| Wed 10 Sep 2008, 16:41 | | SAM - Samroc - Reviewed preliminary results for the year ended 30 June 2008 |
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SAM
SAM
SAM - Samroc - Reviewed preliminary results for the year ended 30 June 2008
SA MINERAL RESOURCES CORPORATION LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1993/000460/06)
Share code: SAM ISIN: ZAE000012019
("Samroc" or "the company")
REVIEWED PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2008
BALANCE SHEET
As at As at
30 June 2008 30 June 2007
Preliminary Audited
R R
ASSETS
NON-CURRENT ASSETS 33 096 963 10 539 264
Property, plant and 5 230 142 10 539 264
equipment
Loans receivable 27 866 821 -
CURRENT ASSETS 18 924 853 3 370 137
Inventories 1 454 409 471 745
Accounts receivable 3 730 797 1 790 170
Other receivables 1 920 392 943 609
Cash and cash 11 819 255 164 613
equivalents
TOTAL ASSETS 52 021 816 13 909 401
EQUITY AND LIABILITIES
CAPITAL AND RESERVES 44 425 514 1 112 412
Stated capital 83 725 538 3 742 749
Share premium - 27 152 471
Accumulated losses (39 300 024) (29 782 808)
NON-CURRENT LIABILITIES 3 128 936 10 304 392
Long-term liabilities 2 502 964 9 778 420
Provision for 625 972 525 972
environmental
rehabilitation
CURRENT LIABILITIES 4 467 366 2 492 598
Accounts payable 3 546 156 2 127 001
Other payables 921 210 365 596
TOTAL EQUITY AND 52 021 816 13 909 401
LIABILITIES
Number of shares in 313 291 612 37 427 492
issue
Net asset value per 14.18 2.97
share(cents)
INCOME STATEMENT
For the year For the year
ended ended
30 June 2008 30 June 2007
Preliminary Audited
R R
Revenue 18 630 630 15 390 461
Cost of sales (13 131 567) (10 923 459)
Gross profit 5 499 063 4 467 002
Operating costs (10 606 157) (4 667 982)
Operating loss (5 107 094) (200 980)
Impairment loss on (5 159 393) -
revaluation of property,
plant and equipment
Realised gain on insurance 501 055 -
claim
Interest received 326 536 15
Interest paid (78 320) (644 156)
Net loss before tax (9 517 216) (845 121)
Taxation - -
Net loss after tax (9 517 216) (845 121)
Weighted average number of 167 592 528 37 427 492
shares
Loss per share (cents) (5.68) (2.26)
Reconciliation of headline
loss:
Loss attributable to (9 517 216) (845 121)
shareholders
Realised gain on insurance (501 055) -
claim
Impairment loss on 5 159 393 -
revaluation of property,
plant and equipment
Headline loss (4 858 878) (845 121)
Headline loss per share (2.90) (2.26)
(cents)
CASH FLOW STATEMENT
For the year For the year
ended ended
30 June 2008 30 June 2007
Preliminary Audited
R R
CASH FLOWS FROM (6 102 030) (39 445)
OPERATING ACTIVITIES
Interest received 326 536 15
Interest paid (78 320) (644 156)
Net cash from (5 853 814) (683 586)
operating activities
CASH FLOWS FROM (179 585) 51 800
INVESTING ACTIVITIES
Plant and equipment (680 640) -
acquired
Proceeds from disposal - 51 800
of plant and equipment
Proceeds from 501 055 -
insurance claim
CASH FLOWS FROM 17 688 041 630 743
FINANCING ACTIVITIES
Decrease in long term (7 275 456) 630 743
liabilities
Increase in loans (27 866 821) (8 025)
receivable
Shares issued for cash 52 830 318 -
net of expenses
Net 11 654 642 (1 043)
increase/(decrease) in
cash and cash
equivalents
Cash and cash 164 613 165 656
equivalents at
beginning of year
Cash and cash 11 819 255 164 613
equivalents at end of
year
STATEMENT OF
CHANGES IN
EQUITY FOR
THE YEAR
ENDED 30 JUNE
2008
Stated Share Accumulated Total
capital premium loss
Balance at 3 742 749 27 152 471 (28 937 687) 1 957 533
30 June 2006
Net loss for (845 121) (845 121)
the
year
Balance at 3 742 749 27 152 471 (29 782 808) 1 112 412
30 June 2007
Shares issued 54 148 090 54 148
for 090
cash
Transfer to 27 152 471 (27 152 -
stated 471)
capital
Expenses (1 317 772) (1 317
written 772)
off against
stated
capital
Net loss for (9 517 216) (9 517
the year 216)
Balance at 30 83 725 538 - (39 300 024) 44 425
June 2008 514
Notes to the Financial Statements
1 Significant accounting policies
1.1 Basis of preparation
The annual financial statements of the group for the twelve months
ended 30 June 2008 have been prepared in accordance with the group`s
accounting policies, which comply with International Financial Reporting
Standards and the presentation and disclosure requirements of
International Accounting Standards statement IAS 34 and the requirements
of the South African Companies Act of 1973 and are consistent with those
of the previous year. They have been prepared on a going concern basis.
1.2 Revenue recognition
Revenue is recognised at the fair value of the consideration received or
receivable to the extent that it is probable that economic benefits will
flow to the group and it can reliably measured. The sale of mining products
is recognised when the significant risks and rewards of ownership of the
products are transferred to the buyer.
1.3 Property, plant and equipment
Items of property, plant and equipment are stated at cost less accumulated
depreciation and accumulated impairment losses. Assets forming part of the
long term infrastructure of mining operations including buildings, plant
and equipment, roads and dams are depreciated evenly over the remaining
useful life of the mining operation or a maximum period of 20 years whichever
is the shorter. Depreciation on mining assets is deferred until the relevant
asset is brought into economic use.
Mineral rights and mining claims which are exploited are valued at historical
cost and are amortised over their estimated useful lives using the unit-of-
production method. Mineral rights and mining claims which are not being
exploited are not amortised.
Depreciation is calculated on the straight line method to write off the
cost of each asset, or the re-valued amounts, to their residual values over
their estimated useful lives. The depreciation rates applicable to each
category of property plant and equipment are as follows:
Motor vehicles 4 years
Office equipment 3 years
Plant and equipment 20 years
1.4 Financial assets and liabilities
Financial assets and liabilities carried on the balance sheet include loans,
investments, cash and cash equivalents, accounts receivable and accounts
payable. All financial instruments are initially measured at fair value.
In the case of financial instruments not classified as at fair value through
profit and loss, transaction costs that are directly attributable to the
acquisition or issue of the financial instrument are added to the fair value.
Accounts receivable and loans originated by the company are measured at
amortized cost using the effective interest rate method less any allowance
for impairment.
Accounts payable are stated at gross invoiced value less discounts. Foreign
payables are re-valued at year-end spot rates prevailing in the market.
A deferred tax asset and/or liability is recognised through equity on the
potential unrealised capital gains and/or losses from available-for-sale
financial assets.
Financial assets and financial liabilities are offset and the net amount
reported in the balance sheet when the Company has legal right to set off
the recognised amounts and intends to either settle on a net basis or to
realise the asset and the liability simultaneously.
1.5 Environmental expenditure
The group has long term decommissioning and rehabilitation liabilities in
relation to its environmental management plans, in compliance with current
environmental and regulatory requirements.
1.5.1 Decommissioning costs
The provision for decommissioning represents the cost that will be incurred
to rectify environmental damage. Accordingly an asset is recognised and
included in property, plant and equipment. Decommissioning costs are
provided at the present value of the costs estimated to settle the
obligation. The unwinding of the decommissioning obligation is included in
the income statement. Estimated future costs of decommissioning are reviewed
regularly
and adjusted as appropriate for new evidence or changes in legislation or
technology. Changes in estimates are capitalised or reversed against the
relevant assets. Gains or losses on the expected disposal of mining assets
are not taken into account when estimating the costs.
1.5.2 Rehabilitation costs
The provision for rehabilitation represents the cost of restoring site
damage after the commencement of mining activities. Provision for costs is
charged to the income statement as a cost of production. Expert evaluation
together with management judgment is used to estimate the quantum of such
costs.
2. Unqualified reviewed report
Moore Stephens MWM has issued an unqualified review report, which is
available for inspection at the Company`s registered office.
Commentary on the Results
A loss of 5,68 (2007:loss of 2,26) cents, a headline loss of 2, 90 (2007:
loss of 2,26) cents and a net asset value of 14, 18 (2007: 2.97) cents per
share were reported. Included in the loss for the year are loans written
off in an amount of R1, 8 million, corporate head office costs in relation to
current and future anticipated corporate actions in an amount of R2, 2
million and an impairment loss on revaluation of property, plant and
equipment in an amount of R5, 2 million. The directors felt it prudent to
impair the value of the plant after giving consideration to the remaining
life of the Greenhills plant, its production capacity as well as the current
condition of the tools
and equipment.
The increase in the net asset value of the Company resulted mainly from a
capital restructure. The purpose of the restructure and the recapitalisation
was to place the company on a sound financial footing and to set it up as a
black controlled diversified mineral resources company that would focus on
acquiring mineral prospects, taking them up the value chain, and entering
into joint venture agreements with recognised operators to turn such
resources into account.
On 26 March 2008, Samroc announced that agreement was reached on 17 March
2008 ("the Agreement") in terms of which Samroc will, subject to specified
conditions in the Agreement, invest in South Africa Congo Oil Company
(Proprietary) Limited ("SacOil"). SacOil will reverse its assets and
liabilities into Samroc. Samroc will then be the South African registered
holding company of interests in the oil concessions located in the Albertine
Graben area of the Democratic Republic of the Congo ("DRC"). The objective of
the transaction is to reverse SacOil into a listed vehicle, so as to enable
SacOil and its partners to effectively fund an exploration and development
programme in the Albertine Graben area.
It is proposed that the name of Samroc will change to SacOil Holdings
Limited. SacOil has been established by a consortium of companies, led by
Divine Inspiration Group (Proprietary) Limited ("DIG") and Encha Group
Limited ("Encha") to pursue investment opportunities in the oil and gas
sector in
DRC and the wider African region. The consortium has committed to the DRC
Government that it will develop the oil and gas sector in DRC and that it
will promote community development and local participation.
In terms of further agreements concluded separately with DIG and SacOil
dated 17 March 2008, Samroc advanced a total amount of USD3, 449million (with
a Rand value of R27, 867 million assuming an exchange rate of R8.08 to the
dollar) paid directly (on behalf of DIG and SacOil) to the DRC Government in
respect of signature bonus for the oil concessions. The loans advanced to DIG
and SacOil are secured by pledges and sureties normal for transactions of
this nature.
Upon conclusion of the SacOil transaction the indebtedness of DIG to Samroc
under the relevant loan agreement will be set-off against the indebtedness
of Samroc to DIG under the SacOil agreement. The indebtedness of SacOil to
Samroc under the relevant loan agreement will be left outstanding on
shareholder loan account.
As previously reported, unauthorised loans in an amount of R1, 8 million
were made by management at the Greenhills plant. The total value of the loans
has been written off in the income statement. The company has since
instituted legal action against the parties involved and the necessary
disciplinary actions have been undertaken and completed. The matter is also
in the
process of being handed over to the Commercial Crimes Unit.
Capital restructure and change of control
On 8 November 2008 the company consolidated and converted its issued share
capital of 374 274 923 ordinary shares of 1 cent each on a 1-for-10 basis
into 37 427 492 ordinary shares of no par value. The comparative figures have
been restated accordingly.
During the period under review, the company had two specific issues of
shares for cash. During December 2007, 235 million shares were issued at
a price of 10cents per share raising R23, 5 million before expenses. The
purpose of the specific issue was to repay the GVM loan account and to
raise capital for the evaluation of new acquisitions by the company and to
facilitate the recruitment of a new management team.
Following a change of control whereby Encha became the controlling
shareholder of the company, an offer was made to minority shareholders.
Results of
the offer can be found in an announcement made to shareholders on 12 December
2007.
During March 2008, another 40, 86 million shares were issued at a price of
75cents per share raising R30, 65 million before expenses. The funds so
raised have and will continue to be deployed in completing the envisaged
SacOil and Pioneer Coal transactions as previously announced and described
below.
Dividend
The board has resolved not to declare any dividend to shareholders for the
period under review.
Future direction
Following the Agreement, the directors of Samroc have decided to focus the
business of Samroc on that of the exploration and development of oil and
gas resources.
During the months following the announcement of the Agreement, Samroc has
received numerous proposals to invest in other minerals-related ventures,
inter alia, the abovementioned coal exploration companies. The directors of
Samroc decided that the coal exploration companies held strong value creating
potential for the shareholders of Samroc and accordingly decided to acquire
the coal exploration assets for the benefit of Samroc shareholders via
Pioneer Coal, and at the same time, to dispose of the Greenhills plant and
Bushveld Pioneer, a wholly owned subsidiary of Samroc, to Pioneer Coal.
The unbundling will allow shareholders to attribute appropriate separate
ratings to their holdings in Samroc and Pioneer Coal. It is expected that
this will unlock any potential discount that may eventuate by retaining both
companies under a single share structure. It will also enable the companies
to develop separate management and funding structures that will be
appropriate for the businesses they operate.
Further cautionary
In the light of the above and further to previous cautionary announcements,
the last of which was dated 2 September 2008, Samroc shareholders are advised
to continue to exercise caution when dealing in their Samroc shares until a
further announcement is made.
By order of the board
Melinda van den Berg
Fusion Corporate Secretarial Services (Proprietary) Limited
Company secretary
Sponsor
Sasfin Capital
A division of Sasfin Bank Limited
Directors: RJ Linnell (Chairman), C Bird*, BH
Christie*, RT Vela*, *British)
Registered office: 119 Rosen Office Park, 37 Invicta Road,
Midrand,1685
Registered postal address: P.O. Box 8439, Halfway House, 1685
Transfer secretaries: Link Market Services SA(Proprietary) Limited
Company Secretary: Melinda van den Berg - Fusion Corporate
Secretarial Services (Proprietary) Limited
Date: 10/09/2008 16:41:01 Produced by the JSE SENS Department.
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