16th Mar 2007 07:01
Berkeley Resources Limited16 March 2007 BERKELEY RESOURCES LIMITED ABN 40 052 468 569 FINANCIAL REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2006 DIRECTORS' REPORT The Board of Directors of Berkeley Resources Limited present their report on theconsolidated entity of Berkeley Resources Limited ("the Company" or "BerkeleyResources") and the entities it controlled during the half-year ended 31December 2006 ("Consolidated Entity"). DIRECTORS The names of the Directors of Berkeley Resources in office during the half-yearand until the date of this report are: Dr Robert HawleyMr Matthew SymeDr James RossSenor Jose Ramon Esteruelas (appointed 16 November 2006)Mr Sean James (appointed 28 July 2006)Mr Ian Middlemas (resigned 16 November 2006) Unless otherwise disclosed, Directors were in office from the beginning of thehalf-year until the date of this report. REVIEW AND RESULTS OF OPERATIONS Operating Results Net operating loss after tax for the half-year ended 31 December 2006 was$2,206,301 (31 December 2005: $1,534,020). This result included the following significant items: * A $1,000,000 gain on the sale of the Strelley and Kangan North properties in the Pilbara region of Western Australia; * An expense of $841,107 in relation to the acquisition of ENUSA's exploration database for the Company's Salamanca I project; and * A non-cash expense of $447,750 in relation to the issue of incentive options (Refer Note 14). Review of Operations During the half year ended 31 December 2006 the Company continued its datareview of the Spanish uranium exploration projects to provide confirmation oftheir prospectivity and prioritise exploration targets. Drilling was commencedon the Salamanca I project with very encouraging initial results confirming thepresence of uranium mineralisation at Retortillo. Two drill rigs are now workingat Retortillo. At the Caceres III project, a review of a number of high gradeprevious drill results and extension of a large radiometric anomaly highlightedthe potential of this area, with drilling expected to commence soon. Also during the half year, the Company agreed to acquire from the Spanishnational uranium company, ENUSA, that company's exploration database for theSalamanca I project. The data is expected to substantially advance the Company'sobjective of generating JORC compliant resources for the project. Senor Jose Ramon Esteruelas, a very experienced Spanish executive, and Mr SeanJames, former managing Director of the Rossing Uranium Mine in Namibia, wereappointed to the Board of Directors. The Company sold its Strelley and Kangan North properties in the Pilbara regionof Western Australia for cash and share consideration resulting in a gain onsale of A$1m. Berkeley is also reviewing other uranium exploration opportunities. Corporate The following material corporate events occurred during the half year: * On 28 July 2006, Mr Sean James was appointed a Director of the Company; * On 26 September 2006, the Company announced it was proceeding with the admission of its ordinary shares to trading the Alternative Investment Market (AIM) of the London Stock Exchange. The Company's securities commenced trading on AIM on 6 December 2006; * On 16 November 2006, Senor Jose Ramon Esteruelas was appointed a Director of the Company and Mr Ian Middlemas resigned as a Director of the Company; * On 29 November 2006 the Company announced the sale of its Strelley and Kangan North properties in the Pilbara region of Western Australia to Atlas Iron Limited. In consideration for the sale the Company received $350,000 cash and 1.3 million Atlas Iron Limited ordinary shares values at $650,000 resulting in a gain on sale of A$1 million; and * During the half year up to 30 November 2006, 12,111,374 Listed Options and 4,850,000 Unlisted Options were exercised which raised approximately $3.4 million. 157,000 Listed Options were not exercised as at the expiry date of 30 November 2006. AUDITOR'S INDEPENDENCE DECLARATION Section 307C of the Corporations Act 2001 requires our auditors, StantonsInternational, to provide the Directors of Berkeley Resources Limited with anIndependence Declaration in relation to the audit of the half-year financialreport. This Independence Declaration is on page 15 and forms part of thisDirectors' Report. Signed in accordance with a resolution of Directors. MATTHEW SYME Managing Director London, 15 March 2007 DIRECTORS' DECLARATION In accordance with a resolution of the Directors of Berkeley Resources Limited,I state that: In the opinion of the Directors: (a) the financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the financial position as at 31 December 2006 and the performance for the half-year ended on that date of the consolidated entity; and (ii) comply with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. On behalf of the Board MATTHEW SYMEManaging Director London, 15 March 2007 CONDENSED CONSOLIDATED INCOME STATEMENT FOR THE HALF YEAR ENDED 31 DECEMBER 2006 Half Year Ended 31 Half Year Ended 31 December December 2006 2005 $ $Revenue from continuing operations 4 1,158,890 38,238 Administration costs (1,026,817) (237,976)Business development costs (187,151) (102,768)Capitalised exploration expenditure written off - (374)Exploration costs (1,853,394) (496,207)Share based payments expense (447,750) (734,933) Loss before income tax (2,356,222) (1,534,020) Income tax expense - - (2,356,222) (1,534,020) Loss for the half-yearLoss attributable to minority interest 149,921 -Loss attributable to members of Berkeley Resources (2,206,301) (1,534,020) Basic earnings per share (cents per share) (2.9) (3.5)Diluted earnings per share (cents per share) (2.9) (3.5) The above Consolidated Income Statement should be read in conjunction with theaccompanying notes. CONDENSED CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2006 Restated 31 December 2006 30 June $ 2006 $ NoteASSETSCurrent AssetsCash and cash equivalents 8,030,464 6,295,162Trade and other receivables 62,468 36,594Total Current Assets 8,092,932 6,331,756 Non-current AssetsExploration expenditure 3,113,054 3,085,253Plant and equipment 183,273 120,966Other financial assets 670,830 9,247Total Non-current Assets 3,967,157 3,215,466 TOTAL ASSETS 12,060,089 9,547,222 LIABILITIESCurrent LiabilitiesTrade and other payables 1,227,182 343,659Provisions 32,103 24,680Total Current Liabilities 1,259,285 368,339 TOTAL LIABILITIES 1,259,285 368,339 NET ASSETS 10,800,804 9,178,883 EQUITYIssued capital 7 18,837,423 14,258,232Reserves 8 1,577,670 2,170,538Accumulated losses (9,777,609) (7,571,308)Parent Entity Interest 10,637,484 8,857,462 Minority interest 163,320 321,421 TOTAL EQUITY 10,800,804 9,178,883 The above Consolidated Balance Sheet should be read in conjunction with theaccompanying notes. CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2006 Attributable to equity holder of the parent Minority Total equity Issued Option Foreign Net Accumulated Total interest Capital Premium Currency Unrealised Losses Reserve Translation Gains Reserve Reserve $ $ $ $ $ $ $ $As at 1 July 2005 5,039,922 295,224 - - (3,829,882) 1,505,264 - 1,505,264Net loss for the period - - - - (1,534,020) (1,534,020) - (1,534,020)Issue of shares (net of 997,360 - - - - 997,360 - 997,360expenses)Exchange differences arisingon translation of foreignoperations - - - - - - - -Net unrealised gain on heldfor sale financial assets - - - - - - - -Exercise of options (net of 224,491 - - - - 224,491 - 224,491expenses)Cost of share based payments - 734,933 - - - 734,933 - 734,933As at 31 December 2005 6,261,773 1,030,157 - - (5,363,902) 1,928,028 - 1,928,028 As at 1 July 2006 14,258,232 2,170,538 - - (7,571,308) 8,857,462 321,421 9,178,883Net loss for the period - - - - (2,206,301) (2,206,301) (149,921) (2,356,222)Issue of shares (net of 3,533,984 - - - - 3,533,984 - 3,533,984expenses)Exchange differences arisingon translation of foreignoperations - - (8,411) - - (8,411) (8,180) (16,591)Net unrealised gain on heldfor sale financial assets - - - 13,000 - 13,000 - 13,000Exercise of options (net of 1,045,207 (1,045,207) - - - - - -expenses)Cost of share based payments - 447,750 - - - 447,750 - 447,750As at 31 December 2006 18,837,423 1,573,081 (8,411) 13,000 (9,777,609) 10,637,484 163,320 10,800,804 The above Consolidated Statement of Changes in Equity should be read inconjunction with the accompanying notes. CONDENSED CONSOLIDATED CASH FLOW STATEMENT FOR THE HALF-YEAR ENDED 31 DECEMBER 2006 Half Year Ended 31 Half Year Ended 31 December 2006 December 2005 $ $Cash flows from operating activitiesPayments to suppliers and employees (2,197,090) (777,087)Interest received 158,890 38,238Net cash outflows from operating activities (2,038,200) (738,849) Cash flows from investing activitiesPayments for capitalised explorationexpenditure (27,800) -Proceeds from sale of exploration projects 350,000 -Payments for plant and equipment (74,123) -Net cash inflow from investing activities 248,077 - Cash flows from financing activitiesProceeds from issue of shares 3,542,275 1,287,900Share issue expenses (4,491) (64,240)Net cash inflow from financing activities 3,537,784 1,223,660 Net increase in cash and cash equivalents 1,747,661 484,811 Net foreign exchange differences (12,359) -Cash and cash equivalents at the beginning ofthe half year 6,295,162 1,392,272Cash and cash equivalents at the end of thehalf year 8,030,464 1,877,083 The above Consolidated Cash Flow Statement should be read in conjunction withthe accompanying notes. 1. REPORTING ENTITY Berkeley Resources Limited (the "Company") is a company domiciled in Australia.The interim financial report of the Company is as at and for the six monthsended 31 December 2006. The annual financial report of the Company as at and for the year ended 30 June2006 is available upon request from the Company's registered office. 2. STATEMENT OF COMPLIANCE The interim financial report is a general purpose financial report which hasbeen prepared in accordance with Accounting Standard AASB 134: Interim FinancialReporting and the Corporations Act 2001. This interim financial report does not include all the information of the typenormally included in an annual financial report. Accordingly, this report is tobe read in conjunction with the annual report of Berkeley Resources Limited forthe year ended 30 June 2006 and any public announcements made by BerkeleyResources Limited during the interim reporting period in accordance with thecontinuous disclosure requirements of the Corporations Act 2001. The financial report has been prepared on a historical basis except foravailable for sale financial assets which are shown at fair value. For the purpose of preparing the half year financial report, the half year hasbeen treated as a discreet reporting period. The interim financial report was approved by the Board of Directors on 15 March2007. 3. SIGNIFICANT ACCOUNTING POLICIES The accounting policies applied by the Company in this interim financial reportare the same as those applied by the Company in its financial report as at andfor the year ended 30 June 2006. The adoption of amending standards mandatory for annual periods beginning on orafter 1 January 2006 are either not applicable to the Consolidated Entity orhave no material impact. 4. REVENUE FROM CONTINUING OPERATIONS Consolidated Consolidated 31 December 31 December 2006 2005 $ $Interest revenue 158,890 38,238Gain on disposal of assets 1,000,000 - 1,158,890 38,238 5. MINORITY INTEREST Interest in:Capital 321,421 -Share of Net Loss (149,921) -Share of Foreign Currency Translation Reserves (8,180) - 163,320 - 6. SEGMENT INFORMATION The Consolidated Entity operates in the mineral exploration industry in thefollowing geographical segments: Geographical Segment Australia China Spain Consolidated Entity Half year Half year Half year Half year Half year Half year Half year Half year ended ended ended ended ended ended ended ended 31 Dec 31 Dec 2005 31 Dec 31 Dec 31 Dec 2006 31 Dec 31 Dec 2006 31 Dec 2005 2006 2006 2005 2005 $ $ $ $ $ $ $ $RevenueOther revenues 1,000,000 38,238 - - 158,890 - 1,158,890 38,238Unallocated revenue - -Total revenue 1,158,890 38,238 ResultsSegment result 1,000,000 (1,065,233) - (149,038) (3,169,071) (319,749) (2,169,071) (1,534,020)Unallocated expenses (187,151) -Loss from ordinaryactivities before incometax expense (2,356,222) (1,534,020)Income tax expense - -Loss attributable tooutside equity interests 149,921 -Net loss (2,206,301) (1,534,020) 7. CONTRIBUTED EQUITY Consolidated Consolidated 31 December 30 June 2006 2006 $ $(a) Issued and paid up capital: 89,091,695 (30 June 2006: 71,130,321) fully paid ordinary shares 18,837,423 14,258,232 (b) Movements in ordinary share capital during the past six months were as follows:- Date Details Number of Shares Issue $ Price $ 1 Jul 06 Opening Balance 71,130,321 - 14,258,2327 Jul 06 - 5Dec 06 Exercise of Listed Options 12,111,374 0.20 2,422,275 Transfer from option reserve - - 60,5575 Sep 06 - 5Dec 06 Exercise of Unlisted $0.20 Options 4,850,000 0.20 970,000 Transfer from option reserve - - 732,650 Share issue expenses - - (6,737)4 Dec 06 Exercise of Director Incentive Options 1,000,000 0.15 150,000 Transfer from option reserve - - 252,000 Share issue expenses - - (1,554)31 Dec 06 Closing Balance 89,091,695 - 18,837,423 8. RESERVES Consolidated Consolidated 31 December 30 June 2006 2006 $ $(a) Option reserve:Nil (30 June 2006: 12,268,374) listed options 785 61,342Nil (30 June 2006: 4,850,000) unlisted options - 732,650Nil (30 June 2006: 1,000,000) $0.15 director incentive options - 252,0001,000,000 (30 June 2006: 1,000,000) $0.20 director incentive options 229,000 229,0001,000,000 (30 June 2006: 1,000,000) $0.25 director incentive options 208,000 208,00010,600,000 (30 June 2006: 10,600,000) $0.70 unlisted options 687,546 687,546750,000 (30 June 2006: Nil) $1.00 incentive options 447,750 - 1,573,081 2,170,538 8. RESERVES (CONT.) (b) Movements in options during the past six months were as follows:- Date Details Number of Number of Number of Number of Number of Deemed $ Listed $0.20 $0.70 $1.00 Grant Unlisted Director Unlisted Incentive Value Options Options Incentive Options Options Options $ ($various)1 Jul 06 Opening Balance 12,268,374 4,850,000 3,000,000 10,600,000 - - 2,170,5387 Jul 06 -5 Dec 06 Exercise of Options(12,111,374) - - - - - (60,557)30 Nov 06 Expiry of Options (157,000) - - - - - -5 Sep 06 -5 Dec 06 Exercise of Options - (4,850,000) - - - - (732,650)4 Dec 06 Exercise of Options - - (1,000,000) - - - (252,000)5 Dec 06 Grant to Directors - - - - 750,000 0.597 447,75031 Dec 06 Closing Balance - - 2,000,000 10,600,000 750,000 - 1,573,081 (c) Foreign Currency Translation reserve:- Consolidated Consolidated 31 December 30 June 2006 2006 $ $Balance at 1 July 2006 - -Translation of foreign operations (8,411) -Balance at 31 December 2006 (8,411) - (d) Net Unrealised Gains reserve:- Consolidated Consolidated 31 December 30 June 2006 2006 $ $Balance at 1 July 2006 - -Unrealised gain on available for sale financial assets 13,000 -Balance at 31 December 2006 13,000 - 9. NON-CASH FINANCING AND INVESTMENT ACTIVITIES 31 December 2006 During the half year ending 31 December 2006, the Company disposed of its interest in the Strelley and KanganNorth exploration projects in the Pilbara region of Western Australia to Atlas Iron Limited. In considerationfor the sale, the Company received $350,000 in cash, 1.3 million Atlas Iron Limited shares valued at $650,000and a pro-rata reimbursement of tenement holding expenses of $14,332. Consideration $ Cash received 350,000Atlas Iron shares received (1,300,000) @ $0.50 each 650,000 1,000,000 Less non-cash consideration (650,000)Net cash inflow upon disposal 350,000 Net Assets DisposedConsideration received and reimbursement of costs 1,014,332Less reimbursement of tenement costs (14,332) 1,000,000Less book value of assets on disposal -Gain on disposal of exploration projects 1,000,000 10. Contingent Liabilities Since the last annual reporting date, there has been no material change in contingent liabilities. 11. Dividends Paid or Provided For No dividend has been paid or provided for during the half year. 12. Subsequent Events After Balance Date There were no significant events occurring after balance date requiring disclosure. 13. COMPARITIVES The comparative figure at 30 June 2006 have been restated to ensure disclosureis consistent with the disclosures at 31 December 2006. This restatement has noimpact on the previously disclosed parent entity interest in reserves oraccumulated losses. 14. SHARE BASED PAYMENTS On 5 December 2006, 750,000 incentive options were granted to directors of theCompany pursuant to shareholder approval. The exercise price of the incentiveoptions is $1.00 and are exercisable on or before 30 November 2008. Theincentive options have been independently valued using the Black-Scholes OptionValuation model, taking into account the terms and conditions upon which theincentive options were granted. The following table lists the inputs to themodel used in determining the value: Share Price at Grant Date $1.09Dividend yield -Volatility 95%Risk-free interest rate 5.89%Expected life of option 1.989 years The estimated fair value of each incentive option is $0.597. Please note the auditors' Independence Declaration and Independent Review Reportcan be viewed on the Company's website (www.berkeleyresources.com.au) This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Berkeley Eng