| Tue 8 Jun 2004, 15:50 | | Financial Effects And Withdrawal Of Cautionary |
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SA Chrome - Financial Effects And Withdrawal Of Cautionary Announcement
South African Chrome and Alloys Limited
(Incorporated in the Republic of South Africa)
(Registration number 1987/003452/06)
Share code: SCE; ISIN code: ZAE000022943
(`SA Chrome` or `the Company`)
FINANCIAL EFFECTS AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Shareholders of SA Chrome are referred to the detailed cautionary announcement
dated 24 February 2004 and the further cautionary announcements dated 8 April
2004 and 25 May 2004 regarding the agreement reached with Xstrata South Africa
(Proprietary) Limited (`Xstrata`) to establish a shared venture in terms of
which they will pool their respective South African chrome and ferrochrome
assets and share in the earnings before interest, tax and depreciation (`pooled
EBITDA`) therefrom (`the Transaction`).
2. FINANCIAL EFFECTS
The following table has been prepared for illustrative purposes only and sets
out the unaudited pro forma financial effects of the Transaction per ordinary
share of SA Chrome, based on the Company`s reviewed results for the six months
ended 30 September 2003.
Note Actual `before` Pro forma Percentage
(cents) `after the change (%)
proposed
transaction`
(cents)
Loss per share 1 (4.74) (2.03) 57.1%
Headline loss per share 1 (4.74) (2.69) 43.2%
Net asset value per share 2 24.0 25.5 6.3%
Weighted average shares for
the period 3 1,089,613,423 1,119,375,328
Ordinary shares in issue 4 1,195,664,823 1,225,426,728
Notes:
1. The `before` column reflects the loss and headline loss per share as
extracted from the reviewed published interim financial results of SA
Chrome for the period ended 30 September 2003. The `after the transaction`
column reflects the loss and headline loss per share after accounting for
SA Chrome`s 11% participation interest in the pooled EBITDA , accounted for
as jointly controlled assets in accordance with the Statement of Generally
Accepted Accounting Practice, AC 119 as if the transaction was effective
from 1 April 2003.The Company`s 11% share of the pro forma pooled EBITDA
(14% in year 2 and 17.5% thereafter), based on its contribution of (R2.1
million) and Xstrata`s contribution of R183 million for the six-month
period ended 30 September 2003, is R19.9 million. The pro forma headline
loss of R30 million is after the deduction of SA Chrome`s head office costs
and expansion feasibility study costs of R7 million, depreciation of R15.1
million and finance costs of R27.5 million for the same period.
2. The `before` column reflects the net asset value per share as extracted
from the reviewed published interim financial results of SA Chrome for the
period ended 30 September 2003. The `after the transaction` column reflects
the net asset value per share after accounting for SA Chrome`s 17.5%
contribution of assets as at 30 September 2003 in accordance with the
Statement of Generally Accepted Accounting Practice, AC 119 as if the
transaction was effective on 30 September 2003.
3. The `after` column reflects the weighted average number of ordinary shares
that would have been in issue for the six month period ended 30 September
2003 if the R25 million to be raised in terms of the agreement had been
raised at 1 April 2003.
4. The `after` column reflects the number of ordinary shares that would have
been in issue as at 30 September 2003 if the R25 million to be raised in
terms of the agreement had been raised at that date .
Because of its nature, the unaudited pro forma financial effects may not give a
fair reflection of SA Chrome`s financial position after the Transaction, nor of
SA Chrome`s future earnings. The financial effects as disclosed above are
considered misleading for the following reasons:
- SA Chrome will share in 17.5% of the pooled EBITDA from year 3
onwards;
- the figures only represent a six-month period;
- the costs associated with a high winter electricity tariff are
included during this six-month period; and
- the average ferrochrome price during this period was 44 US cents /lb,
compared to the current ferrochrome price of 69 US cents/lb.
3. WITHDRAWAL OF CAUTIONARY
Shareholders of SA Chrome are no longer required to exercise caution in
their dealings in SA Chrome shares, with respect to the Transaction.
4. CIRCULAR TO SHAREHOLDERS
A circular to SA Chrome shareholders setting out full details of the
Transaction and containing a notice of general meeting is being prepared
and will be posted to shareholders in due course.
Johannesburg
8 June 2004
Financial adviser and transactional sponsor
Deutsche Securities (SA) (Proprietary) Limited
Sponsor
Rand Merchant Bank Corporate Finance
Reporting accountants
PricewaterhouseCoopers Inc.
Independent advisor
Morgan Stanley South Africa (Proprietary) Limited
Attorneys
Bowman Gilfillan Inc.
Date: 08/06/2004 03:05:07 PM Produced by the JSE SENS Department
