Financial Report - Half Year
Centamin Egypt Limited
15 March 2005
CENTAMIN EGYPT LIMITED
FINANCIAL REPORT
FOR THE HALF-YEAR ENDED
31 DECEMBER 2004
DIRECTORS' REPORT
________________________________________________________________________________
The Directors of Centamin Egypt Limited herewith submit the financial report for
the half-year ended 31 December 2004. In order to comply with the provisions of
the Corporations Act 2001, the Directors report as follows:
DIRECTORS
The names of the Directors and officers of the company during or since the end
of the half-year are:
Mr Sami El-Raghy - Chairman
Mr Josef El-Raghy - Managing Director
Mr Colin Cowden - Non Executive Director
Mr Gordon B Speechly - Non Executive Director
Dr Thomas Elder - Non Executive Director
COMPANY SECRETARY
Mrs Heidi Brown
PERTH OFFICE MANAGER
Mr John Lynch
PRINCIPAL ACTIVITIES
The principal activity of the consolidated entity during the course of the
financial year was the exploration for precious and base metals. There were no
significant changes in the nature of the activities of the consolidated entity
during the year.
CORPORATE GOVERNANCE
The Board of Directors of Centamin Egypt Limited is responsible for the
corporate governance of the Company. The Board monitors the business affairs of
Centamin Egypt Limited on behalf of the shareholders by whom they are elected
and to whom they are accountable.
REVIEW OF OPERATIONS
Discussions with the Egyptian Mineral Resource Authority (EMRA) and the Ministry
for Petroleum and Mineral Wealth continued during the half-year in order to
obtain the renewal of security passes for Centamin's staff and contractors, so
that work may resume at the Sukari gold project. Shareholders are referred to
the Company's quarterly report and website (www.centamin.com.au) for further
details.
AUDITOR'S INDEPENDENCE DECLARATION
The auditor's independent declaration is included.
Signed in accordance with a resolution of the directors made pursuant to s306 of
the Corporations Act 2001.
On behalf of the Directors
Sami El-Raghy
Chairman
Perth, 15 March 2005
INDEPENDENT REVIEW REPORT TO THE MEMBERS
OF CENTAMIN EGYPT LIMITED
Scope
We have reviewed the financial report of Centamin Egypt Limited for the
half-year ended 31 December 2004. The financial report includes the consolidated
financial statements of the consolidated entity comprising the disclosing entity
and the entities it controlled at the end of the half-year or from time to time
during the half-year. The disclosing entity's directors are responsible for the
financial report. We have performed an independent review of the financial
report in order to state whether, on the basis of the procedures described,
anything has come to our attention that would indicate that the financial report
is not presented fairly in accordance with Accounting Standard AASB 1029
'Interim Financial Reporting' and other mandatory professional reporting
requirements in Australia and statutory requirements, so as to present a view
which is consistent with our understanding of the consolidated entity's
financial position, and performance as represented by the results of its
operations and its cash flows, and in order for the disclosing entity to lodge
the financial report with the Australian Securities and Investments Commission.
Our review has been conducted in accordance with Australian Auditing Standards
applicable to review engagements. A review is limited primarily to inquiries of
the entity's personnel and analytical procedures applied to the financial data.
These procedures do not provide all the evidence that would be required in an
audit, thus the level of assurance provided is less than given in an audit. We
have not performed an audit and, accordingly, we do not express an audit
opinion.
Statement
Based on our review, which is not an audit, we have not become aware of any
matter that makes us believe that the half-year financial report of Centamin
Egypt Limited is not in accordance with:
(a) the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity's financial
position as at 31 December 2004 and of its performance for the
half-year ended on that date; and
(ii) complying with Accounting Standard AASB 1029 'Interim Financial
Reporting' and the Corporations Regulations 2001; and
(b) other mandatory professional reporting requirements in Australia.
DELOITTE TOUCHE TOHMATSU
KEITH F JONES
Partner
Chartered Accountants
Perth, 15 March 2005
DIRECTORS' DECLARATION
________________________________________________________________________________
The directors declare that:
a) The attached financial statements and notes thereto comply with
Accounting Standards;
b) The attached financial statements and notes thereto give a true and
fair view of the financial position and performance of the consolidated
entity;
c) In the directors' opinion, the attached financial statements and notes
thereto are in accordance with the Corporations Act 2001; and
d) In the directors' opinion, there are reasonable grounds to believe that
the Company will be able to pay its debts as and when they become due and
payable.
Signed in accordance with a resolution of the directors made pursuant to s303(5)
of the Corporations Act 2001.
On behalf of the Directors
Sami El-Raghy
Chairman
Perth, 15 March 2005
CENTAMIN EGYPT LIMITED and its controlled entities
STATEMENT OF FINANCIAL PERFORMANCE for the half-year ended 31 December 2004
STATEMENT OF FINANCIAL PERFORMANCE
______________________________________________________________________________
Consolidated
------------ -----------
Half Year Ended Half Year Ended
31 Dec 04 31 Dec 03
$ $
------------ -----------
Revenue from ordinary activities 520,786 531,694
Expenses
Salaries, Directors Fees & Superannuation 330,495 639,487
Foreign Exchange Loss 388,178 271,798
Accounting, Audit & Legal Fees 12,550 120,791
Consulting Fees 46,248 119,287
Promotional Expenses 32,777 99,487
Other Expenses From Ordinary Activities 216,130 97,590
Travelling Expenses 35,047 68,533
Listing & Share Registry Fees 36,147 34,800
Office Rent 21,275 25,319
Telephone Expenses 22,031 15,855
Annual Report Expenses 17,888 12,778
------------ -----------
Profit/(Loss) From Ordinary Activities
Before Income Tax Benefit (637,980) (974,031)
Income tax benefit relating to ordinary - -
activities ------------ -----------
Net Profit/(Loss) (637,980) (974,031)
Net Profit/(Loss) attributable to
outside equity interests (637,980) (221)
------------ -----------
Net Profit/(Loss) Attributable to
Members of the Parent Entity (637,980) (973,810)
------------ -----------
Total Changes in Equity Other than
those Resulting from Transactions with
Owners as Owners (637,980) (973,810)
============ ===========
Earnings Per Share - Basic (cents per share) (0.035) (0.19)
- Diluted (cents per share) (0.035) (0.19)
The statement of financial performance is to be read in conjunction with the
notes to and forming part of the half-yearly financial statements
STATEMENT OF FINANCIAL POSITION
Consolidated
----------- -----------
31 December 2004 30 June 2004
$ $
----------- -----------
CURRENT ASSETS
Cash Assets 19,939,307 21,133,460
Receivables 10,789 30,258
Prepayments 125,297 151,400
----------- -----------
Total current assets 20,075,393 21,315,118
----------- -----------
NON-CURRENT ASSETS
Plant and equipment 3 886,884 1,012,896
Exploration expenditure 27,379,807 26,662,812
----------- -----------
Total non-current assets 28,266,691 27,675,708
----------- -----------
Total assets 48,342,084 48,990,826
=========== ===========
CURRENT LIABILITIES
Accounts payable 197,143 204,314
Provisions 190,292 168,869
----------- -----------
Total current liabilities 387,435 373,183
----------- -----------
NON-CURRENT LIABILITIES
Accounts payable 192,283 217,297
Non-Interest bearing liabilities - -
----------- -----------
Total non-current liabilities 192,283 217,297
----------- -----------
Total liabilities 579,718 590,480
----------- -----------
Net assets 47,762,366 48,400,346
=========== ===========
EQUITY
Contributed equity 68,568,240 68,568,240
Reserves 2,809,287 2,809,287
Accumulated losses (23,615,161) (22,977,181)
----------- -----------
Parent entity interest 47,762,366 48,400,346
Outside equity interest - -
----------- -----------
Total equity 47,762,366 48,400,346
=========== ===========
The statement of financial position is to be read in conjunction with the notes
to and forming part of the half-yearly financial statements.
STATEMENT OF CASH FLOWS
Consolidated
----------- -----------
Half-Year Half-Year
Ended Ended
31 Dec 04 31 Dec 03
$ $
----------- -----------
CASH FLOWS FROM OPERATING 20,487 2,400
ACTIVITIES
Cash receipts in the course of
operations
Cash payments in the course of (655,936) (1,513,632)
operations
Interest received 520,786 497,945
----------- -----------
Net cash provided by/(used in)
operating activities (114,663) (1,013,287)
activities ----------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES
Receipts from investing - 6,000
activities
Payment for purchases of
property, plant & equipment (124,218) (24,988)
Payments for exploration (568,094) (800,068)
Proceeds from sale of property,
plant & equipment 1,000 -
----------- -----------
Net cash (used in) investing (691,312) (819,056)
activities ----------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from the issue of - -
shares
Repayment of borrowings - -
----------- -----------
Net cash provided by financing - -
activities ----------- -----------
Net increase/(decrease) in cash (805,975) (1,832,343)
held
Effects of exchange rate changes
on the balance of cash held in (388,178) (268,323)
foreign currencies
Cash at the beginning of the 21,133,460 24,626,319
half-year
----------- -----------
Cash at the end of the half-year 19,939,307 22,525,653
=========== ===========
The statement of cash flows is
to be read in conjunction with
the notes to and forming part of
the half-yearly financial statements.
NOTES TO THE FINANCIAL STATEMENTS
1. Statement of significant accounting policies
The significant policies, which have been adopted in the preparation of
these financial statements, are:
(A) BASIS OF PREPARATION
This financial report is denominated in Australian Dollars.
The half-year financial report is a general purpose financial report
prepared in accordance with the Corporations Act 2001 and AASB 1029
'Half-Year Accounts and Consolidated Accounts'. The half-year financial
report should be read in conjunction with the 2004 Annual Financial Report
together with any announcements made by the company and its controlled
entities during the half-year in accordance with any continuous disclosure
obligations arising under the Corporations Act 2001.
The consolidated accounts have been prepared on the basis of historical
costs and do not take into account changing money values or, except where
stated, current valuations of non-current assets. The accounting policies
have been consistently applied by the entities in the economic entity and,
except where there is a note of a change in accounting policy, are
consistent with those of the previous year.
(B) PRINCIPLES OF CONSOLIDATION
The consolidated accounts of the economic entity include the accounts of the
company, being the chief entity, and its controlled entities. Where an
entity either began or ceased to be controlled during the year, the results
are included only from the date control commenced or up to the date control
ceased. The balances and effects of transactions, between controlled
entities included in the consolidated accounts have been eliminated.
(C) TAXATION
The economic entity adopts the liability method of tax effect accounting.
Income tax benefit is calculated on the profit/ (loss) from ordinary
activities adjusted for permanent differences between taxable and accounting
income. The tax effect of timing differences, which arise from items being
brought to account in different periods for income tax and accounting
purposes, is carried forward in the statement of financial position as a
future income tax benefit or a provision for deferred income tax.
Future income tax benefits are not brought to account unless realisation of
the asset is assured beyond reasonable doubt. Future income tax benefits
relating to tax losses are only brought to account when their realisation is
virtually certain.
(D) NON-CURRENT ASSETS
The carrying amounts of all non-current assets, except exploration
expenditure, are reviewed to determine whether they are in excess of their
recoverable amount at balance date. If the carrying amount of a non-current
asset exceeds the recoverable amount, the asset is written down to the lower
amount. In assessing recoverable amounts the relevant cash flows have not
been discounted to their present value.
(E) INVESTMENTS
Investments in controlled entities are carried in the company's accounts at
recoverable amount. Dividends and distributions are brought to account in
the statement of financial performance when they are proposed by the
controlled entities.
(F) EXPLORATION, EVALUATION AND DEVELOPMENT EXPENDITURE
Exploration, evaluation and development costs are accumulated in respect of
each separate area of interest where rights of tenure are current. These
costs are carried forward where they are expected to be recouped through
sale or successful development and exploitation of the area of interest, or,
where activities in the area of interest have not yet reached a stage that
permits reasonable assessment of the existence of economically recoverable
reserves.
When an area of interest is abandoned or the directors decide that it is not
commercial, any accumulated costs in respect of that area are written off in
the year the decision is made. Each area of interest is also reviewed
annually and accumulated costs written off to the extent that they will not
be recoverable in the future.
As at balance date:
* The economic entity is still progressing exploration to delineate
resources;
* An upgraded feasibility study with respect to the areas of interest is in
the process of being completed; and
* The realisable value is dependant upon the current and future commodity
prices
As a consequence of the above, the ability of the economic entity to recover
the carrying amount of the exploration expenditure and areas of interest is
dependant upon the successful development and commercial exploitation and/or
sale of the relevant areas of interest.
Amortisation is not charged on costs carried forward in respect of areas of
interest in the development phase until production commences.
When production commences, carried forward exploration, evaluation and
development costs are amortised on units of production basis over the life
of the economically recoverable reserves.
Restoration costs are provided for at the time of the activities which give
rise to the need for restoration. If this occurs prior to commencement of
production, the costs are included in deferred exploration and development
expenditure. If it occurs after commencement of production, restoration
costs are provided for and charged to the statement of financial performance
as an expense.
(G) PLANT AND EQUIPMENT
Items of plant and equipment are recorded at cost and depreciated from the
date of acquisition on a reducing balance method over their estimated useful
lives. The following estimated useful lives are used in the calculation of
depreciation:
Plant & Equipment & Office Furniture - 4-10 years
Motor Vehicles - 2-8 years
(H) SUPERANNUATION FUND
The Company contributes to, but does not participate in, compulsory
superannuation funds on behalf of the Employees and Directors in respect of
salaries and directors' fees paid. Contributions are charged against income
as they are made.
(I) FOREIGN CURRENCY
All foreign currency transactions during the year have been brought to
account using the exchange rate in effect at the date of the transaction.
Foreign currency monetary items at balance date are translated at the
exchange rate existing at that date.
All exchange differences are brought to account in the statement of
financial performance in the financial period in which they arise.
The assets and liabilities of the controlled entity incorporated overseas
(being an integrated foreign operation) are translated using the temporal
method. Monetary items are translated using the exchange rate at balance
date and non-monetary items are translated at exchange rates current at the
transaction dates. The statement of financial performance is translated at
the exchange rate current at the transaction date, except that non-monetary
items are translated at the original rates. Exchange differences arising on
translation are taken directly to the statement of financial performance.
(J) RECEIVABLES
Trade receivables and other receivables are recorded at amounts due less any
provision for doubtful debts.
(K) ACCOUNTS PAYABLE
Trade payables and other accounts payable are recognised when the economic
entity becomes obliged to make future payments resulting from the purchase
of goods and services.
(L) DEBT AND EQUITY INSTRUMENTS ISSUED BY THE COMPANY
Debt and equity instruments are classified as either liabilities or as
equity in accordance with the substance of the contractual arrangement.
(M) GOODS AND SERVICES TAX
Revenues, expenses and assets are recognised net of the amount of goods and
services tax (GST), except:
i. Where the amount of GST incurred is not recoverable from the taxation
authority, it is recognised as part of the cost of acquisition of an
asset or as part of an item of expense; or
ii. For receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation
authority is included as part of receivables or payables.
2. Segment reporting
Primary reporting - Business Segments
The economic entity is engaged in the business of exploration for precious
and base metals only, which is characterised as one business segment only.
As the economic entity has only one business segment, all the necessary
reporting disclosures are disclosed elsewhere in the notes to the financial
statements.
Secondary reporting - Geographical Segments
The principal activity of the economic entity during the year was the
exploration for precious and base metals in Egypt and funding is sourced
from Australia.
3. Plant and Equipment
Consolidated
------------------------------
Plant, Motor Total
Equipment & Vehicles
$ $ $
----------- ----------- -----------
Gross Carrying Amount
Balance at 30 June 2004 1,820,963 140,673 1,961,636
Additions 58,822 65,396 124,218
Disposals (3,905) (34,545) (38,450)
Revaluation for Foreign Exchange (103,330) - (103,330)
----------- ----------- -----------
Balance at 31 December 2004 1,772,550 171,524 1,944,074
----------- ----------- -----------
Accumulated Depreciation
Balance at 30 June 2004 (838,090) (110,650) (948,740)
Depreciation Expense (107,342) (10,540) (117,882)
Disposals 1,659 7,773 9,432
----------- ----------- -----------
Balance at 31 December 2004 (943,773) (113,417) (1,057,190)
----------- ----------- -----------
Net Book Value
As at 30 June 2004 982,873 30,023 1,012,896
----------- ----------- -----------
As at 31 December 2004 828,777 58,107 886,884
----------- ----------- -----------
4. Events subsequent to balance date
The consolidated entity is not aware of any other matter or circumstance
arising since the end of the financial period, not otherwise dealt with in
the financial statements or the operations report, that has or may
significantly affect the operations of the consolidated entity, the results
of those operations or the state of affairs of the consolidated entity in
subsequent financial periods.
5. Impact of adopting the Australian equivalents to International Financial
Reporting Standards
Centamin Egypt Limited ('Centamin') has commenced transitioning its
accounting policies, systems and financial reporting from current Australian
Accounting Standards to Australian equivalents of International Financial
Reporting Standards ('IFRS'). The process for identification of the key
impacts on the consolidated entity includes the completion of an impact
assessment to identify the significant financial and systems changes required
and the proposed actions to transition to A-IFRS. The consolidated entity
allocated internal resources to conduct an initial impact assessment.
As Centamin has a 30 June year end, priority has been given to the
identification of initial financial impacts under AASB 1 First Time Adoption
of Australian Equivalents to International Financial Reporting Standards and
the preparation of an opening balance sheet as at 1 July 2004. This will form
the basis of accounting of Australian equivalents to IFRS in the future and
is required when Centamin prepares its first comprehensive A-IFRS compliant
financial report for the half year ended 31 December 2005. Set out below are
the key areas where accounting policies will need to change with the
possibility of financial impacts arising on transition to A-IFRS and in
future reporting periods.
- AASB 2 -International ED2 will require that the fair value of options
granted to employees and directors be expensed over the period from their
grant date to vesting date, or at grant date if there is no vesting period.
- AASB 137 - Provisions, Contingent Liabilities and Contingent Assets, the
consolidated entity will be required to fully provide, based on discounted
future cash flows, for rehabilitation and restoration where there is a legal
or constructive obligation. A corresponding asset, net of depreciation to the
date of transition will be recognised and be depreciated together with
development assets. The entity will be required to recognise the unwinding of
the discount in relation to the provision applied directly as an interest
expense.
- AASB 112 Income Taxes (Australian Equivalents to IFRS), the consolidated
entity will be required to use a balance sheet liability method which focuses
on the tax effects of transactions and other events that affect amounts
recognised in either the Statement of Financial Position or a tax-based
balance sheet. The recognition of tax losses will change from a virtual
certainty criteria to a probability requirement. The financial impact of tax
effect accounting and the tax effects of transitioning to A-IRFS are yet to
be quantified.
- AASB 136 Impairment of Assets (Australian equivalent to IFRS), the
recoverable amount of an asset or cash generating unit is determined as the
higher of fair value less costs to sell and value in use. This will result in
changes in the consolidated entity's current accounting policy, the
determination of cash generating units and the calculation of recoverable
amounts based on discounted cash flows. Under the new policy it is likely
that any impairment of assets will be recognised at an earlier date and the
amount of the write-down may be greater. Reliable estimation of the future
financial effects of this change in accounting policy is not possible as the
conditions and requirements under which impairment will be assessed are yet
to be determined.
The above should not be regarded as a complete list of changes in accounting
policies that will result from the transition to AASB equivalents to IFRS. As
noted above these are expected to be the material areas of impact for the
entity that have been identified.
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