10th Mar 2005 07:30
Golden Prospect PLC10 March 2005 GOLDEN PROSPECT PLC REGISTERED NUMBER: 3172986- ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 31 DECEMBER 2004 CHAIRMAN'S STATEMENT Dear Shareholder Your directors take much pleasure in reporting sustained progress for yourcompany having completed the most successful period in Golden Prospect's nineyear history as a Plc. In 2004 we capitalised further on the strength of the equity environment for thenatural resources sector as a whole. Group pre-tax profits for the year to 31stDecember 2004 more than doubled from £2.17 to £4.49 million. Gross profit in 2004 rose to £4.86 million, of which approximately 60% wasattributable to realisations within the strategic portfolio and 40% to ourtrading and investment banking activities. Diluted earnings per share rose from 1.42p to 3.32p, a rise of 134%. Unrealised gains on our portfolio stood at £14.90 million at the year end andmanagement intends to take advantage of a good liquidity climate to convert asubstantial portion of these gains into realised profits during the currentfinancial year. Our strategic objective is to produce superior returns through economic cycles.To this end, during the year we strengthened the breadth of our business andacquired Ambrian Partners Limited, an FSA authorised corporate advisory andbroking firm and acquired a 25% stake in Minesite (and Oilbarel.com, indirectly)two website and conference businesses dedicated to the resources sector. Wecontinue to explore opportunities to further strengthen the balance and qualityof Golden Prospect's earnings. Our core holdings in Jubilee Platinum and Mano River (companies of which I am anon-executive director) have made outstanding progress in their respectivedevelopment programmes in Africa. Central Asia Gold has recently achieved asuccessful dual listing on the main Toronto Stock Exchange and the stock hasreceived additional support reflecting the company's exciting growth prospects. During last year, significant reductions were made in our larger holdingsincluding Uruguay Minerals, Equigold and Perilya. Since the calendar year-end reductions have been made in Centamin Egypt andTitan Resources, while a takeover by Consolidated Minerals for Reliance Miningwill produce additional liquidity for redeployment. A full operational review will be incorporated in the company's annual report inthe near future. Base Metals Global expansion, supply deficits and a weakening dollar have boosted metal andother commodity prices to new highs. With lags before new mining projects comeon-stream, many metals are facing low inventories as industry wrestles to keepup with the robust demand. Strong demand from the BRICS (Brazil, Russia, Indiaand China) and supply constraints after years of under investment have helpedunderpin higher prices. The argument for a superior level of growth is crediblebut predictions of a 'super cycle' over the next few years ring warning bells tothose who have lived through 30 years of market cycles. Extensive fund buying is pushing share prices well into over-bought territory,and a pullback is looking likely in the near term after which much liquiditywill be pumped into the markets from major corporate activity and sharebuybacks. This should get stocks moving higher again. Gold and Precious Metals The gold market opened the new-year reacting to a bear market rally in thedollar and Central Bank selling. Fears also persist that any IMF revaluation oftheir gold could lead to a large overhang in the market. Gold shares reactedwith significant price drops during this early new-year period of negativesentiment but bullion's strong rally in recent weeks leaves gold shares lookingover-sold and there are plenty of buying opportunities on a selective basis.Focus will be on stocks that show significant leverage to the gold price throughounces in the ground or production. The annual 2,700 tonne gold market still requires over 1,000 tonnes per year ofabove ground supplies to meet demand and producers continue to de-hedge. Increased levels of investment by professionals and institutions are also nowvery evident as they increase their weighting in bullion, and other commodities,while consumer demand continues to climb steadily against a backdrop of tightsupplies. Elsewhere, diamonds, silver and platinum continue to attract solid investmentsupport backed by strong fundamentals for demand driven price rises over thenext few years, while uranium also attracts very strong support. Oils In the oils, crude demand in China (which has barely 10 years of oil reserves),India and the US remains insatiable yet the world producers are pumping at nearcapacity. Investment fund involvement is also increasing in the energy sector.Most of this investment is from passive sources such as pension funds interestedas much in portfolio diversification as short term movements. The secular US dollar bear market (gathering pace again as Asian banks diversifytheir reserves from US dollar assets) will continue to support commodity pricesas it encourages money to flow into hard assets like gold and silver, whilesoaring liquidity due to low global interest rates feeds the bull marketfurther. Moreover, although interest rates might rise in 2005, the increasewill not be enough to significantly affect the upward trend of commodity prices. Healthy corrections will occur from time to time but are perfectly normal instrong bull markets. The Board is happy to appoint director, Tom Gaffney, as Group Chief ExecutiveOfficer. Tom's skill set and investment banking experience as founder andhead of Ambrian Partners will greatly assist the further development of theGroup in the current opportune climate of robust conditions in the resourcesmarket. As a result of this appointment Tom will be granted 2,660,550 options. Tom has previously been a director of JP Morgan's Metals & Mining Team and from1995 was a Director and member of the Management Committee in the CorporateFinance Department of Robert Fleming. He has worked in investment banking for20 years and has specialised in the mining and metals sector. He has advisedmany of the major mining and metals companies on acquisitions, divestitures andcapital markets transactions, including Anglo American, BHP Billiton, Glencoreand Rio Tinto. Tom also previously worked in senior executive positions atNesbitt Burns (the investment bank of the Bank of Montreal) and Lehman Brothersin London, New York and Toronto. As Executive Chairman I welcome Tom's input and I look forward to working withhim in his new capacity. Enquiries:M A Burne, Chairman Tel: 020 7395 1930 CONSOLIDATED PROFIT AND LOSS ACCOUNTYear ended 31 December 2004 2004 2003 £ £ Turnover 10,117,214 6,008,857 Cost of sales (5,256,974) (2,716,967) Gross profit 4,860,240 3,291,890 Other operating income - dividends receivable 101,444 119,396 Administrative expenses (1,182,774) (419,475)Provision for impairment of exploration assets - (842,763)Provision for impairment written back 759,560 - Operating profit - continuing operations 4,538,470 2,149,048Interest receivable 34,427 25,365Interest payable and similar charges (82,233) - Profit on ordinary activities before taxation 4,490,664 2,174,413 Tax on profit on ordinary activities (1,139,968) (905,830)Profit for the financial period 3,350,696 1,268,583 Profit per ordinary share - basic 3.59p 1.42p - diluted 3.32p 1.42p CONSOLIDATED BALANCE SHEETas at 31 December 2004 2004 2003 £ £ £ £ FIXED ASSETSIntangible fixed assets 4,201,631 2,200,000Tangible fixed assets 24,512 3,578Investments 465,560 3,385,823 4,691,703 5,589,401CURRENT ASSETS Debtors: Amounts falling duewithin one year 539,506 26,775 Investments 20,059,578 10,281,729Cash at bank and in hand 3,639,452 967,402 24,238,536 11,815,906CREDITORS: Amounts falling duewithin one year (3,558,466) (1,105,036) NET CURRENT ASSETS 20,680,070 10,710,870 TOTAL ASSETS LESSCURRENT LIABILITIES 25,371,773 16,300,271 CAPITAL AND RESERVESCalled up share capital 10,726,121 8,938,496Share premium account 10,803,383 8,115,458Merger reserve 1,245,256 -Profit and loss account 2,597,013 (753,683) EQUITY SHAREHOLDERS' FUNDS 25,371,773 16,300,271 CONSOLIDATED CASH FLOW STATEMENTYear ended 31 December 2004 2004 2003 £ £ £ £ Net cash inflow/outflowfrom operating activities (861,284) 420,390 Return on investments andservicing of financeInterest receivable 34,427 25,365Interest payable (46,233) -Net cash inflow from returns on investment and servicing of finance (11,806) 25,365 Taxation (901,862) (66,665) Capital expenditure and financial investmentPayments to acquire intangible (66,839) (70,781)fixed assetsPayments to acquire tangible (21,731) (2,174)fixed assetsPayments to acquire fixed asset (115,572) (229,595)investmentsSale of fixed asset investments 1,157 11,862Net cash inflow (outflow) from capitalexpenditure and financial investment (202,985) (290,688) AcquisitionsPayments to acquire (394,374) -subsidiaryBank and cash balances acquired 13,486 -with subsidiary (335,888) -Net cash inflow/(outflow) before financing (2,313,825) 88,402 FinancingIssue of ordinary share capital 3,612,500 -Expenses of share issues (109,567) -Bank loan 1,500,000 -Net cash inflow from financing 5,002,933 -Increase in cash 2,689,108 88,402 The financial information set out above does not constitute statutory accountswithin the meaning of s.240 of the Companies Act 1985. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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