Annual Report and Accounts

29th Aug 2008 13:55



Annual report and Results for the year ended 29 February 2008

Namibian Resources Plc (the "Company")

Chairman's statement

The year to 29th February 2008 was disappointing with turnover decreasing from £504,542 to £140,622 resulting in a loss of £298,168, However, the extensive sampling exploration programme has enabled us to identify diamond resources sufficient to sustain and increase production during 2009. The year saw significant operating cost increases in fuel, maintenance and food. These have been offset by increases in prices received for our diamonds, particularly after year-end. During the year the Directors took a placing of shares to raise £200,000 to maintain our cash resources and there are no bank borrowings. Dr Donald Sutherland joined the group in January of this year and is carrying out a programme of rationalisation to enhance the efficiency and lower the costs of production. He has also identified and tested further areas which are positive for future mining. We are grateful for his dedication to the development of our mine. His activities are reported separately. The board confirms its commitment to expanding production and developing the mine in a profitable manner.

I would like to thank all members of our staff here and in Namibia for their efforts during this difficult year.

Lord Sheppard of Didgemere KCVO Kt 

Review of Operations

During the last several years the Company's operations have focussed on the SW corner of its Pomona concession and an immediately adjacent area where Namdeb has also permitted mining and prospecting activities. In that area the diamond deposits are characterised by an anomalously large average size. Throughout the Namibian coastal zone the quality of the diamonds is extremely high, with only 1-2 percent not being classified as either gem or near-gem. Consequently, the average parcel value received by Sonnberg for its diamonds is directly proportional to average parcel size and hence the revenue generated for a given carat recovery is significantly greater in the zone of high average size.

Throughout the Pomona concession and adjacent areas the diamonds occur in a series of discrete, wind-eroded basins. Each basin contains diamond-bearing deposits which are singular in terms of diamond size, diamond concentration and diamond distribution. Every deposit therefore requires a separate sampling programme to determine its characteristics. A geological model of diamond occurrence applicable to the valley systems has been developed and is considered to provide a sound basis both for orienting sampling activities and for extrapolating sampling results for resource estimation.

The Company's operations have shown that the historical sampling database which it has previously used for resource estimation significantly underestimates diamond occurrence in this part of the concession. This underestimation occurs in two ways. First, certain deposits have not been located by the historic sampling and secondly, of those deposits that have been identified, the extent and level of diamond concentration have been underestimated, in some cases very significantly.

In order to identify and characterise all the deposits in the area and to develop a rational mining plan for future years, the Company has been undertaking prospecting activities and in doing so has sacrificed production time. This is considered to be advantageous to the long-term development of the company. Prospecting activities to date have been very successful in identifying new deposits. It is worth mentioning that Sonnberg's production over the last several years has been almost entirely from deposits that were not included in the statement of resources included in its listing documents.

Total production during the FY 2007-8 was derived from mining, prospecting and various clean-up operations (around processing plants and tailings piles) and totalled 2,126 ct. This was significantly down on FY 2006-7 reflecting the working out (by April 2007) of the rich East Salztal deposit which had been the mainstay of production during the previous year. The Hannahtal deposit was then brought into production and was worked out (524 ct) as was the West Salztal North deposit (60 ct) at the up-slope limit of the West Salztal valley. Both these small deposits had been prospected during the previous year. During this same period prospecting outlined the Mariannental deposit and resulted in the discovery of the Salzpfanne deposit. Economically interesting mineralisation in the Hannahtal North deposit was confirmed, but the sampling of this last deposit remained to be completed at year end.

Small scale production of 22 ct was also derived from an attempt to re-start mining of the West Salztal deposit. Mining had been stopped at West Salztal following the exceptional rains of Easter 2006 which flooded the whole valley floor. Despite an attempt to pump the working face dry, it has not been possible to reactivate mining of this deposit and, for the foreseeable future, no more work will be attempted there. More generally, despite being located in the hyper-arid Namib coastal desert, ground water levels remain high in the valley bottoms and prospecting is still hampered in a number of promising areas.

From September 2007 mining was moved to focus on the Salzpfanne deposit from which over 900 ct had been extracted by year-end. The southern end of mining operations in this deposit is, as at West Salztal, constrained by a high water table and the diamond-bearing sands and gravels continue for an unspecified distance south of the presently defined limit of mining. Nonetheless it is expected that mining of the identified deposit at Salzpfanne will continue throughout almost the whole of the FY 2008-9.

Until late in FY 2007-8 the Company had only a single screening plant in operation at any one time. However a second screening plant was brought into operation at the end of the year and after the financial year-end the new East Salztal North deposit was brought into production simultaneously with the mining of the Salzpfanne deposit. Both operating screening plants have been relocated to immediately adjacent to the deposits being mined, thus constraining operating costs.

The poor performance of operations in FY 2007-8 has been the result of a number of factors - a greater prospecting requirement than initially envisaged; an inability to both prospect and mine simultaneously; and poor equipment availability and utilisation. All these factors are being addressed during FY2008-9.

The annual report and accounts for the 2007 financial year have been printed and posted to shareholders and are available from the Company's website www.namibianresources.com.

Contacts:

The Company
Tony Carlton, CEO		020 8726 0900
Oliver Plummer, Financial Director		020 7831 0100
Collins Stewart (Nomad to the Company)
Adrian Hadden		020 7523 8351

Consolidated income statement for the year ended 29 February 2008

	Note	2008	2007
		£	£
Revenue	1.7	140,622	504,542
Cost of sales		(234,943)	(202,565)
		________	________
Gross profit		(94,321)	301,977
Administrative expenses		(210,317)	(310,463)
		________	________
Operating loss	3	(304,638)	(8,486)
Other interest receivable and similar income		6,470	34,554
		________	________
(Loss)/Profit before tax		(298,168)	26,068
Income tax expense	4	-	-
		________	________
(Loss)/Profit after tax		£(298,168)	£26,068
Earnings per share (pence)	5
Basic		(0.78)	0.07
Diluted		(0.78)	0.06

All amounts relate to continuing activities.

Consolidated statement of total recognised income and expense for the year ended 29 February 2008

		2008 £	2007 £
Exchange difference on translation of foreign operations		(178,543)	(548,824)
		________	________
Net income (expense) recognised directly in equity		(178,543)	(548,824)
(Loss)/Profit for the financial year		(298,168)	26,068
		________	________
Total recognised income and expense for the year		£(476,711)	£(522,756)
		________	________

The notes on pages 15 to 35 form part of these financial statements.

Consolidated balance sheet at 29 February 2008

	Note	2008	2008	2007 as restated	2007 as restated
Assets		£	£	£	£
Non current assets
Intangible assets:
Mining rights and exploration costs	7	860,499		652,878
		________		________
			860,499		652,878
Property, Plant and Equipment	8		970,106		1,172,047
			________		________
			1,830,605		1,824,925
Current assets Inventories	10	32,673		35,948
Trade and other receivables	11	26,363		23,518
Cash and cash equivalents		103,500		372,188
		________		________
			162,536		431,654
Total Assets			£1,993,141		£2,256,579
			________		________
Equity and Liabilities
Share capital	14		3,992,246		3,792,246
Share premium account	15		359,384		359,384
Foreign exchange reserve			99,562		278,105
Retained earnings	16		(2,509,171)		(2,211,003)
			________		________
Total equity	18		1,942,021		2,218,732

Current Liabilities
Trade and other payables	12		51,120		37,847
			________		________
Total Equity and liabilities	18		£1,993,141		£2,256,579
			________		________

Company balance sheet at 29 February 2008

	Note		2008		2007 as restated
			£		£
Assets
Non-current assets
Investments	9		4,091,729		4,199,108
Current assets
Cash and cash equivalents			103,338		208,432
			________		________
Total Assets			4,195,067		4,407,540
			________		________
Equity
Share capital	14		3,992,246		3,792,246
Share premium account	15		359,384		359,384
Retained earnings	16		(175,438)		236,533
			________		________
Total Equity	18		4,176,192		4,388,183
Current Liabilities
Trade and other payables	12		18,875		19,357
			________		________
Total Liabilities			£4,195,067		£4,407,540
			________		________

Consolidated cash flow statement for the year ended 29 February 2008

	Note	2008	2007
		£	£
Cash generated from operating activities	20	(70,548)	60,992
Cash flow from investing activities
Purchase of intangible assets		(279,457)	(74,582)
Purchase of property plant and equipment		(125,003)	(137,531)
Interest Received		6,320	34,554
		________	________
Net cash used in investing activities		(398,230)	(177,559)
Cash flow from financing activities
Proceeds from issue of shares		200,000	-
		________	________
Net decrease in cash and cash equivalents	22	£(268,688)	£(116,567)
		________	________

Notes forming part of the financial statements for the year ended 29 February 2008

1 Accounting policies

1. Presentation of Annual Financial Statements 

The annual financial statements have been prepared for the first time in accordance with International Financial Reporting Standards as adopted by the European Union, and the Companies Act of 1985. The adoption of International Financial Reporting Standards has resulted in the restatement of 2007 balances to provide a like for like comparison. The financial impact of this change in reporting is detailed after each of the above financial reports. 

The annual financial statements have been prepared on the historical cost basis, and incorporate the principal accounting policies set out below. 

The group has not yet applied the following Accounting Standards and Interpretations, which will be applicable to their annual financial statements, that have been issued but are not yet effective: 

IAS 15	Agreement for the Construction of Real Estate.	(Effective 1 January 2009)
IAS 1	Presentation of Financial Statements - Comprehensive revision including required a statements of comprehensive income. Amendments resulting from May 2008 Annual Improvements to IFRSs.	(Effective 1 January 2009)
IAS 16	Property, plant and equipment - Amendments resulting from May 2008 Annual Improvements to IFRSs.	(Effective 1 January 2009)
IAS 23	Borrowing costs.	(Effective 1 January 2009)
IAS 32	Financial Instruments: Presentation - Amendments relating to puttable instruments and obligations arising on liquidation.	(Effective 1 January 2009)
IAS 36	Impairment of Assets - Amendments resulting from May 2008 Annual Improvements to IFRSs.	(Effective 1 January 2009)
IAS 38	Intangible Assets - amendments resulting from May 2008 Annual Improvements to IFRSs.	(Effective 1 January 2009)
IAS 39	Financial Instruments: Recognition and Measurement Amendments resulting from May 2008 Annual Improvements to IFRSs.	(Effective 1 January 2009)

The directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements of the company or the group.

1.1 Basis of Consolidation

The consolidated income statement account and balance sheet include the financial statements of the company and its subsidiary undertakings made up to 29 February 2008. The results of subsidiaries sold or acquired are included in the income statement up to, or from the date control passes. Intra-group sales and profits are eliminated fully on consolidation.

The results of a holding in Oletu Investments Holdings (see Note 10) have not been consolidated on account of it being immaterial. 

1.2 Going Concern

The company's ability to continue as a going concern depends on the prospects of future profitable trading and being able to raise sufficient finance to upgrade its production facilities and equipment, maintain a rolling programme of exploration and improve the volume of, and output from, its processing of raw material. The group is seeking additional sources of finance but also relies on financial support from directors and existing shareholders. To date, the company and the group have accumulated trading losses since the commencement of mining activities and there are inherent uncertainties in the mining industry which make it impossible to predict when the company will become profitable. Nevertheless, the directors remain confident that the company and the group will trade profitably in the foreseeable future and will be able to continue to meet its liabilities as they fall due.

1.3 Significant Judgements

In preparing the annual financial statements, management is required to make estimates and assumptions that affect the amounts represented in the annual financial statements and related disclosures. Use of available information and the application of judgement is inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the annual financial statements. Significant judgements include: 

Trade Receivables 

The group assesses its trade receivables for impairment at each balance sheet date. In determining whether an impairment loss should be recorded in the income statement, the company makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from a financial asset. 

Mining assets

The group assesses the proportion of exploration costs incurred which will provide future economic benefits in identifying areas of interest where future mining could be focused. These costs are capitalised and amortised over the period of the mining licence.

Mining rights

The right of mining on the assigned area was initially valued by an independent geologist. This right is yearly re-assessed for impairment by comparing the value-in-use to the carrying value of the mining right.

1.4 Underlying concepts 

The financial statements are prepared on the going concern basis using accrual accounting. 

Assets and liabilities and income and expenses are not offset unless specifically permitted by an accounting standard. 

Financial assets and financial liabilities are offset and the net amount reported only when a currently legally enforceable right to set off the amounts exists and the intention is either to settle on a net basis or to realise the asset and settle the liability simultaneously. 

The accounting policies adopted are consistent with those used in previous financial periods except for

 

a) Adoption of IFRS

Previously the company and its subsidiaries prepared the financial statements in accordance with UK GAAP. The group elected to publish its first consolidated interim financial statements to 31 August 2007 under IFRS with its transition date to IFRS being 1st March 2006

 

b) Introduction of IFRS - First time adoption 

 

The rules for first time adoption of IFRS are set out in IFRS1, First-Time Adoption of International Financial Reporting Standards. In general, selected accounting policies must be applied retrospectively in determining the opening balance sheet under IFRS. However, IFRS1 allows a number of exemptions to this general principle.

Changes in accounting estimates are recognised in profit or loss. 

Prior period errors are retrospectively restated unless it is impractical to do so, in which case they are applied prospectively. 

Accounting policies are not applied when the effect of applying them is immaterial. 

1.5 Recognition of Assets and Liabilities 

Assets are only recognised if they meet the definition of an asset, it is probable that future economic benefits associated with the asset will flow to the company and the cost or fair value can be measured reliably. 

Liabilities are only recognised if they meet the definition of a liability, it is probable that future economic benefits associated with the liability will flow from the company and the cost or fair value can be measured reliably. 

Financial instruments are recognised when the company becomes a party to the contractual provisions of the instrument. 

Financial assets and liabilities as a result of firm commitments are only recognised when one of the parties has performed under the contract. 

Regular purchases and sales are recognised using trade date accounting. 

1.6 Derecognition of Assets and Liabilities 

Financial assets or parts thereof are derecognised when the contractual rights to receive cash flows have been transferred or have expired or if substantially all the risks and rewards of ownership have passed. Where substantially all the risks and rewards of ownership have not been transferred or retained, the financial assets are derecognised if they are no longer controlled. However, if control in this situation is retained, the financial assets are recognised only to the extent of the continuing involvement in those assets. 

All other assets are derecognised on disposal or when no future economic benefits are expected from their use or on disposal. 

Financial liabilities are derecognised when the relevant obligation has either been discharged or cancelled or has expired. 

 

1.7 Revenue

The total revenue of the group for the year has been derived from its principal activity, mining, wholly undertaken by its subsidiary in Namibia, Sonnberg Diamonds (Namibia) (Proprietary) Limited ("Sonnberg"). All sales are made in Namibia and the majority of assets are also located in Namibia.

Turnover comprises of sales to customers and services rendered to customers. Turnover is stated at the invoice amount and is exclusive of value added taxation.

Revenue from the sale of goods is recognised when all the following conditions have been satisfied: 

Revenue is measured at the fair value of the consideration received or receivable and represents the amounts receivable for goods provided in the normal course of business, net of trade discounts and volume rebates, and value added tax. 

Interest is recognised, in profit or loss, using the effective interest rate method. 

 

1.8 Tax 

Current tax assets and liabilities 

Current tax for current and prior periods is, to the extent unpaid, recognised as a liability. If the amount already paid in respect of current and prior periods exceeds the amount due for those periods, the excess is recognised as an asset. 

Current tax liabilities (assets) for the current and prior periods are measured at the amount expected to be paid to (recovered from) the tax authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date. 

Deferred tax assets and liabilities 

A deferred tax liability is recognised for all taxable temporary differences, except to the extent that the deferred tax liability arises from the initial recognition of an asset or liability in a transaction which at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss). 

A deferred tax asset is recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised. A deferred tax asset is not recognised when it arises from the initial 

recognition of an asset or liability in a transaction at the time of the transaction and affects neither accounting profit nor taxable profit (tax loss). 

A deferred tax asset is recognised for the carry forward of unused tax losses to the extent that it is probable that future taxable profit will be available against which the unused tax losses can be utilised. 

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date. 

Tax expenses 

Current and deferred taxes are recognised as income or an expense and included in profit or loss for the period, except to the extent that the tax arises from: 

Current tax and deferred taxes are charged or credited directly to equity if the tax relates to items that are credited or charged, in the same or a different period, directly to equity. 

1.9 Leases 

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership. 

Rentals payable under operating leases are charged against income on a straight-line basis over the lease term.

1.10 Foreign Currency Translation

Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction.

The results of overseas operations are translated at the rate ruling at the date of the transaction. However the balance sheet is translated at the rate ruling at the date of the balance sheet. Exchange differences arising on translation of opening assets are reported in the consolidated statement of recognised income and expense.

1.11 Mining Assets 

Exploration and evaluation costs other than future site identification costs are expensed as incurred. Site identification costs related to areas of interest are capitalised and carried forward to the extent that they are expected to be recoverable.

Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Accordingly, the costs have been determined on the basis that the restoration will be completed within one year of abandoning the site. 

Mining assets are reviewed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. When facts and circumstances suggest that the carrying amount exceeds the recoverable amount, the mining asset is written down to their recoverable amount. 

1.12 Rehabilitation Costs 

Costs of site restoration are recognised when incurred. Site restoration costs include the dismantling and removal and rehabilitation of the site in accordance with the clauses of the mining permits. Such costs are charged to direct costs. 

1.13 Intangible Assets 

An intangible asset is recognised when: 

Intangible assets are initially recognised at cost. 

Intangible assets are carried at cost less any accumulated amortisation and any impairment losses. Expenditure on acquired intangible assets are capitalised and amortised using the straight-line method over their useful lives. Intangible assets are not revalued. The carrying amount of each intangible asset is reviewed annually and adjusted for impairment where it is considered necessary. 

An intangible asset is regarded as having an indefinite useful life when, based on all relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows. Amortisation is not provided for these intangible assets. For all other intangible assets amortisation is provided on a straight line basis over their useful life. 

The amortisation period and the amortisation method for intangible assets are reviewed every period-end. 

Amortisation is provided to write down the intangible assets, on a straight line basis, to their residual values as follows:

Items	Useful life
Mining Rights	20 Years
Exploration Costs	10 Years

1.14 Investments

Fixed assets investments are stated at cost less provision for diminution in value.

1.15 Property, Plant and Equipment 

The cost of an item of property, plant and equipment is recognised as an asset when: 

and the cost of the item can be measured reliably. 

Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised.

 

The initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located is also included in the cost of property, plant and equipment. 

Property, plant and equipment is carried at cost less accumulated depreciation and any impairment losses. Depreciation is calculated on the straight-line method to write off the cost of each asset to their residual values over their estimated useful lives. Depreciation begins when an item of property, plant and equipment is available for use and ends when the item is derecognised, even if during that period the item was idle. The depreciation rates applicable to each category of property, plant and equipment are as follows: 

Item	Average useful Life
Plant and Machinery	10 years
Motor Vehicles	8 years
Office Equipment	5 years

The residual value and the useful life of each asset are reviewed at each financial period-end. 

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item shall be depreciated separately. 

The depreciation charge for each period is recognised in profit or loss unless it is included in the carrying amount of another asset. 

The gain or loss arising from the derecognition of an item of property, plant and equipment is included in profit or loss when the item is derecognised. The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item. 

1.16 Impairment of Assets

The company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the group estimates the recoverable amount of the asset. 

Irrespective of whether there is any indication of impairment, the company also: 

If there is any indication that an asset may be impaired, the recoverable amount is estimated for the individual asset. If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash-generating unit to which the asset belongs is determined. 

The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its value in use. 

If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. That reduction is an impairment loss. 

An impairment loss of assets carried at cost less any accumulated depreciation or amortisation is recognised immediately in profit or loss. Any impairment loss of a revalued asset is treated as a revaluation decrease. 

A reversal of an impairment loss of assets carried at cost less accumulated depreciation or amortisation other than goodwill is recognised immediately in profit or loss. Any reversal of an impairment loss of a revalued asset is treated as a revaluation increase. 

1.16 Inventories

This represents inventories of consumable stores, held at the lower of cost and net realisable value.

1.18 Financial Instruments

Initial Recognition

The group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement.

 

Financial assets and financial liabilities are recognised on the group's balance sheet when the company becomes party to the contractual provisions of the instrument. 

Loans to (from) Group Companies 

These include loans to the subsidiary company and are recognised initially at fair value plus direct transaction costs. 

Subsequently these loans, where it is practicable to do so and it would have a material effect on consolidated reporting, are measured at amortised cost using the effective interest rate method, less any impairment loss recognised to reflect irrecoverable amounts on loans receivable an 

impairment loss is recognised in profit or loss when there is objective evidence that it is impaired. The impairment is measured as the difference between the investment's carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition. 

Impairment losses are reversed in subsequent periods when an increase in the investment's recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to the restriction that the carrying amount of the investment at the date the impairment is reversed shall not exceed what the amortised cost would have been had the impairment not been recognised. 

Trade and other Receivables 

Trade receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference 

between the asset's carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition. 

Trade and other Payables 

Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method. 

Cash and cash equivalents 

Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These are initially and subsequently recorded at fair value. 

1.19 Provisions and Contingencies 

Provisions are recognised when: 

Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement shall be recognised when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. The reimbursement shall be treated as a separate asset. The amount recognised for the reimbursement shall not exceed the amount of the provision. 

Provisions are not recognised for future operating losses. 

If an entity has a contract that is onerous, the present obligation under the contract shall be recognised and measured as a provision. 

Contingent assets and contingent liabilities are not recognised.

1.20 Executive Share Options

For equity-settled share-based payment transactions the group, in accordance with IFRS2 (effective from 1st January 2006), measures their value, and the corresponding increase in equity, indirectly, by reference to the fair value of the equity instruments granted. The fair value of those equity instruments is measured at grant date using the trinomial method. Where the expense is material, it is apportioned over the vesting period of the financial instrument and is based on the numbers which are expected to vest and the fair value of those financial instruments at the date of the grant. If the equity instruments granted vest immediately, the expense is recognised in full.

2. Employees

The average monthly number of employees, (including directors), during the year was:	Number	Number
Staff of subsidiary	17	12
Staff of head office	1	1
Directors	4	4
	________	________
	22	17
	________	________

3 Operating loss

	2008	2007
	£	£
This has been arrived at after charging:
Depreciation	127,010	112,571
Amortisation	12,955	7,354
Operating lease rentals - land and buildings	7,108	7,200
Auditors' remuneration - audit
(company ߛ £13,290 (2007 - £12,994))	16,631	23,887
	________	________

4 Taxation on loss on ordinary activities

There has been no tax payable in this or the previous year due to the availability of losses.

	2008	2007
	£	£
(Loss)/Profit on ordinary activities before tax	(298,168)	(26,068)
	________	________
(Loss)/Profit on ordinary activities at the standard rate of corporation tax in the UK of 30% (2007 - 30%)
	(89,450)	7,820
Effects of:
Tax losses	89,450	(7,820)
	________	________
Current tax charge for year	-	-
	________	________

A deferred tax asset of £548,980 (2007 - £458,231) relating to losses in the subsidiary undertakings has not been recognised due to inherent uncertainty regarding the availability of suitable taxable profits against which the losses can be recovered within the foreseeable future.

5 Profit per share

Profit per share has been calculated using the weighted average number of shares in issue during the relevant financial periods. The weighted average number of shares in issue is 38,272,187(2007 - 37,922,460) and the loss, being the loss after tax, is £298,168 (2007 profit ߛ £26,068).

Diluted profit per share has been calculated using a weighted average number of shares of 38,272,187 (2007 - 41,672,460), which includes the share options in issue at the start and end of the year.

6 Loss for the financial period

As permitted by Section 230 of the Companies Act 1985, the holding company's profit and loss account has been included in these financial statements. The loss for the financial year is made up as follows:

	2008	2007 as restated
Holding company's (loss)/profit for the financial year	£(411,991)	£1,186,300
	________	________

7 Intangible fixed assets

	Mining rights and
	exploration costs
Group	£
Cost
At 1 March 2007	1,147,560
Additions	279,457
Exchange difference	(104,531)
	________
At 29 February 2008	1,322,486
	________
Amortisation
At 1 March 2007	494,682
Charge for the year	12,955
Exchange differences	(45,060)
	________
At 29 February 2008	461,987
	________
Net book values
At 29 February 2008	£860,499
	________
At 28 February 2007	£652,878
	________

8 Tangible fixed assets

	Office Equipment	Property, Plant  And Equipment	Total
	£	£	£
Group
Cost
At 1 March 2007	3,241	1,425,061	1,428,302
Additions	-	36,454	36,454
Exchange difference	620	(130,588)	(129,968)
	________	________	________
At 29 February 2008	3,861	1,330,927	1,334,788
	________	________	________
Depreciation
At 1 March 2007	1,699	254,556	256,255
Charge for the year Exchange difference	399 526	126,611 (19,109)	127,010 (18,583)
	________	________	________
At 29 February 2008	2,624	362,058	364,682
	________	________	________
Net book Value
At 29 February 2008	£1,237	£968,869	£970,106
	________	________	________
At 28 February 2007	£1,542	£1,170,505	£1,172,047
	________	________	________

9 Fixed asset investments

	Group undertakings	Loans to group undertakings	Total
	£	£	£
Company
At 1 March 2007 (as restated)	2,064,225	2,763,419	4,827,644
Additions	46,205	98,072	144,277
Exchange differences	-	(251,656)	(251,656)
	________	________	________
At 29 February 2008	2,110,430	2,609,835	4,720,265
	________	________	________
Provisions for diminution in value
At 1 March 2007 (as restated) and at 29 February 2008	628,536	-	628,536
	________	________	________
Net book value
At 29 February 2008	£1,481,894	£2,609,835	£4,091,729
	________	________	________
At 28 February 2007  (as restated)	£1,435,689	£2,763,419	£4,199,108

Investment in group undertakings includes

The loans to group undertakings are denominated in Namibian Dollars, are interest free and are subordinated in favour of other creditors of the subsidiary undertakings. See note 19 for details of the Prior Year Adjustment resulting in the restatement of the opening balances. 

The directors are of the opinion that it is impractical to measure the loans to subsidiaries at amortised cost using the effective interest rate method and that to do so would have no benefit to the consolidated position of the company and its subsidiaries as the balances due to and from each company eliminate on consolidation.

10 Inventories

	Group	Group
	2008	2007
Consumable stores	£32,673	£35,948
	________	________

11 Trade and Other Receivables

	Group	Group	Company	Company
	2008	2007	2008	2007
	£	£	£	£
Trade receivables	26,363	23,518	-	-
	________	________	________	________

All amounts fall due for repayment within one year.

12 Trade and other payables

	Group	Group	Company	Company
	2008	2007	2008	2007
	£	£	£	£
Trade Payables and Accruals	51,120	37,847	18,875	19,357
	________	________	________	________

13 Derivatives and other financial instruments

Financial instruments policies and strategies

During the period since its incorporation, the group has financed its business with the cash it has raised through the issue of shares. It has used these funds to acquire and develop business in Namibia. The main risk arising from the group's financial instruments is foreign currency risk.

At 29 February 2008, the group's financial instruments comprised cash and short-term receivables and payables arising directly from its operations. The group's primary treasury activity has been the management of cash. This has been held so as to maximise interest earned without compromising the group's need for flexibility in meeting its cash needs. The group is not currently actively pursuing a strategy of acquiring investments.

Although the group is based in the UK, it has a significant investment in Namibia. As a result, the group's sterling balance sheet can be significantly affected by movements in the Namibian Dollar/Sterling exchange rates.

Sales of diamonds are denominated in Namibian Dollars but the price obtained is dependent on market prices set in US Dollars. The group incurs costs in both Sterling and Namibian Dollars.

The group has not entered into any derivative transactions during the year.

Short-term receivables and payables have been excluded from the numerical disclosures below.

Interest rate risk profile of financial assets:	Floating rate
	2008	2007
	£	£
Sterling	103,338	163,756
Namibian dollar	162	208,432
	________	________
	£103,500	£372,188
	________	________

The financial assets comprise short-term cash deposits. The group does not have any material interest bearing financial liabilities. As the group's principal financial instruments is cash, the directors do not consider there to be a material difference between the book and fair value of the group's financial assets.

14 Share capital

Shares	2008	2007	2008	2007
	Number	Number	£	£
Authorised
500,000,000 ordinary shares of 10p each	500,000,000	500,000,000	50,000,000	50,000,000
	__________	__________	_________	__________
Allotted, called up and fully paid
Ordinary shares of 10p each	39,922,460	37,922,460	3,992,246	3,792,246
	__________	__________	__________	__________

During the year 2,000,000 ordinary shares of 10p each were issued at par.

Options

The company has in issue the following options to subscribe for ordinary shares:

	2008	2007
Number	4,500,000	3,750,000

During the year 750,000 options were granted to DG Sutherland.

Options issued prior to 28 February 2007 are exercisable between 11 February 2004 and 11 February 2009 at a exercise price of £0.15. Options issued during the year are exercisable between 9 January 2008 and 9 January 2013 at an exercise price of £0.12p. As at 29 February 2008 all options were still outstanding.

The directors estimate, by reference to formal valuations of options issued in prior periods and consideration of movements in component factors of those valuations, that the expense to be recognised under IFRS2 in respect of options issued during the year is not material in the context of group results. They consider that the expense of commissioning a separate valuation would be disproportionate to the benefits obtained. Accordingly no adjustments have been made to reflect the issue of options as an expense of the business and the corresponding increase in equity of the business.

15 Share Premium Account

Group and Company	Share Premium account
At 1 March 2007 and 29 February 2008	£359,384

16 Profit and Loss Account

Group	£
At 1 March 2007 (as previously stated)	(1,932,898)
Prior year adjustment	(278,105)
At 1 March 2007 (as restated)	(2,211,003)
Loss for the year	(298,168)
	________
At 29 February 2008	£(2,509,171)
	________
Company	£
At 1 March 2007 (as previously stated)	(1,075,066)
Prior year adjustment	1,311,619
At 1 March 2007 (as restated)	236,553
Loss for the year	(411,991)
	________
At 29 February 2008	£(175,438)
	________

17 Foreign Exchange Reserve

Group	£
At 1 March 2007 (as previously stated)	-
Prior year adjustment	278,105
At 1 March 2007 (as restated)	278,105
Inter-company loan - elimination of exchange loss	(251,656)
Gain on foreign translation	73,113
	________
At 29 February 2008	£99,562
	________

18 Reconciliation of movements in shareholders' funds

	2008	2007
	£	£
Group
(Loss)/Profit for the financial year	(298,168)	26,068
Other recognised gains and losses	(178,543)	(548,824)
Issue of shares	200,000	-
	________	________
	(276,711)	(522,756)
Opening shareholders' funds	2,218,732	2,741,488
	________	________
Closing shareholders' funds	£1,942,201	£2,218,732
	________	________

The conversion from United Kingdom Generally Accepted Accounting Practice to International Financial Reporting Standards has caused no effect on the equity of the group.

	2008	2007
Company	£	£
(Loss)/Profit for the financial year (as restated)	(411,991)	1,186,300
Issue of shares	200,000	-
	________	________
	(211,991)	1,186,300
Opening shareholders' funds (as previously stated)	3,076,564	3,201,883
Prior year adjustment	1,311,619	-
	________	________
Closing shareholders' funds	£4,176,192	£4,388,183
	________	________

19 Prior year adjustments

	Group	Company
	£	£
a. Arising from reclassification of inter-company loan indebtedness as a Namibian Dollar liability		811,619
b. Release of provision for impairment on revaluation of loan		500,000
c. Arising from first time introduction of IFRS and creation of Foreign Exchange Reserve	278,105
	________
		________
		1,311,619
		________

20 Reconciliation of operating loss to net cash outflow from operating activities

	2008	2007
	£	£
Operating loss	(304,638)	(8,486)
Depreciation of plant, property and equipment	121,225	112,571
Amortisation of intangible assets	12,365	7,354
Decrease/(Increase) in inventories	3,275	(1,304)
(Increase)/decrease in trade and other receivables	(2,845)	7,857
Increase/(decrease) in trade and other payables	13,273	(36,816)
Net effect of foreign exchange differences	86,797	(20,184)
Net cash (outflow)/inflow from operating activities	£(70,548)	£60,992
	________	________

21 Analysis of net debt

	At 1 March 2007	Cash flow	At 29 February 2008
	£	£	£
Net cash:
Cash at bank and in hand	£372,188	£(268,688)	£103,500
	________	________	________

22 Reconciliation of net cash flow to movement in net funds

	2008	2007
	£	£
(Decrease) in cash for the year	(268,688)	(116,567)
	________	________
Movement in net funds in the year	(268,688)	(116,567)
Opening net funds	372,188	488,755
	________	________
Closing net funds	£103,500	£372,188
	________	________

23 Contingent liabilities

The mining contract undertaken by the group requires the subsidiary, Sonnberg, to remove all equipment and installations and to rehabilitate all disturbed areas once mining activities have ceased.

Sonnberg pay 1% of sales to a fund held by NAMDEB Diamond Corporation (Proprietary) Limited, to provide for the costs of environmental rehabilitation. The directors' best estimate is that there is no additional liability at the balance sheet date to the contributions already made to this fund. Accordingly, no provision has been made.

24 Commitments under operating leases

As at 29 February 2008, the company had annual commitments under non-cancellable operating leases as set out below:

	2008  Land and buildings	2007  Land and buildings
	£	£
Expiring in less than one year	2,400	2,400
	________	________

The report and accounts have been posted to shareholders and are now available on the Company's website www.namibianresources.com, copies of the Report and Accounts will be available for collection at or by writing to the Company's offices located at Cargil Management Services, 302 High Street, Croydon, Surrey, CR0 1NG. Notice of the AGM, which will be held at 11.30am on the 9th October at 36, Dover Street, London, W1S 4NH, will be posted to shareholders separately. 

ENDFR ILFLFTFIAFIT

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Related Shares:

NBR.L