TIDMRGM
RNS Number : 6074L
Regency Mines PLC
27 December 2018
Regency Mines Plc
("Regency Mines" or the "Company")
Final Audited Results for the Year Ended 30 June 2018
27 December 2018
A copy of the Company's annual report and financial statements
for 2018 - extracts from which are set out below - will be made
available on the Company's website www.regency-mines.com shortly
and at the Annual General Meeting to be held on 25 January
2019.
Chairman's Review
Dear Shareholders,
Overview
Everyone invested in the mineral exploration and development
sector of the market knows what the broad picture has been. After a
multi-year decline from 2010 in commodity prices, which reached its
nadir at the very beginning of 2016, and a corresponding decline in
the liquidity of, and level of interest in, listed companies in the
sector, a sharp recovery took place in the Spring of 2016.
Expanding economies worldwide consumed more natural resources,
and in retrospect the 2015-16 prices, although an unsustainable
aberration, had created expectations so low that the first stages
of recovery saw significant price increases in oil and bulk cargo
minerals, with base metals generally following behind.
Some easy money was made last year, and the setback in 2018 to
date has been the first significant pullback in prices, affecting
both commodities and share prices, and so in part a normal and
healthy reaction. It has been amplified however by signs of a
global slowdown, and by the strains on global liquidity as a result
of the US reversal of quantitative easing, that has impacted
economies outside the US through the dollar exchange rate.
There are two main views of future developments. One would hold
that China will slow, other economies will decline under the
pressure of dollar debts, the Euro area will face a crisis of slow
growth exacerbating banking instability, the US economy is reaching
full capacity and higher interest rates are inevitable, and the
global economic expansion will end with either a short sharp shock
or a decline into stagnation. The other would hold that Asia will
continue to see managed growth, that intra-Asian trade will
increase, and that the US economy will continue to grow adequately
under the influence of tax cuts and renewed infrastructure
investment.
We must prudently be prepared for either scenario. Any
commodity-based business is to some extent a creature of the cycle,
as stocking and destocking affect demand faster than production can
adjust. What we can hope to do in order to manage our long-term
strategies through periods of short-term volatility is, first, to
create cash flow and revenue from cheap production, secondly, to
build into our production some protections against price and demand
declines, and thirdly to position ourselves in minerals and sectors
seeing secular growth throughout the cycle.
Our high-quality metallurgical coal production at MET meets many
of these requirements. We expect it to provide us with cash flows
from cheap production of a relatively scarce commodity, that serves
primarily the robust U.S. market and its recovering steel industry,
where demand is underpinned by a fixed price supply contract for
significant quantities of coal to a specialist biomass power
station.
Our nickel-cobalt joint venture at Mambare in Papua New Guinea
meets one, in that we are deliberately positioned in nickel because
of the expected secular trend of demand growth for stainless steel,
and in that the use of both metals in electric car and other
battery technologies is growing and significant. We are currently
studying the options for some DSO (direct shipping ore) production
in order to generate near-term cash flows from this project.
The headline statement of this section of the Annual Report last
year read "Our base metal interests can now be seen to be entirely
composed of the cathode materials that are key for the new green
car and energy storage revolution that is under way." A year later,
that remains equally true.
Indeed, we have given form to the division set up last year to
study and develop our interests in the technologies and services
that will serve the electric car and battery sectors with the
incorporation of ESTEQ Limited, which has invested in Whitecar Ltd,
the leading electric vehicle rental company in the UK, and which
has helped set up Allied Energy Services to provide power
generation, grid back up and electricity storage from several
identified sites.
With our investment in Curzon Energy plc, where we now have a
seat on the board, we target the generation of cash flows from gas
in the US, as this cleaner energy source progressively gains market
share from coal in the US power generation mix. As this occurs, and
related LNG distribution infrastructure expands to support rising
production levels, we believe the US will continue to export LNG on
an ever-wider scale to Asian and other overseas markets.
Leaving aside the possibility of capital transactions, the focus
for cash flow from operations must be primarily metallurgical coal
for the present, as this will be relatively resistant to any
downturn. DSO nickel production depends on strong nickel prices,
and so will be more likely short term in a benign environment in
which economies grow and increased demand supports a rising nickel
price.
Review of the year
The earlier part of the year to 30 June 2018 saw Regency make
profitable disposals of its interest in Horse Hill Developments,
increase its stake in Curzon Energy plc at that company's IPO,
establish its new energy metal technologies arm ESTEQ Limited make
a maiden investment there in Whitecar Ltd.
On 30 January 2018, the Company's entire outstanding loan
facility of USD835,115 was repaid, following a fundraising at 0.55p
a share to raise GBP1,055,000, of which Directors contributed
GBP100,000.
The purpose of the financing was stated to be to repay the loan,
to expand the Company's coal footprint in the US, and to recommence
activity at Mambare.
The announcement on 5 December 2017 of a MOU with Legacy Hill
Resources Ltd ("LHR"), was then followed on 27 February by the
announcement of a joint venture, and on 6 June by the incorporation
and funding of a joint venture company, Mining Equity Trust, LLC
("MET"), to which Regency contributed USD2,000,000, taking out for
the purpose a new loan of USD1,600,000. On 2 August, after the
financial year end, MET took over the metallurgical coal operations
and assets of Omega Holdings, LLC and other companies in Virginia,
U.S.A.
At the Mambare nickel-cobalt project, Regency put forward a
revised work plan incorporating initial ground penetrating radar
work in order to provide a conceptual expansion of the deposit
envelope and discussed with the contractor the cost and timings of
that work. The settlement of certain partner issues was another
post year end development, finally occurring in November 2018, and
so allowing detailed preparation for work on site to begin.
In both cases, it was not until after the year end that real
progress could be made and it was as disappointing to us as to
other investors who sought a more aggressive timeline.
However, both the coal and the nickel-cobalt are strategic
long-term projects central to our future, so thorough due diligence
and proper structuring with appropriate partners were considered to
be essential to achieve the best results.
We drilled out a major maiden Resource at Mambare at the
beginning of the decade, and have made the painful effort to retain
this asset through a bear market in nickel that began two years
earlier than in other commodities and has scarcely ended now. We
did this because of our confidence that when the nickel and cobalt
market recovered, this would become a world class asset. We are not
therefore now going to compromise our interests by taking any
ill-thought-out actions.
In coal, we identified the potential for recovery in the
metallurgical sector of the market near the bottom of the coal bear
market, but finding an entry point that was going to work and be
within our means has been difficult. Our initial partners proved a
poor choice, but when we found that LHR with whom we shared an
office had the same vision and very relevant expertise, we realised
we had a desirable partner on hand. From that point to production
of coal was less than a year. At the time these delays seemed
frustrating, but in retrospect progress seems quite rapid. Our
joint strategic vision is a larger roll-up strategy, followed by
the listing of a North American company worth several hundred
million dollars; Omega is just the first step. Both parties also
intend that as cash is generated through operations, as much of it
as possible should be returned to the partners, something that will
soon feed into Regency's bottom-line.
Discussion of the Results
In this transition year, the balance sheet at year end looked
fairly similar to that at the beginning, despite the inflows and
outflows that occurred during the year.
The reported loss increased from GBP634,267 to GBP1,549,619, as
aGBP1,482,609 gain on sale of investments was more than offset by
an impairment of our interests in joint venture activities with our
former coal partner. We shall expect to reverse some of this
impairment in time, and will aggressively pursue various avenues to
do so. A further factor was that administration costs increased by
GBP271,076 as despite a reduction in payroll costs, the one-off
costs associated with downsizing our offices caused a temporary
increase in rental and general administrative costs, while finance
and legal costs increased as a result of the arrangements connected
with financing the MET investment.
Principally as a result of this reported loss, total assets
declined from GBP6,450, 885 to GBP5,840,692 over the year, and
total equity declined from GBP5,278,164 to GBP4,446,340.
Prospects
Our objective for the current year is to restructure our balance
sheet from short-term to longer-term liabilities, so that the
impact of expected cash flows from coal production at MET can
strengthen the financing capability of our developing nickel-cobalt
operations at Mambare, and make us financially self-sufficient. To
this end, we will control further our central overhead, and lay off
some of our costs on to partner or investee enterprises, and pursue
recoveries where we can.
We look to our joint venture operations at both MET and Mambare
to progress, and will seek external funding where appropriate. We
will look to issuing new capital to external investors at ESTEQ
with a view to eventually listing that entity in London. We expect
a rapid development in the business of Allied Energy Services.
We look to providing the market with profit guidance for MET as
soon as reasonably possible, as we believe that when we do so that
will have significant market impact.
We propose to strengthen and refresh the Board with new
appointments as appropriate in the coming year.
The measures we have already begun to take to create market
awareness and a steady flow of information will continue and
intensify, in order both to increase engagement with existing
shareholders, and to project to a new audience the identity and
vision of the Company.
Success on the ground and success in the market will, we
believe, be closely linked for us in the coming period, and so we
must and will achieve both.
Andrew Bell
Chairman and CEO
21 December 2018
Results and Dividends
The Group made a loss after taxation of GBP1,549,619 (2017:
GBP534,267). The Directors do not recommend the payment of a
dividend. The following financial statements are extracted from the
audited financial statements which were approved by the Board of
Directors and authorised for issuance on 21 December 2018.
For further information contact:
Andrew Bell 0207 747 9960 Chairman Regency Mines Plc
Scott Kaintz 0207 747 9960 Executive Director Regency Mines
Plc
Roland Cornish/Rosalind Hill Abrahams 0207 628 3396 NOMAD Beaumont Cornish Ltd
Jason Robertson 0207 374 2212 Broker First Equity Limited
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2018
30 June 30 June
Notes 2018 2017
GBP GBP
============================================= ======= ============ =============
ASSETS
Non-current assets
Property, plant and equipment 10 195 15,520
Investments in associates and joint ventures 12 3,161,002 3,585,757
Goodwill 42,471 -
Available for sale financial assets 13 1,099,572 1,443,707
Exploration assets 14 - 40,402
Trade and other receivables 15 1,274,569 1,239,779
============================================= ======= ============ =============
Total non-current assets 5,577,809 6,325,165
============================================= ======= ============ =============
Current assets
Cash and cash equivalents 20 126,125 9,176
Trade and other receivables 15 136,758 116,544
============================================= ======= ============ =============
Total current assets 262,883 125,720
============================================= ======= ============ =============
Total assets 5,840,692 6,450,885
============================================= ======= ============ =============
EQUITY AND LIABILITIES
Equity attributable to owners of the
Parent
Called up share capital 18 1,926,407 1,904,933
Share premium account 20,379,728 19,272,873
Other reserves 440,693 895,947
Retained earnings (18,339,478) (16,795,589)
============================================= ======= ============ =============
Total equity attributable to owners of
the Parent 4,407,350 5,278,164
============================================= ======= ============ =============
Non-controlling interests 38,990 -
============================================= ======= ============ =============
Total equity 4,446,340 5,278,164
============================================= ======= ============ =============
LIABILITIES
Current liabilities
Trade and other payables 16 296,752 401,634
Short-term borrowings 16 1,097,600 771,087
============================================= ======= ============ =============
Total current liabilities 1,394,352 1,172,721
============================================= ======= ============ =============
Total equity and liabilities 5,840,692 6,450,885
============================================= ======= ============ =============
These financial statements on pages 34 to 75 were approved by
the Board of Directors and authorised for issue on 21 December 2018
and are signed on its behalf by:
Andrew Bell
Chairman and CEO
The accompanying notes form an integral part of these financial
statements.
CONSOLIDATED INCOME STATEMENT
FOR THE YEARED 30 JUNE 2018
Year to Year to
30 June 30 June
Notes 2018 2017
GBP GBP
=============================================== ======= ================ ================
REVENUE
Management services - 113,350
=============================================== ======= ================ ================
Total revenue - 113,350
=============================================== ======= ================ ================
Gain on sale of available for sale investments 13 1,482,609 -
Gain on sale of tenements - 55,183
Impairment of available for sale financial
assets (215,372) -
Exploration expenses 643 (930)
Impairment of exploration assets (40,403) (229,262)
Administrative expenses (net) 4 (735,697) (464,621)
Foreign currency (loss)/gain (3,312) 49,678
Other income 47,257 -
Impairment of investments in joint ventures 12 (1,943,132) -
Finance costs, net 5 (142,212) (57,665)
=============================================== ======= ================ ================
Loss for the year before taxation 3 (1,549,619) (534,267)
Tax credit 6 - -
=============================================== ======= ================ ================
Loss for the year (1,549,619) (534,267)
=============================================== ======= ================ ================
Loss per share attributable to:
Equity holders of the Parent (1,543,889) (534,267)
Non-controlling interest (5,730) -
=============================================== ======= ================ ================
(1,549,619) (534,267)
=============================================== ======= ================ ================
Loss per share attributable to owners
of the Parent
Loss per share - basic 9 (0.23) (0.13)
pence pence
Loss per share - diluted 9 (0.23) (0.13)
pence pence
=============================================== ======= ================ ================
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 30 JUNE 2018
30 June 30 June
2018 2017
GBP GBP
========================================================= =========== ============
Loss for the year (1,549,619) (534,267)
Other comprehensive income
Items that will be reclassified subsequently to
profit or loss
Decrease in AFS reserve in relation to disposals (322,507) -
Surplus on revaluation of available for sale financial
assets (163,111) 110,242
Unrealised foreign currency gain on translation
of foreign operations 20,367 58,865
========================================================= =========== ============
Other comprehensive income for the year (465,251) 169,107
========================================================= =========== ============
Total comprehensive expense for the year attributable
to owners of the Parent (2,014,870) (365,160)
========================================================= =========== ============
All of the Group's operations are considered to be
continuing.
The accompanying notes form an integral part of these financial
statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2018
The movements in equity during the year were as follows:
Share Share Retained Other attributable Non-controlling Total
capital premium earnings reserves to owners interests equity
GBP account GBP GBP of the GBP GBP
GBP Parent
GBP
============== ============== ================ =============== ============== ============== =============== ==============
As at 1 July
2016 1,872,522 17,399,710 (15,902,032) 324,638 3,694,838 - 3,694,838
Changes in
equity
for 2017
Loss for the
year - - (534,267) - (534,267) - (534,267)
Other
comprehensive
income
for the year - - (359,290) 528,397 169,107 - 169,107
Transactions
with
owners
Issue of
shares 32,411 1,918,253 - - 1,950,664 - 1,950,664
Share issue
and
fundraising
costs - (45,090) - - (45,090) - (45,090)
Share-based
payment
transfer - - - 42,912 42,912 - 42,912
============== ============== ================ =============== ============== ============== =============== ==============
Total
transactions
with owners 32,411 1,873,163 - 42,912 1,948,486 - 1,948,486
============== ============== ================ =============== ============== ============== =============== ==============
As at 30 June
2017 1,904,933 19,272,873 (16,795,589) 895,947 5,278,164 - 5,278,164
============== ============== ================ =============== ============== ============== =============== ==============
Changes in
equity
for 2018
Loss for the
year - - (1,543,889) - (1,543,889) (5,730) (1,549,619)
Other
comprehensive
income
for the year - - - (465,251) (465,251) - (465,251)
Acquisition of
new
subsidiary - - - - - 44,720 44,720
Transactions
with
owners
Issue of
shares 21,474 1,158,855 - - 1,180,329 - 1,180,329
Share issue
and
fundraising
costs - (52,000) - - (52,000) - (52,000)
Share-based
payment
transfer - - - 9,997 9,997 - 9,997
============== ============== ================ =============== ============== ============== =============== ==============
Total
transactions
with owners 21,474 1,106,855 - 9,997 1,138,326 - 1,138,326
============== ============== ================ =============== ============== ============== =============== ==============
As of 30 June
2018 1,926,407 20,379,728 (18,339,478) 440,693 4,407,350 38,990 4,446,340
-------------- -------------- ---------------- --------------- -------------- -------------- --------------- --------------
Available
for sale Foreign
financial Share-based Associate currency Total
asset payment investments translation other
reserve reserve reserve reserve reserves
Other reserves GBP GBP GBP GBP GBP
------------------------------------------------ --------------- -------------- -------------- --------------- ----------------
As at 1 July 2016 267,004 22,945 (410,439) 445,128 324,638
Changes in equity for 2017
Other comprehensive income for the
year 110,242 - - 58,865 169,107
Transfer to retained earnings (51,149) - 410,439 - 359,290
Share based payment transfer - 42,912 - - 42,912
As at 30 June 2017 326,097 65,857 - 503,993 895,947
------------------------------------------------ --------------- -------------- -------------- --------------- ----------------
Changes in equity for 2018
Other comprehensive(expense) / income
for the year
Decrease in available for sale asset
reserve in relation to disposals (322,507) - - - (322,507)
Change in available for sale asset
reserve due to revaluation (163,111) - - (163,111)
Unrealised foreign currency gain
on translation of foreign operations - - - 20,367 20,367
Total Other comprehensive (expense)
/ income for the year (485,618) - - 20,367 (465,251)
Share based payment transfer - 9,997 - - 9,997
As at 30 June 2018 (159,521) 75,854 - 524,360 440,693
------------------------------------------------ --------------- -------------- -------------- --------------- ----------------
See note 17 for a description of each reserve included
above.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 30 JUNE 2018
Year to 30 June Year to
2018 30 June
GBP 2017
GBP
==================================================== ============================================== ================
Cash flows from operating activities
Loss before taxation (1,549,619) (534,267)
(Increase)/decrease in receivables (108,653) 1,501
Increase/(decrease) in payables 44,000 (217,503)
Depreciation 15,325 6,197
Impairment of exploration properties 40,403 229,262
Share-based payments 35,017 91,359
Currency adjustments 3,313 (49,679)
Finance cost, net 142,212 57,665
Agents fees settled in Curzon's shares, recorded
as Other income (28,000) -
Gain on sale of investments (1,482,609) -
Gain on sale of tenements - (55,183)
Impairment of available for sale financial
assets 215,372 -
Impairment of investments in joint ventures 1,943,132 -
Impairment of loans and receivables 95,033 -
==================================================== ============================================== ================
Net cash outflow from operations (635,074) (470,648)
==================================================== ============================================== ================
Cash flows from investing activities
Proceeds from sale of available for sale investments 1,791,758 -
Proceeds from sale of tenements - 58,837
Purchase of available for sale financial assets (800,000) (75,000)
Payments for exploration costs - (594)
Payments for investments in associates and
joint ventures (443,034) (1,531,778)
==================================================== ============================================== ================
Net cash inflow/(outflow) from investing activities 548,724 (1,548,535)
==================================================== ============================================== ================
Cash flows from financing activities
Proceeds from issue of shares 1,124,310 1,576,701
Transaction costs of issue of shares (59,500) (45,090)
Interest paid (136,730) (72,048)
Proceeds of new borrowings - 771,087
Repayment of borrowings (724,781) (210,251)
==================================================== ============================================== ================
Net cash inflow from financing activities 203,299 2,020,399
==================================================== ============================================== ================
Net (decrease)/increase in cash and cash equivalents 116,949 1,216
Cash and cash equivalents at the beginning
of period 9,176 7,960
==================================================== ============================================== ================
Cash and cash equivalents at end of period 126,125 9,176
==================================================== ============================================== ================
The accompanying notes and accounting policies form an integral
part of these financial statements.
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2018
30 June 30 June
Notes 2018 2017
GBP GBP
==================================== ======= ============ ============
ASSETS
Non-current assets
Property, plant and equipment 10 195 15,520
Investments in subsidiaries 11 483 482
Investments in associates and joint
ventures 12 3,277,662 3,702,417
Available for sale financial assets 13 694,423 1,433,858
Exploration assets 14 - 40,402
Trade and other receivables 15 2,745,016 2,045,053
==================================== ======= ============ ============
Total non-current assets 6,717,779 7,237,732
==================================== ======= ============ ============
Current assets
Cash and cash equivalents 20 6,505 8,125
Trade and other receivables 15 124,346 116,286
==================================== ======= ============ ============
Total current assets 130,851 124,411
==================================== ======= ============ ============
Total assets 6,848,630 7,362,143
==================================== ======= ============ ============
EQUITY AND LIABILITIES
Called up share capital 18 1,926,407 1,904,933
Share premium account 20,379,728 19,272,873
Other reserves (79,453) 496,514
Retained earnings (16,755,707) (15,474,628)
==================================== ======= ============ ============
Total equity 5,470,975 6,199,692
==================================== ======= ============ ============
LIABILITIES
Current liabilities
Trade and other payables 16 280,055 391,364
Short-term borrowings 16 1,097,600 771,087
==================================== ======= ============ ============
Total current liabilities 1,377,655 1,162,451
==================================== ======= ============ ============
Total equity and liabilities 6,848,630 7,362,143
==================================== ======= ============ ============
These financial statements on pages 34 to 75 were approved by
the Board of Directors and authorised for issue on 21 December 2018
and are signed on its behalf by:
Andrew Bell
Chairman and CEO
The accompanying notes form an integral part of these financial
statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2018
The movements in reserves during the year were as follows:
Share
Share premium Retained Other Total
capital account earnings reserves equity
GBP GBP GBP GBP GBP
================= ========================== ================ ================ ================= ================
As at 30 June
2016 1,872,522 17,399,710 (15,148,556) 240,772 4,364,448
Changes in equity
for 2017
Loss for the year - - (326,072) - (326,072)
Other
comprehensive
income
for the year - - - 212,830 212,830
Transactions with
owners
Issue of shares 32,411 1,918,253 - - 1,950,664
Share issue and
fundraising
costs - (45,090) - - (45,090)
Share-based
payment transfer - - - 42,912 42,912
================= ========================== ================ ================ ================= ================
Total
transactions
with owners 32,411 1,873,163 - 42,912 1,948,486
================= ========================== ================ ================ ================= ================
As at 30 June
2017 1,904,933 19,272,873 (15,474,628) 496,514 6,199,692
================= ========================== ================ ================ ================= ================
Changes in equity
for 2018
Loss for the year - - (1,352,545) - (1,352,545)
Other
comprehensive
income
for the year - - 71,466 (585,965) (514,499)
Transactions with
owners
Issue of shares 21,474 1,158,855 - - 1,180,329
Share issue and
fundraising
costs - (52,000) - - (52,000)
Share-based
payment transfer - - - 9,997 9,997
================= ========================== ================ ================ ================= ================
Total
transactions
with owners 21,474 1,106,855 - 9,997 1,138,326
================= ========================== ================ ================ ================= ================
As at 30 June
2018 1,926,407 20,379,728 (16,755,707) (79,454) 5,470,974
================= ========================== ================ ================ ================= ================
Available
for sale Share-based Total
financial payment Currency other
Other reserves asset reserve reserve reserve reserves
GBP GBP GBP GBP
================================ ======================== ==================== =============== ===================
As at 30 June 2016 215,855 22,945 1,972 240,772
Changes in equity for 2017
Other comprehensive income for
the year 110,242 - 102,588 212,830
Share-based payment transfer - 42,912 - 42,912
================================ ======================== ==================== =============== ===================
As at 30 June 2017 326,097 65,857 104,560 496,514
================================ ======================== ==================== =============== ===================
Changes in equity for 2018
Other comprehensive income for
the year
Decrease in available for sale
asset
reserve in relation to
disposals (355,602) - - (355,602)
Change in available for sale
asset reserve
due to revaluation (158,898) - - (158,898)
Transfer between reserves 33,095 - (104,560) 71,466
Total Other comprehensive
(expenses)/income (481,405) - (104,560) (585,965)
Share-based payment transfer - 9,997 - 9,997
================================ ======================== ==================== =============== ===================
As at 30 June 2018 (155,308) 75,854 - (79,454)
================================ ======================== ==================== =============== ===================
See note 17 for a description of each reserve included
above.
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEARED 30 JUNE 2018
Year to 30 June Year to
2018 30 June
GBP 2017
GBP
=================================================== =============================================== ================
Cash flows from operating activities
Loss before taxation (1,352,545) (326,072)
(Increase)/decrease in receivables (668,028) 54,214
(Decrease)/increase in payables 44,000 (223,661)
Depreciation 15,325 6,197
Agents fees settled in Curzon's shares, recorded
as Other income (28,000) -
Share-based payments 35,017 91,359
Finance (income)/costs, net 27,590 (47,771)
Currency gains/(losses) (38,124) 33,612
Gain on sale of investments (1,482,818) -
Impairment of associate 1,943,132 -
Debtors write off 95,033 -
Impairment of available for sale investment 215,372 -
Impairment of exploration expenses 40,403 -
=================================================== =============================================== ================
Net cash outflow from operations (1,153,643) (412,122)
=================================================== =============================================== ================
Cash flows from investing activities
Payments for investments in associates and
joint ventures (443,034) (1,531,778)
Purchase of available for sale financial assets (400,000) (75,000)
Proceeds from sale of available for sale
investments 1,791,758 -
=================================================== =============================================== ================
Net cash inflow/(outflow) from investing activities 948,724 (1,606,778)
=================================================== =============================================== ================
Cash flows from financing activities
Proceeds from issue of shares 1,124,310 1,576,701
Transaction costs of issue of shares (59,500) (45,090)
Interest paid (136,730) (72,048)
Proceeds of new borrowings - 771,087
Repayments of borrowings (724,781) (210,251)
=================================================== =============================================== ================
Net cash inflow from financing activities 203,299 2,020,399
=================================================== =============================================== ================
Net (decrease)/increase in cash and cash
equivalents (1,620) 1,499
Cash and cash equivalents at the beginning
of period 8,125 6,626
=================================================== =============================================== ================
Cash and cash equivalents at end of period 6,505 8,125
=================================================== =============================================== ================
The accompanying notes and accounting policies form an integral
part of these financial statements.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2018
1. Principal accounting policies
1.1 Authorisation of financial statements and statement of
compliance with IFRS
The Group financial statements of Regency Mines plc ("the
Company" or "Regency") for the year ended 30 June 2018 were
authorised for issue by the Board on 21 December 2018 and signed on
the Board's behalf by Andrew Bell and Scott Kaintz. Regency Mines
plc
is a public limited company incorporated and domiciled in
England and Wales. The Company's ordinary shares are traded on
AIM.
1.2 Basis of preparation
The financial statements have been prepared in accordance with
International Financial Reporting Standards and IFRIC
interpretations as endorsed by the EU ("IFRS") and the requirements
of the Companies Act applicable to companies reporting under
IFRS.
The financial statements have been prepared on the historical
cost basis, except for the revaluation of certain financial
instruments. The principal accounting policies adopted are set out
below.
Going concern
The consolidated entity has incurred a loss before tax of
GBP1,549,619 for the year ended 30 June 2018 (2017: loss of
GBP534,267) and had a net cash outflow of GBP86,351 (2017:
GBP2,019,183) from operating and investing activities. At that date
there was a net current liability of
GBP1,131,469 (2017: GBP1,047,003). The loss resulted mainly from
the impairment of the Group's investment in joint ventures
GBP1,943,132 (2017: loss resulted mainly from impairment of
exploration and available for sale assets totalling
GBP229,262).
During the reporting year the Company has made significant
strides in achieving financial stability through the acquisition of
the first producing asset in its history. To acquire these
producing metallurgical coal interests, the Company completed a
Joint Venture Agreement with Legacy Hill Resources and established
Mining Equity Trust ("MET").
On 2 August 2018, MET purchased the metallurgical coal interests
of Omega Holdings in Cedar Bluffs, Virginia. The Company has a 47%
stake in the associate and has forecasted revenues of USD30,468,239
for the 10 months to June 2019.
The Company completed its deleveraging process through the
repayment of the convertible loan with YA PN Ltd on 30 January
2018. The Directors remain confident in the Company's ability to
raise new finance from stock markets if it is required in 2019 and
the Group has demonstrated a consistent ability to do so. On 11
January 2018, the Company raised GBP1,050,000 through the issue of
190,909,090 new ordinary shares at 0.01p each at a price of 0.55
per share.
Regency owns liquid assets that it can sell to fund operations,
the most significant being its 8.9% stake in Curzon Energy Plc,
listed on the Standard List of the London Stock Exchange. The value
of this holding in Q4 2018 was approximately GBP120k. The Company
also has a 5.584% interest in Whitecar Ltd, and an 80% ownership
interest in Allied Energy Ltd. During the past year the Company has
disposed of its interest in Alba Resources plc for gross proceeds
of GBP299k.
The Group has demonstrated the ability to raise debt as
required, as most recently demonstrated by the Omega Holdings
acquisition, where the Company raised USD1.6m from a group of
institutional investors in May 2018.
The Directors believe that based on the forecasts and
projections prepared, sufficient resources will be available for
the Company to continue to operate as a going concern for the
foreseeable future, and that the Company will be able to access
adequate debt and equity capital to supplement income from its US
metallurgical coal operations.
Company Statement of Comprehensive Income
As permitted by Section 408 Companies Act 2006, the Company has
not presented its own Statement of Comprehensive Income. The
Company's loss for the financial year was GBP1,352,545 (2017: loss
of GBP324,423). The Company's other comprehensive loss for the
financial year was GBP481,405 (2017: income GBP110,242).
Amendments to published standards effective for the year ended
30 June 2018.
New standards, amendments and interpretations effective for the
periods from 1 July 2017
The following new standards, amendments and interpretations are
effective for the first time in these financial statements.
However, none have a material effect on the Group and Company:
-- Amendments to IAS 12 Deferred Tax relating to recognition of
deferred tax assets for unrealised losses, effective for the
periods beginning on or after 1 January 2017.
-- Amendments to IAS 7 Financial Instruments: Disclosures,
effective for accounting periods beginning on or after 1 January
2017.
-- Annual Improvements to IFRSs (2014-2016 cycle), Amendments to
IFRS 12, effective for accounting periods beginning on or after 1
January 2017.
There were no new standards or interpretations effective for the
first time for periods beginning on or after 1 July 2017 that had a
significant effect on the Group's financial statements.
New standards, amendments and interpretations not yet
adopted
At the date of authorisation of these financial statements, the
following standards and interpretations which have not been applied
in these financial statements were in issue but not yet effective
for the year presented:
IASB mandatory
Issued date effective date,
for the periods
beginning on or
after
================================================= ============= ========================
New Standards and interpretations
================================================= ============= ========================
IFRS 9 Financial Instruments Various 01-Jan-18
IFRS 15 Revenue from contracts with customers 28-May-14 01-Jan-18
Clarifications to IFRS 15 Revenue from contracts 12-Apr-16 01-Jan-18
with customers
Amendments to IFRS 15: Effective date of IFRS 15-Sep-15 01-Jan-18
15
IFRS 16 Leases 13-Jan-16 01-Jan-19
IFRIC 23 Uncertainty over Income Tax Treatments 07-Jun-17 01-Jan-19
IFRS 17 Insurance contracts1 18-May-17 01-Jan-21
================================================= ============= ========================
Amendments to Existing Standards
================================================= ============= ========================
Classification and Measurement of Share-based
Payment Transactions (Amendments to IFRS 2) 20-Jun-16 01-Jan-18
Annual Improvements to IFRSs (2014-2016 Cycle) 08-Dec-16 01-Jan-17 and
01-Jan-18
IFRIC 22 Foreign Currency Transactions and 08-Dec-16 01-Jan-18
Advance Consideration
Amendments to IFRS 9: Prepayment features 12-Oct-17 01-Jan-19
with negative compensation
Amendments to IAS 40: Transfers of investment 08-Dec-16 01-Jan-18
property
Amendments to IAS 28: Long-term interests 12-Oct-17 01-Jan-19
in associates and joint ventures1
Annual improvements to IFRSs (2015-2017 Cycle)1 12-Dec-17 01-Jan-19
Amendments to IAS 19: Plan amendment, curtailment 07-Feb-18 01-Jan-19
or settlement1
Amendments to References to the conceptual 29-Mar-18 01-Jan-20
framework in IFRSs1
Amendments to IAS 1 and IAS 8: Definition 31-Dec-18 01-Jan-20
of Material1
================================================= ============= ========================
1 Not yet endorsed for use in the EU at the time these accounts
were authorised for issue.
1. Principal accounting policies continued
1.2 Basis of preparation continued
The Directors do not expect that the adoption of these standards
will have a material impact on the financial information of the
Group in future periods, except for IFRS 9 as detailed below.
IFRS 9 "Financial Instruments" will impact both the measurement
and disclosures of financial instruments. The Group is planning
to
first apply this standard at the beginning of the next reporting
year to 30 June 2019. The Group will not retrospectively re-state
prior period but will recognise any difference between the previous
carrying amount and the carrying amount at 1 July 2018 in the
opening retained earnings at 1 July 2018 for the assets that have
not been disposed of at the date of initial application. All the
investments in equity instruments, that are held by the Group at 30
June 2018 are currently included in available for sale financial
assets line in the Statement of Financial Position. The Group is
analysing its investments in equity instruments on an
investment-by-investment basis and in respect of each one plans to
make an irrevocable election to present subsequent changes in the
fair value either in profit and loss (FVTPL)
or in other comprehensive income (FVTOCI). For equity
instruments designated at FVTOCI under IFRS 9, only dividend income
will be recognised in profit or loss, all other gains and losses
will be recognised in OCI without reclassification on
derecognition. This differs from the current treatment of AFS
equity instruments under IAS 39 where gains and losses recognised
in OCI are reclassified on derecognition or impairment.
IFRS 15 "Revenue from Contracts with Customers" - the Company is
pre-revenue hence the adoption would have no impact on the reported
results.
Adoption of IFRS 16 will result in the Group recognising right
of use of assets and lease liabilities for all contracts that are,
or contain,
a lease. For leases currently classified as operating leases,
under current accounting requirements the Group does not recognise
related assets or liabilities, and instead spreads the lease
payments on a straight-line basis over the lease term, disclosing
in its annual financial statements the total commitment. Since the
Group currently only has short-term (less than 12 months) operating
leases, IFRS 16 will not have an impact on the results or balance
sheet of the Group.
IFRS 17 establishes the principles for the recognition,
measurement, presentation and disclosure of insurance contracts
within the scope of the Standard. The Group does not have any
contract that falls within the scope of this standard and therefore
it would have no impact on the reported results.
IFRIC 23 is to be applied to the determination of taxable profit
(tax loss), tax bases, unused tax losses, unused tax credits and
tax rates, when there is uncertainty over income tax treatments
under IAS 12. This interpretation is unlikely to have a material
effect on the reported results.
Standards adopted early by the Group
The Group has not adopted any standards or interpretations early
in either the current or the preceding financial year.
1.3 Basis of consolidation
The consolidated financial statements of the Group incorporate
the financial statements of the Company and entities controlled by
the Company, its subsidiaries, made up to 30 June each year.
Subsidiaries
Subsidiaries are entities over which the Group has the power to
govern the financial and operating policies so as to obtain
economic benefits from their activities. Subsidiaries are
consolidated from the date on which control is obtained, the
acquisition date, until the date that control ceases.
The acquisition method of accounting is used to account for the
acquisition of subsidiaries by the Group. The cost of an
acquisition is measured as the fair value of the assets given,
equity instruments issued, contingent consideration and liabilities
incurred or assumed at the date of exchange. Costs directly
attributable to the acquisition are expensed as incurred.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are initially
measured at fair value at the acquisition date.
Provisional fair values are adjusted against goodwill if
additional information is obtained within one year of the
acquisition date about facts or circumstances existing at the
acquisition date. Other changes in provisional fair values are
recognised through profit or loss.
Intra-group transactions, balances and unrealised gains and
losses on transactions between Group companies are eliminated on
consolidation, except to the extent that intra-group losses
indicate an impairment.
A change in the ownership interest of a subsidiary, without a
loss of control, is accounted for as an equity transaction. If the
Group loses control over a subsidiary, it:
-- derecognises the assets (including goodwill) and liabilities
of the subsidiary;
-- derecognises the carrying amount of any non-controlling
interest;
-- derecognises the cumulative translation differences recorded
in equity;
-- recognises the fair value of the consideration received;
-- recognises the fair value of any investment retained;
-- recognises any surplus or deficit in profit or loss; and
-- reclassifies the Parent's share of components previously
recognised in other comprehensive income to profit or loss or
retained earnings, as appropriate.
Non-controlling interests
Profit or loss and each component of other comprehensive income
are allocated between the aims of the Parent and non-controlling
interests, even if this results in the non-controlling interest
having a deficit balance.
Transactions with non-controlling interests that do not result
in loss of control are accounted for as equity transactions. Any
differences between the adjustment for the non-controlling interest
and the fair value of consideration paid or received are recognised
in equity.
1.4 Summary of significant accounting policies
1.4.1 Investment in associates
An associate is an entity over which the Company is in a
position to exercise significant influence, but not control or
joint control, through participation in the financial and operating
policy decisions of the investee.
Investments in associates are recognised in the consolidated
financial statements using the equity method of accounting. The
Group's share of post-acquisition profits or losses is recognised
in profit or loss and its share of post-acquisition movements in
other comprehensive income are recognised directly in other
comprehensive income. The carrying value of the investment,
including goodwill, is tested for impairment when there is
objective evidence of impairment. Losses in excess of the Group's
interest in those associates are not recognised unless the Group
has incurred obligations or made payments on behalf of the
associate.
Where a Group company transacts with an associate of the Group,
unrealised gains are eliminated to the extent of the Group's
interest in the relevant associate. Unrealised losses are also
eliminated unless the transaction provides evidence of an
impairment of the asset transferred in which case appropriate
provision is made for impairment.
Where the Company's holding in an associate is diluted, the
Company recognises a gain or loss on dilution in profit and loss.
This is calculated as the difference between the Company's share of
proceeds received for the dilutive share issue and the value of the
Company's effective disposal.
In the Company accounts investments in associates are recognised
and held at cost. The carrying value of the investment is tested
for impairment when there is objective evidence of impairment.
1.4.2 Interests in joint ventures
A joint venture is a joint arrangement whereby the partners who
have joint control of the arrangement have rights to the net assets
of the joint arrangement. Joint control is the contractually agreed
sharing of control of the joint arrangement, which exists only when
decisions on relevant activities require the unanimous consent of
the parties sharing control. The Group recognises its interest in
the entity's assets and liabilities using the equity method of
accounting. Under the equity method, the interest in the joint
venture is carried in the balance sheet at cost plus
post-acquisition changes in the Group's share of its net assets,
less distributions received and less any impairment in value of
individual investments. The Group Income Statement reflects the
share of the jointly controlled entity's results after tax.
Any goodwill arising on the acquisition of a jointly controlled
entity is included in the carrying amount of the jointly controlled
entity and is not amortised. To the extent that the net fair value
of the entity's identifiable assets, liabilities and contingent
liabilities is greater than the cost of the investment, a gain is
recognised and added to the Group's share of the entity's profit or
loss in the period in which the investment is acquired.
1. Principal accounting policies continued
1.4 Summary of significant accounting policies continued
1.4.2 Interests in joint ventures continued
Financial statements of the jointly controlled entity will be
prepared for the same reporting period as the Group. Where
necessary, adjustments are made to bring the accounting policies
used into line with those of the Group and to reflect impairment
losses where appropriate. Adjustments are also made in the Group's
financial statements to eliminate the Group's share of unrealised
gains and losses on transactions between the Group and its jointly
controlled entity. The Group ceases to use the equity method on the
date from which it no longer has joint control over, or significant
influence in, the joint venture.
At 30 June 2018, the Group had following contractual
arrangements:
-- Oro Nickel Limited, a contractual arrangement with Direct
Nickel Projects Pty Ltd, which represents a joint venture
established through an interest in a jointly controlled entity, in
order to develop and exploit the Mambare nickel project;
-- Mining Equity Trust, LLC ("MET"), a new Delaware-incorporated
limited liability company, this is a contractual arrangement with
Legacy Hill Resources Ltd ("LHR"), a privately-owned mining
company, (as majority shareholder) and the Company (as minority
shareholder) will hold their interests in MET joint venture. More
details are disclosed in note 12.
1.4.3 Taxation
Corporation tax payable is provided on taxable profits at the
current rate. The tax expense represents the sum of the current tax
expense and deferred tax expense.
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from accounting profit as reported in
the Statement of Comprehensive Income because it excludes items of
income or expense that are taxable or deductible in other years and
it further excludes items that are never taxable or deductible. The
Group's liability for current tax is measured using tax rates that
have been enacted or substantively enacted by the reporting
date.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amount of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
recognised for all taxable temporary differences and deferred tax
assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible
temporary differences can be utilised.
Such assets and liabilities are not recognised if the temporary
difference arises from the initial recognition of goodwill or from
the initial recognition, other than in a business combination, of
other assets and liabilities in a transaction which affects neither
the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and associates
and interests in joint ventures, except where the Group is able to
control the reversal of the temporary difference and it is probable
that the temporary difference will not reverse in the foreseeable
future.
Deferred tax is calculated at the tax rates that are expected to
apply to the period when the asset is realised or the liability is
settled based upon tax rates that have been enacted or
substantively enacted by the reporting date.
Deferred tax is charged or credited in profit or loss, except
when it relates to items credited or charged directly to equity, in
which case the deferred tax is also dealt with in equity, or items
charged or credited directly to other comprehensive income, in
which case the deferred tax is also recognised in other
comprehensive income.
Deferred tax assets and liabilities are offset where there is a
legally enforceable right to offset current tax assets and
liabilities and the deferred tax relates to income tax levied by
the same tax authorities on either:
-- the same taxable entity; or
-- different taxable entities which intend to settle current tax
assets and liabilities on a net basis or to realise and settle them
simultaneously in each future period when the significant deferred
tax assets and liabilities are expected to be realised or
settled.
1.4.4 Property, plant and equipment
Property, plant and equipment acquired and identified as having
a useful life that exceeds one year is capitalised at cost and is
depreciated on a straight-line basis at annual rates that will
reduce book values to estimated residual values over their
anticipated useful lives as follows:
-- Office furniture, fixtures and fittings - 33% per annum
-- Leasehold improvements - 5% per annum
1.4.5 Foreign currencies
Both the functional and presentational currency of Regency Mines
plc is Sterling (GBP). Each Group entity determines its own
functional currency and items included in the financial statements
of each entity are measured using that functional currency.
The functional currencies of the foreign subsidiaries and joint
ventures are the Australian Dollar ("AUD"), the Papua New Guinea
Kina ("PNG") and the US Dollar ("USD").
Transactions in currencies other than the functional currency of
the relevant entity are initially recorded at the exchange rate
prevailing on the dates of the transaction. At each reporting date,
monetary assets and liabilities that are denominated in foreign
currencies are retranslated at the exchange rate prevailing at the
reporting date. Non-monetary assets and liabilities carried at fair
value that are denominated in foreign currencies are translated at
the rates prevailing at the date when the fair value was
determined. Gains and losses arising on retranslation are included
in profit or loss for the period, except for exchange differences
on non-monetary assets and liabilities, which are recognised
directly in other comprehensive income when the changes in fair
value are recognised directly in other comprehensive income.
On consolidation, the assets and liabilities of the Group's
overseas operations are translated into the Group's presentational
currency at exchange rates prevailing at the reporting date. Income
and expense items are translated at the average exchange rates for
the period unless exchange rates have fluctuated significantly
during the year, in which case the exchange rate at the date of the
transaction is used. All exchange differences arising, if any, are
recognised as other comprehensive income and are transferred to the
Group's foreign currency translation reserve.
1.4.6 Revenue
Revenue is the gross inflow of economic benefits during the
period arising in the course of the ordinary activities of the
Group and the Company, when those inflows result in increases in
equity.
Revenue is measured at the fair value of the consideration
received or receivable for investment asset disposals in the normal
course
of business and is recognised when revenue and associated costs
can be measured reliably, and future economic benefits are
probable.
In addition, revenue from management services is recognised on
an accruals basis when the services have been delivered and any
associated costs have been incurred.
1.4.7 Exploration assets
Exploration assets comprise exploration and development costs
incurred on prospects at an exploratory stage. These costs include
the cost of acquisition, exploration, determination of recoverable
reserves, economic feasibility studies and all technical and
administrative overheads directly associated with those projects.
These costs are carried forward in the Statement of Financial
Position as non-current intangible assets less provision for
identified impairments.
Recoupment of exploration and development costs is dependent
upon successful development and commercial exploitation of each
area of interest and will be amortised over the expected commercial
life of each area once production commences. The Group and the
Company currently have no exploration assets where production has
commenced.
The Group adopts the "area of interest" method of accounting
whereby all exploration and development costs relating to an area
of interest are capitalised and carried forward until abandoned. In
the event that an area of interest is abandoned, or if the
Directors consider the expenditure to be of no value, accumulated
exploration costs are written off in the financial year in which
the decision is made. All expenditure incurred prior to approval of
an application is expensed with the exception of refundable rent
which is raised as a receivable.
Upon disposal, the difference between the fair value of
consideration receivable for exploration assets and the relevant
cost within non-current assets is recognised in the Income
Statement.
1. Principal accounting policies continued
1.4 Summary of significant accounting policies continued
1.4.8 Share-based payments
Share options
The Group operates an equity-settled share-based payment
arrangement whereby the fair value of services provided is
determined indirectly by reference to the fair value of the
instrument granted.
The fair value of options granted to Directors and others in
respect of services provided is recognised as an expense in the
Income Statement with a corresponding increase in equity reserves -
the share-based payment reserve until the award has been settled
and then make a transfer to share capital.
On exercise or lapse of share options, the proportion of the
share-based payment reserve relevant to those options is
transferred to retained earnings. On exercise, equity is also
increased by the amount of the proceeds received.
The fair value is measured at grant date and charged over the
vesting period during which the option becomes unconditional.
The fair value of options is calculated using the Black-Scholes
model taking into account the terms and conditions upon which the
options were granted. The exercise price is fixed at the date of
grant.
Non-market conditions are performance conditions that are not
related to the market price of the entity's equity instruments.
They are not considered when estimating the fair value of a
share-based payment. Where the vesting period is linked to a
non-market performance condition, the Group recognises the goods
and services it has acquired during the vesting period based on the
best available estimate
of the number of equity instruments expected to vest. The
estimate is reconsidered at each reporting date based on factors
such as a shortened vesting period, and the cumulative expense is
'trued up' for both the change in the number expected to vest and
any change in the expected vesting period.
Market conditions are performance conditions that relate to the
market price of the entity's equity instruments. These conditions
are included in the estimate of the fair value of a share-based
payment. They are not taken into account for the purpose of
estimating the number of equity instruments that will vest. Where
the vesting period is linked to a market performance condition, the
Group estimates the expected vesting period. If the actual vesting
period is shorter than estimated, the charge is accelerated in the
period that the
entity delivers the cash or equity instruments to the
counterparty. When the vesting period is longer, the expense is
recognised over the originally estimated vesting period.
For other equity instruments granted during the year (i.e. other
than share options), fair value is measured on the basis of an
observable market price.
When a share-based payment is modified, the Group determines
whether the modification affects the fair value of the instruments
granted, affects the number of equity instruments granted or is
otherwise beneficial to the employee. In cases where the exercise
price of options granted to employees is reduced, the Group
recognises the incremental change in fair value (along with the
original fair value determined at grant date) over the remaining
vesting period as an expense and an increase in equity. Decreases
in the fair value are not considered. To determine if an increase
has occurred, management compares the fair value of the modified
award with the fair value of the original award at the modification
date. Any other benefit to the employee is taken into account in
estimating the number of equity instruments that are expected to
vest.
Share Incentive Plan
Where the shares are granted to the employees under the Share
Incentive Plan, the fair value of services provided is determined
indirectly by reference to the fair value of the free, partnership
and matching shares granted on the grant date. Fair value of shares
is measured on the basis of an observable market price, i.e. share
price as at grant date and is recognised as an expense in the
Income Statement on the date of the grant. For the partnership
shares the charge is calculated as the excess of the mid-market
price on the date of grant over the employee's contribution.
1.4.9 Pension
The Group operates a defined contribution pension plan which
requires contributions to be made to a separately administered
fund. Contributions to the defined contribution scheme are charged
to the profit and loss account as they become payable.
1.4.10 Finance costs/revenue
Borrowing costs are recognised on an accruals basis using the
effective interest method.
Finance income is recognised as interest accrues using the
effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest
income over the relevant period using the effective interest rate,
which is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial asset to the
net carrying amount of the financial asset.
1.4.11 Financial instruments
A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equity
instrument of another entity. Financial assets and financial
liabilities are recognised where the Group has become party to the
contractual provisions of the instrument.
Investments
Investments in subsidiary companies are classified as
non-current assets and included in the Statement of Financial
Position of the Company at cost at the date of acquisition less any
identified impairments.
For acquisitions of subsidiaries or associates achieved in
stages, the Company re-measures its previously held equity
interests in the acquiree at its acquisition-date fair value and
recognises the resulting gain or loss, if any, in profit or loss.
Any gains or losses previously recognised in other comprehensive
income are transferred to profit and loss.
Investments in associates and joint ventures are classified as
non-current assets and included in the Statement of Financial
Position of the Company at cost at the date of acquisition less any
identified impairment.
Financial assets
The Group classifies its financial assets into one of the
categories discussed below, depending on the purpose for which the
asset was acquired. The Group has not classified any of its
financial assets as held to maturity or fair value through profit
and loss.
Loans and receivables
These are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They
arise through the provision of goods or services (trade
receivables), but also incorporate other types of contractual
monetary asset. They are initially recognised at fair value plus
transaction costs that are directly attributable to their
acquisition or issue, and are subsequently carried
at amortised cost using the effective interest rate method, less
provision for impairment.
Impairment provision is recognised when there is objective
evidence (such as significant financial difficulties on the part of
the counterparty or default or significant delay in payment) that
the Group will be unable to collect all of the amounts due under
the terms receivable, the amount of such provision being the
difference between the net carrying amount and the net present
value of the future expected cash flows associated with the
impaired receivable.
The Group's loans and receivables comprise trade and other
receivables and cash and cash equivalents in the Consolidated
Statement of Financial Position.
Cash and cash equivalents
Cash and short-term deposits in the Statement of Financial
Position comprise cash at bank and in hand and short-term
deposits.
For the purposes of the Statement of Cash Flows, cash and cash
equivalents consist of cash and cash equivalents as defined above,
net of outstanding bank overdrafts.
1. Principal accounting policies continued
1.4 Summary of significant accounting policies continued
Restricted cash
Cash which is restricted from being exchanged or used to settle
a liability for at least twelve months after the reporting period
is not considered cash and cash equivalents and is classified as
restricted cash.
Trade and other receivables
Trade receivables, which generally have 30-day terms, are
recognised at original invoice amount less an allowance for any
uncollectable amounts. An allowance for impairment is made when
there is objective evidence that the Group will not be able to
collect the debts.
Bad debts are written off when identified.
Available for sale financial assets
Non-derivative financial assets not included in the above
categories are classified as available for sale and comprise
principally the Group's strategic investments in entities not
qualifying for subsidiaries, associates or jointly controlled
entities. These equity investments are intended to be held by the
Group for an indefinite period of time. They are carried at fair
value, where this can be reliably measured, with movements in fair
value recognised in other comprehensive income and debited or
credited to the available for sale trade investments reserve. Where
the fair value cannot be reliably measured, the investment is
carried at cost or a lower valuation where the Directors consider
the value of the investment to be impaired.
Available for sale investments are included within non-current
assets. On disposal, the difference between the carrying amount and
the sum of the consideration received and any cumulative gain or
loss that had previously been recognised directly in reserves is
recognised in the Income Statement, the cost of such disposed of
investments is written off on a first in first out method.
Income from available for sale investments is accounted for in
the Income Statement when the right to receive it has been
established.
The Group assesses at each reporting date whether there is
objective evidence that an investment is impaired. When there is
evidence of impairment, the cumulative loss - measured as the
difference between the acquisition cost and the current fair value,
less any impairment loss on that investment previously recognised
in the Income Statement - is removed from other comprehensive
income and
recognised in the Income Statement. Impairment losses on equity
investments are not reversed through the Income Statement;
increases in their fair value after impairment are recognised
directly in other comprehensive income.
Financial liabilities and equity
The Group classifies its financial liabilities into one of the
two categories: fair value through profit and loss or other
financial liabilities. The Group has not classified any of its
financial liabilities as fair value through profit and loss.
Other financial liabilities comprise trade and other payables
and borrowings.
Warrants
Derivative contracts that only result in the delivery of a fixed
amount of cash or other financial assets for a fixed number of an
entity's own equity instruments are classified as equity
instruments. Warrants relating to equity finance and issued
together with ordinary shares placement are valued by residual
method and treated as directly attributable transaction costs and
recorded as a reduction of share premium account based on the fair
value of the warrants. Warrants classified as equity instruments
are not subsequently re-measured (i.e., subsequent changes in fair
value are not recognised).
Trade and other payables
Trade and other payables are initially recognised at fair value
and represent liabilities for goods and services provided to the
Group prior to the end of the financial year that are unpaid and
arise when the Group becomes obliged to make future payments in
respect of the purchase of these goods and services.
Borrowings
Borrowings are recorded initially at their fair value, plus
directly attributable transaction costs. Such instruments are
subsequently carried at their amortised cost and finance charges,
including premiums payable on settlement or redemption, are
recognised in the Income Statement over the term of the instrument
using an effective rate of interest.
Deferred and contingent consideration
Where it is probable that deferred or contingent consideration
is payable on the acquisition of a business based on an earn out
arrangement, an estimate of the amount payable is made at the date
of acquisition and reviewed regularly thereafter, with any change
in the estimated liability being reflected in the Income Statement.
Where deferred consideration is payable after more than one year
the estimated liability is discounted using an appropriate rate of
interest.
1.5 Significant accounting judgements, estimates and assumptions
The preparation of the Group's consolidated financial statements
requires management to make judgements, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities at the end of the reporting period. However,
uncertainty about these assumptions and estimates could result in
outcomes that require a material adjustment to the carrying amount
of the asset or liability affected in future periods.
Significant judgements in applying the accounting policies
In the process of applying the Group's accounting policies,
management has made the following judgements, which have the most
significant effect on the amounts recognised in the consolidated
financial statements:
Impairment of investments in joint ventures
The carrying amount of investments in joint ventures is tested
for impairment annually; in addition, assets are tested for
impairment whenever events or changes in circumstances indicate
that the carrying amounts for those assets may not be recoverable.
During the year, investments into two joint ventures, Vali Carbon
Corporation and Carbon Minerals Corporation, were fully impaired.
The Directors have taken the view that insufficient management
controls and a lack of efficacy by the Company's JV partner and
operator in the United States has led to an inability to bring
these businesses into metallurgical coal production along the
timelines originally envisioned.
Efforts to assist in correcting these operating deficiencies
were ultimately unsuccessful and as such the Directors feel an
impairment of these assts is appropriate.
Significant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often
determined based on estimates and assumptions of future events. The
key estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of certain
assets and liabilities within the next annual reporting period
are:
Share-based payment transactions
The Group measures the cost of equity-settled transactions with
employees by reference to the fair value of the equity instruments
at the date at which they are granted. The fair value of share
options is determined using the Black-Scholes model.
Fair value measurement
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The fair value
measurement is based on the presumption that the transaction to
sell the asset or transfer the liability takes place either:
-- in the principal market for the asset or liability; or
-- in the absence of a principal market, in the most
advantageous market for the asset or liability. The principal or
the most advantageous market must be accessible by the Group.
The fair value of an asset or a liability is measured using the
assumptions that market participants would use when pricing the
asset or liability, assuming that market participants act in their
economic best interest.
A fair value measurement of a non-financial asset takes into
account a market participant's ability to generate economic
benefits by using the asset in its highest and best use or by
selling it to another market participant that would use the asset
in its highest and best use.
The Group uses valuation techniques that are appropriate in the
circumstances and for which sufficient data are available to
measure fair value, maximising the use of relevant observable
inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or
disclosed in the financial statements are categorised within the
fair value hierarchy, described as follows, based on the lowest
level input that is significant to the fair value measurement as a
whole:
-- Level 1 - Quoted (unadjusted) market prices in active markets
for identical assets or liabilities;
-- Level 2 - Valuation techniques for which the lowest level
input that is significant to the fair value measurement is directly
or indirectly observable; and
-- Level 3 - Valuation techniques for which the lowest level
input that is significant to the fair value measurement is
unobservable.
For assets and liabilities that are recognised in the financial
statements on a recurring basis, the Group determines whether
transfers have occurred between levels in the hierarchy by
re-assessing categorisation (based on the lowest level input that
is significant to the fair value measurement as a whole) at the end
of each reporting period.
For the purpose of fair value disclosures, the Group has
determined classes of assets and liabilities on the basis of the
nature, characteristics and risks of the asset or liability and the
level of the fair value hierarchy as explained above.
1. Principal accounting policies continued
1.5 Significant accounting judgements, estimates and assumptions
continued
Impairment of available for sale financial assets
The Group follows the guidance of IAS 39 to determine when an
available for sale financial asset or a group of financial assets
is impaired. A financial asset or a group of financial assets is
deemed to be impaired if, and only if, there is objective evidence
of impairment as a result of one or more events that has occurred
after the initial recognition of the asset (an incurred "loss
event") and that loss event has an impact on the estimated future
cash flows of the financial asset or the group of financial assets
that can be reliably estimated. This determination requires
significant judgement. In making this judgement, the Group
evaluates, among other factors, the duration and extent to which
fair value of an investment is less than its cost.
In the case of equity investments classified as available for
sale, objective evidence would include a significant or prolonged
decline in the fair value of the investment below its cost.
"Significant" is evaluated against the original cost of the
investment and "prolonged" against the period in which the fair
value has been below its original cost. Mining share prices
typically have more volatility than most other shares and this is
taken into account by management when considering if a significant
decline in the fair value of its mining investments has occurred.
Management would consider that there is a prolonged decline in the
fair value of an equity investment when the period
of decline in fair value has extended to beyond the expectation
management have for the equity investment. This expectation will be
influenced particularly by the company development cycle of the
investment.
As a result of the Group's evaluation, impairment of GBP215,372
(2017: GBPnil) on available for sale investments was recognised in
the income statement.
2. Segmental analysis
As with all natural resource exploration and development
ventures yet to generate cash from operations, ensuring adequate
cash is available to meet operational obligations and to provide
for investment opportunities is critical. This is therefore the
main focus of management information presented to the chief
operational decision makers, being the Executive Chairman and the
Board of Directors.
The only sources of funds are issues of new equity and sales of
exploration rights, investments or other assets. Therefore, in
addition to monitoring the current market perception of the Company
to shareholders, brokers and other possible providers of equity
finance, constant attention is paid to:
-- available cash; and
-- the market value of the Group's listed investments.
At 30 June 2018 the Group had cash and cash equivalents of
GBP126,125 (2017: GBP9,176).
Once the Group's main focus of operations becomes production of
natural resources, the nature of management information examined by
the Board will alter to reflect the need to monitor revenues,
margins, overheads and trade balances, as well as cash.
2. Segmental analysis continued
IFRS 8 requires the reporting of information about the revenues
derived from the various areas of activity and the countries in
which revenue is earned, regardless of whether this information is
used by management in making operating decisions.
Battery
Australian storage, Other Corporate
Year to 30 June exploration battery investments and Total
2018 GBP metals, GBP unallocated GBP
and energy GBP
storage
GBP
=================== ====================== =========== ===================== ====================== =============
Revenue
Management services - - - - -
=================== ====================== =========== ===================== ====================== =============
Impairment of
investment in
joint ventures - - (1,943,132) - (1,943,132)
Gain on sale of
available for
sale investments - - 1,482,609 - 1,482,609
Exploration
expenses 643 - - - 643
Administrative
expenses1 (715) (54,216) - (680,766) (735,697)
Currency
(loss)/gain (40,414) - - 37,102 (3,312)
Share of profits in - - - - -
associates
Impairment of
exploration assets - - (40,403) - (40,403)
Impairment of
available for
sale investments - - (215,372) - (215,372)
Other income - 12,250 - 35,007 47,257
Finance cost - net - - - (142,212) (142,212)
=================== ====================== =========== ===================== ====================== =============
Net (loss) before
tax from
continuing
operations (40,486) (41,966) (716,298) (750,869) (1,549,619)
=================== ====================== =========== ===================== ====================== =============
Battery Corporate
Australian storage, Other and
Year to 30 June 2017 exploration battery investments unallocated Total
GBP metals, GBP GBP GBP
and energy
storage
GBP
===================== ===================== =========== ===================== ====================== ============
Revenue
Management services - - - 113,350 113,350
===================== ===================== =========== ===================== ====================== ============
- - - 113,350 113,350
Gain on sale of
tenements 55,183 - - - 55,183
Gain/(loss) on sale - - - - -
of investments
Exploration expenses (930) - - - (930)
Administrative
expenses1 (278) - - (464,343) (464,621)
Impairment of
exploration assets (229,262) - - - (229,262)
Impairment of - - - - -
available for
sale investments
Finance cost - net - - - (57,665) (57,665)
===================== ===================== =========== ===================== ====================== ============
Net (loss) before tax
from continuing
operations (91,997) - - (442,270) (534,267)
===================== ===================== =========== ===================== ====================== ============
1 Included in administrative expenses is a depreciation charge
of GBP15,325 (2017: GBP6,197) under Corporate and unallocated.
Information by geographical area
Presented below is certain information by the geographical area
of the Group's activities. Investment sales revenue and exploration
property sales revenue are allocated to the location of the asset
sold.
Papua New
Year to 30 June 2018 UK Australia Guinea USA Total
GBP GBP GBP GBP GBP
============================== ========= =========== ================== ========= =========
Revenue - - - - -
Gain on sale of investments 1,482,609 - - - 1,482,609
============================== ========= =========== ================== ========= =========
Total segment revenue and
other gains 1,482,609 - - - 1,482,609
============================== ========= =========== ================== ========= =========
Non-current assets
Investments in associates
and joint ventures - - 1,657,625 1,503,377 3,161,002
Goodwill 42,471 - - - 42,471
Property, plant and equipment 195 - - - 195
Available for sale financial
assets 583,350 47,328 - 468,894 1,099,572
============================== ========= =========== ================== ========= =========
Total segment non-current
assets 626,017 47,328 1,657,625 1,972,270 4,303,240
============================== ========= =========== ================== ========= =========
UK Australia Papua New USA Total
Year to 30 June 2017 GBP GBP Guinea GBP GBP
GBP
============================== ========= ========= ================= ======= =========
Revenue
Management services 113,350 - - - 113,350
Gain on sale of tenements - 55,183 - - 55,183
============================== ========= ========= ================= ======= =========
Total segment revenue and
other gains 113,350 55,183 - - 168,533
============================== ========= ========= ================= ======= =========
Non-current assets
Investments in associates
and joint ventures 15,811 - 1,622,302 828,160 2,466,273
Property, plant and equipment 15,520 - - - 15,520
Available for sale financial
assets 1,183,025 260,682 - - 1,443,707
Exploration assets - - - 40,402 40,402
============================== ========= ========= ================= ======= =========
Total segment non-current
assets 1,214,356 260,682 1,622,302 868,562 3,965,902
============================== ========= ========= ================= ======= =========
3. Loss on ordinary activities before taxation 2018 2017
Group GBP GBP
========================================================= ======= =======
Loss on ordinary activities before taxation is stated
after charging:
Auditor's remuneration:
- fees payable to the Company's auditor for the audit
of consolidated and Company financial statements 16,200 16,000
- fees payable to subsidiary auditors for the audit of - -
subsidiary financial statements
Depreciation 15,352 6,197
Directors' emoluments (note 8) 204,689 257,967
Share-based payments - Directors 9,997 87,340
Share-based payments - Staff - 4,019
========================================================= ======= =======
As declared in note 8, Directors are remunerated in part by
third parties with whom the Company and Group have contractual
arrangements.
4. Administrative expenses Group Group Company Company
2018 2017 2018 2017
GBP GBP GBP GBP
Staff costs
Payroll 197,329 269,472 195,829 269,472
Pension 11,953 - 11,953 -
Consultants 24,800 15,000 15,000 15,000
Employer's NI 12,436 11,970 12,436 11,970
Professional services
Accounting 55,628 45,176 55,628 45,176
Legal 46,106 9,376 43,977 9,376
Marketing 14,256 1,375 14,256 1,375
Other 37,856 9,213 37,856 9,213
Regulatory compliance 61,844 69,109 61,844 69,109
Travel 26,394 16,939 26,172 16,939
Office and admin
General 164,419 (34,491) 123,139 (34,769)
IT-related costs 11,489 19,223 11,489 19,223
Rent 65,742 28,489 65,742 28,489
Insurance 5,477 3,771 5,477 3,771
Total administrative
expenses 735,697 464,621 680,766 464,343
-------------------------------- -------- --------- -------- ---------
5. Finance costs, net 2018 2017
Group GBP GBP
======================= ========= ========
Interest expense (142,212) (57,665)
Interest income - -
======================= ========= ========
(142,212) (57,665)
======================= ========= ========
6. Taxation 2018 2017
GBP GBP
================================================== =========== =========
Current period taxation of the Group
UK corporation tax at 19.00% (2017: 19.75%) on - -
profits for the period
Deferred tax
Origination and reversal of temporary differences - -
Deferred tax assets derecognised - -
================================================== =========== =========
Tax (credit) - -
================================================== =========== =========
Factors affecting the tax charge for the year
Loss on ordinary activities before taxation (1,549,619) (534,267)
================================================== =========== =========
Loss on ordinary activities at the average UK
standard rate of 19% (2017: 19.75%) (294,428) (105,518)
Effect of non-deductible expense 382,207 45,279
Indexation allowance on gains (5,529) -
Effect of tax benefit of losses carried forward 37,445 60,239
Tax losses brought forward (119,695) -
================================================== =========== =========
Current tax (credit) - -
================================================== =========== =========
The Finance Act 2013 set the main rate of corporation tax at 20%
from 1 April 2016 and at 19% from 1 April 2017.
Deferred tax amounting to GBPnil (2017: GBPnil) relating to the
Group's investments was recognised in the Statement of
Comprehensive Income. No deferred tax charge has been made due to
the availability of trading losses, which are estimated circa
GBP3,204 thousand (2017: GBP2,266 thousand), and capital losses
estimated circa GBPnil (2017: GBP30,000).
7. Staff costs
The aggregate employment costs of staff (including 2018 GBP 2017 GBP
Directors) for the year was:
Wages and salaries 165,700 163,900
Pension 11,953 10,201
Social security costs 12,436 15,189
Employee share-based payment charge 35,017 91,359
Total staff costs 225,106 280,649
------------------------------------------------------ ------------ ------------
The average number of Group employees (including 2018 Number 2017 Number
Directors) during the year was:
---------------------------------------------------- ------------ ------------
Executives 3 3
Administration 1 1
4 4
---------------------------------------------------- ------------ ------------
The Company's staff are employed both by the Company and Red
Rock Resources plc ("Red Rock"). During the year, staff costs
of
GBPnil (2017: nil) were recharged to Red Rock. Such recharges
are offset against administration expenses in the Income
Statement.
During the year, for all Directors and employees who have been
employed for more than three months, the Company contributed to
a defined contributions pension scheme as described under
Directors' remuneration in the Directors' Report and a Share
Incentive Plan ("SIP") as described under Management incentives in
the Directors' Report.
8. Directors' emoluments
Share-based Social
Directors' Consultancy Share payments Pension security Total
2018 fees fees Incentive options contributions costs GBP
GBP GBP Plan GBP GBP GBP
GBP
============ ============ ============ ============ ============= ===================== =============== =======
Executive
Directors
A R M Bell 50,400 15,000 7,200 5,199 3,835 4,571 86,205
S Kaintz 67,400 - 7,200 4,799 4,726 7,146 91,271
============ ============ ============ ============ ============= ===================== =============== =======
Non-executive Directors
E Bugnosen 18,000 - 7,020 - 1,204 989 27,213
============ ============ ============ ============ ============= ===================== =============== =======
135,800 15,000 21,420 9,997 9,766 12,706 204,689
============ ============ ============ ============ ============= ===================== =============== =======
Directors' Consultancy Share Share-based Social
fees fees Incentive payments Pension security Total
2017 GBP GBP Plan options contributions costs GBP
GBP GBP GBP GBP
=========== ========== =========== ================ ============= ===================== =============== =======
Executive
Directors
A R M Bell 49,800 15,000 15,141 21,935 3,700 4,227 109,803
S Kaintz 66,800 - 15,141 20,217 3,907 7,196 113,261
=========== ========== =========== ================ ============= ===================== =============== =======
Non-executive Directors
E Bugnosen 18,000 - 14,564 333 1,002 1,005 34,904
=========== ========== =========== ================ ============= ===================== =============== =======
134,600 15,000 44,846 42,485 8,609 12,428 257,968
=========== ========== =========== ================ ============= ===================== =============== =======
The number of Directors who exercised share options in the year
was nil (2017: nil).
During the year, the Company contributed to a Share Incentive
Plan more fully described in the Directors' Report on pages 26 to
28. 2,304,000 free shares (2017: 1,371,428) were issued to each
employee, including Directors, making a total of 4,539,788
(2017: 3,870,248) free and matching shares issued in relation to
services provided by those employees during the reporting year.
The Company also operates a contributory pension scheme more
fully described in the remuneration details on page 27.
.
9. Loss per share
The basic earnings/(loss) per share is derived by dividing the
loss for the year attributable to ordinary shareholders of the
Parent by the weighted average number of shares in issue. Diluted
earnings/(loss) per share is derived by dividing the loss for the
year attributable to ordinary shareholders of the Parent by the
weighted average number of shares in issue plus the weighted
average number of ordinary shares that would be issued on
conversion of all dilutive potential ordinary shares into ordinary
shares.
2018 2017
GBP GBP
======================================================== ============ ===========
(Loss) attributable to equity holders of the Parent
Company (1,543,889) (534,267)
Weighted average number of ordinary shares of GBP0.0001
in issue, used for basic EPS 672,554,882 398,184,727
======================================================== ============ ===========
Earnings/(loss) per share - basic (0.23) pence (0.13)
pence
======================================================== ============ ===========
Earnings/(loss) per share - fully diluted (0.23) pence (0.13)
pence
======================================================== ============ ===========
At 30 June 2018 and at 30 June 2017, the effect of all the
instruments in issue is anti-dilutive as it would lead to a further
reduction of loss per share, therefore they were not included in
the diluted loss per share calculation.
Options and warrants with conditions not met at the end of the
period, that could potentially dilute basic EPS in the future, but
were not included in the calculation of diluted EPS for the periods
presented:
2018 2017
GBP GBP
========================================================= ============= =============
(a) Number of convertible potential shares - convertible
loans, assume converted at the most beneficial price
for the holder. More details are disclosed in this
note below - 147,717,876
(b) Share options granted to employees - total, of
them 27,060,000 27,060,000
- Vested at the end of reporting period 25,330,000 15,330,000
- Not vested at the end of the reporting period 1,730,000 11,730,000
(c) Number of warrants given to shareholders as a
part of placing equity instruments 434,665,467 236,685,670
========================================================= ============= =============
Total number of contingently issuable shares that
could potentially dilute basic earnings per share
in future and anti-dilutive potential ordinary shares
that were not included into the fully diluted EPS
calculation 461,725,467 411,463,546
========================================================= ============= =============
Convertible loans
On 29 May 2018, the Company took a loan of GBP1,060,343, net of
arrangement fees, (USD1,600,000 gross of arrangement fees in
original currency of borrowing) from institutional investors to
fund its 47% interest in a joint venture Mining Equity Trust, LLC
("MET").
More information on this loan is disclosed in note 16. The
loan's initial term is six months with an extension option. If
extended, the loan may be converted by the noteholder at a fixed
price equal to 130% of the 10-day VWAP prior to the initial
repayment date/date of the available six-month extension period
(the "Fixed Price"). If paid in shares, the payment amount will be
convertible at the lower of (i) the Fixed Price, or (ii) a price
equal to 90 per cent of the lowest daily VWAP over the five trading
days immediately preceding the date of the relevant payment
date.
On 5 April 2017, the Company raised an unsecured USD1,000,000
(USD900,000 net of fees) one-year convertible loan bearing interest
at 12%. The lender had an option to convert any part of the loan at
any time during the twelve months into the Company's ordinary
shares at the lower of a fixed conversion price of 1.155 pence per
share and a variable conversion price of 90 per cent. of the lowest
daily VWAP at which the shares have traded in the five trading days
prior to each conversion. This loan was repaid in cash in full on
30 January 2018.
For the purposes of the inclusion into this disclosure, the
conversion price most beneficial for the lender was applied, which
is 90% of the VWAP for five days before 30 June 2017.
There were no ordinary share transactions after 30 June 2018,
that could have changed the EPS calculations significantly if those
transactions had occurred before the end of the reporting
period.
10. Property, plant and equipment
Office furniture
and
Leasehold improvements equipment Total
Group and Company GBP GBP GBP
------------------------------------ ------------------------ ---------------- ---------
Cost
At 1 July 2016 32,822 126,712 159,534
Additions - - -
Disposals - - -
At 30 June 2017 and at 30 June 2018 32,822 126,712 159,534
------------------------------------ ------------------------ ---------------- ---------
Depreciation
At 1 July 2016 (15,422) (122,395) (137,817)
Charge (3,900) (2,297) (6,197)
At 30 June 2017 (19,322) (124,692) (144,014)
Charge (13,500) (1,825) (15,325)
At 30 June 2018 (19,322) (124,692) (144,014)
------------------------------------ ------------------------ ---------------- ---------
Net book value
At 30 June 2018 - 195 195
------------------------------------ ------------------------ ---------------- ---------
At 30 June 2017 13,500 2,020 15,520
------------------------------------ ------------------------ ---------------- ---------
11. Investments in subsidiaries and goodwill
Company GBP
============================ ====
Cost
At 1 July 2016 and 30 June
2017 482
Additions 1
At 30 June 2018 483
================================= ====
Impairment
At 1 July 2016, 30 June -
2017 and 30 June 2018
============================ ====
Net book amount at 30 June
2018 483
Net book amount at 1 July
2016 and 30 June 2017 482
================================= ====
The Parent Company of the Group holds more than 50% of the share
capital of the following companies, the results of which are
consolidated:
Proportion
Company Country Class held by Nature
of Group of
registration business
================= ================== ========= ================= =====================================================
Regency Mines Australia Ordinary 100% Mineral exploration
Australasia
Pty Limited
Regency Resources USA Ordinary 100% Natural resources
Inc
ESTEQ Limited UK Ordinary 100% Holding company
Allied Energy
Services UK Ordinary 80% Energy storage, trading
Ltd (indirectly and grid backup
owned
through ESTEQ
Limited)
================= ================== ========= ================= =====================================================
Goodwill
On 10 November 2017, RGM formed a new 100% owned subsidiary,
ESTEQ Limited, to act as the vehicle for development of
opportunities in the battery and storage technology sector. On 15
March 2018, ESTEQ Limited committed to investing GBP250,000 into
newly issued shares of Allied Energy Services Limited, representing
80% interest in that entity. Non-controlling shareholders brought
with them land rights and connections for seven projects where
combined battery and gas fired generation plants could be connected
to the UK national grid. These seven projects had a combined export
capacity potential of 140MW. They also have engaged in discussions
with multi-national technology and equipment manufacturers to
supply the plant required for the construction of the projects.
Further advanced contractual discussions have occurred with several
approved engineering, procurement and construction contractors to
construct, connect and commission each generation plant. Allied
Energy had also previously negotiated a five-year framework
agreement with a major network player to develop grid services, to
tender for services on Allied Energy's behalf, and to manage the
resulting revenue contracts. Further, the existing management team
offers many years of experience in renewable energy, from procuring
finance to finding key partners and in constructing multiple
anaerobic digestion plants across the United Kingdom.
12. Investments in associates and joint ventures
Group Company
Carrying Balance GBP GBP
---------------------------------------- ---- ------------ ------------
At 1 July 2016 1,638,113 1,754,776
Additions 1,928,134 1,928,131
Transferred to available for
sale investments (40,881) (40,881)
Gain on re-translation from functional
into Group presentation currency 60,391 60,391
------------------------------------------ --- ------------ ------------
At 30 June 2017 3,585,757 3,702,417
Additions 1,503,377 1,503,377
Impairment of investment in joint
ventures (1,928,132) (1,928,132)
Net book amount at 30 June 2018 3,161,002 3,277,662
------------------------------------------------- ------------ ------------
On 11 June 2017, the Company signed a shareholders' agreement
with Legacy Hill Resources Ltd, in accordance with which the
Company will hold 47% of Mining Equity Trust, LLC ("MET"), a new
Delaware-incorporated limited liability company in and through
which Legacy Hill Resources Ltd ("LHR"), a privately-owned mining
company, (as majority shareholder) and the Company (as minority
shareholder)
will hold their interests in the MET joint venture. This 47%
stake represents Regency's proportionate share of cash and non-cash
contributions to the establishment of the JV. The contribution of
Regency to the JV has been funded in part by a USD1,600,000 loan
provided by Cuart Investments PCC Ltd and YA II PN Ltd; the loan
details are further described in the note 16.
During the year, investments in Vali Carbon Corporation and
Carbon Minerals Corporation were impaired. The Directors have taken
the view that insufficient management controls and a lack of
efficacy by the Company's JV partner and operator in the United
States have led to an inability to bring these businesses into
metallurgical coal production along the timelines originally
envisioned. Efforts to assist in correcting these operating
deficiencies were ultimately unsuccessful and as such the Directors
feel an impairment of these assets is appropriate.
At 30 June 2018, the Parent Company of the Group had a
significant influence by virtue other than a shareholding of over
20% or had joint control through a joint venture contractual
arrangement in the following companies:
Proportion
Name Country of Class held by Status Accounting
registration Group at year end
30
June
2018
=========== ================================ ======== ================= ================= =========================
Direct
Mining USA Ordinary 47% Active 31 December
Equity 2018
Trust,
LLC
("MET")1
Carbon USA Ordinary 20% Fully impaired 31 December
Minerals 2018
Corporation
Vali Carbon USA Ordinary 20% Fully impaired 31 December
Corporation 2018
Oro Nickel Papua New Guinea Ordinary 50% Active 30 June 2018
Limited1
=========== ================================ ======== ================= ================= =========================
1 These entities have not yet completed financial statements at
the time of preparation of the financial statements of Regency
Mines plc. Financial statements will be available after the
accounting year end of the entities.
12. Investments in associates and joint ventures continued
At 30 June 2017, the Parent Company of the Group had a
significant influence by virtue other than a shareholding of over
20% or had joint control through a joint venture contractual
arrangement in the following companies:
Proportion
Name Country of Class held by Accounting
registration Group year end
=============== ============================================= ======== ================= =========================
Direct
Carbon Minerals USA Ordinary 20% 31 December
Corporation1 2017
Vali Carbon USA Ordinary 20% 31 December
Corporation1 2017
Oro Nickel Papua New Guinea Ordinary 50% 30 June 2017
Limited1
=============== ============================================= ======== ================= =========================
1 These entities have not yet completed financial statements at
the time of preparation of the financial statements of Regency
Mines plc. Financial statements will be available after the
accounting year end of the entities.
As of 1 July 2017, a decision was taken that Red Rock Resources,
an AIM listed company, accounted as associate up until 30 June
2016, should be carried in the accounts as available for sale
financial asset. Market value of shares at 1 July 2017 was
GBP40,881.
13. Available for sale financial assets
Group Company
==============================================
GBP GBP
============================================== ============ ============
Carrying value
At 1 July 2017 1,147,460 1,147,460
Additions during the year 145,127 135,278
Transfer from investment in associates (note
12) 40,881 40,881
Revaluation 110,239 110,239
Value at 30 June 2017 1,443,707 1,433,858
----------------------------------------------- ------------ ------------
Additions during the year 1,336,502 936,502
Disposals during the year (1,318,181) (1,318,181)
Revaluation (163,597) (158,897)
Impairment (215,372) (215,372)
Impairment reversal 16,513 16,513
=============================================== ============ ============
Value at 30 June 2018 1,099,572 694,423
=============================================== ============ ============
Market value of investments
The market value as at 30 June 2018 of the available for sale
listed and unlisted investments was as follows:
Group Company
================== =========
2018 2017 2018 2017
GBP GBP GBP GBP
======================================== ================== ========= ========== ===========
Quoted on London AIM 183,349 80,758 183,349 80,758
Quoted on Standard List of LSE 468,894 - 468,894 -
Quoted on other foreign stock exchanges 42,179 47,577 42,179 37,728
Unquoted investments at fair value 405,150 1,315,372 - 1,315,372
======================================== ================== ========= ========== ===========
At 30 June 1,099,572 1,443,707 694,422 1,433,858
======================================== ================== ========= ========== ===========
In August 2017 the Company disposed of 1.9% of its stake in
Horse Hill Development Ltd ("HHDL") to UK Oil and Gas ("UKOG"). For
this interest the Company received GBP54,498 in obligations assumed
by the buyer as well as GBP268,502 of value in UKOG shares. These
shares were subsequently sold for gross proceeds of GBP1.3m.
On 29 November 2017, the Company completed a sale of its
remaining 3.1% interest in HHDL for GBP630,000, of which GBP315,000
was delivered in cash and 50% in shares of the buyer, Alba Mineral
Resources plc ("Alba"). These shares were subsequently sold for
gross proceeds of
GBP299,286.
Total gain recognised on sale of available for sale investments
during the reporting year was GBP1,482,609, of which gain on sale
of HHDL shares amounted to GBP453,502 and gain on sale of UKOG
shares GBP1,029,185.
During the reporting year the Company sold part of its shares in
Alba, recognising a loss on sale of those shares in the amount of
GBP21,481. Gain on sale of shares in Greatland Gold plc, that were
also sold by the Company during the year, was recorded in the
amount of GBP21,403.
On 4 October 2017, Curzon Energy Plc, classified under unquoted
investments at fair value in the comparative period in the table
above, listed its shares at the Standard Listing segment of the
Official List, to trade on London Stock Exchange's main market for
listed securities.
On 22 December 2017, ESTEQ Ltd, the Company's 100% owned
subsidiary, made an initial investment of GBP200,000 in Whitecar
Ltd.,
a company currently operating electric vehicle rental car
services in several UK locations. It was followed by another
GBP200,000 investment in Whitecar by ESTEQ in February 2018. These
two tranches gave ESTEQ an initial holding of 5.8% in Whitecar Ltd.
Whitecar has continued its European expansion during and after the
year end, opening a new operating branch in Oslo, Norway and
preparing for its first two operating locations in Germany, while
significantly increasing the size of its operating fleet in the
United Kingdom. Whitecar closed its most recent fundraise during Q3
2018 at a share price of GBP0.04, implying a valuation of the
Company's holdings of GBP462,160. With this in consideration, the
Directors believe that the value of the contribution paid for the
original investment represents fair value of the residual 5.59%
investment at the year end and no impairment is required.
14. Exploration assets
Group Company
------------------------
2018 2017 2018 2017
GBP GBP GBP GBP
Cost
At 30 June 2,894,837 2,785,118 1,050,372 1,050,372
Additions during
the year - 594 - -
Disposals in the
year - (2,321) - -
Exchange gains - 111,446 - -
At 30 June 2,894,837 2,894,837 1,050,372 1,050,372
Impairment
At 30 June (2,854,435) (2,551,218) (1,009,970) (1,009,970)
Impairments recognised
in the year (40,402) (229,262) (40,402) -
Exchange gains - (73,955) - -
At 30 June (2,894,837) (2,854,435) (1,050,372) (1,009,970)
Net book value
At 30 June - 40,402 - 40,402
15. Trade and other receivables
Company
Group
2018 2017 2018 2017
GBP GBP GBP GBP
Non-current
Amounts owed by Group
undertakings - - 1,470,447 805,274
Amounts owed by related
parties
- due from associates
and joint ventures 1,274,569 1,239,779 1,274,569 1,239,779
Total 1,274,569 1,239,779 2,745,016 2,045,053
Current
Sundry debtors 105,686 66,170 98,674 65,912
Prepayments 24,809 44,111 19,409 44,111
Amounts owed by related
parties
- due from key management 6,263 6,263 6,263 6,263
Total 136,758 116,544 124,346 116,286
16. Trade and other payables
Group Company
2018 2017 2018 2017
GBP GBP GBP GBP
Trade and other payables 59,754 212,164 43,057 201,892
Amounts due to related
parties:
- due to Red Rock Resources plc 203,498 118,015 203,498 118,015
Accruals 33,500 71,455 33,500 71,457
Trade and other payables 296,752 401,634 280,055 391,364
Short-term borrowings (note 22) 1,097,600 771,087 1,097,600 771,087
Total 1,394,352 1,172,721 1,377,655 1,162,451
Trade and other payables include a balance of GBP203,498 (2017:
GBP118,015) owing to Red Rock Resources plc, a related party entity
as a result of same directorships.
Loan from Cuart and YA II PN to fund MET JV
On 29 May 2018, the Company took a loan of GBP1,060,343, net of
arrangement fees, (USD1,600,000 gross original value) from
institutional investors to fund its 47% interest in a joint venture
Mining Equity Trust, LLC ("MET"). The loan carries a 10% interest
rate and is for
an initial term of six months and is subject to an
implementation fee of USD96,000. A further six-month extension is
available for a 5% fee. If extended, the loan may be converted by
the noteholder at a fixed price equal to 130% of the 10-day VWAP
prior to the initial repayment date of the available six-month
extension period (the "Fixed Price"). If paid in shares, the
payment amount will be convertible at the lower of (i) the Fixed
Price, or (ii) a price equal to 90 per cent of the lowest daily
VWAP over the five trading days immediately preceding
the date of the relevant payment date. The Company has the right
to prepay the loan at any time in full for a 3% redemption fee,
provided that after the First Repayment Date the Company may only
prepay the loan if the stock price is trading below the Fixed Price
at the time of prepayment.
YA II PN Limited
A short-term loan of GBPnil (2017: GBP771,087) was provided by
YA II PN Limited. Interest on the balance of this loan is charged
at a rate of 12% per annum. This loan and all accumulated interest
was repaid in full on 30 January 2018.
17. Reserves
Share premium
The share premium account represents the excess of consideration
received for shares issued above their nominal value net of
transaction costs.
Foreign currency translation reserve
The translation reserve represents the exchange gains and losses
that have arisen on the retranslation of overseas operations.
Retained earnings
Retained earnings represent the cumulative profit and loss net
of distributions to owners.
Available for sale financial asset reserve
The available for sale financial asset reserve represents the
cumulative revaluation gains and losses in respect of available for
sale trade investments.
Associate investments reserve
The associate investments reserve represents the cumulative
share of gains/losses of associates recognised in the Statement of
Other Comprehensive Income.
Share-based payment reserve
The share-based payment reserve represents the cumulative charge
for options granted, still outstanding and not exercised.
18. Share capital of the Company
The share capital of the Company is as follows:
2018 2017
Issued and fully paid GBP GBP
791,239,654 (2017: 576,491,064) ordinary shares
of GBP0.0001 each 79,124 57,650
1,788,918,926 deferred shares of GBP0.0009
each 1,610,027 1,610,027
2,497,434,980 A deferred shares of GBP0.000095
each 237,256 237,256
As at 30 June 1,926,407 1,904,933
Nominal
Movement in ordinary shares Number GBP
As at 1 July 2016 - ordinary shares of GBP0.0001
each 252,384,571 25,239
Issued 30 August 2016 at GBP0.004 per share 65,625,000 6,563
Issued 13 October 2016 at GBP0.004 per share 9,375,000 937
Issued 20 December 2016 at GBP0.004 per share 52,500,000 5,250
Issued 18 January 2017 at GBP0.004 per share 15,000,000 1,500
Issued 20 January 2017 at GBP0.004 per share 12,500,000 1,250
Issued 08 February 2017 at GBP0.005 per share 21,000,000 2,100
Issued 22 February 2017 at GBP0.0065 per share 11,538,461 1,154
Issued 28 February 2017 at GBP0.008 per share 18,125,000 1,812
Issued 01 March 2017 at GBP0.0039 per share 17,898,183 1,790
Issued 13 March 2017 at GBP0.013 per share 576,923 58
Issued 20 March 2017 at GBP0.008 per share 625,000 63
Issued 21 March 2017 at GBP0.008 per share 4,000,000 400
Issued 27 March 2017 at GBP0.008 per share 3,750,000 375
Issued 03 April 2017 at GBP0.01 per share 32,020,493 3,202
Issued 04 April 2017 at GBP0.0105 per share 5,119,658 512
Issued 10 April 2017 at GBP0.008 per share 500,000 50
Issued 21 April 2017 at GBP0.008 per share 2,175,000 217
Issued 03 May 2017 at GBP0.009 per share 33,999,996 3,400
Issued 05 May 2017 at GBP0.009 per share 17,777,779 1,778
As at 30 June 2017 - ordinary shares of GBP0.0001
each 576,491,064 57,650
Issued 06 Dec 2017 at GBP0.00625 per share 2,304,000 230
Issued 11 Jan 2018 at GBP0.0055 per share 190,909,090 19,091
Issued 29 Jan 2018 at GBP0.0055 per share 18,181,818 1,818
Issued 06 Apr 2018 at GBP0.00475 per share 3,353,682 335
As at 30 June 2018 - ordinary shares of GBP0.0001
each 791,239,654 79,124
18. Share capital of the Company continued
Share re-organisation
The Company's share capital consists of three classes of shares,
being:
-- Ordinary shares with a nominal value of 0.01 pence, which are
the Company's listed securities.
-- Deferred shares with a value of 0.09 pence.
-- A Deferred shares with a value of 0.0095 pence.
Subject to the provisions of the Companies Act 2006, the
deferred shares may be cancelled by the Company, or bought back
for
GBP1 and then cancelled. These deferred shares are not quoted
and carry no rights whatsoever.
Warrants
At 30 June 2018, the Company had 434,665,467 warrants in issue
(2017: 236,685,670) with exercise price ranging GBP0.008-GBP0.018
(2017: GBP0.0039-GBP0.018). Out of those, 264,090,904 (2017:
54,999,996) have market performance conditions that accelerate the
expiry date. Weighted average remaining life of the warrants at 30
June 2018 was 395 days (2017: 637 days). All the warrants are
issued by the Group to its shareholders in the capacity of
shareholders and therefore are outside of IFRS 2 scope.
2018 2017
Group and Company number of number
warrants of warrants
Outstanding at the beginning of the
period 236,685,670 11,111,111
Granted during the period 209,090,908 255,326,482
Exercised during the period - -
Lapsed during the period (11,111,111) (29,751,923)
Outstanding at the end of the period 434,665,467 236,685,670
At 30 June 2018 the Company had the following warrants to
subscribe for shares in issue:
Grant Expiry date Warrant exercise Number
price of warrants
GBP
30 Aug 2016 11 Mar 2019 0.008 64,137,500
19 Oct 2016 11 Mar 2019 0.008 9,375,000
20 Dec 2016 19 Dec 2018 0.013 26,062,500
18 Jan 2017 17 Jan 2019 0.013 13,750,000
19 Jan 2017 18 Jan 2019 0.008 12,500,000
10 Feb 2017 20 Feb 2019 0.010 21,000,000
22 Feb 2017 27 Aug 2018 0.013 10,961,538
10 Apr 2017 20 Oct 2018 0.013 16,010,246
05 May 2017 07 May 2019 0.018 17,777,779
08 May 2017 07 May 2019 0.018 33,999,996
23 Jan 2018 22 Jan 2020 0.010 190,909,090
12 Feb 2018 11 Feb 2020 0.010 18,181,818
Total warrants in issue at 30
June 2018 434,665,467
The aggregate fair value related to the share warrants granted
during the reporting period was GBPnil (2017: GBPnil).
Capital management
Management controls the capital of the Group in order to control
risks, provide the shareholders with adequate returns and ensure
that the Group can fund its operations and continue as a going
concern.
The Group's debt and capital includes ordinary share capital and
financial liabilities, supported by financial assets. There are no
externally imposed capital requirements.
Management effectively manages the Group's capital by assessing
the Group's financial risks and adjusting its capital structure in
response to changes in these risks and in the market. These
responses include the management of debt levels, distributions to
shareholders and share issues.
There have been no changes in the strategy adopted by management
to control the capital of the Group since the prior year.
19. Share-based payments
Employee share options
In prior years, the Company established an employee share option
plan to enable the issue of options as part of the remuneration of
key management personnel and Directors to enable them to purchase
ordinary shares in the Company. Under IFRS 2 "Share-based
Payments", the Company determines the fair value of the options
issued to Directors and employees as remuneration and recognises
the amount as an expense in the Income Statement with a
corresponding increase in equity.
At 30 June 2018 and at 30 June 2017, the Company had outstanding
options to subscribe for ordinary shares as follows:
Options issued 14 June Options issued
2016 exercisable at 0.45 9 September 2016 Total
pence per share expiring exercisable at number
29 January 2022 0.8p per share
Number expiring 9 September
2022
Number
A R M Bell 2,960,000 10,400,000 13,360,000
S Kaintz 2,820,000 9,600,000 12,420,000
E Bugnosen 560,000 - 560,000
Employees 720,000 - 720,000
Total 7,060,000 20,000,000 27,060,000
2018 2017
Weighted Weighted
Number of average Number of average
Company and Group options exercise options exercise
Number price Number price
Pence Pence
Outstanding at the beginning of the period 27,060,000 0.71 7,060,000 0.45
Granted during the year - - 20,000,000 0.80
Cancelled during the year - - - -
===========================================
Outstanding at the end of the period 27,060,000 0.71 27,060,000 0.71
===========================================
No options were granted during the reporting year. During the
financial year ended 30 June 2017, 20,000,000 options were
issued
at an exercise price of 0.8 pence and they expire on 9 September
2022. The options were granted in four tranches, first tranche
vested immediately and the other three tranches had time vesting
conditions attached.
The weighted average fair value of each option granted during
the year was 0.244 pence (2017: 0.244 pence).
The exercise price of options outstanding at 30 June 2018 and 30
June 2017 ranged between 0.45p and 0.8p. Their weighted average
contractual life was 4.014 years (2017: 5.014 years).
Of the total number of options outstanding at 30 June 2018,
25,330,000 (2017: 15,330,000) had vested and were exercisable.
The weighted average share price (at the date of exercise) of
options exercised during the year was nil (2017: nil) as no options
were exercised.
19. Share-based payments continued
The following information is relevant in the determination of
the fair value of options granted under equity-settled share-based
remuneration schemes:
Granted on 9 Granted on
September 14 June 2016
2016
Black-Scholes model Black-Scholes
Option pricing model used model
Weighted average shares price at grant
date, pence 0.55 0.35
Exercise price, pence 0.80 0.45
Weighted average contractual life, months 62.00 55.00
Expected volatility, % 58.843 61.986
Expected dividend growth rate, % 0 0
Risk-free interest rate, % 0.309 0.679
Share-based remuneration expense related to the share options
grant is included in the administrative expenses line in the
Consolidated Income Statement in the amount of GBP9,997 (2017:
GBP42,912).
Share Incentive Plan
In January 2012 the Company implemented a tax efficient Share
Incentive Plan, a government approved scheme, the terms of which
provide for an equal reward to every employee, including Directors,
who have served for three months or more at the time of issue. The
terms of the plan provide for:
-- each employee to be given the right to subscribe any amount
up to GBP150 per month with Trustees who invest the monies in the
Company's shares;
-- the Company to match the employee's investment by
contributing an amount equal to double the employee's investment
("matching shares"); and
-- the Company to award free shares to a maximum of GBP3,600 per
employee per annum. The subscriptions remain free of taxation and
national insurance if held for five years.
All such shares are held by SIP Trustees and the ordinary shares
cannot be released to participants until five years after the date
of the award.
During the financial year, a total of 5,657,682 free, matching
and partnership shares were awarded (2017: 6,491,086) with a fair
value ranging between 0.475 to 0.625 pence (2017: fair value
ranging between 0.425 pence to 1.05 pence) resulting in a
share-based payment charge of GBP25,020 (2017: GBP48,446), included
in the administrative expenses line in the Consolidated Income
Statement.
20. Cash and cash equivalents 30 June 30 June
Group 2018 2017
GBP GBP
Cash in hand and at bank 126,125 9,176
30 June 30 June
Company 2018 2017
GBP GBP
Cash in hand and at bank 6,505 8,125
21. Financial instruments
21.1 Categories of financial instruments
The Group and Company hold a number of financial instruments,
including bank deposits, short-term investments, loans and
receivables and trade payables.
The carrying amounts for each category of financial instrument,
measured in accordance with IAS 39 as detailed in the accounting
policies, are as follows:
30 June 30 June
Group 2018 2017
GBP GBP
===========
FINANCIAL ASSETS
Available for sale financial assets at fair value through other comprehensive
income
Quoted equity shares 694,422 128,332
Unquoted equity shares 405,150 1,315,375
===========
Total available for sale financial assets
carried at fair value 1,099,572 1,443,707
Cash and cash equivalents 126,125 9,176
Loans and receivables
Trade and other receivables 1,411,327 1,356,323
===========
Total financial assets held at amortised cost 1,411,327 1,356,323
Total financial assets 2,637,025 2,809,206
===========
Total current 262,883 125,720
Total non-current 2,374,141 2,683,486
30 June 30 June
Company 2018 2017
GBP GBP
===========
FINANCIAL ASSETS
Available for sale financial assets at fair value through other comprehensive
income
Quoted equity shares 694,422 118,485
Unquoted equity shares - 1,315,375
===========
Total available for sale financial assets 694,422 1,433,860
Cash and cash equivalents 6,505 8,125
Loans and receivables
Trade and other receivables 2,869,362 2,161,339
===========
Total financial assets held at amortised
cost 2,869,362 2,161,339
Total financial assets 3,570,290 3,595,199
===========
Total current 130,851 116,286
Total non-current 3,439,439 3,478,913
21. Financial instruments continued
21.1 Categories of financial instruments continued
Available for sale financial assets carried at fair value using
valuation techniques other than observable market value
As at 30 June 2018, GBP405,150 (2017: GBP1,315,372) of the
Group's available for sale financial assets are valued using
valuation techniques other than observable market price due to the
investment being privately held and no quoted market price
information is available. Financial instruments valued using other
valuation techniques can be reconciled from beginning to ending
balances as follows:
Group Company
================== =========
Company and Group 2018 2017 2018 2017
GBP GBP GBP GBP
====================================== ================== =========
Brought forward 1,315,372 1,139,873 1,315,372 1,139,873
Additions 753,000 75,000 353,000 75,000
Disposals (850,000) - (850,000) -
Revaluation 5,150 100,499 - 100,499
Reclassified to listed (Curzon Energy
Plc) (603,000) - (603,000) -
Impairment (215,372) - (215,372) -
====================================== ================== =========
405,150 1,315,372 - 1,315,372
====================================== ================== =========
During the year the Group made an additional cash investment of
GBP353,000 in Curzon Energy Plc (formerly Westport Energy Plc),
which brought the value of its investment to GBP603,000 (2017:
GBP250,000). This investment was held at cost until its shares were
admitted to trading on Standard Listing of the LSE on 4 October
2017, since then it has been carried at observable market
value.
The Group's investment in Direct Nickel Ltd was further impaired
to zero value during the year. At 30 June 2017 it was carried at
cost less impairment and valued at GBP215,372. There is currently
no intention to dispose of this investment in the foreseeable
future.
In the comparative year, the Group made a cash and share
investment of GBP445,000 in Horse Hill Developments Ltd, that was
further re-valued to GBP850,000. During the reporting period, all
the shares in Horse Hill Developments Ltd. were sold.
During the reporting period, the Company's 100% owned subsidiary
ESTEQ Limited invested GBP400,000 into shares of Whitecar Ltd
("Whitecar"), a company currently operating electric vehicle rental
car services out of Heathrow and several UK locations; this
represented 5.8% of Whitecar Ltd issued share capital at 30 June
2018.
30 June 30 June
Group 2018 2017
GBP GBP
Financial liabilities
Loans and borrowings
Trade and other payables 296,753 401,634
Short-term borrowings 1,097,600 771,087
=========
Total financial liabilities 1,394,353 1,172,721
=========
Total current 1,394,353 1,172,721
Total non-current - -
Trade receivables and trade payables
Management assessed that other receivables and trade and other
payables approximate their carrying amounts largely due to the
short-term maturities of these instruments.
Borrowings
The carrying value of interest-bearing loans and borrowings is
determined by calculating present values at the reporting date,
using the issuer's borrowing rate.
21.2 Fair values
Financial assets and financial liabilities measured at fair
value in the Statement of Financial Position are grouped into three
levels of a fair value hierarchy. The three levels are defined
based on the observability of significant inputs to the
measurement, as follows:
-- Level 1: Quoted (unadjusted) market prices in active markets
for identical assets or liabilities;
-- Level 2: Valuation techniques for which the lowest level
input that is significant to the fair value measurement is directly
or indirectly observable; and
-- Level 3: Valuation techniques for which the lowest level
input that is significant to the fair value measurement is
unobservable.
The carrying amount of the Group and Company's financial assets
and liabilities is not materially different to their fair value.
The fair value of financial assets and liabilities is included at
the amount at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced or
liquidation sale. Where a quoted price in an active market is
available, the fair value is based on the quoted price at the end
of the reporting period. In the absence of a quoted price in an
active market, the Group uses valuation techniques that are
appropriate in the circumstances and for which sufficient data are
available to measure fair value, maximising the use of relevant
observable inputs and minimising the use of unobservable
inputs.
The following table provides the fair value measurement
hierarchy of the Group's assets and liabilities:
Group Level 1 Level 2 Level Total
GBP GBP 3 GBP
GBP
30 June 2018
Available for sale financial assets at fair value through other comprehensive
income
- Quoted equity shares 694,422 - - 694,422
- Unquoted equity investments - 405,150 - 405,150
30 June 2017
Available for sale financial assets at fair value through other comprehensive
income
- Quoted equity shares 128,332 - - 128,332
- Unquoted equity investments - 1,315,375 - 1,315,375
Company Level 1 Level 2 Level Total
GBP GBP 3 GBP
GBP
30 June 2018
Available for sale financial assets at fair value through other comprehensive
income
- Quoted equity shares 694,422 - - 694,422
- Unquoted equity investments - - - -
30 June 2017
Available for sale financial assets at fair value through other comprehensive
income
- Quoted equity shares 118,485 - - 118,485
- Unquoted equity investments - 1,315,375 - 1,315,375
21. Financial instruments continued
21.3 Financial risk management policies
The Directors monitor the Group's financial risk management
policies and exposures and approve financial transactions.
The Directors' overall risk management strategy seeks to assist
the consolidated Group in meeting its financial targets, while
minimising potential adverse effects on financial performance. Its
functions include the review of credit risk policies and future
cash flow requirements.
Specific financial risk exposures and management
The main risks the Group is exposed to through its financial
instruments are credit risk and market risk, consisting of interest
rate risk, liquidity risk, equity price risk and foreign exchange
risk.
Credit risk
Exposure to credit risk relating to financial assets arises from
the potential non-performance by counterparties of contract
obligations that could lead to a financial loss for the Group.
Credit risk is managed through the maintenance of procedures
(such procedures include the utilisation of systems for the
approval, granting and renewal of credit limits, regular monitoring
of exposures against such limits and monitoring of the financial
liability of significant customers and counterparties), ensuring,
to the extent possible, that customers and counterparties to
transactions are of sound creditworthiness. Such monitoring is used
in assessing receivables for impairment.
Risk is also minimised through investing surplus funds in
financial institutions that maintain a high credit rating or in
entities that the Directors have otherwise cleared as being
financially sound.
Trade and other receivables that are neither past due nor
impaired are considered to be of high credit quality. Aggregates of
such amounts are as detailed in note 15.
There are no amounts of collateral held as security in respect
of trade and other receivables.
The consolidated Group does not have any material credit risk
exposure to any single receivable or group of receivables under
financial instruments entered into by the consolidated Group.
Liquidity risk
Liquidity risk arises from the possibility that the Group might
encounter difficulty in settling its debts or otherwise meeting its
obligations related to financial liabilities. The Group manages
this risk through the following mechanisms:
-- monitoring undrawn credit facilities;
-- obtaining funding from a variety of sources; and
-- maintaining a reputable credit profile.
The Directors are confident that adequate resources exist to
finance operations to commercial exploration and that controls over
expenditure are carefully managed. All financial liabilities are
due to be settled within the next twelve months.
Market risk
Interest rate risk
The Company is not exposed to any material interest rate risk
because interest rates on loans are fixed in advance.
Equity price risk
Price risk relates to the risk that the fair value or future
cash flows of a financial instrument will fluctuate because of
changes in market prices largely due to demand and supply factors
for commodities, but also include political, economic, social,
technical, environmental and regulatory factors.
Foreign exchange risk
The Group's transactions are carried out in a variety of
currencies, including Australian Dollar, Papua New Guinea Kina and
UK Sterling. To mitigate the Group's exposure to foreign currency
risk, non-Sterling cash flows are monitored.
22. Reconciliation of liabilities arising from financing activities
Non cash
flow loan Non cash
funds Non cash flow interest
30 June Cash flows transferred flow forex and arrangement 30 June
2017 loan directly movement fees accreted 2018
GBP repayment to MET JV GBP GBP GBP
GBP escrow by
the
lender
GBP
Cuart and YA II PN
loan
to finance MET - - 1,060,343 9,719 27,537 1,097,600
YA II PN loan 771,087 (861,511) - (24,251) 114,675 -
========= ==================
771,087 (861,511) 1,060,343 (14,532) 142,212 1,097,600
========= ==================
Significant non cash flow transactions
During the year a loan from a group of institutional investors
in the amount of GBP1,060,343, net of arrangement fees of
GBP146,156, (USD1,407,287 net of arrangement fees of USD192,713 in
the original loan currency), was paid directly to the MET JV escrow
account as Regency's share of investment into MET JV.
23. Operating lease commitments
On 5 April 2013, Red Rock Resources plc entered into a joint
lease agreement with Regency Mines plc and Greatland Gold plc at
Ivybridge House, 1 Adam Street, London WC2N 6LE. The lease was
non-cancellable until 1 December 2017. The Company let the lease
expire on
1 December 2017 and moved into new offices.
On 21 August 2017, the Company entered into a new lease
agreement for office space with WeWork Aldwych House. The initial
lease runs from 1 October 2017 through 30 September 2019 and is
non-cancellable during this period. Thereafter the lease can be
terminated by giving one full calendar month notice.
The Group and Company's total of future minimum lease payments
under non-cancellable operating leases are as presented in the
table below:
Group Company
2018 2017 2018 2017
GBP GBP GBP GBP
Not later than one year 86,638 12,069 86,638 12,069
Later than one year and not later
than five years 21,750 - 21,750 -
Later than five years - - - -
Total non-cancellable operating
leases commitments at 30 June 108,388 12,069 108,388 12,069
24. Significant agreements and transactions
-- Financing
-- On 11 January 2018, the Company raised GBP1,050,000 through
the issue of 190,909,090 new ordinary shares at 0.01p each at a
price
-- of 0.55 per share. Directors Andrew Bell and Scott Kaintz
invested an aggregate of GBP100,000 cash in the strategic financing
to acquire 18,181,818 shares. Each share issued had an attached
warrant to subscribe for a further share at 1.0p. The warrants were
issued with the Company being able to accelerate warrant conversion
if the volume weighted average price of shares equalled or exceeded
3.5p for 10 consecutive days.
-- Further to this, on 29 January 2018 Regency Mines announced
that it had successfully closed an additional GBP100,000 fundraise
through the Teathers mobile application, which was fully
subscribed. 18,181,818 new ordinary shares of 0.01p each were
issued under the fundraise at a price of 0.55p per ordinary share
on the same terms as described in the announcement dated 11 January
2018.
-- On 30 January 2018, the Company announced that it had repaid
its convertible loan with YA PN Ltd. The final pay-out amounted to
USD835,115. It included USD725,647 of principal and USD33,548 of
accrued interest with a reduced pre-payment fee of 10%.
-- On 6 June 2018 the Company announced that it had agreed to
borrow gross proceeds of USD1,600,000 from institutional investors
in order to fund a portion of its obligations under the MET coal
joint venture. The loan will carry a 10% interest rate and be for
an initial term of six months, subject to an implementation fee of
USD96,000. A further six-month extension would be available for a
5% fee and if extended the loan may be converted by the noteholder
at a fixed price equal to 130% of the 10 day VWAP prior to the date
of the extension period. If extended beyond six months the loan is
subject to a repayment schedule with payments to be paid in cash or
shares at the discretion of the Company. If paid in shares the
payment amounts will be convertible at the lower of the fixed price
noted above, or a price equal to 90% of the lowest daily VWAP over
the five trading days immediately proceeding the date of the
relevant repayment date. The Company has the right to repay the
loan at any time for a 3% redemption fee provided that the Company
may only repay the loan if the stock is trading below the fixed
price at the time of prepayment. The lender was also to receive
three performance bonuses of USD50,000 if the Company's share price
traded above either GBP0.008, GBP0.01 and GBP0.0125 for ten
consecutive days.
--
Sale of interests
-- On 10 July 2017, the Company announced the sale of 1.9% of
its interest in Horse Hill Developments Ltd, to UK Oil and Gas Plc
("UKOG") for total consideration of GBP323,000. GBP268,502 of the
total was delivered in UKOG shares and the balance was a cash
payment that was applied to Regency's proportionate share of
outstanding Horse Hill cash calls. UKOG was also granted a right of
first refusal for 18 months over Regency's remaining 3.1% stake in
Horse Hill Developments Ltd. The sale was announced as completed on
24 August 2017.
-- On 18 October 2017, the Company announced the conditional
sale of the remainder of its 3.1% interest in Horse Hill
Developments Ltd, to Alba Mineral Resources Plc ("Alba") for total
consideration of GBP630,000. Of the consideration 50% was expected
to be paid in cash,
GBP315,000, and the balance in Alba shares at a price equal to
the volume weighted average price of Alba shares in the 15 days
prior to completion. On 29 November 2017, Regency Mines announced
that it had completed the sale.
US metallurgical coal interests
-- On 24 November 2017 the Company announced that it had paid a
refundable advance of GBP34,800 giving the Company the option to
buy the 80% balance of the Rosa Metallurgical Coal Mine owned by
Carbon Minerals Corporation, that the Company did not currently
own.
Regency had a sixty-day period in which to carry out due
diligence on the mine and complex. Should due diligence have proven
favourable Regency would have been able to acquire the mine, wash
plant and other property rights, rights of action, leases,
licences, permits, shareholdings, and other rights including
ownership of MCoal Corporation, the direct holder of the assets,
for the sum of GBP250,000.
This option was subsequently allowed to lapse.
-- On 6 December 2017, Regency Mines plc announced that it had
entered into a Memorandum of Understanding with Legacy Hill
Resources Ltd for co-operation in structuring, financing and owning
coal investments in the US. On 27 February 2018, Regency Mines plc
announced the execution of a Joint Venture Agreement with Legacy
Hill Resources. According to the terms of the agreement,
LHR would own 30% of the JV initially and would subsequently
contribute a further USD1m in cash. Regency was to contribute a
further USD2m and equity contributions were capped at USD3m
cash.
-- On 6 June 2018, the Company announced that it had deposited
USD2,000,000 in an escrow towards its joint venture funding and 47%
holding of Mining Equity Trust. Mining Equity Trust is the limited
liability company in and through which Legacy Hill Resources and
Regency Mines hold their interests in the metallurgical coal joint
venture. Regency agreed to borrow gross proceeds of USD1,600,000
from institutional investors to fund a portion of its obligations
under the JV. The loan carried an interest rate of 10% and was
subject to an implementation fee of USD96,000.
Curzon Energy Plc investment
-- On 28 September 2017 the Company announced Curzon Energy
Plc's intention to raise gross proceeds of GBP2.3m and to seek
admission of its shares to the Standard Listing segment of the
Official list to trade on the London Stock Exchange. Regency
further announced its intention to follow its pre-IPO investment
with a further GBP400,000 as part of the IPO fundraising.
-- On 4 October 2017 Curzon's shares were admitted to trading on
the London Stock Exchange and Regency received 6,467,500 new Curzon
shares, including a 7% broking fee on its IPO subscription rebated
in Curzon shares, and post IPO held a 8.91% stake in Curzon.
Battery and Storage Technologies Division (ESTEQ)
-- On 14 November 2017, Regency Mines announced the creation of
a new Battery and Storage Technologies Division. A new company,
ESTEQ Limited, was formed to act as the vehicle for development of
opportunities in the battery and storage technology sector.
-- On 22 December 2017, ESTEQ agreed terms for an investment in
the battery storage and technology space. An initial investment
of
GBP200,000 was planned in Whitecar Ltd, a company operating
electric vehicle rental car services out of Heathrow and several UK
locations. Following the initial investment, it was decided that
ESTEQ will subscribe for a further GBP200,000 in February 2018 on
the condition that Whitecar successfully closes a Crowdcube funding
of at least GBP650,000. Initial investment gave ESTEQ 3.3% of
Whitecar and a Regency representative joined the Whitecar board. On
February 2018, ESTEQ had a fully diluted holding of 5.8% in
Whitecar following the subsequent investment of GBP200,000.
-- ESTEQ also committed to investing up to a maximum of
GBP250,000 in developing a new project in energy storage and grid
backup, under the name Allied Energy Services Ltd. The Company
received 80% of the share capital of Allied Energy Services Ltd
following its investment.
Change of broker
-- On 1 November 2017 the Company announced the appointment of
First Equity Limited as broker to the Company with immediate
effect.
Change of registered office
-- On 28 March 2018 the Company announced that its registered
office had changed to Salisbury House, London Wall, London, EC2M
5PS.
24. Commitments
As at 30 June 2018, the Company had entered into the following
commitments:
-- Exploration commitments: Ongoing exploration expenditure is
required to maintain title to the Group mineral exploration
permits. No provision has been made in the financial statements for
these amounts as the expenditure is expected to be fulfilled in the
normal course of the operations of the Group.
-- On 21 August 2017, the Company entered into a new lease
agreement for office space with WeWork Aldwych House. The initial
lease runs from 1 October 2017 through 30 September 2019 and is
non-cancellable during this period. Thereafter the lease can be
terminated by giving one full calendar month notice.
25. Pledged assets
-- On 6 June 2018 the Company announced a USD1,600,000 loan had
been agreed in order to fund Regency's commitments to the MET coal
joint venture in the United States. As part of this loan facility
the Company agreed to pledge the 470 shares of capital stock in
Mining Equity Trust and to allow the shares to be held in escrow
for the duration of the loan.
26. Related party transactions
-- On 5 April 2013, Regency Mines plc, Red Rock Resources plc,
where Andrew Bell currently is a Director, and Greatland Gold plc,
where Andrew Bell previously was a Director, entered into a joint
lease at Ivybridge House, 1 Adam Street, London WC2N 6LE. The total
cost to the Company for these expenses during the year was
GBP17,397 (2017: GBP121,046), of which GBP14,497 represented the
Company's share of the office rent and the balance is services
provided (2017: GBP60,523). The Company let this agreement lapse at
expiration on 1 December 2017.
-- The costs incurred on behalf of the Company by Red Rock
Resources plc are invoiced at each month end and settled on a
quarterly basis. By agreement, the Company pays interest at the
rate of 0.5% per month on all balances outstanding at each month
end until they are settled. The total charged to Red Rock Resources
plc for the year was GBP42,200 (2017: GBP15,869). Of this,
GBP13,376 was outstanding at 30 June 2018.
-- The costs incurred by the Company on behalf of Red Rock
Resources plc were GBP45,699 (2017: GBP44,646). Of this, GBP14,096
was outstanding at 30 June 2018.
-- Related party receivables and payables are disclosed in notes 15 and 16, respectively.
-- The Company held 9,084,760 shares (1.91%) in Red Rock
Resources plc as at 30 June 2018 and at 30 June 2017.
-- The key management personnel are the Directors and their
remuneration is disclosed within note 8.
27. Events after the reporting period
-- On 2 August 2018, Mining Equity Trust completed its purchase
of the metallurgical coal operations at Cedar Bluff, Southwest
Virginia of Omega Holdings LLC.
-- On 19 October 2018 Regency announced that its 47% owned
subsidiary MET had sold 44,020 tonnes of coal in September and had
achieved total revenues of USD1.96m. For the ten months to June
2019 the Company announced forecasts of 691,192 tonnes of coal
sales and revenues of USD30.5m.
-- On 14 November 2018 Regency announced an update regarding its
Mambare nickel-cobalt project in Papua New Guinea. Regency
announced that it had reached a new framework agreement with its
50% JV partner, Direct Nickel Projects Limited, in which Regency
consented to a change of control and anticipated a further change
where DNi Projects would move its 50% JV interest into a separate
special purpose vehicle. The parties further agreed that Regency
would act as the main information hub of the JV and would be
responsible for budgets and work programmes. All decisions on
budgets, personnel, programmes and strategy would be taken jointly.
Regency further announced that it had been approached by third
parties interested in co-operating on the Mambare project.
-- On 20 December 2018, Curzon Energy announced that it had
suspended well testing operations at Coos Bay, and would conduct a
comprehensive review of its strategy to determine the optimal way
forward. Curzon indicated that it was considering joint venture
partners for the project, and that the ultimate commerciality would
only be determined through additional appraisal drilling. Curzon
also announced that negotiations with Pared Energy regarding a
potential multi-TCF Texas gas project were proceeding
constructively.
28. Control
There is considered to be no controlling related party.
30. These results are audited, however the information does not
constitute statutory accounts as defined under section 434 of the
Companies Act 2006. The consolidated statement of financial
position at 30 June 2018 and the consolidated income statement,
consolidated statement of comprehensive income, consolidated
statement of changes in equity and the consolidated cash flow
statement for the year then ended have been extracted from the
Group's 2018 statutory financial statements. Their report was
unqualified and contained no statement under sections 498(2) or (3)
of the Companies Act 2006. The financial statements for 2018 will
be delivered to the Registrar of Companies by 31 December 2018.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR TRBFTMBTTBJP
(END) Dow Jones Newswires
December 27, 2018 11:52 ET (16:52 GMT)
Corcel (LSE:CRCL)
Historical Stock Chart
From Apr 2024 to May 2024
Corcel (LSE:CRCL)
Historical Stock Chart
From May 2023 to May 2024