27th Apr 2006 07:02
Aricom PLC27 April 2006 Aricom plc Preliminary Results for the year ended 31 December 2005 London, April 27 2006. Aricom plc ("Aricom" or the "Group"), the AIM tradedgroup developing iron ore and ilmenite interests in Russia's Far East, todayannounces its financial results for the year ended 31 December 2005. Operational highlights: • Ongoing development of the Kuranakh ilmenite and titanomagnetite deposit, which remains on track for start of production in Q4 2007. • Successful US$20 million equity fundraising concluded in March 2005, added to in 2006 through further equity financing totalling US$160 million. • Strategic decision reached to refocus the Group's activities on the opportunity presented by Russia's Far East as a resource-rich region and commercial gateway to China, with an emphasis on bulk mining and iron ore and ilmenite in particular. • Acquisitions in 2006 of interests in the Kimkanskoye and Sutarskoye iron ore deposits and the Bolshoi Seym iron ore and ilmenite deposit, substantially increasing the resource base available to the Group. Financial highlights: • Group turnover of US$7.4 million (2004: US$3.2 million) represented by Chemelt, Aricom's TiO2 trading company based in Moscow. • Group operating loss of US$3.2 million (2004: US$4.3 million loss). • Basic and diluted loss per share of US$0.03 (2004: US$0.06). • Capital expenditure for the period was US$13.2 million (2004: US$5.4 million including acquisitions). • Group net debt at year end was US$1.8 million (2004: US$2.7 million). • Group shareholder funds at year end were US$17.6 million (2004: US$2.3 million). • Group net assets at year end were US$17.7 million (2004: US$2.8 million). The comparatives are for the fifteen month period to 31 December 2004. Sir Malcolm Field, Chairman, said: "Aricom's position has transformed over the last eighteen months. We have madeexcellent progress with our strategic plans and having successfully raisedUS$160 million through the placing of new shares in 2006, we are very wellplaced to seek further growth opportunities in metals and minerals in the FarEast region of Russia. Due to the high level of mineral resources concentratedin the region and the considerable unexploited logistical advantages availableto us there, Aricom is in an exceptionally strong position to meet the expectedcontinuing growth for our products in China and Asia. Our ability to achieve such a substantial share placing demonstrates themarket's confidence in our strategic moves into bulk mining and iron ore inparticular and I look forward to reporting on sound progress during 2006." Enquiries: Tom Swithenbank Aricom plc + 44 20 7201 8939 Tim Grey Millbrook Partnership + 44 20 7520 9455 Statement of the Chairman, Sir Malcolm Field This is our second Annual Report and Accounts since the Company began operatingin 2003 and I am delighted to report that it covers a period of considerableprogress and development for the Company and its interests in the Far Eastregions of Russia. Russia's Far East is a strategically important area for two principal reasons:it is resource-rich and it provides an increasingly important commercial gatewayto China and the rest of Asia, where continuing strong demand for imported rawmaterials is expected. We remain confident in our assumptions of continuingstrong growth in our target markets and increasing demand for our products. We have made excellent progress in the implementation of our strategic plans as we continue to develop our projects in the region. We are on course withthe programme of building our iron ore and ilmenite interests, taking fulladvantage of the opportunities in the region as well as maximising oursignificant mining expertise, business experience and the strong regionalrelationships established in the area. In January 2006, we announced twoimportant acquisitions. Firstly, the acquisition of an option for a 50 percent interest in LLC Rubicon,which has won the licences for the Kimkanskoye and Sutarskoye iron ore deposits.The second transaction was the acquisition of a 49 percent stake in the BolshoiSeym ilmenite and iron ore deposit, in cooperation with Interros, the majorshareholder in Norilsk Nickel and Polyus, both Russian mining companies. Thesetwo transactions will deliver a considerable boost to our resource base andbenefit from close proximity to an established transport infrastructure, and weare confident both will provide a competitive advantage to Aricom. Key infrastructure milestones on our Kuranakh mine have been achieved, and theproposed site of the beneficiation plant has been cleared. There has been adelay in the finalisation of the feasibility study due to volume of workexperienced by Vnipiprom Technologiya, the consultants carrying out the study,and the completion of the study has now been taken over by PHM Engineering, anengineering and design company owned by Peter Hambro Mining plc. We are veryencouraged by the reports received to date and anticipate the full study to becompleted over the next few months. Having successfully raised a total of US$180 million in equity financing in 2005and 2006, Aricom's strategic focus is to develop its existing asset base, whilecontinuing to seek further growth opportunities in metals and minerals in theregion. We are delighted with the positive response to the equity placing andare pleased with the quality of our enlarged shareholder base. Our ability toachieve this substantial share placing demonstrates the market's confidence inour strategic moves into bulk mining and iron ore in particular. It issatisfying to be well funded as we take our next steps and we warmly welcome ournew shareholders. The opportunity to strengthen Aricom's iron ore and ilmenite capability arosewhen Peter Hambro and Pavel Maslovsky brought the Bolshoi Seym and Kimkanskoyeand Sutarskoye deposits to the Company. This was an opportunity the Aricom Boardwas keen to seize, and I am confident that the highest standards of governancehave been met throughout the process of dealing with related party transactions. As joint Deputy Chairmen, Peter Hambro and Pavel Maslovsky will play animportant role in the future strategy and progress of the Company. We believethat our success so far in building Aricom is due in no small part to thestrength of the Anglo-Russian partnerships and business connections in theregion that Peter and Pavel have dedicated themselves to building, as well asthe cohesion and shared values across the developing management team that we arebuilding in the UK and Russia. All our stakeholders play an important role in our future, and I would like totake this opportunity to thank all those who have contributed to ourachievements so far. We remain committed to our value-based culture, which isfounded on safe work practices for our employees and conducting business in asustainable and socially and environmentally responsible way. Our employees'motivation is enhanced by the knowledge that their high performance isrecognised and rewarded. I am grateful for their continuing support. I would also like to thank all our shareholders for their support and theconfidence they continue to show in us. We continue in our determination todeliver superior returns on investment while operating the highest standards ofcorporate governance. Outlook Over the coming year, Aricom will continue to develop its Kuranakh operationsand initiate the feasibility studies for the development of the Kimkanskoye andSutarskoye deposits and commence exploration at Bolshoi Seym. The Company willalso seek out further opportunities for growth in the metals and mineralssectors of Russia's Far East, a region with a high concentration of mineralresources and considerable unexploited logistical advantages, due to itsproximity to China. It is an exciting period for the Company and I look forwardto keeping you informed of the progress in the coming months. Aricom plcConsolidated Profit and Loss Account For the year ended 31 December 2005 ----------------------------------------------------------------------------------------- Year to 31 15 months to December 31 December Notes 2005 2004 US$'000 US$'000------------------------------------------------------- ------- ------------ ------------Turnover 7,363 3,199Cost of Sales (6,773) (3,003)------------------------------------------------------- ------- ------------ ------------Gross profit 590 196 Selling expenses (429) (162)Administrative expenses (3,158) (2,776)Other operating expenses, net (235) (1,556)------------------------------------------------------- ------- ------------ ------------Operating loss (3,232) (4,298) Net interest (payable)/receivable (401) 27------------------------------------------------------- ------- ------------ ------------ Loss on ordinary activities before taxation (3,633) (4,271)Taxation (1) (9)------------------------------------------------------- ------- ------------ ------------ Loss on ordinary activities after taxation (3,634) (4,280) Minority interests 392 26------------------------------------------------------- ------- ------------ ------------ Loss on ordinary activities after taxation and minority (3,242) (4,254)interests ------------------------------------------------------- ------- ------------ ------------Basic and diluted loss per ordinary share (US$) 8 (0.03) (0.06)Proforma basic loss per ordinary share (US$) 8 (0.03) (0.04) ----------------------------------------------------------------------------------------- There are no recognised gains or losses other than those included in theconsolidated profit and loss account and accordingly no consolidated statementof recognised gains and losses has been presented. The above results all relate to continuing operations. Aricom plcConsolidated Balance Sheet At 31 December 2005 --------------------------------------------------------------------------- Notes 2005 2004 US$'000 US$'000------------------------------------------- ----- -------- --------- Fixed assets Tangible assets 18,445 5,435------------------------------------------- ----- -------- --------- 18,445 5,435Current assets Stock 1,371 572Debtors: due within one year 3,341 492Debtors: due after more than one year 3,061 297Cash at bank and in hand 9,543 1,157------------------------------------------- ----- -------- --------- 17,316 2,518 Creditors: amounts falling due within one year (14,392) (1,753)Net current assets 2,924 765------------------------------------------- ----- -------- --------- Total assets less current liabilities 21,369 6,200 Creditors: amounts falling due after one year (3,681) (3,400)------------------------------------------- ----- -------- --------- Net assets 17,688 2,800------------------------------------------- ----- -------- --------- Capital and reserves Called up equity share capital 242 169Share premium 24,852 6,403Profit and loss account (7,496) (4,254)------------------------------------------- ----- -------- --------- Equity shareholders' funds 7 17,598 2,318 Minority interests 90 482------------------------------------------- ----- -------- --------- Total capital employed 17,688 2,800--------------------------------------------------------------------------- Aricom plcConsolidated Cashflow Statement For the year ended 31 December 2005 --------------------------------------------------------------------------- Notes Year to 15 months 31 to 31 December December 2005 2004 US$'000 US$'000------------------------------------------ ----- -------- --------Net cash outflow from operating activities 3 (7,020) (3,915)------------------------------------------ ----- -------- --------Returns on investments and servicing of finance Interest received 227 67Interest paid (422) (283)------------------------------------------ ----- -------- -------- Net cash outflow from returns on investments and servicing of finance (195) (216) Capital expenditure and financial investment Purchase of tangible fixed assets (9,753) (2,508) Acquisitions and disposals Purchase of subsidiary undertakings - (2,617)Cash acquired with subsidiary undertakings - 24------------------------------------------ ----- -------- -------- Net cash outflow on acquisitions and disposals - (2,593) Cash outflow before financing (16,968) (9,232) Financing Net receipts from borrowings 6,114 3,597Gross receipts from issuing ordinary and preference shares 20,492 7,827 Preference shares redeemed - (88)Share issue costs (1,970) (1,167)Finance lease capital repaid (778) -Increase in finance lease debt 2,099 ------------------------------------------- ----- -------- -------- Net cash inflow from financing activities 25,957 10,169------------------------------------------ ----- -------- -------- Increase in cash at bank and in hand 4 8,989 937-------------------------------------------------------------------------- Aricom plcReconciliation of net cash flow to movement in debt For the year ended 31 December 2005 ----------------------------------------------------------------------------------------- Year to 15 months to 31 31 December 2005 December 2004 US$'000 US$'000---------------------------------------------------------- --------------- --------------Increase in cash 8,989 937Increase in debt (6,114) (3,597)Increase in leasing (1,321) ----------------------------------------------------------- --------------- --------------Decrease/(increase) in net debt resulting from cashflows 1,554 (2,660)Loans acquired with subsidiaries - (302)Foreign exchange movements (565) 220---------------------------------------------------------- --------------- --------------Decrease/(increase) in net debt for the year/period 989 (2,742)Net debt at beginning of period (2,742) ----------------------------------------------------------- --------------- --------------Net debt at end of year/period (1,753) (2,742)----------------------------------------------------------------------------------------- Notes to the financial informationFor the year ended 31 December 2005 1. Financial information The financial information has been prepared in accordance with generallyaccepted accounting principles in the UK. The accounting policies applied inpreparing the financial information are consistent with those adopted anddisclosed in the Group's statutory accounts for the year ended 31 December 2005. The financial information set out above does not constitute the Group'sstatutory accounts for the year ended 31 December 2005 but is derived from theGroup's statutory accounts for that period. The auditors' report on thestatutory accounts for the year ended 31 December 2005 was unqualified and didnot contain statements under section 237(2) of the Companies Act 1985 (regardingadequacy of accounting records and returns) or under section 237(3) (regardingprovision of necessary information and explanations). The statutory accounts for the year ended 31 December 2005 have not yet beendelivered to the Registrar of Companies. 2. Dividends There is no current intention to pay a dividend. In due course, the Board ofDirectors will consider the payment of dividends, if and when it is in aposition to do so. 3. Reconciliation of operating loss to net cash outflow from operatingactivities 15 months Year to 31 to 31 December December 2005 2004 US$'000 US$'000-------------------------------------------- ----------- ----------Operating loss (3,232) (4,298)Depreciation charges 189 21Depreciation charges capitalised (175) -Write down of fixed assets 11 4Increase in debtors (2,713) (349)(Decrease)/increase in creditors (301) 1,231Increase in stock (799) (524)-------------------------------------------- ----------- ---------- Net cash outflow from operating activities (7,020) (3,915)-------------------------------------------- ----------- ---------- 4. Analysis of change in net debt Foreign Opening exchange Closing Balance Cashflow movement Balance US$'000 US$'000 US$'000 US$'000------------------------------ ---------- ---------- ---------- ---------Cash at bank and in hand 1,157 8,989 (603) 9,543Debt due after more than one year (3,400) 3,400 - -Debt due within one year (499) (9,514) - (10,013)Lease creditors - (1,321) 38 (1,283)------------------------------ ---------- ---------- ---------- ---------- (2,742) 1,554 (565) (1,753)------------------------------ ---------- ---------- ---------- ---------- 5. Currency of financial statements The currency rates used in the preparation of the financial information set outherein are as follows: 2005 2004 Closing Average Closing Average--------------------------- -------- -------- -------- ---------US dollar to Russian roubles 28.7825 28.2868 27.7487 28.5714Sterling to US dollar 1.7188 1.8188 1.9160 1.7955Euro to US dollar 1.1842 1.2437 1.3538 1.2268--------------------------- -------- -------- -------- --------- 6. Post balance sheet events On 13 February 2006 a further 1,979,450 shares were issued at a price of £0.28in relation to the exercise of options granted in connection with the placing inMarch 2005. On 18 April 2006, 200,000,000 shares were issued at a price of£0.45. On 26 April the total number of shares in issue was 335,348,134. On 22 March 2006, Brasenose Services Ltd acquired 49% in Ural Mining, a Russiancompany holding the licence for the development of the Bolshoi Seym iron ore andilmenite deposit in the Amur region in the Far East of Russia. The costsassociated with this transaction were US$2,900,000. On 18 April 2006 the number of authorised ordinary shares was increased by500,000,000 to 1,000,000,000 ordinary shares. On 19 April 2006, following approval by the shareholders at an EGM on 18 April2006, the company entered into an option agreement for US$9,000,000 for theacquisition of 100% of Expokom (Cyprus) Ltd, a company which holds 50% of LLCRubicon, for a maximum additional payment of US$61 million, to be settled by theissue of ordinary shares at 28p. LLC Rubicon holds the licences for iron oredeposits at Kimkanskoye and Sutarskoye in the Evreyskaya Avtonomnaya Oblast inthe Far East of Russia. Details of the agreement and the licences were set outin a circular posted to shareholders on 22 March 2006. 7. Group combined statement of reserves and reconciliation of movement inshareholders' funds Profit and Share Share loss Capital Premium account Total US$'000 US$'000 US$'000 US$'000--------------------------- -------- -------- -------- --------At 1 January 2005 169 6,403 (4,254) 2,318Loss for the year - - (3,242) (3,242)Issue of share capital 73 20,419 - 20,492Share issue costs incurred in the year - (1,970) - (1,970) --------------------------- -------- -------- -------- --------At 31 December 2005 242 24,852 (7,496) 17,598--------------------------- -------- -------- -------- -------- 8. Loss per ordinary share a) Basic and diluted loss per ordinary 15 monthsshare Year to 31 to 31 December December 2005 2004---------------------------------------------- ----------- ----------Loss for the year (US$'000) (3,242) (4,254)Weighted average number of ordinary shares 125,613,889 75,632,851---------------------------------------------- ----------- ----------Basic and diluted loss per ordinary share (US$) (0.03) (0.06)---------------------------------------------- ----------- ---------- Basic and diluted EPS are the same because the only outstanding share optionsare anti-dilutive as the Group has made a loss. b) Proforma loss per ordinary share Year to 15 months to 31 31 December December 2005 2004------------------------------------------- ----------- -----------Loss for the year (US$'000) (3,242) (4,254)Proforma weighted average number of ordinary shares 125,613,889 94,910,351 Proforma loss per ordinary share (US$) (0.03) (0.04)------------------------------------------- ----------- ----------- The Group did not trade until it listed on 31 December 2003. The proformaweighted average has been calculated as if the 2004 period began on 31 December2003 and not the date of the Company's formation. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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