TIDMPCGB
RNS Number : 8149K
Power Capital Global Ltd
27 June 2014
27 June 2014
POWER CAPITAL GLOBAL LIMITED
("Power Capital" or "the Company")
Audited results for the year ended 31 December 2013
Power Capital Global Limited (AIM:PCGB), the Asia based natural
resources trading and logistics group, today announces its audited
results for the 12 months ended 31 December 2013.
Financial Highlights from Period
-- Net assets GBP834,379 (2012: net liabilities GBP1,469,235);
-- Revenues GBP532,971 (2012: GBP1,191,542);
-- Loss for the year before taxation GBP2,020,045 (2012: GBP1,735,202);
-- Loss per share GBP0.030 (2012: loss per share GBP0.030).
Operational Highlights from Period
-- Indonesia thermal coal off-take agreement re-structured with PMU in September;
-- Asia Pacific Investment Partners Limited - a major Mongolian
property, cement and financial services group in which the Company
is invested - progressing plans towards an IPO; and
-- Minority investment taken in Infrontier Limited, a private
equity fund management company specialising in post conflict
countries.
Post Period Highlights
-- PMU continuing to be invoiced in line with the minimum
monthly commitments of the restructured off-take agreement;
-- Further thermal coal off-take agreements being negotiated in
Indonesia subject to appropriate financing being in place; and
-- Kolarmy loan facility extended from US$6 million to US$9 million.
Chairman of Power Capital Global, Kung-Min Lin, commented:
"Whilst it has been a frustrating year with regards to
developing our Asia based natural resources trading and logistics
business, we continue to progress our parallel investment strategy
where we are successfully targeting businesses that have the
potential to offer the Company in-market access to mining services
and commodity trading opportunities that might otherwise have been
inaccessible or unknown to us across an arc of resource rich
countries spanning East, Central and Southern Asia, from Mongolia
in the north, to Afghanistan in the west and Indonesia in the
south. We therefore look forward to progressing this dual approach
and delivering value in the long-term to our shareholders."
The Reports and Financial Statements for the year ended 31
December 2013 will be posted to shareholders shortly and will then
be available to download on the Company's website,
www.powercapitalglobal.com.
Further information
Power Capital Global
Limited
Simon Dewhurst Tel: +852 3695 5150
Northland Capital Partners
Limited
Edward Hutton/Gavin Burnell Tel: +44 (0)20 7382 1100
GTH Communications Limited
Toby Hall/Suzanne Johnson-Walsh Tel: +44 (0) 20 7822 7493 /
+44 7713 341072
Chairman's Statement
We have made frustratingly limited progress in furthering the
development of an Asia based natural resources trading and
logistics platform during 2013.
Our development strategy has remained stable throughout the year
under review; (i) to build 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; and (ii) to execute a
parallel investment program targeting partner companies that offer
the Company in-market access to mining services and commodity
trading opportunities that might otherwise be inaccessible or
unknown to us across an arc of resource rich countries spanning
East, Central and Southern Asia, from Mongolia in the north, to
Afghanistan in the west and Indonesia in the south.
Summary
Notwithstanding a restructuring of our main coal off-take
agreement, which was completed in September 2013, traded Indonesian
thermal coal volumes were disappointingly low in the second half of
2013. This severely hampered the ability of the Company to further
expand its commodity trading activities and had an adverse impact
on the Company's working capital.
Indonesia
In the early part of 2013 we traded approximately 10,800 metric
tonnes of thermal coal to customers located within Indonesia.
Indonesia's domestic thermal coal trading business 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 the first quarter into softened
market pricing and focussed our attention on trading larger volumes
of thermal coal internationally. In this regard, the Company
announced in March 2013 that its 51% joint venture company, PCG
Coal (Indonesia) Limited ("PCI"), had entered into an off-take
agreement (the "Agreement") with PT Perdana Maju Utama ("PMU") for
one million metric tonnes of thermal coal. PCI subsequently
provided advance payments under the Agreement of US$2 million (the
"Advance") and these funds were used by PMU to commence commercial
strip mining activities on its concession.
PCI traded approximately 10,700 metric tonnes of Agreement
sourced thermal coal on trial barge shipments in early August 2013.
Coal quality was in line with specification but delivered volume
was below expectation. Subsequently, PCI renegotiated certain terms
of the Agreement and in September 2013 signed an addendum under
which PMU is permitted to sell its mined concession thermal coal
direct to third party customers rather than PCI but is required to
compensate PCI at a rate of US$3.20 per metric tonne sold,
comprised of two parts: (i) US$1.50 in commission payments; and
(ii) a repayment of the Advance principal of US$1.70. The minimum
committed monthly sales volume is agreed at 50,000 metric
tonnes.
PCI invoiced PMU for 57,800 metric tonnes of coal in September
2013 and, between October 2013 and May 2014, for the minimum
monthly contract delivery of 50,000 metric tonnes in accordance
with the addendum to the Agreement. The Directors expect that this
volume of coal will continue to be invoiced by PCI and settled each
month going forward up to the off-take commitment of one million
metric tonnes of thermal coal. At the date of this report, PCI has
invoiced PMU for approximately 47% of the committed off-take volume
under the Agreement (468,000 metric tonnes).
The total value of coal sales and commission income generated
under the Agreement in 2013 was approximately GBP386,000 and the
balance on the Advance has been reduced to approximately GBP858,000
(US$1,347,000) as at the end of the year under review.
The Company continues to source alternate off-take opportunities
in Indonesia and is in negotiations for further off-take
agreements. Any such agreements would be subject to appropriate
financing being in place.
The Company has made no material progress in further developing
a vertically integrated tin dredging and smelting operation in
Bangka, Indonesia. The next step in the development of this
business opportunity is to commence cassiterite dredging operations
and, for this stage of works to commence, the Company will need to
secure additional funding.
TSI
The Company is disappointed to report that it has made no
progress in its efforts to hold constructive discussions with the
management and owners of TSI Holdings Limited ("TSI"). The Company
is taking formal steps to achieve redress over the current default
on loan repayments from TSI using all forms of recourse available
to it. The amount outstanding under the TSI facility (including
accrued interest) is GBP0.68 million (US$1.07 million) and the
Company has made appropriate provision against this sum in the
presented results.
Mongolia
The Company has a 1.4% equity stake in Asia Pacific Investment
Partners Limited ("APIP"). APIP continues to progress well with its
plan to secure a stock exchange listing either in the later part of
this year or early 2015. APIP has developed an early stage
exploration license targeting an identified major copper-gold
porphyry system located in the South Gobi. APIP re-organised its
mineral exploration and mining subsidiary assets into a standalone
corporate entity at the end of 2013 and this was subsequently
de-merged from APIP through a distribution of its shares by way of
a dividend in specie. A suitable strategic and financial partner is
now being sought to advance its mineral exploration program.
We remain focussed on using our in-country knowledge and
contacts in Mongolia as a fast track for finding and evaluating
opportunities in the burgeoning natural resources sector in
Mongolia. Political uncertainty has created some headwinds over the
more recent trading period in terms of how foreign investment law
will develop, and the right strategy has in our view been to step
back from making further investments in Mongolia until more clarity
is available.
Afghanistan
The Company acquired a minority interest in InFrontier during
the year under review. InFrontier is a private equity fund
management company specialising in post conflict countries and is
currently focussed on investing in growth capital opportunities in
Afghanistan. It is the first international private equity firm with
a dedicated team based in Afghanistan and is exploring direct
investment opportunities in a number of disciplines, including the
emerging in-country mineral exploration and mining services
industries.
Corporate Matters
The Company continues to benefit from financial support from
Kolarmy Technology INC ("Kolarmy"), a related party company, in the
form of a loan facility. The existing facility was extended from
US$3 million (GBP1.9 million) to US$6 million (GBP3.8 million) in
June 2013, and has recently been extended further to US$9 million
(GBP5.7 million). The facility is drawn by approximately US$5.7
million (GBP3.6 million) as of the reporting date of these
financial statements.
Heng-Jui Lin is the majority shareholder of Kolarmy. The
increase in the Kolarmy facilty is a related party transaction
under the AIM Rules. The directors of the Company other than
Heng-Jui Lin, having consulted with Northland Capital Partners
Limited, consider that the terms of the increase of the Kolarmy
loan facility are fair and reasonable so far as the shareholders of
the Company are concerned.
Lin Kung-Min
Chairman
27 June 2014
Consolidated Statement of Profit Or Loss And Other Comprehensive
Income
For The Year Ended 31 December 2013
Notes 2013 2012
GBP GBP
Revenue 2 532,971 1,191,542
Cost of sales (492,475) (1,285,666)
------------ -------------
Gross profit/(loss) 40,496 (94,124)
Administrative expenses (2,193,786) (1,564,821)
------------ -------------
Operating loss (2,153,290) (1,658,945)
Other income 2 253,079 15,034
Finance costs 4 (119,834) (91,291)
------------ -------------
Loss before taxation 5 (2,020,045) (1,735,202)
Income tax expense 6 (2,226) (946)
------------ -------------
Loss for the year after
taxation (2,022,271) (1,736,148)
Other comprehensive income - -
------------ -------------
Total comprehensive loss (2,022,271) (1,736,148)
============ =============
Attributable to:
Owners of the parent (2,026,093) (1,716,857)
Non-controlling interests 3,822 (19,291)
------------ -------------
Total comprehensive loss (2,022,271) (1,736,148)
============ =============
Loss per share (basic) 7 (GBP0.030) (GBP0.030)
============ =============
Loss per share (diluted) 7 (GBP0.030) (GBP0.030)
=========== ===========
The accompanying accounting policies and notes form an integral
part of these financial statements.
Consolidated Statement of Financial Position
As At 31 December 2013
Notes 2013 2012
GBP GBP
Non-current assets
Property, plant and equipment 10 21,107 35,775
Loans receivable 11 - 636,661
Available-for-sale investments 12 1,273,502 1,273,322
------------ ------------
1,294,609 1,945,758
Current assets
Trade and other receivables 13 1,657,711 219,224
Cash and cash equivalents 109,001 202,419
1,766,712 421,643
Current liabilities
Other payables and accruals 15 799,259 383,995
Amounts due to related companies 16 3,481,857 1,276,698
Convertible loan notes 17 - 3,075,977
Provision for current tax 961 946
------------ ------------
4,282,077 4,737,616
Net current liabilities (2,515,365) (4,315,973)
------------ ------------
Net liabilities (1,220,756) (2,370,215)
============ ============
Equity
Share capital 18 6,229,328 3,057,598
Reserves (7,498,281) (5,472,188)
------------ ------------
Equity attributable to owners
of the parent (1,268,953) (2,414,590)
Non-controlling interests 48,197 44,375
------------ ------------
Capital deficiencies (1,220,756) (2,370,215)
============ ============
The financial statements were approved by the Board of Directors
and signed on its behalf by:
Simon Dewhurst
Director
27 June 2014
The accompanying accounting policies and notes form an integral
part of these financial statements.
Company Statement of Financial Position
As At 31 December 2013
Notes 2013 2012
GBP GBP
Non-current assets
Investments in subsidiaries 9 2 2
------------ ------------
Current assets
Other receivables 13 418,330 -
Amounts due from subsidiaries 14 1,273,322 1,741,314
Cash and cash equivalents 2,384 9,121
------------ ------------
1,694,036 1,750,435
Current liabilities
Other payables and accruals 15 227,206 143,695
Amounts due to subsidiaries 14 632,453 -
Convertible loan notes 17 - 3,075,977
------------ ------------
859,659 3,219,672
Net current assets/(liabilities) 834,377 (1,469,237)
------------ ------------
Net assets/(liabilities) 834,379 (1,469,235)
============ ============
Equity
Share capital 18 6,229,328 3,057,598
Reserves (5,394,949) (4,526,833)
------------ ------------
Total equity/(Capital deficiencies) 834,379 (1,469,235)
============ ============
The financial statements were approved by the Board of Directors
and signed on its behalf by:
Simon Dewhurst
Director
27 June 2014
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 2013
Notes 2013 2012
GBP GBP
Cash flows from operating activities
Loss before taxation (2,020,045) (1,735,202)
Adjustments for:
Depreciation of property, plant
and equipment 15,563 19,327
Dividend income (180) -
Loss on disposal of property, plant
and equipment - 20,546
Provision for bad and doubtful debts 696,735 81,184
Deregistration of a subsidiary - (6,410)
Equity-settled share-based payment 86,939 146,175
Exchange gain on convertible loan
notes - (107,957)
Interest income 2 (31,834) (14,404)
Finance costs 4 119,834 91,291
------------- -------------
Operating cash flows before movements
in working capital (1,132,988) (1,505,450)
Increase in trade and other receivables (1,466,728) (248,638)
Increase in other payables and accruals 304,244 99,911
------------- -------------
Net cash used in operations (2,295,472) (1,654,177)
Income tax paid (2,211) -
------------- -------------
Net cash used in operating activities (2,297,683) (1,654,177)
------------- -------------
Cash flows from investing activities
Additions of property, plant and
equipment (895) (6,993)
Acquisition of available-for-sale
investments - (1,273,322)
Loans to a third party - (636,661)
Interest received 1 1
------------- -------------
Net cash used in investing activities (894) (1,916,975)
------------- -------------
Cash flows from financing activities
Loans from related companies 2,364,324 3,672,692
Repayments of loans from a related
company (159,165) -
Net cash generated from financing
activities 2,205,159 3,672,692
------------- -------------
(Decrease)/Increase in cash and
cash equivalents (93,418) 101,540
Cash and cash equivalents at beginning
of the year 202,419 100,879
------------- -------------
Cash and cash equivalents at end
of the year 109,001 202,419
============= =============
Cash and cash equivalents consist
of:
Cash at bank and in hand 109,001 202,419
============= =============
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 2013
2013 2012
GBP GBP
Cash flows from operating activities
Loss before taxation (868,116) (1,926,620)
Adjustments for:
Equity-settled share-based payment 86,939 146,175
Exchange gain on convertible loan
notes - (107,957)
Deregistration of a subsidiary - 1
-------------- ----------------
Operating cash flows before movements
in working capital (781,177) (1,888,401)
Increase in trade and other receivables (418,330) -
Decrease in amounts due from subsidiaries 467,992 1,830,807
Increase in other payables and accruals 92,325 22,298
Increase in amounts due to subsidiaries 632,453 -
Net cash used in operating activities (6,737) (35,296)
Decrease in cash and cash equivalents (6,737) (35,296)
Cash and cash equivalents at beginning
of the year 9,121 44,417
Cash and cash equivalents at end
of the year 2,384 9,121
============== ================
Cash and cash equivalents consist
of:
Cash at bank and in hand 2,384 9,121
============== ================
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 2013
Share Accumulated Total Non- Total
capital losses controlling
interest
GBP GBP GBP GBP GBP
At 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 and
1 January 2013 3,057,598 (5,472,188) (2,414,590) 44,375 (2,370,215)
Loss for the
year - (2,026,093) (2,026,093) 3,822 (2,022,271)
Other -
comprehensive
income - - - -
----------- --------------- -------------- --------------- --------------
Total
comprehensive
expenses - (2,026,093) (2,026,093) 3,822 (2,022,271)
----------- --------------- -------------- --------------- --------------
Issue of shares
upon conversion
of Convertible
Loan Notes 3,075,977 - 3,075,977 - 3,075,977
Issue of shares
upon
equity-settled
share-based
arrangement
(Note 19) 95,753 - 95,753 - 95,753
At 31 December
2013 6,229,328 (7,498,281) (1,268,953) 48,197 (1,220,756)
=========== =============== ============== =============== ==============
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 2013
Share capital Accumulated Total
losses
GBP GBP GBP
At 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
and
1 January 2013 3,057,598 (4,526,833) (1,469,235)
Loss for the year - (868,116) (868,116)
Other comprehensive
income - - -
-------------- --------------- ----------------
Total comprehensive
expenses - (868,116) (868,116)
Issue of shares upon
conversion of Convertible
Loan Notes 3,075,977 - 3,075,977
Issue of shares upon
equity-settled share-based
arrangement (Note
19) 95,753 - 95,753
At 31 December 2013 6,229,328 (5,394,949) 834,379
============== =============== ================
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 2013
1 Accounting Policies
Basis of accounting
The financial statements of Power Capital Global Limited on
pages 8 to 47 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 2013, the Group had net current liabilities of
GBP2,515,365.
The directors have prepared the financial statements on the
going concern basis which assumes the ability of a party related to
the Group to continue to provide financial support and not seek
repayment of the loan to the Group. A related party has confirmed
that they are willing to make further funding available to the
Group and Company. Should the funding not be available, or should
the related party seek to recall their loans, the Group would need
to try to seek alternative sources of finance. The directors of the
Group acknowledge that to a third party it may be perceived that
this constitutes an uncertainty which casts doubt on the Group and
Company's ability to continue as a going concern.
On 13 June 2014, the Group secured an agreement for a total of
US$9 million twelve month loan facility from Kolarmy Technologies
Inc. ("Kolarmy"), a company under the control of Mr. Lin Heng-Jui
and the director of the Company, 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 previous loan agreement with Kolarmy
dated 13 June 2013.
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.
Taking into consideration the financial resources available to
the Group, including internally generated funds and the continuing
financial support of a related party, 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.
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.
Commission income is recognised when the agreed services have
been provided.
Dividend income is recognised when the right to receive the
dividend is established.
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
profit or loss.
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.
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 2013:
Amendments to IAS 1 (Revised) Presentation of Items of Other Comprehensive Income
IFRS 13 Fair Value Measurement
The adoption of these and other amended 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.
IFRS 9 Financial Instruments
IFRS 10 Consolidated Financial Statements
IFRS 11 Joint Arrangements
IFRS 12 Disclosure of Interests in Other Entities
IFRS 15 Revenue from contracts with customers
IAS27 (2012) Separate Financial Statements
IAS28 (2012) Investments in Associates and Joint Ventures
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.
2 Revenue and Other Income
2013 2012
GBP GBP
Revenue 532,971 1,191,542
======== ==========
Other income
Sundry income 22,614 630
Commission income 198,451 -
Dividend income 180 -
Loan interest income 31,833 14,403
Bank interest income 1 1
-------- ----------
253,079 15,034
======== ==========
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)
2013 2012 2013 2012
GBP GBP GBP GBP
Sales of coal 532,971 677,022 40,496 36,556
Sales of clinkers - 514,520 - (130,680)
532,971 1,191,542 40,496 (94,124)
======== ========== ================ ============
Other income 253,079 15,034
Unallocated corporate
expenses (2,193,786) (1,564,821)
Finance costs (119,834) (91,291)
---------------- ------------
Loss before taxation (2,020,045) (1,735,202)
================ ============
Revenue reported above represents revenue generated from
external customers. There were no intersegment sales during the
year (2012: 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
2013 2012
GBP GBP
Segment assets
Coal business 1,065,403 255,121
Clinker business - -
------------ ------------
Total segment assets 1,065,403 255,121
Unallocated corporate assets
* Property, plant and equipment 21,107 35,775
* Loans receivable - 636,661
* Available-for-sale investments 1,273,502 1,273,322
* Trade and other receivables 593,115 133,583
* Cash and cash equivalents 108,194 32,939
------------ ------------
Consolidated assets 3,061,321 2,367,401
============ ============
Segment liabilities
Coal business (1,631,168) (307,727)
Clinker business - (292,305)
------------ ------------
Total segment liabilities (1,631,168) (600,032)
Unallocated corporate liabilities
* Other payables and accruals (438,583) (328,472)
* Amount due to related companies (2,212,326) (733,135)
* Convertible loan notes - (3,075,977)
Consolidated liabilities (4,282,077) (4,737,616)
============ ============
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.
2013 2012
GBP GBP
Mongolia - 514,520
Indonesia 532,971 677,022
-------- ----------
532,971 1,191,542
======== ==========
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:
2013 2012
GBP GBP
Customer A - 514,520
Customer B 532,971 397,374
Customer C - 279,648
======== ========
4 FINANCE COSTS
2013 2012
GBP GBP
Interest on advances from a related
company 86,140 45,989
Interest on convertible loan notes 33,694 45,302
-------- -------
119,834 91,291
======== =======
5 Loss Before Taxation
Loss before taxation is stated after charging/(crediting) the
following:
2013 2012
GBP GBP
Auditors' remuneration 20,000 18,000
Depreciation of property, plant and
equipment 15,563 19,327
Staff costs (including directors'
emoluments)
- Salaries, wages and other benefits 826,457 698,093
- Equity-settled share-based payments 86,939 146,175
- contributions to defined contribution
retirement plans 10,662 8,537
-------- ---------
924,058 852,805
Loss on disposal of property, plant
and equipment - 20,546
Operating lease expenses - land and
building 82,803 96,373
Provision for bad and doubtful debts 696,735 81,184
Exchange loss/(gain), net 9,626 (97,381)
======== =========
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.
2013 2012
GBP GBP
Group
Current tax - Indonesia
In respect of current year 2,226 946
Deferred tax - -
------ -----
Income tax expense 2,226 946
====== =====
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:
2013 2012
GBP GBP
Loss before taxation (2,020,045) (1,735,202)
Notional tax at the rates applicable
to profits in
the jurisdictions concerned (333,307) (286,308)
Effect of different tax rates of subsidiaries
operating in Indonesia 293 124
Tax effect of non-assessable income (15) -
Tax effect of non-deductible expenses 210,169 252,955
Tax effect of temporary differences
not recognised
for deferred tax purposes 2,201 1,805
Tax effect of unrecognised tax losses 122,885 32,370
------------ ------------
Income tax expense 2,226 946
============ ============
No deferred tax asset has been recognised in relation to tax
loss of approximately HK$25 million (i.e. GBP2 million) (2012:
approximately HK$16 million (i.e. GBP1.3 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
GBP2,026,093 (2012: loss GBP1,716,857) and the weighted average
number of shares in issue as at 31 December 2013 of 67,950,037
(2012: 57,101,056), 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 2013 and
2012 is not presented because the impact of the conversion of
convertible notes is anti-dilutive because the company made a
loss.
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
2013
Executive Director
Simon Dewhurst 78,870 70,704 1,227 150,801
-------- ------------ ------------- --------
Non-Executive Directors
Craig Lees Baxter Niven** 42,000 - - 42,000
Graham Newall - 92,700 1,227 93,927
Lin Heng-Jui 35,890 - - 35,890
Lin Kung-Min* 120,000 - - 120,000
197,890 92,700 1,227 291,817
-------- ------------ ------------- --------
276,760 163,404 2,454 442,618
======== ============ ============= ========
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
======== ============ ============= ========
* 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 (2012: GBP120,000), for the
provision of advisory and support services to the Group.
** Zetachoice Limited, a company controlled by Craig Niven and
his immediate family, received fees under a consultancy agreement
of GBP42,000 (2012: GBP42,000), for the provision of advisory and
support services to the Group.
9 Investments in Subsidiaries - The Company
2013 2012
GBP GBP
At Cost
At 1 January 2 3
Deregistration of a subsidiary - (1)
----- -----
At 31 December 2 2
===== =====
Particulars of the principal subsidiaries at 31 December 2013
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 Trading of
(HK) Limited) Ordinary 51% coal 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
PCG Tin Limited Ordinary 100% Dormant BVI
PCG Ports Limited Ordinary 100% Dormant BVI
10 Property, Plant And Equipment - The Group
Furniture,
Computer fixtures
and Electronic
equipment equipment equipment Total
GBP GBP GBP GBP
Cost
At 1 January 2013 24,965 33,259 1,410 59,634
Additions during the year - 895 - 895
At 31 December 2013 24,965 34,154 1,410 60,529
---------- ----------- ----------- -------
Accumulated depreciation
At 1 January 2013 12,232 10,849 778 23,859
Charge for the year 8,321 7,172 70 15,563
At 31 December 2013 20,553 18,021 848 39,422
---------- ----------- ----------- -------
Net book value
At 31 December 2013 4,412 16,133 562 21,107
========== =========== =========== =======
At 31 December 2012 12,733 22,410 632 35,775
========== =========== =========== =======
11 Loans Receivable
During the year ended 31 December 2012, US$1 million (the
"Loan") was advanced by PCG Engineering Limited, a wholly owned
subsidiary of the Company, to TSI Holdings Limited ("TSI") which is
a third party to the Group. The Loan was unsecured, bearing
interest at 5% per annum and repayable within 24 months from the
date of loan agreement.
The directors of the Company are of the opinion that it has made
no progress in its efforts to hold constructive discussions with
the management and owners of TSI and therefore full provision was
made against this sum of loan.
12 Available For Sale Investments
2013 2012
GBP GBP
Unlisted shares, at cost 1,273,502 1,273,322
========== ==========
The Group's available-for-sale investments represented the
unlisted equity investments which were carried at costs less
impairment loss.
13 Trade And Other Receivables
Group Company
2013 2012 2013 2012
GBP GBP GBP GBP
Trade receivables 257,439 162,368 - -
Less: Provision for impairment (60,074) (81,184) - -
---------- --------- -------- -----
197,365 81,184 - -
Unpaid capital contribution
due from non-controlling
interests 63,666 63,666 - -
Prepayments and other
receivables 1,396,680 74,374 418,330 -
---------- --------- -------- -----
1,657,711 219,224 418,330 -
========== ========= ======== =====
All of the Group's trade receivables are denominated in United
States Dollars ("US$").
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 2013 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 2013, impairment losses of GBP60,074 (2012:
GBP81,184) 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
2013 2012 2013 2012
GBP GBP GBP GBP
At 1 January 81,184 40,555 - -
Impairment losses recognised 60,074 81,184 - -
Written off (81,184) (40,555) - -
At 31 December 60,074 81,184 - -
========== ========== ===== =====
14 Amounts Due From/ (To) Subsidiaries - The Company
2013 2012
GBP GBP
Amounts due from/(to):
PCG Resources (C.I.) Limited 1,015,524 1,015,524
PCG Minerals Trading (HK)
Limited 1,451,493 1,451,493
PCG Services Limited 61,838 80,221
PCG Engineering Limited 394,730 394,730
PCG Mongolia Limited 1,273,322 1,273,322
PCG Resources Limited (632,453) 73,262
------------ ------------
3,564,454 4,288,552
Less: Provision for impairment (2,923,585) (2,547,238)
------------ ------------
640,869 1,741,314
============ ============
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 2013, an impairment
loss of approximately GBP376,347 (2012: GBP1,482,962) was
recognised in the Company's statement of comprehensive income.
The amounts due from/ (to) subsidiaries were unsecured, interest
free and repayable on demand. Due to their short maturities, the
carrying amount of amounts due from/(to) subsidiaries is a
reasonable approximation of their fair value.
15 Other payables and accruals - The Group And Company
The Group
2013 2012
GBP GBP
Accrued expenses 480,928 346,459
Other payables 318,331 37,536
799,259 383,995
======== ========
The Company
2013 2012
GBP GBP
Accrued expenses 227,206 143,695
======== ========
16 Amounts Due To Related Companies - The Group
Notes 2013 2012
GBP GBP
Kolarmy Technologies Inc. (i) 3,294,042 1,276,698
Aylmer Capital Limited (ii) 187,815 -
3,481,857 1,276,698
========== ==========
Note:
(i) Kolarmy is a company under the control of Mr. Lin Heng-Jui,
the director of the Company. The amounts due to Kolarmy were
unsecured, bearing interest at LIBOR plus 3% per annum and
repayable within twelve months.
(ii) Aylmer Capital Limited ("Aylmer") is a company in which Mr.
Simon Dewhurst is the common director. The amounts due to Aylmer
were unsecured, interest free and repayable on demand.
Due to their short maturities, the carrying amount of amounts
due to related companies is a reasonable approximation of their
fair value.
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 (a company under the control
of Mr Lin Kung-Min, the ultimate controlling party of the company)
amounting 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
2013 2012
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 -
================= ======= =================== ========
2013 2012
Number Number
of shares GBP of shares GBP
Paid-in capital
At 1 January 57,534,810 3,057,598 57,056,501 2,982,826
Shares issued upon conversion
of Convertible Loan Notes 16,233,765 3,075,977 - -
Shares issued upon equity-settled
share-based arrangement 655,357 95,753 478,309 74,772
------------- ------------ ----------- ------------
At 31 December 74,423,932 6,229,328 57,534,810 3,057,598
============= ============ =========== ============
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 and 9 December 2013, 478,309 and 655,357
Options with exercise price of GBP0.00000000001 were granted to
certain employees of the group respectively. As mutually agreed
between these employees and the Company, the Options must be
exercised immediately at each date of grant. On each of date of
grant, all Options 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 and 655,357 new shares
issued which were also approximated to the employees' compensation
amounted to GBP74,772 and GBP95,753 respectively which had been
credited to share capital directly. The average share price on each
of date of exercise was 13p and 12p respectively.
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 2013 2012
GBP GBP
Sales to Central Asia Cement
LLC (i) - 514,520
Interest payable to Kolarmy
Technologies Inc. (ii) 119,834 91,291
======== ========
Note:
(i) Central Asia Cement LLC is a wholly owned subsidiary of Asia
Pacific Investment Partners Limited ("APIP"), of which the Group's
executive director, Mr. Simon Dewhurst, was a director.
(ii) Interest paid to Kolarmy Technologies Inc., a company under
the control of Mr. Lin Heng-Jui, the director of the Company. The
Directors have consulted with the Group's nominated adviser to
confirm 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
related companies. 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
2013 2012 2013 2012
GBP GBP GBP GBP
Financial assets
Loans and receivables
* Loans receivable - 636,661 - -
* Trade and other receivables 1,657,711 219,224 418,330 -
* Amounts due from subsidiaries - - 1,273,322 1,741,314
---------- ---------- ---------- ------------
1,657,711 855,885 1,691,652 1,741,314
Available-for-sale investments 1,273,502 1,273,322 - -
Cash and cash equivalents 109,001 202,419 2,384 9,121
---------- ---------- ---------- ------------
3,040,214 2,331,626 1,694,036 1,750,435
========== ========== ========== ============
Financial liabilities
At amortised cost
* Other payables and accruals 799,259 383,995 227,206 143,695
* Amounts due to related companies 3,481,857 1,276,698 - -
* Amounts due to subsidiaries - - 632,453 -
* Convertible loan notes - 3,075,977 - 3,075,977
---------- ---------- ---------- ------------
4,281,116 4,736,670 859,659 3,219,672
========== ========== ========== ============
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 2013, the Group had
concentration of credit risk as 100% (2012: 100%) 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$. The Group currently does not have a
foreign currency hedging policy. However, the Directors monitor the
foreign exchange exposure and will consider hedging significant
foreign currency exposure should the need arises.
The table below illustrates the monetary assets and liabilities
denoted in various currencies by the Group as at reporting
date:
2013 2012
GBP GBP
Monetary Assets:
Sterling 2,433 9,171
US$ 258,356 884,357
Rp 384 4,307
HK$ 40,138 15,392
RMB 5,055 7,037
---------- ----------
306,366 920,264
========== ==========
Monetary Liabilities:
US$ 3,468,399 4,352,649
RMB 13,458 26
---------- ----------
3,481,857 4,352,675
========== ==========
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.
2013 2012
GBP GBP
Sterling strengthens by 10%
US$ 321,004 346,829
Rp (38) (431)
HK$ (4,014) (1,539)
RMB 840 (701)
Sterling weakens by 10%
US$ (321,004) (346,829)
Rp 38 431
HK$ 4,014 1,539
RMB (840) 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 related companies. As at 31 December 2013, the Group had net
current liabilities and net liabilities of GBP2,515,365 and
GBP1,220,756 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
2013
Other payables and accruals 799,259 799,259 799,259
Amounts due to related
companies 3,481,857 3,481,857 3,481,857
4,281,116 4,281,116 4,281,116
========== ============= =============
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
The Company
Total
contractual
Carrying undiscounted Within 1
year
amounts payments or on demand
GBP GBP GBP
Year ended 31 December
2013
Other payables and accruals 227,206 227,206 227,206
Amounts due to subsidiaries 632,453 632,453 632,453
859,659 859,659 859,659
========== ============= =============
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
========== ============= =============
Interest rate risk
At 31 December 2013, the Group's exposure to interest rate risk
mainly arises on an 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 (2012: +/-
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
2013 2012
+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 (82,351) 82,351 (108,817) 108,817
========== ========== ========== ==========
Company
2013 2012
+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 2013, the total future minimum lease payments
under non-cancellable operating leases payable by the Group are as
follows:
2013 2012
GBP GBP
Within one year 80,239 17,724
In the second to fifth years inclusive 19,851 4,536
-------- -------
100,090 22,260
======== =======
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 2013 and 2012.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR FMGZVKNZGDZM
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