Final Results

RNS Number : 0521P

Red Rock Resources plc

19 October 2012

 



Red Rock Resources plc

("Red Rock" or the "Company")

Final Results

for the year ended 30 June 2012

19 October 2012

Executive Chairman's Review

Dear Shareholders,

It is with great pleasure that I present the Company's annual report for the year to 30 June 2012, our eighth year of operation. When I compare our achievements in the field with last year, we achieved much more. Once again we report successful exploration and improvement in production; once again, this operational and exploration success extended to Jupiter Mines Limited, in which we have a material investment; once again, we carried out successful corporate transactions. Once again, however, our share price failed to reflect the progress we were making, and this is a source of great regret that prevents us striking any self-congratulatory note. It is no comfort that most other companies in the minerals sector have also suffered a market derating. We hoped that we would do far better.

Financial discussion

I begin by introducing the financial results declared for the year. Because of the impact of the accounting conventions we have to adopt in certain cases, and the amount of information contained in the accounts, I hope it may be helpful if I highlight and explain some salient points.

In the Consolidated Income Statement, the consolidated pre-tax loss of £4,580,727 compares with a profit for the year to 30 June 2011 of £15,919,442. This latter figure is restated from £13,973,537 as a result of re-categorising our interests in Colombia following a decision in principle to sell which we made before the end of the financial year.

This means that Colombia's results are now shown in a separate line for discontinued operations. Our Colombian subsidiary reported £449,551 profit for the period, of which £229,271 is attributed to the Company, and this compares with a loss of £1,735,517 in the previous period, of which £70,895 was attributable to the Company.

The change in profit in the current year is attributable to two principal factors. The first of these is the absence of the £14,238,297 profit taken last year as a result of our investment in Jupiter Mines Limited ceasing to be accounted for as an associate in that year. The second is a reversal of the £3,647,104 profit at fair value shown last year on an investment in Ascot Mining plc; in both years the necessity of conducting a Black-Scholes valuation of an embedded derivative has produced unexpected results and this year there was in addition an impairment loss on the investment.

A third factor in the latest year's profit figure was the £3,686,211 profit booked on receipt of the first tranche of proceeds from the partial sale of a royalty interest.

In the Consolidated Statement of Financial Position, the key metric of total shareholders' equity fell from £32,843,858 to £24,401,820 over the year, with available for sale financial assets falling from £24,472,120 to £8,809,866. This was primarily as a result of a drop of £14,309,185 in the market value of the Company's holding of shares in Australian-listed Jupiter Mines Limited. Equity was increased during the year by £4,441,844 (before expenses) from the proceeds of issues of new shares in the Company, at prices between 2.45 pence and 4.62 pence per share.

In the Consolidated Statement of Cash Flows, exploration expenditure of £769,413, after £504,362 in the previous year, may appear low. However this heading does not capture all exploration spend for which the Company is responsible. For example, a substantial part of the Group's operations are carried out through associates and joint venture activities. That part of investing activities that consists of payments to acquire associate company and joint venture investments, £2,914,949 in the year ended 30 June 2012, and £450,637 in the year ended 30 June 2011, includes much expenditure on exploration.

The share price ended the period at 1.88 pence per share, a decline from 6.47 pence a year earlier.

Highlights of the year

In my report last year I spoke of the year just ended as one which would see great progress. Our pipeline of managed projects was in three areas - Kenya, Greenland and Colombia - and without going outside these areas we would be kept busy as in each of these countries we had a set of clear objectives to meet. In Kenya we were working to progress the tailings project, working with consultants CSA to generate new Mineral Resource Estimate figures at five projects, and working to generate new exploration targets. In Greenland we were assessing 2011 results and planning a drill season in 2012 which we hoped would give us a Mineral Resource Estimate. In Colombia, having taken majority control, we were looking to improve working practices and increase production.

If these objectives were in some degree our promises, the year ended 30 June 2012 was to be the year of delivery of these promises. Looking back, we can say that overall we delivered. Although in an increasingly difficult funding environment some might have preferred us to scale down our ambitions, and had we been gifted with total foresight it is true that we might have been tempted by those arguments, converting our prospects into defined mineral resources was more than just the delivery of an objective or promise. This conversion was a key milestone in the development of the Company, it increased value, and it and the work associated with it were an essential discipline in providing a platform and training, and generating a framework for further progress.

In Kenya, after delivering in October 2011 a Mineral Resource Estimate for the Macalder Tailings in the highest category, Measured, we completed a Scoping Study and metallurgical test work, began an environmental impact assessment, and in August 2012 after the end of the financial year made application for a Mining Lease for the tailings area.

We also delivered in December 2011 and July 2012 new Mineral Resource Estimates to JORC standard for four other projects in Kenya; KKM, KKM West, Nyanza and Gori Maria. The total resource was estimated at 28 million tons at 1.18 g/t for a contained gold figure of 1.06 million ounces, of which 703,000 oz was at Indicated category and the balance at Inferred category. This included 2.32 million tons at 2.73 g/t at Nyanza for contained gold of 203,000 oz. This work was carried out to a high standard and using stricter parameters than previous resource estimates in the area, and following our re-drilling and analysis, we are now confident of the robustness of our data and have a much better structural understanding which we expect to lead to further drilling of a number of higher grade zones and their potential extensions. As our consultants CSA allowed us to state in our announcement, "The coherence of higher grade mineralisation (>1.5 g/t Au) within the Prospects suggest that potentially mineable volumes of higher grade material do exist".

Also in Kenya, we announced the results of drilling other areas, including the discovery of eight new targets as a result of our aircore drilling programme, of which we regard three as high priority exploration targets. We also announced some high grade drill intercepts in our new drilling, such as 31m at 3.91 g/t gold at Nyanza, including 7m at 9.8 g/t.

In Greenland we announced in December 2011 a further 558 sq km expansion of our licence area to 1,571 sq km. This was the second expansion to the area since we originally became involved with this project in early 2011, when the project area was 644 sq km. As our geologists and geophysicists analysed the area, including the results of our 13,170 line km airborne radiometric and magnetic survey carried out in 2011, they identified important new targets which led us to apply for further expansion of our licence areas, including six new magnetic targets in the area applied for in December.

In 2012 we mobilised two rigs and a large land camp and drilled four targets, including targets within these new areas, in a 4,061m

27 hole diamond drill campaign which began in June 2012 and finished in September 2012. Some 40% of all metres drilled were in iron ore, and we are working with consultants SRK to generate a Mineral Resource Estimate.

The speed and efficiency with which we have achieved results in Greenland were not without considerable cost, and both the efficiency and the costs were at new levels for us, although we brought the programme in within budget.

In Colombia we achieved a stabilisation of production and processing soon after taking a majority stake and replacing some management in the first half of 2011, and in 2012 made further capacity and process improvements after putting a new team in place. The scale of current operations is not large even when we are able to run at full capacity, and the effort we make to achieve satisfactory performance is considerable. Whether that is an optimal use of our human resources is a moot point, and when we received an indicative and conditional purchase offer at the end of the financial year we decided to accept the principle of sale and negotiate terms. It is possible that a larger group with other operations in the area might be better placed to undertake and manage the next steps, investing to define a mineral resource and to increase substantially the scale of activity. An important consideration was that our local equity partners would lack the capacity to invest further and would therefore favour a sale.

Aside from our managed projects there were other milestones. In April 2012 we achieved a satisfactory exit from our investment in Cue Resources Limited when we and the other major investors negotiated and accepted a takeover offer from Uranium Energy Corporation. Before the offer, the Cue Resources Limited price had been as weak as those of other uranium stocks and we knew that our concept of achieving a critical mass by putting that company and our other associate, Resource Star Limited, together had become impractical. The following month we completed the sale of up to half of our royalty interest in the Mt Ida iron ore project for a total consideration of $14 million, of which the first $6 million tranche of cash and shares has been received. Since the end of the June 2012 financial year, Jupiter Mines Limited has announced a 132% increase in the Mineral Resource Estimate for the central part of the Mt Ida project to 1.32 billion tons at 29.79% iron, which is expected to give a concentrate grade of 66.65%. The bankable feasibility study on Mt Ida is expected to be finished by the second quarter of calendar year 2013, so we are pleased to have mitigated risk by selling part of the royalty in advance of that.

Corporate social responsibility ("CSR") and corporate risk

There has been a major development in the professionalism of our corporate social activity programmes during the year. We now have a London-based head of CSR and the advances we have made were reflected in our being selected to run a three session workshop on CSR for Junior Explorers which we presented to a packed room at the Prospectors and Developers Association of Canada ("PDAC") conference in Toronto. What is elegantly termed the "Social Licence to Operate" has become an essential part of not merely production but now exploration as well, and we believe that if we have to engage in CSR, we should take it seriously and be seen to excel.

This year, as well as last, there were no significant accidents in Greenland which attests to the success of our planning of risk management and to our application of appropriate health and safety procedures. We continue to attach high importance to improving our health and safety training and compliance.

At corporate level, we have established a new committee chaired by Mike Nott which is charged with monitoring and reviewing risks to the Company arising from field operations.

We continue to roll out systems to maintain compliance with our policies, and particularly our anti-bribery and whistleblowing policies, including working with third parties such as contractors to ensure that they know and apply our policies.

Personnel

We have further strengthened our professional team during the year, emphasising two aspects. One has been adding to our capacity in data management and data systems and geographical information systems (GIS) and we have been able to take some functions in house that were formerly contracted out. Another has been professional training, sending staff on courses to refresh their knowledge and add new skills, and conducting in-house training to improve and systematise our logging, data collection, data inputting and GIS functions.

Outlook

The current year continues to have its challenges, mainly caused by the continuing unfavourable market environment. Our view on the commodities is that we expect a strong gold price and that we expect the pull of underlying market demand to keep iron ore prices above the level at which recently added capacity becomes uneconomic.

In the absence of a decline in steel production, we believe, iron ore demand, though subject to destocking and restocking cycles, will remain high, while the installation of new capacity is subject to infrastructural constraints and will not meet analysts' projections.

Our current expectation is that we will sell our interests in Colombia before long, and may see other liquidity events. Having invested heavily in achieving Mineral Resource Estimates in Kenya, we expect one more, at the MK prospect, in due course. We also hope for a Mineral Resource Estimate from Greenland before the end of 2012. When we have this, and move up to 60% of the Greenland joint venture, we will have accomplished all our major objectives from the last two years' exploration. Looking forward, we will then have no budgeted expenditure plans of significance and we expect our balance sheet to be considerably more liquid in 2013.

A period of assessment will follow, as we analyse and model the results from Greenland and Kenya and work out our next steps in exploration. It would be our expectation that we would conduct some follow-up work in Kenya, though at a lower level than in the

2011-12 programme.

Another significant development in October 2012 is the coming into production of Jupiter Mines Limited's Tshipi opencast manganese mine in the South Kalahari Basin in South Africa. The start of production at this large open pit mine with a 60 year life should eventually lead to an improvement in the value and liquidity of our shareholding in Jupiter Mines Limited.

Our business model requires sales or realisations as well as acquisition and exploration. The recent market has been favourable for neither activity, but since it was a period where our assets were progressing towards key milestones that did not matter as much as it might have done. We now expect to move into a period where we will be looking to realise some of the new value in our projects, either by disposals or by sharing the ongoing costs with investors who can help us take these projects forward more rapidly. We will, as a priority, be looking to maximise the value of our holdings in Kenya by rationalising the structures through which they are held. At the same time, by moving to hold higher levels of cash, we will be better prepared to take advantage of new opportunities that may appear.

We expect and intend that this shall be a period where we deliver much of what investors may be hoping for, as we reap the benefits of recent investment.

Andrew Bell

Executive Chairman

18 October 2012

Results and dividends

Red Rock and its subsidiaries (the "Group") made a post-tax loss of £1,962,882 (2011: post-tax profit £10,259,984).

The Directors do not recommend the payment of a dividend.

The following financial statements are extracted from the audited financial statements which were approved by the Board of Directors and authorised for issue on 18 October 2012.

Consolidated statement of financial position

as at 30 June 2012

	30 June	30 June
	2012	2011
	£	£
ASSETS
Non-current assets
Property, plant and equipment	38,240	13,327,546
Investments in associates and joint ventures	4,496,053	975,732
Available for sale financial assets	8,809,866	24,472,120
Non-current receivables	5,905,944	2,927,277
Other financial assets	150,413	4,095,696
Deferred tax assets	153,098	-
Exploration assets	-	501,062
Total non-current assets	19,553,614	46,299,433
Current assets
Cash and cash equivalents	347,925	268,788
Other receivables	1,628,900	3,730,906
Current tax receivable	219,484	-
Total current assets	2,196,309	3,999,694
Assets classified as held for sale	15,387,802	-
TOTAL ASSETS	37,137,725	50,299,127
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Called up share capital	884,150	723,983
Share premium account	16,938,435	13,041,125
Other reserves	(7,872,920)	2,751,616
Retained earnings	11,892,745	13,988,004
Total	21,842,410	30,504,728
Non-controlling interest	2,559,410	2,339,130
Total equity	24,401,820	32,843,858
LIABILITIES
Current liabilities
Trade and other payables	1,167,969	4,032,785
Short-term borrowings	1,209,730	1,750,450
Current tax liabilities	-	84,085
Total current liabilities	2,377,699	5,867,320
Liabilities directly associated with the assets classified as held for sale	8,065,206	-
Non-current liabilities
Long-term borrowings	2,293,000	2,817,500
Deferred tax liabilities	-	8,770,449
Total non-current liabilities	2,293,000	11,587,949
TOTAL EQUITY AND LIABILITIES	37,137,725	50,299,127

Consolidated income statement

for the year ended 30 June 2012

		Year to	Year to
		30 June	30 June
		2012	2011*
		£	£
Revenue
Management services		-	64,076
Total revenue		-	64,076
(Loss)/gain on sales of investments		(619,313)	1,215,666
Gain on sale of royalty interest		3,686,211	-
Gain on sales of exploration assets		-	169,322
Profit on transfer of investment from associate		-	14,238,297
Gain on dilution of interest in associate		12,204	252,947
Impairment of investment in associate		(358,188)	(70,298)
Impairment of available for sale investment		(716,605)	-
Financial assets at fair value through profit and loss		(3,945,283)	3,647,104
Exploration expenses		(356,455)	(781,169)
Impairment of exploration assets		(7,077)	(261,224)
Administrative expenses		(2,275,786)	(2,212,290)
Share of losses of associates		(312,043)	(386,228)
Dividend income		22,890	-
Finance income, net		288,718	43,239
(Loss)/profit for the year before taxation from continuing operations		(4,580,727)	15,919,442
Tax credit/(expense)		2,168,294	(3,923,941)
(Loss)/profit for the year from continuing operations		(2,412,433)	11,995,501
Discontinued operations
Profit/(loss) after tax for the year from discontinued operations		449,551	(1,735,517)
(Loss)/profit for the year		(1,962,882)	10,259,984
(Loss)/profit for the year attributable to:
Equity holders of the parent		(2,183,162)	11,924,606
Non-controlling interest		220,280	(1,664,622)
		(1,962,882)	10,259,984
* Certain amounts shown here do not correspond to the 2011 financial statements to re-present results of discontinued operations.
(Loss)/earnings per share attributable to owners of the parent:
Basic		(0.28) pence	1.78 pence
Diluted		-	1.71 pence

Consolidated statement of comprehensive income

for the year ended 30 June 2012

	30 June	30 June
	2012	2011
	£	£
(Loss)/profit for the year	(1,962,882)	10,259,984
Other comprehensive income
(Deficit)/surplus on revaluation of available for sale investment	(14,110,502)	4,082,474
Deferred tax on revaluation of available for sale investments	3,386,520	(1,061,795)
Unrealised foreign currency loss arising upon retranslation of foreign operations	82,915	(53,778)
Total comprehensive (expense)/income net of tax for the year	(12,603,949)	13,226,885
Total comprehensive (expense)/income net of tax attributable to:
Owners of the parent	(12,824,229)	14,891,507
Non-controlling interest	220,280	(1,664,622)
	(12,603,949)	13,226,885

Consolidated statement of changes in equity

for the year ended 30 June 2012

The movements in equity during the period were as follows:

	Share capital £	Share premium account £	Retained earnings £	Other reserves £	Total attributable to owners of the parent £	Non-controlling interest £	Total equity £
As at 30 June 2010	583,908	6,347,920	2,017,768	(350,069)	8,599,527	-	8,599,527
Changes in equity for 2011
Profit/(loss) for the year	-	-	11,924,606	-	11,924,606	(1,664,622)	10,259,984
Other comprehensive income for the year	-	-	-	2,966,901	2,966,901	-	2,966,901
Transactions with owners
Issue of shares	140,075	6,986,508	-	-	7,126,583	-	7,126,583
Share issue costs	-	(293,303)	-	-	(293,303)	-	(293,303)
On acquisition of subsidiary	-	-	-	-	-	4,003,752	4,003,752
Share-based payment charge	-	-	-	180,414	180,414	-	180,414
Share-based payment transfer	-	-	45,630	(45,630)	-	-	-
Total transactions with owners	140,075	6,693,205	45,630	134,784	7,013,694	4,003,752	11,017,446
As at 30 June 2011	723,983	13,041,125	13,988,004	2,751,616	30,504,728	2,339,130	32,843,858
Changes in equity for 2012
(Loss)/profit for the year	-	-	(2,183,162)	-	(2,183,162)	220,280	(1,962,882)
Other comprehensive expense for the year	-	-	-	(10,641,067)	(10,641,067)	-	(10,641,067)
Transactions with owners
Issue of shares	160,167	4,361,357	-	-	4,521,524	-	4,521,524
Share issue costs	-	(464,047)	-	-	(464,047)	-	(464,047)
Share-based payment charge	-	-	-	104,434	104,434	-	104,434
Share-based payment transfer	-	-	87,903	(87,903)	-	-	-
Total transactions with owners	160,167	3,897,310	87,903	16,531	4,161,911	-	4,161,911
As at 30 June 2012	884,150	16,938,435	11,892,745	(7,872,920)	21,842,410	2,559,410	24,401,820

	Available
	for sale		Foreign
	trade	Associate	currency	Share-based	Total
	investments	investments	translation	payment	Other
	reserve	reserve	reserve	reserve	Reserves
	£	£	£	£	£
As at 30 June 2010	(353,517)	(126,226)	(2,589)	132,263	(350,069)
Changes in equity for 2011
Profit for the year	-	-	-	-	-
Other comprehensive income/(expense) for the year	3,020,679	-	(53,778)	-	2,966,901
Transactions with owners
Share-based payment charge	-	-	-	180,414	180,414
Share-based payment transfer	-	-	-	(45,630)	(45,630)
Total transactions with owners	-	-	-	134,784	134,784
As at 30 June 2011	2,667,162	(126,226)	(56,367)	267,047	2,751,616
Changes in equity for 2012
Profit for the year	-	-	-	-	-
Other comprehensive (expense)/income for the year	(10,723,982)	-	82,915	-	(10,641,067)
Transactions with owners
Share-based payment charge	-	-	-	104,434	104,434
Share-based payment transfer	-	-	-	(87,903)	(87,903)
Total transactions with owners	-	-	-	16,531	16,531
As at 30 June 2012	(8,056,820)	(126,226)	26,548	283,578	(7,872,920)

Consolidated statement of cash flows

for the year ended 30 June 2012

		Year to	Year to
		30 June	30 June
		2012	2011
		£	£
Cash flows from operating activities
(Loss)/profit before tax from continuing operations		(4,580,727)	15,919,442
Profit/(loss) before tax from discontinued operations		264,081	(1,945,905)
(Loss)/profit before tax		(4,316,646)	13,973,537
Increase in receivables		(3,177,032)	(5,931,785)
(Decrease)/increase in payables		(1,056,292)	1,427,361
Share of losses in associates		312,043	386,228
Interest receivable and finance income		(847,701)	(150,170)
Dividend income		(22,889)	-
Interest payable		558,983	192,807
Impairment of exploration properties		7,077	261,224
Share-based payments		184,113	180,414
Currency adjustments		114,159	26,500
Impairment of associate		358,188	70,298
Impairment of available for sale investment		716,605	-
Gain on dilution of interest in associates		(12,204)	(252,947)
Loss/(profit) on sale of investments		619,313	(1,215,666)
Non-cash proceeds on sale of royalty interest		(1,315,901)	-
Profit on transfer of available for sale investment from associate		-	(14,238,297)
Financial assets at fair value through profit and loss		3,945,283	(3,647,104)
Depreciation		360,824	710,735
Net cash outflow from operations		(3,572,077)	(8,206,865)
Corporation tax paid		(110,723)	(826,951)
Net cash used in operations		(3,682,800)	(9,033,816)
Cash flows from investing activities
Interest received		378,043	150,170
Dividend income		22,889	-
Acquisition of subsidiary net of cash		-	(2,752,682)
Proceeds of sale of investments		1,919,338	3,816,063
Payments to acquire associate company and joint venture investments		(2,914,949)	(450,637)
Payments to acquire available for sale investments		(387,603)	(774,207)
Exploration expenditure		(769,413)	(504,362)
Payments to acquire property, plant and equipment		(142,707)	(1,193,039)
Net cash outflow from investing activities		(1,894,402)	(1,708,694)
Cash flows from financing activities
Proceeds from issue of shares		4,441,844	7,126,583
Transaction costs of issue of shares		(464,047)	(293,303)
Interest paid		(558,983)	(192,807)
Finance costs		-	(53,140)
Proceeds of new borrowings		5,503,252	7,485,381
Repayments of borrowings		(3,260,814)	(3,624,614)
Net cash inflow from financing activities		5,661,252	10,448,100
Net increase/(decrease) in cash and cash equivalents		84,050	(294,410)
Cash and cash equivalents at the beginning of period		268,788	563,198
Cash and cash equivalents at end of period		352,838	268,788

1 Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards and IFRIC interpretations as endorsed by the EU ("IFRS") and the requirements of the Companies Act applicable to companies reporting under IFRS.

The financial statements have been prepared on the historical cost basis, except for the revaluation of certain financial instruments. This statement has been prepared using accounting policies and presentation consistent with those applied in the preparation of the statutory accounts of the Company.

Company statement of comprehensive income

As permitted by Section 408 Companies Act 2006, the Company has not presented its own income statement or statement of comprehensive income. The Company's loss for the financial year was £1,469,209 (2011: profit £12,331,820). The Company's other comprehensive loss for the financial year was £10,723,982 (2011: profit £3,022,030).

Amendments to published standards effective for the year ended 30 June 2012

The following standards have been adopted during the year:

·      IFRS 7 "Financial Instruments: Disclosure (amendment)"; and

·      IAS 24 "Related Party Disclosures (revised)".

Although the adoption of these amendments has had no impact on the financial position and performance of the Group, additional disclosures have been provided to comply with the revised standards.

Standards adopted early by the Group

The Group has not adopted any standards or interpretations early in either the current or the preceding financial year.

Adoption of standards and interpretations

As at the date of authorisation of these financial statements, there were standards and interpretations in issue but that are not yet effective and have not been applied in these financial statements, as listed below:

Standards, amendments and interpretations in issue but not effective

Effective for annual periods beginning on or after 1 January 2012:

·      IAS 12 "Income Taxes (amendment)".

Effective for annual periods beginning on or after 1 January 2013:

·      IFRS 10 "Consolidated Financial Statements";

·      IFRS 11 "Joint Arrangements";

·      IFRS 12 "Disclosure of Interests in Other Entities";

·      IFRS 13 "Fair Value Measurement";

·      IAS 19 "Employee Benefits (revised)"; and

·      IAS 28 "Investments in Associates and Joint Ventures".

Effective for annual periods beginning on or after 1 January 2015:

·      IFRS 9 "Financial Instruments: Classification and Measurement".

The Directors do not anticipate that the adoption of these standards and interpretations in future periods could have a material effect on the financial position or performance of the Group and Company, other than the introduction of IFRS 10 which could affect the financial position and performance, and IFRS 11, IFRS 12 and IAS 28 which are likely to change or increase the level of disclosure required in respect of the Group's investments. The Group intends to adopt these standards when they become effective.

IFRS 10 is a new standard which establishes principles for the presentation and preparation of consolidated financial statements. As a result of its publication, the Directors will be required to consider the application of the revised definition of control to determine whether additional entities will need to be consolidated and whether consolidation is still appropriate for those that currently are.

The new definition of control will require the directors to consider whether the Company has:

a) power over the investee;

b) exposure, or rights, to variable returns from involvement with the investee; and

c)  the ability to use power over the investee to affect the amount of the investor's returns.

The financial effect of such changes on the Group has not yet been reliably estimated. However, it is widely expected, irrespective of industry sector and without specific reference to the Group, that the adoption of IFRS 10 is likely to result in more entities being consolidated.

1 Basis of preparation continued

IFRS 11 replaces IAS 31 "Interests in Joint Ventures" and SIC-13 "Jointly Controlled Entities - Non-monetary Contributions by Venturers". It removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted for using the equity method. JCEs under current IAS 31 that will be classified as joint ventures under IFRS 11 will transition from proportionate consolidation to the equity method by aggregating the carrying values previously recorded, testing that amount for impairment and then using that amount as deemed cost for applying the equity method going forward. The Group recognises its interest in jointly controlled entities using the equity method of accounting. The application of this new standard will not impact the financial position of the Group.

IFRS 12 includes all of the disclosures that were previously in IAS 27 related to consolidated financial statements, as well as all of the disclosures that were previously included in IAS 31 and IAS 28. These disclosures related to an entity's interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are also required. The adoption of IFRS 12 is likely to change or increase the level of disclosure required in respect of the Group's investments.

As a consequence of the new IFRS 11 and IFRS 12, IAS 28 has been renamed IAS 28 "Investments in Associates and Joint Ventures", and describes the application of the equity method to investments in joint ventures in addition to associates. The application of this new standard will not impact the financial position of the Group.

2 (Loss)/earnings per share

The basic (loss)/earnings per share is derived by dividing the (loss)/profit for the year attributable to ordinary shareholders of the parent by the weighted average number of shares in issue.

Diluted (loss)/earnings per share is derived by dividing the (loss)/profit for the year attributable to ordinary shareholders of the parent by the weighted average number of shares in issue plus the weighted average number of ordinary shares that would be issued on conversion of all dilutive potential ordinary shares into ordinary shares.

The following reflects the (loss)/profit and share data used in the basic and diluted earnings per share computations:

	2012	2011
(Loss)/profit attributable to equity holders of the parent from continuing operations	£(2,412,433)	£11,995,501
Profit/(loss) attributable to equity holders of the parent from discontinued operations	£     229,271	£    (70,895)
(Loss)/profit attributable to equity holders of the parent	£(2,183,162)	£11,924,606
Weighted average number of Ordinary shares of £0.001 in issue	786,916,478	668,431,704
(Loss)/earnings per share - basic	(0.28) pence	1.78 pence
Weighted average number of Ordinary shares of £0.001 in issue inclusive of outstanding options	-	698,902,868
(Loss)/earnings per share - fully diluted	-	1.71 pence

The weighted average number of shares issued for the purposes of calculating diluted earnings per share reconciles to the number used to calculate basic earnings per share as follows:

	2012	2011
Earnings per share denominator	786,916,478	668,431,704
Weighted average number of exercisable share options	12,121,198	30,471,164
Diluted earnings per share denominator*	799,037,676	698,902,868

In accordance with IAS 33, the diluted earnings per share denominator takes into account the difference between the average market price

of ordinary shares in the year and the weighted average exercise price of the outstanding options.

*The Group's weighted average share options of 12,121,198 are non-dilutive for continuing operations because their conversion to ordinary shares would decrease loss per share.

3 The consolidated statement of financial position at 30 June 2012 and the consolidated income statement, statement of comprehensive income, consolidated statement of changes in equity and the consolidated cash flow statement for the year then ended have been extracted from the Group's 2012 statutory financial statements.  The auditors have reported on the 2012 financial statements; their report was unqualified and contained no statement under sections 498(2) or (3) of the Companies Act 2006. The financial statements for 2012 will be delivered to the Registrar of Companies by 31 December 2012.

4 A copy of the Company's annual report and financial statements for 2012 will be made available on the Company's website www.rrrplc.com shortly and at the Annual General Meeting on 29 November 2012; in addition the Annual Report will be posted to the Shareholders.

Enquiries:

 

Andrew Bell	020 7099 5840 or 07766 474849	Red Rock Resources plc	Chairman
Sandra Spencer	020 7099 5840 or 07757 660 798	Red Rock Resources plc	Press Relations
Gerry Beaney/ Daniela Amihood	020 7383 5100	Grant Thornton Corporate Finance	Nominated Adviser
Nick Emerson	01483 413500	Simple Investments Ltd	Broker

 

 

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