TIDMCAF
RNS Number : 2814C
China Africa Resources PLC
14 March 2014
China Africa Resources plc
("China Africa" or "the Company")
Final Results for the Period to 31 December 2013
China Africa Resources plc announces its final results for the
period to 31 December 2013.
Chairman's Statement
I am pleased to present the Report and Accounts for China Africa
Resources plc for the year to 31 December 2013. During the year the
Group's principal activity has been to progress the feasibility
study of the Berg Aukas lead/zinc project.
Financial results
During the year the Group made a loss of US$0.7 million (2012:
US$0.5 million). The loss incurred during the year consisted of
costs of running the head office in London and associated listing
and regulatory requirements. All costs of the Berg Aukas
feasibility study have been capitalised. The directors do not
recommend payment of a dividend (2012: nil).
As at 31 December 2013 the Company had a cash balance of US$1.9
million (2012: US$3.2 million).
Review of the year
This year the primary focus of the Company continued to be to
progress the feasibility study of the Berg Aukas deposit, as well
as continuing to review other business opportunities and developing
our administrative procedures and our corporate governance
framework of the Company.
The highlight of the year was the announcement of a maiden JORC
resource at the Berg Aukas mine.
The JORC Indicated Mineral Resource, of which in excess of 95%
is situated between the 14 and 19 levels (approximately between
350m to 550m below surface, where the majority of historical
resources are located), is 1,264,800 tonnes @ 15.5% zinc, 3.8% lead
and 0.33% V2O5 at a 3% Zn cut-off. (Resource is 100% attributable
to the Company.) The JORC resource was compiled by Coffey Mining
(SA) Pty Ltd.
This JORC resource estimate verifies the historical
(non-compliant with current JORC reporting standards) resource
estimate from December 1977 of 1,196,000 tonnes @15% zinc, 5.3%
lead and 0.63% V2O5 between the 14 and 19 levels as reported in the
Berg Aukas Competent Persons Report 2011 ("2011 CPR"). This has
shown the deposit to be an exceptionally high grade zinc/lead
deposit with much of the significant infrastructure in place
including an 800m shaft and underground development, which should
allow rapid and cost effective reopening of the mine.
The technical report for the pre-feasibility was completed
during the second half of the year but is subject to discussions
with various smelters to purchase the concentrates. Management will
review their options following the establishment of commercial
terms for the purchase of the concentrates from Berg Aukas which
will complete the pre-feasibility study.
We continue to seek opportunities to enlarge the lead and zinc
asset base of CAR and grow the Company for the benefit of our
shareholders.
Outlook
The Company's short-term objective is to establish commercial
terms for the purchase of the concentrates from Berg Aukas, to
complete the pre-feasibility study. Once the appropriate
smelters/refineries have been identified and commercial terms
finalised, the pre-feasibility study will be concluded and
presented to the Board for assessment.
China Africa Resources was established as an organisation
focussed on rapid growth and we will continue to seek and review
new investment opportunities, with a view to expanding our asset
base in the short term. The Company will continue to strive to
become a highly profitable multi-mineral mining Company.
Jianrong Xu
Chairman
Strategic Report
Principal activity
The principal activity of China Africa Resources plc is the
exploration and development of base metals, primarily lead and
zinc.
The subsidiary undertakings principally affecting the losses or
net assets of the Group in the year are listed in note 15.
Business review and future development
A review of the business and its operations can be found in the
Chairman's statement.
Key risk factors and mitigations
Human resources: At the appropriate time, recruiting, attracting
and retaining key commercial, management and technical staff will
be a major challenge to the business in light of the current market
conditions in the resources sector. The Company has engaged a
management team through Weatherly International plc on a contract
basis with the objective of seeing the Company through the
execution of a feasibility study of the Berg Aukas mine. The
effectiveness of this arrangement is under regular review by the
directors.
Project development risk: All potential projects are subject to
an investment appraisal procedure that involves the Board at the
key stages of initiation, mandate and sanction. Projects are
assessed by their strategic fit and contribution to earnings. All
projects are scrutinised for consistency of assumptions and
accuracy of modelling prior to presentation to the Board.
Commodity and foreign exchange risks: The Company's costs and
the feasibility of its projects are affected by exchange rate
movements between the US dollar and Namibian dollar and the
commodity markets.
Management and directors review trends in the commodity markets
and exchange rates on a regular basis when considering the
Company's risk management strategy.
Risks relating to investing in Namibia
Political: Namibia is considered one of the lowest-risk
economies in the African continent. The government pursues a
consistent strategy of encouraging investment in the country, and
is keen to keep the climate attractive for foreign investors. China
Africa Resources has strong links with the President, Prime
Minister, Minister for Mines, and other government members and
officials. The Board reviews the strategic impact of political
changes within the country on an ongoing basis.
Black Economic Empowerment and local participation:There is
currently no Black Economic Empowerment legislation embodied in
Namibian law; however, the government encourages local
participation through a number of avenues. The directors take a
proactive stance in addressing the issue of local participation in
the Company's projects.
Exchange controls and exchange rate fluctuations: China Africa
Resources manages its treasury function through its London office.
The needs of the Namibian subsidiary are balanced against
fluctuations in the currency markets. The Group seeks to optimise
currency transfers, where possible, as the subsidiary draws down
funds on a prudent basis. The Company maintains a consistent and
compliant approach to exchange regulations within Namibia.
Infrastructure: China Africa Resource's Berg Aukas project is
serviced by good regional infrastructure, and the Board reviews its
infrastructure requirements on an ongoing basis. Any challenges
relating to the supply of electricity, water or rail links are
incorporated into investment decisions and addressed as required in
the overall projects. Any infrastructure requirements outside the
project scope are addressed through dialogue with the government
and the relevant parastatal institutions.
Key performance indicators
Costs: The Board and management monitor actual against budgeted
costs on a monthly basis.
Finance: The liquidity requirements of the Company are monitored
on a weekly basis by management, on a monthly and quarterly basis
by the Board and annually by external parties.
Performance: The Board and management monitor the progress of
the feasibility study against the business plan on a monthly
basis.
By order of the Board
Rod Webster
Chief Executive Officer
Date: 13 March 2014
Directors' Report
Results and dividends
During the year the Group made a loss of US$0.7 million (2012:
US$0.5 million). The loss incurred during the year consisted of
costs of running the head office in London and associated listing
and regulatory requirements. All costs of the Berg Aukas
feasibility study have been capitalised. The directors do not
recommend payment of a dividend (2012: nil).
Strategic report
A review of the business and future developments of the Group
are included within the strategic report and the Chairman's
statement.
Going concern
The Group has sufficient funds to cover overheads for the
foreseeable future. The development of the Group's exploration
asset will require significant external funding above the Group's
existing working capital. The Group have met all existing licence
commitments and plan to consider a variety of funding options over
the forthcoming year.
Post-reporting date events
No matters or circumstances have arisen since the end of the
year to the date of signature of these financial statements which
significantly affected or may significantly affect the operations
of the Company, the results of those operations or the state of
affairs of the Company in future financial years.
Directors
The directors who served during the financial year and up to the
date of signing the financial statements are as follows:
Jianrong Xu
Roderick Webster
John Bryant
Xingnan Xie
Shasha Lu
Jingbin Tian
James Richards
Frank Lewis
Directors' indemnities
China Africa Resources plc maintains liability insurance for its
directors and officers during the year and also as at the date of
the report of the directors. This Group cover extends to and
includes the directors and officers of the Company.
Political contributions and charitable donations
During the period there were no charitable or political
donations (2012: nil).
Remuneration
The Company remunerates the directors at a level commensurate
with the size of the Company and the experience of its directors.
Only the two independent non-executive directors are remunerated
directly by China Africa Resources plc. However, as the Company
grows it will be necessary to recruit senior management, and the
Remuneration Committee will review the directors' remuneration and
that of senior management to ensure that it upholds the objectives
of the Company with regard to this issue. Details of directors'
emoluments and of payments made for professional services rendered
are set out below:
Other
2013 Fees benefits Total
US$'000 US$'000 US$'000
Frank Lewis 47 - 47
James Richards 47 - 47
94 - 94
Other
2012 Fees benefits Total
US$'000 US$'000 US$'000
Frank Lewis 48 - 48
James Richards 48 - 48
96 - 96
Financial instruments
The financial risk management policies and objectives are set
out in detail in note 22 of the financial statements.
Statement as to disclosure of information to auditors
The directors who were in office on the date of approval of
these financial statements have confirmed, as far as they are
aware, that there is no relevant audit information of which the
auditors are unaware. Each of the directors has confirmed that they
have taken all the steps that they ought to have taken as directors
in order to make themselves aware of any relevant audit information
and to establish that it has been communicated to the auditor.
Auditor
BDO LLP has expressed their willingness to continue in office
and a resolution to re-appoint them as auditors will be proposed at
the next annual general meeting.
By order of the Board
Rod Webster
Chief Executive Officer
Date: 13 March 2014
Corporate Governance
Introduction
We are not required to comply with the requirements of the UK
Corporate Governance Code, and do not do so; however, the Board of
Directors is committed to high standards of corporate
governance.
The Board is accountable to its shareholders for good
governance, and the statement below is based on the review of
corporate governance that was carried out prior to the listing of
the Company on AIM and as reviewed by the Audit Committee, and
describes how the principles have been applied.
Constitution of the Board
During the year there were four Board meetings. The Audit
Committee met on two occasions and the Remuneration Committee once.
The Nomination Committee did not meet.
The Board was comprised of the following:
Jianrong Xu Non-Executive Chairman
Roderick Webster Chief Executive Officer
John Bryant Non-Executive
Xingnan Xie Non-Executive
Shasha Lu Non-Executive
Jingbin Tian Non-Executive
James Richards Senior Independent Non-Executive
Frank Lewis Independent Non-Executive
Committees of the Board
The Audit Committee is made up of Frank Lewis (Chairman), John
Bryant, Shasha Lu and James Richards.
The Audit Committee meets as required. It reviews the financial
reports and accounts and the preliminary and interim statements,
including the Board's statement on internal financial control in
the annual report, prior to their submission to the Board for
approval. The Audit Committee also reviews corporate governance
within the Group and reports on this to the Board. In addition, it
assesses the overall performance of the external auditor, including
scope, cost effectiveness and objectivity of the audit.
The Audit Committee is also charged with reviewing the
independence of the external auditor and monitors the level of
non-audit fees. These fees are disclosed in note 7. In the opinion
of the Audit Committee, which has reviewed these fees and the
procedures that BDO has in place to ensure they retain their
independence, the auditor's independence is not compromised. The
Committee met twice during 2013 to perform its functions in respect
of the review of the Report and Accounts.
The Audit Committee can meet for private discussion with the
external auditor, who attends the meetings as required. The Company
Secretary acts as secretary to the Committee.
The Remuneration Committee is made up of James Richards
(Chairman), Frank Lewis, John Bryant and Jingbin Tian, with the
Company Secretary serving as secretary.
It should be noted that the Board has determined the
remuneration of the independent non-executive directors. All the
other directors do not receive any direct remuneration from the
Company but are paid by the company that nominated them to the
Board. In the future as the Company develops, the Remuneration
Committee will determine, on behalf of the Board, the Group's
policy on executive remuneration and the remuneration packages for
executive directors. It will also approve and administer any
executive share option scheme and the granting of options as part
of a remuneration package.
The Nominations Committee is made up of Jianrong Xu as Chairman,
James Richards and Frank Lewis, and did not meet during the year
under review.
In accordance with the Quoted Companies Alliance Guidance, the
Board nominated James Richards as the senior independent
non-executive director.
Attendance at meetings
During the year there were four Board meetings, and the details
of attendees are set out below.
Jianrong Xu Non-Executive Chairman (4/4)
Roderick Webster Chief Executive Officer (4/4)
John Bryant Non-Executive (4/4)
Shasha Lu Non-Executive (3/4)
Jingbin Tian Non-Executive (4/4)
Xingnan Xie Non-Executive (4/4)
James Richards Senior Independent Non-Executive (4/4)
Frank Lewis Independent Non-Executive (4/4)
There were two meetings of the Audit Committee and no meetings
of the Remuneration Committee. All the directors who were members
attended these meetings. Following the year end there was a meeting
of the Audit Committee to review the Report and Accounts for the
year ended 31 December 2013.
Internal control
The Board is responsible for reviewing and approving the
adequacy and effectiveness of the Group's internal controls,
including financial and operational control, risk management and
compliance.
In order to establish effective procedures for internal control
and communicate this throughout the Group, including its
subsidiaries, the Board has issued two important documents to all
staff, known as the Board Protocol and the Manual of Internal
Control. These were produced prior to listing of the shares on AIM
and were reviewed by the Audit Committee at its meetings in March
2013.
The key elements of the Group's internal control are set out in
these documents, and contain:
-- a clearly defined structure for the Group, its subsidiaries and management teams;
-- powers which the Board has reserved for itself. These include
the approval of all business plans and budgets for the Group and
all its subsidiaries, the establishment of subsidiary companies and
appointment of directors to them, and the process for project
approval and capital expenditure;
-- terms of reference for the Audit, Remuneration and
Nominations Committees, which define the roles of their
members;
-- information about how often the Board should meet (as a
minimum) and an annual cycle of meetings. This covers the process
for the preparation of Board agendas and Board papers and their
prior consideration by the management team at its weekly
meetings;
-- detailed business plans and budgets to be approved annually
and performance monitored by the management team and the Board at
its monthly meetings; and
-- procedures for the approval of expenditure, the levels of
authority and the management controls.
The directors acknowledge their responsibility for the Group's
system of internal financial control and risk management, and place
considerable importance on maintaining this. The Manual of Internal
Control and the process for authorisation that it imposes, together
with the Board Protocol setting out the process for authorising
business plans, budgets and projects, form an important part of our
decision making process; however, this can only provide reasonable
and not absolute assurance against material errors, losses or
fraud.
There is currently no internal audit function within the Group
owing to the small size of the administrative function. However,
there is a high level of review by directors and a clear
requirement for them to authorise transactions. Should the need for
a separate internal audit function become apparent, the Board will
establish one.
The Board Protocol and the Manual of Internal Control will
continue to be updated and refined as China Africa Resources plc
evolves and grows.
Bribery Act compliance
At its Board meeting on 13 May 2011 the Company adopted a Policy
for Compliance with the Bribery Act 2010, together with a set of
management procedures, which were reviewed by the Audit Committee
at its meetings in March 2013. A report on the effectiveness of
these procedures was made to the Audit Committee and the Board at
its meeting in August 2013. This matter is kept under review by the
Audit Committee under its terms of reference.
Relations with shareholders
The Company endeavours to maintain communication with
shareholders through regulatory announcements, via the Company's
website and by direct contact with its major shareholders. The
Board values the views of its shareholders and fosters continuing
dialogue with investment and fund managers, other investors and
equity analysts to ensure that the investing community receives an
informed view of the Group's prospects, plans and progress.
Directors' Responsibility
The directors are responsible for preparing the annual report
and the financial statements in accordance with applicable law and
regulations.
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 International Financial Reporting Standards
(IFRSs) as adopted by the European Union. 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 and Company for that period. The directors are also required
to prepare financial statements in accordance with the rules of the
London Stock Exchange for companies trading securities on the
Alternative Investment Market.
In preparing these financial statements, the directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether they have been prepared in accordance with
IFRSs as adopted by the European Union, 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 Company will
continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the requirements of the
Companies Act 2006. They are also responsible for safeguarding the
assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Website publication
The directors are responsible for ensuring the annual report and
the financial statements are made available on a website. Financial
statements are published on the Company's website in accordance
with legislation in the United Kingdom governing the preparation
and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity
of the Company's website is the responsibility of the directors.
The directors' responsibility also extends to the ongoing integrity
of the financial statements contained therein.
Independent Auditor's Report to the Members of China Africa
Resources plc
We have audited the financial statements of China Africa
Resources plc for the year ended 31 December 2013 which comprise
the consolidated and Company statements of financial position, the
consolidated income statement, the consolidated statement of
comprehensive income, the consolidated and Company statements of
cash flow, the consolidated and Company statement of changes in
equity and the related notes. The financial reporting framework
that has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by
the European Union and, as regards the parent company financial
statements, as applied in accordance with the provisions of the
Companies Act 2006.
This report is made solely to the Company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of directors and auditors
As explained more fully in the statement of directors'
responsibilities, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give
a true and fair view. Our responsibility is to audit and express an
opinion on the financial statements in accordance with applicable
law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Financial Reporting
Council's (FRC's) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements
is provided on the FRC's website at
www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion:
-- the financial statements give a true and fair view of the
state of the Group's and the parent company's affairs as at 31
December 2013 and of the Group's loss for the year then ended;
-- the Group financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union;
-- the parent company financial statements have been properly
prepared in accordance with IFRSs as adopted by the European Union
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.
Opinion on other matters prescribed by the Companies Act
2006
In our opinion the information given in the Chairman's
statement, strategic report and directors' report for the financial
year for which the financial statements are prepared is consistent
with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where 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 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.
Scott Knight (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
London
United Kingdom
13 March 2014
BDO LLP is a limited liability partnership registered in England
and Wales
(with registered number OC305127).
Consolidated Income Statement
For the 12 month period ended 31 December 2013
Year Year
ended ended
31 December 31 December
2013 2012
Note US$'000 US$'000
Administrative expenses (683) (687)
Operating loss 6 (683) (687)
Finance cost 10 (7) -
Finance income 10 1 192
Loss for the year before taxation (689) (495)
Tax expense 11 - -
Loss for the year attributable
to the equity holders of the parent (689) (495)
Year Year
ended ended
31 December 31 December
Loss per share expressed in cents 2013 2012
Basic and diluted attributable
to the equity holders of the parent 12 (0.03c) (0.02c)
All amounts relate to continuing activities during the
period.
The notes form part of these financial statements.
Consolidated Statement of Comprehensive Income
For the 12 month period ended 31 December 2013
Year Year
ended ended
31 December 31 December
2013 2012
Note US$'000 US$'000
Loss for the year attributable
to the equity holders of the parent (689) (495)
Items that may be reclassified
to profit and loss
Exchange differences on translation
of foreign operations (574) (145)
Total comprehensive loss for the
year (1,263) (640)
All amounts relate to continuing activities during the
period.
The notes form part of these financial statements.
Consolidated and Company Statements of Financial Position
As at 31 December 2013
Group Group Company Company
as at as at as at as at
31 December 31 December 31 December 31 December
2013 2012 2013 2012
Note US$'000 US$'000 US$'000 US$'000
Assets
Non-current assets
Intangible assets 13 6,329 6,218 - -
Property plant and
equipment 14 14 23 - -
Investment in subsidiary 15 - - 4,156 4,156
Loans to subsidiaries 16 - - 4,053 3,085
Total non-current
assets 6,343 6,241 8,209 7,241
Current assets
Trade and other receivables 17 77 238 72 56
Cash and cash equivalents 18 1,922 3,204 1,826 3,132
1,999 3,442 1,898 3,188
Total assets 8,342 9,683 10,107 10,429
Current liabilities
Trade and other payables 19 (136) (214) (131) (211)
Total liabilities (136) (214) (131) (211)
Net assets 8,206 9,469 9,976 10,218
Equity
Share capital 20 377 377 377 377
Share premium 6,607 6,607 6,607 6,607
Merger relief reserve 4,052 4,052 4,052 4,052
Foreign Exchange Reserve (724) (150) - -
Retained deficit (2,106) (1,417) (1,060) (818)
Equity attributable
to shareholders of
the parent company 8,206 9,469 9,976 10,218
The financial statements were approved by the Board on 13 March
2014 and signed on behalf of the Board by:
R J Webster
Chief Executive Officer
The notes form part of these financial statements.
Consolidated and Company Statements of Changes in Equity
For the 12 month period ended 31 December 2013
Share Share Merger Foreign Retained Total
capital premium Reserve exchange deficit
reserve
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
The Group
Balance at 31 December
2011 377 6,607 4,052 (5) (922) 10,109
Loss for the period - - - - (495) (495)
Other comprehensive income
Exchange differences
on translation of foreign
operations - - - (145) - (145)
Balance at 31 December
2012 377 6,607 4,052 (150) (1,417) 9,469
Loss for the period - - - - (689) (689)
Other comprehensive income
Exchange differences
on translation of foreign
operations - - - (574) - (574)
Balance at 31 December
2013 377 6,607 4,052 (724) (2,106) 8,206
The Company
Balance at 31 December
2011 377 6,607 4,052 - (736) 10,300
Loss for the period - - - - (82) (82)
Balance at 31 December
2012 377 6,607 4,052 - (818) 10,218
Loss for the period - - - - (242) (242)
Balance at 31 December
2013 377 6,607 4,052 - (1,060) 9,976
The following describes the nature and purpose of each reserve
within the owner's equity
Reserve Description and purpose
Share capital Nominal value of shares issued.
Share premium Amount subscribed for share capital in excess
of nominal value.
Merger reserve Reserve created on issue of shares on acquisition
of subsidiaries in accordance with Companies
Act 2006 provisions.
Foreign exchange reserve Cumulative translation differences of net
assets of subsidiaries.
Retained deficit Cumulative net gains and losses recognised
in the consolidated statement of comprehensive
income.
The notes form part of these financial statements.
Consolidated and Company Cash Flow Statements
For the 12 month period ended 31 December 2013
Group Group Company Company
Year Year Year Year
ended ended ended ended
Note 31 December 31 December 31 December 31 December
2013 2012 2013 2012
US$'000 US$'000 US$'000 US$'000
Cash flows from operating
activities
Loss for the year (689) (495) (242) (82)
Adjusted by:
Depreciation 5 5 - -
Unrealised exchange
losses 30 (47) 30 (47)
Non cash items within
loans to subsidiary
company - - (600) (600)
Interest received 1 (14) (84) (69)
(653) (551) (896) (798)
Movements in working
capital
Increase in trade
and other receivables 161 (227) (16) (46)
Increase in trade
and other payables (79) 59 (80) 64
Net cash used in operating
activities (571) (719) (992) (780)
Cash flows generated
from investing activities
Interest received (1) 14 (1) 14
Purchase of property,
plant and equipment 14 - (29) - -
Loans to subsidiary
company - - (283) (2,090)
Payments for evaluation
of feasibility studies (680) (2,058) - -
Decrease in cash (681) (2,073) (284) (2,076)
Cash and cash equivalent
at the end of the
year (1,252) (2,792) (1,276) (2,856)
Reconciliation to
net cash
Opening cash balance 3,204 5,949 3,132 5,941
Decrease in cash (1,252) (2,792) (1,276) (2,856)
Foreign exchange movements (30) 47 (30) 47
18 1,922 3,204 1,826 3,132
The notes form part of these financial statements.
Notes to the Consolidated Financial Statements
For the 12 month period ended 31 December 2013
1. NATURE OF OPERATIONS AND GENERAL INFORMATION
China Africa Resources plc's and subsidiaries' (the Group's)
principal activities include exploration and evaluation of mining
assets.
China Africa Resources plc is incorporated and domiciled in
England. The address of China Africa Resources plc's registered
office, which is also its principal place of business, is 180
Piccadilly, London, W1J 9HF. China Africa Resources plc's shares
are listed on the Alternative Investment Market of the London Stock
Exchange.
China Africa Resources' financial statements are presented in
United States dollars (US$), which is also the functional currency
of the parent company.
These consolidated financial statements were approved for issue
by the Board of Directors on 13 March 2014.
2. STANDARDS AND INTERPRETATIONS NOT YET APPLIED BY THE GROUP
2.1 Overall considerations
The Company has adopted all new interpretations, revisions and
amendments to IFRSs issued by the International Accounting
Standards Board.
The adoption had no significant effects on current, prior or
future periods due to the first-time application of these new
requirements in respect of presentation, recognition and
measurement. An overview of relevant new standards, amendments and
interpretations to IFRS's issued but not yet effective is given in
note 2.2.
2.2 Standards, amendments and interpretations to existing
standards that are not yet effective and have not been adopted
early by the Company
At the date of authorisation of these financial statements,
certain new standards, amendments and interpretations to existing
standards have been published but are not yet effective, and have
not been adopted early by the Company.
Management anticipates that all of the pronouncements will be
adopted in the Company's accounting policy for the first period
beginning after the effective date of the pronouncement. The new
standards and interpretations are not expected to have a material
impact on the Company's financial statements.
Effective period
commencing on
or after
IFRS 10 - Consolidated Financial Statements 1 January 2014
-----------------
IFRS 11 - Joint Arrangements 1 January 2014
-----------------
IFRS 12 - Disclosure of Interests in Other 1 January 2014
Entities
-----------------
IAS 27 - Separate Financial Statements 1 January 2014
-----------------
IAS 28 - Investments in Associates and Joint 1 January 2014
Ventures
-----------------
IFRS 10, 11 and 12* - Amendments - Transition 1 January 2014
Guidance
-----------------
IAS 32 Amendment - Offsetting Financial 1 January 2014
Assets and Financial Liabilities
-----------------
IFRS 10,12 and IAS 27* - Amendments - Investment 1 January 2014
Entities
-----------------
IFRS 9* - Financial Instruments To be confirmed
-----------------
IAS 36 Amendment - Recoverable Amounts Disclosures 1 January 2014
for Non-Financial Assets
-----------------
IAS 39 Amendment - Novation of Derivatives 1 January 2014
and Continuation of Hedge Accounting
-----------------
IFRIC 21 Levies 1 January 2014
-----------------
IAS 39 Amendment - Novation of Derivatives 1 January 2014
and Continuation of Hedge Accounting
-----------------
IAS 19 Amendment - Defined Benefit Plans: 1 July 2014
Employee Contributions
-----------------
Annual Improvements to IFRSs 2010-2012 Cycle 1 July 2014
-----------------
Annual Improvements to IFRSs 2011-2013 Cycle 1 July 2014
-----------------
* not yet endorsed by the European Union
The Company is currently assessing the impact of these
standards, and initial indications suggest that they are not
expected to have a significant impact on its financial
statements.
Based on the Company's current business model and accounting
policies, management does not expect material impacts on the
Company's financial statements when the new standards and
interpretations become effective.
3. SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by
the European Union.
The principal accounting policies are summarised below.
Going concern
The Group has sufficient funds to cover overheads for the
foreseeable future. The development of the Group's exploration
asset will require significant external funding above the Group's
existing working capital. The Group have met all existing licence
commitments and plan to consider a variety of funding options over
the forthcoming year.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 31 December each year. Control is
achieved where the Company has the power to govern the financial
and operating policies of an investee entity so as to obtain
benefits from its activities.
The results of subsidiaries acquired or disposed of during the
period are included in the consolidated profit and loss from the
effective date of acquisition or up to the effective date of
disposal, as appropriate.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used
into line with those used by the Group.
All intra-Group transactions, balances, income and expenses and
intra-Group unrealised profits and losses are eliminated on
consolidation.
Intangible assets
Exploration and evaluation costs
Exploration and evaluation expenditure in relation to each
separate area of interest are recognised as an exploration and
evaluation asset in the period in which they are incurred, where
the following conditions are satisfied:
(i) the rights to tenure of the area of interest are current; and
(ii) at least one of the following conditions must also be met:
(a) the exploration and evaluation expenditures are expected to
be recouped through successful development and exploration of the
area of interest, or alternatively, by its sale; or
(b) exploration and evaluation activities in the area of
interest have not, at the reporting date, reached a stage which
permits a reasonable assessment of the existence or otherwise of
economically recoverable reserves, and active and significant
operations in, or in relation to, the area of interest are
continuing.
Exploration and evaluation assets are initially measured at cost
and include the acquisition of rights to explore, studies,
exploratory drilling, trenching and sampling and associated
activities and an allocation of depreciation and amortisation of
assets used in exploration and evaluation activities. General,
administrative and any share-based payment costs are only included
in the measurement of exploration and evaluation costs where they
are related directly to exploration and evaluation activities in a
particular area of interest.
Evaluation expenditure is transferred to property, plant and
equipment upon achieving a bankable feasibility study.
Property, plant and equipment
Property, plant and equipment are recorded at cost, net of
accumulated depreciation and any provision for impairment.
Depreciation is provided using the straight-line method to write
off the cost of the asset less any residual value over its useful
economic life as follows:
Plant and machinery 3 to 15 years
Impairment
At each reporting date, the Group reviews the carrying amounts
of its property, plant and equipment and intangible assets to
determine whether there is any indication that those assets have
suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss (if any). Where the asset does
not generate cash flows that are independent from other assets, the
Group estimates the recoverable amount of the cash-generating unit
to which the asset belongs.
The recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised as an expense
immediately.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (cash-generating unit) in prior years. A reversal of
an impairment loss is recognised as income immediately, unless the
relevant asset is carried at a revalued amount, in which case the
reversal of the impairment loss is treated as a revaluation
increase.
Foreign currency translation
The individual financial statements of each Group company are
presented in the currency of the primary economic environment in
which it operates (its functional currency). For the purpose of the
consolidated financial statements, the results and financial
position of each Group company are expressed in US dollars, which
is the functional currency of the Company and the presentation
currency for the consolidated financial statements.
In preparing the financial statements of the individual
companies, transactions in currencies other than the entity's
functional currency (foreign currencies) are recorded at the rates
of exchange prevailing on the dates of the transactions. At each
reporting date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates
prevailing on the reporting date. Non-monetary items carried at
fair value that are denominated in foreign currencies are
translated at the rates prevailing at the date when the fair value
was determined. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated.
Exchange differences arising, if any, are recognised in profit or
loss.
Exchange differences are recognised in profit or loss in the
period in which they arise, except for:
-- exchange differences which relate to assets under
construction for future productive use, which are included in the
cost of those assets when they are regarded as an adjustment to
interest costs on foreign currency borrowings; or
-- exchange differences on monetary items receivable from or
payable to a foreign operation for which settlement is neither
planned nor likely to occur, which form part of the net investment
in a foreign operation, and which are recognised in other
comprehensive income and reclassified from equity to profit or loss
on disposal of the net investment.
Exchange differences recognised in the profit or loss in the
Group entities' separate financial statements on the translation of
long-term monetary items forming part of the Group's net investment
in the overseas operation concerned are reclassified to other
comprehensive income and accumulated in the foreign exchange
reserve on consolidation.
On consolidation, exchange differences arising from the
translation of the net investment in foreign entities are
recognised in other comprehensive income and accumulated in the
Group's foreign currency translation reserve. On disposal of a
foreign operation, the cumulative amount of exchange differences
relating to that operation is reclassified from equity to profit or
loss.
Taxes
The tax expense represents the sum of the tax currently payable
and deferred tax.
The tax currently payable is based on taxable profit for the
period. Taxable profit differs from net profit as reported profit
or loss because it excludes items of income or expense that are
taxable or deductible in other years, and it further excludes items
that are never taxable or deductible. The Group's liability for
current tax is calculated using tax rates that have been enacted or
substantively enacted by the reporting date.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences, and
deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference arises
from the initial recognition of goodwill or from the initial
recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the taxable
profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and associates,
and interest in joint ventures, except where the Group is able to
control the reversal of the temporary difference and it is expected
that the temporary difference will not reverse in the foreseeable
future. In addition, tax losses available to be carried forward, as
well as other tax credits to the Group, are assessed for
recognition as deferred tax assets.
The carrying amount of deferred tax assets is reviewed at each
reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited in profit or loss,
except when it relates to items charged or credited directly to
equity, in which case the deferred tax is also dealt with in
equity. Tax relating to items recognised in other comprehensive
income is recognised in other comprehensive income.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to taxes levied by the
same taxation authority. The Group intends to settle its current
tax assets and liabilities on a net basis.
Financial instruments, assets and liabilities
The Group uses financial instruments comprising cash, trade
receivables and trade payables that arise from its operations.
Financial assets
The only financial assets currently held by the Group are
classified as loans and receivables and cash and cash equivalents.
These assets are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They
are initially recognised at fair value plus transaction costs that
are directly attributable to their acquisition or issue, and are
subsequently carried at amortised cost using the effective interest
rate method, less provision for impairment.
Impairment provisions are recognised when there is objective
evidence (such as significant financial difficulties on the part of
the counterparty, or default or significant delay in payment) that
the Group will be unable to collect all of the amounts due under
the terms receivable, the amount of such a provision being the
difference between the net carrying amount and the present value of
the future expected cash flows associated with the impaired
receivable. For receivables, which are reported net, such
provisions are recorded in a separate allowance account, with the
loss being recognised within administrative expenses in the
consolidated statement of comprehensive income. On confirmation
that the receivable will not be collectable, the gross carrying
value of the asset is written off against the associated
provision.
Loans and receivables comprise trade and other receivables and
cash and cash equivalents in the statement of financial
position.
Included within loans and receivables are cash and cash
equivalents which include cash in hand and other short-term highly
liquid investments with a maturity of three months or less. Any
interest earned is accrued monthly and classified as interest.
Short-term deposits comprise deposits made for varying periods of
between one day and three months.
For the purposes of the statement of cash flows, cash and cash
equivalents consist of cash and cash equivalents, as defined
above.
De-recognition of financial assets
The Group derecognises a financial asset only when the
contractual rights to the cash flows from the asset expire or it
transfers the asset and substantially all the risk and rewards of
ownership of the asset to another entity.
Financial liabilities
Trade payables and other short-term monetary liabilities are all
classified as other financial liabilities. At present, the Group
does not have any liabilities classified as fair value through
profit or loss.
Trade payables and other short-term monetary liabilities are
initially recognised at fair value and subsequently carried at
amortised cost using the effective interest method. All interest
and other borrowing costs incurred in connection with the above are
expensed as incurred and reported as part of financing costs in the
consolidated statement of comprehensive income.
De-recognition of financial liabilities
The Group derecognises financial liabilities when, and only
when, the Group's obligations are discharged, cancelled or they
expire.
Investment in subsidiaries
In its separate financial statements the Company recognises its
investments in subsidiaries at cost, less any provision for
impairment. The cost of acquisition includes directly attributable
professional fees and other expenses incurred in connection with
the acquisition. It also includes share-based payments issued to
employees of the Company for services provided to subsidiaries.
Finance income
Finance income is recognised as interest accrued using the
effective interest method.
Merger relief
The difference between the fair value of an acquisition and the
nominal value of the shares allotted in a share exchange has been
credited to a merger reserve account, in accordance with the merger
relief provisions of the Companies Act 2006, and accordingly no
share premium for such transactions has been set up.
Related parties
Parties are considered related if one party has the ability to
control the other party or exercises significant influence over the
other party in making financial and operating decisions.
Individuals, associates or companies that directly or indirectly
control or are controlled by or under common control are considered
related parties.
4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Group's accounting policies, described
in note 3, the directors are required to make judgements, estimates
and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period, or in the period of the revision and future
periods if the revision affects both current and future
periods.
Critical judgements in applying the Group's accounting
policies
The following are the critical judgements that the directors
have made in the process of applying the Group's accounting
policies and that have the most significant effect on the amounts
recognised in financial statements.
Impairment of intangibles
The Group determines whether intangibles are impaired when facts
and circumstances suggest that the carrying amount may exceed its
recoverable amount. Such indicators include the point at which a
determination is made as to whether or not commercial reserves
exist. The carrying amount of intangibles at 31 December 2013 was
US$6.3 million (2012: US$6.2 million); refer to note 13.
5. OPERATING SEGMENTS
Operating segments are reported in a manner consistent with the
internal reporting provided to the Board, who are responsible for
allocating resources and assessing performance of the operating
segment.
The Group had no operating revenue during the year.
The Group currently has one operating segment, the mining
segment. This segment is currently engaged in the evaluation of the
Berg Aukas mine in Namibia.
There is only one segment, therefore all disclosures are within
other notes to the accounts.
6. OPERATING LOSS
Year ended Year ended
31 December 31 December
This is stated after charging/(crediting): 2013 2012
US$'000 US$'000
Staff costs (note 8) 104 316
Auditor's remuneration (note 7) 44 45
Depreciation 5 5
7. AUDITOR'S REMUNERATION
The remuneration of the auditor is further analysed as
follows:
Year ended Year ended
31 December 31 December
2013 2012
US$'000 US$'000
Remuneration receivable by the
company's auditors for the audit
of
these accounts 41 42
Fees payable to the company's auditor
and its associates
for other services:
Remuneration receivable by associates
of the company's auditors for 3 3
the audit of subsidiary accounts
Total remuneration 44 45
8. EMPLOYEES AND KEY MANAGEMENT
The total directors' emoluments for the period were US$94,000
(2012: US$96,000) and those of the highest paid director were
US$47,000 (2012: US$48,000). Detailed disclosure of directors'
remuneration is disclosed in the directors' report.
The Group averaged 8 (2012: 8) employees during the period ended
31 December 2013.
Key management personnel as defined under IAS 24 have been
identified as the Board of Directors.
9. LOSS FOR THE FINANCIAL PERIOD
The Company has taken advantage of Section 408 of the Companies
Act 2006 and has not included its own statement of comprehensive
income in these financial statements. The Company's loss for the
period was US$242,000 (2012: US$82,000).
10. NET FINANCE EXPENSE
Year ended Year ended
31 December 31 December
2013 2012
US$'000 US$'000
Finance Income
Bank deposits 1 14
Exchange gains - 178
Total interest revenue 1 192
Finance Costs
Exchange losses (7) -
Total interest expense (7) -
Investment revenue earned on financial
assets analysed by category of
asset is as follows:
Loans & receivables (including
cash and bank balances) 1 14
11. INCOME TAX EXPENSE
Year ended Year ended
31 December 31 December
2013 2012
US$'000 US$'000
Current tax:
UK corporation tax on the result
for the year/ period - -
------------ ------------
Total current taxation - -
Deferred taxation - -
Taxation - -
Differences explained below:
Loss before tax (689) (495)
Loss before tax multiplied by the
standard CT rate 23.25% (24.5%) (160) (121)
Effect of:
Expenses not deductible for tax
purposes 2 2
Differences in local tax rates (104) 25
Tax losses for future utilisation 262 94
Tax charge for the period - -
Unrecognised deferred tax provision
Fixed asset timing differences (1,102) (921)
Short term timing differences (303) (72)
Tax losses UK (85) (142)
Tax losses Namibia (172) (92)
(1,662) (1,227)
The deferred tax assets are currently unrecognised as the
likelihood of sufficient future taxable profits does not yet meet
the definition of "probable".
The estimated value of the potential deferred tax asset in
respect of losses was measured using an expected tax rate of 20%
and 37.5% for the UK and Namibian tax losses respectively (2012:
23%, 37.5%).
All the unrecognised deferred tax balances have been calculated
using the rate at which these assets are expected to unwind, being
20% for the UK and 37.5% for Namibia. The March 2013 Budget
included provisions for the main rate of UK corporation tax to
reduce from 23% to 21% on 1 April 2014, and to 20% on 1 April 2015.
This will reduce the Company's future tax charge accordingly. The
rates of 21% and 20% were substantially enacted on 2 July 2013.
12. LOSS PER SHARE
The calculation of basic and diluted loss per ordinary share is
based on the following data:
Year ended Year ended
31 December 31 December
2013 2012
Basic and diluted loss per share
(US cents) (0.03c) (0.02c)
Weighted average number of shares
for basic and diluted loss per
share 23,076,900 23,076,900
The basic and diluted earnings per share have been calculated
using the loss attributable to shareholders of the parent company,
China Africa Resources plc, of US$689,000 (2012: US$495,000) as the
numerator, i.e. no adjustment to profit was necessary. The basic
and dilutive earnings per share are the same as the Group made a
loss in the period.
13. INTANGIBLE ASSETS
The mining licences and evaluation costs relate to the Berg
Aukas mine in Namibia.
Mining Evaluation Totals
licenses Costs
US$'000 US$'000 US$'000
Cost:
At 1 January 2012 4,156 149 4,305
Additions - 1,990 1,990
Exchange adjustment - (77) (77)
At 31 December 2012 4,156 2,062 6,218
Net book value at 31 December 2012 4,156 2,062 6,218
Cost
At 1 January 2013 4,156 2,062 6,218
Additions - 655 655
Exchange adjustment - (544) (544)
At 31 December 2013 4,156 2,173 6,329
Net book value at 31 December 2013 4,156 2,173 6,329
14. PROPERTY, PLANT AND EQUIPMENT
Totals
US$'000
Cost
At 1 January 2012 -
Additions 29
Exchange adjustment (1)
At 31 December 2012 28
Depreciation
At 1 January 2012 -
Charge for the year for depreciation 5
Exchange adjustment -
At 31 December 2012 5
Net book value at 31 December 2012 23
Cost
At 1 January 2013 28
Exchange adjustment (5)
At 31 December 2013 23
Depreciation
At 1 January 2013 5
Charge for the year for depreciation 5
Exchange adjustment (1)
At 31 December 2013 9
Net book value at 31 December 2013 14
All property plant and equipment can be classified as mobile
plant.
15. INVESTMENT IN SUBSIDIARY
The investments at the reporting date in the share capital of
companies include the following:
Company Company
as at as at
31 December 31 December
2013 2012
US$'000 US$'000
China Africa Resources Namibia
(pty) Ltd 4,156 4,156
China Africa Resources Namibia (pty) Ltd is 100% owned by China
Africa Resources plc and is incorporated in the Republic of
Namibia.
On 1 August 2011 the Group acquired 100% of the voting equity
instruments of China Africa Resources Namibia (pty) Ltd, a company
whose principle activity is exploration and evaluation of mining
assets in Namibia. The company was acquired by the issuing of
6,326,923 ordinary 1p shares at a price of 40p, being the price on
the date of acquisition. The acquisition price was converted to US
dollars at an exchange rate of 1.642. The principal reason for this
acquisition was to develop the Berg Aukas mine in Namibia.
16. LOANS TO SUBSIDARIES
Company Company
as at as at
31 December 31 December
2013 2012
US$'000 US$'000
China Africa Resources (pty) Ltd 4,053 3,085
4,053 3,085
In the prior year Company cashflow an amount of $600,000 was
classified as a cash outflow to a subsidiary company; however, this
was a non-cash transaction and the cashflow has been adjusted
accordingly.
The loan has no fixed terms of repayment and is unsecured.
Interest accrues on the loan at the 12 month US Dollar LIBOR
+2%.
17. TRADE AND OTHER RECEIVABLES
Group Group Company Group
as at as at as at as at
31 December 31 December 31 December 31 December
2013 2012 2013 2012
US$'000 US$'000 US$'000 US$'000
Prepayments 63 10 63 10
Sales Taxes 14 228 9 46
77 238 72 56
18. CASH
Group Group Company Company
as at as at as at as at
31 December 31 December 31 December 31 December
2013 2012 2013 2012
US$'000 US$'000 US$'000 US$'000
Cash and short term
deposits 1,922 3,204 1,826 3,132
19. TRADE AND OTHER PAYABLES - CURRENT
Group Group Company Company
as at as at as at as at
31 December 31 December 31 December 31 December
2013 2012 2013 2012
US$'000 US$'000 US$'000 US$'000
Trade payables 83 165 83 165
Other payables and
accruals 53 49 48 46
------------ ------------ ------------ ------------
136 214 131 211
Trade and other payables are non-interest bearing and normally
settled in the month following date of invoice.
20. SHARE CAPITAL
Allotted, called up and 31 December 31 December 31 December 31 December
fully paid 2013 2012 2013 2012
US$ US$ GBP GBP
Ordinary shares of 0.1p
converted at an exchange
rate of GBP:USD 1.642 377,001 377,001 230,769 230,769
31 December 31 December
2013 2012
Number of ordinary 0.1p
shares in issue 23,076,924 23,076,924
Options to subscribe for ordinary shares of the Company at 31
December 2013 and 31 December 2012 are as follows:
Date of Number of Price per Expiry
grant options option date
1 August 1 August
2011 230,769 42.3p 2014
No new share options were issued in the year.
All of the 230,769 outstanding options are exercisable at a
price higher than the current share price. All options vest on the
grant date.
The weighted average exercise price of share options was
US$0.423 at 31 December 2013 (2012: US$0.423). The weighted average
remaining contractual life of options outstanding at the end of the
year was seven months.
Fair value of options
Inputs to the valuation model
The fair values of options granted have been calculated using
the Black-Scholes pricing model, which takes into account specific
factors such as the vesting periods, the expected dividend yield on
the Company's shares and expected early exercise of share
options.
Grant date 1 Aug 2011
Share price at date of grant GBP0.423 (US$0.695)
Exercise price GBP0.423 (US$0.695)
Volatility 83%
Option life 3 years
Dividend yield -
Risk-free investment rate 0.68%
Volatility has been based on a peer group of companies, as
considered relevant by the directors, due to the lack of trading
history of the Company.
Based on the assumptions, the fair values of the options granted
are estimated to be:
Grant date 1 Aug 2011
Fair value GBP0.173 (US$0.284)
21. CAPITAL AND CONTRACTUAL COMMITMENTS
There was no capital or contractual commitments at 31 December
2013 (2012: nil).
22. FINANCIAL INSTRUMENTS
Significant accounting policies
Details of the significant accounting policies and methods
adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are
recognised, in respect of each class of financial asset, financial
liability and equity instrument, are disclosed in note 3.
The only financial assets currently held by the Group are
classified as loans and receivables and cash and cash
equivalents.
Categories of financial instruments
The carrying amounts presented in the statement of financial
position relate to the following categories of assets and
liabilities.
Carrying value Carrying value
Group Group Company Company
as at as at as at as at
31 December 31 December 31 December 31 December
2013 2012 2013 2012
US$'000 US$'000 US$'000 US$'000
Financial assets
Current
Loans and receivables
Intercompany receivables - - 4,053 3,085
Trade and other receivables 14 228 9 46
Cash and cash equivalents 1,922 3,204 1,826 3,132
1,936 3,432 5,888 6,263
============ ============ ============ ============
Financial liabilities
Current
Amortised cost (136) (214) (131) (211)
(136) (214) (131) (211)
============ ============ ============ ============
As at 31 December 2013 there were no trade receivables that were
past due and all are believed to be recoverable. (2012: nil).
All financial liabilities are repayable within one year.
The fair value is equivalent to book value for current assets
and liabilities. Non-current liabilities are discounted at
prevailing interest rates for both the long and short-term
elements.
The main risks arising from the Group's financial instruments
are liquidity risk, interest rate risk and foreign currency risk.
The directors review and agree policies for managing these risks,
and these are summarised below.
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.
The directors monitor cash flow on a daily basis and at monthly
Board meetings in the context of their expectations for the
business, in order to ensure sufficient liquidity is available to
meet foreseeable needs.
Credit risk
The Company monitors the credit risk of its intercompany loan
through its management accounts and assesses its ability to repay
it. It also monitors the political risk within Namibia and its
effect on the loan's credit worthiness.
Interest rate risk
The Group and Company currently finances its operations through
equity raisings. There are no borrowings and therefore no
significant exposure to interest rate fluctuations.
The Group and Company manages the interest rate risk associated
with the Group and Company cash assets by ensuring that interest
rates are as favourable as possible, whether this is through
investment in floating or fixed interest rate deposits, whilst
managing the access the Group and Company requires to the funds for
working capital purposes.
The interest rate profile of the Group's cash and cash
equivalents as at 31 December 2013 was as follows:
US Pound Namibian
as at 31 December
2013 Dollars Sterling Dollars Total
$'000 $'000 $'000 $'000
Short term deposits with
fixed interest rates - - -
Cash at bank with no interest
rates 1,178 648 96 1,922
1,178 648 96 1,922
US Pound Namibian
as at 31 December
2012 Dollars Sterling Dollars Total
$'000 $'000 $'000 $'000
Short term deposits with
fixed interest rates 1,750 809 - 2,559
Cash at bank with no interest
rates 195 377 73 645
1,945 1,186 73 3,204
At the reporting date, cash at bank floating interest rate is
accruing weighted average interest of nil (2012: 0.2%). As required
by IFRS 7, the Group has estimated the interest rate sensitivity on
period end balances and determined that a one percentage point
increase or decrease in the interest rate earned on short-term
deposits would have caused a corresponding increase or decrease in
net income for the amount of nil (2012: US$26,000).
Foreign currency risk management
The functional currencies of the companies in the Group are US
dollars and Namibian dollars. The Group does not hedge against the
effects of movements in exchange rates. These risks are monitored
by the Board on a regular basis.
The following table discloses the period-end rates applied by
the Group for the purposes of producing the financial
statements:
Translation 2013 2012
Period
end 1 GBP - USD 1.65 1.62
Period
end 1 USD - NAD 10.49 8.47
The carrying amounts of the Group's foreign currency denominated
monetary assets and monetary liabilities at the reporting date are
as follows:
As of 31 December 2013 the Group's net exposure to foreign
exchange risk was as follows:
Group Group
as at as at
31 December 31 December
Net foreign currency 2013 2012
financial assets/ liabilities US$'000 US$'000
United states dollars
Pound sterling 648 1,186
Namibian dollars
648 1,186
============ ============
The following table details the Group's sensitivity to a 10%
increase and decrease in the US dollar against the relevant foreign
currencies. 10% is the sensitivity rate used when reporting foreign
currency risk internally to key management personnel and represents
management's assessment of the reasonably possible change in
foreign exchange rates. The sensitivity analysis includes only
outstanding foreign currency denominated monetary items and adjusts
their translation at the period end for a 10% change in foreign
currency rates. The sensitivity analysis includes external loans as
well as loans to foreign operations within the Group where the
denomination of the loan is in a currency other than the currency
of the lender or the borrower. A positive number below indicates an
increase in profit and equity where the US dollar strengthens 10%
against the relevant currency. For a 10% weakening of the US dollar
against the relevant currency, there would be an equal and opposite
impact on the profit and equity, and the balances below would be
negative.
British pound Namibian British pound Namibian
currency dollar currency currency dollar currency
impact impact impact impact
31 December 31 December 31 December 31 December
2013 2013 2012 2012
US$'000 US$'000 US$'000 US$'000
Effect on
loss +10% 66 10 123 25
-10% 66 10 123 25
Effect on
equity +10% 66 10 123 25
-10% 66 10 123 25
23. EVENTS SUBSEQUENT TO REPORTING DATE
There were no significant events subsequent to the reporting
date.
24. RELATED PARTY TRANSACTIONS
31 December 31 December
2013 2012
US$'000 US$'000
Group and company
The group and company had the following
transactions with
Weatherly International plc a 25% shareholder
of the group.
Management Fee paid 552 552
Trade payables (55) (110)
Company only
Transactions with China Africa Resources
Namibia (pty) Ltd
a wholly owned subsidiary
Management Fee charged 600 600
Interest charged 85 56
Loans receivable 4,053 3,085
The ultimate holding company of China Africa Resources plc is
East China Mineral Exploration and Development Bureau for
Non-Ferrous Metals.
25. CAPITAL MANAGEMENT POLICIES AND PROCEDURES
The Group considers its capital to comprise its ordinary share
capital, share premium and accumulated retained losses, as well as
the reserves (consisting of share-based payments reserve, foreign
currency translation reserve and merger relief reserve).
The Group's objective when maintaining capital is to safeguard
the entity's ability to continue as a going concern, so that it can
provide returns for shareholders and benefits for other
stakeholders.
The Company meets its capital needs by equity financing. The
Group sets the amount of capital it requires to fund the Group's
project evaluation costs and administration expenses. The Group
manages its capital structure and makes adjustments in the light of
changes in economic conditions and the risk characteristics of the
underlying assets.
The Company and Group do not have any derivative instruments or
hedging instruments. It has been determined that a sensitivity
analysis will not be representative of the Company's and Group's
position in relation to market risk, and therefore such an analysis
has not been undertaken.
For further information contact:
Rod Webster, Chief Executive Officer China Africa Resources plc
+44 (0)207 917 2989
Max Herbert, Company Secretary
Samantha Harrison RFC Ambrian Limited +44 (0)203 440 6800
Nominated Advisor and Broker
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SFAFMDFLSEID
Pembridge Resources (LSE:PERE)
Gráfico Histórico do Ativo
De Jun 2024 até Jul 2024
Pembridge Resources (LSE:PERE)
Gráfico Histórico do Ativo
De Jul 2023 até Jul 2024