EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT
30 JUNE 2015
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL REPORT 30 JUNE 2015
CORPORATE DIRECTORY
Non-Executive Director Chairman
Managing Director and Chief Executive Officer
Non-Executive Director
Directors
Mr David Reeves
Mr Keith Coughlan
Dr Pavel Reichl
Company Secretary
Ms Julia Beckett
Registered Office in Australia
Suite 12, Level 1
11 Ventnor Avenue
West Perth WA 6005
Telephone +61 8 6141 3500
Facsimile
+61 8 6141 3599
Email www.europeanmet.com
Registered Address and Place of Incorporation
Rawlinson & Hunter
Woodbourne Hall
PO Box 3162
Road Town
Tortola VG1 110
British Virgin Islands
Share Register
Computershare Investor Services Limited
Level 11
172 St Georges Terrace
Perth WA 6000
Telephone 1300 850 505 (within Australia)
Telephone +61 3 9415 4000 (outside Australia)
Facsimile 1800 783 447 (within Australia)
Facsimile +61 3 9473 2555 (outside Australia)
Auditor
Stantons International Audit and Consulting Pty Ltd
Level 2, 1 Walker Avenue
West Perth WA 6005
Telephone +61 8 9481 3188
Facsimile +61 8 9321 1204
Securities Exchange Listing
Australian Securities Exchange Limited
Level 40, Central Park
152-158 St Georges Terrace
PERTH WA 6000
ASX Code: EMH
1
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL REPORT 30 JUNE 2015
CONTENTS
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Audit Report to the members of European Metals Holdings
Limited
Corporate Governance Statement
Additional Information
Tenement Schedule
3
14
15
16
17
18
19
44
45
47
56
57
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EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL REPORT 30 JUNE 2015
DIRECTORS’ REPORT
Your Directors’ present their report, together with the financial statements of the Group, being the Company and its
controlled entities, for the year ended 30 June 2015.
Directors
The following persons were Directors of the Company and were in office for the entire year, and up to the date of this
report, unless otherwise stated:
Mr David Reeves
Mr Keith Coughlan
Dr Pavel Reichl
Mr Robert Timmins
Mr Colin Ikin
Mr David Porter
Non-Executive Chairman
Managing Director
Non-Executive Director
Non-Executive Chairman
Non-Executive Director
Non-Executive Director
Appointed 6 March 2014
Appointed 6 September 2013
Appointed 6 March 2014
Appointed 24 November 2011, resigned 5 November 2014
Appointed 23 June 2011, resigned 5 November 2014
Appointed 8 January 2012, resigned 5 November 2014
Company Secretary
The following person held the position of Company Secretary at the end of the financial year:
Ms Julia Beckett holds a Certificate in Governance Practice and Administration and is a Certificated Member of Chartered
Secretaries Australia. Julia is a Corporate Governance professional, having worked in corporate administration and
compliance for the past 8 years. She has been involved in business acquisitions, mergers, initial public offerings, capital
raisings as well as statutory and financial reporting. Julia is also Joint Company Secretary of Ensurance Limited.
Principal Activities
The Company is primarily involved in the development of a lithium and tin project in the Czech Republic.
Review of Operations
The 2015 Financial Year has been one of significant growth and development for the Company.
The Company spent the first part of the year conducting a Scoping Study on the Cinovec Lithium and Tin Project.
Consultants were appointed early in the year to advise on all aspects of the Study and this work continued into the first
quarter of 2015.
The Scoping Study demonstrates that Cinovec has the potential to be technically and financially viable. Mine design work
carried out as part of the Study suggests Cinovec could be a bulk underground mining operation. It is envisaged that
processing via a traditional gravity plant would produce tin and tungsten concentrates with the tails being fed to a lithium
processing plant. Atmospheric leach would then be used to produce battery grade lithium carbonate. Cost estimates in the
study were calculated by independent consultants and are based upon data from recent projects and industry standard
estimating factors.
Towards the end of the first half the Company entered into a strategic relationship with ASX listed Lithium Australia Limited
(‘LIT’ formerly Cobre Montana) to test the commercial potential of the Cinovec lithium resource.
It had been known for many years that the Cinovec project contained a very large low grade lithium deposit. The lithium
was historically concentrated by magnetic means to produce a lithium concentrate which was then used to produce a
lithium carbonate based on a sulphate processing route. The world’s first lithium carbonate was produced in this fashion
with Cinovec lithium in 1923.
Lithium Australia through its alliance with Perth based Strategic Metallurgy has the technical knowhow to extract lithium
from the micas that occur in the mineralised zones at Cinovec with a reduced cost profile. The technology not only provides
a low power cost process for lithium carbonate production, it also allows the recovery of potassium as potassium sulphate,
a valuable component of fertilizers. It is also possible to recover rare metals from the mica.
3
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL REPORT 30 JUNE 2015
Review of Operations (Continued)
DIRECTORS’ REPORT
LIT began test work early in 2015. The results of this work were excellent from both flotation and leach with 98% of lithium
recovered to concentrate via flotation and 99.5% recovered via leaching from the concentrate. Significantly, LIT were able
to produce battery grade lithium carbonate from the Cinovec ore sample with a grade of 99.56%. The conclusion of the
lithium metallurgical test work is that Cinovec has the potential to be a very low cost producer of lithium carbonate, net of
by -product credits.
In February the Company announced a significant increase in resources at Cinovec. Of particular note was the very large
increase in the inferred lithium resource to 5.5 mt LCE along with a significant additional exploration target. Given the size
of the lithium deposit at Cinovec and the very low cost profile indicated by the metallurgical test work, Cinovec has become
a globally significant lithium and tin deposit.
We are very happy with this progress, particularly in light of the continued demand for lithium products globally, largely
due to the expansion of the Electric Vehicle and Power Storage industries. European Metals is uniquely placed to take
advantage of this increase in demand being the holder of the largest lithium resource in Europe.
The strategic value of the Cinovec asset is becoming better recognised in the industry. In June the Company secured a
capital raising from a number of key European based investors notably Rare Earth Minerals plc (‘REM’), an AIM listed
company with a portfolio of investments in lithium companies and projects. REM’s most significant investment is in the
Sonora Lithium Project in Mexico via a shareholding in fellow AIM Listed company, Bacanora Minerals and directly into the
project.
The major US electric vehicle and power storage company, Tesla Motors, has recently announced a conditional off take
agreement with Bacanora for lithium from the Sonora Project. This is the first off take agreement that Tesla has entered
into.
The interest shown in European Metals from European investors has led the Company to the decision to dual list its
securities on the AIM Market. This was announced to the ASX in June and is expected to be completed in November.
Overall it has been a very productive and exciting year for the Company and the Cinovec Project and we look forward to
bringing you further news regarding the development of the project.
Results of Operations
The consolidated loss for year ended 30 June 2015 amounted to $666,872 (2014 loss: $1,328,196).
Financial Position
The net assets of the Group have increased by $1,116,757 to $4,144,822 at 30 June 2015.
Significant Changes in the State of Affairs
The following significant changes in the state of affairs of the parent entity occurred during the financial year:
The Oyabi license expired in July 2014. In light of the Company’s strong desire to focus its attention exclusively on the
Czech projects – coupled with a significant decline in iron ore prices and unsatisfactory exploration results – no extension of
the Oyabi license was sought.
On 3 October 2014 the Company announced the award of a research grant under the FAME project, the project will last
approximately 48 months and the Company may be eligible for up grant over this period of up to Euro 105,000.
On 6 November 2014 the Company placed 21,943,023 CDIs at $0.05 to raise an additional $1,097,151 for working capital.
4
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL REPORT 30 JUNE 2015
DIRECTORS’ REPORT
Significant Changes in the State of Affairs (Continued)
The Company announced a substantial increase in resources at the Cinovec project, particularly with respect to the lithium
resource. The lithium resource has increased in tonnage by 285% and in terms of contained lithium by 175%. The resource
is currently 5.5Mt LCE, 514.8Mt @ 0.43% Li2O (0.1% Li cutoff). There is an additional Exploration Target of 3.4 – 5.3 Mt LCE,
350 – 450Mt @ 0.39 – 0.47% Li2O.
On the 27 May 2015 Performance A CDIs issued to vendors for the acquisition of the European Metals, as approved by
shareholders on 20 February 2014, were converted into 5,000,000 CDIs. The performance criteria of these CDIs were driven
by the Net Present Value of the Cinovec project meeting the performance hurdles.
On 30 June 2015 the Company placed 9,339,430 CDIs at $0.08 to raise an additional $747,154 for working capital.
Dividends Paid or Recommended
No dividends were declared or paid during the year and the Directors do not recommend the payment of a dividend.
Information on Directors
David Reeves
Qualifications
Experience
Interest in CDIs and Options
Non-Executive Chairman – Appointed 6 March 2014
Mining Engineer
Mr Reeves is a qualified mining engineer with 25 years’ experience in Africa and
Australia. Mr Reeves holds a First Class Honours Degree in Mining Engineering from
the University of New South Wales, a Graduate Diploma in Applied Finance and
Investment from the Securities Institute of Australia and a First Class Mine Managers
Certificate of Competency.
3,061,872 CDIs
1,658,372 Options
542,651 Class B Performance Shares
Special Responsibilities
Directorships held
listed entities
in other
Member of all the Committees
Managing Director of Ferrex Plc (AIM)
Keith Coughlan
Qualifications
Experience
Interest in CDIs and Options
Special Responsibilities
Directorships held
listed entities
in other
Pavel Reichl
Qualifications
Experience
Managing Director (CEO) – Appointed 6 September 2013
BA
Keith has over 26 years’ experience in stockbroking and funds management. He has
been largely involved in the funding and promoting of resource companies listed on
ASX, AIM and TSX. He has advised various companies on the identification and
acquisition of resource projects and was previously employed by one of Australia’s
then largest funds management organizations.
4,500,000 CDIs
6,000,000 Options
Member of all the Committees
Non Executive Chairman of Talga Resources Limited
Non-Executive Director – Appointed 6 March 2014
PhD from University of Montana
Dr Reichl has over 15 years’ experience in precious, base and PGE metals exploration
and production and has a PhD from University of Montana. He was formerly
Business Unit Manager of a Canadian
listed minerals exploration company
responsible for Europe and Central Asia. Dr Reichl was the former head of the
Newmont acquisition program in Eastern Europe and exploration manager for
Kyrgyzstan and Uzbekistan. He is fluent in English, Czech and Russian.
5
Information on Directors
Interest in CDIs and Options
Special Responsibilities
Directorships held
listed entities
in other
Robert Timmins
Qualifications
Experience
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL REPORT 30 JUNE 2015
DIRECTORS’ REPORT
2,778,672 CDIs
750,000 Options
793,906 Class B Performance Shares
Member of all the Committees
Nil
Non-Executive Chairman – Appointed 24 November 2011, resigned 5 November 2014
Geophysicist
Robert (Bob) Timmins has 40 years experience in mineral and oil exploration.
Bob founded Timmins Geophysics Pty Ltd in 1978, a geophysical consulting and
contracting company. With up to 35 employees this company was principally
involved
interpretation of electromagnetic, magnet
(including polarization) and gravity data. Geophysics customers’ included iron
explorers: CR, Hamersley Iron, BHP, CSR and others. Bob conducted and
interpreted the initial geophysics and sited the drilling which led to the discovery of
the Yandie iron ore deposit.
in the acquisition and
Timmins Geophysics (1988) merged with ASX listed Aerodata Holdings to form
World Geoscience Corporation (“WGC”). WGC managed the conducting, reporting
and presentation of the initial European Union sponsored airborne geophysical
survey of Namibia and Botswana.
Interest in CDIs and Options(1)
Bob has consulted extensively in Australia, Africa (Namibia, Botswana, South Africa,
Tanzania, Kenya and Central African Republic) and the Americas.
Nil CDIs
500,000 Options (expired 19 July 2015)
Special Responsibilities
Directorships held
listed entities
in other
Member of all the Committees
Nil
Colin Ikin
Qualifications
Experience
Interest in CDIs and Options(1)
Special Responsibilities
Directorships held
listed entities
in other
David Porter
Qualifications
Interest in CDIs and Options(1)
Non-Executive Director - Appointed 23 June 2011, resigned 5 November 2014
Stockbroker
Colin was a stockbroker for 17 years. He has extensive experience as CEO of several
mining companies listed on the ASX and AIM. Colin has developed gold, copper,
nickel and cobalt mines in Australia and Africa, including the Bulong pressure acid
leach Nickel Cobalt mine and the Horseshoe polymetallic mine. Colin is a non-
executive director of Cominco Resources Ltd, a company currently developing the
Hinda phosphate and uranium project in the Republic of Congo. He has played a
major role in property developments in Indonesia and Australia.
4,093,580 CDI’s and Nil options
Member of all the Committees
Current Executive Chairman of Namibian Copper NL.
Non-Executive Director – Appointed 8 January 2012, resigned 5 November 2014
Geologist, BSc (Hons), MSc, FIMM
110,000 CDIs
500,000 Options (expired 19 July 2015)
Special Responsibilities
Directorships held
in other
Member of all the Committees
Nil
6
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL REPORT 30 JUNE 2015
DIRECTORS’ REPORT
Information on Directors
listed entities
(1)
Number of CDIs and Options held on the date of resignation which was 5 November 2014.
Director Meetings
The number of Directors’ meetings and meetings of Committees of Directors held during the period and the number of
meetings attended by each of the Directors of the Company during the year are:
Name
David Reeves
Keith Coughlan
Pavel Reichl
Robert Timmins
Colin Ikin
David Porter
Directors’ Meetings
Number attended
3
3
3
1
1
1
Number eligible to attend
3
3
3
1
1
1
7
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL REPORT 30 JUNE 2015
REMUNERATION REPORT (AUDITED)
DIRECTORS’ REPORT
This report details the nature and amount of remuneration for each Director of the Company, and Key Management
Personnel. The directors are pleased to present the remuneration report which sets out the remuneration information for
European Metals Holdings Limited’s non-executive directors, executive directors and other key management personnel.
A. Principles used to determine the nature and amount of remuneration
The remuneration policy of the Company has been designed to align Director and management objectives with shareholder
and business objectives by providing a fixed remuneration component, and offering specific long-term incentives based on
key performance areas affecting the Company’s financial results. The Board of the Company believes the remuneration
policy to be appropriate and effective in its ability to attract and retain the best management and Directors to run and
manage the Company, as well as create goal congruence between Directors, Executives and shareholders.
The Board’s policy for determining the nature and amount of remuneration for Board members and Senior Executives of
the Company is as follows:
The remuneration policy, setting the terms and conditions for the Executive Directors and other Senior Executives, was
developed by the Board. All Executives receive a base salary (which is based on factors such as length of service and
experience), superannuation, options and performance incentives. The Board reviews Executive packages annually by
reference to the Company’s performance, executive performance, and comparable information from industry sectors and
other listed companies in similar industries.
Executives are also entitled to participate in the employee share and option arrangements.
All remuneration paid to Directors and Executives is valued at the cost to the Company and expensed.
The Board policy is to remunerate Non-executive Directors at commercial market rates for comparable companies for time,
commitment, and responsibilities. The Board determines payments to the Non-executive Directors and reviews their
remuneration annually based on market practice, duties, and accountability. Independent external advice is sought when
required. The maximum aggregate amount of fees that can be paid to Non-executive Directors is subject to approval by
shareholders at the Annual General Meeting. Fees for Non- Executive Directors are not linked to the performance of the
Company. However, to align Directors’ interests with shareholder interests, the Directors are encouraged to hold CDIs in
the Company.
The remuneration policy has been tailored to increase the direct positive relationship between shareholders’ investment
objectives and Directors’ and Executives’ performance. Currently, this is facilitated through the issue of options to the
majority of Directors and Executives to encourage the alignment of personal and shareholder interests. The Company
believes this policy will be effective in increasing shareholder wealth. For details of Directors’ and Executives’ interests in
CDIs and options at year end, refer to the remuneration report.
B. Details of Remuneration
Details of the nature and amount of each element of the emoluments of each of the KMP of the Company (the Directors)
for the year ended 30 June 2014 and 30 June 2015 are set out in the following tables:
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EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL REPORT 30 JUNE 2015
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
B. Details of Remuneration (Continued)
2015
Group Key
Management
Personnel
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Equity-settled share-
based payments
Total
% of
remuneration
as share
based
payments
Salary, fees
Profit share
Non-
Other 1
Super-
Other
Equity
Options
and leave
and bonuses
monetary
annuation
Directors:
$
$
$
$
David Reeves
24,000
Keith Coughlan
200,000
Pavel Reichl
83,000
Robert Timmins*
Colin Ikin*
David Porter*
-
-
-
307,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
* Directors resigned on 5 November 2014
$
-
19,000
-
-
-
-
40,000
-
-
-
-
-
40,000
19,000
$
$
$
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
64,000
219,000
83,000
-
-
-
366,000
-
-
-
-
-
-
2014
Group Key
Management
Personnel
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Equity-settled share-
based payments
Total
% of
remuneration
as share
based
payments
Salary, fees
Profit share
Non-
Other
Super-
Other
Equity
Options
and leave
and bonuses
monetary
annuation
Directors:
$
$
$
$
Robert Timmins
16,667
Keith Coughlan
100,000
Pavel Reichl
39,945
Colin Ikin
David Reeves
David Porter
-
-
14,583
171,195
C. Service Agreements
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
9,250
-
-
-
-
9,250
-
-
-
-
-
-
-
$
$
$
$
-
-
-
-
-
-
-
-
100,000
-
-
-
-
100,000
-
-
-
-
-
-
-
16,667
209,250
39,945
-
-
14,583
280,445
-
48%
-
-
-
-
It was formally agreed at a meeting of the directors that the following remuneration be established, there are no formal
notice periods leave accruals or termination benefits payable on termination:
Mr Keith Coughlan to receive a salary of $200,000 per annum plus SGC of 9.5%. Mr Coughlan was paid at a rate of $100,000
per annum from 1 November 2013 and $200,000 from 1 March 2014. Mr Coughlan agreed to accrue half of the salary from
1 Consulting services of Company Non-Executive Director (David Reeves) and the Company which he controls. The amounts billed related
to this consulting service amounted to $40,000 (2014: $Nil) based on normal market rates and the amount outstanding at reporting date
was $30,000 (2014: $Nil) the amount outstanding was equity settled subsequent to balance date.
9
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL REPORT 30 JUNE 2015
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
C. Service Agreements (Continued)
1 March 2014 until such time as the Company is successful at completing a capital raising, the Company completed a
successful capital raising on 6 November 2014.
D. Options issued as part of remuneration for the year ended 30 June 2015.
No options were granted to directors as remuneration during the year ended 30 June 2015 (30 June 2014: Nil) and no
options lapsed during the year.
E. Equity instruments issued on exercise of remuneration options
There were no equity instruments issued during the year to Directors or other KMP as a result of options exercised that had
previously been granted as compensation.
F. Loans to Directors and Executives
No loans have been made to Directors or Executives of the Company during, or since, the year ended 30 June 2015 (2014:
nil).
G. Company performance, shareholder wealth and Directors’ and Executives’ remuneration
The remuneration policy has been tailored to increase the direct positive relationship between shareholders’ investment
objectives and Directors’ and Executives’ performance. This will be facilitated through the issue of options to the majority of
Directors and Executives to encourage the alignment of personal and shareholder interests. The Company believes this
policy will be effective in increasing shareholder wealth. At commencement of mine production, performance based
bonuses based on key performance indicators are expected to be introduced.
H. Other information
Options held by Key Management Personnel
The number of options to acquire CDIs in the Company held during the 2015 reporting period by each of the Key
Management Personnel of the Group; including their related parties are set out below.
Balance at the
start of the year
Granted during
the year
Exercised during
the year
Other changes
2during the year
Balance at the 3
end of the year
Vested and
exercisable
Unvested
30 June 2015
David Reeves
Keith Coughlan
Pavel Reichl
-
-
-
Robert Timmins
500,000
Colin Ikin
-
David Porter
500,000
Total
1,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
658,372
658,372
658,372
4,000,000
4,000,000
4,000,000
-
-
-
-
-
-
500,000
500,000
-
-
500,000
500,000
4,658,372
5,658,372
5,658,372
2 Participation in CDI placement, the offer comprised of four new CDIs for every seven held at an issue price of $0.05 cents per CDI. For
every CDI taken up holders were provided one free attaching option with an exercise price of $0.10 expiring 30 June 2016.
3 Balance at resignation date of 5 November 2014, for those directors (Mr Ikin, Mr Porter and Mr Timmins) who retired during the year.
-
-
-
-
-
-
-
10
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL REPORT 30 JUNE 2015
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
H. Other information (Continued)
30 June 2014
Balance at the
start of the year
Granted during
the year
Exercised during
the year
Other changes
during the year
Balance at the
end of the year
Vested and
exercisable
Unvested
Robert Timmins
500,000
Keith Coughlan
Pavel Reichl
David Reeves
Colin Ikin
-
-
-
-
David Porter
500,000
Total
1,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
500,000
500,000
-
-
-
-
-
-
-
-
500,000
500,000
1,000,000
1,000,000
-
-
-
-
-
-
-
Chess Depositary Interests (‘CDIs’) held by Key Management Personnel
The number of ordinary CDIs in the Company during the 2015 reporting period held by each of the Key Management
Personnel of the Group; including their related parties are set out below.
2015
Name
David Reeves
Indirect
Keith Coughlan
Indirect
Pavel Reichl
Robert Timmins
Colin Ikin
Indirect
David Porter
Indirect
Total
2014
Name
David Reeves
Keith Coughlan
Indirect
Pavel Reichl
Robert Timmins
Colin Ikin
Indirect
David Porter
Indirect
Total
Balance at Start
of year
Granted as
remuneration
during the year
Issued on
exercise of
options
Other Changes
during the year 4
Balance at end
of year5
1,364,124
500,000
1,984,766
-
225,000
3,868,580
110,000
8,052,470
Balance at Start
of year
Granted as
remuneration
during the year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
225,000
3,868,580
-
110,000
4,203,580
500,000
-
-
-
-
-
-
500,000
-
-
-
-
-
-
-
-
1,201,023
2,565,147
4,000,000
793,906
-
-
-
-
4,500,000
2,778,672
-
225,000
3,868,580
110,000
5,994,929
14,047,399
Issued on
exercise of
options
-
-
-
-
-
-
-
-
-
-
Other Changes
during the year
Balance at end
of year
1,364,124
1,364,124
-
-
1,984,766
-
-
-
-
-
3,348,890
-
500,000
1,984,766
-
225,000
3,868,580
-
110,000
8,052,470
4 Participation in CDI placement, the offer comprised of four new CDIs for every seven held at an issue price of $0.05 cents per CDI. For
every CDI taken up holders were provided one free attaching option with an exercise price of $0.10 expiring 30 June 2016. Other changes
included the conversion of Class A Performance Shares for Mr Reeves and Mr Reichl into CDIs according to the terms of Class A
Performance Shares.
5 Balance at resignation date of 5 November 2014, for those directors (Mr Ikin, Mr Porter and Mr Timmins) who retired during the year.
11
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL REPORT 30 JUNE 2015
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
H. Other information (Continued)
Loans to Key Management Personnel
There were no loans to Key Management Personnel during the financial year.
Other transactions with Key Management Personnel
During 2015, the Group used the following services of the directors of the Company.
•
•
•
Sub-underwriting fee of 2% was paid to the Keith Coughlan $7,144 and David Reeves $799 for capital raising sub-
underwriting. The amounts billed were based on normal market rates and the amount outstanding at reporting
date was $Nil.
During the year the Company converted 5,000,000 Performance A Shares into CDIs in accordance with the Term
Sheet approved by Shareholders on the 20 February 2014. The conversion was dependent on the NPV of the
Cinovec project. Mr David Reeves and Mr Pavel Reichl were vendors to the original Term Sheet and participated in
the CDI conversion. The A Class Performance Shares were converted as follows:
Mr David Reeves, conversion of 542,651 Class A Performance Shares to CDIs at a Grant Date Value of nil.
Mr Pavel Reichl, conversion of 793,906 Class A Performance Shares to CDIs at a Grant Date Value of nil.
During the year ended 30 June 2014, the Company sold its investment in securities in a TSX listed entity to a
related entity of Mr Colin Ikin at an agreed price of $473,495 AUD. Total proceeds received was £251,017
(approximately $459,824 at date of receipt).
There were no other transactions with Key Management Personnel during the financial year.
End of Remuneration Report
CDIs under option
Unissued CDIs of European Metals Holdings Limited under option at the date of this report are as follows:
Expiry date
30 June 2016
17 August 2020
Exercise Price
10 cents
16.6 cents
Number under option
21,943,023
3,750,000
No option holder has any right under the options to participate in any other share issue of the Company or of any other
entity.
Environmental Regulations
The Group’s operations are subject to the environmental risks inherent in the mining industry.
Significant events after the reporting date
On 31 July 2015 the Company held a General meeting, the following matters relating the issue of new equity instruments
were approved for issue:
•
•
•
•
Issue of 496,725 CDIs to Mr David Reeves (Non-Executive Chairman) in lieu of consulting fees for the year ended
30 June 20156.
Issue of 2,000,000 options to Mr Keith Coughlan (Executive Director) exercisable at $0.16 cent on or before 17
August 2020.
Issue of 1,000,000 options to Mr David Reeves (Non-Executive Chairman) exercisable at $0.16 cent on or before
17 August 2020.
Issue of 750,000 options to Dr Pavel Reichl exercisable at $0.16 cent on or before 17 August 2020.
6 Fees were accrued for the year end 30 June 2015
12
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL REPORT 30 JUNE 2015
DIRECTORS’ REPORT
Significant events after the reporting date (Continued)
• On 31 July 2015 the Company held a General Meeting and received shareholder approval to place 9,410,578 CDIs
at $0.08 to raise an additional $752,846 for working capital.
• On 31 August 2015 Dr Pavel Reichl was appointed a Non-executive Director of the Company (previously Executive
Director).
Except for the matters noted above there have been no other significant events arising after the reporting date.
Indemnifying officers or auditor
During or since the end of the financial period the Company has given an indemnity or entered into an agreement to
indemnify, or paid or agreed to pay insurance premiums as follows:
i.
ii.
The Company has entered into agreements to indemnify all Directors and provide access to documents, against any
liability arising from a claim brought by a third party against the Company. The agreement provides for the
Company to pay all damages and costs which may be awarded against the Directors.
The Company has paid premiums to insure each of the Directors against liabilities for costs and expenses incurred
by them in defending any legal proceedings arising out of their conduct while acting in the capacity of Director of
the Company, other than conduct involving a willful breach of duty in relation to the Company. Under the terms
and conditions of the insurance contract, the nature of the liabilities insured against and the premium paid cannot
be disclosed.
iii. No indemnity has been paid to auditors.
Proceedings on Behalf of the Company
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to
which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those
proceedings.
The Company was not a party to any such proceedings during the year.
Non-audit Services
Stantons International has not provided any non-audit services during the year.
Auditor’s Independence Declaration
The auditor’s independence declaration for the year ended 30 June 2015 has been received and can be found on page 14 of
the financial report.
This report of the Directors incorporating the remuneration report, is signed in accordance with a resolution of the Board of
Directors.
Keith Coughlan
Managing Director
Dated at 30 September 2015
13
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2015
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2015
Note
30 June 2015
30 June 2014
Revenue – interest income
Other income
Professional fees
Audit fees
Directors’ fees
Share based payments
Employees’ benefits
Travel and accommodation
Office rent
Insurance expense
Share registry expense
Depreciation expense
Impairment expense
Other expenses
Loss before income tax
Income tax expense
Loss for the year
Other comprehensive income
Items that may be reclassified subsequently to profit or loss – exchange
differences on translating foreign operations
Other comprehensive (loss)/income for the year, net of tax
Total comprehensive loss for the year
Net Loss attributable to:
members of the parent entity
Total Comprehensive income attributable to:
members of the parent entity
7
17
3
4
$
6,917
21,516
$
8,743
-
(270,257)
(120,004)
(26,025)
-
-
(23,127)
(31,250)
(100,000)
(219,000)
(114,071)
(29,551)
(16,396)
(20,329)
(51,114)
(2,333)
(39,233)
(35,769)
(12,776)
(39,645)
(17,436)
-
(673,968)
(60,300)
(129,660)
(666,872)
(1,328,196)
-
-
(666,872)
(1,328,196)
(2,258)
(2,258)
40,304
40,304
(669,130)
(1,287,892)
(666,872)
(1,328,196)
(666,872)
(1,328,196)
(669,130)
(1,287,892)
(669,130)
(1,287,892)
Basic and diluted loss per CDI (cents)
8
(1.25)
(4.53)
The above statement should be read in conjunction with the accompanying notes.
15
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2015
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2015
CURRENT ASSETS
Cash and cash equivalents
Other receivables
Other assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
Note
9
10
11
2015
$
2014
$
889,208
378,615
28,703
32,918
26,707
11,516
950,829
416,838
488
1,953
Exploration and evaluation expenditure
12
3,414,934
2,814,798
Intangible assets
TOTAL NON-CURRENT ASSETS
3,398
4,229
3,418,820
2,820,980
TOTAL ASSETS
4,369,649
3,237,818
CURRENT LIABILITIES
Trade and other payables
Other liabilities
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
13
14
15
16
201,536
23,291
224,827
186,495
23,258
209,753
224,827
209,753
4,144,822
3,028,065
6,788,183
5,002,296
222,761
225,019
(2,866,122)
(2,199,250)
4,144,822
3,028,065
The above statement should be read in conjunction with the accompanying notes.
16
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2015
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2015
Issued Capital Option Reserve
Foreign Currency
Translation
Reserve
Accumulated
Losses
$
$
$
$
Total
$
Balance at 1 July 2013
2,402,296
97,560
87,155
(871,054)
1,715,957
Loss attributable to members of the
Company
Other comprehensive income
Total comprehensive loss for the year
Transactions with owners, recognised
directly in equity
CDIs issued during the year, net of costs
-
-
-
-
Share based payments
Balance at 30 June 2014
2,600,000
5,002,296
-
-
-
-
-
-
(1,328,196)
(1,328,196)
40,304
40,304
-
40,304
(1,328,196)
(1,287,892)
-
-
-
-
-
2,600,000
97,560
127,459
(2,199,250)
3,028,065
Balance at 1 July 2014
5,002,296
97,560
127,459
(2,199,250)
3,028,065
Loss attributable to members of the
Company
Other comprehensive loss
Total comprehensive loss for the year
-
-
-
Transactions with owners, recognised
directly in equity
CDIs issued during the year, net of costs
1,755,857
Share based payments
Balance at 30 June 2015
30,030
-
-
-
-
-
-
(666,872)
(666,872)
(2,258)
(2,258)
-
(2,258)
(666,872)
(669,130)
-
-
-
-
1,755,857
30,030
6,788,183
97,560
125,201
(2,866,122)
4,144,822
The above statement should be read in conjunction with the accompanying notes.
17
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2015
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees
Interest received
Receipts for services
30 June 2015
30 June 2014
Note
$
$
(712,182)
(478,795)
6,917
21,516
8,743
-
Net cash (used in) operating activities
18
(683,749)
(470,052)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration and evaluation expenditure
Sale of investments in listed security
Net cash (used in)/ from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of CDIs
Capital raising costs paid
Net cash from financing activities
(567,136)
(187,081)
-
(567,136)
459,824
272,743
1,844,307
(82,829)
1,761,478
-
-
-
Net increase/ (decrease) in cash and cash equivalents
510,593
(197,309)
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at the end of financial year
378,615
889,208
575,924
378,615
The above statement should be read in conjunction with the accompanying notes.
18
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2015
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of preparation
These consolidated financial statements and notes represent those of European Metals Holdings Limited (“the
Company”) and Controlled Entities (the “Consolidated Group” or “Group”). The separate financial statements of
the parent entity, European Metals Holdings Limited, have not been presented within this financial report as is
permitted by Corporations Act 2001.
The financial statements are general purpose financial statements, which have been prepared in accordance with
Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of
the Australian Accounting Standards Boards (AASB) and the Corporations Act 2001. The Group is a for-profit entity
for financial reporting purposes under Australian Accounting Standards.
The accounting policies detailed below have been adopted in the preparation of the financial report. Except for
cash flow information, the financial statements have been prepared on an accrual basis and are based on historical
cost, modified, where applicable, by the measurement at fair values of selected non-current assets, financial assets
and financial liabilities.
The Group is a listed public company, incorporated in the British Virgin Islands and registered in Australia.
(i)
Adoption of new and revised standards
None of the new standards and amendments to standards that are mandatory for the first time for the financial year
beginning 1 July 2014 affected any of the amounts recognised in the current period or any prior period, although it
caused minor changes to the Group’s disclosures.
(ii)
Statement of Compliance
The financial report was authorised for issue on 30 September 2015.
Australian Accounting Standards set out accounting policies that the AASB has concluded would result in the
financial statements containing relevant and reliable information about transactions, events and conditions.
Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with
International Financial Reporting Standards as issued by the IASB.
(iii) Critical accounting estimates and judgements
The application of accounting policies requires the use of judgements, estimates and assumptions about carrying
values of assets and liabilities that are not readily apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors that are considered to be relevant. Actual results
may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are recognised in the period
in which the estimate is revised if it affects only that period, or in the period of the revision and future periods if the
revision affects both current and future periods.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the
equity instruments at the date at which they are granted.
Impairment of capitalised exploration and evaluation expenditure
The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors,
including whether the Group decides to exploit the related lease itself or, if not, whether it successfully recovers the
related exploration and evaluation asset through sale.
Factors that could impact the future recoverability include the level of reserves and resources, future technological
changes, which could impact the cost of mining, future legal changes (including changes to environmental restoration
obligations) and changes to commodity prices.
To the extent that capitalised exploration and evaluation expenditure is determined not to be recoverable in the
future, profits and net assets will be reduced in the period in which this determination is made.
Recognition of deferred tax assets
Deferred tax assets relating to temporary differences and unused tax losses have not been recognised as the
Directors are of the opinion that it is not probable that future taxable profit will be available against which the
benefits of the deferred tax assets can be utilised.
19
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2015
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(b)
Income Tax
Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using
applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are
therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the
year as well unused tax losses.
Current and deferred income tax expense (income) is charged or credited directly to equity instead of the profit or
loss when the tax relates to items that are credited or charged directly to equity.
Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where
amounts have been fully expensed but future tax deductions are available. No deferred income tax will be
recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no
effect on accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the
asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at reporting date.
Their measurement also reflects the manner in which management expects to recover or settle the carrying amount
of the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it
is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be
utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint
ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary
difference can be controlled and it is not probable that the reversal will occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that
net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred
tax assets and liabilities are offset where a legally enforceable right of set-off exists, 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 it is intended that net settlement or simultaneous realisation and settlement of the respective
asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are
expected to be recovered or settled.
(c)
Impairment of assets
At the end of each reporting period the Group assesses whether there is an indication that an asset may be impaired.
If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an
estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to
sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows
that are largely independent of those from other assets or groups of assets and the asset's value in use cannot be
estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash-generating
unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable
amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
Impairment losses relating to continuing operations are recognised in those expense categories consistent with the
function of the impaired asset unless the asset is carried at revalued amount (in which case the impairment loss is
treated as a revaluation decrease).
An assessment is also made at each reporting period as to whether there is any indication that previously recognised
impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is
treated as a revaluation decrease).
20
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2015
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(c)
Impairment of assets (continued)
An assessment is also made at each reporting period as to whether there is any indication that previously recognised
impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is
estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used
to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the
carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the
carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for
the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in
which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted
in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its
remaining useful life.
(d) Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid
investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within
short-term borrowings in current liabilities in the Statement of Financial Position.
(e) Revenue
Interest
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the
financial assets.
(f) Goods and Services Tax (GST)
Revenues, expenses, and assets are recognised net of the amount of GST, except where the amount of GST incurred
is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of
acquisition of the asset or as part of an item of the expense. Receivables and payables in the Statement of Financial
Position are shown inclusive of GST.
Cash flows are presented in the Statement of Cash Flows on a gross basis, except for the GST component of investing
and financing activities, which are disclosed as operating cash flows.
(g) Trade and other receivables
Trade receivables are measured on initial recognition at fair value and are subsequently measured at amortised cost
using the effective interest rate method, less any allowance for impairment. Trade receivables are generally due for
settlement within 30 days.
Impairment of trade receivables is continually reviewed and those that are considered to be uncollectible are written
off by reducing the carrying amount directly. An allowance account is used when there is objective evidence that the
Group will not be able to collect all amounts due according to the original contractual terms. Factors considered by
the Group in making this determination include known significant financial difficulties of the debtor, review of
financial information and significant delinquency in making contractual payments to the Group. The impairment
allowance is set equal to the difference between the carrying amount of the receivable and the present value of
estimated future cash flows, discounted at the original effective interest rate. Where receivables are short-term
discounting is not applied in determining the allowance.
The amount of the impairment loss is recognised in the profit and loss within other expenses. When a trade
receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it
is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited
against other expenses in the profit and loss.
(h)
Finance Income and Finance Costs
Finance income comprises interest income on funds invested (including available-for-sale financial assets), dividend
income, gains on the disposal of available-for-sale financial assets, changes in the fair value of financial assets at fair
value through profit or loss, and gains on hedging instruments that are recognised in profit or loss. Interest income is
recognised as it accrues in profit or loss, using the effective interest method.
21
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2015
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(i)
Employee Benefits
Short-term benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related
service is provided.
A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the
Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the
employee and the obligation can be estimated reliably.
Other long-term employee benefits
Provision is made for the liability due to employee benefits arising from services rendered by employees to the
reporting date. Employee benefits expected to be settled within one year together with benefits arising out of wages
and salaries, sick leave and annual leave which will be settled after one year, have been measured at their nominal
amount. Other employee benefits payable later than one year have been measured at the present value of the
estimated future cash outflows to be made for those benefits.
Contributions made to defined employee superannuation funds are charged as expenses when incurred.
(j)
Exploration and Evaluation Assets
Exploration and evaluation costs, including costs of acquiring licenses, are capitalised as exploration and evaluation
assets on an area of interest basis. Costs of acquiring licences which are pending the approval of the relevant
regulatory authorities as at the date of reporting are capitalised as exploration and evaluation cost if in the opinion of
the Directors it is virtually certain the Group will be granted the licences.
Exploration and evaluation assets are only recognised if the rights of tenure to the area of interest are current and
either:
(a) The expenditures are expected to be recouped through successful development and exploitation of the
area of interest, or
(b) Activities in the area of interest have not at the reporting date, reached a stage which permits a reasonable
assessment of the existence or otherwise of economically recoverable reserves and active and significant
operations in, or in relation to, the area of interest are continuing.
Exploration and evaluation assets are assessed for impairment when:
(i) Sufficient data exists to determine technical feasibility and commercial viability, and
(ii) Facts and circumstances suggest that the carrying amount exceeds the recoverable amount (see
impairment accounting policy in Note 1(c). For the purposes of impairment testing, exploration and
evaluation assets are allocated to cash-generating units to which exploration activity relates. The cash
generating unit shall not be larger than the area of interest.
Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are
demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment
and then reclassified from intangible assets to mining property and development assets within property, plant and
equipment.
(k)
Financial Instruments
Initial recognition and measurement
Financial instruments, incorporating financial assets and financial liabilities, are recognised when the Group becomes
a party to the contractual provisions of the instrument. Trade date accounting is adopted for financial assets that are
delivered within timeframes established by marketplace convention.
Financial instruments are initially measured at fair value plus transactions costs where the instrument is not classified
as at fair value through profit or loss. Transaction costs related to instruments classified as at fair value through profit
or loss are expensed to profit or loss immediately. Financial instruments are classified and measured as set out
below.
22
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2015
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(k)
Financial Instruments (Continued)
Financial assets at fair value through profit and loss
Financial assets are classified at “fair value through profit or loss” when they are held for trading for the purpose of
short term profit taking, derivatives not held for hedging purposes, or when the are designated as such to avoid an
accounting mismatch or to enable performance evaluation where a Group of financial assets is managed by key
management personnel on a fair value basis in accordance with a documented risk management or investment
strategy. Such assets are subsequently measured at fair value with changes in carrying amount being included in
profit or loss.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs.
Subsequent to initial recognition loans and receivables are measured at amortised cost using the effective interest
method, less any impairment losses. Loans and receivables are included in current assets, except for those which are
not expected to mature within 12 months after the end of the reporting period. All other loans and receivables are
classified as non-current assets.
Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable
payments and it is the Group’s intention to hold these investments to maturity. Such assets are recognised initially
at fair value plus any directly attributable transaction costs. They are subsequently measured at amortised cost using
the effective interest rate method, less any impairment losses.
Held-to-maturity investments are included in non-current assets, except for those which are expected to mature
within 12 months after the end of the reporting period. All other investments are classified as current assets.
If during the period the Group sold or reclassified more than an insignificant amount of the held-to-maturity
investments before maturity, the entire held-to-maturity investments category would be tainted and reclassified as
available-for-sale.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are either not suitable to be classified into
other categories of financial assets due to their nature, or they are designated as such by management. They
comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable
payments.
Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses
and foreign exchange gains and losses on available-for-sale monetary items, are recognised as a separate component
of equity. When an investment is derecognised, the cumulative gain or loss in equity is transferred to profit and loss.
Available-for-sale financial assets are included in non-current assets, except for those which are expected to mature
within 12 months after the end of the reporting period. All other available-for-sale financial assets are classified as
current assets.
Financial liabilities
Non-derivative financial liabilities are recognised initially at fair value plus any directly attributable transaction costs.
Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest
rate method.
Fair value
Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to
determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar
instruments and option pricing models.
23
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2015
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(k)
Financial Instruments (Continued)
Derecognition
Financial assets are derecognised where the contractual rights to cash flow expires or the asset is transferred to
another party whereby the entity no longer has any significant continuing involvement in the risks and benefits
associated with the asset. Financial liabilities are derecognised where the related obligations are either discharged,
cancelled or expired. The difference between the carrying value of the financial liability extinguished or transferred
to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities
assumed, is recognised in profit or loss.
(l)
Trade and other payables
Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services
provided to the Group prior to the end of the financial period that are unpaid and arise when the Group becomes
obliged to make future payments in respect of the purchase of these goods and services. Trade and other payables
are presented as current liabilities unless payment is not due within 12 months.
(m) Earnings Per CDI
Basic earnings per CDI
Basic earnings per CDI is determined by dividing the profit or loss attributable to ordinary shareholders of the
Company, by the weighted average number of CDIs outstanding during the period, adjusted for bonus elements in
CDIs issued during the period.
Diluted earnings per CDI
Diluted earnings per CDI adjusts the figure used in the determination of basic earnings per CDI to take into account
the after income tax effect of interest and other financial costs associated with dilutive potential CDIs and the
weighted average number of CDIs assumed to have been issued for no consideration in relation to dilutive potential
CDIs, which comprise convertible notes and CDI options granted.
(n) Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a
substantial period of time to prepare for their intended use or sale, are added to the cost of those assets, until such
time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised in income in the period in which they are incurred.
(o) Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that
can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the
obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money and, when appropriate, the risks specific to the liability.
(p) Segment reporting
An operating segment is a component of the Group that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s
other components. Operating segments’ results are reviewed by the Group’s Managing Director to make decisions
about resources to be allocated to the segment and assess its performance, and for which discrete financial
information is available.
(q) CDI based payments
The grant date fair value of CDI-based payment awards granted to employees is recognised as an employee expense,
with a corresponding increase in equity, over the period that the employees unconditionally become entitled to the
awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related
service and non-market vesting conditions are expected to be met, such that the amount ultimately recognised as an
expense is based on the number of awards that do not meet the related service and non-market performance
conditions at the vesting date. For CDI-based payment awards with non-vesting conditions, the grant date fair value
of the CDI-based payment is measured to reflect such conditions and there is no true-up for differences between
24
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2015
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(q) CDI based payments (Continued)
expected and actual outcomes.
(r)
Issued capital
CDIs are classified as equity. Incremental costs directly attributable to the issue of new CDIs or options are shown in
equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new CDIs
or options for the acquisition of a new business are not included in the cost of acquisition as part of the purchase
consideration.
(s)
Principles of Consolidation
The consolidated financial statements incorporate all of the assets, liabilities and results of the parent European
Metals Holdings Limited and all of the subsidiaries. Subsidiaries are entities the parent controls. The parent controls
an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity. A list of the subsidiaries is provided in Note 21.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group
from the date on which control is obtained by the Group. The consolidation of a subsidiary is discontinued from the
date that control ceases. Intercompany transactions, balances and unrealised gains or losses on transactions
between Group entities are fully eliminated on consolidation. Accounting policies of subsidiaries have been changed
and adjustments made where necessary to ensure uniformity of the accounting policies adopted by the Group.
Equity interests in a subsidiary not attributable, directly or indirectly, to the Group are presented as “non controlling
interests". The Group initially recognises non-controlling interests that are present ownership interests in
subsidiaries and are entitled to a proportionate share of the subsidiary's net assets on liquidation at either fair value
or at the non-controlling interests' proportionate share of the subsidiary's net assets. Subsequent to initial
recognition, non-controlling interests are attributed their share of profit or loss and each component of other
comprehensive income. Non-controlling interests are shown separately within the equity section of the statement of
financial position and statement of comprehensive income.
NOTE 2: DETERMINATION OF FAIR VALUES
A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-
financial assets and liabilities. Fair values have been determined for measurement and / or disclosure purposes based on the
following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in
the notes specific to that asset or liability.
CDI-based payment transactions
The fair value of the employee CDI options and the share appreciation right is measured using the Black-Scholes formula.
Measurement inputs include CDI price on measurement date, exercise price of the instrument, expected volatility (based on
weighted average historic volatility adjusted for changes expected due to publicly available information), weighted average
expected life of the instruments (based on historical experience and general option holder behaviour), expected dividends, and
the risk-free interest rate (based on government bonds). Service and non-market performance conditions attached to the
transactions are not taken into account in determining fair value.
25
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2015
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 3: LOSS BEFORE INCOME TAX
(a) Significant revenues and expenses
The following significant revenue and (expense) items are relevant in
explaining the financial performance:
Impairment Expense
•
•
•
Exploration and expenditure
Property plant and equipment
Other assets
NOTE 4: INCOME TAX
(a) Income tax expense
Current tax
Deferred tax
Deferred income tax expense included in income tax expense comprises:
(Increase) in deferred tax assets
Increase in deferred tax liabilities
(b) Reconciliation of income tax expense to prima facie tax payable
Net loss before tax
Prima facie tax on operating loss at 30% (2014: 30%)
Add / (Less): Non-deductible items
-Impairments
-Share-based payments
-Other
Current year tax loss not recognised
Income tax attributable to operating loss
The applicable weighted average effective tax rates are as follows:
Balance of franking account at year end
Deferred tax assets
Tax losses
Capital raising costs
Unrecognised deferred tax asset
30 June 2015
30 June 2014
$
$
-
-
-
-
(602,435)
(21,754)
(49,779)
(673,968)
30 June 2015
30 June 2014
$
$
-
-
-
-
-
-
-
-
-
-
-
-
(666,872)
(1,328,196)
(200,062)
(398,459)
-
-
10,981
189,081
-
Nil%
Nil
140,677
12,127
152,804
202,190
30,000
55,254
111,015
-
Nil%
Nil
140,122
6,820
146,942
26
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2015
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
30 June 2015
30 June 2014
NOTE 4: INCOME TAX
Set-off deferred tax liabilities
Net deferred tax assets
Deferred tax liabilities
Exploration expenditure
Set-off deferred tax assets
Net deferred tax liabilities
Tax losses
$
$
-
-
152,804
146,942
-
-
-
-
-
-
-
-
Unused tax losses for which no deferred tax asset has been recognised
468,923
467,072
The Company is registered in the British Virgin Islands (BVI) and the Company is a tax resident of Australia. The unused tax losses
are representative of losses incurred in Australia.
There are currently no withholding taxes or exchange control regulations in the BVI applicable to the Company. The Company is
subject to the taxation regulations of the Czech Republic where it currently holds mining license via Geomet S.R.O, and also to UK
taxation regulations in respect of European Metals (UK) Limited.
NOTE 5: RELATED PARTY TRANSACTIONS
Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to
other parties unless otherwise stated.
Other than transactions with Key Management Personnel and their related entities (refer Note 6), there were no other related
party transactions during the year.
27
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2015
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 6: KEY MANAGEMENT PERSONNEL COMPENSATION
Refer to the Remuneration Report contained in the Directors’ Report for details of the remuneration paid or payable to each
member of the Group’s key management personnel (KMP) for the year ended 30 June 2015.
The totals of remuneration paid to KMP during the year are as follows:
Short-term benefits
Post employment benefits
Equity settled
Other payments
2015
$
2014
$
307,000
19,000
171,195
9,250
-
100,000
40,000
366,000
-
280,445
Loans to Key Management Personnel
There were no loans to Key Management Personnel during the financial year (2014: Nil).
Other transactions with Key Management Personnel
During 2015, the Group used the following services of the directors of the Company.
•
•
•
Sub-underwriting fee of 2% was paid to the Keith Coughlan $7,144 and David Reeves $799 for capital raising sub-
underwriting. The amounts billed were based on normal market rates and the amount outstanding at reporting date
was $Nil.
During the year the Company converted 5,000,000 Performance A Shares into CDIs in accordance with the Term Sheet
approved by Shareholders on the 20 February 2014. The conversion was dependent on the NPV of the Cinovec project.
Mr David Reeves and Mr Pavel Reichl were vendors to the original Term Sheet and participated in the CDI conversion.
The A Class Performance Shares were converted as follows:
Mr David Reeves, conversion of 542,651 Class A Performance Shares to CDIs at a Grant Date Value of nil.
Mr Pavel Reichl, conversion of 793,906 Class A Performance Shares to CDIs at a Grant Date Value of nil.
During the year ended 30 June 2014, the Company sold its investment in securities in a TSX listed entity to a related
entity of Mr Colin Ikin at an agreed price of $473,495 AUD. Total proceeds received was £251,017 (approximately
$459,824 at date of receipt).
There were no other transactions with Key Management Personnel during the financial year.
28
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2015
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 7: AUDITOR’S REMUNERATION
2015
$
2014
$
Details of the amounts paid to the auditor of the Group, Stantons International
Audit and Consulting Pty Ltd for audit and non-audit services provided during the
year are set out below:
Remuneration of the auditor of the Group for:
Auditor’s services
Audit and review of financial report
NOTE 8: BASIC AND DILUTED LOSS PER CDI
Basic and diluted loss per CDI (cents)
Loss attributable to members of European Metals Holdings Limited
Weighted average number of CDI outstanding during the year
26,025
23,127
(1.25)
(4.53)
(666,872)
(1,328,196)
53,143,446
29,328,577
The Group is in a loss making position and it is unlikely that the conversion to, calling of, or subscription for, CDI capital in respect
of potential CDIs would lead to a diluted earnings per CDI that shows an inferior view of the earnings per CDI. For this reason, the
diluted loss per CDI for the year ended 30 June 2015 are the same as basic loss per CDI.
NOTE 9: CASH AND CASH EQUIVALENTS
Cash at bank
Total cash and cash equivalents in the Statement of Cash Flows
NOTE 10: OTHER RECEIVABLES
CURRENT
GST and VAT Receivable
Other receivable
NOTE 11: OTHER ASSETS
Current
Prepayment – other
2015
$
2014
$
889,208
378,615
889,208
378,615
28,329
374
28,703
22,302
4,405
26,707
32,918
32,918
11,516
11,516
29
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2015
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 12: EXPLORATION AND EVALUATION EXPENDITURE
Exploration at cost
Balance at the beginning of the year
Acquisition of tenements
Exploration of tenements
Foreign exchange movement
Write off of Oyabi Project
NOTE 13: TRADE AND OTHER PAYABLES
CURRENT
Trade payables
Accrued expenses
Payables are normally due for payment within 30 days.
NOTE 14: OTHER LIABILITIES
CURRENT
Loan from Cominco Resources
2015
$
2014
$
2,814,798
566,449
-
2,627,717
599,746
189,072
390
33,995
-
(602,435)
3,414,934
2,814,798
180,975
20,561
201,536
81,918
104,577
186,495
23,291
23,291
23,258
23,258
European Metals Holdings has a loan agreement with Cominco Resources. The loan is for no fixed term, is interest free,
unsecured and repayable by European Metals at call of Cominco. The funds were advanced in Euros and repayment is expected
in Euros. At 30 June 2015 the amount in Euros was € 16,075.
30
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2015
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
Conversion of A Class Performance Shares
15(c)
27 May 2015
NOTE 15: ISSUED CAPITAL
(a) Issued and paid up capital
75,144,459 (30 June 2014: 38,400,006 CDIs)
Total issued capital
(b) Movements in CDIs
Balance at the beginning of the year
Acquisition of EMH UK
Share based payment
Balance at the end of the year
Balance at the beginning of the year
Rights issue
Share based payment
CDI Placement
Capital raising costs
Balance at the end of the year
(c) Movements A Class Performance Shares
Balance at the beginning of the year
Acquisition of EMH UK
Balance at the end of the year
Balance at the beginning of the year
Conversion into CDIs
Balance at the end of the year
(d) Movements B Class Performance Shares
Balance at the beginning of the year
Acquisition of EMH UK
Balance at the end of the year
Balance at the beginning of the year
Balance at the end of the year
Number
$
75,144,459
6,788,183
6,788,183
Date
Number
$
1 July 2013
12 March 2014
12 March 2014
25,400,006
12,500,000
500,000
2,402,296
2,500,000
100,000
30 June 2014
38,400,006
5,002,296
1 July 2014
6 November 2014
20 April 2015
30 June 2015
38,400,006
21,943,023
462,000
5,000,000
9,339,430
5,002,296
1,097,151
30,030
-
747,155
(88,449)
30 June 2015
75,144,459
6,788,183
Date
Number
$
1 July 2013
12 March 2014
30 June 2014
1 July 2014
15(b)
27 May 2015
30 June 2015
-
5,000,000
5,000,000
5,000,000
(5,000,000)
-
-
$
Date
Number
1 July 2013
12 March 2014
30 June 2014
1 July 2014
30 June 2015
5,000,000
5,000,000
5,000,000
5,000,000
-
-
-
-
-
-
-
-
-
-
-
CDIs entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number
of shares held. On a show of hands every holder of a CDI present at a meeting in person or by proxy, is entitled to one vote, and
in a poll each share is entitled to one vote.
European Metals Holdings limited is a company limited by shares incorporated in the British Virgin Islands with an authorised
share capital, 200,000,000 no par value shares of a single class. Pursuant to the prospectus dated 26 April 2012, the company
31
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2015
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 15: ISSUED CAPITAL (CONTINUED)
issued CDIs in July 2012. The holder of the CDIs has beneficial ownership in the underlying shares instead of legal title. Legal title
and the underlying shares is held by Chess Depository Nominees Pty Ltd.
Holders of CDIs have the same entitlement benefits of holding the underlying shares. Each Share in the Company confers upon
the Shareholder:
1.
2.
3.
the right to one vote at a meeting of the Shareholders of the Company or on any Resolution of Shareholders;
the right to an equal share in any dividend paid by the Company; and
the right to an equal share in the distribution of the surplus assets of the Company on its liquidation.
The terms of the B Class Performance Shares are disclosed in Note 21.
(c) Capital risk management
The Group’s objectives when managing capital is to safeguard its ability to continue as a going concern, so that it may continue
to provide returns for shareholders and benefits for other stakeholders.
The capital structure of the Group consists of equity comprising issued capital, reserves and accumulated losses.
Due to the nature of the Group’s activities, being mineral exploration, the Group does not have ready access to credit facilities,
with the primary source of funding being equity raisings. Therefore, the focus of the Group’s capital risk management is to
maintain sufficient current working capital position to meet the requirements of the Group to meet exploration programmes
and corporate overheads. The Group’s strategy is to ensure appropriate liquidity is maintained to meet anticipated operating
requirements, with a view to initiating appropriate capital raisings as required.
The working capital position of the Group at 30 June is as follows:
Cash and cash equivalents
Other receivables
Other assets
Trade and other payables
The Group is not subject to any externally imposed capital requirements.
NOTE 16: RESERVES
Option Reserve
Foreign Currency Translation Reserve
Total Reserve
Option Reserve
The options reserve is used to recognise the fair value of all options on issue but not yet exercised.
Balance at the beginning of the financial year
Options issued / vested
Balance at the end of the financial year
2015
$
2014
$
889,208
378,615
28,703
32,918
26,707
11,516
(224,827)
(209,753)
726,002
207,085
97,560
125,201
222,761
97,560
127,459
225,019
97,560
97,560
-
-
97,560
97,560
32
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2015
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 16: RESERVES (CONTINUED)
At 30 June 2015 the following options are outstanding:
•
•
21,943,023 listed options exercisable at $0.10 on or before 30 June 2016 were issued as free attaching options pursuant
to a CDI placement in November 2014.
1,200,000 unlisted options exercisable at $0.30 on or before 19 July 2015 were issued to key management personnel.
Foreign Currency Translation Reserve
The foreign currency translation reserve records exchange differences arising on translation of foreign controlled subsidiaries.
Balance at the beginning of the financial year
127,459
87,155
Movement during the year
Balance at the end of the financial year
NOTE 17: SHARE BASED PAYMENTS
(2,258)
125,201
40,304
127,459
The following share-based payment arrangements existed at 30 June 2015:
On 1 December 2011, 1,200,000 share options were granted to employees and key management personnel for no
consideration to acquire 1 CDI in the Company exercisable at $0.30 on or before the 3 year anniversary of the date of
quotation on ASX being 19 July 2015. The options hold no dividend or voting rights and are not transferrable.
Options granted to Key Management Personnel are as follow:
Grant Date
1 December 2011
Number
1,200,000
These options vest from the grant date to the date of quotation of the company on the ASX being 19 July 2012. Further
details of these options are provided in the directors’ report. The options hold no voting of dividend rights and are
unlisted.
A summary of the movements of all company options issued is as follows:
Options outstanding as at 1 July 2013
Granted
Forfeited
Exercised
Expired
Options outstanding as at 30 June 2014
Options outstanding as at 1 July 2014
Granted
Forfeited
Exercised
Expired
Options outstanding as at 30 June 2015
Options exercisable as at 30 June 2014
Options exercisable as at 30 June 2015
Number
Weighted
Average Exercise
Price
1,200,000
$0.30
-
-
-
-
1,200,000
1,200,000
-
-
-
-
1,200,000
1,200,000
1,200,000
-
-
-
-
$0.30
$0.30
-
-
-
-
$0.30
-
-
33
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2015
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 17: SHARE BASED PAYMENTS (CONTINUED)
Other share based payment details as follows
i.
ii.
iii.
On 12 March 2014, 12,500,000 fully paid ordinary CDIs at a market value of $0.20 per CDI were issued to acquire EMH UK
Ltd. The fair value of this consideration was deemed to be the market value at the date of the asset acquisition (see Note
21).
On 12 March 2014, 500,000 fully paid ordinary CDIs at a market value of $0.20 per CDI were issued to key management
personnel for services rendered. Further details are provided in the Directors’ report.
On 27 May 2015, 5,000,000 Class A Performance Shares were converted to CDIs, the conversion was per the terms of the
Net Present Value of the Cinovec project not being less than US$ 140,000,000.
iv.
CDIs granted to Key Management Personnel are as follow:
Grant Date
12 March 2014
Number
500,000
The weighted average fair value of those equity instruments, determined by reference to market price, was $0.20. The
CDIs Included under Share Based Payments in the profit and loss is $100,000, which relates to equity settled transactions.
NOTE 18: CASH FLOW INFORMATION
(a) Reconciliation of cash flow from operating activities with the loss after tax
Loss after income tax
Adjustments for:
Loss on disposal and asset write off
Impairment
Share based payment
Unrealised foreign exchange loss/ (gain)
Depreciation expense
Changes in assets and liabilities
Decrease/ (Increase) in other receivables
(Increase)/ Decrease in other assets
(Decrease)/ Increase in trade and other payables
Cash flow (used in)/from operating activities
2015
$
2014
$
(666,872)
(1,328,196)
-
-
-
(2,970)
2,346
1,303
8,629
(26,185)
64,356
673,968
100,000
(2,221)
17,436
(8,677)
7,071
6,211
(683,749)
(470,052)
(b) Credit standby facilities
The Company had no credit standby facilities as at 30 June 2015 and 2014
(c) Non-cash financing and investing activities
On 12 March 2014, European Metals Holdings Limited acquired EMH UK Ltd (see Note 21). The consideration transferred included
an equity payment of 12,500,000 at $0.20 per CDI totalling $2,500,000. The transaction is a non-cash transaction and excluded
from the statement of cash flows.
34
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2015
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 19: OPERATING SEGMENTS
The accounting policies used by the Group in reporting segments are in accordance with the measurement principles of
Australian Accounting Standards.
The Group has identified its operating segments based on the internal reports that are provided to the Board of Directors.
According to AASB 8 Operating Segments, two or more operating segments may be aggregated into a single operating segment if
the segments have similar economic characteristics, and the segments are similar in each of the following respects:
•
•
•
•
•
The nature of the products and services;
The nature of the production processes;
The type or class of customer for their products and services;
The methods used to distribute their products or provide their services; and
If applicable, the nature of the regulatory environment, for example; banking, insurance and public utilities.
The Group currently has one project which takes into account each of the above mentioned aspects. The principal activity for the
project is exploration of tin and base metals. The project is likely to have the same methods to distribute the resources in future
and the nature of the regulatory environment which is the Czech Republic. This is expected to be the same for future projects.
Accordingly, management has identified one operating segment based on the location of the projects, that being the Czech
Republic.
Australia
$
Congo
$
Czech
$
Total
$
30 June 2015
REVENUE
Interest revenue
Total segment revenue
6,917
6,917
-
-
-
-
Reconciliation to net loss:
(534,121)
4,932
(41,536)
Eliminate intercompany
Loss before income tax
Segment assets
Segment liabilities
30 June 2014
REVENUE
Interest revenue
Total segment revenue
Reconciliation to net loss:
Eliminate intercompany
Loss before income tax
6,917
6,971
(570,725)
(96,147)
(666,872)
3,426,872
4,369,649
40,564
224,827
-
-
8,743
8,743
(1,755,728)
427,532
(1,328,196)
942,777
184,263
8,743
8,743
-
-
-
-
(980,865)
(731,442)
(43,421)
Segment assets
368,973
1,025
2,867,820
3,237,818
Segment liabilities
92,799
-
116,954
209,753
35
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2015
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 20: FINANCIAL RISK MANAGEMENT
The Group’s financial instruments consist mainly of deposits with banks, equity instruments and accounts receivable and payable.
The main purpose of non-derivative financial instruments is to raise finance for Group’s operations. The Group does not
speculate in the trading of derivative instruments.
The Group holds the following financial instruments:
Financial assets
Cash and cash equivalents
Other receivables
Total financial assets
Trade and other payables
Other liabilities
Total financial liabilities
2015
$
2014
$
889,208
378,615
28,703
26,707
917,911
405,322
201,536
186,495
23,291
23,258
224,827
209,753
The fair value of the Group’s financial assets and liabilities approximate their carrying value.
Specific Financial Risk Exposures and Management
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk)
credit risk and liquidity risk.
(i) Market risk
The Board meets on a regular basis to analyse currency and interest rate exposure and to evaluate treasury management
strategies in the context of the most recent economic conditions and forecasts.
Interest rate risk
Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the end of the reporting period
whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments. The
Group is also exposed to earnings volatility on floating rate instruments.
Interest rate risk is not material to the Group as no interest bearing debt arrangements have been entered into.
Price risk
Price risk relates to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
market prices. The Group is exposed to securities price risk on investments classified as available for sale. The investment in listed
equities has been valued at the market price prevailing at reporting date. Management of this investment’s price risk is by
ongoing monitoring of the value with respect to any impairment.
Foreign exchange risk
Exposure to foreign exchange risk may result in the fair value or future cash flows of a financial instrument fluctuating due to
movement in foreign exchange rates of currencies in which the Group holds financial instruments which are other than the AUD
functional currency of the Group.
36
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2015
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 20: FINANCIAL RISK MANAGEMENT (CONTINUED)
With instruments being held by overseas operations, fluctuations in foreign currencies may impact on the Group’s financial
results. The Group’s exposure to foreign exchange risk is monitored by the Board. The majority of the Group’s funds are held in
Australian dollars, British Stirling and Czech Koruna. The Group previously held small sums of money in the subsidiary bank
account in Congolese Franc.
At 30 June, the group has financial assets denominated in the foreign currencies detailed below:
2015
2014
Foreign Currency
AUD Equivalent
Foreign Currency
AUD Equivalent
18,477
-
-
984
-
-
796,314
250,618
465,735
41,801
452,090
1,025
CZK
GBP
CFA
A 5% movement in foreign exchange rates would not have a material increase or decrease on loss before tax (2014: $24,746).
At 30 June 2015, the group has liabilities denominated in the foreign currencies detailed below:
2015
2014
Foreign Currency
AUD Equivalent
Foreign Currency
AUD Equivalent
Euro
CZK
GBP
16,075
645,905
3,024
23,291
34,319
6,207
63,817
16,075
1,096,021
32,940
23,257
57,667
59,421
140,345
A 5% movement in foreign exchange rates would increase or decrease loss before tax by approximately $3,191 (2014: $7,017).
(ii) Credit risk
Credit exposure represents the extent of credit related losses that the Group may be subject to on amounts to be received from
financial assets. Credit risk arises principally from trade and other receivables. The objective of the Group is to minimise the risk
of loss from credit risk. Although revenue from operations is minimal, the Group trades only with creditworthy third parties. In
addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is
insignificant. The Group’s maximum credit risk exposure is limited to the carrying value of its financial assets as indicated on the
Statement of Financial Position and notes to the financial statements.
The credit quality of the financial assets was high during the year. The table below details the credit quality of the financial assets
at the end of the year:
37
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2015
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 20: FINANCIAL RISK MANAGEMENT (CONTINUED)
Financial assets
Credit Quality
Cash and cash equivalents held at BGFI Bank
Cash and cash equivalents held at Komercni Bank
Cash and cash equivalents held at Westpac Bank
•
Interest-bearing deposit
Other receivables and deposits
Impairment losses
There are no past due receivables for the Group.
(iii) Liquidity risk
High
High
High
High
2015
$
2014
$
-
984
1,025
41,801
888,224
335,789
28,703
26,707
917,911
405,322
Liquidity risk is the risk that the entity will not be able to meet its financial obligations as they fall due. The objective of the Group
is to maintain sufficient liquidity to meet commitments under normal and stressed conditions.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, and the availability of funding
through an adequate amount of committed credit facilities. Due to the lack of material revenue, the Group aims at maintaining
flexibility in funding by maintaining adequate reserves of liquidity.
The Group did not have access to any undrawn borrowing facilities at the reporting date.
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the
impact of netting arrangements.
As at 30 June 2015
Trade and other payables
Loan payable to external party
As at 30 June 2014
Trade and other payables
Loan payable to external party
Carrying Amount
$
Contractual Cash
flows
$
201,536
23,291
224,827
201,536
23,291
224,827
Carrying Amount
$
Contractual Cash
flows
$
186,495
23,258
209,753
186,495
23,258
209,753
<3 months
$
201,536
-
201,536
<3 months
$
186,495
-
186,495
3-6 months
$
-
-
-
3-6 months
$
-
-
-
6-24
months
$
-
23,291
23,291
6-24
months
$
-
23,258
23,258
(iv) Cash flow and fair value interest rate risk
From time to time the Group has significant interest bearing assets, but they are as a result of the timing of equity raising and
capital expenditure rather than a reliance on interest income. The interest rate risk arises on the rise and fall of interest rates. The
Group’s income and operating cash flows are not expected to be materially exposed to changes in market interest rates in the
future and the exposure to interest rates is limited to the cash and cash equivalents balances.
38
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2015
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 20: FINANCIAL RISK MANAGEMENT (CONTINUED)
The Group’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result of changes
in market interest rates and the effective weighted average interest rates on classes of financial assets and financial liabilities:
Floating
Interest
Rate
$
Non-
interest
bearing
$
2015 Total
Floating
Interest
Rate
$
$
Non-
interest
bearing
$
2014
Total
$
Financial assets
- Within one year
Cash and cash equivalents
Other receivables and deposits
Total financial assets
Weighted average interest rate
889,208
28,703
917,911
1.62%
-
-
-
889,208
378,615
28,703
26,707
917,911
405,322
2.71%
-
-
-
-
378,615
26,707
405,322
-
Financial Liabilities
- Within one year
Trade and other Payables
Borrowings
Total financial liabilities
-
-
-
201,536
(201,536)
23,291
(23,291)
224,827
(224,827)
-
-
-
186,495
(186,495)
23,258
(23,258)
209,753
(209,753)
Net financial assets/ (liabilities)
917,911
(224,827)
693,084
405,322
(209,753)
195,569
Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis points in the interest rates at the reporting date would have increased or decreased the Group’s equity and
profit or loss by $4,259 (2014: $3,786).
(v) Net fair value of financial assets and liabilities
The net fair value of cash and cash equivalents and non-interest bearing monetary assets and financial liabilities approximates
their carrying values.
NOTE 21: CONTROLLED ENTITIES
Subsidiaries of European Metals Holdings Limited
Controlled entity
Country of Incorporation
Class of Shares
Percentage Owned
Equamineral Group Limited (EGL)*
British Virgin Islands
Equamineral SA (ESA Congo)
Republic of Congo
European Metals UK Limited **
United Kingdom
Geomet S.R.O
Czech Republic
Ordinary
Ordinary
Ordinary
Ordinary
2015
100%
100%
100%
100%
2014
100%
100%
100%
100%
*EGL was incorporated on 8 December 2010 and domiciled in the British Virgin Islands. EGL is the parent company for
Equamineral SA (ESA Congo) located in the Republic of Congo. EGL is the beneficial holder of 100% of the issued share capital in
Equamineral SA. This company is currently in the process of being deregistered.
**EMH UK Limited is the parent company for Geomet S.R.O
39
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2015
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 21: CONTROLLED ENTITIES (CONTINUED)
Acquisition of EMH UK Ltd
On 20 February 2014, the Company acquired European Metals UK Limited (“EMH UK”). EMH UK holds equity in Czech Republic
incorporated entity Geomet S.R.O. Geomet S.R.O holds various granted mining tenements located in the Czech Republic. The
consideration consisted of 12,500,000 CDIs at $0.20 per CDI and 5,000,000 A Class Performance shares convertible into CDIs and
5,000,000 B Class Performance shares convertible into CDIs.
The terms of the performance shares are as follows:
1.
2.
The 5,000,000 A Class Performance Shares will convert to between 3,000,000 and 5,000,000 CDI’s upon the net
present value of the Permits (NPV) being independently determined to be not less than US$100,000,000, or, where
the NPV is less than US$100,000,000 the directors of the Company who are not associates or related parties of
European Metals nevertheless resolve to commission a definitive feasibility study in respect of the Permits (DFS) as
contemplated in the milestone to the B Class Performance shares. This determination or resolution must occur on or
before that date which is 1 year after the date of issue of the A Class Performance shares.
The 5,000,000 B Class Performance Shares will convert to up to 25,000,000 CDI’s subject to completion of a DFS by an
independent third party on or before that date which is 2 years after the date of issue of the B Class Performance
CDI’s. The number of CDI’s issued on conversion will be calculated by reference to a total of $7,500,000 worth less
the value of any A Class Performance shares converted using a deemed issue price of $0.30 per CDI. The conversion
price will be calculated at the time the DFS is provided to the Company subject to being a minimum of $0.30. The B
Class Performance shares will also be subject to early conversion in the event a change of control event occurs prior
to satisfaction of the milestone.
No value has been attributed to the Performance Shares.
This acquisition has not been accounted for as a business combination under AASB 3: “Business Combination” as the assets of
EMH UK were not considered a business. Accordingly, the EMH UK acquisition has been accounted for as an acquisition of assets,
at cost based on the fair value of CDI’s used for the acquisition. The purchase price has been allocated to the identifiable assets
and liabilities of the Consolidated Group of EMH UK as of the date of acquisition as follows:
Exploration and evaluation assets
Total value of assets acquired
Deduct net liabilities assumed:
Net assets acquired
Acquisition date fair value of consideration:
CDIs issued
Note
2015
$
2014
$
2,627,717
2,627,717
(127,717)
2,500,000
2,500,000
-
-
-
-
-
40
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2015
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 22: PARENT ENTITY DISCLOSURE
The following information has been extracted from the books and records of the parent and has been prepared in accordance
with Australian Accounting Standards.
Statement of Financial Position
ASSETS
Current assets
Non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
Profit or Loss and Other Comprehensive Income
Total Loss
Total comprehensive loss
Guarantees
2015
$
2014
$
942,288
3,468,474
4,410,762
367,019
2,788,551
3,155,570
184,262
184,262
180,835
180,835
4,226,500
2,974,735
6,788,183
5,002,296
97,560
97,560
(2,659,243)
(2,125,121)
4,226,500
2,974,735
(534,122)
(980,865)
(534,122)
(980,865)
There are no guarantees entered into by European Metals Holdings Limited for the debts of its subsidiary as at 30 June 2015.
Contingent liabilities
There are no contingent liabilities as at 30 June 2015. Other than as disclosed in Note 21 in respect of the B Class Performance
Shares that may be issued in respect of the acquisition of European Metals (UK) Ltd.
Commitments
There were no commitments as at 30 June 2015.
41
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2015
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 23: CAPITAL COMMITMENTS
Capital expenditure commitments:
Capital expenditure commitments for:
Mining concession commitments
Payable:
Not longer than 1 year
Longer than 1 year and not longer than 5
years
Longer than 5 years
2015
$
-
-
-
-
-
2014
$
115,731
115,731
-
-
115,731
Commitments at 30 June 2015 relate to mining contracts for works to be performed were nil (2014: 2,199,592 CZK and
equating to $115,731 AUD.)
NOTE 24: CONTINGENT LIABILITIES
There are no contingent liabilities as at 30 June 2015. Other than as disclosed in Note 21 in respect of the B Class Performance
Shares that may be issued in respect of the acquisition of European Metals (UK) Ltd.
NOTE 25: SIGNIFICANT EVENTS AFTER THE REPORTING DATE
On 31 July 2015 the Company held a General meeting, the following matters relating the issue of new equity instruments were
approved for issue:
•
•
•
Issue of 496,725 CDIs to Mr David Reeves (Non-Executive Chairman) in lieu of consulting fees for the year ended 30
June 20157.
Issue of 2,000,000 options to Mr Keith Coughlan (Executive Director) exercisable at $0.16 cent on or before 17 August
2020.
Issue of 1,000,000 options to Mr David Reeves (Non-Executive Chairman) exercisable at $0.16 cent on or before 17
August 2020.
Issue of 750,000 options to Dr Pavel Reichl exercisable at $0.16 cent on or before 17 August 2020.
•
• On 31 July 2015 the Company held a General Meeting and received shareholder approval to place 9,410,578 CDIs at
$0.08 to raise an additional $752,846 for working capital.
• On 31 August 2015 Dr Pavel Reichl was appointed a Non-executive Director of the Company (previously Executive
Director).
Except for the matters noted above there have been no other significant events arising after the reporting date.
7 Fees were accrued for the year end 30 June 2015
42
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2015
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 26: NEW ACCOUNTING STANDARDS FOR APPLICATION IN FUTURE PERIODS
The AASB has issued a number of new and amended Accounting Standards and Interpretations that have mandatory application
dates for future reporting periods, some of which are relevant to the Group.
At the date of the authorisation of the financial statements, the standards and Interpretations listed below were in issue but not
yet effective.
AASB 9 Financial Instruments and associated Amending Standards (applicable for annual reporting period commencing 1 January
2018)
The Standard will be applicable retrospectively (subject to the comment on hedge accounting below) and includes revised
requirements for the classification and measurement of financial instruments, revised recognition and derecognition
requirements for financial instruments and simplified requirements for hedge accounting.
Key changes made to this standard that may affect the Group on initial application include certain simplifications to the
classification of financial assets, simplifications to the accounting of embedded derivatives, and the irrevocable election to
recognise gains and losses on investments in equity instruments that are not held for trading in other comprehensive income.
Although the directors anticipate that the adoption of AASB 9 may have an impact on the Group’s financial instruments it is
impractical at this stage to provide a reasonable estimate of such impact.
There are no other standards that are not yet effective and that would be expected to have a material impact on the entity in the
current or future reporting periods and on foreseeable future transactions.
43
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL REPORT 30 JUNE 2015
DIRECTORS’ DECLARATION
The Directors of the Company declare that:
1.
The financial statements and notes, as set out on pages 15 to 43, are in accordance with the Corporations Act 2001
and:
(a)
(b)
(c)
comply with Accounting Standards;
are in accordance with International Financial Reporting Standards issued by the International Accounting
Standards Board, as stated in Note 1 to the financial statements; and
give a true and fair view of the financial position as at 30 June 2015 and of the performance for the year
ended on that date of the Group.
2.
the Chief Executive Officer and Chief Finance Officer have each declared that:
(a)
the financial records of the Group for the financial year have been properly maintained in accordance with s
286 of the Corporations Act 2001;
(b)
the financial statements and notes for the financial year comply with the Accounting Standards; and
(c)
the financial statements and notes for the financial year give a true and fair view.
3.
in the Directors’ opinion there are reasonable grounds to believe that the Group will be able to pay its debts as and
when they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the
Directors by:
Keith Coughlan
Managing Director
Dated at Perth on 30 September 2015.
44
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL REPORT 30 JUNE 2015
CORPORATE GOVERNANCE STATEMENT
This Corporate Governance summary discloses the extent to which the Company will follow the recommendations set by
the ASX Corporate Governance Council in its publication ‘Corporate Governance Principles and Recommendations (3rd
Edition)’ (Recommendations). The Recommendations are not mandatory, however, the Recommendations that will not be
followed have been identified and reasons have been provided for not following them.
The Company’s Corporate Governance Plan has been posted on the Company’s website at www.europeanmet.com.
PRINCIPLES AND RECOMMENDATIONS
COMPLY
(YES/NO)
EXPLANATION
Principle 1: Lay solid foundations for management and oversight
Recommendation 1.1
The Company has adopted a Board Charter.
A listed entity should have and disclose a charter
which:
YES
(a)
(b)
the
sets out
roles and
responsibilities of the board, the chair and
management; and
respective
includes a description of those matters
expressly reserved to the board and those
delegated to management.
Recommendation 1.2
A listed entity should:
YES
(a) undertake
appropriate
before
appointing a person, or putting forward to
security holders a candidate for election, as a
director; and
checks
(b) provide security holders with all material
information relevant to a decision on whether
or not to elect or re-elect a director.
Recommendation 1.3
A listed entity should have a written agreement
with each director and senior executive setting out
the terms of their appointment.
YES
the
sets out
The Board Charter
specific
responsibilities of the Board, requirements as to the
Boards composition, the roles and responsibilities of
the
the Chairman and Company
establishment, operation and management of Board
Committees, Directors access to company records
and information, details of the Board’s relationship
with management,
Board’s
details
performance review and details of the Board’s
disclosure policy.
Secretary,
the
of
A copy of the Company’s Board Charter is stated in
Schedule 1 of the Corporate Governance Plan which
is available on the Company’s website.
(a) The Company has detailed guidelines for the
appointment and selection of the Board. The
Company’s Corporate Governance Plan requires
the Board to undertake appropriate checks
before appointing a person, or putting forward
to security holders a candidate for election, as a
director.
(b) Material information relevant to any decision on
whether or not to elect or re-elect a Director will
be provided to security holders in the notice of
meeting holding the resolution to elect or re-
elect the Director.
The Company’s Corporate Governance Plan requires
the Board to ensure that each Director and senior
executive is a party to a written agreement with the
Company which sets out the terms of that Director’s
or senior executive’s appointment.
Recommendation 1.4
The company secretary of a listed entity should be
accountable directly to the board, through the
chair, on all matters to do with the proper
functioning of the board.
YES
The Board Charter outlines the roles, responsibility
and accountability of the Company Secretary. The
Company Secretary is accountable directly to the
Board, through the chair, on all matters to do with
the proper functioning of the Board.
47
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL REPORT 30 JUNE 2015
CORPORATE GOVERNANCE STATEMENT
Recommendation 1.5
A listed entity should:
(a) have a diversity policy which
includes
requirements for the board:
(i)
set measurable objectives
to
achieving gender diversity; and
for
(ii) to assess annually both the objectives
and the entity’s progress in achieving
them;
(b) disclose that policy or a summary or it; and
(c) disclose as at the end of each reporting
period:
(i) the measurable objectives for achieving
gender diversity set by the board in
accordance with the entity’s diversity
policy and its progress towards achieving
them; and
(ii) either:
(A)
the respective proportions of men
and women on the board, in senior
executive positions and across the
whole organisation (including how
the entity has defined “senior
executive” for these purposes); or
(B)
“Gender Equality
the entity’s
Indicators”, as defined
the
Workplace Gender Equality Act
2012.
in
(a) The Company has adopted a Diversity Policy.
YES
(i) The Diversity Policy provides a framework
for the Company to achieve a list of 6
measurable objectives
that encompass
gender equality.
for
(ii) The Diversity Policy provides
the
monitoring and evaluation of the scope and
currency of
the Diversity Policy. The
company is responsible for implementing,
monitoring
the
measurable objectives.
reporting
and
on
(b) The Diversity Policy is stated in Schedule 9 of the
Corporate Governance Plan which is available on
the company website.
(c)
included
(i) The measurable objectives set by the Board
the annual key
in
will be
performance indicators for the CEO, MD
and senior executives. In addition the Board
will review progress against the objectives
in its annual performance assessment.
(ii) The Company currently has no employees
and utilizes external consultants and
contractors as and when required.
The Board will review this position on an
annual
implement
measurable objectives as and when they
deem the Company to require them.
and will
basis
Recommendation 1.6
A listed entity should:
YES
(a) have and disclose a process for periodically
evaluating the performance of the board, its
committees and individual directors; and
(b) disclose in relation to each reporting period,
whether a performance evaluation was
undertaken
in
in
accordance with that process.
reporting period
the
the Board and
(a) The Board is responsible for evaluating the
performance of
individual
directors on an annual basis. It may do so with
the aid of an independent advisor. The process
for this can be found in Schedule 6 of the
Company’s Corporate Governance Plan.
(b) The Company’s Corporate Governance Plan
requires the Board to disclosure whether or not
performance evaluations were conducted during
the relevant reporting period.
Due to the size of the Board and the nature of
the business, it has not been deemed necessary
to institute a formal documented performance
review program of individuals. However, the
Chairman intends to conduct formal reviews
each financial year whereby the performance of
the Board as a whole and the
individual
contributions of each director are disclosed. The
Board considers that at this stage of the
Company’s development an informal process is
appropriate.
48
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL REPORT 30 JUNE 2015
CORPORATE GOVERNANCE STATEMENT
The review will assist to indicate if the Board’s
performance is appropriate and efficient with
respect to the Board Charter.
remains appropriate
legal and
The Board regularly reviews its skill base and
whether
the
it
for
financial
Company’s operational,
requirements. New Directors are obliged to
participate in the Company’s induction process,
which provides a comprehensive understanding
of the Company, its objectives and the market in
which the Company operates.
Directors are encourages to avail themselves of
resources required to fulfil the performance of
their duties.
YES
(a) The Board is responsible for evaluating the
performance of senior executives. The Board is
to arrange an annual performance evaluation of
the senior executives.
to
the Board
(b) The Company’s Corporate Governance Plan
requires
annual
performance of the senior executives. Schedule
6 ‘Performance Evaluation’ requires the Board to
disclose whether
performance
or
evaluations were conducted during the relevant
reporting period.
conduct
not
Recommendation 1.7
A listed entity should:
(a) have and disclose a process for periodically
its senior
evaluating the performance of
executives; and
(b) disclose in relation to each reporting period,
whether a performance evaluation was
undertaken
in
in
accordance with that process.
reporting period
the
During the financial year an evaluation of
performance of the individuals was not formally
carried out. However, a general review of the
individuals occurs on an on-going basis to ensure
that structures suitable to the Company’s status
as a listed entity are in place.
Principle 2: Structure the board to add value
Recommendation 2.1
The board of a listed entity should:
YES
(a) have a nomination committee which:
(a) The Nomination Committee was formed on 26
August 2015, with all directors appointed as
members of the Committee, being Mr Reeves
(Chairman), Mr Coughlan and Dr Reichl.
(i)
has at least three members, a majority
of whom are independent directors;
and
(ii)
is chaired by an independent director,
and disclose:
(iii)
(iv)
(v)
the charter of the committee;
the members of the committee; and
as at the end of each reporting period,
the number of times the committee
met throughout the period and the
individual attendances of the members
at those meetings; or
(b)
if it does not have a nomination committee,
The role and responsibilities of the Nomination
Committee
in Nomination
outlined
Committee Charter available online on the
Company’s website.
are
The Board devotes time at board meetings to
discuss board succession issues. All members of
the Board are
in the Company’s
nomination process, to the maximum extent
permitted under the Corporations Act and ASX
Listing Rules.
involved
The Board regularly updates the Company’s
(in accordance with
board
recommendation 2.2) to assess the appropriate
skills matrix
49
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL REPORT 30 JUNE 2015
CORPORATE GOVERNANCE STATEMENT
disclose that fact and the processes
it
employs to address board succession issues
and to ensure that the board has the
appropriate balance of skills, experience,
independence and knowledge of the entity to
its duties and
to discharge
enable
responsibilities effectively.
it
Recommendation 2.2
A listed entity should have and disclose a board
skill matrix setting out the mix of skills and
diversity that the board currently has or is looking
to achieve in its membership.
balance of skills, experience, independence and
knowledge of the entity.
YES
Board Skills Matrix
Number of
Directors that
Meet the Skill
Executive & Non- Executive
experience
Industry experience &
knowledge
Leadership
Corporate governance & risk
management
Strategic thinking
Desired behavioural
competencies
Geographic experience
Capital Markets experience
Subject matter expertise:
- accounting
- capital management
- corporate financing
- industry taxation 1
- risk management
- legal
- IT expertise 2
3
3
3
3
3
3
3
3
2
3
2
0
3
3
0
Recommendation 2.3
A listed entity should disclose:
(a) the names of the directors considered by the
YES
board to be independent directors;
(b)
interest, position,
if a director has an
association or relationship of
type
described in Box 2.3 of the ASX Corporate
the
(1) Skill gap noticed however an external taxation
taxation
is employed
to maintain
firm
requirements.
(2) Skill gap noticed however an external IT firm is
employed on an adhoc basis to maintain IT
requirements.
(a) The Board Charter provides for the disclosure of
the names of Directors considered by the Board
to be independent. These details are provided in
the Annual Reports and Company website.
(b) The Board Charter requires Directors to disclose
their
interest, positions, associations and
relationships
the
requires
independence of Directors is regularly assessed
that
and
50
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL REPORT 30 JUNE 2015
CORPORATE GOVERNANCE STATEMENT
it
does
Governance Principles and Recommendation
(3rd Edition), but the board is of the opinion
that
the
not
independence of the director, the nature of
the
association or
relationship in question and an explanation of
why the board is of that opinion; and
interest, position,
compromise
(c)
the length of service of each director
Recommendation 2.4
A majority of the board of a listed entity should be
independent directors.
Recommendation 2.5
The chair of the board of a listed entity should be
an independent director and, in particular, should
not be the same person as the CEO of the entity.
Recommendation 2.6
directors
providing
A listed entity should have a program for inducting
appropriate
new
and
for
professional development opportunities
continuing directors to develop and maintain the
skills and knowledge needed to perform their role
as a director effectively.
by the Board in light of the interests disclosed by
interests,
Directors. Details of the Directors
positions associations and relationships are
provided in the Annual Reports and Company
website.
(c) The
for
Board
Charter
provides
the
determination of the Directors’ terms and
requires the length of service of each Director to
be disclosed. The length of service of each
Director is provided in the Annual Reports and
Company website.
YES
YES
YES
The Board Charter requires that where practical the
majority of the Board will be independent.
Details of each Director’s independence are provided
in the Annual Reports and Company website.
The Board Charter provides that where practical, the
Chairman of the Board will be a non-executive
director. If the Chairman ceases to be independent
then the Board will consider appointing a
lead
independent Director.
The Board Charter states that a specific responsibility
of the Board is to procure appropriate professional
development opportunities for Directors. The Board
is responsible for the approval and review of
induction and continuing professional development
programs and procedures for Directors to ensure that
they can effectively discharge their responsibilities.
Principle 3: Act ethically and responsibly
Recommendation 3.1
A listed entity should:
(a) have a code of conduct for its directors,
senior executives and employees; and
(b) disclose that code or a summary of it.
YES
(a) The Corporate Code of Conduct applies to the
Company’s directors, senior executives and
employees.
(b) The Company’s Corporate Code of Conduct is in
Schedule 2 of the Corporate Governance Plan
which is on the Company’s website.
Principle 4: Safeguard integrity in financial reporting
Recommendation 4.1
The board of a listed entity should:
YES
(a) have an audit committee which:
(i)
has at least three members, all of
whom are non-executive directors and
a majority of whom are independent
directors; and
(ii)
is chaired by an independent director,
who is not the chair of the board,
and disclose:
(b) The Audit and Risk Committee was formed on 26
August 2015, with all directors appointed as
members of the Committee, being Dr Reichl
(Chairman), Mr Reeves and Mr Coughlan.
The role and responsibilities of the Audit and
Risk Committee are outlined in Audit and Risk
Committee Charter available online on the
Company’s website.
The Board devote time at annual board meetings
to
responsibilities
associated with maintaining the Company’s
roles and
fulfilling
the
51
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL REPORT 30 JUNE 2015
CORPORATE GOVERNANCE STATEMENT
(iii)
(iv)
(v)
the charter of the committee;
relevant
the
and
experience of the members of the
committee; and
qualifications
in relation to each reporting period,
the number of times the committee
met throughout the period and the
individual attendances of the members
at those meetings; or
internal audit function and arrangements with
external auditors. All members of the Board are
involved in the Company’s audit function to
ensure the proper maintenance of the entity and
the integrity of all financial reporting.
(b)
that
the
if it does not have an audit committee,
disclose that fact and the processes
it
independently verify and
employs
safeguard
financial
integrity of
reporting, including the processes for the
appointment and removal of the external
auditor and the rotation of the audit
engagement partner.
its
YES
Recommendation 4.2
The board of a listed entity should, before it
approves the entity’s financial statements for a
financial period, receive from its CEO and CFO a
declaration that the financial records of the entity
have been properly maintained and that the
financial statements comply with the appropriate
accounting standards and give a true and fair view
of the financial position and performance of the
entity and that the opinion has been formed on
the basis of a sound system of risk management
and internal control which is operating effectively.
Recommendation 4.3
A listed entity that has an AGM should ensure that
its external auditor attends
is
from security
available to answer questions
holders relevant to the audit.
its AGM and
YES
The Company’s Corporate Governance Plan states
that a duty and responsibility of the Board is to
ensure that before approving the entity’s financial
statements for a financial period, the CEO and CFO
have declared that in their opinion the financial
records of the entity have been properly maintained
and that the financial statements comply with the
appropriate accounting standards and give a true and
fair view of the financial position and performance of
the entity and that the opinion has been formed on
the basis of a sound system of risk management and
internal control which is operating effectively.
The Company’s Corporate Governance Plan provides
that the Board must ensure the Company’s external
auditor attends its AGM and is available to answer
questions from security holders relevant to the audit.
Principle 5: Make timely and balanced disclosure
Recommendation 5.1
A listed entity should:
YES
(a) have a written policy for complying with its
continuous disclosure obligations under the
Listing Rules; and
(b) disclose that policy or a summary of it.
(a) The Board Charter provides details of the
Company’s disclosure policy.
In addition,
Schedule 7 of the Corporate Governance Plan is
entitled ‘Disclosure – Continuous Disclosure’ and
details the Company’s disclosure requirements
as required by the ASX Listing Rules and other
relevant legislation.
(b) The Board Charter and Schedule 7 of the
Corporate Governance Plan are available on the
Company website.
Principle 6: Respect the rights of security holders
Recommendation 6.1
A listed entity should provide information about
Information about the Company and its governance is
available in the Corporate Governance Plan which can
52
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL REPORT 30 JUNE 2015
CORPORATE GOVERNANCE STATEMENT
itself and
website.
its governance to
investors via
its
YES
be found on the Company’s website.
Information about the Company and its governance is
available in the Corporate Governance Plan which can
be found on the Company website.
Recommendation 6.2
A listed entity should design and implement an
investor relations program to facilitate effective
two-way communication with investors.
YES
a
has
adopted
Shareholder
The Company
Communications Strategy which aims to promote and
facilitate effective two-way communication with
investors. The Shareholder Communications Strategy
outlines a range of ways in which information is
communicated to shareholders.
Recommendation 6.3
A listed entity should disclose the policies and
facilitate and
processes
encourage participation at meetings of security
holders.
in place to
it has
YES
The Shareholder Communications Strategy can be
found in Schedule 10 of the Board Charter which is
available on the Company website.
The Shareholder Communications Strategy states
that as a part of the Company’s developing investor
relations program, Shareholders can register with the
Company Secretary to receive email notifications of
when an announcement is made by the Company to
the ASX, including the release of the Annual Report,
half yearly reports and quarterly reports. Links are
made available to the Company’s website on which
all information provided to the ASX is immediately
posted.
Shareholders are encouraged to participate at all
EGMs and AGMs of the Company. Upon the despatch
of any notice of meeting to Shareholders, the
Company Secretary shall send out material with that
notice of meeting stating that all Shareholders are
encouraged to participate at the meeting.
Recommendation 6.4
A listed entity should give security holders the
option to receive communications from, and send
communications to, the entity and its security
registry electronically.
YES
Security holders can register with the Company to
receive email notifications when an announcement is
made by the Company to the ASX.
Shareholders queries should be referred to the
Company Secretary at first instance.
Principle 7: Recognise and manage risk
Recommendation 7.1
The board of a listed entity should:
YES
(a) have a committee or committees to oversee
risk, each of which:
(i)
has at least three members, a majority
of whom are independent directors;
and
(ii)
is chaired by an independent director,
and disclose:
(iii)
the charter of the committee;
(iv)
the members of the committee; and
(b) Due to the size and nature of the existing Board
and the magnitude of the Company’s operations
the Company currently has no Audit and Risk
Committee. Pursuant to Clause 4(h) of the
Company’s Board Charter,
full Board
currently carries out the duties that would
ordinarily be assigned to the Audit and Risk
Committee under the written terms of reference
for that committee.
the
The role and responsibilities of the Audit and
Risk Committee are outlined in Schedule 3 of the
Company’s Corporate Governance Plan available
online on the Company’s website.
The Board devote time at annual board meeting
53
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL REPORT 30 JUNE 2015
CORPORATE GOVERNANCE STATEMENT
(v)
as at the end of each reporting period,
the number of times the committee
met throughout the period and the
individual attendances of the members
at those meetings; or
(b)
if it does not have a risk committee or
committees that satisfy (a) above, disclose
that fact and the process it employs for
overseeing the entity’s risk management
framework.
Recommendation 7.2
(a)
The board or a committee of the board should:
YES
(a) review
the entity’s
risk management
framework with management at
least
annually to satisfy itself that it continues to
be sound, to determine whether there have
been any changes in the material business
risks the entity faces and to ensure that they
remain within the risk appetite set by the
board; and
(b) disclose in relation to each reporting period,
whether such a review has taken place.
Recommendation 7.3
A listed entity should disclose:
YES
(a)
(b)
if it has an internal audit function, how the
function
it
performs; or
is structured and what role
if it does not have an internal audit function,
that fact and the processes it employs for
evaluating and continually
improving the
effectiveness of its risk management and
internal control processes.
Recommendation 7.4
A listed entity should disclose whether, and if so
how, it has regard to economic, environmental
and social sustainability risks and, if it does, how it
manages or intends to manage those risks.
YES
the
fulfilling
roles and
to
responsibilities
associated with overseeing risk and maintaining
the entity’s risk management framework and
associated
internal compliance and control
procedures.
risks,
these
risk, monitor
The Company process for risk management and
internal compliance includes a requirement to
identify and measure
the
environment for emerging factors and trends
risk
that affect
formulate
management strategies and monitor
the
performance of risk management systems.
Schedule 8 of the Corporate Governance Plan is
entitled ‘Disclosure – Risk Management’ and
details the Company’s disclosure requirements
with respect to the risk management review
procedure and
compliance and
internal
controls.
(b) The Board Charter requires the Board to
disclose the number of times the Board met
throughout the relevant reporting period, and
the individual attendances of the members at
those meetings. Details of the meetings will be
provided in the Company’s Annual Report.
Schedule 3 of the Company’s Corporate Plan provides
for the internal audit function of the Company. The
Board Charter outlines the monitoring, review and
assessment of a range of internal audit functions and
procedures.
Schedule 3 of the Company’s Corporate Plan details
the Company’s risk management systems which assist
in identifying and managing potential or apparent
business, economic, environmental and
social
sustainability risks (if appropriate). Review of the
Company’s risk management framework is conducted
at least annually and reports are continually created
by management on the efficiency and effectiveness of
the Company’s risk management framework and
associated
control
procedures.
compliance
internal
and
54
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL REPORT 30 JUNE 2015
CORPORATE GOVERNANCE STATEMENT
Principle 8: Remunerate fairly and responsibly
Recommendation 8.1
The board of a listed entity should:
YES
(a) have a remuneration committee which:
(i)
has at least three members, a majority
of whom are independent directors;
and
(ii)
is chaired by an independent director,
and disclose:
(iii)
(iv)
(v)
the charter of the committee;
the members of the committee; and
as at the end of each reporting period,
the number of times the committee
met throughout the period and the
individual attendances of the members
at those meetings; or
The Remuneration Committee was formed on 26
August 2015, with all directors appointed as members
of the Committee, being Mr Reeves (Chairman), Mr
Coughlan and Dr Reichl.
The role and responsibilities of the Remuneration
Committee are outlined in Remuneration Committee
Charter available online on the Company’s website.
The Board devote time at annual board meetings to
fulfilling the roles and responsibilities associated with
setting the level and composition of remuneration for
Directors and senior executives and ensuring that
such remuneration is appropriate and not excessive.
(b)
that
fact and
it does not have a
remuneration
if
the
committee, disclose
processes it employs for setting the level and
composition of remuneration for directors
and senior executives and ensuring that such
remuneration
and not
excessive.
appropriate
is
Recommendation 8.2
its
listed entity should separately disclose
A
policies and practices regarding the remuneration
of non-executive directors and the remuneration
of executive directors and other senior executives
roles and
and ensure
directors
responsibilities
compared to executive directors and other senior
executives are
level and
composition of their remuneration.
the different
non-executive
that
of
reflected
the
in
YES
The Company’s Corporate Governance Plan requires
the Board to disclose
its policies and practices
remuneration of non-executive,
regarding
executive and other senior directors.
the
YES
Recommendation 8.3
listed entity which has an equity-based
A
remuneration scheme should:
(a) have a policy on whether participants are
permitted to enter into transactions (whether
through the use of derivatives or otherwise)
which limit the economic risk of participating
in the scheme; and
(b) disclose that policy or a summary of it.
(a) Company’s Corporate Governance Plan states
that the Board is required to review, manage
and disclose the policy (if any) on whether
participants are permitted
into
(whether through the use of
transactions
derivatives or otherwise) which
the
economic risk of participating in the scheme. The
Board must review and approve any equity
based plans.
to enter
limit
(b) A copy of the Company’s Corporate Governance
Plan is available on the Company’s website.
55
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL REPORT 30 JUNE 2015
ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES
The following additional information is required by the Australian Securities Exchange Ltd in respect of listed public companies
only.
1
Shareholding as at 23 September 2015
(a) Distribution of Shareholders
Category (size of holding)
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
Number
of Shareholders
19
51
144
212
78
504
(b) The number of shareholdings held in less than marketable parcels is 55.
(c) Voting Rights
The voting rights attached to each class of equity security are as follows:
CDIs
-
Each CDI is entitled to one vote when a poll is called, otherwise each member present at a meeting or by proxy
has one vote on a show of hands.
(d) 20 Largest Shareholders — CDIs as at 23 September 2015
Name
1. HSBC Custody Nominees (Australia) Limited
2. R & H Trust Co (Guernsey) Limited
3. NS Hong Investment (BVI) Ltd
4.
Inswinger Holdings Pty Ltd
5. Nefco Nominees Pty Ltd
6. Armco Barriers Pty Ltd
7. Mrs Eleanor Jean Reeves
8. WB Nominees Limited
9. Vynben Pty Ltd
10. Merrill Lynch (Australia) Nominees Pty Limited
11. Hana Vanova
12. Citicorp Nominees Pty Limited
13. Ms Olga Bubnikova
14. Mr Oto Janout
15. Rodinia Geological Services Pty Ltd
16. Hereford Group Limited
17. Mr Jamie John Carter + Mrs Kristin Carter
18. Mr Brian Michael Moritz
19. Beaufort Securities Ltd
20. Andolin Holdings Pty Ltd
Number of
CDIs Held
8,419,709
% Held of
Issued Ordinary
Capital
9.90
7,191,414
4,700,000
4,500,000
4,027,000
3,700,000
3,061,872
2,834,411
2,805,750
2,778,672
2,778,672
2,598,264
2,158,055
2,158,055
1,599,776
1,571,429
1,479,776
1,113,554
911,012
750,000
8.46
5.53
5.29
4.73
4.35
3.60
3.33
3.30
3.27
3.27
3.05
2.54
2.54
1.88
1.85
1.74
1.31
1.07
0.88
61,137,421
78.88
56
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL REPORT 30 JUNE 2015
ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES
2
3
The name of the Company Secretary is Ms Julia Beckett.
The address of the principal registered office in Australia is Suite 12, Level 1, 11 Ventnor Avenue, West Perth WA
6005. Telephone +61 8 6141-3500.
4
Registers of securities are held at the following addresses
Computershare Investor Services Limited
Level 11
172 St Georges Terrace
Perth, Western Australia 6000
5
Securities Exchange Listing
Quotation has been granted for all the CDIs of the Company on all Member Exchanges of the Australian
Securities Exchange Limited.
6
Unquoted Securities
Options over Unissued Shares
A total of 1,200,000 options over unissued CDIs are on issue.
7
Use of Funds
The Company has used its funds in accordance with its initial business objectives.
TENEMENT SCHEDULE
Project Location
Project
Cinovec
Cinovec 2
Czech Republic
Czech Republic
57