RNS Number:0042S
Gippsland Limited
30 September 2005
GIPPSLAND LIMITED AND ITS CONTROLLED ENTITIES
FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2005
GIPPSLAND LIMITED and its CONTROLLED ENTITIES
ABN 31 004 766 376
DIRECTORS' REPORT
The Directors present their report on the Gippsland Limited ("the Company" or
"Parent Entity") and of the consolidated entity, being Gippsland Limited and its
controlled entities, for the financial year ended 30 June 2005 and the auditor's
report thereon.
DIRECTORS
The names and details of the Directors of Gippsland Limited during the financial
year and until the date of this report are:
Robert John Telford
John Morrison Chisholm
John Stuart Ferguson Dunlop (appointed 1July 2005)
John Damian Kenny
DIRECTORS QUALIFICATIONS AND EXPERIENCE
Robert John Telford (Executive Chairman)
AWAIT (Chem), M RACI
Mr Telford holds an Associate degree in Pure Chemistry (Organic and Inorganic)
having graduated from the Institute of Technology of Western Australia (now
Curtin University) in 1967.
Mr Telford has been a major shareholder in technology-based industries for some
30 years in the capacity of chief executive officer ("CEO"). He has been
involved in the pharmaceutical industry having been a past chairman and major
shareholder of the company Inovax Limited. Mr Telford has held the position of
CEO in companies involved in inorganic and organic chemical manufacture for some
15 years. He has been involved in the international resource industry for some
15 years via private and public companies and in the main is responsible for
securing the Company's interest in its Egyptian resource projects.
Mr Telford has an interest in 13,788,124 ordinary shares and 6,658,280 listed
options to acquire ordinary shares exercisable at 9 cents each on or before 31
December 2007.
John Morrison Chisholm (Executive Director)
B Sc (Hons), PhD, F AusIMM, F AIG
Dr Chisholm is a consulting geologist with a wide experience in exploration
geology and exploration management having worked as a lecturer at the University
of Western Australia and Curtin University prior to working for various
international mining companies. He was formerly an adjunct associate professor
in economic geology at Curtin University.
In 1984 he joined Western United Mining Services Pty Ltd during which time as
managing director he managed a large group of geoscientists and was involved in
the discovery of the Transvaal and Bounty mines.
He is a Fellow of both the Australian Institute of Geoscientists and the
Australasian Institute of Mining and Metallurgy with Chartered Practising status
in Geology. Dr Chisholm was one of the first geologists in Australia to have
been awarded Practising Chartered Status in geology by the Australasian
Institute of Mining and Metallurgy which is the highest level of recognition
that can be attained by professional geologists.
Dr Chisholm has an interest in 50,000 ordinary shares and 2,260,000 listed
options to acquire ordinary shares exercisable at 9 cents each on or before 31
December 2007.
John Stuart Ferguson Dunlop (Non-Executive Director)
BE, M Eng Sc, P Cert Arb, CP, F AusIMM, F IMMM, M SME, M CIMM, M MICA
John Stuart Ferguson Dunlop holds Bachelors and Masters Degrees in Mining
Engineering from the University of Melbourne. He is a certified Mine Manager
having approximately 35 years of international surface and underground mining
experience in a variety of base metal, industrial and precious metal production
and management situations.
He is a Director of the Australasian Institute of Mining and Metallurgy (AusIMM)
and Chairman of its affiliate, the Mineral Industry Consultants Association
(MICA).
Mr Dunlop is a highly experienced mining professional having been involved in
the design, construction and on-going operation of a number of major resource
projects throughout the world. He has a detailed knowledge of the Company's 40Mt
Abu Dabbab tantalum project in Egypt having been involved in the preparation of
the project's Bankable Feasibility Study.
He has operated his own mining consulting firm based in Perth since 1992 and was
previously a senior executive with BHP's (now BHP Billiton) Minerals Division,
before becoming General Manager Operations for Aztec Mining Co Ltd until this
company's takeover by Normandy Mining Ltd. Mr Dunlop currently serves as
Chairman of the Australian Listed explorer Alliance Resources Limited, a
position he has held since 9 May 1994, and since 27 December 1995 was a Non
executive Director of Australian Gold Fields NL. He is also a non executive
director of Encore Metals NL since 22 December 1999.
Mr Dunlop has no interest in any shares or options in the company.
John Damian Kenny (Non-Executive Director)
B Com (Hons), LLB
Mr Kenny is a lawyer having a specialised interest in venture capital, initial
public offerings property developments and agribusiness schemes. He has
extensive experience in public equity fundraisings and the pricing of equity,
debt and derivative securities. Mr Kenny has been involved in the listing on ASX
of a number of mining, oil and gas and technology companies. Mr Kenny is
currently the Chairman of ASX Listed Public Company Chester Mining Limited, a
post he has held since 17 June 2003.
Mr Kenny has an interest in 2,250,000 listed options to acquire ordinary shares
exercisable at 9 cents each on or before 31 December 2007.
COMPANY SECRETARY
Mr Robert Samuel Middlemas B Com, CA, Grad Dip Acc was appointed to the position
of company secretary on 22 March 2005. Mr Middlemas has been involved in the
mining industry for the last 15 years, providing secretarial services to a
number of ASX listed Companies.
PRINCIPAL ACTIVITIES
The principal activity of the consolidated entity during the financial year was
the prospecting and exploration for commercially and economically viable mineral
resources.
There were no significant changes in the nature of the consolidated entity's
principal activity during the year.
OPERATING RESULTS
The consolidated loss after providing for income tax for the year ended 30 June
2005 amounted to $1,995,208 (2004: $1,411,990).
DIVIDENDS
No dividend was paid or declared during the year and the Directors do not
recommend the payment of a dividend for the year ended 30 June 2005.
REVIEW OF OPERATIONS
A detailed review of the Company and consolidated entity's activities during the
financial year is set out in the section titled "Review of Operations" in this
Annual Report.
FINANCIAL POSITION
A full review of the financial position of the Company is contained in the
Discussion and Analysis attached to the Statements of Financial Performance,
Statements of Financial Position, and Statements of Cashflows.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
During the year and to the date of this report, there has not arisen any item,
transaction or event of a material and unusual nature likely, in the opinion of
the Directors of the Company, which may significantly affect the operations of
the Company, the results of those operations, or the state of affairs of the
Company, in future financial years other than:
(i) On 3 December 2004 the Company issued 20,000,000 ordinary
shares at an issue price of 3 UK pence (approx 7 cents) each and 10,000,000
free attaching unlisted options exercisable at 4 UK Pence (approx 9.5 cents)
each on or before 31 December 2007 raising a total of #600,000 ($1,491,612)
(before issue costs) for the purpose of furthering the bankable feasibility
study for the Abu Dabbab Project;
(ii) On 3 March 2005 the Company issued 500,000 ordinary shares
at an issue price of 11 cents each under a revised employment contract; and
(iii)On 27 March 2005 the Company issued 2,790,567 ordinary
shares at an issue price of 2.8 UK pence (approx 7 cents) each following
conversion of unlisted options raising a total of $192,293.
AFTER BALANCE DATE EVENTS
No matters or circumstances have arisen since the end of the financial year
which significantly affected or may significantly affect the operations of the
consolidated entity, the results of those operations, or the state of affairs of
the consolidated entity in future financial years except:
FUTURE DEVELOPMENTS
Information as to likely developments in the operations of the Company and the
consolidated entity and the expected results of those operations in future
financial years has not been included in this report because, in the opinion of
the Directors, it would prejudice the interests of the Company and the
consolidated entity.
ENVIRONMENTAL REGULATION
The consolidated entity's operations are not subject to any significant
environmental regulations under either Commonwealth or State legislation.
However, the Board is committed to achieving a high standard of environmental
performance, and regular monitoring of potential environmental exposures is
undertaken by management. The Board considers that the consolidated entity has
adequate systems in place for the management of its environmental requirements
and is not aware of any breach of those environmental requirements as they apply
to the consolidated entity.
The consolidated entity is required to carry out its activities in accordance
with the Mining Laws and regulations in the areas in which it undertakes its
exploration activities.
PROCEEDINGS ON BEHALF OF COMPANY
No person has applied for leave of Court 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.
The Company was not a party to any such proceedings during the year.
LEGAL PROCEEDINGS
One of Gippsland Limited's investee companies is Here2win.com Pty Ltd in which
Gippsland Limited owns a 90% interest. Here2win.com Pty Ltd is the owner of
various Internet horse racing gaming concepts. On 14 August 2000 Gippsland
Limited announced to the Australian Stock Exchange Ltd that the services of the
Chief Executive Officer of Here2win.com Pty Ltd, Mr Alex Aguero, had been
terminated. Mr Aguero, through Highforce Investments Pty Ltd, continues to hold
a 10% equity stake in Here2win.com Pty Ltd. Mr Aguero has commenced litigation
against Gippsland Limited seeking payment of what he alleges is unpaid
compensation for his services rendered while CEO. The statement of claim filed
by Mr Aguero with the Supreme Court of Western Australia claims, amongst other
things, damages or alternatively the sum of $1,840,000 plus costs. Gippsland
Limited holds the view that the claim is completely without merit and
accordingly the claim is being vigorously defended.
OPTIONS OVER UNISSUED CAPITAL
Listed Options
As at 30 June 2005 and the date of this report the following listed options were
on issue:
Option expiry date Exercise price Number on issue
31 December 2007 9 cents 43,771,393
During the financial year there were no listed options exercised.
Unlisted Options
As at 30 June 2005 and the date of this report the following unlisted options
were on issue:
Option expiry date Exercise price Number on issue
31 December 2007 4 UK pence 10,000,000
During the financial year a total of 2,790,567 unlisted options exercisable at
2.8 UK Pence were exercised.
MEETINGS OF DIRECTORS
During the financial year, 13 meetings of Directors were held. Attendances were
as follows:
NUMBER OF NUMBER OF
MEETINGS MEETINGS
ATTENDED ELIGIBLE TO
ATTEND
Robert John Telford 13 13
John Morrison Chisholm 13 13
John Dunlop 0 0
John Damian Kenny 13 13
REMUNERATION REPORT
The Company's policy for determining the nature and amount of emoluments of
Board members and senior executives of the Company is considered by the
Directors following a review of the market rates and performance.
Non-Executive Directors are remunerated on a fixed fee basis for the performance
of services as a Director.
Details of the nature and amount of each element of the emoluments of each
Director are as set out in the following table:
Directors
Consolidated Entity and Parent Entity
Name Director's Consulting and Superannuation Total
Fees ($) Management Fees ($)
Robert John - 174,960 (i) - 174,960
Telford
John Morrison 36,000 24,650 (i) - 60,650
Chisholm
John Damian Kenny - 36,000 (i) - 36,000
The consulting and management fees include fees paid to related parties of the
Directors.
(i) The Company has entered into a consulting arrangement with a company
controlled by Mr RJ Telford to carry out management and administration services
on behalf of the Company based upon an annual fee of $175,000. A company in
which Dr J M Chisholm has an interest supplies geological services to the
Company (Refer Note 17). The Company has an arrangement with a company
associated with Mr J Kenny to supply corporate services to the Company at normal
commercial rates and conditions (Refer Note 17). There are no other contracts to
which a Director is a party or under which a Director is entitled to a benefit
other than as disclosed in these financial statements.
Other than the Directors there are no executive officers of the Company or
parent entity.
NON-AUDIT SERVICES
The board of directors 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 in Note 15 did not compromise the external auditor's
independence financial years.
AUDITOR'S INDEPENDENCE DECLARATION
The lead auditor's independence declaration for the year ended 30th June 2005
has been received and can be found on the page following this directors' report.
INDEMNIFYING OFFICERS AND AUDITOR
During or since the end of the financial year, the Company has not given an
indemnity or entered into an agreement to indemnify, or paid or agreed to pay an
insurance premium for Officers and Auditors indemnity. The Constitution of the
Company allows for an indemnity in respect of legal liability for damages and
legal costs arising from claims made by reason of any omissions or acts (other
than dishonesty) by them, whilst acting in their individual or collective
capacity as Directors or Officers of the Company or its controlled entities.
Dated at Perth this 29th day of September 2005.
Signed in accordance with a resolution of the Board.
RJ TELFORD
DIRECTOR
AUDITOR'S INDEPENDENCE DECLARATION
UNDER S307C OF THE CORPORATIONS ACT 2001
YEAR END AUDIT
In accordance with the requirements of section 307C of the Corporations Act
2001, as lead auditor for the audit of Gippsland Limited for the year ended 30
June 2005, I declare that, to the best of my knowledge and belief, there have
been:
(a) no contraventions of the auditor independence requirements of the
Corporations Act 2001 in relation to the audit; and
(b) no contraventions of any applicable code of professional conduct
in relation to the audit.
Sean McGurk
Partner
Grant Thornton
Perth
Dated this 29th day of September 2005
GIPPSLAND LIMITED and its CONTROLLED ENTITIES
ABN 31 004 766 376
STATEMENTS OF FINANCIAL PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2005
Consolidated Entity Parent Entity
2005 2004 2005 2004
Note $ $ $ $
Revenues from
ordinary activities 2 22,941 14,539 22,941 14,539
Foreign exchange
(losses) gains 3 (96,093) 79,950 (96,093) 79,950
Employee expenses (128,278) (68,313) (128,278) (68,313)
Management and
consulting expenses (139,968) (134,269) (139,968) (134,269)
Exploration and
feasibility
expenses (1,134,564) (941,081) (1,098,146) (941,081)
Corporate office
expenses (60,958) (47,922) (60,958) (47,922)
Depreciation
expense 3 (11,496) (6,465) (11,496) (6,465)
Provision for
non-recovery of
loans 3 (13,123) (59,039) (109,623) (126,687)
Provision for
diminution in value
of investment 3 (13,124) (59,039) - -
Travel and
accommodation
expenses (85,315) (73,619) (85,315) (73,619)
AIM administration
expenses (156,309) (66,229) (156,309) (66,229)
Other expenses from
ordinary activities (178,921) (50,503) (131,963) (41,894)
--------- --------- --------- ---------
Loss from ordinary
activities before
income tax (1,995,208) (1,411,990) (1,995,208) (1,411,990)
Income tax relating
to ordinary
activities 4 - - - -
--------- --------- --------- ---------
Net loss
attributable to
members of the
parent entity 13 (1,995,208) (1,411,990) (1,995,208) (1,411,990)
========= ========= ========= =========
Adjustments
recognised directly
in equity. 12(a) (74,581) (299,574) (74,581) (299,574)
========= ========= ========= =========
Total Equity
changes (2,069,789) (1,711,564) (2,069,789) (1,711,564)
========= ========= ========= =========
Basic loss per
share (cents per
share) 16 (1.3) (1.2)
========= =========
Diluted loss per
share (cents per
share) 16 (1.3) (1.2)
========= =========
Discussion and Analysis - Financial Performance
The Consolidated Operating Loss for the financial year increased by $583,218,
mainly due to the increased level of activities surrounding the finalisation of
the bankable feasibility study on the Abu Dabbab Tantalum project in Egypt, and
the additional work done to attract potential financiers for the project (refer
operations review in this report for additional information)
Additionally, increased expenditure was undertaken in respect to the exploration
of the eight Wadi Allaqi gold and one copper/nickel projects located to the
southeast of Aswan in Egypt.
Additional costs were also incurred as the Company completed its first full year
trading on the London AIM market, following the successful dual listing with the
ASX in March 2004. This dual listing has enabled the Company to access the
significantly larger equity markets in London, and it is anticipated that
additional equity funding required to finance the Abu Dabbab Tantalum project
will be raised predominantly in this market.
The UK listing has led to fund raisings being made in UK Pounds, and the Company
has suffered an exchange loss during this financial year compared to an exchange
gain in the 2004 financial year as the UK Pound has depreciated against the
Australian Dollar.
Other operating expenses have also increased in line with the increased
activities undertaken by the Company related to the Abu Dabbab project
The statements of financial performance are to be read in conjunction with the
accompanying notes to the financial statements.
GIPPSLAND LIMITED and its CONTROLLED ENTITIES
ABN 31 004 766 376
STATEMENTS OF FINANCIAL POSITION
AS AT 30 JUNE 2005
Consolidated Entity Parent Entity
2005 2004 2005 2004
Note $ $ $ $
CURRENT ASSETS
Cash assets 5 589,522 1,050,459 589,417 1,050,359
Receivables 6 33,078 46,343 33,078 46,343
Other
financial
assets 7 15,270 15,249 15,270 15,249
--------- --------- --------- ---------
TOTAL CURRENT
ASSETS 637,870 1,112,051 637,765 1,111,951
--------- --------- --------- ---------
NON CURRENT
ASSETS
Receivables 6 - - - -
Other
financial
assets 7 - - 305 300
Property,
plant and
equipment 8 41,942 13,476 41,942 13,476
--------- --------- --------- ---------
TOTAL NON
CURRENT ASSETS 41,942 13,476 42,247 13,776
--------- --------- --------- ---------
TOTAL ASSETS 679,812 1,125,527 680,012 1,125,727
--------- --------- --------- ---------
CURRENT
LIABILITIES
Payables 9 99,225 218,014 99,225 218,014
Provisions 10 9,000 5,042 9,000 5,042
--------- --------- --------- ---------
TOTAL CURRENT
LIABILITIES 108,225 223,056 108,225 223,056
--------- --------- --------- ---------
TOTAL
LIABILITIES 108,225 223,056 108,225 223,056
--------- --------- --------- ---------
NET ASSETS 571,587 902,471 571,787 902,671
========= ========= ========= =========
EQUITY
Contributed
equity 12 15,868,236 14,203,912 15,868,236 14,203,912
Accumulated
losses 11 (15,296,649) (13,301,441) (15,296,449) (13,301,241)
--------- --------- --------- ---------
TOTAL EQUITY 13 571,587 902,471 571,787 902,671
========= ========= ========= =========
Discussion and Analysis - Financial Position
During the year the main changes to the financial position have occurred in the
equity contributed, with a total net $1,664,324 of new equity raised through the
London AIM Market. These funds were used predominantly to fund the exploration
and feasibility costs which have been fully expensed in the current year
accounts.
There has also been a decrease in the cash on hand, reflecting the increased
costs involved with the activities undertaken by the Company in finalising the
bankable feasibility study on the Abu Dabbab Tantalum project in Egypt, and the
additional work done to attract potential financiers for the project (refer
operations review in this report for additional information).
Other Balance Sheet items also reflect the increased activity undertaken by the
Company during the year.
The statements of financial position are to be read in conjunction with the
accompanying notes to the financial statements
GIPPSLAND LIMITED and its CONTROLLED ENTITIES
ABN 31 004 766 376
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2005
Consolidated Entity Parent Entity
2005 2004 2005 2004
Note $ $ $ $
CASH FLOWS FROM
OPERATING ACTIVITIES
Other receipts 101,906 83,653 101,906 83,653
Interest
received 2 22,941 14,539 22,941 14,539
Payments for
exploration
and
feasibility
expenditure (1,219,906) (808,168) (1,183,487) (808,168)
Payments for
administrative
expenditure (884,774) (528,973) (837,817) (520,364)
-------- -------- -------- --------
Net cash used
in operating
activities 14(b) (1,979,833) (1,238,949) (1,896,457) (1,230,340)
======== ======== ======== ========
CASH FLOWS FROM
INVESTING ACTIVITIES
Payments for
investment in
Tantalum Egypt
LLC 7 (13,124) (59,039) - -
Loan to
Egyptian
Company for
Mineral
Resources 6 (13,123) (59,039) - -
Payment for
investment in
subsidiary - - (5) -
Loans to
subsidiaries - - (109,623) (126,687)
Purchase of
plant and
equipment (39,962) (8,082) (39,962) (8,082)
-------- -------- -------- --------
Net cash used
in investing
activities (66,209) (126,160) (149,590) (134,769)
======== ======== ======== ========
CASH FLOWS FROM
FINANCING ACTIVITIES
Proceeds from
issue of
shares 1,738,905 2,561,052 1,738,905 2,561,052
Transaction
costs from
issue of
shares (57,707) (316,447) (57,707) (316,447)
-------- -------- -------- --------
Net cash
provided by
financing
activities 1,681,198 2,244,605 1,681,198 2,244,605
-------- -------- -------- --------
Net
increase/(decr
ease) in cash
held (364,844) 879,496 (364,849) 879,496
Effects of
exchange rate
changes on
cash (96,093) 79,950 (96,093) 79,950
Cash at the
beginning of
the financial
year 1,050,459 91,013 1,050,359 90,913
-------- -------- -------- --------
Cash at the
end of the
financial year 14(a) 589,522 1,050,459 589,417 1,050,359
======== ======== ======== ========
Discussion and Analysis - Cashflows
The main cashflow items during the year were the proceeds from new share issues
made through the London AIM Markets. These were lower than the previous year, as
the company finalised the bankable feasibility study on the Abu Dabbab Tantalum
project in Egypt, and completed additional work to attract potential financiers
for the project (refer operations review in this report for additional
information).
Payments for administrative expenditure also increased reflecting the increased
level of activity undertaken by the Company during the financial year.
The additional expenditures have led to a decrease in cash on hand at the end of
the financial year, as expenses have been greater than the inflow of funds
through new equity issues.
The statements of cash flows are to be read in conjunction with the accompanying
notes to the financial statements.
GIPPSLAND LIMITED and its CONTROLLED ENTITIES
ABN 31 004 766 376
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial report is a general purpose financial report that has been
prepared in accordance with applicable Accounting Standards, Urgent Issues Group
Consensus Views, other authoritative pronouncements of the Australian Accounting
Standards Board and the Corporations Act 2001.
This financial report has been prepared on the basis of accounting principles
applicable to a going concern, which assumes the commercial realisation of the
future potential of the consolidated entity's assets and the discharge of its
liabilities in the normal course of business. The financial report has been
prepared on an accruals basis and is based on historical costs and does not take
into account changing money values, or, except where stated, current valuations
of non-current assets. Cost is based on the fair values of the consideration
given in exchange for assets.
The accounting policies have been consistently applied, unless otherwise stated.
The following is a summary of the material accounting policies adopted by the
consolidated entity in the preparation of the financial report.
(a) Principles of Consolidation
The consolidated financial statements comprise the financial statements of
Gippsland Limited and all of its controlled entities. A controlled entity is any
entity controlled by Gippsland Limited. Control exists where Gippsland Limited
has the capacity to dominate the decision-making in relation to the financial
and operating policies of another entity so that the other entity operates with
Gippsland Limited to achieve the objectives of Gippsland Limited. A list of
controlled entities is contained in Note 7 to the financial statements.
All inter-company balances and transactions between entities in the consolidated
entity, including any unrealised profits or losses, have been eliminated on
consolidation.
Outside interests in the equity and results of the entities that are controlled
are shown as a separate item in the consolidated financial report.
(b) Income Tax
The consolidated entity adopts the income statement liability method of
tax-effect accounting. Income tax expense is calculated on the operating result
adjusted for permanent differences.
Timing differences which arise due to the different accounting periods in which
items of revenue and expense are included in the determination of accounting
profit and taxable income are brought to account as either a provision for
deferred income tax or as a future income tax benefit at the rate of income tax
applicable to the period in which the benefit will be received or the liability
will become payable.
Future income tax benefits are not brought to account unless realisation of the
asset is assured beyond any reasonable doubt. Future income tax benefits in
relation to tax losses are not brought to account unless there is virtual
certainty of realisation of the benefit. The amount of benefits brought to
account or which may be realised in the future is based on the assumption that
no adverse change will occur in income taxation legislation, and the
anticipation that the consolidated entity will derive sufficient future
assessable income to enable the benefit to be realised and comply with the
conditions of deductibility imposed by the law.
(c) Mineral Exploration Expenditure
Exploration, evaluation and development costs include expenditure on prospects
still at an exploratory or development stage and are expensed as incurred. These
costs include costs of acquisition, exploration, determination of recoverable
reserves, economic feasibility studies and all technical and administrative
overheads directly associated with those projects.
Recoupment of capitalised exploration, evaluation and development costs is
dependent upon the successful development and commercial exploitation of each
area of interest and are amortised over the expected commercial life of each
area once production commences.
GIPPSLAND LIMITED and its CONTROLLED ENTITIES
ABN 31 004 766 376
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(d) Going Concern Basis of Accounting
The general purpose financial report has been prepared on the basis of a going
concern. The consolidated entity's ability to continue as a going concern is
contingent upon raising additional capital to fund exploration commitments,
other principal activities and for use as working capital. If additional capital
is not raised, the going concern basis may not be appropriate with the result
that the entity may have to realise its assets and extinguish its liabilities
other than in the ordinary course of business and at amounts different from
those stated in the financial report. No allowance for such circumstances have
been made in the financial report.
(e) Property, Plant and Equipment
Property, plant and equipment are carried at cost, less, where applicable, any
accumulated depreciation or amortisation. The carrying amount of property, plant
and equipment is reviewed annually by the Directors to ensure it is not in
excess of the recoverable amount from these assets. The recoverable amount is
assessed on the basis of the expected net cash flows which will be received from
the assets employment and subsequent disposal. The expected net cash flows have
not been discounted to their present values in determining recoverable amounts.
The depreciable amount of all fixed assets is depreciated on a straight line
basis over their useful lives to the consolidated entity commencing from the
time the asset is held ready for use. Leasehold improvements are depreciated
over the shorter of either the unexpired period of the lease or the estimated
useful lives of the improvements.
The depreciation rates for plant and equipment range between 13% and 33%.
(f) Foreign currency transactions
Foreign currency transactions during the year are converted to Australian
currency at the rates of exchange applicable at the dates of the transactions.
Amounts receivable and payable in foreign currencies at the reporting date are
translated at the rates of exchange ruling on that date. Exchange differences
relating to amounts payable and receivable in foreign currencies are brought to
account as exchange gains or losses in the statement of financial performance in
the year in which the exchange rates change.
(g) Leases
Lease payments for operating leases, where substantially all the risks and
benefits remain with the lessor, are charged as expenses in the periods in which
they are incurred.
(h) Investments
Non-current investments are measured on the cost basis. The carrying amount of
non-current investments is reviewed annually by Directors to ensure it is not in
excess of the recoverable amount of these investments. The recoverable amount is
assessed from the shares' current market value or the underlying net assets in
the particular entities.
(i) Interests in Joint Ventures
Interests in joint ventures are brought to account by including in the
respective classifications the share of individual assets employed and
liabilities and expenses incurred in the Statement of Financial Position and
Statement of Financial Performance.
(j) Employee Benefits
Provision is made for the Company's liability for employee benefits arising from
services rendered by employees to balance date. Employee benefits are expected
to be settled within one year together with benefits arising from wages and
salaries, annual leave and sick leave which will be settled after one year, have
been measured at their nominal value.
Liabilities for other employee entitlements, which are not expected to be paid
or settled within 12 months of balance date, are accrued at undiscounted
amounts, where material, in respect of all employees at the present values of
future amounts expected to be paid.
Contributions are made by the consolidated entity to employee superannuation
funds and are charged as expenses when incurred.
GIPPSLAND LIMITED and its CONTROLLED ENTITIES
ABN 31 004 766 376
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(k) Cash
For the purpose of the statement of cash flows, cash includes cash on hand and
at call deposits with banks or financial
institutions, net of bank overdrafts.
(l) Receivables and Revenue Recognition
Interest revenue is recognised on an accruals basis taking into account the
interest rates applicable to the financial assets.
Sundry debtors are settled within 60 days and are carried at amounts due. The
collectibility of debts is assessed at the reporting date and specific provision
is made for any doubtful debts.
(m) Goods and Services Tax
Revenues, expenses and assets are recognised net of the amount of goods and
services tax (GST), except where the amount of GST incurred is not recoverable
from the Australian Taxation Office (ATO). In these circumstances the GST is
recognised as part of the cost of acquisition of the asset or as part of an item
of expense.
Receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the ATO is included as a
current asset or liability in the Statement of Financial Position.
Cash flows are included in the Statement of Cash Flows on a gross basis. The GST
components of cash flows arising from investing and financing activities which
are recoverable from, or payable to the ATO are classified as operating cash
flows.
(n) Payables
These amounts represent liabilities for goods and services provided to the
consolidated entity prior to the end of the financial year and which are unpaid.
The amounts are unsecured and are usually paid within 30 days of recognition.
(o) Contributed Equity
Issued capital is recognised as the fair value of the consideration received by
the Company.
Any transaction costs arising on the issue of ordinary shares are recognised
directly in equity as a reduction of the share proceeds received.
(p) Earnings per Share
Basic earnings per share ("EPS") are calculated based upon the net loss divided
by the weighted average number of ordinary shares. Diluted EPS are calculated as
the net loss divided by the weighted average number of ordinary shares and
dilutive potential ordinary shares.
(q) Comparative Figures
Where required by Accounting Standards comparative figures have been adjusted to
conform with changes in presentation for the current financial year.
GIPPSLAND LIMITED and its CONTROLLED ENTITIES
ABN 31 004 766 376
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
Consolidated Entity Parent Entity
2005 2004 2005 2004
$ $ $ $
NOTE 2 REVENUE FROM ORDINARY ACTIVITIES
Operating activities:
- Interest received from 22,941 14,539 22,941 14,539
other persons
-------- -------- -------- --------
Total revenue from ordinary 22,941 14,539 22,941 14,539
activities ======== ======== ======== ========
NOTE 3 LOSS FROM ORDINARY ACTIVITIES
The loss from ordinary
activities before income tax
has been determined after:
Expenses:
Rental expense on operating 20,412 21,800 20,412 21,800
leases
Contributions to employees 4,320 5,760 4,320 5,760
superannuation plans
Depreciation of plant and 11,496 6,465 11,496 6,465
equipment
Movements in provisions:
- Employee entitlements 3,958 (1,447) 3,958 (1,447)
- Provision against loan to - - 26,247 118,079
Tantalum Int Pty Ltd
- Provision against loan to - - 46,957 8,608
Here2win.com Pty Ltd
- Provision against of loan - - 36,419 -
to Nubian Resources plc
- Provision for 13,123 59,039 - -
non-recovery of loan to
other parties
- Provision for 13,124 59,039 - -
diminution
Foreign exchange losses 96,093 - 96,093
Exploration expenditure 1,134,564 941,081 1,098,145 941,081
incurred and written off ======== ======== ======== ========
Income:
Foreign exchange gains - 79,950 - 79,950
======== ======== ======== ========
NOTE 4 INCOME TAX
(a) Income Tax Expense
--------------------
The aggregate amount of income tax
attributable to the financial
year differs by more than 15% from the
prima facie tax benefit on
the operating loss. The differences
are reconciled as follows:
Loss from ordinary (1,995,208) (1,411,990) (1,995,208) (1,411,990)
activities ======== ======== ======== ========
Prima facie tax benefit on (598,562) (423,597) (598,562) (423,597)
operating loss before income
tax at 30% (2004: 30%)
Add: tax effect of 32,887 38,006 32,887 38,006
non-allowable items -------- -------- -------- --------
Income tax benefit (565,675) (385,591) (565,675) (385,591)
attributable to operating
loss not brought to account
Future income tax benefit not 565,675 385,591 565,675 385,591
brought to account -------- -------- -------- --------
Income tax expense shown in - - - -
the financial statements ======== ======== ======== ========
(b) Future Income Tax Benefit
---------------------------
Future income tax benefits 3,110,238 2,517,385 2,361,703 1,768,850
relating to tax losses not ======== ======== ======== ========
brought to account as their
recoverability is not
virtually certain
The benefit will only be obtained if the Company derives future assessable income
of a nature and of an amount sufficient to enable the benefits from the
deductions for these losses to be realised; the Company continues to comply with
the condition for deductibility imposed by tax legislation; and no changes to tax
legislation adversely affect the Company in realising the benefit from the
deductions for the losses.
The consolidated entity has not entered into a tax consolidated group and there has
been no impact on the tax position as a consequence of the introduction of the
revised tax legislation.
GIPPSLAND LIMITED and its CONTROLLED ENTITIES
ABN 31 004 766 376
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
Consolidated Entity Parent Entity
2005 2004 2005 2004
$ $ $ $
NOTE 5 CASH ASSETS
Cash at bank
and on hand 136,507 59,607 136,402 59,507
Cash held in
foreign
currency 453,015 990,852 453,015 990,852
-------- -------- -------- --------
Cash at bank
and on hand 589,522 1,050,459 589,417 1,050,359
======== ======== ======== ========
The cash held in foreign currency pays interest at an
average rate of 2.9% at 30 June 2005
NOTE 6 RECEIVABLES
CURRENT
Sundry debtors 33,078 46,343 33,078 46,343
======== ======== ======== ========
NON CURRENT
Amounts owed
from
controlled
entities (i) - - 2,738,360 2,628,737
Provision for
non-recovery - - (2,738,360) (2,628,737)
-------- -------- -------- --------
- - - -
-------- -------- -------- --------
Amounts owed
from other
parties -
Egyptian
Mineral
Resources
Authority 72,162 59,039 - -
Provision for
non-recovery (72,162) (59,039) - -
-------- -------- -------- --------
- - - -
-------- -------- -------- --------
- - - -
======== ======== ======== ========
(i) The loans to controlled entities are advanced interest
free, are unsecured and there are no set terms for
repayment.
NOTE 7 OTHER FINANCIAL ASSETS
CURRENT
Prepayments 15,270 15,249 15,270 15,249
======== ======== ======== ========
NON CURRENT
Shares in subsidiaries, at cost
Country of Incorporation Class of Shares Percentage Holding Cost of Parent Entity's Investment
2005 2004 2005 2004
% % $ $
Abutan Pty Ltd Australia Ordinary 100 100 100 100
Ltd
Tantalum
International
Pty Ltd Australia Ordinary 100 100 100 100
Here2win.com
Pty Ltd Australia Ordinary 90 90 100 100
Nubian
Resources plc United Kingdom Ordinary 100 - 5 -
-------- --------
305 300
======== ========
(a) The controlled entities are not audited as they are small proprietary companies not required to prepare
financial statements.
(b) The ultimate parent entity is Gippsland Limited.
(c) On 20 May 2004 Nubian Resources PLC was incorporated in the United Kingdom for the purpose of exploring eight
gold areas and one copper-nickel area in the Wadi Allaqi region of Egypt. All the issued shares were held in
trust as at 30 June 2004 and were transferred to Gippsland Limited in the current financial year.
During 2003 a wholly-owned subsidiary of the Company, Tantalum International Pty
Ltd acquired a 50% interest in Tantalum Egypt LLC for cash consideration of
US$40,000 (A$59,039) and a further amount of US$10,000 (A$13,124) during the
current financial year. The remaining 50% interest in Tantalum Egypt LLC is held
by the Egyptian Mineral Resources Authority which in turn is 100% owned by the
Egyptian Ministry of Petroleum, which is itself owned by the sovereign state
that is the Arab Republic of Egypt. The investment by Tantalum International Pty
Ltd has been fully provided against as at 30 June 2005.
GIPPSLAND LIMITED and its CONTROLLED ENTITIES
ABN 31 004 766 376
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
NOTE 8 Consolidated Entity Parent Entity
PROPERTY, PLANT
AND EQUIPMENT 2005 2004 2005 2004
$ $ $ $
Plant and
equipment - at
cost 177,313 137,352 177,313 137,352
Less:
Accumulated
depreciation (135,371) (123,876) (135,371) (123,876)
-------- -------- -------- -------
Total property,
plant and
equipment 41,942 13,476 41,942 13,476
======== ======== ======== =======
Movement in
carrying amounts:
Movement in the
carrying amounts
for each class
of, property,
plant and
equipment between
the beginning and
end of the
current financial
year.
Balance at the
beginning of
year 13,476 11,859 13,476 11,859
Additions 39,962 8,082 39,962 8,082
Depreciation
expense (11,496) (6,465) (11,496) (6,465)
-------- -------- -------- -------
41,942 13,476 41,942 13,476
======== ======== ======== =======
NOTE 9 PAYABLES
CURRENT
(Unsecured)
Sundry
creditors and
accrued
expenses 90,225 208,114 90,225 208,114
Amounts payable
to Director
related
entities (Refer
Note 17(e)) 9,000 9,900 9,000 9,900
-------- -------- -------- -------
99,225 218,014 99,225 218,014
======== ======== ======== =======
NOTE 10 PROVISIONS
CURRENT
Employee
entitlements 9,000 5,042 9,000 5,042
======== ======== ======== =======
Number of
employees at
year end 1 1 1 1
======== ======== ======== =======
NOTE 11 ACCUMULATED LOSSES
Accumulated
losses at the
beginning of
the financial
year (13,301,441) (11,889,451) (13,301,241) (11,889,251)
Net loss
attributable to
members of the
parent entity (1,995,208) (1,411,990) (1,995,208) (1,411,990)
-------- -------- -------- --------
Accumulated
losses at the
end of the
financial year (15,296,649) (13,301,441) (15,296,449) (13,301,241)
======== ======== ======== ========
GIPPSLAND LIMITED and its CONTROLLED ENTITIES
ABN 31 004 766 376
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
Consolidated Entity Parent Entity
2005 2004 2005 2004
$ $ $ $
NOTE 12 CONTRIBUTED EQUITY
(a) Paid up capital:
------------------
162,818,926 (2004: 15,868,236 14,203,912 15,868,236 14,203,912
139,528,359) fully paid ======== ======= ======== ========
ordinary shares
Share Movements
-----------------
* Opening balance 14,203,912 11,942,434 14,203,912 11,942,434
* On 3 December 2004 1,491,612 - 1,491,612 -
the Company issued
20,000,000 ordinary
shares at 3 pence (7.5
cents) each (refer b(i))
* On 3 March 2005 the 55,000 - 55,000 -
Company issued 500,000
shares under an
employment contract at 11
cents each
* On 27 April 2005 the 192,293 - 192,293 -
Company issued 2,790,567
following an option
conversion at 2.8 pence
(7 cents) each (refer (b)
(ii))
* On 5 August 2003 the - 560,000 - 560,000
Company issued 14,000,000
ordinary shares at 4
cents each
* On 5 December 2003 - 300,000 - 300,000
the Company issued
6,000,000 ordinary shares
at 5 cents each
* On 8 March 2004 the - 1,701,052 - 1,701,052
Company issued 25,000,000
ordinary shares at 6.8
cents (2.8 UK pence)
cents each
* Less: Issue costs (74,581) (299,574) (74,581) (299,574)
associated with capital -------- ------- -------- --------
raisings
* Closing balance 15,868,236 14,203,912 15,868,236 14,203,912
======== ======= ======== ========
The purpose of the share issues above were to support the
ongoing operations of the Company.
NOTES:
(i) Ordinary shares have the right to receive dividends as declared
and, in the event of winding up the Company, to participate in the
proceeds from the sale of all surplus assets in proportion to the
number of and amounts paid up on shares held.
(ii) Ordinary shares entitle their holder to one vote, either in person
or by proxy, at a meeting of the Company.
(b) Options on issue Number of Number of
Options Options
The following options over ordinary
shares are on issue:
Options
exercisable at
9 cents on or
before
31/12/2007
(listed) 43,771,393 43,771,393
Options
exercisable at
4 UK pence on
or before
31/12/2007
(unlisted) (i) 10,000,000 -
Options exercisable at
2.8 UK pence on or
before 8/03/2007(unlisted)(ii) - 2,790,567
-------- --------
53,771,393 46,561,960
======== ========
During the year a total of 10,000,000 unlisted options exercisable at 4 UK
pence on or before 31/12/2007 were issued as securities offered under capital
raising initiatives (Refer Note 12(a)).
On 27 April 2005 a total of 2,790,567 unlisted options were exercised at 2.8
UK pence (7 cents) (Refer Note 12(a)).
GIPPSLAND LIMITED and its CONTROLLED ENTITIES
ABN 31 004 766 376
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
Consolidated Consolidated Parent Parent
Entity Entity Entity Entity
2005 2004 2005 2004
$ $ $ $
NOTE 13 TOTAL EQUITY RECONCILIATION
Balance at the beginning of the 902,471 52,983 902,671 53,183
year
Total changes in equity (1,995,208) (1,411,990) (1,995,208) (1,411,990)
recognised in the Statement of
Financial Performance
attributable to members of the
parent entity
Net proceeds from the issue of 1,664,324 2,261,478 1,664,324 2,261,478
shares --------- -------- -------- --------
Balance at the end of the 571,587 902,471 571,787 902,671
year ========= ======== ======== ========
NOTE 14 CASH FLOW INFORMATION
(a) Reconciliation of cash
------------------------
Cash on hand and foreign 589,522 1,050,459 589,417 1,050,359
currency cash reserves ========= ======== ======== ========
The Company has no unused, standby or
other credit facilities.
(b) Reconciliation of cash flow from operations to
loss from ordinary activities after income tax
--------------------------------------------------
Loss from ordinary activities after income tax (1,995,208) (1,411,990) (1,995,208) (1,411,990)
------------------------------------------------
Non cash items:
Depreciation 11,496 6,465 11,496 6,465
Provision for non- recovery of loans to - - 109,623 126,687
subsidiaries
Provision for non-recovery of other loans 13,124 59,039 - -
Provision for diminution in investments 13,123 59,039 - -
Foreign exchange loss (gain) 96,093 (79,950) 96,093 (79,950)
Issue of shares - non cash - - - -
Changes in assets and liabilities:
- (increase) decrease in sundry debtors (3,608) (11,978) (3,608) (11,978)
- (increase) decrease in prepayments (21) (15,248) (21) (15,248)
- increase (decrease) payables (118,790) 157,121 (118,790) 157,121
- increase (decrease) in provisions 3,958 (1,447) 3,958 (1,447)
--------- -------- -------- --------
Net cash flow used in operating activities (1,979,833) (1,238,949) (1,896,457) (1,230,340)
========= ======== ======== ========
(c) There were no material non cash items during the financial
year.
NOTE 15 AUDITORS' REMUNERATION
Remuneration
of the
auditors of
the parent
entity for
auditing 12,450 11,350 12,450 11,350
and audit review of the financial and half yearly
reports ========= ======== ======== ========
GIPPSLAND LIMITED and its CONTROLLED ENTITIES
ABN 31 004 766 376
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
Consolidated Entity
2005 2004
Cents per Share Cents per Share
NOTE 16 LOSS PER SHARE
Loss per share - Basic loss per share
(cents per share) (1.3) (1.2)
========== ==========
Diluted loss per share - Diluted loss
per share (cents per share) (1.3) (1.2)
========== ==========
(a) The weighted average number of
ordinary shares used in calculating
basic loss per share 151,695,172 117,020,162
========== ==========
(b) Adjusted weighted average number
of
ordinary shares
used in calculating diluted loss 151,468,789 117,828,359
per share ========== ==========
(c) Loss used in the calculation of
basic and diluted
loss per share (1,995,208) (1,411,990)
========== ==========
(d) The 2,790,567 unlisted options exercisable at 2.8 UK pence each on or
before 8 March 2007, and exercised on 27 April 2005 have been included as
potential ordinary shares in the determination of diluted loss per share. The
43,771,393 listed options exercisable at 9 cents each on or before 31 December
2007 have not been included as potential ordinary shares in the determination
of diluted loss per share.
NOTE 17 DIRECTORS' AND EXECUTIVES' DISCLOSURES
(a) Remuneration of Specified Directors and Specified Executives by the
consolidated entity
Remuneration levels are competitively set to attract and retain appropriately
qualified and experienced Directors and senior executives. The Board obtains
independent advice on the appropriateness of remuneration packages, given trends
in comparative companies both locally and internationally. Remuneration packages
include fixed remuneration with bonuses or equity based remuneration entirely at
the discretion of the Board based on the performance of the consolidated entity.
Non-Executive Directors' base fees are presently $36,000 per annum.
Non-Executive Directors do not receive bonuses. Directors' fees cover all main
Board activities.
The following table provides the details of all Directors of the Company
("Specified Directors") and the nature and amount of the elements of their
remuneration for the year ended 30 June 2005. There are no "Specified
Executives" that are involved in the strategic direction of the Company, as this
role is completed by the Executive Chairman and the Non-Executive Directors.
2005
Primary Post Employment
Specified Directors' Fees Consulting & Super Retirement Total
Directors Management -annuation Benefits
Fees
$ $ $ $ $
RJ Telford - 174,960 - - 174,960
JM Chisholm 36,000 24,650 - - 60,650
JD Kenny - 36,000 - - 36,000
---------- ---------- ---------- ---------- ----------
36,000 235,610 - - 271,610
========== ========== ========== ========== ==========
2004
Primary Post Employment
Specified Directors' Fees Consulting & Super Retirement Total
Directors Management -annuation Benefits
Fees
$ $ $ $ $
RJ Telford - 169,220 - - 169,220
JM Chisholm 15,000 18,000 1,350 - 34,350
JD Kenny - 36,000 - - 36,000
---------- ---------- ---------- ---------- ----------
15,000 223,220 1,350 - 239,570
========== ========== ========== ========== ==========
There were no loans made to any Directors as at 30 June 2005 (30 June 2004:
$Nil).
GIPPSLAND LIMITED and its CONTROLLED ENTITIES
ABN 31 004 766 376
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
NOTE 17 DIRECTORS' AND EXECUTIVES' DISCLOSURES (Continued)
(b) Equity instruments
All options refer to options over ordinary shares of Gippsland Limited, which
are exercisable on a one for one basis.
Options over equity instruments granted as remuneration
During the reporting period there were no options over ordinary shares granted
and/or vested to Specified Directors or their nominees. No options have been
granted to Specified Directors since the end of the financial year. During and
since the reporting period no options have been exercised by Specified
Directors.
(c) Specified Directors' Share and Option Holdings in the Parent Entity
2005
The aggregate numbers of ordinary shares and options of the Company held
directly, indirectly or beneficially by Specified Directors of the Company or
their personally-related entities is as follows:
Specified Ordinary Shares Listed Options
Directors
1 July Purchases Sales 30 June 30 June 30 June
2004 2005 2005 2004
RJ Telford 13,788,124 - (220,000) 13,568,124 6,558,322 6,658,280
JM Chisholm 50,000 - - 50,000 2,260,000 2,260,000
JD Kenny - - - - 2,250,000 2,250,000
2004
The aggregate numbers of ordinary shares and options of the Company held
directly, indirectly or beneficially by Specified Directors of the Company or
their personally-related entities is as follows:
Specified Ordinary Shares Listed Options
Directors
1 July Purchases Sales 30 June 30 June 30 June
2003 2004 2004 2003
RJ Telford 13,973,124 - (185,000) 13,788,124 6,658,280 6,758,280
JM Chisholm 50,000 - - 50,000 2,260,000 2,260,000
JD Kenny - - - - 2,250,000 2,250,000
(d) Other Transactions with the Company or its controlled entities
A number of Specified Directors or their personally-related entities, hold
positions in other entities that result in them having control or significant
influence over the financial or operating policies of those entities.
A number of these entities transacted with the Company or its subsidiaries in
the reporting period. The terms and conditions of those transactions were no
more favourable than those available, or might reasonably be expected to be
available, on similar transactions to unrelated entities on an arm's length
basis.
GIPPSLAND LIMITED and its CONTROLLED ENTITIES
ABN 31 004 766 376
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
NOTE 17 DIRECTORS' AND EXECUTIVES' DISCLOSURES (Continued)
(d) Other Transactions with the Company or its controlled entities (Continued)
The aggregate amounts recognised during the year relating to Specified Directors
and their personally-related entities were as detailed below:
Consolidated Entity &
Parent Entity
Specified Transaction 30 June 2005 30 June 2004
Directors
$ $
JM Chisholm Geological consulting services 24,650 2,915
(i)
JD Kenny Legal services (ii) - 11,842
(i) Fees for geological consulting services were paid to an entity in
which Dr JM Chisholm has an interest. Amounts were billed based on normal
market rates for such services and were due and payable under normal
payment terms.
(ii) Fees for legal services were paid to an entity in which Mr JD Kenny
has an interest. Amounts were billed based on normal market rates for such
services and were due and payable under normal payment terms.
Fees for management and administration were paid to an entity controlled by Mr
RJ Telford. These fees have been disclosed in Note 17(a).
(e) Payables to Specified Directors of the Company and their
personally related entities
Consolidated Entity &
Parent Entity
30 June 2005 30 June 2004
$ $
Aggregate amount payable at balance date 9,000 9,900
Current - Accounts payable (Refer Note 9)
The amounts payable as at 30 June 2005 comprised amounts owed in relation to
Director consultancy fees owed to Dr JM Chisholm of $6,000 (2004: $6,000) and
Director consultancy fees owed to Mr JD Kenny of $3,000 (2004: $3000).
NOTE 18 RELATED PARTY TRANSACTIONS
Gippsland Limited is the ultimate parent entity.
The only non Director related party to the Company are its controlled entities.
Refer Note 7 for further details.
Gippsland Limited (the parent entity) has made loans to its controlled entities
totalling $2,738,360 (2004: $2,628,737). Refer Note 6 for further details.
There were no other related party transactions during the year.
NOTE 19 STATEMENT OF OPERATIONS BY SEGMENT
The Company operates within the mineral exploration industry predominantly in
the geographical segment of Egypt. There are no assets or liabilities recorded
with respect to the operations in Egypt and all expenditure is written off to
the Statement of Financial Performance.
NOTE 20 CONTINGENT LIABILITIES
(a) In accordance with normal industry practice the Company has
entered into a joint venture agreement with other parties for the purpose of
exploring and developing various mineral interests. If a party to a joint
venture defaults and does not contribute its share of joint venture obligations,
then the other joint venturers are liable to meet those obligations. In this
event the interest in the permit held by the defaulting party may be
redistributed to the remaining joint venturers.
GIPPSLAND LIMITED and its CONTROLLED ENTITIES
ABN 31 004 766 376
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
NOTE 20 CONTINGENT LIABILITIES (Continued)
(b) In June 1992 the High Court of Australia held in "the Mabo
case" that the common law of Australia recognises a form of native title. The
full impact that the Mabo decision may have on tenements held by the Company is
not yet known.
(c) One of Gippsland Limited's investee companies is Here2win.com Pty Ltd in
which Gippsland Limited owns a 90% interest. Here2win.com Pty Ltd is the owner
of various Internet horse racing gaming concepts. On 14 August 2000 Gippsland
Limited announced to the Australian Stock Exchange Ltd that the services of the
Chief Executive Officer of Here2win.com Pty Ltd, Mr Alex Aguero, had been
terminated. Mr Aguero, through Highforce Investments Pty Ltd, continues to hold
a 10% equity stake in Here2win.com Pty Ltd. Mr Aguero has commenced litigation
against Gippsland Limited seeking payment of what he alleges is unpaid
compensation for his services rendered while CEO. The statement of claim filed
by Mr Aguero with the Supreme Court of Western Australia claims, amongst other
things, damages or alternatively the sum of $1,840,000 plus costs. Gippsland
Limited holds the view that the claim is completely without merit and
accordingly the claim is being vigorously defended.
NOTE 21 COMMITMENTS FOR EXPENDITURE
In order to maintain the mining and exploration tenements in which the Company
and consolidated entity is involved, the Company and consolidated entity is
committed to meet the conditions under which the tenements were granted and the
obligations of the joint venture arrangement which is subject to the conditions
contained in the Joint Venture Agreement and the Mining Licence. As at balance
date, total estimated exploration expenditure commitments on tenements held by
the consolidated entity have not been provided for in the financial statements
and which cover the following twelve month period amount to up to $500,000
(2004: $1,000,000).
NOTE 22 LEASING COMMITMENTS
Consolidated Parent Entity
Entity
2005 2004 2005 2004
$ $ $ $
Total operating lease expenditure contracted
for at balance date but not provided for in
the consolidated financial statements,
payable:
- not later than 1 year 20,400 20,400 20,400 20,400
- later than 1 year but not later than 3,400 23,800 3,400 23,800
5 years -------- ------- -------- -------
Total
Operating
Lease
Commitments 23,800 44,200 23,800 44,200
======== ======= ======== =======
NOTE 23 SUPERANNUATION COMMITMENTS
The Company contributes to individual employee superannuation plans at the
statutory rate of the employee's wages and salaries, in accordance with
statutory requirements, to provide benefits to employees on retirement, death or
disability.
GIPPSLAND LIMITED and its CONTROLLED ENTITIES
ABN 31 004 766 376
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
NOTE 24 FINANCIAL INSTRUMENTS
(a) Interest Rate Risk
The consolidated entity's exposure to the interest rate risk which is the risk
that a financial instrument's value will fluctuate as a result of changes in
market interest rate and the effective weighted average interest rates on
classes of financial assets and financial liabilities, is as follows:
Weighted Average Floating Non Interest Total
Effective Interest Interest Rate Bearing
Rate
2005 2004 2005 2004 2005 2004 2005 2004
Financial
assets
Cash assets 3.16% 3.4% 589,522 1,050,459 - - 589,522 1,050,459
Receivables 33,078 46,343 33,078 46,343
Total
financial
assets 589,522 1,050,459 33,078 46,343 622,600 1,096,802
======= ======= ======= ======= ======= =======
Financial
liabilities:
Payables 99,225 218,014 99,225 218,014
Total
financial
liabilities 99,225 218,014 99,225 218,014
======= ======= ======= ======= ======= =======
(b) Credit Risk
The maximum exposure to credit risk, excluding the value of any collateral or
other security, at balance date to recognised financial assets is the carrying
amount, net of any provisions for doubtful debts of those assets, as disclosed
in the statement of financial position and notes to the financial statements.
The consolidated entity does not have any material credit risk exposure to any
single debtor or group of debtors under financial instruments entered into by
the consolidated entity.
(c) Net Fair Values
For other assets and other liabilities the net fair value approximates their
carrying value. No financial assets and financial liabilities are readily traded
on organised markets in standardised form.
(d) Currency Risk
The Company has a Great British Pound foreign currency cash account as at 30
June 2005 holding #191,141 (2004 - #378,158) which equates to $453,015 (2004 -
A$990,852) based upon the year end exchange rate of A$1:GBP0.4219 (2004 - A$1:
GBP 0.382). The Company has no hedging in place in relation to managing any
foreign exchange currency exposure.
NOTE 25 INTERESTS IN JOINT VENTURES
At 30 June 2005, the Company has interests in the following joint venture whose
principal activities are the exploration for gold, precious metals and base
metals.
Name of Project % Interests Other Parties
2005 2004
Zeehan Tin Deposit -
Tasmania 40% 40% Western Metals Ltd 60%
Abu Dabbab - Egypt 50% 50% Egyptian Mineral Resources Authority - 50%
Wadi Allaqi, Egypt* 50% 50% Egyptian Mineral Resources Authority - 50%
* consists of ten separate tenement holdings
The Joint Venture is of the type where initially one party contributes tenements
with the other party earning a specified percentage by funding exploration
activities. The Joint Venture does not hold any assets and accordingly the
Company's share of exploration expenditure is accounted for in accordance with
the policy set out in Note 1(i).
GIPPSLAND LIMITED and its CONTROLLED ENTITIES
ABN 31 004 766 376
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
NOTE 26 SUBSEQUENT EVENTS
No matters or circumstances have arisen since the end of the financial year
which significantly affected or may significantly affect the operations of the
consolidated entity, the results of those operations, or the state of affairs of
the consolidated entity in future financial years.
NOTE 27 IMPACT OF THE ADOPTION OF AUSTRALIAN EQUIVILANTS TO IFRS
Gippsland Limited is in the process of transitioning its accounting policies and
financial reporting from current Australian Accounting Standards (AGAAP) to
Australian equivalents of International Financial Reporting Standards (AIFRS)
which will be applicable for the financial year ending 30 June 2006. In 2004,
the Company allocated internal resources to conduct impact assessments to
identify key areas that would be impacted by the transition to AIFRS. Priority
has been given to the preparation of an opening balance sheet in accordance with
AIFRS as at 1 July 2004, Gippsland's transition date to AIFRS. This will form
the basis of accounting for AIFRS in the future, and is required when Gippsland
prepares its first fully AIFRS compliant financial report for the year ending 30
June 2006.
Set out below are the key areas where accounting policies are expected to change
on adoption of AIFRS and our best estimate of the quantitative impact of the
changes on total equity as at the date of transition and 30 June 2005 and on net
profit for the year ended 30 June 2005.
The figures disclosed are management's best estimates of the quantitative impact
of the changes as at the date of preparing the 30 June 2005 financial report.
The actual effects of transition to AIFRS may differ from the estimates
disclosed due to ongoing work being undertaken by the Company in relation to
AIFRS, potential amendments to AIFRS's and interpretations thereof being issued
by the standard-setters and IFRIC and emerging accepted practice in the
interpretation and application of AIFRS and UIG interpretations.
(a) Reconciliation of equity as presented under AGAAP to that under AIFRS
No material impacts are expected to the equity presented under AGAAP on adoption
of AIFRS.
(b) Reconciliation of net loss under AGAAP to that under AIFRS
No material impacts are expected to the loss presented under AGAAP on adoption
of AIFRS.
(c) Restated AIFRS Statement of Cash Flows for the year ended 30 June 2005
No material impacts are expected to the cash flows presented under AGAAP on
adoption of AIFRS.
(d) Income Taxes
Under AIFRS, tax balances are determined using a 'balance sheet' approach, which
significantly differs from the current methodology prescribed and applied as
described in Note 1(b). Changes in deferred tax assets and deferred tax
liabilities may arise as a consequence of the different method of measurement,
including changes in deferred tax assets and deferred tax liabilities arising as
a consequence of the recognition of the fair value of exploration assets and
investments quoted on prescribed stock exchanges. The impact of these changes
have not yet been quantified.
Under AIFRS, the criteria for recognition of carried forward tax losses is
'probable' as compared to the current 'virtually certain' test. The consolidated
entity has carried forward tax losses which have not been recognised as deferred
tax assets as they do not satisfy the 'probable' criteria under AIFRS.
(e) Financial Instruments
The directors have elected to apply the first-time adoption exemption available
to the consolidated entity to defer the date of transition of AASB 132
'Financial Instruments: Disclosure and Presentation' and AASB 139 'Financial
Instruments: Recognition and Measurement' to 1 July 2005. Accordingly, there are
no quantitative impacts on the 30 June 2005 financial statements
GIPPSLAND LIMITED and its CONTROLLED ENTITIES
ABN 31 004 766 376
DIRECTORS' DECLARATION
The directors of Gippsland Limited declare that:
1. the financial statements and notes are in accordance with the
Corporations Act 2001 and:
(a) comply with Accounting Standards and Corporations Regulations 2001;
and
(b) give a true and fair view of the financial position as at 30 June 2005
and of the performance for the year ended on that date of the Company and
economic entity;
2. the Chief Executive Officer and Chief Finance Officer have
declared that:
(a) the financial records of the company for the financial year have been
properly maintained in accordance with section 286 of the Corporation Act 2001;
and
(b) the financial statements and notes for the financial year comply with
Accounting Standards; and
(c) the financial statements and notes for the financial year give a true
and fair view.
3. There are reasonable grounds to believe that the Company will
be able to pay its debts as and when they become due and payable.
This declaration is made in accordance with a resolution of the Board of
Directors dated this 29th day of September 2005.
R J TELFORD
DIRECTOR
INDEPENDENT AUDIT REPORT TO MEMBERS OF GIPPSLAND LIMITED
Scope
The financial report and directors' responsibility
The financial report comprises the statement of financial position, statement of
financial performance, statement of cash flows, accompanying notes to the
financial statements, and the directors' declaration for both Gippsland Limited
(the company) and Gippsland Limited and Controlled Entities (the consolidated
entity), for the year ended 30 June 2005. The consolidated entity comprises both
the company and the entities it controlled during that year.
The directors of the company are responsible for the preparation and true and
fair presentation of the financial report in accordance with the Corporations
Act 2001. This includes responsibility for the maintenance of adequate
accounting records and internal controls that are designed to prevent and detect
fraud and error, and for the accounting policies and accounting estimates
inherent in the financial report.
Audit approach
We conducted an independent audit in order to express an opinion to the members
of the company. Our audit was conducted in accordance with Australian Auditing
Standards, in order to provide reasonable assurance as to whether the financial
report is free of material misstatement. The nature of an audit is influenced by
factors such as the use of professional judgment, selective testing, the
inherent limitations of internal control, and the availability of persuasive
rather than conclusive evidence. Therefore, an audit cannot guarantee that all
material misstatements have been detected.
We performed procedures to assess whether in all material respects the financial
report presents fairly, in accordance with the Corporations Act 2001, including
compliance with Accounting Standards and other mandatory financial reporting
requirements in Australia, a view which is consistent with our understanding of
the company's and the consolidated entity's financial position, and of their
performance as represented by the results of their operations and cash flows.
We formed our audit opinion on the basis of these procedures, which included:
examining, on a test basis, information to provide evidence supporting the
amounts and disclosures in the financial report; and
assessing the appropriateness of the accounting policies and disclosures
used and the reasonableness of significant accounting estimates made by the
directors.
While we considered the effectiveness of management's internal controls over
financial reporting when determining the nature and extent of our procedures,
our audit was not designed to provide assurance on internal controls. Our audit
did not involve an analysis of the prudence of business decisions made by the
directors or management. We have read the other information in the annual report
to determine whether it contained any material inconsistencies with the
financial report
Independence
In conducting our audit, we followed the applicable independence requirements of
Australian professional ethical pronouncements and the Corporations Act 2001.
Audit opinion
In our opinion, the financial report of Gippsland Limited is in accordance with:
(a) the Corporations Act 2001, including:
(i) giving a true and fair view of the company's and consolidated
entity's financial position as at 30 June 2005 and of their performance for
the year ended on that date; and
(ii) complying with Accounting Standards in Australia and the
Corporations Regulations 2001; and
(b) other mandatory financial reporting requirements in Australia.
Inherent Uncertainty Regarding Continuation as a Going Concern
Without qualification to the audit opinion expressed above, attention is drawn
to the following matter. As a result of the matters described in Note 1(d) to
the financial statements, there is significant uncertainty whether the
consolidated entity will be able to continue as a going concern and therefore
whether it will realise its assets and extinguish its liabilities in the normal
course of business and at the amounts stated in the financial report.
GRANT THORNTON SEAN MCGURK
Chartered Accountants Partner
Perth - Dated this 29th day of September 2005
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR LMMPTMMAJMRA
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