ANNUAL%20REPORT%202015%20eng

Management Discussion and Analysis
General and Administration Expenses
The Group’s general and administrative expenses relate primarily to head office staff costs, share option
expenses, allowance for doubtful debts, consultancy and professional fees, depreciation and amortisation of office
equipment and other expenses. For the year ended 31 December 2015, the Group’s general and administrative
expenses was USD30.5 million which was similar to the level of USD30.9 million incurred for the year ended 31
December 2014.
Net Finance Costs
Net finance costs for the year ended 31 December 2015 was approximately USD99.0 million (2014: USD94.5
million). Net finance costs for the year ended 31 December 2015 comprised of (i) interest expense and other
credit facilities related expenses, and (ii) USD21.9 million foreign exchange loss due to the depreciating MNT
against the USD.
Income Tax Expenses
The Group did not have income tax expense for the year ended 31 December 2015 due to the loss incurred
during the period, but had income tax credit of USD16.9 million due to the recognition of deferred tax asset. The
Group’s income tax credit for the year ended 31 December 2014 was approximately USD59.0 million.
Loss for the Period
As a result of the costs listed above, losses attributable to equity shareholders of the Company for the year
ended 31 December 2015 amounted to approximately USD187.8 million (2014: USD282.8 million). The major
contributing factor of the Group’s net loss position is the decrease of ASP and sales volume of coking coal
products due to challenging market conditions in China, as coking coal price continued to be affected by global
supply and demand imbalances.
Impairment Loss
In accordance with IAS 36 Impairment of Assets, entity shall assess at the end of each reporting period whether
its assets are carried at value no more than their recoverable amount. Thus, the Company has undertaken an
impairment assessment on the carrying amount of the Group’s property, plant and equipment, construction in
progress and intangible assets; and the carrying amount of the cash generating unit (“CGU”) has not exceeded its
recoverable amount as at 31 December 2015, and has not resulted in the identification of an impairment loss for
the year ended 31 December 2015. The Directors are of the opinion that the impairment provision is adequate as
at 31 December 2015 and no additional or reversal of impairment provision is needed in respect of the Group’s
non-financial assets in this regard. For the year ended 31 December 2014, impairment loss of USD190 million
was recognized, considering the prolonged weakening global coking coal prices due to the supply and demand
imbalances.
Liquidity and Capital Resources
For the year ended 31 December 2015, the Company’s cash needs were primarily related to working capital
requirements and debt repayments.
The Company’s cash resources were mainly funded by proceeds of approximately Hong Kong Dollar (“HKD”) 1,556
million from rights shares issued on 29 December 2014 and revenue generated from sales of coal products.
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Annual Report 2015