TIDMPCGB
RNS Number : 0738I
Power Capital Global Ltd
28 June 2013
For immediate release: 28 June 2013
Power Capital Global Limited
("Power Capital Global" or the "Company")
Audited results for the year ended 31 December 2012
Power Capital Global Limited (AIM:PCGB), the Asia based natural
resources trading and logistics business, has today published its
audited results for the year ended 31 December 2012.
Operational Highlights from Period
-- Parallel investment programme targeting partner companies
offering in-market access to commodity trading opportunities that
might otherwise be inaccessible progressed in Indonesia, Mongolia,
Afghanistan and Myanmar;
-- In Indonesia, $1.06m (GBP0.67 million) of thermal coal
shipments profitably completed through majority owned in-country
joint venture, increasing to $1.5million post year end to date;
and
-- In Mongolia, a 1.2% equity stake taken in the country's
leading foreign invested conglomerate, Asia Pacific Investment
Partners Limited, which the Company believes will provide it with
fast track opportunities in Mongolia's burgeoning natural resources
sector.
Post Period Highlights
-- In April, financial restructuring completed through the
conversion of all issued convertible loan notes, resulting in an
increase in the free float of the Company from 21% to 38% and a
substantial reduction in the gearing of business;
-- In Indonesia, an off-take agreement entered into with PT
Perdana Maju Utama to acquire up to one million metric tonnes of
thermal coal;
-- Further coal off-take, supply chain and non coal related
opportunities being advanced in Indonesia including potential
investment into a vertically integrated tin dredging and smelting
operation located in Bangka; and
-- Terms of $1 million (GBP637,000) loan to TSI being substantially revised.
Chairman of Power Capital Global, Kung-Min Lin, commented:
"The development activities completed in the year have
substantially advanced the Company's plan to build Power Capital
Global into a highly regarded Asian commodity trading business. We
will continue advancing our two distinct but complementary
corporate aims of building a scaleable physical commodity trading
and logistics business in China that is able to operate on a direct
to buyer basis wherever possible whilst at the same time investing
in partner companies in key off-take supply markets to China that
provide opportunities that might otherwise have been inaccessible
or unknown to the Company. The Board is likewise pleased with the
successful conclusion of the balance sheet strengthening activity
post year-end"
A full copy of the 2012 Report and Accounts will shortly be
available for download from the Company's web site:
www.powercapitalglobal.com
Further information
Power Capital Global
Limited
Simon Dewhurst Tel: +852 3695 5150
Northland Capital Partners
Limited
Luke Cairns/Edward Hutton Tel: +44 (0)20 7796 8800
GTH Communications Limited
Toby Hall/Suzanne Johnson Tel: +44 (0)20 7822 7493/7492
Walsh
Chairman's Statement
We have made important progress in the development of an Asia
based natural resources trading and logistics platform during the
past twelve months to 31 December 2012.
Our development strategy has remained unchanged throughout the
year under review and has been focused on executing two distinct
but complementary corporate aims.
First, we are committed to building a scaleable physical
commodity trading and logistics business with a commodity sourcing
market footprint that is global and which supplies a commercial
client base located in the key industrial regions of the People's
Republic of China on a direct-to-buyer basis wherever possible.
Secondly, we are focused on executing a parallel investment
program targeting partner companies that offer the Company
in-market access to commodity trading opportunities that might
otherwise be inaccessible or unknown to us. Specifically, this
strategy has evolved over the past twelve months to target partner
companies in four identified off-take supply markets, namely
Indonesia, Mongolia, Afghanistan and Myanmar. Partner company
investment opportunities are assessed by reference to the
following; (i) in-market competitive advantage related to mining
licenses and / or mineral off-take opportunities; (ii) our
in-market access to senior management; together with (iii) more
traditional private equity consideration of the intrinsic valuation
of the investment opportunity, the target company's market share
(we focus on best in sector companies), quality of management and
our investment exit strategy. We believe that this parallel
investment strategy will yield successful and accelerated scale
into our primary physical commodity trading activities from each of
our target commodity supply markets as referenced above.
Mongolia
In May 2012, the Company announced that it has subscribed,
through its wholly owned subsidiary PCG Mongolia Limited, for a
1.2% equity stake in Asia Pacific Investment Partners Limited
("APIP"). The Company believes that its direct investment in
Mongolia's leading foreign invested conglomerate will provide the
Company with fast track opportunities in the burgeoning natural
resources sector in Mongolia. APIP is currently developing an early
stage exploration license targeting an identified major copper-gold
porphyry system located in the South Gobi and also operates the
country's third largest cement crushing facility which is located
in the capital city, Ulaan Baatar.
Indonesia
We announced the incorporation of a 75% owned Indonesian
domestic thermal coal trading joint venture in our interim results
published in September 2012. In the period under review, sales by
the joint venture amounted to $1.06m (GBP0.67 million). To date,
the joint venture has completed six thermal coal shipments,
totalling approximately 32,000 metric tonnes of thermal coal with
an aggregate sales value of US$1.5 million. All six trades were
profitable. The domestic thermal coal trading business in Indonesia
is seasonal and is subject to significant price volatility as small
traders step in and out the market affecting the short term demand
supply balance. We suspended barge shipments in January 2013 into a
period of softened market pricing and we will recommence trading
activity once market conditions improve.
Subsequent to the end of 2012, the Company, through its
subsidiary, PCG Coal (Indonesia) Limited ("PCI"), entered into an
off-take agreement with PT Perdana Maju Utama ("PMU") to acquire up
to one million metric tonnes of thermal coal. PMU owns a coal
concession totalling approximately 4,700 hectares located in East
Kalimantan, Indonesia. PCI's branding and marketing of the coal has
commenced to our end buyers and the contracted coal volume is
forecast to be delivered by PMU over a twelve-month trading period
following completion of the first batch delivery which is expected
in the coming month.
We continue to explore other coal off-take and supply chain
opportunities in the Kalimantan region of Indonesia such as the
takeover of an established road haulage network and barge loading
facility serving the thermal coal producers adjacent to PMU in East
Kalimantan.
We continue to explore non-coal related investment
opportunities. The Company is in what it considers an advanced
stage of discussion with an investor party affiliated with PMU
seeking funds to further develop a vertically integrated tin
dredging and smelting operation located in Bangka, Indonesia inside
the main Pacific Rim tin zone. Indonesia has proven tin (Sn)
reserves of over 800,000 metric tonnes and supplied nearly 40% of
all global demand in 2012 according to the International Tin
Research Institute. Tin is one of the few metals that has been used
and traded by humans for more than 5,000 years and it has many
advantages and market uses. It has a low melting point, excellent
malleability properties, high resistance to corrosion and fatigue
and the ability to alloy with other metals. Cassiterite is by far
the most important tin ore and it is found in abundance in large
placer deposits located in oceanic submerged river channels in the
shallow waters surrounding the Indonesian islands of Bangka and
Belitung. The Company will make appropriate announcements in
respect of this opportunity in due course.
Corporate Matters
Following the completion of its due diligence on TSI Holdings
Limited ("TSI") during the year under review, the Company
determined to substantially revise its original investment term
sheet and instead agreed a loan arrangement with TSI to provide it
with substantial working, business development, and business
expansion capital. The loan amount is US$1 million (GBP637,000) and
is today fully drawn. The loan arrangement was initially for a two
year term and carried interest at five percent (5%) per annum. A
recent agreement to extend the term of the loan and introduce
certain penalties in the event of default under the TSI loan
arrangement has in principal now been reached between the parties
but is currently unsigned. The Company will arrange to have the
appropriate loan documentation executed in the near future and will
make an announcement once this has been completed.
The Company issued 16,233,765 ordinary shares pursuant to
conversion notices from the holders of the US$5 million unsecured
convertible loan notes ("CLNs") in late April 2013. This represents
full conversion of all CLNs in issue at the end of the year under
review and completes the financial restructuring announced by the
Company in July 2012. It has added new investors in PCGB and
increased the free float in its shares from approximately 21% to
38%. It has also substantially reduced the balance sheet gearing of
the Company.
The Company was pleased to welcome Heng-Jui Lin to its Board in
March 2013 as a non-executive director. Heng-Jui (or Henry) is the
majority shareholder of Kolarmy Technology INC, which is currently
providing the Group with financial support in the form of a loan
facility. Henry is the brother of Kung-Min Lin, the controlling
shareholder of the Company.
Summary
We believe that these important development activities have
substantially advanced the Company in its pursuit of a plan to
build Power Capital Global into a highly regarded Asian commodity
trading business.
Lin Kung-Min
Chairman
28 June 2013
Consolidated Statement of Comprehensive Income
For The Year Ended 31 December 2012
Notes 2012 2011
GBP GBP
Revenue 2 1,191,542 1,566,232
Cost of sales (1,285,666) (2,281,063)
------------- -------------
Gross loss (94,124) (714,831)
Administrative expenses (1,564,821) (1,135,068)
------------- -------------
Operating loss (1,658,945) (1,849,899)
Other income 2 15,034 3
Finance costs 4 (91,291) (217,985)
------------- -------------
Loss before taxation 5 (1,735,202) (2,067,881)
Income tax expense 6 (946) -
------------- -------------
Loss for the year after
taxation (1,736,148) (2,067,881)
Other comprehensive income - -
------------- -------------
Total comprehensive expenses (1,736,148) (2,067,881)
============= =============
Attributable to:
Owners of the parent (1,716,857) (2,067,881)
Non-controlling interests (19,291) -
------------- -------------
Total comprehensive expenses (1,736,148) (2,067,881)
============= =============
Loss per share (basic) 7 (GBP0.030) (GBP0.036)
============= =============
Loss per share (diluted) 7 N/A N/A
The accompanying accounting policies and notes form an integral
part of these financial statements.
Consolidated Statement of Financial Position
As At 31 December 2012
Notes 2012 2011
GBP GBP
Non-current assets
Property, plant and equipment 10 35,775 68,655
Loans receivable 11 636,661 -
Available-for-sale investments 12 1,273,322 -
------------ ------------
1,945,758 68,655
Current assets
Trade and other receivables 13 219,224 51,770
Cash and cash equivalents 202,419 100,879
421,643 152,649
Current liabilities
Other payables and accruals 15 383,995 205,869
Amount due to a related company 16 1,276,698 787,940
Convertible loan notes 17 3,075,977 -
Provision for current tax 946 -
------------ ------------
4,737,616 993,809
Net current liabilities (4,315,973) (841,160)
------------ ------------
Net liabilities (2,370,215) (772,505)
============ ============
Equity
Share capital 18 3,057,598 2,982,826
Reserves (5,472,188) (3,755,331)
------------ ------------
Equity attributable to owners
of the parent (2,414,590) (772,505)
Non-controlling interests 44,375 -
------------ ------------
Capital deficiencies (2,370,215) (772,505)
============ ============
The financial statements were approved by the Board of Directors
and signed on its behalf by:
Simon Dewhurst
Director
28 June 2013
The accompanying accounting policies and notes form an integral
part of these financial statements.
Company Statement of Financial Position
As At 31 December 2012
Notes 2012 2011
GBP GBP
Non-current assets
Investments in subsidiaries 9 2 3
------------ ------------
Current assets
Amounts due from subsidiaries 14 1,741,314 388,187
Cash and cash equivalents 9,121 44,417
------------ ------------
1,750,435 432,604
Current liabilities
Other payables and accruals 15 143,695 49,994
Convertible loan notes 17 3,075,977 -
------------ ------------
3,219,672 49,994
Net current (liabilities)/assets (1,469,237) 382,610
------------ ------------
Net (liabilities)/assets (1,469,235) 382,613
============ ============
Equity
Share capital 18 3,057,598 2,982,826
Reserves (4,526,833) (2,600,213)
------------ ------------
(Capital deficiencies)/Total equity (1,469,235) 382,613
============ ============
The financial statements were approved by the Board of Directors
and signed on its behalf by:
Simon Dewhurst
Director
28 June 2013
The accompanying accounting policies and notes form an integral
part of these financial statements.
Consolidated Statement of Cash flows
For The Year Ended 31 December 2012
Notes 2012 2011
GBP GBP
Cash flows from operating activities
Loss before taxation (1,735,202) (2,067,881)
Adjustments for:
Depreciation of property, plant
and equipment 19,327 15,596
Loss on disposal of property, plant 20,546 -
and equipment
Provision for bad and doubtful debts 81,184 -
Deregistration of a subsidiary (6,410) -
Equity-settled share-based payment 146,175 -
Exchange gain on convertible loan (107,957) -
notes
Interest income 2 (14,404) (3)
Finance costs 4 91,291 217,985
------------- -------------
Operating cash flows before movements
in working capital (1,505,450) (1,834,303)
Increase in
trade and
other
receivables (248,638) (50,495)
Increase in other payables and accruals 99,911 154,805
Net cash used in operating activities (1,654,177) (1,729,993)
------------- -------------
Cash flows from investing activities
Additions of property, plant and
equipment (6,993) (84,251)
Acquisition of available-for-sale
investments (1,273,322) -
Loans to a third party (636,661) -
Interest received 1 3
------------- -------------
Net cash used in investing activities (1,916,975) (84,248)
------------- -------------
Cash flows from financing activities
Loans from a related company 3,672,692 831,373
Repayments of loans from a related
company - (50,933)
Short term loans from third parties - 1,878,151
Repayment of short term loans from
third parties - (1,878,151)
Interest paid - (198,692)
------------- -------------
Net cash generated from financing
activities 3,672,692 581,748
------------- -------------
Notes 2012 2011
GBP GBP
Increase/(Decrease) in cash and
cash equivalents 101,540 (1,232,493)
Cash and cash equivalents at beginning
of the year 100,879 1,333,372
------------ --------------
Cash and cash equivalents at end
of the year 202,419 100,879
============ ==============
Cash and cash equivalents consist
of:
Cash at bank and in hand 202,419 100,879
============ ==============
The accompanying accounting policies and notes form an integral
part of these financial statements.
Company Statement of Cash flows
For The Year Ended 31 December 2012
2012 2011
GBP GBP
Cash flows from operating activities
Loss before taxation (1,926,620) (920,024)
Adjustments for:
Equity-settled share-based payment 146,175 -
Exchange gain on convertible loan (107,957) -
notes
Deregistration of a subsidiary 1 -
---------------- ----------------
Operating cash flows before movements
in working capital (1,888,401) (920,024)
Decrease in trade and other receivables - 1,275
Decrease in amounts due from subsidiaries 1,830,807 66,048
Increase in other payables and accruals 22,298 24,123
Decrease in amounts due to subsidiaries - (6,000)
Net cash used in operating activities (35,296) (834,578)
Cash flows from investing activities
Increase in investments in subsidiaries - (1)
Net cash used in investing activities - (1)
---------------- ----------------
Decrease in cash and cash equivalents (35,296) (834,579)
Cash and cash equivalents at beginning
of the year 44,417 878,996
Cash and cash equivalents at end
of the year 9,121 44,417
================ ================
Cash and cash equivalents consist
of:
Cash at bank and in hand 9,121 44,417
================ ================
The accompanying accounting policies and notes form an integral
part of these financial statements.
Consolidated Statement of Changes In Equity
For The Year Ended 31 December 2012
Share Accumulated Total Non- Total
capital losses controlling
interest
GBP GBP GBP GBP GBP
At 1 January
2011 2,982,826 (1,687,450) 1,295,376 - 1,295,376
Loss for the
year - (2,067,881) (2,067,881) - (2,067,881)
Other - - - - -
comprehensive
income
----------- --------------- -------------- --------------- --------------
Total
comprehensive
expenses - (2,067,881) (2,067,881) - (2,067,881)
----------- --------------- -------------- --------------- --------------
At 31 December
2011 and
1 January 2012 2,982,826 (3,755,331) (772,505) - (772,505)
Loss for the
year - (1,716,857) (1,716,857) (19,291) (1,736,148)
Other -
comprehensive
income - - - -
----------- --------------- -------------- --------------- --------------
Total
comprehensive
expenses - (1,716,857) (1,716,857) (19,291) (1,736,148)
----------- --------------- -------------- --------------- --------------
Capital
contribution
from
non-controlling
interests - - - 63,666 63,666
Issue of shares
upon
equity-settled
share-based
arrangement
(Note 19) 74,772 - 74,772 - 74,772
At 31 December
2012 3,057,598 (5,472,188) (2,414,590) 44,375 (2,370,215)
=========== =============== ============== =============== ==============
The accompanying accounting policies and notes form an integral
part of these financial statements.
Company Statement of Changes In Equity
For The Year Ended 31 December 2012
Share capital Accumulated Total
losses
GBP GBP GBP
At 1 January 2011 2,982,826 (1,680,189) 1,302,637
Loss for the year - (920,024) (920,024)
Other comprehensive - - -
income
-------------- --------------- ----------------
Total comprehensive
expenses - (920,024) (920,024)
-------------- --------------- ----------------
At 31 December 2011
and
1 January 2012 2,982,826 (2,600,213) 382,613
Loss for the year - (1,926,620) (1,926,620)
Other comprehensive
income - - -
-------------- --------------- ----------------
Total comprehensive
expenses - (1,926,620) (1,926,620)
Issue of shares upon
equity-settled share-based
arrangement (Note
19) 74,772 - 74,772
At 31 December 2012 3,057,598 (4,526,833) (1,469,235)
============== =============== ================
The accompanying accounting policies and notes form an integral
part of these financial statements.
Notes To The Financial Statements
For The Year Ended 31 December 2012
1 Accounting Policies
Basis of accounting
The financial statements of Power Capital Global Limited on
pages 6 to 45 have been prepared in accordance with International
Financial Reporting Standards ("IFRSs") which collective term
includes all applicable individual International Financial
Reporting Standards, International Accounting Standards and
Interpretations issued by the International Accounting Standards
Board (the "IASB"), as adopted by the European Union.
The significant accounting policies adopted are detailed
below:
Accounting convention
The accounts have been prepared under the historical cost
convention.
Going concern basis
As at 31 December 2012, the Group had net current liabilities of
GBP4,315,973. Taking into consideration the financial resources
available to the Group, including internally generated funds, the
continuing financial support of its shareholders and the conversion
of convertible loan notes (see Note 23), the directors of the
Company consider that the Group will have sufficient financial
resources to finance its working capital requirements for the
foreseeable future and accordingly, have prepared the financial
statements on a going concern basis notwithstanding the net current
liabilities position of the Group.
All of the rights and entitlements under an existing US$3
million loan facility entered into on 25 July 2012 between the
Group and Power Capital Forex Management Limited ("PCFX"), a
company under the control of Mr. Lin Kung-Min and the ultimate
shareholder of the Company were assigned to Kolarmy Technology INC.
("Kolarmy"), a company under the control of Mr. Lin Heng-Jui,
brother of Mr. Lin Kung-Min, on 16 January 2013 ("Loan
Agreement").
On 13 June 2013, the Group secured agreement for a new US$3
million twelve month loan facility from Kolarmy, to be drawn by the
Group to fund its investing and operating expenditure requirements.
This loan facility has a term of one year and bears interest at
LIBOR plus 3% per annum and replaced the assigned Loan
Agreement.
.
Kolarmy has confirmed to the Directors of the Company that it is
committed to providing financial support to the extent necessary,
to enable the Group to meet its liabilities as and when they fall
due for at least twelve months from the date that these financial
statements are approved by the directors.
Basis of consolidation
The Group financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) prepared to 31 December each year. Control is
achieved where the Company has the power to govern the financial
and operating policies of an investee entity so as to obtain
benefits from its activities. In assessing control, the Group takes
into consideration the existence and effect of potential voting
rights that currently are exercisable or convertible.
The results of subsidiaries acquired or disposed of during the
year are included in the consolidated statement of comprehensive
income from the effective date of acquisition or up to the
effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used
into line with those used by the Group.
All intra-group transactions and balances and any unrealised
gains and losses arising from intra-group transactions are
eliminated in preparing the consolidated financial statements.
Subsidiaries
Subsidiaries are entities over which the Group has the power to
control the financial and operating policies so as to obtain
benefits from their activities. The existence and effect of
potential voting rights that are currently exercisable or
convertible are considered when assessing whether the Group
controls another entity.
In consolidated financial statements, acquisition of
subsidiaries (other than those under common control) is accounted
for by applying the acquisition method. This involves the
estimation of fair value of all identifiable assets and
liabilities, including contingent liabilities of the subsidiary, at
the acquisition date, regardless of whether or not they were
recorded in the financial statements of the subsidiary prior to
acquisition. On initial recognition, the assets and liabilities of
the subsidiary are included in the consolidated statement of
financial position at their fair values, which are also used as the
bases for subsequent measurement in accordance with the Group's
accounting policies.
In the Company's statement of financial position, subsidiaries
are carried at cost less any impairment loss unless the subsidiary
is held for sale or included in a disposal group. The results of
subsidiaries are accounted for by the Company on the basis of
dividends received and receivable at the reporting date.
All dividends whether received out of the investee's pre or
post-acquisition profits are recognised in the Company's profit or
loss.
Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable net of discounts and other sales related
taxes.
Sales of goods are recognised when goods are delivered and title
has passed.
Interest income, is calculated using the effective interest
method by applying the rate that discounts the estimated future
cash receipts through the expected life of the financial instrument
or a shorter period, when appropriate, to the net carrying amount
of the financial asset.
Property, plant and equipment
Property, plant and equipment, other than construction in
progress, are stated at cost less accumulated depreciation and any
accumulated impairment losses. The cost of an item of property,
plant and equipment comprises its purchase price and any directly
attributable costs of bringing the asset to its working condition
and location for its intended use.
Depreciation is calculated on the straight-line basis to write
off the cost of each item of property, plant and equipment, other
than construction in progress, to its residual value over its
estimated useful life, as follows:
Furniture, fixtures and equipment 20%
Electronic equipment 331/3%
Computer equipment 331/3%
The assets' residual values, useful lives and depreciation
methods are reviewed, and adjusted if appropriate, at least at the
end of each reporting period.
An item of property, plant and equipment is derecognised upon
disposal or when no future economic benefits are expected from its
use or disposal. Any gain or loss on disposal or retirement
recognised in profit or loss in the period the asset is
derecognised is the difference between the net sales proceeds and
the carrying amount of the relevant asset.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. All other costs, such as repairs and maintenance are
charged to profit or loss during the financial period in which they
are incurred.
Leases
An arrangement, comprising a transaction or a series of
transactions, is or contains a lease if the Group determines that
the arrangement conveys a right to use a specific asset or assets
for an agreed period of time in return for a payment or a series of
payments. Such a determination is made based on an evaluation of
the substance of the arrangement and is regardless of whether the
arrangement takes the legal form of a lease.
Classification of assets leased to the Group
Assets that are held by the Group under leases which transfer to
the Group substantially all the risks and rewards of ownership are
classified as being held under finance leases. Leases which do not
transfer substantially all the risks and rewards of ownership to
the Group are classified as operating leases.
Operating lease charges as the lessee
Where the Group has the right to use of assets held under
operating leases, payments made under the leases are charged to
profit or loss on a straight-line basis over the lease terms except
where an alternative basis is more representative of the time
pattern of benefits to be derived from the leased assets. Lease
incentives received are recognised in profit or loss as an integral
part of the aggregate net lease payments made.
Financial assets
Classification of financial assets
The Group's financial assets are classified into loans and
receivables and available-for-sale investments.
Management determines the classification of its financial assets
at initial recognition depending on the purpose for which the
financial assets were acquired and where allowed and appropriate,
re-evaluates this designation at the end of reporting period.
All financial assets are recognised when, and only when, the
Group becomes a party to the contractual provisions of the
instrument. Regular way purchases of financial assets are
recognised on trade date.
Derecognition of financial assets occurs when the rights to
receive cash flows from the instruments expire or are transferred
and substantially all of the risks and rewards of ownership have
been transferred.
At the end of each reporting period, financial assets are
reviewed to assess whether there is objective evidence of
impairment. If any such evidence exists, impairment loss is
determined and recognised based on the classification of the
financial asset.
Loans and receivables
These are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market.
Loans and receivables are initially recognised at fair value plus
directly attributable transaction costs and subsequently measured
at amortised cost using the effective interest method, less any
impairment losses. Amortised cost is calculated taking into account
any discount or premium on acquisition and includes fees that are
an integral part of the effective interest rate and transaction
cost.
Available-for-sale investments
These are initially measured at fair value, which ordinarily
equates to cost, including transaction costs. At subsequent
reporting dates, available-for-sale investments are measured at
fair value or at cost where fair value is not readily measurable.
Gains and losses arising from changes in fair value are recognised
in other comprehensive income and taken to the investment
revaluation reserve until the investment is disposed of or is
determined to be impaired, at which time the accumulated fair value
adjustments recognised in equity are included in the income
statement as 'gains and losses from investments'.
Impairment loss of financial assets
Objective evidence of impairment of individual financial assets
includes observable data that comes to the attention of the Group
about one or more of the following loss events:
- significant financial difficulty of the debtor;
- a breach of contract, such as a default or delinquency in interest or principal payments;
- it becoming probable that the debtor will enter bankruptcy or
other financial reorganisation; and
- significant changes in the technological, market, economic or
legal environment that have an adverse effect on the debtor.
For loans and receivables
An impairment loss is recognised in profit or loss when there is
objective evidence that the asset is impaired, and is measured as
the difference between the asset's carrying amount and the present
value of the estimated future cash flows discounted at the original
effective interest rate. The carrying amount of financial asset is
reduced through the use of an allowance account. When any part of
financial asset is determined as uncollectible, it is written off
against the allowance account for the relevant financial asset.
Impairment losses are reversed in subsequent periods when an
increase in the asset's recoverable amount can be related
objectively to an event occurring after the impairment
was recognised, subject to a restriction that the carrying
amount of the asset at the date the impairment is reversed does not
exceed what the amortised cost would have been had the impairment
not been recognised.
For available-for-sale financial assets
For available-for-sale equity investment that is carried at
cost, the amount of impairment loss is measured as the difference
between the carrying amount of the asset and the present value of
estimated future cash flows discounted at the current market rate
of return for a similar financial asset. Such impairment loss is
not reversed.
Financial liabilities
The Group's financial liabilities include other payables and
accruals, amount due to a related company and convertible loan
notes.
Financial liabilities at amortised cost
Financial liabilities are recognised when the Group becomes a
party to the contractual provisions of the instrument. All interest
related charges are recognised as finance costs in profit or
loss.
A financial liability is derecognised when the obligation under
the liability is discharged or cancelled or expires.
Other payables and accruals, amount due to a related company are
recognised initially at their fair value, net of directly
attributable transaction costs incurred and subsequently measured
at amortised cost, using the effective interest method.
Convertible loan notes at amortised costs
Convertible loan notes that can be converted to equity share
capital at the option of the holder, where the number of shares
that would be issued on conversion and the value of the
consideration that would be received at that time do not vary, are
accounted for as compound financial instruments which contain both
a liability component and an equity component.
Convertible loan notes issued by the Company that contain both
financial liability and equity components are classified separately
into respective liability and equity components on initial
recognition. On initial recognition, the fair value of the
liability component is determined using the prevailing market
interest rate for similar non-convertible debts. The difference
between the proceeds of the issue of the convertible loan notes and
the fair value assigned to the liability component, representing
the call option for conversion of the notes into equity, is
included in equity as convertible loan notes equity reserve.
On the issue date of convertible loan notes, if:
i. the noteholders confirm that the convertible loan notes will
be converted into the Company's shares within one year;
ii. the convertible loan notes carry a market interest rate,
with fixed conversion prices and exchange rate; and
iii. the directors of the Company opine that the fair value of
the embedded derivative relating to the foreign currency component
is immaterial on initial recognition,
then it would not be separated out. Accordingly the principal
amount of convertible loan notes would be fully recognised as a
current liability in the statement of financial position. The
liability component is subsequently carried at amortised cost using
the effective interest method.
When the notes are converted, the carrying value of the
liability component at the time of conversion is transferred to
share capital as consideration for the shares issued. If the note
is redeemed, the convertible loan notes liability will be
reversed.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand.
Accounting for income tax
Income tax comprises current tax and deferred tax.
Current income tax assets and/or liabilities comprise those
obligations to, or claims from, fiscal authorities relating to the
current or prior reporting period, that are unpaid at the end of
reporting period. They are calculated according to the tax rates
and tax laws applicable to the fiscal periods to which they relate,
based on the taxable profit for the year. All changes to current
tax assets or liabilities are recognised as a component of income
tax expense in profit or loss.
Deferred tax is calculated using the liability method on
temporary differences at the end of reporting period between the
carrying amounts of assets and liabilities in the financial
statements and their respective tax bases. Deferred tax liabilities
are generally recognised for all taxable temporary differences.
Deferred tax assets are recognised for all deductible temporary
differences, tax losses available to be carried forward as well as
other unused tax credits, to the extent that it is probable that
taxable profit, including existing taxable temporary difference,
will be available against which the deductible temporary
differences, unused tax losses and unused tax credits can be
utilised.
Deferred tax assets and liabilities are not recognised if the
temporary difference arises from goodwill or from initial
recognition (other than in a business combination) of assets and
liabilities in a transaction that affects neither taxable nor
accounting profit or loss.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries, except where
the Group is able to control the reversal of the temporary
differences and it is probable that the temporary differences will
not reverse in the foreseeable future.
Deferred tax is calculated, without discounting, at tax rates
that are expected to apply in the period the liability is settled
or the asset realised, provided they are enacted or substantively
enacted at the end of reporting period.
Changes in deferred tax assets or liabilities are recognised in
profit or loss, or in other comprehensive income or directly in
equity if they relate to items that are charged or credited to
other comprehensive income or directly to equity.
Current tax assets and current tax liabilities are presented in
net if, and only if,
(a) the Group has the legally enforceable right to set off the recognised amounts; and
(b) intends either to settle on a net basis, or to realise the
asset and settle the liability simultaneously.
The Group presents deferred tax assets and deferred tax
liabilities in net if, and only if,
(a) the entity has a legally enforceable right to set off
current tax assets against current tax liabilities; and
(b) the deferred tax assets and the deferred tax liabilities
relate to income taxes levied by the same taxation authority on
either:
(i) the same taxable entity; or
(ii) different taxable entities which intend either to settle
current tax liabilities and assets on a net basis, or to realise
the assets and settle the liabilities simultaneously, in each
future period in which significant amounts of deferred tax
liabilities or assets are expected to be settled or recovered.
Retirement benefits and pensions schemes
Retirement benefits to employees are provided through defined
contribution plans. The Group operates a defined contribution
retirement benefit plan under the Mandatory Provident Fund Schemes
Ordinance (the "MPF Scheme"), for all of its employees who are
eligible to participate in the MPF Scheme. Contributions are made
based on a percentage of the employees' basic salaries.
Contributions are recognised as an expense in profit or loss as
employees render services during the year. The Group's obligations
under these plans are limited to the fixed percentage contributions
payable.
Share based payments
The cost of share-based employee compensation arrangements,
whereby employees receive remuneration in the form of shares or
share options, is recognised as an employee benefit expense in the
income statement.
All share-based compensation is ultimately recognised as an
expense in full at the grant date when the share options granted
vest immediately, with a corresponding increase in reserve. If
vesting periods or other vesting conditions apply, the expense is
recognised over the vesting period, based on the best available
estimate of the number of share options expected to vest.
Non-market vesting conditions are included in assumptions about the
number of options that are expected to become exercisable.
Estimates are subsequently revised, if there is any indication that
the number of share options expected to vest differs from previous
estimates. No adjustment to expense recognised in prior periods is
made if fewer share options ultimately are exercised than
originally vested.
When share options are exercised, the company issues new shares.
The proceeds (if any) received net of any directly attributable
transaction costs are credited to share capital account.
Foreign currencies
The financial statements are presented in Pounds Sterling. Each
entity in the Group determines its own functional currency and
items included in the financial statements of each entity are
measured using that functional currency. The functional currency of
the Company is Pounds Sterling.
In the individual financial statements of the consolidated
entities, foreign currency transactions are translated into the
functional currency of the individual entity using the exchange
rates prevailing at the dates of the transactions. At reporting
date, monetary assets and liabilities denominated in foreign
currencies are translated at the foreign exchange rates ruling at
that date. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the reporting date
retranslation of monetary assets and liabilities are recognised in
profit or loss.
Non-monetary items carried at fair value that are denominated in
foreign currencies are retranslated at the rates prevailing on the
date when the fair value was determined and are reported as part of
the fair value gain or loss. Non-monetary items that are measured
in terms of historical cost in a foreign currency are not
retranslated.
In the consolidated financial statements, all individual
financial statements of foreign operations, originally presented in
a currency different from the Group's presentation currency, have
been converted into Pounds Sterling.
Assets and liabilities have been translated into Pounds Sterling
at the closing rates at the reporting date. Income and expenses
have been converted into Pounds Sterling at the exchange rates
ruling at the transaction dates or at the average rates over the
reporting period provided that the exchange rates do not fluctuate
significantly.
Any differences arising from this procedure have been recognised
in other comprehensive income and accumulated separately in the
exchange reserve in equity, if any.
Share capital
Ordinary shares are classified as equity. Share capital is
determined using the nominal value (if any) of shares that have
been issued and any premiums received on the issuance of shares
over the par value.
Any transaction costs associated with the issuance of shares are
deducted from share capital (net of any related income tax benefit)
to the extent they are incremental costs directly attributable to
the equity transaction.
Segment reporting
The Group identifies operating segments and prepares segment
information based on the regular internal financial information
reported to the executive directors for their decisions about
resources allocation to the Group's business components and for
their review of the performance of those components. The business
components in the internal financial information reported to the
executive directors are determined following the Group's major
operations.
Segment revenue, expenses, results, assets and liabilities
include items directly attributable to a segment as well as those
that can be allocated on a reasonable basis to that segment. They
are determined before intragroup balance and intragroup
transactions are eliminated as part of the consolidation
process.
Related party
(i) A person or a close member of that person's family is
related to the Group if that person:
(a) has control or joint control over the Group;
(b) has significant influence over the Group; or
(c) is a member of key management personnel of the Group or the
Company's parent.
(ii) An entity is related to the Group if any of the following conditions apply:
(a) The entity and the Group are members of the same group
(which means that each parent, subsidiary and fellow subsidiary is
related to the others);
(b) One entity is an associate or joint venture of the other
entity (or an associate or joint venture of a member of a group of
which the other entity is a member);
(c) Both entities are joint ventures of the same third
party;
(d) One entity is a joint venture of a third entity and the
other entity is an associate of the third entity;
(e) The entity is a post-employment benefit plan for the benefit
of the employees of the Group or an entity related to the
Group;
(f) The entity is controlled or jointly controlled by a person
identified in (i); and
(g) A person identifies in (i)(a) has significant influence over
the entity or is a member of key management personnel of the entity
(or of a parent of the entity).
Close members of the family of a person are those family members
who may be expected to influence, or be influence by, that person
in their dealings with the entity and include:
(a) that person's children and spouse or domestic partner;
(b) children of that person's spouse or domestic partner;
and
(c) dependent of that person or that person's spouse or domestic
partner.
Significant judgements and estimates
The preparation of the financial statements requires management
to make judgments, estimates and assumptions that affect the
reported amounts of revenues, expenses, assets and liabilities, and
the disclosure of contingent liabilities. However, uncertainty
about these assumptions and estimates could result in outcomes that
could require a material adjustment to the carrying amounts of the
assets or liabilities affected in the future.
The key assumptions concerning the future and other key sources
of estimation uncertainty at the end of the reporting period, 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.
Impairment of loans and receivables
The provision policy for doubtful debts of the Group is based on
the on-going evaluation of the collectability and ageing analysis
of the outstanding receivables and on the management's judgment. A
considerable amount of judgment is required in assessing the
ultimate realisation of these receivables, including
creditworthiness and the past collection history of each customer
and the related parties. If the financial conditions of the
customers and other debtors of the Group were to deteriorate,
resulting in an impairment of their ability to make payments,
additional impairment may be required.
Issued International Financial Reporting Standards ("IFRS")
In the current year, the Group has applied for the first time
the following new standards, amendments and interpretations (the
"new IFRSs") issued by the IASB and the International Financial
Reporting Interpretations Committee of the IASB, which are relevant
to and effective for the Group's financial statements for the
annual period beginning on 1 January 2012:
Amendments to IFRS 7 Disclosures - Transfers of Financial Assets
The adoption of the new IFRSs had no material impact on how the
results and financial position for the current and prior periods
have been prepared and presented.
New or amended IFRSs that have been issued but are not yet
effective
The following new or amended IFRSs, potentially relevant to the
Group's financial statements, have been issued, but are not yet
effective and have not been early adopted by the Group.
Amendments to IFRSs Annual Improvements to IFRSs 2009-2011 Cycle
Amendments to IAS 1 (Revised) Presentation of Items of Other Comprehensive Income
Amendments to IAS 32 Presentation Offsetting Financial Assets and Financial Liabilities
Amendments to IFRS 7 Disclosures Offsetting Financial Assets and Financial Liabilities
IFRS 9 Financial Instruments
IFRS 10 Consolidated Financial Statements
IFRS 11 Joint Arrangements
IFRS 12 Disclosure of Interests in Other Entities
IFRS 13 Fair Value Measurement
IAS 27 (2011) Separate Financial Statements
IAS 28 (2011) Investments in Associates and Joint Ventures
Other than as noted below, the adoption of the new IFRSs had no
material impact on how the results and financial position for the
current and prior periods have been prepared and presented.
The directors of the Company (the "Directors") anticipate that
all of the pronouncements will be adopted in the Group's accounting
policy for the first period beginning after the effective date of
the pronouncement. The Directors are currently assessing the impact
of other new and amended IFRSs upon initial application. So far,
the Directors have preliminarily concluded that the initial
application of these IFRSs is unlikely to have a significant impact
on the Group's results and financial position.
2 Revenue and Other Income
2012 2011
GBP GBP
Revenue 1,191,542 1,566,232
========== ==========
Other income
Sundry income 630 -
Loan interest income 14,403 -
Bank interest income 1 3
---------- ----------
15,034 3
========== ==========
3 Segment Information
Segment revenues and results
The Group identifies operating segments and prepares segment
information based on the regular internal financial information
reported to the executive directors for their decisions about
resources allocation to the Group's business components and for
their review of the performance of those components. The business
components in the internal financial information reported to the
executive directors are determined following the Group's major
operations.
The Group's operating business are organised and managed
separately according to the nature of products, which each segment
representing a strategic business segment that offers different
natural resources products in Asia market.
No operating segments have been aggregated to form the following
reportable segments.
Coal business - Sales and distribution of steam coal
Clinker business - Sales and distribution of clinkers
The following is an analysis of the Group's revenues and results
by reportable segments:
Segment revenue Segment profit/(loss)
2012 2011 2012 2011
GBP GBP GBP GBP
Sales of coal 677,022 1,566,232 36,556 (714,831)
Sales of clinkers 514,520 - (130,680) -
---------- ---------- ---------------- ------------
1,191,542 1,566,232 (94,124) (714,831)
========== ========== ================ ============
Other income 15,034 3
Unallocated corporate
expenses (1,564,821) (1,135,068)
Finance costs (91,291) (217,985)
---------------- ------------
Loss before taxation (1,735,202) (2,067,881)
================ ============
Revenue reported above represents revenue generated from
external customers. There were no intersegment sales during the
year (2011: Nil).
Segment profit/(loss) represents the profit/(loss) incurred by
each segment without allocation of central administration costs
including directors and administrative staff salaries, other
income, finance costs and income tax expense. This is the measure
reported to the chief operating decision maker for the purposes of
resource allocation and assessment of segment performance.
Segment Assets and Liabilities
2012 2011
GBP GBP
Segment assets
Coal business 255,121 80,689
Clinker business - -
------------ ----------
Total segment assets 255,121 80,689
Unallocated corporate assets
* Property, plant and equipment 35,775 41,977
* Loans receivable 636,661 -
* Available-for-sale investments 1,273,322 -
* Trade and other receivables 133,583 41,010
* Cash and cash equivalents 32,939 57,628
------------ ----------
Consolidated assets 2,367,401 221,304
============ ==========
Segment liabilities
Coal business (307,727) (899,296)
Clinker business (292,305) -
------------ ----------
Total segment liabilities (600,032) (899,296)
Unallocated corporate liabilities
* Other payables and accruals (328,472) (71,442)
* Amount due to a related company (733,135) (23,071)
* Convertible loan notes (3,075,977) -
Consolidated liabilities (4,737,616) (993,809)
============ ==========
For the purposes of monitoring segment performance and
allocating resources between segments:
- all assets are allocated to reportable segments other than
corporate assets; and
- all liabilities are allocated to reportable segments other
than corporate liabilities.
Geographical information
The geographical location of customers is based on the location
at which the goods are delivered and title has passed.
2012 2011
GBP GBP
Taiwan - 1,566,232
Mongolia 514,520 -
Indonesia 677,022 -
---------- ----------
1,191,542 1,566,232
========== ==========
The Company is an investment holding company and the principal
place of the Group's operation is in Hong Kong.
For the purpose of segment information disclosures under IFRS 8,
the Group regarded Hong Kong as its country of domicile. Most of
the Group's non-current assets are principally attributable to Hong
Kong, being the single geographical region.
Information about major customers
Percentage of the customers accounting for 10% or more of total
revenue of the Group is as follows:
2012 2011
Customer A - 1,566,232
Customer B 514,520 -
Customer C 397,374 -
Customer D 279,648 -
========= ==========
4 FINANCE COSTS
2012 2011
GBP GBP
Interest on advances from a related
company 45,989 19,293
Interest on short-term loans from
third parties - 198,686
Interest on bank overdraft - 6
Interest on convertible loan notes 45,302 -
------- --------
91,291 217,985
======= ========
5 Loss Before Taxation
Loss before taxation is stated after charging/(crediting) the
following:
2012 2011
GBP GBP
Auditors' remuneration 18,000 19,045
Depreciation of property, plant and
equipment 19,327 15,596
Staff costs (including directors'
emoluments)
- Salaries, wages and other benefits 698,093 504,250
- Equity-settled share-based payments 146,175 -
- contributions to defined contribution
retirement plans 8,537 2,292
--------- --------
852,805 506,542
Loss on disposal of property, plant
and equipment 20,546 -
Operating lease expenses - land and
building 96,373 64,401
Provision for bad and doubtful debts 81,184 40,555
Write off of bad debts - 25,607
Exchange (gain)/loss, net (97,381) 16,747
========= ========
6 Income Tax Expense
No Hong Kong profits tax has been provided as the Group had no
estimated assessable profits arising in or derived from Hong Kong
for both years. Taxes on profits assessable elsewhere have been
calculated at the rates of tax prevailing in the jurisdictions in
which the Group operates, based on existing legislation,
interpretations and practices in respect thereof during the
year.
2012 2011
GBP GBP
Group
Current tax - Indonesia
In respect of current year 946 -
Deferred tax - -
----- -----
Income tax expense 946 -
===== =====
Pursuant to the rules and regulations of the British Virgin
Islands ("BVI"), the Group is not subject to any income tax in the
BVI.
Reconciliation between Group's income tax expense and accounting
loss at applicable tax rates is as follows:
2012 2011
GBP GBP
Loss before taxation (1,735,202) (2,067,881)
Notional tax at the rates applicable
to profits in
the jurisdictions concerned (286,308) (341,200)
Effect of different tax rates of subsidiaries
operating in Indonesia 124 -
Tax effect of non-deductible expenses 252,955 160,304
Tax effect of temporary differences
not recognised
for deferred tax purposes 1,805 (2,696)
Tax effect of unrecognised tax losses 32,370 183,592
------------ ------------
Income tax expense 946 -
============ ============
No deferred tax asset has been recognised in relation to tax
loss of approximately HK$16 million (i.e. GBP1.3 million) (2011:
approximately HK$13.6 million (i.e. GBP1.1 million)) due to the
unpredictability of the future profit streams.
The Company is resident for corporation tax purposes in the
British Virgin Islands.
7 Loss Per Share Attributable to Owners of The parent
The basic loss per share has been calculated on the basis of the
net loss for the year attributable to owners of the Company of
GBP1,716,857 (2011: loss GBP2,067,881) and the weighted average
number of shares in issue as at 31 December 2012 of 57,101,056
(2011: 57,056,501), as adjusted for the effect of the issuance of
new shares pursuant to the exercise of share options during the
year.
Diluted loss per share for the years ended 31 December 2012 and
2011 is not presented because the impact of the conversion of
convertible notes is anti-dilutive.
8 Directors' Emoluments
The following directors' emoluments were received or receivable
by the Directors holding office during the year:
Salaries,
allowances, Contribution
and other to pension
Fees benefits plans Total
GBP GBP GBP GBP
Year ended 31 December
2012
Executive Director
Simon Dewhurst 77,477 70,704 1,125 149,306
-------- ------------ ------------- --------
Non-Executive Directors
Craig Lees Baxter Niven*** 42,000 - - 42,000
Graham Newall - 92,700 1,125 93,825
Lin Kung-Min* 120,000 - - 120,000
162,000 92,700 1,125 255,825
-------- ------------ ------------- --------
239,477 163,404 2,250 405,131
======== ============ ============= ========
Year ended 31 December
2011
Executive Director
Simon Dewhurst 87,320 35,352 491 123,163
-------- ------------ ------------- --------
Non-Executive Directors
Craig Lees Baxter Niven*** 42,000 - - 42,000
Graham Newall 37,158 34,964 409 72,531
Lin Kung-Min* 110,000 - - 110,000
Mladen Ninkov** 21,000 - - 21,000
-------- ------------ ------------- --------
210,158 34,964 409 245,531
-------- ------------ ------------- --------
297,478 70,316 900 368,694
======== ============ ============= ========
* Long Sheng Asset Management Company, a company controlled by
Lin Kung-Min and his immediate family, received fees under a
consultancy agreement of GBP120,000 (2011: GBP110,000), for the
provision of advisory and support services to the Group.
** Keynes Capital, the registered business name of Keynes
Investments Pty Limited as trustee for the Keynes Trust, received
fees under a consultancy agreement of GBP21,000 during 2011, for
the provision of advisory and support services to the Group. Mladen
Ninkov is a director and employee of Keynes Investments Pty
Limited.
*** Zetachoice Limited, a company controlled by Craig Niven and
his immediate family, received fees under a consultancy agreement
of GBP42,000 (2011: GBP42,000), for the provision of advisory and
support services to the Group.
9 Investments in Subsidiaries - The Company
2012 2011
GBP GBP
At Cost
At 1 January 3 2
Additions - 1
Deregistration of a subsidiary (1) -
----- -----
At 31 December 2 3
===== =====
Particulars of the principal subsidiaries at 31 December 2012
are as follows:
Proportion
Class of of shares Nature of Country of
Name Share held held business incorporation
Directly held
Investment BVI
PCG Resources Limited Ordinary 100% holding
PCG Resources (C.I.) Investment Alderney
Limited Ordinary 100% holding
Indirectly held
PCG Minerals Trading BVI
Limited (formerly
known as PCG Minerals
Limited and PCG International Investment
Limited) Ordinary 100% holding
Administrative
PCG Services Limited Ordinary 100% support Hong Kong
PCG Minerals Trading
(HK) Limited (formerly
known as PCG Coal Trading of
Limited) Ordinary 100% coal Hong Kong
PCG Coal (Indonesia)
Limited (formerly
known as PCG Mineral
(HK) Limited) Ordinary 100% Dormant Hong Kong
Investment
PCG Engineering Limited Ordinary 100% holding BVI
Trading of
clinkers
and investment
PCG Mongolia Limited Ordinary 100% holding BVI
Proportion
Class of of shares Nature of Country of
Name Share held held business incorporation
Indirectly held
PT Power Capital Trading of
Global Mineral Ordinary 75% coal Indonesia
10 Property, Plant And Equipment - The Group
Furniture,
Computer fixtures
and Electronic
equipment equipment equipment Total
GBP GBP GBP GBP
Cost
At 1 January 2012 19,144 63,697 1,410 84,251
Additions during the year 5,821 1,172 - 6,993
Disposal during the year - (31,610) - (31,610)
---------- ----------- ----------- ---------
At 31 December 2012 24,965 33,259 1,410 59,634
---------- ----------- ----------- ---------
Accumulated depreciation
At 1 January 2012 4,642 10,645 309 15,596
Charge for the year 7,590 11,268 469 19,327
Disposal during the year - (11,064) - (11,064)
---------- ----------- ----------- ---------
At 31 December 2012 12,232 10,849 778 23,859
---------- ----------- ----------- ---------
Net book value
At 31 December 2012 12,733 22,410 632 35,775
========== =========== =========== =========
At 31 December 2011 14,502 53,052 1,101 68,655
========== =========== =========== =========
11 Loans Receivable
During the year ended 31 December 2012, US$1 million (the
"Loan") was advanced by PCG Engineering Limited, a wholly owned
subsidiary of the Company, to TSI Holdings Limited ("TSI") which is
a third party to the Group. The Loan was unsecured, bearing
interest at 5% per annum and repayable within 24 months.
The directors of the Company are of the opinion that the
carrying amount of outstanding balance as at year end is
approximate to its fair value.
12 Available For Sale Investments
2012 2011
GBP GBP
Unlisted shares, at cost 1,273,322 -
========== =====
The Group's available-for-sale investments represented the
unlisted equity investments which were carried at costs less
impairment loss.
13 Trade And Other Receivables
Group Company
2012 2011 2012 2011
GBP GBP GBP GBP
Trade receivables 162,368 40,555 - -
Less: Provision for impairment (81,184) (40,555) - -
--------- --------- ----- -----
81,184 - - -
Unpaid capital contribution
due from non-controlling
interests 63,666
Prepayments and other
receivables 74,374 51,770 - -
--------- --------- ----- -----
219,224 51,770 - -
========= ========= ===== =====
All of the Group's trade receivables are denominated in United
States Dollars ("US$").
The customers are obliged to settle the amounts upon
satisfaction of the sales and purchase agreements. Based on
relevant agreements, all outstanding trade receivables as at 31
December 2012 were 60 days past due but not impaired and aged over
90 days.
At each reporting date, the Group reviews trade receivables for
evidence of impairment on both an individual and collective basis.
As at 31 December 2012, impairment losses of GBP81,184 (2011:
GBP40,555) were recognised. The Group did not hold any collateral
as security or other credit enhancements over the impaired trade
receivables, whether determined on an individual or collective
basis.
Impairment losses on trade receivables are recorded using an
allowance account unless the Group is satisfied that recovery of
amount is remote, in which case the impairment loss is written off
against trade receivables directly.
Movements in the allowance for bad and doubtful debts during the
year are as follows:
Group Company
2012 2011 2012 2011
GBP GBP GBP GBP
At 1 January 40,555 - - -
Impairment losses recognised 81,184 66,162 - -
Written off (40,555) (25,607) - -
At 31 December 81,184 40,555 - -
========== ========== ===== =====
14 Amounts Due From Subsidiaries - The Company
2012 2011
GBP GBP
Amounts due from:
PCG Resources (C.I.) Limited 1,015,524 1,015,524
SWB (Admin) Limited - 4,063
PCG Minerals Trading (HK)
Limited 1,451,493 388,187
PCG Services Limited 80,221 48,583
PCG Engineering Limited 394,730 -
PCG Mongolia Limited 1,273,322 -
PCG Resources Limited 73,262
------------ ------------
4,288,552 1,456,357
Less: Provision for impairment (2,547,238) (1,068,170)
------------ ------------
1,741,314 388,187
============ ============
During the year, the Directors reviewed the carrying value of
the amounts due from subsidiaries with reference to the businesses
operated by these subsidiaries and their net asset values. As at
the reporting date, the Directors are of the opinion that provision
for impairment is necessary in respect of the amounts due from
subsidiaries. During the year ended 31 December 2012, an impairment
loss of approximately GBP1,482,962 (2011: GBP500,213) was
recognised in the Company's statement of comprehensive income. A
provision of GBP3,894 was written off during the year due to
deregistration of a subsidiary.
The amounts due from subsidiaries were unsecured, interest free
and repayable on demand.
15 Other payables and accruals - The Group And Company
The Group
2012 2011
GBP GBP
Accruals 346,459 191,588
Other payables 37,536 14,281
383,995 205,869
======== ========
The Company
2012 2011
GBP GBP
Accruals 143,695 49,994
======== =======
16 Amount Due To A Related Company - The Group
At 31 December 2012, the amount due to a related company of
GBP1,276,698 (2011: GBP787,940) represents advances from Power
Capital Forex Management Limited, a company under the control of
Mr. Lin Kung-Min, the ultimate controlling party of the
Company.
The amounts due were unsecured, bearing interest at LIBOR plus
3% per annum and repayable within twelve months.
17 Convertible Loan Notes - The Group And Company
On 25 July 2012, the Group entered into a restructuring of the
loan facilities provided to it by PCFX amounted to US$8 million
(the "PCFX facilities"). US$5 million of the amount drawn under the
PCFX facilities was subsequently re-constituted as 12 month
Unsecured Convertible Loan Notes ("CLN") with a coupon rate at
LIBOR plus 3%, payable quarterly in arrears. The maturity date of
the CLN was 24 July 2013.
The terms of the CLN incorporate a conversion option into the
Company's shares exercisable at any time at 20p per share. In
addition, the Company may at any time mandatorily convert the CLN
or redeem them at par in cash.
On 29 April 2013, the CLN was fully converted into Company's
shares by issue of new shares.
18 Share Capital - The Group and Company
2012 2011
Number of GBP Number of GBP
shares shares
Authorised
At 1 January and 31 December,
Par value 1,000,000,000 - 1,000,000,000 -
================= ======= ================= ========
2012 2011
Number Number
of shares GBP of shares GBP
Paid-in capital
At 1 January 57,056,501 2,982,826 57,056,501 2,982,826
Shares issued upon equity-settled
share-based arrangement 478,309 74,772 - -
------------- ------------ ------------- ------------
At 31 December 57,534,810 3,057,598 57,056,501 2,982,826
============= ============ ============= ============
19 Share Option Scheme
A share option scheme (the "Scheme") was adopted pursuant to a
resolution passed at the annual general meeting of the Company held
on 11 October 2012 for the purpose of providing incentives or
rewards to selected participants. Under the Scheme, it will enable
selected eligible persons (including any director, employee,
consultant or professional adviser) of the Company and of its
subsidiaries to be granted options ("Options") to acquire ordinary
shares in the capital of the Company ("Shares").
The total number of shares in respect of which options may be
granted under the Scheme must not exceed 18 million shares of the
Company prior to the third anniversary of the adoption of the
Scheme (the "Scheme Mandate").
It is intended that Options will normally vest over a period of
three years beginning with the Option grant date (the "Vesting
Period") and may also be subject to performance conditions set at
the time the Option is granted. Options cannot, in any event, be
exercised later than the tenth anniversary of the Option grant
date. Options are not transferable (except on death).
Options may be satisfied by newly issued Shares, or existing
Shares, including Shares purchased in the market by an employees'
trust. Operation of the Scheme will be overseen by the board of
directors of the Company (the "Board").
The number of Shares in respect of which Options may be granted
under the Scheme shall be limited, so that immediately following
the grant of any Options, the aggregate of the number of Shares
issued or remaining capable of being issued pursuant to Options
granted prior to the third anniversary of the adoption of the
Scheme will not exceed 18 million.
Options may be granted during the period of 42 days beginning
with the dealing day following the announcement of the Company's
results for any period or with the day on which an announcement is
made of amendments to be made to the relevant tax legislation or on
which any such amendments come into force.
No payment will be required for the grant of an Option.
The price per share at which Shares may be acquired upon the
exercise of an Option ("Exercise Price") shall be determined at the
time of grant.
The vesting of an Option may be subject to a time-based vesting
schedule to be specified at the date of grant. In addition, the
Scheme provides that the vesting of an Option may be subject to
performance conditions, to be specified at the date of grant. Once
set, performance conditions may be waived or amended if an event
occurs which causes the Company to consider that such performance
conditions could not fairly or reasonably be met, provided that any
amended conditions shall not be more difficult to satisfy than the
original conditions
were intended to be at the time of their imposition.
If a participant terminates employment for cause, an outstanding
Option will lapse in full.
If a participant terminates employment other than for cause, an
outstanding Option shall lapse at the termination date if it is not
then exercisable. To the extent an Option is exercisable at the
termination date, it shall remain exercisable for 90 days and shall
thereafter lapse to the extent not exercised.
If a participant becomes disabled whilst employed by the
Company, any Options shall be retained and exercised in accordance
with the Scheme. If a participant dies in service, his Option shall
become fully exercisable and remain exercisable for its full
term.
In the event of a change of control of the Company or compromise
or arrangement in connection with a scheme for the reconstruction
of the Company or its amalgamation, or a voluntary winding-up,
Options shall become exercisable within specified periods and shall
lapse to the extent not exercised at the end of the applicable
period.
Alternatively, on a change of control, by agreement with the
acquiring company, participants may, release their Options in
consideration of the grant of Options over shares in the acquiring
company.
If there is a rights or capitalisation issue, sub-division,
consolidation, reduction or other variation of the Company's
ordinary share capital, the Board may adjust the number of Shares
subject to an Option and/or the Exercise Price, subject (except in
the case of a capitalisation) to written confirmation by the
Auditors that in their opinion such adjustment is fair and
reasonable provided that the aggregate amount payable on the
exercise of the Option in full is not increased.
On 28 November 2012, 478,309 Options with exercise price of
GBP0.00000000001 were granted to certain employees of the group. As
mutually agreed between these employees and the Company, the
Options must be exercised immediately at date of grant. On date of
grant, 478,309 shares were fully exercised by these employees into
Company's shares by issue of new shares. In the opinion of the
directors, the fair value of the share options was approximately
the same as the open market value of 478,309 new shares issued
which was also approximated to the employees' compensation amounted
to GBP74,772 and had been credited to share capital directly. The
average share price on date of exercise was 13p.
20 Related Party Transactions
20.1 In addition to the transactions and balances disclosed in
Note 14, 16 and 17, the Group had the following significant related
party transactions during the year:
Notes 2012 2011
GBP GBP
Sales commission paid to Kolarmy
Technology INC. (i) - 31,833
Sales to Central Asia Cement (ii)
LLC 514,520 -
Interest paid to Power Capital
Forex Management Limited (iii) 91,291 19,293
======== =======
Note:
(i) Commission paid to Kolarmy Technology INC., in which Mr. Lin
Heng-Jiu had a beneficial interest and was also a director of the
related company. The commission was made with reference to the
terms mutually agreed between both parties.
(ii) Central Asia Cement LLC is a wholly owned subsidiary of
Asia Pacific Investment Partners Limited ("APIP"), of which our
Group's executive director, Mr. Simon Dewhurst, was a director of
APIP.
(iii) Interest paid to Power Capital Forex Management Limited, a
company under the control of Mr. Lin Kung-Min, the ultimate
controlling party of the Company. The Directors having consulted
with the Group's nominated adviser that the terms of the
transaction are fair and reasonable so far as the shareholders of
the Company are concerned.
20.2 Compensation of key management personnel of the Group
The Directors are of the opinion that the key management
personnel were the Directors of the Company, details of whose
emoluments are set out in note 8.
20.3 The Company is listed on the Alternative Investment Market.
Mr. Lin Kung-Min is the ultimate controlling party.
21 Financial Risk Management Objectives and Policies
The Group is exposed to a variety of financial risks which
result from its operating, investing and financing activities. The
Group's major financial instruments include loans receivables,
available-for-sale investments, trade and other receivables, cash
and cash equivalents, other payables and accruals and amount due to
a related company. Details of these financial instruments are
disclosed in the respective notes. The risks associated with these
financial instruments and the policies applied by the Group to
mitigate these risks are set out below. The Directors manage and
monitor these exposures to ensure appropriate measures are
implemented in a timely and effective manner.
Categories of financial assets and liabilities
The carrying amounts presented in the statements of financial
position relate to the following categories of financial assets and
financial liabilities:
Group Company
2012 2011 2012 2011
GBP GBP GBP GBP
Financial assets
Loans and receivables
* Loans receivable 636,661 - - -
* Trade and other receivables 219,224 51,770 - -
* Amounts due from subsidiaries - - 1,741,314 388,187
---------- -------- ---------- --------
855,885 51,770 1,741,314 388,187
Available-for-sale investments 1,273,322 - - -
Cash and cash equivalents 202,419 100,879 9,121 44,417
---------- -------- ---------- --------
2,331,626 152,649 1,750,435 432,604
========== ======== ========== ========
Financial liabilities
At amortised cost
* Other payables and accruals 383,995 205,869 143,695 49,994
* Amount due to a related company 1,276,698 787,940 - -
* Convertible loan notes 3,075,977 - 3,075,977 -
---------- -------- ---------- --------
4,736,670 993,809 3,219,672 49,994
========== ======== ========== ========
Credit risk
Credit risk refers to the risk that the counterparty to a
financial instrument would fail to discharge its obligation under
the terms of the financial instrument and cause a financial loss to
the Group.
The Group has adopted procedures in extending credit terms to
customers and in monitoring its credit risk. The Group's credit
policy and practices include assessment and valuation of customer's
credit reliability and periodic review of their financial status to
determine the credit limits to be granted. To manage credit risks,
the management reviews regularly the recoverable amount of each
individual debt to ensure that adequate impairment is made for the
irrecoverable amounts. At 31 December 2012, the Group had
concentration of credit risk as 100% (2011: Nil) of the Group's
trade receivables were due from a single customer of whom
transactions have exceeded 10% of the Group's total revenue.
Majority of the Group's bank balances are deposited with banks
in Hong Kong, Indonesia and United Kingdom. The credit risk on
liquid funds is limited because the counterparties are banks with
good credit-rating.
Foreign currency risk
Foreign currency risk refers to the risk that the fair value or
future cash flows of a financial instrument will fluctuate because
of changes in foreign exchange rates. Several subsidiaries of the
Group have foreign currency sales and purchases, which expose the
Group to foreign currency risk. Certain trade and other receivables
and payables of the Group are denominated in either Pounds Sterling
("Sterling"), Hong Kong dollars ("HK$"), Renminbi ("RMB"),
Indonesia Rupiah ("Rp") or US$. The Group currently does not have a
foreign currency hedging policy. However, the Directors monitor the
foreign exchange exposure and will consider hedging significant
foreign currency exposure should the need arises.
The table below illustrates the monetary assets and liabilities
denoted in various currencies by the Group as at reporting
date:
2012 2011
GBP GBP
Monetary Assets:
Sterling 9,171 44,667
US$ 884,357 40,826
Rp 4,307 -
HK$ 15,392 15,386
RMB 7,037 -
---------- --------
920,264 100,879
========== ========
Monetary Liabilities:
US$ 4,352,649 787,940
RMB 26 -
---------- --------
4,352,675 787,940
========== ========
The table below illustrates the hypothetical sensitivity of the
Group's reported profits and equity to a 10% increase and decrease
in the exchange rates at the reporting date assuming all other
variables remain unchanged. The sensitivity rate of 10% represents
the Directors assessment of a reasonable possible change. Positive
figures represent an increase in profit and equity.
2012 2011
GBP GBP
Sterling strengthens by 10%
US$ 346,829 74,711
Rp (431) -
HK$ (1,539) (1,539)
RMB (701) -
Sterling weakens by 10%
US$ (346,829) (74,711)
Rp 431 -
HK$ 1,539 1,539
RMB 701 -
Fair values
There is no significant difference between the carrying amounts
and the fair values of the Group and Company's financial
instruments. For current trade and other receivables/payables with
a remaining life of less than one year, the nominal amount is
deemed to reflect the fair value.
Capital risk
The capital of the Group consists of equity attributable to
equity holders of the Company, comprising share capital and
retained earnings / losses. The Group manages its capital to ensure
that entities within the Group will be able to continue as going
concerns whilst maximising the return to shareholders. The Group is
not subject to any externally imposed capital requirements.
Liquidity risk
Liquidity risk relates to the risk that the Group will not be
able to meet its obligations associated with its financial
liabilities. In the management of liquidity risk, the Directors
monitor and maintain a level of cash and cash equivalents deemed
adequate to finance the Group's operations and to meet its debt
obligations as they fall due. The Group finances its working
capital requirements mainly by the funds obtained from advances
from a related company. As at 31 December 2012, the Group had net
current liabilities and net liabilities of GBP4,315,973 and
GBP2,370,215 respectively. The adoption of going concern basis has
been detailed in note 1 above. In the opinion of Directors, the
Group's exposure to liquidity risk is significantly reduced.
The following tables detail the remaining contractual maturities
at the reporting date of the Group's and the Company's financial
liabilities, which are based on the contractual undiscounted
payments (including interest payments computed using contractual
rates) and the earliest date the Group and the Company can be
required to pay:
The Group
Total
contractual
Carrying undiscounted Within 1
year
amounts payments or on demand
GBP GBP GBP
Year ended 31 December
2012
Other payables and accruals 383,995 383,995 383,995
Amount due to a related
company 1,276,698 1,276,698 1,276,698
Convertible loan notes 3,075,977 3,075,977 3,075,977
4,736,670 4,736,670 4,736,670
========== ============= =============
Year ended 31 December
2011
Other payables and accruals 205,869 205,869 205,869
Amount due to a related
company 787,940 787,940 787,940
---------- ------------- -------------
993,809 993,809 993,809
The Company
Total
contractual
Carrying undiscounted Within 1
year
amounts payments or on demand
GBP GBP GBP
Year ended 31 December
2012
Other payables and accruals 143,695 143,695 143,695
Convertible loan notes 3,075,977 3,075,977 3,075,977
3,219,672 3,219,672 3,219,672
========== ============= =============
Year ended 31 December
2011
Other payables and accruals 49,994 49,994 49,994
Interest rate risk
At 31 December 2012, the Group's exposure to interest rate risk
mainly arises on CLN and amount due to a related company which bore
floating interests. The Group has not used any derivative contracts
to hedge its exposure to interest rate risk. The Group has not
formulated a policy to manage the interest rate risk.
Interest rate sensitivity analysis
The following tables illustrate the sensitivity of the loss for
the year and accumulated losses to a reasonably possible change in
interest rates of +25 basis points and -25 basis points (2011: +/-
25 basis points), with effect from the beginning of the year. These
changes are considered to be reasonably possible based on
observation of current market conditions. The calculations are
based on the Group's financial instruments held at each reporting
date. All other variables are held constant. There is no impact on
other components of consolidated equity in response to the possible
change in interest rate.
Group
2012 2011
+25 basis -25 basis +25 basis -25 basis
points points points points
GBP GBP GBP GBP
Effect on loss for the
year
and accumulated losses (108,817) 108,817 (19,699) 19,699
========== ========== ========== ==========
Company
2012 2011
+25 basis -25 basis +25 basis -25 basis
points points points points
GBP GBP GBP GBP
Effect on loss for the
year
and accumulated losses (76,899) 76,899 - -
========== ========== ========== ==========
22 Commitments Under Operating Leases
At 31 December 2012, the total future minimum lease payments
under non-cancellable operating leases payable by the Group are as
follows:
2012 2011
GBP GBP
Within one year 17,724 93,523
In the second to fifth years inclusive 4,536 22,260
------- --------
22,260 115,783
======= ========
The Group leases certain of its office premises and photocopying
machines. The leases run for an initial period of one to five
years, with options to renew the lease and renegotiated the terms
at the expiry date or at dates as mutually agreed between the Group
and respective landlords/lessors. None of the leases include
contingent rentals.
The Company did not have any operating lease commitments as at
31 December 2012 and 2011.
23 Subsequent events
On 29 April 2013, the Company announced that it had issued
16,233,765 ordinary shares pursuant to conversion notices from the
holders of the US$5 million convertible loan notes ("CLN") issued
by the Company on 25 July 2012 at a conversion price of 20p per
share.
This represented full conversion of CLN currently in issue and
completes the restructuring announced by the Company in July 2012.
It added new investors in the Company and increased the free float
in its shares from approximately 21% to 38%. It also substantially
reduced the balance sheet gearing of the Company.
Details of the share conversion are set out in the Company's
announcement dated 29 April 2013.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR KMGZVVNRGFZM
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