«ANNUAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31 DECEMBER 2015 CHARACTERISTICS OF THE GROWTH ENTERPRISE MARKET (“GEM”) OF THE STOCK EXCHANGE OF ...»
(Incorporated in Bermuda with limited liability)
(Stock Code: 8306)
ANNUAL RESULTS ANNOUNCEMENT
FOR THE YEAR ENDED 31 DECEMBER 2015
CHARACTERISTICS OF THE GROWTH ENTERPRISE MARKET (“GEM”) OF
THE STOCK EXCHANGE OF HONG KONG LIMITED (THE “STOCK
GEM has been positioned as a market designed to accommodate companies to
which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors.
Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM.
Hong Kong Exchanges and Clearing Limited and the Stock Exchange take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
This announcement, for which the directors (the “Directors”) of China Nonferrous Metals Company Limited (the “Company”) collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on GEM (the “GEM Listing Rules”) for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief, the information contained in this announcement is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this announcement misleading.
ANNUAL RESULTSThe board (the “Board”) of Directors of the Company is pleased to announce the audited annual results of the Company and its subsidiaries (collectively the “Group”) for the year ended 31 December 2015, together with the comparative figures for the
year ended 31 December 2014, as follows:
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFor the year ended 31 December 2015 RMB’000 Notes RMB’000 Revenue 90,992 5 126,076
NOTES TO THE FINANCIAL STATEMENTS
1. GENERAL INFORMATIONChina Nonferrous Metals Company Limited (the “Company”) was incorporated in Bermuda on 14 April 2004 as an exempted company under the Companies Act 1981 of Bermuda (as amended). Its shares are listed on the Growth Enterprises Market (the “GEM”) of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) with effect from 28 February 2005.
The Company’s registered office is Clarendon House, 2 Church Street, Hamilton HM11, Bermuda and the Company’s principal place of business is Room 1104, Jubilee Centre, 18 Fenwick Street, Wanchai, Hong Kong.
The directors of the Company (the “Directors”) consider that the Company’s immediate and ultimate holding company is Ruffy Investments Limited (“Ruffy”), a company incorporated in the British Virgin Islands.
The principal activity of the Company is investment holding. The principal subsidiaries of the Company are engaged in the mining, processing and trading of mineral resources. There were no significant changes in the Group’s operations during the year.
The financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRSs”) which collective term includes all applicable individual International Financial Reporting Standards, International Accounting Standards (“IASs”) and Interpretations issued by the International Accounting Standards Board (the “IASB”) and the disclosure requirements of the Hong Kong Companies Ordinance. The financial statements include applicable disclosure requirements by the Rules Governing the Listing of Securities on the GEM of the Stock Exchange (the “GEM Listing Rules”).
The financial statements for the year ended 31 December 2015 were approved and authorised for issue by the Board of Directors on 31 March 2016.
2. BASIS OF PRESENTATIONThe Group incurred a loss attributable to the owners of the Company of approximately RMB580,578,000 for the year ended 31 December 2015 and had accumulated losses of approximately RMB641,435,000 at the same date. As at 31 December 2015, the Group has contingent liabilities of approximately RMB1,152,898,000 arising from alleged guarantee documents entered into by two subsidiaries of the Group. In addition, the Group has not repaid the entrusted loan with the principal amount of RMB150,000,000 together with accrued interests and default penalties interest after the expiry date on 30 January 2015 and up to the date of approval of these financial statements. The Group’s mining right of carrying amount of approximately RMB260,191,000 as at 31 December 2015 has been pledged as security of the entrusted loan and is believed to be subject to frozen order. These conditions indicate the existence of material uncertainty which may cast significant doubt on the Group’s ability to continue as a going concern and therefore the Group may be unable to realise its assets and discharge its liabilities in the normal course of business. Notwithstanding the foregoing the financial statements have been prepared on a going concern basis. In the opinion of the directors, the liquidity of the Group can be maintained in the coming year taking into consideration the proposed arrangements which include,
but not limited to, the followings:
The entrusted loan is secured by the Group’s mining rights in Wulatezing Qi, an autonomous region in Inner Mongolia of the PRC and guaranteed by First Create Mining and Mr. Mei Wei. First Create Mining and Mr. Mei Wei have undertaken to honour their obligations as guarantors of this entrusted loan under their guarantee agreements and agree to provide adequate funds to settle the entrusted loan and the accrued interests and penalties.
2. Contingent liabilities on lawsuits and arbitration cases The Group has contingent liabilities of approximately RMB1,152,898,000 arising from alleged guarantee documents entered into by two subsidiaries of the Group.
3. Additional financial support from the controlling shareholder Mr. Mei Wei has undertaken the recoverability of certain trade receivables, deposits and other receivables of the Group in aggregated amount of approximately RMB525,264,000 as at 31 December 2015 in case these balances (in whole or in part) are still outstanding as at 31 December 2016.
In addition to the aforesaid financial undertakings made by Mr. Mei Wei and his affiliates, Mr. Mei Wei has further undertaken to provide continuing financial support to the Group to meet its liabilities as they fall due and to maintain the Group as a going concern for a period at least up to 31 December 2016.
Should the Group be unable to continue in business as a going concern, adjustments would have to be made in the financial statements to write down the values of the assets to their recoverable amounts, to provide for any further liabilities which might arise, and to reclassify non-current assets and non-current liabilities as current assets and current liabilities, respectively.
3. ADOPTION OF NEW AND REVISED IFRSsIn the current year, the Group has applied for the first time the following amendments (the “new IFRSs”) issued by the IASB and the International Financial Reporting Interpretations Committee of the IASB, which are relevant to and effective for the Group’s consolidated financial statements
for the annual period beginning on 1 January 2015:
The adoption of the new IFRSs had no material impact on the Group’s consolidated financial statements.
Annual Improvements 2010-2012 Cycle and 2011-2013 Cycle The amendments issued under the annual improvements process make small, non-urgent changes to a number of standards where they are currently unclear. They include amendments to IAS 24 Related Party Disclosures to clarify that a management entity that provides key management services to a reporting entity is deemed to be a related party of the reporting entity. The reporting entity is required to disclose the amount incurred for the service fee paid or payable to the management entity that employs, or has as directors, the persons that provide the key management personnel services.
The adoption of the amendments to IAS24 has no impact on these financial statements as the Group has not employed any key management personnel services from a management entity.
New/revised IFRSs that have been issued but are not yet effective The following new/revised IFRSs, potentially relevant to the Group’s financial statements, have been issued, but are not yet effective and have not been early adopted by the Group.
Amendments to IAS 1 – Disclosure Initiative The amendments are designed to encourage entities to use judgement in the application of IAS 1 when considering the layout and content of their financial statements.
An entity’s share of other comprehensive income from equity accounted interests in associates and joint ventures will be split between those items that will and will not be reclassified to profit or loss, and presented in aggregate as a single line item within those two groups.
Amendments to IAS 16 and IAS 38 – Clarification of Acceptable Methods of Depreciation and Amortisation The amendments to IAS 16 prohibit the use of a revenue-based depreciation method for items of property, plant and equipment. The amendments to IAS 38 introduce a rebuttable presumption that amortisation based on revenue is not appropriate for intangible assets. This presumption can be rebutted if either the intangible asset is expressed as a measure of revenue or revenue and the consumption of the economic benefits of the intangible asset are highly correlated.
Amendments to IAS 27 (2011) – Equity Method in Separate Financial Statements The amendments allow an entity to apply the equity method in accounting for its investments in subsidiaries in its separate financial statements.
IFRS 9 (2014) – Financial Instruments IFRS 9 introduces new requirements for the classification and measurement of financial assets.
Debt instruments that are held within a business model whose objective is to hold assets in order to collect contractual cash flows (the business model test) and that have contractual terms that give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding (the contractual cash flow characteristics test) are generally measured at amortised cost. Debt instruments that meet the contractual cash flow characteristics test are measured at fair value through other comprehensive income (“FVTOCI”) if the objective of the entity’s business model is both to hold and collect the contractual cash flows and to sell the financial assets. Entities may make an irrevocable election at initial recognition to measure equity instruments that are not held for trading at FVTOCI. All other debt and equity instruments are measured at fair value through profit or loss (“FVTPL”).
IFRS 9 includes a new expected loss impairment model for all financial assets not measured at FVTPL replacing the incurred loss model in IAS 39 and new general hedge accounting requirements to allow entities to better reflect their risk management activities in financial statements.
IFRS 9 carries forward the recognition, classification and measurement requirements for financial liabilities from IAS 39, except for financial liabilities designated at FVTPL, where the amount of change in fair value attributable to change in credit risk of the liability is recognised in other comprehensive income unless that would create or enlarge an accounting mismatch. In addition, IFRS 9 retains the requirements in IAS 39 for derecognition of financial assets and financial liabilities.
IFRS 15 – Revenue from Contracts with Customers The new standard establishes a single revenue recognition framework. The core principle of the framework is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. IFRS 15 supersedes existing revenue recognition guidance including IAS 18 Revenue, IAS 11 Construction Contracts and related interpretations.
IFRS 15 requires the application of a 5 steps approach to revenue recognition:
• Step 1: Identify the contract(s) with a customer
• Step 2: Identify the performance obligations in the contract
• Step 3: Determine the transaction price
• Step 4: Allocate the transaction price to each performance obligation
• Step 5: Recognise revenue when each performance obligation is satisfied IFRS 15 includes specific guidance on particular revenue related topics that may change the current approach taken under IFRS. The standard also significantly enhances the qualitative and quantitative disclosures related to revenue.
The Group is in the process of making an assessment of the potential impact of these new or revised IFRSs and the directors are not yet in a position to quantify the effects on the Group’s consolidated financial statements.