TIDMKGLD
RNS Number : 2833I
Kolar Gold Limited
08 December 2015
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN, INTO OR FROM
ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION
8 December 2015
Kolar Gold Limited
("Kolar Gold" or the "Company")
Final Results Announcement, Strategic Review, Board Changes and
Commencement of Offer Period
Kolar Gold Limited (AIM: KGLD), the Indian focussed gold
exploration and mine development company, announces its audited
final results for the year ended 30 June 2015, a review of its
activities and strategic direction, changes to the Board of
Directors and commencement of offer period, with a view to
maximising value for shareholders.
Results
The Company recorded a loss after tax for the year ended 30 June
2015 of GBP1,254,716, (2014: loss after tax of GBP5,621,538). As at
that date the Company had GBP1.4 million in cash and term deposits
(2014: GBP3.4 million).
The Company has, at the date of this report, the following
interests:
-- a shareholding of 23.5 per cent. in Geomysore Mining Services
(India) Private Limited ("GMSI");
-- a Right of First Refusal, in association with the Cooperative
Societies of Bharat Gold Mines Limited ("BGML") ex-employees, to
acquire the BGML mining assets at Kolar through a tender process to
be held by the owner, the Government of India;
-- cash balances of GBP1.0 million; and
-- liabilities in connection with changes to executive
management of approximately GBP0.25 million.
Review of Activities
Kolar Gold's strategy from the outset has been to focus on
building an Indian gold exploration and mine development company.
It has been progressing this plan through its significant
investment in Geomysore Services (India) Private Limited ("GMSI")
and by pursuing its proposed acquisition of Bharat Gold Mines
Limited, jointly with the BGML Gold Mine ex-employee united unions,
to revive the historic BGML gold mine ("BGML Gold Mine"), which is
located in the Kolar Gold Fields. However, both of these
initiatives have taken significantly longer to progress than was
originally foreseen. The environment for undertaking mine
exploration and development in India is complex and sensitive and
every step is very time consuming with many vested interests
needing to be accommodated on an ongoing basis. Previously
anticipated changes to the regulatory and business environment of
the mining sector are still yet to materialise, despite the initial
optimism following the election of the new government in May 2014
and its desire to attract more foreign direct investment. Kolar
Gold's ability to continue with its current strategy is constrained
given its present cash resources and the current equity market
environment for junior exploration and mining companies in London,
where the Company's shares are quoted.
GMSI
Kolar Gold has a 23.5 per cent shareholding in GMSI. GMSI is
progressing with further exploration and appraisal work to assess
the feasibility, scale and timing of building a producing gold mine
at Jonnagiri, for which GMSI has been granted a 30 year mining
licence to mine 365,000 tonnes of gold ore per year. Over the past
12 months a concerted drilling campaign has been undertaken at
Jonnagiri totalling 15,800 metres in order to enhance the resource
base and improve its definition. A Competent Person's Report on the
drilling results is now expected in January 2016. A full assessment
of the prospects for this mine and likely timing to reach
production will not be known until March 2016 at the earliest once
a pre-feasibility study has been prepared. However, GMSI will
require further funding by early 2016, which it is seeking to
procure from its shareholders, and Kolar Gold will assess its
options and the attractiveness of investing further in GMSI
following the availability of the assessment of the recent drilling
results in January 2016. Any further investment in GMSI will
require Kolar Gold to raise additional funds.
In November 2014 Kolar Gold was granted an option to invest a
further US$2 million (GBP1.34 million) in GMSI within 12 months at
the same valuation as the most recent round of funding, which was
priced at the end of 2014 at a pre new money valuation of $18
million (GBP12.08 million). The option term expired during November
2015 but as the drilling programme and resource assessment has
taken longer for GMSI to complete than expected, Kolar Gold is
seeking to reinstate it with an expiry date of 30 April 2016.
Exercise of this option, if reinstated, would be subject to Kolar
Gold raising further capital.
As at 31 December 2014 the investment in GMSI was held in the
balance sheet of the Company at GBP2.83 million since when the
Company has invested a further GBP389,000. Further investment by
GMSI's other major shareholders has resulted in Kolar Gold's
shareholding now standing at 23.5 per cent. In the absence of Kolar
Gold investing additional capital into GMSI its shareholding will
be diluted further.
GMSI also has a number of other gold licences and applications
in India at different stages of development in some very promising
areas including North, East and South Kolar Belt but progressing
these would require further capital.
Merger discussions with Deccan Gold Mines Limited ("DGM") have
been in abeyance while DGM has focused on raising its own funds
through a rights issue on the Bombay Stock Exchange which was
completed on 9 November 2015 and raised GBP5.10 million. The logic
of the merger, to create India's largest listed gold exploration
company, remains strong and GMSI has indicated that discussions are
likely to be renewed in 2016. Kolar Gold shareholders will be kept
fully informed of developments. The achievability of obtaining a
listing for GMSI shares either through a merger with DGM or by a
listing on the Bombay Stock Exchange will only become clearer once
the economic feasibility of constructing a mine at Jonnagiri are
better known.
BGML
The revival of the BGML Gold Mine continues to be discussed at
state and central government level but the form and timing of any
tender remains uncertain despite previous indications that a
process was likely to commence. The Company continues to pursue
discussions with Government agencies, its partners and interested
parties but the form and timing of the tender for this asset have
still not been confirmed by the Government.
Strategic Review
Against this background the Company has taken further steps to
preserve cash to extend the life of the Company beyond the end of
2016. The Company is reviewing its strategic options with the
intention of considering all available opportunities for maximising
value for shareholders. These include
-- exploring the possibility of realising the value of its
investment in India in an orderly manner, including the possible
sale of one or more of the Company's assets or subsidiaries;
-- investigating mining opportunities outside India, where Kolar
Gold as a vehicle could be an attractive platform for current and
new investors; and
-- seeking new investors who may be prepared to invest in the share capital of Kolar Gold.
These options could involve a third party making an offer for
the Company's shares or the Company making an acquisition for cash
and/or shares and/or delisting from AIM.
If the Directors are unable to see a long term future for Kolar
Gold they will consider winding up the Company and returning
capital to investors.
Board Changes
The Company and Nick Spencer, the CEO of Kolar Gold, have
reached a mutual agreement whereby Nick has today resigned from the
Company and he will step down from the Board of Kolar Gold with
immediate effect.
Separately, Stephen Coe, who has been a non-executive director
since 2011, also today has given notice to resign, for personal
reasons, and he will be stepping down from the Board and leaving
the Company at the end of December 2015. Stephen Oke will replace
Stephen Coe as Chairman of the Audit Committee with effect from 1
January 2016.
Harvinder Hungin, Stephen Oke and Vidyanathan Sivakumar, SUN
Group's representative on the Board of Kolar Gold and who is based
in India and also on the Board of GMSI, will step up to a more
active role in monitoring and developing the Company's interests in
India for the immediate future. Nick Spencer will continue to
support them for the remainder of his contract period that expires
in May 2016. Following Nick's departure and the results of the
current strategic review the Board will review the composition of
the Board and management team.
The Directors wish both Nick and Stephen well and thank them for
their contributions to developing Kolar Gold's position in the
Indian gold mining sector, which has been a challenging
journey.
Broker
Pareto Securities Ltd is no longer joint broker to the Company.
N+1 Singer assumes the role of sole broker to the Company.
Conclusion
The Company will report back to shareholders as soon as the
Strategic Review is complete.
Harvinder Hungin
Chairman
7 December 2015
Takeover Code
Discussions in relation to a merger with a third party or a sale
of the Company will take place within the context of a "formal sale
process" in accordance with Note 2 of Rule 2.6 of the City Code on
Takeovers and Mergers (the "Takeover Code"), such that the Board of
Kolar Gold is able to have discussions with third parties
interested in such a transaction on a confidential basis to the
extent permitted by the Takeover Code.
(MORE TO FOLLOW) Dow Jones Newswires
December 08, 2015 02:00 ET (07:00 GMT)
The Panel on Takeovers and Mergers (the "Takeover Panel") has
granted a dispensation from the requirements of Rules 2.4(a),
2.4(b) and 2.6(a) of the Takeover Code such that any interested
party participating in the formal sale process will not be required
to be publicly identified as a result of this announcement (subject
to Note 3 on Rule 2.2 of the Takeover Code) and will not be subject
to the 28 day deadline referred to in Rule 2.6(a) of the Takeover
Code, for so long as it is participating in the formal sale
process. Interested parties should note Rule 21.2 of the Takeover
Code, which prohibits any form of inducement fee or any other
offer-related arrangement, and that the Company has not at this
stage requested any dispensation from this prohibition under Note 2
of Rule 21.2 of the Takeover Code although it reserves the right to
do so in the future.
This announcement is not an announcement of a firm intention to
make an offer under Rule 2.7 of the Code and there can be no
certainty that an offer will be made, nor as to the terms on which
any offer may be made.
As a consequence of this announcement, the Company is now
considered to be in an "Offer Period" as defined in the Takeover
Code. The dealing disclosure requirements and other provisions of
the Takeover Code that now apply are listed below.
International Advisory Partners Limited ("IAP"), which is
authorised and regulated in the United Kingdom by the Financial
Conduct Authority, is acting as financial adviser to the Company
and is acting for no-one else in connection with the matters
referred to in this announcement and will not be responsible to
anyone other than the Company for providing the protections
afforded to clients of IAP nor for providing advice in relation to
the matters referred to in this announcement.
Parties interested in a transaction with Kolar Gold should
contact IAP (contact details as below).
Enquiries:
Kolar Gold Limited
Harvinder Hungin +44 (0) 7990 516669
International Advisory Partners (Rule 3 Adviser)
James Winterbotham / David +44 (0) 20 7796 0085 or
Anderson +44 (0) 7971 237332
N+1 Singer (Nomad and Broker)
James Maxwell / Jen Boorer +44 (0) 20 7496 3000
Tavistock (PR adviser)
Ed Portman / Nuala Gallagher +44 (0) 20 7920 3150
Further information and disclosure requirements of the Takeover
Code (the "Code")
Information on Securities
In accordance with Rule 2.10 of the Code, the Company confirms
that it has 106,293,537 ordinary shares of 7 pence each in issue at
the close of business on 7 December 2015 and the Ordinary Shares
are admitted to trading on the AIM market of the London Stock
Exchange. The International Securities Identification Number is
GG00B3M9KL68.
Disclosure Requirements
Under Rule 8.3(a) of the Code, any person who is interested in
1% or more of any class of relevant securities of an offeree
company or of any paper offeror (being any offeror other than an
offeror in respect of which it has been announced that its offer
is, or is likely to be, solely in cash) must make an Opening
Position Disclosure following the commencement of the offer period
and, if later, following the announcement in which any paper
offeror is first identified. An Opening Position Disclosure must
contain details of the person's interests and short positions in,
and rights to subscribe for, any relevant securities of each of (i)
the offeree company and (ii) any paper offeror(s). An Opening
Position Disclosure by a person to whom Rule 8.3(a) applies must be
made by no later than 3.30 pm (London time) on the 10th business
day following the commencement of the offer period and, if
appropriate, by no later than 3.30 pm (London time) on the 10th
business day following the announcement in which any paper offeror
is first identified. Relevant persons who deal in the relevant
securities of the offeree company or of a paper offeror prior to
the deadline for making an Opening Position Disclosure must instead
make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes,
interested in 1% or more of any class of relevant securities of the
offeree company or of any paper offeror must make a Dealing
Disclosure if the person deals in any relevant securities of the
offeree company or of any paper offeror. A Dealing Disclosure must
contain details of the dealing concerned and of the person's
interests and short positions in, and rights to subscribe for, any
relevant securities of each of (i) the offeree company and (ii) any
paper offeror, save to the extent that these details have
previously been disclosed under Rule 8. A Dealing Disclosure by a
person to whom Rule 8.3(b) applies must be made by no later than
3.30 pm (London time) on the business day following the date of the
relevant dealing.
If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire or control an
interest in relevant securities of an offeree company or a paper
offeror, they will be deemed to be a single person for the purpose
of Rule 8.3.
Opening Position Disclosures must also be made by the offeree
company and by any offeror and Dealing Disclosures must also be
made by the offeree company, by any offeror and by any persons
acting in concert with any of them (see Rules 8.1, 8.2 and
8.4).
Details of the offeree and offeror companies in respect of whose
relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Takeover Panel's website at www.thetakeoverpanel.org.uk,
including details of the number of relevant securities in issue,
when the offer period commenced and when any offeror was first
identified. You should contact the Panel's Market Surveillance Unit
on +44 (0)20 7638 0129 if you are in any doubt as to whether you
are required to make an Opening Position Disclosure or a Dealing
Disclosure.
Announcements
In accordance with Rule 26.1 of the Code, a copy of this
announcement will be available, subject to certain restrictions
relating to persons in any restricted jurisdiction on the Company's
website at www.kolargold.com.au as soon as possible and in any
event no later than 12:00 noon (London time) on 9 December 2015
(being the business day following the date of this announcement).
The content of the website referred to in this announcement is not
incorporated into and does not form part of this announcement.
In accordance with Rule 30.2, a person may request a copy of the
announcement in hard copy form. A person may also request that all
future documents, announcements and information in relation to the
Offer should be in hard copy form. A hard copy of the announcement
will not be sent unless so requested. A hard copy may be obtained
by sending a request to the Company, Kolar Gold Limited, Ground
Floor, Dorey Court, Admiral Park, St Peter Port, Guernsey GY1
2HT.
Directors' Report
The directors present their report together with the
consolidated financial statements of the Group comprising Kolar
Gold Limited (the Company) and its subsidiaries for the year ended
30 June 2015 and the auditor's report thereon.
Performance review
The Group made a comprehensive loss of GBP1,258,687 during the
year ended 30 June 2015 (2014: loss of GBP5,631,480).
Principal activities and future developments
The Group's principal activity is the development of gold
exploration and mining assets in India, in partnership with its
Indian associate, GMSI and securing and reviving the historic gold
mines of the Kolar Goldfields of Bharat Gold Mines Limited in that
region.
Subsequent events
On 8 December 2015 the Company announced the commencement of a
strategic review together with the mutually agreed termination of
the CEO, Nick Spencer's, employment contract. Additionally Stephen
Coe, a non-executive director, has given notice of his resignation
to take effect from 31 December 2015.
Principal risks and uncertainties
The Group is exposed to a variety of financial risks including
foreign exchange risk, market risk, liquidity risk and credit risk.
These risks are discussed in detail in Note 2.
Note 13 to the financial statements - Financial instruments and
associated risks
The Board of Directors is committed to effective risk management
and is responsible for ensuring that the Group has an appropriate
framework in place to identify and effectively manage business
risks and to monitor business performance and the Group's financial
position. The Board is also responsible for overseeing compliance
with regulatory, prudential, legal and ethical standards.
Accounting policies
The accounting policies of the Group as set out on pages 16 to
22 have been applied consistently during the year.
Dividends
No dividends have been paid or declared and the Directors do not
recommend the declaration of a dividend for the year ended 30 June
2015 (2014: nil).
Going concern
After making enquiries, and considering the current level of
activity, financial arrangements made and for the reasons disclosed
in note 1.3 of the financial statements, the Directors consider
that the Company will have adequate resources to continue in
operational existence for at least 12 months from the date of
approval of these financial statements. For this reason, they
continue to adopt the going concern basis in preparing the
financial statements.
In the longer term, the Group's ability to develop and enhance
its interests in India, via BGML, if its tender bid is successful,
via the right of first refusal and its stake in GMSI, including
bringing the Jonnagiri mining assets to commercial production will
depend upon the ability of the Group and its partners and/or GMSI
to obtain further financing through equity financing, debt
financing or other means.
(MORE TO FOLLOW) Dow Jones Newswires
December 08, 2015 02:00 ET (07:00 GMT)
The only sources of future funds presently available to the
Group are the raising of equity capital by the Company or the sale
of its interest in GMSI either in whole or in part. There can be no
guarantee that any future negotiations will be successful in
securing funding on terms satisfactory to the Group. If adequate
finance is not available, the Group may be required to reduce its
investments and related activities.
Corporate governance statement
The Company, being listed on AIM, is not required to comply with
the UK Corporate Governance Code ("the Code"). However, the Company
has given consideration to the main principles of the Code and the
Directors support the objectives of the Code and intend to comply
with those aspects that they consider relevant to the Group's size
and circumstances.
Following the completion of the Strategic Review described in
the Chairman's Statement, the Company will assess its Board and
management requirements and determine the appropriate committee and
governance structures. Stephen Oke will replace Stephen Coe as
Chairman of the Audit Committee with effect from 1 January
2016.
On behalf of the Board
_____________________________________
Stephen Coe
Director
7 December 2015
Kolar Gold Limited and its controlled entities
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2015
Group
Note 2015 2014
GBP GBP
Options issued to Directors 10 - (21,723)
Salaries and wages (378,877) (380,566)
Due diligence - GMSI and other
prospective gold assets - (52,963)
Other administrative expenses (749,155) (417,712)
Accretion/(Dilution) of investment
in associate 6 5,952 (1,326,888)
Impairment of investment in associate 6 - (2,865,325)
Loss from operating activities (1,122,080) (5,548,349)
------------ ------------
Finance income 30,128 54,250
Finance costs (74) (501)
Net financing income/(expense) 30,054 53,749
------------ ------------
Share of loss of associate 6 (162,690) (126,938)
------------ ------------
Loss before tax (1,254,716) (5,621,538)
Income tax expense 5 - -
------------ ------------
Loss for the year (1,254,716) (5,621,538)
Other comprehensive loss
Items that are or may be reclassified
subsequently to profit or loss
Foreign exchange translation variances (3,971) (9,942)
------------ ------------
Total comprehensive loss for the
year (1,258,687) (5,631,480)
============ ============
Basic and diluted loss per share
(p) 12 (1.18) (5.29)
All results are derived from continuing activities.
The notes section below is an integral part of the consolidated
financial statements.
Kolar Gold Limited and its controlled entities
Consolidated Statement of Financial Position
as at 30 June 2015
Group
2015 2014
Note GBP GBP
Non-current assets
Plant and equipment 10,549 13,403
Investment in associate 6 3,050,303 2,503,017
Total non-current assets 3,060,852 2,516,420
------------ ------------
Current assets
Trade and other receivables 6,950 9,235
Prepayments and other assets 16,642 24,707
Term deposits 931,994 2,060,236
Cash and cash equivalents 505,725 1,370,181
Total current assets 1,461,311 3,464,359
------------ ------------
Total assets 4,522,163 5,980,779
------------ ------------
Current liabilities
Trade and other payables 8 160,848 336,040
Employee benefits 9 117,146 142,325
Total current liabilities 277,994 478,365
------------ ------------
Non-current liabilities
Employee benefits 9 3,986 3,544
------------ ------------
Total non-current liabilities 3,986 3,544
------------ ------------
Total liabilities 281,980 481,909
------------ ------------
Total net assets 4,240,183 5,498,870
============ ============
Equity
Share capital 7,440,546 7,440,546
Share premium 15,690,724 15,690,724
Reserves 3,832,720 3,836,691
Accumulated losses (22,723,807) (21,469,091)
------------ ------------
Total equity 4,240,183 5,498,870
============ ============
The notes section below is an integral part of the consolidated
financial statements.
Kolar Gold Limited and its controlled entities
Consolidated Statement of Changes in Equity
for year ended 30 June 2015
Share Share premium Share Foreign Accumulated Total equity
capital based exchange losses
payment translation
reserve reserve
GBP GBP GBP GBP GBP GBP
---------- -------------- ---------- ------------- ------------- -------------
Balance at 30 June
2013 7,440,546 15,690,724 3,816,304 8,606 (15,847,553) 11,108,627
Loss for the year - - - - (5,621,538) (5,621,538)
Other comprehensive
loss - foreign exchange
translation variances - - - (9,942) - (9,942)
---------- -------------- ---------- ------------- ------------- -------------
Total comprehensive
loss for the year - - - (9,942) (5,621,538) (5,631,480)
Other issues of ordinary
shares - - - - - -
Equity-settled transactions - - 21,723 - - 21,723
---------- -------------- ---------- ------------- ------------- -------------
Total contributions
by and distributions
to owners - - 21,723 - - 21,723
---------- -------------- ---------- ------------- ------------- -------------
Balance at 30 June
2014 7,440,546 15,690,724 3,838,027 (1,336) (21,469,091) 5,498,870
Loss for the year - - - - (1,254,716) (1,254,716)
Other comprehensive
loss - foreign exchange
translation variances - - - (3,971) - (3,971)
---------- -------------- ---------- ------------- ------------- -------------
Total comprehensive
loss for the year - - - (3,971) (1,254,716) (1,258,687)
Other issues of ordinary
shares - - - - - -
Equity-settled transactions - - - - - -
Total contributions
by and distributions
to owners - - - - - -
Balance at 30 June
2015 7,440,546 15,690,724 3,838,027 (5,307) (22,723,807) 4,240,183
---------- -------------- ---------- ------------- ------------- -------------
The notes section below is an integral part of the consolidated
financial statements.
Kolar Gold Limited and its controlled entities
Consolidated Statement of Cash Flows
(MORE TO FOLLOW) Dow Jones Newswires
December 08, 2015 02:00 ET (07:00 GMT)
For the year ended 30 June 2015
Note 2015 2014
GBP GBP
Cash flows from operating activities
Loss for the year (1,254,716) (5,621,538)
Adjustments for:
Depreciation 2,854 8,299
(Accretion)/Dilution of investment
in associate (5,952) 1,326,888
Impairment of investment in associate - 2,865,325
Share of loss of associate 162,690 126,938
Net financing (income)/expense (30,054) (53,749)
Foreign exchange variances 15,431 21,718
Equity-settled transactions 10 - 21,723
Operating loss before changes in
working capital and provisions (1,109,747) (1,304,396)
Change in trade and other receivables 2,285 4,582
Change in other current assets 8,065 2,799
Change in trade and other payables (175,192) 14,590
Change in employee benefits (24,737) 6,503
------------ ------------
Cash used in operating activities (1,299,326) (1,275,922)
Interest and finance costs paid (74) (501)
Net cash used in operating activities (1,299,400) (1,276,423)
------------ ------------
Cash flows from investing activities
Interest received 16,074 61,479
Funds withdrawn from term deposit 1,128,242 2,611,498
Payments for investments (704,024) (700,000)
Payments for plant and equipment - (2,028)
Net cash used in investing activities 440,292 1,970,949
------------ ------------
Cash flows from financing activities - -
------------ ------------
Net (decrease)/increase in cash
and cash equivalents (859,108) 694,526
Foreign exchange gain/(loss) on
cash balances (5,348) (23,162)
Cash and cash equivalents at 1
July 1,370,181 698,817
------------ ------------
Cash and cash equivalents at 30
June
(Excludes term deposits of GBP931,944
(2014: GBP2,060,236) 505,725 1,370,181
============ ============
The notes section below is an integral part of the consolidated
financial statements.
Kolar Gold Limited and its controlled entities
Notes to the financial statements
1. Accounting policies
1.1 Reporting entity
The group financial statements consolidate those of Kolar Gold
Limited and its controlled entities (together referred to as the
"Group").
As at 30 June 2015, the wholly owned subsidiaries of the Company
are:
-- Kolar Gold Resources Limited (Mauritius);
-- Kolar Gold Resources (India) Private Limited; and
-- Kolar Gold Pty Limited
The group financial statements have been prepared and approved
by the directors in accordance with International Financial
Reporting Standards as adopted by the EU ("Adopted IFRSs"). The
financial statements comply with the Companies (Guernsey) Law, 2008
as amended and give a true and fair view of the state of affairs of
the Group.
The accounting policies set out below have, unless otherwise
stated, been applied consistently to all periods presented in these
consolidated financial statements.
1.2 Measurement convention
The financial statements are prepared on the historical cost
basis, except for the following material item in the statement of
financial position and statement of comprehensive income:
-- Share-based payments are measured at fair value.
The financial statements are presented in Great British Pounds
(GBP).
1.3 Going concern
These financial statements have been prepared on the basis of
accounting principles applicable to a "going concern" which assumes
the Group will continue in operation for at least 12 months from
the date of approval of the financial statements and will be able
to realise its assets and discharge its liabilities in the normal
course of operations.
The Group currently has no source of operating cash inflows,
other than interest income, and has incurred net operating cash
outflows for the year ended 30 June 2015 of GBP1,299,400 (2014:
GBP1,276,423). At 30 June 2015, the Group had cash balances and
term deposits of GBP1,437,719 (2014: GBP3,430,417) and a surplus in
net working capital (current assets, including cash, less current
liabilities) of GBP1,183,317 (2014: GBP2,985,994).
The Directors have assessed cash requirements and prepared
forecasts for the next eighteen months. These forecasts are based
on no capital being raised, no other cash inflow beyond interest
income and GST refunds, and the Board changes proceeding as stated
in the Chairman's Report. The Board changes have been agreed with
all parties, with termination giving certainty over the short-term
cash outflows required. Cost savings from downsizing of back office
operations in Australia have also been included. No allowance has
been made in these forecasts for any further investment in GMSI nor
the funding of any other mining opportunities within or outside
India. As at the date of this report the Group has no commitment to
make further investments in GMSI.
In the longer term, the Group's ability to develop and enhance
its interests in India, via BGML, if its tender bid is successful,
via the right of first refusal and its stake in GMSI, including
bringing the Jonnagiri mining assets to commercial production will
depend upon the ability of the Group and its partners and/or GMSI
to obtain further financing through equity financing, debt
financing or other means.
The only sources of future funds presently available to the
Group are the raising of equity capital by the Company or the sale
of its interest in GMSI either in whole or in part. There can be no
guarantee that any future negotiations will be successful in
securing funding on terms satisfactory to the Group. If adequate
finance is not available the Group may be required to reduce its
investments and related activities.
Against this background the Company has taken further steps to
preserve cash to extend the life of the Company until the first
half of 2017 and these have been included in the forecasts. If the
Company fails to raise further cash by this time it may have to
cease trading in its current form. The Company is reviewing its
strategic options with the intention of considering all available
opportunities for maximising value for shareholders. These
include
-- exploring the possibility of realising the value of its
investment in India in an orderly manner, including the possible
sale of one or more of the Company's assets or subsidiaries;
-- investigating mining opportunities outside India, where Kolar
Gold as a vehicle could be an attractive platform for current and
new investors; and
-- seeking new investors who may be prepared to invest in the share capital of Kolar Gold.
These options could involve a third party making an offer for
the Company's shares or the Company making an acquisition for cash
and/or shares and/or delisting from AIM.
If the Directors are unable to see a long term future for Kolar
Gold they will consider winding up the Company and returning
capital to investors.
1.4 Basis of consolidation
Subsidiaries
Subsidiaries are entities controlled by the Group. Control
exists when the investor is exposed, or has rights, to variable
returns from its involvement with the investee and has the ability
to affect those returns through its power over the investee. In
assessing its power over the investee, the Group takes into
consideration its rights through shareholding or other arrangements
to direct the activities which significant affect the investee's
returns. The acquisition date is the date on which control is
transferred to the acquirer. The financial statements of
subsidiaries are included in the consolidated financial statements
from the date that control commences until the date that control
ceases.
All entities were 100% owned and controlled by the parent
entity, Kolar Gold Limited during the period they were members of
the Group.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income
and expenses arising from intra-group transactions, are eliminated
in preparing the consolidated financial statements.
1.5 Investment in associates
The cost of acquiring equity investments in entities over which
the Group is considered to have significant influence is
capitalised and classified as an investment in associates.
Significant influence is the power to participate in the financial
and operating policy decisions of the investee but is not control
or joint control of these policies.
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The investment in associates is accounted for using the equity
method. Under this method, on initial recognition the investment in
an associate is recognised at cost, and the carrying amount is
increased or decreased to recognise the Group's share of the profit
or loss of the investee after the date of acquisition. The Group's
share of the investee's profit or loss is recognised in the Group's
profit or loss. The carrying amount is also adjusted for changes in
the Group's proportionate interest in the investee.
After application of the equity method, including recognising
the associate's losses, the Group applies the requirements of IAS
39 Financial Instruments: Recognition and Measurement to determine
whether it is necessary to recognise any additional impairment loss
with respect to its net investment in the associate. If any
indication of impairment is noted under IAS 39, the impairment
testing will follow the principals of IAS 36 Impairment of
Assets.
1.6 Classification of financial instruments issued by the Group
Following the adoption of IAS 32, financial instruments issued
by the Group are treated as equity only to the extent that they
meet the following two conditions:
(a) they include no contractual obligations upon the Group to
deliver cash or other financial assets or to exchange financial
assets or financial liabilities with another party under conditions
that are potentially unfavourable to the Group; and
(b) where the instrument will or may be settled in the Company's
own equity instruments, it is either a non-derivative that includes
no obligation to deliver a variable number of the Company's own
equity instruments or is a derivative that will be settled by the
Company's exchanging a fixed amount of cash or other financial
assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of
issue are classified as a financial liability. Where the instrument
so classified takes the legal form of the Company's own shares, the
amounts presented in these financial statements for called up share
capital and share premium account exclude amounts in relation to
those shares.
Where a financial instrument that contains both equity and
financial liability components exists these components are
separated and accounted for individually under the above
policy.
1.7 Non-derivative financial instruments
Non-derivative financial instruments comprise trade and other
receivables, cash and cash equivalents, loans and borrowings, and
trade and other payables.
Trade and other receivables
Trade and other receivables are recognised initially at fair
value. Subsequent to initial recognition they are measured at
amortised cost using the effective interest method, less any
impairment losses.
Trade and other payables
Trade and other payables are recognised initially at fair value.
Subsequent to initial recognition they are measured at amortised
cost using the effective interest method.
Term deposits
Term deposits comprise bank deposits with maturity dates of
between 3 and 12 months from balance date.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits. Bank overdrafts that are repayable on demand and form an
integral part of the Group's cash management are included as a
component of cash and cash equivalents for the purpose of the
statement of cash flows.
1.8 Plant and equipment
Plant and equipment are stated at cost less accumulated
depreciation and accumulated impairment losses.
Where parts of an item of plant and equipment have different
useful lives, they are accounted for as separate items of plant and
equipment.
Depreciation is charged to the income statement on a
straight-line basis over the estimated useful lives of each part of
an item of plant and equipment. Land is not depreciated. The
estimated useful lives are as follows:
-- plant and equipment 2.5 to 5 years; and
-- fixtures and fittings 2.5 to 10 years
Depreciation methods, useful lives and residual values are
reviewed at each balance sheet date.
1.9 Foreign currency
Foreign currency transactions
Transactions in foreign currencies are translated to the
respective functional currencies of the Group's entities at the
foreign exchange rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies
at the balance sheet date are retranslated to the functional
currency at the foreign exchange rate ruling at that date. Foreign
exchange differences arising on translation are recognised in the
income statement. Non-monetary assets and liabilities that are
measured in terms of historical cost in a foreign currency are
translated using the exchange rate at the date of the
transaction.
Foreign operations
The assets and liabilities of foreign operations are translated
to the Group's presentation currency, at foreign exchange rates
ruling at the balance sheet date. The revenues and expenses of
foreign operations are translated at an average rate for the year
where this rate approximates to the foreign exchange rates ruling
at the dates of the transactions. Exchange differences arising from
the translation of foreign operations are reported as an item of
other comprehensive income and accumulated in the translation
reserve. When a foreign operation is disposed of, such that control
is lost, the entire accumulated amount in the translation reserve,
is recycled to profit or loss as part of the gain or loss on
disposal. When the Group disposes of only part of its interest in a
subsidiary that includes a foreign operation while still retaining
control, the relevant proportion of the accumulated amount is
reattributed to non-controlling interests.
Exchange differences arising from a monetary item receivable
from or payable to a foreign operation, the settlement of which is
neither planned nor likely in the foreseeable future, are
considered to form part of a net investment in a foreign operation
and are recognised directly in equity in the translation
reserve.
1.10 Impairment
A financial asset not carried at fair value through profit or
loss is assessed at each reporting date to determine whether there
is objective evidence that it is impaired. A financial asset is
impaired if objective evidence indicates that a loss event has
occurred after the initial recognition of the asset, and that the
loss event had a negative effect on the estimated future cash flows
of that asset that can be estimated reliably.
An impairment loss in respect of a financial asset measured at
amortised cost is calculated as the difference between its carrying
amount and the present value of the estimated future cash flows
discounted at the asset's original effective interest rate.
Interest on the impaired asset continues to be recognised through
the unwinding of the discount. When a subsequent event causes the
amount of impairment loss to decrease, the decrease in impairment
loss is reversed through profit or loss.
The carrying amounts of the Group's non-financial assets are
reviewed at each reporting date to determine whether there is any
indication of impairment. If any such indication exists, then the
asset's recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is
the greater of its value in use and its fair value less costs to
sell. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and the risks specific to the asset. For the purpose of impairment
testing, assets that cannot be tested individually are grouped
together into the smallest group of assets that generates cash
inflows from continuing use that are largely independent of the
cash inflows of other assets or groups of assets (the
"cash-generating unit").
An impairment loss is recognised if the carrying amount of an
asset or its cash generating unit exceeds its estimated recoverable
amount. Impairment losses are recognised in profit or loss.
Impairment losses recognised in respect of cash generated units are
allocated first to reduce the carrying amount of any goodwill
allocated to the units, and then to reduce the carrying amounts of
the other assets in the unit (group of units) on a pro rata
basis.
Impairment losses recognised in prior periods are assessed at
each reporting date for any indications that the loss has decreased
or no longer exists. An impairment loss is reversed if there has
been a change in the estimates used to determine the recoverable
amount. An impairment loss is reversed only to the extent that the
asset's carrying amount does not exceed the carrying amount that
would have been determined, net of depreciation or amortisation, if
no impairment loss had been recognised.
1.11 Employee benefits and other share based payment arrangements
Short-term benefits
Short-term employee benefit obligations are measured on an
undiscounted basis and are expensed as the related service is
provided.
Long-term benefits
The Group's net obligation in respect of long-term employee
benefits is the amount of the future benefit that employees have
earned in return for their service in the current and prior
periods; that benefit is discounted to determine its present value,
and the fair value of the related assets is deducted. The discount
rate is the yield at the reporting date on government bonds that
have maturity dates approximating the terms of the Group's
obligations and that are denominated in the same currency in which
the benefit is expected to be paid.
Share-based payment transactions
Share-based payment arrangements in which the Group receives
goods or services as consideration for its own equity instruments
are accounted for as equity-settled share-based payment
transactions, regardless of how the equity instruments are obtained
by the Group.
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Share-based transactions, other than those with employees, are
measured at the value of goods or services received where this can
be reliably measured. Where the services received are not
identifiable, their fair value is determined by reference to the
grant date fair value of the equity instruments provided. Should it
not be possible to measure reliably the fair value of identifiable
goods and services received, their fair value shall be determined
by reference to the fair value of the equity instruments provided
measured over the period of time that the goods and services are
received.
1.11 Employee benefits and other share based payment arrangements (Cont'd)
The expense is recognised in profit or loss (or capitalised as
part of an asset) when the goods are received or as services are
provided, with a corresponding increase in equity.
The grant date fair value of share-based payment awards granted
to employees is recognised as an employee expense, with a
corresponding increase in equity, over the period that the
employees become unconditionally entitled to the awards. The fair
value of the options granted is measured using an option valuation
model, taking into account the terms and conditions upon which the
options were granted. The amount recognised as an expense is
adjusted to reflect the actual number of awards for which the
related service and non-market vesting conditions are expected to
be met, such that the amount ultimately recognised as an expense is
based on the number of awards that do meet the related service and
non-market performance conditions at the vesting date. For
share-based payment awards with non-vesting conditions, the grant
date fair value of the share-based payment is measured to reflect
such conditions and there is no true-up for differences between
expected and actual outcomes.
Share-based payment transactions in which the Group receives
goods or services by incurring a liability to transfer cash or
other assets that is based on the price of the Group's equity
instruments are accounted for as cash-settled share-based payments.
The fair value of the amount payable to recipients is recognised as
an expense, with a corresponding increase in liabilities, over the
period in which the recipients become unconditionally entitled to
payment. The liability is re-measured at each balance sheet date
and at settlement date. Any changes in the fair value of the
liability are recognised in profit or loss.
1.12 Expenses
Operating lease payments
Payments made under operating leases are recognised in profit or
loss on a straight-line basis over the term of the lease. Lease
incentives received are recognised in profit or loss as an integral
part of the total lease expense.
Due diligence - GMSI and other prospective gold assets
These expenses relate to technical, legal and financial advisory
costs with respect to the agreements with GMSI and the assessment
of other prospective gold assets.
Financing income and expenses
Financing expenses comprise interest payable and finance charges
on shares classified as liabilities recognised in profit or loss
using the effective interest method, unwinding of the discount on
provisions, and net foreign exchange losses that are recognised in
the income statement (see foreign currency accounting policy note
1.9). Financing income comprise interest receivable on funds
invested, dividend income, and net foreign exchange gains.
Interest income and interest payable is recognised in profit or
loss as it accrues, using the effective interest method. Foreign
currency gains and losses are reported on a net basis.
1.13 Taxation
Tax on the profit or loss for the year comprises current and
deferred tax. Tax is recognised in profit or loss except to the
extent that it relates to items recognised directly in equity, in
which case it is recognised in equity.
Current tax is the expected tax payable or receivable on the
taxable income or loss for the year, using tax rates enacted or
substantively enacted at the balance sheet date, and any adjustment
to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The following
temporary differences are not provided for: the initial recognition
of goodwill, the initial recognition of assets or liabilities that
affect neither accounting nor taxable profit other than in a
business combination, and differences relating to investments in
subsidiaries to the extent that they will probably not reverse in
the foreseeable future. The amount of deferred tax provided is
based on the expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates enacted
or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against
which the temporary difference can be utilised.
1.14 Earnings per share
The Group presents basic and diluted earnings or loss per share
data for its ordinary shares. Basic earnings/loss per share is
calculated by dividing the profit or loss attributable to ordinary
shareholders of the Company by the weighted average number of
ordinary shares outstanding during the period, adjusted for own
shares held. Diluted earnings/loss per share is determined by
adjusting the profit or loss attributable to ordinary shareholders
and the weighted average number of ordinary shares outstanding,
adjusted for own shares held, for the effects of all dilutive
potential ordinary shares, which comprise convertible notes and
share options and warrants granted.
1.15 Operating segments
Segment results that are reported to the Chief Executive Officer
include items directly attributable to a segment as well as those
that can be allocated on a reasonable basis. Unallocated items
comprise mainly corporate assets, head office expenses, and income
tax assets and liabilities.
Segment capital expenditure is the total cost incurred during
the period to acquire plant and equipment, and intangible assets
other than goodwill.
1.16 Adopted IFRS not yet applied
No newly adopted accounting standards have had a material impact
on the Group. The following accounting standards and amendments
have been issued and been endorsed by the EU but are not applicable
to Kolar Gold Limited in the current year:
-- Amendments to IAS 19 (Defined Benefit Plan: Employee Contributions)
The application of this amendment would not have a material
effect on these financial statements.
1.17 Use of estimates and judgements
The preparation of financial statements in conformity with IFRSs
requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses. Actual results
may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and in any future periods
affected.
In particular, information about assumptions and estimation
uncertainties that have a significant risk of resulting in a
material adjustment within the next financial year are described in
the following notes:
-- Going concern (note 1.3), and
-- Valuation of investment in associate (note 6).
2. Risk management
Overview
The Group has exposure to the following risks:
-- Credit risk;
-- Liquidity risk;
-- Tax risk;
-- Currency risk;
-- Market risk; and
-- Operational risk
This note presents information about the Group's exposure to
each of the above risks, its objectives, policies and processes for
measuring and managing risk, and its management of capital. Further
quantitative disclosures are included throughout these consolidated
financial statements.
Risk management framework
The Board of Directors has overall responsibility for the
establishment and oversight of the risk management framework and
developing and monitoring the Group's risk management policies. Key
risk areas have been identified and the Group's risk management
policies and systems will be reviewed regularly to reflect changes
in market conditions and the Group's activities.
The Audit Committee oversees how management monitors compliance
with the Group's risk management policies and procedures and
reviews the adequacy of the risk management framework in relation
to the risks faced by the Group.
Credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations, and arises principally from the
Group's bank deposits and receivables. The risk of non-collection
is considered to be low.
Liquidity risk
Liquidity risk is the risk that the Group will encounter
difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another
financial asset. The Group's approach to managing liquidity is to
ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and
stressed conditions, without incurring unacceptable losses or
risking damage to the Group's reputation.
Tax risk
The Company holds its investments in India through Kolar Gold
Resources Limited, a wholly owned Mauritian subsidiary.
A Tax Information Exchange Agreement is in place between
Guernsey and India.
The Group does not currently generate significant income in
India and its investment is capital in nature. Future tax
liabilities may be subject to how Indian tax law changes and how
the relevant double tax treaties are interpreted from time to
time.
Currency risk
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The Group is exposed to currency risk on cash and cash
equivalents, receivables and payables that are denominated in a
currency other than the functional currency of the each of the
Group entities. In order to reduce currency risk, each entity holds
most of its funds in the same currency as its functional currency
in sufficient amounts to cover expected future outgoings for
several months. The Group does not use derivatives to hedge its
foreign currency exposures.
Market risk
The Group has acquired an interest in GMSI. This exposes the
Group to fluctuation in the value of that equity investment. The
Group has one director on the board of GMSI and continues to work
closely with GMSI to develop its resources.
In addition, the Group's future revenues from product sales will
be affected by changes in the market price of gold and could also
be subject to exchange controls or similar restrictions.
Operational risk
The Group's business is at an early stage and is subject to
several operational risks. These risks include exploration and
mining risks, delays in approvals to undertake exploration
activities, actual resources differing from estimates, operational
delays and the availability of equipment, personnel and
infrastructure. The significantly larger portfolio of projects
resulting from the agreements with GMSI will spread the risk and
impact of delays in licence approvals. In addition, the Group has
business and liability insurance policies in place to mitigate some
of these risks.
The Group is also dependent on key personnel and subject to the
actions of third parties, including staff of GMSI and other
contractors and suppliers.
The Group's operations are also subject to government laws and
regulations, particularly environmental regulation. The Right to
Fair Compensation and Transparency in Land Acquisition,
Rehabilitation and Resettlement Act was passed in India in 2013.
This legislation put in place a requirement for rehabilitation and
resettlement programmes for those affected by mining activities/
environmental damage. This does not have any direct impact on the
Group at present, but it may impact on its investment in GMSI.
Capital management
The Company has no loans or borrowings and has sufficient
resources, in the view of the Directors, to meet its working
capital requirements until second quarter of calendar year
2017.
The Group manages its capital through the preparation of
detailed forecasts, and tracks actual receipts and outlays against
the forecasts on a regular basis, to ensure that entities in the
Group will be able to continue as a going concern while maximising
the return to shareholders.
The capital structure of the Group consists of cash and cash
equivalents and equity comprising, capital, reserves and
accumulated losses.
The Group has one reportable segment, being Indian Exploration -
Investment in gold exploration activities and administration in the
Kolar Gold Fields region in Karnataka State, India.
The Group also has corporate administrative functions outside
India which generate corporate expenses that have not been
allocated to a segment.
The Group's Chief Executive Officer reviews internal management
reports for this segment on a monthly basis.
Information regarding the results of the reportable segment is
included below. The Group has no revenue at this stage of its
development and performance is measured based on expenses incurred
and exploration activity levels in the Indian segment.
Indian Exploration Corporate Total
2015 2014 2015 2014 2015 2014
GBP GBP GBP GBP GBP GBP
Income -
---------- ------------ ---------- ------------ ------------ ------------
Depreciation and
amortisation - 5,385 2,854 2,914 2,854 8,299
---------- ------------ ---------- ------------ ------------ ------------
Share-based payments - - - 21,723 - 21,723
---------- ------------ ---------- ------------ ------------ ------------
Dilution/(Accretion)
of investment in
associate (5,952) 1,326,888 - - (5,952) 1,326,888
---------- ------------ ---------- ------------ ------------ ------------
Impairment of investment
in associate - 2,865,325 - - - 2,865,325
---------- ------------ ---------- ------------ ------------ ------------
Share of loss of
associate 162,690 126,938 - - 162,690 126,938
---------- ------------ ---------- ------------ ------------ ------------
Other reportable
segment expenses 101,644 216,947 993,480 1,055,418 1,095,124 1,272,365
---------- ------------ ---------- ------------ ------------ ------------
Segment result
before tax (258,382) (4,541,483) (996,334) (1,080,055) (1,254,716) (5,621,538)
---------- ------------ ---------- ------------ ------------ ------------
Reportable segment
assets 3,086,380 2,517,496 1,435,783 3,463,283 4,522,163 5,980,779
---------- ------------ ---------- ------------ ------------ ------------
Investments in
associate 3,050,303 2,503,017 - - 3,050,303 2,503,017
---------- ------------ ---------- ------------ ------------ ------------
Other capital expenditure - - - 2,028 - 2,028
---------- ------------ ---------- ------------ ------------ ------------
Reportable segment
liabilities (3,906) (20,740) (278,074) (461,169) (281,980) (481,909)
---------- ------------ ---------- ------------ ------------ ------------
4. Expenses and auditors' remuneration
2015 2014
GBP GBP
Included in loss for the year are the following:
Depreciation charge 2,854 8,299
======= =======
Operating lease expense 27,092 26,947
======= =======
Auditors' remuneration
Audit of financial statements 53,014 53,941
Other 2,500 10,000
------- -------
Auditors' remuneration 55,514 63,941
======= =======
5. Income tax expense
2015 2014
GBP GBP
Current tax expense
Current year - -
===== =====
Deferred tax expense
Origination and reversal of temporary -
differences -
===== =====
Tax expense in income statement - -
Reconciliation of effective
tax rate 2015 2015 2014 2014
% GBP % GBP
Loss for the year (1,254,716) (5,621,538)
Total income tax for the year - -
------------ ------------
Loss excluding income tax (1,254,716) (5,621,538)
------------ ------------
Income tax using the Company's
domestic rate (0.0) - (0.0) -
Effect of tax rates in foreign
jurisdictions (203,166) (209,325)
Non-deductible expenses 14,025 19,793
Current year losses for which
no deferred tax asset was recognised 189,141 189,532
Total current tax benefit - -
------ ------------ ------ ------------
A deferred tax asset of GBP3,701,988 (2014: GBP3,512,847) has
not been recognised in respect of losses, as there is currently
uncertainty surrounding the recoverability of such assets.
6 Investment in associate
In August 2013 Kolar Gold acquired a 30% equity interest in
Geomysore Mining Services (India) Private Limited ("GMSI") at
a total cost of GBP6,822,168. GMSI is an Indian gold exploration
company based in Bangalore with an extensive portfolio of gold
projects. The Group's investment in GMSI remains a key plank
in its plans to build an Indian gold exploration and mine development
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company.
The fair value of the investment in GMSI at the time of the
acquisition was equivalent to the cost and fair value of the
payments to GMSI and other assets surrendered of GBP6,822,168,
and this amount was determined to be the acquisition cost of
the investment in the associate.
GMSI is accounted for as an associate because, while Kolar Gold
has influence over GMSI, it does not have control, and it is
accounted for on an equity accounting basis.
In November 2013 GMSI issued shares to a third party amounting
to 20% of GMSI's issued share capital, in exchange for the provision
of services. As a result of this transaction and the purchase
arrangements, the Group's equity holding of GMSI fell to an
effective interest of 26%. Subsequent share issues diluted the
Group's holding to 24.15%
Based on the above, between the date of acquisition and 30 June
2014, the Group suffered a loss on dilution in its investment
totalling GBP1,326,888, based on the difference in the value
of the proportion of the shareholding lost and the value of
the compensation received by GMSI for the share issue.
In November 2014 the major GMSI shareholders entered into agreements
to subscribe to four share issues by GMSI over the following
six months. These funds were to finance the ongoing operations
of GMSI, including its exploration activities at its tenements
at Jonnagiri. Furthermore, one of the shareholders agreed to
conduct an extensive drilling programme at Jonnagiri in exchange
for the issue of shares in addition to above share subscriptions.
In addition to the above, in November 2014 Kolar Gold was granted
an option to invest a further US$2 million (GBP1.34 million)
in GMSI within 12 months at the same valuation as the most recent
round of funding, which was priced at the end of 2014 at a pre
new money valuation of $18 million (GBP12.08 million). The option
agreement expired during November 2015 and Kolar Gold is seeking
to have this option reinstated to the end of April 2016 as the
drilling programme and resource assessment has taken longer
for GMSI to complete than expected. Exercise of this option,
if reinstated, would be subject to Kolar Gold raising further
capital.
During the current year, Kolar Gold has invested a further GBP704,024
in GMSI. The additional investment in GMSI has been accounted
for at incremental fair value. A minor gain on accretion has
been recognised based on exchange rates movements at the time
of the share purchases. The share subscriptions by Kolar Gold
and the other shareholders have resulted in Kolar Gold having
a 25.0% equity interest in GMSI as at balance date.
The carrying value of the investment in an associate is determined
as follows:
2015 2014
GBP GBP
Investment in an associate
Opening balance 2,503,017 -
Acquisition cost - 6,822,168
Subsequent investment 704,024 -
Accretion/(dilution) of investment 5,952 (1,326,888)
Impairment of investment - (2,865,325)
Share of loss of associate (162,690) (126,938)
---------- ----------------
Total 3,050,303 2,503,017
========== ================
The Board has considered the valuation of its investment in
GMSI and determined that its fair value is at least equal to
the carrying value of GBP3,050,303 and no impairment loss is
warranted. In determining the fair value of this investment
the Board has had regard to the following areas of judgement:
* the financial position of GMSI,
* the progress made with its exploration activities,
* the price of gold and exchange rates at the reporting
date,
* the valuations of junior and early stage miners on
world markets, and
* discussions that have taken place with shareholders
of GMSI concerning fund raising for future
activities.
The audited financial statements of GMSI for the year ended
31 March 2015, after adjusting to IFRS comprised:
Assets of GBP6.6m (2014: GBP2.4m), of which GBP6.2m (2014: GBP2.1m)
are non-current, GBP433k are current (2014: GBP314k) and GBP82k
cash (2014: GBP66k). Liabilities of GBP132k (all current) (2014:
GBP132k, all current).
GMSI had no revenue other than interest income of less than
GBP5k in both 2014 and 2015 and incurred a loss of GBP637k (2014:
GBP537k).
7. Exploration and evaluation expenditure
2015 2014
GBP GBP
Balance at beginning of year - 6,122,168
Transferred to investment in an associate - (6,122,168)
-------------- ------------------
Balance at end of year - -
============== ==================
8. Trade and other payables
2015 2014
GBP GBP
Trade and other payables due to related
parties 14,275 16,098
Other trade payables 35,479 139,894
Non-trade payables and accrued expenses 111,094 180,048
-------------- ------------------
160,848 336,040
============== ==================
9. Employee benefits
2015 2014
GBP GBP
Current
Liability for annual leave 49,526 48,203
Liability for long service leave 67,620 94,122
-------- --------
117,146 142,325
Non-current
Liability for long service leave 3,986 3,544
-------- --------
121,132 145,869
======== ========
10. Share-based payments
a) Options
As at 30 June 2015, the following unexpired options were in existence
over the shares of Kolar Gold Limited:
Name Date of Ordinary Shares Expiry Date Exercise Price
Grant under option GBP
Harvinder Hungin
(1) 10.6.11 450,000 10.06.16 0.40
Stephen Coe (1) 10.6.11 350,000 10.06.16 0.40
Stephen Oke (1) 10.6.11 350,000 10.06.16 0.40
Harvinder Hungin
(2) 31.12.12 150,000 28.12.17 0.0838
Stephen Coe (2) 31.12.12 125,000 28.12.17 0.0838
Stephen Oke (2) 31.12.12 125,000 28.12.17 0.0838
Harvinder Hungin
(3) 25.11.13 150,000 25.11.18 0.0638
Stephen Coe (3) 25.11.13 125,000 25.11.18 0.0638
Stephen Oke (3) 25.11.13 125,000 25.11.18 0.0638
----------------
1,950,000
================
Each option entitles the holder to subscribe for one ordinary share
in Kolar Gold Limited. Options do not confer any voting rights on
the holder.
(1) The above options were granted by Kolar Gold Limited on 10 June
2011 to directors. The options vested on grant date with no vesting
conditions.
(2) The above options were granted by Kolar Gold Limited on 31 December
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2012 to directors. The options vested on grant date with no vesting
conditions.
(3) The above options were granted by Kolar Gold Limited on 25 November
2013 to directors. The options vested on grant date with no vesting
conditions.
850,000 options expired on 1 December 2013 and 2,700,000 options
expired on 17 June 2014.
No options were issued during the year ended 30 June 2015.
The number and weighted average exercise price of the options are
as follows:
Weighted average Weighted average
exercise price Number of exercise price Number of
GBP options GBP options
2015 2015 2014 2014
Options issued by Kolar
Gold Limited
Outstanding at the
beginning
of the year 0.2662 1,950,000 0.3533 5,100,000
Granted during the year - - 0.0638 400,000
Expired during the year - - 0.3761 (3,550,000)
----------------- ---------------- ----------------- ----------------------
0.2662 1,950,000 0.2662 1,950,000
================= ================ ================= ======================
The weighted average remaining contractual life of the options
is 1.8 years (2014 2.8 years).
b) Warrants
There were no unexercised warrants as at 30 June 2015.
c) Share-based payment expense recognised in the income statement
2015 2014
GBP GBP
Options issued to non-executive
directors - 21,723
Total share-based payment
expense - 21,723
====== =======
11. Capital and reserves
Issued capital - Kolar Gold Limited
Ordinary Shares
(7p each)
a) Authorised capital 400,000,000
================
b) Movement in issued and fully paid share capital:
In issue at 1 July 2013 106,293,537
Issued -
In issue at 30 June 2014 106,293,537
================
In issue at 1 July 2014 106,293,537
Issued -
----------------
In issue at 30 June 2015 106,293,537
====================================================== ================
All shares issued by the Company are 'ordinary' shares and rank
equally in all respects, including for dividends, shareholder
attendance and voter rights at meetings, on a return of capital and
in a winding-up.
c) Reserves
Share premium reserve
The share premium reserve comprises the excess of consideration
received over the par value of the shares issued.
Share based payments reserve
The options reserve comprises the equity value of share based
payments issued by Kolar Gold.
Translation reserve
The translation reserve contains all foreign currency
differences arising from the translation of the financial
statements of foreign operations. Changes arising from monetary
items that are considered to be part of the net investment are also
included in the translation reserve.
12. Loss per share
The calculation of basic loss per share at 30 June 2015 was
based on the loss of GBP1,254,716 (2014: GBP5,621,538), and a
weighted average number of ordinary shares outstanding of
106,293,537 (2014: 106,293,537), calculated as follows:
2015 2014
GBP GBP
Loss attributable to ordinary shareholders 1,254,716 5,621,538
========== ==========
Weighted average number of ordinary
shares
'000 '000
Issued ordinary shares at 1 July 106,294 106,294
Effect of shares issued during
the year - -
---------- ----------
Weighted average number of shares
at 30 June 106,294 106,294
========== ==========
Diluted loss per share
Options and warrants granted to the Directors, staff and
external consultants are considered to be potential ordinary shares
and have not been included in the determination of diluted loss per
share because they are not considered to be dilutive. The options
have not been included in the determination of the basic loss per
share.
2015 pence 2014 pence
per share per share
Basic and diluted loss per share 1.18 5.29
13. Financial instruments
(a) Fair values of financial instruments
The fair values of all financial assets and financial
liabilities are equal to their carrying amounts shown in the
statement of financial position.
Trade and other receivables
The fair value of trade and other receivables is estimated as
the present value of future cash flows, discounted at the market
rate of interest at the balance sheet date if the effect is
material.
Trade and other payables
The fair value of trade and other payables is estimated as the
present value of future cash flows, discounted at the market rate
of interest at the balance sheet date if the effect is
material.
Cash and cash equivalents
The fair value of cash and cash equivalents is estimated as its
carrying amount where the cash is repayable on demand. Where it is
not repayable on demand then the fair value is estimated at the
present value of future cash flows, discounted at the market rate
of interest at the balance sheet date.
(b) Credit risk
Financial risk management
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations, and arises principally from the
Group's receivables and cash and cash equivalents. The carrying
amount of cash, cash equivalents and term deposits represents the
maximum credit exposure on those assets. The cash and cash
equivalents are held with bank and financial institution
counterparties which are rated at least A for Australian and UK
banks, and BBB for Indian banks, based on rating agency Standard
and Poor's ratings.
Exposure to credit risk
The carrying amount of financial assets represents the maximum
credit exposure. Therefore, the maximum exposure to credit risk at
the reporting date was GBP1,444,669 (2014: GBP3,439,652), being the
total of the carrying amount of financial assets, shown in the
statement of financial position.
(c) Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due.
The following are the contractual maturities of financial
liabilities, including estimated interest payments and excluding
the impact of netting agreements.
Financial liabilities Carrying Contractual 6 months 6-12 1 -2 years
amount cash flows or less months
GBP GBP GBP GBP GBP
30 June 2015
Trade and other
payables 160,848 160,848 157,632 - 3,216
========= ============ ========= ======== ===========
30 June 2014
Trade and other
payables 336,040 336,040 238,890 - 97,150
========= ============ ========= ======== ===========
(d) Currency risk
The Group's exposure to foreign currency risk is as follows.
This is based on the carrying amount for monetary financial
instruments which are held in a currency that differs from that
entity's functional currency, except derivatives when it is based
on notional amounts.
2015 2014
GBP GBP
Cash and cash equivalents - A$ 136,540 45,871
Cash and cash equivalents - INR 30,682 10,499
Trade and other payables - INR (1,456) (20,740)
Trade and other payables - A$ (73,318) (165,805)
Trade and other payables - US$ - (10,959)
--------- ----------
92,448 (141,134)
========= ==========
The following significant exchange rates applied during the
year:
Average rate Reporting date spot rate Average rate Reporting date spot rate
2015 2015 2014 2014
GBP:A$ 1.8865 2.05255 1.7714 1.8039
GBP:INR 97.5446 100.077 99.6019 102.065
GBP:US$ N/A N/A 1.6259 1.70276
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Sensitivity analysis
A strengthening of the GBP, as indicated below, against the
Australian dollar and Indian Rupee at 30 June 2015 would have
decreased equity by the amount shown below. This analysis is on
foreign currency exchange rate variances that the Group considered
to be reasonably possible at the end of the reporting period. The
analysis assumes that all other variables, in particular interest
rates, remain constant.
Equity Profit or loss
GBP GBP
30 June 2015
INR (10 percent strengthening) 2,922 -
A$ (10 percent strengthening) 6,322 -
US$ (10 percent strengthening) - -
--------- ---------------
30 June 2014
INR (10 percent strengthening) (1,024) -
A$ (10 percent strengthening) (11,993) -
US$ (10 percent strengthening) (1,096) -
========= ===============
A weakening of the GBP against the Australian dollar and Indian
Rupee at 30 June would have had the equal but opposite effect on
the amounts shown above, on the basis that all other variables
remain constant.
(e) Interest rate risk
Profile
At the reporting date the interest rate profile of
interest-bearing financial instruments was:
Carrying amount
2015 2014
GBP GBP
Variable rate instruments
Cash and cash equivalents 505,725 1,370,181
Term deposits 931,994 2,060,236
1,437,719 3,430,417
========== ==========
Cash flow sensitivity analysis for variable rate instruments
The Group's interest bearing assets at balance date were
invested with financial institutions with a minimum rating (S&P
long term rating) of A for Australian and UK banks, and BBB for
Indian banks and comprised solely bank accounts.
A change in interest rates would have increased/(decreased)
profit or loss by the amounts shown below. This analysis assumes
that all other variables, in particular foreign currency rates,
remain constant. This analysis is performed on the same basis for
2015.
2015 2014
Profit or loss Profit or loss
100 bp increase 100 bp decrease 100 bp increase 100 bp decrease
Variable rate instruments 14,377 (14,377) 34,304 (34,304)
================ ================ ================ ================
14. Operating leases
2015 2014
Non-cancellable operating lease rentals are payable as follows: GBP GBP
Less than one year 18,103 21,427
Between one and five years - 19,140
------- ---------
18,103 40,567
======= =========
15. Group entities
Country of Ownership interest
incorporation 2015 2014
Kolar Gold Resources Limited (i) Mauritius 100% 100%
Kolar Gold Resources (India) Private Limited (ii) India 100% 100%
Kolar Gold Pty Ltd Australia 100% 100%
(i) Incorporated on 3 March 2011
(ii) Incorporated on 24 March 2011
16. Related parties
Key management personnel
2015 2014
Key management personnel remuneration GBP GBP
Cash-settled transactions 563,177 553,182
Share-based payments - 21,723
-------- --------
563,177 574,905
======== ========
In addition to their salaries and fees, key management personnel
participate in the Group's share option programme (see Note
10).
Directors' remuneration and interests
2015 Remuneration Interests
Cash-based Share-based
payments payments Totals Shares Options
GBP GBP GBP No. No.
Harvinder Hungin (Chairman) 45,000 - 45,000 1,700,000(1) 750,000(1)
Nicholas Spencer (Chief Executive
Officer)
Salary 251,789 - 251,789 -
Superannuation 18,553 - 18,553 -
---------------- ---------------- -------- ------------- -----------
Total 270,342 - 270,342 1,763,569 -
---------------- ---------------- -------- ------------- -----------
Stephen Coe 35,000 - 35,000 237,439 600,000
Stephen Oke 40,000 - 40,000 Nil 600,000
V Sivakumar 30,000 - 30,000 Nil Nil
---------------- ---------------- -------- ------------- -----------
TOTALS 420,342 - 420,342 3,701,008 1,950,000
================ ================ ======== ============= ===========
2014 Remuneration Interests
Cash-based Share-based
payments payments Totals Shares Options
GBP GBP GBP No. No.
Harvinder Hungin (Chairman) 45,000 8,147 53,147 1,700,000(1) 750,000(1)
Nicholas Spencer (Chief Executive
Officer)
- Salary 237,785 - 237,785 - -
- Superannuation 14,642 - 14,642 - -
---------------- ---------------- -------- ------------- -------------
Total 252,427 - 252,427 1,763,569 -
---------------- ---------------- -------- ------------- -------------
Stephen Coe 35,000 6,788 41,788 237,439 600,000
Stephen Oke 40,000 6,788 46,788 Nil 600,000
V Sivakumar 25,986 - 25,986 Nil Nil
Shiv Khemka 5,000 - 5,000 Nil Nil
---------------- ---------------- -------- ------------- -------------
TOTALS 403,413 21,723 425,136 3,701,008 1,950,000
==================================== ================ ================ ======== ============= =============
(1.) SG Hambros Trust Company (Channel Islands) Limited hold
1,700,000 Ordinary Shares, as trustee of the Carlyle Settlement, in
which Harvinder Hungin and his family have an interest.
Amounts owing to directors at 30 June 2015 were GBP14,275 (2014:
16,098).
GMSI is a related party, as the Company held a 25% equity
investment in this entity (see Note 6) as at balance date. There
were no amounts outstanding as at 30 June 2015.
SUN Mining is a related party, as Vaidyanathan Sivakumar, a
director of SUN Group is a director of the Group.
SUN Group holds 11,666,237 (2014: 11,666,237) shares in the
Company. There were no transactions between the Group and SUN and
there were no amounts outstanding as at 30 June 2015.
17. Subsequent events
On 8(th) December 2015 the Company announced the commencement of
a strategic review together with the mutually agreed termination of
the CEO, Nick Spencer's, employment contract. Additionally Stephen
Coe, a non-executive director, has given notice of his resignation
to take effect from 31(st) December 2015.
Independent auditor's report to the members of Kolar Gold
Limited
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