African Eagle Resources Regulatory News (AFE)

28 Sep 2007 07:06

African Eagle Resources PLC28 September 2007 African Eagle Resources plc Condensed Consolidated Interim Financial Statements for the period ended 30 June 2007 AIM and AltX quoted African Eagle Resources plc ("African Eagle" or "theCompany", ticker AIM: AFE, AltX: AEA) today announces its interim results. Forthe first time, the interim results have been prepared in accordance withInternational Financial Reporting Standards (IFRS). The condensed consolidatedfinancial statements for the period, accounting policies, and notes, includingan explanation of the transition from UK Generally Accepted Accountingprinciples (UK GAAP) to IFRS are detailed below. The Chairman's Statement is shown as a separate release. Prior to 2007, the Group prepared its audited financial statements and unauditedinterim financial statements under UK GAAP. From 1 January 2007, the Group isrequired to prepare annual consolidated financial statements in accordance withIFRS as adopted by the European Union (EU). The note may be viewed at www.africaneagle.co.uk/investors/financial reports/ Bevan MetcalfCompany SecretaryAfrican Eagle Resources plc 28 September 2007 For further information, see the Company's web site www.africaneagle.co.uk orcontact one of the following: Bevan MetcalfFinance Director & Company Secretary+44 20 7248 6059 Nicola MarrinSeymour Pierce+44 20 7107 8000 About African Eagle African Eagle is a diversified mineral exploration and development companyoperating in eastern and central Africa. The Company's principal advancedprojects are the Mkushi Copper Mines project in Zambia and the Miyabi goldproject in Tanzania, which are being fast-tracked towards production. TheCompany also holds a large well-balanced portfolio of promising earlier stagegold and base metal projects, including the Ndola copper project and the EagleEye iron-oxide copper gold project. Zambia, Tanzania and Mozambique, the sites of African Eagle's projects, are allcountries which have highly prospective geology, relatively low above groundrisks and track records of successful major investments in the metals andminerals industries. African Eagle specialises in project generation and exploration. To take itsdiscoveries into production, it seeks to sign up industry partners with recordsof successful mine development. These joint ventures and, in time, the revenuefrom advanced projects, will finance future exploration and new discoveries. Condensed Consolidated interim income statement 6 months to 6 months Year to 31 30 June December 2007 to 30 June 2006 2006 Note Unaudited Unaudited Unaudited £ £ £Depreciation expense (41,894) (39,851) (68,895)Employee benefits expense (271,099) (243,776) (498,287)Impairment of deferred explorationexpenditure (44,008) (163,297) (215,201)Foreign exchange gain/(loss) 27,082 (52,124) (263,378)Other expenses (174,100) (166,025) (354,432) Operating loss (504,019) (665,073) (1,400,193) Financial income: 59,310 26,629 101,266Bank interest receivable Loss before tax (444,709) (638,444) (1,298,927) Income tax expense - - - Loss for the period (444,709) (638,444) (1,298,927) Loss per share:Basic loss per share 4 (0.3p) (0.5p) (1.0p)Diluted loss per share 4 (0.3p) (0.5p) (1.0p) All operations are continuing The accompanying notes form an integral part of these consolidated financialstatements Condensed Consolidated interim balance sheet 30 June 30 June 31 December 2007 2006 2006 Note Unaudited Unaudited Unaudited £ £ £ASSETS Non-current assetsProperty, plant and equipment 178,426 204,933 153,495Goodwill 106,188 106,188 106,188Available for sale investments 9,819 8,091 10,117Deferred exploration costs 8,683,795 7,698,774 7,172,869 Total non-current assets 8,978,228 8,017,986 7,442,669 Current assetsOther receivables 294,364 140,765 240,466Cash and cash equivalents 1,711,806 3,717,063 2,516,712 Total Current assets 2,006,170 3,857,828 2,757,178 Total assets 10,984,398 11,875,814 10,199,847 The accompanying notes form an integral part of these consolidated financialstatements Condensed Consolidated interim balance sheet (continued) 30 June 30 June 31 December 2007 2006 2006 Note Unaudited Unaudited Unaudited £ £ £LIABILITIES Current liabilitiesTrade and other payables (193,262) (147,424) (180,820) Total liabilities (193,262) (147,424) (180,820) Net assets 10,791,136 11,728,390 10,019,027 EQUITY Equity attributable to equity holders ofthe parentShare capital 3 1,540,341 1,475,358 1,478,249Share premium account 3 12,415,012 11,789,457 11,803,913Merger reserve 705,723 705,723 705,723Available for sale revaluationreserve (8,169) (10,138) (7,929)Foreign currency reserve (1,006,936) (308,581) (1,471,535)Retained losses (2,854,835) (1,923,429) (2,489,394) Total equity 10,791,136 11,728,390 10,019,027 The accompanying notes form an integral part of these consolidated financialstatements Condensed Consolidated interim statement of changes in equity Share Share Merger Available Foreign Retained Total capital premium reserve for sale currency losses equity account revaluation reserve Unaudited reserve Note £ £ £ £ £ £ £ Balance at 31 December 2005 1,129,550 7,953,968 705,723 (9,957) - (1,390,051) 8,389,233Changes in equity for first half of 2006 Loss for period - - - - - (638,444) (638,444) Exchange differences ontranslation of foreignoperations - - - - (308,581) - (308,581) Available for saleinvestments - - - (181) - - (181) Total recognised income and expense for the period 1,129,550 7,953,968 705,723 (10,138) (308,581) (2,028,495) 7,442,027 Issue of share capital 345,808 4,037,576 - - - - 4,383,384Share issue costs - (202,087) - - - - (202,087)Share based payments - - - - - 105,066 105,066 Balance at 30 June 2006 1,475,358 11,789,457 705,723 (10,138) (308,581) (1,923,429) 11,728,390 The accompanying notes form an integral part of these consolidated financialstatements Condensed Consolidated interim statement of changes in equity (continued) Share Share Merger Available Foreign Retained Total capital premium reserve for sale currency losses equity account revaluation reserve Unaudited reserve Note £ £ £ £ £ £ £Balance at 31 December 2005 1,129,550 7,953,968 705,723 - - (1,390,051) 8,399,190 Changes in accountingpolicy - - - (9,957) - - (9,957) Restated balance at 31December 2005 1,129,550 7,953,968 705,723 (9,957) - (1,390,051) 8,389,233 Changes in equity for 2006 Loss for period - - - - - (1,298,927) (1,298,927)Exchange differences ontranslation of foreignoperations - - - - (1,471,535) - (1,471,535) Available for sale investments - - - 2,028 - - 2,028 Total recognised income and expense for the period 1,129,550 7,953,968 705,723 (7,929) (1,471,535) (2,688,978) 5,620,799 Issue of share capital 348,699 4,052,531 - - - - 4,401,230Share issue costs - (202,586) - - - - (202,586)Share based payments - - - - - 199,584 199,584Balance at 31 December 2006 1,478,249 11,803,913 705,723 (7,929) (1,471,535) (2,489,394) 10,019,027 The accompanying notes form an integral part of these consolidated financialstatements Condensed Consolidated interim statement of changes in equity (continued) Share Share Merger Available Foreign Retained Total capital premium reserve for sale currency losses equity account revaluation reserve Unaudited reserve Note £ £ £ £ £ £ £Balance at 31 December 2006 1,478,249 11,803,913 705,723 (7,929) (1,471,535) (2,489,394) 10,019,027 Changes in equity for 2007Loss for period - - - - - (444,709) (444,709) Exchange differences ontranslation of foreignoperations - - - - 464,599 - 464,599 Available for saleinvestments - - - (240) - - (240) Total recognised income and expense for the period 1,478,249 11,803,913 705,723 (8,169) (1,006,936) (2,934,103) 10,038,677 Issue of share capital 62,092 613,535 - - - - 675,627Share issue costs - (2,436) - - - - (2,436)Share based payments - - - - - 79,268 79,268Balance at 30 June 2007 1,540,341 12,415,012 705,723 (8,169) (1,006,936) (2,854,835) 10,791,136 The accompanying notes form an integral part of these consolidated financialstatements Condensed Consolidated interim cash flow statement 6 months to 6 months Year to 31 30 June to 30 June December 2007 2006 2006 Unaudited Unaudited Unaudited Note £ £ £ Cash flows from operating activitiesLoss after taxation (444,709) (638,444) (1,298,927) Adjustments for:Depreciation 41,894 39,851 68,895Profit on disposal of property, plantand equipment (512) - (1,615)Interest income (59,310) (26,629) (101,266)Impairment of deferred explorationexpenditure 44,008 163,297 215,201Share based payments 79,268 105,066 199,584(Increase)/decrease in other receivables (43,149) 31,438 (92,970)Increase in trade and other payables 21,315 8,655 12,801 Net cash used in operating activities (361,195) (316,766) (998,297) Cash flows from investing activitiesPayments to acquire property, plantand equipment (55,917) (3,504) (20,977)Payments for deferred explorationexpenditure (1,134,568) (1,258,652) (1,834,550)Proceeds from sale of equipment 512 - 1,615Interest received 59,310 26,629 101,266 Net cash used in investingactivities (1,130,663) (1,235,527) (1,752,646) Cash flows from financing activitiesProceeds from issue of share capital 673,191 4,181,297 4,198,644 Net cash used in financing activities 673,191 4,181,297 4,198,644 Net (decrease)/increase in cash and cashequivalents (818,667) 2,629,004 1,447,701Cash and cash equivalents at beginningof period 2,516,712 1,097,881 1,097,881Exchange gain/(loss) 13,761 (9,822) (28,870) Cash and cash equivalents at end of 1,711,806 3,717,063 2,516,712period The accompanying notes form an integral part of these consolidated financialstatements Notes to the condensed consolidated interim financial statements 1 NATURE OF OPERATIONS AND GENERAL INFORMATION African Eagle Resources plc ("African Eagle" or the "Company") is a publiclimited company incorporated and domiciled in England and is listed on theAlternative Investment Market ("AIM") of the London Stock Exchange. AfricanEagle is a holding company of a mineral exploration and development group ofcompanies (the "Group"). The principal activities of the Group are theexploration and development of mineral deposits, especially copper and gold, ineastern and central Africa. African Eagle listed on the Alternative Exchange of the Johannesburg Exchange(AltX) on 24 August 2007 (see note 5 "Events after the balance sheet date"). Thelisting was accompanied by a fund raising which raised gross circa £7.4M. Thisensures the Group has sufficient resources to finance its exploration activitiesover the next 2 years. For this reason the Directors continue to adopt the goingconcern basis in preparing the financial statements. African Eagle's consolidated interim financial statements are presented inPounds Sterling (£), which is also the functional currency of the parentcompany. These consolidated interim financial statements have been approved for issue bythe Board of Directors on 27 September 2007. The financial information set out in this interim report does not constitutestatutory accounts as defined in Section 240 of the Companies Act 1985. TheGroup's statutory financial statements for the year ended 31 December 2006,prepared under UK GAAP, have been filed with the Registrar of Companies. Theauditor's report on those financial statements was unqualified. 2 SUMMARY OF ACCOUNTING POLICIES a) Statement of Compliance and basis of preparation Prior to 2007, the Group prepared its audited financial statements and unauditedinterim financial statements under UK Generally Accepted Accounting principles(UK GAAP). From 1 January 2007, the Group is required to prepare annualconsolidated financial statements in accordance with International FinancialReporting Standards (IFRS) as adopted by the European Union (EU). As the 2007annual financial statements will include comparatives for 2006, the Group's dateof transition to IFRS is 1 January 2006 with the 2006 comparatives restated toIFRS. Thus these interim financial statements for the period ended 30 June 2007have been prepared by applying the recognition and measurement provisions ofIFRS and the accounting policies to be adopted for the annual accounts. An exercise to assess the full impact that the change to IFRS has had on theGroup's reported equity, reported losses and accounting policies, has beencompleted. In preparing its opening IFRS balance sheet, the Group has adjustedamounts reported previously in financial statements prepared in accordance withits previous basis of accounting (UK GAAP). The financial information for the twelve months ended 31 December 2006 has beenderived from the group's audited financial statements for the period as filedwith the Registrar of Companies and adjusted for the transition to IFRS. It doesnot constitute the financial statements for that period. The auditor's report onthe statutory financial statements for the year ended 31 December 2006 wasunqualified and did not contain any statement under Section 237(2) or (3) of theCompanies Act 1985. The accounting policies have been applied consistently throughout the Group forthe purposes of preparation of these condensed consolidated interim financialstatements. The Group has elected to apply the following IFRS 1 exemptions and transitionalprovisions: Business combinations exemption The Group has taken advantage of the business combinations exemption whichallows the Group not to restate business combinations prior to 1 January 2006.Instead, the existing goodwill has been frozen at that date, tested forimpairment and not subsequently amortised. Share based compensation The Group has used the exemption under IFRS 1 and has only included those equityinstruments granted after 7 November 2002 that had not vested as of 1 January2006. All share options issued subsequent to that date have been expensed asappropriate in accordance with IFRS 2, "Share Based Payments". Cumulative translation differences exemption The Group has elected to set previously accumulated translation differences tozero at the transition date. b) Basis of consolidation The Group financial statements consolidate those of the Company and itssubsidiary undertakings drawn up to 30 June 2007. The acquisition of African Eagle Resources Limited and its subsidiary KatangaResources Limited in 2002 was accounted for using the acquisition method ofaccounting. The Company took advantage of the merger relief provisions ofsection 131 of the Companies Act 1985 to record the shares issued in connectionwith the acquisition at their nominal value. In the consolidated accounts theshares issued were accounted for at fair value with an appropriate transfer tothe merger reserve. African Eagle Resources Limited has since been dissolved andits investment in Katanga Resources Limited transferred to Twigg ResourcesLimited and the Company. Under IFRS 1 the Group has elected to apply thebusiness combination exemption which allows the Group not to restate businesscombinations prior to 1 January 2006. From this date the goodwill arising onacquisition has been frozen. There have been no business combinations since the1 January 2006. The combination of the Company with Twigg Resources Limited and its subsidiariesin 2000 was accounted for using merger accounting as applicable to group reconstructions. Profits or losses on intra group transactions, and balances are eliminated onconsolidation. c) Property, plant and equipment Property, plant and equipment are held at historical cost net of depreciationand any provision for impairment. Depreciation is calculated to write down thecost or valuation less estimated residual value of all property, plant andequipment over their estimated useful economic lives. The rates generallyapplicable are: Motor vehicles 25%Fixtures and fittings 25%Leasehold Improvements Depreciated over the life of the lease Material residual value estimates are updated as required, but at leastannually, whether or not the asset has been revalued. Where the carrying amountof an asset is greater than its estimated recoverable amount, it is written downimmediately to its recoverable amount. d) Exploration and development costs The Group has elected to apply the transitional provisions under IFRS 6 ("Exploration for and Evaluation of Mineral Resources") which permits the existingaccounting policy under UK GAAP for accounting for and capitalisation of mineralexploration costs. The policy adopted under UK GAAP is based on the Statement ofRecommended Practice "Accounting for Oil and Gas Exploration, Development,Production and Decommissioning Activities" revised in June 2001 (the SORPcurrently in effect). In accordance with the full cost method as set out in the SORP, expenditureincluding directly attributable overheads on the acquisition, exploration andevaluation of interests in licences not yet transferred to a cost pool iscapitalised under intangible assets. All costs incurred prior to obtaining the legal right to undertake explorationand evaluation activities on a project are written-off to the income statementas incurred. Exploration and evaluation costs arising following the acquisition of anexploration licence are capitalised on a project-by-project basis, pendingdetermination of the technical feasibility and commercial viability of theproject. Costs incurred include appropriate technical and administrativeoverheads. Deferred exploration costs are carried at historical cost less anyimpairment losses recognised. When it is determined that such cost will be recouped through successfuldevelopment and exploitation or alternatively by sale of the interest,expenditure will be transferred to tangible assets and depreciated over theexpected productive life of the asset. Whenever a project is considered nolonger viable the associated exploration expenditure is written-off to theincome statement. e) Impairment Whenever events or changes in circumstances indicate that the carrying amount ofan asset may not be recoverable an asset is reviewed for impairment. An asset'scarrying value is written down to its estimated recoverable amount if thatamount is less than the asset's carrying amount. The recoverable amount is thehigher of fair value less costs to sell and value in use. Impairment reviews for deferred exploration and evaluation costs are carried outon a project by project basis, with each project representing a potential singlecash generating unit. An impairment review isundertaken when indicators of impairment arise but typically when one of thefollowing circumstances apply: (i) title to the asset is compromised; (ii) variations in metal prices that render the project uneconomic; and (iii) unexpected geological occurrences that render the resource uneconomic f) Taxation Current income tax assets and liabilities comprise those obligations to, orclaims from fiscal authorities relating to the current or prior reportingperiod, that are unpaid at the balance sheet date. They are calculated accordingto the tax rates and tax laws applicable to the fiscal periods to which theyrelate, based on the taxable profit for the period. Deferred income taxes are calculated using the liability method on temporarydifferences. Deferred tax is generally provided on the difference between thecarrying amounts of assets and liabilities and their tax bases. However,deferred tax is not provided on the initial recognition of goodwill or on theinitial recognition of an asset or liability unless the related transaction is abusiness combination or affects tax or accounting profit. Deferred tax ontemporary differences associated with shares in subsidiaries is not provided ifreversal of these temporary differences can be controlled by the Group and it isprobable that reversal will not occur in the foreseeable future. In addition taxlosses available to be carried forward as well as other income tax credits tothe Group are assessed for recognition as deferred tax assets. Deferred tax liabilities are provided in full, with no discounting. Deferred taxassets are recognised to the extent that it is probable that the underlyingdeductible temporary differences will be able to be offset against futuretaxable income. Current and deferred tax assets and liabilities are calculatedat tax rates that are expected to apply to their respective period ofrealisation, provided they are enacted or substantively enacted at the balancesheet date. Changes in deferred tax assets or liabilities are recognised as a component oftax expense in the income statement, except where they relate to items that arecharged or credited directly to equity in which case the related deferred tax isalso charged or credited to equity. g) Share based payments Share based payment arrangements granted after 7 November 2002 which have notvested by 1 January 2006 are recognised in the financial statements. All goods and services received in exchange for the grant of any share basedpayment are measured at their fair values. Where employees are rewarded usingshare based payments, the fair values of employees' services are determinedindirectly by reference to the fair value of the instrument granted to theemployee. This fair value is appraised at the grant date and excludes theimpact of non-market vesting conditions. Shares options granted by the Groupvest 1 year from the date of grant. All equity-settled share based payments are ultimately recognised as an expensein the income statement with a corresponding credit to retained losses in thebalance sheet. If vesting periods or other non-market vesting conditions apply, the expense isallocated over the vesting period, based on the best available estimate of thenumber of share options expected to vest. Estimates are revised subsequently ifthere is any indication that the number of share options expected to vestdiffers from previous estimates. Any cumulative adjustment prior to vesting isrecognised in the current period. No adjustment is made to any expenserecognised in prior periods if share options that have vested are not exercised. Upon exercise of share options, the proceeds received net of attributabletransaction costs are credited to share capital, and where appropriate sharepremium. h) Financial instruments A financial instrument is any contract that gives rise to a financial asset ofone entity and a financial liability or equity instrument of another entity.Financial assets include cash and cash equivalents, trade and other receivables,equity instruments of another enterprise and are initially recognised in thebalance sheet at fair value, net of transaction costs where applicable.Thereafter, their carrying value depends on how those financial instruments havebeen classified. Cash and cash equivalents includes cash in hand, deposits heldat call with banks, other short-term highly liquid investments with originalmaturities of three months or less from acquisition. Financial assets are divided into the following categories: loans andreceivables; financial assets at fair value through the income statement;available for sale assets; and held to maturity investments. Financial assetsare assigned to the different categories by management on initial recognition,depending on the purpose for which they were acquired. The designation offinancial assets is re-evaluated at every reporting date at which a choice ofclassification or accounting treatment is available. Trade and other receivables are categorised as "loans and other receivables".Loans and receivables are non-derivative financial assets with fixed ordeterminable payments that are not quoted in an active market. After initialrecognition these assets are measured at amortised cost using the effectiveinterest method less provision for impairment. Any change in their value isrecognised in the income statement. Financial liabilities are obligations to pay cash or other financial assets andare recognised when the Group becomes a party to the contractual provisions ofthe instrument. The financial liabilities included in the accounts are recordedinitially at fair value, net of direct issue costs. Recognition of trade and other payables occurs when a Group company becomes aparty to the contractual provisions of the instrument. Most obligations arelegally enforceable and arise under contractual arrangements. These includeamounts owed for assets purchased or services obtained (trade creditors).Accrued expenses are liabilities to pay for goods or services that have beenreceived or supplied but have not been paid, invoiced or formally agreed withthe supplier. The recognition of accrued expenses results directly from therecognition of expenses for items of goods and services consumed during theperiod. The initial measurement of trade and other payables is usually at fairvalue. The Group has not entered into any derivative financial instruments for hedgingor any other purpose. Interest is recognised using the effective interest method which calculates theamortised cost of a financial asset and allocates the interest income over therelevant period. The effective interest rate is the rate that exactly discountsestimated future cash receipts through the expected life of the financial assetto the net carrying amount of the financial asset. i) Available for sale Available for sale financial assets include non-derivative financial assets thatare either designated as such or do not qualify for inclusion in any of theother categories of financial assets. All financial assets within this categoryare measured subsequently at fair value, with changes in value recognised inequity, through the statement of changes in equity. Gains and losses arisingfrom investments classified as available for sale are recognised in the incomestatement when they are sold or when the investment is impaired. In the case of impairment of available for sale assets, any loss previouslyrecognised in equity is transferred to the income statement. j) Income and expense recognition The Group's only income is interest receivable from bank deposits. Operatingexpenses are recognised in the income statement upon utilisation of the serviceor at the date of their origin. Interest received is recognised using theeffective interest method which calculates the amortised cost of a financialasset and allocates the interest income over the relevant period. The effectiveinterest rate is the rate that exactly discounts estimated future cash receiptsthrough the expected life of the financial asset to the net carrying amount ofthe financial asset. All other income and expenses are reported on an accrualbasis. k) Foreign currency translation The financial information for the Group is presented in pounds sterling, whichis also the functional currency of the parent company. Sterling is the currencythat management uses when controlling and monitoring the performance of thegroup. Items included in the financial statements of each of the Group's subsidiariesare measured using the functional currency with the exception of Twigg GoldLimited (a Tanzanian based subsidiary) which is measured in US dollars. In the financial statements of the parent and subsidiaries, foreign currencytransactions are translated into the functional currency of the subsidiary usingthe exchange rates prevailing at the date of the transaction. Exchange ratedifferences arising when monetary items are settled or upon translation at thespot rate ruling at the end of the period are separately reported in the incomestatement. In the consolidated financial statements, all separate financial statements ofsubsidiary entities, originally presented in a currency different from theGroup's presentation currency, have been converted into sterling. Assets and liabilities have been translated into sterling at the closing rate atthe balance sheet date. Income and expenses have been translated into sterlingat the average rates over the reporting period. Any differences arising fromthis procedure have been charged/credited to the "Foreign currency reserve" inequity. Exchange differences arising on a reporting entities net investment in a foreignoperation are recognised in the consolidated financial statements in a separatecomponent of equity ("Foreign currency reserve"). These exchange differenceswill be recognised in the income statement on disposal of the net investment. l) Equity Equity comprises the following: - "Share capital" is the nominal value of equity shares. - "Share premium account" represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue. - "Merger reserve" is the difference between the net assets of the subsidiary acquired and the nominal value of the consideration (e.g. shares issued) to acquire the subsidiary - "Available for sale revaluation reserve" represents the difference between the fair value of the available for sale investments and the acquisition cost of those investments. - "Foreign currency reserve" represents the differences arising from translation of investments in overseas subsidiaries. - "Retained losses" represents retained earnings. m) Operating lease agreements Rentals applicable to operating leases where substantially all of the benefitsand risks of ownership remain with the lessor are charged against profits on astraight line basis over the period of the lease. n) Cash and cash equivalents Cash and cash equivalents in the balance sheet comprise cash on hand and demanddeposits together with other short term, highly liquid investments that arereadily convertible into known amounts of cash and which are subject to aninsignificant risk of changes in value. o) Goodwill Goodwill which represents the excess of the cost of acquisition over the fairvalue of the Group's share of the identifiable net assets acquired iscapitalised and reviewed annually for impairment. Goodwill is carried at costless accumulated impairment losses. Goodwill written off to reserves prior to date of transition to IFRS remains inreserves. There is no re-instatement of goodwill that was amortised prior totransition to IFRS. Goodwill previously written off toreserves is not written back to the income statement on subsequent disposal. 3 Share issues During the period to 30 June 2007 6,209,254 shares were issued of which 300,500shares were issued to satisfy share options previous granted under the Company'semployee share option scheme and 5,908,754 shares were issued to Phelps DodgeMining (Zambia) Limited (PDMZ) under the terms of the Ndola, Zambia earn-inagreement. Shares issued and allotted during the period to 30 June 2007,together with the 2006 comparatives are summarised below: 6 months to 30 June 2007 Number Share capital £ Share premium £At 1 January 2007 147,824,890 1,478,249 11,803,913Issue of shares 6,209,254 62,092 613,535Expenses on share issues - - (2,436)At 30 June 2007 154,034,144 1,540,341 12,415,012 6 months to 30 June 2006 Number Share capital £ Share premium £At 1 January 2006 112,954,962 1,129,550 7,953,968Issue of shares 34,580,825 345,808 4,037,576Expenses on share issues - - (202,087)At 30 June 2006 147,535,787 1,475,358 11,789,457 Year to 31 December 2006 Number Share capital £ Share premium £At 1 January 2006 112,954,962 1,129,550 7,953,968Issue of shares 34,869,928 348,699 4,052,531Expenses on share issues - - (202,586)At 31 December 2006 147,824,890 1,478,249 11,803,913 The issue of shares yielded £675,627 gross in the period with related expensesamounting to £2,436. PDMZ acquired 5,908,754 shares for £651,588 at a price of11.0275 pence per share representing a 10% premium to the average closingmid-market price of African Eagle's shares for the 10 consecutive dealing daysimmediately proceeding 15 February 2007. The employee share options were exercised at 8 pence per share and the weightedaverage share price at the date of exercise was 10.14 pence per share. An agreement dated 14 March 2007, was entered into between African Eagle andLoeb Aron & Company Ltd., under which, warrants to subscribe for up to 600,000ordinary shares in the Company will be issued in two tranches at a subscriptionprice of 18 pence per warrant share. The subscription period terminates on thethird anniversary of the date of issuance. Additional shares have been issued after the balance sheet date and these arelisted under "Events after the balance sheet date" in note 5. 4. Loss per share The calculation of basic loss per share is based on the loss for the period of£444,709 (June 2006: £638,444; December 2006: £1,298,927) divided by theweighted average number of shares in issue during the period of 152,144,955(June 2006: 123,437,168; December 2006: 135,728,466). In calculating the diluted loss per share potential ordinary shares such asshare options and warrants have not been included as they would have the effectof decreasing the loss per share. Decreasing the loss per share would beantidilutive. Headline loss per share has been calculated in accordance with the Institute ofInvestment Management and Research's ("IIMR") Statement of Investment PracticeNo.1 entitled 'The Definition of Headline Earnings'. The calculation of headlineloss per share is based on the loss for the period adjusted for profit on saleof fixed assets, loss on impairment of exploration assets and the tax impact ofthese adjustments as calculated below divided by the weighted average number ofshares in issue during the year. No diluted headline loss per share has beencalculated as it would be antidilutive by reducing the headline loss per share. 6 months to 6 months to Year to 31 30 June 2007 30 June 2006 December 2006 Unaudited Unaudited Unaudited £ £ £ Loss for the period (444,709) (638,444) (1,298,927) Adjusted for:Profit on sale of fixed assets (512) - (1,615)Loss on impairment of exploration assets 44,008 163,297 215,201Tax impact of these adjustments (13,049) (48,989) (64,076)Headline loss (414,262) (524,136) (1,149,417)Weighted average number of shares in issue 152,144,955 123,437,168 135,728,466 Basic & diluted headline loss per share (0.3p) (0.4p) (0.8p) 5 Events after the balance sheet date The financial statements were authorised for issue by the Board of Directors onthe 27 September 2007. The following non-adjusting events arose after thebalance sheet date: Placing of Shares The Company announced the exercise of employee share options on the 27 July 2007whereby employees exercised 15,000 share options at 8p to purchase ordinaryshares in the Company. On 31 July 2007 African Eagle announced a £7.4M (ZAR 104,231,315 at ZAR 14.07 tothe pound) capital raising in South Africa and confirmed its intention to liston the Johannesburg Stock Exchange (AltX). African Eagle's corporate adviser andAltX Sponsor, Nedbank Capital, advised the Company that it had receivedirrevocable applications from South African investors to subscribe for45,457,310 shares for a total of ZAR 88,641,755 gross. In addition African Eaglehad received an irrevocable application from JP Morgan Fleming Natural ResourcesFund, a long standing UK shareholder, for 8,000,000 shares, equivalent to ZAR15,600,000 gross. On the 24 August the Company announced that it had listed on the AlternativeExchange of the Johannesburg Stock Exchange (AltX). Other Announcements On 18 September 2007 the Company announced that it had been awarded MokamboSouth prospecting licence. 6 Explanation of transition to IFRS Basis of transition to IFRS As stated in the Basis of Preparation, these are the Group's first condensedconsolidated interim financial statements for part of the period covered by thefirst IFRS annual consolidated financial statements prepared in accordance withIFRS. An explanation of how the transition from UK GAAP to IFRS has affected theGroup's financial position, financial performance and cash flows is set outbelow. The accounting policies as set out in note 2 have been applied in preparing therestatement of the financial statements for the periods ending 30 June 2006 and31 December 2006 and the actual performance for the period ending 30 June 2007. The rules for first time adoption under IFRS 1, "First time adoption of IFRS"allow the Group to take advantage of a number of exemptions. These exemptionsare designed to simplify the transition process. The Group has adopted thefollowing exemptions: IFRS 1 exemptions: 1. Business combinations exemption The Group has elected the business combinations exemption under IFRS 1, whichallows the Company not to restate business combinations prior to 1 January 2006. 2. Share based compensation The Group has used the exemption under IFRS 1 and has only included those equityinstruments granted after 7 November 2002 that had not vested as of 1 January2006. All share options issued subsequent to that date have been expensed asappropriate in accordance with IFRS 2, "Share Based Payments". 3. Cumulative translation differences exemption The Group has elected to set previously accumulated translation differences tozero at the transition date. Reconciliation of equity at 1 January 2006 UK GAAP Note a Note b IFRS Audited UnauditedASSETS £ £ £ £Non-current assetsProperty, plant and equipment 250,362 - - 250,362Goodwill 106,188 - - 106,188Available for sale investments 18,372 (9,957) - 8,415Deferred exploration costs 7,169,287 - - 7,169,287Current assetsOther receivables 176,039 - - 176,039Cash and cash equivalents 1,097,881 - - 1,097,881Current liabilitiesTrade and other payables (418,939) - - (418,939)Net assets 8,399,190 (9,957) - 8,389,233 EQUITYShare capital 1,129,550 - - 1,129,550Share premium account 7,953,968 - - 7,953,968Merger reserve 705,723 - - 705,723Share based payment reserve 92,871 - (92,871) -Available for sale revaluationreserve - (9,957) - (9,957)Retained losses (1,482,922) - 92,871 (1,390,051)Total equity 8,399,190 (9,957) - 8,389,233 Reconciliation of equity at 30 June 2006 UK GAAP Note a Note b Note d Note e IFRS Unaudited UnauditedASSETS £ £ £ £ £ £Non-current assetsProperty, plant and equipment 204,933 - - - - 204,933Goodwill 72,890 - - 33,298 - 106,188Available for sale investments 18,229 (10,138) - - - 8,091Deferred exploration costs 7,698,774 - - - - 7,698,774Current assetsOther receivables 140,765 - - - - 140,765Cash and cash equivalents 3,717,063 - - - - 3,717,063 Current liabilitiesTrade and other payables (147,424) - - - - (147,424)Net assets 11,705,230 (10,138) - 33,298 - 11,728,390 EQUITYShare capital 1,475,358 - - - - 1,475,358Share premium account 11,789,457 - - - - 11,789,457Merger reserve 705,723 - - - - 705,723Share based payment reserve 197,937 - (197,937) - - -Available for sale revaluation reserve - (10,138) - - - (10,138)Foreign currency reserve - - - (308,581) (308,581)Retained losses (2,463,245) - 197,937 33,298 308,581 (1,923,429)Total equity 11,705,230 (10,138) - 33,298 - 11,728,390 Reconciliation of equity at 1 January 2007 UK GAAP Note a Note b Note d Note e IFRS Audited UnauditedASSETS £ £ £ £ £ £Non-current assetsProperty, plant and equipment 153,495 - - - - 153,495Goodwill 39,593 - - 66,595 - 106,188Available for sale investments 18,046 (7,929) - - - 10,117Deferred exploration costs 7,172,869 - - - - 7,172,869Current assetsOther receivables 240,466 - - - - 240,466Cash and cash equivalents 2,516,712 - - - - 2,516,712Current liabilitiesTrade and other payables (180,820) - - - - (180,820)Net assets 9,960,361 (7,929) - 66,595 - 10,019,027 EQUITYShare capital 1,478,249 - - - - 1,478,249Share premium account 11,803,913 - - - - 11,803,913Merger reserve 705,723 - - - - 705,723Share based payment reserve 292,455 - (292,455) - - -Available for sale revaluation reserve - (7,929) - - - (7,929)Foreign currency reserve - - - - (1,471,535) (1,471,535)Retained losses (4,319,979) - 292,455 66,595 1,471,535 (2,489,394)Total equity 9,960,361 (7,929) - 66,595 - 10,019,027 Reconciliation of profit for the 6 months ended 30 June 2006 UK GAAP Note b Note c Note d IFRS Unaudited Unaudited £ £ £ £ £Depreciation expense - - (39,851) - (39,851)Administrative expenses (541,181) - 507,883 33,298 -Share based payments (105,066) 105,066 - - -Employee benefits expense - (105,066) (138,710) - (243,776)Impairment of deferredexploration expenditure - - (163,297) - (163,297)Foreign exchange losses (52,124) - - - (52,124)Other expenses - - (166,025) - (166,025)Operating loss (698,371) - - 33,298 (665,073)Financial income: Bank interest receivable 26,629 - - - 26,629Loss before tax (671,742) - 33,298 (638,444)Income tax expense - - - - -Loss for the period (671,742) - - 33,298 (638,444) Reconciliation of profit for the year to 31 December 2006 UK GAAP Note b Note c Note d IFRS Audited Unaudited £ £ £ £ £Depreciation expense - - (68,895) - (68,895)Administrative expenses (1,003,826) - 937,231 66,595 -Share based payments (199,584) 199,584 - - -Employee benefits expense - (199,584) (298,703) - (498,287)Impairment of deferredexploration expenditure - - (215,201) - (215,201)Foreign exchange losses (263,378) - - - (263,378)Other expenses - - (354,432) - (354,432)Operating loss (1,466,788) - - 66,595 (1,400,193)Financial income:Bank interest receivable 101,266 - - - 101,266Loss before tax (1,365,522) - - 66,595 (1,298,927)Income tax expense - - - - -Loss for the period (1,365,522) - - 66,595 (1,298,927) Reconciliations between IFRS and UK GAAP Notes to the Reconciliations (a) Investments in Listed Companies The Group in applying IAS 32 and IAS 39 has valued the listed shares inSub-Sahara Resources N.L. at fair value. This investment is treated as"available for sale financial assets" and the movement in fair value has beenrecognised through equity. (b) Share based payments Under UK GAAP, the Group recorded the credit to equity arising on share basedpayments as a separate reserve. On moving to IFRS, it has been determined thatthis reserve may be eliminated against retained losses. (c) Administrative expense Under IFRS the Group has adopted the consolidated income statement, "expense bynature" as opposed to "expense by function". The main change is to replaceadministrative expense and share based payments as reported under UK GAAP with:employee benefits; depreciation; impairment of deferred exploration and otherexpenses. (d) Goodwill amortisation IFRS 3 prohibits the amortisation of goodwill. The standard requires goodwill tobe carried at cost from the transition date. Impairment reviews are requiredannually or when there are indications the carrying value may not berecoverable. The goodwill amortised under UK GAAP during 2006 has been reversedin the income statement with a resulting impact on retained losses in thebalance sheet. The directors are satisfied that the value of goodwill has notbeen impaired. (e) Foreign currency reserve A translation reserve was created for the exchange differences arising from theretranslation of the opening net investment in subsidiaries. Explanation of material adjustments on the cash flow statement Interest received has been reclassified under net cash used in investingactivities where, under UK GAAP, it formed part of the return on investments andservicing of finance. The movement in liquid resources, which comprise the cash equivalents of theGroup, was classified as a cash flow under UK GAAP. Under IFRS, liquid resourceshave been reclassified as cash equivalents and movements and are a component ofthe increase or decrease in cash and cash equivalents in the year. There are no other material differences between the cash flow statementpresented under IFRS and the cash flow statement presented under UK GAAP. END This information is provided by RNS The company news service from the London Stock Exchange