TIDMPCGB

RNS Number : 0738I

Power Capital Global Ltd

28 June 2013

For immediate release: 28 June 2013

Power Capital Global Limited

("Power Capital Global" or the "Company")

Audited results for the year ended 31 December 2012

Power Capital Global Limited (AIM:PCGB), the Asia based natural resources trading and logistics business, has today published its audited results for the year ended 31 December 2012.

Operational Highlights from Period

-- Parallel investment programme targeting partner companies offering in-market access to commodity trading opportunities that might otherwise be inaccessible progressed in Indonesia, Mongolia, Afghanistan and Myanmar;

-- In Indonesia, $1.06m (GBP0.67 million) of thermal coal shipments profitably completed through majority owned in-country joint venture, increasing to $1.5million post year end to date; and

-- In Mongolia, a 1.2% equity stake taken in the country's leading foreign invested conglomerate, Asia Pacific Investment Partners Limited, which the Company believes will provide it with fast track opportunities in Mongolia's burgeoning natural resources sector.

Post Period Highlights

-- In April, financial restructuring completed through the conversion of all issued convertible loan notes, resulting in an increase in the free float of the Company from 21% to 38% and a substantial reduction in the gearing of business;

-- In Indonesia, an off-take agreement entered into with PT Perdana Maju Utama to acquire up to one million metric tonnes of thermal coal;

-- Further coal off-take, supply chain and non coal related opportunities being advanced in Indonesia including potential investment into a vertically integrated tin dredging and smelting operation located in Bangka; and

   --    Terms of $1 million (GBP637,000) loan to TSI being substantially revised. 

Chairman of Power Capital Global, Kung-Min Lin, commented:

"The development activities completed in the year have substantially advanced the Company's plan to build Power Capital Global into a highly regarded Asian commodity trading business. We will continue advancing our two distinct but complementary corporate aims of building a scaleable physical commodity trading and logistics business in China that is able to operate on a direct to buyer basis wherever possible whilst at the same time investing in partner companies in key off-take supply markets to China that provide opportunities that might otherwise have been inaccessible or unknown to the Company. The Board is likewise pleased with the successful conclusion of the balance sheet strengthening activity post year-end"

A full copy of the 2012 Report and Accounts will shortly be available for download from the Company's web site: www.powercapitalglobal.com

 
 Further information 
 
 Power Capital Global 
  Limited 
 Simon Dewhurst               Tel: +852 3695 5150 
 
 Northland Capital Partners 
  Limited 
 Luke Cairns/Edward Hutton    Tel: +44 (0)20 7796 8800 
 
 GTH Communications Limited 
 Toby Hall/Suzanne Johnson     Tel: +44 (0)20 7822 7493/7492 
  Walsh 
 

Chairman's Statement

We have made important progress in the development of an Asia based natural resources trading and logistics platform during the past twelve months to 31 December 2012.

Our development strategy has remained unchanged throughout the year under review and has been focused on executing two distinct but complementary corporate aims.

First, we are committed to building a scaleable physical commodity trading and logistics business with a commodity sourcing market footprint that is global and which supplies a commercial client base located in the key industrial regions of the People's Republic of China on a direct-to-buyer basis wherever possible.

Secondly, we are focused on executing a parallel investment program targeting partner companies that offer the Company in-market access to commodity trading opportunities that might otherwise be inaccessible or unknown to us. Specifically, this strategy has evolved over the past twelve months to target partner companies in four identified off-take supply markets, namely Indonesia, Mongolia, Afghanistan and Myanmar. Partner company investment opportunities are assessed by reference to the following; (i) in-market competitive advantage related to mining licenses and / or mineral off-take opportunities; (ii) our in-market access to senior management; together with (iii) more traditional private equity consideration of the intrinsic valuation of the investment opportunity, the target company's market share (we focus on best in sector companies), quality of management and our investment exit strategy. We believe that this parallel investment strategy will yield successful and accelerated scale into our primary physical commodity trading activities from each of our target commodity supply markets as referenced above.

Mongolia

In May 2012, the Company announced that it has subscribed, through its wholly owned subsidiary PCG Mongolia Limited, for a 1.2% equity stake in Asia Pacific Investment Partners Limited ("APIP"). The Company believes that its direct investment in Mongolia's leading foreign invested conglomerate will provide the Company with fast track opportunities in the burgeoning natural resources sector in Mongolia. APIP is currently developing an early stage exploration license targeting an identified major copper-gold porphyry system located in the South Gobi and also operates the country's third largest cement crushing facility which is located in the capital city, Ulaan Baatar.

Indonesia

We announced the incorporation of a 75% owned Indonesian domestic thermal coal trading joint venture in our interim results published in September 2012. In the period under review, sales by the joint venture amounted to $1.06m (GBP0.67 million). To date, the joint venture has completed six thermal coal shipments, totalling approximately 32,000 metric tonnes of thermal coal with an aggregate sales value of US$1.5 million. All six trades were profitable. The domestic thermal coal trading business in Indonesia is seasonal and is subject to significant price volatility as small traders step in and out the market affecting the short term demand supply balance. We suspended barge shipments in January 2013 into a period of softened market pricing and we will recommence trading activity once market conditions improve.

Subsequent to the end of 2012, the Company, through its subsidiary, PCG Coal (Indonesia) Limited ("PCI"), entered into an off-take agreement with PT Perdana Maju Utama ("PMU") to acquire up to one million metric tonnes of thermal coal. PMU owns a coal concession totalling approximately 4,700 hectares located in East Kalimantan, Indonesia. PCI's branding and marketing of the coal has commenced to our end buyers and the contracted coal volume is forecast to be delivered by PMU over a twelve-month trading period following completion of the first batch delivery which is expected in the coming month.

We continue to explore other coal off-take and supply chain opportunities in the Kalimantan region of Indonesia such as the takeover of an established road haulage network and barge loading facility serving the thermal coal producers adjacent to PMU in East Kalimantan.

We continue to explore non-coal related investment opportunities. The Company is in what it considers an advanced stage of discussion with an investor party affiliated with PMU seeking funds to further develop a vertically integrated tin dredging and smelting operation located in Bangka, Indonesia inside the main Pacific Rim tin zone. Indonesia has proven tin (Sn) reserves of over 800,000 metric tonnes and supplied nearly 40% of all global demand in 2012 according to the International Tin Research Institute. Tin is one of the few metals that has been used and traded by humans for more than 5,000 years and it has many advantages and market uses. It has a low melting point, excellent malleability properties, high resistance to corrosion and fatigue and the ability to alloy with other metals. Cassiterite is by far the most important tin ore and it is found in abundance in large placer deposits located in oceanic submerged river channels in the shallow waters surrounding the Indonesian islands of Bangka and Belitung. The Company will make appropriate announcements in respect of this opportunity in due course.

Corporate Matters

Following the completion of its due diligence on TSI Holdings Limited ("TSI") during the year under review, the Company determined to substantially revise its original investment term sheet and instead agreed a loan arrangement with TSI to provide it with substantial working, business development, and business expansion capital. The loan amount is US$1 million (GBP637,000) and is today fully drawn. The loan arrangement was initially for a two year term and carried interest at five percent (5%) per annum. A recent agreement to extend the term of the loan and introduce certain penalties in the event of default under the TSI loan arrangement has in principal now been reached between the parties but is currently unsigned. The Company will arrange to have the appropriate loan documentation executed in the near future and will make an announcement once this has been completed.

The Company issued 16,233,765 ordinary shares pursuant to conversion notices from the holders of the US$5 million unsecured convertible loan notes ("CLNs") in late April 2013. This represents full conversion of all CLNs in issue at the end of the year under review and completes the financial restructuring announced by the Company in July 2012. It has added new investors in PCGB and increased the free float in its shares from approximately 21% to 38%. It has also substantially reduced the balance sheet gearing of the Company.

The Company was pleased to welcome Heng-Jui Lin to its Board in March 2013 as a non-executive director. Heng-Jui (or Henry) is the majority shareholder of Kolarmy Technology INC, which is currently providing the Group with financial support in the form of a loan facility. Henry is the brother of Kung-Min Lin, the controlling shareholder of the Company.

Summary

We believe that these important development activities have substantially advanced the Company in its pursuit of a plan to build Power Capital Global into a highly regarded Asian commodity trading business.

Lin Kung-Min

Chairman

28 June 2013

Consolidated Statement of Comprehensive Income

For The Year Ended 31 December 2012

 
 
 
 
                                                Notes           2012            2011 
                                                                 GBP             GBP 
 Revenue                                          2        1,191,542       1,566,232 
 Cost of sales                                           (1,285,666)     (2,281,063) 
                                                       -------------   ------------- 
 Gross loss                                                 (94,124)       (714,831) 
 
 Administrative expenses                                 (1,564,821)     (1,135,068) 
                                                       -------------   ------------- 
 Operating loss                                          (1,658,945)     (1,849,899) 
 
 Other income                                     2           15,034               3 
 Finance costs                                    4         (91,291)       (217,985) 
                                                       -------------   ------------- 
 Loss before taxation                             5      (1,735,202)     (2,067,881) 
 Income tax expense                               6            (946)               - 
                                                       -------------   ------------- 
 Loss for the year after 
  taxation                                               (1,736,148)     (2,067,881) 
 Other comprehensive income                                        -               - 
                                                       -------------   ------------- 
 Total comprehensive expenses                            (1,736,148)     (2,067,881) 
                                                       =============   ============= 
 Attributable to: 
 Owners of the parent                                    (1,716,857)     (2,067,881) 
 Non-controlling interests                                  (19,291)               - 
                                                       -------------   ------------- 
 Total comprehensive expenses                            (1,736,148)     (2,067,881) 
                                                       =============   ============= 
 
 Loss per share (basic)                           7       (GBP0.030)      (GBP0.036) 
                                                       =============   ============= 
 
 
 Loss per share (diluted)                        7               N/A             N/A 
 

The accompanying accounting policies and notes form an integral part of these financial statements.

Consolidated Statement of Financial Position

As At 31 December 2012

 
                                                         Notes          2012          2011 
                                                                         GBP           GBP 
 Non-current assets 
 Property, plant and equipment                         10             35,775        68,655 
 Loans receivable                                      11            636,661             - 
 Available-for-sale investments                        12          1,273,322             - 
                                                                ------------  ------------ 
                                                                   1,945,758        68,655 
  Current assets 
 Trade and other receivables                           13            219,224        51,770 
 Cash and cash equivalents                                           202,419       100,879 
                                                                     421,643       152,649 
 Current liabilities 
 Other payables and accruals                           15            383,995       205,869 
 Amount due to a related company                       16          1,276,698       787,940 
 Convertible loan notes                                17          3,075,977             - 
 Provision for current tax                                               946             - 
                                                                ------------  ------------ 
                                                                   4,737,616       993,809 
 Net current liabilities                                         (4,315,973)     (841,160) 
                                                                ------------  ------------ 
 Net liabilities                                                 (2,370,215)     (772,505) 
                                                                ============  ============ 
  Equity 
 Share capital                                         18          3,057,598     2,982,826 
 Reserves                                                        (5,472,188)   (3,755,331) 
                                                                ------------  ------------ 
 Equity attributable to owners 
  of the parent                                                  (2,414,590)     (772,505) 
 Non-controlling interests                                            44,375             - 
                                                                ------------  ------------ 
 Capital deficiencies                                            (2,370,215)     (772,505) 
                                                                ============  ============ 
 

The financial statements were approved by the Board of Directors and signed on its behalf by:

Simon Dewhurst

Director

28 June 2013

The accompanying accounting policies and notes form an integral part of these financial statements.

Company Statement of Financial Position

As At 31 December 2012

 
 
                                                 Notes           2012          2011 
                                                                  GBP           GBP 
 Non-current assets 
 Investments in subsidiaries                       9                2             3 
                                                         ------------  ------------ 
  Current assets 
 Amounts due from subsidiaries                    14        1,741,314       388,187 
 Cash and cash equivalents                                      9,121        44,417 
                                                         ------------  ------------ 
                                                            1,750,435       432,604 
 Current liabilities 
 Other payables and accruals                      15          143,695        49,994 
 Convertible loan notes                           17        3,075,977             - 
                                                         ------------  ------------ 
                                                            3,219,672        49,994 
 Net current (liabilities)/assets                         (1,469,237)       382,610 
                                                         ------------  ------------ 
 Net (liabilities)/assets                                 (1,469,235)       382,613 
                                                         ============  ============ 
  Equity 
 
 Share capital                                    18        3,057,598     2,982,826 
 Reserves                                                 (4,526,833)   (2,600,213) 
                                                         ------------  ------------ 
 (Capital deficiencies)/Total equity                      (1,469,235)       382,613 
                                                         ============  ============ 
 
 

The financial statements were approved by the Board of Directors and signed on its behalf by:

Simon Dewhurst

Director

28 June 2013

The accompanying accounting policies and notes form an integral part of these financial statements.

Consolidated Statement of Cash flows

For The Year Ended 31 December 2012

 
                                                                            Notes           2012           2011 
                                                                                             GBP            GBP 
  Cash flows from operating activities 
  Loss before taxation                                                               (1,735,202)    (2,067,881) 
  Adjustments for: 
  Depreciation of property, plant 
   and equipment                                                                          19,327         15,596 
  Loss on disposal of property, plant                                                     20,546              - 
   and equipment 
  Provision for bad and doubtful debts                                                    81,184              - 
  Deregistration of a subsidiary                                                         (6,410)              - 
  Equity-settled share-based payment                                                     146,175              - 
  Exchange gain on convertible loan                                                    (107,957)              - 
   notes 
  Interest income                                                             2         (14,404)            (3) 
  Finance costs                                                               4           91,291        217,985 
                                                                                   -------------  ------------- 
  Operating cash flows before movements 
   in working capital                                                                (1,505,450)    (1,834,303) 
                                                            Increase in 
                                                             trade and 
                                                             other 
                                                             receivables               (248,638)       (50,495) 
  Increase in other payables and accruals                                                 99,911        154,805 
  Net cash used in operating activities                                              (1,654,177)    (1,729,993) 
                                                                                   -------------  ------------- 
 
  Cash flows from investing activities 
  Additions of property, plant and 
   equipment                                                                             (6,993)       (84,251) 
  Acquisition of available-for-sale 
   investments                                                                       (1,273,322)              - 
  Loans to a third party                                                               (636,661)              - 
  Interest received                                                                            1              3 
                                                                                   -------------  ------------- 
 Net cash used in investing activities                                               (1,916,975)       (84,248) 
                                                                                   -------------  ------------- 
 
  Cash flows from financing activities 
  Loans from a related company                                                         3,672,692        831,373 
  Repayments of loans from a related 
   company                                                                                     -       (50,933) 
  Short term loans from third parties                                                          -      1,878,151 
  Repayment of short term loans from 
   third parties                                                                               -    (1,878,151) 
  Interest paid                                                                                -      (198,692) 
                                                                                   -------------  ------------- 
 Net cash generated from financing 
  activities                                                                           3,672,692        581,748 
                                                                                   -------------  ------------- 
 
 
 
 
                                           Notes           2012            2011 
                                                            GBP             GBP 
 
 Increase/(Decrease) in cash and 
  cash equivalents                                      101,540     (1,232,493) 
 
 Cash and cash equivalents at beginning 
  of the year                                           100,879       1,333,372 
                                                   ------------  -------------- 
  Cash and cash equivalents at end 
   of the year                                          202,419         100,879 
                                                   ============  ============== 
 
 Cash and cash equivalents consist 
  of: 
 Cash at bank and in hand                               202,419         100,879 
                                                   ============  ============== 
 
 
 

The accompanying accounting policies and notes form an integral part of these financial statements.

Company Statement of Cash flows

For The Year Ended 31 December 2012

 
                                                                         2012              2011 
                                                                          GBP               GBP 
  Cash flows from operating activities 
  Loss before taxation                                            (1,926,620)         (920,024) 
  Adjustments for: 
  Equity-settled share-based payment                                  146,175                 - 
  Exchange gain on convertible loan                                 (107,957)                 - 
   notes 
  Deregistration of a subsidiary                                            1                 - 
                                                             ----------------  ---------------- 
  Operating cash flows before movements 
   in working capital                                             (1,888,401)         (920,024) 
   Decrease in trade and other receivables                                  -             1,275 
  Decrease in amounts due from subsidiaries                         1,830,807            66,048 
   Increase in other payables and accruals                             22,298            24,123 
  Decrease in amounts due to subsidiaries                                   -           (6,000) 
  Net cash used in operating activities                              (35,296)         (834,578) 
 
  Cash flows from investing activities 
  Increase in investments in subsidiaries                                   -               (1) 
 Net cash used in investing activities                                      -               (1) 
                                                             ----------------  ---------------- 
 
  Decrease in cash and cash equivalents                              (35,296)         (834,579) 
  Cash and cash equivalents at beginning 
   of the year                                                         44,417           878,996 
   Cash and cash equivalents at end 
    of the year                                                         9,121            44,417 
                                                             ================  ================ 
   Cash and cash equivalents consist 
    of: 
  Cash at bank and in hand                                              9,121            44,417 
                                                             ================  ================ 
 
 

The accompanying accounting policies and notes form an integral part of these financial statements.

Consolidated Statement of Changes In Equity

For The Year Ended 31 December 2012

 
 
                           Share      Accumulated           Total             Non-           Total 
                         capital           losses                      controlling 
                                                                          interest 
                             GBP              GBP             GBP              GBP             GBP 
  At 1 January 
   2011                2,982,826      (1,687,450)       1,295,376                -       1,295,376 
 Loss for the 
  year                         -      (2,067,881)     (2,067,881)                -     (2,067,881) 
  Other                        -                -               -                -               - 
  comprehensive 
  income 
                     -----------  ---------------  --------------  ---------------  -------------- 
 
 Total 
  comprehensive 
  expenses                     -      (2,067,881)     (2,067,881)                -     (2,067,881) 
                     -----------  ---------------  --------------  ---------------  -------------- 
  At 31 December 
   2011 and 
   1 January 2012      2,982,826      (3,755,331)       (772,505)                -       (772,505) 
  Loss for the 
   year                        -      (1,716,857)     (1,716,857)         (19,291)     (1,736,148) 
  Other                                                                          - 
  comprehensive 
  income                       -                -               -                                - 
                     -----------  ---------------  --------------  ---------------  -------------- 
  Total 
   comprehensive 
   expenses                    -      (1,716,857)     (1,716,857)         (19,291)     (1,736,148) 
                     -----------  ---------------  --------------  ---------------  -------------- 
  Capital 
   contribution 
   from 
   non-controlling 
   interests                   -                -               -           63,666          63,666 
  Issue of shares 
   upon 
   equity-settled 
   share-based 
   arrangement 
   (Note 19)              74,772                -          74,772                -          74,772 
  At 31 December 
   2012                3,057,598      (5,472,188)     (2,414,590)           44,375     (2,370,215) 
                     ===========  ===============  ==============  ===============  ============== 
 
 

The accompanying accounting policies and notes form an integral part of these financial statements.

Company Statement of Changes In Equity

For The Year Ended 31 December 2012

 
 
                                 Share capital      Accumulated             Total 
                                                         losses 
                                           GBP              GBP               GBP 
  At 1 January 2011                  2,982,826      (1,680,189)         1,302,637 
 Loss for the year                           -        (920,024)         (920,024) 
  Other comprehensive                        -                -                 - 
   income 
                                --------------  ---------------  ---------------- 
 
 Total comprehensive 
  expenses                                   -        (920,024)         (920,024) 
                                --------------  ---------------  ---------------- 
  At 31 December 2011 
   and 
   1 January 2012                    2,982,826      (2,600,213)           382,613 
  Loss for the year                          -      (1,926,620)       (1,926,620) 
  Other comprehensive 
   income                                    -                -                 - 
                                --------------  ---------------  ---------------- 
  Total comprehensive 
   expenses                                  -      (1,926,620)       (1,926,620) 
  Issue of shares upon 
   equity-settled share-based 
   arrangement (Note 
   19)                                  74,772                -            74,772 
  At 31 December 2012                3,057,598      (4,526,833)       (1,469,235) 
                                ==============  ===============  ================ 
 
 

The accompanying accounting policies and notes form an integral part of these financial statements.

Notes To The Financial Statements

For The Year Ended 31 December 2012

   1          Accounting Policies 

Basis of accounting

The financial statements of Power Capital Global Limited on pages 6 to 45 have been prepared in accordance with International Financial Reporting Standards ("IFRSs") which collective term includes all applicable individual International Financial Reporting Standards, International Accounting Standards and Interpretations issued by the International Accounting Standards Board (the "IASB"), as adopted by the European Union.

The significant accounting policies adopted are detailed below:

Accounting convention

The accounts have been prepared under the historical cost convention.

Going concern basis

As at 31 December 2012, the Group had net current liabilities of GBP4,315,973. Taking into consideration the financial resources available to the Group, including internally generated funds, the continuing financial support of its shareholders and the conversion of convertible loan notes (see Note 23), the directors of the Company consider that the Group will have sufficient financial resources to finance its working capital requirements for the foreseeable future and accordingly, have prepared the financial statements on a going concern basis notwithstanding the net current liabilities position of the Group.

All of the rights and entitlements under an existing US$3 million loan facility entered into on 25 July 2012 between the Group and Power Capital Forex Management Limited ("PCFX"), a company under the control of Mr. Lin Kung-Min and the ultimate shareholder of the Company were assigned to Kolarmy Technology INC. ("Kolarmy"), a company under the control of Mr. Lin Heng-Jui, brother of Mr. Lin Kung-Min, on 16 January 2013 ("Loan Agreement").

On 13 June 2013, the Group secured agreement for a new US$3 million twelve month loan facility from Kolarmy, to be drawn by the Group to fund its investing and operating expenditure requirements. This loan facility has a term of one year and bears interest at LIBOR plus 3% per annum and replaced the assigned Loan Agreement.

.

Kolarmy has confirmed to the Directors of the Company that it is committed to providing financial support to the extent necessary, to enable the Group to meet its liabilities as and when they fall due for at least twelve months from the date that these financial statements are approved by the directors.

Basis of consolidation

The Group financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) prepared to 31 December each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration the existence and effect of potential voting rights that currently are exercisable or convertible.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group.

All intra-group transactions and balances and any unrealised gains and losses arising from intra-group transactions are eliminated in preparing the consolidated financial statements.

Subsidiaries

Subsidiaries are entities over which the Group has the power to control the financial and operating policies so as to obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

In consolidated financial statements, acquisition of subsidiaries (other than those under common control) is accounted for by applying the acquisition method. This involves the estimation of fair value of all identifiable assets and liabilities, including contingent liabilities of the subsidiary, at the acquisition date, regardless of whether or not they were recorded in the financial statements of the subsidiary prior to acquisition. On initial recognition, the assets and liabilities of the subsidiary are included in the consolidated statement of financial position at their fair values, which are also used as the bases for subsequent measurement in accordance with the Group's accounting policies.

In the Company's statement of financial position, subsidiaries are carried at cost less any impairment loss unless the subsidiary is held for sale or included in a disposal group. The results of subsidiaries are accounted for by the Company on the basis of dividends received and receivable at the reporting date.

All dividends whether received out of the investee's pre or post-acquisition profits are recognised in the Company's profit or loss.

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable net of discounts and other sales related taxes.

Sales of goods are recognised when goods are delivered and title has passed.

Interest income, is calculated using the effective interest method by applying the rate that discounts the estimated future cash receipts through the expected life of the financial instrument or a shorter period, when appropriate, to the net carrying amount of the financial asset.

Property, plant and equipment

Property, plant and equipment, other than construction in progress, are stated at cost less accumulated depreciation and any accumulated impairment losses. The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use.

Depreciation is calculated on the straight-line basis to write off the cost of each item of property, plant and equipment, other than construction in progress, to its residual value over its estimated useful life, as follows:

 
    Furniture, fixtures and equipment    20% 
    Electronic equipment                 331/3% 
     Computer equipment                   331/3% 
 
 

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at least at the end of each reporting period.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or retirement recognised in profit or loss in the period the asset is derecognised is the difference between the net sales proceeds and the carrying amount of the relevant asset.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other costs, such as repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

Leases

An arrangement, comprising a transaction or a series of transactions, is or contains a lease if the Group determines that the arrangement conveys a right to use a specific asset or assets for an agreed period of time in return for a payment or a series of payments. Such a determination is made based on an evaluation of the substance of the arrangement and is regardless of whether the arrangement takes the legal form of a lease.

Classification of assets leased to the Group

Assets that are held by the Group under leases which transfer to the Group substantially all the risks and rewards of ownership are classified as being held under finance leases. Leases which do not transfer substantially all the risks and rewards of ownership to the Group are classified as operating leases.

Operating lease charges as the lessee

Where the Group has the right to use of assets held under operating leases, payments made under the leases are charged to profit or loss on a straight-line basis over the lease terms except where an alternative basis is more representative of the time pattern of benefits to be derived from the leased assets. Lease incentives received are recognised in profit or loss as an integral part of the aggregate net lease payments made.

Financial assets

Classification of financial assets

The Group's financial assets are classified into loans and receivables and available-for-sale investments.

Management determines the classification of its financial assets at initial recognition depending on the purpose for which the financial assets were acquired and where allowed and appropriate, re-evaluates this designation at the end of reporting period.

All financial assets are recognised when, and only when, the Group becomes a party to the contractual provisions of the instrument. Regular way purchases of financial assets are recognised on trade date.

Derecognition of financial assets occurs when the rights to receive cash flows from the instruments expire or are transferred and substantially all of the risks and rewards of ownership have been transferred.

At the end of each reporting period, financial assets are reviewed to assess whether there is objective evidence of impairment. If any such evidence exists, impairment loss is determined and recognised based on the classification of the financial asset.

Loans and receivables

These are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are initially recognised at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method, less any impairment losses. Amortised cost is calculated taking into account any discount or premium on acquisition and includes fees that are an integral part of the effective interest rate and transaction cost.

Available-for-sale investments

These are initially measured at fair value, which ordinarily equates to cost, including transaction costs. At subsequent reporting dates, available-for-sale investments are measured at fair value or at cost where fair value is not readily measurable. Gains and losses arising from changes in fair value are recognised in other comprehensive income and taken to the investment revaluation reserve until the investment is disposed of or is determined to be impaired, at which time the accumulated fair value adjustments recognised in equity are included in the income statement as 'gains and losses from investments'.

Impairment loss of financial assets

Objective evidence of impairment of individual financial assets includes observable data that comes to the attention of the Group about one or more of the following loss events:

         -   significant financial difficulty of the debtor; 
   -   a breach of contract, such as a default or delinquency in interest or principal payments; 

- it becoming probable that the debtor will enter bankruptcy or other financial reorganisation; and

- significant changes in the technological, market, economic or legal environment that have an adverse effect on the debtor.

For loans and receivables

An impairment loss is recognised in profit or loss when there is objective evidence that the asset is impaired, and is measured as the difference between the asset's carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate. The carrying amount of financial asset is reduced through the use of an allowance account. When any part of financial asset is determined as uncollectible, it is written off against the allowance account for the relevant financial asset.

Impairment losses are reversed in subsequent periods when an increase in the asset's recoverable amount can be related objectively to an event occurring after the impairment

was recognised, subject to a restriction that the carrying amount of the asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

For available-for-sale financial assets

For available-for-sale equity investment that is carried at cost, the amount of impairment loss is measured as the difference between the carrying amount of the asset and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss is not reversed.

Financial liabilities

The Group's financial liabilities include other payables and accruals, amount due to a related company and convertible loan notes.

Financial liabilities at amortised cost

Financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument. All interest related charges are recognised as finance costs in profit or loss.

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

Other payables and accruals, amount due to a related company are recognised initially at their fair value, net of directly attributable transaction costs incurred and subsequently measured at amortised cost, using the effective interest method.

Convertible loan notes at amortised costs

Convertible loan notes that can be converted to equity share capital at the option of the holder, where the number of shares that would be issued on conversion and the value of the consideration that would be received at that time do not vary, are accounted for as compound financial instruments which contain both a liability component and an equity component.

Convertible loan notes issued by the Company that contain both financial liability and equity components are classified separately into respective liability and equity components on initial recognition. On initial recognition, the fair value of the liability component is determined using the prevailing market interest rate for similar non-convertible debts. The difference between the proceeds of the issue of the convertible loan notes and the fair value assigned to the liability component, representing the call option for conversion of the notes into equity, is included in equity as convertible loan notes equity reserve.

On the issue date of convertible loan notes, if:

i. the noteholders confirm that the convertible loan notes will be converted into the Company's shares within one year;

ii. the convertible loan notes carry a market interest rate, with fixed conversion prices and exchange rate; and

iii. the directors of the Company opine that the fair value of the embedded derivative relating to the foreign currency component is immaterial on initial recognition,

then it would not be separated out. Accordingly the principal amount of convertible loan notes would be fully recognised as a current liability in the statement of financial position. The liability component is subsequently carried at amortised cost using the effective interest method.

When the notes are converted, the carrying value of the liability component at the time of conversion is transferred to share capital as consideration for the shares issued. If the note is redeemed, the convertible loan notes liability will be reversed.

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand.

Accounting for income tax

Income tax comprises current tax and deferred tax.

Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting period, that are unpaid at the end of reporting period. They are calculated according to the tax rates and tax laws applicable to the fiscal periods to which they relate, based on the taxable profit for the year. All changes to current tax assets or liabilities are recognised as a component of income tax expense in profit or loss.

Deferred tax is calculated using the liability method on temporary differences at the end of reporting period between the carrying amounts of assets and liabilities in the financial statements and their respective tax bases. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are recognised for all deductible temporary differences, tax losses available to be carried forward as well as other unused tax credits, to the extent that it is probable that taxable profit, including existing taxable temporary difference, will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.

Deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither taxable nor accounting profit or loss.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax is calculated, without discounting, at tax rates that are expected to apply in the period the liability is settled or the asset realised, provided they are enacted or substantively enacted at the end of reporting period.

Changes in deferred tax assets or liabilities are recognised in profit or loss, or in other comprehensive income or directly in equity if they relate to items that are charged or credited to other comprehensive income or directly to equity.

Current tax assets and current tax liabilities are presented in net if, and only if,

   (a)        the Group has the legally enforceable right to set off the recognised amounts; and 

(b) intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

The Group presents deferred tax assets and deferred tax liabilities in net if, and only if,

(a) the entity has a legally enforceable right to set off current tax assets against current tax liabilities; and

(b) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:

   (i)         the same taxable entity; or 

(ii) different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

Retirement benefits and pensions schemes

Retirement benefits to employees are provided through defined contribution plans. The Group operates a defined contribution retirement benefit plan under the Mandatory Provident Fund Schemes Ordinance (the "MPF Scheme"), for all of its employees who are eligible to participate in the MPF Scheme. Contributions are made based on a percentage of the employees' basic salaries.

Contributions are recognised as an expense in profit or loss as employees render services during the year. The Group's obligations under these plans are limited to the fixed percentage contributions payable.

Share based payments

The cost of share-based employee compensation arrangements, whereby employees receive remuneration in the form of shares or share options, is recognised as an employee benefit expense in the income statement.

All share-based compensation is ultimately recognised as an expense in full at the grant date when the share options granted vest immediately, with a corresponding increase in reserve. If vesting periods or other vesting conditions apply, the expense is recognised over the vesting period, based on the best available estimate of the number of share options expected to vest. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised, if there is any indication that the number of share options expected to vest differs from previous estimates. No adjustment to expense recognised in prior periods is made if fewer share options ultimately are exercised than originally vested.

When share options are exercised, the company issues new shares. The proceeds (if any) received net of any directly attributable transaction costs are credited to share capital account.

Foreign currencies

The financial statements are presented in Pounds Sterling. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. The functional currency of the Company is Pounds Sterling.

In the individual financial statements of the consolidated entities, foreign currency transactions are translated into the functional currency of the individual entity using the exchange rates prevailing at the dates of the transactions. At reporting date, monetary assets and liabilities denominated in foreign currencies are translated at the foreign exchange rates ruling at that date. Foreign exchange gains and losses resulting from the settlement of such transactions and from the reporting date retranslation of monetary assets and liabilities are recognised in profit or loss.

Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined and are reported as part of the fair value gain or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

In the consolidated financial statements, all individual financial statements of foreign operations, originally presented in a currency different from the Group's presentation currency, have been converted into Pounds Sterling.

Assets and liabilities have been translated into Pounds Sterling at the closing rates at the reporting date. Income and expenses have been converted into Pounds Sterling at the exchange rates ruling at the transaction dates or at the average rates over the reporting period provided that the exchange rates do not fluctuate significantly.

Any differences arising from this procedure have been recognised in other comprehensive income and accumulated separately in the exchange reserve in equity, if any.

Share capital

Ordinary shares are classified as equity. Share capital is determined using the nominal value (if any) of shares that have been issued and any premiums received on the issuance of shares over the par value.

Any transaction costs associated with the issuance of shares are deducted from share capital (net of any related income tax benefit) to the extent they are incremental costs directly attributable to the equity transaction.

Segment reporting

The Group identifies operating segments and prepares segment information based on the regular internal financial information reported to the executive directors for their decisions about resources allocation to the Group's business components and for their review of the performance of those components. The business components in the internal financial information reported to the executive directors are determined following the Group's major operations.

Segment revenue, expenses, results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis to that segment. They are determined before intragroup balance and intragroup transactions are eliminated as part of the consolidation process.

Related party

(i) A person or a close member of that person's family is related to the Group if that person:

(a) has control or joint control over the Group;

(b) has significant influence over the Group; or

(c) is a member of key management personnel of the Group or the Company's parent.

   (ii)        An entity is related to the Group if any of the following conditions apply: 

(a) The entity and the Group are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others);

(b) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member);

(c) Both entities are joint ventures of the same third party;

(d) One entity is a joint venture of a third entity and the other entity is an associate of the third entity;

(e) The entity is a post-employment benefit plan for the benefit of the employees of the Group or an entity related to the Group;

(f) The entity is controlled or jointly controlled by a person identified in (i); and

(g) A person identifies in (i)(a) has significant influence over the entity or is a member of key management personnel of the entity (or of a parent of the entity).

Close members of the family of a person are those family members who may be expected to influence, or be influence by, that person in their dealings with the entity and include:

(a) that person's children and spouse or domestic partner;

(b) children of that person's spouse or domestic partner; and

(c) dependent of that person or that person's spouse or domestic partner.

Significant judgements and estimates

The preparation of the financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amounts of the assets or liabilities affected in the future.

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

Impairment of loans and receivables

The provision policy for doubtful debts of the Group is based on the on-going evaluation of the collectability and ageing analysis of the outstanding receivables and on the management's judgment. A considerable amount of judgment is required in assessing the ultimate realisation of these receivables, including creditworthiness and the past collection history of each customer and the related parties. If the financial conditions of the customers and other debtors of the Group were to deteriorate, resulting in an impairment of their ability to make payments, additional impairment may be required.

Issued International Financial Reporting Standards ("IFRS")

In the current year, the Group has applied for the first time the following new standards, amendments and interpretations (the "new IFRSs") issued by the IASB and the International Financial Reporting Interpretations Committee of the IASB, which are relevant to and effective for the Group's financial statements for the annual period beginning on 1 January 2012:

   Amendments to IFRS 7                         Disclosures - Transfers of Financial Assets 

The adoption of the new IFRSs had no material impact on how the results and financial position for the current and prior periods have been prepared and presented.

New or amended IFRSs that have been issued but are not yet effective

The following new or amended IFRSs, potentially relevant to the Group's financial statements, have been issued, but are not yet effective and have not been early adopted by the Group.

   Amendments to IFRSs                           Annual Improvements to IFRSs 2009-2011 Cycle 
   Amendments to IAS 1 (Revised)            Presentation of Items of Other Comprehensive   Income 
   Amendments to IAS 32 Presentation      Offsetting Financial Assets and Financial Liabilities 
   Amendments to IFRS 7 Disclosures       Offsetting Financial Assets and Financial Liabilities 
   IFRS 9                                                  Financial Instruments 
   IFRS 10                                                Consolidated Financial Statements 
   IFRS 11                                                Joint Arrangements 
   IFRS 12                                                Disclosure of Interests in Other Entities 
   IFRS 13                                                Fair Value Measurement 
   IAS 27 (2011)                                       Separate Financial Statements 
   IAS 28 (2011)                                       Investments in Associates and Joint Ventures 

Other than as noted below, the adoption of the new IFRSs had no material impact on how the results and financial position for the current and prior periods have been prepared and presented.

The directors of the Company (the "Directors") anticipate that all of the pronouncements will be adopted in the Group's accounting policy for the first period beginning after the effective date of the pronouncement. The Directors are currently assessing the impact of other new and amended IFRSs upon initial application. So far, the Directors have preliminarily concluded that the initial application of these IFRSs is unlikely to have a significant impact on the Group's results and financial position.

   2          Revenue and Other Income 
 
                              2012        2011 
                               GBP         GBP 
 Revenue                 1,191,542   1,566,232 
                        ==========  ========== 
 Other income 
 Sundry income                 630           - 
 Loan interest income       14,403           - 
 Bank interest income            1           3 
                        ----------  ---------- 
                            15,034           3 
                        ==========  ========== 
 
   3          Segment Information 

Segment revenues and results

The Group identifies operating segments and prepares segment information based on the regular internal financial information reported to the executive directors for their decisions about resources allocation to the Group's business components and for their review of the performance of those components. The business components in the internal financial information reported to the executive directors are determined following the Group's major operations.

The Group's operating business are organised and managed separately according to the nature of products, which each segment representing a strategic business segment that offers different natural resources products in Asia market.

No operating segments have been aggregated to form the following reportable segments.

Coal business - Sales and distribution of steam coal

Clinker business - Sales and distribution of clinkers

The following is an analysis of the Group's revenues and results by reportable segments:

 
                                Segment revenue           Segment profit/(loss) 
                               2012        2011              2012          2011 
                                GBP         GBP               GBP           GBP 
 
 Sales of coal              677,022   1,566,232            36,556     (714,831) 
 Sales of clinkers          514,520           -         (130,680)             - 
                         ----------  ----------  ----------------  ------------ 
                          1,191,542   1,566,232          (94,124)     (714,831) 
                         ==========  ==========  ================  ============ 
 
 Other income                                              15,034             3 
 Unallocated corporate 
  expenses                                            (1,564,821)   (1,135,068) 
 Finance costs                                           (91,291)     (217,985) 
                                                 ----------------  ------------ 
 Loss before taxation                                 (1,735,202)   (2,067,881) 
                                                 ================  ============ 
 

Revenue reported above represents revenue generated from external customers. There were no intersegment sales during the year (2011: Nil).

Segment profit/(loss) represents the profit/(loss) incurred by each segment without allocation of central administration costs including directors and administrative staff salaries, other income, finance costs and income tax expense. This is the measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance.

Segment Assets and Liabilities

 
                                                       2012        2011 
                                                        GBP         GBP 
 Segment assets 
 Coal business                                      255,121      80,689 
 Clinker business                                         -           - 
                                               ------------  ---------- 
 Total segment assets                               255,121      80,689 
 Unallocated corporate assets 
 
        *    Property, plant and equipment           35,775      41,977 
 
        *    Loans receivable                       636,661           - 
 
        *    Available-for-sale investments       1,273,322           - 
 
        *    Trade and other receivables            133,583      41,010 
 
        *    Cash and cash equivalents               32,939      57,628 
                                               ------------  ---------- 
 Consolidated assets                              2,367,401     221,304 
                                               ============  ========== 
 Segment liabilities 
 Coal business                                    (307,727)   (899,296) 
 Clinker business                                 (292,305)           - 
                                               ------------  ---------- 
 Total segment liabilities                        (600,032)   (899,296) 
 Unallocated corporate liabilities 
 
        *    Other payables and accruals          (328,472)    (71,442) 
 
        *    Amount due to a related company      (733,135)    (23,071) 
 
        *    Convertible loan notes             (3,075,977)           - 
 Consolidated liabilities                       (4,737,616)   (993,809) 
                                               ============  ========== 
 

For the purposes of monitoring segment performance and allocating resources between segments:

- all assets are allocated to reportable segments other than corporate assets; and

- all liabilities are allocated to reportable segments other than corporate liabilities.

Geographical information

The geographical location of customers is based on the location at which the goods are delivered and title has passed.

 
                   2012        2011 
                    GBP         GBP 
 Taiwan               -   1,566,232 
 Mongolia       514,520           - 
 Indonesia      677,022           - 
             ----------  ---------- 
              1,191,542   1,566,232 
             ==========  ========== 
 

The Company is an investment holding company and the principal place of the Group's operation is in Hong Kong.

For the purpose of segment information disclosures under IFRS 8, the Group regarded Hong Kong as its country of domicile. Most of the Group's non-current assets are principally attributable to Hong Kong, being the single geographical region.

Information about major customers

Percentage of the customers accounting for 10% or more of total revenue of the Group is as follows:

 
                   2012        2011 
 
 Customer A           -   1,566,232 
 Customer B     514,520           - 
 Customer C     397,374           - 
 Customer D     279,648           - 
              =========  ========== 
 
   4          FINANCE COSTS 
 
                                          2012      2011 
                                           GBP       GBP 
 Interest on advances from a related 
  company                               45,989    19,293 
 Interest on short-term loans from 
  third parties                              -   198,686 
 Interest on bank overdraft                  -         6 
 Interest on convertible loan notes     45,302         - 
                                       -------  -------- 
                                        91,291   217,985 
                                       =======  ======== 
 
   5          Loss Before Taxation 

Loss before taxation is stated after charging/(crediting) the following:

 
                                                2012      2011 
                                                 GBP       GBP 
 Auditors' remuneration                       18,000    19,045 
 Depreciation of property, plant and 
  equipment                                   19,327    15,596 
 Staff costs (including directors' 
  emoluments) 
 - Salaries, wages and other benefits        698,093   504,250 
 - Equity-settled share-based payments       146,175         - 
 - contributions to defined contribution 
  retirement plans                             8,537     2,292 
                                           ---------  -------- 
                                             852,805   506,542 
 Loss on disposal of property, plant 
  and equipment                               20,546         - 
 Operating lease expenses - land and 
  building                                    96,373    64,401 
 Provision for bad and doubtful debts         81,184    40,555 
 Write off of bad debts                            -    25,607 
 Exchange (gain)/loss, net                  (97,381)    16,747 
                                           =========  ======== 
 
   6          Income Tax Expense 

No Hong Kong profits tax has been provided as the Group had no estimated assessable profits arising in or derived from Hong Kong for both years. Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the jurisdictions in which the Group operates, based on existing legislation, interpretations and practices in respect thereof during the year.

 
                                2012   2011 
                                 GBP    GBP 
 Group 
 Current tax - Indonesia 
   In respect of current year    946      - 
 Deferred tax                      -      - 
                               -----  ----- 
 Income tax expense              946      - 
                               =====  ===== 
 

Pursuant to the rules and regulations of the British Virgin Islands ("BVI"), the Group is not subject to any income tax in the BVI.

Reconciliation between Group's income tax expense and accounting loss at applicable tax rates is as follows:

 
                                                         2012          2011 
                                                          GBP           GBP 
 Loss before taxation                             (1,735,202)   (2,067,881) 
 
   Notional tax at the rates applicable 
    to profits in 
    the jurisdictions concerned                     (286,308)     (341,200) 
 Effect of different tax rates of subsidiaries 
  operating in Indonesia                                  124             - 
 Tax effect of non-deductible expenses                252,955       160,304 
   Tax effect of temporary differences 
    not recognised 
    for deferred tax purposes                           1,805       (2,696) 
 Tax effect of unrecognised tax losses                 32,370       183,592 
                                                 ------------  ------------ 
 Income tax expense                                       946             - 
                                                 ============  ============ 
 

No deferred tax asset has been recognised in relation to tax loss of approximately HK$16 million (i.e. GBP1.3 million) (2011: approximately HK$13.6 million (i.e. GBP1.1 million)) due to the unpredictability of the future profit streams.

The Company is resident for corporation tax purposes in the British Virgin Islands.

   7          Loss Per Share Attributable to Owners of The parent 

The basic loss per share has been calculated on the basis of the net loss for the year attributable to owners of the Company of GBP1,716,857 (2011: loss GBP2,067,881) and the weighted average number of shares in issue as at 31 December 2012 of 57,101,056 (2011: 57,056,501), as adjusted for the effect of the issuance of new shares pursuant to the exercise of share options during the year.

Diluted loss per share for the years ended 31 December 2012 and 2011 is not presented because the impact of the conversion of convertible notes is anti-dilutive.

   8          Directors' Emoluments 

The following directors' emoluments were received or receivable by the Directors holding office during the year:

 
                                           Salaries, 
                                         allowances,   Contribution 
                                           and other     to pension 
                                  Fees      benefits          plans     Total 
                                   GBP           GBP            GBP       GBP 
 Year ended 31 December 
  2012 
 
 Executive Director 
  Simon Dewhurst                77,477        70,704          1,125   149,306 
                              --------  ------------  -------------  -------- 
 
 Non-Executive Directors 
 Craig Lees Baxter Niven***     42,000             -              -    42,000 
 Graham Newall                       -        92,700          1,125    93,825 
 Lin Kung-Min*                 120,000             -              -   120,000 
                               162,000        92,700          1,125   255,825 
                              --------  ------------  -------------  -------- 
                               239,477       163,404          2,250   405,131 
                              ========  ============  =============  ======== 
 
 Year ended 31 December 
  2011 
 
 Executive Director 
  Simon Dewhurst                87,320        35,352            491   123,163 
                              --------  ------------  -------------  -------- 
 
 Non-Executive Directors 
 Craig Lees Baxter Niven***     42,000             -              -    42,000 
 Graham Newall                  37,158        34,964            409    72,531 
 Lin Kung-Min*                 110,000             -              -   110,000 
 Mladen Ninkov**                21,000             -              -    21,000 
                              --------  ------------  -------------  -------- 
                               210,158        34,964            409   245,531 
                              --------  ------------  -------------  -------- 
                               297,478        70,316            900   368,694 
                              ========  ============  =============  ======== 
 
 

* Long Sheng Asset Management Company, a company controlled by Lin Kung-Min and his immediate family, received fees under a consultancy agreement of GBP120,000 (2011: GBP110,000), for the provision of advisory and support services to the Group.

** Keynes Capital, the registered business name of Keynes Investments Pty Limited as trustee for the Keynes Trust, received fees under a consultancy agreement of GBP21,000 during 2011, for the provision of advisory and support services to the Group. Mladen Ninkov is a director and employee of Keynes Investments Pty Limited.

*** Zetachoice Limited, a company controlled by Craig Niven and his immediate family, received fees under a consultancy agreement of GBP42,000 (2011: GBP42,000), for the provision of advisory and support services to the Group.

   9          Investments in Subsidiaries - The Company 
 
                                   2012   2011 
                                    GBP    GBP 
 At Cost 
 At 1 January                         3      2 
 Additions                            -      1 
 Deregistration of a subsidiary     (1)      - 
                                  -----  ----- 
 At 31 December                       2      3 
                                  =====  ===== 
 
 

Particulars of the principal subsidiaries at 31 December 2012 are as follows:

 
                                       Proportion 
                          Class of      of shares   Nature of      Country of 
 Name                     Share held      held       business     incorporation 
  Directly held 
                                                    Investment         BVI 
 PCG Resources Limited    Ordinary        100%        holding 
 PCG Resources (C.I.)                               Investment      Alderney 
  Limited                 Ordinary        100%        holding 
 
 
 Indirectly held 
 PCG Minerals Trading                                                    BVI 
  Limited (formerly 
  known as PCG Minerals 
  Limited and PCG International                       Investment 
  Limited)                        Ordinary   100%       holding 
                                                     Administrative 
 PCG Services Limited             Ordinary   100%        support      Hong Kong 
  PCG Minerals Trading 
   (HK) Limited (formerly 
   known as PCG Coal                                   Trading of 
   Limited)                       Ordinary   100%         coal        Hong Kong 
  PCG Coal (Indonesia) 
   Limited (formerly 
   known as PCG Mineral 
   (HK) Limited)                  Ordinary   100%       Dormant       Hong Kong 
                                                      Investment 
 PCG Engineering Limited          Ordinary   100%       holding          BVI 
 
                                                      Trading of 
                                                        clinkers 
                                                     and investment 
 PCG Mongolia Limited             Ordinary   100%       holding          BVI 
 
 
                                    Proportion 
                      Class of       of shares   Nature of      Country of 
 Name                 Share held       held       business     incorporation 
 Indirectly held 
 PT Power Capital                                Trading of 
  Global Mineral       Ordinary        75%          coal        Indonesia 
 
 
   10        Property, Plant And Equipment - The Group 
 
                                          Furniture, 
                               Computer     fixtures 
                                                 and   Electronic 
                              equipment    equipment    equipment      Total 
                                    GBP          GBP          GBP        GBP 
 Cost 
 At 1 January 2012               19,144       63,697        1,410     84,251 
 Additions during the year        5,821        1,172            -      6,993 
 Disposal during the year             -     (31,610)            -   (31,610) 
                             ----------  -----------  -----------  --------- 
 At 31 December 2012             24,965       33,259        1,410     59,634 
                             ----------  -----------  -----------  --------- 
 
 Accumulated depreciation 
 At 1 January 2012                4,642       10,645          309     15,596 
 Charge for the year              7,590       11,268          469     19,327 
 Disposal during the year             -     (11,064)            -   (11,064) 
                             ----------  -----------  -----------  --------- 
 At 31 December 2012             12,232       10,849          778     23,859 
                             ----------  -----------  -----------  --------- 
 
 Net book value 
 At 31 December 2012             12,733       22,410          632     35,775 
                             ==========  ===========  ===========  ========= 
 At 31 December 2011             14,502       53,052        1,101     68,655 
                             ==========  ===========  ===========  ========= 
 
   11        Loans Receivable 

During the year ended 31 December 2012, US$1 million (the "Loan") was advanced by PCG Engineering Limited, a wholly owned subsidiary of the Company, to TSI Holdings Limited ("TSI") which is a third party to the Group. The Loan was unsecured, bearing interest at 5% per annum and repayable within 24 months.

The directors of the Company are of the opinion that the carrying amount of outstanding balance as at year end is approximate to its fair value.

   12        Available For Sale Investments 
 
                                 2012   2011 
                                  GBP    GBP 
 Unlisted shares, at cost   1,273,322      - 
                           ==========  ===== 
 
 

The Group's available-for-sale investments represented the unlisted equity investments which were carried at costs less impairment loss.

   13        Trade And Other Receivables 
 
                                          Group            Company 
                                       2012       2011   2012   2011 
                                        GBP        GBP    GBP    GBP 
 Trade receivables                  162,368     40,555      -      - 
 Less: Provision for impairment    (81,184)   (40,555)      -      - 
                                  ---------  ---------  -----  ----- 
                                     81,184          -      -      - 
 
 Unpaid capital contribution 
  due from non-controlling 
  interests                          63,666 
 Prepayments and other 
  receivables                        74,374     51,770      -      - 
                                  ---------  ---------  -----  ----- 
                                    219,224     51,770      -      - 
                                  =========  =========  =====  ===== 
 

All of the Group's trade receivables are denominated in United States Dollars ("US$").

The customers are obliged to settle the amounts upon satisfaction of the sales and purchase agreements. Based on relevant agreements, all outstanding trade receivables as at 31 December 2012 were 60 days past due but not impaired and aged over 90 days.

At each reporting date, the Group reviews trade receivables for evidence of impairment on both an individual and collective basis. As at 31 December 2012, impairment losses of GBP81,184 (2011: GBP40,555) were recognised. The Group did not hold any collateral as security or other credit enhancements over the impaired trade receivables, whether determined on an individual or collective basis.

Impairment losses on trade receivables are recorded using an allowance account unless the Group is satisfied that recovery of amount is remote, in which case the impairment loss is written off against trade receivables directly.

Movements in the allowance for bad and doubtful debts during the year are as follows:

 
                                         Group             Company 
                                      2012        2011   2012   2011 
                                       GBP         GBP    GBP    GBP 
 At 1 January                       40,555           -      -      - 
 Impairment losses recognised       81,184      66,162      -      - 
 Written off                      (40,555)    (25,607)      -      - 
 At 31 December                     81,184      40,555      -      - 
                                ==========  ==========  =====  ===== 
 
   14        Amounts Due From Subsidiaries - The Company 
 
                                          2012          2011 
                                           GBP           GBP 
 Amounts due from: 
 PCG Resources (C.I.) Limited        1,015,524     1,015,524 
 SWB (Admin) Limited                         -         4,063 
 PCG Minerals Trading (HK) 
  Limited                            1,451,493       388,187 
 PCG Services Limited                   80,221        48,583 
 PCG Engineering Limited               394,730             - 
 PCG Mongolia Limited                1,273,322             - 
 PCG Resources Limited                  73,262 
                                  ------------  ------------ 
                                     4,288,552     1,456,357 
 Less: Provision for impairment    (2,547,238)   (1,068,170) 
                                  ------------  ------------ 
                                     1,741,314       388,187 
                                  ============  ============ 
 

During the year, the Directors reviewed the carrying value of the amounts due from subsidiaries with reference to the businesses operated by these subsidiaries and their net asset values. As at the reporting date, the Directors are of the opinion that provision for impairment is necessary in respect of the amounts due from subsidiaries. During the year ended 31 December 2012, an impairment loss of approximately GBP1,482,962 (2011: GBP500,213) was recognised in the Company's statement of comprehensive income. A provision of GBP3,894 was written off during the year due to deregistration of a subsidiary.

The amounts due from subsidiaries were unsecured, interest free and repayable on demand.

   15        Other payables and accruals - The Group And Company 

The Group

 
                      2012      2011 
                       GBP       GBP 
 Accruals          346,459   191,588 
 Other payables     37,536    14,281 
                   383,995   205,869 
                  ========  ======== 
 

The Company

 
                2012     2011 
                 GBP      GBP 
 Accruals    143,695   49,994 
            ========  ======= 
 
   16        Amount Due To A Related Company - The Group 

At 31 December 2012, the amount due to a related company of GBP1,276,698 (2011: GBP787,940) represents advances from Power Capital Forex Management Limited, a company under the control of Mr. Lin Kung-Min, the ultimate controlling party of the Company.

The amounts due were unsecured, bearing interest at LIBOR plus 3% per annum and repayable within twelve months.

   17        Convertible Loan Notes - The Group And Company 

On 25 July 2012, the Group entered into a restructuring of the loan facilities provided to it by PCFX amounted to US$8 million (the "PCFX facilities"). US$5 million of the amount drawn under the PCFX facilities was subsequently re-constituted as 12 month Unsecured Convertible Loan Notes ("CLN") with a coupon rate at LIBOR plus 3%, payable quarterly in arrears. The maturity date of the CLN was 24 July 2013.

The terms of the CLN incorporate a conversion option into the Company's shares exercisable at any time at 20p per share. In addition, the Company may at any time mandatorily convert the CLN or redeem them at par in cash.

On 29 April 2013, the CLN was fully converted into Company's shares by issue of new shares.

   18        Share Capital - The Group and Company 
 
                                                2012                              2011 
                                      Number of             GBP        Number of              GBP 
                                       shares                           shares 
 Authorised 
 At 1 January and 31 December, 
  Par value                           1,000,000,000           -        1,000,000,000            - 
                                     =================  =======       =================  ======== 
 
                                                 2012                             2011 
                                      Number                           Number 
                                       of shares             GBP        of shares             GBP 
 Paid-in capital 
 At 1 January                           57,056,501     2,982,826         57,056,501     2,982,826 
 Shares issued upon equity-settled 
  share-based arrangement                  478,309        74,772                  -             - 
                                     -------------  ------------      -------------  ------------ 
 At 31 December                         57,534,810     3,057,598         57,056,501     2,982,826 
                                     =============  ============      =============  ============ 
 
 
   19        Share Option Scheme 

A share option scheme (the "Scheme") was adopted pursuant to a resolution passed at the annual general meeting of the Company held on 11 October 2012 for the purpose of providing incentives or rewards to selected participants. Under the Scheme, it will enable selected eligible persons (including any director, employee, consultant or professional adviser) of the Company and of its subsidiaries to be granted options ("Options") to acquire ordinary shares in the capital of the Company ("Shares").

The total number of shares in respect of which options may be granted under the Scheme must not exceed 18 million shares of the Company prior to the third anniversary of the adoption of the Scheme (the "Scheme Mandate").

It is intended that Options will normally vest over a period of three years beginning with the Option grant date (the "Vesting Period") and may also be subject to performance conditions set at the time the Option is granted. Options cannot, in any event, be exercised later than the tenth anniversary of the Option grant date. Options are not transferable (except on death).

Options may be satisfied by newly issued Shares, or existing Shares, including Shares purchased in the market by an employees' trust. Operation of the Scheme will be overseen by the board of directors of the Company (the "Board").

The number of Shares in respect of which Options may be granted under the Scheme shall be limited, so that immediately following the grant of any Options, the aggregate of the number of Shares issued or remaining capable of being issued pursuant to Options granted prior to the third anniversary of the adoption of the Scheme will not exceed 18 million.

Options may be granted during the period of 42 days beginning with the dealing day following the announcement of the Company's results for any period or with the day on which an announcement is made of amendments to be made to the relevant tax legislation or on which any such amendments come into force.

No payment will be required for the grant of an Option.

The price per share at which Shares may be acquired upon the exercise of an Option ("Exercise Price") shall be determined at the time of grant.

The vesting of an Option may be subject to a time-based vesting schedule to be specified at the date of grant. In addition, the Scheme provides that the vesting of an Option may be subject to performance conditions, to be specified at the date of grant. Once set, performance conditions may be waived or amended if an event occurs which causes the Company to consider that such performance conditions could not fairly or reasonably be met, provided that any amended conditions shall not be more difficult to satisfy than the original conditions

were intended to be at the time of their imposition.

If a participant terminates employment for cause, an outstanding Option will lapse in full.

If a participant terminates employment other than for cause, an outstanding Option shall lapse at the termination date if it is not then exercisable. To the extent an Option is exercisable at the termination date, it shall remain exercisable for 90 days and shall thereafter lapse to the extent not exercised.

If a participant becomes disabled whilst employed by the Company, any Options shall be retained and exercised in accordance with the Scheme. If a participant dies in service, his Option shall become fully exercisable and remain exercisable for its full term.

In the event of a change of control of the Company or compromise or arrangement in connection with a scheme for the reconstruction of the Company or its amalgamation, or a voluntary winding-up, Options shall become exercisable within specified periods and shall lapse to the extent not exercised at the end of the applicable period.

Alternatively, on a change of control, by agreement with the acquiring company, participants may, release their Options in consideration of the grant of Options over shares in the acquiring company.

If there is a rights or capitalisation issue, sub-division, consolidation, reduction or other variation of the Company's ordinary share capital, the Board may adjust the number of Shares subject to an Option and/or the Exercise Price, subject (except in the case of a capitalisation) to written confirmation by the Auditors that in their opinion such adjustment is fair and reasonable provided that the aggregate amount payable on the exercise of the Option in full is not increased.

On 28 November 2012, 478,309 Options with exercise price of GBP0.00000000001 were granted to certain employees of the group. As mutually agreed between these employees and the Company, the Options must be exercised immediately at date of grant. On date of grant, 478,309 shares were fully exercised by these employees into Company's shares by issue of new shares. In the opinion of the directors, the fair value of the share options was approximately the same as the open market value of 478,309 new shares issued which was also approximated to the employees' compensation amounted to GBP74,772 and had been credited to share capital directly. The average share price on date of exercise was 13p.

   20        Related Party Transactions 

20.1 In addition to the transactions and balances disclosed in Note 14, 16 and 17, the Group had the following significant related party transactions during the year:

 
                                               Notes      2012     2011 
                                                           GBP      GBP 
         Sales commission paid to Kolarmy 
          Technology INC.                        (i)         -   31,833 
         Sales to Central Asia Cement           (ii) 
          LLC                                          514,520        - 
 
         Interest paid to Power Capital 
          Forex Management Limited             (iii)    91,291   19,293 
                                                      ========  ======= 
 

Note:

(i) Commission paid to Kolarmy Technology INC., in which Mr. Lin Heng-Jiu had a beneficial interest and was also a director of the related company. The commission was made with reference to the terms mutually agreed between both parties.

(ii) Central Asia Cement LLC is a wholly owned subsidiary of Asia Pacific Investment Partners Limited ("APIP"), of which our Group's executive director, Mr. Simon Dewhurst, was a director of APIP.

(iii) Interest paid to Power Capital Forex Management Limited, a company under the control of Mr. Lin Kung-Min, the ultimate controlling party of the Company. The Directors having consulted with the Group's nominated adviser that the terms of the transaction are fair and reasonable so far as the shareholders of the Company are concerned.

20.2 Compensation of key management personnel of the Group

The Directors are of the opinion that the key management personnel were the Directors of the Company, details of whose emoluments are set out in note 8.

20.3 The Company is listed on the Alternative Investment Market. Mr. Lin Kung-Min is the ultimate controlling party.

   21        Financial Risk Management Objectives and Policies 

The Group is exposed to a variety of financial risks which result from its operating, investing and financing activities. The Group's major financial instruments include loans receivables, available-for-sale investments, trade and other receivables, cash and cash equivalents, other payables and accruals and amount due to a related company. Details of these financial instruments are disclosed in the respective notes. The risks associated with these financial instruments and the policies applied by the Group to mitigate these risks are set out below. The Directors manage and monitor these exposures to ensure appropriate measures are implemented in a timely and effective manner.

Categories of financial assets and liabilities

The carrying amounts presented in the statements of financial position relate to the following categories of financial assets and financial liabilities:

 
                                                       Group                Company 
                                                     2012      2011        2012      2011 
                                                      GBP       GBP         GBP       GBP 
 Financial assets 
 Loans and receivables 
 
        *    Loans receivable                     636,661         -           -         - 
 
        *    Trade and other receivables          219,224    51,770           -         - 
 
        *    Amounts due from subsidiaries              -         -   1,741,314   388,187 
                                               ----------  --------  ----------  -------- 
                                                  855,885    51,770   1,741,314   388,187 
 Available-for-sale investments                 1,273,322         -           -         - 
 Cash and cash equivalents                        202,419   100,879       9,121    44,417 
                                               ----------  --------  ----------  -------- 
                                                2,331,626   152,649   1,750,435   432,604 
                                               ==========  ========  ==========  ======== 
 Financial liabilities 
 At amortised cost 
 
        *    Other payables and accruals          383,995   205,869     143,695    49,994 
 
        *    Amount due to a related company    1,276,698   787,940           -         - 
 
        *    Convertible loan notes             3,075,977         -   3,075,977         - 
                                               ----------  --------  ----------  -------- 
                                                4,736,670   993,809   3,219,672    49,994 
                                               ==========  ========  ==========  ======== 
 

Credit risk

Credit risk refers to the risk that the counterparty to a financial instrument would fail to discharge its obligation under the terms of the financial instrument and cause a financial loss to the Group.

The Group has adopted procedures in extending credit terms to customers and in monitoring its credit risk. The Group's credit policy and practices include assessment and valuation of customer's credit reliability and periodic review of their financial status to determine the credit limits to be granted. To manage credit risks, the management reviews regularly the recoverable amount of each individual debt to ensure that adequate impairment is made for the irrecoverable amounts. At 31 December 2012, the Group had concentration of credit risk as 100% (2011: Nil) of the Group's trade receivables were due from a single customer of whom transactions have exceeded 10% of the Group's total revenue.

Majority of the Group's bank balances are deposited with banks in Hong Kong, Indonesia and United Kingdom. The credit risk on liquid funds is limited because the counterparties are banks with good credit-rating.

Foreign currency risk

Foreign currency risk refers to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Several subsidiaries of the Group have foreign currency sales and purchases, which expose the Group to foreign currency risk. Certain trade and other receivables and payables of the Group are denominated in either Pounds Sterling ("Sterling"), Hong Kong dollars ("HK$"), Renminbi ("RMB"), Indonesia Rupiah ("Rp") or US$. The Group currently does not have a foreign currency hedging policy. However, the Directors monitor the foreign exchange exposure and will consider hedging significant foreign currency exposure should the need arises.

The table below illustrates the monetary assets and liabilities denoted in various currencies by the Group as at reporting date:

 
                               2012      2011 
                                GBP       GBP 
 Monetary Assets: 
   Sterling                   9,171    44,667 
   US$                      884,357    40,826 
   Rp                         4,307         - 
   HK$                       15,392    15,386 
   RMB                        7,037         - 
                         ----------  -------- 
                            920,264   100,879 
                         ==========  ======== 
 Monetary Liabilities: 
   US$                    4,352,649   787,940 
   RMB                           26         - 
                         ----------  -------- 
                          4,352,675   787,940 
                         ==========  ======== 
 

The table below illustrates the hypothetical sensitivity of the Group's reported profits and equity to a 10% increase and decrease in the exchange rates at the reporting date assuming all other variables remain unchanged. The sensitivity rate of 10% represents the Directors assessment of a reasonable possible change. Positive figures represent an increase in profit and equity.

 
                                     2012       2011 
                                      GBP        GBP 
 Sterling strengthens by 10% 
   US$                            346,829     74,711 
   Rp                               (431)          - 
   HK$                            (1,539)    (1,539) 
   RMB                              (701)          - 
 
 Sterling weakens by 10% 
   US$                          (346,829)   (74,711) 
   Rp                                 431          - 
   HK$                              1,539      1,539 
   RMB                                701          - 
 

Fair values

There is no significant difference between the carrying amounts and the fair values of the Group and Company's financial instruments. For current trade and other receivables/payables with a remaining life of less than one year, the nominal amount is deemed to reflect the fair value.

Capital risk

The capital of the Group consists of equity attributable to equity holders of the Company, comprising share capital and retained earnings / losses. The Group manages its capital to ensure that entities within the Group will be able to continue as going concerns whilst maximising the return to shareholders. The Group is not subject to any externally imposed capital requirements.

Liquidity risk

Liquidity risk relates to the risk that the Group will not be able to meet its obligations associated with its financial liabilities. In the management of liquidity risk, the Directors monitor and maintain a level of cash and cash equivalents deemed adequate to finance the Group's operations and to meet its debt obligations as they fall due. The Group finances its working capital requirements mainly by the funds obtained from advances from a related company. As at 31 December 2012, the Group had net current liabilities and net liabilities of GBP4,315,973 and GBP2,370,215 respectively. The adoption of going concern basis has been detailed in note 1 above. In the opinion of Directors, the Group's exposure to liquidity risk is significantly reduced.

The following tables detail the remaining contractual maturities at the reporting date of the Group's and the Company's financial liabilities, which are based on the contractual undiscounted payments (including interest payments computed using contractual rates) and the earliest date the Group and the Company can be required to pay:

The Group

 
                                                   Total 
                                             contractual 
                                 Carrying   undiscounted       Within 1 
                                                                   year 
                                  amounts       payments   or on demand 
                                      GBP            GBP            GBP 
 Year ended 31 December 
  2012 
 
 Other payables and accruals      383,995        383,995        383,995 
 Amount due to a related 
  company                       1,276,698      1,276,698      1,276,698 
 Convertible loan notes         3,075,977      3,075,977      3,075,977 
                                4,736,670      4,736,670      4,736,670 
                               ==========  =============  ============= 
 
 Year ended 31 December 
  2011 
 
 Other payables and accruals      205,869        205,869        205,869 
 Amount due to a related 
  company                         787,940        787,940        787,940 
                               ----------  -------------  ------------- 
                                  993,809        993,809        993,809 
 
 

The Company

 
                                                   Total 
                                             contractual 
                                 Carrying   undiscounted       Within 1 
                                                                   year 
                                  amounts       payments   or on demand 
                                      GBP            GBP            GBP 
 Year ended 31 December 
  2012 
 
 Other payables and accruals      143,695        143,695        143,695 
 Convertible loan notes         3,075,977      3,075,977      3,075,977 
                                3,219,672      3,219,672      3,219,672 
                               ==========  =============  ============= 
 
 Year ended 31 December 
  2011 
 
 Other payables and accruals       49,994         49,994         49,994 
 
 

Interest rate risk

At 31 December 2012, the Group's exposure to interest rate risk mainly arises on CLN and amount due to a related company which bore floating interests. The Group has not used any derivative contracts to hedge its exposure to interest rate risk. The Group has not formulated a policy to manage the interest rate risk.

Interest rate sensitivity analysis

The following tables illustrate the sensitivity of the loss for the year and accumulated losses to a reasonably possible change in interest rates of +25 basis points and -25 basis points (2011: +/- 25 basis points), with effect from the beginning of the year. These changes are considered to be reasonably possible based on observation of current market conditions. The calculations are based on the Group's financial instruments held at each reporting date. All other variables are held constant. There is no impact on other components of consolidated equity in response to the possible change in interest rate.

 
                                                 Group 
                                     2012                    2011 
 
                             +25 basis   -25 basis   +25 basis   -25 basis 
                                points      points      points      points 
                                   GBP         GBP         GBP         GBP 
 Effect on loss for the 
  year 
   and accumulated losses    (108,817)     108,817    (19,699)      19,699 
                            ==========  ==========  ==========  ========== 
 
 
                                                Company 
                                     2012                    2011 
 
                             +25 basis   -25 basis   +25 basis   -25 basis 
                                points      points      points      points 
                                   GBP         GBP         GBP         GBP 
 Effect on loss for the 
  year 
   and accumulated losses     (76,899)      76,899           -           - 
                            ==========  ==========  ==========  ========== 
 
   22        Commitments Under Operating Leases 

At 31 December 2012, the total future minimum lease payments under non-cancellable operating leases payable by the Group are as follows:

 
                                             2012      2011 
                                              GBP       GBP 
 Within one year                           17,724    93,523 
 In the second to fifth years inclusive     4,536    22,260 
                                          -------  -------- 
                                           22,260   115,783 
                                          =======  ======== 
 

The Group leases certain of its office premises and photocopying machines. The leases run for an initial period of one to five years, with options to renew the lease and renegotiated the terms at the expiry date or at dates as mutually agreed between the Group and respective landlords/lessors. None of the leases include contingent rentals.

The Company did not have any operating lease commitments as at 31 December 2012 and 2011.

   23        Subsequent events 

On 29 April 2013, the Company announced that it had issued 16,233,765 ordinary shares pursuant to conversion notices from the holders of the US$5 million convertible loan notes ("CLN") issued by the Company on 25 July 2012 at a conversion price of 20p per share.

This represented full conversion of CLN currently in issue and completes the restructuring announced by the Company in July 2012. It added new investors in the Company and increased the free float in its shares from approximately 21% to 38%. It also substantially reduced the balance sheet gearing of the Company.

Details of the share conversion are set out in the Company's announcement dated 29 April 2013.

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR KMGZVVNRGFZM

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