22nd Sep 2006 07:01
Centamin Egypt Limited22 September 2006 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2006 1. Summary of Significant Accounting Policies Statement of Compliance The financial report is a general purpose financial report which has beenprepared in accordance with the Corporations Act 2001, Accounting Standards andInterpretations, and complies with other requirements of the law. AccountingStandards include Australian equivalents to International Financial ReportingStandards ("A-IFRS"). Compliance with the A-IFRS ensures that the consolidatedfinancial statements and notes of the consolidated entity comply withInternational Financial Reporting Standards ("IFRS"). The parent entityfinancial statements and notes also comply with IFRS except for the disclosurerequirements in IAS 132 "Financial Instruments: Disclosure and Presentation" asthe Australian equivalent accounting standard, AASB 132 "Financial Instruments:Disclosure and Presentation" does not require such disclosures to be presentedby the parent entity where its separate financial statements are presentedtogether with the consolidated financial statements of the consolidated entity. The financial statements were authorised for issue by the directors on 21September 2006. (A) BASIS OF PREPARATION This financial report is denominated in Australian Dollars. The financial report has been prepared on the basis of historical cost, exceptfor the revaluation of certain non-current assets and financial instruments.Cost is based on the fair values of the consideration given in exchange forassets. In the application of A-IFRS management is required to make judgments, estimatesand assumptions about carrying values of assets and liabilities that are notreadily apparent from other sources. The estimates and associated assumptionsare based on historical experience and various other factors that are believedto be reasonable under the circumstance, the results of which form the basis ofmaking the judgments. Actual results may different from these estimates. Theestimates and underlying assumptions are reviewed on an ongoing basis. Revisionsto accounting estimates are recognised in the period in which the estimate isrevised if the revision affects only that period, or in the period of therevision and future periods if the revision affects both current and futureperiods. Judgments made by management in the application of A-IFRS that have significanteffects on the financial statements and estimates with a significant risk ofmaterial adjustments in the next year are disclosed, where applicable, in therelevant notes to the financial statements. Accounting policies are selected and applied in a manner which ensures that theresulting financial information satisfies the concepts of relevance andreliability, thereby ensuring that the substance of the underlying transactionsor other events is reported. The consolidated entity changed its accounting policies on 1 January 2005 tocomply with A-IFRS. The transition to A-IFRS is accounted for in accordance withAccounting Standard AASB 1 "First-time Adoption of Australian Equivalents toInternational Financial Reporting Standards", with 1 July 2004 as the date oftransition. An explanation of how the transition from superseded policies toA-IFRS has affected the company's and consolidated entity's financial position,financial performance and cash flows is discussed in Note 33. The accounting policies set out below have been applied in preparing thefinancial statements for the year ended 30 June 2006, the comparativeinformation presented in these financial statements for the year ended 30 June2005 (as disclosed in Note 33), the consolidated entity's date of transition,except for the accounting policies in respect of financial instruments. Theconsolidated entity has not restated comparative information for financialinstruments as permitted under the first-time adoption transitional provisions.The accounting policies for financial instruments applicable to the comparativeinformation and the impact of changes in these accounting policies on 1 July2005, the date of transition for financial instruments is discussed further inNote 32. The following significant policies have been adopted in the preparation andpresentation of the financial report: (B) ACCOUNTS PAYABLE Trade payables and other accounts payable are recognised when the consolidatedentity becomes obliged to make future payments resulting from the purchase ofgoods and services. (C) DEBT AND EQUITY INSTRUMENTS ISSUED BY THE COMPANY Debt and equity instruments are classified as either liabilities or as equity inaccordance with the substance of the contractual arrangement. (D) EXPLORATION, EVALUATION AND DEVELOPMENT EXPENDITURE Exploration and evaluation expenditures in relation to each separate areas ofinterest, are recognised as an exploration and evaluation asset in the year inwhich they are incurred where the following conditions are satisfied: i) the rights to tenure of the area of interest are current; and ii) at least one of the following conditions is also met: a) the exploration and evaluation expenditures are expected to be recouped through successful development and exploration of the area of interest, or alternatively, by its sale: or b) exploration and evaluation activities in the area of interest have not at the reporting date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing. Exploration and evaluation assets are initially measured at cost and includeacquisition of rights to explore, studies, exploration drilling, trenching andsampling and associated activities. General and administrative costs are onlyincluded in the measurement of exploration and evaluation costs where they arerelated directly to operational activities in a particular area of interest. Exploration and evaluation assets are assessed for impairment when facts andcircumstances (as defined in AASB 6 "Exploration for and Evaluation of MineralResources") suggest that the carrying amount of exploration and evaluationassets may exceed its recoverable amount. The recoverable amount of theexploration and evaluation assets (or the cash-generating unit(s) to which ithas been allocated, being no larger than the relevant area of interest) isestimated to determine the extent of the impairment loss (if any). Where animpairment loss subsequently reverses, the carrying amount of the asset isincreased to the revised estimate of its recoverable amount, but only to theextent that the increased carrying amount does not exceed the carrying amountthat would have been determined had no impairment loss been recognised for theasset in previous years. Where a decision is made to proceed with development in respect of a particulararea of interest, the relevant exploration and evaluation asset is tested forimpairment, reclassified to development properties, and then amortised over thelife of the reserves associated with the area of interest once mining operationshave commenced. (E) FOREIGN CURRENCY All foreign currency transactions during the period have been brought to accountusing the exchange rate in effect at the date of the transaction. Foreigncurrency monetary items at balance date are translated at the exchange rateexisting at that date. Non-monetary assets and liabilities carried at fair value that are denominatedin foreign currencies are translated at the rates prevailing at the date whenthe fair value was determined. All exchange differences are brought to accountin the consolidated income statement in the financial period in which theyarise. (F) GOODS AND SERVICES TAX Revenues, expenses and assets are recognised net of the amount of goods andservices tax (GST), except: i. Where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or ii. For receivables and payables which are recognised inclusive of GST. The net amount of GST recoverable from, or payable to, the taxation authority isincluded as part of receivables or payables. (G) IMPAIRMENT OF ASSETS (OTHER THAN EXPLORATION AND EVALUATION) At each reporting date, the consolidated entity reviews the carrying amounts ofits tangible and intangible assets to determine whether there is any indicationthat those assets have suffered an impairment loss. If any such indicationexists, the recoverable amount of the asset is estimated in order to determinethe extent of the impairment loss (if any). Where the asset does not generatecash flows that are independent from other assets, the consolidated entityestimates the recoverable amount of the cash-generating unit to which the assetbelongs. Recoverable amount is the higher of fair value less costs to sell and value inuse. In assessing value in use, the estimated future cash flows are discountedto their present value using a pre-tax discount rate that reflects currentmarket assessment of the time value of money and the risks specific to the assetfor which the estimates of future flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated tobe less than its carrying amount, the carrying amount of the asset(cash-generating unit) is reduced to its recoverable amount. Each cash generatedunit is determined on an area of interest basis. Where an impairment loss subsequently reverses, the carrying amount of the asset(cash-generating unit) is increased to the revised estimate of its recoverableamount, but only to the extent that the increased carrying amount does notexceed the carrying amount that would have been determined had no impairmentloss been recognised for the asset (cash generating unit) in prior years. (H) INVESTMENTS Investments in subsidiaries are carried in the company's separate financialstatements at cost less impairment. (I) LOANS AND RECEIVABLES Trade receivables, loans, and other receivables are recorded at amounts due lessany allowance for doubtful debts. (J) PLANT AND EQUIPMENT Plant and equipment, and equipment under finance lease are stated at cost lessaccumulated depreciation and impairment. Plant and equipment will includecapitalised development expenditure. Cost includes expenditure that is directlyattributable to the acquisition of the item as well as the estimated cost ofabandonment. In the event that settlement of all or part of the purchaseconsideration is deferred, cost is determined by discounting the amounts payablein the future to their present value as at the date of acquisition. Depreciation is provided on property, plant and equipment. Depreciation ofcapitalised development expenditure will be provided on a unit of productionbasis over recoverable reserves, whilst on other fixed assets are calculated ona straight line basis so as to write off the net cost or other re-valued amountof each asset over its expected useful life to its estimated residual value. The estimated useful lives, residual values and depreciation method are reviewedat the end of each annual reporting period. The following estimated useful lives are used in the calculation ofdepreciation: Plant & Equipment & Office Furniture - 4-10 years Motor Vehicles - 2 -8 years (K) PRINCIPLES OF CONSOLIDATION The consolidated financial statements are prepared by combining the financialstatements of all the entities that comprise the consolidated entity, being thecompany (the parent entity) and its subsidiaries as defined in AccountingStandard AASB 127 "Consolidated and Separate Financial Statements". Consistentaccounting policies are employed in the preparation and presentation of theconsolidated financial statements. The consolidated financial statements include the information and results ofeach subsidiary from the date on which the company obtains control and untilsuch time as the company ceases to control such entity. In preparing the consolidated financial statements, all intercompany balancesand transactions, and unrealised profits arising within the consolidated entityare eliminated in full. (L) REVENUE RECOGNITION Interest revenue is recognised on a time proportionate basis that takes intoaccount the effective yield on the financial asset. (M) SHARE-BASED PAYMENTS Employee share options that vested before 1 January 2005 have not been expensed.The shares are recognised when the options are exercised and the proceeds areallocated to share capital. Equity-settled share-based payments granted after 7 November 2002 that werevested on or after 01 January 2005, are measured at fair value at the date ofgrant. Fair value is measured under the Black and Scholes model. The fair valuedetermined at the grant date of the equity-settled share-based payments isexpensed on a straight-line basis over the vesting period, based on theconsolidated entity's estimate of shares that will eventually vest. (N) SUPERANNUATION FUND The Company contributes to, but does not participate in, compulsorysuperannuation funds on behalf of the Employees and Directors in respect ofsalaries and directors' fees paid. Contributions are charged against income asthey are made. (O) TAXATION Current tax Current tax is calculated by reference to the amount of income taxes payable orrecoverable in respect of the taxable profit or tax loss for the period. It iscalculated using tax rates and tax laws that have been enacted or substantivelyenacted by reporting date. Current tax for current and prior periods isrecognised as a liability (or asset) to the extent that it is unpaid (orrefundable). Deferred tax Deferred tax is accounted for using the comprehensive balance sheet liabilitymethod in respect of temporary differences arising from differences between thecarrying amount of assets and liabilities in the financial statements and thecorresponding tax base of those items. In principle, deferred tax liabilities are recognised for all taxable temporarydifferences. Deferred tax assets are recognised to the extent that it isprobable that sufficient taxable amounts will be available against whichdeductible temporary differences or unused tax losses and tax offsets can beutilised. However, deferred tax assets and liabilities are not recognised if thetemporary differences giving rise to them arise from the initial recognition ofassets and liabilities (other than as a result of a business combination) whichaffects neither taxable income nor accounting profit. Furthermore, a deferred tax liability is not recognised in relation to taxabletemporary differences arising from goodwill. Deferred tax assets and liabilities are offset when they relate to income taxeslevied by the same taxation authority and the company/consolidated entityintends to settle its current tax assets and liabilities on a net basis. Current and deferred tax for the period Current and deferred tax is recognised as an expense or income in the incomestatement, except when it relates to items credited or debited directly toequity, in which case the deferred tax is also recognised directly in equity, orwhere it arises from the initial accounting for a business combination, in whichcase it is taken into account in the determination of goodwill or excess. Tax Consolidation The Company and all its wholly-owned Australian resident entities are part of atax-consolidated group under Australian taxation law. Centamin Egypt Limited isthe head entity in the tax-consolidated group. Tax expense/income, deferred taxliabilities and deferred tax assets arising from temporary differences of themembers of the tax-consolidated group are recognised in the separate financialstatements of the members of the tax-consolidated group using the "separatetaxpayer within group" approach. Current tax liabilities and assets and deferredtax assets arising from unused tax losses and tax credits of the members of thetax-consolidated group are recognised by the company (as the head entity in thetax-consolidated group). Due to the existence of a tax funding arrangement between the entities in thetax-consolidated group, amounts are recognised as payable to or receivable bythe company and each member of the group in relation to the tax contributionamounts paid or payable between the parent entity and the other members of thetax-consolidated group in accordance with the arrangement. Further informationabout the tax funding arrangement is detailed in note 3 to the financialstatements. Where the tax contribution amount recognised by each member of thetax-consolidated group for a particular period is different to the aggregate ofthe current tax liability or asset and any deferred tax asset arising fromunused tax losses and tax credits in respect of that period, the difference isrecognised as a contribution to (or distribution to) equity participants. Consolidated Company2. Profit/(Loss) BeforeIncome Tax 2006 2005 2006 2005 $ $ $ $Profit/(Loss) has been arrivedat after including: OPERATING REVENUEInterest revenue 1,140,700 1,046,309 1,110,710 1,046,137 Administration & managementfees - Other entities in thewholly-owned group - - 1,196,597 538,934 Other income - 102,351 - - -------- -------- -------- -------- 1,140,700 1,148,660 2,307,307 1,585,071Foreign exchange rategain/(loss) 2,011,921 (543,942) 2,065,253 (562,767) -------- -------- -------- -------- 3,152,621 604,718 4,372,560 1,022,304 -------- -------- -------- --------OPERATING EXPENSESTotal employee benefitexpense 1,461,487 1,405,155 410,941 75,560 Depreciation of non-currentassets 622,592 88,870 23,482 22,260 Office lease payments 73,269 51,212 53,055 51,212 Allowance for doubtful debts - - 4,500 3,870 Loss on deconsolidation ofPGML* - 102,351 - - * On 30 May 2005, Centamin Limited sold the shares in Pharaoh Gold Mines Limited("PGML") to a third party for US$120.00 cash. The Consolidated entity recogniseda loss of $102,341 on deconsolidation. PGML had only one asset at the date ofsale, a bank account with a cash balance of US$1,345.30. Consolidated Company3. Taxation 2006 2005 2006 2005 $ $ $ $ (a) Income tax expenseCurrent tax expense/(income) (155,971) (89,233) (173,022) (136,310) Deferred tax expense/(income)relating to the origination andreversal of temporarydifferences (458,030) 180,351 (792,321) 112,525 Benefits arising frompreviously unrecognised taxlosses, tax credits ortemporary differences notrecognised 614,001 (91,118) 965,343 23,785 -------- -------- -------- --------Total tax expense/(income) - - - - -------- -------- -------- -------- Income tax expense/(income) - - - -attributable to loss from -------- -------- -------- --------continuing operations Consolidated Company 2006 2005 2006 2005 $ $ $ $The prima facie income taxexpense/(benefit) on the profit/loss before income taxreconciles to the income tax inthe financial statements asfollows: Profit/(Loss) before incometax 1,010,830 (870,412) 2,255,163 (494,301) -------- -------- -------- -------- Tax expense/(income)calculated at 30% ofProfit/(Loss) before incometax (2005 30%) 303,249 (261,124) 676,549 (148,290) Tax effect of amounts which arenot deductible/taxable incalculating taxable income: Non-deductible expenses 310,752 170,006 288,794 172,075 Unused tax losses and taxoffsets not recognised asdeferred tax assets (614,001) 91,118 (965,343) (23,785) -------- -------- -------- --------Tax (expense)/income - - - - -------- -------- -------- -------- The tax rate used in the above reconciliation is the corporate tax rate of 30%payable by Australian corporate entities on taxable profits under the Australiantax law. There has been no change in the corporate tax rate when compared to theprevious reporting period. Consolidated Company 2006 2005 2006 2005 $ $ $ $(b) Income tax recognised directly inequityCurrent and deferred amounts were - - - -charged directly to equity during the -------- -------- -------- --------period (c) Current tax liabilitiesCurrent tax payable to parent entity - - - - -------- -------- -------- -------- Total - - - - -------- -------- -------- -------- Unrecognised deferred tax Consolidated Companybalances 2006 2005 2006 2005 $ $ $ $ The following deferred tax assets have not been brought to account as assets: Tax Losses - revenue 6,287,519 5,767,703 6,287,519 5,767,703 Tax Losses - capital 600,000 600,000 600,000 600,000 Temporary Differences 6,415,865 3,718,117 6,410,865 3,763,117 -------- -------- -------- -------- 13,303,384 10,085,820 13,298,384 10,130,820 -------- -------- -------- -------- TAX CONSOLIDATION Relevance of tax consolidation to the consolidated entity The company and its wholly-owned Australian resident entities have formed atax-consolidated group with effect from 1 July 2003. The head entity within thetax-consolidated group is Centamin Egypt Limited. The members of thetax-consolidated group are identified at note 20. Nature of tax funding arrangements and tax sharing agreements Entities within the tax-consolidated group have entered into a tax fundingarrangement and a tax-sharing agreement with the head entity. Under the terms ofthe tax funding agreement, Centamin Egypt Limited and each of the entities inthe tax-consolidated group has agreed to pay a tax equivalent payment to or fromthe head entity, based on the current tax liability or current tax asset of theentity. Such amounts are reflected in amounts receivable from or payable toother entities in the tax-consolidated group. The tax sharing agreement entered into between members of the tax-consolidatedgroup provides for the determination of the allocation of income tax liabilitiesbetween the entities should the head entity default on its tax paymentobligations. No amounts have been recognised in the financial statements inrespect of this agreement as payment of any amounts under the tax sharingagreement is considered remote. 4. Segment Reporting Primary reporting - Business Segments The economic entity is engaged in the business of exploration for precious andbase metals only, which is characterised as one business segment only. As theeconomic entity has only one business segment, all the necessary reportingdisclosures are disclosed elsewhere in the notes to the financial statements. Secondary reporting - Geographical Segments The principal activity of the economic entity during the year was theexploration for precious and base metals in Egypt. Consolidated Company5. Trade and other receivables 2006 2005 2006 2005 $ $ $ $CURRENTOther Receivables 104,401 280,748 100,982 202GST receivable 78,603 17,370 13,261 8,754 -------- -------- -------- -------- 183,004 298,118 114,243 8,956 -------- -------- -------- -------- NON-CURRENTLoans and advances to - - 43,775,219 30,547,129subsidiariesLess: Allowance for doubtful - - (3,040,239) (3,035,739)debts -------- -------- -------- -------- - - 40,734,980 27,511,390 -------- -------- -------- -------- The loans to controlled entities are amounts that have been advanced forexpenditure on exploration, prospecting and development activities. Consolidated Company6. Prepayments 2006 2005 2006 2005 $ $ $ $CURRENTOther 113,399 114,527 28,206 22,206 -------- -------- -------- -------- 7. Plant and Equipment CONSOLIDATED Plant, Equipment & Office Motor Total Furniture Vehicles $ $ $Gross Carrying Amount Balance at 30June 2005 1,846,037 284,943 2,130,980Additions 193,825 320,788 514,613Disposals - - - ----------- ----------- ----------Balance at 30June 2006 2,039,862 605,731 2,645,593 ----------- ----------- ---------- AccumulatedDepreciation Balance at 30June 2005 (822,381) (130,520) (952,901)Depreciationexpense (472,448) (150,143) (622,591)Disposals - - - ----------- ----------- ----------Balance at 30June 2006 (1,294,829) (280,663) (1,575,492) ----------- ----------- ---------- Net Book Value ----------- ----------- ----------As at 30 June2005 1,023,656 154,423 1,178,079 ----------- ----------- ----------As at 30 June2006 745,033 325,068 1,070,101 ----------- ----------- ---------- COMPANY Plant, Equipment & Office Motor Total Furniture Vehicles $ $ $Gross Carrying Amount Balance at 30June 2005 441,695 32,727 474,422Additions 49,835 - 49,835Disposals - - - ----------- ----------- ----------Balance at 30June 2006 491,530 32,727 524,257 ----------- ----------- ---------- AccumulatedDepreciation Balance at 30June 2005 (411,495) (5,692) (417,187)Depreciationexpense (16,118) (7,364) (23,482)Disposals - - - ----------- ----------- ----------Balance at 30June 2006 (427,613) (13,056) (440,669) ----------- ----------- ---------- Net Book Value ----------- ----------- ----------As at 30 June2005 30,200 27,035 57,235 ----------- ----------- ----------As at 30 June2006 63,917 19,671 83,588 ----------- ----------- ---------- Consolidated Company 2006 2005 2006 2005 $ $ $ $Aggregate depreciation allocated,whether recognised as an expense orcapitalised as part of the carryingamount of other assets during the year:Plant, equipment and office furniture 472,448 61,227 16,118 16,568Motor vehicles 150,143 27,643 7,364 5,692 -------- -------- -------- -------- 622,591 88,870 23,482 22,260 -------- -------- -------- --------Included above, the following amountswere capitalised within explorationexpenditure: 413,029 - - - -------- -------- -------- -------- 8. Investments Consolidated CompanyNON CURRENT Note 2006 2005 2006 2005 $ $ $ $ Shares in subsidiaries - - 5,959,455 5,959,455Recoverable amount write - - (448,286) (448,286)down -------- -------- -------- -------- - - 5,511,169 5,511,169 -------- -------- -------- -------- 9. Exploration and Evaluation Expenditure Exploration and evaluation Consolidated Companyexpenditure(a) - At Cost Note 2006 2005 2006 2005 $ $ $ $Balance at the beginning ofthe year 28,715,883 26,662,812 - -Expenditure for the year 12,341,933 1,722,250 - -Take up joint venture 330,821 330,821 330,821 330,821assets -------- -------- -------- --------Balance at the end of theyear 41,388,637 28,715,883 330,821 330,821 -------- -------- -------- -------- (b) Included within the cost amount of assets is $5,311,744 being the excess ofconsideration over the net tangible assets acquired on the acquisition ofPharaoh Gold Mines NL in January 1999. This amount has been treated as part ofthe cost of exploration and evaluation. Management believe that the recovery ofthese amounts will satisfactorily be made through the exploitation of theproject in due course. 10. Trade and Other Accounts Payable Consolidated Company 2006 2005 2006 2005 $ $ $ $CURRENTTrade payables 216,087 214,151 43,763 7,094Other creditors and accruals - - - - -director personally relatedentitiesOther creditors and accruals 645,172 18,398 97,888 62,654 -------- -------- -------- -------- 861,259 232,549 141,651 69,748 -------- -------- -------- --------NON-CURRENTOther creditors and accruals * 205,448 196,850 - - -------- -------- -------- -------- 205,448 196,850 - - -------- -------- -------- -------- * This represents a loan of US$150,000 payable 14 days after commencement ofcommercial production. There is no interest payable. 11. Current Provisions Consolidated CompanyCURRENT 2006 2005 2006 2005Employee Benefits $ $ $ $Balance at 1 July 2005 234,092 168,869 166,049 84,945Additional provisionrecognised 275,387 130,986 59,222 135,686Reductions due to payment* (183,550) (65,763) (182,824) (54,582) --------- -------- -------- --------Balance at 30 June 2006 325,929 234,092 42,447 166,049 --------- -------- -------- -------- * Note that J El-Raghy's annual and sick leave entitlements were transferredfrom Centamin to PGM during the year. 12. Contributed Equity Consolidated Company 2006 2005 2006 2005 $ $ $ $ Balance atbeginning 68,602,890 68,568,240 68,602,890 68,568,240of financial year Exercise of optionsissued under theEmployee ShareOption Plan - 150,000 @ 23.10 cents - 34,650 - 34,650 - 640,000 @ 23.10 cents 147,840 - 147,840 - 250,000 @ 29.00 cents 72,500 - 72,500 - 50,000 @ 35.00 cents 17,500 - 17,500 - 45,000 @ 28.04 cents 12,618 - 12,618 - 250,000 @ 35.49 cents 88,725 - 88,725 Placement of75,000,000 shares @27.5p 46,401,973 - 46,401,973 --------- -------- --------- --------Balance at end offinancial year 115,344,046 68,602,890 115,344,046 68,602,890 --------- -------- --------- -------- 2006 2005 No. $ No. $Fully Paid OrdinaryShares Balance atbeginning 502,060,369 68,602,890 501,910,369 68,568,240of financial year Exercise of optionsissued under theEmployee ShareOption Plan - @ 23.10 cents 640,000 147,840 150,000 34,650 - @ 29.00 cents 250,000 72,500 - - - @ 35.00 cents 50,000 17,500 - - - @ 28.04 cents 45,000 12,618 - - - @ 35.49 cents 250,000 88,725 - - Placement of75,000,000 shares @27.5p 75,000,000 46,401,973 - - --------- -------- --------- --------Balance at end offinancial year 578,295,369 115,344,046 502,060,369 68,602,890 --------- -------- --------- -------- Fully paid ordinary shares carry one vote per share and carry the right todividends. Unlisted Employee Options 2006 Unlisted Employee Options 2005Options No. No.Balance atbeginning ofyear 3,325,000 5,290,000Issued duringthe year 5,750,000 1,185,000Exercisedduring theyear (1,235,000) (150,000)Lapsed/Expiredduring theyear - (3,000,000) ---------------- ----------------Balance at endof year 7,840,000 3,325,000 ---------------- ---------------- The details of these options are as follows:- i) Balance at beginning of the financial year Options - Series Number Grant Date Expiry/ Exercise Price Exercise Date $Issued 11November 250,000 11 November 2003 11 November 2005 0.29002003Issued 12November 1,010,000 12 November 2003 12 November 2006 0.23102003Issued 17November 130,000 17 November 2003 17 November 2006 0.23102003Issued 15December 750,000 15 December 2003 15 December 2006 0.35492003Issued 04February 775,000 04 February 2005 04 February 2008 0.28042005Issued 17February 410,000 17 February 2005 17 February 2008 0.28042005Total number ofoptions 3,325,000 ii) Granted during the financial year Options - Series Number Grant Date Expiry/ Exercise Price Exercise Date $Issued 31October 4,250,000 31 October 2005 31 October 2010 0.35002005Issued 08December 1,500,000 08 December 2005 08 December 2008 0.43552005Total 5,750,000 The options have been received for nil consideration and are unvested at the endof the year. iii) Lapsed during the financial year There were no options that lapsed or expired during the financial year. iv) Exercised during the financial year Options - Series Number Grant Date Expiry/ Exercise Price Exercise Date $Issued 11 November 250,000 11 November 11 November 0.29002003 2003 2005Issued 12 November 510,000 12 November 12 November 0.23102003 2003 2006Issued 17 November 130,000 17 November 17 November 0.23102003 2003 2006Issued 15 December 250,000 15 December 15 December 0.35492003 2003 2006Issued 17 February 45,000 17 February 17 February 0.28042005 2005 2008Issued 31 October 50,000 31 October 2005 31 October 2010 0.35002005Total 1,235,000 The weighted average share price during the financial year was $0.5392. v) Balance at 30 June 2006 Options - Series Number Grant Date Expiry/ Exercise Price Exercise Date $Issued 12November 500,000 12 November 2003 12 November 2006 23.102003 (1)Issued 15December 500,000 15 December 2003 15 December 2006 35.492003 (1)Issued 04February 775,000 04 February 2005 04 February 2008 28.042005 (1)Issued 17February 365,000 17 February 2005 17 February 2008 28.042005 (1)Issued 31October 4,200,000 31 October 2005 31 October 2010 35.002005 (2)Issued 08December 1,500,000 08 December 2005 08 December 2008 43.552005 (1)Total number ofoptions 7,840,000 (1) These options vest and are exercisable over a period of 12 months, with 50%vesting and exercisable after 6 months and the other 50% vesting and exercisableafter 12 months of issue. These options have a term of 3 years. (2) i) 2,500,000 of these options are subject to performance based hurdles.500,000 of the 2,500,000 options may only be exercised after the completion ofthe bankable feasibility study and subsequent bank finance approval. A further1,000,000 options may be exercised on completion of construction and theremaining 1,000,000 options may be exercised following the first gold pour fromthe Sukari Gold Project. The options have a term of 5 years. ii) 1,000,000 of these options vest and are exercisable over a period of twoyears, with 50% vesting and exercisable after 12 months and the other 50%vesting and exercisable after 24 months of issue. These options have a term of 5years. iii) 700,000 of these options vest and are exercisable immediately. These have aterm of 5 years. 13. Reserves Consolidated Company 2006 2005 2006 2005 $ $ $ $ --------- -------- -------- --------Option reserve 2,273,713 2,273,713 2,273,713 2,273,713 --------- -------- -------- --------Reserve created from theissuing ofoptions for consideration.Balance at the end of the year --------- -------- -------- --------Asset realisation reserve 535,574 535,574 535,574 535,574 --------- -------- -------- --------Reserve created from the realisationof particular assets. --------- -------- -------- --------Capital reserve - - 600,000 600,000Reserve created from the cancellationof shares in the Company held byPharaoh Gold Mines NL. Share option reserveBalance at beginning offinancial year 63,504 - 63,504 -Cost of share basedpayments 475,858 63,504 475,858 63,504Transfer to retainedearnings (9,048) - (9,048) - --------- -------- -------- --------Balance at end of financialyear 530,314 63,504 530,314 63,504 --------- -------- -------- --------Reserve created on the grantingof share options to employees.* 3,339,601 2,872,791 3,939,601 3,472,791 --------- -------- -------- -------- * The share option reserve arises on the grant of share options to employeesunder the employee share option plan. Amounts are transferred out of the reserveand into issued capital when the options are exercised. There is currently no formal policy for realisation of the reserves. 14. Accumulated Losses Consolidated Company 2006 2005 2006 2005 $ $ $ $Balance at the beginningof the year 23,847,593 22,977,181 20,962,493 20,468,192Current year's(profit)/loss (1,010,830) 870,412 (2,255,163) 494,301Transfer from shareoption (9,048) - (9,048) -reserve -------- -------- --------- --------Balance at the end ofthe 22,827,715 23,847,593 18,698,282 20,962,493year -------- -------- --------- -------- 15. Employee Benefits Consolidated Company 2006 2005 2006 2005 $ $ $ $ --------- -------- -------- --------The aggregate employee benefitliability recognised and included inthe financial statements is as 325,929 234,092 42,447 166,049follows:Provision for employee benefits:Current (note 11) --------- -------- -------- -------- 16. Number of Employees Consolidated Company 2006 2005 2006 2005 No. No. No. No. Number of Employees 92 93 3 5 -------- -------- -------- -------- 17. Contingent Liabilities There are no contingent liabilities to report as at 30 June 2006. 18. Commitments for Expenditure Consolidated Company 2006 2005 2006 2005 $ $ $ $Lease of office premisesNot longer than 1 year 53,580 52,005 53,580 52,005Longer than 1 year and not longer than 5years 22,325 73,674 22,325 73,674Longer than 5 years - - - - -------- -------- -------- -------- Total 75,905 125,679 75,905 125,679 -------- -------- -------- -------- On 05 July 2004, the Company exercised its option to extend the Term of theoffice lease for an additional 3 years expiring on 22 November 2007. The rent isincreased by CPI annually on the anniversary of the original lease (22 November2001). 19. Net Assets of the Group The net asset position of the group is lower than that of the Company. Thisposition is a result of fees being charged to the subsidiary through theinter-company account which are expensed within the subsidiary. Managementbelieve that it would be misleading to impair the inter-company receivable.Management believe that the recovery of these amounts will satisfactorily bemade through the exploitation of the project in due course. 20. Particulars in Relation to Subsidiaries Ownership Interest Country of Incorporation 2006 2005PARENT ENTITY % %Centamin Egypt Limited Australia SUBSIDIARIESViking Resources Limited Australia 100 100North African Resources NL Australia 100 100Pharaoh Gold Mines NL Australia 100 100Centamin Limited Bermuda 100 100 21. Notes to the Statements of Cash Flows (a) RECONCILIATION OF CASH AND CASH EQUIVALENTS For the purposes of the Cash Flow Statement, cash includes cash on hand and atbank and deposits. Cash and cash equivalents as at the end of the financial yearas shown in the Cash Flow Statement is reconciled to the related item in thebalance sheet as follows: Consolidated Company 2006 2005 2006 2005 $ $ $ $Cash and cash equivalents 54,493,427 17,984,972 53,966,456 17,907,208 -------- -------- -------- -------- (b) RECONCILIATION OF PROFIT/(LOSS) FROM ORDINARYACTIVITIES TO NET CASHGENERATED BY/(USED IN)OPERATING ACTIVITIESProfit/(Loss) fromordinary activities beforeincome tax 1,010,830 (870,412) 2,255,163 (494,301)Add/(less) non-cash items:Depreciation ofnon-current assets 622,592 88,870 23,482 22,260Foreign exchange rate(gain)/loss (2,011,921) 543,942 (2,065,253) 562,767Changes in assets andliabilities during the year:Decrease/(increase) inreceivables 115,061 (267,860) (105,340) 19,949Decrease/(increase) inprepayments 1,128 36,873 (6,000) 223Increase/(decrease) intrade creditors & accruals 729,048 (29,342) 50,596 54,932 -------- -------- -------- --------Net cash generatedby/(used in) operatingactivities 466,738 (497,929) 152,648 165,830 -------- -------- -------- -------- 22. Related Parties a) Equity interests in related parties Equity interests in subsidiaries Details of the percentage of ordinary shares held in subsidiaries are disclosedin note 20 to the financial statements. Equity interests in associates and joint ventures Details of interests in associates and joint ventures are disclosed in note 28to the financial statements. b) Key management personnel compensation Details of key management personnel compensation are disclosed in note 23 to thefinancial statements. c) Key management personnel equity holdings The details of the movement in key management personnel equity holdings duringthe financial year are as follows:- Key Balance at Granted as Received Net Balance at BalanceManagement 01 July 05 remuneration on exercise other 30 June 06 held Personnel of options change nominally S El-Raghy 78,235,754 - - - *78,235,754 -ChairmanC Cowden 273,026 - 250,000 - 523,026 -Non-executiveDirectorJ El-Raghy 79,185,754 - - - *79,185,754 -ManagingDirector/CEOH Bottomley 2,800,000 - - - 2,800,000 200,000Non-executiveDirectorH Brown - - 100,000 - 100,000 -CompanySecretary \* The total shares held by Mr S El-Raghy and Mr J El-Raghy arise due to them bothbeing directors/trustees of the following personally related entities: - Nordana Pty Ltd 4,990,668 shares- Nordana Pty Ltd 17,595,714 shares- El-Raghy Kriewaldt Pty Ltd 55,299,372 shares- S & M El-Raghy 350,000 shares The balance of 950,000 shares are held by Mr J El-Raghy being a director ofMontana Realty Pty Ltd Key Balance at Granted Received Net other Balance at BalanceManagement 01 July 04 as on change 30 June 05 heldPersonnel remuneration exercise nominally of options S El-Raghy 78,235,754 - - - *78,235,754 -ChairmanC Cowden 223,026 - - 50,000 273,026 -Non-executiveDirectorJ El-Raghy 79,185,754 - - - *79,185,754 -ManagingDirector/CEOM Lynch 505,000 - - - 505,000 50,000OfficeManagerM Kriewaldt 1,963,333 - - - 1,963,333 -Exploration \* The total shares held by Mr S El-Raghy and Mr J El-Raghy arise due to them bothbeing directors/trustees of the following personally related entities: - Nordana Pty Ltd 4,990,668 shares- Nordana Pty Ltd 17,595,714 shares- El-Raghy Kriewaldt Pty Ltd 55,299,372 shares- S & M El-Raghy 350,000 shares The balance of 950,000 shares are held by Mr J El-Raghy being a director ofMontana Realty Pty Ltd The details of the movement in key management personnel options to acquireordinary shares are as follows:- 2006Key Balance at Granted Exercised Other Balance at BalanceManagement 01 July 05 as changes 30 June 06 Vested atPersonnel remuneration -lapsed 30 June 2006 S El-Raghy - - - - - -C Cowden 250,000 500,000 250,000 - 500,000 250,000G Speechly 250,000 - - - 250,000 250,000T Elder 250,000 500,000 - - 750,000 500,000J El-Raghy - - - - -H 500,000 - - 500,000 250,000BottomleyH Brown 300,000 - 100,000 - 200,000 200,000W Foote - 2,500,000 - - 2,500,000 - Total 1,050,000 4,000,000 350,000 - 4,700,000 1,450,000 2005Key Balance at Granted Exercised Other Balance at BalanceManagement 01 July 04 as changes 30 June 05 Vested atPersonnel remuneration -lapsed 30 June 2005 S El-Raghy - - - - - -C Cowden 250,000 - - - 250,000 250,000G Speechly 250,000 - - - 250,000 250,000T Elder 250,000 - - - 250,000 250,000J El-Raghy - - - - - -H Michael 3,000,000 - - (3,000,000) - -M Lynch 250,000 100,000 - - 350,000 250,000D Franks 100,000 100,000 - - 200,000 100,000H Brown 100,000 200,000 - - 300,000 100,000C Tyndall 100,000 - - - 100,000 100,000 Total 4,300,000 400,000 - (3,000,000) 1,700,000 1,300,000 Apart from the details disclosed in this note, no key management personnel hasentered into a material contract with the Company or the economic entity sincethe end of the previous financial year and there were no material contractsinvolving key management personnel interests at year-end. During the financial year, 350,000 options (2005: Nil) were exercised by keymanagement personnel. C Cowden exercised 250,000 options at a price of $0.3549per share for 250,000 ordinary shares in Centamin Egypt Limited and H Brownexercised 100,000 options at a price of $0.2310 per share for 100,000 ordinaryshares in Centamin Egypt Limited. No amounts remain unpaid on the optionsexercised during the financial year at year end. Further details of shareoptions granted during the financial year are contained in Notes 24-26 of thefinancial statements. OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL Mr S El-Raghy and Mr J El-Raghy are also directors and shareholders of El-RaghyKriewaldt Pty Ltd ("El-Raghy Kriewaldt"). El-Raghy Kriewaldt provides officepremises to the Company. All dealings with El-Raghy Kriewaldt are in theordinary course of business and on normal terms and conditions. Rent and officeoutgoings paid to El-Raghy Kriewaldt during the year were $53,055 (2005:$51,612). Refer to Note 18 for commitments for expenditure and leasingarrangements. Mr S El-Raghy provides office premises in Alexandria, Egypt to the Company. Alldealings with Mr S El-Raghy are in the ordinary course of business and on normalterms and conditions. Rent and office outgoings paid to Mr S El-Raghy during theyear were $20,214 (2005: $Nil). A director of the Company, Mr C Cowden has an interest as a director andcontrolling shareholder of Cowden Limited, Insurance Brokers. This Companyprovides insurance broking services to the Company. All dealings with thisCompany are in the ordinary course of business and on normal terms andconditions. Premiums paid to Cowden Limited during the year were $73,212 (2005:$36,397), of which $7,567 was brokerage (2005: $5,357). TRANSACTIONS WITH OTHER RELATED PARTIES During the year the Company provided funds to and received funding fromsubsidiaries. Refer to Notes 5 and 10 for details. 23. KEY MANAGEMENT PERSONNEL COMPENSATION The key management personnel of Centamin Egypt Limited during the financial yearwere: - Mr Sami El-Raghy (Chairman), appointed 29 April 1993;- Mr Josef El-Raghy (Managing Director/CEO), appointed 26 August 2002;- Dr Thomas G Elder (Non-Executive Director) appointed 08 May 2002;- Mr Colin Cowden (Non-Executive Director) appointed 08 March 1982;- Mr G Brian Speechly (Non-Executive Director), appointed 15 August 2000;- Mr H Stuart Bottomley (Non-Executive Director), appointed 26 September 2005;- Mrs Heidi Brown (Company Secretary), appointed 21 July 2004; and- Mr Wayne Foote (Project Manager), appointed 13 October 2005. (a) Key Management Personnel Compensation The Board reviews the remuneration packages of all key management personnel onan annual basis. Compensation packages are reviewed and determined with dueregard to current market rates and are benchmarked against comparable industrysalaries, adjusted by a performance factor to reflect changes in the performanceof the Company. Options are issued to key management personnel under the Employee Share OptionPlan 2002 as part of their remuneration. Options are offered to key managementpersonnel at the discretion of the Directors, having regard, among other things,to the length of service with the Group, the past and potential contribution ofthe person to the Group and in some cases, performance. During the financial year, W Foote was issued 2,500,000 options at an exerciseprice of $0.3500. These options are subject to performance based hurdles.500,000 of the 2,500,000 options may only be exercised after the completion ofthe bankable feasibility study and subsequent bank finance approval. A further1,000,000 options may be exercised on completion of construction and theremaining 1,000,000 options may be exercised following the first gold pour fromthe Sukari Gold Project. The options have a term of five years. Theseperformance conditions were chosen as they reflect the key objectives of WFoote's role as project manager. The aggregate compensation of the key management personnel of the consolidatedentity and the company is set out below:- Consolidated Company 2006 2005 2006 2005 $ $ $ $Short-term employee benefits 1,245,091 1,261,636 283,861 735,209Post-employment benefits 44,538 67,959 15,190 67,959Other long-term benefits - - - -Termination benefits - - - -Share-based payments 171,858 75,560 111,890 75,560 Total 1,461,487 1,405,155 410,941 878,728 The compensation of each member of the key management personnel of theconsolidated entity is set out below:- Short-term employee benefits Post-employment Other long- Share-based pament benefits term Equity settled** Salary Non- Super- employee Termination Shares Options Cash & Fees Bonus monetary Other annuation Other benefits benefits & units & rights settled Other Total $ $ $ $ $ $ $ $ $ $ $ $ $ S 357,353 - - - - - - - - - - - 357,353El-Raghy* J 303,609 - 24,978 - 2,860 - - - - - - - 331,447El-Raghy* T Elder* 49,167 - - - - - - - - 31,868 - - 81,035(1) C Cowden 25,000 - - - 2,250 - - - - 31,868 - - 59,118(1) G B 25,000 - - - 2,250 - - - - - - - 27,250Speechly H 44,107 - - - - - - - - 31,868 - - 75,975Bottomley*(1) W Foote 326,087 - 2,790 - 29,348 - - - - 59,968 - - 418,193(2) H Brown** 67,000 20,000 - - 7,830 - - - - 16,286 - - 111,116* Total 1,197,323 20,000 27,768 - 44,538 - - - - 171,858 - - 1,461,487 * Non-resident directors** Options value as per Black Scholes pricing method. Refer to Notes 12, 24 and 25 for further details of options granted.*** Bonus paid in respect to added responsibilities and represents 18% of total remuneration. (1) The total value of options issued during the year to Mr T Elder, Mr C Cowdenand Mr G B Speechly is $74,768 each. See Note 12 for terms and conditions. (2) The total value of the options granted to W Foote during the financial yeartotalled $437,159. See Note 12 for terms and conditions. Short-term employee benefits Post-employment Other long- Share-based pament benefits term Equity settled** Salary Bonus Non- Super- employee Termination Shares Options Cash & Fees *** monetary Other annuation Other benefits benefits & units & rights settled Other Total2005 $ $ $ $ $ $ $ $ $ $ $ $ $ S 376,283 150,000 144 - - - - - - - - - 526,427El-Raghy* J 224,808 - 20,449 - 22,481 - - - - - - - 267,738El-Raghy T Elder* 49,580 - - - - - - - - 9,573 - - 59,153 C Cowden 25,000 - - - 2,250 - - - - 9,573 - - 36,823 G B 25,000 - - - 2,250 - - - - 9,573 - - 36,823Speechly H Michael 89,856 - - - 8,986 - - - - - - - 98,842**** M J Lynch 74,489 - - - 10,571 - - - - 16,851 - - 101,911(1) D Franks 87,599 - - - 16,588 - - - - 9,997 - - 114,184(1) M 69,000 - - - - - - - - - - - 69,000Kriewaldt H Brown 51,596 - - - 4,644 - - - - 15,425 - - 71,665(1) C Tyndall 17,832 - - - 189 - - - - 4,568 - - 22,589***** Total 1,091,043 150,000 20,593 - 67,959 - - - - 75,560 - - 1,405,155 * Non-resident directors** Options value as per Black Scholes pricing method. Refer to Notes 12, 24 and25 for further details of options granted.*** Bonus paid in respect to performance and represents 28.5% of totalremuneration.**** Mr Michael ceased employment with the Company on 26 November 2004.***** Mrs Tyndall ceased employment with the Company on 19 July 2004. (1) The total value of options granted to key management personnel during theyear ending 30 June 2005 totalled $54,287. The total value of M J Lynch'soptions was $13,572, D W Franks' was $13,572 and H Brown's was $27,143. The share options granted to key management personnel have been valuedinternally by the Company using the Black-Scholes option pricing method. Optionsare offered to key management personnel at the discretion of the Directors,having regard, among other things, to the length of service with the Group, andto the past and potential contribution of the person to the Group, and thenumber of options granted is at the Directors discretion. The weighted averageclosing price of the shares in Centamin Egypt Limited for the financial year was$0.5392. The volatility input into the model was 60% and the government ratesimilar to the term of the option used was 5.25%. The Employee Share Option Plan 2002 was approved by shareholders on 29 November2002. Each option converts into one ordinary share of Centamin Egypt Limited onexercise. No amounts are paid or payable by the recipient of the option untilexercise and options may be exercised at any time from the date of vesting tothe date of their expiry. (b) Contracts for services of key management personnel The Board reviews the remuneration packages of all key management personnel onan annual basis. Compensation packages are reviewed and determined with dueregard to current market rates and are benchmarked against comparable industrysalaries, adjusted by a performance factor to reflect changes in the performanceof the Company. S El-Raghy, J El-Raghy, W Foote and H Brown are employed under formal employmentcontracts. S El-Raghy's current contract does not specify a term, J El-Raghy'scurrent contract specifies a term of 3 years (expiring 01 September 2008), and WFoote's current contract specifies a term of 1 year (expiring 13 October 2006).These 3 contracts require a period of 3 months notice to terminate the contract.H Brown's contract has no specified term, and a period of 1 months notice isrequired to terminate the contract. No key management personnel is entitled toany termination payments apart from remuneration payable up to and including thedate of termination and all payments due by way of accrued leave. 24. Options granted to Directors The unquoted options granted to Directors during the financial year were:- Name Issue Date Number of Unquoted Exercise Expiry Date Options PriceDr T 08 December 2005 500,000 $0.4355 08 December 2008ElderMr C 08 December 2005 500,000 $0.4355 08 December 2008Mr H SBottomley 08 December 2005 500,000 $0.4355 08 December 2008 25. Options granted to Executives The unquoted options granted to Executives during the financial year were:- Name Issue Date Number of Unquoted Exercise Price Expiry Date OptionsMr W Foote 31 October 205 2,500,000 $0.3500 31 October 2010 26. Options granted to Employees At the Annual General Meeting on 29 November 2002, shareholders approved theEmployee Option Plan 2002. To date, the following unquoted options have beenissued under the Employee Option Plan:- Number of Unquoted Issue Date Exercise Expiry Date Number of Options Price Employees 1,160,000 12 November 23.10 cents 12 November 18 2003 2006 130,000 17 November 23.10 cents 17 November 3 2003 2006 750,000 15 December 35.49 cents 15 December 3 2003 2006 775,000 04 February 28.04 cents 04 February 10 2005 2008 410,000 17 February 28.04 cents 17 February 10 2005 2008 1,500,000 08 December 43.55 cents 08 December 3 2005 2008 4,250,000 31 October 35.00 cents 31 October 3 2005 2010 250,000 30 August 65.66 cents 30 August 1 2006 2009 Further details are contained in Note 12. Consolidated Company 2006 2005 2006 2005 $ $ $ $27. Auditors' RemunerationAuditing the financial report 36,800 32,000 31,000 27,000Other services - Tax 4,700 - 4,700 -Other auditors 4,056 - - - -------- -------- -------- -------- 45,556 32,000 35,700 27,000 -------- -------- -------- -------- The auditor of Centamin Egypt Limited is Deloitte Touche Tohmatsu. The Egyptianexpenditure is audited by Mostafa Shawki & Co in Egypt. Mostafa Shawki & Co donot provide any other services to the Company or its subsidiaries. 28. Interests in Joint Ventures The consolidated entity has material interests in the following unincorporatedventure:- JOINTLY CONTROLLED ASSETS Principal Activities Percentage Interest 2006 2005 % % Egyptian Pharaoh Investments Exploration 50 50Sukari Gold Mines Exploration 50 - --------------- -------- -------- The following amount represents the economic entity's interest in assetsemployed in the Egyptian Pharaoh Investments joint venture. The amount isincluded in the consolidated financial statements under the respective category. Consolidated & Company 2006 2005 $ $Non Current AssetsExploration expenditure 330,821 330,821 The following amount represents the economic entity's interest in assetsemployed in the Sukari Gold Mines joint venture. The amount is included in theconsolidated financial statements under the respective category. Consolidated & Company 2006 2005 $ $Non Current AssetsExploration expenditure 24,151 - 29. Superannuation The Company contributes to, but does not participate in, compulsorysuperannuation funds on behalf of its employees and Directors. Contributions arecharged against income as they are made. 30. Earnings Per Share Consolidated 2006 2005 Cents Per Cents Per Share Share Basic earnings per share 0.194 (0.16)Diluted earnings per share 0.192 (0.16) Basic Earnings per Share The earnings and weighted average numberof ordinary shares used in the calculationof basic earnings per share are asfollows: 2006 2005 $ $ -------- --------Profit/(Loss) (a) 1,010,830 (806,908) -------- -------- 2006 2005 No. No. -------- --------Weighted average number of ordinary shares (b) 520,213,903 501,961,547 -------- -------- (a) The Profit/(Loss) used in the calculation of basic earnings per shareequates to the Net Profit/(Loss) in the Income Statement. (b) The options are considered to be potential ordinary shares and are thereforeexcluded from the weighted average number of ordinary shares used in thecalculation of basic earnings per share. Where dilutive, potential ordinaryshares are included in the calculation of diluted earnings per share.Diluted Earnings per Share The earnings and weighted average number ofordinary shares used in the calculation of dilutedearnings per share are as follows: 2006 2005 $ $ -------- --------Profit/(Loss) (a) 1,010,830 (806,908) -------- -------- 2006 2005 No. No. -------- --------Weighted average number of ordinary shares andpotential ordinary shares (b) 525,611,917 501,961,547 -------- -------- (a) The Profit/(Loss) used in the calculation of diluted earnings per shareequates to the Net Profit/(Loss) in the Income Statement. (b) Weighted average number of ordinary shares for the purpose of dilutedearnings per share reconciles to the weighted average number of ordinary sharesused in the calculation of basic earnings per share as follows:- 2006 2005 No. No.Weighted average number of ordinary shares used inthe calculation of basic EPS 520,213,903 501,961,547Shares deemed to be issued for no consideration inrespect of employee options 5,398,014 - -------- --------Weighted average number of ordinary shares used inthe calculation of diluted EPS 525,611,917 501,961,547 -------- -------- 2006 2005(c) The following potential ordinary shares are No. No.not dilutive and are therefore excluded from the -------- --------weighted average number of ordinary shares andpotential ordinary shares used in the calculationof diluted earnings per share:Options - 3,325,000 -------- -------- 31. Events Subsequent to Balance Date In July, the company announced that it is considering the purchase of usedprocess plant items in an effort to reduce both the procurement time and thecost for major plant items. The search has identified a recently closedoperation that contains most of the process plant items that Centamin willrequire for the Sukari project. The potential purchase of this plant represents an opportunity to materiallyreduce the cost of development and also accelerate the construction timetable.Testing of the structural integrity of key plant items has been arranged andnegotiations with the plant owner are at an advanced stage. Consequently thecompletion of the Bankable Feasibility Study (BFS) will be delayed while athorough review of this process plant is completed. 32. Financial Instruments a) Interest Rate Risk The following table details the consolidated entity's exposure to interest raterisk as at reporting date: Average Variable Fixed Non Interest Total Interest Interest Interest Rate Bearing Rate Rate (< 1 yr) 2006 % $ $ $ $FINANCIALASSETSCash 5.04 3,344,983 50,632,885 480,787 54,458,655Receivables - - 183,057 183,057 -------- -------- -------- -------- 3,344,983 50,632,885 663,844 54,641,712 -------- -------- -------- -------- FINANCIALLIABILITIESAccounts - - 861,836 861,836payableEmployee - - 325,929 325,929benefits -------- -------- -------- -------- - - 1,187,765 1,187,765 -------- -------- -------- --------2005FINANCIALASSETSCash 5.36 1,663,921 16,270,838 50,213 17,984,972Receivables - - 298,118 298,118 -------- -------- -------- -------- 1,663,921 16,270,838 348,331 18,283,090 -------- -------- -------- -------- FINANCIALLIABILITIESAccounts - - 429,399 429,399payableEmployee - - 234,092 234,092benefits -------- -------- -------- -------- - - 663,491 663,491 -------- -------- -------- -------- b) Credit Risk Credit risk refers to the risk that a counter-party will default on itscontractual obligations resulting in financial loss to the economic entity. Theeconomic entity has adopted a policy of only dealing with credit-worthycounter-parties and obtaining sufficient collateral or other security whereappropriate, as a means of mitigating the risk of financial loss from defaults.The economic entity measures credit risk on a fair value basis. The economic entity does not have any significant credit risk exposure to anysingle counter-party or any group counter-parties having similarcharacteristics. The carrying amount of financial assets recorded in the financial statementsrepresents the economic entity's maximum exposure to credit risk without takingaccount of the value of collateral or other security obtained. c) Net Fair Value The carrying amount of financial assets and financial liabilities recorded inthe financial statements represents their respective net fair values, determinedin accordance with the accounting policies disclosed in note 1 to the financialstatements. d) Currency Risk The economic entity holds the majority of its funds in an Australian bank andperiodically forwards British Pounds and Australian Dollars to its office inEgypt. The majority of transactions performed in Egypt are conducted in BritishPounds or US dollars however a small reserve of Egyptian Pounds is maintained tomeet day to day administration expenses. The economic entity has not entered into any forward foreign exchange contractsto hedge the exchange rate risk arising from any anticipated futuretransactions. As at 30 June 2006, Egyptian £2,869 (2005: £1,036), US$1,923,642(2005: US$2,403) and GBP £20,308,719 (2005: £1,585,294), Euro €14 (2005: €14)bank balances were unhedged. 33. Impact of adopting the Australian equivalents to International FinancialReporting Standards ("A-IFRS") Effect of A-IFRS on the Balance Sheet as at 01 July 2004 Consolidated Company N Superseded Effect of A-IFRS Superseded Effect of A-IFRS O policies * transition policies * transition T to A-IFRS to A-IFRS E $ $ $ $ $ $ CurrentassetsCash 21,133,460 - 21,133,460 21,101,548 - 21,101,548Trade andotherreceivables 30,258 - 30,258 28,905 - 28,905Prepayments 151,400 - 151,400 22,429 - 22,429Totalcurrent 21,315,118 - 21,315,118 21,152,882 - 21,152,882assets Non-currentassetsReceivables - - - 24,631,961 24,631,961Plant &equipment 1,012,896 - 1,012,896 63,363 - 63,363Investments - - - 5,511,169 5,511,169Explorationexpenditure 26,662,812 - 26,662,812 330,821 - 330,821Totalnon-currentassets 27,675,708 - 27,675,708 30,537,314 - 30,537,314Total 48,990,826 - 48,990,826 51,690,196 - 51,690,196assets CurrentliabilitiesAccountspayables 204,314 - 204,314 95,916 - 95,916Provisions 168,869 - 168,869 84,945 - 84,945Totalcurrent 373,183 - 373,183 180,861 - 180,861liabilities Non-currentliabilitiesAccountspayable 217,297 - 217,297 - - -Totalnon-currentliabilities 217,297 - 217,297 - - -Totalliabilities 590,480 - 590,480 180,861 - 180,861 Net assets 48,400,346 - 48,400,346 51,509,335 - 51,509,335 EquityContributedequity 68,568,240 - 68,568,240 68,568,240 - 68,568,240General 2,809,287 - 2,809,287 3,409,287 - 3,409,287ReserveShare (a) - - - - - -OptionReserveAccumulatedlosses (22,977,181) - (22,977,181) (20,468,192) - (20,468,192)Total 48,400,346 - 48,400,346 51,509,335 - 51,509,335equity * Reported financial position for the financial year ended 33. Impact of adopting the Australian equivalents to International FinancialReporting Standards ("A-IFRS") continued. Effect of A-IFRS on the Income Statement for the financial year ended 30 June2005 Consolidated Company N Superseded Effect of A-IFRS Superseded Effect of A-IFRS O policies* transition policies* transition T to A-IFRS to A-IFRS E $ $ $ $ $ $ Revenue 1,046,309 - 1,046,309 1,046,137 - 1,046,137Other income 102,351 - 102,351 538,934 - 538,934Administrationexpenses (1,132,327) (63,504) (1,195,831) (1,200,686) (63,504) (1,264,190)Foreignexchangegain/(loss) (543,942) - (543,942) (562,767) - (562,767)Marketingexpenses (145,044) - (145,044) (144,044) - (144,044)Travellingexpenses (108,371) - (108,371) (108,371) - (108,371)Other expenses (25,884) - (25,884) - - -Profit/(Loss)before incometax (a) (806,908) (63,504) (870,412) (430,797) (63,504) (494,301)Tax (expense)/ - - - - - -incomeNetprofit/(loss)for the period (806,908) (63,504) (870,412) (430,797) (63,504) (494,301) * Reported financial results under previous Australian GAAP. 33. Impact of adopting the Australian equivalents to International FinancialReporting Standards ("A-IFRS") continued. Effect of A-IFRS on the Consolidated Balance Sheet as at 30 June 2005. Consolidated Company N Superseded Superseded Effect of A-IFRS Effect of A-IFRS O policies* policies* transition to transition T A-IFRS to A-IFRS E $ $ $ $ $ $ CurrentassetsCash 17,984,972 - 17,984,972 17,907,208 - 17,907,208Trade andotherreceivables 298,118 - 298,118 8,956 - 8,956Prepayments 114,527 - 114,527 22,429 - 22,429Totalcurrent 18,397,617 - 18,397,617 17,938,370 - 17,938,370assets Non-currentassetsTrade andotherreceivables - - - 27,511,390 - 27,511,390Plant &equipment 1,178,079 - 1,178,079 57,235 - 57,235Investments - - - 5,511,169 5,511,169Explorationexpenditure 28,715,883 - 28,715,883 330,821 - 330,821Totalnon-currentassets 29,893,962 - 29,893,962 33,410,615 - 33,410,615Total 48,291,579 - 48,291,579 51,348,985 - 51,348,985assets CurrentliabilitiesAccountspayable 232,549 - 232,549 69,748 - 69,748Provisions 234,092 - 234,092 166,049 - 166,049Totalcurrent 466,641 - 466,641 235,797 - 235,797liabilities Non-currentliabilitiesAccountspayable 196,850 - 196,850 - - -Totalnon-currentliabilities 196,850 - 196,850 - - -Totalliabilities 663,491 - 663,491 235,797 - 235,797 Net assets 47,628,088 - 47,628,088 51,113,188 - 51,113,188 EquityContributedequity 68,602,890 - 68,602,890 68,602,890 - 68,602,890General 2,809,287 - 2,809,287 3,409,287 - 3,409,287ReserveShareOption (a) - 63,504 63,504 - 63,504 63,504ReserveAccumulatedlosses (f) (23,784,089) (63,504) (23,847,593) (20,898,989) (63,504) (20,962,493)Total 47,628,088 - 47,628,088 51,113,188 - 51,113,188equity * Reported financial position under previous Australian GAAP. (a) Share-based payments Under AASB 2 Share Based Payments, the Company has determined the fair value ofoptions issued to employees as remuneration and recognised an expense in theConsolidated Income Statement over the vesting period. At the date of transition no adjustment was made as there were no options issuedfrom the commencement date of 7 November 2002 that had not vested at 1 January2005. For the year ended 30 June 2006 and the financial year ended 30 June 2005share-based payments of $63,504 (included in employee benefit expenses) whichwere not recognised under the superseded policies were recognised under A-IRFS,with a corresponding increase in equity. (b) Property, plant and equipment On transition to A-IFRS, the entity had several options in the determination ofthe cost of each tangible asset and could also elect to use the cost or fairvalue basis for the measurement of each class of property, plant and equipmentafter transition. The Consolidated Entity has elected to continue to measureproperty, plant and equipment on the historical cost option. The treatment ofdepreciation and the estimated useful life have also remained the same. Therehas not been any adjustment under A-IFRS in the consolidated entity either attransition or comparative period balance date. (c) Restoration provisions Under AASB 137 Provisions, Contingent Liabilities and Contingent Assets, theCompany is required to recognise the full provision for rehabilitation, based ondiscounted future cash flows, at the date of transition to A-IFRS. Acorresponding asset net of depreciation to the date of transition may qualifyfor recognition as part of development costs and be amortised together withdevelopment assets. The Company, via its wholly owned subsidiary, Pharaoh Gold Mines NL (Pharaoh),is a party to a Concession Agreement with the Government of the Arab Republic ofEgypt, whereby Pharaoh is exploring for gold and associated minerals in theEastern Desert of Egypt. Pharaoh has progressed the Sukari Project to the stagewhere a feasibility study is presently being carried out to a bankable standardinto the development of a 4 to 5 million tonne per annum processing facility. Ifthe Sukari Project goes into production, then under the terms of ConcessionAgreement, Pharaoh or the Operating Company, (which will be owned equally byPharaoh and the Government), as the case may be, shall be responsible for thereasonable restoration and rehabilitation of the project area, in a mannerconsistent with good international practice in the mining industry. As theCompany is not yet in production, there is no obligation for a rehabilitationprovision at this stage. There are therefore no adjustments for rehabilitationprovisions at this stage. (d) Impairment of assets Under A-IFRS, both current and non-current assets are tested for impairment,including property plant and equipment. The entity has determined that no asset impairment provisions are required ontransition to A-IFRS at 01 July 2004, 30 June 2005 or 30 June 2006. (e) Income tax Under superseded policies, the consolidated entity adopted tax-effect accountingprinciples whereby income tax expenses were calculated on pre-tax accountingprofits after adjustment for permanent differences. The tax-effect of timingdifferences, which occur when items are included or allowed for income taxpurposes in a period different to that for accounting, were recognised atcurrent taxation rates as deferred tax assets and deferred tax liabilities, asapplicable. Under A-IFRS, deferred tax is determined using the balance sheet liabilitymethod in respect of temporary differences arising from differences between thecarrying account to assets and liabilities in the financial statements and theircorresponding tax bases. There is no impact on the cumulative financial position at 30 June 2006 or attransition to A-IFRS. This is because:- Tax Losses A deferred tax asset will not be recognised for carry forward tax losses becauseit is not probable that future taxable profits will be available against whichthe unused tax losses can be utilised. (f) Accumulated losses The effect of the above adjustments on retained earnings is as follows: Consolidated ----------------------- 1 Jul 04 30 Jun 05 $ $ ------------- ------------Expensing share-based payments - 63,504 ------------- ------------Total adjustment to accumulated losses - 63,504 ------------- ------------ (g) Cash flows The transition to A-IFRS has had no effect on the consolidated entity's cashflows. ADDITIONAL ASX INFORMATION Additional information required by the Australian Stock Exchange Limited ListingRules and not disclosed elsewhere in this report is as follows. The informationis as at 01 September 2006. SUBSTANTIAL SHAREHOLDERS (holding more than 5%) Fully Paid Ordinary SharesShareholder Ordinary Shares PercentageWillbro Nominees Limited 60,829,816 10.51%El-Raghy Kriewaldt Pty Ltd 55,299,372 9.56%BBHISL Nominees Limited 46,495,849 8.03%Chase Nominees Limited 36,545,128 6.32%Euroclear Nominees Limited 32,165,000 5.56% TOP 20 SHAREHOLDERS (a) Fully Paid Ordinary Shares Quoted Shares Number % HeldWillbro Nominees Limited 60,829,816 10.51%El-Raghy Kriewaldt Pty Ltd 55,299,372 9.56%BBHISL Nominees Limited 46,495,849 8.03%Chase Nominees Limited 36,545,128 6.32%Euroclear Nominees Limited 32,165,000 5.56%Vidacos Nominees Limited 24,377,100 4.21%Goldman Sachs Securities (Nominees) Limited 21,300,500 3.68%State Street Nominees Limited 19,358,772 3.35%Nordana Pty Ltd 17,595,714 3.04%Nortrust Nominees Limited 16,093,898 2.78%Morstan Nominees Limited 15,679,400 2.71%Goldman Sachs International 15,383,084 2.66%HSBC Global Custody Nominee (UK) Limited 13,209,684 2.28%Barclayshare Nominees Limited 11,854,991 2.05%Pershing Keen Nominees Limited 10,267,842 1.77%TD Waterhouse Nominees (Europe) Limited 10,151,976 1.75%Mellon Nominees (UK) Limited 7,903,500 1.37%L R Nominees Limited 6,912,131 1.19%DRKWS Nominees Limited 6,467,000 1.12%National Nominees Limited 6,188,870 1.07% 434,079,627 75.01% At 01 September 2006, there were 578,668,369 fully paid ordinary shares held by1,921 individual shareholders. All issued ordinary shares carry one vote pershare. (b) Options Unquoted Options Number % HeldIssued under Employee Share Option Plan 2002 7,717,000 100.00%Other - - Total 7,717,000 100.00% DISTRIBUTION OF HOLDERS OF EQUITY SECURITIES Holding Range Ordinary Shares Unquoted Options1 - 1,000 138 -1,001 - 5,000 660 -5,001 - 10,000 376 -10,001 - 100,000 588 16100,001 and over 159 11 Total 1921 27 As at 01 September 2006, there were 60 shareholders with less than marketableparcel. CLASS OF SHARES AND VOTING RIGHTS The voting rights attaching to the ordinary shares, set out in Clause 12.8 ofthe Company's Constitution are: "Subject to any rights or restrictions for thetime being attached to any class or classes of shares - (a) at meetings of members or classes of members each member entitled to vote may vote in person or by proxy or attorney; and; (b) on a show of hands every person present who is a member has one vote for each ordinary share held and on a poll every person present or by proxy or attorney has one vote for each ordinary share held." VENDOR SHARES There are no vendor securities on issue at the date of this report. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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