Property, PLANT AND EQUIPMENT

Property, plant and equipment are stated at historical cost less subsequent accumulated depreciation and any accumulated impairment losses. Depreciation is provided at rates calculated to write each asset down to its estimated residual value evenly over its expected useful life, as follows:

 

Land and Buildings                                                             over 50 years

Motor Vehicles                                                                     over 3 years

Fixtures and Equipment                                                      over 3 years

Plant and Equipment                                                           over 2 - 5 years

 

LAND AND BUILDINGS

Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the statement of financial position at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Land that is held under lease for the use in agriculture and forestry is stated at cost less any subsequent depreciation.

 

Depreciation is recognised so as to write off the cost of the assets (other than freehold land and properties under construction) less their residual values over their useful lives, using the straight-line method. For leasehold land and buildings, the useful life is the period of the lease. The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis. Freehold land is not depreciated.

 

IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT

At each statement of financial position date, the Group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

 

Where there has been a change in economic conditions that indicate a possible impairment in a cash-generating unit, the recoverability of the net book value relating to that field is assessed by comparison with the estimated discounted future cash flows based on management's expectations of future oil prices and future costs.

 

The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

 

Where conditions giving rise to impairment subsequently reverse, the effect of the impairment charge is also reversed as a credit to the income statement, net of any depreciation that would have been charged since the impairment.

 

 

Impairment of exploration and evaluation assets and property, plant and equipment

Whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, an asset is reviewed for impairment. An asset's carrying value is written down to its estimated recoverable amount (being the higher of the fair value less costs to sell and value in use) if that is less than the asset's carrying value. Impairment losses are recognised in profit or loss immediately. Impairment reviews for intangible exploration and evaluation assets are carried out on the basis of mineral/gemstone fields with each field representing a single CGU. An impairment review is undertaken when indicators of impairment arise but typically when one of the following circumstances applies:

 

•       unexpected geological occurrences that render the resources uneconomic;

•       title to the asset is compromised;

•       variations in mineral/gemstone prices that render the project uneconomic;

•       variations in the foreign currency rates; or

•       the Group determines that it no longer wishes to continue to evaluate or develop the field.

 

biological assets

A biological asset is defined as a living plant managed by an enterprise which is involved in the agricultural activity of the transformation of biological assets for sale, into agricultural produce, or into additional biological assets. The Group's biological assets mainly comprise the standing timber. The fair value of the standing timber is determined using models based on expected yields, market prices for the saleable produce, after allowing for harvesting costs and other costs yet to be incurred in getting the produce to maturity. Any changes in fair value are recognised in the income statement in the year in which they arise.

 

Forestry

IAS41 requires biological assets to be measured at fair value less costs to sell. The fair value of standing timber is estimated based on the present value of the net future cash flows from the asset, discounted at a current market-based rate. In determining the present value of expected net cash flows, the Group includes the net cash flows that market participants would expect the asset to generate in its most relevant market. Increases or decreases in value are recognised in profit or loss.  When the fair value estimates are determined to be clearly unreliable due to insufficient information being available to the directors, the biological asset is held at cost less any accumulated depreciation and any accumulated losses.

 

All expenses incurred in maintaining and protecting the assets are recognised in profit or loss. All costs incurred in acquiring additional planted areas are capitalised.

 

Agriculture

Crops which are planted from seed to undergoing the process of transformation until they become mature and productive are also stated at fair value less costs to sell. Management review the crops on an ongoing basis and should these be deemed to be unsuitable for further cultivation, full provision for impairment loss is made at that time.

 

A gain or loss arising on initial recognition of biological assets at fair value less costs to sell and from a change in fair value less costs to sell is recognised as profit or loss in the period in which it arises.

 

Agricultural produce harvested from the Group's biological assets is measured at its fair value less costs to sell. The fair value of agricultural produce is based on market prices of agricultural produce of similar size and weight or alternative estimates of fair value.

 

Costs incurred prior to the demonstration of commercial feasibility of forestry and agriculture in a particular area are written-off to profit and loss as incurred.

 

FINANCIAL ASSETS AND LIABILITIES

The Group classifies its financial assets and liabilities as follows:

 

Trade and other receivables

Trade and other receivables do not carry any interest and are initially recognised at fair value.  They are subsequently measured at amortised cost using the effective interest rate method, less any provision for impairment.

Impairment provisions are recognised when there is objective evidence that the Group will be unable to collect all of the amounts due under the terms of the receivable, the amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable.

 

Financial assets at FAIR VALUE THROUGH THE PROFIT OR LOSS ("FVTPL")

Financial investment assets are classified at fair value through profit or loss when either they are held for trading or when they are initially designated at fair value through the profit or loss.

 

The fair value is derived from the closing bid-market price at the reporting date. Gains and losses arising from changes in fair value are recognised directly in profit or loss.

 

A financial asset is classified as held for trading if:

·      it has been acquired principally for the purpose of selling in the near future; or

·      it is part of an identified portfolio of financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or

·      it is a derivative that is not designated and effective as a hedging instrument.

 

A financial asset other than a financial asset held for trading may be designated as at FVTPL upon initial recognition if:

 

·      such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

·      the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group's documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or

·      it forms part of a contract containing one or more embedded derivatives, and IAS 39 Financial Instruments: Recognition and Measurement permits the entire combined contract (asset or liability) to be designated as at FVTPL.

 

FINANCIAL LIABILITIES

Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Financial liabilities are subsequently measured at amortised cost using the effective interest method.

 

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments over the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

 

The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or expire.

 

Trade and other payables

Trade and other payables are not interest bearing and are initially recognised at fair value.  They are subsequently measured at amortised cost using the effective interest rate method.

 

Cash and cash equivalents

Cash and cash equivalents comprise cash at hand and deposits on a term of not greater than 3 months.

 

Share capital

Ordinary shares are classified as equity.  Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from proceeds.

 

LEASES

Leases where the lessor retains substantially all of the risks and rewards of ownership are classified as operating leases and the rentals payments are charged to profit or loss on a straight-line basis over the lease term.

SHARE BASED PAYMENTS

Share options and Warrants

Share option programmes entitle certain employees and Directors to acquire shares of the Company. In addition warrants may be issued as consideration for services provided. These options and warrants are granted by the Company.  The fair value of options granted is recognised as an expense with a corresponding increase in equity.  The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options based on the number expected to vest.  The fair value of the options granted is measured using the Black Scholes valuation model for options without market conditions and using the binomial method for those with market conditions, taking into account the terms and conditions under which the options were granted.  The amount recognised as an expense is adjusted to reflect the actual number of share options that vest.

 

INVENTORIES

Inventories, are stated at the lower of cost-of-production on the weighted average basis or estimated net realisable value. Cost of production includes direct labour, other direct costs and related production overheads. Net realisable value is the estimated selling price in the ordinary course of business.

 

PENSION COSTS

Contributions by the Group to personal pension schemes are charged to profit or loss on a straight-line basis as they become due.

 

TAXATION

The tax expense represents the sum of the tax currently payable and deferred tax.

 

The tax payable is based on taxable profit for the year. The Group's liability for current tax is calculated by using tax rates that have been enacted or substantively enacted by the reporting date.

 

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method.

 

Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled based upon rates enacted and substantively enacted at the reporting date. Deferred tax is charged or credited in profit or loss, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity or taken to other comprehensive income if it relates to other comprehensive income items.

 

CRITICAL ACCOUNTING ESTIMATES AND AREAS OF JUDGEMENT

The preparation of the consolidated financial statements requires management to make estimates and judgements and form assumptions that affect the reported amounts of the assets, liabilities, revenue and costs during the periods presented therein, and the disclosure of contingent liabilities at the date of the financial statements. Estimates and judgements are continually evaluated and based on management's historical experience and other factors, including future expectations and events that are believed to be reasonable. The estimates and assumptions that have a significant risk of causing a material adjustment to the financial results of the Group in future reporting periods are discussed below.

 

Fair value of biological assets

The methods and assumptions used in determining the fair value of standing timber within the forestry concessions held has been based on discounted cash flow models which require a number of significant judgements to be made by the directors in respect of sales price, production levels, operational cost and discount rates. 

 

The discounted cash flow models cover the 10 concession areas of Miombo hardwood forest to which the group has secured the rights to. The concessions cover the same surface as last year but have reduced in number from 12 to 10 which makes for easier management. The concessions are in three locations in three adjacent provinces within northern Mozambique and cover a total area of 314,965 hectares. The concessions have been granted by the Mozambican Government for a 50 year term once the necessary management plan, community consultation and administrative process is completed, and are renewable thereafter. The ten management plans have been presented, of which 3 are fully approved and are now operational, with another 5 in the final stages of approval by the Mozambican Government. We expect the last two to be completed as well by the end of 2017.

 

Harvesting levels are regulated by the Annual Permitted Cut ("APC") (total m3 per species) set in each management plan and approved at Provincial government level and can be reviewed and increased periodically, while continued sustainability is ensured.

 

The volume of timber to be harvested has been estimated based on the assumption that:

·       the proportion of the APC to be harvested in any one year will increase over the first three years and then remain constant.

·       from year 4, all the current APC will be harvested in any one year; as the APC number can be increased as per the 13% increase already authorised from 2016 to 2017.

·       From year 3 to 5 we are projecting to ramp up high margin veneer production with a new unit to about 15% of production as of year 5.

·       We have extended the model from a 10 to a 20 period which we believe is appropriate for the sawmill operation that will be completed in 2017.

 

The valuation model accommodates uncertainties over the actual levels of available timber and reflects the variability of the woodland types and content.

 

The valuation models assume a discount rate of 12%. Further details of the underlying assumptions and judgements are given in note 12.

 

The concessions were granted to Obtala at nil initial cost but with a levy payable to the Mozambique government based on harvesting and sales. These projected costs are included in the discounted cash flow valuation models within costs of sales.

 

In support of the revised valuation and to corroborate the fair value of the forestry concession the directors have also commissioned, an independent valuation report reflecting the value of the sale of rights "to a willing buyer". This report prepared on 1 May 2017 was undertaken by Mr: Edward Anderson-Bickley, formerly of Honour Capital, who is an independent consultant that specialises in providing comprehensive forestry investment and management services, and is regulated and authorised to conduct investment appraisals and analysis of forestry by the Royal Institution of Chartered Surveyors (RICS).

 

On the basis of the recommendations and the existing valuation model, which we are maintaining at the same level in 2016, the Group has successfully raised funds from the sale of Argento Limited Preference Share, with another $6.6 million to be received by Argento by the end of September 2017. These funds are being primarily used to scale up production levels and engage the necessary personnel to support the planned production increases and boost sales team.

 

Impairment of intangible exploration and evaluation assets

The Group has no intangible assets.  An impairment charge of $nil (2015: $24,618,000) was recognised in the year, and the carrying value of intangible exploration and evaluation assets at 31 December 2016 was $nil (2015:£nil).

Accounting standards adopted during the year

 

New standards, amendments to published standards and interpretations to existing standards effective in 2016, with their dates of adoption adopted by the Group and brief description:

 

Annual Improvements to IFRSs 2010-2012 Cycle	Includes amendments to the definitions of 'vesting conditions' and 'market condition' and new definitions of 'performance condition' and 'service condition' in IFRS 2 Share-based Payment	1 February 2015
Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and Amortisation	Clarifies that preparers should not use revenue?based methods to calculate charges for the depreciation or amortisation of items of property, plant and equipment or intangible assets.	1 January 2016
Amendments to IAS1: Disclosure Initiative	Amended to further clarify the concept of materiality, namely that it is applicable to the financial statements as a whole, not just the primary statements and that it applies to specific disclosures required by an IFRS and, therefore, an entity does not have to disclose information required by an IFRS if that information would not be material.	1 January 2016
Annual Improvements to IFRSs 2012-2014 Cycle	The improvements in this Amendment clarify the requirements of IFRSs and eliminate inconsistencies within and between Standards, including disclosure of information 'elsewhere in the interim financial report'.	1 January 2016
Amendments to IAS 27: Equity Method in Separate Financial Statements	Restoration of the option to use the equity method to account for investments in subsidiaries, joint ventures and associates in the entity's separate financial statements.	1 January 2016
Amendments to IFRS 10, IFRS 12 and IAS 28: Investment Entities*	Clarifies that the exemption from preparing consolidated financial statements is available to a parent entity that is a subsidiary of an investment entity. This clarification extends to the equity method for entities that are subsidiaries and that hold interests in associates and joint ventures. IFRS 12 clarifies that an investment entity is not excluded from the scope of the standard.	1 January 2016
Amendments to IAS 16 and IAS 41:	Brings bearer plants, which are used solely to grow produce, into the scope of IAS 16 so that they are accounted for in the same way as property, plant and equipment	1 January 2016

* not yet endorsed by the EU

 

The implementation of these standards did not have a material impact on the Group's consolidated financial statements other than disclosures.

 

ACCOUNTING STANDARDS AND INTERPRETATIONS NOT APPLIED

The following Adopted IFRSs have been issued but have not been applied by the Group in these financial statements. Their adoption is not expected to have a material effect on the financial statements:

 

Annual Improvements to IFRSs 2014-2016 Cycle*	1 January 2017 & 1 January 2018	The improvements in this Amendment clarify the requirements of IFRSs and eliminate inconsistencies within and between Standards, including clarification of the scope of IFRS 12.
Amendments to IAS 12: Recognition of Deferred Tax Assets for Unrealised Losses*	1 January 2017	Clarifies deferred tax on unrealised losses generated by debt instruments carried at fair value.
Amendments to IAS 7: Disclosure Initiative*	1 January 2017	The amendments clarify and improve information provided to users of financial statements about changes in liabilities arising from financing activities.
Amendments to IFRS 2: Classification and Measurement of Share-based Payment Transactions*	1 January 2018	Amendments to provide requirements on the accounting for the effects of vesting and non-vesting conditions on the measurement of cash-settled share-based payments, share-based payment transactions with a net settlement feature for withholding tax obligations, and a modification to the terms and conditions of a share-based payment that changes the classification of the transaction from cash-settled to equity-settled.
IFRIC 22 Foreign Currency Transactions and Advance Consideration*	1 January 2018	Provides requirements about which exchange rate to use in reporting foreign currency transactions (such as revenue transactions) when payment is made or received in advance.
IFRS 9 Financial Instruments	1 January 2018	Replacement to IAS 39 and is built on a logical, single classification and measurement approach for financial assets which reflects both the business model in which they are operated and their cash flow characteristics. Also addresses the so ? called 'own credit' issue and includes an improved hedge accounting model to better link the economics of risk management with its accounting treatment. It is a change from incurred to expected loss model.
IFRS 15 Revenue from Contracts with Customers (IFRS 15 clarifications not EU-endorsed)	1 January 2018	Introduces requirements for companies to recognise revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. Also results in enhanced disclosure about revenue and provides or improves guidance for transactions that were not previously addressed comprehensively and for multiple ? element arrangements.
IFRS 16 Leases*	1 January 2019	The new standard recognises a leased asset and a lease liability for almost all leases and requires them to be accounted for in a consistent manner. This introduces a single lessee accounting model and eliminates the previous distinction between an operating lease and a finance lease.

*Not yet endorsed in the EU.

The Directors anticipate that the adoption of these Standards and Interpretations as appropriate in future periods will have no material impact on the financial statements of the Group, subject to any future business combinations.  

 

 

2. SEGMENTAL REPORTING

 

Segmental information is presented on the basis of the information provided to the Chief Operating Decision Maker ("CODM"), which is the board of directors. 

 

As a result of the sale of LCS, the company has determined that it now has the following reportable segments, being agriculture and forestry, and has restated its operating segment reporting accordingly. The LCS results were included within the Retail segment in 2015.

 

The Group is currently focused on agriculture and forestry. These are the Group's primary reporting segments.  

 

The following table shows the segment analysis of the Group's loss before tax for the year and net assets at 31 December 2016:

 

	Agriculture	Forestry	Unallocated head office costs	Intra-group elimination	Total
	$000	$000	$000	$000	$000
Income statement
Turnover	127	503	-	-	630
Cost of Sales	(205)	64	-	-	(141)
Gross profit	(78)	567	-	-	489
Operating costs	(690)	(139)	-	-	(829)
Administrative expenses	(15)	(499)	(2,974)	-	(3,488)
Depreciation	(499)	(408)	-	-	(907)
Segment operating (loss)/profit before interest	(1,282)	(479)	(2,974)	-	(4,735)
Finance income	-	5	-	-	5
Finance costs	-	(394)	(127)	-	(521)
(Loss)/Profit before tax	(1,282)	(868)	(3,101)	-	(5,251)
Taxation	-	-	-	-	-
(Loss) after tax	-	-	-	-	(5,251)
NET ASSETS
Assets	2,589	176,382	13,721	(11,573)	181,119
Liabilities:
Deferred tax liability	-	(55,848)	-	-	(55,848)
Other	-	(11,573)	(9,846)	11,573	(9,846)
Net assets	2,589	108,961	3,875	-	115,425
OTHER SEGMENT ITEMS
Capital expenditure:
Property, plant and equipment	-	-	-	-	-
Intangible exploration and evaluation assets	-	-	-	-	-

 

 

 

 

 

 

 

 

 

 

The following table shows the segment analysis of the Group's loss before tax for the year and net assets at 31 December 2015:

 

Restated	Exploration and development	Agriculture	Forestry	Unallocated head office costs	Intra-group elimination	Total
	$000	$000	$000	$000	$000	$000
Income statement
Turnover	-	122	746	-	-	868
Cost of Sales	-	(64)	(129)	-	-	(193)
Gross profit	-	58	617	-	-	675
Loss on Impairment of asset	(24,618)	-	-		-	(24,618)
Loss on derivative financial instruments	-	-	-	(1,658)	-	(1,658)
Gain on valuation of biological asset	-	-	13,167	-	-	13,167
Gain on fair value of investment	-	-	-	1,601	-	1,601
Operating costs	-	(537)	(378)	-	-	(915)
Administrative expenses	-	(15)	(147)	(2,295)	-	(2,457)
Depreciation	-	(243)	(145)	(133)	-	(521)
Segment operating (loss)/profit before interest	(24,618)	(737)	13,114	(2,485)	-	(14,726)
Finance income	-	-	9	-	-	9
Finance costs	-	-	(60)	-	-	(60)
Profit before tax	(24,618)	(737)	(13,063)	(2,485)	-	(14,777)
Taxation	-	-	(6,896)	-	-	(6,896)
Profit after tax						(21,673)
NET ASSETS
Assets	-	2,934	175,923	21,128	(20,281)	179,704
Liabilities:
Deferred tax liability	-	-	(55,848)	-	-	(55,848)
Other	-	(219)	(21,078)	(2,244)	20,281	(3,260)
Net assets	-	2,715	98,997	18,884	-	120,596
OTHER SEGMENT ITEMS
Capital expenditure:
Property, plant and equipment	-		-	-	-	-
Intangible exploration and evaluation assets	-		-	-	-	-

 

3.  OPERATING LOSS

	2016	2015
	$000	$000
Operating loss is stated after charging/(crediting):
Depreciation of property, plant and equipment	907	521
Staff costs (see note 4)	1,223	1,848
Agriculture and forestry costs	1,761	1,196
Operating Lease Costs	69	73
Impairment of assets (see notes 10)	-	24,618
Inventory expensed	141	193
Auditor's remuneration:
Audit services
- fees payable to the Company auditor for the audit of the consolidated accounts	50	61
Fees payable to associates of the Company auditor for other services
- auditing the accounts of subsidiaries pursuant to legislation	5	9

 

4.  STAFF COSTS

	2016	2015
	Number	Number
The average monthly number of persons (including Directors) employed by the Group during the year was:
Administration and management	11	13
Agriculture and forestry	7	7
Retail	30	140
	48	160
	2016 $000	2015 $000
The aggregate remuneration comprised:
Wages and salaries	1,223	1,848
Social security costs	-	-
	1,223	1,848
Directors' remuneration included in the aggregate remuneration above comprised:	2016 $000	2015 $000
Emoluments for qualifying services	713	568

 

Included above are emoluments of $190,000 (2015: $189,844) in respect of the highest paid Director.

 

No pension contributions were made on behalf of the Directors and other staff members.

 

 

5. FINANCE INCOME

	2016	2015
	$000	$000
Bank interest receivable	5	9

 

 

6. FINANCE COSTS

	2016	2015
	$000	$000
Bank interest payable	521	58

 

 

7. TAXATION

	2016	2015
	$000	$000
Current tax:
Corporation tax on loss for the year	-	-
Deferred tax:
Origination and reversal of temporary differences	-	(6,896)
Tax on (loss) on ordinary activities	-	(6,896)
Group	$000	$000
Loss on ordinary activities before tax	(5,251)	(14,777)
Loss on ordinary activities multiplied by the average rate of corporation tax of 24.5% (2014: 24.5%)	(1,286)	(3,620)
Effects of:
Losses not recognised for deferred tax	1,286	-
Effect of movement in fair value of intangible assets	-	(3,276)
GROUP Tax (CREDIT) for the year	-	(6,896)

 

The prevailing tax rates of the operations of the Group range between 20% and 35%. Therefore a rate of 24.5% has been used as it best represents the weighted average tax rate experienced by the Group. The Group has estimated losses of $43 million (2015: $38.6 million) available for carry forward against future profits. No deferred tax assets have been recognised in respect of losses due to the unpredictability of future profit streams. Unused tax losses may be carried forward indefinitely.

 

The movement in the year in the Group's net deferred tax position was as follows:

	2016	2015
Deferred tax liabilities	$000	$000
At 1 January	55,848	51,786
Increase in deferred tax liability	-	4,213
Effects of foreign exchange	-	(151)
At 31 December	55,848	55,848

 

 

8.  EARNINGS PER SHARE

 

Basic earnings per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year excluding own shares held jointly by the Obtala Employee Share Trust, "The Trust", and certain employees.

 

Dilutive earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue during the year to assume conversion of all dilutive potential ordinary shares, being share options and  the shares held by the Trust and certain employees.

 

	2016	2015
	$'000	$'000
Loss from continuing operations attributable to owners of the parent	(4,478)	(19,694)
Loss from discontinued operations attributable to owners of the parent	(382)	(1,133)
Total	(4,860)	(20,827)
Weighted average number of ordinary shares
Weighted average number of ordinary shares in issue	263,761,286	263,161,286
Weighted average number of ordinary shares used in calculating earnings per share	263,761,286	263,161,286
Number of options and own shares with dilutive effects	-	-
Weighted average number of ordinary shares used in calculating diluted earnings per share	263,761,286	263,161,286
Earnings per share from continuing operations
Basic (cents)	(1.70)	(7.48)
Diluted (cents)	(1.70)	(7.48)
Earnings per share from discontinued operations
Basic (cents)	(0.14)	(0.32)
Diluted (cents)	(0.14)	(0.32)

There is no dilutive effect of options (note 23) and own shares (note 21) due to the Group's share price during the year.  

 

 

9. Discontinued operations

 

The African Homes Stores group of companies ('LCS') have been discontinued during the year as the company decided to sell its shareholding for $1.The transaction became effective on 24^th December 2016. 

 

Discontinued operations are comprised of the following:

 

	2016 $'000	2015 $'000
Turnover	482	4,787
Cost of sales	(435)	(3,811)
Gross profit	47	976
Administrative expenses	(102)	(1,989)
Depreciation	(41)	(120)
Loss on disposal	(286)	-
	(382)	(1,133)

 

 

10. INTANGIBLE EXPLORATION AND EVALUATION ASSETS

 

		Mindex licences	Paragon Diamonds licences	Montara & Altadis licences	Total licences
		$000	$000	$000	$000
at 1 January 2015		24,965	-	97	(25,062)
Impairment charge for the year		(24,965)	-	(97)	(25,062)
at 31 December 2015 AND 2016		-	-	-	-

 

Impairment

The Directors have considered the following factors when considering whether there have been any indicators for impairment of the exploration and evaluation assets:

 

•       Geology and lithology on each licence as outlined in the most recent CPRs (independent Competent Person's Reports from mining and earth

•       resources consultants);

•       The expected useful lives of the licences and the ability to retain the license interests when they come up for renewal;

•       Comparable information for large mining and exploration companies in the vicinity of each licence;

•       History of exploration success in the regions being explored;

•       Local infrastructure;

•       Climatic and logistical issues; and

•       Geopolitical environment.

 

After considering these factors the Directors have recognised a charge of $25,062,000 in 2015 relating to the impairment of four licences that have expired and the Directors have decided not to renew.