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STREAMPLAY STUDIO LIMITED Annual Report 2007
65841_rns_2007-09-26_ef29709d-655e-400a-b728-85f875c923a6.pdf
Annual Report
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FINANCIAL REPORTS
FOR THE YEAR ENDED
30 JUNE 2007
CORPORATE GOVERNANCE STATEMENT
The directors of Gippsland Limited believe firmly that benefits will flow from the maintenance of the highest possible standards of corporate governance and strive for compliance with best corporate governance practice where practicable.
Trading Policy
The company's policy regarding directors and employees trading in its securities is set by the board. The policy restricts directors and employees from acting on material information until it has been released to the market and adequate time has been given for this to be reflected in the security's prices. Additionally directors and employees are restricted from trading in the Company's securities during close periods preceding periodic lodgement dates.
Website Disclosure of Corporate Governance Practices and Policies
Further information relating to the company's corporate governance practices and policies has been made publicly available on the company's web site at www.gippslandltd.com
Commentary on Departures from Best Practice Recommendations
During the financial year the company has complied with the majority of the ten essential corporate governance principles and the corresponding best practice recommendations as published by the ASX Corporate Governance Council except as detailed below:
Council Recommendation 2.1 A majority of the Board should be independent directors
The Board comprises two independent directors and three non-independent directors. Prior to the appointment of Mr J Starink as an executive director on 8 May 2007, the ratio was two independent directors to two nonindependent directors. Therefore a majority of the Board is not independent.
While the Board strongly endorses the position that boards need to exercise independence of judgment, it also recognises that the need for independence is to be balanced with the need for skills, commitment and a workable board size. The Board believes it has recruited members with the skills, experience and character to discharge its duties and that any greater emphasis on independence would be at the expense of the Board's effectiveness.
Messrs Kenny and Dunlop are Non-Executive Directors of the Company. Both Non-Executive Directors are considered independent within the ASX Corporate Governance Council's guidelines.
Mr Dunlop is a principal at John Dunlop & Associates Pty Ltd, engineering service providers for the Company. Mr Dunlop has been directly involved in the provision of the engineering services by John Dunlop & Associates Pty Ltd, however the undertaking of this role does not constitute Mr Dunlop or John Dunlop & Associates Pty Ltd as being material service providers to the Company. Mr Dunlop does not participate in the discussions regarding the provision of engineering services.
At present the Company believes that the individuals on the Board can make, and do make, quality and independent judgments in the best interests of the Company on all relevant issues. Directors having a conflict of interest in relation to a particular item of business must absent themselves from the Board Meeting before commencement of discussion on the topic.
The Board considers that the Company is not currently of a size, nor are its affairs of such complexity to justify the expense of appointing additional independent Non-Executive Directors.
CORPORATE GOVERNANCE STATEMENT
Council Recommendation 2.2 The chairperson should be an independent director
The company's chairman, Mr Robert John Telford, is considered by the board not to be independent in terms of the ASX Corporate Governance Council's definition of independent director. However the board believes that the chairman is able and does bring quality and independent judgement to all relevant issues falling within the scope of the role of chairman.
The board considers that the company is not currently of a size, nor are its affairs of such complexity to necessitate the appointment of an independent non-executive chairperson.
Council Recommendation 2.3
The roles of chairperson and chief executive officer should not be exercised by the same individual.
The company's chairman Mr Robert John Telford currently holds the position of both chairperson and chief executive officer. The board recognises the importance of independence in decision-making, however believes that Mr Telford is the most appropriate person for the position due to his extensive industry experience and previous record as chairman. The board recognises that Mr Telford has been a major force in the company's success and that as the company enters its next growth stage, Mr Telford's industrial experience and strong and effective leadership will be beneficial.
Council Recommendation 2.4 The board should establish a nomination committee
The Board considers that the Company is not currently of a size to justify the formation of a nomination committee. The Board as a whole undertakes process of reviewing the skill base and experience of existing Directors to enable identification or attributes required in new Directors. Independent consultants are engaged to identify possible new candidates for the Board, when appropriate.
The Board acknowledges this does not comply with Recommendation 2.4 of the ASX Corporate Governance Guidelines. If the Company's activities increase in size, scope and nature, the appointment of a nomination committee will be reviewed by the Board and implemented if appropriate.
Council Recommendation 4.2 The board should establish an audit committee
The Board considers that the Company is not of a size, nor are its financial affairs of such complexity to justify the formation of an audit committee. The Board as a whole undertakes the selection and proper application of accounting policies, the identification and management of risk and the review of the operation of the internal control systems.
The Board acknowledges this does not comply with Recommendation 4.2. If the Company's activities increase in size, scope and nature, the appointment of an audit committee will be reviewed by the Board and implemented if appropriate.
Council Recommendation 4.3 Structure the audit committee so that it consists of:
- only non-executive directors;
- a majority of independent directors;
- an independent chairperson, who is not chairperson of the board;
- at least three members.
Refer comments on council recommendation 4.2
Council Recommendation 4.4 The audit committee should have a formal operating charter.
Refer comments on council recommendation 4.2
CORPORATE GOVERNANCE STATEMENT
Council Recommendation 9.2
The board should establish a remuneration committee.
The Board considers that the Company is not currently of a size, nor are its affairs of such complexity to justify the formation of a remuneration committee. The Board as a whole is responsible for the remuneration arrangements for Directors and executives of the Company.
The Board acknowledges this does not comply with Recommendation 9.2. If the Company's activities increase in size, scope and nature, the appointment of a remuneration committee will be reviewed by the Board and implemented if appropriate.
DIRECTOR'S REPORT
Your directors present their report on the company and its controlled entities for the financial year ended 30 June 2007.
Directors
The names of directors in office at any time during or since the end of the year are:
Mr Robert John Telford Dr John Morrison Chisholm Mr John Stuart Ferguson Dunlop Mr John Damian Kenny Mr Jon Starink (appointed 8 May 2007)
Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.
Company Secretary
The following person held the position of company secretary at the end of the financial year:
Mr Rowan Caren – Bachelor of Commerce, Chartered Accountant. Mr Caren was employed by a first tier chartered accountancy firm in Australia and overseas for six years and has been directly involved in the minerals exploration industry for a further ten years. Mr Caren also provides company secretarial and corporate advisory services to several exploration companies and is a member of the Institute of Chartered Accountants in Australia.
Principal Activities
The principal activities of the economic entity during the financial year were:
• exploration and development of commercially and economically viable mineral resources.
There were no significant changes in the nature of the consolidated group's principal activity during the financial year.
Operating Results
The consolidated loss of the consolidated group after providing for income tax and eliminating minority equity interests amounted to $4,191,218.
Dividends
No dividend was paid or declared during the financial year and the directors do not recommend the payment of a dividend for the financial year ended 30 June 2007.
Review of Operations
During the year the company continued to focus on the development of the Abu Dabbab tin/tantalum project in Egypt and the exploration for gold and base metals in the Wadi Allaqi region of Egypt. A detailed review of the company and the consolidated group's activities will be set out in the company's Annual Report.
Financial Position
The net assets of the consolidated group have decreased by $1,378,737 to $2,411,985 at 30 June 2007. This decrease has largely resulted from the following factors:
- proceeds from share issue raising $2,751,505 offset by
- exploration expenditure of $1,781,410
- project development expenditure of $778,196 and
- administration expenditure of $1,767,042.
DIRECTOR'S REPORT
The consolidated group's sound financial position has enabled the group to focus on:
• completing the bankable feasibility study for the Abu Dabbab tantalum project in Egypt; and continue with an active exploration strategy within the Wadi Allaqi region of Egypt.
The directors believe the company is in a strong and stable financial position to expand and grow its current operations.
Significant Changes in State of Affairs
The following significant changes in the state of affairs of the parent entity occurred during the financial year:
a) On 1 May 2007 the company issued 26,666,666 ordinary shares at $0.109 each, raising $2,895,753.
After Balance Date Events
No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the consolidated group, the results of those operations, or the state of affairs of the consolidated group in future financial years.
Future Developments, Prospects and Business Strategies
Information as to likely developments in the operations of the Company and the consolidated group and the expected results of those operations in future financial years has not been included in this report because, in the opinion of the Directors, it would prejudice the interests of the Company and the consolidated group.
Environmental Issues
The consolidated group's operations are not currently subject to any significant environmental regulations under either Australian or Egyptian legislation. However, the board is committed to achieving a high standard of environmental performance, and regular monitoring of potential environmental exposures is undertaken by management. The board considers that the consolidated group has adequate systems in place for the management of its environmental requirements and is not aware of any breach of those environmental requirements as they apply to the consolidated group.
An environmental and social impact assessment has been completed for the Abu Dabbab project in Egypt.
The consolidated group is required to carry out its activities in accordance with the Mining Laws and regulations in the areas in which it undertakes its exploration activities.
Information on Directors
.
Robert John Telford - Chairman (Executive) AWAIT (Chem), M RACI
Mr Telford holds an Associate degree in Pure Chemistry (Organic and Inorganic) having graduated from the Institute of Technology of Western Australia (now Curtin University) in 1967.
Mr Telford has been a major shareholder in technology-based industries for some 30 years in the capacity of chief executive officer ("CEO"). He has been involved in the pharmaceutical industry having been a past chairman and major shareholder of the company Inovax Limited. Mr Telford has held the position of CEO in companies involved in inorganic and organic chemical manufacture for some 15 years. He has been involved in the international resource industry for some 15 years via private and public companies and in the main is responsible for securing the Company's interest in its Egyptian resource projects.
Interest in Shares and Options - 13,568,124 ordinary shares in Gippsland Limited and options to acquire a further 6,558,322 ordinary shares
DIRECTOR'S REPORT
John Morrison Chisholm - Director (Executive) B Sc (Hons), PhD, F AusIMM, F AIG
Dr Chisholm is a consulting geologist with wide experience in exploration geology and exploration management having worked as a lecturer at the University of Western Australia and Curtin University prior to working for various international mining companies. He was formerly an adjunct associate professor in economic geology at Curtin University.
In 1984 he joined Western United Mining Services Pty Ltd during which time as managing director he managed a large group of geoscientists and was involved in the discovery of the Transvaal and Bounty mines.
He is a Fellow of both the Australian Institute of Geoscientists and the Australasian Institute of Mining and Metallurgy with Chartered Practising status in Geology. Dr Chisholm was one of the first geologists in Australia to have been awarded Practising Chartered Status in geology by the Australasian Institute of Mining and Metallurgy which is the highest level of recognition that can be attained by professional geologists.
Interest in Shares and Options - 150,000 ordinary shares and listed options to acquire a further 2,260,000 ordinary shares.
Jon Starink – Director (Executive) BSC (Hon1), BChemE(Hon1), MApplSc, F AusIMM, FIEAust, FIChemE, MRACI, MTMS, CPEng, CChem, CSci
Mr Starink's qualifications include Bachelor of Science with First Class Honours (University of Sydney), a Bachelor of Chemical Engineering with First Class Honours (University of Sydney) and a Master of Applied Science (University of Sydney). His academic achievements include; Union Carbide Prize in Inorganic Chemistry, Western Mining Prize in Chemical Engineering and Beckman Coulter Postgraduate Prize for Best Overall Performance in Molecular Biotechnology. He held the position of Deputy Head Department of Chemical Engineering at Curtin University of Technology during 1984-85 & 1987.
Based in London, Jon Starink is a Chartered Professional Engineer, a Chartered Scientist and a Chartered Industrial Chemist, a Fellow of the Institution of Engineers Australia, a Fellow of the Australasian Institute of Mining and Metallurgy, a Fellow of the Institution of Chemical Engineers, a Member of The Metallurgical Society and a Member of the Royal Australian Chemical Institute.
He has 30 years experience in the mining industry in the role of both executive and non-executive director. His extensive practical and operational experience includes engineering design and project management; mining exploration management; science and engineering research & development and process innovation & development.
Of particular relevance, for ten years he served in senior technical and engineering roles with the Sons of Gwalia Ltd Greenbushes tantalum-tin project where he was directly responsible for process development, project design and construction management for the tin smelter and tantalum extraction projects.
Interest in Shares and Options – nil.
DIRECTOR'S REPORT
John Stuart Ferguson Dunlop – Director (Non-executive) BE, M Eng Sc, P Cert Arb, CP, F AusIMM, F IMMM, M SME, M CIMM, M MICA
John Stuart Ferguson Dunlop holds Bachelors and Masters Degrees in Mining Engineering from the University of Melbourne. He is a certified Mine Manager having approximately 35 years of international surface and underground mining experience in a variety of base metal, industrial and precious metal production and management situations.
He is a former Director of the Australasian Institute of Mining and Metallurgy (AusIMM) and remains Chairman of its affiliate, the Mineral Industry Consultants Association (MICA). He is also Chairman of Alliance Resources Ltd and Alkane Resources Ltd.
Mr Dunlop is a highly experienced mining professional having been involved in the design, construction and on-going operation of a number of major resource projects throughout the world. He has a detailed knowledge of the Company's 40Mt Abu Dabbab tantalum project in Egypt having been involved in the initial preparation of the project's Bankable Feasibility Study in 2004.
He has operated his own mining consulting firm based in Perth since 1992 and was previously a senior executive with BHP's (now BHP Billiton) Minerals Division, before becoming General Manager Operations for Aztec Mining Co Ltd until this company's takeover by Normandy Mining Ltd.
Interest in Shares and Options - Unlisted options to acquire 2,250,000 ordinary shares.
John Damian Kenny – Director (Non-executive) B Com (Hons), LLB
Mr Kenny a corporate and resources lawyer has a specialised interest in venture capital, initial public offerings and mergers and acquisitions. He has extensive experience in public equity fundraisings and the pricing of equity, debt and derivative securities.
Interest in Shares and Options - Listed options to acquire 2,250,000 ordinary shares.
REMUNERATION REPORT
This report details the nature and amount of remuneration for each director of Gippsland Limited, and for the executives receiving the highest remuneration.
Remuneration Policy
The remuneration policy of Gippsland Limited has been designed to align director and executive objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific long-term incentives. The board of Gippsland Limited believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best executives and directors to run and manage the consolidated group, as well as create goal congruence between directors, executives and shareholders.
The board's policy for determining the nature and amount of remuneration for board members and senior executives of the consolidated group is as follows:
- The remuneration policy, setting the terms and conditions for the executive directors and other senior executives, was developed and approved by the board after seeking professional advice from independent external consultants.
- All executives receive a base salary (which is based on factors such as length of service and experience) and options.
- The board reviews executive packages annually by reference to the consolidated group's performance, executive performance and comparable information from industry sectors.
DIRECTOR'S REPORT
All remuneration paid to directors and executives is valued at the cost to the company and expensed. Options are valued using the Black-Scholes methodology.
The board policy is to remunerate non-executive directors at market rates for time, commitment and responsibilities. The board determines payments to the non-executive directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at the Annual General Meeting. Fees for non-executive directors are not linked to the performance of the consolidated group. However, to align directors' interests with shareholder interests, the directors are encouraged to hold shares in the company and are able to participate in the option plan.
Company performance, shareholder wealth and director and executive remuneration
The remuneration policy has been tailored to increase goal congruence between shareholders, directors and executives. The achievement of this aim has been through the issue of options to the majority of directors and executives to encourage the alignment of personal and shareholder interests. The company believes this policy to have been effective in increasing shareholder wealth over the past four years.
The following table shows the share price at the end of the respective financial years. The improvement in the future outlook for the company is reflected in the share price which has increased over the period of the past four years with the exception of 2006, when the share price fell slightly. The board is of the opinion that these results can be attributed in part to the previously de scribed remuneration policy.
| 2003 | 2004 | 2005 | 2006 | 2007 | |
|---|---|---|---|---|---|
| Share Price at Year-end | $0.045 | $0.076 | $0.11 | $0.10 | $0.12 |
Key Management Personnel Remuneration Policy
The board's policy for determining the nature and amount of remuneration of key management for the group is as follows:
The remuneration structure for key management personnel is based on a number of factors, including length of service, particular experience of the individual concerned, and overall performance of the company. The contracts of service between the company and key management personnel are on a continuing basis, the terms of which are not expected to change in the immediate future. Any options not exercised before or on the date of termination lapse.
DIRECTOR'S REPORT
Key Management Personnel Remuneration
2007
| Key ManagementPerson | Short-term BenefitsCash, salary and | Share-basedPayment | Post-employmentBenefits | Total |
|---|---|---|---|---|
| commissions | Options | Superannuation | ||
| $ | $ | $ | $ | |
| Mr RJ Telford | 207,069 | - | - | 207,069 |
| Dr JM Chisholm | 177,917 | - | - | 177,917 |
| Mr JSF Dunlop | 44,648 | - | - | 44,648 |
| Mr JD Kenny | 38,333 | - | - | 38,333 |
| Mr J Starink | 17,742 | - | - | 17,742 |
| Mr PR Sims | 188,294 | 60,975 | 18,827 | 268,096 |
| Mr RS Caren | 52,500 | - | - | 52,500 |
| Mr RS Middlemas | 4,580 | - | - | 4,580 |
| 731,083 | 60,975 | 18,827 | 810,885 |
2006
| Short-term Benefits | Payment | Total |
|---|---|---|
| commissions | Options | |
| $ | ||
| 174,960 | ||
| 160,417 | ||
| 156,737 | ||
| 36,000 | ||
| 43,400 | - | 43,400 |
| 493,687 | 77,827 | 571,514 |
| Cash, salary and$174,960160,41778,91036,000 | Share-based$--77,827- |
Options issued as part of remuneration for the year ended 30 June 2007
Options are issued to directors and executives as part of their remuneration. The options are not issued based on performance criteria, but are issued to the majority of directors and executives of Gippsland Limited and its subsidiaries to increase goal congruence between executives, directors and shareholders.
Options Granted As Remuneration
| Terms & Conditions for Each Grant | |||||
|---|---|---|---|---|---|
| Key | Value perOption at Grant | ||||
| Management | Date | Exercise Price | |||
| Personnel | Granted No. | Grant Date | $ | $ | Exercise Date |
| Mr PR Sims | 2,250,000 | 15.9.2006 | 0.03 | 0.15 | 31.12.2007 |
All options were granted for nil consideration.
DIRECTOR'S REPORT
Meetings of Directors
During the financial year, 10 meetings of directors were held. Attendances by each director during the year were as follows:
| Directors' Meetings | |||
|---|---|---|---|
| Number eligible toattend | Numberattended | ||
| RJ Telford | 10 | 10 | |
| JM Chisholm | 10 | 9 | |
| JSF Dunlop | 10 | 9 | |
| JD Kenny | 10 | 5 | |
| J Starink | 1 | 1 |
Indemnifying Officers or Auditor
During or since the end of the financial year the company has given an indemnity or entered into an agreement to indemnify, or paid or agreed to pay an insurance premium as follows:
The company has paid premiums to ensure any director or officer of Gippsland Limited against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of director or officer of the company, other than conduct involving a wilful breach of duty in relation to the company. The amount of the premium is $9,500.
Options
At the date of this report, the unissued ordinary shares of Gippsland Limited under option are as follows:
| Grant Date | Date of Expiry | Exercise Price | Number under Option |
|---|---|---|---|
| Jan 2003 – Mar 2004 | 31.12.2007 | $0.09 | 43,732,393 |
| 21.01.2005 | 31.12.2007 | £0.04 | 10,000,000 |
| 15.02.2006 | 31.12.2007 | $0.15 | 2,250,000 |
| 15.09.2006 | 31.12.2007 | $0.15 | 2,250,000 |
| 16.05.2006 | 16.05.2012 | $0.135 | 25,000,000 |
During the year ended 30 June 2007, the following ordinary shares of Gippsland Limited were issued on the exercise of options granted. No further shares have been issued since that date. No amounts are unpaid on any of the shares.
| Grant Date | Exercise Price | Number of Shares Issued |
|---|---|---|
| Jan 2003 – Mar 2004 | $0.09 | 6,000 |
No person entitled to exercise the option had or has any right by virtue of the option to participate in any share issue of any other body corporate.
Proceedings on Behalf of Company
No person has applied for leave of Court to bring proceedings on behalf of the company or intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or any part of those proceedings.
The company was not a party to such proceedings during the year.
DIRECTOR'S REPORT
Non-audit Services
The board of directors is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the services disclosed in Note 6 did not compromise the external auditor's independence for the following reasons:
• The nature of the services provided do not compromise the general principles relating to auditor independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board.
The following fees for non-audit services were paid / payable to the external auditors during the year ended 30 June 2007:
$ Taxation Services 9,000
Auditors Independence Declaration
The lead auditor's independence declaration for the year ended 30 June 2007 has been received and can be found on page 12 of the directors' report.
Signed in accordance with a resolution of the Board of Directors.
R J TELFORD, Director
Dated this 27th day of September 2007.
AUDITOR'S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF GIPPSLAND LIMITED AND CONTROLLED ENTITIES
WHK HORWATH
AUDITOR'S INDEPENDENCE DECLARATION
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Gippsland Limited for the year ended 30 June 2007, I declare that, to the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
WHK HORWATH PERTH AUDIT PARTNERSHIP
CYRUS PATELL Principal
Perth, WA
Dated this 27th day of September 2007
INCOME STATEMENT FOR YEAR ENDED 30 JUNE 2007
| Consolidated Group | Parent Entity | |||||
|---|---|---|---|---|---|---|
| 2007 | 2006 | 2007 | 2006 | |||
| Note | $ | $ | $ | $ | ||
| Revenue | 2 | 135,430 | 30,345 | 127,161 | 30,345 | |
| Foreign exchange gains (losses) | (53,429) | 43,441 | (38,262) | 43,441 | ||
| Management and employee expenses | (671,932) | (469,752) | (579,374) | (469,752) | ||
| Exploration expenses | (287,516) | (15,407) | (34,061) | (15,407) | ||
| Project development expenses | (35,526) | - | - | - | ||
| Corporate office expenses | (85,459) | (88,045) | (85,287) | (88,045) | ||
| Depreciation expense | (41,119) | (20,496) | (23,536) | (20,496) | ||
| Impairment of non-current investments | (2,236,564) | (2,082,011) | (2,768,260) | (2,571,632) | ||
| Travel and accommodation expenses | (306,016) | (215,149) | (298,854) | (215,149) | ||
| AIM administration expenses | (209,387) | (163,527) | (209,387) | (163,527) | ||
| Administration expenses | (399,700) | (668,128) | (361,948) | (178,507) | ||
| Loss before income tax | 3 | (4,191,218) | (3,648,729) | (4,271,808) | (3,648,729) | |
| Income tax expense | 4 | - | - | - | - | |
| Net loss attributable to members of the parent entity | (4,191,218) | (3,648,729) | (4,271,808) | (3,648,729) | ||
| Adjustments recognised directly in equity. | 17 | (144,788) | (69,444) | (144,788) | (69,444) | |
| Total Equity changes | (4,336,006) | (3,718,173) | (4,416,596) | (3,718,173) | ||
| Basic and diluted loss per share (cents per | ||||||
| share) | 7 | (1.77) | (1.98) |
The income statements are to be read in conjunction with the accompanying notes to the financial statements.
BALANCE SHEET AS AT 30 JUNE 2007
| Consolidated Group | Parent Entity | ||||
|---|---|---|---|---|---|
| 2007 | 2006 | 2007 | 2006 | ||
| Note | $ | $ | $ | $ | |
| CURRENT ASSETS | |||||
| Cash and cash equivalents | 8 | 2,611,219 | 3,937,943 | 2,315,359 | 3,934,620 |
| Trade and other receivables | 9 | 119,925 | 49,212 | 118,374 | 49,212 |
| Other current assets | 13 | 22,411 | 914 | 22,411 | 915 |
| TOTAL CURRENT ASSETS | 2,753,555 | 3,988,069 | 2,456,144 | 3,984,747 | |
| NON-CURRENT ASSETS | |||||
| Property, plant and equipment | 12 | 154,908 | 35,685 | 88,136 | 35,685 |
| Other non-current assets | 13 | - | - | 305 | 3,522 |
| TOTAL NON CURRENT ASSETS | 154,908 | 35,685 | 88,441 | 39,207 | |
| TOTAL ASSETS | 2,908,463 | 4,023,754 | 2,544,585 | 4,023,954 | |
| CURRENT LIABILITIES | |||||
| Trade and other payables | 14 | 458,177 | 208,109 | 201,514 | 208,109 |
| Short-term provisions | 16 | 38,301 | 9,923 | 11,476 | 9,923 |
| TOTAL CURRENT LIABILITIES | 496,478 | 218,032 | 212,990 | 218,032 | |
| NON CURRENT LIABILITIESOther long-term provisions | 16 | - | 15,000 | - | 15,000 |
| TOTAL NON-CURRENT LIABILITIES | - | 15,000 | - | 15,000 | |
| TOTAL LIABILITIES | 496,478 | 233,032 | 212,990 | 233,032 | |
| NET ASSETS | 2,411,985 | 3,790,722 | 2,331,595 | 3,790,922 | |
| EQUITYIssued capital | 17 | 25,409,780 | 22,658,274 | 25,409,780 | 22,658,274 |
| Reserves | 18 | 138,802 | 77,827 | 138,802 | 77,827 |
| Retained earnings | (23,136,597) | (18,945,379) | (23,216,987) | (18,945,179) | |
| Parent interest | 2,411,985 | 3,790,722 | 2,331,595 | 3,790,922 | |
| Minority equity interest | - | - | - | - | |
| TOTAL EQUITY | 2,411,985 | 3,790,722 | 2,331,595 | 3,790,922 |
STATEMENT OF CHANGES IN EQUITY FOR YEAR ENDED 30 JUNE 2007
Consolidated Group
| Share Capital | ||||
|---|---|---|---|---|
| Ordinary | RetainedEarnings | OptionReserve | Total | |
| Balance at 1 July 2005 | 15,868,236 | (15,296,650) | - | 571,586 |
| Loss attributable to members of parent entityShares issued during the yearTransaction costsOption reserve on recognition of bonus | 6,859,482(69,444) | (3,648,729) | (3,648,729)6,859,482(69,444) | |
| element of options | 77,827 | 77,827 | ||
| Sub-total | 22,658,274 | (18,945,379) | 77,827 | 3,790,722 |
| Balance at 30 June 2006 | 22,658,274 | _______________________________________________________(18,945,379) | 77,827 | 3,790,722_ |
| Loss attributable to members of parent entityShares issued during the yearTransaction costsOption reserve on recognition of bonus | 2,896,294(144,788) | (4,191,218) | (4,191,218)2,896,294(144,788) | |
| element of options | 60,975 | 60,975 | ||
| Sub-total | 25,409,780 | (23,136,597)_______________________________________________________ | 138,802 | 2,411,985 |
| Balance at 30 June 2007 | 25,409,780 | (23,136,597) | 138,802 | 2,411,985_ |
Parent Entity
| Share Capital | Retained | Option | ||
|---|---|---|---|---|
| Ordinary | Earnings | Reserve | Total | |
| Balance at 1 July 2005 | 15,868,236 | (15,296,450) | - | 571,786 |
| Loss attributable to members of parent entityShares issued during the yearTransaction costsOption reserve on recognition of bonus | 6,859,482(69,444) | (3,648,729) | (3,648,729)6,859,482(69,444) | |
| element of options | 77,827 | 77,827 | ||
| Sub-total | 22,658,274 | (18,945,179) | 77,827 | 3,790,922 |
| Balance at 30 June 2006 | 22,658,274 | _______________________________________________________(18,945,179) | 77,827 | 3,790,922_ |
| Loss attributable to members of parent entityShares issued during the yearTransaction costsOption reserve on recognition of bonus | 2,896,294(144,788) | (4,271,808) | (4,271,808)2,896,294(144,788) | |
| element of options | 60,975 | 60,975 | ||
| Sub-total | 25,409,780 | (23,216,987)_______________________________________________________ | 138,802 | 2,331,595 |
| Balance at 30 June 2007 | 25,409,780 | (23,216,987) | 138,802 | 2,331,595 |
The statements of changes in equity are to be read in conjunction with the accompanying notes to the financial statements.
CASH FLOW STATEMENT FOR YEAR ENDED 30 JUNE 2007
| Consolidated Group | Parent Entity | ||||
|---|---|---|---|---|---|
| 2007 | 2006 | 2007 | 2006 | ||
| Note | $ | $ | $ | $ | |
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||
| Interest receivedPayments to suppliers and employees | 132,549(1,559,832) | 30,345(1,419,153) | 124,280(1,615,754) | 30,345(929,532) | |
| Net cash provided by (used in) operating activities | 21 | (1,427,283) | (1,388,808) | (1,491,474) | (899,187) |
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||
| Loans to subsidiariesPayment for investment in subsidiary | -- | -- | (2,773,570)- | (2,566,322)(8,528) | |
| Purchase of property, plant and equipmentPurchase of other assets | (160,342)(2,437,175) | (14,239)(2,082,011) | (67,459)- | (14,239)- | |
| Net cash provided by (used in) investing activities | (2,597,517) | (2,096,250) | (2,841,029) | (2,589,089) | |
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||
| Proceeds from issue of shares | 2,751,505 | 6,790,038 | 2,751,505 | 6,790,038 | |
| Net cash provided by (used in) financing activities | 2,751,505 | 6,790,038 | 2,751,505 | 6,790,038 | |
| Net increase/(decrease) in cash held | (1,273,295) | 3,304,980 | (1,580,998) | 3,301,762 | |
| Cash at beginning of the financial year | 3,937,943 | 589,522 | 3,934,620 | 589,417 | |
| Effects of exchange rate changes on cash holdings inforeign currencies | (53,429) | 43,441 | (38,263) | 43,441 | |
| Cash at end of the financial year | 8 | 2,611,219 | 3,937,943 | 2,315,359 | 3,934,620 |
The cash flow statements are to be read in conjunction with the accompanying notes to the financial statements.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007
Note 1: Statement of Significant Accounting Policies
The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, including Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.
The financial report covers the consolidated group of Gippsland Limited and controlled entities, and Gippsland Limited as an individual parent entity. Gippsland Limited is a listed public company, incorporated and domiciled in Australia.
This financial report of Gippsland Limited and controlled entities, and Gippsland Limited as an individual parent entity comply with all International Financial Reporting Standards (IFRS) in their entirety.
The following is a summary of the material accounting policies adopted by the consolidated group in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.
Basis of Preparation
The accounting policies set out below have been consistently applied to all years presented.
Reporting Basis and Conventions
The financial report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.
Accounting Policies
a. Principles of Consolidation
A controlled entity is any entity Gippsland Limited has the power to control the financial and operating policies of so as to obtain benefits from its activities.
All inter-company balances and transactions between entities in the consolidated group, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the parent entity.
Where controlled entities have entered or left the consolidated group during the year, their operating results have been included/excluded from the date control was obtained or until the date control ceased.
Minority equity interests in the equity and results of the entities that are controlled are shown as a separate item in the consolidated financial report.
b. Income Tax
The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using the tax rates that have been enacted or are substantially enacted by the balance sheet date.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007
Note 1: Statement of Significant Accounting Policies (continued)
Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.
The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the consolidated group will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.
c. Property, Plant and Equipment
Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses.
Plant and Equipment
Plant and equipment are measured on the cost basis.
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset's employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.
The cost of fixed assets constructed within the consolidated group includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial year in which they are incurred.
Depreciation
The depreciable amount of all fixed assets including building and capitalised leased assets, but excluding freehold land, is depreciated on a straight-line basis over their useful lives to the consolidated group commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.
The depreciation rates used for each class of depreciable assets are:
| Class of Fixed Asset | Depreciation Rate |
|---|---|
| Plant and Equipment | 20 - 33% |
| Leasehold Improvements | 20 - 50% |
The asset's residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the income statement. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007
Note 1: Statement of Significant Accounting Policies (continued)
d. Exploration and Development Expenditure
Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. Refer to Note 25 for further details on changes in accounting policy.
e. Leases
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred.
f. Financial Instruments
Recognition
Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the related contractual rights or obligations exist. Subsequent to initial recognition these instruments are measured as set out below.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method.
Impairment
At each reporting date, the group assess whether there is objective evidence that a financial instrument has been impaired. Impairment losses are recognised in the income statement.
g. Impairment of Assets
At each reporting date, the group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset's fair value less costs to sell and value in use, is compared to the asset's carrying value. Any excess of the asset's carrying value over its recoverable amount is expensed to the income statement.
Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007
Note 1: Statement of Significant Accounting Policies (continued)
h. Interests in Joint Ventures
The consolidated group's share of the assets, liabilities, revenue and expenses of joint venture operations are included in the appropriate items of the consolidated financial statements. Details of the consolidated group's interests are shown at Note 10.
i. Foreign Currency Transactions and Balances
Functional and presentation currency
The functional currency of each of the group's entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity's functional and presentation currency.
Transaction and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in the income statement, except where deferred in equity as a qualifying cash flow or investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the income statement.
Group Companies
The financial results and position of foreign operations whose functional currency is different from the group's presentation currency are translated as follows:
- assets and liabilities are translated at year-end exchange rates prevailing at the reporting date;
- income and expenses are translated at average exchange rates for the period; and
- retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations are transferred directly to the group's foreign currency translation reserve in the balance sheet. These differences are recognised in the income statement in the period in which the operation is disposed.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007
Note 1: Statement of Significant Accounting Policies (continued)
j. Employee Benefits
Provision is made for the company's liability for employee benefits arising from services rendered by employees to balance date. Employee benefits expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits.
Equity-settled compensation
The group operates a share option arrangement. The bonus elements over the exercise price of the employee services rendered in exchange for the grant of options is recognised as an expense in the income statement. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted.
k. Provisions
Provisions are recognised when the group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.
l. Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less and bank overdrafts.
m. Revenue
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.
All revenue is stated net of the amount of goods and services tax (GST).
n. Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown inclusive of GST.
Cash flows are included in the cash flow statement on a gross basis, except for the GST component of investing and financing activities which are disclosed as operating cash flows.
o. Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007
Note 1: Statement of Significant Accounting Policies (continued)
Critical Accounting Estimates and Judgments
The directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the group.
Key Estimates – Impairment
The group assesses impairment at each reporting date by evaluating conditions specific to the group that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Value-in-use calculations performed in assessing recoverable amounts incorporate a number of key estimates.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007
| Note | Consolidated Group | Parent Entity | ||||
|---|---|---|---|---|---|---|
| 2007$ | 2006$ | 2007$ | 2006$ | |||
| Note 2 | Revenue | |||||
| Sales Revenue | ||||||
| -interest received-other revenue | 2a | 125,26210,168 | 30,345- | 125,2261,935 | 30,345- | |
| Total Revenue | 135,430 | 30,345 | 127,161 | 30,345 | ||
| aInterest revenue from: | ||||||
| -other persons | 125,262 | 30,345 | 125,226 | 30,345 | ||
| Note 3 | Loss for the Year | |||||
| Expenses | ||||||
| Impairment of non-current investmentsForeign currency translation losses / (gains) | 2,236,56453,429 | 2,082,011(43,441) | 2,768,26038,262 | 2,571,632(43,441) | ||
| Rental expense on operating leases-minimum lease payments | 63,449 | 32,966 | 55,425 | 32,966 | ||
| Exploration expenditure | 287,516 | 15,407 | 34,061 | 15,407 | ||
| Note 4 | Income Tax Expense | |||||
| The prima facie tax on loss before income tax isreconciled to the income tax as follows: | ||||||
| Prima facie tax on loss before income tax at 30%(2006: 30%) | ||||||
| -economic entity | (1,257,366) | (1,094,619) | (1,281,542) | (1,094,619) | ||
| Add: | ||||||
| Tax effect of:-provision for non recovery of loans | 832,071 | 146,886 | 832,071 | 146,886 | ||
| -exploration expenditure incurred in relation to aforeign permanent establishment | 10,218 | 627,632 | 10,218 | 627,632 | ||
| -non-deductible expenses | 73,918 | 62,008 | 73,918 | 62,008 | ||
| Temporary differences not brought to account | 341,159 | 258,093 | 365,335 | 258,093 | ||
| Income tax expense | - | - | - | - |
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007
NOTE 5 Key Management Personnel Compensation
a Names and positions held of economic and parent entity key management personnel in office at any time during the financial year are:
| Key Management Person | Position |
|---|---|
| Mr RJ Telford | Chairman – Executive |
| Dr JM Chisholm | Director – Executive |
| Mr JSF Dunlop | Director – Non-executive |
| Mr JD Kenny | Director – Non-executive |
| Mr J Starink | Director – Executive |
| Mr PR Sims | Chief Financial Officer |
Key management personnel remuneration has been included in the Remuneration Report section of the Directors Report.
b Options and Rights Holdings
Number of Options held by Key Management Personnel
| Balance | Granted as | Options | Balance | |
|---|---|---|---|---|
| 1.7.2006 | Compensation | Exercised | 30.6.2007 | |
| Mr RJ Telford | 6,558,322 | - | - | 6,558,322 |
| Dr JM Chisholm | 2,260,000 | - | - | 2,260,000 |
| Mr JSF Dunlop | 2,250,000 | - | - | 2,250,000 |
| Mr JD Kenny | 2,250,000 | - | - | 2,250,000 |
| Mr J Starink | - | - | - | - |
| Mr PR Sims | - | 2,250,000 | - | 2,250,000 |
| Total | 13,318,322 | 2,250,000 | - | 15,568,322 |
c. Shareholdings
Number of Shares held by Key Management Personnel
| Balance1.7.2006 | Received asCompensation | OptionsExercised | Net ChangeOther* | Balance30.6.2007 | |
|---|---|---|---|---|---|
| Mr RJ Telford | 13,568,124 | - | - | - | 13,568,124 |
| Dr JM Chisholm | 50,000 | - | - | 100,000 | 150,000 |
| Mr JSF Dunlop | - | - | - | - | - |
| Mr JD Kenny | - | - | - | - | - |
| Mr J Starink | - | - | - | - | - |
| Mr PR Sims | - | - | - | - | - |
| Total | 13,618,124 | - | - | 100,000 | 13,718,124 |
* Net Change Other refers to shares purchased or sold during the financial year.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007
| Consolidated Group | Parent Entity | ||||||
|---|---|---|---|---|---|---|---|
| 2007 | 2006 | 2007 | 2006 | ||||
| $ | $ | $ | $ | ||||
| Note 6 | Auditors' Remuneration | ||||||
| -- | Remuneration of the auditor of the parent entity for:auditing or reviewing the financial reporttaxation services | 29,6709,000 | 14,500- | 29,6709,000 | 14,500- | ||
| Note 7 | Earnings per Share | ||||||
| a | LossEarnings used to calculate basic and dilutive EPS | (4,191,218)(4,191,218) | (3,648,729)(3,648,729) | ||||
| b | Weighted average number of ordinary shares outstandingduring the year used in calculating basic and dilutive EPS | 237,310,914 | 184,346,151 | ||||
| Note 8 | Cash and Cash Equivalents | Consolidated Group2007$ | 2006$ | Parent Entity2007$ | 2006$ | ||
| Cash at bank and in handShort-term bank deposits | 338,3622,272,857 | 3,937,943- | 42,5022,272,857 | 3,934,620- | |||
| Cash at bank and on handThe effective interest rate on short-term bank deposits was 4.97% (2006:4.7%); these deposits have an average maturity of 30 days. | 2,611,219 | 3,937,943 | 2,315,359 | 3,934,620 | |||
| Reconciliation of Cash | |||||||
| Cash at the end of the financial year as shown in the cash flowstatement is reconciled to items in the balance sheet as follows: | |||||||
| Cash and cash equivalents | 2,611,219 | 3,937,943 | 2,315,359 | 3,934,620 | |||
| Note 9 | Trade and Other Receivables | ||||||
| CURRENTOther receivables | 119,925 | 49,212 | 118,374 | 49,212 | |||
| NON-CURRENTAmounts receivable from:Wholly-owned entities (a) | Provision for impairment of receivables - wholly- owned subsidiaries | --- | --- | 10,322,679(10,322,679)- | 7,599,109(7,599,109)- |
a The loans to controlled entities are advanced interest free, are unsecured and will be repaid when the respective subsidiary is generating sufficient funds and has the financial capacity to meet the loan commitment.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007
Note 10 Joint Venture
At 30 June 2007, the Company has interests in the following joint ventures whose principal activities are the exploration for gold, precious metals and base metals.
| Name of Project | % Interests | Other Parties | |
|---|---|---|---|
| 2007 | 2006 | ||
| Zeehan Tin Deposit – Tasmania | 40% | 40% | Western Metals Ltd 60% |
| Seiga – Wadi Allaqi, Egypt | 50% | 50% | Egyptian Mineral Resources Authority – 50% |
| Um Shashoba – Wadi Allaqi, Egypt | 50% | 50% | Egyptian Mineral Resources Authority – 50% |
| Haimur – Wadi Allaqi, Egypt | 50% | 50% | Egyptian Mineral Resources Authority – 50% |
| Nile Valley Block E – Wadi Allaqi, Egypt | 50% | 50% | Egyptian Mineral Resources Authority – 50% |
| Nile Valley Block A – Wadi Allaqi, Egypt | 50% | 50% | Egyptian Mineral Resources Authority – 50% |
| Um Garayat – Wadi Allaqi, Egypt | 50% | 50% | Egyptian Mineral Resources Authority – 50% |
| Koleit – Wadi Allaqi, Egypt | 50% | 50% | Egyptian Mineral Resources Authority – 50% |
| Um Tiur – Wadi Allaqi, Egypt | 50% | 50% | Egyptian Mineral Resources Authority – 50% |
| Abu Swayel – Wadi Allaqi, Egypt | 50% | 50% | Egyptian Mineral Resources Authority – 50% |
The Joint Ventures are of the type where initially one party contributes tenements with the other party earning a specified percentage by funding exploration activities. The Joint Venture does not hold any assets and accordingly the Company's share of exploration expenditure is accounted for in accordance with the policy set out in Note 1(h).
NOTE 11 Controlled Entities
| Controlled Entities Consolidated | Country of Incorporation | Percentage Owned (%)2007 | 2006 |
|---|---|---|---|
| Parent Entity:Gippsland Ltd | Aust | ||
| Subsidiaries of Gippsland Ltd: | |||
| Abutan Pty LtdTantalum International Pty LtdHere2Win.com Pty LtdNubian Resources plcTantalum Egypt LLC | AustAustAustUKEgypt | 10010010010050 | 10010010010050 |
Controlled Entities with Ownership Interest of 50% or Less
The parent entity holds 50% of the ordinary shares of Tantalum Egypt LLC. Under the Articles of Association, Tantalum International Pty Ltd has the sole right to nominate the Chairman of the Board of Directors and the Chief Executive Officer and has the casting vote at Board meetings.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007
| Note 12 | Consolidated Group | Parent Entity | ||
|---|---|---|---|---|
| Property, Plant and Equipment | 2007$ | 2006$ | 2007$ | 2006$ |
| PLANT AND EQUIPMENT | ||||
| Plant and equipment: | ||||
| At cost | 225,696 | 195,502 | 143,379 | 195,502 |
| Accumulated depreciation | (101,843) | (159,817) | (71,795) | (159,817) |
| Total Plant and equipment | 123,853 | 35,685 | 71,584 | 35,685 |
| Leasehold improvements: | ||||
| At cost | 33,385 | - | 18,251 | - |
| Accumulated amortisation | (2,330) | - | (1,699) | - |
| Total Leasehold improvements | 31,055 | - | 16,552 | - |
| Total Property, Plant and Equipment | 154,908 | 35,685 | 88,136 | 35,685 |
a Movements in Carrying Amounts
Movement in the carrying amounts of each class of property, plant and equipment between the beginning and the end of the current financial year
| Consolidated Group | Plant and Equipment | Leasehold Improvements | Total |
|---|---|---|---|
| Balance at 1 July 2005 | 41,942 | - | 41,942 |
| Additions | 14,239 | - | 14,239 |
| Depreciation Expense | (20,496) | - | (20,496) |
| Balance at 30 June 2006 | 35,685 | - | 35,685 |
| Additions | 126,957 | 33,385 | 160,342 |
| Depreciation Expense | (38,789) | (2,330) | (41,119) |
| Balance at 30 June 2007 | 123,853 | 31,055 | 154,908 |
| Parent Entity | Plant and Equipment | Leasehold Improvements | Total |
|---|---|---|---|
| Balance at 1 July 2005 | 41,942 | - | 41,942 |
| Additions | 14,239 | - | 14,239 |
| Depreciation Expense | (20,496) | - | (20,496) |
| Balance at 30 June 2006 | 35,685 | - | 35,685 |
| Additions | 75,456 | 18,251 | 93,707 |
| Transfer to Subsidiary | (17,720) | - | (17,720) |
| Depreciation Expense | (21,837) | (1,699) | (23,536) |
| Balance at 30 June 2007 | 71,584 | 16,552 | 88,136 |
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007
| Consolidated Group | Parent Entity | |||
|---|---|---|---|---|
| 2007$ | 2006$ | 2007$ | 2006$ | |
| Note 13Other Assets | ||||
| CURRENT | ||||
| PrepaymentsAccrued revenue | 19,5302,881 | 914- | 19,5302,881 | 915- |
| 22,411 | 914 | 22,411 | 915 | |
| NON CURRENT | ||||
| Investment in Subsidiaries | - | - | 305 | 3,522 |
| Exploration expenditure capitalised- exploration and evaluation phases- provision for impairment | 2,809,451(2,809,451) | 1,315,557(1,315,557) | -- | -- |
| - | - | - | - | |
| Project development expenditure capitalised- development phase | 3,784,660 | 3,041,990 | - | - |
| - provision for impairment | (3,784,660)- | (3,041,990)- | -- | -- |
a Movements in Carrying Amounts
Movement in the carrying amounts of exploration expenditure and project development expenditure between the beginning and the end of the current financial year
| Consolidated Group | Exploration Expenditure | Project Development Expenditure |
|---|---|---|
| Expenditure | ||
| Balance at 1 July 2006 | 1,315,557 | 3,041,990 |
| Additions | 1,493,894 | 742,670 |
| Balance at 30 June 2007 | 2,809,451 | 3,784,660 |
| Impairment | ||
| Balance at 1 July 2006 | (1,315,557) | (3,041,990) |
| Impairment | (1,493,894) | (742,670) |
| Balance at 30 June 2007 | (2,809,451) | (3,784,660) |
Note 14 Trade and Other Payables
| Consolidated Group | Parent Entity | |||
|---|---|---|---|---|
| 2007 | 2006 | 2007 | 2006 | |
| $ | $ | $ | $ | |
| CURRENT | ||||
| Sundry payables and accrued expensesAmounts payable to: | 396,193 | 190,529 | 139,530 | 190,529 |
| -key management personnel related entities | 61,984 | 17,580 | 61,984 | 17,580 |
| 458,177 | 208,109 | 201,514 | 208,109 |
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007
| Note 15 | Tax | Consolidated Group20072006$$ | 2007$ | Parent Entity2006$ | |
|---|---|---|---|---|---|
| Assets | |||||
| Deferred tax assets not brought to account, the benefits ofwhich will only be realised if the conditions of deductibility setout in Note 1b occur | |||||
| Prior year tax losses brought forward | 1,661,650 | 1,393,412 | 1,661,650 | 1,393,412 | |
| Additional tax losses | 391,762 | 268,238 | 391,762 | 268,238 | |
| Tax losses carried forward | 2,053,412 | 1,661,650 | 2,053,412 | 1,661,650 | |
| The company continues to comply with the condition fordeductibility imposed by tax legislation; and no changes to taxlegislation adversely affected the Company in realising thebenefit from the deductions for the losses.The economic entity has not entered into a tax consolidatedgroup. | |||||
| Note 16 | Provisions | ||||
| Long-termEmployeeBenefits | Total | ||||
| Consolidated Group | |||||
| Opening balance at 1 July 2006Additional provisions | 24,92342,724 | 24,92342,724 | |||
| Amounts used | (29,346) | (29,346) | |||
| Balance at 30 June 2007 | 38,301 | 38,301 | |||
| Parent Entity | |||||
| Opening balance at 1 July 2006Additional provisions | 24,92315,899 | 24,92315,899 | |||
| Amounts used | (29,346) | (29,346) | |||
| Balance at 30 June 2007 | 11,476 | 11,476 | |||
| Consolidated Group | Parent Entity | ||||
| 2007 | 2006 | 2007 | 2006 | ||
| Analysis of Total Provisions | $ | $ | $ | $ | |
| Current | 38,301 | 9,923 | 11,476 | 9,923 | |
| Non-current | - | 15,000 | - | 15,000 | |
| 38,301 | 24,923 | 11,476 | 24,923 |
Provision for Long-term Employee Benefits
A provision has been recognised for employee entitlements relating to long service leave. In calculating the present value of future cash flows in respect of long service leave, the probability of long service leave being taken is based on historical data. The measurement and recognition criteria relating to employee benefits has been included in Note 1 to this report.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007
| Consolidated Group | Parent Entity | ||||
|---|---|---|---|---|---|
| 2007 | 2006 | 2007 | 2006 | ||
| $ | $ | $ | $ | ||
| Note 17 | Issued Capital | ||||
| 259,524,592 (2006: 232,851,926) ordinary shares | 25,409,780 | 22,658,274 | 25,409,780 | 22,658,274 | |
| The company has no maximum authorised share capital. | |||||
| a | Ordinary Shares | ||||
| At the beginning of reporting period | 22,658,274 | 15,868,236 | 22,658,274 | 15,868,236 | |
| Shares issued during the year | |||||
| •On 10 October 2005 the Company issued 15,000,000ordinary shares at 9.3 cents each | - | 1,388,889 | - | 1,388,889 | |
| •On 17 January and 21 April 2006 the Company issued | |||||
| 1,000 & 32,000 ordinary shares respectively following an | |||||
| option conversion at 9 cents each•On 17 March 2006 the Company issued 24,000,000 | - | 2,970 | - | 2,970 | |
| ordinary shares at 11.5 cents each | - | 2,767,623 | - | 2,767,623 | |
| •On 27 March 2006 the Company issued 6,000,000 | |||||
| ordinary shares as settlement of a dispute for nil | - | - | - | - | |
| •On 31 May 2006 the Company issued 25,000,000ordinary shares at 10.8 cents each | - | 2,700,000 | - | 2,700,000 | |
| •On 7 February 2007 the company issued 6,000 ordinary | |||||
| shares following an option conversion at 9 cents each | 540 | - | 540 | - | |
| •On 1 May 2007 the Company issued 26,666,666 ordinary | |||||
| shares at 10.9 cents each•Less: Issue costs associated with capital raisings | 2,895,754(144,788) | -(69,444) | 2,895,754(144,788) | -(69,444) | |
| At reporting date | 25,409,780 | 22,658,274 | 25,409,780 | 22,658,274 |
| Consolidated Group | |||
|---|---|---|---|
| b | Options | 2007$Number of Options | 2006$Number of Options |
| The following options over ordinary shares are on issue: | |||
| Options exercisable at 9 cents on or before 31/12/2007 (listed)Options exercisable at 4 UK pence on or before 31/12/2007 (unlisted))Options exercisable at 15 cents on or before 31/12/2007 (unlisted))Options exercisable at 13.5 cents on or before 16/05/2012 (unlisted)) | 43,732,39310,000,0004,500,00025,000,000 | 43,738,39310,000,0002,250,00025,000,000 | |
| 83,232,393 | 80,988,393 |
Note 18 Reserves
Option Reserve
The option reserve records items recognised as expenses on valuation of employee share options.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007
| Consolidated Group | Parent Entity | |||||
|---|---|---|---|---|---|---|
| 2007 | 2006 | 2007 | 2006 | |||
| $ | $ | $ | $ | |||
| Note 19 | Capital and Leasing Commitments | |||||
| a | Operating Lease Commitments | |||||
| Non-cancellableoperatingleasescontractedbutcapitalised in the financial statements | not | |||||
| Payable – minimum lease payments | ||||||
| -not later than 12 months | 114,612 | 73,662 | 96,000 | 73,662 | ||
| -between 12 months and 5 years | 328,282 | 306,600 | 314,323 | 306,600 | ||
| -greater than 5 years | - | 6,388 | - | 6,388 | ||
| 442,894 | 386,650 | 410,323 | 386,650 |
Perth Office Lease
The property lease is a non-cancellable lease with a five year term, with rent payable monthly in advance. Contingent rental provisions within the lease agreement require the minimum lease payments shall be increased by the lower of CPI or 5% per annum. An option exists to renew the lease at the end of the five-year term for an additional term of five years.
Cairo Office Lease
The property lease is a non-cancellable lease with a two year term, with rent payable monthly in advance.
b Capital Expenditure Commitments
There were no capital commitments at reporting date
Note 20 Segment Reporting
Segment Reporting – Geographical Segments
| Segment Revenues fromExternal Customers | Carrying Amount ofSegment Assets | ||||
|---|---|---|---|---|---|
| 2007$ | 2006$ | 2007$ | 2006$ | ||
| Geographical Location: | |||||
| Australia | 127,161 | 30,345 | 2,544,282 | 4,020,531 | |
| Egypt | 8,269 | - | 364,181 | 3,223 | |
| 135,430 | 30,345 | 2,908,463 | 4,023,754 |
Business Segments
The economic entity only operates in the mining and exploration segment.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007
| Consolidated Group | Parent Entity | ||||
|---|---|---|---|---|---|
| 2007 | 2007 | 2006 | |||
| Note 21 | Cash Flow Information | $ | $ | $ | $ |
| a | Reconciliation of cash flow from operations with loss afterincome tax | ||||
| Loss after income tax | (4,191,218) | (3,648,729) | (4,271,808) | (3,648,729) | |
| Non cash flows in loss | |||||
| Depreciation | 41,119 | 20,496 | 23,536 | 20,496 | |
| Provision for impairment of non-current investments | 2,236,564 | 2,082,011 | 2,768,260 | 2,571,632 | |
| Foreign exchange loss (gain) | 53,429 | (43,441) | 38,262 | (43,441) | |
| Issue of options – non cash | 60,975 | 77,827 | 60,975 | 77,827 | |
| Changes in assets and liabilities: | |||||
| -(increase) decrease in sundry debtors | (73,594) | (16,134) | (72,042) | (16,134) | |
| -(increase) decrease in prepayments | (18,614) | 14,355 | (18,615) | 14,355 | |
| -increase (decrease) in payables | 450,678 | 108,884 | (6,595) | 108,884 | |
| -increase (decrease) in provisions | 13,378 | 15,923 | (13,447) | 15,923 | |
| Cash flow from operations | (1,427,283) | (1,388,808) | (1,491,474) | (899,187) |
There were no material non cash items during the financial year.
Note 22 Subsequent Events
No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years.
Note 23 Related Party Transactions
Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.
Transactions with related parties:
| Consolidated Group | Parent Entity | ||||
|---|---|---|---|---|---|
| 2007$ | 2006$ | 2007$ | 2006$ | ||
| a) | A company controlled by Mr RJTelford, Eco International Pty Ltd, | ||||
| received management fees. | 207,069 | 174,960 | 207,069 | 174,960 | |
| b) | A company controlled by Dr JM | ||||
| Chisholm, Mandu Pty Ltd, received | |||||
| geological consulting fees. | 211,054 | 160,417 | 211,054 | 160,417 | |
| c) | A company controlled by Mr JSF | ||||
| Dunlop, John S Dunlop & Associates | |||||
| Pty Ltd, received directors and mining | |||||
| consulting fees. | 45,640 | 78,910 | 45,640 | 78,910 | |
| d) | A company controlled by Mr JD | ||||
| Kenny, Ventureworks Pty Ltd, | |||||
| received director's fees. | 38,333 | 36,000 | 38,333 | 36,000 | |
| e) | The parent entity, Gippsland Limited, | ||||
| has made loans to its controlled | |||||
| entities. These loans are interest free, | |||||
| unsecured and at call. | - | - | 7,054,347 | 3,227,981 |
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007
Note 24 Financial Instruments
a Financial Risk Management
The group's financial instruments consist mainly of deposits with banks, short-term investments, accounts receivable and payable, loans to and from subsidiaries and leases.
The main purpose of non-derivative financial instruments is to raise finance for group operations. The group does not speculate in the trading of derivative instruments.
Financial Risks
The main risks the group is exposed to through its financial instruments are foreign currency risk, liquidity risk and credit risk.
Foreign currency risk
The group is exposed to fluctuations in foreign currencies arising from the purchase of goods and services in currencies other than the group's measurement currency.
Liquidity risk
The group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate funds are maintained.
Credit risk
The consolidated group does not have any material credit risk exposure to any single receivable or group of receivables under financial instruments entered into by the consolidated group.
b Financial Instruments
Interest Rate Risk
The consolidated group exposure to interest rate risk, which is the risk that a financial instrument's value will fluctuate as a result of changes in market interest rates and the effective weighted average interest rates on classes of financial assets is as follows:
| Weighted AverageEffective InterestRate | FloatingInterest Rate | Non InterestBearing | Total | |||||
|---|---|---|---|---|---|---|---|---|
| 2007 | 2006 | 2007 | 2006 | 2007 | 2006 | 2007 | 2006 | |
| Financial assetsCash assets | 4.97% | 4.70% | 2,611,219 | 3,937,943 | - | - | 2,611,219 | 3,937,943 |
| Receivables | - | - | 119,925 | 49,212 | 119,925 | 49,212 | ||
| Total financial assets | 2,611,219 | 3,937,943 | 119,925 | 49,212 | 2,731,144 | 3,987,155 | ||
| Financial liabilities:Payables | - | - | 458,177 | 208,109 | 458,177 | 208,109 | ||
| Total financial liabilities | - | - | 458,177 | 208,109 | 458,177 | 208,109 |
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007
Note 25 Changes in Accounting Policy
a. The consolidated group changed its accounting policy for the financial year ending 30 June 2007 relating to the capitalisation of exploration and project development expenditure. Exploration and project development expenditure was previously expensed by the parent entity in the year it was incurred. The group has now elected to capitalise exploration and project development expenditure in the appropriate subsidiary company. This change has been implemented as the directors believe it will provide more relevant information and ensure that the free carried share of the joint venture partner in the exploration and development of the projects is recovered from the cash flow of the project when it reaches the production stage.
The aggregate effect of the change in accounting policy on the annual financial statements for the year ended 30 June 2007 is as follows:
| Previously | Previously | |||||||
|---|---|---|---|---|---|---|---|---|
| Stated2007 | Adjustment2007 | Restated2007 | Stated2006 | Adjustment2006 | Restated2006 | |||
| Consolidated Group | ||||||||
| Income Statement | ||||||||
| Exploration | (1,781,410) | 1,493,894 | (287,516) | (1,294,545) | 1,279,138 | (15,407) | ||
| Project Development | (778,196) | 742,670 | (35,526) | (797,563) | 797,563 | - | ||
| Impairment | - | (2,236,564) | (2,236,564) | (5,310) | (2,076,701) | (2,082,011) | ||
| Loss before income tax | (4,191,218) | - | (4,191,218) | (3,648,729) | - | (3,648,729) | ||
| Basic and diluted loss per share | (1.77) | - | (1.77) | (1.98) | - | (1.98) | ||
| Balance Sheet | ||||||||
| Exploration | 36,419 | 2,773,032 | 2,809,451 | 36,419 | 1,279,138 | 1,315,557 | ||
| Project Development | - | 3,784,660 | 3,784,660 | - | 3,041,990 | 3,041,990 | ||
| Provision for Impairment | (36,419) | (6,557,692) | (6,594,111) | (36,419) | (4,321,128) | (4,357,547) | ||
| Parent Entity | ||||||||
| Income Statement | ||||||||
| Exploration | (1,527,955) | 1,493,894 | (34,061) | (1,294,545) | 1,279,138 | (15,407) | ||
| Project Development | (742,670) | 742,670 | - | (797,563) | 797,563 | - | ||
| Impairment | (531,696) | (2,236,564) | (2,768,260) | (494,931) | (2,076,701) | (2,571,632) | ||
| Loss before income tax | (4,271,808) | - | (4,271,808) | (3,648,729) | - | (3,648,729) | ||
| Balance Sheet | ||||||||
| Intercompany Loans | 3,764,987 | 6,557,692 | 10,322,679 | 3,277,981 | 4,321,128 | 7,599,109 | ||
| Provision for Impairment | (3,764,987) | (6,557,692) | (10,322,679) | (3,277,981) | (4,321,128) | (7,599,109) |
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007
Note 25 Changes in Accounting Policy (continued)
b. The following Australian Accounting Standards have been issued or amended and are applicable to the parent and consolidated group but are not yet effective. They have not been adopted in preparation of the financial statements at reporting date.
| AASBStandards Affected | Outline of Amendment | Application Date | Application Date | ||
|---|---|---|---|---|---|
| Amendment | of Standard | for Group | |||
| AASB 2005-10 | AASB 1 | First time adoption of | The disclosure | 1 Jan 2007 | 1 July 2007 |
| Amendments to | AIFRS | requirements of AASB 132: | |||
| Australian | AASB 4 | Insurance Contracts | Financial Instruments: | ||
| Accounting | AASB 101 | Presentation of | Disclosure and Presentation | ||
| Standards | Financial Statements | have been replaced due to | |||
| AASB 114 | Segment Reporting | the issuing of AASB 7: | |||
| AASB 117 | Leases | Financial Instruments: | |||
| AASB 133 | Earnings per Share | Disclosures in August 2005. | |||
| AASB 1023 | General Insurance | These amendments will | |||
| Contracts | involve changes to financial | ||||
| AASB 1038 | Life Insurance | instrument disclosures | |||
| Contracts | within the financial report. | ||||
| AASB 139 | Financial Instruments: | However, there will be no | |||
| Recognition and | direct impact on amounts | ||||
| Measurement | included in the financial | ||||
| report as it is a disclosure | |||||
| standard. | |||||
| AASB 7 Financial | AASB 132 | Financial Instruments: | As above. | 1 Jan 2007 | 1 July 2007 |
| Instruments: | Disclosure and | ||||
| Disclosures | Presentation |
Note 26 Company Details
The registered office of the company is:
Gippsland Limited Suite 4, 207 Stirling Highway Claremont WA 6010
DIRECTORS' DECLARATION
The directors of Gippsland Limited declare that:
-
- the financial statements and notes are in accordance with the Corporations Act 2001 and:
- (a) comply with Accounting Standards and Corporations Regulations 2001; and
- (b) give a true and fair view of the financial position as at 30 June 2007 and of the performance for the year ended on that date of the Company and economic entity;
-
- the Chief Executive Officer and Chief Finance Officer have declared that:
- (a) the financial records of the company for the financial year have been properly maintained in accordance with section 286 of the Corporation Act 2001; and
- (b) the financial statements and notes for the financial year comply with Accounting Standards; and
- (c) the financial statements and notes for the financial year give a true and fair view.
-
- There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors dated this 27th day of September 2007.
R J TELFORD DIRECTOR
.
INDEPENDENT AUDIT REPORT TO THE MEMBERS OF GIPPSLAND LIMITED
WHK HORWATH
INDEPENDENT AUDIT REPORT TO MEMBERS OF GIPPSLAND LIMITED
We have audited the accompanying financial report of Gippsland Limited (the company) and Gippsland Limited and Controlled Entities (the consolidated entity), which comprises the balance sheet as at 30 June 2007, and the income statement, statement of changes in equity and cash flow statement for the year ended on that date, a summary of significant accounting policies and other explanatory notes and the directors' declaration of the consolidated entity comprising the company and the entities it controlled at the year's end or from time to time during the financial year.
As permitted by the Corporations Regulations 2001, the company has disclosed information about the remuneration of directors and executives (remuneration disclosures), required by Accounting Standard AASB 124: Related Party Disclosures, under the heading 'Remuneration Report' in pages 7 to 9 of the directors' report and not in the financial report.
Directors' Responsibility for the Financial Report
The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001*.* This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note1, the directors also state, in accordance with Accounting Standard AASB 101: Presentation of Financial Statements, that compliance with the Australian equivalents to International Financial Reporting Standards (IFRS) ensures that the financial report, comprising the financial statements and notes, complies with IFRS.
The directors also are responsible for preparation and presentation of the remuneration disclosures contained in the directors' report in accordance with the Corporations Regulations 2001.
Auditor's Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement and that the remuneration disclosures in the directors' report comply with Accounting Standard AASB 124.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, provided to the directors of Gippsland Limited on 26 September 2007 would be in the same terms if provided to the directors as at the date of this auditor's report.
Auditor's Opinion
In our opinion, the financial report of Gippsland Limited is in accordance with the Corporations Act 2001 including:
- (a) (i) giving a true and fair view of the company's and consolidated entity's financial position as at 30 June 2007 and of their performance for the year ended on that date; and
- (ii) complying with Australian Accounting Standards (including Australian Accounting Interpretations) and the Corporations Regulations 2001.
- (b) the remuneration disclosures that are contained in pages 7 to 9 of the directors' report comply with Accounting Standard AASB 124.
- (c) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
WHK HORWATH PERTH AUDIT PARTNERSHIP
CYRUS PATELL Principal
Perth, WA
Dated this 27th day of September 2007
ASX ADDITIONAL INFORMATION
Pursuant to the Listing Requirements of the Australian Stock Exchange Limited, the shareholder information set out below was applicable as at 21 September 2007.
A. Distribution of Equity Securities
Analysis of numbers of shareholders and option holders by size of holding:
| Spread of Holdings | Number of Holders | ||
|---|---|---|---|
| Ordinary Shares | Listed Options | ||
| 1 - 1,000 | 59 | 53 | |
| 1,001 – 5,000 | 159 | 43 | |
| 5001 – 10,000 | 217 | 20 | |
| 10,001 – 100,000 | 630 | 81 | |
| 100,001 and over | 228 | 67 | |
| TOTAL | 1,293 | 264 | |
| The total number of securities on issue | 259,524,592 | 43,732,393 | |
| The number of holders holding less than | |||
| a marketable parcel of securities | 224 |
B. Twenty Largest Shareholders
| Name | Number of Shares | % |
|---|---|---|
| International Finance Corporation | 25,000,000 | 9.63% |
| Euroclear Nominees Limited | 19,328,333 | 7.45% |
| Taveroam Pty Ltd | 15,500,000 | 5.97% |
| Smith & Williamson Nominees Limited | 12,450,000 | 4.80% |
| ANZ Nominees Limited | 10,935,138 | 4.21% |
| Situate Pty Ltd | 10,200,000 | 3.93% |
| King Town Holdings Pty Ltd | 9,525,000 | 3.67% |
| Eco International Pty Ltd | 6,997,235 | 2.70% |
| J M Finn Nominees Limited | 5,579,000 | 2.15% |
| Sunvest Corporation Limited | 5,166,665 | 1.99% |
| Starvest PLC | 4,500,000 | 1.73% |
| Barclayshare Nominees Limited | 4,107,490 | 1.58% |
| Teawood Nominees Limited | 3,750,000 | 1.44% |
| L R Nominees Limited | 3,415,016 | 1.32% |
| Mr Robert John Telford & Robin K Telford | 3,336,429 | 1.29% |
| RJ & RK Telford | 3,234,460 | 1.25% |
| Alsanto Nominees Pty Ltd | 3,100,000 | 1.19% |
| Pershing Keen Nominees Limited | 3,021,332 | 1.16% |
| HSBC Custody Nominees | 2,637,600 | 1.02% |
| Giltspur Nominees Limited | 2,531,691 | 0.98% |
| 154,315,389 | 59.46% |
ASX ADDITIONAL INFORMATION
30,317,980 69.33%
C. Twenty Largest Listed Option Holders
| Name | Number ofOptions | % |
|---|---|---|
| Eco International Pty Ltd | 6,259,750 | 14.31% |
| King Town Holdings Pty Ltd | 3,350,000 | 7.66% |
| Situate Pty Ltd | 3,070,000 | 7.02% |
| Mandu Superannuation Fund | 2,260,000 | 5.17% |
| Ventureworks JDK Pty Ltd | 2,250,000 | 5.14% |
| David James Gray | 2,050,000 | 4.69% |
| Alsanto Nominees Pty Ltd | 2,000,000 | 4.57% |
| Averon Holdings Limited | 1,000,000 | 2.29% |
| Edgewater Estates Limited | 1,000,000 | 2.29% |
| Windowland Pty Ltd | 1,000,000 | 2.29% |
| Anthony John Vetter | 1,000,000 | 2.29% |
| SH & PA Hellsing (Hellsing Super Fund Account) | 880,000 | 2.01% |
| Broko Investments Pty Ltd | 645,000 | 1.47% |
| David Christopher Kemp | 601,683 | 1.38% |
| John Langley Webb | 571,140 | 1.31% |
| Jacqou Investments Pty Ltd | 509,412 | 1.16% |
| Cumbak Pty Ltd | 500,000 | 1.14% |
| Peter John Baker | 488,000 | 1.12% |
| David Christopher Kemp | 452,634 | 1.04% |
| Robert Anthony Healy & Helen Healy | 430,361 | 0.98% |
D. Unlisted Option Holders
| Name | Number ofOptions | % | |
|---|---|---|---|
| International Finance Corporation | 25,000,000 | 63% | |
| Credit Suisse First Boston Client Nominees Ltd | 10,000,000 | 25% | |
| JSF Dunlop | 2,250,000 | 6% | |
| PR Sims | 2,250,000 | 6% | |
| 39,500,000 | 100% | ||
| E. | Substantial Shareholders | Number ofOrdinary Sharesin which interestsheld | % |
| Situate Pty Ltd and Taveroam Pty Ltd | 25,700,000 | 9.90% | |
| International Finance Corporation | 25,000,000 | 9.63% | |
| Eco International Pty Ltd and RJ & RK Telford | 13,568,124 | 5.23% |