Cerillion Regulatory News (CER)

19 Jun 2006 07:01

Celtic Resources Holdings PLC19 June 2006 Celtic Resources Holdings Plc ("Celtic", "Celtic Resources", or "the Company") Full year results for the year ending 31 December 2005 • Group gold production in 2005 was 37,991 ounces compared to 31,809 ounces in 2004, an increase of 14.9%. • Interest in the Nezhdaninskoye gold mine in Russia sold for $80 million cash. • Gold poured from the first BIOX(R) plant for treatment of refractory gold ores in the FSU. • Underground mining started at Suzdal. • Shareholders' funds increased during 2005 from $94.8 million to $111.5 million. • Group loss before tax and minority interests was $260,000 including $1.27 million loss on foreign exchange movement. • Celtic has an investment portfolio with a 14.1% holding in Eureka Mining Plc and a 5.6% holding in Victoria Oil & Gas Plc. The Company's annual report and accounts are being sent to shareholders and willbe available on our website shortly. For further information please contact: Kevin Foo / Kate Dexter Smith Leesa Peters / Laurence ReadCeltic Resources Holdings Plc Conduit PRTel: + 44 (0)20 7921 8800 Tel: +44 (0)7812 159 885 Investors@celticresources.com Tel: +44(0)20 7429 leesa@conduitpr.com Frank MoxonWilliams de Broe PlcTel: +44 (0) 20 7588 7511 www.celticresources.com CHAIRMANS STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2005 DEAR SHAREHOLDERS The past 18 months has been a period of intense corporate activity forCeltic while management has also been focused on bringing the newly developedunderground mine and BIOX(R) plant at Suzdal in Kazakhstan up to its fullcapacity. We started 2005 by engaging in a tripartite agreement with Barrick GoldCorporation and IG Alrosa which was outlined in my letter to you in the lastReport and Accounts published in June 2005. These negotiations, involving threecompanies from three different countries and cultures trying to create a majornew Russian gold group were complex and often frustrating. In July 2005, we were also defending ourselves in a substantial arbitration inLondon brought by Arduina Holdings BV. The result, which I reported to you inDecember, was that we had won on every issue, completely vindicating ourposition. On 8 September, when writing to you to cover the interim accounts, it waspointed out that recent Russian press articles hinted at other potential suitorsfor the Nezhdaninskoye and Kyuchus assets, which were in our tripartiteagreement. On 19 September, we informed you that IG Alrosa had sold its Yakutiangold interests including 50% of SVMC to ZAO Polyus, the gold mining arm of MMCNorilsk Nickel and that we looked forward to discussing developments with them.On 6 October, we issued a detailed statement concerning our 50% ownership of theSVMC assets and how we had re-initiated legal proceedings in Russia and theBritish Virgin Islands to protect them. The Company and its legal advisers initiated over sixty legal actions. Althoughthe share price reacted very unfavourably to our position, the Company was ableto place a block of shares with Altima Group to raise $10 million which ensuredwe could take the legal battles to a conclusion. On 23 November, we issued arelease concerning an illegal SVMC shareholders meeting that had been held on 18November and we followed this up on 24 November stating that we had won animportant case on 8 November, restating our aim to proceed through the correctlegal channels to advance our cause. The Company's position and determination was clear and during this period anddespite many provocations your small dedicated teams in London and in Moscownever lost heart. They maintained a thoroughly professional attitude and refusedto give ground to much larger opponents by developing innovative strategies.They were, and are, a great credit to themselves and to the shareholders. Wecontinued to negotiate with Polyus and after some time, a deal to sell ourinterest in SVMC was proposed. After consideration the Board decided unanimouslyto accept this as being in the best interests of the shareholders. This wasannounced after the financial year end ina lengthy release dated 3 February. In this letter I am pleased to confirm that we have received the entire proceedsof that transaction, $80 million, and we await to be repayment of a substantialportion of our original loans to SVMC. We also expect to collect the costsawarded to us for the Arduina case of approximately £1 million. Whilst this is not the outcome I anticipated or wished for I believe that it isa very good result for the Company and a substantial return on our investment. Ibelieve that current market conditions offer excellent opportunities to thosewith gold production, expertise and cash. KAZAKHSTAN Whilst all the corporate activity was keeping your Board fully occupied, earlyproduction results from the new BIOX(R) plant at Suzdal were disappointing andthe Board moved to strengthen management and pay very close attention toincreasing production and gold recovery. We are pleased to report that the newlyappointed management, led by Ross Calnan, has solved most of the problemsencountered and has developed a solid plan which should see the plant achieveits full potential. Last year production was 20,585 ounces and I feel confidentthat the forecast of more than 64,000 ounces for 2006 is achievable. This substantial processing and mining facility was in part funded by local bankborrowings which were shown in the interims as $24.3 million. Current borrowingsare $22.7 million and the Board will consider whether this should be repaid inpart or in full given the relative funding costs and available sources ofcapital. At Zherek, heap leaching of oxide ores led to production of 17,406ounces of gold and we forecast a similar level for this year. The Company remains unhedged but as gold production rises and if prices remainfirm, the Board will, in conjunction with its advisers, continue to reviewforward hedging strategies for gold and currencies. FINANCIAL RESULTS It is encouraging that turnover rose 15.3% last year to $15.7 million on theback of increased gold sales and higher prices. However, I am disappointed toreport that due to an increase in fuel, labour, power and mill reagent costs andan extended plant commissioning period, operating costs rose by 39.6%.Therefore, after three years of profitability, I have to report an operatingloss of $0.21 million compared to an operating profit of $4.98 million in 2004,although I would note that the result included a loss of $1.27 million onforeign exchange movements, without which the group would have maintainedprofitability at the operating and pre-tax levels. The net result was a loss of$1.92 million compared to a profit of $2.80 million. Cash held at the end of2005 totalled $10.5 million and after share issues in the year, groupshareholders'funds rose to $111.5 million from $94.8 million. INVESTMENTS Eureka Mining Plc Celtic holds 3.74 million shares in AIM quoted Eureka Mining Plc. The sharesrepresent a 14.1% holding in Eureka and the current market value of this holdingis approximately £3 million. Eureka had a successful 2005 and met all of its targets. In January 2005 itannounced the 51% acquisition of Urals based Chelyabinsk Copper Gold project inSouthern Russia and the purchase of the remaining 49% has since been completed.In Kazakhstan during July 2005 Eureka signed a joint venture partnership withKazAtomProm regarding the molybdenum mine at Shorskoye. A plant has since beencommissioned to process the output and is producing its first concentrates.Eureka also raised £9 million via a placing with institutional investors inSeptember 2005. Victoria Oil & Gas Plc Celtic holds 6.40 million shares in AIM quoted Victoria Oil & Gas Plc. Theshareholding represents a 5.6% holding in Victoria and the current market valueof this holding is approximately £7 million. During 2005, Victoria madeoutstanding progress towards its goal of becoming an established oil and gasproducer including two acquisitions and the raising of over $35 million in thecapital market. Further to the acquisition of the Kemerkol oil project in Kazakhstan, which has35 million barrels of C1 and C2 reserves and which began production at over 200barrels of oil per day in March 2006, Victoria secured the outstanding 25.2% ofthe potentially giant West Medvezhye gas and condensate project in WesternSiberia. In the third quarter of 2005, the first exploration well was completed at WestMedvezhye and using data from the drilling and subsequent seismic workindependent reserve auditors DeGolyer & MacNaughton have confirmed grosspotential recoverable prospective resource volumes for the project of 5.6trillion cubic feet of gas and over 164 million barrels of liquid hydrocarbons.Victoria is currently testing this initial discovery well and drilling twofurther wells with preliminary test results for each expected soon. Celtic's interest in the two companies is represented by Kevin Foo's positionsas Non Executive Chairman on the Eureka Board of Directors and Chairmanof Victoria. THE FUTURE Our Company has emerged from a difficult few years with a substantial cashbalance, a growing production profile, proven experience in the FSU and amanagement team that has shown its great abilities in all aspects of thebusiness. We are now ready to move into a second phase of Company developmentwhere our gold resource base will be rebuilt, gold production increased,acquisitions completed and associations forged. I should like to thank my fellow Directors and all management and staff fortheir outstanding efforts in 2005. Peter HannenChairman16 June 2006 MANAGING DIRECTORS REVIEW OF OPERATIONSFOR THE YEAR ENDED 31 DECEMBER 2005 Following the sale of our interest in the Nezhdaninskoye gold mine in Russia,Celtic now has two operating gold mines in Kazakhstan, significant investmentsin Eureka Mining and Victoria Oil & Gas, and $80 million cash. The Companyremains focused on gold production in the FSU and is actively reviewingopportunities in the region, from its home base in Kazakhstan. Our medium termaims are to rebuild gold resources to previous levels of approximately10 million ounces and to increase production, by expansion and acquisition, to500,000 ounces per year. KAZAKHSTAN GOLD MINES The Suzdal gold mine is located 75 km south-west of Semipalatinsk in northernKazakhstan. Open pit mining of oxides ceased in August 2004 and in that samemonth, underground development by trackless mining to access the Sulphide oresbegan. The Suzdal Sulphide Project, a treatment plant using state of the artBIOX(R) technology was developed to extract gold from the refractory sulphideores. Commissioning of the mills and concentration circuit began in November2004. Construction was essentially handled in house, using local designinstitutes and contractors, except for the BIOX(R) plant, which requiredspecialist designs from the process supplier, Goldfields Ltd. First gold waspoured at the new plant in May and 2005 full year production reached 20,585ounces. I am pleased to report that the first tonne of gold (31,103 ounces) wasrecently poured from the Suzdal Sulphide plant. At the nearby Zherek mine, 75% owned by Celtic, the open pit and heap leachoperation on oxide ores produced 17,406 ounces of gold. SUZDAL GOLD MINE Underground mine development continued on three levels and stoping began withfull year mined production reaching 40,215 tonnes at an average grade of 15.64g/t of gold. This was below forecast due to equipment downtime and some complexgeological structures that had not been anticipated. Underground drilling hasenabled a much better understanding of the detailed geology and has materiallyassisted in mine stope design and this programme is continuing. In addition,stripping of waste from Pit 4 allowed access to sulphides from this orebody andresource tonnages available are 250,000 tonnes at 8g/t Au. Currently,underground production levels are at over 20,000 tonnes per month and to datesome 150,000 tonnes of ore has been mined from Pit 4, usefully supplementingplant feed. The crushing, grinding, flotation and filtration sections of the new plant werecompleted prior to the BIOX(R) circuit and some gold in concentrates was sold inthe first half of 2005. The BIOX(R) plant, CIL circuit and gold elutionfacilities, including two fully lined tailings dams and a cyanide detoxificationplant began production in May. However, for most of 2005 and in the early part of 2006, production was severelyrestricted because of limitations to the amount of concentrate which could befed to the BIOX(R) plant. This was primarily caused by the continued failure ofthe western supplied air blowers. These are a critical component of the BIOX(R)plant that supplies air to the oxidation tanks. All five blower units have beenreplaced, some twice and after extensive internal and external expert analysis,the primary cause of the problem has been traced to a design fault in theblowers and air ducting to the tanks. In late 2005, the Company decided to completely redesign and replace the blowerswith two large, more robust units and these will be in operation in August.Until then, repaired units have sufficed and production levels have increased.It is particularly pleasing that despite these teething problems, which includedwide fluctuations in feed quality and quantity, as well as ambient temperaturessometimes minus 45degreesC, the "bugs" in the BIOX(R) plant have survived andefficiently consumed whatever feed was available. The plant now has the capacity to treat 300,000 tonnes of ore per year but on amonthly basis has not reached this operating level due to the limitationsmentioned above and grinding circuit throughput problems that have since beenovercome. At present, monthly throughput is averaging 20,000 tonnes per monthagainst a budget of 25,000 tonnes per month, recovery is approximately 69%against budget of 75% and feed grade average for the year to date is 9g/t Auagainst budget of 11 g/t Au. We expect to be meeting or exceeding budgetproduction after the new blowers are installed and gold production for 2006 isforecast to be 64,216 ounces. In the final analysis, designing and constructing a major expansion such as theSuzdal Sulphide Project has proved to be challenging, with project delays andcost over runs. Notably, the main cause of the delayed production has beenwestern supplied equipment. The cost of the project, including extended workingcapital has been about $45 million against an original budget of $35 million.However, as noted in last year's report, this is still considerably cheaper thanan "all western" approach which in the current climate of capital costs wouldtotal over $100 million. This extended commissioning time has also had an impacton operating costs with 2005 total cash costs of $306/ounce. Current cashoperating costs are about $400/ounce and should finish the year at about $366/ounce. The Company aims to produce gold from Suzdal for less than $300/ounce in2007. I should like to acknowledge Kazkommertsbank for their unwavering supportof the Suzdal project. Also, the management team at Suzdal, under Ross Calnanand Aitkaly Bakhtiyarov has overcome significant obstacles and in doing so haspositioned the Company well to take advantage of the experience gained. SUZDAL PRODUCTION FIGURES FOR YEARS 2000 - 2005 Budget 2000 2001 2002 2003 2004 2005 2006------------ ------ ------ ------ ------ ------ ------ ------OXIDE OREMINEDTonnes 124,000 248,000 233,000 187,000 127,865 4,295 -Grade g/t Au 6.0 6.2 5.7 3.5 2.7 0.59 ----------- ------ ------ ------ ------ ------ ------ ------STACKED ON HEAPTonnes 169,000 307,000 355,000 213,000 163,553 47,051 50,000Grade g/t Au 6.14 5.46 4.22 3.39 2.62 1.96 0.9---------- ------ ------ ------ ------ ------ ------ ------SULPHIDE OREMINEDTonnes - - - - 252,782 40,215 391,000Grade g/t Au - - - - 6.2 15.64 10.4---------- ------ ------ ------ ------ ------ ------ ------SULPHIDE ORE TREATEDTonnes - - - - - 151,918 286,750Grade g/t Au - - - - - 8.09 11.26---------- ------ ------ ------ ------ ------ ------ ------GOLD PRODUCTION Ounces 24,244 42,341 36,875 21,167 11,598 20,585 64,216---------- ------ ------ ------ ------ ------ ------ ------TOTAL CASH COST$/oz sold 225 155 163 195 216 306 366---------- ------ ------ ------ ------ ------ ------ ------ ZHEREK GOLD MINE Open pit mining of oxide ores continued at Zherek, 28 km from Suzdal, with402,276 tonnes of ore mined in 2005, some 12% over budget. Despite thisexcellent mining performance (tonnage 25% higher than 2004) the grade mined waslower than in 2004 at 2.51g/t Au compared to an average of 3.37g/t Au in theprevious year. Heap leaching continued as scheduled and ore mined was stacked to recover 17,406ounces of gold at an average cash cost of $370 per ounce in 2005. The oxide oreat Zherek will be exhausted in late 2007 when open pit mining will cease. Padleaching and gold recovery may continue for another year after this. However,studies and a drilling programme have begun to better define the sulphideorebody and a review of the economics of development of an underground mine andpre-concentrator is underway. If deemed economically feasible, it is planned totruck concentrate to the Suzdal plant for final gold recovery. ZHEREK PRODUCTION FIGURES FOR YEARS 2003 - 2005 Forecast 2003 2004 2005 2006----------------- --------------- -------- -------- ---------OXIDE ORE MINEDTonnes 293,411 320,957 402,276 360,000Grade g/t Au 2.00 3.4 2.51 2.16---------------- --------------- -------- -------- ---------STACKING ON HEAPTonnes 352,891 339,685 402,276 360,000Grade g/t Au 1.92 3.3 2.51 2.16---------------- --------------- -------- -------- ---------GOLD PRODUCTIONOunces 11,268 20,211 17,406 18,165---------------- --------------- -------- -------- ---------Total cash cost$/oz sold 373 401 370 350---------------- --------------- -------- -------- --------- GROUP RESOURCES INVENTORY The Company has sought to bring all resource and reserves statements intoAustralian Joint Ore Reserve Committee (JORC) Code and SRK Consulting hasrecently completed a resources audit at Suzdal and Zherek. The figures providedbelow are taken from SRK's report and confirm previously published Russianstandard resources. Overall attributable measured, indicated and inferred goldresources for Suzdal and Zherek are approximately two million ounces. JORC GROUP RESOURCES INVENTORY Ore Contained Tonnes Grade Gold ('000) (g/t Au) ('000 oz)------------------------------ --------- ---------- ----------Suzdal oxidesMeasured and indicated 40 16.4 23Inferred 780 1.1 27------------------------- --------- ---------- ----------Total oxides 820 1.9 50------------------------- --------- ---------- ----------Suzdal sulphidesMeasured and indicated 750 18.7 452Inferred 3,370 7.6 822------------------------- --------- ---------- ----------Total sulphides 4,120 9.6 1,274------------------------- --------- ---------- ----------Suzdal totalMeasured and indicated 790 18.5 475Inferred 4,150 6.4 849------------------------- --------- ---------- ----------Suzdal Total All Categories 4,940 8.3 1,324------------------------- --------- ---------- ---------- Zherek oxidesMeasured and indicated 550 2.1 37Inferred 510 2.8 45------------------------- --------- ---------- ----------Zherek sulphidesMeasured and IndicatedInferred 4,370 5.4 759------------------------- --------- ---------- ----------Zherek TotalMeasured and indicated 550 2.1 37Inferred 4,880 5.1 804------------------------- --------- ---------- ----------Zherek Total All Categories 5,430 4.8 841------------------------- --------- ---------- ---------- Total Group 10,370 6.7 2,165------------------------- --------- ---------- ----------Total Attributable 9,013 6.7 1,955------------------------- --------- ---------- ----------Note: table derived from SRK audited figures as at 1 January 2006. HEALTH, SAFETY AND ENVIRONMENT The health and safety of our employees and contractors is of primary importanceto the Company. We continually monitor safety procedures and train employees forthe special operating conditions of gold mines and treatment plants. We complystringently with local regulation requirements and operate our mines toInternational standards. THE FUTURE Celtic's management has been operating in Kazakhstan since 1990 and the Companynow employs nearly 600 people at two gold mines, with offices in Semipalatinskand Almaty. We have enjoyed a very stable investment climate in Kazakhstan andwe have also earned the respect and support of local and national Governments.The Company has a strong base from which to expand its business, both inKazakhstan and in neighbouring FSU countries. Recently, the region has attracted a number of Western gold miners and localcompanies have discovered the attractions of Western capital markets. We believethat many mining opportunities in Kazakhstan remain. It is a country the size ofEurope, with a growing economy, a well educated and skilful workforce and stableleadership. Expansion of Suzdal and Zherek is one priority but we are activelyreviewing acquisition opportunities. We are also looking east to the Tien Shangold belt, which is the richest gold province in Asia and the second largest inthe world after South Africa's Witwatersrand Basin. There are over a dozen majorgold mines or developments along this belt stretching from Northern Uzbekistanto the Gobi desert in Mongolia. The largest of these is the 170 million ounceMuruntau deposit in Uzbekistan but other world class deposits such as Zarmitan,Amantaytau, Jerooy and Kumtor have also been discovered. We recognise that not every country in this region has yet shown that theirlegal and fiscal environments are as attractive to foreign mining companies asKazakhstan but we believe that our long experience in Central Asia will be thekey to proper risk management and give us a unique edge when assessing andnegotiating acquisitions. My thanks go to all employees and contractors at Suzdal and Zherek and ouroffices in London, Almaty and Semipalatinsk. The Company now has growing goldproduction, second to none experience in the area and significant cash resourcesto meet our objectives. Kevin FooManaging director16 June 2006 CONSOLIDATED PROFIT AND LOSS ACCOUNTfor the year ended 31 December 2005 2005 2004 $000 $000------------------------------------ ------------- -------- --------TURNOVER FROM CONTINUING OPERATIONS 15,662 13,584Cost of sales (9,973) (7,145)------------------------- ------------- -------- --------GROSS PROFIT 5,689 6,439Administrative expenses (4,624) (4,266)Foreign currency exchange (losses)/gains (1,274) 2,809 ------------------------- -------------- ------- --------OPERATING (LOSS)/PROFIT FROM CONTINUING OPERATIONS (209) 4,982Profit on disposal of investments - 962Loan interest payable (450) (374)Interest receivable 102------------------------- ------------- -------- --------(LOSS)/PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION (263) 5,672Taxation (1,458) (2,295)------------------------- ------------- -------- --------(LOSS)/PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION (1,721) 3,377Minority interest (203) (581)------------------------- ------------- -------- --------GROUP (LOSS)/PROFIT FOR THE YEAR (1,924) 2,796------------------------- ------------- -------- --------All income and expenditure arises fromcontinuing operations. US Cents US Cents------------------------------------- ------------- -------- --------(Loss)/earnings per share (4.55) 7.66Fully diluted (loss)/earnings per (4.55) 7.38share ------------- -------- --------------------------------- CONSOLIDATED BALANCE SHEETas at 31 December 2005 2005 2004 $000 $000----------------------------- ---------- ---------FIXED ASSETSIntangible assets 24,872 20,039Tangible assets 44,143 28,106Financial assets 11,423 47,178----------------------------- ---------- --------- 80,438 95,323----------------------------- ---------- ---------CURRENT ASSETSStock 5,846 7,071Debtors 7,552 5,465Financial assets 49,623 -Cash at bank and in hand 10,532 30,494----------------------------- ---------- --------- 73,553 43,030CREDITORS (amounts falling due within one year) (19,959) (13,664)----------------------------- ---------- ---------NET CURRENT ASSETS 53,594 29,366CREDITORS (amounts due after more than one year) (20,183) (28,265)PROVISION FOR LIABILITIES AND CHARGES (1,766) (1,120)----------------------------- ---------- ---------NET ASSETS 112,083 95,304----------------------------- ---------- ---------FINANCED BY:CAPITAL AND RESERVESCalled up share capital - equity 12,564 11,310Called up share capital - non-equity - 3,184Capital conversion reserve 61 61Share premium - equity 100,480 86,376Profit and loss account - equity 11,931 7,407Employee Benefit Trust Reserve - equity (13,562) (13,507)----------------------------- ---------- ---------SHAREHOLDERS' FUNDS 111,474 94,831Minority interests - equity 609 473----------------------------- ---------- --------- 112,083 95,304----------------------------- ---------- --------- CONSOLIDATED CASH FLOW STATEMENTfor the year ended 31 December 2005 2005 2004 Notes $000 $000------------------------------ ------- -------- --------NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES A 4,719 (11,059)---------------------------------- ---- -------- --------RETURNS ON INVESTMENTS AND SERVICING OF FINANCEInterest received 396 102Interest paid (3,687) (2,336)------------------------------ ------- -------- --------NET CASH OUTFLOW FROM RETURNS ON INVESTMENTSAND SERVICING OF FINANCE (3,291) (2,234)---------------------------------- ---- -------- --------TAXATION PAID (1,263) (1,573)------------------------------ ------- -------- --------CAPITAL EXPENDITURE AND FINANCIAL INVESTMENTPayments to acquire intangible fixed assets (11,093) (9,701)Proceeds on disposal of tangible assets 33 -Payments to acquire tangible fixed assets (14,067) (19,236)Additions to financial assets (7,710) ------------------------------- ------- -------- --------NET CASH OUTFLOW FROM CAPITAL EXPENDITUREAND FINANCIAL INVESTMENT (32,837) (28,937)------------------------------ ------- -------- --------NET CASH OUTFLOW BEFORE FINANCING (32,672) (43,803)------------------------------ ------- -------- --------FINANCINGIssue of ordinary share capital 12,270 42,997Costs associated with shares issued during the year (96) ------------------------------- ------- -------- -------- 12,174 42,997Net increase in loans 536 23,703------------------------------ ------- -------- --------NET CASH INFLOW FROM FINANCING 12,710 66,700------------------------------ ------- -------- --------(DECREASE)/INCREASE IN CASH C (19,962) 22,897------------------------------ ------- -------- -------- NOTES FOR THE CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2004 (A) RECONCILIATION OF OPERATING PROFIT TO NET CASH OUTFLOW FROM OPERATINGACTIVITIES 2005 2004 $000 $000------------------------- --------- ----------Operating (loss)/profit (209) 4,982Expenses satisfied by Employee Benefit Trusts - 955Depreciation and fixed asset write down 8,036 1,617Decrease/(increase) in stocks 1,225 (5,171)Increase in debtors (2,087) (6,199)(Decrease)/increase in creditors (1,843) 4,856Settled on Employee Benefit Trust (626) (10,934)Exchange movements 223 (1,165)------------------------- --------- ---------- 4,719 (11,059)------------------------- --------- ---------- (B) ANALYSIS OF NET FUNDS 31 December Cash 31 December flow 2004 2005 $000 $000 $000------------------------ --------- --------- ----------Cash in hand and at bank 30,494 (19,962) 10,532------------------------ --------- --------- ----------Loans falling due within one year (7,352) (8,270) (15,622)Loans falling due in more than one year (24,298) 7,734 (16,564)------------------------ --------- --------- ---------- (31,650) (536) (32,186)------------------------ --------- --------- ----------TOTAL (1,156) (20,498) (21,654)------------------------ --------- --------- ---------- (C) RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 2005 2004 $000 $000------------------------- --------- ----------(Decrease)/increase in cash in the period (19,962) 22,897Cash inflow from increase in debt (536) (23,703)Cash outflow on sale of subsidiaries - (116)Inflow from SVMC debt elimination - 11,049Net deficit at start of year (1,156) (11,283)------------------------- --------- ----------Net deficit at end of year (21,654) (1,156)------------------------- --------- ---------- This information is provided by RNS The company news service from the London Stock Exchange