TIDMLRL
RNS Number : 5624N
Leyshon Resources Limited
01 October 2012
LEYSHON RESOURCES LIMITED
FINAL RESULTS FOR THE YEAR ENDED 30 JUNE 2012
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 2012 ("Consolidated Entity").
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 30 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.
INFORMATION ON DIRECTORS (Cont'd)
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, , ARSM
Mr Seville is a mining geologist and geotechnical engineer with
30 years experience covering exploration, mine development and mine
operations in gold, base metals and coal projects in Australia,
South America, 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.
He is currently Managing Director of ASX/TSX listed industrial
minerals company Orocobre Ltd
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
Murray Wylie
Company Secretary from date of appointment 20 January 2012
Qualifications - B Com (Hon), GradDipAppCorpGov, ACIS
Mr Wylie has more than 25 years experience in administrative and
accounting roles in both the public and private sectors, including
several years experience as Company Secretary and accountant for
another ASX/AIM listed company.
Stacey Apostolou
Company Secretary from date of appointment 7 April 2006 until
resignation on 20 January 2012
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
2012 2011
$ $
Loss of the Consolidated Entity before
income tax (3,142,385) (531,637)
Income tax expense (278,105) (248,347)
------------ ----------
Net loss attributable to members of Leyshon
Resources Limited (3,420,490) (779,984)
============ ==========
REVIEW OF OPERATIONS
During the 2012 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. The financial results for this year
included recognition of current and future liabilities for
landholder compensation agreements for Mt Leyshon (refer Note 26
(d)).
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.
Management, together with its advisors, has completed the
extensive regulatory and other consents which form the
preconditions for the proposed transaction and is now engaged in
commercial negotiations which it is aiming to bring to a conclusion
in the near future.
The Company remains firmly of the view that in light of the
expanding demand for all types of energy within Central China over
the next ten years, high quality energy assets located close to
infrastructure and within transport distance to this market will
become increasingly valuable over time.
In line with this view, on 18 July 2012 the Company was pleased
to announce the proposed acquisition of an unconventional gas
project in China. Further details of this acquisition, which was
completed on 6 August 2012, are provided later in this report under
the Subsequent Events section and in Note 21 to the financial
statements.
DIVIDENDS
No interim or final dividend has been declared in respect to the
financial year ended 30 June 2012 (2011: nil).
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
In June 2012 the Company commenced a drill and test work
programme on a large stockpile approximately 12-15 million tonnes
of highly mineralised ball mill scats at its wholly owned Mt
Leyshon Gold Project in Queensland.
During the year the Company announced an on-market share buyback
programme that commenced on 18 October 2011. In the period to 30
June 2012, the Company purchased 2,214,341 shares at an average of
A$ 19 cents (12 pence) per share. A further 2,954,171 shares have
been purchased since 30 June 2012 under the buyback programme at an
average of A$ 18 cents (12 pence) per share.
SUBSEQUENT EVENTS
Other than as disclosed below, as at the date of this report
there are no matters or circumstances which have arisen since 30
June 2012 that have significantly affected or may significantly
affect:
a) the operations, in financial years subsequent to 30 June
2012, 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 2012, of the Consolidated Entity.
On 18 July 2012 the Company announced a proposed acquisition of
an interest in an unconventional gas project. The acquisition of
Hong Kong based company Pacific Asia Petroleum Limited (PAPL) from
Houston based CAMAC Energy Inc was completed on 6 August 2012. The
acquisition, with effect from 1 July 2012, was for a consideration
of US$2.5 million in cash and the issue of 10,000,000 fully paid
ordinary shares.
PAPL's key asset is a 100% interest in the Zijinshan Production
Sharing Contract (PSC) located on the eastern fringe of the
prolific Ordos Gas Basin in Central China.
The Zijinshan PSC is with PetroChina Coal Bed Methane Company
Limited (PCCBM) which is a subsidiary of China National Petroleum
Corporation, the country's largest integrated energy company. PCCBM
has retained the right to buy back a 40% interest in the contract
at the completion of the exploration phase and to jointly fund the
project into production.
From 10 July 2012 to 27 July 2012 the Company purchased a
further 2,954,171 shares under the on-market share buyback
programme at an average of A$ 18 cents (12 pence) per share.
Subsequent to year end, the Company has reviewed the results of
the ball mill scats drilling and preliminary testwork programme at
its Mt Leyshon Gold Project and decided not to proceed with the
project at this time.
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, no shares were issued by the Company.
During the year, the Company cancelled 2,214,341 shares that
were purchased under the share buyback programme.
OPTIONS
During the year no options were granted or lapsed. 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 2012 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
2012, and the number of meetings attended by each director.
Board Meetings Audit Committee Remuneration Committee
Meetings Meetings
Held Attended Held Attended Held Attended
Directors
John WS Fletcher 11 11 2 2 0 0
Paul C Atherley 11 11 N/A N/A N/A N/A
Richard Seville 11 11 2 2 0 0
Andrew Berry
III 11 11 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 2012. 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
-- Murray Wylie - Company Secretary - Appointed 20 January 2012
-- Stacey Apostolou - Company Secretary - Resigned 20 January 2012
-- Henry Tebar - Exploration Manager - Resigned 23 January 2012
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 or performance rights schemes with the
prior approval of shareholders. Senior management may also
participate in employee share option or performance rights schemes,
with any option or performance right 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
2012 2011 2010 2009 2008
$ $ $ $ $
Revenue 3,064,425 3,011,462 29,913,031 518,802 1,048,631
Net (loss)/profit
before tax (3,142,385) (531,637) 26,655,096 (3,397,827) (10,411,177)
Net (loss)/profit
after tax (3,420,490) (779,984) 26,496,835 (3,397,827) (10,411,177)
Share price at start
of year 0.250 0.200 0.100 0.500 0.625
Share price at end
of year 0.175 0.250 0.200 0.100 0.500
Dividend paid - - - - -
Diluted (loss)/profit
per share (cents) (1.4) (0.3) 12.2 (1.6) (4.8)
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 less 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 $100,000 per annum with effect
from 1 July 2011 ($75,000 prior to 1 July 2011);
-- 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 2012 (2011:
nil);
-- 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 RMB1,700,000 per annum;
-- An expatriate allowance of $100,000 per annum with effect
from 1 July 2011 ($75,000 prior to 1 July 2011);
-- May become entitled to receive performance rights or
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 2012 (2011: nil).
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 until
her resignation on 20 January 2012, 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 2012 (2011:
nil).
Mr Tebar
The service agreement in place with Mr Tebar during the
financial year until his resignation on 23 January 2012 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 2012 (2011: nil).
Mr Wylie
Mr Wylie was engaged for an initial period of three to six
months at $5,000 per month following which a formal service
agreement may be entered into.
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 2012 are as
follows:
Short-term employee benefits Post-employment Termination Share Based
Benefits Payment
------------------ --------------------------------- ---------------- ---------------- ----------------- --------
Salary & fees Bonus Other(1) Super-annuation Shares issued Total
$ $ $
$ $ $ $
------------------ -------------- ------ --------- ---------------- ---------------- ----------------- --------
Directors
John WS Fletcher 66,000 - - - - - 66,000
Paul C Atherley 300,000 - 100,000 - - - 400,000
Richard Seville 41,284 - - 3,716 - - 45,000
Andrew Berry III 41,284 - - 3,716 - - 45,000
Group executives
Peter Niu 260,878 - 100,000 - - - 360,878
Murray Wylie 24,711 2,224 26,935
Stacey Apostolou 52,903 - - - - - 52,903
Henry Tebar 101,854 - 11,864 - - - 113,718
------------------ -------------- ------ --------- ---------------- ---------------- ----------------- --------
(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 2011 are as
follows:
Short-term employee benefits Post-employment Termination Share Based
Benefits Payment
------------------ --------------------------------- ---------------- ---------------- ----------------- --------
Salary & fees Bonus Other(1) Super-annuation Shares 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.
REMUNERATION REPORT (Cont'd)
Share-based Compensation
No options or performance rights were granted, vested, exercised
or lapsed in relation to Directors and executive officers during
the year. There were no options or performance rights held by
Directors or executive officers during the year.
The grant of share options or performance rights 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 4 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
28 September 2012
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2012
Note Year Ended Year Ended
30 June 2012 30 June 2011
$ $
Revenue 2(a) 3,064,425 3,011,462
Exploration expenses (20,975) (83,050)
Project evaluation (1,398,283) (1,282,960)
Administration expenses (1,760,426) (1,539,408)
AIM readmission expenses - (399,264)
Foreign exchange gains/(losses) (12,955) (13,933)
Mt Leyshon holding costs (3,014,171) (224,484)
Loss before tax 2(b) (3,142,385) (531,637)
Income tax expense 3 (278,105) (248,347)
------------- -------------
Loss attributable to members of
Leyshon Resources Limited (3,420,490) (779,984)
============= =============
Loss Per Share
Basic (cents per share) 14 (1.4) (0.3)
Diluted (cents per share) 14 (1.4) (0.3)
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 2012
Year Ended Year Ended
30 June 2012 30 June 2011
$ $
Loss for the year (3,420,490) (779,984)
Other comprehensive income
Exchange differences arising on
translation of foreign operations 15,970 (24,749)
------------- -------------
Other comprehensive income for
the year net of tax 15,970 (24,749)
------------- -------------
Total comprehensive income
attributable to members of
Leyshon Resources Limited (3,404,520) (804,733)
============= =============
The above Consolidated Income Statement should be read in
conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
AS AT 30 JUNE 2012
Note 30 June 2012 30 June 2011
$ $
ASSETS
Current Assets
Cash and bank balances 22(a) 51,014,837 52,901,790
Trade and other receivables 5 780,286 743,088
Other assets 6 18,675 8,923
------------ ------------
Total Current Assets 51,813,798 53,653,801
------------ ------------
Non-Current Assets
Other financial assets 7 15,000 15,000
Property, plant and equipment 8 23,187 29,177
Total Non-Current Assets 38,187 44,177
------------ ------------
TOTAL ASSETS 51,851,985 53,697,978
------------ ------------
LIABILITIES
Current Liabilities
Trade and other payables 9 1,268,538 183,873
Current tax liabilities 173,732 313,589
Provisions 10 60,719 62,890
------------ ------------
Total Current Liabilities 1,502,989 560,352
------------ ------------
Non-Current Liabilities
Trade and other payables 9 1,042,771 -
Total Non-Current Liabilities 1,042,771 -
------------ ------------
TOTAL LIABILITIES 2,545,760 560,352
------------ ------------
NET ASSETS 49,306,225 53,137,626
============ ============
EQUITY
Issued capital 11 70,675,495 71,102,376
Reserves 12 (2,643) (18,613)
Accumulated losses 13 (21,366,627) (17,946,137)
------------ ------------
TOTAL EQUITY 49,306,225 53,137,626
============ ============
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 2012
Employee Foreign
Issued benefits exchange Accumulated
Capital reserve reserve losses Total
$ $ $ $ $
Balance at 1 July
2010 64,175,728 1,373,173 6,136 (18,539,326) 47,015,711
----------- ------------ ---------- ------------- ------------
Loss for the year - - - (779,984) (779,984)
Other comprehensive
income for the year,
net of tax - - (24,749) - (24,749)
----------- ------------ ---------- ------------- ------------
Total comprehensive
income for the year - - (24,749) (779,984) (804,733)
----------- ------------ ---------- ------------- ------------
Expiry of options
transfer to retained
earnings (1,373,173) - 1,373,173 -
Issue of shares 7,000,080 - - - 7,000,080
Share transaction
costs (73,432) - - - (73,432)
----------- ------------ ---------- ------------- ------------
Balance at 30 June
2011 71,102,376 - (18,613) (17,946,137) 53,137,626
----------- ------------ ---------- ------------- ------------
Loss for the year - - - (3,420,490) (3,420,490)
Other comprehensive
income for the year,
net of tax - - 15,970 - 15,970
Total comprehensive
income for the year - - 15,970 (3,420,490) (3,404,520)
----------- ------------ ---------- ------------- ------------
Buy back of shares (426,881) - - - (426,881)
Balance at 30 June
2012 70,675,495 - (2,643) (21,366,627) 49,306,225
----------- ------------ ---------- ------------- ------------
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 2012
Note Year Ended Year Ended
30 June 2012 30 June 20119
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees (3,062,473) (3,304,300)
Mt Leyshon holding costs (993,774) (224,483)
Income tax paid (417,962) (93,019)
Interest received 3,020,890 3,424,497
Net cash flows used in operating
activities 22(b) (1,453,319) (197,305)
--------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of plant and equipment (7,734) (14,032)
Net cash flows used in investing
activities (7,734) (14,032)
------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares - 7,000,080
Share issue costs - (73,432)
Payment for buy-back of shares (422,337) -
Share transaction costs (4,544) -
Net cash flows provided by/(used
in) investing activities (426,881) 6,926,648
------------- --------------
NET INCREASE IN CASH AND CASH EQUIVALENTS (1,887,934) 6,715,311
Cash and cash equivalents at the
beginning of the year 52,901,790 46,193,725
Effects of exchange rate changes
on cash and cash equivalents 981 (7,246)
CASH AND CASH EQUIVALENTS AT THE
END OF THE YEAR 22(a) 51,014,837 52,901,790
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. The Group is a for profit entity
primarily involved in mineral exploration.
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 28 September 2012.
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
The Group has adopted all of the new and revised Standards and
Interpretations issued by the Australian Accounting Standards Board
(the AASB) that are relevant to their operations and effective for
the current reporting period. The adoption of these amendments has
not resulted in any changes to the Group's accounting policies and
has no effect on the amounts reported for the current or prior
periods.
Accounting Standards and Interpretations issued but not yet
effective
Accounting Standards and Interpretations, including those issued
by the IASB/IFRIC where an Australian equivalent has not yet been
made by the AASB, that have recently been issued or amended but are
not yet effective that have not been adopted for the annual
reporting period ended 30 June 2012, but would be relevant to its
operations, are:
Affected Standards Application date Application date for Group
and Interpretations (reporting period commences on or after)
--------------------------------------------- ------------------------------------------ ---------------------------
AASB 9 'Financial Instruments', AASB 2009- 1 January 2013 30 June 2014
11 'Amendments to Australian Accounting
Standards
arising from AASB 9' and AASB 2010-7
'Amendments to Australian Accounting
Standards arising
from AASB 9 (December 2010)' *
AASB 10 'Consolidated Financial Statements' 1 January 2013 30 June 2014
AASB 127 'Separate Financial Statements' 1 January 2013 30 June 2014
(2011)
AASB 13 'Fair Value Measurement' and AASB 1 January 2013 30 June 2014
2011-8 'Amendments to Australian Accounting
Standards
arising from AASB 13'
AASB 119 'Employee Benefits' (2011) and AASB 1 January 2013 30 June 2014
2011-10 "Amendments to Australian Accounting
Standards arising from AASB 119 (2011)'
AASB 2010-8 'Amendments to Australian 1 January 2012 30 June 2013
Accounting Standards -Deferred tax: Recovery
of Underlying
Assets'
AASB 2011-4 Amendments to Australian 1 July 2013 30 June 2014
Accounting Standards to Remove Individual
Key Management
Personnel Disclosure Requirements
AASB 2011-9 'Amendments to Australian 1 July 2012 30 June 2013
Accounting Standards- Presentation of Items
of Other
Comprehensive Income'
* The IASB have recently deferred the application date of the
IFRS equivalent to this standard until 1 January 2015.
The Group is still in the process of reviewing these
standards.
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.
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 2012 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
18.
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.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
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.
(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.
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.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
(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.
Where the Company reacquires its own shares, for example as a
result of share buy-back, those shares are cancelled. No gain or
loss is recognised in the profit or loss and the consideration paid
to acquire the shares, including any directly attributable
transaction costs net of income taxes, is recognised directly as a
reduction from equity.
(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) 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.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
(w) 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.
2012 2011
2. LOSS FROM OPERATIONS $ $
(a) Revenue
Revenue consisted of the following items:
Interest received/receivable 3,064,425 3,011,462
Total revenue 3,064,425 3,011,462
---------- ----------
(b) Loss before income tax
Loss before income tax has been arrived at after
charging the following losses and expenses:
Depreciation and amortisation - plant and equipment 13,723 13,805
Net movement in provisions for employee entitlements (2,171) (1,185)
Exploration expenses 20,975 83,050
Project evaluation expenses 1,398,283 1,282,960
Mt Leyshon holding costs 3,014,171 224,484
Foreign exchange (gain)/loss 12,955 13,933
Rental expense relating to operating leases (minimum
lease payments) 155,770 111,898
Directors fees 198,569 198,569
Wages and salaries 397,333 371,782
Post-employment benefits 14,127 8,611
3. INCOME TAX
Income tax expense
Current tax 278,105 248,347
Deferred tax - -
---------- ----------
278,105 248,347
---------- ----------
Numerical reconciliation of income tax expense to prima facie
tax payable
Loss before income tax expense (3,142,385) (531,637)
Tax at the Australian tax rate of 30% (2011: 30%) (942,715) (159,491)
Tax effect of amounts which are not deductible
in calculating taxable income:
Other non-deductible expenditure 59,188 125,808
----------- ---------
(883,527) (33,683)
Tax losses not brought to account 1,161,632 282,030
----------- ---------
Income tax expense 278,105 248,347
=========== =========
Current tax and income tax expense relate to assessable income
in China Metals Pty Ltd as the Group is not consolidated for
tax.
Unrecognised Deferred Tax Balances
The following deferred tax assets have not been brought to
account as assets:
Tax losses - revenue 11,339,290 10,177,658
11,339,290 10,177,658
---------- ----------
3. INCOME TAX (Cont'd)
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.
2012 2011
4. 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 46,283 43,250
Other non-audit services
- Readmisstion to AIM - 35,000
- Taxation advice 38,200 4,000
-------- -------
Total remuneration 84,483 82,250
-------- -------
5. TRADE AND OTHER RECEIVABLES
Current
Amounts relating to:
- interest receivable 720,265 676,730
- other persons 60,021 66,358
-------- --------
780,286 743,088
======== ========
6. OTHER ASSETS
Current
Prepayments 18,675 8,923
======= ======
2012 2011
7. OTHER FINANCIAL ASSETS $ $
Non-current
Shares in other entities 1 1
Security deposits 14,999 14,999
------------------ ------------------
15,000 15,000
================== ==================
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.
8. PROPERTY, PLANT AND EQUIPMENT
Plant & equipment
At cost 122,443 114,710
Accumulated depreciation (99,256) (85,533)
Total plant and equipment (Note 8(a)) 23,187 29,177
======== ========
(a) Reconciliation
Plant and Equipment
Carrying amount at beginning of year 29,177 28,938
Additions 7,733 14,033
Disposals - -
Depreciation expense (13,723) (13,794)
-------- --------
Total plant & equipment 23,187 29,177
-------- --------
9. TRADE AND OTHER PAYABLES
Current
Trade creditors 254,249 183,873
Mt Leyshon Compensation Agreements (Note
26 (d)) 1,014,289 -
------------ ----------
1,268,538 183,873
============ ==========
Non-Current 1,042,771 -
------------ ----------
Mt Leyshon Compensation Agreements (Note
26 (d)) 1,042,771 -
============ ==========
Trade creditors 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.
10. PROVISIONS
Employee benefits 60,719 62,890
======= =======
2012 2011
11. ISSUED CAPITAL $ $
(a) Issued and paid up capital
244,311,383 (2011: 246,525,724) fully paid
ordinary shares 70,675,495 71,102,376
============= ===========
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):-
Date Details Ordinary Shares Ordinary Shares Total
(Number) ($) ($)
----------- ---------------------------------- ---------------- ---------------- -----------
1/07/10 Opening Balance 216,090,594 64,175,728 64,175,728
31/12/10 Placement - AIM readmission (i) 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
---------------- ---------------- -----------
22/06/12 Buy-back of shares (ii) (2,214,341) (422,337) (422,337)
Share buy-back costs - (4,544) (4,544)
30/06/12 Closing Balance 244,311,383 70,675,495 70,675,495
---------------- ---------------- -----------
Note
(i) 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.
(ii) From 16 May 2012 to 22 June 2012, the Company purchased
2,214,341 fully paid ordinary shares that were acquired in an on
market share buy-back at an average price of A$0.191 per share.
These treasury shares were subsequently cancelled on 11 July
2012.
(iii) Fully paid ordinary shares carry one vote per share and carry the right to dividends.
2012 2011
12. RESERVES $ $
Employee benefits reserve - -
Foreign currency translation reserve (2,643) (18,613)
(2,643) (18,613)
-------- ---------
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.
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.
13. ACCUMULATED LOSSES
Balance at the beginning of the financial
year (17,946,137) (18,539,326)
Net (loss)/profit attributable to members
of Leyshon Resources (3,420,490) (779,984)
Transfer from Employee Benefits Reserve - 1,373,173
------------- -------------
Balance at the end of the financial year (21,366,627) (17,946,137)
============= =============
Adjusted franking account balance (tax
paid basis) 7,006,784 6,913,764
============= =============
2012 2011
14. EARNINGS PER SHARE $ $
Basic loss per share (cents per share) (1.4) (0.3)
Dilutive loss per share (cents per share) (1.4) (0.3)
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:
Net loss used in calculating basic earnings
per share (3,420,490) (779,984)
------------ ----------
Earnings used in calculating basic and diluted
earnings per share (3,420,490) (779,984)
============ ==========
Number of Number of
Shares shares
2012 2011
Weighted average number of ordinary shares
used in calculating basic earnings per share 246,358,998 231,183,083
Effect of dilutive securities - -
Adjusted weighted average number of ordinary
shares and potential ordinary shares used
in calculating diluted earnings per share 246,358,998 231,183,083
============ ============
(a) Conversions, calls, subscriptions or issues after 30 June
2012
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. On 2 August 2012, the Company cancelled 2,954,171 fully
paid ordinary shares that were acquired after 30 June 2012 in an on
market share buy-back at an average price of A$0.183 per share
(b) Non-dilutive securities
There were nil (2011: nil) potential ordinary shares excluded
from the weighted average number of ordinary shares used in the
calculation of diluted earnings per share.
15. DIVIDENDS PAID OR PROVIDED FOR
No dividends have been paid or provided for during the year.
16. COMMITMENTS FOR EXPENDITURE AND CONTINGENT LIABILITIES
There are no commitments for expenditure at 30 June 2012 (2011:
nil). Refer to note 26(d) for a discussion around contingent
liabilities.
17. 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 16 May 2012 and
the lease in Perth is for a period of 1 year commencing 1 September
2012. The Consolidated Entity does not have an option to acquire
the leased assets at the expiry of the lease period.
2012 2011
$ $
Non-cancellable operating leases
Not longer than 1 year 180,050 97,782
Longer than 1 year and not longer than 5 years 123,711 6,614
Longer than 5 years - -
--------- -------
303,761 104,396
========= =======
18. SUBSIDIARIES
Name of Entity Country of Class of Equity Holding
Incorporation Shares
2012 2011
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 & Development British Virgin
Ltd Islands Ordinary 100 100
British Virgin
Chang Xing Ltd Islands Ordinary 100 100
Trident Investment Ltd Hong Kong Ordinary 100 100
Beijing North Asia Mining Management People's Republic
and Consulting Co., Ltd of China N/A 100 100
19. 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.
20. 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 18 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
-- Murray Wylie - Company Secretary (Appointed 20 January 2012)
-- Stacey Apostolou - Company Secretary (Resigned 20 January 2012)
-- Henry Tebar - Exploration Manager (Resigned 23 January 2012)
The aggregate compensation made to key management personnel of
the Company and the Group is set out below:
2012 2011
$ $
Short-term employee benefits 1,100,779 1,073,441
Post-employment benefits 9,655 7,431
Termination benefits - -
Share-based payment - -
--------- ---------
1,110,434 1,080,872
========= =========
Details of individual key management personnel compensation are
disclosed in the Remuneration Report.
20. RELATED PARTY DISCLOSURES (cont'd)
(c) Key management personnel equity holdings
Fully paid ordinary shares of Leyshon Resources
Balance Purchases Received Other Disposals Balance
at the on exercise changes(i) at the end
start of of options of the year
the year
2012
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
Mr Murray Wylie - - - - - -
Ms Stacey
Apostolou(i) 100,000 - - (100,000) - -
Mr Henry Tebar(i) - - - - - -
(i) Ms Apostolou and Mr Tebar resigned during 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 - - - - - -
Options
Balance Granted Exercised Other Balance Vested Vested
at the as remuneration changes at the during and exercisable
start end of the year at the
of the the year end of
year the year
2012
Mr John Fletcher
- 2010 Options - - - - - - -
Mr Richard Seville
- 2010 Options - - - - - - -
Ms Stacey Apostolou
- 2010 Options - - - - - - -
Balance Granted Exercised Other Balance Vested Vested
at the as remuneration changes at the during and exercisable
start (i) end of the year at the
of the the year end of
year the 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) - - -
(i) Options exercisable @ $0.70 each on or before 30 November
2010 or 30 June 2011 (as appropriate)
20. RELATED PARTY DISCLOSURES (cont'd)
(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 (2011: 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 controlled entities in the wholly
owned group during the financial year ended 30 June 2012 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 $1,527,413 (2011: $731,134).
(f) Parent entities
The parent entity in the consolidated entity and the ultimate
parent entity is Leyshon Resources Limited.
21. SUBSEQUENT EVENTS AFTER BALANCE DATE
Acquisition of entity - Pacific Asia Petroleum Limited
With effect from 1 July 2012, Leyshon Resources Limited acquired
100% of the issued capital of Hong Kong registered company Pacific
Asia Petroleum Limited (PAPL). PAPL's key asset is a 100% interest
in the Zijinshan Production Sharing Contract (PSC) located on the
eastern fringe of the prolific Ordos Gas Basin in Central China.
The numbers presented below are provisional and have been accounted
for using the acquisition method of accounting.
Details of the assets, liabilities Note Book value Fair value Fair value
and goodwill: adjustments on acquisition
$ $ $
Other debtors 59,509 - 59,509
Property, plant and equipment 153,977 - 153,977
Trade and other payables (184,873) - (184,873)
---------- ------------ ---------------
Fair value of net identifiable
assets acquired 28,613
Goodwill on acquisition (i) 4,046,589
---------------
Total purchase consideration 4,075,202
===============
Total purchase consideration comprises:
Consideration in cash and cash
equivalents 2,364,500
Less cash and cash equivalents
acquired (89,298)
Issue of Ordinary Shares (ii) 1,800,000
---------------
4,075,202
===============
(i) The provisional amount of goodwill that has been recognised
arose in the business combination because the cost of the
combination included recognition of previous exploration
expenditure conducted on the Production Sharing Contracts licensed
areas.
(ii) Comprises 10,000,000 fully paid Leyshon Resources Limited
ordinary shares issued to the vendors at settlement on 6 August
2012. These shares were issued at the ASX closing price of a fully
paid Leyshon Resources Limited ordinary share on 22 July 2012 when
the definitive share sale and purchase agreement was entered into,
being $0.18 per share.
(iii) The effective date of the acquisition for accounting purposes is 22 July 2012.
Share buy back
From 10 July 2012 to 27 July 2012 the Company purchased a
further 2,954,171 shares under the on-market share buyback
programme at an average of A$ 18 cents (12 pence) per share.
Mt Leyshon
Subsequent to year end, the Company has reviewed the results of
the ball mill scats drilling and preliminary testwork programme at
Mt Leyshon and decided not to proceed with the project at this
time
22. 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:
2012 2011
$ $
Cash and cash equivalents 51,014,837 52,901,790
=========== ===========
(b) Reconciliation of loss for the year to net cash provided (used) by operating activities
(Loss)/profit for the year (3,420,490) (779,984)
Depreciation and amortisation 13,723 13,794
(Decrease)/increase in provision for employee
entitlements (2,171) (1,222)
Unrealised foreign exchange differences 12,955 13,933
(Increase)/decrease in trade and other
receivables and other assets (46,951) 406,877
(Decrease)/increase in payables 1,989,615 149,297
Net cash used by operating activities (1,453,319) (197,305)
============ ==========
(c) Non cash transactions
30 June 2012
During the financial year there were no 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.
23. JOINTLY CONTROLLED ENTITY
The Group was not a venturer in any jointly controlled entities
at 30 June 2012 (2011: nil),
24. 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.
24. 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 receivables 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:
2012 2011
$ $
Loans and receivables 780,286 743,088
Cash and cash
equivalents 51,014,837 52,901,790
---------------------------------- ----------------------------------
51,795,123 53,644,878
================================== ==================================
Impairment losses
None of the Groups' other receivables are past due (2011:
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.
Following the sale of the Group's interests in the Zheng Guang
development project during the 2010 financial year, the Company has
maintained a strong cash position with more than A$51 million cash
and cash equivalents on hand at the end of the reporting period.
Accordingly it is unlikely that the Group will need to raise
additional capital in the next 12 months to meet its currently
known obligations.
24. 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:
2012 2011
$ $
Less than 6 months 51,795,123 53,644,878
6 months to 1 year - -
1 to 5 years - -
Over 5 years - -
---------------- ----------------
51,795,123 53,644,878
================ ================
The following are the maturities of financial liabilities,
including estimated interest payments and excluding the impact of
netting agreements of the Group:
Less than 6 months 777,693 183,873
6 months to 1 year 490,845 -
1 to 5 years 1,042,771 -
Over 5 years - -
--------------- -------------
2,311,309 183,873
=============== =============
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.
24. 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 2012
Financial Assets
Cash and cash equivalents 63,271 303,879 78,223 211 445,584
Financial Liabilities
Amortised cost (119,937) - (605) (120,542)
Net balance sheet
exposure (56,666) 303,879 78,223 (394) 325,042
=========== ========== ========= ======== ==========
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
=========== ========== ========= ======== ==========
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
2011.
Profit or
30 June 2012 Other Equity loss
A$ A$
RMB - (11,333)
USD - 60,776
HKD - 15,645
GBP - (79)
-------------- ----------
- 65,009
=============================== ==========
Profit or
30 June 2011 Other Equity loss
A$ A$
RMB - (8,951)
USD - 20,082
HKD - 7,209
GBP - 132
-------------- ----------
- 18,472
=============================== ==========
24. 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 Effective
Interest Variable
Rate Interest Fixed Interest
Rate Rate Total
% $ $ $
2012
Financial Assets
Cash and cash equivalents 5.69% 51,014,837 - 51,014,837
Financial Liabilities
Financial liabilities - - -
----------- --------------- -----------
51,014,837 - 51,014,837
=========== =============== ===========
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
=========== =============== ===========
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 2011.
Profit or
Other Equity loss
A$ A$
------------- ----------
30 June 2012
Variable rate instruments 510,148 529,018
============= ==========
30 June 2011
Variable rate instruments 510,148 529,018
============= ==========
24. 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 11, 12
and 13 respectively.
25. 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.
In November 2010, shareholders approved the implementation of
the Leyshon Resources Limited Performance Rights plan. The rights
to be granted under this plan are dependent on Company performance.
Each Performance Right is a personal contractual right to be
satisfied through the issue or procurement of shares in the
Company. A performance right may be exercised if it has not
otherwise lapsed in accordance with the performance rights plan, on
the satisfaction of prescribed performance criteria within the
performance period. At the date of this report, there have been no
performance rights issued under the plan.
Valuation of Securities
30 June 2012
There were no share based payments or options granted by the
Company during the year.
30 June 2011
There were no share based payments or options granted by the
Company during the year.
26. PARENT ENTITY DISCLOSURES
Financial Statements
(a) Financial Position
2012 2011
$ $
Assets
Current assets 37,617,972 39,482,398
Non-current assets 10,787,403 9,992,105
Total assets 48,405,375 49,474,503
Liabilities
Current liabilities 1,206,632 111,272
Non-current liabilities 1,042,771 -
Total liabilities 2,249,403 111,272
Equity
Issued capital 70,675,495 71,102,376
Retained losses (24,519,523) (21,739,145)
Total equity 46,155,972 49,363,231
(b) Financial performance
Loss for the year (2,780,378) (186,239)
Other comprehensive income - -
Total comprehensive income (2,780,378) (186,239)
(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 indemnify 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.
26. 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.
Leyshon Resources and Newmont Australia Limited ("Newmont") have
reached settlement for the landholder Compensation Agreements.
The Company will continue to be responsible for its share of ongoing
management costs in relation to the Mount Leyshon assets.
Under the agreements Leyshon Resources is required to make payments
totalling $2.0 million to $2.5 million over the next two years..
Details of the net present value of the associated current and
non-current liabilities are provided under Mt Leyshon holding costs
in Note 9.
2012 2011
$ $
(e) Commitments for the acquisition of property,
plant and equipment by the parent entity - -
This information is provided by RNS
The company news service from the London Stock Exchange
END
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