| Mon 21 May 2001, 0:00 | | Afgem - Audited Annual Results 2001 |
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AFRICAN GEM RESOURCES LIMITED
(Registration No. 1998/007292/06)
Audited Annual Results 2001 for the year ended 28 February
Highlights
- Operating income R23 177 245
- Attributable income R20 965 437
- Earnings per share 17.65c
- Return on ordinary shareholders' funds 26.74%
- Return on net assets 36.84%
Financial Statements (Abridged)
Balance sheets
at 28 February 2001
2001 2000
R R
Assets
Fixed assets 51,091,195 31,878,552
Non current assets 30,375 124,533
Deferred taxation
Current assets 103,211,919 11,936,075
Inventory 3,473,149 5,879,520
Accounts receivable 12,750,853 2,950,418
Cash and cash equivalents 86,987,917 3,106,137
Total assets 154,333,489 43,939,160
Equity and liabilities
Capital and reserves
Ordinary shareholders' interest 133,769,819 23,058,828
Outside shareholders' interest 3,197,419 3,079,283
Non current liabilities 6,025,469 12,924,200
Deferred taxation 2,183,718 149,200
Long term liabilities 3,241,751 12,175,000
Environmental rehabilitation
provision 600,000 600,000
Current liabilities 11,340,782 4,876,849
Accounts payable 4,439,969 4,508,527
Taxation 6,900,813 368,322
Total equity and liabilities 154,333,489 43,939,160
Statement of changes in equity
for the year ended 28 February 2001
Ordinary Share Retained Total
share capital premium earnings
R R R R
Balance at beginning of
year 1,054 22,024,068 1,033,706 23,058,828
Ordinary shares issued 239 95,615,761 - 95,616,000
Share issue expenses
written off - (5,870,446)- (5,870,446)
Retained earnings
attributable to ordinary
shareholders - - 20,965,437 20,965,437
1,293 111,769,383 21,999,143 133,769,819
Income statements
for the year ended 28 February 2001
2001 2000
R R
Revenue 41,139,920 8,525,852
Cost of sales (6,935,478) (4,349,827)
Gross profit 34,204,442 4,176,025
Net foreign exchange loss (646,468) (139,034)
Other income 54,061 -
Pre-production expenditure (2,603,564) (1,114,778)
Operating expenses (7,831,226) (2,931,040)
Operating income (loss) 23,177,245 (8,827)
Interest received on cash and
cash equivalents 4,362,523 514,660
Pre-production expenditure
capitalised 2,603,564 1,114,778
Finance costs (30,271) (114,633)
Net income before taxation 30,113,061 1,505,978
Taxation (9,029,488) (392,989)
Retained earnings after taxation 21,083,573 1,112,989
Outside shareholders' interets (118,136) (79,283)
Retained earnings attributable
to ordinary shareholders 20,965,437 1,033,706
Weighted average number of shares
in issue 118,777,726 70,473,827
Earnings per share (cents) 17,65 1,47
2001 2000
R R
Cash flow statements
for the year ended 28 February 2001
Cash flow from operating activities
Operating income/(loss) before
Changes in working capital 27,705,419 1,282,452
Changes in working capital (7,462,622) (4,774,548)
Cash generated/(utilised) by
operations 20,242,797 (3,492,096)
Interest received 4,362,523 514,660
Finance costs (30,271) (114,633)
Taxation paid (368,322) -
Net cash inflow/(outflow) from
operating activities 24,206,727 (3,092,069)
Cash flow from investing
activities (20,477,252) (27,826,916)
Cash flows from financing
activities 80,152,305 34,025,022
Net increase for the year 83,881,780 3,106,037
Cash and cash equivalents
at the beginning of the year 3,106,137 100
at end of year 86,987,917 3,106,137
Review of results
During the year under review, the AFGEM group enjoyed healthy profits,
fuelled by the achievement of sales targets and the capitalization of pre-
production expenditure at the group's mining operations in Tanzania. Revenue
from operations grew from
R 8 525 852 last year to R 41 139 920, mainly from sales derived from
ongoing bulk sampling, beneficiation and trading activities. Attributable
profits increased from R 1 033 706 in the previous financial year to
R 20 965 437.
The group's balance sheet was strengthened by a cash introduction of R 80
745 554 through the issue of 23 904 000 ordinary shares at 400 cps prior to
the listing of all of its issued shares on the JSE Securities Exchange South
Africa (`JSE') in August last year. This cash inflow, together with strong
cash flows from operating activities enabled AFGEM to increase shareholders'
equity from R 23 058 828 last year to R 133 769 819 at year end. The group
remains relatively debt-free, with long term liabilities decreasing from R
12 175 000 to R 3 241 751.
The significant increase in gross margin from 49% last year to 83% in the
year under review, was primarily due to the low mining costs allocated to
development production. During the previous year, most of the material was
purchased from outside of the group at a higher cost. This margin will
reduce in the future as AFGEM intends establishing a tanzanite buying
operation that will purchase rough and polished tanzanite from dealers at
market prices to supplement production from its mining operations.
STRATE
The JSE is proceeding with the implementation of its electronic settlement
and custody system known as STRATE (Share Transactions Totally Electronic).
STRATE is designed to achieve the contractual, rolling and irrevocable
settlement of share transactions by electronic book entries.
The share capital of African Gem Resources Limited was transferred to the
electronic STRATE environment as of 5 March 2001. Trading ensued on 26 March
2001.
Dividend policy
No dividends will be declared or paid in the current financial year. The
declaration of a dividend in the next financial year will be considered,
especially if no acquisition is pending and no new project financing is
required.
Prospects
- Continued exploration of the tanzanite ore resource and subsequent mine
development
- Initiation of commercial production in late 2001
- Beneficiation facility to be developed in Tanzania
- Tanzanite Foundation brand to be launched
- Other gemstone projects in sub-Saharan Africa to be evaluated
Change in Year End
Subject to the approval of the relevant authorities, it is envisaged that
the company will change its year end from the last day of February to the
last day of March, to coincide with calendar quarters. The next reporting
period will therefore cover the thirteen months ending 31 March 2002.
ADR Programme
The company will initiate an American Depository Receipts (`ADR') programme
with the Bank of New York. ADR's will enlarge the market for AFGEM shares,
create more diversified investor exposure and together with an aggressive
equity marketing strategy, will enhance the international image of the
company.
For and on behalf of the board
M J Nunn M Shein
Chairman & CEO Group Financial Director
22 May 2001
Directors M.J. Nunn (Chairman & CEO), M. Shein (Group Financial Director),
A Bekker*, C H Boulle*, D R Cunningham*, S Mkhize*
(* Non Executive Director)
