TIDMSTGR
RNS Number : 3176J
Stratmin Global Resources PLC
11 June 2014
StratMin Global Resources Plc
("StratMin" or the "Company")
Final Results for the Year to 31 December 2013
StratMin (AIM: STGR), the graphite exploration and production
company with assets in Madagascar, today announces its final
results for the year ending 31 December 2013.
Highlights for the Period
-- Reverse Take Over ('RTO') of Graph Mada Group completed in January 2013.
-- Appointment of Manoli Yannaghas as Managing Director in July 2013.
-- Production of graphite commenced in September 2013.
-- 200 tonnes of graphite sold to Grafitbergbau Kaisersberg of Austria in September 2013.
Post Period Highlights
-- MechProTech Scrubber successfully installed and calibrated at Loharano in March 2014.
-- Scrubber produced positive trial results with an average
carbon content of over 90 per cent.
-- To expand and accelerate the Company's growth strategy in March Stratmin:
o Raised GBP2.5million through institutional and high net worth
investors;
o Appointed Laurie Hunter as Chairman; and
o Strengthened the advisory team through the appointment of
Strand Hanson as NOMAD and Hume Capital as Broker.
-- Repayment of all debt including the GBP750,000 Darwin
Convertible Loan Instrument completed, following the fundraise in
March 2014.
-- Commercial Production in April 2014 of 107 tonnes of large flake graphite.
Notice of AGM
The Annual General Meeting of the Company will be held at
10.00am on 9 July 2014 at the offices of Speechly Bircham LLP, 6
New Street Square, London EC4A 3LX.
The Notice of AGM has been posted to shareholders and can be
viewed on the Company's website, http://www.stratminglobal.com.
For further information please visit www.stratminglobal.comor
contact:
StratMin Global Resources Plc +44 (0) 20 3691
Manoli Yannaghas (Managing Director) 6160
Strand Hanson (Nomad & Financial Adviser) +44 (0) 20 7409
James Spinney / Ritchie Balmer 3494
Hume Capital Securities Plc (Sole Broker) +44 (0) 20 3693
Jon Belliss / Abigail Wayne 1470
Blytheweigh (Financial PR) +44 (0) 20 7138
Tim Blythe / Halimah Hussain / Camilla Horsfall 3204
CHAIRMAN'S STATEMENT
YEAR TO 31 DECEMBER 2013
As your newly appointed Chairman, I am pleased to present to
shareholders the results for the year ended 31 December 2013.
A summary of the year and an outlook have been provided by
Manoli Yannaghas in his Managing Director's review. A Financial
Review has been provided in the Strategic Report under Financial
Highlights.
Although many improvements have been made over the course of the
last 12 months, we still have some work to do in order to ensure
that we reach positive cash-flow in the near term. This remains our
primary focus and your Board joins me in believing that we are now
well placed to achieve this. With the knowledge thus gained, we
will then be well placed to finance and install a new plant with
greater capacity that will be able to generate the wide margins
that our low cost resource makes possible.
I would like to take this opportunity to thank my predecessor as
Chairman, Gobind Sahney, for all his help with the transition and
wish him well for the future.
Your board continues to seek opportunities and strategies to
enhance shareholder value.
I look forward to providing further news as appropriate in the
near future.
Thank you for your continued support.
Laurie Hunter
Chairman
10 June 2014
MANAGING DIRECTOR'S REVIEW
YEAR TO 31 DECEMBER 2013
Introduction
The start of the year saw Stratmin complete the reverse
acquisition of the Graph Mada Group, with a graphite exploration
and development company in Madagascar, which was completed on 28
January 2013.
Graphite remains a highly desirable mineral. It has been
declared strategic by both the USA and the EU. On the supply side,
China, which is responsible for 70 per cent. of global production,
has not only closed numerous graphite mines to reduce pollution,
thus reducing global production, but it has also imposed
significant taxes on exports. Meanwhile, of the many new mines
predicted to come online around the world, few will make it to
production and even fewer will make it in the near term. On the
demand side, global consumption of natural graphite has more than
doubled in the last decade from c.600,000 tons in 2000 to 1.1MM
tons in 2011. While the long term industrial users of graphite
remain a constant, multiple new technologies from pebble mill
reactors through batteries to graphene are expected to result in a
significant further increase in demand over the next decade. For
these reasons we are confident that we have invested in the right
space.
Review of the year
Although the fundamentals of the Graph Mada properties are
excellent, it became apparent soon after the acquisition was
completed, that the production forecasts made at the time of the
RTO were overly optimistic. The plant was unreliable and the carbon
content of the resulting product uncommercial, rendering it
impossible to reach cash flow breakeven. It was under these
circumstances that I was appointed Managing Director in June 2013
with a mandate to bring the project to profitability as quickly and
economically as possible.
The first step was to carry out a complete suite of
metallurgical tests using the consultants SGS and Mintek to better
understand the make-up of our ore. The results of these tests
allowed us to make the necessary product quality related changes to
the plant. However in spite of a complete reorganisation, the plant
as originally commissioned was unable to produce commercial grade
graphite, thus requiring the addition of a pebble mill, which was
commissioned in late February 2014.
Given the unreliability of the original plant a complete
re-analysis of all the machinery was carried out to assess where
any weaknesses lay. The result was a maintenance plan and a
formalisedspare parts order line capable of improving reliability.
Our technical expertise has also been strengthened by the
engagement of consultants including Promet Dadi, Marsden Gray and
VATO Consulting Geological Services.
Outlook
Today I am very pleased to report that we are in a much better
position than this time last year and that we are now able to
produce up to 93 per cent. carbon graphite. With the large size of
our graphite flakes, this demonstrates that Loharano is able to
produce commercial grade material, which combined with the low cost
nature of the deposit, makes it an extremely exciting project.
The Company's first sale was made in the last quarter of 2013
with 200 tonnes of material to Grafitbergbau of Kaiserberg Austria.
This was a trial shipment at a low grade of under 80% carbon. As
the Company has now started to produce small amounts of commercial
grade material, negotiations to establish medium term sales
contracts on the right commercial terms for the Company are under
way with several potential buyers.
The cash flow breakeven point is expected to be achieved at a
production volume of 300 to 350 tonnes per month. To achieve this
volume a new de-watering supplier is required and the machinery
needed to complete this is expected to arrive on site in July and
be installed during August.
It has not been an easy year but I am confident that we have
made substantive progress. This is apparent not only in the obvious
turn-around of carbon grades being achieved; but also in the
acquisition of skills now available to us internally and the
development of internal structures that did not exist before. I
remain excited about the future for Stratmin and believe we have
the right team and partners to move the business forward into its
next stage and beyond.
Manoli Yannaghas
Managing Director
10 June 2014
STRATEGIC REPORT
YEAR TO 31 DECEMBER 2013
The directors present their strategic report for the Group for
the year ended 31 December 2013.
REVIEW OF THE BUSINESS AND FUTURE DEVELOPMENTS
The start of the year saw Stratmin complete the reverse
acquisition of Graphmada Equity Pte. Limited, the parent of Graph
Mada SARL, a graphite exploration and development company in
Madagascar, which completed on 28 January 2013.
A variety of investments were made in the business during the
period, including direct capital expenditure in the plant and the
capture of new key staff and consultants to help grow the
business.
A further and more detailed review of the Group's business
during the year, together with details of its future plans, is set
out in the Managing Director's Review.
FINANCIAL HIGHLIGHTS
The Group achieved its first sales this year of GBP46,000 but
operating loss increased from GBP363,000 to GBP2,096,000 resulting
in a loss per share of 4.15p (2012: 0.7p), reflecting a move to a
cost base required for a producing mine.
RESULTS AND DIVIDENDS
In 2013, the Group's loss after taxation from continuing
operations was GBP2,507,000 (2012: GBP363,000 loss). The Directors
do not recommend the payment of a dividend (2012: GBPnil).
KEY PERFORMANCE INDICATORS
The key performance indicators are set out below.
GROUP STATISTICS 2013 2012 Change %
-------------------------- ------------ ------------ --------
Net asset value GBP5,142,000 GBP375,000 +1,233%
Net asset value per share 7.35p 4.14p +73%
Closing share price 11.88p 4.8p +148%
Market capitalisation GBP8,306,000 GBP4,332,000 +92%
-------------------------- ------------ ------------ --------
KEY RISKS AND UNCERTAINTIES
Currently the principal risks are two-fold. Firstly, the market
price risk affecting the value of the graphite produced which may
not provide sufficient profit to enable the business to continue to
operate. Secondly, the timing and any delay in getting the graphite
plant into full production. The Company has made a significant
investment during the operational phase in bringing the plant into
production and only once it has achieved a level of production that
results in positive cash flow will it be confident of its long term
viability.
Details of other financial risks and their management are given
in Note 24 to the financial statements.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Details of the Group's financial risk management objectives and
policies are set out in Note 24 to these financial statements.
Manoli Yannaghas
Director
10 June 2014
DIRECTORS' REPORT
YEAR TO 31 DECEMBER 2013
The Directors present their annual report and the audited
financial statements of the Group for the year ended 31 December
2013.
PRINCIPAL ACTIVITY AND BUSINESS REVIEW
The Company's objective has changed from making investments in
meaningful ownership positions of operating companies and assets
that have potential for significant value growth in the natural
resource and extractive industries, to that of a graphite
production and exploration company.
The Company is required by the Companies Act 2006 to include a
business review in this report. The information that fulfils the
requirements of this business review can be found in the Chairman's
Statement and Managing Director's Review on pages 2 and 3
respectively, which are incorporated in this report by
reference.
DIRECTORS
The Board comprised the following directors who served
throughout the year and up to the date of this report save where
disclosed otherwise:
Name Position
Manoli Yannaghas Managing Director
Laurie Hunter Chairman (appointed 12 March 2014)
Non-Executive
Gobind Sahney Chairman (resigned 12 March 2014)
Non-Executive
Jeff Marvin Director
Non-Executive
Marius Pienaar Director (appointed 10 April 2013)
Non-Executive
David Premraj Director (appointed 10 April 2013)
DIRECTORS' INTERESTS
The Directors' interests in the share capital of the Company at
31 December 2013, held either directly or through related parties,
were as follows:
Name of director Number of ordinary shares % of ordinary share capital and Voting Rights
Manoli Yannaghas 37,500 0.05
David Premraj 16,507,763 23.61
Marius Pienaar 18,650,000 26.67
-------------------------- ----------------------------------------------
35,195,263 50,33
-------------------------- ----------------------------------------------
Details of the options granted to or held by the Directors are
as follows:
At 31 December At 31 December
2013 or 2012 or Average Earliest Average
Name of director date of appointment Options Options date of cessation Exercise date of Date of
or former director if later granted lapsed if earlier price exercise expiry
-------------------- -------------------- -------- ------- ------------------ --------- ---------- ---------
Gobind Sahney* 479,040 - - 479,040 22.5p 2/03/2012 1/03/2022
Jeff Marvin* 479,040 - - 479,040 22.5p 2/03/2012 1/03/2022
Martin Kiersnowski 10,000 - - 10,000 213.5p 2/03/2012 1/08/2017
Manoli Yannaghas* - - - - 15.9p 30/09/2014 1/05/2017
Laurie Hunter* - - - - 15.7p 12/03/2014 1/09/2017
*The options granted to Gobind Sahney have since been cancelled
following his resignation from the Company on 12 March 2014.
The options granted to Jeff Marvin are exercisable at any time
from the earliest date of exercise to the expiry date.
Since the year end options over, in aggregate, 7,000,000
ordinary shares of 4p each have been granted to Manoli Yannaghas,
Laurie Hunter, Gobind Sahney and certain employees of the Company.
The options granted have a three year term at a weighted average
exercise price of 15.7 pence per share.
DIRECTORS' REPORT
YEAR TO 31 DECEMBER 2013
DIRECTORS' INTERESTS
Of the 7,000,000 issued since year end, Manoli Yannaghas was
issued with 2,250,000 options which have vesting dates of between
12 March 2014 and 30 September 2014. 1,250,000 of these options are
dependent on a variety of performance criteria.
Also of those 7,000,000 issued since year end Laurie Hunter was
issued with 2,000,000 options, 1,000,000 of which vest on 12 March
2015 or earlier if the Company is taken over.
The Company has made qualifying third party indemnity provisions
for the benefit of the Directors in the form of Directors' and
Officers' Liability insurance during the year which remain in force
at the date of this report.
DONATIONS
The Group did not make any political or charitable donations
during the year (2012: GBPnil).
SUPPLIER PAYMENT POLICY
The Group's policy is to abide by the terms of payment agreed
with its suppliers. It does not follow any specific code or
standard on payment practice. At 31 December 2013, the number of
supplier days outstanding was 27 days (2012: 43 days).
EMPLOYEE CONSULTATION
The Group places considerable value on the involvement of its
employees and has continued to keep them informed on matters
affecting them as employees and on various factors affecting the
performance of the Group. This is achieved through formal and
informal meetings. Equal opportunity is given to all employees
regardless of their sex, age, colour, race, religion or ethnic
origin.
SIGNIFICANT SHAREHOLDINGS
On 22 May 2014 the following were interested in 3 per cent. or
more of the Company's share capital (including Directors, whose
interests are also shown above):
% of ordinary
Number of share capital
Name of shareholder ordinary and voting
shares rights
Caralapati Raghairah Premraj 16,507,763 16.40
Marthinus (Marius) Johannes Hendrik Pienaar 12,150,000 12.07
Mrs Kesava Padmavathi 8,100,000 8.05
Mrs Caryl Melissa Jane Pienaar 6,500,000 6.46
Ghanshyam Champakal 5,025,000 4.99
POST YEAR END EVENTS
On 12 March 2014, the Company completed the placing of
27,777,780 new ordinary shares of 4p each at a price 9p each,
raising in aggregate gross proceeds of approximately GBP2.5
million.
On 28 March 2014, the Company issued warrants to subscribe for
1,688,889 ordinary shares at 9p each, exercisable on or before 28
March 2017 and 12 March 2019.
On 31 March 2014 the Company issued 2,971,419 new ordinary
shares of 4p each to certain directors, consultants and contractors
of the Company in lieu of unpaid salary and fees and to satisfy
certain other existing commitments.
On 7 April 2014 the Company used part of the placing proceeds to
repay the existing Convertible Loan Notes totalling GBP750,000 from
Darwin Strategic Limited together with any accrued interest and
arrangement fees.
DIRECTORS' REPORT
YEAR TO 31 DECEMBER 2013
GOING CONCERN
The Directors have a reasonable expectation that the Group has
adequate resources to continue in operation or existence for the
foreseeable future thus we continue to adopt the going concern
basis in preparing the financial statements. Further details
regarding the adoption of the going concern basis can be found in
note 4 of the financial statements.
DISCLOSURE OF INFORMATION TO THE AUDITORS
In the case of each of the persons who are directors of the
Company at the date when this report is approved:
-- So far as each director is aware, there is no relevant audit
information of which the Company's auditors are unaware; and
-- Each of the directors has taken all steps that they ought to
have taken as a director to make themselves aware of any relevant
audit information and to establish that the auditors are aware of
the information.
This information is given and should be interpreted in
accordance with the provisions of Section 418 of the Companies Act
2006.
AUDITOR
Welbeck Associates have expressed their willingness to continue
in office as auditor and it is expected that a resolution to
reappoint them will be proposed at the next annual general
meeting.
CORPORATE GOVERNANCE
The requirements of the UK Corporate Governance Code are not
mandatory for companies traded on AIM. However, the Directors
recognise the importance of sound corporate governance and have
adopted corporate governance principles which the Directors
consider are appropriate for a company of its size.
BOARD OF DIRECTORS
The Company supports the concept of an effective Board leading
and controlling the Company. The Board of Directors is responsible
for approving Company policy and strategy. It meets regularly and
has a schedule of matters specifically reserved to it for decision.
All Directors have access to advice from independent professionals
at the Company's expense. Training is available for new and
existing Directors as necessary.
The Board consists of one Managing director, Manoli Yannaghas,
the Chairman, Laurie Hunter and three Non-Executive directors, Jeff
Marvin, David Premraj and Marius Pienaar.
Matters which would normally be referred to appointed
committees, such as the AIM Compliance committee, are dealt with by
the full Board.
AUDIT COMMITTEE
The Audit Committee comprises David Premraj (Chairman), Jeff
Marvin and Laurie Hunter. The Committee meets at least twice a year
and is responsible for ensuring the financial performance of the
Group is properly reported on and monitored. It liaises with the
auditor and reviews the reports from the auditor relating to the
accounts.
REMUNERATION COMMITTEE
The Remuneration Committee comprises Laurie Hunter (Chairman),
Jeff Marvin and David Premraj. The Committee meets at least twice a
year and is responsible for reviewing the performance of Executive
Directors and sets the scale and structure of their remuneration on
the basis of their service agreements, with due regard to the
interests of the shareholders and the performance of the Group
DIRECTORS' REPORT
YEAR TO 31 DECEMBER 2013
COMMUNICATIONS WITH SHAREHOLDERS
Communications with shareholders are given a high priority by
the management. In addition to the publication of an annual report
and an interim report, there is regular dialogue with shareholders
and analysts. The Annual General Meeting is viewed as a forum for
communicating with shareholders, particularly private investors.
Shareholders may question the Managing Director and other members
of the Board at the Annual General Meeting.
INTERNAL CONTROL
The Directors acknowledge they are responsible for the Group's
system of internal control and for reviewing the effectiveness of
these systems. The risk management process and systems of internal
control are designed to manage rather than eliminate the risk of
the Group failing to achieve its strategic objectives. It should be
recognised that such systems can only provide reasonable and not
absolute assurance against material misstatement or loss. The Group
has well established procedures which are considered adequate given
the size of the business.
AUDITORS
The Board as a whole considers the appointment of external
auditors, including their independence, specifically including the
nature and scope of non-audit services provided.
REMUNERATION
The remuneration of the directors has been fixed by the Board as
a whole. The Board seeks to provide appropriate reward for the
skill and time commitment required so as to retain the right
calibre of director at a cost to the Company which reflects current
market rates.
Details of directors' fees and of payments made for professional
services rendered are set out in Note 8 to the financial statements
and details of the directors' share options are set out in the
Directors' Report.
By order of the Board on 10(th) June 2014
Manoli Yannaghas
Director
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the report of the
directors and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare Group and Company
financial statements for each financial year. The Directors are
required by the AIM Rules of the London Stock Exchange to prepare
group financial statements in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the European
Union ("EU") and have also elected to prepare the Company financial
statements in accordance with IFRS as adopted by the EU. Under
company law the directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of
the state of affairs and profit or loss of the company and group
for that period. In preparing these financial statements, the
directors are required to:
-- select suitable accounting policies and then apply them consistently
-- make judgments and accounting estimates that are reasonable and prudent
-- state whether applicable IFRSs have been followed, subject to
any material departures disclosed and explained in the financial
statements
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
By order of the Board
Manoli Yannaghas
Director
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF STRATMIN GLOBAL
RESOURCES PLC
We have audited the financial statements of Stratmin Global
Resources plc for the year ended 31 December 2013 which comprise
the group income statement, the group statement of comprehensive
income, the group and parent company statements of changes in
equity, the group and parent company statements of financial
position, the group and parent company statements of cash flows,
and the related notes. The financial reporting framework that has
been applied in the preparation of the group and parent company
financial statements is applicable law and International Financial
Reporting Standards (IFRSs) as adopted by the European Union.
This report is made solely to the Company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
As explained more fully in the statement of directors'
responsibilities set out on page 9, the directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view. Our responsibility
is to audit and express an opinion on the financial statements in
accordance with applicable law and International Standards on
Auditing (UK and Ireland). Those standards require us to comply
with the Auditing Practices Board's (APB's) Ethical Standards for
Auditors.
SCOPE OF THE AUDIT OF THE FINANCIAL STATEMENTS
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the Company's circumstances and have been
consistently applied and adequately disclosed; the reasonableness
of significant accounting estimates made by the directors; and the
overall presentation of the financial statements. In addition, we
read all the financial and non-financial information in the annual
report to identify material inconsistencies with the audited
financial statements. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for
our report.
OPINION ON FINANCIAL STATEMENTS
In our opinion:
-- the financial statements give a true and fair view of the
state of the group's and of the parent company's affairs as at 31
December 2013 and of the group's loss for the year then ended;
-- the group and parent company financial statements have been
properly prepared in accordance with IFRS as adopted by the
European Union; and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
OPINION ON OTHER MATTER PRESCRIBED BY THE COMPANIES ACT 2006
In our opinion the information given in the report of the
directors for the financial year for which the financial statements
are prepared is consistent with the financial statements.
OPINION
Emphasis of Matter - Going Concern
In forming our opinion on the financial statements, which is not
modified, we draw your attention to the disclosures made in note 4
to the financial statements concerning the Company's ability to
continue as a going concern.
These conditions, along with other matters explained in note 4
to the financial statements, indicate the existence of a material
uncertainty which may cast significant doubt about the ability of
the Group and Company to continue as a going concern. The directors
have plans to manage the cash flows of the Company to enable it to
continue as a going concern. These plans include the necessary
additional fundraising required to provide the working capital
requirement for the next 12 months. The financial statements do not
include the adjustments that would result if the Group and Company
was unable to continue as a going concern.
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF STRATMIN GLOBAL
RESOURCES PLC
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if, in
our opinion:
-- adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the parent company financial statements are not in agreement
with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Jonathan Bradley Hoare (Senior statutory auditor)
for and on behalf of Welbeck Associates
Chartered Accountants and Statutory Auditor
London, United Kingdom
10 June 2014
GROUP INCOME STATEMENT
YEAR TO 31 DECEMBER 2013
2013 2012
Notes GBP'000 GBP'000
----------------------------------- ----- -------- --------
Continuing operations
Revenue 46 -
Cost of sales (37) -
Gross profit 9 -
Administrative expenses (2,061) (363)
Other operating expenses 9 (104) -
Operating loss 6 (2,156) (363)
Finance costs 10 (351) -
Loss before tax (2,507) (363)
Tax 11 - -
Loss for the year (2,507) (363)
Loss attributable to owners of the
parent (2,507) (363)
Earnings per share attributable
to owners of the parent 12
From continuing operations
Basic and diluted(pence) 12 (4,15) (0.71)
The accounting policies and notes are an integral part of these
financial statements.
GROUP STATEMENT OF COMPREHENSIVE INCOME
YEAR TO 31 DECEMBER 2013
2013 2012
Notes GBP'000 GBP'000
--------------------------------------------------- ----- -------- --------
Loss for the year (2,507) (363)
Other comprehensive income:
Items that may be subsequently reclassified
to profit and loss:
Exchange differences on translation of foreign
operations (8) -
Market value adjustment to investments 16 (12) -
Other comprehensive income/(expense) for
the period (20) -
Total comprehensive loss for the year attributable
to equity holders of the parent (2,527) (363)
The Company has elected to take the exemption under section 408
of the Companies Act 2006 not to present the parent company pro t
and loss account. The loss for the parent company for the year was
GBP1,959,000 (2012: GBP1,244,000).
The accounting policies and notes are an integral part of these
financial statements.
GROUP AND COMPANY STATEMENTS OF FINANCIAL POSITION
AS AT 31 DECEMBER 2013
GROUP COMPANY
------------------ ------------------
2013 2012 2013 2012
Notes GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ----- -------- -------- -------- --------
Non-Current assets
Goodwill 13 5,012 143 - -
Property, plant and equipment 14 804 269 - -
Investment in subsidiaries 15 - - 26,469 46
Available for sale investments 16 26 - 26 859
Loans to group undertakings 15 - - 1,227 118
5,842 412 27,722 1,023
------------------------------- ----- -------- -------- -------- --------
Current assets
Inventories 17 228 69 - -
Trade and other receivables 18 190 64 539 60
Cash and cash equivalents 19 420 4 350 180
838 137 889 240
--------
Current liabilities
Trade and other payables 20 663 174 562 135
Short term borrowings 21 847 - 847 -
1,510 174 1,409 135
------------------------------- ----- -------- -------- -------- --------
Non-Current liabilities
Decommissioning obligation 28 28 - - -
------------------------------- ----- -------- -------- -------- --------
Net assets/(liabilities) 5,142 375 27,202 1,128
------------------------------- ----- -------- -------- -------- --------
Equity
Share capital 26 2,797 2,040 2,797 362
Share premium account 30,167 804 30,167 28,170
Merger reserve 27 23,460 - 23,460 -
Reverse acquisition reserve 23 (48,478) (2,039) - -
Investment reserve (12) - (679) (667)
Other reserve 145 - 153 -
Retained earnings (2,937) (430) (28,696) (26,737)
Total equity 5,142 375 27,202 1,128
------------------------------- ----- -------- -------- -------- --------
These financial statements were approved by the Board of
Directors on 10(th) June 2014.
Signed on behalf of the Board by:
Laurie Hunter Manoli Yannaghas
Director Director
Company number: 05173250
The accounting policies and notes are an integral part of these
financial statements
GROUP STATEMENT OF CHANGES IN EQUITY
YEAR TO 31 DECEMBER 2013
Reverse
Share Merger acquisition Investment Other Retained
capital Share Premium reserve reserve reserves reserves earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- -------- ------------- --------- -------------- ----------- ---------- --------- -------
Balance at 1 January
2012 2,039 - - (2,039) - - (67) (67)
Loss for the year and
total
comprehensive income
for
the period - - - - - - (363) (363)
Net proceeds of share
issues 1 804 - - - - - 805
--------------------- -------- ------------- --------- -------------- ----------- ---------- --------- -------
Balance at 31
December 2012 2,040 804 - (2,039) - - (430) 375
Total comprehensive
income
for the period - - - - (12) (8) (2,507) (2,527)
Adjustment for
reverse acquisition 363 27,356 23,460 (46,439) - - - 4,740
Net proceeds of share
issues 394 2,127 - - - - - 2,521
Share issue costs - (120) - - - - - (120)
Issuance of warrants
in the
period - - - - - 153 - 153
Balance at 31
December 2013 2,797 30,167 23,460 (48,478) (12) 145 (2,937) 5,142
The Company completed the acquisition of Graphmada Equity Pte.
Limited, a graphite mining business, based in Madagascar. The
consideration for the acquisition was GBP25.5 million satisfied
through the issue of 51,000,000 new ordinary shares.
The Merger reserve includes a balance relating to when the
Company acquired the entire issued share capital of Direct
Excellence Limited (previously known as Interactive Prospect
Targeting Limited) pursuant to a share for share exchange on 1
December 2004.
The accounting policies and notes are an integral part of these
financial statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
YEAR TO 31 DECEMBER 2013
Share Investment Retained
capital Share Premium Merger Reserve reserve Other reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- -------- ------------- --------------- ----------- -------------- --------- -------
Balance at 1 January 2012 255 27,128 - (856) - (25,608) 919
Total comprehensive income
for the year - - - 189 - (1,244) (1,055)
Net proceeds of share
issues 107 1,042 - - - - 1,149
Share based payment charge - - - - - 115 115
Balance at 31 December 2012 362 28,170 - (667) - (26,737) 1,128
Total comprehensive expense
for the year - - - (12) - (1,959) (1,971)
Acquisition of Graphmada 2,040 - 23,460 - - - 25,500
Issuance of warrants in the
period - - - - 153 153
Net proceeds of share
issues 395 1,997 - - - - 2,392
Balance at 31 December 2013 2,797 30,167 23,460 (679) 153 (28,696) 27,202
The other reserve includes charge for the year for warrants
issued in the period of GBP153,000. The balance on the Foreign
exchange reserve at the end of the year is GBPnil (2012:
GBPnil)
The accounting policies and notes are an integral part of these
financial statements.
GROUP AND COMPANY STATEMENTS OF CASH FLOWS
YEAR TO 31 DECEMBER 2013
GROUP COMPANY
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------- -------- -------- -------- --------
OPERATING ACTIVITIES
Loss for the year before taxation (2,507) (363) (1,959) (1,244)
Adjusted for:
Finance expense 351 - 351 8
Depreciation 75 8 - -
Share based payment charge - - - 115
Shares issued in settlement of
fees 207 - 207 57
Loss on disposal of property,
plant and equipment 44 - - -
Loss on disposal of investments - - - 389
Operating cash flows before movements
in working capital (1,830) (355) (1,401) (675)
Increase in inventory (159) (69) -
(Increase)/Decrease in trade and
other receivables (126) (61) 26 (25)
Increase in trade and other payables 348 (185) 245 63
Net cash used in operating activities (1,873) (670) (1,130) (637)
---------------------------------------- -------- -------- -------- --------
INVESTING ACTIVITIES
Purchases of available for sale
investments - - - (827)
Purchase of property, plant and
equipment (626) (152) - -
Proceeds from the disposal of
available for sale investments - - - 347
Loans to associated companies - - (1,614) (118)
Acquisition of subsidiary (51) - (51) -
Net cash used in investing activities (677) (152) (1,665) (598)
---------------------------------------- -------- -------- -------- --------
FINANCING ACTIVITIES
Net proceeds from share issues 2,185 820 2,185 1,092
Short term borrowings 847 - 847 -
Interest paid (67) - (67) (8)
Net cash used in financing activities 2,965 820 2,965 1,084
Net (decrease)/increase in cash
and cash equivalents 424 (2) 170 (151)
Cash and cash equivalents at beginning
of year 4 6 180 331
Effect of foreign exchange rate
changes (8) - - -
Cash and cash equivalents at end
of year 420 4 350 180
---------------------------------------- -------- -------- -------- --------
The accounting policies and notes are an integral part of these
financial statements.
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR TO 31 DECEMBER 2013
1 GENERAL INFORMATION
StratMin Global Resources Plc is a company incorporated in
the United Kingdom under the Companies Act 2006. The nature
of the Group's operations and its principal activities are
set out in the Managing Director's Review, the Strategic Report
and the Directors' Report on pages 3, 4 and 5.
2 STATEMENT OF COMPLIANCE
The financial statements comply with International Financial
Reporting Standards as adopted by the European Union. At the
date of authorisation of these financial statements, the following
Standards and Interpretations affecting the Group, which have
not been applied in these financial statements, were in issue,
but not yet effective (and in some cases had not been adopted
by the EU):
Effective for
accounting periods
beginning on
or after:
IFRS 2,8,16,24,36 Amendments resulting from Annual 1 July 2014
improvements 2010-2012 Cycle (subject
to EU endorsement)
IFRS 3,13, Amendments resulting from Annual 1 July 2014
IAS 40 improvements 2011-2013 Cycle (subject
to EU endorsement)
IFRS 7 Deferral of mandatory effective 1 January 2015
date of IFRS 7 and amendments to
transition disclosures
IFRS 9 Deferral of mandatory effective 1 January 2015
date of IFRS 9 and amendments to
transition disclosures (now postponed
in EU)
IFRS 10 Consolidated Financial Statements 1 January 2014
- Amendments for investment entities
IFRS 11 Joint arrangements 1 January 2014
IFRS 12 Disclosure of Interests in Other 1 January 2014
Entities - Amendments for investment
entities
IAS 19 Employee Benefits - Amended to clarify 1 July 2014
the requirements that relate to
how contributions from employees
or third parties that are linked
to service should be attributed
to periods of service (subject to
EU endorsement)
IAS 27 Amendments for investment entities 1 January 2014
IAS 28 Investment in associates 1 January 2014
IAS 32 Financial Instruments: Presentation 1 January 2014
- Amendments to application guidance
on the offsetting of financial assets
and financial liabilities
IAS 36 Impairment of assets 1 January 2014
IAS 38 Amendments resulting from Annual 1 July 2014
improvements 2010-2012 Cycle
IAS 39 Financial Instruments: Recognition 1 January 2014
and Measurement - Amendments for
novation of derivatives
IFRIC 21 Levies 1 January 2014
The Directors anticipate that the adoption of the above
Standards and Interpretations in future periods will have little or
no impact on the financial statements of the Group when the
relevant Standards come into effect for future reporting
periods.
3 Accounting Policies
The principal accounting policies adopted and applied in the
preparation of the Group and Company Financial statements are
set out below.
These have been consistently applied to all the years presented
unless otherwise stated:
BASIS OF ACCOUNTING
The financial statements of Stratmin Global Resources plc (the
"Company") and its subsidiaries (the "Group") have been prepared
in accordance with International Financial Reporting Standards
(IFRS) as adopted for use in the European Union ("EU") applied
in accordance with the provisions of the Companies Act 2006.
IFRS is subject to amendment and interpretation by the International
Accounting Standards Board ("IASB") and the International Financial
Standards Interpretations Committee ("IFRS IC") and there is
an ongoing process of review and endorsement by the European
Commission. The accounts have been prepared on the basis of
the recognition and measurement principles of IFRS that were
applicable at 31 December 2013.
GOING CONCERN
Any consideration of the foreseeable future involves making
a judgement, at a particular point in time, about future events
which are inherently uncertain. The ability of the Group to
carry out its planned business objectives is dependent on its
continuing ability to raise adequate financing from equity investors
and/or the achievement of profitable operations.
Nevertheless, at the time of approving these Financial Statements
and after making due enquiries, the Directors have a reasonable
expectation that the Group has adequate resources to continue
operating for the foreseeable future. For this reason they continue
to adopt the going concern basis in preparing the Financial
Statements.
BASIS OF CONSOLIDATION
The Group's consolidated financial statements incorporate the
financial statements of StratMin Global Resources Plc (the "Company")
and entities controlled by the Company (its subsidiaries). Subsidiaries
are entities over which the Group has the power to govern the
financial and operating policies 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.
Inter-company transactions, balances and unrealised gains on
transactions between Group companies are eliminated. Profits
and losses resulting from inter-company transactions that are
recognised in assets are also eliminated. Accounting policies
of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
Where necessary, adjustments are made to the financial statements
of subsidiaries to bring the accounting policies used into line
with those used by the Group.
All intra-group transactions, balances, income and expenses
are eliminated on consolidation.
Business Combinations
The acquisition of subsidiaries is accounted for using the acquisition
method under IFRS 3. The cost of the 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, plus any costs directly attributable to the business
combination. The acquiree's identifiable assets, liabilities
and contingent liabilities that meet the conditions for recognition
under IFRS 3 are recognised at their fair value at the acquisition
date, except for non-current assets (or disposal groups) that
are classified as held for resale in accordance with IFRS 5
Non-current Assets Held for Sale and Discontinued Operations,
which are recognised and measured at fair value less costs to
sell.
3 ACCOUNTING POLICIES
Business Combinations
Goodwill arising on acquisition is recognised as an asset and
initially measured at cost, being the excess of the cost of
the business combination over the Group's interest in the net
fair value of the identifiable assets, liabilities and contingent
liabilities recognised. If, after reassessment, the Group's
interest in the net fair value of the acquirer's identifiable
assets, liabilities and contingent liabilities exceed the cost
of the business combination, the excess is recognised immediately
in the income statement.
In addition during the year the acquisition of a subsidiary
was accounted for as a reverse acquisition as detailed in Note
22.
AVAILABLE FOR SALE INVESTMENTS
Investments are initially measured at fair value plus directly
attributable incidental acquisition costs. Subsequently, they
are measured at fair value in accordance with IAS 39. This is
either the bid price or the last traded price, depending on
the convention of the exchange on which the investment is quoted.
Investments are recognised as available-for-sale financial assets.
Gains and losses on measurement are recognised in other comprehensive
income except for impairment losses and foreign exchange gains
and losses on monetary items denominated in a foreign currency,
until the assets are derecognised, at which time the cumulative
gains and losses previously recognised in other comprehensive
income are recognised in the income statement.
The Group assesses at each year end date whether there is any
objective evidence that a financial asset or group of financial
assets classified as available-for-sale has been impaired. An
impairment loss is recognised if there is objective evidence
that an event or events since initial recognition of the asset
have adversely affected the amount or timing of future cash
flows from the asset. A significant or prolonged decline in
the fair value of a security below its cost shall be considered
in determining whether the asset is impaired.
When a decline in the fair value of a financial asset classified
as available-for-sale has been previously recognised in other
comprehensive income and there is objective evidence that the
asset is impaired, the cumulative loss is removed from other
comprehensive income and recognised in the income statement.
The loss is measured as the difference between the cost of the
financial asset and its current fair value less any previous
impairment.
foreign currencies
The individual financial statements of each group company are
presented in the currency of the primary economic environment
in which it operates (its functional currency). For the purpose
of the Group financial statements, the results and financial
position of each group company are expressed in Pounds Sterling,
which is the functional currency of the Company, and the presentation
currency for the Group financial statements.
In preparing the financial statement of the individual companies,
transactions in currencies other than the entity's functional
currency (foreign currencies) are recorded at the rates of exchange
prevailing on the dates of the transactions. At each year end
date, monetary assets and liabilities that are denominated in
foreign currencies are retranslated at the rates prevailing
on the year end date. Non-monetary items carried at fair value
that are denominated in foreign currencies are translated at
the rates prevailing at the date when the fair value was determined.
Non-monetary items that are measured in terms of historical
cost in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items,
and on the retranslation of monetary items, are included in
the income statement. Exchange differences arising on the retranslation
of non-monetary items carried at fair value are included in
profit or loss for the period, except for differences arising
on the retranslation of non-monetary items in respect of which
gains and losses are recognised directly in equity. For such
non-monetary items, any exchange component of that gain or loss
is also recognised directly in equity.
3 Accounting Policies
foreign currencies
For the purpose of presenting Group financial statements, the
assets and liabilities of the Group's foreign operations are
translated at exchange rates prevailing on the year end date.
Income and expense items are translated at the average exchange
rates for the period. Exchange differences arising are classified
as equity and transferred to the Group's translation reserve.
Such translation differences are recognised as income or as
expenses in the period in which the operation is disposed of.
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.
taxation
The tax expense represents the sum of the tax currently payable
and deferred tax.
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in
the income statement because it excludes items of income or
expense that are taxable or deductible in other years and it
further excludes items that are never taxable or deductible.
The Group's liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by the
year end date.
Deferred tax is the tax expected to be payable or recoverable
on temporary differences between the carrying amounts of assets
and liabilities in the financial statements and the corresponding
tax bases used in the computation of taxable profit, and is
accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available
against which deductible temporary differences can be utilised.
Such assets and liabilities are not recognised if the temporary
difference arises from the initial recognition of goodwill
or from the initial recognition (other than in a business combination)
of other assets and liabilities in a transaction that affects
neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and associates,
and interests in joint ventures, except where the Group is
able to control the reversal of the temporary difference and
it is probable that the temporary difference will not reverse
in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each
year end date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available
to allow all or part of the asset to be recovered. Deferred
tax is calculated at the tax rates that are expected to apply
in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited in the income
statement, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also
dealt with in equity.
Deferred tax assets and liabilities are offset when there is
a legally enforceable right to set off current tax assets against
current tax liabilities and where they relate to income taxes
levied by the same taxation authority and the Group intends
to settle its current tax assets and liabilities on a net basis.
GOODWILL
Goodwill arising on consolidation represents the excess of
the cost of acquisition over the Group's interest in the fair
value of the identifiable assets and liabilities of a subsidiary,
associate or jointly controlled entity at the date of acquisition
and is included as a non-current asset.
Goodwill is tested annually, or more regularly should the need
arise, for impairment and is carried at cost leff accumulated
impairment losses. Any impairment is recognised immediately
in the income statement and is not subsequently reversed.
Goodwill is allocated to cash generating units for the purpose
of impairment testing.
On disposal of a subsidiary the attributable amount of goodwill
is included in the determination of the profit or loss on disposal.
3 Accounting Policies
IMPAIRMENT OF PROPERTY, PLANT & EQUIPMENT AND INTANGIBLE ASSETS
EXCLUDING GOODWILL
At each financial year end date, the Group reviews the carrying
amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered
an impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the
extent of the impairment loss, if any. Where the asset does
not generate cash flows that are independent from other assets,
the Group estimates the recoverable amount of the cash-generating
unit to which the asset belongs. An intangible asset with an
indefinite useful life is tested for impairment annually and
whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market assessments
of the time value of money and the risks specific to the asset
for which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset or cash-generating unit
is estimated to be less than its carrying amount, the carrying
amount of the asset or cash-generating unit is reduced to its
recoverable amount and the impairment loss is recognised as
an expense immediately.
When an impairment loss subsequently reverses, the carrying
amount of the asset or cash-generating unit is increased to
the revised estimate of its recoverable amount, but so that
the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss
been recognised for the asset or cash-generating unit in prior
years. A reversal of an impairment loss is recognised as income
immediately, unless the relevant asset is carried at a revalued
amount, in which case the reversal of the impairment loss is
treated as a revaluation increase.
PROPERTY, PLANT AND EQUIPMENT
Property, Plant and equipment are recorded at cost, less depreciation,
less any amount adjustments for impairment, if any.
Significant improvements are capitalised, provided they qualify
for recognition as assets. The costs of maintenance, repairs
and minor improvements are expensed when incurred.
Tangible assets retired or withdrawn from service are removed
from the balance sheet together with the related accumulated
depreciation. Any profit or loss resulting from such an operation
is included in the income statement.
Mining properties (included within Plant & Equipment, Fixtures
& Fittings, Buildings and Motor Vehicles) are depreciated using
the unit of production method under IAS 16 based on their total
useful economic life either by number of tonnes produced or
hours available in use. In the units of production method,
depreciation is charged according to the actual usage of the
asset. Therefore a higher depreciation is charged at times
of increased activity and lower depreciation when the plant
is either yet to reach full production or idle for the entire
period. The Directors have applied this method as they believe
it to be a much more accurate technique is estimated the current
fair value of their mining assets.
Other tangible and intangible assets are depreciated on straight-line
method based on the estimated useful lives from the time they
are put into operations, so that the cost diminished over the
lifetime of consideration to estimated residual value as follows:
Other Fixtures & Fittings - Over 5 years
Other Buildings - Between 5 and 10 years
Other Motor Vehicles - Over 5 years
DECOMMISSIONING, SITE REHABILITATION AND ENVIRONMENTAL COSTS
Group companies are required to restore mine and processing
sites at the end of their producing lives to a condition acceptable
to the relevant authorities and consistent with the Group's
environmental policies. The net present value of estimated
future rehabilitation costs is provided for in the financial
statements and capitalised within
3 Accounting Policies
Under IAS 37 the present obligation as a result of a past even
criteria means that only infrastructure currently in place
will result in a provision. Thus the liability excludes decommissioning
costs of facilities yet to be installed.
The costs of on-going programmes to prevent and control pollution
and to rehabilitate the environment are charged to the Income
statement as incurred.
INVENTORY
Inventories are stated at the lower of cost and net realisable
value.
Cost comprises direct materials and, where applicable, direct
labour costs and those overheads that have been incurred in
bringing the inventories to their present location and condition.
Cost is determined using FIFO method. This method assumes that
every product out of stock product cost will be determined
on the basis of the earliest items purchased or produced.
Net realisable value is based on estimated selling price in
the ordinary course of business less any costs of completion
and selling expenses.
Inventory items are initially valued at cost of acquisition,
cost of production or entry price currency converted at the
exchange rate in effect on the date of reception of goods plus
transportation at the rate in force on customs import declaration
("DVI"), plus customs duties, customs fees and transportation
expenses, net of any subsequent impairment or provision.
The Directors review on a monthly basis for any damaged, slow
moving or obsolete items, where impairment has been incurred
and thus fair value adjustments are applied with the amount
recognised in the income statement.
TRADE RECEIVABLES, loans and other receivables
Trade receivables, loans and other receivables that have fixed
or determinable payments that are not quoted in an active market
are classified under 'loans and receivables'. Loans and receivables
are measured at amortised cost using the effective interest
method, less any impairment. Interest income is recognised
by applying the effective interest rate, except for short term
receivables when the recognition of interest would be immaterial.
Other receivables, that do not carry any interest, are measured
at their nominal value as reduced by any appropriate allowances
for irrecoverable amounts.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash on hand and demand
deposits and other short-term highly liquid investments that
are readily convertible to a known amount of cash and are subject
to an insignificant risk of changes in value.
FINANCIAL LIABILITIES
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements
entered into. Financial liabilities are classified as either
financial liabilities 'at FVTPL' or 'other financial liabilities'.
There were no financial liabilities 'at FVTPL' during the current,
or preceding, period.
An equity instrument is any contract that evidences a residual
interest in the assets of the Group after deducting all of
its liabilities.
OTHER FINANCIAL LIABILTIES, BANK AND SHORT TERM BORROWINGS
Interest-bearing bank loans and overdrafts are recorded at
the proceeds received, net of direct issue costs. Finance charges
are accounted for on an accruals basis in profit or loss using
the effective interest rate method and are added to the carrying
amount of the instrument to the extent that they are not settled
in the period in which they arise. Other short term borrowings
being intercompany loans and unsecured convertible loan notes
issued in the year are recognised at amortised cost net of
any financing or arrangement fees.
TRADE PAYABLES
Trade payables are initially measured at fair value and subsequently
measured at amortised cost using the effective interest method,
less provision for impairment.
3 Accounting Policies
EQUITY INSTRUMENTS INCLUDING SHARE CAPITAL
Equity instruments issued by the Company are recorded at the
proceeds received, net of incremental costs attributable to
the issue of new shares.
An equity instrument is any contract that evidences a residual
interest in the assets of a company after deducting all of
its liabilities. Equity instruments issued by Stratmin Global
Resources plc are recorded at the proceeds received net of
direct issue costs.
Share capital represents the amount subscribed for shares at
nominal value.
The share premium account represents premiums received on the
initial issuing of the share capital. Any transaction costs
associated with the issuing of shares are deducted from share
premium, net of any related income tax benefits. Any bonus
issues are also deducted from share premium.
The merger reserve represents the premium on the shares issued
less the nominal value of the shares, being the difference
between the fair value of the consideration and the nominal
value of the shares.
The reverse acquisition reserve arises from the acquisition
of Graphmada Equity Pte. Limited by the Company and represents
the total amount by which the fair value of the shares issued
in respect of the acquisition exceed their total nominal value.
The investment reserve represents the difference between the
purchase costs of the available for sale investments less any
impairment charge and the market or fair value of those investments
at the accounting date.
The warrant reserve represents the fair value, calculated at
the date of grant, of warrants unexercised at the balance sheet
date.
Retained earnings include all current and prior period results
as disclosed in the statement of comprehensive income.
SHARE-BASED PAYMENTS
The Group has applied the requirements of IFRS 2 Share-based
payments. In accordance with the transitional provisions, IFRS
2 has been applied to all grants of equity instruments after
7 November 2002 that were unvested at 1 January 2005.
The Group operates a number of equity-settled share-based payment
schemes under which share options are issued to certain employees.
Equity-settled share-based payments are measured at fair value
(excluding the effect of non market-based vesting conditions)
at the date of grant. The fair value determined at the grant
date of the equity-settled share-based payments is expensed
on a straight-line basis over the vesting period, based on
the Group's estimate of shares that will eventually vest and
adjusted for the effect of non market-based vesting conditions.
Fair value is measured by use of the Black Scholes model. The
expected life used in the model has been adjusted, based on
management's best estimate, for the effects of non-transferability,
exercise restrictions, and behavioural considerations.
REVERSE ACQUISITION
The acquisition of Graphmada Equity Pte. Limited ("GME") on
28 January 2013 was accounted for using the reverse acquisition
method. The following accounting treatment was applied in respect
of the reverse acquisition:
* The assets and liabilities of the legal subsidiary
were recognised and measured in the consolidated
financial statements at their pre-combination
carrying amounts without restatement to fair value;
* The identifiable assets and liabilities of the legal
parent (the accounting acquiree) are recognised in
accordance with IFRS 3 at the acquisition date.
Goodwill is recognised in accordance with IFRS 3;
* The retained earnings and other equity balances
recognised in the consolidated financial statements
are those of the legal subsidiary (the accounting
acquirer) immediately before the business
combination.
The amount recognised as issued equity instruments in the consolidated
financial statements is determined by adding the fair value
of the legal parent (which is based on the number of equity
interests deemed to have been issued by the legal subsidiary)
determined in accordance with IFRS 3 to the legal subsidiary's
issued equity immediately before the business combination. However,
the equity structure (that is, the number and type of equity
instruments issued) shown in the consolidated financial statements
reflects the legal parent's equity structure, including the
equity instruments issued by the legal parent to effect the
combination. The equity structure of the legal subsidiary (accounting
acquirer) is restated using the exchange ratio established in
the acquisition agreement to reflect the number of shares issued
by the legal parent (the accounting acquiree) in the reverse
acquisition.
4 CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATIONS
In the application of the Group's accounting policies, which
are described in note 3, the Directors are required to make
judgements, 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
on-going basis. Revisions to accounting estimates are recognised
in the period. Judgements and estimates that may affect future
periods are as follows:
GOING CONCERN
The Group's activities generated a small revenue GBP46,000 (2012:
Nil), it incurred a loss of GBP2,507,000 during the year (2012:
GBP1,244,000 loss), had a cash balance of GBP421,000 as at 31
December 2013 and as at the date of signing these financial
statements, was yet to reach a level of production at the mine-site
that would generate a positive cash flow.
However, as disclosed in Note 29, on 12 March 2014 the Company
raised gross proceeds of GBP2.5m by way of an equity placing,
approved at a General Meeting on 31 March 2014.
So, after making enquiries, the Directors have formed a judgement
that there is a reasonable expectation that the Company can
secure further adequate resources to continue in operational
existence for the foreseeable future and that adequate arrangements
will be in place to enable the settlement of their financial
commitments.
For this reason, the Directors continue to adopt the going concern
basis in preparing the financial statements. Whilst there are
inherent uncertainties in relation to future events, and therefore
no certainty over the outcome of the matters described, the
Directors consider that, based upon financial projections and
dependent on the success of their efforts to complete these
activities, the Company will be a going concern for the next
twelve months. If it is not possible for the Directors to realise
their plans, over which there is significant uncertainty, the
carrying value of the assets of the company is likely to be
impaired.
SHARE BASED PAYMENTS
The calculation of the fair value of equity-settled share based
awards and the resulting charge to the statement of comprehensive
income requires assumptions to be made regarding future events
and market conditions. These assumptions include the future
volatility of the Group's share price. These assumptions are
then applied to a recognised valuation model in order to calculate
the fair value of the awards. Details of these assumptions are
set out in note 27.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Group holds investments that have been designated as available
for sale on initial recognition. Where practicable the Group
determines the fair value of these financial instruments that
are not quoted (Level 3), using the most recent bid price at
which a transaction has been carried out. These techniques are
significantly affected by certain key assumptions, such as market
liquidity. Other valuation methodologies such as discounted
cash flow analysis assess estimates of future cash flows and
it is important to recognise that in that regard, the derived
fair value estimates cannot always be substantiated by comparison
with independent markets and, in many cases, may not be capable
of being realised immediately.
5 SEGMENTAL INFORMATION
A segment is a distinguishable component of the Company's activities
from which it may earn revenues and incur expenses, whose operating
results are regularly reviewed by the Company's chief operating
decision maker to make decisions about the allocation of resources
and assessment of performance and about which discrete financial
information is available.
As the chief operating decision maker reviews financial information
for and makes decisions about the Company's activities as a whole,
the directors have identified a single operating segment, that
of trading in graphite. The directors consider that it would
not be appropriate to disclose any geographical analysis of the
Company's activities at this point in time, given the current
activity.
6 OPERATING LOSS
2013 2012
GBP'000 GBP'000
----------------------------------------------------- --------- ----------
Operating loss is stated after charging:
Staff costs as per Note 8 below 797 4
Depreciation of property, plant and equipment 75 8
Loss on disposal of property, plant and equipment 44 -
Cost of inventories recognised as an expense 37 -
Write downs of inventories recognised as an
expense 14 -
Net foreign exchange loss 60 23
---------------------------------------------------------- --------- ----------
7 auditors' remuneration
The analysis of auditors' remuneration is as follows:
2013 2012
GBP'000 GBP'000
---------------------------------------------- --------- ---------
Fees payable to the Company's auditors for
the audit of the Company's annual accounts 45 15
Total audit fees 45 15
Fees payable to the Company's auditors and
their associates for other services to the
Group:
- Tax services 4 5
49 20
-------------------------------------------------- --------- ---------
8 staff costs
The average monthly number of employees (including executive
directors) for the continuing operations was:
2013 2012
No. No.
Group total staff 70 19
2013 2012
GBP'000 GBP'000
Wages and salaries 766 4
Social security costs 31 -
797 4
------------------------------------------------------------------------------------ -------------- --------------
Directors' emoluments were as follows:
2013 2013 2013 2013 2012
Directors Social Consultancy Total Total
fees security payments
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- ------------------ ----------------- -------------------- -------------- --------------
Gobind Sahney 98 12 - 110 -
Manoli
Yannaghas 116 16 40 172 23
Jeff Marvin 98 - - 98 -
David Premraj 23 - - 23 -
Marius Pienaar 23 - 39 62 -
358 28 79 465 23
Gobind Sahney and Jeff Marvin received in 2013 GBP21,000 as
director fees for November and December 2012. Included in the
above is an amount of GBP267,268 that was settled by way of
the issue of 2,971,419 ordinary shares of 4p each in the Company
on 31 March 2014.
9 OTHER OPERATING EXPENSE
2013 2012
GBP'000 GBP'000
------------------------------------------------------------------------------------ -------------- --------------
Net loss on disposal of investments - -
Loss on disposal of property, plant and equipment 44 -
Loss on foreign currency transactions 60 -
------------------------------------------------------------------------------------ -------------- --------------
104 -
------------------------------------------------------------------------------------ -------------- --------------
10 finance costs
2013 2012
GBP'000 GBP'000
Interest on bank overdrafts and loans - 8
Charge in relation to the issuance of warrants 153 -
Short term loan finance costs 131 -
Interest on convertible loan notes 67 -
-------------------------------------------------------- --------- ---------
351 8
------------------------------------------------------------- --------- ---------
11 taxation
There is no tax charge/credit in 2013 or 2012.
The UK corporation tax rate applicable for 2013 is 23.5% (2012:
26%). The average rate for 2012 was 26%.
reconciliation of tax charge:
2013 2012
GBP'000 GBP'000
---------------------------------------------- ----------- -----------
Loss on continuing operations
before tax (2,507) (363)
--------------------------------------------------- ----------- -----------
Tax at the UK corporation tax
rate of 23%
Tax at the Singapore corporation 531 -
tax rate of 17% - 62
Effects of:
Tax effect of expenses that are
not deductible in determining
taxable profit: - (1)
Unutilised tax losses carried
forward (531) (61)
Tax charge for period - -
--------------------------------------------------- ----------- -----------
The comparative figures above relate to Graphmada Equity Pte.
Ltd, which is incorporated in Singapore. The Singapore tax rates
differ from the UK and thus the estimate included in the above
table may differ from the actual losses available for carry
forward.
The total taxation charge in future periods will be affected
by any changes to the corporation tax rates in force in the
countries in which the Group operates.
12 EARNINGS PER SHARE
The basic earnings per share is based on the profit/(loss) for
the year divided by the weighted average number of shares in
issue during the year. The weighted average number of ordinary
shares for the year ended 31 December 2013 assumes that all
shares have been included in the computation based on the weighted
average number of days since issue.
2013 2012
GBP'000 GBP'000
------------------------------------------------ ---------- ------------
Loss attributable to owners of the Group:
Loss from continuing operations (2,507) (363)
Loss for the year attributable to owners of
the Group (2,507) (363)
----------------------------------------------------- ---------- ------------
Weighted average number of ordinary shares in
issue for basic and fully diluted earnings* 60,349,602 **50,987,500
LOSS PER SHARE (PENCE PER SHARE)
BASIC AND FULLY DILUTED*:
- from continuing and total operations (4.15p) (0.7p)
----------------------------------------------------- ---------- ------------
*Since the Group has incurred losses in both 2012 and 2013 the
basic loss and the diluted loss per share are the same as the
effect of exercise of options and warrants is not dilutive.
**The weighted average number of shares for 2012 represents the
number of shares issued on the acquisition of Graphmada Equity Pte.
Ltd, adjusted for the shares issued by Graphmada during the
year.
13 GOODWILL
Goodwill has arisen in 2012 on the acquisition of Graph Mada
S.a.r.l ("GMS") by Graphmada Equity Pte. Ltd ("GME") and in 2013
on the acquisition of Grahmada Equity Pte. Ltd by the Company.
2013
GBP'000
---------------------------------- --------- --------- -------- ---------
At 1 January 2012 -
Arising on acquisition of GMS 143
------------------------------------------------------------------ ---------
At 31 December 2012 143
Arising on reverse acquisition
of GME* 4,869
------------------------------------------------------------------ ---------
At 31 December 2013 5,012
------------------------------------------------------------------ ---------
*The amount of GBP4,869,000 includes an amount of GBP370,000 of
Goodwill arising on the reverse acquisition. See Note 22.
The Directors have reviewed the carrying value of Goodwill at 31
December 2013 and consider that no impairment provision is
required. They continue to review Goodwill on an on-going basis and
where necessary in future periods will request external valuations
to further support the valuation basis.
In accordance with IAS 36 the Group values Goodwill at the lower
of its carrying value or its recoverable amount, where the
recoverable amount is the higher of the value if sold and its value
in use. In addition IAS38 requires intangible assets with finite
useful lives to follow the same impairment testing as Goodwill
including the use of value in use calculations.
14 PROPERTY, plant AND EQUIPMENT
Plant and Fixtures Buildings Motor Total
Equipment and fittings and infrastructure Vehicles
Cost GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ----------- --------------- -------------------- ---------- --------
As at 1 January 2012 70 18 3 48 139
Additions 25 16 - 111 152
As at 31 December
2012 95 34 3 159 291
Additions 240 57 272 85 654
Disposals (14) (29) (3) (9) (55)
---------------------------- ----------- --------------- -------------------- ---------- --------
As at 31 December
2013 321 62 272 235 890
---------------------------- ----------- --------------- -------------------- ---------- --------
Depreciation
----------------------- ----------- --------------- -------------------- ---------- --------
As at 1 January 2012 - - 1 13 14
Charge for year - - 1 7 8
As at 31 December
2012 - - 2 20 22
Charge for the year 9 6 6 54 75
Disposals - - (2) (9) (11)
---------------------------- ----------- --------------- -------------------- ---------- --------
As at 31 December
2013 9 6 6 65 86
---------------------------- ----------- --------------- -------------------- ---------- --------
Net book value
----------------------- ----------- --------------- -------------------- ---------- --------
As at 31 December
2013 312 56 266 170 804
---------------------------- ----------- --------------- -------------------- ---------- --------
As at 31 December
2012 95 34 2 138 269
---------------------------- ----------- --------------- -------------------- ---------- --------
15 INVESTMENT IN subsidiarY UNDERTAKINGS
The Company invests in its subsidiary and associated undertakings
2013 2012
COMPANY GBP'000 GBP'000
--------------------------------------------------- ------------ ------------- -----------------
Cost and net book value
At 1 January 46 1,443
Set off against balance with
subsidiary - (1,397)
Acquisition of 15% GME in 2012 821 -
Additions 102 -
Acquisition of 85% GME 25,500 -
--------------------------------------------------- ----------------- ------------- -----------------
As at 31 December 26,469 46
--------------------------------------------------- ----------------- ------------- -----------------
All principal subsidiaries of the Group are consolidated into
the financial statements. At 31 December 2013 the subsidiaries
were as follows:
Subsidiary undertakings Country of Principal activity Holding %
registration
-------------------------- --------------- --------------------------- ----------- ------------
Direct Excellence Intermediate holding Ordinary
Limited UK company shares 100%
Graphmada Equity Intermediate holding Ordinary
Pte. Ltd Singapore company shares 100%
Stratmin Global Ordinary
Graphite Ltd Jersey Operational company shares 100%
Ordinary
Graph Mada S.A.R.L* Madagascar Mining shares 100%
-------------------------- --------------- -------------------------------- ----------- ------------
*Held through subsidiary undertaking.
The following amounts are investments made by the Company in
associated and subsidiary undertakings by way of loan rather than
equity, as above:
COMPANY 2013 2012
GBP'000 GBP'000
Loans to group companies
At 1 January 118 -
Additions 1,109 118
Repayments - -
---------------------------------- -------- --------
As at 31 December 1,227 118
---------------------------------- -------- --------
16 AVAILABLE-FOR-SALE INVESTMENTS
GROUP COMPANY
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------- -------- ------- -------- --------
Investments at fair value at
1 January - - 859 579
Purchases of investments - - - 827
Reclassified as Investment in
subsidiary - - (821) -
Investments acquired on reverse
acquisition 38
Proceeds from sale of investments - - - (347)
(Loss)/gain on disposal of investments - - - (389)
---------------------------------------------- -------- ------- -------- --------
38 - 38 670
Market value adjustments to
investment (12) - (12) 189
---------------------------------------------- -------- ------- -------- --------
Market value of investments
at 31 December 26 - 26 859
---------------------------------------------- -------- ------- -------- --------
Categorised as:
Level 1 Investments 26 - 26 38
Level 3 Investments - - 821
---------------------------------------------- -------- ------- -------- --------
The table above sets out the fair value measurements using the
IFRS 7 fair value hierarchy. Categorisation within the hierarchy
has been determined on the basis of the lowest level of input
that is significant to the fair value measurement of the relevant
asset as follows:
Level 1 - valued using quoted prices in active markets for identical
assets.
Level 2 - valued by reference to valuation techniques using observable
inputs other than quoted prices included within Level 1.
Level 3 - valued by reference to valuation techniques using inputs
that are not based on observable market data.
There were no transfers between Level 1, Level 2 and Level 3
in either 2013 or 2012.
Measurement of fair value of financial instruments
The management team of Stratmin Global Resources plc perform
valuations of financial items for financial reporting purposes,
including Level 3 fair values. Valuation techniques are selected
based on the characteristics of each instrument, with the overall
objective of maximising the use of market-based information.
Level 3 financial assets
Reconciliation of Level 3 fair value measurement of financial
assets:
COMPANY 2013 2012
GBP'000 GBP'000
------------------------------------------------------------ -------- --------
At 1 January 821 -
Reclassified as Investment in Subsidiary (821)
Purchases - 821
----------------------------------------------------------------- -------- --------
At 31 December - 821
----------------------------------------------------------------- -------- --------
Level 3 valuation techniques used by the Group are explained
in Note 24 (Fair value of financial instruments)
Investments held as Level 3 investments in 2012 were reclassified
to "Investment in Subsidiary" in the 2013 period. During the
2012 period the Company held a position in unquoted securities
that did not exert significant influence, as such they were
classified as "Available for Sale" Level 3 financial assets.
During the 2013 period the position held in the unquoted securities
changed to a controlling stake in the investment. As a result,
the classification of the investment moved from "Available for
Sale Investments" to "Investment in Subsidiary" (Note 15).
17 INVENTORY AND WORK IN PROGRESS
GROUP COMPANY
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------- -------- -------- -------- --------
Inventory 69 - - -
Work in progress 159 - - -
----------------------------------------------- -------- -------- -------- --------
228 - - -
----------------------------------------------- -------- -------- -------- --------
The Directors consider the carrying amount of inventory equivalents
approximates to their fair value.
18 TRADE AND OTHER RECEIVABLES
GROUP COMPANY
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------- -------- -------- -------- --------
Other receivables - 7 - 7
Prepayments and accrued income 15 18 9 53
Trade receivable 34 - - -
VAT Receivable 383 - 25 -
----------------------------------------------- -------- -------- -------- --------
432 25 34 60
Short term loans to group companies - - 505 -
----------------------------------------------- -------- -------- -------- --------
432 25 539 60
----------------------------------------------- -------- -------- -------- --------
No receivables were past due or provided for at the year-end or
at the previous year end.
The Directors consider the carrying amount of intercompany loans
and other receivables approximates to their fair value.
19 CASH AND CASH EQUIVALENTS
GROUP COMPANY
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- -------- ------- ------- -------
Cash and cash equivalents 420 185 350 180
------------------------------- -------- ------- ------- -------
The Directors consider the carrying amount of cash and cash
equivalents approximates to their fair value.
20 TRADE AND OTHER PAYABLES
GROUP COMPANY
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
----------------- -------- ------- ------- -------
Trade payables 224 105 136 102
Other payables 12 5 - 5
Accrued expenses 428 38 426 28
---------------------- -------- ------- ------- -------
664 148 562 135
---------------------- -------- ------- ------- -------
The Directors consider the carrying amount of trade payables
approximates to their fair value.
21 SHORT TERM BORROWINGS
The following amounts relate to Short term borrowings:
GROUP COMPANY
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- -------- ------- ------- -------
Bank borrowings and overdrafts - - - -
Convertible loan notes 750 - 750 -
Other short term borrowings 97 - 97 -
------------------------------------ -------- ------- ------- -------
847 - 847 -
------------------------------------ -------- ------- ------- -------
The Convertible loan notes relate to the 15% Secured Convertible
Loan Notes ("CLN"s), that were issued on 5 December 2013 to Darwin
Strategic Limited. These have since the year end been redeemed
following the placing on 12 March 2014.
22 ACQUISITION
On 28 January 2013, the Group acquired 100 per cent of the issued
share capital of Graphmada Equity Pte. Limited by way of a share
for share exchange. The total consideration being 51,000,000
ordinary shares in the Company (legal parent), resulting in the
former shareholders of GME obtaining 87.2% of the issued ordinary
shares of the Company at the time. GME's principal activity is
that of an investment holding company. This transaction has been
accounted for by the reverse acquisition method of accounting
as prescribed by IFRS 3 Business Combinations. Thus for the purposes
of this transaction GME has been treated as the acquirer (or
accounting parent), and the Company as the acquiree. The net
assets of the Company at the date of acquisition consisted of
shareholders funds of GBP1,073,716 and an accumulated loss of
GBP29,732,779.
This transaction has resulted in an increase in Merger Reserve
of GBP4,328,473.
Adjustments to equity are primarily disclosed to recognise the
legal parent's (the Company) capital structure after recognising
the cost of the transaction in equity as prescribed by IFRS 3
Business Combinations.
Net assets acquired:
Fair Value
Book Value Adjustments Adjustments Fair Value
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ----------- ----------- ------------ ----------
Current assets 22 - - 22
15% investment in GME 872 - 3,628 4,500
Other Non-current assets 156 - - 156
Current liabilities (466) - - (466)
Non-current liabilities - - - -
-------------------------- ----------- ----------- ------------ ----------
584 - 3,628 4,212
------------------------------- ----------- ----------- ------------ ----------
Goodwill 370
------------------------------- ----------- ----------- ------------ ----------
Consideration 4,582
------------------------------- ----------- ----------- ------------ ----------
Satisfied by: GBP'000
------------- -------
Cash -
Implied consideration - Shares
issued in exchange 4,531
Stamp duty on shares issued 51
Directly attributable costs -
4,582
-----
23 REVERSE ACQUISITION RESERVE
The reverse acquisition reserve arises from the acquisition of
GME by the Company and represents the total amount by which the
fair value of the shares issued in respect of the acquisition
exceed their total nominal value
2013
GBP'000
----------------------------------------------------- ------------
At 1 January 2013 2,039
Arising on share issue -
Arising on acquisition of GME 46,439
At 31 December 2013 48,478
---------------------------------------------------------- ------------
1.1 FINANCIAL INSTRUMENTS
24
FINANCIAL ASSETS BY CATEGORY
The IAS 39 categories of financial assets included in the Statement
of financial position and the headings in which they are included
are as follows:
2013 2012
GBP'000 GBP'000
-------------------------------------------------------------------------- -------------- --------------
Financial assets:
Cash and cash equivalents 420 185
Available for sale investments 26 859
Loans and receivables 417 125
-------------------------------------------------------------------------------- -------------- --------------
863 1,169
-------------------------------------------------------------------------------- -------------- --------------
FINANCIAL LIABILITIES BY CATEGORY
The IAS 39 categories of financial liability included in the
Statement of financial position and the headings in which they
are included are as follows:
2013 2012
GBP'000 GBP'000
-------------------------------------------------------------------------- -------------- --------------
Financial liabilities at amortised cost:
Trade and other payables 236 110
Short term borrowings 847 -
-------------------------------------------------------------------------- -------------- --------------
1,083 110
-------------------------------------------------------------------------------- -------------- --------------
CAPITAL RISK MANAGEMENT
The Group manages its capital to ensure that entities in the
Group will be able to continue as a going concern while maximising
the return to stakeholders through the optimisation of the debt
and equity balance. The capital structure of the Group consists
of debt, (previously includes the borrowings) cash and cash
equivalents and equity attributable to equity holders of the
Parent Company, comprising issued capital, reserves and retained
earnings, all as disclosed in the Statement of Financial Position.
FINANCIAL RISK MANAGEMENT OBJECTIVES
The Group is exposed to a variety of financial risks which result
from both its operating and investing activities. The Group's
risk management is coordinated by the board of directors, and
focuses on actively securing the Group's short to medium term
cash flows by minimising the exposure to financial markets.
The main risks the Group is exposed to through its financial
instruments are credit risk, liquidity risk and market price
risk.
24 Financial instruments
FOREIGN CURRENCY RISK MANAGEMENT
The Group undertakes transactions denominated in foreign currencies.
Hence, exposures to exchange rate fluctuations arise. After
the acquisition of Graphmada Equity Pte. Ltd, the Group's major
activity is now in Madagascar, bringing exposure to the exchange
rate fluctuations of GBP/GBP Sterling with both USD/$ Dollars
and Madagascan Ariary. The risk is reduced however, given the
selling contracts are in USD, Company cash liquidity is in GBP
and the Company is transferring cash to its trading subsidiary
only for specific operational expenses.
Exchange rate exposures are managed within approved policy parameters.
The Group does not enter into forward exchange contracts to
mitigate the exposure to foreign currency risk as amounts paid
and received in specific currencies are expected to largely
offset one another and the currencies most widely traded are
relatively stable.
The Directors consider the balances most susceptible to foreign
currency movements to be the Investment in Subsidiaries.
These assets are denominated in the following currencies: USD
$'000
--------------------------- ------
Company 31 December 2013
Investment in Subsidiaries 43,870
Company 31 December 2012
Investment in Subsidiaries 75
The following table illustrates the sensitivity of the value
of investments in regards to the relative GBP and USD exchange
rates.
It assumes a +/- 9.44% change in the USD/GBP exchange rate for
the year ended 31 December 2013 and a +/- 5.45% change in the
USD/GBP exchange rate for the year ended 31 December 2012. These
percentages have been based on the average market volatility
in exchange rates in the previous twelve months for those periods.
Impact on investments in subsidiaries: 31 Dec 2013 31 Dec 2012
$'000 $'000
-------------------------- --- ------------- ------------
Change in equity
9.44% increase in USD fx 4,141 -
rate against GBP
9.44% decrease in USD fx (4,141) -
rate against GBP
5.45% increase in USD fx
rate against GBP 4
5.45% decrease in USD fx
rate against GBP (4)
Exposure to foreign exchange rates vary during the year depending
on the volume and nature of foreign transactions. Nonetheless,
the analysis above is considered to be representative of the
Group's exposure to currency risk.
interest rate risk managEment
The Group's exposure to interest rates on financial assets and
financial liabilities is detailed in the liquidity risk management
section of this note.
The sensitivity analyses below have been determined based on
the exposure to interest rates for both derivatives and non-derivative
instruments during the year.
There would have been no effect on amounts recognised directly
in equity.
Credit risk management
The Company's financial instruments, which are subject to credit
risk, are considered to be cash and cash equivalents and trade
and other receivables, and its exposure to credit risk is not
material. The credit risk for cash and cash equivalents is considered
negligible since the counterparties are reputable banks.
The Group's maximum exposure to credit risk is GBP837,000 (2012:
GBP310,000) comprising other receivables and cash.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests
with the Board of Directors, which monitors the Group's short,
medium and long-term funding and liquidity management requirements
on an appropriate basis. The Group manages liquidity risk by
maintaining adequate reserves, banking facilities and reserve
borrowing facilities. The Group's liquidity risk arises in supporting
the trading operations in the subsidiaries, which hopefully
will start to generate profits and positive cash-flows in the
short to medium term. However, as referred to in Note 4 the
Company is currently exposed to significant liquidity risk and
needs to obtain external funding to support the Group going
forwards.
25 dEferred tax
At the year end date, the Group had unused tax losses of GBP4.7m
(2012: GBP3.2m) available for offset against future profits.
No deferred tax asset has been recognised in respect of these
losses (2012: GBPnil) due to the unpredictability of future
profit streams.
26 Called up share capital
Number of Nominal value Share premium
shares
GBP'000 GBP'000
---------------------------- -------------- ---------------- ------------------
ISSUED AND FULLY PAID:
At 31 December 2011 63,872,540 255 27,128
Capital reorganisation (57,485,286) - -
Ordinary shares of 0.4p
each 2,673,746 107 1,042
--------------------------------- -------------- ---------------- ------------------
At 31 December 2012 9,061,000 362 28,170
Ordinary shares of 4p
each 60,859,756 2,435 1,997
--------------------------------- -------------- ---------------- ------------------
At 31 December 2013 69,920,756 2,797 30,167
--------------------------------- -------------- ---------------- ------------------
The Company has one class of ordinary shares, which carry no
right of fixed income
On 28 January 2013 the following events took place:
* The shareholders approved the consolidation of the
Company's shares on the basis of one new ordinary
share of 4p for every ten existing ordinary shares of
0.4p.
* The Company completed the acquisition of Graphmada
Equity Pte. Limited ("GME"), a graphite mining
business, based in Madagascar. The consideration for
the acquisition was GBP25.5 million satisfied through
the issue of 51,000,000 new ordinary shares.
* The acquisition of GME by the Company has been
accounted for as a reverse acquisition so the share
capital of GME prior to its acquisition by Stratmin
is represented in terms of Stratmin shares. Of the
total 69.9million shares in issue at the time
Stratmin shareholders held 7,703,235 shares,
representing 11.02% of the combined group and GME
shareholders held 62,217,521 shares, representing
88.98%.
On 25 February 2013, the Company issued 216,000 new ordinary
shares of 4p each to satisfy certain existing commitments.
On 7 March 2013, the Company issued 102,500 new ordinary shares
of 4p each following the exercise of warrants.
On 16 April 2013, the Company issued 17,499 new ordinary shares
of 4p each following the exercise of warrants.
On 16 June 2013, the Company issued 126,620 new ordinary shares
of 4p each to satisfy certain existing commitments.
On 27 June 2013 the Company issued 5,010,970 new ordinary share
of 4p in compensation for 30,060,000 convertible loan notes
of 5p each and associated interest.
On 23 September 2013 the Company issued 4,166,667 new ordinary
share of 4p for capital raise.
On 11 November 2013 the Company issued 219,500 new ordinary
shares of 4p to satisfy certain existing commitments.
WARRANTS
On 29 January 2013 the Company issued warrants to subscribe
for 300,000 and 250,300 ordinary shares at 4p and 50p per share
respectively, to the subscribers to the placing of GBP1.503,000
of the same date, exercisable on or before 29 January 2016.
On 17 September 2013 the Company issued warrants to subscribe
for 4,166,667 ordinary shares at 20p per share to the subscribers
to the placing of GBP750,000 of the same date, exercisable
on or before 20 June 2014.
On 5 December 2013 the Company issued warrants to subscribe
for 4,024,402 ordinary shares at 18.64p per share to Darwin
Strategic Limited in relation to the purchase of GBP750,000
unsecured convertible loan notes on the same date, exercisable
on or before 5 December 2016. Since the year end the exercise
price has been reset to the lower of 18.64p and 95% of the
volume weighted average price ("VWAP") of the Company's shares
over the last 6 months.
The above issues of warrants are summarised as follows:
Number of warrants Exercise price Expiry date
Issue Date granted
------------------------------- ------------------ -------------- -----------
Brought forward
17 August 2012 62,500 40.00p 16.08.2015
5 October 2012 40,000 50.00p 04.10.2015
------------------------------- ------------------ -------------- -----------
At 1 January 2013 102,500 43.90p
Issued in the year
29 January 2013 250,300 50.00p 29.01.2016
29 January 2013 300,000 4.00p 29.01.2016
17 September 2013 4,166,667 20.00p 20.06.2014
5 December 2013 4,024,402 18.64p 05.12.2016
------------------------------- ------------------ -------------- -----------
8,741,369 19.58p
Exercised or lapsed during the
year
(119,999)
At 31 December 2013 8,723,870 19.62p
------------------------------- ------------------ -------------- -----------
27 Share-based payments
WARRANTS
Warrants issued in the period have been listed out
above in
Note 26. The Company's position with regards to
warrants is
as follows:
The estimated fair value of the warrants granted in
relation
to the charge in the period for the Warrants issued
on 5 December
2013 was calculated by applying the Black-Scholes
option pricing
model. The assumptions used in the calculation were
as follows:
Share price at date of 15.84 pence
grant 18.64 pence
Exercise price 40%
Expected volatility Nil
Expected dividend Exercisable on date of
Vesting criteria grant
Contractual life 3 years
Risk free rate 2.5%
Estimated fair value of 3.79 pence
each
warrant
The total share-based payment expense recognised in the warrant
reserve for the year ended 31 December 2013 in respect of the
warrants granted was GBP152,644 (2012: GBPnil).
Details of the warrants outstanding during the year are as
follows:
2013 2012
Number Weighted Number Weighted
of Warrants average exercise of Warrants average
price exercise
price
000's GBP 000's GBP
------------------------------- --------------- ------------------ ------------- ------------
Outstanding at the beginning
of the year 103 0.4390 - -
Granted during the year 8,741 0.1958 103 0.4390
Exercised during the year* (120) 0.4479 - -
Lapsed during the year - - - -
Reissued in the year - - - -
------------------------------- --------------- ------------------ ------------- ------------
Outstanding at the end
of the year 8,724 0.1962 103 0.4390
Exercisable at the end
of the year 8,724 0.1962 103 0.4390
The warrants outstanding at 31 December 2013 had a weighted
average exercise price of 19.62p and a weighted average remaining
contractual life of 2.6 years.
Equity-settled share option schemes
The Group has granted a variety of options to certain employees
and consultants. Options are exercisable at a price equal to
the average quoted market price of the Company's shares on
the date of grant. If the options remain unexercised after
a period of between 3 and 10 years from the date of grant the
options expire. Options are forfeited if the employee leaves
the Group before the options vest.
On 2 March 2012 the Company granted options over 4,790,403
shares each to Gobind Sahney and Jeff Marvin. The options are
exercisable at any time until 1 March 2022 at 2.25p per share.
Following the share consolidation on 28 January 2013 the number
of options and applicable exercise price were adjusted to 479,040
each at 22.5p for Gobind Sahney and Jeff Marvin.
The estimated fair value of the options granted was calculated
by applying the Black-Scholes option pricing model. The assumptions
used in the calculation were as follows:
Share price at date of grant 2.25pence (pre consolidation)
Exercise price 22.5pence (following share consolidation)
Expected volatility 40%
Expected dividend Nil
Vesting criteria Exercisable on date of grant
Contractual life 10 years
Risk free rate 2.5%
Estimated fair value of each 11.21 pence
warrant
Details of the options outstanding during the year are as follows:
2013 2012
Number Weighted Number Weighted
of options average exercise of options average
price exercise
price
000's GBP 000's GBP
------------------------------- -------------- -------------------- -------------- --------------
Outstanding at the beginning
of the year 958* 0.2250* 10 10.7000
Granted during the year - 958 0.2250
Lapsed during the year - - (10) 10.7000
Reissued in the year -
------------------------------- -------------- -------------------- -------------- --------------
Outstanding at the end
of the year 958 0.2250 958 0.2250
Exercisable at the end
of the year 958 0.2250 958 0.2250
*The option figures above take into account the consolidation
of the Company's ordinary shares in issue at 28 January 2013.
The 479,040 options granted to Gobind Sahney have since been
cancelled following his resignation from the Company on 12
March 2014.
The options outstanding at 31 December 2013 had a weighted
average exercise price of 22.5p and a weighted average remaining
contractual life of 8.2 years.
The charge in the income statement in respect of options in
2013 was GBPnil (2012: GBP115,000).
28 DECOMMISSIONNING OBLIGATION
GROUP COMPANY
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- ------------------ -------------- ------------ ----------
Balance at 1 January - - - -
Provision in the year 28 - - -
-------------------------------------------- ------------------ -------------- ------------ ----------
28 - - -
-------------------------------------------- ------------------ -------------- ------------ ----------
Provision has been made in respect of the eventual
decommissioning cost in respect of the graphite mine in Loharano in
accordance with the Group accounting policy. See Note 3.
29 EVENTS AFTER THE REPORTING PERIOD
On 12 March 2014, the Company completed the placing of 27,777,780
new ordinary shares of 4p each at a price 9p each, raising
in aggregate gross proceeds of approximately GBP2.5 million.
On 28 March 2014, the Company issued warrants to subscribe
for 1,688,889 ordinary shares at 9p each, exercisable on or
before 28 March 2017 and 12 March 2019.
On 31 March 2014 the Company issued 2,971,419 new ordinary
shares of 4p each to certain directors, consultants and contractors
of the Company in lieu of unpaid salary and fees and to satisfy
certain other existing commitments.
On 7 April 2014 the Company used part of the placing proceeds
to repay the existing Convertible Loan Notes totalling GBP750,000
from Darwin Strategic Limited together with any accrued interest
and arrangement fees.
30 Related party transactions
Transactions between the Company and its subsidiaries which
are related parties have been eliminated on consolidation and
are not disclosed in these financial statements.
The remuneration of the Directors, who are the key management
personnel of the Group, is set out in note 8.
Costs recharged from companies controlled by members of key
management for consultancy GBP79,018 (2012: GBP76,635), GBP14,100
was outstanding in the year end.
31 ULTIMATE CONTROLLING PARTY
The Directors do not consider there to be one single ultimate
controlling party.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BBLLFZQFLBBE
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