RNS Number : 3332C
Namibian Resources PLC
29 August 2008
Annual report and Results for the year ended 29 February 2008
Namibian Resources Plc (the "Company")
Chairman's statement
The year to 29th February 2008 was disappointing with turnover decreasing from £504,542
to £140,622 resulting in a loss of £298,168,
However, the extensive sampling exploration programme has enabled us to identify diamond
resources sufficient to sustain and increase
production during 2009. The year saw significant operating cost increases in fuel, maintenance
and food. These have been offset by increases
in prices received for our diamonds, particularly after year-end. During the year the
Directors took a placing of shares to raise £200,000
to maintain our cash resources and there are no bank borrowings. Dr Donald Sutherland joined
the group in January of this year and is
carrying out a programme of rationalisation to enhance the efficiency and lower the costs of
production. He has also identified and tested
further areas which are positive for future mining. We are grateful for his dedication to the
development of our mine. His activities are
reported separately. The board confirms its commitment to expanding production and developing
the mine in a profitable manner.
I would like to thank all members of our staff here and in Namibia for their efforts
during this difficult year.
Lord Sheppard of Didgemere KCVO Kt
Review of Operations
During the last several years the Company's operations have focussed on the SW corner of
its Pomona concession and an immediately
adjacent area where Namdeb has also permitted mining and prospecting activities. In that area
the diamond deposits are characterised by an
anomalously large average size. Throughout the Namibian coastal zone the quality of the
diamonds is extremely high, with only 1-2 percent
not being classified as either gem or near-gem. Consequently, the average parcel value
received by Sonnberg for its diamonds is directly
proportional to average parcel size and hence the revenue generated for a given carat recovery
is significantly greater in the zone of high
average size.
Throughout the Pomona concession and adjacent areas the diamonds occur in a series of
discrete, wind-eroded basins. Each basin contains
diamond-bearing deposits which are singular in terms of diamond size, diamond concentration
and diamond distribution. Every deposit
therefore requires a separate sampling programme to determine its characteristics. A
geological model of diamond occurrence applicable to
the valley systems has been developed and is considered to provide a sound basis both for
orienting sampling activities and for
extrapolating sampling results for resource estimation.
The Company's operations have shown that the historical sampling database which it has
previously used for resource estimation
significantly underestimates diamond occurrence in this part of the concession. This
underestimation occurs in two ways. First, certain
deposits have not been located by the historic sampling and secondly, of those deposits that
have been identified, the extent and level of
diamond concentration have been underestimated, in some cases very significantly.
In order to identify and characterise all the deposits in the area and to develop a
rational mining plan for future years, the Company
has been undertaking prospecting activities and in doing so has sacrificed production time.This is considered to be advantageous to the
long-term development of the company. Prospecting activities to date have been very successful
in identifying new deposits. It is worth
mentioning that Sonnberg's production over the last several years has been almost entirely
from deposits that were not included in the
statement of resources included in its listing documents.
Total production during the FY 2007-8 was derived from mining, prospecting and various
clean-up operations (around processing plants and
tailings piles) and totalled 2,126 ct. This was significantly down on FY 2006-7 reflecting the
working out (by April 2007) of the rich East
Salztal deposit which had been the mainstay of production during the previous year. The
Hannahtal deposit was then brought into production
and was worked out (524 ct) as was the West Salztal North deposit (60 ct) at the up-slope
limit of the West Salztal valley. Both these small
deposits had been prospected during the previous year. During this same period prospecting
outlined the Mariannental deposit and resulted in
the discovery of the Salzpfanne deposit. Economically interesting mineralisation in the
Hannahtal North deposit was confirmed, but the
sampling of this last deposit remained to be completed at year end.
Small scale production of 22 ct was also derived from an attempt to re-start mining of the
West Salztal deposit. Mining had been stopped
at West Salztal following the exceptional rains of Easter 2006 which flooded the whole valley
floor. Despite an attempt to pump the working
face dry, it has not been possible to reactivate mining of this deposit and, for the
foreseeable future, no more work will be attempted
there. More generally, despite being located in the hyper-arid Namib coastal desert, ground
water levels remain high in the valley bottoms
and prospecting is still hampered in a number of promising areas.
From September 2007 mining was moved to focus on the Salzpfanne deposit from which over
900 ct had been extracted by year-end. The
southern end of mining operations in this deposit is, as at West Salztal, constrained by a
high water table and the diamond-bearing sands
and gravels continue for an unspecified distance south of the presently defined limit of
mining. Nonetheless it is expected that mining of
the identified deposit at Salzpfanne will continue throughout almost the whole of the FY
2008-9.
Until late in FY 2007-8 the Company had only a single screening plant in operation at any
one time. However a second screening plant was
brought into operation at the end of the year and after the financial year-end the new East
Salztal North deposit was brought into
production simultaneously with the mining of the Salzpfanne deposit. Both operating screening
plants have been relocated to immediately
adjacent to the deposits being mined, thus constraining operating costs.
The poor performance of operations in FY 2007-8 has been the result of a number of factors
- a greater prospecting requirement than
initially envisaged; an inability to both prospect and mine simultaneously; and poor equipment
availability and utilisation. All these
factors are being addressed during FY2008-9.
The annual report and accounts for the 2007 financial year have been printed and posted to
shareholders and are available from the
Company's website www.namibianresources.com.
Contacts:
The Company
Tony Carlton, CEO 020 8726 0900
Oliver Plummer, Financial Director 020 7831 0100
Collins Stewart (Nomad to the Company)
Adrian Hadden 020 7523 8351
Consolidated income statement for the year ended 29 February 2008
Note 2008 2007
£ £
Revenue 1.7 140,622 504,542
Cost of sales (234,943) (202,565)
________ ________
Gross profit (94,321) 301,977
Administrative expenses (210,317) (310,463)
________ ________
Operating loss 3 (304,638) (8,486)
Other interest receivable and similar income
6,470 34,554
________ ________
(Loss)/Profit before tax (298,168) 26,068
Income tax expense 4 - -
________ ________
(Loss)/Profit after tax £(298,168) £26,068
Earnings per share (pence) 5
Basic (0.78) 0.07
Diluted (0.78) 0.06
All amounts relate to continuing activities.
Consolidated statement of total recognised income and expense for the year ended 29
February 2008
2008 2007
£ £
Exchange difference on translation of foreign
operations (178,543) (548,824)
________ ________
Net income (expense) recognised directly in equity (178,543) (548,824)
(Loss)/Profit for the financial year (298,168) 26,068
________ ________
Total recognised income and expense for the year
£(476,711) £(522,756)
________ ________
The notes on pages 15 to 35 form part of these financial statements.
Consolidated balance sheet at 29 February 2008
Note 2008 2008 2007 2007
as as restated
restated
Assets £ £ £ £
Non current assets
Intangible assets:
Mining rights and exploration 7 860,499 652,878
costs
________ ________
860,499 652,878
Property, Plant and Equipment 8 970,106 1,172,047
________ ________
1,830,605 1,824,925
Current assets
Inventories 10 32,673 35,948
Trade and other receivables 11 26,363 23,518
Cash and cash equivalents 103,500 372,188
________ ________
162,536 431,654
Total Assets £1,993,141 £2,256,579
________ ________
Equity and Liabilities
Share capital 14 3,992,246 3,792,246
Share premium account 15 359,384 359,384
Foreign exchange reserve 99,562 278,105
Retained earnings 16 (2,509,171) (2,211,003)
________ ________
Total equity 18 1,942,021 2,218,732
Current Liabilities
Trade and other payables 12 51,120 37,847
________ ________
Total Equity and liabilities 18 £1,993,141 £2,256,579
________ ________
Company balance sheet at 29 February 2008
Note 2008 2007
as
restated
£ £
Assets
Non-current assets
Investments 9 4,091,729 4,199,108
Current assets
Cash and cash equivalents 103,338 208,432
________ ________
Total Assets 4,195,067 4,407,540
________ ________
Equity
Share capital 14 3,992,246 3,792,246
Share premium account 15 359,384 359,384
Retained earnings 16 (175,438) 236,533
________ ________
Total Equity 18 4,176,192 4,388,183
Current Liabilities
Trade and other payables 12 18,875 19,357
________ ________
Total Liabilities £4,195,067 £4,407,540
________ ________
Consolidated cash flow statement for the year ended 29 February 2008
Note 2008 2007
£ £
Cash generated from operating activities 20 (70,548) 60,992
Cash flow from investing activities
Purchase of intangible assets (279,457) (74,582)
Purchase of property plant and equipment (125,003) (137,531)
Interest Received 6,320 34,554
________ ________
Net cash used in investing activities (398,230) (177,559)
Cash flow from financing activities
Proceeds from issue of shares 200,000 -
________ ________
Net decrease in cash and cash equivalents 22 £(268,688) £(116,567)
________ ________
Notes forming part of the financial statements for the year ended 29 February 2008
1 Accounting policies
1. Presentation of Annual Financial Statements
The annual financial statements have been prepared for the first time in accordance with
International Financial Reporting Standards as
adopted by the European Union, and the Companies Act of 1985. The adoption of International
Financial Reporting Standards has resulted in
the restatement of 2007 balances to provide a like for like comparison. The financial impact
of this change in reporting is detailed after
each of the above financial reports.
The annual financial statements have been prepared on the historical cost basis, and
incorporate the principal accounting policies set
out below.
The group has not yet applied the following Accounting Standards and Interpretations,
which will be applicable to their annual financial
statements, that have been issued but are not yet effective:
IAS 15 Agreement for the Construction of Real (Effective 1 January
Estate. 2009)
IAS 1 Presentation of Financial Statements - (Effective 1 January
Comprehensive revision including required a 2009)
statements of comprehensive income.
Amendments resulting from May 2008 Annual
Improvements to IFRSs.
IAS 16 Property, plant and equipment - Amendments (Effective 1 January
resulting from May 2008 Annual Improvements 2009)
to IFRSs.
IAS 23 Borrowing costs. (Effective 1 January
2009)
IAS 32 Financial Instruments: Presentation - (Effective 1 January
Amendments relating to puttable instruments 2009)
and obligations arising on liquidation.
IAS 36 Impairment of Assets - Amendments resulting (Effective 1 January
from May 2008 Annual Improvements to IFRSs. 2009)
IAS 38 Intangible Assets - amendments resulting (Effective 1 January
from May 2008 Annual Improvements to IFRSs. 2009)
IAS 39 Financial Instruments: Recognition and (Effective 1 January
Measurement Amendments resulting from May 2009)
2008 Annual Improvements to IFRSs.
The directors anticipate that the adoption of these Standards and Interpretations in
future periods will have no material impact on the
financial statements of the company or the group.
1.1 Basis of Consolidation
The consolidated income statement account and balance sheet include the financial
statements of the company and its subsidiary
undertakings made up to 29 February 2008. The results of subsidiaries sold or acquired are
included in the income statement up to, or from
the date control passes. Intra-group sales and profits are eliminated fully on consolidation.
The results of a holding in Oletu Investments Holdings (see Note 10) have not been
consolidated on account of it being immaterial.
1.2 Going Concern
The company's ability to continue as a going concern depends on the prospects of future
profitable trading and being able to raise
sufficient finance to upgrade its production facilities and equipment, maintain a rolling
programme of exploration and improve the volume
of, and output from, its processing of raw material. The group is seeking additional sources
of finance but also relies on financial support
from directors and existing shareholders. To date, the company and the group have accumulated
trading losses since the commencement of
mining activities and there are inherent uncertainties in the mining industry which make it
impossible to predict when the company will
become profitable. Nevertheless, the directors remain confident that the company and the group
will trade profitably in the foreseeable
future and will be able to continue to meet its liabilities as they fall due.
1.3 Significant Judgements
In preparing the annual financial statements, management is required to make estimates and
assumptions that affect the amounts
represented in the annual financial statements and related disclosures. Use of available
information and the application of judgement is
inherent in the formation of estimates. Actual results in the future could differ from these
estimates which may be material to the annual
financial statements. Significant judgements include:
Trade Receivables
The group assesses its trade receivables for impairment at each balance sheet date. In
determining whether an impairment loss should be
recorded in the income statement, the company makes judgements as to whether there is
observable data indicating a measurable decrease in
the estimated future cash flows from a financial asset.
Mining assets
The group assesses the proportion of exploration costs incurred which will provide future
economic benefits in identifying areas of
interest where future mining could be focused. These costs are capitalised and amortised over
the period of the mining licence.
Mining rights
The right of mining on the assigned area was initially valued by an independent geologist.This right is yearly re-assessed for
impairment by comparing the value-in-use to the carrying value of the mining right.
1.4 Underlying concepts
The financial statements are prepared on the going concern basis using accrual accounting.
Assets and liabilities and income and expenses are not offset unless specifically
permitted by an accounting standard.
Financial assets and financial liabilities are offset and the net amount reported only
when a currently legally enforceable right to set
off the amounts exists and the intention is either to settle on a net basis or to realise the
asset and settle the liability simultaneously.
The accounting policies adopted are consistent with those used in previous financial
periods except for
a) Adoption of IFRS
Previously the company and its subsidiaries prepared the financial statements in
accordance with UK GAAP. The group elected to publish
its first consolidated interim financial statements to 31 August 2007 under IFRS with its
transition date to IFRS being 1st March 2006
b) Introduction of IFRS - First time adoption
The rules for first time adoption of IFRS are set out in IFRS1, First-Time Adoption of
International Financial Reporting Standards. In
general, selected accounting policies must be applied retrospectively in determining the
opening balance sheet under IFRS. However, IFRS1
allows a number of exemptions to this general principle.
Changes in accounting estimates are recognised in profit or loss.
Prior period errors are retrospectively restated unless it is impractical to do so, in
which case they are applied prospectively.
Accounting policies are not applied when the effect of applying them is immaterial.
1.5 Recognition of Assets and Liabilities
Assets are only recognised if they meet the definition of an asset, it is probable that
future economic benefits associated with the
asset will flow to the company and the cost or fair value can be measured reliably.
Liabilities are only recognised if they meet the definition of a liability, it is probable
that future economic benefits associated with
the liability will flow from the company and the cost or fair value can be measured reliably.
Financial instruments are recognised when the company becomes a party to the contractual
provisions of the instrument.
Financial assets and liabilities as a result of firm commitments are only recognised when
one of the parties has performed under the
contract.
Regular purchases and sales are recognised using trade date accounting.
1.6 Derecognition of Assets and Liabilities
Financial assets or parts thereof are derecognised when the contractual rights to receive
cash flows have been transferred or have
expired or if substantially all the risks and rewards of ownership have passed. Where
substantially all the risks and rewards of ownership
have not been transferred or retained, the financial assets are derecognised if they are no
longer controlled. However, if control in this
situation is retained, the financial assets are recognised only to the extent of the
continuing involvement in those assets.
All other assets are derecognised on disposal or when no future economic benefits are
expected from their use or on disposal.
Financial liabilities are derecognised when the relevant obligation has either been
discharged or cancelled or has expired.
1.7 Revenue
The total revenue of the group for the year has been derived from its principal activity,
mining, wholly undertaken by its subsidiary in
Namibia, Sonnberg Diamonds (Namibia) (Proprietary) Limited ("Sonnberg"). All sales are made in
Namibia and the majority of assets are also
located in Namibia.
Turnover comprises of sales to customers and services rendered to customers. Turnover is
stated at the invoice amount and is exclusive
of value added taxation.
Revenue from the sale of goods is recognised when all the following conditions have been
satisfied:
* the company has transferred to the buyer the significant risks and rewards of ownership
of the goods;
* the company retains neither continuing managerial involvement to the degree usually
associated with ownership nor effective control
over the goods sold;
* the amount of revenue can be measured reliably;
* it is probable that the economic benefits associated with the transaction will flow to
the company; and
* the costs incurred or to be incurred in respect of the transaction can be measured
reliably.
Revenue is measured at the fair value of the consideration received or receivable and
represents the amounts receivable for goods
provided in the normal course of business, net of trade discounts and volume rebates, and
value added tax.
Interest is recognised, in profit or loss, using the effective interest rate method.
1.8 Tax
Current tax assets and liabilities
Current tax for current and prior periods is, to the extent unpaid, recognised as a
liability. If the amount already paid in respect of
current and prior periods exceeds the amount due for those periods, the excess is recognised
as an asset.
Current tax liabilities (assets) for the current and prior periods are measured at the
amount expected to be paid to (recovered from)
the tax authorities, using the tax rates (and tax laws) that have been enacted or
substantively enacted by the balance sheet date.
Deferred tax assets and liabilities
A deferred tax liability is recognised for all taxable temporary differences, except to
the extent that the deferred tax liability
arises from the initial recognition of an asset or liability in a transaction which at the
time of the transaction, affects neither
accounting profit nor taxable profit (tax loss).
A deferred tax asset is recognised for all deductible temporary differences to the extent
that it is probable that taxable profit will
be available against which the deductible temporary difference can be utilised. A deferred tax
asset is not recognised when it arises from
the initial
recognition of an asset or liability in a transaction at the time of the transaction and
affects neither accounting profit nor taxable
profit (tax loss).
A deferred tax asset is recognised for the carry forward of unused tax losses to the
extent that it is probable that future taxable
profit will be available against which the unused tax losses can be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to
apply to the period when the asset is realised or
the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted by the balance sheet date.
Tax expenses
Current and deferred taxes are recognised as income or an expense and included in profit
or loss for the period, except to the extent
that the tax arises from:
* a transaction or event which is recognised, in the same or a different period, directly
in equity, or
* a business combination.
Current tax and deferred taxes are charged or credited directly to equity if the tax
relates to items that are credited or charged, in
the same or a different period, directly to equity.
1.9 Leases
A lease is classified as a finance lease if it transfers substantially all the risks and
rewards incidental to ownership. A lease is
classified as an operating lease if it does not transfer substantially all the risks and
rewards incidental to ownership.
Rentals payable under operating leases are charged against income on a straight-line basis
over the lease term.
1.10 Foreign Currency Translation
Monetary assets and liabilities denominated in foreign currencies are translated into
sterling at the rates of exchange ruling at the
balance sheet date. Transactions in foreign currencies are recorded at the rate ruling at the
date of the transaction.
The results of overseas operations are translated at the rate ruling at the date of the
transaction. However the balance sheet is
translated at the rate ruling at the date of the balance sheet. Exchange differences arising
on translation of opening assets are reported
in the consolidated statement of recognised income and expense.
1.11 Mining Assets
Exploration and evaluation costs other than future site identification costs are expensed
as incurred. Site identification costs related
to areas of interest are capitalised and carried forward to the extent that they are expected
to be recoverable.
Any changes in the estimates for the costs are accounted on a prospective basis. In
determining the costs of site restoration, there is
uncertainty regarding the nature and extent of the restoration due to community expectations
and future legislation. Accordingly, the costs
have been determined on the basis that the restoration will be completed within one year of
abandoning the site.
Mining assets are reviewed for impairment when facts and circumstances suggest that the
carrying amount of an exploration and evaluation
asset may exceed its recoverable amount. When facts and circumstances suggest that the
carrying amount exceeds the recoverable amount, the
mining asset is written down to their recoverable amount.
1.12 Rehabilitation Costs
Costs of site restoration are recognised when incurred. Site restoration costs include the
dismantling and removal and rehabilitation of
the site in accordance with the clauses of the mining permits. Such costs are charged to
direct costs.
1.13 Intangible Assets
An intangible asset is recognised when:
* it is probable that the expected future economic benefits that are attributable to the
asset will flow to the entity; and
* the cost of the asset can be measured reliably.
Intangible assets are initially recognised at cost.
Intangible assets are carried at cost less any accumulated amortisation and any impairment
losses. Expenditure on acquired intangible
assets are capitalised and amortised using the straight-line method over their useful lives.Intangible assets are not revalued. The
carrying amount of each intangible asset is reviewed annually and adjusted for impairment
where it is considered necessary.
An intangible asset is regarded as having an indefinite useful life when, based on all
relevant factors, there is no foreseeable limit
to the period over which the asset is expected to generate net cash inflows. Amortisation is
not provided for these intangible assets. For
all other intangible assets amortisation is provided on a straight line basis over their
useful life.
The amortisation period and the amortisation method for intangible assets are reviewed
every period-end.
Amortisation is provided to write down the intangible assets, on a straight line basis, to
their residual values as follows:
Items Useful life
Mining Rights 20 Years
Exploration Costs 10 Years
1.14 Investments
Fixed assets investments are stated at cost less provision for diminution in value.
1.15 Property, Plant and Equipment
The cost of an item of property, plant and equipment is recognised as an asset when:
* it is probable that future economic benefits associated with the item will flow to the
company;
* and the cost of the item can be measured reliably.
Costs include costs incurred initially to acquire or construct an item of property, plant
and equipment and costs incurred subsequently
to add to, replace part of, or service it. If a replacement cost is recognised in the carrying
amount of an item of property, plant and
equipment, the carrying amount of the replaced part is derecognised.
The initial estimate of the costs of dismantling and removing the item and restoring the
site on which it is located is also included in
the cost of property, plant and equipment.
Property, plant and equipment is carried at cost less accumulated depreciation and any
impairment losses. Depreciation is calculated on
the straight-line method to write off the cost of each asset to their residual values over
their estimated useful lives. Depreciation begins
when an item of property, plant and equipment is available for use and ends when the item is
derecognised, even if during that period the
item was idle. The depreciation rates applicable to each category of property, plant and
equipment are as follows:
Item Average useful Life
Plant and Machinery 10 years
Motor Vehicles 8 years
Office Equipment 5 years
The residual value and the useful life of each asset are reviewed at each financial
period-end.
Each part of an item of property, plant and equipment with a cost that is significant in
relation to the total cost of the item shall be
depreciated separately.
The depreciation charge for each period is recognised in profit or loss unless it is
included in the carrying amount of another asset.
The gain or loss arising from the derecognition of an item of property, plant and
equipment is included in profit or loss when the item
is derecognised. The gain or loss arising from the derecognition of an item of property, plant
and equipment is determined as the difference
between the net disposal proceeds, if any, and the carrying amount of the item.
1.16 Impairment of Assets
The company assesses at each balance sheet date whether there is any indication that an
asset may be impaired. If any such indication
exists, the group estimates the recoverable amount of the asset.
Irrespective of whether there is any indication of impairment, the company also:
* tests intangible assets with an indefinite useful life or intangible assets not yet
available for use for impairment annually by
comparing its carrying amount with its recoverable amount. This impairment test is performed
during the annual period and at the same time
every period.
* tests goodwill acquired in a business combination for impairment annually.
If there is any indication that an asset may be impaired, the recoverable amount is
estimated for the individual asset. If it is not
possible to estimate the recoverable amount of the individual asset, the recoverable amount of
the cash-generating unit to which the asset
belongs is determined.
The recoverable amount of an asset or a cash-generating unit is the higher of its fair
value less costs to sell and its value in use.
If the recoverable amount of an asset is less than its carrying amount, the carrying
amount of the asset is reduced to its recoverable
amount. That reduction is an impairment loss.
An impairment loss of assets carried at cost less any accumulated depreciation or
amortisation is recognised immediately in profit or
loss. Any impairment loss of a revalued asset is treated as a revaluation decrease.
A reversal of an impairment loss of assets carried at cost less accumulated depreciation
or amortisation other than goodwill is
recognised immediately in profit or loss. Any reversal of an impairment loss of a revalued
asset is treated as a revaluation increase.
1.16 Inventories
This represents inventories of consumable stores, held at the lower of cost and net
realisable value.
1.18 Financial Instruments
Initial Recognition
The group classifies financial instruments, or their component parts, on initial
recognition as a financial asset, a financial liability
or an equity instrument in accordance with the substance of the contractual arrangement.
Financial assets and financial liabilities are recognised on the group's balance sheet
when the company becomes party to the contractual
provisions of the instrument.
Loans to (from) Group Companies
These include loans to the subsidiary company and are recognised initially at fair value
plus direct transaction costs.
Subsequently these loans, where it is practicable to do so and it would have a material
effect on consolidated reporting, are measured
at amortised cost using the effective interest rate method, less any impairment loss
recognised to reflect irrecoverable amounts on loans
receivable an
impairment loss is recognised in profit or loss when there is objective evidence that it
is impaired. The impairment is measured as the
difference between the investment's carrying amount and the present value of estimated future
cash flows discounted at the effective
interest rate computed at initial recognition.
Impairment losses are reversed in subsequent periods when an increase in the investment's
recoverable amount can be related objectively
to an event occurring after the impairment was recognised, subject to the restriction that the
carrying amount of the investment at the date
the impairment is reversed shall not exceed what the amortised cost would have been had the
impairment not been recognised.
Trade and other Receivables
Trade receivables are measured at initial recognition at fair value, and are subsequently
measured at amortised cost using the effective
interest rate method. Appropriate allowances for estimated irrecoverable amounts are
recognised in profit or loss when there is objective
evidence that the asset is impaired. The allowance recognised is measured as the difference
between the asset's carrying amount and the present value of estimated future cash flows
discounted at the effective interest rate
computed at initial recognition.
Trade and other Payables
Trade payables are initially measured at fair value, and are subsequently measured at
amortised cost, using the effective interest rate
method.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term
highly liquid investments that are readily
convertible to a known amount of cash and are subject to an insignificant risk of changes in
value. These are initially and subsequently
recorded at fair value.
1.19 Provisions and Contingencies
Provisions are recognised when:
* the company has a present obligation as a result of a past event;
* it is probable that an outflow of resources embodying economic benefits will be required
to settle the obligation; and .
* a reliable estimate can be made of the obligation.
Where some or all of the expenditure required to settle a provision is expected to be
reimbursed by another party, the reimbursement
shall be recognised when, and only when, it is virtually certain that reimbursement will be
received if the entity settles the obligation.The reimbursement shall be treated as a separate asset. The amount recognised for the
reimbursement shall not exceed the amount of the
provision.
Provisions are not recognised for future operating losses.
If an entity has a contract that is onerous, the present obligation under the contract
shall be recognised and measured as a provision.
Contingent assets and contingent liabilities are not recognised.
1.20 Executive Share Options
For equity-settled share-based payment transactions the group, in accordance with IFRS2
(effective from 1st January 2006), measures
their value, and the corresponding increase in equity, indirectly, by reference to the fair
value of the equity instruments granted. The
fair value of those equity instruments is measured at grant date using the trinomial method.Where the expense is material, it is
apportioned over the vesting period of the financial instrument and is based on the numbers
which are expected to vest and the fair value of
those financial instruments at the date of the grant. If the equity instruments granted vest
immediately, the expense is recognised in
full.
2. Employees
The average monthly number of employees, (including Number Number
directors), during the year was:
Staff of subsidiary 17 12
Staff of head office 1 1
Directors 4 4
________ ________
22 17
________ ________
3 Operating loss
2008 2007
£ £
This has been arrived at after charging:
Depreciation 127,010 112,571
Amortisation 12,955 7,354
Operating lease rentals - land and buildings 7,108 7,200
Auditors' remuneration - audit
(company * £13,290 (2007 - £12,994)) 16,631 23,887
________ ________
4 Taxation on loss on ordinary activities
There has been no tax payable in this or the previous year due to the availability of
losses.
2008 2007
£ £
(Loss)/Profit on ordinary activities before tax (298,168) (26,068)
________ ________
(Loss)/Profit on ordinary activities at the standard rate
of corporation tax in the UK of 30% (2007 - 30%)
(89,450) 7,820
Effects of:
Tax losses 89,450 (7,820)
________ ________
Current tax charge for year - -
________ ________
A deferred tax asset of £548,980 (2007 - £458,231) relating to losses in the subsidiary
undertakings has not been recognised due to
inherent uncertainty regarding the availability of suitable taxable profits against which the
losses can be recovered within the foreseeable
future.
5 Profit per share
Profit per share has been calculated using the weighted average number of shares in issue
during the relevant financial periods. The
weighted average number of shares in issue is 38,272,187(2007 - 37,922,460) and the loss,
being the loss after tax, is £298,168 (2007 profit
* £26,068).
Diluted profit per share has been calculated using a weighted average number of shares of
38,272,187 (2007 - 41,672,460), which includes
the share options in issue at the start and end of the year.
6 Loss for the financial period
As permitted by Section 230 of the Companies Act 1985, the holding company's profit and
loss account has been included in these
financial statements. The loss for the financial year is made up as follows:
2008 2007
as
restated
Holding company's (loss)/profit for the financial year £(411,991) £1,186,300
________ ________
7 Intangible fixed assets
Mining rights and
exploration costs
Group £
Cost
At 1 March 2007 1,147,560
Additions 279,457
Exchange difference (104,531)
________
At 29 February 2008 1,322,486
________
Amortisation
At 1 March 2007 494,682
Charge for the year 12,955
Exchange differences (45,060)
________
At 29 February 2008 461,987
________
Net book values
At 29 February 2008 £860,499
________
At 28 February 2007 £652,878
________
8 Tangible fixed assets
Office Equipment Property, Plant Total
And Equipment
£ £ £
Group
Cost
At 1 March 2007 3,241 1,425,061 1,428,302
Additions - 36,454 36,454
Exchange difference 620 (130,588) (129,968)
________ ________ ________
At 29 February 2008 3,861 1,330,927 1,334,788
________ ________ ________
Depreciation
At 1 March 2007 1,699 254,556 256,255
Charge for the year 399 126,611 127,010
Exchange difference 526 (19,109) (18,583)
________ ________ ________
At 29 February 2008 2,624 362,058 364,682
________ ________ ________
Net book Value
At 29 February 2008 £1,237 £968,869 £970,106
________ ________ ________
At 28 February 2007 £1,542 £1,170,505 £1,172,047
________ ________ ________
9 Fixed asset investments
Group undertakings Loans to group Total
undertakings
£ £ £
Company
At 1 March 2007 (as restated) 2,064,225 2,763,419 4,827,644
Additions 46,205 98,072 144,277
Exchange differences - (251,656) (251,656)
________ ________ ________
At 29 February 2008 2,110,430 2,609,835 4,720,265
________ ________ ________
Provisions for diminution in
value
At 1 March 2007 (as restated)
and at 29 February 2008 628,536 - 628,536
________ ________ ________
Net book value
At 29 February 2008 £1,481,894 £2,609,835 £4,091,729
________ ________ ________
At 28 February 2007 £1,435,689 £2,763,419 £4,199,108
(as restated)
Investment in group undertakings includes
* 100% holding in Sonnberg Diamonds (Namibia) (Proprietary) Limited, a mining company
incorporated in Namibia.
* 75% holding in Oletu Investment Holding (Proprietary) Limited a company incorporated in
Namibia. The company has yet to trade.
The loans to group undertakings are denominated in Namibian Dollars, are interest free and
are subordinated in favour of other creditors
of the subsidiary undertakings. See note 19 for details of the Prior Year Adjustment resulting
in the restatement of the opening balances.
The directors are of the opinion that it is impractical to measure the loans to
subsidiaries at amortised cost using the effective
interest rate method and that to do so would have no benefit to the consolidated position of
the company and its subsidiaries as the
balances due to and from each company eliminate on consolidation.
10 Inventories
Group Group
2008 2007
Consumable stores £32,673 £35,948
________ ________
11 Trade and Other Receivables
Group Group Company Company
2008 2007 2008 2007
£ £ £ £
Trade receivables 26,363 23,518 - -
________ ________ ________ ________
All amounts fall due for repayment within one year.
12 Trade and other payables
Group Group Company Company
2008 2007 2008 2007
£ £ £ £
Trade Payables and Accruals
51,120 37,847 18,875 19,357
________ ________ ________ ________
13 Derivatives and other financial instruments
Financial instruments policies and strategies
During the period since its incorporation, the group has financed its business with the
cash it has raised through the issue of shares.It has used these funds to acquire and develop business in Namibia. The main risk arising from
the group's financial instruments is foreign
currency risk.
At 29 February 2008, the group's financial instruments comprised cash and short-term
receivables and payables arising directly from its
operations. The group's primary treasury activity has been the management of cash. This has
been held so as to maximise interest earned
without compromising the group's need for flexibility in meeting its cash needs. The group is
not currently actively pursuing a strategy of
acquiring investments.
Although the group is based in the UK, it has a significant investment in Namibia. As a
result, the group's sterling balance sheet can
be significantly affected by movements in the Namibian Dollar/Sterling exchange rates.
Sales of diamonds are denominated in Namibian Dollars but the price obtained is dependent
on market prices set in US Dollars. The group
incurs costs in both Sterling and Namibian Dollars.
The group has not entered into any derivative transactions during the year.
Short-term receivables and payables have been excluded from the numerical disclosures
below.
Interest rate risk profile of financial assets: Floating rate
2008 2007
£ £
Sterling 103,338 163,756
Namibian dollar 162 208,432
________ ________
£103,500 £372,188
________ ________
The financial assets comprise short-term cash deposits. The group does not have any
material interest bearing financial liabilities. As
the group's principal financial instruments is cash, the directors do not consider there to be
a material difference between the book and
fair value of the group's financial assets.
14 Share capital
Shares 2008 2007 2008 2007
Number Number £ £
Authorised
500,000,000 ordinary shares of
10p each 500,000,000 500,000,000 50,000,000 50,000,000
__________ __________ _________ __________
Allotted, called up and fully
paid
Ordinary shares of 10p each 39,922,460 37,922,460 3,992,246 3,792,246
__________ __________ __________ __________
During the year 2,000,000 ordinary shares of 10p each were issued at par.
Options
The company has in issue the following options to subscribe for ordinary shares:
2008 2007
Number 4,500,000 3,750,000
During the year 750,000 options were granted to DG Sutherland.
Options issued prior to 28 February 2007 are exercisable between 11 February 2004 and 11
February 2009 at a exercise price of £0.15.Options issued during the year are exercisable between 9 January 2008 and 9 January 2013 at an
exercise price of £0.12p. As at 29 February
2008 all options were still outstanding.
The directors estimate, by reference to formal valuations of options issued in prior
periods and consideration of movements in component
factors of those valuations, that the expense to be recognised under IFRS2 in respect of
options issued during the year is not material in
the context of group results. They consider that the expense of commissioning a separate
valuation would be disproportionate to the benefits
obtained. Accordingly no adjustments have been made to reflect the issue of options as an
expense of the business and the corresponding
increase in equity of the business.
15 Share Premium Account
Group and Company Share Premium account
At 1 March 2007 and 29 February 2008 £359,384
16 Profit and Loss Account
Group £
At 1 March 2007 (as previously stated) (1,932,898)
Prior year adjustment (278,105)
At 1 March 2007 (as restated) (2,211,003)
Loss for the year (298,168)
________
At 29 February 2008 £(2,509,171)
________
Company £
At 1 March 2007 (as previously stated) (1,075,066)
Prior year adjustment 1,311,619
At 1 March 2007 (as restated) 236,553
Loss for the year (411,991)
________
At 29 February 2008 £(175,438)
________
17 Foreign Exchange Reserve
Group £
At 1 March 2007 (as previously stated) -
Prior year adjustment 278,105
At 1 March 2007 (as restated) 278,105
Inter-company loan - elimination of exchange loss (251,656)
Gain on foreign translation 73,113
________
At 29 February 2008 £99,562
________
18 Reconciliation of movements in shareholders' funds
2008 2007
£ £
Group
(Loss)/Profit for the financial year (298,168) 26,068
Other recognised gains and losses (178,543) (548,824)
Issue of shares 200,000 -
________ ________
(276,711) (522,756)
Opening shareholders' funds 2,218,732 2,741,488
________ ________
Closing shareholders' funds £1,942,201 £2,218,732
________ ________
The conversion from United Kingdom Generally Accepted Accounting Practice to International
Financial Reporting Standards has caused no
effect on the equity of the group.
2008 2007
Company £ £
(Loss)/Profit for the financial year (as restated) (411,991) 1,186,300
Issue of shares 200,000 -
________ ________
(211,991) 1,186,300
Opening shareholders' funds (as previously stated) 3,076,564 3,201,883
Prior year adjustment 1,311,619 -
________ ________
Closing shareholders' funds £4,176,192 £4,388,183
________ ________
19 Prior year adjustments
Group Company
£ £
a. Arising from reclassification of inter-company
loan indebtedness as a Namibian Dollar liability 811,619
b. Release of provision for impairment on revaluation 500,000
of loan
c. Arising from first time introduction of IFRS and
creation of Foreign Exchange Reserve 278,105
________
________
1,311,619
________
20 Reconciliation of operating loss to net cash outflow from operating activities
2008 2007
£ £
Operating loss (304,638) (8,486)
Depreciation of plant, property and equipment
121,225 112,571
Amortisation of intangible assets 12,365 7,354
Decrease/(Increase) in inventories 3,275 (1,304)
(Increase)/decrease in trade and other receivables
(2,845) 7,857
Increase/(decrease) in trade and other payables
13,273 (36,816)
Net effect of foreign exchange differences 86,797 (20,184)
Net cash (outflow)/inflow from operating activities
£(70,548) £60,992
________ ________
21 Analysis of net debt
At 1 March 2007 Cash flow At 29 February 2008
£ £ £
Net cash:
Cash at bank and in hand £372,188 £(268,688) £103,500
________ ________ ________
22 Reconciliation of net cash flow to movement in net funds
2008 2007
£ £
(Decrease) in cash for the year (268,688) (116,567)
________ ________
Movement in net funds in the year (268,688) (116,567)
Opening net funds 372,188 488,755
________ ________
Closing net funds £103,500 £372,188
________ ________
23 Contingent liabilities
The mining contract undertaken by the group requires the subsidiary, Sonnberg, to remove
all equipment and installations and to
rehabilitate all disturbed areas once mining activities have ceased.
Sonnberg pay 1% of sales to a fund held by NAMDEB Diamond Corporation (Proprietary)
Limited, to provide for the costs of environmental
rehabilitation. The directors' best estimate is that there is no additional liability at the
balance sheet date to the contributions already
made to this fund. Accordingly, no provision has been made.
24 Commitments under operating leases
As at 29 February 2008, the company had annual commitments under non-cancellable operating
leases as set out below:
2008 2007
Land and Land and
buildings buildings
£ £
Expiring in less than one year 2,400
2,400
________ ________
The report and accounts have been posted to shareholders and are now available on the
Company's website www.namibianresources.com,
copies of the Report and Accounts will be available for collection at or by writing to the
Company's offices located at Cargil Management
Services, 302 High Street, Croydon, Surrey, CR0 1NG. Notice of the AGM, which will be held at
11.30am on the 9th October at 36, Dover
Street, London, W1S 4NH, will be posted to shareholders separately.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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