TIDMGCM
RNS Number : 2047K
GCM Resources PLC
19 December 2022
19 Dec ember 20 22
GCM Resources plc
("GCM" or the "Company")
(AIM:GCM)
Final Results for the year ended 30 June 20 22
Notice of Annual General Meeting
GCM Resources plc announces the publication of its final audited
results for the year ended 30 June 20 22 (the "Annual Report and
Accounts") and that the Company's 20 22 Annual General Meeting will
be held at 10.00 a.m. on Wednes day 18 January 20 23 , at QEII
Centre, Broad Sanctuary, Westminster, London, SW1P 3EE .
The Annual Report and Accounts and the Notice of Annual General
Meeting will be posted to shareholders today. Copies are available
on request from the Company and will be available on the Company's
website ( www.gcmplc.com ). The Annual Report & Financial
Statements are also available on the 'Financial Reports' page of
the Company's website.
For further information:
GCM Resources plc WH Ireland Ltd
Keith Fulton James Joyce
Finance Director Andrew De Andrade
+44 (0) 20 7290 1630 +44 (0) 20 7220 1666
GCM Resources plc
Tel: +44 (0) 20 7290 1630
info@gcmplc.com; www.gcmplc.com
Executive Chairman's Statement
The Board presents the Company's Annual Report and Accounts for
the year ended 30 June 2022, covering a period that started with
optimism as the world emerged from the Coronavirus Pandemic and
business activity begun on a trajectory to normality, but quickly
saw business confidence det er iorate over the second half of the
reporting period as the effects of the Ukraine conflict kicked
in.
The Project remains focused on its core asset, being the
Phulbari coal mine capable of supporting some 6,600MW power
generation, but also incorporates the option for up to 4,000MW
associated power plant developments. The post-pandemic business
revival saw a considerable rise in the Project's significance for
Bangladesh, as energy prices hiked in response to demand
outstripping supply and shipping costs following suit. During this
period, compared to pre-pandemic levels, the coal price more than
doubled and Liquified Natural Gas ("LNG") was up almost 10 times.
Over the second half of the reporting year the Ukraine conflict
exacerbated the energy supply - demand deficit resulting in a
world-wide energy and power crisis. As a consequence, the Project's
significance for Bangladesh in terms of energy cost and reliability
of supply sky-rocketed. Furthermore, as Europe scrambles to shore
up energy supplies, many of the Least Developed Countries ("LDC")
found themselves unable to not only afford the enormous energy cost
but also secure reliable energy supply.
Over the past decade, Bangladesh has demonstrated an
ever-growing dependency on imported energy supplies. The world-wide
energy and power crisis is now forecast to be protracted and has
already become an enormous challenge for LDC economies. The
Bangladesh Government reacted quickly and opted for an "Austerity
Strategy", i.e., restricting the import of energy to take pressure
off Foreign Exchange Reserves. The downside has been a reduction in
business activity and slowing of the economy. At the same time, the
local currency depreciated some 35% against the US Dollar, making
imports in general and energy imports in particular even more
expensive, leading to inflation and an ongoing significant rise in
the cost of living.
There does now appear to be a growing awareness both in
Government and civil society that over-dependence on imported
energy to power industrial and economic development is inherently
high risk and that a balance in energy supply between domestic and
imported should be pursued. This was witnessed recently when the
Bangladesh State Minister for the Ministry of Power, Energy, and
Mineral Resources spoke at length in Parliament in response to
questions regarding why extraction of the Country's domestic coal
resources is lagging. The State Minister's lengthy response, as
reflected on the Parliament Hansard, notes that open pit coal
mining is only possible at Phulbari Coal reserve and cited the main
concern remains the impact on farming. We view this as a very
positive development and are confident that the Project's
comprehensive "Agricultural Improvement Plan", developed within the
scope of the Project's Environmental and Social Impact Assessment,
will negate fears regarding impact on farming, particularly given
that coal mining is a temporary change in land use and following
coal extraction the mine void is backfilled with the land
progressively rehabilitated and returned to agriculture.
Our team in Dhaka has made presentations at senior level of
government to gain support for the Project and refine the Project
Proposal. Feedback, which confirms the recent statements by the
State Minister, has been encouraging with the Proposal now placing
significant emphasis on government involvement, coal price and
foreign reserve savings, agriculture improvement, water
conservation, social management and assistance with enabling
associated infrastructure such as rail upgrade. We are also being
guided by our local Consultant Lobbyist on further refinements to
the Proposal and timing for delivery.
During this last Financial Year, our team continued to work
closely with development partner, Power Construction Corporation of
China, Ltd. ("PowerChina"). Central to the discussions has been the
Project Proposal and how to ensure the Government and People of
Bangladesh, investors and shareholders will derive maximum benefit.
To this end, on 6 December 2021, the MOU focused on coal mine
development was extended for 12-months with the aim of defining the
modality for PowerChina to become a Mine Development Partner,
subject to the approval of PowerChina internal compliance and all
other relevant regulatory agencies. Furthermore, on 11 March 2022,
the power station Joint Venture Agreements with PowerChina for the
initial 4,000MW (two 2,000MW Stages) were extended for two years to
15 March 2024.
Other steps taken in Financial Year 2022 include:
-- On 31 August 2021, an MoU was signed with Sion Corporation of
Japan, Versatech Energy Innovation Limited and AC Biode Co. Ltd for
providing a suitable and effective environmental solution for the
management of the fly-ash waste product that could be produced by
the Project.
-- On 2 March 2022, the Company successfully raised
GBP2.13million through a placing (the "Placing") of 25,291,828
shares and a subscription for 16,171,777 shares of new ordinary 1p
shares in the Company at a price of 5.14 pence per share,
representing a discount of approximately 36.9% to the closing
mid-market share price on 1 March 2022.
Outside the Reporting Period:
-- On 22 August 2022, the Company announced that it had agreed a
further extension of the consultancy agreement with DG Infratech
Pte Ltd ("DGI"), a Bangladeshi controlled company, for an
additional two years. DGI's prime role is to provide advisory and
lobbying services in relation to the Company's business, namely to
achieve project approval.
-- On 12 December 2022, the Company announced that the MOU with
PowerChina, focused on coal mine development, has been extended for
a further 12-months to 6 December 2023.
Overarching Operating Enviromnent:
The United Nations Climate Change Conference COP26 occurred
within the current reporting year and the recent COP27, just
outside this period. There is no doubting Climate Change is
occurring and the LDC are most vulnerable to extreme weather
events, i.e., in general they lack the necessary specialist
expertise, emergency response systems and financial resources to
prepare for and deal with the aftermath of such events. However,
while the Developed Countries are promoting a rapid move to
"renewable energy" as a means to combat Climate Change, the reality
is the LDC are, in the main, low Greenhouse Gas ("GHG") emitters
and also are well behind in power consumption per capita and power
generating capacity to drive industrial growth and economic
development. In addition the current range of renewable energy,
largely being solar and wind, are not suitable for base-load power
which the LDC do struggle to provide. This is reinforced by the
Developed World still largely being reliant on thermal energy for
base-load power.
Bangladesh has maintained its stance regarding coal in its
long-term energy mix with 11,775MW coal-fired power plants
commissioned or in the pipeline. Progress is being made with: t he
Payra 1,320MW Coal-fired Power Plant commissioned in 2019-20; the
first unit (660MW) of the 1,320MW Rampal Coal-fired Power Plant to
be commissioned in November this year and the second 660MW unit due
next year; the 1,320MW Banshkhali Coal-fired Power Plant scheduled
for commissioning in March 2023; with work on the Matabari 1,320MW
Coal-fired Power Plant continuing.
We are confident the Project will become a key part of
Bangladesh's "Energy Security and transition to Renewable Energy"
and that the Phulbari coal mine will become a "Net Zero Carbon" or
"Green Mine" operation through:
-- Utilising electrically powered mining equipment;
-- Developing a large-scale Solar Power Park (Carbon-Offsetting)
within the Project area which would supply to the grid and also
power the Phulbari mining operation; and
-- Additional Carbon Offsetting through progressive development
of an extensive forest plantation as part of the land
rehabilitation plant.
Furthermore, utilsiing the high-energy Phulbari coal in power
generation will potentially reduce Bangladesh's overall GHG
emissions by up to 30% against current imported coal options as
less Phulbari coal is consumed per kWh and coal transportation is
vastly simplified, i.e., international shipping over long distances
and lightering are both eliminated.
Finally, I thank our shareholders and stakeholders for their
patience and support and provide assurance that we now have a
robust Project Proposal that will assist the Bangladesh Government
negate the effects of the long term energy crisis and provide some
relief to exposure to the volatile world energy market. At the same
time it encourages involvement by the Government, reinforcing its
ownership of and benefits accruing from the strategically important
Phulbari coal rsource.
Mohd. Najib Abdul Aziz
Non-Executive Chairman
19 December 2022
Group Strategic Report
Strategy and business model
GCM remains committed to its core strategy of developing the
Phulbari coal deposit as a captive, large-scale, open pit mining
operation supporting some 6,600MW of highly energy-efficient
Ultra-Supercritical power generation. Over the reporting period
this strategy has been enhanced to include installation of a
large-scale Solar Power Park (up to 2,500MW) within the Project
area, to be installed within the first two years of gaining land
access; operating the Phulbari coal mine as a "Net Zero Carbon" or
"Green Mine"; and participation modalities for Government.
GCM's strategy and business model is based on establishing
partnerships with internationally renowned companies, specifically
Chinese State-owned enterprises, to assist with obtaining the
necessary government approvals and finance, and to be involved in
construction and operation of the coal mine and possible power
plants. Consultants are also employed to provide guidance and
lobbying support both in Bangladesh and Internationally.
The business model relies on establishing a reliable domestic
market for the Phulbari coal mine's full production. This is vital
to underpin the Project's economic sustainability and is a
prerequisite to obtaining project finance. In the past we have
focused on a coal market solution with development partner,
PowerChina, involving new power plants commissioned in stages to
match the mine's ramp-up to 15Mtpa nameplate production. To this
end, Joint Venture Agreements("JV's") remain in place covering
4,000MW, with the remaining coal mine production destined for the
domestic market.
While this business model essentially remains valid, we have
made changes in emphasis with the 4,000MW proposed under the JV's
with PowerChina now being an option in the Project Proposal. This
was driven by the fact that there is already significant new
coal-fired power plant capacity being developed by other parties
(with the Government) which is rapidly evolving into a significant
domestic market capable of absorbing the full Phulbari coal mine
production. The Chinese President's address to the United Nations
General Assembly on 22 September 2021 is also a consideration as it
did cast doubt over China financing new coal-fired power projects
outside of China. There has been no further clarification or
follow-up policy statement and there is speculation that the
definition of "new" may possibly not include power plants that were
already at the planning stage. Certainly, the world-wide energy
crisis has changed the power landscape with many countries
reverting to coal-fired power, including many in the European
block. Due to these circumstances, therefore, we consider the risk
adverse option for the Project is to focus on supplying coal to
other power plants in the first instance. This will be a 'Win -
Win" as the Bangladesh Government would secure a high quality coal
supply with reduced supply and cost risks and save billions of
dollars on excessive coal tonnage imports and power generating
costs.
GCM is confident its enhanced strategy and business model will
deliver the project approval. The Project will: reduce the
Country's exposure to the volatile energy market; deliver a
long-term positive impact on Foreign Exchange Reserves; deliver the
lowest coal-based energy price and cheapest electricity,
underpinning expansion and competitiveness of industries, produce
new higher paying jobs, and grow the economy. It potentially will
be an economic "step-jump" for Bangladesh, supporting its move to
become a Developing Country by 2026 and helping achieve its Vision
2041 to:
-- End absolute poverty and to be graduated into higher middle-income status by 2031; and
-- Eradicate poverty on way to becoming a developed nation by 2041
Progress in-line with the strategy
The Company delivered a "Feasibility Study and Scheme of
Development" for the coal mine component of the Project in October
2005. This mine development proposal remains robust, having been
fully evaluated through the Definitive Feasibility Study ("DFS").
The DFS combines over two hundred individual studies by a team of
international and national experts, with a view to delivering a
world-class mining project plan, based on proven international best
mining practices. It includes a comprehensive Environmental and
Social Impact Assessment ('ESIA").
With the assistance of Hong Kong based Dyani Corporation Limited
("Dyani"), the Company developed close working relationships with
the Chinese state-owned-enterprises. Currently the following
arrangements are in place to support GCM's strategy for delivering
the Project:
-- Joint Venture Agreements with PowerChina for 4,000MW of mine-mouth power plants; and
-- MOU with PowerChina aimed at defining the modality for
PowerChina to become a Mine Development Partner.
Power Proposal documents required by the Government for approval
of the initial 4,000MW power plants have been prepared.
Presentations have been made at senior level of government to
galvanise support for the Project and refine the Proposal which has
been expanded to include:
-- Options for participation by Government;
-- Significant benefits of supplying coal directly to the
Government's sanctioned power plants;
-- Large-scale Solar Power Park (up to 2,500MW) on the Project
area within the first couple of years;
-- "Green Mine" with Carbon Offsetting (including forest)
resulting in Net Carbon Zero mining operation; and
-- Very significant Green House Gas emission reduction of some
30% using Phulbari coal vs. Imported Coal
As GCM does not yet generate any revenue, the Board expects that
the Group's operations will continue to be funded by a combination
of equity and debt financing.
Continuing for the foreseeable future, the Company's cash
expenditure is not expected to increase and, as far as possible,
obligations to key stakeholders will be primarily satisfied by the
issue of new ordinary shares in the capital of the Company
("Ordinary Shares"), to both incentivise those stakeholders and
preserve cash.
Year in review
GCM began the reporting year w ith international business
confidence growing as the world emerged from the Coronavirus
Pandemic. However, Bangladesh continued with periods of restricted
movement of people and closure of government and private business
offices until mid-August 2021.
Despite these periods of restricted movement, GCM's Dhaka team
managed to initiate discussions at senior level of government to
gain support for the Project and refine the Proposal to better
address concerns and needs of Government. The initial
recommendation was to prepare a fact sheet comparing Phulbari coal
with imported coal supporting power hubs at various strategic
location throughout Bangladesh. The results were compelling with
Phulbari's high energy coal enabling many billions of dollars of
annual savings. These discussions continued throughout the
reporting period and resulted in refinement of Project
presentations and the Project Proposal. The GCM team was supported
by its development partner, PowerChina, in various key
meetings.
On 31 August 2021, GCM signed an MoU with a consortium of Sion
Corporation of Japan, Versatech Energy Innovation Limited and AC
Biode Co. Ltd for providing management of the Project's power plant
fly-ash waste product. SION has developed a multifunctional
material, CircuLite, which can be manufactured from fly-ash and
would have wide application in Bangladesh for environmental
pollution control and in agricultural for soil conditioning.
On 6 December 2021, the MOU with PowerChina, focused on coal
mine development, was extended for 12-months. PowerChina has
reiterated its desire to particpiate in the coal mine development
and working under this MOU the parties aim to define the extent of
this participation.
On 11 March 2022, the power station Joint Venture Agreements
with PowerChina for the initial 4,000MW (two 2,000MW Stages) were
extended for two years to 15 March 2024.
Outside the reporting period:
-- On 22 August 2022, the Company agreed a further extension of
the consultancy agreement with DG Infratech Pte Ltd ("DGI"), a
Bangladeshi controlled company, for an additional two years. DGI's
prime role is to provide advisory and lobbying services to
facilitate delivery of the Project Proposal and gain project
approval.
-- On 12 December 2022, the Company announced that the MOU with
PowerChina, focused on coal mine development, has been extended for
a further 12-months to 6 December 2023.
The Project Proposal has been enhanced to address the concerns
and needs of the Bangladesh Government and incorporate options for
Government participation. Principal focus is obtaining Coal Supply
Agreements for coal supply to existing and planned coal-fired power
projects and to work with the Government on additional joint
venture arrangements for coal transportation and marketing,
infrastructure development and Industrial Mineral co-product
marketing.
The Project Proposal also includes a large Solar Power Park
within the Project area, which could be operational within the
first two years of Project approval and supply power to the mine as
well as the National Grid. The Project's Agricultural Improvement
and Land Rehabilitation Plans also create significant additional
Carbon Offsetting. The net result is the Project could have a
Carbon Zero "Green Mine" and the Government could reduce its
Greenhouse Gas Emissions (CO (2) ) by some 30% by using Phulbari's
coal instead of imported.
GCM's field team are working closely with the local community
and local authorities to ensure they remain fully informed on the
Project. This field effort is bolstered by over 60 "Community
Liaison Assistants" recruited from across the Project area. They
are not employees but are members of the local community that
assist with delivery of our messages and conveyance of community
feedback.
The Board is pleased with its progress against its strategy of
forming development partnerships covering coal mine and power
plants and that it now has a holistic Project Proposal that
addresses Government's needs and concerns, sets out options for
Government participation, supplies coal for large-scale power
generation through a "Green Mine" approach, saves the Country
billions of dollars annually in Foreign Exchange and at the same
time delivers GHG emissions reduction and significant renewable
energy in the form of a large-scale Solar Park. The Proposal has
been prepared based on feedback from senior level of Government.
Timing of delivery of the Proposal for Government approval is being
guided by our appointed local Consultant Lobbyist, DGI.
WH Ireland Limited remains our Nominated Advisor and Broker
since their appointment on 11 January 2021. As part of the 'Placing
and Subscription" fundraising completed on 2 March 2022, ETX
Capital was appointed as a Joint Broker.
Finance review
The Group recorded a loss of GBP1,679,000 during the year ended
30 June 2022 compared to a loss of GBP1,874,000 during the previous
year. The loss decreased from the comparative year principally due
to a decrease in non-cash, share-based payments accrued in
accordance with the Group's agreements with Dyani & DG in
relation to pre-development expenditure. The decrease was from
GBP809,000 in 2021 to GBP414,000 this year as a result of prior
year milestone payment to the consultant being reached in 2021, but
their continuing partnership allows the Group to continue its
progress in-line with GCM's strategy of developing power generation
as a new business stream, with no slow-down in pursuing continuing
project progress.
The Group recorded a net increase in cash at the end of the year
to GBP961,000 (2021: GBP717,000). Net cash used in operations for
the year was GBP846,000 (2021: GBP326,000), cash used in investing
activities was GBP520,000 (2021: GBP557,000), and cash inflow from
financing was GBP1,610,000 (2021: GBP1,531,000).
The Group has continued its aim to maintain tight control of
expenditure incurred during the year: Administrative expenses were
up by 4.6% to GBP750,000 for the year ended 30 June 2022 (2021:
GBP717,000) which included GBP30,000 non-cash expenditure, however,
finance costs increased by 25.3% to GBP480,000 (2021: GBP383,000)
as a result of the amended terms to the Polo Loan Facility both in
the current and prior year. Capitalised expenditure in relation to
the mine proposal was GBP563,000 for the year ended 30 June 2022
compared to GBP552,000 in the previous year.
To finance its operations during the year, GCM completed a
successful Placing and Subscription in conjunction with ETX Capital
& WH Ireland Ltd, raising Gross proceeds of GBP2,130,000 in
March 2022. In addition, GCM continues to have available, the
short-term loan facility with Polo Resources Limited ("Polo") (the
"Polo Loan Facility"). The Polo Loan has not been increased or
drawn down during the year and remains at a facility of
GBP3,500,000, with GBP3,200,000 drawn to date. The terms of the
loan facility were amended in March 2022 as part of the completed
placing and subscriptions, such that the lender may request
conversion by the issuance of new ordinary shares in the Company at
5.14 pence per share (being the Issue Price) subject to any
necessary regulatory approvals. All other terms of the agreement
remained unchanged. (See Note 12 for detailed terms).
As at the date of this report, the Company had drawn down
GBP3,200,000 of the Polo Loan Facility and the Company currently
has approximately GBP840,000 in available cash resources, which
along with the remaining GBP300,000 of the Loan Facility the
Director's believe will only be sufficient to fund the Company's
cash requirements for the next seven months, assuming the Company's
currently forecast cash costs. The Company is exploring other
financing options, and is confident of securing additional funding
by the end of June 2023 (the "Additional Funding").
Corporate Social Responsibility
Mining is not a 'one go' process like other large development
projects. GCM's management team appreciates that the success of
mining operations is underpinned by an ability to listen to the
communities within which they operate, deal with their concerns,
keep them fully informed, improve livelihoods and, not only
minimise environmental impacts, but improve the local
environment.
GCM is committed to developing the Project in accordance with
highest international and national environmental and social
standards as defined in:
-- International Finance Corporation (World Bank) policies and standards;
-- Equator Principles;
-- Asian Development Bank's (ADB) Safeguard Policies ; and
-- Prevailing policies and laws of Bangladesh.
GCM is also a signatory of UN Global Compact, the World's
largest voluntary corporate responsibility initiative, and embraces
the core values pertaining to human rights, labour standards, the
environment and anti-corruption.
One of the Project's key success factors is the successful
implementation of the Project's Resettlement Action Plan ("RAP").
This was prepared as part of the coal mine's comprehensive
Environmental and Social Impact Assessment and involved several
rounds of surveys covering families within and immediately adjacent
to the Project Area. A demographic survey was also carried out in
2019 to update the population and household trends. GCM is
committed to lift the amenity of its local community and will
ensure the RAP will deliver:
-- Full and fair compensation;
-- Full compensation prior to displacement;
-- Fairness, transparency and choice;
-- Higher living standards (town/village sites improved amenities);
-- Financial grants to enhance livelihoods;
-- Training and preferential employment; and
-- Support of farmers to enhance agricultural production.
GCM maintains facilities in the Project area and its resident
field team is in close contact with the community and local
authorities. Our communication strategy also involves over 60
Community Liaison Assistants ("CLA's"), recruited from across the
Project Area. The strength of the CLA's comes from them also having
their own communication networks, i.e., two-way communication is
greatly enhanced. The Community feedback remains consistent: the
majority want development of their area (rated as one of the
poorest in Bangladesh); they want job opportunities; and above all
they want a better life for their children.
The Project will deliver over 17,000 jobs directly and
indirectly created as a consequence of the mine development alone.
However, many thousands of additional jobs would come from having
an expansive reliable power supply enabling new industrial
development. One such industrial opportunity would come through
industrial mineral co-products that can be extracted from the mine
overburden material removed to access the coal. These co-products
(in very large quantities) would become available soon after
removal of overburden commences (several years ahead of coal
extraction) and include clay for bricks and pottery, China Clay for
ceramics, silica sand for glass manufacturing and a range of sand,
gravels and rock aggregates for the construction industry.
Conservative estimates of the value of these co-products amounts to
some US$17 Billion over the life of the Project.
Risks and uncertainties
The predominant risks and uncertainties faced by the Company are
set out below:
Political and economic - risk that the Company's new approach,
being to establish the Phulbari open pit coal mine as captive to
and packaged to either: (a) in the first instance, supply all or
part of the Phulbari coal mine production to the Government's own
power plants, supporting up to 6,600MW state-of-the-art highly
energy efficient Ultra-Supercritical power plants, or (b) as a
back-up option, supply all or in part of the Phulbari coal mine
production to power plants developed by GCM and its Development
Partner(s), is not approved by the Government of Bangladesh.
However, the Project has also been enhanced with the addition of a
large-scale Solar Power Park (supplying the mine and National Grid)
and a range of Carbon Offsetting measures that would enable the
coal mine to be Carbon Net Zero (a "Green Mine"). The use of
Phulbari coal instead of imported coal would also reduce
Bangladesh's Greenhouse Gas Emissions (CO (2) ) by some 30%, save
the Government billions of dollars in Foreign Exchange and energy
and power generation cost, and allow cheaper power to facilitate
industrial expansion and boost competitiveness. The Board believes
the protracted world-wide energy crisis has greatly enhanced the
value of the Project to the Government and People of Bangladesh and
improved the likelihood for approval. The Board also believes its
strategy of maintaining experienced development partners is an
attractive proposition for the Government and does provide the best
opportunity for realising the huge benefits the Project is capable
of delivering. The Company's Bangladesh team and appointed
consultants / lobbyists maintain contact with Government
officials to prepare for delivery of the expanded Proposal,
however, it recognises that the timing of approval remains in the
hands of the Government. The Company retains its right to seek
legal redress in accordance with the terms of the Contract with the
Government in the event approval is not ultimately forthcoming.
Refer to Note 1 of the consolidated financial statements for
further information.
Strategic - risk that the strategic partnership with the Chinese
state-owned-enterprise PowerChina does not proceed, thus
undermining the Company's strategy of presenting the Project as a
captive coal mine with reliable market options for its full coal
mine production and jeopardising the mine's economic
sustainability. As explained in the "Political and economic risk"
section, the Company has already expanded the Proposal to promote
all or part of the Phulbari captive open pit coal mine production
being sold in the first instance to the Government's own power
plants, thus reducing or eliminating the dependency on having
mine-mouth power plants as the sole market for the Phulbari coal.
The current and prolonged world energy crisis with escalated coal
and LNG prices (increasing pressure of Bangladesh's Foreign
Exchange Reserves) also makes the proposition of the Government
using Phulbari coal for its power plants much more attractive.
The Company has also taken steps to further reduce this risk
through recent signed agreements and continuing dialogue with the
development partner aimed at further strengthening the strategic
partnership; and has in place incentive-based schemes with Dyani to
enhance the relationships with the Chinese government organisations
and with the Bangladeshi controlled entity, DGI, to assist with
taking the Project through the government approval process to
implementation. The Company's Bangladesh team is also working to
prepare Government officials for delivery of the expanded
Proposal.
Financing - risk that the Company will not be able to raise
necessary funds as and when required to take the Project through
the government approval process to implementation stage. The
Directors are confident that the necessary funds will be obtained
as and when required. For further details refer to the Directors'
Report.
Commercial - risk that the Project's economic viability is
undermined by sustained adverse movement of coal price and key cost
elements. The current and prolonged world energy crisis with
escalated coal and LNG prices makes the proposition of the
Government using Phulbari coal for its power plants much more
attractive. Analysts predict the supply/demand forces will support
continuing high coal prices in the medium term, thus using Phulbari
coal will give the Government some protection against supply and
cost escalation risk and save billions of dollars in Foreign
Exchange. To further reduce economic viability risk there will be a
rise and cost provision for the coal mine with the coal supply
agreements for the power plants. Bangladesh has several new power
projects under construction and others in the pipeline with the
full capacity set out in a recent Government report to be in excess
of 10,000MW, i.e., some 40% more than can be supported by the
Phulbari coal mine's full production.
Legal - risk that the mining lease and exploration licences are
revoked. The Group continues to comply with all terms of the
Contract with the Government for "Exploration and Mining of Coal in
Northern Bangladesh" and is careful to ensure that all ongoing
conditions of the Contract and the associated mining lease and
exploration licences are met. GCM has received a recent
comprehensive legal opinion that the Contract is enforceable under
Bangladesh and International law.
Health and safety, social and environmental risks - The Group
remains committed to developing the Project and meeting the highest
international social and environmental standards as detailed in the
Corporate Social Responsibility section within this Strategic
Report.
Climate Change risk - Increased awareness and action against
climate change will put pressure on governments and financing
organisations to reduce exposure to fossil fuel related power
generation. This could affect future Bangladeshi Government policy
towards coal fired generation and limit funding appetite for the
Project. Bangladesh is scheduled to officially become a developing
country in 2026 as the UN committee recommended that the country
should get five years, instead of three, to prepare for the
transition due to the impact of Covid-19 on its economy. Until
2026, the country will continue to enjoy the trade benefits as an
LDC. The Bangladesh Government has also recently adopted its Vision
2041 which aims to end absolute poverty and to be graduated into
higher middle-income status by 2031 and eradicate poverty on way to
becoming a developed nation by 2041.
Bangladesh has minimal emissions and is far behind the developed
countries in terms of GDP and power generation per capita.
Considering the year 2019 (immediately prior to the COVID pandemic
and the worldwide economic slowdown) published figures indicate its
contribution to the world's CO (2) production was some 0.25
percent, i.e. Bangladesh is not a significant emitter.
Vision 2041 identifies two fundamental energy and power sector
pillars necessary to support the Vision: (i) Adopting a least-cost
power generation expansion path; and (ii) Promoting supply of
low-cost primary energy. To achieve this, it needs to steadily grow
its power generation capacity (efficient low cost power) to drive
industrial development and create sustainable new well-paying jobs.
To this end, even if the Phulbari full coal production was consumed
in over 6,000MW of power being generated in the year 2019,
Bangladesh's contribution to the world's CO (2) production would
still have been minimal at less than 0.35%.
The Bangladesh Government recognis es the importance of
commercial fuel diversity for its power generation, however, it
remains heavily reliant on imported fuels, which exposes the
country to inherent world-market risks in terms of maintaining
supply and controlling cost. The world-wide protracted energy
crisis has raised serious questions over Bangladesh's dependence on
imported energy products. It has forced the Government to adopt an
austerity approach involving restricting energy imports and cutting
back on power generation, principally driven by falling Foreign
Exchange Reserves. Civil society and many political figures are now
calling for a rapid move to develop the country's domestic coal
land gas resources to ensure energy security and save on Foreign
Exchange.
The Phulbari Project remains focused entirely on serving
Bangladesh's domestic requirements, adhering to its policies and
laws and supporting its development goals. The Project will assist
Bangladesh achieve its NDC targets as it balances issues to achieve
its Development goals. By using Phulbari's high quality coal high
energy efficient low emission Ultra-Supercritical power plants the
country will not only eliminate greenhouse emissions associated
with coal shipping and handling, but importantly it will realise a
large amount of clean coal technology produced power at tariffs
that will make its industries more competitive. This will help
drive Bangladesh economic development and ability to deal with the
effects of climate change.
Board engagement with stakeholders
This section serves as our section 172 statement and should be
read in conjunction with the rest of the Strategic Report and the
Company's Corporate Governance Statement.
Section 172 of the Companies Act 2006 requires a Director of a
company to act in the way he or she considers, in good faith, and
would be most likely to promote the success of the company for the
benefit of its members as a whole. In doing this, section 172
requires a Director to have regard, among other matters, to: the
likely consequences of any decision in the long term; the interests
of the company's employees; the need to foster the company's
business relationships with suppliers, governments, local
communities, and others; the impact of the company's operations on
the community and the environment; the desirability of the company
maintaining a reputation for high standards of business conduct;
and the need to act fairly with members of the company.
The Directors uses its Board meetings as a mechanism for giving
careful consideration to the factors set out above in discharging
their duties under section 172.
Stakeholder engagement
Key stakeholder groups we engage with are listed below, together
with an explanation of why we focus on them and how we engage
them.
Employees
The success of the Group is dependent upon the hard work and
dedication of all our employees. The Board ensures a continuing
investment in existing employees who are supported through
professional, technical and on-the-job training relevant to their
functional areas, as well as other relevant role-specific training.
The Board directs executives and senior managers to keep staff
informed of the progress and development of the Company on a
regular basis through formal and informal meetings and regular
communications. In addition, the Board ensures funds are provided
for regular events to encourage employee participation in local
community initiatives.
Government Agencies & Local Communities
The Group operates in the regulated mining sector in Bangladesh.
The Board ensures the Company adopts a positive focus on
maintaining productive relations with local communities and all
levels of government. As a result, the Chief Executive Officer and
Chief Operating Officer regularly conduct consultations with
multi-levels of government agencies to ensure that all regulatory
approvals and permits remain in good order. Development of local
community improvement programmes are undertaken with consultation
of local government and community representatives in order to
maintain positive and productive relationships necessary to advance
the Phulbari project.
As a mining exploration Group, the Board takes seriously its
ethical responsibilities to the communities and environment in
which it works. Wherever possible, local communities are engaged in
the geological operations & support functions required for
field operations. The regions in which the Group operates have
native title laws. The Company is respectful of native title rights
and engages proactively with local communities. In addition, we are
careful to manage the environmental obligations of our work, and in
particular undertake site rehabilitation programmes, and prepare
mine management plans, in accordance with local laws and
regulations. Our goal is to meet or exceed standards, in order to
ensure we maintain our social licence to operate from the
communities with which we interact.
Contractors & Suppliers
Our proposed Joint Venture associates, consultants and suppliers
are key business partners, and the quality of goods and services we
receive are essential to supporting operations and to enhance the
project process with our goal to successfully submit our project
proposal to the Bangladesh Government for approval.
During the year, the Board committed significant resources into
fostering improved relationships with our key partners. As directed
by the Board, management collaborates and continually works with
our partners and the full supply chain, sharing best practice and
seeking out synergies to improve.
Lender
For the entire reporting period the Chairman, CEO and FD, on
behalf of the Board have been in regular contact with its lender.
An extension to the loan agreement was agreed during the year,
which enabled the Group to continue on a stable financial
platform.
Investors
Investors are considered key stakeholders, and consequently
investor relations are a focus area for Directors. Where possible
the Board engages investors on Group performance following project
updates and results announcements with face-to-face meetings or
scheduled calls. Over the past year however these consultations
have been severely impacted by the legal & country specific
restrictions placed upon Directors given the world economic climate
under the Covid-19 pandemic.
On behalf of the Board,
Datuk Michael Tang PJN
Chief Executive Officer
19 December 2022
Consolidated Financial Statements
Consolidated Statement of Comprehensive Income
For year ended 30 June
Notes 2022 2021
GBP000 GBP000
Operating expenses
Pre-development expenditure 16 (414) (809)
Exploration and evaluation costs (35) 35
Administrative expenses (750) (717)
Operating loss 3 (1,199) (1,491)
Finance costs (480) (383)
Loss before tax (1,679) (1,874)
Taxation 6 - -
Loss for the year (1,679) (1,874)
Other comprehensive income - -
Total comprehensive expense
for the year (1,679) (1,874)
------- --------
Loss per share
Basic (pence per share) 7 (1.1p) (1.5p)
Diluted (pence per share) 7 (1.1p) (1.5p)
Consolidated Statement of Changes in Equity
For year ended 30 June
Share Share Share based Accumulated Total
capital premium payments losses
account not settled
GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1
July 2020 11,256 53,534 1,706 (29,079) 37,417
Total comprehensive
loss - - - (1,874) (1,874)
Share issuances 792 2,155 (1,938) - 1,009
Share issuance
costs - (78) - - (78)
Shares to be issued - - 809 - 809
Share based payments - - 6 - 6
Balance at 30
June 2021 12,048 55,611 583 (30,953) 37,289
Total comprehensive
loss - - - (1,679) (1,679)
Share issuances 447 2,086 (372) - 2,161
Share issuance
costs - (121) - - (121)
Shares to be issued - - 414 - 414
Share based payments - - 17 - 17
Balance at 30
June 2022 12,495 57,576 642 (32,632) 38,081
-------- -------- ------------ ----------- -------
Consolidated Balance Sheet Company number 04913119
As at 30 June
Notes 2022 2021
GBP000 GBP000
Current assets
Cash and cash equivalents 961 717
Other receivables 8 436 13
Total current assets 1,397 730
Non-current assets
Property, plant and equipment 3 8
Right of use assets 13 19 59
Intangible assets 9 42,742 42,179
Total non-current assets 42,764 42,246
Total assets 44,161 42,976
-------- ---------
Current liabilities
Payables 11 (1,369) (1,422)
Lease liabilities 13 (27) (40)
Total current liabilities (1,396) (1,462)
Non-current liabilities
Lease liabilities 13 (1) (22)
Borrowings 12 (4,683) (4,203)
-------- ---------
Total non-current liabilities (4,684) (4,225)
Total liabilities (6,080) (5,687)
-------- ---------
Net assets 38,081 37,289
-------- ---------
Equity
Share capital 14 12,495 12,048
Share premium account 14 57,576 55,611
Other reserves 14 642 583
Accumulated losses (32,632) (30,953)
Total equity 38,081 37,289
-------- ---------
These financial statements were approved by the Board of
Directors and were signed on their behalf by:
Keith Fulton
Executive Director
19 December 2022
Consolidated Cash Flow Statement
For year ended 30 June
2022 2021
GBP000 GBP000
Cash flows from/(used in) operating
activities
(Loss) before tax (1,679) (1,874)
Adjusted for:
Pre-development expenditure 16 414 809
Finance costs 480 383
Other non-cash expenses 30 -
(755) (682)
Movements in working capital:
(Increase)/Decrease in operating receivables (23) 2
(Decrease)/Increase in operating payables (68) 354
Cash used in operations (846) (326)
Net cash used in operating activities (846) (326)
Cash flows used in investing
activities
Payments for intangible assets (520) (557)
Net cash used in investing activities (520) (557)
Cash flows from financing activities
Issue of ordinary share capital 1,731 1,009
Share issue costs (121) (78)
Proceeds from borrowing - 600
Net cash from financing activities 1,610 1,531
Total increase in cash and cash
equivalents 244 648
Cash and cash equivalents at
the start of the year 717 69
Cash and cash equivalents at
the end of the year 961 717
------- --------
Notes to the Consolidated Financial Statements
1. Accounting policies
GCM Resources plc is domiciled in England and Wales, was
incorporated in England and Wales as a Public Limited Company on 26
September 2003 and admitted to the London Stock Exchange
Alternative Investment Market ("AIM") on 19 April 2004.
The financial report was authorised for issue by the Directors
on 19 December 2022, and the Consolidated Balance Sheet was signed
on the Board's behalf by Keith Fulton.
Basis of preparation
The consolidated financial statements have been prepared in
accordance with UK-adopted international accounting standards and
applied in accordance with the Companies Act 2006. The accounting
policies which follow set out those policies which apply in
preparing the financial statements for the year ended 30 June
2022.
The functional and presentational currency of each of the
entities in the Group is pounds sterling, and all values are
rounded to the nearest thousand pounds (GBP000) except where
otherwise indicated.
Political and economic risks - carrying value of intangible
asset
The principal asset is in Bangladesh and accordingly subject to
the political, judicial, fiscal, social and economic risks
associated with operating in that country.
The Group's principal project relates to thermal coal and
semi-soft coking coal, the markets for which are subject to
international and regional supply and demand factors, and
consequently future performance will be subject to variations in
the prices for these products.
GCM, through its subsidiaries, is party to a Contract with the
Government of Bangladesh which gives it the right to explore,
develop and mine in respect of the licence areas. The Group holds a
mining lease and exploration licences in the Phulbari area covering
the prospective mine site. The mining lease has a 30-year term from
2004 and may be renewed for further periods of 10 years each, at
GCM's option.
In accordance with the terms of the Contract, GCM submitted a
combined Feasibility Study and Scheme of Development report on 2
October 2005 to the Government of Bangladesh. Approval of the
Scheme of Development from the Government of Bangladesh is
necessary to proceed with development of the mine. GCM continues to
await approval.
The Group has received no notification from the Government of
Bangladesh (the "Government") of any changes to the terms of the
Contract. GCM has received legal opinion that the Contract is
enforceable under Bangladesh and International law, and will
consequently continue to endeavour to receive approval for
development.
Accordingly, the Directors believe that the Phulbari Coal and
Power Project (the "Project") will ultimately receive approval,
although the timing of approval remains in the hands of the
Government. To enhance the prospects of the Project, GCM has
engaged in a strategy to align the Project with the needs and
objectives of the Government. This includes the option to supply
coal to both the Government's commissioned and in the pipeline
power plants, which total 11,755MW. The Government is seeking to
grow its economy and deliver electricity at prices that will ensure
competitiveness of its industries. The Group's strategy of
developing the Phulbari coal deposit as a captive, large-scale,
open pit mining operation supporting some 6,600MW of highly
energy-efficient Ultra-Supercritical power generation will enable
cheaper coal-fired electricity than imported coal options. This
evolving strategy has been enhanced to include installation of a
large-scale Solar Power Park (up to 2,500MW) within the Project
area, to be installed within the first two years of gaining land
access; operating the Phulbari coal mine as a "Net Zero Carbon" or
"Green Mine"; and participation modalities for Government.
Until approval of the Scheme of Development from the Government
of Bangladesh is received there is continued uncertainty over the
recoverability of the intangible mining assets. The Directors
consider that it is appropriate to continue to record the
intangible mining assets at cost, however if for whatever reason
the Scheme of Development is not ultimately approved the Group
would impair all of its intangible mining assets, totalling
GBP42,742,000 as at 30 June 2022.
Going concern
As at 30 June 2022, the Group had GBP961,000 in cash and
GBP1,000 in net current assets. The directors and management have
prepared a cash flow forecast to December 2023, which shows that
the Group will require further funds to cover operating costs to
advance the Phulbari Coal and Power Project and meet its
liabilities as and when they fall due. Based on current forecasts,
additional funding will need to be either raised from third parties
or drawn down under the short-term loan facility with Polo
Resources Limited ("Polo Loan Facility") by the end of June 2023,
in order to meet current operating cost projections. The Directors
also note that, under the amended terms of the existing Polo Loan
Facility, the lender agreed not to serve a repayment request in
cash for 5 years from the date of amended terms, 26 March 2021, or
alternatively convert to shares at 5.14 pence per share at the
lender's option (as amended on 1 March 2022). The Company does not
currently have secured funding arrangements in place to cover this
loan or further potential expenditure which may be needed to
advance the Project and, accordingly, should Polo request repayment
of the Polo Loan Facility, (under certain terms of the Loan
Facility) GCM will need to raise funds in a short amount of time,
which may not be available on terms acceptable to the Board or on a
workable timeframe.
The Company currently has GBP300,000 available for drawdown
under the Polo Loan Facility at the date of this report, and based
on projected future cash expenditure, the remaining amount
available for drawdown under the Polo Loan Facility at the date of
this report is not expected to be sufficient to support the
Company's operations for the twelve months from the date of this
report. At the current run rates, along with the Company's existing
cash resources, this is only expected to provide sufficient capital
for the next seven months. The Company intends to explore
alternative funding options over the second quarter of 2023, with
the aim to complete and secure the necessary third-party funding by
the end of June 2023.
In forming the conclusion that it is appropriate to prepare the
financial statements on a going concern basis the Directors have
made the following assumptions that are relevant to the next twelve
months:
- Sufficient additional funding can be obtained for working capital purposes; and
- In the event that operating expenditure increases
significantly as a result of successful progress with regards to
the Phulbari Coal and Power Project, sufficient funding can be
obtained.
While the Directors remain confident that necessary funds will
be available as and when required, as at the date of this report
these funding arrangements are not secured, the above conditions
and events represent material uncertainties that may cast
significant doubt over the Group's and Company's ability to
continue as a going concern. The financial statements have been
prepared on a going concern basis. The financial statements do not
include the adjustments that would result if the Group and Company
were unable to continue as a going concern.
Upon achieving approval of the Phulbari Coal and Power Project,
significant additional financial resources will be required to
proceed to development.
Use of judgements, estimates and assumptions
The preparation of the consolidated financial statements
requires management to make judgements, estimates and assumptions
that affect the application of policies and reported amounts of
assets and liabilities, income and expenses.
The estimates and underlying assumptions are reviewed on an
on-going basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period or in the period of revision and future periods if
the revision affects both current and future periods.
Intangibles
In assessing the recoverability of intangible assets, if an
impairment trigger under IFRS 6 is identified then intangibles are
tested for impairment. Management has identified impairment
triggers to be the market capitalisation of the Company compared to
the recognised amount on the balance sheet and the delay in
obtaining approval of the Scheme of Development. To assess for
recoverability, estimates are used to determine the expected net
return on investment. The estimated return on investment takes into
account estimated recoverable reserves, coal prices, development
and production costs, capital investment requirements, discount
rates and environmental and social costs among other things.
Management has considered the estimated return on investment to be
significantly higher than the current carrying value and therefore
no impairment has been accounted for. The headroom in the value in
use calculation compared to the carrying value is not sensitive to
probable changes in the key underlying assumptions. Refer to
"Political and economic risks - carrying value of intangible asset"
section within Note 1 for further details in respect of the
recoverability of intangible mining assets and the Board's
judgement regarding the ultimate approval of the project being
secured.
Power plant development costs
Power project expenditure is expensed as pre-development
expenditure until it is probable that future economic benefits
associated with the Project will flow to the Group and the costs
can be measured reliably. To assess whether it is probable that
future economic benefits will arise from the power plant
development costs, management judgement was required and
considered: objective evidence that the power plant is technically
and economically feasible, and objective evidence that the
appropriate authorities of the Government of Bangladesh have, or
are likely to approve power plant development. All power project
expenditure were accordingly expensed in the year.
Amendments to the short-term loan
Judgement was required in determining the accounting for the
Group's short-term loan which was restructured during the current
and prior year. The restructure was considered to represent a
significant modification with the loan restructured to allow the
lender the continuing right to convert the outstanding loan balance
and accrued interest to new ordinary shares, but to defer the
repayment period. Previous judgement was required in assessing
whether the restructured facility represented a compound financial
instrument in accordance with IAS32 Financial Instruments:
Presentation or a prima facie on demand loan facility. Management
concluded that as the loan has no maturity date and must be repaid
within 14 days of receiving a request, it is in effect a rolling
14-day short term loan, however as a further amendment has been
claused as such the lender would not serve a repayment request on
the Borrower for 5 years from March 2021, the loan was reclassified
in the prior year being classed as a non-current liability.
Accordingly, the loan continues to be categorised as an on demand
loan facility with no value attributed to the conversion feature
and the loan carried forward at its face value.
Basis of consolidation
Where the Company has control over an investee, it is classified
as a subsidiary. The company controls an investee if all three of
the following elements are present: power over the investee,
exposure to variable returns from the investee, and the ability of
the investor to use its power to affect those variable returns.
Control is reassessed whenever facts and circumstances indicate
that there may be a change in any of these elements of control.
The consolidated financial statements present the results of the
Company and its subsidiaries (the "Group") as if they formed a
single entity. Intercompany transactions and balances between group
companies are therefore eliminated in full. The consolidated
financial statements incorporate the results of business
combinations using the acquisition method. In the statement of
financial position, the acquiree's identifiable assets, liabilities
and contingent liabilities are initially recognised at their fair
values at the acquisition date. The results of acquired operations
are included in the consolidated statement of comprehensive income
from the date on which control is obtained. They are deconsolidated
from the date on which control ceases.
Property, plant and equipment
Items of property, plant and equipment are stated at cost less
accumulated depreciation and impairment losses. Such cost includes
costs directly attributable to making the asset capable of
operating as intended.
Depreciation is charged to the income statement on a
straight-line basis over the estimated useful lives of each part of
an item of property, plant and equipment. The estimated useful
lives in the current and comparative periods are as follows:
-- buildings 7 - 40 years
-- plant and equipment 3 - 15 years
-- vehicles 5 - 7 years
The residual value, the useful life and the depreciation method
applied to an asset are reassessed at least annually.
Power project development costs
Power project expenditure is expensed as pre-development
expenditure until it is probable that future economic benefits
associated with the project will flow to the Group and the costs
can be measured reliably. When it is probable that future economic
benefits will flow to the Group, all costs associated with
developing a power plant project are capitalised as power project
expenditure within property, plant and equipment category of
tangible non-current assets. The capitalised expenditure will
include appropriate technical and administrative expenses but not
general overheads. Power project assets are not depreciated until
the asset is ready and available for use.
Intangible assets
Acquired intangible assets, are measured initially at cost and
are amortised on a straight-line basis over their estimated useful
lives.
Exploration and evaluation costs are capitalised as exploration
and evaluation assets on an area of interest basis in accordance
with IFRS 6. Costs such as geological and geophysical surveys,
drilling and commercial appraisal costs, and other directly
attributable costs of exploration and appraisal including technical
and administrative costs, are capitalised as intangible exploration
and evaluation assets.
Exploration and evaluation assets are only recognised if the
rights of the area of interest are current and either:
(i) the expenditures are expected to be recouped through
successful development and mining of the area of interest, or by
its sale; or
(ii) activities in the area of interest have not reached a stage
which permits a reasonable assessment of the existence or otherwise
of economically recoverable reserves and active and significant
operations in, or in relation to, the area of interest are
continuing or planned for the future.
Exploration and evaluation assets are assessed for impairment if
sufficient data exists to determine technical feasibility and
commercial viability, and facts and circumstances suggest that the
Group should test for impairment. In the event that there is an
indicator of impairment, the Group performs an impairment test in
accordance with its policy on impairment as stated below. For the
purposes of impairment testing, exploration and evaluation assets
are allocated to cash-generating units to which the exploration
activity relates.
Once the technical feasibility and commercial viability of the
extraction of mineral resources in an area of interest are
demonstrable, exploration and evaluation assets attributable to
that area of interest are first tested for impairment and then
reclassified from intangible assets to mining property and
development assets within property, plant and equipment.
Impairment
The Group assesses at each reporting date whether there is an
indication that an asset may be impaired. If any such indication
exists, or when annual impairment testing for an asset is required,
the Group makes an estimate of the asset's recoverable amount. An
asset's recoverable amount is the higher of an asset's or
cash-generating unit's fair value less costs to sell and its value
in use and is determined for an individual asset, unless the asset
does not generate cash inflows that are largely independent of
those from other assets or groups of assets. Where the carrying
amount of an asset exceeds its recoverable amount, the asset is
considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and the risks specific to the asset. Impairment losses of
continuing operations are recognised in the income statement in
those expense categories consistent with the function of the
impaired asset.
An assessment is made at each reporting date as to whether there
is any indication that previously recognised impairment losses may
no longer exist or may have decreased. If such indication exists,
the recoverable amount is estimated. A previously recognised
impairment loss is reversed only if there has been a change in the
estimates used to determine the asset's recoverable amount since
the last impairment loss was recognised. If that is the case the
carrying amount of the asset is increased to its recoverable
amount. That increased amount cannot exceed the carrying amount
that would have been determined, net of depreciation, had no
impairment loss been recognised for the asset in prior years. Such
reversal is recognised in profit or loss. After such a reversal the
depreciation charge is adjusted in future periods to allocate the
asset's revised carrying amount, less any residual value, on a
systematic basis over its remaining useful life.
Financial Instruments
Financial instruments are recognised when the Group becomes a
party to the contractual provisions of the instrument and are
subsequently measured at amortised cost.
Classification and measurement of financial assets
The initial classification of a financial asset depends upon the
Group's business model for managing its financial assets and the
contractual terms of the cash flows. The Group's financial assets
are measured at amortised costs and are held within a business
model whose objective is to hold assets to collect contractual cash
flows and its contractual terms give rise on specified dates to
cash flows that represent solely payments of principal and
interest.
The Group's cash and cash equivalents and other receivables are
measured at amortised cost. Other receivables are initially
measured at fair value. The Group holds other receivables with the
objective to collect the contractual cash flows and therefore
measures them subsequently at amortised cost.
Cash and cash equivalents
Cash includes cash on hand and demand deposits with any bank or
other financial institution. Cash equivalents are short-term,
highly liquid investments that are readily convertible to known
amounts of cash which are subject to an insignificant risk of
changes in value.
Impairment of financial assets
The Group recognises loss allowances for expected credit losses
("ECL's") on its financial assets measured at amortised cost. Due
to the nature of its financial assets, the Group measures loss
allowances at an amount equal to the lifetime ECLs. Lifetime ECLs
are the anticipated ECLs that result from all possible default
events over the expected life of a financial asset. ECLs are a
probability-weighted estimate of credit losses.
Classification and measurement of financial liabilities
A financial liability is initially classified as measured at
amortised cost or FVTPL. A financial liability is classified as
measured at FVTPL if it is held-for-trading, a derivative or
designated as FVTPL on initial recognition.
The Group's accounts payable, accrued liabilities and short-term
debt are measured at amortised cost.
Accounts payable and accrued liabilities are initially measured
at fair value and subsequently measured at amortised cost. Accounts
payable and accrued liabilities are presented as current
liabilities unless payment is not due within 12 months after the
reporting period.
Short-term debt is initially measured at fair value, net of
transaction costs incurred. Subsequently they are measured at
amortised cost using the effective interest rate method. Short-term
debt is classified as current when payment is due within 12 months
after the reporting period.
The Group has no financial liabilities measured at FVTPL.
Where there is a modification to a financial liability, the
financial original liability is de-recognised and a new financial
liability is recognised at fair value in accordance with the
Group's policy.
Other loans and borrowings
All loans and borrowings which are financial instruments are
initially recognised at the present value of cash payable to the
lender (including interest). After initial recognition they are
measured at amortised cost using the effective interest rate
method. The effective interest rate amortisation is included in
finance costs in the income statement.
Income tax
Income tax on the profit or loss for the year comprises current
and deferred tax. Income tax is recognised in the income statement
except to the extent that it relates to items recognised outside
profit and loss, in which case it is recognised in other
comprehensive income or directly in equity as appropriate.
Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantially enacted at
the balance sheet date, and any adjustment to tax payable in
respect of previous years.
Deferred income tax is recognised on all temporary differences
arising between the tax bases of assets and liabilities and their
carrying amounts in the financial statements, with the following
exceptions:
-- where the temporary difference arises from the initial
recognition of goodwill or of an asset or liability in a
transaction that is not a business combination that at the time of
the transaction affects neither accounting nor taxable profit or
loss;
-- in respect of taxable temporary differences associated with
investments in subsidiaries, associates and joint ventures, where
the timing of the reversal of the temporary differences can be
controlled and it is probable that the temporary differences will
not reverse in the foreseeable future; and
-- deferred income tax assets are recognised only to the extent
that it is probable that taxable profit will be available against
which the deductible temporary differences, carried forward tax
credits or tax losses can be utilised.
Deferred income tax assets and liabilities are measured on an
undiscounted basis at the tax rates that are expected to apply when
the related asset is realised or liability is settled, based on tax
rates and laws enacted or substantively enacted at the balance
sheet date.
Foreign currency transactions
Transactions in currencies other than pounds sterling are
recorded at the foreign exchange rate ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign
currencies at the balance sheet date are translated at the foreign
exchange rate ruling at that date. Foreign exchange differences
arising on translation are recognised in the income statement.
Non-monetary assets and liabilities that are measured in terms of
historical cost in a foreign currency are translated using the
exchange rate at the date of the transaction.
Share based payments
The cost of equity-settled transactions is measured by reference
to the fair value at the date at which they are granted and is
recognised as an expense over the vesting period, which ends on the
date on which the recipients become fully entitled to the award.
Fair value is determined using an appropriate pricing model. In
valuing equity-settled transactions, no account is taken of any
vesting conditions, other than conditions linked to the price of
the shares of the Company (market conditions) or to conditions not
related to performance or service (non-vesting conditions).
Where equity settled share based payments are made to
non-employees the cost of equity-settled transactions is measured
by reference to fair value of the goods or services received and
measured at the date the entity obtains the goods or the
counterparty renders the service.
Where the fair value of the goods or services received cannot be
estimated reliably, the entity measures the goods or services
received, and the corresponding increase in equity, indirectly, by
reference to the fair value of the equity instruments granted,
measured at the date the entity obtains the goods or the
counterparty renders service.
At each balance sheet date before vesting, the cumulative
expense is calculated, representing the extent to which the vesting
period has expired and management's best estimate of the
achievement or otherwise of non-market conditions, number of equity
instruments that will ultimately vest or in the case of an
instrument subject to a market condition or non-vesting condition,
be treated as vesting as described above. This includes any award
where non-vesting conditions within the control of the Group or the
employee are not met. W here the equity-settled share based payment
is directly attributable to exploration and evaluation activities,
the movement in cumulative expense since the previous balance sheet
date is capitalised, with a corresponding entry in equity.
Otherwise, the movement in cumulative expense is recognised in the
income statement, with a corresponding entry in equity.
Where the terms of an equity-settled award are modified or a new
award is designated as replacing a cancelled or settled award, the
cost based on the original award terms continues to be recognised
over the original vesting period. In addition, an expense is
recognised over the remainder of the new vesting period for the
incremental fair value of any modification, based on the difference
between the fair value of the original award and the fair value of
the modified award, both as measured on the date of the
modification. No reduction is recognised if this difference is
negative.
Where an equity-settled award is cancelled, it is treated as if
it had vested on the date of cancellation, and any cost not yet
recognised in the income statement for the award is expensed
immediately. Any compensation paid up to the fair value of the
award at the cancellation or settlement date is deducted from
equity, with any excess over fair value being treated as an expense
in the income statement.
New standards and interpretations applied
The Group has adopted all of the amended standards and
interpretations during the year that are relevant to its
operations, none of which had a material impact on the financial
statements.
New standards and interpretations not applied
IASB and IFRIC have issued a number of new standards and
interpretations with an effective date after the date of these
financial statements. These will be adopted in the period that they
become mandatory, unless otherwise indicated. Information on the
new standards which could impact the Group is presented below
Effective Adoption
date date
International Accounting Standards (IAS
/ IFRSs)
Amendments to IAS 16 Property Plant and 1 January 1 January
Equipment 2022 2022
Amendments to IAS 37 Provisions, Contingent 1 January 1 January
Assets and Contingent Liabilities 2022 2022
Annual Improvements to IFRS 2018-20 Cycle 1 January 1 January
2022 2022
Amendments to IFRS 3 Business Combinations 1 January 1 January
- Reference to the Conceptual Framework 2022 2022
Amendments to IAS 37 Onerous Contracts 1 January 1 January
- Cost of Fulfilling a Contract 2022 2022
Amendments to IFRS 16 - Leases: Covid 1 January 1 January
19 related rent concessions 2022 2022
Based on the current and foreseeable operations, the adoption of
the above standards and interpretations will not have a material
impact on the Group's financial statements in the period of initial
application.
2. Segment analysis
The Group operates in one segment being the exploration and
evaluation of energy related projects. The only significant project
within this segment is the Phulbari Coal and Power Project (the
Project) in Bangladesh.
3. Operating loss
2022 2021
GBP000 GBP000
The operating loss is stated after charging:
Directors' remuneration 611 488
Other staff costs (1) 10 7
Operating lease rentals (2) 12 4
Depreciation of property, plant and equipment - -
(3)
(1) Other staff costs for 2022 financial year were GBP186,000 of
which GBP10,000 was expensed in administrative expenses, GBPnil
expensed in exploration and evaluation costs and GBP176,000
capitalised (2021 GBP7,000 expensed in administrative expenses,
GBPnil expensed in exploration and evaluation costs and GBP360,000
capitalised).
(2) Operating lease rental costs for 2022 financial year were
GBP20,000 of which GBP12,000 was expensed and GBP8,000 capitalised
(2021: GBP44,000 of which GBP4,000 was expensed and GBP40,000
capitalised).
(3) Total depreciation for 2022 was GBP5,000 which was
capitalised to intangibles (2021: GBP5,000 capitalised).
During the year Phulbari-related exploration and evaluation
costs amounting to GBP35,000 were expensed in accordance with the
Group's accounting policy on exploration and evaluation costs
(2021: (credited) GBP35,000).
4. Auditor's remuneration
The Group paid the following amounts to its auditors in respect
of the audit of the financial statements and for other services
provided to the Group.
2022 2021
GBP000 GBP000
Audit of the group and company financial
statements 34 32
Audit of subsidiaries - -
-------- --------
Total audit 34 32
-------- --------
Total fees 34 32
-------- --------
5. Amounts paid for Directors' services, and staff costs
2022 2021
GBP000 GBP000
Amounts paid for Directors' services
Amounts paid for Directors' services 611 488
-------- --------
The amounts paid for Directors' services during the year are
disclosed in further detail in the Directors' Report . The
aggregated remuneration of the highest paid director is GBP303,600
(2021: GBP303,600).
Staff costs
Wages and salaries
(1) 176 360
Social security costs 10 7
186 367
---- ----
(1) Excludes amounts paid for Directors' services.
The average monthly number of employees 2022 2021
during the year was: Number Number
Exploration and evaluation 14 14
Administration 3 3
17 17
-------- --------
6. Taxation
Reconciliation of the tax charge in the income statement
2022 2021
GBP000 GBP000
Loss on ordinary activities before tax (1,679) (1,874)
-------- --------
UK corporation tax @ 19% (2022) and 19%
(2021) (319) (356)
Unrecognised deferred tax assets during
the year 301 351
Non-deductible expenditure 18 5
Total tax (credit)/expense reported in - -
the income statement
-------- --------
Unrecognised deferred tax assets
2022 2021
GBP000 GBP000
Deferred tax asset
Tax losses carried forward 4,411 4,110
Impairment 891 891
Other 1 1
5,303 5,002
Less: deferred tax assets de-recognised (5,303) (5,002)
- -
-------- --------
At 30 June 2022 tax losses for which a deferred tax asset was
not recognised amounted to GBP23,216,000 (2021: GBP21,701,000).
Deferred tax assets are only recognised at UK Corporation Tax Rate
of 19% (2021: 19%) should it become more likely than not that
taxable profit or timing differences, against which they may be
deducted, will arise.
7. Loss per share
2022 2021
GBP000 GBP000
(Loss) for the year (1,679) (1,874)
--------- ----------
Thousands Thousands
Weighted average number
of shares
Basic and diluted weighted average number
of shares 151,246 121,733
(Loss) per share
Basic (pence per share) (1.1p) (1.5p)
Diluted (pence per share) (1.1p) (1.5p)
There are 9,300,000 potentially dilutive options, and 702,333
warrants along with 2,927,532 potentially dilutive shares to be
issued at 30 June 2022 which are not included in the calculation of
diluted earnings per share because they were anti -- dilutive for
the period as their conversion to Ordinary Shares would decrease
the loss per share.
8. Other Receivables
2022 2021
GBP000 GBP000
Current
Prepayments 29 9
Other receivables 7 4
Share Capital Unpaid 400 -
(1)
436 13
-------- --------
(1) The Company received full receipt of the outstanding funds
for the share subscription on 5 July 2022.
9. Intangible assets
Exploration Mineral Total
& evaluation rights
expenditure
GBP000 GBP000 GBP000
At 1 July 2020 40,480 1,147 41,627
Additions - exploration & evaluation 552 - 552
At 30 June 2021 41,032 1,147 42,179
Additions - exploration & evaluation 563 - 563
Cost and net book value at 30
June 2022 41,595 1,147 42,742
-------------- -------- -------
Cost and net book value at 30
June 2021 41,032 1,147 42,179
-------------- -------- -------
The mineral rights will be amortised over the licence period
(including extensions) once commercial production commences at the
Phulbari Coal and Power Project.
The exploration and evaluation expenditure will have an
indefinite useful life until approval is obtained for the Phulbari
Coal and Power Project. At that time, the asset will be transferred
to mining property and development assets within property, plant
and equipment in accordance with accounting policy.
10. Investments
Principal undertakings
Investments in which the Group holds 20% or more of the nominal
value of any class of share capital are as follows:
Country of Ownership interest
Incorporation 2022 2021
Subsidiaries
England and
South African Coal Limited Wales 100% 100%
Asia Energy Corporation Pty
Limited Australia 100% 100%
Asia Energy Corporation (Bangladesh)
Pty Limited Australia 100% 100%
Asia Energy (Bangladesh) Pvt
Ltd Bangladesh 100% 100%
Fair Value Through Other Comprehensive
Income
Peoples Telecommunication and
Information Services Ltd (PeoplesTel) Bangladesh 37% 37%
The investment in PeoplesTel has been accounted for as financial
asset at Fair Value Through Other Comprehensive Income as GCM does
not have significant influence. The investment was fully impaired
during the year ended 30 June 2010.
11. Payables
2022 2021
GBP000 GBP000
Trade payables 575 579
Related party accrued payable 794 843
1,369 1,422
-------- --------
Refer to note 20 for details of the related party accrued
payable.
12. Borrowings (Non-current liabilities)
2022 2021
GBP000 GBP000
Loan from related party
Balance as at 1 July 4,203 3,220
Loan instalments drawndown - 600
Interest charges 480 383
Balance as at 30 June 4,683 4,203
-------- --------
Refer to note 20 for details of the loan from related party.
The Company on 1 March 2022, as part of the completed placing
and subscriptions, amended the terms of the loan facility, such
that the lender may request conversion by the issuance of new
ordinary shares in the Company at 5.14 pence per share (being the
Issue Price) subject to any necessary regulatory approvals. All
other terms of the agreement remained unchanged.
The Company on 26 March 2021, as part of the completed placing,
extended and amended the terms of the loan facility provided by
Polo Resources Limited (the "Facility") of which, as was announced
on 7 January 2021, there is GBP300,000 of the initial GBP3.5
million facility remaining undrawn. The lender has agreed that it
will not serve a repayment request on the company for 5 years from
the date of the agreement replacing the previous provision that it
was payable on demand with 90 days' notice. The Company and Polo
Resources Limited have agreed an increase in the interest rate from
12% to 15% per annum rising by 1.5% on the third anniversary and by
a subsequent 1.5% on each anniversary thereafter. Furthermore, the
lender may request conversion by the issuance of new ordinary
shares in the Company at 7.5 pence per share (being the Issue
Price) subject to any necessary regulatory approvals. The Company
may elect to repay all or part of the outstanding loan at any time
giving 60 days' notice and with the agreement of Polo Resources
Limited. Any share issue to the Lender is conditional upon the
Lender's interest, together with the interest of any parties with
which it is in concert, remaining below 30% of the Company's issued
capital. All other principal terms of the loan facility remain
unchanged. Refer page 39 for details of Management judgement used
in accounting for the loan amendment.
13. Leases and Commitments
Right of use assets
The statement of financial position shows the following amounts
relating to leases:
2022 2021
GBP000 GBP000
Buildings 19 59
Vehicles - -
19 59
-------- --------
Lease liabilities
2022 2021
GBP000 GBP000
Classified as;
Current 27 40
Non-current 1 22
28 62
-------- --------
The interest expense incurred on lease liabilities was GBP3,000
(2021: GBP6,000), and capitialised in accordance with the Group's
policy on exploration and evaluation assets. Cash outflows in
respect of right of use assets were GBP47,000 (2021:
GBP49,000).
Other commitments
In addition, under the terms of the Prospecting License
agreement with the Bangladesh authorities for contract licence
areas B, G and H respectively, an annual fee of 500 Taka (GBP4.49
at year-end exchange rate) is payable for each hectare within the
licence area. The Group currently leases 5,480 hectares within
these licence areas. The licence has a 30 year term from 2004 and
may be renewed for further periods of 10 years each, at GCM's
option.
14. Issued share capital
Ordinary Deferred Total
Shares A Shares share
Thousands Thousands capital
GBP000
Allotted, called up
and fully paid:
At 1 July 2020 112,560 - 11,256
Shares issued 6,022 - 602
----------- ----------- ---------
Total pre capital reorganisation 118,582 - 11,858
Capital reorganisation
(see below) 118,582 118,582 -
Shares issued 19,011 - 190
At 30 June 2021 137,593 118,582 12,048
----------- ----------- ---------
Shares issued 44,712 - 447
At 30 June 2022 182,305 118,582 12,495
----------- ----------- ---------
Share issues
On 8 September 2020, 6,021,621 shares were issued to consultants
in accordance with the terms of the their agreements, at prices
from 14p to 26.5p, for a total non cash consideration of
GBP1,276,873.
On 1 April 2021, 13,446,661 shares were issued on completion of
a successful placing at a price of 7.5p, raising gross cash
proceeds of GBP1,008,500.
On 7 May 2021, 5,564,591 shares were issued to consultants in
accordance with the terms of the their agreements, at prices from
10.25p to 18p, for a total non cash consideration of
GBP661,638.
On 1 March 2022, 25,291,828 placing shares and 16,171,777
subscription shares were issued on the completion of a successful
fund raise at 5.14p per share, raising gross cash proceeds of
GBP2,130,000.
On 7 April 2022, 3,248,740 shares were issued to consultants and
a director in accordance with the terms of their agreements, at
prices from 4.25p to 18p, for total non cash consideration of
GBP402,000.
Capital reorganisation
On 25 February 2021 at the Annual General Meeting the
shareholders approved the sub-division of the existing ordinary
shares of 10p each into new ordinary shares of 1p each and deferred
A shares of 9p each. The rights attached to the new ordinary shares
are in all material aspects the same as the rights attaching to the
existing ordinary shares.
Ordinary shares have the right to receive dividends as declared
and, in the event of winding up the Company, to participate in the
proceeds from sale of all surplus assets in proportion to the
number of and amounts paid up on shares held. Ordinary shares
entitle their holder to one vote, either in person or by proxy, at
a meeting of the Company.
The Deferred Shares have no voting rights and do not carry any
entitlement to attend general meetings of the Company; nor will
they be admitted to AIM or any other market. They carry only a
priority right to participate in any return of capital to the
extent of GBP1 in aggregate over the class. In addition, they carry
only a priority right to participate in any dividend or other
distribution to the extent of GBP1 in aggregate over the class. In
each case a payment to any one holder of Deferred Shares shall
satisfy the payment required. The Company will be authorised at any
time to effect a transfer of the Deferred Shares without reference
to the holders thereof and for no consideration pursuant to and in
accordance with the Act. Accordingly, the Deferred Shares will, for
all practical purposes, be valueless and it is the Board's
intention, at an appropriate time, to have the Deferred Shares
cancelled, whether through an application to the Companies Court or
otherwise in accordance with the Act.
Reserves
Share capital
The balance held in share capital relates to the nominal net
proceeds on issue of the Company's equity share capital, comprising
GBP0.01 ordinary shares, and GBP0.09 deferred A shares.
Share premium account
The share premium account represents the premium received over
the nominal value of ordinary shares on issue of the Company's
equity. The share premium account has been reduced by expenditure
associated with issuing shares such as listing costs.
Other reserves
This reserve records the fair value of conditional shares
awarded but not settled, and consultants service payments to be
also settled by way of share issues.
2022 2021
GBP000 GBP000
Share based payments
not settled 642 583
642 583
-------- --------
15. Notes supporting statement of cashflows
Cash and cash equivalents for the purposes of the statement of
cash flows comprises:
2022 2021
GBP000 GBP000
Cash at bank available on demand 961 717
961 717
-------- --------
Non-cash transactions from financing activities are shown in the
reconciliation of liabilities from financing transactions:
Current Total
loans and
borrowings
GBP000 GBP000
Balance at 1 July 2020 3,220 3,220
Cash flows 600 600
Non-cash flows: Interest
accrued 383 383
Balance at 30 June
2021 4,203 4,203
----------- ------
Balance at 1 July 2021 4,203 4,203
Cash flows - -
Non-cash flows: Interest
accrued 480 480
Balance at 30 June
2022 4,683 4,683
----------- ------
16. Significant non-cash transactions
The significant non-cash transactions during the year were as
follows:
-- GBP414,000 of expenses were incurred by consultants for their
services. The consulting payment included GBP300,000 (2,142,857
shares at 14p per share) as payment for a retainer, and GBP114,000
(2,581,818 shares at 18p & 4.125p per share) for a second
consultant retainer. These retainer fee shares which had not been
issued to the consultants at year end have been included in other
reserves for shares to be issued.
17. Share based payments
The charge/(credit) for share based payments during the year is
shown in the following table:
2022 2021
GBP000 GBP000
Charged/(credited) to intangibles
Conditional shares 17 6
17 6
-------- --------
Share Warrants
During the year ended 30 June 2022, the Company granted 30,000
warrants to subscribe for ordinary shares (2021: 672,333). No
warrants were exercised or lapsed during the year (2021: nil). As
at 30 June 2022, 702,333 warrants were in issue (2021:
672,333).
17. Share based payments (continued)
Options
The following table illustrates the number and weighted average
exercise prices (WAEP) of, and movements in, share options during
the year.
2022 2022 2021 2021
Options WAEP Options WAEP
Thousands Thousands
At 1 July 9,300 GBP0.11 9,300 GBP0.11
Exercised during the - - - -
year
Outstanding at 30 June 9,300 GBP0.11 9,300 GBP0.11
----------- -----------
Exercisable at 30 June 9,300 GBP0.11 9,300 GBP0.11
----------- -----------
The options outstanding at 30 June 2022 have an exercise price
of GBP0.11 (2021: GBP0.11) and a weighted average contractual life
of 1.9 years (2021: 2.9 years), including those granted options
whose term was extended during the year. No options were exercised
during the year.
Conditional shares scheme
GCM has a conditional share scheme for Directors, employees,
associates, consultants and contractors. Ordinary shares will be
issued for nil cash consideration, conditional upon the Group
achieving milestones including approval by the Government of
Bangladesh of the Scheme of Development for the Phulbari Coal and
Power Project. The awards granted are classified as equity-settled,
and therefore the fair value is determined by reference to the
share price at the date of the grant, as required by IFRS 2.
Movement in non-vested conditional shares:
2022 2021
Thousands Thousands
At 1 July 210 210
Conditional shares - -
lapsed
----------- -----------
At 30 June 210 210
----------- -----------
The grant details of the conditional shares outstanding as at 30
June 2022 are as follows:
Share price Conditional
at shares
grant date Thousands
GBP
Grant date
25 August 2005 GBP6.32 40
9 March 2006 GBP4.99 30
46 July 2009 GBP0.84 140
210
------------
The cumulative cost recognised in equity in relation to the
conditional shares as at 30 June 2022 is GBP476,000 (2021:
GBP459,000) after taking into account:
-- Expected timeframe for milestones to be achieved
-- Probability of successful completion of milestones
-- The conditional shares awarded to employees are subject to
their employment at the time milestones are reached
The increase in the cost of conditional shares of GBP17,000 for
the year ended 30 June 2022 is directly attributable to the
Phulbari Coal and Power Project, and accordingly capitalised to
intangibles on this basis (2021: expensed GBP6,000).
18. Financial Instruments
The Group holds cash as a liquid resource to fund the
obligations of the Group.
The Group's strategy for managing cash is to maximise interest
income whilst ensuring its availability to match the profile of the
Group's expenditure. This is achieved by regular monitoring of
interest rates and periodic review of expenditure forecasts.
The Group has a policy of not hedging and therefore takes market
rates in respect of foreign exchange risk; however it does review
its currency exposures on a regular basis. The Group has no
significant monetary assets or liabilities that are denominated in
a foreign currency.
The financial liabilities of the Group include trade payables
and a short-term loan from a related party. Trade payables are
recognised at fair value on initial recognition and subsequently
measured at amortised cost. The short-term loan was recognised
based on the present value of cash payable to the lender. As the
short-term loan is payable within 12 months, the present value of
the cash payable was equal to the principal value of the loan.
Interest rate risk
The interest rate maturity profile of the financial assets of
the Group is as follows:
2022 2021
GBP000 GBP000
Floating rate - within
1 year
Cash and cash equivalents - -
-------- --------
Other interest bearing financial instruments which are subject
to fixed rate interest charges are the Group's borrowings as
disclosed in Note 12.
Other financial instruments of the Group which are non-interest
bearing and are therefore not subject to interest rate risk, are,
non-interest-bearing cash and cash equivalents as at 30 June 2022
was GBP961,000 (2021: GBP717,000).
Credit risk
The Group considers the credit ratings of banks in which it
holds funds in order to manage exposure to credit risk and
counterparty risk. Funds are held in banks with credit ratings
ranging from AAA -AA. The maximum credit risk at 30 June 2022 was
as follows:
2022 2021
GBP000 GBP000
Cash and cash equivalents 961 717
-------- --------
Liquidity risk
The Group ensures that it has sufficient cash to meet all its
commitments when required, through equity and short term loan
funding, please refer to the accounting policiesfor further detail.
The table below summarises the contractual maturity profile of the
Group's financial liabilities as at 30 June 2022 and 2021.
Within 1 to 3 3 to 12 2 - 5 years Total &
30 days months months Carrying
GBP000 GBP000 GBP000 GBP000 value
GBP000
2022
Payables 1,296 1 72 - 1,369
Lease liabilities 3 9 15 1 28
Borrowings - - - 4,683 4,683
--------- -------- -------- ------------ ----------
1,299 10 87 4,684 6,080
--------- -------- -------- ------------ ----------
2021
Payables 1,281 86 55 - 1,422
Lease liabilities 3 7 30 22 62
Borrowings - - - 4,203 4,203
--------- -------- -------- ------------ ----------
1,284 93 85 4,225 5,687
--------- -------- -------- ------------ ----------
Currency risk
The Group has no significant monetary assets or liabilities that
are denominated in a foreign currency.
Fair values of financial assets and liabilities
Financial Book value Fair value
instrument
classification
2022 2021 2022 2021
GBP000 GBP000 GBP000 GBP000
Financial assets
Cash and cash equivalents Amortised cost 961 717 961 717
Receivables Amortised cost 436 13 436 13
Financial liabilities
Creditors Amortised cost 1,369 1,422 1,369 1,422
Borrowings Amortised cost 4,683 4,203 4,683 4,203
Management have assessed that the fair value of cash, current
receivables and current payables approximate their carrying amounts
due to the short-term maturities of these instruments.
19. Contingent liabilities
Royalty
The Group is obliged to pay Deepgreen Minerals Corporation Pty
Limited US$1 per tonne of coal produced and sold from the Phulbari
mine. The Directors are of the opinion that a provision is not
required in respect of these matters, as coal has not yet been
produced at Phulbari.
Consultant success fees
The Group is obliged to pay a consultant, DG Infratech PTE.
Limited, success fees conditional upon achieving key milestones
relating to the advancement of the proposed Phulbari Coal and Power
Project, in North-West Bangladesh. As at 30 June 2022 the
outstanding milestones were as follows:
Success Fee - Coal Project's Scheme of Development
-- a one-time fee equal to 5% of Issued Capital, to be paid
within five business days following GCM'S receipt of the written
approval of the Coal Project's Scheme of Development.
Success Fee - Power Plants
-- a one-time fee equal to 2% of Issued Capital, to be paid
within five business days following GCM'S receipt of the written
approval in respect of each group of Power Plants.
Success Fee - Commencement of Development
-- a one-time fee equal to 4% of Issued Capital, to be paid
within five business days following GCM'S commencement of
development of the Coal Project.
The Directors are of the opinion that a provision is not
required in respect of these success fees, as the milestones had
not been met as at 30 June 2022.
20. Related Party Transactions
Key management personnel
2022 2021
GBP000 GBP000
Short-term benefits 643 651
Share based payments 39 1
682 652
-------- --------
Related party loan
GCM is beneficiary to a GBP3.5 million loan facility from its
largest shareholder, with a current interest rate of 15% per annum.
As at 30 June 2022 the Group had utilised GBP3.2 million of the
loan facility (2021: GBP3,200,000) and an interest accrual of
GBP1,483,000 (2021: GBP1,003,000). The terms of the loan were
amended in March 2022 & March 2021, refer to note 12 of the
Company Financial Statements. . Note Polo Resources Ltd is a
related party by way of Michael Tang being a Director of both
Companies.
Management services company
As disclosed in the Directors Report, for the year ended 30 June
2022, the remuneration for the services of Datuk Michael Tang PJN,
Executive Chairman of the Company, was GBP303,600, which comprised
of directors fees amounting to GBP6,000 (2021: GBP6,000) and
management services of GBP297,600 paid to a management services
company (2021: GBP297,600).
For the period September 2018 to March 2021 Datuk Michael Tang
PJN offered to defer the payments due to his management services
company until further notice in order to assist the Company. The
total debt as a result of the deferment of GBP769,000 has not been
paid and is being accrued accordingly
As at 30 June 2022 the amount owing to the management services
company of Datuk Michael Tang PJN was GBP793,000 (2021:
GBP843,000).
21. Events after the end of the reporting period
The following events took place subsequent to 30 June 2022, for
which there has been no adjustment to the 30 June 2022 financial
statements:
- On 22 August 2022, the Company agreed to a further extension
of the consultancy agreement (the "Consultancy Agreement") with DG
Infratech Pte Ltd, a Bangladeshi controlled company ("DGI" or the
"Consultant"), for an additional two years, on similar terms as
previously contracted.
- On 12 December 2022, the Company announced that the MOU with
PowerChina, focused on coal mine development, has been extended for
a further 12-months to 6 December 2023.
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December 19, 2022 08:59 ET (13:59 GMT)
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