TIDMEWR
RNS Number : 5400G
East West Resources PLC
08 May 2014
LONDON, 8 May 2014
EAST WEST RESOURCES PLC
Preliminary Results for the year ended 31 December 2013
East West Resources plc ("EWR" or the "Company" with its
subsidiaries, the "Group") today announces its audited consolidated
results for the twelve months ended 31 December 2013.
Financial highlights
-- Profit before tax of US$ 4.15 million (31 December 2012, loss
of US$ 1.82 million from continuing activities)
-- Profit after tax of US$ 3.92 million (31 December 2012, loss
of US$ 1.97 million from continuing activities)
-- Net profit per share for the year US$ 3.9 cents (2012: net
loss US$ 1.9 cents from continuing operations)
-- Net asset value per share was US$ 28.8 cents as at 31
December 2013 (US$ 24.6 cents as at 31 December 2012).
Commenting on the results, Charles Crick, non-executive
Chairman, stated:
"This is an excellent result for the year with revenues more
than doubled in our physical metals business. Gross trading
revenues for the first four months of the current year are in line
with the same period last year. Our focus remains on copper but we
are increasing our footprint in other metals and have recently
opened an office in Taiwan. As previously reported, we continue to
look for ways to increase our asset base and diversify our revenue
streams."
Enquiries
East West Resources plc
Roger Clegg + 44 (0)20 7634 4700
Cenkos Securities plc
Neil McDonald + 44 (0)20 7397 8900
Derrick Lee + 44 (0)131 220 9100
Notes to Editors
EWR is primarily active in the physical trading of base metals
(primarily copper). It sources and supplies a variety of
commodities to end users all over the world. Supported by its
offices in London, Shanghai, Taipei and a network of agents in
North and South America, Asia and the Middle East, EWR provides
producers and consumers with its marketing insight whilst
emphasizing the financing and risk management aspect of its trading
activities. EWR also holds and manages a number of equity
investments. EWR is quoted on the AIM section of the London Stock
Exchange under the ticker symbol EWR.
Further information on East West Resources plc is available on
the Company's website: www.ewrplc.com
CHAIRMAN'S STATEMENT
Introduction
2013 was an excellent year for the Group. Following on from our
figures for the half year, I am pleased to report that the Group
sustained its performance through to the year ended 31 December
2013.
The result is attributable to the success of the Group's metal
trading business over the period, justifying our decision last year
to focus on that division. That business over the period exceeded
our expectations but its performance needs to be put in the context
of relatively favourable trading conditions over the year which
cannot be guaranteed for future years.
Since the year end, the metals division has opened an office in
Taiwan and we look forward to that making a positive contribution
to the Company in the future.
Other significant features occurring since the year end include
the surrender of our head office lease at Old Change House in the
City of London, the open offer by our major shareholder
Consolidated General Minerals plc ("CGM") and changes to the Board.
I refer to all of these matters below.
Results
For the year ended 31 December 2013, Ambrian Metals Limited
("AML"), our metal trading business had a record year. AML net
revenues for the year rose to $13.68 million, more than double
those of the previous year ($6.68 million) and the company recorded
an operating profit before intra Group charges and tax of $7.95
million for the year (2012: $1.57 million).
The Group recorded an overall pre-tax profit of $4.15 million,
compared with a pre-tax loss for the year ended 31 December 2012 of
$1.82 million (from continuing operations). The Group's post tax
profit of $3.92 million for the year ended 31 December 2013
compares with an after tax loss from continuing operations for the
previous year of $1.97 million.
This is a significant turnaround for the Group but, as mentioned
in my introduction, the results do need to be put into context.
Trading conditions were relatively favourable and gave rise to a
significant increase in tonnages of copper shipped by AML in the
year and higher premiums. A large part of the tonnage increase
resulted from spot market transactions. These transactions are in
their nature unpredictable and opportunistic and there is no
assurance that they can be replicated year on year. Trading
activity generally is also significantly dependent upon global
demand - particularly from the Far East and the Middle East; so,
the result for the year ended 31 December 2013 should not be
treated as a necessary indicator of future performance. More detail
on the results is contained in the Strategic Report which follows
this statement.
Consolidated General Minerals plc
Over the year ended 31 December 2013, CGM continued to make
progress with the construction of its cement mill in Mozambique. As
reported to its shareholders, construction was delayed in 2013 but
towards the end of the year momentum picked up and most of the
civil works were complete by the end of the year. We understand
that, subject to unforeseen delays, commissioning of the cement
mill is now anticipated for September 2014.
In January 2014, we participated in the open offer of CGM to its
shareholders and increased our stake in the company from 11.36 per
cent to 11.95 per cent. The open offer was made at a price of 17
pence (US 28 cents) per share which compares with the 26 pence (US
43 cents) share price at which the Group's initial stake in the
company was purchased. As a result of this, we are required to
revalue our total investment in CGM at the open offer price. This
gives rise to a write down in our investment of $0.88 million which
is included in the Group's results for the year. This is a
technical accounting matter as a result of the application of a
Tier 1 valuation basis according to IFRS and does not reflect the
Board's opinion of the value of CGM and our investment which we
consider to be substantially in excess of 17 pence per share.
The Board considers that the Group's investment in CGM is a
major strategic investment for the Group and that its relationship
with CGM is of importance for the future development of the
Group.
Premises
Most recently, the Company has entered into an agreement to
surrender the lease on its head office premises at Old Change House
which is due to expire in June 2015. We are expecting to vacate the
premises before the end of June 2014. Concurrently, the Group has
entered into a new lease on other premises in the City of London.
The new premises will result in an economy of costs on an ongoing
basis, although in the current year the savings are likely to be
largely off-set by the cost of the move.
Board changes
Since the year end we have appointed two additional
Non-executive Directors to the Board, Kevin Lyon and Ed Marlow.
Kevin is a chartered accountant, with over 30 years of
experience in private equity and senior directorate positions
within a number of companies. He spent approximately 17 years with
the 3i Group, responsible for their core private equity business
across the UK. He is currently Chairman of Mono Global Group, Cutis
Developments and NextEnergy Solar Fund Limited and also serves as
an independent Director of DCK Group. He is also a member of the
Institute for Turnaround Professionals and won the Institute of
Directors Scotland, Non-executive Director of the Year Award in
March 2013.
Ed was, until July 2011, a Managing Director at Credit Suisse
and was previously Global Head of Coverage for Principal
Investments at HSBC. He has over 10 years of specific investment
and advisory experience in sub-Saharan Africa with a particular
emphasis on natural resources. He also has considerable experience
of the UK and Canadian resource markets and is currently
Non-executive Director of Sanatana Resources Inc (TSX) and a
Non-executive Director of Thor Explorations Ltd (TSX). He is also
Chief Executive Officer of African Potash Limited, an AIM traded
company.
Kevin and Ed are already making a valuable contribution to the
Group in helping to develop its long term future.
At the same time as Kevin and Ed joined the Board, Rob Ashley
retired as a Non-executive Director. The Board is grateful to Rob
for his contribution to the Group.
Personnel
We thank all our staff for their considerable loyalty,
commitment and efforts during the year in contributing to the
successful result of the Group for the 2013 financial year.
Outlook
AML has made a good start to the current financial year with
trading conditions continuing to be favourable and its performance
over the first four months of the current year is in line with that
for the previous year. The company's focus remains on the trading
of copper but it is expanding its footprint into other metals
(particularly zinc and aluminium) and the intention is to continue
this expansion.
Whilst the Group's current asset base is sufficient for its
present purposes and offers some scope for expansion, the Board's
view is that in order to achieve a step change in the future growth
and development of the Group it needs to increase its asset base
and diversify its revenue streams. The Board continues to look at
ways of achieving this.
Charles Crick
Chairman
STRATEGIC REPORT
The Directors of the Company and its subsidiary undertakings
(which together comprise the "Group") present their Strategic
Report for the year ended 31 December 2013.
Overview of the Group
The Group's focus is to continue to grow the sourcing and
marketing of physical metals. We will do this by nurturing existing
client relationships, seeking out new opportunities in other
metals, risk management of the business expansion and retention of
key staff within the business. We also continue to seek ways of
increasing the Group's asset base and to diversify its revenue
streams.
With the shift in focus of the Group, we also have elected to
change the reporting currency of the financial statements. It was
felt that with the functional currency of the Group is now
predominantly US Dollars based, a fairer representation of the
business performance would be to present the financial statements
in US Dollars as opposed to our prior year presentation of Pounds
Sterling.
Business review and future prospects
The Group had a successful year from both a financial and
operational perspective. Operationally we began to feel the
positive effects of the downsizing of non-core business units from
the previous year. This further allowed the core business unit (the
metals trading business) to enhance its importance to not only the
Group, but also external stakeholders. We are now a more
streamlined Group, aided by our financial success during 2013. We
saw increased support from our long standing financing
relationships as well as the introduction of new facilities. We
continued to see growth on a tonnage basis of the sales made by
AML. This growth was supported by an increase in our long term
relationships with clients and an increase in spot business.
In the first few months of 2013 the copper price was relatively
stable compared to 2012. However this stability was short-lived as
copper prices began to decline in the middle part of the year. The
price per tonne between the start of the year and the end of June
2013 saw a high of $8,242 and a low of $6,870 (2012: $8,765 high:
$7,220 low).
In the second half of the year, there were a few key factors
that kept the copper price subdued. First, there was a lot of
uncertainty regarding the global economic recovery, especially for
the world's largest consumers of copper - China and the U.S.A. The
second factor that contributed to this was copper's elevated
stockpiles. This was largely driven by China and its restocking of
copper inventory.
AML continued to build its reputation globally and thus, in
spite of the softening commodity prices, it saw an increase in both
the long term customer sales and spot business. In 2013, AML
supplied 30 per cent more total refined copper than in 2012.
Demand in the Middle East saw a turn of fortune from 2012 where
the anticipated demand never arrived. Given the decrease in
geopolitical tensions during 2013, demand for both refined copper
and semi-finished product in the region increased. The increase of
sales in this region was once again an indication of AML's ability
to continue to develop its existing client base, with expansion in
current contracts, as well as new clientele emerging within the
sales portfolio.
During the second half of 2013, efforts to increase AML's
footprint generically were implemented successfully and AML intends
further to expand and diversify its activities in the zinc, lead
and tin business sectors during 2014.
Performance management and business development
Our key performance indicators include, but are not limited to,
both financial metrics and operational metrics. Indicators of the
financial metrics are profit before tax, revenue by segment, own
cash, tangible net asset value and tangible net asset value per
share. This is discussed in greater detail below under the
Financial performance of the Group.
The operational metrics that further demonstrate the positive
year within the trading business have been the increase in tonnage
bought and sold; the continued support of our financing banks and
the increase in their facilities and the retention and addition of
clients to the books of AML. AML continues to maintain its strict
controls around cashflow management and client health. These
controls were evidenced by another year with no bad debts in the
books of AML. Further, as a Group we continue to strive for a
sustainable approach to our operations.
Financial performance of the Group
The Group recorded a profit after tax of $3.92 million (2012:
$7.10 million loss).
Total income from continuing operations was $12.43 million for
the year ended 31 December 2013 compared with $6.45 million for the
year ended 31 December 2012, an increase of more than 100 per cent
resulting from higher revenues in our metals trading.
Operating costs from continuing operations of $8.29 million were
in line with operating costs for the same period last year of $8.27
million.
The Group reported a profit attributable to shareholders from
continuing operations before tax of $4.15 million, a significant
improvement on the loss of $1.82 million for the same period last
year. As is clear from the above, the significant improvement in
results was due to higher revenues from our metals trading
business.
There were no discontinued activities during 2013. The losses
from discontinued activities in the previous year resulted from the
disposal of Ambrian Energy GmbH, our fossil fuels business.
Overall, the Group reported a post-tax profit of $3.92 million
for the year compared to a loss for the year ended 31 December 2012
including discontinued activities, of $7.10 million.
Ambrian Metals Limited
Net revenue from AML, our physical metals trading business, was
$13.68 million for the year ended 31 December 2013 (2012: $6.68
million), a doubling of revenues over the year. This was due to a
greater volume of business both in long term contracts and spot
contracts and a higher level of premiums. This had a significant
impact on profits for this activity with pre-tax profits of $7.95
million (before intra Group interest and management charges) (2012:
$1.57 million). Net assets of AML at 31 December 2013 were $26.50
million (2012: $17.23 million).
AML continued to benefit from the strong support of its
bankers.
In the first half of the year, AML repaid the subordinated loan
of $3.00 million which it had received from the Company's major
shareholder, Consolidated General Minerals plc ("CGM").
Principal Investments
In the 12 months ended 31 December 2013, our investment
portfolio recorded a pre-tax loss of $1.53 million compared with a
pre-tax loss in 2012 of $0.89 million. Included in the current loss
of $1.53 million is a write down of $0.88 million on our investment
stake in CGM, referred to above in the Chairman's statement.
Following the Board's decision last year to substantially reduce
the Group's exposure to junior resource stocks, the total value of
the Group's investment portfolio, including all net assets, held by
Ambrian Principal Investments Limited ("APIL") at 31 December 2013
was $0.44 million (2012: $1.63 million). The investment portfolio
itself was valued at $0.22 million at 31 December 2013 (2012: $0.75
million).
At 31 December 2013, APIL had five holdings with the largest
being Cominco Resources ($0.19 million). Two of the holdings are
unquoted.
The Company continues to hold an interest in CGM (which in turn
holds a near 30 per cent interest in the Company). As at 31
December 2013, the interest was 11.36 per cent. CGM is managed and
part-owned by employees of Ambrian Resources AG ("ARAG") which was
established in February 2010 in partnership with a team of three
former executives of Glencore International AG, one of whom,
Nicolas Rouveyre, is now a Director of the Company. ARAG employees
are charged to CGM. CGM continues to focus on developing its
clinker grinding mill and cement packaging plant in Beira,
Mozambique.
Commissioning of the cement mill is anticipated for September
2014. The Board considers its interest in CGM a core holding for
the future development of the Group and the Company's investment in
CGM has been valued at $1.71 million as a result of the application
of a Tier 1 valuation basis according to IFRS.
It is to be emphasized that there is a high degree of
subjectivity (and therefore uncertainty) involved in the valuation
of unquoted investments. This applies to all of the Group's
unquoted investments.
Expenses
Administrative expenses attributable to the Group's continuing
operations for the year ended 31 December 2013 were $8.29 million
(2012: $8.27 million), which included provisions for year-end
profit related bonuses. Like for like expenses were broadly in line
with those for last year but the expenses for 2012 included
professional fees related to the disposal of certain activities and
a number of one off costs.
Remuneration expenses attributable to continuing operations were
$4.95 million for the 12 months ended 31 December 2013 (2012: $5.45
million). Total headcount in our continuing operations at 31
December 2013 was 34 (31 December 2012: 32).
Balance Sheet
Total net assets of the Group at 31 December 2013 were $28.97
million, up by 17.2 per cent from 31 December 2012. This increase
was principally driven by the significantly improved results from
AML and no losses arising from discontinued activities.
The Group's own cash resources totalled $22.07 million at 31
December 2013 (2012: $28.22 million). The cash resources at 31
December 2012 included a $3.00 million loan from CGM to AML which
was repaid during the course of 2013.
Net tangible asset value per share at 31 December 2013 was 28.79
cents (2012: 24.57 cents). Net tangible asset value is based on
100,602,104 ordinary shares outstanding at 31 December 2013
(excluding Treasury shares and shares held by the Ambrian Capital
Employee Benefit Trust) (2012: 100,602,104 shares).
Risk Management and Financial Risk
The Group attaches great importance to effective risk
management. The principal business unit (being Ambrian Metals
Limited) operates through its own management committee which meets
fortnightly and is also attended by the Group's senior management.
The Group's principal exposures are monitored daily and reviewed by
the Group's senior management. The Group also operates a Risk
Committee which is responsible for recommending risk strategy to
the Board and the Group's risk management framework.
The key business risks to which the Group is exposed are as
follows:
Competition
The Group operates in a competitive environment with a limited
customer base and is therefore vulnerable to losing business to
third parties able and willing to offer more competitive terms. We
aim to mitigate this risk by maintaining close relationships with
our customers, seeking to expand our customer base and providing
differentiating services.
Premium risk
The prime determinant of the profitability of the metals
business is the premium margin made on the sale of the metal, which
in turn is a function of supply and demand and availability for
delivery. Premiums also vary on a regional basis. A significant
reduction in the premium margin or a material change in market
dynamics would be likely to have a materially adverse effect on the
Group. We manage this risk through diversification of our clients
and suppliers on a geographical and political basis.
Commodity concentration and disintermediation
The Group's principal business is focused on commodities which
is a cyclical sector, while acting as an intermediary. Any material
change in demand for relevant commodities could have an adverse
impact on the Group's performance. This is mitigated by the
business keeping the majority business focussed on long term
contracts with clients.
Loss of key staff
Retaining key staff, including, in particular, significant
current and future revenue generators, is essential to the
long-term health and growth of the business. The Group's policies
on remuneration are devised to engender loyalty and promote
performance by such staff. These policies include payment of
bonuses and share option awards where appropriate. Succession
management is also of importance to preserve key customer
relationships. The Group seeks to ensure that these relationships
will be maintained notwithstanding the loss of key personnel.
Operational risk
The value of some of the Group's trades particularly in its
physical businesses is significant. The Group is accordingly
exposed to the risk of material loss through operational errors in
conducting those trades. We manage this risk by a combination of
well established procedures, an experienced and well-trained
operations team, and sophisticated trade capture systems which are
designed to minimise the risk of loss through such errors.
Information technology risk
All of our businesses depend upon robust, effective and
efficient IT support. We have in place appropriate back up
procedures to safeguard the loss of information and records arising
from IT failure. We also seek to ensure that our own material data
and service providers have appropriate back up and disaster
recovery procedures in place to overcome or mitigate any damage to
us resulting from their failure.
Legal risk
Legal risk is inherent in most transactions affecting our
businesses. This is managed by the use of external legal advisers
where appropriate and the adoption of industry standard
documentation.
John M Coles
Finance Director
East West Resources plc
Consolidated statement of comprehensive income
for the year ended 31 December 2013
Year to 31 Year to 31
December 2013 December 2012
US $ US $
Turnover 2,565,693,966 1,798,378,863
Cost of sales (2,551,784,668) (1,791,167,713)
----------------------- ----------------------
Net revenue 13,909,298 7,211,150
Investment portfolio losses (1,476,342) (759,413)
----------------------- ----------------------
Total income 12,432,956 6,451,737
Administrative expenses (8,284,565) (8,270,294)
----------------------- ----------------------
Profit/(loss) before tax from continuing
operations 4,148,391 (1,818,557)
Taxation (228,226) (147,858)
----------------------- ----------------------
Profit/(loss) after tax from continuing
operations 3,920,165 (1,966,415)
(Loss) on discontinued operations net
of tax - (5,129,574)
----------------------- ----------------------
Profit/(loss) after tax from continuing
and discontinued operations 3,920,165 (7,095,989)
----------------------- ----------------------
Other comprehensive income
Exchange (loss)/profit arising from
translation of foreign operations 284,843 1,092,610
----------------------- ----------------------
Total other comprehensive profit/(loss) 284,843 1,092,610
----------------------- ----------------------
Total comprehensive profit/(loss) 4,205,008 (6,003,379)
======================= ======================
Profit/(loss) for the period attributable
to:
Owners of the parent 3,915,109 (7,089,984)
Non-controlling interest 5,056 (6,005)
----------------------- ----------------------
3,920,165 (7,095,989)
----------------------- ----------------------
Total comprehensive profit/(loss) attributable
to:
Owners of the parent 4,199,952 (5,997,374)
Non-controlling interest 5,056 (6,005)
----------------------- ----------------------
4,205,008 (6,003,379)
----------------------- ----------------------
Basic earnings per share in USD cents:
Earnings per share from continuing
and discontinued operations 3.89 (7.09)
Continuing operations 3.89 (1.97)
Diluted earnings per share 3.86 (1.97)
East West Resources plc
Consolidated statement of changes in equity
for the year ended 31 December 2013
Total
equity
attributable
Share to the
based Employee owner
Share premium Treasury Retained payments benefit Exchange of the Non-controlling Total
Share capital account shares earnings reserve trust reserve parent interest equity
US $ US $ US $ US $ US $ US $ US $ US $ US $ US $
Balance at
31 December
2011
(Restated) 17,665,294 18,043,816 (1,986,574) 3,444,902 7,504,944 (11,009,670) (2,912,480) 30,750,232 (65,504) 30,684,728
----------------------- ----------------------------- ------------------- -------------------- ---------------------- ---------------------- ------------------- ------------------- ------------------------ ---------------------
Comprehensive
income
(Loss) for the
year - - - (7,089,984) - - - (7,089,984) (6,005) (7,095,989)
Recycled on
disposal - - - (305,543) - - 305,543 - - -
Transfer
between
reserves - - - - 477,603 (477,603) - - 32 32
Foreign
currency
adjustments - - - 19,995 (8,384) 40,829 1,040,170 1,092,610 - 1,092,610
----------------------- ----------------------------- ------------------- -------------------- ---------------------- ---------------------- ------------------- ------------------- ------------------------ ---------------------
Total
comprehensive
income/(loss)
for the year - - - (7,375,532) 469,219 (436,774) 1,345,713 (5,997,374) (5,973) (6,003,347)
Transactions
with
owners
Share-based
payment
charge - - - - 39,444 - - 39,444 - 39,444
Transactions
with
owners - - - - 39,444 - - 39,444 - 39,444
Balance at
31 December
2012
(Restated) 17,665,294 18,043,816 (1,986,574) (3,930,630) 8,013,607 (11,446,444) (1,566,767) 24,792,302 (71,477) 24,720,825
======================= ============================= =================== ==================== ====================== ====================== =================== =================== ======================== =====================
Comprehensive
income
Profit for the
year - - - 3,915,109 - - - 3,915,109 5,056 3,920,165
Foreign
currency
adjustments - - - - - - 284,843 284,843 - 284,843
----------------------- ----------------------------- ------------------- -------------------- ---------------------- ---------------------- ------------------- ------------------- ------------------------ ---------------------
Total
comprehensive
income for
the
year - - - 3,915,109 - - 284,843 4,199,952 5,056 4,205,008
Transactions
with
owners
Share-based
payment
charge - - - - 38,803 - - 38,803 - 38,803
Transactions
with
owners - - - - 38,803 - - 38,803 - 38,803
Balance at
31 December
2013 17,665,294 18,043,816 (1,986,574) (15,521) 8,052,410 (11,446,444) (1,281,924) 29,031,057 (66,421) 28,964,636
======================= ============================= =================== ==================== ====================== ====================== =================== =================== ======================== =====================
East West Resources plc
Consolidated statement of financial position
at 31 December 2013
As at 31 As at 31
As at 31 December December December
2013 2012 2011
ASSETS US $ US $ US $
Non-current assets
Property, plant and equipment 68,596 87,404 274,672
Deferred tax asset 601,875 54,043 358,619
-------------------- -------------------- ------------------
670,471 141,447 633,291
Current assets
Financial assets at fair value
through profit or loss 1,925,612 3,613,949 7,481,491
Inventory 208,872,237 362,377,398 276,847,937
Trade and other receivables 59,633,460 109,257,698 91,369,981
Cash and cash equivalents 22,074,881 28,217,608 23,764,639
-------------------- -------------------- ------------------
292,506,190 503,466,653 399,464,048
Total assets 293,176,661 503,608,100 400,097,339
==================== ==================== ==================
LIABILITIES
Current liabilities
Financial liabilities at fair
value through profit or loss (2,371,159) (971,228) (7,740,361)
Short term borrowings (176,889,933) (237,876,724) (246,023,387)
Short term liabilities under
sale & repurchase agreements (33,054,823) (175,578,090) (69,627,576)
Trade and other payables (51,095,655) (64,441,230) (45,524,011)
Current tax payable (800,455) (20,003) (497,276)
-------------------- -------------------- ------------------
Total liabilities (264,212,025) (478,887,275) (369,412,611)
Total net assets 28,964,636 24,720,825 30,684,728
==================== ==================== ==================
CAPITAL AND RESERVES
Share capital 17,665,294 17,665,294 17,665,294
Share premium account 18,043,816 18,043,816 18,043,816
Treasury shares (1,986,574) (1,986,574) (1,986,574)
Retained earnings (15,521) (3,930,630) 3,444,902
Share-based payment reserve 8,052,410 8,013,607 7,504,944
Employee benefit trust (11,446,444) (11,446,444) (11,009,670)
Exchange reserve (1,281,924) (1,566,767) (2,912,480)
-------------------- -------------------- ------------------
Total equity attributable
to the owner of the parent 29,031,057 24,792,302 30,750,232
Non-controlling interest (66,421) (71,477) (65,504)
Total equity 28,964,636 24,720,825 30,684,728
==================== ==================== ==================
East West Resources plc
Consolidated statement of cashflows for the year ended 31
December 2013
Year to 31 Year to
December 31 December
2013 2012
US $ US $
Profit/(Loss) for the year 3,920,165 (7,095,989)
Adjustments for:
Depreciation of property, plant
and equipment 18,808 31,362
Amortisation of intangible assets - -
Foreign exchange gains (375,025) 49,720
Taxation expense 228,226 147,858
Unrealised (loss)/gains on financial
assets designated at fair value 1,577,022 490,109
Realised loss/(gain) on financial
assets designated at fair value 12,795 (899,613)
Net cost on acquisition of financial
assets designated at fair value - 3,470,603
Proceeds of sale from disposal 224,578 -
of financial asset at fair value
through profit and loss
Decrease/(increase) in inventories 153,505,161 (71,890,453)
Decrease/(increase) in trade and
other receivables 46,923,695 (10,317,739)
Unrealised (losses) on financial
liabilities at fair value 1,399,930 (7,026,480)
Decrease/(increase) in trade and
other payables (13,345,575) 16,613,869
Share-based payment charge 38,803 39,444
Loss on disposal of subsidiaries - 1,297,000
Cash used in operations 194,128,583 (75,090,309)
Taxation (paid) - -
--------------------- ---------------------
Net cash flow generated/(used)
in operating activities 194,128,583 (75,090,309)
--------------------- ---------------------
Investing activities
Disposal of subsidiary undertakings 2,700,544 (910,116)
Purchase of property, plant and
equipment - (3,850)
Disposal of property, plant and
equipment - 47,559
--------------------- ---------------------
Net cash (used) in investing activities 2,700,544 (866,407)
--------------------- ---------------------
Financing activities
Purchase of shares by employee
benefit trust - -
Increase/ (decrease) in short
term liabilities under sale and
repurchase agreements (142,523,267) 100,299,361
(Decrease) in short term borrowings (60,986,791) (20,465,675)
Dividends paid to owners of the - -
parent
--------------------- ---------------------
Net (cash) used in financing activities (203,510,058) 79,833,686
===================== =====================
Net increase in cash and cash
equivalents (6,680,931) 3,876,970
Cash and cash equivalents at the
beginning of the year 28,217,608 24,994,931
Effect of foreign exchange rate
differences on cash and cash equivalents 538,204 (654,293)
--------------------- ---------------------
Cash and cash equivalents at the
end of the year 22,074,881 28,217,608
===================== =====================
1. Basis of preparation
The financial information set out in this announcement does not
constitute the Group's statutory accounts for the year ended 31
December 2013 or 2012 but is derived from those accounts. Statutory
accounts for the 2012 have been delivered to the Registrar of the
Companies, and those for 2013 will be delivered in due course.
The auditors have reported on those accounts; their reports were
(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 statements under
section 498 (2) or (3) of the Companies Act 2006. The results for
the year ended 31 December 2013 were approved by the Board of
Directors on 7 May 2014 and are audited.
While the financial information included in this preliminary
announcement has been prepared in accordance with the recognition
and measurement criteria of international Financial Reporting
Standards (IFRS's) as endorsed for use in the European Union, this
announcement does not itself contain sufficient information to
comply with IFRS's. The accounting policies adopted in this
announcement have been consistently applied and are consistent with
the policies used in the preparation of the statutory accounts for
the period ending 31 December 2013.
The consolidated financial statements of the Group have been
prepared in accordance with the Companies Act 2006 and
International Financial Reporting Standards (IFRS) as developed and
published by the International Accounting Standards Board (IASB) as
adopted by the European Union (EU).
Presentational currency
The financial statements have been presented in US Dollars which
is the functional currency of the company's principal trading
subsidiary, Ambrian Metals Limited. Until 31 December 2012, the
company presented its financial statements in Pounds Sterling.
Figures for comparative periods have been converted from Pounds
Sterling into US Dollars as set out below:
-- Assets and liabilities denominated in non-US Dollar
currencies were translated into US Dollars at closing rates of
exchange. Non-US Dollar trading results were translated into US
Dollars at average rates of exchange. Differences resulting from
the retranslation of the opening net assets and the results for the
year have been taken to the translation reserve; and
-- Share capital, share premium and other reserves were
translated at the historic rates prevailing at the dates of
transactions.
The exchange rates of Pounds Sterling to US Dollar over the
periods included in the financial statements are as follows:
US Dollar exchange rate /Pound Sterling 31/12/2012 31/12/2011
Closing rate 1.6253 1.5453
Average rate 1.5928 1.6084
2. Segmental analysis
The Group has two reportable segments attributable to its
continuing operations and unallocated central revenues and
costs:
-- Physical metals - comprises Ambrian Metals Limited, a physical metals merchant.
-- Investment portfolio - comprises the Group's principal
investment portfolio held in Ambrian Principal Investments
Limited.
-- Head office costs relate to overheads incurred in connection
with operating the public limited company and include the
share-based payment charges in relation to the staff share option
schemes, the remuneration of the Directors of East West Resources
plc and the costs of Ambrian Resources AG.
During 2012 the Group disposed of its Asset Management business
and Biofuels business. In 2012, the Group closed down its fossil
fuels activities. As a result of these disposals and closures, the
three divisions were treated as discontinued activities of the
Group for 2012.
The measurement of the segmental revenue, profit before tax,
capital expenditure, depreciation, total assets, total liabilities
and net assets have been prepared using consistent accounting
policies across the segments.
Physical Investment Head office Total
Continuing operations Metals Portfolio costs
2013 2013 2013 2013
US $ US $ US $ US $
Turnover 2,565,463,074 - 230,892 2,565,693,966
Cost of Sales (2,551,784,668) - - (2,551,784,668)
Revenue - (1,476,342) - (1,476,342)
13,678,406 (1,476,342) 230,892 12,432,956
====================== ==================== ==================== ===================
Physical Investment Head office Total
Metals Portfolio costs
2012 2012 2012 2012
US $ US $ US $ US $
Turnover 1,797,847,859 - 531,004 1,798,378,863
Cost of Sales (1,791,167,713) - - (1,791,167,713)
Revenue - (759,413) - (759,413)
6,680,146 (759,413) 531,004 6,451,737
====================== ==================== ==================== ===================
Discontinued operations Year to
Year to 31 31 December
December 2013 2012
US $ US $
Biofuels - 265,431
Fossil Fuels - 742,922
Asset Management - 48,300
- 1,056,653
------------------------------------------------- ----------------
Year to 31 December Year to 31 December
2013 2012
Investment portfolio losses represents: US $ US $
Unrealised (losses)/ gains on financial
assets designated at fair value (1,463,547) 444,176
Realised (losses) on financial
assets designated at fair value (12,795) (1,240,849)
Dividends, distributions and other - 37,260
(1,476,342) (759,413)
====================== ====================
Year to 31 December Year to 31 December
2013 2012
Profit/(loss) before tax US $ US $
Continuing operations
Physical metals 7,948,910 1,572,551
Investment portfolio (1,527,089) (885,560)
Head office costs (2,273,430) (2,505,548)
4,148,391 (1,818,557)
====================== ====================
Year to 31 December Year to 31 December
2013 2012
Discontinued operations (after US $ US $
tax)
Biofuels - (4,268,999)
Fossil Fuels - (724,877)
Asset Management - (135,698)
- (5,129,574)
---------------------- --------------------
Year to 31 Year to 31
December 2013 December 2012
Total assets US $ US $
Physical metals 288,779,249 494,485,643
Investment portfolio 436,892 1,802,884
Head office 3,960,520 7,279,188
Fossil fuels* - 40,385
293,176,661 503,608,100
====================== ==================
Total liabilities
Physical metals 252,280,511 477,256,310
Investment portfolio 524 178,321
Head office 1,930,990 1,412,655
Fossil fuels* - 39,989
264,212,025 478,887,275
====================== ==================
The majority of the Group's non-current assets are located in
the UK.
3. Earnings per ordinary share
The calculation of the basic earnings per share is based on the
earnings attributable to ordinary shareholders divided by the
weighted average number of shares in issue during the year,
excluding shares held in the Employee Benefit Trust and Treasury
shares.
The calculation of diluted earnings per share is based on the
basic earnings per share adjusted to allow for the issue of shares
through share option schemes on the assumed conversion of all
dilutive options.
Options exercisable in 2012 have been excluded from the diluted
earnings per share calculation because they are antidilutive.
Reconciliations of the earnings and weighted average number of
shares in the calculations are set out below.
The profit/(loss) attributable to the owners of the company for
continuing and discontinued operations used in the above
calculation is that presented in the consolidated statement of
comprehensive income.
2013 2012
Continuing and discontinued operations
Profit/(Loss) Attributable to shareholders $ 3,915,109 $ (7,089,984)
Diluted profit/(loss) attributable
to shareholders $ 3,915,109 $ (7,089,984)
Weighted average number of shares 100,602,104 100,007,699
Dilutive effect of share options 916,300 -
Basic earnings per share US $ cents 3.89 (7.09)
Diluted earnings per share US $ cents 3.86 (7.09)
Continuing operations
Profit/(Loss) Attributable to shareholders $ 3,915,109 $ (1,966,415)
Diluted profit/(loss) attributable
to shareholders $ 3,915,109 $ (1,966,415)
Weighted average number of shares 100,602,104 100,007,699
Dilutive effect of share options 916,300 -
Basic earnings per share US $ cents 3.89 (1.97)
Diluted earnings per share US $ cents 3.86 (1.97)
4. Financial assets at fair value through profit or loss
2013 2012
US $ US $
Listed:
Investment portfolio - 444,898
Unlisted:
Investment portfolio 1,925,612 3,169,051
1,925,612 3,613,949
---------- ----------
Included in the unlisted investment portfolio is the Company's
stake in CGM valued at $1.71 million. This valuation is based upon
the most recent open offer to shareholders. The directors believe
the value of the project on a risked NPV basis significantly
exceeds this value but recognise that accounting standards have a
hierarchy of basis values which places greater emphasis on
observable market inputs such as an open offer.
All amounts presented in respect of unlisted securities have
been determined with reference to financial information available
at the time of the original investment updated to reflect all
relevant changes to that information at the reporting date. This
determination requires significant judgement in determining changes
to fair value since the last valuation date. In making this
judgement the Board evaluates, among other factors, changes in the
business outlook affecting a particular investment, performance of
the underlying business against original projections and valuations
of similar quoted companies and the most recent fund raise achieved
by the investee company.
5. Non-controlling interest
The non-controlling interest disclosed in the statement of
comprehensive income and statement of financial position represents
a 20% minority interest in Ambrian Resources AG held by
shareholders other than East West Resources plc.
6. Post balance sheet events
On 2 May 2014, East West Resources plc entered into an agreement
for the surrender of the lease of its office premise which is due
to expire in June 2015. It will vacate its premises before 30 June
2014.
On the same date, Ambrian Metals Limited entered into a ten year
lease (with a break clause after 5 years) for office premises in
the City of London.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UGUMCAUPCPPM
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