25 2022 ANNUAL REPORT DIRECTORS’ Report (cont.) 3. RESULTS OF OPERATIONS (cont.) 3.2 FINANCIAL REVIEW (cont.) (b) Income statement The Group recorded a net loss after tax for the year ended 30 June 2022 of $28,615,000 in comparison to a net loss after tax for the year ended 30 June 2021 of $43,245,000. The consolidated result incorporates two one-off adjustments: 1. With the Darlot underground transitioning to a satellite mine providing ore to King of the Hills, accelerated depreciation and inventory write-down for the Darlot Process Plant (now in care and maintenance) totalled $22.585 million in FY22. 2. The completion of the divestment in the Siana Gold Mine resulted in a gain from discontinued operations of $20.049 million. 64,315 ounces of gold was sold during the year, predominantly from the Darlot operation, which, together with silver sales and hedging adjustments, resulted in total revenue of $164,962,000. Cost of sales for the period of $196,049,000 comprised production costs, royalties, movement in stockpiles and depreciation charges (including the $22,585,000 relating to Darlot accelerated depreciation and inventory write-down). (c) Balance sheet Total assets increased from $345,485,000 to $577,365,000 at 30 June 2022. The net increase in total assets was driven by the construction of the KOTH processing plant and related infrastructure, mine development and right of use assets associated with major contracts. Total liabilities were $394,570,000, an increase of $279,961,000 from 30 June 2021. This was mainly driven by fully drawing down the KOTH construction facility of $175,000,000 and the recognition of right-of-use lease liabilities at KOTH of $96,098,000. (d) Cash flow During the year, cash and cash equivalents increased by $14,398,000. Net cash outflows from operating activities for the period were $2,359,000. Cash receipts from customers of $158,606,000 reflect the sale of gold and silver, which benefited from higher gold prices during the year. This was offset by cash outflows of $160,695,000, driven by operational spending at Darlot and Great Western, exploration activities and interest payments. Net cash outflows used in investing activities for the period were $160,104,000, reflecting the completed construction of the King of the Hills processing plant ($94,844,000) and mine development activities ($82,729,000). This was partially offset by proceeds from selling the Siana operation in the Philippines ($21,467,000). The net cash from financing activities of $176,861,000 reflects the net proceeds received from the construction facility ($175,000,000) and the transfer of $13,000,000 from restricted cash for the construction of the new tailings storage facility at King of the Hills. This is offset by payments made on lease liabilities ($8,409,000) and debt establishment and interest costs ($2,730,000). 4. DIVIDENDS No amounts were paid by way of dividends since the end of the previous financial year (2021: Nil). At the time of this report, the Directors do not recommend the payment of a dividend. 5. OPTIONS GRANTED OVER SHARES No options were granted during or since the end of the financial year. No person entitled to exercise the options has any right by virtue of the option to participate in any share issue of Red 5 or any other corporation. 6. PERFORMANCE RIGHTS At the date of this report, there were 37,906,342 performance rights convertible into ordinary fully paid shares. Number Vesting date: 30 June 2023 (LTIP rights subject to performance conditions) 7,945,729 Vesting date: 30 June 2023 (PIO rights subject to performance conditions) 11,550,613 Vesting date: 30 June 2024 (LTIP rights subject to performance conditions) 18,410,000 37,906,342 In December 2019, a total of 10,442,031 performance rights (Performance Rights) that were issued to key management personnel, senior management and operating personnel were vested following the partial achievement of performance conditions (being Total Shareholder Return outperformance against the All Ordinaries Gold Index and increases in ore reserves), measured over the three years ended 30 June 2022. Upon vesting, 5,576,211 Performance Rights have been exercised into an equivalent number of ordinary fully paid shares in accordance with the terms of the Plan. The balance of 4,865,820 Performance Rights were forfeited due to performance conditions not being met (being operating costs performance against budget and safety compliance) and personnel exiting the company during the performance period. 7. INDEMNIFICATION AND INSURANCE OF DIRECTORS, OFFICERS The Company has made an agreement indemnifying all the Directors and officers of the Company against all losses or liabilities incurred by each Director or officer in their capacity as Directors or officers of the Company to the extent permitted by the Corporations Act 2001. The indemnification specifically excludes wilful acts of negligence. The Company paid insurance premiums in respect of Director’s and Officer’ Liability Insurance contracts for current officers of the Company, including officers of the Company’s controlled entities. The liabilities insured are damages and legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of entities in the Group. During the financial year, Red 5 paid premiums of $459,687 (2021: $318,825).
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