Annual Report & Financial Statements 2009 Contents Chairman’s Statement Company Information Report of the Directors Statement of Directors' Responsibilities Corporate Governance Statement Independent Auditor's Report Income Statement Balance Sheet Cash Flow Statement Statement of Changes in Equity Notes to the Financial Statements 2 4 5 9 10 12 14 15 16 17 18 Chairman’s Statement Dear Shareholder, I have pleasure in presenting your Company’s Annual Report and Financial Statements for the year ended 31 May 2009. This was a year during which your Company made further progress with its diamond exploration programme in Finland and clearly demonstrated the capacity of the Seitaperä kimberlite pipe to carry diamond-bearing material. Professor Richard Conroy Chairman A full mineralogical study of all the Seitapera The Company also continues to explore in the micro-diamonds recovered to date, including the Joensuu area of Eastern Finland, where recent 67 micro- and macro-diamonds recovered from a sampling programmes recovered kimberlite 100.20 kg sample as reported in July 2008, has indicator minerals, including G9 and G10 garnets. been completed at MCC Geoscience of Vancouver, These results, taken in conjunction with those Canada. The results indicate that the grade from earlier work, increase the likelihood that distribution in the Seitaperä kimberlite is likely to be the Joensuu area could also contain a number highly variable, a feature common to the diatreme of kimberlite pipes. root zones of many kimberlites. At this point, however, it is not possible to estimate an overall Financials bulk diamond grade. These findings suggest that there is potential for larger diamonds to be present in the Seitaperä pipe, however, the majority of the kimberlite, including the new northeast extension, remains untested. In view of the present state of the diamond market, the Company will not at this stage proceed with the extensive further drilling and micro-diamond sampling that will be required to adequately test a kimberlite of this size (6.9ha). Nevertheless, the Company will continue with evaluation work and The loss after taxation for the year ended 31 May 2009 was €194,126 (2008: €268,638) and the net assets as at 31 May 2009 were €3,712,312 (2008: €3,865,379). As in previous years, I have supported the working capital requirements of the Company and in the period under review have advanced loans to the value of €238,022 and the balance of the loans due to me at the period end was €719,993. The loans have been made on normal commercial terms. advancing its diamond claim applications in Finland. The other Directors consider, having consulted with There has been only limited historical diamond exploration in the Kuhmo area, but when this is considered in conjunction with the results achieved by Karelian, the area’s potential for diamondiferous kimberlites is clearly demonstrated. As a result of these encouraging indications, your Company has applied for licences covering the two other known kimberlite occurrences in the area – Kimberlites 18 the Company’s Nominated Adviser, that the terms of these loans are fair and reasonable in so far as the Company’s shareholders are concerned. Auditors I would like to take the opportunity of thanking the partners and staff of Deloitte and Touche for their services to your Company during the course (Havukkasuo) and 24 (Lentiira). of the year. 2 Annual Report and Financial Statements 2009 Karelian Diamond Resources Directors, Consultants and Staff I would also like to express my deep appreciation of the support and dedication of the Directors, Consultants and Staff, which has made possible the continued progress which your company has achieved. Future Outlook Despite the downturn in the diamond market, we will continue to evaluate opportunities to enhance shareholder value. In view of the positive findings to date, both at Seitapera and in the Kuhmo area generally, we will press on with our applications for licences over the other known kimberlites in the Kuhmo area as well as licence applications in the Joensuu area. We look forward with confidence to a successful future. Professor Richard Conroy Chairman 5 November 2009 Annual Report and Financial Statements 2009 Karelian Diamond Resources 3 Company Information Directors Auditors Stockbroker Professor Richard Conroy Deloitte & Touche City Capital Corporation Limited Chairman* Roger I. Chaplin Non-Executive Director§ Seamus P. FitzPatrick Non-Executive Director+§ Maureen T.A. Jones Managing Director* James P. Jones FCA Finance Director* Louis J. Maguire Non-Executive Director*+§ * Member of the Executive Committee + Member of the Remuneration Committee § Member of the Audit Committee Company Secretary and Registered Office James P. Jones FCA 10 Upper Pembroke Street Dublin 2 Chartered Accountants Deloitte & Touche House Charlotte Quay Limerick Registrars Capita Registrars (Ireland) Limited Unit 5 Manor Street Business Park Manor Street Dublin 7 www.capitaregistrars.ie Nominated Adviser Merchant John East Securities LImited 10 Finsbury Square London EC2A 1AD Principal Bankers National Irish Bank 138 Lower Baggot Street Dublin 2 Professor Richard Conroy Chairman Maureen T.A. Jones Managing Director Louis J. Maguire Non-Executive Director James P. Jones Finance Director Roger I. Chaplin Non-Executive Director Seamus P. FitzPatrick Non-Executive Director 4 Annual Report and Financial Statements 2009 Karelian Diamond Resources 29 Farm Street London W1J 5RL Dublin Stockbroker Dolmen Stockbrokers 75 St. Stephen’s Green Dublin 2 Legal Advisors William Fry Solicitors Fitzwilton House Wilton Place Dublin 2 Roschier-Holmberg Keskuskatu 7A 00 100 Helsinki Finland Head Office Karelian Diamond Resources PLC 10 Upper Pembroke Street Dublin 2 Tel: +353-1-661 8958 Fax: +353-1-662 1213 For further information visit the Company’s website at www.kareliandiamondresources.com or contact: Lothbury Financial Triton Court Finsbury Square London EC2A 1BR Report of The Directors The Directors present their annual report, together The company needs equity capital and financing for with the audited financial statements of Karelian working capital and exploration and development Diamond Resources Plc for the year ended 31 May of its properties. Due to continuing operating 2009. losses, the company’s continuance as a going concern is dependant upon its ability to obtain Principal Activities and Business Review adequate financing and reach profitable levels of The company is a London Stock Exchange AIM- listed natural resource company incorporated in Ireland, which is focused on the discovery of potential world-class diamond deposits in Finland. The company is presently exploring for diamonds and evaluation of an existing diamond prospect operation. It is not possible to predict whether financing efforts will be successful or if the company will attain profitable levels of operations. Results for the Year and State of Affairs at 31 May 2009 (diamondiferous kimberlite pipe) in the Karelian The income statement for the year ended 31 May Craton of Finland. The company has a number 2009 and the balance sheet at that date are set of projects throughout the diamond-prospective out on pages 14 and 15 respectively. The company KarelianCraton, at various stages of development. recorded a loss for the financial year of €194,126 Future Development of the Business loss the shareholders’ funds decreased to €3,712,312 (2008: €268,638). Taking account of the current year It is the intention of the directors to continue to develop the activities of the company concentrating particularly on diamonds. Further strategic at 31 May 2009 from €3,865,379 at 31 May 2008. Going Concern opportunities in mineral resources, both in Finland As explained in Note 2 to the financial statements, and elsewhere, will be sought by the company. the Directors have reviewed cashflow projections Risks and Uncertainties The company’s activities are directed towards the discovery, evaluation and development of diamond and other mineral deposits. Exploration for and development of mineral deposits is speculative. Whilst the rewards can be substantial, there is and other relevant information and are satisfied that the company will be able to continue in operation for the foreseeable future. Accordingly, the financial statements have been prepared on the going concern basis. Directors no guarantee that exploration on the company’s The Directors who served during the year are as properties will lead to the discovery of commercially follows: extractable mineral deposits. The future net asset value is therefore, inter alia, dependent on the success or otherwise of the company’s exploration programmes. Whether a mineral deposit will be commercially viable in a mining operation depends on a number of factors, such as the grade of the deposit, prices of the commodities being exploited, currency fluctuations, proximity to infrastructure, financing costs and government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, import and export regulations and environmental protection. R.T.W.L. Conroy M.T.A. Jones J.P. Jones L.J. Maguire S.P. FitzPatrick R.I. Chaplin In accordance with the company’s Articles of Association, Mr. Roger Chaplin and Miss Maureen Jones will retire by rotation and, being eligible, will offer themselves for re-election at the Annual General Meeting. Annual Report and Financial Statements 2009 Karelian Diamond Resources 5 Report of The Directors Details of Directors Professor Richard Conroy, Chairman of the Board, has been involved in natural resources for many years. He established Trans–International Oil in 1974, which was primarily involved in Irish offshore oil exploration, and initiated the Deminex Consortium which included Deminex, Mobil, Amoco & DSM. Trans-International Oil was merged with Aran Energy Plc in 1979. Professor Conroy founded Conroy Petroleum and Natural Resources Plc which in 1986 made the very significant discovery of the Galmoy zinc deposit in Co. Kilkenny which is now in production as a major base metal mine. Conroy Petroleum was also a founding member of the Stoneboy consortium, an exploration group which discovered the POGO gold field in Alaska now in production as a major gold mine. Conroy Petroleum acquired Atlantic Resources Plc in 1992 and was renamed ARCON International Resources Plc (ARCON). Professor Conroy was Chairman and Chief Executive of ARCON from 1980 to 1994. Professor Richard Conroy is an Emeritus Professor of Physiology in the Royal College of Surgeons in Ireland. His research has included pioneering work on the effects of Circadian Rhythms including Jet Lag, Shift Working and Decision Taking in Business after Intercontinental Flights. she joined Professor Conroy in the formation of Conroy Diamonds and Gold Plc. She has been managing director of that company since 1998. Mr. James Jones, Finance Director, has been associated with the natural resources industry for over 20 years. He is a chartered accountant by profession and a lecturer in Accountancy at Limerick Institute of Technology. He served as finance director of Conroy Petroleum and Natural Resources Plc from its formation until 1994, when he joined with Professor Conroy to create Conroy Diamonds and Gold Plc. He has served as finance director and secretary of that company since its inception in 1995. He became Finance Director and Secretary of this Company on its formation. Mr. Louis Maguire, Non-executive Director, is an auctioneer by profession and land valuation expert with particular expertise in the purchase of mineral rights and in land acquisition for mining. He is also a director of Conroy Diamonds and Gold Plc. Mr. Séamus FitzPatrick, Non-executive Director, has worked in both corporate finance and private equity in London and New York with Morgan Stanley, J. P. Morgan and Bankers’ Trust. In 1999 he co-founded CapVest, which advises funds with in excess of £2.0 billion of assets under management. He is chairman of the Mater Private Hospital and a member of the supervisory board at Drie Mollen. He is also a member of the board of Conroy Professor Conroy served for two terms in the Diamonds and Gold Plc. Irish Parliament as a member of the Senate. As a Senator he was at various times front bench spokesman for the Government party in the Upper House on Energy, Industry and Commerce, Foreign Affairs and Northern Ireland. Mr. Roger Chaplin, Non-executive Director, has over twenty five years experience in mining analysis, gained initially in a major South African mining house and latterly in the City of London. He was Senior Vice President and Mining Analyst at T. Hoare Miss Maureen Jones, Managing Director, has many and Co., which later became Canaccord Capital years experience in natural resources. She also has a (Europe) Limited in London from 1993 to 2003. medical background, as a radiographer specialising Since 2003 he has worked as an independent in nuclear medicine. She became a manager with analyst and as Head of Research for M. Horn & Co. International Medical Corporation in 1977 and He gained a particular interest in diamonds through joined Professor Conroy at Conroy Petroleum and following the development of the Canadian Natural Resources Plc in 1980. She served as a diamond mines over the past fifteen years. director of the company from 1986 to 1994, when 6 Annual Report and Financial Statements 2009 Karelian Diamond Resources Directors’ and Secretary’s Shareholdings and Other Interests The interests of the Directors and Secretary, all of which were beneficially held, in the ordinary share capital and warrants of the company at 31 May 2009 and 31 May 2008 were as follows: At 31 May 2009 At 31 May 2008 Ordinary shares of €0.01 each Warrants Ordinary shares of €0.01 each R.T.W.L. Conroy 37,031,701* 8,354,382 37,031,701* M.T.A. Jones J.P. Jones R.I. Chaplin S.P. FitzPatrick L.J. Maguire 125,836 58,335 20,000 666 51,668 4,941,275 3,104,689 271,262 432,201 432,201 125,836 58,335 20,000 666 51,668 Warrants 8,354,382 4,941,275 3,104,689 271,262 432,201 432,201 *Of the 37,031,701 (2008: 37,031,701) Ordinary Shares beneficially held by Professor Conroy, 30,815,030 (2008: 30,815,030) are held by Conroy Plc a company in which Professor Conroy has a controlling interest. Details of warrants, all of which are exercisable currently, are as follows: Directors At 31 May 2009 Granted During Year At 31 May 2008 Price €/£ Expiry Date R.T.W.L. Conroy 1,000,000 R.T.W.L. Conroy 5,521,049 R.T.W.L. Conroy 1,833,333 M.T.A. Jones 750,000 M.T.A. Jones 4,191,275 J.P. Jones J.P. Jones R.I. Chaplin R.I. Chaplin S.P. FitzPatrick S.P. FitzPatrick L.J. Maguire L.J. Maguire 500,000 2,604,689 200,000 71,262 200,000 232,201 200,000 232,201 - - - - - - - - - - - - - 1,000,000 5p stg 1 September 2015 5,521,049 €0.10 16 November 2017 1,833,333 10p stg 17 July 2010 750,000 5p stg 1 September 2015 4,191,275 €0.10 16 November 2017 500,000 5p stg 1 September 2015 2,604,689 €0.10 16 November 2017 200,000 5p stg 1 September 2015 71,262 €0.10 16 November 2017 200,000 5p stg 1 September 2015 232,201 €0.10 16 November 2017 200,000 5p stg 1 September 2015 232,201 €0.10 16 November 2017 Except as disclosed above, neither the Directors nor their families had any beneficial interest in the share capital of the company. Apart from loans from shareholders (Note 12), there have been no contracts or arrangements during the financial year in which a director of the company was materially interested and which were significant in relation to the company’s business. Annual Report and Financial Statements 2009 Karelian Diamond Resources 7 Report of The Directors Substantial Shareholdings Books of Account So far as the Board is aware, no person or company, other than the Directors’ interests disclosed above and the shareholder’s listed below, held 3% or more of the issued ordinary share capital of the company at 31 May 2009. The measures which the Directors have taken to ensure that proper books of account are kept are the adoption of suitable policies for recording transactions, assets and liabilities, the employment of appropriately qualified staff and the use of Name Number of ordinary shares % computer and documentary systems. The company’s books of account are kept at 10 Upper Pembroke Professor Conroy 37,031,701* 61.17 Street, Dublin 2. HSBC Global Custody 6,422,333 10.64 Pershing Nominees Limited 2,212,999 3.65 Auditors *Of the 37,031,701 ordinary shares beneficially held by Professor Conroy, 30,815,080 are held by Conroy Plc, a company in which Professor Conroy The auditors, Deloitte and Touche, Chartered Accountants, continue in office in accordance with Section 160 (2) of the Companies Act, 1963. has a controlling interest. On behalf of the Board Political Donations There were no political donations during the year. R.T.W.L. Conroy Director 5 November 2009 J.P. Jones Director 8 Annual Report and Financial Statements 2009 Karelian Diamond Resources Statement of Directors’ Responsibilities Irish company law requires the directors to prepare The directors are responsible for keeping proper financial statements for each financial year which books of account which disclose with reasonable give a true and fair view of the state of affairs of accuracy at any time the financial position of the the company and of the loss of the company for company and to enable them to ensure that the that period. In preparing those financial statements, financial statements are prepared in accordance the directors are required to: with International Financial Reporting Standards as n select suitable accounting policies for the financial statements and then apply them consistently; n make judgments and estimates that are reasonable and prudent; and adopted by the European Union and comply with Irish statute comprising the Companies Acts, 1963 to 2009. They are also responsible for safeguarding the assets of the 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 n prepare the financial statements on the going the corporate and financial information included concern basis unless it is inappropriate to on the company’s website. Legislation in Ireland presume that the company will continue in governing the preparation and dissemination of business. financial statements may differ from legislation in other jurisdictions. Annual Report and Financial Statements 2009 Karelian Diamond Resources 9 Corporate Governance Statement Introduction As the Company is quoted on London’s AIM market, the board bases its policies and practices in relation to corporate governance on the Combined Code on Corporate Governance, published by the UK Financial Reporting Council (the Code). reviews the interim and annual financial statements before they are presented to the board, focusing in particular on accounting policies and areas of management judgement and estimation. The committee is responsible for monitoring the controls which are in force to ensure the information reported to the shareholders is accurate The board supports standards in corporate and complete. The committee considers internal governance and endeavours to implement the control issues and contributes to the board's review principles of the Combined Code constructively of the effectiveness of the company’s internal and in a sensible and pragmatic fashion with the control and risk management systems. It also objective of enhancing and protecting shareholder considers the need for an internal audit function, value. This is always harder in a small Company which it believes is not required at present due to than in the larger organisations with which the limited staff and operations of the company. the Combined Code is chiefly concerned. It is The members of the committee have agreed to particularly problematic for a company such as make themselves available should any member of this which is both small and engaged in mineral staff wish to make representations to them about exploration and development rather than more the conduct of the affairs of the company. routine trading operations. The committee advises the board on the Regular board meetings are scheduled to take appointment of external auditors and on their place throughout the year. During the year three remuneration and discusses the nature and scope meetings were held. All major policies are approved of the audit with the external auditors. It meets by the board. Remuneration committee The remuneration committee comprises Mr. Louis Maguire and Mr. Séamus FitzPatrick. It is responsible for making recommendations to the board on the company’s executive remuneration. The committee determines any contract terms, remuneration and other benefits, including share options, for each of the executive directors. The board itself determines the remuneration of the non-executive directors. Audit committee The committee's terms of reference have been approved by the board. The audit committee comprises Mr. Louis Maguire, Mr. Roger Chaplin and Mr. Séamus FitzPatrick. The audit committee formally at least once a year with the company’s external auditors. An analysis of the fees payable to the external audit firm in respect of audit services during the year is set out in Note 4 to the financial statements. The audit committee also undertakes a formal assessment of the auditors’ independence each year which includes: a review of any non-audit services provided to the company; discussion with the auditors of all relationships with the company and any other parties that could affect independence or the perception of independence; a review of the auditors’ own procedures for ensuring the independence of the audit firm and partners and staff involved in the audit including the regular rotation of the audit partner; and obtaining written confirmation from the auditors that, in their professional judgement, they are independent. 10 Annual Report and Financial Statements 2009 Karelian Diamond Resources Internal control Communication with shareholders The board of directors is responsible for, and Extensive information about the company and its annually reviews, the company’s systems of internal activities is given in the annual report and financial control, financial and otherwise. Such systems statements. Further information is available on the provide reasonable but not absolute assurance of the company’s website, kareliandiamondresources. safeguarding of assets, the maintenance of proper com, which is promptly updated whenever accounting records and the reliability of financial announcements or press releases are made. information. The board considers it inappropriate to establish an internal audit function at present because of the company’s limited operations; however this decision is reviewed annually. The chairman holds meetings with substantial shareholders at least once a year, more often when appropriate, and other directors frequently join these and other meetings with smaller There are no significant issues disclosed in the shareholders. Every effort is made to reply promptly report and financial statements for the year ended and effectively to enquiries from shareholders on 31 May 2009 and up to the date of approval of the matters relating to their shareholdings and the report and financial statements that have required business of the company. the board to deal with any related material internal control issues. The directors confirm that the board has reviewed the effectiveness of the system of internal control as operated during the year. Risks and uncertainties In reviewing the risks facing the company, the board considers it is reasonably close to the company’s operations and aware of its activities to be able to adequately monitor risk without the establishment of any formal process. The company may become subject to risks against which it cannot insure or against which it may elect not to insure because of high premium costs or other reasons. The board believes the significant risks facing the company are adequately disclosed in these financial statements and that there are no other risks of comparable magnitude which need to be disclosed. Annual Report and Financial Statements 2009 Karelian Diamond Resources 11 Independent Auditor's Report To the Members of Karelian Diamond Resources PLC We have audited the financial statements of the company; and whether the information given Karelian Diamond Resources Plc for the year in the Report of the Directors is consistent with ended 31 May 2009 which comprise the Income the financial statements. In addition, we state Statement, the Balance Sheet, the Cash Flow whether we have obtained all the information and Statement, the Statement of Changes in Equity explanations necessary for the purpose of our audit and the related notes 1 to 20. These financial and whether the company’s balance sheet and its statements have been prepared under the income statement are in agreement with the books accounting policies set out therein. of account. This report is made solely to the company’s We also report to you if, in our opinion, any members, as a body, in accordance with Section information specified by law regarding directors’ 193 the Companies Act, 1990. Our audit work has remuneration and directors’ transactions is not been undertaken so that we might state to the disclosed and, where practicable, include such company’s members those matters we are required information in our report. 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 auditors The Directors are responsible, as set out in the Statement of Directors Responsibilities, for preparing the Annual Report including the preparation of the financial statements in accordance with applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. Although not required to do so, the directors have voluntarily chosen to make a corporate governance statement. We are not required to consider whether the boards’ statements on internal control cover all risks and controls, or form an opinion on the effectiveness of the company’s corporate governance statement. We read the other information contained in the annual report and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. The other information comprises only the Chairman’s Statement, the Report of the Directors and the Corporate Governance Statement. Our responsibilities Our responsibility, as independent auditor, is to audit do not extend to other information. the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). Basis of audit opinion We conducted our audit in accordance with We report to you our opinion as to whether the International Standards on Auditing (UK and Ireland) financial statements give a true and fair view, in issued by the Auditing Practices Board. An audit accordance with IFRSs as adopted by the European includes examination, on a test basis, of evidence Union, and are properly prepared in accordance relevant to the amounts and disclosures in the with Irish statute comprising the Companies Acts, financial statements. It also includes an assessment 1963 to 2009. We also report to you whether in of the significant estimates and judgments made our opinion: proper books of account have been by the directors in the preparation of the financial kept by the company; whether, at the balance sheet statements and of whether the accounting policies date, there exists a financial situation requiring the are appropriate to the company’s circumstances, convening of an extraordinary general meeting of consistently applied and adequately disclosed. 12 Annual Report and Financial Statements 2009 Karelian Diamond Resources We planned and performed our audit so as to We have obtained all the information and obtain all the information and explanations which explanations we considered necessary for the we considered necessary in order to provide us with purpose of our audit. In our opinion proper books sufficient evidence to give reasonable assurance of account have been kept by the company. The that the financial statements are free from material company’s balance sheet and income statement are misstatement, whether caused by fraud or other in agreement with the books of account. irregularity or error. In forming our opinion we evaluated the overall adequacy of the presentation of information in the financial statements. Opinion In our opinion the financial statements: n give a true and fair view, in accordance with IFRSs as adopted by the European Union of the state of the affairs of the company as at 31 May 2009 and of the loss for the year then ended; and n have been properly prepared in accordance with the Companies Acts, 1963 to 2009. In our opinion the information given in the Report of the Directors is consistent with the financial statements. The net assets of the company, as stated in the balance sheet are more than half the amount of its called-up share capital and, in our opinion, on that basis there did not exist at 31 May 2009 a financial situation which, under Section 40(1) of the Companies (Amendment) Act, 1983, would require the convening of an extraordinary general meeting of the company. Emphasis of Matter – Valuation of Intangible Assets Deloitte & Touche Chartered Accountants and Registered Auditors Without qualifying our opinion, we draw your Limerick 5 November 2009 attention to the disclosures made in Notes 2 and 7 concerning the realisation of exploration and evaluation assets included as intangible assets in the balance sheet. The realisation of these assets is dependent on the successful further development and ultimate production of the mineral reserves and the continued availability of adequate finance. The financial statements do not include any adjustments in relation to these uncertainties and the ultimate outcome cannot at present be determined. Annual Report and Financial Statements 2009 Karelian Diamond Resources 13 Income Statement For the year ended 31 May 2009 OPERATING EXPENSES Other Income LOSS BEFORE TAX Taxation LOSS RETAINED FOR THE YEAR Loss per ordinary share R.T.W.L. Conroy Director J.P. Jones Director Approved by the Directors on 5 November 2009. Note 2009 € 2008 € 3 4 5 6 (194,342) (280,720) 216 12,082 (194,126) (268,638) - - (194,126) (268,638) (€0.0032) (€0.0046) 14 Balance Sheet As at 31 May 2009 ASSETS Non-current Assets Intangible assets Financial assets Property, plant and equipment Current Assets Trade and other receivables Cash and cash equivalents Total Assets EQUITY AND LIABILITIES Capital and Reserves Called up share capital Share premium Share based payments reserve Retained earnings Total Equity Note 2009 € 2008 € 7 8 9 10 13 13 4,883,865 4 1,089 4,221,785 4 1,173 4,884,958 4,222,962 10,222 7,666 50,441 35,430 17,888 85,871 4,902,846 4,308,833 605,416 3,801,202 128,685 (822,991) 605,416 3,801,202 87,626 (628,865) 3,712,312 3,865,379 Non-current Liabilities Trade and other payables: Amounts falling due after more than one year 12 719,993 238,022 Total Non-current Liabilities 719,993 238,022 Current Liabilities Trade and other payables: Amounts falling due within one year 11 470,541 205,432 470,541 205,432 1,190,534 443,454 4,902,846 4,308,833 Total Current Liabilities Total Liabilities Total Equity and Liabilities R.T.W.L. Conroy Director J.P. Jones Director Approved by the Directors on 5 November 2009. 15 Cash Flow Statement For the year ended 31 May 2009 Note 2009 € 2008 € Cash generated by/(used in) operations 14 118,876 (196,010) Tax paid - - Net cash generated by/(used in) operating activities 118,876 (196,010) Cash flows from investing activities Investment in exploration and evaluation Net cash used in investing activities Cash flows from financing activities Issue of share capital Shareholder loans Net cash generated from financing activities Decrease in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year (628,611) (553,053) (628,611) (553,053) - 481,971 1,429,254 (760,163) 481,971 669,091 (27,764) 35,430 (79,972) 115,402 7,666 35,430 16 Statement of Changes in Equity For the year ended 31 May 2009 At 1 June 2007 Issue of shares Share-based payments Loss for the year Share Capital € Share Premium € Share-based Payment Reserve € Retained Earnings (Deficit) € Total Equity € 447,716 157,700 - - 2,529,648 1,271,554 - - 24,600 - 63,026 - (360,227) - - (268,638) 2,641,737 1,429,254 63,026 (268,638) At 31 May 2008 605,416 3,801,202 87,626 (628,865) 3,865,379 At 1 June 2008 Share-based payments Loss for the year 605,416 - - 3,801,202 - - 87,626 41,059 - (628,865) - (194,126) 3,865,379 41,059 (194,126) At 31 May 2009 605,416 3,801,202 128,685 (822,991) 3,712,312 SHARE CAPITAL The share capital comprises of share capital issued for cash and non-cash consideration. SHARE PREMIUM The share premium reserve comprises of the excess consideration received in respect of share capital over the nominal value of shares issued. SHARE BASED PAYMENT RESERVE The share based payment reserve represents the amount expensed to the income statement and the amount capitalised as part of intangible assets of share-based payments granted which are not yet exercised and issued as shares. 17 Notes to the Financial Statements For the year ended 31 May 2009 1. ACCOUNTING POLICIES The financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union and interpretations adopted by the International Accounting Standards Board. These financial statements have also been prepared in accordance with the Companies Acts, 1963 to 2009. The financial statements are prepared under the historical cost convention. ADOPTION OF NEW AND REVISED STANDARDS Three interpretations issued by the International Financial Reporting Interpretations Committee are effective for the current period. These are: IFRS 2 Group and Treasury Share Transactions IFRIC 11 IFRIC 12 Service Concession Agreements IFRIC 14 IAS19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction. STANDARDS AND INTERPRETATIONS IN ISSUE NOT YET ADOPTED At the date of authorisation of these financial statements, other than the standards and interpretations adopted by the company in advance of their effective dates, the following Standards and Interpretations were in issue but not yet adopted: IAS 1 IAS 23 IAS 27 (Amendment) Presentation of Financial Statements (effective for accounting periods beginning on or after 1 January 2009) (Amendment) Borrowing Cost (effective for accounting periods beginning on or after 1 January 2009) (Amendment) Consolidated and Separate Financial Statements (effective for accounting periods beginning on or after 1 July 2009) IFRS1 IFRS1 & IAS 27 IAS 39 IAS 32 & (Amendment) Puttable Financial Instruments and Obligations Arising on Liquidation (effective for accounting periods beginning on or after 1 January 2009) IAS 1 (Amendment) Classification of rights issues (effective for accounting periods beginning on or after IAS 32 1 February 2010) (Amendment) Cost of investment in subsidiary, jointly controlled entity or Associates (effective for accounting periods beginning on or after 1 January 2009) (Amendment) Eligible hedged items (effective for accounting periods beginning on or after 1 July 2009) (Amendment) First time adoption of Financial Reporting Standards (effective for accounting periods on or after 1 July 2009) Amendments to IFRS1 Additional Exemptions for First-Time Adopters (effective for accounting periods on or after 1 January 2010) (Amendment) Vesting conditions and cancellations (effective for accounting periods on or after 1 January 2009) Amendments to IFRS2 Group Cash-settled Share-based payment Transactions (effective for accounting periods on or after 1 January 2010) Business Combinations (effective for accounting periods beginning on or after 1 July 2009) (Amendment) Improving Disclosures about Financial Instruments (effective for accounting periods on or after January 2009) IFRS3 IFRS7 IFRS2 IFRIC 13 Customer Loyalty Programmes (effective for accounting periods beginning on or after 1 July 2008) IFRIC 15 Agreements for the Construction of Real Estate (effective for accounting periods beginning on or after 1 January 2009) IFRIC 16 Hedges of Net Assets in a Foreign Operation (effective for accounting periods beginning on or after 1 October 2008) IFRIC 17 Distribution of Non-Cash Assets to Owners (effective for accounting periods beginning on or after 1 July 2009) IFRIC 18 Transfers of Assets from Customers (effective for accounting periods on or after 1 July 2009) 18 The directors have completed an initial assessment of the impact in relation to the adoption of these Standards and Interpretations for future periods of the Company. The Directors are currently assessing the impact which IFRS 8 – Operating Segments, will have on the company. Initial discussions have taken place to identify the relevant operating segments. On adoption of the standard the reportable segments will be identified for all future financial statements. Apart from IFRS 8, in the opinion of the Directors, the other standards and interpretations will have no material impact on the financial statements of the Company in the period of initial application. A. Intangible Assets The Company accounts for mineral expenditure in accordance with International Financial Reporting Standard 6 – Exploration For and Evaluation of Mineral Resources. (i) Capitalisation Certain costs (other than payments to acquire the legal rights to explore) incurred prior to acquiring the rights to explore are charged directly to the income statement. Exploration, appraisal and development expenditure incurred on exploring, and testing exploration prospects are accumulated and capitalised as intangible exploration and evaluation (E&E) assets. Capitalised costs include geological and geophysical costs, and other direct costs of exploration (drilling, trenching, sampling and technical feasibility and commercial viability activities). In addition, capitalised costs includes an allocation from operating expenses, including share based payments, all such costs are directly related to exploration and evaluation activities. E&E costs are not amortised prior to the conclusion of appraisal activities. At completion of appraisal activities if technical feasibility is demonstrated and commercial reserves are discovered, then the carrying amount of the relevant E&E asset will be reclassified as a development and production asset, once the carrying value of the asset has been assessed for impairment. If following completion of appraisal activities in an area, it is not possible to determine technical feasibility and commercial viability, or if the right to explore expires, then the costs of such unsuccessful exploration and evaluation is written off to the income statement in the period in which the event occurred. (ii) Impairment If facts and circumstances indicate that the carrying value of an E&E asset may exceed its recoverable amount, an impairment review is performed. The following are indicators of impairment. - The 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 made to discontinue exploration and evaluation in an area, because of the absence of commercial reserves. - Sufficient data exists to indicate that the book value will not be fully recovered from future development and production. For E&E assets, where the above indicators exist, an impairment test is carried out. The E&E assets are categorised into Cash Generating Units (“CGU”). The carrying value of the CGU is compared to its recoverable amount and the resulting impairment loss is written off to the income statement. The recoverable amount of the CGU is assessed as the higher of its fair value, less costs to sell, and its value in use. B. Issue Expenses Issue expenses arising on the issue of equity securities are accounted for as a deduction from equity against the share premium account net of any income tax benefit. C. Property, Plant and Equipment Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses. Depreciation is provided on a straight line basis to write off the cost less estimated residual value of the assets over their estimated useful lives as follows: Plant and office equipment 10 years 19 D. Taxation The tax expense represents the sum of the current and deferred tax charge. The tax currently payable is based on taxable profits for the year. Taxable profit differs from net profit or loss as reported in the income statement because it excludes items of income or expenditure that are taxable or deductible in other years and it further excludes items that are not taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base used in the computation of taxable profit and is accounted for using the balance sheet liabilities method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also taken directly to equity. E. Share Based Payments The company has applied the requirements of IFRS 2 “Share-Based Payments”. In accordance with the transitional provisions, IFRS 2 has been applied to all grants of equity instruments after 7 November 2002 that were unvested at 1 June 2006. For equity-settled share based payment transactions (i.e. the granting of share options and share warrants), the company measures the services and the corresponding increase in equity at fair value at the measurement date (which is the grant date) using a recognised valuation methodology for the pricing of financial instruments (Binomial Lattice Model). Given that the share options, and warrants granted do not vest until the completion of a specified period of service the fair value is determined on the basis that the services to be rendered by employees as consideration for the granting of share options and warrants will be received over the vesting period, which is assessed as the grant date. The fair value determined at the grant date of the equity settled share based payments is expensed on a straight line basis over the vesting period, based on the company’s estimate of equity instruments that will eventually vest. F. Revenue recognition Revenue is measured at the fair value of the consideration received or receivable. G. Trade and other receivables and payables Trade and other receivables and payables are measured at initial recognition at fair value, and subsequently measured at amortised cost. H. Cash and cash equivalents Cash and cash equivalents consist of cash at bank held by the company and short term bank deposits with a maturity of three months or less. Cash and cash equivalents are held for the purpose of meeting short term cash commitments. I. Pension costs The company provides for certain employees through defined contribution pension schemes. The amounts charged to the income statement and balance sheet is the contribution payable in that year. Any difference between amounts charged and contributions paid to the pension scheme is included in receivables or payables at the balance sheet. 20 J. Critical accounting judgments and key sources of estimation uncertainty Critical judgments in applying the company’s accounting policies In the process of applying the company’s accounting policies above, management has identified the judgmental areas that have the most significant effect on the amounts recognised in the financial statements (apart from those involving estimations, which are dealt with below): Exploration and evaluation The assessment of whether general administration costs and salary costs are capitalised or expensed involves judgement. Management consider the nature of each cost incurred and whether it is deemed appropriate to capitalise it within intangible assets. In addition there is uncertainty as to whether the exploration activity will yield any economical viable discovery. Impairment of intangible assets If an indicator of impairment exists (as outlined in the Intangible Assets accounting policy), the exploration and evaluation assets need to be allocated into Cash Generating Units. The determination of what constitutes a cash generating unit requires judgment. Once this is decided, the carrying value of each cash generating unit is compared to its recoverable amount. The recoverable amount of the CGU is assessed as the higher of its fair value, less costs to sell, and its value in use. The determination of value in use requires the following judgments: - Estimation of future cash flows expected to be derived from the asset. - Expectation about possible variations in the amount or timing of the future cash flows. - The determination of an appropriate discount rate. Going concern The preparation of the financial statements requires an assessment on the validity of the going concern assumption. The validity of the going concern assumption is dependent on finance being available for the continuing working capital requirements of the company and finance for the development of the company’s projects becoming available. Based on financial support received to date from the shareholders, and their financial commitment to continue to support the company for a period of at least twelve months from the date of approval of these financial statements, the directors believe that the going concern basis is appropriate for these financial statements. Should the going concern basis not be appropriate, adjustments would have to be made to reduce the value of the company’s assets, in particular the intangible fixed assets, to their realisable values. Key sources of estimation uncertainty The preparation of the financial statements requires management to make estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for revenues and expenses during the year. The nature of estimation means that actual outcomes could differ from those estimates. The key sources of estimation uncertainty that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. Share-based payments The estimation of share-based payment costs requires the selection of an appropriate valuation model and consideration as to the inputs necessary for the valuation model chosen. The Company has made estimates as to the volatility of its own shares, the probable life of options granted and the time of exercise of those options. The model used by the Company is the Binomial Lattice Model. 2. GOING CONCERN Mineral exploration and evaluation costs capitalised as intangible assets amounted to €4,883,865 (Note 7) at the balance sheet date. The directors recognise that the future realisation of intangible assets is dependent on the successful further development and ultimate production of the mineral reserves and the availability of sufficient finance to bring the reserves to economic maturity and profitability. The directors have reviewed the projected cash flows for the company and on the basis of the capital funding achieved to date and existing commitments for further capital funding received from the shareholders, together with their review of projected cash flow information and taking into account the high potential of the acreage under licence, they consider it appropriate to prepare the financial statements on a going concern basis. The financial statements do not include any adjustments to the carrying amount, or classification of assets and liabilities, if the company was unable to continue as a going concern. 21 3. OPERATING EXPENSES Operating expenses Transfer to intangible assets (Note 7) Operating expenses are analysed as follows: Wages and salaries Share based payments Depreciation Loan interest Auditors remuneration Other operating expenses 2009 € 514,238 (319,896) 2008 € 493,006 (212,286) 194,342 280,720 2009 € 274,292 41,059 84 39,363 10,000 149,440 2008 € 162,096 63,026 168 33,113 13,500 221,103 514,238 493,006 Of the above costs, a total of €319,896 (2008: €212,286) is allocated to intangible assets. (a) Wages and salaries as disclosed above is analysed as follows: Wages and salaries Social welfare costs Pension costs 2009 € 215,063 20,979 38,250 2008 € 109,039 30,557 22,500 274,292 162,096 The total share based payment charge of €41,059 (2008: €63,026) is accounted for as shown below: Share based payment charge expensed to income statement Share based payment charge transferred to intangible assets 2009 € 7,590 33,469 2008 € 12,017 51,009 41,059 63,026 In the opinion of the directors, approximately eighty per cent of the share based payment charge is directly related to exploration and evaluation activities, and has been capitalised within intangible assets. (b) During the previous year, the directors agreed that actual remuneration due up to 30 November 2007 be waived. Fees and other remuneration for the six months from 1 December 2007 has been accrued in the previous year and in full for the current year. 22 4. LOSS BEFORE TAX The loss before tax is arrived at after charging the following items, which are stated at amounts prior to the transfer to intangible assets: Directors’ remuneration - Fees - Other emoluments (including pension) Share based payments Auditors’ remuneration – audit services Depreciation 2009 € 2008 € 71,075 195,097 50,538 139,569 41,059 10,000 84 63,026 13,500 168 The directors’ remuneration charged during the year included stock option costs of €34,735 (2008: €42,069). 5. TAXATION (a) Analysis of the taxation charge for the year Irish corporation tax Based on adjusted loss for the year Total current tax 2009 € 2008 € - - - - - - No taxation charge arises in the financial year due to a loss being incurred in the current year. (b) Factors affecting the tax charge for the year: The tax due for the year is different to the standard rate of Irish corporation tax. This is due to the following: Loss on ordinary activities before tax Loss on ordinary activities multiplied by the standard rate of Irish corporation tax of 12.5% (2008: 12.5%) Effects of: Losses carried forward for future utilisation Tax charge for the year 2009 € 2008 € (194,126) (268,638) (24,266) (33,580) 24,266 33,580 - - No deferred tax asset has been recognised on accumulated tax losses as it cannot be considered probable that future taxable profit will be available against which the deferred tax asset can be utilised. The amount not recognised amounts to €456,583 (2008: €359,891). 6. LOSS PER ORDINARY SHARE The calculation of the loss per ordinary share of €0.0032 (2008: €0.0046) is based on the loss for the financial year of €194,126 (2008: €268,638) and the weighted average number of ordinary shares on a basic and fully diluted basis during the year of 60,541,676 (2008: 57,913,343). The effect of share options and warrants is anti-dilutive. 23 7. INTANGIBLE ASSETS Exploration and evaluation: Cost At 1 June Expenditure during the year - licence and appraisal costs - other operating costs (Note 3) - equity settled share based payments (Note 3) At 31 May 2009 € 2008 € 4,221,785 3,617,723 342,184 286,427 33,469 391,776 161,277 51,009 4,883,865 4,221,785 Exploration and evaluation assets relate to expenditure incurred in the development of mineral exploration opportunities. The directors are aware that by its nature there is an inherent uncertainty in exploration and evaluation, and, consequently, in relation to the carrying value of capitalised exploration and evaluation assets. The realisation of these intangible assets is dependent on the successful discovery and development of economic reserves. The Directors have considered the proposed work programmes for these mineral reserves. They are satisfied that there are no indications of impairment, but none the less recognise that future realisation of the intangible assets, is dependent on further successful exploration and appraisal activities and the subsequent economic production of the mineral reserves. 8. FINANCIAL ASSETS Investment in subsidiaries 2009 € 4 2008 € 4 Financial assets represent investments of €2 in each of the company’s wholly owned subsidiary undertakings, Karelian Diamonds Limited and Nordic Diamonds Limited. The net assets of each entity is €2. Certain diamond claims in Finland are held in the name of the company’s subsidiaries. The registered office of both non-trading subsidiaries is 10 Upper Pembroke Street, Dublin 2. The above subsidiaries have not been consolidated on the basis that they are not trading, and the net assets of each entity is €2. 9. PROPERTY, PLANT AND EQUIPMENT Plant & Office Equipment Cost At 1 June Additions At 31 May Accumulated Depreciation At 1 June Charge for the year At 31 May 2009 € 1,677 - 1,677 504 84 588 2008 € 1,677 - 1,677 336 168 504 Net Book Amount at 31 May 1,089 1,173 24 10. TRADE AND OTHER RECEIVABLES VAT receivable 11. TRADE AND OTHER PAYABLES: (Amounts falling due within one year) Accrued director’s remuneration - fees and other emoluments - pension contributions Other accruals 2009 € 2008 € 10,222 50,441 10,222 50,441 2009 € 324,112 38,250 108,179 2008 € 110,000 22,500 72,932 470,541 205,432 It is the company’s normal practice to agree terms of transactions, including payment terms, with suppliers and provided suppliers perform in accordance with the agreed terms, it is the company’s policy that payment is made according to the agreed terms. The company has financial risk management policies in place to ensure that all payables are paid within the credit timeframe. The carrying value of the trade and other payables approximates to their fair value. 12. TRADE AND OTHER PAYABLES: (Amounts falling due after more than one year) Shareholder loans Opening balance Funds advanced Loan amount repaid 2009 € 2008 € 238,022 481,971 - 1,031,298 75,000 (868,276) 719,993 238,022 The immediate funding requirements of the company have been financed by advances from the principal shareholder. None of the above loans are repayable on demand. Interest at a rate of 8.25% per annum is accrued on all amounts advanced. The accrued interest for the year ended 31 May 2009 is €72,476 (2008: €33,113). The accrued interest is included within other accruals in Note 11 above. 13. CALLED UP SHARE CAPITAL AND PREMIUM Authorised: 2009 € 2008 € 500,000,000 ordinary shares of €0.01 each 5,000,000 5,000,000 Issued and Fully Paid: Share Number Share Capital € Premium € At start and end of year 60,541,676 605,416 3,801,202 25 13. CALLED UP SHARE CAPITAL AND PREMIUM continued (a) At 31 May 2008 and 31 May 2009 warrants over 4,000,000 shares exercisable at 5p sterling at any time up to 1 September 2015 were outstanding. (b) At 31 May 2008 and 31 May 2009, warrants over 12,852,677 shares exercisable at €0.10 at any time up to 16 November 2017 were outstanding. (c) At 31 May 2008 and 31 May 2009, warrants over 1,833,333 shares exercisable at 10p sterling at any time up to 17 July 2010 were outstanding. (d) At 31 May 2008 and 31 May 2009, options had been issued over 2,000,000 shares. These options are exercisable at prices ranging from €0.0761 to €0.0975 and expire between 16 April 2017 and 14 January 2018. (e) The share price at 31 May 2009 was 3.25p sterling. During the year the price ranged from 2.5p to 8.75p sterling. 14. NOTE TO THE CASHFLOW STATEMENT Reconciliation of Operating Loss to Net Cash generated by/(used in) Operations: Operating loss Depreciation Expense recognised in income statement in respect of equity settled share based payments Increase in creditors Decrease/(increase) in debtors Net cash generated by/(used in) operations 2009 € 2008 € (194,126) 84 (268,638) 168 7,590 265,109 40,219 12,017 108,560 (48,117) 118,876 (196,010) 15. COMMITMENTS AND CONTINGENCIES At 31 May 2009 there were no capital commitments or contingent liabilities. 16. RELATED PARTY TRANSACTIONS The company shares accommodation with Conroy Diamonds and Gold Plc, which has certain common shareholders and directors. For the year ended 31 May 2009, Karelian Diamond Resources Plc, incurred rent and related expenses of €15,474. The total cost incurred was €61,185. 26 17. SHARE BASED PAYMENTS The company operates a share option scheme for employees who devote a substantial amount of their time to the business of the company. Options granted generally have a vesting period of ten years. Details of the share options outstanding during the year are as follows: 1 June Granted during year Exercised during year Lapsed during year 31 May 2009 Weighted Average Exercise Price € 0.0803 - - - 0.0803 No. of Share Options 2,000,000 - - - 2,000,000 2008 Weighted Average Exercise Price € 0.0975 0.0761 - - 0.0803 No. of Share Options 400,000 1,600,000 - - 2,000,000 Warrants granted generally have a vesting period of ten years. Details of the warrants outstanding during the year are as follows: 1 June Granted during year Exercised during year Lapsed during year 31 May 18,686,010 - - - 18,686,010 No. of Share Warrants 2009 Weighted Average Exercise No. of Share Price Warrants € 0.0872 4,000,000 - 14,686,010 - - - - 0.0872 18,686,010 2008 Weighted Average Exercise Price € 0.0735 0.1000 - - 0.0872 The company estimated the fair value of employee stock options and warrants awards using the Binomial Lattice Model. The determination of the fair value of share based payment awards on the date of grant using the Binomial Lattice Model is affected by Karelian Diamond Resources Plc stock price as well as assumptions regarding a number of subjective variables. These variables include the expected term of the awards, the expected stock price volatility over the term of the awards, the risk free interest rate associated with the expected term of the awards and the expected dividends. In 2009, the company’s Binomial Lattice Model included the following weighted average assumptions for the company’s employee stock option and warrants. Dividend yield Expected volatility Risk free interest rate Expected life (in years) 2009 Stock options 2009 Stock warrants 2008 Stock options 2008 Stock warrants 0% 70% 4.2% 10 0% 70% 4.1% 10 0% 70% 4.2% 10 0% 70% 4.1% 10 This calculation results in a share based payments reserve movement of €41,059 (2008: €63,026). 27 18. CONTROLLING PARTY The control of Karelian Diamond Resources Plc is held by the following shareholder: Name Number of ordinary shares % Professor Conroy 37,031,701* 61.17% *Of the 37,031,701 ordinary shares held by Professor Conroy, 30,815,080 are held by Conroy Plc, a company in which Professor Conroy has a controlling interest. 19. POST BALANCE SHEET EVENTS There are no important events since year end which need to be disclosed within these financial statements. 20. APPROVAL OF FINANCIAL STATEMENTS These financial statements were approved by the Board on 5 November 2009 28 10 Upper Pembroke Street Dublin 2 Tel: 353-1-661 8958 Fax: 353-1-662 1213 For further information visit the Company’s website at: www.kareliandiamondresources.com or contact: Lothbury Financial Triton Court, Finsbury Square London EC2A 1BR Tel: +44-20-7011-9411