Final Results

RNS Number : 4260J

Galileo Resources PLC

07 August 2012

 



For Immediate Release

7 August 2012

Galileo Resources Plc

("Galileo" or the "Company")

Annual Report and Accounts

Notice of AGM

Galileo Resources PLC (LSE: GLR), the AIM-quoted emerging African Rare Earth exploration company,presents its final results for the year ended 31 March 2012. Extracts are set out below.

The 2012 Audited Annual Report and Accounts will be posted to shareholders shortly and is available from the following link to this announcement http://www.rns-pdf.londonstockexchange.com/rns/4260J_-2012-8-6.pdf and also from the Company's website www.galileoresources.com.

Chairman's Statement

This is the first annual report of Galileo Resources Plc ("Galileo" or the "Company") since the reverse takeover of Skiptons Global Investment Ltd (BVI) ("Skiptons BVI") by General Industries Plc was completed with a name change to Galileo Resources Plc. The Company was admitted to trading on AIM on 28 September 2011.

The flagship project of the Company is the Glenover Rare Earth Project ("Glenover Project"), comprising a redundant open pit phosphate mine and adjacent farms in North West South Africa. The mine was previously worked by Gold Fields of South Africa Ltd ("Gold Fields"), one of the world's largest gold miners. A divestment programme led to Fer-Min-Ore (Pty) Ltd ("Fer-Min-Ore") acquiring all the rights to the mine and adjacent properties in 1999. Fer-Min-Ore agreed with Skiptons   BVI, an   earn-in   acquisition programme, the rights of which were later sold to General Industries Plc and which formed the core of the reverse takeover.

The rationale for the earn-in programme was to test for the presence of Rare Earth Elements (REEs), which had been historically reported  as  present  in  the  deposit  by academics  and  Gold  Fields  in archived technical   reports.   The   test   work   was predicated on previous grab samples from phosphate stockpiles on the mine, which demonstrated the presence of REEs in excess of 1.5% total rare earth oxides (TREO). The stockpiles have been independently estimated, subsequent to the Company's Admission to AIM, to be in excess of 2 million tonnes and therefore presented the prospect of early ore for process without attendant mining risk and cost.

The REE market is largely controlled by China, which has placed embargos on production by retaining the majority of production for internal use. This led to a volatile market during 2010/11 with prices rocketing as non-Chinese consumers and opportunists drove prices to record levels. The prospect of inadequate supply loomed in a market dependent on REE supply for military, high tech, medical, wind farms and mobile phones. The consumer panic proved to be generally unjustified and prices corrected in the latter part of 2011 and early 2012. Despite the sharp price correction, the basket price of most REE projects, above 1% TREO in ore grade, remains above gross metal values contained in most current producing platinum or gold projects worldwide.

Galileo, in acquiring the Glenover earn-in rights, was more focused on finding a large strategic resource outside China than in short-term fluctuations in REE price. With this in mind,   the   Company   embarked   on   an aggressive diamond-drill programme, which resulted in the identification of more than 28 million tonnes of REE mineralisation (indicated and inferred) @ 1.24% TREO+Y2O3 (Yttrium Oxide) adjacent to the current mineable open pit and in the surface stockpiles. Further exploration, including drilling peripheral to and distant from the open pit, has identified more REE mineralisation with values believed to be potentially viable in a larger context. The results of these drilling and exploration programmes are reported in more detail in the Company's Operations Report, which follows this Chairman's Report.

Galileo is very encouraged by these drilling results   and   intends   to   commence   a preliminary economic assessment for the mining and processing of the resource, including environmental studies and financial modelling. This assessment is expected to commence during July 2012  and  to  be completed towards calendar year-end.

The Company has also acquired rights to an aggregate quarry in the Eastern Cape Province and to earn-in to certain iron ore and manganese exploration projects in Northern Cape Province. The quarry's development has a condition precedent of an off-take agreement with regional government, an agreement that remains pending. The prospecting rights to these exploration projects are currently being formalised. The Company intends to advance those projects, which are legally secure and have good strong technical fundamentals. In essence, the quarry and exploration rights are subordinated to the Glenover project.

The Group's loss for the year, before and after taxation and before taking items of other comprehensive income into account, was £1 835 935 (2011: £2 511). The Group's loss per share was 4 pence (2011: 0.02p). Operating expenses amounted to £1 836 034 (2011: £17 857) and include overheads and corporate costs attributable to the business. A share based payment charge of £787 139 (2011: £Nil) is included in the Group Statement of Comprehensive Income.

The Company entered (post balance sheet) into   Share   Exchange   and   Subscription Agreements with AIM-quoted Praetorian Resources Ltd ("Praetorian") for a placing of 2.5 million Galileo ordinary shares for cash, GBP1 000 000 and agreed to exchanged five million of its ordinary shares of GBP0.05 at a strike price of GBP0.40 for four million Praetorian ordinary shares of nil par value (with Subscription Shares of nil par value attached on 1 for 2 basis) at a price of GBP0.50.

The Company, on 4 July 2012, signed a Heads of Agreement (HoA) with Rare Earth International Ltd (REI) to earn-in interests in three   rare   earth   projects   in   Zambia, Mozambique and Spain. The consideration for the earn-in is the issue of 5.25 million ordinary shares in Galileo. Under this HoA, Galileo has 30 days to conduct title due diligence, which is the only condition on which the HoA may be terminated.

Our plans for the coming year are to complete a preliminary economic assessment on Glenover and move into prefeasibility study as quickly as possible. Concurrently, the Company intends to explore the outer areas of the Glenover concession to assess the potential for a very large open-pittable REE resource, which the directors believe is rapidly evolving into a potentially world-class front-runner in the REE global arena.

I would like to thank employees, management and fellow directors for the hard work during the period of this review and assure shareholders that all our efforts are being directed towards positioning Glenover as one of the premier strategic REE projects outside of China and available for production within a relatively short time frame.

Colin Bird

Chairman and Chief Executive Officer

3 August 2012

The financial information set out below comprises non-statutory accounts.  The financial information for the year ended 31 March 2012 has been extracted from accounts for the year ended 31 March 2012 on which the report of the auditors was unqualified.

ENDS

For further information, please contact:

Colin Bird                                                                                                       Tel [phone]

Chairman & CEO

Richard Wollenberg                                                                                   Tel [phone]

Non-Executive Director

Beaumont Cornish Limited,                                                                  Tel [phone]

Nominated Advisor and Broker

Roland Cornish/James Biddle

Shore Capital Stockbrokers Limited                                                  Tel [phone]

Joint Broker

Jerry Keen/Toby Gibbs

Bishopsgate Communications                                                             Tel [phone]

Nick Rome/ Anna Michniewicz/Ivana Petkova                                              

Directors' Report

The directors submit their report and the audited financial statements for the year ended 31 March 2012.

1. REVIEW OF ACTIVITIES

In the year under review, the Company (previously General Industries Plc) acquired BVI registered Skiptons Global Investment Ltd (BVI) through a reverse takeover by General Industries. Following completion of the acquisition, General Industries changed its name to Galileo Resources Plc, after the relevant shareholder's approvals had been received.

The business of the Group is reviewed, including a description of the principal risks and uncertainties facing the Group and details of the key performances indicators (financial and non-financial) of the Group. Details of the likely future developments of the Group have been addressed in the Chairman's Report and the Operations Report.

Principal activities

The Group and Company are principally engaged in exploration and exploitation of natural resources and seeking potential acquisitions.

Business review

The function of the business review is to provide a balanced and comprehensive review of the Group's performance and developments during the year and its position at the year end. The review also covers the principal risks and uncertainties faced by the Group. At this stage in the Company's development, the key performance indicators that the directors monitor on a regular basis are management of liquid resources, which are cash flows and bank balances.

Financial review

Net loss of the Group was £1 835 935 (2011: £2 511), after taxation of £Nil (2011: £ 1 400).

The directors have not recommended the payment of a dividend (2011: £Nil).

Risk review

The Board and the Executive Committee keep the risks inherent in an exploration business under constant review.

The principal risks for an exploration company and the measures taken by the Company to mitigate them are detailed below:

Exploration risk

Exploration risk is the risk of investing cash and resources on projects which may not provide a return. The Group addresses this risk by using its skills, experience and local knowledge to select only the most promising areas to explore.

Political risk

Political risk is the risk that assets will be lost through expropriation and unrest or war. The Group minimises political risk by operating in countries with relatively stable political systems, established fiscal and mining codes and a respect for the rule of law.

Commodity risk

Commodity risk is the risk that the price earned for minerals will fall to a point where it becomes uneconomic to extract them from the ground and process. The principal metals in  the Group's portfolio are rare earth elements (REE) and phosphorus (as phosphate). The prices of these elements have decreased during the year but remain nevertheless relatively robust. The economics of all the Group's projects are kept under close review on a regular basis.

Financial risk

The three main types of financial risk faced by the Group are credit risk, liquidity risk and currency risk. Liquidity risk is the risk of insufficient working and investment capital. The Group's goal is to finance its exploration and activities from cash flow from operations but in the absence of such cash flow the Group relies on the issue of equity share capital and option agreements to finance its activities. Galileo secured additional funds by way of a placing during the year under review to advance exploration activities in order to develop a mineral resource estimate, initiate metallurgical test work and commence a preliminary economic assessment (PEA) of the Company's Glenover Project.

The Group finances its overseas operations by purchasing South African Rands with Pounds Sterling in the UK and transferring it to meet local operating costs.

The Group does not hedge its exposure and is therefore exposed to currency fluctuations between these two currencies and local currencies but this policy will be reviewed from time to time.

The Group maintains tight financial and budgetary control to keep its operations cost effective to mitigate these financial risks.

Strategic risk

Significant and increasing competition exists for mineral acquisition opportunities throughout the world. As a result of this competition, the Group may be unable to acquire rights to exploit additional attractive mining properties on terms it considers acceptable. Accordingly, there can be no assurance that the Group will acquire any interest in additional operations that would yield reserves or result in commercial mining operations. The Group expects to undertake sufficient due diligence where warranted to help ensure opportunities are subjected to proper evaluation.

Funding risk

The Group has raised funds via equity contributions from new and existing shareholders, thereby ensuring the Company remains a going concern until such time that an off take agreement/debt financial arrangement be entered into. The directors regularly review cash flow requirements to ensure the Company can meet financial obligations as and when they fall due.

Exploration risk

Mineral exploration and development of the Group's mineral exploration properties is speculative in nature and is contingent upon obtaining satisfactory exploration results. Mineral exploration and development involves substantial expenses and a high degree of risk, which even a combination of experience, knowledge and careful evaluation may not be able adequately to mitigate. The degree of risk reduces substantially when a Group's properties move from the exploration phase to the development phase.

Operational risk

Exploration and subsequent mining operations are subject to hazards normally encountered in exploration, development and production. Although it is intended to take adequate precautions during each stage of development to minimise risk, there is a possibility of a material adverse impact on the Group's operations and its financial results. The Group will develop and maintain policies appropriate to the stage of development of its various projects. Staffing and Key Personnel Risks Recruiting and retaining qualified personnel are critical to the Group's success. The number of persons skilled in the acquisition, exploration and development of mining properties is ltd and competition for such persons is intense. While the Group has good relations with its employees, these relations may be impacted by changes in the scheme of labour relations which may be introduced by the relevant governmental authorities. Adverse changes in such legislation may have a material adverse effect on the Group's business, results of operations and financial condition. Staff is encouraged to discuss with management matters of interest to the employees and subjects affecting day to day operations of the Group.

Mining risk

There is no guarantee that the minerals contained in the various assets can be mined either practically, technically or at a cost less than the realizable value of the contained minerals. The cost of development and access may preclude the development of the mine. Should a mine be developed there is no assurance that operations can continue since operations are dependent on product prices, direct operating cost and the cost of "stay in business" capital. Mining operations are often challenged by difficult roof conditions, variability of grade, excess water, small faulting. All of these factors could adversely affect mining production rate and therefore profitability. In extreme situations factors may exist which result in operation being terminated.

Processing risk

REEs are relatively difficult to process and as such require complex chemistry solutions to gain satisfactory recovery. The recovery of one element may be at the sacrifice of another rare earth element and no assurance can be given that the ultimate suite of elements that can be recovered can be done so economically. Should the Company elect to progress to recovery only to concentrate, then there is no assurance that a global market exists for the concentrate. Shareholders and investors should be aware that the cost of building a rare earth processing plant is considerably higher than other mineral processing plants and that the Company may not be able to raise sufficient finance to build such a plant.

Political stability

The Group is conducting its activities in South Africa. The directors believe that the Government of South Africa supports the development of natural resources by foreign investors and actively monitor the situation. However, there is no assurance that future political and economic conditions in South Africa will not result in the Government of South Africa adopting different policies regarding foreign development and ownership of mineral resources. Any changes in policy affecting ownership of assets, taxation, rates of exchange, environmental protection, labour relations, repatriation of income and return of capital, may affect the Group's ability to develop the projects. The Company is complying with current South African Mining Charter Code of Practice and Black Economic Empowerment legislation (refer to note 3 of the directors' report).

Uninsurable risks

The Group may become subject to liability for accidents, pollution and other hazards against which it cannot insure or against which it may elect not to insure because of premium costs or for other reasons, such as in amounts, which exceed policy limits.

Security of tenure

The Group investigates its rights to explore and extract minerals from all of its material properties and, to the best of its knowledge, those rights are expected to be in good standing. However, no assurance can be given, that the Group will be able to secure the grant or the renewal of existing mineral rights and tenures on terms satisfactory to it, or that governments in the jurisdiction in which the Group operates will not revoke or significantly alter such rights or tenures or that such rights or tenures will not be challenged or impugned by third parties, including local governments or other claimants. Although the Group is not currently aware of any existing title uncertainties with respect to any of its future material properties, there is no assurance that such uncertainties will not result in future losses or additional expenditures, which could have an adverse impact on the Group's future cash flows, earnings, results of operations and financial condition.

Market perception

Market perception of mining and exploration companies may change which could impact on the value of investors' holdings and impact on the ability of the Company to raise further funds by issue of further shares in the Company.

Glenover licence

Glenover has six new order prospecting rights covering a surface area of 15 802 hectares. These mineral assets are located primarily on the farm Glenover 371 LQ but are also spread across other farms. The prospecting right to Glenover 371 LQ expires on 30 October 2012 while the other five prospecting rights expire on 31 October 2012. While the directors believe that Glenover will be in a position to extend these prospecting rights there is no guarantee that this will be the case. Failure to do so would have a material effect on the business of Glenover and the value of Company's investment in Glenover.

Environmental factors

All mining operations have some degree of an environmental risk. Although the directors have made reasonable search, no assurance can be given that no outstanding or intended claims against disturbance of the environment exists. REEs are often associated with radioactivity and the Glenover project has amongst other minerals, Thorium present which is radioactive. The directors have considered the significance of this and what potential problems may be presented due to the presence of radioactive minerals. They have concluded that the potential radio- activity will not prevent operations but no assurance can be given that the presence of radioactivity will impact on either capital or operating cost or both. In addition, the enlarged Group will also be subject, where appropriate, for clean-up costs and for any toxic or hazardous substances which may be produced as a result of its operation. Environmental legislation and permitting are evolving in a non-mining supportive manner which could result in onerous standards and enforcement which could result in fines, penalties and closure. As the Company develops it is the intention of the directors to carry out the appropriate base line studies with experts outsourced from independent environmental consultancies.

Reserve and resource estimates

The Group's future reported reserves and resources of Glenover are only estimates. No assurance can be given that the estimated reserves and resources will be recovered or that they will be recovered at the rates estimated. Mineral and metal reserve and resource estimates are based on ltd sampling, and consequently, are uncertain because the samples may not be representative. Mineral and metal reserve and resource estimates may require revision (either up or down) based on actual production experience or further sampling. Any future reserve and/or resource figures will be estimates and there can be no assurance that the minerals are present, will be recovered or that it can be brought into profitable production. Furthermore, a decline in the market price for natural resources that the Group may discover or invest in could render reserves containing relatively lower grades of these resources uneconomic to recover and may ultimately result in a restatement of reserves.

2. GOING CONCERN

We draw attention to the fact that at 31 March 2012, the Group had accumulated losses of £1 826 515 (2011: £9 420 profit) however the assets exceed the liabilities due to equity funding from shareholders.

The Group has sufficient financial resources to enable it to continue in operational existence for the foreseeable future, to continue the current development programme and meet its liabilities as they fall due. The directors have further reviewed the Group's cash flow forecast. In the light of this review and the current financial position, they are satisfied that the Company and Group have or have access to adequate resources to continue in operational existence for the foreseeable future.

Accordingly, the directors consider it appropriate to continue to adopt the going concern basis in preparing these year-end financial statements. This basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.

3. EVENTS AFTER THE REPORTING PERIOD

Other than the description of Glenover and events described in the Operation's Report and the transactions described below, the directors are not aware of any matter or circumstances arising that should be disclosed since the end of the financial year.

A Share Subscription and Funding Agreement will become effective in the new financial year which would introduce a Broad-Based Black Economic Empowered (BBBEE) partner, Galagen (Pty) Ltd ("Galagen"), into the Glenover shareholding. The Company will assist Galagen in purchasing an equity stake in Glenover with the issuance of Preference shares in Galagen. The rationale of this arrangement emanates for the requirements set forth in the Mining Charter of South Africa which sets out the framework, targets and timetable for increasing the participation of Historically Disadvantaged South Africans (HDSA's) in the mining industry, as well as enhancing the benefits of HDSA from the exploitation of mineral resources.

The conditions precedent in the said Shares Subscriptions and Funding Agreement will entitle Galileo to a shareholding of 46.74% and for Galagen a 26% shareholding, should the options be exercised at certain trigger dates.

The Company entered into Share Exchange and Subscription Agreements with AIM-quoted Praetorian Resources Ltd ("Praetorian") for a placing of 2.5 million Galileo ordinary shares for cash (Announced on AIM 4 July 2012) and to exchange five million of its ordinary shares of GBP0.05 each at a strike price of GBP0.40 ("Exchange Shares") for four million Praetorian ordinary shares of nil par value (with Subscription Shares of nil par value attached on 1 for 2 basis) at a strike price GBP0.50.

Praetorian agreed to subscribe GBP1 million cash, for 2.5 million Galileo ordinary shares of par value GBP0.05 at GBP0.40 ("Issue Shares").

The issuance of the above aggregate 7.5 million Exchange and Issue new Galileo ordinary shares to Praetorian represents a shareholding of 9.03% of Galileo's enlarged issued share capital.

The Company, on 4 July 2012, signed a Heads of Agreement (HoA) with Rare Earth International Ltd (REI) to earn-in interests in three rare earth projects in Zambia, Mozambique and Spain. The consideration for the earn-in is the issue of 5.25 million ordinary shares in Galileo at a strike price effective on the date of signing the HoA. Under this HoA, Galileo has 30 days to conduct title due diligence, which is the only condition on which the HoA may be terminated.

4. DIRECTORS' SHAREHOLDING ANALYSIS

Directors' direct and indirect interests in the ordinary shares of the Company, were as
follows:

	At 31 March 2012		At 31 March 2011
Beneficial Owner	% Holding	Shares	Shares
Colin Bird	53.22	44 200 000	-
John Richard Wollenberg	3.37	2 800 000	1 550 000
The Cardiff Property Plc *	1.08	900 000	900 000
Total	57.67	47 900 000	2 450 000

* John Richard Wollenberg and his family are 41.92% shareholders in The Cardiff Property Plc

At reporting date, Colin Bird owns 53.22 per cent in aggregate of the enlarged share capital. This makes him a majority shareholder in Galileo with potentially significant influence over the affairs of the Company.

There were no changes in the directors' shareholdings as stated above between 1 April 2011 and 3 August 2012 .

5. CAPITAL STRUCTURE AND SHARE ISSUE

Authorised and issued share capital

On 26 September 2011 the Company allotted 14 500 000 ordinary shares to private investors at 23p each and the resultant premium of £2 610 000 was credited to the share premium account.

On 26 September 2011 the Company allotted 44 200 000 ordinary shares to private investors to acquire the whole of the issued share capital in Skiptons Global Investment Ltd (BVI) at 23p each and the resultant premium of £7 956 000 was credited to the share premium account.

On 26 September 2011 the Company allotted 300 000 ordinary shares to John Richard Wollenberg in lieu of fees at 23p each and the resultant premium of £54 000 was credited to the share premium account.

The Company allotted 4 857 143 ordinary shares to private investors at 35p each and the resultant premium of £1 457 143 was credited to the share premium account.

Allotment of Shares

As special business at the annual general meeting a resolution will be proposed to renew the power of your directors to allot equity securities, pursuant to section 551 of the Companies Act 2006, such power being ltd to equity securities having an aggregate nominal value of £2 500 000. This authority may be renewed for five years but, in common with modern corporate governance practice, it is your directors' intention that the resolution be ltd to one year and that its renewal be proposed at each annual general meeting.

Pre-emption Rights

As special business at the annual general meeting a resolution will be proposed to renew for a further year the power of your directors to allot equity securities for cash without first offering such securities to existing shareholders. The aggregate nominal amount of equity securities which may be allotted in this way shall not exceed £2 500 000.

Supplier Payment Policy

While the Company does not follow any standard code, its policy is to negotiate terms with all its suppliers and to ensure that they know the terms on which payment will take place when the business is agreed. It is our policy to abide by these terms. In most instances this requires payment within 30 days of the date of invoice. At the year-end no suppliers' invoices were outstanding.

6. NON-CURRENT ASSETS

Details of major changes in the nature of the non-current assets of the Company during the year were as follows:

6.1 Galileo Resources Plc

During the current financial period the Company (previously named General Industries Plc) acquired a 100% interest in Skiptons Global Investment Ltd (BVI) ("Skiptons"), which holds a 100% interest in Utafutaji Trading 112 (Pty) Ltd. Due to the Company's 100% interest in Skiptons, the acquisition will be accounted for as a subsidiary investment during the 2012 financial period.

6.2 Utafutaji Trading 112 (Pty) Ltd - Joint Venture in Glenover Phosphate (Pty) Ltd ("Glenover")

The key asset of Galileo is a joint venture (JV) with Fer-Min-Ore (Pty) Ltd ("Fer-Min-Ore") in Glenover's Glenover Rare Earth Project. Glenover has the prospecting rights to a large concession containing phosphates in the North West of South Africa. Within the project's concession is an open pit, formerly mined for phosphates by Gold Fields of South Africa Ltd in the 1980s and subsequently acquired by Fer-Min-Ore. Historical data suggested that the phosphate and surrounding rock minerals contained Rare Earth Elements (REEs), which was confirmed by independent sampling, earlier in 2012, of previously mined and stockpiled low grade phosphate on surface.

The presence of these stockpiles, which contain a significant resource of REEs represents a major potential benefit to the Company, since these stockpiles represent potential feed to a process plant without attendant mining risk. The concession area is a large carbonatite intrusion, which globally, outside of China, is a much sought after geological environment for hosting potential REE deposits.

6.3 Utafutaji Trading 112 (Pty) Ltd - Acquisition of Brightwater Trade and Invest 55 (Pty) Ltd

In the financial period under review, Utafutaji Trading 112 (Pty Ltd) acquired a 49% interest in Brightwater Trade and Invest 55 (Pty) Ltd, which holds the mining rights to an aggregate quarry in the Eastern Cape Province.

The quarry is a potential near-ready operation, contingent on meeting certain conditions precedent, including an assessment on the exploration areas prior to detailed exploration comprising, inter alia, mapping, rock sampling and, if appropriate, additional exploration drilling.

The Company also has conditional agreements in principal to acquire interests up to 74% in prospecting rights for certain iron ore and manganese concessions in the Northern Cape.

7. DIVIDENDS

No dividends were declared or paid to shareholder during the year.

8. DIRECTORS

The directors of the Company during the year and to the date of this report are as follows:

Name	Title	Change	Date
Colin Bird	Chairman & Chief Executive Officer	Appointed	26-Sep-11
Andrew Francis Sarosi	Technical & Finance Director	Appointed	26-Sep-11
Anthony Shakesby	Finance Director	Resigned	09-Mar-12
Christopher Molefe	Non-executive Director	Appointed	26-Sep-11
John Richard Wollenberg	Non-executive Director
Ian Reynolds	Non-executive Director	Resigned	13-Oct-11
Derek Joseph	Non-executive Director	Resigned	13-Oct-11

9. SECRETARY

The secretary of the Company is Capita Company Secretarial Services Ltd, a division of Capita Registrars Ltd.

34 Beckenham Road Beckenham

Kent  BR3 4TU

10. AUDITORS

Saffery Champness were appointed auditors to the Company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at the annual general meeting.

11. DISCLOSURE OF INFORMATION TO AUDITORS

The directors, who held office at the date of approval of this Directors' Report, confirm that as far as they are each aware, there is no relevant audit information of which the Company's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director to make himself aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

12. DIRECTORS RESPONSIBILITIES AND APPROVAL

The directors are required in terms of the Companies Act 2006 to maintain adequate accounting records and are responsible for the content and integrity of the consolidated annual financial statements and related financial information included in this report. It is their responsibility to ensure that the consolidated annual financial statements fairly present the state of affairs of the Group as at the end of the financial year and the results of its operations and cash flows for the period then ended, in conformity with the applicable law and UK Accounting Standards (UK Generally Accepted Accounting Practice).

The consolidated annual financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgments and estimates.

The directors acknowledge that they are ultimately responsible for the system of internal financial control established by the Group and place considerable importance on maintaining a strong control environment. To enable the directors to meet these responsibilities, the board sets standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the Group and all employees are required to maintain the highest ethical standards in ensuring the Group's business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the Group is on identifying, assessing, managing and monitoring all known forms of risk across the Group. While operating risk cannot be fully eliminated, the Group endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.

The directors are of the opinion, based on the information and explanations given by management that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the consolidated annual financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or loss.

The going concern basis has been adopted in preparing the consolidated annual financial statements. The directors have no reason to believe that the Group will not be a going concern in the foreseeable future, based on forecasts and available cash resources. These consolidated annual financial statements support the viability of the Company. The directors have reviewed the Group's financial position at the balance sheet date and for the period ending on the anniversary of the date of approval of these financial statements and they are satisfied that the Group has, or has access to, adequate resources to continue in operational existence for the foreseeable future.

The Company's independent auditors, Saffery Champness audited the Group's consolidated annual financial statement.

The consolidated annual financial statements, which have been prepared on the going concern basis, were approved by the board on 3 August 2012 and were signed on its behalf by:

Colin Bird                                            Andrew Francis Sarosi

3 August 2012

Statement of Financial Position

		Group		Company
Figures in Pound Sterling	Note(s)	2012	2011	2012	2011
Assets
Non-Current Assets
Property, plant and equipment	3	897	-	282	-
Intangible assets	4	10 174 642	-	-	-
Investments in subsidiaries	5	-	-	10 166 000	-
Investment in joint ventures	6	1 519 841	-	-	-
Investments in associates	7	-	-	-	-
Loans to Group companies and other related entities	8	1 015 912	-	2 916 986	-
Other financial assets	9	5	91 365	-	91 365
		-----------------	-----------------	-----------------	-------------------
		12 711 297	91 365	13 083 268	91 365
Current Assets
Trade and other receivables	10	-	276 229	-	276 229
Cash and cash equivalents	11	2 722 932	831 434	2 468 652	831 434
		-----------------	-----------------	-----------------	-------------------
		2 722 932	1 107 663	2 468 652	1 107 663
		-----------------	-----------------	-----------------	-------------------
Total Assets		15 434 229	1 199 028	15 551 920	1 199 028
Equity and Liabilities
Equity
Share capital	12	3 777 859	585 002	3 777 859	585 002
Share premium	12	12 614 511	599 309	12 614 511	599 309
Reserves		791 761	-	787 139	-
Accumulated (loss)/profit		(1 826 515)	9 420	(1 693 345)	9 420
		-----------------	-----------------	-----------------	-------------------
		15 357 616	1 193 731	15 486 164	1 193 731
Liabilities
Current Liabilities
Trade and other payables	14	76 613	5 297	65 756	5 297
		-----------------	-----------------	-----------------	-------------------
Total Equity and Liabilities		15 434 229	1 199 028	15 551 920	1 199 028

Statement of Comprehensive Income

		Group		Company
Figures in Pound Sterling	Note(s)	2012	2011	2012	2011
Other income		19 164	-	19 164	-
Operating expenses		(1 836 034)	(17 857)	(1 732 204)	(17 857)
		----------------	------------	----------------	-----------
Operating loss	15	(1 816 870)	(17 857)	(1 713 040)	(17 857)
		----------------	------------	----------------	-----------
Investment revenue	16	10 295	16 746	10 295	16 746
Loss from equity accounted investments	6,7	(29 340)	-	-	-
Finance costs	17	(20)	-	(20)	-
		----------------	------------	----------------	-----------
Loss before taxation		(1 835 935)	(1 111)	(1 702 765)	(1 111)
		----------------	------------	----------------	-----------
Taxation	18	-	(1 400)	-	(1 400)
		----------------	------------	------------	-----------
Loss for the year		(1 835 935)	(2 511)	(1 702 765)	(2 511)
		----------------	------------	----------------	-----------
Other comprehensive income:
Translation of foreign subsidiaries		4 622	-	-	-
		----------------	------------	----------------	-----------
Total comprehensive loss		(1 831 313)	(2 511)	(1 702 765)	(2 511)
		----------------	------------	----------------	-----------
Total comprehensive loss attributable to:
Owners of the parent		(1 831 313)	(2 511)	(1 706 765)	(2 511)
Earnings per share
Per share information
Basic loss per share (pence)	19	(4)	(0.02)
Diluted loss per share (pence)	19	(4)	(0.02)

Statement of Changes in Equity

Figures in Pound Sterling	Share Capital	Share premium	Total share capital	Foreign currency translation reserve	Share based payment reserve	Total reserves	Accumulated (loss)/profit	Total equity
Group
Balance at 01 April 2010	510 002	490 000	1 000 002	-	-	-	11 931	1 011 933
Changes in equity
Total comprehensive income for the year	-	-	-	-	-	-	(2 511)	(2 511)
Issue of shares	75 000	140 000	215 000	-	-	-	-	215 000
Share issue and other statutory costs	-	(30 691)	(30 691)	-	-	-	-	(30 691)
	------------	------------	------------	------------	------------	------------	------------	------------
Total changes	75 000	109 309	184 309	-	-	-	(2 511)	181 798
	------------	------------	------------	------------	------------	------------	------------	------------
Balance at 01 April 2011	585 002	599 309	1 184 311	-	-	-	9 420	1 193 731
	------------	------------	------------	------------	------------	------------	------------	------------
Changes in equity
Total comprehensive income for the year	-	-	-	4 622	787 139	791 761	(1 835 935)	(1 044 174)
Issue of shares	3 192 857	12 077 143	15 270 000	-	-	-	-	15 270 000
Share issue and other statutory costs	-	(61 941)	(61 941)	-	-	-	-	(61 941)
	------------	------------	------------	------------	------------	------------	------------	------------
Total changes	3 192 857	12 015 202	15 208 059	4 622	787 139	791 761	(1 835 935)	14 163 885
	------------	------------	------------	------------	------------	------------	------------	------------
Balance at 31 March 2012	3 777 859	12 614 511	16 392 370	4 622	787 139	791 761	(1 826 515)	15 357 616
	------------	------------	------------	------------	------------	------------	------------	------------
Note(s)	12	12	12	13
Company
Balance at 01 April 2010	510 002	490 000	1 000 002	-	-	-	11 931	1 011 933
Changes in equity
Total comprehensive income for the year	-	-	-	-	-	-	(2 511)	(2 511)
Issue of shares	75 000	140 000	215 000	-	-	-	-	215 000
Share issue and other statutory costs	-	(30 691)	(30 691)	-	-	-	-	(30 691)
	------------	------------	------------	------------	------------	------------	------------	------------
Total changes	75 000	109 309	184 309	-	-	-	(2 511)	181 798
	------------	------------	------------	------------	------------	------------	------------	------------
Balance at 01 April 2011	585 002	599 309	1 184 311	-	-	-	9 420	1 193 731
	------------	------------	------------	------------	------------	------------	------------	------------
Changes in equity
Total comprehensive income for the year	-	-	-	-	787,139	787,139	(1,702,765)	(915,626)
Issue of shares	3 192 857	12 077 143	15 270 000	-	-	-	-	15 270 000
Share issue and other statutory costs	-	(61,941)	(61,941)	-	-	-	-	(61 941)
	------------	------------	------------	------------	------------	------------	------------	------------
Total changes	3 192 857	12 015 202	15 208 059	-	787 139	787 139	(1 702 765)	14 292 433
	------------	------------	------------	------------	------------	------------	------------	------------
Balance at 31 March 2012	3 777 859	12 614 511	16 392 370	-	787 139	787 139	(1 693 345)	15 486 164
	------------	------------	------------	------------	------------	------------	------------	------------
Note(s)	12	12	12	13

Statement of Cash Flows

		Group		Company
Figures in Pound Sterling	Note(s)	2012	2011	2012	2011
Cash flows from operating activities
Cash used in operations	21	(634 703)	(20 846)	(546 352)	(20 846)
Interest income		10 295	16 746	10 295	16 746
Finance costs		(20)	-	(20)	-
		----------------	----------------	----------------	----------------
Net cash from operating activities		(624 428)	(4 100)	(536 077)	(4 100)
Cash flows from investing activities
Acquisition of property, plant and equipment	3	(897)	-	(282)	-
Loans advanced to Group companies		(1 015 912)	-	(2 916 986)	-
Foreign exchange loss		(104 802)	-	(104 802)	-
Purchase of investment in joint venture		(1 549 186)	-	-	-
Purchase of investment in associate		-	(361 757)	-	(361 757)
		----------------	----------------	----------------	--------------
Net cash from investing activities		(2 670 797)	(361 757)	(3 022 070)	(361 757)
Cash flows from financing activities
Proceeds on issue of shares, net of issuance costs	12	5 186 723	215 000	5 195 365	215 000
Total cash movement for the year		1 891 498	(150 857)	1 637 218	(150 857)
Cash at the beginning of the year		831 434	982 291	831 434	982 291
		----------------	----------------	----------------	--------------
Total cash at end of the year	11	2 722 932	831 434	2 468 652	831 434

Notice of Annual General Meeting

Notice is hereby given that the Annual General Meeting of Galileo Resources Plc will be held at The Rembrandt Hotel, 11 Thurloe Place, Knightsbridge, London, SW7 2RS, on 3 September 2012 at 11:00 a.m.

 

END

 

 

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