Preliminary Results
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For immediate release |
29 September 2008 |
AURUM MINING PLC
('Aurum' or 'the Company')
Preliminary Results for the year ended 31 March 2008
Aurum Mining plc (AIM: AUR), the gold mining company focussed on the Former Soviet Union (FSU) and whose principal asset is the Andash Project in the Kyrgyz Republic, is pleased to announce its preliminary results for the year ended 31 March 2008.
Key points
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Civil litigation in the Kyrgyz Republic at the year end disrupted progress at Andash though the case is moving close to resolution
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The worsening political and operational environment in the Kyrgyz Republic has caused Aurum to suspend all further investment in the Andash Project until conditions improve
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A strategic review will report by the end of November 2008 on options for generating shareholder value
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Substantial progress made during the year in preparation for construction of the Andash Zone 1 mine and in further exploration work in the Andash licence area
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Balance sheet remains strong with net cash of approximately £19.5 million in August 2008
Sean Finlay, Aurum's Chairman, said: 'We remain convinced of the quality and potential of the Andash asset but have suspended investment and launched a strategic review owing to the worsening political and operational environment in the Kyrgyz Republic. Progress so far gives us confidence that we have a number of credible options for generating shareholder value and we look forward to providing the conclusions of the strategic review by the end of November 2008.'
For further information:
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Aurum Mining plc |
Tel: 020 7478 9050 |
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Mark Jones, Chief Executive Officer Chris Eadie, Chief Financial Officer |
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Arbuthnot Securities |
Tel: 020 7012 2000 |
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John Prior |
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Buchanan Communications |
Tel: 020 7466 5000 |
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Mark Court / Rebecca Skye Dietrich |
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Notes to editors
Aurum Mining, which joined the AIM market of the London Stock Exchange in May 2004, is a mining company focused on gold opportunities in the Former Soviet Union. Its principal asset is an exploration licence over the Andash gold and copper project in the Kyrgyz Republic. A mining licence for Andash Zone 1 was awarded by the Kyrgyz authorities in 2006. The feasibility study compiled by Wardell Armstrong International, also in 2006, confirmed a measured and indicated resource base of 19.2 million tonnes at 1.1 grams per tonne of gold and 0.4% copper, which equates to 1.1 million ozs of gold and gold equivalent. The Andash project also includes Zone 2 and Zone 3 along with Tokhtonysay, Nakhodka and three other additional exploration areas.
Chairman's Statement
The Operating Environment
The year to 31 March 2008 began very positively and we made substantial progress with the Andash project, specifically in preparations for the construction of the Zone 1 mine, by way of further exploration work throughout the Andash licence area and in developing our social responsibility initiatives in the Kyrgyz Republic.
Our momentum was interrupted towards the end of the financial year by a civil case brought under the laws of the Kyrgyz Republic, which effectively challenges our ownership of the Andash licence. The immediate impact of the case, which we viewed from the outset as being entirely without merit, was an enforced cessation of the construction of the Zone 1 mine and the temporary suspension of trading of our shares on AIM.
The case itself concerned the transfer of ownership of assets, including the Andash licence, prior to Aurum's acquisition of Andash Mining Company (AMC) in January 2005. While the case has not yet been formally closed, significant progress has been made in resolving matters. This is highlighted by the lifting of AMC's financial injunction in September 2008.
This civil case, the nature of which is virtually impossible to envisage under UK law, has been highly disruptive. It has impacted the timeline of bringing the Zone 1 mine into production, absorbed management time, added to our costs and undermined shareholder value.
The worsening operating environment in the Kyrgyz Republic, which is highlighted by the impact that a seemingly fraudulent and unfounded claim has had on our business, is of deep concern to me and the rest of the Board. As a result we have decided to cease all further investment into the Andash project until the political and operational environments improve sufficiently to warrant further investment.
Project Update
Whilst the civil case affected work on the ground, we have continued to make important progress in some aspects of the Zone 1 mine including the approval by the Kyrgyz authorities of the technical design of the mine.
While the Board is still convinced of the underlying robustness of the Andash project (a view underpinned by current commodity prices), it will be of no surprise that there has been significant mining inflation in the Kyrgyz Republic as in most other parts of the world. This, combined with the fact that many of the key supply contracts for the project had to be terminated with the onset of the litigation (and subsequently renegotiated from a higher cost base), has meant that the forecast costs to bring the Andash project into production have increased by approximately 35% since Wardell Armstrong International (WAI) completed their cost estimates (as part of their feasibility study on the Zone 1 mine) in November 2006.
In addition to the $12m already invested into the Zone 1 mine, we estimate a further US$65m of funds are required to bring the Zone 1 mine into production. This figure includes all costs (CAPEX, working capital and overheads) required to bring the mine to first cash flow.
Cash funds in the Company currently stand at approximately $36m (£19.5m) so an additional $29m will need to be raised by the Company to bring the Zone 1 mine to first cash flow.
The Company is looking at a number of options to bridge the gap between existing funds and the total funds required to bring the mine into production and it is also looking at a number of initiatives to reduce costs wherever it can.
Although the Company is not investing further funds into the project at this time, the current expectation is that construction of the mine could recommence in March 2009 and, if this is the case, the Board's view is that the Zone 1 mine will be in production in the first quarter of 2010.
Unfortunately the litigation process meant an immediate cessation of a successful exploration programme at a really critical time (details of which are outlined in the Chief Executive's Review). The exploration programme will be resumed once investment on the project recommences and the scope and extent of the work will be determined at that stage.
Strategic Review
In August of this year, the Board announced that the events of the previous six months had highlighted to it the risks of being a single project company in the Kyrgyz Republic. As a result, the Board is currently looking at a number of new initiatives as to how these risks can be best mitigated. The Board has undertaken an initial strategic review in which a number of tactical opportunities are being considered. These include, but are not limited to, diversifying the current project portfolio outside of the Kyrgyz Republic and identifying a business partner that can provide a greater degree of influence over the government of the Kyrgyz Republic.
It is the Board's intention to complete the strategic review before the end of November and formally propose to Shareholders a roadmap for the way forward. If at that stage the Board believes that the climate for further investment has not improved, and that the tactical opportunities to enable Aurum to grow effectively are not appropriate then it will, in consultation with Shareholders, propose to reduce the capitalisation of the company to allow cash to be returned.
Financials
For the year to 31 March 2008, the Group reported a loss of $1.6 million, compared with a loss of $3.7 million in 2007. Cash at bank at the end of August 2008 (post settlement with Marsa AG) was $36m (£19.5m). Careful cost control remains a key priority at Aurum particularly as we reassess the costs and timings of the project now we approach the end of the litigation process.
People
I would like to thank Aurum's staff in the UK and in the Kyrgyz Republic and to thank the Company's consultants and other advisers for their dedicated work throughout this difficult period.
I would also like to express my gratitude for the valuable support from our Shareholders.
Outlook
We remain confident that the civil case will be resolved shortly. Given this, and the fact that we continue to benefit from a strong balance sheet, we remain confident that the Andash Project has potential to create significant value for our Shareholders.
Sean Finlay
Chairman
29 September 2008
Chief Executive's Review
Following the successful equity fundraising in February 2007, the key objective for the Group for the year to 31 March 2008 was to make sufficient progress to enable the Andash Zone 1 mine to be in gold and copper production in the second half of the 2008 calendar year.
While significant progress was made in the period to March 2008, subsequent events have had a major impact on operations and this has meant an immensely frustrating period for all of the Company's stakeholders. While there does currently appear to be some hope that the recent issues in the Kyrgyz Republic will be resolved in the short-term, the recent litigation (and associated financial injunction) has undoubtedly damaged our business and as a direct result of the litigation our original plan to get the Zone 1 mine into production by the end of 2008 has been derailed. The injunction also stopped our extensive exploration programme in its tracks - this was extremely disappointing given the very positive start to the programme.
It will not be possible to assess the full impact of the litigation process until it is fully and finally resolved. As of today the court case is temporarily suspended by the Bishkek courts and while the financial injunction in place against AMC has been lifted - and the company is free to resume its day to activities in the Kyrgyz Republic - the Board still has sufficient concerns about the current operating environment in the Kyrgyz Republic to hold back on further capital expenditure on the Andash project until full confidence has been restored.
Without question the litigation process and the associated impacts are deeply regrettable as AMC was on the brink of committing major expenditure on site preparation, the first step towards getting the Zone 1 mine into production. Progress over the previous few years has been substantial and Aurum was ideally positioned to break through the barrier to being a producer. Until early March 2008, all aspects of the Zone 1 project were coming together and the momentum was building for an aggressive investment and construction phase during the spring and summer to enable the Group to meet all of its targets and goals. The Zone 1 mine was on track to be completed within time and within budget.
Marsa AG litigation
It was a huge shock and disappointment to the Aurum Board when it was notified of the litigation against its subsidiaries, AMC and Kaldora Company Limited.
Without wanting to compromise AMC's position in the case, readers should simply be reminded that the civil case is underpinned by a claim brought by Marsa AG against Marsa Gold LLC, a company controlled by Oleg Kim, a former employee and founder of Andash Mining Company. The case concerns historical transactions involving the transfer of a number of assets (of which the Andash asset is one) prior to Aurum's acquisition of Andash Mining Company in January 2005. As a result of the civil proceedings the Court also ordered a temporary cessation of any further financial transactions for AMC.
The Board continues to believe that there is absolutely no merit to the case whatsoever and it continues to be dismayed by the lack of due process that the Kyrgyz courts have followed during the evolution of the process. The Board has taken this up at the highest levels of government but unfortunately our concerns, whilst shared with other investors in Kyrgyz Republic, are not being reflected in any demonstrable way by government activity.
It is therefore Board's current intention to withhold further direct investment on the project until the operating environment in the Kyrgyz Republic has changed sufficiently to warrant further investment.
The operating climate in Kyrgyz Republic
During the year under review, and subsequent period, there has been a growing concern that the investment climate in the country, particularly for resource companies, is untenable. The Mineral Resources Committee of the International Business Council, a leading business association in the Kyrgyz Republic recently drafted a letter to the Kyrgyz Government in which the following was expressed:
'It is our belief that only concerted and determined action at the highest levels of government will be able to rescue the Kyrgyz mining industry from its current impasse. The reasons for the impasse are complex, and vary in detail from project to project. The underlying common threat is that despite the efforts of genuine investors in the years since independence to bring deposits into production and to generate wealth and employment, barriers to progress have arisen and become insurmountable. The record shows that only direct government support is going to be able to remove these barriers and revive the perception that the Kyrgyz Government is indeed sincere about developing the economy through foreign investment. The potential for partnership is clear - government support for resource development will lead to a flow of tax revenues from the mining industry. Undeveloped ore bodies generate no benefits to the nation'
The recent claim and court process to which the Group has been subjected have highlighted to the Board the fundamental requirement of getting a clear and sincere undertaking from the government of the Kyrgyz Republic that all barriers to investment in the country are removed. In addition the government needs to confirm to the Board and its shareholders that we have full legal title to the Andash asset and that the State Agency for Geology and Mineral Resources will fully uphold the mining licence agreement.
There have been some positive moves, in particular a visit to London by Kapar Kurmanaliev, the Director of the State Agency for Geology and Mineral Resources, in May of this year in which he addressed the investment community on the intentions of the State Agency and Jogorku Kenesh, the parliament of the Kyrgyz Republic, to strengthen the position of foreign investors in the mining industry, and eliminate many of the investment barriers. Kurmanaliev expressed every confidence that the new Mining Code that was to be published in July, and which is now expected in the next few weeks, will go a long way to protecting the rights of investors. Whilst the Board is encouraged, the new code will have to be backed up by clear undertakings from the President and Prime Minister that they will deliver on earlier investment agreements and ensure that the General Prosecutors Office and that the courts become independent.
Strategic Review
In August of this year, the Board announced that the events of the previous six months had highlighted to it the risks of being a single project company in the Kyrgyz Republic. As a result, the Board is currently looking at a number of new initiatives as to how these risks can be best mitigated. The Board has undertaken an initial strategic review in which a number of tactical opportunities are being considered. These include, but are not limited to, diversifying the current project portfolio outside of the Kyrgyz Republic and identifying a business partner that can provide a greater degree of influence over the government of the Kyrgyz Republic.
It is the Board's intention to complete the strategic review before the end of November and formally propose to Shareholders a roadmap for the way forward. If at that stage the Board believes that the climate for further investment has not improved, and that the tactical opportunities to enable Aurum to grow effectively are not appropriate then it will, in consultation with Shareholders, propose to reduce the capitalisation of the company to allow cash to be returned.
Andash Zone 1
As mentioned, the period to March 2008 was one of sustained progress and achievement and we had AMC positioned to deliver our strategic objective of becoming a copper and gold producer during the second half of 2008.
Key to our success in the Kyrgyz Republic was ensuring that we had the best possible team in place to strengthen our position in the region. We have previously outlined the structure of AMC's management team in the Kyrgyz Republic but we were also able to announce during the year the establishment of a local advisory board for AMC and, in respect of this, we were delighted to announce the appointment of Professor Muratbek Imanaliev as the Chairman of this board. Professor Imanaliev is currently the President of the Institute for Public Policy in the Kyrgyz Republic, and he is also a Professor at the American University of Central Asia. Professor Imanaliev is a former Ambassador of the Kyrgyz Republic to the People's Republic of China, and he has twice held the position of the Minister for Foreign Affairs. He also holds the diplomatic rank of Ambassador Extraordinaire and Plenipotentiary of both the former USSR and the Kyrgyz Republic. We were both delighted and very proud that he decided to join AMC, and we remain convinced that he will assist us in our objective of developing the AMC into a world class sociably responsible and economical gold and copper producer when the current issues are resolved.
From the outset of the Andash project we were committed to taking a responsible approach to mining in the region and we were delighted to be able to announce at a public press conference in Bishkek, plans for a $1 million social fund to benefit the local population within the Talas Valley. This fund will be initiated after production commences at the Zone 1 mine and will be managed by local trustees for social, educational and cultural development projects in the Andash area. We believe that the future success of the Andash project can be achieved only through ensuring a commonality of interests between ourselves and local, regional and national groups. Our proposed social fund underlines our objective of making a very positive on-going contribution to the people of the Kyrgyz Republic.
To ensure that local people are fully informed about all aspects of the project, we also opened an information centre in Kupero Bazaar, the nearest village to the mine, during the year. This centre is a focal point for information sharing between AMC and the local community. AMC is itself becoming an increasingly important employer in the region, with staff numbers totaling around 140 prior to the onset of the litigation.
Until March 2008, the Board felt very confident of delivering Zone 1 mine within both the forecast timeline and in-line with our forecast capex budget. However, as previously outlined, the litigation and associated injunction have seriously impacted the business. The Board's current view is that providing the project build commences in March 2009, the mine will be in production in the first quarter of 2010. However until the court case is finally closed and the Board gets clarity and assurances that the operating environment has sufficiently improved to justify further investment into the mine it is not possible to be definitive on forecasts.
Project financial summary
Over the course of the summer, the AMC management team has been working on the layout and design of the Zone 1 mine to ensure that once construction commences the mine can be built as efficiently and effectively as possible. The current best estimate is that US$65m of funds are required to complete the mine and to take it through to cash flow. Given that approximately $12m has already been invested into the mine, this indicates that the total capital and operational costs of the project will be approximately $77m - an increase of over 35% since the completion of the feasibility study in November 2006.
Total capital costs on the Zone 1 mine build are now forecast to be in the region of US$60m compared to the forecast of $48.5m a year ago. This 23% rise can chiefly be attributed to inflation in raw materials (prices of steel and concrete have risen by 30% and 15% respectively over the last twelve months alone) combined with the need for the Company to renegotiate major project contracts in a period of significant mining inflation. These include the power contract, and supply of re-grind mill, compressor and mill buildings.
Further working capital and operational costs required to complete the construction are now forecast to be $17m. These costs are almost 50% higher than forecast at the time of our fundraising in February 2008, and the significant cost increase are primarily due to inflation in fuel, steel balls, reagents, labour and explosives.
Cash funds in the Company currently stand at approximately $36m (£19.5m) so there is a requirement to raise an additional $29m to take the Zone 1 mine to first cash flow.
The incremental $29m required is not only to make up for the increase in project costs due to mining inflation which are outlined above (approximately $21m) but it will also cover the cash shortfall that has arisen through expenditure and charges incurred to date on 'non project' costs such as exploration, legal costs and settlement with Marsa AG. In addition the recent weakening of sterling against the US dollar has increased the funding requirement. These items between them have contributed to an additional $8m financing requirement.
The Company is currently looking at a number of different products and options to raise the additional $29m of finance required to take the Zone 1 mine into production. These initiatives include looking at vendor financings, potential partnering arrangements and investigating the potential of obtaining investment from multilateral institutions.
Alternative plant design
During the summer, the AMC technical team has been working with the support of the State Agency for Geology and Mineral Resources on an alternative plant design to eliminate the need for a conventional tailings management facility (TMF) which over life of mine had a total capital cost of $24m. Following a programme of work using consultants in Britain and Russia, it was established that our tailings are suitable to be cleaned in a washing facility, thereby allowing the cleaned sands to be stored as fill in valleys close to the Zone 1 pit.
If we adopt this design, there are a number of advantages. Whilst there is only a small reduction in upfront capital costs (circa $600k) there is a substantial reduction in the total life of mine costs through eliminating the construction of a tailings management facility of around $24m. The release of land currently allocated to the TMF and currently used in summer as coarse grazing for the local villagers reduces one of the main environmental and social concerns raised by the local population in the impact assessment carried out by both ourselves and consultants. In addition the elimination of sands that contain chemicals has an obvious positive environmental impact, and the reduction in operating costs through reduced water, transportation and land allotment will benefit Aurum considerably. The obvious benefits of this alternative design need to be fully modelled, but the capital and operating cost savings over the course of the mine life are currently forecast to be in the region of $39m.The AMC technical team will continue this work through to a technical design stage so that a final decision can be made.
Exploration update
The Board has always had the utmost confidence and belief in the Andash asset, and it has always been our belief that there is really significant upside potential beyond the Zone 1 mine.
In support of the Board's long held belief in the Andash asset we were delighted to announce excellent results from the initial hole drilled at the Tokhtonysay exploration target and to announce the discovery of new and exciting exploration targets within the Company's Andash license area. It was therefore extremely disappointing that the financial injunction was to disrupt the exploration programme at such a crucial stage.
The initial drill hole at Tokhtonysay hit mineralisation from the surface to a depth of 85m with a remarkable intersection from 15m to 72m of 1.48g/t of gold and 1.41% copper, which includes 2.01g/t Au and 2.2% Cu from 15m to 41m. These excellent gold and copper grades come from an exploration programme that began in Tokhtonysay in September 2007 with the initial hole drilled vertically into a previously identified IP anomaly.
This IP anomaly is 600m by 300m in size. Its characteristics are typical of porphyry systems and are similar, though extending over a larger area, to Zone 1, which has a Joint Ore Reserves Committee (JORC) Measured and Indicated resource of more than 17 million tonnes, containing 624,000 ozs of gold and 72,000 tonnes of copper.
Tokhtonysay comprises seven outcropping mineralised zones, four of which are situated within the Andash exploration license area. The remaining three are within the adjacent Korgontash license area, which is held by Orsu Metals Corporation TSX: OSU and AIM: OSU). Tokhtonysay is situated close to the Zone 1 mine, which is currently under construction, and it therefore has the potential to significantly increase the resource base, prolong the mine life and enhance the profitability of the Andash asset.
In addition to the work at Tokhtonysay, an independent consultancy carried out an extensive programme of geophysics on the Andash Licence area.
At Nakhodka, another target within the Andash Licence area, re-interpretation of historical IP data, allied to the new work completed in 2007, resulted in the identification of a further polarized anomaly. It is located 350m to the north from Zone 1 and at a depth of 20m to 40m. This anomaly is also evident 200m to the east at a depth of 20m to 50m, where it continues to dip downwards to 100m to150m. It is similar to ore body Zone 1 and may lead to the discovery of a blind target with similar parameters located within the contour of the designed open pit. In addition a compact anomaly was discovered some 800m to the southeast of the Nakhodka target. Again this is a blind target, but is detected to a depth of 150m, over a width of 100m, and shows similar characteristics to the Zone 1 ore body. It is intended to investigate this anomaly initially by one vertical drill hole to a depth of 150m.
The work completed during the year under review endorses the strength of the Andash asset and reaffirms the Board's belief of the significant upside potential it offers our shareholders. However, whilst it is necessary to instigate a comprehensive drilling campaign to delineate the extent and quality of additional resource potential, beyond meeting the minimal exploration license requirements the board has decide not to commence the programme until the board decides to re-invest in the asset.
Environment
A statement of environmental impacts required by the Kyrgyz government (Stage 1 of the local environmental standard, OVOS) has been submitted and accepted by the regulatory authorities. Comments of independent ecological experts were sought and relayed to AMC in July for consideration in the Stage 2 OVOS submission. A suitable response to these comments was made by AMC in a letter to the State Agency for Geology and Mineral Resources in August, and this was accepted and noted by the State Agency in November 2007.
The latest information on layout and design has been transmitted to the Kupero Bazaar authorities. Whilst no official response is required by the authorities, at this stage, we believe that we have had a generally positive reaction to the final design layout given in the technical design.
The Stage 2 OVOS (Impact Assessment and Mitigation) has been linked in to the Technical Design which was finally approved by the authorities when the financial injunction was lifted in September this year. The process allows for further changes to be incorporated.
The Environmental and Social Impact Assessment (ESIA) process led by our consultants WAI runs on a parallel timeline to the OVOS process. Environmental and social issues were addressed in the western feasibility study. A working draft of the ESIA report was made available to AMC for review and comment in June of 2007. Further work was progressed during the year, and a social impact assessment, community development programme, environmental monitoring and management plan, mine closure and rehabilitation plan have been drafted.
A final version of the ESIA will be published after receipt of permission from the authorities and consideration of attached conditions.
The Stage 2 OVOS will include the compilation and State approval of maximum permissible discharges, emissions and solid wastes for the construction and operational phases of the project. These will be incorporated into the provisions of the initial ecological passport for the project.
All environmental assessment documents and project descriptions were provided to the Kazakh authorities (Jambal Oblast and Ministry of Environment) as required by the UN Convention on Environmental Impact Assessment in a Transborder context (Espoo) in March 2007. A public meeting was held in Tarac, Kazakhstan in March 2007. Principal concluding remarks were supportive of the project and approved progression to detailed design and the stage 2 OVOS.
Social Impact assessment
During the review period and into the new financial year we continued to establish good working relationships with the local population of Kupero Bazaar, NGO's and regional and local government.
A Community Development Officer has been appointed to provide continuity in the public participation process and to provide the main communication link between AMC and all stakeholders.
We have held a number of public consultations: round table discussions and public meetings, with representatives of the local communities, NGO's and local government. We continue to use expert guidance, and therefore public consultations were attended by WAI's UK consultant Dr. Magnus McFarlane.
Our objective of sharing information centred on the following:
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the beneficial impact for the local community from a well managed producing mine;
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the social, economic and environmental impact the mine will have on the local community; and
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the enhanced life style offered, by creating local job opportunities.
Key concerns shared:
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how the mining activity will affect the local environment;
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how it can be controlled;
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lack of information and understanding about the technical process of mining.
AMC is continuing to work closely with the local community by providing financial help for various projects. The new AMC information centre was opened in Kupero Bazaar in September 2007 to provide a venue for sharing information. It provides details of the proposed mining and processing activity, the economic impact and the benefits it will provide to the local community and include a 'book of comments' that will allow individuals to seek clarification or share concerns. This complements the information packs that were given to every household in the local villages in August last year.
AMC has carried out public relations activities designed to promote and stimulate the development of the mining sector of the country, protection of the environment, rendering assistance to vulnerable
groups of the population, as well as preserving and reviving the national values of the Kyrgyz Republic. AMC also participated in the implementation of a number of projects and charity events to support technical progress, health and education in the Talas region.
During the year AMC rendered financial support for the Council of Veterans, the Council for Women, local government schools, kindergartens, hospitals as well as assistance for farmers.
Summary
Whilst the year under review was highlighted by the clear focus on delivering Andash Zone 1 into production by the end of the 2008 calendar year, the subsequent litigation, financial injunction and concern over the lack of support from the government of the Kyrgyz Republic has forced the Board to take a fundamental review of how the Group should move forward.
We have a strong balance sheet at a time when many junior mining companies are struggling to survive, and the strategic review being undertaken by the Board is giving confidence that we do have a number of options to deliver value to our Shareholders. The current share price has discounted the value of our Andash asset into negative territory. If the climate to bring Andash into production promptly can be established, and the current financial gap bridged, then the opportunity to bring significant benefit to all stakeholders is clear. The Board understands the task at hand, and will consider all options before making recommendations to Shareholders before the end of November 2008.
Mark Jones
Chief Executive Officer
29 September 2008
Consolidated Income Statement
Year ended 31 March 2008
|
|
|
2008 |
2007 |
|
|
Notes |
$'000 |
$'000 |
|
|
|
|
|
|
Administrative expenses |
|
(4,503) |
(3,672) |
|
|
|
|
|
|
Operating loss |
3 |
(4,503) |
(3,672) |
|
|
|
|
|
|
Finance income |
6 |
2,957 |
291 |
|
Finance expenses |
6 |
(79) |
(331) |
|
|
|
|
|
|
Loss for the year before taxation |
|
(1,625) |
(3,712) |
|
|
|
|
|
|
Tax on loss for the year |
7 |
- |
- |
|
|
|
|
|
|
Loss for the year after taxation |
|
(1,625) |
(3,712) |
|
|
|
|
|
|
Loss attributable to the equity shareholders of the parent company |
|
(1,625) |
(3,712) |
|
|
|
|
|
|
Loss per share |
|
|
|
|
Basic and Diluted |
8 |
(3.57)c |
(25.35)c |
|
|
|
|
|
All amounts above relate to continued operations.
Consolidated and Company Balance Sheets
As at 31 March 2008
|
|
|
Group |
|
Company |
|
|
|
|
2008 |
2007 |
2008 |
2007 |
|
|
Notes |
$'000 |
$'000 |
$'000 |
$'000 |
|
Assets |
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
Intangible assets |
10 |
515 |
- |
- |
- |
|
Property, plant and equipment |
9 |
22,516 |
10,053 |
35 |
13 |
|
Investment in subsidiaries |
11 |
- |
- |
6,384 |
6,304 |
|
Amounts owed by subsidiaries |
12 |
- |
- |
20,295 |
5,498 |
|
Total non-current assets |
|
23,031 |
10,053 |
26,714 |
11,815 |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Inventories |
13 |
462 |
361 |
- |
- |
|
Receivables |
14 |
1,671 |
183 |
159 |
117 |
|
Cash and cash equivalents |
19 |
41,730 |
55,649 |
41,720 |
55,498 |
|
Total current assets |
|
43,863 |
56,193 |
41,879 |
55,615 |
|
|
|
|
|
|
|
|
Total assets |
|
66,894 |
66,246 |
68,593 |
67,430 |
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
Trade and other payables |
15 |
423 |
- |
- |
- |
|
Total non-current liabilities |
|
423 |
- |
- |
- |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Trade and other payables |
15 |
1,208 |
689 |
689 |
632 |
|
|
|
|
|
|
|
|
Total current liabilities |
|
1,208 |
689 |
689 |
632 |
|
|
|
|
|
|
|
|
Total liabilities |
|
1,631 |
689 |
689 |
632 |
|
|
|
|
|
|
|
|
Net assets |
|
65,263 |
65,557 |
67,904 |
66,798 |
|
|
|
|
|
|
|
|
Capital and reserves attributable to the equity holders of the company |
|
|
|||
|
Share capital |
16 |
921 |
868 |
921 |
868 |
|
Share premium account |
18 |
64,295 |
64,017 |
64,295 |
64,017 |
|
Merger reserve |
18 |
5,816 |
865 |
5,816 |
865 |
|
Shares to be issued |
18 |
- |
5,000 |
- |
5,000 |
|
Presentational currency translation reserve |
18 |
1,061 |
171 |
1,284 |
439 |
|
Other reserve |
18 |
350 |
435 |
350 |
435 |
|
Retained earnings |
18 |
(7,108) |
(5,799) |
(4,762) |
(4,826) |
|
|
|
|
|
|
|
|
Total Equity |
|
65,263 |
65,557 |
67,904 |
66,798 |
The financial statements were approved and authorised for issue by the Board on 29 September 2008. They were signed on its behalf by:
Chris Eadie, Chief Financial Officer
Consolidated and Company Cash Flow Statements
Year ended 31 March 2008
|
|
Group |
|
Company |
|
|
|
2008 |
2007 |
2008 |
2007 |
|
|
$'000 |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
Cash flows from operating activities |
|
|
|
|
|
Loss for the year |
(1,625) |
(3,712) |
(180) |
(3,244) |
|
Depreciation of property, plant and equipment |
210 |
147 |
14 |
6 |
|
Finance income |
(2,957) |
(291) |
(2,990) |
(291) |
|
Finance expense |
79 |
331 |
3 |
574 |
|
Loss on disposal of property, plant and equipment |
17 |
10 |
- |
- |
|
Share based payments |
244 |
658 |
244 |
658 |
|
Foreign exchange differences |
96 |
12 |
202 |
(371) |
|
|
|
|
|
|
|
Cash flow from operating activities before changes in working capital |
(3,936) |
(2,845) |
(2,707) |
(2,668) |
|
|
|
|
|
|
|
(Increase) in inventories |
(101) |
(339) |
- |
- |
|
(Increase) in trade and other receivables |
(1,488) |
(17) |
(42) |
(66) |
|
Increase in trade and other payables |
942 |
25 |
57 |
128 |
|
|
|
|
|
|
|
Cash used by operations from operating activities |
(4,583) |
(3,176) |
(2,692) |
(2,606) |
|
Income taxes paid |
- |
- |
- |
- |
|
|
|
|
|
|
|
Net cash used in operating activities |
(4,583) |
(3,176) |
(2,692) |
(2,606) |
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
Purchase of property, plant and equipment |
(12,617) |
(218) |
(36) |
(2) |
|
Proceeds from the sale of property, plant and equipment |
9 |
4 |
- |
- |
|
Purchases of intangible assets |
(515) |
(2,120) |
- |
- |
|
Interest income |
2,788 |
291 |
2,788 |
291 |
|
|
|
|
|
|
|
Net cash used in investing activities |
(10,335) |
(2,043) |
2,752 |
289 |
Consolidated and Company Cash Flow Statements (Continued)
Year ended 31 March 2008
|
|
Group |
|
Company |
|
|
|
2008 |
2007 |
2008 |
2007 |
|
|
$'000 |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
Issue of ordinary shares |
197 |
63,762 |
197 |
63,762 |
|
Interest paid |
(6) |
(331) |
(3) |
(203) |
|
(Increase) in loans to subsidiaries |
- |
- |
(14,797) |
(3,122) |
|
Expenses paid in connection with share issue |
- |
(3,337) |
- |
(3,337) |
|
|
|
|
|
|
|
Cash flows from financing activities |
191 |
60,094 |
(14,603) |
57,100 |
|
|
|
|
|
|
|
Net (decrease)/increase in cash and cash equivalent |
(14,727) |
54,875 |
(14,543) |
54,783 |
|
Cash and cash equivalents at the beginning of the year |
55,649 |
630 |
55,498 |
558 |
|
Effect of exchange rate changes on cash and cash equivalents |
808 |
144 |
765 |
157 |
|
Cash and cash equivalents at the end of the year |
41,730 |
55,649 |
41,720 |
55,498 |
Consolidated and Company Statement of Recognised Income and Expense
Year ended 31 March 2008
|
|
Group |
|
Company |
|
|
|
2008 |
2007 |
2008 |
2007 |
|
|
$'000 |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
Exchange translation differences on consolidation of Group entities |
890 |
171 |
845 |
439 |
|
Net income recognised directly in equity |
890 |
171 |
845 |
439 |
|
|
|
|
|
|
|
Loss for the financial year |
(1,625) |
(3,712) |
(180) |
(3,243) |
|
|
|
|
|
|
|
Total recognised income and expense for the financial year |
(735) |
(3,541) |
665 |
(2,804) |
|
|
|
|
|
|
|
Attributable to the equity shareholders of the parent company |
(735) |
(3,541) |
665 |
(2,804) |
|
|
|
|
|
|
Notes to the Financial Statements
Year ended 31 March 2008
1. ACCOUNTING POLICIES
The following accounting policies have been applied in the preparation of the financial statements of Aurum Mining Plc.
Adoption of IFRS in the financial year ending 31 March 2008
In the current year the Group has adopted standards and interpretations issued by the International Accounting Standards Board and the International Financial Reporting Interpretations Committee that are relevant to its operations and effective for the Group's financial year end on 31 March 2008. The adoption of these standards and interpretations has resulted in changes to the Group's accounting policies and the impact of the adoption of IFRS on the results for the year ended 31 March 2007 are set out in Note 22 to the financial statements.
Basis of preparation
These financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ('IFRS').
The Group financial statements are presented in United States Dollars, and all values are rounded to the nearest thousand Dollars ($'000) except when otherwise indicated. The functional currencies of the individual Group companies are:
|
Company |
Functional Currency |
|
Aurum Mining Plc |
Great Britain Pound Sterling (GBP) |
|
Kaldora Company Limited |
US $ (USD) |
|
Andash Mining Company |
Kyrgyz Som |
|
Aurum Mining Kazakhstan LLP |
Kazakh Tenge (KZT) |
The financial statements for the financial year ended 31 March 2007 were presented in Great Britain Pound Sterling. The directors have decided to present the financial statements for the year ended 31 March 2008 as United States Dollars are the generally accepted presentational currency for the natural resources sector. The comparative financial statements for the year ended 31 March 2007 have been represented using a rate for the balance sheet of £1:$1.9625, representing the closing rate at 31 March 2007 and income statement of £1:$1.8943, representing the rate approximating the rate ruling at the date of the transaction for the year ended 31 March 2007.
As at the date of approval of these financial statements, the following standards and interpretations were in issue but not yet effective:
|
IFRS 3 (revised) |
Consolidated financial statements |
|
IFRS 8 |
Operating Segments |
|
IFRIC 12 |
Service concession arrangements |
|
IFRIC 13 |
Customer loyalty programmes |
|
IFRIC 14 |
IAS19 - The limit on a defined benefit asset, minimum funding requirements and their interaction |
|
IFRIC 15 |
Agreements for the construction of real estate |
|
IFRIC 16 |
Hedges of a net investment in a foreign operation |
|
IAS 1 (revised) |
Presentation of financial statements |
|
IAS 23 (revised) |
Borrowing costs |
|
IAS 27 (revised) |
Consolidated and Separate Financial Statements |
The Directors do not anticipate that the adoption of these standards and interpretations in future reporting periods will have a material impact on the Group's results.
Accounting estimates and judgements
The Group makes estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may deviate from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:
Mine rehabilitation obligations
Costs associated with rehabilitating land disturbed during the exploration and mining process and addressing environmental, health and community issues are estimated and provided for based on the most current information available. Estimates may, however, be insufficient and/or further issues may be identified. Any underestimate or unidentified rehabilitation costs will reduce earnings and could materially and adversely affect the Group's asset values, earnings and cash flows.
Capitalised mining costs and mining resources
The Group's reserves of precious metals ('mining properties') are estimates based upon geological studies. Over the longer term the actual mineable resources achieved may vary significantly from the current estimates. The Group periodically updates estimates of reserves and assesses those for indicators of impairment relating to its capitalised mining costs.
Base of mining operations
The Group's primary base of operations is in the Kyrgyz Republic. The laws relating to commercial operations, taxation and future dividend payments are still under development and there may be unforeseen changes to the operating and fiscal environment. The financial statements have been prepared on the assumption that no significant adverse changes to the economic, regulatory and fiscal environment will arise.
Carrying values of inventory
The Group monitors internal and external indicators of impairment relating to its inventory. Management has considered whether any indicators of impairment have arisen over certain spares, materials, tools and equipment held in inventory. After assessing these, management has concluded that impairment has arisen in respect of these assets during the year and subsequently to 31 March 2008. Refer to note 13.
Carrying values of PP&E
The Group monitors internal and external indicators of impairment relating to its property, plant and equipment. Management has considered whether any indicators of impairment have arisen over certain assets relating to the Group's mining operations. After assessing these, management has concluded that no impairment has arisen in respect of these assets during the year and subsequently to 31 March 2008.
Useful lives of intangible assets and property, plant and equipment
Intangible assets and PP&E are amortised or depreciated over their useful lives. Useful lives are based on the management's estimates of the period that the assets will generate revenue, which are periodically reviewed for continued appropriateness. Due to the long lives of certain assets, changes to the estimates used could result in significant variations in the carrying value.
Fair value of financial instruments
The Group determines the fair value of financial instruments that are not quoted, based on estimates using present values or other valuation techniques. Those techniques are significantly affected by the assumptions used, including discount rates and estimates of future cash flows. Where market prices are not readily available, fair value is either based on estimates obtained from independent experts or quoted market prices of comparable instruments. In that regard, the derived fair value estimates cannot be substantiated by comparison with independent markets and, in many cases, could not be realised immediately.
Income Taxes
The Group is subject to income taxes in several jurisdictions and in other jurisdictions has significant carried forward tax losses. Significant judgement is required in determining provisions for income taxes and in determining deferred tax assets based on assessment of probability that taxable profits will be available against which carried forward losses can be utilised.
Legal proceedings
In accordance with IFRS the Group only recognises a provision where there is a present obligation from a past event, a transfer of economic benefits is probable and the amount of costs of the transfer can be estimated reliably. In instances where the criteria are not met, a contingent liability may be disclosed in the notes to the financial statements. Realisation of any contingent liabilities not currently recognised or disclosed in the financial statements could have a material effect on the Group's financial position.
Application of these accounting principles to legal cases requires the Group's management to make determinations about various factual and legal matters beyond its control. The Group reviews outstanding legal cases following developments in the legal proceedings and at each balance sheet date, in order to assess the need for provisions in its financial statements. Among the factors considered in making decisions on provisions are the nature of litigation, claim or assessment, the legal process and potential level of damages in the jurisdiction in which the litigation, claim or assessment has been brought, the progress of the case (including the progress after the date of the financial statements but before those statements are issued), the opinions or views of legal advisers, experience on similar cases and any decision of the Group's management as to how it will respond to the litigation, claim or assessment
Share-based payments
In order to calculate the charge for share-based payments as required by IFRS2, the Group makes estimates principally relating to assumptions used in its option-pricing model as set out in note 17.
Basis of consolidation
The consolidated financial statements incorporate the results of Aurum Mining Plc and its subsidiaries as at 31 March 2008.
The subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. The financial statements of subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting policies. All inter-company balances and transactions, including unrealised profits arising from them, are eliminated.
The Company has taken advantage of Section 230 of the Companies Act 1985 in not presenting its own income statement. The Company's loss for the year was $180,000 (2007: loss of $3,243,000).
Foreign currency transactions
Transactions in foreign currencies are initially recorded in the functional currency by applying the spot exchange rate ruling at the date of transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the balance sheet date. All differences are taken to the income statement, except for differences on monetary assets and liabilities that form part of the Group's net investment in a foreign operation. These are taken directly to equity until the disposal of the net investment, at which time they are recognised in profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at the fair value in a foreign currency are translated using exchange rates at the date when the fair value was determined.
The income statements of individual Group companies with functional currencies other than US Dollars are translated into US Dollars at the rate approximating the rate ruling at the date of the transaction and the balance sheet translated at the rate of exchange ruling on the balance sheet date. Exchange differences which arise from translation of the opening net assets and results of such subsidiary undertakings are taken to reserves. On disposal of such entities, the deferred cumulative amount recognised in equity relating to that particular operation is recognised in the income statement.
All other differences are taken to the income statement with the exception of differences on foreign currency borrowings, which, to the extent that they are used to finance or provide a hedge against foreign equity investments, are taken directly to reserves to the extent of the exchange difference arising on the net investment in these enterprises. Tax charges or credits that are directly and solely attributable to such exchange differences are also taken to reserves.
Business combinations
Business combinations are accounted for under IFRS 3 using the purchase method. Any excess of the cost of the business combination over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities is recognised in the balance sheet as goodwill and is regularly reviewed for impairment. To the extent that the net fair value of the acquired entity's identifiable assets, liabilities and contingent liabilities is greater than the cost of the investment, a gain is recognised immediately in the income statement.
Mining properties
Once a decision is made to proceed with the development of a mining project, exploration and evaluation expenditure other than that on buildings, machinery and equipment is capitalised under property, plant and equipment as mining properties, together with any amount transferred from exploration and evaluation assets. Mining properties are amortised over the estimated life of the reserves on a 'unit of production' basis.
Exploration and evaluation assets
All costs associated with mining development and investment are capitalised on a project-by-project basis pending determination of the feasibility of the project. Costs incurred include appropriate technical and administrative expenses but not general overheads. When a decision is made to proceed to development, the related expenditures will be transferred to mining properties. Where a licence is relinquished, a project is abandoned, or is considered to be of no further commercial value to the company, the related costs will be written off.
The recoverability of deferred mining costs and mining interests is dependent upon the discovery of economically recoverable reserves, the ability of the company to obtain necessary financing to complete the development of reserves and future profitable production or proceeds from the disposition of recoverable reserves.
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.
Property, plant and equipment
Property, plant and equipment, is stated at cost less depreciation and impairment losses. Cost includes the purchase price plus any directly attributable costs to bring the asset into working condition and location for its intended use.
Depreciation is provided on all property, plant and equipment at rates calculated to write off the cost of each asset over its useful life:
|
Office and computer equipment |
20% to 33% per annum |
|
Plant and Equipment: |
20% to 33% per annum |
|
Vehicles |
33% per annum |
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.
Investments in subsidiaries
Fixed asset investments in subsidiary undertakings are shown at cost less provisions for impairment. The cost of acquisition includes directly attributable professional fees and other expenses incurred in connection with the acquisition.
Amounts owed by subsidiaries
Amounts owed by subsidiaries are treated as receivables. Refer to the receivables accounting policy for further details.
Operating leases
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases and rentals payable are charged to the income statement on a straight line basis over the term of the lease.
Finance leases
Leases of plant and equipment where the Group assumes a significant portion of risks and rewards of ownership are classified as a finance lease. Finance leases are capitalised at the estimated present value of the underlying lease payments. Each lease payment is classified between the liability and the finance charges to achieve a constant rate on the finance balance outstanding. Finance charges are charged directly against income, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Group's policy on borrowing costs. The plant and equipment acquired under the finance leases are depreciated over the useful lives of the assets, or over the lease term if shorter.
Impairment of assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. 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. Impairment losses of continuing operations are recognised in the income statement in those expense categories consistent with the function of the impaired asset.
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated.
A previously recognised impairment loss is reversed only if permitted by International Financial Reporting Standards and if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation or amortisation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit and loss. After such a reversal the depreciation or amortisation charge is adjusted in future periods to allocate the asset's revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.
Inventories
Inventory is valued at lower of cost and net realisable value. Cost is based on the cost of purchase on a first in, first out basis. Net realisable value is based on estimated selling price less additional costs to disposal.
Finance costs and debt
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
Financial Instruments
Financial assets and financial liabilities are recognised in the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.
Receivables
Receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Bank borrowings
Interest-bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accrual basis in profit or loss using the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.
Convertible loan notes
Convertible loan notes are regarded as compound financial instruments, consisting of liability and equity components. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible debt. The fair value of warrants included in compound financial instruments are fair valued at the date of grant using the Black-Scholes model and credited to a warrant reserve. The difference between the proceeds of issue of the convertible loan notes and the fair values assigned to the liability component and warrants, representing the embedded option to convert the liability into equity of the Group, is included in equity.
Issue costs are apportioned between the liability and equity components of the convertible loan notes based on their relative carrying amounts at the date of issue. The portion relating to the equity components is charged directly against equity.
The interest expense on the liability component is calculated by applying the prevailing market interest rate for similar non-convertible debt to the liability component of the instrument. The difference between this amount and the interest paid is added to the carrying amount of the convertible loan note.
Trade payables
Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.
Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to settle that obligation. Provisions are measured at the directors' best estimate of the expenditure required to settle the obligation at the balance sheet date, and are discounted to present value where the effect is material.
Finance income and expense
Finance income comprises interest income on funds invested and foreign exchange gains. Interest income is recognised as it accrues, calculated in accordance with the effective interest rate method.
Finance costs comprise interest expense on borrowings, the accumulation of interest on provisions and foreign exchange losses. All interest and other costs incurred in connection with borrowings are expensed as incurred as part of finance costs.
Income taxes
Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements, with the following exceptions:
-
where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination that at the time of the transaction affect neither accounting nor taxable profit or loss;
-
deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carried forward tax credits or losses can be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply when the related asset is realised or liability is settled, based on tax rates and laws enacted or substantively enacted at the balance sheet date.
Income tax is charged or credited directly to equity if it relates to items that are credited or charge to equity. Otherwise income tax is recognised in the income statement.
Rehabilitation obligations
Rehabilitation obligations include future estimated costs of closure and restoration in returning disturbed areas to their original state. Estimated rehabilitation obligations are provided for in the accounting period when the obligation arising from the related disturbance occurs and is based on the net present value of estimated future costs. The unwinding of the discount is included in finance costs. At the time of establishing the provision, a corresponding asset is capitalised, where it gives rise to a future benefit, and is depreciated over the future production from the mine to which it relates.
The provision is reviewed on an annual basis for changes to obligations and discount rates that effect cost estimates or life of operations. The cost of the related asset is adjusted for such changes in the provision and the adjusted cost of the asset is depreciated prospectively.
National Insurance on share options
To the extent that the share price as at the balance sheet date is greater than the exercise price of outstanding options, provision for any National Insurance contributions has been made based on the prevailing rate. The provision is accrued over the performance period attaching to the award.
Pension contribution
The Group does not enter into any pension scheme arrangements. The Group does make payments in lieu of pensions for certain individuals; these costs are expensed as incurred.
Share-based payments
The cost of equity-settled transactions with suppliers of goods and services is measured by reference to the fair value of the good or service received, unless that fair value cannot be estimated reliably. The fair value of the good or service received is recognised as an expense as the Group receives the good or service. The cost of equity-settled transactions with employees, and transactions with suppliers where fair value cannot be estimated reliably, is measured by reference to the fair value of the equity instrument. The fair value of equity-settled transactions with employees is recognised as an expense over the vesting period. The fair value of the equity instrument is determined at the date of grant, taking into account market based vesting conditions. The fair value is determined using an option pricing model.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance conditions are satisfied.
At each balance sheet date before vesting, the cumulative expense is calculated, representing the extent to which the vesting period has expired and management's best estimate of the achievement or otherwise of non-market conditions, the number of equity instruments that will ultimately vest, or in the case of an instrument subject to a market condition, be treated as vesting as described above. The movement in cumulative expense since the previous balance sheet date is recognised in the income statement, with a corresponding entry in equity.
2. SEGMENTAL INFORMATION
For management purposes the Group is organised into two operating divisions, Mining and Corporate. These divisions are the basis on which the Group reports its primary segment information.
Principal activities are as follows:
Corporate - The head office activities of the Group are based in the United Kingdom.
Mining - The mining, production and exploration of gold and other precious metals in the Kyrgyz Republic.
The segment results areas as follows:
|
Year ended 31 March 2008 |
Corporate $'000 |
Mining $'000 |
Group $'000 |
|
|
|
|
|
|
Operating expenses |
(3,167) |
(1,336) |
(4,503) |
|
|
|
|
|
|
Segment result |
(3,167) |
(1,336) |
(4,503) |
|
|
|
|
|
|
Finance income |
|
|
2,957 |
|
Finance expenses |
|
|
(79) |
|
|
|
|
|
|
Loss before taxation |
|
|
(1,625) |
|
Taxation |
|
|
- |
|
|
|
|
|
|
Loss for the year |
|
|
(1,625) |
|
Year ended 31 March 2007 |
Corporate $'000 |
Mining $'000 |
Group $'000 |
|
|
|
|
|
|
Operating expenses |
(2,961) |
(711) |
(3,672) |
|
|
|
|
|
|
Segment result |
(2,961) |
(711) |
(3,672) |
|
|
|
|
|
|
Finance income |
|
|
291 |
|
Finance expenses |
|
|
(331) |
|
|
|
|
|
|
Loss before taxation |
|
|
(3,712) |
|
Taxation |
|
|
- |
|
|
|
|
|
|
Loss for the year |
|
|
(3,712) |
Other segment items included in the income statement are as follows:
|
Year ended 31 March 2008 |
Corporate $'000 |
Mining $'000 |
Group $'000 |
|
|
|
|
|
|
Depreciation |
14 |
196 |
210 |
|
Share based compensation charges |
244 |
- |
244 |
|
Year ended 31 March 2007 |
Corporate $'000 |
Mining $'000 |
Group $'000 |
|
|
|
|
|
|
Depreciation |
6 |
141 |
147 |
|
Share based compensation charges |
658 |
- |
658 |
The segment assets and liabilities and capital expenditure are analysed as follows:
|
Year ended 31 March 2008 |
Corporate $'000 |
Mining $'000 |
Group $'000 |
|
|
|
|
|
|
Segment assets |
41,914 |
24,980 |
66,894 |
|
Segment liabilities |
(689) |
(942) |
(1,631) |
|
|
|
|
|
|
Segment net assets |
41,225 |
24,038 |
65,263 |
|
|
|
|
|
|
Capital expenditure |
28 |
13,104 |
13,132 |
|
Year ended 31 March 2007 |
Corporate $'000 |
Mining $'000 |
Group $'000 |
|
|
|
|
|
|
Segment assets |
55,612 |
10,634 |
66,246 |
|
Segment liabilities |
(632) |
(57) |
(689) |
|
|
|
|
|
|
Segment net assets |
54,980 |
10,577 |
65,557 |
|
|
|
|
|
|
Capital expenditure |
2 |
2,336 |
2,338 |
3. OPERATING LOSS
Operating loss is stated after charging:
|
|
2008 $'000 |
2007 $'000 |
|
|
|
|
|
Depreciation |
210 |
147 |
|
Operating lease expense |
238 |
133 |
|
External auditors' remuneration |
|
|
|
- Fees payable to the Company's auditors for the annual audit of the group financial statements |
80 |
45 |
|
- Fees payable to the Company's auditors for the auditing of accounts of associates of the Company under legislation |
20 |
19 |
|
- Other services |
- |
- |
|
Loss on disposal of assets |
17 |
10 |
|
Share-based payments |
244 |
658 |
The Group has a policy in place for the award of non-audit work to the auditors, which requires approval of the audit committee.
4. STAFF COSTS
|
|
Group |
|
Company |
|
|
|
2008 $'000 |
2007 $'000 |
2008 $'000 |
2007 $'000 |
|
|
|
|
|
|
|
Wages and salaries |
2,075 |
1,104 |
1,202 |
807 |
|
Social security costs |
228 |
87 |
56 |
25 |
|
Pension costs |
8 |
- |
8 |
- |
|
Share based payments |
244 |
658 |
244 |
658 |
|
National insurance on share options |
(43) |
261 |
(43) |
261 |
|
|
|
|
|
|
|
|
2,512 |
2110 |
1,467 |
1751 |
Staffs costs include executive Directors' salaries; fees, benefits and share based payments and are shown gross.
The weighted average monthly number of employees, including executive Directors, employed by the Group and the Company during the year was:
|
|
Group |
|
Company |
|
|
|
2008 |
2007 |
2008 |
2007 |
|
|
|
|
|
|
|
Administration |
73 |
25 |
6 |
4 |
|
Operations |
31 |
19 |
- |
- |
|
|
|
|
|
|
|
Total |
104 |
44 |
6 |
4 |
5. DIRECTORS' EMOLUMENTS - GROUP AND COMPANY
|
|
2008 |
2007 |
|
|
$'000 |
$'000 |
|
|
|
|
|
Directors' emoluments |
1,105 |
752 |
|
Social security costs |
47 |
19 |
|
Pension costs |
8 |
- |
|
Share based payments |
244 |
658 |
|
National insurance on share options |
(43) |
261 |
|
|
1,361 |
1,690 |
The highest paid Director received emoluments totalling $624,924 (2007: $386,437) and share based payments of $127,090 (2007: $350,446).
M Jones is paid via J Cubed Ventures Ltd, a private service company.
S Finlay is paid via Mostop Ltd, a private service company.
C Knight is paid via Knights Consultants Ltd, a private service company.
J Webster is paid via Laverock Ventures Ltd, a private service company.
6. FINANCE INCOME AND EXPENSES
Recognised in profit or loss
|
|
2008 $'000 |
2007 $'000 |
|
|
|
|
|
Finance income |
|
|
|
Bank interest receivable |
2,788 |
291 |
|
Total interest income calculated using effective interest method |
2,788 |
291 |
|
|
|
|
|
Exchange gains |
169 |
- |
|
|
2,957 |
291 |
|
Finance expenses |
|
|
|
Bank interest payable |
3 |
- |
|
Lease interest payable |
3 |
- |
|
Interest payable on Convertible Loan Note (Note 19) |
- |
203 |
|
Total interest expense calculated using effective interest method |
6 |
203 |
|
|
|
|
|
Exchange losses |
73 |
128 |
|
|
79 |
331 |
|
|
|
|
|
Net finance income/(expense) recognised in profit or loss |
2,878 |
(40) |
The above net finance income/(expense) includes the following in respect of assets/(liabilities) not at fair value through profit or loss.
|
|
2008 $'000 |
2007 $'000 |
|
|
|
|
|
Total finance income on financial assets |
2,788 |
291 |
|
Total finance expense on financial liabilities |
(6) |
(203) |
|
|
2,782 |
88 |
7. TAXATION
No current or deferred tax charge has arisen in the current year.
The Company and the Group have incurred tax losses for the year and a corporation tax charge is not anticipated. The potential benefit of these carried forward taxation losses calculated at the rates of tax prevailing in the countries in which the losses were incurred amount to approximately $456k (2007: $908k). This amount has not been recognised in the financial statements as the recovery of this benefit is dependent on the future profitability of certain subsidiaries, the timing of which cannot be reasonably foreseen.
The Directors believe that there have been no breaches of foreign tax regulations and that all necessary provisions have been made in these accounts.
Current taxation
The tax assessed for the year is different from the standard rate of Corporation Tax in the UK. The differences are explained below:
|
|
2008 |
2007 |
|
|
$'000 |
$'000 |
|
|
|
|
|
Loss on ordinary activities before taxation |
(1,625) |
(3,712) |
|
Loss on ordinary activities at the standard rate of Corporation tax in the UK of 30% (2007: 30%) |
(488) |
(1,114) |
|
Effects of: |
|
|
|
Expenses not deductible for tax purposes |
32 |
206 |
|
Unutilised tax losses carried forward |
456 |
908 |
|
Current tax charge |
- |
- |
The Group did not recognise any deferred tax assets or liabilities at 31 March 2008 or 2007.
8. LOSS PER SHARE
Loss per share is calculated based on a loss of $1,625,000 (2007: $3,712,000) on a weighted average of ordinary shares in issue during the year of 45,467,005 (2007: 14,645,392).
The diluted loss per share is calculated on the loss attributable to equity shareholders and on the weighted average diluted number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.
In 2008 and 2007 the potential ordinary shares are anti-dilutive and therefore diluted loss per share has not been calculated.
The options and other potentially dilutive instruments are disclosed in Note 17 to the financial statements.
9. PROPERTY, PLANT AND EQUIPMENT
|
Group |
Office and Computer equipment |
Plant, Equipment and vehicles |
Mining Properties |
Total |
|
|
$'000 |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
Cost |
|
|
|
|
|
At 1 April 2006 |
59 |
587 |
- |
646 |
|
Foreign currency re-translation |
(4) |
(67) |
- |
(71) |
|
Additions |
14 |
204 |
- |
218 |
|
Disposals |
- |
(20) |
- |
(20) |
|
Transfer from unevaluated mining properties |
- |
- |
9,544 |
9,544 |
|
|
|
|
|
|
|
At 1 April 2007 |
69 |
704 |
9,544 |
10,317 |
|
|
|
|
|
|
|
Foreign currency re-translation |
- |
- |
80 |
80 |
|
Additions |
100 |
10,640 |
1,877 |
12,617 |
|
Disposals |
(1) |
(35) |
- |
(36) |
|
|
|
|
|
|
|
At 31 March 2008 |
168 |
11,309 |
11,501 |
22,978 |
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
At 1 April 2006 |
18 |
112 |
- |
130 |
|
Foreign currency re-translation |
|
(12) |
- |
(12) |
|
Charge for the year |
15 |
137 |
- |
152 |
|
Disposals |
- |
(6) |
- |
(6) |
|
|
|
|
|
|
|
At 1 April 2007 |
33 |
231 |
- |
264 |
|
Foreign currency re-translation |
(1) |
(1) |
- |
(2) |
|
Charge for the year |
36 |
174 |
- |
210 |
|
Disposals |
- |
(10) |
- |
(10) |
|
|
|
|
|
|
|
At 31 March 2008 |
68 |
394 |
- |
462 |
|
|
|
|
|
|
|
Net book value |
|
|
|
|
|
At 31 March 2008 |
100 |
10,915 |
11,501 |
22,516 |
|
|
|
|
|
|
|
At 31 March 2007 |
36 |
473 |
9,544 |
10,053 |
Mining properties relate to the Andash asset. There is currently a civil case being heard in the Bishkek Inter-District Court of Kyrgyz Republic concerning a historical transaction involving the transfer of a number of assets (of which the Andash asset is one) prior to Aurum's acquisition of Andash Mining Company in January 2005. This litigation will not be resolved until after the publication of these financial statements. The Directors are confident that the Group will eventually receive a favourable judgment in relation to the asset, however there is no guarantee of this. Should it become apparent that a favourable judgment is unlikely to be granted, the Andash asset will be written down to its net realisable value.
Included within plant, equipment and vehicles is an amount of $91,366 (2007: $Nil), which represents capitalised interest.
The net book value of non-current assets held under finance leases was:
|
|
2008 |
2007 |
|
|
$,000 |
$,000 |
|
|
|
|
|
Cost |
1,243 |
- |
|
Depreciation |
- |
- |
|
Net book value |
1,243 |
- |
|
Company |
Office and computer equipment $'000 |
|
Cost |
|
|
At 1 April 2006 |
26 |
|
Additions |
2 |
|
At 1 April 2007 |
28 |
|
Additions |
36 |
|
At 31 March 2008 |
64 |
|
|
|
|
Depreciation |
|
|
At 1 April 2006 |
9 |
|
Charge for the year |
6 |
|
At 1 April 2007 |
15 |
|
Charge for the year |
14 |
|
At 31 March 2008 |
29 |
|
|
|
|
Net book value |
|
|
At 31 March 2008 |
35 |
|
|
|
|
At 31 March 2007 |
13 |
10. INTANGIBLE ASSETS
|
|
Unevaluated mining properties |
|
Group |
$'000 |
|
|
|
|
Cost |
|
|
As at 1 April 2006 |
2,562 |
|
Foreign currency re-translation |
(138) |
|
Additions during the year |
7,120 |
|
Transfer to mining properties |
(9,544) |
|
|
|
|
At 1 April 2007 |
- |
|
|
|
|
Additions during the year |
515 |
|
At 31 March 2008 |
515 |
|
|
|
|
Net book value |
|
|
At 31 March 2008 |
515 |
|
|
|
|
At 31 March 2007 |
- |
The exploration and evaluation assets are considered to be intangible assets.
The Company had no intangible assets at 31 March 2008 or at 31 March 2007.
11. INVESTMENT IN SUBSIDIARIES
|
|
Investments in subsidiaries |
|
Company |
$'000 |
|
|
|
|
Cost |
|
|
At 1 April 2006 |
1,304 |
|
Additions |
5,000 |
|
|
|
|
At 1 April 2007 |
6,304 |
|
Foreign currency re-translation |
80 |
|
Additions |
- |
|
|
|
|
At 31 March 2008 |
6,384 |
The Company had the following subsidiary undertakings at 31 March 2008 and 31 March 2007 which have been included in the consolidated financial statements:
|
|
Percentage interest |
Country of incorporation |
Activity |
||
|
|
|
|
|
|
|
|
|
2008 |
2007 |
|
|
|
|
|
% |
% |
|
|
|
|
|
|
|
|
|
|
|
Kaldora Company Limited |
100 |
100 |
|
British Virgin Islands |
Holding company |
|
|
|
|
|
|
|
|
Andash Mining Company |
100 |
100 |
|
Kyrgyz Republic |
Mining and exploration |
|
|
|
|
|
|
|
|
Aurum Mining Kazakhstan LLP |
100 |
- |
|
Republic of Kazakhstan |
Mining and exploration |
Aurum Mining Kazakhstan LLP was incorporated on 26 April 2007. The Company has been set up for the purpose of assisting the Group in reviewing potential investment opportunities in Kazakhstan, which neighbours the Kyrgyz Republic.
12. AMOUNTS OWED BY SUBSIDIARIES
|
|
Company |
|
|
|
2008 $'000 |
2007 $'000 |
|
|
|
|
|
Amounts owed by subsidiaries |
20,295 |
5,498 |
The fair value of the transactions with subsidiaries are not materially different to the carrying values presented. The amounts owed by subsidiaries are unsecured, interest free and receivable on demand but are not expected to be fully received within the next twelve months but when the project reaches such an advanced stage of development that it can be repaid out of the proceeds of project cash flow.
13. INVENTORIES
|
|
Group |
|
Company |
|
|
|
2008 $'000 |
2007 $'000 |
2008 $'000 |
2007 $'000 |
|
|
|
|
|
|
|
Raw materials and consumables |
462 |
361 |
- |
- |
Inventory consists of spare parts, fuel and various materials used in exploration and mining operations. Full provision of $92,000 (2007:£nil) was made at year end in respect of steel held by third party on behalf of Andash Mining Company. The ownership of this material is now disputed.
14. RECEIVABLES
|
|
Group |
|
Company |
|
|
|
2008 $'000 |
2007 $'000 |
2008 $'000 |
2007 $'000 |
|
|
|
|
|
|
|
Other debtors |
1,204 |
62 |
- |
- |
|
VAT recoverable |
257 |
- |
- |
- |
|
Prepayments |
146 |
121 |
95 |
117 |
|
Accrued income |
64 |
- |
64 |
- |
|
|
1,671 |
183 |
159 |
117 |
The fair value of receivables is not materially different from the carrying value.
Other debtors
The Group's subsidiary in the Kyrgyz Republic has entered into several contractual commitments with various suppliers for the supply of goods and services. The advance payments are to be repaid by way of deductions from future service invoices of the contractors. A provision of $73,000 (2007: $nil) was made against an advance payment to a supplier that is now in dispute.
VAT Recoverable
The Group's subsidiary is a registered value added tax payer in the Kyrgyz Republic and therefore has a right to be reimbursed for value added tax paid on purchased goods and services. The Group's management believes that the subsidiary would be able to recover the value added tax on the successful development of the resource and commercial production.
15. TRADE AND OTHER PAYABLES
|
|
Group |
|
Company |
|
|
|
2008 $'000 |
2007 $'000 |
2008 $'000 |
2007 $'000 |
|
|
|
|
|
|
|
Current |
|
|
|
|
|
Trade creditors |
191 |
22 |
146 |
14 |
|
Obligations under finance leases |
241 |
- |
- |
- |
|
Other taxation and social security |
62 |
90 |
22 |
74 |
|
Accruals and deferred income |
714 |
577 |
521 |
544 |
|
|
1,208 |
689 |
689 |
632 |
|
|
|
|
|
|
|
Non-current |
|
|
|
|
|
Obligations under finance leases |
423 |
- |
- |
- |
|
|
423 |
- |
- |
- |
The fair value of trade and other payables is not materially different from the carrying value.
Maturity analysis of financial liabilities:
|
|
Group |
|
Company |
|
|
|
2008 $'000 |
2007 $'000 |
2008 $'000 |
2007 $'000 |
|
|
|
|
|
|
|
Less than 3 months |
795 |
418 |
457 |
361 |
|
3-6 months |
61 |
- |
- |
- |
|
6-12 months |
352 |
271 |
232 |
271 |
|
1-5 years |
423 |
- |
- |
- |
|
|
1,631 |
689 |
689 |
632 |
16. SHARE CAPITAL
|
|
Number £0.01 Ordinary shares '000 |
$'000 |
|
Authorised ordinary shares |
|
|
|
At beginning of year |
200,000 |
3,474 |
|
At end of year |
200,000 |
3,474 |
|
|
|
|
|
|
2008 |
2007 |
||
|
|
£0.01 ordinary shares |
$'000 |
£0.01 ordinary shares |
$'000 |
|
Allotted, issued and fully paid ordinary shares |
|
|
|
|
|
At beginning of year |
45,467,005 |
868 |
9,505,775 |
165 |
|
Conversion of Loan Notes |
- |
- |
2,857,135 |
56 |
|
Conversion of accrued interest on Loan Notes |
26,270 |
1 |
244,402 |
5 |
|
Conversion of Warrants |
195,000 |
3 |
- |
- |
|
Share options exercised |
- |
|
81,915 |
1 |
|
Shares issued |
2,500,000 |
49 |
32,777,778 |
641 |
|
|
|
|
|
|
|
At end of year |
48,188,275 |
921 |
45,467,005 |
868 |
On 25 April 2007, 2,500,000 ordinary shares of 1p were allotted at $2 per share to the vendors of Kaldora Company Limited for deferred consideration as part of the acquisition of Andash Mining Company. The difference between the nominal value of the shares issued and the consideration paid of $2 per share has been credited to the merger reserve account.
On 14 May 2007, 26,270 ordinary shares of 1p were allotted following the conversion of accrued interest on loan notes issued on 15 February 2006 at the previously agreed conversion price of 35 pence per share.
On 4 December 2007, 170,000 ordinary shares of 1p were allotted following the conversion of warrants issued on 15 February 2006 at the previously agreed conversion price of 45 pence per share.
On 24 January 2008, 25,000 ordinary shares of 1p were allotted following the conversion of warrants issued on 15 February 2006 at the previously agreed conversion price of 45 pence per share.
17. SHARE OPTIONS AND WARRANTS
Share Options
The following options over ordinary shares have been granted and remained outstanding at 31 March 2008:
|
Exercise Price |
Outstanding at 1 April 2007 |
Granted During year |
Exercised During year |
Outstanding at 31 March 2008 |
Final exercise date |
|
|
|
|
|
|
|
|
47p |
500,000 |
- |
- |
500,000 |
06/05/2009 |
|
55.5p |
2,000,000 |
- |
- |
2,000,000 |
23/02/2011 |
|
84p |
500,000 |
- |
- |
500,000 |
01/05/2010 |
|
99.5p |
500,000 |
- |
- |
500,000 |
08/12/2011 |
|
|
3,500,000 |
- |
- |
3,500,000 |
|
The following options over ordinary shares have been granted and remained outstanding at 31 March 2007:
|
Exercise Price |
Outstanding at 1 April 2006 |
Granted During Year |
Exercised During year |
Outstanding at 31 March 2007 |
Final exercise date |
|
|
|
|
|
|
|
|
47p |
500,000 |
- |
- |
500,000 |
06/05/2009 |
|
47p |
81,915 |
- |
(81,915) |
- |
06/05/2007 |
|
55.5p |
2,000,000 |
- |
- |
2,000,000 |
23/02/2011 |
|
84p |
500,000 |
- |
- |
500,000 |
01/05/2010 |
|
99.5p |
- |
500,000 |
- |
500,000 |
08/12/2001 |
|
|
3,081,915 |
500,000 |
(81,915) |
3,500,000 |
|
Warrants
The following warrants over ordinary shares have been granted and remained outstanding at
31 March 2008:
|
Exercise Price |
Outstanding at 1 April 2007 |
Granted During Year |
Exercised During year |
Outstanding at 31 March 2008 |
Final exercise date |
|
|
|
|
|
|
|
|
45p |
1,000,000 |
- |
195,000 |
805,000 |
15/02/2016 |
The following warrants over ordinary shares have been granted and remained outstanding at 31 March 2007:
|
Exercise Price |
Outstanding at 1 April 2006 |
Granted During Year |
Exercised During year |
Outstanding at 31 March 2007 |
Final exercise date |
|
|
|
|
|
|
|
|
45p |
1,000,000 |
- |
- |
1,000,000 |
15/02/2016 |
Options and warrants held by Directors are disclosed in the report of the Directors.
The market price of shares as at 4 March 2008 (suspension date) was £0.94 (2007: £1.04). The range during the financial year was £0.69 to £1.20.
The expense recognised for share-based payments in respect of Directors and consultant services received during the year ended 31 March 2008 was $243,605 (2007: $681,600).
The following illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share options during the year.
|
|
2008 Number |
2008 WAEP |
2007 Number |
2007 WAEP |
|
|
|
Pence |
|
Pence |
|
|
|
|
|
|
|
Outstanding at beginning of year |
3,500,000 |
64.64 |
3,081,915 |
58.52 |
|
Granted during the year |
- |
- |
500,000 |
99.50 |
|
Exercised |
- |
- |
81,915 |
47.00 |
|
Outstanding at 31 March |
3,500,000 |
64.64 |
3,500,000 |
64.64 |
|
Exercisable at 31 March |
2,800,000 |
63.79 |
2,800,000 |
63.79 |
The following table lists the inputs to the model used for the year ended 31 March 2007. No options were granted in the year ended 31 March 2008.
|
|
|
2008 |
2007 |
|
|
|
|
|
|
Option pricing model used |
|
- |
Black-Scholes |
|
Weighted average share price at grant date (pence) |
|
- |
64.51 |
|
Weighted average exercise price |
|
- |
64.64 |
|
Weighted average expected option life (year) |
|
- |
5.63 |
|
Weighted average share price volatility (%) |
|
- |
50% |
|
Weighted average dividend yield |
|
- |
Nil |
|
Weighted average risk-free interest rate (%) |
|
- |
5.5% |
|
|
|
|
|
|
|
|
|
|
In forming the volatility assumptions the Directors considered the volatility of the share price since the date of listing. The volatility of companies operating in the same sector was also reviewed. Based on these factors the volatility assumption was assessed at 50%.
18. RESERVES
|
|
Share premium |
Merger reserve |
Shares to be issued |
Presentational currency translation reserve |
Option premium on convertible loan |
Warrant reserve |
Retained earnings |
Total |
|
Group |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
|
|
|
|
At 1 April 2007 |
64,017 |
865 |
5,000 |
171 |
- |
435 |
(5,799) |
64,689 |
|
|
|
|
|
|
|
|
|
|
|
Share based payments |
- |
- |
- |
- |
- |
- |
244 |
244 |
|
|
|
|
|
|
|
|
|
|
|
Issue of 2,500,000 shares |
- |
4,951 |
(5,000) |
- |
- |
- |
- |
(49) |
|
|
|
|
|
|
|
|
|
|
|
Issue of 26,270 shares following conversion of Loan Notes accrued interest |
18 |
- |
- |
- |
- |
- |
- |
18 |
|
|
|
|
|
|
|
|
|
|
|
Issue of 195,000 shares following conversion of warrants |
175 |
- |
- |
- |
- |
- |
- |
175 |
|
|
|
|
|
|
|
|
|
|
|
Exercise of warrants |
85 |
- |
- |
- |
- |
(85) |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
Loss for the year |
- |
- |
- |
- |
- |
- |
(1,625) |
(1,625) |
|
|
|
|
|
|
|
|
|
|
|
Exchange differences on retranslation |
- |
- |
- |
890 |
- |
- |
- |
890 |
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2008 |
64,295 |
5,816 |
- |
1,061 |
- |
350 |
(7,180) |
64,342 |
|
|
Share premium |
Merger reserve |
Shares to be issued |
Presentational currency translation reserve |
Option premium on convertible loan |
Warrant reserve |
Retained earnings |
Total |
|
Group |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
|
|
|
|
At 1 April 2006- as restated |
2,931 |
865 |
- |
- |
93 |
435 |
(2,745) |
1,579 |
|
|
|
|
|
|
|
|
|
|
|
Issue expenses |
(3,337) |
- |
- |
- |
- |
- |
- |
(3,337) |
|
|
|
|
|
|
|
|
|
|
|
Share based payments |
- |
- |
- |
- |
- |
- |
658 |
658 |
|
|
|
|
|
|
|
|
|
|
|
Shares to be issued |
- |
- |
5,000 |
- |
- |
- |
- |
5,000 |
|
|
|
|
|
|
|
|
|
|
|
Equity proportion of convertible Loan Notes |
- |
- |
- |
- |
(93) |
- |
- |
(93) |
|
|
|
|
|
|
|
|
|
|
|
Issue of 81,915 shares following exercise of share options |
67 |
- |
- |
- |
- |
- |
- |
67 |
|
|
|
|
|
|
|
|
|
|
|
Issue of 2,777,778 shares at a premium of 89 pence |
4,673 |
- |
- |
- |
- |
- |
- |
4,673 |
|
|
|
|
|
|
|
|
|
|
|
Issue of 30,000,000 shares at a premium of 99 pence |
58,212 |
- |
- |
- |
- |
- |
- |
58,212 |
|
|
|
|
|
|
|
|
|
|
|
Issue of 3,101,537 shares following conversion of Loan Notes and accrued interest |
1,471 |
- |
- |
- |
- |
- |
- |
1,471 |
|
|
|
|
|
|
|
|
|
|
|
Issue of 3,101,537 shares following conversion of Loan Notes and accrued interest |
1,471 |
- |
- |
- |
- |
- |
- |
1,471 |
|
|
|
|
|
|
|
|
|
|
|
Loss for the year |
- |
- |
- |
- |
- |
- |
(3,712) |
(3,712) |
|
|
|
|
|
|
|
|
|
|
|
Exchange differences on retranslation |
- |
- |
- |
171 |
- |
- |
- |
171 |
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2007 |
64,017 |
865 |
5,000 |
171 |
- |
435 |
(5,799) |
64,689 |
|
|
Share premium |
Merger reserve |
Shares to be issued |
Presentational currency translation reserve |
Option premium on convertible loan |
Warrant reserve |
Retained earnings |
Total |
|
Group |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
|
|
|
|
Company |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 April 2007 |
64,017 |
865 |
5,000 |
439 |
- |
435 |
(4,826) |
65,930 |
|
|
|
|
|
|
|
|
|
|
|
Share based payments |
- |
- |
- |
- |
- |
- |
244 |
244 |
|
|
|
|
|
|
|
|
|
|
|
Issue of 2,500,000 shares |
- |
4,951 |
(5,000) |
- |
- |
- |
- |
(49) |
|
|
|
|
|
|
|
|
|
|
|
Issue of 26,270 shares following conversion of Loan Notes accrued interest |
18 |
- |
- |
- |
- |
- |
- |
18 |
|
|
|
|
|
|
|
|
|
|
|
Issue of 195,000 shares following conversion of warrants |
175 |
- |
- |
- |
- |
- |
- |
175 |
|
|
|
|
|
|
|
|
|
|
|
Exercise of warrants |
85 |
- |
- |
- |
- |
(85) |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
Loss for the year |
- |
- |
- |
- |
- |
- |
(180) |
(180) |
|
|
|
|
|
|
|
|
|
|
|
Exchange differences on retranslation |
- |
- |
- |
845 |
- |
- |
- |
845 |
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2008 |
64,295 |
5,816 |
- |
1,284 |
- |
350 |
(4,762) |
66,983 |
|
|
Share premium |
Merger reserve |
Shares to be issued |
Presentational currency translation reserve |
Option premium on convertible loan |
Warrant reserve |
Retained earnings |
Total |
|
Company |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
|
|
|
|
At 1 April 2006- as restated |
2,931 |
865 |
- |
- |
93 |
435 |
(2,241) |
2,083 |
|
|
|
|
|
|
|
|
|
|
|
Issue expenses |
(3,337) |
- |
- |
- |
- |
- |
- |
(3,337) |
|
|
|
|
|
|
|
|
|
|
|
Share based payments |
- |
- |
- |
- |
- |
- |
658 |
658 |
|
|
|
|
|
|
|
|
|
|
|
Shares to be issued |
- |
- |
5,000 |
- |
- |
- |
- |
5,000 |
|
|
|
|
|
|
|
|
|
|
|
Equity proportion of convertible Loan Notes |
- |
- |
- |
- |
(93) |
- |
- |
(93) |
|
|
|
|
|
|
|
|
|
|
|
Issue of 81,915 shares following exercise of share options |
67 |
- |
- |
- |
- |
- |
- |
67 |
|
|
|
|
|
|
|
|
|
|
|
Issue of 2,777,778 shares at a premium of 89 pence |
4,673 |
- |
- |
- |
- |
- |
- |
4,673 |
|
|
|
|
|
|
|
|
|
|
|
Issue of 30,000,000 shares at a premium of 99 pence |
58,212 |
- |
- |
- |
- |
- |
- |
58,212 |
|
|
|
|
|
|
|
|
|
|
|
Issue of 3,101,537 shares following conversion of Loan Notes and accrued interest |
1,471 |
- |
- |
- |
- |
- |
- |
1,471 |
|
|
|
|
|
|
|
|
|
|
|
Loss for the year |
- |
- |
- |
- |
- |
- |
(3,243) |
(3,243) |
|
|
|
|
|
|
|
|
|
|
|
Exchange differences on retranslation |
- |
- |
- |
439 |
- |
- |
- |
439 |
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2007 |
64,017 |
865 |
5,000 |
439 |
- |
435 |
(4,826) |
65,930 |
|
|
|
|
|
|
|
|
|
|
The following describes the nature and purpose of each reserve within owners' equity.
|
Reserve |
Description and purpose |
|
Share premium |
Amounts subscribed for share capital in excess of nominal value. |
|
Merger reserve |
Merger relief reserve for amount in excess of nominal value on issue of shares in relation to business combinations. |
|
Other reserves- Option premium on convertible loan |
Amount of proceeds on issue of convertible debt relating to the equity component (i.e. option to convert the debt into share capital). |
|
Other reserves- Warrant reserve
|
Fair value of the warrants issued as part of compound financial instruments. |
|
Presentational currency translation reserve |
Gains/losses arising on retranslating the net assets of Group operations into US Dollars. |
|
Retained earnings |
Cumulative net gains and losses recognised in the consolidated income statement. |
19. FINANCIAL INSTRUMENTS
The Group and the Company uses financial instruments, other than derivatives, comprising cash at bank, convertible loan notes and various items such as sundry receivables and payables that arise directly from its operations. The main purpose of these financial instruments is to raise finance for the Group's operations.
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group's risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Group's finance function. The Board receives monthly reports from the Chief Financial Officer through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility.
The main risks arising from the Group and the Company's financial instruments are liquidity risk, credit risk, currency risk, and interest rate risk. Further details regarding these policies are set out below:
Liquidity risk
The Group finances its operations through the issue of equity share capital and debt. The Group seeks to manage financial risk, to ensure sufficient liquidity to meet foreseeable requirements and to invest cash profitably at low risk.
The Group holds investments in bank deposits as a liquid resource to fund the projects 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. Liquidity risk is further managed by tight controls over expenditure.
Credit risk
The Group and the Company's credit risk is primarily attributable to the cash held on deposit at financial institutions. It is the Group and the Company's policy to only use recognised financial institutions for these deposits.
Currency risk
The Group and the Company does not hedge its exposure of foreign investments held in foreign currencies. The Group and the Company are exposed to translation and transaction foreign exchange risk and takes profits or losses on these as they arise. The Group and the Company are continually reviewing its strategy towards currency risk.
Currency of net monetary asset/ (liability)
The net monetary assets / (liabilities) of the Group and Company are denominated as follows:
|
|
Group |
|
Company |
|
|
|
2008 |
2007 |
2008 |
2007 |
|
|
$'000 |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
UK Pounds |
41,330 |
54,982 |
43,964 |
57,030 |
|
US Dollars |
408 |
145 |
17,521 |
3,451 |
|
Kyrgyz Som |
32 |
16 |
- |
- |
|
|
|
|
|
|
|
|
41,770 |
55,143 |
61,485 |
60,481 |
The Group is mainly exposed to Kyrgyz Som (functional currency of Andash Mining Company) -a 5% increase in the value of the Kyrgyz Som against the US$ will increase expenses and pre-tax loss by $75,000 (2007: $36,000).
Interest rate risk
The Group and the Company's exposure to changes in interest rates relates primarily to cash at bank. Cash is held either on current or on short term deposits at floating rates of interest determined by the relevant bank's prevailing base rate. The Group and the Company seeks to obtain a favourable interest rate on its cash balances through the use of bank treasury deposits.
Borrowing facilities and interest rate risk
The Group and the Company have financed their operations through the issue of equity share capital and convertible loan notes.
The Group and the Company earned interest on its cash assets at rates between 0% and 6.65% (2007: 0% and 5.07%). The convertible loan notes had a fixed interest rate of 11%.
An increase of 0.5% in interest rates will increase finance income by $250,000 (2007: $26,000).
Cash and cash equivalents
|
|
Group |
|
Company |
|
|
|
2008 |
2007 |
2008 |
2007 |
|
|
$'000 |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
Floating interest rate |
41,730 |
55,649 |
41,720 |
55,498 |
Fair values
The fair values of the Group's financial instruments are considered not materially different from the book value.
Convertible Loan Notes
Loan Notes with a par value of £1,000,000 were issued by the Company for cash (being £1 per Loan Note) on 15 February 2006 (the 'Commencement Date'). The Loan Notes were secured on the Group's interest in the Andash Project.
Interest was payable on the Loan Notes from the Commencement Date to the earlier of the date of redemption or the date of conversion. Interest was accrued at 11% until the first anniversary of the Commencement Date and thereafter at 10 per cent per annum.
The Loan Notes were convertible at the lesser of 35p per ordinary share and the price at which any fundraising took place. The ordinary shares so issued rank pari passu in all respects with the existing ordinary shares in issue.
Each Loan Note holder received one warrant entitling him to subscribe for 1 ordinary share (each a'Warrant') for each £1 of Loan Notes subscribed for. The Warrants, which are transferable (in whole or in part) are exercisable at 45p per share at any time prior to 15 February 2016. The ordinary shares to be so issued will rank pari passu in all respects with the existing ordinary shares in issue.
The Company treated the simultaneous issue of the convertible Loan Notes and warrants as a composite financial instrument. The Company apportioned the proceeds of the loan based upon the fair value of the loan and the fair value of the warrants issued and as a result £53,850 of the proceeds from the loan was classified as equity. Costs incurred on raising the loan amounts of £53,252 were set against the loan amount.
From 14 November 2006 to 31 March 2007, all of the Loan Notes were converted as was accrued interest of £86,000 into ordinary shares. This resulted in the issue of 3,101,537 ordinary shares of 1p at the conversion price of 35 pence per share.
Capital disclosures
As described in notes 16 and 18, the Group considers its capital to comprise its ordinary share capital, share premium and accumulated retained earnings as its capital reserves. In managing its capital, the Group's primary objective is to ensure its continued ability to provide a consistent return for its equity shareholders through capital growth. In order to achieve this objective, the Group seeks to maintain a gearing ratio that balances risk and returns at an acceptable level and also to maintain a sufficient funding base to enable the Group to meet its working capital and strategic investment needs. In making decisions to adjust its capital structure to achieve these aims, either through new share issues or the reduction of debt, the Group considers not only its short-term position but also its long-term operational and strategic objectives.
There has been no other significant changes to the Group's capital management objectives, policies and processes in the year nor has there been any change in what the Group considers to be its capital.
20. FINANCIAL COMMITMENTS
Total commitments under non-cancellable operating leases are as follows:
|
|
Group |
|
Company |
|
|
|
2008 $'000 |
2007 $'000 |
2008 $'000 |
2007 $'000 |
|
Land and buildings, expiring within: |
|
|
|
|
|
- Within one year |
279 |
136 |
138 |
136 |
|
- Two to five years |
656 |
784 |
656 |
784 |
|
Total |
935 |
920 |
794 |
920 |
Total commitments under finance leases are as follows:
|
|
Group |
|
Company |
|
|
|
2008 $'000 |
2007 $'000 |
2008 $'000 |
2007 $'000 |
|
Plant and equipment, expiring within: |
|
|
|
|
|
- Within one year |
241 |
- |
- |
- |
|
- Two to five years |
423 |
- |
- |
- |
|
Total |
664 |
- |
- |
- |
Capital expenditure contracted for at the balance sheet date but not yet incurred is as follows:
|
|
Group |
|
Company |
|
|
|
2008 $'000 |
2007 $'000 |
2008 $'000 |
2007 $'000 |
|
|
|
|
|
|
|
Plant and equipment |
4,628 |
- |
- |
- |
21. RELATED PARTY TRANSACTIONS
During the year there were no related party transactions.
During the prior year the Company entered into various transactions with Power Products International ('PPI') for contracted services including administration, Ecology, Mine Engineering, Legal, Transactions etc. These transactions in total amounted to $nil (2007: $123,016) and the amount outstanding at the year end was $nil (2007: $nil). John Webster a Non-Executive Director of Aurum during the year is also a Director of PPI.
22. TRANSITION TO IFRS
Aurum Mining Plc has a mandatory requirement to implement International Financial Reporting Standards (herein after referred to as 'IFRS') for accounting periods commencing from 1 April 2007. The financial statements for the year ended 31 March 2008 and have been prepared in accordance with International Financial Reporting Standards (IFRS) for the first time.
The Group's transition date to IFRS is 1 April 2006. The rules for the first-time adopting of IFRS are set out in IFRS1 'First time adoption of international reporting standards'. In preparing the IFRS financial information, these transition rules have been applied to the amounts reported previously under generally accepted accounting principles in the United Kingdom (UK GAAP). IFRS1 generally requires full retrospective application of the Standards and Interpretations in force at the first reporting date. However IFRS1 allows certain exemptions in the application of particular Standards to prior periods in order to assist companies with the transition process.
The only exemption applied by the Group on first time adoption of IFRS relates to cumulative translation differences (under IAS 21 'The effects of changes in foreign exchange rates'). This exemption allows cumulative foreign exchange differences for all foreign operations to be set at zero on the date of transition.
The transition from UK GAAP to IFRS has no effect on the Group's financial results, net assets or reported cash flows. The IFRS Income statement, balance sheet and cash flow statements are presented in a different format from that required under UK GAAP.
The presentation of the primary statements has been amended to comply with IAS 1.
Cash flow statements have not been prepared as the only changes to the cash flow statement are presentational. The key presentational changes include Grouping cash flows under three main headings (from operating, investing and financing activities), presenting a statement showing the movements in cash and cash equivalents, and classifying tax cash flows as relating to operating activities.
The Group: Reconciliation of equity at 1 April 2006
The effect of the changes to the Group's accounting policies on the equity of the Group at the date of transition, 1 April 2006, was as follows.
|
|
|
As reported under UK GAAP1 |
Effect of transition to IFRSs |
IFRSs |
|
|
Note |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Property, plant and equipment |
|
457 |
- |
457 |
|
Intangible assets |
|
2,267 |
- |
2,267 |
|
Total non-current assets |
|
2,724 |
- |
2,724 |
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
Inventories |
|
19 |
- |
19 |
|
Receivables |
|
148 |
- |
148 |
|
Cash and cash equivalents |
|
558 |
- |
558 |
|
Total current assets |
|
725 |
- |
725 |
|
|
|
|
|
|
|
Total assets |
|
3,449 |
- |
3,449 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Convertible loan notes |
|
1,117 |
- |
1,117 |
|
Trade and other payables |
|
588 |
- |
588 |
|
|
|
|
|
|
|
Total current liabilities |
|
1,705 |
- |
1,705 |
|
|
|
|
|
|
|
Total liabilities |
|
1,705 |
- |
1,705 |
|
Net assets |
1 |
1,744 |
- |
1,744 |
|
|
|
|
|
|
|
Capital and reserves attributable to the equity holders of the company |
|
|
|
|
|
Share capital |
|
165 |
- |
165 |
|
Share premium account |
|
2,931 |
- |
2,931 |
|
Merger reserve |
|
865 |
- |
865 |
|
Other reserve |
|
528 |
- |
528 |
|
Retained earnings |
|
(2,745) |
- |
(2,745) |
|
Total Equity |
|
1,744 |
- |
1,744 |
1 - The previously reported UK GAAP figures have been restated for the change in presentational currency from £GBP to $USD. The previously reported figure for net assets of £1,003k has been restated as $1,744 using an exchange rate of £1:$ 1.7372.
The Group: Reconciliation of equity at 31 March 2007
The effect of the changes to the Group's accounting policies on the equity of the Group at the date of the date of the last financial statements presented under UK GAAP, 31 March 2007, was as follows.
|
|
|
As reported under UK GAAP1 |
Effect of transition to IFRSs |
IFRSs |
|
|
Note |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Property, plant and equipment |
|
10,053 |
- |
10,053 |
|
|
|
|
|
|
|
Total non-current assets |
|
10,053 |
- |
10,053 |
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
Inventories |
|
361 |
- |
361 |
|
Receivables |
|
183 |
- |
183 |
|
Cash and cash equivalents |
|
55,649 |
- |
55,649 |
|
Total current assets |
|
56,193 |
- |
56,193 |
|
|
|
|
|
|
|
Total assets |
|
66,246 |
- |
66,246 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Trade and other payables |
|
689 |
- |
689 |
|
|
|
|
|
|
|
Total current liabilities |
|
689 |
- |
689 |
|
|
|
|
|
|
|
Total liabilities |
|
689 |
- |
689 |
|
Net assets |
1 |
65,557 |
- |
65,557 |
|
Capital and reserves attributable to the equity holders of the company |
|
|
|
|
|
Share capital |
|
868 |
- |
868 |
|
Share premium account |
|
64,017 |
- |
64,017 |
|
Merger reserve |
|
865 |
- |
865 |
|
Shares to be issued |
|
5,000 |
- |
5,000 |
|
Presentational currency translation reserve |
2 |
354 |
(183) |
171 |
|
Other reserve |
|
435 |
- |
435 |
|
Retained earnings |
2 |
(5,982) |
183 |
(5,799) |
|
Total Equity |
|
65,557 |
65,557 |
65,557 |
Notes to the reconciliation of equity at 31 March 2007
1 - The previously reported UK GAAP figures have been restated for the change in presentational currency from £GBP to $USD. The previously reported figure for net assets of £33,406k has been restated as $65,557k using an exchange rate of £1:$ 1.9625.
2 - Under IAS 21, the Group is required to disclose net exchange differences in a separate component of equity. The Group has elected to set the previously accumulated cumulative translation reserve to zero at 1 April 2006. This exemption has been applied to all subsidiaries in accordance with IFRS 1.
The Group
The Group: Reconciliation of profit for the year ended 31 March 2007
The changes in accounting policies had the following effect on the profit reported for the year ended 31 March 2007.
|
|
|
As reported under UK GAAP1 |
Effect of transition to IFRSs |
IFRSs |
|
|
Note |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
Operating expenses |
|
(3,672) |
- |
(3,672) |
|
|
|
|
|
|
|
Operating loss |
|
(3,672) |
- |
(3,672) |
|
|
|
|
|
|
|
Finance income |
|
291 |
- |
291 |
|
Finance expenses |
|
(331) |
- |
(331) |
|
|
|
|
|
|
|
Loss for the year before taxation |
|
(3,712) |
- |
(3,712) |
|
|
|
|
|
|
|
Tax on loss for the year |
|
- |
- |
- |
|
|
|
|
|
|
|
Loss for the year after taxation |
|
(3,712) |
- |
(3,712) |
|
|
|
|
|
|
|
Loss attributable to the equity shareholders of the parent company |
1 |
(3,712) |
- |
(3,712) |
1 - The previously reported UK GAAP figures have been restated for the change in presentational currency from £GBP to $USD. The previously reported figure for loss for the year of £1,959k has been restated as $3,712k using an exchange rate of £1:$ 1.8943.
The Company: Reconciliation of equity at 1 April 2006
The effect of the changes to the Group's accounting policies on the equity of the Company at the date of transition, 1 April 2006 was as follows.
|
|
|
As reported under UK GAAP1 |
Effect of transition to IFRSs |
IFRSs |
|
|
Note |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Property, plant and equipment |
|
14 |
- |
14 |
|
Investments in subsidiary undertakings |
|
1,155 |
- |
1,155 |
|
Amounts owned by subsidiaries |
|
2,103 |
- |
2,103 |
|
Total non-current assets |
|
3,272 |
- |
3,272 |
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
Receivables |
|
46 |
- |
46 |
|
Cash and cash equivalents |
|
493 |
- |
493 |
|
Total current assets |
|
539 |
- |
539 |
|
|
|
|
|
|
|
Total assets |
|
3,811 |
- |
3,811 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Convertible loan notes |
|
1,117 |
- |
1,117 |
|
Trade and other payables |
|
446 |
- |
446 |
|
|
|
|
|
|
|
Total current liabilities |
|
1,563 |
- |
1,563 |
|
|
|
|
|
|
|
Total liabilities |
|
1,563 |
- |
1,563 |
|
|
|
|
|
|
|
Net assets |
1 |
2,248 |
- |
2,248 |
|
Capital and reserves attributable to the equity holders of the company |
|
|
|
|
|
Share capital |
|
165 |
- |
165 |
|
Share premium account |
|
2,931 |
- |
2,931 |
|
Merger reserve |
|
865 |
- |
865 |
|
Other reserve |
|
528 |
- |
528 |
|
Retained earnings |
|
(2,241) |
- |
(2,241) |
|
Total Equity |
|
2,248 |
- |
2,248 |
1 - The previously reported UK GAAP figures have been restated for the change in presentational currency from £GBP to $USD. The previously reported figure for net assets of £1,294k has been restated as $2,248 using an exchange rate of £1:$ 1.7372.
The Company: Reconciliation of equity at 31 March 2007
The effect of the changes to the Group's accounting policies on the equity of the Company at the date of the date of the last financial statements presented under UK GAAP, 31 March 2007 was as follows.
|
|
|
As reported under UK GAAP1 |
Effect of transition to IFRSs |
IFRSs |
|
|
Note |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Property, plant and equipment |
|
13 |
- |
13 |
|
Investments in subsidiary undertakings |
|
6,304 |
- |
6,304 |
|
Amounts owned by subsidiaries |
|
5,498 |
- |
5,498 |
|
Total non-current assets |
|
11,815 |
- |
11,815 |
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
Receivables |
|
117 |
- |
117 |
|
Cash and cash equivalents |
|
55,498 |
- |
55,498 |
|
Total current assets |
|
55,615 |
- |
55,615 |
|
|
|
|
|
|
|
Total assets |
|
67,430 |
- |
67,430 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Trade and other payables |
|
632 |
- |
632 |
|
|
|
|
|
|
|
Total current liabilities |
|
632 |
- |
632 |
|
|
|
|
|
|
|
Total liabilities |
|
632 |
- |
632 |
|
Net assets |
1 |
66,798 |
- |
66,798 |
|
Capital and reserves attributable to the equity holders of the company |
|
|
|
|
|
Share capital |
|
868 |
- |
868 |
|
Share premium account |
|
64,017 |
- |
64,017 |
|
Merger reserve |
|
865 |
- |
865 |
|
Shares to be issued |
|
5,000 |
|
5,000 |
|
Presentational currency translation reserve |
|
439 |
|
439 |
|
Other reserve |
|
435 |
- |
435 |
|
Retained earnings |
|
(4,826) |
- |
(4,826) |
|
Total Equity |
|
66,798 |
- |
66,798 |
1 - The previously reported UK GAAP figures have been restated for the change in presentational currency from £GBP to $USD. The previously reported figure for net assets of £34,037k has been restated as $66,798 using an exchange rate of £1:$ 1.9625.
23. post balance sheet events
Details of significant post balance sheet events are included within the Chairman's statement and Chief Executive's review.
This information is provided by RNS
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