Final Results
Asia Energy PLC
03 November 2004
Asia Energy PLC (AIM: AEN)
AUDITED PRELIMINARY ANNOUNCEMENT FOR THE PERIOD ENDED JUNE 2004
HIGHLIGHTS
• Asia Energy PLC was admitted to trading on the Alternative Investment Market
of the London Stock Exchange ('AIM') in April 2004
• Primary business: development of a world-class coal mine at Phulbari,
north-west Bangladesh
• Full Definition Feasibility Study (DFS) for coal mine under way and due for
completion in 2005
• Objective to start mining coal in 2007
• Potential Reserves calculated in situ at 430 million tonnes of High
Volatile, Low Sulphur bituminous coal
• Resources expected to increase during the course of the DFS
• Target markets for power generation - Bangladesh and major Asian consumers
• Estimated post-tax Project Net Present Value US$2.3 billion with Internal
Rate of Return of 50%, according to projections by coal mining specialists
MineConsult Pty Ltd and GHD Pty Ltd
• Estimated start-up capital to second year of production of US$530 million,
according to the same projections
• By-product sales not yet taken into account may include clay, industrial
sands and aggregates
• Separate feasibility study on mine mouth power station to commence in Q1 of
2005
For Further Information:
Asia Energy PLC Parkgreen Communications
Michael Frayne, Joint Managing Director Justine Howarth / Cathy Malins
David Lenigas, Joint Managing Director Tel: +44 (0) 20 7493 3713
Tel: +44 (0) 20 7409 0890 cathy.malins@parkgreenmedia.com
Laith Reynolds - Executive Director (CEO- Bangladesh)
Bangladesh: +8801733011445
www.asia-energy.com
W.H. Ireland Limited
Peter Jackson
Tel: +44 (0) 20 7397 3000
CHAIRMAN'S STATEMENT
Dear Shareholder
The business year 2003-2004 was a major landmark for Asia Energy PLC ('the
Company'). The Company was incorporated in London in September 2003 and
acquired 100% of Asia Energy Corporation Pty Ltd, which holds the licences to
explore and mine the Phulbari Coal Project ('the Project') located in north-west
Bangladesh. Asia Energy Corporation Pty Ltd had acquired the Project from BHP
in 1998 and raised initial capital to build on BHP's work, complete additional
exploratory drilling and conduct a pre-feasibility study on the Project. In
April 2004 Asia Energy PLC raised £14 million and the Company's shares were
admitted to trading on AIM. The capital raised is being employed to achieve our
sole mission - the development of the Phulbari Coal Project into a world-class
export quality coal mine and to conduct a separate feasibility on a possible
mine mouth power plant.
Immediately after the Company was admitted to trading on AIM it engaged an
international team of coal industry experts and embarked on a Definitive
Feasibility Study ('DFS') on the Project. We appointed Barclays Capital as
financial adviser in August 2004 to work with us to secure the finance to build
and take the coal mine into production. We now have an experienced senior
management team in place whose objective is to start mining in 2007. We
confidently expect that the Phulbari mine will be highly profitable while at the
same time providing significant economic and social benefits to Bangladesh.
Two reports prepared by independent coal mining specialists, MineConsult Pty Ltd
and GHD Pty Ltd, have, meanwhile, confirmed Phulbari's outstanding economic
potential. Based on an annual production of 15 million tonnes of coal, the cash
flow analyses in their reports indicated an average ungeared post-tax Project
Net Present Value of US$2.3 billion using a discount rate of 10% and an average
Internal Rate of Return of 50%. The same specialists estimated start-up costs
to year two at US$530 million.
The potential quality of the product is also outstanding. Phulbari's High
Volatile A and B Bituminous coal is a low ash, low sulphur product, highly
suitable for export markets and power generation. We have already received a
number of approaches from major coal consumers in Asia.
The DFS coincided with a surge in the price of energy commodities and, in
particular, in the price of thermal coal in both the Pacific and Atlantic Basin
markets. In September 2003 high-grade thermal coal of similar quality to that
present in the Phulbari product was trading at a price in the region of US$35
fob Newcastle, Australia. By April 2004 it was trading at US$70. Market
analysts project that the price will remain at these levels until late 2005 and
2006 and could then settle for the longer term at around US$65.
The pre-feasibility study on the Phulbari Project in 2000 demonstrated there was
a 'solid case' for proceeding to the DFS and the associated raising of capital.
This was based on an output of 9 million tonnes of coal per annum, with 6
million tonnes allocated for a mine mouth power station, and the balance
earmarked for internal Bangladesh markets. Following the substantial increase
in the price of coal, propelled by market-driven demand from China and India,
and on the basis of new audited estimates, the Company increased its projected
output to 15 million tonnes per annum.
The dual gauge railway running through the prospective Phulbari mine provides a
secure outlet for our exports to both Bangladesh's ports and to the markets of
neighbouring India. We are also commissioning a separate survey to evaluate the
viability of the mine mouth power station.
We maintain excellent relations with the Government of Bangladesh, where the
Project enjoys broad support. We plan to build the mine at Phulbari in full and
open consultation with the community and all stakeholders, benchmarking it
according to the highest standards set by the Bangladeshi authorities,
international development agencies and NGOs. It is our goal that in every way
possible it will be both geared to sustainable development and sensitively
attuned to the environment.
I wish to thank our Directors, employees, consultants and advisers for their
great efforts in achieving the AIM quotation and establishing our London
headquarters, and to all of our staff in Bangladesh for their preparation for
and launching of the DFS. I would also like to thank all shareholders who
joined us in April 2004 and as well those who have acquired stock since then.
On your behalf, I and my fellow Directors look forward to sustaining the growth
of all aspects of the Company's operations in the years to come.
Christopher Eager
Chairman
FINANCIAL RESULTS
The Company was incorporated on 26 September 2003.
On 18 December 2003, the Company acquired Asia Energy Corporation Pty Ltd for a
consideration of £1,350,000, satisfied by the issue of 13,500,000 ordinary
shares at 10p per share, and therefore became the 100% owner of the Phulbari
Coal Project in north-west Bangladesh.
Seed capital of £800,000 was also raised by the Company on 18 December 2003
through the issue of 500,000 ordinary shares at 10p per share and 5,000,000
ordinary shares at 15p per share. These funds were used by the Company to
finance a further drilling programme at Phulbari to increase the in situ coal
resource to 426 million tonnes, equivalent to 370 million tonnes according to
the JORC Code, in addition to fulfilling the necessary requirements for
admission of the Company to AIM.
In April 2004, the Company issued 14,959,649 ordinary shares at 75p per share
via a placing, and a further placing was completed on 19 April 2004 of 3,642,987
ordinary shares at 75p per share. A total gross amount of £14 million was
raised, which is being used primarily to fund the DFS for the Phulbari Coal
Project.
The Group loss for the period amounted to £396,065.
Cash and bank balances at the period end amounted to £12.2 million.
ASIA ENERGY PLC
AUDITED GROUP PROFIT AND LOSS ACCOUNT
FOR THE PERIOD ENDED 30 JUNE 2004(a)
Notes 30 June 2004
£
Administrative expenses (497,171)
Group operating loss 3 (497,171)
Attributable to continuing operations:
- Ongoing (333,613)
- Acquisitions (Asia Energy Corporation Pty Ltd) (163,558)
Loss on ordinary activities before interest and taxation (497,171)
Interest receivable 5 101,106
Loss on ordinary activities before taxation (396,065)
Tax on loss on ordinary activities 6 -
Loss on ordinary activities after taxation (396,065)
Loss for the financial year attributable to members of the parent company (396,065)
Retained Loss for the period 17 (396,065)
Basic and Diluted Loss per share (pence) 7 (2.2)p
The above results relate solely to continuing operating activity of the Group.
AUDITED GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE PERIOD ENDED 30 JUNE 2004(a)
30 June 2004
£
Loss for the financial year attributable to members of the parent company (396,065)
Total recognised gains and losses relating to the period (396,065)
(a) - Refer Note 1
ASIA ENERGY PLC
AUDITED GROUP BALANCE SHEET
AS AT 30 JUNE 2004(a)
Notes 30 June 2004
£ £
Fixed assets
Intangible assets 8 2,121,004
Tangible assets 9 154,475
Current assets
Stocks 11 36,564
Debtors: Amounts falling due within one year 12 107,561
Current asset investments 13 8,095
Cash at bank and in hand 12,165,535
12,317,755
Creditors: Amounts falling due within one year 14 (170,359)
Net current assets 12,147,396
Total assets less current liabilities 14,422,875
Net assets 14,422,875
Capital and reserves
Called up share capital 16 3,760,264
Share premium account 17 11,058,676
Profit and Loss account 17 (396,065)
Equity shareholders' funds 17 14,422,875
(a) - Refer Note 1
ASIA ENERGY PLC
AUDITED COMPANY BALANCE SHEET
AS AT 30 JUNE 2004(a)
Notes 30 June 2004
£ £
Fixed assets
Tangible assets 9 -
Investments 10 1,350,000
1,350,000
Current assets
Debtors: Amounts falling due within one year 12 1,282,333
1,282,333
Cash at bank and in hand 12,013,862
13,296,195
Creditors: Amounts falling due within one year 14 (59,762)
Net current assets 13,236,433
Total assets less current liabilities 14,586,433
Net assets 14,586,433
Capital and reserves
Called up share capital 16 3,760,264
Share premium account 17 11,058,676
Profit and Loss account 17 (232,507)
Equity shareholders' funds 17 14,586,433
(a) - Refer Note 1
ASIA ENERGY PLC
AUDITED GROUP STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 30 JUNE 2004(a)
Notes 30 June 2004
£
Net cash (outflow) from operating activities 18(a) (625,300)
Returns on investment and servicing of finance
Interest received 55,579
Interest paid (5,317)
Taxation -
Capital expenditure and financial investment -
Payments to acquire intangible fixed assets (466,155)
Payments to acquire tangible fixed assets (121,120)
Receipts from security deposits 5,480
Acquisitions and disposals
Net cash acquired with subsidiary undertaking 10 33,014
Net cash (outflow) before management of liquid resources and financing (1,123,819)
Management of Liquid Resources
(Increase) in short term deposits (11,000,000)
Financing
Issue of ordinary share capital 14,726,977
Share issue costs (1,268,038)
Repayment of borrowings on acquisition (165,221)
13,293,718
Increase in cash 18(b) 1,169,899
(a) - Refer Note 1
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
Notes 30 June 2004
£
Increase in funds 1,169,899
Repayment of borrowings of acquisitions 18(b) (165,221)
Change in net funds resulting from cash flows 18(b) 1,004,678
Other non cash movements - loan acquired on acquisition 18(b) 165,221
Movement in net funds 1,169,899
Net funds at beginning of period 18(b)
-
Exchange differences (4,364)
Net funds at 30 June 18(b) 1,165,535
ASIA ENERGY PLC
NOTES TO THE FINANCIAL STATEMENTS
AT 30 JUNE 2004
1. Accounting policies
Accounting period
The Company was incorporated on 26 September 2003. These Financial Statements
reflect the period from 26 September 2003 to 30 June 2004.
Basis of preparation
The Financial Statements are prepared under the historical cost convention and
in accordance with applicable United Kingdom accounting standards.
Fundamental Accounting Concept
The Directors are of the opinion that the Group currently has sufficient funds
to meet its obligations as they fall due in the foreseeable future and to
complete the pre-feasibility and feasibility studies. The Company is currently
conducting exploration activities using funds from a capital raising in April
2004. The Directors believe that funding is sufficient to complete
pre-feasibility and feasibility studies scheduled to be completed in late 2005.
Completion of these studies, should they demonstrate the feasibility of the
project, will take the Company to the next stage of development, being the
commencement of operations. This stage will require further funding. The
Directors are confident that the Company's coal interests will be able to be
commercially realised and are confident that further funding will be obtained.
The Directors have taken steps to ensure this occurs . and have appointed
Barclays Capital to provide advice and services in evaluating options and
sources of funding. On this basis, the Directors believe that the adoption of
the going concern basis is justified.
Basis of consolidation
The Group Financial Statements consolidate the Financial Statements of Asia
Energy Plc and all its subsidiary undertakings drawn up to 30 June each year.
Asia Energy Corporation Proprietary Limited has been included in the Group
Financial Statements using the acquisition method of accounting. Accordingly,
the Group Profit and Loss Account and Statement of Cash Flows include the
results and cash flows of Asia Energy Corporation Proprietary Limited from its
acquisition on 18 December 2003. The purchase consideration has been allocated
to the assets and liabilities on the basis of fair value at the date of
acquisition.
The parent company has taken advantage of section 230 of the Companies Act 1985
and has not included its own Profit and Loss Account in these Financial
Statements. The parent company's loss for the year was £232,507.
Intangible assets
Acquisitions
Intangible assets acquired separately from a business are capitalised at cost.
Intangible assets acquired as part of an acquisition of a business are
capitalised separately from goodwill if the fair value can be measured reliably
on initial recognition, subject to the constraint that, unless the asset has a
readily ascertainable market value, the fair value is limited to an amount that
does not create or increase any negative goodwill arising on the acquisition.
Intangible assets, excluding development costs, created within the business are
not capitalised and expenditure is charged against profits in the year in which
it is incurred.
Intangible assets are amortised on a straight line basis over their estimated
useful lives up to a maximum of 20 years. The carrying value of intangible
assets is reviewed for impairment at the end of the first full year following
acquisition and in other periods if events or changes in circumstances indicate
the carrying value may not be recoverable.
Exploration, evaluation and development
Costs carried forward
Exploration, evaluation and development expenditure incurred is accumulated in
respect of each identifiable area of interest. These costs are only carried
forward to the extent that they are expected to be recouped through the
successful development of the area or where activities in the area have not at
balance sheet date, reached a stage which permits reasonable assessment of the
existence of economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written off against
profit in the period in which the decision to abandon the area is made.
Amortisation
Costs on productive areas are amortised over the life of the area of interest to
which such costs relate on a unit of production output basis.
Fixed Assets
All fixed assets are initially recorded at cost.
Depreciation
Depreciation is provided on all tangible fixed assets at rates calculated to
write off the cost, less estimated residual value of each asset evenly over its
expected useful life as follows:
Office furniture and equipment - over 3 to 15 years
Vehicles - over 5 years
The carrying values of tangible fixed assets are reviewed for impairment when
events or changes in circumstances indicate the carrying value may not be
recoverable.
Deferred tax
The tax charge is based on the profit for the period and takes into account
taxation deferred because of timing differences between the treatment of certain
items for taxation and accounting purposes. Deferred tax is recognised in
respect of all timing differences that have originated but not reversed at the
balance sheet date where transactions or events have occurred at that date that
will result in an obligation to pay more, or a right to pay less or to receive
more, tax, in the future. In particular:
• provision is made for tax on gains arising from the revaluation (and
similar fair value adjustments) of fixed assets, and gains on disposal of
fixed assets that have been rolled over into replacement assets, only to the
extent that, at the balance sheet date, there is a binding agreement to
dispose of the assets concerned. However, no provision is made where, on
the basis of all available evidence at the balance sheet date, it is more
likely than not that the taxable gain will be rolled over into replacement
assets and charged to tax only where the replacement assets are sold;
• provision is made for deferred tax that would arise on remittance of the
retained earnings of overseas subsidiaries, associates and joint ventures
only to the extent that, at the balance sheet date, dividends have been
accrued as receivable;
• deferred tax assets are recognised only to the extent that the directors
consider that it is more likely than not that there will be suitable taxable
profits from which the future reversal of the underlying timing differences
can be deducted.
Deferred tax is measured on an undiscounted basis at the tax rates that are
expected to apply in the periods in which timing differences reverse, based on
tax rates and laws enacted or substantively enacted at the balance sheet date.
Foreign currencies
Transactions in foreign currencies are recorded at the rate ruling at the date
of the transaction or at the contracted rate. Monetary assets and liabilities
denominated in foreign currencies are retranslated at the rate of exchange
ruling at the balance sheet date or if appropriate at the forward contract rate.
All differences are taken to the profit and loss account.
Where the trade of a foreign enterprise is more dependent on the economic
environment of the parent company then the Financial Statements of the
undertaking are consolidated using the Temporal method on the following basis:
• Fixed assets are translated into sterling at the rates ruling on the
date of acquisition.
• Monetary assets and liabilities denominated in a foreign currency are
translated into sterling at the foreign exchange rates ruling at the balance
sheet date.
• Revenue and expenses in foreign currencies are recorded in sterling at
the rates ruling at the date of the transactions.
• Any gains or losses arising on translation are reported as reported in
the Profit and Loss Accounts.
Leasing and hire purchase commitments
Assets held under finance leases, which are leases where substantially all the
risks and rewards of ownership of the asset have passed to the Group, and hire
purchase contracts are capitalised in the balance sheet and are depreciated over
their useful lives. The capital elements of future obligations under leases and
hire purchase contracts are included as liabilities in the balance sheet. The
interest elements of the rental obligations are charged in the profit and loss
account over the periods of the leases and hire purchase contracts and represent
a constant proportion of the balance of capital payments outstanding.
Rentals payable under operating leases are charged in the profit and loss
account on a straight line basis over the lease term.
Stock
Stock is valued at the lower of cost or estimated realisable value.
2. Turnover and segmental analysis
There was no turnover during the financial period. The administrative expenses
relate to the United Kingdom, Australian and Bangladesh offices.
The Group operates in one principal area of activity being coal exploration. The
results of Asia Energy Corporation Proprietary Limited, which was acquired on 18
December 2003, all relate to mineral exploration and development activity.
The Group operates within one geographical market, being Bangladesh, and is
supported by management and administrative functions in Australia and the United
Kingdom.
United Kingdom Australia Bangladesh Total
£ 30 June 2004
£ £ £
Operating loss before (333,613) (138,218) (25,340) (497,171)
interest and taxation
Net assets 14,586,433 (139,778) (23,780) 14,422,875
3. Operating loss
Period to 30 June
2004
£
This is stated after charging:-
Auditor's remuneration:
- Audit services 45,000
- Other services 24,634
Directors' remuneration 120,060
Other staff costs 8,591
Depreciation of owned assets 3,340
Operating lease rentals - land and buildings 19,537
4. Directors' emoluments and staff costs
Staff costs
The Company employs no staff other than the Directors disclosed below. The Group
employs 20 staff in the Bangladesh office: 5 employees in accounting and
administration and 15 employees in exploration.
Directors' emoluments
Period to 30 June
2004
£
Directors' emoluments 120,060
M. Frayne (appointed 26/09/03) (1) ** 54,000
D. Lenigas (appointed 26/09/03) ** 21,633
L. Reynolds (appointed 26/09/03) (1) ** 34,827
C. Eager (appointed 26/09/03) 4,800
J. Malins (appointed 26/09/03) 4,800
120,060
** Executive Director
(1) These include amounts for consulting services paid to Director-related
entities. Refer Note 23 for further information.
5. Interest
Period to 30 June 2004
£
Bank interest receivable 101,106
101,106
6. Tax
Tax on profit on ordinary activities
Period to 30
June 2004
£
The tax charge is made up as follows:
Current tax:
UK Corporation Tax -
Overseas Tax -
Total current tax -
Deferred tax:
Origination and reversal of timing differences -
Total deferred tax -
Tax on profit on ordinary activities -
The difference between the effective provision for income tax and the statutory
tax provision at the statutory tax rate is reconciled as follows:
Period to 30
June 2004
£
Loss on ordinary activities before tax (396,065)
UK Corporation Tax @ 30% (118,820)
Permanent differences : non-deductible expenditure 4,500
: non-taxable foreign exchange translation (21,728)
Timing differences : provisions (601)
: accelerated capital allowances (130,740)
: tax losses recognised 131,341
Tax losses not recognised 136,048
Current tax on ordinary activities -
Deferred tax
Deferred tax assets and liabilities are recognised as follows:
Amount transferred in Movement in At 30 June
on acquisition period £ 2004
£ £
Capitalised exploration costs (87,546) (116,213) (203,759)
Provisions 365 780 1,145
Tax losses 87,181 115,433 202,614
- - -
As at 30 June 2004, the Group had unrecognised tax losses arising in Australia
of £492,000, Bangladesh of £24,000 and United Kingdom of £218,000 that are
available indefinitely for offset against future taxable profits of those
companies in which the losses arose, subject to the conditions of deductibility
under the relevant legislation.
Deferred tax assets have not been recognised in respect of these losses. These
assets will be recognised should it become more likely than not that taxable
profits or timing differences, against which they may be deducted, arise.
7. Loss per share
The calculation of the loss per ordinary share is based on a loss of £396,065 to
30 June 2004 and the weighted average number of ordinary shares outstanding of
18,143,860 in the year ended 30 June 2004. There is no difference between the
diluted loss per share and the loss per share presented.
8. Intangible fixed assets
Development Mineral rights Total
expenditure
£
£
£
Cost:
Opening balance - - -
Increase during the year 427,454 - 427,454
Acquisition of subsidiary 546,746 1,146,804 1,693,550
As at 30 June 2004 974,200 1,146,804 2,121,004
Amortisation:
Opening balance - - -
Provided during the year - - -
As at 30 June 2004 - - -
Net book value at 30 June 2004 974,200 1,146,804 2,121,004
The exploration and evaluation activities in the area of interest are still in
the early stages and have not at balance sheet date reached a stage which
permits a reasonable assessment of the existence or otherwise of economically
recoverable reserves. Active and significant operations in the area of interest
are continuing.
The ultimate recoupment of costs carried forward is dependent on the successful
development and commercial exploitation or sale of the respective mining areas.
9. Tangible fixed assets
Group Office Vehicles Total
furniture and
equipment
£
£ £
Cost:
Opening balance - - -
Additions 149,079 2,618 151,697
Acquisition of subsidiary undertaking 6,118 - 6,118
Disposals - - -
At 30 June 2004 155,197 2,618 157,815
Depreciation:
Opening balance - - -
Provided during the period (3,316) (24) (3,340)
At 30 June 2004 (3,316) (24) (3,340)
Net book value at 30 June 2004 151,881 2,594 154,475
Company
The Company does not have any tangible fixed assets as at 30 June 2004.
10. Investments
Details of the investments in which the Company holds 20% or more of the nominal
value of any class of share capital are as follows:
Name of Company Holding Proportion of voting Nature of
rights and shares business
held
Asia Energy Corporation Ordinary Shares 100% Exploration
Proprietary Limited
Cost : £
Opening balance
-
Additions 1,350,000
Disposals -
At 30 June 2004 1,350,000
Amounts provided: -
As at 30 June 2004 -
Net book value at 30 June 2004 1,350,000
On 18 December 2003, the Company acquired Asia Energy Corporation Proprietary
Limited for a consideration of £1,350,000 satisfied by the issue of 13,500,000
ordinary shares of 10p each. The investment in Asia Energy Corporation
Proprietary Limited has been included in the Company's balance sheet at its fair
value at the date of acquisition.
On 18 December 2003, the Company also issued 250,000 ordinary shares of 10p each
for consideration of £25,000 in respect of amounts payable to Deepgreen Minerals
Corporation Limited.
Analysis of the acquisition of Asia Energy Corporation Proprietary Limited:
Book value Other Fair value
£ £ £
Intangibles(a) 546,746 1,146,804 1,693,550
Tangible fixed assets 6,118 6,118
Debtors 27,783 27,783
Cash 33,014 33,014
Creditors due within one year (410,465) (410,465)
Net assets 203,196 1,146,804 1,350,000
Discharged by:
Fair value of shares issued 1,350,000
Costs associated with the acquisition -
1,350,000
(a) The Other adjustment relates to recognition of mineral rights
arising on acquisition.
(b) In addition, the Group paid AUD$100,000 to Deepgreen Minerals
Corporation Limited, upon Asia Energy Plc becoming successfully admitted to the
London Stock Exchange Alternative Investment Market (AIM) on 19 April 2004. This
amount has been expensed at 30 June 2004. The Group will pay further amounts on
the production of resources from the Phulbari Coal Project. Details of these
items are included in Note 22.
11. Stocks
Group
At 30 June
2004
£
Consumables 36,564
36,564
12. Debtors
At 30 June 2004 At 30 June 2004
Group Company
£ £
Loan to subsidiary - 1,236,806
Other debtors 52,471 45,527
Prepayments 55,090 -
107,561 1,282,333
There were no debtors falling due after more than one year at 30 June 2004.
Amounts due from subsidiary undertakings are non-interest bearing.
13. Current asset investments
At 30 June 2004
£
Security deposits 8,095
8,095
Security deposits represent rental deposits on premises in Bangladesh.
14. Creditors: Amounts falling due within one year
At 30 June 2004 At 30 June 2004
Company
Group
£
£
Trade creditors 158,539 59,762
Amounts due to parent undertaking - Deepgreen Minerals 11,820 -
Corporation Limited
170,359 59,762
15. Obligations under leases and hire purchase contracts
Annual commitments under non-cancellable land and buildings operating leases are
as follows :
At 30 June 2004
£
Operating leases which expire:
Within one year -
In two to five years 114,075
In over five years -
114,075
16. Share capital
At 30 June 2004
£
Called up share capital
Authorised
200,000,000 Ordinary Shares of 10p Each 20,000,000
Allotted Called Up and Fully Paid
37,602,638 Ordinary Shares of 10p Each 3,760,264
On 18th December 2003, the Company issued 13,500,000 Ordinary Shares of 10p each
for consideration of the transfer of the entire issued share capital of Asia
Energy Corporation Proprietary Limited pursuant to a Sale and Purchase
Agreement.
On 18 December 2003, the Company issued 250,000 Ordinary Shares of 10p each for
consideration of £25,000 in respect of amounts payable to Deepgreen Minerals
Corporation Limited.
On 18th December 2003, pursuant to subscription letters received, the Company
issued 5,250,000 Ordinary Shares of 10p each for an aggregate consideration of
£775,000, resulting in a share premium, before associated costs, of £250,000.
On 19th April 2004, pursuant to a Prospectus, the Company issued 14,959,649
Ordinary Shares of 10p each for an aggregate consideration of £11,219,737
resulting in a share premium, before associated costs, of £9,723,772.
On 19th April 2004, the Company issued 3,642,987 Ordinary Shares of 10p each for
an aggregate consideration of £2,732,240 resulting in a share premium, before
associated costs, of £2,367,941.
Ordinary shares have the right to receive dividends as declared and, in the
event of winding up the Company, to participate in the proceeds from sale of all
surplus assets in proportion to the number of and amounts paid up on shares
held.
Ordinary shares entitle their holder to one vote, either in person or by proxy,
at a meeting of the Company.
The following options were on issue at 30 June 2004:
Stock Options held Option Price (p) Exercise Period Shares held at 30
at being anytime up to June 2004
30 June 2004
Christopher Eager* - 75 18 April 2009 600,000
Michael Frayne* 500,000 75 18 April 2009 533,333
David Lenigas* 500,000 75 18 April 2009 -
Jonathan Malins* 200,000 75 18 April 2009 250,000
Laith Reynolds* 500,000 75 18 April 2009 -
Staff 75,000 75 18 April 2009 -
All shares were issued to the Directors on 18 December 2003. All options were
issued to the Directors and staff upon the Company being successfully admitted
to AIM on 19 April 2004.
* The Directors have an undertaking with the Company's broker, WH Ireland, that
they will not dispose of any shares or options for a period of twelve months
from 19 April 2004. Staff options are free trading. No options were exercised or
lapsed during the period.
17. Reconciliation of shareholders' funds and movement of reserves
Group Ordinary Share Premium Profit and Total
share capital Account Loss Account share-holders'
funds
£
£ £ £
Opening balance - - - -
Issued on incorporation 2 - - 2
Arising on share issues 3,760,262 12,341,714 - 16,101,976
Share issue costs - (1,283,038) - ( 1,283,038)
Retained profit/(loss) for the year - - (396,065) (396,065)
At 30 June 2004 3,760,264 11,058,676 (396,065) 14,422,875
Company Ordinary Share Premium Profit and Total
share capital Account Loss Account share-holders'
funds
£
£ £ £
Opening balance - - - -
Issued on incorporation 2 - - 2
Arising on share issues 3,760,262 12,341,714 - 16,101,976
Share issue costs - (1,283,038) - ( 1,283,038)
Retained profit/(loss) for the year - - (232,507) (232,507)
At 30 June 2004 3,760,264 11,058,676 (232,507) 14,586,433
18. Notes to the statement of cash flows
(a) Reconciliation of operating profit to net cash outflow from operating
activities
Period ended 30
June 2004
£
Operating Loss (497,171)
Increase in debtors (42,468)
Increase in inventory (36,564)
Decrease in creditors (49,097)
Net cash outflow from operating activities (625,300)
(b) Analysis of net funds
Opening Cash Flow Exchange Other Non-Cash At 30 June
Balance Differences Movements 2004
£ £ £ £ £
Cash at bank and in hand - 1,169,899 (4,364) - 1,165,535
Loan - 165,221 - 165,221 -
Short term deposits* - 11,000,000 - - 11,000,000
- 12,004,678 (4,364) 165,221 12,165,535
* Short term deposits are included within cash at bank and in hand in the
balance sheet.
(c) Major non-cash transactions
See Note 10 for an analysis of the acquisition of Asia Energy Corporation
Proprietary Limited.
(d) Exceptional items
There are no exceptional items during the year.
19. Derivatives and other financial instruments
The Group holds cash and short term deposits as a liquid resource to fund the
obligations of the Group. The Group's strategy for managing cash is to maximise
interest income whilst ensuring its availability to match the profile of the
Group's expenditure. This is achieved by regular monitoring of interest rates
and monthly review of expenditure forecasts.
The Company has no formal policy in respect of foreign exchange risk, however it
does review its currency exposures on an ad hoc basis. Currency exposures
relating to monetary assets held by foreign operations are included within the
Group Profit and Loss Account.
The Group has taken advantage of the exemption in FRS 13 'Derivatives and Other
Financial Instruments' in respect of short-term debtors and creditors and
consequently those items are not included in the relevant analysis within the
following notes.
Interest rate risk profile of financial assets:
The financial assets of the Group are comprised of monies held in bank accounts
and security deposits.
The interest rate profile of the financial assets of the Group as at 30 June
2004 :
Fixed rate Floating rate Non interest Total
bearing
£
£
£ £
Sterling 11,000,000 1,013,862 - 12,013,862
Australian dollars - 3,078 - 3,078
United States dollars - - 93,610 93,610
Bangladesh taka - - 63,080 63,080
11,000,000 1,016,940 156,690 12,173,630
The interest on the fixed rate financial asset is 4.4% which is fixed until
maturity in August 2004. Floating rate financial assets comprise cash balances
on money market deposits at call at an interest rate of 4.2%.
Non-interest bearing financial assets comprise cash deposits at call and do not
receive interest.
Interest rate risk profile of financial liabilities
All of the Group's financial liabilities are short term creditors.
Currency exposures
Currency exposures comprise the monetary assets and liabilities that are not
denominated in the operating currency of the operating unit. The currency
exposures of the Group as at 30 June 2004 are shown below:
Currency exposures Net foreign currency Net foreign
monetary assets currency
Bangladesh monetary assets
Functional currency Taka Total
£ £
Sterling 13,066 13,066
13,066 13,066
Borrowing facilities
The Group has no borrowing facilities in place at 30 June 2004.
Derivative instruments
The Group has no derivative instruments.
Fair values of financial assets and liabilities
All financial assets and liabilities of the Group have been recorded at their
book value, which equates to their fair value.
Book value Fair value
£ £
Financial assets
Cash at bank and in hand 12,165,535 12,165,535
Current asset investments 8,095 8,095
12,173,630 12,173,630
20. Post balance sheet events
On 10th August 2004, the Company issued 1,770,000 options to staff, directors
and consultants responsible for the completion of the Feasibility Study as
follows:
Stock Options issued Option Price (p) Exercise Period being
since 30 June 2004 anytime up to
Christopher Eager* 180,000 75 18 April 2009
Michael Frayne* 180,000 75 18 April 2009
David Lenigas* 180,000 75 18 April 2009
Jonathan Malins* 180,000 75 18 April 2009
Laith Reynolds* 180,000 75 18 April 2009
Other staff and 500,000 75 18 April 2009
consultants*
Other staff and 370,000 75 18 April 2009
consultants
* These option holders have an undertaking with the Company's broker, WH
Ireland, that they will not dispose of any shares or options for a period of
twelve months from 19 April 2004.
On 19th August 2004, the Company advised it had appointed Barclays Capital to
provide advice and services in connection with the financing of the Phulbari
Coal Project in Bangladesh. On the same date, the Company issued to Barclays
Capital up to 2.1 million options exercisable at a price of 75 pence until 19
August 2009. Of these options, 1,000,000 are free-trading, 600,000 options only
become exercisable when the 5 day average closing share price of the Company is
greater than or equal to £1.00 and a further 500,000 options only become
exercisable when the 5 day average closing price of the Company is greater than
or equal to £1.50.
21. Capital commitments
There are no material capital commitments for the Group as at 30 June 2004 which
have not already been provided for in the financial statements.
22. Contingent liabilities
The Group is obliged to pay US$1 per tonne of coal produced to Deepgreen
Minerals Corporation Limited.
Under the investment agreement with the Government of Bangladesh, the Group
will, on commencement of commercial production of coal, be obliged to pay to the
Government of Bangladesh a royalty of 6 per cent of the sale value of all coal
produced and sold pursuant to a Mining Lease in US$.
The financial impact of both of these contingent liabilities cannot be estimated
as the Company has not completed the exploration work.
23. Related party transactions
A service agreement with Bowmaker Management Limited ( 'Bowmaker' ) for
provision of office space and associated services was entered into on 31 October
2003. This agreement is for 6 months with an automatic renewal for 6 months
unless terminated and requires the Company to pay £2,000 per month in advance.
Bowmaker also provides Company Secretarial work and general administrative
assistance. Jonathan Malins, a Director of Asia Energy Plc, is the beneficial
owner of 50 per cent of the issued share capital of Bowmaker. Payments to
Bowmaker in the period to 30 June 2004 amounted to £16,000. As at 30 June 2004,
no amounts were owing.
A share sale and purchase agreement dated 18th December 2003 between Deepgreen
Minerals Corporation Limited ( 'Deepgreen' ) of which Laith Reynolds was a
Director, and other shareholders of Asia Energy Corporation Proprietary Limited,
all of whom had appointed Deepgreen as their agent, and the Company was entered
into pursuant to which the Company agreed to purchase the entire issued capital
Asia Energy Corporation Proprietary Limited for the issue of 13,500,000 ordinary
shares in the Company. On 18 December 2003, the Company also issued 250,000
ordinary shares at
10p each for consideration of £25,000 with respect to amounts payable to
Deepgreen. Pursuant to the same agreement an amount of AUD$100,000 was also paid
to Deepgreen upon the Company becoming admitted to the London Stock Exchange
Alternative Investment Market (AIM) in April 2004. As at 30 June 2004, no
amounts were owing. Further, the Company is obliged to pay a royalty to
Deepgreen as described in Note 22.
A service agreement with Resource and Capital Management Pty Ltd ( 'RCM' ) for
provision of consulting services was entered into on 6 August 2003 which
required the Company to pay RCM £5,000 per month until its admission to AIM.
Reasonable travel and accommodation expenses incurred by RCM in relation to
providing these consultancy services were reimbursed from the Company on a
timely basis. Michael Frayne, a Director of Asia Energy Plc, has a beneficial
interest in and is a director of RCM. Payments to RCM in the period to 30 June
2004 amounted to £38,000 for consultancy services and £27,908 for travel and
accommodation expenses.
On 30 March 2004, the Company entered into a service agreement with RCM Asia Ltd
('RCM Asia') for the provision of consulting services, including the provision
of the services of Mr Michael Frayne, a director of Asia Energy Plc. Michael
Frayne has a beneficial interest in and is a director of RCM Asia. Payments to
RCM Asia in the period to 30 June 2004 amounted to £11,200 for consultancy
services and £14,088 for travel and accommodation expenses. As at 30 June 2004,
£4,666 was owing.
Payments for consulting services to the Company by a Director, Mr L. Reynolds,
amounting to £30,027 were made in the period to 30 June 2004. £17,490 was also
paid in the same period in relation to travel and accommodation expenses
incurred while providing these consulting services to the Company. In the period
prior to acquisition, a subsidiary paid Mr L. Reynolds £14,430 for consulting
services and £4,231 for travel and accommodation expenses which have not been
included in the Group Profit and Loss Account at 30 June 2004. As at 30 June
2004, no amounts were owing.
24. Principal operating subsidiary undertakings
Asia Energy Plc holds 100% of the equity share capital and controls 100% of
voting rights of the following undertakings:
• Asia Energy Corporation Proprietary Limited - incorporated in
Australia and operates in Australia
• Asia Energy Corporation (Bangladesh) Limited - incorporated in
Australia and operates in Bangladesh*
• Asia Energy (Bangladesh) Private Limited (formerly Pan Asian
Corporation Limited) - incorporated and operates in Bangladesh*.
* Indirectly held through Asia Energy Corporation Pty Ltd.
All subsidiary undertakings participate in mineral exploration and development
activity.
25. Parent undertaking and controlling party
In the Directors' opinion the Company's ultimate parent undertaking and
controlling party is Deepgreen Minerals Corporation Limited which is
incorporated in Australia.
26. Operating commitments
Under the terms of Prospecting License agreement with the Bangladesh authorities
for contract license areas B, G and H respectively, an annual fee of 50 Taka is
payable for each hectare within the license area. The Company currently lease
5,480 hectares within these license areas.
27. Five year summary
As the Group commenced trading in the current year no five year summary has been
prepared.
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