Announcements 2007
Annual Report and Accounts
23 March 2007
Further to the announcement on 7 March 2007 of the Company's unaudited results for the period ended December 2006 (the "Period"), the Company has today posted to shareholders its audited report and accounts for the Period. The financial statements and full notes as set out in the accounts are reproduced below. Copies are available from the Company's website and the Company's registered office being 22 Arlington Street, London, SW1A 1RD.
Group Income Statement
for the period ended 31 December 2006
| Notes | Period 11 August 2005 to 31 December 2006 £'000 |
|
|---|---|---|
| Turnover | - | |
| Administrative expenses | (889) | |
| Share options expensed | 5, 14 | (2,258) |
| Group operating loss | 3 | (3,147) |
| Interest receivable | 7 | 505 |
| Loss on ordinary activities before taxation | 2 | (2,642) |
| Income tax expense | 4 | - |
| Loss on ordinary activities after taxation | (2,642) | |
| Retained loss for the period ended 31 December 2006 attributable to members of the parent Company | (2,642) | |
| Loss per share | Pence | |
| -Basic | 6 | (1.17) |
All of the operations are considered to be continuing.
Statement of Recognised Gains and Losses
for the period ended 31st December 2006
| Notes | Period 11 August 2005 to 31 December 2006 £'000 |
|
|---|---|---|
| Loss for the financial period | (2,642) | |
| Currency translation difference | (47) | |
| Total recognised gains and losses for the period | (2,689) |
Group Balance Sheet
At 31st December 2006
| Notes | 31 Dec 2006 £'000 |
31 Dec 2006 £'000 |
|
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Intangible Assets | 8 | 2,240 | |
| Tangible Assests | 9 | 7,578 | 9,818 |
| CURRENT ASSETS | |||
| Cash and cash equivalents | 15 | 16,615 | |
| Trade and other receivables | 11 | 475 | |
| Total Current Assets | 17,090 | ||
| TOTAL ASSETS | 26,908 | ||
| LIABILITIES | |||
| Current liabilities | |||
| Trade and other payables | 12 | (192) | |
| TOTAL LIABILITIES | (192) | ||
| NET ASSETS | 26,716 | ||
| EQUITY | |||
| Called up share capital | 13 | 465 | |
| Share premium | 19,535 | ||
| Retained earnings | (2,642) | ||
| Merger Reserve | 7,033 | ||
| Foreign Exchange Reserve | (47) | ||
| Share based payments reserve | 14 | 2,372 | |
| TOTAL EQUITY | 26,647 |
These financial statements were approved by the Board of Directors on 22 March 2007 and signed on its behalf by:
Donald Strang Director
Kiran Morzaria Director
Company Balance Sheet
At 31st December 2006
| Notes | 31 Dec 2006 £'000 |
31 Dec 2006 £'000 |
|
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Investment in subsidiaries | 10 | 4 | |
| Trade and other receivables | 11 | 10,275 | 10,279 |
| CURRENT ASSETS | |||
| Cash and cash equivalents | 16,608 | ||
| Trade and other receivables | 11 | 91 | |
| Total Current Assets | 16,699 | ||
| TOTAL ASSETS | 26,978 | ||
| LIABILITIES | |||
| Current liabilities | |||
| Trade and other payables | (147) | ||
| TOTAL LIABILITIES | (147) | ||
| NET ASSETS | 26,831 | ||
| EQUITY | |||
| Called up share capital | 13 | 465 | |
| Share premium | 19,535 | ||
| Merger Reserve | 7,033 | ||
| Share based payments reserve | 2,372 | ||
| Retained earnings | 22 | (2,574) | |
| TOTAL EQUITY | 26,831 |
These financial statements were approved by the Board of Directors on 22 March 2007 and signed on its behalf by:
Donald Strang Director
Kiran Morzaria Director
Group Cash Flow Statement
for the period ended 31 December 2006
| Notes | Period 11 August 2005 to 31 December 2006 £'000 |
|
|---|---|---|
| Cash flows from operating activities | ||
| Operating Loss | (3,147) | |
| (Increase) in trade and other receivables | (475) | |
| Increase in trade and other payables | 192 | |
| Foreign exchange translation | (47) | |
| Share options expensed | 2,258 | |
| Net cash outflow from operating activities | (1,219) | |
| Cash flows from investing activities |
|
|
| Interest Received | 505 | |
| Net cash inflow from investing activites | 505 | |
| Cash flows from investing activities | ||
| Payments to acquire intangible assets | (623) | |
| Payments to acquire tangible assets | (327) | |
| Net cash outflow from in investing activities | (949) | |
| Acquisitions and disposals | ||
| Payments to acquire subsidiaries | (267) | |
| Net cash outflow from acquisitions and disposals | (267) | |
| Cash flows from financing activities | ||
| Issue of ordinary share capital | 19,311 | |
| Share issue costs (766) | ||
| Net cash inflow from financing activities | 18,545 | |
| Net increase in cash and cash equivalents | 16,615 | |
| Cash and cash equivalents at beginning of period | - | |
| Cash and cash equivalents at end of period | 15 | 16,615 |
Statement of Changes in Equity
For the period ended 31 December 2006
| Group | Called Up Share Capital £000's |
Share Premium Reserve £000's |
Merger Reserve £000's |
Foreign Currency Translation Reserve £000's |
Share Based payment Reserve £000's |
Retained Earnings £000's |
Total Equity £000's |
|---|---|---|---|---|---|---|---|
| As at 11 August 2005 | - | - | - | - | - | - | - |
| Share capital issued | 465 | 20,580 | - | - | - | - | 21,045 |
| Cost of share issue | - | (1,045) | - | - | - | - | (1,045) |
| Merger reserve arising on acquisition of subsidiary | - | - | 7,033 | - | - | - | 7,033 |
| Loss for the year | - | - | - | - | (2,642) | (2,642) | |
| Share based payments | - | - | - | - | 2,372 | - | 2,372 |
| Currency translation differences | - | - | - | (47) | - | - | (47) |
| As at 31 December 2006 | 465 | (19,535) | 7,033 | (124) | 2,372 | (2,747) | 25,647 |
| Company | |||||||
| As at 11 August 2005 | - | - | - | - | - | - | - |
| Share capital issued | 465 | 20,580 | - | - | - | - | 21,045 |
| Cost of share issue | - | (1,045) | - | - | - | - | (1,045) |
| Merger reserve arising on acquisition of subsidiary | - | - | 7,033 | - | - | - | 7,033 |
| Loss for the year | - | - | - | - | - | (2,547) | (2,547) |
| Share based payments | - | - | - | - | 2,372 | - | 2,372 |
| Currency translation differences | - | - | - | - | - | - | - |
| As at 31 December 2006 | 465 | 19,535 | 7,033 | - | 2,372 | (2,547) | 26,831 |
Notes to the Financial Statements
for the period ended 31 December 2006
1 Summary of Significant Accounting Policies
(a)Authorisation of financial statements
The Group financial statements of Brinkley Mining Plc for the period ended 31 December 2006 were authorised for issue by the Board on 22 March 2007 and the balance sheets signed on the Board's behalf by Mr. Gerard Holden and Mr. Donald Strang. The Company is a public limited Company and was incorporated on 11 August 2005 in England & Wales under the Companies Act 1985. The Company's ordinary shares are traded on the AIM Market operated by the London Stock Exchange.
(b) Statement of compliance with IFRS
The Group's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). The Company's financial statements have been prepared in accordance with IFRS as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 1985. The principal accounting policies adopted by the Group and Company are set out below.
(b) Basis of Preparation
The group's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs). The consolidated financial statements have been prepared on the historical cost basis, except for the measurement to fair value of assets and financial instruments as described in the accounting policies below, and on a going concern bases. The financial report is presented in Sterling and all values are rounded to the nearest thousand pounds (£'000) unless otherwise stated.
(c) Basis of preparation
The consolidated financial statements have been prepared on the historical cost basis, except for the measurement to fair value of assets and financial instruments as described in the accounting policies below, and on a going concern basis. The financial report is presented in Sterling and all values are rounded to the nearest thousand pounds (£'000) unless otherwise stated.
(d) Basis of consolidation
The consolidated financial information incorporates the results of the Company and its subsidiaries ("the Group") using the purchase method. In the consolidated balance sheet, the acquiree's identifiable assets, liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated income statement from the date on which control is obtained. Inter-company transactions and balances between Group companies are eliminated in full. Minority interests represent the portion of profit or loss and net assets in subsidiaries that are not held by the Group and are presented separately in the income statement and within equity in the consolidated balance sheet.
(e) Revenue
The Group had no revenue during the period ending 31 December 2006.
(f) Foreign currencies
The Company's functional currency is Sterling (£). Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. As at the reporting date the assets and liabilities of these subsidiaries are translated into the presentation currency of Brinkley Mining Plc at the rate of exchange ruling at the balance sheet date and their income statements are translated at the average exchange rate for the year. The exchange differences arising on the translation are taken directly to a separate component of equity.
All other differences are taken to the income statement with the exception of differences on foreign currency borrowings, which, to the extent that they are used to finance or provide a hedge against foreign equity investments, are taken directly to reserves to the extent of the exchange difference arising on the net investment in these enterprises. Tax charges or credits that are directly and solely attributable to such exchange differences are also taken to reserves. Goodwill and intangible assets
(g) Intangible assets are recorded at cost less eventual amortisation and provision for impairment in value.
Goodwill on consolidation is capitalised and shown within fixed assets. Positive goodwill is subject to an annual impairment review, and negative goodwill is immediately written-off to the income statement when it arises.
(h) Exploration and development costs
Exploration and development costs are carried forward in respect of areas of interest where the consolidated entity's rights to tenure are current and where these costs are expected to be recouped through successful development and exploration, or by sale. Alternatively, these costs are carried forward while active and significant operations are continuing in relation to the areas of interest and it is too early to make reasonable assessment of the existence or otherwise of economically recoverable reserves. When the area of interest is abandoned, exploration and evaluation costs previously capitalised are written off to the Income Statement.
In accordance with the full cost method, all costs associated with mining development and investment are capitalised on a project-by-project basis pending determination of the feasibility of the project. Costs incurred include appropriate technical and administrative expenses but not general overheads. If a mining development project is successful, the related expenditures will be written-off over the estimated life of the commercial ore reserves on a unit of production basis. Impairment reviews will be carried out regularly by the Directors of the Company. Where a project is abandoned, or is considered to be of no further commercial value to the Company, the related costs will be written off. The recoverability of deferred mining costs and mining interests is dependent upon the discovery of economically recoverable reserves, the ability of the Group to obtain necessary financing to complete the development of reserves and future profitable production or proceeds from the disposition of recoverable reserves.
(i) Significant accounting judgments, estimates and assumptions
(i) Significant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period are:
(ii) Impairment of goodwill and intangibles with indefinite useful lives The Group determines whether goodwill and intangibles with indefinite useful lives are impaired at least on an annual basis. This requires an estimation of the recoverable amount of the cash-generating units to which the goodwill and intangibles with indefinite useful lives are allocated. (iii) Share-based payment transactions The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined using a Black-Scholes model.
(j) Finance costs/revenue
Borrowing costs are recognised as an expense when incurred.
Finance revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.
(k) Cash and cash equivalents
Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less.
For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.
(l) Trade and other receivables
Trade receivables, which generally have 30 day terms, are recognised and carried at original invoice amount less an allowance for any uncollectible amounts.
An allowance for doubtful debts is made when there is objective evidence that the Group will not be able to collect the debts. Bad debts are written off when identified.
(m) Investments
Investments in subsidiary undertakings are stated at cost less any provision for impairment in value, prior to their elimination on consolidation.
(n) Financial instruments
The Group's financial instruments, other than its investments, comprise cash and items arising directly from its operation such as trade debtors and trade creditors. The Group has overseas subsidiaries in Cyprus, South Africa and Seychelles whose expenses are denominated in Sterling, South African Rand and US Dollars respectively. Market price risk is inherent in the Group's activities and is accepted as such.
There is no material difference between the book value and fair value of the Group's cash.
(o) Deferred taxation
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the tax computations, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case it is also dealt with in equity.
(p) Merger reserve
The difference between the fair value of an acquisition and the nominal value of the shares allotted in a share exchange have been credited to a merger reserve account, in accordance with the merger relief provisions of the Companies Act 1985 and accordingly no share premium for such transactions is set-up.
(q) Property, plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Land is measured at fair value less any impairment losses recognised after the date of revaluation.
Depreciation is provided on all tangible assets to write off the cost less estimated residual value of each asset over its expected useful economic life on a straight-line basis at the following annual rates: Land (including option costs) - Nil
Plant and Equipment - between 5% and 25%
All assets are subject to annual impairment reviews.
(r) Impairment of assets
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 its 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 and the asset's value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit 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 relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease).
An assessment is also 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 the Income Statement unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. 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.
(s) Trade and other payables
Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services.
(t) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability.
(u) Share-based payment transactions
(i) Equity settled transactions:
The Group provides benefits to employees (including senior executives) of the Group in the form of share-based payments, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions).
The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using a Black-Scholes model.
In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Brinkley Mining Plc (market conditions) if applicable.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the vesting period).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the Group's best estimate of the number of equity instruments that will ultimately vest. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. The Income Statement charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a market condition.
If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any modification that increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification. If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share (see Note 6).
(v) Earnings per share
Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element.
Diluted earnings per share is calculated as net profit attributable to members of the parent, adjusted for:
- costs of servicing equity (other than dividends) and preference share dividends;
- the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and
- other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.
2 Turnover and segmental analysis
The Group had no turnover during the period.
By geographical area United South Africa Democratic Cyprus Total
Kingdom Republic of
Congo
£ 000's £ 000's £ 000's £ 000's £ 000's
Operating loss for the period 2,574 54 8 6 2,642
ended 31 December 2006
Other segment information
Segment assets 16,700 8,356 1,852 - 26,908
3 Operating loss
Operating loss is arrived at £ 000's
after charging:
Auditors' remuneration - audit 35
Auditors' remuneration - non 5
audit services
Directors' emoluments - fees 304
and salaries
Directors' emoluments - share 2,258
based payments
Auditor's remuneration for non-audit services provided during the period amounting to £5,000 relates to the provision of taxation services. A further charge of £15,000 relates to the provision of an accountants report for the purposes of the Company's AIM Admission Document and was charged to the share premium account.
Auditor's remuneration for audit services above includes £5,000 charged by MGI Gregoriou & Co Certified Public Accountants (Cyprus), £1,000 charged by P.G Economides & Co Limited Chartered Certified Accountants and £14,000 charged by Moores Stephens MWM Inc. Chartered Accountants (S.A.) relating to the audit of the subsidiary companies.
4 Taxation
Analysis of charge in period £ 000's
Tax on ordinary activities -
No taxation has been provided due to losses in the period
Factors affecting the tax charge for the period
£ 000's
Loss on ordinary activities before tax (2,642)
Standard rate of corporation tax in the UK 30%
£ 000's
Loss on ordinary activities multiplied by the
standard rate of corporation tax
(793)
Effects of:
Non deductible expenses 6
Future tax benefit not brought to account 787
Current tax charge for period -
No deferred tax asset has been recognised because there is insufficient evidence of the timing of suitable future profits against which they can be recovered.
5 Directors' emoluments
£ 000's
Directors' remuneration 2,562
Directors Consultancy Options Total
Fees Fees
£ 000's £ 000's £ 000's £ 000's
Executive Directors
Gerard Holden 59 - 748 807
Donald Strang (*) 18 46 449 513
Clayton Dodd 33 - 224 257
Alan Thom 114 - 475 589
Non-Executive Directors
Zodwa Manase 14 - 287 301
Kiran Morzaria 18 - 75 93
Tim Wall 2 - - 2
258 46 2,258 2,562
(*): Consulting services provided by Isona Services Limited No pension benefits are provided for any Director.
6 Loss per share
The Loss for the period attributed to shareholders is £2.6 million. This is divided by the weighted average number of Ordinary shares outstanding calculated to be 225.9 million to give a basic loss per share of 1.17 pence. As inclusion of the potential Ordinary shares would result in a decrease in the loss per share they are considered to be anti-dilutive, as such, a diluted earnings per share is not included.
7 Finance revenue
£ 000's Bank interest receivable 505
8 Intangible assets
Group £ 000's
Cost
Additions 2,240
At 31 December 2006 2,240
The cost is analysed as follows;
£ 000's
Deferred exploration 623
expenditure
Commercial rights 1,617
Impairment Review
At 31 December 2006, the Directors have carried out an impairment review and confirmed that no provision is required.
9 Tangible assets
Plant and Land Total
equipment
Group £ 000's £ 000's £ 000's
Cost
Additions 68 7,511 7,578
At 31 December 2006 68 7,511 7,578
No depreciation has been charged during the period as the plant and equipment were only purchased at period end.
10 Investment in subsidiaries
Shares in
Group
undertakings
Company £ 000's
Cost -
Additions during the period 4
At 31 December 2006 4
The parent company of the Group holds more than 20% of the share capital of the following companies:
Country of Proportion Nature of
Company Registration held business
Direct
Brinkley Mining Ltd Cyprus 100% Holding
Company
Brinkley Mining Project 1 Ltd Cyprus 100% Holding
Company
Brinkley Mining Project 3 Ltd Cyprus 100% Holding
Company
Indirect
Via Brinkley Mining Ltd
Western Uranium (Pty) Ltd South Africa 49% Mineral
Exploration
Brinkley Mining South Africa South Africa 100% Land Holdings
(Pty) Ltd and Options
Brinkley Mining South Africa South Africa 100%
Project 1 (Pty) Ltd Shell Company
Via Brinkley Mining Project 1
Ltd
Brinkley Mining Project 2 Ltd Cyprus 100% Holding
Company
Seychelles 70% Mineral
Exploration
Brinkley Africa Ltd
Via Brinkley Mining Project 3
Ltd
Brinkley Mining Project 4 Ltd Cyprus 100% Holding
Company
11 Trade and other receivables
Group Company
£ 000's £ 000's
Current trade and other receivables
VAT receivable 148 57
Prepayments 327 34
Total 475 91
Non Current trade and other receivables
Loans due from subsidiaries - 10,275
The loans from subsidiaries are interest free and have no fixed repayment date. 12 Trade and other payables
Group Company
£ 000's £ 000's
Current trade and other payables:
Accruals 192 147
13 Share capital
Authorised £ 000's
1,000,000,000 Ordinary shares of 0.15p each 1,500
Called up, allotted, issued and fully paid Number of Nominal value
shares £000's
Incorporation 2 -
August 2005 for cash at 0.15p per share 19,999,998 30
August 2005 for cash at 2p per share 16,250,000 24
November 2005 for cash at 5p per share 19,360,000 29
145,000,000 218
November 2005 - non cash to acquire Uranium
Holdings (Pty)Ltd at 5p per share
December 2005 for cash at 5p per share 22,350,000 34
January 2006 for cash at 5p per share 2,300,000 3
May 2006 for cash at 20p per share 75,347,770 113
May 2006 - non cash in lieu of commissions 734,888 1
at 20p per share
May 2006 for cash at 50p per share 3,371,514 5
May 2006 - non cash in lieu of commissions 37,076 -
at 50p per share
November 2006 - non cash to acquire 70 % of 5,000,000 8
Brinkley Africa Limited at 0.15p per share
As at 31 December 2006 309,751,248 465
Total share options in issue
During the period, 30,000,000 options were issued.
As at 31 December 2006 the options in issue were;
Exercise Price Expiry Date Options in Issue
31 December 2006
50p 5 June 2011 20,000,000
50p 27 June 2011 6,000,000
50p 13 September 2011 4,000,000
30,000,000
No options lapsed or were cancelled and no options were exercised during the period.
Total warrants in issue
During the period; 1,523,756 warrants were issued.
No warrants lapsed, or were cancelled and no warrants were exercised during the period.
As at 31 December 2006, there were 1,523,756 on issue to subscribe for Ordinary shares at 50p expiring on 5 June 2011. All warrants are currently exercisable.
Contingent share issues
Share issue to Blue Nightingale 709 (Pty) Ltd ("Blue Nightingale")
As per the Uranium Projects Agreement dated 10 November 2006 between Brinkley Mining Ltd and Blue Nightingale each party undertakes in favour of each other a right of first refusal with reference to the introduction of uranium projects and opportunities identified by or introduced to them in South Africa. In consideration, Brinkley Mining Ltd will issue 6 million fully paid ordinary shares in Brinkley Mining Plc to Blue Nightingale. These shares will be subject to a 12 month lock-in arrangement and will be issued 20 days after Blue Nightingale has obtained approval of this arrangement from the Reserve Bank of South Africa.
Share issue to Summer Days Trading 3 (Pty) Ltd ("Summer Days")
As per the Compensation and Settlement Agreement dated 13 November 2006 between Brinkley Mining Ltd and Summer Days. Brinkley Mining Ltd has agreed to issue 6.5 million fully paid ordinary shares in Brinkley Mining Plc to Summer Days in recognition of Summer Days contribution in the process of applying for and receiving prospecting rights. These shares will be subject to a 12 month lock-in arrangement and will be issued 20 days after Summer Days has obtained approval of this arrangement from the Reserve Bank of South Africa.
14 Share based payment arrangements
Share options
During the period, the Company established an employee share option plan to enable the issue of options as part of remuneration of key management personnel and Directors to enable the purchase of shares in the entity. Options are granted under the plan for no consideration. Options are granted for a five year period. There are no vesting conditions associated with the options. Options granted under the plan carry no dividend or voting rights.
Under IFRS 2 'Share Based Payments', the Company determines the fair value of options issued to Directors and Employees as remuneration and recognises the amount as an expense in the income statement with a corresponding increase in equity.
Name Date Granted/ Number Exercise Expiry Date Fair Value Fair Value
Vested Price at Grant after discount
(pence) Date (pence)
(pence)
Gerard 5 June 2006 10,000,000 50 5 June 2011 14.97 7.49
Holden
Clayton Dodd 5 June 2006 3,000,000 50 5 June 2011 14.97 7.49
Donald 5 June 2006 6,000,000 50 5 June 2011 14.97 7.49
Strang
Kiran 5 June 2006 1,000,000 50 5 June 2011 14.97 7.49
Morzaria
Alan Thom 27 June 2006 6,000,000 50 27 June 2011 7.91 -
Zodwa Manase 13 September 4,000,000 50 13 September 7.17 -
2006 2011
Totals 30,000,000
The fair value of the options vested during the period was £2.258 million. The assessed fair value at grant date is determined using the Black-Scholes Model that takes into account the exercise price, the term of the option, the share price at grant date, the expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.
The following table lists the inputs to the model used for the period ended 31 December 2006:
Dividend Yield (%) - Expected Volatility (%) 60 Risk-free interest rate (%) 4.80 Share price at grant date (£) 0.33
The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may, not necessarily be the actual outcome. A discount factor of 50% has been applied to the value of the options that were granted on 5 June 2006 (date of admission to AIM ) as the shares had only been listed for one day and thus the factors involved in the estimation of the option price are largely unknown.
14 Share based payment arrangements continued
Warrants
A warrant to subscribe for 0.5 per cent of the issued capital of the Company immediately following admission to AIM at 50p per share was granted to Beaumont Cornish Limited. The warrant is exercisable at any time, in whole or in part up to 5 years after the admission to AIM (5th June 2011). The warrants expense was charged to share issue costs with a corresponding increase in equity.
Name Date Number Exercise Expiry Fair Fair Granted Price Date Value Value (pence) at Grant after Date discount (pence) (pence) Beaumont 5 June Cornish Limited 2006 1,523,756 50 5 June 2011 14.97 7.49
The fair value of the warrants vested during the period was £0.113 million. The assessed fair value at grant date is determined using the Black-Scholes Model that takes into account the exercise price, the term of the warrant, the share price at grant date, the expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the warrant.
The same inputs were used in the model for the warrant valuation as those used for the options valuation. A 50% discount factor was also applied to the warrants as they were also granted on 5 June 2006 (date of admission to AIM).
15 Analysis of changes in net funds
£ 000's
Balance at beginning of period -
Change during the period 16,615
Balance at the end of the period 16,615
16 Financial instruments
The Group uses financial instruments comprising cash, liquid resources and debtors/creditors that arise from its operations. The Group holds cash as a liquid resource to fund the obligations of the Group. The Group's cash balances are held in Sterling and in South African Rands. 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 monthly review of expenditure forecasts.
The Company 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 an ad hoc basis. Currency exposures relating to monetary assets held by foreign operations are included within the foreign exchange reserve in the Group Balance Sheet.
The Group considers the credit ratings of banks in which it holds funds in order to reduce exposure to credit risk.
To date the Group has relied upon equity funding to finance operations. The Directors are confident that adequate cash resources exist to finance operations to commercial exploitation but controls over expenditure are carefully managed.
16 Financial instruments continued
The net fair value of financial assets and liabilities approximates the carrying values disclosed in the financial statements. The currency and interest rate profile of the financial assets is as follows:
Cash and short term deposits
£ 000's
Sterling 16,608
South African Rand 7
At 31 December 2006 16,615
The financial assets comprise cash balances in interest earning
bank accounts at call. The financial assets in Sterling currently
earn interest at the base rate set by the Bank of England less
0.15%
17 Material non-cash transactions
In November 2005, the Company issued 145 million Ordinary shares at 5p each to the vendors in consideration for the acquisition of Uranium Holdings (Pty) Ltd (parent of Western Uranium (Pty) Ltd).
In May 2006, in-lieu of commission for raising for funds for the Companies listing on AIM, Max Capital received 734,888 Ordinary shares in the Company at 20p each and 37,076 Ordinary shares in the Company at 50p each.
On 27 November 2006, the Company issued 5 million Ordinary shares at 0.15p each (nominal value) to the vendors in consideration for the acquisition of 70% of Brinkley Africa Limited.
18 Commitments
As at 31 December 2006, the Company had entered into the following material commitments:
Exploration commitments
Ongoing exploration expenditure is required to maintain title to the Group's mineral exploration permits. No provision has been made in the financial statements for these amounts as the expenditure is expected to be fulfilled in the normal course of the operations of the Group.
19 Business combinations
Acquisition of Western Uranium (Pty) Ltd ("Western Uranium")
On 29 November 2005, the Company acquired the entire share capital of Uranium Holdings Pty Ltd ("Uranium Holdings") for a consideration of £7,250,000 comprising 145 million ordinary shares in the Company issued at 5p each.
The fair value of the net assets of Uranium Holdings has been assessed and adjustments from book value have been made where necessary.
Uranium Holdings owned at the date of acquisition 80 per cent of the share capital of Western Uranium, its main asset. The remaining 20% of the share capital of Western Uranium was held by the Group. Uranium Holdings did not trade prior to its acquisition.
Uranium Fair Value Fair Value
Holdings Adjustments on
(Group) acquisition
(Book Value)
£ 000's £ 000's £ 000's
Fixed assets
Tangible 261 7,250 7,511
Investments - - -
Current assets
Debtors - - -
Total assets 261 7,250 7,511
Creditors 261 - 261
- 7,250 7,250
Consideration for acquisition £ 000's
Purchase of 80% holding in Western 7,250
Uranium by Issue of 145 million
Ordinary Shares at 5p each
Purchase of 20% holding in Western -
Uranium for cash by Brinkley Mining Plc
Total consideration 7,250
Fair value of net assets acquired 7,250
(above)
Goodwill arising on acquisition -
On 13 November 2006, the holding in Western Uranium held by Uranium Holdings was transferred to Brinkley Mining Limited (a wholly owned subsidiary). This was as a result of an internal group restructure.
19 Business combinations continued
Reduction in interest in Western Uranium by 26% to Blue Nightingale
On 25 May 2006, the Company, through its wholly owned subsidiary Brinkley Mining Limited, concluded an agreement with Blue Nightingale and Western Uranium to provide for participation in the Prospects by Blue Nightingale as a shareholder in accordance with, and to provide for a discharge of, the Company's obligations under the Black Economic Empowerment ("BEE") legislation with reference to and for the benefit and economic empowerment of Historically Disadvantaged South Africans ("HSDA"). Pursuant to this agreement, Blue Nightingale have subscribed for 26 per cent of the issued share capital of Western Uranium at par value, leaving the Company with a total holding of 74%.
Reduction in interest in Western Uranium by 25% to Summer Days
On 17 November 2006, the Company through its wholly owned subsidiary Brinkley Mining Limited, concluded an agreement with Blue Nightingale and Summer Days and Western Uranium to provide for participation in the Prospects by Blue Nightingale and Summer Days as Shareholders in accordance with, and to provide for the discharge of the obligations of the Company in terms of, the Act and the Mining Charter with reference to and for the benefit and economic empowerment of HDSA and regulate the rights and obligations of Shareholders and to provide for the management and control of the Company. Pursuant to this agreement, Summer Days have subscribed for 25 per cent of the issued share capital of Western Uranium at par value, leaving the Company with a total holding of 49%. In addition, a further 1 per cent of the issued share capital of Western Uranium was transferred from Blue Nightingale to Summer Days.
Impairment review
The Groups' interest in Western Uranium has been diluted over the period, however the Directors have carried out an impairment review of the investment and have confirmed that the fair value of the net assets assessed after the acquisition of the entire share capital of Uranium Holdings and the subsequent transfer of its holding in Western Uranium to Brinkley Mining Ltd (parent of Western Uranium) is still an appropriate value for the current interest held by the Group at 31 December 2006.
Acquisition of Brinkley Africa Ltd ("Brinkley Africa")
On 27 November 2006, Brinkley Mining Project 2 Ltd (indirect subsidiary of Brinkley Mining Plc) acquired 70% of a Company called Brinkley Africa. The key asset in Brinkley Africa is an agreement with the Le Commissariat General a L'Energie Atomique (CGEA). Under the terms of the agreement Brinkley Africa is the CGEA's partner for the development of the uranium resources in the Democratic Republic of Congo ("DRC") as well as assisting the CGEA to comply with its obligations under national law and International Treaties. Brinkley Africa has a first right of refusal and the right to choose partnerships with the CGEA for the exploration and development of any uranium projects in the DRC.
Brinkley Fair Value Fair Value on
Africa Adjustment(*) acquisition
(Book Value)
£ 000's £ 000's £ 000's
- 1,617 1,617
19 Business combinations continued
£ 000's
Consideration for acquisition
Issue of 5 million ordinary shares of 1,350
Brinkley Mining Plc with a
market value of 27p each
Cash of USD 500,000 267
Total Consideration 1,617
Fair value of net assets 1,617
acquired
Goodwill arising on acquisition -
20 Related party transactions
During the period, the Company paid consultancy fees of £45,500 to Isona Services Limited, a Company related to Donald Strang, Director of Brinkley Mining Plc. This amount was paid under a management services agreement dated 30th May 2006.
In November 2005, the Company acquired Uranium Holdings Pty Ltd from Atomaer Holdings Pty Ltd in which Clayton Dodd is an alternative Director.
21 Post balance sheet events
On 22 January 2007, Mr Alan Thom, the Chief Operating Officer and an Executive Director of the Company, resigned from these positions. On the same date, the Company announced the appointment of Mr Ralph Bagirathi as Chief Executive Africa.
On 26 January 2007, the Company issued 3 million options to staff to subscribe for ordinary shares in the Company at an exercise price of 25p per ordinary share, with a term of 5 years from the date of this announcement. The options will vest to the staff on the first anniversary of their employment with the Group.
On 13 February 2007, Brinkley Mining Plc through its associate Company, Western Uranium (Pty) Limited ("Western Uranium"), executed and notarised the prospecting rights which were granted over the areas in Waterval and Rietkuil previously announced by the Company on 13 October 2006.
Additionally the area called remainder of Krugel's claim 459 was executed and notarised.
In February 2007, Brinkley Africa entered into an addendum to the original Memorandum of Understanding with the CGEA which provides for the parties to incorporate a new Company in the DRC. This new Company is to be called Societe d'Inspection des Matieres Nucleaires et des Substances Radioactive ("SOCIMAR"). Brinkley Africa will have Board control of SOCIMAR and an approximate 40% economic interest. SOCIMAR is mandated by CGEA to conduct radiation testing and certification of export materials with a view to implementing proper controls and to restrict the illicit export of radioactive material. SOCIMAR will receive a fee per unit certified.
22 Profit and loss account of the parent company
As permitted by section 230 of the Companies Act 1985, the profit and loss account of the parent company has not been separately presented in these accounts. The parent company loss for the period was £2.57 million.
Enquiries:
Brinkley Mining Plc Donald Strang, Finance Director Tel: 0207 016 5100
Beaumont Cornish Limited Roland Cornish Tel: 0207 628 3996
