RNS Number:0931R
South China Resources PLC
31 March 2008
31 March 2008
South China Resources Plc ("the Company")
INTERIM RESULTS
Chairman's Statement
On 1 February 2008 South China Resources Plc ("South China" or the "Company")
announced that it had decided not to proceed with further negotiations to
acquire a 53% interest in the Zhunuo Copper Project ("the Project") in Tibet,
China. This decision was set against a background of increased Chinese
regulatory resistance to foreign mining investment in nationally significant and
strategic metal deposits in China.
After reviewing many other potential mining acquisitions and relationships in
China during 2007 the Company has determined that in all cases the price
expected by vendors relative to the quality of projects it reviewed did not
warrant further investment. The Company accordingly terminated its remaining
relationships in China.
Following these terminations, the South China Board has considered how best to
utilise present and future cash reserves. After careful consideration the
Company is proposing to pursue a new investing strategy in Southern Africa.
The Company's strategy is to make investments in the mining and minerals sector.
The geographical focus will be in Southern Africa. The investments may be either
quoted or unquoted and may be in companies, partnerships, joint ventures or
direct interests in energy projects. The Company intends to be an involved and
active investor even though it might not hold a controlling interest in its
investments. Accordingly, where necessary, the Company may seek participation
in the management or board of directors of a company in which the Company
invests. The Directors intend that they will undertake initial assessments and
due diligence on potential investments themselves and will take appropriate
professional advice if merited by the circumstances.
The Company is currently pursuing potential leads and will issue further
announcements as appropriate.
Results
During the six months to 31 December 2007, the Company made a loss before and
after tax of �355,103 (31 December 2006 : Loss of �903,140). During the 6
months ended 31 December 2006 expenditure was predominately incurred on the
termination and winding up of operations in China as well as conducting due
diligence on potential investments and London overheads.
Nathan McMahon
Chairman
31 March 2008
Consolidated Income Statement
For the 6 months ended 31 December 2007
� � �
Six months ended 31 Six months ended 31 Year ended 30
December 2007 December 2006 June 2007
Note (Unaudited) (Unaudited) (Unaudited)
Administrative expenses (378,047) (721,331) (2,293,025)
Exceptional expenses 4 - - (5,993,874)
Share based payments - (250,000) -
OPERATING LOSS (378,047) (971,331) (8,286,899)
Bank interest received 22,944 68,191 95,832
LOSS BEFORE TAXATION (355,103) (903,140) (8,191,067)
Taxation 5 - - -
LOSS ON ORDINARY ACTIVITIES AFTER TAXATION (355,103) (903,140) (8,191,067)
Loss per share (pence) : Basic and diluted 7 (0.22)p (0.57)p (5.13)p
Consolidated Balance Sheet
At 31 December 2007
� � �
As at As at As at
30 June 2007
31 December 31 (Unaudited)
2007 (Unaudited) December 2006
(Unaudited)
NON-CURRENT ASSETS
Intangible assets - 5,777,542 -
Tangible fixed assets 98,095 28,483 115,701
TOTAL NON-CURRENT ASSETS 98,095 5,806,025 115,701
CURRENT ASSETS
Debtors 53,300 15,874 50,168
Cash at bank and in hand 1,159,155 3,324,847 1,818,602
TOTAL CURRENT ASSETS 1,212,455 3,340,721 1,868,770
CURRENT LIABLILITES
Creditors: Amounts falling due within one year (19,740) (54,655) (338,558)
TOTAL CURRENT LIABLITIES (19,740) (54,655) (338,558)
NET CURRENT ASSETS 1,192,715 3,286,066 1,530,212
NET ASSETS 1,290,810 9,092,091 1,645,913
CAPITAL AND RESERVES
Called up share capital 1,616,500 1,592,750 1,616,500
Share premium 7,179,436 7,166,437 7,179,436
Merger reserve 1,440,000 1,440,000 1,440,000
Equity reserve 55,000 250,000 55,000
Profit and loss account (9,000,126) (1,357,096) (8,645,023)
EQUITY SHAREHOLDERS FUNDS 1,290,810 9,092,091 1,645,913
Consolidated Statement of Changes in Equity
At 31 December 2007
Share Share Profit Merger Equity Total
Capital Premium and Loss Reserve Reserve
Account
� � � � � �
At 30 June 2006 1,576,000 7,103,448 (453,956) 1,440,000 0 9,665,492
(Loss) for the period (903,140) (903,140)
Equity based payment 250,000 250,000
Shares issued during the period 16,750 63,000 79,750
Issue expenses (12) (12)
At 31 December 2006 1,592,750 7,103,436 (1,294,096) 1,440,000 250,000 9,092,090
(Loss) for the period (7,350,927) (7,350,927)
Equity based payment (195,000) (195,000)
Shares issued during the period 23,750 76,000 99,750
At 30 June 2007 1,616,500 7,179,436 (8,645,023) 1,440,000 55,000 1,645,913
(Loss) for the period (355,103) (355,103)
At 31 December 2007 1,616,500 7,179,436 (9,000,126) 1,440,000 55,000 1,290,810
Consolidated Cash Flow Statement (Unaudited)
For the 6 months ended 31 December 2007
� � �
Six months ended 31 Six months ended 31 Year ended 30
December 2007 December 2006 June 2007
(Unaudited) (Unaudited) (Unaudited)
Reconciliation of operating (loss) to net
cash outflow from operating activities
Operating (loss) (378,047) (971,331) (8,286,899)
Decrease / (Increase) in debtors (3,132) (898) (35,192)
(Decrease) / Increase in creditors (318,818) 16,343 300,246
Depreciation 17,606 1,183 17,068
Non-cash exceptional write-off - - 5,993,874
Share based payment - 250,000 55,000
Net cash outflow from operating activities (682,391) (704,703) (1,955,903)
Returns on investments and service of finance
Interest received 22,944 68,191 95,832
Capital expenditure
Purchase of tangible fixed assets - (7,974) (111,077)
Purchase of intangible fixed assets - (1,412,198) (1,628,530)
Net cash outflow on capital expenditure - (1,420,172) (1,739,607)
Financing
Shares issued - 79,750 116,500
Issue expenses - (11) (12)
Net cash from financing activities - 79,739 116,488
Decrease in cash (659,447) (1,976,945) (3,483,190)
Reconciliation of net cash flow to movement
in net funds
Decrease in cash in the year (659,447) (1,976,945) (3,483,190)
Net funds at beginning of period 1,818,602 5,301,792 5,301,792
Net funds at end of period 1,159,155 3,324,847 1,818,602
Notes to the Interim Report
For the 6 months ended 31 December 2007
1. PRESENTATION OF INTERIM RESULTS
The next annual financial statements of South China Resources plc ("the Company
"), for the year ending 30 June 2008, will be prepared in accordance with
International Financial Reporting Standards (IFRS) applied in accordance with
the provisions of the Companies Act 1985.
Accordingly, the interim financial information in this report, for the six
months ended 31 December 2007, has been prepared using accounting policies
consistent with IFRS. IFRS is subject to amendment and interpretation by the
International Accounting Standards Board (IASB), and the International Financial
Reporting Interpretations Committee (IFRIC) and there is an ongoing process of
review and endorsement by the European Commission. The financial information
has been prepared on the basis of IFRS accounting policies that the Directors
expect to apply for the year ending 30 June 2008.
The principal accounting policies set below have been consistently applied to
all periods presented.
IFRS transition
IFRS 1 permits companies adopting IFRS for the first time to take certain
exemptions from the full requirements of IFRS in the transition period. The
interim financial information has been prepared on the basis of the following
exemptions:
(i) Business combinations prior to 1 July 2006 have not been
restated to comply with IFRS 3 "Business Combinations"; and
(ii) IFRS 2 "Share Based Payments" has been applied
retrospectively to those options that were issued after 18th April 2005 but had
not vested by 1 July 2006.
The disclosures required by IFRS 1 concerning the transition from UK GAAP to
IFRS are given in Note 8.
Non-Statutory Accounts
The financial information for the six months ended 31 December 2007 and 31
December 2006 set out in the Interim Report is unaudited and does not constitute
statutory accounts. The financial information for the year ended 30 June 2007
set out in this Interim Report does not comprise the Company's statutory
accounts as defined in Section 240 Companies Act 1985.
The statutory accounts for the year ended 30 June 2007, which have been filed
with the Registrar of Companies, were prepared under UK Generally Accepted
Accounting Practice (UK GAAP). The Auditors reported on those accounts; their
Audited Report was unqualified and did not contain a statement under either
Section 237(2) or Section 237(3) of the Companies Act 1985.
The Interim Report for the six months ended 31 December 2007 was approved by the
Directors on 31 March 2008.
Basis of consolidation
The Group financial information consolidates the financial results of the
Company and all operating subsidiaries.
Acquisitions
On the acquisition of a subsidiary, fair values are attributable to the Group's
share of net assets. Where the cost of acquisition exceeds the values
attributable to such net assets, the difference is treated as purchased
goodwill. Where there is any deficiency of the cost of acquisition below the
fair values of the identifiable net assets acquired (i.e. discount on
acquisition) the difference is credited to the income statement in the period of
acquisition. Goodwill arising on consolidation is recognised as an asset and
reviewed for impairment at least annually. Any impairment is recognised
immediately in the income statement and is not subsequently reversed.
Depreciation
Depreciation is provided on all tangible fixed assets, at rates calculated to
write off the cost or valuation, less residual value, of each asset evenly over
its expected useful life as follows:
Information Equipment - Depreciated over 3 years at an annual rate of 33%
Leasehold Improvements - Depreciated over 5 years at an annual rate of 20%
Furniture and Fittings - Depreciated over 5 years at an annual rate of 20%
Provision for impairment is made if an asset's recoverable amount (higher of net
realisable value and value in use) falls below its carrying value.
Trade investments
Listed trade investments are held as fixed assets, stated at cost less provision
for any impairment to their carrying value and are not revalued to their market
value.
Investment in associated undertakings
In the consolidated financial information, shares in associated undertakings are
consolidated using the equity method. In the consolidated income statement the
Group's share of profits and losses of associated undertakings are shown below
operating profit and the consolidated balance sheet includes the Group's share
of net assets of its associated undertakings within non-current asset
investment. The financial results for all of the Group's associated undertakings
are based on financial results to the end of the relevant period/year.
Joint venture
An entity is treated as a joint venture where the Group holds a long term
interest and shares control under a contractual agreement.
In the consolidated financial information, interests in joint ventures are
accounted for using the gross equity method of accounting. The consolidated
income statement includes the Group's share of the results of such undertakings
based on unaudited financial statements. In the consolidated balanced sheet the
Group's share of the identified gross assets and its share of the gross
liabilities attributable to its joint ventures are shown separately.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary differences
can be utilised. Such assets and liabilities are not recognised as the temporary
difference arises from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a transaction that does
not affect profit.
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 difference and it is probable that there
will be a reversal.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset realised. Deferred tax is
charged or credited to the income statement, except when it relates to items
charged or credited directly to equity, in which case the deferred tax is also
dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax liabilities
and when they relate to income taxes levied by the same taxation authority and
the Group intends to settle its current assets and liabilities on a net basis.
Deferred tax is provided on timing differences arising from the revaluation of
the properties. Deferred tax assets are recognised to the extent it is regarded
as more likely than not that they will be recovered. Deferred tax assets and
liabilities are not discounted.
Share based payments
The cost of share-based employee compensation arrangements, whereby employees
receive remuneration in the form of share options, is recognised as an employee
benefit expense in the income statement. The total expense to be apportioned
over the vesting period of the benefit is determined by reference to the fair
value at the date of grant. Fair value is measured by the use of the Black
Scholes model. The expected life used in the model has been adjusted, based on
management's best estimate, for the effects of the non-transferability, exercise
restrictions and behavioural considerations.
Financial instruments
Short term debtors and creditors are not treated as financial assets or
financial liabilities, except for currency disclosure. The Group does not hold
or issue derivatives or any other financial instrument for trading purposes.
Financial instruments are classified on initial recognition in accordance with
the substance of the contractual arrangement and definitions of a financial
liability, financial asset and an equity instrument.
Foreign exchange
Transactions of UK companies denominated in foreign currencies are translated
into sterling at the average rate. Monetary assets and liabilities of UK
companies denominated in foreign currencies at the balance sheet date are
translated at the rates ruling at the date. These translation differences are
dealt with in the income statement. The financial statements of UK companies,
which report in foreign currencies, are translated into sterling at the closing
rates of exchange for the balance sheet and at the average rates for the income
statement. Differences arising from the translation of the opening net
investment in subsidiaries at the closing rate is taken directly to reserves.
Operating leases
Rentals payable under operating leases are charged to the income statement on a
straight line basis over the lease term.
2. KEY ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of financial information in conformity with generally accepted
accounting practice requires management to make estimates and judgements that
affect the reported amounts of assets and liabilities as well as the disclosure
of contingent assets and liabilities at the balance sheet date and the reported
amounts of income and expenses during the reporting period.
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances. The significant judgements
made by management in applying the Group's accounting policies and the key
sources of estimation were:
Impairment of intangible fixed assets
The Group assesses at each balance sheet date whether there is any indication
that any of its assets have been impaired. If such indication exists, the
asset's recoverable amount is estimated and compared to its carrying value.
For goodwill, intangible assets that have an indefinite life and intangible
assets not yet available for use, the recoverable amount is estimated at each
balance sheet date and whenever there is an indication of impairment.
An impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount. Impairment losses are recognised in the
balance sheet.
Share based payments
In determining the fair value of equity settled share based payments and the
related charge to the income statement the Group must make assumptions about
future events and market conditions. Judgement is made as to the likely number
of shares that will vest, and the fair value of each award granted.
Options are measured at fair value at the grant date using the Black-Scholes
model. The fair value is expensed on a straight line basis over the vesting
period, based on an estimate of the number of options that will eventually vest.
Cash settled share based payment transactions results in the recognition of a
liability at its current fair value.
3. GEOGRAPHICAL SEGMENT REPORTING
To date the group has operated in two principal geographical areas of the world,
the UK and China. As the group has decided to cease its operations in China,
the group has not had any turnover.
� � �
Loss Before Taxation Six months ending 31 Six months ending Year ending
By geographical area December 2007 31 December 2006 30 June 2007
(Unaudited) (Unaudited) (Unaudited)
United Kingdom (249,791) (685,359) (2,197,193)
Peoples Republic of China (105,312) (217,781) (5,993,874)
(355,103) (903,140) (8,191,067)
======= ======= ========
� � �
Net Assets Six months ending 31 Six months ending Year ending
By geographical area December 2007 31 December 2006 30 June 2007
(Unaudited) (Unaudited) (Unaudited)
United Kingdom 1,290,810 5,777,542 1,645,913
Peoples Republic of China - 3,314,549 -
1,290,810 9,092,091 1,645,913
======= ======= =======
4. EXCEPTIONAL ITEMS
On 29 May 2007 the company announced the decision to terminate its involvement
in the Danfeng Project and the Joint Venture Company established to develop the
Project, the Shang Lou City Zhongbei Minerals and Mining Development Company
Ltd.
Although exploratory drilling conducted since inception confirmed the presence
of copper mineralisation, the Board believed the Project did not meet the
development criteria of the Company in terms of potential scale and projected
returns on a fully risked basis. All costs associated with the project,
including provision for all closure costs, were written-off to the profit and
loss account in the year ending 30 June 2007.
� � �
Six months ending 31 Six months ending Year ending
December 2007 31 December 2006 30 June 2007
(Unaudited) (Unaudited) (Unaudited)
Project Exploration - Danfeng - - 4,193,874
Goodwill on acquisition 1,800,000
_______ _______ _______
- - 5,993,874
======= ======= =======
5. TAXATION
No taxation has been provided due to losses in the period.
6. DIVIDENDS
The Directors do not recommend the payment of a dividend.
7. LOSS PER SHARE
� � �
Six months ending 31 Six months ending Year ending
December 2007 31 December 2006 30 June 2007
(Unaudited) (Unaudited) (Unaudited)
Basic and Dilutive Loss per share for the period
(Loss) (355,105) (903,140) (8,191,067)
Weighted Average Number of Shares 161.65 million 158.43 million 159.54 million
(Loss) Per Share - pence (0.22)p (0.57)p (5.13)p
The total amount of options held over the shares at 31 December 2007 was
5,859,564. These options are exercisable at between 1p and 40p per share for a
period up to 23 February 2010. No dilutive loss per share is presented as the
effect of exercise of outstanding options is to decrease the loss per share.
8. TRANSITION TO IFRS
South China Resources plc reported under UK GAAP in all previously published
financial statements for the year ended 30 June 2007. The analysis below shows
a reconciliation of net assets and the loss made as reported under UK GAAP as at
30 June 2007 to the revised net assets and loss under IFRS as reported in this
Interim Report. In addition there is a reconciliation of net assets under UK
GAAP to IFRS at the transition date for the Company, being 1 July 2006. There
is also a reconciliation of net assets under UK GAAP to IFRS at the comparative
interim date being 31 December 2006.
� � �
Previous Effects of IFRS
Reconciliation of equity at 1 July 2006 GAAP transition to IFRS
Total net assets 1,645,913 - 1,645,913
======= ======= =======
� � �
Previous Effects of IFRS
GAAP transition to IFRS
Reconciliation of equity at 31 December 2006
Total net assets 9,092,091 - 9,092,091
======= ======= =======
� � �
Previous Effects of IFRS
GAAP transition to IFRS
Reconciliation of equity at 30 June 2007
Total net assets 1,290,810 - 1,290,810
======= ======= =======
� � �
Previous Effects of IFRS
GAAP transition to IFRS
Reconciliation of loss at 30 June 2007
Loss on ordinary activities after taxation (8,191,067) - (8,191,067)
======= ======= =======
- END -
For further information contact:
South China Resources plc
Tim Horgan +44 (0) 20 7493 7671
Nabarro Wells & Co. Limited
Hugh Oram/Natasha Reed +44 (0) 20 7710 7400
Parkgreen Communications
Laura Llewelyn +44 (0) 20 7851 7480
This information is provided by RNS
The company news service from the London Stock Exchange
END
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