Aorere full year result to 31 March 2019

Directors' Review for the year to 31 March 2019 Financial results Your directors submit the audited financial statements of Aorere Resources Limited for the year to 31 March 2019. The trading result for the period was a loss of 271,000 (2018 - $528,000 loss). The reduced loss arose due to a reduction in operating costs Operations Report As at 21 May 2019, our portfolio comprised the following investments. Chatham Rock Phosphate Chatham Rock Phosphate ("CRP") remains the investment that we are most involved with operationally and it presently represents 50.5% of our assets. We are also one of the major CRP shareholders with 2.2% and in conjunction with AOR and CRP directors, staff and consultants hold 28.8%, effectively a controlling interest. CRP was granted a mining permit in 2013 to develop New Zealand's only significant source of environmentally- friendly pastoral phosphate fertiliser and is now preparing to embark on a revised environmental consent application. CRP's role is focused on delivering a secure and sustainable local supply of low-cadmium phosphate that will reduce fertiliser run-off into waterways, produce healthier soils and shrink fertiliser needs over time. The resource has an estimated gross value of $5 to $7 billion, representing one of New Zealand's most valuable mineral assets and is of huge strategic significance because phosphate is essential to maintain New Zealand's high agricultural productivity. Local and international investors have contributed more than $40 million to evaluate the project's financial viability, environmental benefits and impacts, technical and logistical requirements, local and international product uses. CRP proposes to extract up to 1.5 million tonnes of phosphate nodules from the top half metre of sand on identified parts of an 820km2 area on the Chatham Rise, 450km off the west coast of New Zealand, in waters of 400m. The earlier environmental consenting process has established extraction would have no material impact on fishing yields or profitability, marine mammals or seabirds. In progressing plans to submit a new application, CRP notes that the 2017 revisions to the 2013 EEZ Act achieved helpful changes in the permitting process. CRP continues to interact with iwi, academic, industry and central government in order to get the message across that its success will ensure that New Zealand can benefit from an environmentally superior phosphate source. Significantly, environmental permit grants relating to the mining of other marine phosphate deposits offshore Mexico and Namibia appear to be getting closer. In March 2017, CRP listed on the Toronto Stock Exchange to provide a more useful share-trading platform for overseas shareholders and facilitate the capital raising needed for the consenting process and beyond. Subsequently, at the request of their European shareholder base, CRP listed on the Frankfurt Stock Exchange. As earlier announced CRP is also seeking to own other sustainable rock phosphate sources, to move from being a single project company. Asian Mineral Resources Our investment in TSX.V listed Asian Mineral Resources (AMR) dates back to 2000. AMR has divested its 90-per-cent ownership interest in the Ban Phuc nickel mine in Vietnam to Ta Khoa Mining Ltd, a company established by its longstanding in-country senior manager, Stephen Ennor. AMR is now effectively a shell company and the AMR Board is evaluating a number of opportunities with the objective of taking AMR in a new direction. We look forward with great anticipation to the next steps and remain represented on the AMR board. The Future We hold stakes in two companies that still have promising prospects. Our other key asset is the NZX main board listing status enjoyed by Aorere Resources - these listings are expensive to achieve via an IPO process. Acquisition of a listing such as ours offers a path to market that can be an attractive alternative to private companies seeking to join the NZX. Your directors are exploring ways of unlocking this value while still retaining control of our existing assets. As already announced we propose to seek further capital from shareholders in order to continue with these objectives. Chris Castle Peter Liddle Managing director Chairman 22 May 2019 Aorere Resources Limited Results for announcement to the market Reporting Period 12 months to 31 March 2019 Previous Reporting Period 12 months to 31 March 2018 Amount NZ(000s) Percentage change Revenue from ordinary activities NZ$ 294 44.1% Profit (loss) from ordinary activities after tax attributable to security holder (NZ$ 271) 47.1% Net profit (loss) attributable to security holders (NZ$ 271) 47.1% Interim/Final Dividend Amount per security Imputed amount per security It is not proposed to pay a dividend for the reporting period. Record Date Not Applicable Dividend Payment Date Not Applicable Comments: This announcement should be read in conjunction with the attached Aorere Resources Limited Financial Statements for the year ended 31 March 2019 and the Full Year results presentation. 31 March 2019 31 March 2018 Net Tangible Assets per security NZ$0.00 NZ$0.00 31 March 2019 31 March 2018 Basic Earnings per share NZ$0.00 NZ$0.00 Diluted Earnings per share NZ$0.00 NZ$0.00 Audit: This report is based on financial statements which have been audited. Aorere's auditors have issued an unqualified audit opinion, and a copy of the audit report is included in the attached Financial Statements. AORERE RESOURCES LIMITED Financial Statements For the year ended 31 March 2019 AORERE RESOURCES LIMITED Directory Directors: Peter Liddle (Chairman) (1)(2) Chris Castle Jill Hatchwell (1) Linda Sanders Simon Henderson (1)(2) Contacts: +643 525 9170 or +6421 558 185 or chris@widespread.co.nz Website: www.aorereresources.co.nz Headquarters: Level 1, 93 The Terrace, Wellington Postal: P O Box 231, Takaka 7142 Registered office: 1232 State Highway 60, Onekaka, Golden Bay Share registry: Link Market Services, 80 Queen Street, Auckland Auditors: BDO Wellington Audit Limited, Chartered Accountants House, 50 Customhouse Quay, Wellington Legal Advisers: Duncan Cotterill, Chartered Accountants House, 50 Customhouse Quay, Wellington Bankers: ANZ Banking Group (New Zealand) Ltd, 215-229 Lambton Quay, Wellington (1) Member of Audit Committee (2) Member of Remuneration Committee AORERE RESOURCES LIMITED Directors' Report In the opinion of the directors of Aorere Resources Limited, the financial statements and notes, on pages 5 to 27: o Comply with New Zealand generally accepted accounting practice and give a true and fair view of the financial position of the Company and Group as at 31 March 2019 and the results of their operations and cash flows for the year ended on that date. o Have been prepared using appropriate accounting policies, which have been consistently applied and supported by reasonable judgements and estimates. The directors believe that proper accounting records have been kept which enable, with reasonable accuracy, the determination of the financial position of the Company and Group and facilitate compliance of the financial statements with the Financial Reporting Act 2013. The directors consider that they have taken adequate steps to safeguard the assets of the Company and Group, and to prevent and detect fraud and other irregularities. Internal control procedures are also considered to be sufficient to provide a reasonable assurance as the integrity and reliability of the financial statements. The directors are pleased to present the financial statements of Aorere Resources Limited for the year ended 31 March 2019. For and on behalf of the Board of Directors: ........................................ .................................................... Peter Liddle Chris D Castle Director Director 22 May 2019 22 May 2019 AORERE RESOURCES LIMITED CONTENTS Page Statement of Financial Position 5 Statement of Profit or Loss and Other Comprehensive Income 6 Statement of Changes in Equity 7 Statement of Cash Flows 8 Notes to the Financial Statements 9-27 Independent Auditors' Report 28-30 AORERE RESOURCES LIMITED Statement of Financial Position As at 31 March 2019 Group In thousands of dollars Note 2019 2018 Assets Other investments 10 111 204 Investments in Chatham Rock Phosphate Limited 9 91 202 Total non-current assets 202 406 Cash and cash equivalents 12 1 33 Trade and other receivables 13 7 10 Other investments 10 2 2 Prepayments 6 11 Total current assets 16 56 Total assets 218 462 Equity Share capital 16 14,342 14,342 Share warrant reserve 16 5 5 Accumulated losses 16 (14,444) (14,173) Total equity attributable to equity holders of the Company (97) 174 Total equity (97) 174 Liabilities Trade and other payables 14 280 253 Other financial liabilities 15 35 - Total current liabilities 315 253 Other financial liabilities 15 - 35 Total non-current liabilities - 35 Total equity and liabilities 218 462 The financial statements have been approved by the Board of Directors on 22 May 2019. The notes on pages 9 to 27 are an integral part of these financial statements. AORERE RESOURCES LIMITED Statement of Profit or Loss and Other Comprehensive Income For the year ended 31 March 2019 Group In thousands of dollars Note 2019 2018 Revenue 6 294 204 Net Finance income/(expenses) 3 (1) Administration expenses 7 (317) (502) (Loss)/gain on disposal of fair value through profit and loss investments (2018: available-for-sale investments) (6) 18 Change in fair value of financial assets at fair value through profit and loss (2018: Impairment of available-for-sale financial assets) (245) (221) Impairment of investments (-) (10) Profit/(loss) before income tax (271) (512) Income tax credit/(expense) 8 - - Profit/(loss) for the year attributable to shareholders (271) (512) Other Comprehensive income Items that may be reclassified to profit or loss Change in fair value of available-for-sale financial assets - (16) Other comprehensive income for the year, net of tax - (16) Total other comprehensive income (271) (528) Basic (loss)/earnings per share 17 (0.018) (0.037) Diluted (loss)/earnings per share (0.018) (0.037) The notes on pages 9 to 27 are an integral part of these financial statements. AORERE RESOURCES LIMITED Statement of Changes in Equity For the year ended 31 March 2019 In thousands of dollars Share capital Available for sale fair value reserve Share warrant reserve Accumulated losses Total Balance at 1 April 2018 14,342 - 5 (14,173) 174 Profit/(loss) for the year - - - (271) (271) TTotal comprehensive income for the year - - - (271) (271) Balance at 31 March 2019 14,342 - 5 (14,444) (97) Balance at 1 April 2017 14,081 16 5 (13,661) 441 Profit/(loss) for the year - - - (512) (512) Other comprehensive income - (16) - - (16) TTotal comprehensive income for the year - (16) - (512) (528) Transactions with owners in their capacity as owners Issue of shares 264 - - - 264 Share issue costs (3) - - - (3) Balance at 31 March 2018 14,342 - 5 (14,173) 174 The notes on pages 9 to 27 are an integral part of these financial statements. AORERE RESOURCES LIMITED Statement of Cash Flows For the year ended 31 March 2019 Group In thousands of dollars Note 2019 2018 Cash flows from operating activities Cash received from customers 144 204 Interest received 2 2 Cash paid to suppliers (231) (370) Tax refund received - 1 Net cash (used in) operating activities 19 (85) (163) Cash flows from investing activities Proceeds from sale of other investments non-current 33 51 Proceeds from related parties 20 30 Proceeds from NZX Bond - 3 Purchase of other investments non-current - (60) Net cash generated from investing activities 53 24 Cash flows from financing activities Proceeds from issue of share capital - 116 Net cash from financing activities - 116 Net increase/(decrease) in cash and cash equivalents (32) (23) Cash and cash equivalents at 1 April 33 56 Cash and cash equivalents at 31 March 12 1 33 The notes on pages 9 to 27 are an integral part of these financial statements. AORERE RESOURCES LIMITED Notes to Financial Statements For the year ended 31 March 2019 Page 1. Reporting entity 10 2. Basis of preparation 10-11 3. Significant accounting policies 11-15 4. Determination of fair values 15 5. Segment reporting 16 6. Revenue 17 7. Administrative expenses 17 8. Income tax expense in the Statement of profit or loss and other comprehensive income 18 9. Investment in Chatham Rock Phosphate 19 10. Investments 19 11. Deferred tax assets and liabilities 19-20 12. Cash and cash equivalents 20 13. Trade and other receivables 20 14. Trade and other payables 20 15. Other financial liabilities 21 16. Capital and reserves 21 17. Earnings/(loss) per share 22 18. Financial instruments 22-25 19. Reconciliation of the profit/(loss) for the period with the net cash from operating activities 25 20. Related parties 26 21. Contingencies 27 22. Group entities 27 23. Subsequent events 27 24. Effects of changes in accounting policies 27 AORERE RESOURCES LIMITED Notes to Financial Statements For the year ended 31 March 2019 1. Reporting entity Aorere Resources Limited (the "Company"), is a company domiciled and incorporated in New Zealand, registered under the Companies Act 1993 and listed on the New Zealand Stock Exchange ("NZX"). The Company is a FMC Reporting entity in terms of the Financial Markets Conduct Act 2013. The consolidated financial statements of Aorere Resources Limited as at and for the year ended 31 March 2019 comprise the Company and its subsidiaries (together referred to as the "Group") and the Group's interest in equity accounted investees. Aorere Resources Limited invests and trades in a range of locally and overseas listed equities and derives income from interest, dividends and management fees. 2. Basis of preparation (a) Statement of compliance For the purposes of complying with generally accepted accounting practice in New Zealand ("NZGAAP"), the Group is a for-profit entity. These financial statements comply with NZGAAP, New Zealand equivalents to International Financial Reporting Standards ("NZIFRS"), International Financial Reporting Standards, and the requirements of the Financial Market Conduct Act 2013. The financial statements were approved by the Board of Directors on - 22 May 2019. (b) Basis of measurement The financial statements have been prepared on the historical cost convention, as modified by the revaluation of certain assets and liabilities as identified in specific accounting policies below. The methods used to measure fair values are discussed further in Note 4. (c) Going concern The Group incurred a net loss of $271,000 (2018: $512,000) and generated negative operating cash flows of $85,000 (2018: $163,000) during the year ended 31 March 2019. In addition, at 31 March 2019 the Group's current liabilities exceeded its current assets by $299,000 (2018: $197,000) and total liabilities exceeded total assets by $97,000 (2018: total assets exceeded total liabilities by $174,000). However included in total liabilities is $102,000 which is due to Related parties and is payable in shares. Refer Note 20. After considering the Group's cash position, including forecasted revenues and cash flows through until 30 June 2020, the Directors believe there will be sufficient funds to meet the Group's ongoing working capital obligations as they fall due. This will only be possible if the Group is able to sell investments and or raise further capital by one or a combination of placement of shares, pro-rata issue to shareholders, or further issue of shares to the public. Subsequent to balance date the Company has commenced a share purchase plan (SPP) offer to existing shareholders. The SPP offers existing shareholders the opportunity to apply for either an $800 (representing 1 million shares) or $1,600 (representing 2 million shares) parcel of new shares at an issue price of $0.0008 per share. Shareholders can choose to apply for more shares beyond this allocation, subject to the availability of shares. Based on these factors, the Directors have concluded that it is appropriate to prepare the financial statements on the basis that the Group is a going concern. A material uncertainty exists surrounding the Group's ability to raise additional capital. If the Group is unable to raise additional capital, significant doubt would be cast on the validity of the going concern assumption. If the going concern assumption is not valid, the Group may be unable to realise its assets and discharge its liabilities in the normal course of business. The financial statements do not include any adjustments that may need to be made should the Group no longer continue to be a going concern. (d) Functional and presentation currency These financial statements are presented in New Zealand dollars, which is the Group's functional currency. AORERE RESOURCES LIMITED Notes to Financial Statements For the year ended 31 March 2019 2. Basis of preparation (continued) (e) Use of estimates and judgements The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are described in the following notes: o Note 4(a) - valuation of unlisted investments o Note 9 - Investment in Chatham Rock Phosphate (f) Changes in Accounting Policies New standards, interpretations and amendments effective from 1 April 2018 New standards impacting the Group that have been adopted in the annual financial statements for the year ended 2019, and which have given rise to changes in the Group's accounting policies include: o NZ IFRS 9 Financial Instruments (NZ IFRS 9); and o NZ IFRS 15 Revenue from Contracts with Customers (NZ IFRS 15) There was no impact on any of the line items of the financial statements from the implementation. Refer to Note 24 for the effects of changes in accounting policies. (g) New NZ IFRS standards and interpretations issued but not yet adopted At the date of authorisation of these financial statements, certain new standards and interpretations to existing standards have been published but not yet effective, and have not been adopted early by the Group. All pronouncements will be adopted in the first accounting period beginning on or after the effective date of the new standard. Information on new standards, amendments and interpretations that are expected to be relevant to the company's financial statements is provided below. Certain other new standards and interpretations issued but not yet effective, that are not expected to have a material impact on the Group's financial statements, have not been disclosed. There are no other NZ IFRSs or NZ IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group. 3. Significant accounting policies For the purposes of these financial statements the accounting policies set out below have been applied consistently to all periods presented, except for Financial Instruments, refer to Note 24 regarding the effect of changes in accounting policies. (a) Basis of consolidation (i) Subsidiaries The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 31 March 2019. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has: o Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee) o Exposure, or rights, to variable returns from its involvement with the investee, and o The ability to use its power over the investee to affect its returns. AORERE RESOURCES LIMITED Notes to Financial Statements For the year ended 31 March 2019 3. Significant accounting policies (continued) The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary. (ii) Associates (equity accounted investees) Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Associates are accounted for using the equity method (equity accounted investees). The consolidated financial statements include the Group's share of the income and expenses of equity accounted investees, after adjustments to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases. When the Group's share of loss exceeds its interest in an equity accounted investee, the carrying amount of that interest is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee. (iii) Transactions eliminated on consolidation Intra-group balances, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group's interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. (b) Foreign currency Foreign currency transactions Transactions in foreign currencies are translated to the functional currency of the individual group entity at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortised cost in foreign currency translated at the exchange rate at the end of the period. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Foreign currency differences arising on retranslation are recognised in profit or loss. (c) Share capital Ordinary shares Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity. (d) Director benefits Equity settled transactions Directors expenses are recognized when the service is provided, and shares are issued to meet this obligation at a later date. (e) Revenue Performance obligations and timing of revenue recognition Services The Group carries out management services for clients, with revenue recognised typically on an over time basis. The contracts require payment to be received for the time and effort spent by the Group on progressing the contracts in the event of the customer cancelling the contract prior to completion for any reason other than the Group's failure to perform its obligations under the contract. On partially complete contracts, the Group recognises revenue based on stage of completion of the service which is estimated by comparing the number of months spent on the service with the total number of months contracted (i.e. an input based method). This is considered a faithful depiction of the transfer of services and therefore also represents the amount to which the Group would be entitled based on its performance to date. AORERE RESOURCES LIMITED Notes to Financial Statements For the year ended 31 March 2019 3. Significant accounting policies (continued) (f) Finance income and expenses Finance income comprises interest income on funds invested, dividend income, and gains on the disposal of fair value through profit and loss financial assets (2018: available-for-sale financial assets), changes in the fair value of financial assets at fair value through profit or loss, and foreign currency gains that are recognised in profit or loss. Interest income is recognised as it accrues, using the effective interest method. Dividend income is recognised on the date that the Group's right to receive payment is established, which in the case of quoted securities is the ex-dividend date. Finance expenses comprise interest expense on borrowings, foreign currency losses, changes in the fair value of financial assets at fair value through profit or loss, impairment losses recognised on financial assets (except for trade receivables), and losses on the disposal of fair value through profit and loss financial assets (2018: available-for-sale financial assets) that are recognised in profit or loss. All borrowing costs are recognised in profit or loss using the effective interest method. (g) Income tax expense Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent that it relates to items recognised directly in other comprehensive income, in which case it is recognised in other comprehensive income. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance date, and any adjustment to tax payable in respect of previous years. Deferred tax is provided for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding tax bases of those items. The following temporary differences are not provided for: the initial recognition of assets or liabilities that affect neither accounting nor taxable profit, differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future and differences relating to investments in equity accounted investees. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the reporting date. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. (h) Earnings per share The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Group by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares. (i) Financial Instruments Financial assets The Group classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired. The Group's accounting policy for each category is as follows: Fair value through profit or loss This category comprises in-the-money derivatives (see "Financial liabilities" section for out-of-money derivatives classified as liabilities). They are carried in the statement of financial position at fair value with changes in fair value recognised in the consolidated statement of comprehensive income in the finance income or expense line. Other than derivative financial instruments which are not designated as hedging instruments, the Group does not have any assets held for trading, however it has classified other investments and investments in Chatham Rock Phosphate Limited as fair value through profit and loss. Amortised cost These assets arise principally from the provision of goods and services to customers (e.g. trade receivables), but also incorporate other types of financial assets where the objective is to hold these assets in order to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment. AORERE RESOURCES LIMITED Notes to Financial Statements For the year ended 31 March 2019 3. Significant accounting policies (continued) Impairment provisions for current and non-current trade receivables are recognised based on the simplified approach within NZ IFRS 9 using a provision matrix in the determination of the lifetime expected credit losses. During this process the probability of the non-payment of the trade receivables is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised within cost of sales in the consolidated statement of comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision. Impairment provisions for receivables from related parties and loans to related parties are recognised based on a forward looking expected credit loss model. The methodology used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset. For those where the credit risk has not increased significantly since initial recognition of the financial asset, twelve month expected credit losses along with gross interest income are recognised. For those for which credit risk has increased significantly, lifetime expected credit losses along with the gross interest income are recognised. For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised. From time to time, the Group elects to renegotiate the terms of trade receivables due from customers with which it has previously had a good trading history. Such renegotiations will lead to changes in the timing of payments rather than changes to the amounts owed and, in consequence, the new expected cash flows are discounted at the original effective interest rate and any resulting difference to the carrying value is recognised in the consolidated statement of comprehensive income (operating profit) as part of the impairment expense. The Group's financial assets measured at amortised cost comprise trade and other receivables, related party loans and cash and cash equivalents in the consolidated statement of financial position. Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less, and - for the purpose of the statement of cash flows - bank overdrafts. Bank overdrafts are shown within loans and borrowings in current liabilities on the consolidated statement of financial position. Fair value through other comprehensive income No assets are classified as Fair value through other comprehensive income. Financial liabilities The Company/Group classifies its financial liabilities into one of two categories, depending on the purpose for which the liability was incurred. The Group's accounting policy for each category is as follows: Fair value through profit or loss This category comprises out-of-the-money derivatives (see "Financial assets" for in-the-money derivatives). They are carried in the consolidated statement of financial position at fair value with changes in fair value recognised in profit and loss. The Group does not hold or issue derivative instruments for speculative purposes, but for hedging purposes. Other than these derivative financial instruments, the Group does not have any liabilities held for trading nor has it designated any financial liabilities as being at fair value through profit or loss, other than the convertible note debt described further below.. Other financial liabilities Other financial liabilities include the following items: Bank borrowings and the Group's redeemable preference shares are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the consolidated statement of financial position. Liability components of convertible loan notes are measured as described further below. Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method. AORERE RESOURCES LIMITED Notes to Financial Statements For the year ended 31 March 2019 3. Significant accounting policies (continued) Convertible debt The proceeds received on issue of the Group's convertible debt are allocated into their liability and equity components. The amount initially attributed to the debt component equals the discounted cash flows using a market rate of interest that would be payable on a similar debt instrument that does not include an option to convert. Subsequently, the debt component is accounted for as fair value through profit and loss until extinguished on conversion or maturity of the bond. The remainder of the proceeds is allocated to the conversion option and is recognised in the "Convertible debt option reserve" within shareholders' equity, net of income tax effects. Share capital Financial instruments issued by the Group are classified as equity only to the extent that they do not meet the definition of a financial liability. The Group's ordinary shares are classified as equity instruments. 4. Determination of fair values A number of the Group's accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability. (a) Investments in equity and debt securities The fair value of financial assets at fair value through profit or loss (and available-for-sale financial assets in 2018) is determined by reference to their quoted bid price at the reporting date. Where an active market does not exist around reporting date, a proxy for the quoted bid price is determined using active market prices for a period closest to the reporting date. For equity investments which are unlisted, the fair value is based on appropriate valuation methodology. The Group has one unlisted investment, being shares in Tasman Capital. Fair value of this investment is based on the listed share prices of the shares it owns, as that makes up the bulk of the assets and equity of Tasman Capital. (b) Receivables The fair value of receivables is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date. AORERE RESOURCES LIMITED Notes to Financial Statements For the year ended 31 March 2019 5. Segment reporting Segment information is presented in respect of the Group's business and geographical segments. For management purposes there is only one operating segment which is investment. Geographical segments The investment segment operates in three principal geographical areas, New Zealand, Canada and other. In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of investments. Segment assets are based on the geographical location of the assets. Group - Geographical segments In thousands of dollars New Zealand Canada Other Total 2019 Interest revenue 3 - - 3 Other revenue 215 79 - 294 Total revenue 218 79 - 297 Segment assets 193 25 - 218 Other segment information Investment in Chatham Rock Phosphate 91 - - 91 2018 Interest revenue 3 - - 3 Other revenue 204 - - 204 Total revenue 207 - - 207 Segment assets 344 118 - 462 Other segment information Investment in Chatham Rock Phosphate 202 - - 202 AORERE RESOURCES LIMITED Notes to Financial Statements For the year ended 31 March 2019 6. Revenue Group In thousands of dollars Note 2019 2018 Consultancy fees 20 144 204 Directors fees 20 79 - Other income 1 - Forgiveness of debt 20 70 - Total revenue 294 204 7. Administrative expenses The following items of expenditure are included in administrative expenses: Group In thousands of dollars Note 2019 2018 Auditor's remuneration to BDO comprises: Audit of financial statements 20 20 Tax return preparation 3 6 Total auditor's remuneration 23 26 Accountancy 10 13 Consultancy fees - 1 Directors fees 20 42 42 General expenses 4 6 Insurance 5 14 Legal fees 13 37 Listing fees 25 26 Management fees 20 184 324 Registry fees 11 11 Travel expenses - 2 Total administration expenses 317 502 AORERE RESOURCES LIMITED Notes to Financial Statements For the year ended 31 March 2019 8. Income tax expense in the Statement of Profit and Loss and Other Comprehensive Income Reconciliation of effective tax rate Group In thousands of dollars 2019 2018 Profit/(loss) for the year (271) (512) Total income tax (credit)/expense - - Profit/(loss) excluding income tax (271) (512) Income tax using the Company's domestic tax rate (28%) (76) (143) Tax effect of: Non-deductible expenses 78 17 Non-assessable income - (5) Non-assessable equity accounted earnings - 62 Current year losses for which no deferred tax asset is recognised 33 52 Change in unrecognised temporary differences 1 12 Change in recognised temporary differences (39) - Investment income calculated under tax legislation 3 5 Income tax (credit)/expense - - Comprising: Current tax expense - - Deferred tax expense (Note 11) Origination and reversal of temporary differences 1 (1) (12) Change in unrecognised temporary differences 1 12 - - Total income tax (credit)/ expense recognised directly in profit or loss - - The current tax liability/(asset) consists of: Resident withholding tax paid - - Current tax liability/(asset) - - Imputation credit account Imputation credits at 1 April 197 198 Resident withholding tax deducted - 1 - New Zealand tax payments, net of refunds - - (1) Imputation credits at 31 March 197 197 The closing balance represents imputation credits available to be attached to any future distributions from the Company's reserves, subject to shareholder continuity provisions. AORERE RESOURCES LIMITED Notes to Financial Statements For the year ended 31 March 2019 9. Investment in Chatham Rock Phosphate At year end the Group has a 2.7% (2018: 3.6%) interest in Chatham Rock Phosphate Limited (Listed on the TSX). The Company aims to be the premier supplier of direct application phosphate to the New Zealand and global agricultural sector. The Directors have determined the fair value of the investment to be $91,000 based on the listed price of CAD $0.15 cents on 29 March 2019 converted to NZD. 10. Investments Other investments Group In thousands of dollars 2019 2018 Non-current investments Fair value through profit and loss (2018: Available-for-sale financial assets) Listed equity shares 25 118 Unlisted equity shares 6 6 Held as Amortised cost (2018: Loans and Receivables) NZX Bond 80 80 111 204 Current investments Financial assets designated at fair value through profit or loss 2 2 The NZX have a charge over the NZX Bond of $75,000. 11. Deferred tax assets and liabilities Recognised deferred tax assets and liabilities Deferred tax assets and liabilities are attributable to the following: Group In thousands of dollars 2019 2018 Trade and other payables - (39) Tax losses - 39 Net tax (assets)/liabilities - - Movement in temporary differences during the year: In thousands of dollars Balance at 1/4/18 Recognised in income Balance at 31/3/19 Trade and other payables (39) 39 - Tax losses 39 (39) - - - - AORERE RESOURCES LIMITED Notes to Financial Statements For the year ended 31 March 2019 11. Deferred tax assets and liabilities (continued) In thousands of dollars Balance at 1/4/17 Recognised in income Balance at 31/3/18 Trade and other payables (27) (12) (39) Tax losses 27 12 39 - - - Unrecognised deferred tax assets Deferred tax assets have not been recognised in respect of the following items: Group In thousands of dollars 2019 2018 Tax losses (243) (210) Net tax (assets)/liabilities (243) (210) The tax losses do not expire under current tax legislation, subject to shareholder continuity provisions. The temporary differences arising on non-current investments do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because the timing of future taxable profits against which the Group can utilise the benefits of these items is uncertain. 12. Cash and cash equivalents Group In thousands of dollars 2019 2018 Bank balances 1 9 Haywoods Broker account - 24 Cash and cash equivalents in the statement of cash flows 1 33 13. Trade and other receivables Group In thousands of dollars 2019 2018 GST receivable 5 8 Interest receivable 2 2 7 10 14. Trade and other payables Group In thousands of dollars 2019 2018 Trade creditors 7 5 Other payables 22 24 Related party payables 251 224 280 253 Related party payables includes $149,000 (2018:$164,000) payable in cash and $102,000 (2018:$60,000) payable in shares. AORERE RESOURCES LIMITED Notes to Financial Statements For the year ended 31 March 2019 15. Other Financial Liabilities Group In thousands of dollars 2019 2018 Convertible Debenture 35 35 35 35 Convertible Debenture As part of pursuing the Nevada Project, Mr Gordon Fretwell advanced to the Group NZ$35,000 on 31 October 2016 (Debt) to help meet project related costs. The Group has entered into a convertible instrument with Mr Gordon Fretwell, under which Mr Gordon Fretwell may elect (in whole or in part) to convert the Debt to fully paid shares in the Company at an issue price of $0.0009 per share. If the Debt has not been converted on or before 31 March 2020, the Company must repay the Debt. The Debt is interest free. The volume weighted average market price of a share in the Company over the 12 month period to 31 March 2019 was $0.001. The issue of shares on conversion at $0.0009 reflects a 10% discount to this price. The entire balance has been classified as debt as, in the director's opinion, the value of the conversion features are not material. 16. Capital and reserves Share capital Ordinary shares In thousands of shares 2019 2018 On issue at 1 April 1,476,456 1,210,527 Issued for cash - 141,035 Issued in lieu of payment - 124,894 On issue at 31 March 1,476,456 1,476,456 Ordinary Shares All issued shares are fully paid and have no par value. The holders of ordinary shares are entitled to receive dividends and are entitled to one vote per share at meetings of the Company. All shares rank equally with regard to the Company's residual assets. In May 2017 the Company issued 94,893,585 ordinary shares in aggregate to Campbell McKenzie, Wairaka Rock Services Limited and Techbase International Limited in satisfaction of payment for services rendered to the Company in the financial year 1 April 2016 to 31 March 2017. The issue prices were $0.00129 per share (18,604,651 shares); $0.00125 per share (21,600,000 shares); $0.002 per share (7,875,000 shares); $0.001 per share (45,690,940 shares) and $0.00187 per share (1,122,994 shares). In September 2017 the Company completed a Rights Issue which resulted in the issue of 141,034,977 ordinary shares at $0.00085. In September 2017 the Company issued 30,000,000 ordinary shares in aggregate to Chris Castle in satisfaction of payment for services under his consultancy agreement and relating to the year ended 31 March 2017. The issue price was $0.001 per share (30,000,000 shares). Equity-settled transactions No expenses settled by equity transactions have been included in expenses in the year ended 31 March 2019. All equity-settled payments were settled at listed 20 day Volume Weighted Average Price ("VWAP") on the day of issue. Fair value reserve The fair value reserve comprises the cumulative net change in the fair value of available-for-sale financial assets until the investment is derecognised. This note only relates to the 2018 year. AORERE RESOURCES LIMITED Notes to Financial Statements For the year ended 31 March 2019 17. Earnings/(loss) per share Basic earnings/(loss) per share The calculation of basic and diluted earnings per share at 31 March 2019 was based on the profit/(loss) attributable to ordinary shareholders of $(271,000) (2018: $(512,000)) and a weighted average number of ordinary shares outstanding of 1,476,456,000 (2018: 1,382,233,000), calculated as follows: Profit/(loss) attributable to ordinary shareholders Group In thousands of shares 2019 2018 Basic earnings/(loss) per share (cents) (0.018) (0.037) Net profit/(loss) for the year (271) (512) Weighted average number of ordinary shares In thousands of shares 2019 2018 Issued ordinary shares at 1 April 1,476,456 1,210,527 Effect of shares issued May 17 - 82,674 Effect of shares issued September 17 - 89,032 Weighted average number of ordinary shares at 31 March 1,476,456 1,382,233 Weighted and diluted earnings per share are the same as there are no equity instruments which would dilute it. 18. Financial instruments Exposure to credit, foreign currency, equity prices and liquidity risks arise in the normal course of the Group's business. Foreign currency risk The Group is exposed to foreign currency risk on investments that are denominated in a currency other than the Group's functional currency, New Zealand dollars ($), which is the presentation currency of the Group. The currency in which some transactions are denominated in is Canadian dollars ("CAD"). It is the Group's policy not to hedge foreign currency risks. In thousands of dollars NZD 2019 Foreign currency risk Other investments held in Canadian dollars 25 2018 Foreign currency risk Other investments held in Canadian dollars 118 For the Group's investments that are held overseas, their value in New Zealand dollars is affected by exchange rate fluctuations. Market risk Equity Price risk The Group primarily invests in overseas-based mining and mineral exploration companies and are held for the longer term. Due to the very narrow spread of investments and the mineral sector focus, the Group's investment approach is likely to provide returns either better or worse than market averages. The Group is structured and operated to achieve growth in shareholders' funds and more particularly in the asset value of each share. AORERE RESOURCES LIMITED Notes to Financial Statements For the year ended 31 March 2019 18. Financial instruments (continued) The objective is not to make trading profits on a regular annual basis by selling our successful investments. A year in which net tangible assets per share increases by 20% or more is a good year for the Group, regardless of the accounting profit or loss that may have been incurred. However, the directors cannot make any forecasts or predictions as to future profits. The business of the Group involves investment in equities, most of these being junior mining companies in development mode. The directors are unable to predict the success, or otherwise, of present or proposed investments and are similarly unable to predict when such successes, or otherwise, might occur. Often four or five investments represent 90% of the portfolio value. This occurs because further funds may be directed toward an investment opportunity once it starts to appreciate in value. This approach is contrary to classic portfolio management theory; it increases the investment exposure at the same time as the potential downside increases. The outcome of such an approach is increased volatility in the investment returns achieved by the Group. Risk is minimised to the extent that it can be by the following strategies: ? Investments are financed solely from equity sources (the group will have no borrowings) ? Investments will be well researched before acquisition ? There is frequent monitoring of the portfolio and market conditions generally ? There is continuous ongoing assessment of investments in the context of other investment opportunities available. Other investments of the Group relate to: In thousands of dollars 2019 2018 Non-current investments Equity securities at fair value through profit and loss (2018: available-for-sale) 31 124 Current investments Equity securities at fair value through profit and loss 2 2 Equity securities relate to investments in common stock of entities of privately held and listed companies. Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations associated with financial liabilities as they fall due. The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation. Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate liquidity risk framework for the management of the Group's short, medium and longer term funding and liquidity management requirements. The Group manages liquidity risk by maintaining a cash balance through monitoring future cash flow forecasts of its operations and management's expectations of the settlement of financial assets and liabilities. Refer to Note 2(c). At 31 March 2019, the Group had $280,000 (2018: $253,000) in trade and other payables and $35,000 (2018: $35,000) in other liabilities. Trade payables are non-interest bearing and have a contractual maturity of less than 30 days. Capital management The Group's capital includes share capital, reserves, and retained earnings. At 31 March 2019 the Group's total liabilities exceeded total assets by $97,000. However, included in total liabilities is $102,000 which is due to Related parties and is payable in shares. Refer Note 20. The Group is not subject to any externally imposed capital requirements. There have been no material changes in the Group's management of capital during the year. AORERE RESOURCES LIMITED Notes to Financial Statements For the year ended 31 March 2019 18. Financial instruments (continued) Credit risk Credit risk is the risk that an outside party will not be able to meet its obligations to the Group. Financial assets, which potentially subject the Group to concentrations of credit risk, consist principally of cash and accounts receivable. At reporting date, there are no issues with the credit quality of financial assets that are neither past due or impaired, and all amounts are expected to be received in full. The maximum exposure to credit risk is represented by the carrying value of each financial asset in the Statement of Financial Position. Classification and fair values The fair value of all financial instruments is the carrying value. The Company measures equity investments at fair value (refer Note 9 and 10). All equity investments in listed Companies are measured based on Level 1 inputs in the fair value hierarchy. Level 1 inputs are based on quoted prices in active markets for identical investments. Refer to Note 4(a) for how other investments (ie. non-listed) are valued. In thousands of dollars Fair value through profit or loss (Fair value through profit and loss and available-for-sale 2018) Amortised cost (Loans and receivables 2018) Total carrying amount 2019 Assets Other investments 31 80 111 Investment in CRP 91 - 91 Total non-current assets 122 80 202 Other investments 2 - 2 Trade and other receivables - 2 2 Cash and cash equivalents - 1 1 Total current assets 2 3 5 Total assets 124 83 207 Liabilities Trade and other payables 280 - 280 Other liabilities 35 - 35 Total current liabilities 315 - 315 Total liabilities 315 - 315 AORERE RESOURCES LIMITED Notes to Financial Statements For the year ended 31 March 2019 18. Financial instruments (continued) In thousands of dollars Fair value through profit or loss Loans and receivables 2018 Available-for-sale 2018 Total carrying amount 2018 Assets Other investments - 80 124 204 Investment in CRP - - 202 202 Total non-current assets - 80 326 406 Other investments 2 - - 2 Trade and other receivables - 2 - 2 Cash and cash equivalents - 33 - 33 Total current assets 2 35 - 37 Total assets 2 115 326 443 Liabilities Other liabilities 35 - - 35 Total non-current liabilities 35 - - 35 Trade and other payables 253 - - 253 Total current liabilities 253 - - 253 Total liabilities 288 - - 288 As a result of the transition to IFRS 9 the amounts recognised as available-for-sale in 2018 are classified as fair value through profit and loss in 2019 and the amounts recognised as loans and receivables in 2018 are classified as amortised cost in 2019. 19. Reconciliation of the profit/(loss) for the year with the net cash from operating activities Group In thousands of dollars 2019 2018 Profit/(loss) for the year after income tax (271) (512) Adjustments for: (Gains) on sale of fair value through profit and loss financial assets (2018: available-for-sale financial assets) 6 (18) Non-cash expenses Income settled in shares (79) - Other income (1) - Loss in fair value of fair value through profit and loss financial assets (2018: available-for-sale financial assets) 245 221 Impairment of investments - 10 Share of loss of equity accounted investees - - (100) (299) Change in trade and other receivables 4 105 Change in trade and other payables 6 30 Change in prepayments 5 1 Net cash from operating activities (85) (163) AORERE RESOURCES LIMITED Notes to Financial Statements For the year ended 31 March 2019 20. Related parties Directors of the Company directly control 16.91% (2018: 16.91%) of the voting shares of the Company. Chris Castle, Jill Hatchwell & Linda Sanders, Directors of Aorere Resources Ltd are also commonly Directors in Chatham Rock Phosphate Limited and Chatham Rock Phosphate (NZ) Limited. Chris Castle is also a director of Asian Mineral Resources Limited. The annual management fee payable to Chris Castle for this year is $40,000 (2018: $120,000) payable in cash $40,000 (2018: $60,000) and shares $nil (2018: $60,000). This arrangement was originally negotiated by the independent directors, effective from 24 July 2015 and is reviewed from time to time. In September 2018, Chris Castle agreed to a write down of $30,000 of 2018 fees outstanding (the share component) and accepted a $10,000 payable in cash and $20,000 payable in shares. Chris Castle is contracted on a full time basis to Aorere Resources Limited. In addition, Chris Castle receives management fees passed through from Chatham Rock Phosphate Limited. This year that has amounted to $144,000 (2018:$204,000) (refer Note 6). The outstanding balance at reporting date was $64,000 (2018: $60,000) which is included in trade payables (2018: trade payables) and includes both cash and shares. Also outstanding at reporting date was $64,000 (2018: $43,000) payable to Chris Castle for funds advanced to the Company. The balances are interest free and not payable on demand. Transaction value Year ended 31 March Balance receivable/(payable) as at 31 March In thousands of dollars 2019 2018 2019 2018 Related Parties Transactions Asian Mineral Resources Limited Directors fees received 79 - - - Chatham Rock Phosphate (NZ) Limited Management fees received 144 204 - - Asian Mineral Resources Limited settled the Directors fees receivable to the Group by issuing 105,000 shares in the Company. Transactions with key management personnel Key management personnel of the Group are also members of the board of directors. Key management personnel remuneration includes the following, in addition to Chris Castle's remuneration already disclosed: In thousands of dollars 2019 2018 Short-term benefits paid: Directors fees - - Equity-settled payments - 67 Total remuneration - 67 There were no transactions during the year with key management personnel (2018: settlement of 2017 consultancy fees and 2017 Directors fees). The outstanding balance at reporting date was $nil (2018: $nil) included in trade payables and $123,000 (2018: $121,000) included in accruals, of this $82,000 has been agreed to be settled in shares. Additionally in September 2018, the Directors agreed to a write down in their Directors fees for 2017 of 50%, which decreased their fees from $79,000 to $39,000. This is included in related party payables. AORERE RESOURCES LIMITED Notes to Financial Statements For the year ended 31 March 2019 21. Contingencies There are no contingent liabilities at 31 March 2019 (2018: nil). 22. Group entities Significant subsidiaries are listed below. All subsidiaries have a 31 March balance date. Country of Incorporation Ownership interest 2019 2018 Widespread Limited New Zealand 100 100 Mineral Investments Limited New Zealand 100 100 Nevada Gold Limited was removed from the NZ Companies Register on 28 February 2019. 23. Subsequent Events On 14 May 2019 the Group announced a share purchase plan (SPP) offer to existing shareholders. The group has been focused on widening its portfolio of investments and is seeking to investigate a suitable business to acquire by way of reverse listing. The Group considers its NZX main board listing status to be a key asset as it would offer a suitable private company an alternative path to market and create equity value for shareholders. The capital raised by the SPP will allow the Group to meet basic compliance costs while the Group progresses its investigations to identify and pursue the acquisition of a suitable business and expand the Group's assets. While the Group has not entered into any documentation for a transaction, it has had discussions with several interested parties and believes there is a reasonable prospect of securing such a transaction in the next 12 months. The SPP will offer existing shareholders the opportunity to apply for either an $800 (representing 1 million shares) or $1,600 (representing 2 million shares) parcel of new shares at an issue price of $0.0008 per share. Shareholders can choose to apply for more shares beyond this allocation, subject to the availability of shares. The Group hopes to place up to 442,936,250 Ordinary shares, valued at up to $354,349. The Record date is 22 May 2019 and the Closing date will be 13th June 2019. 24. Effects of Changes in Accounting Policies The Group has chosen to use the fully retrospective method on adoption of IFRS 15. There has been no impact on the revenue recognition as a result of the new standard as the consultancy fees and Directors fees are recognised over time as the services are provided. As such there have been no changes to comparatives or opening comparatives equity as a result of the change. The Group has chosen not to restate comparatives on adoption of IFRS 9, and therefore, adjustments are not reflected in restated prior year financial statements. Rather, these changes have been processed at the date of initial application (1 April 2018) and recognised in the opening equity balances. Note the amount recognised in other comprehensive income in 2018 reduced the reserve to nil, as such there were no adjustments required, other than presentational disclosures as a result of the new standard. INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF AORERE RESOURCES LIMITED Opinion We have audited the consolidated financial statements of Aorere Resources Limited ("the Company") and its subsidiaries (together, "the Group"), which comprise the consolidated statement of financial position as at 31 March 2019, and the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 31 March 2019, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with New Zealand equivalents to International Financial Reporting Standards ("NZ IFRS"). Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (New Zealand) ("ISAs (NZ)"). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with Professional and Ethical Standard 1 (Revised) Code of Ethics for Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board, 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. Our firm carries out other assignments for the Group in the area of taxation compliance. The firm has no other relationship with, or interests in, the Company or any of its subsidiaries. Material Uncertainty Related to Going Concern We draw attention to Note 2(c) to the consolidated financial statements, which indicates that the Group incurred a net loss of $271,000 (2018: $512,000) and generated negative operating cash flows of $85,000 (2018: $163,000) during the year ended 31 March 2019 and, as of that date, the Group's current liabilities exceeded its current assets by $299,000 (2018: current assets exceeded current liabilities by $197,000) and total liabilities exceeded total assets by $97,000 (2018: total assets exceeded total liabilities by $174,000). As stated in Note 2(c), these events or conditions, along with other matters as set forth in Note 2(c), indicate that a material uncertainty exists that may cast significant doubt on the Group's ability to continue as a going concern. Our opinion is not modified in respect of this matter. Key Audit Matters Except for the matter described in the Material Uncertainty Related to Going Concern section, we have determined that there are no other key audit matters to communicate in our report. Other Information The directors are responsible for the other information. The other information comprises the Directors' Review, Shareholder Information, Statutory Information and Corporate Governance Information, but does not include the consolidated financial statements and our auditor's report thereon. The other information is expected to be made available to us after the date of this auditor's report. Our opinion on the consolidated financial statements does not cover the other information and we will not express any form of audit opinion or assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. When we read the other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the directors. Directors' Responsibilities for the Consolidated Financial Statements The directors are responsible on behalf of the Group for the preparation and fair presentation of the consolidated financial statements in accordance with NZ IFRS, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, the directors are responsible on behalf of the Group for assessing the Group'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 Group or to cease operations, or have no realistic alternative but to do so. Auditor's Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated 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 (NZ) 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 decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with ISAs (NZ), we exercise professional judgement and maintain professional scepticism throughout the audit. We also: o Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. o Obtain an understanding of internal control relevant to the audit 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 Group's internal control. o Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. o Conclude on the appropriateness of the use of the going concern basis of accounting by the directors and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern. o Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. o Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Who we Report to This report is made solely to the Company's shareholders, as a body. Our audit work has been undertaken so that we might state those matters which we are required to state to them in an auditor's 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 shareholders, as a body, for our audit work, for this report or for the opinions we have formed. The engagement partner on the audit resulting in this independent auditor's report is Mark Bewley. BDO Wellington Audit Limited Wellington New Zealand 22 May 2019 End CA:00334884 For:AOR Type:FLLYR Time:2019-05-22 14:10:24