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Amedeo Resources PLC RNS Release

Final Results for the year ended 31 December 2015


RNS Number : 0692B
Amedeo Resources PLC
14 June 2016
 

14 June 2016

Amedeo Resources plc
("Amedeo" or the "Company")
Audited Results for the Year Ended 31 December 2015
and Notice of AGM

Amedeo, the resource and resource infrastructure and asset investment company, is pleased to announce its consolidated audited results for the year ended 31 December 2015.

Period highlights

·     Physical build of Le Tourneau Super 116E Class design self-elevating mobile offshore jack up drilling rig ("Explorer 1"), completed and commissioning underway. Explorer 1 expected to be delivered in 2H2016

 

·     MGR Resources PTE Ltd ("MGR") posts a profit of US$90,000 despite depressed iron ore prices and difficult market

 

·     Administrative expenses for the year were down 20% on the prior period at US$651,000 compared with US$812,000 for the 11 months ended 31 December 2014

 

·     Cash at the year end at US$2,340,000 (2014: US$1,179,000), and post year end at US$4,152,000

ENDS

For further information please visit www.amedeoresources.com or contact:

Enquiries:

Glen Lau
Chief Executive Officer

Amedeo Resources Plc
Tel office: +44 20 7583 8304   

Zafar Karim
Executive Director

Amedeo Resources Plc 
Tel office: +44 20 7583 8304   

Paul Shackleton
Nominated Adviser & Broker

WH Ireland
Tel office: +44 113 394 6600

Elliott Hance
Joint Broker

Beaufort Securities Limited
Tel office: +44 20 7382 8300

Notes

Amedeo Resources plc is an investment company whose policy is to invest principally, but not exclusively, in the resources and resources infrastructure and asset sectors. Amedeo has a deep and broad global network and wide contact base in these sectors, including in East and South East Asia and the Middle East which it leverages to source and make investments. These sectors exhibit high growth and are strategically important. Amedeo is a proactive investor which assists its investee companies to grow by providing investment, expertise and contacts.



 

CHAIRMAN'S STATEMENT

 

Introduction

 

Progress at Jiangsu Yangzijiang Offshore Engineering Co. Ltd's ("YZJ Offshore") marine vessel yard on its first order, a Le Tourneau Super 116E Class design self-elevating mobile offshore jack up drilling rig ("Explorer 1"), continued and the physical build was completed at the end of the year. Following completion of the physical build, commissioning, a process of extensive testing and certification commenced.

 

With the fall in the oil price, the rig market remains difficult and while discussions with several potential purchasers are on-going, no new orders have been obtained. While this is disappointing, YZJ Offshore has the capability to build many different vessels and blocks, and with Explorer 1's construction now complete, YZJ Offshore has a completed vessel to showcase.

 

With the iron ore price depressed, MGR Resources PTE Ltd ("MGR") has had a difficult year and cut back on its activities. Nonetheless, it managed to post a profit of US$90,000 during the year under review.

 

Despite the ongoing difficult environment, Amedeo continues to pursue its long term strategy of building a vertically integrated business in the resource and energy and related infrastructure sectors, and on an operational level, it continues to run a tight ship: Administrative expenses for the year were down 20% on the prior period at US$651,000 compared with US$812,000 for the 11 months ended 31 December 2014. Cash at the year end was US$2,340,000 (2014: US$1,179,000), and increased further following the year end to US$4,152,000 due to the repayment of a loan by MGR in February 2016 of US$1,717,000 as well as receipt of interest of US$300,000 in March 2016, the only remaining loan balance with MGR is the US$400,000 loan made in 2015.

 

YZJ Offshore

 

YZJ Offshore's first order, Explorer 1, was physically completed in December at the end of the year. Following completion, commissioning commenced, a process of testing and certifying which takes several months, subsequent to which the rig is expected to be delivered. Currently, delivery is expected in the second half of 2016 at the original contract price.

 

While the rig market in general may be oversupplied, YZJ Offshore's first rig is a Le Tourneau Super 116 Enhanced Class design self-elevating mobile offshore jack. The Le Tourneau is the most established design in the offshore world. It has the a very popular footprint i.e. its legs space dimension is one that has been used for many years and for many wells, therefore as well as being used for new wells it is extensively used for existing wells. Other rig designs do not have this significant advantage.

 

Le Tourneau was recently purchased by Keppel FELs, which has built and delivered almost half of the world's jack up and semi-submersibles in the past decade, due to the importance and uniqueness of the Le Tourneau design. Moreover, in the current new build market, there are no Le Tourneaus that have been built on speculation. All have been ordered for clients and by clients.

 

With respect to new orders, YZJ Offshore continues discussions with potential customers for further orders with the benefit that it now has a rig that is physically complete to showcase. This is important from both a marketing perspective and also from a reputational perspective. No new orders, however, have been forthcoming as currently the offshore vessel market remains difficult due to the volatility in the oil price from its high around US$115 per barrel in July 2014, through below c.US$30 per barrel, with only a recent recovery. As at the time of writing, the oil price is around US$50 per barrel, an increase of over 70% from its lows.

 

While the recovery in commodity prices, including oil, might suffer a setback this year, with the likelihood of rising US interest rates, Amedeo believes that any setback is likely to be temporary, particularly in the oil and gas sector. Accordingly, while the current outlook in the offshore vessel sector may appear challenging, Amedeo believes that the medium to long term outlook is positive with activity set to increase.

 

YZJ Offshore, having completed its first rig and therefore taken the first step along establishing its reputation, together with being a large and well equipped yard (it has the capacity to build product carriers, specialised platforms, semi-submersibles, amongst other vessels, as well as rigs), it is well positioned to take advantage of the recovery in the offshore fabrication market.

 

YZJ Offshore is also able to fabricate blocks for container ships and gas carrier vessels, and as such it is absorbing container block overspill from Yangzijiang Shipbuilding (Holdings) Ltd's principal yards. These activities keep YZJ Offshore's yard busy.

 

Amedeo has an indirect 19.0% stake in YZJ Offshore which it holds through its 47.5% stake in the joint venture company, YZJ Offshore Engineering Pte Ltd ("YZJ JV").

 

MGR

 

With the reduced demand for iron ore and depressed iron ore prices (from around US$70 per tonne at the beginning of 2015 to around US$40 by the end of 2015), MGR scaled back its iron ore operations, and focused on monitoring that market and exploring opportunities for broking other commodities, along the East and South East Asia, South Asia, Middle East and Africa corridors. Actual broking activities during 2015 were minimal and, in anticipation of reduced activities, in January 2015, MGR repaid Amedeo US$1,950,100 of its convertible loan that was issued in April 2013.

 

As at the year end, MGR had a loan of US$2,177,000 outstanding to Amedeo. With activities remaining, and expected to remain, at low levels, in February 2016, MGR repaid a further US$1,717,000 of the loan balance to Amedeo. Amedeo has a 49.0% equity stake in MGR.

 

Financial Review

 

Revenue for the year ended 31 December 2015 was US$128,000 (11 months to 31 December 2014: US$91,000), an increase of US$37,000 or 41% on the prior period. Amedeo provides various business development and marketing services to MGR, which represents 100% of revenue in both periods.

 

Administrative expenses were US$651,000 (11 months to 31 December 2014: US$812,000), a decrease of US$164,000 or 20%. The decrease is primarily due to the fact there were a number of one-off items in the prior period (fees related to the investment in YZJ JV and items related to a now settled VAT dispute) amounting in total to US$149,000.

 

Amedeo's share of loss in associates was US$2,014,000 (11 months to 31 December 2014: US$922,000). This was made up of a loss of US$2,059,000 (11 months to 31 December 2014: US$942,000) at YZJ JV and a profit of US$45,000 (11 months to 31 December 2014: US$20,000 profit) at MGR. The losses/profits of the associates are non-cash items.

 

Foreign exchange losses amount to US$115,000 (11 months to 31 December 2014: US$197,000). These were predominately due to translating GBP denominated loans into US$. This is a non-cash item.

 

Finance income decreased to US$300,000 (11 months to 31 December 2014: US$444,000) due to the repayment of US$1,950,000 of loans from MGR during the year.

 

Overall loss on ordinary activities before taxation increased to US$2,610,000 (11 months to 31 December 2014: loss of US$1,411,000). Basic and fully diluted loss per share for the period was US7.99¢ (11 months to 31 December 2014: US4.40¢).

 

Excluding non-cash items, loss on ordinary activities before taxation for the year ended 31 December 2015 reduced by US$57,000 to US$220,000 (11 months to 31 December 2014: loss of US$277,000), a 21% reduction.

 

Foreign exchange translation differences of US$978,000 (2014: US$64,000) arose, which relate to Amedeo's indirect investment in YZJ Offshore. The translation of Amedeo's indirect investment in YZJ Offshore is also a non-cash item.

 

Taking the balance sheet foreign exchange translation differences into account, overall, total comprehensive loss for the period was US$3,588,000 (11 months to December 2014: loss of US$1,475,000).

 

At the period end, the carrying value on the balance sheet of investments in associates fell to US$16,213,000 (2014: US$19,205,000), primarily as a result of the share of loss from Amedeo's stake in YZJ JV. Current assets fell to US$5,044,000 (2014: US$5,576,000). Cash as at 31 December 2015 was US$2,340,000 (2014: US$1,179,000).

 

Subsequent to the year end, MGR paid back a further loan of US$1,717,000. Consequently, at the date of these financial statements, the Group had approximately US$4,152,000 of cash and cash equivalent balances.

 

Trade payables at the period end decreased to US$147,000 (2014: US$344,000) due to timing differences on when invoices were paid around the period end.

 

Overall, at the period end, net and total assets were US$21,110,000 (2014: US$24,437,000) and US$21,257,000 (2014: US$24,781,000), respectively.

 

 

Share Consolidation

 

During the year, and following passing of a resolution at the last Annual General Meeting, the shares of Amedeo Resources plc underwent a 1 for 100 consolidation. This had the effect of reducing the number of shares outstanding by a factor of 100 from 3,265,384,300 ordinary shares of 0.1p each to 32,653,843 ordinary shares of 10p each.  The Company does not hold any shares in treasury. At the year end and the date of these financial statements, the total number of Ordinary Shares in the Company with voting rights was 32,653,843.

 

 

Share based payment awards

 

During the year under review, and in line with Amedeo's policy of aligning Directors' incentives with those of shareholders as well as keeping cash remuneration modest, Amedeo awarded Glen Lau, the Company's Chief Executive Officer, 2,607,211 warrants to subscribe for new ordinary shares of 10p in the Company. The warrants have share price performance and time vesting conditions. They have an exercise price of 100 pence compared with the share price of 35 pence at the time of the award.

 

Outlook

 

With the current difficulties with the rig market, winning new orders at YZJ Offshore has been difficult. Amedeo do not expect this situation to continue in the medium term, and when the recovery does come, YZJ Offshore, having proved itself with Explorer 1 and with its capability to produce advanced, specialised and localised rigs as well as a range of other vessels, is well placed to take advantage of it. Depressed iron ore prices have not helped MGR. It, however, remains profitable and is exploring other opportunities.

 

Amedeo remains focused on long term strategy of building a vertically integrated business in the resource and energy and related infrastructure sectors.

 

The Board looks forward confidently to the future.

 

Annual general meeting

 

A notice convening the annual general meeting of the Company ("AGM") to be held at 201 Temple Chambers, 3-7 Temple Avenue, London EC4Y 0DT at 2:00pm on 8 July 2016 will be sent to shareholders today. 



 

COSOLIDATED STATEMENT OF COMPREHENSIVE INCOME                                                                

for the year ended 31 December 2015



Year ended
31 Dec 2015

11 months ended 31 Dec 2014








Note

$'000

$'000





Revenue


128

91

 

  

Administrative expenses

4

(651)

(812)

Share based payments


(261)

(15)

Share of loss of associates

5

(2,014)

(922)

Foreign currency loss


(115)

(197)



______

______

Loss from operations


(2,913)

(1,855)





Profit on sale of quoted shares


3

-

Finance income

7

300

444



______

______

Loss on ordinary activities before taxation


(2,610)

(1,411)





Taxation

8

-

-



______

______

Loss for the year/period              


(2,610)

(1,411)





Basic and diluted loss per share

9

(7.99)¢

(4.40)¢

 

Other Comprehensive Income

Foreign exchange translation difference


(978)

(64)



______

_____

Total Comprehensive Expense for the year/period


(3,588)

(1,475)

 

The accompanying notes are an integral part of these financial statements.

All activities are derived from continuing operations.

The Company has elected to take exemption under section 408 of the Companies Act 2006 from presenting the Company statement of comprehensive income. The loss for the Company for the year ended 31 December 2015 was US$450,000 (11 months to 31 December 2014: loss of US$408,000).



 STATEMENTS OF CHANGES IN EQUITY

for the year ended 31 December 2015

               

Group


Share capital

Share premium account

Share-based payment reserve

 

Foreign currency translation reserve

Accumulated Losses

Total equity attributable to equity holders of parent


$'000

$'000

$'000

$'000

$'000

$'000

At 1 February 2014

4,923

21,643 

289

1,523

(10,822)

17,556

Loss for the period

-

-

-

-

(1,411)

(1,411) 

Share-based payments

-

-

15

-

-

15

Foreign exchange

-

-

-

(64)

-

(64)

Issue of share capital

881

7,902

-

-

-

8,783

Issue costs

-

(442)

-

-

-

(442)


______

________

________

________

_________

________

At 31 December 2014

5,804

29,103

304

1,459

(12,233)

24,437








Loss for the year

-

-

-

-

(2,610)

(2,610)

Share-based payments

-

-

261

-

-

261

Foreign exchange

-

-

-

(978)

-

(978)


______

_______

______

______

_______

______

At 31 December 2015

5,804

29,103

565

481

(14,843)

(21,110)


______

________

________

________

_________

________

 

            Company

Share capital

Share premium account

Share-based payment reserve

 

Foreign currency translation reserves

Accumulated Losses

Total equity attributable to equity holders of parent


$'000

$'000

$'000

$'000

$'000

$'000

At 1 February 2014

4,923 

21,643

289

922

(9,597)

18,180

Loss for the period

-

-

-

-

(408)

(408)

Share-based payments

-

-

15

-

-

15

Issue of share capital

881

7,902

-

-

-

8,783

Issue costs

-

(442)

-

-

-

(442)


______

______

______

______

_______

______

At 31 December 2014

5,804

29,103

304

922

(10,005)

26,128








Loss for the year

-

-

-

-

(450)

(450)

Share-based payments

-

-

261

-

-

261


______

_______

______

______

_______

______

At 31 December 2015

5,804

29,103

565

922

(10,455)

25,939


______

________

________

________

_________

________

 

The accompanying notes are an integral part of these financial statements.

 

STATEMENTS OF FINANCIAL POSITION

as at 31 December 2015



                          Group

                         Company

Assets

Note

 Dec 2015

Dec 2014

 Dec 2015

Dec 2014

Non-current assets


$'000

$'000

$'000

$'000

Investment in subsidiaries

10

-

8

8

Investment in associates

11

16,213

19,205

-

-



_____

_____

_

_



16,213

19,205

8

8







Current assets






Loans receivable

12

2,177

3,813

24,809

24,867

Investments in quoted shares

13

-

7

-

7

Investment in unquoted preference shares

14

-

33

-

33

Other receivables

15

527

544

468

250

Cash and cash equivalents


2,340

1,179

759

1,017



____

____

______

_____



5,044

5,576

26,036

26,174







Total assets


21,257

24,781

26,044

26,182







Liabilities






Current liabilities






Trade and other payables

16

(147)

(344)

(105)

(54)



____

___

____

____

Total liabilities


(147)

(344)

(105)

(54)









______

______

______

______

Net assets


21,110

24,437

25,939

26,128







Equity






Called up share capital

17

5,804

5,804

5,804

5,804

Share premium account


29,103

29,103

29,103

29,103

Share-based payment reserve

18

565

304

565

304

Foreign currency translation reserve


481

1,459

922

922

Accumulated losses


(14,843)

(12,233)

(10,455)

(10,005)



_____

_____

_____

_____

Total equity


21,110

24,437

25,939

26,128

 

Approved by the Board and authorised for issue on 13 June 2016 and signed on behalf of the Board by

 

Glen Lau

Director

Registered Number 05216336

The accompanying notes are an integral part of these financial statements.

STATEMENTS OF CASH FLOWS



Group

Company

 



Year ended   31 Dec 2015

11 months ended 31 Dec 2014

Year ended       31 Dec 2015

11 months ended 31 Dec 2014









$'000

$'000

$'000

$'000

Loss for the period before tax


(2,610)

(1,411)

(450)

(408)

Adjustments for:






Share-based payments


261

15

261

-

Share of loss of associates


2,014

922

-

-

Change in receivables


17

(492)

(218)

(198)

Change in  payables


(197)

144

51

(78)

Loss on sale of quoted shares


(3)

-

(3)

-

Provision for unquoted preference shares


33

-

33

-

Finance income


(300)

-

(300)

-

Unrealised FX losses


86

-

86

-



_____

_____

_____

_____

Cash used in operating activities


(699)

(822)

(540)

(684)







Investing activities






Receipt on sale of quoted shares


10

-

10

-

Investment in associates


-

(5,059)

-

-

Loans made to associates


(400)

(1,863)

-

(1,863)

Loans made to subsidiaries


-

-

(28)

(5,059)

Loans repaid by associates


1,950

-

-

-



______

______

______

______

Net cash from (used in) investing activities


1,560

(6,922)

           (18)

(6,922)







Financing activities






Proceeds from share issue


-

8,783

-

8,783

Share issue costs


-

(442)

-

(442)

Finance income


300

-

300

-



_______

_______

_______

_______

Net cash from financing activities


300

8,341

300

8,341



_______

_______

_______

_______







Net increase/(decrease) in cash and cash equivalents


1,161

597

(258)

735







Cash and equivalents at beginning of year/period


1,179

582

1,017

271

Effects of currency translation on cash and cash equivalents


-

-

-

11







Cash and equivalents at end of year/period


2,340

1,179

759

1,017

 

 

 

The accompanying notes are an integral part of these financial statements.

            NOTES TO THE GROUP FINANCIAL STATEMENTS

1. Accounting policies

The principal accounting policies are summarised below. They have all been applied consistently throughout the period and the preceding year unless stated otherwise.

 

Basis of accounting

The financial statements of the Group and the Company have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations issued by the International Accounting Standards Board as adopted by European Union.

 

The financial statements have been prepared under the historical cost convention, with the exception of financial instruments, some of which are measured at fair value.

 

The accounting policies applied are the same as those applied in the financial statements for the year ended 31 December 2014. New standards introduced during the period had no material impact on the results or net assets of the company.

 

Standards and interpretations in issue but not yet effective

A number of new standards and amendments to existing standards have been published which are mandatory, but are not effective for the year ended 31 December 2015. The Directors do not anticipate that the adoption of these revised standards and interpretations will have a significant impact on the figures included in the Financial Statements in the period of initial application other than the following:

IFRS 9 Financial Instruments

The standard makes substantial changes to the measurement of financial assets and financial liabilities. There will only be three categories of financial assets whereby financial assets are recognised at either fair value through profit and loss, fair value through other comprehensive income or measured at amortised cost. On adoption of the standard, the Group will have to re-determine the classification of its financial assets based on the business model for each category of financial asset. This is not considered likely to give rise to any significant adjustments other than reclassifications.

 

The principal change to the measurement of financial assets measured at amortised cost or fair value through other comprehensive income is that impairments will be recognised on an expected loss basis compared to the current incurred loss approach. As such, where there are expected to be credit losses these are recognised in profit or loss. For financial assets measured at amortised cost the carrying amount of the asset is reduced for the loss allowance.

For financial assets measured at fair value through other comprehensive income the loss allowance is recognised in other comprehensive income and does not reduce the carrying amount of the financial asset.

Most financial liabilities will continue to be carried at amortised cost, however, some financial liabilities will be required to be measured at fair value through profit or loss, for example derivative financial instruments, with changes in the liabilities' credit risk recognised in other comprehensive income. The Group expects this to have some impact due to the value of financial instruments across its entities.

The standard is effective for periods beginning on or after 1 January 2018 but is yet to be endorsed by the EU. 

IFRS 15- Revenue for contracts with customers

The standard has been developed to provide a comprehensive set of principles in presenting the nature, amount, timing and uncertainty of revenue and cash flows arising from a contract with a customer. The standard is based around five steps in recognising revenue:

 

1.     Identify the contract with the customer;

2.     Identify the performance obligations  in the contract

3.     Determine the transaction price;

4.     Allocate the transaction price; and

5.     Recognise revenue when a performance obligation is satisfied.

On application of the standard the disclosures are likely to increase. The standard includes principles on disclosing the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers, by providing qualitative and quantitative information.

The standard is effective for periods beginning on or after 1 January 2018 but is yet to be endorsed by the EU.

IFRS 16 - Leases

The standard is effective for periods beginning on or after 1 January 2019, but can be applied before that date if the Company also applies IFRS 15 revenue from Contracts with Customers. IFRS 16 eliminates the classification of leases as either operating leases or finance leases for a lessee. Instead all leases are treated in a similar way to finance leases applying IAS 17. Leases are 'capitalised' by recognising the present value of the lease payments and showing them either as lease assets (right-of-use assets) or together with property, plant and equipment. If lease payments are made over time, a company also recognises a financial liability representing its obligation to make future lease payments. IFRS 16 replaces the typical straight-line operating lease expense for those leases applying IAS 17 with a depreciation charge for lease assets (included within operating costs) and an interest expense on lease liabilities (included within finance costs).

 

Going concern

The Group's business activities, together with the financial position of the Group and the factors likely to affect its future development, performance and position are set out in the Chairman's Statement on pages 4 to 7.

As at the year end, the Group had US$2,340,000 of cash. The Group's administrative expenses were US$651,000 (11 months to 31 December 2014: US$812,000). The Directors do not expect these cash costs to rise substantially in the foreseeable future. As at the date of signature of these financial statements the Group had US$4,152,000 of cash and equivalent balances, following the repayment of a loan by MGR in February 2016. 

On the basis of the above, the Directors believe that sufficient funds will be available to support the going concern status of the Group over the next 12 months following the approval of these financial statements. Consequently, the Directors believe that it is appropriate to prepare the Group's financial statements on a going concern basis.

Basis of consolidation

Where the Company has the power, either directly or indirectly, to govern the financial and operating policies of another entity or business so as to obtain benefits from its activities, it is classified as a subsidiary. The consolidated financial statements present the results of the Company and its two subsidiary undertakings, Amedeo Resources (Asia) PTE Ltd ("Amedeo Asia") and Creon Corporation Limited ("Corporation"), the latter of which is dormant, as if they formed a single entity. Inter-company transactions and balances between Group companies are therefore eliminated in full.

 

Revenue

The revenue received from the services provided for MGR is recognised in the accounting period in which the services are rendered.

 

Investments in subsidiaries

Investments in subsidiary undertaking is stated at cost less any provision for impairment.

 

Investments in unquoted and quoted shares

Investments in unquoted shares and quoted shares (should the Group invest in any in the future) are/will be initially measured at cost, excluding transaction costs. Subsequent measurement of all investments is at fair value. The fair values of listed investments will be based on bid prices at the financial year end date.

 

Assets held by the Group at the period end include unlisted ordinary equity shares and unlisted redeemable preference shares.

 

When managing its investments, the Group aims to profit from changes in the fair value of equity investments. Accordingly, all quoted equity investments, should they be held, will be designated as "at fair value through the profit and loss" and will be subsequently recorded in the statement of financial position as current assets at fair value.

 

Investment in associates

Where the Company, or its wholly owned subsidiary, has significant influence over an entity, normally having an interest being more than 20% and less than 50%, such as Amedeo Asia's holdings in YZJ JV and MGR, then that investment is classified as an associate and is equity accounted, see notes 5 and 11.

 

Under the equity method, on initial recognition the investment in an associate is recognised at cost, and the carrying amount is increased or decreased to recognise the Company's share of the profit or loss of the investee after the date of acquisition. The Company's share of the associate's profit or loss is recognised in its statement of comprehensive income. Distributions received from an associate reduce the carrying amount of the investment.

 

After application of the equity method, an impairment review is carried out to determine whether it is necessary to recognise any additional impairment loss with respect to its net investment in the associate.

 

Loans receivable

Loans receivable are valued at nominal amount less provisions against recoverability. The maximum exposure in respect of the loan portfolio at the period end is the amount receivable shown in note 12. No hedging transactions have been entered into with respect to the loan portfolio.

 

Impairment

At each financial period end date, the Group reviews the carrying amounts of its non-current assets with finite lives 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. Where it is not possible to estimate the recoverable amount of the individual asset, the Group estimates that recoverable amount of the cash-generating unit to which the asset belongs.

 

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank, in hand and demand deposit and other short term highly liquid investments of three months or less at inception that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

Financial liabilities and equity

Financial liabilities and equity are classified according to the substance of the financial instrument's contractual obligations rather than the financial instrument's legal form. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.

 

Financial assets

Apart from its unquoted investments and investments in associates, the Group has only financial assets classified as loans and receivables. The Group's loans and receivables comprise loans and other receivables and cash and cash equivalents in the statement of financial position.

 

Trade payables

Trade payables are not interest bearing and are stated at their nominal value.

 

Equity instruments

Equity instruments issued by the Company are recorded as the proceeds received, net of direct issue costs.

 

Current and deferred tax

Taxation is applied on a current basis in accordance with IAS 12 "Income taxes". Deferred taxation is provided in full on temporary differences that result in an obligation at the balance sheet date to pay more tax or a right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law. Temporary differences arise from differences between the carrying amounts of assets and liabilities for financial reporting and the amounts used for taxation purposes. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which unused tax losses and credits can be utilised. Deferred tax assets and liabilities are not discounted.

 

Deferred tax assets and liabilities are offset 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.

 

Foreign currencies

The financial information is presented in United States Dollars which is the functional currency of the Company.  The presentational and functional currency changed from United Kingdom Pounds Sterling in the 11 months ended 31 December 2014.

 

Transactions in foreign currencies are translated at the rate prevailing at the date of transaction, with any differences recognised to the Income Statement. Monetary assets and liabilities denominated in foreign currencies in each company are translated at the rates of exchange prevailing at the accounting date.

 

On consolidation, revenues, costs and cash flows of undertakings abroad are included in the Group income statement at average rates of exchange for the year. The assets and liabilities denominated in foreign currencies are translated into United States Dollars using rates of exchange at the reporting date.

 

Exchange differences on the re-translation of opening net assets and results for the year of foreign subsidiary undertakings and associates are dealt with through other comprehensive income net of differences on loans denominated in foreign currency. Other gains and losses arising from foreign currency transactions, including trading, are included in the consolidated income statement.

 

Share-based payments

All share-based payments are accounted for in accordance with IFRS 2 - "Share-based payments". The Company issues equity-settled share-based payments in the form of share warrants to certain Directors and key advisers. Equity settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date of equity-settled share-based payments is expensed on a straight line basis over the vesting period, based on the Company's estimate of shares that will eventually vest.

 

Fair value is estimated using a Black Scholes probability valuation model. The expected life used in the model has been calculated by reducing the total contractual life to management's best estimate of the expected date of exercise.

 

Critical accounting estimates and judgements

The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

 

(a) Impairment of investment in associated company: 

The investment in the associated company is stated on an equity accounting basis supported by the audited financial statements of the associate. The Group is also required to determine whether any impairment loss should be recognised in accordance with IAS 39. The recoverable amount is determined based on value in use calculations. In determining the value in use, the Company estimates:

(i) its share of the present value of the estimated future cash flows expected to be generated by the associate or joint venture, including the cash flows from the operations of the associate or joint venture and the proceeds from the ultimate disposal of the investment; or

(ii) the present value of the estimated future cash flows expected to arise from dividends to be received from the investment and from its ultimate disposal. 

It then compares the product of these estimates with the total carrying value of the associate. 

 

(b) Recoverability of loans receivable:

Separately, the Company determines the recoverability of its loans to its associate, MGR. As the loans were used to make working capital available to MGR, consideration of the recoverability of the loans is related to consideration of the carrying value of the associate. 

 

2. Segmental reporting

No segmental analysis is considered necessary as the Directors believe that the Group has only one segment in the period under review, being that of an investment company with a focus on investments in, but not exclusively, the resources and/or resources infrastructure sectors, with no specific national or regional focus.

3. Reference date and presentational currency

 

In the prior period, the Directors decided to change the accounting reference date from 31 January to 31 December. This is more typical in the resource and offshore sector and generally. As a result of this change not all amounts disclosed in the financial statements for the corresponding period may be directly comparable.

 

4. Administrative expenses

 

Expenses included in administrative expenses are analysed below


Year ended on
31 Dec 2015

11 months ended 31 Dec 2014


$'000

$'000

Administration, legal, professional and financial costs

508

664

Directors' fees

143

140

Unrecovered VAT

-

8


_____

_____


651

812


_____

_____

The auditor's fees in the year ended 31 December 2015 for the audit of the parent company and the consolidated accounts were in respect of taxation services amounted to US$Nil (11 months to 31 December 2014: US$50,000) and auditor's fees payable to the associates of the company's auditors in respect of audit of the subsidiary's financial statements were US$35,000 (11 months to 31 December 2014: US$30,000). In addition, fees for non-audit services in respect of taxation services in the year ended 31 December 2015 were US$Nil (11 months to 31 December  2014: US$47,500).

 

5. Share of loss of associates


Year ended 31   Dec 2015

11 months ended 31 Dec 2014


$'000

$'000

YZJ Offshore Engineering Pte Ltd

 

(2,059)

(942)

MGR Resources Pte Ltd

45

20


_____

_____


(2,014)

(922)


_____

______

 

The Company's wholly-owned Singapore-registered subsidiary, Amedeo Asia, holds a 47.51% investment in YZJ JV, a Singapore registered company. The loss of US$2,059,000 represents Amedeo Asia's share of YZJ JV's loss for the year ended 31 December 2015 (11 months to 31 December 2014: US$942,000) and Amedeo Asia's share of  MGR's income for the year  ended 31 December 2015 of US$45,000 (11 months to 31 December 2014: US$20,000).

 

6. Foreign exchange losses


Year ended
31 Dec 2015

11 months ended 31 Dec 2014


$'000

$'000

Loss on conversion of loans made to associates

86

181


____

____




In June 2014, the Company made a foreign currency denominated, interest free, unsecured loan to its wholly-owned subsidiary, Amedeo Asia, totalling GBP1.2 million (translated to US$2.044 million in June 2014), to enable Amedeo Asia to make a convertible loan to MGR ("Convertible Loan").  At 31 December 2015, the loan of GBP1.2 million was retranslated to US$1.777 million at the reporting date, resulting in an unrealised loss on foreign exchange of US$0.086 million. See table below, which details this:

Loan from Amedeo Asia to MGR in 2014



At  1 January 2015


 $1.863m

Less: At 31 December 2015


($1.777)m

Unrealised loss on foreign exchange


US $0.086m

 

 

The Company does not hedge against movements in foreign exchange rates.

7. Loan interest


Year ended
31 Dec 2015

11 months ended 31 Dec 2014


$'000

$'000

Interest on loans made to associates

300

444


____

____

 

Interest on loans made to associates is made up of interest receivable from MGR.

8. Taxation

Year ended
31 Dec 2015

11 months ended
31 Dec 2014


$'000

$'000

UK Corporation tax



Factors affecting tax charge in the year



Loss on ordinary activities before tax

(2,010)

(1,411)

Loss on ordinary activities at the effective rate

of corporation tax 20% (11months to 31 December 2014: 20%)

(402)

 

(282)

Unrelieved losses

402

282


-

-


___

___

Deferred income tax assets are recognised for tax losses carried-forward to the extent that the realisation of the related tax benefit through future taxable profits is probable. The Group does not recognise any deferred income tax assets relating to carried forward tax losses as there is insufficient evidence that any deferred tax asset recognised will be recovered.

 

9. Loss per share

 

The basic and diluted loss per share for the year to 31 December 2015 was US7.99¢ (11 months to 31 December 2014: US4.40¢). The calculation of loss per share is based on the loss of US$2,610, 000 for the year ended 31 December 2015 (11 months to 31 December 2014: US$1,411,000 loss) and the weighted average number of shares in issue during the year to 31 December 2015 of 32,653,843 (11 months to 31 December 2014:32,104,388). The prior period numbers have been restated to reflect a consolidation of the number of shares in issue to 10 pence each, which was approved at the AGM on 30 June 2015 and was effective from 5.30pm on that date.

 

No warrants were exercised in the year ended 31 December 2015. The outstanding warrants represent approximately 15% of the Company's current issued share capital and are considered by the Directors to be anti-dilutive, given that the various exercise prices of warrants are all in excess of the average share price for the year.

 

10. Investment in subsidiaries


Company


31 Dec 2015

31 Dec 2014

Cost or valuation

$'000

$'000

At 31December 2014

8

8


___

___

At 31 December 2015

8

8


___

___

The investment in subsidiaries shown in above is the investment in Amedeo Asia.

The Company's subsidiaries were as follows:

 

Name

Country of incorporation

Proportion of ownership interest



Dec 2015

Dec 2014

Creon Corporation Limited

England

100%

100%

Amedeo Resources (Asia) Pte Limited ("Amedeo Asia")

Singapore

100%

100%

 

Creon Corporation Limited was incorporated on 24 November 2011 and acquired by the Company on 16 December 2011. It remains dormant. Amedeo Asia was incorporated on 10 July 2012 to hold the Company's Asian-based investments.

 

 

 

11. Investments in associates

 

Amedeo's wholly owned subsidiary, Amedeo Asia has a holding in YZJ JV, which is incorporated in Singapore, of 47.51%.  YZJ JV has a 40% stake in Jiangsu Yangzijiang Offshore Engineering Co. Ltd ("YZJ Offshore"), which is incorporated in Singapore. YZJ JV equity accounts for its 40% interest in YZJ Offshore, and Amedeo Asia equity accounts for its 47.51% stake in YZJ JV. Amedeo provided an interest free unsecured loan to Amedeo Asia to make the 47.51% stake in YZJ JV.

 

Amedeo Asia also has a 49% stake in MGR, which is incorporated in Singapore. Amedeo Asia equity accounts for its 49% stake in MGR. In the year to 31 December 2015 the Group received a dividend from MGR amounting to US$: Nil (11 months to 31 December 2014: US$Nil).

 


    YZJ JV


MGR


Total


31 Dec 15

31 Dec 14 


31 Dec 15

31 Dec 14

 


31 Dec 15

31 Dec 14

Amounts relating to associates

$'000

$'000


$'000

$'000


$'000

$'000

Current assets

973

1,086


10,407

14,496


11,380

15,582

Non-current assets

32,282

38,524


-

-


32,282

38,524

Current liabilities

(9)

(16)


(7,568)

(11,656)


(7,577)

(11,672)

Non-current liabilities


-


(1,949)

(2,035)


(1,949)

(2,035)


______

______


_______

_______


_______

_______

Net assets

33,246

39,594


890

805


34,136

40,399


_______

_______


_______

_______


_______

_______

Group's share of net assets of associates

15,777

18,811


436

394


16,213

19,205


_______

_______


_______

_______


_______

_______










Total revenue

3

2


9,261

43,777


9,264

43,779

(Loss)/Profit

(4,334)

(2,165)


92

46


4,242

(2,119)


_______

_______


_______

_______


_______

_______

Group's share of loss of associates (see note 5)

(2,059)

(942)


45

20


2,014

(922)


_______

_______


_______

_______


_______

_______

 

 

Group's share of net assets of associates

$'000

Opening at 1 January 2015

19,205

Additional investment in associates

-

Group's share of loss of associates

(2,014)

Foreign exchange translation difference

(978)

Closing at 31 December 2015

16,213

  

 

 

12. Loans receivable


Group

Company

 


31 Dec 2015

31 Dec 2014

31 Dec 2015

31 Dec 2014


$'000

$'000

$'000

$'000

Balance brought forward

3,813

1,950

24,867

18,090

Loans advanced

400

2,044

28

6,958

Loans repaid

(1,950)

-

-

-

Foreign exchange loss

(86)

(181)

(86)

(181)


______

______

______

______

Balance carried forward

 

2,177

3,813

24,809

24,867


______

______

______

______

During the year, the Group made a loan to an associate, MGR, of US$400,000 (11 months to 31 December 2014: US$2,044,000), and received repayment of a loan to MGR of US$1,950,000.

The Directors consider that the carrying amount of loans receivable approximates to their fair value.

13. Investments in quoted shares


Group and Company


31 Dec 2015

31 Dec 2014

Cost or valuation

$'000

$'000

At 1 January

7

7

Sales Proceeds

(10)

-

Profit on disposal

3

-


_____

_____


-

7

At 31 December 2015

 

_____

_____

 

The investment represents 2,775 ordinary shares in the capital of Ashcourt Rowan PLC. This investment has been disposed of during the year for a sale value of US$10,000.

 

14. Investment in unquoted preference shares


Group and Company


31 Dec 2015

31 Dec 2014

Cost or valuation

$'000

$'000

Cost

660

660

Provision brought forward

(627)

(627)

Impairment  during the year

(33)

-


_______

_______


-

33


_______

_______

 

15. Other receivables


            Group

Company


31 Dec 2015

31 Dec 2014

31 Dec 2015

31 Dec 2014


$'000

$'000

$'000

$'000

Prepayments and sundry debtors

527

544

468

250

 

The Directors consider that the carrying amount of other receivables approximates to their fair value.

 

 

 

16. Trade and other payables

Current liabilities

Group

         Company


31 Dec 2015

31 Dec 2014

31 Dec 2015

31 Dec 2014


$'000

$'000

$'000

$'000

Trade payables and accruals

147

344

105

54


______

______

______

______


147

344

105

54


______

______

______

______

 

 

17.  Called up share capital


31 Dec 2015

31 Dec 2014

Allotted, called up and fully paid


Restated

Ordinary shares



In issue at beginning of the period

32,653,843

27,386,193

Issued for cash

-

5,267,650

Total Ordinary shares

32,653,843

32,653,843





$'000

$'000

Ordinary Shares of 10p each

5,179

5,179

44,190,545 Deferred Shares of 0.9p each

625

625


_____

_____

Total Share Capital

5,804

5,804

 

During the year, the Company announced a share capital reorganisation so that every 100 Existing Ordinary Shares of 0.1p be consolidated into 1 ordinary share of 10p. This reduced number of ordinary shares in issue from 3,265,384,300 to 32,653,843.

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. 

18. Warrants

The Company had 1,915,446 outstanding warrants at 31 December 2014. In the year ended 31 December 2015, 3,107,211 warrants were granted per the table below. This leaves 5,022,657 warrants outstanding at 31 December 2015. All the warrants can be exercised between the date of grant and the end of the exercise period shown below.

 

Date of grant  

End of

Exercise period

Number of Warrants granted

Exercise price

Number exercised

Number of Warrants at 31 Dec 2015

31 August 2012

31 August 2017

710,000

50 pence

50,000

660,000




5,072,657


50,000

5,022,657




________


 _______ 

________ 

 

The weighted average exercise price for the warrants at the beginning of the period was 52 pence.

The weighted average exercise price for the warrants at the end of the period was 81 pence.

The weighted average remaining contractual life of outstanding warrants as at the end of the period was 6.78 years.

Two warrants were granted during the year, the first was granted on 1 February 2015 with 500,000 warrants whilst the second was granted on 12 March 2016 with 2,607,211 warrants.

The charge in the current year of US$261,000 relates to the 3,107,211warrants issued during the year.

The following table sets out the warrants held by Directors and former Directors, or entities connected with the Directors, who served during the year and up to the date of this report:

Warrant holder  

Number of Warrants

Date of grant  

End of
exercise period

Exercise price

Number exercised

Notes

 (1) Fulton Capital Management Limited is a company owned and controlled by Mr Lau, the Company's chief executive officer

(2) During the year, Mr Lau was issued 2,607,211 warrants with an exercise price of 100p and an expiration date of 12 March 2025.

(3) During the year, Mr Karim acquired from a third party 333,157 warrants with an exercise price of 100p and an expiration date of 1 February 2025.

 

The share based payment charge in the period under review of US$261,000 relates to the 3,107,211 warrants issued in 2015 (period ended 31 December 2014: US$15,000). The Black Scholes pricing model was used to calculate the share based payment charge.

 

 

19. Asset value per share

 

The net asset value per share at 31 December 2015 was US$0.65 (31 December 2014: US$0.75). Net asset value is based on the net assets as at 31 December 2015 of US$21.1 million (31 December 2014: US$24.44 million) and on the number of ordinary shares in issue at 31 December 2015 being 32,653,843 ordinary shares (31 December 2014:  Restated 32,653,843).

 

20. Staff numbers and costs

The average monthly number of employees of the Group, including Directors, during the period was 4 (2014: 4). The Directors are considered the key management of the Group. The aggregate remuneration of the Directors is set out in the remuneration report. All employees are Directors of the Company, therefore no remuneration was paid to staff of the Company (11 months to 31 December 2014: US$: Nil).

21. Related party transactions

In April 2014, Amedeo signed a management services agreement with MGR to provide marketing assistance and services to MGR. During the year, MGR paid US$128,000 to Amedeo in respect of these services (11 months to 31 December 2014: US$91,000).

During the year, Amedeo made a loan of US$400,000 to MGR and MGR repaid a loan of US$1,950,000 to Amedeo.. The Group earned US$300,000 in interest on their loans to MGR for the year to 31 December 2015 (11 months to 31 December 2014: US$444,000). At the year end US$300,000 of interest was outstanding and is included in other receivables (at 31 December 2014: US$444,000) which has been paid in full subsequent to the year end in March 2016. Also, subsequent to year end, MGR repaid a loan of US$1,717,000 to Amedeo, in February 2016. Following this, the only remaining loan balance with MGR is the US$400,000 loan made in 2015.

22. Financial instruments and risk management

 

Investments

All of the Group's actual and intended investments present a risk of loss of capital. Such investments are subject to investment specific, industry specific, sector specific, market specific and macro-economic risks including, but not limited to, international economic conditions, international financial policies and performance, governmental events and changes in laws. Moreover, the Company may only have a limited ability to vary its investments in response to changing conditions.

The success of the Group is dependent upon the identification, making, management and realisation of suitable investments. There can be no guarantee that such investments can or will be made or that such investments will be successful. Poor performance by an investment could severely affect the net asset value per share of the Company.

The Group may have minority interests in companies, partnerships and ventures. As such it may be unable to exercise control over the operations of such investments or exercise control over any exit, or timing of any exit, by other investors in such investments. In addition, the managements of the investee companies targeted by the Directors may not always welcome proactive shareholder involvement.

The Group may dispose of investments in certain circumstances and may be required to give representations and warranties about those investments. In certain cases such representations and warranties may be challenged. This may lead to the Group having to pay damages to the extent that such representations and warranties turn out to be inaccurate or other terms of sale are breached.

There can be no certainty that the value of investments as reported from time to time will in fact be realised.

 

Investments in unquoted companies

It is intended that the Group's investment portfolio will comprise interests predominantly in unquoted, growth companies, which may be difficult to value and/or realise. Investments in unquoted growth companies may involve greater risks than is customarily associated with investments in larger, more established quoted companies. In particular, such companies may have limited product offerings, markets or resources and may be dependent on a small number of key individuals. As at 31 December 2015, the Group's holding of unquoted investments was valued at approximately US$16.2 million (31 December 2014: US$19.2 million).

Market risk

It is possible that certain investments will represent a significant proportion of the Company's total assets, such as Amedeo Asia's investment in YZJ JV. As a result, the impact on the Company's performance and the potential returns to investors will be adversely affected to a greater degree if any one of those investments were to perform badly than would be the case if the Company's portfolio of investments was more diversified. At 31 December 2015, the overall investment allocation was a portfolio of 2 investments all of which were in unquoted companies. As at 31 December 2015, the Company's investment in YZJ JV represented 98% of the value of the Company's investment portfolio and almost 76% of the Group's gross assets.

Interest rate risk

The majority of the Group's financial assets and liabilities are not interest bearing. As a result, the Group is not subject to significant amounts of risk due to fluctuations in the prevailing levels of market interest rates. Any cash and cash equivalents are held in short notice accounts. The table below summarises the Group's exposure to interest rate risks.

As at 31 December 2015


Non-interest

Fixed




bearing

interest

Total

Assets


$'000

$'000

$'000

Investments 

16,213

-

16,213

Loans to MGR


-

2,177

2,177

Other receivables


527

-

527

Cash and cash equivalents


2,340

-

2,340





______

______

______

Total financial assets



19,080

2,177

21,257





______

______

______

Liabilities






Trade and other payables


147

-

147





______

______

______

Total financial liabilities


147

-

147



______

______

______

 

As at 31 December 2014


Non-interest

Fixed




bearing

interest

Total

Assets


$'000

$'000

$'000

Investments

19,212

33

19,245

Loan to MGR


-

3,813

3,813

Other receivables


544

-

544

Cash and cash equivalents


1,179

-

1,179





______

______

______

Total financial assets



20,935

3,846

24,781





______

______

______

Liabilities






Trade and other payables


344

-

344





______

______

______

Total financial liabilities


344

-

344



______

______

______

Hedging and currency risk

As the current focus of the Company's investment has been outside of the UK, the majority of the Company's investments are denominated in US$. The Company's accounting currency is also US$.

Liquidity risk

The Company's financial instruments include minority equity investments in unquoted Singapore-registered companies. As a result, the Company may not be able to quickly liquidate some of its investments in these instruments at an amount close to their fair value in order to meet its liquidity requirements.

The Company has a procedure to manage liquidity risk whereby the board meet regularly to review investment holdings and current and anticipated levels of financial liabilities. Where liquidity of the investments within the portfolio is believed to be at a level which may adversely affect the Company's ability to service its financial obligations, the board will consider taking action to improve cash flow, which may include utilising bank overdrafts or other credit arrangements.

The table below details the contractual, undiscounted cash flows of the Group's financial liabilities.

31 December 2015



$'000

$'000

$'000

$'000

Trade and other payables


147

-

-

-




______

______

______

______

Total




147

-

-

-





______

______

______

______









31 December 2014







Trade and other payables



344

-

-

-




_______

______

______

______

Total



344

-

-

-




_______

______

______

______

 

Credit risk

Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Group. The carrying amounts of financial assets best represent the maximum credit risk exposure at the balance sheet date.

 

Capital risk management

The Company is currently financed solely through equity and manages its capital to ensure that it has sufficient financial resources to implement its planned operations while maximising the return to stakeholders. Please see the Strategic Report on page 7 for details.

 

23. Subsequent events

 

Save for the repayment by MGR of US$1,717,000 of the loan due to Amedeo in February 2016, there are no significant subsequent events to report. 

 

24. Ultimate controlling party

 

The ultimate controlling party is Qatar Investment Corporation, which holds 61.1% of the issued Ordinary Share capital of the Group. Qatar Investment Corporation is a wholly owned investment vehicle of Mr Ghanim Al Saad, Non-Executive Chairman of the Company.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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