Final results for the year ended 30 June 2017

RNS Number : 6212Y

Ironveld PLC

07 December 2017

 

7 December 2017                                                                                                        

IRONVELD PLC

("Ironveld" or the "Company")

Final results for the year ended 30 June 2017

Ironveld plc, the owner of a High Purity Iron ("HPI"), Vanadium and Titanium project located on the Northern Limb of the Bushveld Complex in Limpopo Province, South Africa (the "Project") is pleased to announce its final results for the 12 months ended 30 June 2017 ("the Period"). The Period saw the Company move towards the potential acquisition of a smelting business ("Middelburg Smelting") to enable early production.

Operational Highlights

·    Section 11 transfers of the mining licence for heavy minerals, iron and vanadium to the Company's subsidiaries HW Iron (Pty) Ltd and Lapon (Pty) Ltd effected

·      Planned acquisition of Middelburg Smelting facility and associated independent power plant that would provide a readymade smelter enabling early production of HPI, Vanadium and Titanium

·      Exclusive discussions continue with Ironveld Middelburg, a subsidiary of the Company, to acquire the Smelting facility. Considerable time has been spent by management on site preparing for the commencement of operations

·      Offtake agreements are in place for HPI, Vanadium and Titanium for the first five years of production

·      The water use licence application has been submitted to the Department of Water Affairs

·      Access agreements being negotiated with the communities and affected land owners for the areas to be mined in the first five years

·    The Air Emissions licence was granted by the Department of Economic Development and Tourism ("Ledet")

Financing

·      During the year, completed two successful placings, raising £2.1 million in June 2017 to fund working capital and repay the R15 million loan facility with Sylvania Metals Pty Limited as well as c.£1.8 million in October 2016

·      Post-period end, successfully completed a further placing, raising £1.765 million

Outlook

·      The Company remains in advanced discussions with a number of funding providers for the acquisition of the Middelburg Smelting facility that would allow for the necessary upgrades and subsequent   processing of the Company's own magnetite

·    Subject to finalising funding arrangements the Company will seek to move to production within six months of financial completion

Peter Cox, CEO said:

"During the Period, we shifted our immediate focus from constructing a 15 MW smelter to securing the acquisition of the Middelburg Smelting facility, to enable early production and allow us to begin selling to offtake partners, generating revenue and cash flow for the Company. Although progress has been slower than we hoped, we remain confident in finalising funding arrangements that would allow for the necessary refurbishments to the Smelting Facility to be completed and for smelting and refining of our magnetite ore to commence.

"This is an extremely exciting period for the Company as we transition towards becoming a production led mining company. We continue to receive important support from our shareholders and consequently the Company is today in a position of strength with a stable balance sheet.

"We have made further progress post period and look forward to updating shareholders further in due course."

For further information, please contact:

Ironveld plc Peter Cox, Chief Executive	c/o Camarco 020 3757 4980
Shore Capital and Corporate Limited Stephane Auton / Toby Gibbs (corporate finance) Jerry Keen (corporate broking)	020 7408 4090
Camarco Gordon Poole / Kimberley Taylor / Monique Perks	020 3757 4980

Notes to Editors:

Ironveld (IRON.LN) is the owner of a High Purity Iron, Vanadium and Titanium project located on the Northern Limb of the Bushveld Complex in Limpopo Province South Africa.  Ironveld expects to mine its own VTM ore as feedstock for a 7.5 MW DC smelter which will produce speciality iron products including high purity iron powder as well as vanadium and titanium slag products.

The Definitive Feasibility Study published in April 2014 confirms the project's viability to deliver an exceptionally high grade iron product (99.5% Fe) called High Purity Iron which commands a premium in the market place. Vanadium and Titanium slag containing commercial grades of vanadium and titanium will also be produced and sold.

Ironveld's Board includes; Giles Clarke as Chairman, Peter Cox as CEO, Vred von Ketelhodt as CFO, Nick Harrison and Rupert Fraser as a Non-Executive Directors.

Ironveld is an AIM traded company. For further information on Ironveld please refer to www.ironveld.com.

 

CHAIRMAN'S STATEMENT - STRATEGIC REPORT

During the year, there have been a number of operational achievements that ensured the Company exited the period in a position of strength with highly deliverable goals focused on developing the HPI, Vanadium and Titanium Project.

During the Period, the Company acquired ownership of the magnetite resources via Section 11 transfer of the mining licences for heavy minerals, iron and vanadium. The Company now holds unfettered rights to 56.4 million tons of magnetite ore on the Main Magnetite Layer of the Bushveld Igneous Complex grading 48% Fe,14.7% TiO2 and 1.12% V2o% giving 27 million tons of in situ iron, 8.3 million tons of TiO2 and 632 thousand tons of V2O5. The mining licences are held by the Companies subsidiaries HW Iron (Pty) Ltd and Lapon (Pty) Ltd. Post year-end the prospecting right for the Luge (Pty) Ltd properties has been granted, which is expected to increase the magnetite ore available to the Company to feed the Middelburg smelter and eventual larger scale operations.

The Period also saw the granting of the Air Emissions licence by the Department of Economic Development and Tourism and the Water Use licence for HW Iron being submitted to the Department of Water Affairs, which is anticipated to be granted in the first quarter of 2018. The Company places significant importance on community engagement and engagement is ongoing to conclude access and lease agreements for the areas that will be mined in the first 5 years.

In line with the Company's intention of building and operating a 15MW smelter, during the Period, it successfully concluded a R 244.08m funding package with the Industrial Development Corporation (IDC), relating specifically to the 15MW smelter. To have the support of the IDC is a significant achievement as the organisation is owned by the South African government under the supervision of the Economic Development Department and its vision is aligned with ours in supporting and contributing to the creation of sustainable economic growth in South Africa.

In April 2017, the Board took the strategic decision to shift the immediate focus from constructing a 15 MW smelter to acquiring a 7.5 MW smelting facility and associated independent power plant in Middelburg, South Africa. This took effect through the signing of two non-binding memorandum of understanding ("MOUs"). The acquisition of the Middelburg facility would provide the Company with a readymade smelter, enabling early production of HPI, Vanadium and Titanium and facilitating supply into the offtake agreements, which have been agreed for the first five years of production with highly reputable partners. We also believe the acquisition would significantly de-risk the Project, whilst delivering attractive economic returns and cash flow.

Shortly after the year-end and following the signing of the two MOUs relating to Middelburg, the Company put down a R8.8m refundable deposit towards the potential acquisition in exchange for exclusivity. Although the negotiations and due diligence of the acquisition have taken longer than planned, the Directors remain confident of successfully concluding discussions and securing the required funding. Once the necessary upgrades and refurbishments have been made, the Company's own magnetite ore can be processed through the Middelburg smelting facility and the Company will then supply products to its offtake partners. Considerable time has been spent by management on site at the Middelburg Smelting facility, preparing for the commencement of operations. However, no further work will be done until the funding for the acquisition has been concluded and the necessary upgrades have been made.

The Company plans to produce High Purity Iron as a water atomised powder. This product is widely used in the automotive industry, and has applications in powder metallurgy and magnetic materials and in a variety of specialist applications. There is a growing market for this product driven by the continuous introduction of new materials and technologies. Vanadium has extensive applications including the grid energy storage market, where vanadium redox flow batteries are under development, being heralded as the "missing-link" in volume storage for clean energy. Titanium, which is used in the pigment industry as well as in the steel and alloying industries, is a key part of a new battery technology. The Company has also been investigating the possibility of producing titanium metal powders for the additive manufacturing industry and once production commences at the Middelburg facility this will be pursued further.

The continued support of our shareholders has enabled us to successfully complete two placings during the year. These have provided us with the working capital required to support ongoing project development, as well as repay the R15 million loan facility with Sylvania Metals Pty Limited. Furthermore, post-period end, we were able to close a third successful fundraise to strengthen our balance sheet and working capital position, as we remain focused on the potential acquisition of the Middelburg Smelting facility and moving towards commencing production.

We continue to work closely with the local communities to improve standards of living. We are incredibly proud of our Keep a Girl in School Programme, in which we work closely with our partners, the Imbumba Foundation and the Nelson Mandela Foundation, to provide hygiene support to some 600 female students at schools in the Project area. Work to introduce a support program to similarly encourage academic excellence amongst male students in the project area ongoing with the support of the Imbumba foundation.

Financial

The group recorded a loss before tax of £0.7 (2016: £0.6m) and cash balances of £0.8m (2016: £0.1m) at the end of the period. The Company does not plan to pay a dividend for the year ended 30 June 2017.

Going concern

The Directors are confident that the Company has sufficient working capital for the foreseeable future.

Outlook

The Board remains committed to successfully concluding negotiations for the potential acquisition of the Middelburg Smelting facility, which would fulfil the Company's aim of becoming a production led mining company through the early production of HPI, Vanadium and Titanium and significantly de-risking the Project.

We would like to thank all of our shareholders for their ongoing support for both the Company and the Project and we look forward to providing further updates in the near future.

Giles Clarke

Chairman

6 December 2017

 

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 30 JUNE 2017

			Year		Year
			ended		ended
			2017		2016
	Note		£'000		£'000
Administrative expenses			(553)		(494)
Operating loss	4		(553)		(494)
Investment revenues	6		1		-
Finance costs	7		(185)		(91)
Loss before tax			(737)		(585)
Tax	8		-		-
Loss for the year			(737)		(585)
Attributable to:
Owners of the Company			(737)		(584)
Non-controlling interests			-		(1)
			(737)		(585)
Loss per share - Basic and diluted	9		(0.20p)		(0.18p)

There is no difference between the results as disclosed above and the results on a historical cost basis.  The income statement has been prepared on the basis that all operations are continuing operations.

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

YEAR ENDED 30 JUNE 2017

			Year ended		Year ended
			2017		2016
			£'000		£'000
Loss for the period			(737)		(585)
Exchange differences on the translation of foreign operations			2,380		(525)
Total comprehensive income for the period			1,643		(1,110)
Attributable to:
Owners of the Company			1,057		(954)
Non-controlling interests			586		(156)
			1,643		(1,110)

 

CONSOLIDATED BALANCE SHEET

AS AT 30 JUNE 2017

			2017						2016
	Note		£'000						£'000
Non-current assets
Intangible assets	11		26,750						21,509
Property, plant and equipment	12		5						9
			26,755						21,518
Current assets
Trade and other receivables	14		780						234
Cash and cash equivalents			788						113
			1,568						347
Total assets			28,323						21,865
Current liabilities
Trade and other payables	15		(331)						(186)
Borrowings	16		(889)						(992)
			(1,220)						(1,178)
Net-current liabilities
Deferred tax liabilities	17		(5,580)						(4,699)
Total liabilities			(6,800)						(5,877)
Net assets			21,523						15,988
Equity
Share capital	19		7,671						6,500
Share premium	20		18,211						16,136
Other reserves	20		-						21
Retained earnings	20		(8,282)						(10,006)
Equity attributable to owners of the Company			17,600						12,651
Non-controlling interests	23		3,923						3,337
Total equity			21,523						15,988

These financial statements were approved by the Board and authorised for issue on 6 December 2017.

Signed on behalf of the Board

P Cox Director		Company Registration No: 04095614

 

PARENT COMPANY BALANCE SHEET

AS AT 30 JUNE 2017

		2017			2016
	Note	£'000			£'000
Non-current assets
Investments	13	21,213			18,954
Current assets
Trade and other receivables	14	507			78
Cash and cash equivalents		260			74
		767			152
Total assets		21,980			19,106
Current liabilities
Trade and other payables	15	(205)			(179)
Total liabilities		(205)			(179)
Net assets		21,775			18,927
Equity
Share capital	19	7,671			6,500
Share premium	20	18,211			16,136
Other reserves	20	-			21
Retained earnings	20	(4,107)			(3,730)
Total equity (Owners of the Company)		21,775			18,927

The loss for the financial year dealt with in the financial statements of the parent Company was £458,000 (2016 - loss £424,000).

These financial statements were approved by the Board and authorised for issue on 6 December 2017.

Signed on behalf of the Board

P Cox Director

Company Registration No: 04095614

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2017

Attributable to the owners of the Company:

	Share		Share		Warrant		Retained		Total
	Capital		Premium		Reserves		Earnings		Equity
	£'000		£'000		£'000		£'000		£'000
As at 1 July 2015	6,474		16,056		21		(8,902)		13,649
Loss for the year	-		-		-		(584)		(584)
Other comprehensive income	-		-		-		(525)		(525)
Issue of share capital	26		80		-		-		106
Credit for equity settled share based payments	-		-		-		171		171
Adjustment arising from changes  in non-controlling interests	-		-		-		(166)		(166)
At 30 June 2016	6,500		16,136		21		(10,006)		12,651
Loss for the year	-		-		-		(737)		(737)
Other comprehensive income	-		-		-		2,380		2,380
Issue of share capital	1,171		2,054		-		-		3,225
Expiration of share warrant	-		21		(21)		-		-
Credit for equity settled share based payments	-		-		-		81		81
Balance at 30 June 2017	7,671		18,211		-		(8,282)		17,600

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)

FOR THE YEAR ENDED 30 JUNE 2017

Total equity					Owners of the Company		Non-controlling interest		Total equity
					£'000		£'000		£'000
As at 1 July 2015					13,649		3,328		16,977
Loss for the year					(594)		(1)		(585)
Other comprehensive income					(525)		(156)		(681)
Issue of share capital					106		-		106
Credit for equity settled share based payments					171		-		171
Adjustment for changes in non-controlling interests					(166)		166		-
At 30 June 2016					12,651		3,337		15,988
Loss for the year					(737)		-		(737)
Other comprehensive income					2,380		586		2,966
Issue of share capital					3,225		-		3,225
Credit for equity settled share based payments					81		-		81
At 30 June 2017					17,600		3,923		21,523

 

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2017

Equity attributable to the equity holders of the Company:

	Share		Share		Other		Retained		Total
	Capital		Premium		Reserves		Earnings		Equity
	£'000		£'000		£'000		£'000		£'000
As at 1 July 2015	6,474		16,056		21		(3,477)		19,074
Issue of share capital	26		80		-		-		106
Credit for equity settled share based payments	-		-		-		171		171
Loss for the year	-		-		-		(424)		(424)
At 30 June 2016	6,500		16,136		21		(3,730)		18,927
Issue of share capital	1,171		2,054		-		-		3,225
Expiration of share warrant	-		21		(21)		-		-
Credit for equity settled share based payments	-		-		-		81		81
Loss for the year	-		-		-		(458)		(458)
Balance at 30 June 2017	7,671		18,211		-		(4,107)		21,775

 

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 30 JUNE 2017

			2017		2016
	Note		£'000		£'000
Net cash from operating activities	21		(641)		(470)
Investing activities
Purchases of property, plant and equipment			(1)		(4)
Purchase of exploration and evaluation assets			(914)		(821)
Contribution to exploration and evaluation assets			-		187
Interest received			1		-
Net cash used in investing activities			(914)		(638)
Financing activities
Proceeds on issue of shares (net of costs)			2,552		6
Repayment of borrowings			(312)		(187)
Net cash generated / (used) by financing activities			2,240		(181)
Net increase/(decrease) in cash and cash equivalents			685		(1,289)
Cash and cash equivalents at the beginning o of the period	21		113		1,407
Effect of foreign exchange rates			(10)		(5)
Cash and cash equivalents at end of year	21		788		113

 

COMPANY CASH FLOW STATEMENT

FOR THE YEAR ENDED 30 JUNE 2017

			2017		2016
	Noted		£'000		£'000
Net cash from operating activities	21		(390)		(231)
Investing activities
Payments to acquire investments			(1,976)		(1,082)
Net cash used in investing activities			(1,976)		(1,082)
Financing activities
Proceeds on issue of shares (net of costs)			2,552		6
Net cash generated by financing activities			2,552		6
Net increase/(decrease) in cash and cash equivalents			186		(1,307)
Cash and cash equivalents at the beginning of the period	21		74		1,381
Cash and cash equivalents at end of year	21		260		74

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

1. General information

Ironveld Plc is a public company incorporated in the United Kingdom under the Companies Act 2006 whose shares are listed on the Alternative Investment Market of the London Stock Exchange. The address of the registered office is given on page 2. The nature of the Group's operations and its principal activities are set out in note 3 and in the Strategic Report on pages 3 to 4.

Adoption of new and revised Standards

There were no new or amended IFRS standards or IFRIC interpretations adopted for the first time in these financial statements that had a material impact on the financial statements.

At the date of authorisation of these financial statements, the following accounting standards, amendments to existing standards and interpretations are not yet effective and have not been adopted early by the Group.

IFRS 15 (Clarification)              Revenue from Contracts with Customers

IFRS 9 (2014)                          IFRS 9 Financial Instruments (2014)

                                                IFRS 10 &IAS 28 (amended)     Sale or Contribution of Assets between investors and its Associates

IFRS 16                                  Leases

IAS 12 (amended)                    Recognition of Deferred Tax Assets for Unrealised Losses

IAS 7 (amended)                      Disclosure Initiative

IFRS 15 (Clarification)               Revenue from Contracts with Customers

                                                IFRS 2 (amended)                    Classification and Measurement of Share-based Payment Transactions

IFRS4 (amended)                     Applying IFRS9 Insurance contracts

IFRIC 22                                  Foreign currency transactions and advance consideration

IAS40 (amended)                      Transfer of Investment property

Annual Improvements to IFRSs 2014-2016 Cycle.

The adoption of these standards, amendments and interpretations is not expected to have a material impact on the Group and Company's result for the year or equity.

2.1 Significant accounting policies

The financial statements are based on the following policies which have been consistently applied:

Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.

The financial statements have been prepared on the historical cost basis. The principal accounting policies are set out below:

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and all entities controlled by the Company (its subsidiaries) made up to the year end.  Control is achieved where the Company has power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.

Subsidiaries are consolidated from the date of their acquisition, being the date on which the Company obtains control and ceases when the Company loses control of the subsidiary. Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of the subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

2.1 Significant accounting policies (continued)

Basis of consolidation (continued)

Non-controlling interests in subsidiaries are identified separately from the Group's equity therein. Those interests of non-controlling shareholders are initially measured at their proportionate share of the fair value of the acquirees identifiable net assets. Subsequent to acquisition, the carrying value of the non-controlling interests is the amount of initial recognition plus the non-controlling interests' share of the subsequent changes in equity.

Changes in the Group's interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amount of the Group's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the Company.

Business combinations

Acquisitions of subsidiaries are accounted for using acquisition accounting. The consideration for each acquisition is measured at the fair value of assets given, liabilities incurred or assumed and equity instruments issued by the Group in exchange for control in the acquiree. Acquisition-related costs are recognised in the income statement as incurred.

Exploration and evaluation

Costs incurred prior to acquiring the rights to explore are charged directly to the income statement.

Licence acquisition costs and all other costs incurred after the rights to explore an area have been obtained, such as the direct costs of exploration and appraisal (including geological, drilling, trenching, sampling, technical feasibility and commercial viability activities) are accumulated and capitalised as intangible exploration and evaluation ("E&E") assets, pending determination. Amounts charged to project partners in respect of costs previously capitalised are deducted as contributions received in determining the accumulated cost of E&E assets.

E&E assets are not amortised prior to the conclusion of the appraisal activities. At completion of appraisal activities, if financial and technical feasibility is demonstrated and commercial reserves are discovered then, following development sanctions, the carrying value of the relevant E&E asset will be reclassified as a development and production asset in intangible assets after the carrying value has been assessed for impairment and, where appropriate adjusted. If after completion of the appraisal of the area it is not possible to determine technical and commercial feasibility or if the legal rights have expired or if the Group decide to not continue activities in the area, then the cost of unsuccessful exploration and evaluation are written off to the income statement in the relevant period.

The Group's definition of commercial reserves for such purposes is proved and probable reserves on an entitlement basis. Proved and probable reserves are the estimated quantities of minerals which geological, geophysical and engineering data demonstrate with a specified degree of certainty to be recoverable in future years from the known reserves and which are considered to be commercially producible.

Such reserves are considered commercially producible if management has the intention of developing and producing them and such intention is based upon:

     -         a reasonable expectation that there is a market for substantially all of the expected production;

     -         a reasonable assessment of the future economics of such production;

                       -        evidence that the necessary production, transmission and transportation facilities are available or can be made available; and

     -         agreement of appropriate funding; and

     -         the making of the final investment decision

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

2.1 Significant accounting policies (continued)

Exploration and evaluation (continued)

On an annual basis a review for impairment indicators is performed. If an indicator of impairment exists an impairment review is performed. The recoverable amount is then considered to be the higher of the fair value less costs of sale or its value in use. Any identified impairment is written off to the income statement in the period identified.

Development and production assets

Development and production assets, classified within property, plant and equipment, are accumulated generally on a field basis and represents the cost of developing the commercial reserves discovered and bringing them into production, together with the E&E expenditure incurred in finding the commercial reserves transferred from intangible assets.

Depreciation of producing assets

The net book values of producing assets are depreciated generally on the field basis using the unit or production method by reference to the ratio of production in the period and the related commercial reserves of the field, taking into account the future development expenditure necessary to bring those reserves to production.

Research and development

Research expenditure is recognised as an expense in the period in which it is incurred.

An internally-generated asset arising from any development is recognised only if all of the following conditions are met:

     -         an asset is created that can be identified;

     -         it is probable that the asset created will generate future economic benefits; and

     -         the development cost of the asset can be measured reliably.

Revenue

Revenue is measured at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, net of discounts and value added tax.

Taxation

The tax expense represents the sum of the tax payable and deferred tax.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base used in the calculation of the taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised on all appropriate taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which the deductible timing differences can be utilised. The carrying amount of deferred tax assets is reviewed at each balance sheet date.

Deferred tax is calculated at the tax rates that are expected to be applicable in the period when the liability or asset is realised and is based on tax laws and rates substantially enacted at the balance sheet date. Deferred tax is charged in the income statement except where it relates to items charged/credited in other comprehensive income, in which case the tax is also dealt with in other comprehensive income.

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

2.1  Significant accounting policies (continued)

Leases

Rentals payable under operating leases are charged to the income statement on a straight line basis over the lease term.

Property, plant and equipment

Tangible fixed assets are stated at cost less depreciation.  Depreciation is provided at rates calculated to write off the cost less the estimated residual value of each asset over its expected useful life, as follows:

Plant and machinery                                10% - 25% straight line basis or reducing balance basis

Foreign currencies

The individual financial statements of each group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purposes of the consolidated financial statements, the results and financial position of each group company are expressed in pounds sterling, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency are recognised at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences are recognised in the income statement in the period in which they arise.

When presenting the consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated at the exchange rates prevailing at the balance sheet date. Income and expense items are translated at average exchange rates for the period, unless exchange rates have fluctuated significantly in which case the rates at the date of the transactions are used. Exchange differences arising are recognised in other comprehensive income and accumulated in equity (attributed to non-controlling interests where appropriate).

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated using the closing rate.

Financial instruments

Financial assets and financial liabilities are recognised in the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.

Other receivables

Other receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method except for short-term receivables when recognition of interest would be immaterial. Appropriate allowances for the estimated irrecoverable amounts are recognised in the income statement when there is objective evidence that the asset is impaired.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, and other short term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

2.1 Significant accounting policies (continued)

Financial instruments (continued)

Financial liability and equity

Interest bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accrual basis in the income statement using the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

The Group classifies financial instruments, or their component parts, on initial recognition as a financial asset, financial liability or an equity instrument in accordance with the substance of the contractual arrangement. Financial instruments are initially recognised at fair value and are subsequently amortised using the effective interest method. Fair value is estimated from available market data and reference to other instruments considered to be substantially the same.

Trade and other payables

Trade payables and other financial liabilities are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.

The Group's activities expose it primarily to the financial risks of changes in interest rates on borrowings.

Investments

Investments in subsidiaries are stated at cost less any provision for the permanent diminution in value.

Share-based payments

The Group issues equity-settled share-based payments to certain employees and other parties.  Equity settled share-based payments are measured at fair value at the date of grant.  In respect of employee related share based payments, the fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest. In respect of other share based payments, the fair value is determined at the date of grant and recognised when the associated goods or services are received.

Operating segments

The Group considers itself to have one operating segment in the year and further information is provided in note 3.

Going concern

The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operating existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements. Further details are provided in the note 2.2 and in the Strategic Report on pages 3 to 4.

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

2.2 Critical accounting estimates and judgements

The Group makes estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Fair value of acquisition

On acquisition of a subsidiary, the Company is required to estimate the fair value of the assets and liabilities acquired and the consideration paid. The estimate in respect of exploration and evaluation assets is affected by many factors including the future viability of commercial reserves which have been based on the judgement of directors supported by third party technical reports.

Going concern

The Group's present resources and existing facilities are only considered adequate to meet committed overhead expenditure for the foreseeable future being the period to 31 December 2018. The Directors are presently fully engaged with finance providers to raise the further funds which will allow them to commit to the next phase of the Project and the Directors are confident that sufficient funds can be raised for this additional planned activity.

The Directors therefore have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future, being twelve months from the date of the approval of the financial statements and are optimistic that the Group will be able to raise further funds when required for the additional planned activities. The Company is committed to developing the Project and is actively engaged in raising finance to allow the development to proceed.  For this reason, the Board continues to adopt the going concern basis in the preparation of the financial statements.

Fair value of share based payments

Calculation of the fair value of the share based payments issued requires estimates to be used for the share price volatility, the risk free rate and the model used to calculate the fair value.

Exploration and evaluation assets

The Group has adopted a policy of capitalising the costs of exploration and evaluation and carrying the amount without impairment assessment until impairment indicators exist (as permitted by IFRS 6). The directors consider that the Group remains in the exploration and evaluation phase and therefore, under IFRS 6, the directors have to make judgements as to whether any indicators of impairment exist and the future activities of the Group. No such indicators of impairment were identified and therefore no impairment review has been carried out.

Deferred tax assets

The directors must judge whether the future profitability of the Group is likely in making the decision whether or not to recognise a deferred tax asset in respect of taxation losses. No deferred tax assets have been recognised in the year.

Useful lives of property, plant and equipment

Property, plant and equipment are amortised or depreciated over their useful lives. Useful lives are based on the management's estimates of the period that the assets will generate revenue, which are based on judgement and experience and periodically reviewed for continued appropriateness. Changes to estimates can result in significant variations in the carrying value and amounts charged to the consolidated income statement in specific periods.

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

3.  Business and geographical segments

Information reported to the Group Directors for the purposes of resource allocation and assessment of segment performance is focused on the activity of each segment and its geographical location. The directors consider that there is only one business segment, which is the activity of prospecting, exploration and mining based in South Africa.

4.  Operating loss

Operating loss for the year is shown after charging:		Year ended			Year ended
		2017			2016
		£'000			£'000
Net foreign exchange gains/(losses)		3			(5)
Depreciation on tangible assets		6			8
Lease payments under operating leases		34			25

Auditors remuneration
Fees payable to the auditors for the audit of the Company's accounts		28			24
Fees payable to the Company's auditors and its associates for other services:-
The audit of the Company's subsidiaries		8			8
Tax compliance services		3			3
Other assurance services		8			9

5.  Staff costs

		Year			Year
		ended			ended
		2017			2016
		£'000			£'000
Wages and salaries		635			519
Social security costs		17			17
Share based payments		81			155
		733			691

Directors remuneration and fees

341

309

The aggregate remuneration paid to the highest paid Director was

132

118

		2017			2016
The average monthly number of employees, including Directors, during the period was as follows:		Number			Number
Administration and management		14			16

Further details of the Directors' remuneration are given in the Directors' Remuneration Report on pages 9 and 10.

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

6.  Investment revenues

		Year ended			Year ended
		2017			2016
		£'000			£'000
Interest on bank deposits		1			-

7.  Finance costs

		Year ended			Year ended
		2017			2016
		£'000			£'000
Loan interest and similar charges		185			91

8.  Tax

		Year ended			Year ended
		2017			2016
		£'000			£'000
a)   Tax charge for the period
Corporation tax:
Current period		-			-
Deferred tax (note 17)		-			-
		-			-
b)   Factors afftecting the tax charge for the period Loss on ordinary activities for the period before taxation		(737)			(585)
Loss on ordinary activities for the period before taxation multiplied by effective rate of  corporation tax of 19.75% (2016 - 20%)		(146)			(117)
Non- deductible expenses		16			34
Unused tax losses not recognised		130			83
Tax expense for the year		-			-

c) Factors that may affect future tax charges  -  The Group has estimated unutilised tax losses amounting to £3,100,000 (2016 - £2,460,000) the values of which are not recognised in the balance sheet. The losses represent a potential deferred taxation asset of £630,000 (2016 - £490,000) which would be recoverable should the Group make sufficient suitable taxable profits in the future.

In addition, the Group has pooled exploration costs incurred of £6,150,000 (2016 - £4,400,000) which are expected to be deductible against future trading profits of the Group.

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

9.  (Loss)/earnings per share

		2017			2016
		£'000			£'000
Loss attributable to the owners of the Company		(737)			(584)

Loss per share - Basic and diluted
Continuing operations			(0.20p)						(0.18p)

The calculation of basic earnings per share is based on 360,142,884 (2016 - 326,938,397) ordinary shares, being the weighted average number of ordinary shares in issue during the year.

Where the Group reports a loss for the current period, then in accordance with IAS 33, the share options are not considered dilutive. Details of such instruments which could potentially dilute basic earnings per share in the future are included in note 19.

Under IAS 33, the share warrants in issue during the year were not considered to be diluting as the market price throughout the period was below the exercise price of the warrants in issue. Further details are provided in note 19.

10.  Loss attributable to owners of the parent Company

As permitted by Section 408 of the Companies Act 2006, the profit and loss account of the parent Company is not presented as part of these accounts. The parent Company's loss for the financial year amounted to £458,000 (2016 - £424,000).

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

11.  Intangible assets

				Exploration and evaluation assets
					£'000
Group
Cost:
At 1 July 2015					21,743
Additions					927
Contributions received					(187)
Exchange differences					(974)
At 30 June 2016					21,509
Additions					1,120
Exchange differences					4,121
At 30 June 2017					26,750
Amortisation:
At 1 July 2015, 30 June 2016 and 30 June 2017					-
Net book value at 30 June 2017					26,750
Net book value at 30 June 2016					21,509

The Group's exploration and evaluation assets all relate to South Africa.

In respect of the exploration and evaluation assets which remain in the appraisal phase, the Group has performed a review for impairment indicators, as required by IFRS 6 and in the absence of such indicators no impairment review was carried out.

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

12.  Property plant and equipment

					Plant and machinery
					£'000
Group
Cost:
At 1 July 2016					32
Additions					1
Exchange differences					6
At 30 June 2017					39
Depreciation:
At 1 July 2016					23
Charge for the period					6
Exchange differences					5
At 30 June 2017					34
Net book value at 30 June 2017					5
Net book value at 30 June 2016					9

					Plant and machinery
Cost:					£'000
At 1 July 2015					29
Additions					4
Exchange					(1)
At 30 June 2016					32
Depreciation:
At 1 July 2015					15
Charge for the period					8
Exchange differences					-
At 30 June 2016					23
Net book value at 30 June 2016					9
Net book value at 30 June 2015					14

All non-current assets in 2017 and 2016 were located in South Africa.

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

13. Investments

Company - subsidiary undertakings

					Loans		Shares		Total
					£'000		£'000		£'000
Cost:
As at 1 July 2015					-		17,776		17,776
Additions					-		1,178		1,178
At 30 June 2016					-		18,954		18,954
Additions					861		1,398		2,259
At 30 June 2017					861		20,352		21,213
Net book value 30 June 2017					861		20,352		21,213
Net book value 20 June 2016					-		18,954		18,954

Additions in the year of £1,398,000 (2016 - £1,178,000) represent further shares issued, and fully paid, by Ironveld Mauritius Limited, the Company's wholly owned subsidiary.

The loans in the period represent loans to Ironveld Holdings (Propriety) Limited which incur interest at a rate not exceeding the base lending rate applicable in England and Wales and are repayable by 31 December 2019.

The Company has investments in the following principal subsidiaries. To avoid a statement of excessive length, details of the investments which are not significant have been omitted:

Name of company				Shares		Proportion of voting rights held		Nature of business
Ironveld Mauritius Limited				Ordinary		*100%		Holding Company
Ironveld Holdings (Pty) Limited				Ordinary		100%		Holdings Company
Ironveld Mining (Pty) Limited				Ordinary		100%		Mining and exploration
Ironveld Middelburg (Pty) Limited				Ordinary		100%		Ore processing and smelting
Ironveld Smelting (Pty) Limited				Ordinary		74%		Ore processing and smelting
HW Iron (Pty) Limited				Ordinary		68%		Prospecting and mining
Lapon Mining (Pty) Limited				Ordinary		74%		Prospecting and mining
Luge Prospecting and Mining (Pty) Limited				Ordinary		74%		Prospecting and mining

* Held directly by Ironveld Plc all other holdings are indirect.

All subsidiary undertakings are incorporated in South Africa, other than Ironveld Mauritius Limited, which is incorporated in Mauritius.

Further details of non-wholly owned subsidiaries of the Group are provided in note 23.

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

14. Trade and other receivables

			Group				Company
			2017		2016		2017		2016
			£'000		£'000		£'000		£'000
Amounts owed from Group undertakings			-		-		-		39
Other debtors			751		209		482		33
Prepayments and accrued income			29		25		25		6
			780		234		507		78

Credit risk

The Group's principal financial assets are bank balances, cash balances, and other receivables. The Group's credit risk is primarily attributable to its other receivables of which £249,000 (2016 - £171,000) is due from a third party financial institution and further information is provided in note 18. The amounts presented in the balance sheet are net of allowances for doubtful receivables. Other debtors also includes £450,000 (2016 - £Nil) in respect of placing proceeds not received by the year end.

15. Trade and other payables

			Group					Company
			2017		2016			2017			2016
			£'000		£'000			£'000			£'000
Trade payables			61		14			61			14
Taxation and social security costs			25		25			24			24
Other payables			113		5			5			5
Accruals and deferred income			132		142			115			136
			331		186			205			179
Due within 12 months			(331)		(186)			(205)			(179)
Due after more than 12 months			-		-			-			-

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

16. Borrowings

			Group					Company
			2017		2016			2017			2016
			£'000		£'000			£'000			£'000
Other loans			889		992			-			-
The borrowings are repayable as follows:
On demand or within one year			889		992			-			-
			889		992			-			-
Due for settlement within 12 months			(889)		(992)			-			-
Due for settlement after more than 12 months			-		-			-			-

Further details on loans are provided in note 18.

17. Deferred tax

							Group
							2017			2016
							£'000			£'000
Balance at 1 July							4,699			4,930
Exchange differences							881			(231)
Balance at 30 June							5,580			4,699
The deferred tax liability is made up as follows:
							Group
							2017			2016
							£'000			£'000
Fair value adjustments
							5,580			4,699

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

18. Financial instruments

The Group's policies as regards derivatives and financial instruments are set out in the accounting policies in note 2. The Group does not trade in financial instruments.

Capital risk management

The Group manages its capital to ensure that they will be able to continue as a going concern whilst maximising the return to stakeholders through the optimisation of the debt and equity balance. The Group's overall strategy remains unchanged from 2016.

The capital structure of the Group consists of debt, which includes the borrowings disclosed in note 16, cash and cash equivalents and equity attributable to equity holders of the parent Company.

The Group is not subject to any externally imposed capital requirements.

Interest rate risk profile

The Group is exposed to interest rate risk because the Group borrows funds at both fixed and floating interest rates. The Group's exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management section of this note.

Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Group has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults. The Group's exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of the transactions concluded is spread where possible.

Liquidity Risk Management

Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has established an appropriate liquidity risk management framework for the management of the Group's short, medium and long term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves and banking facilities by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. Details of additional undrawn facilities that the Group has at its disposal to manage liquidity are set out below.

Financial facilities

The Group did not have any secured bank loan or overdraft facilities during the current or comparative period.

Financial assets

The Group has no financial assets, other than short-term receivables and cash deposits of £788,000 (2016 - £113,000). The cash deposits attract variable rates of interest. At the year end the effective rate was 0.3% (2016 - 0.04%). The cash deposits held were as follows:-

				2017		2016
				£'000		£'000
Sterling - United Kingdom banks				251		23
USD - United Kingdom banks				3		47
South African Rand - United Kingdom banks				6		3
South African Rand - South African banks				528		40
				787		113

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

18. Financial instruments (continued)

Financial liabilities

The Group's financial liabilities consist of other loans. Interest rates charged on these are as follows:

				Weighted average effective
				Interest rate		Within 1 year
				(%)		£'000
30 June 2017
Variable interest rates - SA				14.50		889
30 June 2016
Variable interest rates - SA				5.14		992

Other loans relate to a loan agreed on the acquisition of the Ironveld Group. The loan of £889,000 (2016 - £992,000) bears interest at 14.5%, was repayable by 30 June 2017 and was repaid shortly after the year end. The loan was secured against the assets of the Group and by share warrants as noted in note 19.

Currency exposures

The Group undertakes transactions denominated in foreign currencies and is consequently exposed to fluctuations in exchange rates.

The carrying amounts of the Group's foreign currency denominated monetary assets and monetary liabilities were as follows:-

As at 30 June 2017				Assets		Liabilities
				£'000		£'000
British Pound Sterling (£)				740		204
USD ($)				3		-
South African Rand (R)				786		1,016
				1,529		1,220
As at 30 June 2016				Assets		Liabilities
				£'000		£'000
British Pound Sterling (£)				56		178
USD ($)				47		-
South African Rand (R)				218		1,000
				321		1,178

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

18. Financial instruments (continued)

Financial commitments and guarantee

A rehabilitation guarantee of £711,000 (R 11,993,000) (2016 - £599,000 (R 11,993,000)) has been issued to the Department of Mineral Resources in South Africa from two subsidiaries, HW Iron Proprietary Limited and Luge Prospecting and Mining Company Proprietary Limited, in order to comply with Section 41 of the Mineral and Petroleum Resources Development Act, 202 (Act 28 of 2002).  Under this agreement the Group will pay deposits to a third party financial institution to be held pending discharge of any potential claim on this guarantee.  At 30 June 2017 £249,000 (R 4,206,000) (2016 - £171,000 (R 3,426,000)) had been deposited in respect of this agreement and is included in other receivables.  This represents a concentration of credit risk and the Group is exposed to currency risks on these amounts.  As the Project has not yet commenced then no liability is considered to exist at the reporting date and the amount remains repayable as a current asset.

19. Share capital

Group and Company

				2017		2016
Allotted, called up and fully paid				£'000		£'000
444,641,279 (2016 - 327,544,176) ordinary shares of 1p each				4,447		3,276
322,447,158 (2016 - 322,447,158) deferred shares of 1p each				3,224		3,224
				7,671		6,500

In August 2016, the Company issued 743,513 ordinary shares at 5.75p in lieu of consultant and contractor expenses.

In October 2016, the Company completed a placing of 40,000,003 ordinary shares at a price of 4.5p. The costs in respect of this placing were settled by an additional issue of 2,266,667 ordinary shares.

In January 2017, the Company issued 3,801,341 ordinary shares at 4.75p in lieu of consultant and contractor expenses.

In February 2017, the Company issued 285,579 ordinary shares of 1pence each on the exercise of employee share options.

The Company completed a second placing in June 2017 placing 70,000,000 ordinary shares at 2p each

Since the year end, in November 2017, the Company completed a further placing of 88,250,000 ordinary shares of 1p each raising £1,765,000 before expenses.

Unlike ordinary shares, the deferred shares have no voting rights, no dividend rights and on a return of capital or winding up are entitled to a return of amounts credited as paid. The deferred shares are not transferrable and beneficial interest in the deferred shares can be transferred to such persons as the Directors may determine as custodian for no consideration without sanction of the holder.

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

19. Share capital (continued)

Share options

The Company has a share option scheme for certain employees and former employees of the Group. The share options in issue during the period were as follows:

Date Granted	Exercise Price	As at 1 July 2016		Granted in year			Exercised in year					Lapsed / Cancelled		As at 30 June 2017
		£'000		£'000			No					No		No
21 May 2010	10p	1,600,000		-			-					-		1,600,000
16 August 2012	1p	6,235,137		-			(285,579)					-		5,949,558
14 November 2012	1p	6,663,505		-			-					-		6,663,505
16 April 2013	1p	1,033,334		-			-					-		1,033,334
7 November 2013	1p	2,086,667		-			-					-		2,086,667
1 May 2014	1p	200,000		-			-					-		200,000
1 October 2015	1p	2,500,000		-			-					-		2,500,00
27 January 2016	1p	445,545		-			-					-		445,545
Date granted	Expiry date			Exercise period
21 May 2010	21 May 2020			To May 2020
16 August 2012	16 August 2022
14 November 2012	14 November 2022			The options are exercisable 1/3 on the first anniversary of the grant, 1/3 on the second anniversary of the grant and the final 1/3 on third anniversary of the grant
16 April 2013	16 April 2023
7 November 2013	7 November 2023
1 May 2014	1 May 2024
1 October 2015	1 October 2025
27 January 2016	27 January 2026

Of the options granted on 1 October 2015, 1,000,000 are exercisable following first commercial production from the proposed 15 MW smelter.

The Group recognised a share based payment expense of £81,000 (2016 - £171,000) in the period. No options were granted in the year

Share warrants

As at 1 July 2016 there were 8,399,966 warrants in issue issued at a price of 0.25p each. These warrants expired on 24 September 2016.

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

19. Share capital (continued)

Share warrants continued

On the 1 November 2016 40,000,003 new share warrants were issued pursuant to a share warrant instrument dated 26 October 2016. One warrant was issued to each placee in respect of each placing share issued at that date and each warrant allowed the holder to subscribe for one ordinary share in Ironveld Plc and were exercisable at 6.75 pence at any time during the 12 months from the date of issue of the warrants. The Company shall procure that the ordinary shares issued pursuant to the exercise of warrants are admitted to trading on AIM. The warrants themselves will not be dealt with or admitted to trading on any market and are only transferable in limited circumstances by their holders. No placing proceeds were allocated to the issue of the warrants

Warrants may be exercised in whole or in part (and from time to time) prior to the final expiry date. The warrants are non-transferable.

In addition to the above warrants, Sylvania Metals Pty Limited entered into a loan facility of 15,000,000 South African Rand, in consideration for which the Company has undertaken to grant Sylvania warrants with effect from 16 August 2012 as a guarantee. Sylvania were entitled, pursuant to these warrants, to subscribe for such number of 1 pence Ordinary Shares as results from dividing £1,500,000 by the volume weighted average price of the Company's shares on AIM for the 90 business days ending on the business day immediately prior to the date of exercise, with such warrants being exercisable during the period commencing on 1 January 2017 and ending on the earlier of repayment in full of the loan facility monies or the fifth anniversary of admission.

Such warrants were only exercisable to the extent that any amount is then outstanding under the loan facility. The proceeds derived from the exercise of the warrants would be used only to repay the associated loan. The loan of 15,000,000 South African Rand was repaid after the year-end and no warrants were exercised.

20. Reserves

Group					Warrant reserve		Share premium account		Retained earnings
					£'000		£'000		£'000
At 1 July 2016					21		16,136		(10,006)
Loss for the period					-		-		(737)
Exchange difference on translation of foreign operations					-		-		2,380
Issue of share capital					-		2,054		-
Expiry of share warrants					(21)		21		-
Credit for equity settled share based payments					-		-		81
At 30 June 2017					-		18,211		(8,282)

Retained earnings is made up of cumulative profits and losses to date, share based payments, adjustments arising from changes in non-controlling interests and exchange differences on translation of foreign operations.

 

IRONVELD PLC

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

20. Reserves (continued)

Company					Warrant reserve		Share premium account		Retained earnings
					£'000		£'000		£'000
At 1 July 2016					21		16,136		(3,730)
Loss for the period					-		-		(458)
Issue of share capital					-		2,054		-
Expiry of share warrants					(21)		21		-
Credit for equity settled share based payments					-		-		81
At 30 June 2017					-		18,211		(4,107)

The balance classified as share premium is the premium on the issue of the Group's equity share capital, comprising 1p ordinary shares and 1p deferred shares less any costs of issuing the shares.

The warrant reserve represents the estimated fair value of share warrants issued in prior periods which expired in the year.

21. Cash generated from operations

Group							2017		2016
							£'000		£'000
Operating loss							(553)		(494)
Depreciation on property, plant and equipment							6		8
Share based payment expense							21		171
Operating cash flows before movements in working capital							(526)		(315)
Movement in receivables							20		(109)
Movement in payables							51		(46)
Cash used in operations							(455)		(470)
Interest paid							(186)		-
Net cash used in operations							(641)		(470)
Cash and cash equivalents							2017		2016
							£'000		£'000
Cash and bank balances							788		113

Included in cash and bank at the year end was South African Rand 8,800,000 (£522,000) which was held in a solicitors client account and which was paid out shortly after the year-end  in respect of the potential acquisition of the Middelburg Smelting facility.

 

IRONVELD PLC

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

21. Cash generated from operations (continued)

Company							2017		2016
							£'000		£'000
Operating loss							(458)		(424)
Share based payment expense							21		76
Operating cash flows before movements in working capital							(437)		(348)
Movement in receivables							21		8
Movement in payables							26		109
Net cash used in operations							(390)		(231)
Cash and cash equivalents							2017		2016
							£'000		£'000
Cash and bank balances							260		74

22. Related party transactions

Group and Company

The key management personnel of the Group are the directors. Directors' remuneration is disclosed in Note 5.

During the year the Company paid £48,000 (2016 - £55,200) for accounting services to Westleigh Investments Holdings Limited, a company in which G Clarke and N Harrison are materially interested.

Other receivable include £Nil (2016 - £2,800) due to Kennedy Ventures Plc, a company in which G Clarke and N Harrison are materially interested. 

All transactions are considered to be on terms equivalent to those that prevail in arm's length transactions.

23. Non-controlling interest

							2017		2016
							£'000		£'000
At 1 July							3,337		3,328
Exchange adjustments							586		(156)
Adjustment arising from change in non-controlling interest							-		166
Share of loss for the period							-		1
At 30 June							3,923		3,337

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

23. Non-controlling interest (continued)

The table below shows details of non-wholly owned subsidiaries of the Group that have material non-controlling interests:

	Proportion of oting rights and shares held		Profit/(loss) allocated to non-controlling interests				Accumulated non-controlling interests
	2017 - (2016)		2017		2016		2017		2016
			£'000		£'000		£'000		£'000
HW Iron (Pty) Limited	32% (32%)		-		-		(1,221)		1,061
Lapon Mining (Pty) Limited	26% (26%)		-		-		2,704		2,277
Other non-controlling interests			-		(1)		(2)		(1)
			-		(1)		3,923		3,337

Summarised financial information in respect of each of the Group's subsidiaries that have material non-controlling interests is set out below. The summarised financial information below represents amounts before intragroup eliminations. The accounts of the subsidiaries have been translated from their presentational currency of South African Rand (R) using the R : GBP exchange rate prevailing at 30 June 2017 of 16.8652 (2016 - 20.0272).

HW Iron (Proprietary) Limited

							2017		2016
							£'000		£'000
Current assets							248		171
Non-current assets							7,125		5,817
Current liabilities							(2,021)		(1,480)
Non-current liabilities							(1,534)		(1,291)
Equity attributable to owners of the Company							2,597		2,156
Non-controlling interest							1,221		1,061
Revenue							-		-
Expenses							-		1
Profit/(loss) for the year							-		(1)
Attributable to the owners of the Company							-		(1)
Attributable to non-controlling interests							-		-
Dividends paid to non-controlling interests							-		-
Net cash inflow from operating activities							(45)		(252)
Net cash outflow from investing activities							(213)		7
Net cash inflow from financing activities							258		245
Net cash inflow							-		-

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017

23. Non-controlling interest (continued)

Lapon Mining (Proprietary) Limited

							2017		2016
							£'000		£'000
Current assets							-		-
Non-current assets							15,831		13,222
Current liabilities							(1,384)		(1,056)
Non-current liabilities							(4,046)		(3,407)
Equity attributable to owners of the Company							7,697		6,482
Non-controlling interest							2,704		2,277
Revenue							-		-
Expenses							-		1
Profit/(loss) for the year							-		(1)
Attributable to the owners of the Company									(1)
Attributable to non-controlling interests							-		-
Dividends paid to non-controlling interests							-		-
Net cash inflow from operating activities							-		(1)
Net cash outflow from investing activities							(13)		(26)
Net cash inflow from financing activities							13		27
Net cash inflow							-		-

24. Control
 

The Directors consider that there is no overall controlling party.

25. Posting of accounts

The Report and Accounts for the period ended 30th June 2017 will shortly be available on the Company's website and will be sent to registered shareholders by post shortly together with notice of the Company's AGM.

 

END

 

 

FR KMMGZNVMGNZM