| Fri 21 Dec 2001, 0:00 | | Zarara Energy Limited - Unaudited Preliminary |
|
September 2001
ZARARA ENERGY LIMITED
(Formerly Mawenzi Resources Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1895/001078/06)
Share code: ZRR ISIN: ZAE000003277
("Zarara" or "the company")
Unaudited preliminary report for the year ended 30 September 2001
Issued: 27 430 900 ordinary shares of 5 cents each (2000 - 255 577 396
ordinary shares of 0,5 cent each)
Weighted average number of shares used in earnings calculations: 2001 - 26
122 254 (2000 - 233 071 909)
Abridged consolidated income statement
Year Year
Ended ended
30 Sept 2001 30 Sept 2000
R'000 R'000
Revenue 26 062 60 525
Operating loss (18 298) (27 528)
Amortisation of goodwill - (7 735)
Exceptional items (99 991) (179 751)
Loss on disposal of
subsidiary companies - (8 326)
Goodwill written-off (34 361) (135 176)
Surplus on realisation of
investment and fixed assets 854 55 519
Write-down of investments
and fixed assets (66 484) (54 994)
Provision for loss on deposit - (36 774)
Loss before investment
and interest income (118 289) (215 014)
Net interest received/(paid) 6 065 (5 482)
Loss before taxation (112 224) (220 496)
Taxation (694) (3 367)
Loss after taxation (111 530) (217 129)
Outside shareholders' interest (1 609) (1 517)
Net loss for year (109 921) (215 612)
Headline loss per share (cents) (289) (345)
Attributable loss per share (cents) (421) (925)
Headline loss reconciliation
Loss attributable to shareholders (109 921) (215 612)
Adjusted for goodwill written-off 34 361 135 176
Headline loss (75 560) (80 436)
Summarised cash flow
Cash generated/(utilised)
in operating activities 67 420 (163 237)
Cash (utilised)/generated in
investing activities (36 934) 84 727
Cash (outflow)/inflow from
financing activities (14 308) 84 148
Net cash inflow 16 178 5 638
Abridged consolidated balance sheet
At At
30 Sept 2001 30 Sept 2000
R'000 R'000
Assets
Fixed assets 20 577 18 662
Goodwill and intangible assets 177 35 129
Investment and loans 24 149 96 448
Non-current assets 44 903 150 239
Current assets 83 868 128 997
Total assets 128 771 279 236
Equity and liabilities
Capital and reserves 109 559 230 885
Outside shareholders' interest 180 1 789
Non-current liabilities 3 906 6 700
Long-term liabilities 3 906 4 791
Deferred liabilities - 1 909
Current liabilities 15 126 39 862
Total equity and liabilities 128 771 279 236
Abridged statement of changes in equity
Share capital and premium
Opening balance 364 236 216 225
Reduction of share premium (11 405) -
Ordinary shares issued - 148 011
352 831 364 236
Non-distributable reserves
Opening balance 3 446 14 075
Translation of foreign currency - 578
Transfer to distributable reserves (578) (11 207)
2 868 3 446
Distributable reserves
Opening balance (136 797) 12 638
Transfer from non-
distributable reserve 578 11 207
Transfer from general reserve - 54 970
Net loss (109 921) (215 612)
(246 140) (136 797)
Total equity 109 559 230 885
Comments
Accounting policies
The results were prepared in accordance with the Statements of Generally
Accepted Accounting Practice and are consistent with the accounting policies
applied in the interim financial report for the period ended 30 March 2001.
General Oil Exploration
Engineering analysis determined that four zones in the Kandamis production
licence, Turkey were of sufficient commercial interest to warrant testing.
The tests produced significant flows of CO2. However, as there was no market
for CO2 in the region, the wells were sealed and abandoned.
During the last quarter the company acquired, through its exploration
activities in the United States of America, a 50% working interest in 222
oil and gas producing wells on 160 leases in the states of Alabama,
Arkansas, North Dakota, Wyoming, Colorado, New Mexico, Kansas, Oklahoma,
Texas, Louisiana, and Mississippi ("Delmar project"). Zarara's share of
these properties realizes a gross production rate of 65 barrels of oil/day
("bopd") and 1,100 million cubic feet/day ("mcfd") of natural gas, which
yields approximately $80,000 per month in gross income and approximately net
revenue of $46,000 per month (after providing for interest and capital
repayments on the loan). The Delmar project has an economic life of over 40
years. The acquisition was funded through a subsidiary for $1,440,000 and in
addition a bank loan of $1,150,000 was secured from the International Bank
of Commerce of San Antonio, Texas. 75% of the gas production was hedged at a
price of $3,70 per mcf for the period of the loan.
Zarara also has a small interest in an operation that treats marine waste by
way of an integrated modular plant requiring limited land space and a low
level of wastewater retention time. This plant provides traditional
treatment and bio-treatment of oily, industrial and biological wastewaters.
Its first plant was commissioned in Gibraltar and it is now investigating a
number of specific opportunities in other port locations worldwide,
including South Africa.
A subsidiary of Zarara has acquired an interest in the Leesburg Asphalt
Company LLC. It owns a plant which is a single tower refinery designed to
process about 4 000 bopd of heavy sour crude oil. The plant has been
commissioned and full production should commence in the new financial year.
It is expected that the cost of the investment ($191 000) will be repaid in
one year.
At a meeting of the directors of Zarara Oil and Gas Limited, a subsidiary of
Zarara, held on 30 November 2001 it was decided to liquidate that company
due to high overheads and dollar-denominated operating costs. It was also
agreed to transfer any significant assets to Zarara thereby reducing the
loan due from Zarara Oil and Gas Limited. Excluding the goodwill write-off,
a further amount of R32 million has been written-off against this
investment.
Operations
During the year the company acquired the remaining 73% of the shareholding
in Stepstone Investments (Pty) Ltd for a consideration of R1,3 million. This
company holds a leasehold property situated at Maydon Wharf, Durban.
This property is leased to various tenants with the main tenant being the
Harbour Group of companies.
Southridge Properties has performed according to expectations as a result of
occupancy of the Luipaardsvlei properties.
Many of the problems arising out of the previous years operations have been
resolved. Ongoing disputes with the purchaser of the major portion of the
property portfolio still needs to be resolved. An amount of R10,4 million
has been written-off in this reporting financial year which adequately
provides for the previous financial problems.
The Harbour Group of companies lost its main customer during the year. This
resulted in a re-assessment of that company's position in the market with a
restructuring of its management and overall strategy. New tenants have taken
occupancy and it is now well-positioned to take advantage of opportunities
in the coming year.
Borrowings
Zarara has incurred borrowings of $1,15 million repayable over three years
at an interest rate of 8% for the Delmar project. This loan is serviced from
dollar revenues as discussed above and is secured by the related properties.
There is a further bond of R1,7 million in Stepstone Investments (Pty) Ltd
payable over 10 years at an interest rate of 13%. Subject to the appropriate
approvals, the company has agreed to the acquisition of Bioproducts which
includes a capital commitment of R8,2 million.
Bioproducts
On 16 November 2001 the company announced that it had signed an agreement to
acquire, in partnership with the current management of the business, the
lysine manufacturing business owned by a partnership between AECI Limited
and the Industrial Development Corporation of South Africa Limited ("IDC"),
for a consideration of R23,5 million. The IDC has agreed in principle to
acquire a 28,5% of the business for R9,4 million being its portion of the
initial consideration. The business produces 11 500 tons of lysine per year,
of which approximately 50% is exported.
Arbitration
The arbitration between Zarara, NRB Holdings Limited, New Republic Bank
Limited and SMG Holdings Limited was settled during November 2001. A further
amount of R37, 2 million has been written-off.
In the matter between NRB Holdings Limited, New Republic Bank Limited and
Zarara the action by NRB Holdings Limited has been withdrawn.
The constitution of the board of directors of Zarara
Mr Hennie Buitendag has been appointed to the board of the company. Mr
Buitendag is a director of several listed companies in South Africa and
abroad and has a depth of experience which will be of value to the company.
It is envisaged that additional appointments will be made during the year to
better reflect the spread of shareholder base of Zarara.
By order of the board
24 December 2001
