Registered number: 05389216 FINNAUST MINING PLC (FORMERLY CENTURION RESOURCES PLC) ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2014 FINNAUST MINING PLC CONTENTS Company Information Chairman’s Report Group Strategic Report Directors’ Report Statement of Directors’ Responsibilities Corporate Governance Report Independent Auditor’s Report Consolidated and Company Statement of Financial Position Consolidated Income Statement Consolidated Statement of Comprehensive Income Consolidated Statement of Changes in Equity Company Statement of Changes in Equity Consolidated and Company Statements of Cash Flows Notes to the Financial Statements Page 2 3 5 8 10 11 12 13 14 15 16 17 18 19 FINNAUST MINING PLC COMPANY INFORMATION Directors Daniel Lougher (Non-Executive Chairman) (Appointed 29 November 2013) Graham Marshall (Non-Executive Director) (Appointed 29 November 2013) Gregory Kuenzel (Non-Executive Director) Alastair Clayton (Executive Director) Company Secretary Garth Palmer CA Registered Office 47 Charles Street London W1J 5EL Company Number 05389216 Bankers Nominated Adviser & Joint Broker Joint Broker Independent Auditor Solicitors HSBC Bank plc 129 New Bond Street London W1J 2JA S.P. Angel Corporate Finance LLP Prince Frederick House 35-39 Maddox Street London W1S 2PP Sanlam Securities Limited 10 King William Street London EC4N 7TW PKF Littlejohn LLP Statutory Auditor 1 Westferry Circus Canary Wharf London E14 4HD Kerman & Co LLP 200 Strand London WC2R 1DJ 2 FINNAUST MINING PLC CHAIRMAN’S REPORT FinnAust Mining Plc (formerly Centurion Resources Plc) (“FinnAust” or the “Group”) is committed to the creation of shareholder value through exploration. In this vein the Group’s focus during the period has centred on advancing our portfolio of high grade copper, zinc and nickel assets in Finland where three high priority projects have been identified: Hammaslahti, Outokumpu and Enonkoski (the “Projects”). Our prospective portfolio was acquired by way of a reverse- takeover of Finland Investments Plc (formerly FinnAust Mining Plc) in December 2013 from Western Areas Limited (“Western Areas”) who controlled 84% and minority Finnish investors that controlled 16%. Western Areas is an ASX 200 company with a proven track record in acquiring and developing quality resource assets, and with Western Areas came the addition of highly experienced management personnel. Our strengthened Board immediately oversaw the implementation of a rolling 10,300m drilling campaign and this has already led to the discovery of a new potential high grade ore lode of copper (‘Cu’), zinc (‘Zn’), lead (‘Pb’), silver (‘Ag’) and gold (‘Au’) mineralisation at the Hammaslahti Project. Our operations team’s commitment to FinnAust’s prospective portfolio, located in a premier mining district, as well as our defined development strategy, places FinnAust on the right path to realise value from its multi-asset portfolio. The Projects cover approximately 4,710sq km and are located in a prolific geological belt in Southern Finland. Importantly, they are located in a prime exploration region where local operators, such as ASX listed Altona Mining Limited (“Altona”), have delivered positive results. Altona’s nearby Kylylahti mine was recently the subject of a conditional offer of approximately US$100 million from Swedish mining company Boliden AB. The exploration focus to date has largely centred on Hammaslahti, where the Group is looking to identify extensions to and structural repeats of the previously mined copper-gold-zinc ore body interpreted to be part of a re-mobilised volcanogenic massive sulphide (“VMS”) type deposit. FinnAust considers both the wider area around the mine and the down plunge extensions of the known ore body to be under-explored and in some cases, untested. Consequently, the Group has to date drilled a total of 27 diamond drill holes for 5,870m on below pit targets as well as several regional geophysical targets between 500m and 800m north, east and south-east of the Hammaslahti open pits to improve our understanding of the mineralisation. Importantly, results from recent drilling have highlighted that the main Hammaslahti mine structure hosts possibly four separate plunging lodes now open to the north of the old zinc pit with 5.6m at 3.2% Cu and down dip extensions to the south with 3.5m at 11.5% Cu. This equates to a strike length of approximately 1.8 km. We are encouraged by the fact that the mineralisation discovered is relatively shallow and proximal to the historic pit, underground drives and historical mine infrastructure. At Outokumpu we conducted an on-ice drilling programme at Lake Juojärvi to test for Outokumpu-style massive copper and polymetalic mineralisation. The section of untested inferred Outukumpu geology under the lake is approximately 5km long. A total of four holes for 1,461m were completed in February 2014 across a drill traverse roughly equidistant from previously drilled traverses. A further hole located at the south-west end of the belt extending an existing drill traverse was also completed. Importantly, all four holes intercepted varying thicknesses of known Outokumpu geology; one drill hole intercepted approximately 50m of iron sulphides. Whilst not a discovery in itself, our geologists believe this may represent some kind of feeder structure or sulphidic “tail” that may be part of a larger multi metal system. Work on the significance of this or otherwise is continuing. In addition, at Enonkoski, we have identified possible extensions and repeats of high-grade nickel-copper mineralisation at and near the historical Enonkoski mine, where a previous drill intercept returned 15m at 6.9% nickel and 2.0% copper. Target generation and the interpretation of new geochemical and geophysical data sets is well underway at this project and we will look to further advance this asset in due course as part of our 10,300m drill programme. The Group also maintains an 80% interest in the Mitterberg Copper Project (“Mitterberg”), a previously producing tenure in the Mitterberg district of Salzburg, Austria, where approximately 120,000 tonnes copper was extracted between 1829 and ceased in 1977. The project, which is comprised of 47 licences over 33 sq km, sits in the Mitterberg district, which arguably contains the largest copper concentration in the Eastern Alps, and has an estimated exploration target of 11.0Mt to 11.7Mt with a grade range of 1.0% to 1.15% Cu. FinnAust will continue to seek the best possible way of realising value from Mitterberg, but the Group’s primary focus is on advancing our Finnish portfolio. Financial Review The loss before taxation of the Group for the period ended 30 June 2014 amounted to £2,394,934 (30 June 2013: £400,786). The Group’s cash position at 30 June 2014 was £1,706,137 (30 June 2013: £101,551) and currently stands at approximately £1.5 million. 3 FINNAUST MINING PLC CHAIRMAN’S REPORT Outlook FinnAust has transformed during the period, having acquired a suite of distinctive and highly prospective assets in Finland; a country rated the number one mining destination worldwide in the Fraser Institute Global Mining Survey Results 2012/2013. We are ideally located in a prolific geological belt, which includes the famous Outokumpu copper mine and other high-grade mines, and our three assets have already been subject to significant investment from their previous owners, providing us with an excellent base from which to commence our work. Our programme has already been highly productive, having led to the possible discovery of at least four separate plunging lodes at the Hammaslahti Project and with drilling on-going, we are excited to receive further results in the coming months, which we are confident will add value to our portfolio for the benefit of shareholders. I would like to take this opportunity to thank our shareholders, advisers and management team for their support during this transitional time for the Group and look forward to the year ahead. Daniel Lougher Chairman 22 August 2014 4 FINNAUST MINING PLC GROUP STRATEGIC REPORT The Directors of the Company and its subsidiary undertakings (which together comprise the “Group”) present their Strategic Report on the Group for the period ended 30 June 2014. Strategic Approach The Group’s aim is to create value for shareholders through the discovery and development of economic mineral deposits. The Group’s strategy is to continue to progress the development of its existing projects in Europe and to evaluate its existing and new mineral resource opportunities with a view to potential joint venture arrangements and/or other corporate activities. Organisation Overview The Group’s business is directed by the Board and is managed on a day-to-day basis by the Executive Director. The Board monitors compliance with objectives and policies of the Group through monthly performance reporting, budget updates and periodic operational reviews. The Board comprises the Executive Director and three Non-Executive Directors. The Corporate Head Office of the Group is located in London, UK, and provides corporate support services to the overseas operations. Overseas operations are managed out of the Group’s office in Outokumpu, Finland. Review of Business The most significant event during the period for the Group was completion of the acquisition of the suite of copper, zinc and nickel projects in Finland by way of reverse takeover in December 2013. The acquired Finnish assets cover approximately 4,710 square kilometres and are located in a prolific geographical belt in Southern Finland. Upon completion of the acquisition the Group immediately implemented a 10,300 metre drill campaign at the Finnish licence area which has delivered positive findings, including the potential discovery of a new area of copper mineralisation. Despite being the site of a mining operation, very little is known about the Hammaslahti near mine geology and potential. This is both a challenge and opportunity facing the exploration team and I am pleased to report that results are now beginning to be generated that indicate the Company’s thesis that further extensions and completely new plunging mineralised structures exist adjacent to and beneath the previously mined Hammaslahti area. Hole R317 identified two mineralised zones contained within a large mineralised envelope of 20.45m at 1.12% copper (‘Cu’), with the upper zone returning 5.5m at 1.46% Cu from 166m, and the lower zone 11.0m at 1.24% Cu from 176m. With >1% grades and large widths reported from the first hole placed near to the historical mine these results are extremely encouraging. Significantly, two further drill holes, R318 and R319, have also been completed and appear to extend the zone of known mineralisation substantially, terminating at the old zinc/gold open pit up-dip and potentially open at depth and laterally. R318, which is located approximately 100m south of R317 and down plunge, intercepted a large copper mineralised envelope, albeit lower-grade. Our geologists believe this mineralisation is part of a relatively continuous north to south plunging lode transitioning from shallow zinc and gold in the north to copper as it deepens in the south. Most encouragingly a new potential lode has been intersected to the north of the known mineralisation with a further semi- massive to massive sulphide zone identified by hole R325. This returned 5.6m at 3.2% Cu, 2.7% Zn, 0.7% Pb, 71gpt Ag and 0.76gpt Au from 196.80m downhole. This high-grade massive to semi-massive sulphide mineralisation has been found within a broader mineralised envelope of 8.65m at 2.2% Cu, 2.0% Zn, 0.5% Pb, 47gpt Ag and 0.50 gpt Au. The lower-grade up-plunge portion of this mineralised lode was intercepted in three drill holes, R321, R322, R324, on a single traverse 100m north of R325 and the results indicate grades are improving down plunge. Drilling is currently underway testing the extent of this new lode. Exploration efforts in the coming months will continue to focus on these near mine areas. The exploration team is confident that a new understanding of the local geology will lead to more polymetalic mineralisation being discovered at Hammaslahti. Financial Performance Review The loss of the Group for the period ended 30 June 2014 before taxation amounts to £2,394,934 (30 June 2013: £400,786). The loss for the current period includes £1,199,636 impairment to intangibles (including goodwill) (refer to Note 7) and £541,177 impairment to prepayments (refer to Note 23). 5 FINNAUST MINING PLC GROUP STRATEGIC REPORT The Board monitors the activities and performance of the Group on a regular basis. The Board uses financial indicators based on budget versus actual to assess the performance of the Group. The indicators set out below will continue to be used by the Board to assess performance over the period to 30 June 2015. The three main KPIs for the Group are as follows. These allow the Group to monitor costs and plan future exploration and development activities: KPI Cash and cash equivalents Administrative expenses as a percentage of total assets Exploration costs capitalised 2014 2013 £1,706,137 £101,551 12.03% 5.07% £1,280,107 £2,105,707 Cash has been used to fund the Group’s operations and facilitate its investment activities (refer to the Statements of Cash Flows on page 18). Exploration costs capitalised consist of the acquisition of exploration assets through business combinations (refer to Note 17 to the Financial Statements for more information) and exploration expenditure on the Group’s exploration licences net of foreign exchange rate movements. Principal Risks and Uncertainties The management of the business and the execution of the Group’s strategy are subject to a number of risks. The key business risks affecting the Group are set out below. Risks are formally reviewed by the Board, and appropriate processes are put in place to monitor and mitigate them. If more than one event occurs, it is possible that the overall effect of such events would compound the possible adverse effects on the Group. Exploration risks The exploration and mining business is controlled by a number of global factors, principally supply and demand which in turn is a key driver of global mineral prices; these factors are beyond the control of the Group. Exploration is a high-risk business and there can be no guarantee that any mineralisation discovered will result in proven and probable reserves or go on to be an operating mine. At every stage of the exploration process the projects are rigorously reviewed to determine if the results justify the next stage of exploration expenditure ensuring that funds are only applied to high priority targets. The principal assets of the Group comprising the mineral exploration licences are subject to certain financial and legal commitments. If these commitments are not fulfilled the licences could be revoked. They are also subject to legislation defined by the Government; if this legislation is changed it could adversely affect the value of the Group’s assets. Dependence on key personnel The Group and Company is dependent upon its executive management team and various technical consultants. Whilst it has entered into contractual agreements with the aim of securing the services of these personnel, the retention of their services cannot be guaranteed. The development and success of the Group depends on the Company’s ability to recruit and retain high quality and experienced staff. The loss of the service of key personnel or the inability to attract additional qualified personnel as the Group grows could have an adverse effect on future business and financial conditions. Uninsured risk The Group, as a participant in exploration and development programmes, may become subject to liability for hazards that cannot be insured against or third party claims that exceed the insurance cover. The Group may also be disrupted by a variety of risks and hazards that are beyond control, including geological, geotechnical and seismic factors, environmental hazards, industrial accidents, occupation and health hazards and weather conditions or other acts of God. Funding risk The only sources of funding currently available to the Group are through the issue of additional equity capital in the Parent Company or through bringing in partners to fund exploration and development costs. The Company’s ability to raise further funds will depend on the success of the Group’s exploration activities and its investment strategy. The Company may not be successful in procuring funds on terms which are attractive and, if such funding is unavailable, the Group may be required 6 FINNAUST MINING PLC GROUP STRATEGIC REPORT to reduce the scope of its exploration activities or relinquish some of the exploration licences held for which it may incur fines or penalties. Financial Risks The Group’s operations expose it to a variety of financial risks that can include market risk (including foreign currency, price and interest rate risk), credit risk, and liquidity risk. The Group has a risk management programme in place that seeks to limit the adverse effects on the financial performance of the Group by monitoring levels of debt finance and the related finance costs. The Group does not use derivative financial instruments to manage interest rate costs and, as such, no hedge accounting is applied. Details of the Group’s financial risk management policies are set out in Note 3 to the Financial Statements. The Group Strategic Report was approved by the Board on 22 August 2014. Alastair Clayton Executive Director 7 FINNAUST MINING PLC DIRECTORS’ REPORT The Directors present their annual report on the affairs of FinnAust Mining Plc (formerly Centurion Resources Plc), together with the audited Consolidated Financial Statements for the period ended 30 June 2014. Principal Activity The principal activity of the Company is to make investments and/or acquire projects in the natural resources and mineral sectors as a whole. The principle activity of the Group is to implement its mineral exploration strategy to advance projects towards defining a sufficient in-situ mineral resource to support a detailed feasibility study towards mine development and production. Dividends The Directors do not recommend the payment of a dividend for the period (Company 28 February 2013: £nil; Group 30 June 2013: £nil). Directors & Directors’ Interests The Directors who served during the period ended 30 June 2014 are shown in the Company Information on page 2 and had, at that time the following beneficial interests in the shares of the Company: Alastair Clayton (1) Greg Kuenzel (2) Daniel Lougher (3) Graham Marshall (3) Robert Hyndes (4) Peter Landau (4) 30 June 2014 28 February 2013 (or later date of appointment) Ordinary Shares Options Ordinary Shares Options 800,000 8,000,000 800,000 1,000,000 30,000 3,600,000 30,000 600,000 - - n/a n/a - - n/a n/a - - - - 50,000 700,000 400,000 750,000 (1) Alastair Clayton’s shares are held by Valzina Global Limited. (2) Greg Kuenzels’ shares are held by Fitel Nominees Limited. 3,000,000 of Greg Kuenzel’s options are held by Heytesbury Corporate LLP of which Greg is a partner. (3) Appointed on 29 November 2013. (4) Resigned on 4 September 2013. Further details on options can be found in Note 15 to the Financial Statements. Corporate Responsibility Environmental FinnAust undertakes its exploration activities in a manner that minimises or eliminates negative environmental impacts and maximises positive impacts of an environmental nature. FinnAust is a mineral explorer, not a mining company. Hence, the environmental impact associated with its activities is minimal. To ensure proper environmental stewardship on its projects, FinnAust conducts certified baseline studies prior to all drill programmes and ensures that areas explored are properly maintained and conserved. Health and safety FinnAust operates a comprehensive health and safety programme to ensure the wellness and security of its employees. The control and eventual elimination of all work related hazards requires a dedicated team effort involving the active participation of all employees. A comprehensive health and safety programme is the primary means for delivering best practices in health and safety management. This programme is regularly updated to incorporate employee suggestions, lessons learned from past incidents and new guidelines related to new projects with the aim of identifying areas for further improvement of health and safety management. This results in continuous improvement of the health and safety programme. Employee involvement is recognised as fundamental in recognising and reporting unsafe conditions and avoiding events that may result in injuries and accidents. Internal Controls The Board recognises the importance of both financial and non-financial controls and has reviewed the Group’s control environment and any related shortfalls during the year. Since the Group was established, the Directors are satisfied that, given the current size and activities of the Group, adequate internal controls have been implemented. Whilst they are aware that no system can provide absolute assurance against material misstatement or loss, in light of the current activity and 8 FINNAUST MINING PLC DIRECTORS’ REPORT proposed future development of the Group, continuing reviews of internal controls will be undertaken to ensure that they are adequate and effective. Further details of corporate governance can be found in the Corporate Governance Report on page 11. Going Concern The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and, therefore, continue to adopt the going concern basis in preparing the Annual Report and Financial Statements. Further details on their assumptions and their conclusion thereon are included in the statement on going concern included in Note 2.4 to the Financial Statements. Directors’ and Officers’ Indemnity Insurance The Group has made qualifying third-party indemnity provisions for the benefit of its Directors and Officers. These were made during the period and remain in force at the date of this report. Events after the reporting period Events after the reporting period are set out in Note 27 to the Financial Statements. Policy and Practice on Payment of Creditors The Company and its subsidiary undertakings agree terms and conditions for their business transactions with suppliers. Payment is then made in accordance with these terms, subject to the terms and conditions being met by the supplier. As at 30 June 2014, the Company had an average of 0.5 days (2013: 6 days) purchases outstanding in trade payables. The Group average was 5 days (2013: 30 days). Future Developments Details of future developments for the Group are disclosed in the Chairman’s Report on page 3. Provision of Information to Auditor So far as each of the Directors is aware at the time this report is approved: • • there is no relevant audit information of which the Company's auditor is unaware; and the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information. Auditor PKF Littlejohn LLP has signified its willingness to continue in office as auditor. This report was approved by the Board on 22 August 2014 and signed on its behalf. Alastair Clayton Executive Director 9 FINNAUST MINING PLC STATEMENT OF DIRECTORS’ RESPONSIBILITIES The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations, including the AIM Rules for Companies. Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the Group and Parent Company Financial Statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company, and of the profit or loss of the Group for that period. In preparing these Financial Statements, the Directors are required to: • select suitable accounting policies and then apply them consistently; • make judgments and accounting estimates that are reasonable and prudent; and • state whether applicable IFRSs as adopted by the European Union have been followed, subject to any material departures disclosed and explained in the financial statements. 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 Group and Company, and enable them to ensure that the Financial Statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and Company, and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of the Financial Statements may differ from legislation in other jurisdictions. The Company is compliant with AIM Rule 26 regarding the Company’s website. The Directors confirm that they have complied with the above requirements in preparing the Financial Statements. 10 FINNAUST MINING PLC CORPORATE GOVERNANCE REPORT The Board of Directors currently comprises one Executive Director and three Non-Executive Directors, one of whom is the Chairman. The Company is not required to comply with the UK Corporate Governance Code or the Corporate Governance Code for Small and Mid-Size Quoted Companies 2013, as published by the Quoted Companies Alliance. However, the Directors recognise the importance of sound corporate governance and the Board intends, to the extent they consider appropriate in light of the Group’s size, stage of development and resources, to implement certain corporate governance recommendations. The Directors have responsibility for the overall corporate governance of the Group and recognise the need for the highest standards of behaviour and accountability. The Board has a wide range of experience directly related to the Group and its activities and its structure ensures that no one individual or group dominates the decision making process. Board Meetings The Board meets regularly throughout the year. The Board is responsible for formulating, reviewing and approving the Group's strategy, financial activities and operating performance. Board Committees The Group has established an Audit Committee and a Remuneration Committee. In light of the size of the Board, the Directors do not consider it necessary to establish a Nomination Committee. However, this will be kept under regular review. Audit Committee The Audit Committee, comprising Daniel Lougher, Graham Marshall and Greg Kuenzel, reviews the Group's annual and interim financial statements before submission to the Board for approval. The Committee also reviews regular reports from management and the external auditor on accounting and internal control matters. Where appropriate, the Committee monitors the progress of action taken in relation to such matters. The Committee also recommends the appointment, and reviews the fees, of the external auditor. The Committee keeps under review the cost effectiveness and the independence and objectivity of the external auditor. A formal statement of independence is received from the external auditor each year. Remuneration Committee The Remuneration Committee, comprising Daniel Lougher, Graham Marshall and Greg Kuenzel, is responsible for reviewing the performance of the Executive Director and for setting the scale and structure of their remuneration, determining the payment of bonuses, considering the grant of options under any share option scheme and, in particular, the price per share and the application of performance standards which may apply to any such grant, paying due regard to the interests of shareholders as a whole and the performance of the Group. Internal Controls The Directors acknowledge their responsibility for the Group’s systems of internal controls and for reviewing their effectiveness. These internal controls are designed to safeguard the assets of the Group and to ensure the reliability of financial information for both internal use and external publication. Whilst they are aware that no system can provide absolute assurance against material misstatement or loss, in light of the increased activity and further development of the Group, continuing reviews of internal controls will be undertaken to ensure that they are adequate and effective. Risk Management The Board considers risk assessment to be important in achieving its strategic objectives. Project milestones and timelines are regularly reviewed. Securities Trading The Group has adopted a share dealing code for dealings in shares by directors and senior employees which is appropriate for an AIM quoted company. The Directors will comply with Rule 21 of the AIM Rules for Companies relating to Directors’ dealings and will take all reasonable steps to ensure compliance by the Group’s applicable employees. Relations with Shareholders The Board is committed to providing effective communication with the Shareholders of the Group. Significant developments are disseminated through stock exchange announcements and regular updates of the Group’s website. The Board views the AGM as a forum for communication between the Group and its shareholders and encourages their participation in its agenda. 11 FINNAUST MINING PLC INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF FINNAUST MINING PLC We have audited the Financial Statements of FinnAust Mining Plc (formerly Centurion Resources Plc) for the period ended 30 June 2014 which comprise the Consolidated and Company Statements of Financial Position, the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated and Company Statements of Changes in Equity, the Consolidated and Company Statements of Cash Flows and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the 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 auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed. 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 and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. 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: • the Financial Statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 30 June 2014 and of the Group’s loss for the year then ended; the Group Financial Statements have been properly prepared in accordance with IFRSs as adopted by the European Union; the Parent Company Financial Statements for the 16 months ended 30 June 2014 have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and the Financial Statements have been prepared in accordance with the requirements of the Companies Act 2006. • • • Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Strategic Report and the Directors’ Report for the financial period 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 matters where the Companies Act 2006 requires us to report to you if, in our opinion: • adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or 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. Alistair Roberts (Senior statutory auditor) For and on behalf of PKF Littlejohn LLP Statutory Auditor 22 August 2014 1 Westferry Circus Canary Wharf London E14 4HD 12 FINNAUST MINING PLC STATEMENTS OF FINANCIAL POSITION As at 30 June 2014 Non-Current Assets Property, plant and equipment Intangible assets Trade and other receivables Investment in subsidiaries Available for sale financial assets Current Assets Trade and other receivables Cash and cash equivalents Note 6 7 10 8 9 10 11 Company number: 05389216 Consolidated Company 30 June 2014 £ 30 June 2013 £ 30 June 2014 28 February 2013 £ £ 16,322 18,456 1,145 8,101,446 20,069 7,190,919 21,430 - - 322 - - - - - - 9,577,636 - 616,482 375,000 8,137,837 7,230,805 9,578,781 991,804 100,952 1,706,137 581,023 101,551 77,093 1,666,932 48,433 491,827 1,807,089 682,574 1,744,025 540,260 Total Assets 9,944,926 7,913,379 11,322,806 1,532,064 Current Liabilities Trade and other payables Borrowings 12 13 239,192 125,000 233,850 35,007 279,676 - - - 364,192 233,850 35,007 279,676 Total Liabilities 364,192 233,850 35,007 279,676 Net Assets 9,580,734 7,679,529 11,287,799 1,252,388 Equity attributable to owners of the Parent Share capital Share premium Deferred shares Reverse acquisition reserve Other reserves Retained losses Total Equity 14 14 16 4,941,953 141,180 4,941,953 459,953 14,188,311 1,825,104 (8,071,001) 51,209 (3,354,842) 8,500,753 - - (2,496) (959,908) 14,188,311 1,825,104 7,437,936 1,825,104 - - 398,010 (10,065,579) 779,970 (9,250,575) 9,580,734 7,679,529 11,287,799 1,252,388 The Financial Statements were approved and authorised for issue by the Board of Directors on 22 August 2014 and were signed on its behalf by: Alastair Clayton Executive Director The Notes on pages 19 to 43 form part of these Financial Statements. 13 FINNAUST MINING PLC CONSOLIDATED INCOME STATEMENT For the year ended 30 June 2014 Continued operations Note Revenue Cost of sales Gross profit Administrative expenses Impairment of intangibles Operating Loss Finance income Loss Before Income Tax Income tax expense Loss for the Year Loss attributable to Owners of the Parent Year ended 30 June 2014 Year ended 30 June 2013 £ - - - £ - - - 23 7, 17 (1,196,222) (1,199,636) (2,395,858) 924 (2,394,934) - 20 21 (400,923) - (400,923) 137 (400,786) - (2,394,934) (400,786) (2,394,934) (400,786) Basic and Diluted Earnings Per Share attributable to owners of the parent during the year (expressed in pence per share) 22 (1.352) p (0.510) p The Company has elected to take the exemption under Section 408 of the Companies Act 2006 from presenting the Parent Company Income Statement and Statement of Comprehensive Income. The loss for the Company for the 16-month period ended 30 June 2014 was £1,203,743 (year ended 28 February 2013: £497,183). The Notes on pages 19 to 43 form part of these Financial Statements. 14 FINNAUST MINING PLC CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 30 June 2014 Loss for the year Other Comprehensive Income: Items that may be subsequently reclassified to profit or loss Currency translation differences Other comprehensive income for the year, net of tax Year ended 30 June 2014 Year ended 30 June 2013 £ £ (2,394,934) (400,786) (344,305) (2,496) (344,305) (2,496) Total Comprehensive Income for the Year Attributable to Owners of the Parent (2,739,239) (403,282) Items in the statement above are disclosed net of tax. The income tax relating to each component of other comprehensive income, where relevant, is disclosed in Note 21. The Notes on pages 19 to 43 form part of these Financial Statements. 15 FINNAUST MINING PLC CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 30 June 2014 Attributable to owners of the parent Share capital Share premium Deferred shares Note £ £ Balance as at 1 July 2012 124,067 6,378,773 Loss for the year - - Other comprehensive income for the year Items that may be subsequently reclassified to profit or loss Currency translation differences Total comprehensive income for the year - - - - Proceeds from share issue 14 17,113 2,121,980 Total transactions with owners, recognised in equity Balance as at 30 June 2013 17,113 2,121,980 141,180 8,500,753 Balance as at 1 July 2013 141,180 8,500,753 Loss for the year Other comprehensive income Items that may be subsequently reclassified profit or loss Currency translation differences Total comprehensive income for the year - - - - - - £ - - - - - - - - - - - Reverse acquisition reserve £ - - - - - - - - - Other reserves Retained losses Total equity £ - - £ £ (559,122) 5,943,718 (400,786) (400,786) (2,496) - (2,496) (2,496) (400,786) (403,282) - - - - 2,139,093 2,139,093 (2,496) (959,908) 7,679,529 (2,496) (959,908) 7,679,529 - (2,394,934) (2,394,934) - (344,305) - (344,305) - (344,305) (2,394,934) (2,739,239) Proceeds from share issue Issue costs Reverse acquisition Issued options 14 14 15 - 4,482,000 6,823,000 - (72,625) 318,773 (1,062,817) 1,825,104 - - - (8,071,001) - - 391,231 - - - - 6,779 Total transactions with owners, recognised in equity Balance as at 30 June 2014 4,800,773 5,687,558 1,825,104 (8,071,001) 398,010 4,941,953 14,188,311 1,825,104 (8,071,001) 51,209 (3,354,842) 9,580,734 - - - - - 11,305,000 (72,625) (6,598,710) 6,779 4,640,444 The Notes on pages 19 to 43 form part of these Financial Statements. 16 FINNAUST MINING PLC COMPANY STATEMENT OF CHANGES IN EQUITY For the 16 month period ended 30 June 2014 Attributable to equity shareholders Share capital £ Share premium Deferred shares £ £ Other reserves £ Retained losses £ Total equity £ Note Balance as at 1 March 2012 104,315 6,197,225 1,825,104 764,945 (8,927,134) (35,545) Loss for the year Total comprehensive income for the year Proceeds from share issues Issue costs Share based payments Issued options Expired options Total transactions with owners, recognised in equity Balance as at 28 February 2013 14 14 15 15 - - - - 343,638 - 12,000 - - 1,318,546 (125,835) 48,000 - - 355,638 1,240,711 - - - - - - - - - - - 71,657 - 117,110 (497,183) (497,183) (497,183) (497,183) - - - - 1,662,184 (54,178) 60,000 117,110 (173,742) 173,742 - 15,025 173,742 1,785,116 459,953 7,437,936 1,825,104 779,970 (9,250,575) 1,252,388 Balance as at 1 March 2013 459,953 7,437,936 1,825,104 779,970 (9,250,575) 1,252,388 Loss for the period Total comprehensive income for the period Proceeds from share issues Issue costs Issued options Expired options Total transactions with owners, recognised in equity - - - - 14 14 15 4,482,000 - 6,823,000 (72,625) - - - - 4,482,000 6,750,375 - - - - - - - - - - - 6,779 (1,203,743) (1,203,743) (1,203,743) (1,203,743) - - - 11,305,000 (72,625) 6,779 - (388,739) 388,739 (381,960) 388,739 11,239,154 Balance as at 30 June 2014 4,941,953 14,188,311 1,825,104 398,010 (10,065,579) 11,287,799 The Notes on pages 19 to 43 form part of these Financial Statements. 17 FINNAUST MINING PLC STATEMENTS OF CASH FLOWS For the periods ended 30 June 2014 Consolidated Company Year ended Year ended 30 June 2014 30 June 2013 16 month period ended 30 June 2014 Year ended 28 February 2013 Note £ £ £ £ Cash flows from operating activities Loss before taxation Adjustments for: Depreciation Impairment of intangibles Other gains or losses Finance income Share based payments Non-cash expenditure Foreign exchange gains Changes in working capital: Decrease/(increase) in trade and other receivables Increase/(decrease) in trade and other payables Net cash generated from operating activities Cash flows from investing activities Finance income Proceeds from sale of available for sale financial assets Purchase of available for sale financial assets Purchase of property, plant and equipment Loans granted to subsidiary undertakings Acquisition of subsidiary, net of cash acquired Purchase of intangible assets Net cash used in investing activities Cash flows from financing activities Proceeds from issue of share capital Transaction costs of share issue Proceeds from borrowings Repayment of borrowings 6 7, 17 9, 23 20 15 10 12 20 6 17 7 14 14 13 13 (2,394,934) (400,786) (1,203,743) (497,183) 2,729 1,199,636 (74,816) (924) 6,779 - (582,450) 2,236 - - (137) - 1,582 - 842 - (37,500) (1,120) 6,779 - 81,799 481,433 250,605 5,338 (630,249) (28,660) (244,669) 729 - - (103) 177,110 12,184 (44,909) (30,068) (57,727) (1,357,209) (776,749) (1,426,272) (439,967) 924 137 - - - - 509,806 - - - - - (1,280,107) (2,275,786) 1,120 412,500 103 - - (131,059) (1,665) (1,342,953) - - - - (14,300) - (769,377) (2,275,649) (930,998) (145,256) 3,605,000 2,125,850 3,605,000 1,100,000 (72,625) 324,816 (125,000) - - - (72,625) (54,177) - - - - Net cash generated from financing activities 3,732,191 2,125,850 3,532,375 1,045,823 Net increase/(decrease) in cash and cash equivalents 1,605,605 (926,548) 1,175,105 460,600 Cash and cash equivalents at beginning of period 101,551 971,989 491,827 31,227 Exchange (loss)/gain on cash and cash equivalents (1,019) 56,110 - - Cash and cash equivalents at end of period 11 1,706,137 101,551 1,666,932 491,827 Major non-cash transactions On 2 December 2013 the Company’s shares were admitted to trading on AIM (the “Admission”). In connection with the Admission the Company issued the following: • • • 154,000,000 new ordinary shares of 2 pence per share fully paid as consideration for the purchase of Finland Investments Plc (previously FinnAust Mining Plc); £3,080,000 (Note 14); 6,000,000 options to board and management valid for 3.5 years from the date of issue and exercisable at 15 pence per option (Note 15); and 6,000,000 options to board and management valid for 5.5 years from the date of issue and exercisable at 20 pence per option (Note 15). At 30 June 2014 £82,310 of exploration and evaluation additions remained outstanding and unpaid. The Notes on pages 19 to 43 form part of these Financial Statements. 18 FINNAUST MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the period ended 30 June 2014 1. General information The principal activity of FinnAust Mining Plc (the “Company”) and its subsidiaries (together the “Group”) is the exploration and development of precious and base metals. The Company’s shares are listed on the AIM market of the London Stock Exchange. The Company is incorporated and domiciled in England. On 29 November 2013 Centurion Resources Plc changed its name to Finnaust Mining Plc. The address of its registered office is 47 Charles Street, London, W1J 5EL. 2. Summary of Significant Accounting Policies The principal Accounting Policies applied in the preparation of these Consolidated Financial Statements are set out below. These Policies have been consistently applied to all the periods presented, unless otherwise stated. 2.1. Basis of Preparation of Financial Statements The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and IFRS Interpretations Committee (“IFRS IC”) as adopted by the European Union, the Companies Act 2006 that applies to Companies reporting under IFRS and IFRS IC interpretations. The Consolidated Financial Statements have also been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets. The Financial Statements are presented in Pound Sterling rounded to the nearest pound. The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Consolidated Accounting Policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4. 2.2. New and Amended Standards (a) New and amended standards mandatory for the first time for the financial periods beginning on or after 1 March 2013 The financial statements have been drawn up on the basis of accounting standards, interpretations and amendments effective at the beginning of the accounting period. The following new standards, interpretations and amendments to published standards effective in the period have been adopted by the Group: Standard IAS 12 (amendment) IAS 1 (amendment) IFRS 13 IAS 19 (amendment) IFRIC 20 IFRS 1 (amendment) IFRS 7 (amendment) IFRS 1 (amendment) (annual improvements 2009-2011) IAS 1 (amendment) (annual improvements 2009-2011) IAS 16 (amendment) (annual improvements 2009-2011) IAS 32 (amendment) (annual improvements 2009-2011) IAS 34 (amendment) (annual improvements 2009-2011) Impact on initial application Deferred tax: Recovery of underlying assets Presentation of items of other comprehensive income Fair value measurement Employee benefits Stripping costs in the production phase of surface mine Government loans Disclosures: Offsetting financial assets and financial liabilities First International Financial Reporting Standards: Severe hyperinflation and removal of fixed dates for first time adopters time adoption of Presentation of financial statements Property, plant and equipment Financial instruments – presentation Interim financial reporting Effective date 1 January 2012*1 1 July 2012*1 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 *1 Effective date 1 January 2013 for the EU The above pronouncements have been adopted for the first time this period and have not resulted in any material changes in the financial statements other than additional disclosures to the financial statements. 19 FINNAUST MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the period ended 30 June 2014 (b) New standards, amendments and Interpretations in issue but not yet effective or not yet endorsed and not early adopted Effective date 1 July 2014*1 1 January 2014 1 January 2014 1 January 2014 1 January 2014 1 January 2014 1 January 2014 No mandatory effective date*1 No mandatory effective date*1 No mandatory effective date*1 1 January 2014 1 January 2014 1 January 2014 1 January 2014 1 January 2014 1 January 2014 1 January 2014 1 January 2014 1 January 2014 1 January 2016*1 1 January 2016*1 1 January 2016*1 1 January 2017*1 1 July 2014*1 Standard IAS 19 (amendment) IAS 27 IAS 27 (amendment) IAS 28 IAS 32 (amendment) IAS 36 (amendment) IAS 39 (amendment) IAS 39, IFRS 7 and IFRS 9 (amendment November 2013) IFRS 7 and 9 (amendment December 2011) IFRS 9 Impact on initial application Defined benefit plans: employee contributions Separate financial statements Separate financial statements – Investment entities Investments in associates and joint ventures Offsetting financial assets and financial liabilities Impairment of assets – Recoverable amount disclosures for non-financial assets Novation of derivatives and continuation of hedge accounting Hedge accounting Mandatory effective date and transition disclosures Financial instruments IFRS 10 IFRS 10 (amendment) IFRS 10 (amendment) IFRS 11 IFRS 11 (amendment) IFRS 12 IFRS 12 (amendment) IFRS 12 (amendment) IFRIC 21 IAS 16 (Amendments) IFRS 11 (Amendment) IFRS 14 IFRS 15 IFRS 2 (amendment) (annual improvements 2010-2012) IFRS 3 (amendment) (annual improvements 2010-2012) IFRS 8 (amendment) (annual improvements 2010-2012) and IAS 38 IFRS 13 (amendment) (annual improvements 2010-2012) IAS 16 (amendment) (annual improvements 2010-2012) IAS 24 (amendment) (annual improvements 2010-2012) IAS 38 (amendment) (annual improvements 2010-2012) IFRS 1 (amendment) (annual improvements 2011-2013) IFRS 3 (amendment) (annual improvements 2011-2013) IFRS 13 (amendment) (annual improvements 2011-2013) IAS 40 (amendment) (annual improvements 2011-2013) 16 IAS (Amendments) and IAS 41 Consolidated financial statements Consolidated financial statements – Investment entities Consolidated financial statements – transition guidance Joint arrangements Joint arrangements – transition guidance Disclosure of interests in other entities Disclosure of interests in other entities – Investment entities Disclosure of interests in other entities – transition guidance Levies Clarification of acceptable methods of depreciation and amortization Accounting for acquisition of interests in joint operations Regulatory deferral accounts Revenue from contracts with customers Share-based payment – Definition of ‘vesting condition’ – Accounting Business combinations consideration in a business combination Operating segments – Aggregation of operating segments and Reconciliation of the total of the reportable segments’ assets to the entity’s assets Fair value measurement – Short-term receivables and payables 1 July 2014*1 1 July 2014*1 contingent for 1 July 2014*1 Property, plant and equipment – Revaluation method – proportionate restatement of accumulated depreciation Related party disclosures – Key management personnel Intangible assets – Revaluation method – proportionate restatement of accumulated amortization First Standards – Meaning of effective IFRSs Business Combinations – Scope of exception for joint ventures International Financial Reporting time adoption of Fair value measurement – Scope of paragraph 52 (portfolio exception) Investment property – Clarifying the interrelationship of IFRS 3 and IAS 40 when classifying property as investment property or owner-occupied property Property, plant and equipment and Agriculture: Bearer Plants 20 1 July 2014*1 1 July 2014*1 1 July 2014*1 1 July 2014*1 1 July 2014*1 1 July 2014*1 1 July 2014*1 1 January 2016*1 FINNAUST MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the period ended 30 June 2014 *1 Not yet endorsed by the EU The Group is evaluating the impact of the new and amended standards above. The Directors believe that these new and amended standards are not expected to have a material impact on the Group’s results or shareholders’ funds. 2.3. Basis of Consolidation The Group Financial Statements consolidate the Financial Statements of FinnAust Mining Plc and the audited management accounts of all of its subsidiary undertakings made up to 30 June 2014. Subsidiaries are entities over which the Group has control. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The Group obtains and exercises control through voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. Investments in subsidiaries are accounted for at cost less impairment within the parent company financial statements. The acquisition by FinnAust Mining Plc of Finland Investments Plc has been accounted for under reverse acquisition accounting. Although the Consolidated Financial Statements have been prepared in the name of the legal parent, FinnAust Mining Plc, they are in substance a continuation of the financial statements of the legal subsidiary, Finland Investments Plc. The results of FinnAust Mining Plc are included in the Consolidated Statement of Comprehensive Income from the effective date of acquisition of Finland Investments Plc. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the Group. All significant intercompany transactions and balances between Group enterprises are eliminated on consolidation. The following accounting treatment has been applied in respect of the reverse acquisition: • The assets and liabilities of the legal subsidiary, Finland Investments Plc, are recognised and measured in the Consolidated Financial Statements at their pre-combination carrying amounts, without restatement to fair value; • The equity structure appearing in the Consolidated Financial Statements reflects the equity structure of the legal parent, FinnAust Mining Plc, including the equity instruments issued to effect the business combination; • Comparative numbers presented in the Consolidated Financial Statements are those reported in the financial statements of the legal subsidiary, Finland Investments Plc; and • The cost of acquisition is measured as the fair value of the assets acquired, equity instruments issued and liabilities incurred or assumed at the date of exchange. 2.4. Going Concern The Group’s business activities together with the factors likely to affect its future development, performance and position are set out in the Chairman’s Report on pages 3 and 4. In addition, Note 3 to the Consolidated Financial Statements includes the Group’s objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and its exposure to market, credit and liquidity risk. The Consolidated Financial Statements have been prepared on a going concern basis. Although the Group’s assets are not generating revenues and an operating loss has been reported, the Directors believe that the Group has sufficient funds to undertake its operating activities over the next 12 months including any additional payment required in relation to its current exploration projects. The Group has financial resources which, the Directors believe, will be sufficient to fund the Group’s committed expenditure both operationally and on various exploration projects for this time period. However, in order to complete other exploration work over the life of existing projects and as additional projects are identified additional funding will be required. The amount of funding is unforeseen at the point of approval of these Financial Statements and the Group will be required to raise additional funds either via an issue of equity or through the issuance of debt. The Directors are confident that funds will be forthcoming if and when they are required. Should additional funding not be forthcoming the Directors have agreed, if circumstances require, to defer payment of their fees until such time as adequate funding is received. The Directors have a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the Group and Company financial statements. 21 FINNAUST MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the period ended 30 June 2014 2.5. Segment Reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision- maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors that makes strategic decisions. No revenue is currently being generated. Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. 2.6. Foreign Currencies (a) Functional and presentation currency Items included in the Financial Statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the ‘functional currency’). The functional currency of the UK parent entity and UK subsidiary is Pound Sterling and the functional currency of the Finnish and Austrian subsidiaries is Euros. The Financial Statements are presented in Pound Sterling, rounded to the nearest pound, which is the Company’s functional and Group’s presentation currency. (b) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where such items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. (c) Group companies The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: • assets and liabilities for each year end date presented are translated at the closing rate at the date of the Statement of Financial Position; • income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and • all resulting exchange differences are recognised in other comprehensive income. On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of monetary items receivable from foreign subsidiaries for which settlement is neither planned nor likely to occur in the foreseeable future are taken to other comprehensive income. When a foreign operation is sold, such exchange differences are recognised in the Income Statement as part of the gain or loss on sale. 2.7. Intangible assets Goodwill Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over the Group’s interest in the fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash- generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level. Goodwill impairment reviews are undertaken annually, or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment is recognised immediately as an expense and is not subsequently reversed. Exploration and evaluation assets The Group recognises expenditure as exploration and evaluation assets when it determines that those assets will be successful in finding specific mineral resources. Expenditure included in the initial measurement of exploration and evaluation assets and which are classified as intangible assets relate to the acquisition of rights to explore, topographical, 22 FINNAUST MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the period ended 30 June 2014 geological, geochemical and geophysical studies, exploratory drilling, trenching, sampling and activities to evaluate the technical feasibility and commercial viability of extracting a mineral resource. Capitalisation of pre-production expenditure ceases when the mining property is capable of commercial production. Exploration and evaluation assets are recorded and held at cost. Exploration and evaluation assets are not subject to amortisation, but are assessed annually for impairment. The assessment is carried out by allocating exploration and evaluation assets to cash generating units, which are based on specific projects or geographical areas. Whenever the exploration for and evaluation of mineral resources in cash generating units does not lead to the discovery of commercially viable quantities of mineral resources and the Group has decided to discontinue such activities of that unit, the associated expenditures are written off to the income statement. 2.8. Investments in subsidiaries Investments in Group undertakings are stated at cost, which is the fair value of the consideration paid, less any impairment provision. 2.9. Property, Plant and Equipment Property, Plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is provided on all property, plant and equipment to write off the cost less estimated residual value of each asset over its expected useful economic life on a straight line basis at the following annual rates: Office Equipment – 20% straight line Machinery and Equipment – 10% straight line Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposal are determined by comparing the proceeds with the carrying amount and are recognised within ‘Other (losses)/gains’ in the income statement. 2.10. Impairment of non-financial assets Assets that have an indefinite useful life, for example, intangible assets not ready to use, and goodwill, are not subject to amortisation and are tested annually for impairment. Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. 2.11. Financial Assets (a) Classification The Group classifies its financial assets in the following categories: loans and receivables and available-for-sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. (i) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. The Group’s loans and receivables comprise trade and other receivables and cash and cash equivalents in the Statement of Financial Position. 23 FINNAUST MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the period ended 30 June 2014 (ii) Available-for-sale financial assets Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures or management intends to dispose of the investment within 12 months of the end of the reporting period. (b) Recognition and measurement Financial assets are initially recognised at fair value plus transaction costs. Financial assets are derecognised when the rights to receive cash flows from the assets have expired or have been transferred, and the Group has transferred substantially all of the risks and rewards of ownership. Available-for-sale financial assets are subsequently carried at fair value unless the Group is precluded from doing so as, in the case of unlisted equity securities, the range of reasonable fair value estimates is significant and the probabilities of the various estimates cannot be reasonably assessed. In such circumstances available-for-sale financial assets are held at cost and reviewed annually for impairment. Loans and receivables are subsequently carried at amortised cost using the effective interest method. Changes in the fair value of monetary and non-monetary securities classified as available-for-sale are recognised in other comprehensive income. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in the Income Statement as “gains and losses from investment securities.” Interest on available-for-sale securities calculated using the effective interest method is recognised in the Income Statement as part of other income. Dividends on available-for-sale equity instruments are recognised in the Income Statement as part of other income when the Group’s right to receive payments is established. (c) Impairment of financial assets The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset, or a group of financial assets, is impaired. A financial asset, or a group of financial assets, is impaired, and impairment losses are incurred, only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a “loss event”), and that loss event (or events) has an impact on the estimated future cash flows of the financial asset, or group of financial assets, that can be reliably estimated. The criteria that the Group uses to determine that there is objective evidence of an impairment loss include: the disappearance of an active market for that financial asset because of financial difficulties; • significant financial difficulty of the issuer or obligor; • a breach of contract, such as a default or delinquency in interest or principal repayments; • • observable data indicating that there is a measureable decrease in the estimated future cash flows from a portfolio of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio; or • for assets classified as available-for-sale, a significant or prolonged decline in fair value of the security below its cost. For loans and receivables, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred), discounted at the financial asset’s original effective interest rate. The asset’s carrying amount is reduced, and the loss is recognised in the Income Statement. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the Income Statement. For assets classified as available-for-sale, the Group assesses at each reporting period whether there is objective evidence that a financial asset is impaired. In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below it cost is one example that the asset is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss, measured as the difference between the acquisition cost and the current fair value, less any impairment loss on the financial previously recognised in profit or loss, is removed from equity and recognised in profit or loss. Impairment losses recognised in profit or loss on equity instruments are not reversed through profit or loss. If, in a subsequent period, the fair value of a debt instrument classified as available-for-sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through the Income Statement. 2.12. Financial Liabilities Financial liabilities comprise trade and other payables and borrowings in the Statement of Financial Performance, and are held at amortised cost. 24 FINNAUST MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the period ended 30 June 2014 Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method. Borrowings in the statement of financial position are also classified as financial liabilities and are held at amortised cost. Borrowings are classified as current liabilities if repayment is due within one year or less. If not, they are presented as non- current liabilities. 2.13. Cash and Cash Equivalents Cash and cash equivalents comprise cash at bank and in hand. 2.14. Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability in cash for at least 12 months after the end of the reporting period. 2.15. Share capital and share premium Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity, as a deduction, net of tax, from the proceeds provided there is sufficient premium available. Should sufficient premium not be available placing costs are recognised in the Income Statement. Deferred shares are classified as equity. Deferred shares have no rights to receive dividends, or to attend or vote at general meetings of the Company and are only entitled to a return of capital after payment to holders of new ordinary shares of £100,000 per each share held. 2.16. Share Based Payments The Group operates a number of equity-settled, share-based schemes, under which the entity receives services from employees or third party suppliers as consideration for equity instruments (options and warrants) of the Group. The fair value of the third party suppliers’ services received in exchange for the grant of the options is recognised as an expense in the Income Statement or charged to equity depending on the nature of the service provided. The value of the employee services received is expensed in the Income Statement and its value is determined by reference to the fair value of the options granted: • • • including any market performance conditions; excluding the impact of any service and non-market performance vesting conditions (for example, profitability or sales growth targets, or remaining an employee of the entity over a specified time period); and including the impact of any non-vesting conditions (for example, the requirement for employees to save). Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total expense or charge is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the Income Statement or equity as appropriate, with a corresponding adjustment to a separate reserve in equity. When the options are exercised, the Group issues new shares. The proceeds received, net of any directly attributable transaction costs, are credited to share capital (nominal value) and share premium when the options are exercised. 2.17. Taxation Current tax is the tax currently payable based on the taxable profit for the year. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or recognised in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively. Current tax is calculated at the tax rates (and laws) that have been enacted or substantively enacted by the Statement of Financial Position date in the respective countries where the tax liability is realised and settled. 25 FINNAUST MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the period ended 30 June 2014 Deferred tax is recognised for using the liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets (including those arising from investments in subsidiaries), are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiaries only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be used. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. Deferred tax is calculated at the tax rates (and laws) that have been enacted or substantively enacted by the statement of financial position date and are expected to apply to the period when the deferred tax asset is realised or the deferred tax liability is settled. Deferred tax assets and liabilities are not discounted. 2.18. Operating leases Leases of assets under which a significant amount of the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Operating lease payments are charged to the income statement on a straight-line basis over the period of the respective leases. 2.19. Finance income Interest income, relating to cash and cash equivalents, is recognised on a time proportion basis, taking into account the principal amounts outstanding and the interest rates applicable. Interest income in relation to interest earned on available for sale financial assets is recognised in the Income Statement on an effective interest basis. 2.20. Retirement benefit costs Payments to defined contribution retirement benefit plans are charged as an expense as they fall due. 3. Financial Risk Management 3.1. Financial Risk Factors The Group’s activities expose it to a variety of financial risks: market risk (foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance. None of these risks are hedged. Risk management is carried out by the London based management team under policies approved by the Board of Directors. 26 FINNAUST MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the period ended 30 June 2014 Market Risk (a) Foreign currency risk The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Euro and the British Pound. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations. The Group negotiates all material contracts for activities in relation to its subsidiaries in either British Pounds or Euros. The Group does not hedge against the risks of fluctuations in exchange rates. The volume of transactions is not deemed sufficient to enter into forward contracts. The Group has not sensitised the figures for fluctuations in foreign exchange rates as the Directors are of the opinion that these fluctuations would not have a significant impact on the financial statements of the Group at the present time. The Directors will continue to assess the effect of movements in exchange rates on the Group’s financial operations and initiate suitable risk management measures where necessary. (b) Price risk The Company was exposed to equity securities price risk because of investments held by the Company, classified as available-for-sale financial assets. These assets were disposed of during the period hence there is no exposure to the Company or the Group at the period end. The Group is not exposed to commodity price risk. The Directors will revisit the appropriateness of this policy should the Group’s operations change in size or nature. (c) Interest rate risk As the Group’s borrowings are non-interest bearing it is not exposed to interest rate risk on financial liabilities. The Group’s interest rate risk arises from its cash held on short-term deposit, which is not significant. Credit Risk Credit risk arises from cash and cash equivalents as well as outstanding receivables. Management does not expect any losses from non-performance of these receivables. The amount of exposure to any individual counter party is subject to a limit, which is assessed by the Board. The Group considers the credit ratings of banks in which it holds funds in order to reduce exposure to credit risk. Liquidity Risk In keeping with similar sized mineral exploration groups, the Group’s continued future operations depend on the ability to raise sufficient working capital through the issue of equity share capital. The Directors are confident that adequate funding will be forthcoming with which to finance operations. Controls over expenditure are carefully managed. Financial liabilities are all due within one year. 3.2. Capital Risk Management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, in order to enable the Group to continue its exploration and evaluation activities, and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the issue of shares or sell assets to reduce debts. At 30 June 2014 the Group had borrowings of £125,000 (30 June 2013: £nil) and defines capital based on the total equity of the Company. The Group monitors its level of cash resources available against future planned exploration and evaluation activities and may issue new shares in order to raise further funds from time to time. Given the Group’s level of debt versus its cash at bank and cash equivalents, the gearing ratio is immaterial. 3.3. Fair Value Estimation The table below analyses financial instruments carried at fair value, by valuation method. The level at which a financial instrument can be defined is as follows: • Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1); 27 FINNAUST MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the period ended 30 June 2014 • • Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2); and Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3). The following table presents the Company’s financial assets that are measured at fair value. The Company does not have any financial liabilities measured at fair value. The Group has no such available for sale financial assets. Assets Available-for-sale financial assets Total assets 2014 Level 3 £ - - Total £ - - 2013 Level 3 £ Total £ 375,000 375,000 375,000 375,000 As the available-for-sale asset is non-quoted and the inputs to calculate the above value are not based on observable market data, the instrument is included in Level 3. The following table presents the changes in Level 3 instruments for the periods ended: Opening balance Additions into Level 3 Disposals from Level 3 Total assets 30 June 2014 £ 375,000 - (375,000) 28 February 2013 £ - 375,000 - - 375,000 4. Critical Accounting Estimates and Judgements The preparation of the Financial Statements in conformity with IFRSs requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the year. Actual results may vary from the estimates used to produce these Financial Statements. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Items subject to such estimates and assumptions, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial years, include but are not limited to: Impairment of intangible assets – exploration and evaluation costs Exploration and evaluation costs have a carrying value at 30 June 2014 of £8,101,446 (2013: £7,190,919). Such assets have an indefinite useful life as the Group has a right to renew exploration licences and the asset is only amortised once extraction of the resource commences. Management tests for impairment annually whether exploration projects have future economic value in accordance with the accounting policy stated in Note 2.7. Each exploration project is subject to an annual review by either a consultant or senior company geologist to determine if the exploration results returned during the year warrant further exploration expenditure and have the potential to result in an economic discovery. This review takes into consideration long term metal prices, anticipated resource volumes and supply and demand outlook. In the event that a project does not represent an economic exploration target and results indicate there is no additional upside a decision will be made to discontinue exploration; an impairment charge will then be recognised in the Income Statement. The Directors have reviewed the estimated value of each project prepared by management and have concluded that an adjustment of £312,831 is required and provided against the exploration assets. 28 FINNAUST MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the period ended 30 June 2014 Impairment of prepayments Prepayments have a carrying value at 30 June 2014 of £30,275 (30 June 2013: £558,271). During the period £541,177 of prepayments carried by previous management in relation to an ultimately unsuccessful London Stock Exchange Listing in 2012 were impaired on the basis that they no longer represent a future benefit to the Group. Estimated impairment of goodwill Goodwill has a carrying value of £nil (2013: £nil). The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in Note 2.7 to the Consolidated Financial Statements. Management has concluded that goodwill does not reflect an increase in the Group’s assets and therefore have impaired goodwill in full. See Note 7 to the Consolidated Financial Statements. Write-off of trade & other payables and borrowings During the period ended 30 June 2014 management wrote-off £36,433 (30 June 2013: £nil) in trade & other payables and £74,816 (30 June 2013: £nil) in borrowings on the basis that these amounts no longer represent a legal financial obligation by the Group. Share based payment transactions The Group has made awards of options and warrants over its unissued share capital to certain Directors as part of their remuneration package. Certain warrants have also been issued to shareholders as part of their subscription for shares and suppliers for various services received. The valuation of these options and warrants involves making a number of critical estimates relating to price volatility, future dividend yields, expected life of the options and forfeiture rates. These assumptions have been described in more detail in Note 15. Available-for-sale financial assets Available-for-sale financial assets of the Company have a carrying value at 30 June 2014 of £nil (28 February 2013: £375,000). These were disposed of during the period ended 30 June 2014 prior to the date of the reverse acquisition. The fair value of financial instruments that are not traded in an active market (for example un-listed equity securities) is determined, where possible, by using valuation techniques. The Group follows the guidance of IAS 39 to determine when an available-for-sale equity investment is impaired. This determination requires significant judgement. In making this judgement, the Group evaluates, among other factors, the duration and extent to which the fair value of an investment is less than its cost; and the financial health of the short-term business outlook for the investee, including factors such as industry and sector performance and operational and financing cash flow. Management has concluded that there is no impairment charge necessary to the carrying value of available-for-sale financial assets on the basis that all available-for-sale financial assets have been disposed during the period. 5. Segment Information Management has determined the operating segments based on reports reviewed by the Board of Directors that are used to make strategic decisions. During the year the Group had interests in three geographical segments; the United Kingdom, Austria, and Finland. Activities in the UK are mainly administrative in nature whilst the activities in Austria and Finland relate to exploration and evaluation work. The Group had no turnover during the year. 2014 Administrative expenses Impairment of intangibles Austria £ (16,336) - Finland £ (829,161) (312,831) UK £ Total £ (350,725) (886,805) (1,196,222) (1,199,636) Loss from operations per reportable segment (16,336) (1,141,992) (1,237,530) (2,395,858) Additions to non-current assets Reportable segment assets Reportable segment liabilities 578,891 579,652 840 331,636 7,620,104 328,345 1,145 1,745,170 35,007 911,672 9,944,926 364,192 29 FINNAUST MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the period ended 30 June 2014 2013 Administrative expenses Loss from operations per reportable segment Additions to non-current assets Reportable segment assets Reportable segment liabilities 6. Property, Plant and Equipment Austria £ - - - - - Finland £ (400,923) (400,923) 2,103,496 7,913,379 233,850 UK £ - - - - - Total £ (400,923) (400,923) 2,103,496 7,913,379 233,850 Group Cost As at 1 July 2012 Disposals Exchange differences As at 30 June 2013 As at 1 July 2013 Acquired through reverse acquisition Exchange differences As at 30 June 2014 Depreciation As at 1 July 2012 Charge for the year Disposals Exchange differences As at 30 June 2013 As at 1 July 2013 Acquired through reverse acquisition Charge for the year Exchange differences As at 30 June 2014 Net book value as at 30 June 2013 Net book value as at 30 June 2014 Machinery & equipment Office equipment £ £ 16,890 (2,948) 869 14,811 14,811 - (530) 7,242 - 451 7,693 7,693 3,124 (283) Total £ 24,132 (2,948) 1,320 22,504 22,504 3,124 (813) 14,281 10,534 24,815 4,632 1,467 (2,948) (94) 3,085 3,085 - 1,387 196 4,668 11,726 9,613 205 769 - (11) 963 963 1,459 1,342 61 3,825 6,730 6,709 4,837 2,236 (2,948) (105) 4,048 4,048 1,459 2,729 257 8,493 18,456 16,322 Depreciation expense of £2,729 (30 June 2013: £2,236) for the Group has been charged in administration expenses. 30 FINNAUST MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the period ended 30 June 2014 Company Cost As at 1 March 2012 Disposals As at 28 February 2013 As at 1 March 2013 Additions As at 30 June 2014 Depreciation As at 1 March 2012 Charge for the year As at 28 February 2013 As at 1 March 2013 Charge for the year As at 30 June 2014 Net book value as at 28 February 2013 Net book value as at 30 June 2014 Office equipment £ 1,459 - 1,459 1,459 1,665 3,124 408 729 1,137 1,137 842 1,979 322 1,145 Depreciation expense of £842 (28 February 2013: £729) for the Company has been charged in administration expenses. 7. Intangible Assets Intangible assets comprise exploration and evaluation costs and goodwill. Exploration and evaluation assets are all internally generated. Exploration & Evaluation Assets - Cost and Net Book Value As at 1 July Additions Acquired through reverse acquisition (at fair value) Exchange differences Impairments As at 30 June Group 30 June 2014 £ 7,190,919 1,280,107 571,703 (628,452) (312,831) 8,101,446 30 June 2013 £ 5,085,212 2,105,707 - - - 7,190,919 Exploration projects in Finland and Austria are at an early stage of development and no JORC (Joint Ore Reserves Committee) or non-JORC compliant resource estimates are available to enable value in use calculations to be prepared. The Directors therefore undertook an assessment of the following areas and circumstances that could indicate the existence of impairment: • The Group’s right to explore in an area has expired, or will expire in the near future without renewal; • No further exploration or evaluation is planned or budgeted for; • A decision has been taken by the Board to discontinue exploration and evaluation in an area due to the absence of a commercial level of reserves; and • Sufficient data exists to indicate that the book value will not be fully recovered from future development and production. 31 FINNAUST MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the period ended 30 June 2014 Following their assessment the Directors concluded that an impairment charge of £312,831 was necessary at the end of the period in respect of certain Finnish exploration licences that were not renewed during the period and which have therefore been fully impaired, and treated as an exceptional item. For more information see Note 4. Goodwill - Cost and Net Book Value As at 1 July Acquired through business combinations Impairment losses As at 30 June Group 30 June 2014 £ - 886,805 (886,805) - 30 June 2013 £ - - - - The Directors do not consider goodwill reflects an increase in the Group’s assets and therefore have impaired goodwill in full, which is considered to be an exceptional item. For more information see Note 17. 8. Investments in Subsidiary Undertakings Shares in Group Undertakings At beginning of period Additions in period (Note 17) At end of period Loans to Group undertakings Total Company 30 June 2014 28 February 2013 £ 2 7,700,000 7,700,002 1,877,634 9,577,636 £ 1 1 2 616,480 616,482 Investments in Group undertakings are stated at cost, which is the fair value of the consideration paid, less any impairment provision. Principal subsidiaries Group and Company: Name of subsidiary Country of incorporation Proportion of ordinary shares held by parent (%) Proportion of ordinary shares held by the Group (%) Centurion Mining Limited United Kingdom Centurion Universal Limited United Kingdom 100% 100% Centurion Resources GmbH Austria Finland Investments Plc United Kingdom 100% FinnAust Mining Management Oy FinnAust Mining Northern Oy FinnAust Mining Southern Oy Finland Finland Finland All subsidiary undertakings are included in the consolidation. 32 100% 100% 100% 100% 100% 100% 100% Nature of business Dormant Holding Exploration Holding Exploration Exploration Exploration FINNAUST MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the period ended 30 June 2014 The proportion of the voting rights in the subsidiary undertakings held directly by the parent company do not differ from the proportion of ordinary shares held. 9. Available-for-Sale Financial Assets At beginning of period Additions Disposals At end of period Less: non-current portion Current portion Company 30 June 2014 28 February 2013 £ £ 375,000 - (375,000) - - - - 375,000 - 375,000 (375,000) - During the previous period the Company acquired a 10% investment in North Mining D.O.O (“North Mining”) for £375,000. North Mining is a Montenegrin base metals exploration company and wholly owned subsidiary of ASX listed Balamara Resources Limited (“Balamara”). On 2 July 2013 the Company exercised its option under the terms of the investment agreement to have Balamara repurchase the Company’s 10% investment in North Mining at a 10% premium to the original purchase price. 10. Trade and Other Receivables Current portion Prepayments VAT receivable Other receivables Total current portion Non-current portion Other receivables Total non-current portion Total Group Company 30 June 2014 £ 30,275 30,752 39,925 30 June 2013 £ 558,271 2,125 20,627 100,952 581,023 20,069 20,069 21,430 21,430 30 June 2014 28 February 2013 £ 25,101 12,067 39,925 77,093 - - £ 3,453 44,980 - 48,433 - - 121,021 602,453 77,093 48,433 The fair value of all receivables is the same as their carrying values stated above. Non-current receivables relate to security deposits held against service accounts and do not have a defined due date, they are receivable upon closure of the respective accounts. At 30 June 2014 all trade and other receivables were fully performing. 33 FINNAUST MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the period ended 30 June 2014 The carrying amounts of the Group and Company’s trade and other receivables are denominated in the following currencies: UK Pounds Euros Group Company 30 June 2014 £ 77,093 43,928 30 June 2013 £ - 602,453 121,021 602,453 30 June 2014 28 February 2013 £ 77,093 - 77,093 £ 48,433 - 48,433 The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Group does not hold any collateral as security. 11. Cash and Cash Equivalents Group Company 30 June 2014 £ 30 June 2013 £ 30 June 2014 28 February 2013 £ £ Cash at bank and in hand 1,706,137 101,551 1,666,932 491,827 All of the Group and Company’s cash at bank is held with institutions with an AA- credit rating. 12. Trade and Other Payables Trade payables Other creditors Accrued expenses Group Company 30 June 2014 £ 68,850 - 30 June 2013 £ 77,545 - 170,342 156,305 239,192 233,850 30 June 2014 £ 1,562 2 33,443 35,007 28 February 2013 £ 9,262 1 270,413 279,676 Trade payables include amounts due of £25,802 and accrued expenses £56,508 in relation to exploration and evaluation activities. 13. Borrowings Current Unsecured borrowings at amortised cost Non-interest bearing loan Group 30 June 2014 £ 125,000 125,000 30 June 2013 £ - - Non-interest bearing loans arose during the period as unsecured cash advances to the Group from the ultimate controlling party Western Areas Limited (“Western Areas”) as disclosed in Note 26. The agreed facility was £250,000, denominated in Pound Sterling, for which further funds were advanced totalling £74,816.This additional funding was subsequently forgiven by Western Areas. The balance of the non-interest bearing loan is repayable upon demand by Western Areas. 34 FINNAUST MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the period ended 30 June 2014 There are no undrawn borrowings as at the year end. The fair value of the borrowings as at the year end equates to its carrying value above. 14. Share capital and premium Company Issued and fully paid As at 1 March 2012 Issue of new shares – 13 August 2012 Issue of new shares – 12 November 2012 (1) At 28 February 2013 Issue of new shares – 2 July 2013 Share consolidation – 29 November 2013 Issue of new shares – 2 December 2013 (2) Number of shares 52,157,401 4,400,000 173,419,296 229,976,697 20,000,000 (224,979,027) 222,100,000 Ordinary shares £ 104,315 8,800 346,838 459,953 40,000 - 4,442,000 Share premium £ Total £ 6,197,225 6,301,540 35,200 1,205,511 44,000 1,552,349 7,437,936 7,897,889 160,000 200,000 - - 6,590,375 11,032,375 As at 30 June 2014 247,097,670 4,941,953 14,188,311 19,130,264 Group Issued and fully paid As at 1 July 2012 Issue of new shares – 25 July 2012 Issue of new shares – 23 October 2012 Issue of new shares – 2 December 2012 Issue of new shares – 25 January 2013 Issue of new shares – 13 March 2013 Issue of new shares – 12 April 2013 Issue of new shares – 24 May 2013 Number of shares Ordinary shares £ Share premium £ Total £ 72,500,000 124,101 6,378,773 6,502,874 3,320,000 1,740,000 1,200,000 380,000 1,120,000 1,120,000 1,120,000 5,646 2,978 2,054 650 1,917 1,917 1,917 704,497 369,224 254,638 80,635 237,662 237,662 237,662 710,143 372,202 256,692 81,285 239,579 239,579 239,579 At 30 June 2013 82,500,000 141,180 8,500,753 8,641,933 Reverse acquisition – 2 December 2013 Issue of new shares – 2 December 2013 (2) (57,502,330) 222,100,000 358,773 4,442,000 (902,817) (544,044) 6,590,375 11,032,375 As at 30 June 2014 247,097,670 4,941,953 14,188,311 19,130,264 (1) (2) Includes issue costs of £125,835 Includes issue costs of £72,625 On 29 November 2013 the shareholders approved the consolidation of the Company’s equity whereby each existing ordinary share of 0.2p was converted into new ordinary shares of 2p each on the basis of one new ordinary share for every existing ten ordinary shares. On 2 December 2013 the Company raised £3,405,000 via the issue and allotment of 68,100,000 new ordinary shares of 2 pence each fully paid at a price of 5 pence per share. On the same date the Company issued 154,000,000 new ordinary shares of 2 pence each fully paid at 5 pence per share as consideration for a business acquisition, being £7,700,000. 35 FINNAUST MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the period ended 30 June 2014 15. Share Based Payments Share options and warrants outstanding and exercisable at the end of the period have the following expiry dates and exercise prices: Grant Date Expiry Date Exercise price in £ per share 31 March 2010 31 March 2010 12 November 2012 31 March 2013 31 March 2013 12 November 2015 29 November 2013 29 May 2017 12 November 2012 29 November 2013 12 November 2017 29 May 2019 18.00 20.00 0.67 0.15 0.10 0.20 Options & Warrants 30 June 2014 28 February 2013 - - 1,681,930 6,000,000 3,684,366 6,000,000 52,746 9,906 1,681,930 - 3,684,366 - 17,366,296 5,428,948 The Company and Group have no legal or constructive obligation to settle or repurchase the options or warrants in cash. The fair value of the share options and warrants was determined using the Black Scholes valuation model. The parameters used are detailed below: Granted on: Life (years) Share price (pence per share) Risk free rate Expected volatility Expected dividend yield Marketability discount Total fair value (£000) 2013 Options 2013 Options 29/11/2013 3.5 years 5.7p 2.25% 26.41% - 20% 3 29/11/2013 5.5 years 5.7p 2.25% 26.41% - 20% 4 2012 Options & Warrants 12/11/2012 5 years 1.13p 2012 Warrants 12/11/2012 3 years 1.13p 2.25% 29.74% - 20% 117 2.25% 29.74% - 20% 72 The expected volatility for the 2012 options & warrants was based on historical share price volatility of similar AIM listed entities for the 6 months prior to the date of granting. This was considered to be the most reasonable measure of expected volatility, given the relatively brief trading history of the Company available. The expected volatility of the 2013 options is based on historical volatility for the six months prior to the date of granting. The risk free rate of return is based on zero yield government bonds for a term consistent with the option life. A reconciliation of options and warrants granted over the period to 30 June 2014 is shown below: 2014 2013 Weighted average exercise price (£) 0.0300 1.8316 - 0.1750 0.1237 0.1237 Weighted average exercise price (£) 0.0920 0.0499 - 0.0090 0.0300 0.0300 Number 26,521,652 (25,895,128) - 53,662,956 54,289,480 54,289,480 Outstanding as at period start Expired Number 54,289,480 (626,524) Adjustment for share consolidation (48,296,660) Granted Outstanding as at period end Exercisable at period end 12,000,000 17,366,296 17,366,296 36 FINNAUST MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the period ended 30 June 2014 2014 2013 of Range exercise prices (£) Weighted average exercise price (£) Number of shares Weighted average remaining life expected (years) Weighted average remaining life contracted (years) Weighted average exercise price (£) Number of shares Weighted average remaining life expected (years) Weighted average remaining life contracted (years) 0 – 0.05 0.00900 5,366,296 0.05 – 2.00 0.1750 12,000,000 3.37 3.92 3.37 3.92 0.0090 1.8316 53,662,956 626,524 4.71 0.08 4.71 0.08 No options or warrants were exercised during the period. The total fair value has resulted in a charge to the Income Statement for the period ended 30 June 2014 of £6,779 (2013: £117,110) and a charge to Share Premium of £nil (2013: £71,658). 16. Other Reserves Group Foreign currency translation reserve Merger reserve Redemption reserve Share option reserve At 1 July 2012 Currency translation differences At 30 June 2013 Reverse acquisition Options granted (Note 15) £ - - - 166,000 - £ - (2,496) (2,496) - - Currency translation differences - (344,305) £ - - - 36,463 - - £ - - - 188,768 6,779 Total £ - (2,496) (2,496) 391,231 6,779 - (344,305) At 30 June 2014 166,000 (346,801) 36,463 195,547 51,209 At 1 March 2012 Options expired Options granted At 28 February 2013 Options expired Options granted (Note 15) At 30 June 2014 Company Merger reserve Redemption reserve Share option reserve £ £ £ Total £ 166,000 36,463 562,482 764,945 - - - - (173,742) 188,767 (173,742) 188,767 166,000 36,463 577,507 779,970 - - - - (388,739) (388,739) 6,779 6,779 166,000 36,463 195,547 398,010 37 FINNAUST MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the period ended 30 June 2014 17. Business Combination On 2 December 2013 the Group acquired 100% of the share capital of Finland Investments Plc (previously FinnAust Mining Plc and the “Legal Subsidiary”) for £7,700,000. Through this acquisition the Group acquired the wholly owned subsidiaries of the Legal Subsidiary, the subsidiaries hold licences in Finland for the exploration and evaluation of precious and base metals. As a result of the acquisition the Group will be able to conduct exploration and evaluation work on the various exploration project sites. The acquisition has been treated as a reverse acquisition and hence accounted for in accordance with IFRS 3 (Revised), as set out in the accounting policies. The following table summaries the consideration paid for FinnAust Mining Plc (previously Centurion Resources Plc and the ‘Legal Parent’) through the reverse acquisition and the amounts of the assets acquired and liabilities assumed on the acquisition date. In accordance with IFRS 3 (Revised), goodwill under a reverse acquisition is calculated on the net assets of the legal parent. The goodwill of £886,805 arising from the acquisition is attributable to the value of the parent company being an AIM listed entity to the Legal Subsidiary. Consideration at 2 December 2013 Equity instruments in issue (249,976,697 ordinary shares 0.57p each) Total consideration Recognised amounts of identifiable assets acquired and liabilities assumed Cash and cash equivalents (Note 11) Property, plant & equipment (Note 6) Trade and other receivables (Note 10) Trade and other payables (Note 12) Total identified net assets Goodwill £ 1,424,867 1,424,867 509,806 1,665 673,963 (647,372) 538,062 886,805 The Directors do not consider goodwill reflects an increase in the Group’s assets and therefore have impaired the goodwill in full. In a reverse acquisition the acquisition date fair value of the consideration transferred by the Legal Subsidiary is based on the number of equity instruments that the Legal Subsidiary would have had to issue to the owners of the Legal Parent to give the owners of the Legal Parent the same percentage of equity interests that results from the reverse acquisition. However, in the absence of a reliable valuation of the Legal Subsidiary, the cost of the combination was calculated using the fair value of all the pre-acquisition issued equity instruments of the Legal Parent as at the date of the acquisition. The fair value was based on the published price of the Legal Parent shares on 29 November 2013 immediately prior to the acquisition. Acquisition related costs of £570,422 were recognised in the Legal Parent’s Income Statement. These costs were incurred prior to the date of the acquisition and have therefore been eliminated on consolidation along with other pre-acquisition losses in the Legal Parent in accordance with the requirements of IFRS 3 (Revised) as outlined in the accounting policies. The fair values of the recognised amounts of identifiable assets acquired and liabilities assumed equate to their carrying values as stated above. The Legal Parent did not contribute any revenue to the Group since the acquisition on 2 December 2013. The Consolidated Income Statement includes an operating loss of £1,236,648 in the period since acquisition, which is attributable to the Legal Parent. Had the Legal Parent been consolidated from 1 July 2013, the Consolidated Income Statement would show revenue of £nil and a loss of £2,515,568. 38 FINNAUST MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the period ended 30 June 2014 18. Employee benefit expense Staff costs (excluding Directors) Salaries and wages Social security costs Retirement benefit costs Group Year ended 30 June 2014 Year ended 30 June 2013 £ £ 328,411 58,577 10,773 400,464 67,946 10,824 397,761 479,234 The average monthly number of employees for the Group during the year was 6 (30 June 2013: 8). These were all employed in exploration & evaluation related roles. Of the above Group staff costs, £213,168 (30 June 2013: £334,359) has been capitalised in accordance with IFRS 6 as exploratory related costs and are shown as an intangible addition in the year. 19. Directors' Remuneration Company Executive Directors Alastair Clayton Non-executive Directors Greg Kuenzel Daniel Lougher Graham Marshall Peter Landau Robert Hyndes Nicholas Lee Anthony Roberts Directors’ Fees Options Issued 16 month period ended 30 June 2014 Year ended 28 February 2013 16 month period ended 30 June 2014 Year ended 28 February 2013 £ £ £ £ 133,867 11,045 3,954 31,785 38,500 - - - - - - 172,367 24,000 - - 7,200 24,000 6,000 16,000 88,245 1,695 - - - - - - 19,071 - - 23,839 12,714 - 12,714 5,649 100,123 No pension benefits are provided for any Director. 20. Finance Income Interest received from cash and cash equivalents Finance Income 39 Group Year ended 30 June 2014 Year ended 30 June 2013 £ 924 924 £ 137 137 FINNAUST MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the period ended 30 June 2014 21. Income Tax Expense No charge to taxation arises due to the losses incurred. Income tax expense Analysis of tax charge Current tax charge for the year Deferred tax charge/(credit) for the year Income tax expense Group Year ended 30 June 2014 Year ended 30 June 2013 £ - - - £ - - - The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to the profits of the consolidated entities as follows: Loss before tax Tax at the applicable rate of 20.55% (2013: 23.00%) Effects of: Expenditure not deductible for tax purposes Depreciation in excess of/(less than) capital allowances Impairment of intangibles Net tax effect of losses carried forward Foreign tax payable Tax charge Group Year ended 30 June 2014 £ Year ended 30 June 2013 £ (2,394,394) (400,786) (492,048) (92,181) 1,609 (823) 246,525 244,737 - - 1,365 - - 90,816 - - Due to changes in UK tax legislation the applicable tax rate has changed from 23% to 21% with effect from 1 April 2013. The weighted average applicable tax rate of 20.55% (2013: 23.00%) used is a combination of the 21% standard rate of corporation tax in the UK, 20% Finnish corporation tax and 25% Austrian corporation tax. The Group has a deferred income tax asset of approximately £1,197,832 (2013: £953,095) due to tax losses available to carry forward against future taxable profits. The Company has tax losses of approximately £3,229,934 (2013: £2,039,000) available to carry forward against future taxable profits. No deferred tax asset has been recognised on accumulated tax losses because of uncertainty over the timing of future taxable profits against which the losses may be offset. 22. Earnings per Share Group The calculation of the total basic earnings per share of (1.352) pence (30 June 2013: (0.510) pence) is based on the loss attributable to equity holders of the parent company of £2,394,394 (30 June 2013: £400,786) and on the weighted average number of ordinary shares of 177,178,360 (30 June 2013: 78,550,575) in issue during the period. Company The calculation of the total basic earnings per share of (0.997) pence (28 February 2013: (0.467) pence) is based on the loss attributable to equity holders of the company of £1,203,743 (28 February 2013: £497,183) and on the weighted average number of ordinary shares of 120,720,668 (28 February 2013: 106,356,588) in issue during the period. In accordance with IAS 33, basic and diluted earnings per share are identical for both the Group and Company as the effect of the exercise of share options would be to decrease the earnings per share. Details of share options that could potentially dilute earnings per share in future periods are set out in Note 15. 40 FINNAUST MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the period ended 30 June 2014 23. Expenses by nature Directors’ fees Employee salaries AIM related costs (including Public Relations) Establishment expenses Auditor remuneration Auditor fees for other services Travel & subsistence Professional & consultancy fees (Gain) / loss on foreign exchange Depreciation Share based payments Operating lease charges Write-off trade & other payables and borrowings Impairment of prepayments Other expenses Total administrative expenses Group Year ended 30 June 2014 £ Year ended 30 June 2013 £ 40,915 184,593 109,729 22,377 16,000 1,000 23,804 - 144,875 - - 16,228 8,079 5,713 311,880 224,589 - 2,729 6,779 9,916 (111,249) 541,177 36,572 394 2,236 - - - - (1,191) 1,196,222 400,923 The above Directors’ fees are exclusive of £65,053 (30 June 2013: £nil) which has been capitalised in accordance with IFRS 6 as exploratory related costs and are shown as an intangible addition in the year. Write-off of trade & other payables and impairment of prepayments pertain to newly acquired Finland Investments Plc. Write-off of trade & other payables consist of: • • £74,816 write-down of loan from ultimate controlling entity; and £36,433 write-off of historical trade creditors that have been confirmed as no longer due by previous management. Written off prepayments were carried by the previous management and relate to costs incurred in an attempted but ultimately unsuccessful London Stock Exchange listing in 2012. Services provided by the Company’s auditor and its associates During the year, the Group (including overseas subsidiaries) obtained the following services from the Company’s auditors and its associates: Group Year ended 30 June 2014 Year ended 30 June 2013 £ £ Fees payable to the Company’s auditor and its associates for the audit of the Parent Company and Consolidated Financial Statements Fees payable to the Company’s auditor for tax compliance & other services 16,000 1,000 16,228 8,079 24. Commitments (a) Royalty agreements As part of the contractual arrangement with Thames Mining Limited (“Thames Mining”) the Group has agreed to pay a royalty on revenue from mineral sales arising from mines developed by Centurion Resources GmbH and covered by the 41 FINNAUST MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the period ended 30 June 2014 Mitterberg Copper Exploration Licences (the “Licences”) acquired by the Company. Under the terms of the Royalty Agreement between Thames Mining and the Company, the Group shall pay a 2 per cent royalty on revenue from all mineral sales less permitted deductions generated from revenue in connection with the Licences. The royalty agreement includes a right of first refusal granted in favour of Thames Mining whereby it is given the opportunity to buy back the Licences in the event that it is proposed to be sold by the Company. (b) Operating lease commitments The Group leases office premises under a non-cancellable operating lease agreement. The lease was on an initial fixed term of two years automatically renewable at the end of the lease period for a further two year fixed term, which occurred on 1 February 2013. The lease expenditure charged to the Income Statement during the year is disclosed in Note 23. The future aggregate minimum lease payments under non-cancellable operating leases are as follows: Group 30 June 2014 £ 4,500 4,500 30 June 2013 £ - - Not later than one year Total lease commitment 25. Related Party Transactions Loans to Group undertakings Amounts receivable as a result of loans granted to subsidiary undertakings are as follows: Centurion Universal Limited Centurion Resources GmbH Finland Investments Plc FinnAust Mining Southern Oy Centurion Mining Limited At 30 June (Note 8) Company 30 June 2014 £ 28 February 2013 £ 14,300 595,694 155,868 1,111,577 195 14,300 602,180 - - - 1,877,634 616,480 Loans granted to subsidiaries have increased during the period due to additional loans being granted to the subsidiaries, and foreign exchange losses charged to the Income Statement of £81,799, given that no loans were repaid during the period. These amounts are unsecured, interest free and repayable in Euros when sufficient cash resources are available in the subsidiaries. All intra Group transactions are eliminated on consolidation. Transactions with ultimate controlling party Western Areas Limited (“Western Areas”), the ultimate controlling party of FinnAust Mining Plc as disclosed in Note 26 and a company of which Daniel Lougher is a director, was paid £86,285 for exploration costs and related expenditure (2013: £291,577) during the period. A further £6,818 (2013: £60,281) has been accrued at period-end. No balance, other than this accrual, was outstanding at the period-end. 42 FINNAUST MINING PLC NOTES TO THE FINANCIAL STATEMENTS For the period ended 30 June 2014 Western Areas granted loans to the Group during the period totalling £324,816, of which the Group repaid £125,000 and Western Areas forgave £74,816. The balance payable to Western Areas as at 30 June 2014 was £125,000 (30 June 2013: £nil). Other Transactions Heytesbury Corporate LLP, a limited liability partnership of which Gregory Kuenzel is a partner, was paid a fee of £54,400 (2013: £nil) for the provision of corporate management and consulting services to FinnAust Mining Plc. No balance was outstanding at the period-end. Furthermore, on 29 November 2013 the Company issued the following options to Heytesbury Corporate LLP: • • 1,500,000 options valid for 3.5 years from the date of issue and exercisable at 15 pence per option; and 1,500,000 options valid for 5.5 years from the date of issue and exercisable at 20 pence per option. Noricum Gold Limited, a company of which Greg Kuenzel is a Director, was paid a fee of £12,990 (2013: £7,272) for management consulting services provided to and exploration costs incurred on behalf of FinnAust Mining Plc. No balance was outstanding at the period-end (2013: £7,272). 26. Ultimate Controlling Party The ultimate controlling party is Western Areas Limited, a company incorporated and registered in Australia, by virtue of its 67.79% holding. 27. Events after the Reporting Date There have been no events after the reporting date of a material nature. 43