which the Group holds 20% or more of the nominal
value of any class of share capital are as follows:
Country of Ownership interest
Incorporation 2021 2020
Subsidiaries
England and
South African Coal Limited Wales 100% 100%
Asia Energy Corporation Pty
Limited Australia 100% 100%
Asia Energy Corporation (Bangladesh)
Pty Limited Australia 100% 100%
Asia Energy (Bangladesh) Pvt
Ltd Bangladesh 100% 100%
Fair Value Through Other Comprehensive
Income
Peoples Telecommunication and
Information Services Ltd (PeoplesTel) Bangladesh 37% 37%
The investment in PeoplesTel has been accounted for as financial
asset at Fair Value Through Other Comprehensive Income as GCM does
not have significant influence. The investment was fully impaired
during the year ended 30 June 2010.
11. Payables
2021 2020
GBP000 GBP000
Trade payables 579 527
Related party accrued payable 843 546
1,422 1,073
-------- --------
Refer to note 20 for details of the related party accrued
payable.
12. Borrowings
2021 2020
GBP000 GBP000
Loan from related party
Balance as at 1 July 3,220 2,343
Loan instalments drawndown 600 600
Interest charges 383 277
Balance as at 30 June 4,203 3,220
-------- --------
Refer to note 20 for details of the loan from related party.
The Company on 26 March 2021, as part of the completed equity
placing, extended and amended the terms of the loan facility
provided by Polo Resources Limited (the "Facility") of which, as
was announced on 7 January 2021, there is GBP300,000 of the initial
GBP3.5 million facility remaining undrawn. The lender has agreed
that it will not serve a repayment request on the Company for 5
years from the date of the agreement replacing the previous
provision that it was payable on demand with 90 days' notice. The
Company and Polo Resources Limited have agreed an increase in the
interest rate from 12% to 15% per annum rising by 1.5% on the third
anniversary and by a subsequent 1.5% on each anniversary
thereafter. Furthermore, the lender may request conversion by the
issuance of new ordinary shares in the Company at 7.5 pence per
share (being the Issue Price) subject to any necessary regulatory
approvals. The Company may elect to repay all or part of the
outstanding loan at any time giving 60 days' notice and with the
agreement of Polo Resources Limited. Any share issue to the Lender
is conditional upon the Lender's interest, together with the
interest of any parties with which it is in concert, remaining
below 30% of the Company's issued capital. All other principal
terms of the loan facility remain unchanged. Refer page 39 for
details of Management judgement used in accounting for the loan
amendment
13. Leases and Commitments
Right of use assets
The statement of financial position shows the following amounts
relating to leases:
2021 2020
GBP000 GBP000
Buildings 59 29
Vehicles - 12
59 33
-------- --------
Lease liabilities
2021 2020
GBP000 GBP000
Classified as;
Current 40 27
Non-current 22 21
62 48
-------- --------
The interest expense incurred on lease liabilities was GBP6,000
(2020: GBP5,000), and capitialised in accordance with the Group's
policy on exploration and evaluation assets. Cash outflows in
respect of right of use assets were GBP49,000 (2020:
GBP66,000).
Other commitments
In addition, under the terms of the Prospecting License
agreement with the Bangladesh authorities for contract licence
areas B, G and H respectively, an annual fee of 500 Taka (GBP4.33
at year-end exchange rate) is payable for each hectare within the
licence area. The Group currently leases 5,480 hectares within
these licence areas. The licence has a 30 year term from 2004 and
may be renewed for further periods of 10 years each, at GCM's
option.
14. Issued share capital
Ordinary Deferred Total
Shares A Shares share
Thousands Thousands capital
GBP000
Allotted, called up
and fully paid:
At 1 July 2019 98,639 - 9,864
Shares issued 13,921 - 1,392
At 30 June 2020 112,560 - 11,256
----------- ----------- ---------
At 1 July 2020 112,560 - 11,256
Shares issued 6,022 - 602
----------- ----------- ---------
Total pre capital reorganisation 118,582 - 11,858
Capital reorganisation
(see below) 118,582 118,582 -
Shares issued 19,011 - 190
At 30 June 2021 137,593 118,582 12,048
----------- ----------- ---------
Share issues
On 23 January 2020, 13,721,354 shares were issued to consultants
in accordance with the terms of the their agreements, at prices
from 14p to 38.25p, for a total non cash consideration of
GBP4,347,635.
On 15 April 2020, 200,000 shares were issued to former director
on the exercising of their share options at a price of 11p per
share for a total of GBP22,000.
On 8 September 2020, 6,021,621 shares were issued to consultants
in accordance with the terms of the their agreements, at prices
from 14p to 26.5p, for a total non cash consideration of
GBP1,276,873.
14. Issued share capital (continued)
On 1 April 2021, 13,446,661 shares were issued on completion of
a successful placing at a price of 7.5p, raising gross cash
proceeds of GBP1,008,500.
On 7 May 2021, 5,564,591 shares were issued to consultants in
accordance with the terms of the their agreements, at prices from
10.25p to 18p, for a total non cash consideration of
GBP661,638.
Capital reorganisation
On 25 February 2021 at the Annual General Meeting the
shareholders approved the sub-division of the existing ordinary
shares of 10p each into new ordinary shares of 1p each and deferred
A shares of 9p each. The rights attached to the new ordinary shares
are in all material aspects the same as the rights attaching to the
existing ordinary shares.
Ordinary shares have the right to receive dividends as declared
and, in the event of winding up the Company, to participate in the
proceeds from sale of all surplus assets in proportion to the
number of and amounts paid up on shares held. Ordinary shares
entitle their holder to one vote, either in person or by proxy, at
a meeting of the Company.
The Deferred Shares have no voting rights and do not carry any
entitlement to attend general meetings of the Company; nor will
they be admitted to AIM or any other market. They carry only a
priority right to participate in any return of capital to the
extent of GBP1 in aggregate over the class. In addition, they carry
only a priority right to participate in any dividend or other
distribution to the extent of GBP1 in aggregate over the class. In
each case a payment to any one holder of Deferred Shares shall
satisfy the payment required. The Company will be authorised at any
time to effect a transfer of the Deferred Shares without reference
to the holders thereof and for no consideration pursuant to and in
accordance with the Act. Accordingly, the Deferred Shares will, for
all practical purposes, be valueless and it is the Board's
intention, at an appropriate time, to have the Deferred Shares
cancelled, whether through an application to the Companies Court or
otherwise in accordance with the Act.
Reserves
Share capital
The balance held in share capital relates to the nominal net
proceeds on issue of the Company's equity share capital, comprising
GBP0.01 ordinary shares, and GBP0.09 deferred A shares.
Share premium account
The share premium account represents the premium received over
the nominal value of ordinary shares on issue of the Company's
equity. The share premium account has been reduced by expenditure
associated with issuing shares such as listing costs.
Other reserves
This reserve records the fair value of conditional shares
awarded but not settled, and consultants service payments to be
also settled by way of share issues.
2021 2020
GBP000 GBP000
Share based payments
not settled 583 1,706
583 1,706
-------- --------
15. Notes supporting statement of cashflows
Cash and cash equivalents for the purposes of the statement of
cash flows comprises:
2021 2020
GBP000 GBP000
Cash at bank available on demand 717 69
717 69
-------- --------
Non-cash transactions from financing activities are shown in the
reconciliation of liabilities from financing transactions:
Current Total
loans and
borrowings
GBP000 GBP000
Balance at 1 July 2019 2,343 2,343
Cash flows 600 600
Non-cash flows: Interest
accrued 277 277
Balance at 30 June
2020 3,220 3,220
----------- ------
Balance at 1 July 2020 3,220 3,220
Cash flows 600 600
Non-cash flows: Interest
accrued 383 383
Balance at 30 June
2021 4.203 4.203
----------- ------
16. Significant non-cash transactions
The significant non-cash transactions during the year were as
follows:
-- GBP809,000 of expenses were incurred by consultants for their
services. The consulting payment included GBP300,000 (2,142,857
shares at 14p per share) as payment for a retainer, and GBP365,000
(3,557,449 shares at 10.25p per share) a success fee for a
milestone achievement, and GBP144,000 (800,000 shares at 18p per
share) for a second consultant retainer. These retainer fee shares
which had not been issued to the consultants at year end have been
included in other reserves for shares to be issued.
17. Share based payments
The charge/(credit) for share based payments during the year is
shown in the following table:
2021 2020
GBP000 GBP000
Charged/(credited) to intangibles
Conditional shares 6 (201)
6 (201)
-------- --------
Share Warrants
During the year ended 30 June 2021, the Company granted 672,333
warrants to subscribe for ordinary shares (2020: nil). No warrants
were exercised or lapsed during the year. (2020: nil). As at 30
June 2021, 672,333 warrants were in issue. (2020: nil).
17. Share based payments (continued)
Options
The following table illustrates the number and weighted average
exercise prices (WAEP) of, and movements in, share options during
the year.
2021 2021 2020 2020
Options WAEP Options WAEP
Thousands Thousands
At 1 July 9,300 GBP0.11 9,500 GBP0.11
Exercised during the - - (200) (GBP0.11)
year
Outstanding at 30 June 9,300 GBP0.11 9,300 GBP0.11
----------- -----------
Exercisable at 30 June 9,300 GBP0.11 9,300 GBP0.11
----------- -----------
The options outstanding at 30 June 2021 have an exercise price
of GBP0.11 (2020: GBP0.11) and a weighted average contractual life
of 2.9 years (2020: 3.9 years), including those granted options
whose term was extended during the year. No options were exercised
during the year. The 9,300,000 options in issue at 31 May 2020, had
their expiry date extended to 31 May 2024.
Conditional shares scheme
GCM has a conditional share scheme for Directors, employees,
associates, consultants and contractors. Ordinary shares will be
issued for nil cash consideration, conditional upon the Group
achieving milestones including approval by the Government of
Bangladesh of the Scheme of Development for the Phulbari Coal and
Power Project. The awards granted are classified as equity-settled,
and therefore the fair value is determined by reference to the
share price at the date of the grant, as required by IFRS 2.
Movement in non-vested conditional shares:
2021 2020
Thousands Thousands
At 1 July 210 313
Conditional shares
lapsed - (103)
----------- -----------
At 30 June 210 210
----------- -----------
The grant details of the conditional shares outstanding as at 30
June 2021 are as follows:
Share price Conditional
at shares
grant date Thousands
GBP
Grant date
25 August 2005 GBP6.32 40
9 March 2006 GBP4.99 30
46 July 2009 GBP0.84 140
210
------------
The cumulative cost recognised in equity in relation to the
conditional shares as at 30 June 2021 is GBP459,000 (2020:
GBP453,000) after taking into account:
-- Expected timeframe for milestones to be achieved
-- Probability of successful completion of milestones
-- The conditional shares awarded to employees are subject to
their employment at the time milestones are reached
The increase in the cost of conditional shares of GBP6,000 for
the year ended 30 June 2021 is directly attributable to the
Phulbari Coal and Power Project, and accordingly capitalised to
intangibles on this basis (2020: credit GBP201,000).
18. Financial Instruments
The Group holds cash as a liquid resource to fund the
obligations of the Group.
The Group's strategy for managing cash is to maximise interest
income whilst ensuring its availability to match the profile of the
Group's expenditure. This is achieved by regular monitoring of
interest rates and periodic review of expenditure forecasts.
The Group has a policy of not hedging and therefore takes market
rates in respect of foreign exchange risk; however it does review
its currency exposures on a regular basis. The Group has no
significant monetary assets or liabilities that are denominated in
a foreign currency.
The financial liabilities of the Group include trade payables
and a short-term loan from a related party. Trade payables are
recognised at fair value on initial recognition and subsequently
measured at amortised cost. The short-term loan was recognised
based on the present value of cash payable to the lender. As the
short-term loan is payable within 12 months, the present value of
the cash payable was equal to the principal value of the loan.
Interest rate risk
The interest rate maturity profile of the financial assets of
the Group is as follows:
2021 2020
GBP000 GBP000
Floating rate - within
1 year
Cash and cash equivalents - -
-------- --------
Other interest bearing financial instruments which are subject
to fixed rate interest charges are the Group's borrowings as
disclosed in Note 12.
Other financial instruments of the Group which are non-interest
bearing and are therefore not subject to interest rate risk, are,
non-interest-bearing cash and cash equivalents as at 30 June 2021
was GBP717,000 (2020: GBP69,000).
Credit risk
The Group considers the credit ratings of banks in which it
holds funds in order to manage exposure to credit risk and
counterparty risk. Funds are held in banks with credit ratings
ranging from AAA -AA. The maximum credit risk at 30 June 2021 was
as follows:
2021 2020
GBP000 GBP000
Cash and cash equivalents 717 69
-------- --------
Liquidity risk
The Group ensures that it has sufficient cash to meet all its
commitments when required, through equity and short term loan
funding, please refer to the accounting policies for further
detail. The table below summarises the contractual maturity profile
of the Group's financial liabilities as at 30 June 2021 and
2020.
Within 1 to 3 3 to 12 2 - 5 years Total &
30 days months months Carrying
GBP000 GBP000 GBP000 GBP000 value
GBP000
2021
Payables 1,281 86 55 - 1,422
Lease liabilities 3 7 30 22 62
Borrowings - - - 4,203 4,203
--------- -------- -------- ------------ ----------
1,284 93 85 4,225 5,687
--------- -------- -------- ------------ ----------
2020
Payables 1,004 26 43 - 1,073
Lease liabilities 2 5 20 21 48
Borrowings - - 3,220 - 3,220
--------- -------- -------- ------------ ----------
1,006 31 3,283 21 4,341
--------- -------- -------- ------------ ----------
18. Financial Instruments (continued)
Currency risk
The Group has no significant monetary assets or liabilities that
are denominated in a foreign currency.
Fair values of financial assets and liabilities
Financial instrument Book value Fair value
classification
2021 2020 2021 2020
GBP000 GBP000 GBP000 GBP000
Financial assets
Cash and cash equivalents Amortised cost 717 69 717 69
Receivables Amortised cost 13 16 13 16
Financial liabilities
Creditors Amortised cost 1,422 1,073 1,422 1,073
Borrowings Amortised cost 4,203 3,220 4,203 3,220
Management have assessed that the fair value of cash, current
receivables and current payables approximate their carrying amounts
due to the short-term maturities of these instruments.
19. Contingent liabilities
Royalty
The Group is obliged to pay Deepgreen Minerals Corporation Pty
Limited US$1 per tonne of coal produced and sold from the Phulbari
mine. The Directors are of the opinion that a provision is not
required in respect of these matters, as coal has not yet been
produced at Phulbari.
Consultant success fees
The Group is obliged to pay a consultant, Dyani Corporation
Limited, success fees conditional upon achieving key milestones
relating to the advancement of the proposed 6,000MW coal fired
power plant at the mine-mouth of the Phulbari Coal and Power
Project, in North-West Bangladesh. As at 30 June 2021 the
outstanding milestones were as follows:
Success Fee - Mine
-- a one-time fee equal to 2% of Issued Capital, to be paid
within five business days following the execution of an Acceptable
MOU with a Strategic Partner in respect to the Mine; and
-- a one-time fee equal to 4% of Issued Capital if an Acceptable
Framework Agreement in respect to the Mine has been entered into,
or 6% of Issued Capital if an Acceptable Framework Agreement with
respect to the Mine has not been entered into, to be paid within
five business days following the execution of an Acceptable
Definitive Agreement with a Strategic Partner in respect to the
Mine.
Success Fee - Power Plant 1
-- Fee 1 - a one-time fee equal to 5% of the Issued Capital, to
be paid within five business days following the execution of all
Acceptable Definitive Agreements with a Strategic Partner in
respect to Power Plant 1
Success Fee - Power Plant 3
-- a one-time fee equal to 4% of Issued Capital, if an
Acceptable Framework Agreement with respect to Power Plant 3 has
been entered into, or 6% of Issued Capital if an Acceptable
Framework Agreement with respect to Power Plant 3 has not been
entered into, to be paid within five business days following the
execution of all Acceptable Definitive Agreements with a Strategic
Partner in respect to Power Plant 3.
19. Contingent liabilities (continued)
Consultant success fees
The Group is also obliged to pay a consultant, DG Infratech PTE.
Limited, success fees conditional upon achieving key milestones
relating to the advancement of the proposed 6,000MW coal fired
power plant at the mine-mouth of the Phulbari Coal and Power
Project, in North-West Bangladesh. As at 30 June 2021 the
outstanding milestones were as follows:
Success Fee - Coal Project's Scheme of Development
-- a one-time fee equal to 5% of Issued Capital, to be paid
within five business days following GCM'S receipt of the written
approval of the Coal Project's Scheme of Development; and
Success Fee - Power Plants
-- a one-time fee equal to 2% of Issued Capital, to be paid
within five business days following GCM'S receipt of the written
approval in respect of each group of Power Plants; and
Success Fee - Commencement of Development
-- a one-time fee equal to 4% of Issued Capital, to be paid
within five business days following GCM'S commencement of
development of the Coal Project; and
The Directors are of the opinion that a provision is not
required in respect of these success fees, as the milestones had
not been met as at 30 June 2021.
20. Related Party Transactions
Key management personnel
2021 2020
GBP000 GBP000
Short-term benefits 651 597
Termination benefits - -
Share based payments 1 12
652 675
-------- --------
Related party loan
GCM is beneficiary to a GBP3.5 million loan facility from its
largest shareholder, with a current interest rate of 15% per annum.
As at 30 June 2021 the Group had utilised GBP3.2 million of the
loan facility (2020: GBP2,600,000) and an interest accrual of
GBP1,003,000 (2020: GBP620,000). The terms of the loan were amended
in March 2021, refer to note 12 of the Financial Statements. Polo
Resources Ltd is a related party by way of Michael Tang being a
Director of both Companies.
Management services company
As disclosed in the Directors Report, for the year ended 30 June
2021, the remuneration for the services of Datuk Michael Tang PJN,
Executive Chairman of the Company, was GBP303,600, which comprised
of directors fees amounting to GBP6,000 (2020: GBP6,000) and
management services of GBP297,600 paid to a management services
company (2020: GBP297,600).
For the period September 2018 to March 2021 Datuk Michael Tang
PJN offered to defer the payments due to his management services
company until further notice in order to assist the Company. The
total debt as a result of the deferment of GBP769,000 has not been
paid and is being accrued accordingly.
As at 30 June 2021 the amount owing to the management services
company of Datuk Michael Tang PJN was GBP843,000 (2020:
GBP546,000).
21. Events after the end of the reporting period
The following events took place subsequent to 30 June 2021, for
which there has been no adjustment to the 30 June 2021 financial
statements:
- On 31 August 2021, the Company agreed a memorandum of
understanding ("MOU") with Sion Corporation of Japan ("SION"),
Versatech Energy Innovation Limited ("VERSATECH"), and AC Biode Co.
Ltd ("AC BIODE") for providing a suitable and effective
environmental solution for the management of the fly-ash waste
product that will be produced by the Phulbari Coal and Power
Project ("the Project"). This will include, inter alia,
investigations into the production of the composite material
CircuLite from fly-ash produced by the Project and the application
of CircuLite to various environmental and agricultural improvements
within Bangladesh.
- On 19 October 2021, the Company announced that it is in
discussions with China Nonferrous Metal Industry's Foreign
Engineering and Construction Co., Ltd. (" NFC ") to agree a 12
month extension of the framework agreements announced on 15 October
2020 which expired on 12 October 2021.
- On 1 November 2021 the Company announced the resignation of
James Hobson from his position as an Independent Non-Executive
Director. Mr Hobson's resignation takes effect from 1 December
2021. The Company is currently in the process of recruiting a
replacement Independent Non-Executive director.
- On 23 November 2021 the Company announced, Power Construction
Corporation of China, Ltd. (" PowerChina ") had agreed to an
extension for a period of a further 12 months from 6 December 2021
to 6 December 2022 on the same terms as the previous memorandum of
understanding (" MoU ") which is primarily focused on the Phulbari
coal mine development. This will allow PowerChina and GCM to
determine the modality for PowerChina to become a Mine Development
Partner, subj ect to the approval of PowerChina internal compliance
and all other relevant regulatory agencies .
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END
FR DKDBQOBDDKBB
(END) Dow Jones Newswires
December 22, 2021 01:59 ET (06:59 GMT)
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