Notice of AGM & Audited results for the year

NOTES TO THE AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2017

 

1.    Statement of accounting policies

The Group and Company results for the year ended 30 June 2017 have been prepared using the accounting policies applied by the Company in its 30 June 2016 annual report which are in accordance with International Financial Reporting Standards (IFRS and IFRC interpretations) issued by the International Accounting Standards Board ("IASB") as adopted for use in the EU (IFRS, including the SAICA financial reporting guides as issued by the Accounting Practices Committee and the Companies Act 2006 (UK). They are presented in Pound Sterling.

This financial report does not include all notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2017 and any public announcements by Jubilee Platinum PLC after that date to the date of publication of these results.

All monetary information is presented in the functional currency of the Company being Great British Pound. The Group's principal accounting policies and assumptions have been applied consistently over the current and prior comparative financial period. The financial information for the year ended 30 June 2016 contained in this report does not constitute statutory accounts as defined by section 435 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditor's report on those accounts was unqualified did not contain a statement under section 498(2)-(3) of the Companies Act 2006.

 

2.    Financial review

 

The Group reported a loss per share from continuing operations for the period under review, excluding impairments of intangible assets, of 0.25 pence (ZAR 4.27 cents) compared to a loss of 0.38 pence (ZAR 8.07 cents) for the comparative period. Impairment of intangible assets totaled GBP 8.47 million, net of tax, which if included equates to a group loss per share of 1.07 pence (ZAR 18.55 cents). The impairment relates to the Group's interest in its Nickel Tailings Project in Australia. Although the board expects to realise the value of the Nickel Tailings Project, the board felt it prudent to impair the asset until the legal impasse with BHP is resolved.

The Group managed to continue to tightly control costs. Total operating expenses from continued operations is down 26.69 % to GBP 3.44 million (ZAR 59.46 million) ((2016: GBP 4.69 million) (ZAR 81.06 million)).

 

Earnings per share for the year ended 30 June 2017 were as follows:                                         2017                2016

 

Basic loss for the year - continuing operations (£'000) Basic loss for the year - discontinuing operations (£'000)	(10 570) -	(3 412) (283)
Total loss for the year (£'000)	(10 570)	(3 695)
Weighted average number of shares in issue ('000)	984 780	906 241
Loss per share - continuing operations (pence)	(1.07)	(0.38)
Loss per share - discontinuing operations (pence)	-	(0.03)
	(1.07)	(0.41)
Loss per share - continuing operations (ZAR cents)	(18.55)	(8.07)
Loss per share - discontinuing operations (ZAR cents)	-	(0.67)
	(18.55)	(8.74)

The Group reported a net asset value of 5.04 pence (ZAR 85.54 cents) (2016: 5.65 pence (ZAR 112.38 cents) per ordinary share. The total shares in issue as at 30 June 2017 were 1 118 360 942 (2016: 991 087 994). Refer to note 6 below for details of shares issued during the period under review.

3.    Dividends

The Board did not declare any dividends for the period under review. (2016: Nil)

 

4.    Auditor's review opinion

These results have been audited by the Group's auditors, Saffery Champness LLP and their report is available for inspection at the Company's registered office. A copy of the report is also attached to the back of this announcement as annexure 1.

 

5.    Board

There were no changes to the board during the period under review and up to the date of this announcement.

 

6.    Share capital

 

 

Authorised The share capital of the Company is divided into an unlimited number of ordinary shares of 1 pence each. Issued Ordinary shares of 1 pence each (£) Share premium (£)	30 June 2017         11 183 609 76 491 331	30 June 2016         9 910 872 72 604 297
Total issued capital (£)	87 674 940	82 515 169
Number of shares in issue Ordinary shares	1 118 360 942	991 087 194

 

The Company issued the following shares during the period and up to the date of this annual report:

 

	Number of	Issue price -	Purpose
Date	shares	Pence	of the issue
Opening balance	991 087 194
21 November 2016	25 000 000	3.55	Warrants
21 November 2016	1 848 167	2.44	Director remuneration
23 January 2017	2 300 000	3.16	Warrants
31 January 2017	2 500 000	3.15975	Warrants
03 February 2017	10 550 581	3.23	Warrants
09 February 2017	2 500 000	3.15975	Warrants
14 February 2017	2 000 000	3.15975	Warrants
17 February 2017	2 000 000	3.15975	Warrants
22 February 2017	1 450 000	3.15975	Warrants
27 February 2017	625 000	2.0	Warrants
27 February 2017	500 000	2.5	Warrants
10 March 2017	10 000 000	4.725	Warrants
23 March 2017	66 000 000	5.0	Issue for cash
Closing balance at year-end	1 118 360 942
Balance as at the last practicable date	1 118 360 942

 

The Company did not issue any shares after year-end to the date of this report.

During the year transaction costs accounted for as a deduction from equity amounted to GBP 314 050.

At year-end and at the last practicable date the Company had the following warrants outstanding:

 

		Subscription	End of		Spot at
		price	exercise	Volatility	Issue date
Number of warrants	Issue date	pence	period	%	pence
3 591 742	2015-08-12	4.750	2018-08-12	77.49	4.48
8 244 825	2016-03-23	4.725	2019-03-23	83.81	2.94
11,836,567

The fair value of these warrants was determined using the Black-Scholes Valuation Model with the inputs illustrated in the table above. A risk free rate of 0.5 % were applied in the valuation. The company recognised a share-based payment charge against the share-based payment reserve in the amount of £22 025 (2016: £304 925) in accordance with section 610 (2) of the United Kingdom Companies Act 2006. This charge relates to equity placings successfully completed.

 

7.    Business segments

 

In the opinion of the Directors, the continuing operations of the Group companies comprise of four reporting segments (including those reported on for the comparative period) being:

-           the beneficiation of Platinum Group Metals ("PGMs") and development of PGM smelters utilising exclusive commercialisation rights of the ConRoast smelting process, located in South Africa ("PGM beneficiation and development");

-           the evaluation of the reclamation and processing of sulphide nickel tailings at BHP Billiton's Leinster, Kambalda and Mount Keith properties in Australia (Nickel tailings);

-           the exploration and mining of Platinum Group Metals ("PGMs") (Exploration and mining);

-           the parent company operates a head office based in the United Kingdom, which incur certain               administration and corporate costs.

The results of the discontinued operations comprise of two segments which have been combined into one segment referred to as Disposal Group being:

-           base metal smelting in South Africa; and

-           electricity generation in South Africa.

The Group's operations span five countries, South Africa, Australia, Madagascar, Mauritius and the United Kingdom. There is no difference between the accounting policies applied in the segment reporting and those applied in the Group financial statements. Mauritius and Madagascar do not meet the qualitative threshold under IFRS 8, consequently no separate reporting is provided.

 

Segment report for the year ended 30 June 2017

 

Figures in Sterling	PGM beneficiation and development	Nickel tailings	Exploration and mining	Other operations	Total continuing operations	Disposal group
Total revenues	(9 805 702)	-	-	-	(9 805 702)	-
Cost of sales	8 038 731	-	-	-	8 038 731	-
Forex losses	47 714	-	-	24 704	72 418	-
Loss before taxation	1 511 175	18 566 747	71 118	734 887	20 883 927	(461 728)
Taxation	250 303	(10 099 909)	-	-	(9 849 605)	-
Loss after taxation	1 761 478	8 466 838	71 118	734 887	11 034 322	(461 728)
Interest received	(11 609)	-	(760)	(6 304)	(18 673)	-
Interest paid	198 565	-	-	-	198 565	-
Depreciation, amortisation and impairments	1 108 866	18 554 683	15 901	-	19 679 451
Total assets	24 149 529	15 131 292	26 524 677	3 440 910	69 246 408
Total liabilities	(7 138 099)	(2 275 862)	(2 414 659)	(1 059 526)	(12 888 146)

 

Segment report for the year ended 30 June 2016

 

Figures in Sterling	PGM beneficiation and development	Nickel tailings	Exploration and mining	Other operations	Total continuing operations	Disposal group
Total revenues	(1 127 880)	-	-	(346 041)	(1 473 921)	(1 420 145)
Cost of sales	589 290	-	-	19 019	608 309	682 365
Forex losses	(7 658)	-	-	77 571	69 913	-
Loss before taxation	787 554	10 711	16 174	2 784 748	3 599 187	276 660
Taxation	-	-	-	-	-	-
Loss after taxation	787 554	10 711	16 174	2 784 748	3 599 187	276 660
Interest received	(120 301)	-	(75)	(23 701)	(144 077)	(193)
Interest paid	5	-	-	13 413	13 417	-
Depreciation and amortisation	597 613	-	838	-	598 451	-
Total assets	14 004 569	31 666 391	23 626 458	3 797 622	73 095 339	-
Total liabilities	(2 904 304)	(9 656 474)	(3 885 972)	(478 516)	(16 925 267)	-

 

8.    Going concern

 

The Directors have adopted the going-concern basis in preparing the financial statements.

 

The period under review was transformational for the Jubilee Group of companies and it has continued to successfully implement its Metals Recovery Strategy which is advancing at an encouraging pace and the Board is confident that the Group can make further acquisitions to complement its existing projects and extend its brand and capabilities into other global surface projects.

 

The objectives of Jubilee's Metals Recovery Strategy are threefold:

-      Secure low risk, low capital intensive, long-term commodity production from mine waste at an attractive point on the global cost curve by using advanced, environmentally sustainable metal recovery techniques;

-      Diversify across multiple commodities including platinum, cobalt, copper and gold to hedge income risk and to align with global trends; and

-      Rehabilitate the adverse footprint left by legacy mining in accordance with International Environmental Standards.

The field of extractive metallurgy has made substantial technological progress in the last 10 years increasing the ability to profitably re-process materials that contain metals and minerals missed by the initial recovery path. For several years now, Jubilee has developed successful proprietary processing techniques to optimise metal recovery in an environmentally friendly and sustainable manner for many companies including large blue-chip mining houses. Jubilee Processing is well positioned to capitalise on its in-house expertise to become a global leader in this field.

 

·     On 9 August 2017, Jubilee secured a project funding structure, provided by RiverFort Capital Group Limited ("RiverFort"), which is modelled on the successful Hernic platinum and chrome recovery project which was also financed through RiverFort.

 

The key features of the Agreement are:

-      Funding will be provided at project-level directly to the Jubilee project subsidiary by RiverFort

-      USD 50 million pre-approved debt funding targeting multiple surface based metal recovery projects based on established individual project criteria

-      The funding commitment is for an initial 33-month period with the flexibility for mutual extension

-      In recognition of the funding commitment, RiverFort has been granted the right to exercise a 2.5 % maximum preference equity stake in the subsidiary Jubilee Processing

 

·     As previously announced on 31 March 2016, the remaining purchase consideration of the Middelburg Disposal was calculated at approximately GBP 0.39 million (ZAR 8.90 million) net of closing adjustments including stock and supplier adjustments. The final settlement amount of GBP 0.46 million (ZAR 7.40 million) has been received by Jubilee in March 2017. These proceeds strengthened the Group's cash flow and its ability to fund its projects.

 

·     During March 2017 the Company successfully completed a placing of 66 000 000 new ordinary shares of 1 pence each ("Ordinary Shares") in Jubilee (the "Placing Shares") at a price of 5.0 pence (ZAR 78.70 cents) per share to raise approximately GBP 3.30 million before expenses (ZAR 51.90 million at current conversion rates).

 

The Directors are of the opinion that the Group and Company are funded sufficiently to enable it to continue with its operations as a going concern.

 

 

9.    Events after the reporting period

 

9.1 PlatCro Platinum and Chrome Tailings Project ("PlatCro project")

 

Post the period under review the Company executed a Framework and Processing of Tailings Agreement ("the Agreement") with PlatCro in March 2017 for the acquisition of new platinum, palladium, rhodium and gold ("4E PGMs") bearing surface material existing at PlatCro as well as all future surface material at PlatCro. The existing surface material is estimated at 1 250 000 tonnes with an estimated grade of 2.7 g/t 4E PGMs. This ensured Jubilee the sole right to future earnings from the platinum bearing material.

 

The PlatCro project will target a processing rate of 25 000 tonnes per month to complement Jubilee's surface tailings platinum production by a further 14 200 ounces of PGMs per annum. This projects a total production target at stable operations of approximately 50 000 ounces of PGMs per annum for Jubilee from all its surface tailings and 3^rd party ore projects.

 

Under the Agreement Jubilee will acquire the existing material for a total consideration of GBP 3.13 (ZAR 50.00) per tonne of surface material remaining after on-going further recovery of residual chromite by PlatCro. Approximately 79 % of the material is estimated to remain following chromite removal, which equates to a 4E PGM acquisition value of GBP 3.50 million (ZAR 55.40 million).

 

The Agreement allows for a two-stage payment over an estimated three month period following the conclusion of the Agreement. Future material will be acquired at a value of GBP 3.13 (ZAR 50.00) per tonne of material post chromite removal. The surface material is located within trucking distance of Jubilee's Hernic operation, thereby offering the opportunity to process the additional material at the Company's existing Hernic plant for PGM recovery. Jubilee also holds the option to acquire property located adjacent to the surface material for the construction of a dedicated platinum processing plant, if deemed appropriate, and at Jubilee's election.

 

On 9 May 2017 Jubilee executed the first payment of GBP 1.16 million (ZAR 20 million) as part of the PlatCro project. The PlatCro project includes the upfront acquisition of all PGMs contained in surface material as well as future PGMs from further processing and mining operations.

 

The final payment for the existing surface PGMs is subject to the completion of the surface drill programme and receiving regulatory approval to commence with the processing of the PGMs. The first payment was recognised in the statement of financial position as a prepayment until such time as the necessary conditions have been met. On 31 July 2017 Jubilee notified PlatCro that it has undertaken and completed a survey of the dam as provided for in the Agreement.

 

9.2 Project funding secured

 

On 9 August 2017, Jubilee secured a USD50 million project funding structure, provided by RiverFort Capital Group Limited ("RiverFort"), which is modelled on the successful Hernic platinum and chrome recovery project which was also financed through RiverFort.

 

10.  Contingencies and commitments

 

Other than disclosed below, there are no material contingent assets or liabilities as at 30 June 2017.

 

10.1 PlatCro Platinum and Chrome Tailings Project ("PlatCro project")

 

Jubilee executed a framework and processing of tailings agreement ("the Agreement") with PlatCro Proprietary Limited ("PlatCro"). The Agreement provides for the acquisition of the platinum, palladium, rhodium and gold ("4E"or "PGMs") contained in the existing surface material as well as all future material at the PlatCro. Existing surface material is estimated to be 1.25 million tonnes at an estimated grade of 2.7 g/t 4E PGMs. On 9 May 2017 Jubilee executed the first payment of GBP 1.16 million (ZAR 20 million) as part of the PlatCro project.

 

The PlatCro project includes the upfront acquisition of all PGMs contained in surface material as well as future PGMs from further processing and mining operations of which the first payment equates to approximately 50 % of the acquisition value. The final payment for the existing surface PGMs is subject to the completion of the surface drill programme and receiving regulatory approval to commence with the processing of the PGMs. The first payment was recognised in the statement of financial position as a prepayment until such time as the necessary conditions have been met. On 31 July 2017 Jubilee notified PlatCro that it has undertaken and completed a survey of the dam as provided for in the Agreement. As at the period end Jubilee recognised the first payment of the acquisition value as a prepayment in an amount of GBP 1.16 million (ZAR 20 million).

 

Contacts

Jubilee Platinum PLC

Colin Bird/Leon Coetzer
Tel +44 (0) 20 7584 2155 / Tel +27 (0) 11 465 1913
Andrew Sarosi
Tel +44 (0)1752 221937

JSE Sponsor

Sasfin Capital, (a member of the Sasfin group)
Sharon Owens
Tel +27 (0)11 809 7500

Nominated Adviser

SPARK Advisory Partners Limited
Mark Brady/Andrew Emmott
Tel: +44 (0)203 368 3551

Broker

Beaufort Securities Limited
Jon Belliss
Tel: +44 (0) 20 7382 8300

 

 

Annexure 1

 

Jubilee Platinum Plc

Opinion

 

We have audited the financial statements of Jubilee Platinum Plc for the year ended 30 June 2017 which comprise the Consolidated and Company Statements of Comprehensive Income, the Consolidated and Company Statements of Financial Position, the Consolidated and Company Statements of Changes in Equity, the Consolidated and Company Statements of Cash flows and notes to the financial statements, including a summary of significant accounting policies set out on pages 30 to 71. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards ("IFRS") as adopted by the European Union.

In our opinion, the financial statements:

·                give a true and fair view of the state of affairs of the Group and of the parent company  as at 30 June 2017 and of their losses for the period then ended;

·                have been properly prepared in accordance with IFRS as adopted by the European Union; and

·                have been prepared in accordance with the requirements of the Companies Act 2006.

 

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.  Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditors' report and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Basis for opinion

 

We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

 

Conclusions relating to going concern

 

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

 

·                the Directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

·                the Directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

 

 

Key audit matters

 

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statement as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit.

 

Key audit matter	How our audit addressed the key audit matter
Carrying value of intangible assets The carrying value of intangible assets included in the Group's balance sheet at 31 December 2017 was stated at £48.2m, contained within 3 cash generating units ("CGUs").   The Directors assess at each reporting period end whether there is any indication that an asset may be impaired and intangible assets with an indefinite life must be tested for impairment on an annual basis. The determination of recoverable amount, being the higher of value-in-use and fair value less costs to dispose, requires judgement on the part of management in both identifying and then valuing the relevant CGUs, especially for projects where the there is an uncertain timeframe.   Deferred tax liabilities are recognised on certain intangible assets following business combinations and these liabilities are re-evaluated at each reporting period end.    Any impairment in these CGUs could lead to subsequent impairments in the parent company investments in subsidiaries or intercompany loans to these subsidiaries.   Due to the significance of the intangible assets to the consolidated financial statements, the significant judgements involved in these calculations and the potential impact to parent company investments and intercompany loans, the carrying value of intangible assets is a key audit matter.	Our audit procedures included the following: ·      Assessing the methodology used by the Directors to calculate recoverable amounts and evaluated if it complies with the requirements of IAS 36; ·      Assessing the viability of the platinum group elements ("PGE") exploration asset by analysing future projected cash flows used in the value in use calculations for the CGU to determine whether the assumptions used in projecting the cash flows are reasonable and supportable given the current macroeconomic climate; ·      Performing sensitivity analysis on key assumptions and testing the mathematical accuracy of models; ·      Comparing foreign exchange rates used in management's calculations against third party sources; ·      Understanding the commercial prospects of the assets, and where possible comparison of assumptions with external data sources; ·      Reviewing correspondence and other sources for evidence of impairment; ·      Reviewing the recoverability of intercompany loans within the parent company and indicators of impairment in investments in subsidiaries; ·      Assessing the appropriateness and completeness of the related disclosures in note 8, intangible assets, of the group financial statements; and ·      Recalculating the deferred tax liability relating to specific intangible assets and assessing applicable tax rates.   Based on our procedures, we noted no material exceptions and considered management's key assumptions to be within reasonable ranges.
Key audit matter	How our audit addressed the key audit matter
Revenue recognition Revenue for the year was £9.8m, representing a significant increase on 2016. Additionally, this is the first year of production at Hernic, leading to the recognition of revenue from platinum group metals ("PGM") concentrate sales as well as chromite concentrate.   As required by IFRS as adopted by the European Union, an entity is required to recognise revenue at the fair value of the consideration received or receivable when the following conditions have been satisfied:   ·      the entity has transferred to the buyer the significant risks and rewards of ownership of the goods; ·      the entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; ·      the amount of revenue can be measured reliably; ·      it is probable that the economic benefits associated with the transaction will flow to the entity; and ·      the costs incurred or to be incurred in respect of the transaction can be measured reliably.   For the sale of chromite concentrate and PGM concentrate, revenue is initially recognised at the fair value of the consideration receivable, which is an estimate of the final sales price (see note 1.11, revenue recognition accounting policy, for the full revenue recognition policy).   Due to the significance of revenue to the consolidated financial statements, the judgement involved in estimating consideration receivable and this being the first year of revenue generated at the Hernic project, revenue recognition is a key audit matter.	Our audit procedures included the following: ·      Evaluating  the Group's revenue recognition policy and management's current year accounting assessment for the fair value of consideration receivable; ·      Confirming the implementation of the Group's policy to both PGM concentrate sales at Hernic and chromite concentrate sales at DCM by performing tests to confirm our understanding of the process by which revenue is calculated; ·      Confirming that fair value measurements are determined in accordance with IFRS 13; ·      Comparing foreign exchange rates used in management's calculations; ·      Substantive tests agreeing concentrates to weighbridge tickets and underlying calculations to terms stipulated in individual customer contracts ; and ·      Assessing the appropriateness of the related disclosures in notes 1.1 and 3, revenue recognition accounting policy and revenue split by commodity, of the group financial statements.   Based on our procedures, we noted no material exceptions and considered management's key assumptions to be within reasonable ranges. We consider that revenue recognition has been recognised appropriately and is in accordance with the Group's revenue recognition policy.

 

 

 

 

 

Key audit matter

How our audit addressed the key audit matter

Accounting for project finance raised in the year   The carrying value of project finance liabilities at 30 June 2017 was £3.8m. Funding was raised in the year to finance the construction and working capital of the Hernic project.   These borrowings are required to be held at amortised cost under IAS 39. Additionally, when the conditions for borrowing costs to be capitalised are met these are required to be capitalised in accordance with IAS 23.   Due to the introduction of new, and significant, liabilities during the year, together with the requirement to capitalise certain elements of borrowing costs, accounting for project finance is a key audit matter.

Our audit procedures included the following: ·      Reviewing loan agreements to determine all individual cash flows necessary to calculate the effective interest rate required to hold the loans at amortised cost; ·      Recalculating the effective interest rate and the total liability as at 30 June 2017; ·      Reviewing loan agreements and other third party evidence to determine when the conditions under IAS 23 where met to commence and cease capitalisation of borrowing costs; ·      Recalculating the borrowing costs required to be capitalised during the year; ·      Comparing foreign exchange rates used in management's calculations; and ·      Assessing the appropriateness and completeness of the related disclosures in notes 19 and 21, other financial liabilities and financial instruments.   Based on our procedures, we noted no material exceptions and considered that disclosures relating to project finance have been made appropriately.

 

Our application of materiality

We apply the concept of materiality in planning and performing our audit, in evaluating the effect of any identified misstatements and in forming our opinion. Our overall objective as auditor is to obtain reasonable assurance that the financial statements as a whole are free from material misstatement, whether due to fraud or error. We consider a misstatement to be material where it could reasonably be expected to influence the economic decisions of the users of the financial statements.

 

We have determined a materiality of £620,000 (2016: £500,000) for both the Group and Company financial statements. This is based on 1% of net assets prior to audit.

 

An overview of the scope of our audit

We tailored the scope of our audit to ensure that we obtained sufficient evidence to support our opinion on the financial statements as a whole, taking into account the structure of the Group and the Company, the accounting processes and controls and the industry in which the Group operates.

 

As Group auditors we carried out the audit of the Company financial statements and, in accordance with ISA 600, obtained sufficient evidence regarding the audit of seven subsidiaries undertaken by component auditors in South Africa and Australia. These seven subsidiaries were deemed to be significant to the Group financial statements either due to their size or their risk characteristics. The Group audit team directed, supervised and reviewed the work of the component auditors in South Africa and Australia, which involved issuing detailed instructions, holding regular discussions with component audit teams, performing detailed file reviews and visiting South Africa to attend local audit meetings with management.  Audit work in South Africa and Australia was performed at materiality levels of £100,000, lower than Group materiality.

 

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we looked at where the Directors made subjective judgements, for example in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. We also addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the Directors that represented a risk of material misstatement due to fraud.

 

Other information

 

The Directors are responsible for the other information. The other information comprises the information included in the Annual Report, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

 

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information; we are required to report that fact.

 

We have nothing to report in this regard.

 

Opinions on other matters prescribed by the Companies Act 2006

 

In our opinion, based on the work undertaken in the course of the audit:

 

·                the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

·                the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.

 

Matters on which we are required to report by exception

 

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report.

 

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

 

·                adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

·                the financial statements are not in agreement with the accounting records and returns; or

·                certain disclosures of Directors' remuneration specified by law are not made; or

·                we have not received all the information and explanations we require for our audit. 

 

Responsibilities of Directors

 

As explained more fully in the Directors' Responsibilities Statement set out on page 20, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

 

In preparing the financial statements, the Directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

 

Auditor's responsibilities for the audit of the financial statements

 

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

 

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at:  www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

 

 

 

 

…………………………………..

 

Andrew Gaskell (Senior Statutory Auditor)

for and on behalf of Saffery Champness LLP

 

Chartered Accountants

Statutory Auditors                                                                                              

 

71 Queen Victoria Street

London

EC4V 4BE

 

9 November 2017

 

Annexure 2 - Headline earnings per share

Accounting policy

Headline earnings per share (HEPS) is calculated using the weighted average number of shares in issue during the period under review and is based on earnings attributable to ordinary shareholders, after excluding those items as required by Circular 2/2013 issued by the South African Institute of Chartered Accountants (SAICA).

                                                                                                                                                           30 June 2017     30 June 2016

Headline loss per share comprises the following:
Continuing operations
Loss from continuing operations for the period attributable to ordinary shareholders	(10 570)	(3 412)
Impairment of other financial assets net of tax	8 522	856
Loss on sale of property plant and equipment	-	1
Loss on exchange differences	72	81
Headline loss from continuing operations	(1 976)	(2 474)
Weighted average number of shares in issue	984 780	906 241
Headline loss per share from continuing operations (pence)	(1.07)	(0.27)
Headline loss per share from continuing operations (ZAR cents)	(18.55)	(5.85)
Discontinued operations
Loss from discontinued operations for the period attributable to ordinary shareholders	-	(283)
Headline loss from discontinued operations	-	(283)
Weighted average number of shares in issue	984 780	906 241
Headline loss per share from discontinued operations (pence)	-	(0.03)
Headline loss per share from discontinued operations (ZAR cents)	-	(0.67)
Average conversion rate used for the period under review £:ZAR	0.05786	0.04667