TIDMLRL
RNS Number : 3098P
Leyshon Resources Limited
30 September 2011
LEYSHON RESOURCES LIMITED
FINANCIAL REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2011
The Directors of Leyshon Resources Limited present their report
on the
Consolidated Entity consisting of Leyshon Resources Limited
("the Company" or "Leyshon Resources") and the entities it
controlled at the end of, or during, the financial year ended 30
June 2011 ("Consolidated Entity").
For further information contact:
Leyshon Resources Limited
Paul Atherley - Managing Director
Tel: +61 417 475 038 or China +86 137 1800 1914
patherley@leyshonresources.com
Seymour Pierce Limited
John Cowie/Jonathan Wright (Nominated Advisers)
Richard Redmayne / Leti McManus (Corporate broking)
Tel: +44 (0)207 107 8000
DIRECTORS
The following persons were Directors of the Company during the
financial year and up to the date of this report:
John W S Fletcher
Paul C Atherley
Richard P Seville
Andrew Berry III
INFORMATION ON DIRECTORS
John WS Fletcher CBE
Non-Executive Chairman from date of appointment 7 April 2006
Member of the Audit Committee and Chairman of the Remuneration
Committee
Mr Fletcher served as an Executive and main Board Director of
the Trafalgar Group ("Trafalgar") for more than 20 years, which at
the time was one of the UK's largest industrial groups. Following
the acquisition of Trafalgar by Kvaerner ASA ("Kvaerner"), he
became Chairman and President of Kvaerner's engineering and
construction worldwide operations.
In 1996, he was awarded the title of CBE (Commander of the
British Empire) for his contribution to British industry. He was a
member of the international advisory team to the Beijing Mayor in
1998 and later held the position of Executive Vice Chairman of the
Construction Supervision Committee for the National Stadium for the
Beijing 2008 Olympics.
Mr Fletcher is based in Hong Kong and is a director and
shareholder of Somerley Group Limited ("Somerley"), the holding
company for Somerley Limited (a specialist financial services
company which has been operating for more than 25 years with a
Beijing Representative Office), Somerley China Associates Limited,
Somerley Asset Management Limited, Somerley Singapore Pte Limited,
Somerley Investment Consulting (Shanghai) Limited and Somerley
Australia Limited. Somerley also own 40% of Sydney based financial
advisory firm Inteq Limited in which Mr Fletcher is a Somerley
Director. Somerley advises both Chinese and international groups
from its Hong Kong, Beijing, Shanghai, Sydney and Perth offices on
access to capital via the Hong Kong Stock Exchange and via foreign
direct investment. Mr Fletcher continues to maintain his
well-established industry, government and financial connections in
London.
Mr Fletcher also sits on the Advisory Board of Ambienta SGR
S.p.A a fund management company focusing on the environment based
in Italy as well as Luxottica China Advisory Board.
During the three year period to the end of the financial year,
Mr Fletcher has not held a directorship in any other listed
company.
Paul C Atherley
Managing Director from date of appointment 4 May 2004
Qualifications - BSc (Hons), MappSC, MBA, MAusIMM, ARSM
Mr Atherley graduated in mining engineering from the Royal
School of Mines, Imperial College in 1982 and has over 25 years
industry operating experience including periods with British Coal
in the UK and Mount Isa Mines Ltd in Australia. He was an Executive
Director of the Investment Bank arm of HSBC Australia where he
undertook a range of advisory roles in the resources sector. In
August 2004 he retired from the position of Managing Director of an
ASX and AIM listed mining company, a position he held since the
company's flotation in 1994. During this period he completed a
number of acquisitions and financings of resource projects in
Australia, South-East Asia, Africa and Western Europe.
During the three year period to the end of the financial year,
Mr Atherley has not held a directorship in any other listed
company.
Richard Seville
Non-Executive Director from date of appointment 1 February
2007
Member of the Audit Committee and Remuneration Committee
Qualifications - BSC (Hon), MEngSc, MAusIMM, MAICD, ARSM
Mr Seville is a mining geologist and geotechnical engineer with
25 years experience covering exploration, mine development and mine
operations in gold, base metals and coal projects in Australia,
Africa and Asia. Mr Seville also has significant corporate
experience and held the roles of operations director and/or
managing director for ASX/AIM listed companies since 1994.
During the three year period to the end of the financial year,
Mr Seville has held a directorship in Orocobre Limited (November
2007 - present)
Andrew Berry III
Non-Executive Director from date of appointment 10 October
2008
Chairman of the Audit Committee
Qualifications - BS Geological Engineering and MBA
Mr Berry has over 35 years experience in financing projects
mainly with Chase Manhattan Bank in the Far East and Australia.
During this period Mr Berry played an integral role in the
completion of over US$25 billion in transactions for power
generation, mining and petroleum companies in Australia and
throughout the international arena.
He is currently a Non-Executive Director of the unlisted
Corporative Fund Limited. Previously Mr Berry was a Non-Executive
Director of several listed and unlisted Australian resource focused
companies including the ASX and Port Moresby Stock Exchange listed
Highlands Pacific Limited. Mr Berry is a citizen of the United
States and Australia.
During the three year period to the end of the financial year,
Mr Berry has held directorships in CorporActive Fund Limited
(September 2007 - Present) and Viridis Investment Management
Limited (July 2005 - February 2011).
Company Secretary
Stacey Apostolou
Company Secretary from date of appointment 7 April 2006
Qualifications - B Bus, CPA
Ms Apostolou has been employed with the Company since August
2005. She has previously acted as Finance Director to the Company
and another ASX/AIM listed company, has held company secretarial
roles for publicly listed companies within the mining and
exploration industry and has over 20 years relevant industry
experience. Ms Apostolou has been responsible for the corporate,
treasury, finance, accounting and administration functions for
these companies.
PRINCIPAL ACTIVITIES
The principal activities of the Consolidated Entity during the
year consisted of gold and other minerals exploration. There was no
significant change in the nature of those activities during the
financial year.
CONSOLIDATED RESULTS
2011 2010
$ $
(Loss)/profit of the Consolidated Entity
before income tax (531,637) 26,655,096
Income tax (248,347) (158,261)
---------- -----------
Net (loss)/profit attributable to members
of Leyshon Resources Limited (779,984) 26,496,835
========== ===========
Note: The 2010 profit result included a gain of $28,444,559 on
the disposal of the Consolidated Entity's 70% interest in the Sino
Foreign Joint Venture company Black Dragon Mining Company Limited
(Black Dragon), which owned the Zheng Guang Gold Project.
REVIEW OF OPERATIONS
During the 2011 financial year, the Company has been reviewing
and undertaking due diligence on a number of investment
opportunities, some of which have the potential to meet the
Company's investment criteria.
Business Strategies and Prospects
With the support of its shareholders, the Company has adopted an
investing policy that aims to capitalise on its extensive
experience in China. The policy focuses on acquiring and developing
mineral and energy projects in those commodities and located in
those countries which it believes will be of interest to Chinese
mining and other groups for either offtake, partnership or
sale.
The Company continues to review, and in some cases carry out due
diligence, on a number of possible projects both internationally
and within China. As previously advised, the Company has completed
a preliminary technical and legal due diligence review on a PRC
entity that holds an exploration licence over a thermal coal
project in the Western Chinese province of Xinjiang and is
currently reviewing a number of copper and gold projects in China
and Australia.
DIVIDENDS
No interim or final dividend has been declared in respect to the
financial year ended 30 June 2011 (2010: nil).
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
During the 2011 financial year, the Company successfully
completed its readmission to AIM and as part of the readmission
placed 30,435,130 new fully paid ordinary shares at A$0.23, raising
approximately A$7.0 million before costs.
The Company has also achieved Wholly Owned Foreign Investor
(WOFE) status for it's activities and investments in China. This is
an important step as it allows the Company to make investments and
undertake its business activities in China within a regulatory
framework that is much closer to that governing local companies
than was previously the case.
In January 2011 the Company announced that it has created and
appointed four members to a Beijing based Advisory Board to provide
guidance in relation to the Company's investments in China. The
Advisory Board members will provide specific advice in relation to
investments within China, provide introductions to relevant
government bodies and where appropriate represent the Company at
various levels of government. The appointees are all senior
officials who have held positions in the Ministry of Lands and
Resources.
During the year the Company announced the completion of its
share buyback programme which was undertaken during the previous
year. In total the Company purchased 2,165,098 shares at an average
of A$0.174 cents and 10.8 pence per share. All share purchases
under the buyback programme were carried out during the 2010
financial year.
SUBSEQUENT EVENTS
As at the date of this report there are no matters or
circumstances which have arisen since 30 June 2011 that have
significantly affected or may significantly affect:
a) the operations, in financial years subsequent to 30 June
2011, of the Consolidated Entity constituted by Leyshon Resources
Limited and the entities it controls from time to time;
b) the results of those operations; or
c) the state of affairs, in financial years subsequent to 30
June 2011, of the Consolidated Entity.
LIKELY DEVELOPMENTS
The Company continues to receive investment proposals from many
locations around the world and it actively considers each one in
light of its competitive advantage of being able to access the
Chinese end user market.
The Company remains diligent in its assessment of assets at all
times and is therefore prepared to commit significant expenditure
on due diligence and other studies before committing to a
transaction. The Company can give no assurance that these due
diligence investigations and/or discussions will successfully
conclude in an acquisition.
In the opinion of the Directors, any further disclosure of
information regarding likely developments in the operations of the
Consolidated Entity and the expected results of these operations in
subsequent financial years may prejudice the interests of the
Consolidated Entity and accordingly, has not been disclosed.
ENVIRONMENTAL REGULATIONS
The Consolidated Entity's operations are subject to various
environmental laws and regulations under the relevant government's
legislation. Full compliance with these laws and regulations is
regarded as a minimum standard for all operations to achieve.
Instances of environmental non-compliance by an operation are
identified either by external compliance audits or inspections by
relevant government authorities.
Pursuant to an agreement between the Company and Newmont
Australia Limited ("Newmont"), Newmont is responsible for all
environmental obligations in respect of the Mt Leyshon leases in
perpetuity regardless of changes to those obligations arising from
changes to regulatory requirements and has indemnified the Company
to that effect.
SHARES
During the year, the Company:
-- issued 30,435,130 fully paid ordinary shares at A$0.23 as
part of its readmission process to the Alternative Investment
Market.
OPTIONS
During the year the following options lapsed in accordance with
their terms:
-- on 30 November 2010, 4,000,000 unlisted options at an
exercise price of $0.70 each lapsed in accordance with their terms
and conditions; and
-- on 30 June 2011, 750,000 unlisted options at an exercise
price of $0.70 each lapsed in accordance with their terms and
conditions.
There were no unissued ordinary shares of Leyshon Resources
under option at the date of this report.
During the financial year no shares were issued as a result of
the exercise of options. Since 30 June 2011 and up to the date of
this report, no shares have been issued as a result of the exercise
of options.
INSURANCE OF OFFICERS AND AUDITORS
During the financial year, the Company paid a premium in respect
of a contract insuring the directors of the Company, the company
secretary and all executive officers of the Company and of any
related body corporate against a liability incurred as such a
director, secretary or executive officer to the extent permitted by
the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of the liability and the amount of the
premium.
The Company has not otherwise, during the financial year,
indemnified or agreed to indemnify an officer or auditor of the
Company or of any related body corporate against a liability
incurred as such an officer or an auditor.
MEETINGS OF DIRECTORS
The following table sets out the number of meetings of the
Company's directors held during the financial year ended 30 June
2011, and the number of meetings attended by each director.
Audit Committee Remuneration Committee
Board Meetings Meetings Meetings
Held Attended Held Attended Held Attended
Directors
John WS
Fletcher 7 7 2 2 0 0
Paul C
Atherley 7 7 N/A N/A N/A N/A
Richard
Seville 7 7 2 2 0 0
Andrew Berry
III 7 7 2 2 N/A N/A
------------- ------ --------- ------ ---------- --------- -------------
INFORMATION ON DIRECTORS' INTERESTS IN SECURITIES OF LEYSHON
RESOURCES
Interest in Securities
at the date of this
Report
----------------- -------------------------
Ordinary Options
Shares
----------------- -------------- ---------
John WS Fletcher 2,316,324 -
Paul C Atherley 29,530,000 -
Richard Seville 750,000 -
Andrew Berry - -
III
----------------- -------------- ---------
REMUNERATION REPORT (AUDITED)
This remuneration report which forms part of the directors'
report, sets out information about the remuneration of Leyshon
Resources Limited's directors and its senior management for the
financial year ended 30 June 2011. The prescribed details for each
person covered by this report are detailed below.
Director and Senior Management Details
The following persons acted as directors of Leyshon Resources
Limited during or since the end of the financial year:
-- John WS Fletcher (Chairman)
-- Paul C Atherley (Managing Director)
-- Richard P Seville (Non Executive Director)
-- Andrew J Berry III ( Non Executive Director)
The term 'senior management' is used in this remuneration report
to refer to the following persons. Except as noted, the named
persons held their current position for the whole of the financial
year and since the end of the financial year:
-- Peter Niu - Financial Controller, Leyshon Resources
Limited
-- Stacey Apostolou - Company Secretary
-- Henry Tebar - Exploration Manager
There were no other group executives or Company executives
during the year.
Remuneration policies
Executive remuneration
The Company's remuneration policy for executive directors and
senior management is designed to promote superior performance and
long term commitment to the Company. Remuneration packages are set
at levels that are intended to attract and retain executives
capable of managing the Company's operations. Executives receive a
base remuneration which is market related, together with an element
of performance based remuneration.
Overall remuneration policies are subject to the discretion of
the Board and will be adapted to reflect competitive market and
business conditions where it is in the interests of the Company and
shareholders to do so. Within this framework, the remuneration
committee (established 9 May 2007) considers remuneration policies
and practices generally, and determines specific remuneration
packages and other terms of employment for executive directors and
senior executive management.
Executive remuneration and other terms of employment are
reviewed annually by the committee having regard to performance,
relevant comparative information and expert advice.
The objective of any short term incentives is to link
achievement of the Company's operational targets with the
remuneration received by executives charged with meeting those
targets. The objective of long term incentives is to reward
executives in a manner which aligns this element of their
remuneration with the creation of shareholder wealth.
The committee's remuneration policies are designed to align
executive's remuneration with shareholders' interests and to retain
appropriately qualified executive talent for the benefit of the
Company. The main principles of the policies are that:
-- Reward reflects the competitive market in which the Company
operates;
-- Individual reward should be linked to performance criteria;
and
-- Executives should be rewarded for both financial and
non-financial performance.
REMUNERATION REPORT (Cont'd)
The structure of remuneration packages for executive directors
and other senior executive management consists of the
following:
-- Salary - executive directors and senior executives receive a
fixed sum base salary payable monthly in cash;
-- Short term incentives - through eligibility to participate in
performance bonus plans;
-- Long term incentives - executive directors are eligible to
participate in share option schemes with the prior approval of
shareholders. Senior management may also participate in employee
share option schemes, with any option issues generally being made
in accordance with thresholds set in plans approved by
shareholders. The Board however, considers it appropriate to retain
the flexibility to issue shares or options to senior management
outside of approved employee option plans and in the event that no
employee option plan exists; and
-- Other benefits - executive directors and senior management,
where applicable, are eligible to participate in superannuation
schemes.
Non-executive directors' remuneration
In accordance with current corporate governance practices, the
structure for the remuneration of non-executive directors and
senior management is separate and distinct. Shareholders approve
the maximum aggregate remuneration for non-executive directors. The
remuneration committee recommends the actual payments to directors
and the Board is responsible for ratifying any recommendations, as
appropriate. The maximum aggregate remuneration approved for
non-executive directors is currently $250,000 which does not
include any share based payments. The Board approves any
consultancy arrangements for non-executive directors who provide
services outside of and in addition to their duties as
non-executive directors.
Non-executive directors are entitled to statutory superannuation
benefits if applicable. At the current stage of the Company's
development, non-executive directors may also be entitled to
participate in equity based remuneration schemes.
All directors are entitled to have their indemnity insurance
paid by the Company.
Relationship between the remuneration policy and Company
performance
The table below sets out summary information about the
Consolidated Entity's earnings and movements in shareholder wealth
for the five years to June 2011:
30 June 30 June 30 June 30 June 30 June
2011 2010 2009 2008 2007
$ $ $ $ $
Revenue 3,011,462 29,913,031 518,802 1,048,631 628,530
Net
(loss)/profit
before tax (531,637) 26,655,096 (3,397,827) (10,411,177) (10,081,813)
Net
(loss)/profit
after tax (779,984) 26,496,835 (3,397,827) (10,411,177) (10,081,813)
Share price at
start of
year 0.200 0.100 0.500 0.625 0.315
Share price at
end of year 0.250 0.200 0.100 0.500 0.625
Dividend paid - - - - -
Diluted
(loss)/profit
per share
(cents) (0.3) 12.2 (1.6) (4.8) (5.8)
There is currently no direct link in the relationship between
the remuneration for key management personnel and the Company's
financial performance, however, this position may change and be
reassessed in the future if an acquisition is undertaken.
REMUNERATION REPORT (Cont'd)
Service Agreements
Non Executive Directors
Mr Fletcher
The Company has entered into a service agreement with Mr
Fletcher whereby he is paid a fee of $66,000 per annum in his
capacity as Chairman with effect from 1 January 2009 ($90,000 prior
to 1 January 2009). Mr Fletcher is entitled to receive
reimbursement for out of pocket expenses incurred whilst on Company
business. The agreement is for no fixed term, does not provide for
the payment of termination benefits and may be terminated by either
party by providing 90 days written notice.
Mr Seville
The Company has entered into a service agreement with Mr Seville
whereby he is paid a fee of $45,000 per annum including
superannuation in his capacity as Non-Executive Director with
effect from 1 January 2009 ($50,000 prior to 1 January 2009). Mr
Seville is entitled to receive reimbursement for out of pocket
expenses incurred whilst on Company business. The agreement is for
no fixed term, does not provide for the payment of termination
benefits and may be terminated by either party by providing 90 days
written notice.
In addition, the Company has entered into a consultancy
arrangement with Richard Seville & Associates Pty Ltd in
relation to the provision of technical services by Mr Seville at
the rate of $1,600 per day. The consultancy agreement can be
terminated by either party providing three months written
notice.
Mr Berry
The Company has entered into a service agreement with Mr Berry
whereby he is paid a fee of $45,000 per annum including
superannuation in his capacity as Non-Executive Director with
effect from 1 January 2009 ($50,000 prior to 1 January 2009). Mr
Berry is entitled to receive reimbursement for out of pocket
expenses incurred whilst on Company business. The agreement is for
no fixed term, does not provide for the payment of termination
benefits and may be terminated by either party by providing 90 days
written notice.
Executive Director
Mr Atherley
The service agreement in place with Mr Atherley during the
financial year contains the following key provisions:
-- Entered into with effect from 1 July 2006 for a rolling
twelve month term as Managing Director;
-- May be terminated by the Company by providing no more than
three months notice;
-- May be terminated by Mr Atherley by providing at least six
months notice;
-- If Mr Atherley is removed as a director of the Company by
shareholders, or as the managing director of the Company, then the
Company will be deemed to have terminated the contract;
-- Base salary of $300,000 per annum with effect from 1
September 2008 ($450,000 prior to 1 September 2008);
-- An expatriate allowance of $75,000 per annum with effect from
1 January 2010;
-- A discretionary cash bonus of up to $500,000 per annum is
payable based on, in the Board's view, the contribution of Mr
Atherley towards the Company's achievement of its overall
objectives. There was no cash bonus granted during 2011 (2010:
$250,000);
-- No amount is payable in the event of termination for neglect
of duty or gross misconduct; and
REMUNERATION REPORT (Cont'd)
-- If Mr Atherley's contract is terminated, other than for
neglect of duty or gross misconduct, then the Company shall pay to
Mr Atherley a Termination Payment. The Termination Payment shall be
the aggregate of the contract rate that would be payable for the
period commencing when the contract terminates and ending at the
end of the contract term. In the event that the Termination Payment
exceeds the amount calculated in accordance with section 200F of
the Corporations Act or Chapter 10.19 of the ASX Listing Rules,
then the Termination Payment will be reduced by such amount as is
necessary so as to not exceed the amount permitted.
Senior Management
Mr Niu
The service agreement in place with Mr Niu during the financial
year contains the following key provisions:
-- Entered into with effect from 17 March 2008 for no defined
period;
-- May be terminated by the Company or Mr Niu by providing three
months notice. No payment, other than for notice, is payable upon
termination;
-- Base salary of RMB1,200,000 per annum;
-- An expatriate allowance of $75,000 per annum with effect from
1 January 2010
-- May become entitled to receive incentive options in the
Company at a price to be determined by the Board at the time of
issue; and
-- May become entitled to receive a cash bonus of up to 100% of
his base salary at the discretion of the Board. There was no cash
bonus granted during 2011 (2010: $200,000).
Ms Apostolou
The consultancy arrangement in place during the financial year
with Apostman Holdings Pty Ltd in relation to the provision of
company secretarial and corporate services by Ms Apostolou,
contains the following key provisions:
-- Entered into with effect from 10 October 2008 for no defined
period;
-- May be terminated by the Company by providing three months
notice or by Ms Apostolou by providing one month notice. No
payment, other than for notice, is payable upon termination;
-- Consultancy fee of $8,000 per month ($12,500 per month prior
to 1 January 2011);
-- May become entitled to receive incentive options in the
Company at a price to be determined by the Board at the time of
issue; and
-- May become entitled to receive a cash bonus at the discretion
of the Board. There was no cash bonus granted during 2011 (2010:
$75,000).
Mr Tebar
The service agreement in place with Mr Tebar during the
financial year contains the following key provisions:
-- Entered into with effect from 16 November 2009 for no defined
period;
-- May be terminated by the Company or Mr Tebar by providing one
month notice. Payment of two months remuneration is payable upon
termination;
-- Base salary of $150,000 per annum;
-- Rental accommodation to be supplied:
-- May become entitled to receive incentive options in the
Company at a price to be determined by the Board at the time of
issue; and
-- May become entitled to receive a cash bonus of up to 50% of
his base salary at the discretion of the Board. No cash bonus was
granted during 2011 (2010: Nil).
REMUNERATION REPORT (Cont'd)
Details of Remuneration
The emoluments (paid or payable) of each Director and the
executive officers for the financial year ended 30 June 2011 are as
follows:
Share
Short-term employee Termination Based
benefits Post-employment Benefits Payment
------------ --------------------------- ---------------- ------------ -------- --------
Salary Shares
& fees Bonus Other(1) Super-annuation issued Total
$ $ $ $ $ $ $
------------ -------- ------ --------- ---------------- ------------ -------- --------
Directors
John WS
Fletcher 66,000 - - - - - 66,000
Paul C
Atherley 300,000 - 75,000 - - - 375,000
Richard
Seville 41,284 - - 3,716 - - 45,000
Andrew
Berry III 41,284 - - 3,716 - - 45,000
Group
executives
Peter Niu 173,929 - 75,000 - - - 248,929
Stacey
Apostolou 123,000 - - - - - 123,000
Henry Tebar 160,163 - 17,780 - - - 177,943
------------ -------- ------ --------- ---------------- ------------ -------- --------
(1() Expatriate allowance for Mr Atherley and Mr Niu. Rental
accommodation for Mr Tebar.
The emoluments (paid or payable) of each Director and the
executive officers for the financial year ended 30 June 2010 are as
follows:
Share
Termination Based
Short-term employee benefits Post-employment Benefits Payment
------------ ----------------------------- ---------------- ------------ -------- --------
Salary Shares
& fees Bonus Other(1) Super-annuation issued Total
$ $ $ $ $ $ $
------------ -------- -------- --------- ---------------- ------------ -------- --------
Directors
John WS
Fletcher 66,000 - - - - - 66,000
Paul C
Atherley 300,000 250,000 37,500 - - - 587,500
Richard
Seville 43,142 - - 1,858 - - 45,000
Andrew
Berry III 41,284 - - 3,716 - - 45,000
Group
executives
Peter Niu 214,969 200,000 37,500 - - - 452,469
Stacey
Apostolou 90,000 75,000 - - - - 165,000
Henry
Tebar(2) 100,478 - - - - - 100,478
------------ -------- -------- --------- ---------------- ------------ -------- --------
(1() Expatriate allowance.
(2() Commenced as Exploration Manager 16 November 2009.
REMUNERATION REPORT (Cont'd)
Share-based Compensation
No options were granted, vested or exercised and 2,000,000
options lapsed in relation to Directors and executive officers
during the year. Details of options held by Directors and executive
officers during the year are as follows:
Balance Balance Vested and
at the at the Vested exercisable
start end of during at the end
of the Granted as Other the the of the
year remuner-ation Exercised changes year year year
2011
Mr John
Fletcher 1,000,000 - - (1,000,000) - - -
Mr
Richard
Seville 1,000,000 - - (1,000,000) - - -
Note 1 - All options exercisable at $0.70 each and lapsed on 30
November 2010.
The grant of share options is not directly linked to previously
determined performance milestones or hurdles as the current stage
of the Group's activities make it difficult to determine effective
and appropriate key performance indicators and milestones. No
options were forfeited during the year.
There is currently no Board policy in relation to the person
granted the option limiting his or her exposure to risk in relation
to the securities as the options are issued in addition to their
separate remuneration package.
NON-AUDIT SERVICES
The Directors are satisfied that the provision of non-audit
services during the year by the auditor (or by another person or
firm on the auditor's behalf) is compatible with the general
standard of independence for auditors imposed by the Corporations
Act 2001. The Audit Committee assesses the provision of non-audit
services by the auditors to ensure that the auditor independence
requirements of the Corporations Act 2001 in relation to the audit
are met.
Details of amounts paid or payable to the auditor for non-audit
services provided during the year by the auditor are outlined in
note 5 to the financial statements.
AUDITOR'S INDEPENDENCE DECLARATION
Section 307C of the Corporations Act 2001 requires our auditors,
Deloitte Touche Tohmatsu, to provide the directors of Leyshon
Resources with an Independence Declaration in relation to the audit
of the attached Financial Statements. This Independence Declaration
is included in this Financial Report at page 14 and forms part of
this Directors' Report.
Signed in accordance with a resolution of the Board of
Directors.
On behalf of the Directors
Paul Atherley
Managing Director
Beijing, China
30 September 2011
DIRECTORS' DECLARATION
The directors declare that:
(a) in the directors' opinion, there are reasonable grounds to
believe that the Company will be able to pay its debts as and when
they become due and payable;
(b) in the directors' opinion, the attached financial statements
and notes thereto are in accordance with the Corporations Act 2001,
including compliance with accounting standards and giving a true
and fair view of the financial position and performance of the
Company and the consolidated entity;
(c) in the directors' opinion, the attached financial statements
and notes thereto are in accordance with International Financial
Reporting Standards issued by the International Accounting
Standards Board, as stated in note 1; and
(d) the directors have been given the declarations required by
s.295A of the Corporations Act 2001.
Signed in accordance with a resolution of the directors made
pursuant to s.295(5) of the Corporations Act 2001.
On behalf of the Directors
Paul Atherley
Managing Director
Beijing, China
30 September 2011
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2011
Year Ended Year Ended
30 June 2011 30 June 2010
Note $ $
Continuing operations
Revenue 2 3,011,462 1,468,472
Other income - 6,230
Exploration expenses (83,050) (58,435)
Project evaluation expenses (1,282,960) (293,849)
Corporate and administration expenses (1,539,408) (2,478,458)
AIM readmission expenses (399,264) -
Foreign exchange gains/(losses) (13,933) (283,646)
Mt Leyshon holding costs 29(d) (224,484) (149,777)
Loss before tax (531,637) (1,789,463)
Income tax expense 4 (248,347) (158,261)
------------- -------------
Loss for the year from continuing
operations (779,984) (1,947,724)
Discontinued operations
Profit/(loss) for the year from
discontinued operations 3 - 28,444,569
------------- -------------
Profit/(Loss) attributable to
members of Leyshon Resources Limited (779,984) 26,496,835
============= =============
Earnings Per Share
From continuing and discontinued
operations
Basic (cents per share) 17 (0.3) 12.2
Diluted (cents per share) 17 (0.3) 12.2
From continuing operations
Basic earnings per share (cents
per share) 17 (0.3) (0.9)
Diluted earnings per share (cents
per share) 17 (0.3) (0.9)
The above Consolidated Income Statement should be read in
conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2011
Year Ended Year Ended
30 June 2011 30 June 2010
Note $ $
(Loss)/profit for the year (779,984) 26,496,835
Other comprehensive income
Exchange differences on translating
foreign operations
Exchange differences arising during
the year (24,749) (876,170)
Reclassification adjustment relating
to foreign operations disposed
of in the year (Note 3) - 393,389
------------- -------------
Other comprehensive income for
the year net of tax (24,749) (482,781)
------------- -------------
Total comprehensive income
attributable to members of
Leyshon Resources Limited (804,733) 26,014,054
============= =============
The above Consolidated Income Statement should be read in
conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2011
30 June 2011 30 June 2010
Note $ $
ASSETS
Current Assets
Cash and bank balances 25(a) 52,901,790 46,193,725
Trade and other receivables 6 743,088 1,145,616
Other assets 7 8,923 13,260
------------ ------------
Total Current Assets 53,653,801 47,352,601
------------ ------------
Non-Current Assets
Other financial assets at fair
value through profit and loss 8 1 1
Other financial assets 9 14,999 14,999
Property, plant and equipment 10 29,177 28,938
Total Non-Current Assets 44,177 43,938
------------ ------------
TOTAL ASSETS 53,697,978 47,396,539
------------ ------------
LIABILITIES
Current Liabilities
Trade and other payables 12 183,873 158,455
Current tax liabilities 4 313,589 158,261
Provisions 13 62,890 64,112
------------ ------------
Total Current Liabilities 560,352 380,828
------------ ------------
TOTAL LIABILITIES 560,352 380,828
------------ ------------
NET ASSETS 53,137,626 47,015,711
============ ============
EQUITY
Issued capital 14 71,102,376 64,175,728
Reserves 15 (18,613) 1,379,309
Accumulated losses 16 (17,946,137) (18,539,326)
------------ ------------
TOTAL EQUITY 53,137,626 47,015,711
============ ============
The above Consolidated Statement of Financial Position should be
read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2011
Year Ended Year Ended
30 June 2011 30 June 2010
$ $
Issued Capital
Issued and paid up capital - at the
beginning of the year 64,175,728 64,552,218
-------------- --------------
Issue of shares 7,000,080 -
Buy back of shares - (374,284)
Less share transaction costs (73,432) (2,206)
6,926,648 (376,490)
-------------- --------------
Issued and paid up capital - at the end
of the year 71,102,376 64,175,728
============== ==============
Employee Benefit Reserve
Balance at the beginning of the year 1,373,173 1,941,893
Expiry of options (1,373,173) (568,720)
Employee benefit reserve at the end of
the year - 1,373,173
============== ==============
Foreign Exchange Reserve
Foreign exchange reserve at the beginning
of the year 6,136 488,917
Exchange differences arising during the
year on translation of foreign operations
attributable to members of Leyshon
Resources Limited (24,749) (876,170)
Transfer to Income Statement on sale of
foreign operations as stated in Note 3 - 393,389
(24,749) (482,781)
-------------- --------------
Foreign exchange reserve at the end of
the year (18,613) 6,136
============== ==============
Total reserves at the end of the year (18,613) 1,379,309
============== ==============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2011 (CONTINUED)
Year Ended Year Ended
30 June 2011 30 June 2010
$ $
Accumulated Losses
Accumulated losses at the beginning of
the year (18,539,326) (45,604,881)
(Loss)/profit for the year attributable
to members of Leyshon Resources Limited (779,984) 26,496,835
Other comprehensive income - -
(779,974) 26,496,835
-------------- --------------
Transfer from employee benefit reserve 1,373,173 568,720
Accumulated losses at the end of the year (17,946,137) (18,539,326)
============== ==============
Reconciliation of comprehensive income
(Loss)/profit for the year (779,984) 26,496,835
Other comprehensive income
Exchange differences on translating foreign
operations
Exchange differences arising during
the year (24,749) (876,170)
Reclassification adjustment relating
to foreign operations disposed of
in the year (Note 3) - 393,389
---------- -----------
Total comprehensive income (804,733) 26,014,054
========== ===========
The above Consolidated Statement of Changes in Equity should be
read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2011
Year Ended Year Ended
30 June 2011 30 June 20109
Note $ $
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees (3,528,783) (3,206,459)
Income tax paid (93,019) -
Interest received 3,424,497 398,823
Net cash flows used in operating
activities (197,305) (2,807,636)
--------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of plant and equipment (14,032) (26,461)
Proceeds from sale of interest in
jointly controlled entity 3 - 46,039,933
Loans to other entities - (50,276)
Development expenditure 3 - (458,097)
Net cash flows (used in)/provided
by investing activities (14,032) 45,505,099
------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares 7,000,080 -
Share issue costs (73,432) -
Payment for buy-back of shares - (374,284)
Share transaction costs - (2,206)
Net cash flows provided by/(used
in) investing activities 6,926,648 (376,490)
------------- --------------
NET INCREASE IN CASH AND CASH
EQUIVALENTS 6,715,311 42,320,973
Cash and cash equivalents at the
beginning of the year 46,193,725 3,918,963
Effects of exchange rate changes
on cash and cash equivalents (7,246) (46,211)
CASH AND CASH EQUIVALENTS AT THE
END OF THE YEAR 52,901,790 46,193,725
The above Consolidated Statement of Cash Flows should be read in
conjunction with the accompanying notes.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Statement of compliance
These financial statements are a general purpose financial
report which has been prepared in accordance with the Corporations
Act 2001, Accounting Standards and Interpretations, and comply with
other requirements of the law.
Accounting Standards include Australian equivalents to
International Financial Reporting Standards ('A-IFRS'). Compliance
with A-IFRS ensures that the financial statements and notes of the
Company and the Group comply with International Financial Reporting
Standards ('IFRS').
The financial statements were authorised for issue by the
directors on 30 September 2011.
Basis of preparation
The financial report has been prepared on the basis of
historical cost, except for the revaluation of certain non-current
assets and financial instruments. Cost is based on the fair values
of the consideration given in exchange for assets. All amounts are
presented in Australian dollars, unless otherwise noted.
Adoption of new and revised Accounting Standards
In the current year, the Consolidated Entity has adopted all of
the new and revised Standards and Interpretations issued by the
Australian Accounting Standards Board ("AASB") that are relevant to
its operations and effective for annual reporting periods beginning
on or after 1 July 2010. The standards adopted are:
-- AASB 124 : "Related Party Disclosures"
-- AASB 2009-5 : "Further Amendments to Australian Accounting
Standards arising from the Annual Improvements Project"
-- AASB 2009-8 : "Amendments to Australian Accounting Standards
- Group Cash-Settled Share-based Payment Transactions"
-- AASB 2009-10 : "Amendments to Australian Accounting Standards
- Classification of Rights Issues"
-- AASB 2010-3 : "Amendments to Australian Accounting Standards
arising from the Annual Improvements Project"
-- AASB Interpretation 19 : "Extinguishing Liabilities with
Equity Instruments"
The adoption of these new and revised Standards and
Interpretations has resulted in some disclosure changes being
made.
At the date of authorisation of the financial report, the
Standards and Interpretations listed below were in issue but not
yet effective.
Initial application of the following Standard will not affect
any of the amounts recognised in the financial report, but will
change the disclosures presently made in relation to the Group and
the Company's financial report:
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
Standard / Interpretation Effective for Expected to be
annual reporting initially applied
periods beginning in the financial
on or after: year ending:
AASB 124 Related Party Disclosures 1 January 2011 30 June 2012
(2009) and AASB 2009-12 Amendments
to Australian Accounting Standards
AASB 9 Financial Instruments, 1 January 2013 30 June 2014
AASB 2009-11 Amendments to
Australian Accounting Standards
arising from AASB 9. AASB
9 introduces new requirements
for classifying and measuring.
AASB 2010-4 Further Amendments 1 January 2011 30 June 2012
to Australian Accounting Standards
arising from Annual Improvements
Project
AASB 2010-5 Amendments to 1 January 2011 30 June 2012
Australian Accounting Standards
AASB 2010-6 Amendments to 1 July 2011 30 June 2012
Australian Accounting Standards
- Disclosures on Transfers
of Financial Assets
AASB 2010-8 Amendments to 1 January 2012 30 June 2013
Australian Accounting Standards
- Deferred Tax: Recovery of
Underlying Assets'
AASB 2011-4 Amendments to 1 July 2013 30 June 2014
Australian Accounting Standards to
Remove Individual Key Management
Personnel Disclosure Requirements
AASB 10 Consolidated Financial 1 January 2013 30 June 2014
Statements
AASB 11 Joint Arrangements 1 January 2013 30 June 2014
AASB 12 Disclosure of Interests 1 January 2013 30 June 2014
in Other Entities
IFRS 13 Fair Value Measurement 1 January 2013 30 June 2014
Critical accounting judgements and key sources of estimation
uncertainty
In the application of the Group's accounting policies, which are
described in Note 1, the Directors' are required to make judgments,
estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period, or in the period of the revision and future
periods if the revision affects both current and future
periods.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
Key sources of estimation uncertainty
There are no key assumptions concerning the future, and other
key sources of estimation uncertainty at the balance sheet date,
that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next
financial year.
Significant accounting policies
The following significant accounting policies have been adopted
in the preparation and presentation of the financial report:
(a) Going Concern Basis
The financial report has been prepared on the going concern
basis, which contemplates the continuity of normal business
activity and the realisation of assets and the settlement of
liabilities in the normal course of business.
(b) Basis of Consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) as at 30 June 2011 and the results of all
subsidiaries for the year then ended. Leyshon Resources Limited and
its subsidiaries together are referred to as the Group or the
Consolidated Entity. A list of subsidiaries is provided in Note
21.
Subsidiaries are all those entities (including special purpose
entities) over which the Group has the power to govern the
financial and operating policies so as to obtain benefits from
their activities, generally accompanying a shareholding of more
than one-half of the voting rights. The existence and effect of
potential voting rights that are currently exercisable or
convertible are considered when assessing whether the Group
controls another entity.
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated from
the date that control ceases.
The acquisition method of accounting is used to account for the
acquisition of subsidiaries by the Group (refer to note 1(h)).
Subsequent to initial recognition, investments in subsidiaries are
measured at cost in the Company's financial statements.
Intercompany transactions and balances, and unrealised gains on
transactions between Group companies, are eliminated. Unrealised
losses are also eliminated unless the transaction provides evidence
of the impairment of the asset transferred. Accounting policies of
subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
Non-controlling interests in the results and equity of
subsidiaries are shown separately in the consolidated income
statement and statement of financial position respectively.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
(c) Interests in Joint Ventures
The Group accounts for its interests in jointly controlled
entities with proportionate consolidation. Proportionate
consolidation is a method of accounting whereby the Group's share
of each of the assets, liabilities, income and expenses of its
jointly controlled entities is reported on a line-by-line basis in
the consolidated entity's financial statements. The Group considers
that proportionate consolidation provides users of the financial
report with reliable and relevant information.
(d) Foreign Currency Translation
(i) Functional and presentation currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates ("the functional
currency"). The consolidated financial statements are presented in
Australian dollars, which is the Company's functional and
presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
period-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the income
statement.
(iii) Group companies
The results and financial position of all the Group entities
(none of which has the currency of a hyperinflationary economy)
that have a functional currency different from the presentation
currency are translated into the presentation currency as
follows:
-- Assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance
sheet;
-- Income and expenses for each income statement are translated
at average exchange rates (unless this is not a reasonable
approximation of the cumulative effect of the rates prevailing on
the transaction dates, in which case income and expenses are
translated at the dates of the transactions); and
-- All resulting exchange differences are recognised as a
separate component of equity in the foreign currency translation
reserve.
Where a foreign operation is sold or borrowings repaid, a
proportionate share of such exchange differences are recognised in
the income statement as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate.
(e) Revenue Recognition
Revenue is measured at the fair value of the consideration
received or receivable. The following specific recognition criteria
must also be met before revenue is recognised:
Interest
Interest is recognised on a time proportionate basis that takes
into account the effective yield on the financial asset.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
(f) Income Tax
The income tax expense or income for the period is the tax
payable on the current period's taxable income based on the
national income tax rate for each jurisdiction adjusted by changes
in deferred tax assets and liabilities attributable to temporary
differences between the tax bases of assets and liabilities and
their carrying amounts in the financial statements, and to unused
tax losses.
Deferred tax assets and liabilities are recognised for temporary
differences at the tax rates expected to apply when the assets are
recovered or liabilities are settled, based on those tax rates
which are enacted or substantively enacted for each jurisdiction.
The relevant tax rates are applied to the cumulative amounts of
deductible and taxable temporary differences to measure the
deferred tax asset or liability. An exception is made for certain
temporary differences arising from the initial recognition of an
asset or a liability. No deferred tax asset or liability is
recognised in relation to these temporary differences if they arose
in a transaction, other than a business combination, that at the
time of the transaction did not affect either accounting profit or
taxable profit or loss.
Deferred tax assets are recognised for deductible temporary
differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary
differences and losses.
Current and deferred tax balances attributable to amounts
recognised directly in equity are also recognised directly in
equity.
Leyshon Resources Limited and its wholly owned Australian
controlled entities have not implemented the tax consolidation
legislation.
(g) Operating Leased Assets
Leases are classified at their inception as either operating or
finance leases based on the economic substance of the agreement so
as to reflect the risks and benefits incidental to ownership.
Operating leased assets, where the lessor effectively retains
substantially all of the risks and benefits of ownership of the
leased item, are not capitalised and rental payments are expensed
to the income statement over the lease term on a straight line
basis except where another systematic basis is more representative
of the time pattern in which economic benefits from the leased
asset are consumed.
(h) Business Combinations
Acquisitions of subsidiaries and businesses are accounted for
using the acquisition method. The consideration for each
acquisition is measured at the aggregate of the fair values (at the
date of exchange) of assets given, liabilities incurred or assumed,
and equity instruments issued by the Group in exchange for control
of the acquiree. Acquisition-related costs are recognised in profit
or loss as incurred.
Where applicable, the consideration for the acquisition includes
any asset or liability resulting from a contingent consideration
arrangement, measured at its acquisition-date fair value.
Subsequent changes in such fair values are adjusted against the
cost of acquisition where they qualify as measurement period
adjustments (see below). All other subsequent changes in the fair
value of contingent consideration classified as an asset or
liability are accounted for in accordance with relevant Standards.
Changes in the fair value of contingent consideration classified as
equity are not recognised.
Where a business combination is achieved in stages, the Group's
previously held interests in the acquired entity are remeasured to
fair value at the acquisition date (i.e. the date the Group attains
control) and the resulting gain or loss, if any, is recognised in
profit or loss. Amounts arising from interests in the acquiree
prior to the acquisition date that have previously been recognised
in other comprehensive income are reclassified to profit or loss,
where such treatment would be appropriate if that interest were
disposed of.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
The acquiree's identifiable assets, liabilities and contingent
liabilities that meet the conditions for recognition under AASB
3(2008) are recognised at their fair value at the acquisition date,
except that:
-- deferred tax assets or liabilities and liabilities or assets
related to employee benefit arrangements are recognised and
measured in accordance with AASB 112 Income Taxes and AASB 119
Employee Benefits respectively;
-- liabilities or equity instruments related to the replacement
by the Group of an acquiree's sharebased payment awards are
measured in accordance with AASB 2 Share-based Payment; and
-- assets (or disposal groups) that are classified as held for
sale in accordance with AASB 5 Noncurrent Assets Held for Sale and
Discontinued Operations are measured in accordance with that
Standard.
If the initial accounting for a business combination is
incomplete by the end of the reporting period in which the
combination occurs, the Group reports provisional amounts for the
items for which the accounting is incomplete. Those provisional
amounts are adjusted during the measurement period (see below), or
additional assets or liabilities are recognised, to reflect new
information obtained about facts and circumstances that existed as
of the acquisition date that, if known, would have affected the
amounts recognised as of that date.
The measurement period is the period from the date of
acquisition to the date the Group obtains complete information
about facts and circumstances that existed as of the acquisition
date - and is
subject to a maximum of one year.
(i) Impairment of Assets
Assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by
which the asset's carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset's fair value less
costs to sell and value in use. For the purposes of assessing
impairment where an asset does not generate cash flows that are
independent from other assets, assets are grouped at the lowest
levels for which there are separately identifiable cash flows (cash
generating units).
(j) Cash and Cash Equivalents
"Cash and cash equivalents" includes cash on hand, deposits held
at call with financial institutions, other short-term highly liquid
investments that are readily convertible to known amounts of cash
and which are subject to an insignificant risk of changes in value,
and bank overdrafts. Bank overdrafts are shown within borrowings in
current liabilities on the statement of financial position.
(k) Receivables
Trade and other receivables are recognised initially at fair
value and subsequently measured at amortised cost less provision
for doubtful debts. Trade receivables are due for settlement no
more than 30 days from the date of recognition.
(l) Other Financial Assets
The Group classifies its investments in the following
categories: financial assets at fair value through profit or loss,
loans and receivables, held-to-maturity investments, and
available-for-sale financial assets. The classification depends on
the purpose for which the investments were acquired.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
(i) Financial assets at fair value through profit or loss
This category has two sub-categories: financial assets held for
trading, and those designated at fair value through profit or loss
on initial recognition. Derivatives are also categorised as held
for trading unless they are designated as hedges. Assets in this
category are classified as current assets if they are either held
for trading or are expected to be realised within twelve months of
the balance sheet date.
(ii) Loans and receivables
Trade receivables, loans and other receivables are recorded at
amortised costs less impairment.
(m) Fair value estimation
The fair value of financial assets and financial liabilities
must be estimated for recognition and measurement.
The fair value of financial instruments traded in active markets
(such as publicly traded derivatives, and trading and
available-for-sale securities) is based on quoted market prices at
the balance sheet date. The quoted market price used for financial
assets held by the Group is the current bid price; the appropriate
quoted market price for financial liabilities is the current ask
price.
(n) Non-current assets held for sale
Non-current assets and disposal groups are classified as held
for sale if their carrying amount will be recovered principally
through a sale transaction rather than through continuing use. This
condition is regarded as met only when the sale is highly probable
and the asset (or disposal group) is available for immediate sale
in its present condition. Management must be committed to the sale,
which should be expected to qualify for recognition as a completed
sale within one year from the date of classification.
Non-current assets (and disposal groups) classified as held for
sale are measured at the lower of their previous carrying amount
and fair value less costs to sell.
(o) Property, Plant and Equipment
Plant and equipment is stated at historical cost less
depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. All other repairs and maintenance are charged to the
income statement during the financial period in which they are
incurred.
Plant and equipment are depreciated at rates based upon their
expected useful lives as follows:
Life Method
Plant and Equipment 2 - 15 years Diminishing
value
The assets' residual values and useful lives are reviewed, and
adjusted if appropriate, at each balance sheet date.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
An asset's carrying amount is written down immediately to its
recoverable amount if the asset's carrying amount is greater than
its estimated recoverable amount (note 1(i)). Gains and losses on
disposals are determined by comparing proceeds with carrying
amount. These are included in the income statement.
(p) Payables
These amounts represent liabilities for goods and services
provided to the Group prior to the end of the financial period
which are unpaid. The amounts are unsecured and are usually paid
within 30 days of recognition.
(q) Employee Benefits
Liabilities for wages and salaries, including non-monetary
benefits, annual leave, accumulating sick leave and long service
leave expected to be settled within twelve months of the reporting
date are recognised in provisions in respect of employees' services
up to the reporting date and are measured at the amounts expected
to be paid when the liabilities are settled. Liabilities for
non-accumulating sick leave are recognised when the leave is taken
and measured at the rates paid or payable.
The liability for long service leave not expected to be settled
within 12 months is recognised in the provision for employee
benefits and measured as the present value of expected future
payments to be made in respect of services provided by employees up
to the reporting date. Consideration is given to expected future
wage and salary levels, experience of employee departures and
periods of service. Expected future payments are discounted using
market yields at the reporting date on national government bonds
with terms to maturity and currency that match, as closely as
possible, the estimated future cash outflows.
Contributions to the defined contribution superannuation fund
are recognised as an expense as they become payable. Prepaid
contributions are recognised as an asset to the extent that a cash
refund or a reduction in future payments is available.
(r) Issued Capital
Issued and paid up capital is recognised at the fair value of
the consideration received by the Company.
Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
(s) Dividends
Provision is made for the amount of any dividend declared on or
before the end of the year but not distributed at statement of
financial position date.
(t) Earnings per Share (EPS)
Basic earnings per share is calculated by dividing the
consolidated profit/(loss) attributable to equity holders of the
company, excluding any costs of servicing equity other than
ordinary shares, by the weighted average number of ordinary shares
outstanding during the year, adjusted for bonus elements in
ordinary shares issued during the year.
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into account the
after income tax effect of interest and other financing costs
associated with dilutive potential ordinary shares and the weighted
average number of shares assumed to have been issued for no
consideration in relation to dilutive potential ordinary
shares.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
(u) Exploration and evaluation expenditure
Exploration and evaluation expenditure encompasses expenditures
incurred by the Group in connection with the exploration for and
evaluation of mineral resources before the technical feasibility
and commercial viability of extracting a mineral resource are
demonstrable.
Exploration and evaluation expenditure incurred by the Group is
accumulated for each area of interest and recorded as an asset
if:
(1) the rights to tenure of the area of interest are current;
and
(2) the exploration and evaluation expenditures are expected to
be recouped through successful development and exploitation of the
area of interest, or alternatively, by its sale.
For each area of interest, expenditure incurred in the
acquisition of rights to explore is capitalised, classified as
tangible or intangible, and recognised as an exploration and
evaluation asset. Exploration and evaluation assets are measured at
cost at recognition. Exploration and evaluation expenditure
incurred by the Group subsequent to acquisition of the rights to
explore is expensed as incurred until it is determined that
expenditures are expected to be recouped and an asset is
recognised.
(v) Development Expenditure
Development expenditure represents the costs incurred in
preparing mines for production. The costs are carried forward to
the extent that these costs are expected to be recouped through the
successful exploitation of the Company's mining properties and then
amortised over the life of the reserves associated with the area of
interest once mining operations have commenced.
Development expenditure is reviewed at each reporting date to
establish whether an indication of impairment exists. If any such
indication exists, the recoverable amount of the development
expenditure is estimated to determine the extent of the impairment
loss (if any). Where an impairment loss subsequently reverses, the
carrying amount of the asset is increased to the revised estimate
of its recoverable amount, but only to the extent that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset in previous years.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
(w) Goods and Services Tax
Revenues, expenses and assets are recognised net of the amount
of GST except:
-- where the GST incurred on a purchase of goods and services is
not recoverable from the taxation authority, in which case the GST
is recognised as part of the cost of acquisition of the asset or as
part of the expense item as applicable; and
-- receivables and payables are stated with the amount of GST
included.
The net amount of GST recoverable from, or payable to, the
taxation authority is included as part of receivables or payables
in the balance sheet.
Cash flows are included in the Cash Flow Statement on a gross
basis and the GST components of cash flows arising from investing
and financing activities, which are recoverable from, or payable
to, the taxation authority are classified as operating cash
flows.
Commitments and contingencies are disclosed net of the amount of
GST recoverable from, or payable to, the taxation authority.
(x) Share Based Payments
Share based payments may be provided to directors, employees,
consultants and other advisors.
For shares issued as payment, the fair value of the shares
issued is recognised as an expense with a corresponding increase in
equity. The fair value of the shares issued is based on the volume
weighted average share price on the ASX for the previous 10 trading
days before they are issued.
For share options granted, the following treatment is
adopted:
The fair value of options granted is recognised as an expense
with a corresponding increase in equity. The fair value is measured
at grant date and recognised over the period during which the
holders become unconditionally entitled to the options.
The fair value at grant date is independently determined using a
Black-Scholes option pricing model that takes into account the
exercise price, the term of the option, the share price at grant
date and expected price volatility of the underlying share, the
expected dividend yield and the risk-free interest rate for the
term of the option.
The fair value of the options granted excludes the impact of any
non-market vesting conditions. Non-market vesting conditions are
included in assumptions about the number of options that are
expected to become exercisable. At each balance sheet date, the
entity revises its estimate of the number of options that are
expected to become exercisable. The expense recognised each period
takes into account the most recent estimate.
Upon the exercise of options, the balance of the reserve
relating to those options is transferred to share capital.
Continuing Discontinued Total
2011 2010 2011 2010 2011 2010
2. LOSS FROM OPERATIONS $ $ $ $
(a) Revenue
Revenue consisted of the
following items:
Interest
received/receivable 3,011,462 1,468,472 - - 3,011,462 1,468,472
---------- ---------- ----- --------
Total revenue 3,011,462 1,468,472 - - 3,011,462 1,468,472
---------- ---------- ----- -------- ------------ ----------
(b) Loss before income
tax
Loss before income tax
has been arrived at after
crediting the following
gains:
Sundry income - 6,230 - - - 6,230
---------- ---------- ----- -------- ------------ ----------
Total other income - 6,230 - - - 6,230
---------- ---------- ----- -------- ------------ ----------
Loss before income tax
has been arrived at after
charging the following
losses and expenses:
Depreciation and
amortisation - plant and
equipment 13,805 13,046 - - 13,805 13,046
Net movement in
provisions for -
employee entitlements (1,185) 18,660 - - (1,185) 18,660
Exploration expenses 83,050 58,435 - 156,714 83,050 215,149
Mt Leyshon holding costs 224,484 149,777 - - 224,484 148,777
Project evaluation
expenses 1,282,960 293,849 - - 1,282,960 293,849
Foreign exchange
(gain)/loss 13,933 283,646 - - 13,933 283,646
Rental expense relating
to operating leases
(minimum lease
payments) 111,898 54,327 - - 111,898 54,327
Equity settled share
based payments - - - - - -
Post-employment benefits 8,611 9,540 - - 8,611 9,540
3. GAIN ON DISPOSAL OF INTEREST IN JOINTLY CONTROLLED ENTITY
On 2 December 2009 the Company disposed of its 70% interest in
the Sino Foreign Joint Venture company Black Dragon Mining Company
Limited (Black Dragon), which owns the Zheng Guang Gold
Project.
Period from
1 July 2009
to
2 December
2009
$
Exploration loss for the period (156,714)
Gain on disposal of interest
in Black Dragon 28,601,273
------------
28,444,559
============
The following were the results for the Consolidated Entity's
interest in Black Dragon for the period:
Revenue -
Operating expenses (156,714)
---------
Loss before income tax (156,714)
Income tax expense -
---------
Loss after income tax (156,714)
=========
3. GAIN ON DISPOSAL OF INTEREST IN JOINTLY CONTROLLED ENTITY
(Continued)
The following cash flows for the Consolidated Entity's interest
in Black Dragon for the period have been included in the
Consolidated Entity's Statement of Cash Flows:
*Period from
1 July 2009 to
2 December 2009
$
Net cash inflows from operating
activities -
Net cash inflows from investing
activities 45,581,836
Net cash inflows from financing
activities -
----------------
Net cash inflows 45,581,836
================
The Consolidated Entity's interest in the net assets of Black
Dragon at the date of disposal was as follows:
2 December 2009
$
Book value of net assets sold
Current assets
Cash and cash equivalents 5,699
Trade and other receivables 852,471
Non-current assets
Development properties 23,918,553
Other financial assets 3,560,518
Exchange differences transferred
from foreign exchange reserve 393,389
Current liabilities
Trade and other payables (872,195)
Non-current liabilities
Deferred tax liabilities (3,604,688)
Net assets disposed 24,253,747
Less withholding tax for equity
transfer (3,077,876)
---------------
21,175,871
Gain on disposal 28,601,273
---------------
Total consideration 49,777,144
===============
Consideration
Cash and cash equivalents 46,039,933
Liabilities assumed by purchaser 3,737,211
---------------
49,777,144
===============
A gain of $28,444,559 after tax was recognised on the disposal
of the Consolidated Entity's interest in Black Dragon. People's
Republic of China withholding tax of $3,077,876 was withheld from
the sale proceeds. No other tax charge or credit arose on the
transaction.
2011 2010
4. INCOME TAX $ $
Income tax expense
Current tax 248,347 158,261
Deferred tax - -
-------- --------
248,347 158,261
-------- --------
Numerical reconciliation of income tax expense to prima facie
tax payable
Loss from continuing operations before income
tax expense (531,637) (1,789,463)
Tax at the Australian tax rate of 30% (2010: 30%) (159,491) (536,839)
Tax effect of amounts which are not deductible
in calculating taxable income:
Other non-deductible expenditure 125,808 325,013
--------- -----------
(33,683) (211,826)
Tax losses not brought to account 282,030 370,087
--------- -----------
Income tax expense 248,347 158,261
========= ===========
Current tax and income tax expense relate to assessable income
in China Metals Pty Ltd as this entity is not included in the tax
consolidated group.
Unrecognised Deferred Tax Balances
The following deferred tax assets have not been brought to
account as assets:
Tax losses - revenue 10,177,658 9,895,628
10,177,658 9,895,628
---------- ---------
Tax Consolidations
Legislation to allow groups, comprising a parent entity and its
Australian resident wholly-owned entities, to elect to consolidate
and be treated as a single entity for income tax purposes was
substantively enacted on 21 October 2002. The Company and its
wholly owned Australian resident entities are eligible to
consolidate for tax purposes under this legislation.
The Board has not yet resolved to consolidate eligible entities
within the Consolidated Entity for tax purposes. The Board will
review this position annually, before lodging of that year's income
tax return.
2011 2010
5. REMUNERATION OF AUDITORS $ $
Auditor of the parent entity
Audit Services
Fees paid to Deloitte Touche Tohmatsu
- Audit and review of the financial reports
and other audit work 43,250 49,000
Other non-audit services
- Readmisstion to AIM 35,000 -
- Taxation advice 4,000 15,450
------- --------
Total remuneration 82,250 64,450
------- --------
6. TRADE AND OTHER RECEIVABLES
Current
Amounts relating to:
- interest receivable 676,730 1,089,765
- other persons 66,358 55,851
-------- ----------
743,088 1,145,616
======== ==========
7. OTHER ASSETS
Current
Prepayments 8,923 13,260
====== =======
8. OTHER FINANCIAL ASSETS AT FAIR
VALUE THROUGH PROFIT OR LOSS
Non-current
Shares in other entities 1 11
======= ======
9. OTHER
FINANCIAL
ASSETS
Non-current
Security
deposits 14,999 14,999
------------------------------ ------------------------------
14,999 14,999
============================== ==============================
Each reporting period, the recoverable amount of all non-current
assets is assessed. Where the carrying amount of a non-current
asset is greater than its recoverable amount, the asset is written
down to its recoverable amount. The recoverable amount of the asset
has been based on its fair value less costs to sell. The
recoverable amount write down represents the excess of the carrying
amount over the recoverable amount as determined by the
directors.
Note
10. PROPERTY, PLANT AND EQUIPMENT 2011 2010
$ $
Plant & equipment
At cost 114,710 100,677
Accumulated depreciation (85,533) (71,739)
Total plant and equipment (Note 10(a)) 29,177 28,938
======== ========
(a) Reconciliation
Plant and Equipment
Carrying amount at beginning of year 28,938 2,771
Additions 14,033 26,461
Disposals - -
Depreciation expense (13,794) (11,346)
Adjustment to Non-Current Assets held for sale
(1) - 11,052
-------- --------
Total plant & equipment 29,177 28,938
-------- --------
(1() The decision was made not to sell the previously identified
plant and equipment and therefore the adjustment includes
depreciation of $1,700 for the period to 2 December 2009.
11. DEVELOPMENT PROPERTIES
Balance brought forward - -
Development expenditure incurred - 3,630,198
-----------
Subtotal - 3,630,198
Transferred to Non-Current Assets held for
sale 8-(3,630,198)
-----------
Closing balance - -
===========
Development expenditure in 2010 includes $3,289,484 for
liabilities assumed by the purchaser.
12. TRADE AND OTHER
PAYABLES
Current
Trade creditors and accruals (unsecured) 183,873 158,455
======== ========
These amounts represent liabilities for goods and services
provided to the Group prior to the end of the financial period
which are unpaid. The amounts are unsecured and non-interest
bearing with average payment terms of 30 days.
13. PROVISIONS
Employee benefits 62,890 64,112
======= =======
2011 2010
14. ISSUED CAPITAL $ $
(a) Issued and paid up capital
246,525,724 (2010: 216,090,594) fully paid
ordinary shares 71,102,376 64,175,728
============= ===========
Changes to the then Corporations Law abolished the authorised
capital and par value concept in relation to share capital from 1
July 1998. Therefore, the Company does not have a limited amount of
authorised capital and issued shares do not have a par value.
(b) Movements in share capital during the past two years were as
follows (Consolidated Entity and Company):-
Ordinary Shares Ordinary Shares Total
Date Details (Number) ($) ($)
--------- ------------------ ---------------- ---------------- -----------
1/07/09 Opening Balance 218,255,692 64,552,218 64,552,218
Buy-back of
21/01/10 shares (i) (2,165,098) (374,284) (374,284)
Share buy-back
costs - (2,206) (2,206)
30/06/10 Closing Balance 216,090,594 64,175,728 64,175,728
---------------- ---------------- -----------
Placement - AIM
31/12/10 readmission (ii) 30,435,130 7,000,080 7,000,080
Share issue costs - (73,432) (73,432)
30/06/11 Closing Balance 246,525,724 71,102,376 71,102,376
---------------- ---------------- -----------
Note
(i) On 21 January 2010, the Company cancelled 2,165,098 fully
paid ordinary shares that were acquired in an on market share
buy-back at an average price of A$0.174 per share.
(ii) On 31 December 2010, the Company placed 30,435,130 new
fully paid ordinary shares at A$0.23 as part of its readmission to
AIM.
(iii) Fully paid ordinary shares carry one vote per share and
carry the right to dividends.
2011 2010
15. RESERVES $ $
Employee benefits reserve - 1,373,173
Foreign currency translation reserve (18,613) 6,135
(18,613) 1,379,308
--------- ----------
Movement in reserves
The movement in each of the reserves has been set out in the
Statement of Changes in Equity.
Nature and purpose of reserves
Employee benefits reserve
The employee benefits reserve is used to recognise the fair
value of services provided to the Company by employees who are paid
through the issue of options in the Company.
Details of the options that comprise the employee benefits
reserve are as follows:
Nil (2010: 4,750,000) $0.70 options - 1,373,173
---
- 1,373,173
----------------------------------------- ----------
Foreign currency translation reserve
Exchange differences arising on translation of the foreign
controlled entity are taken to the foreign currency translation
reserve as described in note 1(d). The accumulated exchange
difference is recognised in profit and loss when the net investment
is disposed of.
16. ACCUMULATED LOSSES
Balance at the beginning of the financial
year (18,539,326) (45,604,881)
Net (loss)/profit attributable to members
of Leyshon Resources (779,984) 26,496,835
Transfer from Employee Benefits Reserve 1,373,173 568,720
------------- -------------
Balance at the end of the financial year (17,946,137) (18,539,326)
============= =============
Adjusted franking account balance (tax
paid basis) 6,913,764 6,913,764
============= =============
2011 2010
17. EARNINGS PER SHARE $ $
From continuing and discontinued operations
Basic (loss)/profit per share (cents per
share) (0.3) 12.2
Dilutive (loss)/profit per share (cents per
share) (0.3) 12.2
From continuing operations:
Basic loss per share (cents per share) (0.3) (0.9)
Diluted loss per share (cents per share) (0.3) (0.9)
The following reflects the earnings and average number of
ordinary shares and potential ordinary shares used in the
calculations of basic and diluted earnings per share:
2011 2010
$ $
Net (loss)/profit used in calculating basic
earnings per share (779,984) 26,496,835
Adjustment to exclude profit from discontinued
operations - 28,444,559
---------- ------------
Earnings used in calculating basic and diluted
earnings per share from continuing operations (779,984) (1,947,724)
========== ============
Number of Number of
Shares shares
2011 2010
Weighted average number of ordinary shares
used in calculating basic earnings per share 231,183,083 217,306,608
Effect of dilutive securities
Adjusted weighted average number of ordinary
shares and potential ordinary shares used
in calculating diluted earnings per share 231,183,083 217,306,608
============ ============
(a) Conversions, calls, subscriptions or issues after 30 June
2011
There have been no conversions to, calls of, or subscriptions
for ordinary shares or issues of potential ordinary shares since
the reporting date and before the completion of this financial
report.
(b) Non-dilutive securities
The following potential ordinary shares are anti-dilutive and
are therefore excluded from the weighted average number of ordinary
shares used in the calculation of diluted earnings per share from
continuing and discontinued operations:
Number of Number of
potential potential
shares shares
2011 2010
Options - 70 cents exercise price - 4,750,000
18. DIVIDENDS PAID OR PROVIDED FOR
No dividends have been paid or provided for during the year.
19. COMMITMENTS FOR EXPENDITURE AND CONTINGENT LIABILITIES
There are no commitments for expenditure at 30 June 2011 (2010:
nil). Refer to note 29(d) for a discussion around contingent
liabilities.
20. LEASE COMMITMENTS
Operating leases
Leasing arrangements
The operating leases relate to the lease of an office in Beijing,
China and an office in Perth, Australia. The current lease in
Beijing is for a period of two years commencing 28 March 2009
and the lease in Perth is for a period of 1 year commencing 1
September 2011. The Consolidated Entity does not have an option
to acquire the leased assets at the expiry of the lease period.
2011 2010
$ $
Non-cancellable operating leases
Not longer than 1 year 97,782 94,746
Longer than 1 year and not longer than 5 years 6,614 87,696
Longer than 5 years - -
------- -------
104,396 182,442
======= =======
21. SUBSIDIARIES
Country of Class of
Name of Entity Incorporation Shares Equity Holding
2011 2010
Parent Entity % %
Leyshon Resources Limited Australia
Controlled Entities
China Metals Pty Ltd Australia Ordinary 100 100
Ikh Zuchi Resources LLC Mongolia Ordinary 100 100
South Gobi Coal Company
Limited Cayman Islands Ordinary 100 100
Xinjiang Exploration & British Virgin
Development Ltd (1) Islands Ordinary 100 -
British Virgin
Chang Xing Ltd (1) Islands Ordinary 100 -
Trident Investment Ltd (1) Hong Kong Ordinary 100 -
Beijing North Asia Mining
Management and Consulting People's Republic
Co., Ltd (1) of China N/A 100 -
(1) Incorporated on behalf of Leyshon Resources Limited
22. SEGMENT INFORMATION
As the Consolidated Entity has only one operating segment, all
the necessary reporting disclosures are disclosed elsewhere in the
notes to the financial statements.
23. RELATED PARTY DISCLOSURES
(a) Equity interests in related parties
Equity interests in subsidiaries
Details of the percentage of ordinary shares held in
subsidiaries are disclosed in Note 21 to the financial
statements.
(b) Key management personnel compensation
The directors' and key management personnel of the Consolidated
Entity during the year were as follows. Unless otherwise specified
each person held their position for the full financial year.
-- John WS Fletcher (Chairman)
-- Paul C Atherley (Managing Director)
-- Richard Seville (Non Executive Director)
-- Andrew J Berry III (Non Executive Director)
-- Peter Niu - Financial Controller, Leyshon Resources
Limited
-- Stacey Apostolou - Company Secretary
-- Henry Tebar - Exploration Manager
The aggregate compensation made to key management personnel of
the Company and the Group is set out below:
2011 2010
$ $
Short-term employee benefits 1,073,441 1,455,873
Post-employment benefits 7,431 5,574
Termination benefits - -
Share-based payment - -
--------- ---------
1,080,872 1,461,447
========= =========
Details of individual key management personnel compensation are
disclosed in the Remuneration Report.
23. RELATED PARTY DISCLOSURES (cont'd)
(c) Key management personnel equity holdings
Fully paid ordinary shares of Leyshon Resources
Balance
at the Received Balance
start of on exercise Other at the end
the year Purchases of options changes Disposals of the year
2011
Mr Paul Atherley 29,530,000 - - - - 29,530,000
Mr John Fletcher 2,316,324 - - - - 2,316,324
Mr Richard Seville 750,000 - - - - 750,000
Mr Andrew Berry
III - - - - - -
Mr Peter Niu 28,026 - - - - 28,026
Ms Stacey
Apostolou 100,000 - - - - 100,000
Mr Henry Tebar - - - - - -
2010
Mr Paul Atherley 29,000,000 530,000 - - - 29,530,000
Mr John Fletcher 2,202,824 113,500 - - - 2,316,324
Mr Richard Seville - 750,000 - - - 750,000
Mr Andrew Berry III - - - - - -
Mr Peter Niu 28,026 - - - - 28,026
Ms Stacey Apostolou 100,000 - - - - 100,000
Mr Henry Tebar - - - - - -
Options exercisable @ $0.70 each on or before 30 November 2010
or 30 June 2011 (as appropriate)
Balance Balance Vested and
at the at the Vested exercisable
start end of during at the end
of the Granted as Other the the of the
year remuneration Exercised changes year year year
2011
Mr John
Fletcher
- 2010
Options 1,000,000 - - (1,000,000) - - -
Mr
Richard
Seville -
2010
Options 1,000,000 - - (1,000,000) - - -
Ms Stacey
Apostolou
- 2010
Options 2,000,000 - - (2,000,000) - - -
Balance Vested and
at the Balance Vested exercisable
start at the during at the end
of the Granted as Other end of the of the
year remuneration Exercised changes the year year year
2010
Mr John
Fletcher
- 2010
Options 1,000,000 - - - 1,000,000 - 1,000,000
Mr
Richard
Seville -
2010
Options 1,000,000 - - - 1,000,000 - 1,000,000
Ms Stacey
Apostolou
- 2010
Options 2,000,000 - - - 2,000,000 - 2,000,000
23. RELATED PARTY DISCLOSURES (cont'd)
Options exercisable @ $0.40 or $0.55 (as appropriate) each on or
before 30 November 2009
Balance Balance Vested and
at the at the Vested exercisable
start end of during at the end
of the Granted as Other the the of the
year remuneration Exercised changes year year year
2011
- - - - - - -
2010
Mr Vic
McLaglen
- $0.40
Options 550,000 - - (550,000) - - -
Mr Vic
McLaglen-
$0.55
Options 550,000 - - (550,000) - - -
(d) Other transactions with key management personnel (and their
related parties) of Leyshon Resources
There were no other transactions with key management personnel
(and their related parties) during the year (2010: Nil).
(e) Transactions with other related parties
Transactions between Leyshon and its subsidiaries
Inter-company Account
Leyshon provides working capital to its controlled entities.
Transactions between Leyshon and other controlled entities in the
wholly owned group during the financial year ended 30 June 2011
consisted of:
(i) Working capital advanced by Leyshon;
(ii) Working capital repaid to Leyshon; and
The above transactions were made interest free with no fixed
terms for the repayment of principal on the working capital
advanced by Leyshon.
At balance date amounts receivable from controlled entities
totalled $731,134 (2010: $440,518).
(f) Parent entities
The parent entity in the consolidated entity and the ultimate
parent entity is Leyshon Resources Limited.
24. SUBSEQUENT EVENTS AFTER BALANCE DATE
There were no significant events occurring after balance date
requiring disclosure in the financial statements.
25. notes to the CASH FLOW STATEMENT
(a) Reconciliation of cash and cash equivalents
Cash and cash equivalents at the end of the financial year as
shown in the cash flow statement is reconciled to the related items
in the balance sheet as follows:
2011 2010
$ $
Cash and cash equivalents 52,901,790 46,193,725
=========== ===========
(b) Reconciliation of loss for the year to net cash provided
(used) by operating activities
(Loss)/profit for the year (779,984) 26,496,835
Depreciation and amortisation 13,794 13,046
(Decrease)/increase in provision for employee
entitlements (1,222) 18,660
Unrealised foreign exchange differences 13,933 283,646
Gain from sale of interest in Black Dragon
Mining - (28,444,559)
Share based payment expense - -
(Increase)/decrease in trade and other
receivables and other assets 406,877 (1,075,367)
(Decrease)/increase in payables 149,297 (99,897)
Net cash used by operating activities (197,305) (2,807,636)
========== =============
(c) Non cash transactions
30 June 2011
During the financial year:
a) On 30 November 2010, 4,000,000 options with an exercise price
of 70 cents expired.
b) On 30 June 2011, 750,000 options with an exercise price of 70
cents expired.
c) Grant of options - there were no options granted by the
Company during the year.
30 June 2010
During the financial year:
a) On 30 November 2009, 700,000 options with an exercise price
of 40 cents expired.
b) On 30 November 2009, 550,000 options with an exercise price
of 55 cents expired.
c) Grant of options - there were no options granted by the
Company during the year.
26. JOINTLY CONTROLLED ENTITY
The Group was not a venturer in any jointly controlled entities
at 30 June 2011 (2010: nil),
27. FINANCIAL RISK MANAGEMENT
Overview
This note presents information about the Company's and Group's
exposure to credit, liquidity and market risks, their objectives,
policies and processes for measuring risk, and management of
capital.
The Company and the Group does not use any form of derivatives
as it is not at a level of exposure that requires the use of
derivatives to hedge its exposure. Exposure limits are reviewed by
management on a continuous basis. The Group does not enter into or
trade financial instruments, including derivative financial
instruments, for speculative purposes.
The Board of Directors has overall responsibility for the
establishment and oversight of the risk management framework.
Management monitors and manages the financial risks relating to the
operations of the group through regular reviews of the risks.
Significant Accounting Policies
Details of the significant accounting policies and methods
adopted, including the criteria for recognition, the basis of
measurement and the basis on which revenues and expenses are
recognised, in respect of each class of financial asset, financial
liability and equity instrument are disclosed in Note 1 to the
financial statements.
Net Fair Value
The carrying amount of financial assets and financial
liabilities recorded in the financial statements represents their
respective net fair values, determined in accordance with the
accounting policies disclosed in Note 1 to the financial
statements.
Credit risk
Credit risk refers to the risk that counter-party will default
on its contractual obligations resulting in financial loss to the
consolidated entity. The consolidated entity has adopted the policy
of only dealing with creditworthy counter-parties and obtaining
sufficient collateral or other security where appropriate, as a
means of mitigating the risk of financial loss from defaults. The
consolidated entity measures credit risk on a fair value basis. The
consolidated entity does not have any significant credit risk
exposure to any single counter-party.
27. FINANCIAL RISK MANAGEMENT (cont'd)
Cash and cash equivalents
The Group limits its exposure to credit risk by only investing
in liquid securities and only with counterparties that have an
acceptable credit rating.
Trade and other equivalents
As the Group operates primarily in exploration activities, it
does not have trade receivable and therefore is not exposed to
credit risk in relation to trade receivables.
The Company and Group have established an allowance for
impairment that represents their estimate of incurred losses in
respect of other receivables (mainly relates to staff advances and
security bonds) and investments. The management does not expect any
counterparty to fail to meet its obligations.
Exposure to credit risk
The carrying amount of the Group's financial assets represents
the maximum credit exposure. The Group's maximum exposure to credit
risk at the reporting date was:
2011 2010
$ $
Loans and receivables 743,088 1,145,616
Cash and cash equivalents 52,901,790 46,193,725
----------- -----------
53,644,878 47,339,342
=========== ===========
Impairment losses
None of the Groups' other receivables are past due (2010:
Nil)
Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. The Group's
approach to managing liquidity is to ensure, as far as possible,
that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the
Group's reputation.
The Group manages liquidity risk by maintaining adequate cash
reserves from funds raised in the market and by continuously
monitoring forecast and actual cash flows. The Group does not have
any external borrowings.
As a result of the Company completing the sale of the Group's
interests in Black Dragon Mining Company Limited, during the prior
year, which held the Zheng Guang development project, an amount of
more than A$34 million cash and cash equivalents was received.
Accordingly it is unlikely that the Group will need to raise
additional capital in the next 12 months to meet its currently
known obligations.
27. FINANCIAL RISK MANAGEMENT (cont'd)
The following are the maturities of financial assets including
estimated interest receipts and excluding the impact of netting
agreements of the Group:
2011 2010
$ $
Less than 6 months 53,644,878 47,339,342
6 months to 1 year - -
1 to 5 years - -
Over 5 years - -
---------------- ----------------
53,644,878 47,339,342
================ ================
The following are the maturities of financial liabilities,
including estimated interest payments and excluding the impact of
netting agreements of the Group:
2011 2010
$ $
Less than 6 months 183,873 158,455
6 months to 1 year - -
1 to 5 years - -
Over 5 years - -
------------- -------------
183,873 158,455
============= =============
All financial liabilities of the Group and Company are
non-interest bearing.
Market Risk
Market risk is the risk that changes in market prices, such as
foreign exchange rates, interest rates and equity prices will
affect the Group's income or the value of its holdings of financial
instruments. The objective of market risk management is to manage
and control market risk exposure within acceptable parameters,
whilst optimising the return. The Group manages market risk by
ensuring it only holds short-term, predominantly fixed interest
financial instruments with maturities of less than six months.
Currency Risk
The Group is exposed to currency risk on investments, purchases
and borrowings that are denominated in a currency other than the
respective functional currencies of Group entities, which is
primarily the Australian Dollar (AUD). The currencies in which
these transactions primarily are denominated are USD, GBP, HKD and
RMB.
The Group has not entered into any derivative financial
instruments to hedge such transactions.
The Group's investments in its subsidiaries are not hedged as
those currency positions are considered to be long term in
nature.
27. FINANCIAL RISK MANAGEMENT (cont'd)
Exposure to Currency Risk
The Group's exposure to foreign currency risk at balance date
based on notional amounts was as follows:
A$
---------------------------------------------------
RMB USD HKD GBP Total
30 June 2011
Financial Assets
Cash and cash
equivalents 60,762 100,408 36,043 661 197,874
Financial Liabilities
Amortised cost (105,515) - - (105,515)
Net balance sheet
exposure (44,753) 100,408 36,043 661 92,359
========== ======== ======= ======== ==========
30 June 2010
Financial Assets
Cash and cash
equivalents 43,159 120,563 - 1,162 164,884
Financial Liabilities
Amortised cost (39,314) (9,800) - (3,360) (52,474)
Net balance sheet
exposure 3,845 110,763 - (2,198) 112,410
========== ======== ======= ======== ==========
Sensitivity analysis
A 20 percent strengthening of the Australian dollar against the
following currencies at 30 June would have increased (decreased)
equity and profit or loss by the amounts shown below. This analysis
assumes that all other variables, in particular interest rates,
remain constant. The analysis is performed on the same basis for
2010.
Profit or
Other Equity loss
30 June 2011 A$ A$
RMB - (8,951)
USD - 20,082
HKD - 7,209
GBP - 132
-------------- ----------
- 18,472
============================= ==========
Profit or
Other Equity loss
30 June 2010 A$ A$
RMB - 769
USD - 22,153
HKD - -
GBP - 440
-------------- ----------
- 22,482
============================= ==========
27. FINANCIAL RISK MANAGEMENT (cont'd)
A 20 percent weakening of the Australian dollar against the
above currencies at 30 June would have had an equal but opposite
effect on the above currencies to the amounts shown above, on the
basis that all other variables remain constant.
Interest rate risk
The Group is exposed to interest rate risk (primarily on its
cash and cash equivalents), which is the risk that a financial
instrument's value will fluctuate as a result of changes in the
market interest rates on interest-bearing financial instruments.
The Group does not use derivatives to mitigate these exposures.
The Group adopts a policy of ensuring that as far as possible it
maintains excess cash and cash equivalents in short terms deposit
at interest rates maturing over 90 day rolling periods.
Weighted Average Variable
Effective Interest Fixed Interest
Interest Rate Rate Rate Total
% $ $ $
2011
Financial
Assets
Cash and cash
equivalents 6.13% 52,901,790 - 52,901,790
Financial
Liabilities
Financial
liabilities - - -
----------- --------------- -----------
52,901,790 - 52,901,790
=========== =============== ===========
2010
Financial
Assets
Cash and cash
equivalents 6.03% 46,193,725 - 46,193,725
Financial
Liabilities
Financial
liabilities - - -
----------- --------------- -----------
46,193,725 - 46,193,725
=========== =============== ===========
At the reporting date the interest rate profile of the Group's
and the Company's interest-bearing financial instruments was:
Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis points in interest rates at the reporting
date would have increased (decreased) equity and profit or loss by
the amounts shown below. This analysis assumes that all other
variables, in particular foreign currency rates, remain constant.
The analysis is performed on the same basis for 2010.
Profit or
Other Equity loss
A$ A$
-------------- ----------
30 June 2011
Variable rate instruments - 529,018
============== ==========
30 June 2010
Variable rate instruments - 461,937
============== ==========
27. FINANCIAL RISK MANAGEMENT (cont'd)
Commodity Price Risk
The Group is still operating primarily in the exploration and
evaluation phase and accordingly the Group's financial assets and
liabilities are not yet subject to commodity price risk.
Capital Management
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern and to maintain
a strong capital base sufficient to maintain future exploration and
development of its projects. In order to maintain or adjust the
capital structure, the Group may return capital to shareholders,
issue new shares or sell assets to reduce debt. The Group's focus
has been to raise sufficient funds through equity to fund
exploration and evaluation activities.
There were no changes in the Group's approach to capital
management during the year. Risk management policies and procedures
are established with regular monitoring and reporting.
Neither the Company nor any of its subsidiaries are subject to
externally imposed capital requirements.
The capital structure of the Group consists of equity
attributable to equity holders of the parent, comprising issued
capital, reserves and retained losses as disclosed in Notes 14, 15
and 16 respectively.
28. SHARE BASED PAYMENTS
The Company does not have a formal employee share option plan,
however the Board has from time to time granted shares or options
to employees and officers on a discretionary basis as it is
considered that this provides a cost-effective and efficient means
of remunerating and incentivising employees. In addition,
shareholders have in General Meeting approved the granting of all
incentive options to Directors. The share based payment expenses
have been recognised in respect of the fair value of shares or
options granted as remuneration.
Valuation of Securities
30 June 2011
There were no share based payments or options granted by the
Company during the year.
30 June 2010
There were no share based payments or options granted by the
Company during the year.
29. PARENT ENTITY DISCLOSURES
Financial Statements
(a) Financial Position
2011 2010
$ $
Assets
Current assets 39,482,398 33,093,092
Non-current assets 9,992,105 9,700,989
Total assets 49,474,503 42,794,081
Liabilities
Current liabilities 111,272 171,253
Total liabilities 111,272 171,253
Equity
Issued capital 71,102,376 64,175,728
Retained losses (21,739,145) (22,926,073)
Employee benefits reserve - 1,373,173
Total equity 49,363,231 42,622,828
(b) Financial performance
Loss for the year (186,239) (1,224,550)
Other comprehensive income - -
Total comprehensive income (186,239) (1,224,550)
(c) Guarantees entered into by the parent
entity in relation to the debts of its
subsidiaries - -
(d) Contingent liabilities of the parent
entity
Mount Leyshon Assets
As part of the restructure of the Company in November 2001 that
saw the Company cease to be a subsidiary of Newmont Australia Limited
(then Normandy Mining Limited) ("Newmont"), the Company and Newmont
entered into a Management Agreement on 30 November 2001 in respect
of the closure of the Mt Leyshon mine ("Management Agreement").
It was intended and agreed that Newmont would implement a mine
closure plan and be responsible for all ongoing environmental obligations
associated with the Mt Leyshon assets.
Pursuant to the terms of the Management Agreement, Newmont agreed
to be responsible in perpetuity for the Company's rehabilitation
obligations arising out of the Mt Leyshon mine site and has agreed
to provide an indemnity to the Company in respect of all environmental
obligations in relation to or as a result of mining activities
at Mt Leyshon.
It is not considered that the Company carries any risk of any substantive
liability for anything done or omitted to be done, at the Mt Leyshon
mine site, prior to 2001.
29. PARENT ENTITY DISCLOSURES (cont'd)
(d) Contingent liabilities of the parent entity (cont'd)
Prior to the restructure of the Company in November 2001, the Company
had previously entered into Compensation Agreements with landholders
part of whose lands were covered by the Company's mining leases
at the Mt Leyshon mine site. The entry into Compensation Agreements
with landholders is a statutory requirement for the holder of a
mining lease in Queensland. Compensation had been paid in advance
under each landholder Compensation Agreement. In each case advance
compensation was only paid until 2002 or thereabouts on the basis
that production from the Mt Leyshon mine site would have ceased.
The Company has a continuing primary responsibility to the landholders
under the Compensation Agreements whilst it remains the holder
of mining leases in Queensland and Newmont continues to undertake
rehabilitation activities.
The Company is seeking to reach a settlement under the Compensation
Agreements to remove the necessity for ongoing payments into the
future. At this stage, it is likely that the Company will reach
settlement on one of the agreements for an amount in the expected
range of $1 to $1.5 million over the next 18 months. Discussions
in relation to the other agreement are ongoing.
2011 2010
$ $
(e) Commitments for the acquisition of - -
property, plant and equipment by the parent
entity
Independent Auditor's Report
Report on the Financial Report
We have audited the accompanying financial report of Leyshon
Resources Limited, which comprises the statement of financial
position as at 30 June 2011, the income statement, the statement of
comprehensive income, the statement of cash flows and the statement
of changes in equity for the year ended on that date, notes
comprising a summary of significant accounting policies and other
explanatory information, and the directors' declaration of the
consolidated entity comprising the company and the entities it
controlled at the year's end or from time to time during the
financial year as set out on pages 15 to 52.
Directors' Responsibility for the Financial Report
The directors of the company are responsible for the preparation
of the financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the
directors determine is necessary to enable the preparation of the
financial report that is free from material misstatement, whether
due to fraud or error. In Note 1, the directors also state, in
accordance with Accounting Standard AASB 101 Presentation of
Financial Statements, that the consolidated financial statements
comply with International Financial Reporting Standards.
Auditor's Responsibility
Our responsibility is to express an opinion on the financial
report based on our audit. We conducted our audit in accordance
with Australian Auditing Standards. Those standards require that we
comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable
assurance whether the financial report is free from material
misstatement.
An audit involves performing procedures to obtain audit evidence
about the
amounts and disclosures in the financial report. The procedures
selected depend on the auditor's judgement, including the
assessment of the risks of material misstatement of the financial
report, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the
entity's preparation of the financial report that gives a true and
fair view, in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity's internal control. An
audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made
by the directors, as well as evaluating the overall presentation of
the financial report.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit
opinion.
Auditor's Independence Declaration
In conducting our audit, we have complied with the independence
requirements of the Corporations Act 2001. We confirm that the
independence declaration required by the Corporations Act 2001,
which has been given to the directors of Leyshon Resources Limited,
would be in the same terms if given to the directors as at the time
of this auditor's report.
Auditor's Opinion
In our opinion:
(a) the financial report of Leyshon Resources Limited is in
accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity's
financial position as at 30 June 2011 and of its performance for
the year ended on that date; and
(ii) complying with Australian Accounting Standards and the
Corporations Regulations 2001; and
(b) the consolidated financial statements also comply with
International Financial Reporting Standards as disclosed in Note
1.
Report on the Remuneration Report
We have audited the Remuneration Report included in page 8 to 13
of the
directors' report for the year ended 30 June 2011. The directors
of the company are responsible for the preparation and presentation
of the Remuneration Report in accordance with section 300A of the
Corporations Act 2001. Our responsibility is to express an opinion
on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Opinion
In our opinion the Remuneration Report of Leyshon Resources
Limited for the year ended 30 June 2011, complies with section 300A
of the Corporations Act 2001.
DELOITTE TOUCHE TOHMATSU
Leanne Karamfiles
Partner
Chartered Accountants
Perth, 30 September 2011
This information is provided by RNS
The company news service from the London Stock Exchange
END
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