| Wed 27 Feb 2002, 0:00 | | Sallies Limited - Unaudited Results For The Six Mo |
|
2001 and Further Cautionary
SALLIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1903/001879/06)
JSE Share code: SAL
ISIN Code : ZAE000022588
("the Group" or "the Company")
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2001
AND FURTHER CAUTIONARY
HIGHLIGHTS
23% increase in profit from mining
369% increase in headline earnings per share
CONSOLIDATED INCOME STATEMENTS
Six months Six months 12 months
ended ended ended
31 Dec 31 Dec 30 June
2001 2000 Per- 2001
Unaudited Unaudited centage Audited
R'000 R'000 change R'000
Revenue - mining 56 818 40 198 41 99 031
Cost of sales (42 147) (29 559) 43 (77 897)
Profit
from mining activities 14 671 12 316 19 23 307
Less:
Depreciation (1 019) (1 031) (2 173)
Amortisation
of mineral rights (1 016) (1 004) (2 053)
Operating profit from mining 12 636 10 281 23 19 081
Profit on disposal of assets 16 - 167
Administrative expenses (4 775) (3 162) (8 768)
Impairment of assets (6 296) - -
Amortisation of goodwill (415) (594) (1 020)
Net finance costs (1 188) (1 706) (2 896)
Net foreign exchange gains 2 281 (2 837) (2 138)
Net profit before taxation 2 259 1 982 14 4 426
Taxation (677) (775) (242)
Net profit for period 1 582 1 207 31 4 184
Issued shares (number) 92 294 454 64 574 054 92 294 454
Weighted average shares
issued (number) 92 294 454 64 574 054 66 017 034
Weighted average shares
issued for diluted
earnings per share (number) 98 204 454 100 984 054 101 284 054
Reconciliation of earnings:
Net profit attributable to
ordinary shareholders for
basic earnings per share 1 582 1 207 31 4 184
Amortisation of goodwill 415 594 1 020
Impairment of assets
(net of tax) 4 407 - -
Deferred tax on amortised
goodwill (415) (594) (656)
Profit on disposal of assets
(net of tax) (11) - (202)
Loss on discontinued
operations (net of tax) - - 1 566
Opening stock of mined
ore stock - (315) -
Net profit attributable to
ordinary shareholders for
headline earnings per share 5 978 892 570 5 912
Depreciation 1 019 1 031 1 521
Amortisation
of mineral rights 1 016 1 004 2 053
Adjusted cash earnings
attributable to ordinary
shareholders for cash
earnings per share 8 013 2 927 174 9 486
Income adjusted for diluted
earnings per share 130 492 2 664
Earnings per share:
Basic
- undiluted (cents) 1,7 1,9 (8) 6,3
- diluted (cents) 1,7 1,7 4 6,8
Headline
- undiluted (cents) 6,5 1,4 369 9,0
- diluted (cents) 6,2 1,4 354 8,5
Cash earnings
- undiluted (cents) 8,7 4,5 92 14,4
- diluted (cents) 8,3 3,4 145 12,0
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Accu-
Share Share mulated
capital premium income Total
R'000 R'000 R'000 R'000
Balance at 30 June 2000 64 42 020 (582) 41 502
Net income for period - - 1 207 1 207
Balance at 31 December 2000 64 42 020 625 42 709
Net proceeds from share issue 28 11 943 - 11 962
Net income for period - - 2 977 14 939
Balance at 30 June 2001 92 53 954 3 602 57 648
Net income for period - - 1 582 1 582
Balance at 31 December 2001 92 53 954 5 184 59 230
CONSOLIDATED BALANCE SHEETS
Restated
31 Dec 31 Dec 30 June
2001 2000 2001
Unaudited Unaudited Audited
R'000 R'000 R'000
EQUITY AND LIABILITIES
Capital and reserves 59 230 42 709 57 648
Share capital and premium 54 046 42 084 54 046
Accumulated income 5 184 625 3 602
Non-current liabilities 21 717 48 216 26 787
Long-term loan 5 279 29 494 8 848
Provision for environmental
rehabilitation 1 096 966 937
Deferred taxation 15 342 17 756 17 002
Current liabilities 42 815 22 299 23 979
Accounts payable and provisions 14 823 10 974 13 522
Taxation payable 1 304 1 512 -
Bank overdraft 2 167 - -
Current portion of long-term
liabilities 24 521 9 813 10 457
Total equity and liabilities 123 762 113 224 108 414
ASSETS
Non-current assets 67 014 71 790 74 554
Property, plant and equipment 54 732 58 668 61 857
Goodwill 12 282 13 122 12 697
Current assets 56 748 41 434 33 860
Inventories 12 663 14 582 8 652
Accounts receivable 36 816 19 308 15 036
Forward exchange contract asset 7 269 - 52
Taxation pre-paid - - 910
Cash and cash equivalents - 7 544 9 210
Total assets 123 762 113 224 108 414
Net asset value per share (cents) 64,2 66,1 62,5
CONSOLIDATED CASH FLOW STATEMENTS
Six months Six months 12 months
ended ended ended
31 Dec 31 Dec 30 June
2001 2000 2001
Unaudited Unaudited Unaudited
R'000 R'000 R'000
Net cash inflow/(outflow)
from operating activities (11 191) 8 011 24 982
Cash surplus/(deficit) generated
by operations (9 880) 9 662 30 466
Net interest paid (1 188) (1 706) (2 896)
Normal taxation (paid)/received (123) 55 (2 588)
Net cash outflow from
investment activities (1 222) (2 583) (7 783)
Net additions to mine plant,
equipment and buildings (2 742) (2 583) (8 903)
Additions to office furniture
and equipment - - (96)
Proceeds from disposal of assets 1 520 - 1 216
Net cash inflow/(outflow)
from funding activities 1 036 - (10 105)
Proceeds from issue of shares - - 12 012
Long-term loan
- raised 1 157 - -
- repaid (121) - (22 117)
Net increase/(decrease) in
cash and cash equivalents (11 377) 5 428 7 094
Cash and cash equivalents
at beginning of period 9 210 2 116 2 116
Cash and cash equivalents/
(overdraft) at end of period (2 167) 7 544 9 210
OPERATING STATISTICS
Six months Six months 12 months
ended ended ended
31 Dec 31 Dec Percentage 30 June
2001 2000 change 2001
Acid grade fluorspar
concentrat
Ore mined tonne 603 962 596 755 1 1 120 386
Stripping tonne ore 0,63 0,49 29 0,54
Ore milled tonne 474 296 493 403 (4) 1 055 661
Head grade % 15,13 13,68 11 13,69
Production tonne 56 996 57 686 (1) 112 391
Sales volume tonne 53 443 47 450 13 109 310
Average selling
price Rand/tonne 987,63 790,04 25 840,89
Average export
sales price USD/tonne 110,57 110,73 (0) 112,16
Average
exchange rate Rand/USD 9,13 7,33 25 7,67
Average export
sales price Rand/tonne 1 009,31 811,65 24 860,27
Average cost of
export product Rand/tonne 727,26 615,34 18 663,45
Average local
sales price Rand/tonne 724,86 610,98 19 657,10
Average cost of
local product Rand/tonne 576,03 484,95 19 517,73
Metallurgical grade
fluorspar concentrate
Production tonne 7 247 6 615 10 11 753
Sales volume tonne 7 092 6 659 7 13 027
Average selling
price Rand/tonne 497,34 425,47 17 454,05
Average cost of
production Rand/tonne 438,58 373,69 17 430,42
Agricultural lime
Sales volume tonne 23 445 16 152 45 42 649
Average selling
price Rand/tonne 8,01 6,61 21 6,28
Other
Emloyment number 145 180 (19) 182
Staff turnover % 3 2 114 10
Safety rating stars 5 5 (100) 5
COMMENTARY
Overview
The headline results for the six months ended 31 December 2001 are much
improved over the results for the corresponding prior period, while the
reported net profit was reduced by an impairment of assets with a book value
of R6,3 million. The improved headline performance emanated primarily from
the weakening Rand/US$ exchange rate, whilst the results were adversely
affected by the delivery of 2 250 DMT of acid grade fluorspar as consignment
stock.
Production
Acid grade fluorspar concentrate production decreased by 1% mainly due to
significantly lower recoveries, caused by the nature of ore mined, to those
attained in the previous corresponding period. The 18% increase in the cost
of production was mainly due to the change from principal mining to
contractor mining, higher stripping ratios, lower recoveries and increases
in the cost and consumption of reagents.
Metallurgical grade fluorspar concentrate is still purchased from a
competitor, dried and briquetted, for sale into the local market. Production
is limited to demand, while the cost of supplying customers increased by
17%, which was mainly as a result of an increase in the cost of raw
materials and the transport thereof.
Sales
Acid grade fluorspar concentrate sales volumes increased by 13% due to an
additional shipment being shipped during the reporting period. There was no
increase in US$ sales prices, while Rand prices were 24% up due to Rand
weakness. During the period under review a major customer decided to resort
to Internet-bidding, changing their procurement specifications and the terms
and conditions of the supply agreement, which were considered onerous and
unacceptable to the Board. Consequently, average pricing during the second
half will reduce by approximately US$5,0 per tonne. The full production
capacity of the plant has been sold for the calendar year ending 31 December
2002.
Currently the Group remains the only local supplier of metallurgical
grade fluorspar concentrate to the local market. Sales volumes remain
dependent on local demand, with pricing based on import parity pricing.
Mineral resources
The Group, through its ongoing exploration programme, has maintained its
measured proven and probable reserves at levels that are adequate for a
further 14 years of production at current production levels. Large
unexplored inferred resources exist in close proximity to the plant.
Capital expenditure
Capital expenditure during the reporting period amounted to R2,7 million
and relates mainly to the acquisition of a XRF analyser (R1,1 million) and a
new haul road (R1,6 million) from the Buffelshoek ore deposit.
During the 2000 and 2001 financial years the Group embarked on a
feasibility study to increase production levels to 260 000 tonne per annum.
In the light of the changed economic outlook the Board has decided not to
proceed with the expansion as envisaged and has consequently decided to
write-off the cost of the feasibility of R4,9 million. Further, mining
assets with a book value of R1,4 million are impaired, as these assets had
not been sold by the reporting date.
Accounting policies
The Group's accounting policies conform to South African Statements of
Generally Accepted Accounting Practice. These policies are consistent with
those applied in the previous year.
Restatement of comparative results
The consolidated income statement, earnings per share, consolidated
balance sheet and net asset value per share for the period ended 31 December
2000 have been restated to realign with current disclosure.
Diluted earnings per share
Diluted earnings per share have been calculated assuming that at the
beginning of the year 5 910 000 (2000 - 5 610 000) share options, allocated
to directors, employees and consultants, were exercised and, for comparative
purposes, that RMB had exercised its conversion right in the issue of 36 710
000 shares, the number of shares being based on the share price and exchange
rate at 1 July 2000. The net profit is therefore adjusted by the after-tax
effect of interest earned on the additional capital from the exercise of the
share options and in the comparative years the interest and foreign exchange
gains/(losses) on the US$1,5 million portion of the RMB loan.
Further cautionary announcement
Further to the cautionary announcements dated 6 December 2001 and 17
January 2002, shareholders are advised that negotiations are continuing
which, if successfully concluded, may have an effect on the price of the
Company's securities.
Accordingly, shareholders are advised to continue to exercise caution
when dealing in the Company's securities until a full announcement is made.
On behalf of the Board
M J Tuite
Chairman
Johannesburg
27 February 2002
Registered office
KPMG Forum, 1226 Schoeman Street, Pretoria, 0002
(PO Box 11265, Hatfield, 0028)
Transfer secretaries
Computershare Services Limited, 1st Floor, Edura, 41 Fox Street,
Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107)
Directors
M J Tuite* (Chairman), P H de Villiers (Managing), O R Dix, L J Woolcock*
*Australian
