RNS Number:6339J
Gippsland Limited
28 September 2006
Gippsland Limited
ABN 31 004 766 376
GIPPSLAND LIMITED AND ITS CONTROLLED ENTITIES
ABN 31 004 766 376
ANNUAL REPORT
FOR THE YEAR ENDED
30 JUNE 2006
CORPORATE GOVERNANCE STATEMENT
Unless disclosed below, all the best practice recommendations of the ASX
Corporate Governance Council have been applied for the entire financial year
ended 30 June 2006.
Board Composition
The skills, experience and expertise relevant to the position of each director
who is in office at the date of the annual report and their term of office are
detailed in the director's report.
The names of the independent directors of the company are:
John Stuart Ferguson Dunlop
John Damian Kenny
When determining whether a non-executive director is independent the director
must not fail any of the following materiality thresholds:
- less than 10% of company shares are held by the director
and any entity or individual directly or indirectly associated with the
director;
- no sales are made to or purchases made from any entity or
individual directly or indirectly associated with the director; and
- none of the directors income or the income of an
individual or entity directly or indirectly associated with the director is
derived from a contract with any member of the economic entity other than income
derived as a director of the entity.
Independent directors have the right to seek independent professional advice in
the furtherance of their duties as directors at the company's expense. Written
approval must be obtained from the chairman prior to incurring any expense on
behalf of the company.
Trading Policy
The company's policy regarding directors and employees trading in its securities
is set by the board. The policy restricts directors and employees from acting on
material information until it has been released to the market and adequate time
has been given for this to be reflected in the security's prices.
Audit Committee
The board considers that the company is not of size, nor are its financial
affairs of such complexity to justify the formation of an audit committee. The
board as a whole undertakes the role of the audit committee.
Performance Evaluation
The board has adopted a self-evaluation process to measure its own performance
during the financial year. An annual review is undertaken in relation to the
composition and skills mix of the Directors of the company.
Remuneration Policies
The remuneration policy, which sets the terms and conditions for the senior
executives, was developed by the board. The board reviews executive packages
annually by reference to company performance, executive performance, comparable
information from industry sectors and other listed companies. The policy is
designed to attract the highest calibre executives and reward them for
performance which results in long-term growth in shareholder value.
The amount of remuneration for all directors, including all monetary and
non-monetary components, are detailed in the Note 6 to the financial report. All
remuneration paid to executives is valued at the cost to the company and
expensed.
The board expects that the remuneration structure implemented will result in the
company being able to attract and retain the best executives to run the economic
entity. It will also provide executives with the necessary incentives to work to
grow long-term shareholder value.
The payment of options and other incentive payments are reviewed by the board
annually as part of the review of executive remuneration.
Remuneration Committee
The board considers that the company is not of size, nor are there sufficient
executives to justify the formation of a remuneration committee. The board as a
whole undertakes the role of the remuneration committee.
Explanations for Departures from Best Practice Recommendations
During the financial year the company has complied with the majority of the ten
essential corporate governance principles and the corresponding best practice
recommendations as published by the ASX Corporate Governance Council except as
detailed below:
Council Recommendation 2.2
The chairperson should be an independent director
The company's chairman, Mr Robert John Telford, is considered by the board not
to be independent in terms of the ASX Corporate Governance Council's definition
of independent director. However the board believes that the chairman is able
and does bring quality and independent judgement to all relevant issues falling
within the scope of the role of chairman.
The board considers that the company is not currently of a size, nor are its
affairs of such complexity to necessitate the appointment of an independent
non-executive chairperson.
Council Recommendation 2.3
The roles of chairperson and chief executive officer should not be exercised by
the same individual.
The company's chairman Mr Robert John Telford currently holds the position of
both chairperson and chief executive officer. The board recognises the
importance of independence in decision-making, however believes that Mr Telford
is the most appropriate person for the position due to his extensive industry
experience and previous record as chairman. The board recognises that Mr Telford
has been a major force in the company's success and that as the company enters
its next growth stage, Mr Telford's industrial experience and strong and
effective leadership will be beneficial.
Council Recommendation 2.4
The board should establish a nomination committee
The board considers that the company is not currently of a size to justify the
formation of a nomination committee. The board as a whole undertakes the process
of reviewing the skill base and experience of existing directors to enable
identification or attributes required in new directors. Where appropriate
independent consultants are engaged to identify possible new candidates for the
board.
Council Recommendation 4.2
The board should establish an audit committee
Refer comments above in the corporate governance statement on the audit
committee.
Council Recommendation 4.3
Structure the audit committee so that it consists of:
* only non-executive directors;
* a majority of independent directors;
* an independent chairperson, who is not chairperson of the board;
* at least three members.
Refer comments on council recommendation 4.2
Council Recommendation 4.4
The audit committee should have a formal operating charter.
Refer comments on council recommendation 4.2
Council Recommendation 9.2
The board should establish a remuneration committee.
Refer comments above in the corporate governance statement on the remuneration
committee.
Your directors present their report on the company and its controlled entities,
for the financial year ended 30 June 2006.
Directors
The names of directors in office at any time during or since the end of the year
are:
Robert John Telford
John Morrison Chisholm
John Stuart Ferguson Dunlop
John Damian Kenny
Directors have been in office since the start of the financial year to the date
of this report unless otherwise stated.
Company Secretary
The following person held the position of company secretary at the date the
accounts were signed:
Mr Rowan Caren - Bachelor of Commerce, Chartered Accountant. Mr Caren was
employed by a first tier chartered accountancy firm in Australia and overseas
for six years and has been directly involved in the minerals exploration
industry for a further ten years. Mr Caren also provides company secretarial and
corporate advisory services to several exploration companies and is a member of
the Institute of Chartered Accountants in Australia.
Principle Activities
The principal activities of the economic entity during the financial year were
the:
* exploration and development of commercially and economically viable
mineral resources.
There were no significant changes in the nature of the economic entity's
principal activity during the financial year.
Operating Results
The consolidated loss of the economic entity after providing for income tax and
eliminating minority equity interests amounted to $3,648,729.
Dividends
No dividend was paid or declared during the financial year and the directors do
not recommend the payment of a dividend for the financial year ended 30 June
2006.
Review of Operations
A detailed review of the company and the economic entity's activities during the
financial year is set out in the section titled "Review of Operations" in this
Annual Report.
Financial Position
The net assets of the economic entity have increased by $3,219,135 to $3,790,722
at 30 June 2006. This increase has largely resulted from the following factor:
* proceeds from share issue raising $6,790,038
The economic entity's strong financial position has enabled the group to focus
on:
* updating the bankable feasibility study for the Abu Dabbab tantalum
project in Egypt; and
increasing the amount of exploration work undertaken in the Wadi Allaqi region
of Egypt.
The directors believe the company is in a strong and stable financial position
to expand and grow its current operations.
Significant Changes in State of Affairs
The following significant changes in the state of affairs of the parent entity
occurred during the financial year:
a) On 10 October 2005 the company issued 15,000,000 ordinary shares at
$0.093 each.
b) On 17 March 2006 the company issued 24,000,000 ordinary shares at $0.115
each
c) On 31 May 2006 the company issued 25,000,000 ordinary shares at $0.108
each to IFC.
Adoption of Australian Equivalents to IFRS
As a result of the introduction of Australian equivalents to International
Financial Reporting Standards (AIFRS), the company's financial report has been
prepared in accordance with those Standards. A reconciliation of adjustments
arising on the transition to AIFRS is included in Note 2 to this report.
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
economic entity, the results of those operations, or the state of affairs of the
economic entity in future financial years.
Future Developments, Prospects and Business Strategies
Information as to likely developments in the operations of the Company and the
economic 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 economic
entity.
ADVANCE /U 7.95Environmental Issues
The economic 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 economic 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 economic entity.
The economic 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.
Information on Directors
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.
Interest in Shares and Options - 13,568,124 ordinary shares in Gippsland Limited
and options to acquire a further 6,558,322 ordinary shares
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.
Interest in Shares and Options - 50,000 ordinary shares and listed options to
acquire a further 2,260,000 ordinary shares.
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 (aged 55) 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.
Interest in Shares and Options - Unlisted options to acquire 2,250,000 ordinary
shares.
John Damian Kenny (Non-Executive Director)
B Com (Hons), LLB
Mr Kenny a corporate and resources lawyer has a specialised interest in venture
capital, initial public offerings and mergers and acquisitions. He has
extensive experience in public equity fundraisings and the pricing of equity,
debt and derivative securities.
Interest in Shares and Options - Listed options to acquire 2,250,000 ordinary
shares.
REMUNERATION REPORT
This report details the nature and amount of remuneration for each director of
Gippsland Limited, and for the executives receiving the highest remuneration.
Remuneration Policy
The remuneration policy of Gippsland Limited has been designed to align director
and executive objectives with shareholder and business objectives by providing a
fixed remuneration component and offering specific long-term incentives. The
board of Gippsland Limited believes the remuneration policy to be appropriate
and effective in its ability to attract and retain the best executives and
directors to run and manage the economic entity, as well as goal congruence
between directors, executives and shareholders.
The board's policy for determining the nature and amount of remuneration for
board members and senior executives of the economic entity is as follows:
* The remuneration policy, setting the terms and conditions for the
executive directors was developed and approved by the board.
* All executives receive a base salary (which is based on factors such
as length of service and experience) and options.
* The board reviews executive packages annually by reference to the
economic entity's performance, executive performance and comparable information
from industry sectors.
All remuneration paid to directors and executives is valued at the cost to the
company and expensed.
The board policy is to remunerate non-executive directors at market rates for
time, commitment and responsibilities. The board determines payments to the
non-executive directors and reviews their remuneration annually, based on market
practice, duties and accountability. The maximum aggregate amount of fees that
can be paid to non-executive directors is subject to approval by shareholders at
the Annual General Meeting. Fees for non-executive directors are not linked to
the performance of the economic entity. However, to align directors' interests
with shareholder interests, the directors are encouraged to hold shares in the
company and are able to participate in the option plan.
Company performance, shareholder wealth and director and executive remuneration
The remuneration policy has been tailored to increase goal congruence between
shareholders, directors and executives. This achievement of this aim has been
through the issue of options to the majority of directors and executive to
encourage the alignment of personal and shareholder interests. The company
believes this policy to have been effective in increasing shareholder wealth
over the past four years.
The following table shows the gross revenue, net losses and share price at the
end of the respective financial years. Analysis of the actual figures shows an
increase in losses as a consequence of the feasibility studies into the Abu
Dabbab tantalum project and exploration at the Wadi Allaqi projects. The
improvement in the future outlook for the company is reflected in the share
price which has increased over the period over the past four years with the
exception of 2006, where the share price fell slightly. The board is of the
opinion that these results can be attributed in part to the previously described
remuneration policy.
REMUNERATION REPORT (cont)
Remuneration Report
2002* 2003* 2004* 2005 2006
Revenue $5,170 $9,577 $14,539 $22,941 $30,345
Net Loss ($634,090) ($754,635) ($1,711,564) ($2,069,789) ($3,648,729)
Share Price at
Year-end $0.076 $0.045 $0.076 $0.11 $0.10
* Prepared under AGAAP. There are no material differences to the
results if they were to be presented under AIFRS.
Details of Remuneration for year ended 30 June 2006
The remuneration for each director of the consolidated entity during the year
was as follows:
Salary, Fees and
Commissions Options Total
$ $ $
Directors
RJ Telford 174,960 - 174,960
JM Chisholm 160,417 - 160,417
JSF Dunlop 78,910 77,827 156,737
JD Kenny 36,000 - 36,000
450,287 77,827 528,114
Options issued as part of remuneration for the year ended 30 June 2006
Options are issued to directors as part of their remuneration. The options are
not issued based on performance criteria, but are issued to all directors of
Gippsland Limited and its subsidiaries to increase goal congruence between
executives, directors and shareholders.
Granted Options Granted Total Options Total
No as part of Remuneration Exercised
Remuneration Represented
by Options
$ % $ $
Directors
RJ Telford - - - - -
JM Chisholm - - - - -
JSF Dunlop 2,250,000 77,827 49.6 - 77,827
JD Kenny - - - - -
The options will expire on 31 December 2007.
The exercise price ($0.15) of shares the subject of the options will be payable
in full on exercise of the options.
Meetings of Directors
During the financial year, 9 meetings of directors were held. Attendances by
each director during the year were as follows:
Directors Meetings
Number eligible
to attend Number attended
Directors
RJ Telford 9 9
JM Chisholm 9 8
JSF Dunlop 8 6
JD Kenny 9 8
Indemnifying Officers or 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.
Options
At the date of this report, the unissued ordinary shares of Gippsland Limited
under option are as follows:
Grant Date Date of Expiry Exercise Price Number under Option
Jan 2003 - Mar 2004 31/12/07 $0.09 43,738,393
21/01/05 31/12/07 $0.09 10,000,000
15/02/06 31/12/07 $0.15 2,250,000
16/05/06 16/05/12 $0.135 25,000,000
During the year ended 30 June 2006, the following ordinary shares of Gippsland
Limited were issued on the exercise of options granted. No further shares have
been issued since that date. No amounts are unpaid on any of the shares.
Grant Date Exercise Price Number of Shares Issued
Jan 2003 - Mar 2004 $0.09 33,000
No person entitled to exercise the option had or has any right by virtue of the
option to participate in any share issue of any other body corporate.
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 such proceedings during the year.
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 7 did not compromise the external auditor's
independence.
Auditors Independence Declaration
The lead auditor's independence declaration for the year ended 30 June 2006 has
been received and can be found on page 10 of the directors' report.
Signed in accordance with a resolution of the Board of Directors.
R J TELFORD, Director
Dated this 22nd day of September 2006.
AUDITOR'S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT
2001
TO THE DIRECTORS OF GIPPSLAND LIMITEDAND CONTROLLED ENTITIES
I declare that, to the best of my knowledge and belief, during the year ended 30
June 2006 there have been:
1. no contraventions of the auditor independence requirements as set out
in the Corporations Act 2001 in relation to the audit; and
2. no contraventions of any applicable code of professional conduct in
relation to the audit.
GRANT THORNTON
Chartered Accountants
SEAN MCGURK
Partner
Perth, Western Australia
Dated this 22nd day of September 2006
INCOME STATEMENT
FOR YEAR ENDED 30 JUNE 2006
Economic Entity Parent Entity
2006 2005 2006 2005
Note $ $ $ $
Revenue 3 30,345 22,941 30,345 22,941
Foreign exchange gains (losses) 4 43,441 (96,093) 43,441 (96,093)
Employee expenses 4 (120,650) (128,278) (120,650) (128,278)
Management and consulting expenses (349,102) (139,968) (349,102) (139,968)
Exploration and feasibility 4 (2,092,108) (1,134,564) (2,092,108) (1,098,146)
expenses
Corporate office expenses (88,045) (60,958) (88,045) (60,958)
Depreciation expense 4 (20,496) (11,496) (20,496) (11,496)
Provision for non-recovery of loans (489,621) (13,123) (489,621) (109,623)
Provision for diminution in value of 4 (5,310) (13,124) (5,310) -
investment
Travel and accommodation expenses (215,149) (85,315) (215,149) (85,315)
AIM administration expenses (163,527) (156,309) (163,527) (156,309)
Other expenses from ordinary (178,507) (178,921) (178,507) (131,963)
activities
Loss from ordinary activities before (3,648,729) (1,995,208) (3,648,729) (1,995,208)
income tax
Income tax relating to ordinary 5 - - - -
activities
Net loss attributable to members of the (3,648,729) (1,995,208) (3,648,729) (1,995,208)
parent entity
Adjustments recognised directly in 17 (69,444) (74,581) (69,444) (74,581)
equity.
Total Equity changes (3,718,173) (2,069,789) (3,718,173) (2,069,789)
Basic and diluted loss per share 8 (1.98) (1.32)
(cents per share)
The income statements are to be read in conjunction with the accompanying notes
to the financial statements.
BALANCE SHEET AS AT 30 JUNE 2006
Economic Entity Parent
Entity
2006 2005 2006 2005
Note $ $ $ $
CURRENT ASSETS
Cash and cash equivalents 9 3,937,943 589,522 3,934,620 589,417
Trade and other receivables 10 49,212 33,078 49,212 33,078
Other assets 13 915 15,270 915 15,270
TOTAL CURRENT ASSETS 3,988,070 637,870 3,984,747 637,765
NON CURRENT ASSETS
Receivables 10 - - - -
Other assets 13 - - 3,522 305
Property, plant and equipment 12 35,685 41,942 35,685 41,942
TOTAL NON CURRENT ASSETS 35,685 41,942 39,207 42,247
TOTAL ASSETS 4,023,754 679,812 4,023,954 680,012
CURRENT LIABILITIES
Trade and other payables 14 208,109 99,225 208,109 99,225
Provisions 16 9,923 9,000 9,923 9,000
TOTAL CURRENT LIABILITIES 218,032 108,225 218,032 108,225
NON CURRENT LIABILITIES
Provisions 16 15,000 - 15,000 -
TOTAL NON CURRENT LIABILITIES 15,000 - 15,000 -
TOTAL LIABILITIES 233,032 108,225 233,032 108,225
NET ASSETS 3,790,722 571,587 3,790,922 571,787
EQUITY
Contributed equity 17 22,658,274 15,868,236 22,658,274 15,868,236
Reserves 18 77,827 - 77,827 -
Accumulated losses (18,945,379) (15,296,649) (18,945,179) (15,296,449)
TOTAL EQUITY 3,790,722 571,587 3,790,922 571,787
The balance sheets are to be read in conjunction with the accompanying notes to
the financial statements
STATEMENT OF CHANGES IN EQUITY
FOR YEAR ENDED 30 JUNE 2006
Economic Entity
Share Capital
Retained Option
Ordinary Earnings Reserve Total
Balance at 1 July 2004 14,203,912 (13,301,442) - 902,470
Loss attributable to
members of parent entity (1,995,208) (1,995,208)
Shares issued during the
year 1,738,905 1,738,905
Transaction Costs (74,581) (74,581)
Sub-total 15,868,236 (15,296,650) - 571,586
Balance at 30 June 2005 15,868,236 (15,296,650) - 571,586
Loss attributable to
members of parent entity (3,648,729) (3,648,729)
Shares issued during the
year 6,859,482 6,859,482
Option reserve on
recognition of bonus
element of options 77,827 77,827
Transaction Costs (69,444) (69,444)
Sub-total 22,658,274 (18,945,379) 77,827 3,790,722
Balance at 30 June 2006 22,658,274 (18,945,379) 77,827 3,790,722
Parent Entity
Share Capital
Retained Option
Ordinary Earnings Reserve Total
Balance at 1 July 2004 14,203,912 (13,301,242) - 902,670
Loss attributable to
members of parent entity (1,995,208) (1,995,208)
Shares issued during the
year 1,738,905 1,738,905
Transaction Costs (74,581) (74,581)
Sub-total 15,868,236 (15,296,450) - 571,786
Balance at 30 June 2005 15,868,236 (15,296,450) - 571,786
Loss attributable to
members of parent entity (3,648,729) (3,648,729)
Shares issued during the
year 6,859,482 6,859,482
Option reserve on
recognition of bonus
element of options 77,827 77,827
Transaction Costs (69,444) (69,444)
Sub-total 22,658,274 (18,945,179) 77,827 3,790,922
Balance at 30 June 2006 22,658,274 (18,945,179) 77,827 3,790,922
The statements of changes in equity are to be read in conjunction with the
accompanying notes to the financial statements.
CASH FLOW STATEMENT FOR YEAR ENDED 30 JUNE 2006
Economic Entity Parent Entity
2006 2005 2006 2005
Note $ $ $ $
CASH FLOWS FROM OPERATING ACTIVITIES
Other receipts - 101,906 - 101,906
Interest received 3 30,345 22,941 30,345 22,941
Payments for exploration and feasibility (2,012,737) (1,219,906) (2,012,737) (1,183,487)
expenditure
Payments for administrative expenditure (1,488,427) (884,774) (993,496) (837,817)
Net cash used in operating activities 21 (3,470,819) (1,979,833) (2,975,888) (1,896,457)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for investment in Tantalum Egypt - (13,124) - -
LLC
Loan to Egyptian Company for Mineral - (13,123) - -
Resources
Payment for investment in subsidiary - - (8,528) (5)
Loans to subsidiaries - - (489,621) (109,623)
Purchase of plant and equipment (14,239) (39,962) (14,239) (39,962)
Net cash used in investing activities (14,239) (66,209) (512,388) (149,590)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares 6,859,482 1,738,905 6,859,482 1,738,905
Transaction costs from issue of shares (69,444) (57,707) (69,444) (57,707)
Net cash provided by financing activities 6,790,038 1,681,198 6,790,038 1,681,198
Net increase/(decrease) in cash held 3,304,980 (364,844) 3,301,762 (364,849)
Effects of exchange rate changes on cash 43,441 (96,093) 43,441 (96,093)
Cash at the beginning of the financial year 589,522 1,050,459 589,417 1,050,359
Cash at the end of the financial year 9 3,937,943 589,522 3,934,620 589,417
The cash flow statements are to be read in conjunction with the accompanying
notes to the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2006
Note 1: Statement of Significant Accounting Policies
The financial report is a general purpose financial report that has been
prepared in accordance with Australian Accounting Standards, Urgent Issues Group
Interpretations, other authoritative pronouncements of the Australian Accounting
Standards Board and the Corporations Act 2001.
The financial report covers the economic entity of Gippsland Limited and
controlled entities, and Gippsland Limited as an individual parent entity.
Gippsland Limited is a listed public company, incorporated and domiciled in
Australia.
This financial report of Gippsland Limited and controlled entities, and
Gippsland Limited as an individual parent entity comply with all Australian
equivalents to International Financial Reporting Standards (AIFRS) in their
entirety.
The following is a summary of the material accounting policies adopted by the
economic entity in the preparation of the financial report. The accounting
policies have been consistently applied, unless otherwise stated.
Basis of Preparation
Reporting Basis and Conventions
The financial report has been prepared on an accrual basis and is based on
historical costs.
Accounting Policies
(a) Principles of Consolidation
A controlled entity is any entity Gippsland Limited has the power to control the
financial and operating policies of so as to obtain benefits from its
activities.
A list of controlled entities is contained in Note 11 to the financial
statements. All controlled entities have a June financial year end.
All inter-company balances and transactions between entities in the economic
entity, including any unrealised profits or losses, have been eliminated on
consolidation. Accounting policies of subsidiaries have been changed where
necessary to ensure consistencies with those policies applied by the parent
entity.
Where controlled entities have entered or left the economic entity during the
year, their operating results have been included/excluded from the date control
was obtained or until the date control ceased.
Minority equity 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 charge for current income tax expense is based on the profit for the year
adjusted for any non-assessable or disallowed items. It is calculated using the
tax rates that have been enacted or are substantially enacted by the balance
sheet date.
Deferred tax is accounted for using the balance sheet liability method in
respect of temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial statements. No deferred
income tax will be recognised from the initial recognition of an asset or
liability, excluding a business combination, where there is no effect on
accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the
period when the asset is realised or liability is settled. Deferred tax is
credited in the income statement except where it relates to items that may be
credited directly to equity, in which case the deferred tax is adjusted directly
against equity.
Deferred income tax assets are recognised to the extent that it is probable that
future tax profits will be available against which deductible temporary
differences can be utilised.
Income Tax (cont)
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 economic 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) Property, Plant and Equipment
Each class of property, 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 from these assets. The
recoverable amount is assessed on the basis of the expected net cash flows that
will be received from the asset's employment and subsequent disposal. The
expected net cash flows have been discounted to their present values in
determining recoverable amounts.
Depreciation
The depreciable amount of all fixed assets including building and capitalised
leased assets, but excluding freehold land, is depreciated on a straight-line
basis over their useful lives to the economic entity commencing from the time
the asset is held ready for use.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset Depreciation Rate
Plant and Equipment 13 -33%
Computing Equipment 27 - 33%
Motor Vehicles 30%
The asset's residual values and useful lives are reviewed, and adjusted if
appropriate, at each balance sheet 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.
Gains and losses on disposal are determined by comparing proceeds with the
carrying amount. These gains and losses are included in the income statement.
When revalued assets are sold, amounts included in the revaluation reserve
relating to that asset are transferred to retained earnings.
(d) Exploration and Development Expenditure
Exploration, evaluation and development expenditure incurred is accumulated in
respect of each identifiable area of interest. These costs are only carried
forward to the extent that they are expected to be recouped through the
successful development of the area or where activities in the area have not yet
reached a stage that permits reasonable assessment of the existence of
economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full
against profit in the year in which the decision to abandon the area is made.
(e) 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.
(f) Financial Instruments
Recognition
Financial instruments are initially measured at cost on trade date, which
includes transaction costs, when the related contractual rights or obligations
exist. Subsequent to initial recognition these instruments are measured as set
out below.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market and are stated at
amortised cost using the effective interest rate method.
Impairment
At each reporting date, the group assess whether there is objective evidence
that a financial instrument has been impaired. Impairment losses are recognised
in the income statement.
(g) Impairment of Assets
At each reporting date, the group reviews the carrying values of its tangible
and intangible assets to determine whether there is any indication that those
assets have been impaired. If such an indication exists, the recoverable amount
of the asset, being the higher of the asset's fair value less costs to sell and
value in use, is compared to the asset's carrying value. Any excess of the
asset's carrying value over its recoverable amount is expensed to the income
statement.
Where it is not possible to estimate the recoverable amount of an individual
asset, the group estimates the recoverable amount of the cash-generating unit to
which the asset belongs.
(h) Foreign Currency Transactions and Balances
Functional and presentation currency
The functional currency of each of the group's entities is measured using the
currency of the primary economic environment in which that entity operates. The
consolidated financial statements are presented in Australian dollars which is
the parent entity's functional and presentation currency.
Exchange differences arising on the translation of non-monetary items are
recognised directly in equity to the extent that the gain or loss is directly
recognised in equity, otherwise the exchange difference is recognised in the
income statement.
Transaction and balances
Foreign currency transactions are translated into functional currency using the
rates of exchange applicable at the date of the transactions. Foreign currency
monetary items are translated at the year-end exchange rate. Non-monetary items
measured at historical cost continue to be carried at the exchange rate at the
date of the transaction. Non-monetary items measured at fair value are reported
at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised
in the income statement, except where deferred in equity as a qualifying cash
flow or investment hedge.
Group Companies
The financial results and position of foreign operations whose functional
currency is different from the group's presentation currency are translated as
follows:
- assets and liabilities are translated at year-end
exchange rates prevailing at the reporting date;
- income and expenses are translated at average exchange
rates for the period; and
- retained earnings are translated at the exchange rates
prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations are
transferred directly to the group's foreign currency translation reserve in the
balance sheet. These differences are recognised in the income statement in the
period in which the operation is disposed.
(i) 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 have been measured at the amounts
expected to be paid when the liability is settled, plus related on-costs.
Employee benefits payable later than one year have been measured at the present
value of the estimated future cash outflows to be made for those benefits.
Equity-settled compensation
The group operates a share option arrangement. The bonus elements over
the exercise price of the employee services rendered in exchange for the grant
of options is recognised as an expense in the income statement. The total amount
to be expensed over the vesting period is determined by reference to the fair
value of the options granted.
(j) Provisions
Provisions are recognised when the group has a legal or constructive obligation,
as a result of past events, for which it is probable that an outflow of economic
benefits will result and that outflow can be reliably measured.
(k) Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits held at call with
banks, other short-term highly liquid investments with original maturities of
three months or less and bank overdrafts.
(l) Revenue
Interest revenue is recognised on an proportional basis taking into account the
interest rates applicable to the financial assets.
(m) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except
where the amount of GST incurred is not recoverable from the Australian Taxation
Office. 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 in the balance sheet are shown inclusive of GST.
Cash flows are included in the cash flow statement on a gross basis, except for
the GST component of investing and financing activities which are disclosed as
operating cash flows.
(n) Comparative Figures
When required by Accounting Standards comparative figures have been adjusted to
conform with changes in presentation for the current financial year.
Note 2 First-time Adoption of Australian Equivalents to International
Financial Reporting Standards
(a) Reconciliation of equity at 1 July 2004 and 30 June 2005
On adoption of the new Australian Equivalents to International Reporting
Standards (AIFRS) , there were no differences between equity presented under
AIFRS with that presented under AGAAP.
(b) Reconciliation of net loss for the year ended 30 June 2005
On adoption of the new AIFRS standards, there were no differences between net
loss presented under AIFRS with that presented under AGAAP.
Note Economic Entity Parent Entity
2006 2005 2006 2005
$ $ $ $
Note 3 Revenue
Operating activities
- Interest received 3a 30,345 22,941 30,345 22,941
Total Revenue 30,345 22,941 30,345 22,941
a Interest revenue from:
- other related parties 30,345 22,941 30,345 22,941
Note 4 Loss for the Year
Expenses
Rental expense on operating leases
- minimum lease payments 32,966 20,412 32,966 20,412
Contributions to employees superannuation 4,680 4,320 4,680 4,320
plans
Depreciation of plant and equipment 20,496 11,496 20,496 11,496
Movements in provisions:
- Employee entitlements 15,923 3,958 15,923 3,958
- Provision against loan to Tantalum Int - - 9,788 26,247
Pty Ltd
- Provision against loan to Here2win.com - - 477,723 46,957
Pty Ltd
- Provision against loan to Nubian - - 2,110 36,419
Resources plc
- Provision for non-recovery of loan to - 13,123 - -
other parties
- Provision for diminution 5,310 13,124 5,310 -
Foreign currency translation losses - 96,093 - 96,093
Exploration expenditure incurred and 1,292,544 1,134,564 1,292,544 1,098,145
written off
Income:
Foreign currency translation gains 43,441 - 43,441 -
Note 5 Income Tax Expense
a The components of the tax expense
comprise:
Current tax - - - -
Deferred tax 15 - - - -
- - - -
(b) The prima facie tax on loss before income
tax is reconciled to the income tax as
follows:
Prima facie tax on loss before income tax at
30% (2005: 30%)
- economic entity (1,094,619) (598,562) (1,094,619) (598,562)
Add:
Tax effect of:
- provision for non recovery of 146,886 32,887 146,886 32,887
loans
- exploration expenditure incurred in
relation to a foreign permanent
establishment 627,632 - 627,632 -
- non-deductible expenses 62,008 2,700 62,008 2,700
Income tax attributable to entity (258,093) (562,975) (258,093) (562,975)
These tax losses have not been brought to account at balance date.
NOTE 6 Key Management Personnel Compensation
a Names and positions held of economic and parent entity key
management personnel in office at any time during the financial year are:
Key Management Person Position
Mr RJ Telford Chairman - Executive
Mr JM Chisholm Director - Executive
Mr JSF Dunlop Director - Non-executive
Mr JD Kenny Director - Non-executive
b Compensation Practices
The board's policy for determining the nature and amount of compensation of key
management for the group is as follows:
The compensation structure for key management personnel is based on a number of
factors, including particular experience of the individual concerned and overall
performance of the company. The contracts for service between the company and
key management personnel are on a continuing basis, the terms of which are not
expected to change in the immediate future.
The employment conditions of the executives are formalised in contracts of
employment.
The board determines the compensation for each key management personnel. Refer
note 6 (c).
c. Key Management Personnel Compensation
2006
Key Management Person
Short-term Benefits Share-based Payment
Cash, salary and commissions Options Total
Mr RJ Telford 174,960 - 174,960
Mr JM Chisholm 160,417 - 160,417
Mr JSF Dunlop 78,910 77,827 156,737
Mr JD Kenny 36,000 - 36,000
450,287 77,827 528,114
The fees paid to Mr RJ Telford for management and administration were paid to an
entity that he controls, Eco International Pty Ltd.
2005
Key Management Person
Short-term Benefits
Cash, salary and commissions
Mr RJ Telford 174,960
Mr JM Chisholm 60,650
Mr JSF Dunlop -
Mr JD Kenny 36,000
271,610
d. Options Holdings
Number of Options Held by Key Management Personnel
Value per
Balance Granted as Option at Options Balance Exercise
1.7.2005 Compensation Grant Date Exercised 30.6.2006 Price
$
Key Management Person
Mr RJ Telford 6,558,322 - - - 6,558,322 0.09
Mr JM Chisholm 2,260,000 - - - 2,260,000 0.09
Mr JSF Dunlop - 2,250,000 0.035 - 2,250,000 0.15
Mr JD Kenny 2,250,000 - - - 2,250,000 0.09
11,068,322 2,250,000 - 13,318,322 0.10
All options were granted for nil consideration. The options held by RJ Telford,
JM Chisholm and JD Kenny are listed and hence valued at market prices.
The fair value of the options granted to Mr JSF Dunlop was calculated by using a
Black Scholes option pricing model applying the following inputs:
Exercise Price $0.15
Expiry date of Options 31 December 2007
Underlying share price $0.13
Expected share price volatility 70%
Risk free interest rate 5.31%
Historical volatility has been the basis for determining expected share price
volatility as it is assumed that this is indicative of future tender, which may
not eventuate.
All options will expire on 31 December 2007.
The option holder may exercise options at any time prior to the expiry date.
The exercise price of shares the subject of the options will be payable in full
on exercise of the options.
e. Share Holdings
Number of Shares Held by Key Management Personnel
Balance Received as Options Balance
1.7.2005 Compensation Exercised 30.6.2006
Key Management Person
Mr RJ Telford 13,568,124 - - 13,568,124
Mr JM Chisholm 50,000 - - 50,000
Mr JSF Dunlop - - - -
Mr JD Kenny - - - -
13,618,124 - - 13,618,124
Economic Entity
2006 2005
$ $
Note 7 Auditors' Remuneration
Remuneration of the auditor of the parent entity for:
- auditing or reviewing the financial report 14,500 12,450
Note 8 Earnings per Share
a Loss (3,648,729) (1,995,208)
Earnings used to calculate basic and dilute EPS 3,648,729 (1,995,208)
b Weighted average number of ordinary shares 184,346,151 151,695,172
outstanding during the year used in calculating
basic and dilute EPS
Economic Entity Parent Entity
2006 2005 2006 2005
$ $ $ $
Note 9 Cash and Cash Equivalents
Cash at bank and in hand 3,044,812 136,507 3,044,712 136,402
Cash held in foreign currency 893,131 453,015 889,908 453,015
Cash at bank and on hand 3,937,943 589,522 3,934,620 589,417
The effective interest rate was 4.7% (2005: 3.16%)
Reconciliation of Cash
Cash at the end of the financial year as shown in
the cash flow statement is reconciled to items in
the balance sheet as follows:
Cash and cash equivalents 3,937,943 589,522 3,934,620 589,417
Note 10 Trade and Other Receivables
CURRENT
Other Receivables 49,212 33,078 49,212 33,078
NON-CURRENT
Amounts receivable from:
Wholly owned entities (a) - - 3,227,981 2,738,360
Provision for impairment of receivables wholly- owned - - (3,227,981) (2,738,360)
subsidiaries
- - - -
Other parties - Egyptian Mineral Resources Authority 72,162 72,162 - -
Provision for impairment (72,162) (72,162) - -
- - - -
- - - -
a The loans to controlled entities are advanced interest free, are unsecured and will be repaid when
the respective subsidiary is generating sufficient funds and has the financial capacity to meet the
loan commitment.
NOTE 11 Controlled Entities
Controlled Entities Consolidated
Country of Incorporation Percentage Owned (%)
2006 2005
Parent Entity:
Gippsland Ltd Aust
Subsidiaries of Gippsland Ltd:
Abutan Pty Ltd Aust 100 100
Tantalum International Pty Ltd Aust 100 100
Here2Win.com Pty Ltd Aust 100 90
Nubian Resources plc UK 100 100
Tantalum Egypt LLC Egypt 50 50
Controlled Entities with Ownership Interest of 50% or Less
The parent entity holds 50% of the ordinary shares of Tantalum Egypt LLC. Under
the Articles of Association, Tantalum International Pty Ltd has the sole right
to nominate the Chairman of the Board of Directors and the Chief Executive
Officer.
Note 12 Economic Entity Parent Entity
Property, Plant and Equipment 2006 2005 2006 2005
$ $ $ $
Plant and equipment:
At cost 195,502 177,313 195,502 177,313
Accumulated depreciation (159,817) (135,371) (159,817) (135,371)
Total property, plant and equipment 35,685 41,942 35,685 41,942
a Movements in Carrying Amounts
Movement in the carrying amounts of each class of property, plant and equipment
between the beginning and the end of the current financial year
Plant and Equipment
Balance at the beginning of year 41,942
Additions 14,239
Depreciation expense (20,496)
Carrying amount at the end of year 35,685
Economic Entity Parent Entity
2006 2005 2006 2005
$ $ $ $
Note 13 Other Assets
CURRENT
Prepayments 915 15,270 915 15,270
NON CURRENT
Investment in Subsidiaries - - 3,522 305
Note 14 Trade and Other Payables
CURRENT
Sundry payables and accrued expenses 190,529 90,225 190,529 90,225
Amounts payable to:
- key management personnel related entities 17,580 9,000 17,580 9,000
208,109 99,225 208,109 99,225
Note 15 Tax
Assets
Deferred tax assets not brought to account, the
benefits of which will only be realised if the
conditions of deductibility set out in Note 1b
occur
Prior year tax losses brought forward 3,080,360 2,517,385 2,331,825 1,768,850
Additional tax losses 258,093 562,975 258,093 562,975
Tax losses carried forward 3,338,453 3,080,360 2,589,918 2,331,825
The company continues to comply with the condition
for deductibility imposed by tax legislation; and
no changes to tax legislation adversely affected
the Company in realising the benefit from the
deductions for the losses.
The economic entity has not entered into a tax
consolidated group.
Note 16 Provisions
Long-term Employee Benefits
$
Opening Balance at 1 July 2005 9,000
Additional Provisions 18,692
Amounts Used (2,769)
Balance at 30 June 2006 24,923
Analysis of Total Provisions
Economic Entity Parent Entity
2006 2005 2006 2005
Current 9,923 9,000 9,923 9,000
Non-current 15,000 - 15,000 -
24,923 9,000 24,923 9,000
Provision for Long-term Employee Benefits
A provision has been recognised for employee entitlements relating to long
service leave. In calculating the present value of future cash flows in respect
of long service leave, the probability of long service leave being taken is
based on an estimation. The measurement and recognition criteria relating to
employee benefits has been included in Note 1 to this report.
Economic Entity Parent Entity
2006 2005 2006 2005
$ $ $ $
Note 17 Issued Capital
232,851,926 (2005: 162,818,926) ordinary shares 22,658,274 15,868,236 22,658,274 15,868,236
fully paid ordinary shares
The company has no maximum authorised share capital.
a Ordinary Shares
At the beginning of reporting period 15,868,236 14,203,912 15,868,236 14,203,912
* On 3 December 2004 the Company issued
20,000,000 ordinary shares at 3 pence (7.5 cents)
each (refer b(i)) - 1,491,612 - 1,491,612
* On 3 March 2005 the Company issued
500,000 shares under an employment contract at 11
cents each - 55,000 - 55,000
* On 27 April 2005 the Company issued
2,790,567 following an option conversion at 2.8
pence (7 cents) each (refer (b)(ii)) - 192,293 - 192,293
* On 10 October 2005 the Company issued
15,000,000 ordinary shares at 9.3 cents each 1,388,889 - 1,388,889 -
* On 17 January and 21 April 2006 the
Company issued 1,000 & 32,000 ordinary shares
respectively following an option conversion at 9 2,970 - 2,970 -
cents each
* On 17 March 2006 the Company issued
24,000,000 ordinary shares at 11.5 cents each 2,767,623 - 2,767,623 -
* On 27 March 2006 the Company issued
6,000,000 ordinary shares as settlement of a
dispute for nil - - - -
* On 31 May 2006 the Company issued
25,000,000 ordinary shares at 10.8 cents each 2,700,000 - 2,700,000 -
* Less: Issue costs associated with capital (69,444) (74,581) (69,444) (74,581)
raisings
At reporting date 22,658,274 15,868,236 22,658,274 15,868,236
Economic Entity
2006 2005
$ $
Number of Number of
Options Options
Options
b
The following options over ordinary shares are on issue:
Options exercisable at 9 cents on or before 31/12/2007 43,738,393 43,771,393
(listed)
Options exercisable at 4 UK pence on or before 31/12/ 10,000,000 10,000,000
2007 (unlisted))
Options exercisable at 15 cents on or before 31/12/ 2,250,000 -
2007 (unlisted))
Options exercisable at 13.5 cents on or before 16/05/ 25,000,000 -
2012 (unlisted))
80,988,393 53,771,393
Note 18 Reserves
Option Reserve
The option reserve records items recognised as expenses on
valuation of employee share options.
Economic Entity Parent Entity
2006 2005 2006 2005
$ $ $ $
Note 19 Capital and Leasing Commitments
a Operating Lease Commitments
Non-cancellable operating leases contracted but not
capitalised in the financial statements
Payable - minimum lease payments
- not later than 12 months 73,662 20,400 73,662 20,400
- between 12 months and 5 years 306,600 3,400 306,600 3,400
- greater than 5 years 6,388 - 6,388 -
386,650 23,800 386,650 23,800
The property lease is a non-cancellable lease with a five year term, with rent
payable monthly in advance. Contingent rental provisions within the lease
agreement require the minimum lease payments shall be increased by the lower of
CPI or 4% per annum. An option exists to renew the lease at the end of the
five-year term for an additional term of five years.
b Capital Expenditure Commitments
There were no capital commitments at reporting date
Note 20 Segment Reporting
Segment Reporting - Geographical Segments
Segment Revenues Carrying Amount
from External Customers of Segment Assets
2006 2005 2006 2005
$ $ $ $
Geographical Location:
Australia 30,345 22,941 4,020,531 679,812
Egypt - - 3,223 -
30,345 22,941 4,023,754 679,812
Geographical Segments
The economic entity's business segments are located in Australia and Egypt.
Business Segments
The economic entity only operates in the mining and exploration segment.
Economic Entity Parent Entity
2006 2005 2006 2005
$ $ $ $
Note 21 Cash Flow Information
a Reconciliation of cash flow from operations
with loss after income tax
Loss after income tax (3,648,729) (1,995,208) (3,648,729) (1,995,208)
Non cash flows in loss
Depreciation 20,496 11,496 20,496 11,496
Provision for non- recovery of loans to - - 494,931 109,623
subsidiaries
Provision for non-recovery of other loans - 13,124 - -
Provision for diminution in investments - 13,123 - -
Foreign exchange loss (gain) (43,441) 96,093 (43,441) 96,093
Issue of options - non cash 77,827 - 77,827 -
Changes in assets and liabilities:
- (increase) decrease in sundry debtors (16,134) (3,608) (16,134) (3,608)
- (increase) decrease in prepayments 14,355 (21) 14,355 (21)
- increase (decrease) in payables 108,884 (118,790) 108,884 (118,790)
- increase (decrease) in provisions 15,923 3,958 15,923 3,958
Net cash flow used in operating activities (3,470,819) (1,979,833) (2,975,888) (1,896,457)
There were no material non cash items during the financial
year.
Note 22 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 11 for further details.
Gippsland Limited (the parent entity) has made loans to its controlled entities
totalling $3,227,981 (2005: $2,738,360). Refer note 10 for further details.
Gippsland Limited paid an amount of $8,528 on behalf of Nubian Resources PLC for
company registration fees.
There were no other related party transactions during the year.
Note 23 Financial Instruments
a Financial Risk Management
The group's financial instruments consist mainly of deposits with banks,
short-term investments, accounts receivable and payable, and loans to and from
subsidiaries.
The main purpose of non-derivative financial instruments is to raise finance for
group operations
Financial Risks
The main risks the group is exposed to through its financial instruments are
foreign currency risk, liquidity risk and credit risk.
Note 23 Financial Instruments (cont)
Foreign Currency Risk
The group is exposed to fluctuations in foreign currencies arising from the
purchase of goods and services in currencies other than the group's measurement
currency.
Liquidity Risk
The group manages liquidity risk by monitoring forecast cash flows and ensuring
that adequate funds are maintained.
Credit Risk
The economic entity does not have any material credit risk exposure to any
single receivable or group of receivables.
b Financial Instruments
Interest Rate Risk
The economic entity's exposure to interest rate risk, which is the risk that a
financial instrument's value will fluctuate as a result of changes in market
interest rates and the effective weighted average interest rates on classes of
financial assets is as follows:
Weighted Average Floating Non Interest Total
Effective Interest Interest Rate Bearing
Rate
2006 2005 2006 2005 2006 2005 2006 2005
Financial assets
Cash assets 4.7% 3.4% 3,937,943 589,522 - - 3,937,943 589,522
Receivables - - 49,212 33,078 49,212 33,078
Total financial assets 3,937,943 589,522 49,212 33,078 3,987,155 622,600
Financial liabilities:
Payables - - 208,109 99,225 208,109 99,225
Total financial - 208,109 99,225 208,109 99,225
liabilities -
Note 24 Interests in Joint Ventures
At 30 June 2006, 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
2006 2005
Zeehan Tin Deposit - Tasmania 40% 40% Western Metals Ltd 60%
Abu Dabbab - Egypt 50% 50% Egyptian Mineral Resources Authority - 50%
Nuweibi - Wadi Allaqi, Egypt 50% 50% Egyptian Mineral Resources Authority - 50%
Seiga - Wadi Allaqi, Egypt * 50% 50% Egyptian Mineral Resources Authority - 50%
tba - Wadi Allaqi, Egypt * 50% 50% Egyptian Mineral Resources Authority - 50%
Tba - Wadi Allaqi, Egypt * 50% 50% Egyptian Mineral Resources Authority - 50%
Tba - Wadi Allaqi, Egypt * 50% 50% Egyptian Mineral Resources Authority - 50%
Tba - Wadi Allaqi, Egypt * 50% 50% Egyptian Mineral Resources Authority - 50%
Tba - Wadi Allaqi, Egypt * 50% 50% Egyptian Mineral Resources Authority - 50%
Tba - Wadi Allaqi, Egypt * 50% 50% Egyptian Mineral Resources Authority - 50%
Tba - Wadi Allaqi, Egypt * 50% 50% Egyptian Mineral Resources Authority - 50%
Abu Swayel - Wadi Allaqi, Egypt * 50% 50% Egyptian Mineral Resources Authority - 50%
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).
Note 25 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 26 Changes in Accounting Policy
The following Australian Accounting Standards have been issued or amended and
are applicable to the parent and economic entity but are not yet effective. They
have not been adopted in preparation of the financial statements at reporting
date.
Nature of Change in
AASB AASB Standard Accounting Policy Application Date of Application Date
Amendment Affected and Impact the Standard for the Group
2004-3 AASB 1: First-time No Change, no impact 1 January 2006 1 July 2006
Adoption of AIFRS
AASB 101: Presentation No Change, no impact 1 January 2006 1 July 2006
of Financial Statements
AASB 124: Related No Change, no impact 1 January 2006 1 July 2006
Party Disclosures
2005-1 AASB 139: Financial No Change, no impact 1 January 2006 1 July 2006
Instruments: Recognition
and Measurement
2005-5 AASB 1: First-time No Change, no impact 1 January 2006 1 July 2006
Adoption of AIFRS
Note 26 Changes in Accounting Policy (cont)
AASB 139: Financial No Change, no impact 1 January 2006 1 July 2006
Instruments: Recognition
and Measurement
2005-6 AASB 3: Business No Change, no impact 1 January 2006 1 July 2006
Combinations
2005-9 AASB 132: Disclosure No Change, no impact 1 January 2006 1 July 2006
and Presentation
AASB 139: Financial No Change, no impact 1 January 2006 1 July 2006
Instruments: Recognition
and Measurement
2005-10 AASB 139: Financial No Change, no impact 1 January 2007 1 July 2007
Instruments: Recognition
and Measurement
AASB 101: Presentation No Change, no impact 1 January 2007 1 July 2007
of Financial Statements
AASB 114: Segment No Change, no impact 1 January 2007 1 July 2007
Reporting
AASB 117: Lease No Change, no impact 1 January 2007 1 July 2007
AASB 133: Earnings per No Change, no impact 1 January 2007 1 July 2007
Share
AASB 132: Financial No Change, no impact 1 January 2007 1 July 2007
Instruments: Disclosure
and Presentation
AASB 1: First-time No Change, no impact 1 January 2007 1 July 2007
Adoption of AIFRS
AASB 4: Insurance No Change, no impact 1 January 2007 1 July 2007
Contracts
AASB 1023: General No Change, no impact 1 January 2007 1 July 2007
Insurance Contracts
2006-1 AASB 121: The Effects No Change, no impact 1 January 2006 1 July 2006
of Changes in Foreign
Exchange Rates
New AASB 7: Financial No Change, no impact 1 January 2007 1 July 2007
Standard Instruments: Disclosure
New AASB 119: Employee No Change, no impact 1 January 2006 1 July 2006
Standard Benefits: December
2004
All other pending Standards issued between the previous financial report and the
current reporting dates have no application to either the parent or economic
entity.
Note 27 Company Details
The registered office of the company is:
Gippsland Limited
207 Stirling Highway
Claremont WA 6010
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 2006
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 22nd day of September 2006.
R J TELFORD
DIRECTOR
INDEPENDENT AUDIT REPORT TO THE MEMBERS OF
GIPPSLAND LIMITED
Scope
The financial report and directors' responsibility
The financial report comprises the income statement, balance sheet, statement of
changes in equity, cash flow statement, accompanying notes to the financial
statements, and the directors' declaration for Gippsland Limited (the "Company")
and Gippsland Limited (the consolidated entity), for the year ended 30 June
2006. 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 judgement, 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:
n examining, on a test basis, information to provide evidence supporting
the amounts and disclosures in the financial report, and
n 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.
Independence
In conducting our audit, we followed applicable independence requirements of
Australian professional ethical pronouncements and the Corporations Act 2001.
In accordance with ASIC Class Order 05/83, we declare to the best of our
knowledge and belief that the auditor's independence declaration set out on page
10 of the financial report has not changed as at the date of providing our audit
opinion.
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 2006 and of their
performance for the financial year ended on that date; and
ii. complying with Accounting Standards in Australia and
the Corporations Regulations 2001; and
b) other mandatory professional reporting requirements in Australia.
GRANT THORNTON
Chartered Accountants
SEAN MCGURK
Partner
Perth, Western Australia
Dated this 22nd day of September 2006
Pursuant to the Listing Requirements of the Australian Stock Exchange Limited,
the shareholder information set out below was applicable as at 7 September 2006.
A. Distribution of Equity Securities
Analysis of numbers of shareholders and option holders by size
of holding:
Spread of Holdings Number of Holders
Ordinary Shares Listed Options
1 - 1,000 50 51
1,001 - 5,000 111 44
5001 - 10,000 181 21
10,001 - 100,000 368 81
100,001 and over 127 70
TOTAL 837 267
The total number of securities on 232,851,926 43,738,393
issue
The number of holders holding less
than a marketable parcel of
securities 30
B. Twenty Largest Shareholders
Name Number of Shares %
Computershare Company Nominees Ltd 79,243,345 34.03%
International Finance Corporation 25,000,000 10.74%
Eco International Pty Ltd 10,231,695 4.39%
King Town Holdings Pty Ltd 9,500,000 4.08%
William Richard Basil 9,150,000 3.93%
Situate Pty Ltd 8,800,000 3.78%
Taveroam Pty Ltd 5,900,000 2.53%
Sunvest Corporation Limited 5,166,665 2.22%
Starvest Plc 4,500,000 1.93%
Robert and Robin Telford 3,336,429 1.43%
Highforce Investments Pty Ltd 2,765,516 1.19%
Trafalgar Resource Finance 2,308,332 0.99%
Colin Montague Lionel Smith Esq 1,925,000 0.83%
ANZ Nominees Limited 1,772,778 0.76%
Yellowrock Pty Ltd 1,300,000 0.56%
HSBC Custody Nominees 1,250,000 0.54%
DS & Co (Sheepfarming) Ltd 1,225,000 0.53%
Cobolt Investments Ltd 1,220,481 0.52%
Philip and Jennifer Wheatley 1,075,500 0.46%
Tricom Nominees Pty Limited 1,049,364 0.45%
176,720,105 75.89%
C. Twenty Largest Listed Option Holders
Name Number of Options %
Eco International Pty Ltd 6,259,750 14.31%
King Town Holdings Pty Ltd 3,150,000 7.20%
Situate Pty Ltd 2,320,000 5.30%
Mandu Superannuation Fund 2,260,000 5.17%
Ventureworks JDK Pty Ltd 2,250,000 5.14%
David James Gray 2,250,000 5.14%
David Christopher Kemp 1,542,267 3.53%
Tricom Nominees Pty Ltd 1,300,000 2.97%
Windowland Pty Ltd 1,000,000 2.29%
Robert Anthony Healy 1,000,000 2.29%
Averon Holdings Limited 1,000,000 2.29%
Edgewater Estates Limited 1,000,000 2.29%
Broko Investments Pty Ltd 780,000 1.78%
Rosewarne Superannuation 700,000 1.60%
Jacqou Investments Pty Ltd 654,412 1.50%
Helena Nemchin 500,000 1.14%
Mark Koussas 500,000 1.14%
Cumbak Pty Ltd 500,000 1.14%
Chris Scott-Orr 475,000 1.09%
Peter John Baker 423,000 0.97%
29,864,429 68.28%
D. Unlisted Option Holders
Name Number of Options %
International Finance Corporation 25,000,000 67%
Credit Suisse First Boston Client 10,000,000 27%
Nominees Ltd
JSF Dunlop 2,250,000 6%
37,250,000 100%
E. Substantial Shareholders Number of Ordinary %
Shares
in which interests
held
Computershare Company Nominees Ltd 79,243,345 34.03%
International Finance Corporation 25,000,000 10.74%
Situate Pty Ltd and Taveroam Pty Ltd 14,700,000 6.31%
Eco International Pty Ltd and RJ & R 13,568,124 5.82%
Telford
This information is provided by RNS
The company news service from the London Stock Exchange
END
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