TIDMASR
RNS Number : 8250U
Asia Resources PLC
30 June 2009
30 June 2009
Asia Resources plc
Annual Accounts for the year ended 31 December 2008
Highlights
* LSJ, the operating subsidiary, is incorporated in Malaysia and it's principal
activities are the purchase and reprocessing of scrap gold
* Turnover of RM 1,206,996,000 (approximately GBP207.6m)
* Operating profit of RM 9,393,000 (approximately GBP1.61m)
* Profit after tax of RM 2,912,000 (approximately GBP500k)
* The quantity of physical gold resold during the year exceeded 12 tonnes at a
time when gold peaked at US$ 1,000 per ounce
* The Board remains dedicated to continue identifying investment opportunities in
the gold and related industries and creating value for shareholders.
Note
The latest available exchange rate for the Malaysian Ringgit is 1 RM/GBP 0.1720
for the purposes of the currency translation above
Chairman's Statement
I am pleased to announce the Company's first results incorporating the
successful acquisition of LS Gold Bullion Sdn Bhd ('LSJ', formerly known as Lin
Shoon Jewellers Sdn Bhd). The acquisition, by way of a reverse transaction under
the AIM rules, was satisfied with a new issue of 109,636,364 of new Ordinary
Shares to the Vendors credited as fully paid at a price of 10.95 pence per
share, a discount to the mid-market closing price of 11.74 pence on 1 July 2007
(the day immediately prior to the proposed acquisition being announced by the
Company). The Consideration Shares rank pari passu with the Existing Ordinary
Shares. The consideration of GBP12M was agreed on the basis of the audited
financial statements of LSJ as at 31December 2006, as agreed by the two
independent Financial Advisers, representing the Vendor and the Company
respectively.
The Company entered into the Acquisition Agreement on 3 July 2007 and, as result
of this Agreement the shares of Asia Resources Plc were suspended from trading.
On the 28 January 2008 the resolution to acquire the entire issued share capital
of LSJ was duly passed at the Company's EGM and the Company was subsequently
re-admitted onto AIM on 29 January 2008.
LSJ is a company incorporated in Malaysia and it's principal activities are the
purchase and reprocessing of scrap gold and the reselling of the resulting
bullion. LSJ also produces and sells high quality, high gold content, hand-made
jewellery as well as selling products from other jewellery manufacturers.
The acquisition resulted in the Vendors owning 73.17 per cent. of the Enlarged
Issued Share Capital of the Company. As such, the acquisition fell within the
ambit of Rule 9 of the City Code, where the Waiver by the Panel was duly
obtained. The acquisition was a reverse takeover under the AIM Rules and, as
such, required the consent of the independent shareholders which was duly
obtained at the EGM of the Company on 28 January2008.
The Group's results have been prepared according to IFRS 3 (UK GAAP does not
include such an accounting method but the UITF permit the use of Reverse
Acquisition Accounting by means of a Companies Act true and fair override).
Accordingly the Group's results for 2008 include the full year of LSJ together
with post acquisition costs and interest income of the Company, the Group's 2007
results are those of LSJ only.
Shareholders should note that following the acquisition the Company will no
longer be subject to the provisions of the City Code as the place of central
management will be located outside the United Kingdom, the Channel Islands or
the Isle of Man and the shareholders will no longer benefit from the
protections of the City Code.
If circumstances change, including if changes to the Board are made, the Company
will consult with the Panel to ascertain whether this will affect the central
place of management of the Company. The Company will make an announcement in the
event that the Company will be deemed to be subject to the Code.
Business Review
During the year to 31 December 2008 the Group made a profit before tax of RM
7.31 million (2007: RM 7.20 million) and I am pleased to announce that LSJ's
turnover has, for the first time, exceeded RM 1 billion.
The quantity of physical gold resold during the year exceeded 12 tonnes, this at
a time when gold prices peaked at over US$ 1,000 per ounce. LSJ has established
itself as the market leader in Malaysia and continues to seek further local
sources of scrap gold. Whilst there is sufficient availability onshore for
growth the directors are also investigating sourcing further turnover from other
ASEAN countries.
These are the first results incorporating LSJ and, in accordance with IFRS 3,
the Group's comparative results do not include the expenses of the Company.
Following the acquisition of LSJ, Directors' remuneration and fees were reviewed
and disclosed in the re-admission document and in the Corporate Governance
section of this annual report.
The Group tax charge for the year is at higher than marginal rates as a result
of disallowed expenses relating to fees paid for the consideration of new
opportunities for sourcing scrap gold.
With the acquisition of LSJ, the Company has taken a first major step in the
fulfillment of its strategy. In 2009 the Board intends to focus on consolidating
this acquisition and on seeking further sourcing opportunities. The
Board remains dedicated to continue identifying investment opportunities in the
gold and related industries and creating value for shareholders.
Going forward
Having acquired LSJ the Company has identified opportunities for enhancing
margin with the creation of a bespoke, branded product - this is still within
the development stage and customer appetite is being sought.
There is no immediate prospect of physical capacity constraints in LSJ, the
Company therefore remains committed to seeking further opportunities to source
scrap gold. The Company is currently investigating prospects that will assist in
sourcing more raw product, some of these products have a natural commercial
hedge to the reprocessing business.
Stock turnover remains at affordable levels and further turnover is financed on
approximately a 50:1 basis, the Company is seeking further non-recourse debtor
finance to assist with future growth and reserves the right to increase it's
standard reprocessing margin in the event of sustained price increases in the
value of gold.
Pursuant to Rule 20 of the AIM Rules, the Company has sent copies of its Annual
Report for the year ending 31 December 2008. Also, the Annual Report is
available on www.asiaresourcesplc.com
CONTACT
Asia Resources Plc:
Michael Stainer Tel: 07879
407554
www.asiaresourcesplc.co.uk
Zimmerman Adams International Limited
Dominique Doussot Tel: (0)207 398
2900
Jonathan Evans
Hichens, Harrison & Co. Plc
Daniel Briggs Tel: (0)207
382 4450
INCOME STATEMENT
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| | | GROUP | | COMPANY |
+-------------------------+-------+--------------------------+--+-----------------------+
| |Notes | 2008 | 2007 | | 2008 | 2007 |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| | | RM'000 | RM'000 | | RM'000 | RM'000 |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| | | | | | | |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| Revenue | | 1,206,996 | 814,915 | | - | - |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| | | | | | | |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| Cost of sales | | (1,186,400) | (794,313) | | - | - |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| | | | | | | |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| Gross profit | | 20,596 | 20,602 | | - | - |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| | | | | | | |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| Other income | | 3,358 | 382 | | - | - |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| Loss on disposal of | | - | (1,339) | | - | - |
| subsidiaries | | | | | | |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| Administrative expenses | | (14,561) | (10,840) | | (3,704) | (1,184) |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| | | | | | | |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| | | | | | | |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| Operating profit/(loss) | 2 | 9,393 | 8,805 | | (3,704) | (1,184) |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| | | | | | | |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| Finance income | | 1,496 | 834 | | 522 | 666 |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| Finance costs | 3 | (3,583) | (2,440) | | - | - |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| | | | | | | |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| | | | | | | |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| Profit/(loss) before | | 7,306 | 7,199 | | (3,182) | (518) |
| taxation | | | | | | |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| | | | | | | |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| Taxation | | (4,394) | (2,628) | | - | - |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| | | | | | | |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| Profit/(loss) for the | | 2,912 | 4,571 | | (3,182) | (518) |
| year | | | | | | |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| | | | | | | |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| Attributable to: | | | | | | |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| Equity holders of the | | 2,912 | 4,571 | | | |
| company | | | | | | |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| | | | | | | |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| Earnings per share | | | | | | |
| (Sen): | | | | | | |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| Basic | | 1.94 | 3.05 | | | |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| Diluted | | 1.94 | 3.05 | | | |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| | | | | | | |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
| Net dividend per share | | - | - | | | |
| (Sen) | | | | | | |
+-------------------------+-------+-------------+------------+--+-----------+-----------+
BALANCE SHEETS
+---------------------------------+---+---+-----+---+----------+---+---+-----+---+----------+
| | GROUP | COMPANY |
+-------------------------------------+----------------------------+------------------------+
| |Notes | 2008 | 2007 | | 2008 | 2007 |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| | | RM'000 | RM'000 | | RM'000 | RM'000 |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| ASSETS | | | | | | |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| Non-current assets | | | | | | |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| Property, plant and equipment | 5 | 9,623 | 9,382 | | - | - |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| Investment properties | | 1,373 | 1,409 | | - | - |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| Investments in subsidiaries | | - | - | | 92,575 | - |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| Goodwill | 6 | 19,039 | 211 | | - | - |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| Available-for-sale investments | | 1,157 | 400 | | - | - |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| | | 31,192 | 11,402 | | 92,575 | - |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| Current assets | | | | | | |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| Inventories | | 21,550 | 17,053 | | - | - |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| Trade and other receivables | | 77,008 | 62,588 | | 572 | 10,672 |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| Fixed deposits | | 32,372 | 21,026 | | - | - |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| Cash and cash equivalents | 7 | 2,471 | 536 | | 307 | 7,538 |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| | | 133,401 | 101,203 | | 877 | 18,210 |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| | | | | | | |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| TOTAL ASSETS | | 164,593 | 112,605 | | 93,454 | 18,210 |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| | | | | | | |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| EQUITY AND LIABILITIES | | | | | | |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| | | | | |
+---------------------------------------------------+----------+-------+---------+----------+
| Share capital | | 9,621 | 3,288 | | 9,621 | 2,581 |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| Share premium | | 15,680 | - | | 15,680 | 15,680 |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| Merger reserve | | - | - | | 70,046 | - |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| Share-based payments reserve | | 861 | - | | 861 | 96 |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| Reverse acquisition reserve | | 6,156 | - | | - | - |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| Foreign exchange reserve | | 182 | - | | 182 | - |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| Retained earnings/(losses) | | 26,467 | 23,555 | | (4,113) | (931) |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| Total Equity | | 58,967 | 26,843 | | 92,277 | 17,426 |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| | | | | | | |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| Current liabilities | | | | | | |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| Trade and other payables | | 26,055 | 25,892 | | 1,177 | 784 |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| Tax payable | | 6,926 | 6,148 | | - | - |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| Borrowings | 8 | 67,990 | 50,382 | | - | - |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| | | 100,971 | 82,422 | | 1,177 | 784 |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| Non-current liabilities | | | | | | |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| Borrowings | 8 | 3,814 | 2,813 | | - | - |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| Deferred taxation | | 841 | 527 | | - | - |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| | | 4,655 | 3,340 | | - | - |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| | | | | | | |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| Total Liabilities | | 105,626 | 85,762 | | 1,177 | 784 |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| | | | | | | |
+---------------------------------+-------+---------+----------+-------+---------+----------+
| TOTAL EQUITY AND LIABILITIES | | 164,593 | 112,605 | | 93,454 | 18,210 |
+---------------------------------+---+---+-----+---+----------+---+---+-----+---+----------+
CASH FLOW STATEMENT
+--------+---------------------------------+----------+----------+--+----------+----------+
| | | GROUP | | COMPANY |
+--------+---------------------------------+---------------------+--+---------------------+
| | | 2008 | 2007 | | 2008 | 2007 |
+--------+---------------------------------+----------+----------+--+----------+----------+
| | | RM'000 | RM'000 | | RM'000 | RM'000 |
+--------+---------------------------------+----------+----------+--+----------+----------+
| Cash flows from operating activities | | | | | |
+------------------------------------------+----------+----------+--+----------+----------+
| Operating profit/(loss) | 9,363 | 8,805 | | (3,704) | (1,184) |
+------------------------------------------+----------+----------+--+----------+----------+
| | | | | | | |
+--------+---------------------------------+----------+----------+--+----------+----------+
| Adjustments for items not requiring an | | | | | |
| outflow of funds: | | | | | |
+------------------------------------------+----------+----------+--+----------+----------+
| Share-based payments | 134 | - | | 134 | 96 |
+------------------------------------------+----------+----------+--+----------+----------+
| Loss on gold loan from changes in gold | 805 | 2,938 | | - | - |
| prices | | | | | |
+------------------------------------------+----------+----------+--+----------+----------+
| Impairment of investments | 43 | - | | - | - |
+------------------------------------------+----------+----------+--+----------+----------+
| Loss on disposal of tangible assets | 6 | 68 | | - | - |
+------------------------------------------+----------+----------+--+----------+----------+
| Depreciation | 1,520 | 1,660 | | - | - |
+------------------------------------------+----------+----------+--+----------+----------+
| Operating profit/(loss) before changes | 11,871 | 13,471 | | (3,570) | (1,184) |
| in working capital | | | | | |
+------------------------------------------+----------+----------+--+----------+----------+
| | | | | | | |
+--------+---------------------------------+----------+----------+--+----------+----------+
| Changes in working capital: | | | | | |
+------------------------------------------+----------+----------+--+----------+----------+
| (Increase)/decrease in inventories | (4,498) | 2,812 | | - | - |
+------------------------------------------+----------+----------+--+----------+----------+
| (Increase)/decrease in trade and other | (3,626) | (25,348) | | 10,279 | (8,651) |
| receivables | | | | | |
+------------------------------------------+----------+----------+--+----------+----------+
| (Decrease)/increase in trade and other | (620) | 4,293 | | 214 | 552 |
| payables | | | | | |
+------------------------------------------+----------+----------+--+----------+----------+
| Interest paid | (3,583) | (2,440) | | - | - |
+------------------------------------------+----------+----------+--+----------+----------+
| Income taxes payable | (3,393) | (2,006) | | - | - |
+------------------------------------------+----------+----------+--+----------+----------+
| Net cash (used in)/from operating | (3,849) | (9,218) | | 6,923 | (9,283) |
| activities | | | | | |
+------------------------------------------+----------+----------+--+----------+----------+
| | | | | | | |
+--------+---------------------------------+----------+----------+--+----------+----------+
| Investing activities | | | | | |
+------------------------------------------+----------+----------+--+----------+----------+
| Interest and dividends received | 1,496 | 834 | | 522 | 666 |
+------------------------------------------+----------+----------+--+----------+----------+
| Cash acquired on acquisition | 7,538 | - | | - | - |
+------------------------------------------+----------+----------+--+----------+----------+
| Purchases of investments | (8,160) | - | | (14,858) | - |
+------------------------------------------+----------+----------+--+----------+----------+
| Proceeds from disposals of property, | 179 | 962 | | - | - |
| plant and | | | | | |
| equipment and investment properties | | | | | |
+------------------------------------------+----------+----------+--+----------+----------+
| Payments to acquire property, plant and | (1,736) | (2,488) | | - | - |
| equipment and investment properties | | | | | |
+------------------------------------------+----------+----------+--+----------+----------+
| Net cash (used in)/from investing | (683) | (692) | | (14,336) | 666 |
| activities | | | | | |
+------------------------------------------+----------+----------+--+----------+----------+
| | | | | | | |
+--------+---------------------------------+----------+----------+--+----------+----------+
| Financing activities | | | | | |
+------------------------------------------+----------+----------+--+----------+----------+
| Placement of fixed deposits | (11,346) | (9,119) | | - | - |
+------------------------------------------+----------+----------+--+----------+----------+
| Bank borrowings obtained | 41,879 | 23,183 | | - | - |
+------------------------------------------+----------+----------+--+----------+----------+
| Bank borrowings repaid | (30,115) | (5,487) | | - | - |
+------------------------------------------+----------+----------+--+----------+----------+
| Finance lease repayments | (315) | (104) | | - | - |
+------------------------------------------+----------+----------+--+----------+----------+
| Net cash from financing activities | 103 | 8,473 | | - | - |
+------------------------------------------+----------+----------+--+----------+----------+
| | | | | | | |
+--------+---------------------------------+----------+----------+--+----------+----------+
| Decrease in cash and cash equivalents | (4,429) | (1,437) | | (7,413) | (8,617) |
+------------------------------------------+----------+----------+--+----------+----------+
| Effects of foreign exchange rate changes | 182 | - | | 182 | - |
+------------------------------------------+----------+----------+--+----------+----------+
| Cash and cash equivalents at 1 January | (4,320) | (2,883) | | 7,538 | 16,155 |
+------------------------------------------+----------+----------+--+----------+----------+
| | | | | | | |
+--------+---------------------------------+----------+----------+--+----------+----------+
| Cash and cash equivalents at 31 December | (8,567) | (4,320) | | 307 | 7,538 |
+--------+---------------------------------+----------+----------+--+----------+----------+
The group's consolidated financial statements for the year ended 31 December
2008, from which this financial information has been extracted, and for the
comparative year ended 31 December 2007 are prepared on a going concern basis
and in accordance with IFRS, and in accordance with those parts of the Companies
Act 1985 applicable to companies reporting under IFRS.
The financial information contained in this report does not constitute full
statutory accounts within the meaning of Section 240 of the Companies Act 1985.
The figures are extracted from the audited financial statements for the year
ended 31 December 2008 which will be filed with the Registrar of Companies, sent
to shareholders and will be available on Asia Resources' website at
www.asiaresourcesplc.co.uk.
The comparative figures for the year ended 31 December 2007 are not the
statutory financial statements for that year. Those accounts have been reported
on by the company's auditors and delivered to the Registrar of Companies. The
report of the auditors was (i) unqualified, (ii) did not include a reference to
any matters to which the auditors 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 Companies Act 1985.
The accounting policies applied are consistent with those adopted and disclosed
in the Group's annual financial statements for the year ended 31 December 2008.
Accounting Policies
The consolidated financial statements of Asia Resources plc ("the company") and
its subsidiaries (together "the group") for the year ended 31 December 2008 were
authorized for issue by the directors on 29 June 2009. Asia Resources plc is a
public limited company incorporated and domiciled in the United Kingdom. Its
shares are publicly traded on the Alternative Investment Market ("AIM") of the
London Stock Exchange. The principal activities of the group are dealing of
jewellery, trading of gold bullion and the provision of craftsmanship works on
jewellery.
The group's subsidiaries all operate in Malaysia and the principal place of
business is 22, Jalan Serunai 16, Taman Klang Jaya, 41200 Klang, Selangor Darul
Ehsan. The principal accounting policies applied in the preparation of these
financial statements are set out below. These policies have been consistently
applied to all the years presented, unless otherwise stated below.
1.1 Basis of preparation
The financial statements are prepared under the historical cost convention and
on a going concern basis, except for the revaluation of available-for-sale
investments to their fair values.
These consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards, as adopted by the European Union
("IFRS") and in accordance with the UK's Companies Act 1985. The parent
company's financial statements have also been prepared in accordance with IFRS.
The financial statements are presented in Malaysian Ringgits and all values are
rounded to the nearest thousand Ringgits (RM'000) except when otherwise
indicated. The exchange rate of Malaysian Ringgits to Pounds Sterling at 31
December 2008 was GBP1 : RM4.9989 (RM1 : GBP0.2000).
1.2 Basis of consolidation, reverse acquisition accounting and comparative
information
The consolidated financial statements incorporate the financial statements of
the company and its subsidiary undertakings. The financial information of the
subsidiaries are prepared for the same reporting period as the parent company
using consistent accounting policies. Intra-group sales, transactions and
balances are eliminated on consolidation.
Reverse acquisition accounting
On 28 January 2008 the company became the legal parent company of LS Gold
Bullion Sdn. Bhd. and its subsidiaries (the "LS Gold Bullion Group"). Due to the
relative values of the companies, the former LS Gold Bullion Sdn. Bhd.
shareholders became the majority shareholders with 73% of the enlarged share
capital. Furthermore, the company's continuing operations and
executive management were mainly those of LS Gold Bullion Group. Accordingly,
the substance of the combination was LS Gold Bullion Sdn. Bhd. acquired Asia
Resources plc in a reverse acquisition.
Under the requirements of the Companies Act 1985 it would normally be necessary
for the company's consolidated accounts to follow the legal form of the business
combination. In that case the pre-combination results would be those of Asia
Resources plc. The results of LS Gold Bullion Group would then be brought into
the group from 28 January 2008. However, this would portray the combination as
an acquisition of the LS Gold Bullion Group by Asia Resources plc and would, in
the opinion of the directors, fail to give a true and fair view of the substance
of the business combination. Accordingly, the directors have adopted reverse
acquisition accounting as the basis of consolidation in order to give a true and
fair view.
2. Operating profit/(loss)
+----------------------------+--+----------+-----------+--+-----------+-----------+
| | | Group | | Company |
+----------------------------+--+----------------------+--+-----------------------+
| | | 2008 | 2007 | | 2008 | 2007 |
+----------------------------+--+----------+-----------+--+-----------+-----------+
| | | RM'000 | RM'000 | | RM'000 | RM'000 |
+----------------------------+--+----------+-----------+--+-----------+-----------+
| The operating | | | | | | |
| profit/(loss) is stated | | | | | | |
| after | | | | | | |
| charging/(crediting): | | | | | | |
+----------------------------+--+----------+-----------+--+-----------+-----------+
| Auditors' remuneration: | | 235 | - | | 235 | - |
| Current parent company | | 90 | - | | 90 | - |
| auditors | | 53 | 135 | | - | - |
| Previous parent company | | | | | | |
| auditors | | | | | | |
| Subsidiaries' auditors | | | | | | |
+----------------------------+--+----------+-----------+--+-----------+-----------+
| Non-audit fees relating to | | - | 1,932 | | - | 1,932 |
| acquisition payable to | | | | | | |
| previous parent company | | | | | | |
| auditors | | | | | | |
+----------------------------+--+----------+-----------+--+-----------+-----------+
| Depreciation | | 1,520 | 1,660 | | - | - |
+----------------------------+--+----------+-----------+--+-----------+-----------+
| Write back of provision | | (3,000) | - | | - | - |
| for | | | | | | |
| contingent loss not | | | | | | |
| required | | | | | | |
+----------------------------+--+----------+-----------+--+-----------+-----------+
| Rental income from | | (138) | (69) | | - | - |
| investment | | | | | | |
| properties | | | | | | |
+----------------------------+--+----------+-----------+--+-----------+-----------+
| Loss on disposal of | | - | 1,339 | | - | - |
| subsidiary | | | | | | |
+----------------------------+--+----------+-----------+--+-----------+-----------+
| Loss on disposal of | | 6 | 68 | | - | - |
| tangible assets | | | | | | |
+----------------------------+--+----------+-----------+--+-----------+-----------+
| Loss on gold loan | | 805 | 2,938 | | - | - |
| resulting from gold price | | | | | - | - |
| appreciation | | | | | | |
+----------------------------+--+----------+-----------+--+-----------+-----------+
| Rental expense | | 152 | 221 | | - | - |
| - land and buildings | | 18 | 13 | | - | - |
| - other | | | | | | |
+----------------------------+--+----------+-----------+--+-----------+-----------+
| Staff costs (including | | 5,710 | 4,413 | | 1,461 | 624 |
| directors' remuneration) | | | | | | |
| (note 9) | | | | | | |
+----------------------------+--+----------+-----------+--+-----------+-----------+
| Foreign exchange | | (53) | 194 | | - | - |
| (gains)/losses | | | | | | |
+----------------------------+--+----------+-----------+--+-----------+-----------+
| Bad and doubtful debts | | 433 | 483 | | - | - |
| expense | | | | | | |
+----------------------------+--+----------+-----------+--+-----------+-----------+
3. Finance Costs
+----------------------------+---+-----------+-----------+---+-----------+-----------+
| | | Group | | Company |
+----------------------------+---+-----------------------+---+-----------------------+
| | | 2008 | 2007 | | 2008 | 2007 |
+----------------------------+---+-----------+-----------+---+-----------+-----------+
| | | RM'000 | RM'000 | | RM'000 | RM'000 |
+----------------------------+---+-----------+-----------+---+-----------+-----------+
| Interest and charges on: | | | | | | |
+----------------------------+---+-----------+-----------+---+-----------+-----------+
| Bank overdraft | | 676 | 345 | | - | - |
+----------------------------+---+-----------+-----------+---+-----------+-----------+
| Banker's acceptance | | 1,175 | 763 | | - | - |
+----------------------------+---+-----------+-----------+---+-----------+-----------+
| Finance leases | | 32 | 40 | | - | - |
+----------------------------+---+-----------+-----------+---+-----------+-----------+
| Gold loans | | 817 | 659 | | - | - |
+----------------------------+---+-----------+-----------+---+-----------+-----------+
| Term loans | | 166 | 117 | | - | - |
+----------------------------+---+-----------+-----------+---+-----------+-----------+
| Other financing and loans | | 717 | 516 | | - | - |
+----------------------------+---+-----------+-----------+---+-----------+-----------+
| | | | | | | |
+----------------------------+---+-----------+-----------+---+-----------+-----------+
| | | 3,583 | 2,440 | | - | - |
+----------------------------+---+-----------+-----------+---+-----------+-----------+
4. Earnings per share
The basic earnings per ordinary share has been calculated using the profit for
the financial year attributable to the company's equity shareholders of
RM3,099,000 (2007: RM4,571,000) and the weighted average number of ordinary
shares in issue of 149,836,364 (2007: 149,836,364). The diluted loss per share
has been calculated using a weighted average number of shares in issue and to be
issued of 149,836,364 (2007: 149,947,858). The weighted average number of shares
in issue for 2008 and 2007 has been calculated on a reverse acquisition
accounting basis as follows :
20082007
Number of shares Number of shares
Number of shares in issue prior to reverse acquisition
40,200,000 40,200,000
Number of ordinary shares issued by the legal parent
to the owners of the legal subsidiary on 28 January 2008109,636,364
109,636,364
____________________
Actual number of shares issued149,836,364 149,836,364
========= =========
Deemed weighted average number of shares issued
149,836,364 149,836,364
========= =========
For the purpose of calculating diluted earnings per share, the profit for the
year attributable to company's equity shareholders and the weighted average
number of ordinary shares in issue during the financial year have been adjusted
for the dilutive effects of all potentially dilutive ordinary shares, i.e. share
options in issue at 31 December 2008.
5. Property, Plant and Equipment
+---------------------+------------+------------+-----------+-----------+-----------+
| Group | Land & | Office | Tools & | Motor | Total |
| |buildings |equipment, |equipment | vehicles | |
| | |fixtures & | | | |
| | | fittings | | | |
+---------------------+------------+------------+-----------+-----------+-----------+
| | RM'000 | RM'000 | RM'000 | RM'000 | RM'000 |
+---------------------+------------+------------+-----------+-----------+-----------+
| Cost | | | | | |
+---------------------+------------+------------+-----------+-----------+-----------+
| At 1 January 2007 | 3,032 | 8,779 | 57 | 1,175 | 13,043 |
+---------------------+------------+------------+-----------+-----------+-----------+
| Additions | 887 | 655 | (3) | 210 | 1,749 |
+---------------------+------------+------------+-----------+-----------+-----------+
| Disposals | - | (905) | - | - | (905) |
+---------------------+------------+------------+-----------+-----------+-----------+
| Write off of assets | (121) | (44) | - | - | (165) |
+---------------------+------------+------------+-----------+-----------+-----------+
| Reclassifications | (24) | 24 | - | - | - |
+---------------------+------------+------------+-----------+-----------+-----------+
| | | | | | |
+---------------------+------------+------------+-----------+-----------+-----------+
| At 31 December 2007 | 3,775 | 8,509 | 54 | 1,385 | 13,723 |
+---------------------+------------+------------+-----------+-----------+-----------+
| | | | | | |
+---------------------+------------+------------+-----------+-----------+-----------+
| At 1 January 2008 | 3,775 | 8,509 | 54 | 1,385 | 13,723 |
+---------------------+------------+------------+-----------+-----------+-----------+
| Additions | 1,437 | 258 | 1 | 216 | 1,912 |
+---------------------+------------+------------+-----------+-----------+-----------+
| Disposals | (1) | (27) | - | (198) | (226) |
+---------------------+------------+------------+-----------+-----------+-----------+
| Write off of assets | (19) | (27) | - | - | (46) |
+---------------------+------------+------------+-----------+-----------+-----------+
| | | | | | |
+---------------------+------------+------------+-----------+-----------+-----------+
| At 31 December 2008 | 5,192 | 8,713 | 55 | 1,403 | 15,363 |
+---------------------+------------+------------+-----------+-----------+-----------+
| | | | | | |
+---------------------+------------+------------+-----------+-----------+-----------+
| Accumulated | | | | |
| depreciation and | | | | |
| impairment | | | | |
+---------------------+------------+------------+-----------+-----------+
| At 1 January 2007 | 284 | 2,623 | 1 | 530 | 3,438 |
+---------------------+------------+------------+-----------+-----------+-----------+
| Depreciation | 270 | 1,105 | 6 | 239 | 1,620 |
+---------------------+------------+------------+-----------+-----------+-----------+
| Disposals | (46) | (659) | (1) | - | (706) |
+---------------------+------------+------------+-----------+-----------+-----------+
| Write off of | - | (11) | - | - | (11) |
| assets | | | | | |
+---------------------+------------+------------+-----------+-----------+-----------+
| | | | | | |
+---------------------+------------+------------+-----------+-----------+-----------+
| At 31 December 2007 | 508 | 3,058 | 6 | 769 | 4,341 |
+---------------------+------------+------------+-----------+-----------+-----------+
| | | | | | |
+---------------------+------------+------------+-----------+-----------+-----------+
| At 1 January 2008 | 508 | 3,058 | 6 | 769 | 4,341 |
+---------------------+------------+------------+-----------+-----------+-----------+
| Depreciation | 206 | 1,021 | 6 | 253 | 1,486 |
+---------------------+------------+------------+-----------+-----------+-----------+
| Disposals | (1) | (7) | - | (62) | (70) |
+---------------------+------------+------------+-----------+-----------+-----------+
| Write off of assets | (10) | (7) | - | - | (17) |
+---------------------+------------+------------+-----------+-----------+-----------+
| | | | | | |
+---------------------+------------+------------+-----------+-----------+-----------+
| At 31 December 2008 | 703 | 4,065 | 12 | 960 | 5,740 |
+---------------------+------------+------------+-----------+-----------+-----------+
| | | | | | |
+---------------------+------------+------------+-----------+-----------+-----------+
| Net book values | 4,489 | 4,648 | 43 | 443 | 9,623 |
| At 31 December 2008 | | | | | |
+---------------------+------------+------------+-----------+-----------+-----------+
| | | | | | |
+---------------------+------------+------------+-----------+-----------+-----------+
| At 31 December 2007 | 3,267 | 5,451 | 48 | 616 | 9,382 |
+---------------------+------------+------------+-----------+-----------+-----------+
(a)Freehold land and buildings with a carrying amount of RM1,584,000 (2007:
RM1,441,000) have been pledged to banks as security for credit facilities
granted to the group.
(b) Included in the property, plant and equipment above are motor vehicles
under finance leases with carrying amounts of RM365,389 (2007: RM499,869).
(c) Included in the property, plant and equipment above are assets which are
fully depreciated with costs of RM691,000 (2007: RM512,000).
6. Goodwill
Group
2008 2007
RM'000 RM'000
Cost
At 1 January 211629
Arising on reverse acquisition18,828 -
Disposal of subsidiary
-(418)
________ ________
At 31 December19,039 211
======= =======
As discussed in note 1.2 above, the group has applied reverse acquisition
accounting in respect of the company's acquisition of the LS Gold Bullion Group
on 28 January 2008. The company (Asia Resources plc) is the legal parent company
although under reverse acquisition accounting it is deemed to be a subsidiary
company of LS Gold Bullion Sdn Bhd.
The above addition to goodwill of RM18.5 million arose on the difference between
the fair value of Asia Resources plc's share capital and the fair value of its
net assets at the reverse acquisition date, as shown below.
Book and fair values
RM'000
Receivables
10,672
Cash at bank
7,538
Trade payables(783)
_________
Net assets acquired 17,427
Goodwill arising on acquisition 18,828
_________
Total consideration of acquisition36,255
========
Consideration satisfied by:
Company shares in issue at acquisition
(40,200,000 shares at GBP0.1095 each)
28,264
Costs of acquisition 7,991
_________
36,255
========
The book values and fair values of the assets and liabilities at the date of
acquisition were considered to be the same.
The group tests goodwill annually for impairment, or more frequently if there
are indications that goodwill might be impaired.
The recoverable amounts of the CGU's are determined from value in use
calculations. The key assumptions for the value in use calculations are those
regarding the discount rates, growth rates and expected changes to selling
prices and direct costs during the forecast period. Management estimated the
discount rate of 10% using pre-tax rates that reflect current market assessments
of the time value of money and the risks specific to the CGU's. The growth rates
are based on industry growth forecasts. Changes in selling prices and direct
costs are based on past practices and expectations of future changes in the
market.
The group prepares cash flow forecasts derived from the most recent financial
budgets approved by management and extrapolates cash flows based on an estimated
growth rate of 3 per cent. after the fifth year of forecasts.
7. Cash and Cash Equivalents
+-----------------------------+------------+-----------+-----------+----------+
| | Group | Company |
+-----------------------------+------------------------+----------------------+
| | 2008 | 2007 | 2008 | 2007 |
+-----------------------------+------------+-----------+-----------+----------+
| | RM'000 | RM'000 | RM'000 | RM'000 |
+-----------------------------+------------+-----------+-----------+----------+
| | | | | |
+-----------------------------+------------+-----------+-----------+----------+
| Cash at bank | 2,471 | 536 | 307 | 7,538 |
+-----------------------------+------------+-----------+-----------+----------+
| Fixed deposits | 32,372 | 21,026 | - | - |
+-----------------------------+------------+-----------+-----------+----------+
| | | | | |
+-----------------------------+------------+-----------+-----------+----------+
| | 34,843 | 21,562 | 307 | 7,538 |
+-----------------------------+------------+-----------+-----------+----------+
Cash and cash and cash equivalents includes fixed deposits of RM32,372,000 (2007
- RM21,026,000) pledged as security for bank borrowings. As these are pledged
accounts they are not included in the cash and cash equivalents in the cash flow
statement and are shown separately on the balance sheet. Movements in these
deposits have therefore been treated as a financing activity in the cash flow
statement.
8. Borrowings
+---------------------------+------------+-----------+-----------+------------+
| | Group | Company |
+---------------------------+------------------------+------------------------+
| | 2008 | 2007 | 2008 | 2007 |
+---------------------------+------------+-----------+-----------+------------+
| | RM'000 | RM'000 | RM'000 | RM'000 |
+---------------------------+------------+-----------+-----------+------------+
| Current liabilities | | | | |
+---------------------------+------------+-----------+-----------+------------+
| Bank overdrafts | 11,038 | 4,856 | - | - |
+---------------------------+------------+-----------+-----------+------------+
| Term loans | 622 | 369 | - | - |
+---------------------------+------------+-----------+-----------+------------+
| Gold loans | 22,709 | 24,297 | - | - |
+---------------------------+------------+-----------+-----------+------------+
| Banker's acceptances | 19,396 | 18,300 | - | - |
+---------------------------+------------+-----------+-----------+------------+
| Revolving credit | 11,711 | - | - | - |
+---------------------------+------------+-----------+-----------+------------+
| Trust receipts | 2,000 | 2,000 | - | - |
+---------------------------+------------+-----------+-----------+------------+
| Factoring | 347 | 384 | - | - |
+---------------------------+------------+-----------+-----------+------------+
| Finance leases | 167 | 176 | - | - |
+---------------------------+------------+-----------+-----------+------------+
| | | | | |
+---------------------------+------------+-----------+-----------+------------+
| | 67,990 | 50,382 | - | - |
+---------------------------+------------+-----------+-----------+------------+
| Non-current liabilities | | | | |
+---------------------------+------------+-----------+-----------+------------+
| Term loans | 3,403 | 2,273 | - | - |
+---------------------------+------------+-----------+-----------+------------+
| Finance leases | 411 | 540 | - | - |
+---------------------------+------------+-----------+-----------+------------+
| | | | | |
+---------------------------+------------+-----------+-----------+------------+
| | 3,814 | 2,813 | - | - |
+---------------------------+------------+-----------+-----------+------------+
| | | | | |
+---------------------------+------------+-----------+-----------+------------+
| Total Borrowings | 71,804 | 53,195 | - | - |
+---------------------------+------------+-----------+-----------+------------+
The above bank borrowings are secured by the following:
* legal charge over the group's freehold land and buildings;
* pledge of fixed deposits of the group and third party;
* monthly sinking fund contribution placed as fixed deposit by a subsidiary
company;
* minimum investment of RM1,200,000 in "Floating Rate Negotiable Instrument of
Deposit";
* joint and several guarantee by all the directors of LS Gold Bullion Sdn Bhd.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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