TIDMCRO
RNS Number : 7627I
Creon Resources PLC
08 July 2013
8 July 2013
Creon Resources Plc
("Creon", "the Group" or "the Company")
Audited results for year ended 31 January 2013 and notice of
AGM
Creon Resources Plc (AIM: CRO), the resources related investment
company, is pleased to announce the consolidated audited results of
Creon Resources plc for the year ended 31 January 2013.
Period highlights
-- Group's net asset value up 18-fold year-on-year to 0.41 pence (2012: 0.023 pence);
-- New investment funds of more than GBP12.0 million raised via an open offer to all shareholders;
-- Invested US$15.3 million (GBP9.7 million) in new oil and gas rig construction joint venture with multi-billion dollar
shipbuilding giant, Yangzijiang Shipbuilding (Holdings) Ltd
("Yangzijiang"), for a 46.45% stake in YZJ Offshore;
-- YZJ Offshore's associate, YZJOE, a company in which Creon has an 18.6% indirect interest, secures first rig order
worth US$170 million for delivery in mid-2015; and
-- Board strengthened with appointments of Mr Ghanim Al Saad as Non-executive Chairman and Mr Glen Lau as Chief
Executive Officer.
Post period highlights
-- Acquired 49% stake in ferrous metal and ore trader, MGR Resources;
-- Delivery of YZJOE's first rig order on track with enhanced specification; and
-- Development of YZJOE's new rig-yard near Shanghai progressing well with land compacting continuing and skidway
construction expected to start shortly.
Glen Lau, CEO of Creon, commented:
"The year ended 31 January 2013 has clearly been an exceptional
one for Creon, transforming itself into a well capitalised and well
respected investment company with investments in sectors with high
growth potential over both the short and long term. We are
delighted with our JV Investment alongside Yangzijiang into YZJ
Offshore, which is on schedule to deliver its first order on budget
and on time. The development of YZJOE's rig yard just north of
Shanghai ought to deliver significant value uplift to Creon as
construction on that site continues apace. Our recent investment in
MGR is starting to bear fruit and we anticipate receiving our first
returns from that investment in the second half of the year. We are
financially secure with a strong management team and we look
forward to updating shareholders on further developments during the
course of the current financial year."
The Company's Report and Accounts for the year ended 31 January
2013, together with the notice of Annual General Meeting ("AGM")
will be posted to shareholders today and the full report is
available to view and download from the Company's website at
www.creonresources.com. The AGM is to be held at the Company's
registered office at 201 Temple Chambers, 3-7 Temple Avenue, London
EC4Y 0DT at 11:00am on 31 July 2013.
For further information please contact:
Creon Resources plc
Glen Lau, CEO Tel: + 65 9677
9427
Daniel Stewart & Company plc, Nominated
Adviser & Broker
Paul Shackleton/James Felix Tel: + 44 (0) 20
7776 6550
ENDS
CHAIRMAN'S STATEMENT
I am pleased to present these audited results of Creon Resources
plc ("Creon" or the "Company") and its subsidiaries (the "Group")
for the year ended 31 January 2013.
Introduction
The 2012/13 year has been a transformational one for Creon:
-- In June 2012, we raised more than GBP12.0 million from new
and existing shareholders;
-- In July 2012, we made our first significant resources
investment when we invested US$15.3 million into YZJ Offshore
Engineering PTE Ltd ("YZJ Offshore"), a joint venture with
multi-billion dollar shipbuilding giant, Yangzijiang Shipbuilding
(Holdings) Ltd ("Yangzijiang"), for a 46.45% stake in YZJ
Offshore;
-- In December 2012, the 40% associate of YZJ Offshore, Jiangsu
Yangzijiang Offshore Engineering Co Ltd ("YZJOE"), secured its
first rig order worth US$170 million for delivery in mid-2015;
and
-- In April 2013, we acquired a 49% stake in ferrous metal and
ore trader, MGR Resources PTE Ltd.
Background
Creon is an investment company with a broad investment policy
which has focused on the resources sector. Its aim is to deliver
significant shareholder returns through capital growth and to
provide the services of its directors and management to its
investee companies, when necessary. The background and experience
of the Company's directors ("Directors") and its advisory network
are crucial to the Group's success, providing it with the necessary
access to value enhancing deals, particularly in the high growth
regions such as the Middle East and South East Asia.
Review of Creon's investments
YZJ Offshore
Creon made its largest investment to date in July 2012, when the
Company, entered into a joint venture with multi-billion dollar
China based shipbuilding giant, Yangzijiang, in the offshore oil
and gas infrastructure sector ("JV Agreement").
Under the terms of the JV Agreement, Creon and Yangzijiang each
invested in a joint venture company, YZJ Offshore, a Singapore
registered company specifically set up by Yangzijiang to be a
leading player in the design and construction of marine offshore
oil and gas vessels (jack-up and semi-submersible rigs) ("the JV
Investment"). Creon invested US$15.33 million into YZJ Offshore
with Yangzijiang and its associates having invested a further
US$14.67 million.
The joining of forces with Yangzijiang under this JV Agreement
represented a substantial endorsement of Creon's standing and that
of its management in the oil and gas infrastructure sector. The
Directors are confident of identifying and executing further
significant deals with similar industry heavyweights in order to
deliver material shareholder value.
The Offshore oil and gas market
The Directors believe demand for newly designed rigs will be
underpinned by the phasing out of the existing stock of rigs over
the next few years. The Directors consider that based on the
current stock and new rig builds in the pipeline, there could be an
under supply by almost 200 jack-up rigs by 2020, given that almost
half the current fleet of jack-up rigs are more than 30 years old.
Both Creon and Yangzijiang believe the requirement to provide
higher specification rigs to enable even deeper and more efficient
drilling represents an excellent investment opportunity.
About Yangzijiang Shipbuilding (Holdings) Ltd
Yangzijiang was established in 1956 and is listed on the main
board of the Singapore stock exchange. Yangzijiang is the largest
non-state owned container shipbuilder in China. In the year ended
31 December 2012, Yangzijiang generated sales of approximately
US$2.3 billion and net profits of approximately US$0.6 billion.
Yangzijiang reported net assets of approximately US$2.6 billion as
at 31 December 2012. The Directors were aware that Yangzijiang had
been exploring opportunities to diversify from its traditional
container shipbuilding sector into the offshore oil and gas
infrastructure sector for some time and were open to collaborating
with partners with expertise, such as Creon.
As a consequence, Yangzijiang invited Creon to participate in
the JV Investment to further enhance YZJ Offshore's access to the
necessary skills and expertise in rig design, sales and procurement
so as to enable YZJ Offshore to grow into a successful and
significant business.
First new rig order
In December 2012, Creon was delighted to announce that YZJ
Offshore's 40% associate, YZJOE, the entity in which Creon has an
indirect 18.58% shareholding, had secured a US$170 million order
for a drilling rig to be delivered in mid-2015. The order, to
deliver one unit of a Le Tourneau Super 116E Class design
self-elevating Mobile Offshore Jack-up Drilling Rig ("First Rig"),
is currently on track for delivery, albeit now designed to an even
higher specification with an increased order value.
The First Rig is currently being built at one of Yangzijiang's
existing yards, with the laying of the keel due to take place later
this month.
Long term strategy
Not only does YZJ Offshore have aspirations to become a leading
player in the provision of front end engineering, design and
management consultancy services for the construction, fabrication
and repair of oil and gas marine vessels and platforms, but YZJ
Offshore's longer term strategy is to own and construct its own
purpose built rig-building yard in China. To that end, in July
2012, YZJOE secured the land rights to approximately 1.6 million
square metres of prime shorefront land in Taicang, Jiangsu Province
on China's east coast, some 50 miles north of Shanghai ("Land").
The Land is the ideal location for the construction of YZJOE's new
rig yard ("New Yard") due to its deep water and absence of bridges
en route to the open sea. Since July 2012, Creon can report that
the Land is currently being compacted in order to prepare for
construction thereon and building of the skidway is expected to get
underway shortly.
MGR Resources
In early April 2013, Creon's wholly owned subsidiary, Creon
Resources (Asia) PTE Ltd ("Creon Asia") acquired 49% of MGR
Resources PTE Ltd ("MGR"). MGR is a wholesale trader of ferrous
metals and ore, sourced principally from Africa, India and the
Middle East and sold on to buyers in East Asia, including
China.
As part of the investment into MGR, Creon also provided MGR with
an US$1.95 million three year convertible loan with a coupon of
15%.
Although only a recent investment, Creon can announce that MGR
is in advanced negotiations over long term supply contracts from
sub-Saharan Africa for iron ore and chromium ore. These contracts,
if secured on the current expected terms, will generate significant
returns for MGR and accordingly, Creon. Trading in MGR since
Creon's investment is in line with MGR's management's expectations
and Creon anticipates receiving a return on its investment in the
second half of the year.
Other legacy investments
Creon retains its holding of 400,000 unquoted preference shares
of GBP1 each in privately owned Pinnacle Plus Limited ("Pinnacle")
made in 2008 ("the Preference Share"). Pleasingly, Pinnacle traded
profitably during its latest financial year ended 30 April 2012 and
as such, although the Directors continue to account for the
Preference Share prudently, having previously made significant
provisions against the carrying value of the Preference Share, the
Directors now believe that a material proportion, if not all, of
the par value of this investment (GBP0.4 million), together with
interest due thereon (GBP0.14 million), may now be realizable on
its due date in September 2013.
Financial review
The Directors' focus during the year was to strengthen the
Company's balance sheet, which was successfully achieved through
the raising of more than GBP12.0 million via the open offer to all
shareholders in June 2012, and to contemplate on and then execute
its investment strategy, which resulted in the Company's US$ 15.3
million investment into YZJ Offshore in July 2012.
In June 2012, shareholders approved the Company issuing
approximately 2.4 billion new ordinary shares of 0.5 pence each
("Ordinary Shares") via an open offer to all shareholders ("Open
Offer") in order to raise approximately GBP12.0 million (US$18.8
million) of new funds for the Company. The Company had secured a
partial underwriting of the Open Offer from Qatar Investment
Corporation ("QIC"), a company controlled by Mr Ghanim Al Saad, who
became non-executive Chairman of Creon in October 2012.
Having undertaken extensive research on a number of possible
investments, the Directors invested US$15.3 million (GBP9.96
million) into YZJ Offshore through its wholly owned subsidiary,
Creon Asia, which was specifically set up to hold its Asian-based
investments.
The Group reported a consolidated loss for the year of GBP1.09
million (2012: GBP0.65 million). This was primarily made up of
administration costs of GBP0.74 million, comprised of GBP0.35
million costs incurred in connection with the investment in YZJ
Offshore, GBP0.1 million of which were professional fees relating
to the Open Offer and GBP0.29 million were the Company's normal
cost administration fees, which includes a GBP0.1 million non-cash
charge on the issue of warrants to Directors' in lieu of fees.
GBP0.2 million of the Group's overall costs of GBP1.09 million was
the non-cash loss on foreign exchange due to the strengthening of
the US$ against GBPSterling between the making of the JV Investment
in July 2012 and the end of the financial year. The balance of
costs of GBP0.15 million was Creon Asia's 46.65% share of YZJ
Offshore's reported losses during the period.
There was no income generated in the year.
The Group's net assets as at 31 January 2013 of GBP11.21 million
(2012: GBP0.07 million) were made up primarily of the carrying
value at cost of Creon Asia's 46.45% in YZJ Offshore of GBP9.52
million. Cash at the year-end was GBP1.75 million (2012: GBP0.1
million). Since the year end, Creon has made an equity investment
of GBP0.05 million into MGR and has also provided MGR with a three
year 15% coupon convertible loan of US$1.95 million (GBP1.23
million). As at the date of this announcement, Creon has cash of
approximately GBP0.25 million and normal annualised running costs
of less than GBP0.2 million.
Net asset value as at 31 January 2013 was up almost 18-fold to
0.41 pence per share (2012: 0.023 pence).
Investment policy
The Company's investment policy is set out below and remains
unchanged from that approved by its shareholders at the Company's
annual general meeting held on 31 July 2012 ("2012 AGM").
The investment policy allows the Company to invest principally,
but not exclusively, in the resources and/or resources
infrastructure sectors, with no specific national or regional
focus. The Company may be either an active investor and acquire
control of a single company or it may acquire non-controlling
shareholdings.
The proposed investments to be made by the Company may be either
quoted or unquoted; made by direct acquisition or through farm-ins;
may be in companies, partnerships, joint ventures; or direct
interests in resources projects. Target investments will generally
be involved in projects in the exploration and/or development
stage. The Company's equity interest in a proposed investment may
range from a minority position to 100 per cent. ownership.
The Company will initially focus on projects located in Asia and
the Middle East but will also consider investments in other
geographical regions, including Europe.
The Company will identify and assess potential investment
targets and where it believes further investigation is required,
intends to appoint appropriately qualified advisers to assist.
The Company proposes to carry out thorough project review
processes in which all material aspects of any potential investment
will be subject to appropriate due diligence, as appropriate. It is
likely that the Company's financial resources will be invested in
either a small number of projects or potentially in just one
investment which potentially may or may not be deemed to be a
reverse takeover under the AIM Rules, depending on the
circumstances.
Where this is the case, the Company intends to mitigate risks by
undertaking appropriate due diligence processes. Any transaction
constituting a reverse takeover under the AIM Rules will be subject
to shareholder approval. The possibility of building a broader
portfolio of investment assets has not, however, been excluded.
The Company intends to deliver shareholder returns principally
through capital growth rather than income distribution via
dividends. Given the nature of the Company's investment policy, the
Company does not intend to make regular periodic disclosures or
calculations of net asset value.
Warrants
During the year, the Company issued a total of 87.0 million
warrants to acquire Ordinary Shares ("Warrants"), of which 82.0
million were granted to Directors (or entities connected with the
Directors) and 5.0 million to key advisers. The Warrants, all of
which have vested, have exercise prices of either 0.5 pence (5 year
exercise period) or 0.75 pence (10 year exercise period) per
Warrant and were granted as incentives and in part in lieu of fees.
The Warrants represent approximately 3% of the Company's current
issued share capital. No Warrants have been exercised during the
year or after the year end. The overall non-cash cost to the
Company of issuing the Warrants was GBP0.15 million, which has been
expensed in the year. It remains the intention of the Directors to
implement a long term incentive plan at the appropriate time.
Director changes
Mr Ghanim Al Saad joined the board of the Company as
Non-executive Chairman on 5 October 2012 and Mr Glen Lau joined the
board of the Company as Chief Executive Officer on 19 September
2012, replacing Mr Jeswant Natarajan, who stepped down as Chief
Executive Officer on the same day having been appointed to the
position on 4 April 2012.
Current position and outlook
The year ended 31 January 2013 has clearly been an exceptional
one for Creon, transforming itself into a well capitalised and well
respected investment company with investments in sectors with high
growth potential over both the short and long term.
We are delighted with our JV Investment alongside Yangzijiang
into YZJ Offshore, which is on schedule to deliver its first order
on budget and on time. The development of YZJOE's rig yard just
north of Shanghai ought to deliver significant value uplift to
Creon as construction on that site continues apace. Our recent
investment in MGR is starting to bear fruit and we anticipate
receiving our first returns from that investment in the second half
of the year.
We are financially secure with a strong management team and we
look forward to updating shareholders on further developments
during the course of the current financial year.
Lastly, I would like to thank all our shareholders for their
continuing support and commitment.
Annual general meeting
The Company has today posted to shareholders a notice convening
the annual general meeting of the Company ("AGM"), together with
form of proxy, to be held at 201 Temple Chambers, Temple Avenue,
London EC4Y ODT at 11:00 a.m. on 31 July 2013.
CREON RESOURCES PLC
GROUP STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 January 2013
2013 2012
Note GBP'000 GBP'000
Revenue - -
Cost of sales - -
______ _______
Gross profit - -
Administrative expenses 1 (744) (645)
Share of loss of associate 2 (148) -
Foreign exchange loss 3 (202) -
________ ________
Loss from operations (1,094) (645)
Finance income - -
_______ ________
Loss on ordinary activities before
taxation (1,094) (645)
Taxation - -
_______ ________
Retained loss for the year (1,094) (645)
Basic and diluted loss per share 4 (0.07)p (0.83)p
All of the Group's activities are classed as continuing and
there were no recognised gains or losses in either year other than
those included above.
STATEMENTS OF CHANGES IN EQUITY
Group
Total equity
Share-based attributable
Share premium payment Retained to equity holders
Share capital account reserve earnings of parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 February
2011 440 3,816 - (3,840) 416
Loss for the
year - - - (645) (645)
Issue of share
capital 280 22 - - 302
______ ________ ________ _________ ________
At 31 January
2012 720 3,838 - (4,485) 73
Loss for the
year - - - (1,094) (1,094)
Share-based
payments - - 150 - 150
Issue of share
capital 2,417 9,665 - - 12,082
______ ________ ________ _________ ________
At 31 January
2013 3,137 13,503 150 (5,579) 11,211
______ ________ ________ _________ ________
Company
Total equity
attributable
Share Share-based to equity
premium payment Retained holders of
Share capital account reserve earnings parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 February
2011 440 3,816 - (3,841) 415
Loss for the
year - - - (644) (644)
Issue of share
capital 280 22 - - 302
______ ________ ________ _________ ________
At 31 January
2012 720 3,838 - (4,485) 73
Loss for the
year - - - (682) (682)
Share-based
payments - - 150 - 150
Issue of share
capital 2,417 9,665 - - 12,082
______ ________ ________ _________ ________
At 31 January
2013 3,137 13,503 150 (5,167) 11,623
______ ________ ________ _________ ________
STATEMENTS OF FINANCIAL POSITION
as at 31 January 2013
Group Company
Assets Note 2013 2012 2013 2012
Non-current assets GBP'000 GBP'000 GBP'000 GBP'000
Investment in subsidiaries - - 5 -
Investment in associates 5 9,517 - - -
_____ _ _ _
9,517 - 5 -
Current assets
Loans receivable 7 - - 9,971 -
Investments in quoted
shares 4 4 4 4
Investment in unquoted
preference shares 6 20 20 20 20
Other receivables 4 - 4 -
Cash and cash equivalents 1,750 104 1,703 104
_____ ___ ______ ___
1,778 128 11,702 128
Total assets 11,295 128 11,707 128
Liabilities
Current liabilities
Trade and other payables 8 (84) (55) (84) (55)
____ ___ ____ ____
Total liabilities (84) (55) (84) (55)
_______ ___ _______ ___
Net assets 11,211 73 11,623 73
Equity
Called up share capital 9 3,137 720 3,137 720
Share premium account 13,503 3,838 13,503 3,838
Share warrant reserve 10 150 - 150 -
Retained earnings (5,579) (4,485) (5,167) (4,485)
______ _______ ______ ________
Total equity 11,211 73 11,623 73
STATEMENTS OF CASH FLOWS
Group Company
2013 2012 2013 2012
GBP GBP GBP GBP
Loss for the year before tax (1,094) (645) (682) (644)
Adjustments for:
Foreign exchange loss - 181 -
Impairment of investment - 380 - 380
Share-based payments 150 - 150 -
Loan receivable provision - 68 - 68
Change in receivables (4) 35 (4) 34
Change in payables 29 (48) 29 (48)
Share of loss of associates 148 - - -
_______ _______ _______ _______
Cash flows from operating activities (771) (210) (326) (210)
Investing activities
Investment in associates (9,665) - (5) -
Loans made to subsidiaries - - (10,152)
Loans receivable repaid - 12 - 12
______ ______ ______ ______
Net cash used in investing
activities (9,665) 12 (10,157) 12
Financing activities
Issue of share capital 12,082 302 12,082 302
_______ _______ _______ _______
Net cash from financing activities 12,082 302 12,082 302
_______ _______ _______ _______
Net increase in cash and equivalents 1,646 104 1,599 104
Cash and equivalents at beginning
of year 104 - 104 -
Cash and equivalents at end
of year 1,750 104 1,703 104
NOTES TO THE AUDITED RESULTS
1. Administrative expenses
Expenses included in administrative expenses (net) are analysed
below
2013 2012
GBP'000 GBP'000
Administration, legal, professional
and financial costs 165 92
Directors' fees 185 18
Professional costs of acquiring 354 -
investment in associate
Unrecovered VAT 40 61
Impairment of quoted investment - 1
Impairment of investments - 380
Impairment of receivables - 93
______ ______
744 645
______ ______
GBP96,000 of the Directors' fees expense of GBP185,000 was the
charge incurred in the issue of warrants to Directors. See note 10.
Unrecovered VAT represents input VAT incurred during the periods
which the Directors have decided to prudently provide for whist the
Company is in dispute with HMRC over its ability to recover input
VAT. See note 8. The auditor's fees in the year ended 31 January
2013 were GBP19,500 (2012 - GBP10,000)
2. Share of loss of associate
2013 2012
GBP'000 GBP'000
YZJ Offshore 148 -
______ ______
148 -
______ ______
The Company's wholly owned Singapore registered subsidiary,
Creon Asia holds a 46.45% investment in YZJ Offshore, a Singapore
registered company. GBP148,000 represents Creon Asia's share of YZJ
Offshore's loss for the period from the date of the investment on
17 July 2012 to 31 January 2013. See note 5.
3. Foreign exchange losses
2013 2012
GBP'000 GBP'000
Loss on conversion of loans made 202 -
to subsidiary
_____ _____
202 -
_____ _____
During the year, the Company made a number of foreign currency
denominated interest free, unsecured loans to its wholly owned
subsidiary, Creon Asia. An unrealised loss on foreign exchange of
GBP0.19 million arose on one such loan, for US$15.5 million
(GBP9.96 million), made in July 2012 to enable Creon Asia to make
the investment into YZJ Offshore ("Investment Loan"). At 31 January
2013, the Investment Loan was translated at GBP9.77 million. As at
the date of this announcement, the Investment Loan is carried at
GBP10.06 million, resulting in an unrealised gain on foreign
exchange of approximately GBP0.29 million in the current financial
year to date. In August 2012, the Company made a further loan of
approximately GBP0.2 million to Creon Asia. The Company does not
hedge against movements in foreign exchange rates.
4. Loss per share
The basic and diluted loss per share for the year ended 31
January 2013 was 0.07p. (2012: 0.83p) The calculation of loss per
share is based on the loss of GBP1,094,000 for the year ended 31
January 2013 (2012: GBP645,000) and the weighted average number of
shares in issue during the year of 166,122,339 (2012: 77,613,559).
87.0 million Warrants were granted in the year ended 31 January
2013, see note 10, all of which were outstanding as of 31 January
2013 (2012: nil). The outstanding Warrants represent approximately
3% of the Company's current issued share capital and, due to
losses, are considered by the Directors to be anti-dilutive.
5. Investment in associates
Creon's wholly owned subsidiary, Creon Asia has a 46.45% holding
in YZJ Offshore, which was acquired in July 2012 ("JV Investment").
The JV Investment is held at cost less share of losses. Creon
provided an interest free unsecured loan to Creon Asia to make the
JV Investment. See note 3.
2013 2012
Aggregated amounts relating to associates GBP'000 GBP'000
Total assets 20,515 -
Total liabilities 27 -
_______ _______
Net assets 20,488 -
_______ _______
Group's share of net assets of associates 9,517 -
_______ _______
Total revenue 2 -
Loss (318) -
_______ _______
Group's share of loss of associates (148) -
_______ _______
6. Investment in unquoted preference shares
Group and Company
2013 2012
Cost or valuation GBP'000 GBP'000
At 1 February 20 400
Provision against carrying value - (380)
_______ _______
At 31 January 20 20
_______ _______
The investment in unquoted preference shares represents 400,000
GBP1 non-voting redeemable preference shares held in Pinnacle Plus
Limited ("the Preference Share") and is held at the Directors'
valuation. The Preference Share, which was acquired in 2008,
accrues interest at a rate of 7.0 per cent. per annum, payable on
the date of redemption, with redemption being at Pinnacle's
discretion at any time up to 30 September 2013, upon which date the
Preference Share will be automatically redeemed. The Company has
not recognized any interest income accrued on the Preference Share
to date.
Whilst the Directors continue to believe that a material part or
all of the Preference Share may be redeemed when due, and the
Directors will be taking every step to ensure that the full
GBP400,000 of redeemable preference share, together with the full
interest due of GBP140,000 is repaid, the Directors have taken a
prudent view of the carrying value of the investment at the balance
sheet date. The carrying value of the Preference Share will
continue to be monitored closely by the Directors.
7. Loans receivable
Group Company
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
Balance brought forward - 80 - 80
Loans advanced - - 9,971 -
Bad debt provision - (68) - (68)
Loans repaid - (12) - (12)
______ ______ ______ ______
Balance carried forward - - 9,971 -
______ ______ ______ ______
During the year, the Company made a number of interest free,
unsecured and repayment on demand loans to its wholly owned
subsidiary, Creon Resources (Asia) PTE Ltd , totalling GBP9.97
million at the year end (2012: "nil). The Directors consider that
the carrying amount of loans receivable approximates to their fair
value.
8. Trade and other payables
Current liabilities Group and Company
2013 2012
GBP'000 GBP'000
Creditors and accrual 59 30
VAT provision 25 25
______ ______
84 55
______ ______
The VAT provision of GBP25,000 represents the amount of VAT
previously recovered by the Company which HMRC are now disputing.
The Directors strongly refute HMRC's claim and maintain that the
Company should have validly reclaimed such amounts. The Company is
taking such legal and professional advice to protect its position.
The GBP25,000 provision is included on the grounds of prudent
accounting and in no way is an indication of the Directors' belief
in the outcome of the dispute. See note 1. The Directors consider
that the carrying amount of trade and other payables approximates
to their fair value.
9. Share capital
2013 2012
Allotted, called up and fully paid GBP'000 GBP'000
2,738,619,633 Ordinary Shares of 0.1p
each 2,739 322
44,190,545 Deferred Shares of 0.9p
each 398 398
_____ ____
3,137 720
On 12 July 2012, the Company issued and allotted 2,416,429,088
ordinary shares of 0.1p ("Ordinary Shares") for cash at a price of
0.5p per via a partially underwritten open offer to all
shareholders raising gross proceeds of GBP12.08 million for the
Company.
The 44,190,545 deferred shares of 0.9p each ("Deferred Shares")
do not entitle the holder thereof to receive notice of or attend
and vote at any general meeting of the Company or to receive a
dividend or other distribution or to participate in any return on
capital on a winding up unless the assets of the Company are in
excess of GBP1,000,000,000,000. The Company retains the right to
purchase the Deferred Shares from any Shareholder for a
consideration of one penny in aggregate for all that shareholder's
Deferred Shares. As such, the Deferred Shares effectively have no
value. Share certificates have not and will not be issued in
respect of the Deferred Shares.
10. Warrants
The Company had no outstanding Warrants or options over Ordinary
Shares at the beginning of the year. During the year ended 31
January 2013, the Company issued Warrants as set out in the table
below.
Number of
Number of Warrants
Exercise Warrants Exercise Number at 31 Jan
Date of grant period granted price exercised 2013
---------------- -------------- ----------- ----------- ----------- -----------
4 April 2012 4 April 2022 16,000,000 0.75 pence - 16,000,000
31 August 31 August
2012 2017 71,000,000 0.5 pence - 71,000,000
________ _______ ________
87,000,000 - 87,000,000
________ _______ ________
All of the Warrants granted during the year have vested and
there are no outstanding conditions to exercise. The Company
incurred a total charge in relation to the issue of the Warrants of
GBP150,200. The Directors used the Black-Scholes option model when
calculating the non-cash charge. The share prices used for 0.75
pence Warrants and the 0.5 pence Warrants were 0.64 pence and 0.6
pence, respectively. The expected volatility of the 0.75 pence
Warrants and the 0.5 pence Warrants was 12.5% and 10%, respectively
and was based on the historic closing mid-market share price of the
Company's shares from the date of the grant of the respective
Warrants to the date of this announcement. The Directors, having
taken advice, deemed the Company's risk free interest rate to be
5%.
The following table sets out the Warrants held by Directors, or
entities connected with the Directors, who served during the year
and up to the date of this announcement:
Number of Exercise Exercise Number
Warrant holder Warrants Date of grant period price exercised
----------------- ----------- -------------- ------------- ----------- -----------
J Natarajan* 16,000,000 4 April 2012 4 April 2022 0.75 pence -
31 August 31 August
J Natarajan* 29,000,000 2012 2017 0.5 pence -
31 August 31 August
A Berting 5,000,000 2012 2017 0.5 pence -
31 August 31 August
A Quraishi 7,000,000 2012 2017 0.5 pence -
Fulton Capital 31 August 31 August
Management Ltd^ 25,000,000 2012 2017 0.5 pence -
Notes
* J Natarajan served as the Company's chief executive officer
from 4 April 2012 until 19 September 2012.
^ Fulton Capital Management Limited is a company owned and
controlled by Mr G Lau, the Company's chief executive office who
was appointed on 19 September 2012.
11. Asset value per share
The net asset value per share at 31 January 2013 was GBP0.0043
(31 January 2012; GBP0.0002). Net asset value is based on the net
assets as at 31 January 2013 of GBP11.21 million (31 January 2012:
GBP73,000) and on the number of Ordinary Shares in issue at 31
January 2013 being 2,738,619,633 ordinary shares (31 January 2012:
322,190,545).
12. Related party transactions
As part of the investment made by the Company's wholly owned
subsidiary, Creon Asia into YZJ Offshore in July 2012, Creon Asia
paid a fee to Fulton Capital, a company owned and controlled by Mr
G Lau, CEO of the Company, of GBP192,590 (2012: GBPnil).
On 10 April 2013, Creon Asia acquired a 49% equity interest in
Singapore based MGR US$49,900 (the "Investment"). Creon Asia has
acquired the Investment from Fortus PTE Ltd, a company of which Mr
G Lau is a director, but not a shareholder. As part of the
Investment, Creon has provided a three year unsecured 15% coupon
convertible loan to MGR of up to US$1.95 million to assist MGR to
increase its trading operations ("Convertible Loan"). The
Convertible Loan can be converted at any time during the three year
period at Creon's option into new shares in MGR at US$1 per new
share.
The non-executive Director services of A Berting are provided to
the Company through Melotti, a Company of which Mr A Berting is the
sole shareholder and director. During the year, fees of GBP12,000
were paid to Melotti (2012: nil) and there were no balances
outstanding at the year end.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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