RNS Number:4422Q
Gippsland Limited
19 March 2008
Gippsland Limited (the "Company")
Half Year Financial Report
The Company reports its half year results for the 6 month period ended 31
December 2007 as follows:
ABN 31 004 766 376
and Controlled Entities
FINANCIAL REPORT
FOR THE HALF YEAR ENDED
31 DECEMBER 2007
GIPPSLAND LIMITED ABN 31 004 766 376
and Controlled Entities
CONTENTS
CORPORATE DIRECTORY 1
DIRECTORS' REPORT 3
AUDITOR'S INDEPENDENCE DECLARATION 4
CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE HALF YEAR ENDED 31 DECEMBER 2007 5
CONDENSED CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2007 6
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE HALF YEAR ENDED 31 DECEMBER 2007 7
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
FOR THE HALF YEAR ENDED 31 DECEMBER 2007 8
NOTES TO THE FINANCIAL REPORT
FOR THE HALF YEAR ENDED 31 DECEMBER 2007 9
DIRECTORS' DECLARATION 12
INDEPENDENT AUDITOR'S REVIEW REPORT TO THE MEMBERS OF GIPPSLAND
LIMITED 13
GIPPSLAND LIMITED ABN 31 004 766 376
and Controlled Entities
CORPORATE DIRECTORY
DIRECTORS Robert John (Jack) Telford - Executive Chairman & Chief Executive
Officer
John Morrison Chisholm - Executive Director
Jon Starink - Executive Director
John Stuart Ferguson Dunlop - Non-Executive Director
John Damien Kenny - Non-Executive Director
COMPANY SECRETARY Rowan St John Caren
REGISTERED OFFICE 207 Stirling Highway
Claremont WA 6010
Australia
POSTAL ADDRESS PO Box 352
Nedlands WA 6909
Australia
TELEPHONE +61 (0)8 9340 6000
FACSIMILE +61 (0)8 9340 6060
E-MAIL info@gippslandltd.com
WEBSITE www.gippslandltd.com
AUDITORS PKF Chartered Accountants & Business Advisors
Level 7, BGC Centre
28 The Esplanade
Perth WA 6000
Australia
NOMINATED ADVISOR (NOMAD) Seymour Pierce Limited
20 Old Bailey
London EC4M 7EN
United Kingdom
SOLICITORS Blakiston and Crabb Trowers & Hamlins
1202 Hay Street 3rd Floor, 1 El Gabalaya Street
West Perth WA 6005 Zamalek, Cairo
Australia Arab Republic of Egypt
Cobbets
Ship Canal House, King Street
Manchester M2 4WB
United Kingdom
SHARE REGISTRIES Security Transfer Registrars Pty Ltd PO Box 535
Suite 1, Alexandrea House Applecross WA 6953
770 Canning Hwy Australia
Applecross WA 6153
Australia
Website: www.securitytransfer.com.au
Computershare Limited
PO Box 82
The Pavilions, Bridgwater Road
Bristol BS99 7NH
United Kingdom
Website: www.computershare.com
GIPPSLAND LIMITED ABN 31 004 766 376
and Controlled Entities
CORPORATE DIRECTORY (cont)
AUSTRALIAN STOCK EXCHANGE The Company's securities are quoted on the official
list of the Australian Stock Exchange Ltd (ASX), the home exchange being:
The Australian Stock Exchange (Perth) Ltd
1 The Esplanade
Perth WA 6000
Australia
ASX CODE Shares - GIP
LONDON STOCK EXCHANGE The Company's securities are quoted on the London Stock
Exchange Plc's (LSE) Alternative Investment Market (AIM);
10 Paternoster Square
London, EC4M 7LS
United Kingdom
LSE - AIM CODE Shares - GIP
GIPPSLAND LIMITED ABN 31 004 766 376
and Controlled Entities
DIRECTORS' REPORT
Your directors submit the financial report of the economic entity for the half
year ended 31 December 2007.
Directors
The names of directors who held office during or since the end of the half-year:
Mr Robert J Telford
Dr John M Chisholm
Mr Jon Starink
Mr John D Kenny
Mr John SF Dunlop
Review of Operations
The consolidated operating profit after tax for the half year was $13,777 (2006
- loss of $1,978,847).
The principal activities of the economic entity during the half-year were the
exploration and development of commercially and economically viable mineral
resources. The primary focus continued to be on the development of the Abu
Dabbab tantalite, tin and feldspar project in Egypt in which both Gippsland and
the Egyptian Government have a 50% economic interest. A 10 year offtake
agreement was signed with the German company HC Starck GmbH for the supply of
600,000 pounds of Ta2O5 per annum. This agreement replaced an earlier smaller
agreement for the sale of 480,000 pounds of Ta2O5 per annum over a five year
period. The project will also produce an average of 1,530 tonnes of tin per
annum which will be sold via the London Metal Exchange or on the spot market.
An addendum to the Bankable Feasibility Study (BFS) was also completed detailing
the relocation of the plant site closer to the vicinity of the mine to reduce
ore haulage costs.
Detailed discussions commenced with a major German bank over the terms and
conditions for securing the debt portion of the project finance. The bank is now
in the process of undertaking due diligence on the project.
An in-fill drilling programme totalling 1,438m has commenced to increase the
drilling density at Abu Dabbab. This programme will enable the inferred
resources to be upgraded to an indicated resource category and hence be
converted to a reserve under the JORC code.
Gippsland also continued exploration on the Wadi Allaqi tenements in southern
Egypt. Drilling was undertaken at the Seiga and Abu Swayel prospects for gold
and copper-nickel respectively. This exploration intersected zones of
mineralisation at both prospects.
The company appointed Fox-Davies Capital Ltd and subsequent to the half year end
Seymour Pierce Ltd as Co-Brokers to the Company. Seymour Pierce Ltd has also
been appointed as the NOMAD for the company.
During the half year Gippsland completed the issue and allotment of 33,674,180
shares pursuant to the conversion of listed options having an exercise price of
A$0.09 which expired on 31 December 2007.
Auditor's Declaration
The lead auditor's independence declaration under section 307C of the
Corporations Act 2001
is set out on page 4 for the half-year ended 31 December 2007.
This report is signed in accordance with a resolution of the Board of Directors.
R J TELFORD
DIRECTOR
Dated this 14th day March 2008
GIPPSLAND LIMITED ABN 31 004 766 376
and Controlled Entities
GIPPSLAND LIMITED ABN 31 004 766 376
and Controlled Entities
CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE HALF YEAR ENDED 31 DECEMBER 2007
Consolidated Entity
Note 31 December 2007 31 December 2006
$ $
Revenue 54,775 92,632
Foreign exchange losses (28,260) (3,703)
Management and employee expenses (666,253) (323,620)
Exploration expenses (12,426) (835,927)
Reversal of impairment of
deferred exploration expenditure 3 2,116,696 -
Depreciation expense (44,098) (18,641)
Impairment of deferred
exploration expenditure (889,908) (432,929)
Administration expense (516,749) (456,659)
Profit / (loss) before income tax
expense 13,777 (1,978,847)
Income tax expense - ________-
Net profit / (loss) attributable
to members of the parent entity 13,777 (1,978,847)
Basic profit (loss) / diluted
profit (loss) per share (cents
per share) 0.0 (0.8)
The accompanying notes form part of these financial statements.
GIPPSLAND LIMITED ABN 31 004 766 376
and Controlled Entities
CONDENSED CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2007
Consolidated Entity
31 December 30 June
2007 2007
$ $
CURRENT ASSETS
Cash and cash equivalents 3,104,747 2,611,219
Trade and other receivables 42,809 119,925
Other current assets 26,005 22,411
--------- ---------
TOTAL CURRENT ASSETS 3,173,561 2,753,555
--------- ---------
NON CURRENT ASSETS
--------- ---------
Property, plant and equipment 233,722 154,908
Deferred exploration expenditure 2,456,091 -
--------- ---------
TOTAL NON CURRENT ASSETS 2,689,813 154,908
--------- ---------
TOTAL ASSETS 5,863,374 2,908,463
--------- ---------
CURRENT LIABILITIES
Trade and other payables 350,014 458,177
Short term provisions 56,923 38,301
--------- ---------
TOTAL CURRENT LIABILITIES 406,937 496,478
--------- ---------
NON-CURRENT LIABILITIES
Long term provisions - -
--------- ---------
TOTAL NON-CURRENT LIABILITIES - -
--------- ---------
TOTAL LIABILITIES 406,937 496,478
--------- ---------
NET ASSETS 5,456,437 2,411,985
--------- ---------
EQUITY
Contributed equity 28,440,456 25,409,780
Share option reserve 138,802 138,802
Accumulated losses (23,122,821) (23,136,597)
--------- ---------
5,456,437 2,411,985
--------- ---------
The accompanying notes form part of these financial statements.
GIPPSLAND LIMITED ABN 31 004 766 376
and Controlled Entities
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE HALF YEAR ENDED 31 DECEMBER 2007
Share Capital Accumulated Option Total
-Ordinary Losses Reserve
Balance at 1
July 2006 22,658,274 (18,945,379) 77,827 3,790,722
Loss
attributable
to members
of - (1,978,847) - (1,978,847)
parent ---------- ------------ ------- --------
entity
Sub-total 22,658,274 (20,924,226) 77,827 1,811,875
Option
reserve
on
recognition
of bonus - - 60,975 60,975
element of ---------- ------------ ------- --------
options
Balance at
31 22,658,274 (20,924,226) 138,802 1,872,850
December ---------- ------------ ------- --------
2006
Balance at 1
July 2007 25,409,780 (23,136,598) 138,802 2,411,984
Profit
attributable
to members
of - 13,777 - 13,777
parent ---------- ------------ ------- --------
entity
Sub-total 25,409,780 (23,122,821) 138,802 2,425,761
Shares
issued
during the 3,030,676 - - 3,030,676
year ---------- ------------ ------- --------
Balance at
31 28,440,456 (23,122,821) 138,802 5,456,437
December ========== ============ ======= ========
2007
The accompanying notes form part of these financial statements.
GIPPSLAND LIMITED ABN 31 004 766 376
and Controlled Entities
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
FOR THE HALF YEAR ENDED 31 DECEMBER 2007
Consolidated Entity
31 December 31 December
2007 2006
$ $
CASH FLOW FROM OPERATING ACTIVITIES
Interest received 40,749 84,399
Payments to suppliers and employees (2,035,623) (1,647,122)
--------- ---------
Net cash used in operating activities (1,994,874) (1,562,723)
--------- ---------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (122,912) (177,117)
Payments for project development (382,662) -
--------- ---------
Net cash used in investing activities (505,574) (177,117)
--------- ---------
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from share issues 3,030,676 -
--------- ---------
Net cash provided by financing activities 3,030,676 -
--------- ---------
Net increase / (decrease) in cash held 530,228 (1,739,841)
Effects of exchange rate changes on cash (36,700) (3,703)
Add opening cash brought forward 2,611,219 3,937,943
--------- ---------
Closing cash carried forward 3,104,747 2,194,399
--------- ---------
The accompanying notes form part of these financial statements.
NOTE 1. BASIS OF PREPARATION
The half-year consolidated financial statements are a general purpose financial
report prepared in accordance with the requirements of the Corporations Act
2001, Australian Accounting Standard AASB 134: Interim Financial Reporting,
Urgent Issues Group Interpretations and other authoritative pronouncements of
the Australian Accounting Standards Board.
The half-year financial report does not include all of the notes of the type
normally included within the annual financial report and therefore cannot be
expected to provide as full an understanding of the financial performance,
financial position and financing and investing activities of the consolidated
entity as the full financial report.
It is recommended that this financial report be read in conjunction with the
annual financial report for the year ended 30 June 2007 and any public
announcements made by Gippsland Limited and its controlled entities during the
half-year in accordance with the continuous disclosure requirements arising
under the Corporations Act 2001.
The half-year report does not include full disclosures of the type normally
included in an annual financial report.
For the purpose of preparing the half-year financial report, the half-year has
been treated as a discrete reporting period.
Reporting Basis and Conventions
The half-year report has been prepared on an accrual basis and is based on
historical costs modified by the revaluation of selected non-current assets,
financial assets and financial liabilities for which the fair value basis of
accounting has been applied.
Going Concern
The financial statements have been prepared on the going concern basis of
accounting which assumes that the Group will be able to meet its commitments,
realise its assets and discharge its liabilities in the ordinary course of
business.
The Group's ability to continue as a going concern is contingent upon raising
additional capital and / or debt finance to fund exploration and project
development, funding for the Abu Dabbab project, other commitments, other
principal activities and working capital. If additional capital and / or debt
finance is not raised, the going concern basis may not be appropriate with the
result that the entity may have to realise its assets and extinguish its
liabilities other than in the ordinary course of business and at amounts
different from those stated in the financial report. No allowance for such
circumstances has been made in the financial report.
Changes in accounting policies
Since 1 July 2007, the Group has adopted the following Standards and
interpretations, mandatory for financial reporting periods beginning on and
after 1 July 2007. Adoption of these Standards and Interpretations did not have
any material effect on the financial position or the performance of the Group.
* AASB 101 (revised October 2006) Presentation of the financial statements
* AASB 7 Financial Instruments: Disclosures
* AASB 2005-10 Amendments of Australian Accounting Standards (AASB 132,
101, 114, 117, 133, 139, 1, 4, 1023 and 1038)
* AASB 2007-1 Amendments of Australian Accounting Standards arising from
the Interpretation 11 (AASB 2)
* AASB 2007-4 Amendments of Australian Accounting Standards arising from
ED 151 and Other Amendments
* AASB 2007-7 Amendments of Australian Accounting Standards (AASB 1, AASB
2, AASB 4, AASB 5, AASB 107 & AASB 128)
* Interpretation 10 Interim Financial Reporting Impairment
* Interpretation 11 AASB 2 - Group and Treasury Share Transactions
NOTE 2: SEGMENT INFORMATION
Primary reporting - Business segments
The economic entity only operates in the mining and exploration segment.
Primary reporting - Geographic segments
Segment Revenue Segment result
Half-year ended Half-year ended
31 December 31 December 31 December 31 December
2007 2006 2007 2006
$ $ $ $
Continuing operations
Australia 37,138 92,596 (797,374) (1,142,956)
Egypt 17,637 36 811,151 (835,891)
--------- -----------
Consolidated revenue 54,775 92,632
--------- ----------- ----------- -----------
Profit / (loss) before
income tax expense 13,777 (1,978,847)
Income tax expense - -
----------- -----------
Profit / (loss) for
the period 13,777 (1,978,847)
----------- -----------
NOTE 3: REVERSAL OF IMPAIRMENT LOSS
In the current period, the company has reversed impairment losses previously
recognised amounting to $2,116,696 in relation to the Abu Dabbab tantalite, tin
and feldspar project.
The main events and circumstances that led to the reversal of these impairment
losses are as follows:
* A 10 year off take agreement was signed with the German company HC
Starck GmbH for the supply of 600,000 pounds of tantalum per annum.
* Bankable Feasibility Study on the Abu Dabbab has been updated.
* Detailed negotiations with a major German Bank to secure the debt
portion of project finance have commenced. The bank is now undertaking its
due diligence process.
* Commencement of an in fill drilling program at Abu Dabbab to upgrade the
indicated resource to reserve category under the JORC code requirements.
The main class of asset affected by the reversal of the impairment loss is
Deferred Exploration Expenditure which at 31 December 2007, totals $2,465,091.
NOTE 4: CONTRIBUTED EQUITY
31 December 31 December 30 June 30 June
2007 2007 2007 2007
$ Number $ Number
Issued capital:
293,198,772
(June 2007:
259,524,592)
fully paid
ordinary shares 28,440,456 293,198,772 25,409,780 259,524,592
========== ============ ======== ========
Movement
Opening Balance
at 1July 2007 25,409,780 259,524,592
Shares issued
through the
exercise of
options during
the period 3,030,676 33,674,180
---------- ----------
Closing balance
at 31 December
2007 28,440,456 293,198,772
========== ==========
Options
No of Options
Opening balance
at 1July 2007 83,232,393
Less: Exercise
of options
during the
period (33,674,180)
Less: Options
expired at 31
December 2007 (24,558,213)
----------
Closing balance
at 31 December
2007 25,000,000
==========
As at 31 December 2007 the economic entity had the following options on issue:
(i) 25,000,000 unlisted options exercisable at 13.5 cents each by 26 May 2012.
NOTE 5: CONTINGENT LIABILITIES
There have been no changes in contingent liabilities since the last annual
reporting date.
NOTE 6: EVENTS SUBSEQUENT TO REPORTING DATE
Since 31 December 2007, the following events have arisen that have materially
affected the operations of the economic entity, the results of the economic
entity or the state of affairs of the economic entity.
* Gippsland Limited has issued 2 million options to each of the Company's
London based co-brokers, Seymour Pierce Limited and Fox-Davies Capital
Limited. These options are not listed and are non transferable, have an
exercise price of 7UK pence and an expiry of 15 December 2011.
* Gippsland Limited has issued 500,000 shares to an employee as part of
the employee's employment agreement. The shares will be held in escrow for
12 months ending 28 February 2009.
GIPPSLAND LIMITED ABN 31 004 766 376
and Controlled Entities
DIRECTORS' DECLARATION
The directors of Gippsland Limited declare that:
1. The financial statements and notes, as set out on pages 5 to 11:
a) comply with Accounting Standard AASB 134: Interim Financial Reporting
and the Corporations Regulations 2001; and
b) give a true and fair view of the consolidated entity's financial
position as at 31 December 2007 and of its performance for the half-year ended
on that date.
2. In the directors' opinion there are reasonable grounds to believe that
the economic entity will be able to pay its debts as and when they become due
and payable.
This declaration is made in accordance with a resolution of the Board of
Directors dated this 14th day of March 2008.
R.J. Telford
Chairman
GIPPSLAND LIMITED ABN 31 004 766 376
and Controlled Entities
Enquiries:
Jack Telford
Gippsland Limited
T: +61 (0)8 9340 6000
E: jtelford@gippslandltd.com
www.gippslandltd.com
David Newton, Director Corporate Finance Richard Hail, Head of Corporate Finance
Seymour Pierce Limited Fox-Davies Capital
T: +44 (0)20 7107 8000 T: +44 (0)20 7936 5200
E: davidnewton@seymourpierce.com E: richard.hail@fdcap.com
Jane Stacey / Ed Portman Warrick Hazeldine
Investor Relations Investor Relations
T: +44 (0)20 7429 6606 / 6607 T: +61 (0)8 9485 1254
E: jane@conduitpr.com M: +61 (0)417 944 616
E: ed@conduitpr.com E: whazeldine@purplecom.com.au
This information is provided by RNS
The company news service from the London Stock Exchange
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