TIDMSTGR
RNS Number : 9890N
Stratmin Global Resources PLC
22 May 2015
StratMin Global Resources Plc
("StratMin" or the "Company")
Final Results for the Year to 31 December 2014
22(nd) May 2015
StratMin (AIM: STGR), the graphite exploration and production
company with assets in Madagascar, today announces its final
results for the year ending 31 December 2014.
Highlights for the Period
-- The Company commenced commercial production of graphite in
April 2014 with continuing production throughout the year.
-- StratMin signed an Offtake Agreement, for its natural flake
graphite product, with one of the world's largest independent
processors and merchants of graphite in October 2014.
-- Substantial surficial regolith-hosted graphite mineralisation
was identified at the Company's Mahefadok prospect in October
2014.
-- Revenue for the period increased from GBP46,000 in 2013 to GBP153,000 in 2014.
Post Period Highlights
-- Consistent 94 per cent carbon in graphite production achieved at Loharano in May 2015.
-- Production and sales volumes increased consistently in the first quarter of 2015.
-- Better than expected preliminary exploration results for the
Company's previously unexplored Mahefadok, Mahela and Ambatofafana
prospects were achieved.
Enquiries For further information please visit
www.stratminglobal.com or contact:
+44 (0) 20
StratMin Global Resources Plc 3691 6160
Laurie Hunter (Chairman)
Strand Hanson (Nominated & Financial
Adviser) +44 (0) 20
James Spinney / Ritchie Balmer 7409 3494
+44 (0) 20
Beaufort Securities (Sole Broker) 7382 8311
Elliot Hance
Blytheweigh (Financial PR) +44 (0) 20
Halimah Hussain / Megan Ray 7138 3204
CHAIRMAN'S STATEMENT
YEAR TO 31 DECEMBER 2014
2014 was a year of transition for Stratmin. The primary
objectives were to raise the carbon content of our graphite
concentrate to 94%, to sign an off-take agreement with a credible
purchaser and to get to cash flow break even. Although we only
managed to achieve one of these three objectives in 2014 (signed
off-take agreement), I am pleased to say that we are now on the
cusp of reaching all three, having achieved a 94% carbon content in
mid-May.
The first half of 2014 was challenging as the market was
demanding ever higher graphite carbon content, while prices were
eroding. This meant that, with a steady cost of production, the
Group incurred a gross loss in its efforts to achieve improved
grade. Fortunately prices stabilised in the second half of the year
and we were able to identify the changes to our production flow
sheet necessary to raise the carbon grade to 94%. This year we
anticipate building on all the improvements made to the production
cycle so that we can sell our product at increased margins and
higher volumes. Once we are satisfied that we have reached the
right level of plant optimisation, we will invest in further volume
upgrades. We shall also be continuing to identify and prove up the
resource on the rest of our license as we are confident that we
have only scratched the surface to date.
The political environment in Madagascar has become much less
fractious since elections in 2014 ushered in a democratic
government that is widely recognised by the international
community. The background for business continues to improve as
government institutions gradually find their feet and return to
normal operations. While operating in Madagascar will always have
its challenges due to a paucity of infrastructure and weather
issues, we remain confident that we are welcome in our community
and poised to enrich it.
I look forward to providing further news as appropriate in the
near future and thank you for your continued support.
Laurie Hunter
Chairman
21 May 2015
MANAGING DIRECTOR'S REVIEW
YEAR TO 31 DECEMBER 2014
Introduction
2014 saw the Company build on the engineering and metallurgical
work carried out in 2013. Although there remains more to be done
with respect to plant performance, I am happy to report the
position of the Company at end of the year was significantly more
positive than at the start of the year, both in terms of production
outlook and administrative control.
The graphite market stabilised in the second half of the year
after seeing the price soften and demand for carbon content
increase from 92 to 94% in the early part of 2014. These movements
were attributable to an increase in domestic Chinese production
which rose in advance of environmental closure orders placed on
many smaller Chinese graphite mines. It is interesting to note many
of these mines have still not re-opened today. The recent raft of
MOU's between junior graphite explorers and Chinese buyers indicate
that domestic supply in China is not secure. If this continues, we
expect there to be a tightening of prices.
2014 was an important year for Madagascar. In December, it held
the first election since 2005. The result is a democratically
elected government that is now much more stable. Foreign investment
has started to flow inwards as the government takes a more
pro-business stance. Much is expected of the current President and
his team but this first step is encouraging.
Review of the year
The main priority of 2014 was rebuilding the plant flow sheet.
We did this using data from consultants Marsden Gray, Promet Dadi
and SGS as well as the data gathered on the ground by our mine
manager Wilhelm Reitz and his team. This allowed us to deliver both
major additions and minor adjustments to the plant resulting in a
much improved flow sheet that could produce commercial grade
graphite at a more consistent rate.
The last quarter of 2014 saw the plant produce consistently on a
one shift a day basis. The carbon grades achieved were steady
between 88 - 92% carbon throughout the flake size categories.
Production has since continued to increase month on month to March
where 281 tonnes of 20% moisture graphite was produced. Production
volumes will continue to grow in 2015 and I would expect them to be
substantially higher by year end 2015 than those reported in March.
However this growth will not take place on a linear basis
Grade was the main challenge for the year. Achieving +94% carbon
content proved harder than anticipated. Although the larger flakes
were easier to beneficiate to the higher carbon percentages, the
smaller flakes proved stubborn. This is important as they make up
40% of the end product and are only sold at a profit when over 94%
carbon content. Further milling and washing capacity was added but
we had to wait until May 2015 to crack the grade puzzle. This was a
fantastic result from Wilhelm and his team.
Further work has been done on the deposit over the period. With
only 10% of the property having had any exploration work carried
out on it, and with the amount of graphite that is visible at
surface, initial exploration work was completed to identify two
further surface deposits: Mahefadok which consists of a 2kms
strike, trenching to a depth of 4.5metres and samples up to 7.8%
carbon; and Ambatofafana where outcrop samples of 11% were
gathered. With these two new strikes and the knowledge that the
existing resource was only calculated to 7metres and is open at
depth, the outlook for a resource upgrade is very positive.
Delivering a working plant was not the only accomplishment in
2014. An overhaul and rebuild of the financial and administrative
systems was completed. We built a new stock/inventory database,
designed import and export processes, implemented management
structures throughout the mine and the wider company and ensured
that strict top down accounting policies were and remain adhered
to. I am pleased to report that your company now has a very
efficient administrative back bone, for which I would particularly
like to thank our CFO Mirela Gheorghe for her tireless efforts with
this.
An often forgotten component of a mining company is sales. One
of the year's highlights was the signing of an off take agreement.
A component of the agreement is confidentiality covering the
counterparty identity and pricing. But the most important aspect is
that our counterparty has a binding agreement to purchase all our
product over the 94% carbon benchmark (everything under 94% carbon
content is on a first refusal basis). I would like to thank Jeff
Marvin for his help in getting this relationship in place.
Outlook
Stratmin has come a long way since the Reverse Take Over and it
has been a very difficult journey for all involved, investors
particularly. I am happy to report that the vast majority of the
residual problems have been identified and fixed. We have
demonstrated this across the business but most importantly by the
improvement of our production performance. The graphite story
remains extremely compelling and Stratmin is in a unique position
as a growing producer to take full advantage of the consolidation
that the Directors believe must take place in the market over the
short and medium term. This is a very exciting time for the
Company, and I look forward to seeing that reflected in our share
price.
It remains for me to thank our team for their efforts over the
period. Any good company is the sum of its constituent parts and
2014 has been noteworthy for how the team at Stratmin and Graph
Mada worked together in often challenging situations. Whether it is
Shaun Truter who is an essential part of our plant management,
Mamison Randrianantenaina who handles the administration at the
mine, Johnny Razafimahefa who operates our lab or Jacques Yves
Rabenandrasana our in country accountant; and everyone I have not
mentioned,
Manoli Yannaghas
Managing Director
21 May 2015
STRATEGIC REPORT
YEAR TO 31 DECEMBER 2014
The directors present their strategic report for the Group for
the year ended 31 December 2014.
REVIEW OF THE BUSINESS
The Group is involved in graphite production and
exploration.
On 28 January 2013 Stratmin completed the reverse acquisition of
Graphmada Equity Pte. Limited, the parent of Graph Mada SARL, a
graphite exploration and development company in Madagascar.
A variety of investments were made in the business during 2013
and 2014, 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, which is incorporated within
this report by reference.
FINANCIAL HIGHLIGHTS
The Group achieved sales this year of GBP153,000, the operating
loss increased from GBP2,156,000 in 2013 to GBP2,345,000 resulting
in a loss per share of 2.47p (2013: 4.15p), reflecting a move to a
cost base required for a producing mine.
RESULTS AND DIVIDENDS
In 2014, the Group's loss after taxation from continuing
operations was GBP2,384,000 (2013: GBP2,507,000 loss). The
Directors do not recommend the payment of a dividend (2013:
GBPnil).
KEY PERFORMANCE INDICATORS
The key performance indicators are set out below.
GROUP STATISTICS 2014 2013 Change %
-------------------------- ------------ ------------ --------
Net asset value GBP6,198,000 GBP5,142,000 +21%
Net asset value per share 5.55p 7.35p -24%
Closing share price 7.67p 11.88p -35%
Market capitalisation GBP8,634,000 GBP8,306,000 +4%
-------------------------- ------------ ------------ --------
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
21 May 2015
DIRECTORS' REPORT
YEAR TO 31 DECEMBER 2014
The Directors present their annual report and the audited
financial statements of the Group for the year ended 31 December
2014.
PRINCIPAL ACTIVITY AND BUSINESS REVIEW
The Company is no longer required to include the Principal
Activity and Review of the Business within the Directors Report.
This information is now included within the Strategic Report above,
as part of the 'Review of the Business' under the Amendment to the
Companies Act 2006 of s414c(2a).
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
Non-Executive
David Premraj Director
DIRECTORS' INTERESTS
The Directors' interests in the share capital of the Company at
31 December 2014, held either directly or through related parties,
were as follows:
Name of director Number of ordinary shares % of ordinary share capital and Voting Rights
David Premraj 305,556 0.26
Manoli Yannaghas 306,167 0.27
Jeff Marvin 916,667 0.81
Marius Pienaar 18,650,000 16.56
-------------------------- ----------------------------------------------
20,178,390 17.90
Details of the options granted to or held by the Directors are
as follows:
At 31
December At 31 December
Name of 2013 2014 or
director or date date of Average Earliest Average
or former of appointment Options Options cessation Exercise date Date
director if later granted lapsed if earlier price of exercise of expiry
------------------- --------------- --------- --------- -------------- --------- ------------ ----------
Jeff Marvin* 479,040 - - 479,040 22.5p 2/03/2012 1/03/2022
Gobind Sahney 479,040 750,000 (479,040) 750,000 14.0p 12/03/2014 12/03/2017
Manoli Yannaghas** - 2,250,000 - 2,250,000 15.9p 30/09/2014 1/05/2017
Laurie Hunter*** - 2,000,000 - 2,000,000 15.7p 12/03/2014 1/09/2017
*The options granted to Jeff Marvin are exercisable at any time
from the earliest date of exercise to the expiry date.
**Of the 7,000,000 options granted during the year, 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 options granted during the year,
Laurie Hunter was issued with 2,000,000 options, 1,000,000 of which
vested on 12 March 2015.
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.
DIRECTORS' REPORT
YEAR TO 31 DECEMBER 2014 (continued)
DONATIONS
The Group did not make any political or charitable donations
during the year (2013: 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 2014, the number of
supplier days outstanding was 25 days (2013: 27 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 19 May 2015 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 share capital
Name of shareholder of ordinary and voting
shares rights
Consolidated Resources Pte Ltd 16,507,763 12.46
Viking Investments Ltd 12,150,000 9.71
Mrs Kesava Padmavathi 8,100,000 6.11
Mrs Caryl Melissa Jane Pienaar 6,500,000 4.90
Ghanshyam Champakal 5,025,000 3.79
POST YEAR END EVENTS
On 23 January 2015 the Company issued 945,043 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 26 January 2015, the Company completed the placing of
18,947,369 new ordinary shares of 4p each at a price 4.75p each,
raising in aggregate gross proceeds of approximately
GBP900,000.
As part of the placing on 26 January 2015, the Company issued
warrants to subscribe for one new Ordinary share for every two
Placing shares, being 9,473,682 warrants in total, each exercisable
at 8p per Ordinary share at any time before 23 January 2016.
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.
DIRECTORS' REPORT
YEAR TO 31 DECEMBER 2014 (continued)
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. The Directors recognise the
value of the Quoted Companies Alliance Corporate Governance Code
for Small and Mid-sized Quoted Companies, to the extent that they
consider it appropriate and having regard to the size, current
stage of development and resources of the Group. While under the
AIM Rules full compliance is not required, the Directors believe
that the Company applies the recommendations in so far as it is
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 Laurie Hunter (Chairman), Jeff
Marvin and David Premraj. 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
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.
DIRECTORS' REPORT
YEAR TO 31 DECEMBER 2014 (continued)
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.
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.
By order of the Board on 21 May 2015
Manoli Yannaghas
Director
GROUP INCOME STATEMENT
YEAR TO 31 DECEMBER 2014
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 2014 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 10, 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 2014 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 Strategic Report and
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 uncertainty
which may cast doubt about the ability of the Group and Company to
continue as a going concern. However, the directors have plans to
manage the cash flows of the Company to enable it to continue as a
going concern. 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 (continued)
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
21 May 2015
GROUP INCOME STATEMENT
YEAR TO 31 DECEMBER 2014
2014 2013
Notes GBP'000 GBP'000
--------------------------------- ----- -------- --------
Continuing operations
Revenue 153 46
Cost of sales (185) (37)
Gross (loss)/profit (32) 9
Administrative expenses (2,298) (2,061)
Other operating expenses 9 (15) (104)
Operating loss 6 (2,345) (2,156)
Finance costs 10 (35) (351)
Loss before tax (2,380) (2,507)
Tax 11 (4) -
Loss for the year (2,384) (2,507)
Loss attributable to owners
of the parent company (2,384) (2,507)
Earnings per share attributable
to owners of the parent company 12
From continuing operations
Basic and diluted(pence) 12 (2.47) (4.15)
The accounting policies and notes are an integral part of these
financial statements.
GROUP STATEMENT OF COMPREHENSIVE INCOME
YEAR TO 31 DECEMBER 2014
2014 2013
Notes GBP'000 GBP'000
--------------------------------------- ----- -------- --------
Loss for the year (2,384) (2,507)
Other comprehensive income:
Items that may be subsequently
reclassified to profit and loss:
Exchange differences on translation
of foreign operations (49) (8)
Market value adjustment to investments 16 (20) (12)
Other comprehensive income/(expense)
for the period (69) (20)
Total comprehensive loss for the
year attributable to equity holders
of the parent (2,453) (2,527)
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
GBP1,243,000 (2013: GBP1,959,000).
The accounting policies and notes are an integral part of these
financial statements.
GROUP AND COMPANY STATEMENTS OF FINANCIAL
POSITION
AS AT 31 DECEMBER 2014
GROUP COMPANY
------------------ ------------------
2014 2013 2014 2013
Notes GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ----- -------- -------- -------- --------
Non-Current assets
Goodwill 13 5,012 5,012 - -
Property, plant and
equipment 14 1,230 804 3 -
Investment in subsidiaries 15 - - 26,469 26,469
Available for sale
investments 16 6 26 6 26
Loans to group undertakings 15 - - 2,286 1,227
6,248 5,842 28,764 27,722
---------------------------- ----- -------- -------- -------- --------
Current assets
Inventories 17 242 228 - -
Trade and other receivables 18 357 190 1,116 539
Cash and cash equivalents 19 91 420 79 350
690 838 1,195 889
--------
Current liabilities
Trade and other payables 20 382 663 271 562
Short term borrowings 21 226 847 226 847
608 1,510 497 1,409
---------------------------- ----- -------- -------- -------- --------
Non-Current liabilities
Decommissioning obligation 28 132 28 - -
---------------------------- ----- -------- -------- -------- --------
Net assets/(liabilities) 6,198 5,142 29,462 27,202
---------------------------- ----- -------- -------- -------- --------
Equity
Share capital 26 4,505 2,797 4,505 2,797
Share premium account 26 31,771 30,167 31,771 30,167
Merger reserve 23,460 23,460 23,460 23,460
Reverse acquisition
reserve 23 (48,478) (48,478) - -
Investment reserve (32) (12) (699) (679)
Other reserves 293 145 350 153
Retained earnings (5,321) (2,937) (29,925) (28,696)
Total equity 6,198 5,142 29,462 27,202
---------------------------- ----- -------- -------- -------- --------
These financial statements were approved by the Board of
Directors on 21 May 2015.
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 2014
Reverse
Share Share Merger acquisition Investment Other Retained
capital 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
2013 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
Total comprehensive
income for the period - - - - (20) (49) (2,384) (2,453)
Net proceeds of share
issues 1,708 1,862 - - - 35 - 3,605
Share issue costs - (258) - - - 53 - (205)
Share based payment
costs - - - - - 109 - 109
Balance at 31 December
2014 4,505 31,771 23,460 (48,478) (32) 293 (5,321) 6,198
The Company completed in 2013 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 2014
Share Merger Investment Other Retained
capital Share Premium Reserve reserve reserves earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- -------- ------------- --------- ----------- ---------- --------- -------
Balance at 1 January 2013 362 28,170 - (667) - (26,737) 1,128
Total comprehensive income
for the year - - - (12) - (1,959) (1,971)
Acquisition of Graphmada 2,040 - 23,460 - - - 25,500
Net proceeds of share issues 395 1,997 - - - - 2,392
Issue of warrants - - - - 153 - 153
Balance at 31 December 2013 2,797 30,167 23,460 (679) 153 (28,696) 27,202
Total comprehensive expense
for the year - - - (20) - (1,229) (1,249)
Issuance of warrants in the
period - - - - - -
Net proceeds of share issues 1,708 1,862 - - 35 - 3,605
Share issue costs - (258) - - 53 - (205)
Share based payment costs - - - - 109 - 109
Balance at 31 December 2014 4,505 31,771 23,460 (699) 350 (29,925) 29,462
The other reserve includes charge to the warrant reserve for the
year for warrants issued of GBP88,000 (2013: GBP153,000). The
balance on the Foreign exchange reserve at the end of the year is
GBP49,000 (2013: 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 2014
GROUP COMPANY
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- -------- -------- -------- --------
OPERATING ACTIVITIES
Loss for the year before
taxation (2,380) (2,507) (1,229) (1,959)
Adjusted for:
Finance expense 35 351 35 351
Depreciation 58 75 1 -
Share based payment charge 109 - 109 -
Shares issued in settlement
of fees 30 207 30 207
Loss on disposal of property,
plant and equipment 36 44 - -
Loss on disposal of investments - - - -
Operating cash flows before
movements in working capital (2,112) (1,830) (1,054) (1,401)
Increase in inventory (14) (159) - -
(Increase)/Decrease in
trade and other receivables (167) (126) (16) 26
Increase/(Decrease) in
trade and other payables (6) 348 (17) 342
Net cash used in operations (2,299) (1,767) (1,087) (1,033)
Tax paid (4) - - -
Net cash used in operating
activities (2,303) (1,767) (1,087) (1,033)
--------------------------------- -------- -------- -------- --------
INVESTING ACTIVITIES
Purchases of available
for sale investments - - - -
Purchase of property, plant
and equipment (416) (626) (3) -
Loans to associated companies - - (1,620) (1,614)
Acquisition of subsidiary - (51) - (51)
Net cash used in investing
activities (416) (677) (1,623) (1,665)
--------------------------------- -------- -------- -------- --------
FINANCING ACTIVITIES
Net proceeds from share
issues 3,095 2,185 3,095 2,185
Short term borrowings (621) 750 (621) 750
Interest paid (35) (67) (35) (67)
Net cash used in financing
activities 2,439 2,868 2,439 2,868
Net (decrease)/increase
in cash and cash equivalents (280) 424 (271) 170
Cash and cash equivalents
at beginning of year 420 4 350 180
Effect of foreign exchange
rate changes (49) (8) - -
Cash and cash equivalents
at end of year 91 420 79 350
--------------------------------- -------- -------- -------- --------
The accounting policies and notes are an integral part of these
financial statements.
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR TO 31 DECEMBER 2014
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, 5 and
6.
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):
-- IFRS 9 Financial Instruments
-- IFRS 15 Revenue from Contracts with Customers
-- IFRS 11 (amendments) Accounting for Acquisitions
of Interests in Joint Operations
-- IAS 16 and IAS 38 (amendments) Clarification
of Acceptable Methods of Depreciation and Amortisation
-- IAS 19 (amendments) Defined Benefit Plans:
Employee Contributions
-- IAS 27 (amendments) Equity Method in Separate
Financial Statements
-- IFRS 10 and IAS 28 (amendments) Sale or Contribution
of Assets between an Investor and its Associate
or Joint Venture
-- Annual Improvements to IFRSs: 2010-2012 Amendments
to: IFRS 2 Share-based Payment, IFRS 3 Business
Combinations, IFRS 8 Operating Segments, IFRS
13 Fair Value Measurement, IAS 16 Property,
Plant and Equipment, IAS 24 Related Party Disclosures
and IAS 38 Intangible Assets
-- Annual Improvements to IFRSs: 2011-2013 Amendments
to: IFRS 3 Business Combinations, IFRS 13 Fair
Value Measurement and IAS 40 Investment Property
-- Annual Improvements to IFRSs: 2012-2014 Cycle
Amendments to: IFRS 5 Non-current Assets Held
for Sale and Discontinued Operations, IFRS 7
Financial Instruments: Disclosures, IAS 19 Employee
Benefits and IAS 34 Interim Financial Reporting
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.
3 Accounting Policies (continued)
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.
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 in 2013 the acquisition of a subsidiary
was accounted for as a reverse acquisition as
detailed in Note 22.
revenue recognition
The Group's Revenue is predominantly generated
from the sale of Graphite all of which is governed
by an Off-take agreement signed in 2014. The
agreement is with an external third party, the
terms of which are subject to a confidentiality
agreement. Revenue is recognised net of any
sales taxes and discounts. Customers are invoiced
on an Free On Board basis (FOB), Meaning ownership
transfers to the customer following clearance
of customs at the port of departure.
3 ACCOUNTING POLICIES (continued)
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.
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.
3 Accounting Policies (continued)
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.
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.
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.
3 Accounting Policies (continued)
IMPAIRMENT OF PROPERTY, PLANT & EQUIPMENT AND
INTANGIBLE ASSETS EXCLUDING GOODWILL (continued)
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 Property, plant & equipment.
Under IAS 37 the present obligation as a result
of a past event 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.
3 Accounting Policies (continued)
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 (continued)
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.
3 Accounting Policies (continued)
REVERSE ACQUISITION (continued)
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
GBP153,000 (2013: GBP46,000), incurred a loss
of GBP2,384,000 during the year (2013: GBP2,507,000
loss), had a cash balance of GBP91,000 as at
31 December 2014, and despite the recent improvements
in volume of production and grade, was yet to
reach a level of production at the mine-site
that would generate a positive cash flow as at
the date of signing these financial statements.
However, as disclosed in Note 29, on 26 January
2015 the Company raised gross proceeds of GBP900,000
by way of an equity placing, approved at a General
Meeting on 11 February 2015.
So, after making enquiries, the Directors have
formed a judgement that there is a reasonable
expectation that the Company can secure further
adequate resources when needed, 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.
DECOMMISSIONING OBLIGATIONS
The Directors calculated the net present value
of estimated future rehabilitation costs based
on the Plant & equipment and Buildings & infrastructure
currently in place. The discount factor applied
was based on the current cost of capital. There
is an expectation for future infrastructure costs
to be incurred as the plant expands, or a second
plant to be installed, but these have not been
recognised as these upgrades have yet to be installed.
4 CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATIONS
(continued)
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 Group or Company's activities from which
it may earn revenues and incur expenses, whose
operating results are regularly reviewed by
the Group'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 Group'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 and the sensitive nature of
the Off-take agreement signed during the year.
Although the Directors can confirm that all
Revenue and Cost of sales relate to the mining
activity in Madagascar.
6 OPERATING LOSS
2014 2013
GBP'000 GBP'000
----------------------------------------- -------- --------
Operating loss is stated after charging:
Staff costs as per Note 8 below 1,021 797
Depreciation of property, plant and
equipment 107 75
Loss on disposal of property, plant
and equipment 63 44
Cost of inventories recognised as
an expense 14 37
Write downs of VAT receivable 11 -
Write downs of inventories recognised
as an expense 15 14
Net foreign exchange (gain)/loss (48) 60
--------------------------------------------- -------- --------
7 auditors' remuneration
The analysis of auditors' remuneration is as
follows:
2014 2013
GBP'000 GBP'000
-------------------------------------------------------------------------------- -------------- --------------
Fees payable to the Group's auditors
for the audit of the Group's annual
accounts 45 45
Total audit fees 45 45
Fees payable to the Group auditor
and their associates for other services
to the Group:
- Tax services 4 4
49 49
-------------------------------------------------------------------------------------------- -------------- --------------
8 staff costs
The average monthly number of employees (including
executive directors) for the continuing operations
was:
2014 2013
No. No.
-------------------------------------------------------------------------------- -------------- --------------
Group total staff 97 70
2014 2013
GBP'000 GBP'000
-------------------------------------------------------------------------------- -------------- --------------
Wages and salaries 876 766
Social security costs 36 31
Share based payment expense 109 -
1,021 797
-------------------------------------------------------------------------------------------- -------------- --------------
Directors' emoluments were as follows:
2014 2014 2014 2014 2013
Directors Social Consultancy Total Total
fees security payments
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- ------------------ ----------------- -------------------- -------------- --------------
Laurie
L Hunter 64 - - 64 -
Gobind Sahney 65 - - 65 110
Manoli Yannaghas 205 9 - 214 172
Jeff Marvin 30 - - 30 98
David Premraj 30 - - 30 23
Marius Pienaar 30 - 3 33 62
424 9 3 436 465
Included in Manoli Yannaghas director fees is
an amount of GBP13,389 that was settled by way
of the issue of 334,727 ordinary shares of 4p
each in the Company on 23 January 2015.
9 OTHER OPERATING EXPENSE
2014 2013
GBP'000 GBP'000
--------------------------------------------- --------- ---------
Loss on disposal of property, plant
and equipment 63 44
(Gain)/loss on foreign currency
transactions (48) 60
------------------------------------------------- --------- ---------
15 104
------------------------------------------------- --------- ---------
10 finance costs
2014 2013
GBP'000 GBP'000
----------------------------------------------- ---------- ----------
Charge in relation to the issuance
of warrants - 153
Short term loan finance costs 35 131
Interest on convertible loan notes - 67
---------------------------------------------------- ---------- ----------
35 351
---------------------------------------------------- ---------- ----------
11 taxation
There is no UK tax charge/credit in 2014 or
2013.
The UK corporation tax rate applicable for 2014
is 23.5% (2013: 23.5%).
Reconciliation of tax charge:
2014 2013
GBP'000 GBP'000
----------------------------------------------- ---------- ----------
Loss on continuing operations
before tax (2,380) (2,507)
---------------------------------------------------- ---------- ----------
Tax at the UK corporation
tax rate of 21.5% (2013:
23.5%)
Tax at the Singapore corporation 512 589
tax rate of 17% - -
Effects of:
Tax effect of expenses
that are not deductible - -
in determining taxable
profit:
Foreign taxes payable (4) -
Unutilised tax losses carried
forward (512) (589)
Tax charge for period (4) -
----------------------------------------------- ---------- ----------
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 2014 assumes
that all shares have been included in the computation
based on the weighted average number of days
since issue.
2014 2013
GBP'000 GBP'000
----------------------------------------------- ---------- ----------
Loss attributable to owners of the
Group:
Loss from continuing operations (2,384) (2,507)
Loss for the year attributable to
owners of the Group (2,384) (2,507)
---------------------------------------------------- ---------- ----------
Weighted average number of ordinary
shares in issue for basic and fully
diluted earnings* 96,473,697 60,349,602
12 EARNINGS PER SHARE (continued)
LOSS PER SHARE (PENCE PER SHARE)
BASIC AND FULLY DILUTED*:
- from continuing and total operations (2.47p) (4.15p)
--------------------------------------------- -------- --------
*Since the Group has incurred losses in both 2013 and 2014 the
basic loss and the diluted loss per share are the same as the
effect of exercise of options and warrants is not dilutive.
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.
2014 2013
GBP'000 GBP'000
------------------------------------ -------- -------
At 1 January 5,012 143
Arising on reverse acquisition
of GME* - 4,869
-------------------------------------- --- -------- -------
At 31 December 5,012 5,012
-------------------------------------- --- -------- -------
* The amount of GBP4,869,000 includes an amount of GBP370,000 of
Goodwill arising on the reverse acquisition for the remaining 85%
(see Note 22 for further details). The remaining amount of
GBP4,499,000 relates to the Goodwill arising on the reverse
acquisition for the initial 15% investment made by the Company in
GME in 2012.
The Directors have reviewed the carrying value of Goodwill at 31
December 2013 and consider that no impairment provision is
required. The Impairment review involved calculating the NPV of the
Group's cash generating assets including the assets acquired in
2013 following the acquisition of GME. The NPV calculation involved
using the discounted cash flow forecast model based on current and
expected production results. As a result of carrying out this
impairment testing review the Directors felt there was no need for
any impairment of the carrying value of the Goodwill.
The Directors 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.
14 PROPERTY, plant AND EQUIPMENT
Plant Fixtures Buildings Motor Group
and Equipment and and infrastructure Vehicles Total
fittings
Cost GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ----------------- ----------- -------------------- ---------- ---------
As at 1 January
2013 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
Additions 251 13 244 61 569
Disposals (37) - - - (37)
------------------------- ----------------- ----------- -------------------- ---------- ---------
As at 31 December
2014 535 75 516 296 1,422
------------------------- ----------------- ----------- -------------------- ---------- ---------
Depreciation
------------------------- ----------------- ----------- -------------------- ---------- ---------
As at 1 January
2013 - - 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
Charge for the
year 49 14 20 24 107
Disposals (1) - - - (1)
------------------------- ----------------- ----------- -------------------- ---------- ---------
As at 31 December
2014 57 20 26 89 192
------------------------- ----------------- ----------- -------------------- ---------- ---------
Net book value
------------------------- ----------------- ----------- -------------------- ---------- ---------
As at 31 December
2014 478 55 490 207 1,230
------------------------- ----------------- ----------- -------------------- ---------- ---------
As at 31 December
2013 312 56 266 170 804
------------------------- ----------------- ----------- -------------------- ---------- ---------
15 INVESTMENT IN subsidiarY UNDERTAKINGS
The Company invests in its subsidiary and associated
undertakings
2014 2013
COMPANY GBP'000 GBP'000
-------------------------------------------- ----------- -------------------- ---------------------
Cost and net book value
At 1 January 26,469 46
Acquisition of 15% GME
in 2012 - 821
Additions - 102
Acquisition of 85% GME - 25,500
------------------------------------------------- ----------- -------------------- ---------------------
As at 31 December 26,469 26,469
------------------------------------------------- ----------- -------------------- ---------------------
All principal subsidiaries of the Group are
consolidated into the financial statements.
At 31 December 2014 the subsidiaries were as
follows:
Subsidiary Country Principal activity Holding %
undertakings of registration
------------------------ ------------------ --------------------------------- ---------- ---------
Direct Excellence Intermediate Ordinary
Limited UK holding company shares 100%
Graphmada Equity Intermediate Ordinary
Pte. Ltd Singapore holding company shares 100%
Stratmin Global Operational Ordinary
Graphite Ltd Jersey company shares 100%
Graph Mada Ordinary
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 2014 2013
GBP'000 GBP'000
Loans to group companies
At 1 January 2014 1,227 118
Additions 1,059 1,109
Repayments - -
---------------------------------- -------- --------
As at 31 December 2,286 1,227
----------------------------------- -------- --------
16 AVAILABLE-FOR-SALE INVESTMENTS
GROUP COMPANY
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Investments at fair value
at 1 January 2014 26 - 26 859
Reclassified as Investment
in subsidiary - - - (821)
Investments acquired
on reverse acquisition - 38 - -
26 38 26 38
Market value adjustments
to investment (20) (12) (20) (12)
--------------------------------- -------- -------- -------- --------
Market value of investments
at 31 December 2014 6 26 6 26
--------------------------------- -------- -------- -------- --------
Categorised as:
Level 1 Investments 6 26 6 26
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 2014 or 2013.
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 2014 2013
GBP'000 GBP'000
------------------------------------------------ -------- --------
At 1 January - 821
Reclassified as Investment in Subsidiary - (821)
At 31 December - -
----------------------------------------------------- -------- --------
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).
INVENTORY AND WORK IN
17 PROGRESS
GROUP COMPANY
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- -------- -------- -------- --------
Inventory 168 69 - -
Work in progress 74 159 - -
----------------------------------- -------- -------- -------- --------
242 228 - -
----------------------------------- -------- -------- -------- --------
The Directors consider the carrying amount of inventory
equivalents approximates to their fair value.
18 TRADE AND OTHER RECEIVABLES
GROUP COMPANY
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- -------- -------- -------- --------
Other receivables - - - -
Prepayments and accrued
income 22 15 14 9
Trade receivable 65 34 21 -
VAT Receivable 270 141 15 25
----------------------------------- -------- -------- -------- --------
357 190 50 34
Short term loans to group
companies - - 1,066 505
----------------------------------- -------- -------- -------- --------
357 190 1,116 539
----------------------------------- -------- -------- -------- --------
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
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- -------- ------- ------- -------
Cash and cash equivalents 91 420 79 350
------------------------------- -------- ------- ------- -------
The Directors consider the carrying amount of cash and cash
equivalents approximates to their fair value.
20 TRADE AND OTHER PAYABLES
GROUP COMPANY
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
----------------- -------- ------- ------- -------
Trade payables 161 224 85 136
Other payables 65 12 32 -
Accrued expenses 156 428 154 426
----------------------- -------- ------- ------- -------
382 664 271 562
----------------------- -------- ------- ------- -------
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
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- -------- ------- ------- -------
Convertible loan notes - 750 - 750
Other short term borrowings* 226 97 226 97
----------------------------------- -------- ------- ------- -------
226 847 226 847
----------------------------------- -------- ------- ------- -------
Included within Other short term borrowings is a short term loan
of GBP219,000 from David Premraj. The loan accrued interest of
GBP10,923 and was repaid shortly after the year end (see Note 30).
The Directors consider the carrying amount of trade payables
approximates to their fair value.
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 shareholder's
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
Book Value Fair
Value Adjustments Adjustments 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
------------------------------- ------- ----------- ------------ -------
22 ACQUISITION (continued)
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
-----
*As mentioned in Note 13 the total Goodwill arising on the
reverse acquisition of GME includes a balance of GBP4,499,000
relating to the portion attributable to the initial 15% investment
by the Company in GME in 2012.
23 REVERSE ACQUISITION RESERVE
The reverse acquisition reserve arose from the
acquisition of GME by the Company in 2013 and
represents the total amount by which the fair
value of the shares issued in respect of the
acquisition exceed their total nominal value.
2014 2013
GBP'000 GBP'000
------------------------------ --------- --------
At 1 January 2013 48,478 2,039
Arising on share issue - -
Arising on acquisition
of GME - 46,439
At 31 December 2013 48,478 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:
2014 2013
GBP'000 GBP'000
------------------------------------- --------- ---------
Financial assets:
Cash and cash equivalents 91 420
Available for sale investments 6 26
Loans and receivables 598 417
-------------------------------------- ---- --------- ---------
695 863
------------------------------------------- --------- ---------
24 Financial instruments (continued)
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:
2014 2013
GBP'000 GBP'000
----------------------------------------------- ------------ ----------
Financial liabilities at amortised
cost:
Trade and other payables 226 236
Short term borrowings 226 847
----------------------------------------------- ----- ------------ ----------
452 1,083
----------------------------------------------- ----- ------------ ----------
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.
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 2014
Investment in Subsidiaries 46,889
------------------------------------------------ ------- --------------------
Company 31 December 2013
Investment in Subsidiaries 43,870
------------------------------------------------ ------- --------------------
24 Financial instruments (continued)
FOREIGN CURRENCY RISK MANAGEMENT
The following table illustrates the sensitivity
of the value of investments in regards to the
relative GBP and USD exchange rates.
It assumes a +/- 4.72% change in the USD/GBP
exchange rate for the year ended 31 December
2014 and a +/- 9.44% change in the USD/GBP exchange
rate for the year ended 31 December 2013. 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 31 Dec
2014 2013
$'000 $'000
---------------------------------- ------ ------------ -----------
Change in equity
4.72% increase in USD fx
rate against GBP 2,213 -
4.72% decrease in USD fx
rate against GBP (2,213) -
9.44% increase in USD fx
rate against GBP - 4,141
9.44% decrease in USD fx
rate against GBP - (4,141)
------------------------------------------ ---------------- -----------
Exposure to foreign exchange rates varies 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.
There are no long term loans or short term loans
that carry any interest and thus sensitivity
analyses have not been provided 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
GBP689,000 (2013: GBP837,000) 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 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 GBP6.1m (2013: GBP4.7m) available for
offset against future profits. No deferred tax
asset has been recognised in respect of these
losses (2013: GBPnil) due to the unpredictability
of future profit streams.
26 Called up share capital
Number Nominal Share premium
of shares value GBP'000
GBP'000
ISSUED AND FULLY PAID:
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
Ordinary shares of
4p each 42,713,481 1,708 1,862
Expenses of share issues - - (258)
--------------------------------- ------------ --------- --------------
At 31 December 2014 112,634,237 4,505 31,771
--------------------------------- ------------ --------- --------------
The Company has one class of ordinary shares,
which carry no right of fixed income.
On 14 March 2014, the Company issued 27,777,780
new ordinary shares of 4p each for capital raise.
On 31 March 2014, the Company issued 2,971,419
new ordinary shares of 4p each to satisfy certain
existing commitments.
On 28 October 2014, the Company issued 11,428,570
new ordinary shares of 4p each for capital raise.
On 01 November 2014, the Company issued 535,714
new ordinary shares of 4p each to satisfy certain
existing commitments.
WARRANTS
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.
On 28 March 2014 the Company issued warrants
to subscribe for 1,388,889 ordinary shares at
9p per share, exercisable on or before 28 March
2017 to Hume Capital Limited and warrants to
subscribe for 300,000 ordinary shares at 9p
per share, exercisable on or before 12 March
2019 to Strand Hanson Limited.
On 29 October 2014 the Company issued warrants
to subscribe for 5,714,283 ordinary shares at
10p per share to the subscribers to the placing
of GBP800,000 of the same date, exercisable
on or before 4 November 2015.
The above issues of warrants are summarised
as follows:
Number
Issue Date of warrants Exercise
issued price Expiry date
--------------------------- ------------ --------- --------------
Brought forward 112,500 40 - 235p Various
29 January 2013 250,300 50.00p 29.01.2016
29 January 2013 300,000 4.00p 29.01.2016
7 March 2013 (102,500) 40 - 50p -
15 April 2013 (17,499) 40p -
17 September 2013 4,166,667 20.00p 20.06.2014
5 December 2013 4,024,402 18.64p 05.12.2016
--------------------------- ------------ --------- --------------
As at 1 January 2014 8,733,870
Issued in the year
28 March 2014 1,388,889 9.00p 28.03.2017
28 March 2014 300,000 9.00p 12.03.2019
29 October 2014 5,714,283 10.00p 04.11.2015
--------------------------- ------------ --------- --------------
16,137,042
Exercised or lapsed
during the year
17 September 2013 (4,166,667) 20.00p 20.06.2014
At 31 December 2014 11,970,375 13.89p
--------------------------- ------------ --------- --------------
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 28 March 2014 was calculated
by applying the Black-Scholes option pricing
model. The assumptions used in the calculation
were as follows:
28 March 2014 29 October 2014
Share price at date 8.63 pence 8.00 pence
of grant 10.00 pence 10.00 pence
Exercise price 40% 40%
Expected volatility Nil Nil
Expected dividend Exercisable on Exercisable on
Vesting criteria date of grant date of grant
Contractual life 2 years 1 year
Risk free rate 2.5% 2.5%
Estimated fair value 4.5635 pence 1.9894 pence
of each warrant
The total share-based payment expense recognised in the option
and warrant reserve for the year ended 31 December 2014 in respect
of the warrants issued was GBP88,000 (2013: GBP152,644).
Details of the warrants outstanding during the
year are as follows:
2014 2013
Number Weighted Number Weighted
of Warrants average of Warrants average
exercise exercise
price price
000's GBP 000's GBP
----------------------- ------------- ---------- ------------- ----------
Outstanding at the
beginning of the
year 8,734 0.1962 113 0.8990
Granted during the
year 7,403 0.9771 8,741 0.1958
Exercised during
the year* - - (120) 0.4479
Lapsed during the
year (4,167) 0.2000 - -
Reissued in the year - - - -
----------------------- ------------- ---------- ------------- ----------
Outstanding at the
end of the year 11,970 0.1389 8,734 0.1962
Exercisable at the
end of the year 11,970 0.1389 8,734 0.1962
The warrants outstanding at 31 December 2014
had a weighted average exercise price of 13.89p
(2013: 19.62p) and a weighted average remaining
contractual life of 2.1years (2013: 2.6 years).
27 Share-based payments (continued)
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.
On 12 March 2014 the Company granted options
over, in aggregate, 7,000,000 ordinary shares
to the Board, key staff and consultants as follows:
2,250,000 were granted to Manoli Yannaghas in
four tranches at exercise prices of 14p, 17p
and 21p, with different vesting conditions all
expiring on 12 March 2017.
2,000,000 were granted to Laurie Hunter in three
different tranches at exercise prices of 14p,
17p and 21p, all of which vested on the anniversary
of the date of issue. 1,000,000 options expire
on 12 March 2017 and 1,000,000 options expire
on 12 March 2018.
2,000,000 were granted to key staff and a director
of one of the Company's subsidiaries.
750,000 were granted to the outgoing Chairman
vesting immediately with an exercise price of
14p expiring on 12 March 2017.
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:
14p Options 17p Options 21p Options
Share price 9.00 pence 9.00 pence 9.00 pence
at date of 14.00 pence 17.00 pence 21.00 pence
grant 40% 40% 40%
Exercise price Nil Nil Nil
Expected volatility Exercisable Exercisable Exercisable
Expected dividend on date of on date of on date of
Vesting criteria grant grant grant
3 years 3-4 years 3-4 years
Contractual 2.5% 2.5% 2.5%
life
Risk free rate 2.2054 pence 1.70435 pence 1.2405 pence
Estimated fair
value of each
Option
The total share-based payment expense recognised in the option
and warrant reserve for the year ended 31 December 2014 in respect
of the options granted was GBP109,413 (2013: GBPnil).
27 Share-based payments (continued)
Details of the options outstanding during the
year are as follows:
2014 2013
Number Weighted Number Weighted
of options average of options average
exercise exercise
price price
000's GBP 000's GBP
----------------------- ------------ ---------- ------------ ----------
Outstanding at the
beginning of the
year *958 0.2250 *958 0.2250
Granted during the
year 7,000 0.1566 - -
**Cancelled during
the year (479) 0.2250 - -
Lapsed during the - - -
year -
Reissued in the year - - - -
----------------------- ------------ ---------- ------------ ----------
Outstanding at the
end of the year 7,479 0.1610 *958 0.2250
Exercisable at the
end of the year 3,229 0.1526 *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
been cancelled following his resignation from
the Company on 12 March 2014.
The 7,000,000 options granted during the period
have been detailed out above.
The options outstanding at 31 December 2014
had a weighted average exercise price of 16.1p
(2013: 22.5p) and a weighted average remaining
contractual life of 4.2 years.
The charge in the income statement in respect
of options in 2014 was GBP109,413 (2013: GBPnil).
28 DECOMMISSIONNING OBLIGATION
GROUP COMPANY
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
---------------------- -------- ------- ------- -------
Balance at 1 January 28 - - -
Provision in the year 104 28 - -
---------------------------- -------- ------- ------- -------
132 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 23 January 2015 the Company issued 945,043
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 26 January 2015, the Company completed the
placing of 18,947,369 new ordinary shares of
4p each at a price 4.75p each, raising in aggregate
gross proceeds of approximately GBP900,000.
As part of the placing on 26 January 2015, the
Company issued warrants to subscribe for one
new Ordinary share for every two Placing shares,
being 9,473,682 warrants in total, each exercisable
at 8p per Ordinary share at any time before
23 January 2016.
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 GBP3,045
(2013: GBP79,018), entirely paid during the
year.
During the year a Director lent the Company
GBP219,000 by way of a short term Director Loan.
This has been included within Short Term Borrowings.
The amount outstanding at year end was GBP219,000,
with interest accruing at 4.98%. The loan was
repaid in full within 3 months of the year end.
31 CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES
The Group had no capital commitments or contingent
liabilities as at 31 December 2014 (2013: GBPnil).
32 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 DFLFLEEFXBBX
Stratmin Global (LSE:STGR)
Historical Stock Chart
From Jun 2024 to Jul 2024
Stratmin Global (LSE:STGR)
Historical Stock Chart
From Jul 2023 to Jul 2024
