| Fri 27 Dec 2002, 11:54 | | Falcon Investment Holdings Societe Anonyme - Revie |
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Falcon Investment Holdings Societe Anonyme
(Incorporated in Luxembourg - R.C. Number B39773)
("the Company")
Share code: FLC ISIN number: LU0042254812
Registered Office
6 rue Adolphe Fischer,
L-1520, Luxembourg
Reviewed results for the year ended 30th September 2002
This has been a very difficult year with little by way of concrete
achievement to show to shareholders as a result of all of the effort that has
been put in. As advised in my interim report Venice gold mine in Zimbabwe
was closed in the year. Thanks to the labours of our loyal and hardworking
workforce, our three remaining gold mines in Zimbabwe continue to operate for
the time being, despite the deteriorating economic environment. We are
continuing work on the development of our iodine deposit in Chile.
Zimbabwe
The Government of Zimbabwe has maintained the official exchange rate for the
Zimbabwe dollar at Z$55:US$1 for the last two years, despite rampant
inflation over that period, officially measured in excess of 100% per annum.
There have also been a number of other exchange rates during the year for
example: Z$300:US$1 for customs duties, Z$158:US$1 for tobacco sales and an
implied rate for most of the year of Z$144:US$1 for gold bullion sales.
There has been an unofficial "parallel" market for foreign exchange and at
the year end the exchange rate in this market was Z$720:US$1. Since the year-
end the Government of Zimbabwe has announced tighter restrictions on the
availability and use of foreign currencies and we are still evaluating the
impact this will have on our business.
In view of the lack of clarity in respect of exchange rates pertaining in
Zimbabwe exacerbated by the recently announced foreign exchange regulations,
your Directors have deemed it prudent not to consolidate earnings emanating
from Zimbabwe or the assets utilised to generate those earnings. Instead,
the unaudited financial results include only the income from Zimbabwe that we
have received in United States dollars.
However we believe that our investments in Zimbabwe still have value for
shareholders and, as a guide and for information purposes only, we have
prepared an unaudited illustrative consolidated Group Profit and Loss Account
and an unaudited illustrative consolidated Group Balance Sheet which are set
out below. These illustrative figures have been prepared on a conservative
basis by translating the Profit and Loss Accounts of our Zimbabwe investments
at the average of the month end parallel exchange rates (Z$450:US$1; 2001:
Z$151:US$1) and the Balance Sheets at the closing parallel exchange rates
(Z$720:US$1; 2001: Z$360:US$1)
The impact on the business of the controlled price which we receive for our
gold production is clearly demonstrated by the illustrative consolidated
Group Profit and Loss Account. Gold production has declined 10% to 1,093kg
from 1,215kg last year, mainly due to the closure of Venice mine, however
revenue has declined in US dollar terms by 29%. Excluding Venice, gold
production was 1,044kg compared to 1,065kg last year. The squeeze on income
means that no funds are available for exploration and this is resulting in
declining proven reserves, which will constrain future production. Gold
production is being concentrated in areas of proven reserves with high gold
content to maximise income in order to cover ever inflating operating costs,
which have increased in local currency by over 100% in the year. We continue
to make representations to the Government of Zimbabwe to permit us to obtain
greater control over the foreign exchange generated by the sale of our gold
production, in order to safeguard the jobs of our employees and our
suppliers` employees.
We are in negotiations regarding the restructuring of our investment in
Falcon Gold Zimbabwe Limited. These negotiations have reached an advanced
stage and we will make a further announcement once we have received the
requisite consents from regulatory authorities.
Chile
Development work is continuing on our Iodine deposit in Chile. We have
submitted an environmental impact assessment and are in negotiations with
potential joint venture partners who could assist with marketing of the
iodine and nitrate by-products and who would provide a share of the funding
required to develop the project.
Prospects
The prospects in Chile are exciting and we will keep shareholders informed of
significant developments as they occur. However prospects in Zimbabwe remain
bleak. Our objective is to maintain operations and an effective management
infrastructure in Zimbabwe so that we can capitalise on opportunities that
may present themselves in the future.
David C Marshall
Chairman
24th December 2002
NOTICE OF MEETING
The Annual General Meeting will take place on Friday 28th March 2003 at 3.00
p.m. at the registered office of the Company, 6 rue Adolphe Fischer L-1520
Luxembourg.
Rwed Consolidated
Profit and Loss
Account
2001 2001 2002 FOR THE YEAR ENDED 2002 2001 2001
30th SEPTEMBER
Restated Restated
R000 R000 R000 US$00 US$000 US$00
0
125,046 - - Revenue - - 13,89
(131,517) (4,401) (3,805) Operating costs (361) (489) (14,6
(6,471) (4,401) (3,805) Operating loss before (361) (489) (719)
interest and taxation
- 1,512 1,318 Income from 125 168 -
investment in
Zimbabwean subsidiary
- dividend
747 504 116 Interest received 11 56 83
(9) - - Interest paid - - (1)
(135) - (42) Exchange losses (4) - (15)
(5,868) (2,385) (2,413) Loss before (229) (265) (652)
exceptional item and
taxation
- - (5,892) Exceptional item (see (559) - -
note below)
(5,868) (2,385) (8,305) Loss before taxation (788) (265) (652)
1,890 (387) (348) Tax (charge)/credit (33) (43) 210
on ordinary
activities
(3,978) (2,772) (8,653) Loss on ordinary (821) (308) (442)
activities after tax
387 270 253 Minority interests 24 30 43
(3,591) (2,502) (8,400) Loss attributable to (797) (278) (399)
shareholders and
retained for the year
189 c 135 c 453 Loss per share US 43 15 c 21
cents - basic and
fully diluted
189 c 135 c 137 Headline loss per 13 15 c 21
share - US cents
SA cents SA cents SA US US cents US ce
cents cents
Note: The exceptional item is a provision to write down the carrying
value of the investments.
Reviewed Consolidated Statement of
Changes in Equity
2001 2001 2002 2002 2001
Restated
R000 R000 R000 US$000 US$000
Exchange differences on translation
of the financial statements of
(2,763) - 327 foreign entities 31 -
(2,763) - 327 Net profit/(loss) not recognised in
the income statement 31 -
(3,591) (2,502) (8,400) Net loss for the year (797) (278)
(6,354) (2,502) (8,073) Total recognised losses and movement
in shareholders` funds (766) (278)
28,746 19,773 20,226 Opening shareholders` funds 1,919 2,197
22,392 17,271 12,153 Closing shareholders` funds 1,153 1,919
Reviewed Consolidated
Balance Sheet
2001 2001 2002 AT 30th SEPTEMBER 2002 2001 2001
Restated Restated
R000 R000 R000 Assets US$000 US$000 US$000
Non current assets
43,695 16,011 18,150 Property, plant and 1,722 1,779 4,855
equipment
162 6,201 1,370 Investments 130 689 18
43,857 22,212 19,520 1,852 2,468 4,873
Current assets
6,597 - - Mine stores - - 733
10,386 720 1,170 Accounts receivable 111 80 1,154
7,776 6,489 3,362 Cash and bank balances 319 721 864
24,759 7,209 4,532 430 801 2,751
Current liabilities
(27,486) (4,068) (2,867) Accounts payable (falling
due within one year) (272) (452) (3,054)
(2,727) 3,141 1,665 Net current 158 349 (303)
assets/(liabilities)
41,130 25,353 21,185 Total assets less current
liabilities 2,010 2,817 4,570
Non current liabilities
(2,925) - - Deferred taxation - - (325)
38,205 25,353 21,185 2,010 2,817 4,245
Capital and reserves
18,540 18,540 21,712 Called up share capital 2,060 2,060 2,060
2,934 2,934 3,436 Other reserves 326 326 326
918 (4,203) (12,996) Retained earnings (1,233) (467) 102
22,392 17,271 12,152 Shareholders` funds 1,153 1,919 2,488
15,813 8,082 9,033 Minority interests 857 898 1,757
38,205 25,353 21,185 2,010 2,817 4,245
Note: The Zimbabwe dollar exchange rate used for balance sheet purposes was
Z$720 : US$1.
Reviewed Consolidated Cash Flow
Statement
2001 2001 2002 FOR THE YEAR ENDED 30th 2002 2001 2001
SEPTEMBER
Restated Restated
R000 R000 R000 US$000 US$000 US$00
Cash flows from operating
activities
(4,833) (4,806) (5,175) Cash used by operations (491) (534) (537)
747 504 116 Interest received 11 56 83
(9) - - Interest paid - - (1)
- 1,512 1,318 Dividend received from
Zimbabwean subsidiary 125 168 -
(1,647) (387) (422) Taxation paid (40) (43) (183)
(5,742) (3,177) (4,163) Net cash outflows from
operating activities (395) (353) (638)
Investment activities
(8,910) (3,978) (358) Purchase of tangible assets (34) (442) (990)
999 - - Proceeds on disposal of
investments and tangible fixed
assets - - 111
(7,911) (3,978) (358) Net cash outflow from (34) (442) (879)
investment activities
(13,653) (7,155) (4,521) Net cash outflow before
financing activities (429) (795) (1,51
Financing activities
846 846 305 Minority interests in Falcon de
Chile 29 94 94
(963) - - Dividend paid to outside
shareholders - - (107)
(117) 846 305 Net cash inflow/(outflow) from
financing 29 94 13
(13,770) (6,309) (4,216) Net decrease in funds (400) (701) (1,53
17,982 12,798 7,599 Net funds at start of year 721 1,422 1,998
(747) - (21) Effect of foreign exchange rate (2) - (83)
changes
3,465 6,489 3,362 Net funds at end of year 319 721 385
Notes
1. As described in the Chairman`s Review, the earnings, assets and
liabilities of Zimbabwe subsidiary companies have not been consolidated.
Investments have been reflected in accordance with IAS 29. The 2001
comparatives have been restated. The results for the year ended 30th
September 2002 and the balance sheet at that date, which are unaudited, have
otherwise been prepared on the basis of accounting policies adopted for the
year ended 30th September 2001. The 2001 comparatives prior to restatements
financial statements do not comply with the requirements of IAS 29 (Financial
reporting in Hyperinflationary Economies). Otherwise they financial
statements comply with International Accounting Standards and Luxembourg law
in all material respects. The results, which have been reviewed by the
Company`s auditors, AGN-Horsburgh & Co., are unaudited. The auditors report,
which is unqualified, is available for inspection at the company`s registered
address.
2. Capital expenditure during the year was equivalent to US$34,000 (2001 -
US$990,000, restated US$441,000). At 30th September 2002, there were no
outstanding capital commitments (2001 - US$765,000, restated - nil).
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 on
30th March 2001, of 1,864,026. The comparative figure has been amended
accordingly.
Notes on the directors` illustrative statements:
The following statements are for illustrative purposes only and are referred
to in paragraph 3 - Zimbabwe, of the chairman`s statement above.
2. The following statements which have been reviewed by the Company`s
auditors, AGN-Horsburgh & Co., are unaudited. The auditors report, which is
unqualified, is available for inspection at the company`s registered address.
Illustrative Reviewed Consolidated
Profit And Loss Account
2002 FOR THE YEAR ENDED 30th SEPTEMBER 2002 2001
R000 R000 US$000 US$000
94,626 111,408 Market value of gold produced 10,570 10,514
(49,077) (73,517) Effect of exchange controls and
regulated prices (6,975) (5,453)
45,549 37,891 Revenue- converted at average
parallel exchange rate 3,595 5,061
(50,706) (40,811) Operating costs (3,872) (5,634
(5,157) (2,920) Operating loss before interest and
taxation (277) (573)
594 179 Interest received 17 66
- (21) Interest paid (2) -
(108) (42) Exchange gains/(losses) (4) (12)
(4,671) (2,804) Loss before taxation (266) (519)
396 (569) Tax (charge)/credit on ordinary
activities (54) 44
(4,275) (3,373) Loss on ordinary activities after
tax (320) (475)
315 (63) Minority interests (6) 35
(3,960) (3,436) Loss attributable to shareholders
and retained for the year (326) (440)
216 c 177 c Loss per share US cents - basic,
fully diluted and headline 17 c 24
SA cents SA cents US cents US cen
Illustrative Reviewed Consolidated
Statement of Recognised Gains and Losses
2002 2002
R000 US$000
Exchange differences on translation of
the financial statements of
(790) foreign entities (75)
(790) Net loss not recognised in the income (75)
statement
(3,436) Net loss for the year (326)
(4,226) Total recognised losses and movement in (401)
shareholders` funds
16,126 Opening shareholders` funds 1,530
11,900 Closing shareholders` funds 1,129
Illustrative Unaudited
Consolidated Balance Sheet
2001 2002 AT 30th SEPTEMBER 2002 2001
Restated Restated
R000 R000 Assets US$000 US$000
Non current assets
20,241 20,564 Property, plant and equipment 1,951 2,249
27 11 Investments 1 3
20,268 20,575 1,952 2,252
Current assets
1,008 927 Mine stores 88 112
2,106 1,655 Accounts receivable 157 234
6,687 4,690 Cash and bank balances 445 743
9,801 7,272 690 1,089
Current liabilities
(6,570) (5,671) Accounts payable (falling due
within one year) (538) (730)
3,231 1,601 Net current assets 152 359
23,499 22,176 Total assets less current
liabilities 2,104 2,611
Non current liabilities
(450) (379) Deferred taxation (36) (50)
23,049 21,797 2,068 2,561
Capital and reserves
18,540 21,712 Called up share capital 2,060 2,060
2,934 3,436 Other reserves 326 326
(7,704) (13,248) Retained earnings (1,257) (856)
13,770 11,900 Shareholders` funds 1,129 1,530
9,279 9,897 Minority interests 939 1,031
23,049 21,797 2,068 2,561
Sponsor: The Janus Corporation (Pty) Limited
Date: 27/12/2002 08:31:00 AM Produced by the JSE SENS Department
