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MTZ
MTZ
MTZ - Matodzi - Reviewed Provisional Results For The Year Ended 31 March 2007
MATODZI RESOURCES LIMITED
(Incorporated in the Republic of South Africa)
Registration Number: 1933/004523/06
Share Code: MTZ & ISIN: ZAE000042412
("Matodzi" or "the Company" or "the Group")
REVIEWED PROVISIONAL RESULTS FOR THE YEAR ENDED 31 MARCH 2007
HIGHLIGHTS
Sale of Letseng diamond mine at a profit of R685 million
Profit after taxation of R617 million
Attributable earnings of R262 million up 100%
Special cash dividend of R0.76 per share
Headline loss per share decreases by 8%
CONSOLIDATED INCOME STATEMENT Notes Reviewed Audited
Year ended Year ended
31 March 2007 31 March
2006
R`000 R`000
Revenue 135 760 401 523
Total production costs (50 714) (218 953)
Production costs (49 213) (184 098)
Depreciation - (28 185)
Other non cash operating expenses (1 501) (6 670)
Operating profit 85 046 182 570
Net finance costs 2 13 163 (58 715)
Profit on disposal of subsidiary 3 684 591 -
Impairment of listed investments - (16 820)
Fair value adjustment 4 2 000 1 001
Profit on restructuring of debt 5 - 181 143
General and administrative expenses (54 402) (62 705)
Net profit before taxation 6 730 398 226 474
Income tax expense 7 (113 772) (47 182)
Net profit for the year 616 626 179 292
Profit attributable to:
Minority interest 354 801 48 614
Equity holders of the parent 261 825 130 678
Earnings per share - (cents) 8
Basic earnings - (cents) 70.7 86.6
7
Diluted earnings per share - 70.7 35.3
(cents)
Number of ordinary shares in issue 370 547 286 370 547 286
Weighted average number of shares 370 547 286 150 887 597
in issue
CONSOLIDATED BALANCE SHEET Reviewed Audited
Year- ended Year-ended
31 March 2007 31 March
2006
R`000 R`000
ASSETS
Non-current assets
Property, plant and equipment 34 96
Investment properties 3 310 1 310
Investments and loans receivable 33 641 151 821
Investment in associates - -
Total non-current assets 36 985 153 227
Current assets
Trade and other receivables - 6 735
Cash and cash equivalents 18 361 20 355
Total current assets 18 361 27 090
Disposal group held for sale - 348 100
Total assets 55 346 528 417
EQUITY AND LIABILITIES
EQUITY
Equity attributable to equity holders 42 971 62 763
Minority interest 1 138 66 036
Total equity 44 109 128 799
LIABILITIES
Non-current liabilities
Interest-bearing borrowings - 46 773
Non-interest bearing borrowings 2 678 -
Total non-current liabilities 2 678 46 773
Current liabilities
Taxation 5 810 887
Provisions 545 558
Interest-bearing borrowings 23 277 701
Trade and other payables 2 181 2 420
Total current liabilities 8 559 231 566
Disposal group held for sale - 121 279
TOTAL EQUITY AND LIABILITIES 55 346 528 417
CONDENSED CONSOLIDATED CASH FLOW Notes Reviewed Audited
STATEMENTS Year-ended Year ended
31 March 2007 31 March
2006
R`000 R`000
Cash flow (utilised in)/generated (82 053) 103 124
by operating activities
Cash flow generated by/(utilised 966 362 (113 393)
in) investing activities
Cash flow utilised in from (886 303) (5 158)
financing activities
Net movement in cash and cash (1 994) (15 417)
equivalents
Cash and cash equivalents at 20 355 58 566
beginning of the year
Reclassification to disposal group - (22 794)
held for sale
Cash and cash equivalents at the 18 361 20 355
end of the year
CONDENSED CONSOLIDATED Share Share Accumu- Minority Total
STATEMENT OF CHANGES IN capital premium lated interest R`000
EQUITY R`000 R`000 loss R`000
R`000
Balance 31 March 2006 92 637 201 552 (231 426) 66 036 128 799
Dividends paid by - - - (377 008) (377 008)
subsidiary
Dividends paid by the - - (281 617) - (281 617)
Company
Reduction in minority - - - (42 691) (42 691)
interest due to disposal of
subsidiary
Net profit for the year - - 261 825 354 801 616 626
Balance 31 March 2007 92 637 201 552 (251 218) 1 138 44 109
NOTES TO THE PROVISIONAL RESULTS
1. BASIS OF PREPARATION
The report is prepared in accordance with the recognition and measurement
requirements of International Financial Reporting Standards ("IFRS"), and
the preparation and disclosure requirements of IAS 34 Interim Financial
Reporting. These accounting policies have been applied consistently to all
years presented in these condensed consolidated financial results.
Reviewed Audited
Year ended Year-ended
31 March 31 March
2007 2006
R`000 R`000
2 Net finance costs
Interest received 28 591 11 703
Preference shares - "B" preference shares - (23 417)
Preference shares - Witnigel preference shares - (19 339)
Interest on loans (15 428) (27 662)
13 163 (58 715)
3 Profit on disposal of subsidiary
Profit on disposal of subsidiary 684 591 -
The sale of Letseng Diamonds (Proprietary)
Limited, a subsidiary of Letseng Investment
Holdings (South Africa) (Proprietary) Limited
gave rise to a profit on disposal for the year.
4 Fair value adjustment
Investment properties 2 000 1 001
External valuations have been obtained for the
properties
5 Profit on restructuring of debt
Profit on restructuring of debt - Witnigel - 181 143
preference shares
The effect of restructuring the Witnigel
preference shares was the elimination of R194
million of external debt for the Group,
resulting in a gain for the Group on
consolidation of R181million for the prior year.
6 Profit for the year is stated after taking into
account the following:
Corporate fees on disposal of Letseng (5 013) -
Depreciation (62) (36 437)
Staff costs (6 212) (14 794)
7 Income tax expense
Current tax (113 772) (11 579)
Current year (19 792) (52 037)
Secondary taxation on companies raised (94 252) -
Prior year withholding taxation 272 -
Utilisation of prior year losses - 40 458
Deferred tax
Current year - (35 603)
(113 772) (47 182)
8 Earnings per share
Attributable profit for the year 261 825 130 678
Reconciliation between attributable profit and
headline loss:
Attributable profit 261 825 130 678
Impairment of mineral rights and mining assets - 432
Profit on restructuring of debt - (181 143)
Profit on disposal of subsidiary (375 064) -
Headline loss (113 239) (50 033)
Headline loss per share - (cents) (30.6) (33.2)
Weighted average number of ordinary shares in 370 547 286 150 887 597
issue
Diluted number of ordinary shares in issue 370 547 286 370 547 286
9 Investments and loans receivable
Listed investments 33 641 33 641
Loans receivable - 181 180
33 641 151 821
The loans have been recovered.
Listed investments consist of 210 255 713 JCI
ordinary shares of R0.16, which was the price at
which they were suspended on JSE (2006: 210 255
713 at R0.16).
10 Cash and cash equivalents
Cash and cash equivalents 18 361 20 355
Matodzi has restricted cash amounting to R256
000 (2006: Rnil).
11 Equity attributable to equity holders
Ordinary share capital
Authorised:
750 000 000 (2006: 750 000 000) ordinary shares 187 500 187 500
of 25 cents each
Issued:
370 547 286 (2006: 370 547 286) ordinary shares 92 637 92 637
of 25 cents each
Movements in issued share capital
Total number of shares in issue at beginning of 370 547 286 149 262 157
the year
Shares issued to public shareholders - 7 460 000
Shares issued to JCI in respect of the - 213 825 129
preference share redemption
Total number of shares in issue at end of the 370 547 286 370 547 286
year
Share premium
At beginning of the year 201 552 42 010
Arising on shares issued during the year - 159 542
201 552 201 552
Reviewed Audited
Year-ended Year ended
31 March 31 March
2007 2006
R`000 R`000
12 Equity component of preference shares
"B" preference shares
At beginning of the year - 12 960
Equity component transferred to share premium on - (12 960)
redemption
- -
The Matodzi "B" preference shares were
considered a compound financial instrument in
terms of IAS 32 Financial Instruments:
Presentation, and in accordance with this
statement the equity component had been raised
in the prior year.
13 Interest-bearing borrowings
Loan payable 23 274 474
Current portion of interest bearing borrowings (23) (227 701)
and loans
- 46 773
14 Disposal of subsidiary
The Group entered into a binding legal agreement with Gem Diamond Mining
Company of Africa Limited for the disposal of Letseng Investment Holdings
(South Africa) (Proprietary) Limited ("Letseng Holdings") entire 76%
interest in Letseng Diamonds (Proprietary) Limited (incorporated in
Lesotho and a subsidiary of the Group) ("Letseng Diamonds"). The effective
date of the disposal was 1 July 2006.
Letseng Diamonds` results are consolidated in the financial statements of
Letseng Holdings. The operating profit as reflected in the reviewed income
statement relates to the results of Letseng Diamonds to the date of
dispoal. Included in general and administrative expenses is R29 608 573
(2006: R42 133 481) relating to Letseng Diamonds.
Based on the requirements of IFRS 5 - Non-current Assets Held for Sale and
Discontinued Operations, the assets and liabilities attributable to
Letseng Diamonds were disclosed as a disposal group held for sale.
The assets and liabilities attributable to Letseng Diamonds disposed of
consisted of the following:
Reviewed
Year-ended
31 March
2007
R`000
Property, plant and equipment 208 340
Intangible assets 69 375
Inventory 33 588
Trade and other receivables 62 605
Total non cash assets 373 908
Deferred tax liabilities (62 963)
Trade and other payables (49 252)
Taxation (16 844)
Provision - leave and severance pay (5 057)
Minority shareholders` interest (42 691)
Total liabilities (176 807)
Cash and cash equivalents disposed of 6 308
Net assets disposed of 203 409
Proceeds from sale of subsidiary 888 000
Profit on disposal of subsidiary 684 591
Related parties
Identification of related parties
The ultimate holding company of Matodzi is JCI Limited ("JCI"). JCI effectively
holds 57.1% of the issued share capital of Matodzi which was acquired during the
prior year.
Material related party transactions
Transactions with directors
Remuneration is paid to directors in the form of fees to non-executive directors
and remuneration to executive directors. The remuneration committee approved a
special bonus paid to the directors, during the year under review. During
December 2006, Consolidated Resources and Exploration Limited (a subsidiary of
Matodzi) entered into a joint venture agreement with Orlyfunt Holdings
(Proprietary) Limited and Itsuseng Mining (Proprietary) Limited in which Messrs
Rasethaba and Nkuhlu respectively have an interest. The directors did not have a
material interest in any contract of significance with the Company or any of its
subsidiaries, except as noted above, which may have given rise to a conflict of
interest during the year.
Transactions with entities in the Group
During the year under review, the Company and its subsidiaries entered into
various loan transactions with one another in the ordinary course of business.
These transactions occurred at arm`s length and have been eliminated on
consolidation.
Transactions with other related stakeholders
Consolidated Mining Management Services Limited ("CMMS"), a subsidiary of JCI
was repaid an amount of R44 093 693 (2006: advanced R11 282 682) by the Group,
including interest capitalised at prime overdraft rate during the 2007 year to
fund operating activities. Balance outstanding of R2 678 116 is interest free
(2006: R46 771 800 interest bearing).
Letseng Holdings and it`s subsidiary paid CMMS a management fee during the year
under review of R630 000 (2006: R7 260 000). Loan receivable from JCI amounts to
R nil (2006: R113 380 336). Refer note 9.
Auditors` Review Report
The Company`s auditors` KPMG Inc. have reviewed the provisional results for the
year ended 31 March 2007. A copy of their unqualified review report is available
for inspection at the Company`s registered address.
Going concern
Matodzi will be in a position to meet its obligations as and when they fall due.
Accordingly the directors continue to adopt the going concern basis in the
preparation of the financial statements.
Subsequent events
The Company has additional restricted cash amounting to R170 000 subsequent to
the year end.
Capital commitments
The Company has no capital commitments.
Dividends
The Company does not intend to declare any dividend other than the 76 cents
dividend already declared and paid.
Segment reporting
The Group comprises of the following business segments, namely mining and other
operations. The mining segment was signed during the year under review.
Directorate changes
The following directorate changes have taken place during the period under
review:
John Chris Lamprecht - resigned on 16 May 2006;
Mafika Edmund Mkwanazi - resigned on 30 October 2006;
Andile Reeves Nkuhlu - appointed on 31 October 2006;
Sandile Swana - appointed on 31 October 2006;
Thabo Mosololi - resigned on 5 February 2007;
Leslie Arthur Maxwell - appointed on 5 February 2007;
Thabo Sindisa Kwinana - appointed on 5 February 2007.
COMMENTARY TO THE PROVISIONAL RESULTS
Post the implementation of the Letseng disposal and the settlement of all
Matodzi`s long term debt, a dividend payment followed.
Listed investments
210 255 713 ordinary JCI shares, constituting 9.5% of the issued share capital
of JCI. The value of Matodzi`s investment in JCI amounts to R33.6 million, based
on a share price of 16 cents per share ("cps"), which is the price at which the
JCI shares were suspended on JSE. Subsequent to JCI recently publishing its
estimated net asset value statement the value of a JCI share will be
substantially higher, in the event of a merger between Randgold & Exploration
Company Limited and JCI being implemented.
New order prospecting rights
Matodzi has submitted applications to the Department of Minerals and Energy
("the DME") for the conversion of certain of its unused old order mineral rights
to new form prospecting rights. The portfolio of minerals includes diamonds,
gold, coal and other industrial minerals.
A 35% interest in White Water Gold (Proprietary) Limited ("WWG")
Matodzi previously owned gold rights covering the Nigel and Kimberley reefs in
which constitutes a "distal" part of the Witwatersrand Basin. In July 2005,
Matodzi entered an agreement with White Water Limited, Covenant Mining and
Finance (SA) (Proprietary) Limited and WWG, which was concluded in the current
year, whereby it sold the prospecting right and certain surface right permits to
WWG for a consideration of 35% of the issued share capital of WWG. Furthermore,
Matodzi will be a Black Economic Empowerment ("BEE") partner with a 30% interest
in White Water Exploration (Proprietary) Limited, which intends to acquire and
explore additional ground-dip from Witnigel`s existing lease area. Matodzi
together with Covenant Mining are looking at alternatives to develop the former
Witnigel Gold Mine.
Matodzi will continue with its principal activities of sourcing and evaluating
investment opportunities in the resources sector and carry on as its main
activity, the exploitation of its prospecting rights. The Company intends
embarking on new exploration projects and capitalising on the prospecting rights
that it currently holds.
The nature of Matodzi`s business remains that of a mining investment company.
The strategy going forward is centred around:
The acquisition of a 57.1% stake held by JCI by a BEE company
The Company is in discussions with its holding company, JCI, to rectify the
dilution of its BEE shareholding.
Continued exploration of new Order Prospecting Rights
Matodzi is well positioned to take advantage of exploration opportunities which
exist in the current economic climate, and has been informally approached by
various prospective partners and investors that have shown an interest in
participating with the Company, both on a project and equity basis going
forward.
Partnership with other BEE partners
Matodzi is targeting emerging BEE recipients of new order prospecting rights.
Matodzi will jointly fund exploration programmes with these partners. This
business development and emerging BEE partnership programme will drive the
Company`s future growth.
For and on behalf of the board
Andrew Mlangeni Sello Mashao Rasethaba
Chairman Chief Executive Officer
16 July 2007 Johannesburg
Sponsor
Sasfin Capital
(A division of Sasfin Bank Limited)
Registered office:
13th Floor
28 Harrison Street
Johannesburg 2001
(PO Box 11165 Johannesburg 2000)
Transfer secretaries:
Computershare Investor Services 2004 (Proprietary) Limited
70 Marshall Street, Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
Directors: A Mlangeni (Independent Non-Executive Chairman), SM Rasethaba (Chief
Executive Officer), AR Nkuhlu (Executive), PH Gray (Non-Executive), TS Kwinana
(Non-Executive), LA Maxwell (Non-Executive), S Swana (Non-Executive).
Date: 16/07/2007 12:43:01 Produced by the JSE SENS Department.
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