Final Results

Asia Energy PLC 04 November 2005 Asia Energy Plc (AIM: AEN) PRELIMINARY ANNOUNCEMENT FOR THE YEAR ENDED 30 JUNE 2005 Highlights •Phulbari deposit exploration completed with more than 100 drill holes bored •Resource modelled and calculated at 572 million tonnes, with 90% in Measured and Indicated categories to JORC standards •Coal basin remains open for more exploration to the south •Products defined by laboratory testing as low ash metallurgical, export thermal and domestic thermal •Mining activity is expected to start in late 2006 •Full production target 15 million saleable tonnes per annum by 2013 •Up to 12 Mtpa (million tonnes per annum) for export •Projected Life of Mine is 30 plus years •Environmental Clearance for open pit mine approved by Government of Bangladesh (GoB) in September 2005 •Feasibility Study and Scheme of Development for mine approval lodged with GoB in October 2005 •Power station proposal lodged with GoB in October 2005 •Definitive Feasibility Study due for completion end of Q4 2005 with the Banking Finance Process to fund the development of the Project to commence early 2006 •The Company has received numerous approaches from major coal producers, coal consumers and coal trading companies who have all expressed interest in participating in the development of the Project For further information: Michael Frayne, Joint Managing Director Justine Howarth, Cathy Malins michael.frayne@asia-energy.com Parkgreen Communications David Lenigas, Joint Managing Director Tel: +44 (0) 20 7493 3713 david.lenigas@asia-energy.com Justine.howarth@parkgreenmedia.com Asia Energy PLC cathy.malins@parkgreenmedia.com Tel: +44 (0) 20 7079 1798, Fax: +44 (0) 20 7491 2758 info@asia-energy.com; www.asia-energy.com Chairman's Statement Asia Energy PLC ('the Company', 'Asia Energy') made significant progress over the past 12 months towards achieving the goal of starting an open pit coal mine at Phulbari in Northwest Bangladesh in 2006. A year ago I reported that we had embarked on a Definitive Feasibility Study (DFS) for the Project and I can confirm that this is nearing completion and that all the major exploratory work for the DFS is now completed. The past year was an exciting time for the Company, culminating in October 2005 with the official presentation to the Government of Bangladesh (GoB) of the Feasibility Study and Scheme of Development for the mine and a proposal to build a mine-mouth power station. In August 2005 the Company issued an updated resource statement following completion of an intensive programme of drilling, and gravity and seismic surveying. The Phulbari basin now has a JORC estimated resource of 572 million tonnes (more than 90% in the Measured and Indicated categories), with the prospect that further drilling at the southern end will reveal still more coal. A year ago we reported a JORC resource of 370 million tonnes (mostly in the Indicated and Inferred categories) and we said at the time we were confident the resource would increase during the course of the DFS work. The Company, meanwhile, maintained its commitment to meeting the highest standards in environmental and social management. More than 300 specialist field workers and consultants were employed to complete Environmental and Social Impact Assessments. These were undertaken in accordance with 'best practice', notably the Equator Principles of the World Bank's International Finance Corporation (IFC), and the IFC's environmental and social safeguard policies with the World Bank's specific guidelines on coal mining. In September 2005, the Department of Environment of the GoB approved the Environmental Impact Assessment and granted the future mine Environmental Clearance. Management plans, focused on sustainable development, were produced with the means to mitigate and handle all the environmental and social impacts of the mine. A key component was a draft Resettlement Action Plan which will ensure that all people who are relocated as a result of the mine are compensated fairly and fully. The overarching objective is that no one is disadvantaged by the mine. To this end, we modified the mine design to ensure that it avoided most of Phulbari Township, the biggest urban centre in the area. The Company recruited several additional executives to meet its demanding schedules and to prepare for the upcoming mining operations. William McIntosh, a mining engineer with extensive experience in open pit coal mining, was appointed to the Board as Executive Director for Project Development and Gary Lye, with a strong background in mine development, was promoted to CEO Bangladesh. I am confident that we have the right team in place to carry the Project forward. More than 20 leading international and Bangladeshi organisations and consultancies were deployed in putting together the major reports during the year. These included SMEC International Pty Ltd, on environmental and social issues, GHD Pty Ltd, on coal resource evaluation and mine infrastructure, MineConsult Pty Ltd, on mine design and economic modelling, QCC Resources Pty Ltd, on coal quality, Sandwell Engineering Inc, for port infrastructure design, and Demas Dredging Consultants with Quay Marine Services and CANARAIL for the rail transport, navigation and maritime components. Barclays Capital continued to provide the lead in financing the Project. They have identified numerous options to fund the development of the Project. We anticipate finalising the optimal combination of these finance options in early 2006. I wish to thank our Directors, employees, consultants and advisers for their tremendous efforts in achieving so much in the past year. I would also like to thank all our shareholders for their continued confidence in the Company. The Phulbari Coal Project is a major development opportunity both for Bangladesh and for Asia Energy and I and my fellow Directors look forward to leading this exciting Project through to coal production. Christopher Eager Chairman ASIA ENERGY PLC GROUP PROFIT AND LOSS ACCOUNT FOR THE PERIOD ENDED 30 JUNE 2005 Notes 30 June 2005 30 June 2004(a) £ £ Administrative expenses (1,328,579) (497,171) ---------- ---------- Group operating loss 3 (1,328,579) (497,171) ---------- ---------- Group operating loss and loss on ordinary activities before interest and taxation (1,328,579) (497,171) Interest receivable 5 447,409 101,106 ---------- ---------- Loss on ordinary activities before taxation (881,170) (396,065) Tax on loss on ordinary activities 6 - - ---------- ---------- Loss on ordinary activities after taxation (881,170) (396,065) ---------- ---------- Loss for the financial year attributable to members of the parent company (881,170) (396,065) ---------- ---------- Retained loss for the period 17 (881,170) (396,065) ========== ========== Basic and diluted loss per share (pence) 7 (2.3)p (2.2)p The above results relate solely to continuing operating activity of the Group. GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE PERIOD ENDED 30 JUNE 2005 30 June 2005 £ 30 June 2004(a) £ Loss for the financial year attributable to members of the parent company (881,170) (396,065) --------- --------- Total recognised gains and losses relating to the period (881,170) (396,065) ========= ========= ASIA ENERGY PLC GROUP BALANCE SHEET AS AT 30 JUNE 2005 Notes 30 June 2005 30 June 2004(a) £ £ Fixed assets Intangible assets 8 10,287,033 2,121,004 Tangible assets 9 361,280 154,475 --------- --------- 10,648,313 2,275,479 --------- --------- Current assets Stocks 11 - 36,564 Debtors: Amounts falling due within one year 12 221,886 107,561 Current asset investments 13 15,410 8,095 Cash at bank and in hand 5,642,722 12,165,535 --------- --------- 5,880,018 12,317,755 Creditors: Amounts falling due within one year 14 (1,180,337) (170,359) --------- --------- Net current assets 4,699,681 12,147,396 --------- --------- --------- --------- Total assets less current liabilities 15,347,994 14,422,875 --------- --------- --------- --------- Net assets 15,347,994 14,422,875 ========= ========= Capital and reserves Called up share capital 16 4,001,103 3,760,264 Share premium account 17 12,624,126 11,058,676 Profit and loss account 17 (1,277,235) (396,065) --------- --------- Equity shareholders' funds 17 15,347,994 14,422,875 ========= ========= The Financial Statements were approved by the Board on the 2 November 2005 and signed on its behalf. .............................. Michael Frayne Director ASIA ENERGY PLC COMPANY BALANCE SHEET AS AT 30 JUNE 2005 Notes 30 June 2005 30 June 2004(a) £ £ Fixed assets Investments 10 1,350,000 1,350,000 --------- --------- 1,350,000 1,350,000 --------- --------- Current assets Debtors: Amounts falling due within one year 12 9,283,772 1,282,333 Cash at bank and in hand 5,522,112 12,013,862 --------- --------- 14,805,884 13,296,195 Creditors: Amounts falling due within one year 14 (113,727) (59,762) --------- --------- Net current assets 14,692,157 13,236,433 --------- --------- Total assets less current liabilities 16,042,157 14,586,433 --------- --------- --------- --------- Net assets 16,042,157 14,586,433 ========= ========= Capital and reserves Called up share capital 16 4,001,103 3,760,264 Share premium account 17 12,624,126 11,058,676 Profit and loss account 17 (583,072) (232,507) --------- --------- Equity shareholders' funds 17 16,042,157 14,586,433 ========= ========= ASIA ENERGY PLC GROUP STATEMENT OF CASH FLOWS FOR THE PERIOD ENDED 30 JUNE 2005 Notes 30 June 2005 30 June 2004(a) £ £ Net cash (outflow) from operating activities 18(a) (1,273,929) (625,300) Returns on investment and servicing of finance Interest received 492,936 55,579 Interest paid - (5,317) Taxation - - Capital expenditure and financial investment Payments to acquire intangible fixed assets (7,269,211) (466,155) Payments to acquire tangible fixed assets (256,583) (121,120) (Payments to)/receipts from security deposits (7,315) 5,480 Acquisitions and disposals Net cash acquired with subsidiary undertaking 10 - 33,014 -------- --------- Net cash (outflow) before management of liquid resources and financing (8,314,102) (1,123,819) -------- --------- Management of liquid resources Decrease/(Increase) in short term deposits 11,000,000 (11,000,000) Financing Issue of ordinary share capital 1,806,289 14,726,977 Share issue costs (15,000) (1,268,038) Repayment of borrowings on acquisition - (165,221) -------- --------- 1,791,289 13,293,718 -------- --------- -------- --------- Increase in cash 18(b) 4,477,187 1,169,899 ======== ========= RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS Notes 30 June 2005 30 June 2004(a) £ £ Increase in funds 4,477,187 1,169,899 Repayment of borrowings of acquisitions 18(b) - (165,221) (Decrease)/Increase in short term deposits (11,000,000) 11,000,000 --------- --------- Change in net funds resulting from cash flows 18(b) (6,522,813) 12,004,678 Other non cash movements - loan acquired on acquisition 18(b) - 165,221 --------- --------- Movement in net funds (6,522,813) 12,169,899 Net funds at beginning of period 18(b) 12,165,535 - Exchange differences - (4,364) --------- --------- Net funds at 30 June 18(b) 5,642,722 12,165,535 ========= ========= 1. Accounting policies Accounting period The Company was incorporated on 26 September 2003. Previous year's results reflect the period from 26 September 2003 to 30 June 2004. Basis of preparation The Financial Statements are prepared under the historical cost convention and in accordance with applicable United Kingdom accounting standards. Fundamental Accounting Concept The Directors are of the opinion that the Group currently has sufficient funds to meet its obligations as they fall due in the foreseeable future and to complete the pre-feasibility and feasibility studies, scheduled to be completed in late 2005. The Company is currently conducting exploration activities using funds from a capital raising in April 2004. Completion of these studies, should they demonstrate the feasibility of the project, will take the Company to the next stage of development, being the commencement of operations. This stage will require further funding and appropriate approval from the Bangladesh government. The Directors are confident that the Company's coal interests will be able to be commercially realised and are confident that further funding and necessary government approvals will be obtained. The Directors have taken steps to ensure this occurs and have appointed Barclays Capital to provide advice and services in evaluating options and sources of funding, including equity, project debt, debentures, convertible debentures, export credit agencies, multi and bi-lateral agencies, off-take agreements and joint venture partners. With completion of the Banking documents including the Independent Reviews on technical, environmental and social studies, the Banking marketing process to determine the optimal combination of these finance options should commence in early 2006. On this basis, the Directors believe that the adoption of the going concern basis is justified. Basis of consolidation The Group Financial Statements consolidate the Financial Statements of Asia Energy Plc and all its subsidiary undertakings drawn up to 30 June each year. Asia Energy Corporation Proprietary Limited has been included in the Group Financial Statements using the acquisition method of accounting. Accordingly, the Group Profit and Loss Account and Statement of Cash Flows include the results and cash flows of Asia Energy Corporation Proprietary Limited from its acquisition on 18 December 2003. The purchase consideration has been allocated to the assets and liabilities on the basis of fair value at the date of acquisition. The parent company has taken advantage of section 230 of the Companies Act 1985 and has not included its own Profit and Loss Account in these Financial Statements. The parent company's loss for the year was £350,565 (2004: Loss of £232,507). Intangible assets Acquisitions Intangible assets acquired separately from a business are capitalised at cost. Intangible assets acquired as part of an acquisition of a business are capitalised separately from goodwill if the fair value can be measured reliably on initial recognition, subject to the constraint that, unless the asset has a readily ascertainable market value, the fair value is limited to an amount that does not create or increase any negative goodwill arising on the acquisition. Intangible assets, excluding development costs, created within the business are not capitalised and expenditure is charged against profits in the year in which it is incurred. Intangible assets are amortised on a straight line basis over their estimated useful lives up to a maximum of 20 years. The carrying value of intangible assets is reviewed for impairment at the end of the first full year following acquisition and in other periods if events or changes in circumstances indicate the carrying value may not be recoverable. Note 1 Continued Exploration, evaluation and development Costs carried forward Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not at balance sheet date, reached a stage which permits reasonable assessment of the existence of economically recoverable reserves. Accumulated costs in relation to an abandoned area are written off against profit in the period in which the decision to abandon the area is made. Amortisation Costs on productive areas are amortised over the life of the area of interest to which such costs relate on a unit of production output basis. Fixed Assets All fixed assets are initially recorded at cost. Depreciation Depreciation is provided on all tangible fixed assets at rates calculated to write off the cost, less estimated residual value of each asset evenly over its expected useful life as follows: Office furniture and equipment - over 3 to 15 years Field Equipment - over 3 to 15 years Vehicles - over 5 to 7 years Buildings - over 40 years The carrying values of tangible fixed assets are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Deferred tax The tax charge is based on the profit for the period and takes into account taxation deferred because of timing differences between the treatment of certain items for taxation and accounting purposes. Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events have occurred at that date that will result in an obligation to pay more, or a right to pay less or to receive more, tax in the future. In particular: •provision is made for tax on gains arising from the revaluation (and similar fair value adjustments) of fixed assets, and gains on disposal of fixed assets that have been rolled over into replacement assets, only to the extent that, at the balance sheet date, there is a binding agreement to dispose of the assets concerned. However, no provision is made where, on the basis of all available evidence at the balance sheet date, it is more likely than not that the taxable gain will be rolled over into replacement assets and charged to tax only where the replacement assets are sold; •provision is made for deferred tax that would arise on remittance of the retained earnings of overseas subsidiaries, associates and joint ventures only to the extent that, at the balance sheet date, dividends have been accrued as receivable; Note 1 Continued •Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date. •Deferred tax assets are recognised only to the extent that the directors consider that it is more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. Foreign currencies Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction or at the contracted rate. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date or if appropriate at the forward contract rate. All differences are taken to the profit and loss account. Where the trade of a foreign enterprise is more dependent on the economic environment of the parent company then the Financial Statements of the undertaking are consolidated using the Temporal method on the following basis: •Fixed assets are translated into sterling at the rates ruling on the date of acquisition. •Monetary assets and liabilities denominated in a foreign currency are translated into sterling at the foreign exchange rates ruling at the balance sheet date. •Revenue and expenses in foreign currencies are recorded in sterling at the rates ruling at the date of the transactions. •Any gains or losses arising on translation are reported in the Profit and Loss Accounts. Leasing and hire purchase commitments Assets held under finance leases, which are leases where substantially all the risks and rewards of ownership of the asset have passed to the Group, and hire purchase contracts are capitalised in the balance sheet and are depreciated over their useful lives. The capital elements of future obligations under leases and hire purchase contracts are included as liabilities in the balance sheet. The interest elements of the rental obligations are charged in the profit and loss account over the periods of the leases and hire purchase contracts and represent a constant proportion of the balance of capital payments outstanding. Rentals payable under operating leases are charged in the profit and loss account on a straight line basis over the lease term. Stock Stock is valued at the lower of cost or estimated realisable value. 2. Turnover and segmental analysis There was no turnover during the financial period. The administrative expenses relate to the United Kingdom, Australian and Bangladesh offices. The Group operates in one principal area of activity being coal exploration. The results of Asia Energy Corporation Proprietary Limited, which was acquired on 18 December 2003, all relate to mineral exploration and development activity. The Group operates within one geographical market, being Bangladesh, and is supported by management and administrative functions in Australia and the United Kingdom. United Kingdom Australia Bangladesh Total £ £ £ 30 June 2005 £ Operating loss before interest and taxation (797,974) (531,753) 1,148 (1,328,579) Net assets 16,042,157 (696,583) 2,420 15,347,994 United Kingdom Australia Bangladesh Total £ £ £ 30 June 2004 £ Operating loss before interest and taxation (333,613) (138,218) (25,340) (497,171) Net assets 14,586,433 (139,778) (23,780) 14,422,875 3. Operating loss Year to 30 June 2005 Period to 30 June 2004 £ £ This is stated after charging:- Auditor's remuneration: - Audit services* 51,050 45,000 - Other services - 24,634 Director's remuneration 435,040 120,060 Other staff costs 53,057 8,591 Depreciation of owned assets 49,778 3,340 Operating lease rentals - land and buildings 27,893 19,537 * £26,000 (2004: £23,000) relates to the Company 4. Directors' emoluments and staff costs Staff costs The Company employs no staff other than the Directors disclosed below. The Group employs 56 staff in the Bangladesh office (2004: 20). 11 employees are in accounting and administration (2004: 5) and 45 employees are in exploration (2004: 15). Directors' emoluments Year to 30 June 2005 Period to 30 June 2004 £ £ Directors' emoluments 383,704 120,060 ========= ========= M. Frayne (1) ** 88,000 54,000 D. Lenigas ** 88,000 21,633 W.McIntosh (appointed 20 December 2004)(1) ** 159,704 - C. Eager 24,000 4,800 J. Malins 24,000 4,800 L. Reynolds (resigned 11 February 2005) 53,336 34,827 --------- --------- 435,040 120,060 ========= ========= ** Executive Director (1) These include amounts for consulting services paid to Director-related entities. Refer to Note 22 for further information. Further breakdown of these amounts is provided in the Directors' Report. 5. Interest Year to 30 June 2005 Period to 30 June 2004 £ £ Bank interest receivable 447,409 101,106 --------- --------- 447,409 101,106 ========= ========= 6. Tax Tax on profit on ordinary activities Year to 30 June 2005 Period to 30 June 2004 £ £ The tax charge is made up as follows: Current tax: UK Corporation Tax - - Overseas Tax - - --------- --------- Total current tax - - --------- --------- Deferred tax: Origination and reversal of - - timing differences --------- --------- Total deferred tax - - --------- --------- Tax on profit on ordinary - - activities ========= ========= The difference between the effective provision for income tax and the statutory tax provision at the statutory tax rate is reconciled as follows: Year to 30 June 2005 Period to 30 June 2004 £ £ Loss on ordinary activities before tax (881,170) (396,065) --------- --------- UK Corporation Tax @ 30% (264,351) (118,820) Permanent differences : non-deductible expenditure 15,000 4,500 : non-taxable foreign exchange translation 127,690 (21,728) Timing differences : other (87,425) (601) : accelerated capital allowances (2,409,244) (130,740) : tax losses recognised 2,496,669 131,341 Tax losses not recognised 121,661 136,048 --------- --------- Current tax on ordinary - - activities ========= ========= Deferred tax Deferred tax assets and liabilities are recognised as follows: Opening Balance Movement in period At 30 June 2005 1 July 2004 £ £ £ Capitalised exploration costs (203,759) (2,557,807) (2,761,566) Other 1,145 (91,915) (90,770) Tax losses 202,614 2,649,722 2,852,336 ------------ ---------- ---------- - - - ------------ ---------- ---------- As at 30 June 2005, the Group had unrecognised tax losses arising in Australia of £660,000 (2004: £492,000), Bangladesh of £25,000 (2004: £24,000) and United Kingdom of £518,000 (2004: £218,000) that are available indefinitely for offset against future taxable profits of those companies in which the losses arose, subject to the conditions of deductibility under the relevant legislation. Deferred tax assets have not been recognised in respect of these losses. These assets will be recognised should it become more likely than not that taxable profits or timing differences, against which they may be deducted, arise. 7. Loss per share The calculation of the loss per ordinary share is based on a loss of £881,170 to 30 June 2005 (2004: Loss of £396,065) and the weighted average number of ordinary shares outstanding of 38,325,572 in the year ended 30 June 2005 (2004: 18,143,860 shares). There is no difference between the diluted loss per share and the loss per share presented. 8. Intangible fixed assets Development expenditure Mineral rights Total £ £ £ Cost: Opening balance 974,200 1,146,804 2,121,004 Increase during the year 8,166,029 - 8,166,029 ---------- ---------- ---------- As at 30 June 2005 9,140,229 1,146,804 10,287,033 ---------- ---------- ---------- Amortisation: Opening balance - - - Provided during the - - - year ---------- ---------- ---------- As at 30 June 2005 - - - ---------- ---------- ---------- ---------- ---------- ---------- Net book value at 30 June 2005 9,140,229 1,146,804 10,287,033 ---------- ---------- ---------- The exploration and evaluation activities in the area of interest are still in the early stages and have not at balance sheet date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves. Active and significant operations in the area of interest are continuing. The ultimate recoupment of costs carried forward is dependent on the successful development and commercial exploitation or sale of the respective mining areas. 9. Tangible fixed assets Group Field Equipment Buildings Office furniture and equipment Vehicles Total £ £ £ £ £ Cost: Opening balance 32,421 31,797 90,979 2,618 157,815 Additions 64,724 23,249 76,334 92,276 256,583 --------- -------- -------- -------- -------- At 30 June 2005 97,145 55,046 167,313 94,894 414,398 --------- -------- -------- -------- -------- Depreciation: Opening balance (750) - (2,566) (24) (3,340) Provided during the period (17,076) (1,500) (19,844) (11,358) (49,778) --------- -------- -------- -------- -------- At 30 June 2005 (17,826) (1,500) (22,410) (11,382) (53,118) --------- -------- -------- -------- -------- --------- -------- -------- -------- -------- Net book value at 30 June 2005 79,319 53,546 144,903 83,512 361,280 ========= ======== ======== ======== ======== Net book value at 30 June 2004 31,671 31,797 88,413 2,594 154,475 ========= ======== ======== ======== ======== Company The Company does not have any tangible fixed assets as at 30 June 2005. 10. Investments Details of the investments in which the Company holds 20% or more of the nominal value of any class of share capital are as follows: Name of Holding Proportion of voting Nature of Company rights and shares held business Asia Energy Ordinary 100% Exploration Corporation Shares Proprietary Limited Cost : £ Opening balance 1,350,000 Additions - Disposals - ---------- At 30 June 2005 1,350,000 ---------- Amounts provided: As at 30 June 2005 - ---------- Net book value at 30 June 2005 1,350,000 ========== 11. Stocks Group At 30 June 2005 At 30 June 2004 £ £ Consumables - 36,564 ----------- ------------ - 36,564 =========== ============ 12. Debtors At 30 June 2005 At 30 June 2005 At 30 June 2004 At 30 June 2004 Group Company Group Company £ £ £ £ Amounts due from subsidiaries - 9,195,991 - 1,236,806 Other 128,371 16,481 52,471 45,527 debtors Prepayments 93,515 71,300 55,090 - ---------- ---------- ---------- ---------- 221,886 9,283,772 107,561 1,282,333 ---------- ---------- ---------- ---------- There were no debtors falling due after more than one year at 30 June 2005. Amounts due from subsidiary undertakings are non-interest bearing. 13. Current asset investments At 30 June 2005 At 30 June 2004 £ £ Security deposits 15,410 8,095 ---------- ---------- 15,410 8,095 ---------- ---------- Security deposits represent rental deposits on premises in Bangladesh. 14. Creditors: Amounts falling due within one year At 30 June 2005 At 30 June 2005 At 30 June 2004 At 30 June 2004 Group Company Group Company £ £ £ £ Trade creditors 1,180,337 113,727 158,539 59,762 Amounts due to - - 11,820 - related party --------- --------- --------- --------- 1,180,337 113,727 170,359 59,762 --------- --------- --------- --------- 15. Obligations under leases and hire purchase contracts Annual commitments under non-cancellable land and buildings operating leases are as follows : At 30 June 2005 At 30 June 2004 £ £ Operating leases which expire: Within one year 31,219 27,400 In two to five years 15,492 45,415 In over five years - - ----------- ----------- 46,711 72,815 ----------- ----------- 16. Share capital At 30 June 2005 At 30 June 2004 £ £ Called up share capital Authorised 200,000,000 Ordinary Shares of 10p Each 20,000,000 20,000,000 =========== =========== Allotted Called Up and Fully Paid =========== =========== 40,011,024 Ordinary Shares of 10p Each 4,001,103 3,760,264 (2004: 37,602,638 shares) =========== =========== Ordinary shares have the right to receive dividends as declared and, in the event of winding up the Company, to participate in the proceeds from sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company. During the year, the Company issued 2,408,386 Ordinary Shares of 10p each for consideration of £1,806,290 in respect of 1,855,000 options and 553,386 warrants exercised. Total Share Options in Issue During the year 1,855,000 options were exercised. 3,870,000 options were issued during the year. As at 30 June 2005 there were 3,790,000 options on issue to subscribe for Ordinary Shares at 75p (2004: 1,775,000). All options have an exercise period being any time up to 18 April 2009. Note 16 Continued Total Warrants in Issue During the year 553,386 warrants were exercised. No warrants were issued during the year. As at 30 June 2005 there were 805,000 warrants on issue to subscribe for Ordinary Shares at 75p (2004: 1,358,386). 17. Reconciliation of shareholders' funds and movement of reserves Group Ordinary share capital Share Premium Account Profit and Loss Account Total share-holders' funds £ £ £ £ Opening balance 3,760,264 11,058,676 (396,065) 14,422,875 Arising on share issues 240,839 1,565,450 - 1,806,289 Retained loss for the year - - (881,170) (881,170) --------- --------- --------- --------- At 30 June 2005 4,001,103 12,624,126 (1,277,235) 15,347,994 --------- --------- --------- --------- Group Ordinary share capital Share Premium Account Profit and Loss Account Total share-holders' funds £ £ £ £ Opening balance - - - - Issued on incorporation 2 - - 2 Arising on share issues 3,760,262 12,341,714 - 16,101,976 Share issue costs - (1,283,038) - (1,283,038) Retained loss for the year - - (396,065) (396,065) --------- --------- --------- --------- At 30 June 2004 3,760,264 11,058,676 (396,065) 14,422,875 --------- --------- --------- --------- Company Ordinary share capital Share Premium Account Profit and Loss Account Total share-holders' funds £ £ £ £ Opening balance 3,760,264 11,058,676 (232,507) 14,586,433 Arising on share issues 240,839 1,565,450 - 1,806,289 Retained loss for the year - - (350,565) (350,565) --------- --------- --------- --------- At 30 June 2005 4,001,103 12,624,126 (583,072) 16,042,157 --------- --------- --------- --------- Note 17 Continued Company Ordinary share capital Share Premium Account Profit and Loss Account Total share-holders' funds £ £ £ £ Opening balance - - - - Issued on incorporation 2 - - 2 Arising on share issues 3,760,262 12,341,714 - 16,101,976 Share issue costs - (1,283,038) - ( 1,283,038) Retained profit/(loss) for the year - - (232,507) (232,507) -------- -------- -------- --------- At 30 June 2004 3,760,264 11,058,676 (232,507) 14,586,433 -------- -------- -------- --------- 18. Notes to the statement of cash flows (a) Reconciliation of operating profit to net cash outflow from operating activities Year ended 30 June 2005 Period ended 30 June 2004 £ £ Operating loss (1,328,579) (497,171) Increase in debtors (159,852) (42,468) Decrease/(increase) in inventory 36,564 (36,564) Increase/(decrease) in creditors 128,160 (49,097) Depreciation of fixed assets 49,778 - ------------ ------------ Net cash outflow from operating activities (1,273,929) (625,300) ------------ ------------ (b) Analysis of net funds Opening Balance Cash Flow At 30 June 2005 £ £ £ Cash at bank and in hand 1,165,535 4,477,187 5,642,722 Short term deposits* 11,000,000 (11,000,000) - -------- --------- --------- 12,165,535 (6,522,813) 5,642,722 ======== ========= ========= * Short term deposits are included within cash at bank and in hand in the balance sheet. 19. Derivatives and other financial instruments The Group holds cash as a liquid resource to fund the obligations of the Group. The Group's strategy for managing cash is to maximise interest income whilst ensuring its availability to match the profile of the Group's expenditure. This is achieved by regular monitoring of interest rates and monthly review of expenditure forecasts. The Company has no formal policy in respect of foreign exchange risk, however it does review its currency exposures on an ad hoc basis. Currency exposures relating to monetary assets held by foreign operations are included within the Group Profit and Loss Account. Note 19 Continued The Group has taken advantage of the exemption in FRS 13 'Derivatives and Other Financial Instruments' in respect of short-term debtors and creditors and consequently those items are not included in the relevant analysis within the following notes. Interest rate risk profile of financial assets: The financial assets of the Group are comprised of monies held in bank accounts and security deposits. The interest rate profile of the financial assets of the Group as at 30 June 2005: Fixed rate Floating rate Non interest bearing Total £ £ £ £ Sterling - 5,522,112 - 5,522,112 Australian dollars - 838 - 838 United States dollars - - 57,308 57,308 Bangladesh taka - - 77,874 77,874 --------- --------- --------- --------- - 5,522,950 135,182 5,658,132 --------- --------- --------- --------- The interest rate profile of the financial assets of the Group as at 30 June 2004: Fixed rate Floating rate Non interest bearing Total £ £ £ £ Sterling 11,000,000 1,013,862 - 12,013,862 Australian dollars - 3,078 - 3,078 United States dollars - - 93,610 93,610 Bangladesh taka - - 63,080 63,080 --------- --------- --------- --------- 11,000,000 1,016,940 156,690 12,173,630 --------- --------- --------- --------- Floating rate financial assets comprise cash balances on money market deposits at call at the Bank of England current base rate of interest. Non-interest bearing financial assets comprise cash deposits at call and do not receive interest. Interest rate risk profile of financial liabilities All of the Group's financial liabilities are short term creditors. Currency exposures Currency exposures comprise the monetary assets and liabilities that are not denominated in the operating currency of the operating unit. The currency exposures of the Group as at 30 June 2005 are shown below: 2005: Currency exposures Net foreign currency Net foreign currency Net foreign currency monetary assets monetary assets monetary assets Functional currency United States Dollars Bangladesh Taka Total £ £ £ Sterling 57,308 165,564 222,872 ------------ ------------ ------------ 57,308 165,564 222,872 ------------ ------------ ------------ Note 19 Continued 2004: Currency exposures Net foreign currency Net foreign currency Net foreign currency monetary assets monetary assets monetary assets Functional currency United States Dollars Bangladesh Taka Total £ £ £ Sterling 103,484 13,066 116,515 ------------ ------------ ------------ 103,484 13,066 116,515 ------------ ------------ ------------ Borrowing facilities The Group has no borrowing facilities in place at 30 June 2005 (2004: Nil). Derivative instruments The Group has no derivative instruments (2004: Nil). Fair values of financial assets and liabilities All financial assets and liabilities of the Group have been recorded at their book value, which equates to their fair value. 2005 2005 2004 2004 Book value Fair value Book value Fair value £ £ £ £ Financial assets ------------------ Cash at bank and in hand 5,642,722 5,642,722 12,165,535 12,165,535 Current asset investments 15,410 15,410 8,095 8,095 --------- --------- --------- --------- 5,658,132 5,658,132 12,173,630 12,173,630 --------- --------- --------- --------- 20. Capital commitments There are no material capital commitments for the Group as at 30 June 2005 which have not already been provided for in the financial statements. 21. Contingent Liabilities The Group is obliged to pay US$1 per tonne of coal produced to Deepgreen Minerals Corporation Limited. Under the investment agreement with the Government of Bangladesh, the Group will, on commencement of commercial production of coal, be obliged to pay to the Government of Bangladesh a royalty of 6 per cent of the sale value of all coal produced and sold pursuant to a Mining Lease in US$. The financial impact of both of these contingent liabilities cannot be estimated as the Company has not completed the exploration work. 22. Related party transactions A service agreement with Bowmaker Management Limited ('Bowmaker') for provision of office space and associated services was entered into on 31 October 2003. This agreement was for 6 months with an automatic renewal for 6 months unless terminated and requires the Company to pay £2,000 per month in advance. Bowmaker also provides Company Secretarial work and general administrative assistance. Jonathan Malins, a Director of Asia Energy Plc, is the beneficial owner of 50 per cent of the issued share capital of Bowmaker. Payments to Bowmaker in the period to 30 June 2005 amounted to £10,000 (2004 : £16,000). As at 30 June 2005, no amounts were owing (2004 : nil). On 30 March 2004, the Company entered into a service agreement with RCM Asia Ltd ('RCM Asia') for the provision of consulting services, including the provision of the services of Mr Michael Frayne, a director of Asia Energy Plc. Michael Frayne had a beneficial interest in and was a consultant to RCM Asia until 31 March 2005. Payments to RCM Asia in the period to 30 June 2005 amounted to £52 ,000 (2004 : £11,200) for consultancy services and £18,000 (2004: £14,088) for travel and accommodation expenses. As at 30 June 2005 no amounts were owing (2004: £4,666). From 1 April 2004, the service agreement with RCM Asia was assigned to Adelise Services Ltd ('Adelise'). Michael Frayne has a beneficial interest in and is a consultant to Adelise. Payments to Adelise in the period to 30 June 2005 amounted to £22,000 for consulting services and £6,000 for travel and accommodation expenses. Payments for consulting services to the Company by Fingals Cave Pty Ltd, including the provision of the services of Mr W. McIntosh, a director of Asia Energy Plc, amounting to £146,929 were made in the period to 30 June 2005. As at 30 June 2005, £3,495 was owing. Cambrian Mining Plc provided office space and associated services to the Company during the year and was paid £109,794. Mr J. Malins is a director and shareholder of both Cambrian Mining Plc and Asia Energy Plc. As at 30 June 2005, £71,300 related to prepaid office space and services. 23. Principal operating subsidiary undertakings Asia Energy Plc holds 100% of the equity share capital and controls 100% of voting rights of the following undertakings: • Asia Energy Corporation Pty Ltd - incorporated in Australia and operates in Australia • Asia Energy Corporation (Bangladesh) Pty Ltd - incorporated in Australia and operates in Bangladesh* • Asia Energy (Bangladesh) Private Limited (formerly Pan Asian Corporation Limited) - incorporated and operates in Bangladesh*. • Asia Mining (Bangladesh) Private Limited - incorporated and operates in Bangladesh**. * Indirectly held through Asia Energy Corporation Pty Ltd. ** Indirectly held through Asia Energy Corporation (Bangladesh) Pty Ltd All subsidiary undertakings participate in mineral exploration and development activity. 24. Operating commitments Under the terms of the Prospecting License agreement with the Bangladesh authorities for contract license areas B, G and H respectively, an annual fee of 100 Taka is payable for each hectare within the license area. The Company currently lease 5,480 hectares within these license areas. 25. Five year summary As the Group has only recently commenced trading, no five year summary has been prepared. This information is provided by RNS The company news service from the London Stock Exchange

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