6th Dec 2007 07:05
Mwana Africa PLC06 December 2007 MWANA AFRICA RELEASES 2007 FINANCIAL STATEMENT INFORMATION RESTATED UNDER IFRS AND CORRECTION UNDER UK GAAP Mwana Africa PLC, a leading natural resources company, today provides anunaudited summary of the restatement of its 2007 interim financial statementsunder International Financial Reporting Standards as adopted in the EU ("adoptedIFRS"). This summary also presents a restatement of results previously reportedunder UK GAAP. This summary is being provided at the same time as the announcement on 6December 2007 of Mwana Africa PLC's interim results for the six months ended 30September 2007. The principal item recorded in the reconciliation from UK GAAP to IFRS relatesto the valuation method applied to the Group's short-term investments. This hasno impact on the income statement. There are no IFRS adjustments to Group cashflows, only re-classifications of items within the cash flow statement. The reconciliation below also records a restatement of results previouslyreported under UK GAAP. This follows further analysis by management of thefinancial performance and financial position of the Group's subsidiary, BinduraNickel Corporation Limited ("BNC"), and prepared on the basis of US$ functionalcurrency. The directors judge that the functional currency of BNC is US$ basedon revenue, capital expenditure and the majority of costs being denominated inUS$. The Group's interim results for the first half of 2007 and for the full year onan adapted IFRS basis and a comparative UK GAAP basis are summarised in thetable below. Reconciliations for each item in the table are provided in thenotes attached. Detailed reconciliations are provided in the appendix attached. Year - 2007 Interim - 2007 ------------------------------------------------------------------------------ Notes IFRS UK GAAP UK GAAP IFRS UK GAAP (re-stated) (reported) (reported) ------------------------------------------------------------------------------ Revenue 1 121,860 121,860 121,860 46,053 46,053(£000)Operating 2 28,143 28,143 30,675 13,137 13,137profit (£000) Profit before 3 39,203 39,203 41,735 25,982 25,982tax (£000)Profit after 4 36,820 36,820 39,352 20,941 20,941tax (£000)Profit 5 18,886 18,886 21,879 10,527 10,527atributableto equityshareholdersof the parent(£000)Earnings per 6 7.79 7.79 9.03 4.46 4.46share (basic- pence) Shareholders' 7 159,409 159,147 162,419 93,491 93,491equity (£000) Net increase 26,534 25,926 25,926 46,268 35,383in cash andcash equivalents(£000) Enquiries:Mwana Africa PLC MerlinOliver Baring, Executive Chairman Tom Randell / Anca SpiridonTel: +44 207 654 5588 Tel: +44 207 653 6620 Notes to Restatement Announcement-------------------------------------------------------------------------------- 2007 2007 Year Interim £000 £000(1) RevenueTurnover as reported under UK GAAP 121,860 46,053- Correction under UK GAAP (note a) - - ------------------------Turnover as restated under UK GAAP 121,860 46,053- IFRS adjustment - - ------------------------Revenue under IFRS 121,860 46,053 ======================== (2) Operating profitOperating profit as reported under UK GAAP 30,675 13,137- Correction under UK GAAP (note a) (2,532) - ------------------------Operating profit as restated under UK GAAP 28,143 13,137- IFRS adjustment - - ------------------------Operating profit under IFRS 28,143 13,137 ======================== (3) Profit before taxProfit before tax as reported under UK GAAP 41,735 25,982- Correction under UK GAAP (note a) (2,532) - ------------------------Profit before tax as restated under UK GAAP 39,203 25,982- IFRS adjustment - - ------------------------Profit before tax under IFRS 39,203 25,982 ======================== (4) Profit after taxProfit / (loss) after tax as reported under UK GAAP 39,352 20,941- Correction under UK GAAP (note a) (2,532) - ------------------------Profit before tax as restated under UK GAAP 36,820 20,941- IFRS adjustment - - ------------------------Profit after tax under IFRS 36,820 20,941 ======================== Notes to Restatement Announcement (continued)-------------------------------------------------------------------------------- 2007 2007 Year Interim-------------------------------------------------------------------------------- £000 £000(5) Profit for the financial yearProfit for the financial year share as 21,879 10,527reported under UK GAAP- Correction under UK GAAP (note a) (2,993) - --------------------------Profit for the financial year as restated 18,886 10,527under UK GAAP- IFRS adjustment - - --------------------------Profit atributable to equity shareholders of 18,886 10,527the parent under IFRS ========================== (6) Earnings per shareEarnings per share as reported under UK GAAP 9.03p 4.46p- Correction under UK GAAP (note b) (1.24p) - --------------------------Earnings per share as reported under UK GAAP 7.79p 4.46p- IFRS adjustment - - --------------------------Earnings per share under IFRS 7.79p 4.46p ========================== (7) Shareholders' equityShareholders' equity as reported under UK 162,419 93,491GAAP- Correction under UK GAAP (note c) (3,272) - --------------------------Shareholders' equity as restated under UK 159,147 93,491GAAP- IFRS adjustment (note d) 262 - --------------------------As restated under IFRS 159,409 93,491 ========================== Notes to UK GAAP restatement: The balances reported under UK GAAP for the year ended 31 March 2007 and as at31 March 2007 have been restated under UK GAAP following analysis by managementof the financial performance and financial position of the Group's subsidiary,Bindura Nickel Corporation Limited. Certain adjustments were made to the accounting treatment of exchange movementsrelating to transactions and balances originally denominated in Zimbabweandollars. These adjustments are described below. a) The reported operating profit has decreased by £2,532,000 for the yearended 31 March 2007, comprising an exchange loss of £3,511,000 relating todividends from BNC partially offset by £979,000 of exchange gains. The neteffect was to reduce the Group's profit attributable to equity shareholders ofthe parent by £2,993,000. b) Earning per share has been reduced in accordance with the adjustment innote a above. c) A translation adjustment of £740,000 was made to Zimbabwean dollardividends paid to the minority shareholders in BNC. This adjustment, togetherwith the £2,532,000 decrease in the Group's profit before minority interestresulted in a total decrease of £3,272,000 in the Group's shareholders' equity. Notes to IFRS restatement: d) At 31 March 2007, shareholders' equity under IFRS are £262,000 higherthan presented under UK GAAP, comprising the uplift of £328,000 of the group'sshort-term investments from impaired cost under UK GAAP to fair value for IFRSpurposes. This has been partially offset by an increase in the deferred taxliability of £66,000. No restatement for IFRS purposes was required to thebalance sheet at 1 April 2006 and 30 September 2006 or to the income statementfor the six months or full year. 1. Basis of preparation Mwana Africa PLC ("Mwana Africa" or "the Company") will report its annualconsolidated financial statements for the year ending 31 March 2008 inaccordance with International Financial Reporting Standards as adopted in the EU("adopted IFRS"). This appendix presents and explains the unaudited conversion of the consolidatedresults of Mwana Africa from UK Generally Accepted Accounting Practice ("UKGAAP") onto an IFRS basis for the six months ended 30 September 2006 and theyear ended 31 March 2007 and similarly the Group's financial position as at thatdate and also 30 September 2006 and at the date of the transition of theCompany's consolidated financial statements to IFRS, being 1 April 2006. This financial information has been prepared on the basis of the recognition andmeasurement requirements of adopted IFRSs that are effective (or available forearly adoption) at 31 March 2007, the Group's first annual reporting date atwhich it is required to use adopted IFRSs. Based on these adopted IFRSs, thedirectors have applied the accounting policies, which they expect to apply whenthe first annual IFRS financial statements are prepared for the year ending 31March 2008. However, the adopted IFRSs that will be effective (or available for earlyadoption) in the annual financial statements for the year ending 31 March 2008are still subject to change and to additional interpretations and thereforecannot be determined with certainty. Accordingly, the accounting policies forthat annual period will be determined finally only when the annual financialstatements are prepared for the year ending 31 March 2008. The financial information, in the form of the primary statements contained inthis appendix, is presented based on how the directors expect to present theprimary statements for the year ending 31 March 2008. Where no definitiveguidance exists in IAS 1, a UK GAAP approach has been adopted in order tomaintain consistency with prior years. This format and presentation may requiremodification in the event that further guidance is issued, but otherwise theCompany believes that the basis on which this financial information has beenprepared will be sufficient to enable it to comply fully with IFRS in its annualfinancial statements for the year ended 31 March 2008 without furthersignificant modification to either the format and presentation or thecomparative financial information contained in the primary financial statementsherein. The comparative figures for the financial year ended 31 March 2007 are not thecompany's statutory accounts for that financial year. Those accounts, which wereprepared under UK GAAP, have been reported on by the company's auditors anddelivered to the registrar of companies. The report of the auditors was (i)unqualified, (ii) did not include a reference to any matters to which theauditors drew attention by way of emphasis without qualifying their report, and(iii) did not contain a statement under section 237(2) or (3) of the CompaniesAct 1985. 2. Restatement of Financial Statement Comparatives from UK GAAP to IFRS Income statement, balance sheet and cash flow reclassifications fromUK GAAP to IFRS The adoption of IFRS requires certain changes to be made to the format andpresentation of income statement, balance sheet and cash flow informationpreviously disclosed under UK GAAP. In the income statement and balance sheetshown in sections 2.3 and 2.4 and in the statement of cash flows, the followingprincipal changes have been made to the primary statements disclosed under UKGAAP and restated as noted above, prior to presenting them under IFRS in section2.3 and 2.4: i. Under IFRS, deferred tax assets and liabilities are required to be shown as separate line items on the balance sheet. This has resulted in the reclassification of deferred tax assets previously included within provisions under UK GAAP of £5,701 at 31 March 2007 (1 April 2006: £6,589; 30 September 2006: £385,633) and deferred tax liabilities previously included within provisions under UK GAAP of £1,355,109 at 31 March 2007 (1 April 2006: £1,467,461; 30 September 2007: £2,387,938). ii. Under IFRS, income taxes recoverable and payable are required to be shown as separate line items on the balance sheet. This has resulted in a reclassification of income tax recoverable previously included within debtors under UK GAAP of £164,151 at 31 March 2007 (1 April 2006: nil; 30 September 2006: £56,605); and income tax payable previously included within creditors under UK GAAP of £51,639 at 31 March 2007 (1 April 2006: £1,275,889; 30 September 2006: £2,895,335). iii. IFRS requires provisions expected to be settled within one year of the balance sheet date to be shown as current liabilities. No adjustment was required. iv. IFRS requires certain cash deposits to be included within the balances disclosed as "cash and cash equivalents", whereas these deposits were included within short-term deposits under UK GAAP. This has resulted in a reclassification at 31 March 2007 of £607,261 (1 April 2006: Nil, 30 September 2006: £10,884,383) from short-term investments to cash and cash equivalents. v. In addition to the change in presentation brought about by items iv above, the Group statement of cash flows under IFRS must comply with the format and headings prescribed in IAS 7. With the exception of the reclassification described in iv above, no other IFRS transitional adjustments impacted on the restated net cash flow from operating, investing or financing activities. Accounting adjustments made on transition from UK GAAP to IFRS As required by IFRS 1, Mwana Africa has prepared reconciliation statements whichpresent the adjustments made in order to transition the Group's UK GAAP primarystatements for 2007 onto an IFRS basis. Reconciliations are provided in respect of the adjustments made to the Group'sfinancial position at the date of transition to IFRS, 1 April 2006, 30 September2006 and 31 March 2007. With regard to the Group's reported financialperformance, reconciliations are provided for the six months ended 31 March 2006and for the full year ended 30 September 2006. The reconciliations in this appendix are located as follows: • Income Statement reconciliation from UK GAAP to IFRS Section 2.3 • Balance Sheet reconciliation from UK GAAP to IFRS Section 2.4 • Consolidated Statement of Recognised Income and Expense Section 2.5 • Summary description of significant IFRS adjustments Section 2.6 • Exemptions taken under IFRS 1 Section 2.7 Income Statement reconciliation from UK GAAP to IFRS Interim - 2007 Full Year - 2007 -------------------------------------- -----------------------------------------------------------------Financial As reported Effect of Reported in As reported Prior year As restated Effect Reported inStatement under UK transition compliance under UK adjustment under of compliancecaption with IFRS UK GAAP transition with IFRS to IFRS £000 £000 £000 £000 £000 £000 £000 £000 -------------------------------------- ----------------------------------------------------------------- Revenue 46,053 - 46,053 121,860 - 121,860 - 121,860 Cost of sales,administrative,selling anddistributioncosts (32,916) - (32,916) (91,185) (2,532) (93,717) - (93,717) ----------------------------------------------------------------------------------------------------------Operating 13,137 - 13,137 30,675 (2,532) 28,143 - 28,143Profit Finance 13,254 - 13,254 11,106 - 11,106 - 11,106income Finance costs (409) - (409) (46) - (46) - (46) ----------------------------------------------------------------------------------------------------------Profit before 25,982 - 25,982 41,735 (2,532) 39,203 - 39,203tax Income Tax (5,041) - (5,041) (2,383) - (2,383) - (2,383) --------------------------------------------------------------------------------------------------------- Profit after 20,941 - 20,941 39,352 (2,532) 36,820 - 36,820tax Profitattributable to minorityinterests (10,414) - (10,414) (17,473) (461) (17,934) - (17,934) ---------------------------------------------------------------------------------------------------------- Profit 10,527 - 10,527 21,879 (2,993) 18,886 - 18,886attributable to shareholders of the parent ========================================================================================================= Basic earnings 4.46p - 4.46p 9.03p (1.24)p 7.79p - 7.79pper share --------------------------------------------------------------------------------------------------------- Diluted 4.21p - 4.21p 8.31p (1.24)p 7.17p - 7.17pearnings per ---------------------------------------------------------------------------------------------------------share Balance Sheet reconciliation from UK GAAP to IFRS 1 April 2006 30 September 2006 31 March 2007 ------------------------------------------------------------------------------------------------------------Financial As Effect of Reported As Effect of Reported As Prior year As reported Effect of Reportedstatement reported transition in reported transition in reported adjustment under UK transition incaption under to IFRS compliance under to IFRS compliance under GAAP to IFRS compliance UK GAAP with IFRS UK GAAP with IFRS UK GAAP (post with IFRS adjustment) £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 ------------------------------------------------------------------------------------------------------------AssetsProperty, 65,365 - 65,365 61,751 - 61,751 68,541 - 68,541 - 68,541plant &equipment Intangible 12,980 - 12,980 13,213 - 13,213 15,099 - 15,099 - 15,099assets Investments - - - 8,879 - 8,879 12,009 - 12,009 - 12,009 Deferred tax 7 7 - 386 386 - 6 6asset ------------------------------------------------------------------------------------------------------------Total 78,345 7 78,352 83,843 386 84,229 95,649 - 95,649 6 95,655non-current assets ------------------------------------------------------------------------------------------------------------ Cash and 14,311 - 14,311 47,687 10,884 58,571 38,086 - 38,086 607 38,693cashequivalents Available for 10,884 (10,884) - 2,369 - 2,369 (279) 2,090sale assets Inventories 8,773 - 8,773 8,333 - 8,333 12,211 - 12,211 - 12,211 Trade andother 9,455 - 9,455 16,563 (57) 16,506 22,891 - 22,891 (164) 22,727receivables Tax receivable 57 57 - 164 164 ------------------------------------------------------------------------------------------------------------Total current 32,539 - 32,539 83,467 - 83,467 75,557 - 75,557 328 75,885assets ------------------------------------------------------------------------------------------------------------Total 110,884 7 110,891 167,310 386 167,696 171,206 - 171,206 334 171,540assets ========================================================================================================= EquityIssued 17,938 - 17,938 24,792 - 24,792 24,917 - 24,917 - 24,917capital Share 54,116 - 54,116 87,888 - 87,888 250 - 250 - 250premium Retained (3,547) - (3,547) 2,314 - 2,314 98,461 (1,299) 97,162 139 97,162 earnings ------------------------------------------------------------------------------------------------------------Total shareholders 68,507 - 68,507 114,994 - 114,994 123,628 (1,299) 122,329 139 122,468equity Minority interests 24,984 - 24,984 32,502 - 32,502 38,791 (1,973) 36,818 123 36,941 ----------------------------------------------------------------------------------------------------------- Total 93,491 - 93,491 147,496 - 147,496 162,419 (3,272) 159,147 262 159,409equity ========================================================================================================= Liabilities Trade and 14,037 (1,276) 12,761 14,895 (2,895) 12,000 4,793 3,272 8,065 (52) 8,013otherpayables Taxation - 1,276 1,276 - 2,895 2,895 - - - 52 52payable ----------------------------------------------------------------------------------------------------------- Total current 14,037 - 14,037 14,895 - 14,895 4,793 3,272 8,065 - 8,065liabilities -----------------------------------------------------------------------------------------------------------Provisions 3,356 (1,461) 1,895 4,919 (2,002) 2,917 3,994 - 3,994 (1,349) 2,645 Deferred tax - 1,468 1,468 - 2,388 2,388 - - - 1,421 1,421liability Total 3,356 7 3,363 4,919 386 5,305 3,994 - 3,994 72 4,066non-current liabilities -----------------------------------------------------------------------------------------------------------Total equity 110,884 7 110,891 167,310 386 167,696 171,206 - 171,206 334 171,540and liabilities ========================================================================================================= Consolidated Statement of Recognised Income and Expense reconciliation from UK GAAP to IFRS Interim - 2007 Year end - 2007 ------------------------------------------ ----------------------------------------------------- As reported Effect of As reported As reported Prior year Effect of As reported under UK GAAP transition under IFRS under UK GAAP adjustment transition under IFRS £000 £000 £000 £000 £000 £000 £000 ------------------------------------------ ----------------------------------------------------- Profit/(loss) 10,527 - 10,527 21,879 (2,993) - 18,886for the year Remeasurement gain onavailable forsale - - - - - 139 139financialassets, netof deferredtax Net exchange differenceson the (4,742) - (4,742) (7,749) 1,694 - (6,055)retranslationof netinvestments ------------------------------------------ ----------------------------------------------------- Total recognised gains relating 5,785 - 5,785 14,130 1,299 139 12,970to the financialyear ------------------------------------------ ----------------------------------------------------- ------------------------------------------ ----------------------------------------------------- 2.6 Summary description of significant IFRS adjustments A summary of the principal adjustments made in order to transition the Company'srestated UK GAAP financial statements to IFRS are noted below. a) Available for sale financial assets IFRS requires that available for sale assets be shown at market price, whereasthese investments were shown at cost under UK GAAP. This has resulted in anincrease at 31 March 2007 of £327,953 (31 March 2006: Nil; 30 September 2006:Nil) in available for sale assets, an £65,590 increase in deferred tax and anincrease of £262,362 in non-distributable reserves. 2.7 Exemptions taken under IFRS 1 Mwana Africa has taken advantage of the following exemptions from IFRS 1: a) Business combinations Mwana has elected to take the exemption not to apply IFRS 3 BusinessCombinations retrospectively to past business combinations which occurred beforethe date of transition to IFRS, 1 April 2006. b) Cumulative translation differences Mwana has elected to take the exemption to consider that the cumulativetranslation differences for all foreign operations are deemed to be zero at thedate of transition to IFRSs and the gain or loss on a subsequent disposal of anyforeign operation shall exclude translation differences that arose before thedate of transition to IFRSs and shall include later translation differences This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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