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AFG
AFG
AFG - Afgem Limited - Announcement
Afgem Limited
("Afgem" or "the Company")
(Incorporated in the Republic of South Africa)
(Registration number 1998/007292/06)
JSE share code: AFG & ISIN: ZAE000067757
Announcement
1. Introduction
Afgem announced on 4 June 2007 that an agreement had been reached in terms of
which Afgem will, subject to the fulfillment of certain conditions precedent,
dispose of its entire shareholding in Simolotse Mine (Proprietary) Limited
("Simolotse") and Afgem Diamonds (Proprietary) Limited ("Afgem Diamonds")
("the companies")("shares") and claims on loan account against the companies
("claims") to MEEPO Investment Consortium (Proprietary) Limited ("MEEPO"), a
subsidiary of New African Mining AG ("NAM") for an amount of R5.2 million in
cash and Euro 2.1 million in MEEPO A Class shares issued at a price of Euro
0.50 per MEEPO A Class share ("the transaction"). Each MEEPO A Class Share has
the equivalent value of a NAM share which shares are listed on the Frankfort
Stock Exchange and traded at a price of Euro 1.17 on 2 October 2007.
2. Revised terms
Although MEEPO had not completed its due diligence on the companies as at the
date of this announcement, Afgem and MEEPO have signed an addendum to the sale
of shares agreement based on results of the due diligence whereby:
* Afgem and MEEPO have agreed to include Afgem`s 100% interest in Bokang Mine
(Proprietary) Limited as part of the transaction, without altering the purchase
price; and
* the date for the fulfillment of the conditions precedent in respect of the
transaction has been extended to 31 October 2007.
3. Financial effects
The unaudited pro forma financial effects of the transaction, for which the
directors are responsible, are provided for illustrative purposes only to show
the effect of the transaction on losses and net asset value per share as if the
transaction took place on 1 April 2006 and 31 March 2007 respectively. Because
of their nature, the unaudited pro forma financial effects may not give a true
reflection of the Company`s financial position and performance. The unaudited
pro forma financial effects have been compiled from the audited consolidated
results for the year ending 31 March 2007 and are presented in a manner
consistent with the format and accounting policies adopted by Afgem and have
been adjusted as described in the notes hereto:
Before the After the %
Notes transaction transaction change
Loss per share (cents) 1, 2, 13.15 4.04 (69.3%)
4
Diluted loss per share 1, 2, 10.11 3.11 (69.2%)
(cents) 4
Headline loss per share 1, 2, 7.35 4.04 (45.0%)
(cents) 4
Net asset value per share 3, 5 11.32 20.90 84.6%
(cents)
Net tangible asset value per 3, 5 11.32 20.90 84.6%
share (cents)
Actual number of shares in 257,622 257,622 -
issue (`000)
Weighted average number of 248,161 248,161 -
shares in issue (`000)
Diluted number of shares in 322,968 322,968 -
issue (`000)
Notes:
1. The "before" loss per share, diluted loss per share and headline loss per
share figures are based on the weighted average number of shares in issue
at 31 March 2007.
2. The adjustments to the loss per share, diluted loss per share and headline
loss per share are based on the weighted average number of shares in issue
at 31 March 2007 and are stated assuming that the transaction is effective
1 April 2006.
3. For net asset value and net tangible asset value calculations, it is
assumed that the transaction is effective 31 March 2007 and based on the
actual number of shares in issue at 31 March 2007.
4. A profit of R20.8m was recognised as income as a result of the proceeds of
the transaction exceeding the carrying value of the investments based on a
traded price of Euro 1.17 per NAM share.
5. Net asset value per share increased as a result of the subsidiaries sold,
the reduction in royalties payable and a reduction in environmental
liabilities due to the disposal of Simolotse.
4. Liquidation application dismissal
On 14 June 2007 it was announced that the Company was served with court papers
wherein Rex Mining Corporation Limited ("RMCL") and Rex Diamond Mining
Corporation ("RDMC") (collectively "Rex") had made an application to the High
Court of South Africa (Witwatersrand Local Division) for a final liquidation
order to be granted for the winding up of Afgem.
On 8 August 2007, Rex`s application was dismissed with costs and it is believed
that Rex have requested leave to appeal the decision.
5. Change statement
Subsequent to reporting its provisional results for the year ended 31 March
2007 on 5 July 2007, it has become probable that the transaction with MEEPO as
outlined above, would be effected, and management accordingly decided to re-
value its assets in accordance with IFRS 5 (Non-current Assets Held for Sale
and Discontinued Operations) and to record all its investments in subsidiaries
as assets held for sale. The company also decided to create a provision against
recovery of the loan made to RMCL to the value of R4.9 million as it appears as
if such company is unable to pay the debt, and Afgem holds no security for the
loan.
These changes are material in value and substance, and it is therefore regarded
to be appropriate to report the full results after the above changes, rather
than merely indicating changes of individual amounts.
Income Statements for the year ended 31 March 2007
Group Company
Audited Audited Audited Audited
year ended year ended year ended Year ended
31 March 2007 31 March 31 March 31 March
2006 2007 2006
R R R R
Continuing
operations
Revenue 3,000,000
Loss with (2,412,700) (2,412,700)
investment
written off
Operating (7,045,592) (3,510,420) (7,045,592) (3,654,976)
expenses
Operating loss (9,458,292) (3,510,420) (9,458,292) (654,976)
Net financing 140,069 267,408 140,069 267,408
income
Loss before tax (9,318,223) (3,243,012) (9,318,223) (387,568)
Income tax
Loss for the (9,318,223) (3,243,012) (9,318,223) (387,568)
year
Discontinued
operations
Loss for the (23,325,170) (12,736,969) (21,495,324) (13,520,227)
year from
discontinued
operations
Loss before tax (32,643,393) (15,979,981) (30,813,547) (13,907,795)
Income tax 2,547 7,134,927 7,134,927
refund
Loss for the (32,640,846) (8,845,054) (30,813,547) (6,772,868)
year
Attributable
to:
Equity holders (32,640,846) (8,845,054)
of the parent
Minority
interest
Loss for the (32,640,846) (8,845,054)
year
Weighted 210,992,038
average number 248,160,655
of shares in
issue
Basic loss per (13.15) (4.19)
share (cents)
Diluted loss (10.11) (3.29)
per share
(cents)
Headline loss (7.35) (7.38)
per share
(cents)
Balance Sheets as at 31 March 2007
Group Company
N Audited Audited Audited Audited
o 31 March 31 March 2006 31 March 31 March
t 2007 2007 2006
e
s
R R R R
Assets
Non-current
assets
Property, 39,919,941
plant and
equipment
Intangible 50,573,654
assets
Interest in 27,182,630 45,475,173
subsidiarie
s
Loans to 11,627,105 27,880,987
Group
companies
Total non- 90,493,595 38,809,735 73,356,160
current
assets
Current
assets
Inventories 230,009
Short-term 2,009,362 7,241,849 2,009,362 7,073,847
loans
receivable
Trade and 46,620 1,878,072 46,620 56,228
other
receivables
Cash and 18,252 1,178,821 18,252 102,894
cash
equivalents
Non-current
assets 60,532,573
classified
as held for
sale
Total 62,606,807 10,528,751 2,074,234 7,232,969
current
assets
Total 62,606,807 101,022,346 40,883,969 80,589,129
assets
Equity
Ordinary 2,576 2,340 2,576 2,340
share
capital
Preference 723 723 723 723
share
capital
Share 43,413,796 37,737,033 43,413,796 37,737,033
premium
Share 82,828 52,313
options
outstanding
Retained (14,255,524) 18,385,322 (10,356,039) 20,457,508
earnings
Total 29,161,571 56,208,246 33,061,056 58,249,917
equity
Non-current
liabilities
Interest- 966,091
bearing
borrowings
Non
interest- 1,237,787 1,237,787
bearing
borrowings
Environment 15,698,750
al
rehabilitat
ion
Provision 2,082,530 17,975,073
for 2,082,530 17,975,073
purchase
price of
investment
Total non- 3,320,317 34,639,914 3,320,317 17,975,073
current
liabilities
Current
liabilities
Interest- 491,937
bearing
borrowings
Short-term 647,419 25,704 647,419 25,704
loans
payable
Trade and 3,855,177 9,656,545 3,855,177 4,338,435
other
payables
Current
liabilities
directly 25,622,323
associated
with non-
current
assets
classified
as held for
sale
Total 30,124,919 10,174,186 4,502,596 4,364,139
current
liabilities
Total 62,606,807 101,022,346 40,883,969 80,589,129
equity and
liabilities
Statements of Changes in Equity for the year ended 31 March 2007
Ordinary share Preference share Share premium
capital capital
R R R
Group
Balance at 1 April 1,438 1,622,673
2005
Shares issued 902 723 36,114,360
Share based payments
Loss for the year
Balance at 31 March 2,340 723 37,737,033
2006
Shares issued 236 5,676,763
Share based payments
Loss for the year
Balance at 31 March 2,576 723 43,413,796
2007
Table continues:.
Share options Retained Total equity
outstanding earnings/ attributable to
(accumulated equity holders of
loss) the parent
R R R
Group
Balance at 1 April 27,230,376 28,854,487
2005
Shares issued 36,115,985
Share based 82,828 82,828
payments
Loss for the year (8,845,054) (8,845,054)
Balance at 31 March 82,828 18,385,322 56,208,246
2006
Shares issued 5,676,999
Share based (82,828) (82,828)
payments
Loss for the year (32,640,846) (32,640,846)
Balance at 31 March (14,255,524) 29,161,571
2007
Ordinary share Preference Share premium
capital share capital
R R R
Company
Balance at 1 April 1,438 1,622,673
2005
Shares issued 902 723 36,114,360
Share based
payments
Loss for the year
Balance at 31 March 2,340 723 37,737,033
2006
Shares issued 236 5,676,763
Share based
payments
Loss for the year
Balance at 31 March 2,576 723 43,413,796
2007
Table continues:
Share options Retained Total equity
outstanding earnings/ attributable to
(accumulated equity holders of
loss) the parent
R R R
Company
Balance at 1 April 27,230,376 28,854,487
2005
Shares issued 36,115,985
Share based 52,313 52,313
payments
Loss for the year (6,772,868) (6,772,868)
Balance at 31 March 52,313 20,457,508 58,249,917
2006
Shares issued 5,676,999
Share based (52,313) (52,313)
payments
Loss for the year (30,813,547) (30,813,547)
Balance at 31 March (10,356,039) 33,061,056
2007
Cash Flow Statements for the year ended 31 March 2007
Group Company
Audited year Audited Audited year Audited year
ended year ended ended ended
31 March 31 March 31 March 2007 31 March 2006
2007 2006
R R R R
Cash (utilised (9,517,290) (7,955,587) (2,300,382) 3,121,282
in)/generated by
operations
Net financing 140,069 411,964 140,069 267,408
income
Taxation refunded 1,228,896 1,316,011
Net cash utilised (9,377,221) (6,314,727) (2,160,313) 4,704,701
in operations
Net acquisition of (2,500,000)
subsidiaries
Acquisition of (1,767,548)
property, plant and
equipment
Cash flows from 2,280,000
discontinued
operations
Net cash from 2,280,000 (1,767,548) (2,500,000)
investing
activities
Proceeds from the 5,677,000 11,115,985 5,677,000 11,115,985
issue of share
capital
Movement in loans (5,241,442) (17,973,127)
to subsidiaries
Increase in long- 9,120, 000
term loans
Increase in 354,326
interest-bearing
borrowings
Increase/(provision 402,326 402,326
against or (5,706,218) (7,715,788)
repayment of) short-
term loans
Increase in non 1,237,787 1,237,787
interest-bearing
borrowings
Decrease in (883,000) (9,750)
environmental
rehabilitation fund
Cash flows from 121,923
discontinued
operations
Net cash from 6,556,036 5,754,343 2,075,671 (5,452,930)
financing
activities
Net decrease in (541,185) (2,327,932) (84,642) (3,248,229)
cash and cash
equivalents
Cash and cash 1,178,821 3,114,434 102,894 3,351,123
equivalents at
beginning of year
Cash and cash 392,319
equivalents
acquired
Cash and cash 637,636 1,178,821 18,252 102,894
equivalents at end
of year
Reconciliation of loss to headline loss for the year ended 31 March 2007
Group Group
Audited Audited
year ended year ended
31 March 2007 31 March
2006
R R
Loss attributable to ordinary shareholders (32,640,846) (8,845,054)
Adjusted for:
Impairment of intangible assets 14,400,524 405,418
Reversal of taxation charge from prior years (1,316,011)
Taxation effect on profit on sale of tanzanite (5,818,916)
business
Headline loss (18,240,322) (15,574,563)
The consolidated annual results of 2007 as referred to above and the financial
statements, which will be posted to shareholders on 4 October 2007, were
audited by Zeelie De Kock Chartered Accountants (SA). Their report is available
for inspection at the Company`s registered office.
6. Notice of Annual General Meeting
Notice is hereby given that the annual general meeting of shareholders will be
held at 10:00am on 14 November 2007 at 3rd Floor, 10 Melrose Boulevard, Melrose
Arch, Johannesburg, to transact business as stated in the notice of annual
general meeting forming part of the annual financial statements.
Melrose Arch
4 October 2007
Sponsor
Macquarie First South Corporate Finance (Pty) Limited
Date: 04/10/2007 16:00:01 Produced by the JSE SENS Department.
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