FOR THE
YEAR ENDED
30 JUNE 2019
ANNUAL
REPORT
ADRIATIC
METALS
PLC
COMPANY
DIRECTORY
Adriatic Metals plc and Controlled Entities
Company Registration No. 10599833
ARBN 624 103 162
DIRECTORS
Peter Bilbe (Non-Executive Chairman)
Paul Cronin (Managing Director & CEO)
Julian Barnes (Non-Executive Director)
Eric de Mori (Non-Executive Director)
Milos Bosnjakovic (Non-Executive Director)
Michael Rawlinson (Non-Executive Director)
COMPANY SECRETARY
Sean Duffy (Joint)
Gabriel Chiappini (Joint)
UNITED KINGDOM REGISTERED OFFICE
Stamford House, Regent Street
Cheltenham, Gloucestershire GL50 1HN
England
AUSTRALIAN OFFICE
Ground Floor, 24 Outram Street
West Perth WA 6005
Australia
CONTENTS
02 STRATEGIC REPORT
FY19 HIGHLIGHTS
CEO REVIEW
ACTIVITIES AND DIFFERENTIATION
PRINCIPAL RISKS AND UNCERTAINTIES
AUDITOR
11 REPORT OF THE DIRECTORS
DIRECTORS’ REPORT
DIRECTORS AND KEY MANAGEMENT
CORPORATE GOVERNANCE REPORT
DIRECTORS’ RESPONSIBILITIES STATEMENT
18 FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
COMPANY STATEMENT OF
FINANCIAL POSITION
CONSOLIDATED AND COMPANY
STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF
CASH FLOWS
COMPANY STATEMENT OF
CASH FLOWS
NOTES TO THE CONSOLIDATED AND
COMPANY FINANCIAL STATEMENTS
THE MEMBERS OF ADRIATIC METALS PLC
48 INDEPENDENT AUDITOR’S REPORT TO
52 ASX ADDITIONAL INFORMATION
Lubbock Fine Chartered Accountants
65 St Paul’s Churchyard
London EC4M 8AB
England
STOCK EXCHANGE LISTING
Australian Securities Exchange
(Code: ADT)
SHARE REGISTRY
Computershare Investor
Services Pty Limited
Level 11, 172 St Georges Terrace
Perth WA 6000
Australia
WEBSITE
www.adriaticmetals.com
ADRIATIC METALS
PLC IS AN ASX-LISTED
ZINC POLYMETALLIC
EXPLORER AND
DEVELOPER VIA ITS
100% INTEREST IN THE
VAREŠ PROJECT IN
BOSNIA & HERZEGOVINA
01
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORT FOR THE YEAR ENDED
30 JUNE 2019
ADRIATIC METALS PLC
ANNUAL REPORT
STRATEGIC
REPORT
HIGHLIGHTS
FY19
0202
Following Adriatic’s successful Initial Public
Offering in May 2018, Adriatic finished the calendar
year as the best ASX IPO of 2018, with the share
price increasing from the A$0.20 issue price at IPO
to close the year at A$0.575.
In November 2018, Adriatic closed a successful
capital raising of A$10.8 million at an issue price of
A$0.55, welcoming new institutional shareholders
onto our register.
We concluded a 13,000m drill programme in
December 2018 on Adriatic’s 100% owned Vareš
project in Bosnia and Herzegovina, significantly
extending the known mineralisation of the Rupice
prospect, with major drill hole intercepts being
announced including;
• Hole BR-13-18 intercepted 24m @ 3.7 g/t Au,
167 g/t Ag, 14.8% Zn, 7.7% Pb, 0.7% Cu and
53% BaSO4 from 220m
• Hole BR-22-18 intercepted 42m @ 5.7 g/t Au,
245 g/t Ag, 14.1% Zn, 8.4% Pb, 1.4% Cu and
34% BaSO4 from 222m
• Hole BR-24-18 intercepted 34m @ 3.0 g/t Au,
455 g/t Ag, 13.3% Zn, 6.8% Pb, 0.5% Cu and
60% BaSO4 from 146m
• Hole BR-25-18 intercepted 46m @ 4.1 g/t Au,
309 g/t Ag, 12.7% Zn, 9.6% Pb, 1.0% Cu and
40% BaSO4 from 218m
• Hole BR-36-18 intercepted 72m @ 2.5 g/t Au,
211 g/t Ag, 18.3% Zn, 10.0% Pb, 2.5% Cu and
25% BaSO4 from 206m.
Completion of over 20,000m of drilling on the project
has led to the completion of an updated JORC
(2012) mineral resource estimate for Veovača and a
maiden JORC (2012) mineral resource estimate for
Rupice, as follows;
Commenced an extensive Gradient Array Pole
Di-Pole Induced Polarisation survey over the entire
Rupice prospect seeking to distinguish and identify
further high grade target areas for follow up drilling.
Expansion of our senior management team to
include Graham Hill as Chief Operating Officer, and
expanded our board to include Michael Rawlinson
as Non-Executive Director.
Achieved significant regulatory milestones including
approvals of an expanded concession area covering
key targets at both Rupice and Veovača, and the
subsequent issue of an Urban Planning Permit
and Exploration Permit over the increased area.
Additionally, the ‘Reserves’ Elaborat for the Rupice
deposit was issued by The Federal Ministry for
Mines, Energy and Infrastructure, representing a
step toward the issue of an Exploitation Permit for
the combined Vareš Concession.
ACTIVITIES &
DIFFERENTIATION
Adriatic is a base and precious metals explorer
and developer via its 100% interest in the
Vareš Project in the Federation of Bosnia &
Herzegovina (Bosnia). The Project comprises a
brown-field open cut zinc/lead/barite and silver
mine at Veovača, and at Rupice, an advanced
exploration deposit which exhibits exceptionally
thick mineralisation with high grades of precious
and base metals.
Focussed on expediting exploration and development
activities and the establishment of strong in-country
relationships, Adriatic has recruited a world class
multi-disciplinary team to rapidly advance the Company’s
assets and to capitalise on its first mover advantage in
Bosnia through the assessment of additional potential
strategic land holdings.
Adriatic’s exploration programme is continuing, following
exceptional intercepts at Rupice and declaration of a
maiden resource at Rupice, and an updated resource
at Veovača. The sites are less than 12km apart and are
proximal to or in the near vicinity of existing infrastructure
in terms of power, water, rail, sealed roads, access to
a skilled workforce, accommodation facilities, service
providers and an international airport.
Adriatic seeks to differentiate through its competitive
advantages of:
• establishing an early mover advantage in Bosnia
as the Company is the only publicly listed mining
concession holder in a country with a rich mining
history, a pro-mining outlook, highly prospective
geology and a stable fiscal and political system.
• strategically increasing its concession footprint, based
on a database of historically discovered mineralisation
near to its current projects and by reviewing other
historic and new opportunities within Bosnia.
• a capable and multi-disciplinary management team
which includes well regarded and experienced mining
professionals with a track record of project delivery
and operating experience.
•
identifying through exploration drilling some of the
highest grade polymetallic results globally; and
• being well funded for its current activities including
the 20,000m diamond core drill programme and
numerous technical evaluation programs, to culminate
in a Scoping Study during the fourth quarter of 2019.
0303
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORTFINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT This year has been exceptionally
rewarding for Adriatic and its
shareholders. Our 2018 and
2019 drilling programme has
seen a significant number of
extremely high-grade intercepts
at the Rupice prospect, and
culminated in a maiden Mineral
Resource Estimate exceeding
most expectations. Your board
and management team are
focused on ensuring we continue
to develop our mineral assets in
Bosnia with a view to increasing
both the tonnage and metal
values of the resources and
rapidly progressing scoping and
feasibility studies together with
progressing the various approvals
processes. The Company’s key
strategic highlights as follows.
FOR THE YEAR ENDED
30 JUNE 2019
ADRIATIC METALS PLC
ANNUAL REPORT
STRATEGIC
REPORT
CHIEF
EXECUTIVE
OFFICER’S
REVIEW
0404
EXPLORATION PROGRAMME
& ASSETS
(i) Rupice Prospect -
The Rupice Prospect was an
advanced exploration project
which when acquired, exhibited
exceptionally high grades of base
and precious metals and is located
approximately 12 km North West of
the Veovača Deposit. The company
has released dozens of drill holes
which demonstrate the lateral extent,
and continuous nature of high-grade
mineralisation at Rupice, which has
enabled it to define a maiden
Mineral resource estimate outlined
in table 1.
FIGURE 1 – PLAN MAP OF RUPICE INTERCEPTS
TABLE 1 – RUPICE MAIDEN MINERAL RESOURCE ESTIMATE (JORC 2012) – JULY 2019
RUPICE MINERAL RESOURCES, JULY 2019
JORC
CLASSIFICATION
TONNES
GRADES
CONTAINED METAL
MT
7.5
1.9
9.4
Au
g/t
2.0
0.9
1.8
Ag
g/t
207
86
183
Zn
%
5.7
2.4
5.1
Pb
%
3.7
1.6
3.3
BaSO4
%
34
18
31
Cu
%
0.6
0.3
0.6
Au
oz
470
60
530
Ag
oz
50
5
55
Zn
Kt
430
50
480
Pb
Kt
BaSO4
Kt
278
30
310
2,590
330
2,920
Cu
Kt
46
6
52
Indicated
Inferred
Total
Notes:
1. Mineral Resources are based on JORC
Code definitions.
2. A cut-off grade of 0.6% zinc equivalent has
been applied.
3. ZnEq – Zinc equivalent was calculated using
conversion factors of 0.80 for lead, 0.08 for
BaSO4, 1.80 for Au, 0.019 for Ag and 2.40
for Cu, and recoveries of 90% for all elements.
Metal prices used were US$2,500/t for Zn,
US$2,000/t for Pb, $200/t for BaSO4,
$1,400/oz for Au, $15/oz for Ag and
$6,000 for Cu.
4. The applied formula was: ZnEq = Zn% * 90%
+ 0.8 * Pb% * 90% + 0.08 * BaSO4% * 90% +
1.8 * Au(g/t) * 90% + 0.019 * Ag(g/t)* 90% +
Cu% * 2.4 * 90%.
5. It is the opinion of Adriatic Metals and the
Competent Persons that all elements and
products included in the metal equivalent
formula have a reasonable potential to be
recovered and sold.
6. Metallurgical recoveries of 90% have been
applied in the metal equivalent formula based
on recent test work results.
7. A bulk density was calculated for each model
cell using regression formula BD = 2.88143
+ BaSO4 * 0.01555 + Pb * 0.02856 + Zn *
0.02012 + Cu * 0.07874 for the barite high-
grade domain and BD = 2.76782 + BaSO4 *
0.01779 + Pb * 0.03705 + Zn * 0.02167 +
Cu * 0.07119 for the barite low-grade domain
(the barite domains were interpreted using
30% BaSO4).
8. Rows and columns may not add up exactly
due to rounding.
0505
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORTFINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT FOR THE YEAR ENDED
30 JUNE 2019
ADRIATIC METALS PLC
ANNUAL REPORT
STRATEGIC
REPORT
CHIEF
EXECUTIVE
OFFICER’S
REVIEW
“The company has released dozens of
drill holes which demonstrate the lateral
extent, and continuous nature of
high-grade mineralisation at Rupice.”
FIGURE 2 – LONG SECTION OF
RUPICE INTERCEPTS
TABLE 2 – SIGNIFICANT INTERCEPTS TO DATE AT RUPICE
FROM
m
TO
m
INTERVAL
m
Au
g/t
Ag
g/t
Zn
%
Cu
%
Pb
%
BaSO4
%
178
214
196
210
236
220
222
146
218
228
206
240
246
242
278
232
276
264
244
264
180
264
248
278
256
276
64
64
36
66
28
24
42
34
46
20
72
16
30
2.3
4.6
4.4
2.1
3.4
3.7
5.7
3.0
4.1
4.1
2.5
1.59
4.6
396
537
463
158
271
167
245
455
309
479
211
241
265
8.4
10.8
5.7
12.8
10.8
14.8
14.1
13.3
12.7
8.2
18.3
13.7
9.7
0.9
0.9
0.5
2.3
0.5
0.7
1.4
0.5
1.0
0.5
2.5
1.0
0.4
5.1
7.7
4.3
8.6
5.9
7.7
8.4
6.8
9.6
5.6
10.7
10
5.2
44
46
55
37
61
53
34
60
40
60
25
52
43
HOLE
#
BR-01-17
BR-02-18
BR-03-18
BR-05-18
BR-10-18
BR-13-18
BR-22-18
BR-24-18
BR-25-18
BR-32-18
BR-36-18
BR-01-19
BR-04-19
0606
TABLE 3 – UPDATED MINERAL RESOURCE ESTIMATE VEOVAČA (JORC 2012)
JORC
CLASSIFICATION
TONNES
Indicated
Inferred
Total
MT
5.3
2.1
7.4
Au
g/t
0.08
0.06
0.08
Ag
g/t
50
17
41
Zn
%
1.6
1.1
1.4
Pb
%
1.0
0.5
0.9
BaSO4
%
16
6
13
FIGURE 3 – MAP SHOWING ADRIATIC’S EXISTING (RED) AND NEW CONCESSION AREAS (BLUE)
EXPLORATION PROGRAMME
& ASSETS – CONTINUED
(ii) Veovača Deposit - is an historic
open cut zinc, lead, barite and silver
mine which operated between 1983
and 1987 and ultimately shut down
prior to emerging hostilities in the
region. Following a 1,381 metre
diamond drilling programme at
Veovača in 2017 to confirm historical
results, the company completed a
further 2,341m program in 2018
and 2019 to define an updated
mineral resources estimate outlined
in table 3.
This represents a significant increase
in mineral resources at Veovača
and provides a solid base for future
scoping and mine studies, currently
being prepared by the Company.
(iii) Approval received for
Expanded Concession area –
in August 2018, the Vareš Municipal
Council approved Adriatic’s
application for a major land expansion
to its existing Concession Agreement
at its 100% owned Vareš Projects
that comprise Rupice and Veovača.
Under the terms of the Concession
Agreement, the Company has
three Fields, being Veovača I & II
and Rupice-Jurasavec Brestic,
as outlined in red in Figure 3 (right).
The extension areas include land
where the Company has identified
strong exploration potential and
where additional drilling has
identified extensions to the known
mineralisation or where historical or
recent data indicates the potential
for new discoveries. The expanded
Concession area includes land
immediately to the north of hole
BR-5-18, which intercepted 66m
of high-grade mineralisation,
and subsequent drilling has
identified extensions to the Rupice
mineralisation into the Expanded
Concession as described above.
In January 2019 the Federal Ministry
of Mines, Energy & Infrastructure,
approved the company’s request for
a new Exploration Permit over the
Expanded Concession Area.
0707
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORTFINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT RESULT FOR FY19
As the company is in pre-production
there is no forecast earnings nor
expectation for profits and the
Company will continue to invest
in its exploration assets and incur
losses in the near to medium term.
The Loss after tax for the period was
£2,417,653; FY18 (£1,928,697) and
comprised one off costs for the 2019
year including share option costs for
£456,617 as per note 17 in the Group
Consolidated Financial Statements to
30 June 2019.
CAPITAL RAISING
During the year, Adriatic successfully
completed a A$10.8 million capital
raising from select institutions, and
Sandfire Resources NL who exercised
their Anti-Dilution Right as described
in the Strategic Collaboration
Agreement between Adriatic and
Sandfire Resources.
Paul Cronin
MANAGING DIRECTOR & CEO
FOR THE YEAR ENDED
30 JUNE 2019
ADRIATIC METALS PLC
ANNUAL REPORT
STRATEGIC
REPORT
CHIEF
EXECUTIVE
OFFICER’S
REVIEW
EXPLORATION PROGRAMME
& ASSETS – CONTINUED
(iv) Permitting Milestone –
Adriatic recently confirmed that the
Federal Ministry of Mining within the
Federation of Bosnia & Herzegovina
has provided written acknowledgment
of the completion of the Reserves
Elaborat for the Rupice deposit
complimenting the previous approval
received for the Veovača Deposit,
and representing a major milestone
toward the issue of the Exploitation
Permit. Under the terms of the
Concession Agreement, the Company
is required to complete the conditions
for an Exploitation Permit by May
2020, which will then provide the
company with licence tenure until
2038 and can be further extended
at the election of the Company for a
period of 10 years. Following the issue
of the Exploitation Permit, Adriatic will
prepare and submit a Main Mining
Plan (Feasibility Study) and apply
for a Water Management Permit,
which once accepted, will result in
an Operations Permit being granted.
(v) Scoping and Economic
Studies – Adriatic is in the process of
preparing a JORC compliant Scoping
Study on the Vareš project. Significant
Metallurgical, Geo-Technical,
Hydro-Geological and Concentrate
marketing work has been conducted
to support the Study, and the results
are expected to be released in the
fourth quarter of 2019.
0808
TENEMENT PORTFOLIO TABLE
CONCESSION
NUMBER
LICENCE AREAS (HA)
RUPICE EXPLORATION
RIGHTS EXPIRY
VEOVAČA
EXPLOITATION RIGHTS
VEOVAČA I
VEOVAČA II
RUPICE
DURATION
(YEARS)
EXPIRY
DURATION
(YEARS)
EXPIRY
04-18-21389-1/13
107.69
222.87
535.16
7.5
25 May 2020
25
12 March 2038(i)
(i) Tenure exploitation rights approved by Federal Ministry of Mining within the Federation of Bosnia & Herzegovina, subject to completing
the conditions for an Exploitation Permit by May 2020, which will then provide the company with license tenure until 2038 and can be
further extended at the election of the Company for a period of 10 years.
COMPETENT
PERSONS
STATEMENT
The information in this report which
relates to Exploration Results is
based on information compiled
by Mr Robert Annett, who is a
member of the Australian Institute of
Geoscientists (AIG). Mr Annett is a
consultant to Adriatic Metals PLC and
has sufficient experience relevant to
the style of mineralisation and type of
deposit under consideration and to
the activity he is undertaking to qualify
as a Competent Person as defined
in the 2012 Edition of the “Australian
Code of Reporting of Exploration
Results, Mineral Resources and Ore
Reserves”. Mr Annett consents to the
inclusion in this report of the matters
based on that information in the form
and context in which it appears.
KEY
PERFORMANCE
INDICATORS
The near term and primary
performance indicators for Adriatic
are related to its exploration activities
and include:
(i) Efficiently managing the
exploration programme and
increasing the current mineralised
footprint and Increasing Adriatic’s
current JORC resource base
(ii) Advancing the permitting status
on a pathway towards exploitation
(iii) Continued exploration on nearby
prospects to define further drill
targets with the intent of making
additional mineral discoveries
(iv) Progressing the technical
study elements for the deposits,
culminating in publishing a
scoping study and making
progress towards future
Pre-Feasibility and
Feasibility Studies.
FUTURE
PROSPECTS
Adriatic are concluding a Scoping
Study based on the recently declared
Mineral Resource estimates and the
metallurgical testwork programme
initiated in Q4 2018. Successful drilling
at Rupice has led to continuous growth
of that resource and drilling will continue
there to further expand the resources,
improve the geological understanding
of the deposits, and to collect further
metallurgical samples and carry out
geotechnical and hydrogeotechnical
drilling work to support ongoing
technical studies. Adriatic will continue
to move along the permitting pathway
and are aiming to obtain the Veovača
Exploitation Permit in Q4 2019.
Metallurgical testwork aimed at
optimising currently developed
flowsheets and carrying out necessary
variability and other work will continue
and will support ongoing technical
studies leading to development of a
Feasibility Study planned for 2020.
Further permitting work will progress
for Rupice and in parallel with
Feasibility Study and other work with
the future goal being to initiate project
implementation leading ultimately to
mining and processing operations.
Simultaneously Adriatic will continue
with exploration activities on
new targets generated by recent
geophysical investigations as well
as historical areas of mining activity.
Expansion of the concession areas
to allow investigation of the corridor
between Veovača and Rupice is being
investigated and ongoing soil sampling
of all areas within existing concessions
will continue to advance the potential of
further areas of known mineralisation.
0909
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORTFINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
FOR THE YEAR ENDED
30 JUNE 2019
ADRIATIC METALS PLC
ANNUAL REPORT
STRATEGIC
REPORT
PRINCIPAL RISKS
AND UNCERTAINTIES
The management of the business and
the execution of the Group’s strategy
expose it to a number of risks.
These risks are reviewed by the Board
and Management with appropriate
processes put in place to monitor and
mitigate the risks.
Key business risks affecting the
Group are set out below.
• EXPLORATION &
DEVELOPMENT
Mineral exploration and development
is a speculative and high-risk
undertaking that may be impeded
by circumstances and factors
beyond the control of the Company.
There can be no assurance that
exploration on the Projects, or any
other exploration properties that may
be acquired in the future, will result
in the discovery of an economic
mineral resource. Even if an
apparently viable mineral resource is
identified, there is no guarantee that
it can be economically exploited.
• FUTURE FUNDING NEEDS
The funds raised to date are
considered sufficient to meet
the immediate objectives of the
Company. Further funding may be
required by the Company in the
event costs exceed estimates or
revenues do not meet estimates,
to support its ongoing operations
and implement its strategies.
• BOSNIAN IN-COUNTRY RISKS
The Projects are located in Bosnia
and Herzegovina. The Company
will be subject to the risks
associated with operating in that
country, including various levels of
political, sovereign, economic and
other risks and uncertainties.
Any material adverse changes in
government policies, legislation,
political, legal and social
environments in Bosnia and
Herzegovina and or any other
country that the Company has
economic interests in that affect
mineral exploration activities, may
affect the viability and profitability
of the Company.
• OPERATIONAL RISKS
The operations of the Company
may be affected by various factors,
including:
(i)
failure to locate or identify
mineral deposits;
(ii) failure to retain and secure key
management;
(iii) failure to achieve predicted
grades in exploration and
mining; and
(iv) operational and technical
difficulties encountered in
metallurgy, processing
and mining.
In the event that any of these
potential risks eventuate, the
Company’s operational and
financial performance may be
adversely affected.
• ENVIRONMENTAL RISK
The Company’s activities are
subject to the environmental laws
inherent in the mining industry
and those specific to Bosnia
and Herzegovina. The Company
intends to conduct its activities
in an environmentally responsible
manner and in compliance with
all applicable laws. However, the
Company may be the subject
of accidents or unforeseen
circumstances that could subject
the Company to extensive liability.
• COMMODITY & CURRENCY
EXCHANGE PRICES
The value of the Company’s
assets and potential earnings
may be affected by fluctuations in
commodity prices and exchange
rates, such as the USD and GBP
denominated zinc price and the
GBP / USD exchange rate.
Peter Bilbe
CHAIRMAN
1010
REPORT OF
THE DIRECTORS
DIRECTORS AND KEY MANAGEMENT
PETER BILBE, B. ENG (MINING) (HONS)
PAUL CRONIN, B. COM & MBA
MILOS BOSNJAKOVIC
Non-Executive Chairman
Managing Director & CEO
Non-Executive Director
Mr Bilbe is a mining engineer with
40 years Australian and international
mining experience in gold, base
metals and iron ore at the operational,
CEO and board levels. Mr Bilbe is
currently Non-Executive Chairman of
Independence Group NL and since
2009 has overseen the growth of
Independence from operating a single
mine to a AUD$3 billion diversified
gold and base metals mining and
exploration company. Mr Bilbe is
also Non-Executive Chairman of
Horizon Minerals Limited, an emerging
gold developer.
Peter Bilbe was appointed as the
Non-Executive Chairman of the
Company on 16 February 2018
and serves as Chair of the
Remuneration Committee.
JULIAN BARNES, BSC (HONS)
Non-Executive Director
Dr Barnes is a geologist with extensive
experience in major exploration and
development projects. Previously,
he was Executive Vice President
Dundee Precious Metals where he
lead exploration, project acquisition,
and due diligence with a strong focus
on Balkan mining & development.
He founded and led Resource Service
Group for nearly two decades, which
ultimately became RSG Global and
has since been sold to Coffey Mining.
He is also a Non-Executive Director
of Thor Explorations Ltd, a company
listed on the Toronto Stock Exchange
(Venture Exchange) and Zinc Of
Ireland, a company listed on the
Australia Stock Exchange.
Julian Barnes was appointed as
a Director of the Company on
16 February 2018 and serves as a
member of the Audit Committee.
Mr Cronin is a unique resource
finance specialist, with significant
experience in equity, debt and
mergers and acquisitions within the
sector. As CEO of ASX Listed Anatolia
Energy, Paul oversaw two successful
and oversubscribed capital raisings,
steering the stock to be the best
performing uranium stock globally
during his time with the company,
and prior to its sale at a significant
premium to its market capitalisation.
Prior to Anatolia, Paul was Vice
President at the highly-regarded
resource fund, RMB Resources
where he originated, structured and
managed several debt and equity
investments on behalf of the fund.
Paul is currently CEO of ASX
listed Black Dragon Gold,
and Non-Executive Director
of Global Atomic Corporation.
Paul Cronin was appointed as
a Director of the Company on
3 February 2017 and on
18 September 2019, Paul Cronin
was appointed as Managing Director
and CEO of Adriatic.
ERIC DE MORI,
B. MARKETING & DIP. FINANCIAL SERVICES
Non-Executive Director
Mr de Mori has over 15 years’
experience in ASX small capital
investment and corporate finance,
specializing in natural resources,
biotechnology and technology.
Eric has a broad skill set across ASX
listed company corporate finance and
has held several director and major
shareholder positions with ASX listed
technology and resource companies.
Eric is the head of natural resources
for institutional stockbroker Ashanti
Capital and a Non-Executive Director
of Invictus Energy Ltd.
Mr de Mori was appointed to the
Board on 10 August 2017 and serves
as a member of the Audit Committee.
Mr Bosnjakovic is a dual national of
Australia and Bosnia Herzegovina
and was the co-founder of ASX-listed
Balamara Resources Limited.
He has significant experience in
mineral projects in the region and
is a qualified lawyer with extensive
experience in the Former Yugoslav
Republics, Australia and New
Zealand. Mr Bosnjakovic is currently
engaged as consultant to Adriatic,
responsible for government and
regulatory relations, and will remain
in that important role.
Mr Bosnjakovic was appointed to
the Board of the Company on
16 July 2018 and serves as a member
of the Remuneration Committee.
MICHAEL RAWLINSON
Non-Executive Director
Mr Rawlinson was the Global
Co-Head of Mining and Metals at
Barclays investment bank between
2013 and 2017 having joined
from the boutique investment
bank, LiberumCapital, a business he
helped found in 2007.
Mr Rawlinson was previously
served as a Non-Executive Director
of Talvivaara Mining Company Plc
between April 2012 and
November 2013. Mr Rawlinson is
currently Senior Independent
Non-Executive Director of Hochschild
Mining plc and Non-Executive
Director at Capital Drilling.
Mr Rawlinson was appointed to the
Board of the Company on 4 March
2019 and serves as a member of the
Remuneration Committee and Chair
of the Audit Committee.
1111
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORTFINANCIAL STATEMENTSREPORT OF THE DIRECTORSSTRATEGIC REPORT REPORT OF
THE DIRECTORS
SENIOR MANAGEMENT
GRAHAM HILL
Chief Operating Officer
Mr Hill is an experienced mining
engineer and was previously CEO
of Silver Bear resources where he
took the company from exploration
through to production, overseeing
the development of a remote
underground mining operation in
Siberia. Mr Hill has successfully
overseen the evaluation and
development phases for multiple
mining operations in Africa and central
Asia during his 35 year career, which
commenced in Anglo American, and
where he later was accepted into the
company’s renowned management
development program.
ROBERT ANNETT,
BSC (HONS), ARSM, AIMM, AIG & MIQ
Head of Exploration
Mr Annett is an experienced geologist
with over 40 years’ experience across
all aspects of exploration, evaluation
and mining of precious, base &
industrial metals. He is a Competent
Person under the JORC Code and
is responsible for the day to day
management of all exploration works.
Robert Annett was appointed as
Head of Exploration on 1 April 2017.
SEAN DUFFY,
MBA, GRAD CERT. IN BUSINESS MARKETING
Chief Financial Officer &
Company Secretary (Joint)
Mr Duffy brings with him more than
20 years of international finance
experience in the mining industry,
including key positions with BHP
Billiton and other AIM/ASX listed
companies. Sean Duffy was
appointed as Chief Financial
Officer and Company Secretary
on 17 November 2017.
GABRIEL CHIAPPINI
Company Secretary (Joint)
Mr. Chiappini is an experienced ASX
director and has been active in the
capital markets for 17 years.
He has assisted in raising $AUD450m
and has provided investment and
divestment guidance to a number of
companies and has been involved
with 10 ASX IPO’s in the last 12 years.
He is a member of the AICD and CA
ANZ. Mr. Chiappini is a director of
Black Rock Mining and Eneabba
Gas Limited.
ADNAN TELETOVIC, B. ENG (HONS.)
General Manager,
Eastern Mining d.o.o.
Dr. Teletovic is a dual
Bosnian-Australian national with
extensive experience in the mining
industry having previously held senior
positions at Kalgoorlie Consolidated
Gold Mines, BHP Billiton and the
Prevent Group, one of Bosnia’s largest
diversified industrial corporations.
Adnan has a Bachelor of Engineering
(Hons.) from Victoria University of
Technology, a PhD from Deakin
University and has significant
experience in not only general
management but also a track record in
managing large capital mining projects
in the Australian mining industry.
1212
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORT DIRECTORS REPORT
The Directors present their annual report with the statutory financial statements of the Group for the year ended
30 June 2019.
This report should be read in conjunction with the Strategic Report on pages 2 to 10.
1. BOARD OF DIRECTORS AND OFFICERS OF THE COMPANY
The names of the Directors who held office during the financial year and to the date of this report were:
DIRECTOR NAME
POSITION
APPOINTED
Peter Bilbe
Paul Cronin
Julian Barnes
Eric de Mori
Milos Bosnjakovic
Michael Rawlinson
Non-Executive Chairman
Managing Director & CEO
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
16 February 2018
3 February 2017
16 February 2018
10 August 2017
16 July 2018
4 March 2019
The company secretary is Sean Duffy and Gabriel Chiappini (joint).
2. RESULTS
The Group realised a loss after tax for the year of £2,417,653 (2018 loss of £1,928,697).
3. GOING CONCERN
The Group incurred a loss of £2,417,653 (30 June 2018: £1,928,697) in the period however the Group also had a net
asset position at the balance sheet date.
The Company and Group meet their day to day working capital requirements by support of investors. The directors
believe it is appropriate to prepare the financial statements on a going concern basis which assumes that the Company
and the Group will continue in operational existence for the foreseeable future on the basis of the Group’s plans and the
continued support of investors
If the Company and Group are unable to continue in operational existence for the foreseeable future, adjustments would
have to be made to reduce the balance sheet values of the assets to their recoverable amounts, provide for further
liabilities that might arise, and reclassify non-current assets and liabilities to current.
4. DIVIDEND
The Directors do not recommend the payment of a final dividend for the year ended 30 June 2019 (2018: $nil).
5. DIRECTORS’ INDEMNITY INSURANCE
The Company has arranged appropriate Directors’ and Officers’ insurance to indemnify the Directors against liability in
respect of proceedings brought about by third parties. Such provisions remain in place at the date of this report.
6. AUDITOR
Lubbock Fine Chartered Accountants have been appointed as auditors of Adriatic Metals plc and at the Company’s
2nd Annual General Meeting Lubbock Fine Chartered Accountants will be proposed for re-appointment.
7. FINANCIAL RISK MANAGEMENT OBJECTIVES
The Group’s financial risk management objectives and policies and exposures to risk are outlined in Note 23 to the
financial statements.
1313
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORTFINANCIAL STATEMENTSREPORT OF THE DIRECTORSSTRATEGIC REPORT
REPORT OF
THE DIRECTORS
DIRECTORS REPORT (CONTINUED)
8. ROUNDING OF AMOUNTS AND PRESENTATIONAL CURRENCY
Unless otherwise expressly stated, the Group financial statements are presented in British Pounds (“£”) which is the
Group’s presentational currency.
On behalf of the Board
Peter Bilbe
CHAIRMAN
25 September 2019
CORPORATE GOVERNANCE REPORT
The Board of Directors of Adriatic is responsible for establishing the corporate governance framework of the group having
regard to the ASX Corporate Governance Council published guidelines. The Board guides and monitors the business and
affairs of the group on behalf of the shareholders by whom they are elected and to whom they are accountable. The Board
has adopted a corporate governance framework, based upon ASX Corporate Governance Principles, which it considers to
be suitable given the size, history and strategy of the Company.
The Company’s Corporate Governance Statement has been approved by the Board and can be located on the Company’s
website at https://www.adriaticmetals.com/downloads/corp-governance-files-/corporate-governance-manual-adriatic-
metals-plc-3-march-2018.pdf
REMUNERATION POLICY FOR EXECUTIVES AND MANAGEMENT
During 2018 the company established a Remuneration Committee comprising of Non Executive Directors.
The Board is responsible for determining and reviewing compensation arrangements for the Directors and senior executives
reporting to the Chief Executive Officer and/or Managing Director. The broad policy is to ensure that remuneration properly
reflects the individuals’ duties and responsibilities and that remuneration is fair and competitive in attracting, retaining and
motivating quality people with appropriate skills and experience. At the time of determining remuneration, consideration is
given by the Board to the Group’s financial circumstances and performance.
As part of its suite of corporate governance policies and procedures, the Board has adopted a formal Remuneration and
Nomination Committee Charter and Remuneration Policy.
The Committee and Board have established the following parameters as part of the remuneration framework for executives:
The Directors have responsibility for the appointment and performance assessment of the Chief Executive Officer and Chief
Financial Officer, Company Secretary, other senior executives and terms and conditions including remuneration and approving
the Company’s remuneration and rewards framework. When considering the remuneration policy for the Company’s
Executives and Management the Board will consider performance and achievement in line with the Company’s objectives and
to ensure the interests of shareholders and stakeholders are enhanced. The Board will perform an annual review to ensure a
strong link between performance and reward is made and will form part of the annual remuneration review.
SHARE OPTIONS
The Company has adopted a company share option plan (Plan). The Plan forms what the Board considers to be an
important element of the Company’s total remuneration strategy for its officers and staff.
1414
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORT
REMUNERATION POLICY FOR NON-EXECUTIVE DIRECTORS
The Directors have responsibility to review, monitor and make recommendations to the Board regarding the orientation and
education of directors which includes an annual review of the directors’ compensation programme.
The Company Articles provide that each Director is entitled to such remuneration from the Company as the Directors
decide, but the total amount provided to all non-executive directors must not exceed in aggregate the amount fixed by the
Directors prior to the first annual general meeting. The aggregate remuneration for all non-executive directors has been set
at an amount of AUD$400,000 per annum by the Directors. The remuneration of the Non- Executive Directors must not
be increased except pursuant to a resolution passed at a general meeting of the Company where notice of the proposed
increase has been given to Shareholders in the notice convening the meeting.
DIRECTORS’ REMUNERATION (AUDITED)
The Company paid the following remuneration to each Director:
SALARY/FEE
£
LONG TERM
BENEFIT
£
TOTAL
£
-
-
-
-
-
-
-
30,000
29,854
49,850
30,225
10,000
9,762
159,691
(AU$54,000) equivalent
(AU$90,000) equivalent
30,000
29,854
49,850
30,225
10,000
9,762
159,691
SALARY/FEE
£
30,000
30,000
50,000
30,000
30,000
30,000
200,000
2019
Paul Cronin
Eric de Mori
Peter Bilbe
Julian Barnes
Milos Bosnjakovic
Michael Rawlinson
TOTAL
The annual Directors fees payable by the Company is as follows:
Paul Cronin
Eric de Mori
Peter Bilbe
Julian Barnes
Milos Bosnjakovic
Michael Rawlinson
TOTAL
1515
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORTFINANCIAL STATEMENTSREPORT OF THE DIRECTORSSTRATEGIC REPORT
REPORT OF
THE DIRECTORS
DIRECTORS’ REMUNERATION (AUDITED) (CONTINUED)
RELATED PARTY NOTE – DIRECTOR ADVISOR FEES
The Company considers personnel with the authority and responsibility for planning, directing and controlling the activities of
the Company to be key management personnel.
The following amounts were incurred with respect to the Company’s Directors, Chief Executive Officer and Chief Financial
Officer of the Company;
Chief Executive Officer
Chief Operating Officer
Chief Finance Officer
Company Secretary - Joint
Directors Fees
Advisory Fees - Directors
Total
30 JUNE 2019
£
30 JUNE 2018
£
172,917
32,250
55,002
21,529
172,191
134,500
588,389
76,000
-
29,725
-
41,239
195,400
342,364
Swellcap is a related party of the Company as it is controlled by Paul Cronin, a Director of the Company. The Company
has engaged Swellcap to provide the Company with corporate office facilities and services from 1 April 2018 at £5,000
per month. This fee was increased to £6,000 per month from 1 May 2019 and the total fees to 30 June 2019 were £67,000.
Milos Bosnjakovic, a Director of the Company, has a consultancy agreement with the Company for his Head of Government
Affairs role for £5,000 per month in addition to his Directors Fees. The total fees to 30 June 2019 were £67,500.
DIRECTOR’S SHARE OPTIONS
In addition to the fees above, the Company has issued the following options to Directors.
NAME OF
DIRECTOR
NON-EXECUTIVE
OPTIONS
GRANTED
TOTAL
OPTIONS
VESTED
AS AT
1 JULY 2018
OPTIONS
VESTING IN
THE YEAR
OPTIONS
LAPSING IN
THE YEAR
TOTAL
OPTIONS
VESTED
AS AT
30 JUNE 2019
EXERCISE
PRICE
EARLIEST
DATE OF
EXERCISE
(ESCROW
DATE)
DATE OF
EXPIRY
Peter Bilbe
Paul Cronin
Eric de Mori
Julian Barnes
Milos Bosnjakovic
1,500,000 1,500,000
5,000,000
5,000,000
4,000,000
4,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1/4/2019
1/4/2019
1/4/2019
1/4/2019
1/4/2019
-
-
-
-
-
1,500,000 AUD $0.30 1/5/2020 1/7/2021
5,000,000 AUD $0.20 1/5/2020 1/7/2023
4,000,000 AUD $0.20 1/5/2020 1/7/2023
1,000,000 AUD $0.30 1/5/2020 1/7/2021
1,000,000 AUD $0.40 1/5/2020 1/7/2021
Michael Rawlinson was appointed to the Board of Directors on March 4, 2019 and included and award of 1M share options
with a 3 year term and exercise price of A$1.00, subject to shareholder approval.
DIRECTORS’ INTERESTS
The Directors’ interests in shares and other securities in Adriatic plc are set out below:
NON-EXECUTIVE DIRECTOR
NUMBER OF ORDINARY SHARES (CDI’S)
30 JUNE 2019
NUMBER OF OPTIONS
30 JUNE 2019
Peter Bilbe
Paul Cronin
Eric de Mori
Julian Barnes
Milos Bosnjakovic
Michael Rawlinson
1616
250,000
16,851,332
11,054,000
-
16,000,000
40,000
1,500,000
5,000,000
4,000,000
1,000,000
1,000,000
-
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORT
DIRECTORS RESPONSIBILITIES STATEMENT
The directors are responsible for preparing the Strategic Report, the Directors’ Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors
have elected to prepare the financial statements in accordance with International Financial Reporting Standards (IFRS) and
applicable UK Company law. Under company law the directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of
the Group for that year. In preparing these financial statements, the directors are required to:
·
select suitable accounting policies and then apply them consistently;
· make judgements and estimates that are reasonable and prudent;
·
state whether applicable International Financial Reporting Standards have been followed, subject to any material
departures disclosed and explained in the financial statements;
· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will
continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s
and Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and
enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and
other irregularities.
The directors confirm that:
• so far as each director is aware, there is no relevant audit information of which the company’s auditor is unaware; and
•
the directors have taken all the steps that they ought to have taken as directors in order to make themselves aware of
any relevant audit information and to establish that the auditors are aware of that information.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the
company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
On behalf of the Board
Peter Bilbe
CHAIRMAN
25 September 2019
1717
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORTFINANCIAL STATEMENTSREPORT OF THE DIRECTORSSTRATEGIC REPORT
YEAR ENDED 30 JUNE 2019
CONSOLIDATED STATEMENT
OF PROFIT OR LOSS & OTHER
COMPREHENSIVE INCOME
Administrative expenses
OPERATING LOSS
Finance costs
LOSS BEFORE TAX FROM CONTINUING OPERATIONS
Tax
LOSS FROM CONTINUING OPERATIONS
Other comprehensive income
TOTAL COMPREHENSIVE INCOME
Earnings per share expressed in pence per share:
Basic
Diluted
All the activities of the Group are classed as continuing.
NOTE
YEAR ENDED
30 JUN 2019
£
YEAR ENDED
30 JUN 2018
£
5
8
9
10
16
(2,163,209)
(2,163,209)
(2,170,921)
(2,170,921)
(254,444)
(2,417,653)
(242,224)
(1,928,697)
-
-
(2,417,653)
(1,928,697)
42,875
5,965
(2,374,778)
(1,922,732)
(1.69)
(1.49)
(2.27)
(2.10)
The Company has taken advantage of section 408 of the Companies Act 2006 not to publish its own statement of
profit or loss.
The notes on pages 24 to 47 form part of these financial statements.
1818
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORT AS AT 30 JUNE 2019
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
NON-CURRENT ASSETS
Intangible assets
Tangible assets
CURRENT ASSETS
Trade and other receivables
Cash and cash equivalents
TOTAL ASSETS
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Share capital
Share premium
Other capital reserves
Other reserves
Retained deficit
TOTAL EQUITY
CURRENT LIABILITIES
Trade and other payables
NOTE
30 JUN 2019
£
30 JUN 2018
£
12
11
13
14
16
18
18
18
3,971,210
721,128
4,692,338
361,724
5,369,759
5,731,483
1,034,235
626,308
1,660,543
147,711
4,644,389
4,792,100
10,423,821
6,452,643
2,013,701
11,084,777
1,714,826
74,242
(4,638,657)
1,733,042
5,515,049
1,282,365
31,367
(2,221,004)
10,248,889
6,340,819
15
174,932
111,824
TOTAL EQUITY AND LIABILITIES
10,423,821
6,452,643
The notes on pages 24 to 47 form part of these financial statements.
These financial statements were approved by the Board and were signed on its behalf by:
Mr P Cronin
DIRECTOR
Date: 25 September 2019
Company Registration Number: 10599833
1919
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORTFINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT AS AT 30 JUNE 2019
COMPANY STATEMENT
OF FINANCIAL POSITION
NON-CURRENT ASSETS
Investments
Intangible assets
Tangible assets
CURRENT ASSETS
Trade and other receivables
Cash and cash equivalents
TOTAL ASSETS
Equity
Share capital
Share premium
Other capital reserves
Retained earnings
TOTAL EQUITY
CURRENT LIABILITIES
Trade and other payables
NOTE
30 JUN 2019
£
30 JUN 2018
£
4
12
11
13
14
16
18
18
4,888,901
734,414
22,486
5,645,801
97,246
5,100,764
5,198,010
1,517,405
345,761
26,454
1,889,620
110,494
4,572,426
4,682,920
10,843,811
6,572,540
2,013,701
11,084,777
1,714,826
(4,072,190)
1,733,042
5,515,049
1,282,365
(2,023,689)
10,741,114
6,506,767
15
102,697
65,773
TOTAL EQUITY AND LIABILITIES
10,843,811
6,572,540
These financial statements were approved by the Board and were signed on its behalf by:
Mr P Cronin
DIRECTOR
Date: 25 September 2019
Company Registration Number: 10599833
The notes on pages 24 to 47 form part of these financial statements.
2020
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORT YEAR ENDED 30 JUNE 2019
CONSOLIDATED AND
COMPANY STATEMENT
OF CHANGES IN EQUITY
GROUP
SHARE
CAPITAL
SHARE
PREMIUM
OTHER
CAPITAL
RESERVE
RETAINED
EARNINGS
£
£
£
£
OTHER
RESERVES
(FOREIGN
CURRENCY
TRANSLATION
RESERVES)
£
TOTAL
£
As at 1 July 2017
Loss for the period
Issue of share capital
Issue of options
Other comprehensive income
856,323
-
876,719
406,183
-
5,108,866
-
-
-
-
-
1,282,365
-
(292,307)
(1,928,697)
-
25,402
-
-
-
5,965
995,601
(1,928,697)
5,985,585
1,282,365
5,965
As at 30 June 2018
1,733,042
5,515,049
1,282,365
(2,221,004)
31,367
6,340,819
Loss for the period
Issue of share capital
Exercise of options
Issue of options
Other comprehensive income
-
276,684
3,975
-
-
-
5,484,230
85,498
-
-
-
-
(24,156)
456,617
-
(2,417,653)
-
-
-
-
-
-
42,875
(2,417,653)
5,760,914
65,317
456,617
42,875
As at 30 June 2019
2,013,701
11,084,777
1,714,826
(4,638,657)
74,242 10,248,889
COMPANY
SHARE
CAPITAL
SHARE
PREMIUM
OTHER
CAPITAL
RESERVE
RETAINED
EARNINGS
£
£
£
£
OTHER
RESERVES
(FOREIGN
CURRENCY
TRANSLATION
RESERVES)
£
TOTAL
£
As at 1 July 2017
Loss for the period
Issue of share capital
Issue of options
Other comprehensive income
856,323
-
876,719
-
-
406,183
-
5,108,866
-
-
-
-
-
1,282,365
-
7,982
(2,031,671)
-
-
-
As at 30 June 2018
1,733,042
5,515,049
1,282,365
(2,023,689)
Loss for the period
Issue of share capital
Exercise of options
Issue of options
Other comprehensive income
-
276,684
3,975
-
-
-
5,484,230
85,498
-
-
-
-
(24,156)
456,617
-
(2,048,501)
-
-
-
-
-
-
-
-
-
-
-
-
-
1,270,488
(2,031,671)
5,985,585
1,282,365
-
6,506,767
(2,048,501)
5,760,914
65,317
456,617
-
As at 30 June 2019
2,013,701
11,084,777
1,714,826
(4,072,190)
- 10,741,114
2121
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORTFINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT YEAR ENDED 30 JUNE 2019
CONSOLIDATED STATEMENT
OF CASH FLOWS
Loss
Foreign exchange difference on consolidation
Depreciation and amortisation
Share based payments
Other non-cash movements
Working capital adjustments:
Increase in trade and other receivables
Decrease in inventories
Increase/(Decrease) in trade and other payables
2019
£
2018
£
(2,417,653)
42,875
88,674
432,461
-
(1,928,697)
5,965
8,910
1,161,408
(4,885)
(214,013)
-
63,108
(130,023)
22
(89,548)
Net cash flows used in operating activities
(2,004,548)
(976,848)
Investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
(105,998)
(3,014,471)
(40,296)
(756,479)
Net cash flows used in investing activities
(3,120,469)
(796,775)
Financing activities
Issue of share capital (net of fees)
5,850,387
6,106,542
Net cash flows generated from financing activities
5,850,387
6,106,542
Net increase in cash and cash equivalents
725,370
4,332,919
Cash and cash equivalents at 30 June 2018
4,644,389
311,470
Cash and cash equivalents at 30 June 2019
5,369,759
4,644,389
The notes on pages 24 to 47 form part of these financial statements.
2222
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORT YEAR ENDED 30 JUNE 2019
COMPANY STATEMENT
OF CASH FLOWS
(Loss)/profit
Depreciation and amortisation
Share based payments
Working capital adjustments:
Decrease/(increase) in trade and other receivables
Increase/(Decrease) in trade and other payables
2019
£
2018
£
(2,048,501)
3,968
432,461
(2,031,671)
-
1,161,408
13,248
36,924
164,506
(122,886)
Net cash flows used in operating activities
(1,561,900)
(828,643)
Investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Investment in subsidiary undertaking
-
(388,653)
(3,371,496)
(26,094)
(272,349)
(633,860)
Net cash flows used in investing activities
(3,760,149)
(932,303)
Financing activities
Issue of share capital
5,850,387
6,106,542
Net cash flows generated from financing activities
5,850,387
6,106,542
Net increase in cash and cash equivalents
528,338
4,345,596
Cash and cash equivalents at 30 June 2018
4,572,426
226,830
Cash and cash equivalents at 30 June 2019
5,100,764
4,572,426
The notes on pages 24 to 47 form part of these financial statements
2323
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORTFINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT YEAR ENDED 30 JUNE 2019
NOTES TO THE
CONSOLIDATED
FINANCIAL STATEMENTS
1. CORPORATE INFORMATION
The consolidated financial statements present the financial information of Adriatic Metals Plc and its subsidiary
(collectively, the Group) for the year ended 30 June 2019. Adriatic Metals Plc (the Company or the parent) is a public
company limited by shares and incorporated in England & Wales. The registered office is located at Second Floor,
Stamford House, Regent Street, Cheltenham, United Kingdom, GL50 1HN.
The Group is principally engaged in the exploration for metals for future mining activity.
Information on the Group’s structure is provided in Note 4.
2. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PREPARATION
The consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with
International Financial Reporting Standards, issued by the International Accounting Standards Board (IASB) as adopted by
the European Union (“IFRSs”), and with the Companies Act 2006.
The consolidated financial statements have been prepared on a historical cost basis.
The principal accounting policies adopted by the Group in the preparation of the financial statements are set out below.
The policies have been consistently applied to all the years presented, unless otherwise stated.
The consolidated financial statements are presented in British Pounds (£) rounded to the nearest pound.
GOING CONCERN
The Group incurred a loss of £2,417,653 (2018 - £1,928,697) in the year however the Group also had a net asset position at
the balance sheet date.
The Company and Group meet their day to day working capital requirements by support of investors. The directors believe
it is appropriate to prepare the financial statements on a going concern basis which assumes that the Company and the
Group will continue in operational existence for the foreseeable future on the basis of the Group’s plans.
If the Company and Group are unable to continue in operational existence for the foreseeable future, adjustments would
have to be made to reduce the balance sheet values of the assets to their recoverable amounts, provide for further liabilities
that might arise, and reclassify non-current assets and liabilities to current.
BUSINESS COMBINATIONS
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the
aggregate of the consideration transferred measured at acquisition date fair value and the amount of any non-controlling
interest in the acquiree. For each business combination, the Group measures non-controlling interest in the acquiree at the
proportionate share of the acquiree’s identifiable net assets.
If the business combination is achieved in stages, the previously held equity interest is remeasured at its acquisition date fair
value and any resulting gain or loss is recognised in profit or loss.
The acquisition of an additional ownership interest in a subsidiary without a change of control is accounted for as an equity
transaction. Any excess or deficit of consideration paid over the carrying amount of the non-controlling interest is recognised
in equity of the parent in transactions where the non-controlling interest is acquired or sold without loss of control.
The Group has elected to recognise this effect in retained earnings.
GOODWILL
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount
recognised as the non-controlling interest over the fair value of identifiable assets, liabilities and contingent liabilities acquired.
Goodwill is capitalised as an intangible asset with any impairment in carrying value being charged to the consolidated
statement of comprehensive income. Where the fair value of identifiable assets, liabilities and contingent liabilities exceed the
fair value of consideration paid, the excess is credited in full to the consolidated statement of comprehensive income on the
acquisition date.
2424
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORT 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FOREIGN CURRENCIES
The Group’s consolidated financial statements are presented in GBP (£), which is considered to be the Group’s functional
currency. For each entity the Group determines the functional currency and items included in the financial statements of
each entity are measured using that functional currency which is the currency of the primary economic environment in which
the entity operates (‘the local functional currency’).
TRANSACTIONS AND BALANCES
Transactions in foreign currencies are initially recorded by the Group’s entities at their respective functional currency spot
rates at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of
exchange at the reporting date.
Differences arising on settlement or translation of monetary items are recognised in profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange
rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated
using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary
items measured at fair value is treated in line with the recognition of gain or loss on change in fair value of the item.
Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of
assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated
at the spot rate of exchange at the reporting date.
GROUP COMPANIES
On consolidation, the assets and liabilities of foreign operations are translated into GBP (£) at the rate of exchange prevailing
at the reporting date and their income statements are translated at average exchange rates prevailing during the period.
The exchange differences arising on translation for consolidation are recognised in other comprehensive income.
REVENUE RECOGNITION
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue
can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the
consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty.
TAXES
Current income tax
Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from
or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or
substantively enacted, at the reporting date in the countries where the Group operates and generates taxable income.
Current income tax relating to items recognised directly in equity is recognised in equity and not in the income statement.
Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax
regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities
and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
- When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that
is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable
profit or loss.
-
In respect of taxable temporary differences associated with investments in subsidiaries and associates, when the timing
of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not
reverse in the foreseeable future.
2525
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORTFINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
YEAR ENDED 30 JUNE 2019
NOTES TO THE
CONSOLIDATED
FINANCIAL STATEMENTS
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
TAXES (CONTINUED)
Deferred tax (CONTINUED)
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any
unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available
against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can
be utilised, except:
- When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset
or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss.
-
In respect of deductible temporary differences associated with investments in subsidiaries and associates, deferred tax
assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable
future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised
deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that
future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised
or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets
against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date,
are recognised subsequently if new information about facts and circumstances change. The adjustment is either treated
as a reduction to goodwill (as long as it does not exceed goodwill) if it was incurred during the measurement period or
recognised in profit or loss.
Sales tax
Expenses and assets are recognised net of the amount of sales tax, except:
- When the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which
case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable.
- When receivables and payables are stated with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or
payables in the statement of financial position.
EXPLORATION AND EVALUATION EXPENDITURE
Pre-licence costs
Pre-licence costs relate to costs incurred before the Group has obtained legal rights to explore in a specific area. Such costs
may include the acquisition of exploration data and the associated costs of analysing that data. These costs are expensed in
the period in which they are incurred.
Exploration and evaluation expenditure
Exploration and evaluation activity involves the search for mineral resources, the determination of technical feasibility and the
assessment of commercial viability of an identified resource.
Exploration and evaluation activity includes:
· Researching and analysing historical exploration data
· Gathering exploration data through geophysical studies
· Exploratory drilling and sampling
· Determining and examining the volume and grade of the resource
· Surveying transportation and infrastructure requirements
· Conducting market and finance studies
2626
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORT 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
EXPLORATION AND EVALUATION EXPENDITURE (CONTINUED)
Exploration and evaluation expenditure (CONTINUED)
Licence costs paid in connection with a right to explore in an existing exploration area are capitalised and amortised over
the term of the permit.
Once the legal right to explore has been acquired, exploration and evaluation expenditure is charged to profit or loss as
incurred, unless the Group concludes that a future economic benefit is more likely than not to be realised. These costs
include directly attributable employee remuneration, materials and fuel used, surveying costs, drilling costs and payments
made to contractors.
In evaluating whether the expenditures meet the criteria to be capitalised, several different sources of information are
used. The information that is used to determine the probability of future benefits depends on the extent of exploration and
evaluation that has been performed.
Exploration and evaluation expenditure incurred on licences where a JORC-compliant resource has not yet been established
is expensed as incurred until sufficient evaluation has occurred in order to establish a JORC-compliant resource.
Costs expensed during this phase are included in ’Other operating expenses’ in the statement of profit or loss and other
comprehensive income.
Upon the establishment of a JORC-compliant resource (at which point, the Group considers it probable that economic
benefits will be realised), the Group capitalises any further evaluation expenditure incurred for the particular licence as
exploration and evaluation assets up to the point when a JORC-compliant reserve is established. Capitalised exploration
and evaluation expenditure is considered to be an intangible asset.
Exploration and evaluation assets acquired in a business combination are initially recognised at fair value, including resources
and exploration potential that is considered to represent value beyond proven and probable reserves. Similarly, the costs
associated with acquiring an exploration and evaluation asset (that does not represent a business) are also capitalised.
They are subsequently measured at cost less accumulated impairment. Once JORC-compliant reserves are
established and development is sanctioned, exploration and evaluation assets are tested for impairment and transferred
to ’Mines under construction’ which is a sub-category of ‘Mine properties’. No amortisation is charged during the
exploration and evaluation phase.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if
any. Such cost includes the cost of replacing part of the property, plant and equipment and borrowing costs for long-term
construction projects if the recognition criteria are met. When significant parts of property, plant and equipment are required
to be replaced at intervals, the Group recognises such parts as individual assets with specific useful lives and depreciates
them accordingly. All other repair and maintenance costs are recognised in profit or loss as incurred.
Property, plant and equipment transferred from acquisitions are initially measured at the fair value at the date on which
control is obtained.
Land and buildings are measured at cost less accumulated depreciation on buildings and impairment losses.
Depreciation is calculated on a straight-line at the following rates per each category of asset:
- Land & buildings – Not depreciated
- Plant & equipment – 15%
- Office Equipment – 15%
- Vehicles – 15%
- Assets under construction – Not depreciated
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when
no future economic benefits are expected from its use. Any gain or loss arising on de-recognition of the asset (calculated as
the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement
when the asset is derecognised.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial
year end and adjusted prospectively, if appropriate.
2727
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORTFINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT YEAR ENDED 30 JUNE 2019
NOTES TO THE
CONSOLIDATED
FINANCIAL STATEMENTS
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INTANGIBLE ASSETS
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a
business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at
cost less any accumulated amortisation and accumulated impairment losses.
Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure
is reflected in profit and loss in the period in which the expenditure is incurred. The useful lives of intangible assets are
assessed as either finite or indefinite.
Intangible assets with finite lives are amortised over their useful economic life and assessed for impairment whenever there
is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an
intangible asset with a finite useful life are reviewed at least at the end of each reporting period. The amortisation expense on
intangible assets with finite lives is recognised in the income statement as the expense category that is consistent with the
function of the intangible assets.
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at
the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life
continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.
Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are recognised in the income statement when the asset is derecognised.
Amortisation is calculated on a straight-line at the following rates per each category of asset:
- Patents & Licences – 20%
FINANCIAL INSTRUMENTS
The Company classifies its financial assets in the following measurement categories:
· Those to be measured subsequently at fair value (either through OCI “FVTOCI”, or through profit or loss “FVTPL”); and
· Those to be measured at amortised cost.
The classification depends on the Company’s business model for managing the financial assets and the contractual terms of
the cash flows.
On initial recognition, a financial asset is classified as measured: at amortised cost, FVOCI or FVTPL.
A financial asset is measured at amortised cost if it meets both the following conditions and is not designated as at FVTPL:
· The asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and
· The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured at amortised cost using effective interest method. The
amortised cost is reduced by impairment losses if any.
A debt instrument is measured at FVOCI only if it meets both of the following conditions and is not designated as at FVTPL:
· The asset is held within a business model whose objective is achieved by both collecting contractual cash flows and
selling financial assets; and
· The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to
present subsequent changes in fair value in other comprehensive income (OCI). This election is made on an
investment-by-investment basis.
All other financial assets that are not classified as measured at amortised cost or FVOCI are measured at FVTPL.
In addition, on initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the
requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an
accounting mismatch that would otherwise arise.
For trade and contract receivables, the Company has applied simplified approach permitted by IFRS 9. Simplified approach
is applied to a portfolio of trade receivables that are homogenous in nature and carry similar credit risk. However, simplified
approach requires expected lifetime losses to be recognised from initial recognition of the receivables.
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FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORT 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FINANCIAL INSTRUMENTS (CONTINUED)
Receivables are written off when they are deemed uncollectible because of bankruptcy or other forms of receivership of the
debtors. The assessment of expected credit losses on receivables takes into account credit-risk concentration, collective
debt risk based on average historical losses, specific circumstances such as serious adverse economic conditions in a
specific country or region and other forward-looking information.
FINANCIAL LIABILITIES
The classification of financial liabilities at initial recognition depends on the purpose for which the financial liability was issued
and its characteristics.
Financial liabilities are measured at cost and have not been amortised. These includes trade payables and other short-term
monetary liabilities, which are initially recognised at fair value and subsequently carried at cost.
A financial liability (in whole or in part) is derecognised when the company has extinguished its contractual obligations or is
cancelled. Any gain or loss on derecognition is taken to the statement of comprehensive income.
TRADE RECEIVABLES
Trade receivables are initially measured at fair value, and are subsequently measured at amortised cost using the effective
interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in statement of
comprehensive income when there is objective evidence that the asset is impaired. The allowance recognised is measured
as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at
the effective interest rate computed at initial recognition.
TRADE AND OTHER PAYABLES
Trade and other payables are initially measured at fair value, and are subsequently measured at amortised cost, using the
effective interest rate method.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents in the statement of financial position comprise cash at banks and on hand and short-term
deposits with a maturity of three months or less. For the purpose of the consolidated statement of cash flows, cash and
cash equivalents consist of cash and short-term deposits as defined above, net of outstanding bank overdrafts.
SHARE-BASED PAYMENTS
Employees and consultants (including senior executives) of the Group receive remuneration in the form of share-based
payments, whereby services are rendered as consideration for equity instruments (equity-settled transactions).
EQUITY-SETTLED TRANSACTIONS
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an
appropriate valuation model, further details of which are given in Note 17.
That cost is recognised in employee benefits expense (Note 5), together with a corresponding increase in equity
(other capital reserves), over the period in which the service and, where applicable, the performance conditions are fulfilled
(the vesting period). The cumulative expense recognised for equity-settled transactions at each reporting date until the
vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of
equity instruments that will ultimately vest. The expense or credit in the statement of profit or loss for a period represents the
movement in cumulative expense recognised as at the beginning and end of that period.
Service and non-market performance conditions are not taken into account when determining the grant date fair value of
awards, but the likelihood of the conditions being met is assessed as part of the Group’s best estimate of the number of
equity instruments that will ultimately vest. Market performance conditions are reflected within the grant date fair value.
Any other conditions attached to an award, but without an associated service requirement, are considered to be non-vesting
conditions. Non-vesting conditions are reflected in the fair value of an award and lead to an immediate expensing of an
award unless there are also service and/or performance conditions.
2929
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORTFINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT YEAR ENDED 30 JUNE 2019
NOTES TO THE
CONSOLIDATED
FINANCIAL STATEMENTS
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
EQUITY-SETTLED TRANSACTIONS (CONTINUED)
No expense is recognised for awards that do not ultimately vest because non-market performance and/or service conditions
have not been met. Where awards include a market or non-vesting condition, the transactions are treated as vested
irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance and/or service
conditions are satisfied.
When the terms of an equity-settled award are modified, the minimum expense recognised is the grant date fair value of
the unmodified award, provided the original terms of the award are met. An additional expense, measured as at the date of
modification, is recognised for any modification that increases the total fair value of the share-based payment transaction,
or is otherwise beneficial to the employee. Where an award is cancelled by the entity or by the counterparty, any remaining
element of the fair value of the award is expensed immediately through profit or loss.
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per
share (further details are given in Note 16).
PROVISIONS AND CONTINGENCIES
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event,
it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a
reliable estimate can be made of the amount of the obligation. When the Group expects some or all of a provision to be
reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only
when the reimbursement is virtually certain. The expense relating to a provision is presented in the income statement net
of any reimbursement.
STANDARDS ISSUED BUT NOT YET EFFECTIVE
Standards issued and not yet effective for the Group’s financial statements for the period ended 30 June 2019 are listed
below. This listing of standards and interpretations issued are those that the Group reasonably expects to have an impact
on disclosures, financial position or performance when applied at a future date. The Group intends to adopt these standards
when they become effective.
CHANGES IN ACCOUNTING POLICY AND DISCLOSURES
a)
IFRS 15, ‘Revenue from Contracts with Customers’ issued in May 2014 provides a single, principles based five-step
model to be applied to all contracts with customers. The five steps in the model are as follows:
·
·
Identify the contract with the customer
Identify the performance obligations in the contract
· Determine the transaction price
· Allocate the transaction price to the performance obligations in the contract
· Recognise revenue when (or as) the entity satisfies a performance obligation
The standard’s requirements will also apply to the recognition and measurement of gains and losses on the sale of some
non-financial assets that are not an output of the entity’s ordinary activities (e.g., sales of property, plant and equipment or
intangibles). Extensive disclosures will be required, including disaggregation of total revenue information about performance
obligations; changes in contract asset and liability account balances between periods and key judgements and estimates.
The Company adopted IFRS 15 using the full retrospective method. The effect of initially applying this standard did not have
any material impact on the Company’s financial statements as of 31 December 2018 and 31 December 2017 as a result of
the changes in accounting policies as detailed below).
b)
IFRS 9, ‘Financial Instruments’ outlines the recognition, measurement and derecognition of financial assets and financial
liabilities, the impairment of financial assets and hedge accounting. Financial assets are to be measured at amortised
cost, fair value through profit or loss or fair value through other comprehensive income, with an irrevocable option
on initial recognition to recognise some equity financial assets at fair value through other comprehensive income.
The impairment model in IFRS 9 moves to one that is based on expected credit losses rather than the IAS 39 incurred
loss model. The derecognition principles of IAS 39, ‘Financial Instrument: Recognition and Measurement’ have been
transferred to IFRS 9. The hedge accounting requirements have been liberalised from that allowed previously.
The requirements are based on whether an economic hedge is in existence, with less restriction to prove whether
a relationship will be effective than current requirements.
3030
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORT 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CHANGES IN ACCOUNTING POLICY AND DISCLOSURES (CONTINUED)
The Company adopted IFRS 9 retrospectively, with the initial application date of 1 January 2018 and adjusting the
comparative information for the period beginning 1 January 2017 for any effects in adoption of IFRS 9. The key changes
to the Company’s accounting policies resulting from the adoption of IFRS 9 as detailed in below) did not result to any
restatement of the Company’s comparative figures as of 31 December 2017 and did not have any material effect on the
Company’s financial statements as of 31 December 2018.
The management believes that the adoption of the above and other amendments effective for the current accounting period
has not had any material impact on the recognition, measurement and presentation in the financial statements.
Standard that is not yet effective and has not been adopted early by the Company
The following standard that is applicable to the Company has been published and is mandatory for accounting periods of
the Company beginning after 1 January 2018, but which has not been adopted early by the Company:
·
IFRS 16, ‘Leases’ is effective for annual periods beginning on or after 1 January 2019.The scope of IFRS 16 includes
leases of all assets, with certain exceptions. IFRS 16 requires lessees to account for all leases under a single on-balance
sheet model in a similar way to finance leases under IAS 17. The standard includes two recognition exemptions for
lessees – leases of ’low-value’ assets and short-term leases (i.e., leases with a lease term of 12 months or less). At the
commencement date of a lease, a lessee will recognise a liability to make lease payments and an asset representing
the right to use the underlying asset during the lease term. Lessees will be required to separately recognise the interest
expense on the lease liability and the depreciation expense on the right-of-use asset. Lessor accounting is substantially
unchanged from accounting under IAS 17. A lessee can choose to apply the standard using either a full retrospective or
a modified retrospective transition approach. The standard’s transition provisions permit certain reliefs. Early application
is permitted, but not before an entity applies IFRS 15.
The management has started an initial assessment of the potential impact of the above standard on its financial statements.
The most significant impact identified is that the Company will recognise new assets and liabilities for its operating leases of
office space.
USE OF ESTIMATES AND JUDGEMENTS
The preparation of financial statements in accordance with IFRS requires Management to make judgments, estimates
and assumptions that affect the reported amounts of assets and liabilities, income and expenses, and the disclosure of
contingent liabilities. The estimates and associated assumptions are based on historical experience and various other
factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the
judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the
revision and future periods if the revision affects both current and future periods.
In particular, the following is an area where particular judgement is required:
Exploration and evaluation expenditure
Exploration and evaluation activity involves the search for mineral resources, the determination of technical feasibility
and the assessment of commercial viability of an identified resource.
Exploration and evaluation activity includes:
· Researching and analysing historical exploration data
· Gathering exploration data through geophysical studies
· Exploratory drilling and sampling
· Determining and examining the volume and grade of the resource
· Surveying transportation and infrastructure requirements
· Conducting market and finance studies
Licence costs paid in connection with a right to explore in an existing exploration area are capitalised and amortised
over the term of the permit.
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FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORTFINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT YEAR ENDED 30 JUNE 2019
NOTES TO THE
CONSOLIDATED
FINANCIAL STATEMENTS
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES AND JUDGEMENTS (CONTINUED)
Exploration and evaluation expenditure (CONTINUED)
Once the legal right to explore has been acquired, exploration and evaluation expenditure is charged to profit or loss as
incurred, unless the Group concludes that a future economic benefit is more likely than not to be realised. These costs
include directly attributable employee remuneration, materials and fuel used, surveying costs, drilling costs and payments
made to contractors.
In evaluating whether the expenditures meet the criteria to be capitalised, several different sources of information are
used. The information that is used to determine the probability of future benefits depends on the extent of exploration and
evaluation that has been performed.
3. SEGMENT INFORMATION
It is the opinion of the directors that the operations of the Group represent one segment, as they are treated as such when
evaluating performance.
4. GROUP INFORMATION
Additions
At 30 June 2018
Additions
At 30 June 2019
NET BOOK VALUE
At 30 June 2019
At 30 June 2018
INVESTMENT IN
SUBSIDIARY
£
1,517,405
1,517,405
3,371,496
4,888,901
4,888,901
1,517,405
The consolidated financial statements of the Group include:
NAME
PRINCIPAL ACTIVITIES
ADDRESS OF REGISTERED OFFICE
% EQUITY INTEREST
2019
2018
Eastern Mining d.o.o
Mining exploration
Marsala Tita 3/II, 1000 Sarajevo,
Bosnia and Herzegovina
100
100
3232
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORT 5. ADMINISTRATIVE EXPENSES
Wages and salaries
Employee benefit expense – share options
Consultancy fees
Depreciation
Amortisation
Other costs
IPO Costs
NOTE
17
11
12
2019
£
2018
£
233,896
456,616
591,651
11,646
77,496
791,904
-
2,163,209
173,850
1,121,275
531,954
4,632
5,321
210,883
123,006
2,170,921
6. EMPLOYEES
The average monthly number of employees during the year was as follows:
2019
2018
5
16
21
4
10
14
2019
2018
5
4
9
3
2
5
2019
£
2018
£
25,000
3,605
28,605
12,500
3,625
16,125
Eastern Mining d.o.o.
Administrative staff - Eastern Mining
Exploration staff - Eastern Mining
Adriatic Metals Plc
Directors
Administrative and Management
7. AUDITORS REMUNERATION
Auditor’s remuneration – fees payable to the Group’s auditor for the
audit of the group’s annual accounts.
Auditor’s remuneration – fees payable to the auditor for the
audit of accounts of subsidiaries of the company
3333
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORTFINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT YEAR ENDED 30 JUNE 2019
NOTES TO THE
CONSOLIDATED
FINANCIAL STATEMENTS
8. FINANCE COSTS
Foreign currency movements
Interest receivable
2019
£
2018
£
(291,949)
37,505
(254,444)
(242,224)
-
(242,224)
9.
INCOME TAX
No liability to corporation tax arose on ordinary activities for the year ended 30 June 2019 or 30 June 2018.
RECONCILIATION OF TOTAL TAX CHARGE INCLUDED IN PROFIT AND LOSS
2019
£
2018
£
Loss before tax
(2,417,653)
(1,928,697)
Loss multiplied by the standard rate of corporation tax in the UK 19%
(459,354)
(366,452)
Effects of:
Losses carried forward
Total tax charge
459,354
366,452
-
-
FACTORS THAT MAY AFFECT FUTURE CURRENT AND TOTAL TAX CHARGES
A deferred tax asset of £78,100 (2018 - £70,000) at the year end has not been recognised due to uncertainty surrounding
the Group’s future taxable profits.
The UK corporation tax rate will be reduced to 17%, effective 1 April 2020. The effects of this change has been reflected in
the financial statements.
10. OTHER COMPREHENSIVE INCOME
2019
£
2018
£
Foreign exchange differences on consolidation
42,875
5,965
3434
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORT 11. TANGIBLE ASSETS
GROUP
LAND &
BUILDINGS
£
PLANT &
EQUIPMENT
£
ASSETS UNDER
CONSTRUCTION
£
TOTAL
£
COST
At 1 July 2017
Additions
Disposals
Foreign exchange differences
562,362
-
-
3,758
19,055
40,205
-
125
4,693
91
-
32
586,110
40,296
-
3,915
At 30 June 2018
566,120
59,385
4,816
630,321
Additions
Disposals
Foreign exchange differences
58,663
-
6,195
41,140
4,816
-
-
(4,816)
-
At 30 June 2019
630,978
105,341
DEPRECIATION
At 1 July 2017
Charge for the year
At 30 June 2018
Charge for the year
On disposals
At 30 June 2019
NET BOOK VALUE
At 30 June 2019
-
-
-
-
-
-
424
3,589
4,013
11,178
-
15,191
630,978
90,150
-
-
-
-
-
-
-
-
99,803
-
6,195
736,319
424
3,589
4,013
11,178
-
15,191
721,128
At 30 June 2018
566,120
55,372
4,816
626,308
3535
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORTFINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT YEAR ENDED 30 JUNE 2019
NOTES TO THE
CONSOLIDATED
FINANCIAL STATEMENTS
11. TANGIBLE ASSETS (CONTINUED)
LAND &
BUILDINGS
£
PLANT &
EQUIPMENT
£
ASSETS UNDER
CONSTRUCTION
£
TOTAL
£
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
360
26,094
-
26,454
-
-
26,454
-
-
-
3,968
-
3,968
22,486
26,454
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
360
26,094
-
26,454
-
-
26,454
-
-
-
3,968
-
3,968
22,486
26,454
COMPANY
COST
At 1 July 2017
Additions
Disposals
At 30 June 2018
Additions
Disposals
At 30 June 2019
DEPRECIATION
At 1 July 2017
Charge for the year
At 30 June 2018
Charge for the year
On disposals
At 30 June 2019
NET BOOK VALUE
At 30 June 2019
At 30 June 2018
3636
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORT 12. INTANGIBLE ASSETS
GROUP
COST
At 1 July 2017
Additions
Disposals
Foreign exchange differences
EXPLORATION
& EVALUATION
ASSETS
£
PATENTS AND
LICENCES
TOTAL
£
£
172,337
756,479
-
444
111,740
-
-
526
284,077
756,479
-
970
At 30 June 2018
929,260
112,266
1,041,526
Additions
Disposals
Foreign exchange differences
2,600,409
-
-
414,062
-
-
3,014,471
-
-
At 30 June 2019
3,529,669
526,328
4,055,997
AMORTISATION AND IMPAIRMENT
At 1 July 2017
Charge for the year
At 30 June 2018
Charge for the year
On disposals
At 30 June 2019
NET BOOK VALUE
At 30 June 2019
At 30 June 2018
-
-
-
-
-
-
1,970
5,321
7,291
77,496
-
1,970
5,321
7,291
77,496
-
84,787
84,787
3,529,669
441,541
3,971,210
929,260
104,975
1,034,235
3737
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORTFINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT YEAR ENDED 30 JUNE 2019
NOTES TO THE
CONSOLIDATED
FINANCIAL STATEMENTS
12. INTANGIBLE ASSETS (CONTINUED)
COMPANY
COST
At 1 July 2017
Additions
Disposals
Foreign exchange differences
At 30 June 2018
Additions
Disposals
At 30 June 2019
AMORTISATION AND IMPAIRMENT
At 1 July 2017
Charge for the year
At 30 June 2018
Charge for the year
At 30 June 2019
NET BOOK VALUE
At 30 June 2019
At 30 June 2018
EXPLORATION
& EVALUATION
ASSETS
£
73,412
272,349
-
-
345,761
388,653
-
734,414
-
-
-
-
-
734,414
345,761
PATENTS AND
LICENCES
£
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
TOTAL
£
73,412
272,349
-
-
345,761
388,653
-
734,414
-
-
-
-
-
734,414
345,761
13. TRADE AND OTHER CURRENT RECEIVABLES
GROUP
2019
£
287,514
74,210
361,724
2018
£
128,583
19,128
147,711
COMPANY
2019
£
78,482
18,764
97,246
2018
£
91,730
18,764
110,494
VAT
Other receivables
3838
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORT 14. CASH AND CASH EQUIVALENTS
GROUP
2019
£
2018
£
COMPANY
2019
£
2018
£
Cash at bank
Petty cash
5,366,266
3,493
5,369,759
4,640,896
3,493
4,644,389
5,097,271
3,493
5,100,764
4,568,933
3,493
4,572,426
15. TRADE AND OTHER CURRENT PAYABLES
Trade payables
Accruals
Taxes payable
Other payables
16. SHARE CAPITAL
GROUP AND COMPANY
Issued and fully paid
Shares issued
GROUP
2019
£
105,886
26,423
2,546
40,077
174,932
2018
£
46,258
51,515
4,485
9,566
111,824
COMPANY
2019
£
77,760
24,937
-
-
102,697
2018
£
14,258
51,515
-
-
65,773
30 JUN 2019
£
30 JUN 2018
£
2,013,701
1,733,042
In October 2017, the company issued 3,641,863 shares with a par value of £0.05342
On January 30, 2018 the company performed a share split on a 1:4 basis from the 19,798,899 shares issued to
79,195,596 shares in preparation for a listing on the Australian Stock Exchange (“ASX”).
On February 2, 2018 the company issued 1,000,000 shares in lieu of a capital raising fee and issued on the ASX
with a listing price of A$0.20c
3939
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORTFINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT YEAR ENDED 30 JUNE 2019
NOTES TO THE
CONSOLIDATED
FINANCIAL STATEMENTS
16. SHARE CAPITAL (CONTINUED)
On April 27, 2018 the company listed on the ASX and, upon listing, awarded the following shares and options:
NO. OF SHARES
80,195,596
600,000
50,000,000
130,795,596
NO. OF SHARES
130,795,596
19,686,991
150,482,587
NO. OF SHARES
150,482,587
300,000
150,782,587
9,000,000
2,000,000
7,825,000
18,825,000
169,607,587
SHARE SUMMARY
Total shares at IPO
Shares issued for fees
CDIs issued on listing
Total Shares
On November 20, 2018 the company made an institutional placement of CDI’s on the ASX as follows:
Total shares at placement
CDI’s issued at placement at 55c AUD share price
Total Shares
From April 11, 2019 to May 1, 2019 options were exercised for shares:
Total shares on issue before option exercise
CDI’s issued on exercise
Total Shares at June 30, 2019
OPTIONS – SEE NOTE 17
Founder options at A$0.20
Advisor options at A$0.40
Executive options (various)
Total Options
Fully diluted Share Capital
4040
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORT 16. SHARE CAPITAL (CONTINUED)
EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the period.
Diluted earnings per share is calculated using the weighted average number of shares adjusted to assume the conversion of
all dilutive potential ordinary shares.
Reconciliations are set out below.
2019
EARNINGS
£
WEIGHTED
AVERAGE
NUMBER OF
SHARES
PER-SHARE
AMOUNT
PENCE
Basic EPS
Earnings attributable to ordinary shareholders
Effect of dilutive securities
(2,417,653)
-
142,826,588
19,693,014
(1.69)
-
Diluted EPS
Adjusted earnings
2018
Basic EPS
Earnings attributable to ordinary shareholders
Effect of dilutive securities
Diluted EPS
Adjusted earnings
(2,417,653)
162,519,601
(1.44)
EARNINGS
£
WEIGHTED
AVERAGE
NUMBER OF
SHARES
PER-SHARE
AMOUNT
PENCE
(1,928,697)
-
84,960,236
6,678,082
(2.27)
-
(1,928,697)
91,638,318
(2.10)
The weighted average number of shares has been calculated as if the share split occurred at the start date of the
comparative period presented so that the earning per share figure is comparable.
4141
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORTFINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT YEAR ENDED 30 JUNE 2019
NOTES TO THE
CONSOLIDATED
FINANCIAL STATEMENTS
17. SHARE OPTION SCHEME
During 2018, the Company issued a number of share options, and the details of these are as follows:
EXECUTIVE OPTIONS
30c EXECUTIVE
OPTIONS
40c EXECUTIVE
OPTIONS
60c EXECUTIVE
OPTIONS
Underlying share price (A$)
Exercise price (A$)
Valuation date
Expiry date
Life of the options (years)
Volatility
Risk free rate
Number of options
Value per option (A$)
Value per Tranche (A$)
OTHER OPTIONS
Underlying share price (A$)
Exercise price (A$)
Valuation date
Expiry date
Life of the options (years)
Volatility
Risk free rate
Number of options
Value per option (A$)
Value per Tranche (A$)
0.200
0.300
20 Feb 2018
1 Jul 2021
3.36
135%
2.01%
2,500,000
0.150
375,000
0.200
0.400
20 Feb 2018
1 Jul 2021
3.36
135%
2.01%
5,250,000
0.143
607,750
0.200
0.600
20 Feb 2018
1 Jul 2021
3.36
135%
2.01%
750,000
0.132
330,000
FOUNDER
ADVISOR
0.200
0.200
20 Feb 2018
1 Jul 2023
5.36
135%
2.45%
9,000,000
0.178
1,602,000
0.200
0.400
20 Feb 2018
1 Jul 2021
3.36
135%
2.01%
2,000,000
0.143
286,000
The share options have been valued, at the grant date, using the Black Scholes model for valuing options, and the inputs
included in the modelling of this are shown above.
The key uncertainty in relation to this modelling is the volatility of the underlying share prices. For the purposes of the
modelling, this has been determined by assessing volatility of the shares in the 4 months post listing, which represents the
only suitable basis for determining the volatility.
During the 2018 year, the founder and advisor options fully vested, and the full value of these options were therefore
recognised in the year ended 30 June 2018.
The executive options are recognised over their vesting period, taking into account the number of options which are
expected to vest.
4242
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORT 17. SHARE OPTION SCHEME (CONTINUED)
The impact of share options on the financial statements was as follows:
Executive options
30c Executive Options
40c Executive Options
60c Executive Options
Other options
Advisor Options
Founder Options
GRANT DATE FAIR
VALUE
£
RECOGNISED IN
2018
£
RECOGNISED IN
2019
£
211,243
422,860
55,904
161,090
905,355
1,756,452
67,806
135,733
12,381
161,090
905,355
1,282,365
143,437
269,657
43,523
-
-
456,617
All recognised amounts in relation to options were shown within administrative expenses in the year, within the
“Employee benefit expense – share options” line in Note 5.
The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in,
share options during the year (excluding share appreciation rights):
Outstanding at 1 July
Granted during the year
Exercised during the year
Expired during the year
Outstanding at 30 June
Exercisable at 30 June
2019
2018
NUMBER
WAEP
NUMBER
WAEP
19,500,000
-
(300,000)
-
19,200,000
18,200,000
$0.30
$0.40
$0.30
-
19,500,000
-
-
19,500,000
11,000,000
-
$0.30
$0.30
The weighted average remaining contractual life for the share options outstanding as at 30 June 2019 was 2.5 years
(2018: 3.5 years).
The weighted average fair value of options granted during the year was 0c (2018: 16c).
The range of exercise prices for options outstanding at year end was 20c to 60c (2018 20c to 60c).
18. RETAINED EARNINGS AND RESERVES
The other reserves of the Company are as follows:
Retained Earnings
Includes all current and prior period retained profits and losses, less dividends paid.
Other Capital Reserve
Used to recognise the value of equity-settled share-based payments. See Note 17.
Used to recognise the foreign currency movements on consolidation.
Other Reserves
(Foreign currency
translation reserves)
4343
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORTFINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT YEAR ENDED 30 JUNE 2019
NOTES TO THE
CONSOLIDATED
FINANCIAL STATEMENTS
19. RELATED PARTIES
The Company considers personnel with the authority and responsibility for planning, directing and controlling the activities of
the Company to be key management personnel.
The following amounts were incurred with respect to the Company’s Directors, Chief Executive Officer and Chief Financial
Officer of the Company;
Chief Executive Officer
Chief Operating Officer
Chief Finance Officer
Company Secretary - Joint
Directors Fees
Advisory Fees - Directors
Total
30 JUNE 2019
£
30 JUNE 2018
£
172,917
32,250
55,002
21,529
172,191
134,500
588,389
76,000
-
29,725
-
41,239
195,400
342,364
ADVISORY FEES – DIRECTORS £134,500
Swellcap is a related party of the Company as it is controlled by Paul Cronin, a Director of the Company. The Company
has engaged Swellcap to provide the Company with corporate office facilities and services from 1 April 2018 at £5,000
per month. This fee was increased to £6,000 per month from 1 May 2019 and the total fees to 30 June 2019 were £67,000.
Milos Bosnjakovic, a Director of the Company, has a consultancy agreement with the Company for his Head of Government
Affairs role for £5,000 per month in addition to his Director’s Fees. The total fees to 30 June 2019 were £67,500.
20. COMMITMENTS AND CONTINGENCIES
The company had no commitments as at 30 June 2019, or 2018.
21. EVENTS AFTER THE REPORTING DATE
On July 2, 2019 the Company announced a change in substantial holding due to on market trading from Sandfire
Resources NL from a holding of 7.65% to 11.13% with 16,776,855 shares held. On August 14, 2019 a further notice
of change of interests and substantial holding was announced for 2,551,717 shares taking Sandfire Resources NL to
12.78% with 19,328,572 shares held.
On July 23, 2019 the Company released a Maiden Mineral Resource for Rupice for 9.4Mt at 5.1% Zinc, 3.3% Lead,
183g/t Silver, 1.8g/t Gold, 0.6% Copper and 31% Barium Sulphate in the Indicated and Inferred category and an updated
Mineral Resource for Veovača for 7.4Mt at 1.4% Zinc, 0.9% Lead, 41g/t Silver, 0.1g/t Gold and 13% Barium Sulphate in
the Indicated and Inferred category.
On September 18, 2019 the Company announced the appointment of Paul Cronin as Managing Director and CEO which
included a total of 1.5M performance rights conditional upon set milestones and shareholder approval.
Michael Rawlinson was appointed to the Board of Directors on March 4, 2019 and included an award of 1M share options
with a 3 year term and exercise price of A$1.00, subject to shareholder approval.
Subsequent to 30 June 2019, the Board approved 1M share options with a 3 year term and exercise price of A$1.25 to the
Company’s COO, Graham Hill.
4444
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORT 22. FINANCIAL INSTRUMENTS
FAIR VALUE
The fair value of the financial assets and financial liabilities of the Group, at each reporting date, approximates to their
carrying amount as disclosed in the Consolidated Statement of Financial Position and in the related notes.
The fair value of the financial assets and liabilities are included at the amounts at which the instrument could be exchanged
in a current transaction between willing parties, other than in a forced or liquidation sale. The cash and cash equivalents,
trade and other receivables and trade and other payables approximate their carrying value amounts largely due to the
short-term maturities of these instruments. Set out below is a comparison of the carrying amounts and fair values of financial
instruments as at 30 June 2019:
GROUP
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
COMPANY
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
2019
CARRYING
AMOUNT
£
FAIR VALUE
£
2018
CARRYING
AMOUNT
£
FAIR VALUE
£
5,369,759
361,724
5,369,759
361,724
4,644,389
19,128
4,644,389
19,128
174,932
174,932
107,339
107,339
2019
CARRYING
AMOUNT
£
FAIR VALUE
£
2018
CARRYING
AMOUNT
£
FAIR VALUE
£
5,100,764
97,246
5,100,764
97,246
4,572,426
18,764
4,572,426
18,764
102,697
102,697
65,773
65,773
23. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
CAPITAL RISK MANAGEMENT
The Group’s objectives when managing capital are:
·
·
·
to safeguard the Group’s ability to continue as a going concern, so that it continues to provide returns and benefits
for shareholders;
to support the Group’s growth; and
to provide capital for the purpose of strengthening the Group’s risk management capability.
The Group actively and regularly reviews and manages its capital structure to ensure an optimal capital structure and equity
holder returns, taking into consideration the future capital requirements of the Group and capital efficiency, prevailing and
projected profitability, projected operating cash flows, projected capital expenditures and projected strategic investment
opportunities. Management regards total equity as capital and reserves, for capital management purposes.
4545
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORTFINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
YEAR ENDED 30 JUNE 2019
NOTES TO THE
CONSOLIDATED
FINANCIAL STATEMENTS
23. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
FINANCIAL RISK FACTORS
The Group is exposed to market risk, foreign currency risk, credit risk and liquidity risk. Within each of the operating
subsidiaries, the entities senior management oversees the management of these risks for their operations and periodically
identify, measure and manage these risks. These risks are summarised below.
MARKET RISK
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of the changes
in market prices. Market risk reflects interest rate risk, currency risk and other price risks.
Given that the company is not yet selling any minerals this is not a risk that affects the company in the current year,
however, when the company does begin to trade in minerals it is a risk that will have to be considered given the volatility
of mineral prices.
FOREIGN CURRENCY RISK
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily
to the Group’s subsidiary company operating in Bosnian Mark while the Group’s presentation currency is that of British
Pound. If the rate of the Bosnian Mark were to increase this would have a negative impact on the turnover and profit
of the Group.
See the below sensitivity analysis for details of the possible impacts.
GROUP FOREIGN CURRENCY SENSITIVITY ANALYSIS
The following table demonstrates the sensitivity to a possible change in the Bosnian Mark exchange rates, with all other
variables held constant and the impact on the Group’s profit before tax to changes in the fair value of monetary assets
and liabilities.
30 JUNE 2019
Increase in foreign exchange rate of 10%
Bosnian Mark
Decrease in foreign exchange rate of 10%
Bosnian Mark
30 JUNE 2018
Increase in foreign exchange rate of 10%
Bosnian Mark
Decrease in foreign exchange rate of 10%
Bosnian Mark
EFFECT ON
PROFIT OR LOSS
£
EFFECT ON
EQUITY
£
33,560
(390,466)
(41,017)
477,236
EFFECT ON
PROFIT OR LOSS
£
EFFECT ON
EQUITY
£
15,155
(120,351)
(18,523)
147,096
The movement in profit or loss is a result of a change in the fair value of assets and liabilities denominated in Bosnian Mark
where the functional currency of the entity is a currency other than the entity’s reporting currency.
The movement in equity arises from changes in foreign currency offsetting the translation of foreign operations’ net
assets into £.
As can be seen from the above analysis the profit and loss would not be materially affected however equity could be
affected with a slight movement in foreign exchange rates.
4646
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORT 23. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
GROUP FOREIGN CURRENCY SENSITIVITY ANALYSIS (CONTINUED)
In addition to investments in foreign subsidiaries denominated in Bosnian Marks, at the year-end the Group held financial
assets denominated in other currencies, as follows:
30 JUNE 2019
30 JUNE 2019
30 JUNE 2018
Amounts in Euros
Amounts in Australian Dollars
€ 268,230
A$ 9,236,297
€ 1,827,922
A$ 4,834,668
A 10% movement in the exchange rates with these currencies would have an impact of 10% of the above on both losses
and equity.
CREDIT RISK
Credit risk is the risk that a counterparty will not meet its obligations under a customer contract leading to a financial loss.
The Group is exposed to credit risk from its operating activities (trade receivables) and from its financing activities, including
taxes receivable, foreign exchange transactions and other financial instruments. Management do not consider that the
Group has significant exposure to credit risk.
LIQUIDITY RISK
Liquidity risk is the risk that arises when the maturity of assets and liabilities does not match. An unmatched position
potentially enhances profitability, but can also increase the risk of losses. The Company does not face significant liquidity
risks and uncertainties as they are currently in a net asset position.
4747
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORTFINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT TO THE SHAREHOLDERS OF ADRIATIC METALS PLC
INDEPENDENT
AUDITOR’S
REPORT
ADRIATIC METALS PLC
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF ADRIATIC METALS PLC
OPINION
We have audited the consolidated financial statements of Adriatic Metals Plc (the ‘Company’) and its subsidiaries
(the ‘Group’) for the year ended 30 June 2019, which comprise the Consolidated Statement of Profit or Loss and
Other Comprehensive Income, the Consolidated and Company Balance Sheets, the Consolidated and Company
Statements of Changes in Equity, the Consolidated and Company Statement of Cash Flows and the related notes,
including a summary of significant accounting policies. The financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting Standards as adopted by the European Union.
In our opinion the consolidated financial statements:
· give a true and fair view of the state of the Group’s and of the parent Company’s affairs as at 30 June 2019 and of
the Group’s loss for the year then ended;
·
·
have been properly prepared in accordance with International Financial Reporting Standards as adopted by the
European Union; and
have been prepared in accordance with the requirements of the Companies Act 2006.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described in the Auditors’ responsibilities for the audit of the
financial statements section of our report. We are independent of the Group and Company in accordance with the
ethical requirements that are relevant to our audit of the consolidated financial statements in the United Kingdom,
including the Financial Reporting Council’s Ethical Standard, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
CONCLUSIONS RELATING TO GOING CONCERN
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to
you where:
·
·
the directors’ use of the going concern basis of accounting in the preparation of the consolidated financial
statements is not appropriate; or
the directors have not disclosed in the consolidated financial statements any identified material uncertainties that
may cast significant doubt about the Group’s or the parent Company’s ability to continue to adopt the going
concern basis of accounting for a period of at least twelve months from the date when the consolidated financial
statements are authorised for issue.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
consolidated financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall
audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
4848
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORT Key audit matter
How our audit addressed the key audit matter
Impairment of exploration and evaluation assets and
investment in subsidiary company
The Group has capitalised significant costs in
respect of its mining exploration activities, in
accordance with IFRS 6 ‘Exploration for Evaluation
of Mineral Resources’ (IFRS 6), therefore there is a
risk of impairment.
The results from the exploration activity are key
to ensuring that future commercialisation will be
achievable and that there are no indications of
impairment, as well as the good standing of the
licences in place.
The Company also has a significant investment in
its subsidiary, the carrying value of which is linked to
the underlying exploration asset. Therefore there is
also a risk of impairment of the investments.
In accordance with IFRS 6 we reviewed the
exploration and evaluation (E&E) assets for indications
of impairment.
We have reviewed the assets for indications of
impairment, considered and discussed the Groups
forecasts and impairment reviews and obtained
evidence that the licences remain in good standing.
Based on the above, no indications of impairment
were noted.
OUR APPLICATION OF MATERIALITY
The scope and focus of our audit was influenced by our assessment and application of materiality. We apply the
concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements on our
audit and on the consolidated financial statements.
We define financial statements materiality as the magnitude by which misstatements, including omissions, could
influence the economic decisions taken on the basis of the consolidated financial statements by reasonable users.
We also determine a level of performance materiality, which we use to determine the extent of testing needed to
reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements
exceeds materiality for the consolidated financial statements as a whole.
· Overall materiality - We determine materiality for the consolidated financial statements as a whole to be
£210,000. This was based on the key performance indicator, being 2% of gross assets. We believe gross asset
values are the most appropriate bench mark due to the minimal income statement activity during the year and
existence of key balance sheet items.
· Performance materiality - On the basis of our risk assessment, together with our assessment of the company’s
control environment, our judgement is that performance materiality for the consolidated financial statements
should be 55% of materiality, amounting to £115,000.
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
consolidated financial statements. In particular, we looked at where the directors made subjective judgements,
for example in respect of significant accounting estimates that involved making assumptions and considering future
events that are inherently uncertain.
We tailored the scope of our audit to ensure that we performed sufficient work to be able to give an opinion on the
financial statements as a whole, taking into account an understanding of the structure of the Group and Company,
its activities, the accounting processes and controls, and the industry in which they operate. Our planned audit testing
was directed accordingly and was focused on areas where we assessed there to be the highest risk of material
misstatement. During the audit, we reassessed and re-valuated audit risks and tailored our approach accordingly.
The audit testing included substantive testing on significant transactions, balances and disclosures, the extent of
which was based on various factors such as our overall assessment of the control environment, the effectiveness of
controls and management of specific risk.
We communicated with those charged with governance regarding, among other matters, the planned scope and
timing of the audit and significant findings, including any significant deficiencies in internal control that we identify
during the audit.
4949
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORTFINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT TO THE SHAREHOLDERS OF ADRIATIC METALS PLC
INDEPENDENT
AUDITOR’S
REPORT
OTHER INFORMATION
The directors are responsible for the other information. The other information comprises the information included in the
Annual Report, other than the consolidated financial statements and our Auditors’ Report thereon. Our opinion on the
consolidated financial statements does not cover the other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are required to determine whether there is a material
misstatement in the consolidated financial statements or a material misstatement of the other information. If, based
on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
OPINION ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006
In our opinion, based on the work undertaken in the course of the audit:
·
·
the information given in the Group Strategic Report and the Directors’ Report for the financial year for which
the financial statements are prepared is consistent with the consolidated financial statements; and
the Group Strategic Report and the Directors’ Report have been prepared in accordance with applicable
legal requirements.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained
in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the
Directors’ Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us
to report to you if, in our opinion:
·
·
·
adequate accounting records have not been kept by the Group, or returns adequate for our audit have not been
received from branches not visited by us; or
the Group consolidated financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
· we have not received all the information and explanations we require for our audit.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the Directors’ Responsibilities Statement, the directors are responsible for the preparation
of the consolidated financial statements and for being satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the preparation of consolidated financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the directors are responsible for assessing the Group and parent
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend to liquidate the Group or the parent
Company or to cease operations, or have no realistic alternative but to do so.
5050
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORT AUDITORS’ RESPONSIBILITIES FOR THE AUDIT OF THE GROUP FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an Auditors’ Report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these consolidated financial statements.
A further description of our responsibilities for the audit of the consolidated financial statements is located on the
Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our
Auditors’ Report.
USE OF OUR REPORT
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members
those matters we are required to state to them in an Auditors’ Report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s
members, as a body, for our audit work, for this report, or for the opinions we have formed.
Stephen Banks (Senior Statutory Auditor)
for and on behalf of
Lubbock Fine
Chartered Accountants & Statutory Auditors
3rd Floor Paternoster House
65 St Paul’s Churchyard
London
EC4M 8AB
Date:
5151
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORTFINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT ASX
ADDITIONAL
INFORMATION
SHAREHOLDINGS
The issued capital of the Company as at 6 August 2019 is 150,782,587 fully paid ordinary shares. All issued ordinary shares
carry one vote per share and carry the rights to dividends.
DISTRIBUTION OF ORDINARY SHARES
RANGE
TOTAL HOLDERS
SHARES
% SHARES
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 Over
Rounding
Total
99
218
125
279
101
52,158
648,400
1,014,336
9,999,290
139,068,403
822
150,782,587
0.03
0.43
0.67
6.63
92.23
0.01
100.00
UNMARKETABLE PARCELS AS AT 6 AUGUST 2019
Minimum $ 500
1
44
5,988
MINIMUM
PARCEL SIZE
HOLDERS
SHARES
TOP 20 SHAREHOLDERS AS AT 6 AUGUST 2019
RANK NAME
UNITS
% OF UNITS
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
MR MILOS BOSNJAKOVIC
SANDFIRE RESOURCES NL
CITICORP NOMINEES PTY LIMITED
GLAMOUR DIVISION PTY LTD
MR PAUL DAVID CRONIN
MRS REBECCA CRONIN
BNP PARIBAS NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD DRP
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
MR CHARLES WAITE MORGAN
NATIONAL NOMINEES LIMITED
MR ALBERTO LAVANDEIRA ADAN
UBS NOMINEES PTY LTD
ILWELLA PTY LTD
GLAMOUR DIVISION PTY LTD
EQUITY TRUSTEES LIMITED
ILWELLA PTY LTD
DISCOVERY CAPITAL
GREAT AUSTRALIA CORPORATION PTY LTD
16,000,000
11,505,173
10,936,764
9,148,192
8,425,668
8,425,664
8,364,524
7,329,780
6,724,682
5,829,766
5,478,112
2,685,000
2,666,664
2,500,000
2,318,181
1,655,808
1,451,000
1,239,000
1,000,000
1,000,000
10.61
7.63
7.25
6.07
5.59
5.59
5.55
4.86
4.46
3.87
3.63
1.78
1.77
1.66
1.54
1.10
0.96
0.82
0.66
0.66
5252
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORT
SUBSTANTIAL SHAREHOLDERS AS AT 6 AUGUST 2019
As at 6 August 2019 there were four shareholders who held a substantial shareholding within the meaning of the Australian
Corporations Act. A person has a substantial holding if the total votes that they or their associates have relevant interests in
is five per cent of more of the total number of votes.
NAME
Paul Cronin
Sandfire Resources NL
Milos Bosnjakovic
Eric de Mori
VOTING RIGHTS
SHARES
% OF ISSUED
CAPITAL
16,851,332
16,776,855
16,000,000
11,054,000
11.18%
11.13%
10.61%
7.34%
The Company is incorporated under the legal jurisdiction of England and Wales. To enable companies such as the Company
to have their securities cleared and settled electronically through CHESS, Depositary Instruments called CHESS Depositary
Interests (CDIs) are issued. Each CDI represents one underlying ordinary share in the Company (Share). The main difference
between holding CDIs and Shares is that CDI holders hold the beneficial ownership in the Shares instead of legal title.
CHESS Depositary Nominees Pty Limited (CDN), a subsidiary of ASX, holds the legal title to the underlying Shares.
Pursuant to the ASX Settlement Operating Rules, CDI holders receive all of the economic benefits of actual ownership of the
underlying Shares. CDIs are traded in a manner similar to shares of Australian companies listed on ASX.
CDIs will be held in uncertificated form and settled/transferred through CHESS. No share certificates will be issued to CDI
holders. Each CDI is entitled to one vote when a poll is called, otherwise each member present at a meeting or by proxy has
one vote on a show of hands.
If holders of CDls wish to attend and vote at the Company’s general meetings, they will be able to do so. Under the ASX
Listing Rules and the ASX Settlement Operating Rules, the Company as an issuer of CDls must allow CDI holders to attend
any meeting of the holders of Shares unless relevant English law at the time of the meeting prevents CDI holders from
attending those meetings.
In order to vote at such meetings, CDI holders have the following options:
(i)
instructing CDN, as the legal owner, to vote the Shares underlying their CDls in a particular manner. A voting instruction
form will be sent to CDI holders with the notice of meeting or proxy statement for the meeting and this must be
completed and returned to the Company’s Share Registry prior to the meeting; or
(ii) informing the Company that they wish to nominate themselves or another person to be appointed as CDN’s proxy with
respect to their Shares underlying the CDls for the purposes of attending and voting at the general meeting; or
(iii) converting their CDls into a holding of Shares and voting these at the meeting (however, if thereafter the former CDI
holder wishes to sell their investment on ASX it would be necessary to convert the Shares back to CDls). In order to vote
in person, the conversion must be completed prior to the record date for the meeting. See above for further information
regarding the conversion process.
As holders of CDls will not appear on the Company’s share register as the legal holders of the Shares, they will not be
entitled to vote at Shareholder meetings unless one of the above steps is undertaken.
As each CDI represents one Share, a CDI Holder will be entitled to one vote for every CDl they hold.
Proxy forms, CDI voting instruction forms and details of these alternatives will be included in each notice of meeting sent to
CDI holders by the Company.
These voting rights exist only under the ASX Settlement Operating Rules, rather than under the Companies Act 2006
(England and Wales). Since CDN is the legal holder of the applicable Shares and the holders of CDIs are not themselves the
legal holder of their applicable Shares, the holders of CDls do not have any directly enforceable rights under the Company’s
articles of association.
As holders of CDIs will not appear on our share register as the legal holders of shares of ordinary shares they will not be
entitled to vote at our shareholder meetings unless one of the above steps is undertaken.
5353
FOR THE YEAR ENDED 30 JUNE 2019ADRIATIC METALS PLCANNUAL REPORTFINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT www.adriaticmetals.com