| Fri 14 Dec 2001, 0:00 | | Falcon Investment Holdings Societe Anonyme - Preli |
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unaudited results for the year ended 30th September 2001
Falcon Investment Holdings Societe Anonyme
(Incorporated in Luxembourg. R.C. No. B 39773)
Registered Office
6 rue Adolphe Fischer,
L-1520, Luxembourg
14th December 2001
Preliminary announcement of unaudited results for the year ended 30th
September 2001
The situation of our operating mines in Zimbabwe is very grave. Falcon Gold
Zimbabwe Limited ("Falgold"), our 57.1% subsidiary, operates three gold
mines in Zimbabwe and continues to run at a loss. Olympus Gold Mines
Limited ("Olympus"), a 66.7% subsidiary, operates another gold mine at a
small profit.
The Group's loss for the year after tax and minorities was US$399,000 (2000:
US$213,000). The deterioration in performance was due to increased losses
in Zimbabwe, as explained below, development costs on our Chilean iodine
project and a reduction in interest income as a result of lower cash
balances and falling world interest rates.
The Government of Zimbabwe pays 20% of the proceeds of the sale of gold we
produce into foreign currency bank accounts at the international price of
gold. Sale proceeds for the balance of our production are paid in Zimbabwe
Dollars at the gold support price converted at the official rate of
exchange. The gold support price was introduced in April 2001 at US$343 per
ounce and increased to US$430 per ounce in August 2001. Prior to April 2001
the Zimbabwe dollar element of our sales proceeds was based on the
international price of gold.
The price in Zimbabwe dollars that we are receiving from the Government of
Zimbabwe for our gold has increased by less than 50% since September 2000,
in spite of the fact that inflation in Zimbabwe is running at close to 100%
per annum. Most of our mining consumables and spares, though purchased
locally, are imported. The costs of these inputs have risen considerably
because our suppliers have had to obtain foreign currency from the parallel
market at rates of up to Z$300:US$1. This compares to the official exchange
rate of Z$55:US$1. As a result of the extraordinary efforts of management
in Zimbabwe operating losses have only increased by 22% over the last year
to US$490,000.
We produced 1,215kg of gold in the year to 30th September 2001 (2000:
1,310kg) and employ 1,171 people in Zimbabwe. We expect that the Government
of Zimbabwe will continue to support the gold mining industry and enable us
to continue operations for the short term. A presidential election is due
before the end of April 2002 and we anticipate that the operating
environment will improve in the second half of the year. The accounts of
our Zimbabwe subsidiaries therefore continue to be prepared on a going
concern basis. The book value of our share of the net assets of Falgold and
Olympus at 30th September 2001, translated at the official exchange rate of
Z$55:US$1, was US$1,998,000 (2000: US$2,402,000). It is unlikely that we
would be able to recover much of this value should we be forced to close the
mines and any amount received may not be remittable from Zimbabwe.
We own 52.2% of a company that has identified, and obtained mining rights
over, a significant iodine deposit in Chile's Atacama Desert. The deposit
has close to 50 million metric tonnes of mineable resources with
economically attractive iodine grades and could support an operation to
supply around 5% of current world consumption for 20 years. Work is
progressing on access rights, the identification of cheaper alternative
water supplies and the clearance of a minor title dispute, prior to
completion of the pre-feasibility study.
The share consolidation proposed at the end of last year was approved at the
Annual General Meeting and shareholders have been issued with new share
certificates for two shares of Euro 1.25 each to replace three old shares of
US$2.00 each. The resulting reduction in share capital and share premium
has been transferred to eliminate the deficit on the holding company's
profit and loss account.
The outlook for the year ahead is very uncertain. Much depends on the
operating environment in Zimbabwe, which we do not expect to improve in the
first half of the year. Our objectives are to maintain operations in
Zimbabwe and to generate value from our investment in Chile.
D C MARSHALL
Chairman
Unaudited
Consolidated Profit and Loss Account
Year ended 30th September 2001 2000
US$000 US$000
Revenue 13,894 12,062
Operating costs (14,613) (12,774)
Operating loss before
interest and taxation (719) (712)
Interest received 83 307
Interest paid (1) -
Exchange losses (15) (20)
Loss on ordinary activities before exceptional item and tax
(652) (425)
Exceptional items - 198
Loss before taxation (652) (227)
Tax credit/(charge) on ordinary
activities 210 (16)
Loss on ordinary activities after tax (442) (243)
Minority interests 43 30
Loss attributable to shareholders
and retained for the year (399) (213)
Loss per share - US cents - basic 21c 11c
Headline loss per share - US cents 21c 17c
Dividend per share - US cents Nil Nil
Consolidated Balance Sheet
Unaudited
at 30 September 2001 2000
US$000 US$000
Assets
Non-current assets
Property, plant and equipment 4,855 4,651
Investments 18 17
4,873 4,668
Current assets
Mine stores 733 296
Accounts receivable 1,154 334
Cash and bank balances 864 1,998
2,751 2,628
Current liabilities
Accounts payable (falling due within
one year) (3,054) (1,512)
Net current (liabilities)/assets (303) 1,116
Total assets less current liabilities 4,570 5,784
Non current liabilities
Deferred taxation (325) (722)
4,245 5,062
Capital and reserves
Called up share capital 2,060 5,592
Other reserves 326 (1,432)
Retained earnings 102 (966)
Shareholders' funds 2,488 3,194
Minority interests 1,757 1,868
4,245 5,062
Consolidated Cash Flow Statement
Year ended 30th September 2001 2000
US$000 US$000
Cash flows from operating activities
Cash used by operations (537) (529)
Interest received 83 307
Interest paid (1) -
Taxation - paid (183) (231)
Net cash outflows from operating activities (638) (453)
Investment activities
Purchase of tangible assets (990) (2,226)
Proceeds on disposal of investments
and tangible fixed assets 111 437
Net cash outflow from investment activities (879) (1,789)
Financing activities
Minority interests in Falcon de Chile 94 820
Dividend paid to outside shareholders (107) -
Net cash (outflow)/inflow from financing (13) 820
Net decrease in funds (1,530) (1,422)
Net funds at start of year 1,998 3,879
Effect of foreign exchange rate changes (83) (459)
Net funds at end of year 385 1,998
Notes
1. The results for the year ended 30th September 2001 and the balance sheet
at that date, which are unaudited, have been prepared on the basis of
accounting policies adopted for the period ended 30th September 2000. These
financial statements do not comply with the requirements of IAS 29
(Financial reporting in Hyperinflationary Economies), otherwise they comply
with International Accounting Standards and Luxembourg law in all material
respects. The results, which have been reviewed by the Company's auditors,
Deloitte & Touche S.A., are unaudited.
2.Capital expenditure during the year was equivalent to US$990,000 (2000-
US$2,226,000). At 30th September 2001, there were outstanding capital
commitments, authorised but not contracted, equivalent to US$765,000 (2000-
US$626,000).
3.Loss per share is based on the result for the year attributable to members
and the number of shares in issue, following the capital reduction, of
1,864,026. The comparative figure has been amended accordingly.
NOTICE OF MEETING
According to the Company's Articles of Incorporation ("Articles"), the
Annual General Meeting of Shareholder's ("AGM") is required to be held on
the last Friday in the month of March. The Articles further state that if
the AGM cannot take place on that date, it should take place on the first
preceding day. Because Friday 29th March 2002 is Good Friday, the AGM
should take place on Thursday 28th March 2002. However, as it will not be
possible for either the Chairman or any of the Directors to attend the
meeting in person and to properly present the Annual Report and Accounts to
the meeting on that date, it has been decided to bring forward the meeting.
Accordingly the Annual General Meeting will take place on Tuesday 26th March
2002 at 3.00 p.m. at the registered office of the Company, 6 rue Adolphe
Fischer L-1520 Luxembourg. Copies of the annual report and accounts will be
posted to shareholders on or about 14th January 2002.
