Brockman Mining Limited
Annual Report 2019

Plain-text annual report

CONTENTS ANNUAL REPORT 2019 Corporate Information Chairman’s Message Management Discussion and Analysis Directors and Management Corporate Governance Report Environment, Social and Governance Report Directors’ Report Independent Auditor’s Report Consolidated Statement of Comprehensive Income Consolidated Balance Sheet Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Consolidated Financial Information Financial Summary ASX Additional Information 2 3 4 14 16 30 36 42 47 48 49 51 52 81 82 1 00E1908195 AR.indb 1 00E1908195 AR.indb 1 25/9/2019 17:43:23 25/9/2019 17:43:23 CORPORATE INFORMATION BOARD OF DIRECTORS Non-executive Directors Kwai Sze Hoi (Chairman) Liu Zhengui (Vice Chairman) Ross Stewart Norgard Executive Directors Chan Kam Kwan, Jason (Company Secretary) Kwai Kwun, Lawrence Colin Paterson Independent non-executive Directors Yap Fat Suan, Henry Uwe Henke Von Parpart Choi Yue Chun, Eugene COMPANY SECRETARY Chan Kam Kwan, Jason AUDITOR Ernst and Young Chartered Accountants 11 Mounts Bay Road Perth WA 6000 Australia PRINCIPAL PLACE OF BUSINESS IN HONG KONG Unit 3903B Far East Finance Centre 16 Harcourt Road Admiralty Hong Kong Tel: (852) 3766 1079 Fax: (852) 3007 9138 PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE MUFG Fund Services (Bermuda) Limited 4th Floor North Cedar House 41 Cedar Avenue Hamilton HM 12 Bermuda BRANCH SHARE REGISTRARS AND TRANSFER OFFICE IN HONG KONG Tricor Secretaries Limited Level 54 Hopewell Centre 183 Queen’s Road East Hong Kong BRANCH SHARE REGISTRARS AND TRANSFER OFFICE IN AUSTRALIA Computershare Investor Services Pty Ltd Level 11 172 St Georges Terrace REGISTERED OFFICE (BERMUDA) Perth WA 6000 Clarendon House 2 Church Street Hamilton HM11 Bermuda Tel: 1 441 295 5950 Fax: 1 441 299 4979 PRINCIPAL PLACE OF BUSINESS IN AUSTRALIA Level 2, 56 Ord Street West Perth WA 6005 Australia Tel: (61) 8 9389 3000 PRINCIPAL BANKER Hang Seng Bank Limited Standard Chartered Bank (Hong Kong) Limited Bank of Communications Westpac Banking Corporation WEBSITE www.brockmanmining.com www.irasia.com/listco/hk/brockmanmining STOCK CODE 159 (Main Board of The Stock Exchange of Hong Kong Limited) BCK (Australian Securities Exchange) 00E1908195 AR.indb 2 00E1908195 AR.indb 2 25/9/2019 17:43:23 25/9/2019 17:43:23 CHAIRMAN’S MESSAGE ANNUAL REPORT 2019 Dear Shareholders I am pleased to be able to report that the Company Whilst the success of an infrastructure solution for our has made further significant progress towards the Marillana Project is the cornerstone of our business and commencement of production of iron ore from our vision for the future, the Company continues to explore flagship Marillana Project. other ways to further grow the business by utilising this infrastructure for other projects. In particular, In July last year the Company reached agreement management continues to investigate ways that the w i t h M i n e r a l R e s o u r c e s L i m i t e d ( M R L ) , a w o r l d considerable iron ore resources at Ophthalmia, located renowned mining services provider, to establish a Joint only 80 – 90km south of Marillana might be brought into Venture over Marillana that will ultimately secure an production once a rail loading facility is established infrastructure solution (comprising a light railway and at Marillana, to achieve our vision of becoming a port system) for the project. The Joint Venture became sustainable iron ore producer supplying the Asian unconditional in January this year and since then MRL market. has worked diligently towards meeting their obligations under the agreement. MRL has recently encountered I can assure you that we shall not relax our efforts in some delays in meeting those obligations and so we achieving this goal. considered it prudent to give them extra time to make sure that they get everything right before commencing I would like to thank my fellow Directors and the construction on this very important project, which will Company’s management for their continued hard work unlock the value of Brockman’s stranded assets. The and dedication in pursuing an infrastructure logistics Joint Venture with MRL is a truly collaborative win- solution for our Marillana Project, despite the difficult win situation for both companies, each of whom is regulatory regime that exists. committed to ensuring its success. M R L h a s a l s o m a d e c o n s i d e r a b l e p r o g r e s s i n our shareholders for their patience and genuine support n e g o t i a t i o n s w i t h t h e W e s t e r n A u s t r a l i a n S t a t e over our long journey. We look forward to sharing our Government in relation to a State Agreement for the success with all of you in the near future. I would also like to express my heartfelt thanks to all of railway and also in negotiating access to the inner harbour at Port Hedland for construction of one or more berths capable of handling cape size vessels for the export of iron ore. These developments are crucial for supplying the infrastructure solution that Marillana needs. We understand that MRL will be constructing and operating a rail demonstration test track later this Kwai Sze Hoi year as the final step in the technical validation of the Chairman railway. 25 September 2019 00E1908195 AR.indb 3 00E1908195 AR.indb 3 25/9/2019 17:43:23 25/9/2019 17:43:23 3 MANAGEMENT DISCUSSION AND ANALYSIS OVERVIEW During the year, the Group recorded no revenue and is now focused entirely on the iron ore operations in Western Australia. Loss for the year before income tax from continuing operations was HK$25.8 million, compared to the previous year HK$49.0 million. IRON ORE OPERATIONS – WESTERN AUSTRALIA This segment of the business comprises the 100% owned Marillana Iron Ore Project (“Marillana”), the Ophthalmia Iron Ore Project (“Ophthalmia”) and other regional exploration projects. The Group recorded a profit from continuing operations (after tax) of approximately HK$67.6 million (2018: loss of approximately HK$49.0 million), mainly due to the recognition of an income tax credit of HK$93.4 million. This credit was the result of a partial offset of the deferred tax liability upon recognition of a deferred tax asset in respect of certain of the Group’s Australian tax losses. The income tax credit is non-cash in nature. The operating loss was significantly reduced by 43% to HK$24.9 million (2018: loss of HK$44.0 million), mainly due to a gain from the disposal of mineral tenements in Australia and the reduction of foreign exchange losses. The loss before income tax and share of losses of joint venture for the year for this segment attributable to the Group was HK$26.2 million (2018: HK$27.2 million). Total expenditure associated with mineral exploration for the year ended 30 June 2019 amounted to HK$7.8 million (2018: HK$9.5 million). Total expenditure associated with mineral exploration and evaluation for each of the projects in Western Australia for the financial years is summarised as follows: Project Marillana Ophthalmia Regional Exploration Project Marillana Ophthalmia Year ended 30 June 2019 HK$’000 4,533 1,926 1,337 7,796 2018 HK$’000 6,669 908 1,883 9,460 No development expenditure has been recognised in the financial statements during the year ended 30 June 2019 (year ended 30 June 2018: Nil). Total capital expenditure for each of the projects in Western Australia for the financial years is summarised as follows: Year ended 30 June 2019 HK$’000 Addition to property, plant & equipment — — — Addition to mining properties — — — 2018 HK$’000 Addition to property, plant & equipment 125 — 125 Addition to mining properties — — — 00E1908195 AR.indb 4 00E1908195 AR.indb 4 25/9/2019 17:43:23 25/9/2019 17:43:23 ANNUAL REPORT 2019 Impairment internal sources of information. As at 30 June 2019, The Group has assessed whether any indicators of the Group assessed and concluded there were no impairment exist with reference to both external and indicators of impairment present. Figure 1: Project location map – Brockman tenements MARILLANA PROJECT OVERVIEW The 100% owned Marillana is Brockman’s flagship Marillana Development On 26 July 2018 Brockman Iron Pty Ltd (‘Brockman project located within mining lease M47/1414 in the Iron’) (a wholly-owned subsidiary of the Company) Hamersley Iron Province within the Pilbara region of and Polaris Metals Pty Ltd (a wholly-owned subsidiary Western Australia. It is located approximately 100 km of MRL) entered into a Farm-in Joint Venture (FJV) north-west of the township of Newman. Agreement (see announcements dated 27 July 2018 on the HKEX and ASX platforms) pursuant to which and The project area covers 82 square km bordering the subject to the terms and conditions therein, Polaris may Hamersley Range, where extensive areas of supergene farm-in and earn a 50% interest in Marillana by satisfying iron ore mineralisation, the source of hematite detrital certain Farm-in obligations. mineralisation at Marillana, have developed within the dissected Brockman Iron Formation that caps the Range. 00E1908195 AR.indb 5 00E1908195 AR.indb 5 25/9/2019 17:43:23 25/9/2019 17:43:23 55 MANAGEMENT DISCUSSION AND ANALYSIS On 21 January 2019, the FJV Agreement became During the period, MRL identified that extra time Unconditional and Polaris commenced its Farm- was required to undertake additional drilling and In Obligations. Once, Polaris has met its Farm-in metallurgical testwork to ensure that there are no fatal Obligations, the farm-in interest will be transferred to flaws in the mine plan and process plant design. Such Polaris and the Joint Venture will be established with campaign is expected to last 6 to 12 months. each party holding a 50% interest in Marillana. Brockman Iron and a SPV (subsidiary of MRL) also within the agreements, as outlined below: entered into a Mine to Ship Services Agreement for the transport of the Marillana iron ore product via a light- 1. The Farm-In Period (for satisfaction of the Farm-In rail system from the mine site to Port Hedland. Obligations) has been extended to 31 July 2020; The parties have therefore agreed to vary certain dates The Mine to Ship Services Agreement is itself subject 2. Construction commencement of the rail and to several conditions precedent including execution port system has been extended from ‘on or of an agreement with the State of Western Australia; before 31 December 2019’ to ‘on or before 31 procuring all the leases and licences for the light rail December 2020’; and system and port development; and MRL and SPV obtaining the finance to fund the construction and 3. Operation commencement of the rail and port commissioning of the rail and port infrastructure. system has been extended from ‘on or before 31 December 2021’ to ‘on or before 31 December Upon satisfaction of all conditions under the Mine 2022. to Ship Services Agreement, MRL will be obliged t o c o n s t r u c t a n d c o m m i s s i o n t h e r a i l a n d p o r t As a consequence of the variation under the FJV, the infrastructure needed to establish, operate and provide date for satisfaction of the Conditions Precedent for the a service to transport up to 30Mtpa of iron ore from the Mine to Ship Services Agreement has been extended to mine site to Port Hedland and on to vessels for export 31 December 2020. for the life of the Marillana Project. Farm-in prior to Joint Venture Farm-in obligations and interest Joint Venture Formation and scope The parties have agreed to establish the Joint Venture Polaris shall earn a 50% interest in Marillana by satisfying as an unincorporated joint venture (in which both the following obligations during the Farm-in Period: parties have a 50% interest). The scope of the Joint Venture is to establish a mining and processing (i) m i n i m u m e x p e n d i t u r e o f A $ 2 5 0 , 0 0 0 o n o p e r a t i o n a t M a r i l l a n a a t a m i n i m u m 2 0 M t p a exploration and development of Marillana; production rate, with the product to be transported to Port Hedland using a light railway to be constructed by (ii) completion of the following to evaluate the a subsidiary of MRL. economic feasibility of mining minerals on the tenements under Marillana (or such other areas Management committee as the parties may agree): A management committee comprising a total of six representatives shall be established. Each of the Joint (a) Polaris’ process design criteria of the Venturers shall appoint three representatives. processing plant(s); (b) completion of Polaris’ optimised mine all strategic decisions relating to the conduct of the plan study; and activities undertaken by the Joint Venture including the consideration and approval of any work programme (c) completion of a mine site layout that and budget in the management of the joint venture. The role of the management committee is to make illustrates Polaris’ preferred location for the processing plant(s) on the tenements u n d e r M a r i l l a n a c o n s i s t e n t w i t h t h e optimised mine plan referred to in (b) above. 00E1908195 AR.indb 6 00E1908195 AR.indb 6 25/9/2019 17:43:26 25/9/2019 17:43:26 ANNUAL REPORT 2019 Development funding The rail and port infrastructure system comprises a The Joint Venturers will be responsible for funding the light railway connecting Marillana to the port of Port development activities of Marillana up to a maximum Hedland plus train unloading, product stockpiling, of A$300 million in total or A$150 million by each Joint reclaim and ship-loading facilities connected to a deep Venturer. Polaris will use all reasonable endeavours to water cape-size berth at South West Creek in the inner procure the debt financing to fund the development harbour of Port Hedland. activities for and behalf of the Joint Venturers. The development activities include all site establishment The parties have agreed on a provisional service fee and non-process infrastructure costs. Brockman shall subject to standard escalation clauses typical for an repay its share of the debt financing, the terms and agreement of this nature. conditions of which is still subject to Brockman’s acceptance. Manager Pursuant to the terms of the FJV Agreement, Polaris has agreed to act as the first manager of the Joint Venture. Loan Agreement Polaris to provide an interest-free loan of A$10 million to Brockman Iron to fund Brockman Iron’s financial obligations under the FJV Agreement and for working capital in relation to the Group’s iron ore business in the Pilbara region of Western Australia. The loan is in an escrow account and upon satisfaction of the Farm-In Obligations the funds will be released from escrow. The loan will be repaid from the net revenue received by Brockman Iron from the sale of its share of Marillana ore sold and transported under the Mine to Ship Services Agreement. Mine to Ship Services Agreement Under the Mine to Ship Services Agreement, MRL (or a subsidiary) will construct (at its own cost) and operate a rail and port infrastructure system in accordance with the following timeline: (i) construction is to commence on or before 31 December 2020; and (ii) operation is to commence on or before 31 December 2022. MINERAL RESOURCES AND ORE RESERVES Brockman reports its Mineral Resources and Ore Reserves on an annual basis, in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2012 Edition (the ‘JORC Code 2012’), unless otherwise noted. Mineral Resources are quoted inclusive of Ore Reserves. In the previous year, Brockman updated its Marillana Mineral Resources and Ore Reserves to the JORC 2012 Code (refer to announcement dated 25 May 2018). Mineral Resources and Ore Reserves were previously reported under the JORC 2004 Code and released to the market on 9 February 2010 and 9 September 2010 respectively by Brockman Resources Limited, now a wholly owned subsidiary of Brockman Mining Limited. Marillana has a very significant Mineral Resource estimate of 1.51 billion tonnes (Bt) of hematite Detrital and Channel Iron (CID) mineralisation, comprising 169.5 million tonnes (Mt) of Measured Mineral Resources, 1,046 Mt of Indicated Mineral Resources and 291 Mt of Inferred Mineral Resources (see Tables 1 and 2). 00E1908195 AR.indb 7 00E1908195 AR.indb 7 25/9/2019 17:43:26 25/9/2019 17:43:26 77 MANAGEMENT DISCUSSION AND ANALYSIS Table 1: Detrital (beneficiation feed) Mineral Resource Summary (cut-off grade: 38% Fe) Mineralisation type Resource classification Tonnes (Mt) Grade (% Fe) GRAND TOTAL Total tonnes may not add up, due to rounding Measured Indicated Inferred 169.5 961.9 273 1,404.4 41.6 42.3 42.0 42.2 Table 2: CID Mineral Resource Summary (cut-off grade: 52% Fe) Resource classification Indicated Inferred TOTAL Tonnes (Mt) 84.2 17.7 101.9 Fe (%) 55.8 54.4 55.6 AI2O3 (%) 3.58 4.34 3.71 SiO2 (%) 5.0 6.6 5.3 P (%) 0.097 0.080 0.094 LOI (%) 9.76 9.30 9.68 The JORC 2012 Ore Reserve estimate is based on Metallurgical testwork results were used to estimate the revised JORC 2012 Mineral Resource model, and the recoverable fraction from the DID ore component. incorporates a number of factors and assumptions as Recoveries of final product and grades (of iron, silica, outlined in the announcement of 25 May 2018. alumina and LOI) were estimated in the block model. Based upon dense media separation (DMS) testwork, The base case optimisation was determined with cut-off it is expected that the final product has an average grades of 38% Fe for DID and 52% Fe for CIDs within the grade of at least 60% Fe and 37.3% in mass recovery. final pit and tenement boundary limits. Table 3: Marillana Project — Ore Reserves * Reserve classification Probable Probable TOTAL * # ## Reserves are included within Resources cut-off grade 52% Fe cut-off grade 38% Fe Table 4: Marillana Project – Ore Reserves final product Ore type Tonnes (Mt) DID CID 967 46 1,013 Reserves Class Probable Probable Probable Ore Sale Tonnes Type CID Product DID Product Total Ore (Mt) 46 358 404 Fe (%) 55.5 60.3 59.8 SiO2 (%) 5.3 6.2 6.1 Al2O3 (%) 3.7 3.0 3.1 LOI (%) 9.7 2.5 3.3 00E1908195 AR.indb 8 00E1908195 AR.indb 8 25/9/2019 17:43:26 25/9/2019 17:43:26 ANNUAL REPORT 2019 The Marillana project has total estimated Probable Ore The Mineral Resource and Reserve estimation (see Reserves of 967 Mt of DID plus 46 Mt if direct ship CID Tables 1 to 4) was prepared by Golder Associates Pty (Table 3). The total saleable product from the processed Ltd and has been classified in accordance with the iron ore feed is estimated at 404 Mt averaging 59% Fe, 6.1% SiO2, and 3.1% AI2O3 (Table 4). Life of mine strip ratio is 1.0:1 (tonnes of Waste of tonnes of Ore). Australasian Code for Reporting of Exploration results, Mineral Resources and Ore Reserves (JORC Code, 2012 Edition). The Marillana Ore Reserves are based solely on the Measured and Indicated Mineral Resources. The Mineral Resources also include some 273Mt of Inferred Mineral Resources (DID), comprising 201 Mt based on wide -spaced drilling to the north of the Indicated Mineral Resource boundary and 72 Mt of previously Indicated Mineral Resources that was downgraded to Inferred classification during the Projection Pursuit Multi- variate Transform (PPMT) process. Based on historical conversion of Inferred to Indicated Mineral Resources, it is anticipated that additional drilling may enable some of the Inferred material to be upgraded to Indicated classification. Marillana represents one of the largest published hematite Ore Reserve positions in the Pilbara, outside the three major producers (BHPB, Rio and FMG). The Detrital Ore is upgraded to a high-quality, sinter feed product via simple beneficiation, which is supported by low-cost mining, low waste ratios and large continuous ore zones. OPHTHALMIA PROJECT OVERVIEW The 100% owned Ophthalmia iron ore project, located north of Newman in the East Pilbara region of Western Australia, is the most significant iron ore project for the Company outside of its flagship Marillana project. Since the discovery of significant occurrences of bedded hematite mineralisation by field reconnaissance mapping and surface sampling in August 2011, major exploration drilling programmes have been completed and JORC compliant Mineral Resources have been estimated and reported for the Sirius, Coondiner, and Kalgan Creek deposits. The total Mineral Resource at Ophthalmia is 341 Mt grading 59.3% Fe (Table 5). 00E1908195 AR.indb 9 00E1908195 AR.indb 9 25/9/2019 17:43:26 25/9/2019 17:43:26 99 MANAGEMENT DISCUSSION AND ANALYSIS Figure 3: Location of Ophthalmia Prospects and Resources Approvals The signing of this agreement paves the way for the The Native Title Agreement with the Nyiyaparli people granting of mining leases over the project area once that was executed in May 2015 covers all tenements Brockman has established an infrastructure solution to comprising the Ophthalmia project and was based facilitate development of the project. on the existing agreement with the Nyiyaparli people covering Marillana (signed in 2009). It takes into Metallurgy consideration the Nyiyaparli people’s interests with In 2016 a bulk sample of ore from the Sirius deposit was regard to the management of Cultural Heritage sent to CISRI (China Iron and Steel Resources Institute and Protection of the land and environment at the Group) in China for a comprehensive sinter testwork Ophthalmia project, as well as providing education and programme. The bulk sample was generated in 2013 training opportunities for the local Nyiyaparli people. by compositing diamond drill core from 7 holes spaced across the entire deposit. 00E1908195 AR.indb 10 00E1908195 AR.indb 10 25/9/2019 17:43:26 25/9/2019 17:43:26 ANNUAL REPORT 2019 The sinter testwork program showed that there are Mineral Resources no fatal flaws in the sintering performance of blends Ophthalmia has a Mineral Resource estimate of 340.9 where Sirius fines replaces either Pilbara Blend of MAC million tonnes of hematite mineralisation, comprising (Mining Area C) fines up to 30%. Most parameters 280 million tonnes of Indicated Resources and 61 million show only gradual changes as substitution increases, tonnes classified as Inferred Resources (see Table 5). except that mix moisture and fuel loads do increase significantly. There is little change in sinter productivity The resource estimate was classified in accordance or granulation, RDI (Reduction Degradation Index) is with guidelines provided in the JORC Code 2012. Refer similar or improved marginally, as has its softening and to ASX Announcement dated 1 December 2014. melting performance. RI (Reducibility Index) is lower but still well within tolerance. Table 5: Ophthalmia DSO Mineral Resource Summary Deposit Class Kalgan Creek Inferred Indicated Coondiner (Pallas and Castor) Sirius Ophthalmia Project Sub Total Indicated Inferred Sub Total Indicated Inferred Sub Total Indicated Inferred Total Tonnes (Mt) 34.9 24.4 59.3 140.5 17.1 157.6 105.0 19.0 124.0 280.4 60.5 340.9 Fe (%) 59.3 59.5 59.4 58.5 58.1 58.4 60.4 60.2 60.3 59.3 59.3 59.3 30 June 2019 CaFe* (%) 62.7 63.2 62.9 62.0 61.5 62.0 63.7 63.4 63.6 62.7 62.8 62.7 SiO2 (%) 4.08 4.38 4.21 5.18 6.06 5.27 3.54 4.09 3.62 4.43 4.73 4.49 AI2O3 (%) 4.57 3.90 4.29 4.46 4.45 4.46 3.97 3.83 3.95 4.29 4.03 4.24 S (%) 0.009 0.007 0.009 0.007 0.008 0.007 0.007 0.009 0.007 0.007 0.008 0.007 P (%) 0.183 0.157 0.173 0.176 0.155 0.174 0.18 0.17 0.18 0.178 0.160 0.175 LOI (%) 5.49 5.81 5.63 5.71 5.47 5.68 5.22 5.14 5.20 5.50 5.50 5.50 * CaFe represents calcined Fe and is calculated by Brockman using the formula CaFe = Fe%/((100-LOI)/100). Total tonnes may not add due to rounding. WEST PILBARA PROJECT Overview The West Pilbara project comprises four tenements centred around Duck Creek, located about 100-130 km WNW of Paraburdoo in the West Pilbara region. (Refer to Figure 1). At Duck Creek, mineralisation comprises discrete mesas of channel iron deposits (“CID”) 15-30 m above the surrounding plains with stripping ratios expected to be very low for the targets identified. Seven mesas containing ore grade CID mineralisation have been identified from surface sampling, but only six have been drilled due to access limitations. Brockman has completed an Inferred Mineral Resource estimate of 18.3 Mt grading 56.5% Fe, for the channel iron deposit (“CID”) mineralisation at Duck Creek (E47/1725), as detailed in Table 6 below. The Mineral Resource estimate has been classified in accordance with guidelines of the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported. The Mineral Resource estimate is based on the results of 45 vertical RC holes drilled on sections varying from approximately 200 to 400 m apart along the long axis of each mesa, supported by surface sampling to confirm the lateral extent of mineralisation. 00E1908195 AR.indb 11 00E1908195 AR.indb 11 25/9/2019 17:43:27 25/9/2019 17:43:27 1111 MANAGEMENT DISCUSSION AND ANALYSIS Table 6: Duck Creek Mineral Resource estimate – (at a lower cut-off grade of 54% Fe) Mesa Classification 1 2 3 4 5 6 Inferred Inferred Inferred Inferred Inferred Inferred All Inferred Tonnes (Mt) 4.1 5.1 2.3 1.4 3.0 2.4 18.3 Fe (%) 55.8 56.6 56.4 56.4 56.3 58.0 56.5 CaFe* (%) 63.2 64.1 61.6 61.9 61.4 62.8 62.8 SiO2 (%) 4.40 3.58 5.71 6.43 6.32 5.15 4.91 AI2O3 (%) 2.69 2.44 4.53 3.34 4.07 3.25 3.22 S (%) 0.058 0.037 0.023 0.087 0.020 0.015 0.037 P (%) 0.032 0.041 0.065 0.077 0.071 0.112 0.060 LOI (%) 11.8 11.7 8.4 8.9 8.4 7.6 10.0 CaFe represents calcined Fe and is calculated by Brockman using the formula CaFe = Fe%/((100-LOI)/100). * Total tonnes may not add due to rounding. OTHER PROJECTS Irwin-Coglia Ni-Co and Ni-Cu Prospect – 40% Interest Following the Group’s decision to divest the 40% interest in the Irwin-Coglia nickel laterite project, a competitive sale process was undertaken by PCF Capital Group. The outcome from this process was that the 60% participant in the Irwin Joint Venture Project (Murrin Murrin Holdings Pty Ltd and Glenmurrin Pty Ltd) purchased the Company’s 40% interest. The consideration received by the Company was A$1,700,000 (HK$9,617,000) which was paid in September 2018 following execution of a sale and purchase agreement and satisfaction of all conditions precedent. Mineral Resources and Ore Reserves The information in this report that relates to the Mineral Reserve and Mineral Resource estimates of the Marillana project was declared as part of a market announcement issued on 25 May 2018. The information in this report that relates to the Mineral Resource of Ophthalmia project was declared as part of a market announcement issued on 1 December 2014. The information in this report that relates to the Inferred Mineral Resource of West Pilbara Project was declared as part of a market announcement issued on 14 May 2013. This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported. The Company confirms that it is not aware of any new information or data that materially affects the information included in the original announcements referred to above. All material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcements. Mineral Resources and Ore Reserves Governance of Internal Controls Brockman ensures that the Mineral Resources and Ore Reserve estimates quoted are subject to governance arrangements and internal controls activated at a site level and at the corporate level. Internal and external review of Marillana Resources and Ore Reserves estimation procedures and results are carried out through a technical review team which is comprised of highly competent and qualified professionals. These reviews have not identified any material issues. LIQUIDITY AND FINANCIAL RESOURCES The Group generally finances its short-term funding requirements with equity funding and borrowings. The Group’s ability to advance its iron ore project developments is reliant, among other things, on access to appropriate and timely funding. The current ratio as at 30 June 2019 is 14.51 (30 June 2018: 11.73). The gearing ratio of the Group (long-term debt over equity and long-term debt) is measured at 0.02 (30 June 2018: 0.02). During the period, the Group did not engage in the use of any financial instruments for hedging purposes, and there was no hedging instrument outstanding as at 30 June 2019. 00E1908195 AR.indb 12 00E1908195 AR.indb 12 25/9/2019 17:43:28 25/9/2019 17:43:28 ANNUAL REPORT 2019 CAPITAL STRUCTURE During the reporting period, the Company has the following movements in the share capital: Exercise of employee options 59,250,000 employee options were exercised by directors and employees. PLEDGE OF ASSETS AND CONTINGENT LIABILITIES As at 30 June 2019 there were no assets that were pledged to secure any debt, and the Company did not provide any financial guarantees and there was no material contingent liability of the Group (30 June 2018: Nil). RISK DISCLOSURE Market Risk The Group is exposed to various types of market risks, including fluctuations in iron ore price. (a) Commodities price risk Iron ore price: The fair value of the Group’s mining exploration properties in Australia is exposed to fluctuations in expected future iron ore price. The remuneration policy and packages, including share options of the Group’s employees, senior management and directors are maintained at market levels and are reviewed periodically by the management and the remuneration committee. ENVIRONMENTAL POLICY AND COMPLIANCE WITH RELEVANT LAWS AND REGULATIONS Environmental Protection As a responsible entity, the Group has endeavoured to comply with local laws and regulations in relation to waste disposal and environmental protection. At corporate level, the Group also encourages staff to save energy, minimise the use of natural resources and paper products. We operate effective and sustainable iron ore business work actively through all areas of the business to minimise the actual and potential environmental impact of the Company’s activities, respect the rights of the traditional owners and value the indigenous cultural heritage associated with its operations. Furthermore, with no mining operations to be carried out, disturbance to the environment is expected to be minimal. We will continue to ensure that in the future, we are accountable for our environmental footprint. We have not used any commodity derivative instruments or futures for speculation or hedging purposes. Management will review market conditions from time to time and determine the best strategy to deal with the fluctuations of iron ore price as required. Compliance with Laws and Regulations During the year, the Group has complied with the relevant standards, laws and regulations that have a significant impact on our businesses. At the same time, the Group always maintains a safe working environment for staff in accordance with relevant safety policies. (b) (c) Funding risk T h e c o m m e n c e m e n t o f e x p l o r a t i o n a n d potential development of the iron ore projects will depend on whether the Group can secure the necessary funding. Risk that the project will not be materialised This risk is largely driven by various factors such as commodity prices, government regulations, regulation related to prices, taxes, royalties, land tenure, viable infrastructure solution, capital raising ability etc. The Board will therefore closely monitor the development of the project. STAFF AND REMUNERATION As at 30 June 2019, the Group employed 14 employees (30 June 2018: 17), of which 4 were in Australia (includes 1 non-executive director) (30 June 2018: 5) and 10 in Hong Kong (includes 5 non-executive directors) (30 June 2018: 12). Relationship with Employees, Customers and Suppliers The Group believes that human resources are the most important asset for the Group’s sustainable development. We offer competitive remuneration packages and a high quality working environment for our employees. It is our custom to respect each other and ensure that fairness is applied to everyone. From time to time, we provide relevant on-the-job training to enhance employees’ professional knowledge. The Group also organises different leisure events and frequent group discussions for the participation of employees to enhance the working relationship of the employees and communications with management. We also strive to maintain good working relationships with our suppliers and customers. Remuneration Policy The Group’s compensation strategy is to promote a pay-for-performance culture to reward employee performance that will maximise shareholder value in the long term. The Group from time to time reviews remuneration packages provided to its employees to ensure that the total compensation is internally equitable, externally competitive and supports the Group’s strategy. 1313 00E1908195 AR.indb 13 00E1908195 AR.indb 13 25/9/2019 17:43:28 25/9/2019 17:43:28 DIRECTORS AND MANAGEMENT As at the date of this report, the Company has the Mr. Ross Stewart Norgard following directors and senior management: Mr. Ross Stewart Norgard, aged 73. Mr. Norgard joined NON-EXECUTIVE DIRECTORS Mr. Kwai Sze Hoi Mr. Kwai Sze Hoi, aged 69. Mr. Kwai joined the Group in June 2012. He is the Chairman of the Group. Mr. Kwai graduated from Anhui University in 1975. Mr. Kwai has more than 30 years experience in international shipping and port operation businesses and is a successful entrepreneur. In 1990, he founded Ocean Line Holdings Ltd (“Ocean Line”). Ocean Line wholly owns, operates and manages a fleet of total deadweight tonnage of 3 million metric tonnes, with routes running worldwide. Also, Ocean Line has investments in infrastructure and operates other shipping related businesses including ports, terminals, warehouses, logistics, ship repairs and crew manning etc. The diversified operations of Ocean Line put it in a highly competitive position globally. In addition, Ocean Line has investments in real estate, mining, financial services, securities, trading and hotel businesses. Mr. Kwai is the father of Mr. Kwai Kwun, Lawrence, an Executive Director of the Group. Mr. Liu Zhengui Mr Liu Zhengui, aged 72. Mr. Liu joined the Group in April 2012, and became the Vice Chairman of the Group in June 2012. Mr. Liu Zhengui has over 40 years of experience in corporate finance and the Company as Non-executive Director in August 2012. He is a chartered accountant and former managing director of KMG Hungerfords and its successor firms in Perth, Western Australia. For the past 30 years he has worked extensively in the fields of raising venture capital and the financial reorganisation of businesses. He has held numerous positions on industry committees including past chairman of the West Australian Professional Standards Committee of the Institute of Chartered Accountants, a former member of the National Disciplinary Committee, a former member of Lionel Bowens National Corporations Law Reform Committee, a former chairman of the Duke of Edinburgh Award Scheme and a former member of the University of Western Australia’s Graduate School of Management (MBA programme). Mr. Norgard is also a director of Nearmap Limited (formerly known as Ipernica Limited) (Chairman since 1987) and was a director of Ammtec Limited from 1994 to November 2010. Prior to his present appointment as Non-executive Director of the Company, he was the non-executive Deputy Chairman of Brockman Resources Limited, a former ASX listed entity which is now a wholly owned subsidiary of Brockman Mining Limited. EXECUTIVE DIRECTORS Mr. Kwai Kwun, Lawrence capital management. He holds a bachelor degree Mr. Kwai Kwun, Lawrence, aged 38, joined the Board in management engineering from HeFei University of in March 2014. He is a member of the Executive Technology. He is currently a director of Shandong School of Economics and Social Development （山東社 會 經 濟 發 展 研 究 院 ） and is the chairman of Shandong Dongyin Investment Management Co., Ltd （山東東銀投 資管理有限公司）. He is also a financial consultant of the Shandong provincial government. During the period 2004 to 2009, Mr. Liu was the chairman of Bank of Committee. Mr. Kwai, has extensive experience in investment in international shipping, port operations and ship building, mining and finance. Mr Kwai graduated from Harvard University in the United States with a Bachelor of Mathematics degree. Mr Kwai is the son of Mr. Kwai Sze Hoi, the Chairman of the Group. China Group Investment Limited (BOCGI). Prior to that, Mr Chan Kam Kwan, Jason he served as the chief executive of Bank of China’s Mr. Chan Kam Kwan, Jason, aged 46, joined the branches in three different provinces for 16 years. Group in January 2008. He is the Company Secretary and a member of the Executive Committee. Mr. Chan graduated from the University of British Columbia in Canada with a Bachelor of Commerce Degree and he holds a certificate as a Certified Public Accountant issued by the Washington State Board of Accountancy in the United States of America. Mr. Chan has extensive experience in corporate finance. 00E1908195 AR.indb 14 00E1908195 AR.indb 14 25/9/2019 17:43:28 25/9/2019 17:43:28 ANNUAL REPORT 2019 Mr. Colin Paterson Development Limited. He is also an independent non- Chief Executive Officer of Australian Operation executive director of Concord New Energy Group Mr. Colin Paterson, aged 58, has over 30 years’ Limited and Frontier Services Group Limited, which are e x p e r i e n c e i n t h e r e s o u r c e s s e c t o r c o v e r i n g a listed on the Main Board of the Stock Exchange. diverse range of geological environments throughout Australia, but principally in Pilbara iron ore region as Mr. Choi Yue Chun, Eugene well as gold and nickel exploration in the Archaean Mr. Choi Yue Chun, Eugene, aged 47, joined the Group of Western Australia. He has extensive experience in June 2014. He holds a Bachelor of Laws degree from in the technical supervision of exploration projects; the University of Hong Kong, and was admitted as a resource development, project generation and project solicitor of the High Court of Hong Kong 1997. Currently evaluations. He was principal geologist with Asarco Mr. Choi is a member of the Law Society of Hong Kong. Australia Ltd and held a similar position with Mining He has over 15 years of experience in the legal field, Project Investors Pty Ltd (subsequently MPI Mines specialising in corporate finance and compliance Limited). Following which he was the founding director matters for listed companies in Hong Kong. Mr Choi of Brockman Mining Australia Pty Ltd. is currently the senior legal counsel of Rusal Global Management B.V. INDEPENDENT NON-EXECUTIVE DIRECTORS Mr. Uwe Henke Von Parpart SENIOR MANAGEMENT HONG KONG Mr. Hendrianto Tee Mr. Uwe Henke Von Parpart, aged 78, joined the Business Development Director Group in January 2008. He received a Fullbright Mr. Hendrianto Tee joined Brockman Mining Limited scholarship and did his graduate work in mathematics in January 2009 as the Chief Investment Officer after and philosophy (Ph.D.) at Princeton University and the spending a large part of his career focusing on debt University of Pennsylvania. capital markets with several global financial institutions, among others Fleet Boston (now Bank of America Merrill Mr Parpart is a partner and the Head of Strategy Lynch) and UBS AG. In October 2014, Mr. Tee re-joined at Capital Link International. Prior to his position at Brockman Mining Limited as the Business Development Capital Link, he was the Managing Director and Chief Director overseeing project funding and development. Strategist for Reorient Group Limited in Hong Kong. In Prior to re-joining, Mr. Tee spent 3 years in investment this capacity, he was responsible for macro-economic, and advisory activities covering the resources sector in fixed-income and equity-markets research and strategy Australia, Canada and Indonesia. Mr. Tee graduated in Asia. His analyses were published and featured on from Walsh University, USA, with a Bachelor of Arts CNBC Asia and Bloomberg TV. Mr. Parpart has also Degree (Magna Cum Laude). contributed to numerous magazines and newspapers and until recently was a columnist for Forbes Global and Shinchosha Foresight Magazine (Tokyo). Mr. Yap Fat Suan, Henry Mr. Yap Fat Suan, Henry, aged 73, joined the Group in January 2014. He holds a master degree in Business Administration from the University of Strathclyde, Glasgow, in the United Kingdom. He is a fellow member of the Institute of Chartered Accountants in England and Wales and an associate member of the Hong Kong Institute of Certified Public Accountants. He has extensive experience in finance and accounting. Mr Yap retired as managing director of Johnson Matthey Hong Kong Limited in June 2007 and prior to that he was the general manager of Sun Hung Kai China 00E1908195 AR.indb 15 00E1908195 AR.indb 15 25/9/2019 17:43:28 25/9/2019 17:43:28 1515 CORPORATE GOVERNANCE REPORT COMPLIANCE OF THE CODE ON CORPORATE GOVERNANCE PRACTICES The Company is listed on both the Australian Securities CHAIRMAN AND CHIEF EXECUTIVE OFFICER The roles of the Chief Executive Officer and Chairman are separate and exercised by different individuals. The Exchange (“ASX”) and the Stock Exchange of Hong position for the chief executive officer at the Group Kong Limited (“SEHK”). The Company’s Corporate level has been vacant during the period. Nonetheless, G o v e r n a n c e p o l i c i e s h a v e b e e n f o r m u l a t e d t o Mr. Colin Paterson, an executive director of the ensure that it is a responsible corporate citizen. Unless Company, also serves as the Chief Executive Officer otherwise noted, the Company has compiled with all of Brockman Mining Australia Pty Ltd (a wholly-owned aspects of the Corporate Governance Code as set subsidiary of the Company), and is responsible for the out in Appendix 14 of the Rules Governing the Listing oversight of the core iron ore business operation. of Securities on the SEHK (“the HK Listing Rules”) and the ASX Corporate Governance Council’s ‘Corporate The Chairman held interests in the shares of the G o v e r n a n c e P r i n c i p l e s a n d R e c o m m e n d a t i o n s C o m p a n y , a n d i s n o t i n d e p e n d e n t a s h e i s a 3rd Edition (“the CGPR”) which applies for year- substantial shareholder of the Company. The Board ends commencing on or after 1 July 2016, (“the ASX has determined that his commercial experience is Principles”) during the entire year ended 30 June 2019. more beneficial to shareholders at this stage of the Except for the following: Company’s development than the independence requirement outlined in the Principles. BOARD MEMBERSHIP The Board has been structured for an effective composition, with a balance of skills, experience and commitment to adequately discharge its responsibilities and duties. During the year ended 30 June 2019, three of the nine Directors were independent. Whilst this is not a majority of Independent non-executive directors, it is believed to be a suitable balance between the composition of executive and non-executive directors. Each of the independent non-executive Directors has made an annual confirmation stating compliance with the independence criteria set out in Rule 3.13 of the HK Listing Rules and Principle 2.4 of the ASX Principles. The Directors consider all of the independent non-executive Directors to be independent under the independence criteria and all are capable of effectively exercising independent judgment. (i) Under Code Provision A.2.1, which requires the roles of chairman and chief executive should be separate and should not be performed by the same individual. The position of Chief Executive Officer at the Group level has been vacant during the period. Nonetheless, Mr. Colin Paterson, who serves as the chief executive officer of Brockman Mining Australia Pty Ltd (a wholly-owned subsidiary of the Company), is responsible for the oversight of the core iron ore business operation; and (ii) Under the Code Provision A.6.7, non-executive Directors should attend general meetings. During the year, due to directors’ other commitments and schedule conflicts, not all of the non- executive directors of the Company attended all the general meetings. BOARD OF DIRECTORS The Board is responsible to shareholders for the overall strategic direction of the Group, including establishing goals for management and monitoring the achievement of those goals with the objective of enhancing the Company and shareholders’ value. The Board has delegated responsibility for the management of the Company’s business and affairs to the Executive Committee. The responsibilities reserved for the Board of Directors are set out in the Board Charter, a copy of which is available on the website of the Company. The Board Charter is reviewed periodically and each Director is provided with a letter of appointment which outlines their key terms and conditions so each Director clearly understands their responsibilities. 00E1908195 AR.indb 16 00E1908195 AR.indb 16 25/9/2019 17:43:28 25/9/2019 17:43:28 ANNUAL REPORT 2019 Directors in office during the year are as follows: Name of Director/role Non-Executive Directors Kwai Sze Hoi, Chairman Liu Zhengui, Vice Chairman Ross Stewart Norgard Independent Non-Executive Directors Uwe Henke Von Parpart Yap Fat Suan, Henry Choi Yue Chun, Eugene Executive Directors Date of appointment 15 Jun 2012 27 Apr 2012 22 Aug 2012 2 Jan 2008 8 Jan 2014 12 Jun 2014 Chan Kam Kwan, Jason, 2 Jan 2008 Company Secretary Kwai Kwun Lawrence Colin Paterson 13 Mar 2014 25 Feb 2015 Period in office as at the date of Board Meeting General Meeting Annual Report Attended/Eligible Attended/Eligible (Years of service) to attend* to attend* 7 7 7 11 5 5 11 5 4 5/7 5/7 5/7 5/7 5/7 5/7 7/7 7/7 5/7 2/2 0/2 0/2 2/2 2/2 2/2 2/2 2/2 2/2 * Represents total number of board and general meetings held during the period. Determination of eligibility has taken into account the respective directors’ period in office. A total of 7 meetings were held during the year ended 30 June 2019. Biographical details of the Directors are stated under the section ‘Directors and Management’. The Board has established different sub-committees with members as at 30 June 2019 as follows: Nomination Audit Remuneration Sustainability Management Executive Committee Committee Committee Committee Committee Committee Health, Safety, Environment & Risk Member Member Member Member Member Member Member Member Member Chairman Non-Executive Directors Kwai Sze Hoi (Chairman) Liu Zhengui (Vice Chairman) Ross Stewart Norgard Executive Director Cham Kam Kwan Jason (Company Secretary) Kwai Kwun Lawrence Colin Paterson Independent Non-Executive Directors Yap Fat Suan Henry Uwe Henke Von Papart Choi Yue Chun Eugene Chairman Chairman Chairman Member Member Member Member Member Member Member Chairman Member All Committees of the Board have access to professional advice where necessary. Minutes of Committee meetings are kept by the Secretary of the meeting. 00E1908195 AR.indb 17 00E1908195 AR.indb 17 25/9/2019 17:43:28 25/9/2019 17:43:28 1717 CORPORATE GOVERNANCE REPORT Board Skills Matrix The following table summarises the combination of skills and experience of the board: Experience, skills & attributes Board Nomination Audit performance Sustainability Risk Executive Remuneration & Total Non-Executive Directors Total Executive Directors Total Independent Non-Executive Directors Experience Corporate leadership Successful experience in CEO and/or other senior corporate leadership International experience Senior experience in multiple international locations Resources industry experience Relevant industry (resources, mining, exploration) experience Other Board level listed experience Membership of other listed entities (last 3 yrs) Knowledge and skills Finance and capital management Governance Risk and Compliance Gender Male Female 3 3 3 9 2 4 5 7 2 9 0 2 0 3 5 2 1 2 5 2 5 0 0 0 3 3 2 0 1 3 2 3 0 2 0 3 5 2 1 2 5 2 5 0 1 0 2 3 1 1 2 3 1 3 0 1 1 1 3 1 2 2 1 2 3 0 0 3 0 3 1 2 2 1 1 3 0 00E1908195 AR.indb 18 00E1908195 AR.indb 18 25/9/2019 17:43:28 25/9/2019 17:43:28 ANNUAL REPORT 2019 Induction of Directors • Succession planning for the Board and senior Following appointment, directors are supported through management; an induction briefing given by the corporate legal counsel, which seeks to familiarise the directors on listing • The appointment and re-election of Directors; rules, responsibilities and legal obligations of being and appointed as Directors of the Company. Furthermore, meetings with senior management are held at times • Ensuring appropriate skills are available to the to familiarise the directors with the operations of the Board to discharge its duties and add value to Company. In addition, a written directors’ training the Company. material is circulated at times to keep directors abreast of the latest updates in regulations. The Committee consists of a majority of independent NOMINATION COMMITTEE The Board has established a Nomination Committee which carries out its duties in accordance with the Terms of Reference and Nomination Policy, a copy of which is located on the Company’s website. The Committee’s primary functions are: • To identify suitable candidates for nomination to the Board, Board Committees and senior management; Name of member Independent Non-Executive Directors Yap Fat Suan Henry — Chairman Uwe Henke Von Parpart Choi Yue Chun Eugene Non-Executive Directors Kwai Sze Hoi Liu Zhengui Directors and was comprised of the following members during the year ended 30 June 2019: Meetings attended/ eligible to attend(*) 1/1 1/1 1/1 1/1 1/1 (*) Represents the total number of meetings held during the year ended 30 June 2019. NOMINATION POLICY The Company has adopted a Nomination Policy which sets out below the nomination procedures and the (b) the Committee and/or Board identifies potential candidates, possibly with assistance from external agencies and/or advisors; criteria. Nomination Procedures Subject to the provisions in the Company’s Bye-laws, if the Board recognises the need for an additional Director or member of senior management: (a) the Board determines the required skilled set, relevant expertise and experience, having consideration of the current Board composition a n d s i z e a n d s h a r e h o l d e r s t r u c t u r e o f t h e Company; (c) the Company Secretary provides the Board with the biographical details and details of the relationship between the candidate and the company and/or Directors, directorships held, skills and experience, other positions which involve significant time commitment and any other particulars required by law for any candidate for appointment to the Board; (d) the Board develops a short list of candidates; 1919 00E1908195 AR.indb 19 00E1908195 AR.indb 19 25/9/2019 17:43:28 25/9/2019 17:43:28 CORPORATE GOVERNANCE REPORT (e) in the case of the appointment of an additional be sufficiently free of other commitments to be independent non-executive Director, the Board able to devote the time needed to prepare for obtains all information in relation to the proposed meetings and participate in induction, training, Director to allow the Board to adequately assess appraisal and other Board associated activities. the independence of the Director; (f) the Board agrees on a preferred candidate; proposed as an independent non-executive • I n d e p e n d e n c e : F o r t h e c a n d i d a t e w h o i s (g) the Chairman of the Board approaches the independence requirements as set out in Rule p r e f e r r e d c a n d i d a t e t o c a n v a s s i n t e r e s t , 3.13 of the Listing Rules. He or she must always be availability and terms of appointment; and aware of threats to his or her independency and d i r e c t o r , h e o r s h e m u s t s a t i s f y a l l t h e avoid any conflict of interest with the Company. (h) the chairman of the Committee, the Chairman of He or she must be able to represent and act the Board and the Company Secretary finalise a in the best interest of the Company and its letter of appointment for Board approval. shareholders as a whole. In the case of the appointment of independent non- These factors are for reference only, and not meant executive Directors, appointments should be for specific to be exhaustive and decisive. To ensure that the terms and subject to re-election, the ASX Listing Rules, existing policy continues to be implemented smoothly the HKEx Listing Rules and the Companies Act 1981 of in practice, the Company shall undertake regular Bermuda. reviews and reassess this policy having regard to the regulatory requirements, good corporate governance The selection criteria including but not limited to the practice and the expectations of the Shareholders and following other stakeholders of the Company. The Company will propose amendments to the Board for approval. • Business experience: The candidate should have significant experience from a senior role in an area of business, public affairs or academia, BOARD DIVERSITY POLICY The Board has adopted a board diversity policy relevant to the Company. Awareness of the (the “Policy”) setting out the approach to achieve Group’s focusing industry would be an advantage diversity on the Board. The Company considered but not a requirement in all cases. diversity of board members can be achieved through consideration of a number of aspects, including but • Public board experience: The candidate should not limited to gender, age, cultural and educational have relevant expertise and experience earned background, professional experience, skills, knowledge a s a B o a r d m e m b e r o f a r e p u t a b l e l i s t e d and length of service. All board appointments are company or from a senior position in his or her based on merit and contribution, and candidates industry, public affairs or academia. are considered against objective criteria, having due regard for the benefits of diversity on the Board. • Diversity: The candidate should contribute to The Nomination Committee reviews the Policy on a the Board being a diverse body, with diversity regular basis and discusses any revisions that may be reflecting gender, age, cultural and educational required, and recommends any such revisions to the background, ethnicity, professional experience, Board for consideration and approval. qualifications, skills and length of service. Given the current composition of the Board, a female candidate would be an advantage but not a requirement. • Standing: The candidate should be of the highest ethical character and have a strong reputation and standing, both personally and professionally, in his or her fields. • Time commitment: Each Board member must have sufficient time available for the proper performance of his or her duties. Directors should APPOINTMENT AND RE-ELECTION OF DIRECTORS In accordance with the Bye-Laws of the Company and to comply with relevant HK and ASX Listing Rules, every Director should be subject to retirement by rotation at least once every three years. Non-Executive Directors are appointed for a fixed term of 3 years. All Directors appointed to fill a casual vacancy should be subject to re-election by shareholders at the first annual general meeting (‘AGM’) after their appointment and not less than one-third of the Directors should be subject to retirement and re-election every year. 00E1908195 AR.indb 20 00E1908195 AR.indb 20 25/9/2019 17:43:28 25/9/2019 17:43:28 ANNUAL REPORT 2019 In accordance with our Bye-Laws 87(1), at each AGM way of telephone or video-conference. Any resolutions one-third of the directors shall retire from office by can be passed by way of written resolutions circulated rotation so that each Director shall retire at least once to and signed by all Directors from time to time when every three years. Messrs. Liu Zhengui, Kwai Kwun, necessary except for matters in which a substantial Lawrence, and Ross Stewart Norgard will be standing shareholder or a Director or their respective associates for re-election at the forthcoming AGM. has a conflict of interest. The Board held 7 meetings No Directors’ service contract contains a provision requiring greater than one year’s notice or requires The Company normally provides reasonable notice compensation greater than one year’s emoluments. period of every Board meeting to all the Directors to during the year ended 30 June 2019. CONTINUING PROFESSIONAL DEVELOPMENT Each of the Directors keeps abreast of his responsibilities as a Director of the Company and of the conduct, business activities and development of the Company, as well as the laws and regulations applicable to the Company. Comprehensive inductions are conducted upon appointment and the Company ensures suitable professional development is undertaken by Directors and members of senior management, with an objective to keep them abreast of the listing rules amendments and refresh their knowledge and skills on corporate governance. The Directors provide and the Company maintains a record of all professional development undertaken during the period. Mr. Chan Kam Kwan, Jason, being an Executive Director and the Company Secretary of the Company received no less than 15 hours of relevant professional training during the financial year. All other Directors reviewed written professional development materials during the year ended 30 June 2019. BOARD MEETINGS The Board conducts meetings on a regular basis as required by business needs. The Bye-Laws of the Company allow board meetings to be conducted by Name of Director/role Non-Executive Directors Kwai Sze Hoi Liu Zhengui Independent Non-Executive Directors Yap Fat Suan, Henry, Chairman Uwe Henke Von Parpart Choi Yue Chun Eugene give them an opportunity to attend. If such notice is not possible, permission to waive is obtained from the Directors. Prior to each meeting of the Board, the Directors are provided with appropriate, complete and reliable information to ensure timely consideration before each Board meeting to enable them to make informed decisions. The Board is provided with the opportunity to meet independently from Executive Directors as and when required. Each Director also has separate and independent access to senior management whenever necessary. REMUNERATION AND PERFORMANCE COMMITTEE The Board has a Remuneration and Performance Committee to ensure that the Company is able to attract, retain, and motivate a high-calibre team which is essential to the success of the Company. The Committee carries out its duties in accordance with the Terms of Reference, a copy of which is located on the Company’s website. The Committee consists of a majority of independent Directors and was compromised of the following members during the year ended 30 June 2019: Meetings attended/ eligible to attend(*) 1/1 1/1 1/1 1/1 1/1 2121 (*) Represents the total number of meetings held during the year ended 30 June 2019. 00E1908195 AR.indb 21 00E1908195 AR.indb 21 25/9/2019 17:43:28 25/9/2019 17:43:28 CORPORATE GOVERNANCE REPORT T h e p r i n c i p a l d u t i e s o f t h e R e m u n e r a t i o n a n d Performance review of the Board Performance Committee include, inter alia, reviewing B o a r d p e r f o r m a n c e a n d i n d i v i d u a l D i r e c t o r and making recommendations to the Board on performance are reviewed on an ongoing basis t h e C o m p a n y ’ s r e m u n e r a t i o n p o l i c y ; m a k i n g and evaluated annually by the Remuneration and recommendations to the Board on the remuneration Performance Committee. Individual Directors may meet o f E x e c u t i v e a n d N o n - E x e c u t i v e D i r e c t o r s , a n d with the Chairman of the Committee to discuss their members of the senior management; reviewing and view towards their remuneration packages. making recommendations to the Board in respect of performance-based remuneration by reference to Remuneration of Executive Directors corporate goals and objectives resolved; and ensuring The Remuneration and Performance Committee of no Director or any of his or her associates is involved in the Board of Directors of the Company is responsible deciding his own remuneration. for reviewing compensation arrangements for the Executive Directors, including the Chief Executive In addition to its duties surrounding remuneration, Officer (if any) and the senior management team, and the Committee is also responsible for the annual making recommendations to the Board for approval. performance review of the Board, Board Committees The Committee assesses the appropriateness of the and individual Directors’ performance. nature and amount of remuneration of Directors and REMUNERATION AND PERFORMANCE The terms of reference in respect of the Remuneration and Performance Committee distinguishes the structure of the Non-Executive Directors’ remuneration from that of Executive Directors and senior executives. Non-Executive Director Compensation The Board is determined to attract and retain high calibre Non-Executive Directors to work with the Company, whilst at the same time preserving cash flow. Accordingly, the structure of the Non-Executive Directors’ remuneration allows for remuneration in the form of share options, granted under the share option scheme. Whilst this represents a departure from the Code and Principles, the Committee believes it is appropriate for the size of the Company, and is satisfied by the fact that all Director participation under the share option scheme is approved by Shareholders and the grant aligns with the long term performance of the Company. The Company’s Bye-laws provide that the Directors’ remuneration shall be determined by the Company in general meeting. The Company has fixed a maximum sum of A$1 million in aggregate for Non- Executive Directors per annum, unless otherwise and approved by the Shareholders. senior managers on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality board and executive team. Executive compensation framework The Company aims to reward executives with a level and mix of compensation commensurate with their position and responsibilities within the Company. The Remuneration and Performance Committee is assisted in the process by the use of independent salary data, if applicable. The executive pay and reward framework has 2 components: base pay and long-term incentives through participation in the 2012 Share Option Scheme. Details of the 2012 Share Option Scheme can be found in the financial statements. Performance review – Executives S e n i o r e x e c u t i v e s ’ p e r f o r m a n c e i s r e v i e w e d o n a n o n g o i n g b a s i s a n d e v a l u a t e d a n n u a l l y b y the Remuneration and Performance Committee. The evaluation is undertaken by each executive completing a questionnaire on performance issues or each executive having one-on-one interviews with the chairman of the Committee. Performance evaluations were completed during the period for senior executives. Individual executives may meet with the chairman of the Committee to discuss their responses. 00E1908195 AR.indb 22 00E1908195 AR.indb 22 25/9/2019 17:43:28 25/9/2019 17:43:28 ANNUAL REPORT 2019 Remuneration of Directors and senior management compensation) of the directors and members of the For details of the remuneration of each Director in senior management by band for the year ended 30 the financial year, refer to the notes to the financial June 2019 is set out below: statements. The emoluments (includes share-based HK$0 to HK$1,000,000 HK$1,000,001 – HK$2,000,000 HK$2,000,001 – HK$3,000,000 Number of members 2019 * Number of members 2018 6 2 2 10 6 2 2 10 AUDIT COMMITTEE The Board has established an Audit Committee to carry out its oversight of the Company’s financial reporting system and internal control procedures. The Committee carries out its duties in accordance with the Terms of Reference, a copy of which is located on the Company’s website. Name of Director/role Expertise The Committee consists of a majority of Independent Directors, none of whom have been employed as previous or current auditors of the Company. The composition and expertise of the Committee was as follows during the year ended 30 June 2019: Meetings attended/ eligible to attend(*) Independent Non-Executive Directors Yap Fat Suan, Henry, Chairman Uwe Henke Von Parpart Choi Yue Chun, Eugene Fellow of the Institute of Chartered Accountants in England and Wales and an associate member of the Hong Kong Institute of Certified Public Accountants Graduated from Princeton University and the University of Pennsylvania with a PhD Mathematics and Philosophy. Up to March 2016, Managing Director and Chief Strategist for Reorient Financial Markets Limited Graduated from the University of Hong Kong with a Bachelor of Laws degree, admitted as a solicitor of the High Court of Hong Kong in 1997 and member of the Law Society of Hong Kong 3/3 3/3 3/3 (*) Represents the total number of meetings held during the year ended 30 June 2019. The primary responsibilities of the Audit Committee are, (b) to review and monitor the external auditor’s inter alia, i n d e p e n d e n c e a n d o b j e c t i v i t y a n d t h e effectiveness of the audit process in accordance (a) to consider and make recommendations to the with applicable standards. The Committee Board on the appointment, reappointment and should discuss with the auditor the nature and removal of the external auditor (and to approve scope of the audit and reporting obligations the remuneration and terms of engagement before the audit commences; of the external auditor) and any questions of resignation or dismissal of that auditor; 00E1908195 AR.indb 23 00E1908195 AR.indb 23 25/9/2019 17:43:28 25/9/2019 17:43:28 2323 CORPORATE GOVERNANCE REPORT (c) to develop and implement policy on the (h) to consider any findings of major investigations of engagement of an external auditor or to supply risk management and internal control matters as non-audit services. For this purpose, ‘external delegated by the Board or on its own initiative auditor’ shall include any entity that is under and management’s response to these findings; common control, ownership or management of the audit firm, or any entity that a reasonable (i) where an internal audit function exists, to ensure and informed third party having knowledge co-ordination between the internal and external of all relevant information would reasonably auditors, and to ensure that the internal audit conclude as part of the audit firm nationally or function is adequately resourced and has internationally. The Committee should report to appropriate standing within the Company, and the Board, identifying any matters in respect of to review and monitor the effectiveness of the which it considers that action or improvement is internal audit function; needed and making recommendations as to the steps to be taken; (j) where an internal audit function exists, to assess the performance and objectivity of the internal (d) to monitor the integrity of financial statements audit function and to make recommendations of the Company and the Company’s annual for the appointment and dismissal of the Head report and accounts, half-yearly report and, of Internal Audit; if prepared for publication, quarterly reports, and to review significant financial reporting (k) to review the Group’s financial and accounting judgements contained in them; policies and practices; (e) to evaluate the adequacy of the Company’s (l) to review the external auditor’s management accounting control system by reviewing written letter, any material queries raised by the auditor reports from the external auditors, and monitor to management in respect of the accounting management’s responses and actions to correct records, financial accounts or systems of control any noted deficiencies; and management’s response; (f) to review the adequacy and effectiveness (m) to ensure that the Board provides a timely of the Company’s financial controls, and response to the issues raised in the external unless expressly addressed by a separate auditor’s management letter; board risk committee, or by the board itself, to review the Company’s internal control (n) to review arrangements for employees of and risk management systems through active the Company can use, in confidence, to communication with management and the raise concerns about possible improprieties external auditors; in financial reporting, internal control or other matters. The audit committee should ensure that (g) to discuss with management the system of proper arrangements are in place for fair and internal control and risk management and independent investigation of these matters and ensure that management has discharged its for appropriate follow-up action; and duty to have effective systems. This discussion should include the adequacy of resources, (o) to act as the key representative body for staff qualifications and experience, training overseeing the issuer’s relations with the external programmes and budget of the Company’s auditor. accounting and financial reporting function; 00E1908195 AR.indb 24 00E1908195 AR.indb 24 25/9/2019 17:43:28 25/9/2019 17:43:28 ANNUAL REPORT 2019 EXECUTIVE COMMITTEE The Board has constituted the Executive Committee and delegated the responsibility of the day-to-day management and has empowered the Executive Committee to implement policies and strategies, for the business activities and operations, internal control and administration of the Group. The Executive Committee carries out all the general powers of management and control of the activities of the Group as vested in the Board, save for those matters which are reserved for the Board’s decision and approval pursuant to the written terms of reference of the Executive. The members include the Executive Directors and certain senior management appointed by the Board from time to time. The Executive Committee meets whenever it is necessary to carry out its obligations. HEALTH, SAFETY, ENVIRONMENT AND SUSTAINABILITY COMMITTEE The Board has established a Committee to oversee the health, safety, environmental and sustainability activities of the Company. The Committee carries out its duties in accordance with the Terms of Reference, a copy of which is located on the Company’s website. The Committee consists of a majority of independent Directors and was comprised of the following members during the year ended 30 June 2019: Minutes of the Audit Committee Meeting are kept by a secretary of the meeting. Draft and final versions of minutes of the meeting are sent to all members of the committee for their comment and records respectively, in both cases within a reasonable time after the meetings. The Term of Reference of the Audit Committee is available in the website of the Company. DIRECTORS’ REPSPONSIBILITY FOR THE FINANCIAL STATEMENTS The financial statements of the Company for the year ended 30 June 2019 have been reviewed by the Board and the Audit Committee and audited by the external auditor, Ernst and Young Australia. The Directors acknowledge their responsibility for preparing the consolidated financial statements of the Company and presenting a balanced, clear and comprehensive assessment of the Group’s performance and prospects. The Directors ensure that the preparation of the consolidated financial statements of the Company are in accordance with statutory requirements and applicable accounting standards. The Directors also ensure the publication of the financial statements of the Company in a timely manner. The report of the auditor of the Company about their reporting responsibilities on the financial statements of the Company is set out in the Independent Auditor’s Report. Name of Director/role Independent Non-Executive Directors Choi Yue Chun, Eugene, Chairman Yap Fat Suan, Henry Non-Executive Director Ross Stewart Norgard (*) Represents the total number of meetings held during the year ended 30 June 2019. Meetings attended/ eligible to attend(*) 1/1 1/1 1/1 2525 00E1908195 AR.indb 25 00E1908195 AR.indb 25 25/9/2019 17:43:28 25/9/2019 17:43:28 CORPORATE GOVERNANCE REPORT The principle duties of the Committee are: (d) ensuring that the Company monitors trends and (a) reviewing and monitoring the sustainability, of sustainability, environment, health and safety, environmental, safety and health policies and and evaluates their impact on the Company; activities of the Company; and reviews current and emerging issues in the field (b) e n c o u r a g i n g , s u p p o r t i n g a n d c o u n s e l l i n g (e) reviewing and making recommendations to the management in developing short and long Board with respect to environmental aspects term policies and standards to ensure that of expansions, acquisitions and dispositions with the principles set out in the sustainability, material environmental implications. environmental, health and safety policies are being adhered to and achieved; (c) regularly reviewing community, environmental, health and safety response compliance issues and incidents to determine, on behalf of the Board, whether the Company is taking all necessary action in respect of those matters and that the Company has been duly diligent in carrying out its responsibilities and activities in that regard; RISK MANAGEMENT COMMITTEE The Board has established a Committee to oversee risk and the management and internal control of the processes by which risk is considered for both ongoing operations and prospective actions of the Company. The Committee carries out its duties in accordance with the Terms of Reference, a copy of which is located on the Company’s website. The Committee was comprised of the following members during the year ended 30 June 2019: Name of Director/role Executive Director Colin Paterson (Chairman) Non-Executive Director Ross Stewart Norgard Independent Non-Executive Director Choi Yue Chun, Eugene Meetings attended/ eligible to attend(*) 1/1 1/1 1/1 (*) Represents the total number of meetings held during the year ended 30 June 2019. Whilst the risk management committee was not chaired key role of identifying risks and enabling processes for by an independent director and it does not comprise risk management. Senior management are required of a majority of independent directors, the committee to report risks identified to the Risk Management was mainly composed of non-executive directors Committee or Chief Executive Officer. and independent non-executive directors who do not participate in the daily operation of the Group. The Risk Management Committee will meet periodically The Company considers that objectivity can still be to review and ensure that the Company has in place maintained with such arrangements. processes to assess and manage specific and general business risks and appropriate mitigation procedures R i s k m a n a g e m e n t e n c o m p a s s e s a l l a r e a s o f where applicable. the Company’s activities. Once a business risk is i d e n t i f i e d , t h e r i s k m a n a g e m e n t p r o c e s s e s a n d The overall results of this assessment are presented to systems implemented by the Company are aimed the Board, in oral and written form, at every Board at providing the necessary framework to enable the meeting by the Chairman of the Risk Management business risk to be managed. Management has the Committee, and updated as needed. 00E1908195 AR.indb 26 00E1908195 AR.indb 26 25/9/2019 17:43:28 25/9/2019 17:43:28 ANNUAL REPORT 2019 The Board reviews the Company’s risk management Although the Company is not required to comply with at every Board meeting, and where required, makes Section 295A of the Australian Corporations Act 2001 improvements to its risk management and internal (being a company incorporated in Bermuda), the compliance and control systems. Board requires a Executive Director to state in writing to the Board that: INTERNAL CONTROL AND RISK MANAGEMENT The Board has overall responsibility for the Group’s system of internal control and for the assessment and management of risk. The Board has conducted a review of and is satisfied with the effectiveness of the system of internal control of the Group. ‘The financial records of the Company have been properly maintained and the financial statements comply with the appropriate accounting standards and give a true and fair view of the Company’s financial position, and that the opinion has been based on the basis of a sound system of risk management and internal control which is operating effectively’. The Company has outsourced its internal audit function and has engaged an independent management consultancy company to assess the internal control m e a s u r e s o f t h e G r o u p o n a y e a r l y b a s i s . T h e MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS The Company has adopted a Securities Trading Policy conclusion is that there was no significant weakness in which applies, inter alia, to all Directors and Key the Company’s internal control and risk management Management Personnel. The Securities Trading Policy systems. complies with the ASX Listing Rules and the Model Code for Securities Transactions by Directors of Listed The Board also reviews at least annually the adequacy Issuers (the “Model Code”) as set out in Appendix of resources, qualifications and experience of staff 10 of the HK Listing Rules. A copy of the Company’s of the Group’s accounting and financial reporting Securities Trading Policy is available on the website of function, and their training programmes and budget. the Company. The Executive Directors of the Company report directly All directors have confirmed, following a specific to the Board and the Audit Committee, and monitor enquiry by the Company, that they have complied with the existence and effectiveness of the controls in the the required standard as set out in the Model Code. Group’s business operations. The Executive Directors also discuss the audit plan with the Audit Committee and the external auditors. The audit plan is reassessed during the year as needed to ensure that adequate resources are deployed and the plan’s objectives are met. In addition, regular consultation is undertaken with the Group’s external auditors so they are aware of the significant factors which may affect their respective scope of work. Reports from the external auditors on relevant financial reporting matter are presented to the Audit Committee, and, as appropriate, to the Board. For risk management, the Board, the Risk Management Committee, and management have reviewed the Group’s financial, operational, compliance and strategic aspects and identified certain risk areas. Certain types of risks and internal control weaknesses have been identified and the relevant measures implemented to mitigate these risks are disclosed under the section ‘Management Discussion and Analysis’. AUDITORS’ REMUNERATION The aggregate remuneration in respect of services provided by Ernst and Young Australia for the year ended 30 June 2019 was HK$1,659,000 of which HK$785,000 represents annual audit fees, HK$874,000 represents fees for non-audit services. T h e s e r v i c e s p r o v i d e d b y t h e p r e v i o u s a u d i t o r PricewaterhouseCoopers for the year ended 30 June 2019 was HK$1,377,000 of which HK$927,000 represents annual audit fees and HK$450,000 represents fees for non-audit services. 00E1908195 AR.indb 27 00E1908195 AR.indb 27 25/9/2019 17:43:28 25/9/2019 17:43:28 2727 CORPORATE GOVERNANCE REPORT COMPANY SECRETARY The Company Secretary is responsible to the Board for ensuring that Board procedures are followed COMMUNICATON WITH SHAREHOLDERS The Board is committed in providing clear and full and that the activities of the Board are carried out performance information of the Group to shareholders efficiently and effectively. The Company Secretary and have established a communications strategy, assists the Chairman to prepare agendas and Board a copy of which can be found on the Company’s papers for meetings and disseminates such documents website. The strategy is designed to promote effective to the Directors and Board Committees in a timely c o m m u n i c a t i o n w i t h s h a r e h o l d e r s t h r o u g h o u t manner. The Company Secretary is responsible for the year and encourage effective participation ensuring that the Board is fully briefed on all legislative, at general meetings. In addition to the circulars, regulatory and corporate governance developments notices and financial reports sent to shareholders, when making decisions. The Company Secretary is additional information of the Group is also available to also directly responsible for the Group’s compliance shareholders on the Group’s Company’s website. with the continuing obligations of the Listing Rules and The Codes on Takeovers and Mergers and Share As well as ensuring timely and appropriate access to Repurchases, including publication and dissemination of information for all investors via announcements to the the Company’s reports, financial statements and interim ASX and SEHK, the Company will also ensure that all reports within the period as per the Listing Rules. Also, relevant documents are released on the website of timely dissemination of announcements and information the Company for the purpose of both stakeholders relating to the Group to the market and ensuring that and shareholders. Copies of all corporate governance appropriate notification is made when there are any policies, charters and terms of references are available dealings by Directors in the securities of the Group. on the website of the Company. The Company Secretary is accountable directly to the Board. Each year the Company’s external auditor attends the AGM and is available to answer questions from security The Company Secretary also advises the Directors on holders relevant to the audit. their obligations in respect of disclosure of interests in securities, connected transactions and inside Shareholders are encouraged to attend the AGM for information and ensures that the standards and which at least 20 clear business days’ notice is given. disclosures required by the Listing Rules are observed. The Chairman and Directors are available to answer questions on the Group’s business at the meeting. With respect to the secretarial function of the Group, In accordance with the Bye-Laws of the Company, the Company Secretary maintains formal minutes of the a minimum of 14 days’ notice is required for every Board meetings and other Board committee meetings. shareholder meeting and all shareholders shall have statutory rights to call for special general meetings During the year, Mr Chan Kam Kwan Jason, the and put forward agenda items for consideration in the Company Secretary of the Company, has undertaken general meetings. All resolutions at the general meeting no less than 15 hours of professional training to update are decided by a poll which is conducted by the his skills and knowledge. Group’s branch share register in Hong Kong. The Group values feedback from shareholders on its effort to promote transparency and foster investor relationships. Comments and suggestions are always welcomed. CONTINUOUS DISCLOSURE The Directors are committed to keeping the market fully informed of material developments to ensure compliance with the ASX, and the HK Listing Rules. The Directors have observed the disclosure requirements of the ASX and the HK Listing Rules, and to ensure accountability at a senior management level for that compliance. A copy of the Communications Strategy and Continuous Disclosure Policy can be found on the Company’s website. 00E1908195 AR.indb 28 00E1908195 AR.indb 28 25/9/2019 17:43:28 25/9/2019 17:43:28 ANNUAL REPORT 2019 Procedures for Putting Forward Proposals at a General Meeting Any number of shareholders representing not less than 5% of the total voting rights of the Company on the date of the requisition or not less than 100 shareholders of the Company are entitled to put forward a proposal for consideration at a general meeting of the Company. Shareholders should follow the procedures as set out in Section 79 of the Act for putting forward such proposals. Provision of Information in Respect of and by Directors Updated information with regard to the change in other Directorships of the Directors of the Company are on the Company’s website and in the 2019 Annual Report. CONSTITUTIONAL DOCUMENTS There was no significant change in the memorandum and articles of association and the Bye-Laws of the Company during the year. The memorandum and articles of association and the Bye-Laws of the Company are available on the Company’s website. SHAREHOLDERS RIGHTS How shareholders can convene a special general meeting Subject to Section 74 of the Companies Act 1981 of Bermuda (the “Act”) and the Bye-Law 58 of the Company, the Board may whenever it thinks fit call special general meetings, and members holding at the date of deposit of the requisition not less than one-tenth of the paid up capital of the Company carrying the right of voting at general meetings for the Company shall at all times have the right, by written requisition to the Board or the Company Secretary of the Company, to require a special general meeting to be called by the Board for the transaction of any business specified in such requisition; and such meeting shall be held within two months after the deposit of such requisition. If within 21 days of such deposit the Board fails to proceed to convene such meeting the requisitionists themselves may do so in accordance with the provisions of Section 74(3) of the Act. Procedures for directing Shareholders’ Enquiries to the Board S h a r e h o l d e r s e n q u i r i e s c a n b e d i r e c t e d t o inquiry@brockmanmining.com or by writing to the Company Secretary’s office, whose contact details are as follows: Unit 3903B, Far East Finance Centre, 16 Harcourt Road, Admiralty, Hong Kong. The enquiries would then be assessed and considered (if appropriate) to put to the Board. Shareholders may also make enquiries with the Board at the general meetings of the Company. 00E1908195 AR.indb 29 00E1908195 AR.indb 29 25/9/2019 17:43:29 25/9/2019 17:43:29 2929 ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT The Directors are pleased to present the Environmental, Social and Governance Report for the year ended 30 June 2019 in compliance with the applicable code provision of the Environmental, Social and Governance Reporting Guide as set out in the Appendix 27 of the Listing Rules. A. ENVIRONMENTAL PROTECTION A.1 EMISSIONS D u r i n g t h e y e a r , t h e G r o u p w a s a t minimal spend and retained office space to secure an infrastructure solution for the Marillana project. No mining activities have been carried out. Management considers that the emissions and wastes generated by any exploration activity would have an insignificant impact on the environment due to the minimal activities undertaken. At present, and with consideration to the scale of the exploration activity, the Greenhouse Gases emissions are generated from electricity consumption in the office space. Relevant KPls are as shown below: Purchased electricity 15,606 kWh consumption Carbon dioxide 12,485 kg CO2e emission from the generation of purchased electricity Carbon dioxide 32.4 kg/square emission intensity per metre office area in M2 During the reporting period, the major hazardous wastes were printer toner c a r t r i d g e s , b a t t e r i e s a n d o b s o l e t e computer and printing equipment. These were properly disposed and recycled. N o n - h a z a r d o u s w a s t e s u c h a s d a i l y domestic waste from employee and printing paper. These amounts were not considered material. As mitigation measures for emissions, the Company implement the following: — Reduction of unnecessary business trips and organize board meetings via electronic communications. — Encouraged employee to switch off lights and air conditioning. During the reporting period, the Company has relocated its corporate office, and due to the increased size of office space and reduced number of employee, there was a slight increase in electricity consumption and the corresponding carbon footprint. A.2 USE OF RESOURCES The Group is committed to promoting a n e n v i r o n m e n t a l l y c o n s c i o u s w o r k e n v i r o n m e n t a n d h a s f o c u s e d o n m e a s u r e s t o m i n i m i z e w a s t e a n d electricity consumption, initiate paper and cartridge recycling, and promoting electronic communications and storage. To reduce consumption of paper, the Group prefers using electronic means to disseminate information via electronic devices and electronic communication systems. We encourage our office employees to switch off idle lights, air conditioners and other office equipment, and we remind our employees to print and photocopy on both sides of paper if printing is unavoidable. We also encourage our employees to bring their own lunch and reduce purchase of takeaway and beverages and hence reduce the use of plastic disposable utensils. The group encourages its employees to choose public transportation and carpool to reduce car driving and thus the impact on the environment and transportation. The Group does not own any vehicles and we therefore do not directly produce any greenhouse and hazardous gases from cars used. Our offices are required to maintain in- door temperature at 25 degree Celsius to ensure efficient use of air conditioning. 00E1908195 AR.indb 30 00E1908195 AR.indb 30 25/9/2019 17:43:29 25/9/2019 17:43:29 ANNUAL REPORT 2019 The Group, also promotes initiatives p r o j e c t . E a c h y e a r , t h e C o m p a n y to mitigate environmental impacts by undertakes an annual compliance review choosing energy-efficient products by and provides a report to the Office of c o m p a r i n g E n e r g y L a b e l s i s s u e d b y Environmental Protection Authority to the Electrical and Mechanical Services declare its compliance status as required. D e p a r t m e n t ( E M S D ) / E n e r g y R a t i n g Labels issued by the Australian Federal Brockman is proposing to clear up to Government. As waste electrical and 3,785 ha of vegetation to mine and electronic equipment (WEEE) pose severe transport ore to Port Hedland by rail. harm to the environment, the Group After rehabilitation, the long-term cleared encourages all employees to engage the footprint will be around 60 ha which WEEE donation or recycle programs. represents the final open pit void. All other disturbances will be rehabilitated to A l l e m p l o y e e s a r e r e s p o n s i b l e a n d the satisfaction of the Western Australian a c c o u n t a b l e f o r o p e r a t i n g i n a n E n v i r o n m e n t a l P r o t e c t i o n A u t h o r i t y environmentally responsible manner. (EPA), Department of Environment and Conservation (DEC) and Department of The Group’s existing business operation Mines, Industry, Resources and Safety. does not require any significant water consumption, water usage and any B r o c k m a n h a s p r e v i o u s l y e n g a g e d consumption relates to drinking water E c o l o g i a E n v i r o n m e n t ( E c o l o g i a ) t o (including bottled water). The Group’s drinking water consumption for the year amounted to 1.23m3 with a water consumption intensity amounted to approximately 0.21m3 per employee. We require employees to report immediately prepare the Preliminary Documentation required to assess the project under the Environmental Protection and Biodiversity Conservation Act 1999 (Cth). Most key environmental approvals are in place and we shall adhere to our proposed plan in the event of commencement of early whenever damage is found to any of the works. We would have best endeavours water facilities. to mitigate environmental disturbance, and apply our monitoring schedule when A.3 T H E E N V I R O N M E N T A N D N A T U R A L the projects commercializes. RESOURCES T h e C o m p a n y i s c o m m i t t e d t o t h e principles of being a good corporate and environmental citizen, and shall take into B. careful consideration of environmental, social responsibility and sustainability issues when choosing its vendors. The Group aims to minimize its environmental footprint and its disturbance to the natural resources. We anticipate that fines residue storage and waste rock management, water use and discharge, and land management and rehabilitation would be the most important areas of concern once in production and the Group shall closely monitor these aspects, in compliance with its regulatory approvals obtained with key State and Commonwealth environmental approvals that have been received for the Marillana SOCIAL B.1 EMPLOYMENT AND LABOUR PRACTICES Employment W e b e l i e v e t h a t p e o p l e a r e t h e foundation of our business, and retaining quality staff is paramount to supporting our business. We aim to retain our staff by offering an employee-friendly working environment, and we make sure our employees are well compensated, not only in terms of remuneration, but we strive to facilitate work-life balance for all our employees. 00E1908195 AR.indb 31 00E1908195 AR.indb 31 25/9/2019 17:43:29 25/9/2019 17:43:29 3131 ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT Recruitment Equal opportunity, diversity and anti- The Group has established a human discrimination r e s o u r c e s m a n a g e m e n t c o v e r i n g A l l D i r e c t o r s , s e n i o r m a n a g e m e n t various aspects of employment. During and employees of the Company are our recruitment process, employees e x p e c t e d t o c o n d u c t t h e m s e l v e s are hired based on consideration of with integrity, openness, honesty and their experience, qualifications and f a i r n e s s , a n d i n t h e b e s t i n t e r e s t s knowledge. All employees have entered o f t h e C o m p a n y . T h e B o a r d h a s into a written employment contract that established a Code of Conduct, which outlines conditions of employment which is supported by a Whistleblower Policy, includes job title, job duties, working to guide all Directors, members of senior hours, holidays, remuneration, termination management and employees. A copy of process and benefits are agreed by both the Code of Conduct and Whistleblower parties. Policy is available in the corporate governance section of the Company’s Promotion, compensation and dismissal website. We motivate employees by promotion and salary increments based on results T h e C o m p a n y ’ s r e c o g n i t i o n o f t h e of regular performance appraisals. Staff benefits of diversity where people from dismissal is based on the Hong Kong different gender, age, ethnicity and E m p l o y m e n t O r d i n a n c e o r r e l e v a n t cultural backgrounds can bring fresh l o c a l l a w s a n d r e g u l a t i o n s , a s w e l l ideas and perceptions which make the as the requirements stipulated in the workplace more efficient is reinforced in e m p l o y m e n t c o n t r a c t s . A p a r t f r o m the Diversity Policy, a copy of which is offering employees competitive salary available in the corporate governance p a c k a g e s , t h e G r o u p a l s o p r o v i d e s section of the Company’s website. This annual bonuses and employee share policy outlines specific diversity initiatives o p t i o n s t o e l i g i b l e e m p l o y e e s a s designed to facilitate equal employment incentives to retain our staff. Working hours, rest periods and benefits opportunities and requires the Company to set out specific diversity initiatives and targets with the aim of reporting A five-day work week arrangement is the progress towards the metrics in the adopted to facilitate work-life balance. annual report. These key metrics include: In addition to all rest days and statutory holidays as specified in local laws and • Proportion of women appointed r e g u l a t i o n s , e m p l o y e e s a r e e n t i t l e d to paid annual, maternity, paternity, marriage and compassionate leave. Employees are also entitled to benefits such as medical benefits, MPF scheme contributions and other benefits subject t o t h e G r o u p ’ s h u m a n r e s o u r c e s management policy. as Non-Executive Directors of the Company; P r o p o r t i o n o f w o m e n i n t h e workplace; Proportion of women in senior management; Parental leave return rates; and Employee turnover. • • • • 00E1908195 AR.indb 32 00E1908195 AR.indb 32 25/9/2019 17:43:29 25/9/2019 17:43:29 ANNUAL REPORT 2019 The following metrics shows the comparison over historical data. The historical data is as follows: Proportion of women appointed as Non-Executive Directors Proportion of women in the workplace Proportion of women in senior management Parental leave return rates Employee turnover 2019 2018 2017 2016 2015 0 15% 8% 18% 15% 0 18% 38% N/A 53% 0 21% 13% 100% 24% 0 24% 10% N/A 82% 0 10% 11% N/A 45% The Board is continually looking to achieve diversity and will endeavour to appoint individuals who will provide a mix of diverse experience, perspective and skills appropriate for the Company, including appropriate technical and commercial skills relevant to the mining industry. Our human resources function ensures that the Company is free from any form of discrimination on the grounds of age, gender, religion, marital status, family status, sexual orientation, disability, race and nationality. We are committed to creating a corporate culture of equality, respect diversity and mutual support. During the year, the Group was not aware of any material breaches of the relevant laws and regulations relating to the Group’s compensation and dismissal, recruitment and promotion, working hours, rest periods, equal opportunity, diversity, anti-discrimination and other benefits and welfare. In addition, no fines or sanctions were imposed on us due to non-compliance with the relevant laws and regulations during the year. TOTAL WORKFORCE By Nature of Work Corporate directors Corporate Services Project Development Exploration By Gender Male Female By Employee Category Directors (Executive) Directors (Non-executive) Management team 14 Australia Hong Kong 2 1 0 1 7 2 1 0 Australia Hong Kong 3 1 9 1 Australia Hong Kong 1 1 2 2 5 3 00E1908195 AR.indb 33 00E1908195 AR.indb 33 25/9/2019 17:43:29 25/9/2019 17:43:29 3333 ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT B.2 HEALTH, SAFETY AND SUSTAINABILITY The Company is committed to the development of a sustainable iron ore business in Western Australia that benefits its employees, contractors, suppliers, partners and the community. We will achieve this through the effective implementation and proactive management of our commitments and obligation to workplace health and safety, the environment and to the communities in which we operate. To operate an effective and sustainable iron ore business, the Company will: — F o c u s o n t h e e l i m i n a t i o n a n d management of workplace hazards and risks; — Act ethically and responsibly in all its interactions; — Promote a culture which focuses its employees, contractors, suppliers and partners on workplace health and safety as the responsibility of all those who work in its business; — Provide a workplace free from bullying or discrimination and offering equal opportunity to all employees; — Work actively through all areas of its business to minimise the actual and potential environmental impact of the Company’s activities; and — Respect the rights of the traditional owners and value the indigenous cultural heritage associated with its operations. We will implement systems and ensure that resources are allocated to implement and m o n i t o r t h e s e c o m m i t m e n t s a n d i t s l e g a l obligations. Our employees, contractors and partners will be updated on the Company’s progress towards these goals. The policy and the system that support it will be routinely measured to ensure the delivery of our commitments and system improvements made where the need arises. The Group shall observe to our Operational Health and Safety (‘OHS’) Policy for all our activities and our Company’s health and safety objectives are summarized as follows: — A c h i e v e “ Z e r o H a r m ” t o p e o p l e , t h e c o m m u n i t y a n d t h e w o r k p l a c e environment; — Support, encourage and promote efforts to achieve industry-leading occupational health and safety performance; — Eliminate or manage circumstances w h i c h m a y l e a d t o i n j u r y , p r o p e r t y damage and business interruption; and — Achieve health and safety performance consistent with the OHS Policy. Brockman will employ the following principles: — Everyone has a responsibility for health and safety; — Hazards should be identified and their risks eliminated or controlled; — Every task, can be done safely; — Health and safety standards will not b e l i m i t e d t o o n l y m i n i m u m l e g a l requirements. These objectives will be achieved by: Providing employees and contractors with the necessary responsibility training and resources to assist them to perform their tasks safely and effectively; Establishing and enforcing accountabilities for employees and contractors regarding health and safety policy, objectives and performance; Complying with all applicable laws, regulations and statutory obligations; 00E1908195 AR.indb 34 00E1908195 AR.indb 34 25/9/2019 17:43:29 25/9/2019 17:43:29 ANNUAL REPORT 2019 D e m o n s t r a t i n g e f f e c t i v e l e a d e r s h i p a n d The Company upholds the c on fi den tial ity management of health and safety through regarding customers, prospective customers risk assessment and the development and o r b u s i n e s s c o u n t e r p a r t s ’ i n f o r m a t i o n . implementation of safe operational procedures, Confidentiality agreements were in place to and communication in health and safety issues. protect any leakage of information. B3. DEVELOPMENT AND TRAINING B7. ANTI-CORRUPTION Employees are the most important asset of The Company has established rules against the Company. First-class professionals and bribery or corruption, which prohibit employees management team are the guarantee of from accepting gifts from other people in successful business, and therefore we are eager a business relationship. To ensure effective to provide them with relevant training and implementation, every employee has been encourage them to fully utilize their potential. t r a i n e d o n t h e s e r u l e s . F u r t h e r m o r e , t h e We subsidize our employees for their continuing Company has set up a whistle blower policy education, and encourage employees to ( d e t a i l s o f w h i c h c a n b e f o u n d o n t h e participate in various workshops and seminars company website), and Brockman encourages according to their respective areas of interest s t a k e h o l d e r s t o p u r s u e a n d r e p o r t a n y and job description. B4. LABOUR STANDARDS All our labour-related policies and practices comply with the Employment Ordinance, and relevant labour laws in Australia. Furthermore, the Group strictly prohibits the employment of child labour and forced labour, and complies with all relevant laws and regulations. During the year, we did not employ child labour and did not received any complaints or reporting of child labour or forced labour. B5. SUPPLY CHAIN MANAGEMENT T h e C o m p a n y h a s e s t a b l i s h e d s o u n d procurement procedures and requirement for vendors. Upon selection of new vendors, t h e C o m p a n y w i l l e v a l u a t e t h e v e n d o r s ’ performance, reliability and pricing, but also the environmental attributes such as impact to the environment and energy saving functionalities. Also, consideration of previous performance of the vendor in terms of creditability and compliance with local regulations. B6. PRODUCT RESPONSIBILITY T h e C o m p a n y w i l l e n s u r e a l l r e q u i r e d documentation will be implemented prior to shipment of iron ore. Sinter testwork conducted has provided positive results and confirmation of our product quality and the Group will strive to maintain the product’s quality upon future delivery of ore. misconduct, fraudulent or corrupt practices, breaches in rules, coercion or harassment. Active channels are in place for employees to report directly in event of any potential source of bribery/corruption in any business execution. Training has also been provided for employees a n d d i r e c t o r s t o d i s c o u r a g e a n y f o r m o f corruption. Brockman takes a zero tolerance approach to corruption and bribery and is committed to acting professionally, fairly and with integrity in all our business dealings. Our whistleblower policy adopted encourages employees to report on any incidences of fraud, misappropriation of funds or corruption while the reporters’ privacy are completely protected. B8. COMMUNITY INVESTMENT We provide opportunities for our employees to be a part of our local communities. We encourage our employees to volunteer their time and skills in contributing to the community at the same time enriching their knowledge of environmental and social issues, moreover, to prevent and mitigate any potential and actual negative impact on the community. The Company had sponsor charity run/marathon for employees. 00E1908195 AR.indb 35 00E1908195 AR.indb 35 25/9/2019 17:43:29 25/9/2019 17:43:29 3535 DIRECTORS’ REPORT The Directors present their report together with the audited consolidated financial statements of the Company for the year ended 30 June 2019. PRINCIPAL ACTIVITIES AND GEOGRAPHICAL ANALYSIS OF OPERATIONS The Company is an investment holding company. The principal activities of the Company and its subsidiaries (“Group”) are exploration and development of iron ore mining projects in Western Australia. Detailed activities of each of the Company’s subsidiaries are as set out in Note 33 to the consolidated financial statements. RESULTS AND APPROPRIATIONS The results of the Group for the year ended 30 June 2019 are set out in the consolidated statement of DIVIDEND POLICY The Company has adopted a dividend policy (the “Dividend Policy”), pursuant to which the Company may distribute dividends to the shareholders of the Company by way of cash or shares. Any distribution of dividends shall be in accordance with the Hong Kong Laws, the bye-laws of the Company, the Bermuda Companies Act 1981 (as amended from time to time) and any other applicable laws, rules and regulations. The recommendation of the payment of any dividend is subject to the absolute discretion of the Board, and any declaration of dividend will be subject to the approval of the Shareholders. In proposing any dividend payout, the Board shall also take into account, inter alia: • the Group’s actual and expected financial comprehensive income on page 47. performance; RESERVES Movements in the reserves of the Group during the year are set out in consolidated statement of changes in equity on pages 49 to 50. • • shareholders’ interests; retained earnings, distributable reserves and contributed surplus of the Company and each of the other members of the Group; PROPERTY, PLANT AND EQUIPMENT Details of the movements in property, plant and equipment are set out in Note 19 to the consolidated financial statements. REVIEW OF OPERATIONS It is recommended that the financial statements be read in conjunction with the 30 June 2019 annual report and any public announcements made by the Company during the period. Detailed business review is set out in pages 4 to 13. In accordance with the continuous disclosure requirements, readers are referred to the announcements lodged with the ASX regarding exploration and other activities of the Company. • the level of the Group’s debts to equity ratio, return on equity and financial covenants to which the Group is subject; • • possible effects on the Group’s creditworthiness; any restrictions on payment of dividends or other convenants on the Group’s financial ratios that may be imposed by the Group’s financial creditors; • t h e G r o u p ’ s e x p e c t e d w o r k i n g c a p i t a l requirements and future expansion plans; • liquidity position and future commitments at the time of declaration of dividend; FINAL DIVIDEND The Board does not recommend the payment of a dividend. • • taxation considerations; statutory and regulatory restrictions; 00E1908195 AR.indb 36 00E1908195 AR.indb 36 25/9/2019 17:43:29 25/9/2019 17:43:29 ANNUAL REPORT 2019 • • general business conditions and strategies; Independent Non-executive Directors: general economic conditions, business cycle Yap Fat Suan, Henry of the Group’s business and other internal or Choi Yue Chun, Eugene external factors that may have an impact on the Uwe Henke Von Parpart business or financial performance and position In accordance with Clause 87(1) of the Company’s of the Company; and Bye-laws Messrs. Liu Zhengui, Ross Stewart Norgard and Kwai Kwun, Lawrence, shall retire and, being eligible, • other factors that the Board deems appropriate. offer him for re-election at the forthcoming annual general meeting. The Dividend Policy will be reviewed from time to time and there is no assurance that a dividend will be proposed or declared in any specific periods. DISTRIBUTABLE RESERVES As at 30 June 2019, the Company has no reserve CONFIRMATION OF INDEPENDENCE All the independent non-executive directors are appointed for a specific term and will be subject to retirement by rotation and re-election in accordance with the HK Listing Rules and the Bye-Laws of the available for distribution to the shareholders. Company. The Company has received from each of PRE-EMPTIVE RIGHTS There are no provisions for pre-emptive rights under the Company’s Bye-laws, or the laws in Bermuda, which would oblige the Company to offer new shares on a pro-rata basis to existing shareholders. FINANCIAL SUMMARY A summary of the results and of the assets and liabilities of the Group for the last 5 financial years is set out on page 81. DIRECTORS The Directors of the Company during the year and up to the date of this report were: Non-executive Directors: Kwai Sze Hoi (Chairman) Liu Zhengui (Vice Chairman) Ross Stewart Norgard Executive Directors: Colin Paterson Chan Kam Kwan, Jason (Company Secretary) Kwai Kwun, Lawrence the Independent Non-executive Directors, an annual confirmation of their independence pursuant to Rule 3.13 of the HK Listing Rules. The Company considers all of the Non-executive Directors are independent. DIRECTOR’S SERVICE CONTRACT None of the directors who are proposed for re- election at the forthcoming annual general meeting has a service contract with the Company which is not determinable by the Company within one year without payment of compensation, other than statutory compensation. DIRECTORS’ AND CHIEF EXECUTIVE’S INTERESTS As at 30 June 2019, the interests and short positions of the directors and chief executives and their respective associates in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the “SFO”) as recorded in the register maintained by the Company pursuant to Section 352 of the SFO, or which were otherwise required to be notified to the Company and the SEHK, pursuant to the Model Code were as follows: 00E1908195 AR.indb 37 00E1908195 AR.indb 37 25/9/2019 17:43:29 25/9/2019 17:43:29 3737 DIRECTORS’ REPORT Long positions of ordinary shares of HK$0.10 each of the Company Name of director Mr Kawi Sze Hoi Mr Liu Zhengui Mr Ross Stewart Norgard Mr Colin Paterson Capacity Jointly (Note) Interests of controlled corporation (Note) Beneficial owner Interest of spouse Beneficial owner Beneficial owner Interests of controlled corporation Beneficial owner Interest of spouse Mr Kwai Kwun Lawrence Beneficial owner Interests of controlled corporation Mr Chan Kam Kwan Jason Beneficial owner Mr Uwe Henke Von Parpart Beneficial owner Mr Yap Fat Suan Henry Beneficial owner Mr Choi Yue Chun Eugene Beneficial owner Number of issued ordinary shares held Number of options granted Percentage of the issued share capital of the Company 60,720,000 2,426,960,137 47,400,000 9,264,000 — 64,569,834 178,484,166 30,173,004 22,625,442 45,908,412 59,000,000 — — 400,000 — — — 40,000,000 — 2,500,000 1,500,000 — 12,000,000 — 17,500,000 — 10,000,000 1,500,000 1,500,000 1,500,000 0.66% 26.32% 0.95% 0.10% 0.03% 0.72% 1.94% 0.46% 0.25% 0.69% 0.64% 0.11% 0.02% 0.02% 0.02% Note: The 2,426,960,137 shares were held by Ocean Line Holdings Ltd., a company held 60% by Mr. Kwai Sze Hoi and 40% by Ms Cheung Wai Fung (Mr Kwai’s spouse). In addition, Mr. Kwai and Ms Cheung have a joint direct interest in 60,720,000 shares of the Company. Save as disclosed above, none of the Directors and Chief Executive, nor their associates had any interests or short positions in any shares, underlying shares or debentures of the Company or any of its associated corporations as at 30 June 2019. 00E1908195 AR.indb 38 00E1908195 AR.indb 38 25/9/2019 17:43:29 25/9/2019 17:43:29 ANNUAL REPORT 2019 SHARE OPTIONS The share option scheme (the “Share Option Scheme”) of the Company was adopted by the Company pursuant to the resolution of the shareholders at the AGM dated 13 November 2012. The particulars of the Share Option Scheme are set out in Note 26 to the consolidated financial statements and details of the options outstanding as at 30 June 2019 which have been granted to Qualified Persons under the Share Option Scheme are as follows: Outstanding as at Outstanding as at Option type 1 July 2018 Exercised Lapsed Granted 30 June 2019 Directors Kwai Sze Hoi Liu Zhengui Ross Stewart Norgard Chan Kam Kwan Jason Kwai Kwun Lawrence Colin Paterson Uwe Henke Von Parpart Choi Yue Chun Eugene Yap Fat Suan Henry Employees TOTAL 2018B 2018B 2018B 2018B 2018B 2018B 2018B 2018B 2018B 2018A 80,000,000 40,000,000 2,500,000 1,500,000 10,000,000 — — — 35,000,000 17,500,000 12,000,000 1,500,000 1,500,000 1,500,000 — — — — — — — — — — — — — 65,000,000 1,750,000 1,500,000 210,500,000 59,250,000 1,500,000 Weighted average exercise price 0.13 — — — — — — — — — — 40,000,000 2,500,000 1,500,000 10,000,000 17,500,000 12,000,000 1,500,000 1,500,000 1,500,000 61,750,000 149,750,000 0.14 The total number of securities available for issue under the share option scheme amounts to 570,948,213 as at the date of the annual report, representing 6.19% of the issued share capital outstanding. DIRECTORS’ RIGHTS TO ACQUIRE SHARES OR DEBENTURES Other than as disclosed in the section ‘Directors and Chief Executives’ interests’, at no time during the period was the Company, its holding company, or any of its subsidiaries or fellow subsidiaries, a party to any DIRECTORS’/CONTROLLING SHAREHOLDERS’ INTERESTS IN TRANSACTIONS, ARRANGEMENTS AND CONTRACTS THAT ARE SIGNIFICANT IN RELATION TO THE GROUP’S BUSINESS Details of the related party transactions for the year arrangements to enable the Directors of the Company are set out in Note 32 to the consolidated financial and their associates to acquire benefits by means statements. Other than as disclosed therein, no of the acquisition of shares in, or debentures of, the contracts of significance to which the Company, Company or any other body corporate. transactions, arrangements and subsidiaries or fellow DIRECTORS’ INTERESTS IN COMPETING BUSINESS N o n e o f t h e D i r e c t o r s h a s a n y i n t e r e s t s i n a n y competing business to the Group. subsidiaries was party and in which a Director or a controlling shareholder of the Company had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the period. 00E1908195 AR.indb 39 00E1908195 AR.indb 39 25/9/2019 17:43:29 25/9/2019 17:43:29 3939 DIRECTORS’ REPORT MANAGEMENT CONTRACTS No contracts concerning the management and RELATED PARTY TRANSACTIONS Significant related party transactions entered into by administration of the whole or any substantial part of the Group during the year ended 30 June 2019 are the business of the Company were entered into or disclosed in Note 32 to the consolidated financial existed during the year. statements. SUBSTANTIAL SHAREHOLDERS As at 30 June 2019, the register of substantial shareholders maintained by the Company pursuant to Section 336 of the SFO shows that the following shareholders had notified the Company of relevant interests and short positions in the issued share capital of the Company: Long positions of ordinary shares and underlying shares of HK$0.10 each of the Company Name of shareholder Nature of interest Ocean Line Holdings Ltd (“Ocean Line”) (Note 1) Beneficial owner Number of shares or underlying shares 2,426,960,137 Kawi Sze Hoi (Note 1) Interest held by controlled corporations 2,426,960,137 Interest held jointly with another person Beneficial owner Interest of spouse 60,720,000 87,400,000 9,264,000 Cheung Wai Fung (Note 1) Interest held by controlled corporations 2,426,960,137 Interest held jointly with another person Beneficial owner Interest of spouse Equity Valley Investments Limited Beneficial owner The XSS Group Limited (Note 2) Interest held by controlled corporations Cheung Sze Wai, Catherine (Note 2) Interest held by controlled corporations Luk Kin Peter Joseph (Note 2) Interest held by controlled corporations Beneficial owner 60,720,000 9,264,000 87,400,000 515,574,276 515,574,276 515,574,276 515,574,276 50,000,000 Percentage of the issued share capital of the Company 26.32% 26.32% 0.66% 0.95% 0.10% 26.32% 0.66% 0.10% 0.95% 5.59% 5.59% 5.59% 5.59% 0.54% KQ Resources Limited Beneficial owner 1,301,270,318 14.11% Notes: 1. 2. Ocean Line is owned 60% by Mr Kwai Sze Hoi and 40% by Ms Cheung Wai Fung (Mr Kwai’s spouse). In addition, Mr Kwai and Ms Cheung have a joint direct interest in 60,720,000 shares. In addition, Mr Kwai was granted a total of 80,000,000 options, of which 40,000,000 were exercised on the 17 January 2019. The 515,574,276 shares were held by Equity Valley Investments Limited. Equity Valley Investments Limited is wholly-owned by The XSS Group Limited, of which 50%, 20% and 30% of its issued share capital were held by Mr Luk Kin Peter Joseph, Ms Cheung Sze Wai, Catherine (Mr Luk’s spouse) and Ms Chong Yee Kwan (Mr Luk’s mother) respectively. In addition, Mr Luk was granted a total of 50,000,000 options. Other than as disclosed above, the Company has not been notified of any other relevant interests or short positions in the issued share capital of the Company as at 30 June 2019. 00E1908195 AR.indb 40 00E1908195 AR.indb 40 25/9/2019 17:43:29 25/9/2019 17:43:29 ANNUAL REPORT 2019 PURCHASE REDEMPTION OR SALE OF LISTED SECURITIES During the year, neither the Company nor any of its CORPORATE GOVERNANCE The Company is committed to maintain a high standard of corporate governance practices. Information on subsidiaries purchased, sold or redeemed any of the the corporate governance practices adopted by the listed securities of the Company. Company is set out in the Corporate Governance Report on pages 16 to 29 of the annual report. PERMITTED INDEMNITY PROVISION Pursuant to the Bye-Laws of the Company, the Directors shall be indemnified and secured harmless out of the SUFFICIENCY OF PUBLIC FLOAT As at the date of this report, based on information that assets and profits of the Company against all losses and is publicly available to the Company and within the liabilities etc which they may incur or sustain by reason knowledge of the Directors, there was sufficient public of the execution of their duties, provided that this float of the Company’s securities as required under the indemnity shall not extend to any matter in respect of HK Listing Rules. any fraud or dishonesty which may attach to any of the directors. The Company has also arranged appropriate directors and officers insurance coverage for the directors and officers of the Group. MAJOR CUSTOMERS AND SUPPLIERS The aggregate operating and administrative expenses attributable to the Group’s five largest suppliers were AUDITOR The financial statements for the financial year ended 30 June 2019 have been audited by Ernst and Young who retire and, being eligible, offer themselves for re-appointment at the forthcoming annual general meeting of the Company. less than 24% of total operating and administrative By order of the Board. expenses (include exploration and evaluation expenses) for the year. At no time during the year did any Director, or associate of a Director, or any shareholder of the Company, which to the knowledge of the Directors owned more than 5% of the Company’s share capital, have any beneficial interests in these customers Kwai Sze Hoi or suppliers. Chairman Hong Kong, 25 September 2019 PROVISION OF INFORMATION IN RESPECT OF ANY DIRECTOR Updated information with regard to the change in other directorships of the Directors of the Company is as set out below: — Mr. Kwai Sze Hoi has been appointed as chairman of Ocean Line Port Development Limited (Stock Code: 8502) since December 2017 and the company was listed in July 2018. — Mr. Chan Kam Kwan Jason has resigned as the executive director and company secretary of Lajin Entertainment Network Group Limited (Stock code: 8172) in November 2018. 00E1908195 AR.indb 41 00E1908195 AR.indb 41 25/9/2019 17:43:29 25/9/2019 17:43:29 4141 INDEPENDENT AUDITOR’S REPORT Independent auditor’s report to the shareholders of Brockman Mining Limited (incorporated in Bermuda with limited liability) OPINION We have audited the consolidated financial statements of Brockman Mining Limited (the “Company”) and its subsidiaries (together the “Group”) set out on pages 47 to 80, which comprise the consolidated balance sheet as at 30 June 2019, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 30 June 2019 and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance. BASIS FOR OPINION We conducted our audit in accordance with International Standards on Auditing issued by the International Auditing and Assurance Standards Board (“ISAs”). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. MATERIAL UNCERTAINTY RELATED TO GOING CONCERN We draw attention to Note 2(a) in the consolidated financial statements, which describes the principal conditions that raise doubt about the Group’s ability to continue as a going concern. These events or conditions indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. KEY AUDIT MATTERS Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the consolidated financial statements of the current period. These matters were addressed in the context of the 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. In addition to the matter described in the Material Uncertainty Related to Going Concern section, and for each matter below, our description of how our audit addressed the matter is provided in that context. 00E1908195 AR.indb 42 00E1908195 AR.indb 42 25/9/2019 17:43:29 25/9/2019 17:43:29 ANNUAL REPORT 2019 We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying consolidated financial statements. 1. Carrying value of capitalised mining exploration properties Why significant How our audit addressed the key audit matter At 30 June 2019 the Group held capitalised mining exploration properties in Australia of HK$757,345,000, representing 97% of the Group’s total assets. We considered and challenged the Group’s assessment as to whether there were impairment indicators present that required the capitalised mining exploration properties to be tested for impairment as at 30 June 2019. The carrying value of mining exploration properties is assessed for impairment by the Group when facts and circumstances indicate that these properties may exceed their recoverable amount. The determination as to whether there are any indicators to require a mining exploration property to be assessed for impairment, involves a number of judgments including whether the Group has tenure, will be able to perform ongoing expenditure and whether there is sufficient information for a decision to be made that the area of interest is not commercially viable. The Directors did not identify any impairment indicators. Refer to Note 18 in the consolidated financial statements for capitalised mining exploration property balances and related disclosures. In performing our procedures, we: ► ► ► Considered whether the Group’s right to explore was current, which included obtaining and assessing supporting documentation such as license agreements Considered the Group’s intention to carry out significant ongoing exploration and evaluation activities in the relevant areas of interest which included reviewing the Group’s Board approved cashflow forecast and enquiring of senior management and the Directors as to their intentions and the strategy of the Group Assessed whether exploration and evaluation data exists to indicate that the carrying value of mining exploration properties is unlikely to be recovered through development or sale, and ► Assessed the adequacy of the disclosures in Note 18 of the consolidated financial statements. 00E1908195 AR.indb 43 00E1908195 AR.indb 43 25/9/2019 17:43:29 25/9/2019 17:43:29 43 INDEPENDENT AUDITOR’S REPORT 2. Recognition of deferred tax asset Why significant How our audit addressed the key audit matter We assessed the Group’s decision to record a DTA and the methodology for determining the amount of the DTA to be recognised for compliance with IFRS. Our audit procedures included the following: ► We assessed the amount of the Group’s available carry forward tax losses and the impact of any known or potential limitations that may affect the recoverability of the estimated tax benefit arising from the carry forward tax losses. This work included consultation with our tax specialists ► We obtained and considered correspondence: ► B e t w e e n t h e G r o u p a n d t h e A u s t r a l i a n t a x authorities, and ► Between the Group and external tax advisors. ► We also assessed the adequacy of the related disclosures in the consolidated financial statements. At 30 June 2019, the Group recognised a deferred tax asset (DTA) of HK$93,373,000 in its consolidated balance sheet with a corresponding deferred tax benefit in the consolidated statement of comprehensive income for certain of its Australian carry forward tax losses. This DTA has been fully offset against the deferred tax liability in the consolidated balance sheet, resulting in a net deferred tax liability of HK$134,172,000. The Group’s exploration activities in Australia have generated significant carry forward tax losses. Australian tax laws covering the recoupment of these carry forward tax losses are complex. Under IFRS, DTAs for carry forward tax losses are only recognised when their recovery is considered probable. This consideration of carry forward tax loss recognition is reassessed at each reporting period. Given the significant degree of judgement involved in management’s assessment as to the recoverability of the DTA and the related income tax benefit recorded for the year ended 30 June 2019, we consider this a key audit matter. R e f e r t o N o t e s 4 ( b ) , 1 4 a n d 2 7 i n t h e consolidated financial statements for and related disclosures. OTHER INFORMATION INCLUDED IN THE ANNUAL REPORT The Directors of the Company 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 auditor’s report thereon. Our opinion on the consolidated financial statements does not cover the other information and 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, 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. 00E1908195 AR.indb 44 00E1908195 AR.indb 44 25/9/2019 17:43:30 25/9/2019 17:43:30 ANNUAL REPORT 2019 RESPONSIBILITIES OF THE DIRECTORS FOR THE CONSOLIDATED FINANCIAL STATEMENTS The Directors of the Company are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with IFRS issued by the IASB and the disclosure requirements of the Hong Kong Companies Ordinance, 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 of the Company are responsible for assessing the Group’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 of the Company either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. The Directors of the Company are assisted by the Audit Committee in discharging their responsibilities for overseeing the Group’s financial reporting process. AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED 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 auditor’s report that includes our opinion. Our report is made solely to you, as a body, in accordance with section 90 of the Bermuda Companies Act 1981, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs 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. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: ► Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. ► Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. ► Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors. ► Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. 00E1908195 AR.indb 45 00E1908195 AR.indb 45 25/9/2019 17:43:30 25/9/2019 17:43:30 45 INDEPENDENT AUDITOR’S REPORT ► Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. ► Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the Audit Committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. The engagement partner on the audit resulting in this independent auditor’s report is Pierre Dreyer. Ernst & Young Chartered Accountants Perth, Western Australia 25 September 2019 00E1908195 AR.indb 46 00E1908195 AR.indb 46 25/9/2019 17:43:30 25/9/2019 17:43:30 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 30 June 2019 ANNUAL REPORT 2019 Year ended 30 June Note 2019 HK$’000 2018 HK$’000 Other income Other gain/(loss) Administrative expenses Exploration and evaluation expenses Operating loss Finance income Finance costs Finance costs, net Share of profit/(loss) of joint ventures Loss before income tax Income tax benefit Profit/(loss) for the year from continuing operations Discontinued operation Profit from discontinued operation Profit for the year Other comprehensive income/(loss) Item that may be reclassified to profit or loss Exchange differences arising from translation of foreign operations Reclassification of translation reserve arising from disposal of subsidiaries Other comprehensive loss for the year Total comprehensive income for the year Profit/(Loss) for the period attributable to equity holders of the Company: Continuing operations Discontinued operation Total comprehensive (loss)/income attributable to equity holders of the Company: Continuing operations Discontinued operation (Loss)/earnings per share attributable to the equity holders of the Company during the year Basic (loss)/earnings per share from: Continuing operations Discontinued operation Diluted (loss)/earnings per share from: Continuing operations Discontinued operation 11 12 9 9 13 30 14 34 16 16 16 16 142 9,526 (26,803) (7,796) (24,931) 54 (1,320) (1,266) 412 (25,785) 93,373 67,588 — 67,588 (34,045) — (34,045) 33,543 67,588 — 33,543 — 300 (208) (34,644) (9,460) (44,012) 26 (4,511) (4,485) (562) (49,059) — (49,059) 157,145 108,086 (12,451) (55,578) (68,029) 40,057 (49,059) 157,145 (61,510) 101,567 HK cents HK cents 0.74 — 0.74 0.73 — 0.73 (0.58) 1.85 1.27 (0.58) 1.85 1.27 The notes on pages 52 to 80 form an integral part of these consolidated financial statements. 00E1908195 AR.indb 47 00E1908195 AR.indb 47 25/9/2019 17:43:30 25/9/2019 17:43:30 47 CONSOLIDATED BALANCE SHEET As at 30 June 2019 Non-current assets Mining exploration properties Property, plant and equipment Interest in joint venture Other non-current assets Current assets Other receivables, deposits and prepayments Cash and cash equivalents Total assets Equity Share capital Reserves Accumulated losses Total equity Non-current liabilities Deferred income tax liability Borrowings Provisions Current liabilities Trade and other payables Total liabilities Total equity and liabilities As at 30 June Note 2019 HK$’000 2018 HK$’000 18 19 30 22 21 25 27 24 23 23 757,345 802,617 144 653 508 268 126 538 758,650 803,549 918 20,906 21,824 780,474 390 34,258 34,648 838,197 922,123 3,812,692 916,198 4,301,421 (4,102,845) (4,632,894) 631,970 584,725 134,172 12,828 — 147,000 1,504 1,504 148,504 780,474 238,954 11,508 58 250,520 2,952 2,952 253,472 838,197 The consolidated financial statements on pages 47 to 80 were approved by the Board of Directors on 25 September 2019 and were signed on its behalf. Kwai Kwun, Lawrence Director Chan Kam Kwan, Jason Director The notes on page 52 to 80 form an integral part of these consolidated financial statements. 00E1908195 AR.indb 48 00E1908195 AR.indb 48 25/9/2019 17:43:30 25/9/2019 17:43:30 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 30 June 2019 ANNUAL REPORT 2019 l a t o T 0 0 0 ’ $ K H 3 6 9 , 3 6 4 6 8 0 , 8 0 1 ) 1 5 4 , 2 1 ( ) 8 7 5 , 5 5 ( ) 9 2 0 , 8 6 ( 7 5 0 , 0 4 — — 0 0 0 , 8 7 5 0 7 , 2 5 0 7 , 0 8 5 2 7 , 4 8 5 r e h t O e v r e s e r 0 0 0 ’ $ K H 5 2 2 , 8 5 4 — — — — — — — — 6 3 2 , 4 6 3 2 , 4 6 8 0 , 8 0 1 — — — — 6 8 0 , 8 0 1 — — — 0 1 7 , 5 0 1 7 , 5 ) 1 5 4 , 2 1 ( ) 8 7 5 , 5 5 ( ) 9 2 0 , 8 6 ( ) 9 2 0 , 8 6 ( — — — ) 6 5 2 ( ) 6 5 2 ( — — — — — — — — 5 0 7 , 2 5 0 7 , 2 3 3 8 , 2 8 — — — — — — — ) 6 4 9 , 9 ( ) 6 5 2 ( ) 0 9 6 , 9 ( — s e s s o l 0 0 0 ’ $ K H e v r e s e r 0 0 0 ’ $ K H ) 0 9 6 , 6 4 7 , 4 ( ) 4 9 6 , 5 3 6 ( e v r e s e r 0 0 0 ’ $ K H 8 2 1 , 0 8 0 9 6 , 9 s e v r e s e r 0 0 0 ’ $ K H y n a p m o C e h t f o s r e d o h l y t i u q e o t l e b a t u b i r t t A d e s a b r - e a h S d e t l a u m u c c A n o i t a l s n a r T n o i t a s n e p m o c y r o t u t a t S r e a h S i m u m e p r — — — — — — — — — — 0 0 0 ’ $ K H 6 0 1 , 0 6 4 , 4 r e a h S l a t i p a c 0 0 0 ’ $ K H 8 9 1 , 8 3 8 — — — — — 0 0 0 , 8 7 — — — 0 0 0 , 8 7 m o r f g n i s i r a e v r e s e r n o i t a l s n a r t f o n o i t a c i f i s s a c e R l f o n o i t a l s n a r t n o g n i s i r a s e c n e r e f f i d e g n a h c x E s n o i t r a e p o n g e i r o f s e i r i a d i s b u s f o l a s o p s i d r a e y e h t r o f ) s s o l ( / e m o c n i e v i s n e h e r p m o c l a t o T r a e y e h t r o f s s o l e v i s n e h e p m o c r r e h t o l a t o T s e i r i a d i s b u s f o l a s o p s i d n o p u r e f s n a r T e v r e s e r y r o t u t a t s o t s n o i t a i r r p o p p A s r e d o h l y t i u q e h t i w s n o i t c a s n a r t l a t o T s r e d o h l y t i u q e h t i w s n o i t c a s n a r T n o i t a s n e p m o c d e s a b r e a h S r s e a h s f o e c n a u s s I r 7 1 0 2 l y u J 1 t a e c n a a B l t i f o r p e v i s n e h e r p m o C r a e y e h t r o f t i f o r P s s o l e v i s n e h e r p m o c r e h O t 1 6 4 , 2 6 4 ) 4 9 8 , 2 3 6 , 4 ( ) 9 7 9 , 3 0 7 ( 6 0 1 , 0 6 4 , 4 8 9 1 , 6 1 9 8 1 0 2 e n u J 0 3 t a e c n a a B l 00E1908195 AR.indb 49 00E1908195 AR.indb 49 25/9/2019 17:43:30 25/9/2019 17:43:30 49 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 30 June 2019 l a t o T 0 0 0 ’ $ K H 5 2 7 , 4 8 5 8 8 5 , 7 6 ) 5 4 0 , 4 3 ( 3 4 5 , 3 3 — 5 2 9 , 5 1 2 4 , 1 6 5 3 , 6 2 0 7 , 3 1 0 7 9 , 1 3 6 — — — — — r e h t O s e v r e s e r 0 0 0 ’ $ K H 1 6 4 , 2 6 4 — 8 8 5 , 7 6 8 8 5 , 7 6 — — — ) 5 4 0 , 4 3 ( ) 5 4 0 , 4 3 ( — — — — — — — — — — ) 1 6 4 , 2 6 4 ( 1 6 4 , 2 6 4 ) 1 6 4 , 2 6 4 ( 1 6 4 , 2 6 4 — ) 5 4 8 , 2 0 1 , 4 ( ) 4 2 0 , 8 3 7 ( ) 9 8 4 , 1 ( 0 1 9 , 2 6 5 3 , 6 7 6 8 , 4 0 0 7 , 7 8 — 0 1 9 , 2 6 1 0 , 3 6 4 , 4 s e s s o l 0 0 0 ’ $ K H e v r e s e r 0 0 0 ’ $ K H ) 4 9 8 , 2 3 6 , 4 ( ) 9 7 9 , 3 0 7 ( e v r e s e r 0 0 0 ’ $ K H 3 3 8 , 2 8 y n a p m o C e h t f o s r e d o h l y t i u q e o t l e b a t u b i r t t A d e s a b r - e a h S d e t l a u m u c c A n o i t a l s n a r T n o i t a s n e p m o c r e a h S i m u m e p r — — — — 0 0 0 ’ $ K H 6 0 1 , 0 6 4 , 4 — — — r e a h S l a t i p a c 0 0 0 ’ $ K H 8 9 1 , 6 1 9 — — 5 2 9 , 5 5 2 9 , 5 3 2 1 , 2 2 9 s n o i t r a e p o n g e i r o f f o n o i t a l s n a r t n o g n i s i r a s e c n e r e f f i d e g n a h c x E r a e y e h t r o f ) s s o l ( / t i f r o p e v i s n e h e p m o c r l a t o T s r e d o h l y t i u q e h t i w s n o i t c a s n a r T 8 1 0 2 l y u J 1 t a e c n a a B l r a e y e h t r o f t i f o r P s r e d o h l y t i u q e h t i w s n o i t c a s n a r t l a t o T 9 1 0 2 e n u J 0 3 t a e c n a a B l s e s s o l d e t l a u m u c c a o t r e f s n a r T n o i t a s n e p m o c d e s a b r - e a h S r s e a h s f o e c n a u s s I s n o i t p o f o e s i c r e x E . s t n e m e t a t s l i a c n a n i f d e t a d i l o s n o c e s e h t f o t r a p l r a g e t n i n a m o r f 0 8 o t 2 5 s e g a p n o s e t o n e h T 00E1908195 AR.indb 50 00E1908195 AR.indb 50 25/9/2019 17:43:30 25/9/2019 17:43:30 CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 30 June 2019 ANNUAL REPORT 2019 Cash flows from operating activities Net cash used in operating activities Cash flows from investing activities Interest received Proceeds from disposal of mineral tenements Proceeds from disposal of property, plant and equipment Investment in joint venture Acquisition of property, plant and equipment Net cash outflows arising from disposal of subsidiaries Net cash generated from investing activities Cash flows from financing activities Proceeds from issuance of ordinary shares Proceeds from borrowings Interest paid Net cash generated from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Effects of foreign exchange rate changes Note Year ended 30 June 2019 HK$’000 2018 HK$’000 28 (29,995) (33,581) 45 9,526 — (116) (13) — 9,442 7,347 — — 7,347 (13,206) 34,258 (146) 20,906 26 — 3,160 (249) (126) (140) 2,671 32,158 11,000 (1,908) 41,250 10,340 23,995 (77) 34,258 Cash and cash equivalents at end of the year 21 Cash used for exploration and evaluation activities included in operating activities (7,796) (9,795) The notes on pages 52 to 80 form an integral part of these consolidated financial statements. 00E1908195 AR.indb 51 00E1908195 AR.indb 51 25/9/2019 17:43:30 25/9/2019 17:43:30 51 NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION 1. GENERAL INFORMATION Brockman Mining Limited (the “Company”) and its subsidiaries (collectively, the “Group”) principally engage in the acquisition, exploration and development of iron ore projects in Australia. The Company is a public company incorporated in Bermuda as an exempted company with limited liability and its shares are listed on The Stock Exchange of Hong Kong Limited (the “SEHK”) and Australian Securities Exchange (the “ASX”). The address of its registered office is Clarendon House, 2 Church Street, Hamilton HM11, Bermuda. These consolidated financial statements are presented in Hong Kong dollars (HK$), and all values are rounded to the nearest thousand (HK$’000), except where otherwise indicated. 2. BASIS OF PREPARATION The consolidated financial statements of Brockman Mining Limited have been prepared in accordance with all applicable International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. The consolidated financial statements have been prepared under the historical cost convention. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4. (a) Going concern basis For the year ended 30 June 2019, the Group recorded a net loss before tax of HK$25,785,000 (2018: HK$49,059,000) and had operating cash outflows of HK$29,995,000 (30 June 2018: HK$33,581,000). The Group did not record any revenue during the year and the loss before tax for the period was primarily attributable to the exploration and evaluation of the Company’s iron ore exploration projects and corporate overhead costs. As at 30 June 2019, the Group’s cash and cash equivalents amounted to HK$20,906,000 (30 June 2018: HK$34,258,000). On the 19 July 2019, both Brockman Iron and Polaris agreed that the Farm-in Obligations may take up to a further 12 months to complete and therefore the parties have agreed to extend certain key dates under the FJV. The directors are confident that the Group can continue to advance the FJV with the aim of unlocking the value of the Marillana Project. Once Polaris fulfils its Farm-in Obligations, an interest-free loan of A$10,000,000 (equivalent to approx. HK$58,000,000), which is currently secured in an escrow account will be released to Brockman Iron. The loan proceeds shall be used to meet Brockman Iron’s financial obligations under the FJV Agreement and for working capital in relation to the Group’s iron ore business in the Pilbara region of Western Australia. This loan will only be repaid from net revenue received by Brockman Iron from the sale of its share of product sold from the Marillana Project that is transported under the rail and port system contemplated in the Mine to Ship Services Agreement. The Group has taken a number of measures to improve its liquidity position, including, but not limited to, the following: (i) (ii) Extending the repayment date of the existing loans of HK$12,828,000 from the substantial shareholder to 31 October 2020. These loans bear interest at 12% per annum. On 18 September 2018, the Group secured a standby loan facility from its substantial shareholder amounting to HK$10,000,000. If drawn down, the loan will be unsecured, bear interest at 12% per annum and be repayable on 31 October 2020. The directors have reviewed the Group’s cash flow projections which cover a period of not less than twelve months from the date of approval of these consolidated financial statements. They are of the opinion that, taking into account the above-mentioned measures, the Group will have sufficient financial resources to satisfy its future working capital requirements and to meet its financial obligations as and when they fall due within the next twelve months from the date of approval of these consolidated financial statements. The directors are confident that the Group can continue to access debt and equity funding to meet medium term working capital requirements and has a history of securing such funding as required in the past to support their confidence. In the event that funding of an amount necessary to meet the future budgeted operational and investing activities of the Group is unavailable, the directors would undertake steps to curtail these operating and investment activities. Accordingly, the directors of the Company consider that it is appropriate to prepare the Group’s consolidated financial statements on a going concern basis. 00E1908195 AR.indb 52 00E1908195 AR.indb 52 25/9/2019 17:43:30 25/9/2019 17:43:30 ANNUAL REPORT 2019 2. BASIS OF PREPARATION (Continued) Going concern basis (Continued) (a) Notwithstanding the above, there remains material uncertainty as to whether the Group can raise sufficient funding as outlined above which may cast significant doubt about the Group’s ability to continue as a going concern and, therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in these consolidated financial statements. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of the Group’s assets or to the amounts and classification of liabilities which might be necessary should the Group not continue as a going concern. 3. PRINCIPAL ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. (a) Changes in accounting policy and disclosures New and amendments to standards adopted by the Group The following standards and amendments to standards are effective for accounting year beginning on or after 1 July 2018, and have been adopted in preparing these consolidated financial statements: Effective for annual periods beginning on or after Annual improvements Project IFRS 1 Annual Improvements 2014-2016 Cycle 1 January 2018 and IAS 28 (Amendment) IAS 40 (Amendment) IFRS 2 (Amendment) IFRS 9 IFRS 4 (Amendments) IFRS 15 IFRS 15 (Amendment) IFRIC 22 Transfers of Investment Property Share-based Payment, Classification and Measurement of Share-based Payment Transactions Financial Instruments Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts Revenue from Contracts with Customers Clarification to IFRS 15 Foreign Currency Transactions and Advance Consideration 1 January 2018 1 January 2018 1 January 2018 1 January 2018 1 January 2018 1 January 2018 1 January 2018 There has been no material impact from the adoption of these accounting standards. 00E1908195 AR.indb 53 00E1908195 AR.indb 53 25/9/2019 17:43:30 25/9/2019 17:43:30 53 NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION 3. PRINCIPAL ACCOUNTING POLICIES (Continued) Changes in accounting policy and disclosures (Continued) (a) New and amendments to standards and interpretations that are not yet effective and have not been early adopted by the Group The following new standards, amendments to standards and interpretations have been issued, but are not effective for the year ended 30 June 2019 and have not been early adopted: IFRIC 23 Annual Improvements Project Uncertainty Over Income Tax Treatments Annual Improvements 2015-2017 Cycle (Amendments) IAS 19 (Amendment) IAS 28 (Amendment) IFRS 9 (Amendment) IFRS 16 Conceptual Framework for Financial Plan Amendment, Curtailment or Settlement Long-term Interests in Associates and Joint Ventures Prepayment Features with Negative Compensation Leases Revised Conceptual Framework for Financial Reporting 2018 Reporting IAS 1 and IAS 8 (Amendments) Presentation of Financial Statements and Accounting Policies, Changes in Accounting Estimates and Errors, Definition of Material Effective for annual periods beginning on or after 1 January 2019 1 January 2019 1 January 2019 1 January 2019 1 January 2019 1 January 2019 1 January 2020 1 January 2020 IFRS 17 IFRS 3 IFRS 10 and IAS 28 (Amendment) Insurance Contracts Definition of a Business Sale or Contribution of Assets between an Investor 1 January 2021 1 January 2020 To be determined and its Associate or Joint Venture None of these are expected to have a significant effect on the consolidated financial statements, except for the following as set out below, the effect of which is yet to be determined by the Group: IFRS 16 Leases IFRS 16 was issued in May 2016. It will result in almost all leases being recognised on the balance sheet, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use asset over the leased item) and a financial liability to pay rentals are recognised. The only exceptions are short-term and low-value leases. The accounting for lessors will not significantly change. The new standard will result in an increase asset and financial liabilities in the consolidated balance sheet. As for the financial performance impact in the consolidated statement of comprehensive income, operating lease expenses will decrease, while depreciation and amortisation and the interest expense will increase. The standard is mandatory for financial years beginning on or after 1 January 2019. IFRIC 23 Uncertainty Over Income Tax Treatment The interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application of IAS 12 and does not apply to taxes or levies outside the scope of IAS 12, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments. The interpretation specifically addresses the following: — — — — Whether an entity considers uncertain tax treatments separately The assumptions an entity makes about the examination of tax treatments by taxation authorities How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates How an entity considers changes in facts and circumstances. 00E1908195 AR.indb 54 00E1908195 AR.indb 54 25/9/2019 17:43:30 25/9/2019 17:43:30 ANNUAL REPORT 2019 3. PRINCIPAL ACCOUNTING POLICIES (Continued) (b) Subsidiaries Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. When necessary, amounts reported by subsidiaries have been adjusted to conform with the Group’s accounting policies. (i) (ii) Changes in ownership interests in subsidiaries without change of control Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions with equity holders of the Group. The difference between fair value of any consideration paid and the relevant share acquired of the carrying amount of net assets of the subsidiary is recorded in equity. Gains or losses on disposal of non-controlling interests are also recorded in equity. Disposal of subsidiaries When the Group ceases to have control of a subsidiary, any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. It means the amounts previously recognised in other comprehensive income are reclassified to profit or loss or transferred to another category of equity or specified/permitted by applicable IFRS. (c) Joint arrangements The Group applies IFRS 11 to all joint arrangements. Investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each investor. The Group has assessed the nature of its joint arrangements and determined them to be joint ventures. Joint ventures are accounted for using the equity method. Under the equity method of accounting, interests in joint ventures are initially recognised at cost and adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses and movements in other comprehensive income. When the Group’s share of losses in joint ventures equals or exceeds its interests in the joint ventures (which includes any long-term interests that, in substance, form part of the Group’s net investment in the joint ventures), the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint ventures. Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in the joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures have been changed where necessary to ensure consistency with the policies adopted by the Group. (d) Segment reporting Operating segments are reported in a manner consistent with internal reports provided to executive directors of the Company who are responsible for allocating resources and assessing performance of the operating segments. 00E1908195 AR.indb 55 00E1908195 AR.indb 55 25/9/2019 17:43:30 25/9/2019 17:43:30 55 NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION 3. PRINCIPAL ACCOUNTING POLICIES (Continued) (e) Foreign currency translation (i) Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operations (the ‘functional currency’). The consolidated financial statements are presented in Hong Kong dollars, which is the Company’s functional and the Group’s presentation currency. (ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit and loss. Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the profit and loss. (iii) Group companies The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: — — assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; income and expenses for each statement of comprehensive income are translated at average exchange rate (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rates on the dates of the transactions); and — all resulting currency translation differences are recognised in other comprehensive income. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Currency translation differences arising are recognised in other comprehensive income. (iv) Disposal of foreign operation and partial disposal On the disposal of a foreign operation (that is, a disposal of the Group’s entire interest in a foreign operation, a disposal involving loss of control over a subsidiary that includes a foreign operation), all of the currency translation differences accumulated in equity in respect of that operation attributable to the owners of the Company are reclassified to profit or loss. In the case of a partial disposal that does not result in the Group losing control over a subsidiary that includes a foreign operation, the proportionate share of accumulated currency translation differences is re-attributed to non-controlling interests and is not recognised in profit and loss. For all other partial disposals (that is, reductions in the Group’s ownership interest in joint ventures that do not result in the Group losing joint control) the proportionate share of the accumulated exchange difference is reclassified to profit and loss. (f) Mining properties Mining properties are stated in the balance sheet at cost less subsequent accumulated amortisation and any accumulated impairment losses. Mining properties are amortised using the units of production method based on the proven and probable mineral reserves and starts when commercial production commences. Mining properties acquired in a business combination are identified and recognised as intangible assets separately from goodwill where they satisfy the definition of an intangible asset and their fair values can be measured reliably. The cost of such intangible assets is their fair values at the acquisition date. Impairment reviews of mining properties are undertaken if events or changes in circumstances indicate a potential impairment. The carrying value of mining properties is compared to the recoverable amount, which is the higher of value-in-use and the fair value less costs of disposal. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Mining properties that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. 00E1908195 AR.indb 56 00E1908195 AR.indb 56 25/9/2019 17:43:30 25/9/2019 17:43:30 ANNUAL REPORT 2019 3. PRINCIPAL ACCOUNTING POLICIES (Continued) (g) Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses. The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. (h) (i) Expenditure incurred after items of property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to profit or loss in the period in which it is incurred. In situations where the recognition criteria are satisfied, the expenditure for a major inspection is capitalised in the carrying amount of the asset as a replacement. Where significant parts of property, plant and equipment are required to be replaced at intervals, the Company recognises such parts as individual assets with specific useful lives and depreciates them accordingly. Depreciation is calculated on the straight-line basis to write off the cost of each item of property, plant and equipment to its residual value over its estimated useful life. The principal annual rates used for this purpose are as follows: Plant, furniture, fixtures and equipment 12.5% — 25% Where parts of an item of property, plant and equipment have different useful lives, the cost of that item is allocated on a reasonable basis among the parts and each part is depreciated separately. Residual values, useful lives and the depreciation method are reviewed, and adjusted if appropriate, at least at each financial year end. An item of property, plant and equipment including any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or retirement is recognised in the profit and loss in the year the asset is derecognised and determined as is the difference between the net sales proceeds and the carrying amount of the relevant asset. Impairment of non-financial assets Assets that are subject to amortisation and mining exploration properties are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash- generating unit). Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. Financial assets Classification and measurement up to 30 June 2018 The Company classified its financial assets as loans and receivables. The classification depended on the purpose for which the financial assets were acquired. Management determined the classification of its financial assets at initial recognition. Loans and receivables were non-derivative financial assets with fixed or determinable payments that were not quoted in an active market. They were included in current assets, except for the amounts that were settled or expected to be settled more than 12 months after the end of the reporting period. These were classified as non-current assets. The Company’s loans and receivables comprised ‘amounts due from fellow subsidiaries’, ‘deposits and other receivables’ and ‘cash and cash equivalents’ in the balance sheet. Classification and measurement from 1 July 2018 Financial assets are classified, at initial recognition, as subsequently measured at amortised cost and fair value through profit or loss. The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price determined under IFRS 15. In order for a financial asset to be classified and measured at amortised cost, it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. Subsequent measurement up to 30 June 2018 Loans and receivables were subsequently carried at amortised cost using the effective interest method. 00E1908195 AR.indb 57 00E1908195 AR.indb 57 25/9/2019 17:43:30 25/9/2019 17:43:30 57 NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION 3. PRINCIPAL ACCOUNTING POLICIES (Continued) (i) Financial assets (Continued) Subsequent measurement from 1 July 2018 Regular way purchases and sales of financial assets are recognised on the trade-date, the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks are rewards of ownership. The Group measures financial assets at amortised cost if both of the following conditions are met: — and — The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows 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 using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. Financial assets at fair value through profit or loss are carried in the balance sheet at fair value with net changes in fair value recognised in the profit and loss. Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Impairment of financial assets up to 30 June 2018 The Company assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable date indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the statement of comprehensive income. Impairment of financial assets from 1 July 2018 For trade receivables, the Group applies a simplified approach to calculating the ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. Other receivables Other receivables are amounts due from transactions outside the ordinary course of business. If collection of other receivables is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets. Other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Cash and cash equivalents Cash and cash equivalents include cash in hand and deposits held at call with banks. Share capital Ordinary shares are classified as equity, incremental costs directly attributable to the issue of new shares or options are shown in equity as deduction, net of tax, from the proceeds. (j) (k) (l) 00E1908195 AR.indb 58 00E1908195 AR.indb 58 25/9/2019 17:43:30 25/9/2019 17:43:30 ANNUAL REPORT 2019 3. PRINCIPAL ACCOUNTING POLICIES (Continued) (m) Trade and other payables Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. (n) Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; and difference between the proceeds (net of transaction costs) and the redemption value is recognised in the profit and loss over the period of the borrowing using the effective interest method. Fees paid on the settlement of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period. (o) Borrowing costs General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profit and loss in the period in which they are incurred. (p) Current and deferred income tax The tax expense for the period comprises current and deferred tax. Tax is recognised in the statement of comprehensive income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in other comprehensive income or directly in equity, respectively. All wholly-owned Australian subsidiaries of the Company form a tax consolidated group under Australian tax law and are taxed as a single entity. Brockman Mining Holdings (Australia) Pty Ltd (‘BMHA’), a wholly-owned subsidiary of the Company, is the head entity of the Australian tax consolidated group. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Group operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary difference 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 re-assessed 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 income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. 00E1908195 AR.indb 59 00E1908195 AR.indb 59 25/9/2019 17:43:30 25/9/2019 17:43:30 59 NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION 3. PRINCIPAL ACCOUNTING POLICIES (Continued) (q) Employee benefits (i) Short-term obligations Salaries, annual bonuses, annual leave entitlement and the cost of non-monetary benefits expected to be settled within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liability for annual leave is recognised in the provision for employee benefits. All other short-term employee benefit obligations are presented as payables. (ii) Other long term employee benefit obligations The liability for long service payment which is not expected to be settled within 12 months after the end of the period in which the employees render the related service is recognised in the provision for employee benefits and measured as the present value of the expected future payments to be made in respect of services provided by employees up to the end of a reporting period. Consideration is given to expected future wages and salary levels, experience of employee departures and periods of services. Expected future payments are discounted using market yields at the end of the reporting period on high quality corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting date, regardless of when the actual settlement is expected to occur. (iii) Pension obligations The Group participates in various defined contribution schemes. The schemes are generally funded through payments to insurance companies, trustee-administrated funds or the relevant government authorities. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to the employee services in the current and prior periods. Payments to state-managed retirement benefit and Mandatory Provident Fund retirement scheme are charged as expenses when employees have rendered services entitling them to the contributions. For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payment is available. (r) Share-based payments (i) Equity-settled share-based payment transactions The Group operates equity-settled, share-based compensation plans, under which the entity receives services from directors, employees or consultants as consideration for equity instruments (share options) of the Group. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the option granted: — — — including any market performance conditions (for example, an entity’s share price); excluding the impact of any service and non-market performance vesting conditions (for example, profitability, sales growth targets and remaining as an employee of the entity over a specified time period); and including the impact of any non-vesting conditions (for example, the requirement for employees to save or holding shares for a specified period of time). When the options are exercised, the Company issues new shares. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised. (ii) Share-based payment transactions among group entities The grant by the Company of options over its equity instruments to the employees of subsidiary undertakings in the Group is treated as a capital contribution. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity in the parent entity accounts. 00E1908195 AR.indb 60 00E1908195 AR.indb 60 25/9/2019 17:43:30 25/9/2019 17:43:30 ANNUAL REPORT 2019 3. PRINCIPAL ACCOUNTING POLICIES (Continued) (s) Provisions A provision is recognised when a present obligation (legal and constructive) has arisen as a result of a past event and it is probable that a future outflow of resources will be required to settle the obligation, provided that a reliable estimate can be made of the amount of the obligation. (t) (u) (v) (w) When the effect of discounting is material, the amount recognised for a provision is the present value at the end of the reporting period of the future expenditures expected to be required to settle the obligation. The increase in the discounted present value amount arising from the passage of time is included in finance costs in profit and loss. Revenue recognition Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services. Interest income Interest income from a financial asset is accrued on a time basis at the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount. Government grants Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions. Government grants relating to costs are deferred and recognised in the consolidated statement of comprehensive income over the year necessary to match them with the costs that they are intended to compensate. Exploration and evaluation costs Except for acquisition costs for mining exploration properties which are capitalised, the Group has a policy of expensing all exploration and evaluation expenditure, in the financial year in which it incurred, unless its recoupment out of revenue to be derived from the successful development of the prospect, or from sale of that prospect, is assured beyond reasonable doubt. (x) Consumption tax (Goods and Services Tax and Value-added Tax) Revenues, expenses and assets are recognised net of the amount of consumption tax except: — where the consumption tax incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the consumption tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and — receivables and payables are stated with the amount of consumption tax included. The net amount of consumption tax recoverable from, or payable to, the taxation authority is included as part of the receivables or payables in the balance sheet. Cash flows are included in the consolidated statement of cash flows on a gross basis and the consumption tax component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of consumption tax recoverable from, or payable to, the taxation authority. (y) Leases Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the consolidated statement of comprehensive income on a straight-line basis over the period of the lease. 00E1908195 AR.indb 61 00E1908195 AR.indb 61 25/9/2019 17:43:31 25/9/2019 17:43:31 61 NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION 4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are considered to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. (a) Impairment of mining exploration properties in Australia Mining exploration properties are reviewed for impairment whenever events or changes in circumstances indicate that an impairment may exist. The Group performs an assessment of impairment indicators to determine whether if there is any indicator of impairment. The assessment of whether there are any impairment indicators in respect of a mining exploration property involves a number of judgments. These include whether the Group has the right to explore in the specific area of interest, whether ongoing expenditure is planned or budgeted and whether there is sufficient information for a decision to be made that the area of interest is not commercially viable. As at 30 June 2019, the carrying amount of the mining properties is HK$757,345,000 (2018: HK$802,617,000). There is no impairment loss recognised for the year ended 30 June 2019 (2018: Nil) as no impairment indicators were present. (b) Income taxes Deferred tax assets are recognised for unused tax losses and other deductible temporary differences to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised based upon the likely timing and the level of future taxable profits, together with future tax planning strategies and changes in factors which provide confirmation of the existence and ability to utilise tax losses. Following analysis undertaken by the Group after completion of a review of its tax losses. The Group determined that the recognition of certain overseas tax losses was probable as the Group had sufficient taxable temporary differences relating to the relevant taxation authority and taxable entity, which were expected to result in taxable amounts against which these particular tax losses could be utilised before they expire. As a result of this analysis, the Group recognised deferred tax assets of HK$93,373,000 (2018: nil) in the current year and has HK$807,000,000 (2018: HK$1,441,000,000) of unrecognised tax losses carried forward at year end. The deferred tax assets brought to account have been fully offset against the Group’s deferred tax liability in Note 27. The unrecognised tax losses relate to overseas subsidiaries that have a history of losses, do not expire, and may not be used to offset taxable or other income elsewhere in the Group. The Group has determined that these losses are not expected to be available for utilisation when taxable temporary differences are expected to reverse. On this basis, the Group has determined that it cannot recognise deferred tax assets on these unrecognised tax losses carried forward. Further work continues in respect of assessing whether these unrecognised tax losses may become available. 5. CAPITAL RISK MANAGEMENT The Group manages it capital to ensure that entities in the Group will be able to continue as going concerns while maximising the return to shareholders through the optimisation of the debt and equity balances. The directors of the Company consider that the capital structure of the Group consists of long-term debt, and equity attributable to equity holders of the Company comprising issued capital and reserves. The directors of the Company review the capital structure by considering the cost of capital and the risks associated with each class of capital. Based on recommendations of the directors, the Group will balance its overall capital structure through payment of dividends, new share issues as well as the issue of the new debt or the repayment of existing debt. Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements. The gearing ratios at 30 June 2019 and 2018 were as follows: Long-term debt (including borrowings, due to related parties and other payables to a third party) Total equity Total capital Gearing ratio 2019 HK$’000 12,828 631,970 644,798 1.99% 2018 HK$’000 11,508 584,725 596,233 1.93% 00E1908195 AR.indb 62 00E1908195 AR.indb 62 25/9/2019 17:43:31 25/9/2019 17:43:31 ANNUAL REPORT 2019 6. FINANCIAL RISK MANAGEMENT (a) Financial risk factors The Group’s activities expose it to a variety of financial risks and management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner. The Group does not and is prohibited from entering into derivative contracts for speculative purposes. (b) Liquidity risk The Group’s primary cash requirements have been for the payments for working capital and exploration and evaluation activities. The Group generally finances its short term funding requirements with equity funding and loans from shareholders. The following table details the Group’s remaining contractual maturity for its financial liabilities. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group could be required to pay. The table includes both interest and principal cash flows. 30 June 2019 Non-derivative financial liabilities: Trade and other payables Borrowings 30 June 2018 Non-derivative financial liabilities: Trade and other payables Borrowings Within 1 year of demand HK$’000 1 to 2 years HK$’000 Total undiscounted cash flows HK$’000 Carrying amount at year ended date HK$’000 705 — 705 2,038 — 2,038 — 14,596 14,596 — 13,273 13,273 705 14,596 15,301 2,038 13,273 15,311 705 12,828 13,533 2,038 11,508 13,546 (c) Fair value estimation The fair values of the Group’s financial assets, including other receivables, deposits, amounts due from related parties, and cash and cash equivalents; and the Group’s financial liabilities, including trade and other payables, borrowings, amounts due to related parties approximate their carrying amounts due to their short-term maturities. 00E1908195 AR.indb 63 00E1908195 AR.indb 63 25/9/2019 17:43:31 25/9/2019 17:43:31 63 NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION 7. REVENUE There was no revenue during the year ended 30 June 2019 (2018: nil). 8. SEGMENT INFORMATION Operating segments are reported in a manner consistent with internal reports provided to executive directors of the Company who are responsible for allocating resources and assessing performance of the operating segments. The executive directors consider the performance of the Group from a business perspective. The Group’s reportable operating segment is as follows: Mineral tenements in Australia – tenement acquisition, exploration and towards future development of iron ore projects in Western Australia Others primarily relate to the provision of corporate services for investment holding companies. These activities are excluded from the reportable operating segments and are presented to reconcile to the totals included in the Group’s consolidated statement of comprehensive income and consolidated balance sheet. Executive directors assess and review the performance of the operating segments based on segment results which is calculated as loss before income tax less share of profit/(losses) of joint ventures. Segment assets reported to executive directors of the Company are measured in a manner consistent with that in the consolidated balance sheet. (a) The following is an analysis of the Group’s revenue and results by business segment: Mineral tenements in Australia HK$’000 Others HK$’000 Sub-Total HK$’000 Discontinued operation Mining operation in the PRC HK$’000 Total HK$’000 For the year ended 30 June 2019: Segments results (5,147) (21,050) (26,197) — (26,197) Share of profit of joint ventures Loss before income tax Other information: Depreciation of property, plant and equipment (115) (10) (125) Exploration and evaluation expenses Income tax benefit (7,796) 93,373 — — (7,796) 93,373 412 (25,785) (125) (7,796) 93,373 — — — For the year ended 30 June 2018: Segments results Share of loss of joint ventures Loss before income tax Other information: (26,671) (21,826) (48,497) 157,145 108,648 (562) 108,086 Depreciation of property, plant and equipment Exploration and evaluation expenses (162) (9,460) (10) — (172) (9,460) — — (172) (9,460) 00E1908195 AR.indb 64 00E1908195 AR.indb 64 25/9/2019 17:43:31 25/9/2019 17:43:31 ANNUAL REPORT 2019 8. SEGMENT INFORMATION (Continued) (b) The following is an analysis of the Group’s total assets by business segment as at 30 June 2019: As at 30 June 2019: Segment assets Total segment assets include: Interest in joint ventures Additions to property, plant and equipment As at 30 June 2018: Segment assets Total segment assets include: Interests in joint ventures Additions to property, plant & equipment Mineral tenements in Australia HK$’000 Others HK$’000 Total HK$’000 759,905 20,569 780,474 653 — — 13 653 13 805,684 32,513 838,197 126 125 — 1 126 126 (c) Geographical information The mineral tenements are located in Australia. The following is an analysis of the carrying amounts of the Group’s mining exploration properties, property, plant and equipment, and interests in joint ventures analysed by geographical area in which the assets are located: Hong Kong Australia 9. EXPENSES BY NATURE Auditor’s remuneration — Audit services — EY — Audit services — PwC — Non-audit services — EY — Non-audit services — PwC Depreciation of property, plant and equipment Operating lease rentals Staff costs (including directors’ emoluments) (Note 10) Exchange loss Exploration and evaluation expenses (excluding staff costs and rental expenses) 2019 HK$’000 13 758,636 2018 HK$’000 11 803,000 2019 HK$’000 2018 HK$’000 785 927 874 450 125 1,563 19,940 9 5,943 — 980 — 580 172 2,101 20,405 8,608 5,639 65 00E1908195 AR.indb 65 00E1908195 AR.indb 65 25/9/2019 17:43:31 25/9/2019 17:43:31 NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION 10. EMPLOYEE BENEFIT EXPENSE Salaries and other benefits Post-employment benefits Share-based compensation 2019 HK$’000 12,964 620 6,356 19,940 2018 HK$’000 16,887 813 2,705 20,405 (a) Five highest paid individuals Of the five individuals who received the highest emoluments in the Group for the year, three (2018: two) are the directors of the Company whose emoluments are disclosed in Note 15. The emoluments of the remaining two (2018: three) individuals are as follows: Salaries and other benefits Post-employment benefits Termination benefits Share-based compensation The emoluments of the remaining individuals fell within the following bands: HK$1,000,001 – HK$2,000,000 HK$2,000,001 – HK$2,500,000 11. OTHER INCOME Government grant (Note a) 2019 HK$’000 3,509 172 — 287 3,968 Number of individuals 2019 1 1 2 2019 HK$’000 142 142 2018 HK$’000 3,023 164 1,535 1,329 6,051 2018 1 2 3 2018 HK$’000 300 300 Note a: Government grant mainly represents incentive credits provided by the Australian Federal Government, for research and development activities carried out in Australia. 00E1908195 AR.indb 66 00E1908195 AR.indb 66 25/9/2019 17:43:31 25/9/2019 17:43:31 12. OTHER GAIN (LOSSES) Gain on disposal of mineral tenement Loss on disposal of property, plant and equipment 13. FINANCE COSTS, NET Finance income Interest income on bank deposits Finance costs Interest on borrowings (Note 24) Finance costs, net ANNUAL REPORT 2019 2019 HK$’000 9,526 — 9,526 2018 HK$’000 — (208) (208) 2019 HK$’000 2018 HK$’000 54 (1,320) (1,266) 26 (4,511) (4,485) 14. INCOME TAX BENEFIT No provision for Hong Kong Profits tax or overseas income tax has been made in the consolidated financial statements as the Group has no assessable profit for the year (2018: Nil). The applicable corporate income tax rate is 30% (2018: 30%) for subsidiaries in Australia. The income tax on the Group’s loss before income tax differs from the theoretical amount that would arise using the enacted tax rate of the consolidated entities as follows: Loss before income tax Tax calculated at the applicable domestic tax rate of respective companies (note a) Income not subject to tax Expenses not deductible for tax purposes Recognition of previously unrecognised tax losses Tax losses for which no deferred income tax asset was recognised Note a: The weighted average applicable tax rate was 18.9% (2018: 24.0%). 2019 HK$’000 (25,785) (4,894) (3,023) 1,111 (93,373) 6,806 (93,373) 2018 HK$’000 (49,059) (11,771) (26) 1,165 — 10,632 — 00E1908195 AR.indb 67 00E1908195 AR.indb 67 25/9/2019 17:43:31 25/9/2019 17:43:31 67 NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION 15. BENEFITS AND INTERESTS OF DIRECTORS (a) Directors’ emoluments The remuneration of every director for the year ended 30 June 2019 is set out below: Name Kwai Sze Hoi Chan Kam Kwan, Jason Kwai Kwun, Lawrence Liu Zhengui Yap Far Suan, Henry Choi Yue Chun, Eugene Uwe Henke Von Parpart Ross Stewart Norgard Colin Paterson Total Fees HK$’000 — — — 240 228 228 228 226 — 1,150 Salary HK$’000 — 123 1,083 — — — — — 2,224 3,432 Discretionary bonuses HK$’000 — — — — — — — — — — Housing allowance HK$’000 — 960 — — — — — — — 960 Share based payment expense HK$’000 2,605 325 1,140 81 49 49 49 40 Retirement benefit scheme HK$’000 — 50 50 — — — — — Total HK$’000 2,605 1,459 2,273 321 277 277 277 266 321 4,659 115 215 2,661 10,416 The remuneration of every director for the year ended 30 June 2018 is set out below: Name Kwai Sze Hoi Chan Kam Kwan, Jason Kwai Kwun, Lawrence Liu Zhengui Yap Far Suan, Henry Choi Yue Chun, Eugene Uwe Henke Von Parpart Ross Stewart Norgard Colin Paterson Total Fees HK$’000 — — — 240 228 228 228 228 — 1,152 Salary HK$’000 — 40 1,000 — — — — — 2,500 3,540 Discretionary bonuses HK$’000 Housing allowance HK$’000 Share based expense HK$’000 Retirement benefit scheme HK$’000 — 83 83 — — — — — — 166 — 960 — — — — — — — 714 90 313 22 13 13 13 11 89 — 50 50 — — — — — 61 960 1,278 161 Total HK$’000 714 1,223 1,446 262 241 241 241 241 2,650 7,257 (a) (b) (c) (d) (e) (f) Directors’ retirement benefits No retirement benefits were paid to or receivable by any directors in respect of their other services in connection with the management of the affairs of the Company or its subsidiaries (2018: Nil). Directors’ termination benefits No payment was made to directors as compensation for early termination of their appointment during the year (2018: Nil). Consideration provided to third parties for making available directors’ services No payment was made to any former employer of directors for making available the services of them as a director of the Company (2018: Nil). Information about loans, quasi-loans and other dealings in favour of directors, controlled bodies corporate by and connected entities with such directors As at 30 June 2019, there are no loans, quasi-loans and other dealings in favour of directors, controlled bodies corporate by and connected entities with such directors during the year (2018: Nil). Directors’ material interests in transactions, arrangements or contracts No significant transactions, arrangements or contracts in relation to the Company’s business to which the Company was a party and in which a director of the Company had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year (2018: Nil). Remuneration paid or receivable in respect of accepting office as director There was no remuneration paid or receivable in respect of accepting office as director and other emoluments paid or receivable in respect of director’s other services in connection with the management of the affairs of the Company or its subsidiary undertaking during the year (2018: Nil). 00E1908195 AR.indb 68 00E1908195 AR.indb 68 25/9/2019 17:43:31 25/9/2019 17:43:31 ANNUAL REPORT 2019 16. (LOSS)/EARNINGS PER SHARE Basic (loss)/earnings per share is calculated by dividing the (loss)/earnings attributable to the equity holders of the Company by the weighted average number of ordinary shares on issue during the period. Diluted (loss)/earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding and to assume conversion of all dilutive potential ordinary shares. Profit/(Loss) for the period attributable to the equity holders of the Company (HK$’000) — Continuing operations — Discontinued operations 2019 2018 67,588 — 67,588 (49,059) 157,145 108,086 Weighted average number of ordinary shares for the purpose for calculating the basic (loss)/earnings per share (thousands) 9,187,642 8,514,475 Effects of dilution from: — share options (thousands) Weighted average number of ordinary shares adjusted for the effect of dilution (thousands) Profit/(Loss) per share attributable to the equity holders of the Company: Basic (HK cents) — Continuing operations — Discontinued operation Diluted (HK cents) — Continuing operations — Discontinued operation 45,250 9,213,953 0.74 — 0.74 0.73 — 0.73 — — (0.58) 1.85 1.27 (0.58) 1.85 1.27 17. DIVIDEND No dividend was paid or proposed during the year ended 30 June 2019, nor has any dividend been proposed since the balance sheet date (2018: Nil). 18. MINING EXPLORATION PROPERTIES Balance as at 1 July 2017 Exchange differences Balance as at 30 June 2018 Exchange differences Balance as at 30 June 2019 Mining exploration properties in Australia HK$’000 829,031 (26,414) 802,617 (45,272) 757,345 The mining properties in Australia represent the carrying value of mining and exploration projects in Australia (including the Marillana iron ore project) held by the Group. 00E1908195 AR.indb 69 00E1908195 AR.indb 69 25/9/2019 17:43:31 25/9/2019 17:43:31 69 NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION 18. MINING EXPLORATION PROPERTIES (Continued) As at 30 June 2019, the Group assessed whether events or changes in circumstances indicate a potential material change to the recoverable value of the mining properties since 30 June 2018. The Group performed an assessment of impairment indicators. Based on this assessment, management concluded that as at 30 June 2019, there was no indication that the recoverable value of the mining exploration properties has materially changed and thus impairment assessment was not required. 19. PROPERTY, PLANT AND EQUIPMENT For the year ended 30 June 2019 1 July 2018 Additions Depreciation Exchange differences At 30 June 2019 At 30 June 2019 Cost Accumulated depreciation Net book amount For the year ended 30 June 2018 1 July 2017 Additions Written off Disposals Depreciation Exchange differences At 30 June 2018 At 30 June 2018 Cost Accumulated depreciation Net book amount Plant, furniture, fixtures and equipment HK$’000 268 13 (125) (12) 144 4,918 (4,774) 144 Total HK$’000 3,673 126 (14) (3,368) (172) 23 268 5,156 (4,888) 268 Plant, furniture fixtures and equipment HK$’000 Construction in progress HK$’000 335 126 (14) — (172) (7) 268 5,156 (4,888) 268 3,338 — — (3,368) — 30 — — — — There was no depreciation expense (2018: Nil) included in cost of sales and depreciation of HK$125,000 (2018: HK$173,000) was included in administrative expenses. 00E1908195 AR.indb 70 00E1908195 AR.indb 70 25/9/2019 17:43:31 25/9/2019 17:43:31 20. FINANCIAL INSTRUMENTS Financial assets at amortised cost Other non-current assets Other receivables and deposits Cash and cash equivalents Other financial liabilities at amortised cost Trade and other payables Borrowings 21. CASH AND CASH EQUIVALENTS Cash and cash equivalents The balance of cash and cash equivalents are denominated in the following currencies: HK$ A$ US$ 22. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS Other receivables and deposits Prepayments ANNUAL REPORT 2019 2019 HK$’000 508 58 20,906 21,472 2019 HK$’000 705 12,828 13,533 2019 HK$’000 20,906 20,906 2019 HK$’000 19,541 1,185 180 20,906 2019 HK$’000 58 860 918 2018 HK$’000 538 10 34,258 34,806 2018 HK$’000 2,038 11,508 13,546 2018 HK$’000 34,258 34,258 2018 HK$’000 31,841 2,080 337 34,258 2018 HK$’000 10 380 390 00E1908195 AR.indb 71 00E1908195 AR.indb 71 25/9/2019 17:43:31 25/9/2019 17:43:31 71 NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION 23. TRADE AND OTHER PAYABLES Trade payables of the Group principally represent amounts outstanding to suppliers. The normal credit period is between 30 days and 90 days. Trade and other payables Provisions Less: Non-current portion Amount shown under current liabilities 2019 HK$’000 705 799 1,504 — 1,504 Amounts classified as non-current liabilities are unsecured, interest-free and not repayable within 12 months. 24. BORROWINGS Non-current Loans from a substantial shareholder 2019 HK$’000 12,828 12,828 2018 HK$’000 2,038 972 3,010 (58) 2,952 2018 HK$’000 11,508 11,508 As at 30 June 2019, the borrowings from a substantial shareholder are unsecured, they bear interest at 12% (2018: 12%) per annum and are repayable on 31 October 2020 (30 June 2018: 31 October 2019). 25. SHARE CAPITAL Ordinary shares of HK$0.1 each Authorised As at 30 June 2019 and 30 June 2018 Issued and fully paid As at 1 July 2016 and 30 June 2017 Issue of shares Issue of shares (Note a) At 30 June 2019 Number of shares ’000 Share capital HK$’000 20,000,000 2,000,000 8,381,982 780,000 59,250 9,221,232 838,198 78,000 5,925 922,123 Note a: On the 22 January and 19 March 2019 share options were exercised by directors and employees of the Group. 00E1908195 AR.indb 72 00E1908195 AR.indb 72 25/9/2019 17:43:31 25/9/2019 17:43:31 ANNUAL REPORT 2019 26. SHARE OPTION SCHEME Share option scheme of the Company The 2012 share option scheme (the “2012 Share Option Scheme”) of the Company was adopted by the Company pursuant to the approval by shareholders at the Annual General Meeting on 13 November 2012. The 2012 Share Option Scheme replaced the previous share option scheme which expired in August 2012, its primary purpose was to provide incentives or rewards to selected participants for their contribution to the Group. The 2012 Share Option Scheme is valid and effective for a period of ten years from the date of its adoption and will expire in August 2022. Share options granted under the previous share option scheme prior to its expiry shall continue to be valid and exercisable pursuant to its rules. The fair value of the employee services and consultancy services received in exchange for the grant of the share options is recognised as an expense, with a corresponding adjustment to employee share-based compensation reserve, over the vesting period. At the end of each reporting period, the Company revises its estimates of the number of options that are expected to vest. It recognises the impact of the revision to original estimate, if any, in the consolidated statement of comprehensive income, with a corresponding adjustment to equity. Details of specific categories of options are as follows: Option type Date of grant Vesting period Number of share options granted Exercise period Exercise price (HK$) 2015A 19 January 2015 19 January 2015 2018A 7 December 2017 7 December 2017 2018B 7 December 2017 7 December 2017 19 January 2015 — 18 January 2016 19 January 2015 — 18 January 2016 7 December 2017 — 31 December 2018 7 December 2017 — 31 December 2019 7 December 2017 — 31 December 2018 7 December 2017 — 31 December 2019 4,000,000 4,000,000 32,500,000 32,500,000 72,750,000 72,750,000 19 January 2016 — 18 January 2018 19 January 2017 — 18 January 2018 1 January 2019 — 31 December 2020 1 January 2020 — 31 December 2020 1 January 2019 — 31 December 2020 1 January 2020 — 31 December 2020 0.450 0.450 0.124-0.162 0.124-0.162 0.124-0.162 0.124-0.162 The fair values of all the share options were calculated using the Binomial model prepared by an independent valuer. The inputs into the model were as follows: Exercise price Volatility Expected option life Annual risk-free rate Expected dividend yield 2015A 2018A 2018B HK$0.45 HK$0.124-HK$0.162 HK$0.124-HK$0.162 49% 3 years 0.648% 0% 67% 3 years 1.440% 0% 68% 3 years 1.876% 0% The volatility measured at grant date is referenced to the historical volatility of shares of the Company. For the year ended 30 June 2019, the Company recognised the total expense of HK$6,356,000 (2018: HK$2,705,000) in relation to the share options previously granted by the Company during the year. 00E1908195 AR.indb 73 00E1908195 AR.indb 73 25/9/2019 17:43:31 25/9/2019 17:43:31 73 NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION 26. SHARE OPTION SCHEME (Continued) Movements in the number of share options outstanding and their related weighted average exercise prices are as follows: 2019 2018 Average exercise price in HK$ per share option Number of share options (thousands) Average exercise price in HK$ per share option Number of share options (thousands) 0.13 — 0.12 0.15 0.14 210,510 — 59,250 1,500 149,750 0.45 0.13 — 0.45 0.13 8,000 210,500 — (8,000) 210,500 At 1 July Granted Exercised Lapsed At 30 June 2019 As at 30 June 2019, 149,750,000 (2018: 210,500,000) options were outstanding with a weighted average exercise price of HK$0.14 (2018: HK$0.13), 105,250,000 were vested (2018: Nil) and 59,250,000 options were exercised (2018: Nil) during the year with a weighted average exercise price of HK$0.12 (2018: Nil) As at 30 June 2019, the weighted average of the remaining contractual life of the outstanding share options was 1.5 years (30 June 2018: 2.5 years). 27. DEFERRED INCOME TAX The following is the deferred income tax movement recognised by the Group: At 1 July 2017 Exchange differences At 30 June 2018 Offset of deferred tax asset for tax losses recognised Exchange differences At 30 June 2019 Mining exploration properties in Australia HK$’000 (246,817) 7,863 (238,954) 93,373 11,409 (134,172) All deferred tax liabilities are expected to be settled more than 12 months after the balance sheet date. At 30 June 2019, the Group’s total tax losses were HK$1,111,000,000 (2018: HK$1,441,000,000). The Group did not recognise a deferred income tax asset in respect of tax losses amounting to approximately HK$807,000,000 (2018: HK$1,441,000,000) as the utilisation of these tax losses is subject to the satisfaction of the loss recoupment rules in the relevant tax jurisdiction as well as other uncertainties which mean that their realisation is not considered probable. However, the Group did recognise a deferred tax asset offset of HK$304,000,000 (2018: nil) (at the tax rate of 30%) for a portion of the tax losses as these losses satisfy the conditions for the recognition of a deferred tax asset and their realisation is therefore, considered probable. 00E1908195 AR.indb 74 00E1908195 AR.indb 74 25/9/2019 17:43:31 25/9/2019 17:43:31 28. NOTE TO STATEMENT OF CASH FLOWS Cash flows from operating activities (Loss)/profit before income tax — Continuing operations — Discontinued operation Adjustments for: Depreciation of property, plant and equipment Share-based compensation Finance income Finance costs Other gain/losses Loss/(gain) on disposal of property, plant and equipment Gain on disposal of subsidiaries Share of (profit)/losses of joint ventures Exchange loss/(gain) Operating cash flows before movements in working capital Decrease/(increase) in other receivables and deposits (Decrease)/increase in provisions (Decrease)/increase in trade and other payables (Decrease)/increase in amounts due to related parties Cash used in operating activities ANNUAL REPORT 2019 Year ended 30 June 2019 HK$’000 2018 HK$’000 (Restated) (25,785) — (25,785) 125 6,356 (45) 1,320 (9,527) — — (412) 9 (27,959) (528) 741 (2,249) — (29,995) (49,059) 157,145 108,086 172 2,705 (26) 4,938 — 208 (156,201) 562 8,608 (30,948) 554 (307) (3,262) 382 (33,581) 29. COMMITMENTS (a) (b) (c) Operating lease commitments (i) The Group had commitments mainly for future minimum lease payments under non-cancellable operating lease in respect of office premises which fall due as follows: Not later than 1 year Later than 1 year and no later than 5 years 2019 HK$’000 976 303 1,279 2018 HK$’000 978 571 1,549 The above lease commitments do not include the amount of potential lease renewal options under these operating lease arrangements. Capital commitments As at 30 June 2019, the Group did not have any capital commitments (2018: Nil). Exploration expenditure commitments As at 30 June 2019, the Group is required to meet or exceed a minimum level of exploration expenditure of A$1,265,000 equivalent to approximately HK$6,935,000 (2018: A$1,275,000 equivalent to approximately HK$7,407,000), over the next year. Obligations are subject to change upon expiry of the existing exploration leases or on application for a new lease. (d) Joint Venture commitments As at 30 June 2019 there were no joint venture commitments (2018: A$126,000 equivalent to approximately HK$732,000). 75 00E1908195 AR.indb 75 00E1908195 AR.indb 75 25/9/2019 17:43:31 25/9/2019 17:43:31 NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION 30. INTEREST IN JOINT VENTURES At 1 July 2018 Contributions to the joint venture Share of profit/(loss) of joint venture Exchange differences At 30 June 2019 2019 HK$’000 2018 HK$’000 126 132 412 (17) 653 430 249 (562) 9 126 Details of the Group’s interest in the joint venture is as follows: Name of joint venture Interest held in share of output Principal activities NWIOA Ops. Pty Ltd (Note (a)) 37% Port and related infrastructure Note a: NWIOA Ops. Pty Ltd is a joint venture incorporated in Australia which is seeking to develop port and related infrastructure on behalf of the North West Iron Ore Alliance (“NWIOA”) members. Management considers the interest in the joint venture is not individually material to the Group. 31. RETIREMENT BENEFITS SCHEMES The Group operates a defined contribution retirement benefits scheme (the ‘MPF Scheme’) under the Mandatory Provident Fund Scheme Ordinance for its employees in Hong Kong. The Group contributes at least 5% (2018: 5%) of the employees’ basis salaries to the MPF scheme. The assets of the MPF scheme are held separately from those of the Group in an independently administered fund. The employees of the Group subsidiaries in Australia are entitled to superannuation that is a defined contribution plan under which the Group contributes of 9.5% (2018: 9.5%) of base salary. The total cost is charged to administrative expense of approximately HK$620,000 (2018: HK$813,000) represents contributions to these schemes by the Group in respect of the current year. 32. RELATED PARTY DISCLOSURES (a) Material related party transactions Except as disclosed within these consolidated financial statements, the Group has no material related party transactions during the year( 2018: Nil). (b) Related party balances The details of the loans from a substantial shareholder are disclosed in Note 24. The amounts due from/to related parties included as current assets or current liabilities are unsecured, interest-free and repayable on demand. (c) Compensation of key management personnel The remuneration of directors and other members of key management during the year were as follows: Salaries and other benefits Post-employment benefits Termination benefits Share-based compensation expenses 2019 HK$’000 9,051 387 — 4,947 14,385 2018 HK$’000 9,383 385 2,211 2,607 14,586 The remuneration of directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends. 00E1908195 AR.indb 76 00E1908195 AR.indb 76 25/9/2019 17:43:31 25/9/2019 17:43:31 ANNUAL REPORT 2019 33. SUBSIDIARIES The following is a list of the principal subsidiaries as at 30 June 2019 and 30 June 2018: Name of subsidiary Subsidiaries directly held by the Company: Place of incorporation Place of operation Particular of issued share capital Ownership interest held by the Company Principal activities Brockman Mining (Management) Limited Hong Kong Hong Kong Golden Genie Limited Wah Nam Iron Ore Limited Best Resources Limited BVI BVI BVI Hong Kong Hong Kong Hong Kong Subsidiaries indirectly held by the Company: Brockman Mining Australia Pty Ltd Australia Australia Brockman Iron Pty Ltd Australia Australia Brockman Exploration Pty Ltd Australia Australia Brockman East Pty Ltd Australia Australia Yilgarn Mining (WA) Pty Ltd Australia Australia Brockman Infrastructure Pty Ltd Australia Australia Brockman Ports Pty Ltd Australia Australia Wah Nam Australia Finance Pty Ltd Australia Australia Brockman Maverick Pty Ltd Australia Australia Brockman Holdings (Australia) Pty Ltd Australia Australia 1 Ordinary share of HK$1 1 Ordinary share of US$1 1 Ordinary share of US$1 1 Ordinary share of US$1 145,053,151 Ordinary shares of A$1 each 1 Ordinary share of A$1 1 Ordinary share of A$1 1 Ordinary share of A$1 841,001 Ordinary shares of A$1 1 Ordinary share of A$1 76 Ordinary shares of A$1 each 1 Ordinary share of A$1 2 Ordinary shares of A$1 12 Ordinary shares of A$1 each 100% 100% Investment holding 100% 100% Investment holding 100% 100% Investment holding 100% 100% Investment holding 100% 100% Investment holding 100% 100% Exploration & evaluation 100% 100% Exploration & evaluation 100% 100% Exploration & evaluation 100% 100% Exploration & evaluation 100% 100% Rail infrastructure 100% 100% Port infrastructure 100% 100% Investment holding 100% 100% Exploration & evaluation 100% 100% Investment holding 00E1908195 AR.indb 77 00E1908195 AR.indb 77 25/9/2019 17:43:32 25/9/2019 17:43:32 77 NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION 34. DISPOSAL OF SUBSIDIARIES On 29 June 2018, the Company, entered into a sale and purchase agreement with an independent party pursuant to which the Company agreed to sell the entire equity interest in Smart Year Investments Limited and its subsidiaries (together, the ‘Smart Year Group’) at a consideration of HK$1 (‘Disposal’). Such consideration is subject to an upward adjustment resulting from potential occurrence of a future event, however the Directors of the Company consider such adjustment to be remote. The Disposal was completed on 29 June 2018 and the Company ceased to have any control and equity interest in Smart Year Group. Profit from discontinued operation An analysis of the result of discontinued operation, and the result recognised on the re-measurement of assets or disposal group, is as follows: Other income Selling and administrative expenses Reversal of over-provision of social security expenses Impairment loss Operating gain Reversal of interests on long-term payable Finance cost Profit for the year from operating activities Gain on disposal of subsidiaries Profit for the year from discontinued operation Profit for the year from discontinued operation attributable to: — Equity holders of the Company 2018 HK$’000 83 (173) 1,461 — 1,371 — (427) 944 156,201 157,145 157,145 00E1908195 AR.indb 78 00E1908195 AR.indb 78 25/9/2019 17:43:32 25/9/2019 17:43:32 ANNUAL REPORT 2019 35. BALANCE SHEET AND RESERVE MOVEMENT OF THE COMPANY As at 30 June Non-current assets Property, plant and equipment Current assets Other receivables, deposits and prepayments Amounts due from subsidiaries Cash and cash equivalents Total assets Equity and liabilities Share capital Reserves Total equity Non-current liabilities Borrowings Current liabilities Trade and other payables Amount due to subsidiaries Total liabilities Total equity and liabilities Note (a) 2019 HK$’000 13 13 692 767,285 17,765 785,742 785,755 922,123 (396,378) 525,745 12,828 12,828 248 246,934 247,182 260,010 785,755 2018 HK$’000 8 8 177 546,651 31,753 578,581 578,589 916,198 (597,516) 318,682 11,508 11,508 1,457 246,942 248,399 259,907 578,589 The balance sheet of the Company was approved by the Board of Directors on 25 September 2019 and was signed on its behalf. Kwai Kwun, Lawrence Director Chan Kam Kwan, Jason Director 00E1908195 AR.indb 79 00E1908195 AR.indb 79 25/9/2019 17:43:32 25/9/2019 17:43:32 79 NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION 35. BALANCE SHEET AND RESERVE MOVEMENT OF THE COMPANY (Continued) Note (a) Reserves movement in the Company Balance at 1 July 2017 Comprehensive income: Loss for the year Share-based compensation (Note 26) At 30 June 2018 Comprehensive income: Profit for the year Exercise of options Share-based compensation (Note 26) Balance at 30 June 2019 Share premium HK$’000 4,460,106 — — 4,460,106 — 2,910 — 4,463,016 Share-based compensation reserve HK$’000 Accumulated losses HK$’000 Total HK$’000 80,128 (5,079,939) (539,705) — 2,705 82,833 — (1,489) 6,356 87,700 (60,516) — (60,516) 2,705 (5,140,455) (597,516) 193,361 193,361 — — 1,421 6,356 (4,947,094) (396,378) 36. EVENTS OCCURRING AFTER BALANCE SHEET DATE On the 19 July 2019, both Brockman Iron and Polaris have agreed that the Farm-in Obligations (see Note 2(a)) may take up to a further 12 months to complete (31 July 2020) and therefore the parties have agreed to extend certain key dates under the FJV. Those dates are: 1. 2. 3. 4. The Farm-In Period (for satisfaction of the Farm-in obligations) has been extended to 31 July 2020; Construction commencement of the Rail and Port system has been extended from “on or before 31 December 2019” to “on or before 31 December 2020”; Operation commencement of the Rail and Port System has been extended from “on or before 31 December 2021” to “on or before 31 December 2022”; and The date for satisfaction of the Conditions Precedent for the Mine to Ship Services Agreement has been extended to 31 December 2020. As a consequence of the above, it is now expected that the production from the Marillana Project will commence by end of calendar year 2022. 00E1908195 AR.indb 80 00E1908195 AR.indb 80 25/9/2019 17:43:32 25/9/2019 17:43:32 FINANCIAL SUMMARY ANNUAL REPORT 2019 2019 HK$’000 (Note a) — (25,785) 93,373 Year ended 30 June 2018 HK$’000 2017 HK$’000 2016 HK$’000 2015 HK$’000 — — 11,590 36,525 (49,059) (37,057) (758,063) (1,603,584) — — 130,905 367,036 RESULTS Revenue Loss before income tax Income tax benefit Profit/(loss) for the year from continuing operations 67,588 (49,059) (37,057) (627,158) (1,236,548) Profit/(loss) for the year from discontinued operations Profit/(loss) for the year Attribute to: Equity holders of the Company Earnings/(loss) per share (HK cents) — Basic — Diluted ASSETS AND LIABILITIES Total assets Total liabilities Total equity — 67,588 157,145 108,086 (801) (38,308) — — (627,158) (1,236,548) 67,588 108,086 (38,308) (627,158) (1,236,548) 0.74 0.73 1.27 1.27 (0.46) (0.46) (7.48) (7.48) (14,75) (14,75) Year ended 30 June 2019 HK$’000 780,474 (148,504) 631,970 631,970 2018 HK$’000 838,197 (253,472) 584,725 584,725 2017 HK$’000 858,630 (394,667) 463,963 463,963 2016 HK$’000 835,953 (348,536) 487,417 487,417 2015 HK$’000 1,657,462 (503,607) 1,153,805 1,153,805 Note a: The financial figures above were extracted from the Consolidated Financial Statements. 00E1908195 AR.indb 81 00E1908195 AR.indb 81 25/9/2019 17:43:32 25/9/2019 17:43:32 81 ASX ADDITIONAL INFORMATION A. DISTRIBUTION OF SHAREHOLDINGS AS AT 20 SEPTEMBER 2019 Category 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over TOTAL Ordinary shares Unlisted options @ HK$0.124 Unlisted options @ HK$0.162 Holders Size of holding Holders Size of holding Holders Size of holding 40 16 51 583 256 946 10,537 39,701 445,804 24,231,953 9,196,504,136 9,221,232,131 11 11 134,250,000 134,250,000 4 4 15,500,000 15,500,000 Additional information in accordance with the listing requirements of the Australian Securities Exchange Limited are as follows: The number of shareholders holding less than a marketable parcel of shares as at 20 September 2019 is 159. Unquoted Securities As at 21 September 2019, unlisted options amounted to a total of 149,750,000 units, all of which are expiring 31 December 2020. Among these options, 134,250,000 options have an exercise price of HK$0.124 and the rest 15,500,000 options have an exercise price of HK$0.162. B. TWENTY LARGEST SECURITY HOLDERS AS AT 20 SEPTEMBER 2019 Name 1 Ocean Line Holdings Ltd 2 CM Securities (Hong Kong) Ltd 3 4 5 6 7 The Hong Kong and Shanghai Banking Equity Valley Investments Ltd UBS Securities Hong Kong Ltd KQ Resources Ltd Sun Hung Kai Investments Services Ltd 8 Citibank N.A 9 Global Mastermind Securities Ltd 10 Yungfeng Securities Ltd 11 Cornerstone Pacific Ltd 12 13 14 Hing Wong Securities Ltd Ross Norgard/Longfellow Nominees Barwick Investments Ltd 15 Guoyuan Securities Brokerage (Hong Kong) 16 Sinopac Securities (Asia) Ltd 17 China Industrial Securities 18 Zhang Haoyang 19 Duofu Holdings Group Co., Ltd 20 HSBC Broking Securities (Hong Kong) Ltd * Δ Δ * Δ * Δ Δ Δ Δ * Δ * * Δ Δ Δ * * Δ Number of shares 1,857,743,902 764,904,972 662,808,334 499,972,276 468,564,113 426,485,426 385,976,220 342,610,535 310,308,000 306,600,032 250,000,000 189,231,000 243,054,003 174,668,000 139,362,800 137,427,792 103,810,800 100,000,000 80,000,000 72,079,554 % 20.15% 8.30% 7.19% 5.42% 5.08% 4.63% 4.19% 3.75% 3.37% 3.32% 2.71% 2.05% 2.64% 1.89% 1.51% 1.49% 1.13% 1.08% 0.87% 0.78% The number of shares stated herein are extracted and sorted from the register of shareholders (“*”) and the participant report from the Central Clearing and Settlement System of the Hong Kong Stock Exchange (“CCASS”) (“Δ”). As the Company does not have information in relation to the ultimate beneficial owners of the shares held by the participants of the CCASS, the numbers herein may not reflect the actual number of shares beneficially owned by each of the shareholders. Also, refer to Section C below – ‘Substantial Shareholders’ for additional information. 00E1908195 AR.indb 82 00E1908195 AR.indb 82 25/9/2019 17:43:32 25/9/2019 17:43:32 ANNUAL REPORT 2019 C. SUBSTANTIAL SHAREHOLDERS Name of shareholder Capacity Number of shares or underlying shares Percentage of the issued share capital of the Company Ocean Line Holdings Ltd (Note 1) Beneficial owner 2,426,960,137 Kwai Sze Hoi (Note 1) Interest held by controlled corporations 2,426,960,137 Beneficial owner Interest held jointly with another person 87,400,000 60,720,000 Cheung Wai Fung (Note 1) Interest held by controlled corporations 2,426,960,137 Interest held jointly with another person Interest of spouse Equity Valley Investments Limited Beneficial owner 60,720,000 9,264,000 515,574,276 The XSS Group Ltd (Note 2) Interest held by controlled corporations 515,574,276 Cheung Sze Wai, Catherine (Note 2) Interest held by controlled corporations 515,574,276 Luk Kin Peter Joseph (Note 2) Interest held by controlled corporations 515,574,276 Interest of spouse 515,574,276 Beneficial owner 50,000,000 26.32% 26.32% 0.95% 0.66% 26.32% 0.66% 0.10% 5.59% 5.59% 5.59% 5.59% 5.59% 0.54% KQ Resources Limited Beneficial owner 1,301,270,316 14.11% Notes: Please refer to Notes 1 and 2 under section headed: Substantial shareholders on page 40. D. VOTING RIGHTS The voting rights attaching to each class of equity securities are set out below: a) Ordinary shares Each shareholder present in person or by proxy, attorney or representative in a meeting shall have one vote on a poll for each share held. b) Options No voting rights E. STOCK EXCHANGE LISTING Quotation has been granted for all the ordinary shares of the Company on all member Exchanges of the ASX Limited. F. INCOME TAX Brockman Mining Limited is taxed as a public company. 00E1908195 AR.indb 83 00E1908195 AR.indb 83 25/9/2019 17:43:32 25/9/2019 17:43:32 83 ASX ADDITIONAL INFORMATION G. TENEMENT SCHEDULE — AS AT 20 SEPTEMBER 2019 Location Tenement type number Commodity Status Interest held Tenement Project Duck Creek West Pilbara E Duck Creek West Pilbara E Duck Creek East West Pilbara E Fig Tree Juna Downs Juna Downs East Pilbara E West Pilbara E West Pilbara E Madala Bore West Pilbara E Marandoo Marillana Marillana Marillana Marillana Mindy Mindy Mt King Ophthalmia Ophthalmia Ophthalmia Ophthalmia Ophthalmia Ophthalmia Ophthalmia West Pilbara E East Pilbara L East Pilbara M East Pilbara East Pilbara E E West Pilbara E West Pilbara E West Pilbara E East Pilbara East Pilbara East Pilbara East Pilbara East Pilbara East Pilbara East Pilbara E E E E R R R E E E E E E Parson George East Pilbara Parson George East Pilbara Punda Spring Punda Spring Punda Spring Punda Spring East Pilbara East Pilbara East Pilbara East Pilbara Punda Spring West Pilbara E Tom Price Windell West Pilbara E West Pilbara E 47/1725 47/3152 47/2994 47/3025 47/3363 47/3364 47/3285 47/3105 45/0238 47/1414 47/3170 47/3532 47/3585 47/4206 47/3446 47/1598 47/2280 47/2291 47/3549 47/0013 47/0015 47/0016 47/3217 47/3491 47/4037 47/4038 47/4039 47/4040 47/3575 47/3565 47/4240 Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Granted Granted Granted Granted Granted Granted Granted Granted 100% 100% 100% 100% 100% 100% 100% 100% Application 100% Granted Granted 100% 100% Application 100% Granted 100% Application 100% Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Application 100% Application 100% Application 100% Application 100% Granted Granted 100% 100% Application 100% 00E1908195 AR.indb 84 00E1908195 AR.indb 84 25/9/2019 17:43:32 25/9/2019 17:43:32 

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