Registered number: 05389216
FINNAUST MINING PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2015
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
7
9
10
11
12
13
14
15
16
17
18
FINNAUST MINING PLC
COMPANY INFORMATION
Directors
Daniel Lougher (Non-Executive Chairman)
Graham Marshall (Non-Executive Director)
Gregory Kuenzel (Non-Executive Director)
Alastair Clayton (Executive Director) - Resigned 3 June 2015
Company Secretary
Garth Palmer CA
Registered Office
47 Charles Street
London
W1J 5EL
Company Number
05389216
Bankers
Nominated Adviser
& 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
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
Hammaslahti
With three highly prospective licence areas, we have established a solid footprint within a mineral rich region. To date, we
have drilled a total of 15,000m across our Finnish portfolio. Our Hammaslahti Copper Project (‘Hammaslahti’) has been the
focus of the majority of this work, with 45 holes drilled over 10,366m. This has led to the discovery of a shallow multi-metal
lode, which contains high-grade copper with zinc, lead and silver. This is located directly below the northern zinc/gold open
pit of the historical Hammaslahti mine.
Drilling has successfully extended this mineralised zone, with a strike length of over 500m north to south and over 125m
east to west now identified. It is our belief that this lode is one of four southerly plunging multi-metal lodes, all of which
appear open at depth, which are part of a relatively continuous north to south plunging lode system, transitioning from
shallow zinc and gold in the north, to copper as it deepens in the south. These additional lodes exist to the north, south and
east of the old mine and underground workings. This location, together with the shallow nature of the mineralisation, offers
significant capex and opex benefits, as the mineralisation is proximal to the historical mine infrastructure. The Company is
currently evaluating the significance of these results to determine the best value outcome for shareholders.
Kelkka
At our Kelkka Nickel-Copper Project (‘Kelkka’) (previously called Enonkoski), we have drilled a total of 3,570m across 21
holes, with the objective of identifying mineralisation of a similar style to the previously producing Enonkoski nickel-copper
mine (‘Enonkoski’). This historical mine, which is located within our Kelkka licence area, reportedly produced 6.7Mt at an
average grade of 0.8% Ni between 1984 and 1994. Drilling has consequently been conducted close to the old mine, and
we were pleased to discover a short, shallow interval of remobilised nickel/copper sulphides at the Laukunlampi intrusion
(‘Laukunlampi’) 1km southeast of Enonkoski.
Whilst these grades are low, the presence of these remobilised veins is very encouraging and suggests that Laukunlampi is
capable of hosting nickel/copper mineralisation. It is our belief that the potential still exists to identify massive sulphide ore
bodies. Indeed, within the Kelkka licence area, historical drill intercepts have returned results of 15m at 6.9% Ni and 2.0%
Cu, and with modern exploration techniques such as ZTEM geophysical technology now available to us, we believe
commercial discoveries can still be made. Anglo American highlighted the resource potential of the country, with the 2006
world-class discovery of the Sakatti nickel-copper-platinum group elements deposit in northern Finland. Although this
project is still in its early phase of exploration, a sulphide body in excess of 1,500m long has been identified to-date,
underpinning the potential for commercial discoveries to be made.
Outokumpu
At our Outokumpu Copper Project (‘Outokumpu’), we have conducted on-ice drilling at Lake Juojärvi to test for massive
copper and polymetallic mineralisation. Four holes have been drilled across a previously undrilled 5km section of the
renowned Outokumpu Belt, which hosted the world famous Outokumpu Copper Mine, which produced ~42Mt at 3.1%
copper between 1908-1999. The holes, which are along strike from the old mine, all intercepted varying thicknesses of
known Outokumpu geology; one drill hole intercepted approximately 50m of iron sulphides. Whilst not a discovery in itself,
we believe that this may represent some kind of feeder structure or sulphidic "tail" that may be part of a larger multi metal
system. We are also currently assessing a number of additional ways in which to develop this project, which includes
potential joint venture opportunities; we will update the market on these developments when practicable.
Mitterberg
Aside from our Finnish portfolio, we hold an 80% interest in the previously producing Mitterberg Copper Project in Austria.
We continue to assess the best way in which to realise value from this asset.
Corporate Update
FinnAust continues to benefit from the cornerstone investment and support of ASX major Western Areas Limited (‘Western
Areas’). The Company not only benefits from access to funding, but also gains the experience of a proven management
and technical team; Western Areas successfully identified from greenfield exploration and put into production two high
grade nickel mines and is now one of the leading nickel producers in Australia. I am Managing Director and Chief Executive
Officer of Western Areas, and my fellow FinnAust Board member Graham Marshall is General Manager-Commercial of
Western Areas, thus strongly demonstrating Western Areas’ commitment to FinnAust.
During the period Alastair Clayton an Executive Director of the Company, resigned from the Board of Directors and from his
employment with the Company. We are grateful for Alastair's contributions in supporting our admission to AIM and initial
exploration efforts of the Company, and wish him well for the future as we look to develop our exploration activity.
3
FINNAUST MINING PLC
CHAIRMAN’S REPORT
Post-period end, we were delighted to announce that Roderick McIllree ('Rod') joined the Company as interim Chief
Executive Officer ('CEO'). Rod’s extensive experience in both mining and finance will be extremely valuable in not only
determining future exploration activity at our Finnish assets but also supporting the Company’s continued expansion within
Europe and Scandinavia.
Financial Review
The loss before taxation of the Group for the year ended 30 June 2015 amounted to £561,381 (30 June 2014: £2,394,934).
The Group’s cash position at 30 June 2015 was £795,368 (30 June 2014: £1,706,137) and currently stands at
approximately £640,032.
Outlook
We have established a solid portfolio of assets and through our targeted exploration programmes are well placed for future
growth. Our focus going forward will be on furthering our understanding of the resource potential of our three Finnish
licence areas. We are currently finalising our next phase of exploration; initial activity will focus on Outokumpu and will
include mapping, sampling and reinterpretation of new geophysical data. Further updates regarding this proposed
exploration, work at Hammaslahti and across our wider portfolio, will be made as soon as practicable.
Additionally, we maintain an active growth strategy and in line with this will continue to assess additional prospective
opportunities both in Finland and across the wider Scandinavian region in order to leverage our established regional
presence in what is a very favourable mining location.
Finally, I would like to take this opportunity to thank our shareholders, advisers and management team for their continued
support and hard work.
Daniel Lougher
Chairman
19 August 2015
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 year ended 30 June 2015.
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 interim Chief Executive Officer
who was appointed on 22 July 2015. 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 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
To date, the Company has drilled a total of 15,000m across our Finnish portfolio. Our Hammaslahti Copper Project
(‘Hammaslahti’) has been the focus of the majority of this work, with 45 holes drilled over 10,366m. This has led to the
discovery of a shallow multi-metal lode, which contains high-grade copper with zinc, lead and silver. This is located directly
below the northern zinc/gold open pit of the historical Hammaslahti mine. Drilling has successfully extended this mineralised
zone, with a strike length of over 500m north to south and over 125m east to west now identified and the Company is
currently evaluating the significance of these results to determine the best value outcome for shareholders.
At our Kelkka Nickel-Copper Project (‘Kelkka’) (previously called Enonkoski), we have drilled a total of 3,570m across 21
holes, with the objective of identifying mineralisation of a similar style to the previously producing Enonkoski nickel-copper
mine (‘Enonkoski’). Although this project is still in its early phase of exploration, a sulphide body in excess of 1,500m long
has been identified to-date, underpinning the potential for commercial discoveries to be made.
At our Outokumpu Copper Project (‘Outokumpu’), we are also currently assessing a number of additional ways in which to
develop this project, which includes potential joint venture opportunities.
Financial Performance Review
The loss of the Group for the year ended 30 June 2015 before taxation amounts to £561,381 (30 June 2014: £2,394,934).
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 2016.
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
2015
2014
£795,368
£1,706,137
6.04%
12.03%
£1,080,814
£1,280,107
Cash has been used to fund the Group’s operations and facilitate its investment activities (refer to the Statements of Cash
Flows on page 17).
Exploration costs capitalised consist of exploration expenditure on the Group’s exploration licences net of foreign exchange
rate movements.
Principal Risks and Uncertainties
5
FINNAUST MINING PLC
GROUP STRATEGIC REPORT
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 its ability to recruit and retain high
quality and experienced staff. The loss of the service of key personnel or the inability to attract additional qualified personnel
as the Group grows could have an adverse effect on future business and financial conditions.
On 3 June 2015 Alastair Clayton the Executive Director resigned and on 22 July 2015 the Group appointed Roderick
McIllree in the capacity of interim Chief Executive Officer.
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
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 19 August 2015.
Greg Kuenzel
Director
6
FINNAUST MINING PLC
DIRECTORS’ REPORT
The Directors present their annual report on the affairs of FinnAust Mining Plc together with the audited Consolidated
Financial Statements for the year ended 30 June 2015.
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 principal 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 year (Company 30 June 2014: £nil; Group 30 June
2014: £nil).
Directors & Directors’ Interests
The Directors who served during the year ended 30 June 2015 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
Graham Marshall
30 June 2015
30 June 2014
Ordinary
Shares
Options
Ordinary
Shares
Options
n/a
n/a
800,000
8,000,000
30,000
3,600,000
30,000
3,600,000
-
-
-
-
-
-
-
-
(1) Alastair Clayton’s shares are held by Valzina Global Limited. Alastair Clayton resigned on 3 June 2015.
(2) Greg Kuenzel’s 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.
Further details on options can be found in Note 14 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 regarded 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
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 10.
7
FINNAUST MINING PLC
DIRECTORS’ REPORT
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 year 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 25 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 2015, the Company had an average of 12 days (2014: 0.5 days) purchases outstanding in trade payables. The
Group average was 59 days (2014: 5 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 19 August 2015 and signed on its behalf.
Greg Kuenzel
Director
8
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.
This statement was approved by the Board on 19 August 2015 and signed on its behalf.
Greg Kuenzel
Director
9
FINNAUST MINING PLC
CORPORATE GOVERNANCE REPORT
The Board of Directors currently comprises 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 interim Chief Executive Officer and for setting the scale and structure of his 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.
10
FINNAUST MINING PLC
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF FINNAUST MINING PLC
We have audited the Financial Statements of FinnAust Mining Plc for the year ended 30 June 2015 which comprise the
Group Strategic Report, the Directors’ Report, 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 2015 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 12 months ended 30 June 2015 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
19 August 2015
1 Westferry Circus
Canary Wharf
London
E14 4HD
11
FINNAUST MINING PLC
STATEMENTS OF FINANCIAL POSITION
As at 30 June 2015
Non-Current Assets
Property, plant and equipment
Intangible assets
Trade and other receivables
Investment in subsidiaries
Current Assets
Trade and other receivables
Cash and cash equivalents
Note
6
7
9
8
9
10
Company number: 05389216
Consolidated
Company
30 June
2015
£
30 June
2014
£
30 June
2015
£
30 June
2014
£
12,327
16,322
812
1,145
8,432,062
-
8,101,446
20,069
-
-
-
-
-
-
10,971,654
9,577,636
8,444,389
8,137,837
10,972,466
9,578,781
79,178
100,952
38,526
77,093
795,368
1,706,137
715,583
1,666,932
874,546
1,807,089
754,109
1,744,025
Total Assets
9,318,935
9,944,926
11,726,575
11,322,806
Current Liabilities
Trade and other payables
Borrowings
Total Liabilities
11
12
198,800
62,500
239,192
125,000
261,300
364,192
261,300
364,192
49,664
35,007
-
49,664
49,664
-
35,007
35,007
Net Assets
9,057,635
9,580,734
11,676,911
11,287,799
Equity attributable to owners of the Parent
Share capital
Share premium
Deferred shares
Reverse acquisition reserve
Other reserves
Retained losses
Total Equity
13
13
5,919,731
4,941,953
5,919,731
4,941,953
14,274,528
14,188,311
14,274,528
14,188,311
1,825,104
(8,071,001)
1,825,104
(8,071,001)
1,825,104
-
1,825,104
-
15
(974,504)
51,209
398,010
398,010
(3,916,223)
(3,354,842)
(10,740,462)
(10,065,579)
9,057,635
9,580,734
11,676,911
11,287,799
The Financial Statements were approved and authorised for issue by the Board of Directors on 19 August 2015 and were
signed on its behalf by:
Greg Kuenzel
Director
The Notes on pages 18 to 39 form part of these Financial Statements.
12
FINNAUST MINING PLC
CONSOLIDATED INCOME STATEMENT
For the year ended 30 June 2015
Continued operations
Revenue
Cost of sales
Gross profit
Administrative expenses
Foreign exchange
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
Note
21
7
18
19
Year ended
30 June
2015
Year ended 30
June
2014
£
1,028
-
1,028
(563,340)
-
-
(562,312)
931
(561,381)
-
£
-
-
-
(1,196,222)
-
(1,199,636)
(2,395,858)
924
(2,394,934)
-
(561,381)
(2,394,934)
(561,381)
(2,394,934)
Basic and Diluted Earnings Per Share attributable to owners of the parent
during the year (expressed in pence per share)
20
(0.201) p
(1.352) 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 year ended 30 June 2015 was £674,883 (year ended 30 June 2014: £1,203,743).
The Notes on pages 18 to 39 form part of these Financial Statements.
13
FINNAUST MINING PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2015
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
2015
Year ended 30
June
2014
£
£
(561,381)
(2,394,934)
(1,025,713)
(344,305)
(1,587,094)
(344,305)
Total Comprehensive Income for the Year Attributable to Owners of the Parent
(1,587,094)
(2,739,239)
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 19.
The Notes on pages 18 to 39 form part of these Financial Statements.
14
FINNAUST MINING PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2015
Attributable to owners of the parent
Share
capital
£
Share
premium
Deferred
shares
£
£
Note
Reverse
acquisition
reserve
£
Other
reserves
Retained
losses
Total equity
£
£
£
Balance as at 1 July 2013
141,180
8,500,753
-
-
-
-
-
-
(2,496)
(959,908)
7,679,529
-
(2,394,934)
(2,394,934)
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
Issue costs
Reverse acquisition
Issued options
Total transactions with
owners, recognised in
equity
Balance as at 30 June
2014
Balance as at 1 July 2014
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
Proceeds from share issue
Issue costs
Reverse acquisition
Issued options
Total transactions with
owners, recognised in
equity
Balance as at 30 June
2015
-
-
-
-
4,482,000
6,823,000
-
(72,625)
-
-
-
-
-
-
-
-
318,773 (1,062,817) 1,825,104
(8,071,001)
391,231
-
-
-
-
6,779
(344,305)
-
(344,305)
(344,305)
(2,394,934)
(2,739,239)
-
-
- 11,305,000
-
-
-
(72,625)
(6,598,710)
6,779
13
13
14
4,800,773
5,687,558 1,825,104
(8,071,001)
398,010
-
4,640,444
4,941,953 14,188,311 1,825,104
(8,071,001)
51,209
(3,354,842)
9,580,734
-
-
-
-
-
-
-
4,941,953 14,188,311 1,825,104
(8,071,001)
51,209
(3,354,842)
9,580,734
-
-
-
-
(561,381)
(561,381)
-
-
13
13
14
977,778
122,222
-
-
-
(36,005)
-
-
977,778
86,217
-
-
-
-
-
-
-
-
(1,025,713)
-
(1,025,713)
-
-
-
-
-
-
(1,025,713)
(561,381)
(1,587,094)
-
-
-
-
-
-
-
-
-
1,100,000
(36,005)
-
-
-
1,063,995
5,919,731 14,274,528 1,825,104
(8,071,001)
(974,504)
(3,916,223)
9,057,635
-
-
-
The Notes on pages 18 to 39 form part of these Financial Statements.
15
FINNAUST MINING PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2015
Attributable to equity shareholders
Share
capital
£
Share
premium
Deferred
shares
£
£
Other
reserves
£
Retained
losses
£
Total equity
£
Note
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 year
-
-
-
-
Proceeds from share issues
Issue costs
Issued options
Expired options
13
13
14
4,482,000
-
6,823,000
(72,625)
-
-
-
-
Total transactions with
owners, recognised in
equity
4,482,000
6,750,375
-
-
-
-
-
-
-
-
-
-
-
(1,203,743)
(1,203,743)
(1,203,743)
(1,203,743)
-
-
11,305,000
(72,625)
6,779
(388,739)
-
388,739
6,779
-
(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
Balance as at 1 July 2014
4,941,953
14,188,311 1,825,104
398,010
(10,065,579)
11,287,799
Loss for the year
Total comprehensive
income for the year
Proceeds from share issues
Issue costs
Issued options
Expired options
Total transactions with
owners, recognised in
equity
-
-
-
-
13
13
14
977,778
-
-
-
122,222
(36,005)
-
-
977,778
86,217
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(674,883)
(674,883)
(674,883)
(674,883)
-
-
-
-
-
1,100,000
(36,005)
-
-
1,063,995
Balance as at 30 June 2015
5,919,731
14,274,528 1,825,104
398,010
(10,740,462)
11,676,911
The Notes on pages 18 to 39 form part of these Financial Statements.
16
FINNAUST MINING PLC
STATEMENTS OF CASH FLOWS
For the year ended 30 June 2015
Consolidated
Company
Year ended
Year ended
30 June 2015
30 June 2014
Year ended
30 June 2015
Period ended
30 June 2014
Note
£
£
£
£
Cash flows from operating activities
Loss before taxation
Adjustments for:
Depreciation
Impairment of intangibles
Other gains or losses
Finance income
Share based payments
Intercompany management fees
Foreign exchange
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 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
21
18
14
9
11
18
6
7
13
13
12
12
(561,381)
(2,394,934)
(674,883)
(1,203,743)
2,335
-
-
(931)
-
-
2,729
1,199,636
(74,816)
(924)
6,779
-
86,070
(582,450)
333
-
-
(875)
-
(181,129)
306,883
842
-
(37,500)
(1,120)
6,779
-
81,799
(1,452)
(37,019)
481,433
5,338
(1,177)
14,476
(28,660)
(244,669)
(512,378)
(1,357,209)
(536,372)
(1,426,272)
931
924
-
-
-
-
-
-
-
509,806
(1,080,814)
(1,280,107)
875
-
-
1,120
412,500
(1,665)
(1,519,772)
(1,342,953)
-
-
-
-
(1,079,883)
(769,377)
(1,518,897)
(930,998)
1,139,925
3,605,000
1,139,925
3,605,000
(36,005)
-
(72,625)
324,816
(62,500)
(125,000)
(36,005)
(72,625)
-
-
-
-
Net cash generated from financing activities
1,041,420
3,732,191
1,103,920
3,532,375
Net increase/(decrease) in cash and cash
equivalents
(550,841)
1,605,605
(951,349)
1,175,105
Cash and cash equivalents at beginning of period
Exchange (loss)/gain on cash and cash equivalents
1,706,137
(359,928)
101,551
(1,019)
1,666,932
491,827
-
-
Cash and cash equivalents at end of period
10
795,368
1,706,137
715,583
1,666,932
At 30 June 2015, £92,003 of exploration and evaluation additions remained outstanding and unpaid.
The Notes on pages 18 to 39 form part of these Financial Statements.
17
FINNAUST MINING PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
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 of the London Stock
Exchange. The Company is incorporated and domiciled in England.
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 (“IFRIC”) as adopted by the European Union, the Companies Act 2006 that
applies to Companies reporting under IFRS and IFRIC 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 July 2014
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 27
IAS 27 (Amendments)
IAS 36 (Amendments)
IFRS 10 (Amendments)
IFRS 10 (Amendments)
IFRS 12 (Amendments)
IFRS 12 (Amendments)
IFRS 12 (Amendments)
Impact on initial application
Separate Financial Statements
Consolidated Financial Statements - Investment Entities
Impairment of Assets - Recoverable Amount Disclosures for
Non-Financial Assets
Consolidated Financial Statements
Consolidated Financial Statements - Investment Entities
Disclosure of Interests in Other Entities
Disclosure of Interests in Other Entities
Disclosure of Interests in Other Entities - Investment Entities
Effective date
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
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.
(b) New standards, amendments and Interpretations in issue but not yet effective or not yet endorsed and not early adopted
Standard
IAS 1 (Amendments)
IAS 16 (Amendments)
IAS 16 (Amendments)
IAS 19 (Amendments)
IAS 27 (Amendments)
IAS 28 (Amendments)
IAS 28 (Amendments)
Impact on initial application
Presentation of Financial Statements - Disclosure Initiative
Property, plant and equipment - Clarification of Acceptable
Methods of Depreciation
Property, plant and equipment - Bearer Plants
Defined Benefits Plans - Employee Contributions
Separate Financial Statements
Investments in Associates and Joint Ventures
Accounting
Exception
Investments - Applying
the Consolidation
for
Effective date
*1 January 2016
*1 January 2016
*1 January 2016
1 February 2015
*1 January 2016
*1 January 2016
*1 January 2016
18
FINNAUST MINING PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
IAS 38 (Amendments)
IAS 41 (Amendments)
IFRS 9 (Amendments)
IFRS 10 (Amendments)
IFRS 10 (Amendments)
IFRS 11 (Amendments)
IFRS 12 (Amendments)
IFRS 14 (Amendments)
IFRS 15 (Amendments)
Annual Improvements
Annual Improvements
Annual Improvements
*1 Subject to EU endorsement
Intangible Assets - Clarification of Acceptable Methods of
Amortisation
Agriculture - Bearer Plants
Financial Instruments
Consolidated Financial Statements - Investments in Associates
and Joint Ventures
Consolidated Financial Statements: Applying the Consolidation
Exception
Joint Arrangements - Accounting for Acquisition of Interests in
Joint Operations
Disclosure of
Consolidation Exception
Regulatory Deferral Accounts
Revenue from Contracts with Customers
2012 - 2014 Cycle
2010 - 2012 Cycle
2011 - 2013 Cycle
in Other Entities: Applying
Interests
the
*1 January 2016
*1 January 2016
*1 January 2018
*1 January 2016
*1 January 2016
*1 January 2016
*1 January 2016
*1 January 2016
*1 January 2018
*1 January 2016
1 February 2015
1 January 2015
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 consolidated financial statements consolidate the financial statements of the Company and its subsidiaries made up to
30 June each year. Subsidiaries are entities over which the Group has control. Control is achieved when the Group is
exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns
through its power over the investee.
Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the
Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and
circumstances in assessing whether it has power over an investee, including:
The contractual arrangement with the other vote holders of the investee;
•
• Rights arising from other contractual arrangements; and
The Group's voting rights and potential voting rights
•
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to
one or more of the three elements of control. Subsidiaries are fully consolidated from the date on which control is
transferred to the group. They are deconsolidated from the date that control ceases. Assets, liabilities, income and
expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from
the date the Group gains control until the date the Group ceases to control the subsidiary.
Investments in subsidiaries are accounted for at cost less impairment within the parent company financial statements.
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.
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
19
FINNAUST MINING PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
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.
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.
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 Pounds 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.
20
FINNAUST MINING PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
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,
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.
21
FINNAUST MINING PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
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.
(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
Regular purchases and sales of financial assets are recognised on the trade date – the date on which the Group
commits to purchasing or selling the asset. Financial assets carried at fair value through profit or loss is initially
recognised at fair value, and transaction costs are expensed in the Income Statement. 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. Gains or losses arising from changes in the fair value of financial assets at fair value through profit or loss are
presented in the Income Statement within ‘Other (Losses)/Gains – Net’ in the period in which they arise.
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.
22
FINNAUST MINING PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
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.
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.
Equity
Equity comprises the following:
•
•
•
•
“Share capital” represents the nominal value of the Ordinary shares;
“Share Premium” represents consideration less nominal value of issued shares and costs directly attributable to
the issue of new shares;
“Other reserves” represents the merger reserve, foreign currency translation reserve, redemption reserve and
share option reserve;
“Retained earnings” represents retained losses.
2.16.
Share capital, share premium and deferred shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are
shown in equity, as a deduction, net of tax, from the proceeds provided there is sufficient premium available. 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.
2.17.
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
23
FINNAUST MINING PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
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.
2.18.
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.
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.
2.19.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for
goods or services supplied in course of ordinary business, stated net of discounts, returns and value added taxes. The
Group recognises revenue when the amount of revenue can be reliably measured; when it is probable that future economic
benefits will flow to the entity; and when specific criteria have been met for the Group’s activities described below.
24
FINNAUST MINING PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
Revenue is recognised in respect of amounts recharged to project strategic partners in accordance to their contractual
terms.
2.20. 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.
2.21.
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.
2.22.
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.
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 as most of the foreign exchange movements result from the retranslation of inter
company loans. The Group has not sensitised the figures for fluctuations in foreign exchange rates as the Directors are of
the opinion that these fluctuations, apart from the retranslation of intercompany loans at the closing rate, would not have a
significant impact on the financial statements of the Group. However, the Directors acknowledge that, at the present time
except, the foreign exchange retranslations have resulted in a rather higher than normal fluctuations which are separately
disclosed, and is predominantly due to the exceptional nature of Euro exchange rate in the last couple of years or so in the
current economic climate. 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. One measure may include the
presentation currency of future financial statements being shown in Euros, which is the Group’s functional currency, as this
may reduce the presentation fluctuations that have arisen in the last couple of years.
(b) Price risk
The Group is not exposed to commodity price risk as a result of its operations, which are still in the exploration phase. The
only revenue relates to intra group revenue in respect of recharges which are eliminated on consolidation. The Directors will
revisit the appropriateness of this policy should the Group’s operations change in size or nature.
The Group has no exposure to equity securities price risk, as it has no listed or unlisted equity investments other than
investments in wholly owned subsidiaries.
(c) Interest rate risk
25
FINNAUST MINING PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
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 2015 the Group had borrowings of £62,500 (30 June 2014: £125,000) 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.
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 2015 of £8,432,062 (2013: £8,101,446). 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 no impairment is
necessary for the year ended 30 June 2015.
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.
26
FINNAUST MINING PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
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 14.
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.
2015
Revenue
Administrative expenses
Austria
£
-
(12,281)
Finland
£
1,028
(154,528)
UK
£
-
(396,531)
Total
£
1,028
(563,340)
Loss from operations per reportable segment
(12,281)
(153,500)
(396,531
(562,312)
(Reductions)/additions to non-current assets
Reportable segment assets
Reportable segment liabilities
2014
Administrative expenses
Impairment of intangibles
Loss from operations per reportable segment
Additions to non-current assets
Reportable segment assets
Reportable segment liabilities
6. Property, Plant and Equipment
Group
Cost
As at 1 July 2013
Acquired through reverse acquisition
Exchange differences
As at 30 June 2014
As at 1 July 2014
Exchange differences
As at 30 June 2015
(61,033)
519,312
441
Austria
£
(16,336)
-
(16,336)
578,891
579,652
840
367,918
8,033,086
147,814
Finland
£
(829,161)
(312,831)
(1,141,992)
331,636
7,620,104
328,345
(333)
766,537
113,045
306,552
9,318,935
261,300
UK
£
(350,725)
(886,805)
(1,237,530)
1,145
1,745,170
35,007
Total
£
(1,196,222)
(1,199,636)
(2,395,858)
911,672
9,944,926
364,192
Machinery &
equipment
Office
equipment
£
£
Total
£
22,504
3,124
(813)
24,815
24,815
(3,124)
-
3,124
-
3,124
3,124
-
3,124
21,691
22,504
-
(813)
21,691
21,691
(3,124)
18,567
27
FINNAUST MINING PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
Depreciation
As at 1 July 2013
Acquired through reverse acquisition
Charge for the year
Exchange differences
As at 30 June 2014
As at 1 July 2014
Charge for the year
Exchange differences
As at 30 June 2015
Net book value as at 30 June 2014
Net book value as at 30 June 2015
4,370
-
1,887
257
6,514
6,514
2,002
(1,464)
7,052
15,177
11,515
-
1,137
842
-
1,979
1,979
333
4,370
1,137
2,729
257
8,493
8,493
2,335
-
(1,464)
2,312
1,145
9,364
16,322
812
12,327
Depreciation expense of £2,335 (30 June 2014: £2,729) for the Group has been charged in administration expenses.
Company
Cost
As at 1 March 2013
Additions
As at 30 June 2014
As at 1 July 2014
Additions
As at 30 June 2015
Depreciation
As at 1 March 2013
Charge for the year
As at 30 June 2014
As at 1 July 2014
Charge for the year
As at 30 June 2015
Net book value as at 30 June 2014
Net book value as at 30 June 2015
Office
equipment
£
1,459
1,665
3,124
3,124
-
3,124
1,137
842
1,979
1,979
333
2,312
1,145
812
Depreciation expense of £333 (30 June 2014: £842) for the Company has been charged in administration expenses.
28
FINNAUST MINING PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
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
2015
£
8,101,446
1,080,814
-
(750,198)
-
8,432,062
30 June
2014
£
7,190,919
1,280,107
571,703
(628,452)
(312,831)
8,101,446
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.
Following their assessment the Directors concluded that no impairment charge was necessary for the year ended 30 June
2015. In the prior year, the Directors concluded that an impairment charge of £321,831 was necessary as a result of certain
Finnish exploration licences not being renewed.
Goodwill - Cost and Net Book Value
As at 1 July
Acquired through business combinations
Impairment losses
As at 30 June
Group
30 June
2015
£
-
-
-
-
30 June
2014
£
-
886,805
(886,805)
-
The Directors did not consider goodwill reflected an increase in the Group’s assets and therefore impaired goodwill in full in
the prior period.
29
FINNAUST MINING PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
8.
Investments in Subsidiary Undertakings
Shares in Group Undertakings
At beginning of period
Additions in period
At end of period
Loans to Group undertakings
Total
Company
30 June
2015
£
7,700,002
30 June
2014
£
2
-
7,700,000
7,700,002
7,700,002
3,271,652
1,877,634
10,971,654
9,577,636
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 and
place of business
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
Centurion Resources GmbH
Austria
100%
100%
Nil
Finland Investments Plc
United Kingdom
100%
FinnAust Mining Finland Oy
FinnAust Mining Northern Oy
Finland
Finland
Nil
Nil
100%
100%
100%
100%
100%
100%
All subsidiary undertakings are included in the consolidation.
Nature of
business
Dormant
Holding
Exploration
Holding
Exploration
Exploration
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. 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
2015
£
29,781
27,483
735
30 June
2014
£
30,275
30,752
39,925
30 June
2015
£
26,277
12,249
-
57,999
100,952
38,526
20,069
20,069
-
-
121,021
38,526
77,093
21,179
21,179
79,178
30
30 June
2014
£
25,101
12,067
39,925
77,093
-
-
FINNAUST MINING PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
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 2015 all trade and other receivables were fully performing. No ageing analysis is considered necessary as the
Group has no trade receivable receivables which would require such an analysis to be disclosed under the requirements of
IFRS 7.
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
2015
£
38,526
40,652
79,178
30 June
2014
£
77,093
43,928
121,021
30 June
2015
£
28,526
-
38,526
30 June
2014
£
77,093
-
77,093
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.
10. Cash and Cash Equivalents
Group
Company
30 June
2015
£
30 June
2014
£
30 June
2015
£
30 June
2014
£
Cash at bank and in hand
795,368
1,706,137
715,583
1,666,932
All of the Group and Company’s cash at bank is held with institutions with an AA- credit rating.
11. Trade and Other Payables
Trade payables
Other creditors
Accrued expenses
Group
Company
30 June
2015
£
91,250
9,400
98,150
30 June
2014
£
68,850
-
170,342
198,800
239,192
30 June
2015
£
18,518
2
31,144
49,664
28 February
2014
£
1,562
2
33,443
35,007
Trade payables include amounts due of £77,510 and accrued expenses £14,493 in relation to exploration and evaluation
activities.
31
FINNAUST MINING PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
12. Borrowings
Current
Unsecured borrowings at amortised cost
Non-interest bearing loan
Group
30 June
2015
£
62,500
62,500
30 June
2014
£
125,000
125,000
Non-interest bearing loans arose during the prior period as unsecured cash advances to the Group from the ultimate
controlling party Western Areas Limited (“Western Areas”) as disclosed in Note 24. The agreed facility was £250,000,
denominated in Pound Sterling and the balance of the non-interest bearing loan is repayable upon demand by Western
Areas.
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.
13. Share capital and premium
Company
Issued and fully paid
At 1 March 2013
Number of shares
Ordinary
shares
£
Share premium
£
Total
£
229,976,697
459,953
7,437,936
7,897,889
Issue of new shares – 2 July 2013
20,000,000
40,000
160,000
200,000
Share consolidation – 29 November 2013
Issue of new shares – 2 December 2013 (1)
(224,979,027)
-
-
-
222,100,000
4,442,000
6,590,375 11,032,375
At 30 June 2014
247,097,670
4,941,953
14,188,311 19,130,264
Issue of new shares – 29 October 2014 (2)
48,888,890
977,778
86,217
1,063,995
As at 30 June 2015
295,986,560
5,919,731
14,274,528 20,194,259
Group
Issued and fully paid
As at 1 July 2013
Number of shares
Ordinary
shares
£
Share premium
£
Total
£
82,500,000
141,180
8,500,753
8,641,933
Reverse acquisition – 2 December 2013
Issue of new shares – 2 December 2013 (1)
(57,502,330)
222,100,000
358,773
4,442,000
(902,817)
(544,044)
6,590,375 11,032,375
At 30 June 2014
247,097,670
4,941,953
14,188,311 19,130,264
Issue of new shares – 29 October 2014 (2)
48,888,890
977,778
86,217
1,063,995
As at 30 June 2015
295,986,560
5,919,731
14,274,528 20,194,259
(1)
(2)
Includes issue costs of £72,625
Includes issue costs of £36,005
On 29 October 2014 the Company raised £1,100,000 via the issue and allotment of 48,888,890 new ordinary shares of 2
pence each fully paid at a price of 2.25 pence per share.
32
FINNAUST MINING PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
14. 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
12 November 2012
29 November 2013
12 November 2012
12 November 2015
29 May 2017
12 November 2017
29 November 2013
29 May 2019
0.67
0.15
0.10
0.20
Options & Warrants
30 June
2015
1,681,930
6,000,000
3,684,366
30 June
2014
1,681,930
6,000,000
3,684,366
6,000,000
6,000,000
17,366,296
17,366,296
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:
2013 Options
2013 Options
2012 Options &
Warrants
2012 Warrants
Granted on:
29/11/2013
29/11/2013
12/11/2012
12/11/2012
Life (years)
Share price (pence per share)
Risk free rate
Expected volatility
Expected dividend yield
Marketability discount
Total fair value (£000)
3.5 years
5.7p
2.25%
26.41%
-
20%
3
5.5 years
5.7p
2.25%
26.41%
-
20%
4
5 years
1.13p
2.25%
29.74%
-
20%
117
3 years
1.13p
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 year to 30 June 2015 is shown below:
2015
2014
Weighted
average
exercise price
(£)
Number
Outstanding at beginning of year
17,366,296
0.1237
Expired
Adjustment for share consolidation
Granted
Outstanding as at year end
Exercisable at year end
-
-
-
-
-
-
17,366,296
17,366,296
0.1237
0.1237
Weighted
average
exercise price
(£)
0.0300
1.8316
-
0.1750
0.1237
0.1237
Number
54,289,480
(626,524)
(48,296,660)
12,000,000
17,366,296
17,366,296
33
FINNAUST MINING PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
2015
2014
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
2.37
2.92
2.37
2.92
0.00900
5,366,296
0.1750
12,000,000
3.37
3.92
3.37
3.92
No options or warrants were exercised during the year. The total fair value has resulted in a charge to the Income
Statement for the year ended 30 June 2015 of £nil (2014: £6,779) and a charge to Share Premium of £nil (2013: £ nil).
15. Other Reserves
At 1 July 2013
Reverse acquisition
Options granted (Note 14)
Currency translation differences
Group
Foreign
currency
translation
reserve
£
(2,496)
-
-
(344,305)
Merger
reserve
£
-
166,000
-
-
Redemption
reserve
Share option
reserve
£
-
£
-
Total
£
(2,496)
36,463
188,768
391,231
-
-
6,779
6,779
-
(344,305)
At 30 June 2014
166,000
(346,801)
36,463
195,547
51,209
Currency translation differences
-
(1,025,713)
-
-
(1,025,713)
At 30 June 2015
166,000
(1,372,514)
36,463
195,547
(974,504)
At 28 February 2013
Options expired
Options granted (Note 14)
At 30 June 2014
At 30 June 2015
Company
Merger
reserve
Redemption
reserve
Share option
reserve
£
£
£
Total
£
166,000
36,463
577,507
779,970
-
-
-
-
(388,739)
6,779
(388,739)
6,779
166,000
36,463
195,547
398,010
166,000
36,463
195,547
398,010
34
FINNAUST MINING PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
16. Employee benefit expense
Staff costs (excluding Directors)
Salaries and wages
Social security costs
Retirement benefit costs
Group
Year ended
30 June
2015
Year ended
30 June
2014
£
£
310,175
55,892
12,203
328,411
58,577
10,773
378,270
397,761
The average monthly number of employees for the Group during the year was 6 (30 June 2014: 6). These were all
employed in exploration & evaluation related roles.
Of the above Group staff costs, £348,527 (30 June 2014: £213,168) has been capitalised in accordance with IFRS 6 as
exploratory related costs and are shown as an intangible addition in the year.
17. Directors' Remuneration
Company
Executive Directors
Alastair Clayton (1)
Non-executive Directors
Greg Kuenzel
Daniel Lougher
Graham Marshall
No pension benefits are provided for any Director.
(1) Alastair Clayton resigned on 3 June 2015.
18. Finance Income
Interest received from cash and cash equivalents
Finance Income
Directors’ Fees
Options Issued
Year ended
30 June
2015
Year ended
30 June
2014
£
£
203,043
133,867
12,000
38,500
-
-
-
-
215,043
172,367
Year ended
30 June
2015
Year ended
30 June
2014
£
-
-
-
-
-
£
3,954
1,695
-
-
5,649
Group
Year ended
30 June
2015
Year ended
30 June
2014
£
931
931
£
924
924
35
FINNAUST MINING PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
19. 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
2015
Year ended
30 June
2014
£
-
-
-
£
-
-
-
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 21.18% (2014: 20.55%)
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
2015
£
Year ended
30 June
2014
£
(561,381)
(2,394,394)
(118,900)
(492,048)
9,953
2,335
-
106,612
-
-
1,609
(823)
246,525
244,737
-
-
The weighted average applicable tax rate of 21.18% (2014: 20.55%) 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 £1,381,961 (2014: £1,197,832) due to tax losses available to
carry forward against future taxable profits. The Company has tax losses of approximately £4,145,017 (2014: £3,229,934)
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.
20. Earnings per Share
Group
The calculation of the total basic earnings per share of (0.201) pence (30 June 2014: (1.352) pence) is based on the loss
attributable to equity holders of the parent company of £561,381 (30 June 2014: £2,394,394) and on the weighted average
number of ordinary shares of 279,913,500 (30 June 2014: 177,178,360) in issue during the year.
Company
The calculation of the total basic earnings per share of (0.241) pence (30 June 2014: (0.997) pence) is based on the loss
attributable to equity holders of the company of £674,833 (30 June 2014: £1,203,743) and on the weighted average number
of ordinary shares of 279,913,500 (30 June 2014: 120,720,668) in issue during the year.
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 14.
36
FINNAUST MINING PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
21. 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
Insurance
Depreciation
Share based payments
Write-off trade & other payables and borrowings
Impairment of prepayments
Other expenses
Total administrative expenses
Group
Year ended
30 June
2015
£
Year ended
30 June
2014
£
129,007
29,743
108,367
45,383
16,000
1,000
11,327
156,818
18,197
2,335
-
-
-
45,163
40,915
184,593
109,729
32,293
16,000
1,000
23,804
311,880
12,103
2,729
6,779
(111,249)
541,177
24,469
563,340
1,196,222
The above Directors’ fees are exclusive of £86,036 (30 June 2014: £65,053) which has been capitalised in accordance with
IFRS 6 as exploratory related costs and are shown as an intangible addition in the year.
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
2015
Year ended
30 June
2014
£
£
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
16,000
1,000
22. 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
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.
As part of the contractual arrangement with Magnus Minerals Limited (“Magnus”) the Group has agreed to pay royalties on
revenue from mineral sales arising from mines developed by the Group. Under the terms of the respective Royalty
Agreements between Magnus and the Company, the Group shall pay the following:
•
0.5% of net smelter returns over mineral production from the Kainuu Schist Belt tenements;
37
FINNAUST MINING PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
•
•
•
1.0% of net smelter returns over mineral production from the Outokumpu Savonara Mine Belt tenements;
1.5% of net smelter returns over mineral production from the Enonoski Area tenements; and
2.5% of net smelter returns over mineral production from the Hammaslahti Area tenements.
The Enonoski and Hammaslahti Royalty Agreements further provide that royalty entitlements may be extended to future
rights with the respective areas of influence defined with the agreements.
Additionally, under the terms of the Kainuu Schist Belt Royalty Agreement and the Outokumpu Savonara Mine Belt Royalty
Agreement the Group is obligated to pay SES Finland Limited a 0.5% net smelter royalty in respect of production from the
associated tenements and Western Areas Limited (“Western Areas”) 0.5% of net smelter returns over mineral production of
the tenements using a biological leaching technology owned by Western Areas.
(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 July 2014. The lease expenditure charged to the Income Statement during the year is disclosed in Note 21 and is included
within establishment expenses.
The future aggregate minimum lease payments under non-cancellable operating leases are as follows:
Group
30 June
2015
£
18,000
18,000
30 June
2014
£
4,500
4,500
Not later than one year
Total lease commitment
23. 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 Finland Oy
Centurion Mining Limited
At 30 June (Note 8)
Company
30 June
2015
£
564,300
58,828
192,401
2,455,928
195
30 June
2014
£
564,300
45,694
155,868
1,111,577
195
3,271,652
1,877,634
Loans granted to subsidiaries have increased during the year due to additional loans being granted to the subsidiaries, and
foreign exchange losses charged to the Income Statement of £288,084, given that no loans were repaid during the year.
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 24 and
a company of which Daniel Lougher is a director, was paid £66,148 for exploration costs and related expenditure (2014:
38
FINNAUST MINING PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
£86,285) during the year. A further £11,863 (2014: £6,818) has been accrued at year-end. No balance, other than this
accrual, was outstanding at the year-end.
Western Areas granted loans to the Group during the prior period totalling £324,816, of which the Group has repaid
£187,500 and Western Areas waived £74,816. The balance payable to Western Areas as at 30 June 2015 was £62,500 (30
June 2014: £125,000).
Other Transactions
The Group defines its key management personnel as the Directors of the Company as disclosed in the Directors Report.
Heytesbury Corporate LLP, a limited liability partnership of which Gregory Kuenzel is a partner, was paid a fee of £84,000
(2014: £54,400) for the provision of corporate management and consulting services to FinnAust Mining Plc. No balance was
outstanding at the year-end.
Noricum Gold Limited, a company of which Greg Kuenzel is a Director, was paid a fee of £nil (2014: £12,990) for
management consulting services provided to and exploration costs incurred on behalf of FinnAust Mining Plc. No balance
was outstanding at the year-end (2014: £nil).
24. Ultimate Controlling Party
The ultimate controlling party is Western Areas Limited, a company incorporated and registered in Australia, by virtue of its
60.34% holding.
25. Events after the Reporting Date
There have been no events after the reporting date of a material nature.
39