15th Mar 2006 07:02
Petra Diamonds Ld15 March 2006 15 March 2006 Petra Diamonds Limited ('Petra', 'the Group' or 'the Company') Interim Results for the Six Months to 31 December 2005 (unaudited) Highlights to 15 March 2006 • Group - expansion of operations on track in Angola, Botswana, Sierra Leone, and South Africa; base set for significant exploration developments and production upside in next six months • Angola - kimberlitic occurrences at Alto Cuilo increased toapproximately 1,323 hectares in estimated surface area (31 January 2006: 1,080);33 kimberlitic occurrences (31 January 2006: 26) now confirmed by drilling;third core drill rig ordered to expedite drilling of the substantial number ofanomalies; 350 alluvial pits (31 January 2006: 245) now completed • Botswana - focus placed on the Gope area where there arediamondiferous kimberlites within Petra's licence areas; Falcon results for theGope West flyblock identify 18 anomalies in the A block; 700km(2) low-levelXcalibur horizontal gradient magnetic survey in the immediate vicinity of theGope kimberlites results in the selection of a further 24 target anomalies • Sierra Leone - Kono project on track for first production from the Lionfissures by June 2006; Petra has earned a 51% interest in the Kono jointventure following expenditure of US$3 million on the Kono project • South Africa - production growth target met of 167,000 carats for thetwelve month period to 31 December 2005; on track for production of 200,000carats for FY 2005/6 (FY 2004/5 actual: 143,673 carats); 76 carat (sold forUS$465,000) and 67 carat diamonds recovered Adonis Pouroulis, Chairman, said; "Petra has established operations in some of the most prospective regions fordiamond exploration across Africa. As production increases at our mines in SouthAfrica, so too will our revenue streams, whilst we progress our excitingexploration projects and commence production in Sierra Leone. The next sixmonths will provide a steady stream of news as we work to further realise thetrue value of our assets and we believe there is significant potential upsidefor the Company." Summary of Results (unaudited) 6 months to 6 months to 6 months to 31 December 2005 30 June 2005 31 December 2004 Revenue * £5.5m £1.2m - Production (carats) 88,640 78,530 65,143 Loss before depreciation, amortisationand foreign exchange movements £0.9m £2.1m £3.4m Loss for the period £1.1m £7.2m £4.3 Loss per share 0.79 pence 9.07 pence 6.28 pence Cash at bank (period end) £7.1m £15.4m £0.5m * The results from the Crown South African production operations are includedfrom June 2005 as the acquisition of Crown Diamonds was effective 1 June 2005. Chairman's Statement It is with great pleasure that I present the 2006 interim financial statementsduring what is a very active time for the Group. In the period under reviewSouth African diamond production increased substantially and exploration at AltoCuilo was fast tracked, delivering exceptional results. The period also saw sitepreparations in Sierra Leone and the completion of the production plant inpreparation of near term production on the Kono project whilst exploration wasfurther advanced on the Kalahari ground in Botswana. Petra's South African operations produced just over 167,000 carats for the 2005calendar year and are on track to produce 200,000 carats for the year to June2006. Although the rough diamond market experienced a dip in the last quarter ofthe year, in that prices achieved were below those for the six months to June2005, the market has since recovered somewhat as demand for rough continues tooutpace supply. De Beers has recently announced an overall increase of 2% inrough diamond prices. Petra is achieving its objective of being an African-focused diamond group, withoperations in South Africa, Botswana, Angola and Sierra Leone. In 2005 Africaaccounted for over sixty percent of diamond supply world-wide and we continue tobelieve the continent offers the most exciting diamond opportunities. One of ourmain goals is to fill the production gap between the four major diamondproducers and the diamond juniors. The increasing production from South Africaand near term production from Sierra Leone will assist us to achieve this goal. Results The loss for the period amounted to £1,102,463 (6 months to 30 June 2005:£7,259,089), stated after operating charges of £1,833,100 (6 months to 30 June2005: £1,830,195), amortisation of intangibles of £579,220 (6 months to 30 June2005: £4,409), and net financing income of £2,307,636 (6 months to 30 June 2005:£237,549). Group net cash outflow for the period is stated after taking account of miningdevelopment cash outflows in Sierra Leone of £1,398,996 (6 months to 30 June2005: £102,270), other capital expenditure for the period of £893,722 (6 monthsto 30 June 2005: £520,613), repayment of all outstanding convertible loan notesof £718,944, cash inflow from the acquisition of Kalahari Diamonds of £3,154,388as well as the settlement in July 2005 of the Helam mine acquisition costs andvarious term loans. Intangible assets of £9,995,608 were brought into the balance sheet followingthe acquisition of Kalahari Diamonds Limited in September 2005 and IFRS requirethat this amount be written off over the estimated life of the assets, which theBoard has estimated to be four years in respect of the prospecting licences. Acharge of £579,220 is included within operating expenditure in respect of theamortisation of the licences during the period. The results from the Crown South African production operations acquired wereconsolidated into the Petra Group results from 1 June 2005. Therefore, thecomparative period to June 2005 includes results of the South African operationsacquired for one month and the period to 31 December 2005 includes a full sixmonths results. The results for the period to 30 June 2005 and for the period to 31 December2004 have been restated, as with effect from the period to 31 December 2005 theCompany has complied with IRFS 2, Share Based Payments, in respect of shareoptions granted to management. Alto Cuilo - Angola Exploration developments at Alto Cuilo have continued to exceed ourexpectations. In conjunction with BHP Billiton and our Angolan partners,activities have been focused on the drilling of anomalies identified followingthe completion of the low-level Midas survey and the preparation and sampling ofalluvial pits alongside the Luange river. The Midas survey identified over 200 magnetic anomalies that have been earmarkedfor further investigation. Drilling of these anomalies has been underway sinceAugust and has so far resulted in the discovery of 33 kimberlitic occurrences,an increase from the 26 identified at the date of Petra's last quarterly reporton 31 January 2006. Three of these kimberlitic occurrences have surfaceexpressions of over 100 hectares in size. An estimated 1,300 hectares ofkimberlitic occurrences have now been identified and will be furtherinvestigated. To date, over 15,000 metres of core drilling has been undertaken,with a third drill having been ordered to increase the pace of drilling. 74% ofthe holes drilled on the Midas anomalies have intersected kimberlite, again anexceptional success rate in kimberlite exploration. The alluvial exploration programme continues alongside the kimberliteactivities. Bulk sampling has resulted in over 350 pits being excavated so far. The costs of exploration and associated activities on Alto Cuilo for the sixmonths to 31 December 2005 amounted to US$7.8m, all such expenditure beingfunded by BHP Billiton in accordance with the Alto Cuilo JV agreement. BHPBilliton's spend as at 31 December amounted to US$13.4m. Kalahari Diamonds - Botswana The successful acquisition of Kalahari Diamonds in September 2005 establishedPetra as the largest holder of diamond exploration licences in Botswana. It alsobrought several new investors to the Company including the International FinanceCorporation and resulted in BHP Billiton increasing its stake in Petra. Drilling of selected Falcon anomalies continues on the ground and Petra isundertaking further investigation of the known Gope kimberlite field, wherethere are several known diamondiferous kimberlites within Petra's licence areas.Our technical teams are also focusing on revisiting and improving the analysisof the Falcon data acquired so far. Helam, Sedibeng and Star mines - South Africa The South African mines recorded revenue of £5.5 million for the six monthperiod and Petra continues to be South Africa's second largest producer of roughdiamonds by volume after De Beers. The mines achieved record production of justover 167,000 carats for calendar year 2005 and are on track for the growthtarget of 200,000 carats for FY 2005/6. Mining methods are being implemented on all mines to set the platform for asignificant increase in production, targeted at over 300,000 carats in FY 2009/10. There have been some notable stones recovered from the South African mines. A67.1 carat diamond was recovered recently, this stone being in addition to the76 carat diamond recovered in November 2005 which was sold for US$465,000. Highvalue recoveries of this nature, combined with stringent control of productioncosts, feed though to the Group's bottom line and we look forward to othersimilar recoveries in the future. Kono Project - Sierra Leone As noted in Petra's announcement of 27 February 2006, the Kono project is ontrack for the first diamond recovery from treatment of the initial bulk samplesby June 2006. The diamond recovery plant has arrived on site and establishmentof site facilities will be completed this month. Initial trenching has established that varying fissure seams, with widths of upto 1.7 metres having been intersected. Further, geological samples taken fromvarious kimberlite fissures in the area have returned some exceptionalprocessing and mineral probing results Under the terms of the Kono JV with Mano River Resources ('Mano'), by spending atotal of US$3 million on the Kono Project, Petra would acquire a 51% equityinterest in the Kono Project. Petra has accelerated expenditure and thereforethe development of the Kono Project in order to bring production on line as soonas possible and has incurred US$3 million of expenditure and earned a 51%interest in the Kono JV. From now on expenditure will be funded pro-rata by bothPetra and Mano. Petra is very pleased to have delivered on its stated objective of thefast-tracked development of the Kono Project. With a 51% interest in thisexciting project we look forward to further developments and to first productionbeginning later this year. Conclusion The Company aims to be a world class diamond group occupying a niche position;that of being a mid-tier producer of gemstone diamonds. This will be achieved bypossessing a highly prospective exploration portfolio ensuring future growth,growing the Company's production profile and by geographically diversifying theCompany's portfolio of projects. The next six month period is expected to see increasing production from themines in South Africa without a significant increase in operating costs. In themedium term production is planned from the kimberlite fissures in Sierra Leoneand also from Alto Cuilo, should an economically viable alluvial deposit bequantified. The required infrastructure to achieve this is already in place. Inaddition, any new diamond projects that meet and fulfil Petra's overlyingobjectives will be carefully considered. The Company has a strong treasury to finance the above development. The revenuefor the period of £5.5 million was the largest of any diamond company quoted onAIM and the Company is well placed to benefit from the robust diamond market, atthe same time enjoying strong support from BHP Billiton in both Angola andBotswana. Adonis Pouroulis, Chairman 15 March 2006 For further information, please contact: Petra Diamonds, South Africa Parkgreen Communications, London Adonis Pouroulis//David Abery Justine Howarth / Cathy Malins Tel +27 11 467 6710 Tel +44 20 7493 3713 John Baillie, Perth Field PR, Adelaide Tel +61 8 9381 8888 Kevin Skinner Tel +61 8 8234 9555, Mobile +61 414 822 631 PETRA DIAMONDS LIMITED UNAUDITED CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTH PERIOD ENDED 31 DECEMBER 2005 Notes Restated Restated 1 July 2005- 1 July 2004- 1 July 2004 - 31 31 30 June December 2005 December 2004 2005 £ £ £Revenue 5,497,276 - 1,225,292Cost of Sales (5,998,383) (1,060,954) - Gross (loss)/profit (501,107) 164,338 -Exploration expenditure (738,548) (2,838,546) (3,799,608)Operating expenditure (2,412,320) (880,354) (7,544,760)- other (1,833,100) (878,131) (2,708,326)- amortisation of intangibles 5 (579,220) (2,223) (4,409)- impairment of goodwill - - (4,832,025) Financial income 2,465,163 4,555 19,636Financial expense (157,527) (555,574) (333,106)Net financing income/(costs) 6 2,307,636 (551,019) (313,470)Loss before tax (1,344,339) (4,269,919) (11,493,500)Income tax 241,876 - (35,508)Loss for the period (1,102,463) (4,269,919) (11,529,008)Basic and diluted loss per share - pence 7 (0.79) (6.28) (15.59) UNAUDITED CONSOLIDATED STATEMENT OF TOTAL RECOGNISED INCOME AND EXPENSE FOR THE SIX MONTH PERIOD ENDED 31 DECEMBER 2005 Restated Restated 1 July 2005- 1 July 2004- 1 July 2004 - 31 31 30 June December December 2004 2005 2005 £ £ £Loss for the period (1,102,463) (4,269,919) (11,529,008)Exchange adjustments on translation of 1,013,677 475,979 647,083subsidiary andbranch undertakings recognised directly inequityTotal recognised income and expenses (88,786) (3,793,940) (10,881,925)Prior year adjustment - 111,102 320,827 (88,786) (3,682,838) (10,561,098) PETRA DIAMONDS LIMITED UNAUDITED CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2005 Notes Restated Restated 31 December 31 December 30 June 2004 2005 2005 £ £ £ASSETSProperty, plant and equipment 45,356,392 2,301,919 40,938,217Intangible assets 5 9,430,185 80,281 187,199Investments - listed 700,000 - -Trade and other receivables 108,873 - 89,960Total non-current assets 55,595,450 2,382,200 41,215,376 Inventories 1,460,852 - 782,996Trade and other receivables 1,716,208 615,970 1,563,640Cash and cash equivalents 7,070,308 452,466 15,374,678Total current assets 10,247,368 1,068,436 17,721,314 Total assets 65,842,818 3,450,636 58,936,690 EQUITY AND LIABILITIESEquityIssued capital 9 14,832,739 6,926,954 13,094,946Share premium account 10 67,608,994 19,746,615 56,711,873Foreign currency translation reserve 10 3,299,838 2,115,057 2,286,161Share based payment reserve 10 457,682 183,971 320,827Accumulated loss 10 (36,190,756) (27,959,146) (35,088,293)Total equity 50,008,497 1,013,451 37,325,514 LiabilitiesInterest-bearing loans and borrowings 3,522,649 2,000,000 239,470Trade and other payables 474,332 - 1,114,737Provisions 1,087,292 - 956,758Deferred tax liabilities 7,016,415 - 6,648,166Total non-current liabilities 12,100,688 2,000,000 8,959,131 Interest-bearing loans and borrowings 529,493 - 6,464,162Trade and other payables 2,432,042 437,185 5,049,297Provisions 772,098 - 1,138,586Total current liabilities 3,733,633 437,185 12,652,045 Total liabilities 15,834,321 2,437,185 21,611,176 Total equity and liabilities 65,842,818 3,450,636 58,936,690 PETRA DIAMONDS LIMITED UNAUDITED CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTH PERIOD ENDED 31 DECEMBER 2005 Notes Restated Restated 1 July 2005- 1 July 2004- 1 July 2004 - 30 31 December 31 June 2005 December 2004 2005 £ £ £Loss after taxation for the period (1,102,463) (4,269,919) (11,529,008)Depreciation of property plant and equipment 304,430 284,403 340,966- explorationDepreciation of property plant and equipment 1,553,236 - 249,394- miningDepreciation of property plant and equipment 10,333 5,768 15,628- otherAmortisation of intangible assets 5 579,220 2,223 4,409Profit on sale of property plant and (3,297) - (866)equipmentImpairment of intangible assets - - 73,710Impairment of goodwill - - 4,832,025Interest received (142,769) (4,555) (19,636)Interest paid 157,527 62,998 216,585Foreign exchange (gain)/loss (2,322,394) 556,407 497,083Share based payment provision 136,855 72,869 209,725Rehabilitation unwinding provision 37,652 - -Operating loss before working capital changes (791,670) (3,289,806) (5,109,985)(Increase) in trade and other receivables (98,455) (65,132) (563,539)(Decrease) / increase in trade and other (1,442,368) (48,331) 1,088,439payables(Increase) in inventories (677,856) - (28,860)Cash utilised in operations (3,010,349) (3,403,269) (4,613,945)Interest paid (157,527) (62,998) (216,585)Net cash utilised by operating activities (3,167,876) (3,466,267) (4,830,530)Cash flows from investing activitiesProceeds from sale of property, plant and 31,843 - 866equipmentAcquisition of subsidiary net of cash 4 3,154,338 - 57,688acquiredInterest received 142,769 4,555 19,636Acquisition of property, plant and equipment (2,292,718) (893,993) (1,516,876)Acquisition of listed investment (700,000) - -Net cash from investing activities 336,232 (889,438) (1,438,686) Cash flows from financing activitiesProceeds from the issue of share capital - 1,054,939 18,106,789Decrease in long term borrowings (5,169,851) (13,620) (218,837)Payment of transaction costs (363,584) - -Net cash from financing activities (5,533,435) 1,041,319 17,887,952 Net (decrease)/increase in cash and cash (8,365,079) (3,314,386) 11,618,736equivalentsCash and cash equivalents at beginning of the 15,374,678 3,766,852 3,766,852periodEffect of exchange rate fluctuations on cash 60,709 - (10,910)heldCash and cash equivalents at end of the 7,070,308 452,466 15,374,678period PETRA DIAMONDS LIMITED NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTH PERIOD ENDED 31 DECEMBER 2005 1. ACCOUNTING POLICIES The interim results, which are unaudited, have been prepared in accordance withInternational Financial Reporting Standards (IFRS) adopted by the InternationalAccounting Standards Board (IASB). This interim report does not include all thenotes of the type normally included in an annual financial report. Accordingly,this report is to be read in conjunction with the Annual Report for the yearended 30 June 2005 and any public announcements made by the Company during theinterim reporting period. The unaudited interim financial statements for the six months ended 31 December2005 do not constitute statutory accounts and have been drawn up usingaccounting policies and presentation consistent with those applied in theaudited accounts for the year ended 30 June 2005. The financial information for the year ended 30 June 2005 has been extractedfrom the statutory accounts for that period, after the adjustment for theadoption of IFRS 2. The auditors report for the year ended 30 June 2005 wasunqualified. The results for the year to 30 June 2005 reflect the results for the Company(pre the acquisition of Crown Diamonds NL) for the eleven months to 31 May 2005and for the enlarged group, including one month's contribution from the Crownoperations acquired, to 30 June 2005. The effective date of control of CrownDiamonds was 1 June 2005. The financial information for the 6 months ended 31 December 2004 has beenextracted from the interim results released to 31 December 2004 after theadjustment for the adoption of IFRS 2. 2. DIVIDENDS No dividends were proposed or paid during the period. 3. SEGMENTAL INFORMATION The Group comprises the following business segments: Mining - the extraction and sale of rough diamonds from mining operations inSouth Africa for the diamond industry. Exploration - exploration operations carried out in Angola, Sierra Leone,Botswana and South Africa. Business segments Mining Exploration Consolidated 1 July 2005 - 1 July 2005 - 1 July 2005 - 31 December 31 December 31 December 2005 2005 2005 £ £ £Revenue from external customers 5,497,276 - 5,497,276Gross loss (501,107) - (501,107)Segment result (839,352) (2,812,623) (3,651,975)Net financing income 1,024,432 1,283,204 2,307,636Income tax 241,876 - 241,876Profit/(loss) for the period 426,956 (1,529,419) (1,102,463) PETRA DIAMONDS LIMITED NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTH PERIOD ENDED 31 DECEMBER 2005 Business segments Mining Exploration Consolidated 1 July 2004 - 1 July 2004 - 1 July 2004 - 31 December 31 December 31 December 2004 2004 2004 £ £ £Revenue from external customers - - -Gross loss - - -Segment result - (3,718,900) (3,718,900)Net financing income/(cost) - (551,019) (551,019)Income tax - - -Loss for the period - (4,269,919) (4,269,919) Business segments Mining Exploration Consolidated 1 July 2004 - 1 July 2004 - 1 July 2004 - 30 June 30 June 30 June 2005 2005 2005 £ £ £Revenue from external customers 1,225,292 - 1,225,292Gross profit/(loss) 164,338 - 164,338Segment result 37,406 (11,217,436) (11,180,030)Net financing income/(cost) 72,058 (385,528) (313,470)Income tax (35,508) - (35,508)Profit/(loss) for the year 73,956 (11,602,964) (11,529,008) PETRA DIAMONDS LIMITED NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTH PERIOD ENDED 31 DECEMBER 2005 4. ACQUISITION OF SUBSIDIARY On 30 September 2005, the Company acquired all the shares in Kalahari DiamondsLimited ("Kalahari"), for £12,479,005, satisfied by the issue of 16,166,529shares. Kalahari, through its wholly-owned Botswana subsidiary, Sekaka Diamonds(Pty) Limited, is the holder of approximately 80,000 km(2) of diamondprospecting licences in Botswana. In the three months to 31 December 2005,Kalahari made an exploration loss, before depreciation and amortisation, of£421,700. Effect of the acquisition The acquisition had the following effect on the Group's assets and liabilities. Kalahari's net assets at acquisition date: Book Values Fair value Carrying Values Adjustments £ £ £Consolidated fair value of net assets of entityacquired:-Plant and equipment 100,059 - 100,059Prospecting licences 728,086 9,267,522 9,995,608Cash assets 3,154,338 - 3,154,338Receivables 54,113 - 54,113Accruals and payables (825,113) - (825,113)Consideration settled satisfied in shares 3,211,483 9,267,522 12,479,005 5. INTANGIBLE ASSETS Goodwill Pre Mineral Prospecting Total production rights licences expenditure £ £ £ £ £CostAt 1 July 2005 - 187,199 - - 187,199Transfer to property plant and - (187,199) - - (187,199)equipmentExchange differences - - - 13,797 13,797Acquisition by business combination - - - 9,995,608 9,995,608 At 31 December 2005 - - - 10,009,405 10,009,405AmortisationAt 1 July 2005 - - - - -Exchange differences - - - - -Provided in the year - - (579,220) (579,220) -At 31 December 2005 - - - (579,220) (579,220)Net book amount 30 June 2005 - 187,199 - 187,199 -Net book amount 31 December 2005 - - - 9,430,185 9,430,185 PETRA DIAMONDS LIMITED NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTH PERIOD ENDED 31 DECEMBER 2005 The amortisation of intangible assets has arisen due to the Board taking theview that Kalahari Diamonds Limited's prospecting licences have an averageremaining life of four years. Therefore the intangible asset recorded on theacquisition effective 30 September 2005 of Kalahari Diamonds Limited of£9,267,522 (note 4), has been amortised for the three month period from 1October to 31 December 2005. 1 July 2005 - 1 July 2004 - 1 July 2004 - 30 June 31 December 31 December 2005 2005 2004 £ £ £6. NET FINANCING INCOME/(COSTS)On bank loans and overdrafts (108,006) (946) (29,395)Other debt finance costs (49,521) (62,052) (187,190)Foreign exchange losses - (492,576) (116,521)Financial expense (157,527) (555,574) (333,106)Interest received 142,769 4,555 19,636Foreign exchange gains 2,322,394 - -Financial income 2,465,163 4,555 19,636 2,307,636 (551,019) (313,470) 1 July 2005 1 July 2004 - 1 July 2004 - - 30 June 31 December 31 December 2005 2004 2005 £ £ £7. LOSS PER SHAREThe calculation of loss per share is based on theloss for the six month period ended 31 December 2005of £1,102,463 (six month period ended 31 December2004: £4,269,919) and on a weighted average, duringthe six month period ended 31 December 2005, of139,565,621 (six month period ended 31 December 2004:68,010,371) ordinary shares of 10p each in issueduring the period. Loss for the period (1,102,463) (4,269,919) (11,529,008) Shares Shares SharesBasic weighted average number of ordinary shares in 139,565,621 68,010,371 73,937,847issue Pence Pence PenceBasic loss per share - pence (0.79) (6.28) (15.59)Due to the Group's loss for the period, the dilutedloss per share is the same as the basic loss pershare PETRA DIAMONDS LIMITED NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTH PERIOD ENDED 31 DECEMBER 2005 8. CONVERTIBLE NOTE A controlled entity, Crown Diamonds NL, had 16,078,191 (£1,229,621) convertiblenotes on issue at the beginning of the period. During the period, 6,660,430Crown Diamonds NL convertible notes were converted into 1,011,993 ordinaryshares of the Company. The notes were convertible into ordinary shares of theCompany, at the option of the note holder or repayable on 30 November 2005. 1 July 2005 - 1 July 2004 - 1 July 2005 - 1 July 2004 - 31 December 31 December 31 December 31 December 2005 2004 2005 2004Movements in secured convertible notes Number Number £ £Balance at beginning of period 16,078,191 - 1,229,621 -Exchange differences - - (2,123) -Redeemed during the period (9,417,761) - (720,248) -Converted to ordinary Shares (6,660,430) - (507,250) -Balance at the end of period - - - - 9. ISSUED CAPITAL Number of 1 July 2005 - Number of shares 1 July 2004 - shares 31 December 31 December 2005 2004 £ £ Authorised - ordinary shares of 10p eachAs at 31 December 2004 and 31 200,000,000 20,000,000 120,000,000 12,000,000December 2005Issued and fully paid 130,949,456 13,094,946 67,849,975 6,784,998At 1 July 2005Allotments during the year 16,365,939 1,636,594 1,419,560 141,956Conversion of convertible notes 1,011,993 101,199 - -At 31 December 2005 148,327,388 14,832,739 69,269,535 6,926,954 PETRA DIAMONDS LIMITED NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTH PERIOD ENDED 31 DECEMBER 2005 10. RESERVES Share Foreign Share based Accumulated premium currency payment loss account translation reserve reserve £ £ £ £6 Month period ending 31 December2004:At 1 July 2004 18,834,587 1,639,078 - (23,578,125)Implementation of IFRS 2 (refer note - - 111,102 (111,102)11)Restated balance at 1 July 2004 18,834,587 1,639,078 111,102 (23,689,227)Loss for the period - - - (4,269,919)Equity based share options - - 72,869 -Exchange differences - 475,979 - -Premium allotments during the year 912,028 - - -At 31 December 2004 19,746,615 2,115,057 183,971 (27,959,146) 6 Month period ending 31 December2005:At 1 July 2005 56,711,873 2,286,161 - (34,767,466)Implementation of IFRS 2 (refer note - - 320,827 (320,827)11)Restated balance at 1 July 2005 56,711,873 2,286,161 320,827 (35,088,293)Loss for the period - - - (1,102,463)Equity based share options - - 136,855 -Exchange differences - 1,013,677 - -Premium allotments during the year 10,522,887 - - -Share issue costs (31,816) - - -Convertible notes issued 406,050 - - -At 31 December 2005 67,608,994 3,299,838 457,682 (36,190,756) 11. ADOPTION OF IFRS 2 (SHARE BASED EMPLOYEE OPTIONS) During the period, the Company adopted IFRS 2 with respect to the treatment ofshare-based employee share options. In order to comply with IFRS 2, the Companynow expenses the fair value of share-based employee options with a correspondingincrease in equity. The fair value is measured at grant date and spread over theperiod during which the employees become unconditionally entitled to theoptions. The comparative numbers have been appropriately restated. The effect ofthe change is as follows: Gross Taxation NetIncrease in net loss due to increase in personnelcosts: - 30 June 2004 (111,102) - (111,102) - 30 June 2005 (209,725) - (209,725)Restatement of opening accumulated losses inrespect of prior year adjustment (320,827) - (320,827) PETRA DIAMONDS LIMITED NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTH PERIOD ENDED 31 DECEMBER 2005 12. SHARE BASED OPTIONS The Company has an established share option programme that entitles theRemuneration Committee, at its discretion, to grant share options to directorsand senior management. The terms and conditions of the share options grantedduring the year ended 30 June 2005 are disclosed in the Annual Report. Shareoptions made prior to 7 November 2002 have, in accordance with the transitionalprovisions and recognition and measurement principles in IFRS 2, not been takeninto account. The share-based option expense has been calculated using theBlack-Scholes-Merton formula. Fair value of share options and assumptions for the 6 months ended 31 December2005: Directors Senior managementFair value at measurement date 26.9p - 40.9p 9.2p - 25.4pExercise price 44p - 85p 44p - 67.75pShare price 31 December 2005 63p 63pExpected volatility 50% 50%Option life 10 years 1 - 10 yearsExpected dividends - -Risk-free interest rate (based on national government bonds) 4.2% - 5% 3.5% - 4.9% The expected volatility is based on historic volatility, adjusted for anyextreme changes in the share price during the historic period. No options hadbeen exercised during the period. During the six months ended 31 December 2005,the Company recognised expenses of £136,855 related to the fair value ofemployee share options (refer to note 11 for prior period adjustments). 13. POST-BALANCE SHEET EVENTS Sierra Leone The Company and Mano River Resources Inc ("Mano") are engaged in a joint venturerelating to the production of diamonds in the Kono diamond district in SierraLeone. On 27 February the Group announced that it had incurred $3 million ofexpenditure on the Kono Project and had earned 51% interest in the joint ventureand in Basama Diamonds Limited, which holds the Kono Project licences. 14. CONTINGENT LIABILITIES There were no material changes to the contingent liabilities during the interimperiod, as compared with those set out in the accounts for the year ended 30June 2005. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Petra Diamonds