Registered number: 10545738
CHESTERFIELD RESOURCES PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 DECEMBER 2018
CHESTERFIELD RESOURCES PLC
CONTENTS
Company Information
Chairman’s Statement
Group Strategic Report
Directors’ Report
Directors’ Responsibilities Statement
Corporate Governance Report
Directors’ Remuneration Report
Independent Auditor’s Report
Group Statement of Comprehensive Income
Group and Company Statement of Financial Position
Group Statement of Changes in Equity
Company Statement of Changes in Equity
Group and Company Statement of Cash Flows
Notes to the Financial Statements
Page
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2
4
7
9
10
12
16
20
21
22
23
24
25
CHESTERFIELD RESOURCES PLC
COMPANY INFORMATION
Directors
Company Secretary
Registered Office
Auditors
Brokers
Solicitors
Bankers
Registrars and Transfer Office
Martin French (Executive Chairman)
David Cliff
David Hall
Peter Damouni
Heytesbury Corporate LLP
7-9 Swallow Street
London
England
W1B 4DE
PKF Littlejohn LLP
Statutory Auditor
1 Westferry Circus
Canary Wharf
London
E14 4HD
Shard Capital Partners LLP
23rd Floor
20 Fenchurch Street
London
EC3M 3BY
Hill Dickinson LLP
The Broadgate Tower
20 Primrose Street
London
EC2A 2EW
Barclays Bank plc
1 Churchill Place
Canary Wharf
London
E14 5HP
Neville Registrars Limited
Neville House
Steelpark Road
Halesowen
B62 8HD
Website
www.chesterfieldresourcesplc.com
1
CHESTERFIELD RESOURCES PLC
CHAIRMAN’S STATEMENT
Chesterfield Resources plc has made significant progress in its operations since my last letter to shareholders, a little over
six months ago.
By way of recap, in July 2018 Chesterfield re-admitted as a Standard Listing on the main board of the London Stock Exchange.
This was to effect an acquisition of HKP Exploration Limited, which held a number of mineral exploration licences in the
Republic of Cyprus. In the third quarter of 2018 the Group commenced a preliminary drill campaign on a number of targets
namely Evloimeni, Mavroyi, Magouda, Double Seven and Ayia Saranta.
Progress report for the last six months
The Company completed 3,097m of its drilling campaign in the last quarter of 2018 on several targets in its Troodos West
Exploration area. From a preliminary analysis of core, the Board of Directors took a decision to greatly expand the Group’s
land package in Cyprus. There were numerous intersections of 1-2% Cu and also a surprising amount of gold, with many
intersections assaying at 1-2g per tonne. There was a geological surprise also, with the discovery of more recent epithermal
systems alongside the well-established Cyprus-type Volcanogenic Massive Sulphide (“VMS”) mineralization. This means that
copper-gold+/-zinc mineralisation can be hosted in two different types of system
The operations team was asked to focus its attention on identifying new minerals rights land packages for the Group to apply
for. Because the permits were available directly from the authorities in Cyprus they were relatively inexpensive and easy to
acquire. Thus, it made sense to secure first mover advantage by submitting applications over the most promising licence
areas still available. The programme of new land applications was completed at the end of February 2019, almost quadrupling
the Group’s total land position to 237 km2. This made Chesterfield by far the largest holder of mineral rights in Cyprus. The
new licence areas expanded the Group’s position along both the northern and southern flanks of the Troodos mountains in
the most prospective volcanic belt.
In addition, more prospecting permits were also granted on the Group’s existing batch of applications at Troodos North. I am
pleased to report the current portfolio of approved prospecting permits now totals more than 50 km2.
In order to run this significantly expanded exploration programme, the Group recruited Mike Parker as Chief Operating Officer
in January 2019. Mike brings a huge amount of experience to Chesterfield. Prior to joining our Group, Mike had a 20-year
career for First Quantum. He was a key player in making two major copper discoveries for First Quantum and was its Country
Manager for DRC and then Peru.
To provide a first sweep of our greatly enlarged exploration area, we commissioned a remote sensing survey, using both the
Astra and the Sentinel 2 satellite platforms. The survey uses both high resolution satellite photography and also data from the
non-visible spectrum using specially calibrated satellite sensors. The survey is able to identify geological faults that may
control mineralization and associated rock alterations due to hydrothermal activity. The satellite data was interpreted using a
specialist company in the US. It has allowed us to rapidly reduce our search areas to a number of specific targets, which
would otherwise have taken many of months of field work on the ground. The survey has also identified targets outside of our
exploration licence areas and, as a result, we may submit applications for further licences.
The Group has built a strong field team in Cyprus. This includes three graduates from Camborne School of Mines (CSM). We
are pleased to have built a good relationship with one of the premier mining schools in the UK. We recently hosted a field visit
in Cyprus for CSM’s third year students and will shortly be taking in two of its Master’s students on internships in Cyprus. It is
important to us that we are well integrated into the local community. We now have employ four part-time Cypriot geologists
on the team, have good relationship with the Mine Services department and we also employ contractors from the villages we
operate around.
The team has been involved in an intensive period of data collection over the last few months. There is a very large volume
of historical data in Cyprus, both from the period of mining in the 1960s and 1970s, and various exploration and study projects
since. Sifting through this and digitising the most relevant information has been a meticulous but rewarding process. The team
has spent much time in the field mapping and sampling the areas of greatest interest. The various layers of information are
being collated into the Group’s geographic information system (GIS).
We have also made some corporate changes in Cyprus. PKF Savvides & Co Ltd have been appointed as our local auditors,
Hive Management Services Ltd has been appointed as our in-country accountants, and we have changed the name of HKP
Exploration Limited to CRC Chesterfield Chesterfield Resources (Cyprus) Limited.
2
CHESTERFIELD RESOURCES PLC
CHAIRMAN’S STATEMENT
We are looking forward to an active period ahead. The operations team has been conducting intensive field studies on several
targets which we will shortly be further investigating using geophysics. The Group has a diamond drill in storage at our core
shed in Cyprus and we expect to be drilling again soon. We have been careful to ensure we have completed detailed
examination of each target before moving onto the most costly process of drill testing of targets.
Outside of the exploration there are a number of other opportunities that the Group is investigating that could yield near-term
revenue potential. It is our intention to grow the business through joint ventures and new projects as these opportunities arise.
Having worked hard to build our land position in Cyprus, operations team and data sets, the Group now has a strong target
list in final stages of preparation. We now also feel in a position to start releasing information regarding the Group’s
operations and prospects more actively to the stock market. The shares are becoming more actively traded and the price
stronger. We will be using various channels of communication to raise the profile of the Group. This will be accompanied by
a more professional web site and revamped presentation. Chesterfield is entering an exciting phase of its growth and I look
forward to bringing you regular news over coming weeks and months.
David Hall, one of our directors, has decided not to stand for re-election this year. David is involved in a number of different
junior resource projects, both listed and unlisted. Having helped shape our venture in Cyprus, he has now found many
demands on his busy schedule. We would like to thank him for his hard work and wish him the best of luck.
Financial Review
The loss before taxation of the Group for the year ended 31 December 2018 amounted to £689,367 (period ended 31
December 2017: £111,012).
The Group’s cash position at 31 December 2018 was £1,885,726 (2017: £1,184,424).
In July 2018 the group raised £2,000,000 by issuing 26,666,667 new ordinary shares of 0.1 pence at a price of 7.5 pence per
share. The funds raised is to primarily support the continued exploration of various license areas in Cyprus.
Outlook
I would like to thank our shareholders for their support, we are lucky to have a strong and supportive base of investors and
we hope that the coming months and years will continue to be value accretive for all our stakeholders.
Martin French
Executive Chairman
29 April 2019
3
CHESTERFIELD RESOURCES PLC
GROUP STRATEGIC REPORT
The Directors of the Company and its subsidiary undertakings (which together comprise the “Group”) present their Strategic
Report on the Group for the year ended 31 December 2018.
Strategic Approach
The Group’s aim is to create value for shareholders through the discovery and development of economic mineral deposits.
The Group’s strategy is to continue to progress the development of its existing projects in Cyprus and to evaluate its existing
and new mineral resource opportunities.
Organisation Overview
The Group’s business is directed by the Board and is managed on a day-to-day basis by the Executive Chairman, Martin
French. The Board monitors compliance with objectives and policies of the Group through monthly performance reporting,
budget updates and periodic operational reviews.
The Corporate Head Office of the Group is located in London, UK, and provides corporate support services to the overseas
operations. Overseas operations are managed out of the Group’s office in Cyprus.
The Board comprises of one Executive Director and three Non-Executive Directors as detailed below:
Martin French - Executive Chairman
Mr French has over 30 years of experience in capital markets, investment banking and mining. He began his career at Merrill
Lynch, and was country manager for Credit Lyonnais Securities Asia (CLSA) in various locations in Asia, before setting up its
business in Latin America. Mr French was also Managing Director of North River Resources plc from December 2012 until
January 2015, and took its Namibia-based brownfield lead-zinc project through to bankable feasibility study and sourced a
strategic funding partner. The project is now under construction.
David Hall - Non-Executive Director
Mr Hall has over 29 years of experience in the exploration sector. He is currently the CEO of Thani Stratex Resources Limited,
Chairman of Horizonte Minerals plc (AIM:HZM), founder of Erris Resources plc (AIM:ERIS) and of Oriole Resources plc
(formerly Stratex International plc). Previously he was with AngloGold South America and responsible for programmes which
led to discovery of the La Rescantada gold deposit.
David Cliff - Non-Executive Director
Mr Cliff has over 50 years in exploration and mine geology. Previously he had over 26 years at Rio Tinto including five as
Exploration Manager Europe. He has a BSc Hons in Geology and is a Chartered Engineer and Member of the Institute of
Materials, Minerals and Mining.
Peter Damouni - Non-Executive Director
Mr. Damouni has over 17 years of experience in investment banking and capital markets, with expertise in mining and oil and
gas. Throughout his career, Mr. Damouni has worked on and led equity and debt financings valued over $5 billion. He has
comprehensive experience in equity financing, restructuring, corporate valuations and advisory assignments.
During the year the Group had the following gender composition of employees and directors:
Gender Composition
Directors
Senior Management
Employees
Review of Business
Male
4
1
0
Female
0
0
0
In July 2018, the Group completed the acquisition of 100% of the share capital of CRC Chesterfield Resources (Cyprus)
Limited (formerly HKP Exploration Limited) by way of share consideration. Further information is included in note 10 to these
Financial Statements.
The 2018 work programme has provided a well-grounded scientific understanding of the geological potential in Cyprus. Having
now completed this first-pass exploration drilling phase, it is anticipated that future programs will focus on proven geological
techniques to rank targets in order of drilling importance to maximise the potential for exploration success.
4
CHESTERFIELD RESOURCES PLC
GROUP STRATEGIC REPORT
Financial Performance Review
The loss of the Group for the year ended 31 December 2018 before taxation amounts to £689,367 (period ended 31 December
2017: £111,012).
The Board monitors the activities and performance of the Group on a regular basis. The Board uses financial indicators based
on budget versus actual to assess the performance of the Group. The indicators set out below will continue to be used by the
Board to assess performance over the year to 31 December 2018.
The three main KPIs for the Group are as follows. These allow the Group to monitor costs and plan future exploration and
development activities:
KPI
Cash and cash equivalents
Administrative expenses as a percentage of total assets
Exploration costs capitalised during the period
2018
1,885,726
22%
1,156,429
2017
1,184,424
9%
-
Cash has been used to fund the Group’s operations and facilitate its investment activities (refer to the Statement of Cash
Flows on page 24).
Administrative expenses are the expenses related to the Group’s ability to run the corporate functions to ensure they can
perform their operational commitments. The rise in these expenses for the year is due to the expansion of the Group via the
acquisition and increase in operational work in Cyprus.
Exploration costs capitalised during the year consist of exploration expenditure on the Group’s exploration licences net of
foreign exchange rate movements.
Principal Risks and Uncertainties
The management of the business and the execution of the Group’s strategy are subject to a number of risks. The key business
risks affecting the Group are set out below.
Risks are formally reviewed by the Board, and appropriate processes are put in place to monitor and mitigate them. If more
than one event occurs, it is possible that the overall effect of such events would compound the possible adverse effects on
the Group.
Exploration risks
The exploration and mining business is controlled by a number of global factors, principally supply and demand which in turn
is a key driver of global mineral prices; these factors are beyond the control of the Group. Exploration is a high-risk business
and there can be no guarantee that any mineralisation discovered will result in proven and probable reserves or go on to be
an operating mine. At every stage of the exploration process the projects are rigorously reviewed to determine if the results
justify the next stage of exploration expenditure ensuring that funds are only applied to high priority targets.
The principal asset of the Group, comprising the mineral exploration licences, are subject to certain financial and legal
commitments. If these commitments are not fulfilled the licences could be revoked. They are also subject to legislation defined
by the Cypriot Government; if this legislation is changed it could adversely affect the value of the Group’s assets.
Dependence on key personnel
The Group and Company is dependent upon its executive management team and various technical consultants. Whilst it has
entered into contractual agreements at market rates with the aim of securing the services of these personnel, the retention of
their services cannot be guaranteed. The development and success of the Group depends on its ability to recruit and retain
high quality and experienced staff. The loss of the service of key personnel or the inability to attract additional qualified
personnel as the Group grows could have an adverse effect on future business and financial conditions.
Uninsured risk
The Group, as a participant in exploration and development programmes, may become subject to liability for hazards that
cannot be insured against or third party claims that exceed the insurance cover. The Group may also be disrupted by a variety
of risks and hazards that are beyond its control, including geological, geotechnical and seismic factors, environmental
hazards, industrial accidents, occupation and health hazards and weather conditions or other acts of God.
Funding risk
The only sources of funding currently available to the Group are through the issue of additional equity capital in the parent
company in discrete tranches or through bringing in partners to fund exploration and development costs. The Company’s
ability to raise further funds will depend on the success of the Group’s exploration activities and its investment strategy. The
5
CHESTERFIELD RESOURCES PLC
GROUP STRATEGIC REPORT
Company may not be successful in procuring funds on terms which are attractive and, if such funding is unavailable, the
Group may be required to reduce the scope of its exploration activities or relinquish some of the exploration licences held for
which it may incur fines or penalties.
Political risk
All of the Group’s operations are located in a foreign jurisdiction. As a result, the Group is subject to political, economic and
other uncertainties, including but not limited to, changes in policies or the personnel administering them, terrorism,
appropriation of property without fair compensation, cancellation or modification of contractual rights, foreign exchange
restrictions and currency fluctuations.
Financial Risks
The Group’s operations expose it to a variety of financial risks that can include market risk (including foreign currency, price
and interest rate risk), credit risk, and liquidity risk. The Group has a risk management programme in place that seeks to limit
the adverse effects on the financial performance of the Group by monitoring levels of debt finance and the related finance
costs. The Group does not use derivative financial instruments to manage interest rate costs and, as such, no hedge
accounting is applied.
Details of the Group’s financial risk management policies are set out in Note 3 to the Financial Statements.
The Group Strategic Report was approved by the Board on 29 April 2019.
Martin French
Executive Chairman
29 April 2019
6
CHESTERFIELD RESOURCES PLC
DIRECTORS’ REPORT
The Directors present their annual report on the affairs of Chesterfield Resources plc together with the audited Financial
Statements for the year ended 31 December 2018. The comparatives comprise the results of the Company for the period
from incorporation on 4 January 2017 to 31 December 2017.
Dividends
The Directors do not recommend the payment of a dividend for the year (2017: nil).
Directors & Directors’ Interests
The Directors who served during the year ended 31 December 2018 are shown below and had, at that time the following
beneficial interests in the shares of the Company:
Martin French (1)
Peter Damouni
David Cliff
David Hall (2)
Derek Crowhurst (3)
Christopher Hall (4)
(1) Martin French was appointed Executive Chairman on 26 July 2018
(2) David Hall was appointed on 3 July 2018
(3) Derek Crowhurst resigned on 4 September 2018
(4) Christopher Hall resigned on 26 July 2018
31 December 2018
Ordinary
Shares
3,000,000
1,533,333
450,000
1,373,334
-
-
Options &
Warrants
2,564,000
2,066,666
1,215,000
115,000
-
-
31 December 2017
Ordinary
Shares
-
1,200,000
450,000
-
250,000
100,000
Options &
Warrants
-
1,200,000
750,000
-
500,000
200,000
Further details on options can be found in Note 20 to the Financial Statements.
Substantial Shareholders
The substantial shareholders with more than a 3% shareholding at 29 April 2019 are shown below:
Claudio Ciavarella
Leo Berezan
Kingfisher Distribution Company Limited
Martin French
Fahad Al Tamimi
Glenn Olnick
Wentworth Ltd
1770120 Ontario Inc.
Corporate Responsibility
Holding
4,400,000
4,201,334
3,350,000
3,000,000
2,333,333
2,075,000
2,000,000
1,925,000
Percentage
7.10%
6.78%
5.41%
4.84%
3.77%
3.35%
3.23%
3.11%
Environmental
Chesterfield undertakes its exploration activities in a manner that minimises or eliminates negative environmental impacts
and maximises positive impacts of an environmental nature. Chesterfield is a mineral explorer, not a mining company. Hence,
the environmental impact associated with its activities is minimal. To ensure proper environmental stewardship on its projects,
Chesterfield conducts certified baseline studies prior to all drill programmes and ensures that areas explored are properly
maintained and conserved.
Health and safety
Chesterfield operates a comprehensive health and safety programme to ensure the wellness and security of its employees.
The control and eventual elimination of all work related hazards requires a dedicated team effort involving the active
participation of all employees. A comprehensive health and safety programme is the primary means for delivering best
practices in health and safety management. This programme is regularly updated to incorporate employee suggestions,
lessons learned from past incidents and new guidelines related to new projects with the aim of identifying areas for further
improvement of health and safety management. This results in continuous improvement of the health and safety programme.
Employee involvement is regarded as fundamental in recognising and reporting unsafe conditions and avoiding events that
may result in injuries and accidents.
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CHESTERFIELD RESOURCES PLC
DIRECTORS’ REPORT
Internal Controls
The Board recognises the importance of both financial and non-financial controls and has reviewed the Group’s control
environment and any related shortfalls during the period. Since the Group was established, the Directors are satisfied that,
given the current size and activities of the Group, adequate internal controls have been implemented. Whilst they are aware
that no system can provide absolute assurance against material misstatement or loss, in light of the current activity and
proposed future development of the Group, continuing reviews of internal controls will be undertaken to ensure that they are
adequate and effective.
Corporate Governance
The statement on corporate governance can be found in the Corporate Governance Report on page 10 of these Financial
Statements. The Corporate Governance Report forms part of this directors report and is incorporated into it by cross reference.
Going Concern
The Directors have a reasonable expectation that the Group and Company have adequate resources to continue in
operational existence for the foreseeable future and, therefore, continue to adopt the going concern basis in preparing the
Annual Report and Financial Statements. Further details on their assumptions and their conclusion thereon are included in
the statement on going concern included in Note 2.3 to the Financial Statements.
Directors’ and Officers’ Indemnity Insurance
The Group has made qualifying third-party indemnity provisions for the benefit of its Directors and Officers. These were made
during the period and remain in force at the date of this report.
Events after the reporting period
There were no events after the reporting date.
Future Developments
The workplan for 2019 involves a considerable increase in ground-holding to 32 exploration licences (currently 7) with a total
area of approximately 243 km2 (currently 32.29 km2). Compilation of historical data into GIS systems, remote sensing satellite
work, field mapping, geochemistry and geophysics will all aid the identification and ranking of drill targets for 2019.
Brexit
In March 2017, the UK officially triggered Article 50 and notified the EU of its intention of leaving the EU following the UK’s
June 2016 referendum vote to leave the EU (commonly known as Brexit). The terms of the UKs withdrawal requires ratification
and agreement with the EU which has not yet been reached. The UK and EU continue to negotiate the exit of the UK from
the EU until which time the impact to the Group and Company remains uncertain.
Financial instruments
Details of the Group’s financial instruments are disclosed in note 18 to these Financial Statements.
Provision of Information to Auditor
So far as each of the Directors is aware at the time this report is approved:
•
•
there is no relevant audit information of which the Company's auditor is unaware; and
the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit
information and to establish that the auditor is aware of that information.
Auditor
PKF Littlejohn LLP has signified its willingness to continue in office as auditor. A resolution to reappoint PKF Littlejohn LLP
as auditor will be proposed at the Annual General Meeting.
This report was approved by the Board on 29 April 2019 and signed on its behalf.
Martin French
Executive Chairman
8
CHESTERFIELD RESOURCES PLC
DIRECTORS RESPONSIBILITIES STATEMENT
The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare Financial Statements for each financial year. Under that law the Directors
have elected to prepare the Group and Company Financial Statements in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union. Under company law the Directors must not approve the Financial
Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company, and
of the profit or loss of the Group and Company for that period. In preparing these Financial Statements, the Directors are
required to:
select suitable accounting policies and then apply them consistently;
•
• make judgments and accounting estimates that are reasonable and prudent;
•
state whether applicable IFRSs as adopted by the European Union have been followed, subject to any material
departures disclosed and explained in the Financial Statements; and
prepare the Financial Statements on a going concern basis unless it is inappropriate to presume the Group and
Company will continue in business
•
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group Company, and
enable them to ensure that the Financial Statements and the Directors Remuneration Report comply with the Companies Act
2006 and, as regards the group Financial Statements, Article 4 of the IAS Regulation. They are also responsible for
safeguarding the assets of the Group and Company, and hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
They are also responsible to make a statement that they consider that the Annual Report and Financial Statements, taken as
a whole, is fair, balanced, and understandable and provides the information necessary for the shareholders to assess the
Group and Company’s position and performance, business model and strategy.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the
Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of the Financial
Statements may differ from legislation in other jurisdictions.
Directors Responsibility pursuant to DTR4
Each of the Directors whose names and functions are listed on page 4 confirm that, to the best of their knowledge and belief:
•
•
The Financial Statements prepared in accordance with IFRS as adopted by the European Union, give a true
and fair view of the assets, liabilities, financial position and loss of the Group and Company; and
the Annual Report and Financial Statements, including the Business review, includes a fair review of the
development and performance of the business and the position of the Group and Company, together with a
description of the principal risks and uncertainties that they face.
On behalf of the Board
Martin French
Executive Chairman
29 April 2019
9
CHESTERFIELD RESOURCES PLC
CORPORATE GOVERNANCE REPORT
Principles of corporate governance
The Group is not required to comply with the UK Code of Corporate Governance. However, the Directors recognise the
importance of sound corporate governance and the Board intends, to the extent it considers appropriate in light of the Group’s
size, stage of development and resources, to implement certain corporate governance recommendations.
The Directors have responsibility for the overall corporate governance of the Group and recognise the need for the highest
standards of behaviour and accountability. The Board has a wide range of experience directly related to the Group and its
activities and its structure ensures that no one individual or group dominates the decision making process.
Board structure
During the year the Board comprised the executive Chairman and three non-executive Directors. Their details appear on
page 4. The Board is responsible to shareholders for the proper management of the Group. The Directors’ responsibilities
statement in respect of the Financial Statements is set out on page 9. The non-executive Directors have a particular
responsibility to ensure that the strategies proposed by the executive Director are fully considered. To enable the Board to
discharge its duties, all directors have full and timely access to all relevant information and there is a procedure for all
Directors, in furtherance of their duties, to take independent professional advice, if necessary, at the expense of the Group.
The Board is responsible for overall Group strategy, approval of major capital expenditure projects and consideration of
significant financing matters. The following Board committees, which have written terms of reference, deal with specific
aspects of the Group’s affairs:
Nomination Committee
In light of the size of the Board, the Directors do not consider it necessary to establish a Nomination Committee. However,
this will be kept under regular review.
Audit Committee
The Audit Committee, comprising David Cliff and Peter Damouni, reviews the Group's annual and interim Financial
Statements before submission to the Board for approval. The Committee also reviews regular reports from management and
the external auditor on accounting and internal control matters. Where appropriate, the Committee monitors the progress of
action taken in relation to such matters. The Committee also recommends the appointment, and reviews the fees, of the
external auditor. The Committee keeps under review the cost effectiveness and the independence and objectivity of the
external auditor. A formal statement of independence is received from the external auditor each year.
Remuneration Committee
The Remuneration Committee, comprising Peter Damouni and David Cliff, is responsible for reviewing the performance of
the Board and for setting the scale and structure of remuneration, determining the payment of bonuses, considering the grant
of options under any share option scheme and, in particular, the price per share and the application of performance standards
which may apply to any such grant, paying due regard to the interests of shareholders as a whole and the performance of the
Group.
Board Meetings
The Board meets regularly throughout the year. The Board is responsible for formulating, reviewing and approving the Group's
strategy, financial activities and operating performance.
Date
Type
Present
27 February 2018
Board Meeting
Christopher Hall, Peter Damouni, David Cliff, Derek Crowhurst
23 April 2018
Board Meeting
Christopher Hall, Peter Damouni, David Cliff, Derek Crowhurst
8 June 2018
Board Meeting
Christopher Hall, Peter Damouni, David Cliff, Derek Crowhurst
18 June 2018
Board Meeting
Christopher Hall, Peter Damouni, David Cliff, Derek Crowhurst, David Hall
25 June 2018
Board Meeting
Christopher Hall, Peter Damouni, David Cliff, Derek Crowhurst, David Hall
25 June 2018
Board Meeting
Christopher Hall, Peter Damouni, David Cliff, Derek Crowhurst, David Hall
17 July 2018
Board Meeting
Peter Damouni, Derek Crowhurst, David Cliff, David Hall
4 September 2018
Board Meeting
Martin French, Peter Damouni, David Cliff
10 October 2018
Board Meeting
Martin French, Peter Damouni, David Cliff, David Hall
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CHESTERFIELD RESOURCES PLC
CORPORATE GOVERNANCE REPORT
Internal Controls
The Directors acknowledge their responsibility for the Group’s systems of internal controls and for reviewing their
effectiveness. These internal controls are designed to safeguard the assets of the Group and to ensure the reliability of
financial information for both internal use and external publication. Whilst they are aware that no system can provide absolute
assurance against material misstatement or loss, in light of the increased activity and further development of the Group,
continuing reviews of internal controls will be undertaken to ensure that they are adequate and effective. The key elements
of the control system in operation are:
•
•
the Board meets regularly with a formal schedule of matters reserved to it for decision;
there are established procedures for planning, approval and monitoring of capital expenditure and information
systems for monitoring the Group’s financial performance against approved budgets and forecasts;
• UK financial operations are closely monitored by members of the Board to enable them to assess risk and address
the adequacy of measures in place for its monitoring and control. The Cyprus operations are closely supervised by
the UK based executives through daily, weekly and monthly reports from the directors key management in Cyprus.
Risk Management
The Board considers risk assessment to be important in achieving its strategic objectives. Project milestones and timelines
are regularly reviewed.
The Bribery Act 2010
The Board is committed to acting ethically, fairly and with integrity in all its endeavours and compliance of the code is closely
monitored.
Securities Trading
The Group has adopted a share dealing code for dealings in shares by Directors and senior employees which is appropriate
for a quoted company. The Directors will take all reasonable steps to ensure compliance by the Group’s applicable employees.
Relations with Shareholders
The Board is committed to providing effective communication with the Shareholders of the Group. Significant developments
are disseminated through stock exchange announcements and regular updates of the Group’s website. The Board views the
AGM as a forum for communication between the Group and its shareholders and encourages their participation in its agenda.
On behalf of the Board
Martin French
Executive Chairman
29 April 2019
11
CHESTERFIELD RESOURCES PLC
DIRECTORS’ REMUNERATION REPORT
The Company has an established Remuneration Committee. The Committee reviews the scale and structure of the Directors’
fees, taking into account the interests of shareholders and the performance of the Group and Directors.
The Company’s auditors, PKF Littlejohn LLP are required by law to audit certain disclosures and where disclosures have
been audited they are indicated as such.
Statement of Chesterfield Resources Plc’s policy on Directors’ remuneration by the Chairman of the Remuneration
Committee
As Chairman of the Remuneration Committee I am pleased to introduce our Directors’ Remuneration Report. One of the
Remuneration Committee’s aims is to provide clear, transparent remuneration reporting for our shareholders which adheres
to the best practice corporate governance principles that are required for listed organisations.
The Directors’ Remuneration Policy, which is set out on pages 11 to 13 of this report, will be submitted to shareholders for
approval at our Annual General Meeting on 5 June 2019.
A key focus of the Directors’ Remuneration Policy is to align the interests of the Directors to the long-term interests of the
shareholders and aims to support a high performance culture with appropriate reward for superior performance, without
creating incentives that will encourage excessive risk taking or unsustainable company performance. This is underpinned
through the implementation and operation of incentive plans.
Key Activities of the Remuneration Committee
The key activities of the Remuneration Committee are:
•
•
to determine and agree with the Board the framework or broad policy for the remuneration of the Company's
chairman, chief executive, the executive directors, the company secretary and such other members of the executive
management as it is designated to consider;
in determining such policy, take into account all factors which it deems necessary including relevant legal and
regulatory requirements. The objective of such policy shall be to ensure that members of the executive management
of the Company are provided with appropriate incentives to encourage enhanced performance and are, in a fair and
responsible manner, rewarded for their individual contributions to the success of the Company;
recommend and monitor the level and structure of remuneration for senior management;
•
• when setting remuneration policy for directors, review and have regard to the remuneration trends across the
Company, and review the on-going appropriateness and relevance of the remuneration policy;
obtain reliable, up-to-date information about remuneration in other companies. To help it fulfil its obligations the
Committee shall have full authority to appoint remuneration consultants and to commission or purchase any reports,
surveys or information which it deems necessary, within any budgetary restraints imposed by the Board;
be exclusively responsible for establishing the selection criteria, selecting, appointing and setting the terms of
reference for any remuneration consultants who advise the Committee;
approve the design of, and determine targets for, any performance related pay schemes operated by the Company
and approve the total annual payments made under such schemes;
review the design of all share incentive plans for approval by the Board and shareholders. For any such plans,
determine each year whether awards will be made, and if so, the overall amount of such awards, the individual
awards to executive directors, company secretary and other designated senior executives and the performance
targets to be used;
ensure that contractual terms on termination, and any payments made, are fair to the individual, and the Company,
that failure is not rewarded and that the duty to mitigate loss is fully recognised; and
oversee any major changes in employee benefits structures throughout the Company.
•
•
•
•
•
•
Members
The Remuneration Committee comprises the following independent Non-Executive Directors:
Name
Peter Damouni
David Cliff
Date of appointment
Position
Chairman
Member
3 July 2018
3 July 2018
12
CHESTERFIELD RESOURCES PLC
DIRECTORS’ REMUNERATION REPORT
Remuneration Components
The Company remunerates directors in line with best market practice in the industry in which it operates. The components of
Director remuneration that are considered by the Board for the remuneration of directors in future years are likely to consist
of:
• Base salaries
• Pension and other benefits
• Annual bonus
• Share Incentive arrangements
Given the early stage of development of the Company, the Remuneration Committee do not consider it appropriate to have
annual bonuses, share incentive arrangements or pensions and other benefits. The Remuneration Committee also do not
consider it necessary to have maximum amounts of each remuneration component.
The Executive Director has entered into a service agreement with the Company and the Non-Executive Directors have entered
into letters of appointment with the Company.
All such contracts impose certain restrictions as regards the use of confidential information and intellectual property and the
Executive Director’s service contract imposes restrictive covenants which apply following the termination of the agreement.
Other matters
The Company has established a workplace pension scheme but it does not presently have any employees qualifying under
the auto-enrolment pension rules who have not opted out of the scheme. It does not currently pay pension amounts in relation
to Directors’ remuneration. The Company has not paid out any excess retirement benefits to any Directors or past Directors.
The Company has not paid any compensation to past Directors. The Company has also issued options to Directors as part
of a long-term incentive scheme.
Recruitment Policy
Base salary levels will take into account market data for the relevant role, internal relativities, their individual experience and
their current base salary.
For external and internal appointments, the Board may agree that the Company will meet certain relocation and/or incidental
expenses as appropriate.
Payment for loss of Office
The Committee will honour the Executive Director’s contractual entitlements. Service contracts do not contain liquidated
damages clauses. If a contract is to be terminated, the Committee will determine such mitigation as it considers fair and
reasonable in each case. There is no agreement between the Company and its Executive Director or employees, providing
for compensation for loss of office or employment that occurs because of a takeover bid.
The Committee reserves the right to make additional payments where such payments are made in good faith in discharge of
an existing legal obligation (or by way of damages for breach of such an obligation); or by way of settlement or compromise
of any claim arising in connection with the termination of an Executive Director’s office or employment.
Service Agreements and letters of appointment
The Executive Director’s service agreement is not for a fixed term and may be terminated by the Company or the Executive
Director by giving 3 months’ notice.
Name
Martin French
Date of service
agreement
27 July 2018
Notice period by
Company (months)
3 months
Notice period by
Director (months)
3 months
The terms of the all Directors’ appointments are subject to their re-election by the Company’s shareholders at any Annual
General Meeting at which the all Directors stand for re-election.
13
CHESTERFIELD RESOURCES PLC
DIRECTORS’ REMUNERATION REPORT
The Non-Executive Directors of the Company do not have service contracts, but are appointed by letters of appointment.
Each Non-Executive Director’s term of office runs for an initial period of three years unless terminated earlier upon written
notice or upon their resignations.
The details of each Non-Executive Director’s current term are set out below:
Name
David Hall
David Cliff
Peter Damouni
Date of service
agreement
28 June 2018
16 March 2017
16 March 2017
Current
term
(years)
3 years
3 years
3 years
Notice
period by
Company
(months)
3 months
3 months
3 months
Notice
period by
Director
(months)
3 months
3 months
3 months
Executive Director’s remuneration - Audited
The table below sets out the remuneration received by the Executive Director for the years ended 31 December 2018 and
2017:
Executive Director
Martin French
Total
There was no executive Director appointed in 2017.
Non-Executive Directors’ remuneration - Audited
Basic salary
2018
£
11,250
11,250
Total
2018
£
11,595
11,595
The table below sets out the remuneration received by each Non-Executive Director during the years ended 31 December
2018 and 2017.
David Hall
David Cliff
Peter Damouni
Christopher Hall
Derek Crowhurst (1)
Total
Basic salary
2018
£
12,000
33,000
33,000
30,000
31,000
139,000
Consultancy fees
2018
£
-
-
-
-
10,000
10,000
Total
2018
£
12,000
33,000
33,000
30,000
41,000
149,000
(1 )The Group paid fees totalling £10,000 for services supplied by Crowhurst Consultants Limited, of which Derek Crowhurst
is a Director.
David Cliff
Peter Damouni
Christopher Hall
Derek Crowhurst
Total
Basic salary
2017
£
4,000
4,000
4,000
4,000
16,000
Total
2017
£
4,000
4,000
4,000
4,000
16,000
14
CHESTERFIELD RESOURCES PLC
DIRECTORS’ REMUNERATION REPORT
Relative importance of spend on pay
The table below illustrates the year-on-year change in total remuneration compared to distributions to shareholders and loss
before tax for the financial periods ended 31 December 2018 and 2017:
Year ended 31 December 2018
Period ended 31 December 2017
Distributions to
shareholders
£
nil
nil
Total employee pay
£
158,932
16,000
Operational cash
outflow
£
708,110
100,049
Total employee pay includes wages and salaries, social security costs and pension cost for employees in continuing
operations. Further details on Employee remuneration are provided in note 7.
Operational cash outflow has been shown in the table above as cash flow monitoring and forecasting is an important
consideration for the Remuneration Committee and Board of Directors when determining cash based remuneration for
directors and employees.
Historical Share Price Performance Comparison
The table below compares the share price performance (based on a notional investment of £100) of Chesterfield Resources
plc against the FTSE SmallCap for the period August 2017 to December 2018 calculated on a month end spot basis. The
FTSE SmallCap is been chosen to provide a wider market comparator constituting companies of an appropriate size:
31 December 2018
11 August 2017
FTSE Small Cap
£
Chesterfield Resources plc
£
90.97
100
84.09
100
Chesterfield Resources plc was listed in August 2017 and therefore no historical share price data exists prior to this period,
there was also no data between 2 November 2017 and 3 July 2018 pending completion of a transaction. It is for these reasons
that the historical investment performance is not reflective of the current Group.
Consideration of shareholder views
The Board considers shareholder feedback received and guidance from shareholder bodies. This feedback, plus any
additional feedback received from time to time, is considered as part of the Company’s annual policy on remuneration.
Approved on behalf of the Board of Directors.
………………………
Peter Damouni
Director & Remuneration Committee Chairman
29 April 2019
15
CHESTERFIELD RESOURCES PLC
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF CHESTERFIELD RESOURCES PLC
Opinion
We have audited the Financial Statements of Chesterfield Resources Plc (the ‘Company’) and its subsidiaries (the ‘Group’)
for the year ended 31 December 2018 which comprise: the Group Statement of Comprehensive Income, the Group and
Company Statements of Financial Position, the Group and Company Statements of Changes in Equity, the Group and
Company Statements of Cash Flows and notes to the Financial Statements, including a summary of significant accounting
policies. The financial reporting framework that has been applied in their preparation is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European Union and as regards the Company Financial
Statements, as applied in accordance with the provisions of the Companies Act 2006.
In our opinion:
•
•
•
•
the Financial Statements give a true and fair view of the state of the Group’s and of the Company’s affairs as at 31
December 2018 and of the Group’s and Company’s loss for the year then ended;
the Group Financial Statements have been properly prepared in accordance with IFRSs as adopted by the European
Union;
the Company Financial Statements have been properly prepared in accordance with IFRSs as adopted by the
European Union and as applied in accordance with the provisions of the Companies Act 2006; and
the Financial Statements have been prepared in accordance with the requirements of the Companies Act 2006; and,
as regards the Group Financial Statements, Article 4 of the IAS Regulation.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Statements section of our report. We are independent of the Group and Company in accordance with the ethical requirements
that are relevant to our audit of the Financial Statements in the UK, including the FRC’s Ethical Standard as applied to listed
public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you
where:
•
•
the directors’ use of the going concern basis of accounting in the preparation of the Financial Statements is not
appropriate; or
the directors have not disclosed in the Financial Statements any identified material uncertainties that may cast
significant doubt about the Group’s or the Company’s ability to continue to adopt the going concern basis of
accounting for a period of at least twelve months from the date when the Financial Statements are authorised for
issue.
Our application of materiality
The scope of our audit was influenced by our application of materiality. The quantitative and qualitative thresholds for
materiality determine the scope of our audit and the nature, timing and extent of our audit procedures. The materiality applied
to the Group Financial Statements was £60,000, based on 2% of gross assets. The performance materiality was £36,000.
The materiality applied to the Parent company Financial Statements was £36,000, based on 5% of the loss before tax. The
performance materiality was £21,600. For each component in the scope of our Group audit, we allocated a materiality that
was less than our overall Group materiality.
An overview of the scope of our audit
As part of designing our audit, we determined materiality and assessed the risk of material misstatement in the Financial
Statements. In particular, we looked at areas involving significant accounting estimates and judgement by the directors and
considered future events that are inherently uncertain. We also addressed the risk of management override of internal
controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material
misstatement due to fraud.
Whilst Chesterfield Resources plc is a company listed on the Standard segment of the London Stock Exchange, the Group’s
operations principally comprise an exploration project located in Cyprus. We assessed the significant components of the
16
CHESTERFIELD RESOURCES PLC
INDEPENDENT AUDITOR’S REPORT
Group to be the exploration project in Cyprus and the corporate accounting function. We performed a full scope audit on the
corporate accounting function and consolidation.
A PKF member firm performed a full scope audit of the exploration project in Cyprus, under our direction and supervision as
group auditors under ISA 600. This involved the issue of detailed group reporting instructions and we performed a review of
the component auditor working papers. The Senior Statutory Auditor interacted regularly with the component audit team
during all stages of the audit and was responsible for the scope and direction of the audit process. This, in conjunction with
additional procedures performed at a consolidation level, gave us appropriate evidence for our opinion of the Group and
Company Financial Statements.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Financial
Statements of the current period and include the most significant assessed risks of material misstatement (whether or not due
to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources
in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of
the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters.
Key Audit Matter
How the scope of our audit responded to the key
audit matter
Carrying value and assessment of impairment of
intangible exploration and evaluation assets (refer
note 12)
reported
intangible assets of
The Group has
£1,156,429 in its Statement of Financial Position as at
31 December 2018 which comprise exploration and
evaluation assets. The
value and
recoverability of these intangible assets are tested
annually for impairment. The estimate recoverable
amount of this balance is subjective due to the
inherent uncertainty involved in the assessment of
early stage exploration projects.
carrying
We tested the Group’s exploration licences to confirm
good title and standing, including the likelihood of
renewal on future expiry.
the
reviewed and evaluated
We
impairment
assessment prepared by management in relation to
the Cyprus project. Our procedures included an
assessment of
the early stage exploration and
evaluation project with reference to the criteria listed
within IFRS 6, to include whether:
•
•
exploration and evaluation work to date indicates
that
to be
recovered from further development or sale; and
the carrying amount
is unlikely
substantive expenditure on further exploration and
evaluation is not budgeted or planned.
Other information
The other information comprises the information included in the annual report, other than the Financial Statements and our
auditor’s report thereon. The directors are responsible for the other information. Our opinion on the Group and Company
Financial Statements does not cover the other information and, except to the extent otherwise explicitly stated in our report,
we do not express any form of assurance conclusion thereon. In connection with our audit of the Financial Statements, our
responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent
with the Financial Statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a
material misstatement in the Financial Statements or a material misstatement of the other information. If, based on the work
we have performed, we conclude that there is a material misstatement of this other information, we are required to report that
fact.
We have nothing to report in this regard.
17
CHESTERFIELD RESOURCES PLC
INDEPENDENT AUDITOR’S REPORT
Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the directors’ report for the financial year for which the Financial
Statements are prepared is consistent with the Financial Statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the Company and their environment obtained in the course
of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report
to you if, in our opinion:
•
•
adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been
received from branches not visited by us; or
the Company Financial Statements and the part of the directors’ remuneration report to be audited are not in
agreement with the accounting records and returns; or
•
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the
Group and Company Financial Statements and for being satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the preparation of Financial Statements that are free from material
misstatement, whether due to fraud or error.
In preparing the Group and Company Financial Statements, the directors are responsible for assessing the Group’s and the
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or the Company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the 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. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of
these Financial Statements.
A further description of our responsibilities for the audit of the Financial Statements is located on the Financial Reporting
Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Other matters which we are required to address
We were appointed by the Board of Directors on 22 November 2018 to audit the Financial Statements for the year ended 31
December 2018. Our total uninterrupted period of engagement is 1 year, covering the year ended 31 December 2018.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the Company and we
remain independent of the Group and the Company in conducting our audit.
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the Financial
Statements from our sector experience and through discussions with the Directors. We considered the extent of compliance
with those laws and regulations as part of our procedures on the related Financial Statement items. We communicated
identified laws and regulations throughout our audit team and remained alert to any indications of non-compliance throughout
the audit. As with any audit, there remained a higher risk of non-detection irregularities, as these may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal controls.
Our audit opinion is consistent with the additional report to the audit committee.
18
CHESTERFIELD RESOURCES PLC
INDEPENDENT AUDITOR’S REPORT
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are
required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone, other than the company and the company's members as a body, for our audit
work, for this report, or for the opinions we have formed.
David Thompson (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP
Statutory Auditor
29 April 2019
1 Westferry Circus
Canary Wharf
London E14 4HD
19
CHESTERFIELD RESOURCES PLC
GROUP STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2018
Continuing operations
Administrative expenses
Operating Loss
Loss before taxation
Income tax
Loss for the Period attributable to owners of the parent
Basic and Diluted Earnings Per Share attributable to owners of the
parent (expressed in pence per share)
Loss for the period
Other Comprehensive Income:
Items that may be subsequently reclassified to profit or loss
Currency translation differences
Other comprehensive income for the period, net of tax
Group*
31 December
2018
31 December
2017
£
£
(689,367)
(111,012)
Note
6
(689,367)
(111,012)
(689,367)
(111,012)
-
-
(689,367)
(111,012)
(1.524)
(1.01)
8
9
31 December
2018
31 December
2017
£
£
(689,367)
(111,012)
6,181
(6,181)
-
-
Total Comprehensive Income attributable to owners of the parent
(683,186)
(111,012)
* The comparative shown for the Group is that of the Company which is explained further in note 1 to these financial
statements
The Notes on pages 25 to 42 form part of these Financial Statements.
20
CHESTERFIELD RESOURCES PLC
STATEMENTS OF FINANCIAL POSITION
As at 31 December 2018
Company number: 10545738
Group*
Company
31 December
2018
31 December
2017
31 December
2018
31 December
2017
Non-Current Assets
Property, plant and equipment
Intangible assets
Investments in subsidiaries
Current Assets
Trade and other receivables
Cash and cash equivalents
11
12
13
14
15
Note
£
13,891
1,156,429
-
1,170,320
£
-
-
-
-
£
-
-
1,100,837
1,100,837
£
-
-
-
-
77,067
1,885,726
44,683
1,184,424
45,871
1,862,997
44,683
1,184,424
1,962,793
1,229,107
1,908,868
1,229,107
Total Assets
3,133,113
1,229,107
3,009,705
1,229,107
Non-Current Liabilities
Deferred tax liabilities
Current Liabilities
16
(127,450)
(127,450)
-
-
-
-
-
-
Trade and other payables
17
(89,138)
(51,286)
(76,078)
(51,286)
Total Liabilities
(216,588)
(51,286)
(76,078)
(51,286)
Net Assets
2,916,525
1,177,821
2,933,627
1,177,821
Equity attributable to owners of the Parent
Share capital
Share premium
Other reserves
Retained losses
Total Equity
19
19
159,933
3,534,597
22,374
(800,379)
126,600
1,157,873
4,360
(111,012)
159,933
3,534,597
16,193
(777,096)
126,600
1,157,873
4,360
(111,012)
2,916,525
1,177,821
2,933,627
1,177,821
* The comparative shown for the Group is that of the Company which is explained further in note 1 to these financial statements.
The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the Parent
Company Statement of Comprehensive Income. The loss for the Parent Company for the year was £666,084 (2017:
£111,012).
The Financial Statements were approved and authorised for issue by the Board on 29 April 2019 and were signed on its
behalf by:
Martin French
Executive Chairman
The Notes on pages 25 to 42 form part of these Financial Statements.
21
CHESTERFIELD RESOURCES PLC
GROUP STATEMENT OF CHANGES IN EQUITY
As at 31 December 2018
Company number: 10545738
Attributable to owners of the Parent
Share
capital
Share premium
Other
reserves
Retained
losses
Note
Balance on Incorporation on 4
January 2017
Loss for the period
Other comprehensive income
for the period
Items that may be subsequently
reclassified to profit or loss
Currency translation differences
Total comprehensive income for
the period
£
-
-
-
-
Proceeds from share issues
Issue costs
Share based payments
9
9
20
126,600
-
-
£
-
-
-
-
1,274,000
(116,127)
£
-
-
-
-
-
-
-
4,360
£
-
Total
£
-
(111,012)
(111,012)
-
-
(111,012)
(111,012)
-
-
-
-
1,400,600
(116,127)
4,360
1,288,833
Balance as at 1 January 2018
126,600
1,157,873
4,360
(111,012)
1,177,821
126,600
1,157,873
4,360
126,600
1,157,873
4,360
(111,012)
1,177,821
-
-
-
-
-
-
-
(689,367)
(689,367)
6,181
-
6,181
6,181
(689,367)
(683,186)
9
19
20
10
26,666
-
-
1,973,334
(89,943)
-
-
-
11,833
6,667
493,333
-
-
-
-
-
-
2,000,000
(89,943)
11,833
500,000
2,421,890
(800,379)
2,916,525
Balance as at 31 December 2018
159,933
3,534,597
33,333
2,376,724
11,833
22,374
* The comparative shown for the Group is that of the Company which is explained further in note 1 to these financial
statements
Share capital represents the nominal value of ordinary and deferred shares issued.
Share premium represents the amounts subscribed for share capital in excess of the nominal value of the shares issued, net
of cost of issue.
Other reserves represents the share option reserve and the foreign currency translation reserve. The share option reserve
represents the fair value of the share options outstanding and the foreign currency translation reserve represents the
accumulated foreign currency translation differences upon converting the Group’s results into the presentational currency.
Retained losses comprise the Group’s accumulative gains and losses recognised in the statement of comprehensive income.
The Notes on pages 25 to 42 form part of these Financial Statements.
22
Total transactions with owners,
recognised directly in equity
Balance as at 31 December
2017*
Loss for the period
Other comprehensive income
for the period
Items that may be subsequently
reclassified to profit or loss
Currency translation differences
Total comprehensive income for
the period
Proceeds from share issues
Issue costs
Share based payment
Shares issued on business
combination
Total transactions with owners,
recognised directly in equity
CHESTERFIELD RESOURCES PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2018
Attributable to equity shareholders
Share
capital
Share
premium
Other
reserves
Retained
losses
Total equity
Note
£
-
-
-
18
18
20
126,600
-
-
£
-
-
-
1,274,000
(116,127)
£
-
-
-
-
-
-
4,360
126,600
1,157,873
4,360
£
-
£
-
(111,012)
(111,012)
(111,012)
(111,012)
-
-
-
-
1,400,600
(116,127)
4,360
1,288,833
Balance on Incorporation on 4
January 2017
Loss for the period
Total comprehensive income for the
period
Proceeds from share issues
Issue costs
Share based payments
Total transactions with owners,
recognised directly in equity
Balance as at 31 December 2017
126,600
1,157,873
4,360
(111,012)
1,177,821
Balance as at 1 January 2018
126,600
1,157,873
4,360
(111,012)
1,177,821
Loss for the period
Total comprehensive income for the
period
Proceeds from share issues
Issue costs
Share based payments
Shares issued on business combination
Total transactions with owners,
recognised directly in equity
18
18
20
10
-
-
-
-
26,666
1,973,334
-
-
(89,943)
-
11,833
6,667
493,333
-
33,333
2,376,724
11,833
-
-
-
-
(666,084)
(666,084)
(666,084)
(666,084)
-
-
-
-
-
2,000,000
(89,943)
11,833
500,000
2,421,890
Balance as at 31 December 2018
159,933
3,534,597
16,193
(777,096)
2,933,627
The Notes on pages 25 to 42 form part of these Financial Statements.
23
CHESTERFIELD RESOURCES PLC
STATEMENTS OF CASH FLOWS
For the year ended 31 December 2018
Group*
Company
Year ended
Period ended
31 December
2018
31 December
2017
Year ended
31
December
2018
Period ended
31 December
2017
Note
£
£
£
£
(689,367)
(111,012)
(666,084)
(111,012)
11
20
2,864
11,833
-
6,158
17,350
(56,946)
-
4,360
-
-
(44,683)
51,286
-
11,833
(5,374)
(7,120)
24,116
4,859
-
4,360
-
-
(44,683)
51,286
Cash flows from operating activities
Loss before income tax
Adjustments for:
Depreciation and amortisation
Share options expense
Intercompany charges
Foreign exchange
(Increase)/Decrease in trade and receivables
Increase/(Decrease) in trade and payables
Net cash used in operating activities
(708,108)
(100,049)
(637,770)
(100,049)
Cash flows from investing activities
Cash acquired upon acquisition
Interest received
Purchase of property plant and equipment
Loans granted to subsidiary undertakings
Exploration and evaluation activities
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Transaction costs of share issue
1,744
-
(16,755)
-
(485,636)
(500,647)
-
-
-
-
-
-
-
(11,641)
-
(582,071)
-
(593,712)
-
-
-
-
-
-
2,000,000
1,400,600
2,000,000
1,400,600
(89,943)
(116,127)
(89,943)
(116,127)
11
12
18
18
Net cash generated from financing activities
1,910,057
1,284,473
1,910,057
1,284,473
Net increase in cash and cash equivalents
701,302
1,184,424
678,575
1,184,424
Cash and cash equivalents at beginning of
period
Exchange gain on cash and cash equivalents
1,184,424
-
-
-
1,184,424
-
-
-
Cash and cash equivalents at end of period
15
1,885,726
1,184,424
1,862,999
1,184,424
* The comparative shown for the Group is that of the Company which is explained further in note 1 to these financial statements
The Notes on pages 25 to 42 form part of these Financial Statements.
24
CHESTERFIELD RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2018
1. General information
The principal activity of Chesterfield Resources plc (the ‘Company’) and its subsidiaries (together the ‘Group’) is the
exploration and development of precious and base metals. The Company is a public limited Company whose shares were
admitted to the Standard listing segment of the Main market of the London Stock Exchange on 29 August 2017. The
Company is incorporated and domiciled in England.
The address of its registered office is 7-9 Swallow Street, London, W1B 4DE.
The Company acquired the entire share capital of CRC Chesterfield Resources (Cyprus) Limited on 3 July 2018 which the
Directors have treated as an asset acquisition as explained in note 10 to these financial statements. The Directors are required
to and have prepared Group financial statements which include the results of the acquired subsidiary from the year that the
acquisition took place. As the acquisition was not considered to meet the definition of a business combination under IFRS 3,
the Group Financial Statements are prepared as though the Company has acquired an asset and as such, the comparative
financial information for the Group financial statements is that of the Company.
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these Financial Information are set out below (‘Accounting
Policies’ or ‘Policies’). These Policies have been consistently applied to all the periods presented, unless otherwise stated.
2.1. Basis of preparation of Financial Statements
The Group and Company Financial Statements have been prepared in accordance with International Financial Reporting
Standards (‘IFRS’) and IFRS Interpretations Committee (‘IFRS IC’) as adopted by the European Union, the Companies Act
2006 that applies to companies reporting under IFRS and IFRS IC interpretations. The Group and Company Financial
Statements have also been prepared under the historical cost convention, except as modified for assets and liabilities
recognised at fair value on an asset acquisition.
The Financial Statements are presented in Pound Sterling rounded to the nearest pound.
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 Accounting Policies. The areas involving
a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Group and
Company Financial Statements are disclosed in Note 4.
a) Changes in accounting policies and disclosures
i)
New and amended standards adopted by the Group and Company
As of 1 January 2018, the Group and Company adopted IFRS 9, Financial Instruments (‘IFRS 9’), which replaced IAS 39,
Financial Instruments: Recognition and Measurement. IFRS 9 addresses the classification, measurement and recognition of
financial assets and liabilities. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary
measurement categories for financial assets: amortised cost, fair value through other comprehensive income (‘FVOCI’), and
25
CHESTERFIELD RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2018
fair value through the profit and loss statement (‘FVTPL’). The basis of classification depends on the entity’s business model
and the contractual cash flow characteristics of the entity’s business model and of the financial asset.
Investments in equity instruments are required to be measured at FVTPL with the irrevocable option at inception to present
changes in fair value in other comprehensive income.
There is now a new expected credit losses model that replaces the incurred loss impairment model previously used in IAS
39. The Company has no other financial assets (except those at amortised cost) and as a result there is no impact of the new
impairment requirements to the Financial Information.
From 1 January 2018, the Group and Company classifies its financial assets in the following measurement categories:
•
•
Those to be measured subsequently at fair value (either through other comprehensive income, or through profit or
loss), and
Those to be measured at amortised cost.
At initial recognition, the Group and Company measures a financial asset at its fair value plus, in the case of a financial asset
not at FVTPL, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of
financial assets are expensed and carried at FVTPL.
Financial Liabilities
The Group and Company reviewed the financial liabilities reported on its Statement of Financial Position and completed an
assessment between IAS 39 and IFRS 9 to identify any accounting changes. The financial liabilities subject to this review
were the trade and other payables. Based on this assessment of the classification and measurement model, impairment, and
interest expense, the accounting impact on financial liabilities was determined not to be material.
For financial liabilities there were no changes to classification and measurement.
The Company has applied IFRS 9 but there have been no adjustments required following adoption other than changes in
terminology.
Of the other IFRSs and IFRICs adopted, none have a material effect on the Group or Company Financial Statements.
ii)
New standards, amendments and interpretations in issue but not yet effective or not yet endorsed and not early
adopted
Standards, amendments and interpretations that are not yet effective and have not been early adopted are as follows:
Standard
IFRS 16
IFRS 9 (Amendments)
IAS 28 (Amendments)
2015-2017 Cycle
IFRS 3 (Amendments)
Impact on initial application
Leases
Prepayment features with negative
compensation
Long term interests in associates and joint ventures 1 January 2019
1 January 2019
Annual improvements to IFRS Standards
Not yet determined
Business combinations
Effective date
1 January 2019
1 January 2019
Of the other IFRSs and IFRICs, none are expected to have a material effect on the Group or Company Financial
Statements.
2.2. Basis of consolidation
The Group Financial Statements consolidate the Financial Statements of the Company and its subsidiaries made up to 31
December. Subsidiaries are entities over which the Group has control. Control is achieved when the Group is exposed, or
has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its
power over the investee.
Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the
Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and
circumstances in assessing whether it has power over an investee, including:
The contractual arrangement with the other vote holders of the investee;
•
• Rights arising from other contractual arrangements; and
The Group's voting rights and potential voting rights
•
26
CHESTERFIELD RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2018
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to
one or more of the three elements of control. Subsidiaries are fully consolidated from the date on which control is transferred
to the Group. They are deconsolidated from the date that control ceases. Assets, liabilities, income and expenses of a
subsidiary acquired or disposed of during the period are included in the Group Financial Statements from the date the Group
gains control until the date the Group ceases to control the subsidiary.
Investments in subsidiaries are accounted for at cost less impairment within the Company Financial Statements. Where
necessary, adjustments are made to the Financial Statements of subsidiaries to bring the accounting policies used in line with
those used by other members of the Group. All significant intercompany transactions and balances between Group
enterprises are eliminated on consolidation.
2.3. Going concern
The Group’s business activities together with the factors likely to affect its future development, performance and position are
set out in the Chairman’s Report on pages 2-3. In addition, Note 3 to the Group Financial Statements includes the Group’s
objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial
instruments and its exposure to market, credit and liquidity risk.
The Group and Company Financial Statements have been prepared on a going concern basis. Although the Group’s assets
are not generating revenues and an operating loss has been reported, the Directors are of the view that the Group has
sufficient funds to undertake its operating activities over the next 12 months from the date these Financial Statements are
approved including any additional payments required in relation to its current exploration projects. The Group has financial
resources which the Directors consider will be sufficient to fund the Group’s committed expenditure both operationally and on
various exploration projects for this time period. However, in order to complete other exploration work over the life of existing
projects and as additional projects are identified, additional funding will be required. The amount of funding cannot be forecast
with any certainty at the point of approval of these Financial Statements and the Group will be required to raise additional
funds either via an issue of equity or through the issuance of debt. The Directors are reasonably confident that funds will be
forthcoming if and when they are required. Should additional funding not be forthcoming the Directors have agreed, if
circumstances require, to defer payment of their fees until such time as adequate funding is received and if necessary scale
back exploration activity.
The Directors have a reasonable expectation that the Group and Company have adequate resources to continue in
operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in
preparing the Group and Company Financial Statements.
2.4. Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-
maker (CODM). The CODM, who is responsible for allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors that makes strategic decisions.
Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
2.5. Foreign currencies
(a) 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 operates (the ‘functional currency’). The functional currency of the UK parent
entity is Pound Sterling. The functional currency of the Cyprian subsidiary is Euros. The Financial Statements are
presented in Pounds Sterling which is the Group’s presentation currency.
(b) 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 such items are re-measured. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the Statement of Comprehensive Income.
(c) 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:
27
CHESTERFIELD RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2018
• assets and liabilities for each period end date presented are translated at the period-end closing rate;
•
income and expenses for each Income Statement are translated at average exchange rates (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 dates of the transactions); and
• all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of
monetary items receivable from foreign subsidiaries for which settlement is neither planned nor likely to occur in the
foreseeable future, are taken to other comprehensive income. When a foreign operation is sold, such exchange
differences are recognised in the Statement of Comprehensive Income as part of the gain or loss on sale.
2.6. Intangible assets
Exploration and evaluation assets
The Group recognises expenditure as exploration and evaluation assets when it determines that those assets will be
successful in finding specific mineral resources. Expenditure included in the initial measurement of exploration and evaluation
assets and which are classified as intangible assets relate to the acquisition of rights to explore, topographical, geological,
geochemical and geophysical studies, exploratory drilling, trenching, sampling and activities to evaluate the technical
feasibility and commercial viability of extracting a mineral resource. Capitalisation of pre-production expenditure ceases when
the mining property is capable of commercial production.
Exploration and evaluation assets are recorded and held at cost
Exploration and evaluation assets are not subject to amortisation, but are assessed annually for impairment. The assessment
is carried out by allocating exploration and evaluation assets to cash generating units (“CGU’s”), which are based on specific
projects or geographical areas. The CGU’s are then assessed for impairment using a variety of methods including those
specified in IFRS 6.
Whenever the exploration for and evaluation of mineral resources in cash generating units does not lead to the discovery of
commercially viable quantities of mineral resources and the Group has decided to discontinue such activities of that unit, the
associated expenditures are written off to the Statement of Comprehensive Income.
Exploration and evaluation assets recorded at fair-value on acquisition
Exploration assets which are acquired are recognised at fair value. When an acquisition of an entity whose only significant
assets are its exploration asset and/or rights to explore, the Directors consider that the fair value of the exploration assets is
equal to the consideration. Any excess of the consideration over the capitalised exploration asset is attributed to the fair value
of the exploration asset.
2.7. Investment in subsidiaries
Investments in Group undertakings are stated at cost, which is the fair value of the consideration paid, less any impairment
provision.
2.8. Property, plant and equipment
Property, Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses.
Depreciation is provided on all property, plant and equipment to write off the cost less estimated residual value of each asset
over its expected useful economic life on a straight line basis at the following annual rates:
Office Equipment – 10% straight line
Vehicles – 20% straight line
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be
measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged
to the Statement of Comprehensive Income during the financial period in which they are incurred.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount.
28
CHESTERFIELD RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2018
Gains and losses on disposal are determined by comparing the proceeds with the carrying amount and are recognised within
‘Other (losses)/gains’ in the Statement of Comprehensive Income.
2.9. Impairment of non-financial assets
Assets that have an indefinite useful life, for example, intangible assets not ready to use, are not subject to amortisation and
are tested annually for impairment. Property, plant and equipment is 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 to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels
for which there are separately identifiable cash flows (cash generating units). Non-financial assets that suffered impairment
are reviewed for possible reversal of the impairment at each reporting date.
2.10. Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, and subsequently measured at amortised cost, fair value through OCI, or
fair value through profit or loss.
The classification of financial assets at initial recognition that are debt instruments depends on the financial asset’s contractual
cash flow characteristics and the Group’s business model for managing them. 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.
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, 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.
The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate
cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the
financial assets, or both.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
•
•
•
•
Financial assets at amortised cost (debt instruments)
Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments)
Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon
derecognition (equity instruments)
Financial assets at fair value through profit or loss
Financial assets at amortised cost (debt instruments)
This category is the most relevant to the Group and Company. The Group and Company measures financial assets at
amortised cost if both of the following conditions are met:
•
•
The financial asset is held within a business model with the objective to hold financial assets in order to collect
contractual cash flows; and
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the effective interest rate (EIR) method and are subject
to impairment. Interest received is recognised as part of finance income in the statement of profit or loss and other
comprehensive income. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or
impaired. The Group’s financial assets at amortised cost include trade receivables (not subject to provisional pricing) and
other receivables.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily
derecognised when:
•
•
The rights to receive cash flows from the asset have expired; or
The Group and Company has transferred its rights to receive cash flows from the asset or has assumed an obligation
to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and
29
CHESTERFIELD RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2018
either (a) the Group and Company has transferred substantially all the risks and rewards of the asset, or (b) the
Group and Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has
transferred control of the asset.
Impairment of financial assets
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through
profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and
all the cash flows that the Group expects to receive, discounted at an approximation of the original EIR. The expected cash
flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual
terms.
The Group recognises an allowance for ECLs for all debt instruments not held at fair value through profit or loss. ECLs are
based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that
the Group expects to receive, discounted at an approximation of the original EIR. The expected cash flows will include cash
flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms. IFRS 9.5.5.1
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk
since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next
12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since
initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective
of the timing of the default (a lifetime ECL).
For trade receivables (not subject to provisional pricing) and other receivables due in less than 12 months, the Group applies
the simplified approach in calculating ECLs, as permitted by IFRS 9. Therefore, the Group does not track changes in credit
risk, but instead, recognises a loss allowance based on the financial asset’s lifetime ECL at each reporting date.
The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases,
the Group may also consider a financial asset to be in default when internal or external information indicates that the Group
is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by
the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows
and usually occurs when past due for more than one year and not subject to enforcement activity.
At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit impaired. A financial
asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the
financial asset have occurred.
2.11. Financial liabilities
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and
borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial
liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable
transaction costs. The Group’s financial liabilities include trade and other payables and loans.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities
designated upon initial recognition as at fair value through profit or loss. IFRS 9.4.2.1(a) Financial liabilities are classified as
held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative
financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as
defined by IFRS 9. Separated embedded derivatives are also classified as held for trading unless they are designated as
effective hedging instruments. Gains or losses on liabilities held for trading are recognised in the statement of profit or loss
and other comprehensive income.
Loans and borrowings and trade and other payables
After initial recognition, interest-bearing loans and borrowings and trade and other payables are subsequently measured at
amortised cost using the EIR method. Gains and losses are recognised in the statement of profit or loss and other
comprehensive income when the liabilities are derecognised, as well as through the EIR amortisation process.
30
CHESTERFIELD RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2018
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss and other
comprehensive income.
This category generally applies to trade and other payables.
Derecognition
A financial liability is derecognised when the associated obligation is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms
of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the
original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in profit
or loss and other comprehensive income.
Liabilities within the scope of IFRS 9 are classified as financial liabilities at fair value through profit and loss or other liabilities,
as appropriate.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
Financial liabilities included in trade and other payables are recognised initially at fair value and subsequently at amortised
cost.
2.12. Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand.
2.13. Share capital, share premium and deferred shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are
shown in equity, as a deduction, net of tax, from the proceeds provided there is sufficient premium available.
Deferred shares are classified as equity. Deferred shares have no rights to receive dividends, or to attend or vote at general
meetings of the Company and are only entitled to a return of capital after payment to holders of new ordinary shares of
£100,000 per each share held.
2.14. Share based payments
The Group operates a number of equity-settled, share-based schemes, under which the Group receives services from
employees or third party suppliers as consideration for equity instruments (options and warrants) of the Group. The fair value
of the third party suppliers’ services received in exchange for the grant of the options is recognised as an expense in the
Statement of Comprehensive Income or charged to equity depending on the nature of the service provided. The value of the
employee services received is expensed in the Statement of Comprehensive Income and its value is determined by reference
to the fair value of the options granted:
•
•
•
including any market performance conditions;
excluding the impact of any service and non-market performance vesting conditions (for example, profitability or sales
growth targets, or remaining 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).
The fair value of the share options and warrants are determined using the Black Scholes valuation model.
Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total
expense or charge is recognised over the vesting period, which is the period over which all of the specified vesting conditions
are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number of options that are
expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if
any, in the Statement of Comprehensive Income or equity as appropriate, with a corresponding adjustment to a separate
reserve in equity.
When the options are exercised, the Group 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.
31
CHESTERFIELD RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2018
2.15. Taxation
No current tax is yet payable in view of the losses to date.
Deferred tax is recognised for using the liability method in respect of temporary differences arising from differences between
the carrying amount of assets and liabilities in the Group Financial Statements and the corresponding tax bases used in the
computation of taxable profit. However, deferred tax liabilities are not recognised if they arise from the initial recognition of
goodwill; deferred 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.
In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets (including
those arising from investments in subsidiaries), are recognised to the extent that it is probable that taxable profits will be
available against which deductible temporary differences can be utilised.
Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiaries only
to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available
against which the temporary difference can be used.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in except where the Group is
able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the
foreseeable future.
Deferred tax 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 tax assets and liabilities relate to income taxes levied by the same taxation authority on
either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
Deferred tax is calculated at the tax rates (and laws) that have been enacted or substantively enacted by the statement of
financial position date and are expected to apply to the period when the deferred tax asset is realised or the deferred tax
liability is settled.
Deferred tax assets and liabilities are not discounted.
3. Financial risk management
3.1. Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (foreign currency risk, price risk and interest rate
risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the Group’s financial performance. None of these risks are
hedged.
Risk management is carried out by the London based management team under policies approved by the Board of Directors.
3.2. Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, to enable
the Group to continue its exploration and evaluation activities, and to maintain an optimal capital structure to reduce the cost
of capital. In order to maintain or adjust the capital structure, the Group may adjust the issue of shares or sell assets to reduce
debts.
At 31 December 2018 the Group had borrowings of £nil (2017: £nil) and defines capital based on the total equity of the Group.
The Group monitors its level of cash resources available against future planned exploration and evaluation activities and may
issue new shares in order to raise further funds from time to time.
Given the Group’s level of debt versus its cash at bank and cash equivalents, the gearing ratio is immaterial.
4. Critical accounting estimates and judgements
The preparation of the Financial Statements in conformity with IFRS requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the Financial Statements and the reported amount of expenses during the period. Actual results may vary from the
estimates used to produce these Financial Statements.
Estimates and judgements are regularly evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
Items subject to such 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 years, include but are not limited to:
32
CHESTERFIELD RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2018
Impairment of intangible assets – exploration and evaluation costs
Exploration and evaluation costs have a carrying value at 31 December 2018 of £1,156,429 (2017: nil). Such assets have an
indefinite useful life as the Group has a right to renew exploration licences and the asset is only amortised once extraction of
the resource commences. Management tests for impairment annually whether exploration projects have future economic
value in accordance with the accounting policy stated in Note 2.6. Each exploration project is subject to an annual review by
either a consultant or senior company geologist to determine if the exploration results returned during the period warrant
further exploration expenditure and have the potential to result in an economic discovery. This review takes into consideration
long term metal prices, anticipated resource volumes and supply and demand outlook. In the event that a project does not
represent an economic exploration target and results indicate there is no additional upside a decision will be made to
discontinue exploration; an impairment charge will then be recognised in the Statement of Comprehensive Income.
Share based payment transactions
The Group has made awards of options and warrants over its unissued share capital to certain Directors as part of their
remuneration package. The valuation of these options and warrants involves making a number of critical estimates relating
to price volatility, future dividend yields, expected life of the options and forfeiture rates. These assumptions have been
described in more detail in Note 20.
5. Segment Information
Management has determined the operating segments based on reports reviewed by the Board of Directors that are used to
make strategic decisions. During the period the Group had interests in two geographical segments; the United Kingdom, and
Cyprus. Activities in the UK are mainly administrative in nature whilst the activities in Cyprus relate to exploration and
evaluation work.
2018
Revenue
Administrative expenses
Loss before tax per reportable segment
Additions to PP&E
Additions to intangible asset
Reportable segment assets
Reportable segment liabilities
2017
Revenue
Administrative expenses
Loss before tax per reportable segment
Additions to PP&E
Additions to intangible asset
Reportable segment assets
Reportable segment liabilities
UK
£
-
(666,045)
(666,045)
-
-
1,903,497
(76,078)
UK
£
-
(111,012)
(111,012)
-
-
1,229,107
(51,286)
Total
£
-
(689,367)
(689,367)
13,891
1,156,429
3,125,388
(208,863)
Total
£
-
(111,012)
(111,012)
-
-
1,229,107
(51,286)
Cyprus
£
-
(23,322)
(23,322)
13,891
1,156,429
1,221,891
(132,785)
Cyprus
£
-
-
-
-
-
-
-
33
CHESTERFIELD RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2018
6. Expenses by nature
Directors’ fees
Stock exchange related costs (including public relations)
Auditor remuneration
Travel & subsistence
Professional & consultancy fees
Insurance
Depreciation
Share Option expense
Other expenses
Total administrative expenses
Group
31 December
2018
£
31 December
2017
£
142,946
46,984
31,175
48,664
374,936
3,809
2,864
11,833
26,156
689,367
16,000
11,087
11,000
-
61,577
-
-
4,360
6,988
111,012
Services provided by the Company’s auditor and its associates
During the period, the Group (including overseas subsidiaries) obtained the following services from the Company’s auditors
and its associates:
Group
31 December
31 December
2018
£
2017
£
Fees payable to the Company’s auditor and its associates for the audit of the Company
and Group Financial Statements
31,175
11,000
7. Directors' remuneration
Executive Director
Martin French (1)
Non-executive Directors
David Cliff
David Hall (2)
Peter Damouni
Chris Hall (3)
Derek Crowhurst (4)
(1) Martin French was appointed on 26 July 2018
(2) David Hall was appointed on 3 July 2018
(3) Derek Crowhurst resigned on 4 September 2018
(4) Chris Hall resigned on 26 July 2018
31 December 2018
Short-term
benefits
£
Total
£
11,250
11,250
33,000
12,000
33,000
30,000
31,000
33,000
12,000
33,000
30,000
31,000
150,250
150,250
Share options with a fair value of £8,682 were awarded to Directors during the year (2017: £nil).
Of the above Group Directors Remuneration, £7,304 (2017: nil) has been capitalised in accordance with IFRS 6 as exploratory
related costs and are shown as an intangible addition in the period.
34
CHESTERFIELD RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2018
David Cliff
Peter Damouni
Chris Hall
Derek Crowhurst
8.
Income tax
31 December 2017
Short-term
benefits
£
4,000
4,000
4,000
4,000
Total
£
4,000
4,000
4,000
4,000
16,000
16,000
No charge to taxation arises due to the losses incurred.
The tax on the Group’s loss before tax differs from the theoretical amount that would arise using the weighted average tax
rate applicable to the losses of the consolidated entities as follows:
Loss before tax
Tax at the applicable rate of 18.78% (2017: 19.25%)
Effects of:
Expenditure not deductible for tax purposes
Depreciation in excess of/(less than) capital allowances
Losses carried forward on which no deferred tax asset is recognised
Tax
Group
31 December
2018
31 December
2017
£
£
(689,367)
(111,012)
(129,464)
(21,370)
2,794
2,820
123,850
-
11,861
-
9,509
-
The weighted average applicable tax rate of 18.78% (2017: 19.25%) used is a combination of the 19% standard rate of
corporation tax in the UK and 12.5% Cypriot corporation tax.
The Group has a potential deferred income tax asset of approximately £132,000 (2017: £10,000) due to tax losses available
to carry forward against future taxable profits. The Company has tax losses of approximately £176,000 (2017: £49,400)
available to carry forward against future taxable profits. No deferred tax asset has been recognised on accumulated tax losses
because of uncertainty over the timing of future taxable profits against which the losses may be offset.
9. Earnings per share
The calculation of the total basic earnings per share of (1.524) pence (2017: (1.01) pence) is based on the loss attributable
to equity holders of the Company of £689,367 (2017: £111,012) and on the weighted average number of ordinary shares of
45,221,005 (2017: 10,970,166) in issue during the period.
In accordance with IAS 33, basic and diluted earnings per share are identical for the Group as the effect of the exercise of
share options would be to decrease the earnings per share. Details of share options that could potentially dilute earnings per
share in future periods are set out in Note 20.
35
CHESTERFIELD RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2018
10. Acquisition of Exploration and Evaluation asset
On 28 June 2018 the Company announced that it had entered into an acquisition agreement to acquire 100% of CRC
Chesterfield Resources (Cyprus) Limited (“CHF Cyprus”), formerly known as HKP Exploration Limited. CHF Cyprus is a
company incorporated in the Republic of Cyprus whose principal activity is the exploration for natural resources in Cyprus.
The total consideration of £500,000 was satisfied by the issue of 6,666,667 new Ordinary Shares to the CHF Cyprus sellers
at a price of 7.5p per Ordinary Share and was conditional upon re-admission to the Standard Listed segment of the Official
List and to trading on the London’s Stock Exchange Main Market for listed securities, which took place on 3 July 2018.
Therefore, the acquisition date was deemed as being 3 July 2018. The price of 7.5p per share was based on an agreed price
between the Company and vendor.
The following table summaries the fair value of assets acquired and liabilities assumed as the acquisition date:
Intangible assets
Trade and other receivables
Cash and other equivalents
Trade and other payables
Deferred Tax Assets (Liabilities)
Net assets (liabilities) acquired at 3 July 2018
Book value
(£)
FV adjustment
(£)
Fair value
(£)
-
14,480
1,744
(60,897)
1,330
(43,343)
670,793
-
-
-
(127,450)
670,793
14,480
1,744
(60,897)
(126,120)
543,343
500,000
Under IFRS 3, a business must have three elements: inputs, processes and outputs. CHF Cyprus was an early stage
exploration company and had no mineral reserves and no plan to develop a mine. CHF Cyprus did have title to mineral
properties but these could not be considered inputs because of their early stage of development. CHF Cyprus had no
processes to produce outputs and had not completed a feasibility study or a preliminary economic assessment on any of its
properties and had no infrastructure or assets that could produce outputs. Therefore, the Directors conclusion was that the
transaction was an asset acquisition and not a business combination. The fair value adjustment to intangible assets of
£670,793 represents the excess of the purchase consideration of £500,000 over the excess of the net assets acquired (net
liabilities of £43,343) and a deferred tax liability of £127,450.
The total amount of acquisition related costs incurred by the Group was £86,420 with all of these recognised as an expense.
These costs have been recognised in administrative expenses within the Statement of Comprehensive Income.
The amount of revenue of CHF Cyprus since the acquisition date included in the Group Statement of Comprehensive Income
is £1,761.
The amount of loss of CHF Cyprus since the acquisition date included in the Group Statement of Comprehensive Income is
£25,083.
If the acquisition of CHF Cyprus had occurred on 1 January 2018 the revenue and loss of the Group would have been £1,761
and £50,045.
36
CHESTERFIELD RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2018
11. Property, plant and equipment
Group
Cost
As at 4 January 2017
Additions
As at 31 December 2017
As at 1 January 2018
Additions
As at 31 December 2018
Depreciation
As at 4 January 2017
Charge for the period
As at 31 December 2017
As at 1 January 2018
Charge for the period
As at 31 December 2018
Net book value as at 31 December 2017
Vehicles
Office
equipment
£
-
-
-
-
£
-
-
-
-
Total
£
-
-
-
-
10,785
5,970
16,755
10,785
5,970
16,755
-
-
-
-
2,157
2,157
-
-
-
-
-
707
707
-
-
-
-
-
2,864
2,864
-
Net book value as at 31 December 2018
8,628
5,263
13,891
The Company holds no property or other plant and equipment.
12. Intangible Assets
Intangible assets comprise exploration and evaluation costs. Exploration and evaluation assets are all internally generated
except for those acquired at fair value.
Exploration & Evaluation Assets - Cost and Net Book Value
Opening balance
Additions
Acquired at fair value (Note 10)
As at end of period
Group
2018
£
-
485,636
670,793
1,156,429
2017
£
-
-
-
-
Exploration projects in Cyprus are at an early stage of development and there are no JORC (Joint Ore Reserves Committee)
or non-JORC compliant resource estimates available to enable value in use calculations to be prepared. The Directors
therefore undertook an assessment of the following areas and circumstances that could indicate the existence of impairment:
• The Group’s right to explore in an area has expired, or will expire in the near future without renewal;
• No further exploration or evaluation is planned or budgeted for;
• A decision has been taken by the Board to discontinue exploration and evaluation in an area due to the absence of a
commercial level of reserves; or
• Sufficient data exists to indicate that the book value will not be fully recovered from future development and production.
37
CHESTERFIELD RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2018
Following their assessment, the Directors concluded that no impairment charge was necessary for the period ended 31
December 2018.
13. Investments in Subsidiary Undertakings
Shares in Group Undertakings
At beginning of period
Acquisition during period (see note 10)
At end of period
Loans to Group undertakings
Total
Company
2018
£
-
500,000
500,000
600,837
1,100,837
2017
£
-
-
-
-
-
Investments in Group undertakings are stated at cost, which is the fair value of the consideration paid, less any impairment
provision.
Subsidiaries
Name of subsidiary
Registered office address
CRC Chesterfield
Resources (Cyprus)
Limited(1)
Illoupoleos 1, Germasogela,
4046 Limassol, Cyprus
(1) Previously known as HKP Exploration Limited.
Country of
incorporation
and place of
business
Proportion of
ordinary
shares held
by parent (%)
Proportion of
ordinary shares
held by the
Group (%)
Nature of
business
Cyprus
100%
100%
Exploration
14. Trade and other receivables
Current
Prepayments
Other receivables
Amounts due from group undertakings
VAT receivable
Total
Group
Company
31 December
2018
31 December
2017
31 December
2018
31
December
2017
£
21,285
21,878
-
33,904
77,067
£
9,683
35,000
-
-
£
£
20,567
9,683
-
35,000
5,374
19,930
-
-
44,683
45,871
44,683
Trade and other receivables are all due within one year. The fair value of all receivables is the same as their carrying values
stated above.
38
CHESTERFIELD RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2018
15. Cash and cash equivalents
Group
Company
31 December
31 December
31 December
2018
£
2017
£
2018
£
31
December
2017
£
Cash at bank and in hand
1,885,726
1,184,424
1,862,997
1,184,424
Cash at bank comprises balances held by the Company in current bank accounts. The carrying value of these approximates
to their fair value.
16. Deferred Tax
The movement in the deferred tax liabilities account is as follows:
Deferred tax liabilities
Acquisition of subsidiary (Note 10)
Deferred tax liabilities
17. Trade and other payables
Trade payables
Accruals
Other payables
Group
2018
£
127,450
127,450
2017
£
-
-
Company
2018
£
2017
£
127,450
127,450
-
-
Group
Company
31 December
31 December
31 December
2018
£
52,064
37,064
10
89,138
2017
£
31,365
19,921
-
51,286
31
December
2017
£
31,365
19,921
-
2018
£
44,083
31,985
10
76,078
51,286
Trade payables and accruals principally comprise amounts outstanding for trade purchases and continuing costs. The
Directors consider that the carrying value amount of trade and other payables approximates to their fair value.
18. Financial Instruments by Category
Group
31 December 2018
31 December 2017
Assets per Statement of Financial Performance
other
Trade
and
prepayments)
Cash and cash equivalents
receivables
(excluding
Loans &
receivables
£
Total
£
55,782
1,885,726
55,782
1,885,726
1,941,508
1,941,508
Loans &
receivables
£
35,000
1,184,424
1,219,424
Total
£
35,000
1,184,424
1,219,424
39
CHESTERFIELD RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2018
Liabilities per Statement of Financial
Performance
Trade and other payables (excluding non-financial
liabilities)
31 December 2018
31 December 2017
At amortised
cost
Total
At amortised
cost
£
£
£
52,074
52,074
52,074
52,074
31,365
31,365
Total
£
31,365
31,365
Company
31 December 2018
31 December 2017
Loans &
receivables
£
Total
£
25,304
1,862,997
25,304
1,862,997
1,888,301
1,888,301
Loans &
receivables
£
35,000
1,184,424
1,219,424
At amortised
cost
Total
At amortised
cost
£
£
£
44,093
44,093
44,093
44,093
31,365
31,365
Total
£
35,000
1,184,424
1,219,424
Total
£
31,365
31,365
Assets per Statement of Financial Performance
other
Trade
and
prepayments)
Cash and cash equivalents
receivables
(excluding
Liabilities per Statement of Financial
Performance
Trade and other payables (excluding non-financial
liabilities)
19. Share capital
Group and Company
Number of shares
authorised,
issued and fully
paid
Share Capital
Share premium
£
£
Total
£
At 31 December 2017(1)
28,600,000
126,600
1,157,873
1,284,473
Issue of new shares – 3 July 2018 (2)
26,666,667
26,666
1,883,391
1,910,057
Issue of new shares - acquisition of Chesterfield
Resources (Cyprus) Limited – 3 July 2018
6,666,667
6,667
493,333
500,000
As at 31 December 2018
61,933,334
159,933
3,534,597
3,694,530
(1) £116,127 of costs directly attributable to the issuance of shares was deducted from the brought forward share premium.
(2) £89,943 of costs directly attributable to the issuance of shares was deducted from share premium during the year
Of the total number of shares, there are 59,933,334 ordinary shares and 2,000,000 deferred shares. Share capital value is
£159,933 of which £61,933 is ordinary shares and the balance of £98,000 is deferred shares.
Each ordinary share has a par value of 0.1p and carries the right to one vote, to receive dividends and to participate on a
return of capital.
Each deferred share has a par value of 4.9p and has no voting rights, no rights to receive dividends and, on a winding up or
return of capital, the holders of deferred shares shall receive the nominal capital paid up on deferred shares only after the
payment of £1.000,000 per share to the holders of ordinary shares.
On 3 July 2018 the Company issued 26,766,667 new Ordinary Shares of 0.1p each in the capital of the Company at 7.5p per
share to raise net proceeds of £1,910,057.
40
CHESTERFIELD RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2018
On 3 July 2018 the Company issued 6,666,667 new Ordinary Shares of 0.1p each in the capital of the Company at 7.5p per
share as consideration for 100% of the share capital of Chesterfield Resources (Cyprus) Limited.
20. Share based payments
Share options
Share options and warrants outstanding and exercisable at the end of the period have the following expiry dates and exercise
prices:
Grant Date
22 August 2017
16 March 2017
22 August 2017
28 June 2018
28 June 2018
26 July 2018
Expiry Date
2 July 2020
2 July 2023
2 July 2021
2 July 2020
2 July 2023
2 July 2023
Exercise price in £ per share
0.05
0.05
0.10
0.15
0.75
0.11
Options & Warrants
31 December
2018
31 December
2017
494,300
5,200,000
13,000,000
13,333,322
2,970,000
1,400,000
494,300
5,200,000
13,000,000
-
-
-
36,397,622
18,694,300
The Company and Group have no legal or constructive obligation to settle or repurchase the options or warrants in cash.
The fair value of the share options and warrants was determined using the Black Scholes valuation model. The parameters
used are detailed below:
2018 Options
2018 Options
2017 Options
Granted on:
Life (years)
Exercise price (pence per share)
Risk free rate
Expected volatility
Expected dividend yield
Marketability discount
Total fair value (£000)
28/6/2018
4.5 years
7.5p
0.5%
14.33%
-
20%
11
26/7/2018
4 years
11.25p
0.5%
14.33%
-
20%
0.3
22/8/2017
2 years
5p
1%
30%
-
-
4
The expected volatility of the 2018 options is based on volatility for the six months of trading after admission . The expected
volatility of the 2017 options is based on historical volatility of similar companies. The risk-free rate of return is based on zero
yield government bonds for a term consistent with the option life. A reconciliation of options and warrants granted over the
period to 31 December 2018 is shown below:
Outstanding at beginning of period
Granted
Outstanding as at period end
Exercisable at period end
2018
2017
Weighted
average
exercise price
(£)
0.08
0.13
0.11
0.11
Number
18,694,300
17,703,322
36,397,622
36,397,622
Weighted
average
exercise price
(£)
-
0.08
0.08
0.08
Number
-
18,694,300
18,694,300
18,694,300
41
CHESTERFIELD RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2018
2018
2017
Weighted
average
exercise
price (£)
Number of
shares
Weighted
average
remaining
life
expected
(years)
Weighted
average
remaining
life
contracted
(years)
Weighted
average
exercise
price (£)
Number of
shares
Weighted
average
remaining
life
expected
(years)
Weighted
average
remaining
life
contracted
(years)
0.05
0.10
5,694,300
30,703,322
4.24
2.65
4.24
2.65
0.05
0.10
5,694,300
13,000,000
4.24
2.5
4.24
2.5
of
Range
exercise
prices (£)
0 – 0.05
0.05 – 0.15
During the period there was a charge of £11,833 (2017: £4,360) in respect of share options.
21. Related party transactions
Loans to Group undertakings
Amounts receivable as a result of loans granted to subsidiary undertakings are as follows:
CRC Chesterfield Resources (Cyprus Limited)
At 31 December
Company
31 December
2018
£
31 December
2017
£
600,837
600,837
-
-
These amounts are unsecured, interest free and repayable in Euros when sufficient cash resources are available in the
subsidiaries.
All intra Group transactions are eliminated on consolidation.
Other related party transactions
There were no members of key personnel management other than Directors, whose remuneration is disclosed in note 7.
The Group paid fees totalling £10,000 (2017: £nil) for services supplied by Crowhurst Consultants Limited, of which Derek
Crowhurst is a Director. These services were provided after Derek Crowhurst resign as a director on 4 September 2018. As
at 31 December 2018 there was no balance outstanding.
22. Commitments
License commitments
Chesterfield now owns 7 mineral exploration licenses in Cyprus via the acquisition of Chesterfield Resources (Cyprus) Limited.
These licences include commitments to pay annual licence fees and minimum spend requirements.
As at 31 December 2018 these are as follows:
Group
Not later than one year
Later than one year and no later than five years
Total
23. Ultimate controlling party
The Directors believe there is no ultimate controlling party.
42
Group
Minimum
spend
requirement
£
Total
£
350,000
370,625
1,400,000 1,482,500
License
fees
£
20,625
82,500
103,125
1,750,000 1,853,125