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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Universal Coal | LSE:UCL | London | Ordinary Share | GB00B0704D34 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.00 | - |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number : 6943G
Universal Coal PLC
27 October 2008
Universal Coal plc / Index: AIM / Epic: UCL / Sector: Natural Resources
27th October 2008
Universal Coal plc
('Universal Coal' or 'the Company')
Final Results
Universal Coal plc announces its final results for the year ended 30th June 2008.
Highlights:
* Raised £1.59 million by way of placing 79,444,887 new ordinary shares at a price of 2p per share
* Terminated Chinese projects to focus on coal production in South Africa
* Entered into several significant transactions in the coal-rich South African region of Mpumalanga
* Projects have the potential to position the Company as a notable coal producer
* Readmission document currently being prepared
CHAIRMAN'S STATEMENT
The past year has yielded some very significant developments since the Universal Coal Board decided to terminate its remaining
relationships in China. We have pursued a new investment strategy in the mining and minerals sector located in South Africa. This considered
approach has resulted in the Company entering into several exciting transactions which could position the Company as a notable coal producer
in Southern Africa.
On 1 May 2008, we announced that the Company's 70.5% owned South African subsidiary will acquire 100% of the Elof prospecting rights
from Injula Mining Operations Pty Ltd. On 6 August 2008, we further announced that another 100% owned South African subsidiary had acquired
an exclusive option to acquire 100% of the Vlakplaats open Coal Project and a 35% interest in the Camden Coal Project.
These transactions, in accordance with AIM Rules, constitute a reverse takeover and will be subject to shareholder approval.
Consequently, the Company's shares have been suspended from trading on AIM until an admission document is posted to shareholders. The
acquisition of the prospecting rights for both projects will also require Ministerial consent to, and registration of, the transfer by the
Department of Minerals and Energy, as well as South African Reserve Bank approval.
The Company is in the process of preparing an admission document. However, the Company will not be able to complete this process by 31
October 2008, by when its shares will have been suspended from trading on AIM for six months. Therefore, in all likelihood the Company's
shares will be cancelled from AIM as of 7am on 3 November 2008. The Directors are working to complete all necessary documentation to enable
the Company to return to the AIM market as soon as practicable.
Summary of the transactions
Our projects have been selected due to their close proximity and location in the Witbank Coal Field, some 65km East of Johannesburg,
arguably the most economically important area of coal reserves in South Africa.
Elof Coal Project
The Elof Coal Project, which comprises the Middelbult, Wolvenfontein and Modderfontein areas, contains quality domestic thermal coal
that has the potential to meet ESKOM guidelines for power generation. The project is located near several coal-fired power stations and has
road, rail and power infrastructure running within 1,000 metres of the project.
Of the five defined coal seams exploited in the Witbank coal field, the Elof Coal Project contains mainly JORC defined inferred
resources in Seam 2 and Seam 4, which are the most widely exploited coal types, primarily used for domestic and export thermal product. This
project does contain some potentially economically exploitable resources in Seam 5, which is generally classified as high-grade blending
coking coal.
Elof project highlights:
* Shallow, largely open pittable predominantly domestic grade thermal coal resources, as well as some export grade thermal coal
* Contains 112 million tonnes ('Mt') gross in-situ tonnes of which 88Mt is currently at JORC inferred category, of which 70.5% to be
attributed to Universal Coal plc
* Adjacent to several power stations for mine gate sales to ESKOM
* Rail, road, power and water infrastructure less than 1,000 metres away
* Raw coal qualities have the potential to meet ESKOM guidelines with strong domestic prices
* Management and development team to join Board/Company with extensive local coal mining experience
* Plan to advance towards production through completion of Bankable Feasibility Study as soon as is practicable
* Strong BEE partner with extensive project pipeline in Southern Africa
Vlakplaats Coal Project
The Vlakplaats Coal Project, which comprises the Vlakplaats and Wolvenfontein areas, contains both domestic and export quality thermal
coal suitable for international markets. The project abuts the Elof Coal Project which is situated to the West.
Of the five defined coal seams exploited in the Witbank Coal Field, the Vlakplaats Coal Project contains JORC defined inferred resources
in Seam 2 and Seam 4 which are the most widely exploited coal types, primarily used for domestic and export thermal product.
Vlakplaats project highlights:
* Shallow, largely open pit prospect, containing predominantly export A-grade thermal coal resources as well as some domestic
grade thermal coal
* Contains JORC inferred resources of 179Mt gross in-situ tonnes - 100% attributed to Universal Coal plc
Camden Coal Project
Located in the Ermelo Coal Field some 200km SE of Johannesburg, the Camden Coal Project, is nearby the Camden Power Station, some 10km
South of the town Ermelo. The project comprises the farms Kromdraai 441 IS, Drinkwater 443 IS, De Goede Hoop 473 IS and Burhmansklipkrans
331 KT (excluding portion 1) held under new order prospecting rights and measuring approximately 15,000 hectares.
The Camden Coal Project contains up to five coal seams, including the B and C Seams which are the most widely exploited coal seams in
the Ermelo Coal Field and primarily used for domestic and export thermal product. To date no JORC or SAMREC compliant coal resources have
been defined at the Project but due diligence of historical data is underway. Ongoing discussion is therefore continuing with the vendors as
the Board believes the area may have the potential to host a significant coal resource.
Camden project highlights:
* Contains up to five coal seams, including the B and C Seams which are the most widely exploited coal seams in the Ermelo Coal
Field and primarily used for domestic and export thermal product
* Located approximately 200km South East of Johannesburg, in close proximity to the Camden Power Station
* The Board believes the area may have the potential to host a significant coal resource
In recognition of the Company's revised corporate strategy and regional focus, an Extraordinary General Meeting was held on the 1
September 2008. All proposed resolutions were duly passed, enabling the Company to allot relevant securities to facilitate both equity and
debt raising finances to meet initial vendor transactional costs and working capital requirements. An initial round of funding occurred on
the 26 September 2008 whereby the company raised £1.59 million by way of placing 79,444,887 new ordinary shares at a price of 2p.
I am also pleased to report that the Company is in advanced negotiations with potential end users of sea-borne A grade export thermal
coal regarding appropriate funding for these transactions.
The Board is confident that these projects can attract funding in a manner that will avoid excessive dilution to the current
shareholders and provide significant reward to shareholders. Further shareholder value may also be derived from ongoing negotiations of
additional coal prospects with holders of other South African mining assets.
We have a great team in place which has the experience and capability to progress all of our projects through to a production phase and
beyond. As we enter this promising phase of the Company's development and to better reflect its future business, the Company has
appropriately changed its name to "Universal Coal plc".
Nathan McMahon
Chairman
INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2008
2008 2007
Note £ £
CONTINUING OPERATIONS
Administrative expenses (753,652) (2,293,025)
OPERATING LOSS (753,652) (2,293,025)
Interest received on bank deposits 29,910 95,832
LOSS BEFORE TAXATION 5 (723,742) (2,197,193)
Taxation 7 - -
LOSS AFTER TAXATION - CONTINUING OPERATIONS (2,197,193)
(723,742)
LOSS FOR THE YEAR FROM DISCONTINUED 3 - (5,993,874)
OPERATIONS
LOSS FOR THE YEAR (723,742) (8,191,067)
LOSS PER SHARE
Basic and diluted - continuing operations 6 (0.45)p (1.37)p
Basic and diluted - discontinued operations 6 - (3.76)p
Basic and diluted - continuing and 6 (0.45)p (5.13)p
discontinued operations
BALANCE SHEET
AS AT 30 JUNE 2008
2008 2007
Note £ £
NON-CURRENT ASSETS
Property, plant and equipment 8 84,294 115,701
Investments in subsidiaries 9 - -
84,294 115,701
CURRENT ASSETS
Trade and other receivables 10 140,247 114,031
Cash and cash equivalents 11 721,760 1,754,739
862,007 1,868,770
CURRENT LIABILITIES
Trade and other payables 12 (24,130) (338,558)
NET CURRENT ASSETS 837,877 1,530,212
NET ASSETS 922,171 1,645,913
EQUITY
Called up share capital 13 1,616,500 1,616,500
Share premium 14 7,179,436 7,179,436
Equity reserve 14 10,000 55,000
Retained earnings 14 (7,883,765) (7,205,023)
TOTAL EQUITY 922,171 1,645,913
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2008
Share capital Share premium Retained earnings Merger reserve Equity reserve Total
£ £ £ £ £ £
As at 1 July 2006 1,576,000 7,103,448 (453,956) 1,440,000 - 9,665,492
Share based payment - - - - 55,000 55,000
Shares issued 40,500 76,000 - - - 116,500
Share issue expenses - (12) - - - (12)
Loss for the year - - (8,191,067) - - (8,191,067)
Transfer of merger reserve - - 1,440,000 (1,440,000) - -
As at 30 June 2007 1,616,500 7,179,436 (7,205,023) - 55,000 1,645,913
Share based payment - - 45,000 - (45,000) -
Loss for the year - - (723,742) - - (723,742)
As at 30 June 2008 1,616,500 7,179,436 (7,883,765) - 10,000 922,171
CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 JUNE 2008
2008 2007
Note £ £
Cash flows from operating activities
Operating loss (753,652) (2,293,025)
Depreciation 33,086 17,068
Share based payment - 55,000
(720,566) (2,220,957)
Movement in working capital
Increase in debtors (26,216) (35,192)
(Decrease)/increase in creditors (314,428) 300,246
Net cash outflow from operating activities (1,061,210) (1,955,903)
Cash flows from investing activities
Purchase of intangible fixed asset - (1,628,530)
Purchase of property, plant and equipment (1,679) (111,077)
Interest received 29,910 95,832
Net cash inflow/(outflow) investing 28,231 (1,643,775)
activities
Cash flow from financing activities
Issued shares - 116,500
Issue expenses - (12)
Net cash inflow from financing activities - 116,488
Decrease in cash and cash equivalents (1,032,979) (3,483,190)
Cash and cash equivalents at beginning of 11 1,754,739 5,237,929
the year
Cash and cash equivalents at end of the 11 721,760 1,754,739
year
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2008
1. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been
applied consistently to all the years presented, unless otherwise stated, and in preparing an opening IFRS balance sheet as at 1 July 2006
for the purpose of transition to IFRS.
Basis of preparation
These financial statements have been prepared for the first time in accordance with International Financial Reporting Standards and
IFRIC interpretations as adopted by the European Union (IFRS's as adopted by the EU) and the Companies Act 1985 applicable to companies
reporting under IFRS. The disclosures required by IFRS 1 concerning the transition from UK GAAP to IFRS are given in note 15.
a) Standards, interpretations and amendments to existing standards that are not yet effective and have not been adopted by the Company
and may be applicable to the Company's operations:
* IAS 1 Presentation of Financial Statements (Amendments)
* IAS 16 Property, Plant and Equipment (Amendments)
* IAS 23 Borrowing Costs (Amendments)
* IAS 27 Consolidated and Separate Financial Statements (Amendments)
* IAS 32 Financial Instruments: Presentation (Amendments)
* IAS 36 Impairment of Assets (Amendments)
* IAS 38 Intangible Assets (Amendments)
* IAS 39 Financial Instruments: Recognition and Measurement (Amendments)
* IFRS 1 First-time Adoption of International Financial Reporting Standards (Amendments)
* IFRS 2 Share-based Payment (Amendments)
* IFRS 3 Business Combinations (Amendments)
* IFRS 5 Non-current Assets Held for Sale and Discontinued Operations (Amendments)
* IFRS 8 Operating Segments
Directors do not believe implementation of any of above will have a significant impact.
Revenue
Revenue comprises the invoiced value of sales in respect of trading operations and excludes investment income, discounts allowed,
rebates and other non-operating income and value added tax.
Exploration and evaluation assets
Exploration and evaluation assets are derived from the fair value paid as consideration for the investment in subsidiaries. An annual
impairment review is carried out each year with any impairments recognised in the income statement.
Exploration licences
Exploration rights and licences are recorded at cost of acquisition and are depreciated on a straight-line basis over the license
period. When there is little likelihood of a mineral right being exploited, or the value of mineral rights have diminished below carrying
value, a write down is effected against income in the period that such determination is made.
Impairment of assets
* Exploration of assets
At each reporting date, the Company assesses whether there is any indication that the exploration licences may be impaired. Where an
indicator of impairment exists, the Company makes a formal estimate of the recoverable amount. Where the carrying amount of an asset exceeds
its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
* Exploration and evaluation assets
Exploration and evaluation assets are assessed for impairment when fact and circumstances suggest that the carrying amount of an
exploration and evaluation asset may exceed its recoverable amount.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. Depreciation is
charged so as to write off the costs of assets, over their estimated useful lives, using the straight line method, on the following basis:
IT Equipment - 33% on cost
Leasehold improvements - 20% on cost
Furniture and fittings - 20% on cost
Financial instruments
Financial assets and financial liabilities are recognised on the balance sheet when the Company becomes a party to the contractual
provisions of the instrument.
The Company classified its financial assets in the following categories: at fair value through profit or loss, loans and receivables and
available for sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the
classification of its financial assets at initial recognition.
a) Financial assets at fair value though profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading which is principally for the purpose of
selling in the short term. Derivatives are also categorised in this category unless designated as hedges. Assets in this category are
classified as current assets.
b) Loans and Receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
They are included in current assets. The Company's loans and receivables comprise of 'trade and other receivables' and 'cash and cash
equivalents'. Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost less provision
for impairment.
c) Available-for-sale financial assets
Available-for-sale financial assets are non derivatives that are either designated to this category or not classified in any of the
other categories.
The Company classifies its financial liabilities as trade and other payables and tax payable which are recognised initially at fair
value and subsequently measured at amortised cost using the effective interest method.
Leases
Payments made under operating leases are recognised in the income statement on a straight line basis over the term of the lease.
Taxation
Current taxes are based on the results shown in the financial statements and are calculated according to local tax rules, using tax
rates enacted or substantially enacted by the balance sheet date.
Deferred tax
Deferred tax is calculated on the comprehensive basis using the liability method, which requires provision for temporary differences
between the tax bases of assets and liabilities and their carrying amounts on the balance sheet. Tax rates enacted at the balance sheet date
are used to determine the deferred tax balances. Deferred tax assets are recognised to the extent that it is probable that future taxable
profit will be available against which the asset can be utilised. Deferred tax is applied to share-based payments in accordance with IAS 12
Income Taxes.
Foreign currencies
Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date.
Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange
differences are taken into account in arriving at the operating result.
The Company translates its foreign operations using the closing rate method.
One of the requirements of IAS 21 - 'The Effects of Changes in Foreign Exchange Rates' is that on disposal of a foreign operation, the
cumulative amount of exchange differences previously recognised directly in equity for that foreign operation are to be transferred to the
income statement as part of the profit or loss on disposal. The Company has adopted the exemption allowing these cumulative translation
differences to be reset to zero at the transition date. If the Company had not taken this exemption, a different amount of net foreign
exchange gains and losses would be transferred to the income statement on disposal of a foreign operation.
Monetary assets and liabilities for foreign operations are translated at the year end exchange rate and non-monetary assets are recorded
at the exchange rate prevailing at the date of acquisition.
Exchange differences arising from the translation of the net assets of foreign operations are taken to the translation reserve. Other
exchange differences are taken to the profit and loss account.
Share-based payments
The Company has granted equity-settled share-based payments. The fair value of the incentive granted is recognised as an expense with a
corresponding increase in equity. The fair value is measured at the grant date and spread over the period during which the employees or
third parties become unconditionally entitled to the incentives. When identifiable, the fair value is determined by the value of the
services provided. When a fair value for the services provided cannot be ascertained the fair value is measured by reference to the fair
value of the equity instrument granted.
Finally, if there is not a reliable measurement by reference to the fair value of the equity instruments granted then the fair value is
measured at its intrinsic value (that is, the difference between market price and exercise price). The intrinsic value is re-measured at
each reporting date until the equity instruments are exercised, forfeited or lapsed. The amount recognised as an expense is adjusted to
reflect for the expected number of share incentives that are expected to be exercised. It is anticipated that share incentives will be
exercised when the traded market price is in excess of the exercise price.
Mining exploration
Expenditure for exploration activities is charged against income until the viability of the mining venture has been proven.
Consolidation policy
Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies so as to obtain benefit
from their activities. Subsidiaries are fully consolidated from the date on which control is transferred until the date that the control
ceases.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group.
Inter-company transactions, balances and unrealised gains and losses on transactions between Group companies are eliminated.
The Company has two direct and two indirect subsidiary undertakings, as described in note 9, which have not traded in the past two
years. Consolidated financial statements have not been prepared as the subsidiary undertakings are considered to be immaterial to the
Group.
Judgements made in applying accounting policies and key sources of estimation uncertainty
The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation were:
(a) Impairment of intangible fixed assets
The Group assesses at each balance sheet date whether there is any indication that any of its assets have been impaired. If such
indication exists, the asset's recoverable amount is estimated and compared to its carrying value.
For goodwill, intangible assets that have an indefinite life and intangible assets not yet available for use, the recoverable amount is
estimated at each balance sheet date and whenever there is an indication of impairment.
An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. Impairment losses
are recognised in the balance sheet.
(b) Share-based payments
In determining the fair value of equity settled share based payments and the related charge to the income statement, the Group must make
assumptions about future events and market conditions. Judgement is made as to the likely number of shares that will vest, and the fair
value of each award granted.
Options are measured at fair value at the grant date using the Black-Scholes model. The fair value is expensed on a straight line basis
over the vesting period, based on an estimate of the number of options that will eventually vest.
Cash-settled share-based payment transactions result in the recognition of a liability at its current fair value.
2. TURNOVER AND SEGMENTAL REPORTING
As the Group remains focussed on exploration activities, the Group had no turnover for the year ended 30 June 2008, nor for the prior
year ended 30 June 2007. The directors consider exploration to be the only business segment of the Group.
Year ended 30 June 2008 Year ended 30 June 2007
UK China UK China
£ £ £ £
Assets 946,301 - 1,984,471 5,993,874
Liabilities (24,130) - (338,558) -
Net assets 922,171 - 1,645,913 5,993,874
Capital additions - intangible - - - 1,628,530
Capital additions - tangible 1,679 - 111,077 -
Depreciation / amortisation 33,086 - 17,068 5,993,974
3. DISCONTINUED OPERATIONS - DANFENG PROJECT
On the 29 May 2007, the Company announced the decision to terminate its involvement in the Danfeng Project ("the Project") and the Joint
Venture Company established to develop the Project, the Shang Lou City Zhongbei Minerals and Mining Development Company Ltd. Although
exploratory drilling conducted since inception confirmed the presence of copper mineralisation the Board believed the Project did not meet
the development criteria of the Company in terms of potential scale and projected returns on a fully risked basis. All costs associated with
the project, including provision for all closure costs, were written-off to the income statement account in 2007.
Loss for the year from discontinued operations
2008 2007
£ £
Impairment of project exploration costs - (4,193,874)
Goodwill impairment - (1,800,000)
- (5,993,874)
Taxation - -
Loss for the year from discontinued operations - (5,993,874)
Assets and liabilities of discontinued operations
2008 2007
£ £
Assets
Project exploration - -
Goodwill - -
Liabilities - -
- -
Cash flows for discontinued operations
2008 2007
£ £
Investing activities - 1,628,530
-
Net cash out flow - 1,628,530
4. EMPLOYEES AND DIRECTORS
2008 2007
£ £
Wages and salaries 176,577 514,000
Social security 22,602 -
Directors' emoluments 132,942 407,000
2008 2007
The average number of employees during the year was as
follows:
Management and administration 5 7
Operation resources 1 14
Total 6 21
5. LOSS BEFORE TAXATION
The loss before tax is stated after charging:
2008 2007
£ £
Depreciation - owned assets 33,086 17,068
Fees payable to the Company's auditors for the audit of 13,500 7,500
the Company's annual accounts
Directors' emoluments 132,942 407,000
Share based payment - 55,000
Foreign exchange differences 42,758 -
6. LOSS PER SHARE
Year ended 30 June 2008 Year ended 30 June 2007
Earnings Weighted average number of Earnings Weighted average
shares number of shares
£ £
Loss for the year from (723,742) (2,197,193)
continuing operations
Loss for the year from - (5,993,874)
discontinued operations
Earnings available to (723,742) 161,650,003 (8,191,067) 159,535,414
shareholders
Loss per share from continuing (0.45)p (1.37)p
operations
Loss per share from - (3.76)p
discontinued operations
There were no dilutive share options as at 30 June 2008 and 30 June 2007.
7. TAX
Analysis of the tax charge
No liability to UK corporation tax arose on ordinary activities for the year ended 30 June 2008 nor for the year ended 30 June 2007.
Factors affecting the tax charge
The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below:
2008 2007
£ £
Loss on ordinary activities before tax (723,742) (8,191,067)
Loss on ordinary activities multiplied by the (217,123) (2,457,320)
standard rate of corporation tax in the UK of 30%
(2007 - 30%)
Effects of:
Creation of tax losses not recognised - revenue 217,123 1,915,507
Creation of tax losses not recognised - capital - 540,000
Net disallowable expenditure - 1,813
Total tax - -
The Company has a potential deferred tax asset arising from revenue losses of £2,251,453 (2007: £2,049,330) incurred since inception. No
deferred tax asset has been recognised as there is no certainty that sufficient profits will arise in future accounting periods against
which these losses could be offset against.
8. PROPERTY, PLANT AND EQUIPMENT
IT Equipment Leasehold Furniture & fittings Total
Improvements
£ £ £ £
COST
At 1 July 2006 25,763 - - 25,763
Additions 13,914 83,760 13,403 111,077
At 1 July 2007 39,677 83,760 13,403 136,840
Additions 1,679 - - 1,679
At 30 June 2008 41,356 83,760 13,403 138,519
DEPRECIATION
At 1 July 2006 4,071 - - 4,071
Charge for the year 11,721 4,230 1,117 17,068
At 1 July 2007 15,792 4,230 1,117 21,139
Charge for year 13,777 17,031 2,278 33,086
At 30 June 2008 29,569 21,261 3,395 54,225
NET BOOK VALUE
At 30 June 2008 11,787 62,499 10,008 84,294
At 30 June 2007 23,885 79,530 12,286 115,701
9. INVESTMENTS IN SUBSIDIARIES
Shares in group undertakings
£
COST -
At 1 July 2006 -
Additions -
At 1 July 2007 -
Additions -
At 30th June -
NET BOOK VALUE -
At 30 June 2007 -
-
At 30 June 2008 -
The Company's investments at the balance sheet date in the share capital of companies include the following:
Subsidiaries
Copper Developments Pty Ltd
Country of incorporation: Australia
Nature of business: Minerals exploration and development company
%
Class of shares holding
Ordinary 100.00
2008
£
Aggregate capital and reserves -
Results for the year -
Copper Developments Pty Ltd is a wholly owned dormant company with cash and Share capital of AU$1.
Universal Coal and Energy South Africa (Pty) Ltd
Country of incorporation: South Africa
Nature of business: Intermediary holding company
%
Class of shares holding
Ordinary 100.00
2008
£
Aggregate capital and reserves -
Results for the year -
Universal Coal and Energy South Africa (Pty) Ltd is respectively a 70.5% and a 100% holding company of two newly incorporated dormant
companies as at 30 June 2008: (i) Universal Coal Development South Africa 1 (Pty) Ltd and (ii) Universal Coal Development South Africa 2
(Pty) Ltd. Further information on these companies is set out in note 22: Post balance sheet events.
10. INVESTMENTS IN SUBSIDIARIES
2008 2007
£ £
Current:
VAT receivable 1,005 30,519
Prepayments 73,875 5,967
Accounts receivable 1,504 13,682
Property lease deposit 63,863 63,863
140,247 114,031
11. CASH AND CASH EQUIVALENTS
2008 2007
£ £
Cash at bank 274,682 1,754,739
Escrow deposit 447,078 -
721,760 1,754,739
12. TRADE AND OTHER PAYABLES
2008 2007
£ £
Current:
Trade creditors 10,630 90,599
Other creditors 13,500 247,959
24,130 338,558
13. ORDINARY SHARES
Authorised
Number: Class: Nominal value: 2008 2007
£ £
5,000,000,000 Ordinary £0.01 50,000,000 50,000,000
Allotted, issued and fully paid:
Number: Class: Nominal value: 2008 2007
£ £
161,650,003 Ordinary £0.01 1,616,500 1,616,500
(2007: 161,650,003)
The following options were granted by the Company and have not been exercised at 30 June 2008:
Number of ordinary shares Exercise price Expiry date
249,997 5.0p 23 February 2010
10,333,334 40.0p 30 June 2009
14. RESERVES
Share Capital Share Premium Profit & Loss Equity Reserve Total
Account
£ £ £ £ £
As at 1 July 2007 1,616,500 7,179,436 (7,205,023) 55,000 1,645,913
Share based payment - - 45,000 (45,000) -
Loss for the year - - (723,742) - (723,742)
As at 30 June 2008 1,616,500 7,179,436 (7,883,765) 10,000 922,171
Equity reserve is a share based payment reserve.
15. TRANSITION TO IFRS
Universal Coal plc reported under UK GAAP in all previously published financial statements for the year ended 30 June 2007. The analysis
below shows a reconciliation of net assets and profit as reported under UK GAAP as at 30 June 2007 to the revised net assets and profit
under the IFRS as reported in these financial statements for the year ended 30 June 2008. In addition, there is a reconciliation of net
assets under UK GAAP to IFRS at the transition date for the Company, being 1 July 2006.
UK GAAP Effects of transition to IFRS IFRS
£ £ £
Reconciliation of equity at 1
July 2006
Total net assets 1,290,810 - 1,290,810
Reconciliation of equity at 30
June 2007
Total net assets 1,645,913 - 1,645,913
Reconciliation of loss at 30
June 2007
Loss on ordinary activities (8,191,067) - (8,191,067)
after taxation
There are no changes to cash flow between IFRS and UK GAAP.
16. FINANCIAL INSTRUMENTS
The Company's activities expose it to a variety of financial risks: in particular capital risk management, market risk (including
currency risk, fair value interest rate risk and price risk) and liquidity risk. The Group's overall risk management programme focuses on
the unpredictability of financial markets and seeks to minimise the potential adverse effects on the Group's performance. The Board on
behalf of the members carries out risk management.
a) Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while optimising the debt
and equity balance. The capital structure of the Group consists of cash and cash equivalents and equity comprising issued capital, reserves
and retained earnings.
The Group does not enter into derivative or hedging transactions and it is the Group's policy that no trading in financial instruments
will be undertaken.
The main risk arising from the Group's financial instruments is currency risk. The board reviews and agrees policies for managing such
risk explained below.
b) Interest rate risk
The Company finances its operations through equity. There are no loans hence the Company is not exposed to interest rate fluctuations.
c) Market risk
(i) Foreign exchange risk
The Company operates internationally and is exposed to foreign exchange risks.
The Company has subsidiaries and associated undertakings based overseas and are exposed to foreign currency translation risk.
The Company's operations incur expenditures in the local currencies of South Africa and the United Kingdom. Revenue from operations and
certain other capital and operating costs may be in US dollars. As a result of the use of these different currencies, the Company is subject
to foreign currency fluctuations which may materially affect its financial position and operating results.
As the Group maintains foreign currencies or other financial assets and liabilities, should exchange rates fluctuate by 15% the change
in value would be 15%. In relation to costs incurred in future, the effect of any change in rates is indeterminate as other factors are
likely to cause costs to change in conjunction with foreign exchange movements.
(ii) Price risk
Prices ultimately received for coal in relation to the Company's investments will have significant impact on the profitability and
viability of all projects in which the Group has an interest. Increases to prices may have significant and leveraged effect to the current
and future values of projects and shares held, the converse will apply where prices fall.
(iii) Fair value interest rate risk
The Company has no liabilities which accrue interest; therefore the Company has no exposure to interest rate risk on borrowings.
d) Credit risk
The Company does not hold any trade receivables due from external customers and is therefore not exposed to any significant credit risk.
The carrying amount of the Group's financial assets represents its maximum exposure to credit risk.
e) Liquidity Risk
Prudent liquidity risk management implies maintaining sufficient cash. Management monitors rolling forecasts of the Company's liquidity
reserve. The review consists of considering the liquidity of local markets, projecting cash flows and the level of liquid assets to meet
these. The management raises additional capital financing when the review indicates this to be necessary.
The financial instruments of the Company are:
Year ended 30 June 2008 Year ended 30 June 2007
Loans and Financial Loans and Financial Liabilities
receivables Liabilities receivables
£ £ £ £
Financial assets
Other debtors 140,247 114,031
Cash and cash equivalents 721,760 1,754,739
Financial liabilities
Trade creditor and accruals 24,130 338,558
All financial assets and liabilities are initially stated at fair value and measured at amortised cost, and all carrying values
approximate to fair values.
17. SHARE-BASED PAYMENT TRANSACTIONS
The Company has share-based payment arrangements, which are as below:
3 August 2005 - share options
Number granted - 249,997
Contractual life - 4 years and 8 months
Vesting conditions - None
Exercise price - 5p
Exercisable - Expire if not exercised by 23 February 2010
18 April 2005 - share options
Number granted - 10,333,334
Contractual life - 4 years and 2 months
Vesting conditions - None
Exercise price - 40p
Exercisable - Expire if not exercised by 30 June 2009
The fair value of the share-based payment is based upon the Black-Scholes formula, a commonly used option pricing model. The calculation
of volatility used in the model is based upon an average of market prices against current market prices of listed companies operating in the
mining industry.
All options are equity settled. Further detail in relation to the options:
As at 30 June 2008 As at 30 June 2007
Outstanding options at start of 14,365,831 27,966,665
year
Options granted - 3,782,500
Options forfeited (3,782,500) (13,333,334)
Exercised - options - (4,050,000)
Outstanding at end of year - 10,583,331 14,365,831
options
Weighted average exercise price £0.38p £0.36p
Weighted average remaining 1.1 years 2.1 years
contractual life
There was a write-back of share based payments during the year amounting to £45,000 (2007: £55,000), due to the resignation and
forfeiture of share options by directors, management and staff.
The inputs into the Black-Scholes model in respect of options granted during the year are as follows:
As at 30 June 2008 As at 30 June 2007
Weighted average share price in - 13p
pence
Weighted average exercise price - 40p
in pence
Expected volatility - 56%
Expected life - 2 years
Risk free rate - 10%
Expected dividends None None
18. RELATED PARTY DISCLOSURES
No one entity has control over the Group.
19. ENVIRONMENTAL MATTERS
The directors have considered the possible provision for environmental rehabilitation. As the Group is still in the exploration stage,
little damage has been done to the environment and, therefore, no provision is required in relation to this matter.
20. CAPITAL COMMITMENTS
On 20 March 2007, the Company entered into a 5 year rental lease expiring 19 March 2012. The annual rental charge totals £85,150. As at
30 June 2008, the remaining rental commitment amounted to £298,025 (2007: £383,175).
21. CONTINGENT LIABILITES
There are no contingent liabilities.
22. POST BALANCE SHEET EVENTS
On 21 July 2008, the Board approved the creation of £390,000 of 0% convertible loan stock (the "Convertible Loan Stock") in favour of
Aguas Kalama Ltd (the "Stockholder"). The Convertible Loan Stock will convert on the earlier of the re-admission to trading on the AIM of
the Company's shares or at the election of the Stockholder at the lower of the placing price or 2p.
On 6 August 2008, the Company announced that its 100% owned South African subsidiary, Universal Coal Development South Africa 2 (Pty)
Ltd, had acquired an exclusive option to acquire 100% of the prospecting rights in the Vlakplaats Coal Project from Universal Pulse Trading
132 (Pty) Ltd ("UPT"). As consideration the Company will, upon registration of the prospecting right in the name of UPT in the Mining Titles
and Registration Office, pay to UPT a non-refundable deposit of R 3.5m (approximately £250,000). The Company shall then receive an exclusive
option period of 90 days from the date of registration of the prospecting right.
Should the Company exercise the Option, the consideration payable to UPT will be R350m (approximately £25m) in cash, payable upon
registration of the transfer of the prospecting right to the Company. The Company is considering a number of sources of funding for the
acquisition in the event that it exercises the Vlakplaats Option, which may result in the issue of new ordinary shares in the Company or its
subsidiaries. A facilitation fee of £2m shall be payable to the introducers of the Vlakplaats coal project to the Company. It is proposed
that the facilitators shall utilise these funds to subscribe for ordinary shares in the Company.
In view of the transaction's size, the acquisition constitutes a reverse takeover (as defined in the AIM Rules for Companies) for the
Company and is therefore subject to the approval of its shareholders.
The Company also announced on 6 August 2008 it had procured the right to acquire, prior to 30 September 2008, a 35% interest (the
"Camden Option") in the Camden Coal Project from Continental Coal Limited ("Continental"). As consideration the Company agreed to pay
Continental a non-refundable deposit of US$100,000 upon satisfactory completion of due diligence on the Camden Project. However, the
exercise period expired due to the Company not receiving requested vendor documents. Ongoing discussions are continuing with Continental.
The Company has reserved its position and is seeking an extension to the exercise period.
The Company has been granted the right to inspect the prospecting rights and intends, in conjunction with Continental, to conduct a
limited technical drilling program over the project in the coming weeks.
Should the Company exercise the Camden Option, the Company shall form a joint venture company with Continental in order to explore for
coal resources on the Camden Coal Project. The consideration payable to Continental will be R9.25m (approximately £640,000) in cash, payable
upon registration of the transfer of the prospecting rights to the joint venture. Furthermore, the Company would transfer R10m
(approximately £690,000) to the joint venture company to fund an agreed exploration programme over the Camden Coal Project. A facilitation
fee of 5 Million ordinary shares in the Company shall also be payable to the introducers of the Camden Coal Project.
The Company will also retain the right to purchase a further 15% beneficial interest in the Camden Project on terms to be agreed in the
future.
On 1 September 2008, the Company held an Extraordinary General Meeting which passed the following resolutions:
* To renew the Board's authority to allot relevant securities:
(i) Up to a nominal amount of £2,000,000;
(ii) As if statutory pre-emption rights did not apply to any such allotments up to a nominal amount of £2,000,000;
(iii) Other than pursuant to (i) and (ii) above, in connection with the issue by the Company of the convertible unsecured loan note of
£390,000 to Aguas Kalama Ltd and the conversion thereof;
* To provide the Company with sufficient capacity to allot further shares to, inter alia, complete the Elof and Vlakplaat's
transactions and raise further finances for the Company if the Directors consider this appropriate for those transactions or working capital
requirements or otherwise and in the best interests of the Company;
**ENDS**
For further information visit www.universalcoal.com or contact:
Tim Horgan Universal Coal plc Tel: +44 (0) 20 7292 9112
Hugh Oram Nabarro Wells & Co. Tel: +44 (0) 20 7634 4700
Ltd
Hugo de Salis/Victoria Thomas St Brides Media & Tel: +44 (0) 20 7236 1177
Finance
This information is provided by RNS
The company news service from the London Stock Exchange
END
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