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Central Asia Metals PLC Proposed acquisition of -52-

22 Sep 2017 6:01 am

The following is a reconciliation of SASA's total equity reported in accordance with Local GAAP to its total equity under IFRS at the transition date 1 January 2014 and at 31 December 2014 as follows:
 
                                                Own      Statutory      Other         Retained       Total 
                                              capital     reserves     reserves       earnings       equity 
                                            -----------  ---------  --------------  ------------  ------------ 
Balance at 1 
 January 2014 
 under Local 
 GAAP....................................     4,672,933    934,596     137,866,132    91,960,227   235,433,888 
IFRS Policy Impacts 
 Provisions for 
 employee benefits 
 (Note 
 a)....................................... 
 .....                                                -          -               -     (368,1790     (368,179) 
Balance at 1 
 January 2014 
 under IFRS                                   4,672,933    934,596     137,866,132    91,592,048   235,065,709 
                                            ===========  =========  ==============  ============  ============ 
 Balance at 31 
  December 2014 
  under Local 
  GAAP.....................                   4,672,933    934,596    (15,267,166)    79,059,027    69,399,390 
                                            -----------  ---------  --------------  ------------  ------------ 
 IFRS Policy 
  Impacts 
  Provisions 
  for employee 
  benefits 
  (Note 
  a)...................................... 
  ..                                                  -          -               -      (51,443)      (51,443) 
 Provisions for 
  rehabilitation 
  and environment 
  and depreciation 
  (Note 
  b)...................................... 
  ..                                                  -          -               -     (248,020)     (248,020) 
                                            -----------  ---------  --------------  ------------  ------------ 
 Balance at 31 
  December 2014 
  under 
  IFRS..................................      4,672,933    934,596    (15,267,166)    78,759,564    69,099,927 
                                            ===========  =========  ==============  ============  ============ 
 
   a)         Provisions for employee benefits 

RETIREMENT BENEFITS

The Sasa mine operates a retirement benefit plan, whereas all employees will receive a one- off payment in the amount of two average monthly salaries paid in the Republic of Macedonia in the period coinciding with the event of an employee's retirement. Based on the provisions of IFRS 19, contributions to the plans by Sasa take into consideration the results of actuarial assumptions, which will incorporate estimates about demographic and financial variables. At the end of the closing period Sasa will review the ultimate cost of the benefit and discount it to its present value, to determine the balance of the net benefit liability in its balance sheet. An increase in the present value of the obligation ("current service cost") will be recognised as an expense in the Profit and Loss statement.

JUBILEE AWARD

The Sasa mine recognises an award to its employees who have accrued at least 10 years of service at the company, in the amount of one average monthly salary paid in the Republic of Macedonia in the three months prior to the achievement of the 10th working year, pursuant to the Collective Employment Agreements. IFRS 19 requires the expected liability (which is subjected to significant uncertainty, due to the need to estimate average duration of employment) to be discounted to Present Value, with a charge to the Profit and Loss statement for any increase of the expected liability.
   b)         Asset retirement obligation 

Effective 1 January 2014, Sasa adopted IFRS 37.40, ("Provisions, Contingent Liabilities and Contingent Assets"), which provides accounting and disclosure requirements for retirement obligations associated with long-lived assets. Based on the pronouncements of IFRS 37.40, an Asset Retirement Obligation liability is recorded for an amount equivalent to the total Present Value of all remediation and retirement costs, as estimated by a third party expert based on their most current and reliable expectations at the reporting period. Present Value is calculated using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the liability. IFRS 37 requires that the Present Value of asset retirement costs for which Sasa has a legal obligation be recorded as liabilities, with an equivalent amount added to the asset cost. The liability is accreted (increased) to its present value each period and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, Sasa will settle the obligation for its recorded amount or record a gain or loss if it is settled at a different amount.
   c)         Income tax 

Under previous GAAP income tax arising from declared dividends is presented as part of the Dividends distribution in the Statement of changes in equity.

Under IAS 12 Income tax, which specifies that the income tax arising from distribution of retained earnings should be presented as Income tax expense in the period in which the distribution is declared. The effect is increase the accumulated profit and decrease the current year profit for year 2015 in the amount of USD1,128,945 and for the year ended 31 December 2014 for the amount of USD 6,957,370.

Furthermore, during 2013, SASA declared distribution from retained earnings arising from years 2008 to 2011, to other reserves in the amount of USD 143,987,596 and paid related income tax in the amount of USD15,896,332. During 2014, SASA declared and paid dividend in the amount USD 136,876,645 including related withholding tax in the amount of USD 14,398,768. The effect is increase the accumulated profit and decrease the current year profit for year 2013 in the amount of USD15,896,332.
   24.3     Reconciliation of Comprehensive income 

The following is a reconciliation of SASA's comprehensive income reported in accordance with Macedonian GAAP to its net income under IFRS for the period ending 31 December 2014:
 
                                                                                                         Year ended 
                                                                                                         31 December 
                                                                                                 Note       2014 
 Total comprehensive income - 
  As reported under Local GAAP...................                                                         42,297,989 
 IFRS Policy Impacts 
  Income tax 
  expense.................................................................................... 
  ............                                                                                     12    (7,543,967) 
 Provisions for employee 
  benefits........................................................................                 19       (56,004) 
 Provisions for rehabilitation 
  and environment..................................................                                19      (270,008) 
                                                                                                       ------------- 
 Total comprehensive income - 
  As reported under IFRS................................                                                  34,428,010 
                                                                                                       ============= 
 
   25.       Events after the reporting period 

There are no events after the reporting period that would have an impact on the 2015 statement of comprehensive income, statement of financial position or statement of cash flows.

SECTION B: UNAUDITED HISTORICAL FINANCIAL INFORMATION OF LYNX RESOURCES

FOR THE FINANCIAL PERIOD FROM 19 JUNE 2013 TO 31 DECEMBER 2015

AND THE FINANCIAL YEAR ENDED 31 DECEMBER 2016

Lynx Resources Limited

Historical Consolidated Financial Information for the periods ended 31 December 2016

(all amounts are in USD unless otherwise stated)

Consolidated statement of comprehensive income (loss)
 
                                                                                                        For the 
                                                                                                         period 
                                                                                                         from 19 
                                                                                                         June to 
                                                                                                       31 December 
                                                                               Notes       2016           2015 
                                                                              ------  -------------  ------------- 
 Revenue................................................................... 
  ......................                                                                65,760,476     8,317,549 
----------------------------------------------------------------------------  ------  -------------  ------------- 
 Presented as: 
 Gross 
  revenue................................................................... 
  ............                                                                   6       78,508,182      8,622,911 
 Marketing                                                                              (9,372,696)              - 
 costs...................................................................... 
 ..... 
 Silver purchases for silver                                                            (1,598,619)              - 
  stream.............................................. 
 Freight 
  cost...................................................................... 

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September 22, 2017 02:01 ET (06:01 GMT)

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