23. Cash flows from operating activities
31 December 31 December 2012
2013 Restated
$ $
Net loss from operations (2,057,343) (5,628,224)
Adjustments for:
Share of associate undertaking's
losses 87,225 13,437
Impairments - 3,050,548
Gain on dilution of subsidiary - 147,659
Translation and currency movements 22,027 (161,281)
Depreciation 788 595
Share based payments charge 47,741 1,416,949
_______ _______
Operating cash flows before movements
in working capital (1,899,562) (1,160,317)
Decrease/ (increase) in trade
and other receivables 539,597 (495,168)
Decrease in trade and other payables (4,861) (29,825)
Net cash outflow from operating
activities (1,364,826) (1,685,310)
24. Controlling party
The Company has no controlling entity and is the ultimate parent
of the Group.
25. Related party transactions
C Kyriakou and J Reynolds are directors of Natasa Mining Ltd
("Natasa"), a substantial shareholder in the Company.
As further described in Note 17, on 2 August 2013, Natasa and
the Company entered into a loan facility agreement whereby Natasa
agreed to make available to the Company a loan facility of not less
than GBP1.7 million for the period up to 31 January 2015 at a rate
of interest of 15% p.a. compounded annually and a fee of 3% of
amounts drawn down, capitalised with the loan, and repayment on 60
days notice provided that such notice cannot be given prior to 31
January 2015 or earlier on the occurrence of an event of default
(which would include Natasa not having two representatives on the
Board of the Company). Security for this facility is a charge over
the shares held by the Company in its subsidiaries. At the same
time the parties entered a deed of novation whereby the Company
assumed all of the liabilities of UMC Energy PLC ("PLC") to
Natasa.
$10,817,642 of debt owing by PLC to Natasa was assumed by the
Company under the deed of novation,including accrued interest of
$2,440,312. Of the amount novated, $1,952,582 had been borrowed by
PLC during the year ended 31 December 2013, including interest and
charges of $1,036,225 (2012: $1,023,978).
In addition, during the year ended 31 December 2013 the Company
borrowed, under the Natasa loan facility, $1,183,978. This amount
includes interest and charges of $501,822.
At present, the Company is entirely dependent on funding from
Natasa for its continuing operation.
On 2 August 2013, the Company entered into an agreement with
Natasa Management SARL ("Management"), a wholly-owned subsidiary of
Natasa, pursuant to which Management will provide to the Company
office facilities and will facilitate the meetings of Directors in
order for them to manage and control the affairs of the Company. In
return for these services the Company agreed to pay Management the
cost of the services provided plus 10% subject to a minimum fee of
EUR250 per month, which during the year amounted to $1,698 (2012:
$nil).
C Kyriakou paid expenses on behalf of the Company, for which he
was reimbursed, amounting to $173,890 (2012: $46,091).
Petro-Ex Pty Limited, a company in which C Hart has an interest,
paid expenses on behalf of the Company, for which it was
reimbursed, amounting to $32,711 (2012: $4,474).
The Company was charged $65,656 (2012: $66,557) by Resource
Capital Partners Inc for the provision of the consultancy services
of C Kyriakou.
The Company was charged $31,265 (2012: $5,282) by
Accomplishments Pty Limited for the provision of the services of R
Cleary as director.
The Company was charged $136,021 (2012: $50,698) by Petro-Ex Pty
Ltd for the provision of the consultancy services of C Hart.
The Company was charged $92,709 (2012: $99,491) by J Reynolds
for the provision of accounting and administration services. J
Reynolds paid expenses on behalf of the Company, for which he was
reimbursed, amounting to $84,781 (2012: $118,147).
The Company was charged $31,265 (2012: $22,186) by Shakesby
Investments Pty Limited for the provision of the services of R
Shakesby as director.
The parent company of the group is UMC Energy Corporation and
details of its subsidiaries are set out in note 12.
During the year, Group members made additional advances,
including the provision of support services and staff, to the
Company's subsidiary Uramad SA of $267,181 (2012: $201,203) and at
the year end, Uramad SA owed Group companies $6,119,403 (2012:
$5,852,222). The amount owing to Group members has been fully
impaired in the books of the relevant company.
During the year, Group members made advances to the Company's
associate Gini Energy Ltd of $nil (2012: $48,478). The amount
outstanding at the year end was $nil (2012: $nil).
During the year, Group members on-charged $171,970 (2012:
$470,034) of costs relating to the PNG Petroleum project to Gini
Energy Ltd for payment by CNOOC under the CNOOC/Gini non-recourse
loan. The amount outstanding at the year end was $nil (2012:
$470,034).
26. Post balance sheet events
Since 1 January 2014, the Company has advanced a further
US$12,588 to Uramad SA, for use on uranium exploration project
development activities.
Since 1 January 2014, the Company has borrowed a further
$217,109 from Natasa Mining Ltd, for working capital purposes.
27. Financial instruments
The Group's financial instruments comprise cash and cash
equivalents, loans payable and various items such as trade
receivables, trade payables, accruals and prepayments that arise
directly from its operations.
The main purpose of these financial instruments is to finance
the Group's operations.
The Board regularly reviews and agrees policies for managing the
level of risk arising from the Group's financial instruments. These
are summarised below:
Credit risk
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to the
Group, and arises principally from the consolidated entity's bank
balances which, except for impairment adjustments recognised, is
considered by the directors to be recoverable in full.
The carrying amounts of the financial assets recognised in the
balance sheet best represents the Group's maximum exposure to
credit risk at the reporting date. In respect of these financial
assets and the credit risk embodied within them, the Group holds no
collateral as security and there are no other significant credit
enhancements in respect of these assets. The credit quality of all
financial assets that are neither past due nor impaired is
appropriate and is consistently monitored in order to identify any
potential adverse changes in credit quality. There are no financial
assets that have had renegotiated terms that would otherwise,
without that renegotiation, have been past due or impaired.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due.
The Group's policy throughout the year has been to ensure that
it has adequate liquidity to meet its liabilities when due by
careful management of its working capital.
The following are the contractual maturities of financial
liabilities:
Carrying Greater than
31 December 2013 amount Cash flows 3 months or one year
less
$ $ $ $
Trade and other
payables 21,215 21,215 21,215 -
Loans payable 12,001,620 12,001,620 12,001,620 -
12,022,835 12,022,835 12,022,835 -
Carrying Greater than
31 December 2012 amount Cash flows 3 months or one year
less
Restated $ $ $ $
Trade and other
payables 14,769 14,769 14,769 -
Loans payable 9,865,769 9,865,769 9,865,769 -
9,880,538 9,880,538 9,880,538 -
Market risk
Market risk is the risk that changes in market prices, such as
commodity prices, foreign exchange rates, interest rates and equity
prices will affect the Group's income or value of its holdings in
financial instruments.
Commodity price risk
The principal activity of the Group is the development of a
petroleum extraction project in Papua New Guinea and a uranium
mining project in Madagascar and the principal market risk facing
the Group is an adverse movement in the commodity price of
petroleum/natural gas or uranium.
Any long term adverse movement in these prices would affect the
commercial viability of the projects and hence the value of the
Group as a whole.
Foreign currency risk
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