RNS Number:9615Q
KimCor Diamonds plc
28 March 2008
28 March 2008
KIMCOR DIAMONDS PLC
("KimCor" or the "Company" or the "Group")
INTERIM RESULTS
FOR THE PERIOD ENDING 31 DECEMBER 2007
KimCor (AIM:KIM), a diamond producer and exploration company with properties in
South Africa and Tanzania, is pleased to announce its interim results for the 9
months ended 31 December 2007.
These second set of interim results have been produced following the recent
change in the Company's accounting reference date to 30 June. As announced on 20
March 2008, this change has been undertaken in order to align KimCor's financial
year end with that of Dwyka Diamonds Holdings Limited ("DDH"), the parent
company of the group of companies acquired by KimCor from Dwyka Resources
Limited in September 2007. The audited full year results for DDH can be sourced
from Dwyka Resources Limited's results for the full year ended 30 June 2007.
The Company's next annual results will be for the 15 months ended 30 June 2008
and are expected to be published by 31 October 2008.
Enquiries:
KimCor Diamonds plc Tel: 020 3178 6179
Martyn Churchouse
Strand Partners Limited Tel: 020 7409 3494
Simon Raggett
Warren Pearce
Victoria Milne-Taylor
Bishopsgate Communications Ltd Tel: 020 7562 3350
Maxine Barnes
Nick Rome
Consolidated income statement for the nine months ended 31 December 2007
Note Nine months to Nine months to
31 December 31 December
2007 2006
Unaudited Unaudited
�'000 �'000
Revenue 2,602 2,661
Cost of sales (3,420) (3,388)
-------- --------
Gross loss (818) (727)
Administrative expenses (2,830) (1,172)
Other operating income 613 1,523
-------- --------
Loss from operations (3,035) (376)
Finance income 43 19
Finance expense (162) (149)
-------- --------
Loss for the period before taxation (3,154) (506)
Tax 4 -
-------- --------
Loss for the period after taxation attributable to (3,150) (506)
equity holders of the parent
-------- --------
Basic and diluted loss per share 5 (1.71)p (0.38)p
-------- --------
Consolidated balance sheet as at 31 December 2007
31 December 2007 30 June 2007
Unaudited Unaudited
�'000 �'000
ASSETS
Non - current assets
Property, plant and equipment, including mining 8,463 2,402
properties
Prospecting rights 119 -
Other non-current receivables 189 163
-------- --------
8,771 2,565
-------- --------
Current assets
Inventories 177 189
Trade and other receivables 705 306
Cash and cash equivalents 2,237 177
-------- --------
3,119 672
-------- --------
Total assets 11,890 3,237
-------- --------
LIABILITIES
Current liabilities
Trade and other payables 728 765
Accruals 54 -
Provisions 468 298
-------- --------
1,250 1,063
-------- --------
Non-current liabilities
Borrowings 1,943 11,937
Deferred tax liability 1,093 -
-------- --------
3,036 11,937
-------- --------
Total liabilities 4,286 13,000
-------- --------
Equity attributable to equity holders of the
parent
Share capital issued 1,341 -
Share premium reserve 7,034 -
Cumulative translation adjustments (923) 2,631
Warrant reserve 157 -
Retained earnings and other reserves (5) (12,373)
-------- --------
Equity attributable to equity holders of the 7,604 (9,742)
parent
-------- --------
Minority interest - (21)
-------- --------
Total equity and liabilities 11,890 3,237
-------- --------
Consolidated statement of changes in equity for six months ended 31 December
2007
Share Share Warrant Retained Translation Total
premium reserve earnings Reserve
capital and other
reserves
�'000 �'000 �'000 �'000 �'000 �'000
Balance as of 1 - - - (12,373) 2,631 (9,742)
July 2007
Loss for the - - - (2,518) - (2,518)
period
Foreign exchange
on translation
of foreign
operation - - - - (3,554) (3,554)
Reverse takeover 1,341 7,034 157 14,886 - 23,418
Balance as of 31 1,341 7,034 157 (5) (923) 7,604
December 2007
Consolidated cash flow statement for the nine months ended 31 December 2007
Nine months to 31 Nine months to 31
December December
2007 2006
Unaudited Unaudited
�'000 �'000
CASH FLOW FROM OPERATING ACTIVITIES
Loss before tax: (3,154) (506)
Adjustments for:
Finance expense 162 149
Finance income (43) (19)
Depreciation, amortisation and impairment 1,108 324
Equity settled share-based payment expense 18 -
Provision for rehabilitation 11 30
Income from sales of investments - (1,329)
Foreign exchange difference 590 684
-------- --------
Operating loss before changes in working capital (1,308) (667)
(Decrease)/increase in other payables (821) 298
Decrease/(increase) in other receivables 914 (264)
Increase in inventories (132) (57)
-------- --------
Net cash flow from operating activities (1,347) (690)
INVESTING ACTIVITIES
Purchase of property, plant and equipment (360) (723)
Interest received 43 5
Loans issued - (2)
Cash held in subsidiary at the date of acquisition 85 -
-------- --------
(232) (720)
FINANCING ACTIVITIES
Proceeds from issue of ordinary shares 3,234 -
Proceeds from loan raised 648 913
Repayment of the loan (66) -
Interest paid (122) (2)
-------- --------
3,694 911
-------- --------
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS DURING THE 2,115 (499)
PERIOD
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 122 879
-------- --------
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 2,237 380
-------- --------
Notes forming part of the interim financial statements
1. CORPORATE INFORMATION
KimCor Diamonds plc (the "Company") is a diamond mining and exploration company
incorporated in England and Wales on 21 March 2005 for the purpose of developing
diamond mining assets and projects primarily in South Africa.
2. BASIS OF PREPARATION
These primary statements and selected notes comprise the unaudited interim
consolidated results of the Company and its subsidiaries ("the Group") for the
nine months ended 31 December 2007.
The audited financial statements for the period ended 31 March 2007 were
prepared in accordance with International Financial Reporting Standards (IFRSs
and IFRIC interpretations), as adopted by the European Union and with those
parts of the Companies Act 1985 applicable to companies preparing their accounts
under IFRS.
These primary statements and selected notes reflect the acquisition of 100% of
the issued share capital of Dwyka Diamonds Holdings Limited ("DDH"). As a result
of this transaction, described as a reverse takeover, shareholders of DDH
acquired control of the Company. Accordingly, this transaction has been
accounted for as an acquisition of the Company by DDH (See Note 6). The interim
financial statements therefore represent a continuation of the financial
statements of DDH, the legal subsidiary acquired. These interim consolidated
financial statements reflect the results of the operations and cash flows of DDH
for all periods presented and include those of the Company subsequent to the
date of the reverse takeover on 21 September 2007. The consolidated balance
sheet at 30 June 2007 and the consolidated income statement and cash flow
statement for the 9 months ended 31 December 2006 are that of DDH.
The comparative period figures for the income statement are for the nine months
ended 31 December 2006. For the balance sheet the figures are at 30 June 2007
and are not audited.
The unaudited interim consolidated results of the Group presented in this
interim announcement have been prepared on the basis of the accounting policies
applied for the interim consolidated results for the 6 months ended 30 September
2007 which are consistent with DDH's accounting policies as set out in Part 4 of
the Admission Document (dated 21 August 2007) and the financial statements for
the year ended 31 March 2007. These accounting policies are expected to be
adopted for the next set of results for the 15 months ended 30 June 2008. As
permitted the Group has chosen not to adopt IAS 34 Interim Financial Reporting.
The interim financial statements for the 9 months ended 31 December 2007 are
unaudited and within the meaning of the section 240 of the Companies Act 1985,
such accounts do not constitute full statutory accounts of the Group.
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that may
have a financial impact on the entity and that are believed to be reasonable
under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting
accounting estimates will, by definition, seldom equal the related actual
results. The estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within the
next financial year are discussed below.
(i) Reverse Takeover ("RTO")
Reverse takeover accounting for the acquisition of DDH (Note 6);
(ii) Income taxes
The Group is subject to income taxes in various jurisdictions where it has
foreign operations. Significant judgement is required in determining the
worldwide provision for income taxes. There are many transactions and
calculations undertaken during the ordinary course of business for which the
ultimate tax determination is uncertain. The Group recognises liabilities for
anticipated tax audit issues based on estimates of whether additional taxes will
be due. Where the final tax outcome of these matters is different from the
amounts that were initially recorded, such differences will impact the current
and deferred tax provisions in the period in which such determination is made.
(iii) Exploration, evaluation and mining properties
The Group's main activity is the exploration and evaluation for, and mining of,
diamonds. The nature of mining and exploration activities are such that it
requires interpretation of complex and difficult geological models in order to
make an assessment of the size, shape, depth and quality of resources and their
anticipated recoveries. The economic, geological and technical factors used to
estimate mining viability may change from period to period. In addition
exploration activities by their nature are inherently uncertain. Changes in all
these factors can impact exploration and mining asset carrying values,
provisions for rehabilitation and the recognition of deferred tax assets.
(iv) Rehabilitation obligations
The Group estimates the future removal costs of mine operations disturbances at
the time of installation of the assets and commencement of operations. In most
instances, removal of assets occurs some years into the future. This requires
judgemental assumptions regarding removal date, the extent of reclamation
activities required, the engineering methodology for estimating cost, future
removal technologies in determining the removal cost and asset specific discount
rates to determine the present value of these cash flows.
4. SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies are set out below:
Basis of consolidation
(i) Subsidiaries
The consolidated financial statements incorporate the financial statements of
the Group and entities controlled by the Group (its subsidiaries).
Subsidiaries are all those entities (including special purpose entities) over
which the Group has the power to govern the financial and operating policies,
generally accompanying a shareholding of more than one-half of the voting
rights. The existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether the Group
controls another entity.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are de-consolidated from the date that control
ceases.
The purchase method of accounting is used to account for the acquisition of
subsidiaries by the Group.
Intercompany transactions, balances and unrealised gains on transactions between
Group companies are eliminated. Unrealised losses are also eliminated unless the
transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
Minority interests in the results and equity of subsidiaries are shown
separately in the consolidated income statement and balance sheet respectively.
(ii) Associates
Associates are all entities over which the Group has significant influence but
not control, generally accompanying a shareholding of between 20 per cent. and
50 per cent. of the voting rights. Investments in associates are accounted for
using the equity method of accounting, after initially being recognised at cost.
The Group's share of its associates' post-acquisition profits or losses is
recognised in the income statement, and its share of post-acquisition movements
in reserves is recognised in reserves. The cumulative post acquisition movements
are adjusted against the carrying amount of the investment. Dividends receivable
from associates reduce the carrying amount of the investment.
When the Group's share of losses in an associate equals or exceeds its interest
in the associate, including any other unsecured receivables, the Group does not
recognise further losses, unless it has incurred obligations or made payments on
behalf of the associate.
Unrealised gains on transactions between the Group and its associates are
eliminated to the extent of the Group's interest in the associates. Unrealised
losses are also eliminated unless the transaction provides evidence of an
impairment of the asset transferred.
Business combinations
Business combinations are accounted for using the purchase method.
The cost of the acquisition is measured at the aggregate of the fair values at
the date of exchange, of assets given, liabilities incurred or assumed, and
equity instruments issued by the Group in exchange for control of the acquiree,
plus any costs directly attributable to the business combination. The
acquiree's identifiable assets, liabilities and contingent liabilities that meet
the conditions for recognition under IFRS 3 are recognised at their fair value
at the acquisition date.
Any excess of the cost of acquisition over the fair values of the identifiable
net assets acquired is recognised as goodwill. Any deficiency of the cost of
acquisition below the fair values of the identifiable net assets acquired (i.e.
discount on acquisition) is credited to the income statement in the period of
acquisition.
Foreign currency
(i) Functional and presentation currency
Items included in the financial statements of each of the Group's entities are
measured using the currency of the primary economic environment in which the
entity operates ('the functional currency'). The consolidated financial
statements are presented in Pounds Sterling.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using
the exchange rates prevailing at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such transactions and from the
translation at year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the income statement.
(iii) Group companies
On consolidation, the assets and liabilities of the Group's overseas operations
are translated at exchange rates prevailing on the balance sheet date. Goodwill
and fair value adjustments arising on the acquisition of a foreign entity are
treated as assets and liabilities of the foreign entity and translated at the
closing rate.
Income and expense items are translated at the average exchange rates for the
period unless exchange rates fluctuate significantly. Exchange differences
arising, if any, are classified as equity and transferred to the Group's
translation reserve. Exchange differences recognised in the income statement of
Group entities' separate financial statements on the translation of long-term
monetary items forming part of the Group's net investment in the overseas
operation concerned are reclassified to the foreign exchange reserve. On
disposal of a foreign operation, the cumulative exchange differences recognised
in the foreign exchange reserve relating to that operation up to the date of
disposal are transferred to the income statement as part of the profit or loss.
Property, plant and equipment
Items of property, plant and equipment are initially recognised at cost. As
well as the purchase price, cost includes directly attributable costs and
estimated present value of any future costs of dismantling and removing items.
The corresponding liability is recognised within provisions. Property, plant and
equipment is stated at cost less accumulated depreciation and any impairment
losses.
Land is shown at cost and is not depreciated. Depreciation is provided on all
other assets to write down the cost, less residual value, by equal instalments
over their estimated useful lives as follows:
- Buildings 10-20 years
- Machinery 5-12 years
- Vehicles 3-5 years
- Furniture, fittings and equipment 3-8 years
The depreciation charge for each period is recognised in the income statement,
unless it is included in the carrying amount of another asset. Subsequent
expenditure relating to an item of property, plant and equipment is capitalised
when it is probable that future economic benefits from the use of the asset will
be increased. All other subsequent expenditure is recognised as an expense in
the period in which it is incurred.
Repairs and maintenance which neither materially add to the value of assets nor
appreciably prolong their useful lives are charged against income. The gain or
loss arising from the de-recognition of an item of property, plant and equipment
is included in the income statement when the item is de-recognised. The gain or
loss arising from the de-recognition of an item of property, plant and equipment
is determined as the difference between the net disposal proceeds, if any, and
the carrying amount of the item. The carrying values of property, plant and
equipment are reviewed for impairment when events or changes in circumstances
indicate the carrying value may not be recoverable. Assets under construction
are carried at cost less any recognised impairment. Borrowing costs attributable
to assets under construction are recognised as an expense as incurred.
Mining properties
Mining properties are stated at cost of acquisition and/or accumulation of
exploration, evaluation and development costs in respect of areas of interest in
which mining has commenced less accumulated amortisation and any impairment
loss.
When further development expenditure is incurred in respect of a mining property
after the commencement of production, such expenditure is carried forward as
part of the mine property only when substantial future economic benefits are
thereby established, otherwise such expenditure is classified as part of the
cost of production.
Amortisation is provided on a unit-of-production basis so as to write off the
cost in proportion to the depletion of the proved and probable mineral
resources.
Exploration and evaluation costs
Exploration and evaluation costs include expenditure incurred in connection with
the exploration for and the evaluation of economically recoverable diamond
resources. These costs include costs of acquisition, exploration and appraisal
costs and technical overheads directly associated with those projects. The
Company's policy with respect to exploration and evaluation expenditure is to
use the "area of interest" method. Under this method, exploration and evaluation
costs are carried forward on the following basis:
(i) Each area of interest is considered separately when deciding whether, and to
what extent, to carry forward or write off exploration and evaluation costs;
(ii) Exploration and evaluation costs related to an area of interest may be
carried forward provided that rights to tenure of the area of interest are
current and provided further that one of the following conditions are met:
* such costs are expected to be recouped through successful development
and exploitation of the area of interest or alternatively, by its sale; or
* exploration and/or evaluation activities in the area of interest have
not yet reached a stage which permits a reasonable assessment of the existence
or otherwise of economically recoverable reserves and active and significant
operations in relation to the area are continuing.
(iii) The carrying values of exploration and evaluation costs are reviewed by
directors where results of exploration and/or evaluation of an area of interest
are sufficiently advanced to permit a reasonable estimate of the costs expected
to be recouped through successful development and exploitation of the area of
interest or by its sale. Expenditure in excess of this estimate is written off
to the income statement in the year in which the review occurs;
(iv) When development of an area of interest is complete and production
commences, all exploration, evaluation and development costs carried forward as
an asset (including the cost of extractive rights acquired) are transferred to
mining properties. Development costs related to an area of interest are carried
forward as an asset to the extent that they are expected to be recovered either
through sale or successful exploitation; and
(v) The carrying values of exploration, evaluation and development expenditure
are carried forward and amortised over the expected useful life of each project.
Inventories
Inventories, which include rough diamonds, finished goods and raw materials, are
stated at the lower of cost and estimated net realisable value. Cost is
determined on a first-in, first-out basis and comprises direct labour and direct
materials. Net realisable value is the estimated selling price in the ordinary
course of business, less the cost of completion and selling expenses.
Provisions
Provisions are recognised when the consolidated entity has a legal, equitable or
constructive obligation to make a future sacrifice of economic benefits to other
entities as a result of past transactions or other past events, it is probable
that a future sacrifice of economic benefits will be required and a reliable
estimate can be made of the amount of the obligation.
Rehabilitation and restoration costs
The Group has obligations for site restoration related to its mining properties.
The Group establishes restoration provisions for future mine closure costs when
a legal or constructive obligation exists based on the present value of the
future cash flows required to satisfy the obligations. Provisions expected to be
utilised in the coming 12 months on areas with lives of less than one year are
accounted for in the income statement of the Group. Provisions not expected to
be utilized in the coming 12 months are added to the capital cost of the related
mining assets in mine properties and amortised over the resource life. The
provision is accreted to its future value over the resource life through a
charge to borrowing costs.
Changes in the estimated cost of rehabilitation are applied on a prospective
basis with an adjustment to capital cost
5. BASIC AND DILUTED LOSS PER SHARE
Basic loss per share amounts are calculated by dividing net loss for the period,
attributable to ordinary equity holders of the parent, by the weighted average
number of ordinary shares outstanding during the period.
Diluted earnings per share amounts are calculated by dividing the net loss
suffered by equity shareholders of the parent by the weighted average number of
ordinary shares outstanding during the period plus the weighted average number
of ordinary shares that would be issued on the conversion of all the dilutive
potential ordinary shares into ordinary shares.
The loss per share for the 9 month period ended 31 December 2006 is calculated
using the number of shares issued to the shareholders of DDH during the RTO, in
line with the guidance in IAS 33 Earnings per share.
In line with IFRS 3, following the RTO the equity structure of the Group
reflects the equity of the legal parent, including the shares issued by it to
effect the business combination. In the nine month period ended 31 December
2007, the weighted average number of shares has been calculated as follows:
* Number of ordinary shares from beginning of period to date of RTO is
the number of shares issued by the Company to the owners of DDH; and
* From the acquisition date to the end of the period the number of
shares is the actual number of shares of the Company outstanding during the
period.
The following reflects the loss and share data used in the basic and diluted
earnings per share computations:
Nine months to 31 Nine months to 31
December December
2007 2006
�'000 �'000
Net loss attributable to equity holders of the parent 3,150 506
--------- ---------
No diluted loss per share has been calculated as the Group has incurred a loss
for the period.
Nine months to 31 Nine months to
December 31 December
2007 2006
Number Number
Basic weighted average number of shares 184,041,717 134,383,718
--------- ---------
There were no transactions involving ordinary shares or potential ordinary
shares between the reporting date and the date of completion of these financial
statements.
6. REVERSE TAKEOVER
On 21 September 2007 the Company became the legal parent of DDH. As part of this
combination Dwyka Resources Limited, the sole shareholder of DDH, became the
owner of 50.09% of the enlarged share capital. Accordingly, and considering the
size of the companies involved, the substance of the combination was that DDH
acquired the Company in a reverse acquisition.
Under the requirements of the Companies Act 1985 it would normally be necessary
for the Company's consolidated accounts to follow the legal form of the business
combination. In that case, the pre-combination results would be those of the
Company and DDH would be included only in relation to its performance from 21
September 2007. However this would show the combination as the acquisition of
DDH by the Company and would, in the opinion of the directors, fail to give a
fair view of the substance of the business combination. Accordingly, the
directors have adopted reverse acquisition accounting as the basis of the
consolidation.
On 21 September 2007, DDH acquired 50.09% of the issued share capital of the
Company for the consideration of �5,039,608 representing directly attributable
costs of �0.7 million and 67,191,859 ordinary shares of the Company in issue
immediately prior to the takeover for which the fair value was determined by the
directors as the placing price of 6.5p of the new ordinary shares issued and
proposed for placing on AIM at the same date.
The provisional fair value of the net assets acquired was determined by the
directors, having regard to reports by independent experts.
The loss incurred in the period to 31 December 2007 by the old KimCor group
which was acquired in this reverse takeover was �532,681. Had the acquisition
occurred on 1 April 2007, the estimated operating loss for the group would have
been �807,996 higher at �3,958,503 for the nine month period ended 31 December
2007.
Book and fair values of the net assets at the date of acquisition, were as
follows:
Book Fair value Fair value
values adjustments to group
�'000 �'000 �'000
Mining properties 1,763 3,601 5,364
Property, plant and equipment 527 - 527
Other long-term assets 224 360 584
Inventories 4 - 4
Cash and short-term deposits 85 - 85
Other receivables 855 - 855
Trade and other creditors (923) - (923)
Deferred tax liability (412) (1,044) (1,456)
-------- --------- --------
Net assets 2,123 2,917 5,040
-------- --------- --------
Goodwill arising on acquisition -
--------
5,040
--------
Discharged by:
Fair value of shares issued 4,367
Acquisition costs 673
--------
5,040
-------
No identifiable goodwill has arisen in respect of this transaction. The surplus
value of the consideration over the other separable net assets and liabilities
of the acquired group has been attributed to the mining properties and
represents their estimated fair value as at the date of acquisition of 21
September 2007.
7. POST BALANCE SHEET EVENTS
On 20 March 2008, the Group announced a change to its accounting reference date
from 31 March to 30 June. The change was made in order to align the accounting
reference date of KimCor with that the South African subsidiaries acquired as
part of the reverse takeover, further details of which are set out in Note 6
above.
In view of the above, the next annual report and accounts will be prepared by
the Group for the 15 months ending 30 June 2008.
There were no other significant post balance sheet events arising since 31
December 2007.
8. AVAILABILITY OF INTERIM REPORT
Copies of this interim report for the nine months ended 31 December 2007 will be
available from the offices of KimCor Diamonds plc, 8 Tavistock Street, London,
WC2E 7PP, and on the Company's website www.kimcordiamonds.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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