MAXIMUS RESOURCES LIMITED ANNUAL REPORT 2014 CORPORATE DIRECTORY Maximus Resources Limited ABN 74 111 977 354 CONTENTS DIRECTORS Robert Michael Kennedy (Non-executive Chairman) Kevin Malaxos (Managing Director) Leigh Carol McClusky (Non-executive Director) Ewan John Vickery (Non-executive Director) Nicholas John Smart (Alternate for Mr Vickery) COMPANY SECRETARY Rajita Alwis REGISTERED OFFICE Level 3, 100 Pirie Street Adelaide South Australia 5000 PRINCIPAL OFFICE Level 3, 100 Pirie Street Adelaide South Australia 5000 Telephone +61 8 7324 3172 Facsimile +61 8 8312 5501 SOLICITORS DMAW Lawyers Level 3, 80 King William Street Adelaide South Australia 5000 Telephone +61 8 8210 2222 Facsimile +61 8 8210 2233 Minter Ellison Lawyers Level 10, 25 Grenfell Street Adelaide South Australia 5000 Telephone +61 8 8233 5555 Facsimile +61 8 8233 5556 SHARE REGISTRY Computershare Investor Services Level 5, 115 Grenfell Street Adelaide South Australia 5000 Telephone +61 8 8236 2300 Facsimile +61 8 8236 2305 AUDITOR Grant Thornton 67 Greenhill Road Wayville South Australia 5034 BANKER National Australia Bank 48 Greenhill Road Wayville South Australia 5034 STOCK EXCHANGE LISTING Australia Securities Exchange (Adelaide) Maximus Resources Limited shares are listed on the Australian Securities Exchange ASX code: MXR WEBSITE www.maximusresources.com The website includes information about the Company, its strategies, projects, reports and ASX announcements. 2 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 CHAIRMAN’S LETTER MANAGING DIRECTOR’S REPORT TENEMENT SCHEDULE FINANCIAL REPORT DIRECTORS’ REPORT AUDITOR’S INDEPENDENCE DECLARATION CORPORATE GOVERNANCE STATEMENT FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONSOLIDATED STATEMENT OF CASH FLOWS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DIRECTORS’ DECLARATION INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS ASX ADDITIONAL INFORMATION 3 4 7 8 9 18 19 23 24 25 26 27 50 51 54 COMPLIANCE STATEMENTS Disclaimer This Annual Report contains forward looking statements that are subject to risk factors associated with the exploration and mining industry. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a variety of variables which could cause actual results or trends to differ materially. Exploration Targets Exploration Targets are reported according to Clause 18 of the JORC Code, 2004. This means that the potential quantity and grade is conceptual in nature and that there has been insufficient exploration to define a Mineral Resource and that it is uncertain if further exploration will result in the determination of a Mineral Resource. Competent Person The information in this report relating to Exploration Results, Mineral Resources and Ore Reserves is based on information compiled by Mr Steven Cooper who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Cooper is a consultant to Maximus Resources Limited. He has sufficient experience that is relevant to the styles of mineralisation and types of deposit under consideration and consents to the inclusion of the information in this report in the form and context in which it appears. Mr Cooper qualifies as a Competent Person as defined in the 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code). CHAIRMAN’S LETTER Dear Fellow Shareholders As you are aware, the past year has been a difficult one for In November last year, we announced that agreement in principle the resources sector, with falling commodity prices, escalating had been reached with Monax Alliance Pty Ltd (a wholly costs and tight capital markets; almost the perfect storm for owned subsidiary of Monax Mining Ltd) and a Memorandum of the resources sector. However, your company was able to Understanding (or MoU) signed that provided Monax with a six progress a number of opportunities throughout the year, without month exclusive period to conduct Due Diligence on the four (4) the requirement to raise capital and still achieve encouraging Millers Creek tenements held by Maximus. During the exclusivity exploration outcomes particularly from our ongoing exploration period, Monax retained the option to enter into a Farm-in program at the highly prospective Narndee project in Western Agreement with Maximus. The Farm-in Agreement entitled Australia. I reported to shareholders last year that until markets improve and we can raise additional capital our strategy is to seek joint Monax Alliance to earn up to 80% interest in the Millers Creek project by investing US$3 million on exploration activities on the tenements within a three year period. venture parties or sell projects with a view to retaining some In May this year, Monax exercised its option to enter into a upside for the company. Your Managing Director continued to Farm-in Agreement with Maximus, and earn up to 80% interest pursue this core objective throughout the year, achieving two in the Millers Creek tenements through investing US$3 million in significant transactions. The first of these involved the sale of five (5) of the nine (9) tenements held by Maximus in the Adelaide Hills package here in South Australia, including the Bird in Hand project to Terramin exploration over the next three years. Preparation of the Farm- in Agreement is progressing and I hope to be in a position to confirm the details of the transaction during this years’ Annual General Meeting for Shareholders. Exploration Limited, a wholly owned subsidiary of Terramin During the Due Diligence period, Monax undertook a detailed Australia Limited. This transaction was completed in October review of historical information and identified several IOCGU 2013 and secured a cash payment of $1.5 million plus 25 million style targets before committing to a ground gravity survey in May fully paid ordinary shares in Terramin Australia Ltd, plus two this year. The ground gravity survey confirmed that a minimum further contingent payments of $1 million each and a royalty of six targets remain to be tested on the four tenements, with the on gold production. We continue to monitor the progress of highest priority target to be drill tested as soon as the Farm-in Terramin as it addresses community and environmental issues Agreement is signed and an open access window is available to on the Bird in Hand project. the WPA. The second transaction involves the 100% interest in the The Farm-in Agreement with Monax provides some certainty Millers Creek Project (formerly Billa Kalina project) located in around the exploration expenditure commitments for the the Woomera Prohibited Area (or WPA) in the highly prospective Millers Creek project for the next three years, provided we have Gawler Craton region in South Australia. After the termination of continued exploration success, whilst retaining significant upside the Farm-in Agreement with Tychean Resources Ltd (formerly to Maximus shareholders as the project develops. ERO Mining Ltd) in May 2013, we pursued other parties with interest in IOCGU style mineralisation. We continue to explore on our Narndee tenements in Western Australia, with recent drill programs targeting predominantly base metals including copper, lead and zinc in the southern tenement E59/908 located approximately 100 km south, south east of Mt Magnet and gold targets on the northern tenements east of Mt Magnet. MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 3 Results from our first two drilling programs on Narndee in 2012 Your company continues to review opportunities that are and 2013 identified massive sulphide mineralisation with assays presented to either secure a project or take an interest in of high grade zinc and copper. An extensive soil sampling worthwhile projects, but to-date none of those presented or program was undertaken followed-up by an Induced Polarisation reviewed warrant further action. We will continue to review other survey in January this year to identify targets for the proposed projects, particularly in the current environment, provided that third drill program recently completed in August of this year. they present a low risk production option for your company. Once again, the drilling intersected high massive sulphide results We continue to operate on minimal budget overheads in in several holes, along with further high grade zinc and copper order to conserve our capital for exploration whilst meeting intersections. In addition, significant widths of mineralisation an acceptable standard for a listed company. Our Managing were intersected including 10 metres of continuous anomalous Director has worked diligently to progress our exploration within copper in one hole, including anomalous zinc and lead assays. the capital constraints. I commend his report to you which will Ongoing success with our exploration at Narndee reaffirms our expand on our projects. views that we are on the cusp of a significant breakthrough It remains for me to thank shareholders, my fellow Directors, staff on our tenements. With persistence and a little luck, which and contractors for their assistance and support in what has historically plays a part in any exploration program, we will been another difficult year. I look forward to further exploration continue to build on the significant results to-date at Narndee success, both directly and also in collaboration with Joint and eventually our persistence should pay off with a significant Venture assets and your continued support for Maximus for the discovery. coming year. Further on-ground exploration is planned in the coming months followed by a step-out RC drill program to track the extent of the sub-horizontal mineralised zones identified to-date There remains a broad choice of gold and base metal targets across the Narndee tenement holding which we plan to explore progressively. We plan to continue to focus on this region with an Electro-magnetic (EM) survey planned later this year to identify Bob Kennedy CHAIRMAN additional drill targets, and then follow this up with the next phase of targeted RC drilling in early 2015. Market conditions have remained extremely tight throughout 2013 and 2014 but through the process of rationalising the sizable tenement holding in both South Australia and Western Australia we have reduced the burden on the company to meet the significant tenement expenditure commitments. Further deterioration in market conditions will require us to continue to do so as we attempt to maintain a hold on the most prospective areas where we have invested significant exploration funds. 4 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 MANAGING DIRECTOR’S REPORT Review of operations Continued progress throughout the 2013/2014 financial year was The Narndee tenements located in the Murchison region made by Maximus with two significant transactions achieved in Western Australia remained as the company’s primary and ongoing exploration success on the Narndee poly-metallic exploration focus with a multi-electrode resistivity/Induced tenements following the third Reverse Circulation (RC) drill Polarisation survey undertaken in January 2014 followed by program. In July 2013, Maximus signed a Binding Agreement with Terramin Exploration Pty Limited (a wholly owned subsidiary our third drilling campaign that commenced during June 2014, once approval was received from the Department of Mines & Petroleum (DMP). of Terramin Australia Limited) (ASX:TZN) for the sale of five The preliminary results from this third drilling campaign continue Adelaide Hills tenements, including the Bird in Hand project. The to provide significant confidence that the southern blocks of total transaction was valued at A$3,500,000, plus a 0.5% gross the Narndee tenement package have the potential to host a royalty on gold in excess of 50,000 Oz mined plus 25 million significant Volcanic Massive Sulphide (VMS) style Copper-Gold Terramin ordinary shares. The first payment of A$1.5 million plus orebody similar to the nearby MinMetals’ Golden Grove project. the issue of 25 million TZN shares was completed in November Assay results received post June 30 confirm the existence of at 2013 following signing of the formal Sales Agreement and least two poly-metallic structures containing high grade copper Ministerial approval for the transfer of tenements. Maximus with mineralised intersections up to 10 metres in-hole length and retains four tenements in the Adelaide Hills region and continued elevated lead and zinc intersections (see ASX announcement with modest exploration on these tenements in 2014. dated 1 September 2014). This transaction de-risked the company’s Adelaide Hills holding During 2013, several tenements within the Narndee project by eliminating any exposure to environmental or regulatory holding were relinquished due to our inability to meet the compliance and approval issues, whilst retaining upside required expenditure commitments over the exploration license exposure to future production via the remaining two contingent term. Maximus retained the core of the tenements the subject of milestone payments and the gold royalty. YANDAL Eromanga Basin NORTH GAWLER CRATON our recent exploration focus. Contact was established with the private group that subsequently secured the relinquished MXR tenements (G&M Resources Pty Ltd) with a view to documenting a Joint Venture agreement to progress exploration. Negotiation progressed throughout 2013/14 with MXR committing minor expenditure to the suite of JV tenements. In late 2014, G&M Resources determined that, due to the continuing deterioration in market conditions, it no longer wished to commit or contribute to ongoing JV exploration expenditures and that Maximus should acquire the tenements. Documentation including tenement transfer applications was prepared and submitted to the DMP in WA during September/ October. The Millers Creek Project (formerly the Billa Kalina project) originally comprised of three tenements, is located northwest Yilgarn Craton NARNDEE Figure 1 Location of activities. MILLERS CREEK of Lake Torrens in the Eromanga Basin within the Woomera Gawler Craton ADELAIDE HILLS Prohibited Area (WPA) in central South Australia. The tenements previously formed part of a Farm-in Joint Venture Agreement with Tychean Resources Ltd (formerly ERO Mining Ltd) which was terminated in May 2013 after a ground gravity survey failed to identify a suitable anomaly over the Peeweena Dam target area. MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 5 Maximus subsequently secured the adjoining tenement to the In summary, 2013/2014 was a challenging but productive west (EL 4898), and commenced negotiations with Monax year for your company, with divestment of high risk assets Alliance Pty Ltd (a wholly owned subsidiary of Monax Mining Ltd) and attracting a major international partner (through Monax to establish a Farm-in Agreement and fund exploration activities Alliance) to fund exploration on the Millers Creek tenements. across the four (4) tenements held by MXR. A Memorandum Securing Monax Alliance (which is funded by the large South of Understanding (MoU) was agreed and signed with Monax American Explorer Antofagasta) as our Joint Venturer to continue Alliance in November 2013, granting a 6 month exclusive period exploring the Millers Creek project is an exciting prospect for to conduct non-invasive exploration work and technical reviews your company. Farm-in documentation is progressing with of the Millers Creek tenements. During the exclusivity period, both groups ensuring that the documentation accurately Monax Alliance had the option to enter into a Farm-in Agreement accommodates current and future outcomes, with anticipation with MXR, to earn 80% equity in the four (4) tenements by high that all exploration preparatory work undertaken to-date spending US$3 million over a 3 year term. Monax Alliance should result in success at the project level. elected to enter into a Farm-in Agreement with MXR in May 2014, and preparation of the Farm-in Agreement documentation is progressing. Divesting the majority of the Adelaide Hills tenement package including the Bird in Hand project reduced the risk profile of Maximus whilst providing working capital required to continue The Deed of Access (Exploration) allowing Maximus access to exploring the company’s other assets. Further exploration work the Woomera Prohibited Area to conduct exploration activities on the Narndee tenements in Western Australia continued to on the Millers Creek tenements was also revised during the year produce encouraging results, including additional significant and a Deed of Amendment issued by the Commonwealth. intersections of massive sulphide mineralisation, high grade Maximus continues to hold the view that the Billa Kalina copper and zinc intersections and anomalous Lead grades. tenements remains some of the most highly prospective, but The plan for the year ahead is continued focus on progressing under explored ground in South Australia. exploration activities on the highly prospective Narndee tenements in Western Australia, finalising the Farm-in Agreement with Monax Alliance and commencement of the proposed exploration activities on the Millers Creek tenements, initial review and preliminary exploration of the Welbourn Hill Project and continued review of other projects and opportunities as they arise. In closing, I would like to once again thank all Maximus staff and contractors for their efforts and contributions throughout the year, and the Maximus shareholders for your ongoing support of the Board. Kevin Malaxos MANAGING DIRECTOR Maximus secured two (2) exploration tenements located in the northern Gawler Craton (Nicholson Hill EL 5247 and Welbourn Hill EL 5248) east of Marla along the Oodnadatta track. During an exploration program by the previous tenement holder in 2012, a gravity survey failed to produce a suitable IOCGU target of significant magnitude. However, the survey did generate targets that indicate the potential for copper targets. The Welbourn Hill tenement hosts wide zones of anomalous copper which could extend down to the top of the basement rock, at approximately 450 metres vertical. The plan is to complete surface geophysics during H2, 2014 to test two identified targets. The Marree tenement (EL 4913) situated along the margins of the Eromanga Basin in South Australia was not renewed in 2014 following a review of the exploration potential of this tenement, and no interest shown in a possible joint venture. During August 2012, MXR finalised the sale of the Sellheim project in Queensland to a private consortium. All relevant tenement transfer documentation was completed, signed and submitted in August 2012. However, it has taken two years for the three EPMs forming part of the Sale Agreement to be transferred across to the new owners, due to a series of administrative oversights by the regulator. The three EPMs were finally transferred in May 2014, and MXR retains no interest or liability in the Sellheim tenement package. 6 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 TENEMENT SCHEDULE For the year ended 30 June 2014 Tenement number Tenement name Registered holder/applicant Maximus Resources interest WESTERN AUSTRALIA NARNDEE PROJECT E58/356 E59/908 E59/1335 E58/444 E59/1917 E59/1918 SOUTH AUSTRALIA ADELAIDE HILLS PROJECT EL 4641 EL 5351 EL 5354 EL 5135 MILLERS CREEK PROJECT EL 4463 EL 4899 EL 4854 EL 4898 NORTHERN GAWLER CRATON PROJECT EL 5247 EL 5248 Mount Ford Narndee Maximus Resources Ltd Maximus Resources Ltd 4 Corner Bore Maximus Resources Ltd Brailia South Boondanoo Boondanoo Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Echunga Maximus Resources Ltd Mount Monster Maximus Resources Ltd Williamstown Mount Rufus Maximus Resources Ltd Maximus Resources Ltd Billa Kalina Maximus Resources Ltd Bamboo Lagoon Maximus Resources Ltd Millers Creek Paisley Creek Nicholson Hill Welbourn Hill Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 7 FINANCIAL REPORT For the year ended 30 June 2014 Maximus Resources Limited ABN 74 111 977 354 These financial statements are the consolidated financial statements of the consolidated entity consisting of Maximus Resources Limited and its subsidiaries. The financial statements are presented in the Australian currency. Maximus Resources Limited is a company limited by shares, is listed on the Australian Securities Exchange (ASX) under the code “MXR” and is incorporated and domiciled in Australia. The registered office and principal place of business is: Maximus Resources Limited Level 3, 100 Pirie Street Adelaide SA 5000 Registered postal address is: Maximus Resources Limited Level 3, 100 Pirie Street Adelaide SA 5000 A description of the nature of the Company’s operations and its principal activities is included in the directors’ report, on pages 9 to 10, which is not part of these financial statements. The financial statements were authorised for issue by the directors on 24/09/2014. The directors have the power to amend and reissue the financial statements. Through the use of the internet, we have ensured that our corporate reporting is timely and complete. All press releases, financial reports and other information are available on our website: www.maximusresources.com. 8 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 DIRECTORS’ REPORT Your directors present their report on Maximus Resources Limited (referred to hereafter as the Company) at the end of, or during, the year ended 30 June 2014 DIRECTORS The following persons were directors of the Company during the whole of the financial year and up to the date of this report: Robert Michael Kennedy (Non-executive chairman) Kevin John Malaxos (Managing Director) Leigh Carol McClusky (Non executive director) Ewan John Vickery (Non executive director) Nicholas John Smart (Alternate director for E J Vickery) PRINCIPAL ACTIVITIES During the year the principal activities of the Company consisted of natural resources exploration and development. Operational and financial review 1. Operating results and financial position The net result of operations of the Company for the financial year was a loss of $2,678,300 (2013: $13,080,046). This loss is significantly lower than the previous year due to an impairment charge of $12,029,940 being recorded for the 2013 year. The net assets of the Company have decreased by $2,228,299 during the financial year from $6,291,376 at 30 June 2013 to $4,063,077 at 30 June 2014. The Bird in Hand project located in the Adelaide Hills was disposed of during the year. This disposal resulted in a loss of $2.15 million being recorded. The sale of the Bird in Hand project included two contingent payments totaling $2 million. The contingent receipts have not been included in the consideration for the sale proceeds of the project (refer to note 21 Contingent Assets). DIVIDENDS There were no dividends declared or paid during the year (2013: Nil). 2. Review of Operations Narndee The Narndee tenements in Western Australia continued as the primary exploration focus for the company with an Induced Polarisation (IP) survey completed in January 2014 to identify future drill targets. This survey was followed by our third Reverse Circulation (RC) drill program commencing in June this year and consisting of a 10 hole program to test those targets identified in the earlier IP survey. A ten hole program was planned to further test the mineralised sulphide intersections reported in the phase 1 and phase 2 drilling programs plus areas identified from the IP survey undertaken in January. Preliminary visual logging results and hand held XRF results of drill chip samples confirm ongoing encouraging results with several holes recording significant copper grades and significant copper and zinc intervals. Assay results returned from the assay laboratory in Perth confirm those earlier preliminary results and contribute to our growing confidence that the area has the potential to host a significant volcanic massive sulphide (VMS) style copper-gold orebody, similar to neighbouring projects in the region, including the Golden Grove mine. The next phase of exploration is to undertake a broad ground Electro-magnetic (EM) survey to identify additional drill targets followed by a step-out drilling program to test all identified targets. Following the 3rd stage drill program on E59/908 in the southern region of the Narndee tenement block, a shallow 13 hole drill program was completed on E58/431 to commence testing for gold occurrences on the northern tenements within the Narndee tenement package. Several tenements failed to amass the required expenditure commitments over the exploration license term and were relinquished during 2012/13. Maximus retained the core of the tenements the subject of our recent exploration focus. Contact was made with the private group that secured the tenements MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 9 DIRECTORS’ REPORT (cont) relinquished by Maximus, with a view of negotiating a Joint Venture Agreement. Negotiations commenced in early 2013. However with continued worsening market conditions, the private group determined that it did not intend contributing to the ongoing exploration of these tenements and recommended that Maximus purchase the tenements for a nominal cost per tenement. Transfer documents were prepared in August 2014 and forwarded to the Department of Mines and Petroleum for action. Adelaide Hills In July 2013, Maximus signed a Binding Agreement with Terramin Australia Limited for the sale of five of the Adelaide Hills tenements, including the Bird in Hand project. The total transaction was valued at $3,500,000, plus a 0.5% gross royalty on gold in excess of 50,000 Oz mined with a gold price above A$1,000/Oz plus 25 million Terramin fully paid ordinary (FPO) shares. The first payment of $1.5 million plus 25 million shares to Maximus was completed in November 2013 following signing of the formal Sales Agreement and receipt of Ministerial approval for the transfer of the tenements. Two contingent payments remain outstanding and are dependent on Environmental approval to mine (PEPR) from the Department for State Development (DSD, formerly DMITRE) ($1 million) and the commencement of bullion production from the site ($1 million). Maximus retains four tenements in the Adelaide Hills region and has completed minor exploration activities on these tenements during 2014. Millers Creek (formerly Billa Kalina) The Millers Creek project is located north west of Lake Torrens in the Eromanga Basin within the Woomera Prohibited Area (WPA) in central South Australia. The project originally comprises three tenements and formed part of a Farm-in Joint Venture Agreement with ERO Mining Ltd. This Farm-in JV was terminated in May 2013 with Maximus retaining 100% of the project. Maximus subsequently secured a fourth contiguous tenement (previously held by ERO Mining) to include in the Millers Creek tenement package. Maximus retains all mineral rights on the tenement package. Maximus commenced negotiating a new Farm-in and Joint Venture Agreement with Monax Alliance Pty Limited (a wholly owned subsidiary of Monax Mining Ltd) to continue exploration on the Millers Creek tenements which we believe remains some of the most highly prospective, but under explored ground in South Australia. A binding Memorandum of Understanding was signed with Monax Alliance in November 2013 providing Monax Alliance a six month exclusive period to complete non-invasive exploration works on the four Millers Creek tenements prior to making a final decision to enter into a Farm-in Joint Venture Agreement. Monax Alliance notified Maximus in May 2014 of its intention to enter into a Farm-in Agreement with Maximus following completion of formal documentation. Negotiations remain ongoing, however it is anticipated that formal documentation should be signed in H1 2014/2015. Both parties have reviewed exploration work completed in the past 6 months and agreed on the initial exploration program on these tenements. Marree The Marree tenement (EL 4913) situated along the margins of the Eromanga Basin in South Australia was not renewed in 2014 following a review of the exploration potential of this tenement, and no interest shown in a possible joint venture. Sellheim The Sellheim project was sold to a private consortium for a total of $400,000 plus replacement of a $91,000 environmental bond. The transaction was finalised in August 2012. Notification was received from the Queensland Department of Natural Resources and Mines on 6th May 2014 notifying Maximus that the formal transfer of the three EPMs included in the 2012 transaction had been transferred to the new owner. Maximus now holds no interest or liability in relation to the Sellheim project. Corporate During the year an option holder exercised 27 unlisted options with an exercise price of $0.02. The exercise resulted in 27 ordinary shares being issued in February 2014. Summary 2013/2014 has been a challenging but productive year for your company. Market conditions continued to deteriorate resulting in tightening of available capital in the market, making raising working capital difficult. Additional exploration on the Narndee tenements in Western Australia provided encouraging results, confirming significant intersections of massive sulphide mineralisation, high grade copper and zinc intersections and anomalous lead grades. Divestment of several Adelaide Hills tenements, including the Bird in Hand project reduced the risk exposure of the company to environmental approval requirements and conditions, whilst providing the required working capital to continue exploration activities on the company’s other tenements. The signing of the binding MoU with Monax Alliance and the subsequent election by Monax to commit to a Farm-in Agreement once documentation is finalised and signed will facilitate renewed exploration activities to commence. We continue to believe that Millers Creek has the potential to be a significant stand-alone project for the company. 3. Significant changes in the state of affairs There have been no significant changes in the state of affairs from the 2013 financial year to 2014. 4. Events arising since the end of the reporting period There has been no transaction or event of a material and unusual nature that has arisen in the interval between the end of the financial year and the date of this report that is likely, in the opinion of the directors, to affect significantly the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial years. 5. Future business developments, prospects and business strategies The year ahead will see a continued focus on progressing exploration activities on the prospective Narndee tenements in Western Australia, continued exploration on the proposed Millers Creek Farm-in Joint Venture Agreement and review of other projects and opportunities as they arise. 6. Environmental regulation The Company’s operations are subject to significant environmental regulation under both Commonwealth and relevant State legislation in relation to discharge of hazardous waste and materials arising from any exploration or mining activities and development conducted by the Company on any of its tenements. The Company believes it is not in breach of any environmental obligation. 10 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 INFORMATION ON DIRECTORS Robert Michael Kennedy ASAIT, Grad Dip (Systems Analysis), FCA, ACIS, Life Member AIM, FAICD. Non executive Chairman. Experience and expertise Mr Kennedy has been non-executive chairman of Maximus Resources Limited since 2004. He is a Chartered Accountant and a consultant of Kennedy & Co Chartered Accountants, a firm he founded. Mr Kennedy brings to the Board his expertise and extensive experience as chairman and non-executive director of a range of listed public companies in the resources sector. He conducts the review of the Board including the Managing Director in his executive role. Mr Kennedy leads the development of strategies for the development and future growth of the Company. Apart from his attendance at Board and Committee meetings, Mr Kennedy leads the Board’s external engagement of the Company meeting with Government, Investors and is engaged with the media. He is a regular attendee of audit committee functions of the major accounting firms. Independence In assessing Mr Kennedy’s independence, the Board (excluding Mr Kennedy), took into account his ability to think independently across a wide range of issues and his continuous availability. Whilst Mr Kennedy has been appointed to a number of Resource Industry Boards, due to his extensive knowledge of the industry, the time required across these companies in no way impedes on his dedication to his role as Chairman of the Board. Whilst Mr Kennedy holdings are slightly greater than five per cent the Board has determined that Mr Kennedy is an independent taking into other factors in determining independence such as his independence of mind and his conduct as a non-executive director. Current and former directorships in the last 3 years Mr Kennedy is a director of ASX listed companies Ramelius Resources Limited (since listing in March 2003), Flinders Mines Limited (since December 2001), Tychean Resources Limited (since March 2006), Monax Mining Limited (since August 2004), Marmota Energy Limited (since April 2006), Tellus Resources Limited (since December 2013) and formerly Beach Energy Limited (since 1991 until 2012), Somerton Energy Limited (from 2010 to 2012), Impress Energy Limited (from March 2011 to September 2012) and Adelaide Energy Limited (from 9 December 2011 to 21 September 2012). Special responsibilities Chairman of the Board. Member of the Audit Committee. Interests in shares and options 50,000,000 ordinary shares in Maximus Resources Limited. 18,000,000 unlisted options in Maximus Resources Limited Kevin John Malaxos BSc Mining Engineering. Managing Director. Experience and expertise A director since 13 December 2010, Mr Malaxos has 28 years experience in the resources sector in senior management and executive roles across a suite of commodities including gold, nickel, iron ore, silver, lead, zinc and chromium. He has managed surface and underground mining operations and brings a wealth of experience in project evaluation and development, project approval and Government liaison. Mr Malaxos’ previous roles include CEO for Mt Gibson Mining (MGX) and COO of listed iron ore developer Centrex Metals Limited (CXM), where he was responsible for project development, project approvals and community and government consultation. Other current directorships Mr Malaxos is a non executive director of ASX listed company Flinders Mines Limited (since December 2010). Special responsibilities Managing Director. Interests in shares, options and rights 20,000,000 ordinary shares in Maximus Resources Limited. 7,000,000 unlisted options in Maximus Resources Limited. Leigh Carol McClusky Non executive Director. Experience and expertise Appointed as a director on 1 September 2010, Ms McClusky is an experienced and respected media personality with a media career spanning almost 30 years in newspapers, radio and television across Australia. Most recently Ms McClusky hosted a top rating current affairs program in South Australia for 13 years, until she left in 2008 to develop her boutique Public Relations consultancy, McClusky & Co Public Relations and Communications, which now services a wide variety of clients and is continuing to expand into a diverse range of portfolios. Ms McClusky has amassed a huge range of experience across Sydney, Adelaide and Melbourne with Australian Associated Press, The Sun newspaper, the Weekly Times, ABC Television, and the Nine Network, presenting and hosting television and breakfast radio programs. Other current directorships Ms McClusky is currently a Board member of the Women’s and Children’s Hospital Foundation. Interests in shares and options 2,456,668 ordinary shares in Maximus Resources Limited. 1,223,334 unlisted options in Maximus Resources Limited. Ewan John Vickery LLB Non executive Director. Experience and expertise A director since incorporation 17 December 2004, Mr Vickery is a corporate and business lawyer with over 30 years experience in private practice in Adelaide. He has acted as an advisor to companies on a variety of corporate and business issues including capital and corporate restructuring, native title and land access issues, and as lead native title advisor and negotiator for numerous mining and petroleum companies. He is a member of the Exploration Committee of the South Australian Chamber of Mines and Energy Inc, the International Bar Association Energy and Resources Law Section, the Australian Institute of Company Directors and is a past national president of Australian Mining and Petroleum Law Association (AMPLA Limited). Other current directorships Mr Vickery is a non executive director of Flinders Mines Limited (since 2001). Mr Vickery is also a non executive director of Tychean Resources Limited (Appointed May 2013). MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 11 Indemnification and insurance of officers The Company has entered into deeds of indemnity with each director whereby, to the extent permitted by the Corporations Act 2001, the Company agreed to indemnify each director against all loss and liability incurred as an officer of the Company, including all liability in defending any relevant proceedings. The Company is required to indemnify the directors and other officers of the Company against any liabilities incurred by the directors and officers that may arise from their position as directors and officers of the Company. No costs were incurred during the year pursuant to this indemnity. Insurance premiums Since the end of the previous year the Company has paid insurance premiums of $22,671 to insure the directors and officers in respect of directors’ and officers’ liability and legal expenses insurance contracts. Proceedings on behalf of company No person has applied to the Court under section 237 of the Corporations Act 2001 to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001. Non audit services The Board of Directors, in accordance with advice from the Audit Committee, is satisfied that the provision of non audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the services disclosed below did not compromise the external auditor’s independence for the following reasons: • all non audit services are reviewed and approved by the Audit Committee prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and • the nature of the services provided do not compromise the general principles relating to auditor independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board. Fees for non audit services paid or payable to the external auditors, its related practices or non related audit firms during the year ended 30 June 2014 was $4,000 (2013: Nil). DIRECTORS’ REPORT (cont) Former directorships in last 3 years Mr Vickery was a non executive director of ASX listed company ERO Mining Limited from 2006 to 2011. Special responsibilities Chairman of the Audit Committee. Interests in shares and options 16,070,001 ordinary shares in Maximus Resources Limited. 6,072,001 unlisted options in Maximus Resources Limited. Nicholas John Smart Alternate director for E J Vickery. Experience and expertise An alternate director since 9 May 2005, Mr Smart has held positions as a general manager in Australia and internationally. Previously a full Associate Member of the Sydney Futures Exchange and adviser with a national share broking firm, with over 25 years experience in the corporate arena including capital raising for private and listed companies. Other experience includes startup companies in technology development including commercialisation of the Synroc process for safe storage of high level nuclear waste, controlled temperature and atmosphere transport systems and the beneficiation of low rank coals. He is an alternate director for Maximus Resources Limited (since May 2005) and an alternate director for Flinders Mines Ltd (since 2009). Mr Smart currently consults to various public and private companies. Interests in shares and options Nil Company Secretary Rajita Shamani Alwis LLB B.Com(Acc & Fin), CA. Experience and expertise Ms Alwis has been the Company Secretary since 30 June 2011 to the date of this report. Ms Alwis has more than 10 years’ experience in public practice and commerce and has been a Company Secretary of numerous listed and proprietary companies. Ms Alwis is a Chartered Accountant and holds a degree of Bachelor of Commerce (Accounting and Finance) and a Bachelor of Laws. Meetings of directors The numbers of meetings of the Company’s board of directors and of each board committee held during the year ended 30 June 2014, and the number of meetings attended by each director were: Full meetings of directors Audit committee meetings A 12 12 11 12 - B 12 12 12 12 - A 2 - - 2 - B 2 - - 2 - Robert Michael Kennedy Kevin John Malaxos Leigh Carol McClusky Ewan John Vickery Nicholas John Smart A = Number of meetings attended B = Number of meetings held during the time the director held office or was a member of the committee during the year 12 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 The Company also has an Employee Incentive Rights Plan approved by shareholders that enables the Board to offer eligible employees rights to acquire ordinary fully paid shares in the Company. Under the terms of the Plan, rights to acquire ordinary fully paid shares at no cost may be offered to the Company’s eligible employees as determined by the Board in accordance with the terms and conditions of the Plan. The objective of the Plan is to align the interests of employees and shareholders by providing employees of the Company with the opportunity to participate in the equity of the Company as a long term incentive to achieve greater success and profitability for the Company and to maximise the long term performance of the Company. The employment conditions of the Managing Director were formalised in a contract of employment. The base salary as set out in the employment contract is reviewed annually. The Managing Director’s contract may be terminated at any time by mutual agreement and in instances of serious misconduct the Company may terminate his agreement without notice. B Voting and comments made at the company’s 2013 Annual General Meeting Maximus Resources Limited received more than 80% of ‘yes’ votes on its remuneration report for the 2013 financial year. The company did not receive any specific feedback at the AGM or throughout the year on its remuneration practices. C Details of remuneration This report details the nature and amount of remuneration for each key management person of the Company and for the executives receiving the highest remuneration. The names and positions held by directors and key management personnel of the Company during the financial year are: Mr R M Kennedy Chairman, non-executive Mr K J Malaxos Managing Director Ms L C McClusky Director, non-executive Mr E J Vickery Director, non-executive Mr N J Smart Alternate director for E J Vickery, non-executive Remuneration report – audited The remuneration report is set out under the following main headings: A Principles used to determine the nature and amount of remuneration B Details of remuneration C Service agreements D Share based compensation The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001. A Principles used to determine the nature and amount of remuneration The Company’s policy for determining the nature and amounts of emoluments of board members and senior executive officers of the Company is as follows: The Company’s Constitution specifies that the total amount of remuneration of non executive directors shall be fixed from time to time by a general meeting. The current maximum aggregate remuneration of non executive directors has been set at $300,000 per annum. Directors may apportion any amount up to this maximum amount amongst the non executive directors as they determine. Directors are also entitled to be paid reasonable travelling, accommodation and other expenses incurred in performing their duties as directors. The remuneration of the Managing Director is determined by the non executive directors on the Board as part of the terms and conditions of his employment which are subject to review from time to time. The remuneration of other executive officers and employees is determined by the Managing Director subject to the approval of the Board. Non executive director remuneration is by way of fees and statutory superannuation contributions. Non executive directors do not participate in schemes designed for remuneration of executives nor do they receive options or bonus payments and are not provided with retirement benefits other than salary sacrifice and statutory superannuation. The Company’s remuneration structure is based on a number of factors including the particular experience and performance of the individual in meeting key objectives of the Company. The Board is responsible for assessing relevant employment market conditions and achieving the overall, long term objective of maximising shareholder benefits, through the retention of high quality personnel. The Company does not presently emphasise payment for results through the provision of cash bonus schemes or other incentive payments based on key performance indicators of the Company given the nature of the Company’s business as a junior listed mineral exploration entity and the current status of its activities. However the Board may approve the payment of cash bonuses from time to time in order to reward individual executive performance in achieving key objectives as considered appropriate by the Board. MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 13 DIRECTORS’ REPORT (cont) REMUNERATION REPORT (AUDITED) Key management personnel and other executives of the Company 2014 Name Robert Michael Kennedy Kevin John Malaxos Leigh Carol McClusky Ewan John Vickery Nicholas John Smart Total key management personnel compensation Short term employee benefits Short term employee benefits Short term employee benefits Post-employment benefits Share based payments Share based payments Directors’ fees Salary Bonus Superannuation Options Rights $ 82,454 $ - $ - - 251,662 45,767 54,500 49,875 - - - - - - - 186,829 251,662 45,767 $ 7,646 27,571 - 4,625 - 39,842 $ - - - - - - $ - - - - - - Key management personnel and other executives of the Company 2013 Name Robert Michael Kennedy Kevin John Malaxos^ Leigh Carol McClusky* Ewan John Vickery Nicholas John Smart Total key management personnel compensation Short term employee benefits Short term employee benefits Short term employee benefits Post-employment benefits Share based payments Share based payments Directors’ fees Salary Bonus Superannuation Options Rights $ 82,661 $ - - 252,293 54,500 50,000 - - - - 187,161 252,293 $ - - - - - - $ 7,439 22,706 - 4,500 - 34,645 $ - - - - - - $ - 7,500 282,499 - - - 54,500 54,500 - 7,500 481,599 Total $ 90,100 325,000 54,500 54,500 - 524,100 Total $ 90,100 * Director fees for Ms McClusky were paid to McClusky and Co Pty Ltd, a related entity of the director. ^ During the 2013 year selected executives were granted incentive rights which have a three year vesting period and performance conditions. In accordance with the requirements of the Australian Accounting Standards, remuneration includes a proportion of the notional value of equity compensation granted or outstanding during the 2013 year. The fair value of equity instruments which do not vest during the reporting period is determined as at the grant date and is progressively allocated over the vesting period. The amount included as remuneration is not related to or indicative of the benefit (if any) that individuals may ultimately realise should the rights vest. The fair value of the rights as at the date of their grant has been determined in accordance with the Employee Incentive Rights Plan as set out in note 31. The relative proportions of remuneration that are fixed and those that are at risk are as follows: 2014 Name Kevin John Malaxos Fixed remuneration Fixed remuneration At risk – STI* At risk – STI* At risk – LTI** At risk – LTI** 2014 % 85 2013 % 82 2014 % 15 2013 % - 2014 % - 2013 % 18 * Short term incentives (STI) include cash incentive payments (bonuses) linked to company and/or individual performance. ** Long term incentives (LTI) include equity grants issued via the Company’s Employee Share Option and Incentive Rights Plans. This plan is designed to provide long term incentives for executives to deliver long term shareholder returns. 14 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 D Service agreements The Board has negotiated a contract with Mr Malaxos with no fixed term at a salary of $275,000 per annum inclusive of superannuation guarantee contributions to be reviewed annually and with termination on three month’s notice. Mr Malaxos was also granted a sign on bonus of the issue of 1,500,000 rights to acquire ordinary shares at no cost, expiring 14 December 2011 and 1,500,000 rights to acquire ordinary shares at no cost, expiring 14 December 2012. On 14 December 2011 and 14 December 2012 Mr Malaxos was granted on each date 1,500,000 ordinary shares as per the incentive rights. Whilst Messrs Kennedy and Vickery and Ms McClusky are engaged as directors without formal agreements, it is the intention for these directors to enter into formal agreements per the ASX Corporate Governance Principles and Recommendations Third Edition. E Share based compensation Incentive rights The Company has an Employee Incentive Rights Plan approved by shareholders that enables the Board to offer eligible employees rights to acquire ordinary fully paid shares in the Company. Under the terms of the Plan, rights to acquire ordinary fully paid shares at no cost may be offered to the Company’s eligible employees as determined by the Board in accordance with the terms and conditions of the Plan. Options granted as remuneration Apart from the rights granted under the Company’s Employee Incentive Rights Plan as detailed above, no other rights or options were granted to directors or key management personnel of the Company during the financial year. Shares issued on exercise of remuneration options No shares were issued to directors as a result of the exercise of remuneration options during the financial year. Directors’ interests in shares and options i) Option holdings The numbers of options over ordinary shares in the Company held during the financial year by each director of Maximus Resources Limited and other key management personnel of the Company, including their personally related parties, are set out below. 2014 Name Balance at start of the year Issued as remuneration Exercised (expired/ purchased) Acquired during the year Balance at end of the year Vested and exercisable Unvested R M Kennedy 18,000,000 7,000,000 1,223,334 6,072,001 - - - - - - - - - - - - - - - - 18,000,000 18,000,000 7,000,000 7,000,000 1,223,334 1,223,334 6,072,001 6,072,001 - - - - - - - K J Malaxos L C McClusky E J Vickery N J Smart 2013 Name R M Kennedy K J Malaxos L C McClusky E J Vickery N J Smart Balance at start of the year Issued as remuneration Exercised (expired/ purchased) Acquired during the year Balance at end of the year Vested and exercisable Unvested - - - - - - - - - - - - - - - 18,000,000 18,000,000 18,000,000 7,000,000 7,000,000 7,000,000 1,223,334 1,223,334 1,223,334 6,072,001 6,072,001 6,072,001 - - - - - - - - MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 15 DIRECTORS’ REPORT (cont) REMUNERATION REPORT (AUDITED) ii) Rights holdings The numbers of rights to acquire ordinary shares in the Company held during the financial year by each director of Maximus Resources Limited and other key management personnel of the Company, including their personally related parties, are set out below. 2014 Name Balance at start of the year Issued as remuneration Exercised (expired/ purchased) Acquired during the year Balance at end of the year Vested and exercisable Unvested K J Malaxos - - - - - - - 2013 Name Balance at start of the year Issued as remuneration Exercised (expired/ purchased) Acquired during the year Balance at end of the year Vested and exercisable Unvested K J Malaxos 1,500,000 - (1,500,000) - - - - iii) Share holdings The numbers of shares in the Company held during the financial year by each director of Maximus Resources Limited and other key management personnel of the Company, including their personally related parties, are set out below. 2014 Name R M Kennedy KJ Malaxos L C McClusky E J Vickery N J Smart 2013 Name R M Kennedy KJ Malaxos L C McClusky E J Vickery N J Smart Balance at start of the year 50,000,000 20,000,000 2,456,668 16,070,001 - Balance at start of the year 32,000,000 11,500,000 1,233,334 9,998,000 - Received as compensation Exercise of options/rights Acquired/ (disposed) - - - - - - - - - - - - - - - Received as compensation Exercise of options/rights Acquired/ (disposed) - - - - - - 18,000,000 1,500,000 - - - 7,000,000 1,223,334 6,072,001 - Balance at end of the year 50,000,000 20,000,000 2,456,668 16,070,001 - Balance at end of the year 50,000,000 20,000,000 2,456,668 16,070,001 - Shares under option Unissued ordinary shares of Maximus Resources Limited under option at the date of this report are as follows: Date options granted 26 April 2013 30 April 2013 Expiry date Exercise price 30 April 2015 30 April 2015 $0.02 $0.02 Number under option 89,788,277 6,296,334 96,084,611 16 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 Auditors independence declaration A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 18. This report is signed and dated in Adelaide on this 24th day of September 2014 and made in accordance with a resolution of the directors. Robert M Kennedy DIRECTOR MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 17 AUDITOR’S INDEPENDENCE DECLARATION 18 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 CORPORATE GOVERNANCE STATEMENT The Board of Directors of Maximus Resources Limited is committed to improving and achieving good standards of corporate governance and has established corporate government policies and procedures, where appropriate and practicable, consistent with the Corporate Governance Principles and Recommendations – 2nd Edition issued by the ASX Corporate Governance Council (“ASX Recommendations”). The following statement sets out a summary of the Company’s corporate governance practices that were in place during the financial year and how those practices relate to the ASX Recommendations. These recommendations are not intended to be prescriptions to be followed by all ASX listed companies, but rather guidelines designed to produce an effective quality and integrity outcome. The Corporate Governance Council has recognised that a “one size fits all” approach to Corporate Governance is not required. Instead, it states aspirations of good practice for optimising corporate performance and accountability in the interests of shareholders and the broader economy. A company may consider that a recommendation is inappropriate to its particular circumstances and has flexibility not to adopt it and explain why. In ensuring a good standard of ethical behaviour and accountability, the Board has included in its corporate governance policies those matters contained in the ASX Recommendations where applicable. However, the Board also recognises that full adoption of the ASX Recommendations may not be practical nor provide the optimal result given the particular circumstances and structure of the Company. The Board is, nevertheless, committed to ensuring that appropriate Corporate Governance practices are in place for the proper direction and management of the Company. This statement outlines the main Corporate Governance practices of the Company disclosed under the ASX Recommendations, including those that comply with good practice and which unless otherwise disclosed, were in place during the whole of the financial year ended 30 June 2014. Principle 1: Lay solid foundations for management and oversight Recommendation 1.1 – Recommendation followed The Board is governed by the Corporations Act 2001, ASX Listing Rules and a formal constitution adopted by the company in 2006. The constitution was amended in December 2011 following shareholder approval at the 2011 Annual General Meeting. The role of the Board is to provide leadership and direction to management and to agree with management the aims, strategies and policies of the Company for the protection and enhancement of long term shareholder value. The Board takes responsibility for the overall Corporate Governance of the Company including its strategic direction, management goal setting and monitoring, internal control, risk management and financial reporting. The Board has an established framework for the management of the entity including a system of internal control, a business risk management process and appropriate ethical standards. In fulfilling its responsibilities, the Board is supported by an Audit Committee to deal with internal control, ethical standards and financial reporting. The Board appoints a Managing Director responsible for the day to day management of the Company including management of financial, physical and human resources, development and implementation of risk management, internal control and regulatory compliance policies and procedures, recommending strategic direction and planning for the operations of the business and the provision of relevant information to the Board. The Board has not adopted a formal statement of matters reserved to them or a formal board charter that details their functions and responsibilities nor a formal statement of the areas of authority delegated to senior executives. Recommendation 1.2 – Recommendation followed The Board takes responsibility for monitoring the composition of the Board and reviewing the performance and compensation of the Company’s executive directors and senior management with the overall objective of motivating and appropriately rewarding performance. The Board considers the Company’s present circumstances and goals ensure maximum shareholder benefits from the attraction and retention of a high quality Board and senior management team. The Board on a regular basis reviews the performance of and remuneration for executive director’s and senior management including any equity participation by such executive directors and senior management. The Board evaluates the performance of the Managing Director and Company Secretary on a regular basis and encourages continuing professional development. Recommendation 1.3 – Recommendation followed During the period the Board undertook an informal performance evaluation of the Managing Director, Company Secretary and senior management. The evaluation was in accordance with the Company’s process for evaluation of senior executives. Principle 2: Structure the board to add value Recommendation 2.1 – Recommendation followed The composition of the Board consists of four directors, three of whom, are independent directors. The Audit Committee currently consists of two independent directors, Mr Vickery and Mr Kennedy. Recommendation 2.2 – Recommendation not followed The Chairman, Mr Kennedy is an independent director. Whilst Mr Kennedy is a substantial shareholder, his voting shares in the Company are only slightly over five per cent. The Board has determined that Mr Kennedy is an independent director by taking into account other factors in determining independence such as his independence of mind and his conduct as a non-executive director. MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 19 CORPORATE GOVERNANCE STATEMENT (cont) Recommendation 2.3 – Recommendation followed The role of Chairman of the Board is separate from that of the Managing Director, who is responsible for the day to day management of the Company and is in compliance with the ASX Recommendation that these roles not be exercised by the same individual. Recommendation 2.4 – Recommendation not followed The Board believes that given the size of the Company and the stage of the entity’s life as a publicly listed junior exploration company that the cost of establishing a nomination committee in line with ASX Recommendation 2.4 and establishing a formal charter as recommended by ASX Recommendation 2.4 cannot be justified by the perceived benefits of doing so. As such, the whole Board currently carries out this function. It is anticipated that a formal charter will be developed in the future, as the Company develops further. Recommendation 2.5 – Recommendation not followed The Board recognises that as a result of the Company’s size and the stage of the entity’s life as a publicly listed junior exploration company, the assessment of the Board’s overall performance and its own succession plan is conducted on an ad hoc basis. Whilst this is at variance with the ASX Recommendation 2.5, the directors consider that at the date of this report an appropriate and adequate process for the evaluation of directors is in place. A more formal process of Board assessment will be considered in the future as the Company develops. Recommendation 2.6 – Recommendation followed The names of the directors of the Company and terms in office at the date of this Statement together with their skills, experience, expertise and financial interests in the Company are set out in the Directors’ Report section of this report. The non-executive directors are considered to be independent. The Company has no relationships with any of the independent directors which the Company believes would compromise the independence of these directors. All directors are entitled to take such legal advice as they require at any time and from time to time on any matter concerning or in relation to their rights, duties and obligations as directors in relation to the affairs of the Company at the expense of the Company. The Company’s constitution specifies the number of directors must be at least three and at most ten. The Board may at any time appoint a director to fill a casual vacancy. Directors appointed by the Board are subject to election by shareholders at the following annual general meeting and thereafter directors (other than the Managing Director) are subject to re-election at least every three years. The tenure for executive directors is linked to their holding of executive office. As the board does not have a nominations Committee, the functions of this Committee in its absence are dealt with by the Board as a whole. An assessment of the Board’s overall performance and its own succession plan is conducted on an ad hoc basis and was done so during the year by the Chairman. Principle 3: Promote ethical and responsible decision making Recommendation 3.1 – Recommendation not followed While the Company does not have a formal code of conduct, as the Board believes that given the size of the Company and the stage of the entity’s life as a publicly listed junior exploration company that the cost of establishing and managing a formal code of conduct cannot be justified, the Company requires all its directors and employees to abide by good standards of behaviour, business ethics and in accordance with the law. In discharging their duties, directors of the Company are required to: • act in good faith and in the best interests of the Company; • exercise care and diligence that a reasonable person in that role would exercise; • exercise their powers in good faith for a proper purpose and in the best interests of the Company; • not improperly use their position or information obtained through their position to gain a personal advantage or for the advantage of another person to the detriment of the Company; • disclose material personal interests and avoid actual or potential conflicts of interests; • keep themselves informed of relevant Company matters; • keep confidential the business of all directors’ meetings; and • observe and support the Board’s Corporate Governance practices and procedures. Directors are also required to provide the Company with details of all securities registered in the director’s name or an entity in which the director has a relevant interest within the meaning of section 9 of the Corporations Act 2001 and details of all contracts, other than contracts to which the Company is a party to which the director is a party or under which the director is entitled to a benefit, and that confer a right to call for or deliver shares in the Company and the nature of the director’s interest under the contract. Directors are required to disclose to the Board any material contract in which they may have an interest. In accordance with Section 195 of the Corporations Act 2001, a director having a material personal interest in any matter to be dealt with by the Board, will not be present when that matter is considered by the Board and will not vote on that matter. Recommendation 3.2 – Recommendation not followed While the company embraces the concept of diversity, there is no formal diversity policy as the Board believes that given the size of the Company and the stage of the entity’s life, the cost of establishing and managing a formal diversity policy cannot be justified. The Company recognises that each employee brings their own unique capabilities, experiences and characteristics to their work and that the Company values such diversity at all levels of the Company in all that it does. The Company believes in treating people with respect and dignity. The Company strives to create a supportive and understanding environment in which all individuals realise their maximum potential within the Company, regardless of their differences. The Company is committed to employing the best people to do the best job. 20 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 Recommendation 3.3 – Recommendation not followed While the Company does not have a formal diversity policy, the Company has a strong commitment to gender diversity. Female participation is reflected in the organisation. Gender diversity will be a strategic focus for the Company in the coming years, particularly with the introduction of recommendations on gender diversity by the ASX Corporate Governance Council. Recommendation 3.4 – Recommendation followed For the annual period ending 30 June 2014, the Company provides the following information in relation to employees: • Percentage of women employees in whole organisation: 57.14% • Percentage of women in senior executive positions: 0.00% Recommendation 4.3 – Recommendation followed A formal Audit Committee Charter has been adopted, that details the functions and responsibilities of the Audit Committee. Recommendation 4.4 – Recommendation followed Mr Vickery is a qualified lawyer and member of the Institute of Company Directors. Mr Kennedy is a qualified Chartered Accountant. Details of the Audit Committee member’s qualifications and attendance at meetings are set out in the Directors’ Report section of this report. The Committee meets at least twice per annum and reports to the Board. The Managing Director, CFO/ Company Secretary and external auditor may by invitation attend meetings at the discretion of the Committee. • Percentage of women on the board: 25.00% Principles 5: Make timely and balanced disclosure Recommendation 3.5 – Recommendation followed While the Company does not have a formal diversity policy, it is diverse along many dimensions. Diversity at the Company refers to all the characteristics that make individuals different from each other. It includes characteristics or factors such as religion, race, ethnicity, language, gender, sexual orientation, disability, age or any other area of potential difference. The Company believes that the wide array of perspectives that results from such diversity promotes innovation and business success. Principle 4: Safeguard integrity in financial reporting Recommendation 4.1 – Recommendation followed The Company has established an Audit Committee to oversee corporate governance over internal controls, ethical standards, financial reporting, and external accounting and compliance procedures. Also, the Board as a whole addresses the governance aspects of the full scope of Maximus’ activities to ensure that it adheres to appropriate ethical standards. The main responsibilities of the Audit and Risk Committee include: • reviewing, assessing and making recommendations to the Board on the annual and half year financial reports released to the market by the Company; • overseeing establishment, maintenance and reviewing the effectiveness of the Company’s internal control and ensuring efficacy and efficiency of operations, reliability of financial reporting and compliance with applicable Accounting Standards and ASX Listing Rules; Recommendation 5.1 & 5.2 – Recommendations followed The Company has adopted a continuous disclosure policy and operates under the continuous disclosure requirements of the ASX Listing Rules and ensures that all information which may be expected to affect the value of the Company’s securities or influence investment decisions is released to the market in order that all investors have equal and timely access to material information concerning the Company. The information is made publicly available on the Company’s website, following release to the ASX, www.maximusresources.com/governance.html. Principle 6: Respect the rights of shareholders Recommendation 6.1 & 6.2 – Recommendations not followed The Board aims to ensure that shareholders are informed of all major developments affecting the Company’s state of affairs. In accordance with the ASX Recommendations, information is communicated to shareholders as follows: • • the annual financial report which includes relevant information about the operations of the Company during the year, changes in the state of affairs of the entity and details of future developments, in addition to the other disclosures required by the Corporations Act 2001; the half yearly financial report lodged with ASX and Australian Securities and Investments Commission (ASIC) and sent to all shareholders who request it; liaising with and reviewing reports of the external auditor; and • notifications relating to any proposed major changes in the • • reviewing performance and independence of the external auditor and where necessary making recommendations for appointment and removal of the Company’s auditor. Recommendation 4.2 – Recommendation not followed The Audit Committee consists of two non-executive Board directors, Messrs Vickery & Kennedy, and is chaired by Mr Vickery. The Board believes that given the size of the Company and the stage of the entity’s life as a publicly listed junior exploration company that the cost of establishing an audit committee with at least three members in line with ASX Recommendation 4.2 cannot be justified by the perceived benefits of doing so. The existing composition of the Audit Committee is such that review and authorisation of the integrity of the Company’s financial reporting and the independence of the external auditor is via the exercise of independent and informed judgment. Company which may impact on share ownership rights that are submitted to a vote of shareholders; • notices of all meetings of shareholders; • publicly released documents including full text of notices of meetings and explanatory material made available on the Company’s website; and • disclosure of the Company’s Corporate Governance practices and communications strategy on the entity’s website. The Board encourages full participation of shareholders at the Annual General Meeting to ensure a high level of accountability and identification with the Company’s strategy and goals. Important issues are presented to the shareholders as single resolutions. The external auditor of the Company is also invited to the Annual General Meeting of shareholders and is available to answer any questions concerning the conduct, preparation and content of the auditor’s MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 21 CORPORATE GOVERNANCE STATEMENT (cont) report. Pursuant to section 249K of the Corporations Act 2001 the external auditor is provided with a copy of the notice of meeting and related communications received by shareholders. Due to the size of the Company and the stage of life of the entity as a publicly listed junior exploration company, the Board does not believe a formal policy for shareholder communication is required. However, a summary describing how the Company will communicate with its shareholders is posted on the Company’s website, www.maximusresources.com/governance.html. Principle 7: Recognise and manage risk Recommendation 7.1, 7.2 & 7.4 – Recommendations not followed The Board recognises that there are inherent risks associated with the Company’s operations including mineral exploration and mining, environmental, title and native title, legal and other operational risks. The Board endeavours to mitigate such risks by continually reviewing the activities of the Company in order to identify key business and operational risks and ensuring that they are appropriately assessed and managed. No formal report in relation to the Company’s management of its material business risk is presented to the Board. Due to the size of the Company and the stage of life of the entity as a publicly listed junior exploration company, and the inherent risks associated with the industry it operates in, the Board does not believe formal policies for oversight and management of risk is required nor a mechanism for formal review be established. A summary describing how the Company manages risk by procedures established at Board and executive level can be found posted on the Company’s website, www.maximusresources.com/governance.html. Recommendation 7.3 – Recommendation followed In accordance with ASX Recommendation 7.3 the Chief Executive Officer and Chief Financial Officer have provided assurances that the written declarations under s295A of the Corporations Act 2001 are founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks. Both the Chief Executive Officer and Chief Financial Officer provided said assurances at the time the s295A declarations were provided to the Board. Principle 8: Remunerate fairly and responsibly Recommendation 8.1 – Recommendation not followed The Board believes that given the size of the Company and the stage of the entity’s life as a publicly listed junior exploration company that the cost of establishing a formal remuneration committee in line with ASX Recommendation 8.1 cannot be justified by the perceived benefits of doing so. The Board takes responsibility for monitoring the composition of the Board and reviewing the compensation of the Company’s executive directors and senior management with the overall objective of motivating and appropriately rewarding performance. Recommendation 8.2 – Recommendation not followed The Board does not have a separate remuneration committee given the size of the Company and the stage of the entity’s life as a publicly listed junior exploration company. Recommendation 8.3 – Recommendation followed The Company’s remuneration practices are set out as follows. The Company’s Constitution specifies that the total amount of remuneration of non-executive directors shall be fixed from time to time by a general meeting. The current maximum aggregate remuneration of non-executive directors has been set at $300,000 per annum. Directors may apportion any amount up to this maximum amount amongst the non-executive directors as they determine. Directors are also entitled to be paid reasonable travelling, accommodation and other expenses incurred in performing their duties as directors. Non-executive director remuneration is by way of fees and statutory superannuation contributions. Non-executive directors do not participate in schemes designed for remuneration of executives nor do they receive options or bonus payments and are not provided with retirement benefits other than salary sacrifice and statutory superannuation. The remuneration of the Managing Director is determined by the Board as part of the terms and conditions of his employment which are subject to review from time to time. The remuneration of employees is determined by the Managing Director subject to the approval of the Board. The Company’s remuneration structure is based on a number of factors including the particular experience and performance of the individual in meeting key objectives of the Company. The Board is responsible for assessing relevant employment market conditions and achieving the overall, long term objective of maximising shareholder benefits, through the retention of high quality personnel. The Company does not presently emphasise payment for results through the provision of cash bonus schemes or other incentive payments based on key performance indicators of the Company given the nature of the Company’s business as a recently listed mineral exploration entity and the current status of its activities. However, the Board may approve the payment of cash bonuses from time to time in order to reward individual executive performance in achieving key objectives as considered appropriate by the Board. The Company also has an Employee Incentive Rights Plan approved by shareholders that enables the Board to offer eligible employees rights to acquire ordinary fully paid shares in the Company. Under the terms of the Plan, rights to acquire ordinary fully paid shares at no cost may be offered to the Company’s eligible employees as determined by the Board in accordance with the terms and conditions of the Plan. The objective of the Plan is to align the interests of employees and shareholders by providing employees of the Company with the opportunity to participate in the equity of the Company as a long term incentive to achieve greater success and profitability for the Company and to maximise the long term performance of the Company. The non-executive directors are not eligible to participate in the Plan. The employment conditions of the Managing Director are formalised in a contract of employment. The Managing Director’s contract may be terminated at any time by mutual agreement or without notice in serious instances of misconduct. Further details of director’s remuneration, superannuation and retirement payments are set out in the Remuneration Report section of the Directors’ Report. The Company’s Corporate Governance Policies can be found at www.maximusresources.com/governance.html. 22 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the year ended 30 June 2014 Other income Administrative expenses Marketing expenses Exploration expenditure written off (Loss) on sale of exploration assets (Loss) on sale of development assets (Loss) on sale of assets Impairment of financial assets (Loss) before income tax Income tax expense (Loss) from continued operations Loss from discontinued operation Loss for the year Other comprehensive income Notes 5 6 6 6 13(b) 18(a) 7 4 Consolidated 30 June 2014 $ Consolidated 30 June 2013 $ 22,222 (522,915) (5,048) (20,304) (2,147,985) - (4,270) - (2,678,300) 21,647 (642,802) (4,582) (9,748,503) - (384,512) (8,723) (2,281,437) (13,048,912) - (607) (2,678,300) (13,049,519) - (30,527) (2,678,300) (13,080,046) Changes in the fair value of available for sale financial assets 18(a) Other comprehensive income for the year (net of tax) 450,000 450,000 44,607 44,607 Total comprehensive loss for the year (2,228,300) (13,035,439) (Loss) is attributable to: Maximus Resources Limited Total comprehensive loss for the year is attributable to: (2,678,300) (13,080,046) Maximus Resources Limited (2,228,300) (13,035,439) Earnings per share for (loss) from continuing operations attributable to the ordinary equity holders of the Company: Basic earnings per share Diluted earnings per share Earnings per share for (loss) from continuing and discontinued operations attributable to the ordinary equity holders of the company: Basic earnings per share Diluted earnings per share 29 29 29 29 This statement should be read in conjunction with the notes to the financial statements. Cents Cents (0.31) (0.31) (0.31) (0.31) (1.65) (1.65) (1.66) (1.66) MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 23 CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 30 June 2014 ASSETS Current assets Cash and cash equivalents Trade and other receivables Available for sale assets Other current assets Total current assets Non current assets Available for sale financial assets Plant and equipment Exploration and evaluation Total non current assets Notes Consolidated 30 June 2014 $ Consolidated 30 June 2013 $ 8 9 10 11 12 13(a) 625,036 5,005 1,083,821 9,601 1,723,463 - 5,305 2,437,811 2,443,116 265,845 224 - 10,821 276,890 133,821 10,921 5,974,807 6,119,549 Total assets 4,166,579 6,396,439 LIABILITIES Current liabilities Trade and other payables Provisions Total current liabilities Non current liabilities Provisions Total non current liabilities Total liabilities Net assets EQUITY Contributed equity Reserves Retained losses Total equity 14 15 16 17 19 18(b) 65,615 22,592 88,207 15,295 15,295 83,572 15,282 98,854 6,209 6,209 103,502 105,063 4,063,077 6,291,376 35,394,766 405,393 35,394,765 1,358,489 (31,737,082) (30,461,878) 4,063,077 6,291,376 This statement should be read in conjunction with the notes to the financial statements. 24 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 30 June 2014 Consolidated Notes Contributed equity $ Reserves $ Retained losses $ Total equity $ Balance at 1 July 2013 35,394,765 1,358,489 (30,461,878) 6,291,376 Total comprehensive loss for the year: (Loss) for the year Revaluation of financial assets 18 18 Transactions with owners in their capacity as owners: Employee options lapsed Contributions of equity 17 - - - - 1 1 - 450,000 450,000 (2,678,300) (2,678,300) - (2,678,300) 450,000 (852,204) (1,403,096) 1,403,096 - - (1,403,096) 1,403,096 - 1 1 Balance at 30 June 2014 35,394,766 405,393 (31,737,082) 4,063,077 Balance at 1 July 2012 35,004,343 (878,341) (17,381,832) 16,744,170 Total comprehensive loss for the year: (Loss) for the year Revaluation of financial assets Transactions with owners in their capacity as owners: Contributions of equity Rights issued during the year Transaction costs (net of tax) 18 18 17 17 - - - - (13,080,046) (13,080,046) 2,236,830 2,236,830 - 2,236,830 (13,080,046) (10,843,216) 384,338 7,500 (1,416) 390,422 - - - - - - - - 384,338 7,500 (1,416) 390,422 Balance at 30 June 2013 35,394,765 1,358,489 (30,461,878) 6,291,376 This statement should be read in conjunction with the notes to the financial statements. MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 25 CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 30 June 2014 Notes Consolidated 30 June 2014 $ Consolidated 30 June 2013 $ Cash flows from operating activities Payments to suppliers and employees Interest received Net cash used in operating activities 28 Cash flows from investing activities Payments for plant and equipment Proceeds from sale of tenements Proceeds from sale of development assets Payments for exploration and evaluation Net cash provided by investing activities Cash flows from financing activities Proceeds from issues of shares and other equity securities Payments of issue costs Net cash provided by financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year 8 This statement should be read in conjunction with the notes to the financial statements. (531,218) 22,222 (508,996) (2,037) 1,500,000 - (629,777) 868,186 1 - 1 359,191 265,845 625,036 (489,360) 21,647 (467,713) (8,723) - 491,913 (872,177) (388,987) 384,338 (2,023) 382,315 (485,209) 751,054 265,845 26 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 June 2014 1 Summary of significant accounting policies The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the consolidated entity consisting of Maximus Resources Limited and its subsidiaries. a) Basis of preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act 2001. Maximus Resources Limited is a for-profit entity for the purpose of preparing the financial statements. i) Compliance with IFRS The consolidated financial statements of the Maximus Resources Limited company also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRSs ensures that the financial statements and notes comply with International Financial Reporting Standards (IFRS). ii) Historical cost convention These financial statements have been prepared on an accrual basis, under the historical cost convention, as modified by the revaluation of available for sale financial assets, financial assets and liabilities (including derivative instruments) at fair value through profit or loss and certain classes of property, plant and equipment. iii) Critical accounting estimates The directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Company. b) Principles of consolidation i) Subsidiaries The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Maximus Resources Limited (‘’Company’’ or ‘’Parent Entity’’) as at 30 June 2013 and the results of all subsidiaries for the year then ended. Maximus Resources Limited and its subsidiaries together are referred to in this financial report as the ‘Consolidated Entity’ or the ‘Group’. Subsidiaries are all entities (including special purpose entities) over which the Company has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Company controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Company. They are de-consolidated from the date that control ceases. The acquisition method of accounting is used to account for business combinations by the Company (refer to note 1). The Company applies a policy of treating transactions with minority interests as transactions with parties external to the Company. Disposals to minority interests result in gains and losses for the Company that are recorded in the consolidated statements of financial performance. Purchases from minority interests result in goodwill, being the difference between any consideration paid and the relevant share acquired of the carrying value of identifiable net assets of the subsidiary. Intercompany transactions, balances and unrealised gains on transactions between Company companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Company. Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of financial position respectively. Investments in subsidiaries are accounted for at cost in the separate financial statements of Maximus Resources Limited. ii) Changes in ownership interests The Company treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Company. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in a separate reserve within equity attributable to owners of Maximus Resources Limited. When the Company ceases to have control, joint control or significant influence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, jointly controlled entity or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Company had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. c) 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 has been identified as the Board of Directors. MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 27 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont) 30 June 2014 d) Revenue recognition i) Sale of goods Revenue from sale of goods includes sales of refined gold production and internet sales of gold nuggets. Recognition is at point of sale of the product, when the risks and rewards of ownership are transferred. ii) Interest income Interest income is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. e) Income tax The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the company’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also 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. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the Company is able to control the timing of the reversal of the temporary differences and it is probable that the differences 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 and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively. f) Impairment of non-financial assets Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested 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 inflows which are largely independent of the cash inflows from other assets or groups of assets (cash generating units). Non- financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date. g) Cash and cash equivalents For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short term, highly liquid investments with original maturities of 12 months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position. h) Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Trade receivables are generally due for settlement within 30 days. They are presented as current assets unless collection is not expected for more than 12 months after the reporting date. i) Joint ventures i) Jointly controlled assets The Company’s share of the assets, liabilities, revenue and expenses of joint venture operations are included in the appropriate items of the financial statements. Details of the joint ventures are set out in note 27. ii) Joint venture entities The Company’s interests in joint ventures are accounted for using the equity method after initially being recognised at cost. Under the equity method, the share of the profits or losses of a joint venture is recognised in the consolidated statement of profit or loss and other comprehensive income, and the share of movements in reserves is recognised in reserves in the statement of financial position. Details relating to the joint venture entities are set out in note 27. j) Investments and other financial assets Recognition and derecognition Regular purchases and sales of financial assets are recognised on trade-date – the date on which the Company commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Company has transferred substantially all the risks and rewards of ownership. When securities classified as available for sale are sold, the accumulated fair value adjustments recognised in other comprehensive income are reclassified to profit or loss as gains and losses from investment securities. 28 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 Measurement At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss. Loans and receivables and held to maturity investments are subsequently carried at amortised cost using the effective interest method. Available for sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are presented in profit or loss within other income or other expenses in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in profit or loss as part of revenue from continuing operations when the Company’s right to receive payments is established. Interest income from these financial assets is included in the net gains/(losses). Changes in the fair value of monetary securities denominated in a foreign currency and classified as available for sale are analysed between translation differences resulting from changes in amortised cost of the security and other changes in the carrying amount of the security. The translation differences related to changes in the amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in other comprehensive income. Changes in the fair value of other monetary and non-monetary securities classified as available for sale are recognised in other comprehensive income. Details on how the fair value of financial instruments is determined are disclosed in note 2. Fair value The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Company establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models making maximum use of market inputs and relying as little as possible on entity specific inputs. Impairment The Company assesses at the end of each reporting period whether there is objective evidence that a financial asset or 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. In the case of equity investments classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator that the assets are impaired. If there is evidence of impairment for any of the Company’s financial assets carried at amortised cost, the 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. The cash flows are discounted at the financial asset’s original effective interest rate. The loss is recognised in the statement of profit or loss and other comprehensive income. k) Plant and equipment Each class of plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses. Plant and equipment Plant and equipment are measured on the cost basis. The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the assets’ employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts. Subsequent costs are included in the assets’ carrying amount or recognised as separate assets as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost can be measured reliably. All other repairs and maintenance are charged to the statement of profit or loss and other comprehensive income during the financial period in which they are incurred. Depreciation The depreciable amount of all fixed assets is depreciated on a straight line basis over their useful lives to the Company commencing from the time the asset is held ready for use. The depreciation rates used for plant & equipment are from 12.5 to 40%. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. 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 note 1(f). Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the statement of profit or loss and other comprehensive income. When revalued assets are sold, it is Company policy to transfer any amounts included in other reserves in respect of those assets to retained earnings. l) Trade and other payables These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months from the reporting date. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method. m) Employee benefits i) Short term obligations Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months after the end of each reporting period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liability for annual leave is recognised in the provision for annual leave. All other short term employee benefit obligations are presented as payables. MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 29 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont) 30 June 2014 ii) Other long term employee benefit obligations The liability for long service leave and annual leave which is not expected to be settled within 12 months after the end of the reporting period in which the employees render the related service is recognised in non-current liabilities – provisions and measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the end of the reporting period on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. iii) Share based payments Share based compensation benefits are provided to employees via the Maximus Resources Limited Employee Incentive Rights Plan and an employee share scheme. Information relating to these schemes is set out in note 31. The cost of equity settled transactions is measured by the fair value at the date at which the equity instruments are granted. The fair value is determined using the Black Scholes or Binomial pricing model. The cost is recognised as an expense in the statement of comprehensive income with a corresponding increase in the share based payments reserve or issued capital when the options, rights or shares are issued. n) Earnings per share (EPS) i) Basic earnings per share Basic earnings per share is calculated by dividing: ¬ the profit attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary shares ¬ by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year and excluding treasury shares. ii) Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account: ¬ the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and ¬ the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. o) Exploration and evaluation expenditure Exploration and evaluation costs related to an area of interest are written off as incurred except they may be carried forward as an item in the statement of financial position where the rights of tenure of an area are current and one of the following conditions is met: – the costs are expected to be recouped through successful development and exploitation of the area of interest, or alternatively, by its sale; and – exploration and/or evaluation activities in the area of interest have not at the end of each reporting period reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing. Capitalised costs include costs directly related to exploration and evaluation activities in the relevant area of interest. General and administrative costs are allocated to an exploration or evaluation asset only to the extent that those costs can be related directly to operational activities in the area of interest to which the asset relates. Capitalised exploration and evaluation expenditure is written off where the above conditions are no longer satisfied. Identifiable exploration assets acquired are recognised as assets at their cost of acquisition, as determined by the requirements of AASB 3: Business Combinations. Exploration and evaluation expenditure incurred subsequent to the acquisition in respect of an exploration asset acquired is accounted for in accordance with the policy outlined above. All capitalised exploration and evaluation expenditure is assessed for impairment if facts and circumstances indicate that an impairment may exist. Exploration and evaluation assets are also tested for impairment once commercial reserves are found, before the assets are transferred to development properties. p) Development properties Development expenditure incurred by or on behalf of the Company is accumulated separately for each area of interest in which economically recoverable reserves have been identified to the satisfaction of the directors. Such expenditure comprises net direct costs and an appropriate portion of related overhead expenditure having a specific nexus with the development property. Once a development decision has been taken, all past and future exploration and evaluation expenditure in respect of the area of interest is aggregated with the cost of development and classified under non-current assets as ‘’development properties’’. A development property is reclassified as ‘’mine property’’ at the end of the commissioning phase, when the production reaches a previously determined capacity. No amortisation is provided in respect of development properties until they are reclassified as ‘’mine properties’’. Development properties are tested for impairment in accordance with the policy in note 1(f). q) Mine properties Mine properties represent the accumulation of all exploration, evaluation and development expenditure incurred by or on behalf of the Company in relation to areas of interest in which mining of a mineral resource has commenced. When further development expenditure is incurred in respect of a mine property after the commencement of production, such expenditure is carried forward as part of the mine property only when it is probable that the additional future economic benefits associated with the expenditure will flow to the Company. Otherwise such expenditure is classified as part of the cost of production. Mine properties are tested for impairment in accordance with the policy in note 1(f). r) Goods and services tax (GST) Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense. 30 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statement of financial position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows. s) Comparative figures Comparative figures are adjusted to conform to Accounting Standards when required. t) Contributed equity 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. If the Company reacquires its own equity instruments, for example as the result of a share buy back or a share based payment plan, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the owners of Maximus Resources Limited as treasury shares until the shares are cancelled or reissued. Where such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the owners of Maximus Resources Limited u) Key estimates The preparation of the financial statements requires management to make estimates and judgements. These estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Group and that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The 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 year are discussed below: Impairment The Company assesses impairment at each reporting date by evaluating conditions specific to the Company that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Value in use calculations performed in assessing recoverable amounts incorporate a number of key estimates. Exploration and evaluation The Company’s policy for exploration and evaluation is discussed in Note 1(o). The application of this policy requires management to make certain assumptions as to future events and circumstances. Any such estimates and assumptions may change as new information becomes available. If, after having capitalised exploration and evaluation expenditure, management concludes that the capitalised expenditure is unlikely to be recovered by future sale or exploration, then the relevant capitalised amount will be written off through the statement of profit or loss and other comprehensive income. Share based payments The Group measures share based payments at fair value at the grant date using the Black Scholes or Binomial formula taking into account the terms and conditions upon which the instrument was granted, as discussed in note 31. v) Standards, amendments and interpretations to existing standards During the current year the Group adopted all of the new and revised Australia Accounting Standards and Interpretations applicable to its operations which became mandatory. Information on the new standards is presented below: AASB 10 Consolidated Financial Statements AASB 10 supersedes AASB 127 Consolidated and Separate Financial Statements (AASB 127) and AASB Interpretation 112 Consolidation - Special Purpose Entities. AASB 10 revises the definition of control and provides extensive new guidance on its application. These new requirements have the potential to affect which of the Group’s investees are considered to be subsidiaries and therefore to change the scope of consolidation. The requirements on consolidation procedures, accounting for changes in non-controlling interests and accounting for loss of control of a subsidiary are unchanged. Management has reviewed its control assessments in accordance with AASB 10 and has concluded that there is no effect on the classification (as subsidiaries or otherwise) of any of the Group’s investees held during the period or comparative periods covered by these financial statements. AASB 11 Joint Arrangements AASB 11 supersedes AASB 131 Interests in Joint Ventures (AAS 131) and AASB Interpretation 113 Jointly Controlled Entities- Non-Monetary-Contributions by Venturers. AASB 11 revises the categories of joint arrangement, and the criteria for classification into the categories, with the objective of more closely aligning the accounting with the investor’s rights and obligations relating to the arrangement. In addition, AASB 131’s option of using proportionate consolidation for arrangements classified as jointly controlled entities under that Standard has been eliminated. AASB 11 now requires the use of the equity method for arrangements classified as joint ventures (as for investments in associates). The amendments have had no impact on the Group. AASB 13 Fair Value Measurements AASB 13 clarifies the definition of fair value and provides related guidance and enhanced disclosures about fair value measurements. It does not affect which items are required to be fair-valued. The scope of AASB 13 is broad and it applies for both financial and non-financial items for which other Australian Accounting Standards require or permit fair value measurements or disclosures about fair value measurements, except in certain circumstances. AASB 13 applies prospectively for annual periods beginning on or after 1 January 2013. Its disclosure requirements need not be applied to comparative information in the first year of application. The Group has however included as comparative information the AASB 13 disclosures that were required previously by AASB 7 Financial Instruments: Disclosures. The Group has applied AASB 13 for the first time in the current year; see Notes 2(d). Amendments to AASB 119 Employee Benefits The 2011 amendments to AASB 119 made a number of changes to the accounting for employee benefits, the most significant relating to defined benefit plans. Under the amendments, employee benefits ‘expected to be settled wholly’ (as opposed to ‘due to be settled’ under the superseded version of AASB 119) within 12 months after the end of the reporting period are short-term benefits, and are therefore not discounted when calculating leave liabilities. As the Group does not expect all annual leave for all employees to be used wholly within 12 months of the end of reporting period, annual MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 31 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont) 30 June 2014 leave is included in ‘other long-term benefit’ and discounted when calculating the leave liability. This change has had no impact on the presentation of annual leave as a current liability in accordance with AASB 101 Presentation of Financial Statements. Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Group. At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by the Group. Management anticipates that all of the relevant pronouncements will be adopted in the Group’s accounting policies for the first period beginning after the effective date of the pronouncement. Information on new standards, amendments and interpretations that are expected to be relevant to the Group’s financial statements is provided below. Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Group’s financial statements. New standards and interpretations not yet adopted. The Group notes the following Accounting Standards which have been issued but are not yet effective at 30 June 2014. These standards have not been adopted early by the Group. The Group assessment of the impact of these new standards and interpretations is set out below: AASB 9 introduces new requirements for the classification and measurement of financial assets and liabilities. These requirements improve and simplify the approach for classification and measurement of financial assets compared with the requirements of AASB 139. The main changes are: – Financial assets that are debt instruments will be classified based on (1) the objective of the entity’s business model for managing the financial assets; and (2) the characteristics of the contractual cash – Allows an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income (instead of in profit or loss). – Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument. – Financial assets can be designated and measured at fair value through profit or loss at initial recognition if doing so eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities, or recognising the gains and losses on them, on different bases. – Where the fair value option is used for financial liabilities the change in fair value is to be accounted for as follows: ¬ The change attributable to changes in credit risk are presented in other comprehensive income (OCI) and; ¬ The remaining change is presented in profit or loss. There will be no impact on the Group accounting for financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss and the Group does not have any such liabilities. The de- recognition rules have been transferred from AASB 139 Financial Instruments: Recognition and Measurement and have not been changed. The Group has not yet decided when to adopt AASB 9. AASB 9 requirements regarding hedge accounting represent a substantial overhaul of hedge accounting that will enable entities to better reflect their risk management activities in the financial statements. Consequential amendments arising from AASB 9 are contained in AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010), AASB 2010-10 Further Amendments to Australian Accounting Standards – Removal of Fixed Dates for First time Adopters, AASB 2012-6 Amendments to Australian Accounting Standards – Mandatory Effective Date of AASB 9 and Transition Disclosures, AASB 2013-9 Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial Instruments and AASB 2014-1 Amendments to Australia Accounting Standards. IFRS 15 Revenue from Contracts with Customers (effective date 1 January 2017) IFRS 15: – replaces IAS 18 Revenue, IAS 11 Construction Contracts and some revenue-related Interpretations – establishes a new control-based revenue recognition model – changes the basis for deciding whether revenue is to be recognised over time or at a point in time – provides new and more detailed guidance on specific topics (e.g., multiple element arrangements, variable pricing, rights of return, warranties and licensing) – expands and improves disclosures about revenue The entity has not yet assessed the full impact of this Standard. Clarification of acceptable methods of depreciation & amortisation (amendments to IAS 16 and IAS 38) The amendments to IAS 16 prohibit the use of a revenue- based depreciation method for property, plant and equipment. Additionally, the amendments provide guidance in the application of the diminishing balance method for property, plant and equipment. The amendments to IAS 38 present a rebuttable presumption that a revenue-based amortisation method for intangible assets is inappropriate. This rebuttable presumption can be overcome (i.e. a revenue-based amortisation method might be appropriate) only in two limited circumstances: – the intangible asset is expressed as a measure of revenue, for example when the predominant limiting factor inherent in an intangible asset is the achievement of a revenue threshold (for instance, the right to operate a toll road could be based on a fixed total amount of revenue to be generated from cumulative tolls charged); or – when it can be demonstrated that revenue and the consumption of the economic benefits of the intangible asset are highly correlated. The Australian Accounting Standards Board (AASB) is expected to issue the equivalent Australian amendment shortly. Accounting for acquisition of interests in joint operations (amendment to IAS 11) The amendments to IFRS 11 state that an acquirer of an interest in a joint operation in which the activity of the joint operation constitutes a ‘business’, as defined in IFRS 3 Business Combinations, should: – apply all of the principles on business combinations accounting in IFRS 3 and other IFRSs except principles that conflict with the guidance of IFRS 11. This requirement also applies to the acquisition of additional interests in an existing joint operation that results in the acquirer retaining joint control of the joint operation (note that this requirement applies to the additional interest only, i.e. the existing interest is not remeasured) and to the formation of a joint operation when an existing business is contributed to the joint operation by one of the parties that participate in the joint operation; and – provide disclosures for business combinations as required by IFRS 3 and other IFRSs. The Australian Accounting Standards Board (AASB) is expected to issue the equivalent Australian amendment shortly. 32 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 2 Financial risk management The Company's activities expose it to a variety of financial risks: market risk (including interest rate risk), credit risk and liquidity risk. The Company's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Company. Risk management is carried out by management under policies approved by the Board of Directors. Management identifies and evaluates financial risks in close co-operation with the Company's operating units. The board provides principles for overall risk management, as well as policies covering specific areas, such as interest rate risk, credit risk, the use of financial instruments and investment of excess liquidity. The Company's financial instruments consist mainly of deposits with banks, accounts receivable and payable, and loans to associated companies. The Company holds the following financial instruments: Financial assets Cash and cash equivalents Trade and other receivables Available-for-sale financial assets Financial liabilities Trade and other payables a) Market risk i) Foreign exchange risk Consolidated 30 June 2014 $ Consolidated 30 June 2013 $ 625,036 5,005 1,083,821 1,713,863 65,615 65,615 265,845 224 133,821 399,890 83,572 83,572 Foreign exchange risk is the risk that financial loss will be suffered due to adverse movements in exchange rates. The Company is not exposed to foreign exchange risk. ii) Price risk Price risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate as a result of changes in market prices (other than those arising from foreign exchange or interest rate risk). The Company is not exposed to any material price risk. iii) Cash flow and fair value interest rate risk Interest rate risk is the risk that a financial instrument's value will fluctuate as a result of changes in market interest rates and the effective weighted interest rates on classes of financial assets and financial liabilities. Interest rate risk is managed by the Company with the use of rolling short-term deposits. The Company has no long term financial liabilities upon which it pays interest. As at the end of the reporting period, Maximus Resources Limited had the following variable rate cash and cash equivalent holdings: 30 June 2014 30 June 2014 30 June 2013 30 June 2013 Weighted average interest rate % 3.25% Balance $ 625,036 625,036 Weighted average interest rate % 4.38% Balance $ 265,845 265,845 Cash and cash equivalents Net exposure to cashflow interest rate MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 33 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont) 30 June 2014 Interest rate sensitivity analysis At 30 June 2014, the effect on profit and equity as a result of changes in the interest rate, with all other variables remaining constant would be as follows: Interest rate risk Increase 2% Decrease 2% 30 June 2014 Carrying amount $ Financial assets Cash and cash equivalents 625,036 Total increase/ (decrease) Profit $ 444 444 Equity $ 444 444 Profit $ (444) (444) Interest rate risk Increase 2% Decrease 2% 30 June 2013 Carrying amount $ Financial assets Cash and cash equivalents 265,845 Total increase/ (decrease) Profit $ 433 433 Equity $ 433 433 Profit $ (433) (433) Equity $ (444) (444) Equity $ (433) (433) b) Credit risk Credit risk is the risk of default by borrowers and transactional counterparties as well as the loss of value of assets due to deterioration in credit quality. Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as credit exposures to wholesale and retail customers, including outstanding receivables and committed transactions. For banks and financial institutions, only independently rated parties with a minimum rating of ‘A’ are accepted. Individual risk limits are set based on internal or external ratings in accordance with limits set by the board. Sales to retail customers are required to be settled in cash or using major credit cards, mitigating credit risk. c) Liquidity risk Liquidity risk is the risk that the Company may encounter difficulty in settling its debts or otherwise meeting its obligations. The Company manages liquidity risk by monitoring cash flows and ensuring that adequate funds are available to meet cash demands. At the reporting date the Company held deposits at call of $35,000 (2013: $35,000) that are expected to readily generate cash inflows for managing liquidity risk. d) Fair value measurements The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. AASB 7: Financial Instruments: Disclosures requires disclosure of fair value measurements by level of the following fair value measurement hierarchy: a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1) b) inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (level 2), and c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3). 34 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 The following table presents the Company’s assets and liabilities measured and recognised at fair value at 30 June 2014 and 30 June 2013. 30 June 2014 Assets Available-for-sale financial assets Terramin Australia Limited Tychean Resources Limited 30 June 2013 Assets Available-for-sale financial assets Tychean Resources Limited 3 Segment information a) Description of segments Level 1 $ 950,000 133,821 1,083,821 Level 1 $ 133,821 133,821 Level 2 Level 3 $ - - - $ - - - Level 2 Level 3 $ - - $ - - Total $ 950,000 133,821 1,083,821 Total $ 133,821 133,821 Identification of reportable segments Management has determined the operating segments based on the reports reviewed and used by the Board of Directors (the chief operating decision makers) that are used to make strategic decisions. The Company is managed primarily on the basis of geographical area of interest, since the diversification of the Company operations inherently has notably different risk profiles and performance assessment criteria. Operating segments are therefore determined on the same basis. Reportable segments disclosed are based on aggregating operating segments where the segments are considered to have similar economic characteristics and are also similar with respect to the following: – external regulatory requirements – geographical and geological styles The Billa Kalina project changed its name to Milles Creek during the year. Mining In 2013 other listed segmented assets for the Company include development costs and costs associated with the mining lease(Sellheim). Accounting policies developed Unless stated otherwise, all amounts reported to the Board of Directors as chief decision maker with respect to operating segments are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of the Company. MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 35 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont) 30 June 2014 b) Business segments 2014 Segment revenue Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) Loss on sale of exploration assets Impairment Segment assets Segment asset movements for the year: Capital expenditure Capital expenditure impaired Disposals Millers Creek Adelaide Hills Province Narndee Other Total $ - - - - $ - $ - $ - $ - (2,147,985) (4,270) (20,304) (2,172,559) (2,147,985) - - - - (2,147,985) (20,304) (20,304) 165,964 50,826 2,214,649 6,372 2,437,811 71,729 198,811 334,078 - - - (4,147,985) - - 26,675 (20,304) 631,293 (20,304) - (2,147,985) Total movement for the year 71,729 (3,949,174) 334,078 6,371 (1,536,996) Total segment assets Unallocated assets Total assets Total segment liabilities Unallocated liabilities Total liabilities 2013 Segment revenue Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) - - - - 2,437,811 1,728,768 4,165,579 - 99,500 99,500 Millers Creek Adelaide Hills Province Narndee Other Total $ - $ - $ - $ - $ - (404,448) (4,266,577) (4,659,854) (3,092,296) (12,423,175) Cost of goods sold from discontinued operation - - - (30,527) (30,527) Impairment Segment assets Segment asset movements for the year: (404,448) (4,266,577) (4,659,854) (417,624) (9,748,503) 94,235 4,000,000 1,880,571 94,236 5,974,807 Capital expenditure 125,147 119,132 458,636 17,535 720,450 Capital expenditure impaired (404,448) (4,266,577) (4,659,854) (417,624) (9,748,503) Total movement for the year (279,301) (4,147,445) (4,201,218) (400,089) (9,028,053) Total segment assets Unallocated assets Total assets Total segment liabilities Unallocated liabilities Total liabilities - - - - 5,974,807 421,632 6,396,439 - 105,063 105,063 36 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 i) Adjusted EBITDA A reconciliation of adjusted EBITDA to operating profit before income tax is provided as follows: Allocated: Adjusted EBITDA Unallocated: Interest revenue Administrative expenses Marketing expenses Consolidated 2014 $ Consolidated 30 June 2013 $ (2,172,559) (12,423,175) 22,222 (522,915) (5,048) 21,647 (642,802) (4,582) Profit before income tax from continuing operations (2,678,300) (13,048,912) ii) Segment assets Reportable segments’ assets are reconciled to total assets as follows: Allocated: Segment assets Unallocated: Cash and cash equivalents Trade and other receivables Other assets Available-for-sale financial assets Plant and equipment Total assets as per the consolidated statements of financial position iii) Segment liabilities Reportable segments’ liabilities are reconciled to total liabilities as follows: Allocated: Allocated segment liabilities from discontinued operations Unallocated: Trade and other payables Provisions Total liabilities as per the consolidated statements of financial position Consolidated 30 June 2014 $ Consolidated 30 June 2013 $ 2,437,811 5,974,807 625,036 5,005 9,601 1,083,821 5,305 4,166,579 265,845 224 10,821 133,821 10,921 6,396,439 Consolidated 30 June 2014 Consolidated 30 June 2013 $ - 65,615 37,887 103,502 $ - 83,572 21,491 105,063 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 37 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont) 30 June 2014 Consolidated 30 June 2014 $ - - Consolidated 30 June 2013 $ (30,527) (30,527) Consolidated 30 June 2014 Consolidated 30 June 2013 $ 22,222 22,222 $ 21,647 21,647 Consolidated 30 June 2014 $ Consolidated 30 June 2013 $ 97,392 1,867 147,575 275,856 225 - 522,915 5,048 5,048 20,304 - 20,304 130,853 32,474 171,957 253,830 3,688 50,000 642,802 4,582 4,582 12,967 9,735,536 9,748,503 4 Loss from discontinued operation Cost of goods sold Cost of gold extraction (Sellheim) Loss for the year 5 Other income Interest received 6 Expenses Administration Compliance Depreciation Administration costs Employment costs Legal fees Other Marketing Marketing and promotion Exploration expenses General exploration expenditure written off Capitalised exploration expenditure impaired 38 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 7 Income tax expense a) Income tax expense: Current tax b) Numerical reconciliation of income tax expense to prima facie tax payable Loss from continuing operations before income tax expense Tax at the Australian tax rate of 30% (2013: 30%) Tax effect of amounts which are not deductible (assessable) in calculating taxable income: Temporary differences not brought to account Income tax expense Consolidated 30 June 2014 Consolidated 30 June 2013 $ - - $ 607 607 (2,678,300) (803,490) (13,048,912) (3,914,674) 803,490 - 3,912,043 607 A deferred tax asset (DTA) has not been recognised in respect of temporary differences as they do not meet the recognition criteria as outlined in Note 1(e) of the financial statements. A DTA has not been recognised in respect of tax losses either as realisation of the benefit is not regarded as probable. The Company has unrecognised DTAs of $6,111,261 (2013: $5,348,978) that are available indefinitely for offset against future taxable profits. The tax rates applicable to each potential tax benefit are as follows: • • timing differences – 30% tax losses – 30% 8 Current assets – cash and cash equivalents Cash at bank and in hand Term deposits a) Risk exposure Consolidated 30 June 2014 Consolidated 30 June 2013 $ 90,036 535,000 625,036 $ 230,845 35,000 265,845 The Company’s exposure to interest rate risk is discussed in note 2. The maximum exposure to credit risk at the end of each reporting period is the carrying amount of each class of cash and cash equivalents mentioned above. b) Deposits at call The deposits are bearing a weighted average interest rate of 3.25% (2013: 4.38%). The deposits have a period to repricing of 6 months (2013: 6 months). MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 39 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont) 30 June 2014 9 Current assets – Trade and other receivables Net trade receivables Trade and other receivables GST paid on purchases 10 Current assets – Other current assets Security deposit Prepayments 11 Available-for-sale financial assets a) Fair values Available-for-sale financial assets include the following classes of financial assets: Current Shares in listed companies Non-current Shares in listed companies Total available-for-sale financial assets b) Listed securities Consolidated 30 June 2014 $ 5,005 - 5,005 Consolidated 30 June 2013 $ - 224 224 Consolidated 30 June 2014 Consolidated 30 June 2013 $ - 9,601 9,601 $ 98,841 453 99,294 Consolidated 30 June 2014 $ 1,083,821 1,083,821 - - 1,083,821 Consolidated 30 June 2013 $ - 133,821 133,821 133,821 Maximus Resources Limited holds 44,607,143 shares in Tychean Resources Limited (formerly ERO Mining Limited) (2013: 44,607,143) and 25,000,000 shares in Terramin Australia Limited. There are no fixed returns or fixed maturity dates attached to these investments. These shares are held as available-for-sale and their value is marked to market at financial year end. 40 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 12 Non-current assets – plant and equipment Consolidated At 30 June 2013 Cost or fair value Accumulated depreciation Net book amount Year ended 30 June 2014 Opening net book amount Additions Disposals Depreciation charge Closing net book amount At 30 June 2014 Cost or fair value Accumulated depreciation Net book amount Year ended 30 June 2013 Opening net book amount Additions Disposals Depreciation charge Closing net book amount At 30 June 2013 Cost or fair value Accumulated depreciation Net book amount Plant and equipment $ Furniture, fittings and equipment $ 16,007 (12,183) 3,824 3,824 - (861) (1,503) 1,460 11,984 (10,524) 1.460 439,294 - (406,101) (29,369) 3,824 16,007 (12,183) 3,824 12,913 (8,061) 4,852 4,852 - (3,409) (927) 516 2,216 (1,700) 516 8,702 - (2,465) (1,385) 4,852 12,913 (8,061) 4,852 Machinery and vehicles $ - - - - - - - - - - - 27,756 - (16,521) (11,235) - - - - Computer equipment and software $ 2,950 (705) 2,245 2,245 2,037 - (953) 3,329 4,987 (1,658) 3,329 87 2,950 - (792) 2,245 2,950 (705) 2,245 Total $ 31,870 (20,949) 10,921 10,921 2,037 (4,270) (3,383) 5,305 19,187 (13,882) 5,305 475,839 2,950 (425,087) (42,781) 10,921 31,870 (20,949) 10,921 13 Non-current assets – exploration and evaluation, development and mine properties a) Exploration and evaluation Exploration and evaluation Movement: Opening balance Expenditure incurred Disposal Loss on sale of exploration assets Impairment of capitalised expenditure Closing balance Closing balance comprises: Exploration and evaluation – 100% owned Exploration and evaluation phases – joint ventures Consolidated 30 June 2014 $ Consolidated 30 June 2013 $ 5,974,807 631,293 (2,000,000) (2,147,985) (20,304) 2,437,811 223,162 2,214,649 2,437,811 15,002,860 720,450 - - (9,748,503) 5,974,807 5,974,807 - 5,974,807 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 41 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont) 30 June 2014 b) Assets classified as held for sale Mine properties Loss on sale of assets held for sale - Sellheim Consolidated 30 June 2014 $ - Consolidated 30 June 2013 $ (384,512) The company completed the sale of the Sellheim alluvial project to a private consortium for $400,000 on 4th September 2012. 14 Current liabilities – trade and other payables Trade payables Accrued expenses Credit cards 15 Current liabilities – provisions Annual leave 16 Non-current liabilities – provisions Annual leave Long service leave Consolidated 30 June 2014 Consolidated 30 June 2013 $ 42,558 22,500 557 65,615 $ 64,987 18,100 485 83,572 Consolidated 30 June 2014 Consolidated 30 June 2013 $ 22,592 22,592 $ 15,281 15,281 Consolidated 30 June 2014 Consolidated 30 June 2013 $ 6,789 8,506 15,295 $ - 6,209 6,209 42 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 17 Contributed equity a) Share capital Ordinary shares Fully paid b) Movements in ordinary share capital: Consolidated 30 June 2014 Shares Consolidated 30 June 2014 Shares Consolidated 30 June 2014 $ Consolidated 30 June 2014 $ 869,376,390 869,376,363 35,394,766 35,394,765 Date Details Number of shares Issue price $ 1 July 2012 Opening balance 24 December 2012 Incentive rights 26 April 2013 Non-renounceable rights issue 771,791,725 1,500,000 35,004,343 $0.005 7,500 Proceeds received 89,788,304 $0.004 359,153 30 April 2013 Non-renounceable rights issue - underwriting Proceeds received 6,296,334 $0.004 Less: Transaction costs arising on share issues Deferred tax credit recognised directly in equity 30 June 2013 Balance 12 February 2014 Exercise of Options 869,376,363 27 $0.02 Less: Transaction costs arising on share issues Deferred tax credit recognised directly in equity 25,185 35,396,181 (2,023) 607 35,394,765 1 35,394,766 - - 30 June 2014 Balance 869,376,390 35,394,766 c) Ordinary shares Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. At shareholders’ meetings, on a show of hands every holder of ordinary shares present in person or by proxy is entitled to one vote, and upon a poll each share is entitled to one vote. Ordinary shares have no par value and the Company does not have a limited amount of authorised capital. d) Options and rights Information relating to the Maximus Resources Limited Employee Share Option and Incentive Rights Plans, including details of options and rights issued, exercised and lapsed during the financial year and the options/rights outstanding at the end of the financial year, is set out in note 31. e) Capital risk management The Company has no debt capital. There are no externally imposed capital requirements. The Company’s debt and capital includes ordinary share capital, supported by financial assets. There are no externally imposed capital requirements. Management effectively manages the Company’s capital by assessing its financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders and share issues. There have been no changes in the strategy adopted by management to control the capital of the Company since the prior year. This strategy is to ensure that the Company has no debt. MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 43 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont) 30 June 2014 18 Reserves and retained losses a) Reserves Available-for-sale investments revaluation reserve (i) Share based payments reserve (ii) Movements: i) Available-for-sale investments revaluation reserve Balance 1 July Impairment Revaluation of financial assets (net of tax) (note 13) Balance 30 June ii) Share based payments reserve Balance 1 July Employee options lapsed Balance 30 June Retained earnings Balance 1 July Transfer from share based payment reserve Net loss for the year Balance 30 June b) Nature and purpose of reserves i) Available-for-sale reserve Consolidated 30 June 2014 $ 405,393 - 405,393 (44,607) - 450,000 405,393 1,403,096 (1,403,096) Consolidated 30 June 2013 $ (44,607) 1,403,096 1,358,489 (2,281,436) 2,236,829 - (44,607) 1,403,096 - - 1,403,096 (30,461,878) (17,381,832) 1,403,096 (2,675,387) (31,734,169) - (13,080,046) (30,461,878) Changes in the fair value of instruments, such as equities, classified as available-for-sale financial assets, are recognised in other comprehensive income, as described in note 1(k) and accumulated in a separate reserve within equity. Amounts are reclassified to profit or loss when the associated assets are sold or impaired. ii) Share based payments reserve The share based payments reserve records items recognised as expenses on valuation of employee options and rights and options issued to external parties in consideration for goods and services rendered. 19 Key management personnel disclosures Key management personnel compensation Short-term employee benefits Post employment benefits Share based payments Consolidated 30 June 2014 Consolidated 30 June 2013 $ 484,258 39,842 - 524,100 $ 439,454 34,645 7,500 481,599 Detailed remuneration disclosures and interests held by key management personnel are provided in sections A to D of the remuneration report on pages 13 to 16. 44 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 20 Remuneration of auditors During the year the following fees were paid or payable for services provided by the auditor of the Company, its related practices and non-related audit firms: Grant Thornton Taxation services Audit and review of financial reports Total auditors’ remuneration 21 Contingencies a) Contingent liabilities Consolidated 30 June 2014 $ 4,000 28,300 32,300 Consolidated 30 June 2013 $ - 27,500 27,500 The Group had no known contingent liabilities as at 30 June 2014 (2013: Nil). b) Contingent assets During the financial year, the Adelaide Hills tenement package was reduced to 4 tenements during the period, following the sale of 5 tenements, including the Bird in Hand project to Terramin Australia Limited (“Terramin”). The consideration included the following contingent payment from Terramin: – $1,000,000 payable upon approval of a Program for Environmental Protection and Rehabilitation; and – $1,000,000 payable upon commencement of bullion production. Maximus is also entitled to a 0.5% royalty payable upon bullion production in excess of 50,000 ozs. 22 Commitments a) Commitments for exploration and joint venture expenditure In order to maintain current rights of tenure to exploration tenements the Company will be required to outlay in the year ending 30 June 2015 amounts of approximately $131,571 (2014: $91,880) in respect of tenement lease rentals and to meet minimum expenditure requirements pursuant to various joint venture requirements. b) Lease commitments : Company as lessee The State Government departments responsible for mineral resources require performance bonds for the purposes of rehabilitation of areas disturbed by exploration activities. At 30 June 2013, the Group had $35,000 of bank guarantees in place for this purpose (2013: $35,000). 23 Related party transactions a) Key management personnel Disclosures relating to key management personnel are set out in note 19. b) Transactions with other related parties The following transactions occurred with related parties: – Minter Ellison received $66,219 during the year for legal costs (2013: $8,751) from the Group. Mr Vickery is a consultant at Minter Ellison Lawyers. – Monax Alliance Pty Ltd (subsidiary of Monax Mining Limited) paid to the Company $51,649 (2013: Nil) for costs relating to the Millers Creek project (2013: Nil). Mr Kennedy is a director of Monax Mining Limited. – Tychean Resources Limited received Nil (2013: $25,227) for the termination of the Billa Kalina Farm-in and Joint Venture agreement. Mr Kennedy and Mr Vickery are directors of Tychean Resources Limited. Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 45 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont) 30 June 2014 24 Subsidiaries The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 1(b): Name of entity Maxiron Pty Ltd MXR Metals Pty Ltd MXR Minerals Pty Ltd Country of incorporation Australia Australia Australia 25 Cashflows from discontinued operations Cashflows from operating activities Payments to suppliers and employees – Sellheim Net cash (used in) discontinued operations Class of shares Equity holding Equity holding Ordinary Ordinary Ordinary 2014 % 100 100 100 2013 % 100 100 100 Consolidated 30 June 2014 $ - - Consolidated 30 June 2013 $ (30,527) (30,527) 26 Interests in joint ventures Maximus Resources Limited has the following interests in unincorporated joint ventures: State Agreement name Parties Summary WA Corporate Group Agreement WA Creasy Agreement MXR and Corporate Resource Consultants Pty Ltd, B Legendre and TE Johnston and Associates Pty Ltd MXR and Nemex Pty Ltd and M G Creasy WA Orex Ironstone Well Deed of Assignment MXR and Orex Mining Pty Ltd and Nemex Pty Ltd Corporate Group retains a 10% free carried interest in all or specified blocks within several exploration licences in the Narndee Project. Creasy retains a 30% free carried interest in prospecting licences 53/1308 to 53/1311 following MXR’s purchase of 90% of Nemex’s interest in the Ironstone Well Project. MXR has sold a 90% interest in all minerals except iron in E53/1223 and a 90% interest in all minerals in the remaining Ironstone Well Project tenements for a future production royalty capped at $4 million. 27 Events occurring after the reporting period No matter or circumstance has occurred subsequent to the end of the financial year that has significantly affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group in subsequent financial years. 46 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 28 Reconciliation of profit after income tax to net cash inflow from operating activities (Loss) for the year Depreciation Loss on sale of exploration assets Impairment of capitalised exploration expenditure Impairment of financial assets Net (gain)/loss on disposal of non-current assets Tax effect on transaction costs Change in operating assets and liabilities: Decrease/(increase) in trade and other receivables Decrease/(increase) in other operating assets (Decrease)/increase in trade and other payables (Decrease)/increase in provisions Net cash (outflow)/inflow from operating activities 29 Earnings per share a) Basic earnings per share Loss from continuing operations attributable to the ordinary equity holders Weighted average number of ordinary shares outstanding during the year used to calculate basic earnings per share Basic earnings per share (cents) b) Diluted earnings per share Consolidated 30 June 2014 $ Consolidated 30 June 2013 $ (2,678,300) (13,080,046) 1,867 2,147,985 20,304 - 4,270 - (4,781) 1,220 (17,957) 16,396 (508,996) 32,474 - 9,748,503 2,281,437 393,236 2,023 8,489 88,470 88,039 (30,338) (467,713) Consolidated 30 June 2014 $ (2,678,300) 869,376,373 Consolidated 30 June 2013 $ (13,049,519) 789,647,386 (0.31) (1.37) Loss from continuing operations attributable to the ordinary equity holders (2,678,300) (13,049,519) Weighted average number of options outstanding during the year used to calculate diluted earnings per share Weighted average number of ordinary shares outstanding during the year used to calculate diluted earnings per share - - 869,376,373 789,647,386 Diluted earnings per share (cents) (0.31) (1.37) a) Basic earnings per share Loss from continuing and discontinued operations attributable to the ordinary equity holders of the company Weighted average number of ordinary shares outstanding during the year used to calculate basic earnings per share (2,678,300) (13,080,046) 869,376,373 789,647,386 Basic earnings per share (cents) (0.31) (1.65) b) Diluted earnings per share Loss from continuing and discontinuing operations attributable to the ordinary equity holders of the company Weighted average number of options outstanding during the year used to calculate diluted earnings per share Weighted average number of ordinary shares outstanding during the year used to calculate diluted earnings per share (2,678,300) (13,080,046) - - 869,376,373 789,647,386 Diluted earnings per share (cents) (0.31) (1.65) MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 47 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont) 30 June 2014 Options Options granted to employees under the Maximus Resources Limited Employee Share Option Plan are considered to be potential ordinary shares. These have a dilutive effect on the weighted average number of ordinary shares. As the Company has reported a loss of $2,678,300 this financial year (2013: $13,080,046), the options have not been included in the determination of diluted earnings per share. Details relating to the options are set out in note 30. 30 Share based payments a) Employee option plan No option arrangements existed at 30 June 2014: On 4 February 2009 1,645,000 options were issued to employees under the Company’s Employee Share Option Plan. These options expired on 3 February 2014 Set out below is a summary of the options granted under the plan: 2014 Outstanding at the beginning of the year Expired Outstanding at the end of the year 2013 Balance Expired Number of options Weighted average exercise price 1,645,000 (1,645,000) - $ 0.040 0.040 - Number of options Weighted average exercise price 2,250,000 (605,000) 1,645,000 $ 0.077 - 0.040 Fair value of options granted No employee options were granted during the year ended 30 June 2014 (2013: Nil). Therefore no calculation of the fair value of options granted during the year was required to be made using the Black Scholes option pricing model. b) Employee incentive rights plan No incentive rights arrangements existed at 30 June 2014 and 2013. 48 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 31 Parent entity Statement of financial position Current assets Non-current assets Total assets Current liabilities Non-Current liabilities Total liabilities Net assets Shareholder’s equity Contributed equity Reserves Retained losses Capital and reserves attributable to owners Statement of profit or loss and other comprehensive income Profit for the year Other comprehensive income Total comprehensive income 32 Going concern Parent 2014 $ 1,724,904 2,443,116 4,168,020 94,994 8,506 103,501 Parent 2013 $ 278,332 6,119,549 6,397,881 98,854 17,188 116,042 4,064,519 6,281,839 35,394,768 405,393 35,387,268 1,365,989 (31,734,642) (30,471,418) 4,064,519 6,281,839 (2,678,300) (13,080,046) 450,000 44,607 (2,228,300) (13,035,439) The financial report has been prepared on the basis of going concern. The cash flow projections of the company and consolidated entity evidence that the company will require positive cash flows from additional capital for continued operations. The company incurred a loss of $2,678,300 (2013 $13,080,046) and operations were funded by a net cash outlay of $1,140,809 from operating and investing activities after excluding the cash proceeds from the sale of Bird in Hand tenements of $1,500,000. The company and consolidated entity’s ability to operate as a going concern is contingent upon obtaining additional capital. If additional capital is not obtained, the going concern basis of accounting may not be appropriate, as a result that the company may have to realise its assets and extinguish its liabilities, other than in the ordinary course of business in amounts which could be different from those stated in the financial report. No allowance for such circumstances has been made in the financial report. MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 49 DIRECTORS’ DECLARATION 30 June 2014 In the directors’ opinion: a) the consolidated financial statements and notes set out on pages 23 to 49 are in accordance with the Corporations Act 2001, including: i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements, and ii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2014 and of their performance for the financial year ended on that date, and b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable, and c) the financial statements comply with International Financial Reporting Standards as confirmed in note 1(a). The directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A of the Corporations Act 2001. This declaration is made in accordance with a resolution of the directors. Robert M Kennedy DIRECTOR Adelaide 24 September 2014 50 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 INDEPENDENT AUDITOR’S REPORT 30 June 2014 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 51 INDEPENDENT AUDITOR’S REPORT 30 June 2014 52 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 53 ASX ADDITIONAL INFORMATION 30 June 2014 The shareholder information set out below was applicable as at 30 September 2014. Unquoted securities Unlisted options over ordinary shares A Distribution of equity securities Analysis of numbers of equity security holders by size of holding: Holding 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over Shares Options 132 219 239 832 712 2,134 9 32 17 141 68 267 There were 1,579 holders of less than a marketable parcel of ordinary shares. At a share price of $0.003, an unmarketable parcel is 166,667 shares. B Equity security holders Twenty largest quoted equity security holders The names of the twenty largest equity holders of quotes securities are listed below: Options @ $0.02 expiring on 30 April 2015 Number on issue Number of holders 96,084,611 267 C Substantial holders As at 30 September 2014 the following were substantial shareholders: Shareholder Mr Robert Kennedy D Voting rights Number of shares 50,000,000 The voting rights attaching to each class of equity securities are set out below: Ordinary shares On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have once vote. Units % of units Options No voting rights. Rank Name 1. 2. 3. 4. 5. 6. 7. 8. 9. MR NICHOLAS BARADAKIS TRIPLE EIGHT GOLD PTY LTD RMK SUPER PTY LTD MR KEVIN MICHAEL KELLY KENNY INVESTMENTS PTY LTD FLINDERS MINES LIMITED MR DARREN WARES COLIN JOHN HOUGH MR DARRYN ANTHONY 10. MRS LILY YAN HONG LI 11. ROVER INVESTMENTS PTY LTD 12. MRS GWENDOLINE MALAXOS 42,000,000 29,088,202 20,911,798 19,310,416 17,000,000 16,305,555 15,850,000 15,000,153 15,000,000 15,000,000 12,000,000 11,200,000 11,000,000 10,985,392 4.83 3.34 2.40 2.22 1.95 1.87 1.82 1.72 1.72 1.72 1.38 1.29 1.26 1.26 1.15 1.15 1.15 13. 14. 15. 16. 17. ITONE PTY LTD J P MORGAN NOMINEES AUSTRALIA LIMITED DALE PARK PTY LTD 10,000,000 KELLY BROS PROPRIETARY LIMITED 10,000,000 LAWRENCE CROWE CONSULTING PTY LTD 10,000,000 18. MR BRIAN WILLCOCKS + MRS SHONA 10,000,000 1.15 WILLCOCKS 19. AM-AUSTRALIAN MINERALS EXPLORATION PTY LTD 20. COLIN HOUGH TOTAL top 20 holders of ordinary fully paid shares 9,800,000 1.13 9,150,000 1.05 309,601,516 35.57 TOTAL remaining holders balance 560,774,874 64.43 54 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 MAXIMUS RESOURCES LIMITED | ANNUAL REPORT 2014 55