RNS Number:7853R
Investika Ltd
23 February 2007
INVESTIKA LTD
Preliminary Results for the year ended 31 December 2006
23 February 2007
Investika Ltd ("Investika" or the "Company") the investment company in the
mining finance industry with a focus on pre-production emerging resource
opportunities announces today its preliminary results for the period ended 31
December 2006.
REVIEW OF OPERATIONS AND STATE OF AFFAIRS
Berong Nickel Corporation
Continued to support its investment in Berong Nickel Corporation, which is
developing the Berong nickel project on the island of Palawan Philippines,
through expending $2,052,928 on project related expenses. The Berong nickel
project achieved two key milestones, namely (i) was granted a Special Mines
Permit by the Mines and Geosciences Bureau to commence commercial mining
operations and (ii) commenced extraction of a bulk metallurgical sample of
laterite nickel ore. The bulk sample will be used for metallurgical test
purposes in the Chinese char-nickel process. The successful testing of this ore
is expected to pave the way for a long term supply contract.
By 31 December 2006, approximately 50,000 tons of ore was stockpiled at the
coastal causeway ready for shipment. The bulk sample was extracted from the
closest accessible ore within the Permit Area, whilst commercial operations will
start from a separate area identified to have higher grades. Road access to the
commercial mining area is under development.
Activities currently underway or being programmed include the development of a
new road and a trestle conveyor for the direct loading of ships without the use
of barges. Both these developments are anticipated to significantly enhance
operations. The new road will considerably shorten the distance from the mine to
the coastal stockpile areas and has the advantage of being a dedicated road
without community housing development along its route. The trestle conveyor will
allow the loading of ships under most sea conditions, and at loading rates
considerably faster than achievable using barges.
Requests for laterite ore continue strongly, with demand far exceeding supply.
The demand is across all grade ranges from around 1% nickel grade ore through to
above 2% nickel grade ore. The Berong nickel project will be able to supply all
grade ranges, with initial commercial development and sales concentrating on the
high grade ore, and opportunistically selling the lower grade ore. Negotiations
continue with BHP Billiton/QNI on the long term supply (4 years + annually for
another 5 years) of up to 500,000 tonnes per year ore.
Options analysis and metallurgical testing for future value added processing of
the laterite ore continues. Processing options being considered include HPAL,
vat leaching, ferro-nickel smelting, and the Chinese "blast furnace" process.
Activities undertaken on field exploration and evaluation include-
Total program since
commencement
Test Pits - Re-sampled 1,299
- # samples 8,763 (8,000 metres)
Test Pits - Re-deepened 414
- # samples 2,026 (1,543 metres)
Test Pits - New 157
- # samples 972 (986 metres)
Drilling - # Holes 640
- # samples 7,885 (7627 metres)
Lines Cleared - kms 95
GPR Survey - kms 55
Density Measurements - # 313
Tommy SA
Continued to support its investment in Tommy SA, which is developing the Las
Pascualas and El Morado copper projects in Chile. A total of US$3.6 million has
been expended on project related expenses by the joint venture parties, of which
the Company's share was $371,296.
Project Las Pascualas.
An extensive drilling program was completed at Pascuala North as well as three
scout drilling programs at Pascuala South and East, Llano Corredores and Breccia
East. The Pascuala North drilling comprised 72 reverse circulation holes
totalling 7,835 metres on a 100 x 100 metre grid pattern.
A geological model of the Pascuala North deposit has been generated and given to
SRK Consultants (Santiago, Chile) to undertake an external resource block model
and ore estimate. This work is planned for completion in February 2007.
A Scoping Study dealing with mining, processing, infrastructure and services and
environmental aspects for the supergene (enrichment) zone of the Pascuala North
deposit to confirm project viability has commenced and is due to be completed in
March 2007.
A metallurgical progress report from the University of La Serena on bacterial
leaching (cultivation) was received. In summary, the test work to date has
proved that the underground mine water at Pascuala North contains bacteria that
can be successfully cultured and used in the leaching of the supergene ore and
that the ore sample showed good bioleaching characteristics. A seven month leach
test work program for both the supergene and oxide ores has commenced at a
laboratory in Santiago.
Project El Morado.
Following examination of exploration results from the project, the Company
resolved not to pay the second year option fee and as a result the option over
the property has lapsed.
Belitung Zinc Corporation
Continued to support its investment in Belitung Zinc Corporation plc (BZC),
which is developing the Kelapa Kampit zinc/lead project on the island of
Belitung, Indonesia.
Following the formation of BZC in late 2005, in January 2006 BZC raised #3
million (approximately $7 million) in equity from a group of UK investors
leaving the Company with a reduced equity interest of 42.5% in BZC. This
dilution resulted in the consolidated entity recognising a gain of $3,045,125.
The required permit for the exploration of all base metals, including tin,
within the Kelapa Kampit deposit was granted during the year.
The rehabilitation of two adits was completed. Two bulk samples of material,
weighing approx. 40kg each, were taken from the mineralized zones in the adits
and delivered to a metallurgical laboratory in Tasmania for assaying of metal
content and the assessment of recovery potential.
Trenching and mapping of the central 2.5 km (Central Block ) of the
approximately 12 km long mineralised zone was completed during November 2006 and
a start was made in December 2006 on cutting additional trenches to the east and
west of the Central Block.
The mineralogical model of the Central block is expected to be completed by
February 2007 and the in-fill diamond-core drilling of this zone is scheduled to
commence later in the first quarter of 2007.
UMC Energy plc
Continued to support its investment in AIM listed UMC Energy plc (UMC) which
finalised the acquisition of an 80% interest in a uranium exploration project in
Madagascar.
The exploration permits, which have been granted for 10 years expiring in 2015
and 2016 are located in the Morondava Basin which is infilled and layered with
sediments, most notably the Karoo formation that hosts uranium mineralization.
The areas were previously identified and explored during the uranium cycles of
1956 to 1963 and 1979 to 1982 by the United Nations (PUND) and the Office of
National Mines and Strategic Industries (OMNIS), a Malagasy state body,
respectively. Later, the French uranium company Cogema took on large permits and
continued regional exploration that terminated in the late 1990s with the
down-turn in uranium prices and demand.
Included in the acquisition is the data base for the Morondava Basin that
includes the results of airborne geophysical and radiometric surveys, drill logs
for 790 drill holes (approximately 83,000 metres of drilling) with indicated
uranium values, and visible uranium mineralization associated with targets
picked from 7,000 radioactive anomalies, recorded and plotted.
A geological field camp was established, in mid-November 2006, in the Folakara
area of the Morondava Basin and a start was made on the drilling of
approximately 12 diamond-core drill holes, in the area previously explored by
Cogema in the 1960s, in order to verify the stratigraphy documented by the
French and to establish the nature of the minerals present. Due to the onset of
the rainy season, field operations were curtailed in early December 2006 and are
scheduled to resume during the second quarter of 2007, once the water levels in
the rivers have subsided sufficiently to permit vehicle access.
Toledo Mining Corporation
Acquired an equity interest of 11.6% in the capital of AIM listed Toledo Mining
Corporation plc (TMC) at a cost of $8,439,945. TMC owns a 56.1% economic
interest in the Berong nickel project. In addition, it owns a (i) 52% economic
interest in the Ipilan nickel project located on the island of Palawan,
Philippines and which is being explored and is expected to be developed
initially as a direct shipping operation; and (ii) 58% economic interest in the
Ulugan nickel project located on the island of Palawan, Philippines and which
will be subjected to exploration activities.
Other Developments
* Increased its holding in AIM listed Tarquin Resources plc to 32.6%
following the acquisition of additional shares at a cost of $2,120,344.
Tarquin Resources plc is the Company's joint venture partner in Tommy SA
and holds a 51% interest in that entity.
* Acquired an interest in AIM listed Cambrian Oil and Gas plc at a cost of
$495,078.
* Acquired an interest in AIM listed Irvine Energy plc at a
cost of $148,251.
* Consolidated its share capital on the basis of 1 for 100.
* Undertook a successful 1 : 1 rights issue raising $13,034,249 through the
issue of 6,517,124 ordinary shares (adjusted for the 1 : 100
consolidation).
* Raised $3,400,952 (net of costs) through placing 1,306,500 ordinary
shares (adjusted for the 1 : 100 consolidation).
* Was admitted to the London Stock Exchange's AIM market on 22 August 2006.
Other than the matters referred to above, in the opinion of the Directors, there
were no significant changes in the state of affairs of the consolidated entity
that occurred during the financial year under review that are not otherwise
disclosed in this report or the consolidated financial statements.
TRADING RESULTS
The profit after income tax of the consolidated entity for the year ended 31
December 2006 was $349,048 (2005 : $2,575,807).
SUBSEQUENT EVENTS
Between 1 January 2007 and the date of this report the following material
transactions have occurred. The Company has:
* increased its interest in UMC Energy plc to 19.6% following the acquisition
of further shares in that entity through the allotment of 500,000 ordinary
shares in the Company.
* following shareholder approval at the January 2007 general meeting, granted
to directors, employees and consultants 575,000 options over ordinary shares.
The options have an exercise price of $3.80 per share and expire on 31 December
2012.
* effected the deregistration of its dormant subsidiary Kidz.Net National Pty
Ltd.
Other than the matters discussed above, there has not arisen in the interval
between the end of the financial year and the date of this report any item,
transaction or event of a material and unusual nature likely, in the opinion of
the Directors of the consolidated entity, to affect significantly the operations
of the consolidated entity, the results of those operations or the state of
affairs of the consolidated entity, in subsequent financial years.
LIKELY DEVELOPMENTS
It is anticipated that the consolidated entity will continue to support its
portfolio of investments.
Further information about likely developments in the operations of the
consolidated entity and the expected results of those operations in future
financial years has not been included in this report because disclosure of the
information would be likely to result in unreasonable prejudice to the
consolidated entity.
J.A. Landels
Director
Enquiries to:
Chrisilios Kyriakou, Chief Executive Officer
Investika Ltd
Telephone: 020 7514 1480
Paul Dudley/James Joyce
WH Ireland Limited
Telephone: 020 7220 1666
INVESTIKA LTD
INCOME STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
Consolidated The Company
2006 2005 2006 2005
Note $ $ $ $
Total revenue from services 2 133,063 93,743 133,063 93,743
Gain on sale of shares 2 90,110 3,846,203 90,110 3,846,203
Financial income 2 297,657 66,194 297,657 66,194
Personnel costs 3 (749,202) (1,050,840) (749,202) (1,050,840)
Exploration expenditure (199,396) (240,431) (199,396) (240,431)
Exploration expenditure recovered 193,469 - 193,469 -
Costs associated with placement and
rights issue (65,873) - (65,873) -
Costs associated with AIM admission (1,078,227) - (1,078,227) -
Depreciation and amortisation 3 (9,438) (4,831) (9,438) (4,831)
Impairment losses on investments 3 - - - (20,632)
Reversal of / (impairment) losses on
trade and other receivables 3 64,772 11,823 64,772 11,823
Travel expenditure (100,068) (62,333) (100,068) (62,333)
Facilities 3 (63,250) (63,250) (63,250) (63,250)
Audit fees (116,762) (69,063) (116,762) (69,063)
Other administrative expenses (269,355) (157,304) (269,356) (157,305)
Results from operating activities 3 (1,872,500) 2,369,911 (1,872,501) 2,349,278
Gain on dilution of subsidiary 9 3,045,125 - - -
Share of net (loss) / profit of 9 (823,577) 205,896 - -
associates
Profit / (loss) before tax 3 349,048 2,575,807 (1,872,501) 2,349,278
Income tax expense 5 - - - -
Profit / (loss) for the year
attributable to equity holders of
the Company 349,048 2,575,807 (1,872,501) 2,349,278
Basic earnings per share (cents) 6 3.2 45.0
Diluted earnings per share (cents) 6 3.0 45.0
INVESTIKA LTD
STATEMENTS OF RECOGNISED INCOME AND EXPENSE
FOR THE YEAR ENDED 31 DECEMBER 2006
Consolidated The Company
2006 2005 2006 2005
Note $ $ $ $
Change in fair value of equity
securities available for sale net of
tax 15 351,739 (159,416) 1,077,844 (315,409)
Net income / (expense) recognised
directly in equity 351,739 (159,416) 1,077,844 (315,409)
Profit / (loss) for the year 16 349,048 2,575,807 (1,872,501) 2,349,278
Total recognised income and expense
for the year attributable to equity
holders of the Company 17 700,787 2,416,391 (794,657) 2,033,869
INVESTIKA LTD
BALANCE SHEETS
AS AT 31 DECEMBER 2006
Consolidated The Company
2006 2005 2006 2005
Note $ $ $ $
ASSETS
Current Assets
Cash and cash equivalents 2,054,098 1,151,422 2,054,098 1,151,422
Trade and other receivables 7 29,978 4,615 29,978 4,619
Total Current Assets 2,084,076 1,156,037 2,084,076 1,156,041
Non-Current Assets
Trade and other receivables 7 371,296 - 371,296 -
Exploration and evaluation expenditure -
intangible 8 - 2,405,553 - 2,405,553
Investments accounted for using the equity
method 9 6,298,654 1,771,019 - -
Other investments 10 16,076,047 1,777,881 20,741,070 3,099,524
Plant and equipment 11 17,762 6,697 17,762 6,697
Total Non-Current Assets 22,763,759 5,961,150 21,130,128 5,511,774
Total Assets 24,847,835 7,117,187 23,214,204 6,667,815
LIABILITIES
Current Liabilities
Trade and other payables 12 211,662 175,804 211,659 175,804
Provisions 13 2,235 2,235 2,235 2,235
Total Current Liabilities 213,897 178,039 213,894 178,039
Non-current Liabilities
Deferred tax liabilities 5 330,904 146,742 575,237 79,887
Total Non-current Liabilities 330,904 146,742 575,237 79,887
Total Liabilities 544,801 324,781 789,131 257,926
NET ASSETS 24,303,034 6,792,406 22,425,073 6,409,889
EQUITY
Issued capital 14 19,767,990 3,332,788 19,767,990 3,332,788
Reserves 15 1,610,194 883,816 2,180,306 727,823
Retained earnings 16 2,924,850 2,575,802 476,777 2,349,278
TOTAL EQUITY 17 24,303,034 6,792,406 22,425,073 6,409,889
INVESTIKA LTD
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2006
Consolidated The Company
2006 2005 2006 2005
Note $ $ $ $
Cash flows from operating activities
Cash receipts in the course of operations 430,720 231,440 430,720 231,440
Cash paid to suppliers and employees (1,998,759) (1,118,453) (1,998,759) (1,139,085)
Net cash from operating activities 24(ii) (1,568,039) (887,013) (1,568,039) (907,645)
Cash flows from investing activities
Proceeds from sale of equity investments 225,345 4,356,223 225,345 4,356,223
Purchase of:
- equity investments (11,598,257) (1,464,745) (11,598,257) (1,464,745)
- interest in associates (2,199,777) (655,109) (2,199,777) (634,477)
Payments for:
- exploration and evaluation expenditure - (1,009,648) - (1,009,648)
- purchases of plant and equipment (20,502) (7,773) (20,502) (7,773)
Loans and advances:
- to associates (371,296) - (371,296) -
- to other entities (2,500,000) - (2,500,000) -
- repaid by other entities 2,500,000 60,000 2,500,000 60,000
Net cash from investing activities (13,964,487) 1,278,948 (13,964,487) 1,299,580
Cash flows from financing activities
Net proceeds from the issue of share 16,435,202 - 16,435,202 -
capital
Net cash from financing activities 16,435,202 - 16,435,202 -
Net increase / (decrease) in cash and cash
equivalents 902,676 391,935 902,676 391,935
Cash and cash equivalents at 1 January 1,151,422 759,487 1,151,422 759,487
Cash and cash equivalents at 31 December 24(i) 2,054,098 1,151,422 2,054,098 1,151,422
1. SIGNIFICANT ACCOUNTING POLICIES
Investika Ltd (the "Company") is a company domiciled in Australia. The
consolidated financial report of the Company for the year ended 31 December 2006
comprises the Company and its subsidiaries (together referred to as the "
consolidated entity") and the consolidated entity's interest in associates.
The financial report was authorised for issue by the directors on 23 February
2007.
a. Statement of compliance
The financial report is a general purpose financial report which has been
prepared in accordance with Australian Accounting Standards ("AASBs") adopted by
the Australian Accounting Standards Board ("AASB") and the Corporations Act
2001.
b. Basis of preparation
The financial report is presented in Australian dollars.
The consolidated entity plans to adopt AASB 7 Financial Instruments : Disclosure
(August 2005) and AASB 2005-10 Amendments to Australian Accounting Standards
(September 2005) in the 2007 financial year. The initial application of AASB 7
and AASB2005-10 is not expected to have an impact on the financial results of
the Company and the consolidated entity as the standard and the amendment are
concerned only with disclosures.
The financial report is prepared on the historical cost basis except that
financial instruments classified as available-for-sale are stated at their fair
value.
The preparation of financial statements requires management to make judgements,
estimates and assumptions that affect the application of policies and reported
amounts of assets and liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience and various other
factors that are believed to be reasonable under the circumstances, the results
of which form the basis of making the judgements about carrying values of assets
and liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates. These accounting policies have been
consistently applied by each entity in the consolidated entity.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
Judgements made by management in the application of Australian Accounting
Standards that have significant effect on the financial report and estimates
with a significant risk of material adjustment in the next year are discussed in
note 8.
The accounting policies set out below have been applied consistently to all
periods presented in the consolidated financial report.
The accounting policies have been applied consistently by consolidated entities.
c. Basis of consolidation
Subsidiaries
The financial statements of subsidiaries are included in the consolidated
financial statements from the date control commences until the date control
ceases. Control exists when the Company has the power, directly or indirectly,
to govern the financial and operating policies of an entity so as to obtain
benefits from its activities.
Transactions eliminated on consolidation
Intragroup balances and any unrealised gains and losses or income and expenses
arising from intragroup transactions are eliminated in preparing the
consolidated financial statements.
d. Goodwill
Goodwill, representing the excess of the purchase consideration plus incidental
costs over the fair value of the identifiable net assets acquired on the
acquisition of a subsidiary or an associate, is stated at cost less any
accumulated impairment losses. Goodwill is allocated to cash-generating units
and is no longer amortised but is tested annually for impairment (see accounting
policy s). In respect of associates, the carrying amount of goodwill is included
in the carrying amount of the investment in the associate.
Subsidiaries
Investments in subsidiaries are carried in the Company's financial statements at
the cost of acquisition less impairment losses.
Associates
An associate is an entity, other than a partnership, over which the consolidated
entity exercises significant influence, but not control, over financial and
operating policies.
In the Company's financial statements, investments in associates are carried at
fair value, with resulting revaluation gains and losses recognised in equity.
The fair value of investments in listed shares of associates is their quoted bid
price at the balance sheet date and the fair value of investments in unlisted
shares of associates is cost.
The consolidated financial statements includes the consolidated entity's share
of the total recognised gains and losses of associates on an equity accounted
basis, from the date that significant influence commences until the date that
significant influence ceases. When the consolidated entity's share of losses
exceeds its interest in an associate, the consolidated entity's carrying amount
is reduced to nil and recognition of further losses is discontinued except to
the extent that the consolidated entity has incurred legal or constructive
obligations or made payments on behalf of an associate.
Unrealised gains arising from transactions with associates are eliminated to the
extent of the consolidated entity's interest in the entity with adjustments made
to the "Investment in associates" and "Share of associates net profit / (loss)"
accounts.
When an associate makes a new issue of capital, changing the consolidated
entity's percentage ownership, changes in the share of retained profits are
reflected in the net profit or loss and changes in the share of reserves are
reflected as direct adjustments to the specific equity accounts.
Equity securities
Other investments held by the consolidated entity are classified as being
available-for-sale and are measured at fair value, with any resultant gain or
loss recognised directly in equity, except for impairment losses. Where these
investments are derecognised, the cumulative gain or loss previously recognised
directly in equity is recognised in profit or loss. Where these investments are
interest-bearing, interest calculated using the effective interest method is
recognised in the income statement.
The fair value of listed financial instruments classified as available-for-sale
is their quoted bid price at the balance sheet date and the fair value of
unlisted financial instruments is cost.
Financial instruments classified as available-for-sale investments are
recognised / derecognised by the consolidated entity on the date it commits to
purchase / sell the investments. Securities held to maturity are recognised /
derecognised on the day they are transferred to / by the consolidated entity.
Gains / (losses) on derecognition
Gains and (losses) from the sale of investments represents the proceeds from the
sale of equity investments less the original cost or fair value to the
consolidated entity, adjusted for any impairment losses previously recognised in
relation to the investments.
f. Income tax
Income tax on the profit or loss for the year comprises current and deferred
tax. Income tax is recognised in the income statement except to the extent that
it relates to items recognised directly in equity, in which case it is
recognised in equity.
Current tax is the expected tax payable on the taxable income for the year,
using tax rates enacted or substantively enacted at the balance sheet date, and
any adjustment to tax payable in respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing for
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. The
following temporary differences are not provided for: goodwill not deductible
for tax purposes, the initial recognition of assets or liabilities that affect
neither accounting nor taxable profit, and differences relating to investments
in subsidiaries to the extent that they will probably not reverse in the
foreseeable future. The amount of deferred tax provided is based on the expected
manner of realisation or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantively enacted at the balance
sheet date.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be
utilised. Deferred tax assets are reduced to the extent that it is no longer
probable that the related tax benefit will be realised.
g. Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank
overdrafts that are repayable on demand and form an integral part of the
consolidated entity's cash management are included as a component of cash and
cash equivalents for the purpose of the statement of cash flows.
h. Plant and equipment
Acquisition of assets
Items of plant and equipment are initially recorded at their cost of acquisition
at the date of acquisition, being the fair value of the consideration provided
plus incidental costs attributable to the acquisition. Subsequently, they are
measured at cost less accumulated depreciation / amortisation and impairment
losses.
Depreciation and amortisation
Items of plant and equipment are depreciated / amortised using the straight-line
method over their estimated useful lives.
The depreciation / amortisation rates and methods are reviewed annually for
appropriateness and the rates used for each class of asset in both the current
and prior years are as follows:
- Leasehold improvements 27% (or the life of the lease if shorter)
- Office furniture and
computer equipment 27%
Assets are depreciated or amortised from the date of acquisition or, in respect
of internally constructed assets, from the time an asset is completed and held
ready for use.
Gains / (losses) on derecognition
Sales of current assets and non-current assets are included as revenue at the
date control of the asset passes to the buyer. The gain or loss on disposal is
calculated as the difference between the carrying value of the asset at the time
of disposal and the net proceeds on disposal.
i. Leased plant and equipment
Leases of plant and equipment under which the Company or its subsidiaries do not
assume substantially all the risks and benefits of ownership are classified as
operating leases. Lease payments are accounted for as described in accounting
policy j.
j. Expenses
Operating lease payments
Payments made under operating leases are recognised in the income statement on a
straight-line basis over the term of the lease. Lease incentives received are
recognised in the income statement as an integral part of the total lease
expense and spread over the lease term.
Net financing costs
Net financing costs comprise interest payable on borrowings calculated using the
effective interest rate method, dividends on redeemable preference shares,
interest receivable on funds invested, dividend income, foreign exchange gains
and losses, and gains and losses on hedging instruments that are recognised in
the income statement.
Interest income is recognised in the income statement as it accrues, using the
effective interest method. Dividend income is recognised in the income statement
on the date the entity's right to receive payment is established which in the
case of quoted securities is ex-dividend date.
k. Exploration, evaluation and development expenditure
Exploration and evaluation
Pre-licence costs are recognised in the income statement as incurred.
Exploration and evaluation costs, including the costs of acquiring licences, are
capitalised as exploration and evaluation assets on a project-by-project basis
pending determination of the technical feasibility and commercial viability of
the project. The capitalised costs are presented as either tangible or
intangible exploration and evaluation assets according to the nature of the
assets acquired. When a licence is relinquished or a project abandoned, the
related costs are recognised in the income statement immediately.
Tangible / intangible exploration and evaluation assets that are available for
use are depreciated / amortised on a units of production basis over the life of
the economically recoverable reserve.
Expenditure deemed to be unsuccessful is recognised in the income statement
immediately.
Development
Development costs are capitalised upon the consolidated entity demonstrating:
(i) the technical feasibility of completing the development so that it will be
available for use; and (ii) how the development costs will generate probable
future economic benefits.
Exploration, evaluation and development assets are depreciated on a straight
line basis over the life of the area of interest according to the rate of
depletion of the economically recoverable reserves.
l. Trade and Other Receivables
Trade debtors to be settled within 60 days are carried at amortised cost less
impairment losses.
m. Trade and Other Payables
Trade accounts payable are stated at amortised cost.
n. Foreign currency transactions and balances
Transactions in foreign currencies are translated at the foreign exchange rate
ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are translated to
Australian dollars at the foreign exchange rate ruling at that date. Foreign
exchange differences arising on translation are recognised in the income
statement. Non-monetary assets and liabilities that are measured in terms of
historical cost in a foreign currency are translated using the exchange rate at
the date of the transaction. Non-monetary assets and liabilities denominated in
foreign currencies that are stated at fair value are translated to Australian
dollars at foreign exchange rates ruling at the dates the fair value was
determined.
o. Financial statements of foreign operations
The assets and liabilities of foreign operations, including goodwill and fair
value adjustments arising on consolidation, are translated to Australian dollars
at foreign exchange rates ruling at the balance sheet date. The revenues and
expenses of foreign operations, excluding foreign operations in
hyperinflationary economies, are translated to Australian dollars at rates
approximating the foreign exchange rates ruling at the dates of the
transactions. The revenues and expenses of foreign operations in
hyperinflationary economies are translated to Australian dollars at the foreign
exchange rates ruling at the balance sheet date. Foreign exchange differences
arising on retranslation are recognised directly in a separate component of
equity.
p. Employee benefits
Salaries, annual leave and sick leave
The provisions for employee benefits to salaries, annual leave and sick leave
represent present obligations resulting from employees' services provided up to
the balance date that are expected to be settled within twelve months are
calculated at undiscounted amounts based on salary rates that the consolidated
entity expects to pay as at the balance date including related on-costs.
Long service leave
The provision for employee benefits to long service leave represents the present
value of the estimated future cash outflows to be made resulting from employees'
services provided up to balance date.
The provision is calculated using estimated future increases in salary rates
including related on-costs and expected settlement dates based on turnover
history and is discounted using the rates attaching to national government
securities at balance date which most closely match the terms of maturity of the
related liabilities.
Share based payment transactions
The Company's Participants' Option Incentive Scheme, approved at the 2005 annual
general meeting allows directors, employees and consultants to acquire shares in
the Company. The principal terms of the options are that they have an exercise
price of $2.50 each and are exercisable at any time on or before the earlier of
30 June 2010 and 90 days after the date the participant ceases to be employed by
the Company. During the year ended 31 December 2006 50,000 (2005 : 570,000)
options were granted under the Scheme.
The fair value of services received in return for share options granted to
employees and others is measured by reference to the fair value of the share
options granted. The fair value of options granted is recognised as an employee
expense with a corresponding increase in equity. The fair value is measured at
grant date and spread over the period during which the participants become
unconditionally entitled to the options. The fair value is measured using the
Black-Scholes option pricing model, taking into account the terms and conditions
upon which the options were granted. The amount recognised as an expense is
adjusted to reflect the actual number of share options that vest except where
the forfeiture is only due to the share price not achieving the threshold for
vesting.
Superannuation plan
The Company and its subsidiaries contribute to several defined contribution
plans. Obligations for contributions to defined contribution plans are
recognised as an expense in the income statement as incurred.
q. Goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and
services tax (GST), except where the amount of GST is not recoverable from the
Australian Taxation Office (ATO). In these circumstances the GST is recognised
as part of the cost of acquisition of the asset or as part of an item of the
expense.
Receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the ATO is included as a
current asset or liability in the balance sheet.
Cash flows are included in the statement of cash flows on a gross basis. The GST
components of cash flows arising from investing and financing activities which
are recoverable from, or payable to, the ATO are classified as operating cash
flows.
Revenue from services comprises management fees that are charged to related
parties and investees and are recognised as the service is rendered.
s. Impairment
The carrying amount of the consolidated entity's assets are reviewed at each
balance date to determine whether there is any indication of impairment. If such
indication exists, the asset's recoverable amount is estimated.
An impairment loss is recognised whenever the carrying amount of an asset or of
a cash generating unit exceeds its recoverable amount. Impairment losses are
recognised in the income statement unless the asset has previously been
revalued, in which case the impairment loss is recognised as a reversal to the
extent of that previous revaluation with any excess recognised through the
income statement.
Impairment of receivables is not recognised until objective evidence is
available that a loss event has occurred. Receivables are individually assessed
for impairment.
When a decline in the fair value of an available-for-sale financial asset has
been recognised directly in equity and there is objective evidence that the
asset is impaired, the cumulative loss that had been recognised directly in
equity is recognised in profit or loss even though the financial asset has not
been derecognised. The amount of the cumulative loss that is recognised in the
profit or loss is the difference between the acquisition cost and current fair
value, less any impairment loss on that financial asset previously recognised in
profit or loss.
t. Segment reporting
A segment is a distinguishable component of the consolidated entity that is
engaged either in providing products or services (business segment), or in
providing products or services within a particular economic environment
(geographical segment), which is subject to risks and rewards that are different
from those of other segments. The consolidated entity's primary format for
segment reporting is based on business segments.
Consolidated The Company
2006 2005 2006 2005
$ $ $ $
2. REVENUE AND OTHER INCOME
Rendering of services revenue 133,063 93,743 133,063 93,743
Other income:
Interest income 297,657 66,194 297,657 66,194
Gain on sale of shares 90,110 3,846,203 90,110 3,846,203
Total other income 387,767 3,912,397 387,767 3,912,397
Total revenue and other income 520,830 4,006,140 520,830 4,006,140
3. PROFIT / (LOSS) BEFORE INCOME TAX EXPENSE
(a) Individually significant expenses /
(revenues) included in profit / (loss) before
tax:
Gain on dilution of subsidiary (3,045,125) - - -
Gain on sale of shares (90,110) (3,846,203) (90,110) (3,846,203)
(b) Operating profit / (loss) before tax has
been arrived at after charging / (crediting)
the following items:
Depreciation of plant & equipment 9,438 4,831 9,438 4,831
Personnel costs
- wages and salaries 645,908 487,858 645,908 487,858
- contributions to defined contribution funds 2,841 4,009 2,841 4,009
- reduction in employee leave entitlement - 12,000 - 12,000
- equity-settled transactions 87,401 541,420 87,401 541,420
- other 13,052 5,553 13,052 5,553
749,202 1,050,840 749,202 1,050,840
Operating lease rentals 63,250 63,250 63,250 63,250
(Reversal of) / impairment losses on:
- investments - - - 20,632
- trade and other receivables (64,772) (11,823) (64,772) (11,823)
(Reversal of) / impairment losses on trade and other receivables relates to an advance made during 2005 which
was provided for in that year as impaired and which was then recovered in 2006.
4. AUDITORS' REMUNERATION
Amounts received or due and receivable for
audit services by:
KPMG Australia - Audit and review of financial
reports 116,762 69,063 116,762 69,063
Amounts received or due and receivable for
other services by:
KPMG Australia - Taxation services 19,880 15,000 19,880 15,000
Consolidated The Company
2006 2005 2006 2005
$ $ $ $
5. TAXATION
(a) Tax expense
Current (449,359) 873,399 (449,359) 873,399
Deferred
Tax liability for share of associates'
(losses) / profits (247,073) 61,769 - (6,189)
Deferred tax asset not recognised 696,432 - 449,359 -
Benefit of tax losses recognised - (935,168) - (867,210)
449,359 (873,399) 449,359 (873,399)
Total income tax expense - - - -
Numerical reconciliation between income tax
expense and pre tax net profit / (loss)
Profit / (loss) before tax 349,048 2,575,807 (1,872,501) 2,349,278
Income tax using the domestic corporate income
tax rate of 30% (2005 : 30%) 104,714 772,742 (561,750) 704,784
Increase in income tax due to:
Non-deductible expenditure - equity-settled
transactions 112,392 162,426 112,392 162,426
Non-taxable gain arising on dilution of (913,538) - - -
subsidiary
Deferred tax asset not recognised 696,432 - 449,359 -
Decrease in income tax due to:
Benefit of tax losses recognised - (935,168) - (867,210)
Income tax expense / (benefit)
- - - -
(b) Deferred tax liabilities
Deferred tax liabilities are attributable to
Equity securities available-for-sale 330,904 146,742 575,237 79,887
The Company has elected to classify its investments as available-for-sale
financial assets with movements in their fair value being recorded in an equity
reserve (see note 15 for more information). Increases in the fair value of
investments requires the Company to record a deferred tax liability under AASB
112 Income taxes. This standard requires, inter alia, the Directors to only
recognise available tax losses when it is probable that the consolidated entity
will derive future taxable profits.
(c) Deferred tax assets not taken to account
The potential future income tax benefit arising from tax losses has not been
recognised as an asset because recovery of tax losses is not considered probable
Revenue losses carried forward 9,600,439 10,103,149 6,724,302 7,227,012
The potential future income tax benefit will only be obtained if:
(i) the relevant company derives future assessable income of a nature and an
amount sufficient to enable the benefit to be realised, or the benefit can be
realised by another company in the consolidated entity in accordance with
Division 170 of the Income Tax Assessment Act 1997;
(ii) the relevant company and/or the consolidated entity complies with the
conditions for deductibility imposed by law; and
(iii) no changes in tax legislation adversely affect the relevant company and/or
the consolidated entity in realising the benefit.
(d) Franking credits
The Company has no franking credits available.
Consolidated The Company
2006 2005 2006 2005
6. EARNINGS PER SHARE
Basic earnings per share * 3.2c 45.6c
Diluted earnings per share * 3.0c 45.6c
Profit attributable to ordinary 349,048 2,575,807
shareholders
Weighted average number of ordinary shares
used in the calculation of basic and
diluted loss per share* 10,959,689 5,647,337
* 2005 figures adjusted for effects of May 2006 1 : 100 consolidation of share capital
$ $ $ $
7. TRADE AND OTHER RECEIVABLES
Current
Trade debtors 24,893 24,893 24,893 24,893
Less : Impairment (24,893) (24,893) (24,893) (24,893)
Advances to other entities 90,000 90,000 90,000 90,000
Less : Impairment (90,000) (90,000) (90,000) (90,000)
Proceeds due from sale of investments 21,461 - 21,461 -
Other debtors 8,517 4,615 8,517 4,619
29,978 4,615 29,978 4,619
Non-current
Advances to associates 371,296 - 371,296 -
Loans to subsidiaries - - - 9,696,449
Less: Impairment - - - (9,696,449)
371,296 - 371,296 -
8. EXPLORATION AND EVALUATION EXPENDITURE
- INTANGIBLE
Opening balance - 1 January 2,405,553 555,905 2,405,553 555,905
Equity settled transactions - 840,000 - 840,000
Cash settled transactions - 1,009,648 - 1,009,648
Transferred to unlisted equity securities
on conversion to equity interest (2,405,553) - (2,405,553) -
Closing balance - 31 December - 2,405,553 - 2,405,553
Critical accounting judgements in applying the consolidated entity's accounting
policies
Exploration and evaluation expenditure has been incurred in respect of projects
which have yet to reach a stage of development where a determination of the
technical feasibility and commercial viability of the project can be assessed on
a comprehensive basis. In these circumstances, the directors have used their
experience to determine whether there is any indication that the asset has been
impaired and have concluded that there are currently no such indications.
9. INVESTMENTS IN ASSOCIATES
(a) The consolidated entity has the following investments in associates:
Reporting Ownership
Principal Activities Country Date 2006 2005
Belitung Zinc Mining exploration and evaluation on the UK 30 June 42.5% 100.0%
Corporation plc Kelapa Kampit zinc/lead project in
- unlisted Indonesia
Tarquin Resources Mining exploration and evaluation on the UK 31 Dec 32.6% 23.5%
plc Las Pascualas copper project in Chile
Tommy SA - unlisted Mining exploration and evaluation on the Chile 31 Dec 49.0% 49.0%
Las Pascualas copper project in Chile
Metak Ltd - Mining exploration and evaluation UK 30 June 50.0% 50.0%
unlisted
Share of Net assets as Share of
associates reported by associates
net profit / associates net assets
(loss) equity
Profit / recognised Total (100%) accounted
(loss) liabilities
Revenues Total assets
(100%) (100%) (100%) (100%)
2006
Belitung Zinc
Corporation plc 230,933 (982,365) (200,171) 14,913,863 231,228 14,682,635 3,045,125
Tarquin
Resources plc 231,460 (2,010,710) (623,406) 10,104,693 3,064,768 7,039,925 3,253,529
Tommy SA 1,458 (535,125) - 4,884,073 5,408,015 (523,942) -
Metak Ltd - - - - - - -
463,851 (3,528,200) (823,577) 29,902,629 8,704,011 21,198,618 6,298,654
2005
Tarquin
Resources plc 1,711,488 1,318,944 226,528 4,393,621 277,370 4,116,251 967,319
Tommy SA - - - - - - -
Metak Ltd - (41,264) (20,632) - - - -
1,711,488 1,277,680 205,896 4,393,621 277,370 4,116,251 967,319
Consolidated The Company
2006 2005 2006 2005
$ $ $ $
9. INVESTMENTS IN ASSOCIATES (continued)
(b) Equity accounting for investments in associates
Results of associates
Share of net (loss) / profit of associates (823,577) 226,528 - -
Impairment loss - (20,632) - -
Share of associates' net profit / (loss)
accounted for using the equity method (823,577) 205,896 - -
Movements in carrying amount of investments
Opening balance - 1 January 1,771,019 - - -
Investments in associates made during year 2,306,087 1,565,123 - -
Gain on dilution of subsidiary becoming an
associate 3,045,125 - - -
Share of net profit / (loss) of associates (823,577) 205,896 - -
Closing balance - 31 December 6,298,654 1,771,019 - -
Share of associates' capital commitments
contracted but not provided for or payable:
Within one year - - - -
One year or later and no later than five years - - - -
- - - -
Summary financial position of associates
The consolidated entity's share of aggregate
assets and liabilities of associates is as
follows:
Current assets 3,365,672 712,526 - -
Non-current assets 8,660,044 319,975 - -
Total assets 12,025,716 1,032,501 - -
Current liabilities 402,367 65,182 - -
Non-current liabilities 3,344,945 - - -
Total liabilities 3,747,312 65,182 - -
Net assets - as reported by associate 8,278,404 967,319 - -
Adjustments arising from equity accounting
Goodwill 1,215,245 803,700 - -
Impairment loss (3,194,995) - - -
Net assets - equity adjusted 6,298,654 1,771,019 - -
10. OTHER INVESTMENTS
Non-current
Shares in subsidiaries at cost - - 13,696,449 4,000,000
Less: Impairment loss - - (13,696,449) (4,000,000)
- - - -
Equity securities available for sale:
Investment in associates:
- listed shares - - 4,464,852 1,321,643
- unlisted shares - - 200,171 -
Other shares:
- listed 11,617,565 1,657,143 11,617,565 1,657,143
- unlisted 4,458,482 120,738 4,458,482 120,738
Total other financial assets 16,076,047 1,777,881 20,741,070 3,099,524
Consolidated The Company
2006 2005 2006 2005
$ $ $ $
11. PLANT AND EQUIPMENT
Office furniture and computer equipment
At cost 34,999 59,660 34,999 59,660
Accumulated depreciation (17,237) (52,963) (17,237) (52,963)
17,762 6,697 17,762 6,697
Leasehold improvements
At cost 61,419 61,419 61,419 61,419
Accumulated amortisation (61,419) (61,419) (61,419) (61,419)
- - - -
Total plant and equipment net book value 17,762 6,697 17,762 6,697
Reconciliations
Reconciliations of the carrying amount for
each class of plant and equipment are set
out below:
Office furniture and computer equipment
Cost
Opening balance - 1 January 59,660 51,887 59,660 51,887
Additions 20,503 7,773 20,503 7,773
Disposals (45,164) - (45,164) -
Closing balance - 31 December 34,999 59,660 34,999 59,660
Accumulated depreciation
Opening balance - 1 January (52,963) (48,132) (52,963) (48,132)
Disposals 45,164 - 45,164 -
Depreciation (9,438) (4,831) (9,438) (4,831)
Closing balance - 31 December (17,237) (52,963) (17,237) (52,963)
Leasehold improvements
Cost
Opening balance - 1 January 61,419 61,419 61,419 61,419
Additions - - - -
Closing balance - 31 December 61,419 61,419 61,419 61,419
Accumulated amortisation
Opening balance - 1 January 61,419 (61,419) 61,419 (61,419)
Amortisation - - - -
Closing balance - 31 December (61,419) (61,419) (61,419) (61,419)
12. TRADE AND OTHER PAYABLES
Non-trade payables and accruals 211,662 175,804 211,659 175,804
13. PROVISIONS
Employee leave entitlements
Opening balance - 1 January 2,235 14,235 2,235 14,235
Provision used during the year - (12,000) - (12,000)
Closing balance - 31 December 2,235 2,235 2,235 2,235
14. CAPITAL
Issued and paid-up capital
13,534,709 (2005 : 571,062,475) ordinary
shares, fully paid 19,767,990 3,332,788 19,767,990 3,332,788
Consolidated and The Company
2006 2005 2006 2005
Ordinary share capital Number Number $ $
Opening balance - 1 January 571,062,475 541,062,475 3,332,788 12,519,305
Shares issued:
Issued for cash 732,862,475 16,435,202
To acquire interest in Berong nickel - 30,000,000 - 840,000
project
Consolidation of share capital on the
basis of 1 : 100 in accordance with
shareholders' resolution at 2006 AGM and
as announced to the ASX on 18 May 2006 (1,290,390,241) - - -
Write off accumulated deficit in
accordance with shareholders' resolution
at 2005 AGM and as announced to the ASX
on 25 May 2005 - - - (10,026,517)
Closing balance - 31 December 13,534,709 571,062,475 19,767,990 3,332,788
Holders of ordinary shares are entitled
to receive dividends as declared from
time to time and are entitled to one
vote per share at shareholders'
meetings. In the event of the winding up
of the Company, ordinary shareholders
rank after creditors and are fully
entitled to any net proceeds on
liquidation.
Options
Option holders are not entitled to
participate in any share issue of the
Company or to receive dividends.
30 June 2010 $2.50 (2005 : $0.025)
options over ordinary shares
Opening balance - 1 January 57,000,000 -
Granted during the year 5,000,000 57,000,000
Consolidation of share capital on the
basis of 1 : 100 in accordance with
shareholders' resolution at 2006 AGM and
as announced to the ASX on 18 May 2006 (61,380,000)
Closing balance - 31 December 620,000 57,000,000
21 August 2009 $3.15 options over
ordinary shares
Opening balance - 1 January - -
Granted during the year 136,547 -
Closing balance - 31 December 136,547 -
These options are not considered to be
dilutive at 31 December 2006 as the
option strike price exceeded the average
share price of the Company during the
period.
Consolidated The Company
2006 2005 2006 2005
Note $ $ $ $
15. RESERVES
Fair value reserve
Opening balance - 1 January 342,396 501,812 186,403 501,812
Change in fair value of equity
securities available for sale net
of tax 351,739 (159,416) 1,077,844 (315,409)
Closing balance - 31 December 694,135 342,396 1,264,247 186,403
Equity compensation reserve
Opening balance - 1 January 541,420 - 541,420 -
Equity settled transactions 374,639 541,420 374,639 541,420
Closing balance - 31 December 916,059 541,420 916,059 541,420
Total reserves - 31 December 1,610,194 883,816 2,180,306 727,823
Fair value reserve
The fair value reserve includes the cumulative net change in the fair value of available-for-sale investments
net of tax until the investment is derecognised.
Equity compensation reserve
The equity compensation reserve includes the fair value of options granted under the Company's Participant's
Option Incentive Schemes.
16. RETAINED EARNINGS
Opening balance - 1 January 2,575,802 (10,026,522) 2,349,278 (10,026,517)
Profit / (loss) for the period 349,048 2,575,807 (1,872,501) 2,349,278
Write off of accumulated losses 14 - 10,026,517 - 10,026,517
Closing balance - 31 December 2,924,850 2,575,802 476,777 2,349,278
17. TOTAL EQUITY RECONCILIATION
Total equity at beginning of year 6,792,406 2,994,595 6,409,889 2,994,600
Equity settled transactions (net of 374,639 541,420 374,639 541,420
tax)
Total recognised income / (expense)
for the year 700,787 2,416,391 (794,657) 2,033,869
Contributions of equity 16,435,202 840,000 16,435,202 840,000
Total equity at end of year 24,303,034 6,792,406 22,425,073 6,409,889
Consolidated
and the Company
18. CONTROLLED ENTITIES Interest Interest
Parent entity - Investika Ltd Place of 2006 2005
Subsidiaries Note incorporation % %
Kidz.net National Pty Ltd (i) NSW 99.95 99.95
Belitung Zinc Corporation plc (ii) UK 42.5% 100.0
(i) The Company holds 99.95% voting interest in Kidz.Net National Pty Ltd but
holds 100% of the shares that provide entitlement to income and capital
distributions by this entity. Hence there is no outside equity interest in this
company. During the period, the Company applied to have Kidz.Net National Pty
Ltd deregistered, which became effective on 15 January 2007.
(ii) Prior to 31 December 2005, Belitung Zinc Corporation plc was dormant and on
20 January 2006, it became an associate following the Company's equity interest
in that entity diluting to 42.5%. There were no acquisitions or disposals in
2006 or in 2005.
Interest Interest
2006 2005
19. MATERIAL INTERESTS IN OTHER ENTITIES % %
Nature of business
Berong Nickel Corporation Nickel mining 18.7 -
Toledo Mining Corporation plc Mining exploration and evaluation 11.6 -
UMC Energy plc Mining exploration and evaluation 11.7 15.8
20. SEGMENT INFORMATION
Investment Mining Total
Primary segments Services
$ $ $
Business Segments
2006
Segment revenue 133,063 - 133,063
Interest income 297,657 - 297,657
Gain on sale of shares 90,110 - 90,110
Total revenue and other income 520,830 - 520,830
Segment result 816,103 (5,927) 810,176
Share of net profit / (loss) of associates (823,557) - (823,557)
Interest income 297,657 - 297,657
Reversal of impairment losses 64,772 - 64,772
Profit / (loss) for the period 354,975 (5,927) 349,048
Depreciation and amortisation 9,438 - 9,438
Segment assets 20,389,354 4,458,481 24,847,835
Segment liabilities 544,801 - 544,801
Capital expenditure 11,714,125 2,052,928 13,767,053
2005
Segment revenue 93,743 - 93,743
Interest income 66,194 - 66,194
Gain on sale of shares 3,846,203 - 3,846,203
Total revenue and other income 4,006,140 - 4,006,140
Segment result 2,597,097 (305,203) 2,291,894
Share of net profit / (loss) of associates 226,528 (20,632) 205,896
Interest income 66,194 - 66,194
Reversal of impairment losses 11,823 - 11,823
Profit / (loss) for the period 2,901,642 (325,835) 2,575,807
Depreciation and amortisation 4,831 - 4,831
Segment assets 4,711,634 2,405,553 7,117,187
Segment liabilities 324,781 - 324,781
Capital expenditure 2,354,530 1,009,648 3,364,178
Secondary segments South United
Australia Asia America Kingdom Total
$ $ $ $
Geographic Segments
2006
Segment Revenue 8,063 - - 125,000 133,063
Segment Assets 2,080,376 4,458,481 371,296 17,937,682 24,847,835
2005
Segment Revenue 93,743 - - - 93,743
Segment Assets 1,385,582 2,405,553 - 3,326,052 7,117,187
Investment services represent the consolidated entity's activities in investing
in, and contributing to the management of, other companies, and cash held on
deposit. Mining represents the Company's interest in prospective mining
ventures.
Consolidated The Company
2006 2005 2006 2005
$ $ $ $
21. EMPLOYEE BENEFITS
Aggregate liability for employee benefits,
including on-costs
Current 2,235 2,235 2,235 2,235
Number of employees at year end 1 1 1 1
Pursuant to a special resolution passed at the 2005 annual general meeting, the
Company created a Participants' Option Incentive Scheme. The options are
exercisable at any time up to the expiry date at $2.50 (2005 : $0.025) per share
and expire on 30 June 2010 or 90 days after the date on which the participant no
longer holds any office in, or employment with the Company. 50,000 options were
granted under this scheme and no options were exercised during the financial
year.
Unissued ordinary shares of the Company under the Participants' Option Incentive Scheme are:
Exercise Number of options
Expiry date price 2006 2005
30 June 2010 * $2.50 620,000 570,000
* 2005 figures adjusted for effects of 1 : 100
share consolidation
Consolidated The Company
2006 2005 2006 2005
$ $ $ $
Superannuation plans
The Company and its subsidiaries contribute to
several defined contribution plans.
Details of contributions during the year and
contributions payable at balance date are as
follows:
Employer contributions to the plans 2,841 4,009 2,841 4,009
Employer contributions payable to the plans - - - -
22. DIRECTOR AND KEY MANAGEMENT PERSONNEL DISCLOSURES
Remuneration of Directors and Specified Executives
Remuneration of senior management personnel is determined by a Remuneration
Committee comprised of the non-executive directors. The Board as a whole is
responsible for making recommendations on remuneration policies and packages
applicable to the Board members of the consolidated entity. The broad
remuneration policy is to ensure the remuneration package properly reflects the
person's duties and responsibilities, and that remuneration is competitive in
attracting, retaining and motivating people of the highest quality; taking into
account information obtained via reputable industry remuneration surveys and /
or independent consultant reports. This also includes responsibility for share
option schemes, incentive performance packages, retirement and termination
entitlements, fringe benefits policies and professional indemnity and liability
insurance policies. For the current year all packages comprised fixed
remuneration elements and equity based remuneration only; no bonuses were paid.
Salary and Non-cash Super Options
Fees Benefits Benefits Granted (i) Total
$ $ $ $ $
2006
Directors
Executive:
C. Kyriakou (CEO) 218,182 41,973 - - 260,155
J.R. Reynolds (CFO) (from 7/6/06) 46,098 - - - 46,098
Non-Executive:
J.A. Landels (Chairman) 50,000 - - - 50,000
M.R. Arnesen (from 2/11/06) 3,823 - 344 - 4,167
S. Borg 22,936 - 2,064 - 25,000
R.A. Cleary 104,030 - - - 104,030
Officers
Company:
J.B. Maguire (Co Secretary) 144,000 - - - 144,000
J.R. Reynolds (CFO) (until 7/6/06) 22,254 - - - 22,254
2005
Directors
Executive:
C. Kyriakou (CEO) 118,182 - - 140,400 258,582
Non-Executive:
J.A. Landels (Chairman) 50,000 - - 46,800 96,800
S. Borg 22,936 - 2,064 14,040 39,040
R.A. Cleary (from 16/3/05) 58,024 - - 112,320 170,344
Officers
Company:
J.B. Maguire (Co Secretary) 144,000 - - 74,880 218,880
J.R. Reynolds (CFO) 83,655 - 2,250 30,450 116,355
22. DIRECTOR AND KEY MANAGEMENT PERSONNEL DISCLOSURES (continued)
(i) The fair value of the options is calculated at the date of grant using a
Black-Scholes model and allocated to each reporting period evenly over the
period from grant date to vesting date. The value disclosed above is the portion
of the fair value of the options allocated to this reporting period.
The following factors and assumptions were used in determining the fair value of options on grant date:
Estimated
Price of Risk free
Fair value Exercise shares on Estimated Interest Dividend
Grant Expiry per option price grant date volatility rate yield
date date $ * $ * $ * % % %
26/5/05 30/6/2010 0.936 2.50 1.70 70 5.63 0
11/11/05 30/6/2010 1.094 2.50 1.40 123 5.63 0
* Adjusted for effect of May 2006 1 : 100 share capital consolidation
Estimated volatility is based on the price of the Company's ordinary shares over
the period 2 December 2004 to 26 May 2005 and 2 December 2004 to 11 November
2005, as traded on the Australian Stock Exchange. Each option entitles the
holder to purchase one ordinary share in the Company. These options expire on
the earlier of their expiry date and 90 days after the date the director or
employee ceases to be employed by the Company. The options granted vest on 26
May 2005 and 11 November 2005 respectively.
Equity instruments
All options refer to options over ordinary shares of Investika Ltd.
During the year, no options over ordinary shares were granted and vested.
Equity holdings and transactions : Ordinary shares
Held at Acquired in Acquired Disposed Held at
2006 1.1.2006 * Rights issue on market on market 31.12.2006
Specified directors
J.A. Landels 34,000 50,000 16,000 - 100,000
C. Kyriakou 1,849,762 2,220,000 504,536 - 4,574,298
M.R. Arnesen - - - - -
S. Borg 23,053 33,206 - - 56,259
R.A. Cleary - - - - -
J.R. Reynolds 2,000 4,000 - - 6,000
Specified
executives
J.B. Maguire 120,000 24,000 - - 144,000
* Adjusted for effect of May 2006 1 : 100 share capital consolidation
Held at Acquired Disposed Held at
2005 1.1.2005 * on market * on market * 31.12.2005 *
Specified directors
J.A. Landels 34,000 - - 34,000
C. Kyriakou 1,779,762 70,000 - 1,849,762
S. Borg 97,130 10,000 (84,077) 23,053
R.A. Cleary - - - -
Specified executives
J.B. Maguire 75,000 45,000 - 120,000
J.R. Reynolds 1,000 1,000 - 2,000
* Adjusted for effect of May 2006 1 : 100 share capital consolidation
Equity holdings and transactions : Options over ordinary shares
Held and Held and
Vested at Vested at
2006 1.1.2006 * Granted 31.12.2006
Specified directors
J.A. Landels 50,000 - 50,000
C. Kyriakou 150,000 - 150,000
M.R. Arnesen - - -
S. Borg 15,000 - 15,000
R.A. Cleary 120,000 - 120,000
J.R. Reynolds 30,000 - 30,000
Specified executives
J.B. Maguire 80,000 - 80,000
* Adjusted for effect of May 2006 1 : 100 share capital consolidation
Held and Held and
Vested at Vested at
2005 1.1.2005 * Granted * 31.12.2005
Specified directors
J.A. Landels - 50,000 50,000
C. Kyriakou - 150,000 150,000
M.R. Arnesen -
S. Borg - 15,000 15,000
R.A. Cleary - 120,000 120,000
Specified executives
J.B. Maguire - 80,000 80,000
J.R. Reynolds - 30,000 30,000
* Adjusted for effect of May 2006 1 : 100 share capital consolidation
All options vested on date of grant.
Other transactions with the Company or its subsidiaries
A number of specified directors and specified executives, or their personally
related entities, hold positions in other entities that result in them having
control or significant influence over the financial or operating policies of
those entities.
A number of these entities transacted with the Company or its subsidiaries in
the reporting period. The terms and conditions of those transactions were no
more favourable than those available, or which might reasonably be expected to
be available, on similar transactions to unrelated entities on an arm's length
basis.
The aggregate amounts recognised during the year relating to specified
directors, specified executives and their personally-related entities, were
total revenue of $8,063 and total expense of $477,829. Details of the
transactions are as follows:
2006 2005
Specified Transaction Note $ $
directors
C. Kyriakou Management fee (vi), (vii), (viii) 8,063 66,743
R.A. Cleary Management fee (vii), (viii) 8,063 53,899
C. Kyriakou Consultancy fees and rent (i), (ii) 281,432 181,432
R.A. Cleary Consultancy (iii) 104,030 58,024
J.R. Reynolds Consultancy (iv) 68,352 58,655
S. Borg IT support and equipment (v) 24,015 10,169
(i) Management consultancy fees of $218,182 (2005: $118,182) were paid by the
Company to a company in which a Director, Mr Kyriakou, has an interest. These
services were charged at commercial rates. The amount of management consulting
fees is included in the remuneration disclosure set out in this note 22.
(ii) Rent of $63,250 (2005: $63,250) was paid by the Company to a company in
which a Director, Mr. Kyriakou, has an interest. This rent was charged at
commercial rates.
(iii) Consultancy fees of $104,030 (2005: $58,024) were paid by the Company to a
company in which a Director, Mr Cleary, has an interest. These services were
charged at commercial rates. The amount of consulting fees is included in the
remuneration disclosure set out in this note 22.
(iv) Consultancy fees of $68,352 (2005: $58,655) were paid by the Company to a
business in which a Director, Mr Reynolds, has an interest. These services were
charged at commercial rates. The amount of consulting fees is included in the
remuneration disclosure set out in this note 22.
(v) IT equipment amounting to $17,233 (2005: $5,001) was purchased by the
Company from, and IT services of $6,782 (2005: $5,168) were supplied to the
Company by, a company in which a Director, Mr. Borg, has an interest.
(vi) Management fees of $nil (2005: $12,844) were charged by the Company to
Tarquin Resources plc of which Mr Kyriakou is a director. These services were
charged at commercial rates. By the balance date, the total amount had been
paid.
(vii) Management fees of $4,838 (2005: $44,224) were charged by the Company to
Toledo Mining Corporation plc of which Mr Kyriakou and Mr Cleary are directors.
These services were charged at commercial rates. By the balance date, the total
amount had been paid.
(viii) Management fees of $3,225 (2005: $9,675) were charged by the Company to
UMC Energy plc of which Mr Kyriakou and Mr Cleary are directors. These services
were charged at commercial rates. By the balance date, the total amount had been
paid.
(ix) Expenses incurred in sourcing the Kelapa Kampit project amounting to
$288,261 (2005 : $nil) were recovered from Belitung Zinc Corporation plc of
which Mr Kyriakou and Mr Reynolds are directors. By the balance date, the total
amount had been paid.
2006 2005
Assets and liabilities arising from the above transactions $ $
Current assets
Trade debtors and advances - -
Current liabilities
Trade and other payables - -
- -
Subsidiaries
Details of interests in subsidiaries are set out in note 18. Details of dealings
with these entities are set out below. These transactions are in the normal
course of business and on normal terms and conditions.
Loans between the Company and its subsidiaries have no specified term and do not
bear interest. The loan to Kidz.Net National Pty Ltd amounting to $9,696,448 was
capitalised into share capital during the period. The total value of the loans
at 31 December 2006 is $nil (2005: $9,696,448). These amounts have been provided
for to the extent of $nil (2005: $9,696,448).
23. FINANCIAL INSTRUMENTS
(a) Terms and conditions
Significant terms and conditions for each class of financial asset and financial
liability, both recognised and unrecognised at the balance date, are as follows:
Receivables: The amounts receivable from trade receivables, other debtors and
advances to associates do not bear interest. The advance to the associate is
repayable on demand.
Trade creditors: Trade creditors are normally settled within 60 days.
(b) Foreign Exchange Risk
The expenses of the Company's mining exploration activities are incurred in
United States dollars. At 31 December 2006, the Company held US$627,755 (2005 :
US$10,953) in a US dollar bank account. To the extent that expenditure exceeds
this amount, the Company is exposed to any deterioration in the Australian
dollar - US dollar exchange rate. Funding permitting, it is the Company's policy
to cover known expenditures or alternatively to put in place forward exchange
contracts where the timing of payments is definite. At balance date, there were
no such forward exchange contracts utilised by the consolidated entity.
(c) Credit Risk Exposures
The consolidated entity's maximum exposure to credit risk at balance date in
relation to each class of recognised financial assets is the carrying amount of
those assets as indicated in the balance sheet. At balance date, the
consolidated entity did not have any material concentration of credit risk.
(d) Interest Rate Risk
The following table details the consolidated
entity's exposure to interest rate risk as
at reporting date:
Consolidated
Effective Variable Non
Interest Interest Interest
Rate Rate Bearing Total
Note % $ $ $
31 December 2006
Financial Assets
Cash and cash equivalents 24(i) 4.9% 2,054,098 - 2,054,098
Trade and other receivables 7 - 401,273 401,273
Equity securities available for sale 10 - 16,076,047 16,076,047
2,054,098 16,477,320 18,531,418
Financial Liabilities
Trade and other payables 12 - 211,662 211,662
Employee benefits 13 - 2,235 2,235
- 213,897 213,897
31 December 2005
Financial Assets
Cash and cash equivalents 24(i) 5.0% 1,151,422 - 1,151,422
Trade and other receivables 7 - 4,615 4,615
Equity securities available for sale 10 - 1,777,881 1,777,881
1,151,422 1,782,496 2,933,918
Financial Liabilities
Trade and other payables 12 - 175,804 175,804
Employee benefits 13 - 2,235 2,235
- 178,039 178,039
Maturities
Cash and cash equivalents have a maturity date within 6 months. All other
financial assets and financial liabilities have no specific specific dates of
maturity.
(e) Net Fair Value Consolidated
The aggregate net fair value of financial Carrying Net fair Carrying Net fair
assets and financial liabilities, both recognised amount value amount Value
and unrecognised at balance date, are as 2006 2006 2005 2005
follows:
Note $ $ $ $
Financial Assets
Cash and cash equivalents 24(i) 2,054,098 2,054,098 1,151,422 1,151,422
Trade and other receivables 7 401,273 401,273 4,615 4,165
Equity securities available for sale 10 16,076,047 16,076,047 1,777,881 1,777,881
18,531,418 18,531,418 2,933,918 2,933,918
Financial Liabilities
Trade and other payables 12 211,662 211,662 175,804 175,804
211,662 211,662 175,804 175,804
For investments accounted for using the equity method and equity securities
available for sale, the net fair value is based on market price. For all other
financial assets and liabilities, the carrying amount as shown approximates the
fair value, due to short-term maturity.
Consolidated The Company
2006 2005 2006 2005
$ $ $ $
24. NOTES TO THE STATEMENTS OF CASH FLOWS
(i) Reconciliation of cash
For the purposes of the statements of cash flows, cash includes cash on hand and
at bank and short-term deposits. Cash as at the end of the financial year as
shown in the statements of cash flows is reconciled to the balance sheet as
follows:
Classified as cash 2,054,098 1,151,422 2,054,098 1,151,422
2,054,098 1,151,422 2,054,098 1,151,422
(ii) Reconciliation of cash flows from
operating activities
Profit / (loss) for the period 349,048 2,575,807 (1,872,501) 2,349,278
Adjustments for:
Depreciation 9,438 4,831 9,438 4,831
Gain on sale of shares (90,110) (3,846,203) (90,110) (3,846,203)
Gain on dilution of subsidiary (3,045,125) - - -
(Reversal of) / impairment losses - (76,595) - (76,595)
Share of net (profit) / loss of associates 823,577 (205,896) - -
Equity-settled share-based payment expenses 374,639 541,420 374,639 541,420
Operating cash flow before changes in working
capital and provisions (1,578,533) (1,006,636) (1,578,534) (1,027,269)
(Increase) / decrease in trade and other
receivables (25,358) 66,469 (25,358) 66,470
(Decrease) / increase in provisions - (12,000) - (12,000)
(Decrease) / increase in trade and other 35,852 65,154 35,853 65,154
payables
Net cash from operating activities (1,568,039) (887,013) (1,568,039) (907,645)
(iii) Non-cash financing and investing activities
During the year, $2,405,553 relating to intangible exploration and evaluation
expenditure was transferred to unlisted equity securities.
In 2005 the Company issued 30,000,000 shares with an attributed value of
$840,000 as a non-cash investing transaction in accordance with the requirements
of the Berong nickel agreement. The issue of shares was approved at the
Company's Annual General Meeting held on 25 May 2005.
25. COMMITMENTS AND CONTINGENT LIABILITIES
Under the three year option arrangement entered into in respect of the Las
Pascualas project, the Company is responsible for its 49% share of the option
fees which are payable in November 2007 and November 2008, being respectively
US$1,000,000 and US$5,200,000. Accordingly, the Company's share of the option
fees payable in November 2007 is $650,000 and in November 2008 is $3.4 million.
Other than the item referred to above, the Company and consolidated entity have
no commitments for capital or revenue purchases other than those entered into in
the ordinary course of business.
The Company and the consolidated entity have no commitments under
non-cancellable leases.
The Company and the consolidated entity have no contingent liabilities.
27. SUBSEQUENT EVENTS
Between 1 January 2007 and the date of this report the following material
transactions have occurred. The Company has:
* increased its interest in UMC Energy plc to 19.6% following the acquisition
of further shares in that entity through the allotment of 500,000 ordinary
shares in the Company.
* following shareholder approval at the January 2007 general meeting, granted
to directors, employees and consultants 575,000 options over ordinary shares.
The options have an exercise price of $3.80 per share and expire on 31 December
2012.
* effected the deregistration of its dormant subsidiary Kidz.Net National Pty
Ltd.
The financial effects of the above transaction have not been brought to account
in the financial statements for the year ended 31 December 2006.
A. STATEMENT OF ISSUED SHARES
(i) The total number of shareholders is 1,602. Each shareholder is entitled
to one vote per share held.
(ii) There are 13,534,709 ordinary fully paid shares listed on the Australian
Securities Exchange Ltd.
(iii) The twenty largest shareholders hold 92.01% of the Company's issued
capital.
B. DISTRIBUTION OF SECURITIES
Number of Number of
Shareholders Optionholders
1 - 2,000 1,476 -
2,001 - 5,000 75 -
5,001 - 10,000 19 -
10,001 - 100,000 23 6
100,001 and over 9 7
1,602 13
C. ON-MARKET BUYBACK
There is no current on-market buyback.
D. SUBSTANTIAL SHAREHOLDERS
Substantial shareholders are as follows: Good Hope Finance & Investment Pty Ltd 4,574,298 shares
RAB Special Situations (Master Fund) Ltd 1,119,860 shares
Cambrian Mining plc 855,000 shares
E. VOTING RIGHTS
Ordinary shares - refer note 14
Options over ordinary shares - there are no voting rights attached to the
options over ordinary shares.
F. UNQUOTED SECURITIES
The Company has on issue 1,331,547 options over ordinary shares.
These options are held by 13 persons. There are no holders with more than 20%
of the class of securities.
G. TOP 20 SHAREHOLDERS APPEARING ON THE REGISTER:
No. of % of
Shareholder's Name Shares held Capital held
Good Hope Finance & Investment Pty Ltd 4,566,706 33.74%
Mustoni Ltd 1,648,420 12.18%
Westpac Custodian Nominees 1,247,795 9.22%
Capita IRG Trustees Nominees Ltd 1,190,689 8.80%
ANZ Nominees Ltd 973,921 7.20%
Cambrian Mining plc 855,000 6.32%
National Nominees Ltd 671,457 4.96%
Golden Dragon Trading Ltd 600,475 4.44%
Bell Potter Nominees Ltd 152,000 1.13%
Rockcor Holdings Pty Ltd 100,000 0.74%
Blamnco Trading Pty Ltd 90,000 0.66%
Maguire, John Bertrand 64,321 0.48%
Murray Morgan Investment Ltd 55,548 0.41%
John Capp Pty Ltd 46,000 0.34%
Mutu Ltd 46,000 0.34%
Reef Securities Ltd 33,000 0.24%
Citicorp Nominees Pty Ltd 30,306 0.22%
S & S Borg Pty Ltd 30,000 0.22%
Fernbridge Holdings Ltd 28,500 0.21%
Saade, Nada 21,061 0.16%
Top 20 Total 12,451,999 92.01%
This information is provided by RNS
The company news service from the London Stock Exchange
END
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