| Tue 17 Feb 2009, 9:44 | | EPS - Eastern Platinum Limited - News Release |
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EPS
EPS
EPS - Eastern Platinum Limited - News Release
EASTERN PLATINUM LIMITED
(Incorporated in Canada)
(Canadian Registration number BC0722783)
(South African Registration number 2007/006318/10)
Share Code TSX: ELR ISIN: CA2768551038
Share Code AIM: ELR ISIN: CA2768551038
Share Code JSE: EPS ISIN: CA2768551038
NEWS RELEASE - EASTPLATS REPORTS EARLY ADOPTION OF INTERNATIONAL FINANCIAL
REPORTING STANDARDS FOR THE YEAR COMMENCING JANUARY 1, 2009
Mr. Ian Rozier, President and CEO of Eastern Platinum Limited ("Eastplats" or
the "Company") is pleased to announce that on February 9, 2009, the British
Columbia and Ontario Securities Commissions granted the Company exemptive
relief to adopt International Financial Reporting Standards ("IFRS") with an
adoption date of January 1, 2009 and a transition date of January 1, 2008.
1. IFRS Conversion
Eastplats` comprehensive IFRS conversion plan addresses changes in accounting
policies, restatement of comparative periods, organization, internal controls
and any required changes to business processes. To facilitate this process
and ensure the full impact of the conversion is understood and managed
reasonably, Eastplats hired a Manager of Financial Reporting whose time has
been largely dedicated to the IFRS conversion project. The Canadian
accounting staff has attended several training courses on the adoption and
implementation of IFRS and the South African accounting staff is familiar
with IFRS due to the local adoption of IFRS in 2005. Through in-depth
training and the reconciliation of historical Canadian GAAP financial
statements to IFRS, Eastplats believes that its accounting personnel have
obtained a thorough understanding of IFRS.
Eastplats has reviewed its accounting system, its internal controls and its
disclosure control processes and believes they will not need significant
modification as a result of the conversion to IFRS.
2. Initial adoption of International Financial Reporting Standards
IFRS 1 "First-time Adoption of International Financial Reporting Standards"
sets forth guidance for the initial adoption of IFRS. Under IFRS 1, the
standards are applied retrospectively at the transitional balance sheet date
with all adjustments to assets and liabilities taken to retained earnings
unless certain exemptions are applied. Eastplats will be applying the
following exemptions to its opening balance sheet dated January 1, 2008:
(a) Business Combinations
IFRS 1 indicates that a first-time adopter may elect not to apply IFRS 3
Business Combinations retrospectively to business combinations that occurred
before the date of transition to IFRS. Eastplats will take advantage of this
election and will apply IFRS 3 to business combinations that occurred on or
after January 1, 2008.
(b) Cumulative translation differences
IFRS 1 allows a first-time adopter to not comply with the requirements of IAS
21 The Effects of Changes in Foreign Exchange Rates for cumulative
translation differences that existed at the date of transition to IFRS.
Eastplats has chosen to apply this election and will deem its cumulative
translation differences for all foreign operations to be zero at the date of
transition to IFRS. If, subsequent to adoption, a foreign operation is
disposed of, the translation differences that arose before the date of
transition to IFRS shall be excluded from the gain or loss on disposal.
(c) Share-based payment transactions
IFRS 1 encourages, but does not require, first-time adopters to apply IFRS 2
Share-based Payment to equity instruments that were granted on or before
November 7, 2002, or equity instruments that were granted subsequent to
November 7, 2002 and vested before the later of the date of transition to
IFRS and January 1, 2005. Eastplats has applied the election to apply IFRS 2
prospectively to equity instruments vested prior to January 1, 2008.
(d) IAS 27 - Consolidated and Separate Financial Statements
In accordance with IFRS 1, if a company elects to apply IFRS 3 Business
Combinations retrospectively, IAS 27 Consolidated and Separate Financial
Statements must also be applied retrospectively. As Eastplats elected to
apply IFRS 3 prospectively, the Company has also elected to apply IAS 27
prospectively.
IFRS 1 also outlines specific guidelines that a first-time adopter must
adhere to under certain circumstances. Eastplats will be applying the
following guidelines to its opening balance sheet dated January 1, 2008:
(a) Assets and liabilities of subsidiaries, associates and joint ventures
In accordance with IFRS 1, if a parent company adopts IFRS subsequent to its
subsidiary, associate or joint venture adopting IFRS, the assets and the
liabilities of the subsidiary, associate or joint venture are to be included
in the consolidated financial statements at the same carrying amounts as in
the financial statements of the subsidiary, associate or joint venture.
Eastplats will apply this election.
(b) Estimates
In accordance with IFRS 1, an entity`s estimates under IFRS at the date of
transition to IFRS must be consistent with estimates made for the same date
under previous GAAP, unless there is objective evidence that those estimates
were in error. Eastplats` IFRS estimates as of January 1, 2008 will be
consistent with its Canadian GAAP estimates for the same date unless evidence
is obtained that indicates that the estimates were in error.
3. Impact of IFRS
IFRS employs a conceptual framework that is similar to Canadian GAAP.
However, significant differences exist in certain matters of recognition,
measurement and disclosure. While adoption of IFRS will not change
Eastplats` actual cash flows, it will result in changes to Eastplats`
reported financial position and results of operations. In order to allow the
users of the financial statements to better understand these changes, the
following qualitative explanation of the differences between Canadian GAAP
and IFRS was completed for Eastplats` net earnings, assets, liabilities, and
shareholders equity for the nine month period ended September 30, 2008.
(a) Revenue and interest income
Eastplats settles its metal sales three to five months following the physical
delivery of the concentrates.
Canadian GAAP - All sales revenue is recorded as trade revenue with 100% of
the receivable recognized on the date of sale. Sales that have not settled
by period end are adjusted to the period end market price.
IFRS - The future revenue expected to be received must be present valued.
The difference between the present value and the future value is recognized
as interest revenue over the term of settlement. The remainder of revenue is
recorded as trade revenue. Sales that have not settled by period end are
adjusted to the market price at the period end market price unless a lower
price is expected in which case the lower prices are applied.
(b) Cost of sales
As discussed below, property, plant and equipment has a different value in
accordance with IFRS than in accordance with Canadian GAAP. This results in
a different value for amortization expense, and a corresponding change in
cost of sales.
(c) Impairment reversals and other income
Canadian GAAP - Impairment losses cannot be reversed.
IFRS - Impairment losses can be reversed. Eastplats` South African
subsidiaries` financial statements have been prepared in accordance with IFRS
since 2005 and have recognized impairment loss reversals between 2005 and
2008. In accordance with IFRS 1, the Company measured its subsidiaries`
assets and liabilities at their IFRS values which included the impairment
loss reversals.
(d) Stock based compensation
Canadian GAAP
(i) The fair value of stock-based awards with graded vesting are calculated
as one grant and the resulting fair value is recognized on a straight-
line basis over the vesting period.
(ii) Forfeitures of awards are recognized as they occur.
IFRS
(i) Each tranche of an award with different vesting dates is considered a
separate grant for the calculation of fair value, and the resulting fair
value is amortized over the vesting period of the respective tranches.
(ii) Forfeiture estimates are recognized in the period they are estimated,
and are revised for actual forfeitures in subsequent periods.
(e) Minority shareholder`s interest
Minority shareholder`s interest is calculated in the same manner in
accordance with Canadian GAAP and IFRS. However, minority shareholder`s
interest is calculated based on profit after taxation and the adjustments
discussed above directly affect profit after taxation. This is expected to
result in an adjustment to minority shareholder`s interest.
(f) Income tax expense
Income tax expense is calculated in the same manner in accordance with
Canadian GAAP and IFRS. However, income tax expense is calculated based on
profit or loss and the adjustments discussed above directly affect profit or
loss. This is expected to result in an adjustment to income tax expense.
(g) Trade and other receivables
Please refer to the revenue discussion in point (a) above.
(h) Intangible assets
Canadian GAAP - Purchased mineral rights are recorded as property, plant and
equipment.
IFRS - Purchased mineral rights are recorded as intangible assets. This
results in a corresponding adjustment to property, plant and equipment and
intangible assets.
(i) Property, plant and equipment ("PPE")
There are three adjustments made to PPE: reclassification as intangible
assets, reversal of impairment losses, and depreciation. The
reclassification of mineral properties from PPE to intangible assets has been
discussed in point (h), reversal of impairment losses has been discussed in
point (c), and changes in depreciation amounts have been discussed in point
(b). Please refer to these discussions for further information.
(j) Future income tax asset/liability
Future income tax asset/liability is calculated in the same manner in
accordance with Canadian GAAP and IFRS. However, the balances (e.g. PPE)
used to calculate the future income tax asset or liability differ under
Canadian GAAP and IFRS. This is expected to result in an adjustment to the
future income tax asset or liability.
(k) Accounts payable, accrued liabilities and provisions
Canadian GAAP - Accounts payable, accrued liabilities and provisions are
disclosed on the balance sheet as a single line item.
IFRS - A provision is a liability of uncertain timing or amount. Provisions
are disclosed separately from liabilities and accrued liabilities and require
additional disclosure.
(l) Asset retirement obligation ("ARO")
Canadian GAAP - When the ARO is revalued, any difference between the current
and previous ARO is recorded against the asset.
IFRS - When the ARO is revalued, any difference between the current and
previous ARO is allocated between the environmental asset and the expense.
(m) Accumulated other comprehensive income or loss
Canadian GAAP - Four of Eastplats` subsidiaries are considered to be
integrated subsidiaries. The non-monetary assets and liabilities of these
subsidiaries are translated using historical rates. The difference resulting
from the balance sheet and income statement being translated at different
rates is recorded within "Foreign exchange gain or loss" on the income
statement.
IFRS - All subsidiaries assets and liabilities are translated at the period
end spot rate. The difference resulting from the balance sheet and income
statement being translated at different rates is recorded within Cumulative
Translation Adjustment on the balance sheet. As well, the IFRS 1 exemption
discussed in point (ii) above will result in an adjustment to accumulated
other comprehensive income or loss.
(n) Accumulated profit or loss.
As discussed above, the transition to IFRS resulted in adjustments to net
income and retained earnings. These adjustments resulted in a corresponding
adjustment to accumulated profit or loss.
Total shares issued and outstanding: 680,526,421
16 February 2009
For further information contact:
Investor Relations
Website: www.eastplats.com
Email: info@eastplats.com
Tel: 1-(604)-685-6851, Fax: 1-(604)-685-6493
NOMAD: JSE Sponsor:
Canaccord Adams Limited, London PSG Capital (Pty) Limited,
Email: South Africa
Ryan.Gaffney@canaccordadams.com Email: anjem@psgcapital.com
Tel: +44 20 7050 6500 Tel: +27 21 887 9602
Certain statements included herein constitute "forward-looking statements"
within the meaning of applicable Canadian securities legislation. These
forward-looking statements are based on certain assumptions by Eastplats and
as such are not a guarantee of future performance. Actual results could
differ materially from those expressed or implied in such forward-looking
statements due to factors such as general economic and market conditions,
increased costs of production and a decline in metal prices. Eastplats is
under no obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as
required by applicable laws.
Date: 17/02/2009 09:44:01 Produced by the JSE SENS Department.
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