CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
REPORT AS AT 31 DECEMBER 2015
China Africa Resources plc
Company No. 07352056
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
Contents
Strategic Report
Chairman’s statement .......................................................................................................................... 2
Principal risks and Uncertainties .......................................................................................................... 3
Key Performance indicators ................................................................................................................. 4
Corporate Governance
Directors’ report .................................................................................................................................... 5
Directors Remuneration Report ............................................................................................................ 7
Corporate governance ......................................................................................................................... 8
Directors’ responsibilities.................................................................................................................... 10
Independent Auditor’s Report to the Members of China Africa Resources plc ................................... 11
Financial Statements
Consolidated income statement ......................................................................................................... 13
Consolidated statement of comprehensive income ............................................................................ 14
Consolidated and Company statements of financial position ............................................................. 15
Consolidated and Company statements of changes in equity ............................................................ 16
Consolidated and Company cash flow statements ............................................................................. 17
Notes to the consolidated financial statements .................................................................................. 18
Company Information
Company information ......................................................................................................................... 38
________________________________________________________________________________________________
1
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
Chairman’s statement
I am pleased to present the report and accounts for China Africa Resources plc results for the year ended 31 December
2015.
Financial Results
During the year the Group made a loss of US$0.6 million (2014- US$0.8 million). The loss incurred during the year
consists of costs of running the head office in London and associated listing and regulatory requirements. All costs of the
Berg Aukas feasibility study have been capitalised.
As at 31 December 2015 the Group had US$0.7 million (2014- US$1.2 million) in cash reserves.
The company received a loan for US$200,000 from its parent, HK ECE in the year. The loan bears interest at 12 month
libor and is repayable on 30 June 2016. In common with many exploration and development companies, the Company
raises finance for its activities in discrete tranches. The Group and the Company has not generated revenues from
operations. As such, the Group’s and Company’s ability to continue to adopt the going concern assumptions will depend
upon a number of matters including future successful capital raisings for necessary funding or loans from third parties. In
order to continue to meet the Group’s working capital needs, loan repayments and development plans further funding will
be required. In the event that the Company is unable to secure further finance either through third parties or capital
raising, it may not be able to fully develop its projects or meet its working capital requirements. In the absence of such
further financing opportunities being successful, there exists a material uncertainty that may cast significant doubt on the
entity’s ability to continue as a going concern, and therefore, it may be unable to realise it’s assets and discharge its
liabilities in the ordinary course of business.
Review of the year
During the year the Group has engaged in reviewing options to fund the feasibility study for the Berg Aukas Mine in
Namibia having successfully completed the pre- feasibility study last year.
Key data from the pre-feasibility study:
Mine Type
Reserves *
Zinc
Lead
Vanadium oxide
Mining Rate
Mine Life
Processing Method
Processing rate
Recoverable Metal
Zinc
Lead
Cash cost (C1) **
Underground
2.05 million tonnes
11.1%
2.8%
0.23%
250,000 tonne per annum (tpa)
10 years
Heavy Media Separation / Flotation
250,000 tpa / 80,000 tpa
20,483 tpa
5,079 tpa
US$466/ tonne of Zinc (US$ 0.21/ Ib Zinc)
*Reserves (JORC) plus minable inventory
**Net of lead and silver credits
The pre-feasibility study of the Berg Aukas mine demonstrates it to be a viable project. The project has pre-
tax Net Present Values (NPVs), with an effective date of November 2013, using a discount rate of 10% of
between US$49 million and US$51 million (best-estimated value), dependent on the processing option
selected. The post tax NPV is US$29m on best-estimated value, with a pre-tax internal Rate of Return (IRR)
of 25% in real US$ terms.
We are also continuing to seek opportunities to enlarge the Lead and Zinc asset base of CAR and grow the
Company for the benefit of our shareholders.
The directors continue to seek funding to finance the feasibility study of Berg Aukus.
Cungen Ding
Director and Chairman of the Board
6 May 2016
________________________________________________________________________________________________
2
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
Principal risks and Uncertainties
Nature of Risk
Funding Risk
The company will need to secure additional funding to
complete its feasibility study.
Impact
Shortage of cash for completion of the feasibility study.
Project Risk
The feasibility study of Berg Aukas is not considered
bankable.
Impact
Berg Aukas cannot be developed.
Currency and Commodity Risk
The Group’s costs and the feasibility of its projects are
affected by exchange rate movements between the US
dollar and other currencies specifically the Namibian dollar
and sterling.
Impact
Costs increase and revenue decreases.
Human Resources Risk
The achievement of
the Group’s objectives will be
dependent on the Group attracting qualified and motivated
staff.
How we manage it
We believe the Berg Aukas feasibility study will be
attractive to investors. Ongoing costs have been reduced
to the minimum and the Group can look to its key
shareholders for support until investment is found.
We manage the project in stages to minimise investment
at each decision making point.
We have already completed the pre feasibility study for the
Berg Aukas mine which indicates the potential feasibility of
the project.
Management and Directors review trends in the commodity
markets and exchange rates on a regular basis when
considering the Group’s risk management strategy.
The Namibian dollar has been a depreciating currency for
several years. As funding and revenue is generally
denominated in US dollars this reduces costs. The Group
will review the need to hedge commodity prices as and
when appropriate.
The Group maintains balances in the UK in sterling and
US dollar to reduce risk.
The Group outsources the development of its project to
Weatherly
International plc who has an established
presence in Namibia. Weatherly will also assist in the
recruitment stage when appropriate.
Impact
The efficiency of a particular aspect of the Group’s
reduced
operations could be affected
profitability.
leading
to
Country Risk
Some investors may perceive Namibia as a high risk
country in which to operate.
Impact
Legal, regulatory or political changes could impact on the
Group’s operations.
The Fraser Institute annual survey of mining destinations
(2015) rates Namibia as the top country in Africa for
investment attractiveness. The Government pursues a
constant strategy of encouraging investment in the country
and is keen to keep the climate attractive for foreign
investors.
Business Review & Development
A review of the business and its operations can be found in the Chairman’s statement on page 2.
________________________________________________________________________________________________
3
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
Key Performance indicators
KPI
Shareholder returns
Measure
Share price performance
Cash flows
Cash balances
Performance of mine development
Achievement of project milestones
Performance
The company’s share price dropped
from 11.5p to 4.1p in a year that was
generally punishing for the mining
sector. Improvements in the coming
year will be dependent on whether to
progress to a full feasibility study or
not.
from
reduced
Cash
US$1.2m
to $0.7m. The Group
implemented a series of cost savings
initiatives to reduce the cash burn
going forward.
The pre feasibility study indicates the
Berg Aukas mine
is a viable
development project.
balances
Corporate and Social Responsibility Report (CSR)
China Africa Resources plc is committed to complying with all Health and Safety, environmental and social legislation in
the countries in which it operates and protecting the health and general well being of its employees and contractors. It is
committed to preserving the environment and the communities in the areas where we operate.
Environment
Concern for the environment is of upmost importance to China Africa Resources plc. As well as meeting all the
environmental standards required by Namibian legislation it is our policy to reduce to a minimum the potential
environmental impact of our activities and have a positive impact on the areas in which we operate.
Health, Safety and Security
The health, safety and security of the personnel and communities in which we operate takes priority in the management
of our operations. Our goal is to prevent injury and ill health to employees and contractors by providing a safe and
healthy working environment and by minimising risks associated with occupational hazards.
Business Ethics
China Africa Resources plc is committed to carrying out all its operations with high moral and legal standards. China
Africa Resources plc has an anti-corruption and anti-bribery policy which are in line with the requirements of the UK
Bribery Act. Staff and contractors are made aware of their obligations both on recruitment and by periodical updates.
The strategic Report on pages 2-4 was approved by the Board of Directors on 6 March 2016 and was signed on its
behalf by Cungen Ding, Chairman of the Board.
Cungen Ding
Director and Chairman of the Board
6 May 2016
________________________________________________________________________________________________
4
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
Directors’ report
Principal activity
The principal activity of China Africa Resources Plc is the exploration and development of base metals, primarily lead
and zinc.
The subsidiary undertaking principally affecting the profits or net assets of the Group in the period is China Africa
Resources Namibia (pty) Ltd.
Business review and future development
A review of the business and future developments of the Group are included within the Chairman’s statement and the
strategic report on pages 2-4.
Results and dividends
During the year the Group made a loss of US$0.6 million (2014- US$0.8m). The loss incurred during the year consists of
costs of running the head office in London and associated listing and regulatory requirements. All costs of the Berg
Aukas feasibility study have been capitalised. The Directors do not recommend payment of a dividend (2014: nil).
Going concern
In common with many exploration and development companies, the Company raises finance for its activities in discrete
tranches. The Group and the Company has not generated revenues from operations. As such, the Group’s and
Company’s ability to continue to adopt the going concern assumptions will depend upon a number of matters including
future successful capital raisings for necessary funding or loans from third parties.
In order to continue to meet the Group’s working capital needs, loan repayments and development plans further funding
will be required. In the event that the Company is unable to secure further finance either through third parties or capital
raising, it may not be able to fully develop its projects or meet its working capital requirements. In the absence of such
further financing opportunities being successful, there exists a material uncertainty that may cast significant doubt on the
entity’s ability to continue as a going concern, and therefore, it may be unable to realise it’s assets and discharge its
liabilities in the ordinary course of business.
Post reporting date events
No matters or circumstances have arisen since the end of the period to the date of signature of these financial
statements which significantly affected or may significantly affect the operations of the Group or Company, the results of
those operations or the state of affairs of the Group or Company in future financial years.
Directors
The Directors who served during the year ended 31 December 2015 and up to the date of signing the financial
statements were as follows:
Cungen Ding
Roderick Webster
John Bryant
Frank Lewis
Li Ming
James Richards
Jingbin Tian
Wuming Wang
Non Executive Chairman
Chief Executive Officer
(Resigned 16 November 2015)
All directors except Roderick Webster were non executives.
Directors' indemnities
China Africa Resources plc maintained liability insurance for its Directors and officers during the period and also as at the
date of the report of the Directors. This Group cover extends to and includes the Directors and officers of the subsidiary
Company.
Financial instruments
The financial risk management policies and objectives are set out in detail in Note 23 of the financial statements.
________________________________________________________________________________________________
5
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
Information on exposure to risks
Price and cash flow risks are discussed in the Strategic report on page 3, while credit and liquidity risks are covered in
note 23.
Statement as to disclosure of information to auditors
The Directors who were in office on the date of approval of these financial statements have confirmed, as far as they are
aware, that there is no relevant audit information of which the auditors are unaware. Each of the Directors have
confirmed that they have taken all the steps that they ought to have taken as Directors in order to make themselves
aware of any relevant audit information and to establish that it has been communicated to the auditor.
Auditors
BDO LLP have expressed their willingness to continue in office and a resolution to re-appoint them as auditors will be
proposed at the next annual general meeting.
By order of the Board
Rod Webster
Director
6 May 2016
________________________________________________________________________________________________
6
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
Directors’ Remuneration Report
The Group remunerate the Directors at a level commensurate with the size of the Group and the experience of its
Directors. Only the two Independent Non–Executive Directors are remunerated directly by China Africa Resources Plc as
the other Directors are all remunerated directly by the company that nominated them to the Board of Directors. However
as the Group grows it will be necessary to recruit senior management and the Remuneration Committee will review the
Directors’ remuneration and that of senior management to ensure that it upholds the objectives of the Group with regard
to this issue. Details of Directors’ emoluments and of payments made for professional services rendered are set out
below:
2015
Frank Lewis
James Richards
Fees
US$'000
Other
Benefits
US$'000
Total
US$'000
40
40
80
-
-
-
40
40
80
2014
Frank Lewis
James Richards
Fees
US$'000
Other
Benefits
US$'000
Total
US$'000
49
49
98
-
-
-
49
49
98
On behalf of the Remuneration Committee
James Richards
Non Executive Director
6 May 2016
________________________________________________________________________________________________
7
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
Corporate governance
Introduction
The Board of Directors is committed to high standards of corporate governance.
The Board is accountable to its shareholders for good governance, and the statement below is based on the review of
corporate governance that was carried out prior to the listing of the Company on AIM and as reviewed by the Audit
Committee and describes how the principles of good governance have been applied. Due to the size and nature of its
operations the Group does not seek to comply with the provisions of the UK Corporate Governance Code in its entirety.
Constitution of the Board
During the year there were two Board meetings, two Audit Committee Meetings and no Remuneration Committee
meetings or Nomination Committee meetings. Attendance at the Board meetings is shown below.
The Directors’ attendance was as follows:
Number of meetings
Cungen Ding
Roderick Webster
John Bryant
Frank Lewis
Li Ming
James Richards
Jingbin Tian
Wuming Wang
Committees of the Board
Non Executive Chairman (2/2)
(1/2)
Chief Executive Officer
(2/2)
(2/2)
(1/2)
(2/2)
(1/2)
(1/2)
Senior Independent
The Audit Committee is made up of Frank Lewis (Chairman), John Bryant, James Richards and Cungen Ding.
Attendance was as follows:
Frank Lewis
John Bryant
Cungen Ding
James Richards
Chairman
Number of meetings
(2/2)
(2/2)
(2/2)
(2/2)
The Audit Committee meets as required. It reviews the financial reports and accounts and the preliminary and interim
statements, including the Board’s statement on internal financial control in the annual report, prior to their submission to
the Board for approval. The Audit Committee also reviews corporate governance within the Group and reports on this to
the Board. In addition, it assesses the overall performance of the external auditor including scope, cost effectiveness and
objectivity of the audit.
The Audit Committee is also charged with reviewing the independence of the external auditor and monitors the level of
non-audit fees. These fees are disclosed in note 7. In the opinion of the Audit Committee, which has reviewed these fees
and the procedures that BDO have in place to ensure they retain their independence, the auditor’s independence is not
compromised. The Committee met twice in 2015 to perform its functions in respect of the review of the Report and
Accounts.
The Audit Committee can meet for private discussion with the external auditor, who attends its meetings as required.
The Company Secretary acts as secretary to the committee.
The Remuneration Committee is made up of James Richards (Chairman), Frank Lewis and John Bryant. Jingbin Tian
served until his resignation from the Board on 16 November 2015.
The Remuneration Committee did not meet in 2015. It should be noted that the Board has determined the remuneration
of the Independent Non-Executive Directors. All the other Directors do not receive any direct remuneration from the
Company but are paid by the company that nominated them to the Board. In the future as the Company develops the
Remuneration Committee will determine on behalf of the Board, the Group’s policy on executive remuneration and the
remuneration packages for executive Directors. It would also approve and administer any executive share option scheme
and the grant of options as part of a remuneration package.
________________________________________________________________________________________________
8
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
The Nominations Committee is made up of Wuming Wang (Chairman), James Richards and Frank Lewis and did not
meet during the period under review.
Internal control
The Board is responsible for reviewing and approving the adequacy and effectiveness of the Group’s internal controls,
including financial and operational control, risk management and compliance.
The key elements of the Group’s internal control are set out in the Accounting Procedures Manual and the Board
Protocol and contain:
a clearly defined structure for the Group, its subsidiaries and management teams;
powers which the Board has reserved for itself. These include the approval of all business plans and budgets
for the Group and its subsidiary, the establishment of subsidiary companies and appointment of Directors to
them, and the process for project approval and capital expenditure;
terms of reference for the Audit, Remuneration and Nominations Committees, which define the roles of their
members;
information about how often the Board should meet (as a minimum) and an annual cycle of meetings. This
covers the process for the preparation of Board agendas and, Board papers and their prior consideration by the
Management team at its weekly meetings;
detailed business plans and budgets to be approved annually and performance monitored by the Management
team and Board at its meetings, which occur on a quarterly basis; and
procedures for the approval of expenditure, the levels of authority and the management controls.
The Directors acknowledge their responsibility for the Group’s system of internal financial control and risk management,
and place considerable importance on maintaining this. The Manual of Internal Control and the process for authorisation
that it imposes, together with the Board Protocol setting out the process for authorising business plans, budgets and
projects, form an important part of our decision making process; however, this can only provide reasonable and not
absolute assurance against material errors, losses or fraud.
There is currently no internal audit function within the Group owing to the small size of the administrative function.
However, there is a high level of review by Directors and a clear requirement for them to authorise transactions. Should
the need for a separate internal audit function become apparent, the Board will establish one.
The Board Protocol and the Accounting Procedures Manual have both been updated and refined as China Africa
Resources Plc business evolves and grows.
Bribery Act
At its Board Meeting on 16 May 2011 the Company adopted a Policy for Compliance with the Bribery Act 2010 together
with a set of Management Procedures; these were reviewed by the Audit Committee at its meetings in March 2015.
Relations with shareholders
The Company endeavours to maintain communication with shareholders through regulatory announcements, via the
Company’s website and by direct contact with its major shareholders. The Board values the views of its shareholders
and fosters continuing dialogue with investment and fund managers, other investors and equity analysts to ensure that
the investing community receives an informed view of the Group’s prospects, plans and progress.
________________________________________________________________________________________________
9
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
Directors’ responsibilities
The Directors are responsible for preparing the strategic report and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors
have elected to prepare the Group and Company financial statements in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European Union. Under company law the Directors must not approve
the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group
and Company and of the profit or loss of the Group and Company for that period. The Directors are also required to
prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities
on the Alternative Investment Market.
In preparing these financial statements, the Directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether they have been prepared in accordance with IFRSs as adopted by the European Union, subject
to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and
enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are
also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
Website publication
The Directors are responsible for ensuring the annual report and the financial statements are made available on a
website. Financial statements are published on the Company's website in accordance with legislation in the United
Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other
jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The
Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.
________________________________________________________________________________________________
10
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
Independent Auditor’s Report to the Members of China Africa Resources plc
We have audited the financial statements of China Africa Resources Plc for the year ended 31 December 2015 which
comprise the consolidated income statement, the consolidated statement of comprehensive income, the consolidated
and Company statement of financial position, the consolidated and Company statement of changes in equity, the
consolidated and Company cash flow statements and the related notes. The financial reporting framework that has been
applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the
European Union and as regards the parent company financial statements, as applied in accordance with the provisions
of the Companies Act 2006.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the company and the Company’s members as a
body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of Directors and auditors
As explained more fully in the statement of Directors’ responsibilities, the Directors are responsible for the preparation of
the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and
express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing
(UK and Ireland). Those standards require us to comply with the Financial Reporting Council’s (FRC’s) Ethical
Standards for Auditors.
Scope of the audit of the financial statements
A description of
www.frc.org.uk/auditscope/private.cfm.
the scope of an audit of
financial statements
is provided on
the FRC’s website at
Opinion on financial statements
In our opinion:
the financial statements give a true and fair view of the state of the Group’s and the parent company’s affairs as at
31 December 2015 and of the Group’s loss for the year then ended;
the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European
Union;
the parent Company’s financial statements have been properly prepared in accordance with IFRS’S as adopted by
the European Union and as applied in accordance with the provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Emphasis of matter – Going concern
In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the
disclosures made in note 3 to the financial statements concerning the Group’s and the Company’s ability to continue as a
going concern. The Directors note that additional funds need to be raised either through equity raisings or other financial
arrangements. This cannot be guaranteed and there are no legally binding agreements in place relating to the raising of
additional funds. These circumstances indicate the existence of a material uncertainty, which may cast significant doubt
on the Group and the Company’s ability to continue as a going concern. The financial statements do not include the
adjustments that would result if the Company were unable to continue as a going concern.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and Directors’ Report for the financial year for which the
financial statements are prepared is consistent with the financial statements.
________________________________________________________________________________________________
11
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you
if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not
been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of Directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Scott Knight (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
London, United Kingdom
6 May 2016
BDO LLP is a limited liability partnership registered in England and Wales (with registered number
OC305127).
________________________________________________________________________________________________
12
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
Consolidated income statement
For the year ended 31 December 2015
Year
ended
31 December
2015
US$'000
Year
ended
31 December
2014
US$'000
(546)
(546)
(16)
(562)
(784)
(784)
(49)
(833)
-
-
(562)
(833)
Year
ended
31 December
2015
Year
ended
31 December
2014
(2.44c)
(3.61c)
Note
6
10
11
Administrative expenses
Operating loss
Finance cost
Loss for the year before taxation
Tax expense
Loss for the year attributable to the equity
holders of the parent
Loss per share expressed in US cents
Basic and diluted attributable to the equity
holders of the parent
12
All amounts relate to continuing activities during the period.
The notes on pages 18 to 37 form part of these financial statements.
________________________________________________________________________________________________
13
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
Consolidated statement of comprehensive income
For the year ended 31 December 2015
Loss for the year attributable to the equity
holders of the parent
Items that may be reclassified to profit and
loss
Exchange differences on translation of foreign
operations
Total comprehensive loss for the year
attributable to equity holders of the parent
Year
ended
31 December
2015
US$'000
Year
ended
31 December
2014
US$'000
(Restated)
(562)
(833)
(1,351)
(504)
(1,913)
(1,337)
The notes on pages 18 to 37 form part of these financial statements.
________________________________________________________________________________________________
14
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
Consolidated and Company statements of financial position
As at 31 December 2015
Group
as at
31 December
2015
US$'000
Group
as at
31 December
2014
US$'000
(Restated)
Group
as at
1 January
2014
US$'000
(Restated)
Company
as at
31 December
2015
Company
as at
31 December
2014
US$'000
US$'000
Assets
Non-current assets
Intangible assets
Property, plant and
equipment
Investment in subsidiary
Loans to subsidiaries
Total non-current assets
Current assets
Trade and other
receivables
Cash and cash
equivalents
Not
e
13
14
15
16
17
18
Total assets
Current liabilities
Trade and other payables
Loans
19
20
Total liabilities
Net assets
Equity
21
Share capital
Share premium
Merger relief reserve
Foreign exchange reserve
Retained deficit
Equity attributable to
shareholders of the parent
company
-
-
3,567
-
3,567
17
645
662
-
-
4,156
4,789
8,945
18
1,105
1,123
4,229
10,068
(68)
(200)
(268)
(178)
-
(178)
3,137
4,474
4,940
3
-
-
9
-
-
14
-
-
3,140
4,483
4,954
24
1,151
1,175
5,658
(178)
-
(178)
77
1,922
1,999
6,953
(136)
-
(136)
22
675
697
3,837
(70)
(200)
(270)
3,567
377
6,556
4,052
(3,968)
(3,450)
5,480
6,817
3,961
9,890
377
6,556
4,052
(2,617)
(2,888)
377
6,607
4,052
(2,113)
(2,106)
377
6,556
4,052
-
(7,024)
377
6,556
4,052
-
(1,095)
3,567
5,480
6,817
3,961
9,890
The financial statements were approved by the Board on 6 May 2016 and signed on behalf of the Board by:
R J Webster
Chief Executive Officer
The notes on pages 18 to 37 form part of these financial statements.
________________________________________________________________________________________________
15
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
Consolidated and Company statements of changes in equity
For the year ended 31 December 2015
The Group
Balance at 31 December 2013
Prior year adjustment
Share
capital
Share
premium
Merger
relief
reserve
Foreign
exchange
reserve
Retained
deficit
Total
US$'000 US$'000
US$'000
US$'000 US$'000 US$'000
377
-
6,607
-
4,052
-
(724)
(1,389)
(2,106)
-
8,206
(1,389)
Balance at 31 December 2013 (Restated)
377
6,607
4,052
(2,113)
(2,106)
6,817
Loss for the period
Other comprehensive income
Exchange differences on translation of
foreign operations (Restated)
-
-
-
-
-
-
-
(833)
(833)
(504)
-
(504)
Total Comprehensive income
377
6,607
4,052
(2,617)
(2,939)
5,480
Share based payments
-
(51)
-
-
51
-
Balance at 31 December 2014 (Restated)
Loss for the period
377
-
6,556
-
4,052
-
(2,617)
-
(2,888)
(562)
5,480
(562)
Other comprehensive income
Exchange differences on translation of
foreign operations
-
-
-
(1,351)
-
(1,351)
Balance at 31 December 2015
377
6,556
4,052
(3,968)
(3,450)
3,567
The Company
Balance at 31 December 2013
Loss for the period
Total Comprehensive income
Share based payments
Balance at 31 December 2014
Loss for the period
377
-
6,607
-
4,052
-
377
6,607
4,052
-
(51)
-
377
-
6,556
-
4,052
-
-
-
-
-
-
-
(1,060)
9,976
(86)
(86)
(1,146)
9,890
51
-
(1,095)
9,890
(5,929)
(5,929)
Balance at 31 December 2015
377
6,556
4,052
-
(7,024)
3,961
The following describes the nature and purpose of each reserve within owners’ equity
Reserve
Share capital
Share premium
Merger relief reserve
Foreign exchange reserve
Retained deficit
Description and purpose
Nominal value of shares issued.
Amount subscribed for share capital in excess of nominal value.
Reserve created on issue of shares on acquisition of its subsidiary in accordance
with Companies Act 2006 provisions.
Cumulative translation differences of net assets of subsidiary.
Cumulative net gains and losses recognised in the consolidated statement of
comprehensive income.
The notes on pages 18 to 37 form part of these financial statements.
________________________________________________________________________________________________
16
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
Consolidated and Company cash flow statements
For the year ended 31 December 2015
Note
s
14
Cash flows from operating activities
Loss for the year
Adjusted by:
Depreciation
Unrealised exchange losses
Impairment of loans to subsidiaries
Non cash items within loans to subsidiary
company
Movements in working capital
Decrease in trade and other receivables
(Decrease) / increase in trade and other
payables
17
19
Group
Year
ended
31 December
2015
US$'000
Group
Year
ended
31 December
2014
US$'000
Company
Year
ended
31 December
2015
US$'000
Company
Year
ended
31 December
2014
US$'000
(562)
(833)
(5,929)
4
(33)
-
-
(591)
2
(120)
4
(47)
-
-
(876)
53
42
-
(37)
588
4,789
(589)
2
(110)
(86)
-
(37)
-
(736)
(859)
54
47
Net cash used in operating activities
(709)
(781)
(697)
(758)
Cash flows used in investing activities
Payments for evaluation of feasibility studies
Net cash used in investing activities
Cash flows used in financing activities
Receipt of loans
Net cash inflow from financing activities
-
-
200
200
(37)
(37)
-
-
-
200
200
-
-
-
Decrease in cash
(509)
(818)
(497)
(758)
Reconciliation to net cash
Opening cash balance
Decrease in cash
Foreign exchange movements
1,151
(509)
33
1,922
(818)
47
1,105
(497)
37
1,826
(758)
37
Cash and cash equivalents at year end
18
675
1,151
645
1,105
The notes on pages 18 to 37 form part of these financial statements.
________________________________________________________________________________________________
17
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
Notes to the consolidated financial statements
For the 12 month year ended 31 December 2015
1. NATURE OF OPERATIONS AND GENERAL INFORMATION
China Africa Resources plc and subsidiary (“the Group's”) principal activities include exploration and evaluation of mining
assets.
China Africa Resources plc is incorporated and domiciled in England. The address of China Africa Resources plc's
registered office, which is also its principal place of business, is 180 Piccadilly, London W1J 9HF. China Africa
Resources plc's shares are listed on the Alternative Investment Market of the London Stock Exchange.
China Africa Resources plc’s financial statements are presented in United States dollars (US$), which is also the
functional currency of the parent company.
These consolidated financial statements were approved for issue by the Board of Directors on 6 May 2016.
2. STANDARDS AND INTERPRETATIONS NOT YET APPLIED BY THE GROUP
2.1 Overall considerations
The company has adopted the new interpretations, revisions and amendments to IFRS issued by the International
Accounting Standards Board.
The adoption had no significant effects on current, prior or future periods due to the first-time application of these new
requirements in respect of presentation, recognition and measurement. An overview of relevant new standards,
amendments and interpretations to IFRS's issued but not yet effective is given in note 2.2.
2.2 Standards, amendments and interpretations to existing standards that are not yet effective and have not
been adopted early by the company
At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to
existing standards have been published but are not yet effective, and have not been adopted early by the Group.
Management anticipates 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 new standards and interpretations are not expected
to have a material impact on the Group's financial statements.
Financial Instruments (effective 1 January 2018) (not yet EU adopted)
IFRS 9
IFRS 5 Non Current assets held for resale and discontinued operations (effective 1 January 2016)
IFRS 10 The narrow-scope amendments to IFRS 10 Consolidates Financial Statements (effective 1 January
2016)
IFRS 11 Amendments to Joint Arrangements (effective 1 January 2016)
IFRS 12 Amendments to Disclosure of Interest in Other Entities (effective 1 January 2016)
IAS 1 Amendments to Presentation of Financial Statements (effective 1 January 2016)
IAS 16 Amendments to Property, Plant and Equipment (effective 1 January 2016)
IAS19 Amendments to Employee Benefits (effective 1 January 2016)
IAS 27 Amendments to Consolidated and Separate Financial Statements (effective 1 January 2016)
IAS 28 Amendments to Investments in Associates and Joint Ventures (effective 1 January 2016)
IAS 34 Amendments to Interim Financial Reporting (effective 1 January 2016)
IAS 38 Amendments to Intangible Assets (effective 1 January 2016)
________________________________________________________________________________________________
18
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
3. SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as
adopted by the European Union.
Going concern
In common with many exploration and development companies, the Company raises finance for its activities in discrete
tranches. The Group and the Company has not generated revenues from operations. As such, the Group’s and
Company’s ability to continue to adopt the going concern assumptions will depend upon a number of matters including
future successful capital raisings for necessary funding or loans from third parties.
In order to continue to meet the Group’s working capital needs, loan repayments and development plans further funding
will be required either through equity raisings or other financial arrangements. This cannot be guaranteed and there are
no legally binding agreements in place relating to the raising of additional funds. In the event that the Company is unable
to secure further finance it may not be able to fully develop its projects or meet its working capital requirements. In the
absence of such further financing opportunities being successful, there exists a material uncertainty that may cast
significant doubt on the entity’s ability to continue as a going concern, and therefore, it may be unable to realise it’s
assets and discharge its liabilities in the ordinary course of business.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the company and entities controlled by the
company (its subsidiary) made up to 31 December each year. The company controls an investee if all three of the
following elements are present: power over the investee, exposure to variable returns from the investee and the ability of
the investor to use its power to affect those variable returns.
The results of acquired operations are included in the consolidated statement of comprehensive income from the date on
which control is obtained. They are deconsolidated from the date on which control ceases.
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, balances, income and expenses and intra-Group unrealised profits and losses are
eliminated on consolidation.
Intangible assets
Exploration and evaluation costs
Exploration and evaluation expenditure in relation to each separate area of interest are recognised as an exploration and
evaluation asset in the period in which they are incurred where the following conditions are satisfied:
(i)
the rights to tenure of the area of interest are current; and
(ii) at least one of the following conditions must also be met:
(a) The exploration and evaluation expenditures are expected to be recouped through successful development and
exploration of the area of interest, or alternatively, by its sale, or
(b) Exploration and evaluation activities in the area of interest have not, at the reporting date, reached a stage
which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves,
and active and significant operations in, or in relation to, the area of interest are continuing.
Exploration and evaluation assets are initially measured at cost and include the acquisition of rights to explore, studies,
exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation and amortisation
of assets used in exploration and evaluation activities. General, administrative and any share based payment costs are
only included in the measurement of exploration and evaluation costs where they are related directly to exploration and
evaluation activities in a particular area of interest.
Exploration expenditure is transferred to property, plant and equipment upon achieving a bankable feasibility study. An
impairment test is required prior to transfer to property, plant and equipment.
________________________________________________________________________________________________
19
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
Property, plant and equipment
Property, plant and equipment are recorded at cost, net of accumulated depreciation and any provision for impairment.
Depreciation is provided using the straight-line method to write off the cost of the asset less any residual value over its
useful economic life as follows:
Plant and machinery
3 to 15 years
Impairment of intangible assets
At each reporting date, the Group reviews its intangible assets to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated
in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are
independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the
asset belongs.
The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash
flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is
recognised as an expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to
the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in
prior years. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at
a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
Foreign currency translation
The individual financial statements of each Group company are presented in the currency of the primary economic
environment in which it operates (its functional currency). For the purpose of the consolidated financial statements, the
results and financial position of each Group company are expressed in US dollars, which is the functional currency of the
company and the presentation currency for the consolidated financial statements.
In preparing the financial statements of the individual companies, transactions in currencies other than the entity’s
functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions.
At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the
rates prevailing on the reporting date. Non-monetary items carried at fair value that are denominated in foreign
currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that
are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences arising, if any,
are recognised in profit or loss except for:
exchange differences which relate to assets under construction for future productive use, which are included in
the cost of those assets when they are regarded as an adjustment to interest costs on foreign currency
borrowings;
Exchange differences recognised in the profit or loss in the Group entities’ separate financial statements on the
translation of long-term monetary items forming part of the Group’s net investment in the overseas operation concerned
are reclassified to other comprehensive income and accumulated in the foreign exchange reserve on consolidation.
On consolidation, exchange differences arising from the translation of the net investment in foreign entities are
recognised in other comprehensive income and accumulated in the Group’s foreign currency translation reserve. On
disposal of a foreign operation, the cumulative amount of exchange differences relating to that operation is reclassified
from equity to profit or loss.
________________________________________________________________________________________________
20
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
Taxes
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable result for the period. Taxable profit differs from net profit as reported profit
or loss because it excludes items of income or expense that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that
have been enacted or substantively enacted by the reporting date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is
accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable
temporary differences, and deferred tax assets are recognised to the extent that it is probable that taxable profits will be
available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the
accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and
associates, and interest in joint ventures, except where the Group is able to control the reversal of the temporary
difference and it is expected that the temporary difference will not reverse in the foreseeable future. In addition, tax
losses available to be carried forward as well as other tax credits to the Group are assessed for recognition as deferred
tax assets.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset
is realised. Deferred tax is charged or credited in profit or loss, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also dealt with in equity. Tax relating to items recognised in other
comprehensive income is recognised in other comprehensive income.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to taxes levied by the same taxation authority and the Group intends to settle
its current tax assets and liabilities on a net basis.
Financial instruments, assets and liabilities
The Group uses financial instruments comprising cash, loans to subsidiaries, trade receivables and trade payables that
arise from its operations.
Financial assets
The only financial assets currently held by the Group are classified as loans and receivables and cash and cash
equivalents. These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market. They are initially recognised at fair value plus transaction costs that are directly attributable to their
acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less
provision for impairment.
Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the
part of the counterparty or default or significant delay in payment) that the Group will be unable to collect all of the
amounts due under the terms receivable, the amount of such a provision being the difference between the net carrying
amount and the present value of the future expected cash flows associated with the impaired receivable. For receivables,
which are reported net, such provisions are recorded in a separate allowance account with the loss being recognised
within administrative expenses in the consolidated statement of comprehensive income. On confirmation that the
receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.
Loans and receivables comprise trade and other receivables and cash and cash equivalents in the statement of financial
position.
Included within loans and receivables are cash and cash equivalents which include cash in hand and other short term
highly liquid investments with a maturity of three months or less. Any interest earned is accrued monthly and classified as
interest. Short term deposits comprise deposits made for varying periods of between one day and three months.
For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as
defined above.
________________________________________________________________________________________________
21
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire; or it
transfers the asset and substantially all the risk and rewards of ownership of the asset to another entity.
Financial liabilities
Trade payables and other short-term monetary liabilities are all classified as other financial liabilities. At present, the
Group does not have any liabilities classified as fair value through profit or loss.
Trade payables and other short-term monetary liabilities, are initially recognised at fair value and subsequently carried at
amortised cost using the effective interest method. All interest and other borrowing costs incurred in connection with the
above are expensed as incurred and reported as part of financing costs in the consolidated statement of comprehensive
income.
Derecognition of Financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or
they expire.
Investment in Subsidiaries
In its separate financial statements the Company recognises its investments in subsidiaries at cost, less any provision for
impairment. The cost of acquisition includes directly attributable professional fees and other expenses incurred in
connection with the acquisition. It also includes share based payments issued to employees of the Company for services
provided to subsidiaries.
Finance Income
Finance income is recognised as interest accrues using the effective interest method.
Loans
Loans are recognised when the Group becomes a party to the contractual provisions of the instrument and are
recognised at fair value plus transaction costs.
Merger Relief
The difference between the fair value of an acquisition and the nominal value of the shares allotted in a share exchange
has been credited to a merger relief reserve account, in accordance with the merger relief provisions of the Companies
Act 2006 and accordingly no share premium for such transactions has been setup.
________________________________________________________________________________________________
22
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
4. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Group’s accounting policies, described in note 3, the Directors are required to make judgments,
estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on historical experience and other factors that are
considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the
revision and future periods if the revision affects both current and future periods.
Critical judgment in applying the Group’s accounting policies
The following are the critical judgments that the Directors have made in the process of applying the Group’s accounting
policies and that have the most significant effect on the amounts recognised in financial statements.
Impairment of intangibles
The Group determines whether intangibles are impaired when facts and circumstances suggest that the carrying amount
may exceed its recoverable amount. Such indicators include the point at which a determination is made as to whether or
not a commercial reserve exists. The carrying amount of intangibles at 31 December 2015 was US$3.1 million, (2014-
US$4.5 million) - refer to note 13. At the end of the year the Directors impaired the inter company loans to subsidiaries in
order to address the disparity between the Group and Company net assets.
Prior year adjustment
In preparing the financial statements for the year ended 31 December 2015, the Directors have identified that the fair
value uplift of $4.1m attributable to the mining license at Group level should be considered to have the same functional
currency as the entity which benefits from the license. The prior year financial statements have therefore been amended
to reflect the required accounting. This has resulted in a decrease of US$1.6m in the carrying value of the consolidated
exploration and evaluation assets previously reported for the period ended 31 December 2014 with the other side of the
adjustment being to the foreign exchange reserve for the same amount.
________________________________________________________________________________________________
23
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
5. OPERATING SEGMENTS
Operating segments are reported in a manner consistent with the internal reporting provided to the Board, who are
responsible for allocating resources and assessing performance of the operating segment.
The Group had no operating revenue during the year.
The Group currently has one operating segment, the Mining segment. This segment is currently engaged in the
evaluation of the Berg Aukas Mine in Namibia.
There is only one segment, therefore all IFRS 8 disclosures are incorporated within other notes to the accounts.
6. OPERATING LOSS
This is stated after charging:
Staff costs (note 8)
Auditor's remuneration (note 7)
Depreciation (note 14)
Management fee
7. AUDITOR’S REMUNERATION
Remuneration receivable by the company's auditors for the audit of
these accounts
Fees payable to the company's auditor and its associates
for other services:
Remuneration receivable by associates of the company's auditors for
the audit of subsidiary accounts
Total remuneration
Year ended
31 December
2015
US$'000
Year ended
31 December
2014
US$'000
86
32
4
270
108
51
4
360
Year ended
31 December
2015
US$'000
Year ended
31 December
2014
US$'000
30
47
2
32
4
51
8. EMPLOYEES AND KEY MANAGEMENT
The total Directors’ emoluments for the year were US$80,000 (2014- US$98,000) and social security payments were
US$6,000 (2014 – US$10,000). Those of the highest paid director were US$40,000 (2014 - US$49,000). Detailed
disclosure of Directors’ remuneration is disclosed in the Directors’ remuneration report on page 7.
The Group averaged 8 (2014 - 8) employees during the year ended 31 December 2015.
Key management personnel as defined under IAS 24 have been identified as the Board of Directors.
________________________________________________________________________________________________
24
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
9. LOSS FOR THE FINANCIAL YEAR
The Company has taken advantage of Section 408 of the Companies Act 2006 and has not included its own statement
of comprehensive income in these financial statements. The Company’s loss for the year was US$5,929,000 (2014- loss
of US$85,000.)
10. FINANCE COSTS
Finance Costs
Exchange losses
Total finance costs
Year ended
31 December
2015
US$'000
Year ended
31 December
2014
US$'000
(16)
(16)
(49)
(49)
________________________________________________________________________________________________
25
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
11. TAX EXPENSE
Current tax:
UK corporation tax on the result for the year
Total current taxation
Deferred taxation
Taxation
Differences explained below:
Loss before tax
Loss before tax multiplied by the standard CT rate 20.25% (2014:
21.49%)
Effect of:
Differences in local tax rates
Tax losses for future utilisation
Other short term timing differences
Tax charge for the year
Unrecognised deferred tax provision
Short term timing differences
Tax losses UK
Tax losses Namibia
Year ended
31 December
2015
US$'000
Year ended
31 December
2014
US$'000
-
-
-
-
-
-
-
-
(562)
(833)
(114)
(179)
(376)
212
278
(186)
199
166
-
-
(816)
(187)
(508)
(429)
(189)
(78)
(1,511)
(696)
The deferred tax assets are currently unrecognised as the likelihood of sufficient future taxable profits does not yet meet
the definition of “probable”.
The unrecognised deferred tax asset has no expiry period.
The estimated value of the potential deferred tax asset in respect of losses was measured using an expected tax rate of
20% and 37.5% for the UK and Namibian tax losses respectively (2014: 20%, 37.5%).
________________________________________________________________________________________________
26
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
12. LOSS PER SHARE
The calculation of basic and diluted loss per ordinary share is based on the following data:
Year ended
31 December
2015
Year ended
31 December
2014
Basic and diluted loss per share (US cents)
(2.44c)
(3.61c)
Weighted average number of shares for basic and diluted loss per
share
23,076,924
23,076,924
The basic and diluted earnings per share have been calculated using the loss attributable to shareholders of the parent
company, China Africa Resources plc, of US$562,000 (2014: US$833,000) as the numerator, i.e. no adjustment to loss
was necessary. The basic and dilutive loss per share are the same as the Group made a loss in the year.
________________________________________________________________________________________________
27
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
13. INTANGIBLE ASSETS
Cost
At 1 January 2014
Restatememt of opening balance for exchange
movements
At 1 January 2014
Additions
Exchange adjustment
Group
Mining
Licenses
US$'000
(Restated)
Group
Evaluation
Costs
US$'000
Group
Total
US$'000
(Restated)
4,156
2,173
6,329
(1,389)
-
(1,389)
2,767
-
(256)
2,173
65
(275)
4,940
65
(531)
At 31 December 2014
2,511
1,963
4,474
Net book value at 31 December 2014 (restated)
Net book value at 31 December 2013 (restated)
2,511
2,767
1,963
2,173
4,474
4,940
Cost
At 1 January 2015
Additions
Exchange adjustment
2,511
-
(642)
1,963
-
(695)
4,474
-
(1,337)
At 31 December 2015
1,869
1,268
3,137
Net book value at 31 December 2015
Net book value at 31 December 2014 (restated)
1,869
2,511
1,268
1,963
3,137
4,474
The mining licenses and evaluation costs relate to the Berg Aukas mine in Namibia.
In preparing the financial statements for the year ended 31 December 2015, the Directors have identified that the fair
value uplift of US$4.1m attributable to the mining license at Group level should be considered to have the same
functional currency (Namibian dollars) as the entity which benefits from the license. The prior year financial statements
have therefore been amended to reflect the required accounting. This has resulted in a decrease of US$1.6m in the
carrying value of the consolidated exploration and evaluation assets previously reported for the period ended 31
December 2014 with the other side of the adjustment being to the foreign exchange reserve for the same amount.
________________________________________________________________________________________________
28
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
14. PROPERTY PLANT AND EQUIPMENT
Cost
At 1 January 2014
Exchange adjustment
At 31 December 2014
Depreciation
At 1 January 2014
Charge for the year for depreciation
Exchange adjustment
At 31 December 2014
Net book value at 31 December 2014
Net book value at 31 December 2013
Cost
At 1 January 2015
Exchange adjustment
At 31 December 2015
Depreciation
At 1 January 2015
Charge for the year for depreciation
Exchange adjustment
At 31 December 2015
Net book value at 31 December 2015
Net book value at 31 December 2014
Group
US$'000
23
(2)
21
9
4
(1)
12
9
14
21
(6)
15
12
4
(4)
12
3
9
All property plant and equipment can be classified as mobile plant.
________________________________________________________________________________________________
29
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
15. INVESTMENT IN SUBSIDARY
China Africa Resources Namibia (pty) Ltd
Opening balance
Impairment
Company
as at
31 December
2015
US$'000
Company
as at
31 December
2014
US$'000
4,156
(589)
4,156
-
3,567
4,156
China Africa Resources Namibia (pty) Ltd is 100% owned by China Africa Resources plc and is incorporated in the
Republic of Namibia.
On 1 August 2011 the Group acquired 100% of the voting equity instruments of China Africa Resources Namibia (pty)
Ltd a company whose principal activity is exploration and evaluation of mining assets in Namibia. The company was
acquired by the issuing of 6,326,923 ordinary 1p shares at a price of 40p being the price on the date of acquisition. The
acquisition price was converted to US dollars at an exchange rate of 1.642. The principal reason for this acquisition was
to develop the Berg Aukas Mine in Namibia.
The impairment recorded within the year has been charged to the company’s income statement. An impairment provision
was considered appropriate given the disparity between the Group and Company Net Assets.
16. LOANS TO SUBSIDARIES
China Africa Resources Namibia (pty) Ltd
Company
as at
31 December
2015
US$'000
Company
as at
31 December
2014
US$'000
-
-
4,789
4,789
The intercompany loan is was fully impaired in the year in order to address the disparity between the Group and
Company Net Assets. The loan remains repayable in November 2018 and is unsecured. The loan attracts interest of
US$ 12 month libor +2%.
17. TRADE AND OTHER RECEIVABLES
Prepayments
Sales Taxes
Group
as at
31 December
2015
US$'000
Group
as at
31 December
2014
US$'000
Company
as at
31 December
2015
US$'000
Company
as at
31 December
2014
US$'000
12
10
22
12
12
24
12
5
17
12
6
18
________________________________________________________________________________________________
30
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
18. CASH AND CASH EQUIVALENTS
Group
as at
31 December
2015
US$'000
Group
as at
31 December
2014
US$'000
Company
as at
31 December
2015
US$'000
Company
as at
31 December
2014
US$'000
Cash and short term deposits
675
1,151
645
1,105
19. TRADE AND OTHER PAYABLES - CURRENT
Group
as at
31 December
2015
US$'000
Group
as at
31 December
2014
US$'000
Company
as at
31 December
2015
US$'000
Company
as at
31 December
2014
US$'000
Trade payables
Other payables and accruals
34
36
70
136
42
178
34
34
68
136
42
178
Trade and other payables are non interest bearing and normally settled in the month following date of invoice.
20. LOANS
Group
as at
31 December
2015
US$'000
Group
as at
31 December
2014
US$'000
Company
as at
31 December
2015
US$'000
Company
as at
31 December
2014
US$'000
Total loans
Short term portion of loan
200
(200)
Long term portion of loans
-
-
-
-
200
(200)
-
-
-
-
The loan from the Group’s parent HK ECE, is unsecured and bears interest at 12 month libor and is repayable on 30
June 2016.
________________________________________________________________________________________________
31
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
21. SHARE CAPITAL
Allotted, called up and fully paid
Ordinary shares of 0.1p converted at an
exchange rate of £:USD 1.642, except for
the share capital at incorporation, which was
converted at an exchange rate of £:USD
1.6032
31 December
2015
US$
31 December
2014
US$
31 December
2015
£
31 December
2014
£
377,001
377,001
230,769
230,769
31 December
2015
31 December
2014
Number of ordinary 0.1p shares in issue
23,076,924
23,076,924
22. CAPITAL AND CONTRACTUAL COMMITMENTS
There were no capital or contractual commitments at 31 December 2015 (2014- nil.).
23. FINANCIAL INSTRUMENTS
Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset,
financial liability and equity instrument, are disclosed in note 3.
The only financial assets currently held by the Group are classified as loans and receivables and cash and cash
equivalents.
Categories of financial instruments
The carrying amounts presented in the statement of financial position relate to the following categories of assets and
liabilities.
Carrying value
Carrying value
Group
as at
31 December
2015
US$'000
Group
as at
31 December
2014
US$'000
Company
as at
31 December
2015
US$'000
Company
as at
31 December
2014
US$'000
-
10
675
-
12
1,151
-
5
645
4,789
6
1,105
685
1,163
650
5,900
(70)
(200)
(178)
-
(68)
(200)
(178)
-
Financial assets
Current
Loans and receivables
Intercompany receivables
Trade and other receivables
Cash and cash equivalents
Financial liabilities
Current- Amortised cost
Trade and other payables
Loans
________________________________________________________________________________________________
(270)
(178)
(268)
(178)
32
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
As at 31 December 2015 there were no trade receivables that were past due (2014- nil) and all are believed to be
recoverable.
All financial liabilities are repayable within one year.
The fair value is equivalent to book value for current assets and liabilities. Non-current liabilities are discounted at
prevailing interest rates for both the long and short term elements.
The main risks arising from the Group’s financial instruments are liquidity risk, interest rate risk, credit risk and foreign
currency risk. The Directors review and agree policies for managing these risks and these are summarised below.
Liquidity risk
Liquidity risk arises from the Group’s management of working capital. It is the risk that the Group will encounter difficulty
in meeting its financial obligations as they fall due. As noted elsewhere in the financial statements the Group’s short term
loan of $200,000 from its shareholder HK ECE falls due for repayment on 30 June 2016. The Directors are current
assessing the Group’s options in respect of raising additional finance for the business.
The Directors monitor cash flow on a daily basis and at quarterly Board meetings in the context of their expectations for
the business, in order to ensure sufficient liquidity is available to meet foreseeable needs.
Credit risk
The Company monitors the credit risk of its intercompany loan through its management accounts and assesses the
subsidiary’s ability to repay the loans. It also monitors the political risk within Namibia and its effect on the loan’s credit
worthiness. Under existing contractual arrangement loans with subsidiary is repayable in November 2018. Repayment
will be dependent on the mine going into production and repayment terms will be extended if necessary.
Interest rate risk
The Group’s policy is to minimise interest rate cash flow exposures on long term financing. At 31 December 2015, the
Group was exposed to changes in market interest rates through its Parent Company, which are subject to variable
interest rates.
The following table illustrates the sensitivity of the net results for the year and equity to a reasonably possible change in
interest rates of +/-1.0 base points (2014 +/- 1/0 basis points) with effect from the beginning of the year. These changes
are considered to be reasonably possible based on observations of current market conditions. The calculations are
based on the Company’s financial instruments held at each balance sheet date. All other variables are held constant.
Net effect on after tax profits
Equity
2015
US$'000
+1.0
Base
points
2
2
2014
US$'000
+1.0
Base
points
-
-
________________________________________________________________________________________________
33
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
The interest rate profile of the Group’s cash and cash equivalents as at 31 December 2015 was as follows:
As at 31 December 2015
Cash at bank with no interest rate
As at 31 December 2014
Short term deposits with fixed interest rates
Cash at bank with no interest rate
US
Dollars
$'000
545
545
US
Dollars
$'000
650
129
779
Pound
Sterling
$'000
Namibian
Dollars
$'000
100
100
30
30
Pound
Sterling
$'000
Namibian
Dollars
$'000
Total
$'000
675
675
Total
$'000
650
501
-
326
326
-
46
46
1,151
At the reporting date, the cash at bank with fixed interest rate is accruing weighted average interest of 0.0% per annum
(2014: 0.1%). As required by IFRS 7, the Group has estimated the interest rate sensitivity on year end balances and
determined that a one percentage point increase or decrease in the interest rate earned on short term deposits would
have caused a corresponding increase or decrease in net income in the amount of US$ nil (2014: US$6,500).
All cash and short term deposits were held by the Company except the Namibian dollars which were held by the
subsidiary company.
________________________________________________________________________________________________
34
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
23. FINANCIAL INSTRUMENTS (continued)
Foreign currency risk management
The functional currencies of the companies in the Group are US dollars and Namibian dollars. The surplus cash to
operating needs is held in US dollars to limit currency risk against the Group’s functional currency. The Group does not
hedge against the effects of movements in exchange rates, risks are monitored by the Board on a regular basis.
The following table discloses the year end rates applied by the Group for the purposes of producing the financial
statements:
Translation
2015
2014
Year end
Year end
1 GBP – USD
1 USD – NAD
1.48
15.53
1.56
11.56
The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the
reporting date are as follows:
Cash and cash equivalents
Pound Sterling
Namibian Dollars
Group
as at
31 December
2015
US$'000
Group
as at
31 December
2014
US$'000
Company
as at
31 December
2015
US$'000
Company
as at
31 December
2014
US$'000
100
30
130
326
46
372
100
-
100
326
-
326
The following table details the Group’s sensitivity to a 10% increase and decrease in the US dollar against the relevant
foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key Management
personnel and represents Management’s assessment of the reasonably possible change in foreign exchange rates. The
sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation
at the year-end for a 10% change in foreign currency rates. The sensitivity analysis includes external loans as well as
loans to foreign operations within the Group where the denomination of the loan is in a currency other than the currency
of the lender or the borrower. A positive number below indicates an increase in profit and equity where the US dollar
strengthens 10% against the relevant currency. For a 10% weakening of the US dollar against the relevant currency,
there would be an equal and opposite impact on the profit and equity, and the balances below would be negative.
________________________________________________________________________________________________
35
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
British pound
currency impact
Namibian dollar
currency impact
British pound
currency impact
Namibian dollar
currency impact
31 December
2015
US$'000
31 December
2015
US$'000
31 December
2014
US$'000
31 December
2014
US$'000
Effect on loss
+10%
-10%
Effect on equity
+10%
-10%
11
11
11
11
3
3
3
3
33
33
33
33
5
5
5
5
24. EVENTS SUBSEQUENT TO REPORTING DATE
There were no significant subsequent post reporting date events.
25. RELATED PARTY TRANSACTIONS
The controlling party of China Africa Resources plc is East China Mineral Exploration and Development Bureau for Non
Ferrous Metals. The immediate holding company is HK ECE.
31 December
2015
US$'000
31 December
2014
US$'000
Group and Company
The Group and Company had the following transactions with
Weatherly International plc a 25% shareholder of the Group.
Management Fee paid
Trade payables
The Group and Company had the following transactions with
HK ECE a 65% shareholder of the Group.
Loans received during the year
Loans outstanding at the end of the year
Company only
Transactions with China Africa Resources Namibia (pty) Ltd
a wholly owned subsidiary
Management Fee charged
Interest charged
Gross loans receivable
Impairment
270
-
200
200
420
141
5,350
(5,350)
360
(108)
-
-
600
110
4,789
-
Net loans receivable
-
4,789
________________________________________________________________________________________________
36
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
26. CAPITAL MANAGEMENT POLICIES AND PROCEDURES
The Group considers its capital to comprise its ordinary share capital, share premium and accumulated retained losses
as well as loans and reserves (consisting of share based payments reserve, foreign currency translation reserve and
merger relief reserve).
The Group’s objective when maintaining capital is to safeguard the entity's ability to continue as a going concern, so that
it can provide returns for shareholders and benefits for other stakeholders.
The Company meets its capital needs by equity financing and borrowing. The Group sets the amount of capital it
requires to fund the Group’s project evaluation costs and administration expenses. The Group manages its capital
structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the
underlying assets.
Capital for the reporting period under review is summarised as follows:
Total equity
Borrowings
31 December
2015
US$'000
31 December
2014
US$'000
3,567
200
9,900
-
3,767
9,900
________________________________________________________________________________________________
37
CHINA AFRICA RESOURCES PLC
________________________________________________________________________________________________
Company information
Directors
Cungen Ding
Roderick Webster
James Richards
Frank Lewis
John Bryant
Li Ming
Wuming Wang
(Chairman and Non-executive Director)
(Chief Executive Officer)
(Senior Independent Non-executive Director)
(Independent Non-executive Director)
(Non-executive Director)
(Non-executive Director)
(Non-executive Director)
Secretary
Kevin Ellis
Registered office
180 Piccadilly
London W1J 9HF
Registered number
07352056 (England and Wales)
Auditor
Bankers
Solicitors
Nominated adviser
and broker
Registrars
Website
TDIM
BDO LLP
55 Baker Street
London W1U 7EU
Bank of Scotland
St James’s Gate
14-16 Cockspur Street
London SW1Y 5BL
Cooley (UK) LLP
Dashwood
69 Old Broad Street
London EC2M 1QS
RFC Ambrian Ltd
Level 5, Condor House,
10 St Paul’s Churchyard
London EC4M 8AL
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
www.chinaafricares.com
CAF
________________________________________________________________________________________________
38