| Tue 4 May 2004, 18:08 | | YEAR ENDED 31 DECEMBER 2003 |
|
Eersteling - Audited Results;
Release Date: 04/05/2004 17:30:01 Code(s): ESL
Eersteling - Audited Results;
- Conversion of Ordinary shares;
- Delisting; and
- Withdrawal of Cautionary Announcement.
Eersteling Gold Mining Company Limited
(Incorporated in the Republic of South Africa)
(Registration number 1987/001814/06)
Share code: ESL ISIN code: ZAE 000002473
("Eersteling" or the "Company")
ANNOUNCEMENT REGARDING:
- AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2003;
- THE PROPOSED CONVERSION OF 584 362 ORDINARY SHAREs TO REDEEMABLE
CONVERTIBLE PREFERENCE SHARES, REDEMPTION OF SUCH PREFERENCE SHARES AND THE
DELISTING OF EERSTELING; AND
- WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. Abridged Annual Financial Statements
1.1 Commentary
The strengthening of the rand against the United States dollar has resulted in
the reduction during the year, after accrual of interest of R1 925 000, of R21
274 000 in the amount owing on the United States dollar Caledonia Shareholder"s
Loan.
An amount of R49 495 000 has been written off the value of capitalised mining
assets in accordance with Accounting Statement AC128 on impairment of assets.
The directors of Eersteling have resolved not to declare a divided for the year
end 31 December 2003.
1.2 Basis of preparation of financial statements
The financial statements have been prepared in accordance with South African
statements of Generally Accepted Accounting Practice (GAAP) and the accounting
policies used are consistent with the prior year, except in respect of mining
assets and prospecting and exploration expenditure. In previous years the
accounting policy for the mining assets comprised the appropriation method
generally adopted by the gold mining industry in South Africa at the time.
1.3 Audit report
Eersteling"s auditors BDO Spencer Steward (Johannesburg), have audited the
financial information for the year ended 31 December 2003. Their unqualified
audit report is available for inspection at the registered office of the
Company.
1.4 The following are the abridged financial statements for Eersteling for the
year ended 31 December 2003 :
BALANCE SHEETS
2003 2002
R"000 R"000
Assets
Non-current assets
Mining assets 57 837 107 301
Current assets 2 609 362
Greeenstone Rehabilitation 335 305
Trust
Accounts receivable 242 35
Bank balances 2 032 22
Total assets 60 446 107 663
Equity and liabilities
Capital and reserves (30 516) 822
Issued capital 67 570 67 570
Accumulated loss (98 086) (66 748)
Non-current liabilities 88 378 106 784
Borrowings 87 378 106 061
Provision for rehabilitation 1 000 723
Current liabilities 2 584 57
Accounts payable 634 57
Bank overdraft 1 950 -
Total equity and liabilities 60 446 107 663
Net asset value per share (197,3) 5,3
(cents)
INCOME STATEMENTS
2003 2002
R"000 R"000
Gross revenue 290 37
Prospecting and exploration (2 426)
Operating costs (981) (100)
Operating profit/(loss) (3 117) (63)
Finance (costs) recovered 21 274 30 313
Impairment of mining assets (49 495)
Profit (loss before taxation (31 338) 30 250
Taxation - -
Profit (loss) for the year (31 338) 30 250
after taxation
Earnings (loss) per share (202,6) 195,6
(cents)
Headline earnings (loss) per (32,6) (12,8)
share (cents)
Reconciliation of Earnings to headline earnings per share
Profit (loss) for the year (31 338) 30 250
after taxation
Less impairment of assets 49 495 -
Add (less) unrealised foreign (23 199) (32 238)
exchange gain
Headline earnings (loss) (5 042) (1 988)
STATEMENTS OF CHANGES IN EQUITY
Share Share Accumulated
Capital Premium Loss Total
R"000 R"000 R"000 R"000
Balance at 01 155 67 415 (96 998) (29 428)
January 2002
Net profit for the 30 250 30 250
year
Balance at 01 155 67 415 (66 748) 822
January 2003
Loss for the year (31 338) (31 338)
Balance at 31 155 67 415 (98 086) (30 516)
December 2003
CASH FLOW STATEMENTS
2003 2002
R"000 R"000
Cash flows from operating 18 774 30 338
activities
Cash generated by operating (2 500) 25
activities
Finance (costs) recovered 21 274 30 313
Cash flows from investing (31) 57
activities
Proceeds of recoveries of - 57
plant and equipment
Fixed asset additions (31) -
Cash flows from financing
activities
Long term loans raised (18 683) (30 313)
(repaid)
Increase in cash and cash 60 82
equivalents
Cash and cash equivalents at
beginning of the 22 (60)
Year
Cash and cash equivalents at 82 22
end of the year
2. Introduction to the transaction
Eersteling shareholders are referred to the cautionary announcement published on
SENS on 26 February 2004 wherein it was detailed that the board of directors of
the Company (the "Board") had resolved to implement a transaction subject to the
suspensive condition referred to below, whereby:
- 584 362 ordinary shares held in Eersteling by minorities ("the minority
shareholders") will be converted ("the conversion") into 0% redeemable
preference shares of 1 cent each in the share Capital of Eersteling
("preference shares");
- the preference shares will be immediately redeemed at a redemption price of
21c per share (" the redemption"); and
- the Company will thereafter apply to terminate its listing on the JSE
Securities Exchange South Africa ("JSE") (" the termination of listing"),
(collectively the "transaction").
3. Rationale for the Transaction
Eersteling has been dormant since February 1997. Caledonia Mining Corporation
("Caledonia") currently holds 96,22% of the ordinary shares, with the remaining
3,78% being held by the minority shareholders. Bearing in mind the limited
public spread of Eersteling, the costs of maintaining Eersteling"s listing have
become prohibitively high. In addition, trade on the JSE in Eersteling shares
is relatively thin.
The Board is of the view that the listing of Eersteling has done very little to
enhance the value of Eersteling in the current environment and that the costs of
maintaining the listing are unjustifiable in light of the dormant state of
Eersteling and the continuing efforts to reduce Eersteling"s cost base. The
board is also of the view that the proposed conversion and redemption of the
shares held by the minority shareholders at a price which is the highest traded
market value of the shares in the last year, is in the best interests of
shareholders.
Furthermore, Eersteling has a large shareholder"s loan (the "Caledonia
Shareholder"s Loan"). This shareholders loan is subordinated vis-a-vis
creditors but will always rank ahead of shareholders. There are prospects for
Eersteling in respect of the mining of gold and platinum, but even with these
prospects and considering the funding required to recommence any mining
operations it is highly unlikely that the Caledonia Shareholder"s Loan will be
repaid.
The transaction will allow the minority shareholders to exit their shareholding
at a fair consideration and at the same time allow the Company to eliminate the
high listing expenses while the creditors are still protected after the proposed
termination of listing.
To date, the minority shareholders have had little opportunity to realise their
investment in Eersteling, due to the illiquid nature of the investment. This
conversion and redemption will allow minority shareholders to realise an
investment, which they would otherwise have difficulty in doing.
4. Suspensive Condition to the transaction and general meeting
The transaction is subject to the suspensive condition that the requisite number
of ordinary shareholders approve the transaction at the Eersteling general
meeting to be held at 10:00 on Friday, 28 May 2004 at the registered office of
Eersteling.
5. Salient Dates of the Transaction
Set out below are the salient dates of the transaction:
2004
Date of posting of the circular to Tuesday, 4 May
Eersteling shareholders
Last day for receipt of forms of proxy
in respect of the Eersteling general Wednesday, 26
meeting (not later than 10:00) May
Eersteling general meeting to be held at Friday, 28 May
10:00
Announcement of the results of the Friday, 28 May
Eersteling general meeting made on SENS
Announcement of the results of the Monday 31 May
Eersteling general meeting published in
the press
Last day to trade in shares on JSE Friday, 4 June
Suspension of trading in shares on JSE Monday, 7 June
from the commencement of trade
Record Date Friday, 11 June
Dematerialised shareholders will have Monday, 14 June
their accounts at their CSDP or broker
credited on or about
Certificated shareholders will have Monday, 14 June
their cheques posted or electronic
transfers made to their bank accounts
provided that the surrender forms and
share certificates or documents of title
are received by Friday, 11 June 2004
Eersteling shares terminated from the Tuesday, 15 June
JSE from the commencement of trade
6. Note: No share certificates may be dematerialised or rematerialised after
Friday, 4 June 2004.
6.1 Financial Effects of the Transaction
The pro forma financial effects of the conversion and redemption on Eersteling"s
dividend/interest, earnings per share, headline earnings per share, net asset
value per share and tangible net asset value per share, based on the published
audited annual financial results for the year ended 31 December 2003, are set
out below.
6.2 The effects are the responsibility of the Board and have been prepared for
illustrative purposes only on the basis stated. These pro forma financial
effects assume the conversion and redemption had been effected on 1 January 2003
for dividend/interest and earnings purposes and on 31 December 2003 for net
asset value purposes:
Before After Percentage
(1) (cents) Change (%)
(cents)
Dividend/interest -(2) 1,62 (3) >100%
per share
Earnings per share (202.6) 1,62 (3) >100%
Headline earnings (32.6) 1,62 (3) >100%
per share
Net Asset Value per (197,3) 21.00 >100%
share (4)
Tangible net asset (197,3) 21.00 >100%
value per share (3)
Number of shares in 15 467 15 467
issue 900 900
Assumptions:
1. Based on the audited financial statements for the year ended 31
December 2003.
2. To date minority shareholders have received no dividends from
Eersteling.
3. Redemption proceeds payable to minority shareholders have been assumed
to be invested at an interest rate of 11% per annum from which 30%
corporate tax has been deducted.
4. Redemption proceeds payable to the minority shareholders.
7. JSE and Securities Regulation Panel ("SRP") rulings
After a process of consultation with Eersteling and reviewing, inter alia, the
dormant status of the Company, the JSE and SRP have waived the requirement for
the Board to appoint an independent adviser as required by the Securities
Regulation Panel Code on Takeovers and Mergers and the JSE Listings
Requirements, to provide it with advice as to the fairness of the conversion and
delisting.
8. Opinions and Recommendations
The Board has considered the terms and conditions of the transaction and are
unanimously of the opinion that the transaction is fair and reasonable to the
minority shareholders.
The directors of Eersteling intend to vote in favour of the transaction in
respect of the Eersteling shares beneficially held by them.
9. Circular to shareholders
A circular incorporating, inter alia, the details of and resolutions relating to
the transaction and the financial statements for the year ended 31 December 2003
will be posted to shareholders on Tuesday, 4 May 2004.
10. Withdrawal of cautionary announcement
Eersteling shareholders are no longer required to exercise caution in dealings
in their Eersteling shares.
Johannesburg
4 May 2004
Sponsor to Eersteling
SASFIN CORPORATE FINANCE, A DIVISION OF SASFIN BANK LIMITED
Legal adviser to Eersteling
JOWELL GLYN & MARAIS INC.
Auditors and reporting accountants to Eersteling
BDO SPENCER STEWARD (JOHANNESBURG)
Date: 04/05/2004 05:30:12 PM Produced by the JSE SENS Department
