TIDMWTI
RNS Number : 1448M
Weatherly International PLC
13 September 2012
Weatherly International Plc ("Weatherly" or "the Company" or
"the Group")
Final Results for Year Ended 30 June 2012
Weatherly is pleased to announce its final results for the year
ended 30 June 2012.
These accounts have been approved by the Board on the 12
September 2012 but have not yet been lodged at Companies House
Summary Highlights for the Year Ended 30 June 2012
Financial
-- Profit after tax of US$21.4 million for the year ended 30 June 2012.
-- US$10.4 million of cash generated from operating activities.
-- US$8.5 million cash at bank at 30 June 2012.
Corporate and Operational
-- Mining contracts restructured and new mining contractor appointed at Otjihase.
-- Investment by Namibian interests in the operating subsidiary of Weatherly.
-- Maiden Tschudi reserve statement (JORC) released.
-- Tschudi feasibility study nears completion.
-- Sale of Berg Aukas project to China Africa Resources for profit of US$4.1 million.
-- Payment of dividend by 'in specie' distribution of shares in
China Africa Resources worth US$1.2 million.
For further information please contact:
Weatherly International Plc +44 (0) 20 7917 2989
Rod Webster, Chief Executive Officer
Max Herbert, Company Secretary
Dean Friday, Investor Relations
Canaccord Genuity Limited +44 (0) 20 7523 8350
John Prior, Sebastian Jones
Chairman's and Chief Executive's Statement
We are pleased to report Weatherly's results for the year ended
30 June 2012.
Financial Results
During the year, the Group generated a profit after tax of
US$21.4 million. Removing the effect of the deferred tax benefit
received during the year the Group's profit before tax was US$14.2
million. (See note 14)
Our Central Operations, the Otjihase and Matchless mines,
reached 60% of budgeted steady-state production in July 2011 and
revenue has been recognised in those mines from that date. As a
result our mining activities in Namibia generated an operating
profit of US$10.3 million, while corporate costs of US$3.3 million
reduced the Group operating profit to US$7.0 million. The Group
made a profit on the sale of its subsidiary, which owned the Berg
Aukas project, to China Africa Resources of US$4.1 million and it
released its provision of US$5.2 million against the section 311
compromise creditors as the agreement has expired. The Namibian
dollar depreciated against the US dollar by nearly 20% in the year
resulting in a foreign exchange loss of US$1.4 million, most of
which is unrealised. The Group also incurred net interest costs of
US$0.4 million.
The Group generated US$10.4 million of cash from operating
activities and US$0.5 million from the sale of plant. Of this,
US$4.0 million was reinvested in property, plant and equipment at
Central Operations, US$3.4 million on the Tschudi feasibility study
while US$3.1 million was used to repay loans. The Group finished
the year with US$8.5 million of cash.
Review of the Year
Weatherly had two main strategic objectives over the period,
namely the consolidation of production from its Central Operations,
and the progression of the Tschudi feasibility study. The mining
operations continued to be profitable throughout despite some
difficulties. Tschudi feasibility study results have reinforced its
position as our priority project, albeit one requiring further
optimisation.
On 1 August 2011, the ordinary shares of China Africa Resources
plc (CAR) were admitted to trading on AIM. East China Mineral
Exploration & Development Bureau (ECE) acquired 65% of the
shares for GBP4.7 million (US$7.7 million), and Weatherly sold the
Berg Aukas project to China Africa Resources in return for a 35%
shareholding. Weatherly distributed 10% of the shares to its
shareholders as an 'in specie' dividend leaving it with a 25%
holding. This represented the commencement of a formal relationship
between Weatherly and a capable and ambitious Chinese company in
ECE. During the year, Weatherly's management team administered
China Africa Resources under the provisions of a management
services agreement under the control of the CAR Board. The primary
focus of China Africa Resources has been to progress the Berg Aukas
feasibility study.
In September 2011, an agreement was executed for the sale of a
2.5% shareholding in our Namibian subsidiary, Ongopolo Mining
Limited (OML), to Labour Investment Holdings (LIH), the investment
arm of the National Union of Namibian Workers. This agreement was
pursuant to a Memorandum of Understanding signed with LIH in 2010,
and a Weatherly initiative to promote local participation through
direct equity ownership. The sale price of N$ 7.2 million
(approximately US$0.9 million) was provided through a vendor
finance facility, where the payment of the consideration is to be
deferred and deducted from LIH's future dividends. The agreement
also provides an option for LIH to increase its shareholding to 5%
by paying cash for additional shares at a price based on an
independent valuation of OML at the time of exercise.
Weatherly continues its prudent risk management strategy of
maintaining forward sales of approximately 200 tonnes per month of
copper over a 15 to 18-month period. At 30 June 2012, our forward
contracts had a mark-to-market value of US$4.9 million.
Complementing this, the Company has also fixed the exchange rate of
converting US$1.5 million per month into N$ over the same period at
an average rate of US$1:N$8.68.
Central Operations
The Company produced 5,208 tonnes of copper in concentrate from
Central Operations, which fell short of our target of 7,000 tonnes
for the year. This was due to a series of problems at Otjihase,
described in the Review of Operations (page 6), which necessitated
a change in mining contractor and changes to the structure of the
contract. The shortfall in production resulted in higher than
expected operating costs, but we anticipate that the changes we
have made will have a positive impact on production and costs going
forward.
The Company was saddened by two fatalities at Otjihase.
Investigations were conducted by management and the Chief Mines
Inspector into the circumstances of these accidents. The
investigation by the Chief Mines Inspector into the first accident
has been completed and all recommendations have been adopted; the
investigation into the second accident is ongoing. Safety
procedures have been reviewed in detail in light of these
accidents.
Tschudi Project
The Company expects to complete the feasibility study by the end
of 2012 and be well advanced with the funding arrangements for the
project's development. As previously reported, the Company is
designing an open pit mine containing 22.5mt @ 0.87% Cu (Ore
Reserve-Coffey, Feb. 2012) producing on average 15,000 tonnes per
annum of copper for 11 years.. The process to be utilised is heap
leaching followed by solvent extraction and electrowinning to
produce a 99.99% pure copper cathode. Subject to funding and
environmental approval, the first copper could be produced before
the end of 2014.
Outlook
Considerable uncertainty exists in the world and it is difficult
to predict the course of the copper price in the coming year.
Management is therefore focusing on improved performance at its
operating mines and the development of a new mine at Tschudi to
move the company closer to its stated objective of being a 20,000
tpa copper producer.
We have taken steps to address production issues at the Otjihase
mine, both in contractual arrangements and in investment to improve
operational flexibility. We will be considering possible future
investment at these mines to exploit opportunities that exist to
reopen previously mined areas in order to increase production
further.
At Tschudi the results that we are obtaining from the
optimisation work being carried out by our project team are very
encouraging and bode well for the future development of the mine.
The completion of the feasibility study and subsequent funding will
remain our priority in the coming year.
Whilst it has been a difficult year we would like to thank all
our staff for their continuing support and hard work for the
benefit of the Company.
John Bryant Rod Webster
Chairman Chief Executive Officer
12 September 2012
Review of Operations
Central Operations
Copper production for the year was 5,208 tonnes, as summarised
in the quarterly production table below.
Quarter
to
30 Sep Quarter to Quarter to Quarter to
2011 31 Dec 2011 31 Mar 2012 30 Jun 2012 Total
Ore treated
(t) 101,836 97,958 82,558 85,153 367,505
Grade (%) 1.36 1.56 1.58 1.66 1.53
Recovery (%) 92.55 92.83 92.98 91.52 92.48
Copper concentrate
(t) 5,005 5,714 5,148 5,605 21,472
Copper contained
(t) 1,281 1,421 1,214 1,292 5,208
The Matchless mine experienced a speedy ramp up to full
production and has been able to maintain solid production
performance throughout the year. The mining contractor at Matchless
performed well with ore grades and dilution rates meeting
expectations.
The Otjihase mine has encountered several issues that have
hampered operations. The mine suffered badly from the most severe
wet season on record in 2011, equipment downtime interfered with
production and sub-standard performance from the primary mining
services contractor all contributed to the poor level of
production.
In light of this, the operations at Otjihase have been under
constant review. A number of steps have been taken throughout the
year to deal with issues and improve performance at the mine.
Firstly the decision was taken to open up two new working areas in
the mine earlier than had been originally planned to afford greater
flexibility. Significant work and infrastructure expenditure was
incurred in order to bring these areas into production.
Secondly, to deal with the poor performance of the mining
contractor, it was decided to break up the lead operating contract
into three discrete contracts; mining, crushing/conveying and
processing, and to replace the lead mining contractor with the
contractor who has been performing to a high standard at the
Matchless mine. Notwithstanding that these extensive measures
inevitably created an element of disruption and cost, their
introduction went smoothly.
We are confident that we have taken the necessary steps to deal
with the production issues in the Otjihase mine. Pillar recovery is
by its nature technically challenging, but can be carried out
safely and economically with the right resources. We have taken
some tough decisions as outlined above and expect to see the
benefits of this in the coming year. Investigations are continuing
into optimising the extraction of the remaining resources.
Opportunities exist at both Otjihase and Matchless to reopen
previously mined areas, and a decision on the advancement of one or
more of these opportunities is expected to be made in the coming
months.
Cost of production has been higher than targeted for the year.
The full year cost of production (C1 cash cost) was US$5,554 per
tonne of copper produced. The higher costs are due to a combination
of one-off costs associated with the contractual changes, costs
associated with opening up new working areas and lower copper
production rates at the Otjihase mine.
Tschudi Feasibility Study
Work continues on the feasibility study and the Company remains
on track for its first copper cathode production in 2014. As
previously reported, the Company is targeting a mine life of 11
years producing an average of 15,000 tonnes per annum of copper
cathode. The process to be utilised is heap leaching followed by
solvent extraction and electrowinning.
A new project team was appointed in May to investigate
opportunities for reducing the capital and operating costs in
addition to improving copper recovery. This work has focussed on
the:
-- re-design of the pit and waste dumps to minimise waste handling;
-- re-design of the leach pads to minimise the number of pad lifts and associated costs;
-- soliciting tenders for the contracting of both the mining and crushing activities;
-- soliciting tenders for a lump sum bid for the build of the
solvent extraction and electrowinning plant; and
-- optimising ore blends and crush sizes to increase copper recovery and reduce leach times.
While the additional work associated with these initiatives has
extended the feasibility study timetable, it is expected to deliver
a leaner, more attractive project. The Company is expecting to
announce the results of the feasibility study by the end of the
year.
Berg Aukas and China Africa Resources
Weatherly has a 25% shareholding in China Africa Resources, and
administers the business under the provisions of a management
services agreement. The primary focus of China Africa Resources has
been the progression of the Berg Aukas feasibility study.
Safety
The vast majority of mine labour is employed by three major
contracting groups although they have changed during the year in
question. Weatherly as the principal sets the standards and
procedures applying to all contracting groups active at the mine
sites. Taking all the contracting groups into account there were 24
lost time injuries and 2 fatalities.
The circumstances of each of these fatalities have been
investigated both externally by the Inspector of Mines and
internally by the Company's management and advisors. The inspector
of Mines has delivered his findings on the first fatality where he
found no wrongdoing on the part of the company. It did however
recommend the replacement of manual scaling with purpose designed
equipment, a recommendation that has already been implemented. The
company is still awaiting the second finding. Whilst the Company
has always operated under the appropriate Namibian Safety
Standards, the Board has taken the decision to upgrade the
company's entire safety management system to meet the international
standard (OSHAS18001).
Environment
Weatherly is committed to maintaining the highest environmental
standards and during the coming year, the Company will be reviewing
its environmental management and reporting systems to ensure it
continues to do so. Weatherly is in full compliance with all
appropriate Namibian legislation at all its sites, and there were
no environmental incidents on any of our sites during the year.
As a result of changes in environmental legislation in Namibia
(in February 2012), Weatherly, along with all other existing mining
companies, has been asked to submit a revised environmental impact
statement and management plan for both Central Operations and
Tschudi by February 2013. Weatherly has engaged environmental
consultants Synergistics to assist with the submissions
John Bryant Rod Webster
Chairman Chief Executive Officer
12 September 2012
Table A
Reserve Reserve Tonnes and Grade Contained Metal
------------------- ---------------------------------------- ----------------------------
Cu
Deposits Category Tonnes (%) Ag (g/t) Au (g/t) Cu (t) Ag (kg) Au (kg)
------------------- ----------- ----------- ----- --------- --------- -------- -------- --------
Underground (at
1% cut off)
----------- ----------- ----- --------- --------- -------- -------- --------
Otjihase Proven 2,755,712 1.67 7.06 0.30 45,958 19,468 825
------------------- ----------- ----------- ----- --------- --------- -------- -------- --------
Probable 287,600 1.01 7.57 0.15 2895 2177 42
=========== ===== ========= ========= ======== ======== ========
Total 3,043,312 1.61 7.11 0.28 48,853 21,645 867
------------------------------- ----------- ----- --------- --------- -------- -------- --------
Matchless
(West Extension) Proven - - - - - - -
------------------- ----------- ----------- ----- --------- --------- -------- -------- --------
Probable 514,340 1.89 - - 9,726 - -
=========== ========= ========= ======== ========
Total 514,340 1.89 - - 9,726 - -
------------------------------- ----------- ----- --------- --------- -------- -------- --------
Grand Total - Underground 3,557,652 1.65 6.08 0.24 58,579 21,645 867
================================ =========== ===== ========= ========= ======== ======== ========
Open Pit (at 0.3%
cut off)
----------- ----------- ----- --------- --------- -------- -------- --------
Tschudi Proven - - - - - - -
------------------- ----------- ----------- ----- --------- --------- -------- -------- --------
Probable 22,500,000 0.87 - - 195,750 - -
Total 22,500,000 0.87 - - 195,750 - -
------------------------------- ----------- ----- --------- --------- -------- -------- --------
Table B
Weatherly Mining Namibia: Mineral Resources as at 30 June
2012
Resource In Situ Tonnes and Grade In Situ Metal
------------------- ---------------------------------------- ----------------------------
Cu
Deposit Category Tonnes (%) Ag (g/t) Au (g/t) Cu (t) Ag (kg) Au (kg)
------------------- ------------ ----------- ----- --------- --------- -------- -------- --------
@ 1% cut off)
------------ ----------- ----- --------- --------- -------- -------- --------
Otjihase Measured 3,342,371 2.37 8.88 0.42 79,239 29,673 1,412
------------------- ------------ ----------- ----- --------- --------- -------- -------- --------
Indicated 3,828,064 1.94 7.76 0.32 74,217 29,639 1,204
-------------------------------- ----------- ----- --------- --------- -------- -------- --------
Inferred 3,718,494 1.41 5.19 0.23 52,335 19,293 839
======== ======== ========
Total 10,888,929 1.89 7.23 0.32 205,791 78,605 3,455
-------------------------------- ----------- ----- --------- --------- -------- -------- --------
*Matchless
(West Extension) Measured - - - - - - -
------------------- ------------ ----------- ----- --------- --------- -------- -------- --------
Indicated 428,611 2.14 - - 9,180 - -
-------------------------------- ----------- ----- --------- --------- -------- -------- --------
Inferred 230,460 2.32 - - 5,346 - -
========= ========= ======== ======== ========
Total 659,071 2.20 - - 14,526 - -
-------------------------------- ----------- ----- --------- --------- -------- -------- --------
Tsumeb West Measured 35,255 2.45 13 - 864 458 -
------------------- ------------ ----------- ----- --------- --------- -------- -------- --------
Indicated 520,400 2.24 20.02 - 11,680 10,417 -
-------------------------------- ----------- ----- --------- --------- -------- -------- --------
Inferred 413,200 1.88 16.35 - 7,757 6,757 -
========= ======== ========
Total 968,855 2.09 18.20 - 20,301 17,632 -
-------------------------------- ----------- ----- --------- --------- -------- -------- --------
Grand Total 12,516,855 1.92 7.69 0.28 240,618 96,237 3,455
================================= =========== ===== ========= ========= ======== ======== ========
(at 0% cut off)
------------ ----------- ----- --------- --------- -------- -------- --------
Tschudi Measured 4,449,000 1.09 11.12 - 48,550 - -
------------------- ------------ ----------- ----- --------- --------- -------- -------- --------
Indicated 28,882,000 0.85 10.30 - 247,979 - -
-------------------------------- ----------- ----- --------- --------- -------- -------- --------
Inferred 19,699,000 0.72 9.75 - 142,205 - -
========= ======== ========
Total 53,030,000 0.83 10.16 - 438,734 - -
-------------------------------- ----------- ----- --------- --------- -------- -------- --------
Tsumeb Tailings Measured 12,000,000 0.48 - 12.74 57,600 152,880 -
------------------- ------------ ----------- ----- --------- --------- -------- -------- --------
All reserves and resources in tables A and B above have been
updated by a competent person, A Thomson BSc (Hons) Geology,
Country Manager & Technical Director, Weatherly Mining Namibia,
member of South African Council for Natural Scientific Professions
(registered number 400052/86), in accordance with the Australian
Code of Reporting Mineral Resources and Reserves (JORC).
Note: *In addition to the reserves and resources contained in
the table above, Old Matchless has a historical (non compliant)
reserve (Chaplin, TCL, 1984) of 812,639t at 2.4% equating to
19,506t of copper.
Table C
Weatherly Mining Namibia: Historical Resources
Cu Pb Zn Ag Au Pb Zn Ag Au
Deposit Tonnes (%) (%) (%) (g/t) (g/t) Cu (t) (t) (t) (kg) (kg)
------------------- ----------- ----- ----- ----- ------- ------- -------- ----- ----- ------ ------
* Old Matchless
Mine 1,060,000 2.50 - - - - 26,500 - - - -
------------------- ----------- ----- ----- ----- ------- ------- -------- ----- ----- ------ ------
* Tsumeb Mine
(Open Pit) 150,000 2.96 - - 61.0 - 4,440 - - 9,150 -
------------------- ----------- ----- ----- ----- ------- ------- -------- ----- ----- ------ ------
* Uris Mining
Area 180,000 2.27 - - - - 4,086 - - - -
------------------- ----------- ----- ----- ----- ------- ------- -------- ----- ----- ------ ------
Total: Deposit
Resources 1,390,000 2.51 - - 6.6 - 35,026 - - 9,150 -
------------------- ----------- ----- ----- ----- ------- ------- -------- ----- ----- ------ ------
* Tsumeb Tailings 16,000,000 0.71 - - - - 113,600 - - - -
------------------- ----------- ----- ----- ----- ------- ------- -------- ----- ----- ------ ------
Total: Dump
Resources 16,000,000 0.71 - - - 113,600 - - - -
------------------- ----------- ----- ----- ----- ------- ------- -------- ----- ----- ------ ------
Note: reserves contained in Table C are "historical" and
although most were prepared at the time in accordance with South
African reporting standards (SAMREC) they will not comply with
current standards until a further process of independent
verification has been carried out.
* Remaining resource/reserve calculated by Gold Fields in
1984.
Directors' Report
The directors present their report, together with the Group and
Parent Company financial statements and auditor's reports, for the
year ended 30 June 2012.
Principal Activity and Review of the Business
The principal activity of Weatherly International plc during the
year was to act as a holding company for the Group's activities in
mining and production of base metals, primarily copper.
The subsidiary and associated undertakings principally affecting
the profits or net assets of the Group in the year are listed in
note 18(a).
A review of business can be found in the Chairman's and Chief
Executive's Statement on pages 4 to 5 and the Review of Operations
on pages 6 to 7.
The Directors
The directors during the year ended 30 June 2012 were:
J Bryant (Non-executive Chairman)
R J Webster (Chief Executive Officer)
W G Martinick (Non-executive)
A J Stephens (Senior Independent Non-executive)
Going Concern
The Company expects to generate sufficient funds to operate as a
going concern for the next 12 months, based on its projected
production levels and prevailing exchange rates and copper prices.
Exchange rates and the price of copper will continue to have a
significant impact on the Group's cash flow.
The business has taken steps to manage its exposure to the
commodity markets; at 30 June 2012 it had sold forward 3,550 tonnes
of copper at an average price of US$8,361/tonne of copper, which it
is currently delivering. The Group maintains forward contracts
extending out to between 15 and 18 months. These forward sales were
negotiated to preserve the profitability of the mines in the face
of an economic crisis similar in scale to that of 2008-2009. In
addition, the Group has fixed the US$:N$ exchange rate for US$1.5
million of revenue per month over the same period at an average
exchange rate of 8.68.
The business has a debt financing facility of US$5.9 million
with Louis Dreyfus. The loan is linked to an offtake agreement and
is structured with repayment terms linked to the production of
concentrate at the Central Operations. The Board considers this
financing model reduces risk by better matching its debt service
obligations with projected cash flows.
Results and Dividends
The consolidated profit for the year after taxation was US$21.4
million.
Key Performance Indicators
Production: the Board monitors monthly production against
budgeted figures, which management monitors on a daily basis.
Production concentrate grades are monitored by management on a
shipment basis and the Board monitors ore grades on a monthly
basis. For the year ended 30 June 2012 367,000 tonnes of ore was
extracted producing 5,200 tonnes of copper contained in
concentrate.
Costs: the Board and management monitor actual against budgeted
costs on a monthly basis.
Finance:the liquidity requirements of the Company are monitored
on a weekly basis by management, monthly and quarterly by the
Board, and semi-annually by external parties.
Key Risk Factors and Mitigations
Commodity price risk and foreign exchange risks: the Company's
revenues and expenses are affected by changes in the price of
copper and exchange rate movements between the US dollar and the
Namibian dollar.
Management and directors review trends in the copper price and
exchange rates on a regular basis when considering the Company's
risk management strategy.
The Company mitigates the risk by placing forward contracts to
sell approximately 200 tonnes of copper per month and to convert
US$1.5 million into Namibian dollars per month for 15 to 18 months.
At 30 June 2012 the average price of its forward contracts was
US$8,362/tonne of copper and the average exchange rate of the fixed
currency conversions was US$1:N$8.68.
Liquidity risk: the directors monitor cash flow on a daily basis
and at monthly Board meetings in the context of their expectations
for the business, in order to ensure sufficient liquidity is
available to meet foreseeable needs. At present, equity funding
from the share issue and loans from Louis Dreyfus Commodities
Metals Suisse SA are the main methods of funding.
Project development risk:all potential projects are subject to
an investment appraisal procedure that involves the Board at the
key stages of initiation, mandate and sanction. Projects are
constantly monitored as new data is obtained and reassessed to
ensure further expenditure is worthwhile.
Risks Relating to Investing in Namibia
Political: Namibia is considered one of the lowest-risk
economies on the African continent. The Government pursues a
consistent strategy of encouraging investment in the country, and
is keen to keep the climate attractive for foreign investors.
Weatherly maintains strong links with the Prime Minister, Minister
for Mines, and other Government members and officials. The Board
reviews the strategic impact of political changes within the
country on an ongoing basis.
Black Economic Empowerment and local participation: there is
currently no Black Economic Empowerment legislation embodied in
Namibian law; however, the Government encourages local
participation through a number of avenues. Weatherly has adopted a
proactive stance in making equity in its projects available to
appropriate empowerment groups. Accordingly, Labour Investment
Holdings Inc (LIH), the investment arm of the National Union of
Namibian Workers, hold a 2.5% stake in Ongopolo Mining Ltd,
Weatherly's wholly-owned subsidiary which owns and operates our
Namibian mines. LIH also have an option to purchase a further 2.5%.
Additionally we continue to discuss with the Government of Namibia
its 5.10% shareholding in Weatherly and its transfer to Epangelo,
the state-owned mining company. These arrangements will be for the
long-term benefit of the community and the Company.
Substantial Holdings
Shareholdings of 3% and more of the issued share capital of the
Company were extracted from the shareholders' register at close of
business on 31 August 2012 as follows:
Major Shareholders' Information
Shareholder Name Number of Shares % Holding
============================================== ================== ===========
Legal & General (Unit Trust Managers) Limited 51,000,000 9.50
============================================== ================== ===========
Government of the Republic of Namibia 27,364,986 5.10
============================================== ================== ===========
Rod J Webster* 27,343,800 5.10
============================================== ================== ===========
Blackrock 26,817,929 5.00
============================================== ================== ===========
Legal & General Group - Direct 25,945,455 4.84
============================================== ================== ===========
Wolf G Martinick* 19,263,200 3.59
============================================== ================== ===========
Golden Target Pacific Limited 16,300,000 3.04
============================================== ================== ===========
(*Director)
Post Balance Sheet Events
The directors are not aware of any matters or circumstances
arising since the end of the financial period not dealt with in the
annual financial statements which significantly affect the
financial position of the Group or the results of the
operations.
Future Developments
Discussion of future developments can be found in the Chairman's
and Chief Executive's Statement on pages 4 and 5 and the Review of
Operations on pages 6 to 7.
Company's Policy on Payment of Creditors
It is the Group's policy to settle terms of payment with
suppliers when agreeing the terms of each transaction, to ensure
that suppliers are made aware of these terms of payment, and to
endeavour to adhere to them. Trade creditors of the Group at 30
June 2012 were equivalent to 42 days' purchases (2011: 37 days),
based on the average daily amount invoiced by suppliers during the
year. The Company does not have significant trade creditor
balances.
Exchange Rates
The following rates have been used in the compilation of the
financial statements and notes supporting the accounts:
Translation 2012 2011
Year end 1 GBP - USD 1.57 1.60
Average 1 GBP - USD 1.58 1.59
Year end 1 USD - NAD 8.11 6.83
Average 1 USD - NAD 7.75 7.01
Statement of Directors' Responsibilities
The directors are responsible for preparing the annual report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law, the directors
have elected to prepare financial statements in accordance with
International Financial Reporting Standards (IFRS) as adopted by
the European Union. Under company law the directors must not
approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs and profit
or loss of the Group for that period. In preparing these financial
statements, the directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable and prudent;
-- state whether applicable IFRSs have been followed, subject to
any material departures disclosed and explained in the financial
statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Group and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The directors confirm that, in so far as each of the directors
is aware:
-- there is no relevant audit information of which the Company's auditors are unaware; and
-- the directors have taken all steps that they ought to have
taken in order to make themselves aware of any relevant audit
information and to establish that the auditors are aware of that
information.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Auditor
Grant Thornton UK LLP have expressed their willingness to
continue in office as auditor, and a resolution to reappoint them
will be proposed at the forthcoming Annual General Meeting.
On behalf of the Board:
Rod Webster
Chief Executive Officer
12 September 2012
Corporate Governance Report
Introduction
The Board of Directors is committed to high standards of
corporate governance.
The Board is accountable to its shareholders for good
governance, and the statement below is based on the review of
corporate governance that was carried out by the Audit Committee
and describes how the principles of good governance have been
applied.
Constitution of the Board
During the year ended 30 June 2012, the Board was comprised of
the following:
John Bryant Chairman
Rod Webster Chief Executive Officer
Alan Stephens Senior Independent Non-executive Director
Wolf Martinick Non-executive Director
Non-executive Directors
During the year, the Board had three non-executive directors:
John Bryant (Non-executive Chairman), Alan Stephens, (Senior
Independent Non-executive Director), and Wolf Martinick. Alan
Stephens and John Bryant were considered to be independent. Due to
the size of Wolf Martinick's shareholding of 3.59%, he is not
considered to be an independent director. The relatively small
number of share options that have been granted to the other two
non-executive directors does not, in the opinion of Weatherly's
advisers or its directors, impair their independence.
Committees of the Board
The Board has three Standing Committees, each of which has terms
of reference setting out its authority and duties, as follows:
The Audit Committee was made up of John Bryant as Chairman and
Alan Stephens for the year ended 30 June 2012.
The Audit Committee meets as required. It reviews the financial
reports and accounts and the preliminary and interim statements,
including the Board's statement on internal financial control in
the annual report, prior to their submission to the Board for
approval. The Audit Committee also reviews corporate governance
within the Group and reports on this to the Board. In addition, it
assesses the overall performance of the external auditor including
scope, cost-effectiveness and objectivity of the audit.
The Audit Committee is also charged with reviewing the
independence of the external auditor and monitors the level of
non-audit fees. These fees are disclosed in note 10 to the
accounts. In the opinion of the Audit Committee, which has reviewed
these fees and the procedures that Grant Thornton UK LLP have in
place to ensure they retain their independence, the auditor's
independence is not compromised. The Audit Committee met three
times during the period, and John Bryant and Alan Stephens were
present on all occasions.
The Audit Committee can meet for private discussion with the
external auditor, who attends these meetings as required. The
Company Secretary acts as secretary to the Committee.
The Remuneration Committee was made up of Alan Stephens as
Chairman and John Bryant during the year, with the Company
Secretary serving as secretary.
The Remuneration Committee determines, on behalf of the Board,
the Group's policy on executive remuneration and the remuneration
packages for executive directors. It also approves and administers
the executive share option scheme, the long-term incentive plan
(LTIP) and the grant of options as part of the remuneration
package. The Remuneration Committee met four times during the
period, with Alan Stephens and John Bryant in attendance on each
occasion.
The Nominations Committee is made up of John Bryant and Rod
Webster with either Wolf Martinick or Alan Stephens.
In addition to its role of considering the appointment of
directors and senior managers, the Nominations Committee is also
charged with reporting to the Board on the effectiveness of the
Board, its sub-committees and its directors, and it does this at
the end of the annual audit cycle. The Nominations Committee did
not meet during the year.
Attendance at Meetings
During the year, there were a large number of substantive Board
meetings. Directors' attendance at meetings of the Board and its
sub-committees during the period was as follows:
John Bryant Board 15/15 Audit Committee 2/2 Remuneration
Committee 4/4
Rod Webster Board 15/15
Alan Stephens Board 13/15 Audit Committee 2/2 Remuneration
Committee 4/4
Wolf Martinick Board 13/15
Of the fifteen Board meetings, seven were of a procedural nature
and eight were substantive meetings.
The Board is responsible for reviewing and approving the
adequacy and effectiveness of the Group's internal controls,
including financial and operational control, risk management and
compliance.
In order to establish effective procedures for internal control
and communicate these throughout the Group, including its
subsidiaries, the Board has issued two important documents to all
staff known as the Board Protocol and the Manual of Internal
Control.
The key elements of the Group's internal control are set out in
these documents, and contain:
-- a clearly defined structure for the Group, its subsidiaries and management teams;
-- powers which the Board has reserved to itself. These include
the approval of all business plans and budgets for the Group and
all its subsidiaries, the establishment of subsidiary companies and
appointment of directors to them, and the process for project
approval and capital expenditure;
-- terms of reference for the Audit, Remuneration and
Nominations Committees, which define the roles of their
members;
-- information about how often the Board should meet (as a
minimum) and an annual cycle of meetings. This covers the process
for the preparation of Board agendas and Board papers, and their
prior consideration by the management team at its weekly
meetings;
-- detailed business plans and budgets to be approved annually
and performance monitored by the management team and the Board at
its monthly meetings; and
-- procedures for the approval of expenditure, the levels of
authority and the management controls.
The directors acknowledge their responsibility for the Group's
system of internal financial control and risk management, and place
considerable importance on maintaining this. The Manual of Internal
Control and the process for authorisation that it imposes, together
with the Board Protocol setting out the process for authorising
business plans, budgets and projects, form an important part of our
decision-making process; however, this can only provide reasonable
and not absolute assurance against material errors, losses or
fraud.
There is currently no internal audit function within the Group
owing to the small size of the administrative function. However,
Ernst and Young were engaged to perform an internal audit review of
our procedures in Namibia. There is also a high level of review by
directors and a clear requirement for them to authorise
transactions. Should the need for a separate internal audit
function become apparent, the Board will establish one.
The Board Protocol and the Manual of Internal Control have both
been updated and refined as Weatherly's business evolves and
grows.
Bribery Act Compliance
In response to the introduction of the Bribery Act 2010 and in
order to ensure compliance, the Board approved a suite of
documentation that included a policy statement on anti-corruption
and bribery, a code of conduct for employees, a set of management
procedures, a note defining responsibilities within the Company and
an implementation plan which has been rolled out in the Company.
Progress on the implementation has been reported to the Audit
Committee. The Audit Committee noted that documentation has been
circulated and meetings to explain the procedures have been held
with all staff and contractors on site including our operating
mines in Namibia. Notices have been displayed at our locations with
the "whistle-blowing" procedure. The implementation and
effectiveness of these procedures is continually monitored and
reported to the Board.
Relations with Shareholders
The Company endeavours to maintain regular communications with
shareholders through regulatory announcements, via the Weatherly
International website and by direct contact with its major
shareholders. Rod Webster has also participated in conference calls
with groups of smaller shareholders. The Board values the views of
its shareholders and fosters continuing dialogue with investment
and fund managers, other investors and equity analysts to ensure
that the investing community receives an informed view of the
Group's prospects, plans and progress.
Directors' Remuneration Report
Remuneration Committee
The Company has established a Remuneration Committee which is
constituted in accordance with the recommendations of the UK
Corporate Governance Code (June 2010). The members of the Committee
for the year ended 30 June 2012 were Alan Stephens and John Bryant,
who are both independent non-executive directors, and the Committee
was chaired by Alan Stephens.
Neither member of the Committee has any personal financial
interest (other than as a shareholder), conflicts of interests
arising from cross-directorships, or day-to-day involvement in
running the business. The Committee makes recommendations to the
Board. No director plays a part in any discussion about his own
remuneration.
In determining the directors' remuneration for the year, the
Committee consulted Rod Webster (Chief Executive) and Max Herbert
(Company Secretary) about its proposals. The Committee also
appointed PricewaterhouseCoopers to provide options valuation
advice.
Remuneration Policy for the Executive Directors
Executive remuneration packages are designed to attract,
motivate and retain directors of the highest calibre to lead the
Company and to reward them for enhancing value to shareholders. The
performance management of the executive directors and key members
of senior management, and the determination of their annual
remuneration package, are undertaken by the Committee.
There are five main elements of the remuneration package for
executive directors and senior management:
-- basic annual salary;
-- benefits in kind;
-- annual bonus payments;
-- share option incentives;
-- pension arrangements.
The Company's policy is that a substantial proportion of the
remuneration of the executive directors should be performance
related. Executive directors may earn an annual bonus payment
together with the benefits of participation in share option
schemes.
Basic Salary
An executive director's basic salary is reviewed by the
Committee prior to the beginning of each year and when an
individual changes position or responsibility. In deciding
appropriate levels, the Committee considers the Group as a whole
and relies on objective research which gives up-to-date information
on a comparable group of companies. In considering the Chief
Executive's basic salary, the Remuneration Committee took into
account his extensive responsibilities.
Benefits in Kind
The executive director receives benefits in kind, principally
private medical insurance.
Annual Bonus Payments
The Committee establishes the objectives that must be met for
each financial year if a cash bonus is to be paid. In setting
appropriate bonus parameters, the Committee refers to the objective
research on a comparator group of companies, as noted above. The
Committee believes that any compensation awarded should be tied to
the interests of the Company's shareholders and that the principal
measure of those interests is total shareholder return. Account is
also taken of the relative success of the different parts of the
business for which the executive directors are responsible and the
extent to which the strategic objectives set by the Board are being
met. The maximum performance-related bonus that can be achieved is
100% of basic annual salary. The strategic objectives, control
system and indicators are also aligned to total shareholder
return.
Share Options
The Company has issued share options to its staff under an
unapproved share option scheme. The Remuneration Committee has
responsibility for the administration of the scheme and the
granting of options under its terms. This includes setting the
performance criteria when appropriate and the strike price of the
options. The details of these awards are set out below and their
accounting treatment is dealt with in note 30 to the financial
statements.
On 11 October 2011, the directors agreed to change the rules of
the Weatherly International plc 2006 unapproved share option plan
under the terms of Rule 25 so that under Rule 23 invested share
options that have been awarded will vest immediately on a change of
control of ownership of the business.
Pension Arrangements
Executive directors receive pension contributions to their own
private pension schemes.
Directors' Contracts
All the directors have signed contracts with the Company. Rod
Webster's appointment does not have a fixed term but is subject to
12 months' notice by either party. The non-executive directors are
appointed for a fixed term: John Bryant and Wolf Martinick for two
years and Alan Stephens for three years. These may be terminated by
giving two months' notice, without compensation for loss of office.
All newly appointed directors are required to offer themselves for
election at the next Annual General Meeting of the Company and
their appointments are subject to them being so elected.
Non-executive remuneration is determined by the Board within the
limits set by the Articles of Association and is based on
independent salary surveys of fees paid to non-executive directors
of similar companies. The basic salary paid to each non-executive
director in the year was GBP30,000. The non-executive directors
receive further fees for additional work performed for the Company
on the basis of the number of additional days worked.
Aggregate Directors' Remuneration
The total amounts for directors' remuneration, paid by Weatherly
International plc and its subsidiaries, were as follows:
Salary Other Bonus Benefits Pension Total
fees in kind
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
2012
Executive
R J Webster 361 - 258* 6 61 686
Non-executive
W G Martinick 48 - - - - 48
J Bryant 48 80 - - - 128
A Stephens 48 - - - - 48
505 80 258* 6 61 910
2011
Executive
R J Webster 363 - - 4 61 428
Non-executive
W G Martinick 56 - - - - 56
J Bryant 48 32 - - - 80
A Stephens 48 32 - - - 80
515 64 - 4 61 644
* this relates to period ending 30 June 2011
Directors' Share Options
Aggregate directors' remuneration disclosed above does not
include any amounts for the value of options to acquire ordinary
shares in the Company granted to or held by the directors. No
options have been granted to directors since 2010. Details of the
total number of options granted to date are set out below.
30 June Warrant/option
Name of director 2012 price pence
R J Webster 2,500,000 3.0
W G Martinick 750,000 3.0
J Bryant 750,000 3.0
A Stephens 750,000 3.0
4,750,000
Each director's options are exercisable as one third on
1/4/2011, one third on 1/4/2012, and one third on 1/4/2013, and
remain exercisable over a ten-year period.
The share price movements during the year were as follows: high
of 10.4 pence, low of 3.85 pence and a closing share price at 30
June 2012 of 4.1 pence.
There have been no variations to the terms and conditions or
performance criteria for directors' share options during the
financial year.
Approval
This report was approved by the Board of Directors on 12
September 2012 and signed on its behalf by:
Rod Webster
Chief Executive Officer
Independent Auditor's Report to the Members of Weatherly
International plc
We have audited the Group financial statements of Weatherly
International plc for the year ended 30 June 2012, which comprise
the Consolidated Income Statement, Consolidated Statement of
Comprehensive Income, Consolidated Statement of Financial Position,
Consolidated Statement of Changes in Equity, Consolidated Cash Flow
Statement and the related notes. The financial reporting framework
that has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRS) as adopted by
the European Union.
This report is made solely to the Company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors' Responsibilities
Statement set out on page 13, the directors are responsible for the
preparation of the Group financial statements and for being
satisfied that they give a true and fair view. Our responsibility
is to audit and express an opinion on the Group financial
statements in accordance with applicable law and International
Standards on Auditing (UK and Ireland). Those standards require us
to comply with the Auditing Practices Board's (APB's) Ethical
Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements
is provided on the APB's website at
www.frc.org.uk/apb/scope/private.cfm.
Opinion on financial statements
In our opinion, the Group financial statements:
-- give a true and fair view of the state of the Group's affairs
as at 30 June 2012 and of its profit for the year then ended;
-- have been properly prepared in accordance with IFRS as adopted by the European Union; and
-- have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Directors' Report,
in the financial year for which the Group financial statements are
prepared is consistent with the Group financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters,
where the Companies Act 2006 we are required to report to you if,
in our opinion:
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Other matter
We have reported separately on the Parent Company financial
statements of Weatherly International plc for the year ended 30
June 2012.
Nicholas Page
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Gatwick
12 September 2012
Consolidated Income Statement
For the year ended 30 June 2012
Year ended Year ended
30 June 30 June
2012 2011
Note US$'000 US$'000
Revenue 5 47,577 16
Cost of sales (34,211) (4,054)
Gross profit / (loss) 13,366 (4,038)
Distribution costs (3,240) -
Other operating income 6 162 184
Administrative expenses (3,314) (4,111)
Operating profit / (loss) 9 6,974 (7,965)
Profit on disposal of subsidiary 18(b) 4,146 -
Release of compromise creditor provision 25 5,187 -
Profit on disposal of investments - 6,828
Foreign exchange (loss) / gain (1,443) 227
Finance costs 13 (489) (188)
Finance income 12 126 52
Profit / (loss) before results of
associated company 14,501 (1,046)
Share of losses of associated company (318) -
Profit / (loss) before tax 14,183 (1,046)
Tax credit 14 7,167 -
Profit / (loss) on continuing operations 21,350 (1,046)
Profit from discontinued operations 8 - 508
Profit / (loss) for the year 21,350 (538)
Profit / (loss) attributable to:
Owners of the parent 21,033 (535)
Non-controlling interests 317 (3)
21,350 (538)
Total and continuing earnings / (loss)
per share
Basic earnings / (loss) per share (US
cents)
Earnings / (loss) from continuing activities 15 3.91c (0.21c)
Earnings from discontinued activities 15 - 0.10c
Total 3.91c (0.11c)
=========== ===========
Diluted earnings / (loss) per share
(US cents)
Earnings / (loss) from continuing activities 15 3.90c (0.21c)
Earnings from discontinued activities 15 - 0.10c
Total 3.90c (0.11c)
=========== ===========
The notes on pages 26 to 59 form part of these financial
statements.
Consolidated Statement of Comprehensive Income
At 30 June 2012
Year ended Year ended
30 June 30 June
2012 2011
US$'000 US$'000
Profit / (loss) for the year 21,350 (538)
Exchange differences on translation
of foreign operations (4,326) 2,702
Fair value movement of investments
in the year - 4,675
Reclassification adjustment on disposal
of investments - (6,828)
Other comprehensive income for the
year net of tax (4,326) 549
Total comprehensive income for the
year 17,024 11
Total comprehensive income attributable
to:
Owners of the parent 16,720 14
Non-controlling interests 304 (3)
17,024 11
Consolidated Statement of Financial Position
At 30 June 2012
As at As at
30 June 30 June
2012 2011
Note US$'000 US$'000
Assets
Non-current assets
Property, plant and equipment 17 26,759 32,819
Deferred tax 14 3,815 -
Intangible assets 16 3,646 414
Investment in associates 18(b) 2,684 57
Trade and other receivables 21 887 -
Total non-current assets 37,791 33,290
Current assets
Deferred tax 14 3,352 -
Inventories 20 3,088 3,367
Trade and other receivables 21 4,928 2,922
Cash and cash equivalents 23 8,525 9,091
19,893 15,380
Non-current assets held for sale 19 938 1,197
20,831 16,577
Total assets 58,622 49,867
Current liabilities
Trade and other payables 25 5,364 4,364
Unsecured payables subject to a compromise
on acquisition 25 - 3,223
Loans 24 2,096 5,548
Total current liabilities 7,460 13,135
Non-current liabilities
Unsecured payables subject to a compromise
on acquisition 25 - 1,964
Loans 24 5,567 6,120
Provisions 26 247 293
Total non-current liabilities 5,814 8,377
Total liabilities 13,274 21,512
Net assets 45,348 28,355
Equity
Issued capital 27 4,581 4,581
Share premium 6,092 6,092
Merger reserve 18,471 18,471
Share-based payments reserve 486 303
Foreign exchange reserve (11,302) (6,989)
Retained earnings 26,526 6,138
Equity attributable to shareholders
of the Parent Company 44,854 28,596
Non-controlling interests 28 494 (241)
45,348 28,355
.......................................................................
On behalf of the Board:
R J Webster
Chief Executive Officer
Approved by the Board on 12 September 2012
The notes on pages 26 to 59 form part of these financial
statements.
Consolidated Statement of Changes in Equity
For the year ended 30 June 2012
Issued Share Merger Share-based Foreign Retained Total Non-controlling Total
capital premium reserve payment exchange earnings interests equity
reserve reserve
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 30 June
2010 3,860 - 18,471 556 (9,691) 13,097 26,293 (238) 26,055
Issue of share
capital 721 6,092 - - - - 6,813 - 6,813
Share-based
payments - - - 151 - - 151 - 151
Lapsed options and
warrants - - - (404) - 404 - - -
Dividend - - - - - (4,675) (4,675) - (4,675)
721 6,092 - (253) - (4,271) 2,289 - 2,289
Loss for the
period - - - - - (535) (535) (3) (538)
Other
comprehensive
income
Exchange
differences
on translation of
foreign
operations - - - - 2,702 - 2,702 - 2,702
Fair value
movement
in investments - - - - - 4,675 4,675 - 4,675
Recycling of
investment
fair value
through
profit and loss - - - - - (6,828) (6,828) - (6,828)
Total
comprehensive
income for the
year - - - - 2,702 (2,688) 14 (3) 11
Balance at 30 June
2011 4,581 6,092 18,471 303 (6,989) 6,138 28,596 (241) 28,355
Issue of share
capital - - - - - - - - -
Share-based
payments - - - 283 - - 283 - 283
Lapsed options and
warrants - - - (100) - 100 - - -
Sale of
non-controlling
interest share of
subsidiary (see
note
22) - - - - - 456 456 431 887
Dividend - - - - - (1,201) (1,201) - (1,201)
Transactions with
owners - - - 183 - (645) (462) 431 (31)
Profit for the
period - - - - 21,033 21,033 317 21,350
Other
comprehensive
income
Exchange
differences
on translation of
foreign
operations - - - - (4,313) - (4,313) (13) (4,326)
Total
comprehensive
income for the
year - - - - (4,313) 21,033 16,720 304 17,024
Balance at 30 June
2012 4,581 6,092 18,471 486 (11,302) 26,526 44,854 494 45,348
The notes on pages 26 to 59 form part of these financial
statements.
Consolidated Cash Flow Statement
For the year ended 30 June 2012
Year ended Year ended
30 June 30 June
Notes 2012 2011
US$'000 US$'000
Cash flows from operating activities
Profit / (loss) for the year 21,350 (538)
Adjusted by:
Depreciation 5,087 3,714
Reverse impairment of development expenditure - (2,240)
Deferred tax asset 14 (7,167) -
Profit on disposal of discontinued
businesses 8 - (621)
Profit on disposal of Dundee shares - (6,828)
Share-based payment expenses 282 153
Profit on sale of assets (200) (660)
Profit on disposal of subsidiary 18(b) (4,146) -
Loss of associated company 318 -
Settlement of legal dispute with pledged
cash 344 -
Release of compromise creditor provision (5,187) -
Exchange movements in pledged cash 100 -
Finance costs 489 188
Interest received (126) (52)
11,144 (6,884)
Movements in working capital
Decrease / (increase) in inventories 279 (3,315)
Increase in trade and other receivables (2,006) (2,343)
Increase in trade and other payables 1,002 1,434
Net cash generated by / (used in) operating
activities 10,419 (11,108)
Cash flows generated from investing
activities
Interest received 126 52
Payments for property, plant and equipment (4,091) (9,294)
Payments for evaluation of feasibility
studies (3,419) (414)
Proceeds from disposal of discontinued
businesses 8 - 3,202
Receipts from sales of property, plant
and equipment 534 1,398
Investment in associates - (57)
Net cash used in investing activities (6,850) (5,113)
Cash flows from financing activities
Proceeds from issue of equity shares - 6,813
(Repayment of) / receipts from loans (3,081) 11,668
Pledged notice deposit recovery / (payment) 23 344 (1,340)
Interest paid and finance charges (489) (188)
Net cash (used in) / generated by financing
activities (3,226) 16,953
Increase in cash 343 732
Reconciliation to net cash
Net cash at 1 July 7,751 6,984
Increase in cash 343 732
Foreign exchange gains (121) 35
Net cash at 30 June 23 7,973 7,751
The notes on pages 26 to 59 form part of these financial
statements.
Notes to the Consolidated Financial Statements
For the year ended 30 June 2012
1. NATURE OF OPERATIONS AND GENERAL INFORMATION
Weatherly International plc and subsidiaries' ("the Group's")
principal activities include the mining and sale of copper.
Weatherly International plc is the Group's ultimate Parent
Company. It is incorporated and domiciled in England. The address
of Weatherly International plc's registered office, which is also
its principal place of business, is 180 Piccadilly, London W1J 9HF.
Weatherly International plc's shares are listed on the Alternative
Investment Market (AIM) of the London Stock Exchange.
Weatherly International's financial statements are presented in
United States dollars (US$), which is also the functional currency
of the Parent Company.
These consolidated financial statements were approved for issue
by the Board of Directors on 12 September 2012.
2. NEW ACCOUNTING STANDARDS AND AMENDMENTS
The Group has adopted the following new interpretations,
revisions and amendments to IFRS issued by the International
Accounting Standards Board, which are relevant to and effective for
the Group's financial statements:
-- IAS 24 "Related Party Disclosures" (amended) effective from 1
January 2011, adopted by the EU on 19 July 2010;
-- IFRS 7 "Financial Instruments: Disclosures - Transfers of
Financial Assets", effective from 1 July 2011.
The adoption of these new requirements did not have any impact
on the financial position or the performance of the Group.
At the date of authorisation of these financial statements,
certain new standards, amendments and interpretations to existing
standards applicable to the Group have been published but are not
yet effective, and have not been adopted early by the Group.
IFRS 10 "Consolidated Financial Statements", effective from 1
January 2013, is not yet adopted by the EU. It introduces a new,
principle-based definition of control which will apply to all
investees to determine the scope of consolidation.
IFRS 13 "Fair Value Measurement", effective from 1 January 2013,
is not yet adopted by the EU. It defines fair value as the price
that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at
the measurement date. The standard clarifies that fair value is
based on a transaction taking place in the principal market for the
asset or liability or, in the absence of a principal market, the
most advantageous market. The principal market is the market with
the greatest volume and level of activity for the asset or
liability.
Certain other new standards and interpretations have been issued
but are not expected to have a material impact on the Group's
consolidated financial statements once adopted:
-- IFRS 9 "Financial Instruments" effective from 1 January 2015, not yet adopted by the EU;
-- IFRS 11 "Joint Arrangements" effective from 1 January 2013, not yet adopted by the EU;
-- IFRS 12 "Disclosure of Interests in Other Entities" effective
from 1 January 2013, not yet adopted by the EU;
-- IAS 1 "Financial Statement Presentation" - Other
Comprehensive Income, effective from 1 July 2012, not yet adopted
by the EU;
-- IAS 19 "Employee Benefits" effective from 1 January 2013, not yet adopted by the EU;
-- IAS 27 "Separate Financial Statements" (Revised) effective
from 1 January 2013, not yet adopted by the EU;
-- IAS 28 "Investments in Associates and Joint Ventures" (Revised).
3. SIGNIFICANT ACCOUNTING POLICIES
Basis of Preparation
The financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by
the European Union.
The financial statements have been prepared on the historical
cost basis. The principal accounting policies are summarised below
and are consistent in all material respects with those applied in
the previous year, except as otherwise noted.
Basis of Consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 30 June each year. Control is
achieved where the Company has the power to govern the financial
and operating policies of an investee entity so as to obtain
benefits from its activities.
Non-controlling interests in the net assets of consolidated
subsidiaries are identified separately from the Group's equity
therein. Non-controlling interests consist of the amount of those
interests at the date of the original business combination (see
below) and the amount in excess of the non-controlling interests'
share of changes in equity since the date of the combination.
Losses applicable to the non-controlling interests in excess of the
non-controlling interests in the subsidiary's equity are allocated
to the non-controlling interest.
The results of subsidiaries acquired or disposed of during the
year are included in the Consolidated Income Statement from the
effective date of acquisition or up to the effective date of
disposal, as appropriate.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used
into line with those used by the Group.
All intra-group transactions, balances, income and expenses and
intra-group unrealised profits and losses are eliminated on
consolidation.
Business Combinations
Business combinations are accounted for using the acquisition
method. The acquisition method involves the recognition of the
acquiree's identifiable assets and liabilities, including
contingent liabilities, regardless of whether they were recorded in
the financial statements prior to acquisition. On initial
recognition, the assets and liabilities of the acquired subsidiary
are included in the consolidated statement of financial position at
their fair values, which are also used as the basis for subsequent
measurement in accordance with the Group's accounting policies.
Goodwill is stated after separating out identifiable intangible
assets. Goodwill represents the excess of the fair value of the
consideration transferred over the fair value of the Group's share
of the identifiable net assets of the acquiree at the date of
acquisition. Any excess of identifiable net assets over the fair
value of the consideration transferred is recognised in profit or
loss immediately after acquisition.
The share of non-controlling interests in the acquiree is
initially measured at the non-controlling interests' proportion of
the net fair value of the assets, liabilities and contingent
liabilities recognised.
Investments in Associates
The Group classifies companies over which it has significant
influence as associates when they do not meet the criteria to be
classified as subsidiaries. When the Group holds, directly or
indirectly, 20% or more of the voting power of the Company, it is
presumed that the Group has significant influence unless it can be
clearly demonstrated that this is not the case.
Associates are accounted for under the equity method. The
investment is initially recognised at cost and the carrying amount
is increased or decreased to recognise the Group's share of the
profit or loss of the investee after the date of the acquisition.
The Group's share of the profit or loss of the investee is
recognised in the Group's profit or loss. Distributions received
from the associated Company reduce the carrying amount of the
investment.
Intangible Assets
Computer software
Computer software is accounted for using the cost model, whereby
capitalised costs are amortised on a straight-line basis over their
estimated useful lives (three years), as these are considered
finite. Purchased software and the direct cost associated with the
customisation and installation thereof is capitalised. Acquired
computer software licences are capitalised on the basis of the cost
incurred to acquire and install the specific software.
Costs associated with maintaining computer software, i.e.
expenditure relating to patches and other minor updates as well as
their installation, are expensed as incurred.
The amortisation charge reported in profit and loss is included
in the profit and loss line item "administrative expenses".
Expenditure incurred to restore or maintain the originally assessed
future economic benefits of existing software systems is recognised
in profit and loss.
Exploration and evaluation costs
Expenditure on advances to companies solely for exploration
activities and the Group's own regional exploration activities
prior to evaluation are capitalised, unless no further future
benefit is considered likely whereupon it is written off to profit
and loss. Exploration expenditure to define mineralisation at
existing ore bodies or within the vicinity of existing ore bodies
is considered a mine development cost and transferred to property,
plant and equipment upon achieving a bankable feasibility
study.
Revenue Recognition
Revenue represents the amounts derived from the sale of copper
and other metals in the production of copper which fall within the
Company's ordinary activities, stated net of value added tax. Sales
of goods are recognised when goods are delivered and title has
passed.
Copper concentrate sales are provisionally priced based on spot
prices at the time of sale, and provisional assays indicating the
amount of metal within the concentrate. The final revenue varies
according to the price at the end of the quotational period and the
final agreed assay results. This final agreement can take between
30 and 150 days after delivery to the customer. Ninety-five per
cent (95%) of the initial valuation is paid on delivery with the
balance paid on final agreement of prices.
The Company mitigates commodity price risk by maintaining
forward sales for a period of 15 to 18 months of 200 tonnes of
copper per month. In addition, the Company elects to fix all
remaining contained copper in each lot in multiples of 25 tonnes,
resulting in less than 25 tonnes of copper per lot being open to
price variations.
The forward contracts and price fixing arrangements are deemed
to be "own use" contracts under IAS39 and do not meet the criteria
of hedge accounting.
Interest income is reported using the effective interest method.
Dividends received are recognised when the right to receive payment
is established.
Leases
Operating leases
Where the Group is a lessee in a lease that does not transfer
substantially all the risks and rewards of ownership from the
lessor to the Group, the total lease payments are charged to profit
or loss on a straight-line basis over the period of the lease.
Group as a lessor
Assets leased out under operating leases are included in assets
held for sale in the balance sheet. They are depreciated over their
expected useful lives on a basis consistent with similar owned
property, plant and equipment. Rental income (net of any incentives
given to lessees) is recognised on a straight-line basis over the
lease term.
Foreign Currency Translation
The individual financial statements of each Group Company are
presented in the currency of the primary economic environment in
which it operates (its functional currency). For the purpose of the
consolidated financial statements, the results and financial
position of each Group Company are expressed in US dollars, which
is the functional currency of the Parent Company and the
presentation currency for the consolidated financial
statements.
In preparing the financial statements of the individual
companies, transactions in currencies other than the entity's
functional currency (foreign currencies) are recorded at the rates
of exchange prevailing on the dates of the transactions. At each
balance sheet date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates
prevailing on the balance sheet date. Non-monetary items carried at
fair value that are denominated in foreign currencies are
translated at the rates prevailing at the date when the fair value
was determined. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated.Exchange
differences arising, if any, are recognised in profit or loss.
Exchange differences are recognised in profit or loss in the
period in which they arise except for:
-- exchange differences which relate to assets under
construction for future productive use, which are included in the
cost of those assets when they are regarded as an adjustment to
interest costs on foreign currency borrowings;
-- exchange differences on monetary items receivable from or
payable to a foreign operation for which settlement is neither
planned nor likely to occur, which form part of the net investment
in a foreign operation, and which are recognised in other
comprehensive income and reclassified from equity to profit or loss
on disposal of the net investment.
On consolidation, exchange differences arising from the
translation of the net investment in foreign entities are
recognised in other comprehensive income and accumulated in the
Group's foreign currency translation reserve. On disposal of a
foreign operation, the cumulative amount of exchange differences
relating to that operation is reclassified from equity to profit or
loss.
Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which are assets
that necessarily take a substantial period of time to get ready for
their intended use or sale, are added to the cost of those assets
until such time as the assets are substantially ready for their
intended use or sale.
All other borrowing costs are recognised in profit or loss in
the period in which they are incurred.
Income Taxes
The tax expense represents the sum of the tax currently payable
and deferred tax.
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported profit or
loss because it excludes items of income or expense that are
taxable or deductible in other years and it further excludes items
that are never taxable or deductible. The Group's liability for
current tax is calculated using tax rates that have been enacted or
substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences, and
deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference arises
from the initial recognition of goodwill or from the initial
recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the taxable
profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and associates,
and interest in joint ventures, except where the Group is able to
control the reversal of the temporary difference and it is expected
that the temporary difference will not reverse in the foreseeable
future. In addition, tax losses available to be carried forward as
well as other income tax credits to the Group are assessed for
recognition as deferred tax assets.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited in profit or loss,
except when it relates to items charged or credited directly to
equity, in which case the deferred tax is also dealt with in
equity. Tax relating to items recognised in other comprehensive
income is recognised in other comprehensive income.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
Property, Plant and Equipment
Non-mining assets
Property, plant and equipment are recorded at cost net of
accumulated depreciation and any provision for impairment.
Depreciation is provided using the straight-line method to write
off the cost of the asset less any residual value over its useful
economic life as follows:
Freehold buildings Fifteen years
Plant and machinery Three to fifteen years
Development costs Life of mine
Freehold land Not depreciated
Development and production expenditure
When exploration and evaluation work shows a mine to be
commercially viable, the accumulated costs are transferred to
property, plant and equipment. Mining plant and equipment consist
of buildings, plant and machinery, which are depreciated over the
shorter of the estimated useful life of the asset or the life of
the mine.
Mining property for mines in production, including pre-stripping
costs, is written off on a unit of production basis over the life
of the mine.
Asset residual values and useful lives are reviewed annually and
amended as necessary. Assets are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying
amount of the fixed asset may not be recoverable. An asset's
carrying amount is written down immediately to its recoverable
amount if the asset's carrying amount exceeds the higher of the
asset's fair value less costs to sell or value-in-use.
Development costs relating to major programmes at the existing
mines are capitalised. These costs consist primarily of expenditure
to expand the capacity of the operating mine. Day-to-day mine
development costs to maintain production are expensed as incurred.
Initial development and production costs on a new mine, which
include site establishment costs, are capitalised until production
reaches commercial production which is defined as 60% of budgeted
steady-state production, at which time the accumulated costs are
transferred to property, plant and equipment. Mining plant and
equipment consists of buildings, plant and machinery, which are
depreciated over the shorter of the estimated useful life of the
asset or the life of the mine.
Impairment
At each balance sheet date, the Group reviews the carrying
amounts of its tangible and intangible assets to determine whether
there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where the asset does not generate
cash flows that are independent from other assets, the Group
estimates the recoverable amount of the cash-generating unit to
which the asset belongs. An intangible asset with an indefinite
useful life is tested for impairment annually and whenever there is
an indication that the asset may be impaired.
The recoverable amount is the higher of fair value less costs to
sell and value-in-use. In assessing value-in-use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time, value of money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised as an expense
immediately.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (cash-generating unit) in prior years. A reversal of
an impairment loss is recognised as income immediately, unless the
relevant asset is carried at a revalued amount, in which case the
reversal of the impairment loss is treated as a revaluation
increase.
Assets Held for Sale
The Group classifies a non-current asset as held for sale if its
carrying amount will be recovered principally through a sale
transaction rather than continuing use. The asset must be available
for immediate sale in its present condition subject only to terms
that are usual and customary for sales of such assets and its sale
must be highly probable. The sale should be expected to be
completed within one year from the date of classification unless
the delay is caused by events or circumstances beyond the Group's
control.
Assets classified as held for sale are measured at the lower of
their carrying amount and fair value less costs to sell.
Inventories
Inventories are stated at the lower of cost and net realisable
value, using the average cost principle. Cost includes all direct
expenditure and related overheads incurred to the balance sheet
date. Cost is determined on the following bases:
-- copper concentrate is valued at the average total production
cost at the relevant stage of production; and
-- consumable stores are valued on a moving average cost basis.
Net realisable value is the estimated selling price in the
ordinary course of business, less the cost of completion and
selling expenses.
Financial Instruments, Assets and Liabilities
The Group uses financial instruments comprising cash, trade
receivables, trade payables, convertible debt, derivatives and
other equity investments that arise from its operations.
Financial assets
Financial assets are divided into the following categories:
loans and receivables; financial assets at fair value through
profit or loss; and available-for-sale financial assets. Currently
the Group only has loans and receivables. Financial assets are
assigned to the different categories by management on initial
recognition, depending on the purpose for which they were
acquired.
All financial assets are recognised when the Group becomes a
party to the contractual provisions of the instrument. Financial
assets other than those categorised as at fair value through profit
or loss are recognised at fair value plus transaction costs.
Financial assets categorised as at fair value through profit or
loss are recognised initially at fair value with transaction costs
expensed through profit or loss.
Financial assets at fair value through profit or loss include
financial assets that are held for trading, which include
derivatives. Subsequent to initial recognition, the financial
assets included in this category are measured at fair value with
changes in fair value recognised in profit or loss.
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. Trade receivables are classified as loans and receivables.
Loans and receivables are measured subsequent to initial
recognition at amortised cost using the effective interest method,
less provision for impairment. Any change in their value through
impairment or reversal of impairment is recognised in profit or
loss.
Provision against trade receivables is made when there is
objective evidence that the Group will not be able to collect all
amounts due to it in accordance with the original terms of those
receivables. The amount of the write-down is determined as the
difference between the asset's carrying amount and the present
value of estimated future cash flows, discounted using the original
effective interest rate.
Available-for-sale financial assets include non-derivative
financial assets that are either designated as such or do not
qualify for inclusion in any of the other categories of financial
assets. All financial assets within this category are measured
subsequently at fair value, with changes in value recognised in
other comprehensive income. Gains and losses arising from
investments classified as available-for-sale are reclassified from
equity to profit or loss when they are sold or when the investment
is impaired.
In the case of impairment of available-for-sale assets, any loss
previously recognised in other comprehensive income is reclassified
from equity to profit or loss. Impairment losses recognised in the
profit and loss on equity instruments are not reversed through
profit or loss. Impairment losses recognised previously on debt
securities are reversed through profit or loss when the increase
can be related objectively to an event occurring after the
impairment loss was recognised in profit or loss.
An assessment for impairment is undertaken at least at each
balance sheet date.
A financial asset is derecognised only where the contractual
rights to the cash flows from the asset expire or the financial
asset is transferred and that transfer qualifies for derecognition.
A financial asset is transferred if the contractual rights to
receive the cash flows of the asset have been transferred or the
Group retains the contractual rights to receive the cash flows of
the asset but assumes a contractual obligation to pay the cash
flows to one or more recipients. A financial asset that is
transferred qualifies for derecognition if the Group transfers
substantially all the risks and rewards of ownership of the asset,
or if the Group neither retains nor transfers substantially all the
risks and rewards of ownership but does transfer control of that
asset.
Cash and cash equivalents comprise cash on hand and demand
deposits, together with other short-term, highly liquid investments
that are readily convertible into known amounts of cash and which
are subject to an insignificant risk of changes in value less bank
overdrafts repayable on demand.
Financial liabilities
The Group's financial liabilities include bank overdrafts,
loans, unsecured creditors, convertible debt and trade and other
payables.
Financial liabilities are obligations to pay cash or other
financial assets and are recognised when the Group becomes a party
to the contractual provisions of the instrument. Financial
liabilities categorised as at fair value through profit or loss are
recorded initially at fair value, and all transaction costs are
recognised immediately in profit or loss. All other financial
liabilities are recorded initially at fair value, net of direct
issue costs.
Finance charges, including premiums payable on settlement or
redemption and direct issue costs, are charged to profit or loss on
an accruals basis using the effective interest method and are added
to the carrying amount of the instrument to the extent that they
are not settled in the period in which they arise.
Financial liabilities are categorised as at fair value through
profit or loss where they are classified as held for trading or
designated as at fair value through profit or loss on initial
recognition. Such liabilities are measured at fair value. A
financial liability is derecognised only when the obligation is
extinguished, that is, when the obligation is discharged, cancelled
or expires.
All loans and borrowings are initially recognised at the fair
value net of issue costs associated with the borrowing. After
initial recognition, loans and borrowings are subsequently measured
at amortised cost using the effective interest method. Amortised
cost is calculated by taking into account any issue costs and any
discount or premium on settlement. Gains and losses on
derecognition are recognised in finance charges.
The effective interest method is a method of calculating the
amortised cost of a financial liability and of allocating interest
expense over the relevant period. The effective interest rate is
that rate which exactly discounts estimated future cash payments
through the expected life of the financial liability or, where
appropriate, a shorter period.
Trade payables are recognised initially at their fair value and
subsequently measured at amortised costs less settlement
payments.
Equity
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all its
liabilities. Equity instruments are recorded at the proceeds
received net of direct issue costs. The Group has in issue only
ordinary shares and the conditions of the shares are such that they
are accounted for as equity.
Forward Contracts
The Group uses forward contracts to mitigate its risks
associated with commodity price fluctuations. The gain or loss on
the forward contracts is recognised in profit or loss in the period
in which it matures. If the contract becomes onerous by the Group
not being able to meet its obligations, the difference between the
forward price and spot price is debited to profit or loss.
Provisions
Provisions are recognised when the present obligations arising
from legal or constructive commitment resulting from past events
are expected to lead to an outflow of economic resources from the
Group which can be estimated reliably.
Provisions are measured at the present value of the estimated
expenditure required to settle the present obligation, based on the
most reliable evidence available at the balance sheet date.
All provisions are reviewed at each balance sheet date and
adjusted to reflect the current best estimates.
Equity
Equity comprises the following:
-- "issued capital" represents the nominal value of equity shares;
-- "share premium" represents the excess over nominal value of
the fair value of consideration received for equity shares, net of
expenses of the share issue;
-- "merger reserve" represents the excess over nominal value of
the fair value of shares issued in a share for share exchange
satisfying the conditions of section 612 of the Companies Act
2006;
-- "share-based payment reserve" represents equity-settled
share-based employee remuneration until such share options are
exercised;
-- "foreign exchange reserve" represents the differences arising
from translation of investments in overseas subsidiaries;
-- "retained earnings" represents retained profits less retained losses;
-- "non-controlling interests" represents the amounts not attributable to the Parent Company.
Share-based Payments
Equity-settled transactions
The Group operates equity-settled share-based compensation plans
for remuneration of its employees.
All employee services received in exchange for the grant of any
share-based compensation are measured at their fair values. These
are indirectly determined by reference to the share option awarded.
Their value is appraised at the grant date and excludes the impact
of any non-market vesting conditions (e.g. profitability or sales
growth targets).
The cost of equity-settled transactions with employees is
measured by reference to the fair value at the date at which they
are granted and is recognised as an expense over the vesting
period, which ends on the date on which the relevant employees
become fully entitled to the award. Fair value is determined by an
external valuer using an appropriate pricing model. In valuing
equity-settled transactions, no account is taken of any vesting
conditions, other than market conditions linked to the price of the
shares of the Company.
At each balance sheet date before vesting, the cumulative
expense is calculated, representing the extent to which the vesting
period has expired and management's best estimate of the
achievement or otherwise of non-market conditions and the number of
equity instruments that will ultimately vest, or in the case of an
instrument subject to a market condition, be treated as vesting as
described above. The movement in cumulative expense since the
previous balance sheet date is recognised in profit or loss, with a
corresponding entry in equity.
Where the terms of an equity-settled award are modified or a new
award is designated as replacing a cancelled or settled award, the
cost based on the original award terms continues to be recognised
over the original vesting period. In addition, an expense is
recognised over the remainder of the new vesting period for the
incremental fair value of any modification, based on the difference
between the fair value of the original award and the fair value of
the modified award, both as measured on the date of the
modification. No reduction is recognised if this difference is
negative.
Where an equity-settled award is cancelled, it is treated as if
it had vested on the date of cancellation, and any cost not yet
recognised in profit or loss for the award is expensed immediately.
Any compensation paid up to the fair value of the award at the
cancellation or settlement date is deducted from equity, with any
excess over fair value being treated as an expense in profit or
loss.
All equity-settled share-based payments are ultimately
recognised as an expense in the statement of comprehensive income
with a corresponding credit to "share-based payment reserve".
Upon exercise of share options, the proceeds received net of any
directly attributable transaction costs, up to the nominal value of
the shares issued, are reallocated to share capital with any excess
being recorded as additional share premium.
Employee Benefits
Defined contribution pension scheme
The pension costs charged against profits are the contributions
payable to the scheme in respect of the accounting period.
The Group pays contributions to personal pension schemes of
employees, which are administered independently of the Group.
4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Group's accounting policies, described
in note 3, the directors are required to make judgements, estimates
and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period, or in the period of the revision and future
periods if the revision affects both current and future
periods.
Critical Judgements in Applying the Group's Accounting
Policies
The following are the critical judgements, apart from those
involving estimations (which are dealt with separately below), that
the directors have made in the process of applying the Group's
accounting policies and that have the most significant effect on
the amounts recognised in financial statements.
Going concern
The Company expects to generate sufficient funds to operate as a
going concern for the next 12 months, based on its projected
production levels and prevailing market conditions. Exchange rates
and the price of copper will continue to have a significant impact
on the Group's cash flow.
The business has taken steps to manage its exposure to the
commodity markets; at 30 June 2012 it had sold forward 3,550 tonnes
of copper at an average price of US$8,361/tonne of copper, which it
is currently delivering. The Group maintains forward contracts
extending out to between 15 and 18 months. These forward sales were
negotiated to preserve the profitability of the mines in the face
of an economic crisis similar in scale to that of 2008-2009. In
addition, the Group has fixed the US$:N$ exchange rate for US$1.5
million of revenue per month over the same period at an average
exchange rate of 8.68.
The business has a debt financing facility of US$5.9 million
with Louis Dreyfus. The loan is linked to an offtake agreement and
is structured with repayment terms linked to the production of
concentrate at the Central Operations. The Board considers this
financing model reduces risk by better matching its debt service
obligations with projected cash flows.
Forward contracts
In applying the Group's revenue recognition accounting policy,
forward sale contracts and associated price fixing agreements are
deemed to be "own use" contracts that fall outside the scope of IAS
39 and are not considered to be derivatives.
Sources of Estimation Uncertainty
Revenue
The Group initially receives payment and takes revenue based on
the copper, gold and silver content in the concentrate when the
concentrate reaches the ship's rail. There are a number of
variables in this initial valuation of revenue valuation that may
change by the time the final price is agreed.
Metal price: the Group fixes the price of the copper in
multiples of 25 tonnes either through forward contracts or through
fixing the price at the time of sale. The remaining quantity of
copper is initially priced on the spot price of the day. The final
price will be based on the average price in either one months' time
(M+1) or four months' time (M+4) based on the offtaker's biannual
election.
Gold and silver are priced initially at the spot price but the
final price will be M+1.
Assay results: the quantity of copper, gold and silver is based
on assays taken at the mine in the initial invoice. The final price
is based on assays taken by seller and buyer at the port, Walvis
Bay. The final price is based on the average assays of the parties.
In the event the difference between the assay results exceeds
contractual limits an umpire sample is used.
Moisture; the initial invoice is based on the estimated dry
metric tonnes (DMT) in the lot. The DMT is based on the wet metric
tonnes (WMT) weight of the concentrate at the port and the moisture
content measured at the mine. The moisture content on the final
invoice is based on the moisture content measured at the port.
The Group recognises revenue based on the initial invoice and
amends it when the final invoice is agreed. The offtaker pays 95%
of the initial invoice immediately and the balance when the final
price is agreed.
Capitalisation and expensing of development expenses
For a new start-up, all pre-production expenditure and any
associated income are capitalised until reaching commercial
production. The Group defines commercial production as 60% of
budgeted steady-state production whereupon it believes the mines
have reached a stable level of production. After reaching
commercial production, income and expenditure are charged to profit
and loss. The capitalised development is amortised over the life of
the mine.
The directors use their judgement to determine the level of
production at which the mine will achieve a steady state and the
life of a mine.
Where a mine recommences production after being in care and
maintenance, all production costs and associated income are charged
to profit and loss immediately. Specific development projects, for
example to open up new areas of the mine, are capitalised within
property, plant and equipment. These development projects are
amortised over the period in which the mine will benefit from the
development, as discussed below.
Carrying value of property, plant and equipment
All mining assets are amortised where the mine operating plan
calls for production from well-defined mineral reserves over proven
and probable reserves.
For mobile and fixed plant, the straight-line method is applied
over the estimated useful life of the asset which does not exceed
the estimated mine life based on proven and probable mineral
reserves, as the useful lives of these assets are considered to be
limited to the life of the relevant mine.
The calculation of amortisation could be impacted by the
estimate of actual production in the future being different from
current forecast production based on proven and probable mineral
reserves.
The factors affecting estimated mineral reserves include:
-- changes in proven and probable mineral reserves;
-- possible significant variations in the grade of mineral reserves from time to time;
-- differences between actual commodity prices and commodity price assumptions;
-- unforeseen operational issues at mine sites;
-- changes in capital, operating, mining, processing and
reclamation costs, discount rates and foreign exchange rates;
and
-- changes in mineral reserves could similarly impact the useful
lives of assets depreciated on a straight-line basis, where those
lives are limited to the life of the mine.
The recoverable amounts of cash-generating units and individual
assets have been determined based on the higher of value-in-use
calculations and fair values less costs to sell. These calculations
require the use of estimates and assumptions. It is possible that
the copper price estimation may change, which may then impact the
estimated life of mine determinant and may then require a material
adjustment to the carrying value of property, plant and
equipment.
The Group reviews and tests the carrying value of assets when
events or changes in circumstances suggest that the carrying amount
may not be recoverable. Assets are grouped at the lowest level for
which identifiable cash flows are largely independent of cash flows
of other assets. If there are indications that impairment may have
occurred, estimates are prepared for expected future cash flows for
each group of assets. They are significantly affected by a number
of factors including published reserves, resources, exploration
potential and production estimates, together with economic factors
such as spot and future copper prices, discount rates, foreign
currency exchange rates, estimates of costs to produce reserves and
future capital expenditure.
Fair value of share options
The directors use their judgement in selecting an appropriate
valuation technique for share options, and have selected the
Black-Scholes model. Details of the assumptions used and of the
results of sensitivity analyses regarding these assumptions are
provided in note 30.
5. REVENUE
An analysis of the Group's revenue is as follows:
Year ended Year ended
30 June 30 June
2012 2011
US$'000 US$'000
Sale of goods 47,577 16
Total revenue 47,577 16
6. OTHER OPERATING INCOME
Year ended Year ended
30 June 30 June
2012 2011
US$'000 US$'000
Property rental 105 127
Other 57 57
162 184
7. OPERATING SEGMENTS
In identifying its operating segments, management generally
follows the physical location of its mines.
In the previous year, two operating segments were disclosed:
mining and smelting. Smelting was a discontinued segment having
been disposed of in the previous year. Mining has been split into
Central Operations and Northern Operations to reflect the greater
activity of the feasibility studies in Northern Operations.
The activities undertaken by the Central Operations segment
include the sale of extracted copper from Otjihase and Matchless
mines. The activities undertaken by the Northern Operations segment
included a valuation of resources relating to the feasibility study
for the Tschudi Open Pit mine and Tsumeb Tailings project.
Each of these operating segments is managed separately as each
of these service lines requires different technologies and other
resources as well as marketing approaches.
The measurement policies the Group uses for segment reporting
under IFRS 8 are the same as those used in its financial
statements.
The revenues of Otjihase and Matchless are indistinguishable as
the ore coming from both mines passes through the same concentrator
and the two mines are viewed as one operating unit. Evaluation
costs relating to feasibility studies for the Tschudi Open Pit mine
and Tsumeb Tailings projects have been capitalised as disclosed in
note 16.
The Group's operations are located in Namibia and the UK. The
mining and smelting segments are located in Namibia, while the
corporate function is carried out in London.
Year ended 30 June 2012
Central Northern
Operations Operations Consolidated
US$'000 US$'000 US$'000
Sales and other operating revenues
External sales 47,577 - 47,577
Segment revenues 47,577 - 47,577
Central Northern
Operations Operations Consolidated
Segmental profit / (loss) US$'000 US$'000 US$'000
Segmental operating profit /
(loss) 10,705 (375) 10,330
=========== ===========
Profit on release of compromise
creditors 5,187
Profit on disposal of Berg Aukus
mine 4,146
Unallocated corporate expenses (3,356)
Unrealised foreign exchange loss (1,443)
Interest expense (489)
Interest income 126
Profit before associated company 14,501
Central Northern
Operations Operations
Segmental costs US$'000 US$'000
Depreciation 4,860 227
=========== ===========
Revenue by geographical area
US$'000
Switzerland 47,550
South Africa 27
47,577
The Group's revenues were to
one customer in each country
Central Northern
Operations Operations Total
US$'000 US$'000 US$'000
Segment assets 46,908 5,486 52,394
=========== ===========
Unallocated corporate assets 6,228
Total assets 58,622
Central Northern
Operations Operations
Non-current assets by geographic
area US$'000 US$'000
Namibia 29,032 4,548
=========== ===========
Year ended 30 June 2011
Central Northern
Operations Operations Consolidated
US$'000 US$'000 US$'000
Sales and other operating revenues
External sales 16 - 16
Revenue 16 - 16
Central Northern
Operations Operations Consolidated
Segmental loss US$'000 US$'000 US$'000
Segmental operating loss (3,462) (650) (4,112)
Discontinued business (508) (508)
(3,462) (1,158) (4,620)
Unallocated corporate expenses 3,710
Interest expense (188)
Interest income 52
Loss before associated company (1,046)
Central Northern
Operations Operations
Segmental costs US$'000 US$'000
Depreciation 3,378 331
Revenue by geographical area South Africa
US$'000
Total revenue 16
16
All the Group's revenues were
to a single customer
Central Northern
Operations Operations Consolidated
US$'000 US$'000 US$'000
Segment assets 39,267 2,655 41,922
Unallocated corporate assets 7,945
Total assets 49,867
Central Northern
Operations Operations
Non-current assets by geographic
area US$'000 US$'000
Namibia 29,672 4,548
=========== =============
8. DISCONTINUED OPERATIONS
Year ended Year ended
30 June 30 June
2012 2011
US$'000 US$'000
Cost of sales - (117)
Gross loss - (117)
Other operating income - 4
Loss on discontinued operations - (113)
Profit from disposal of discontinued
operations - 621
- 508
On 17 May 2010, the Group sold the
Kombat mine owned by Ongopolo Mining
Ltd to Grove Export CC for $N22.8m,
approximately $3.2m.
Proceeds US$'000
Cash 3,202
3,202
Net asset value of assets disposed
of 2,581
Profit on disposal 621
The fair value of assets disposed of
was: US$'000
Property, plant and equipment 2,581
2,581
9. OPERATING PROFIT / (LOSS)
Year ended Year ended
30 June 30 June
This is stated after charging / (crediting): 2012 2011
US$'000 US$'000
Depreciation of owned assets 5,087 3,714
Amortisation of owned assets - 3
Staff costs (see note 11) 6,027 3,314
Profit on sale of property, plant and
equipment (200) (660)
Operating lease payments - equipment 5 3
Auditor's remuneration (note 10) 144 131
10. AUDITOR'S REMUNERATION
Year ended Year ended
30 June 30 June
2012 2011
US$'000 US$'000
The remuneration of the auditor is
further analysed as follows:
Fees payable to the Company's auditor
for the audit of the Company's annual
accounts 66 79
Fees payable to the Company's auditor
and its associates for other services:
The audit of the Company's subsidiaries,
pursuant to legislation 47 27
Tax services 7 11
Other services 24 14
Total remuneration 144 131
11. EMPLOYEES AND KEY MANAGEMENT
The total directors' emoluments for the year were US$909,000
(2011: US$644,000) and those of the highest paid director were
US$686,000 (2011: US$428,000). Detailed disclosure of directors'
remuneration is disclosed in the audited sections of the directors'
remuneration report on pages 17 to 19.
a) Staff numbers
Year ended Year ended
30 June 30 June
2012 2011
No. No.
The average number of employees, including
directors
Group:
Corporate UK 9 8
Namibia
Mining 33 22
Average number of persons employed 42 30
b) Staff costs
Year ended Year ended
30 June 30 June
2012 2011
US$'000 US$'000
Aggregated remuneration comprised:
Wages and salaries 5,401 2,973
Social security costs 180 82
Pension contributions 163 107
Share-based payments 283 152
Employment costs 6,027 3,314
c) Key management remuneration
Year ended Year ended
30 June 30 June
2012 2011
US$'000 US$'000
Key management remuneration
Short-term employment benefits 1,600 1,171
Post-employment benefits 97 91
Share-based payments 78 152
1,775 1,414
Key management personnel as defined under IAS 24 have been
identified as the Board of Directors and further management
personnel who have the authority and responsibility for planning,
directing and controlling the activities of the Group.
12. FINANCE INCOME
Year ended Year ended
30 June 30 June
2012 2011
US$'000 US$'000
Interest revenue:
Bank deposits 126 52
Total interest revenue 126 52
13. FINANCE COSTS
Year ended Year ended
30 June 30 June
2012 2011
US$'000 US$'000
Bank 124 46
Louis Dreyfus Commodities Metals Suisse
SA 365 142
Total interest expense 489 188
14. INCOME TAX
Year ended Year ended
30 June 30 June
2012 2011
US$'000 US$'000
Profit / (loss) before tax 14,183 (538)
UK corporation tax @ 25.57% (2011:
28%) 3,627 (148)
Tax effects of:
Expenses not allowable for tax purposes 118 (214)
Non-taxable income (2,095) -
Movement on unrecognised deferred tax (1,650) -
Deferred tax asset recognised 7,167 -
Tax losses for future utilisation - 362
Total income tax credit 7,167 -
Unrecognised deferred tax asset
Accelerated capital allowances 7,957 8,970
Other temporary differences (3,060) 1,649
Share-based payments (27) (17)
Tax losses - UK (2,133) (2,524)
Tax losses - Namibia (38,155) (54,380)
Unrecognised deferred tax asset (35,418) (46,302)
Gross tax losses
UK (9,997) (9,683)
Namibia (114,879) (149,467)
(124,876) (159,150)
Deferred tax assets are recognised to the extent that future
taxable profits are reasonably foreseeable and meet the definition
of "probable".
The gross tax losses have no expiry period.
Year ended Year ended
30 June 30 June
2012 2011
Movement on deferred tax assets US$'000 US$'000
At beginning of year - -
Asset recognised during the year 7,167 -
At end of year 7,167 -
US$3.4 million is deemed to be a current asset and US$3.8
million a non-current asset.
15. EARNINGS / (LOSS) PER SHARE
The calculation of basic and diluted loss per ordinary share is
based on the following data:
Year ended Year ended
30 June 30 June
2012 2011
Basic earnings / (loss) per share (US
cents)
Earnings / (loss) from continuing activities 3.91c (0.21c)
Earnings from discontinuing activities - 0.10c
Total 3.91c (0.11c)
============ ============
Diluted earnings / (loss) per share
(US cents)
Earnings / (loss) from continuing activities 3.90c (0.21c)
Earnings from discontinuing activities - 0.10c
Total 3.90c (0.11c)
============ ============
Weighted average number of shares for
basic earnings / (loss) per share 536,571,808 507,547,250
Number of dilutive options 2,752,427 -
Weighted average number of shares for
diluted earnings / (loss) per share 539,324,235 507,547,250
Both the basic and diluted earnings per share have been
calculated using the profit attributable to shareholders of the
Parent Company, Weatherly International plc, of US$21,033,000 (2011
loss of US$535,000) as the numerator, i.e. no adjustment to profit
was necessary in either year.
For the year ended 30 June 2012, 16.9 million (2011: 26.8
million) potential ordinary shares have been excluded from the
calculations of earnings / (loss) per share as they are
anti-dilutive.
16. INTANGIBLE ASSETS
Computer
Evaluation software Total
US$'000 US$'000 US$'000
Cost
At 1 July 2010 - 97 97
Additions 410 - 410
Exchange difference 4 9 13
Disposals - (106) (106)
At 30 June 2011 414 - 414
Amortisation:
At 1 July 2010 - (94) (94)
Provided during the year - (3) (3)
Exchange differences - (12) (12)
Disposals - 109 109
At 30 June 2011 - - -
Net book value at 30 June 2011 414 - 414
=========== ========== ========
Cost
At 1 July 2011 414 - 414
Additions 3,419 - 3,419
Exchange difference (187) - (187)
Disposals - - -
At 30 June 2012 3,646 - 3,646
Net book value at 30 June 2012 3,646 - 3,646
=========== ========== ========
17. PROPERTY, PLANT AND EQUIPMENT
a)
Freehold Plant Development
property and machinery costs Totals
US$'000 US$'000 US$'000 US$'000
Cost
At 1 July 2010 20,051 18,870 - 38,921
Additions - 4,593 4,701 9,294
Reverse impairment (see
note 35) - - 2,240 2,240
Disposals (323) (44) - (367)
Exchange adjustment 2,405 4,459 - 6,864
At 30 June 2011 22,133 27,878 6,941 56,952
Depreciation:
At 1 July 2010 (4,891) (11,227) - (16,118)
Provided during the year (1,163) (2,551) - (3,714)
Disposals 23 44 - 67
Exchange adjustment (904) (3,464) - (4,368)
At 30 June 2011 (6,935) (17,198) - (24,133)
Net book value at 30 June
2011 15,198 10,680 6,941 32,819
Cost
At 1 July 2011 22,133 27,878 6,941 56,952
Additions 87 2,578 1,426 4,091
Disposals - (766) - (766)
Exchange adjustment (3,502) (7,256) (1,097) (11,855)
At 30 June 2012 18,718 22,434 7,270 48,422
Depreciation
At 1 July 2011 (6,935) (17,198) - (24,133)
Provided during the year (1,057) (2,754) (1,276) (5,087)
Disposals - 503 - 503
Exchange adjustment 1,519 5,478 57 7,054
At 30 June 2012 (6,473) (13,971) (1,219) (21,663)
Net book value at 30 June
2012 12,245 8,463 6,051 26,759
The following serve as security for borrowings:
Carrying Carrying
amount amount Bond amount Bond amount
2012 2011 2012 2011
US$'000 US$'000 US$'000 US$'000
Nature of property, plant
and equipment
Moveable mining assets
of Ongopolo Mining Limited 5,853 6,386 12,000 12,000
18. INVESTMENTS
a) Subsidiaries
The Company's investments at the balance sheet date in the share
capital of companies include the following:
Name % holding Nature of Country Class of
business of incorporation shares
Weatherly (SL) Limited 100 Holding company St Lucia 1,000 ordinary
US$1
Puku Minerals Limited (owned 100 Mineral exploration Zambia 100 ordinary
by Weatherly (SL) Limited) US$1
Weatherly (Namibia SL) Limited 100 Holding company St Lucia 125,381,946
ordinary
20p
Weatherly (Namibian Custom 100 Holding company St Lucia 1,000 ordinary
Smelters) Limited GBP1
Weatherly Mining Namibia 99 Mineral exploration, Namibia 20,000,000
Limited owned by Weatherly development ordinary
(Namibia SL) Limited and production N$1.
1,000 redeemable
preference
shares N$1
Weatherly International 100 Trustee company England 1 ordinary
Trustee Company Limited and Wales GBP1
The following entities are owned by
Weatherly Mining Namibia Limited:
Ongopolo Mining Limited 97.5 Mineral exploration Namibia 95,590,000
and development ordinary
N$0.387
Tsumeb Specimen Mining (Pty) 100 Dormant Namibia 4,000 ordinary
Limited US$1
b) Investment in associates
On 1 August 2011, Weatherly's associated company, China Africa
Resources plc (CAR), listed on AIM. This completed the conditions
precedent where East China Exploration and Development Bureau for
Non-Ferrous Metals (ECE) paid GBP4.7 million (approximately US$7.7
million) to maintain their 65% share of CAR and Weatherly sold
their subsidiary, China Africa Resources Namibia (Pty) Ltd (CARN),
to CAR to maintain their 35% shareholding. CARN's only asset was
the Berg Aukas mine in Namibia, which had a book value of $1 at the
time of the transfer. CARN was valued at GBP2.5 million (US$4.1
million) by CAR, calculated as GBP4.7 million (US$7.7 million) x
35/65.
Immediately after listing, Weatherly issued 10% of their shares
as an in specie dividend to the shareholders of Weatherly
International plc, leaving the Company with 25% of the share
capital of CAR. The dividend valuation was calculated at 10/35 of
the Weatherly shareholding value of US$4.2 million.
Summary of the financial position of associates are as
follows:
30 June 30 June
2012 2011
US$'000 US$'000
As at 30 June 2011 57 -
Sale of CARN to CAR 4,146 57
-------- --------
4,203 57
Dividend - disposal of shares (1,201) -
-------- --------
3,002 57
Loss of CAR in year (318) -
As at 30 June 2012 2,684 57
Dividend per share (p) 0.22 -
The summarised financial statements
of CAR are:
30 June 30 June
2012 2011
US$'000 US$'000
Property, plant and equipment 27 -
Intangible assets 5,537 -
-------- --------
Total non-current assets 5,564 -
Receivables 138 248
Cash 4,297 61
Payables (198) (149)
4,237 160
-------- --------
Net assets 9,801 160
======== ========
Equity 11,036 160
Foreign exchange reserve (28) -
Retained deficit (1,207) -
Equity and reserves 9,801 160
======== ========
Loss for the period (1,273) -
19. NON-CURRENT ASSETS HELD FOR SALE
Assets classified as non-current assets held for sale at June
2011 comprise properties sold at auction on 8 June 2009 and subject
only to regulatory approval. The regulatory approval requires the
subdivision of the plots being sold and has proved to be a complex
process administratively. It is expected that the process will be
completed in the next 12 months. All assets are included in the
Northern Operations segment of the segmental analysis.
Freehold Plant
property and machinery Totals
US$'000 US$'000 US$'000
Balance at 30 June 2010 3,403 361 3,764
Disposals (2,615) (405) (3,020)
Exchange differences 409 44 453
Balance at 30 June 2011 1,197 - 1,197
Disposals (70) - (70)
Exchange differences (189) - (189)
Balance at 30 June 2012 938 - 938
The carrying value above approximates to the selling value and
costs to sell are expected to be minimal.
20. INVENTORIES
30 June 30 June
2012 2011
US$'000 US$'000
Metal in concentrate on hand 1,905 2,684
Metal in ore stockpile on hand - 390
Consumables 1,183 293
3,088 3,367
The difference between purchase price or production cost of
inventories and their replacement cost is not material.
21. TRADE AND OTHER RECEIVABLES
30 June 30 June
2012 2011
US$'000 US$'000
Current trade and other receivables
Trade receivables 3,473 1,564
Pre-payments and other receivables 1,440 1,301
VAT 15 57
4,928 2,922
Non-current trade and other receivables
Receivables for sale of non-controlling
share of subsidiary (Note 22) 887 -
887 -
Total receivables 5,815 2,922
As at 30 June 2012 there were no trade receivables past due
(2011: nil).
22. SALE OF NON-CONTROLLING INTEREST IN SUBSIDARY
During the year, the Group sold a 2.5% minority share of
Ongopolo Mining Ltd (OML) to Labour Investment Holdings (Pty) Ltd
(LIH) in Namibia. The shareholding was sold for N$7.2 million
(US$887,000). The terms of the agreement were that the amount due
from LIH will be deducted from any dividends paid by OML. LIH has
pledged its shareholding as security for the debt.
The sale has been accounted for as follows:
US$'000
Receivables from LIH 887
Share of net assets in OML disposed of (431)
Profit on sale of non-controlling interest
recognised in equity 456
The profit on sale of non-controlling interests has been
accounted for through retained earnings.
LIH were also given an option to buy a further 2.5% of Ongopolo
Mining Limited at a 20% discount on the market value at the time
the option was exercised. The option will lapse in September
2016.
23. CASH
30 June 30 June
2012 2011
US$'000 US$'000
Cash and short-term deposits 7,973 7,751
Pledged notice deposit 552 1,340
8,525 9,091
For the purpose of the cash flow statement
the closing cash and cash equivalents
comprise the following:
7,973 7,751
The notice deposits are pledged in favour of the Namibian
electricity supplier, NamPower, as a guarantee of payment.
US$688,000 was pledged for a legal dispute which was resolved
with a 50% payment and the balance of US$344,000 returned to the
Group. The remaining deposit is to guarantee future payments.
24. BORROWINGS
Secured borrowings
30 June 30 June
2012 2011
US$'000 US$'000
Secured borrowing at amortised cost
Louis Dreyfus Commodities Metals Suisse
SA Working Capital Loan 5,917 7,000
Short-term portion of loan (917) (1,715)
5,000 5,285
Louis Dreyfus Commodities Metals Suisse
SA Inventory Loan 657 3,516
Short-term portion of loan (657) (3,516)
- -
First National Bank of Namibia Limited 1,089 1,152
Short-term portion of loan (522) (317)
567 835
Total borrowings 7,663 11,668
Short-term portion (2,096) (5,548)
5,567 6,120
The weighted average interest rates paid during the year were as
follows:
30 June 30 June
2012 2011
% %
Louis Dreyfus Commodities Metals Suisse
SA - Working Capital Loan 3.40% 3.30%
Louis Dreyfus Commodities Metals Suisse
SA - Inventory Loan 3.75% 3.75%
First National Bank of Namibia Limited 9.75% 9.75%
Louis Dreyfus Commodities Metals Suisse SA - Working Capital
Loan
The loan bears interest at US$3 per month libor + 3% and is
denominated in US$.
The loan is repayable at $50 per dry metric tonne sold to Louis
Dreyfus by Ongopolo Mining Ltd (OML). In addition there is a cash
sweep where Louis Dreyfus recover 80% of the excess cash of
OML.
$0.9 million of the loan matures in March 2013, US$1.5 million
in July 2013 and the remaining $3.5 million matures in November
2014.
The loan is secured by a notarial general covering bond up to
US$12 million over the moveable assets and receivables of OML and a
pledge and cession of the shares of OML.
Louis Dreyfus Commodities Metals Suisse SA - Inventory Loan
The loan bears interest at Louis Dreyfus' cost of funds + 2.5%
for 60 days and is denominated in US$.
The loan is repayable on sale of copper concentrate stocks at
Walvis Bay to Louis Dreyfus.
The loan is secured on the copper concentrate inventory at
Walvis Bay.
First National Bank of Namibia Limited
The loan is an asset financing facility and bears interest at
First National Bank of Namibia Limited's prime overdraft rate and
is denominated in Namibian dollars.
The loan is repayable in 36 equal instalments.
The loan is secured on the assets financed by the facility and a
letter of surety by Weatherly International plc.
25. TRADE AND OTHER PAYABLES
30 June 30 June
Current 2012 2011
US$'000 US$'000
Trade payables 5,106 3,967
Other payables and accruals 258 397
-------- --------
5,364 4,364
Unsecured payables subject to a compromise
on acquisition - 3,223
Non-current
Unsecured payables subject to a compromise
on acquisition - 1,964
As part of the acquisition of Ongopolo, the Group reached an
offer of compromise with unsecured payables to pay the amounts due
over five years subject to certain conditions being met. The five
years have now expired and the remaining US$5.2 million has been
released to profit and loss. An offer of compromise is broadly
similar in effect to a scheme of an arrangement to creditors under
the Companies Act 2006; the offer of compromise was sanctioned by
the High Court of Namibia.
26. PROVISIONS
30 June 30 June
2012 2011
US$'000 US$'000
Opening provisions 293 262
Exchange movement (46) 31
Closing provisions 247 293
One of the Group's subsidiaries is engaged in a legal dispute
with a former contractor. The Company provided for the amount it
believes is payable under the contract. The contractor is claiming
US$588,000. The court has ruled in favour of the Group's subsidiary
but the contractor is appealing.
27. SHARE CAPITAL
30 June 30 June
Number of shares issued 2012 2011
Number of shares in issue
at beginning of the year 536,571,808 445,893,427
Shares issued during year - 90,678,381
Number of shares in issue
at end of the year 536,571,808 536,571,808
Allotted, called up and fully 30 June 30 June 30 June 30 June
paid 2012 2011 2012 2011
US$ US$ GBP GBP
Ordinary shares of 0.5p 4,580,867 4,580,867 2,682,859 2,682,859
4,580,867 4,580,867 2,682,859 2,682,859
The outstanding warrants/options to subscribe for ordinary
shares of the Company as at 30 June 2012 are as follows:
Date of Number of Price per Expiry date
grant warrants/options warrant/option
pence
10-May-07 166,667 23.50 17 April 2013
10-May-07 166,667 23.50 17 April 2014
10-May-07 166,666 23.50 17 April 2015
08-May-08 25,000 20.50 21 April 2013
31 December
10-May-08 10,500,000 8.00 2013
01-Apr-10 7,250,000 3.00 1 April 2020
05-Aug-10 3,500,000 3.20 5 August 2020
16-Mar-11 2,666,667 10.00 16 March 2021
26-May-11 1,000,000 9.25 26 March 2021
16-Aug-11 1,250,000 8.00 16 August 2021
18 October
18-Oct-11 1,000,000 5.00 2021
28. NON-CONTROLLING INTERESTS
US$'000
At 30 June 2010 (238)
Share of Weatherly Mining Namibia Ltd loss (3)
At 30 June 2011 (241)
Sale of non-controlling interests in subsidiary
(see note 22) 431
Share of loss of Weatherly Mining Namibia
Ltd 58
Share of profit in Ongopolo Mining Limited 259
Exchange movements (13)
At 30 June 2012 494
Non-controlling interests represent 1% of Weatherly Mining
Namibia Limited and 2.5% of Ongopolo Mining Limited.
29. CAPITAL COMMITMENTS
30 June 30 June
2012 2011
US$'000 US$'000
Capital commitments
Contracted for but not yet recognised
in the financial statements 185 293
30. SHARE-BASED PAYMENTS
Equity-settled share-based payments: options
The Company has an unapproved share option scheme for eligible
employees, including directors. Options are exercisable at a price
equal to the average market price of the Company's shares on the
date of grant, with a vesting period of three years. The options
are settled in equity when exercised.
If the options remain unexercised after a period of ten years
from the vesting date, the options expire. Options are forfeited if
the employee leaves the Company before the options vest.
Details of the number of share options and the weighted average
exercise price (WAEP) outstanding during the year are as
follows:
At 30 June 2012 At 30 June 2011
Weighted Weighted
average average
exercise exercise
price price
Options pence Options pence
Outstanding at start
of period 16,300,000 5.81 7,958,334 4.74
Granted during the year 2,250,000 6.67 8,500,000 7.08
Forfeited/lapsed during
the year (1,358,333) 10.19 (158,334) 20.29
Outstanding at end of
the period 17,191,667 5.59 16,300,000 5.81
Exercisable at end of
the period 9,358,334 5.77 2,966,667 6.75
Share options outstanding at the end of the year are exercisable
within a range of 3p and 23.5p.
The average life remaining of options over shares is 8.1 years
at 30 June 2012 (2011: 9.43).
The fair value of the options was calculated using the
Black-Scholes model as US$64,000. The inputs for the current year
were as follows:
Date of Estimated Exercise Expected Expected Risk-free
vesting fair value Share price price volatility life rate
pence pence pence
16/08/2012 2.2p 7.9p 8p 74.0% 10 0.60%
18/10/2012 2.1p 6.1p 5p 67.0% 10 0.57%
18/08/2013 3.1p 7.9p 8p 74.0% 10 0.69%
18/10/2013 2.7p 6.1p 5p 67.0% 10 0.65%
16/08/2014 3.8p 7.9p 8p 74.0% 10 0.92%
18/10/2014 3.1p 6.1p 5p 67.0% 10 0.88%
The dividend yield rate input in each of the above calculations
was zero.
The share price movements during the year were as follows: high
of 10.4p, low of 3.85p and a closing share price at 30 June 2012 of
4.1p.
The volatility of the Company's share price on each date of
grant was calculated as the average of volatilities of share prices
of companies in the peer group on the corresponding dates. The
share price volatility of each Company in the peer group was
calculated as the average of annualised standard deviations of
daily continuously compounded returns on the companies' stock,
calculated over five years back from the date of grant.
The peer group consists of mining companies quoted on AIM with a
market capitalisation of less than GBP100 million. The risk-free
rate is the yield to maturity on the date of grant of a UK gilt
strip, with term to maturity equal to the life of the option.
31. PENSIONS AND OTHER POST-RETIREMENT BENEFITS
The Parent Company has no pension scheme or post-retirement
benefits scheme. Payments are made to the private pension funds of
directors, forming part of their total remuneration.
Ongopolo Mining Ltd contributes 8% of pensionable salaries,
while employees are obliged to contribute 1% of pensionable
salaries and may contribute more if they wish. The fund is
administered on an inclusive basis, meaning the difference between
the total contribution of 8% and the total income of the fund
accumulates for the retirement fund purposes.
32. FINANCIAL INSTRUMENTS
Significant accounting policies
Details of the significant accounting policies and methods
adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are
recognised, in respect of each class of financial asset, financial
liability and equity instrument, are disclosed in note 3.
Categories of financial instruments
The carrying amounts presented in the statement of financial
position relate to the following categories of assets and
liabilities.
Carrying value
30 June 30 June
2012 2011
US$'000 US$'000
Financial assets
Current
Loans and receivables
Trade and other receivables 3,473 1,569
Cash and cash equivalents 8,525 9,091
11,998 10,660
Non-current
Trade and other receivables 887 -
12,885 10,660
Financial liabilities
Current
Amortised cost 7,460 13,135
Non-current
Amortised cost 5,567 8,084
13,027 21,219
======== ========
As at 30 June 2012 there were no trade receivables that were
past due and all are believed to be recoverable.
The fair value is equivalent to book value for current assets
and liabilities. Non-current liabilities are discounted at
prevailing interest rates for both the long- and short-term
elements.
The table below summarises the maturity profile of the Group's
financial liabilities at 30 June 2012, based on contractual
undiscounted payments.
Year ended 30 June 2011
Within More than
1 year 1-5 years 5 years
US$'000 US$'000 US$'000
Floating rate
Loans 5,658 6,555
Unsecured creditors subject
to a compromise on acquisition 3,556 2,569 -
Non-interest bearing
Trade and other payables 4,364 - -
======== ========== ==========
Year ended 30 June 2012
Within More than
1 year 1-5 years 5 years
US$'000 US$'000 US$'000
Floating rate
Loans 2,141 5,812
Non-interest bearing
Trade and other payables 5,364 - -
Liquidity risk
The directors monitor cash flow on a daily basis and at monthly
Board meetings in the context of their expectations for the
business, in order to ensure sufficient liquidity is available to
meet foreseeable needs. At present, equity funding from share
issues and loans from Louis Dreyfus Commodities Metals Suisse SA
are the main methods of funding.
Interest rate risk
The Group's policy is to minimise interest rate cash flow risk
exposures on long-term financing. At 30 June 2012, the Company was
exposed to changes in market interest rates through its Parent
Company and bank borrowings, which are subject to variable interest
rates.
The following table illustrates the sensitivity of the net
results for the year and equity to a reasonably possible change in
interest rates of +/- 1.0 basis points (2010: +/- 1.0 basis points)
with effect from the beginning of the year. These changes are
considered to be reasonably possible based on observations of
current market conditions. The calculations are based on the
Company's financial instruments held at each balance sheet date.
All other variables are held constant.
2012 2011
US$'000 US$'000
+1.0 +1.0
Base points Base points
Net effect on after-tax profits 77 117
Equity 77 117
An increase in interest rates will decrease profits.
Substantially all cash resources are invested in fixed-rate
interest-bearing deposits - sterling at 0.53% on monthly call and
US dollars at 0.16% on monthly call. The directors seek to get the
best rates possible while maintaining flexibility and
accessibility. The inter-company loans are set at a rate tied to
the market from time to time.
Credit risk
The Group sells copper concentrate to a recognised, creditworthy
trading house. The income is paid for with terms of 95% on the
concentrate leaving Namibia, with 5% being trade receivables. The
maximum credit risk exposure related to financial assets is
represented by the carrying value as at the balance sheet date.
Foreign currency risk management
The Group undertakes certain transactions denominated in foreign
currencies. Exchange rate exposures are managed within approved
policy parameters utilising spot rate foreign exchange contracts.
The Group operates within the UK and southern Africa and most
revenue transactions are denominated in US dollars while most costs
are denominated in Namibian dollars, resulting in exposure to
exchange rate fluctuations. Funds are periodically transferred
overseas to meet capital commitments as required.
The carrying amounts of the Group's foreign currency denominated
monetary assets (cash, trade and other receivables) and monetary
liabilities at the reporting date are as follows:
Liabilities Assets
30 June 30 June 30 June 30 June
2012 2011 2012 2011
US$'000 US$'000 US$'000 US$'000
United States dollar 6,574 11,668 2,827 2,636
British pound - - 1,331 4,085
Namibian dollar 1,089 - 7,840 3,934
TOTAL 7,663 11,668 11,998 10,655
Foreign currency sensitivity analysis
The Group is mainly exposed to the currencies of the United
Kingdom (British pound) and Namibia (Namibian dollar).
The following table details the Group's sensitivity to a 20%
increase and decrease in the US dollar against the relevant foreign
currencies. Twenty per cent (20%) is the movement experienced
during the current financial year and used when reporting foreign
currency risk internally to key management personnel and represents
management's assessment of the reasonably possible change in
foreign exchange rates. The sensitivity analysis includes only
outstanding foreign currency denominated monetary items and adjusts
their translation at the period end for a 20% change in foreign
currency rates. The sensitivity analysis includes external loans as
well as loans to foreign operations within the Group where the
denomination of the loan is in a currency other than the currency
of the lender or the borrower. A positive number below indicates an
increase in profit and equity where the US dollar strengthens 20%
against the relevant currency. For a 20% weakening of the US dollar
against the relevant currency, there would be an equal and opposite
impact on the profit and equity, and the balances below would be
negative.
British pound currency Namibian dollar
impact currency impact
30 June 30 June 30 June 30 June
2012 2011 2012 2011
US$'000 US$'000 US$'000 US$'000
Effect on profit +20% (266) (818) (1,350) (786)
-20% 266 818 1,350 786
Effect on equity +20% (266) (818) (1,350) (786)
-20% 266 818 1,350 786
Commodity price risk
The Board determines that it is in the Group's interest to
ensure that we achieve at least a minimum price in Namibian dollars
for a proportion of production such that future cash flows are
forecast to cover costs even if copper prices fall.
Our policy is to have forward contracts in place for 15 to 18
months to cover the sale of 200 tonnes of contained copper. As the
contract is priced in US dollars, we also fix the exchange rate at
which this is converted into Namibian dollars for US$1.5 million
per month. All forward contracts are subject to achieving target
prices.
At 30 June the Group had outstanding forward sales of 3,550
tonnes of copper at an average price of US$8,362 and had fixed the
exchange rate at which cash is converted to Namibian dollars of
US$21 million of revenue at an average price of US$1:N$8.68.
The Group also fixes the price on all remaining contained copper
in lots of 25 tonnes immediately on delivery.
Gold and silver prices are not fixed but are priced on the
average monthly price following the month of delivery.
The approximate effects on the Group's results of a 10% movement
in the average price achieved for copper in the year, when not
covered by forward contracts, would be as follows:
30 June 30 June
2012 2011
US$'000 US$'000
Net effect on after-tax profits 2,249 -
Equity 2,249 -
33. EVENTS SUBSEQUENT TO BALANCE SHEET DATE
The directors are not aware of any matters or circumstances
arising since the end of the financial period not dealt with in the
annual financial statements which significantly affect the
financial position of the Group or the results of the
operations.
34. IMPAIRMENT OF ASSETS
Summary of reversal of impairments 30 June 30 June
for the year ended 2012 2011
US$'000 US$'000
Otjihase - 2,240
Otjihase development expenditure was impaired in 2008 when the
mines were put on care and maintenance. With the reopening of the
mines, the impairment has been reassessed and the development
expenditure reinstated.
The impairment has been reversed to cost of sales within the
mining segment.
35. OTHER RELATED PARTY TRANSACTIONS
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note.
The following related party transactions occurred with China
Africa Resources plc, an associate.
30 June 30 June
2012 2011
US$'000 US$'000
Related party balances
Debtors 55 -
Management fees receivable 517 -
36. CAPITAL MANAGEMENT POLICIES AND PROCEDURES
The Group's capital management objectives are:
-- to ensure the Group's ability to continue as a going concern; and
-- to provide an adequate return to shareholders
by pricing products and services commensurately with the level
of risk.
The Group sets the amount of capital in proportion to its
overall financing structure, i.e. equity and financial liabilities.
The Group manages the capital structure and makes adjustments to it
in the light of changes in economic conditions and the risk
characteristics of the underlying assets. In order to maintain or
adjust the capital structure, the Group may adjust the amount of
dividends paid to shareholders, return capital to shareholders,
issue new shares, or sell assets to reduce debt.
Capital for the reporting periods under review is summarised as
follows:
30 June 30 June
2012 2011
US$'000 US$'000
Total equity 44,854 28,596
Borrowings 7,663 11,668
52,517 40,264
======== ========
The Company's going concern status is covered in note 4, and the
activities of the Company to provide adequate return to
shareholders are described in the Chairman's and Chief Executive's
Statement and the Review of Operations.
Statement of Directors' Responsibilities - Parent Company
The directors are responsible for preparing the annual report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
have elected to prepare the Parent Company financial statements in
accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards and applicable laws).
Under company law the directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and of the profit or
loss of the Company for that period. In preparing these financial
statements, the directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable and prudent;
-- state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
In so far as each of the directors is aware:
-- there is no relevant audit information of which the Company's auditors are unaware; and
-- the directors have taken all steps that they ought to have
taken to make themselves aware of any relevant audit information
and to establish that the auditors are aware of that
information.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Independent Auditor's Report to the Members of Weatherly
International plc
We have audited the Parent Company financial statements of
Weatherly International plc for the year ended 30 June 2012 which
comprise the Parent Company balance sheet, and the related notes.
The financial reporting framework that has been applied in their
preparation is applicable law and United Kingdom Accounting
Standards (United Kingdom Generally Accepted Accounting
Practice).
This report is made solely to the Company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of directors and auditors
As explained more fully in the Directors' Responsibilities
Statement set out on page 60, the directors are responsible for the
preparation of the Parent Company financial statements and for
being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the Parent
Company financial statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's
(APB's) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements
is provided on the APB's website at
www.frc.org.uk/apb/scope/private.cfm.
Opinion on financial statements
In our opinion, the Parent Company financial statements:
-- give a true and fair view of the state of the Company's affairs as at 30 June 2012;
-- have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
-- have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Directors' Report
for the financial year for which the financial statements are
prepared is consistent with the Parent Company financial
statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters,
where the Companies Act 2006 requires us to report to you if, in
our opinion:
-- adequate accounting records have not been kept by the Parent
Company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the Parent Company financial statements are not in agreement
with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Other matter
We have reported separately on the Group financial statements of
Weatherly International plc for the year ended 30 June 2012.
Nicholas Page
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Gatwick
12 September 2012
Company Balance Sheet
At 30 June 2012
As at As at
30 June 30 June
2012 2011
US$'000 US$'000
Fixed assets Note
Investments 39 39,097 36,152
Total fixed assets 39,097 36,152
Current assets
Debtors amounts due greater
than 1 year 42 53,538 54,233
Debtors amounts due less than
1 year 42 215 494
Cash at bank and in hand 3,123 7,367
Total current assets 56,876 62,094
Creditors
Amounts falling due within one
year 43 371 4,233
371 4,233
Net current assets 56,505 57,861
Net assets 95,602 94,013
Capital and reserves
Called up share capital 47 4,581 4,581
Share premium 47 6,092 6,092
Merger reserve 47 18,471 18,471
Share-based payments reserve 47 486 302
Profit and loss account 47 65,972 64,567
95,602 94,013
........................................................................
On behalf of the Board:
R J Webster
Chief Executive Officer
Approved by the Board on 12 September 2012
The notes on pages 63 to 68 form part of these financial
statements.
Company registration no. 3954224
Notes to the Parent Company Financial Statements
For the year ended 30 June 2012
37. BASIS OF ACCOUNTING
The separate financial statements of the Company are presented
as required by the Companies Act 2006. They have been prepared
under the historical cost convention and in accordance with
applicable United Kingdom Accounting Standards and law.
The principal accounting policies are summarised below and are
consistent in all material respects with those applied in the
previous year, except as otherwise noted.
38. ACCOUNTING POLICIES: PARENT ENTITY
a. Basis of preparation and change in accounting policy
The parent entity financial statements of Weatherly
International plc were approved for issue by the Board of Directors
on 12 September 2012.
The financial statements are prepared under the historical cost
convention.
The financial statements are prepared in accordance with
applicable accounting standards.
b. Deferred tax
Deferred tax is recognised in respect of all timing differences
that have originated but not reversed at the balance sheet date
where transactions or events have occurred at that date that will
result in an obligation to pay more, or a right to pay less or to
receive more, tax, with the following exceptions:
-- provision is made for tax on gains arising from the
revaluation (and similar fair value adjustments) of fixed assets,
and gains on disposal of fixed assets that have been rolled over
into replacement assets, only to the extent that, at the balance
sheet date, there is a binding agreement to dispose of the assets
concerned. However, no provision is made where, on the basis of all
available evidence at the balance sheet date, it is more likely
than not that the taxable gain will be rolled over into replacement
assets and charged to tax only where the replacement assets are
sold;
-- provision is made for deferred tax that would arise on
remittance of the retained earnings of overseas subsidiaries,
associates and joint ventures only to the extent that, at the
balance sheet date, dividends have been accrued as receivable;
-- deferred tax assets are recognised only to the extent that
the directors consider that it is more likely than not that there
will be suitable taxable profits from which the future reversal of
the underlying timing differences can be deducted.
Deferred tax is measured on an undiscounted basis at the tax
rates that are expected to apply in the periods in which timing
differences reverse, based on tax rates and laws enacted or
substantively enacted at the balance sheet date.
c. Share-based payments
Equity-settled transactions
The cost of equity-settled transactions with employees is
measured by reference to the fair value at the date at which they
are granted and is recognised as an expense over the vesting
period, which ends on the date on which the relevant employees
become fully entitled to the award. Fair value is determined by an
external valuer using an appropriate pricing model. In valuing
equity-settled transactions, no account is taken of any vesting
conditions, other than market conditions linked to the price of the
shares of the Company.
No expense is recognised for awards that do not ultimately vest,
except for awards where vesting is conditional upon a market
condition, which are treated as vesting irrespective of whether or
not the market condition is satisfied, provided that all other
performance conditions are satisfied.
At each balance sheet date before vesting, the cumulative
expense is calculated, representing the extent to which the vesting
period has expired and management's best estimate of the
achievement or otherwise of non-market conditions and the number of
equity instruments that will ultimately vest, or in the case of an
instrument subject to a market condition, be treated as vesting as
described above. The movement in cumulative expense since the
previous balance sheet date is recognised in the profit and loss
amount with a corresponding entry in equity.
Where the terms of an equity-settled award are modified or a new
award is designated as replacing a cancelled or settled award, the
cost based on the original award terms continues to be recognised
over the original vesting period. In addition, an expense is
recognised over the remainder of the new vesting period for the
incremental fair value of any modification, based on the difference
between the fair value of the original award and the fair value of
the modified award, both as measured on the date of the
modification. No reduction is recognised if this difference is
negative.
Where an equity-settled award is cancelled, it is treated as if
it had vested on the date of cancellation, and any cost not yet
recognised in the profit and loss for the award is expensed
immediately. Any compensation paid up to the fair value of the
award at the cancellation or settlement date is deducted from
equity, with any excess over fair value being treated as an expense
in the profit and loss account.
All equity-settled share-based payments are ultimately
recognised as an expense in the profit and loss account with a
corresponding credit to "other reserve".
Upon exercise of share options, the proceeds received net of
attributable transaction costs are credited to share capital and,
where appropriate, share premium.
d. Interest-bearing loans and borrowings
All interest-bearing loans and borrowings are initially
recognised at net proceeds. After initial recognition, debt is
increased by the finance cost in respect of the reporting period
and reduced by payments made in respect of the debts of the period.
Finance costs of debt are allocated over the term of the debt at a
constant rate on the carrying amount.
e. Classification of shares as debt or equity
An equity instrument is a contract that evidences a residual
interest in the assets of an entity after deducting all its
liabilities. Accordingly, a financial instrument is treated as
equity if:
(i) there is no contractual obligation to deliver cash or other
financial assets or to exchange financial assets or liabilities on
terms that may be unfavourable; and
(ii) the instrument is a non-derivative that contains no
contractual obligations to deliver a variable number of shares or
is a derivative that will be settled only by the Group exchanging a
fixed amount of cash or other assets for a fixed number of the
Group's own equity instruments.
When shares are issued, any component that creates a financial
liability of the Company or Group is presented as a liability in
the balance sheet, measured initially at fair value net of
transaction costs and thereafter at amortised cost until
extinguished on conversion or redemption. The corresponding
dividends relating to the liability component are charged as
interest expense in the income statement. The initial fair value of
the liability component is determined using a market rate for an
equivalent liability without a conversion feature.
The remainder of the proceeds on issue is allocated to the
equity component and included in shareholders' equity, net of
transaction costs. The carrying amount of the equity component is
not re-measured in subsequent years.
Transaction costs are apportioned between the liability and
equity components of the shares, based on the allocation of
proceeds to the liability and equity components when the
instruments are first recognised.
f. Investments
Investments are measured at historic cost, less any provision
for impairment.
39. INVESTMENTS
30 June 30 June
2012 2011
US$'000 US$'000
Fixed asset investments
Opening balance 36,152 36,095
China Africa Resources plc (see note
18 (b)) 4,146 57
Dividend - disposal of shares (see
note 18 (b)) (1,201) -
Closing balance 39,097 36,152
For a listing of the subsidiaries, see note 18 (a).
40. OPERATING PROFIT
Auditor's remuneration relating to the parent entity amounted to
US$66,000 (2011: US$79,000).
41. DIRECTORS' REMUNERATION
30 June 30 June
2012 2011
US$'000 US$'000
Emoluments 603 429
Contributions to money-purchase schemes 61 61
664 490
Fees of highest paid director 441 210
During the year, no directors (2011: nil) participated in
defined benefit pension schemes and one director (2011: one)
participated in money-purchase pension schemes.
42. DEBTORS
30 June 30 June
2012 2011
Debtors due within one year US$'000 US$'000
Trade debtors 55 308
Pre-payments and other debtors 145 129
VAT 15 57
Total current 215 494
Debtors due after more than one year
Amount due from subsidiary undertakings
(see note 50) 53,538 54,233
Total non-current 53,538 54,233
Total debtors 53,753 54,727
43. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
30 June 30 June
2012 2011
US$'000 US$'000
Trade creditors 110 319
Other creditors and accruals 261 398
Louis Dreyfus Commodities Metals Suisse
SA - 3,516
371 4,233
44. SUBSIDIARIES
Details of the Company's subsidiaries at 30 June 2012 are as
included in the consolidated Group accounts under
note 18 (a).
45. FINANCIAL ASSETS
Loans to other Group entities
At the balance sheet date amounts receivable from the fellow
Group companies were US$53.5 million (2011: US$54.2 million). The
carrying amount of these assets approximates to their fair value.
These amounts owing from Group companies are shown net of an
impairment amount of US$10.5 million (2011: US$10.5 million).
Following a review by the directors these are considered due after
more than one year as there is no agreed repayment date.
Cash and cash equivalents
These comprise cash held by the Company and short-term bank
deposits with an original maturity of three months or less. The
carrying amount of these assets approximates their fair value.
46. FINANCIAL LIABILITIES
Trade and other payables
Trade payables principally comprise amounts outstanding for
trade purchases and ongoing costs.
The carrying amount of trade payables approximates their fair
value.
Borrowings
The Company had no borrowings during the financial year (2011:
US$3.2 million).
47. MOVEMENT IN SHAREHOLDERS' FUNDS
Share-based
Issued Share Merger payment Retained Total
capital premium reserve reserve earnings equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
At 30 June 2010 3,860 - 18,471 556 64,868 87,755
Loss for the year - - - - (705) (705)
Dividend - - - - (4,675) (4,675)
Revaluation of shares - - - - 4,675 4,675
Proceeds of issue of shares 721 6,092 - - - 6,813
Lapsed options and warrants - - - (404) 404 -
Share-based payments - - - 150 - 150
At 30 June 2011 4,581 6,092 18,471 302 64,567 94,013
Profit for the year - - - - 2,507 2,507
Dividend - - - - (1,202) (1,202)
Revaluation of shares - - - - - -
Proceeds of issue of shares - - - - - -
Lapsed options and warrants - - - (100) 100 -
Share-based payments - - - 284 - 284
At 30 June 2012 4,581 6,092 18,471 486 65,972 95,602
48. PROFIT/(LOSS) ATTRIBUTABLE TO MEMBERS OF THE PARENT
COMPANY
The profit for the year dealt with in the accounts of the Parent
Company, Weatherly International plc, was US$2,507,000 (2011: loss
of US$705,000). As permitted by section 408 of the Companies Act
2006, no separate profit or loss account is presented in respect of
the Parent Company.
49. POST BALANCE SHEET EVENTS
See note 33.
50. RELATED PARTY TRANSACTIONS
The following related party transactions occurred with Weatherly
Mining Namibia Ltd, a non-wholly-owned subsidiary.
30 June 30 June
2012 2011
US$'000 US$'000
Related party balances
Debtors 53,538 54,233
Management fees received 2,400 190
Interest received 1,097 881
This information is provided by RNS
The company news service from the London Stock Exchange
END
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