XLON:CDL ESEF Annual Report
CLOUDBREAK DISCOVERY PLC (XLON:CDL)
ESEF Annual Report
2023-11-02
For: 2023-06-30
View Original
Added on
October 02, 2026
1
Registered number: 6275976
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2023
CLOUDBREAK DISCOVERY PLC
CONTENTS
Page
Company Information 2
Interim CEO’s Report 3
Strategic Report 5
Directors’ Report 9
Directors’ Remuneration Report 12
Statement of Directors’ Responsibilities 15
Corporate Governance Report 16
Independent Auditor’s Report 21
Statements of Financial Position 27
Consolidated Comprehensive Income Statement 28
Consolidated Statement of Changes in Equity 29
Company Statement of Changes in Equity 30
Statements of Cash Flows 31
Notes to the Financial Statements 32
CLOUDBREAK DISCOVERY PLC
COMPANY INFORMATION
2
Directors Andrew Male
Emma Priestley
Paul Gurney
Company Secretary Westend Corporate LLP
Registered Office 6 Heddon Street
London
W1B 4BT
Company Number 6275976
Bankers HSBC Bank plc
69 Pall Mall
London
SW1Y 5EY
Financial Adviser Novum Securities Limited
2
nd
Floor
7-10 Chandos Street
London
W1G 9DG
Registrar Share Registrars Ltd
Suite E, First Floor
9 Lion and Lamb Yard
Farnham
Surrey
GU9 7LL
Independent Auditor PKF Littlejohn LLP
Statutory Auditor
15 Westferry Circus
Canary Wharf
London
E14 4HD
Solicitors Bird & Bird LLP
12 New Fetter Lane
London
EC4A 1JP
CLOUDBREAK DISCOVERY PLC
INTERIM CEO’S REPORT
3
Company Updates
I am happy to provide shareholders of Cloudbreak with an update on the activity of the Company over the past year. This will
be the Company’s second full year on the Main Segment of the London Stock Exchange.
As with most junior resource companies, it has been a challenging year, and ours has been no different. During the past year
we have however continued to maintain and advance our projects, complete project advancement with our partners and
begun to realise the value of some of the exploration and corporate assets we have.
During the course of the year the Company raised a small amount of capital from the market and continued to use its
drawdown facility with Crescita Capital LLC. These funds were used for general working capital purposed and to advance the
suite of Cloudbreak projects.
In addition, the Company completed corporate restructuring in order to lessen the overheads and expenditures.
In December 2022 we appointed a new Broker and continue to work with them for the advancement of financing opportunities
and project generation. In the spring and summer of 2023, Cloudbreak, like most resource companies, has been quiet waiting
for market corrections and a renewed buoyancy while continuing to advance the projects the Company has.
In June 2023, the Board accepted the resignation of the CEO and Chairman along with some of the Executive management
team. The Board wanted to refocus and re-align Cloudbreak to be more “London centric” and this move allowed for this as
well as cost savings. The Board re-aligned and with Andrew Male assuming the interim CEO role, Paul Gurney continues as
a Non-Executive Director and Emma Priestley as an Independent Non-Executive Director.
Projects
Cloudbreak has demonstrated the business model’s viability and will continue to progress in this manner. The Company
currently has two energy investments, Legado Oil & Gas Limited and G2 Energy Corp. While both of these projects have had
their own delays and issues, Cloudbreak is happy with their progress and will continue to look for projects of this nature going
forward.
Cloudbreak has also realised proceeds from the sale of shares that it holds in other companies as a result of the partnerships
it has fostered over the past two years, as well as realising cash proceeds from the sale or optioning of various projects in the
mining space.
Outlook
The year ended 30 June 2023 was active for the Group, having hit a number of operational milestones. We further diversified
our portfolio with projects in the energy sector and in new jurisdictions.
Despite the global macroeconomic climate, the outlook for the natural resources sector looks robust. Our focus on
commodities key to the energy transition movement offers an attractive opportunity for significant shareholder returns as
demand, and therefore prices, are set to remain high. Our project generator model allows us to diversify our portfolio across
the resource sector, building value while minimizing risk and cost.
We are starting to see some projects reach a point where we could potentially begin receiving more royalty payments further
underpinning the benefit of our business model. It is down to the depth of experience within our team that we are able to
execute this model successfully.
We look forward to keeping investors updated over the next year and beyond as we generate and pursue new ideas, including
lithium assets and bauxite projects, while continuing to diversify into energy royalties and attracting new partnerships.
Financial Review
During the year ended 30 June 2023, the Group earned £364,968 (2022: £559,523) in revenue from property option sale
agreements. It realised £677,400 from sales of shares and raised a total of £582,625 through the capital market and
£1,473,581 in draws from its drawdown facility. Total capital generated was £2,056,206 and at the end of the fiscal year,
there was £244,074 in cash on hand.
Subsequent to the year end the Company raised a further £340,000 in Convertible Loan Notes from existing shareholders
and directors.
Whilst the financial statements have been prepared on a going concern basis the Company will be required to raise
additional funds within the next 12 months. The Directors are confident that they will be secure the necessary funding,
but the current conditions do indicate the existence of a material uncertainty.
The result for the 2023 FY of £3,997,899 (2022: £5,557,029) for the year ended 30 June 2023 consisted mainly of income
from property option payments, expenses from professional and consulting fees and realised loss on sale of investments.
CLOUDBREAK DISCOVERY PLC
INTERIM CEO’S REPORT
4
For a further breakdown on expenses, please refer to note 24 and for further breakdown on value of investments, please
refer to note 6.
Financial Position
The Group’s Statement of Financial Position as at 30 June 2023 and comparatives at 30 June 2022 are summarised
below:
2023
£
2022
£
Current assets 487,251 1,611,212
Non-current assets 3,216,644 3,805,897
Total assets 3,703,895 5,417,109
Current liabilities 1,704,437 1,395,910
Total liabilities 1,704,437 1,395,910
Net assets 1,999,458 4,021,199
On behalf of the Board, I would like to record our thanks to those who have helped the Company throughout the year.
Andrew Male
Interim CEO
24 October 2023
CLOUDBREAK DISCOVERY PLC
STRATEGIC REPORT
5
The Directors of the Company present their Strategic Report on the Group for the year ended 30 June 2023.
Principal Activity
The principal activity of the Group is natural resource project and royalty generation as well as acquisition of projects and
royalties.
Review of operations
A review of the business of the Company during the year and an indication of likely future developments may be found in the
Interim CEO’s Statement.
Financial performance review
The loss of the Group for the year ended 30 June 2023 amounts to £3,997,899 (30 June 2022: £5,557,029).
The Board monitors the activities and performance of the Group on a regular basis. The Board uses financial indicators based
on budget versus actual to assess the performance of the Group. The indicators set out below will continue to be used by the
Board to assess performance over the period to 30 June 2023.
The main KPIs for the Group are as follows. These allow the Group to monitor costs and plan future exploration and
development activities:
KPI 2023 2022
Cash and cash equivalents £244,074 £310,578
Administrative expenses as a percentage of total assets 108.2% 59.6%
Exploration and evaluation cash expenditures £648,310 £370,848
Carrying value of investment £891,255 £2,069,302
Cash has been used to fund the Group’s operations and facilitate its investment activities (refer to the Statements of Cash
Flows).
Administrative expenses are the expenses related to the Group’s ability to run the corporate functions to ensure they can
perform their operational commitments.
Exploration costs include non-capitalised costs and costs capitalised during the period consist of exploration expenditure on
the Group’s exploration licences net of foreign exchange rate movements.
Principal risks and uncertainties
The management of the business and the execution of the Group’s strategy are subject to a number of risks. The key business
risks affecting the Group are set out below.
Risks are formally reviewed by the Board, and appropriate processes are put in place to monitor and mitigate them. If more
than one event occurs, it is possible that the overall effect of such events would compound the possible adverse effects on the
Group.
Exploration risks
The energy and resource business are controlled by a number of global factors, principally supply and demand which in turn
is a key driver of global prices; these factors are beyond the control of the Group. Exploration is a high-risk business and there
can be no guarantee that any mineralisation discovered will result in proven and probable reserves or go on to be an operating
mine. At every stage of the exploration process the projects are rigorously reviewed to determine if the results justify the next
stage of expenditure ensuring that funds are only applied to high priority targets. The energy sector is a cyclic business and
sensitive to several global and regional factors that the company is not able to predict or control.
CLOUDBREAK DISCOVERY PLC
STRATEGIC REPORT
6
Some of the principal assets of the Group are subject to certain financial and legal commitments. If these commitments are
not fulfilled the licences could be revoked. They are also subject to option agreements and legislation defined by the local
government; if this legislation is changed or option payments are not made on time, it could adversely affect the value of the
Group’s assets.
Dependence on key personnel
The Group is dependent upon its executive management team and various technical consultants. Whilst it has entered into
contractual agreements with the aim of securing the services of these personnel, the retention of their services cannot be
guaranteed. The development and success of the Group depends on its ability to recruit and retain high quality and
experienced staff. The loss of the service of key personnel or the inability to attract additional qualified personnel as the Group
grows could have an adverse effect on future business and financial conditions.
Uninsured risk
The Group, as a participant in exploration and development programmes, may become subject to liability for hazards that
cannot be insured against or third-party claims that exceed the insurance cover. The Group may also be disrupted by a variety
of risks and hazards that are beyond control, including geological, geotechnical and seismic factors, environmental hazards,
industrial accidents, occupational and health hazards and weather conditions or other acts of God.
Royalty acquisitions risk
The growth and viability of the Group is dependent on its ability to successfully identify and acquire royalties. The availability
of potential royalties which meet the Group’s investing policy will depend, inter alia, on the state of the world economy, general
business conditions, commodity prices, mining sector appetite, alternative sources of finance and financial markets generally.
Funding risk
The only sources of funding currently available to the Group are through the issue of additional equity capital in the parent
company, drawdown additional equity through the Crescita Capital Facility or through bringing in partners to fund exploration
and development costs. The Group’s ability to raise further funds will depend on the success of the Group’s exploration
activities and its investment strategy. The Group may not be successful in procuring funds on terms which are attractive and,
if such funding is unavailable, the Group may be required to reduce the scope of its exploration activities or relinquish some
of the exploration licences held for which it may incur fines or penalties.
Financial risks
The Group’s operations expose it to a variety of financial risks that can include market risk (including foreign currency, price
and interest rate risk), credit risk, and liquidity risk. The Group has a risk management programme in place that seeks to limit
the adverse effects on the financial performance of the Group by monitoring levels of debt finance and the related finance
costs. The Group does not use derivative financial instruments to manage interest rate costs and, as such, no hedge
accounting is applied.
Investment risks
The Group holds investments in publicly listed and non-listed securities. These future valuations are determined by many
factors but include the operational and financial performance of the underlying investee companies, as well as market
perceptions of the future of the economy and its impact upon the economic environment in which these companies operate.
This risk represents the potential loss that the Group might suffer through holding its financial investment portfolio in the face
of market movements.
Details of the Group’s financial risk management policies are set out in Note 3 to the Financial Statements.
Going Concern
These financial statements have been prepared on the going concern basis, as set out in Note 2.4.
The consolidated financial statements have been prepared under the going concern assumption. Under the going concern
assumption, an entity is ordinarily viewed as continuing in business for the foreseeable future with neither the intention nor the
necessity of liquidation, ceasing trading or seeking protection from creditors pursuant to laws or regulations.
CLOUDBREAK DISCOVERY PLC
STRATEGIC REPORT
7
The Group receives property option income, debenture interest income and royalty income but even along with reducing
expenditure for 2024FY, the forecasts indicate that the Group and Parent Company, in order to meet their operational
objectives, and expected liabilities as they fall due, will be required to raise additional funds within the next 12 months.
Whilst the Directors are confident that they will secure the necessary funding, the current conditions do indicate the existence
of a material uncertainty that may cast significant doubt regarding the applicability of the going concern assumption and the
auditors have made reference to this in their audit report. The Directors are confident in the Company’s ability to raise additional
funds as required, from existing and/or new investors, within the next 12 months. Thus, they continue to adopt the going
concern basis of accounting preparing these financial statements.
Internal Controls
The Board recognises the importance of both financial and non-financial controls and has reviewed the Group’s control
environment and any related shortfalls during the year. Since the Group was established, the Directors are satisfied that, given
the current size and activities of the Group, adequate internal controls have been implemented. The Directors are aware that
no system can provide absolute assurance against material misstatement or loss, however, in light of the current activity and
proposed future development of the Group, continuing reviews of internal controls will be undertaken to ensure that they are
adequate and effective.
Section 172(1) Statement - Promotion of the Company for the benefit of the members as a whole
The Directors believe they have acted in the way most likely to promote the success of the Company for the benefit of its
members as a whole, as required by s172 of the Companies Act 2006.
The requirements of s172 are for the Directors to:
• Consider the likely consequences of any decision in the long term,
• Act fairly between the members of the Company,
• Maintain a reputation for high standards of business conduct,
• Consider the interests of the Company’s employees,
• Foster the Company’s relationships with suppliers, customers and others, and
• Consider the impact of the Company’s operations on the community and the environment.
The Group operates as a project generation and royalty business for the natural resources sectors, which is inherently
speculative in nature and, without regular income, is dependent upon fund-raising for its continued operation. The nature of
the business is important to the understanding of the Group by its members, employees and suppliers, and the Directors are
as transparent about the cash position and funding requirements as is allowed under FCA regulations.
The application of the
s172 requirements are demonstrated throughout this report and the financial statements as a whole, with the following
examples representing some of the key decisions made in 2023 and up to the date of the approval of these financial
statements:
• Remunerate the Directors with share options in lieu of cash: during the year, having decided on a plan to raise new
funds to finance operations, the Directors also decided that to maximise funds available for exploration the Directors
would be remunerated in part by share options instead of cash. This has the added benefit of more fully aligning the
interests of the Directors with those of the members.
• Ethical responsibility to the community and the environment: the Board takes seriously its ethical responsibilities
to the communities and environment in which it works. We abide by the local and relevant UK laws on anti-corruption
and bribery. Wherever possible, local communities are engaged in the geological operations and support functions
required for field operations, providing much needed employment and wider economic benefits to the local communities.
In addition, we follow international best practise on environmental aspects of our work. Our goal is to meet or exceed
standards, in order to ensure we obtain and maintain our social licence to operate from the communities with which we
interact.
The need to act fairly between members of the Company
After weighing up all relevant factors, the Directors consider which course of action best enables delivery of our strategy over
the long-term, taking into consideration the impact on stakeholders. The Directors believe they have acted in the way they
consider most likely to promote the success of the Company for the benefit of its members as a whole.
CLOUDBREAK DISCOVERY PLC
STRATEGIC REPORT
8
The Board is committed to maintaining good communication and having constructive dialogue with its shareholders. The
Company has close ongoing relationships with key private shareholder, analysts and brokers, providing the opportunity to
discuss issues and provide feedback at meetings with the Company. All shareholders are encouraged to attend the
Company's Annual General Meeting and any general meetings held by the Company.
The desirability of the Company maintaining a reputation for high standards of business conduct
The Board periodically reviews and approves clear frameworks, such as the Company’s Code of Business Ethics, to ensure
that its high standards are maintained both within the Group and the business relationships we maintain. This, complemented
by the various ways the Board is informed and monitors compliance with relevant governance standards, help ensure its
decisions are taken and that the Group acts in ways that promote high standards of business conduct.
Consider the interests of the Company’s employees
The are no employees in the Group currently; only Directors. Still, the Group is committed to considering the interests of all
directors of the Company when decisions or changes are to be made.
Developing relationships with the option agreement partners, suppliers and others
Delivering on our strategy requires strong mutually beneficial relationships with suppliers. The Group values all of its suppliers
and aims to build strong positive relationships through open communication and adherence option agreement terms. The
Group is committed to being a responsible entity and doing the right thing for its suppliers and business partners.
The impact of the Company’s operations on the community and the environment
The Group is committed to the highest environmental, social and governance standards both internally within the Group and
externally with its partners. The Group is committed to being a responsible entity in terms of the community and the wider
environment.
Conclusion
The Directors believe that to the best of their wisdom and abilities, they have acted in the way they consider prudent to
promote the success of the Company for the benefit of its members as a whole, in the true spirit of the provisions of Section
172 (1) of the Companies Act 2006.
The Group Strategic Report was approved by the Board on 24 October 2023.
Andrew Male
Interim Chief Executive Officer
CLOUDBREAK DISCOVERY PLC
DIRECTORS’ REPORT
9
The Directors are pleased to present their Report and the audited consolidated Financial Statements of the Company
and its subsidiaries for the year ended 30 June 2023.
Results and Dividends
Loss on ordinary activities of the Group after taxation amounted to £3,997,899 (2022: loss of £5,557,029). The
Directors do not recommend the payment of a dividend (2022: £Nil).
Directors & Directors’ interests
The Directors who held office at 30 June 2023 had the following beneficial interests in shares and options of the Group:
30 June 2023 30 June 2022
Ordinary
Shares
Options
Ordinary
Shares
Options
Emma Priestley 2,000,000 1,850,000 2,000,000 1,100,000
Andrew Male 2,000,000 1,350,000 2,000,000 600,000
Paul Gurney - 750,000 - -
Samuel “Kyler” Hardy - - 91,626,929 1,500,000
Total 4,000,000 3,950,000 95,626,929 3,200,000
• Samuel “Kyler” Hardy resigned 19 June 2023.
Substantial shareholders
On 23 October 2023, the following parties had notified the Group of a beneficial interest that represents 3% or more of the
Group's issued share capital at those dates:
23 October 2023
Holding Percentage
Crescita Capital 109,327,776 17.99%
Samuel Kyler Hardy 91,816,574 15.10%
Campbell Smyth 26,440,288 4.44%
Corporate responsibility
Greenhouse gas emissions
Given the nature of its activities which include aerial geophysics with a helicopter and the operation of drill rigs, the Group is
conscious of greenhouse gas emissions. The Directors are mindful of their responsibilities in this regard and strive to seek
opportunities where improvements may be made.
The Board recognises its responsibility to protect the environment and is fully committed to conserving natural resources and
striving for environmental sustainability, by ensuring that its facilities are operated to optimise energy usage; minimise waste
production; and protect nature and people.
The Company is currently deemed to be a low energy user meaning it has consumed less that 40MWh of energy during the
reporting period. This includes the combustion of gas, consumption of fuel for transport and the purchase of electricity for its
own use. As such, it is exempt from disclosing actual kWh of energy emitted during the period from its operations and activities.
As the Group’s operations scale up, it will continue to monitor its energy use and its status as a low energy user. The Group
will seek to collect, structure, and effectively disclose related performance data for the material, climate-related risks and
opportunities identified where relevant.
CLOUDBREAK DISCOVERY PLC
DIRECTORS’ REPORT
10
Internal controls
The Board recognises the importance of both financial and non-financial controls and has reviewed the Group’s control
environment and any related shortfalls during the period. Since the Group was established, the Directors are satisfied that,
given the current size and activities of the Group, adequate internal controls have been implemented. Whilst they are aware
that no system can provide absolute assurance against material misstatement or loss, in light of the current activity and
proposed future development of the Group, continuing reviews of internal controls will be undertaken to ensure that they are
adequate and effective.
Supplier payment policy
The Group's current policy concerning the payment of trade creditors is to follow the CBI's Prompt Payers Code (copies are
available from the CBI, Centre Point, 103 New Oxford Street, London WC1A 1DU).
The Group's current policy concerning the payment of trade creditors is to:
• settle the terms of payment with suppliers when agreeing the terms of each transaction;
• ensure that suppliers are made aware of the terms of payment by inclusion of the relevant terms in contracts; and
• pay in accordance with the Group's contractual and other legal obligations.
Going concern
These financial statements have been prepared on the going concern basis, as set out in Note 2.4.
The Directors have prepared cash flow forecasts for the period ending 31 December 2024, which take into account the cost
and operational structure of the Group and Parent Company, property option income, debenture interest and any existing
licence and working capital requirements. These forecasts indicate that the Group and parent Company’s cash resources will
not be sufficient to cover the projected expenditure for the period of 12 months from the date of approval of these financial
statements. These forecasts indicate that the Group and Parent Company, in order to meet their operational objectives, and
expected liabilities as they fall due, will be required to raise additional funds within the next 12 months.
Whilst the Directors are confident that they will secure the necessary funding, the current conditions do indicate the existence
of a material uncertainty that may cast significant doubt regarding the applicability of the going concern assumption and the
auditors have made reference to this in their audit report. The Directors are confident in the Company’s ability to raise
additional funds as required, from existing and/or new investors, within the next 12 months. Thus, they continue to adopt the
going concern basis of accounting preparing these financial statements.
Directors’ and Officers’ indemnity insurance
The Group has made qualifying third-party indemnity provisions for the benefit of its Directors and Officers. These were made
during the period and remain in force at the date of this report.
Financial risk management objectives
The Group has disclosed the financial risk management objectives within Note 3 to these Financial Statements.
The task force on climate-related financial disclosures
The task force on climate-related financial disclosures (“TCFD”) aim to provide investors, lenders and other stakeholders with
information necessary to assess climate related risks and opportunities. The Group takes various actions throughout local
operations to mitigate the potential impacts of the Group’s activities. The Directors recognise the benefits of disclosing climate-
related financial information, but due to the Group’s small scale and stage of development, have not yet fully implemented
the TCFD recommendations. During 2023/2024 the Directors will establish a cross-functional team to evaluate and implement
the TCFD recommendations over the next few years.
Events after the reporting period
Events after the reporting period are set out in Note 28 to the Financial Statements.
Future developments
Details of future developments for the Group are disclosed in the Interim CEO’s Report on page 3.
CLOUDBREAK DISCOVERY PLC
DIRECTORS’ REPORT
11
Provision of information to Auditor
So far as each of the Directors is aware at the time this report is approved:
• there is no relevant audit information of which the Company's auditor is unaware; and
• the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit
information and to establish that the auditor is aware of that information.
Auditor
PKF Littlejohn LLP has signified its willingness to continue in office as auditor.
This report was approved by the Board on 24 October 2023 and signed on its behalf.
Andrew Male
Interim Chief Executive Officer
CLOUDBREAK DISCOVERY PLC
DIRECTORS’ REMUNERATION REPORT
12
The Company has an established Remuneration Committee. The purpose of the remuneration policy is to attract, retain and
motivate Executive Directors of a high calibre with a view to encouraging commitment to the development of the Company
and for long term enhancement of shareholder value.
The Company’s auditors, PKF Littlejohn LLP are required by law to audit certain disclosures and where disclosures have
been audited, they are indicated as such.
Service Contracts
The Executive Directors have entered into Service Agreements with the Company and continue to be employed until
terminated by the Company.
In the event of termination or loss of office the Director is entitled only to payment of his basic salary in respect of his notice
period. In the event of termination or loss of office in the case of a material breach of contract the Director is not entitled to
any further payment.
Executive Directors are allowed to accept external appointments with the consent of the Board, provided that these do not
lead to conflicts of interest. Executive Directors are allowed to retain fees paid.
The contracts are available for inspection at the Company's registered office.
Implementation Report
Particulars of Directors’ Remuneration
Particulars of directors’ remuneration, including directors’ options are provided in notes 15 and 18 and further referenced in
the Directors’ report.
Remuneration owing to the Directors’ during the year ended 30 June 2023 was:
Short-term
benefits
Share based
payments Total
£ £ £
Directors
Samuel “Kyle
r
” Hardy
(1)
120,000 6,329 126,329
Paul Gurney
30,000 3,798 33,798
Emma Priestly
45,000 3,798 48,798
Andrew Male 120,000 3,798 123,798
315,000 17,723 332,723
(1) Samuel “Kyler” Hardy resigned on 19 June 2023.
Remuneration hasn’t been paid in full to all directors, the amounts referenced above have either been accrued or partially
paid. Refer to note 26 for amounts still owning to the Directors.
Remuneration paid to the Directors’ during the year ended 30 June 2022 was:
Short-term
benefits
Share based
payments Total
£ £ £
Directors
Samuel “Kyler” Hardy
- 2,000 2,000
Paul Gurney
7,500 - 7,500
Emma Priestly
- 600 600
Andrew Male 72,476 600 73,076
79,976 3,200 83,176
CLOUDBREAK DISCOVERY PLC
DIRECTORS’ REMUNERATION REPORT
13
Incentive plans
The Company have an established Option Scheme.
On 9 August 2022, the Directors were granted options over 2,250,000 ordinary shares of 0.1 pence each in the capital of the
Company. The Options vested immediately and have an exercise price of 2.25p with a 2-year exercise period.
The Directors held the following options at the beginning and the end of the year:
As at 30
June 2022
Granted
during the
year
At 30 June
2023
Exercise
price
Expiry
date
Emma Priestley 1,100,000 750,000 1,850,000 £0.0225 9/8/2025
Andrew Male 600,000 750,000 1,350,000 £0.0225 9/8/2025
Paul Gurney - 750,000 750,000 £0.0225 9/8/2025
Total 1,700,000 2,250,000 3,950,000 - -
Percentage change in the renumeration of the Chief Executive
The previous CEO, Samuel “Kyler” Hardy resigned from the Company on 19 June 2023. The interim CEO is Andrew Male,
so therefore no CEO disclosure has been presented.
Performance Graph
The Directors have considered the requirement of the UK 10-period performance graph comparing the company’s Total
Shareholder Return with that of a comparable indicator. The Directors do not currently consider that including the graph will
be meaningful as the Company is currently in a loss-making position and is not paying dividends. The Directors will review
the inclusion of this table for future reports.
Relative importance of spend on pay
The Directors have considered the requirement to present information on the relative importance of spend on pay compared
to shareholder dividends paid. Given that the Company does not currently pay dividends we have not considered it necessary
to include such information.
Other matters
The Company does not have any pension plans for any of the Directors and does not pay contributions in relation to their
remuneration. The Company has not paid out any excess retirement benefits to any Directors.
Directors interests in shares
The beneficial interest of the Directors in the Ordinary Share Capital of the Company at 30 June 2023 was:
30 June 2023
Ordinary Shares
% of issued share
capital
Emma Priestley
2,000,000 0.33%
Andrew Male 2,000,000 0.33%
Paul Gurney - -
Total 4,000,000 0.66%
CLOUDBREAK DISCOVERY PLC
DIRECTORS’ REMUNERATION REPORT
14
The beneficial interest of the Directors in the Ordinary Share Capital of the Company at 30 June 2022 was:
30 June 2022
Ordinary Shares
% of issued share
capital
Emma Priestley
2,000,000 0.41%
Andrew Male
2,000,000 0.41%
Paul Gurney
- -
Samuel “Kyler” Hardy
(1)
91,626,929 18.96%
Total
95,626,929 19.78%
(1) Samuel “Kyler” Hardy resigned on 19 June 2023.
The Directors’ remuneration report was approved by the Board on 24 October 2023.
Emma Priestley
Remuneration Committee Chairman
CLOUDBREAK DISCOVERY PLC
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
15
The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable
law and regulations, including the AIM Rules for Companies.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have
elected to prepare the Group and Company Financial Statements in accordance with UK-adopted International Accounting
Standards (UK-adopted IAS) in conformity with the requirements of the Companies Act 2006. Under company law the
Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state
of affairs of the Group and Company, and of the profit or loss of the Group for that period. In preparing these Financial
Statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgments and accounting estimates that are reasonable and prudent;
• state whether applicable UK-adopted IAS in conformity with the requirements of the Companies Act 2006 have been
followed, subject to any material departures disclosed and explained in the financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will
continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s
and Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and
Company, and enable them to ensure that the Financial Statements comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the Group and Company, and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the
Company’s website, www.cloudbreakdiscovery.com. Legislation in the United Kingdom governing the preparation and
dissemination of the Financial Statements may differ from legislation in other jurisdictions.
The Directors confirm that they have complied with the above requirements in preparing the Financial Statements.
Directors Responsibility pursuant to Disclosure and Transparent Rules
Each of the Directors whose names and functions are listed on page 2 confirm that, to the best of their knowledge and belief:
• The Financial Statements prepared in accordance with UK-adopted international accounting standards, give a
true and fair view of the assets, liabilities, financial position and loss of the Group and Company; and
• the Annual Report and Financial Statements, including the Business review, includes a fair review of the
development and performance of the business and the position of the Group and Company, together with a
description of the principal risks and uncertainties that they face.
CLOUDBREK DISCOVERY PLC
CORPORATE GOVERNANCE REPORT
16
As a Group listed on the Standard Segment of the Official List of the UK Listing Authority, the Group is not required to
comply with the provisions of the UK Corporate Governance Code. However, the Board is committed to maintaining high
standards of corporate governance and so far, as appropriate given the Group’s size and the constitution of the Board,
complies and intends to comply with The Corporate Governance Guidelines for Small and Mid-Sized Companies (the
“QCA Code”).
In light of the Group’s size and recent history, the Group has deviated from the QCA Code in the following respects:
• The provisions relating to the composition of the Board and the division of responsibilities are not being complied
with as the Board feels these provisions to be inapplicable, given the size of the Group.
• The Board do not consider an internal audit function to be applicable due to the size of the Group.
• A diversity policy as applied to the Group’s administrative management and supervisory bodies has not yet been
developed.
The Directors are responsible for internal control in the Group and for reviewing effectiveness. Due to the size of the
Group, all key decisions are made by the Board. The Directors have reviewed the effectiveness of the Group’s systems
during the period under review and consider that there have been no material losses, contingencies or uncertainties due
to weaknesses in the controls.
The Group hold timely board meetings or informal meetings as issues arise which require the attention of the Board. The
Board is responsible for the management of the business of the Group, setting the strategic direction of the Group and
establishing the policies of the Group. It is the Directors’ responsibility to oversee the financial position of the Group and
monitor the business and affairs of the Group, on behalf of the Shareholders, to whom they are accountable. The primary
duty of the Directors is to act in the best interests of the Group at all times. The Board also addresses issues relating to
internal control and the Group’s approach to risk management and has formally adopted an anti-corruption and bribery
policy.
The Directors have established an audit committee, a nomination committee and a remuneration committee with formally
delegated duties and responsibilities. Emma Priestley and Paul Gurney are each considered by the Board to be an
independent Non-Executive Director. At the date of release, Andrew Male is considered to be an Executive Director.
The QCA Code has ten principles of corporate governance that the Group has committed to apply within the foundations of
the business. These principles are:
1. Establish a strategy and business model which promote long-term value for shareholders;
2. Seek to understand and meet shareholder needs and expectations;
3. Take into account wider stakeholder and social responsibilities and their implications for long term success;
4. Embed effective risk management, considering both opportunities and threats, throughout the organisation;
5. Maintain the board as a well-functioning balanced team led by the Chair;
6. Ensure that between them the directors have the necessary up to date experience, skills and capabilities;
7. Evaluate board performance based on clear and relevant objectives, seeking continuous improvement;
8. Promote a corporate culture that is based on ethical values and behaviours;
9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board;
and
10. Communicate how the Group is governed and is performing by maintaining a dialogue with shareholders and other
relevant stakeholders.
There follows a short explanation of how the Group will apply each of the principles:
Principle One
Business Model and Strategy
The Board has determined that the best medium and long term value can be delivered through the adoption of a single
strategy. The Group’s principal activity is natural resource project and royalty generation as well as acquisition of projects
and
royalties. Cloudbreak maximizes its returns by seeking buyers to purchase its properties or by seeking partners to jointly
develop its properties through joint ventures or other partnering mechanisms.
Principle Two
Understanding Shareholder Needs and Expectations
The Board is committed to maintaining good communication and having constructive dialogue with its shareholders.
Shareholders are encouraged to attend the Group’s Annual General Meeting (“AGM”). Investors also have access to current
information on the Group though its website, www.cloudbreakdiscovery.com, and via Andrew Male, Interim Chief Executive
Officer, who is responsible for shareholder liaison and is available to answer investor relations enquiries. Shareholders can
email the Group at info@cloudbreakdiscovery.com or via a submission on the Group website.
CLOUDBREK DISCOVERY PLC
CORPORATE GOVERNANCE REPORT
17
The Group’s Annual Report, Notice of AGM are sent to all shareholders and can be downloaded from our website. Copies of
the interim report and other investor presentations are also available on the Group’s website. Shareholders are kept up to
date via regulatory news flow (“RNS”) on matters of a material substance and regulatory nature.
Periodic updates are provided to the market and any deviations to these updates are announced via RNS. At the AGM,
separate resolutions are proposed on each substantial issue. For each proposed resolution, proxy forms are issued which
provide voting shareholders with an opportunity to vote in advance of the AGM if they are unable to vote in person. Our
registrars, count the proxy votes which are properly recorded, and the results of the AGM are announced through an RNS.
The Board is keen to ensure that the voting decisions of shareholders are reviewed and monitored and that approvals sought
at the Group’s AGM are as much as possible within the recommended guidelines of the QCA Code. Non-deal roadshows will
be arranged throughout the year to meet with existing shareholders and potential new stakeholders to maintain, as much as
possible, transparency and dialogue with the market. Additionally, investor presentations can be found on the Group’s website.
Principle Three
Considering Wider Stakeholder and Social Responsibilities
The Board recognises that the long-term success of the Group is reliant upon open communication with its internal and
external stakeholders: investee companies, shareholders, contractors, suppliers, regulators and other stakeholders. The
Group has close ongoing relationships with a broad range of its stakeholders and provides them via regular contact with the
opportunity to raise issues and provide feedback to the Group. The Board regularly reviews and assesses its key resources
and relationships and has established processes and systems to ensure that there is close oversight and contact with its
minority investee companies and key stakeholders.
Principle Four
Risk Management
The Board is responsible for ensuring that procedures are in place and being implemented effectively to identify, evaluate
and manage the significant risks faced by the Group, noting that the Group is primarily an operating company with some
remaining minority investments in portfolio companies. A risk assessment matrix has been established by the Group and is
updated at regular intervals. The following principal risks, and controls to mitigate them, have been identified:
Risk. Impact Probability Risk Level Mitigating
Actions &
Controls
Risk
Owner
Accept
Exploration
risks
High Low Medium Experience of
the Board and
the technical
senior
management
team;
CEO Yes
Dependence on
key personnel
High Medium Low Key
management
have significant
equity;
Share options
awarded;
Exciting
business
opportunities
CEO Yes
Uninsured risk Medium Low Low Group’s
exploration
programmes are
in the early
stages with no
mine
development or
operations in
place as of yet
CEO Yes
CLOUDBREK DISCOVERY PLC
CORPORATE GOVERNANCE REPORT
18
Funding risk High Medium Medium Cash on hand,
investments
held and bought
deal equity
facility in place
sufficient to fund
the Comely for
the foreseeable
future.
CEO Yes
Financial risks High Medium Medium No debt held by
the Group.
The Audit
Committee are
responsible for
overseeing and
managing this
risk accordingly.
CEO Yes
Investment risk High Medium Medium Investments are
held in both
listed and
unlisted entities
and the board
monitor their
investments in a
regular basis.
For unlisted
investments the
board attempt to
have regular
communication
with the
management
team of the
investee.
CEO Yes
Principle Five
A Well Functioning Board of Directors
The Board comprises the Interim Chief Executive Officer, Andrew Male, and two Non-Executive Directors, Paul Gurney
and Emma Priestley. Biographical details of the current Directors are set out on the Company’s website. Executive and
Non-Executive Directors are subject to re-election in accordance with both the requirements of the UK Companies Act
2006 and the Group’s articles of association (“Articles”). The Group’s Articles state that Directors are subject to re-election
at intervals of no more than three years. The letters of appointment for all Directors stipulate the time commitment that
each Director is expected to provide to the Group.
The Board meets at least once a month. It has established an Audit Committee, the members of which are Paul Gurney
and Emma Priestley. The Nominations Committee consists of Emma Priestley (Chair) and Paul Gurney. A Remuneration
Committee has been established and is composed of Emma Priestley (Chair) and Paul Gurney.
Emma Priestley and Paul Gurney are considered to be independent Directors and as such the Group is in compliance
with the requirement to have a minimum of two independent Non-Executive Directors on its Board.
The Nominations committee shall review further appointments and make recommendations to the Board.
The Group reports annually in the Directors’ Report on the number of Board and committee meetings held during the
year and the attendance record of individual Directors. To date, in the current financial year, the Directors have a 100%
record of attendance at such meetings. Directors meet formally and informally both in person and by telephone.
Principle Six
Appropriate Skills and Experience of the Directors
CLOUDBREK DISCOVERY PLC
CORPORATE GOVERNANCE REPORT
19
The Board currently consists of three Directors. Westend Corporate LLP acts as the Company Secretary. The Group
believes that the current balance of skills in the Board as a whole, reflects a very broad range of commercial and
professional skills across geographies and industries and all of the Directors have experience in the natural resources
sector and public markets. Information about the directors can be found on the website.
The Board is kept abreast with developments of governance and London Stock Exchange (“LSE”) regulations. The
Group’s lawyers provide updates on governance issues. The Directors have access to the Group’s company secretary,
lawyers and auditors as and when required and are able to obtain advice from other external bodies when necessary.
Principle Seven
Evaluation of Board Performance
Internal evaluation of the Board, the Committees and individual Directors is undertaken on an annual basis in the form
of peer appraisal and discussions to determine the effectiveness and performance against targets and objectives, as well
as the Directors’ continued independence. As a part of the appraisal the appropriateness and opportunity for continuing
professional development whether formal or informal is discussed and assessed.
Principle Eight
Corporate Culture
The Board recognises that their decisions regarding strategy and risk will impact the corporate culture of the Group as a
whole, which in turn will impact the Group’s performance. The Directors are very aware that the tone and culture set by
the Board will greatly impact all aspects of the Group as a whole and the way that consultants or other representatives
behave. The corporate governance arrangements that the Board has adopted are designed to instil a firm ethical code
to be followed by Directors, employees, consultants and representatives alike throughout the entire organisation. The
Group strives to achieve and maintain an open and respectful dialogue with employees, representatives, regulators,
suppliers and other stakeholders. Therefore, the importance of sound ethical values and behaviours is crucial to the
ability of the Group to successfully achieve its corporate objectives. The Board places great importance on this aspect
of corporate life and seeks to ensure that this flows through all that the Group does. The Directors consider that at present
the Group has an open culture facilitating comprehensive dialogue and feedback and enabling positive and constructive
challenge. The Group has adopted, with effect from the date on which its shares were admitted to LSE, a code for
Directors’ dealings in securities which is appropriate for a company whose securities are traded on LSE and is in
accordance with the requirements of the Market Abuse Regulation which came into effect in 2016.
Issues of bribery and corruption are taken seriously, the Group has a zero-tolerance approach to bribery and corruption
and has an anti-bribery and corruption policy in place to protect the Group, its employees and those third parties to which
the business engages with. The policy is provided to staff upon joining the business and training is provided to ensure
that all employees within the business are aware of the importance of preventing bribery and corruption. Each
employment contract specifies that the employee will comply with the policies. There are strong financial controls across
the business to ensure on going monitoring and early detection.
Principle Nine
Maintenance of Governance Structures and Processes
The Audit Committee is chaired by Paul Gurney with Emma Priestley being the other member. The Board has adopted
appropriate delegations of authority which set out matters which are reserved for the Board. The Chairman is responsible
for the effectiveness of the Board as well as primary contact with shareholders, while, as an operating company,
execution of the Group’s strategy is delegated to the Chief Executive Officer.
The Audit Committee has primary responsibility for monitoring the quality of internal controls and ensuring that the
financial performance of the Group is properly measured and reported. It receives reports from Group advisors and
auditors relating to the interim and annual accounts and the accounting and internal control systems in use throughout
the Group. The Audit Committee meets not less than twice in each financial year, and it has unrestricted access to the
Group’s auditors.
In accordance with the Companies Act 2006, the Board complies with: a duty to act within their powers; a duty to promote
the success of the Group; a duty to exercise independent judgement; a duty to exercise reasonable care, skill and
diligence; a duty to avoid conflicts of interest; a duty not to accept benefits from third parties and a duty to declare any
interest in a proposed transaction or arrangement. The Board notes requirement for the Group to meet the LSE Rules
for Companies such that the Group is suitable at all times to remain admitted to trading on LSE. This includes the
requirement for a governance structure compatible with this requirement.
The Board retains full and effective control over the Group and holds regular meetings at which financial, operational and
other reports are considered and where appropriate voted upon. The Board is responsible for the Group’s strategy and
key financial and compliance issues.
There are certain matters that are reserved for the Board, they include:
CLOUDBREK DISCOVERY PLC
CORPORATE GOVERNANCE REPORT
20
•
approval of the Group’s strategic aims and objectives;
•
Review of Group performance and ensuring that any necessary corrective action is taken;
•
Extension of the Group’s activities into new business or geographical areas;
•
Any decision to cease to operate all or any part of the Group’s business;
•
Major changes to the Group’s corporate structure and management and control structure;
•
Any changes to the Group’s listing;
•
Changes to governance and key business policies;
•
Ensuring maintenance of a sound system of internal control and risk management;
•
Approval of half yearly and Annual Report and accounts and preliminary announcements of final year results;
•
Reviewing material contracts and contracts not in the ordinary course of business.
As the Group grows, the Directors will ensure that the governance framework remains in place to support the
development of the business.
Principle Ten
Shareholder Communication
The Board is committed to maintaining good communication and having constructive dialogue with its shareholders in
compliance with regulations applicable to companies quoted on the LSE market. All shareholders are encouraged to
attend the Group’s AGM where they will be given the opportunity to interact with the Directors.
Investors also have access to current information on the Group though its website, www.cloudbreakdiscovery.com, and
via Andrew Male, Interim Chief Executive Officer, who is available to answer investor relations enquiries.
The Group shall include, when relevant, in its Annual Report, any matters of note arising from the Audit Committee (none
for the current year).
Copies of all Annual Reports, Notices of Meetings, Circulars sent to shareholders and Admission Documents (in respect
of the last five years) are included on the Group’s website.
If a significant proportion of votes was ever cast against a resolution by shareholders in General Meeting, the Group
would, on a timely basis, provide an explanation of what actions it intends to take to understand the reasons behind that
vote result, and, where appropriate, any different action it has taken, or will take, as a result of the vote.
Paul Gurney
Non-Executive Director
24 October 2023
CLOUDBREAK DISCOVERY PLC
INDEPENDENT AUDITOR’S REPORT
As at 30 June 2023
21
Opinion
We have audited the financial statements of Cloudbreak Discovery plc. (the ‘parent company’) and its subsidiaries (the ‘group’)
for the year ended 30 June 2023 which comprise the Statements of Financial Position, the Consolidated Comprehensive
Income Statement, the Consolidated and Company Statements of Changes in Equity, the Statements of Cash Flows and
notes to the financial statements, including significant accounting policies. The financial reporting framework that has been
applied in their preparation is applicable law and UK-adopted international accounting standards and as regards the parent
company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
In our opinion:
• the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as
at 30 June 2023 and of the group’s loss for the year then ended;
• the group financial statements have been properly prepared in accordance with UK-adopted international accounting
standards;
• the parent company financial statements have been properly prepared in accordance with UK-adopted international
accounting standards and as applied in accordance with the provisions of the Companies Act 2006; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the group and parent company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as
applied to listed public interest entities, 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.
Material uncertainty related to going concern
We draw attention to note 2.4 in the financial statements, which indicates that the group will need to raise additional funds
either through debt or equity during the going concern period in order to fund exploration expenditure and to meet its liabilities
as they fall due. As stated in note 2.4, these events or conditions, indicate that a material uncertainty exists that may cast
significant doubt on the group’s and parent company’s ability to continue as a going concern. Our opinion is not modified in
respect of this matter.
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the group’s and parent
company’s ability to continue to adopt the going concern basis of accounting included obtaining management’s assessment
of going concern and associated cash flow forecasts for a period of 20 months from the date of approval of the financial
statements. We reviewed the overall forecast which included checking the mathematical accuracy and agreeing the opening
position to cash balances. We also made enquiries of management to assess key inputs and assumptions made and drivers
of the assessment which includes committed costs and option income expected and we also performed sensitivity analysis
on the forecast . This was then agreed to supporting documentation where appropriate. We also evaluated the inputs to the
cash flow forecast for reasonableness, compared non-discretionary costs to historic costs incurred by the group, and also
considered the availability of funding or access to existing and additional working capital of the group.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections
of this report.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements.
At the planning stage, materiality is used to determine the financial statement areas that are included within the scope of our
audit and the extent of sample sizes during the audit. This is reviewed accordingly during fieldwork and completion dependent
on adjustments made during the audit.
The group was audited to a level of materiality for the financial statements as a whole of £82,000 (2022: £105,000), a
benchmark calculated using 2% of gross assets of the group. We consider gross assets, which is made up predominantly of
investment assets, to be the most significant determinant of the group’s financial position and performance used by
shareholders and investors for the current year and that the group’s future operations are being driven by investments and
the performance of the subsidiaries, as the Company has no external borrowings and a small amount of liabilities relative to
assets held.
CLOUDBREAK DISCOVERY PLC
INDEPENDENT AUDITOR’S REPORT
As at 30 June 2023
22
The performance materiality applied at the group level was 70% (2022: 70%) of group materiality of £57,400 (2022: £73,500)
and we have reported to management misstatements during our audit work above £4,100 (2022: £5,250) for the group, as
well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. Performance materiality
for the group and parent company was set at 70% of overall materiality due to our accumulated knowledge in respect of the
group and the assessed level of risk associated with a listed company operating within the exploration sector .
The materiality applied to the parent company was £58,000 (2022: £64,000) being 2% of expenditure. This benchmark is
considered to be the determinant of the parent company’s financial position and performance measures considered to be of
most relevant to shareholders as it is a head cost centre and is not revenue generative. Performance materiality applied was
£40,600 (2022: £44,800) being 70% (2022: 70%) of parent materiality.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality.
Our approach to the audit
In designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
We looked at areas involving significant accounting estimates and judgement by the directors which includes the valuation of
investments, including those at fair value through profit of loss (FVPL) and the consideration of future events that are inherently
uncertain such as the recoverable value of the parent company’s investment in the subsidiaries. We also addressed the risk
of management override of internal controls, including an evaluation of whether there was evidence of bias by the directors
that represented a risk of material misstatement due to fraud.
Of the seven components of the group, a full scope audit was performed on the complete financial information of two
components which composed of the parent company and the Canadian subsidiary. A limited scope review was performed
on a component assessed as material and the remaining components were subject to analytical review procedures only as
they were not significant or material to the group.
Of the components of the group which we performed full scope audit, one is located in Canada and audited in London,
conducted by group audit team using a team with specific experience of auditing mining exploration entities and publicly listed
entities. The Senior Statutory Auditor interacted regularly with the audit teams during all stages of the audit and was
responsible for the scope and direction of the audit process. This, in conjunction with additional procedures performed, gave
us appropriate evidence for our opinion on the group and parent company financial statements.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due
to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources
in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of
the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters. In addition to the matter described in the Material uncertainty related to going concern section we have determined
the matters described below to be the key audit matters to be communicated in our report.
Key Audit Matter How our scope addressed this matter
Valuation and classification of investments in
other entities (Note 6)
Financial investments carrying value as at 30 June
2023 amounted to £891,255 are the most
significant balances in the financial statements
and are material.
Cloudbreak Exploration Inc. (previously known as
Cloudbreak Discovery (Canada)) holds shares in
other listed and non-listed companies as
investments.
Under International Financial Reporting Standard
(IFRS) 9 Financial Instruments, these investments
should be valued at the fair value through profit or
loss. Some investments are held under level 3 of
the fair value hierarchy in accordance with IFRS 13
Our audit work included the following:
Obtaining the agreements underpinning the
investments and understanding the key terms;
Obtaining broker statements as proof of
ownership;
Reviewing the accounting treatment to ensure
investments are appropriately classified and
valued in accordance with IFRS 9;
Undertaking substantive testing on additions,
disposals and fair value movements in the year.
CLOUDBREAK DISCOVERY PLC
INDEPENDENT AUDITOR’S REPORT
As at 30 June 2023
23
Fair Value Measurement which involves
management judgement and estimation due to its
lack of active market. There is a risk that these
investments are incorrectly valued as at the year
end. This is considered a key audit matter,
Any gains or losses on disposal were re-
calculated;
Challenging key inputs and assumptions in
management’s valuation models used to
determine the fair value and reviewing
accounting entries made to assess whether the
basis of valuation is appropriate and fair value
adjustments recorded correctly; and
Ensuring disclosures made in the financial
statements in relation to critical accounting
judgements are adequate.
Based on the procedures performed, we found
management’s assessment of the carrying value and
classification of investment in other entities to be
supported by the underlying models and the
judgements and estimates applied reasonable.
Valuation of investments in subsidiaries – parent
company
Investments in subsidiaries, as shown in Note 6, is
the most significant asset in the parent company’s
Statement of Financial Position. Given that the
subsidiaries are dependent on financing from the
parent, there is a risk that the investments in
subsidiaries and associated loans provided by the
parent may not be fully recoverable. The estimated
recoverable amount is subjective due to the
inherent uncertainty involved in the assessment of
early-stage exploration projects in the
subsidiaries, we considered the carrying value of
the investments to be a key audit matter.
Our work in this area included the following:
Confirmation of ownership of investments by
reviewing Company records and filings with the
local government registries;
Consideration of recoverability of investments
by reference to underlying net asset values in
each subsidiary and the cash flow forecasts;
A review of the impairment assessment
prepared under IAS 36 Impairment of assets by
the company and challenge of key inputs and
estimates included therein such as inflows and
outflows in the future forecast and relevant
discount rates; and
Ensuring disclosures made in the financial
statements in relation to are adequate.
Based on the procedures performed, we deemed the
carrying value of investment in subsidiaries, including
any associated loans to be reasonable after the
impairment charge recognised by the management.
Other information
The other information comprises the information included in the annual report, other than the financial statements and our
auditor’s report thereon. The directors are responsible for the other information contained within the annual report. Our opinion
on the group and parent company financial statements does not cover the other information and, except to the extent
otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to
read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify
such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a
material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
CLOUDBREAK DISCOVERY PLC
INDEPENDENT AUDITOR’S REPORT
As at 30 June 2023
24
Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
• the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the
course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report
to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not
been received from branches not visited by us; or
• the parent company financial statements and the part of the directors’ remuneration report to be audited are not in
agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the
group and parent company financial statements and for being satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the group and parent company financial statements, the directors are responsible for assessing the group’s and
the parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company
or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to
which our procedures are capable of detecting irregularities, including fraud is detailed below:
• We obtained an understanding of the group and parent company and the sector in which they operate to identify
laws and regulations that could reasonably be expected to have a direct effect on the financial statements. We
obtained our understanding in this regard through discussions with management, industry research, application of
cumulative audit knowledge and experience of the sector. .
• We determined the principal laws and regulations relevant to the group and company in this regard to be those
arising from:
o Listing Rules;
o UK Companies Act 2006;
o Anti Bribery Legislation;
CLOUDBREAK DISCOVERY PLC
INDEPENDENT AUDITOR’S REPORT
As at 30 June 2023
25
o Market Abuse Directive;
o The Money Laundering and Terrorist Financing (Amendment) Regulations 2019;
o Disclosure and Transparency Rules for listed entities;
o Local industry regulations where the group operates; and
o Local tax and employment law.
• We designed our audit procedures to ensure the audit team considered whether there were any indications of non-
compliance by the group and parent with those laws and regulations. These procedures included, but were not
limited to:
o Making enquiries of management;
o Review of Board minutes; and
o Review of legal expenses
• Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those
leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases
the more that compliance with a law or regulation is removed from the events and transactions reflected in the
financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also
greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
• We also identified the risks of material misstatement of the financial statements due to fraud. We considered, in
addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls, that the
potential for management bias was identified in relation to the value and classification of investments in other entities
and value of investments in subsidiaries – parent company and we addressed this by challenging the assumptions
and judgements made by management when auditing that significant accounting estimate
• As in all of our audits, we addressed the risk of fraud arising from management override of controls by performing
audit procedures which included, but were not limited to: the testing of journals; reviewing accounting estimates for
evidence of bias; and evaluating the business rationale of any significant transactions that are unusual or outside
the normal course of business; and reviewing transactions through the bank statements to identify potentially large
and unusual transactions that do not appear to be in line with our understanding of business operations. Aside from
the non-rebuttable presumption of a risk of fraud arising from management override of controls, we did not identify
any significant fraud risks.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading
to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that
compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we
will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring
due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
Other matters which we are required to address
The Company was listed on London stock exchange on 3 June 2021. We were re-appointed as auditor of the public listed
entity by the Audit Committee on 24 November 2022 to audit the financial statements for the period ending 30 June 2023.
Our total uninterrupted period of engagement is 13 years, covering the periods ending 30 June 2010 to 30 June 2023,
including the audit years prior to listing.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the group or the parent company and
we remain independent of the group and the parent company in conducting our audit.
Our audit opinion is consistent with the additional report to the audit committee.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are
required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not
CLOUDBREAK DISCOVERY PLC
INDEPENDENT AUDITOR’S REPORT
As at 30 June 2023
26
accept or assume responsibility to anyone, other than the company and the company's members as a body, for our audit
work, for this report, or for the opinions we have formed.
Daniel Hutson (Senior Statutory Auditor) 15 Westferry Circus
For and on behalf of PKF Littlejohn LLP Canary Wharf
Statutory Auditor London E14 4HD
24 October 2023
CLOUDBREAK DISCOVERY PLC
STATEMENT OF FINANCIAL POSITION
As at 30 June 2023 Company number: 06275976
The Notes on pages 32 to 61 form part of these Financial Statements.
27
The Company has elected to take the exemption under Section 408 of the Companies Act 2006 from presenting the Parent
Company Income Statement and Statement of Comprehensive Income. The loss for the Company for the year ended 30 June
2023 was £8,781,189 (loss for year ended 30 June 2022: £2,523,971).
The Financial Statements were approved and authorised for issue by the Board of Directors on 24 October and were signed
on its behalf by:
Andrew Male
Interim Chief Executive Officer
Group Company
Note
30 June
2023
£
30 June
2022
£
30 June
2023
£
30 June
2022
£
Non-Current Assets
Royalty asset 7 1 1 - -
Intangible assets 5 236,518 78,694 - -
Investments 6 891,255 2,069,302 43,046 68,056
Investment in subsidiaries 6 - - 1,997,048 7,252,886
Leased Asset 29,810 - - -
Convertible debenture receivables 8 475,168 1,657,900 475,168 1,657,900
Current Assets
Trade and other receivables 10 243,177 1,300,634 77,254 1,676,619
Cash and cash equivalents 11 244,074 310,578 18,684 124,118
Convertible debenture receivables 8 1,583,892 - 1,583,892 -
Total Assets 3,703,895 5,417,109 4,195,092 10,779,579
Current Liabilities
Trade and other payables 13 1,704,437 1,395,910 1,454,431 1,357,254
Total Liabilities 1,704,437 1,395,910 1,454,431 1,357,254
Net Assets 1,999,458 4,021,199 2,740,661 9,422,325
Equity attributable to owners of the Parent
Share capital 14 778,635 654,129 778,635 654,129
Share premium 14 16,753,221 14,821,521 16,753,221 14,821,521
Other reserves 16 519,045 599,093 340,716 297,397
Reverse asset acquisition reserve (4,134,019 ) (4,134,019 ) - -
Retained losses (11,917,424 ) (7,919,525 ) (15,131,911) (6,350,722)
Total Equity 1,999,458 4,021,199 2,740,661 9,422,325
CLOUDBREAK DISCOVERY PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2023
The Notes on pages 32 to 61 form part of these Financial Statements.
28
Continued operations Note
Year ended
30 June
2023
£
Year ended 30
June
2022
£
Profit on disposal of exploration & evaluation asset sales
Administrative expenses 24
(4,006,518 ) (3,308,214 )
Foreign exchange (losses)/gains (81,024 ) 39,380
Operating loss (3,722,574 ) (2,709,311 )
Finance income 19 369,587 154,518
Other income 47,121 11,233
Impairment of loans 9 (128,607 ) (184,365 )
Impairment of property (12,636 ) -
Other gains 20 17,913 8,332
Realised Loss on investments 21 (866,421 ) -
Unrealised fair value gain/(loss) on investments 6 309,896 (2,837,437 )
Loss before income tax (3,985,721 ) (5,557,029 )
Income tax 22 (12,178 ) -
Loss for the year attributable to owners of the Parent (3,997,899 ) (5,557,029 )
Basic and Diluted Earnings Per Share attributable to owners of the
Parent during the period (expressed in pence per share) 23 (0.01 )p (0.01 )p
Year ended
30 June
2023
£
Year ended
30 June
2022
£
Loss for the period (3,997,899 ) (5,557,029 )
Other Comprehensive Income:
Items that may be subsequently reclassified to profit or loss
Currency translation differences (123,367 ) 233,866
Other comprehensive income for the period, net of tax (4,121,266 ) (5,323,163 )
Total Comprehensive Income attributable to owners of the parent (4,121,266 ) (5,323,163 )
CLOUDBREAK DISCOVERY PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2023
29
Note
Share
capital
£
Share premium
£
Reverse asset
acquisition reserve
£
Other reserves
£
Retained losses
£
Total
£
Balance as at 1 July 2021 560,520 10,905,507 (4,134,019 ) 511,501 (2,554,928 ) 5,288,581
Loss for the year - - - - (5,557,029 ) (5,557,029 )
Other comprehensive income
for the year
Items that may be subsequently
reclassified to profit or loss
Currency translation differences - - - 233,866 - 233,866
Total comprehensive income for
the year - - - 233,866
(5,557,029 ) (5,323,163 )
Issue of shares
14 93,609 3,994,527 - - - 4,088,136
Issue costs 14 - (78,513 ) - - - (78,513 )
Options Granted 16 - - - 11,238 - 11,238
Warrants Granted 16 - - - 30,075 - 30,075
Options Exercised 16 - - - (24,962 ) 24,962 -
Share Options Expired 16 - - - (112,406 ) 112,406 -
Share Options Cancelled 16 - - - (1,180 ) 1,180 -
Warrants Exercised 16 - - - (13,024 ) 13,024 -
Other equity movement 16 - - - 4,845 - 4,845
Elimination of other reserves 16 - - - (40,860 ) 40,860 -
Total transactions with owners,
recognised directly in equity
Balance as at 30 June 2022 654,129 14,821,521 (4,134,019 ) 599,093 (7,919,525 ) 4,021,199
Balance as at 1 July 2022 654,129 14,821,521 (4,134,019 ) 599,093 (7,919,525 ) 4,021,199
Loss for the year - - - - (3,997,899 ) (3,997,899 )
Other comprehensive income
for the year
Items that may be subsequently
reclassified to profit or loss
Currency translation differences
(123,367 )
Total comprehensive income for
the year
(3,997,899 ) (4,121,266 )
Issue of shares 14 124,506 1,934,700 - - - 2,059,206
Issue costs 14 - (3,000 ) - - - (3,000 )
Options Granted 16 - - - 36,723 - 36,723
Warrants Granted 16 - - - 6,596 - 6,596
Total transactions with owners,
recognised directly in equity
Balance as at 30 June 2023 778,635 16,753,221 (4,134,019 ) 519,045 (11,917,424 ) 1,999,458
CLOUDBREAK DISCOVERY PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2023
The Notes on pages 32 to 61 form part of these Financial Statements.
30
Note
Share capital
£
Share
premium
£
Other reserves
£
Retained losses
£
Total equity
£
Balance as at 1 July 2021 560,520 10,905,507 407,656 (3,983,168) 7,890,515
Loss for the year - - - (2,523,971) (2,523,971)
Total comprehensive income
for the year - - - (2,523,971) (2,523,971)
Issue of shares
14
93,609 3,994,527 - - 4,088,136
Issue Costs
14
- (78,513) - - (78,513)
Options granted 16 - - 11,238 - 11,238
Warrants Granted 16 - - 30,075 - 30,075
Options Exercised
16
- - (24,962) 24,962 -
Share Options Expired
16
- - (112,406) 112,406 -
Share Options Cancelled
16
- - (1,180) 1,180 -
Warrants Exercised
16
(13,024) 13,024 -
Other equity movement 16 - - 4,845 - 4,845
Elimination of other reserves
16 - - (4,845) 4,845 -
Total transactions with
owners, recognised directly in
equity 93,609 3,916,014 (110,259) 156,417 4,055,781
Balance as at 30 June 2022 654,129 14,821,521 297,397 (6,350,722) 9,422,325
Balance as at 1 July 2022 654,129 14,821,521 297,397 (6,350,722) 9,422,325
Loss for the year - - - (8,781,189) (8,781,189)
Total comprehensive income
for the year
- - - (8,781,189) (8,781,189)
Issue of shares
14
124,506 1,934,700 - - 2,059,206
Issue Costs
14
- (3,000) - - (3,000)
Options granted 16 - -
36,723
- 36,723
Warrants Granted 16 - -
6,596
- 6,596
Total transactions with
owners, recognised directly in
equity
124,506 1,931,700 43,319 - 2,099,525
Balance as at 30 June 2023 778,635 16,753,221 340,716 (15,131,911) 2,740,661
CLOUDBREAK DISCOVERY PLC
STATEMENTS OF CASH FLOWS
For the year ended 30 June 2023
The Notes on pages 32 to 61 form part of these Financial Statements.
31
Group Company
Note
Year ended
30 June 2023
£
Year ended
30 June 2022
£
Year ended 30
June 2023
£
Year ended 30
June 2022
£
Cash flows from operating activities
Loss before income tax (3,997,899 ) (5,557,029 ) (8,781,189) (2,523,981)
Adjustments for:
Exploration and evaluation asset sales - (559,523 ) - -
Provision for bad debt 287,052 - 140,000 -
Other income - (11,233 ) - -
Other gains - (8,332 ) - -
Realised loss on investments 866,421 - - -
Change in fair value of investments (309,896 ) 2,837,437 14,961 39,623
Change in fair value of convertible debentures 91,106 - 91,106 -
Impairment of loans 128,607 184,365 52,444 123,486
Impairment of property 12,636 - - -
Impairment of intercompany investments - - 6,056,544
Interest income (369,587 ) (154,518 ) (309,274) (101,367)
Intercompany sales - - (155,129) (406,186)
Unrealised foreign exchange/(loss) (100,977 ) 44,615 30,448 (73,125)
Share option expenses 24 43,306 41,325 43,306 41,325
Stock based compensation - 1,770,000 - 1,770,000
Decrease/(Increase) in trade and other receivables 10 773,143 (776,342 ) 1,614,494 (766,999)
Increase/(Decrease) in trade and other payables 13 282,930 491,807 108,424 907,376
Net cash used in operating activities (2,293,158 ) (1,697,428 ) (1,093,865) (989,848)
Cash flows from investing activities
Funds received on sale of investment 6 677,400 210,178 - -
Funds spent on investment 6 (58,649 ) (181,937 ) (58,007) -
Funds spent on leased assets (29,810 ) - - -
Funds received on sale of exploration assets 5 47,206 97,508 - -
Loans to subsidiaries 6 - - (732,651) (762,391)
Interest received 226,382 - 226,382 -
Exploration and evaluation expenses
(222,667 )
(41,786 )
-
-
Convertible debenture receivable 8 (503,499 ) (1,595,635 ) (503,499) (1,595,635)
Net cash generated from (used in) investing
activities
(1,067,775) (2,358,026)
Cash flows from financing activities
Proceeds from issue of share capital 14 2,059,206 2,318,120 2,059,206 2,318,120
Shares cancelled - - - -
Cost of shares issued 144 (3,000 ) (78,513 ) (3,000) (78,513)
Repayment of leasing liabilities and borrowings 34,085 - - -
Net cash generated from financing activities 2,090,291 2,239,607 2,056,206 2,239,607
Net decrease/(increase) in cash and cash
equivalents
(66,504 )
(969,493 )
(105,434)
(1,108,267)
Cash and cash equivalents at beginning of year 11
124,118
1,232,385
Exchange gain on cash and cash equivalents - 2,454 - -
Cash and cash equivalents at end of year 244,074 310,578 18,684 124,118
Major Non-Cash Transactions
During the year ended 30 June 2023, £177,549 worth of investments were received as part of property option income (refer
to note 5 and note 6).
CLOUDBREAK DISCOVERY PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2023
32
1. General information
The Company is a public limited company incorporated and domiciled in England
listed on the London Stock Exchange. The registered office of the Company is 6 Heddon Street, London , W1B 4BT .
2. Summary of significant Accounting Policies
The principal Accounting Policies applied in the preparation of these Financial Statements are set out below. These Policies
have been consistently applied to all the periods presented, unless otherwise stated.
2.1. Basis of preparation of Financial Statements
The Financial Statements have been prepared in accordance with UK-adopted international accounting standards (UK IAS)
in accordance with the requirements of the Companies Act 2006. The Financial Statements have also been prepared under
the historical cost convention.
The Financial Statements are presented in Pound Sterling rounded to the nearest pound.
The preparation of financial statements in conformity with UK IAS requires the use of certain critical accounting estimates. It
also requires management to exercise its judgement in the process of applying the Accounting Policies. The areas involving
a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Consolidated
Financial Statements are disclosed in Note 4.
2.2. New and amended standards
(a) New and amended standards mandatory for the first time for the financial periods beginning on or after 1 July 2022
The International Accounting Standards Board (IASB) issued various amendments and revisions to International Financial
Reporting Standards and IFRIC interpretations. The amendments and revisions were applicable for the period ended 30 June
2023 but did not result in any material changes to the financial statements of the Group or Company.
ii) New standards, amendments and interpretations in issue but not yet effective or not yet endorsed and not early adopted
Standards, amendments and interpretations that are not yet effective and have not been early adopted are as follows:
| Standard | Impact on initial application | Effective date |
| IAS 12 | Income taxes | 1 January 2023 |
| IFRS 17 | Insurance contracts | 1 January 2023 |
| IAS 8 | Accounting estimates | 1 January 2023 |
| IAS 1 | Classification of Liabilities as Current or Non- | |
| Current. | ||
| 1 January 2023 | ||
| IAS 1 | Presentation of Financial Statements regarding the | |
| amendments of disclosure of accounting policies | ||
| 1 January 2023 | ||
| IAS 1 (Amendments) | Classification of liabilities as current or non-current | 1 January 2024 |
| IAS 16 (Amendments) | Lease Liability in a Sale and Leaseback | 1 January 2024 |
The Group is evaluating the impact of the new and amended standards above which are not expected to have a material
impact on the Group’s results or shareholders’ funds.
2.3. Basis of Consolidation
The Consolidated Financial Statements consolidate the financial statements of the Company and its subsidiaries made up to
30 June. Subsidiaries are entities over which the Group has control. 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.
Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the
Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and
circumstances in assessing whether it has power over an investee, including:
• The contractual arrangement with the other vote holders of the investee;
• Rights arising from other contractual arrangements; and
• The Group's voting rights and potential voting rights
CLOUDBREAK DISCOVERY PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2023
33
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. Subsidiaries are fully consolidated from the date on which control is transferred
to the Group. They are deconsolidated from the date that control ceases. Assets, liabilities, income and expenses of a
subsidiary acquired or disposed of during the period are included in the consolidated financial statements from the date the
Group gains control until the date the Group ceases to control the subsidiary.
Investments in subsidiaries are accounted for at cost less impairment within the Parent Company financial statements. Where
necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with
those used by other members of the Group. All significant intercompany transactions and balances between Group enterprises
are eliminated on consolidation.
2.4. Going concern
The Group Financial Statements have been prepared on a going concern basis. The Directors are of the view that, the Group
has funds to meet its planned expenses over the next 12 months from the date of these financial statements.
As at 30 June 2023, the Group had cash and cash equivalents of £244,074. The Directors have prepared cash flow forecasts
to 31 December 2024, which take into account the cost and operational structure of the Group and Parent Company, property
option income, debenture interest and any existing licence and working capital requirements. These forecasts indicate that
the Group and Parent Company’s cash resources are not sufficient to cover the projected expenditure for a period of 12
months from the date of approval of these financial statements. These forecasts indicate that the Group and Parent Company,
in order to meet their operational objectives, and meets their expected liabilities as they fall due, will be required to raise
additional funds within the next 12 months.
In common with many entities in the resource sector, the Company will need to raise further funds within the next 12 months
in order to meet its expected liabilities as they fall due. Whilst the Directors are confident that they will be secure the necessary
funding, the current conditions do indicate the existence of a material uncertainty Which may cast significant doubt about the
ability of the Group and parent company to continue as a going concern. The auditors have made reference to this material
uncertainty in their independent auditor's report.
2.5. Foreign currencies
a) Functional and presentation currency
Items included in the Financial Information are measured using the currency of the primary economic environment in
which the entity operates (the ‘functional currency’). The functional currency of the parent company is Pounds Sterling as
is the functional currency of the UK subsidiaries which are Imperial Minerals (UK) Limited and Kudu Resources Limited.
The functional currency of the Canadian subsidiary, Cloudbreak Exploration Inc. is Canadian Dollars
. The functional
currency of the US subsidiaries, Cloudbreak Discovery (US) Ltd. and Cloudbreak Energy (US) Ltd. is US Dollars. The
functional currency of the Guinea subsidiary, Kudu Resources Guinea is the Guinean Franc. The Financial Information in
The Group’s overseas subsidiaries are translated in accordance with IAS 21 – The Effect of Changes in Foreign Exchange
Rates.
b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates
of the transactions or valuation where such items are re-measured. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the Income Statement in other comprehensive income. The financial
statements are presented in Pounds Sterling (£), the functional currency of Cloudbreak Discovery Plc is Pounds Sterling,
as is the functional currency of the UK subsidiaries which are Imperial Minerals (UK) Limited and Kudu Resources Limited.
2.6. Fair value measurement
IFRS 13 establishes a single source of guidance for all fair value measurements. IFRS 13 provides guidance on how to
measure fair value under IFRS when fair value is required or permitted. The resulting calculations under IFRS 13 affected the
principles that the Company uses to assess the fair value, but the assessment of fair value under IFRS 13 has not materially
changed the fair values recognised or disclosed. IFRS 13 mainly impacts the disclosures of the Company. It requires specific
disclosures about fair value measurements and disclosures of fair values, some of which replace existing disclosure
requirements in other standards.
2.7. Finance Income
Interest income is recognised using the effective interest method.
CLOUDBREAK DISCOVERY PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2023
34
2.8. Other income
The other income of the Group comprises royalty income. It is measured at the fair value of the consideration received or
receivable after deducting discounts and other withholding tax. The royalty income becomes receivable on extraction and
sale of the relevant underlying commodity, and by determination of the relevant royalty agreement.
2.9. Cash and cash equivalents
Cash and cash equivalents comprise cash at hand and current and deposit balances with banks and similar institutions, which
are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value. This definition
is also used for the Statement of Cash Flows.
2.10. Trade and other receivables and prepaids
Trade receivables are amounts due from third parties in the ordinary course of business. If collection is expected in one year
or less, they are classified as current assets. If not, they are presented as non-current assets.
2.11. Royalty assets at fair value through profit and loss
Royalty financial assets are recognised or derecognised on completion date where a purchase or sale of the royalty is under
a contract, and are initially measured at fair value, including transaction costs. All of the Group’s royalty financial assets have
been designated as at fair value through profit and loss (“FVTPL”). The royalty financial assets at FVTPL are measured at
fair value at the end of each reporting period, with any fair value gains or losses recognised in the ‘revaluation of royalty
financial assets’ line item of the income statement.
2.12. Investments in subsidiaries
Investments in Group undertakings are stated at cost, which is the fair value of the consideration paid, less any impairment
provision.
2.13. Intangible assets
Exploration and evaluation assets
The Group recognises expenditure as exploration and evaluation assets when it determines that those assets hold potential
to be successful in finding specific resources. Expenditure included in the initial exploration and evaluation assets relate to
the acquisition of rights to explore, topographical, geological, geochemical and geophysical studies, exploratory drilling,
trenching, sampling and activities to evaluate the technical feasibility and commercial viability of extracting a resource.
Capitalisation of pre-production expenditure ceases when the prospective property is capable of commercial production.
Exploration and evaluation assets are recorded and held at cost
Exploration and evaluation assets are not subject to amortisation, as such at the year-end all intangibles held have an
indefinite life but are assessed annually for impairment. The assessment is carried out by allocating exploration and evaluation
assets to cash generating units (‘CGU’s’), which are based on specific projects or geographical areas. The CGU’s are then
assessed of impairment using those specified in IFRS 6.
Whenever the exploration for and evaluation of resources in cash generating units does not lead to the discovery of
commercially viable quantities of resources and the Group has decided to discontinue such activities of that unit, the
associated expenditures are written off to the Income Statement.
Exploration and evaluation assets recorded at fair-value on business combination
Exploration assets which are acquired as part of a business combination are recognised at fair value in accordance with IFRS
3. When a business combination results in the acquisition of an entity whose only significant assets are its exploration asset
and/or rights to explore, the Directors consider that the fair value of the exploration assets is equal to the consideration. Any
excess of the consideration over the capitalised exploration asset is attributed to the fair value of the exploration asset.
2.14. Impairment of non-financial assets
Assets that have an indefinite useful life, for example, intangible assets not ready to use, are not subject to amortisation and
are tested annually for impairment. An impairment loss is recognised for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in
CLOUDBREAK DISCOVERY PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2023
35
use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash generating units). Non-financial assets that suffered impairment are reviewed for possible
reversal of the impairment at each reporting date.
2.15. 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 (FVTPL)
Non-derivative financial assets comprising the Group's strategic financial investments in entities not qualifying as subsidiaries
or jointly controlled entities. These assets are classified as financial assets at fair value through profit or loss. They are carried
at fair value with changes in fair value recognised through the income statement. Where there is a significant or prolonged
decline in the fair value of a financial investment (which constitutes objective evidence of impairment), the full amount of the
impairment is recognised in the income statement.
Due to the nature of these assets being unlisted investments or held for the longer term, the investment period is likely to be
greater than 12 months and therefore these financial assets are shown as non-current assets in the Statement of financial
position.
Amortised Cost
These assets comprise the 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.
The Group's financial assets measured at amortised cost comprise trade and other receivables, convertible debenture
receivables and cash and cash equivalents in the consolidated statement of financial position. Cash and cash equivalents
include 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.
(a) Recognition and measurement
Amortised cost
Regular purchases and sales of financial assets are recognised on the trade date at cost – the date on which the Group
commits to purchasing or selling the asset. Financial assets are derecognized when the rights to receive cash flows from the
assets have expired or have been transferred, and the Group has transferred substantially all of the risks and rewards of
ownership.
Fair value through the profit or loss
Financial assets that do not meet the criteria for being measured at amortised cost or FVTOCI are measured at FVTPL. The
Group holds equity instruments that are classified as FVTPL as these were acquired principally for the purpose of selling.
Financial assets at FTVPL are measured at fair value at the end of each reporting period, with any fair value gains or losses
recognised in profit or loss. Fair value is determined by using market observable inputs and data as far as possible. Inputs
used in determining fair value measurements are categorised into different levels based on how observable the inputs used
in the valuation technique utilised are (the ‘fair value hierarchy’):
- Level 1: Quoted prices in active markets for identical items (unadjusted)
- Level 2: Observable direct or indirect inputs other than Level 1 inputs
- Level 3: Unobservable inputs (i.e. not derived from market data).
The classification of an item into the above levels is based on the lowest level of the inputs used that has a significant effe
ct
on the fair value measurement of the item. Transfers of items between levels are recognised in the period they occur.
The Group measures its investments in quoted shares using the quoted market price.
(b) Impairment of financial assets
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through
profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and
all the cash flows that the Group expects to receive, discounted at an approximation of the original EIR. The expected cash
flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual
terms.
CLOUDBREAK DISCOVERY PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2023
36
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk
since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next
12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since
initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective
of the timing of the default (a lifetime ECL).
For trade receivables (not subject to provisional pricing) and other receivables due in less than 12 months, the Group applies
the simplified approach in calculating ECLs, as permitted by IFRS 9. Therefore, the Group does not track changes in credit
risk, but instead, recognises a loss allowance based on the financial asset’s lifetime ECL at each reporting date.
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, based on analysis of internal
or external information. 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.
The Group considers a financial asset in default when contractual payments are 180 days past due. However, in certain
cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the
Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements
held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash
flows and usually occurs when past due for more than one year and not subject to enforcement activity.
At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit impaired. A financial
asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the
financial asset have occurred.
(d) Derecognition
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it
transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.
On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount and
the sum of the consideration received and receivable is recognised in profit or loss. This is the same treatment for a financial
asset measured at FVTPL.
2.16. Financial Investments
Non-derivative financial assets comprising the Group’s strategic financial investments in entities not qualifying as subsidiaries,
associates or jointly controlled entities. These assets are classified as financial assets at fair value through profit or loss. They
are carried at fair value with changes in fair value recognised through the income statement. Where there is a significant or
prolonged decline in the fair value of a financial investment (which constitutes objective evidence of impairment), the full
amount of the impairment is recognised in the income statement.
Listed investments are valued at closing bid price on 30 June 2023. Unlisted investments that are not publicly traded and
whose fair value cannot be measured reliably, are measured at cost loss less impairment.
2.17. Equity
Equity comprises the following:
• “Share capital” represents the nominal value of the Ordinary shares;
• “Share Premium” represents consideration less nominal value of issued shares and costs directly attributable to the
issue of new shares;
• “Reverse asset acquisition reserve” represents the retained losses of the Company before acquisition and the
Company equity at reverse acquisition.
• “Other reserves” represents the foreign currency translation reserve, warrant reserve and share option reserve where;
o “Foreign currency translation reserve” represents the translation differences arising from translating the
financial statement items from functional currency to presentational currency;
o “Warrant reserve” represents share warrants awarded by the Group;
o “Share option reserve" represents share options awarded by the Group;
• “Retained earnings” represents retained losses.
2.18. Share based payments
CLOUDBREAK DISCOVERY PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2023
37
The Group operates an equity-settled, share-based scheme under which the Group receives services from employees or
contractors as consideration for equity instruments (options and warrants) of the Group. The fair value of the third-party
suppliers’ services received in exchange for the grant of the options is recognised as an expense in the Income Statement or
charged to equity depending on the nature of the service provided. The value of the employee services received is expensed
in the Income Statement and its value is determined by reference to the fair value of the options granted:
•
including any market performance conditions;
•
excluding the impact of any service and non-market performance vesting conditions (for example, profitability or sales
growth targets, or remaining an employee of the entity over a specified time period); and
•
including the impact of any non-vesting conditions.
The fair value of the share options and warrants are determined using the Black Scholes valuation model.
Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total
expense or charge is recognised over the vesting period, which is the period over which all of the specified vesting conditions
are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number of options that are
expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if
any, in the Income Statement or equity as appropriate, with a corresponding adjustment to a separate reserve in equity.
When the options are exercised, the Group issues new shares. The proceeds received, net of any directly attributable
transaction costs, are credited to share capital (nominal value) and share premium when the options are exercised.
2.19. Taxation
No current tax is yet payable in view of the losses to date for all entities in the Group apart from Cloudbreak Exploration Inc.,
who had a tax payable amount of $19,641 CAD (£12,178) for the year.
Deferred tax is recognised for using the liability method in respect of temporary differences arising from differences between
the carrying amount of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in
the computation of taxable profit. However, deferred tax liabilities are not recognised if they arise from the initial recognition
of goodwill; deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other
than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.
In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets (including
those arising from investments in subsidiaries), are recognised to the extent that it is probable that taxable profits will be
available against which deductible temporary differences can be utilised.
Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiaries only
to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available
against which the temporary difference can be used.
Deferred tax liabilities will be recognised for taxable temporary differences arising on investments in subsidiaries except where
the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current
tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on
either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
Deferred tax is calculated at the tax rates (and laws) that have been enacted or substantively enacted by the statement of
financial position date and are expected to apply to the period when the deferred tax asset is realised or the deferred tax
liability is settled.
Deferred tax assets and liabilities are not discounted.
3. Financial risk management
The Group’s activities expose it to a variety of financial risks: market risk (foreign currency risk, price risk and interest rate
risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the Group’s financial performance. None of these risks are
hedged.
CLOUDBREAK DISCOVERY PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2023
38
Risk management is carried out by the Canadian based management team under policies approved by the Board of Directors.
3.1. Treasury policy and financial instruments
During the years under review, the financial instruments were cash and cash equivalents, shares in listed and unlisted
companies and other receivables which were or will be required for the normal operations of the Group.
The Group operates informal treasury policies which include ongoing assessments of interest rate management and
borrowing policy. The Board approves all decisions on treasury policy.
The Group has raised funds to finance future activities through the placing of shares, placing of shares via the Crescita
Capital LLC draw down facility, together with share options and warrants. There are no differences between the book value
and fair value of the above financial assets. The risks arising from the Group’s financial instruments are liquidity and interest
rate risk. The Directors review and agree policies for managing these risks and they are summarised below:
Unlisted investments
The Company is required to make judgments over the carrying value of investments in unquoted companies where fair values
cannot be readily established and evaluate the size of any impairment required. It is important to recognise that the carrying
value of such investments cannot always be substantiated by comparison with independent markets and, in many cases, may
not be capable of being realised immediately. Management’s significant judgement in this regard is that the value of their
investment represents their cost less previous impairment.
Market risk & foreign currency risk
The Group is exposed to market risk, primarily relating to interest rate and foreign exchange movements. The Group does not
hedge against market or foreign exchange risks as the exposure is not deemed sufficient to enter into forwards or similar
contracts.
Credit risk
Credit risk arises from cash and cash equivalents as well as outstanding receivables. The amount of exposure to any individual
counter party is subject to a limit, which is assessed by the Board.
The Group considers the credit ratings of banks in which it holds funds in order to reduce exposure to credit risk.
Liquidity risk and interest rate risk
The Group seeks to manage financial risk, to ensure sufficient liquidity is available to meet foreseeable needs and to invest
cash assets safely and profitably. This is achieved by the close control by the Directors of the Group in the day-to-day
management of liquid resources. Cash is invested in deposit accounts which provide a modest return on the Group’s resources
whilst ensuring there is limited risk of loss to the Group.
3.2. Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to
provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the
cost of capital.
4. Critical accounting estimates and judgements
The preparation of the Financial Information in conformity with IFRSs requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the Financial Information and the reported amount of expenses during the year. Actual results may vary from the
estimates used to produce this Financial Information.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
Significant items subject to such estimates and assumptions include, but are not limited to:
Share based payment transactions
CLOUDBREAK DISCOVERY PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2023
39
The Group has made awards of options and warrants over its unissued share capital to certain Directors and employees as
part of their remuneration package. Certain warrants have also been issued to shareholders as part of their subscription for
shares and to suppliers for various services received.
The valuation of these options and warrants involves making a number of critical estimates relating to price volatility, future
dividend yields, expected life of the options and forfeiture rates.
Classification of royalty arrangements: initial recognition and subsequent measurement
The Directors must decide whether the Group’s royalty arrangements should be classified as:
• Intangible assets in accordance with IAS 38 Intangible Assets; or
• Financial assets in accordance with IFRS 9 Financial Instruments
The Directors use the following selection criteria to identify the characteristics which determine which accounting standard
to apply to each royalty arrangement:
Type 1 – Intangible assets: Royalties, are classified as intangible assets by the Group. The Group considers the substance
of a simple royalty to be economically similar to holding a direct interest in the underlying mineral asset. Existence risk (the
commodity physically existing in the quantity demonstrated), production risk (that the operator can achieve production and
operate a commercially viable project), timing risk (commencement and quantity produced, determined by the operator) and
price risk (returns vary depending on the future commodity price, driven by future supply and demand) are all risks which the
Group participates in on a similar basis to an owner of the underlying mineral licence. Furthermore, in a royalty intangible,
there is only a right to receive cash to the extent there is production and there are no interest payments, minimum payment
obligations or means to enforce production or guarantee repayment. These are accounted for as intangible assets under
IAS-38.
Type 2 – Financial royalty assets (royalties with additional financial protection): In certain circumstances where the risk is
considered too high, the Group will look to introduce additional protective measures. This has taken the form of minimum
payment terms. Once an operation is in production, these mechanisms generally fall away such that the royalty will display
identical characteristics and risk profile to the intangible royalties; however, it is the contractual right to enforce the receipt of
cash which results in these royalties being accounted for as financial assets under IFRS 9. There are currently no royalties
classified as financial royalty assets.
Estimated impairment of convertible loan notes receivable & Convertible debenture receivables
Anglo African Minerals Plc (‘AAM’)
The Group has assessed whether the AAM convertible loan notes receivable which has been previously fully impaired in the
prior year, should remain impaired in the current year or be reversed. They have reassessed this asset and determined that
there are no conditions to reverse the impairment.
G2 Energy Corp. (“G2”)
The Group also assessed whether the G2 convertible debenture receivable should be impaired and based on the current
production levels and the programme at the Masten Unit Energy Project, they have determined it should not be impaired as
G2, through the funding from the Company, now have the funds required to undertake the exploration activity and advance
the project. The terms of the debenture is still being met by both parties and G2 are paying the necessary interest payments.
The directors assessed this debenture in accordance with IFRS and concluded it is a financial asset accounted for as
amortised cost as the financial asset is held within a business model with the objective to hold and collect the contractual
cash flows which is in the form of interest and principal payments. As part of the debenture agreement, the Group received
a 3.25% Overriding Royalty Interest in the project which has limited production and revenues. In accordance with IFRS the
directors has assessed the royalty interest and accounted for it as intangible assets in accordance with IAS 38 because
there is only a right to receive cash to the extent there is production and there are no interest payments, minimum payment
obligations or means to enforce production or guarantee repayment. These are accounted for as intangible assets under IAS
38. The directors considered the fair value of the royalty assets which they receive in exchange as part of the debenture
agreement for which they did not pay any consideration. Fair value is determined based on discounted cash flow models
(and other valuation techniques) using assumptions considered to be reasonable and consistent with those that would be
applied by a market participant. The determination of assumptions used in assessing fair values is subjective and the use of
different valuation assumptions could have a significant impact on financial results. The current royalty covers a very small
production site. During the year ended 30 June 2023, £35k was received, with a total of £61k being received to date from
this royalty. Following their assessment, the directors concluded that the fair value of the royalty agreement was not material
CLOUDBREAK DISCOVERY PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2023
40
and has not been recognised as intangible asset. As part of the debenture agreement, the Group received 6,500,000
warrants for G2, however management have deemed that these warrants have no material value at this stage as the assets
held by G2 are predominantly made up of early-stage exploration and production assets which currently producing limited
amounts of revenue. The group is in regular communication with G2 and is monitoring the results of its exploration activities
that will be undertaken as the result of the funding by the Group to G2.
Texas Legacy Exploration LLC (“Texas Legacy”)
The Group assessed whether the Texas Legacy convertible debenture receivable should be impaired and based on the
programme at the Butte Strawn Energy Project, they have determined it should not be impaired as Texas Legacy have the
funds required to undertake the exploration activity and proceed with their projects. During the year, after review from the
Group, it was agreed that the principal value of the debenture should be reduced from $1,500,000 USD to $600,000 USD
with no further obligations for the Group. As part of the revised debenture agreement, the Group have the option to receive
a 2% overriding royalty in lieu of cash of all the outstanding principal amount of the debenture.
Unlisted investments
The Group is required to make judgments over the carrying value of investments in unquoted companies where fair values
cannot be readily established and evaluate the size of any fair value movement required. It is important to recognise that the
carrying value of such investments cannot always be substantiated by comparison with independent markets and, in many
cases, may not be capable of being realised immediately. Management’s significant judgement in this regard is that the value
of their investment represents their cost value. This valuation method was considered the most appropriate by management
due to the limited information available related to the unlisted investments as at 30 June 2023. Management have assessed
whether any fair value movement on the unlisted investments is required at 30 June 2023 and have determined that none is
required.
Recovery of other receivables
Included in other receivables is an amount of £140,000 as at 30 June 2023 in respect of unpaid ordinary share capital issued
on 3 June 2021. The Directors plan to take action to recover the amount owed and believe that the amount will be recovered
in full in due time, but because this outcome is not certain and the balance has been owed for an extended period of time, a
provision for bad debt for the full amount has been implemented.
Valuation of exploration and evaluation assets
Exploration and evaluation costs have a carrying value of 30 June 2023 of £236,518 (2022: £78,694). Such assets have an
indefinite useful life as the Group has the right to renew exploration licenses or options and the asset is only amortised once
extraction of the resource commences. The value of the Group’s exploration and evaluation expenditure will be dependent
upon the success of the Group in discovering economic and recoverable resources, especially in the countries of operation
where political, economic, legal, regulatory and social uncertainties are potential risk factors. The future revenue flows
relating to these assets is uncertain and will also be affected by competition, relative exchange rates and potential new
legislation and related environmental requirements. The Group’s ability to continue its exploration programs and develop its
projects is dependent on future fundraisings and utilising the Crescita Capital LLC drawdown facility. The ability of the Group
to continue operating within some of the jurisdictions contemplated by management is dependent on a stable political
environment which is uncertain based on the history of the country. This may also impact the Group’s legal title to assets
held which would affect the valuation of such assets. There have been no changes made to any past assumptions.
The Directors have undertaken a review to assess whether circumstances exist which could indicate the existence of
impairment as follows:
• The Group no longer has title to mineral leases or the title will expire in the near future and is not expected to be renewed.
• A decision has been taken by the Board to discontinue exploration due to the absence of a commercial level of reserves.
• Sufficient data exists to indicate that the costs incurred will not be fully recovered from future development and
participation.
Following their assessment, the Directors concluded that an impairment charge of £12,636 (2022: Nil) was necessary. This
impairment arose as a result of the termination of the Stateline property option agreement by Volt lithium.
CLOUDBREAK DISCOVERY PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2023
41
5. Intangible assets
As at June 30, 2023, the Group’s exploration and evaluation assets are as follows:
| Group | ||
| Exploration & Evaluation Assets | ||
| 30 June 2023 | ||
| £ | ||
| 30 June 2022 | ||
| £ | ||
| South Timmins, British Columbia | 1 | 1 |
| Klondike Property | - | 1 |
| Atlin West Property | 1 | 1 |
| Yak Property | 1 | 1 |
| Stateline Property | - | 13,013 |
| Rizz Property | 1 | 6,053 |
| Icefall Property | 1 | 9,018 |
| Northern Treasure Property | 111,023 | 34,638 |
| Silver Vista Property, British Columbia | - | 1 |
| Silver Switchback Property, British Columbia | - | 1 |
| Rupert Property, British Columbia | 1 | 15,966 |
| Apple Bay Property, British Columbia | 1 | - |
| Foggy Mountain, British Columbia | 43,220 | - |
| Bobcat Property, Idaho | 48,183 | - |
| Elk Creek, Pennsylvania | 34,085 | - |
| As at June 30 | 236,518 | 78,694 |
As at June 30, 2023, the Group’s reconciliation of exploration and evaluation assets are as follows:
| Group | ||
| Exploration & Evaluation Assets | ||
| 30 June 2023 | ||
| £ | ||
| 30 June 2022 | ||
| £ | ||
| Cost | ||
| As at 1 July | 78,694 | 30,679 |
| Additions | 222,667 | 139,294 |
| Disposals | (47,206) | (97,508) |
| Impairments | (12,636) | - |
| Net proceeds from sale | - | 1 |
| Forex movement | (5,001) | 6,228 |
| As at June 30 | 236,518 | 78,694 |
South Timmins Property, Canada
During the year ended June 30, 2021, the Group paid $27,540 CAD (£16,080) in asset staking costs to acquire twelve
mineral titles in Ontario, Canada known as the South Timmins property.
On 23 September 2021, the Group entered into an option agreement with 1315956 BC Ltd
, under which 1315956 BC Ltd
may acquire up to a 100% interest in the Group’s South Timmins property subject to a 1% net smelter return (“NSR”) to the
Group. In order for 1315956 BC Ltd to fully exercise the option on the South Timmins Property, they must pay the Group an
aggregate of $495,000 CAD, issue 2,250,000 common shares of 1315956 BC Ltd and incur exploration expenses of
$1,515,000 with a minimum of $265,000 CAD in the first year.
To date, the Group has received cash payments of $270,000 (£157,579) and 500,000 shares in relation to the option
payments due under the agreement.
No payments due during the 2023 FY.
CLOUDBREAK DISCOVERY PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2023
42
Silver Switchback Property, Canada
On May 8, 2020, the Group entered into an option agreement to purchase 100% of the rights to the Silver Switchback
Property located in British Columbia, Canada. To earn a 100% interest, the Group must make aggregate cash payments of
$75,000 CAD ($15,000 CAD paid - £8,850), issue 1,850,000 shares (250,000 shares issued at a value of $40,000 CAD -
£23,356) in the Group and incur work commitments on the property of $475,000 CAD over three years. The property is
subject to a 2% NSR which the Group may re-purchase 1.5% for $1,250,000 CAD.
On August 27, 2020, the Group entered into an option agreement with Norseman, under which Norseman may acquire up
to a 100% interest in the Group’s Silver Switchback Property subject to a 1% NSR to the Group. In order for Norseman to
fully exercise the option on the Silver Switchback Property, they must pay the Group $30,000 CAD (received), issue 750,000
common shares and assume certain obligations due to the original vendor over three years. Norseman will have the right
to repurchase one-half (0.5%) of the NSR from the Group for $500,000 CAD. The Group has received cash payments of
$30,000 CAD and 750,000 Norseman shares in relation to the option payments due under the agreement.
During the year ended 30 June 2023, the option was cancelled, and the property was terminated.
Silver Vista, Canada
On May 8, 2020, the Group entered into an option agreement to purchase 100% of the rights to the Silver Vista Property
located in British Columbia, Canada. To earn a 100% interest, the Group will need to make aggregate cash payments of
$65,000 CAD ($20,000 CAD paid - £11,678), issue 1,375,000 shares (370,000 shares issued at a value of $75,000 CAD -
£43,793) in the Group and incur work commitments on the property of $275,000 CAD, over three years. The property is
subject to a 2% NSR which the Group may acquire one-half (1%) for $1,000,000 CAD.
During the year ended June 30, 2021, the Group made a payment of $80,000 CAD (£46,713) to a prior optionor to fulfil prior
option agreement obligation.
On September 21, 2020, the Group entered into an option agreement with Norseman, under which Norseman may acquire
up to a 100% interest in the Group’s Silver Vista Property subject to a 1% NSR payable to the Group. In order for Norseman
to fully exercise the option on the Silver Switchback Property, they must pay the Group $50,000 CAD (received - £29,500),
and issue 2,000,000 common shares (received and valued at $40,000 CAD - £23,600). Norseman will have the right to
repurchase one-half (0.5%) of the NSR for $500,000 CAD.
During the year ended 30 June 2023, the option was cancelled, and the property was terminated.
Rupert, Canada
On September 11, 2018, the Group entered into an asset purchase agreement with a company controlled by a director of
the Group and two unrelated persons to purchase the Rupert Property, located in British Columbia, Canada. As consideration
for the property, the Group issued 2,000,000 common shares valued at $100,000 CAD (£59,000) and granted a 2% NSR.
At any time, 1% of the NSR can be purchased by the Group for $1,500,000 CAD. Of the common shares issued to acquire
the property, 1,000,000 were issued to a company that was controlled by a director of the Group. The Group also agreed to
incur aggregate expenditures on the property of $800,000 ($100,000 CAD - £59,000 incurred).
On December 11, 2020, the Group sold the Rupert Property to Buscando Resources Corp. (“Buscando”), a company with a
director in common. Payments to be received by the Group are as follows:
•
$150,000 CAD in total cash payments with $25,000 CAD (£14,750) on closing (received), $50,000 CAD on or before
12 months after Buscando is listed on a public exchange (still owing at 30 June 2023), $75,000 CAD on or before 24
months after Buscando is listed on a public exchange;
•
3,750,000 shares in total issued to the Group with 1,000,000 shares issued on closing (received and valued at $50,000
CAD – £29,500), 1,250,000 on or before 12 months after Buscando is listed on a public exchange (received and valued
at $125,000 CAD - £74,653), 1,500,000 on or before 24 months after Buscando is listed on a public exchange; and
•
$200,000 expenditures incurred on the property with $100,000 CAD on or before 12 months after Buscando is listed
on a public exchange, $100,000 CAD on or before 24 months after Buscando is listed on a public exchange.
As a result of the sale to Buscando, the original vendors waived the exploration commitments required by the Group under
the September 11, 2018, agreement.
During the 2023FY, $50,000 CAD (£29,862) was due as a cash payment and is still owed to the Group in relation to the
option payments due under the agreement.
CLOUDBREAK DISCOVERY PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2023
43
Atlin West, Canada
On August 9 2021, the Group entered into an option agreement with 1315843 BC Ltd to purchase 100% of the rights to the
Atlin West Project located in British Columbia, Canada. To earn a 100% interest, 1315843 BC Ltd make aggregate cash
payments of $700,000 CAD, issue 8,000,000 shares in 1315843 BC Ltd and make payments of $325,000 over a three-year
period to Cloudbreak. Upon completion of the work Cloudbreak will transfer 100% interest. Cloudbreak will retain a net 2%
NSR. The Group has previously received cash payments of $100,000 CAD and 3,000,000 shares in relation to the option
payments due under the agreement.
No payments due during the 2023 FY.
Yak, Canada
On October 13 2021, the Group entered into an option agreement with Moonbound Mining Ltd (‘Moonbound’). In respect of
the Yak Project located in British Columbia, Canada. Moonbound will issue Cloudbreak 2,700,000 common shares and make
aggregate cash payments of $145,000 CAD over a three-year period. Additionally, Moonbound will commit to spending up
to $700,000 CAD in exploration expenditure on the property and enter into a public transaction within six months of the
agreement. Upon completion of the obligations, Cloudbreak will transfer 100% interest and retain a net 2% NSR. The Group
has previously received cash payments of $35,000 CAD (£20,903) and 700,000 shares in relation to the option payments
due under the agreement.
No payments due during the 2023 FY.
Klondike, United States
On July 15 2021, the Group entered into the Klondike project based in Colorado, United States, with Alianza Minerals Ltd.
On December 7 2021, Cloudbreak and Alianza Minerals entered into an option agreement with Volt Lithium Corp. (formerly
known as Allied Copper Corp.) for the advancement of the Klondike project. Volt Lithium will issue Cloudbreak and Alianza
7,000,000 common shares and make a total of $400,000 CAD in cash payments over a three-year period. Upon completion
of the obligations, the alliance will transfer 100% interest in the Klondike project to Volt Lithium. Volt Lithium will also issue
3,000,000 warrants exercisable for a 36-month term. To date, the Group has received cash payments of $200,000 CAD and
2,000,000 shares in relation to the option payments due under the agreement.
On 2 February 2023, the option agreement was terminated by Volt Lithium so no further payments will be received.
Stateline, United States
On February 9 2022, Cloudbreak and Alianza Minerals entered into an option agreement with Volt Lithium Corp (formerly
known as Allied Copper Corp) in respect of the Stateline Project in Colorado, United States. Volt Lithium will issue the alliance
4,250,000 common shares over a three-year period and make aggregate cash payments of $315,000 CAD ($40,000 CAD
paid) with a further $50,000 CAD due on closing. Additionally, Volt Lithium will commit to spending up to £3,750,000 CAD in
exploration expenditure on the property over three years. The alliance will retain a net 2% NSR, not subject to a buy down
provision.
On August 9 2022, Cloudbreak and Alianza Minerals agreed to amend the terms of the Stateline option agreement with Volt
Lithium entered into on 9 February 2022. Under the modified terms, Volt Lithium will be able to delay the issuance of shares
and warrants whilst keeping the agreement in good standing. Outstanding Volt Lithium shares will become payable to
Alianza and Cloudbreak as either party reduces its equity holding through sale or other type of divesture, or if additional
shares are issued in Volt Lithium which would dilute either party’s holdings. Up to 30 June 2022, the Group has received
cash payments of $65,000 CAD and 250,000 shares in relation to the option payments due under the agreement.
To date, the Group has received cash payments of $25,000 CAD (£14,931) and 250,000 shares in relation to the option
payments due under the agreement.
No payments due during the 2023 FY.
On 11 August 2023, the option agreement was terminated by Volt Lithium so no further payments will be received.
Icefall, Canada
On March 3 2022, the Group entered into an option agreement with 1311516 BC Ltd in respect of the Icefall Project in British
Colombia, Canada. 1311516 BC Ltd will issue 2,000,000 common shares to Cloudbreak’s subsidiary Cloudbreak Exploration
Inc. and make an aggregate of $120,000 CAD in cash payments to the Group. Additionally, 1311516 will commit to spending
up to £700,000 CAD in exploration expenditure on the property over three years. This will need to be done to earn an interest
of 75% in the project. Upon completion of the terms Cloudbreak and 1311516 BC Ltd will enter a joint venture in which each
CLOUDBREAK DISCOVERY PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2023
44
party will be responsible for its pro-rata share of expenditures on the project. Up to 30 June 2022, the Group has received
cash payments of $25,000 CAD and 2,000,000 shares in relation to the option payments due under the agreement.
During the 2023FY, $25,000 CAD (£14,931) was due as a cash payment and is still owed to the Group of in relation to the
option payments due under the agreement.
Rizz, Canada
On February 25 2022, the Group entered into an option agreement with 1311516 BC Ltd in respect of the Rizz Project in
British Colombia, Canada. 1311516 BC Ltd will issue 3,000,000 common shares to Cloudbreak and make an aggregate of
$120,000 CAD in cash payments to the Group. Additionally, 1311516 BC Ltd will commit to spending up to $750,000 CAD
in exploration expenditure on the property over three years. This will need to be done to earn an interest of 75% in the
project. Upon completion of the terms, Cloudbreak and 1311516 BC Ltd will enter a joint venture in which each party will be
responsible for its pro-rata share of expenditures on the project. Up to 30 June 2022, the Group received cash payments of
$25,000 CAD and 3,000,000 shares in relation to the option payments due under the agreement.
During the 2023FY, $25,000 CAD (£14,931) was due as a cash payment and is still owed to the Group of in relation to the
option payments due under the agreement.
Northern Treasure, Canada
During 2022, the Group staked the Northern Treasure property for $50,645 CAD which is located in Northern British
Columbia. The Company continues to actively explore this property and look for a partner to develop the property further.
On 28 October 2022, Cloudbreak announced that Precision GeoSurveys has completed a high-resolution helicopter-borne
magnetic survey over the Northern Treasure Project in British Columbia.
Foggy Mountain, Canada
In April 2022, the Group staked the Foggy Mountain property which is located in Central British Columbia.
On 19 October 2022, Cloudbreak announced that that it has completed a reconnaissance surface programme at the property.
The Company continues to actively explore this property and look for a partner to develop the property further.
Bobcat, United States
On 6 December 2022, the Group entered a holding and cost share agreement with Longford Capital Corp pertaining to the
holding, exploration, operations and development of the Bob Cat property in Idaho. The Group acquired 50% interest in the
property for $60,000 USD (£47,517).
Elk Creek, United States
On 21 November 2022, the Group acquired an oil and gas lease for $43,157 USD (£34,178), for a property based in
Pennsylvania, USA. The lease gives the Group full permission to conduct any and all due diligence on the leased premises,
which includes inspections, tests, environmental assessments, soil studies, surveys and more.
6. Investments in subsidiary undertakings
| Company | ||
| 30 June 2023 | ||
| £ | ||
| 30 June 2022 | ||
| £ | ||
| Shares in Group Undertakings | ||
| At beginning of period | 7,252,886 | 6,485,487 |
| Additions | - | 5,008 |
| Shares transferred to CEI | (5,000) | - |
| Impairments | (6,056,544) | - |
| At end of period | ||
| 1,191,342 | 6,490,495 | |
| Loans to group undertakings | ||
| 805,706 | 762,391 | |
| Total | ||
| 1,997,048 | 7,252,886 |
CLOUDBREAK DISCOVERY PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2023
45
Following the Directors intangible asset impairment assessment using the discounted cash flow model, the Directors
concluded that the impairment of the investment in and the loan receivable from Cloudbreak Exploration Inc with a carrying
value of £7,922,540 be impaired to £1,865,996. The full amount of the impairment has been allocated to the investment in
subsidiary. The need for the impairment was a result of a reduction in exploration assets and investments since the original
valuation in June 2021.
Investments held by Company
| Company | ||
| 30 June 2023 | ||
| £ | ||
| 30 June 2022 | ||
| £ | ||
| At beginning of the period | ||
| 68,056 | 107,679 | |
| Shares transferred to CEI | ||
| (68,056) | - | |
| G2 Energy Corp | ||
| 58,007 | - | |
| Fair value movement | ||
| (14,961) | (39,623) | |
| Total | ||
| 43,046 | 68,056 |
Subsidiaries
Details of the subsidiary undertakings at 30 June 2023 are as follows:
| Name of subsidiary | Registered office address | ||||
| Country of | |||||
| incorporation | |||||
| and place of | |||||
| business | |||||
| Proportion | |||||
| of ordinary | |||||
| shares held | |||||
| by parent | |||||
| (%) | |||||
| Proportion of | |||||
| ordinary | |||||
| shares held | |||||
| by the Group | |||||
| (%) | Nature of business | ||||
| Imperial Minerals | |||||
| (UK) Limited | |||||
| 6th Floor, 60 Gracechurch | |||||
| Street, London, EC3V | |||||
| 0HR | |||||
| United | |||||
| Kingdom | |||||
| 100% | 100% | Dormant | |||
| Cloudbreak | |||||
| Exploration Inc. | |||||
| Suite 520/999 West | |||||
| Hastings Street, | |||||
| Vancouver BC V6C2W2 | |||||
| Canada | 100% | 100% | |||
| A mineral property | |||||
| project generator | |||||
| Cloudbreak Discovery | |||||
| (US) Ltd. | |||||
| 1209 Orange Street, | |||||
| Wilmington, New Castle, | |||||
| Delaware, 19801 | |||||
| USA | 100% | 100% | |||
| Mineral | |||||
| exploration | |||||
| projects | |||||
| Kudu Resources | |||||
| Limited | |||||
| 12 New Fetter Lane, | |||||
| London, United Kingdom, | |||||
| EC4A 1JP | |||||
| United | |||||
| Kingdom | |||||
| 100% | 100% | ||||
| Mineral | |||||
| exploration | |||||
| projects | |||||
| Cloudbreak Energy | |||||
| (US) Ltd. | |||||
| 1209 Orange Street, | |||||
| Wilmington, New Castle, | |||||
| Delaware, 19801 | |||||
| USA | 100% | 100% | |||
| Oil and Gas | |||||
| acquisitions | |||||
| Kudu Resources | |||||
| Guinea | |||||
| Coleah Domino, 1 | |||||
| st | |||||
| Floor, | |||||
| Office B, BF 4370, | |||||
| Commune De Matam, | |||||
| Conakry | |||||
| Guinea | 100% | 100% | |||
| Mineral | |||||
| exploration | |||||
| projects |
CLOUDBREAK DISCOVERY PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2023
46
Investments held by subsidiaries
Financial assets at fair value through profit or loss are as follows:
| Level 1 | ||||
| £ | ||||
| Level 2 | ||||
| £ | ||||
| Level 3 | ||||
| £ | ||||
| Total | ||||
| £ | ||||
| 30 June 2022 | 1,900,685 | - | 168,617 | 2,069,302 |
| Additions | 236,198 | - | - | |
| 236,198 | ||||
| Disposals | (677,311) | - | (89) | |
| (677,400) | ||||
| Fair value changes | 309,896 | - | - | |
| 309,896 | ||||
| Realised loss on investments | (866,421) | - | - | |
| (866,421) | ||||
| Foreign exchange | (131,322) | - | (48,998) | |
| (180,320) | ||||
| 30 June 2023 | 771,725 | - | 119,530 | 891,255 |
As at June 30, 2023, investments were classified as held for trading and recorded at their fair values based on quoted market
prices (if available). Investments that do not have quoted market prices are measured at cost due to the limited amount of
information available related to the fair value of the investments.
Calidus Resources Corp. and Canary Biofuels Inc. are Level 3 investments, all other investments listed below are Level 1.
Imperial Helium Corp.
On April 20, 2020, the Group purchased 450,000 preferred shares in Imperial Helium Corp. for $45 CAD (£26). On December
15, 2020, 45,000 of these preferred shares were converted into common shares for no additional consideration. On
December 11, 2020, the Group purchased $110,000 CAD (£66,138) in Imperial Helium Corp. convertible debenture notes
that yielded 10%. On May 18, 2021, the convertible debenture converted into 575,767 ordinary shares of Imperial Helium
Corp.
During the year ended 30 June 2023, the Group sold their shares in Royal Helium Corp (formerly known as Imperial Helium
Corp) for a total of $150,503 CAD (£89,884).
Temas Resources Corp.
On September 23, 2020, the Group sold its La Blache property to Temas Resources Corp. (“Temas”) for a cash payment of
$30,000 CAD (£17,517) and 10,000,000 Temas shares which had a value at the time of $2,000,000 CAD (£1,167,815). The
Group retained a 2% NSR on the La Blache property. The Temas shares are subject to pooling restrictions with 2,500,000
Temas shares released March 23, 2021, and 7,500,000 Temas released September 23, 2021. In 2022, the Group sold
29,000 shares for $2,020 CAD (£1,290).
During the year ended 30 June 2023 the Group sold 457,000 of their shares in Temas Resources for a total of $28,474 CAD
(£17,006) and had a share consolidation with a ratio of 9:1. At 30 June 2023, the fair value of the Temas Resources shares
was $147,996 CAD (£88,230).
Norseman Silver Inc.
On 23 August 2021, the Group received 380,000 shares in Norseman from the option agreement for the Silver Switchback
property for $129,200 CAD (£74,235).
On 31 May 2021, the Group received 1,000,000 shares in Norseman from the option agreement for the Caribou property for
$170,000 CAD (£108,575).
During the year ended 30 June 2022, the Group sold 1,766,500 shares in Norseman for a total of $352,002 CAD (£208,888).
During the year ended 30 June 2023, the Group received 1,200,000 warrants and sold their shares in Norseman for a total
of $528,200 CAD (£315,455).
Buscando Resources Corp.
On December 31, 2020, the Group sold the Rupert property to Buscando, in exchange for 1,000,000 shares in Buscando at
a value of $50,000 CAD (£29,195).
CLOUDBREAK DISCOVERY PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2023
47
During the year ended 30 June 2022, the Group purchased an additional 50,000 shares in Buscando for a total of $6,840
CAD (£4,305)
During the year ended 30 June 2023, the Group purchased 10,000 shares for a total of $1,080 CAD (£645) and received
1,250,000 shares for $0.10 CAD each from the Rupert Property option agreement.
At 30 June 2023, fair value of the Buscando shares is $246,000 CAD (£146,657).
Linceo Resources Corp.
On August 17, 2019, the Group sold the Granny Smith and Fuji mineral claims to Linceo Media Group (“Linceo”), a company
with a director in common, for 4,000 shares in Linceo at a value of $47,600 CAD (£27,793) and retained a 2.5% NSR on
each property. During the year ended June 30, 2021, the Group impaired the shares in Linceo to $1. Management assessed
the value at year end and confirmed there is no further changes to the fair value of the Linceo shares.
AAM shares
On June 2, 2021, the Group acquired 12,500,000 AAM share purchase warrants that had a conversion price of $0.03 USD
and expiry date of July 1, 2021 and acquired 11,000,000 AAM ordinary shares. The Group issued 1,200,000 ordinary shares
to acquire the 12,500,000 AAM share purchase warrants (£36,000 value) and 3,520,000 ordinary shares (£105,600 value)
to acquire the 11,000,000 AAM ordinary shares. The warrants expired on July 1, 2021, with the £36,000 impaired to $1.
During the year ended June 30, 2021, the Group impaired the shares in AAM to $1. Management assessed the value at
year end and confirmed there is no further changes to the fair value of the AAM shares.
Moonbound Mining Ltd
On October 13 2021, the Group received 700,000 shares from Moonbound Mining Ltd. from the option agreement for the
Yak property for $35,000 CAD (£20,638.70).
During the year ended 30 June 2023, the Group sold their shares in Moonbound Mining for a total of $75,843 CAD (£45,295).
Power Group Project Ltd.
On October 1, 2021, the Group took part in a private placement with 1315843 BC Ltd whereby the Company purchased
2,350,000 shares at a price of $0.0001 per share which had a value of $235 CAD (£137) when received.
On October 1, 2021, the Group received 3,000,000 shares from 1315843 BC Ltd. in relation to the option agreement with
1315843 BC Ltd for the West Atlin property. The 1315843 BC Ltd shares had a value of $300 CAD (£175) when received.
In December 2021, 1315843 BC Ltd. was acquired by Power Group Projects Ltd. (“PGP”) with the 5,350,000 held in 1315843
BC Ltd. exchanged for 5,350,000 PGP shares.
During the year ended 30 June 2023, the Group received 10,350,000 shares in Power Group Projects from a share transfer
from Mary Yelich related to shares that were owed to the Group, and a share conversion from 1311516 BC Ltd.
At 30 June 2023, fair value of the Power Group Projects shares is $153,500 CAD (£91,512).
Calidus Resources Corp.
On September 1, 2021, the Group received 500,000 shares from Calidus Resources Corp. for the option agreement for the
South Timmins property for $500 CAD (£320).
This is a level 3 investment, with no public information available so management have kept the value at cost.
Prosper Africa Resources Ltd.
On March 7, 2022, the Group purchased 1,500,000 shares from Prosper Africa Resources Ltd. for $150 CAD (£96).
Management assessed the value at 30 June 2022 and confirmed there is no further changes to the fair value of the Prosper
Africa Resources shares.
During the year ended 30 June 2023, this investment was written off by the Group.
Volt Lithium Corp (formerly known as Allied Copper Corp.)
On 3 February 2022, the Group received 1,000,000 shares from Volt Lithium Corp. from the option agreement for the
Klondike project for $225,000 (£130,661).
During the year ended 30 June 2023, the Group sold 959,500 shares in Volt Lithium Corp. for a total of $249,082 CAD
(£148,758).
At 30 June 2023, fair value of the Volt Lithium Corp. shares is $75,530 CAD (£45,029).
Canary Biofuels Inc.
On 28 June 2022, the Group purchased 59,700 shares from Canary Biofuels Inc. for $200,095 (£127,753). This is a level 3
investment, with no public information available so management have kept the value at cost..
CLOUDBREAK DISCOVERY PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2023
48
At 30 June 2023, the cost of the Canary Biofuels Inc. shares is $200,095 CAD (£119,230).
Alchemist Mining Inc.
On 14 January 2022, the Group purchased 1,250,000 shares from Alchemist Mining Inc. for $93,750 (£54,184).
During the year ended 30 June 2023, the Group sold 305,000 shares in Alchemist mining for a total of $106,022 (£63,319).
At 30 June 2023, fair value of the Alchemist Mining shares is $614,250 (£366,194).
1311516 B.C. Ltd
On 3 March 2022, the Group received 3,000,000 shares from 1311516 B.C. Ltd from the option agreement for the Rizz
property for $5,010 CAD (£2,963).
On 9 March 2022, the Group received 2,000,000 shares from 1311516 B.C. Ltd from the option agreement for the Icefall
property for $3,340 CAD (£1,978).
Management assessed the value at year end and confirmed there is no further changes to the fair value of the 1311516 B.C.
Ltd shares.
G2 Energy Corp.
During the year ended 30 June 2023, the Group received 6,017,000 shares from G2 Energy Corp. 5,110,000 of these shares
were received in place of the quarterly interest that was due to be paid to the Group as part of the debenture agreement
entered on 31 May 2022, and 907,000 of the shares were received for legal fees covered by the Group, for G2.
At 30 June 2023, fair value of the G2 Energy Corp. shares is $72,204 CAD (£43,046).
7. Royalty Asset
Apple Bay Property, Canada
On April 5, 2017, the Group purchased a 1.50% production royalty on the Apple Bay property located in British Columbia,
Canada. The production royalty was purchased for 3,000,000 shares of the Group at a deemed value of $0.10 CAD (£0.058)
per share from a company controlled by the CEO of the Group. During the year ended June 30, 2021, the Group determined
that the royalty was impaired and reduced the balance to £1. As at June 30, 2023, included in Royalty Assets is £1 (June 30,
2022 – £1) attributed to the Apple Bay property.
8. Debentures Receivable
| Group | ||
| 30 June 2023 | ||
| £ | ||
| 30 June 2022 | ||
| £ | ||
| Opening | ||
| 1,657,900 | - | |
| Additions | ||
| 503,499 | 1,595,635 | |
| Royalties to be received | ||
| - | 11,233 | |
| Royalty payments related to previous year | ||
| (11,233) | - | |
| Fair Value Movement | ||
| (91,106) | 51,032 | |
| At end of period | ||
| 2,059,060 | 1,657,900 |
CLOUDBREAK DISCOVERY PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2023
49
Masten Unit, United States
On 31 May 2022, the Group entered into an agreement with G2 Energy Corp. (‘G2’) on the Masten Unit Energy Project
located in Cochran County Texas, United States. Whereby the Company will provide G2 with a $2,000,000 USD debenture
on a two-year term in exchange for a 3.25% Overriding Royalty Interest in the Project. G2 will pay 12% per annum interest
to the Company, calculated and paid quarterly in cash or shares at the discretion of the Company. As part of the agreement,
The Group received 6,500,000 warrants for G2, however management have deemed that these warrants have no value at
this stage as the assets held by G2 are predominantly made up of the early stage exploration assets on which they have
received from the Company. The group is in regular communication with G2 and is monitoring the results of its exploration
activities that will be undertaken as the result of the funding by the Group to G2.
Butte Strawn, United States
On 16 August 2022, the Company entered into an agreement with Iron Forge Holdings (III) Ltd (IF3). Whereby the company
will provide IF3 with a $1,500,000 USD debenture for the Butte Strawn Energy Project located in Irion County, Texas.
$500,000 USD was paid on signing. IF3 will pay 12.5% per annum interest to the Company, calculated and paid quarterly in
cash or shares at the discretion of the Company. The Company received 6,000,000 warrants with a strike price of $0.35
CAD with a three-year term from financial close. On 16 June 2023, it was agreed that the principal value of the debenture
be reduced from $1,500,000 USD to $600,000 USD with no further obligations for the Group. All accrued interest not paid
as of the date of the agreement has been forgiven and both parties agreed to cancelling the warrants. The overriding royalty
was reduced from 6% to 2%.
9. Convertible loans
| Group | ||||
| 30 June 2023 | ||||
| £ | ||||
| 30 June 2022 | ||||
| £ | ||||
| Convertible loan note | $500,000 USD (£395,975) | 76,163 | 60,878 | |
| Convertible loan note | $420,000 USD (£332,668) | 28,157 | 75,720 | |
| Convertible loan note | $49,790 USD (£39,437) | 6,573 | 11,763 | |
| Convertible loan note | $250,000 USD (£6,573) | 17,714 | 36,004 | |
| Impairment provision | (128,607) | (184,365) | ||
| - | - |
On March 20, 2019, the Group issued a $500,000 USD (£361,847) unsecured convertible loan note to Anglo-African Minerals
plc (“AAM”). The convertible loan note bears interest at 10% per annum and compounds monthly, is unsecured, and had an
original maturity date of September 20, 2019. The convertible loan note is convertible into common shares of AAM at $0.01
USD per share. The maturity date of the convertible loan note was subsequently extended to March 20, 2020, and the Group
was issued 21,029,978 AAM warrants per the terms of the extension. These warrants have a strike price of $0.025 USD per
share, with an expiry date of September 19, 2021. As at June 30, 2021, the Group impaired the balance down to $Nil as
collectability was considered doubtful. As at June 30, 2023, Management have accrued interest amounting £76,163 (2022 -
£60,878) on the convertible loan and this same value has been impaired during the year.
On June 2, 2021, the Group acquired an unsecured convertible loan note that was issued to AAM from Cronin Services Ltd.,
a company controlled by the former Chairman and CEO of the Group, that had a principal value of $420,000 USD (£303,744)
and accrued interest of $61,261 (£44,304) for total value of $481,261 USD (£348,048). The Group issued 14,166,790 ordinary
shares and 7,083,395 share purchase warrants to acquire this note. Each share purchase warrant may be converted into one
ordinary share of the Group at £0.05 per ordinary share and expires June 2, 2025. The convertible loan note bears interest
at 10% per annum and compounds monthly, is unsecured, and had a maturity date of May 31, 2021. The convertible loan
note is convertible into common shares of AAM at $0.01 USD per share. As at June 30, 2021, the Group impaired the balance
down to $Nil as collectability was considered doubtful. As at June 30, 2023, Management have accrued interest amounting
£28,157 (2022 - £75,720) on the convertible loan and this same value has been impaired during the year. The overall decrease
is from foreign exchange movement on interest and principal.
CLOUDBREAK DISCOVERY PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2023
50
On June 2, 2021, the Group acquired an unsecured convertible loan note that was issued to AAM from Cronin Capital Corp.,
a company controlled by the former Chairman and CEO of the Group, that had a principal value of $49,790 USD (£35,949)
and accrued interest of $9,826 USD (£7,094) for total value of $59,617 USD (£43,043). The Group issued 1,630,832 ordinary
shares and 1,630,832 share purchase warrants to acquire this note. Each share purchase warrant may be converted into one
ordinary share of the Group at £0.05 per ordinary share and expires 2025 June 2. The convertible loan note bears interest at
15% per annum and compounds monthly, is unsecured, and had a maturity date of 2020 September 30. The convertible loan
note is convertible into common shares of AAM at $0.005 USD per share. As at June 30, 2021, the Group impaired the
balance down to $Nil as collectability was considered doubtful. As at June 30, 2023, Management have accrued interest
amounting £6,573 (2022 - £11,763) on the convertible loan and this same value has been impaired during the year.
On June 2, 2021, the Group acquired an unsecured convertible loan note that was issued to AAM by Reykers Nominees
Limited that had a principal value of $250,000 USD (£180,500) and accrued interest of $52,776 (£38,104) for total value of
$302,776 USD (£218,604). The Group also acquired 12,500,000 AAM share purchase warrants that had a conversion price
of $0.03 USD and expiry date of July 1, 2021 and acquired 11,000,000 AAM ordinary shares. The Group issued 8,912,756
ordinary shares to acquire this convertible note, 1,200,000 ordinary shares to acquire the 12,500,000 AAM share purchase
warrants and 3,520,000 ordinary shares to acquire the 11,000,000 AAM ordinary shares. The convertible loan note bears
interest at 10% per annum and compounds monthly, is unsecured, and had a maturity date of 30 June 2020. The convertible
loan note is convertible into common shares of AAM at $0.01 USD per share. As at June 30, 2021, the Group impaired the
balance down to $Nil as collectability of the convertible loan was considered doubtful and the shares and warrants impaired.
As at June 30, 2023, Management have accrued interest amounting £17,714 (2022 - £36,004) on the convertible loan and
this same value has been impaired during the year.
10. Trade and other receivables
The following table sets out the fair values of financial assets within Trade and other receivables.
| Group | Company | |||
| 30 June 2023 | ||||
| £ | ||||
| 30 June 2022 | ||||
| £ | ||||
| 30 June 2023 | ||||
| £ | ||||
| 30 June 2022 | ||||
| £ | ||||
| Other Receivables | 69,879 | 16,427 | 47,523 | 16,428 |
| Inter-company Receivables | - | - | - | 406,186 |
| Tax Receivables | 18,372 | 15,627 | - | - |
| Sundry Receivables | 142,475 | 204,574 | 142,475 | 190,000 |
| Trade Receivables | 272,247 | - | - | - |
| Prepayments | 27,256 | 1,064,005 | 27,256 | 1,064,005 |
| Provision for bad debt | (287,052) | - | (140,000) | - |
| 243,177 | 1,300,634 | 77,254 | 1,676,619 |
The fair value of all current receivables is as stated above.
Included in sundry receivables is an amount of £140,000 (2022: £190,000) as at 30 June 2023 in respect of unpaid ordinary
share capital issued on 3 June 2021. A provision of £140,000 has been included for this after review from management.
The maximum exposure to credit risk at the year-end date is the carrying value of each class of receivable mentioned
above. The Group does not hold any collateral as security. Trade and other receivables are all denominated in £ sterling.
The carrying amounts of the Group and Company’s trade and other receivables are denominated in the following currencies:
CLOUDBREAK DISCOVERY PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2023
51
| Group | Company | |||
| 30 June 2023 | ||||
| £ | ||||
| 30 June 2022 | ||||
| £ | ||||
| 30 June 2023 | ||||
| £ | ||||
| 30 June 2022 | ||||
| £ | ||||
| UK Pounds | 83,604 | 1,130,433 | 77,254 | 1,676,619 |
| Canadian Dollars | ||||
| 146,250 | ||||
| 30,201 | ||||
| - | ||||
| - | ||||
| US Dollars | ||||
| 8 | ||||
| - | ||||
| - | ||||
| - | ||||
| Guinea Franc | ||||
| 13,315 | ||||
| - | ||||
| - | ||||
| - | ||||
| 243,177 | 1,160,634 | 77,254 | 1,676,619 |
11. Cash and cash equivalents
| Group | Company | |||
| 30 June 2023 | ||||
| £ | ||||
| 30 June 2022 | ||||
| £ | ||||
| 30 June 2023 | ||||
| £ | ||||
| 30 June 2022 | ||||
| £ | ||||
| Cash at bank and in hand | 244,074 | 310,578 | 18,684 | 124,118 |
The majority of the entities cash at bank is held with institutions with at least a AA- credit rating. A bank account in the UK
which holds a small percentage of cash is held with institutions whose credit rating is unknown.
The carrying amounts of the Group and Company’s cash and cash equivalents are denominated in the following currencies:
| Group | Company | |||
| 30 June 2023 | ||||
| £ | ||||
| 30 June 2022 | ||||
| £ | ||||
| 30 June 2023 | ||||
| £ | ||||
| 30 June 2022 | ||||
| £ | ||||
| UK Pounds | 6,523 | 107,707 | 1,593 | 107,707 |
| US Dollars | 17,091 | 16,411 | 17,091 | 16,411 |
| Canadian Dollars | ||||
| 220,460 | ||||
| 186,460 | ||||
| - | ||||
| - | ||||
| 244,074 | 310,578 | 18,684 | 124,118 |
12. Financial Instruments by Category
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies and, whilst
retaining ultimate responsibility for them, it has delegated authority for designing and operating processes that ensure the
effective implementation of the objectives and policies to the Group’s finance function. The Board receives monthly reports
through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and
policies it sets.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the
Group’s competitiveness and flexibility.
The Group reports in Sterling. Internal and external funding requirements and financial risks are managed based on policies
and procedures adopted by the Board of Directors. The Group does not use derivative financial instruments such as forward
currency contracts, interest rate and currency swaps or similar instruments. The Group does not issue or use financial
instruments of a speculative nature.
CLOUDBREAK DISCOVERY PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2023
52
Capital management
The Group’s objectives when maintaining capital are:
• to safeguard the entity’s ability to continue as a going concern, so that it can continue to provide returns for shareholders
and benefits for other stakeholders; and
• to provide an adequate return to shareholders.
The capital structure of the Group consists of total shareholders’ equity as set out in the ‘Statement of Changes in Equity’.
All working capital requirements are financed from existing cash resources and the Crescita draw down facility.
Capital is managed on a day to day basis to ensure that all entities in the Group are able to operate as a going concern.
Operating cash flow is primarily used to cover the overhead costs associated with operating as London Standard-listed
company.
Liquidity risk
Liquidity risk arises from the Group’s management of working capital. It is the risk that the Group will encounter difficulty in
meeting its financial obligations as they fall due.
Whilst the Group’s payables exceeds the cash at bank, the Directors are confident they can raise the funds required to meet
its obligations.
The Board receives forward looking cash flow projections at periodic intervals during the year as well as information regarding
cash balances. At the balance sheet date the Group had cash balances of £244,074 and the financial forecasts indicated
that the Group is expected to raise funds to meet its obligations under all reasonably expected circumstances and will not
need to establish overdraft or other borrowing facilities.
Interest rate risk
As the Group has no borrowings, it only has limited interest rate risk. The impact is on income and operating cash flow and
arises from changes in market interest rates. Cash resources are held in current, floating rate accounts.
Market risk
Market price risk arises from uncertainty about the future valuations of financial instruments held in accordance with the
Group’s investment objectives. These future valuations are determined by many factors but include the operational and
financial performance of the underlying investee companies, as well as market perceptions of the future of the economy and
its impact upon the economic environment in which these companies operate. This risk represents the potential loss that the
Group might suffer through holding its financial investment portfolio in the face of market movements, which was a maximum
of £891,255 (2022: £2,069,302).
The investments in equity of quoted companies that the Group holds are less frequently traded than shares in more widely
traded securities. Consequently, the valuations of these investments can be more volatile.
CLOUDBREAK DISCOVERY PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2023
53
Market price risk sensitivity
The table below shows the impact on the return and net assets of the Group if there were to be a 20% movement in overall
share prices of the financial investments held at 30 June 2023.
| 2023 | 2022 | |
| Other comprehensive | ||
| income and | ||
| Net assets | ||
| Other | ||
| comprehensive | ||
| income and | ||
| Net assets | ||
| £ | £ | |
| Decrease if overall share price falls by 20%, with all other | ||
| variables held constant | ||
| (1,069,506) | (2,367,554) | |
| Decrease in other comprehensive earnings and net asset value | ||
| per Ordinary share (in pence) | ||
| (1.23) | (0.0049)p | |
| Increase if overall share price rises by 20%, with all other | ||
| variables held constant | ||
| 1,069,506 | 2,367,554 | |
| Increase in other comprehensive earnings and net asset value | ||
| per Ordinary share (in pence) | ||
| 1.23 | 0.0049p |
The impact of a change of 20% has been selected as this is considered reasonable given the current level of volatility
observed and assumes a market value is attainable for the Group’s unlisted investments.
Currency risk
The Directors consider that there is minimal significant currency risk faced by the Group. The current foreign currency
transactions the Group enters are denominated in CAD$ and USD$ in relation to transactions associated with exploration
and evaluation option payments and property expenditures. The Group maintains minimal foreign currency holdings to
minimize this risk.
Credit risk
Credit risk is the risk that a counterparty will fail to discharge an obligation or commitment that it has entered into with the
Group. The Group’s maximum exposure to credit risk is:
| 2023 | 2022 | |
| £ | £ | |
| Cash at bank | 244,074 | 310,578 |
| Other receivables | 243,177 | 1,160,633 |
| Convertible debenture receivable | 2,059,060 | 1,657,900 |
| 2,546,311 | 3,129,111 |
The Group’s cash balances are held in accounts with HSBC, BLK.FX, Bank of Montreal and with its Investment Broker
accounts.
Fair value of financial assets and liabilities
Financial assets and liabilities are carried in the Statement of Financial Position at either their fair value (financial
investments) or at a reasonable approximation of the fair value (trade and other receivables, trade and other payables and
cash at bank).
The fair values are included at the amount at which the instrument could be exchanged in a current transaction between
willing parties, other than in a forced or liquidation sale.
Trade and other receivables
The following table sets out the fair values of financial assets within Trade and other receivables.
CLOUDBREAK DISCOVERY PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2023
54
| 2023 | 2022 | |
| Financial assets | £ | £ |
| Trade and other receivables - Non interest earning | 243,177 | 1,160,633 |
There are no financial assets which are past due and for which no provision for bad or doubtful debts has been made.
Trade and other payables
The following table sets out financial liabilities within Trade and other payables. These financial liabilities are predominantly
non-interest bearing. Other liabilities include tax and social security payables and provisions which do not constitute
contractual obligations to deliver cash or other financial assets.
| 2023 | 2022 | |
| Financial liabilities | £ | £ |
| Trade and other payables – Non interest earning | 1,704,437 | 1,395,910 |
13. Trade and other payables
The following table sets out the fair values of financial assets within Trade and other payables.
| Group | Company | |||
| 30 June 2023 | ||||
| £ | ||||
| 30 June | ||||
| 2022 | ||||
| £ | ||||
| 30 June 2023 | ||||
| £ | ||||
| 30 June 2022 | ||||
| £ | ||||
| Trade payables | 1,493,943 | 1,217,736 | 1,303,186 | 1,194,500 |
| Accruals | 151,396 | 157,353 | 139,687 | 142,084 |
| Other Creditors | 59,098 | 20,821 | 11,558 | 20,670 |
| Trade and other payables | 1,704,437 | 1,395,910 | 1,454,431 | 1,357,254 |
The carrying amounts of the Group and Company’s trade and other payables are denominated in the following currencies:
| Group | Company | |||
| 30 June | ||||
| 2023 | ||||
| £ | ||||
| 30 June 2022 | ||||
| £ | ||||
| 30 June 2023 | ||||
| £ | ||||
| 30 June 2022 | ||||
| £ | ||||
| UK Pounds | 1,497,746 | 1,357,254 | ||
| 1,454,431 | ||||
| 1,357,254 | ||||
| Canadian Dollars | ||||
| 172,606 | ||||
| 38,656 | ||||
| - | ||||
| - | ||||
| US Dollars | ||||
| 34,085 | ||||
| - | ||||
| - | ||||
| - | ||||
| 1,704,437 | ||||
| 1,395,910 | ||||
| 1,454,431 | ||||
| 1,357,254 |
CLOUDBREAK DISCOVERY PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2023
55
14. Share capital and premium
| Number of | ||||
| shares | ||||
| Share capital | ||||
| £ | ||||
| Share premium | ||||
| £ | ||||
| Total | ||||
| £ | ||||
| As at 1 July 2021 | 389,565,060 | 560,520 | 10,905,507 | 11,466,027 |
| Issue of new shares – 21 July 2021 | ||||
| 500,000 | 500 | 14,500 | 15,000 | |
| Issue of new shares – 31 December 2021 | ||||
| 500,000 | 500 | 14,500 | 15,000 | |
| Issue of new shares – 4 January 2022 | ||||
| 58,000,000 | 58,000 | 1,682,000 | 1,740,000 | |
| Warrant exercised – 28 February 2022 | ||||
| 100,000 | 100 | 4,900 | 5,000 | |
| Issue of new shares – 1 March 2022 | ||||
| (1) | ||||
| 19,596,931 | 19,597 | 1,371,660 | 1,391,257 | |
| Warrant exercised – 4 March 2022 | ||||
| 1,428,874 | 1,429 | 41,437 | 42,866 | |
| Warrant exercised – 7 March 2022 | ||||
| 100,000 | 100 | 4,900 | 5,000 | |
| Warrant exercised – 9 March 2022 | ||||
| 783,335 | 783 | 22,717 | 23,500 | |
| Issue of new shares – 31 March 2022 | ||||
| 12,000,000 | 12,000 | 738,000 | 750,000 | |
| Warrant exercised – 6 April 2022 | ||||
| 400,000 | 400 | 11,600 | 12,000 | |
| Warrant exercised – 13 April 2022 | ||||
| 200,000 | 200 | 9,800 | 10,000 | |
| As at 30 June 2022 | 483,174,200 | 654,129 | 14,821,521 | 15,475,650 |
| Issue of new shares – 5 July 2022 | 16,800,000 | 16,800 | 361,200 | 378,000 |
| Issue of new shares – 19 July 2022 | 26,027,776 | 26,028 | 556,597 | 582,625 |
| Issue of new shares – 5 August 2022 | 10,000,000 | 10,000 | 169,000 | 179,000 |
| Issue of new shares – 1 September 2022 | 12,000,000 | 12,000 | 168,000 | 180,000 |
| Issue of new shares – 28 September 2022 | 14,000,000 | 14,000 | 166,180 | 180,180 |
| Issue of new shares – 25 October 2022 | 18,500,000 | 18,500 | 185,000 | 203,500 |
| Issue of new shares – 2 December 2022 | 15,000,000 | 15,000 | 161,850 | 176,850 |
| Issue of new shares – 27 January 2023 | 4,300,000 | 4,300 | 42,570 | 46,870 |
| Issue of new shares – 18 April 2023 | 7,876,829 | 7,878 | 121,303 | 129,181 |
| As at 30 June 2023 | ||||
| 607,678,805 | 778,635 | 16,753,221 | 17,531,856 |
(1) Includes issue costs of £3,000
On 5 July 2022, the Group issued and allotted 16,800,000 new ordinary shares at a price of 2.25 pence per share as part of
a drawdown on the Crescita Capital LLC facility.
On 19 July 2022, the Group issued and allotted 26,027,776 new ordinary shares at a price of 2.25 pence per share as part
of a fundraise in which Shard Capital acted as the Group’s sole broker.
On 5 August 2022, the Group issued and allotted 10,000,000 new ordinary shares at a price of 1.79 pence per share as part
of a drawdown on the Crescita Capital LLC facility.
On 1 September 2022, the Group issued and allotted 12,000,000 new ordinary shares at a price of 1.50 pence per share as
part of a drawdown on the Crescita Capital LLC facility.
On 28 September 2022, the Group issued and allotted 14,000,000 new ordinary shares at a price of 1.30 pence per share
as part of a drawdown on the Crescita Capital LLC facility.
On 25 October 2022, the Group issued and allotted 18,500,000 new ordinary shares at a price of 1.10 pence per share as
part of a drawdown on the Crescita Capital LLC facility.
CLOUDBREAK DISCOVERY PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2023
56
On 2 December 2022, the Group issued and allotted 15,000,000 new ordinary shares at a price of 1.179 pence per share
as part of a drawdown on the Crescita Capital LLC facility.
On 27 January 2023, the Group issued and allotted 4,300,000 new ordinary shares at a price of 1.09 pence per share as
part of a drawdown on the Crescita Capital LLC facility.
On 18 April 2023, the Group issued and allotted 7,876,829 new ordinary shares at a price of 1.64 pence per share as part
of a drawdown on the Crescita Capital LLC facility.
15. Share based payments
The outstanding share options and warrants as at 30 June 2023 are shown below:
| Options | Warrants | ||
| Weighted average | |||
| exercise price | |||
| (£) | |||
| As at 30 June 2021 | |||
| 5,050,000 | 43,615,967 | 0.015 | |
| Options - Cancelled | |||
| (1,566,667) | - | 0.27 | |
| Options - Exercised | |||
| (83,333) | - | 0.03 | |
| Options - Issued | |||
| 11,250,000 | - | 0.03 | |
| Warrants - Exercised | |||
| - | (2,928,876) | 0.04 | |
| Warrants - Issued | |||
| - | 3,150,002 | 0.04 | |
| Warrants - Expired | |||
| - | (20,615,401) | 0.11 | |
| As at 30 June 2022 | |||
| 14,650,000 | 23,221,692 | 0.04 | |
| Options – Cancelled | (150,000) | - | 0.03 |
| Options – Exercised | - | - | - |
| Options – Issued | 7,250,000 | - | 0.02 |
| Warrants – Exercised | - | - | - |
| Warrants – Issued | - | 2,950,000 | 0.02 |
| Warrants - Expired | - | (7,926,968) | 0.05 |
| As at 30 June 2023 | 21,750,000 | 18,244,724 | 0.04 |
The Company and Group have no legal or constructive obligation to settle or repurchase the options or warrants in cash.
The fair value of the share options and warrants was determined using the Black Scholes valuation model. The parameters
used are detailed below:
| 2021 Warrants | 2021 Warrants | 2022 Warrants | |||
| 2022 | |||||
| Warrants | |||||
| 2023 | |||||
| Warrants | |||||
| Granted on: | 2/06/2021 | 2/06/2021 | 13/8/2021 | 1/3/2022 | 9/8/2022 |
| Number of | |||||
| warrants | |||||
| 4,530,497 | 8,714,227 | 2,750,002 | 400,000 | 2,950,000 | |
| Life (years) | 2.71 years | 4 years | 2 years | 2 years | 1 year |
| Share price | |||||
| (pence per | |||||
| share) | |||||
| 0.10p | 0.05p | 0.025p | 0.10p | 0.025p | |
| Risk free rate | 0.55% | 0.81% | 0.58% | 0.80% | 2.07% |
| Expected | |||||
| volatility | |||||
| 100% | 100% | 20.28% | 140.94% | 51.43% | |
| Expected | |||||
| dividend yield | |||||
| - | - | - | - | - | |
| Total fair value | £46,092 | £157,695 | £2,750 | £27,314 | 6,596 |
CLOUDBREAK DISCOVERY PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2023
57
| 2021 Options | 2022 Options | ||
| 2023 Options | |||
| Granted on: | 2/06/2020 | ||
| 25/8/2021 | 9/8/2022 | ||
| Number of options | 5,050,000 | ||
| 11,250,000 | 7,250,000 | ||
| Life (years) | 3.08 years | ||
| 4 years | 3 years | ||
| Share price (pence per share) | 0.025p | ||
| 0.03p | 0.025p | ||
| Risk free rate | 0.64% | ||
| 0.62% | 1.78% | ||
| Expected volatility | 100% | ||
| 20.55% | 51.43% | ||
| Expected dividend yield | - | ||
| - | - | ||
| Total fair value | £99,572 | ||
| £11,238 | £36,723 |
The expected volatility of the options is based on historical volatility for the six months prior to the date of granting.
The risk-free rate of return is based on zero yield government bonds for a term consistent with the option life.
A reconciliation of options and warrants granted over the year to 30 June 2023 is shown below:
| 2023 | 2022 | |||||||
| Range of | ||||||||
| exercise | ||||||||
| prices (£) | ||||||||
| Weighte | ||||||||
| d | ||||||||
| average | ||||||||
| exercise | ||||||||
| price (£) | ||||||||
| Number of | ||||||||
| shares | ||||||||
| Weighted | ||||||||
| average | ||||||||
| remainin | ||||||||
| g life | ||||||||
| expected | ||||||||
| (years) | ||||||||
| Weighted | ||||||||
| average | ||||||||
| remaining | ||||||||
| life | ||||||||
| contracted | ||||||||
| (years) | ||||||||
| Weighted | ||||||||
| average | ||||||||
| exercise | ||||||||
| price (£) | ||||||||
| Number of | ||||||||
| shares | ||||||||
| Weighted | ||||||||
| average | ||||||||
| remaining | ||||||||
| life | ||||||||
| expected | ||||||||
| (years) | ||||||||
| Weighted | ||||||||
| average | ||||||||
| remaining | ||||||||
| life | ||||||||
| contracted | ||||||||
| (years) | ||||||||
| 0 – 0.029 | 0.02 | 14,750,000 | 3.047 | 3.047 | 0.0286 | 16,300,000 | 4.282 | 4.282 |
| 0.03 – 0.049 | 0.03 | 11,600,000 | 1.431 | 1.431 | 0.0500 | 16,641,195 | 1.740 | 1.740 |
| 0.05 – 0.099 | 0.05 | 8,714,227 | 1.971 | 1.971 | 0.1000 | 4,530,497 | 1.630 | 1.630 |
| 0.10 – 0.15 | 0.10 | 4,930,497 | 0.650 | 0.650 | 0.1125 | 400,000 | 1.670 | 1.670 |
16. Other reserves
| Group | ||||
| Share option | ||||
| reserve | ||||
| £ | ||||
| Warrant option | ||||
| reserve | ||||
| £ | ||||
| Foreign currency | ||||
| translation | ||||
| reserve | ||||
| £ | ||||
| Total | ||||
| £ | ||||
| At 30 June 2022 | ||||
| 84,667 | 212,717 | 301,709 | 599,093 | |
| Currency translation differences | - | - | (123,367) | (123,367) |
| Issued Options | 36,723 | - | - | 36,723 |
| Issued Warrants | - | 6,596 | - | 6,596 |
| At 31 June 2023 | 121,390 | 219,313 | 178,342 | 519,045 |
17. Employee benefit expense
The total number of Directors who served in the year was 4 (2022: 4). There are no employees of the Group.
The following amounts were paid during the year to Directors:
CLOUDBREAK DISCOVERY PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2023
58
| Group | ||
| Staff costs | ||
| Year ended | ||
| 30 June 2023 | ||
| £ | ||
| Year ended | ||
| 30 June 2022 | ||
| £ | ||
| Directors Fees and Consulting Fees | 315,000 | 79,976 |
| Employee salaries and Tax | 33,515 | - |
| 348,515 | 79,976 |
Amounts included in Directors fees and salaries include £315,000 (2022: £79,976) in relation to director fees and consulting
fees. Details of fees paid to Companies and Partnerships of which the Directors detailed above are Directors and Partners
have been disclosed in Note 26.
18. Directors' remuneration
| Year ended 30 June 2023 | ||||
| Short-term | ||||
| benefits | ||||
| Post- | ||||
| employment | ||||
| benefits | ||||
| Share based | ||||
| payments | Total | |||
| £ | £ | £ | £ | |
| Directors | ||||
| Kyler Hardy | ||||
| (1) | ||||
| 120,000 | - | 6,329 | 126,329 | |
| Paul Gurney | ||||
| 30,000 | - | 3,798 | 33,798 | |
| Emma Priestly | ||||
| 45,000 | - | 3,798 | 48,798 | |
| Andrew Male | 120,000 | - | 3,798 | 123,798 |
| 315,000 | - | 17,723 | 332,723 |
(1) Kyler Hardy resigned on 19 June 2023.
Remuneration hasn’t been paid in full to all directors, the amounts referenced above have either been accrued or partially
paid. Refer to note 26 for amounts still owning to the Directors.
Emma Priestley’s Director fees related to the previous financial year were invoiced and accounted for in the current financial
year.
3,500,000 options were issued to directors on 9 August 2022 for their services. The options have an exercise price of £0.0225
and expire on 9 August 2025. Details of the Share Option charges can be found in Note 15
| Year ended 30 June 2022 | ||||
| Short-term | ||||
| benefits | ||||
| Post- | ||||
| employment | ||||
| benefits | ||||
| Share based | ||||
| payments | Total | |||
| £ | £ | £ | £ | |
| Directors | ||||
| Kyler Hardy | ||||
| - | - | 2,000 | 2,000 | |
| Paul Gurney | ||||
| 7,500 | - | - | 7,500 | |
| Emma Priestly | ||||
| - | - | 600 | 600 | |
| Andrew Male | 72,476 | - | 600 | 73,076 |
| 79,976 | - | 3,200 | 83,176 |
CLOUDBREAK DISCOVERY PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2023
59
19. Finance income
| Group | ||
| Year ended | ||
| 30 June 2023 | ||
| £ | ||
| Year ended | ||
| 30 June 2022 | ||
| £ | ||
| Interest income on convertible loan | ||
| 143,224 | 138,107 | |
| G2 Technology – debenture interest | ||
| 197,061 | 16,411 | |
| Texas Legacy Exploration – debenture interest | ||
| 29,302 | - | |
| Finance Income | 369,587 | 154,518 |
The interest income on the convertible loan is interest on the AAM convertible loans. This interest is subsequently impaired.
Refer to note 9 for further information.
20. Other gains
| Group | ||
| Year ended | ||
| 30 June 2023 | ||
| £ | ||
| Year ended | ||
| 30 June 2022 | ||
| £ | ||
| Other gains | ||
| 17,913 | 8,332 | |
| Other gains | 17,913 | 8,332 |
21. Loss on disposal of investments
| Group | ||
| Year ended | ||
| 30 June 2023 | ||
| £ | ||
| Year ended | ||
| 30 June 2022 | ||
| £ | ||
| Realised loss on disposal of investments | ||
| (866,421) | - | |
| Loss on disposal of investments | (866,421) | - |
22. Income tax expense
No charge to taxation arises due to the losses incurred.
The tax on the Group’s loss before tax differs from the theoretical amount that would arise using the weighted average tax
rate applicable to the losses of the consolidated entities as follows:
| Group | ||
| Year ended | ||
| 30 June 2023 | ||
| £ | ||
| Year ended | ||
| 30 June 2022 | ||
| £ | ||
| Loss before tax | ||
| (3,997,899) | (5,557,029) | |
| Tax at the applicable rate of 18.00% (2022: 17%) | (719,622) | (944,695) |
| Effects of: | ||
| Expenditure not deductible for tax purposes | ||
| 8,179 | 8,181 | |
| Net tax effect of losses carried forward | 723,621 | 936,514 |
| Tax (charge)/refund | ||
| (12,178) | - |
CLOUDBREAK DISCOVERY PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2023
60
The weighted average applicable tax rate of 18% (2022: 17%) used is a combination of the 19% standard rate of corporation
tax in the UK, 15% Canadian corporation tax and 21% US corporation tax.
The Company has tax losses of approximately £2,853,785 (2022: £2,130,164) available to carry forward against future
taxable profits. No deferred tax asset has been recognised on accumulated tax losses because of uncertainty over the
timing of future taxable profits against which the losses may be offset.
23. Earnings per share
Group
The calculation of the basic loss per share of £0.01 (2022: £0.01) is based on the loss the loss attributable to equity owners
of the group of £3,997,899 (2022: loss of £5,697,030), and on the weighted average number of ordinary shares of
578,496,992 (2022: 428,042,226) in issue during the period.
In accordance with IAS 33, no diluted earnings per share is presented as the effect on the exercise of share options or
warrants would be to decrease the loss per share.
Details of share options and warrants that could potentially dilute earnings per share in future periods are set out in Note 15.
24. Expenses by nature
| Group | ||
| Year ended | ||
| 30 June | ||
| 2023 | ||
| £ | ||
| Year ended | ||
| 30 June | ||
| 2022 | ||
| £ | ||
| Professional fees | 1,123,570 | 1,564,654 |
| Consulting fees | 1,581,215 | 1,184,930 |
| Employees and Contractors | 228,515 | - |
| Transfer agent and filing fees | - | 110,965 |
| Travel | 94,302 | 86,597 |
| Insurance | 37,312 | 30,929 |
| IT & Software services | 13,938 | 2,608 |
| Public Relations | 150,119 | 188,160 |
| Premises and Office costs | 10,447 | 18,040 |
| Property costs/exploration costs | 425,643 | - |
| Share option expense | 43,306 | 41,325 |
| Other expenses | 298,151 | 80,006 |
| Total administrative expenses | 4,006,518 | 3,308,214 |
CLOUDBREAK DISCOVERY PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2023
61
25. Commitments
License commitments
The Group owns a number of exploration licences in Canada. These licences include commitments to pay minimum spend
requirements. The Group have entered into option agreements on all of their properties aside from newly staked properties,
Northern Treasure and Foggy Mountain. As part of these option agreements, the minimum spend obligations have been
passed onto the Optionees. Refer to note 6 for further information.
As at 30 June 2023 these are as follows:
| Group | |
| Minimum spend | |
| requirement | |
| £ | |
| Not later than one year | 674,709 |
| Later than one year and no later than five years | 99,589 |
| Total | 774,298 |
26. Related party transactions
Details of the Directors’ remuneration can be found in Note 18. Key Management Personnel are considered to be the
Directors.
At June 30, 2023, the Group held investments of £280,214
in Temas Resources, Volt Lithium (previously Allied Copper
Corp), Calidus Resources and Buscando Resources where Kyler Hardy is also a Director (2022: £1,589,124). The holdings
of these investments are connected to requirements in the property option agreements whereby the optionees are to make
payments in shares. All companies except for Calidus Resources are Level 1 investments and are not directly controlled by
Kyler Hardy. For further information, please refer to note 6.
During the year, the Group paid Cronin Services £759,073 for the provision of consulting and management services during
the year (2022; £1,234,952) a company controlled by the previous CEO, Kyler Hardy. These were in relation to consultancy
fees under a management service agreement dated 1 February 2020 and 1 June 2021. In November, there was an updated
contract agreed between the Group and Cronin Services related the consultancy services provided. This agreement involved
Cronin services providing monthly CFO, technical, marketing and office services for the Group, for a monthly fee of $27,500
USD and annual director fees for Kyler of £120,000. Throughout the year, Cronin Capital and Cronin Services invoiced the
Group £829,322. The Group paid amounts totalling nil (2022: £5,034) to Cronin Capital Corp. The amount outstanding owing
to Cronin Capital and Cronin Services at the year-end was £996,515 (2022: £965,340).
During the year, the Group paid amounts totalling £59,000 (2022: 72,476) to Westridge Management International Ltd. A
company controlled by Andrew Male, a Director of the group. The amount outstanding owing to Westridge Management at
the year-end was £65,000 (2022: £14,000). Andrew was also issued 750,000 options with an exercise price of £0.0225
during the year.
During the year, the Group made no payments (2022: nil) to Windy Apple Ventures Ltd. A company controlled by Paul
Gurney, a Director of the group. The amount accrued and outstanding owing to Windy Apple Ventures Ltd. at the year-end
was £22,500 (2022: £nil). Paul was also issued 750,000 options with an exercise price of £0.0225 during the year.
During the year, the Group made no payments (2022: nil) to Emma Priestley. The amount accrued and outstanding owing
to Emma at the year-end was £30,000 (2022: £nil). Emma was also issued 750,000 options with an exercise price of £0.0225
during the year.
27. Ultimate controlling party
The Directors believe there is no ultimate controlling party.
28. Events after the reporting date
On 11 July 2023, the Company issued convertible loan notes (CLN). The gross proceeds totalled £340,000 and the CLN’s
have a maturity date set at 31 January 2024, with an annual interest rate of 12%. Paul Gurney, Non-Executive Director of
the Company participated in the CLN.
