Interim Results

Kenmare Resources PLC 21 September 2005 Kenmare Resources plc ('Kenmare' or 'the Company') Kenmare Interim Results For the period ended 30th June 2005 Chairman's Statement Dear Shareholder, Implementation of Kenmare's Moma Titanium Minerals Project continues apace with 41% completion already being achieved. Commissioning is on track for the fourth quarter of 2006. Most of the steelwork and process components have arrived safely on site from Western Australia and assembly is due to commence this month. Bulk earthworks and civilworks are nearing completion. Construction of the permanent accommodation village has progressed well and it will soon be ready to receive a large influx of construction workers to erect the plants, jetty and other facilities. Recruitment and the placement of major supply contracts for the operations phase are well underway. The market outlook for titanium minerals continues to be positive, driven by strong pigment demand most notably in China. Industry analysts forecast tightness in the ilmenite market to continue for the coming years. This has led to a firming of ilmenite prices, which is set to continue as limited new supplies are scheduled to enter the market and Moma is well placed to capitalise on the positive demand outlook. Negotiations are ongoing with a number of customers for the balance of Moma's ilmenite production. Demand for zircon continues to be very strong and prices have increased to circa US$700 per metric tonne for premium grade. This compares to our financing which was based on approximately US$500 per metric tonne. The outlook is for zircon supply to remain tight for the foreseeable future. Kenmare has contracted a significant volume of its zircon to date at market-based prices, ensuring that we benefit from the continuing strong market conditions. Kenmare has commenced in-fill drilling of the dredge path and recent results have met with expectations. When this programme is completed we plan to investigate more extensively the resource potential beyond the immediate mining area. The Moma Development Association continues to work with Non-Governmental Organisations (NGOs) to set up initiatives to ensure the local community will benefit from the project. These initiatives include skills and agricultural training, promotion of spin-off businesses and health awareness. The Association has engaged a development consultant to further advance a number of projects. During the six months ended 30th June 2005 we report a profit of US$3,750,033. This profit arises primarily from foreign exchange gains on Euro-denominated debt and deposit interest earned net of Kenmare's corporate operating costs. In the six months, investment in Deferred Development Expenditure and Construction at Moma increased by US$84,411,649 to US$220,056,203 and bank loans increased by US$64,548,488 to US$119,522,623. Cash and bank balances at the 30th June amounted to US$80,527,088. We will continue to focus on the successful management of the construction process and look forward to the challenges ahead as we move to production. Charles Carvill Chairman 21st September 2005 For more information: Kenmare Resources plc Michael Carvill, Managing Director Tel: + 353 1 671 0411 Mob: + 353 87 674 0110 Conduit PR Ltd Leesa Peters Tel: +44 (0) 207 618 8708 Mob: + 44 (0) 781 215 9885 Murray Consultants Ltd Aoibheann O'Sullivan Tel: + 353 1 498 0346 Mob: +353 87 629 1453 www.kenmareresources.com INDEPENDENT AUDITORS' REVIEW REPORT TO THE BOARD OF DIRECTORS OF KENMARE RESOURCES PLC Interim Financial Information - Six months ended 30th June 2005 Introduction We have been instructed by the Company to review the financial information for the six months ended 30th June 2005 which comprises the Consolidated Income Statement, the Consolidated Balance Sheet, the Group Cash Flow Statement, and related notes 1 to 9. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This report is made solely to the Company in accordance with Bulletin 1999/4 ' Review of Interim Financial Information' issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report or for the conclusions we have reached. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the interim report in accordance with the Listing Rules of the Irish Stock Exchange and of the UK Financial Services Authority which require that the accounting policies and presentation applied to the interim figures are consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. International Financial Reporting Standards As disclosed in note 1, the next annual financial statements of the Group will be prepared in accordance with International Financial Reporting Standards as adopted for use in the EU. Accordingly, the interim report has been prepared in accordance with the recognition and measurement criteria of IFRS and the disclosure requirements of the Listing Rules. The accounting policies are consistent with those that the Directors intend to use in the annual financial statements. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom and Ireland. A review consists principally of making enquiries of management and applying analytical procedures to the financial information and underlying financial data and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with International Statements on Auditing (UK and Ireland) and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30th June 2005. Deloitte & Touche Chartered Accountants and Registered Auditors Deloitte & Touche House Earlsfort Terrace Dublin 2 21st September 2005 KENMARE RESOURCES PLC CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS ENDED 30th JUNE 2005 6 Months 6 Months 12 Months 30/06/2005 30/06/2004 31/12/2004 Unaudited Unaudited Audited US$ US$ US$ Revenue - - - Operating Gains/(Expenses) 2,852,596 46,750 (588,330) Operating Profit/(Loss) 2,852,596 46,750 (588,330) Interest Receivable 897,437 25,130 611,625 Profit on Ordinary Activities Before Taxation 3,750,033 71,880 23,295 Taxation - - - Profit On Ordinary Activities After Taxation 3,750,033 71,880 23,295 Earnings per share: Basic 0.58c 0.03c 0.01c Earnings per share: Diluted 0.48c 0.02c 0.01c KENMARE RESOURCES PLC CONSOLIDATED BALANCE SHEET AS AT 30 th JUNE 2005 6 Months 6 Months 12 Months 30/06/2005 30/06/2004 31/12/2004 Unaudited Unaudited Audited US$ US$ US$ ASSETS Non-Current Assets Deferred Development Expenditure 91,730,552 42,074,660 61,661,793 Construction in Progress 86,711,581 - 32,368,691 Property, Plant and Equipment 41,614,070 41,618,255 41,614,070 220,056,203 83,692,915 135,644,554 Current Assets Debtors 7,769,835 751,985 1,557,260 Cash at Bank and In Hand 80,527,088 538,203 92,851,383 88,296,923 1,290,188 94,408,643 Total Assets 308,353,126 84,983,103 230,053,197 EQUITY Capital and reserves attributable to the Company's equity holders Called Up Share Capital 53,426,440 26,327,993 52,923,239 Share Premium Account 100,986,877 29,916,845 99,589,865 Profit and Loss Account - (Deficit) (18,122,666) (21,824,113) (21,872,698) Share Options Reserve 1,836,045 42,659 175,259 Revaluation Reserve 30,141,002 30,141,002 30,141,002 Other Reserve 3,642,080 3,642,080 3,642,080 Capital Conversion Reserve Fund 754,191 754,191 754,191 Total Equity 172,663,969 69,000,657 165,352,938 LIABILITIES Non-current Liabilities Bank loans 119,522,623 - 54,974,135 Accruals and other loans 5,780,738 1,502,582 1,568,202 125,303,361 1,502,582 56,542,337 Current Liabilities Accruals 10,385,796 14,479,864 8,157,922 Total Liabilities 135,689,157 15,982,446 64,700,259 Total equity and liabilities 308,353,126 84,983,103 230,053,197 KENMARE RESOURCES PLC GROUP CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30 th JUNE 2005 6 Months 6 Months 12 Months 30/06/2005 30/06/2004 31/12/2004 Unaudited Unaudited Audited US$ US$ US$ Operating activities Profit/(loss) for the period 2,852,596 46,750 (588,330) Adjustment for: Depreciation - 4,185 8,370 Foreign exchange movement 2,048,758 (36,440) 2,992,062 Share-based payment expense 166,079 - 13,260 Operating cashflows before movements In working capital 5,067,433 14,495 2,425,362 (Increase) in debtors (6,212,575) (661,663) (1,466,938) Increase in accruals 6,475,864 11,254,957 5,042,638 Net cash from operating activities 5,330,722 10,607,789 6,001,062 Investing activities Interest received 897,437 25,130 611,624 Addition of Deferred Development Expenditure (30,068,759) (14,605,104) (34,192,237) Addition of Construction in Progress (54,342,890) - (32,368,691) Net cash used in investing activities (83,514,212) (14,579,974) (65,949,304) Financing activities Issue of Ordinary Share Capital 1,903,230 127,037 105,644,318 Cost of share issue (3,018) - (9,249,015) Share option reserve 1,494,707 - 119,340 (Decrease) in debt due within one year - - (109,622) Increase/(decrease) in debt due beyond a year 64,513,034 (227,579) 54,812,176 Net cash from financing activities 67,907,953 (100,542) 151,217,197 Net (decrease)/increase in cash and cash equivalents (10,275,537) (4,072,727) 91,268,995 Cash and cash equivalents at beginning of period 92,851,383 4,574,490 4,574,490 Effect of foreign exchange rate changes (2,048,758) 36,440 (2,992,062) Cash and cash equivalents at end of period 80,527,088 538,203 92,851,383 KENMARE RESOURCES PLC NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30th JUNE 2005 1. Basis of Preparation of the Interim Financial Statements In the current year, the Group has adopted all of the new and revised Standards and Interpretations issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB that are relevant to its operations and effective for accounting period beginning on the 1st January 2005. The adoption of these new Standards and revised Standards and Interpretations has resulted in changes to the Group's accounting policies set out on page 24 of the 2004 Annual Report and Accounts for Share-based Payments (IFRS 2) and Property, Plant and Equipment (IAS 16). The adoption of IFRS 2 has affected the amounts reported for the current and prior years and details of this are set out in Note 2. The unaudited interim financial information in this statement has been reviewed by the auditors in respect of the six months ended the 30th June 2005 only and their Report to the Directors is set out on page 3. 2. Share-based payments IFRS 2 Share-based Payment requires the recognition of share-based payments, which in the case of the Group are share options, at fair value at the date of grant. Prior to the adoption of IFRS 2, the Group did not recognise the financial effect of share-based payments until such payments were settled. In accordance with the transitional provisions of IFRS 2, the Standard has been applied retrospectively to all grants of share options after the 7th November 2002 that were unvested as of 1st January 2005. The fair value of the share entitlements to be expensed is determined by using a Black-Scholes option pricing model. The following inputs were used in determining the fair value of share entitlements: • The exercise price which is the market price at the date that share entitlements were granted. • Future price volatility was based on historical volatility as a guide and is assessed over one year. • A risk free interest rate. For the year ended the 31st December 2004, the change in accounting policy has resulted in a decrease in profit for the year of US$13,260 (2003:US$4,266). The Balance Sheet at 31st December 2004 has been restated to reflect share-based payment capitalised of US$119,340 (2003:US$38,393) and the share option reserve movement amounted to US$132,600 (2003: US$42,659). For the period ended the 30th June 2005, the share-based payment expense was US$166,079 and the share-based payment capitalised was US$1,494,707, resulting in a movement in the share option reserve for the period of US$1,660,786. 3. Earnings and Fully Diluted Earnings per Share The calculation of the earnings and fully diluted earnings per share is based on the profit after taxation of US$3,750,033 (2004: US$71,880) and the weighted average number of shares in issue during the six months ended the 30th June 2005 of 649,779,786 shares (2004: 288,212,873 shares). The calculation of fully diluted earnings per share for 2005 is based on the profit for the period after taxation as for basic earnings per share. The number of shares is adjusted to show the potential dilution if share options and share warrants are converted into ordinary shares. This increases the weighted average number of shares in issue to 787,759,271. 4. Deferred Development Expenditure The recovery of deferred development expenditure is dependent upon the successful development of the Moma Titanium Minerals Project, Mozambique, which in turn is dependent on the continued availability of adequate funding for the Project. The Directors are satisfied that deferred expenditure is worth not less than cost less any amounts written off and that the exploration projects have the potential to achieve mine production and positive cash flows. Additions include interest capitalised of US$2,699,400 (2004: US$nil). 5. Construction in Progress Construction in Progress represents expenditure under a fixed price contract for the engineering, procurement, building, commissioning and transfer of facilities at the Moma Titanium Minerals Project in Mozambique. This contract was entered into on the 7th April 2004. The Contractor is a joint venture formed for this project, between Multiplex Ltd and Bateman B.V. Multiplex is a large contracting group based in Australia with operations stretching around the globe and specialises in large complex construction projects. Bateman is an international engineering group with specific mineral sands experience and experience of working in Mozambique. The recovery of Construction in Progress is dependent upon the successful development of the Moma Titanium Minerals Project, which in turn is dependent on the continued availability of adequate funding for the Project. 6. Property, Plant and Equipment Property, Plant and Equipment comprise of a Processing and Mining Plant. GRD Minproc Limited, an independent Australian engineering group, appraised the mining and processing plant on a depreciated replacement cost basis of valuation as at 30th June 2000 and the Plant was held at this valuation in the accounts to 31st December 2004. Confirmation of the existence of the Processing and Mining Plant at the year end was provided by C.R. Cox & Associates (Australia), a firm of marine consultants and surveyors. Under the transition to IFRS, the Group has elected to use the above valuation as the deemed cost as and from the 1st January 2005. The recovery of this amount is dependent upon the successful development of the Moma Titanium Minerals Project, which in turn is dependent on the continued availability of adequate funding for the Project. 7. Reconciliation of changes in Equity 6 Months 6 Months 12 Months 30/06/2005 30/06/2004 31/12/2004 Unaudited Unaudited Audited US$ US$ US$ Balance at the beginning of the period 165,352,938 68,801,740 68,801,740 Issue of Shares - at par 503,201 58,454 26,653,700 Share Premium, net of costs 1,397,012 68,583 69,741,603 Employee share based compensation 1,660,785 - 132,600 Profit for the period 3,750,033 71,880 23,295 Closing Shareholders' funds 172,663,969 69,000,657 165,352,938 8. Non-Consolidation of Subsidiary Undertaking As set out in detail in Note 28 of the 2004 Annual Report, Grafites de Ancuabe, S.A.R.L., a subsidiary company, has been excluded from consolidation from 31st December 1999. 9. Approval of Interim Financial Statements The interim financial statements were approved by the Board on the 21 st September 2005. 21 September, 2005 This information is provided by RNS The company news service from the London Stock Exchange

Companies

Kenmare Resources (CDI) (KMR)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today