Final Results

RNS Number : 8194R

Namibian Resources PLC

31 August 2010

 

For immediate release 31 August 2010

 

NAMIBIAN RESOURCES Plc ("the Company")

 

Annual Report and Financial Statements for the year ended 28 February 2010

 

The Company today announces its final results for the year ended 28 February 2010. The Annual Report and Accounts, together with the Notice of Annual General Meeting, are being posted to shareholders and will also be available on the Company's website www.namibian resources.com. The Annual General Meeting will be held at 36 Dover Street, London W1S 4NH on 20 October 2010 at 11.00 am.

 

Chairman's statement

 

 

YEAR ENDED 28 February 2010

 

The year to 28th February 2010 was disappointing as expected due to the cessation of production at Sonnberg following the near collapse of the international diamond market and soaring fuel costs. Our staffing was greatly reduced and care and maintenance only was carried out throughout the year.

 

During the current financial year diamond prices have improved and although limited our production both in terms of diamond size and value has increased considerably. Pending the conclusion of our ongoing efforts to raise additional financing the Directors are demonstrating their determination to achieve profitability by continuing to fund the company with interest free unsecured loans. Negotiations with potential investors are continuing and we will report again on progress when appropriate.

 

Lord Sheppard of Didgemere KCVO Kt.

 

 

Enquiries:

 

Tony Carlton, Namibian Resources Plc Telephone 020 8726 0900

Roland Cornish, Beaumont Cornish Limited Telephone 020 7628 3396

 

 

Namibian Resources Plc

 

Review of Operations

 

 

YEAR ENDED 28 February 2010

 

In October last year we reported on the severe downturn in the diamond market causing a severe impacton our operations with the cessation of all our operations in Namibia. Sonnberg mining and sampling was terminated and our operations were put on a care and maintenance basis due to the uncertainty of realised diamond values. Care and maintenance only was maintained throughout the year to 28th February 2010.

 

Production on a much-reduced scale was recommenced in April this year. Although production has been low since this time we are very encouraged by the prices that we are now receiving for production during the current financial year. We are continuing to progress our efforts for financing options to upgrade our mining operations and to seek additional resources for development. We are having ongoing discussions with potential investors to provide the necessary funds. A mining plan is in place to take us through to early 2011 on identified deposits. In the meantime the Directors have continued to support the company with unsecured interest free loans which totalled £597,500 at 28th February 2010.

 

 

 

ACA Carlton

 

 

 

 

 

 

 

 

 

Namibian Resources Plc

 

Consolidated income statement for the year ended 28 February 2010

 

	Note	2010	2009
		£	£
Revenue	1.7	-	127,580
Cost of sales		-	(414,848)
		________	________
Gross loss		-	(287,268)
Administrative expenses		(289,554)	(206,506)
		________	________
Operating loss	3	(289,554)	(493,774)
Other interest receivable and similar income		201	1,289
		________	________
(Loss) before tax		(289,353)	(492,485)
Income tax expense	4	-	-
		________	________
(Loss) after tax		£(289,353)	£(492,485)
Earnings per ordinary share (pence)	5
Basic		(0.72)	(1.23)
Diluted		(0.71)	(1.21)

 

 

 

 

Consolidated statement of comprehensive income for the year ended 28 February 2010

 

	2010 £	2009 £
Exchange difference on translation of foreign operations	298,573	76,945
	________	________
Net income recognised directly in equity	298,573	76,945
(Loss) for the financial year	(289,353)	(492,485)
	________	________
Total recognised income and expense for the year	£9,220	£(415,540)
	________	________

 

Namibian Resources Plc

 

Consolidated balance sheet at 28 February 2010

 

	Note	2010	2010	2009	2009
Assets		£	£	£	£
Non current assets
Intangible assets:
Mining rights and exploration costs	7	1,023,652		914,571
		________		________
			1,023,652		914,571
Property, Plant and Equipment	8		1,065,409		913,712
			________		________
			2,089,061		1,828,283
Current assets Inventories	10	37,520		31,967
Trade and other receivables	11	39,895		36,165
Cash and cash equivalents	13	6,478		36,739
		________		________
			83,893		104,871
Total Assets			£2,172,954		£1,933,154
			________		________
Equity and Liabilities
Share capital	14		3,992,246		3,992,246
Share premium account	15		359,384		359,384
Currency translation reserve	17		475,080		176,507
Retained earnings	16		(3,291,009)		(3,001,656)
			________		________
Total equity			1,535,701		1,526,481

Current Liabilities
Trade and other payables	12		637,253		406,673
			________		________
Total Equity and liabilities	18		£2,172,954		£1,933,154
			________		________

 

 

 

Namibian Resources Plc

 

Consolidation Statement of changes in equity for the year ended 28 February 2010

 

 

 

	2010	2009
	£	£
Opening balance	1,526,481	1,942,021
Loss for financial year	(289,353)	(492,485)
Translation reserve	298,573	76,945
	________	________
Closing balance	£1,535,701	£1,526,481
	________	________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Namibian Resources Plc

 

Company balance sheet at 28 February 2010

 

 

	Note		2010		2009
			£		£
Assets
Non-current assets
Investments	9		4,540,016		4,392,108
Current assets
Cash and cash equivalents			6,376		25,681
			________		________
Total Assets			£4,546,392		£4,417,789
			________		________
Equity
Share capital	14		3,992,246		3,992,246
Share premium account	15		359,384		359,384
Retained earnings	16		(414,238)		(308,394)
			________		________
Total Equity	18		3,937,392		4,043,236
Current Liabilities
Trade and other payables	12		609,000		374,553
			________		________
Total Equity and Liabilities			£4,546,392		£4,417,789
			________		________

 

 

Namibian Resources Plc

 

Company Statement of changes in equity for the year ended 28 February 2010

 

 

 

 

	2010	2009
	£	£
Opening balance	4,043,236	4,176,192
Loss for financial year	(105,844)	(132,956)
	________	________
Closing balance	£3,937,392	£4,043,236
	________	________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Namibian Resources Plc

 

Cash flow statements for the year ended 28 February 2010

 

	Note	Group 2010	Company 2010	Group 2009	Company 2009
		£	£	£	£
Cash flow generated from operating activities	19	(30,462)	(19,305)	15,454	(78,056)
Cash flow from investing activities
Purchase of intangible assets		-	-	(47,809)	-
Purchase of property plant and equipment		-	-	(35,695)	-
Interest Received		201	-	1,289	399
		________	________	________	________
Net cash used in investing activities		201	-	(82,215)	399
		________	________	________	________
Net decrease in cash and cash equivalents	21	£(30,261)	£(19,305)	£(66,761)	£(77,657)
		________	________	________	________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Namibian Resources Plc

 

Notes forming part of the financial statements for the year ended 28 February 2010

 

Namibian Resources Plc ("the Company") and its subsidiary ("the group") are primarily involved in mining. Namibian Resources Plc, a public limited company incorporated and domiciled in England is the Group's ultimate parent company.

 

1 Accounting Policies

 

1. Presentation of Annual Financial Statements

 

The annual financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union, and the Companies Act of 2006.

 

The annual financial statements 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:

 

IFRS 2 - Share-based Payment - Amendments resulting from April 2009 Annual Improvements to IFRSs

(effective first annual period commencing on or after 1/7/2009)

IFRS 3 - Share-based Payment - Business Combinations - Comprehensive revision on applying the acquisition method (effective first annual period commencing on or after 1/7/2009)

IFRS 5 - Non-current assets Held for Sale and Discontinued Operations (effective first annual period commencing on or after 1/1/2010)

IFRS 8 - Operating Segments (effective first annual period commencing on or after 1/1/2010)

IFRIC 17 - Distributions of Non-cash Assets to Owners (effective first annual period commencing on or after 1/7/2009)

IFRIC 18 - Transfers of Assets from Customers (effective first annual period commencing on or after 1/7/2009)

IAS 7 - Statement of Cash Flows (effective first annual period commencing on or after 1/1/2010)

IAS 23 - Borrowing costs (effective first annual period commencing on or after 1/1/2010)

IAS 27 - Consequential amendments arising from amendments to IFRS 3 (effective first annual period commencing on or after 1/7/2009)

IAS 31 - Interests in Joint Ventures - Amendments resulting from May 2008 Annual Improvements to IFRSs (effective first annual period commencing on or after 1/7 /2009)

IAS 36 - Impairment of Assets (effective first annual period commencing on of after 1/1/2010)

IAS 38 - Intangible Assets - Amendments resulting from April 2009 Annual Improvements to IFRSs (effective first annual period commencing on or after 1/7/2009)

IAS 39 - Financial Instruments: Recognition and Measurement - Amendments for eligible hedged items (effective first annual period commencing on or after 1/7/2009)

IAS 39 - Financial Instruments: Recognition and Measurement - Amendments for embedded derivatives when reclassifying financial instruments (effective first annual period commencing on or after 1/7 /2009)

IAS 39 - Financial Instruments: Recognition and Measurement - Amendments resulting from April 2009 Annual Improvements to IFRSs (effective first annual period commencing on or after 1/7/2009)

 

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 28 February 2010. 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 9) have not been consolidated on account of it being dissolved on 15th December 2009.

 

 

1.2 Going Concern

 

Following the disruption and down turn in the Diamond Market in November 2008 the company has continued on a care and maintenance basis pending a resumption of normal conditions. The company's ability to raise finance to expand operations was curtailed by market conditions. However, the company will seek additional finance to expand its operations when conditions in the Diamond Market improve. 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.

 

The Directors' consider the company is a going concern because all equipment and services are being maintained in order. All contracts and liabilities have been complied with and met. Since February 28 2010 the Group has no outstanding liabilities other than in the normal course of business and this will continue at least until February 28 2011. There are no borrowings of any nature other than from the Directors.

 

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 the change in accounting estimates on depreciation of property, plant and equipment.

 

Changes in accounting estimates are recognised in profit or loss.

 

Prior period errors are retrospectively restated unless it is impractical to do so.

 

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.

 

 

 

 

 

 

 

 

 

 

 

 

Namibian Resources Plc

 

Notes forming part of the financial statements for the year ended 28 February 2010 (continued)

 

 

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:

 

·; the company has transferred to the buyer the significant risks and rewards of ownership of the goods;

·; the company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

·; the amount of revenue can be measured reliably;

·; it is probable that the economic benefits associated with the transaction will flow to the company; and

·; the costs incurred or to be incurred in respect of the transaction can be measured reliably.

 

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.

 

 

 

 

 

 

Namibian Resources Plc

 

Notes forming part of the financial statements for the year ended 28 February 2010 (continued)

 

 

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:

 

·; a transaction or event which is recognised, in the same or a different period, directly in equity, or

·; a business combination.

 

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.

 

 

 

 

 

 

 

Namibian Resources Plc

 

Notes forming part of the financial statements for the year ended 28 February 2010 (continued)

 

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.

 

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:

 

·; it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and

·; the cost of the asset can be measured reliably.

 

Namibian Resources Plc

 

Notes forming part of the financial statements for the year ended 28 February 2010 (continued)

 

 

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 10 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:

 

·; it is probable that future economic benefits associated with the item will flow to the company;

·; 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. Except for plant and machinery 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:

 

Plant and machinery is depreciated on the unit of production method. This represents a change in accounting policy as it was previously depreciated on a straight line basis over 10 years.

 

Item Average useful Life

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:

 

·; tests intangible assets with an indefinite useful life or intangible assets not yet available for use for impairment annually by comparing its carrying amount with its recoverable amount. This impairment test is performed during the annual period and at the same time every period.

·; tests goodwill acquired in a business combination for impairment annually.

 

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.

 

1.17 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:

 

·; the company has a present obligation as a result of a past event;

·; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and .

·; a reliable estimate can be made of the obligation.

 

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:	2010 Number	2009 Number
Staff of subsidiary - Production	5	16
Staff of head office - Administration	1	1
Directors' - Management	5	5
	________	________
	11	22
	________	________

 

The total wages, salaries and social security costs were 2010 £85,057 (2009 £122,864).

 

 

3 Operating Loss

	2010	2009
	£	£
This has been arrived at after charging:
Depreciation	6,605	169,662
Amortisation	46,690	39,734
Operating lease rentals - land and buildings	7,200	7,200
Auditor's remuneration - audit
(company ‑ £11,500 (2009 - £11,500))	17,193	16,110
Directors' Remuneration	25,000	28,200
	________	________

The remuneration of the highest paid director is £25,000 (2009 £28,200).

 

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.

 

	2010	2009
	£	£
(Loss) on ordinary activities before tax	(289,353)	(492,485)
	________	________
(Loss) on ordinary activities at the standard rate of corporation tax in the UK of 28% (2009 - 28%)
	(81,019)	(137,896)
Effects of:
Tax losses	81,019	137,896
	________	________
Total tax charge for year	-	-
	________	________

 

A deferred tax asset of £950,697 (2009 - £718,299) 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 Loss per Share

 

Loss per share has been calculated using the weighted average number of ordinary shares in issue during the relevant financial periods. The weighted average number of shares in issue is 39,922,460 (2009 - 39,922,460) and the loss, being the loss after tax, is £289,353 (2009 loss ‑ £492,485).

 

Diluted Loss per share has been calculated using a weighted average number of shares of 40,672,460 (2009 - 40,672,460), 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 408 of the Companies Act 2006, 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:

	2010	2009
Holding company's (loss) for the financial year	£(105,844)	£(132,956)
	________	________

7 Intangible Assets

	Mining rights and
	exploration costs
Group	£
Cost
At 1 March 2008	1,322,486
Additions	47,809
Exchange difference	73,102
	________
At 28 February 2009	1,443,397
Additions	-
Exchange difference	250,770
	________
At 28 February 2010	1,694,167
	________
Amortisation
At 1 March 2008	461,987
Charge for the year	39,734
Exchange differences	27,105
	________
At 28 February 2009	528,826
Charge for the year	46,690
Exchange differences	94,990
	________
At 28 February 2010	670,506
	________
Net book values
At 28 February 2010	£1,023,652
	________
At 28 February 2009	£914,571
	________

 

 

Of the net book value above £600,821 (2009 £511,889) relates to Mining Rights. There has been no amortisation of these rights in the year as it is the view of the directors that the fair value of the Rights exceeds the Net Book Value at the beginning and end of the year.

 

8 Property Plant and Equipment

	Fixtures & Fittings	Plant & Machinery	Total
	£	£	£
Group
Cost
At 1 April 2008	3,861	1,330,927	1,334,788
Additions	-	35,695	35,695
Exchange difference	(1,357)	72,724	71,367
	________	________	________
At 31 March 2009	2,504	1,439,346	1,441,850
Additions	-	-	-
Exchange difference	435	250,065	250,500
	________	________	________
At 28 February 2010	2,939	1,689,411	1,692,350
	________	________	________
Depreciation
At 1 April 2008	2,624	362,058	364,682
Charge for the year	394	169,268	169,662
Exchange difference	(1,395)	(4,811)	(6,206)
	________	________	________
At 31 March 2009	1,623	526,515	528,138
Additions	20	6,585	6,605
Exchange difference	283	91,915	92,198
	________	________	________
At 28 February 2010	1,926	625,015	626,941
	________	________	________
Net book value
At 28 February 2010	£1,013	£1,064,396	£1,065,409
	________	________	________
At 28 February 2009 At 28 February 2009	£881	£912,831	£913,712
	________	________	________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9 Fixed Asset Investments

	Group undertakings	Loans to group undertakings	Total
	£	£	£
Company
At 1 March 2008	2,110,430	2,609,835	4,720,265
Additions	-	300,379	300,379
Conversion to share capital	-	-	-
	________	________	________
At 28 February 2009	2,110,430	2,910,214	5,020,644
Additions	-	147,908	147,908
Conversation to share capital	717,781	(717,781)	-
	________	________	________
At 28 February 2010	2,828,211	2,340,341	5,168,552
	________	________	________
Provisions for diminution in value
At 1 March 2009 and at 28 February 2010 and at 28 February 2010	628,536	-	628,536
	________	________	________
Net book value
At 28 February 2010	£2,199,675	£2,340,341	£4,540,016
	________	________	________
At 28 February 2009	£1,481,894	£2,910,214	£4,392,108
	________	________	________

 

Investment in group undertakings includes

·; 100% holding in Sonnberg Diamonds (Namibia) (Proprietary) Limited, a mining company incorporated in Namibia.

·; 75% holding in Oletu Investment Holding (Proprietary) Limited a company incorporated in Namibia. The company has yet to trade. This company was dissolved on 15th December 2009.

 

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.

 

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 2010	Group 2009
Consumable stores	£37,520	£31,967
	________	________

 

 

11 Trade and Other Receivables

	Group	Group	Company	Company
	2010	2009	2010	2009
	£	£	£	£
Trade receivables	39,895	36,165	-	-
	________	________	________	________

All amounts fall due for repayment within one year.

 

 

 

12 Trade and other Payables

	Group	Group	Company	Company
	2010	2009	2010	2009
	£	£	£	£
Trade Payables and Accruals	39,753	56,673	11,500	24,553
Loans from Directors	597,500	350,000	597,500	350,000
	________	________	________	________
	637,253	406,673	609,000	374,553
	________	________	________	________

 

 

There are no terms of repayment for the directors' loans which are interest free.

 

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 28 February 2010, 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
	2010	2009
	£	£
Sterling	102	25,681
Namibian dollar	6,376	11,058
	________	________
	£6,478	£36,739
	________	________

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.

 

 For the year ended 28 February 2010 the directors decided not to amortise the mining rights on the basis that their value at the beginning and end of the year exceeds the net book value.

 

 

 

 

 

 

 

 

 

 

14 Share Capital

	Shares	2010	2009	2010	2009
		Number	Number	£	£
	Authorised
	Ordinary shares of 1p each	440,697,860	440,697,860	4,406,979	4,406,979
	Deferred shares of 9p each	39,922,460	39,922,460	3,593,021	3,593,021
		________	________	________	________
	Total	480,620,320	480,620,320	8,000,000	8,000,000
		__________	__________	_________	__________
	Allotted, called up and fully paid
	Ordinary shares of 1p each	39,922,460	39,922,460	399,225	399,225
	Deferred shares of 9p each	39,922,460	39,922,460	3,593,021	3,593,021
		________	________	________	________
		79,844,920	79,844,920	3,992,246	3,992,246
		__________79	__________	__________	__________

The deferred shares have no rights to dividend or to attend any general meetings. The shares shall not be deemed to be varied or abrogated by the creation or issue of any new shares ranking in priority to or pari passu with or subsequent to such share.

 

The ordinary shares have attached to them full voting, dividend and capital distribution (including on winding up) rights; they do not confer any rights of redemption.

 

 

 

Options

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

 

	2010	2009
Number	750,000	750,000

Options are exercisable between 9 January 2009 and 9 January 2013 at an exercise price of £0.12p. As at 28 February 2010 these options were still outstanding. Since the balance sheet date these have now lapsed.

 

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 2009 and 28 February 2010	£359,384

 

 

16 Retained Earnings

 

Group	£
At 1 March 2009	(3,001,656)
Loss for the year	(289,353)
	________
At 28 February 2010	£(3,291,009)
	________
Company	£
At 1 March 2009	(308,394)
Loss for the year	(105,844)
	________
At 28 February 2010	£(414,238)
	________

 

 

 

17 Foreign Exchange Reserve

 

Group	£
At 1 March 2009	176,507
Currency translation reserve	298,573
	________
At 28 February 2010	£475,080
	________

 

 

18 Reconciliation of Movements in Shareholders' Funds

 

	2010	2009
	£	£
Group
(Loss) for the financial year	(289,353)	(492,485)
Other recognised gains and losses	298,573	76,945
Issue of shares	-	-
	________	________
	9,220	(415,540)
Opening shareholders' funds	1,526,481	1,942,021
	________	________
Closing shareholders' funds	£1,535,701	£1,526,481
	________	________

 

 

 

	2010	2009
Company	£	£
(Loss) for the financial year	(105,844)	(132,956)
Opening shareholders' funds	4,043,236	4,176,192
	________	________
Closing shareholders' funds	£3,937,392	£4,043,236
	________	________

 

 

 

 

19 Reconciliation of operating loss to net group cash outflow from operating activities

 

	Group 2010	Company 2010	Group 2009	Company 2009
	£	£	£	£
Operating loss	(289,554)	(105,844)	(493,774)	(132,956)
Depreciation of plant, property and equipment	6,605	-	169,662	-
Amortisation of intangible assets	46,690	-	39,734	-
Decrease/(Increase) in inventories	(5,553)	-	706	-
(Increase)/decrease in trade and other receivables	3,730	(147,908)	(9,802)	(300,379)
Increase/(decrease) in trade and other payables	230,590	234,447	355,553	355,678
Net effect of foreign exchange differences	(22,970)	-	(46,625)	-
Net cash (outflow)/inflow from operating activities	£(30,462)	£(19,305)	£15,454	£(77,657)
	________	________	________	________

 

 

 

 

 

20 Analysis of Net Debt

	At 1 March 2009	Group Cash flow	At 28 February 2010
	£	£	£
Net cash:
Cash at bank and in hand	£36,739	£(30,261)	£6,478
	________	________	________

	At 1 March 2009	Company Cash flow	At 28 February 2010
	£	£	£
Net cash:
Cash at bank and in hand	£25,681	£(19,305)	£6,376
	________	________	________

 

 

 

21 Reconciliation of net cash flow to movement in net funds

	Group 2010	Company 2010	Group 2009	Company 2009
	£	£	£	£
(Decrease) in cash for the year	(30,261)	(19,305)	(66,761)	(77,657)
	________	________	________	________
Movement in net funds in the year	(30,261)	(19,305)	(66,761)	(77,657)
Opening net funds	36,739	25,681	103,500	103,338
	________	________	________	________
Closing net funds	£6,478	£6,376	£36,739	£25,681
	________	________	________	________

 

 

 

22 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.

 

 

 

23 Related Party Transactions

During the year the company received loans from Lord Sheppard of Didgemere of £190,000 (2009 £200,000), B M Moritz £57,500 (2009 £145,000) and ACA Carlton £0 (2009 £5,000). The balances owed to these individuals at the year end were £390,000 (2009 £200,000), £202,500 (2009 £145,000) and £5,000 (2009 £5,000) respectively. The loans are interest free and with no repayment terms.

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