TIDMLRL
RNS Number : 9993C
Leyshon Resources Limited
24 March 2014
LEYSHON RESOURCES LIMITED
ABN 75 010 482 274
FINANCIAL REPORT
FOR THE YEAR ENDED
31 DECEMBER 2013
CORPORATE DIRECTORY
Directors Share Register
Richard Seville - Non-Executive UK
Chairman Computershare Investor Services
Corey Nolan - Managing Director plc
Andrew Berry III - Non-Executive 2nd Floor, Vintners Place
Director 68 Upper Thames Street
Paul Atherley - Non-Executive Director London
EC4V 3BJ
Company Secretary United Kingdom
Murray Wylie
Australia
Principal and Registered Offices Computershare Investor Services
China Pty Ltd
Suite 04, 21/F, Tower B Level 2, Reserve Bank Building
Ping An International Financial 45 St Georges Terrace
Center, Perth WA 6000
No.3 Xinyuan South Road, Australia
Chaoyang District, Telephone: 1300 557 010
Beijing 100027 International: +618 9323 2000
Telephone: +86 10 8444 2882 Facsimile: +618 9323 2033
Facsimile: +86 10 8444 2887
Australia Solicitors
Suite 3, Level 3 Jun He Law Offices - Beijing
1292 Hay Street Hardy Bowen Solicitors - Perth
West Perth WA 6005
Telephone: +618 9321 0077 Stock Exchange Listings
Facsimile: +618 9322 4073 Alternative Investment Market
London Stock Exchange
Auditor 10 Paternoster Square
Deloitte Touche Tohmatsu London EC4M 7LS
Bankers Australian Securities Exchange
Bank of China - Beijing Home Branch - Perth
National Australia Bank 2 The Esplanade
Perth WA 6000
AIM and ASX Code
LRL
Index
Directors' Report 3
Auditor's Independence Declaration 17
Directors' Declaration 18
Consolidated Statement of Profit or Loss and Other
Comprehensive Income 19
Consolidated Statement of Financial Position 21
Consolidated Statement of Changes in Equity 23
Consolidated Statement of Cash Flows 24
Notes to the Financial Statements 25
Independent Audit Report 61
DIRECTORS' REPORT
The Directors of Leyshon Resources Limited present their report
on the Group consisting of Leyshon Resources Limited ("the Company"
or "Leyshon Resources") and the entities it controlled at the end
of, or during, the year ended 31 December 2013 ("Group"). All
amounts presented in the annual report including the Directors'
Report are presented in United States Dollars (US$) unless
otherwise indicated.
DIRECTORS
The following persons were Directors of the Company during the
year ended 31 December 2013 and up to the date of this report:
Richard P Seville
Corey Nolan - Appointed 14 February 2014
Paul C Atherley
Andrew Berry III
John W S Fletcher - Resigned 25 November 2013
INFORMATION ON DIRECTORS
Richard Seville
Non-Executive Director from date of appointment 1 February
2007
Non-Executive Chairman from 25 November 2013
Chairman of the Remuneration Committee and member of the Audit
Committee
Qualifications - BSC (Hon), MEngSc, MAusIMM, ARSM
Mr Seville is a mining geologist and geotechnical engineer with
more than 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 has 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 directorships in Orocobre Limited (November
2007 - present) and Elementos Limited (October 2013 - present).
Corey Nolan
Managing Director from date of appointment 14 February 2014
Qualifications - B Com, MMEE, GAICD
Nr Nolan has twenty years of diverse experience in the resources
sector. This has included experience in mining operations, global
resource evaluation, and the financing and development of new
opportunities in Australia, South Africa, Asia and South
America.
Mr Nolan is a qualified mineral economist. He has held
specialist roles as an equities analyst in the mining and natural
resources sector of stock broking firms Morgan Stanley and Wilson
HTM. During this period he undertook detailed coverage of the
Australian and global resources sector including the commodities
market.
Mr Nolan has been a Director at PWC in the corporate finance and
valuations practice, specialising in resources industry valuations
for Australian and global resources firms.
During the three year period to the end of the financial year,
Mr Nolan has held a directorship with Elementos Limited (July 2007
- present).
INFORMATION ON DIRECTORS (Cont'd)
Paul C Atherley
Managing Director from date of appointment 4 May 2004 until 14
February 2014
Non-Executive Director from 14 February 2014
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 experience. 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. During this period he completed a
number of acquisitions and financings of resource projects in
Australia, South-East Asia, Africa and Western Europe.
Mr Atherley is an experienced Managing Director with well
established relationships in the London and Australian capital
markets. He has been based in Beijing since 2005 and has pioneered
the company's activities in China. During this period he has built
the Leyshon Management team and established extensive government
and industry relationships. He currently serves as the Vice
Chairman of the China Britain Business Council and is Chairman of
the Energy Committee. He also serves on the EU-China Chamber Energy
Working Group.
During the three year period to the end of the financial year,
Mr Atherley has not held a directorship in any other listed
company.
Andrew Berry III
Non-Executive Director from date of appointment 10 October
2008
Chairman of the Audit Committee and member of the Remuneration
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.
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 and the unlisted CorporActive Fund 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 - August 2013) and Viridis Investment Management
Limited (July 2005 - February 2011).
INFORMATION ON DIRECTORS (Cont'd)
John WS Fletcher CBE
Non-Executive Chairman from date of appointment 7 April 2006
until resignation on 25 November 2013
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.
Company Secretary
Murray Wylie
Company Secretary from date of appointment 20 January 2012
Qualifications - B Com (Hon), GradDipAppCorpGov, ACIS
Mr Wylie has more than 30 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.
PRINCIPAL ACTIVITIES
The principal activities of the Group during the year consisted
of exploration for unconventional gas and for gold and other
minerals. There was no significant change in the nature of those
activities during the year. Shareholders voted to change the
Group's investing policy on 13 January 2014 to remove references to
energy projects and focus on mineral exploration opportunities
following the demerger of its energy assets.
CONSOLIDATED RESULTS
Year ended Six months
ended 31
December
31 December 2012
2013
$
$
Loss of the Group before income tax (8,713,880) (4,309,715)
Income tax expense (10,095) (70,257)
------------- ------------
Net loss attributable to members of Leyshon
Resources Limited (8,723,975) (4,379,972)
------------- ------------
Net cash flows used in operating activities (7,394,400) (2,222,602)
31 December 31 December
2013 2012
$ $
Net assets 32,352,084 47,821,581
REVIEW OF OPERATIONS
During the year ended 31 December 2013, the Company has
undertaken exploration drilling and testing on its Zijinshan
unconventional gas project. 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 Company has also been focussing on implementing a
corporate restructure to effect the separation of its energy and
mineral businesses.
During the year, the Company, through its wholly owned
subsidiary Pacific Asia Petroleum Limited (PAPL), carried out
drilling and testing programmes associated with its exploration and
appraisal programme for its Zijinshan Gas Project on the eastern
fringe of the prolific Ordos Gas Basin in Central China. The
programme remains at an early stage in the exploration and
appraisal phase of de-risking the project and accordingly each well
will be fully evaluated before proceeding with the subsequent
well.
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.
During the year, drilling of well ZJS6 was completed in January
2013 and well ZJS7 was completed in September 2013. Flow testing
was carried out on wells ZJS5 (drilled in 2012) along with wells
ZJS6 and ZJS7. The Company also acquired 318 kilometres of 2D
seismic data.
Following the hydraulic facture stimulation of one of the target
zones in well ZJS5 a free gas flow rate of 160,000 scf/day was
recorded over eight hours of stable flow at a tubing head pressure
of 200psi. The initial flow rate recorded on the single zone
exceeded management's internal estimate for commercial production
of 125,000 scf/day.
Analysis of the results to date suggests that further flow may
be possible from untested potential pay zones. Following a three
week shut-in period a formation pressure test on a single zone
recorded 16.5MPa/2425psi, significantly higher than that recorded
in nearby wells in the same strata.
Testing of well ZJS6 was suspended due to technical issues. The
well has a total depth of 2,320 metres with 80 metres of cumulative
potential pay interval intersected across 15 potential pay zones.
Several of the zones tested, which elsewhere in the field are dry,
produced water. It has not been possible to isolate or to
accurately define the source of the water nor to determine whether
these are issues specific to well ZJS6 or more general to this area
of the licence. Accordingly the decision was made to discontinue
testing on the well for the time being and to focus exploration and
appraisal efforts on the upcoming programme.
It is possible that the ZJS6 well may be revisited at later date
to attempt to isolate the water and to test different zones.
However very useful information on the target zones has been
gathered which will be valuable for testing future wells.
Interpretation of the 318 kilometres of 2D seismic data acquired
was completed with the results being used to assist in determining
future well locations and later to assist in resource assessment.
The results are also required as supporting data for the Chinese
Reserve Report submission.
The drilling of well ZJS7, at a location approximately three
kilometres to the northeast of well ZJS5, has been completed and it
is now undergoing testing. The well has a design depth of
approximately 2,100 metres and is targeting the same potential pay
zones as those intersected in well ZJS5.
BUSINESS STRATEGIES AND PROSPECTS
On 13 September 2013, the Company announced that it would seek
shareholder and regulatory approvals to undertake a corporate
restructure to effect the separation of its energy and mineral
businesses.
The restructure was implemented on 23 January 2014 after
obtaining shareholder approval on 13 January 2014. The restructure
was achieved through the demerger of the Company's energy assets,
including the Company's interests in the Zijinshan Gas Project
along with cash reserves of approximately US$33 million, into an
energy focussed vehicle, Leyshon Energy Limited (Leyshon Energy).
The demerger was effected via a pro--rata in--specie distribution
of 100% of shares in Leyshon Energy to the Company's shareholders
on a one-for-one basis.
In the Directors' opinion, the principal advantages to
shareholders of the Energy Separation are as follows:
-- Shareholders will retain their current indirect interest in
the Zijinshan Gas Project through their pro rata shareholding in
Leyshon Energy.
-- Shareholders will retain their shareholding in the Company in
the same proportion in which it was held prior to the
implementation of the Energy Separation.
-- It enables the Company to focus on the Mt Leyshon Gold
Project, and other mineral investment opportunities whilst enabling
Leyshon Energy to focus on the Zijinshan Gas Project as well as
actively seeking other investment and acquisition opportunities in
the oil and gas sector in China and elsewhere.
-- It provides a strategic opportunity to develop Leyshon Energy
as a stand-alone company which can continue to explore and
commercialise the Zijinshan Gas Project and should enable a more
transparent market value to be placed on the Zijinshan Gas
Project.
After approving the demerger of Leyshon Energy on 13 January
2014, shareholders approved amendments to the Company's investing
policy to reflect the Company's focus on gold and other minerals
exploration and investment opportunities by removing references to
energy projects. The investing policy aims to capitalise on the
Company's extensive experience in China. The policy focuses on
acquiring and developing mineral 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.
DIVIDENDS
No interim or final dividend has been declared in respect to the
year ended 31 December 2013 (six months ended 31 December 2012:
nil).
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
On 13 September 2013 the Company announced that it that it would
seek shareholder and regulatory approvals to undertake a corporate
restructure to effect the separation of its energy and mineral
businesses. On 9 December 2013 the Company despatched a Notice of
Meeting seeking shareholder approval to demerge its energy assets
via an in-specie distribution to eligible shareholders of the
Company. Shareholder approval was obtained subsequent to year end
on 13 January 2014 and the demerger implemented on 23 January
2014.
During the year ended 31 December 2013, the Company announced
the closure of its
on-market share buyback programme. In the year to 31 December
2013, no shares were purchased by the Company under the share
buyback programme.
On 17 December 2012 the Company announced that it had changed
its financial year end from 30 June to 31 December and a change in
presentation currency from Australian Dollars to United States
Dollars, effective 1 January 2013.
Readers of this report should be aware that when comparing
current period figures to comparatives, they are comparing the
current twelve month period to the previous six month period. The
current financial period covers 1 January 2013 to 31 December 2013
while the previous financial period covered 1 July 2012 to 31
December 2012.
SUBSEQUENT EVENTS
Other than as disclosed below, as at the date of this report
there are no matters or circumstances which have arisen since 31
December 2013 that have significantly affected or may significantly
affect:
a) the operations, in financial years subsequent to 31 December
2013, of the Group 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 31 December 2013, of the Group.
On 13 January 2014, shareholders approved the demerger of the
Company's energy assets via the in-specie distribution of 100% of
the ordinary shares of Leyshon Energy Limited to eligible
shareholders of the Company. The demerger was completed and Leyshon
Energy Limited commenced trading on the AIM market of the London
Stock Exchange on 23 January 2014.
Mr Corey Nolan was appointed as Managing Director of Leyshon
Resources on 14 February 2014.
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
Group and the expected results of these operations in subsequent
financial years may prejudice the interests of the Group and
accordingly, has not been disclosed.
ENVIRONMENTAL REGULATIONS
The Group'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.
OPTIONS
During the year ended 31 December 2013 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 year, the Company agreed to issue 5,000,000
performance rights to Key Management Personnel. These were deemed
granted and an expense recognised. The intended recipients
subsequently agreed to forego their entitlement should the demerger
of the Company's energy assets proceed. The demerger was completed
on 23 January 2014 and accordingly the performance rights will not
be issued.
During the year no shares were issued as a result of the
exercise of options. Since 31 December 2013 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 year ended 31 December 2013,
and the number of meetings attended by each director.
Board Meetings Audit Committee Remuneration Committee
Meetings Meetings
Held Attended Held Attended Held Attended
Directors
Richard Seville 13 10 2 2 1 1
Paul C Atherley 13 12 N/A N/A N/A N/A
Andrew Berry
III 13 13 2 2 1 1
John WS Fletcher 13 11 2 2 1 1
------------------ ------ --------- ------ ---------- --------- --------------
INFORMATION ON DIRECTORS' INTERESTS IN SECURITIES OF LEYSHON
RESOURCES
Interest in Securities
at the date of this
Report
---------------- -------------------------
Ordinary Options
Shares
---------------- -------------- ---------
Richard Seville 750,000 -
Corey Nolan - -
Paul C Atherley 31,330,000 -
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
year ended 31 December 2013. 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:
-- Richard P Seville (Non Executive Director, Chairman from 25 November 2013)
-- Corey Nolan (Managing Director appointed 14 February 2014)
-- Paul C Atherley (Non Executive Director, Managing Director until 14 February 2014)
-- Andrew J Berry III ( Non Executive Director)
-- John WS Fletcher (Chairman - resigned 25 November 2013)
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 - Chief Financial Officer
-- Frank Fu - Chief Operating Officer
-- Murray Wylie - Company Secretary
There were no other group executives or Company executives
during the period.
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 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. In line with recommended corporate
governance principles, non-executive directors are not 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 Group's
earnings and movements in shareholder wealth for the five financial
periods to December 2013. All amounts have been restated to reflect
the change in the Group's presentation currency effective 1 January
2013.
Year ended 6 months Year ended Year ended Year ended
31 December ended 31 30 June 30 June 30 June
2013 December 2012 2011 2010
2012
$ $ $ $ $
Revenue 715,130 1,162,143 3,160,146 2,979,510 26,388,977
Net (loss)/profit
before tax (8,713,880) (4,309,715) (3,240,541) (525,996) 23,514,859
Net (loss)/profit
after tax (8,723,975) (4,379,972) (3,527,333) (771,708) 23,375,243
Share price at start
of period (AUD) 0.210 0.175 0.250 0.200 0.100
Share price at end
of period (AUD) 0.105 0.210 0.175 0.250 0.200
Dividend paid - - - - -
Basic (loss)/profit
per share (cents) (3.5) (1.8) (1.4) (0.3) 10.8
Diluted (loss)/profit
per share (cents) (3.5) (1.8) (1.4) (0.3) 10.8
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.
REMUNERATION REPORT (Cont'd)
Service Agreements
Non Executive Directors
Mr Seville
The Company has entered into a service agreement with Mr Seville
whereby he is paid a fee of A$45,000 per annum including
superannuation in his capacity as Non-Executive Director with
effect from 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 providing 90 days written notice.
In addition, the Company has entered into a consultancy
arrangement with Richard Seville & Associates Pty Ltd for the
provision of technical services by Mr Seville at the rate of
A$1,600 per day. Either party can terminate the consultancy
agreement by 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 A$45,000 per annum including
superannuation in his capacity as Non-Executive Director with
effect from 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.
Mr Fletcher
The Company has entered into a service agreement with Mr
Fletcher whereby he is paid a fee of A$66,000 per annum in his
capacity as Chairman with effect from 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 Fletcher resigned 25 November 2013.
Executive Director
Mr Atherley
The service agreement in place during the year with North Asia
Metals Ltd (NAM) for Managing Director and consultancy services
provided by Mr Atherley, contains the following key provisions:
-- Entered into with effect from 6 August 2012 with end date 31 December 2015;
-- Base fee of $460,000 per annum; and
-- May be terminated by the Company with not more than three
months notice or by NAM 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;
-- An expatriate allowance of $105,000 per annum;
-- An annual cash bonus of up to 50% of base fee per annum is
payable based on, in the Board's view, the contribution of Mr
Atherley towards the general performance of the Company and his
achievement of any agreed personal objectives. A cash bonus of
$105,000 was granted during the year ended 31 December 2013 (six
months to 31 December 2012: nil);
-- An annual long term incentive with the maximum accounting
cost to the Company of 50% of the annual base fee;
-- No amount is payable in the event of termination for neglect
of duty or gross misconduct; and
-- 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 equal to the base fee for one
year. 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.
REMUNERATION REPORT (Cont'd)
Senior Management
Mr Niu
The service agreement in place with Mr Niu during the year
contains the following key provisions:
-- Entered into with effect from 6 August 2012 with end date 5 August 2015;
-- Base salary of $300,000 per annum;
-- May be terminated by the Company with not more than three
months notice or by Mr Nui by providing at least six months
notice;
-- An expatriate allowance of $105,000 per annum;
-- An annual discretionary cash bonus of up to 50% of base
salary per annum is payable based on, in the Board's view, the
contribution of Mr Nui towards the general performance of the
Company and his achievement of any agreed personal objectives. A
cash bonus of $105,000 was granted during the year ended 31
December 2013 (six months ended 31 December 2012: nil);
-- An annual long term incentive with the maximum accounting
cost to the Company of 50% of the annual base salary;
-- No amount is payable in the event of termination for neglect
of duty or gross misconduct; and
-- If Mr Niu's contract is terminated, other than for neglect of
duty or gross misconduct, then the Company shall pay to Mr Nui an
amount equal to the base fee for six months.
Mr Fu
The service agreement in place during the financial period with
Mr Frank Fu contains the following key provisions:
-- Entered into with effect from 1 March 2013 with end date 29 February 2016;
-- Base salary of RMB1,785,000 ($292,000) per annum;
-- May be terminated by the Company with not more than three
months notice or by Mr Fu by providing at least three months
notice;
-- Additional allowances and statutory welfare of RMB717,000 ($117,300) per annum;
-- An annual discretionary cash bonus of up to 50% of base
salary per annum is payable based on, in the Board's view, Mr Fu's
achievement of any agreed personal objectives, performance targets
and Company targets. A cash bonus of $75,000 was granted during the
year ended 31 December 2013 (six months ended 31 December 2012:
nil);
-- An annual long term incentive with the maximum accounting
cost to the Company of 50% of the annual base fee;
-- No amount is payable in the event of termination for neglect
of duty or gross misconduct; and
-- If Mr Fu's contract is terminated, other than for neglect of
duty or gross misconduct, then the Company shall pay to Mr Fu an
amount equal to the base salary for three months
Mr Wylie
Mr Wylie receives payment of A$5,000 per month but has not
entered into a formal service agreement.
Novation of Service Agreements to Leyshon Energy Limited
Deeds of novation were entered into with Mr Atherley, Mr Nui and
Mr Fu to terminate their agreements with Leyshon Resources and
transfer the agreements to Leyshon Energy Limited, with effect from
the implementation of the demerger agreement on 23 January
2014.
REMUNERATION REPORT (Cont'd)
Details of Remuneration
The emoluments (paid or payable) of the Directors and senior
management for the year ended 31 December 2013 are as follows:
Short-term employee benefits Post-employment Share Based
Payment
------------- -------------------------------- ---------------------------------- ------------------ -------------- --------
Salary & Bonus(1) Other(2) Super-annuation Termination Perform-ance Total % relating to
fees Benefits rights(3) perfor-mance
rights
$ $
$ $ $ $ $
------------- ---------- --------- --------- ---------------- ---------------- ------------- ------------ ---------------
Directors
Paul C
Atherley 556,896 104,585 104,737 - - 6,825 773,043 0.9%
Richard
Seville 42,511 - - 896 - - 43,407 -
Andrew Berry
III 39,800 - - 3,607 - - 43,407 -
John WS
Fletcher
(4) 57,435 - 19,251 - - - 76,686 -
Senior
management
Peter Niu 314,297 109,943 103,130 - - 2,531 529,901 0.5%
Frank Fu 265,936 78,530 102,498 13,389 - 1,688 462,041 0.4%
Murray Wylie 53,097 - - 4,845 - - 57,942 -
------------- ---------- --------- --------- ---------------- ---------------- ------------- ------------ ---------------
Total 1,329,972 293,058 329,616 22,737 - 11,044 1,986,427 0.6%
------------- ---------- --------- --------- ---------------- ---------------- ------------- ------------ ---------------
(1() 2012 Short Term Incentive bonus granted at the discretion
of the Board.
(2() Expatriate allowance for Mr Atherley and Mr Niu. Additional
allowances for Mr Fu. Consultancy fees for Mr Fletcher
(3) Agreements to issue performance rights but the officers
subsequently agreed to forego conditional upon the demerger which
was completed effective 23 January 2014. Refer Note 29 for further
details.
(4) Mr Fletcher resigned 25 November 2013.
The emoluments (paid or payable) of the Directors and senior
management for the six months ended 31 December 2012 are as
follows:
Short-term employee benefits Post-employment Share Based Payment
----------------- ---------------------------------- ---------------------- --------------------- ---------------- -------------
Salary & Bonus(1) Other(2) Super-annuation Termination Perform-ance Total % relating
fees Benefits rights to
perfor-mance
rights
$ $
$ $ $ $ $
------------- ----------- --------- --------- ------------------- -------------------- --------------- -------- -------------
Directors
Paul C
Atherley 144,690 - 48,230 - - - 192,920 -
Richard
Seville 21,703 - - - - - 21,703 -
Andrew Berry
III 19,911 - - 1,792 - - 21,703 -
John WS
Fletcher 31,832 - - - - - 31,832 -
Senior
management
Peter Niu 125,432 - 48,230 - - - 173,662 -
Frank Fu (3) 72,457 72,345 17,218 2,843 - 164,863 -
Murray Wylie 26,549 - - 2,389 - - 28,938 -
------------- ----------- --------- --------- ------------------- -------------------- --------------- -------- -------------
Total 442,574 72,345 113,678 7,024 - - 635,621 -
------------- ----------- --------- --------- ------------------- -------------------- --------------- -------- -------------
(1() Mr Fu received a sign-on bonus, which was paid in cash on
commencement of employment.
(2() Expatriate allowance for Mr Atherley, Mr Niu and Mr Fu.
(3) Mr Fu commenced 17 September 2012.
REMUNERATION REPORT (Cont'd)
Share-based Compensation
No options were granted, vested, exercised or lapsed in relation
to Directors and senior management during the year. There were no
options held by Directors or senior management during the
period.
During the year, the Company agreed to issue 2,500,000
performance rights to Mr Atherley, 1,500,000 performance rights to
Mr Niu and 1,000,000 to Mr Fu. Shareholder approval was obtained
for Mr Atherley's performance rights on 31 May 2013.
Mr Atherley, Mr Fu and Mr Niu subsequently agreed in writing to
forego their performance rights conditional on the successful
demerger of the Group's energy assets and subsequent listing of
Leyshon Energy Limited on London's AIM exchange. This occurred on
23 January 2014. As a result these performance rights will not be
issued.
Each performance right would be valid for five years and would
entitle the holder to one free fully paid ordinary share in Leyshon
Resources Limited. The rights would vest upon achievement of set
performance milestones in relation to the Zijinshan PSC. 50% would
vest when pilot gas production commenced, 25 % after obtaining
approval of a Chinese Reserves Report and the final 25% following
approval of the Overall Development Plan.
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 period. Certain
additional details in relation to the performance rights have been
included within Note 29 of the financial statements.
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 period 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 period by the auditor are outlined in
note 4 to the financial statements.
REMUNERATION CONSULTANTS
During the year CRA Plan Managers Pty Limited (CRA) completed a
review of the remuneration policies and strategies of the Company
as well as a review of individual Director and Senior Management
remuneration. No other kind of advice was provided by CRA. A cash
fee of $7,336 was paid for remuneration consultancy provided during
the period.
All data provided to the remuneration consultants was reviewed
by the remuneration committee and all communications between the
Company and the remuneration consultants were via the remuneration
committee. The Board is satisfied that remuneration recommendations
from CRA have been made free from undue influence by the members of
key management personnel to whom the recommendations relate.
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 17 and forms part of
this Directors' Report.
REMUNERATION REPORT (Cont'd)
CHANGE OF REPORTING PERIOD - COMPARATIVE AMOUNTS
During the previous period the Company notified the Australian
Securities and Investment Commission (ASIC) under s 323D(4) of the
Corporations Act 2001 that the Company was changing its financial
year end from 30 June to 31 December, effective 31 December 2012.
The change was required to align Leyshon's financial year end with
that of PAPL, following its acquisition on 6 August 2012.
Consequently the comparative financial information is as at 31
December 2012 and for the six month period then ended.
The current financial period covers 1 January 2013 to 31
December 2013.
Readers of this report should be aware that when comparing
current period figures to comparatives, they are comparing the
current twelve month period to the previous six month period.
Signed in accordance with a resolution of the Board of
Directors.
On behalf of the Directors
Corey Nolan
Managing Director
24 March 2014
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Woodside Plaza Level 14
240 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 (0) 9365 7007
www.deloitte.com.au
24 March 2014
Dear Board Members
Leyshon Resources Limited
In accordance with section 307C of the Corporations Act 2001, I
am pleased to provide the following declaration of independence to
the directors of Leyshon Resources Limited.
As lead audit partner for the audit of the financial statements
of Leyshon Resources Limited for the financial year ended 31
December 2013, I declare that to the best of my knowledge and
belief, there have been no contraventions of:
(i) the auditor independence requirements of the Corporations
Act 2001 in relation to the audit; and
(ii) any applicable code of professional conduct in relation to
the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
David Newman
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional
Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
DIRECTORS' DECLARATION
The directors declare that:
(a) in the directors' opinion, there are reasonable grounds to
believe that the Group will be able to pay its debts as and when
they become due and payable;
(b) in the directors' opinion, the attached financial statements
and notes thereto are in accordance with the Corporations Act 2001,
including compliance with accounting standards and giving a true
and fair view of the financial position and performance of the
Company and the Group;
(c) in the directors' opinion, the attached financial statements
and notes thereto are in accordance with International Financial
Reporting Standards issued by the International Accounting
Standards Board, as stated in note 1; and
(d) the directors have been given the declarations required by
s.295A of the Corporations Act 2001.
Signed in accordance with a resolution of the directors made
pursuant to s.295(5) of the Corporations Act 2001.
On behalf of the Directors
Corey Nolan
Managing Director
24 March 2014
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
FOR THE YEAR ENDED 31 DECEMBER 2013
Note Year Ended Six Months
Ended
31 Dec 2013 31 Dec 2012
$
$
Continuing operations
Revenue 2(a) 715,130 1,161,892
Exploration expenses (697) (203,375)
Project evaluation - (150,515)
Administration expenses (1,988,894) (822,838)
Foreign exchange gains/(losses) 352,774 (14,898)
Mt Leyshon holding costs (249,548) (234,998)
Share-based payments (11,044) -
Loss before tax 2(b) (1,183,279) (264,730)
Income tax expense 3 (10,095) (70,257)
------------ ------------
Loss for the year from continuing
operations (1,192,374) (334,987)
------------ ------------
Discontinued operations
Loss for the year from discontinued
operations 8 (7,531,601) (4,044,985)
------------ ------------
Loss for the period (8,723,975) (4,379,972)
Other comprehensive income, net of
income tax
Items that may be reclassified subsequently
to profit or loss:
Exchange differences on translating
foreign operations (591,142) 156,800
Exchange differences on translating
into presentation currency (6,165,424) 1,049,772
------------ ------------
Other comprehensive income for the
period net of tax (6,756,566) 1,206,572
------------ ------------
Total comprehensive income for the
period (15,480,541) (3,173,400)
============ ============
Loss attributable to members of Leyshon
Resources Limited (15,480,541) (3,173,400)
============ ============
Total comprehensive income attributable
to members of Leyshon Resources Limited (15,481,457) (3,173,400)
============ ============
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME (Cont'd)
FOR THE YEAR ENDED 31 DECEMBER 2013
Note Year Ended Six Months
Ended
31 Dec 2013 31 Dec 2012
$
$
Loss Per Share
From continuing and discontinued
operations
Basic (cents per share) 17 (3.5) (1.8)
Diluted (cents per share) 17 (3.5) (1.8)
From continuing operations
Basic (cents per share) 17 (0.5) (0.1)
Diluted (cents per share) 17 (0.5) (0.1)
The above Consolidated Statement of Profit or Loss and Other
Comprehensive Income should be read in conjunction with the
accompanying notes. All amounts presented in respect of prior
periods have been restated to reflect the change in presentation
currency as set out in the accounting policies.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2013
Note 31 Dec 2013 31 Dec 2012
$ $
ASSETS
Current Assets
Cash and bank balances 26(a) 3,070,886 47,253,874
Trade and other receivables 5 35,336 674,828
Current tax assets 24,639 -
Other assets 6 20,175 67,188
----------- -----------
3,151,036 47,995,890
Assets classified as held for
distribution 9 38,186,634 -
----------- -----------
Total Current Assets 41,337,670 47,995,890
----------- -----------
Non-Current Assets
Other financial assets 7 13,309 15,557
Property, plant and equipment 10 10,541 229,983
Exploration & evaluation assets 11 - 5,519,320
Total Non-Current Assets 23,850 5,764,860
----------- -----------
TOTAL ASSETS 41,361,520 53,760,750
----------- -----------
LIABILITIES
Current Liabilities
Trade and other payables 12 77,214 3,266,105
Current tax liabilities - 188,765
Provisions 13 74,086 104,261
----------- -----------
151,300 3,559,131
Liabilities directly associated
with assets classified as held
for distribution 9 8,858,136 -
----------- -----------
Total Current Liabilities 9,009,436 3,559,131
----------- -----------
Non-Current Liabilities
Trade and other payables 12 - 1,106,349
Deferred tax liability 3 1,273,689
- ,689
Total Non-Current Liabilities - 2,380,038
----------- -----------
TOTAL LIABILITIES 9,009,436 5,939,169
----------- -----------
NET ASSETS 32,352,084 47,821,581
=========== ===========
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Cont'd)
AS AT 31 DECEMBER 2013
Note 31 Dec 2013 31 Dec 2012
$ $
EQUITY
Issued capital 14 57,071,050 57,071,050
Reserves 15 1,470,493 8,634,239
Accumulated losses 16 (26,607,683) (17,883,708)
------------ ------------
31,933,860 47,821,581
Less amounts recognised in other
comprehensive income and accumulated
in equity relating to assets classified
as held for distribution 15 418,224 -
------------ ------------
TOTAL EQUITY 32,352,084 47,821,581
============ ============
The above Consolidated Statement of Financial Position should be
read in conjunction with the accompanying notes. All amounts
presented in respect of prior periods have been restated to reflect
the change in presentation currency as set out in the accounting
policies.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2013
Equity-settled
employee Foreign
Issued benefits exchange Accumulated
Capital reserve reserve losses Total
$ $ $ $ $
Balance at 1 July
2012 56,167,213 - 7,427,667 (13,503,736) 50,091,144
----------- --------------- ------------ ------------- -------------
Loss for the period - - - (4,379,972) (4,379,972)
Other comprehensive
income for the
period, net of
tax - - 1,206,572 - 1,206,572
----------- --------------- ------------ ------------- -------------
Total comprehensive
income for the
period - - 1,206,572 (4,379,972) (3,173,400)
----------- --------------- ------------ ------------- -------------
Issue of shares 1,817,970 - - - 1,817,970
Share transaction
costs (6,701) - - - (6,701)
Buy back of shares (907,432) - - - (907,432)
Balance at 31 Dec
2012 57,071,050 - 8,634,239 (17,883,708) 47,821,581
----------- --------------- ------------ ------------- -------------
Loss for the year - - - (8,723,975) (8,723,975)
Other comprehensive
income for the
period, net of
tax - - (6,756,566) - (6,756,566)
Total comprehensive
income for the
period - - (6,756,566) (8,723,975) (15,480,541)
----------- --------------- ------------ ------------- -------------
Recognition of
share-based payments - 11,044 - - 11,044
Balance at 31 Dec
2013 57,071,050 11,044 1,877,673 (26,607,683) 32,352,084
----------- --------------- ------------ ------------- -------------
The above Consolidated Statement of Changes in Equity should be
read in conjunction with the accompanying notes. All amounts
presented in respect of prior periods have been restated to reflect
the change in presentation currency as set out in the accounting
policies.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2013
Note Year Ended Six Months Ended
31 Dec 2013 31 Dec 2012
$
$
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees (7,677,413) (2,811,506)
Mt Leyshon holding costs (699,410) (743,877)
Income tax paid (212,446) (61,664)
Interest received 1,194,868 1,394,445
Net cash flows used in operating
activities 8, 26(b) (7,394,401) (2,222,602)
----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of subsidiary 24 - (2,462,902)
Acquisition of plant and equipment 10 (122,136) (62,823)
Net cash flows used in investing
activities 8 (122,136) (2,525,725)
------------ ----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Share issue costs - (6,698)
Payment for buy-back of shares - (898,065)
Share transaction costs - (9,048)
Net cash flows used in investing
activities 8 - (913,812)
------------ ----------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (7,516,537) (5,662,139)
Cash and cash equivalents at the
beginning of the period 47,253,874 51,828,545
Effects of exchange rate changes
on cash and cash equivalents (3,546,346) 1,087,468
CASH AND CASH EQUIVALENTS AT THE
END OF THE PERIOD 26(a) 36,190,991 47,253,874
The above Consolidated Statement of Cash Flows should be read in
conjunction with the accompanying notes. All amounts presented in
respect of prior periods have been restated to reflect the change
in presentation currency as set out in the accounting policies.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Statement of compliance
Leyshon Resources Limited (the Company) is a limited company
incorporated in Australia whose shares are publicly traded on the
Australian Securities Exchange, and on the AIM Board of the London
Stock Exchange.
The addresses of its registered office and principal place of
business are disclosed in the introduction to the annual
report.
The nature of the operations and principal activities of the
Company are described in the Directors' Report.
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 Accounting Standards.
Compliance with Australian Accounting Standards 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 March 2014.
Change of reporting period - comparative amounts
During the previous period the Company notified the Australian
Securities and Investment Commission (ASIC) under s 323D(4) of the
Corporations Act 2001 that the Company was changing its financial
year end from 30 June to 31 December, effective 31 December 2012.
The change was required to align Leyshon's financial year end with
that of PAPL, following its acquisition on 6 August 2012.
Consequently the comparative financial information is as at 31
December 2012 and for the six month period then ended.
The current financial period therefore covers 1 January 2013 to
31 December 2013. The previous financial period covers 1 July 2012
to 31 December 2012.
Readers of this report should be aware that when comparing
current period figures to comparatives, they are comparing the
current twelve month period to the previous six month period.
In December 2012, the Company also announced a change in
presentation currency from Australian dollars to United States
dollars effective 1 January 2013 (Note 1(d)). All comparative
financial information has been restated to reflect the Company's
results as if they had been historically reported in US$.
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 United States dollars, unless otherwise noted.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
New and revised Standards and Interpretations affecting amounts
reported and/or disclosures in the financial statement
In the current year the Consolidated Entity has adopted all of
the new and revised Standards and Interpretations issued by the
Australian Accounting Standards Board that are relevant to its
operations and effective for the current annual reporting period.
The following Standards and Interpretations were adopted:
- AASB 10 - Consolidated Financial Statements
- AASB 11 - Joint arrangements
- AASB 12 - Disclosure of interest in Other Entities
- AASB 127 - Separate Financial Statements (2011)
- AASB 128 - Investments in Associates and Joint Ventures (2011)
- AASB 13 - Fair value measurement and related AASB 2011-8
Amendments to Australian Accounting Standards arising from AASB
13
- AASB 119 - Employee benefits (2011), AASB 2011-10 Amendments
to Australian Accounting Standards arising from AASB 119 (2011) and
AASB 2011-11 Amendments to AASB 119 (2011)
- AASB 2011 4 - Amendments to Australian Accounting Standards
arising from the Consolidation and Joint Arrangement Standards
- AASB 2011 9 - Amendments to Australian Accounting Standards -
Presentation of other comprehensive income
- AASB 2012 2 - Amendments to Australian Accounting Standards -
Disclosures - Offsetting financial assets and financial liabilities
(Amendments to AASB 7)
- AASB 2012 5 - Amendments to Australian Accounting Standards
arising from Annual Improvements 2009-2011 Cycle
The adoption of these standards did not result in changes in
accounting policies or adjustments to the amounts recognised in the
financial statements. The standards only affected disclosures in
the notes to the financial statements.
Impact of the application of AASB 10
AASB 10 changes the definition of control such that an investor
has control over an investee when a) it has power of the investee
b) it is exposed, or has rights, to variable returns from its
involvement with the investee and c) has the ability to use its
power to affect its returns. All three of these criteria must be
met for an investor to have control over an investee. Previously,
control was defined as the power to govern the financial and
operating policies of an entity so as to obtain benefits from its
activities.
The application of AASB 10 has had no impact on the consolidated
financial statements.
Impact of the application of AASB 11
AASB 11 deals with how a joint arrangement of which two or more
parties have joint control should be classified and accounted for.
Under AASB 11, there are only two types of joint arrangements -
joint operations and joint ventures. The classification of joint
arrangements under AASB 11 is determined based on the rights and
obligations of parties to the joint arrangements by considering the
structure, the legal form of the arrangements, the contractual
terms agreed by the parties to the arrangement, and when relevant,
other facts and circumstances. A joint operation is a joint
arrangement whereby the parties that have joint control of the
arrangement (i.e joint operators) have rights to the assets, and
obligations for the liabilities, relating to the arrangement. A
joint venture is a joint arrangement whereby the parties that have
joint control of the arrangement (i.e joint venturers) have rights
to the net assets of the arrangement. Previously, AASB 31
contemplated three types of joint arrangements - jointly controlled
entities, jointly controlled operations and jointly controlled
assets. The classification of joint arrangement under AASB 31 was
primarily determined based on the legal form of the
arrangement.
The application of AASB 11 should have no impact as there are no
joint arrangements at present
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
New and revised Standards and Interpretations affecting amounts
reported and/or disclosures in the financial statement (cont'd)
Impact of the application of AASB 12
AASB 12 is a new disclosure standard and is applicable to
entities that have interest in subsidiaries, joint arrangements,
associates and/or unconsolidated structured entities. In general,
the application of AASB 12 has resulted in more extensive
disclosures in the consolidated financial statements but this has
not had a material impact on the current year consolidated
financial statements.
Impact of the application of AASB 13
The Consolidated Entity has applied AASB 13 for the first time
in the current year. AASB 13 establishes a single source of
guidance for fair value measurement and disclosures about fair
value measurements. The scope of AASB 13 is broad, the fair value
measurement requirements of AASB 13 apply to both financial
instrument items and non-financial instrument items for which other
AASB require or permit fair value measurements and disclosures
about fair value measurements, except share-based payment
transactions that are within the scope of AASB 2, leasing
transactions within the scope of AASB 17 and measurements that have
some similarities to fair value but are not fair value.
AASB 13 defines fair value as the price that would be received
to sell an asset or paid to transfer a liability in an orderly
transaction in the principal (or most advantageous) market at the
measurement date under current market conditions. Fair value under
AASB 13 is an exit price regardless of whether that price is
directly observable or estimated using another valuation n
technique. Also, AASB 13 includes extensive disclosure
requirements.
AASB 13 requires prospective application from 1 January 2013.
The application of AASB 13 has not had any material impact on the
amounts recognised in the consolidated financial statements.
Impact of the application of AASB 119
In the current year, the Consolidated Entity has applied AASB
119 (as revised in 2011) 'Employee Benefits' and the related
consequential amendments for the first time.
AASB 119 (as revised in 2011) changes the accounting for defined
benefit plans and termination benefits. These are not currently
relevant for the Consolidated Entity and has not had any impact on
the amounts recognised in the consolidated financial
statements.
Impact of the application of AASB 2012-2
The Consolidated Entity has applied the amendments to AASB 7
"Disclosures - Offsetting Financial Assets and Financial
Liabilities' for the first time in the current year. The amendments
to AASB 7 require entities to disclose information about rights of
offset and related arrangements (such as collateral posting
requirements) for financial instruments under an enforceable master
netting agreement or similar arrangement.
The amendments have been applied retrospectively. As the
Consolidated Entity does not have any offsetting arrangements in
place, the application of the amendments has had no material impact
on the disclosures or on the amounts recognised in the consolidated
financial statements.
The Consolidated Entity has not elected to early adopt any new
standards or amendments.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
Adoption of new and revised Accounting Standards
At the date of authorisation of the financial report, a number
of Standards and Interpretations were on issue but not yet
effective:
Affected Standards Effective for annual reporting periods beginning on or
and Interpretations after
---------------------------------------------------------- ----------------------------------------------------------
AASB 9 'Financial Instruments'(December 2009) and AASB 1 January 2017
2009-11 'Amendments to Australian Accounting
Standards arising from AASB 9'
AASB 2012-6 'Amendments to Australian Accounting
Standards - Mandatory Effective Date of AASB
8 and Transition Disclosure'
AASB 2013-9 'Amendments to Australian Accounting
Standards - Conceptual Framework, Materiality
and Financial Instruments'
---------------------------------------------------------- ----------------------------------------------------------
AASB 1031 'Materiality' (2013) 1 January 2014
---------------------------------------------------------- ----------------------------------------------------------
ASB 2011-4 'Amendments to Australian Accounting Standards 1 July 2013
to Remove Individual Key Management
Personnel Disclosure Requirements'
---------------------------------------------------------- ----------------------------------------------------------
AASB 2012-3 'Amendments to Australian Accounting 1 January 2014
Standards - Offsetting Financial Assets and
Financial Liabilities'
---------------------------------------------------------- ----------------------------------------------------------
AASB 2013-3 'Amendments to AASB 136 - Recoverable Amount 1 January 2014
Disclosures for Non-Financial Assets'
---------------------------------------------------------- ----------------------------------------------------------
AASB 2013-4 'Amendments to Australian Accounting 1 January 2014
Standards - Novation of Derivatives and Continuation
of Hedge Accounting'
---------------------------------------------------------- ----------------------------------------------------------
AASB 2013-9 'Amendments to Australian Accounting Part B - Materiality
Standards - Conceptual Framework, Materiality 1 January 2014
and Financial Instruments' Part C - Financial Instruments
1 January 2014
---------------------------------------------------------- ----------------------------------------------------------
Management is currently evaluating the impact that the initial
application of these standards and interpretations will have on the
financial reports of the consolidated entity.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
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
a) Significant accounting judgments
In the process of applying the Group's accounting policies,
management has made the following judgments, apart from those
involving estimations, which have the most significant effect on
the amounts recognised in the financial statements:
Capitalisation of exploration and evaluation expenditure
The Group has capitalised significant exploration and evaluation
expenditure associated with the acquisition of Pacific Asia
Petroleum Limited, on the basis either that this is expected to be
recouped through future successful development or alternatively
sale of the Areas of Interest. If ultimately the area of interest
is abandoned or is not successfully commercialised, the carrying
value of the capitalised exploration and evaluation expenditure
would be written down to its recoverable amount.
Deferred tax assets
The Group expects to have carried forward tax losses which have
not been recognised as deferred tax assets because it is not
considered sufficiently probable at this point in time, that these
losses will be recouped by means of future profits taxable in the
relevant jurisdictions.
b) Significant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often
determined based on estimates and assumptions of future events. The
key estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of certain
assets and liabilities within the next annual reporting period
are:
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
Impairment of capitalised exploration and evaluation
expenditure
The future recoverability of capitalised exploration and
evaluation expenditure associated with the acquisition of Pacific
Asia Petroleum Limited is dependent on a number of factors,
including whether the Group decides to exploit the area of interest
itself or, if not, whether it successfully recovers the related
exploration and evaluation asset through sale.
Factors that could impact the future recoverability include the
level of reserves and resources, future technological changes,
costs of drilling and production, production rates, future legal
and political changes, and changes to commodity prices.
As at 31 December 2013, the carrying value of capitalised
exploration expenditure is $4,721,611, refer to note 11. This
amount was transferred to assets classified as held for
distribution, refer to note 9.
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. The cash assets to be
retained by the Group following the demerger of Leyshon Energy are
considered sufficient to fund its known expenditure commitments
beyond the next twelve months.
(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 31 December 2013 and the results of all
subsidiaries for the year then ended. Leyshon Resources Limited and
its subsidiaries together are referred to as the Group. A list of
subsidiaries is provided in note 21.
Subsidiaries are all those entities (including special purpose
entities) over which the Group has the power to govern the
financial and operating policies so as to obtain benefits from
their activities, generally accompanying a shareholding of more
than one-half of the voting rights. The existence and effect of
potential voting rights that are currently exercisable or
convertible are considered when assessing whether the Group
controls another entity.
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated from
the date that control ceases.
The acquisition method of accounting is used to account for the
acquisition of subsidiaries by the Group (refer to note 1(h)).
Subsequent to initial recognition, investments in subsidiaries are
measured at cost in the Company's financial statements.
Intercompany transactions and balances, and unrealised gains on
transactions between Group companies, are eliminated. Unrealised
losses are also eliminated unless the transaction provides evidence
of the impairment of the asset transferred. Accounting policies of
subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
Non-controlling interests in the results and equity of
subsidiaries are shown separately in the consolidated income
statement and statement of financial position respectively.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
(c) 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.
(d) Foreign Currency Translation
(i) Change in reporting currency
Effective 1 January 2013, the Company changed its presentation
currency from Australian dollars (AUD$) to United States dollars
(US$). The change in presentation currency is to better reflect the
Company's business activities and to improve investors' ability to
compare the Company's financial results with other publicly traded
businesses in the industry. Prior to 1 January 2013, the Company
reported its financial statements in AUD$. A change in presentation
currency is a change in accounting policy which is accounted for
retrospectively. In making this change in presentation currency,
the Company followed the requirements set out in AASB 121 "The
Effects of Change in Foreign Exchange Rates" ("AASB 121"). In
accordance with AABS 121, the financial statements for all periods
presented have been translated into the new presentation currency
using the current rate method. Under this method, the consolidated
statement of Profit or Loss and other comprehensive income and the
consolidated statement of cash flows for each period have been
translated into the presentation currency using the average
exchange rates prevailing during each reporting period.
All assets and liabilities have been translated using the
exchange rate prevailing at the consolidated balance sheets dates.
Shareholders' equity transactions have been translated using the
rates of exchange in effect as of the dates of the various capital
transactions, while shareholders' equity balances from the
translation are included as a separate component of other
comprehensive income. All resulting exchange differences arising
from the translation are included as a separate component of other
comprehensive income. All comparative financial information has
been restated to reflect the Company's results as if they had been
historically reported in US$ and the effect on the consolidated
financial statements resulted in an accumulated other comprehensive
income adjustment which increased the Foreign exchange reserve to
$7.4 million at 1 July 2012.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
(ii) Functional 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 recognised in
Australian dollars, which is the Company's functional currency. The
consolidated financial statements are then translated in United
States dollars, which is the company's presentation currency
(iii) 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.
(iv) 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 Company's
functional currency are translated into the functional 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 earned from cash reserves 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. 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 distribution
Non-current assets and disposal groups are classified as held
for distribution if their carrying amount will be returned to
shareholders through an in-specie distribution rather than through
continuing use. This condition is regarded as met only when the
distribution is highly probable and the asset (or disposal group)
is available for immediate distribution in its present condition.
Management must be committed to the distribution, which should be
expected to qualify for recognition as a completed disposal within
one year from the date of classification.
Non-current assets (and disposal groups) classified as held for
distribution 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 superannuation funds are recognised as an
expense as they become payable.
(r) Provisions
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it
is probable that the Group will be required to settle the
obligation, and a reliable estimate can be made of the amount of
the obligation.
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the end
of the reporting period, taking into account the risks and
uncertainties surrounding the obligation. When a provision is
measured using the cash flows estimated to settle the present
obligation, its carrying amount is the present value of those cash
flows (where the effect of the time value of money is
material).
When some or all of the economic benefits required to settle a
provision are expected to be recovered from a third party, a
receivable is recognised as an asset if it is virtually certain
that reimbursement will be received and the amount of the
receivable can be measured reliably.
(s) 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.
(t) 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.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
(u) 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.
(v) 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.
(w) Goods and Services Tax
Revenues, expenses and assets are recognised net of the amount
of GST except:
-- where the GST incurred on a purchase of goods and services is
not recoverable from the taxation authority, in which case the GST
is recognised as part of the cost of acquisition of the asset or as
part of the expense item as applicable; and
-- receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the
taxation authority is included as part of receivables or payables
in the balance sheet.
Cash flows are included in the Cash Flow Statement on a gross
basis and the GST components of cash flows arising from investing
and financing activities, which are recoverable from, or payable
to, the taxation authority are classified as operating cash
flows.
Commitments and contingencies are disclosed net of the amount of
GST recoverable from, or payable to, the taxation authority.
Year Ended Six Months
31 Dec Ended
2013 31 Dec
2012
2. LOSS FROM OPERATIONS $ $
(a) Revenue
Revenue consisted of the following items:
Interest received/receivable 715,130 1,161,892
Total revenue 715,130 1,161,892
----------- -----------
(b) Loss before income tax from continuing operations
Loss before income tax from continuing operations
has been arrived at after charging the following
losses and expenses:
Depreciation and amortisation - plant and equipment 4,557 5,299
Net movement in provisions for employee entitlements (2,370) 25,951
Exploration expenses 697 203.375
Project evaluation expenses - 150,515
Mt Leyshon holding costs 249,548 234,998
Foreign exchange (gain)/loss (352,774) 14,898
Share-based payments 11,044 -
Rental expense relating to operating leases (minimum
lease payments) 50,528 23,824
Directors fees 278,971 118,014
Consultancy 385,200 209,405
Legal fees 353,303 78,796
3. INCOME TAX
Income tax expense
Current tax 10,095 70,257
Deferred tax - -
----------- -----------
10,095 70,257
----------- -----------
Numerical reconciliation of income tax expense to prima facie
tax payable
Loss before income tax expense from continuing
operations (1,192,374) (334,987)
Loss before income tax expense from discontinued
operations (7,531,601) (4,044,985)
----------- -----------
Loss before income tax expense (8,723,975) (4,379,972)
Tax at the Australian tax rate of 30% (31 December
2012: 30%) (2,617,193) (1,313,992)
Tax effect of amounts which are not deductible
in calculating taxable income:
Other non-deductible expenditure (647,358) 89,277
----------- -----------
(3,264,551) (1,224,715)
Tax losses not brought to account 3,274,646 1,294,972
----------- -----------
Income tax expense 10,095 70,257
=========== ===========
Current tax and income tax expense relate to assessable income
in China Metals Pty Ltd as the Group is not consolidated for
tax.
Year Ended Six Months
31 Dec Ended
2013 31 Dec
2012
$ $
3. INCOME TAX (Cont'd)
Deferred tax liabilities
The balance comprises temporary differences attributable
to:
Fair value adjustments on acquisition of subsidiary
(i) -1,273,689
-1,273,689
---------
(i) The deferred tax liability arises upon adoption of the
balance sheet method for the acquisition of PAPL as required by
AASB 112 Income Taxes. Although this does not represent a cash
liability payable by the controlled entity, nonetheless the
adoption of AASB 112 requires that it be brought to account. On the
basis that the controlled entity receives revenue in the future
from its operations in China, it will receive an income tax benefit
to its Income Statement representing the amortization of the
deferred tax liability in line with the amortization of the
Exploration and Evaluation expenditure which has been carried
forward in respect of this asset.
Movements
Opening balance at start of period 1,273,689 -
Arising on business combination - 1,273,689
Foreign exchange movement (184,807)
Reclassification to assets held for distribution 9(1,089,602)
----------- ---------
Closing balance at 31 December - 1,273,689
----------- ---------
Unrecognised Deferred Tax Balances
The following deferred tax assets have not been brought to
account as assets:
Tax losses - revenue 14,158,169 13,032,553
14,158,169 13,032,553
----------- ----------
Movements
Opening balance at start of period 13,032,553 11,520,156
Tax losses not brought to account during the
period 3,271,616 1,273,896
Foreign exchange movement (2,146,000) 238,501
Closing balance at 31 December 14,158,169 13,032,553
----------- ----------
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 Group for tax purposes. The Board will review this
position annually, before lodging of that year's income tax
return.
Year Ended Six Months
Ended
31 Dec 31 Dec
2013 2012
$
$
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 79,805 43,097
Other non-audit services
- Taxation advice 25,683 -
--------- -----------
Total remuneration 105,488 43,097
--------- -----------
31 Dec 31 Dec
2013 2012
5. TRADE AND OTHER RECEIVABLES $ $
Current
Amounts relating to:
- interest receivable - 515,007
- other (1) 35,336 159,821
--------- --------
35,336 674,828
========= ========
(1) Other receivables comprise office rent security deposits and staff expense advances.
Refer note 28 for disclosures on interest rate, foreign
exchange, liquidity and credit risk, including aging and
recoverability of trade and other receivables.
6. OTHER ASSETS
Current
Prepayments 20,175 67,188
======= =======
7. OTHER FINANCIAL ASSETS
Non-current
Shares in other entities 1 1
Security deposits 13,308 15,556
----------------- -----------------
13,309 15,557
================= =================
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. DISCONTINUED OPERATIONS
On 13 September 2013, the Company announced that it would seek
shareholder and regulatory approvals to separate its energy and
mineral businesses. On 9 December 2013 the Company despatched a
Notice of Meeting seeking shareholder approval to demerge its
energy assets via an in-specie distribution to eligible
shareholders of the Company. Shareholders subsequently approved the
demerger on 13 January 2014 and the demerger was implemented on 23
January 2014.
The results of the discontinued operations included in the
Consolidated Statement of Profit or Loss and Other Comprehensive
Income are set out below. The current and comparative period loss
and cash flows relating to the energy business have been presented
below and have been classified as discontinued operations.
Year Ended Six Months
31 Dec Ended
2013 31 Dec
2012
$ $
Loss for the year from discontinued operations
Revenue 747 251
Exploration expenses (8,327,824) (3,224,634)
Exchange gains/(losses) 2,335,170 (127,024)
Other expenses (1,539,694) (693,578)
------------ ------------
Loss before tax (7,531,601) (4,044,985)
Attributable income tax expense - -
Loss for the year from discontinued operations
(attributable to
owners of the Company) (7,531,601) (4,044,985)
------------ ------------
Loss per share from discontinued operations
Basic (cents per share) (3.0) (1.7)
Diluted (cents per share) (3.0) (1.7)
Cash flows from discontinued operations
Net cash outflows from operating activities (5,782,695) (1,866,996)
Net cash outflows from investing activities (122,136) (62,824)
Net cash outflows from financing activities - -
------------ ------------
Net cash outflows (5,904,831) (1,929,820)
------------ ------------
The energy assets have been classified and accounted for at 31
December 2013 as assets held for distribution (see note 9).
9. ASSETS CLASSIFIED AS HELD FOR DISTRIBUTION
As disclosed in Note 8, the Group obtained shareholder approval
on 13 January 2014 to demerge its energy assets via an in-specie
distribution to eligible shareholders of the Company, which was
implemented on 23 January 2014.
9. ASSETS CLASSIFIED AS HELD FOR DISTRIBUTION (Cont'd)
The major classes of assets and liabilities of the energy
business at the end of the reporting period are as follows:
31 Dec 2013
$
Cash and bank balances 33,120,105
Trade and other receivables 100,579
Property, plant and equipment 207,278
Exploration & evaluation assets 4,721,611
Other assets 37,061
---------------------
Assets classified as held for distribution 38,186,634
---------------------
Trade and other payables 7,726,308
Provisions 42,226
Deferred tax liabilities 1,089,602
---------------------
Liabilities associated with assets classified as held
for distribution 8,858,136
---------------------
Net assets classified as held for distribution 29,328,498
---------------------
Amounts recognised directly in equity relating to assets
classified as held for distribution 418,224
---------------------
31 Dec 31 Dec
2013 2012
$ $
10. PROPERTY, PLANT AND EQUIPMENT
Plant & equipment
At cost 111,221 398,487
Accumulated depreciation (100,680) (168,504)
Total plant and equipment (Note 10(a)) 10,541 229,983
========= =========
(a) Reconciliation
Plant and Equipment
Carrying amount at beginning of year 229,983 24,048
Additions 82,763 63,370
Additions through business combination - 156,555
Depreciation expense (48,078) (14,007)
Reclassification to assets held for distribution (207,278) -
Foreign exchange movement (46,849) 17
--------- ---------
Total plant & equipment 10,541 229,983
--------- ---------
31 Dec 31 Dec
2013 2012
$ $
11. EXPLORATION AND EVALUATION ASSETS
Current
Balance brought forward 5,519,320 -
Additions through business combination - 5,526,484
Foreign exchange movement (797,709) (7,164)
Reclassification to assets held for distribution (4,721,611) -
Closing balance - 5,519,320
============== ============
The Group has exploration and evaluation assets in the Ordos Gas
Basin in Central China. Recoverability of the carrying amount of
exploration and evaluation assets is dependent on the successful
development and commercial exploitation, or alternatively the sale,
of the respective areas of interest. Refer note 1 for further
information on the recoverability of this asset.
In July 2012, Leyshon acquired 100% of Pacific Asia Petroleum
Limited (PAPL), which owns a 100% interest in the Zijinshan
Production Sharing Contract (PSC), which is located on the eastern
fringe of the prolific Ordos Gas Basin in Central China. Upon
acquisition of PAPL, an exploration and evaluation asset of
$5,526,484 was recognised by the Group. Refer note 24 for further
information in relation to the acquisition of PAPL. Exploration and
evaluation expenditure subsequent to the acquisition is expensed
until it is determined that expenditures are expected to be
recouped and an asset is recognised, refer note 1(v).
At 31 December 2013, the exploration and evaluation assets
associated with PAPL were reclassified as assets held for
distribution (Note 9) in recognition of the decision to seek
shareholder approval for the demerger of the Company's energy
assets via an in-specie distribution (Note 8) to eligible
shareholders.
12. TRADE AND OTHER PAYABLES
Current
Trade creditors 40,786 250,704
Accruals 36,428 2,497,169
Mt Leyshon Compensation Agreements - 518,182
--------- ------------
77,214 3,266,105
========= ============
Non-Current
Mt Leyshon Compensation Agreements - 1,106,349
--------- ------------
- 1,106,349
========= ============
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.
Refer to note 30(d) for further information concerning amounts
due in relation to the Mt Leyshon compensation agreements.
Refer note 28 for disclosures on foreign exchange and liquidity
risk.
13. PROVISIONS
Employee benefits 74,086 104,261
======= ========
31 Dec 31 Dec
2013
$ 2012
14. ISSUED CAPITAL $
(a) Issued capital
249,457,212 (31 Dec 2012: 249,457,212) fully
paid ordinary shares 57,071,050 57,071,050
============= ===========
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 were as follows (Group and
Company):-
Date Details Ordinary Shares Ordinary Shares
(Number) ($)
---------- ------------------------------------- ---------------- ----------------
1/07/12 Opening Balance 244,311,383 56,167,213
6/08/12 Share issue - PAPL acquisition (i) 10,000,000 1,817,970
Share issue costs (6,701)
4/10/12 Buy-back of shares (ii) (4,854,171) (898,381)
Share buy-back costs (9,051)
31/12/12 Closing Balance 249,457,212 57,071,050
---------------- ----------------
31/12/13 Closing Balance 249,457,212 57,071,050
---------------- ----------------
Note
(i) On 6 August 2012, the Company issued 10,000,000 fully paid
ordinary shares as part of the consideration for the acquisition of
PAPL from Houston based CAMAC Energy Inc, refer note 24 for further
information.
(ii) From 10 July 2012 to 4 October 2012, the Company purchased
4,854,171 fully paid ordinary shares that were acquired in an on
market share buy-back at an average price of A$0.178 per share.
These treasury shares were subsequently cancelled on 5 November
2012.
(iii) Fully paid ordinary shares carry one vote per share and carry the right to dividends.
(iv) During 2013, the Company agreed to issue 5,000,000
performance rights to Key Management Personnel, however the
officers concerned agreed to forego their entitlement should the
demerger of the Company's energy assets proceed. The demerger was
completed on 23 January 2014 and accordingly the performance rights
have not been and will not be issued.
31 Dec 31 Dec
2013 2012
15. RESERVES $ $
Share-based payment reserve 11,044 -
Foreign currency translation reserve 1,877,673 8,634,238
1,888,717 8,634,238
---------- ----------
Less amounts recognised in other comprehensive
income and accumulated in equity relating
to assets classified as held for distribution (418,224) -
1,470,493 8,634,238
---------- ----------
The amounts recognised in other comprehensive income and
accumulated in equity relating to assets classified as held for
distribution relates to foreign exchange on the translation of
foreign operations
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
Share-based payment reserve
The share-based payment reserve is used to recognise the fair
value of services provided to the Company in return for the issue
of equity-based payments in the Company.
Foreign currency translation reserve
The foreign currency translation reserve recognises exchange
differences that arise from translation of foreign controlled
entities into the Group's functional currency and from translation
from the functional currency to the presentation currency for
reporting. Exchange differences arising from translation of foreign
controlled entities into the functional currency are taken to the
foreign currency translation reserve as described in note 1(d). The
accumulated exchange difference is recognised in profit or loss
when the net investment is disposed of.
Foreign exchange translation reserve relating
to translation of foreign operations (412,110) 153,856
Foreign exchange translation reserve relating
to translation into presentation currency 2,289,783 8,480,382
1,877,673 8,634,238
---------- ----------
16. ACCUMULATED LOSSES
Balance at the beginning of the financial
year (17,883,708) (13,503,736)
Net loss attributable to members of Leyshon
Resources (8,723,975) (4,379,972)
Balance at the end of the financial period (26,607,683) (17,883,708)
============= =============
Adjusted franking account balance (tax
paid basis) 6,269,331 7,328,524
============= =============
Year Ended Six Months
31 Dec 2013 Ended
31 Dec 2012
17. EARNINGS PER SHARE $ $
From continuing and discontinued operations
Basic loss per share (cents per share) (3.5) (1.8)
Diluted loss per share (cents per share) (3.5) (1.8)
From continuing operations:
Basic loss per share (cents per share) (0.5) (0.1)
Diluted loss per share (cents per share) (0.5) (0.1)
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:
From continuing and discontinued operations:
Net loss used in calculating basic earnings
per share (8,723,975) (4,379,972)
------------ ------------
Earnings used in calculating basic and diluted
earnings per share (8,723,975) (4,379,972)
------------ ------------
From continuing operations:
Net loss used in calculating basic earnings
per share (1,192,374) (334,987)
------------ ------------
Earnings used in calculating basic and diluted
earnings per share (1,192,374) (334,987)
------------ ------------
Number of Number of
Shares shares
31 Dec 2013 31 Dec 2012
Weighted average number of ordinary shares
used in calculating basic earnings per share 249,457,212 248,758,590
Effect of dilutive securities - -
Adjusted weighted average number of ordinary
shares and potential ordinary shares used
in calculating diluted earnings per share 249,457,212 248,758,590
============ ============
(a) Conversions, calls, subscriptions or issues after 31
December 2013
There have been no conversions to, calls of, or subscriptions
for ordinary shares or issues of potential ordinary shares since
the reporting date and before the completion of this financial
report.
(b) Non-dilutive securities
There were 5,000,000 (31 December 2012: nil) potential ordinary
shares excluded from the weighted average number of ordinary shares
used in the calculation of diluted earnings per share. These have
not been taken into account because they would not have a dilutive
effect on earnings per share as calculated in accordance with AASB
133.
18. DIVIDENDS PAID OR PROVIDED FOR
No dividends have been paid or provided for during the year (Dec
2012: nil).
19. COMMITMENTS FOR EXPENDITURE AND CONTINGENT LIABILITIES
There are no commitments for expenditure at 31 December 2013 (31
December 2012: nil). Refer to note 30(d) for a discussion around
contingent liabilities for the parent entity, Leyshon Resources
Limited.
20. LEASE COMMITMENTS
Operating leases
Leasing arrangements
The operating leases relate to the lease of an office in Beijing,
China and an office in Perth, Australia. The current lease in
Beijing is for a period of two years commencing 1 November 2012
and the lease in Perth is for a period of 1 year commencing 1
September 2013. The Group does not have an option to acquire the
leased assets at the expiry of the lease period.
31 Dec 31 Dec
2013 2012
$ $
Non-cancellable operating leases
Not longer than 1 year 279,970 355,046
Longer than 1 year and not longer than 5 years - 261,215
Longer than 5 years - -
---------- ---------
279,970 616,261
========== =========
21. SUBSIDIARIES
Name of Entity Country of Class of Equity Holding
Incorporation Shares
31 Dec 31 Dec
2013 2012
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
Leyshon Energy Limited United Kingdom Ordinary 100 100
British Virgin
Leyshon Energy Limited (1) Islands Ordinary 100 100
Pacific Asia Petroleum, Limited
(1) Hong Kong Ordinary 100 100
Pacific Asia Petroleum (HK)
Ltd (1) Hong Kong Ordinary 100 100
(1) These entities were demerged from the Group on 23 January
2014.
22. SEGMENT INFORMATION
At the end of the year, the Group had two operating segments,
being the exploration for unconventional gas in China and
exploration for minerals, (the Group's Energy and Minerals
businesses respectively). In relation to the exploration for
unconventional gas in China, the Group had non-current exploration
and evaluation assets of $4,721,611 and property, plant and
equipment of $207,278 located in China. These assets were
transferred to assets held for distribution (Note 9). All other
non-current assets are located in Australia. All the other
necessary reporting disclosures are disclosed elsewhere in the
notes to the financial statements, specifically notes 8 and 9. All
assets, liabilities, revenue and expenses that do not relate to the
Energy business relate to the Group's continuing Minerals
business.
23. RELATED PARTY DISCLOSURES
(a) Equity interests in related parties
Equity interests in subsidiaries
Details of the percentage of ordinary shares held in
subsidiaries are disclosed in note 21 to the financial
statements.
(b) Key management personnel compensation
The directors' and key management personnel of the Group during
the year were as follows. Unless otherwise specified each person
held their position for the full financial year.
-- Richard Seville (Non Executive Director, Chairman from 25 November 2013)
-- Paul C Atherley (Managing Director)
-- Andrew J Berry III (Non Executive Director)
-- John WS Fletcher (Chairman) - resigned 25 November 2013
-- Peter Niu - Chief Financial Officer, Leyshon Resources Limited
-- Frank Fu - Chief Operating Officer
-- Murray Wylie - Company Secretary
The aggregate compensation made to key management personnel of
the Company and the Group is set out below:
Year Ended Six Months
31 Dec 2013 Ended
31 Dec
2012
$ $
Short-term employee benefits 1,952,646 628,597
Post-employment benefits 22,737 7,024
Termination benefits - -
Share-based payments 11,044 -
------------- -----------
1,986,427 635,621
============= ===========
Details of individual key management personnel compensation are
disclosed in the Remuneration Report.
23. RELATED PARTY DISCLOSURES (cont'd)
(c) Key management personnel equity holdings
Fully paid ordinary shares of Leyshon Resources
Balance Purchases Received Other changes(i) Disposals Balance
at the start on exercise at the end
of the period of options of the period
31 Dec 2013
Mr Paul Atherley 29,530,000 1,800,000 - - - 31,330,000
Mr John Fletcher
(1) 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 Frank Fu - - - - - -
Mr Murray Wylie - - - - - -
31 Dec 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 - - - - - -
(1) Mr Fletcher resigned on 25 November 2013
Options
There were no options on issue during the year ended 31 December
2013 (six months to 31 December 2012: nil).
Performance rights
During the year, Company agreed to issue 5,000,000 performance
rights to Key Management Personnel as Long Term Incentive payments,
however the officers concerned agreed to forego their entitlement
should the demerger of the Company's energy assets proceed. The
demerger was completed on 23 January 2014 and accordingly the
performance rights will not be issued.
Share-based payments were recognised in relation to these
performance rights to record the proportional expense at 31
December 2013 in the event that the demerger did not proceed.
(d) Other transactions with key management personnel (and their
related parties) of Leyshon Resources
During the year, Mr Fletcher received consulting fees of $19,251
for business advisory services provided in relation to potential
merger and acquisition opportunities. There were no other
transactions with key management personnel (and their related
parties) during the year (six months to 31 December 2013: nil).
(e) Parent entity
The parent entity in the Group and the ultimate parent entity is
Leyshon Resources Limited.
24. BUSINESS COMBINATIONS
Subsidiaries Acquired
Principal Date of Proportion Consideration
activity Acquisition of shares Transferred
acquired
(%) $
Year ended 31 December
2013
No business combinations occurred during the year ended 31
December 2013
Six months ended 31 Dec.
2012
Pacific Asia Petroleum Unconventional 22 July
Limited gas exploration 2012 100 4,371,027
With effect from 22 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 have been accounted for using
the acquisition method of accounting.
The book value and provisional Note Book value Fair value Fair value
fair value of the assets and liabilities adjustments on acquisition
acquired were as follows:
$ $ $
Cash and cash equivalents 90,793 - 90,793
Other debtors 60,505 - 60,505
Property, plant and equipment 156,555 - 156,555
Exploration and evaluation asset - 5,526,484 5,526,484
Trade and other payables (187,968) - (187,968)
Deferred tax liability recognised
on acquisition - (1,275,342) (1,275,342)
---------------
Fair value of net identifiable
assets acquired 119,885 4,251,142 4,371,027
Total purchase consideration comprises:
Consideration in cash and cash
equivalents 2,553,695
Issue of Ordinary Shares (i) 1,817,332
---------------
4,371,027
===============
(i) 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 A$0.175 per share.
(ii) The effective date of the acquisition for accounting purposes is 22 July 2012.
24. BUSINESS COMBINATIONS (cont'd)
$
Cash outflow on acquisition:
Consideration settled in cash and cash
equivalents 2,533,695
Less cash and cash equivalents acquired (90,793)
------------
Net cash outflow on acquisition 2,462,902
------------
25. SUBSEQUENT EVENTS AFTER BALANCE DATE
On 13 January 2014, shareholders approved the demerger of the
Company's energy assets via an in-specie distribution of Leyshon
Energy shares on a one-for-one basis to existing Leyshon Resources
shareholders, The in-specie distribution was completed on 23
January 2014 and Leyshon Energy commenced trading on AIM on the
same day.
On 14 February 2014. Mr Corey Nolan was appointed Managing
Director of Leyshon Resources. Mr Paul Atherley resigned from his
position as Managing Director of Leyshon Resources on the same day
to concentrate on his role as Managing Director of Leyshon Energy.
Mr Atherley remains on the Board of Leyshon Resources as a
non-executive director.
There were no other significant events occurring after balance
date requiring disclosure in the financial statements.
26. notes to the STATEMENT OF CASH FLOWs
(a) Reconciliation of cash and cash equivalents
Cash and cash equivalents at the end of the financial period as
shown in the statement of cash flows is reconciled to the related
items in the statement of financial position as follows:
31 Dec 2013 31 Dec
2012
$ $
Cash and bank balances relating to continuing
operations 3,070,886 47,253,874
Cash and bank balances included in a disposal
group held for distribution (Note 9) 33,120,105 -
------------- -----------
36,190,991 47,253,874
============= ===========
26. NOTES TO THE STATEMENT OF CASH FLOWS (cont'd)
(b) Reconciliation of loss for the year to net cash provided (used) by operating activities
Year Ended Six Months
31 Dec 2013 Ended
31 Dec
2012
$ $
(Loss)/profit for the period (8,723,975) (4,379,972)
Depreciation and amortisation 48,078 14,007
(Decrease)/increase in provision for employee
entitlements 29,484 26,840
Unrealised foreign exchange differences (2,687,944) 141,616
Share based payments 11,044 -
(Increase)/decrease in trade and other
receivables and other assets 480,131 176,334
(Decrease)/increase in payables 3,448,781 1,798,573
Net cash used by operating activities (7,394,401) (2,222,602)
============ ===============
(c) Non cash transactions
31 December 2013
During the financial year there were no non cash
transactions.
31 December 2012
During the six months to 31 December 2013 there were 10,000,000
fully paid ordinary shares issued as part consideration for the
acquisition of PAPL, refer note 24 for further information.
27. JOINTLY CONTROLLED ENTITY
The Group was not a venturer in any jointly controlled entities
at 31 December 2013 (31 December 2012: nil).
Through PAPL, the Group held a 100% interest in the Zijinshan
Production Sharing Contract ("PSC") with PetroChina Coal Bed
Methane Company Limited (PCCBM). 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.
The Group's interest in PAPL and the Zijinshan PSC ceased following
the demerger of its energy assets into Leyshon Energy Limited on 23
January 2014 (Note 9).
28. 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.
28. FINANCIAL RISK MANAGEMENT (Cont'd)
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
Group. The Group 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 Group measures credit risk on
a fair value basis. The Group does not have any significant credit
risk exposure to any single counter-party.
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:
31 Dec 2013 31 Dec 2012
$ $
Loans and receivables 1,427,582 690,385
Cash and cash equivalents 3,070,886 47,253,874
4,498,468 47,944,258
============ ============
Impairment losses
As at 31 December 2013 none of the Groups' other receivables are
past due or impaired (31 Dec 2012: nil)
28. FINANCIAL RISK MANAGEMENT (cont'd)
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.
After the demerger of Leyshon Energy in January 2014, Leyshon
Resources will retain around $3 million cash. With a strong cash
position and minimal expenditure commitments, it is unlikely that
the Group will need to raise additional capital in the next 12
months to meet its currently known obligations.
The following are the maturities of financial assets including
estimated interest receipts and excluding the impact of netting
agreements of the Group:
31 Dec
2013 31 Dec 2012
$ $
Less than 6 months 36,326,906 47,928,702
6 months to 1 year - -
1 to 5 years - -
Over 5 years - -
---------------- -----------------
36,326,906 47,928,702
================ =================
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 3,331,186 3,454,871
6 months to 1 year - -
1 to 5 years - 1,140,842
Over 5 years - -
--------------- ---------------
3,331,186 4,595,713
=============== ===============
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.
28. FINANCIAL RISK MANAGEMENT (cont'd)
The Group has not entered into any derivative financial
instruments to hedge such transactions. The Group has adopted a
policy of maintaining the majority of its available cash and cash
equivalents in USD to minimise currency risk.
The Group's investments in its subsidiaries are not hedged as
those currency positions are considered to be long term in
nature.
Exposure to Currency Risk
The Group's exposure to foreign currency risk at balance date
based on notional amounts was as follows:
$
-------------------------------------------------------------------
RMB USD HKD GBP Total
31 Dec 2013
Financial Assets
Cash and cash equivalents 164,910 35,808,332 27,352 292 36,000,886
Receivables 113,595 - - - 113,595
Financial Liabilities
Amortised cost (6,313,275) - - - (6,313,275)
Net balance sheet
exposure 6,034,770 35,808,332 27,352 292 29,801,206
============== ============= ========= ========== =============
31 Dec 2012
Financial Assets
Cash and cash equivalents 213,317 9,112,077 69,353 8,066 9,402,813
Receivables 120,281 - - - 120,281
Financial Liabilities
Amortised cost (2,496,897) - (12,287) (2,509,184)
Net balance sheet
exposure (2,163,299) 9,112,077 69,353 (4,221) 7,013,910
============== ============= ========= ========== =============
Sensitivity analysis
A 20 percent strengthening of the Australian dollar against the
following currencies at 31 December 2013 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 31 December 2012.
Other Equity Profit/(loss)
31 Dec 2013 $ $
RMB - 27,531
USD - 7,121,281
HKD - 5,390
GBP - 58
-------------- --------------
- 7,154,260
============================= ==============
28. FINANCIAL RISK MANAGEMENT (cont'd)
Other Equity Profit/(loss)
31 Dec 2012 $ $
RMB - 25,434
USD - 1,609,321
HKD - 13,278
GBP - (844)
-------------- --------------
- 1,674,819
============================= ==============
A 20 percent weakening of the Australian dollar against the
above currencies at 31 December 2012 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 has adopted a policy of ensuring that as far as
possible it maintains excess cash and cash equivalents in USD
denominated accounts available at call. These accounts currently
earn low interest.
Weighted
Average Effective
Interest Variable
Rate Interest Fixed Interest
Rate Rate Total
% $ $ $
31 Dec 2013
Financial Assets
Cash and cash equivalents 0.31% 36,190,991 - 36,190,991
Financial Liabilities
Financial liabilities - - -
----------- --------------- -----------
36,190,991 - 36,190,991
=========== =============== ===========
31 Dec 2012
Financial Assets
Cash and cash equivalents 3.90% 47,253,874 - 47,253,874
Financial Liabilities
Financial liabilities - - -
----------- --------------- -----------
47,253,874 - 47,253,874
=========== =============== ===========
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 31 December
2012.
28. FINANCIAL RISK MANAGEMENT (cont'd)
Profit or
Other Equity loss
$ $
------------- ----------
31 Dec 2013
Variable rate instruments 393,422 393,422
============= ==========
31 Dec 2012
Variable rate instruments 473,152 473,152
============= ==========
Commodity Price Risk
The Group is still operating primarily in the exploration and
evaluation phase and accordingly the Group's financial assets and
liabilities are not yet subject to commodity price risk.
Capital Management
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern and to maintain
a strong capital base sufficient to maintain future exploration and
development of its projects. In order to maintain or adjust the
capital structure, the Group may return capital to shareholders,
issue new shares or sell assets to reduce debt. The Group's focus
has been to raise sufficient funds through equity to fund
exploration and evaluation activities.
There were no changes in the Group's approach to capital
management during the year. Risk management policies and procedures
are established with regular monitoring and reporting.
Neither the Company nor any of its subsidiaries are subject to
externally imposed capital requirements.
The capital structure of the Group consists of equity
attributable to equity holders of the parent, comprising issued
capital, reserves and retained losses as disclosed in Notes 14, 15
and 16 respectively.
29. 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 May 2013, 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.
31 Dec 2013
During the year, the Company agreed to issue 2,500,000
performance rights to Mr Atherley, 1,500,000 performance rights to
Mr Niu and 1,000,000 to Mr Fu. Shareholder approval was obtained
for Mr Atherley's performance rights on 31 May 2013.
29. SHARE BASED PAYMENTS (Cont'd)
Mr Atherley, Mr Fu and Mr Niu subsequently agreed in writing to
forego their performance rights conditional upon the successful
demerger of the Group's energy assets and subsequent listing of
Leyshon Energy Limited on London's AIM exchange. This occurred on
23 January 2014. As a result these performance rights have not been
and will not be issued.
Each performance right would be valid for five years and would
entitle the holder to one free fully paid ordinary share in Leyshon
Resources Limited. The rights would vest upon achievement of set
performance milestones in relation to the Zijinshan PSC. 50% would
vest when pilot gas production commenced, 25 % after obtaining
approval of a Chinese Reserves Report and the final 25% following
approval of the Overall Development Plan.
31 Dec 2012
There were no share based payments in existence during the
period.
Fair value of performance rights granted in the year
The following table illustrates the number (No.) and weighted
average exercise prices of Performance Rights granted as share
based payments and outstanding at 31 December 2013.
Number Exercise Deemed grant Earliest Latest exercise Fair value
of performance price date (1) exercise date at grant
rights date date
$
P Atherley 2,500,000 Nil 31 May 2013 30 June 2014 31 May 2018 0.023
P Nui 1,500,000 Nil 9 July 2013 30 June 2014 9 July 2018 0.017
F Fu 1,000,000 Nil 9 July 2013 30 June 2014 9 July 2018 0.017
(1) No performance rights were issued by the Company during the
year. For accounting purposes, pursuant to AASB 2 "Share-based
Payment", performance rights for Mr Atherley are deemed to have
been granted at the date of shareholder approval and performance
rights for Mr Nui and Mr Fu are deemed to have been granted at
execution of revised employment agreements.
All of the Performance Rights were issued under the terms of the
Company's Performance Rights Plan. Under the terms of the
Performance Rights Plan, the above performance rights are only
exercisable once the respective performance hurdles have been met.
All performance hurdles relate to the Zijinshan Gas Project.
-- 50% (2,500,000) performance rights are exercisable following
the commencement of Pilot Production under a Pilot Development
Programme approved by the relevant Chinese authorities. This is
considered an important step forward from the exploration phase,
both technically and commercially, with the generation of income
from associated gas sales.
-- 25% (1,250,000) performance rights are exercisable after
approval is obtained for a Chinese Reserves Report. This is an
important step for the project in determining the development
strategy and is an essential requirement for obtaining approval of
the Overall Development Plan.
-- 25% (1,250,000) performance rights are exercisable after
approval of the Overall Development Plan by the relevant Chinese
authorities. This incorporates the detailed plans for construction
and development of the production wells, associated plant and
environmental and government approvals.
29. SHARE BASED PAYMENTS (Cont'd)
Inputs for the valuation of the performance rights include:
M Atherley P Nui F Fu
Dividend yield (%) Nil Nil Nil
Expected volatility (%) 90% 90% 90%
Risk-free interest rate
(%) 2.75% 2.75% 2.75%
Expected life of performance 5 years 5 years 5 years
right
Exercise price Nil Nil Nil
Share price at grant
date 0.23 0.18 0.18
Valuation date 31 May 2013 9 July 2013 9 July 2013
30. PARENT ENTITY DISCLOSURES
Financial Statements
(a) Financial Position
31 Dec 2013 31 Dec 2012
$ $
Assets
Current assets 36,839,903 45,040,033
Non-current assets 4,331,850 6,052,778
Total assets 41,171,753 51,092,811
Liabilities
Current liabilities 1,471,635 703,027
Non-current liabilities 1,089,603 2,380,020
Total liabilities 2,561,238 3,083,047
Equity
Issued capital 57,071,050 57,071,050
Retained losses (18,460,535) (9,061,286)
Total equity 38,610,515 48,009,764
(b) Financial performance
Loss for the period (9,410,293) (763,283)
Other comprehensive income 11,044 -
Total comprehensive income (9,399,249) (735,003)
(c) Guarantees entered into by the parent
entity in relation to the debts of its subsidiaries - -
30. PARENT ENTITY DISCLOSURES (cont'd)
(d) Contingent liabilities of the Group and
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 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.
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") reached
settlement for the landholder Compensation Agreements in 2011.
The Company will continue to be responsible for its share of ongoing
management costs in relation to the Mount Leyshon assets.
31 Dec 2013 31 Dec 2012
$ $
(e) Commitments for the acquisition of property,
plant and equipment by the parent entity - -
(f) 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 year ended 31 December 2013 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 $7,432,478 (31 December 2012: $9,091,456).
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Woodside Plaza Level 14
240 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 (0) 9365 7007
www.deloitte.com.au
Independent Auditor's Report
to the members of Leyshon Resources Limited
Report on the Financial Report
We have audited the accompanying financial report of Leyshon
Resources Limited, which comprises the statement of financial
position as at 31 December 2013, the statement of profit or loss
and other comprehensive income, the statement of cash flows and the
statement of changes in equity for the year ended on that date,
notes comprising a summary of significant accounting policies and
other explanatory information, and the directors' declaration of
the consolidated entity, comprising the company and the entities it
controlled at the year's end or from time to time during the
financial year as set out on pages 18 to 60.
Directors' Responsibility for the Financial Report
The directors of the company are responsible for the preparation
of the financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the
directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from
material misstatement, whether due to fraud or error. In Note 1,
the directors also state, in accordance with Accounting Standard
AASB 101 Presentation of Financial Statements, that the
consolidated financial statements comply with International
Financial Reporting Standards.
Auditor's Responsibility
Our responsibility is to express an opinion on the financial
report based on our audit. We conducted our audit in accordance
with Australian Auditing Standards. Those standards require that we
comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable
assurance whether the financial report is free from material
misstatement.
An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the financial report. The
procedures selected depend on the auditor's judgement, including
the assessment of the risks of material misstatement of the
financial report, whether due to fraud or error. In making those
risk assessments, the auditor considers internal control, relevant
to the company's preparation of the financial report that gives a
true and fair view, in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the company's
internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness
of accounting estimates made by the directors, as well as
evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit
opinion.
Auditor's Independence Declaration
In conducting our audit, we have complied with the independence
requirements of the Corporations Act 2001. We confirm that the
independence declaration required by the Corporations Act 2001,
which has been given to the directors of Leyshon Resources Limited,
would be in the same terms if given to the directors as at the time
of this auditor's report.
Opinion
In our opinion:
(a) the financial report of Leyshon Resources Limited is in
accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity's
financial position as at 31 December 2013 and of its performance
for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the
Corporations Regulations 2001; and
(b) the consolidated financial statements also comply with
International Financial Reporting Standards as disclosed in Note
1.
Report on the Remuneration Report
We have audited the Remuneration Report included in page 10 to
15 of the directors' report for the year ended 31 December 2013.
The directors of the company are responsible for the preparation
and presentation of the Remuneration Report in accordance with
section 300A of the Corporations Act 2001. Our responsibility is to
express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
Opinion
In our opinion the Remuneration Report of Leyshon Resources
Limited for the year ended 31 December 2013, complies with section
300A of the Corporations Act 2001.
DELOITTE TOUCHE TOHMATSU
David Newman
Partner
Chartered Accountants
Perth, 24 March 2014
Liability limited by a scheme approved under Professional
Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR JIMLTMBITMAI
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