11 Jun 2012 07:00
AMBRIAN CAPITAL PLC
Results for the 12 months ended 31 December 2011
LONDON, 11 June 2012 - Ambrian Capital plc ("Ambrian Capital") today announces its preliminary results for the 12 months ended 31 December 2011.
Financial Highlights
·; Total income for the year from continuing operations was £5.48 million (2010: £9.60 million (restated))
·; Loss for the year from continuing operations, before tax, was £4.10 million (2010: profit £1.13 million (restated))
·; Overall Group loss for the year from all operations was £9.61 million (2010: profit £1.51 million (restated))
·; Group own cash at 31 December 2011 was £15.38 million (2010: £18.97 million)
·; Prior year adjustment in the Group's metals trading business has reduced retained earnings for the year ended 31 December 2009 by £2.31 million and for the year ended 31 December 2010 by £0.36 million
·; Tangible net asset value per voting share (net of deferred tax) was 19.6p as at 31 December 2011 compared with 26.4p as at 31 December 2010 (restated)
Commenting on the results, Robert Ashley, Chief Executive of Ambrian Capital, said:
"This has been a challenging year for the Group amidst the resurgent turmoil in the global economy and the substantial rationalisation of the Group's business has come at a considerable price in terms of earnings and net assets.
Nevertheless, we have a strong and liquid balance sheet and our metals trading business continues to trade positively. After selling down its inventory backlog, our biofuels business is also shipping new cargoes to meet the summer demand at positive margins. When the rationalisation of our cost base has been completed, we anticipate that the Group will return to profitability as a whole."
The Company has convened its Annual General Meeting for Friday 29 June 2012 at 3.00pm at the offices of Maclay Murray & Spens, 12th Floor, One London Wall, London EC2Y 2AB and the accounts are being sent to shareholders.
Enquiries
Ambrian Capital plc | |
Rob Ashley, Chief Executive | + 44 (0)20 7634 4784
|
Macquarie Capital (Europe) Limited | |
Steve Baldwin Nicholas Harland | + 44 (0)20 3037 2000 |
M:Communications | |
Charlotte Kirkham | + 44 (0)20 7920 2331 |
Notes to Editors:
AMBRIAN CAPITAL PLC
Ambrian Capital plc (AIM: AMBR) is a specialist natural resources business active in commodities merchandising and principal investments.
Commodities
Ambrian Metals Limitedis a physical metals trader with a particular strength in refined copper. Through Ambrian Metals' offices in London and Shanghai and agents in New York, Santiago, São Paulo, Seoul and Tokyo, it sources non-ferrous metals from producers for distribution to an international client base of metals consumers and merchants.
Ambrian Energy GmbH is a physical energy trading company focused on the supply of biofuels.
Ambrian Energy Limited andStrategic Energy Bank Limited are advisers and arrangers in fossil fuel transactions and strategic storage.
Principal Investments
Ambrian Principal Investments Limited is an investment company which holds Ambrian's principal investment portfolio. It is managed by Ambrian Asset Management Limited, which is authorised and regulated by the Financial Services Authority.
Further information on Ambrian Capital is available on the Company's website: www.ambrian.com
CHAIRMAN'S REPORT
2011 was a year of change and rationalisation for the Ambrian Group. In April 2011, we entered into an agreement to dispose of our LME futures broking business, Ambrian Commodities Limited ("ACL"), which was completed in August. Subsequently, in November 2011, we entered into an agreement to dispose of our corporate finance and equities business, Ambrian Partners Limited ("APL"), which was completed in March this year. In both instances, the risk and reward of the respective businesses passed at exchange of contracts and completion took place later after receipt of the requisite consents for the change of control of the respective companies.
These disposals were made in light of the deteriorating environment in the credit and equities markets and our lack of confidence in the future direction of those markets in the short to medium term. However, this rationalisation of our businesses has come at a price in terms of earnings and net assets.
Following these disposals, the Group's business is now focused principally on our commodity trading businesses in metals and biofuels. The Board has already taken significant steps to reduce the Group's cost base and continues to look for further efficiencies and savings.
Regrettably, our balance sheet has been impacted by prior year adjustments resulting from valuation inconsistencies which have arisen in our metals trading business in previous years. These were identified after an exhaustive investigation by management carried out in conjunction with our auditors, BDO. Further details of the adjustments are referred to in the Chief Executive's Report.
The Board is satisfied that these inconsistencies are problems of the past and that adequate reconciliation processes and controls are now in place to safeguard against inconsistencies of a similar nature arising in the future.
In February 2011, following Tom Gaffney's resignation, Robert Ashley took over as Chief Executive bringing extensive expertise in both commodities and treasury.
In August 2011, I took over from Lawrence Banks following his retirement from your Board after seven years service with the Group, four of which were as Chairman.
In June 2011, Charles Crick took over as acting head of corporate finance of APL. Following his assistance in selling that company to RFC Group, he retired from the Board in March 2012.
I thank all the retiring Directors for their contributions over the years.
I also take this opportunity to extend my thanks to all Ambrian Group staff for their support and considerable efforts throughout 2011.
Shareholders will note that amongst the resolutions to be proposed at the AGM convened for 29 June 2012, we are proposing a resolution to change the name of the Company to East West Resources PLC, which the Board feels better encapsulates the activities of the Group following the sale of our LME futures broking and stockbroking businesses.
Finally, I refer shareholders to the outlook statement set out at the end of the Chief Executive's Report.
Nathan A Steinberg
Chairman
CHIEF EXECUTIVE'S REPORT
Total Income and Pre-Tax Profits
Total income from continuing operations was £5.48 million for the year ended 31 December 2011 compared with £9.60 million (restated) for the year ended 31 December 2010, a decline principally resulting from the negative performance of both our fossil fuels business and investment portfolio.
Operating and administrative costs from continuing operations of £8.14 million were marginally lower than the operating costs for the same period last year of £8.15 million.
The loss attributable to shareholders from continuing operations after tax was £4.10 million, compared with a restated profit of £1.13 million for the same period last year, principally reflecting the reversal in performance of the investment portfolio and a lack of income in our fossil fuels business relative to the significant capital invested in the start up of this activity.
As a result of the disposals of Ambrian Commodities Limited ("ACL") and Ambrian Partners Limited ("APL") during the year, we have treated the results of these two companies as discontinued activities. Having written down the intangible assets relating to our investment in APL to zero in the six months ended 30 June 2011, we incurred trading losses in that company in the second half, giving rise to a pre-tax loss of £5.11 million attributable to our investments in both APL and ACL.
The Group loss attributable to shareholders from all operations was £9.61 million after tax, compared to a restated after tax profit of £1.51 million for the year ended 31 December 2010.
This loss includes a deferred tax asset in Ambrian Capital of £0.79 million which has been expensed as there is no certainty that it can be utilised within the foreseeable future (as required by International Accounting Standard 12 if it is to be recognised as an asset).
Dividend
In view of the loss reported by the Group, the Board has decided not to recommend a dividend in respect of the year ended 31 December 2011 (2010:1.5p per share).
Continuing operations
Commodities
Revenue from continuing operations in the Commodities division was £6.35 million for the year ended 31 December 2011 (2010: £5.50 million restated).
Metals - Ambrian Metals Limited ("AML")
The principal feature of 2011 was the marked volatility in copper prices, with these peaking at $10,109 per tonne in February and then falling to $6,695 per tonne in September. The price ended the year at $7,554 per tonne. Consequently premiums were similarly volatile throughout the year.
In the first half of the year, Chinese demand was subdued, largely as a result of the high copper price. However, AML experienced a modest increase in activity in the second half as prices reduced. Despite this volatility, AML increased its market share in China with over 40 per cent of total sales in the year being attributable to Chinese customers.
In the Middle East, the business was affected by the widespread political unrest and the severe market volatility in commodity prices. These factors resulted in delays in a number of utility projects which, in combination with stock holdings carried over by a number of AML's customers from 2010, led to less demand in the region than forecast at the start of the year. Nevertheless, AML increased its market share in the Middle East in 2011 and the region remains a major source of customers for the business.
The balance of sales was split between South Korea, Europe and the rest of SE Asia. The majority of the company's supplies were sourced from Russia, Zambia and India.
Over the 12 months ended 31 December 2011, AML supplied a total tonnage of refined copper of 240,528 tonnes (compared with 246,050 tonnes supplied for the equivalent period in 2010).
AML continued to benefit from the strong support of its bankers and now has uncommitted trade finance facilities totalling over US$385 million compared to US$330 million at 31 December 2011 and US$310 million at 31 December 2010.
Total revenues in the physical metals division were £3.75 million in the period, down from £4.16 million for the 12 months to 31 December 2010 (restated).
Profit before tax for the division for the 12 months to 31 December 2011 was £1.65 million compared with £1.80 million (restated) for the same period in 2010.
Biofuels - Ambrian Energy GmbH ("AEG")
Total revenue in AEG for the 12 months ended 31 December 2011 was £2.20 million compared with £1.34 million in 2010. This was a strong performance for a business which was only started in September 2010 although the second half performance did not quite match the first six months due to the difficulty of reducing inventory into the winter months. The business was affected by a period of lower biodiesel premiums relative to gasoil and delayed shipments of biodiesel from Asia which led to increased storage and financing expenses in the latter stages of the year. Overall, biodiesel prices remained consistent throughout the year with premiums over gasoil trading in a range between US$200-500 per tonne depending upon seasonality and quality.
Most of AEG's customers are located in North West Europe with occasional deliveries to Italy and Spain and as such the business is seasonal with demand affected by winter temperatures. Most of the product is sourced from South East Asia with some supplies from South America and Europe. AEG merchandises an expanded range of biodiesel grades including Rapeseed Oil Methyl Ester ("RME"), Soyabean Oil Methyl Ester ("SME"), Palm Oil Methyl Ester ("PME") and Used Cooking Oil Methyl Ester ("UCOME"). As a recycled waste product, UCOME is considered a second generation biofuel with the highest rated greenhouse gas saving potential.
During the year, the EU Renewable Energy Directive 2009/28/EC ("Red") was implemented in additional EU member states, leading to increased demand for certified product.
As members of the International Sustainability & Carbon Certification ("ISCC") and the Roundtable of Sustainable Palm Oil ("RSPO"), AEG continues to be at the forefront of sustainability practices in the biofuels market with all feedstock supplied from sustainable sources.
The business has been funded to date by €2.0 million capital and a subordinated loan facility of up to US$4.8 million provided by the Group and uncommitted trade finance facilities of US$40 million provided by commercial banks.
Profit before tax for AEG for the 12 months to 31 December 2011 was £0.96 million, compared with a loss of £0.07 million for the same period in 2010.
Fossil fuels - Ambrian Energy Limited ("AEL") and Strategic Energy Bank Limited ("SEB")
Total revenue in AEL and SEB for the 12 months ended 31 December 2011 was £0.40 million (2010: £nil) and the companies recorded a loss before tax for the 12 months to 31 December 2011 of £1.31 million (2010: £0.17 million), Regrettably, the business has not fulfilled expectations primarily as a result of difficult trading conditions affecting the fossil fuel market throughout the year and high storage fees. Since the year end, the Group has ceased providing capital to AEL and is curtailing its activities in the business.
Principal Investments
In the 12 months ended 31 December 2011, investment portfolio recorded a pre-tax loss of £1.66 million compared with a pre-tax profit of £2.75 million in the 12 months ended 31 December 2010.
This reflects a reduction of 27.5% in the value of the underlying investments since 31 December 2010 but compares with a decrease of 33.6% for the AIM Basic Resources Index (and increases over the same period in sterling terms of 9.4% for gold and 11.5% for crude oil).
In light of adverse market conditions and prevailing economic uncertainty, the Board decided to reduce substantially its exposure to junior resource stocks and as a result the total value of APIL's investment portfolio at 31 December 2011 was £1.73 million compared with a principal investment portfolio valued at £4.22 million at 31 December 2010.
At 31 December 2011, Ambrian Principal Investments Limited ("APIL") which holds a significant part of the investment portfolio had 15 holdings. The unlisted investments were valued at £0.45 million at 31 December 2011, compared with £0.71 million at 31 December 2010.
Ambrian Capital continues to hold a 12.5% interest in Consolidated General Minerals PLC ("CGM") which was de-listed from AIM on 1 July 2011. CGM is managed and part-owned by employees of Ambrian Resources AG ("ARAG") which was established in February 2010 in partnership with a team of three former executives of Glencore International AG. ARAG employees are now charged to CGM. CGM continues to focus on developing its clinker grinding mill and cement packaging plant in Beira, Mozambique. As at 31 December 2011, CGM's reported own cash position was US$19.7 million.
Discontinued operations
Ambrian Commodities Limited ("ACL") and Ambrian Partners Limited ("APL")
In April 2011 we entered into an agreement for the sale to INTL Global Currencies Limited (a wholly-owned subsidiary of INTL FCStone Inc) of the whole of the issued share capital of ACL with effect from 31 March 2011. This agreement was completed on 31 August 2011 and resulted in the return to the Company of its invested capital of £4.37 million. In November 2011, we entered into an agreement for the sale to RFC Group Limited of the whole of the issued share capital of APL with effect from 31 October 2011. This agreement was completed on 30 March 2012. In both agreements, the risk and reward of the businesses passed at exchange of contracts and completion took place later after the requisite consents for the change of control of the respective companies had been obtained. As a result of these disposals, the results of ACL and APL for the periods until their disposal have been treated as discontinued operations. The disposal of APL resulted in an after tax loss of £5.51 million on our investment in APL (represented by a loss on the Group's original investment (including goodwill) of £3.71 million, a £0.40 million write-off of non-recoverable deferred tax and trading losses in the period of £1.40 million). The overall loss in Group attributable to our discontinued operations was £5.51 million.
Expenses
Group administrative expenses attributable to the Group's continuing operations for the year ended 31 December 2011 were £8.14 million(2010: £8.15 million restated), of which £7.16 million (2010: £6.67 million) were represented by fixed costs (excluding provisions for year-end profit related bonuses and share-based payment charges). Like for like expenses were broadly in line with those for last year.
Remuneration expenses attributable to continuing operations, before share-based payment charges, were £3.72 million in the 12 months ended 31 December 2011 (2010: £3.30 million) of which (i) £2.74 million was represented by salaries, employers' national insurance and benefits (2010: £1.79 million) and (ii) £0.98 million represented a provision for year-end profit related bonuses (2010: £1.51million). The ratio of total remuneration expenses to total income relating to our continuing operations was 67% for the year compared with 37% for 2010. The variance in these two percentages is largely attributable to the reversal in performance of the investment portfolio and the lack of income in our fossil fuels business.
Total headcount in our continuing operations at 31 December 2011 was 30 (compared with a total Group headcount at 31 December 2010 of 78).
Share-based payment charges were £0.16 million in the 12 months ended 31 December 2011 (2010: £0.52 million).
Non-remuneration expenses attributable to continuing operations were £4.42 million in the 12 months ended 31 December 2011 (2010: £4.88 million).
Balance Sheet
Prior year adjustment and restatement of 2010 financial results
The Group balance sheet has been adversely impacted by a prior year adjustment resulting from valuation inconsistencies in our metals trading business.
In conjunction with the Company's auditors, management carried out an exhaustive investigation into the financial reporting of the physical metals business and the manner in which transactions have been recorded in the books of AML since the acquisition of the AML business in 2008. As a result of this investigation, it was found that there were inconsistencies in the manner in which certain inventory and open sales contracts had been valued in the Group's financial statements for the previous years ended 31 December 2009 and 31 December 2010. The financial statements for the year ended 31 December 2011 have been prepared on the basis that the inventory has been valued at open market value less costs to sell and the open sales contracts (which are included in prepayments and accrued income) only include any contracted profit which is in excess of open market value. This amount is reduced by a liability for any open contracts which at the year-end are below open market value.
In the year ended 31 December 2009, open sales contracts included in prepayments and accrued income were overvalued by £4.08 million as they had not been reduced to reflect the uplift of related inventory items to fair value. After adjusting for credits for bonuses and taxation, the Group profit after tax for the year ended 31 December 2009 was overstated by £2.31 million. Group retained earnings for the year ended 31 December 2009 were overstated by the same amount.
In the year ended 31 December 2010, open sales contracts included in prepayments and accrued income were overvalued by a net amount of £1.10 million for the same reason as set out above in relation to the previous year. After adjusting for credits for bonuses and taxation, the Group profit after tax for the year ended 31 December 2010 was overstated by £0.36 million which has been restated in the financial statements for this period. Group retained earnings for the year ended 31 December 2010 were overstated by the same amount. Further details are provided in Note 3 of the condensed consolidated financial statements.
Net assets
Total net assets at 31 December 2011 were £19.86 million, down from £30.15 million at 31 December 2010 (restated). The principal factors impacting the Group's net assets were the losses attributable to our investments in APL and ACL (£5.51 million), the losses on our investment portfolio (£1.66 million), the prior year adjustments and restatements relating to our physical metals business referred to above (£2.67 million) and the losses arising in our fossil fuels business (£1.30 million).
The Group's own cash resources totalled £15.38 million at 31 December 2011 compared with £18.97 million at 31 December 2010. As a result of the disposal of APL, the £0.9 million balance of cash due on completion of that sale which had not been received at 31 December 2011 (but which has been received since the year-end) has been treated as a debtor. The reduction in own cash amounting to £3.59 million is principally attributable to APL and ACL leaving the Group, the investment portfolio losses, the losses in the fossil fuel business, payment of professional fees and employee severance amounts and the payment of the final dividend for the year ended 31 December 2010.
Net tangible asset value per share (net of deferred tax) was 19.6p (compared with 26.4p as at 31 December 2010 (restated)). Net tangible asset value per share is based on 100,136,584 ordinary shares outstanding at 31 December 2011 (excluding Treasury shares and shares held by the Ambrian Capital Employee Benefit Trust) (2010: 98,477,751).
Outlook
This has been a challenging year for the Group amidst the resurgent turmoil in the global economy. However, the Group has a strong and liquid balance sheet and the metals trading business continues to trade positively. After selling down itsinventory backlog, the biofuels business is also shipping new cargoes to meet the summer demand at positive margins. When the rationalisation of the Group's cost base has been completed, the Board anticipates that the Group will return to profitability as a whole.
In view of the uncertainty in world markets, we remain focused on the risk, control and reporting environment applicable to the Group's operations and we continue to look for strategic opportunities to enhance shareholder value.
Robert Ashley
Chief Executive
AMBRIAN CAPITAL PLC
FINANCIAL STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2011
Consolidated statement of comprehensive income
Year to 31 December 2011
£ | Year to 31 December 2010 (restated) £ | ||
Revenue | 6,894,593 | 5,503,078 | |
Investment portfolio (losses) and gains | (1,409,649) | 4,094,224 | |
Total income | 5,484,944 | 9,597,302 | |
Administrative expenses | (8,143,053) | (8,153,603) | |
(Loss)/profit before tax | (2,658,109) | 1,443,699 | |
Taxation | (1,436,937) | (313,005) | |
(Loss)/profit after tax from continuing operations | (4,095,046) | 1,130,694 | |
(Loss)/profit on discontinued operations before tax | (5,112,764) | 681,822 | |
Taxation on discontinued operations | (399,870) | (303,429) | |
(Loss)/profit after tax from continuing and discontinued operations |
(9,607,680) |
1,509,087 | |
Other comprehensive income | |||
Exchange profit/(loss) arising from translation of foreign operations | 245,460 |
(459,080) | |
Total other comprehensive income | 245,460 | (459,080) | |
| |||
Total comprehensive (loss)/income | (9,362,220) | 1,050,007 | |
(Loss)/profit for the period attributable to: | |||
Owners of the parent | (9,604,730) | 1,599,532 | |
Non-controlling interest | (2,950) | (90,445) | |
(9,607,680) | 1,509,087 | ||
Total comprehensive income attributable to: | |||
Owners of the parent | (9,359,270) | 1,140,452 | |
Non-controlling interest | (2,950) | (90,445) | |
(9,362,220) | 1,050,007 | ||
Earnings per share continuing and discontinued operations: | |||
Basic | (9.88) pence | 1.62 pence | |
Continuing operations: | |||
Basic | (4.21) pence | 1.23 pence | |
Consolidated statement of financial position at 31 December 2011
| 2011 | 2010 (restated) | 2009 (restated) | |
£ | £ | £ | ||
ASSETS | ||||
Non-current assets | ||||
Property, plant and equipment | 177,747 | 288,754 | 317,511 | |
Intangible assets | - | 2,150,109 | 2,290,109 | |
Deferred tax asset | 232,071 | 2,038,275 | 1,904,968 | |
409,818 | 4,477,138 | 4,512,588 | ||
Current Assets | ||||
Financial assets at fair value through profit or loss | 4,841,449 | 7,250,816 | 4,698,734 | |
Inventory | 179,154,816 | 237,921,517 | 58,551,733 | |
Trade and other receivables | 59,127,665 | 103,413,968 | 51,451,699 | |
Current tax recoverable | - | 215,219 | 1,107,775 | |
Cash and cash equivalents | 15,378,657 | 31,121,434 | 37,432,135 | |
258,502,587 | 379,922,954 | 153,242,076 | ||
Total Assets | 258,912,405 | 384,400,092 | 157,754,664 | |
LIABILITIES | ||||
Current liabilities | ||||
Financial liabilities at fair value through profit or loss | (5,008,970) | (18,745,460) | (7,709,922) | |
Short term borrowings | (159,207,524) | (177,851,710) | (85,590,071) | |
Short term liabilities under sale & repurchase agreements | (45,057,643) |
(82,363,606) |
- | |
Trade and other payables | (29,459,659) | (74,146,542) | (34,270,265) | |
Current tax payable | (321,799) | (1,145,936) | (59,672) | |
Total liabilities | (239,055,595) | (354,253,254) | (127,629,930) | |
Total net assets | 19,856,810 | 30,146,838 | 30,124,734 | |
CAPITAL AND RESERVES | ||||
Share capital | 11,136,121 | 11,136,121 | 11,136,121 | |
Share premium account | 11,105,383 | 11,105,383 | 11,105,383 | |
Merger reserve | - | 1,245,256 | 1,245,256 | |
Treasury shares | (1,128,716) | (1,128,716) | (1,093,889) | |
Retained earnings | 762,273 | 10,187,976 | 10,051,747 | |
Share-based payment reserve | 4,325,508 | 4,161,508 | 3,639,675 | |
Employee benefit trust | (5,471,023) | (5,445,444) | (5,342,707) | |
Exchange reserve | (830,472) | (1,075,932) | (616,852) | |
Total equity attributable to the owner of the parent | 19,899,074 | 30,186,152 | 30,124,734 | |
Non-controlling interest | 42,264) | (39,314) | 0 | |
Total equity | 19,856,810 | 30,146,838 | 30,124,734 | |
Consolidated statement of changes in equity for the year ended 31 December 2011
| Share capital
| Share premium account |
Merger reserve | Share- based payments reserve |
Employee benefit trust |
Treasury shares |
Retained earnings |
Exchange reserve |
Non-controlling interest |
Total Equity |
£ | £ | £ | £ | £ | £ | £ | £ | £ | £ | |
Balance at 31 December 2009 | 11,136,121 | 11,105,383 | 1,245,256 | 3,639,675 | (5,342,707) | (1,093,889) | 12,357,624 | (616,852) |
- | 32,430,611 |
Prior year adjustment (Note 3) | - | - | - | - | - | - | (2,305,877) | - | - | (2,305,877) |
Restated balances at 31 December 2009 | 11,136,121 | 11,105,383 | 1,245,256 | 3,639,675 | (5,342,707) | (1,093,889) | 10,051,747 | (616,852) |
- | 30,124,734 |
Profit for the period | - | - | - | - | - | - | 1,963,931 | - |
(90,445) | 1,873,486 |
Prior year adjustment (Note 3) | - | - | - | - | - | - | (364,399) | - |
- | ((364,399) |
Other comprehensive income | - | - | - | - | - | - | - | (459,080) | - | (459,080) |
Non-controlling interest on incorporation of subsidiary | - | - | - | - | - | - | - | - | 51,131 | 51,131 |
Share-based payment charge | - | - | - | 521,833 | - | - | - | - | 521,833 | |
Purchase of shares | - | - | - | - | (268,295) | (34,827) | - | - | - | (303,122) |
Sale of shares | - | - | - | - | 165,558 | - | - | - | - | 165,558 |
Dividends | - | - | - | - | - | - | (1,463,303) | - | - | (1,463,303) |
Restated balances at 31 December 2010 | 11,136,121 | 11,105,383 | 1,245,256 | 4,161,508 | (5,445,444) | (1,128,716) | 10,187,976 | (1,075,932) | (39,314) | 30,146,838 |
(Loss) for the period | - | - | - | - | - | - | (9,604,730) | - |
(2,950) | (9,607,680) |
Elimination on disposal | - | - | (1,245,256) | - | - | - | 924,392 | - | - | (320,864) |
Other comprehensive income | - | - | - | - | - | - | - | 245,460 | - | 245,460 |
Share-based payment charge | - | - | - | 164,000 | - | - | - | - | - | 164,000 |
Purchase of shares | - | - | - | - | (57,809) | - | - | - | - | (57,809) |
Sale of shares | - | - | - | - | 32,230 | - | - | - | - | 32,230 |
Dividends | - | - | - | - | - | - | (745,365) | - | - | (745,365) |
Balance at 31 December 2011 | 11,136,121 | 11,105,383 | - | 4,325,508 | (5,471,023) | (1,128,716) | 762,273 | (830,472) | (42,264) | 19,856,810 |
Consolidated statement of cash flows for the year ended 31 December 2011
Year to 31 December 2011
£ | Year to 31 December 2010 (restated) £ | |
(Loss)/profit for the year | (9,607,680) | 1,509,087 |
Adjustments for: | ||
Depreciation of property, plant and equipment | 52,600 | 217,392 |
Amortisation of intangible assets | 2,150,109 | 140,000 |
Foreign exchange losses/(gains) | 96,538 | (38,311) |
Taxation expense | 1,836,807 | 616,434 |
Unrealised gains on financial assets designated at fair value | 155,366 | 48,845 |
Realised losses on financial assets designated at fair value | 2,213,170 | 263,567 |
Net cost/(income) on acquisition of financial assets designated at fair value | 40,831 | (2,864,494) |
Decrease/(increase) in inventories | 58,766,701 | (179,369,785) |
Decrease/(increase) in trade and other receivables | 41,936,350 | (51,962,269) |
Unrealised (losses)/gains on financial liabilities at fair value | (13,736,490) | 11,035,538 |
(Decrease)/increase in trade and other payables | (43,447,274) | 39,876,277 |
(Decrease)/increase in short term liabilities under sale and repurchase agreements |
(37,305,963) |
82,363,606 |
(Decrease)/increase in short term borrowings | (18,644,186) | 92,261,639 |
Share-based payment charge | 164,000 | 521,833 |
Loss on disposal of subsidiaries | 1,500,000 | - |
Cash used in operations | (13,829,121) | (5,380,641) |
Taxation (paid)/recovered | (481,175) | 1,229,080 |
Net cash flow used in operating activities | (14,310,296) | (4,151,561) |
Investing activities | ||
Cash introduced by non-controlling interest on incorporation of subsidiary |
- |
51,131 |
Disposal of subsidiary undertakings | (868,139) | - |
Purchase of property, plant and equipment | (83,405) | (188,767) |
Disposal of property, plant and equipment | 141,115 | 133 |
Net cash (used) in investing activities | (810,429) | (137,503) |
Financing activities | ||
Purchase of shares by employee benefit trust | (25,579) | (268,295) |
Sale of shares by employee benefit trust | - | 165,558 |
Purchase of treasury shares | - | (34,828) |
Dividends paid to owners of the parent | (745,365) | (1,463,303) |
Net cash used in financing activities | (770,944) | (1,600,868) |
Net decrease in cash and cash equivalents | (15,891,669) | (5,889,932) |
Cash and cash equivalents at the beginning of the year | 31,121,434 | 37,432,135 |
Foreign exchange gains on translation of foreign subsidiaries | 148,892 | (420,769) |
Cash and cash equivalents at the end of the year | 15,378,657 | 31,121,434 |
Notes to the condensed consolidated financial statements
1 Basis of preparation
The financial information set out in this announcement does not constitute the Group's statutory accounts for the years ended 31 December 2011 or 2010 but is derived from those accounts. Statutory accounts for 2010 have been delivered to the Registrar of Companies, and those for 2011 will be delivered in due course.
The auditors have reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain statements under section 498 (2) or (3) of the Companies Act 2006. The results for the year ended 31 December 2011 were approved by the Board of Directors on 8 June 2012 and are audited.
While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs) as endorsed for use in the European Union, this announcement does not itself contain sufficient information to comply with IFRSs. The accounting policies adopted in this announcement have been consistently applied and are consistent with the policies used in the preparation of the statutory accounts for the period ending 31 December 2011.
2 Segmental analysis
The Group has four reportable segments attributable to its continuing operations and unallocated central revenues and costs:
·; Physical metals - comprises Ambrian Metals Limited, a physical metals merchant.
·; Biofuels - comprises Ambrian Energy GmbH, a biofuels trader
·; Fossil fuels - comprises Ambrian Energy Limited, a physical fuels merchant and Strategic Energy Bank Limited, an adviser and arranger of transactions.
·; Investment portfolio - comprises the Group's principal investment portfolio held in Ambrian Principal Investments Limited.
·; Unallocated central revenues represent recharges of costs from Ambrian Resources AG ("ARAG"). Unallocated central costs relate to overheads incurred in connection with operating the public limited company and include the share-based payment charges in relation to the staff share option schemes, the remuneration of the Directors of Ambrian Capital plc and the costs of ARAG.
During the year, the Group disposed of its LME futures broking business and entered into an agreement to dispose of its Corporate finance & equities division (which was completed after the year end.). As a result of these disposals, the two divisions have been treated as discontinued activities of the Group.
The measurement of the segmental revenue, profit before tax, capital expenditure, depreciation, total assets, total liabilities and net assets have been prepared using consistent accounting policies across the segments.
2011 | 2010 |
| |||
£ | £ |
| |||
Revenue/Income | Restated |
| |||
Continuing operations |
| ||||
Physical metals | 3,751,879 | 4,160,539 |
| ||
Biofuels | 2,194,656 | 1,342,539 |
| ||
Fossil Fuels | 401,285 | - |
| ||
Commodities division | 6,347,820 | 5,503,078 |
| ||
Investment portfolio | (1,409,649) | 4,094,224 |
| ||
Unallocated central | 546,773 | - |
| ||
5,484,944 | 9,597,302 |
| |||
Discontinued operations Corporate finance & equities |
4,119,339 |
9,776,968 |
| ||
LME futures broking | 513,891 | 2,172,107 |
| ||
4,633,230 | 11,949,075 |
| |||
10,118,174 | 21,546,377 |
| |||
| |||||
Investment portfolio income represents: |
| ||||
Unrealised (losses)/gains on financial assets designated at fair value |
(1,260,821) |
670,507 |
| ||
Realised gains on financial assets designated at fair value |
(155,366) |
1,701,177 |
| ||
Dividends, distributions and other | 6,538 | 1,722,540 |
| ||
(1,409,649) | 4,094,224 |
| |||
| |||||
Profit/loss before tax | |||||
Continuing operations | |||||
Physical metals | 1,653,681 | 1,801,302 | |||
Biofuels | 955,990 | (72,433) | |||
Fossil Fuels | (1,307,346) | (172,305) | |||
Commodities division | 1,302,325 | 1,556,564 | |||
Investment portfolio | (1,660,189) | 2,745,674 | |||
Unallocated central | (2,300,245) | (2,858,539) | |||
(2,658,109) | 1,443,699 | ||||
Discontinued operations Corporate finance & equities |
(5,059,127) |
318,024 | |||
LME futures broking | (53,637) | 363,798 | |||
(5,112,764) | 681,822 | ||||
(7,770,873) | 2,125,521 | ||||
| |||||
Capital expenditure |
| ||||
Corporate finance & equities | - | 35,545 |
| ||
Physical metals | - | 1,429 |
| ||
Biofuels | 11,252 | 124,039 |
| ||
11,252 | 161,013 |
| |||
Unallocated central | 72,153 | 27,755 |
| ||
83,405 | 188,768 |
| |||
| |||||
Depreciation |
| ||||
Corporate finance & equities | - | 207,012 |
| ||
LME futures broking | - | 3,145 |
| ||
Physical metals | 73 | 97 |
| ||
Biofuels | 22,714 | 7,138 |
| ||
Unallocated central | 29,813 | - |
| ||
52,600 | 217,392 |
| |||
| |||||
Total assets |
| ||||
Corporate finance & equities | - | 7,222,554 |
| ||
LME futures broking | - | 19,370,676 |
| ||
Physical metals | 239,251,286 | 337,521,347 |
| ||
Fossil fuels | 455,183 | 58,506 |
| ||
Biofuels | 10,556,315 | 8,622,636 |
| ||
Investment portfolio | 2,084,079 | 4,862,611 |
| ||
Unallocated central | 6,565,542 | 6,741,762 |
| ||
258,912,405 | 384,400,092 |
| |||
| |||||
Total liabilities |
| ||||
Corporate finance & equities | - | 2,127,080 |
| ||
LME futures broking | - | 14,987,479 |
| ||
Physical metals | 230,203,388 | 328,783,182 |
| ||
Biofuels | 6,514,782 | 168,310 |
| ||
Fossil fuels | 754,116 | 6,377,784 |
| ||
Investment portfolio | 35,613 | 68,750 |
| ||
Unallocated central | 1,547,696 | 1,796,462 |
| ||
239,055,595 | 354,253,254 |
| |||
The majority of the Group's non-current assets are located in the UK. The information required to disclose the geographical analysis of revenues from customers is not available and the cost to develop it would be excessive.
3 Prior year adjustment
During the preparation of the 2011 financial statements a number of inconsistencies have been discovered in respect of accounting for open sales contracts and inventory. The 2011 statements have been prepared on the basis that inventory has been valued at open market value less costs to sell and that open sales contracts which are included in prepayments and accrued income only include any contracted profit which is in excess of open market value. This amount is reduced to reflect a liability for any open contracts which at the year-end are below open market value.
In the year ended 31 December 2009 open sales contracts included in prepayments and accrued income were overvalued by £4,084,392 as they had not been reduced to reflect the uplift of related inventory items to fair value. This resulted, after adjusting for administrative expenses comprising bonuses (£733,812) and related taxation charge adjustments (£1,044,703) in the Group profit after tax for the year ended 2009 being overstated by £2,305,877. Group retained earnings for the year ended 31 December 2009 were overstated by the same amount.
In the year ended 31 December 2010 open sales contracts included in prepayments and accrued income were overvalued by £1,104,459 as they had not been reduced to reflect contracted losses for open contracts which at the year-end were below market value. This resulted, after adjusting for administrative expenses comprising bonuses (£331,337) and related taxation charge adjustments (£408,723) in the Group profit after tax for the year ended 2010 being overstated by £364,399. Group retained earnings for the year ended 31 December 2010 were overstated by the same amount. This has been adjusted by a prior year adjustment in these financial statements. This adjustment reduced the Earnings per Share by 0.02 pence in the year.
In the year ended 31 December 2010 open sales contracts included in prepayments and accrued income were overvalued by £12,654,841 and inventory relating to metals was undervalued by the same amount as the allocation of open market values for inventory and prepayments and accrued income was not correctly stated. This has no impact on the results for the year ended 31 December 2010. The comparative statements for 2010 in these financial statements have been restated.
In previous years prepayments and accrued income and accruals and deferred income have been presented by showing their gross open sales and purchases commitments at the period end. In 2011 the company changed its accounting policy in relation to the presentation of prepayments and accrued income and accruals and deferred income in the statements of financial position. The effect of measurement of these is now presented net in either prepayments and accrued income or accruals and deferred income depending on whether the outcome of measuring these results in gains or losses at the end of each reporting period. The change is accounting policy was made to better reflect the fact that these instruments are derivative financial instruments which can be settled net at each reporting date on a contract by contract basis. This change has no effect on the group's net equity position and effects on the statement of financial position are shown below.
The effect of the above adjustments has been to increase/(decrease) the reported numbers as follows:
Prior year adjusted Consolidated statement of comprehensive income | |||
2010 | 2009 | ||
£ | £ | ||
Revenue | (1,104,459) | (4,084,392) | |
Administrative expenses | 331,337 | 733,812 | |
Profit before tax | (773,122) | (3,350,580) | |
Taxation | 408,723 | 1,044,703 | |
(Loss)/profit after tax | (364,399) | (2,305,877) | |
Prior year adjusted Statement of Financial Position | ||
2010 | 2009 | |
£ | £ | |
Deferred tax asset | 102,701 | 650,840 |
Prepayments | (174,701,913) | (199,824,620) |
Inventory | 12,654,481 | - |
Trade and other receivables | 331,697 | 733,812 |
Total assets | (161,613,034) | (198,439,968) |
Accruals Current tax payable | 160,942,613 306,022 | 195,740,228 393,863 |
Net assets | (364,399) | (2,305,877) |
4 Earnings per Ordinary Share
The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year, excluding shares held in the Employee Benefit Trust and treasury shares.
The calculation of diluted earnings per share is based on the basic earnings per share adjusted to allow for the issue of shares through the share option schemes on the assumed conversion of all dilutive options.
Reconciliations of the earnings and weighted average number of shares in the calculations are set out below.
2011 | 2010 | ||||||
(Loss) Attributable to Owners of the Company £ Restated | Weighted average number of shares Restated | Profit Attributable to Owners of the Company £ Restated | |||||
Per share amount (pence) | Weighted average number of shares Restated | Per share amount (pence) | |||||
Continuing and discontinued operations | |||||||
Basic earnings | |||||||
per share | (9,604,730) | 97,260,778 | (9.88) | 1,599,532 | 98,542,909 | 1.62 | |
_________ | _________ | _________ | _________ | ||||
Dilutive effect | |||||||
of share options | - | 994,960 | |||||
_________ | _________ | ||||||
Diluted earnings | |||||||
per share | (9,604,730) | 97,260,778 | (9.88) | 1,599,532 | 99,537,869 | 1.62 | |
_________ | _________ | _________ | _________ | _________ | _________ | ||
Continuing operations | |||||||
Basic earnings | |||||||
per share | (4,092,096) | 97,260,778 | (4.21) | 1,221,139 | 98,542,909 | 1.23 | |
_________ | _________ | _________ | _________ | ||||
Dilutive effect | |||||||
of share options | - | 994,960 | |||||
_________ | _________ | ||||||
Diluted earnings | |||||||
per share | (4,092,096) | 97,260,778 | (4.21) | 1,221,139 | 99,537,869 | 1.23 | |
_________ | _________ | _________ | _________ | _________ | _________ | ||
The loss attributable to the owners of the company for continuing and discontinued operations used in the above calculation is that presented in the consolidated statement of comprehensive income. The loss attributable to owners of the company for discontinuing operations is derived from the loss from continuing operations of £4,095,046 (2010: profit £1,130,694) which is adjusted for the loss for the period attributable to the non-controlling interest of £2,950 (2010:loss £90,445).
5 Discontinued operations
In March 2011, the Group entered into an agreement to dispose of its entire interest in Ambrian Commodities Limited ("ACL") which was completed in September 2011 and in November 2011, the Group entered into an agreement to sell its entire interest in Ambrian Partners Limited ("APL") which was completed on 30 March 2012 but with the risk and reward passing with effect from 31 October 2011. As a result of these disposals, the operations of ACL and APL during the year ended 31 December 2011 have been treated as discontinued operations.
Trade & other receivables contain a sum of £900,000 representing the post tax consideration for the disposal of APL.
The assets attributable to the discontinued operations as at their respective effective disposal dates are set out below.
At disposal 2011 £ |
2010 £ | |
Property, plant and equipment | 697 | 142,731 |
Trade and other receivables | 3,247,998 | 7,893,593 |
Cash | 5,338,335 | 18,877,617 |
Trade and other payables | (1,716,834) | (17,415,246) |
Net asset position | 6,870,196 | 9,498,695 |
The post-tax gain on disposal of discontinued operations was determined as follows:
Result of discontinued operations
2011 £ | 2010 £ | ||
Revenue | 4,633,230 | 11,949,075 | |
Administrative expenses | (8,245,994) | (11,267,253) | |
Loss from selling discontinued operations | (1,500,000) | - | |
(5,112,764) | 681,822 | ||
Taxation (expense) | (399,870) | (303,429) | |
(Loss)/profit for the year | (5,512,634) | 378,393 | |
(Loss)/earnings per share discontinued operations: | |||
Basic | (5.67) pence | 0.38 pence | |
| |||
The total proceeds of the disposal of Ambrian Commodities Limited was £4,370,196 and the total proceeds of the disposal of Ambrian Partners Limited was £1,000,000.
Statement of cash flows from discontinued operations | ||
Operating activities | (13,539,282) | (7,656,357) |
Investing activities | (868,139) | - |
Net cash from discontinued operations | (14,407,421) | (7,656,357) |
In the above tables, the comparative information for 2010 has been restated to present income generated and expenses incurred by both discontinued operations.
6 Non-controlling interest
The non-controlling interest disclosed in the statement of comprehensive income and statement of financial position represents a 20% minority interest in Ambrian Resources AG held by shareholders other than Ambrian Capital plc.