Goldplat 2011 A-W 2_Layout 1 23/09/2011 17:29 Page a SOUTH AFRICAN OFFICE: Daveyton Road, PO Box 40, Benoni 1500, South Africa Tel: +27 (0) 11 423 1202 Fax: + 27 (0) 11 423 1230 Email: info@goldplat.com www.goldplat.com UNITED KINGDOM OFFICE: Covenham House Downside Bridge Road Cobham KT11 3EP Tel: +44 (0) 1932 918 070 Email: info@goldplat.com African focused gold production and advanced exploration ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011 Goldplat 2011 A-W 2_Layout 1 23/09/2011 17:29 Page c C O N T E N T S H I G H LI G HTS C HAI R MAN’S STATE M E NT O P E R ATI O N S R E PO RT D I R ECTO R S’ R E PO RT I N D E P E N D E NT AU D ITO R ’ S R E PO RT G R O U P STATE M E NT O F C O M P R E H E N S I V E I N C O M E G R O U P AN D C O M PANY STAT E M E NTS O F F I NAN C I AL POS I T I O N G R O U P AN D C O M PANY STAT E M E NTS O F C H AN G E S I N S HAR E H O LD E R S’ EQ U I T Y G R O U P AN D C O M PANY CAS H F LOW STAT E M E NTS N OTES TO TH E F I NAN C IAL STAT E M E NTS D I R ECTO R S AN D ADVI S E R S 1 2 6 10 14 16 17 18 19 20 39 Whilst building profits and revenues remains a key objective for Goldplat, the exploration and development of brownfield projects, is where we see the growth and value uplift potential, as we continue to build the Company into a mid tier gold producer in Africa. Designed and produced by Deane Wakefield Limited Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:58 Page 1 H I G H L I G H T S • 48% increase in operating profits to £3,054,000 (2010: £2,059,000) • 76% increase in profit before tax to £3,428,000 (2010: £1,943,000) • Net cash position of £3,010,000 (2010: £1,018,000) • Gold recovery plants performing robustly – production up 31% to 28,185 ounces of gold (2010: 21,461): • Additional contracts won with mining majors in South Africa and West Africa to acquire gold bearing by-products for processing • New toll processing agreements in Ghana generating significant cash • Increased efficiency at both plants • Brownfield gold projects in Kenya, Burkina Faso and Ghana, advancing towards production in Kenya: • On track to delineate in excess of 1 million ounces of resources by H1 2012 • Imminent gold production at Kilimapesa gold project in Kenya and 1,800m drilling underway • 3,100m drilling programme completed at Nyieme gold project in Burkina Faso with results to be announced shortly • Commencing exploration programme at the recently acquired Banka Gold Project located in a premier gold district in Ghana B U R K I N A F A S O G H A N A K E N YA S O U T H A F R I C A 1 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:58 Page 2 C H A I R M A N ’ S S TAT E M E N T I am delighted to report on the progress your Company has made during the period as a cash generative, profitable, debt free gold producer and mine development company focussed in Africa. This year has seen us make a significant increase in profit before tax due to gold production increasing to record levels of 28,185 ounces (‘oz’) from the Company’s gold recovery operations in South Africa and Ghana and the favourable gold price environment. Whilst building profits and revenues remains a key objective for the Company, the exploration and development of brownfield projects, typically high grade vein systems, is where we see the growth and value uplift potential, as we continue to build the Company into a mid tier gold producer in Africa. With three mining development projects in Kenya, Burkina Faso and Ghana, all with near term resource upgrade and production potential, I believe that Goldplat looks set for significant growth during the remainder of 2011 and beyond. Operating profits increased by 48% to £3,054,000 (2010: £2,059,000). This is the measure by which Goldplat believes its performance should be judged, as measures such as turnover are complicated by the different deals under which Goldplat purchases materials for processing. It is particularly noteworthy that the major part of the increase was generated in Ghana, where the Group benefits from a tax holiday, thus reducing the overall tax charge. In South Africa, the long term strengthening of the Rand seems to be reversing, which will enable the producing companies in both South Africa and Ghana to benefit from the strength of the gold price. The headline profit before tax is £3,428,000 (2010: £1,943,000). After stripping out the exceptional gain explained below of £425,000 this is an increase of more than 50%. The low tax charge of £472,000 (2010: £713,000) is partly due to the fact that profits in Ghana are not subject to tax until 2015, but also due to the fact that a reduced dividend was declared by the South African subsidiary, as such dividends give rise to a secondary tax charge. The increase in earnings per share of 93% while very satisfactory, should be viewed in the light of the comments above. In December 2010 we undertook a placing and raised £5.5 million (£5.2 million after expenses) in order to accelerate the development of our brownfield exploration assets in Kenya, Burkina Faso and Ghana and to acquire potential further gold mining assets. This cash enabled us to negotiate early settlement of the balance of the purchase price of Kilimapesa Gold. The original amount owed of US$ 1.5 million was settled for a single payment of US$ 0.8 million. Under IFRS, the reduction of £425,000 is included as an exceptional gain in the Group Statement of Comprehensive Income. As I mentioned earlier, our two gold recovery operations, which process by-products from the mining process to recover gold, performed strongly during the period. Total gold production for the year increased by 33% to 28,185 (2010: 21,461 oz of gold ), which can be attributed to the improving operational efficiency of both plants. A number of initiatives were made, including the purchase of new equipment, the re-negotiations of by-product contracts and the signing of new contracts with both major and smaller mining companies, all of which helped improve margins and counteract the rising costs of electricity, royalties and transport. In Ghana, toll processing agreements referred to in the operations report were also a significant factor in increasing both production and profits. 2 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:58 Page 3 As previously highlighted, Goldplat’s growth strategy is one of value creation, developing gold projects with near-term resource potential towards and into production. We aim to delineate in excess of 1 million oz of gold of JORC compliant resources from our three gold mining development projects by the first half of 2012 and in line with this, we have implemented defined exploration and development programmes across each of our projects with the view of developing multiple profitable mining operations in the near to medium term. In western Kenya at our Kilimapesa Gold project located in the historically producing Migori Archaean Greenstone Belt, we have a maiden resource of 1.65Mt at 2.44 g/t of gold for 129,000 oz of gold which we intend to increase and upgrade towards the 0.5 million oz mark by Q4 2011. Underground development is underway, as is a 28 shallow hole 1,120m drilling programme. In tandem with this, we intend to increase the rate of production to approximately 10,000 oz of gold per annum within 12 months of being granted our mining licence. We anticipate being granted the Mining Lease in the near future and look forward to updating on this in due course. Sales of gold bullion will commence as soon as we have commissioned the elution plant, anticipated to be early in October 2011. Meanwhile, at our 246sq km Nyieme gold project in Burkina Faso, another drilling programme is underway aimed at proving-up the project’s economic validity and production potential. Previous drill programmes have yielded highly positive results highlighting high-quartz vein structures. Currently, the project has a maiden resource of 685,000t at 2.61g/t gold for 57,501 oz gold, which has been calculated over an initial 2km of a potential 8km strike. A 3,100m resource drilling programme has just been completed, and we will announce our first drill results in due course followed by a JORC compliant resource upgrade. 3 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:58 Page 4 C H A I R M A N ’ S S TAT E M E N T C O N T I N U E D In line with Goldplat’s strategy of expanding its portfolio of brownfield projects, we completed the purchase of the 29 sq km Banka Gold Mining Lease in Ghana (‘Banka’) from Gulf Coast Resources Ghana Limited (‘Gulf Coast Resources’) in May 2011. Previous drilling programmes at the project, which is located in the Ashanti Gold Belt 10km southwest of Newmont’s 14 million oz Akyem gold deposit, have defined significant high grade gold intersections. With an initial non-JORC compliant resource of 262,107oz of gold, which we intend to upgrade, increase and convert to a JORC compliant status through infill drilling at depth later this year, Banka looks to have mine development and value upside potential. We are reviewing other similar projects across the continent including a gold mining asset in South Africa located close to the Benoni operation, which the management believes could provide long term feed stock for the processing plant and would enhance the stability of the South African operations. We will update the market on developments in due course. Looking ahead, we anticipate that our current strong performance will continue with increasing profits at our gold recovery plants and solid growth from our three brownfield gold projects as we focus on attaining a resource base in excess of 1 million ounces. Our mining development projects are central to Goldplat’s portfolio as we advance towards increasing our gold production profile to become a gold mining company in Africa. I would like to take this opportunity to thank my fellow directors, management and our workforce for their dedication and help over the past year as well as our shareholders for their continuing support. I believe that Goldplat has the foundations in place from which to deliver significant value and I look forward to updating the market on our progress. Brian Moritz Chairman 12 September 2011 4 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:58 Page 5 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:58 Page 6 O P E R AT I O N S R E P O R T GOLD RECOVERY OPERATIONS Goldplat Recovery – South Africa The South African gold recovery business continues to perform well, with gold production for the year ended 30 June 2011 totalling 18,190 ounces of gold (2010: 17,263). During the year, a number of initiatives were undertaken to improve the plant’s operational efficiency and profitability, which have impacted positively. A mobile screen was purchased to pre-screen selected raw materials, remove waste material and increase the grade of the fines generated at the plant. The high grade mill project is in the process of being commissioned which will increase milling capacity at the recovery plant. Importantly the production capacity at the flotation section of the recovery plant has been increased by 15%. We keep an open dialogue with the surrounding gold mining houses. In line with this, we renegotiated a number of existing contracts, to improve our economic margins, which has helped counteract the rising costs of electricity, royalties and transport seen in South Africa during the past year. We have also signed a number of new contracts with mining companies including Simmer and Jack Limited and AngloGold Ashanti (‘AngloGold’) in South Africa. Post period end, we signed a Letter of Intent with DRD Gold, to secure further feedstock from its East Rand Proprietary Mines operation. We are currently reviewing and analysing the surface reserves including old shaft areas, railway lines and the gold plant itself, following which contracts will be signed based on the volumes, grades and recovery for the viable reserves established. Interest has also been shown by a number of Tanzanian gold producers in supplying raw materials to Goldplat Recovery, although the issue of receiving permission from the Government of Tanzania to export gold in concentrate form rather than bullion remains outstanding. Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:58 Page 7 Gold Recovery Ghana (‘GRG’) – Ghana GRG’s gold processing operation has moved from strength to strength as it utilises its prime location in West Africa to build contacts with major gold mining houses operating within the region. Its solid performance during the year has generated significant cash flow for the Company and the ten year tax break, which runs until 2015, has also helped our bottom line. Gold production for the year to 30 June 2011 was up 138% to 9,995 oz of gold (2010: 4,198 oz). Additionally, we secured two toll processing agreements with Golden Star and Adamus Resources in Ghana in September 2010 and April 2011 respectively, which allows some of GRG’s stockpiled by-products to be processed off-site. Both agreements were a significant factor in increasing both gold production and profits for the full year at GRG. As with the South African gold recovery business, building stockpiles of gold bearing raw materials to process is important for the long-term success of the business with existing contracts with mining companies including Goldfields Limited, AngloGold and Golden Star Resources Limited, contributing to this. We are also in advanced discussions with other major mining companies in Mali and Burkina Faso regarding the acquisition of further processing by-products for gold recovery, which could significantly boost these stockpiles. In light of this, an additional furnace is being installed at the plant to increase its processing capacity, which we anticipate will be operational by Q1 2012 GOLD MINING AND EXPLORATION Kilimapesa Gold – Kenya Initial Kilimapesa Gold is on track to become a high grade profitable mining operation in the near term. production is targeted at 5,000 oz of gold per annum increasing to 10,000 oz of gold per annum within 12 months of being issued our mining licence. In this respect, the Title Deed required for the completion of the application of the mining licence has been issued and the documentation has been delivered to the Commissioner of Mines and Geology of Kenya. The gazetting of the application for three months in the Kenyan national press before issuance of the Mining Lease can be finalised is soon to be completed, and we look forward to updating on this development in due course. Commissioning of the elution plant is expected in early to mid October 2011 after which sales of gold bullion will commence. In terms of exploration, we have an active programme in place comprising both underground development and exploration drilling, which aims to upgrade our current resource 1.65Mt at 2.44 g/t of gold for 129,000 oz towards the 0.5 million oz mark by 1H 2012. Underground development is underway, primarily focussed on extending the 250m underground strike exposure of the auriferous quartz veins and to provide additional ore resources. The programme has started with three development ends on the auriferous quartz vein being explored to the east of the project. The vein structures across Kilimapesa Gold have been historically worked on in places and we are confident of the grade continuity. Following a data gathering exercise earlier in the year, which included geological mapping and sampling, Induced Polarisation (‘IP’) anomalies, artisanal activity, and previous reverse circulation (‘RC’) drilling results, we identified four highly prospective targets at Kilimapesa Gold (Vim/Rutha and Red Ray, Kilimapesa Hill and Olepoipoi), which have formed the focus for our 1,800m 2011 drilling programme. 7 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:58 Page 8 O P E R AT I O N S R E P O R T C O N T I N U E D Phase 1 of a two phased drilling programme commenced June 2011 and has focussed on exploring the Vim/Rutha and Red Ray target areas which are 2km south of Kilimapesa Hill where the maiden resource was defined. At the Vim/Rutha target 16 shallow holes for a total of 640m are being drilled. Several narrow (between 5cm and 100cm thick) steeply dipping auriferous quartz veins trending parallel to the veins intersected in the mining operations at Kilimapesa Hill outcrop on surface and have demonstrated lateral continuity of between 300-400m. A geophysical IP survey confirmed the lateral continuity of the veins but has also indicated possible hitherto unknown veins. The estimated total strike length of the veins of over 5 km attests to the prospective potential of this area. Following Phase 1, four deeper holes will be drilled for a total of 460m. The Red Ray target is located 1 km east of Kilimapesa Gold’s processing plant. Phase 1 drilling comprises surface and underground mapping as well as 12 shallow diamond drill holes for a total length of 480m. Two deeper holes for a total of 180m will be drilled in the second phase of the drilling programme. The Red Ray target has two main veins striking east to west and dipping steeply to the south which can be traced along the crest of two small hills which are approximately 1.5 km in length. These veins are thought to correlate to the veins currently exposed in Adit B at Kilimapesa Hill 5 km to the west. Extensive artisanal activity has taken place along the crest of the hills and the veins are also exposed at the base of the hills in the adits. Additionally, individual rock chip samples of up to 10 g/t Au have been previously recorded by Goldplat. To date five holes of the total 1,120m 28 shallow hole (depths of 40m) Phase 1 programme have been completed. We expect this phase to be completed by end of October 2011 with results to follow there after. Once a full analysis of these results has been undertaken we will commence with Phase 2, which has been designed to follow up on the results of Phase 1 with intercepts up to 80m deep. Nyieme Gold Project – Burkina Faso Development of the 246 sq km Nyieme project in Burkina Faso, located 270 km southwest of Ouagadougou, is progressing well. It is our intention to prove up the economic viability of the project and delineate an upgraded JORC compliant resource by 1H 2012 with the target of bringing it into production in the mid term. In September 2010 we concluded an 11 hole diamond drilling programme over a high gold grade area previously identified by an RC programme completed by the previous owners, Sanu Exploration (‘BVI’) Limited in 2008. Results received were highly encouraging with five holes returning gold grades in excess of 4 g/t, the highest value being 19.1 g/t over a width of 116cm – clearly demonstrating the economic potential of the project. Following this, in December 2010 we announced a maiden JORC compliant resource from Nyieme’s first target totaling 685,000 tonnes at 2.61 g/t gold for 57,501 oz of gold at a cut-off grade of 1.0 g/t gold for all categories. The total estimated resource includes an Indicated mineral resource of 225,000 tonnes at 2.98 g/t gold for 21,557 oz gold and an additional 460,000 tonnes at 2.43 g/t gold for 35,937 oz of gold within the Inferred category. It must be noted that the maiden resource was calculated over an initial 2 km of a potential 8 km strike, and in April 2011 we implemented a 3,100m RC drilling programme to test the geological model and to identify other areas on the licence area with the aim of significantly increasing the JORC resource. Follow-up diamond drilling will be conducted over areas of potential that have been identified in the now complete RC drilling programme, the results of which will be announced shortly. 8 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:58 Page 9 Banka Gold Project – Ghana In November 2010 we signed a binding memorandum of agreement with Gulf Coast Resources, a Canadian mining company, to acquire a 90% interest in the Banka Mining Lease, a ten year renewable mining lease for gold and associated minerals covering an area of 29 sq km located in the highly prospective Amansie East and Asante Akim South Districts of the Ashanti Region of the Republic of Ghana. We completed the acquisition in May 2011, once the full mining licence had been issued, for the consideration of USD 1.6 million in return for 10% carried interest owned by the Government of Ghana, and Gulf Coast Resources Inc, the parent company of Gulf Coast Resources, receiving a net smelter royalty of 1.5% on any gold sold in the future. Before we purchased the project, an independent report compiled by SEMS Exploration Services, a leading mineral exploration consultancy in West Africa, highlighted the potential for significant gold mineralisation. Banka has a current initial non JORC compliant resource of 262,107 oz of gold to a depth of 100m but the report suggests significant potential to upgrade this and increase the resource with infill drilling and increase the depth of drilling to 250m. The geological setting of Banka comprises Birimian volcanosedimentary rocks occurring to the east of the property and Banket conglomerate horizons trending in a north easterly direction through the western portion. Newmont’s Akyem deposit, which is located 10 km to the east and has circa 14 million oz of resource, occurs within the Birimian volcanosedimentary units and the massive gold deposits of Tarkwa occur in Banket conglomerate horizons similar to those seen on the Banka concession. Previous diamond core drilling programmes clearly defined significant high grade gold intersections located within a broad low grade mineralised zone, and a 4 km strike with surface outcropping has also been identified. Previous drill results include best intersections of 0.8m at 13.2g/t gold and 1m at 11.30 g/t of gold and historical mine records suggest artisanal miners were exploiting a gold resource estimated to be at a grading of up to 26.9 g/t gold. Our aim is to rapidly advance this brownfield gold project, convert and raise the existing gold resource to a JORC compliant status, and develop Banka in the mid-term into a profitable mining operation. The first step towards achieving this will be the initiation of a 4,300m diamond drilling programme at Banka due to commence October 2011. Demetri Manolis Chief Executive Officer 12 September 2011 9 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:58 Page 10 D I R E C T O R S ’ R E P O R T The Directors present their report and the audited consolidated financial statements for the year ended 30 June 2011. PRINCIPAL ACTIVITIES Goldplat plc is incorporated in England and Wales as a public limited company. The principal activity of the Company is the management of a Group which produces precious metals on the African continent. The Group’s South African subsidiary produces gold, silver and platinum group metals from metallurgical challenging materials produced by the primary producers. To satisfy BEE rules, 15% of the share capital is held by a qualifying entity. The Group’s Ghanaian gold recovery subsidiary produces gold from metallurgical challenging materials and processed ores. The Group’s Kenyan operation Kilimapesa Gold (Pty) Limited is now wholly owned by the Group, after the acquisition of the remaining 50% effective 1 July 2009 and completed in the year under review. Further details on the financial position and development of the Group are set out in the Chairman’s Statement and Operations Report. RESULTS The Group reports a consolidated pre-tax profit of £3,428,000 (2010: £1,943,000) and an after tax profit of £2,956,000 (2010: £1,230,000). Factors affecting these results are set-out in the Chairman’s Statement and Operations Report. CREDITORS PAYMENT POLICY The Company’s policy is to ensure that, in the absence of dispute, all suppliers are dealt with in accordance with its standard payment practice whereby all outstanding trade accounts are settled within the term agreed with the supplier at the time of supplying or otherwise 30 days from the month end of receipt of the relevant invoice. EMPLOYEES The Directors have a participative management style with frequent direct contact between junior and senior employees. A two-way flow of information and feedback is maintained through formal and informal meetings covering Company and unit performance. The Group is an Equal Employment Opportunity employer. 10 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:58 Page 11 GOING CONCERN After making enquiries, the Directors have formed a judgement that, as at the date of approving the financial statements, there is a reasonable expectation that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future. For this reason, the Directors continue to adopt the going concern basis in preparing the accounts. FINANCIAL RISK MANAGEMENT The Group’s operations expose it to a variety of financial risks as set out in note 3 to the accounts. DIVIDENDS No dividend is proposed for the year. DIRECTORS AND THEIR INTERESTS The following Directors served during the year: B M Moritz D A Manolis (Chief Executive Officer) (Chief Financial Officer) I Visagie (Non-executive Chairman) Dr R Pitts Smith was appointed as Managing Director, recovery operations on 7 July 2011. The Directors’ interests in the share capital of the Company at 30 June 2011 were as follows: B M Moritz Number of ordinary shares of 1p each 1,550,000 Percentage of issued share capital 0.93 No other Director had a beneficial interest in the share capital of the Company. POLITICAL AND CHARITABLE DONATIONS There were no political donations during the year. Goldplat Recovery (Pty) Limited expended £31,290 (2010: £20,948) for the period substantially on their partial sponsorship of the Inter Africa Soccer Academy for previously disadvantaged children and smaller amounts toward educational requirements of personnel, their children and other selected individuals. Gold Recovery Ghana Limited expended £421 (2010: £2,870) on community projects. 11 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:58 Page 12 D I R E C T O R S ’ R E P O R T C O N T I N U E D CORPORATE GOVERNANCE STATEMENT The Board has established an audit committee and a remuneration committee with formally delegated duties and responsibilities. During the year the audit committee consisted of B M Moritz. The audit committee has responsibility for ensuring that the financial performance, position and prospects of the Company are properly monitored and reported on, for meeting with the auditor and discussing their reports on the accounts and the Company’s financial controls and for recommending the appointment of auditors. The remuneration and terms and conditions of appointment of non-executive directors are set by the Board. No Director may participate in any discussions or decisions regarding his own remuneration. The Group has adopted procedures to ensure compliance with the Bribery Act 2010. DIRECTORS’ REMUNERATION B M Moritz D A Manolis I Visagie Total Salaries £’000 Fees £’000 Other £’000 – 202 105 307 33 – – 33 – 17 10 27 Total £’000 33 219 115 367 No share options were granted to any director during the year. DIRECTORS’ INDEMNITIES The Company maintains Directors’ and officers’ liability insurance providing appropriate cover for any legal action brought against its Directors and/or officers. STATEMENT OF DIRECTORS’ RESPONSIBILITIES The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards as adopted by the European Union. The financial statements are required by law to give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that year. In preparing those financial statements, the Directors are required to: • select suitable accounting policies then apply them consistently; • make judgements and estimates that are reasonable and prudent; • state that the financial statements comply with International Financial Reporting Standards as adopted • prepare the financial statements on the going concern basis unless it is inappropriate to presume that by the European Union; the Group will continue in business. 12 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:58 Page 13 The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. STATEMENT OF DISCLOSURE TO AUDITOR Insofar as the Directors are aware: • there is no relevant audit information of which the Company’s auditor is unaware; and • the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information. REAPPOINTMENT OF AUDITOR A resolution to re-appoint Chantrey Vellacott DFK LLP as auditor of the Group and the Company will be proposed at the Annual General Meeting. By order of the Board: Brian Moritz Director 12 September 2011 13 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:58 Page 14 I N D E P E N D E N T A U D I T O R ’ S R E P O R T to the shareholders of Goldplat plc We have audited the financial statements of Goldplat Plc for the year ended 30 June 2011 which comprise the Group Statement of Comprehensive Income, the Group and Company Statements of Financial Position, the Group and Company Statements of Changes in Equity, the Group and Company Cash Flow Statements and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRS) as adopted by the European Union and as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006. This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITOR As explained more fully in the statement of Directors' responsibilities, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors. SCOPE OF THE AUDIT OF THE FINANCIAL STATEMENTS An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group's and the parent Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies, we consider the implications for our report. OPINION ON FINANCIAL STATEMENTS In our opinion: affairs as at 30 June 2011 and of the Group's profit for the year then ended; • the financial statements give a true and fair view of the state of the Group's and of the parent Company's • the Group financial statements have been properly prepared in accordance with IFRS as adopted by the • the parent Company financial statements have been properly prepared in accordance with IFRS as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and European Union; • the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. 14 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:58 Page 15 OPINION ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006 In our opinion the information given in the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements. MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION We have nothing to report in respect of the following where, the Companies Act 2006 requires us to report to you if, in our opinion: audit have not been received from branches not visited by us; or • adequate accounting records have not been kept by the parent Company, or returns adequate for our • the parent Company financial statements are not in agreement with the accounting records and returns; or • certain disclosures of Directors' remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit. Ian Staunton FCA CF Senior Statutory Auditor for and on behalf of: Chantrey Vellacott DFK LLP Chartered Accountants and Statutory Auditor London 12 September 2011 The Directors are responsible for the maintenance and integrity of the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Legislation in the United Kingdom governing the preparation and dissemination of accounts may differ from legislation in other jurisdictions. 15 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:59 Page 16 G R O U P S TAT E M E N T O F C O M P R E H E N S I V E I N C O M E FOR THE YEAR ENDED 30 JUNE 2011 Revenue Cost of sales Gross profit Administrative expenses Group 2011 £’000 Group 2010 £’000 Notes 1(g) 19,620 (15,239) 10,663 (7,147) 4,381 (1,327) 3,516 (1,457) Operating profit 2,059 Exceptional gain 7 425 – Finance income 8 68 212 Finance expense 8 (119) (328) 3,054 4 Profit before tax 3,428 Taxation 9 (472) Profit for the year Exchange translation Total comprehensive income Attributable to: Shareholders of Goldplat plc Non-controlling interests Earnings per share Basic Diluted 1,943 (713) 1,230 496 2,956 (128) 2,828 1,726 2,600 228 1,534 192 2,828 1,726 10 2.12p 1.90p 1.10p 0.96p The Company has taken advantage of the exemption contained in S.408, Companies Act 2006, and has not presented its own statement of comprehensive income. The Company’s comprehensive loss for the year ended 30 June 2011 was £411,000 (2010: £554,000). All of the activities of the Group are classed as continuing. 16 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:59 Page 17 G R O U P A N D C O M P A N Y S TAT E M E N T S O F F I N A N C I A L P O S I T I O N AS AT 30 JUNE 2011 Group 2011 £’000 Group Company 2011 2010 £’000 £’000 Company 2010 £’000 Notes Assets Non-current assets Property, plant and equipment Pre-production expenditure Intangible assets Proceeds from sale of shares in subsidiary Investments Loans to subsidiary companies Current assets Inventories Trade and other receivables Cash and cash equivalents Total assets Equity and liabilities Equity attributable to equity holders of the Company Share capital Share premium Retained earnings / (accumulated losses) Exchange reserves Shareholders’ equity Non-controlling interests Total equity Non-current liabilities Provisions Obligations under finance leases Deferred taxation Loans and borrowings Current liabilities Trade and other payables Obligations under finance leases Taxation Loans and borrowings 12 13 28 14 26 27 15 16 17 18 23 22 19 20 21 22 20 3,903 2,748 6,920 383 3,589 1,552 5,745 390 – – 6,425 – – 4,124 – – – – – – – – 6,425 1,004 13,954 11,276 10,549 7,429 3,367 6,584 3,127 13,078 3,825 1,866 1,018 6,709 – – 32 17 2,061 297 2,093 314 27,032 17,985 12,642 7,743 1,671 11,401 7,568 183 20,823 676 1,121 6,772 4,738 311 1,671 11,401 (507) 1,121 6,772 (198) – – 12,942 475 12,565 7,695 – – 21,499 13,417 12,565 7,695 220 62 457 180 100 444 – – – – – – – – – – 739 724 – – 4,477 157 43 77 48 – – – – 117 – – – 3,462 107 275 Total equity and liabilities 27,032 17,985 12,642 7,743 4,794 3,844 77 48 The financial statements were approved by the Board of Directors and authorised for issue on 12 September 2011. They were signed on its behalf by: Ian Visagie, Director. Company Number: 05340664 17 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:59 Page 18 G R O U P A N D C O M P A N Y S TAT E M E N T S O F C H A N G E S I N S H A R E H O L D E R S ’ E Q U I T Y FOR THE YEAR ENDED 30 JUNE 2011 Share capital £’000 Share premium Retained earnings Exchange reserves Non- controlling interests £’000 £’000 £’000 £’000 Total £’000 Group Balance at 30 June 2009 1,121 6,772 3,414 (185) 420 11,542 1,726 192 Comprehensive income for the year – – 1,038 Non-controlling interests in subsidiary dividend – – – – (137) (137) Treasury shares – – 49 – – 49 Share incentive scheme reserve – – 237 – – 237 496 6,772 1,121 475 Balance at 30 June 2010 4,738 Comprehensive income for the year – – 2,728 228 Non-controlling interests in subsidiary dividend – – – – (27) 550 Issue of shares 13,417 2,828 (27) 4,950 – – – 5,500 Costs of share issue – (370) – – – (370) Settled by issue of warrants – 49 – – – 49 Share incentive scheme reserve – – 102 – – 102 311 (128) Balance at 30 June 2011 1,671 11,401 7,568 183 676 21,499 Share capital £’000 Share Accumulated losses £’000 premium £’000 Exchange reserves £’000 Non- controlling interests £’000 Total £’000 Company Balance at 30 June 2009 7,963 Comprehensive income for the year – – (554) – – (554) 237 Share incentive scheme reserve – – 49 Treasury shares – – 237 – – 49 – – 70 – – 6,772 1,121 1,121 Balance at 30 June 2010 7,695 Comprehensive income for the year – – (411) – – (411) 5,500 Issue of shares (370) 49 102 4,950 – – – 550 Costs of share issue – (370) – – – Settled by issue of warrants – 49 – – – Share incentive scheme reserve – – 102 – – (198) – – 6,772 Balance at 30 June 2011 1,671 11,401 (507) – – 12,565 18 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:59 Page 19 G R O U P A N D C O M P A N Y C A S H F L O W S TAT E M E N T S FOR THE YEAR ENDED 30 JUNE 2011 Cash flows from operating activities Cash generated from operations Financing income Financing expense Taxation paid Notes 25.1 25.2 Group 2011 £’000 Group Company 2011 2010 £’000 £’000 Company 2010 £’000 777 68 (105) (724) 1,431 212 (316) (617) (281) (297) 1 1 (12) – – (15) Net cash from operating activities 16 710 (295) (308) Cash flows from investing activities Purchase of shares in subsidiary undertaking Proceeds from sale of property, plant and equipment Acquisition of mining rights Acquisition of property, plant and equipment Pre-production expenditure 25.3 – 16 (83) 10 – – – – (1,140) – – – – – – – (680) (1,391) (984) (638) Net cash flows from investing activities (3,195) (1,695) – – Cash flows from financing activities Sale of treasury shares Proceeds from issue of shares Proceeds from sale of interest in subsidiary undertaking Loans to subsidiary Loans repaid Finance leases raised Finance lease payments – – 49 49 5,179 – 5,179 – – – 27 82 – – (3,120) (167) – – – 119 – – (107) – – – (647) 207 Net cash flows from financing activities 5,218 (309) 2,059 (118) Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Effect of exchange rate changes on monetary assets 2,039 1,018 (47) (1,294) 2,198 114 1,764 297 (426) 723 – – Cash and cash equivalents at end of year 25.4 3,010 1,018 2,061 297 19 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:59 Page 20 N O T E S T O T H E F I N A N C I A L S TAT E M E N T S FOR THE YEAR ENDED 30 JUNE 2011 1. ACCOUNTING POLICIES a) Presentation of financial information The consolidated financial statements are presented in pounds sterling, which is considered by the Directors to be the most appropriate presentation currency. The majority of the group transactions are undertaken in South African Rand although all sale prices are denominated in US$. The Company’s business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman’s Statement. The financial position of the Company, its cash flows, liquidity position and borrowing facilities are described in these financial statements. The financial statements include the Company’s objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk. The Company has sufficient reserves of raw material and ongoing contracts with its current suppliers. The Company has a secure market for its precious metal products which are sold at market related prices which are above production costs. The Directors believe that this performance will be sustainable for the ensuing year and therefore continue to adopt the going concern basis of accounting in preparing the annual financial statements. b) Basis of preparation of the financial statements The financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the EU. The financial statements have been prepared on the historical cost basis. The principal accounting policies adopted are set out below. c) New standards and interpretation At the date of authorisation of these financial statements, there were International Financial Reporting Standards and Interpretations that were in issue but not yet effective, which have not been applied in preparing these financial statements. The Directors anticipate that the adoption of these Standards and Interpretations in future years will have no impact on the financial statements except for additional disclosures when the relevant Standards and Interpretations come into effect. d) Basis of consolidation The consolidated financial statements incorporate the financial statements of the Company and enterprises controlled by the Company (its subsidiaries) made up to 30 June each year. Control is achieved where the Company has the power to govern the financial and operating policies of a subsidiary. All intra-Group transactions, balances, income and expenses are eliminated on consolidation. e) Use of assumptions and estimates The preparation of the consolidated financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of revision and future periods of the revision affects both current and future periods. 20 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:59 Page 21 Critical estimates and assumptions are made with regard to the valuation of warrants issued, capitalisation of pre- production expenditure and the carrying value of goodwill. Accounting entries are made in accordance with the accounting policies detailed below. f) Goodwill The acquisition method of accounting is used to account for the purchase of subsidiaries. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination, irrespective of the extent of minority interests, are measured initially at their fair values at the acquisition date. The excess of the cost of the acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of the acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is accounted for directly in the statement of comprehensive income. The cost of an acquisition is measured at the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. g) Revenue recognition Revenue from the sale of precious metals is recognised in the statement of comprehensive income when the significant risks and rewards of ownership have been transferred to the buyer excluding sales taxes. Interest income is accrued on a time basis, by reference to the principal outstanding and the applicable effective interest rate. h) Foreign currency All assets and liabilities of foreign subsidiaries are translated at the closing rate. Income and expense items are translated at an average rate for the year with all differences being charged to the statement of comprehensive income. On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of borrowings are taken directly to equity. Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of the foreign operation and translated at the closing rates. i) Financial instruments Trade and other receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest method. A provision is established when there is objective evidence that the Group will not be able to collect all amounts due. The amount of any provision is recognised in the consolidated statement of comprehensive income. Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original maturity of three months or less. Bank overdrafts that are repayable on demand and form part of the Group’s cash management are included as a component of cash and cash equivalents for the purposes of the statement of cash flows. Trade and other payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method. Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the Group statement of comprehensive income over the term of the borrowings on an effective interest basis. 21 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:59 Page 22 N O T E S T O T H E F I N A N C I A L S TAT E M E N T S FOR THE YEAR ENDED 30 JUNE 2011 1. ACCOUNTING POLICIES (CONTINUED) j) Property, plant and equipment Items of property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses. The cost of the mining assets includes the costs of dismantling and removing the items and restoring the site on which they are located. The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied with the item will flow to the Group and the cost of the item can be measured reliably. All other costs are recognised in the Group statement of comprehensive income as an expense as incurred. Depreciation Depreciation is charged to the Group statement of comprehensive income on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Freehold land is not depreciated. • Leasehold land • Buildings • Plant and equipment • Motor vehicles • Office equipment • Insurance spares • Environmental assets • Pre-production expenditure Lease period 20 years 10 years 5 years 6 years 10 years Life of mine 10 years from date of commencement of production Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, over the term of the relevant lease. k) Pre-production expenditure Pre-production expenditure, including evaluation costs, incurred on mines to establish or expand productive capacity, or to support and maintain that productive capacity are capitalised. Capitalisation ceases when the mine is in a condition necessary to operate as intended by management. l) Mineral rights Mineral rights represent rights in production, development and exploration phase properties. The amount capitalised represents fair value at the time acquired. Mineral rights associated with production phase properties are amortised over the estimated life of the mine. Mineral rights associated with development and exploration phase properties are not amortised until such time as the underlying property is converted to the production phase. Impairment of mineral rights in production phase properties is considered based on expected future cash flows and estimates of recoverable minerals. Mineral rights associated with development and exploration properties are individually evaluated for impairment based on exploration results. 22 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:59 Page 23 m) Leases Leases under the terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. n) Inventories Consumable stores and raw materials are valued at the lower of cost and net realisable value on the weighted average basis and include costs incurred in acquiring the inventories and bringing them to their existing location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. Bullion on hand, gold and platinum represent production on hand after the smelting process, gold contained in the elution process, gold loaded carbon in the CIL (carbon-in-leach) and CIP (carbon-in-pulp) processes, gravity concentrates, platinum group metals (PGM) concentrates and any form of precious metal in process where the quantum of the contained metal can be accurately determined. It is valued at the average production cost for the year, including amortisation and depreciation. o) Impairment The carrying amounts of the Group’s assets, other than inventories and deferred tax assets, are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the Group statement of comprehensive income. Goodwill is assessed annually for possible impairment. Impairment losses relating to goodwill are not reversed. p) Share-based payments Equity settled share-based payments are measured at fair value (excluding the impact of any non-market vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest and adjusted for the effect of non market-based vesting conditions. Fair value is measured by use of the Black Scholes model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercised restrictions and behavioural considerations. q) Provisions A provision is recognised in the statement of financial position when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, 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, where appropriate, the risks specific to the liability. Environmental obligation In accordance with the Group’s environmental policy and applicable legal requirements, a provision for site restoration in respect of contaminated land is recognised when the land is contaminated. The estimated long term environmental obligations, comprising rehabilitation and mine closure, are based on the Group’s environmental management plans in compliance with current environmental and regulatory requirements. The amounts disclosed in the financial statements as environmental assets and obligations include rehabilitation. 23 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:59 Page 24 N O T E S T O T H E F I N A N C I A L S TAT E M E N T S FOR THE YEAR ENDED 30 JUNE 2011 1. ACCOUNTING POLICIES (CONTINUED) q) Provisions continued Environmental obligation continued The cost of rehabilitation projects undertaken, which has been included in the provision estimate, are charged to the provision as incurred. The cost of current programs to prevent and control future liabilities are charged to the Group statement of comprehensive income as incurred. r) Finance costs Finance costs comprise interest payable on borrowings calculated using the effective interest rate method, interest receivable on funds invested and foreign exchange gains and losses that are recognised in the Group statement of comprehensive income. Finance expense component of finance lease payments is recognised in the Group statement of comprehensive income using the effective interest rate method. s) Taxation Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the Group statement of comprehensive income except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. 24 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:59 Page 25 2. SEGMENTAL ANALYSIS The Group is a producer of precious metals on the African continent. A geographical analysis of operations is set out below. Burkina United Intra-group Faso Kingdom adjustments £’000 £’000 £’000 Total £’000 (294) 19,620 (294) (15,239) – – – – – – – – – – – – – 4,381 (1,327) 3,054 425 68 (119) 3,428 (472) 2,956 27,032 (5,533) 3,227 287 Segmental report 2011 South Africa £’000 Ghana £’000 Kenya £’000 Revenue from recovery of precious metals 12,333 7,581 Cost of sales Gross profit Administrative expenses Operating profit/(loss) (9,653) (5,880) 2,680 1,701 (606) (210) before finance cost 2,074 1,491 Exceptional gain Finance income Finance expense – 5 (85) – 16 (19) Profit/(loss) before tax 1,994 1,488 Taxation (472) – Profit/(loss) for the year 1,522 1,488 – – – – – – – – – – – – – – – – – – – – – – – – – (511) (511) 425 47 (15) (54) – (54) Segment assets 8,115 6,392 3,254 1,006 8,265 Segment liabilities (2,399) (2,127) (101) (91) (815) Capital expenditure Depreciation 404 229 1,184 872 767 58 – – – – 25 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:59 Page 26 N O T E S T O T H E F I N A N C I A L S TAT E M E N T S FOR THE YEAR ENDED 30 JUNE 2011 2. SEGMENTAL ANALYSIS CONTINUED Segmental report 2010 Revenue from recovery of precious metals Cost of sales Gross profit Administrative expenses Operating profit/(loss) before finance cost Finance income Finance expense Profit/(loss) before tax Taxation Profit/(loss) for the year Segment assets Segment liabilities Capital expenditure Depreciation South Africa £’000 Ghana £’000 Kenya £’000 United Kingdom £’000 Intra-group adjustments £’000 Total £’000 8,402 2,668 (5,700) (1,854) 2,702 (580) 814 (227) 2,122 587 4 (143) 1,983 (713) 1,270 22 (50) 559 – 559 – – – – – – – – – – – – – (650) (650) 186 (135) (599) – (599) 6,394 2,405 2,580 6,606 (2,776) (656) (89) (1,047) 586 180 356 53 683 – – – (407) 10,663 (407) (7,147) – – – – – – – – – – – – 3,516 (1,457) 2,059 212 (328) 1,943 (713) 1,230 17,985 (4,568) 1,625 233 3. FINANCIAL RISK MANAGEMENT The Group’s operations expose it to a variety of financial risks. Exposure to credit, interest rate and currency risks arises in the normal course of the Group’s business. The Group has in place a risk management programme that seeks to limit the adverse effect of such risks on its financial performance which is provided below: Currency risk The Group is exposed to foreign currency risk on sales and purchases that are denominated in a currency other than the GBP. The currencies giving rise to this risk are primarily US Dollar, South African Rand, Ghanaian Cedi, the CFA Franc and the Kenyan Shilling. Interest rate risk The Group generally adopts a policy of ensuring that its exposure to changes in interest rates is on a floating rate basis. Credit risk Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. The Group primarily deals with reputable mining houses and is unlikely to suffer any losses from this risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet. 26 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:59 Page 27 Liquidity risk The Group reviews its facilities regularly to ensure that it has adequate funds for operations and expansion plans. Fair values The fair values of financial instruments such as interest-bearing loans and borrowings, finance lease liabilities, trade and other receivables/payables are substantially identical to carrying amounts reflected in the balance sheet. Capital risk management The Group’s objective when managing capital is to safeguard its accumulated capital in order to provide an adequate return to shareholders by maintaining a sufficient level of funds, in order to support continued production and maintenance at the processing plants and to acquire, explore and develop other precious and base metal deposits in Africa. The Group considers its capital to be shareholders’ equity which comprises share capital and retained earnings, which at 30 June 2011 totalled £20,640,000 (2010: £12,635,000). Market risk Due to the nature of the Groups operations, it is mainly exposed to the following risks: – Fluctuations in the price of gold; – Exchange rate risk at its operations. During the year under review the following applied: Gold price – USD/oz Rand / US Dollar exchange rate GBP / US Dollar exchange rate GHC / US Dollar exchange rate Sensitivity analysis The Group has applied the following assumptions in its sensitivity analysis: High Low Average 1,552 6.49 1.67 1.57 1,157 7.78 1.49 1.36 1,345 7.03 1.59 1.49 Gold price – USD/oz Rand / US Dollar exchange rate GHC / US Dollar exchange rate GBP / US Dollar exchange rate Equivalent Rand price per kilogram Equivalent GHC price per kilogram Equivalent GBP price per kilogram High case scenario Low case scenario 1,600 7.50 1.65 1.70 385,808 84,878 30,259 1,300 6.50 1.40 1.50 271,673 58,154 27,864 The Group’s sensitivity to market risk The following table illustrates the Group’s sensitivity to these risks based on the above assumptions: Effect on the results and equity for the year based on these assumptions would have been: - Gold Recovery Ghana Limited - Goldplat Recovery (Pty) Limited High case scenario Low case scenario £’000 £’000 2,327 3,071 (751) (1,392) 27 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:59 Page 28 N O T E S T O T H E F I N A N C I A L S TAT E M E N T S FOR THE YEAR ENDED 30 JUNE 2011 4. OPERATING PROFIT BEFORE FINANCE COSTS Arrived at after taking into account: Auditor’s remuneration Depreciation of property, plant and equipment - owned - leased Loss on disposal of property, plant and equipment Share incentive scheme costs Directors’ emoluments as set out in note 6 Group 2011 £’000 55 274 13 8 102 367 Group 2010 £’000 48 232 1 5 237 322 Auditor’s remuneration in respect of the Company amounted to £37,000 (2010: £31,000). Of the £37,000, £30,000 (2010: £28,000) was in relation to audit services, £1,000 (2010: £1,000) for tax compliance and £6,000 (2010: £2,000) for tax advice. 5. PERSONNEL EXPENSES Wages and salaries National insurance and unemployment fund Skills development levy Medical aid contributions Group life contributions Average number of employees Administrative personnel Production personnel 1,980 18 26 3 29 1,525 12 21 6 23 2,056 1,587 Number of employees 20 261 20 289 309 281 The above average number of employees includes all executive directors and key management personnel. 28 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:59 Page 29 6. DIRECTORS’ EMOLUMENTS Salaries Fees Other benefits 2011 2011 Non- Executive executive £’000 £’000 2011 Total £’000 307 – 307 – 33 33 27 – 27 334 33 367 2010 Executive £’000 2010 Non- executive £’000 2010 Total £’000 Salaries Fees – 28 Compensation for loss of office – 18 Other benefits 250 – 250 28 18 26 – 26 276 46 322 Apart from the Directors, emoluments paid to key management personnel amounted to £229,000 (2010: £50,000). The highest paid director received £219,000 (2010: £147,000). The Directors hold options to acquire 12 million ordinary shares at 10p per share as set out in note 11. During the previous year the Group paid JW Capital Ideas in relation to the services provided by Mr J Woolgar in his role as Non-Executive Director; Fees as non-executive Director Compensation for loss of office These amounts are included in the disclosures above. 7. EXCEPTIONAL GAIN Gain on settlement agreement 2011 £’000 2010 £’000 – 3 – 18 – 21 Group 2011 £’000 Group 2010 £’000 425 – On 1 July 2009, the Group acquired the balance of 50% of the share capital of Kilimapesa Gold (Pty) Limited. Part of the consideration for the acquisition was paid on signing the agreement with the balance falling due in instalments following the commencement of commercial production. Under the terms of a settlement agreement, a reduced balancing payment was agreed giving rise to an exceptional gain of £425,000. 29 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:59 Page 30 N O T E S T O T H E F I N A N C I A L S TAT E M E N T S FOR THE YEAR ENDED 30 JUNE 2011 8. FINANCE INCOME/(EXPENSE) Interest income on cash balances held Foreign exchange gains Finance income Interest expense on utilisation of overdraft facility Interest on outstanding taxes Interest on environmental liability Foreign exchange loss Other Finance expense 9. TAXATION Current tax expense Current year Prior year Secondary tax on dividends paid from South Africa Deferred tax expense Origination and reversal of temporary differences Change in tax rate Total tax expense Group 2011 £’000 6 62 68 (22) – (14) (83) – (119) Group 2010 £’000 5 207 212 (4) (72) (12) (239) (1) (328) Group 2011 £’000 Group 2010 £’000 477 (13) 18 44 (54) 472 501 7 92 97 16 713 Reconciliation of effective tax rate The difference between the total tax shown above and the amount calculated by applying the standard rate of United Kingdom corporation tax to the profit before tax is as follows: Profit before tax Tax on profit from operations at standard United Kingdom corporation tax rate of 28% (2010: 28%) Effects of: Expenses not deductible for tax purposes Effect of lower tax levied on overseas subsidiaries Adjustments to tax charge in respect of previous periods Secondary tax on dividends paid from South Africa Total tax charged for the year 3,428 1,943 960 544 (40) (453) (13) 18 472 102 (32) 7 92 713 30 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:59 Page 31 10. EARNINGS PER SHARE The calculation of earnings per ordinary share is based on the following: Earnings for the purpose of earnings per share – basic – diluted Group 2011 £’000 2,956 2,965 Group 2010 £’000 1,230 1,239 Number of Shares Number of Shares Weighted average number of ordinary shares in issue during the year Effect of dilutive options 139,393,973 111,841,644 16,173,750 16,173,750 Weighted average number of ordinary shares in issue during the year for the purpose of diluted earnings per share 155,567,723 128,015,394 11. SHARE OPTIONS AND WARRANTS Share options Outstanding and exercisable at 1 July and 30 June Number of options 2011 Exercise price 2011 Number of options 2010 Exercise price 2010 17,200,000 750,000 17,950,000 10p 7.5p 17,200,000 750,000 10p 7.5p 17,950,000 The fair value of these share options was calculated at the date of issue using the Black Scholes Model using the following assumptions: Risk free interest rate Expected volatility Expected dividend yield Life of the options – 2.93% – 55% – 0% – 3.5 years The weighted average remaining contractual life of the options outstanding at the balance sheet date is 2 years 148 days. Number of warrants 2011 Exercise price 2011 Number of warrants 2010 Exercise price 2010 Warrants Granted during the year and exercisable at 30 June 1,671,200 10p – – The fair value of these warrants was calculated at the date of issue using the Black Scholes Model using the following assumptions: Risk free interest rate Expected volatility Expected dividend yield Life of the warrants – 2.00% – 20% – 0% – 3 years 31 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:59 Page 32 N O T E S T O T H E F I N A N C I A L S TAT E M E N T S FOR THE YEAR ENDED 30 JUNE 2011 12. PROPERTY, PLANT AND EQUIPMENT Freehold/ leasehold land £’000 Buildings £’000 Plant and equipment £’000 Motor vehicles £’000 Office equipment £’000 Environ- mental asset £’000 Group Cost Balance at 1 July 2009 Additions Disposals Foreign exchange translation Balance at 30 June 2010 Balance at 1 July 2010 Additions Disposals Foreign exchange translation Balance at 30 June 2011 Depreciation Balance at 1 July 2009 Depreciation charge for the year Disposals Foreign exchange translation Balance at 30 June 2010 Balance at 1 July 2010 Depreciation charge for the year Disposals Foreign exchange translation Balance at 30 June 2011 Carrying amounts 105 139 – 15 259 259 – – (21) 238 3 3 – – 6 6 2 – – 8 491 35 – 9 535 535 21 (13) 3 2,277 560 (16) 328 3,149 3,149 446 (18) (21) 623 242 (90) 51 826 826 184 – 13 546 3,556 1,023 76 12 – 11 99 99 13 (4) 3 677 142 (9) 88 898 898 168 (2) 33 111 1,097 272 48 (81) 35 274 274 71 – 10 355 668 552 41 8 – 4 53 53 29 – – 82 14 6 – 1 21 21 5 – 1 27 55 32 Total £’000 3,656 987 (106) 422 4,959 4,959 696 (31) (19) 5,605 1,086 233 (90) 141 1,370 1,370 287 (6) 51 119 3 – 15 137 137 16 – 7 160 44 22 – 6 72 72 28 – 4 104 1,702 56 65 3,903 3,589 Balance at 30 June 2011 Balance at 30 June 2010 230 253 435 436 2,459 2,251 Plant and equipment with a net book value of £267,000 (2010: £181,000) is subject to finance leases as disclosed in note 22. 32 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:59 Page 33 13. PRE-PRODUCTION EXPENDITURE Balance at 1 July Expenditure incurred Foreign exchange translation Balance at 30 June Group Company 2011 2010 £’000 £’000 Company 2010 £’000 Group 2011 £’000 1,552 1,391 (195) 884 638 30 – – – – 2,748 1,552 – – – – – – – – – – – – – 17 17 292 5 297 The Group has capitalised all expenditure incurred on the Kilimapesa Hill gold mining project, the Nyieme gold mining project and the Anumso gold mining project whilst the mines are in the development phase. 14. PROCEEDS FROM SALE OF SHARES IN SUBSIDIARY Consideration due on sale of 15% of the issued share capital of Goldplat Recovery (Pty) Limited brought forward Received from dividends Foreign exchange translation 15. INVENTORIES Consumable stores Raw materials Precious metals on hand and in process 16. TRADE AND OTHER RECEIVABLES Trade receivables Other receivables 17. CASH AND CASH EQUIVALENTS Bank balances Short term bank deposits 390 (27) 20 383 472 (82) – 390 590 962 1,815 519 1,095 2,211 3,367 3,825 5,879 705 1,339 527 6,584 1,866 – – – – – – – – – 32 32 3,076 51 969 49 2,058 3 3,127 1,018 2,061 33 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:59 Page 34 N O T E S T O T H E F I N A N C I A L S TAT E M E N T S FOR THE YEAR ENDED 30 JUNE 2011 18. SHARE CAPITAL Authorised Ordinary shares of 1p Issued and fully paid Ordinary shares of 1p 2011 £’000 2011 No. of shares 2010 £’000 2010 No. of shares 10,000 1,000,000,000 10,000 1,000,000,000 1,671 167,120,000 1,121 112,120,000 On 30 December 2010 the Company issued 55,000,000 new ordinary shares of 1p each, fully paid for cash at 10p per share to provide additional working capital. 19. DEFERRED TAXATION Balance at 1 July Current charge - temporary differences - change in tax rate Foreign exchange translation Balance at 30 June Comprising: Capital allowances Prepayments 20. LOANS AND BORROWINGS Non-current Balance at 1 July Repaid Balance at 30 June Current Bank overdrafts Balance at 30 June Group 2011 £’000 Group Company 2011 2010 £’000 £’000 Company 2010 £’000 444 45 (55) 23 457 (543) 86 457 – – – 117 117 289 111 7 37 444 (530) 86 444 647 (647) – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 34 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:59 Page 35 21. TRADE AND OTHER PAYABLES Trade creditors Accruals Due on purchase of shares in subsidiary Group 2011 £’000 1,756 2,721 – Group Company 2011 2010 £’000 £’000 Company 2010 £’000 1,223 1,243 996 30 47 – 77 – – – – – – – 48 – – 48 – – – – – – – Total 4,477 3,462 22. OBLIGATIONS UNDER FINANCE LEASES Minimum instalment – less than one year Interest Principal Minimum instalment– between one and five years Interest Principal Balance at 30 June 171 (14) 157 65 (3) 62 219 121 (14) 107 106 (6) 100 207 The average lease term is 2 years. For the year ended 30 June 2011, the average effective borrowing rate was 10%. Interest rates are variable over the lease term and vary according to the South African prime interest rate. The Group’s obligations under finance leases are secured over the leased assets. 23. PROVISIONS Environmental obligation Balance at 1 July Provisions made during the year Unwinding of discount Foreign exchange translation Balance at 30 June 180 17 14 9 220 146 3 12 19 180 – – – – – – – – – – The provision relates to a requirement to rehabilitate the land owned in South Africa upon cessation of the mining right. 35 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:59 Page 36 N O T E S T O T H E F I N A N C I A L S TAT E M E N T S FOR THE YEAR ENDED 30 JUNE 2011 24. RELATED PARTIES Transactions with Group companies The Group’s subsidiary Goldplat Recovery (Pty) Limited had the following related party transactions and balances with Gold Recovery Ghana Limited and Kilimapesa Gold (Pty) Limited. Gold Recovery Ghana Limited – Trade and other receivables – Goods, equipment and services supplied – Purchases of precious metals Kilimapesa Gold (Pty )Limited - Trade and other receivables - Goods, equipment and services supplied Group 2011 £’000 Group 2010 £’000 47 220 294 209 509 226 261 407 283 336 Loans provided by the Company to Group Companies are disclosed in note 27. Gold Recovery Ghana Limited had the following related party transactions and balances with Anumso Gold Limited. Anumso Gold Limited - Trade and other receivables - Goods, equipment and services supplied 2011 £’000 2010 £’000 14 – – – Transactions with other related parties During the year the Group paid professional fees to MSP Secretaries Limited, a company of which BM Moritz is a director, in relation to accounting services provided, totalling £10,000 (2010: £10,000). In addition, the Group paid professional fees to Share Registrars Limited, a subsidiary of MSP Secretaries Limited, in relation to the maintenance of the Company’s share register, totalling £9,500 (2010: £5,000). In the previous year the Group paid fees to Chromex Mining plc - a company in which BM Moritz was then a director, in relation to rent and other office running costs, totalling £14,000. Pricing policies Transactions with related parties take place on terms no more favourable than transactions with unrelated parties. 36 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:59 Page 37 25. NOTES TO THE CASH FLOW STATEMENT 25.1 Cash generated from operations Operating profit Adlustments for: Depreciation of property, plant and equipment Loss on disposal of property, plant and equipment Share incentive scheme cost Exceptional gain Operating profit/(loss) before working capital changes Decrease/(increase) in inventories (Increase)/decrease in trade and other receivables Increase in trade and other payables Effect of exchange rate on payables 25.2 Financing cost As per statement of comprehensive income Adjust for: Interest on environmental liability 25.3 Acquisition of property, plant and equipment Additions for the year Adjust for: Additions to environmental assets Group 2011 £’000 Group Company 2011 2010 £’000 £’000 Company 2010 £’000 3,054 2,059 (397) (543) 287 8 102 (425) 3,026 458 (4,718) 2,011 – 233 5 237 – 2,534 (2,352) 146 995 108 777 1,431 (119) 14 (105) (696) 16 (680) (328) 12 (316) (987) 3 (984) – – 102 – (295) – (15) 29 – (281) (15) – (15) – – – 2,061 – – – 237 – (306) – 9 – – (297) (12) – (12) – – – 297 – 297 25.4 Cash and cash equivalents Cash and cash equivalents include the following for the purposes of the cash flow statement: Bank balances and short term deposits (Note 17) Bank overdrafts (Note 20) 3,127 (117) 1,018 – 3,010 1,018 2,061 37 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:59 Page 38 N O T E S T O T H E F I N A N C I A L S TAT E M E N T S FOR THE YEAR ENDED 30 JUNE 2011 26. INVESTMENTS Company Investment in Gold Mineral Resources Ltd Company 2011 £’000 Company 2010 £’000 6,425 6,425 As at 30 June 2011 the Company had the following subsidiaries: Name of Company Country of incorporation Interest Activity Gold Mineral Resources Ltd - Directly Goldplat Recovery (Pty) Ltd – Indirectly Gold Recovery Ghana Ltd – Indirectly Kilimapesa Gold (Pty) Ltd - Indirectly Anumso Gold Ltd (formerly Banka Gold Ltd) - Indirectly Nyieme Gold SARL - Indirectly Guernsey South Africa Ghana Kenya Ghana Burkina Faso 100% 85% 100% 100% 100% 100% Holding company Gold recovery Gold recovery Mining minerals Mining minerals Mining minerals 27. LOANS TO SUBSIDIARY COMPANIES Funds advanced to Gold Mineral Resource Limited Company 2011 £’000 Company 2010 £’000 4,124 1,004 Interest is charged at 2% above LIBOR on the monthly outstanding balance. This interest was waived for the year ended 30 June 2010 and 30 June 2011. Loans to subsidiary companies are unsecured. 28. INTANGIBLE ASSETS Balance at 1 July Additions Acquisition of 50% in subsidiary undertaking Group 2011 Mineral rights £’000 – 1,140 – Goodwill £’000 5,745 35 – Total £’000 5,745 1,175 – Balance at 30 June 5,780 1,140 6,920 Group 2010 £’000 4,778 – 967 5,745 The mineral rights acquired during the year represent the cost paid for exploration and mining licenses in Burkina Faso and Ghana. Goodwill relates to the cost of the investment held in Gold Mineral Resources Limited and is supported by the ongoing gold recovery operations in South Africa and Ghana and the Kilimapesa mine in Kenya. 38 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:59 Page 39 D I R E C T O R S A N D A D V I S E R S DIRECTORS Brian Moritz, Non-executive Chairman Demetri Manolis, Chief Executive Officer Ian Visagie, Chief Financial Officer Dr Robert Pitts Smith, Managing Director recovery operations SECRETARY AND REGISTERED OFFICE Stephen Ronaldson 55 Gower Street London WC1E 6HQ NOMINATED ADVISER AND BROKER SOLICITORS Ronaldsons Solicitors 55 Gower Street London WC1E 6HQ REGISTRARS Share Registrars Limited Suite E, First Floor 9 Lion and Lamb Yard Farnham Surrey GU9 7LL WEBSITE www.goldplat.com WH Ireland Limited 24 Martin Lane London EC4R 0DR AUDITOR Chantrey Vellacott DFK LLP Russell Square House 10-12 Russell Square London WC1B 5LF FINANCIAL PUBLIC RELATIONS St Brides Media & Finance Limited Chaucer House 38 Bow Lane London EC4M 9AY REGISTRATION NUMBER 5340664 39 GOLDPLAT plc Annual Report and Financial Statements 2011 Goldplat 2011 A-W (P.872)_Layout 1 26/09/2011 13:59 Page 40 40 GOLDPLAT plc Annual Report and Financial Statements 2010 Goldplat 2011 A-W 2_Layout 1 23/09/2011 17:29 Page c C O N T E N T S H I G H LI G HTS C HAI R MAN’S STATE M E NT O P E R ATI O N S R E PO RT D I R ECTO R S’ R E PO RT I N D E P E N D E NT AU D ITO R ’ S R E PO RT G R O U P STATE M E NT O F C O M P R E H E N S I V E I N C O M E G R O U P AN D C O M PANY STAT E M E NTS O F F I NAN C I AL POS I T I O N G R O U P AN D C O M PANY STAT E M E NTS O F C H AN G E S I N S HAR E H O LD E R S’ EQ U I T Y G R O U P AN D C O M PANY CAS H F LOW STAT E M E NTS N OTES TO TH E F I NAN C IAL STAT E M E NTS D I R ECTO R S AN D ADVI S E R S 1 2 6 10 14 16 17 18 19 20 39 Whilst building profits and revenues remains a key objective for Goldplat, the exploration and development of brownfield projects, is where we see the growth and value uplift potential, as we continue to build the Company into a mid tier gold producer in Africa. Designed and produced by Deane Wakefield Limited Goldplat 2011 A-W 2_Layout 1 23/09/2011 17:29 Page a SOUTH AFRICAN OFFICE: Daveyton Road, PO Box 40, Benoni 1500, South Africa Tel: +27 (0) 11 423 1202 Fax: + 27 (0) 11 423 1230 Email: info@goldplat.com www.goldplat.com UNITED KINGDOM OFFICE: Covenham House Downside Bridge Road Cobham KT11 3EP Tel: +44 (0) 1932 918 070 Email: info@goldplat.com African focused gold production and advanced exploration ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011