Herencia Resources Regulatory News (HER)

22 Jun 2007 13:07

Herencia Resources PLC22 June 2007 Herencia Resources plc ("Herencia" or the "Company") AUDITED INTERIM FINANCIAL STATEMENTS For the six months ended 31 December 2006 As announced on 5 April 2007, with effect from 8 April 2007 Herencia changed itsaccounting reference date to 31 December. On that same date, Herencia also confirmed that it would release auditedaccounts for the Group for the six month period ended 31 December 2006 as soonas possible in order that audited information would be available to investors.Those audited results are now attached. The same financial information was released in unaudited form on 29 March 2007. For further information please contact: Michael Bohm, Herencia Resources plc Tel: +61 8 9221 7466David Youngman, WH Ireland Limited Tel: +44 161 832 2174 GROUP INCOME STATEMENT 6 months 6 months ended ended 31 December 31 December Notes 2006 2005 (audited) (un-audited) £ £Revenue - -Cost of sales - -Gross profit - -Administration expenses (113,265) (163,189)Operating loss 4 (113,265) (163,189)Finance revenue 4 11,665 9,846Loss before taxation (101,600) (153,343)Taxation 6 - -Loss for the period (101,600) (153,343) Loss per ordinary shareBasic 2 (0.04)p (0.13)pDiluted 2 (0.04)p (0.13)p The results shown above relate entirely to continuing operations.There are no recognised gains and losses other than those passing through theincome statement. GROUP BALANCE SHEET 31 December 30 June Notes 2006 2006 (audited) (audited) £ £ASSETS Non current assetsIntangible assets 10 1,142,120 886,129Property, plant and equipment 11 56,563 31,772Investments 12 - - 1,198,683 917,901 Current assetsCash and cash equivalents 7 1,073,464 160,293Trade and other receivables 8 69,912 43,241 1,143,376 203,534 Total assets 2,342,059 1,121,435 LIABILITIESCurrent liabilitiesTrade and other payables 9 25,903 43,435Total liabilities 25,903 43,435 Net Assets 2,316,156 1,078,000 Share Capital 347,100 200,000Share premium account 2,558,825 1,276,925Reserve for own shares - 82,000Translation reserve 3,649 10,893Accumulated losses (593,418) (491,818)Total equity and reserves 2,316,156 1,078,000 GROUP CASH FLOW STATEMENT 6 months ended 6 months ended 31 December 31 December Notes 2006 2005 (audited) (un-audited) £ £Net cash outflow from operating activities 14 (161,398) (108,117) Cash flows from investing activitiesInterest received 11,665 9,846Purchase of property, plant and equipment (28,105) -Cash acquired with subsidiary undertakings - 500,000Net funds used for investing in exploration 10 (255,991) (160,005) Net cash (utilised by)/generated from investing activities (272,431) 349,841 Cash flows from financing activitiesProceeds from issue of shares 13 1,389,000 -Issue costs (42,000) - Net cash generated from financing activities 1,347,000 - Net increase in cash and cash equivalents 913,171 241,724 Cash and cash equivalents at 1 July 2006 (2005 - 1 July 2005) 160,293 451,930 Cash and cash equivalents at the end of the period 7 1,073,464 693,654 GROUP STATEMENT OF CHANGES in EQUITY Share Share Reserve for Translation Accumulated Total capital premium own shares reserve losses £ £ £ £ £ £Balance at 1 July 2005 100,000 450,000 - - (99,145) 450,855(un-audited)Issue of shares 100,000 900,000 - - - 1,000,000Issue of costs - - - - - -Exchange differences ontranslation of foreign operations - - - - - - Net loss for the period - - - - (153,343) (153,343) Balance at 31 December 2005 200,000 1,350,000 - - (252,488) 1,297,512(un-audited) Balance at 1 July 2006 (audited) 200,000 1,276,925 82,000 10,893 (491,818) 1,078,000Issue of shares 46,067 1,342,933 - - - 1,389,000Issue costs - (42,000) - - - (42,000)Transfer from reserve 82,000 (82,000) - -Exchange differences onretranslation of foreignoperations - - - (7,244) - (7,244) Net loss for the period - - - - (101,600) (101,600) Balance at 31 December 2006 328,067 2,577,858 - 3,649 (593,418) 2,316,156(audited) The accompanying notes form part of this financial report. NOTES TO THE FINANCIAL REPORTS 1. Accounting policies The principal accounting policies, all of which have been applied consistentlyto all the periods for which the financial reports have been presented are setout below. 1.1. Basis of preparation The financial reports have been prepared using the historical cost conventionand are presented in UK pound sterling. In addition, the financial reports havebeen prepared in accordance with the International Financial Reporting Standards("IFRS") including IFRS 6, Exploration for and Evaluation of Mineral Resources,as adopted by the European Union ("EU"). The Company recently changed its accounting reference date from 30 June to 31December. The last audited statutory financial statements of the Group coveredthe period from the Company's date of incorporation of 27 January 2005 to 30June 2006. The next audited statutory financial statements of the Group will befor the eighteen months ending 31 December 2007. As there will be a gap of morethan twelve months between the two sets of audited financial statements, thesecurities regulators have requested for publication of the audited interimfinancial reports of the Group for the six months ended 31 December 2006 inrespect of this company. The unaudited financial information covering thisperiod was published on 30 March 2007. International Accounting Standard 34 (IAS34) specifies the periods for whichinformation should be presented for each primary statement in the interimreport. These are: a) The balance sheet information should be given as at the end of theinterim period, with comparative information as at the end of the previous fullfinancial year. b) The income statement should relate to the current interim period andthe current year-to-date information; the comparative information should beprovided for the equivalent period in the previous year. c) The statement of changes in equity and the cash flow statement shouldbe presented for the current period year-to-date; the comparative informationshould be provided for the equivalent period in the previous year. These financial reports have been presented in accordance with the aboverequirements and they do not constitute statutory financial statements asdefined in section 240 of the Companies Act 1985. They have been prepared usingaccounting basis and policies consistent with those used in the preparation ofthe financial statements of the Company for the period ended 30 June 2006. The comparative figures on the balance sheet as at 30 June 2006 are extractedfrom the statutory financial statements which have been filed with the Registrarof Companies and which contain an unqualified audit report and did not containstatements under Section 237(2) of the Companies Act 1985. The comparative figures in the income statement, the statement of changes inequity and the cash flow relate to the equivalent period in the previous yearand are extracted from the unaudited interim financial information published inrespect of that period. 1.2. Basis of consolidation Subsidiaries are fully consolidated from the date on which control istransferred to the Group. They are de-consolidated from the date that controlceases. The purchase method of accounting is used to account for the acquisitionof subsidiaries by the Company. The cost of an acquisition is measured as thefair value of the assets given, equity instruments issued and liabilitiesincurred or assumed at the date of exchange, plus costs directly attributable tothe acquisition. Identifiable assets acquired and liabilities and contingentliabilities assumed in a business combination are measured initially at theirfair values at the acquisition date. The excess of the cost of acquisition overthe fair value of the Group's share of the identifiable net assets acquired isrecorded as goodwill. Goodwill arising on acquisitions is capitalised andsubject to an impairment review, both annually and when there are indicationsthat the carrying value may not be recoverable. Inter-company transactions, balances and unrealised gains on transactionsbetween group companies are eliminated. All the companies over which the Company has control, apply, where appropriate,the same accounting policies as the Company. 1.3. Goodwill Goodwill is the difference between the amount paid on the acquisition of thesubsidiary undertakings and the aggregate fair value of their separable netassets - of which oil and gas exploration expenditure is the primary asset.Goodwill is capitalised as an intangible asset and in accordance with IFRS3 'Business Combinations' is not amortised but tested for impairment when there areany indications that its carrying value is not recoverable. As such, goodwill isstated at cost less any provision for impairment in value. If a subsidiaryundertaking is subsequently sold, goodwill arising on acquisition is taken intoaccount in determining the profit and loss on sale. 1.4. Foreign currency translation Transactions in foreign currencies are translated into sterling at the rate ofexchange ruling at the date of the transaction. Monetary assets and liabilitiesdenominated in foreign currencies are translated at the rate of exchange rulingat the balance sheet date. The resulting exchange gain or loss is dealt with inthe profit and loss account. The assets and liabilities of the foreign subsidiary undertakings are translatedinto Sterling at the rates of exchange ruling at the year end and their resultsare translated at the average exchange rate for the period. Exchange differencesresulting from the retranslation of net investments in subsidiary undertakingsare treated as movements of reserves. 1.5. Cash and cash equivalents The company considers all highly liquid investments, with a maturity of 90 daysor less to be cash equivalents, carried at the lower of cost or market value. 1.6. Deferred taxation Deferred tax is provided in full, using the liability method, on temporarydifferences arising between the tax bases of assets and liabilities and theircarrying amounts in the interim financial information. Deferred tax isdetermined using tax rates (and laws) that have been enacted or substantiallyenacted by the balance sheet date and are expected to apply when the relateddeferred tax is realised or the deferred liability is settled. Deferred tax assets are recognised to the extent that it is probable that thefuture taxable profit will be available against which the temporary differencescan be utilised. 1.7. Exploration and development costs All costs associated with mineral exploration and investments are capitalised ona project by project basis, pending determination of the feasibility of theproject. Costs incurred include appropriate technical and administrativeexpenses but not general corporate overheads. If an exploration project issuccessful, the related expenditures will be transferred to mining assets andamortised over the estimated life of the commercial ore reserves on a unit ofproduction basis. Where a licence is relinquished or project abandoned, therelated costs are written off. Where the Group maintains an interest in aproject, but the value of the project is considered to be impaired, a provisionis made against the relevant capitalised costs. The recoverability of all exploration and development costs is dependent uponthe discovery of economically recoverable reserves, the ability of the Group toobtain necessary financing to complete the development of the reserves andfuture profitable production or proceeds from the disposition thereof. Amounts recorded for these assets represent costs and are not intended toreflect present or future values. 1.8. Impairment of exploration and development costs The carrying value of unevaluated areas is assessed on at least an annual basisor when there has been an indication that impairment in value may have occurred. The impairment of unevaluated prospects is assessed based on the Directors'intention with regard to future exploration and development of individualsignificant areas and the ability to obtain funds to finance such explorationand development. 2. Loss per share The basic loss per ordinary share of (0.04)p (2005; (0.13p)) for the Group hasbeen calculated by dividing the loss for the period of £101,600 (2005: £153,343)by the weighted average number of ordinary shares in issue of 265,684,057(2005: 113,586,957). The diluted loss per share has been kept the same as the basic loss per share asthe potential issue of further shares in connection with the acquisition ofTarapaca Resources (Bermuda) Limited decreases the basic loss per share, thusbeing anti-dilutive. The Company has no share warrants or options in issue. 3. Segmental information During the period, the Group was organised into its main business segment asmineral exploration. The primary segmental reporting is determined to be geographical segmentaccording to the location of the asset. There are two reporting geographicalsegments. Geographical segment Australia Chile TotalSix months ended 31 December 2006 £ £ £Administration expenses (135,952) (62,621) (198,573)Finance revenue 11,665 - 11,665Foreign exchange gain - 85,308 85,308Loss before taxation (124,287) 22,687 (101,600)As at 31 December 2006Intangible assets - 1,142,120 1,142,120Property, plant and equipment - 56,563 56,563Trade and other receivables - 69,912 69,912Cash and cash equivalents 873,452 200,012 1,073,464Trade and other payables (5,264) (20,639) (25,903)Net assets 868,188 1,447,968 2,316,156Six months ended 31 December 2005Administration expenses (163,189) - (163,189)Finance revenue 9,846 - 9,846Loss before taxation (153,343) - (153,343)As at 31 December 2005 (un-audited)Intangible assets - 660,005 660,005Property, plant and equipment - - -Trade and other receivables - - -Cash and cash equivalents 693,654 - 693,654Trade and other payables (56,147) - (56,147)Net assets 637,507 660,005 1,297,512 At the end of the financial period, the Group had not commenced commercialproduction from its exploration sites and therefore had no turnover in theperiod. 2006 2005 £ £4. Reconciliation of lossIncomeInterest income 11,665 9,846Other income - -Total income 11,665 9,846Expenses by natureAuditors' remuneration- audit (5,725) (5,875)- other services - -Depreciation of tangible assets (3,313) -Travel (31,314) (10,945)Consultants (2,938) (41,126)Legal costs (3,963) (63,495)Company secretarial (9,049) (15,898)Directors' fees (25,304) (19,165)Share registry costs (2,057) (1,882)Public relations - (10,135)Foreign exchange loss/gain (25,665) 9,718Other costs (3,937) (4,386)Total expenses (113,265) (163,189)Loss for period (101,600) (153,343) 2006 2005 £ £5. Directors' emoluments Wages and salaries 25,304 18,000Social security costs - 1,165 25,304 19,165 There are no employees other than the Directors. 6. Taxation Current tax charge - - Deferred taxDeferred tax current period charge - - - - Factors affecting the tax charge for the periodLoss on ordinary activities before taxation (101,600) (153,343) Loss on ordinary activities before taxationmultiplied by standard rate of corporationtax of 30.00% (2005: 30%) (30,480) (46,003) Effects of:Non deductible expenses 7,997 2,915Tax losses 22,483 43,088 Current tax charge - - Factors that may affect future tax charges At the balance sheet date, the Group has unused tax losses available for offsetagainst suitable future profits. A deferred tax asset has not been recognised inrespect of such losses due to uncertainty of future profit streams. As at As At 31 December 30 June 2006 2006 £ £7. Cash and cash equivalents Cash at bank and in hand 1,073,464 160,293 8. Trade and other receivables Other receivables 69,912 43,241 69,912 43,241 9. Trade and other payables Accruals and deferred income 25,903 43,435 25,903 43,435 10. Intangible assets Goodwill Exploration and Total development costs CostAs at 1 July 2006 500,000 386,129 886,129Additions - 255,991 255,991At 31 December 2006 500,000 642,120 1,142,120 ImpairmentAs at 1 July 2006 - - -Impairment during the period - - -As at 31 December 2006 - - - Carrying amountAs at 31 December 2006 500,000 642,120 1,142,120 The exploration and development costs relate to expenditure incurred at the Iquique and Paguanta projectslocated in Chile, South America. The goodwill of £500,000 arose on acquisition of Tarapaca Resources (Bermuda) Limited, a company incorporatedin Bermuda (note 12). In accordance with the accounting policy, the Directors have assessed the value of goodwill and theexploration and development costs carried in the accounts as intangible fixed assets. In the opinion of theDirectors, no impairment provision is considered necessary. As at As at 31 December 30 June 2006 2006 £ £11. Property, plant and equipment Plant and equipmentAt cost 62,405 34,301Accumulated depreciation (5,842) (2,529)Total property and equipment 56,563 31,772 Movements in carrying amountsMovement in the carrying amounts for each class of plant and equipment between the beginning and end of the financial period:Balance at the beginning of the period 31,772 -Additions at cost 28,104 34,301Disposals - -Depreciation expense (3,313) (2,529)Carrrying amount at the end of the period 56,563 31,772 12. Fixed asset investments company name Country of registration or Class Shares incorporation held %DirectTarapaca Resources (Bermuda) Limited Bermuda Ordinary 100IndirectTarapaca Holdings (BVI) Ltd British Virgin Islands Ordinary 100Iquique Resources (Chile) SA Chile Ordinary 100Paguanta Resources (Chile) SA Chile Ordinary 100 The principal activity of Iquique Resources (Chile) SA and Paguanta Resources (Chile) SA was mineralexploration whereas Tarapaca Resources (Bermuda) Limited and Tarapaca Holdings (BVI) Ltd are holdingcompanies. As at As at 31 December 30 June 2006 2006 £ £13. Called up share capital Authorised:10,000,000,000 ordinary shares of £0.001 each 10,000,000 10,000,000 Allotted, issued and fully paid:328,066,666 ordinary shares (2005: 200,000,000 ordinary shares) 328,067 200,000 Pursuant to the Acquisition Agreement for the acquisition of the Tarapaca Group of Companies in November 2005, there area further 50,000,000 Ordinary Shares at £0.01 per share that may be allotted to Mineral securities Limited subject tocertain performance criteria. The performance criteria are the investment by the Group of at least US$2,000,000 in theProjects within 36 months of the date of the Acquisition Agreement or the Group disposing of a majority interest ineither of the Projects. The following shares in the Company were issued during the period: • On 10 July 2006, the Company completed a private placement raising a capital sum of £571,000 from the issue of38,066,667 ordinary shares at a price of 1.5p per share. (Of the £571,000 cash raised, £82,000 was received prior to 1July 2006).• On 30 October 2006, the Company also raised a capital sum of £900,000 from the issue of 90,000,000 ordinaryshares at a price of 1p per share. The movements in the share capital are summarised below: Number of £ shares As at 1 July 2006 200,000,000 200,000Issued on 10 July 2006 38,066,666 38,067Issued on 30 October 2006 90,000,000 90,000At 31 December 2006 328,066,666 328,067 The details of shares and options issued after 31 December 2006 are set out innote 16. The share premiums arising as a result of above transactions were as follows: £ As at 1 July 2006 1,276,925Issued on 10 July 2006 532,933Issued on 30 October 2006 810,000Issue costs (42,000)As at 31 December 2006 2,577,858 Six months ended Six months ended 31 December 31 December 2006 2005 £ £14. Net cash outflow from operating activities Operating loss (113,265) (163,189)Increase in trade and other receivables (26,670)Increase in trade and other payables (17,532) 55,072Depreciation of property, plant and equipment 3,313 -Exchange differences on retranslation of foreign operations (7,244) -Net cash outflow from operating activities (161,398) (108,117) 15. Control No one party is identified as controlling the Company. 16. Subsequent events No matter or circumstances have arisen since the end of the reporting date and the date of this report whichsignificantly affect or may significantly affect the results of the Group as presented in this financial report. Thedetails of the shares and options issued subsequent to the year end are set out in the directors report. 17. Related party transactions During the period, the Company raised a capital sum of £1,471,000 through theissue of its own shares and Mineral Securities Limited ("Minsec") a company inwhich some of the directors of the Company are directors and shareholders asstated in the Directors' interests paragraph in the Directors' report, hasinvested £450,000. During the period, the Company also entered into an Alliance Agreement withMinsec. Under the alliance, Herencia will utilize its established office andtechnical team based in Chile together with Minsec's technical and commercialteam based in Perth. Minsec will provide Herencia Resources plc with access toits experienced team of geological, mining and commercial personnel to assistHerencia in both the evaluation and potential future development of any newresource opportunities. John Bottomley, the secretary of the Company is an employee of Sprecher GrierHalberstam LLP, a firm of solicitors. During the period this partnership waspaid a sum of £6,594 in respect of legal and secretarial services to theCompany. These related party transactions are based on independent third party commercialrates. The Directors who have interests in these transactions did notparticipate in the decision making process relating to these transactions. 18. Contingent liabilities and capital commitments The Group had no contracted capital commitments at 31 December 2006. The Group had no contingent liabilities at 31 December 2006. 19. Decommissioning expenditure The Directors have considered the environmental issues and the need for anynecessary provision for the cost of rectifying any environmental damage, asmight be required under local legislation. In their view, no provision isnecessary for any future costs of decommissioning or any environmental damage. This information is provided by RNS The company news service from the London Stock Exchange