TIDMRGM
RNS Number : 7779X
Regency Mines PLC
29 November 2017
Regency Mines Plc
("Regency Mines" or the "Company")
Final Audited Results for the Year Ended 30 June 2017
29 November 2017
A copy of the Company's annual report and financial statements
for 2017 - 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 29 December
2017.
Chairman's Review
Dear Shareholders,
Overview
The world looks quite different now from the way it looked a
year ago. Then we were looking back at a calendar year that had
seen the final sell-off of a commodity bear market and an ensuing
sharp recovery. Sentiment was still fragile, and many investors
were unsure whether the recovery would last or whether the Chinese
economy might suffer a slowdown or a financial crisis. Now, we have
the prospect of a broad-based recovery, with global growth rising
from 3% in 2016 to 3.6% in 2017 and 3.7% in 2018, global trade
accelerating, and inflation worldwide trending below expectations.
Encouraging aspects of this picture are the broadening of growth to
include most regions, with stable growth in China, a synchronised
recovery in Japan, Europe and Russia, and strong growth in Asian
and emerging European economies.
The oil price and those of other industrial commodities have
broadly advanced, although the current levels still seem modest
compared with those of the boom years.
Developments During 2016-2017
Regency began its 2016-17 financial year with a share price of
0.35 pence, and ended it 63% higher at 0.57 pence. It began the
year with a market value of GBP883,000 and ended it 272% higher at
GBP3,286,000. It began the year just holding on to its stake in its
Mambare nickel/cobalt project without being able to raise money for
or justify exploration in a still unfavourable price environment
for nickel. In a search for potential cash-flow generating
businesses it had acquired a 5% stake in UK onshore oil explorer
Horse Hill Developments Ltd, and made a GBP175,000 pre-IPO
investment in U.S. coal bed methane developer, Curzon Energy
plc.
During the year there was news flow in relation to Horse Hill,
and a small residual Australian investment was disposed of for
A$100,000. As coal prices rose and later in the year a new U.S.
President committed to allowing the coal industry to survive took
office, an investment was made in metallurgical coal projects in
the Appalachian belt of the United States. These US investments in
coal have taken longer to mature than hoped, however the
fundamental investment case for metallurgical coal remains a strong
one.
We ended the year with a clearer identity, holding coal, coal
bed methane and oil interests, where prices were rising, on the one
hand and our historic industrial metal interests in nickel and
cobalt interests, where we still had to wait for real price
recovery, on the other. We already knew that our Horse Hill
interest was non-core due to our lack of influence or control over
the asset's development, and that there was strong interest from
potential buyers, and we planned to and in fact invested these
proceeds in our hydrocarbon division, ultimately into Curzon
Energy.
Although we had a strong belief in the importance of our
lateritic nickel/cobalt deposit at Mambare in Papua New Guinea,
having drilled out a major Resource there at the beginning of the
decade, we had no idea when the nickel price would follow
manganese, coal and selected other commodities and show a
significant rise. We therefore were keeping expenditure on our
licences to a minimum. Nickel had been the first metal to see its
price rise on the China boom in the early 2000s, but had also been
the earliest to fall. The nickel price has often been volatile, and
has sometimes followed a different course from other metals. Two
thirds of use is in stainless steel, demand for which has grown at
about 6% p.a. historically and it appears to be reverting towards
this rate after several years of slower growth and oversupply.
Subsequent Developments
Since the end of our reporting year, which runs to 30 June 2017,
the nickel price has shown growing strength. Cobalt, which accounts
for a significant percentage of our potential revenues from any
development of Mambare, had already risen in price since the
beginning of 2016, and in the last few months this EV battery
cathode material has followed lithium, the main anode material, in
seeing increasing investor attention as analysts focus on the
demand impact of growing EV battery use as the electric car
industry accelerates. Some EV batteries use five times as much
nickel as cobalt in the cathodes, and projections of nickel demand
for this use mean that nickel, with only 2.25m tons of worldwide
primary production in 2016, will be the next metal market to be
significantly impacted by this new demand source.
These price rises however, though significant and possibly only
at an early stage, are not what interest us principally at Mambare.
What matters most for a huge Resource like ours, which is itself
derived from only the small part of the deposit target already
drilled, is that the growth in demand should be there. For it is
that which will ensure the willingness of investors, industry
partners, and banks to finance major new sources of supply such as
ours. Now that the focus has just begun to switch to nickel, our
cobalt/nickel deposit becomes once again, after several years, an
asset which we can advance and actively take steps to develop and
promote.
In July 2017, shortly after the year end we announced the sale
of 1.9% out of our 5% shareholding in Horse Hill Developments Ltd
("Horse Hill"). Of the GBP323,000 consideration, we took GBP268,502
in the form of listed shares which we were able to sell within two
months for aggregate proceeds of GBP1,297,700. In October 2017 we
agreed to sell the balance of 3.1% of Horse Hill for GBP630,000,
and we expect this transaction to complete shortly.
In September 2017 we paid down $350,000 of current liabilities
and added GBP400,000 to our existing GBP175,000 investment in coal
bed methane developer Curzon Energy plc as it listed its shares on
the London Stock Exchange. The initial reports regarding
operational progress on the existing wells at Curzon's assets in
Oregon is expected in the near term.
We continue to take steps to advance and rationalise our
interests and involvement in metallurgical coal in the U.S., where
prices remain attractive and where we expect to introduce further
developments, the first of which, recently announced, is the option
to buy out our partners at the Rosa Coal Mine in Alabama.
Discussion of the Results
Losses reported for the year to 30 June 2017 fell from
GBP1,965,722 to GBP534,267. This was the result primarily of a
reduction in impairments taken against exploration assets, where
the only impairment this year was an exploration tenement in
Queensland, but also reflected a reduction in other losses and in
administrative expenses and an increase in revenues.
The sales made since year end of Horse Hill Developments Ltd
shares lead us to expect a move back into profit in the current
year.
It was the knowledge that our available for sale financial
assets, which ended the year at GBP1,443,707, were reasonably
liquid, and the expectation that we would shortly sell part or all
of our Horse Hill holding to one buyer or another, that allowed us
to expand our current liabilities to considerably in excess of
current assets by restructuring and increasing our short term
liabilities through a $1m convertible loan in April, of which $750k
remains outstanding.
Total shareholders' equity rose by 41.8% from GBP3,694,838 to
GBP5,238,265. This largely resulted from equity fundraising during
the year. We began the year raising money at 0.4 pence per share,
but by May 2017 were raising new money at 0.9 pence a share. The
higher share price later in the year meant that the equity funding
total included some GBP310,000 from the exercise of warrants; a
clear demonstration of our investors looking to follow up on their
initial investments.
The Company's larger balance sheet, greater spread of assets and
higher market value, created over the course of the year the
critical mass needed to support a listing and ensure the long-term
viability of the business, while laying the foundation for
internally generated growth."
Prospects
The last few months, which are the first few months of the
current financial year, have seen the Company able to realise
profits from its portfolio of interests by the sale of interests in
Horse Hill, and as a result both strengthen its balance sheet and
increase its significant investment in Curzon Energy plc to 8.91%.
Gas prices and demand in the U.S. are likely to continue their
advance as a greener and less polluting form of energy as the
essential distribution infrastructure is installed and Curzon
operates in a regional market where gas has long sold at a premium
price. Further proceeds are expected from Horse Hill, and these
should enable the Company to increase its metallurgical coal
footprint as well as continue to pay down short term
borrowings.
The improvement in cobalt and nickel prices, and the developing
EV, home and industrial battery story, where the structure and
scale of demand for the different metals is becoming clearer, mean
that Regency finds itself now in an enviable position. It has
through difficult times held on to what is now a 50% interest in
one of the potentially major assets in a fast-moving area of the
mineral sector. This is a strength we can build on. We expect
interest in battery metals to increase,
and have announced the setting up of a separate division to
develop our interests in the technologies and services that will
serve the electric car and battery sectors more generally.
We look forward to an exciting year. With early profits banked
from Horse Hill sales, it looks to be a profitable one. We will
remain active in the development of our old energy, or hydrocarbon,
interests, and 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. This
offers us access to the investment and development opportunities
that will drive industry and metals demand for the foreseeable
future to the clear benefit of our stakeholders. As always, we
thank you for your support during the past year, we maintain our
sharp focus on the creation of meaningful value for our investors
and shareholders.
Andrew Bell
Chairman and CEO
27 November 2017
Results and Dividends
The Group made a loss after taxation of GBP534,267 (2016:
GBP1,965,722). 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 issue on 27 November 2017.
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 Ltd.
Consolidated statement of financial position
As at 30 June 2017
30 June 30 June
2017 2016
Notes GBP GBP
-------------------- ----- ------------ ------------
ASSETS
-------------------- ----- ------------ ------------
Non-current
assets
-------------------- ----- ------------ ------------
Property,
plant and
equipment 9 15,520 21,716
-------------------- ----- ------------ ------------
Investments
in associates
and joint
ventures 11 3,585,757 1,638,113
-------------------- ----- ------------ ------------
Available
for sale financial
assets 12 1,443,707 1,147,460
-------------------- ----- ------------ ------------
Exploration
assets 13 40,402 233,900
-------------------- ----- ------------ ------------
Trade and
other receivables 14 1,239,779 1,202,312
-------------------- ----- ------------ ------------
Total non-current
assets 6,325,165 4,243,501
-------------------- ----- ------------ ------------
Current assets
-------------------- ----- ------------ ------------
Cash and cash
equivalents 19 9,176 7,960
-------------------- ----- ------------ ------------
Trade and
other receivables 14 116,544 344,815
-------------------- ----- ------------ ------------
Total current
assets 125,720 352,775
-------------------- ----- ------------ ------------
Total assets 6,450,885 4,596,276
-------------------- ----- ------------ ------------
EQUITY AND
LIABILITIES
-------------------- ----- ------------ ------------
Equity attributable
to owners
of the Parent
-------------------- ----- ------------ ------------
Called up
share capital 18 1,904,933 1,872,523
-------------------- ----- ------------ ------------
Share premium
account 19,272,873 17,399,710
-------------------- ----- ------------ ------------
Other reserves 895,947 324,638
-------------------- ----- ------------ ------------
Retained earnings (16,795,589) (15,902,031)
-------------------- ----- ------------ ------------
Total equity 5,278,164 3,694,838
-------------------- ----- ------------ ------------
LIABILITIES
-------------------- ----- ------------ ------------
Current liabilities
-------------------- ----- ------------ ------------
Trade and
other payables 15 401,634 619,139
-------------------- ----- ------------ ------------
Short-term
borrowings 15 771,087 282,299
-------------------- ----- ------------ ------------
Total current
liabilities 1,172,721 901,438
-------------------- ----- ------------ ------------
Total equity
and liabilities 6,450,885 4,596,276
-------------------- ----- ------------ ------------
These financial statements were approved by the Board of
Directors and authorised for issue on 27 November 2017 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 year ended 30 June 2017
Year to Year to
30 June 30 June
2017 2016
Notes GBP GBP
--------------------------- ----- ------------ ------------
Revenue
--------------------------- ----- ------------ ------------
Management services 113,350 24,910
--------------------------- ----- ------------ ------------
Total revenue 113,350 24,910
--------------------------- ----- ------------ ------------
Gain/(loss) on
dilution of interest
in associate - 19,325
--------------------------- ----- ------------ ------------
Loss on sales of
investments - (86,735)
--------------------------- ----- ------------ ------------
Gain on sale of
tenements 55,183 (48,049)
--------------------------- ----- ------------ ------------
Impairment of
available for
sale financial
assets - (547,068)
--------------------------- ----- ------------ ------------
Exploration expenses (930) (611)
--------------------------- ----- ------------ ------------
Impairment of exploration
assets (229,262) (658,281)
--------------------------- ----- ------------ ------------
Administrative
expenses (net) (414,943) (594,733)
--------------------------- ----- ------------ ------------
Share of losses
of associates and
joint ventures
(net of tax) - (48,430)
--------------------------- ----- ------------ ------------
Finance costs,
net 4 (57,665) (26,050)
--------------------------- ----- ------------ ------------
Loss for the year
before taxation 3 (534,267) (1,965,722)
--------------------------- ----- ------------ ------------
Tax credit 5 - -
--------------------------- ----- ------------ ------------
Loss for the year
attributable to
owners of the Parent (534,267) (1,965,722)
--------------------------- ----- ------------ ------------
Loss per share
attributable to
owners of the Parent
--------------------------- ----- ------------ ------------
Loss per share
- basic 8 (0.13) pence (1.20) pence
--------------------------- ----- ------------ ------------
Loss per share
- diluted 8 (0.13) pence (1.20) pence
--------------------------- ----- ------------ ------------
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 comprehensive income
For the year ended 30 June 2017
30 June 30 June
2017 2016
GBP GBP
------------------------- --------- -----------
Loss for the year (534,267) (1,965,722)
------------------------- --------- -----------
Other comprehensive
income
------------------------- --------- -----------
Items that will
be reclassified
subsequently to
profit or loss
------------------------- --------- -----------
Surplus on revaluation
of available for
sale financial assets 110,242 184,297
------------------------- --------- -----------
Share of other
comprehensive income
of associates - 6,364
------------------------- --------- -----------
Unrealised foreign
currency gain 58,865 50,892
------------------------- --------- -----------
Other comprehensive
income for the
year 169,107 241,553
------------------------- --------- -----------
Total comprehensive
expense for the year
attributable to owners
of the Parent (365,160) (1,724,169)
------------------------- --------- -----------
The accompanying notes form an integral part of these financial
statements.
Consolidated statement of changes in equity
For the year ended 30 June 2017
The movements in equity 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
2015 1,815,326 16,700,261 (13,936,310) 60,140 4,639,417
-------------------- --------- ---------- ------------ --------- -----------
Changes
in equity
for 2016
-------------------- --------- ---------- ------------ --------- -----------
Loss for
the year - - (1,965,722) - (1,965,722)
-------------------- --------- ---------- ------------ --------- -----------
Other
comprehensive
income
for the
year - - - 241,553 241,553
-------------------- --------- ---------- ------------ --------- -----------
Transactions
with owners
-------------------- --------- ---------- ------------ --------- -----------
Issue
of shares 57,196 749,449 - - 806,645
-------------------- --------- ---------- ------------ --------- -----------
Share issue
and fundraising
costs - (50,000) - - (50,000)
-------------------- --------- ---------- ------------ --------- -----------
Share-based
payment transfer - - - 22,945 22,945
-------------------- --------- ---------- ------------ --------- -----------
Total transactions
with owners 57,196 699,449 - 22,945 779,590
-------------------- --------- ---------- ------------ --------- -----------
As at
30 June
2016 1,872,522 17,399,710 (15,902,032) 324,638 3,694,838
-------------------- --------- ---------- ------------ --------- -----------
Changes
in equity
for 2017
-------------------- --------- ---------- ------------ --------- -----------
Loss for
the year - - (534,267) - (534,267)
-------------------- --------- ---------- ------------ --------- -----------
Other comprehensive
income for
the year - - (359,290) 528,397 169,107
-------------------- --------- ---------- ------------ --------- -----------
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 (16,795,589) 895,947 5,278,164
-------------------- --------- ---------- ------------ --------- -----------
Available
for sale Foreign
financial Share-based Associate currency Total
asset payment investments translation other
reserve reserve reserve reserve reserves
GBP GBP GBP GBP GBP
--------------- ---------- ------------- ------------ ------------ ---------
As at
30 June
2015 82,707 - (416,803) 394,236 60,140
--------------- ---------- ------------- ------------ ------------ ---------
Changes
in equity
for 2016
--------------- ---------- ------------- ------------ ------------ ---------
Other
comprehensive
income
for the
year 184,297 - 6,364 50,892 241,553
--------------- ---------- ------------- ------------ ------------ ---------
Share-based
payment
transfer - 22,945 - - 22,945
--------------- ---------- ------------- ------------ ------------ ---------
As at
30 June
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
--------------- ---------- ------------- ------------ ------------ ---------
See note 16 for a description of each reserve included
above.
Consolidated statement of cash flows
For the year ended 30 June 2017
Year to Year to
30 June 30 June
2017 2016
GBP GBP
------------------------- ----------- -----------
Cash flows from
operating activities
------------------------- ----------- -----------
Loss before taxation (534,267) (1,965,722)
------------------------- ----------- -----------
Decrease/(increase)
in receivables 1,501 283,555
------------------------- ----------- -----------
Increase/(decrease)
in payables (217,503) 225,453
------------------------- ----------- -----------
Depreciation 6,197 7,453
------------------------- ----------- -----------
Impairment of
exploration properties 229,262 658,281
------------------------- ----------- -----------
Share-based payments 91,359 47,995
------------------------- ----------- -----------
Currency adjustments (49,679) (26,871)
------------------------- ----------- -----------
Finance cost,
net 57,665 26,050
------------------------- ----------- -----------
Share of losses
of associate - 48,430
------------------------- ----------- -----------
Loss on sale of
investments - 86,735
------------------------- ----------- -----------
Gain on sale of
tenements (55,183) 48,049
------------------------- ----------- -----------
Impairment of
available for
sale financial
assets - 547,068
------------------------- ----------- -----------
(Gain)/loss on
dilution of interest
in associate - (19,325)
------------------------- ----------- -----------
Net cash outflow
from operations (470,648) (32,849)
------------------------- ----------- -----------
Cash flows from
investing activities
------------------------- ----------- -----------
Interest received - 15,869
------------------------- ----------- -----------
Proceeds from
sale of investments - 124,158
------------------------- ----------- -----------
Proceeds from
sale of tenements 58,837 -
------------------------- ----------- -----------
Purchase of property,
plant and equipment - (20,343)
------------------------- ----------- -----------
Purchase of available
for sale financial
assets (75,000) (674,498)
------------------------- ----------- -----------
Payments for exploration
costs (594) (37,771)
------------------------- ----------- -----------
Payments for investments
in associates and
joint ventures (1,531,778) -
------------------------- ----------- -----------
Net cash outflow
from investing
activities (1,548,535) (592,585)
------------------------- ----------- -----------
Cash inflows from
financing activities
------------------------- ----------- -----------
Proceeds from
issue of shares 1,576,701 781,595
------------------------- ----------- -----------
Transaction costs
of issue of shares (45,090) (50,000)
------------------------- ----------- -----------
Interest paid (72,048) (41,919)
------------------------- ----------- -----------
Proceeds of new
borrowings 771,087 -
------------------------- ----------- -----------
Repayment of borrowings (210,251) (59,847)
------------------------- ----------- -----------
Net cash inflow
from financing
activities 2,020,399 629,829
------------------------- ----------- -----------
Net (decrease)/increase
in cash and cash
equivalents 1,216 4,395
------------------------- ----------- -----------
Cash and cash
equivalents at
beginning of period 7,960 3,565
------------------------- ----------- -----------
Cash and cash
equivalents at
end of period 9,176 7,960
------------------------- ----------- -----------
The accompanying notes and accounting policies form an integral
part of these financial statements.
Company statement of financial position
For the year ended 30 June 2017
30 June 30 June
2017 2016
Notes GBP GBP
-------------------- ----- ------------ ------------
ASSETS
-------------------- ----- ------------ ------------
Non-current
assets
-------------------- ----- ------------ ------------
Property,
plant and
equipment 9 15,520 21,716
-------------------- ----- ------------ ------------
Investments
in subsidiaries 10 482 482
-------------------- ----- ------------ ------------
Investments
in associates
and joint ventures 11 3,702,417 1,754,773
-------------------- ----- ------------ ------------
Available
for sale financial
assets 12 1,433,858 1,147,460
-------------------- ----- ------------ ------------
Exploration
assets 13 40,402 40,402
-------------------- ----- ------------ ------------
Trade and
other receivables 14 2,045,053 2,003,858
-------------------- ----- ------------ ------------
Total non-current
assets 7,237,732 4,968,691
-------------------- ----- ------------ ------------
Current assets
-------------------- ----- ------------ ------------
Cash and cash
equivalents 19 8,125 6,626
-------------------- ----- ------------ ------------
Trade and
other receivables 14 116,286 286,455
-------------------- ----- ------------ ------------
Total current
assets 124,411 293,081
-------------------- ----- ------------ ------------
Total assets 7,362,143 5,261,772
-------------------- ----- ------------ ------------
EQUITY AND
LIABILITIES
-------------------- ----- ------------ ------------
Called up
share capital 18 1,904,933 1,872,522
-------------------- ----- ------------ ------------
Share premium
account 19,272,873 17,399,710
-------------------- ----- ------------ ------------
Other reserves 496,514 240,772
-------------------- ----- ------------ ------------
Retained earnings (15,474,628) (15,148,556)
-------------------- ----- ------------ ------------
Total equity 6,199,692 4,364,448
-------------------- ----- ------------ ------------
LIABILITIES
-------------------- ----- ------------ ------------
Current liabilities
-------------------- ----- ------------ ------------
Trade and
other payables 15 391,364 615,025
-------------------- ----- ------------ ------------
Short-term
borrowings 15 771,087 282,299
-------------------- ----- ------------ ------------
Total current
liabilities 1,162,451 897,324
-------------------- ----- ------------ ------------
Total equity
and liabilities 7,362,143 5,261,772
-------------------- ----- ------------ ------------
These financial statements were approved by the Board of
Directors and authorised for issue on 27 November 2017 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 year ended 30 June 2017
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
2015 1,815,326 16,700,261 (13,267,690) 33,530 5,281,427
-------------------- --------- ---------- ------------ --------- -----------
Changes in
equity for
2016
-------------------- --------- ---------- ------------ --------- -----------
Loss for the
year - - (1,880,866) - (1,880,866)
-------------------- --------- ---------- ------------ --------- -----------
Other comprehensive
expense for
the year - - - 184,297 184,297
-------------------- --------- ---------- ------------ --------- -----------
Transactions
with owners
-------------------- --------- ---------- ------------ --------- -----------
Issue of shares 57,196 749,449 - - 806,645
-------------------- --------- ---------- ------------ --------- -----------
Share issue
and fundraising
costs - (50,000) - - (50,000)
-------------------- --------- ---------- ------------ --------- -----------
Share-based
payment transfer - - - 22,945 22,945
-------------------- --------- ---------- ------------ --------- -----------
Total transactions
with owners 57,196 699,449 - 22,945 779,590
-------------------- --------- ---------- ------------ --------- -----------
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
-------------------- --------- ---------- ------------ --------- -----------
Available
for sale
financial Share-based Total
asset payment Currency other
reserve reserve reserve reserves
GBP GBP GBP GBP
-------------------- ---------- ----------- -------- ---------
As at 30 June
2015 31,558 - 1,972 33,530
-------------------- ---------- ----------- -------- ---------
Changes in
equity for
2016
-------------------- ---------- ----------- -------- ---------
Other comprehensive
expense for
the year 184,297 - - 184,297
-------------------- ---------- ----------- -------- ---------
Share-based
payment transfer - 22,945 - 22,945
-------------------- ---------- ----------- -------- ---------
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
-------------------- ---------- ----------- -------- ---------
See note 16 for a description of each reserve included
above.
Company statement of cash flows
For the year ended 30 June 2017
Year to Year to
30 June 30 June
2017 2016
GBP GBP
------------------------- ----------- -----------
Cash flows from
operating activities
------------------------- ----------- -----------
Loss before taxation (326,072) (1,880,866)
------------------------- ----------- -----------
(Increase)/Decrease
in receivables 54,214 258,294
------------------------- ----------- -----------
(Decrease)/Increase
in payables (223,661) 231,509
------------------------- ----------- -----------
Depreciation 6,197 7,453
------------------------- ----------- -----------
Share-based payments 91,359 47,995
------------------------- ----------- -----------
Finance (income)/costs,
net (47,771) 26,050
------------------------- ----------- -----------
Currency loss 33,612 47,156
------------------------- ----------- -----------
Loss on sale of
investments - 18,474
------------------------- ----------- -----------
Impairment of
associate - 72,678
------------------------- ----------- -----------
Impairment of
available for
sale investment - 478,454
------------------------- ----------- -----------
Impairment of
exploration expenses - 658,281
------------------------- ----------- -----------
Net cash outflow
from operations (412,122) (34,522)
------------------------- ----------- -----------
Cash flows from
investing activities
------------------------- ----------- -----------
Interest received - 15,869
------------------------- ----------- -----------
Payments for exploration
costs - (36,299)
------------------------- ----------- -----------
Payments for investments
in associates
and joint ventures (1,531,778) -
------------------------- ----------- -----------
Purchase of property,
plant and equipment - (20,343)
------------------------- ----------- -----------
Purchase of available
for sale financial
assets (75,000) (674,498)
------------------------- ----------- -----------
Proceeds from
sale of investments - 124,158
------------------------- ----------- -----------
Net cash outflow
from investing
activities (1,606,778) (591,113)
------------------------- ----------- -----------
Cash inflows from
financing activities
------------------------- ----------- -----------
Proceeds from
issue of shares 1,576,701 781,595
------------------------- ----------- -----------
Transaction costs
of issue of shares (45,090) (50,000)
------------------------- ----------- -----------
Interest paid (72,048) (41,919)
------------------------- ----------- -----------
Proceeds of new
borrowings 771,087 -
------------------------- ----------- -----------
Repayments of
borrowings (210,251) (59,847)
------------------------- ----------- -----------
Net cash inflow
from financing
activities 2,020,399 629,829
------------------------- ----------- -----------
Net (decrease)/increase
in cash and cash
equivalents 1,499 4,194
------------------------- ----------- -----------
Cash and cash
equivalents at
beginning of period 6,626 2,432
------------------------- ----------- -----------
Cash and cash
equivalents at
end of period 8,125 6,626
------------------------- ----------- -----------
The accompanying notes and accounting policies form an integral
part of these financial statements.
Notes to financial statements
For the year ended 30 June 2017
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 2017 were
authorised for issue by the Board on 27 November 2017 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
GBP534,267 for the year ended 30 June 2017 (2016: loss of
GBP1,965,722), and had a net cash outflow of GBP2,019,183 (2016:
GBP625,434) from operating and investing activities. At that date
there was a net current liability of GBP1,047,001 (2016:
GBP548,663). The loss resulted mainly from the impairment of the
Group's exploration and available for sale assets totalling
GBP229,262 (2016: GBP1,205,349).
In August 2017 the Company disposed of 1.9% of its stake in
Horse Hill Developments 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 18 October 2017, Regency announced a conditional sale to dispose
of its remaining 3.1% interest in HHDL for GBP630,000, of which 50%
would be delivered in cash and 50% in shares of the buyer, Alba
Mineral Resources plc.
These two transactions together represent a material amount of
capital injected into the business and should provide adequate
funding at current operational rates well into 2018.
The Directors are confident in the Company's ability to raise
new finance from stock markets if this is required during 2018 and
the Group has demonstrated a consistent ability to do so. This
includes a share issuance of 318.9 million shares for total
consideration of GBP1.89 million since the 2016 financial
year-end.
The Group has also demonstrated the ability to raise debt
capital when required and on 5 April 2017 announced that it had
raised an unsecured US$1.0 million convertible loan note, bearing
interest of 12% and convertible into the Company's ordinary shares.
The loan is convertible into shares at either a fixed price of
GBP0.01155 or a variable price based on the volume weighted average
price of the five trading days prior to conversion.
Regency further owns liquid assets that it can sell in order to
fund operations, as demonstrated in the past year, with 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 following Curzon's IPO in September 2017 was approximately
GBP600k.
As the natural resource space continues to improve in the second
half of 2017 and beyond, the Directors feel strongly that the value
of Regency's project portfolio, from the Mambare Nickel Project in
Papua New Guinea, to Curzon Energy and its US coal assets, will
start to be more fully recognised in the share price and market
capitalisation of the business. With this positive move in the
markets and the associated developments in batteries and energy
storage technologies in particular, the Directors are confident in
their ability to access capital and fund the business adequately
for the next year.
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 GBP324,423 (2016:
GBP1,880,866). The Company's other comprehensive income for the
financial year was GBP110,242 (2016: GBP184,297).
Amendments to published standards effective for the year ended
30 June 2017.
New standards, amendments and interpretations effective for the
periods from 1 January 2016
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:
-- Annual Improvements to IFRSs (2012-2014 cycle): IAS 19
Employee Benefits, IFRS 5 Non-Current Assets Held for Sale and
Discontinued Operations, IFRS 7 Financial Instruments:
Disclosures;
-- Amendments to IFRS 10 Consolidated Financial Statements, IFRS
12 Disclosure of Interest in Other Entities and IAS 28 Investments
in Associates and Joint Venture (2011);
-- Amendments to IFRS 11 Joint Arrangements in relation to
accounting for acquisition of interests in joint operations.
There were no new standards or interpretations effective for the
first time for accounting periods beginning on or after 1 July 2016
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:
-- IFRS 9 Financial Instruments, effective for accounting
periods beginning on or after 1 January 2018;
-- IFRS 15 Revenue from Contracts with Customers, effective for
accounting periods beginning on or after 1 January 2017;
-- Amendments to IAS 12 Deferred Tax relating to recognition of
deferred tax assets for unrealised losses, effective for accounting
periods beginning on or after 1 January 2017 (not yet endorsed in
the EU);
-- Amendments to IAS 7 Financial Instruments: Disclosures,
effective for accounting periods beginning on or after 1 January
2017 (not yet endorsed in the EU);
-- Annual Improvements to IFRSs (2014-2016 cycle), Amendments to
IFRS 12, effective for accounting periods beginning on or after 1
January 2017 (not yet endorsed in the EU).
The effects of IFRS 15 Revenues from Contracts with Customers
and IFRS 9 Financial Instruments are still being assessed, but it
is not expected that these new standards and the amendments
mentioned above will have a significant effect on the Group or
Company's future financial statements.
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.
Subsidiaries continued
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.
For the years ended 30 June 2017, the consolidated financial
statements combine those of the Company with its subsidiary,
Regency Mines Australasia Pty Limited and Regency Resources
Inc.
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
The Group has a contractual arrangement with Direct Nickel Pty
Ltd which represents a joint venture established through an
interest in a jointly controlled entity, Oro Nickel Limited in
order to develop and exploit the Mambare nickel project. The Group
also has a contractual arrangement with Carbon Minerals
Corporation, a Delaware company which has entered into an agreement
to acquire and develop the Rosa metallurgical coal mine. The Group
has a further contractual agreement with Vali Carbon Corporation, a
Delaware based company set up to pursue metallurgical coal
investments in the Appalachian region of the United States.
Further, the Company has signed a memorandum of agreement with Mr
Stephen Moscicki to conduct due diligence over a metallurgical coal
property of 6,500 acres in north-eastern Alabama.
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.
1.4.2 Interests in joint ventures continued
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.
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.
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.
1.4.8 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 a transfer is made 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 be 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 case 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.
Restricted cash
Cash which is restricted from being exchanged or used to settle
a liability for at least 12 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 costs of such disposed off
investments are 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 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.
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:
Recognition of holdings less than 20% as an associate
The Directors have classified, as an associate, an equity
investment where 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.
Significant influence is presumed when the Company holds greater
than 20% of the voting power of the investee, unless it can be
clearly demonstrated that this is not the case. Conversely, if the
Company holds less than 20% of the voting power of an investee, it
is presumed that the Company does not have significant influence,
unless such influence can be clearly demonstrated.
The Company owns 1.91% (2016: 2.32%) of the issued share capital
of Red Rock Resources plc. Andrew Bell, Chairman and Chief
Executive Officer of the Company, is also a member of the Board and
the Executive Chairman of Red Rock Resources plc. In accordance
with IAS 28, the Directors of the Company consider this to provide
the Group with significant influence as defined by the standard. As
such, it continued to recognise Red Rock Resources plc as an
associate for the year ended 30 June 2016 despite its shareholding
being below 20%. The effect of recognising Red Rock Resources as an
available for sale financial asset in the year ended 30 June 2016
would be to decrease the loss by GBP9,878 and decrease other
comprehensive income by GBP6,364.
As of 1 July 2017, due to dilution of the percentage of
shareholding it was decided that Red Rock Resources should be
accounted as an available for sale financial asset. Details of such
transfer are disclosed in note 12.
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.
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, no impairment (2016:
GBP547,068) 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;
-- the market value of the Group's listed investments.
At 30 June 2017 the Group had cash and cash equivalents of
GBP9,176 (2016: GBP7,960).
The market value of the most significant of the Group's listed
investments, Red Rock Resources plc, at 30 June 2017 was
GBP70,407
(2016: GBP40,881).
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.
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.
Investment
in
Red
Rock Corporate
Resources Other Australian and
Year to 30 June plc investments exploration unallocated Total
2017 GBP GBP GBP GBP GBP
------------------------ ---------- ------------ ------------ ------------ ---------
Revenue
------------------------ ---------- ------------ ------------ ------------ ---------
Management services - - - 113,350 113,350
------------------------ ---------- ------------ ------------ ------------ ---------
- - - 113,350 113,350
------------------------ ---------- ------------ ------------ ------------ ---------
Gain on dilution
of interest
in associate - - - - -
------------------------ ---------- ------------ ------------ ------------ ---------
Gain on sale
of tenements - - 55,183 - 55,183
------------------------ ---------- ------------ ------------ ------------ ---------
Gain/(loss)
on sale of investments - - - - -
------------------------ ---------- ------------ ------------ ------------ ---------
Exploration
expenses - - (930) - (930)
------------------------ ---------- ------------ ------------ ------------ ---------
Administrative
expenses* - - (278) (464,343) (464,621)
------------------------ ---------- ------------ ------------ ------------ ---------
Currency (loss)/gain - - 83,290 (33,612) 49,678
------------------------ ---------- ------------ ------------ ------------ ---------
Share of profits
in associates - - - - -
------------------------ ---------- ------------ ------------ ------------ ---------
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)
------------------------ ---------- ------------ ------------ ------------ ---------
Investment
in
Red
Rock Corporate
Resources Other Australian and
Year to 30 plc investments exploration unallocated Total
June 2016 GBP GBP GBP GBP GBP
---------------------- ---------- ------------ ------------ ------------ -----------
Revenue
---------------------- ---------- ------------ ------------ ------------ -----------
Management
services - - - 24,910 24,910
---------------------- ---------- ------------ ------------ ------------ -----------
- - - 24,910 24,910
---------------------- ---------- ------------ ------------ ------------ -----------
Gain on dilution
of interest
in associate 19,325 - - - 19,325
---------------------- ---------- ------------ ------------ ------------ -----------
Gain on sale
of tenements - - (48,049) - (48,049)
---------------------- ---------- ------------ ------------ ------------ -----------
Gain/(loss)
on sale of
investments - 17,880 (104,616) - (86,736)
---------------------- ---------- ------------ ------------ ------------ -----------
Exploration
expenses - (658,281) (611) - (658,892)
---------------------- ---------- ------------ ------------ ------------ -----------
Administrative
expenses* - - 84,526 (679,257) (594,732)
---------------------- ---------- ------------ ------------ ------------ -----------
Share of profits
in associates (48,430) - - - (48,430)
---------------------- ---------- ------------ ------------ ------------ -----------
Impairment
of available
for sale investments - (547,067) - - (547,067)
---------------------- ---------- ------------ ------------ ------------ -----------
Finance cost
- net - - - (26,050) (26,050)
---------------------- ---------- ------------ ------------ ------------ -----------
Net (loss)
before tax
from continuing
operations (29,105) (1,187,468) (68,750) (680,397) (1,965,722)
---------------------- ---------- ------------ ------------ ------------ -----------
* Included in administrative expenses is depreciation charge of
GBP6,197 (2016: GBP7,453) 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.
Year to Papua
30 June UK Australia New Guinea Other Total
2017 GBP GBP GBP GBP GBP
-------------------- ---------- --------- ----------- -------- ----------
Revenue
-------------------- ---------- --------- ----------- -------- ----------
Management
services 113,350 - - - 113,350
-------------------- ---------- --------- ----------- -------- ----------
Gain on
sale of
tenements - 55,183 - - 55,183
-------------------- ---------- --------- ----------- -------- ----------
Loss on
sale of
investments - - - - -
-------------------- ---------- --------- ----------- -------- ----------
Total
segment
revenue 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
-------------------- ---------- --------- ----------- -------- ----------
Papua
Year to 30 June UK Australia New Guinea Other Total
2016 GBP GBP GBP GBP GBP
-------------------- -------- --------- ----------- ------- ----------
Revenue
-------------------- -------- --------- ----------- ------- ----------
Management
services 24,910 - - - 24,910
-------------------- -------- --------- ----------- ------- ----------
Gain on sale
of tenements - (48,049) - - (48,049)
-------------------- -------- --------- ----------- ------- ----------
Loss on sale
of investments - (74,526) - - (74,526)
-------------------- -------- --------- ----------- ------- ----------
Total segment
revenue 24,910 (122,575 - - (97,665)
-------------------- -------- --------- ----------- ------- ----------
Non-current
assets
-------------------- -------- --------- ----------- ------- ----------
Investments
in associates
and joint ventures 15,811 - 1,622,302 - 1,638,113
-------------------- -------- --------- ----------- ------- ----------
Property, plant
and equipment 21,717 - - - 21,717
-------------------- -------- --------- ----------- ------- ----------
Available for
sale financial
assets 932,085 215,375 - - 1,147,460
-------------------- -------- --------- ----------- ------- ----------
Exploration
assets - 175,527 - 58,375 233,901
-------------------- -------- --------- ----------- ------- ----------
Total segment
non-current
assets 969,613 390,902 1,622,302 58,375 3,041,191
-------------------- -------- --------- ----------- ------- ----------
3. Loss on ordinary activities before taxation
2017 2016
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 16,000 15,000
----------------------------------------- ------- -------
fees payable to subsidiary
auditors for the audit of subsidiary
financial statements - 2,294
----------------------------------------- ------- -------
Depreciation 6,197 7,453
----------------------------------------- ------- -------
Directors' emoluments (note
7) 257,967 214,955
----------------------------------------- ------- -------
Share-based payments - Directors 87,340 39,392
----------------------------------------- ------- -------
Share-based payments - staff 4,019 8,603
----------------------------------------- ------- -------
As declared in note 7, Directors are remunerated in part by
third parties with whom the Company and Group have
contractual arrangements.
4. Finance costs, net
2017 2016
GBP GBP
----------------- -------- --------
Interest expense (57,665) (41,919)
----------------- -------- --------
Interest income - 15,869
----------------- -------- --------
(57,665) (26,050)
----------------- -------- --------
5. Taxation
2017 2016
GBP GBP
--------------------------------- --------- -----------
Current period taxation
of the Group
--------------------------------- --------- -----------
UK corporation tax at 20.00%
(2016: 20.00%) 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 (534,267) (1,965,722)
--------------------------------- --------- -----------
Loss on ordinary activities
at the average UK standard
rate of 19.75% (2016: 20.00%) (105,518) (393,144)
--------------------------------- --------- -----------
Impact of subsidiaries and
associates - 5,943
--------------------------------- --------- -----------
Effect of non-deductible
expense 45,279 241,070
--------------------------------- --------- -----------
Effect of tax benefit of
losses carried forward 60,239 146,131
--------------------------------- --------- -----------
Current tax (credit) - -
--------------------------------- --------- -----------
Finance Act 2013 set the main rate of corporation tax at 20%
from 1 April 2016 and at 19% from 1 April 2017.
6. Staff costs
The aggregate employment costs of staff (including Directors)
for the year was:
2017 2016
GBP GBP
--------------------- ------- -------
Wages and salaries 163,900 211,646
--------------------- ------- -------
Severance costs - 14,679
--------------------- ------- -------
Pension 10,201 12,704
--------------------- ------- -------
Social security
costs 15,189 17,953
--------------------- ------- -------
Employee share-based
payment charge 91,359 47,995
--------------------- ------- -------
Total staff costs 280,649 304,977
--------------------- ------- -------
The average number of Group employees (including Directors)
during the year was:
2017 2016
Number Number
--------------- ------- -------
Executives 3 3
--------------- ------- -------
Administration 1 1
--------------- ------- -------
Exploration - -
--------------- ------- -------
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 (2016: GBP34,151) 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.
7. Directors' emoluments
Share Share-based Social
Directors' Consultancy Incentive payments Pension security
fees fees Plan (options) contributions costs Total
2017 GBP GBP 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
-------------- ---------- ----------- ---------- ----------- --------------- --------- -------
Share-based Social
Directors' Consultancy Share-based payments Pension security
fees fees payments (options) contributions costs Total
2016 GBP GBP GBP GBP GBP GBP GBP
-------------- ---------- ----------- ----------- ----------- --------------- --------- -------
Executive
Directors
-------------- ---------- ----------- ----------- ----------- --------------- --------- -------
A R M Bell 48,000 15,000 7,200 9,433 3,485 3,156 86,274
-------------- ---------- ----------- ----------- ----------- --------------- --------- -------
S Kaintz 65,000 - 7,200 9,433 3,284 6,468 91,385
-------------- ---------- ----------- ----------- ----------- --------------- --------- -------
Non-executive
Directors
-------------- ---------- ----------- ----------- ----------- --------------- --------- -------
E Bugnosen 18,000 - 7,050 1,785 934 1,006 28,775
-------------- ---------- ----------- ----------- ----------- --------------- --------- -------
J M E Lee
(resigned
30 Sept
16) 4,500 - - - - (156) 4,344
-------------- ---------- ----------- ----------- ----------- --------------- --------- -------
J Watkins
(resigned
15 Sept
16) 4,500 - - - - (322) 4,178
-------------- ---------- ----------- ----------- ----------- --------------- --------- -------
140,000 15,000 21,450 20,651 7,703 10,152 214,956
-------------- ---------- ----------- ----------- ----------- --------------- --------- -------
The number of Directors who exercised share options in the year
was nil (2016: nil).
During the year, the Company contributed to a Share Incentive
Plan more fully described in the Directors' Report. 1,371,428 free
shares (2016: 2,850,416 free shares) were issued to each employee,
including Directors, making a total of 3,870,248 (2016: 5,356,296)
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.
8. Loss per share
The basic 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 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.
The following reflects the loss and share data used in the basic
and diluted loss per share computations:
2017 2016
---------------------------------------------------------------------------------------- ------------ --------------
Loss attributable to equity holders of the Parent GBP(534,267) GBP(1,965,722)
---------------------------------------------------------------------------------------- ------------ --------------
Weighted average number of ordinary shares of GBP0.0001 (2016: GBP0.001) in issue 398,184,727 163,621,119
---------------------------------------------------------------------------------------- ------------ --------------
(0.13) (1.20)
Loss per share - basic pence pence
---------------------------------------------------------------------------------------- ------------ --------------
Weighted average number of ordinary shares of GBP0.0001 (2016: GBP0.001) in issue
inclusive
of dilutive outstanding options 398,184,727 163,621,119
---------------------------------------------------------------------------------------- ------------ --------------
(0.13) (1.20)
Loss per share - fully diluted pence pence
---------------------------------------------------------------------------------------- ------------ --------------
The weighted average number of shares issued for the purposes of
calculating diluted earnings per share reconciles to the number
used to calculate basic earnings per share as follows:
2017 2016
GBP GBP
-------------------- ----------- -----------
Loss per share
denominator 398,184,727 163,621,119
-------------------- ----------- -----------
Weighted average
number of dilutive
share options - -
-------------------- ----------- -----------
Diluted loss per
share denominator 398,184,727 163,621,119
-------------------- ----------- -----------
In accordance with IAS 33, the diluted EPS is calculated by
adjusting the earnings and number of shares for the effects of
dilutive options and other dilutive potential ordinary shares. The
effects of all the instruments in issue by the Group at 30 June
2017 are anti-dilutive (2016: all anti-dilutive) and all
anti-dilutive potential ordinary shares are ignored in calculating
diluted EPS. The details of all anti-dilutive warrants and options
in issue are disclosed in note 17 and note 18 respectively.
9. Property, plant and equipment
Office furniture
Leasehold and
Group and improvements equipment Total
Company GBP GBP GBP
------------------ -------------- ---------------- ---------
Cost
------------------ -------------- ---------------- ---------
At 1 July
2015 14,822 124,370 139,192
------------------ -------------- ---------------- ---------
Additions 18,000 2,342 20,342
------------------ -------------- ---------------- ---------
Disposals - - -
------------------ -------------- ---------------- ---------
Currency exchange - - -
------------------ -------------- ---------------- ---------
At 30 June
2016 32,822 126,712 159,534
------------------ -------------- ---------------- ---------
Additions - - -
------------------ -------------- ---------------- ---------
At 30 June
2017 32,822 126,712 159,534
------------------ -------------- ---------------- ---------
Depreciation
------------------ -------------- ---------------- ---------
At 1 July
2015 (14,822) (115,542) (130,364)
------------------ -------------- ---------------- ---------
Charge (600) (6,853) (7,453)
------------------ -------------- ---------------- ---------
Currency exchange - - -
------------------ -------------- ---------------- ---------
At 30 June
2016 (15,422) (122,395) (137,817)
------------------ -------------- ---------------- ---------
Charge (3,900) (2,297) (6,197)
------------------ -------------- ---------------- ---------
At 30 June
2017 (19,322) (124,692) (144,014)
------------------ -------------- ---------------- ---------
Net book value
------------------ -------------- ---------------- ---------
At 30 June
2017 13,500 2,020 15,520
------------------ -------------- ---------------- ---------
At 30 June
2016 17,400 4,317 21,717
------------------ -------------- ---------------- ---------
10. Investments in subsidiaries
Company GBP
------------------------- ---
Cost
------------------------- ---
At 30 June 2017 and 2016 482
------------------------- ---
Impairment
------------------------- ---
At 30 June 2017 and 2016 -
------------------------- ---
Net carrying value
------------------------- ---
Net book amount at 30
June 2017 and 2016 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:
Country Proportion
of held by Nature of
Company registration Class Group business
------------- --------------- ---------- ------------ --------------
Regency Mines
Australasia Mineral
Pty Limited Australia Ordinary 100% exploration
--------------- --------------- ---------- ------------ ------------
Regency
Resources Natural
Inc USA Ordinary 100% resources
------------- --------------- ---------- ------------ --------------
11. Investments in associates and joint ventures
Group Company
Carrying balance GBP GBP
----------------------- --------- ---------
At 30 June 2015 1,660,854 1,827,454
----------------------- --------- ---------
Additions - -
----------------------- --------- ---------
Impairment - (72,678)
----------------------- --------- ---------
Loss on dilution
of interest 19,325 -
----------------------- --------- ---------
Share of total
comprehensive
loss for the year (42,066) -
----------------------- --------- ---------
At 30 June 2016 1,638,113 1,754,776
----------------------- --------- ---------
Additions 1,928,134 1,928,131
----------------------- --------- ---------
Impairment - -
----------------------- --------- ---------
Transferred to
available for
sale investments (40,881) (40,881)
----------------------- --------- ---------
Gain on re-translation
from functional into
Group presentation
currency 60,391 60,391
----------------------- --------- ---------
Net book amount
at 30 June 2017 3,585,757 3,702,417
----------------------- --------- ---------
The Parent Company of the Group, as at 30 June 2017, 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:
Country Proportion
of held by Accounting
Name registration Class Group year end
--------------- --------------- ---------- ---------- ---------------- -------------
Direct
--------------- --------------- ---------- ---------- ---------------- -------------
Carbon Minerals 31 December
Corporation* USA Ordinary 20% 2017
--------------- --------------- ---------- ------------ --------------
Vali Carbon 31 December
Corporation* USA Ordinary 20% 2017
--------------- --------------- -------------------- -------------- -------------
Oro Nickel Papua
Limited* New Guinea Ordinary 50% 30 June 2017
--------------- --------------- ---------- ------------ --------------
*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.
The Parent Company of the Group, as at 30 June 2016, 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:
Country Proportion Proportion
of held by held by Accounting
Name registration Class Group 2017 Group 2016 year end
----------- -------------- --------- ----------- ----------- ----------
Direct
----------- -------------- --------- ----------- ----------- ----------
Red Rock
Resources England 30 June
plc and Wales Ordinary 1.91% 2.32% 2017
----------- -------------- --------- ----------- ----------- ----------
Oro Nickel Papua 30 June
Limited New Guinea Ordinary 50.00% 50.00% 2017
----------- -------------- --------- ----------- ----------- ----------
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. The market value of shares at the date of transfer
was GBP40,881.
Summarised financial information for the Company's associates
and joint ventures, where available, as at 30 June 2017 is given
below:
For the year
ended 30 As at 30 June
June 2017 2017
-------------------- ------------------------------ -------------------------
Total comprehensive
Revenue Loss expense Assets Liabilities
Name GBP GBP GBP GBP GBP
----------- ------- --------- ------------------- ---------- -----------
Red Rock
Resources
plc - (283,280) (106,089) 10,538,727 (1,911,492)
----------- ------- --------- ------------------- ---------- -----------
12. Available for sale financial assets
Group Company
GBP GBP
------------------- --------- ---------
Carrying value
------------------- --------- ---------
At 30 June 2015 995,011 909,749
------------------- --------- ---------
Additions during
the year 674,498 674,498
------------------- --------- ---------
Disposals during
the year (227,894) (142,632)
------------------- --------- ---------
Impairments during
the year (478,452) (478,452)
------------------- --------- ---------
Revaluation 184,297 184,297
------------------- --------- ---------
Value at 30 June
2016 1,147,460 1,147,460
------------------- --------- ---------
Additions during
the year 145,127 135,278
------------------- --------- ---------
Transfer from
investment in
associates (note
11) 40,881 40,881
------------------- --------- ---------
Revaluation 110,239 110,239
------------------- --------- ---------
Value at 30 June
2017 1,443,707 1,433,858
------------------- --------- ---------
The value of the Company's investment in Horse Hill Developments
Ltd ("HHDL") has been increased during the year based on
transactions that occurred in shares of the entity during the year.
However, it is important to note that shares in HHDL remain
unlisted and thus valuations are based on a relatively small number
of transactions between arm's length buyers. See note 20 for
additional details of listed and unlisted AFS assets.
13. Exploration assets
Group Company
-------------------------- -----------
2017 2016 2017 2016
GBP GBP GBP GBP
-------------- ----------- ----------- ----------- -----------
Cost
-------------- ----------- ----------- ----------- -----------
At 30 June 2,785,118 2,540,744 1,050,372 1,014,073
-------------- ----------- ----------- ----------- -----------
Additions
during the
year 594 37,771 - 36,299
-------------- ----------- ----------- ----------- -----------
Disposals
in the year (2,321) - - -
-------------- ----------- ----------- ----------- -----------
Exchange
gains 111,446 206,603 - -
-------------- ----------- ----------- ----------- -----------
At 30 June 2,894,837 2,785,118 1,050,372 1,050,372
-------------- ----------- ----------- ----------- -----------
Impairment
-------------- ----------- ----------- ----------- -----------
At 30 June (2,551,218) (1,711,593) (1,009,970) (351,689)
-------------- ----------- ----------- ----------- -----------
Impairments
recognised
in the year (229,262) (658,281) - (658,281)
-------------- ----------- ----------- ----------- -----------
Disposals
in the year - - - -
-------------- ----------- ----------- ----------- -----------
Exchange
gains (73,955) (181,344) - -
-------------- ----------- ----------- ----------- -----------
At 30 June (2,854,435) (2,551,218) (1,009,970) (1,009,970)
-------------- ----------- ----------- ----------- -----------
Net book
value
-------------- ----------- ----------- ----------- -----------
At 30 June
2017 40,402 233,900 40,402 40,402
-------------- ----------- ----------- ----------- -----------
At 30 June
2016 233,900 829,151 40,402 40,402
-------------- ----------- ----------- ----------- -----------
14. Trade and other receivables
Group Company
-------------------- --------- ---------
2017 2016 2017 2016
GBP GBP GBP GBP
-------------------- --------- --------- --------- ---------
Non-current
-------------------- --------- --------- --------- ---------
Amounts
owed by
Group undertakings - - 805,274 801,546
-------------------- --------- --------- --------- ---------
Amounts
owed by
related
parties
-------------------- --------- --------- --------- ---------
due from
associates
and joint
ventures 1,239,779 1,202,312 1,239,779 1,202,312
-------------------- --------- --------- --------- ---------
Total 1,239,779 1,202,312 2,045,053 2,003,858
-------------------- --------- --------- --------- ---------
Current
-------------------- --------- --------- --------- ---------
Sundry
debtors 66,170 222,617 65,912 164,257
-------------------- --------- --------- --------- ---------
Prepayments 44,111 35,232 44,111 35,232
-------------------- --------- --------- --------- ---------
Amounts
owed by
related
parties
-------------------- --------- --------- --------- ---------
due from
associates
and joint
ventures - 86,966 - 86,966
-------------------- --------- --------- --------- ---------
due from
key management 6,263 - 6,263 -
-------------------- --------- --------- --------- ---------
Total 116,544 344,815 116,286 286,455
-------------------- --------- --------- --------- ---------
15. Trade and other payables
Group Company
------------------------- --------- ------------------ ---------
2017 2016 2017 2016
GBP GBP GBP GBP
------------------------- --------- ------- --------- -------
Trade and other payables 330,179 387,467 319,907 383,353
------------------------- --------- ------- --------- -------
Accruals 71,455 221,663 71,457 221,663
------------------------- --------- ------- --------- -------
Amounts due to related
parties:
------------------------- --------- ------- --------- -------
due to associates - - - -
------------------------- --------- ------- --------- -------
due to key management - 10,009 - 10,009
------------------------- --------- ------- --------- -------
Trade and other payables 401,634 619,139 391,364 615,025
------------------------- --------- ------- --------- -------
Short-term borrowings 771,087 282,299 771,087 282,299
------------------------- --------- ------- --------- -------
Total 1,172,721 901,438 1,162,451 897,324
------------------------- --------- ------- --------- -------
Trade and other payables include a balance of GBP118,015 (2016:
nil) owing to Red Rock Resources Plc, a related party entity as a
result of same directorship.
YA II PN Limited
A short-term loan of GBP771,087 (2016: nil) was provided by YA
II PN Limited. Interest on the balance of this loan is charged at a
rate of 12% per annum. Repayments are made either in cash or by
issue of shares in the Company in line with the terms of the
agreement.
16. 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 investment 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.
17. Share capital of the Company
The share capital of the Company is as follows:
2017 2016
Issued and fully paid GBP GBP
------------------------------- --------------- ---------
124,871,749 ordinary shares
of GBP0.01 each 12,487 12,487
------------------------------- --------------- ---------
1,788,918,926 deferred shares
of GBP0.09 each 1,610,027 1,610,027
------------------------------- --------------- ---------
2,497,434,980 A deferred
shares of GBP0.0095 each 237,256 237,256
------------------------------- --------------- ---------
127,512,822 ordinary shares
of GBP0.01 each 12,752 12,752
------------------------------- --------------- ---------
324,106,493 ordinary shares
pf GBP0.01 each 32,411 -
------------------------------- --------------- ---------
As at 30 June 1,904,933 1,872,522
------------------------------- --------------- ---------
Nominal
Movement in share capital Number GBP
------------------------------- --------------- ---------
Ordinary shares of GBP0.001
each
------------------------------- --------------- ---------
As at 30 June 2015 2,052,990,373 1,815,326
------------------------------- --------------- ---------
Issued 20 August 2015 at
0.00045 pence per share 444,444,600 44,444
------------------------------- --------------- ---------
As at 23 December 2015,
pre-share re-organisation 2,497,434,973 1,859,770
------------------------------- --------------- ---------
23 December 2015, share
re-organisation (see below)
------------------------------- --------------- ---------
Issue of deferred shares
of GBP0.0095 each (2,497,434,973) (237,256)
------------------------------- --------------- ---------
Issue of new ordinary shares
of GBP0.0005 each (2,497,434,973) (12,487)
------------------------------- --------------- ---------
Share consolidation: 1 new
ordinary share of GBP0.01
for 20 ordinary shares of
GBP0.0005 124,871,749 249,743
------------------------------- --------------- ---------
Issued 06 January 2016 at
GBP0.000525 per share 2,285,712 229
------------------------------- --------------- ---------
Issued 22 February 2016
at GBP0.00325 per share 54,236,919 5,424
------------------------------- --------------- ---------
Issued 10 March 2016 at
GBP0.006 per share 66,666,667 6,667
------------------------------- --------------- ---------
Issued 01 April 2016 at
GBP0.00425 per share 4,323,524 432
------------------------------- --------------- ---------
As at 30 June 2016 - ordinary
shares of GBP0.01 each 252,384,571 1,872,522
------------------------------- --------------- ---------
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 GBP0.01 each 576,491,064 1,904,933
------------------------------- --------------- ---------
Change in nominal value/share re-organisation
The nominal value of shares in the Company was originally 0.1
pence. At a shareholders' meeting on 23 December 2015, the
Company's shareholders approved a re-organisation of the Company's
shares which resulted in the creation of three classes of shares,
being:
-- Ordinary shares with a nominal value of 0.01 pence, which
will continue as 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.
At 30 June 2017, the Company had 236,685,670 warrants in issue
(2016: 11,111,111) with exercise price ranging GBP0.0039-GBP0.018
(2016: GBP0.01-GBP0.013). All the warrants are issued by the Group
to its shareholders in the capacity of shareholders and therefore
are outside of IFRS 2 scope. Details on warrant issues during the
year are disclosed in note 21.
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.
18. 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 2017, the Company had outstanding options to
subscribe for ordinary shares as follows:
Options issued Options issued
14 June 2016 9 September
exercisable 2016 exercisable
at 0.45 pence at 0.8p per
per share share,
expiring expiring
29 January on 9 September
2022 2022 Total
Number Number 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
----------- -------------- ----------------- ----------
2017 2016
------------------ --------------------- -------------------------
Weighted Weighted
Number average average
of exercise Number of exercise
Company and options price options price
Group Number Pence Number Pence
------------------ ---------- --------- ------------ ---------
Outstanding
at the beginning
of the period 7,060,000 0.45 13,200,000 3.00
------------------ ---------- --------- ------------ ---------
Granted during
the year 20,000,000 0.80 7,060,000 0.45
------------------ ---------- --------- ------------ ---------
Cancelled
during the
year - - (13,200,000) 3.00
------------------ ---------- --------- ------------ ---------
Outstanding
at the end
of the period 27,060,000 0.71 7,060,000 0.45
------------------ ---------- --------- ------------ ---------
During the financial year 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; the first tranche vested
immediately and the other three tranches had time and market
performance vesting conditions (2016: 7,060,000 options at an
exercise price of 0.45 pence, expiring on 29 January 2022, granted
in four tranches; the first vested immediately and the other three
had time and market vesting conditions).
The weighted average fair value of each option granted during
the year was 0.244 pence (2016: 0.169 pence).
The exercise price of options outstanding at 30 June 2017 ranged
between 0.45p and 0.8p (2016: 0.45p). Their weighted average
contractual life was 5.014 years (2016: 5.63 years).
Of the total number of options outstanding at 30 June 2017,
15,330,000 (2016: 1,800,000) had vested and were exercisable.
The weighted average share price (at the date of exercise) of
options exercised during the year was nil (2016: nil) as no options
were exercised.
The following information is relevant in the determination of
the fair value of options granted during the year under
equity-settled share based remuneration schemes:
Granted on Granted on
9 September 2017 14 June 2017
--------------------- ------------------ -------------
Option pricing Black-Scholes Black-Scholes
model used model model
--------------------- ------------------ -------------
Weighted average
share 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 GBP42,912 (2016:
GBP22,945).
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 has 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 3,870,248 free and
matching shares were awarded (2016: 5,356,296) with a fair value of
1.05 pence (2016: 0.425-0.525 pence) resulting in a share-based
payment charge of GBP48,446 (2016: GBP25,050), included in the
administrative expenses line in the Consolidated Income
Statement.
19. Cash and cash equivalents
30 June 30 June
2017 2016
Group GBP GBP
----------------- ------- -------
Cash in hand and
at bank 9,176 7,960
----------------- ------- -------
30 June 30 June
2017 2016
Company GBP GBP
----------------- ------- -------
Cash in hand and
at bank 8,125 6,626
----------------- ------- -------
20. Financial instruments
20.1 Categories of financial instruments
The Group and Company holds 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
2017 2016
Group GBP GBP
------------------------------ --------- ---------
Financial assets
------------------------------ --------- ---------
Available for sale financial
assets at fair value through
other comprehensive income
------------------------------ --------- ---------
Quoted equity shares 128,332 7,587
------------------------------ --------- ---------
Unquoted equity shares 1,315,375 1,139,873
------------------------------ --------- ---------
Total available for sale
financial assets 1,443,707 1,147,460
------------------------------ --------- ---------
Loans and receivables
------------------------------ --------- ---------
Trade and other receivables 1,356,323 1,547,127
------------------------------ --------- ---------
Total financial assets 2,800,030 2,694,587
------------------------------ --------- ---------
Total current 116,544 344,815
------------------------------ --------- ---------
Total non-current 2,683,486 2,349,772
------------------------------ --------- ---------
30 June 30 June
2017 2016
Company GBP GBP
------------------------------ --------- ---------
Financial assets
------------------------------ --------- ---------
Available for sale financial
assets at fair value through
other comprehensive income
------------------------------ --------- ---------
Quoted equity shares 118,485 7,587
------------------------------ --------- ---------
Unquoted equity shares 1,315,375 1,139,873
------------------------------ --------- ---------
Total available for sale
financial assets 1,433,860 1,147,460
------------------------------ --------- ---------
Loans and receivables
------------------------------ --------- ---------
Trade and other receivables 2,161,339 2,290,313
------------------------------ --------- ---------
Total financial assets 3,595,199 3,437,773
------------------------------ --------- ---------
Total current 116,286 286,455
------------------------------ --------- ---------
Total non-current 3,478,913 3,151,318
------------------------------ --------- ---------
Available for sale financial assets valued at cost or using
valuation techniques other than observable market value
As at 30 June 2017, GBP1,315,372 (2016: GBP1,139,873) of the
Group's available for sale financial assets are valued at cost less
impairment due to the investment being privately held and no quoted
market price information is available, or valued using valuation
techniques other than observable market price.
The Group's investment in Direct Nickel Ltd at 30 June 2017 was
carried at cost less impairment and valued at GBP215,375 (2016:
GBP215,375). 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. At the year
end, and based on the most recent transactions, this investment has
been revalued to GBP850,000 (2016: revalued to GBP749,498). The
revaluation was done base on a single sale transaction of 1.9%
shares in Horse Hill Developments on 10 July 2017 with all the
details available on the Company's website.
During the year the Group made an additional cash investment of
GBP75,000 in Westport Energy Plc, which brought the value of its
investment to GBP250,000 (2016: GBP175,000). This investment is
currently held at cost. The investee was renamed during the year
into Curzon Energy Plc, and its shares were admitted to trading on
the Standard Listing of the LSE on 4 October 2017.
Financial instruments held at cost less impairment or valued
using other valuation techniques can be reconciled from beginning
to ending balances as follows:
Unlisted investments
at cost
------------------ ---------------------- ---------
2017 2016
Group and Company GBP GBP
------------------ ---------------------- ---------
Brought forward 1,139,873 762,439
------------------ ---------------------- ---------
Additions 75,000 671,590
------------------ ---------------------- ---------
Revaluation 100,499 184,297
------------------ ---------------------- ---------
Impairment - (478,453)
------------------ ---------------------- ---------
Carried forward 1,315,372 1,139,873
------------------ ---------------------- ---------
30 June 30 June
2017 2016
Group GBP GBP
---------------------- --------- -------
Financial liabilities
---------------------- --------- -------
Loans and borrowings
---------------------- --------- -------
Trade and other
payables 401,634 619,139
---------------------- --------- -------
Short-term borrowings 771,087 282,299
---------------------- --------- -------
Total financial
liabilities 1,172,721 901,438
---------------------- --------- -------
Total current 1,172,721 901,438
---------------------- --------- -------
Total non-current - -
---------------------- --------- -------
Current financial liabilities in the Company are lower than
those of the Group, due to trade and other payables in subsidiary
companies.
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.
20. Financial instruments continued
20.2 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:
Level
1 Level 2 Level 3 Total
Group GBP GBP GBP GBP
--------------------- ------- --------- ------- ---------
30 June 2017
--------------------- ------- --------- ------- ---------
Available for
sale financial
assets at fair
value through
other comprehensive
income
--------------------- ------- --------- -------
Quoted equity
shares 128,332 - - 128,332
--------------------- ------- --------- ------- ---------
Unquoted equity
shares - 1,315,375 - 1,315,375
--------------------- ------- --------- ------- ---------
30 June 2016
--------------------- ------- --------- ------- ---------
Available for
sale financial
assets at fair
value through
other comprehensive
income
--------------------- ------- --------- -------
Quoted equity
shares 7,587 - - 7,587
--------------------- ------- --------- ------- ---------
Unquoted equity
shares - 1,139,873 - 1,139,873
--------------------- ------- --------- ------- ---------
Level
1 Level 2 Level 3 Total
Company GBP GBP GBP GBP
--------------------- ------- --------- ------- ---------
30 June 2017
--------------------- ------- --------- ------- ---------
Available for
sale financial
assets at fair
value through
other comprehensive
income
--------------------- ------- --------- -------
Quoted equity
shares 118,485 - - 118,485
--------------------- ------- --------- ------- ---------
Unquoted equity
shares - 1,315,375 - 1,315,375
--------------------- ------- --------- ------- ---------
30 June 2016
--------------------- ------- --------- ------- ---------
Available for
sale financial
assets at fair
value through
other comprehensive
income
--------------------- ------- --------- -------
Quoted equity
shares 7,587 - - 7,587
--------------------- ------- --------- ------- ---------
Unquoted equity
shares - 1,139,873 - 1,139,873
--------------------- ------- --------- ------- ---------
20.3 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 to 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 14.
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 12 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, Canadian Dollar, Papua New
Guinea Kina and UK Sterling.
To mitigate the Group's exposure to foreign currency risk,
non-Sterling cash flows are monitored.
21. Significant agreements and transactions
Financing
-- On 30 August 2016, the Company raised GBP300,000 by way of an
issue of 75,000,000 new ordinary shares at a price per share of 0.4
pence. Paul Johnson participated in GBP75,000 of this placing. The
Company has also granted Paul Johnson the right to join the Board
of the Company upon completion of the full placing. For every one
share, each subscriber will be issued with one warrant exercisable
at 0.8 pence per share and expiring on 11 March 2019.
-- On 14 October 2016 the Company raised GBP37,500 from the
issuance of 9,375,000 new ordinary shares at a price per share of
0.4 pence through the completion of a second tranche of funding to
Paul Johnson. Paul Johnson also received 9,375,000 new warrants
exercisable at 0.8 pence per share and expiring on 11 March
2019.
-- On 20 December 2016 the Company raised GBP210,000 through the
issuance of 52,500,000 shares at a price per share of 0.4 pence.
Each participant in the placing received for every share purchased
one warrant exercisable at a price of 0.8 pence per share until 19
December 2018.
-- On 18 January 2017 the Company raised GBP60,000 through the
issuance of 15,000,000 shares at a price per share of 0.4 pence.
Each participant in the placing received for every share purchased
one warrant exercisable at a price of 0.8 pence per share until 17
January 2019.
-- On 19 January 2017 the Company raised GBP50,000 through the
issuance of 12,500,000 shares at a price per share of 0.4 pence via
the Teathers mobile application, which gives qualified private
investors access to placings and initial public offerings. Each
participant in the placing received for every share purchased one
warrant exercisable at a price of 0.8 pence per share until 17
January 2019.
-- On 08 February 2017 the Company raised GBP105,000 through the
issuance of 21,000,000 shares at a price per share of 0.5 pence.
Each participant in the placing received for every share purchased
one warrant exercisable at a price of 0.8 pence per share until 7
February 2019.
-- On 22 February 2017 the Company raised GBP75,000 through the
issuance of 11,538,461 shares to Value Generation Limited at a
price per share of 0.65 pence. This fundraising was in
consideration for an option given to Value Generation Limited to
purchase the Company's exploration assets at Motzfeldt, Greenland.
Value Generation Limited received for every share purchased one
warrant exercisable at a price of 1.3 pence per share until 22
August 2018.
-- On 4 April 2017 the Company raised GBP320,204.93 through the
issuance of 32,020,493 shares to Stephen Moscicki at a price per
share of 1.0 pence. Stephen Moscicki received for every one share
purchased one half warrant exercisable at a price of 1.3 pence per
share until 4 October 2018.
-- On 2 May 2017 the Company raised GBP306,000 through the
issuance of 33,999,996 shares at a price per share of 0.9 pence.
Each participant in the placing received for every share purchased
one warrant exercisable at a price of 1.8 pence per share until 1
May 2019. The Company may give notice that should the volume
weighted average share price of Regency exceed 10 pence for 10
trading days Regency may give warrant holders 10 days' notice that
the warrants must be exercised within a further 24 days or will
otherwise lapse.
-- On 8 May 2017 the Company raised GBP160,000 through the
issuance of 17,777,779 shares at a price per share of 0.9 pence via
the Teathers mobile application, which gives qualified private
investors access to placings and initial public offerings. Each
participant in the placing received for every share purchased one
warrant exercisable at a price of 1.8 pence per share until 07 May
2019.
Sale of interests
-- On 20 September 2016, the Company announced the sale of its
remaining direct interest of 4% in the tenements comprising the
Fraser Range Project in Western Australia to Ram Resource ltd for a
total consideration of AUD100,000. Additionally, the Company was
issued the option to purchase 16,666,666 new ordinary shares in Ram
Resource ltd at a price of AUD0.006 per share expiring on 20
September 2020. Regency retains its performance shares and a 1%
gross revenue royalty over the tenements.
Restructured investment in Direct Nickel
On 21 October 2016, the Company was informed of a restructuring
of the Direct Nickel Group. Previously, the Company held a 6.78%
direct stake in Direct Nickel Ltd ("DNiL"), which held 100% of
Direct Nickel Holding Pty Ltd ("DNiH"), which held 100% shares in
Direct Nickel Projects Pty Ltd ("DNiP"). After the restructuring,
the Company owns a 6.78% direct stake in DNiH which in turn holds
40% of DNiP and 40% of Direct Nickel Technologies ("DNiT"), which
holds the technology patents and licences. In addition, the Company
also owns 0.339% of Planet Minerals Ltd.
21. Significant agreements and transactions continued
US metallurgical coal investments
-- On 25 November 2016 the Company announced a heads of terms to
acquire a 20% shareholding in Carbon Minerals Corporation, a
Delaware Company, which has entered into an agreement to acquire
the Rosa metallurgical coal mine, located in Alabama in the United
States. Regency paid an initial non-refundable deposit of GBP50,000
with a further GBP200,000 due after completion of due diligence and
a shareholders' agreement. On 20 December 2016 the Company
announced a fundraising, the purpose of which was to provide
funding toward the completion of this acquisition with completion
scheduled for 23 December 2016. A further announcement on 10
January 2017 confirmed the completion of the investment.
-- On 6 February 2017 the Company announced a further coal
investment in the form of an agreement to invest USD150,000 to
receive a 20% shareholding in Vali Carbon Corporation, a new
Delaware company set up to pursue metallurgical coal investments in
the Appalachians in the United States. The co-venturers in Vali
Carbon Corporation have agreed to sign a definitive shareholder
agreement with normal shareholder protections and an agreed budget
for the coming year. Regency retains a put right to UK Carbon
Resolutions should this not occur. On 9 March 2017 the Company
announced that this investment had been completed and that a new
metallurgical coal opportunity within the target Appalachian area
had been identified and secured and would be transferred into Vali
Carbon Corporation.
-- On 16 March 2017 the Company announced a memorandum of
agreement for a new coal joint venture in Alabama, in the United
States. The memorandum established a joint venture 25% Regency and
75% Mr Stephen Moscicki, to conduct due diligence over a
metallurgical coal property of approximately 6,500 acres in
north-eastern Alabama. Mr Moscicki had signed an agreement with the
vendor of the property and made an initial payment. The two parties
will co-operate on a basis of exclusivity while conducting due
diligence and finalising detailed terms. Each party would meet its
share of costs. On 4 April 2017 the Company announced that a
supplementary agreement had been signed between the parties
pursuant to which Regency has contributed USD400,000 to the costs
of acquisition, permitting and preparation of the property.
-- On 28 March 2017 the Company announced the acquisition for
nominal consideration of a 20% interest in the Black Creek coal
property located in Alabama, in the United States.
Grant of option over Motzfeldt project
On 22 February 2017 the Company announced that it had granted a
four-month option to Value Generation Limited ("VGL"), a private
company, to acquire 100% interest in licence 2014/01 covering the
Motzfeldt intrusive complex in Southern Greenland. As consideration
for the option VGL agreed to subscribe for GBP75,000 of Regency's
shares at a price of 0.65 pence with 1 for 1 warrants exercisable
at a price of 1.3 pence.
During the option period VGL has the right at any time within
the four-month option period to exercise the option for
consideration of GBP350,000 payable in cash. In the event that the
option is exercised and Motzfeldt is sold on within the next 18
months Regency is to be granted a 1.25% gross revenue royalty over
future production from the licence. If the sale value exceeds
GBP5m, Regency will be paid an additional consideration of GBP500k
and if the sale consideration exceeds GBP10m, Regency will be paid
an additional consideration of GBP1m.
Share Incentive Plan
On 6 April 2017, the Board of Directors approved the issue of
5,119,658 ordinary shares of 0.01 pence each in the Company under
the Company's Share Incentive Plan ("SIP") for the 2016/17 tax
year. 1,371,428 free shares, 1,249,410 partnership shares and
2,498,820 matching shares have been awarded with reference to the
mid-market closing price of 0.425 pence on 1 April 2016.
22. Commitments
As at 30 June 2017, 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.
-- The Company has an existing joint lease agreement with Red
Rock Resources plc and Greatland Gold plc relating to Ivybridge
House, 1 Adam Street, London WC2N 6LE. The lease is non-cancellable
until 1 December 2017 and will be allowed to lapse on that
date.
23. 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
GBP121,046 (2016: GBP110,918), of which GBP60,523 represented the
Company's share of the office rent and the balance services
provided (2016: GBP44,979). The Company planned to let this
agreement lapse at expiration on 1 December 2017.
-- The costs incurred on behalf of the Company by Regency Mines
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 GBP15,869 (2015: GBP16,865).
-- Related party receivables and payables are disclosed in notes 14 and 15, respectively.
-- The Company held 9,084,760 shares (1.91%) in Red Rock Resources plc as at 30 June 2016.
-- The key management personnel are the Directors and their
remuneration is disclosed within note 7.
24. Events after the reporting period
Sale of interest
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 were 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.
Completion of the sale was contingent on the satisfaction or
waiver by Alba of certain conditions precedent including due
diligence in respect of the sale interest and receipt of all
required third party consents, approvals and waivers. In
particular, UK Oil and Gas retain a first right of refusal which
they must exercise within 25 business days of being notified of the
proposed sale.
Curzon Energy Plc investment (ex Westport Energy Plc)
On 26 May 2016, the Company announced an investment in Curzon
Energy Plc ("Curzon"), a company formed to acquire natural gas
operations in the United States. The Company agreed to subscribe
for 21,875 new ordinary shares of GBP1.00 per share of Westport at
a price of GBP8.00 per share for a total consideration of
GBP175,000 in a pre-IPO funding.
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.
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.
Change of broker
On 1 November 2017 the Company announced the appointment of
First Equity Limited as broker to the Company with immediate
effect.
US Metallurgical Coal Investments
On 24 November 2017 the Company announced that it has 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 does not currently
own. Regency has a sixty day period in which to carry out due
diligence on the mine and complex. Should due diligence prove
favourable Regency would be able to acquire the mine, wash plant
and other property rights, rights of action, leases, licenses,
permits, shareholdings, and other rights including ownership of
MCoal Corporation, the direct holder of the assets, for the sum of
GBP250,000.
25. Control
There is considered to be no controlling related party.
26. 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 2017 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 2017 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 2017 will
be delivered to the Registrar of Companies by 31 December 2017.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BPBRTMBJTBMR
(END) Dow Jones Newswires
November 29, 2017 02:00 ET (07:00 GMT)
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