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FALCON - UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2004
Falcon Investment Holdings Societe Anonyme
(Incorporated in Luxembourg - R.C. Number B39773)
(`the Company`)
JSE Share code: FLC
ISIN number: LU0042254812
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2004
Dear Shareholder,
The results for the half-year ended 31st March 2004 are attached.
This has been a disappointing period for Falcon. At the time of my last report,
I had high hopes that we had identified a suitable acquisition for the Group,
however we were unable to agree terms and negotiations have now been
discontinued. The cash element of consideration for that acquisition would have
been in Pounds Sterling and, in anticipation of a further weakening of the US
dollar, we moved the bulk of our cash balances into Pounds Sterling. This has
generated a paper profit in the period of US$292,000. Some or all of this gain
may reverse in the second half of the year as, pending an acquisition in Europe,
we do not at present intend to switch our cash resources back into US dollars.
The Group`s net assets per share are US$2.24, of which cash in Europe is
US$2.37.
Chile
The liquidation of our Chilean subsidiary is proceeding slowly. The arbitration
process regarding the interpretation of the shareholders` agreement has been
completed reasonably successfully. Final accounts have been submitted to the
Chilean tax authorities and we need their clearance before we can dissolve the
company. An interim distribution of US$237,000 was received in March 2004. The
final distribution is expected before our year end.
Zimbabwe
As envisaged in my last report, the Government of Zimbabwe continues to manage
the mechanism for the compulsory purchase of the output of our Zimbabwe gold
mines in a manner that enables the mines to remain in production. However, the
situation in Zimbabwe remains precarious, with inflation of up to 600% p.a..
The high rates of inflation mean that all cash generated by the mines is
required to fund inflationary increases in working capital requirements. No
cash remains for reinvestment to replace the reserves that we are mining,
reducing the future earnings potential for the mines. We do not expect the
situation in Zimbabwe to improve quickly, and we are extremely grateful for the
continuing efforts of our staff.
Prospects
Europe
We continue to seek opportunities to re-invest the Group`s cash in a well
established and profitable business in Europe.
Zimbabwe
Prospects in Zimbabwe remain unclear. Our strategy remains the preservation of
our infrastructure of both staff and equipment, to the extent that results
allow, in order to be able to take advantage of any opportunities that may
arise.
Yours faithfully
David C. Marshall
Chairman
UNAUDITED CONSOLIDATED GROUP PROFIT AND LOSS ACCOUNT
Half years ended Year ended
31st March 31st March 30th
September
September
2004 2003 2003
Unaudited Unaudited Audited
US$000 US$000 US$000
Revenue - - -
Operating costs (217) (274) (387)
Operating loss before interest (217) (274) (387)
and taxation
Income from investment in - - 65
Zimbabwean subsidiary-dividend
Interest received 78 1 11
Exchange gains/(losses) 292 (25) 89
Profit/(Loss)before exceptional 153 (298) (222)
items and taxation
Exceptional item (note 4) - 1,408 10,108
Profit before taxation 153 1,110 9,886
Taxation 16 (5) (3,199)
Profit after taxation 169 1,105 6,687
Attributable to outside (2) (560) (4,341)
shareholders
Retained profit for the period 167 545 2,346
Reconciliation of earnings per
share
Earnings per share (US cents) - 9c 29 c 126 c
basic
Less exceptional items, net of - c (37)c (137)c
tax and minority interests (US
cents)
Headline profit/(loss) per share 9c (8)c (11)c
(US Cents)
CHANGES IN EQUITY
Exchange differences (202) 10 720
Net profit for the period 167 545 2,346
(35) 555 3,066
Shareholders` funds at start of 4,219 1,153 1,153
the period
Shareholders` funds at end of 4,184 1,708 4,219
the period
CONSOLIDATED GROUP BALANCE SHEET
31st March 31st March 30th September
2004 2003 2003
Unaudited Unaudited Audited
US$000 US$000 US$000
Non current assets
Property, plant and equipment - 1,722 -
Investments 130 238 130
130 1,960 130
Current assets
Other current assets 25 88 57
Cash and bank balances 5,323 1,076 8,084
5,348 1,164 8,141
Current liabilities (393) (249) (2,477)
Net current assets 4,955 915 5,664
Total assets, less current 5,085 2,875 5,794
liabilities
Capital and Reserves
Share capital 2,060 2,060 2,060
Non-distributable reserves 402 326 326
Revenue reserve 1,722 (678) 1,833
Shareholders` funds 4,184 1,708 4,219
Outside shareholders` interests 901 1,167 1,575
5,085 2,875 5,794
CONSOLIDATED GROUP CASH FLOW STATEMENT
Half years ended Year ended
31st March 31st March 30th September
2004 2003 2003
Unaudited Unaudited Audited
US$000 US$000 US$000
Operating activities
Cash absorbed by normal trading (425) (263) 202
activities
Interest received and other 78 1 11
investment income
Dividend received from - - 65
Zimbabwean subsidiary
Taxation (1,911) (8) (1,157)
(2,258) (270) (879)
Investment activities
Purchase of tangible assets - (6) (12)
Proceeds on disposal of - 1,300 11,729
investments and tangible fixed
assets
Net cash inflow from investment - 1,294 11,717
activities
Net cash (outflow)/inflow before (2,258) 1,024 10,838
financing
Financing activities
Dividend and capital repaid to (856) (267) (3,705)
outside shareholders
Net cash (outflow) from (856) (267) (3,705)
financing
Net (decrease)/increase in cash (3,114) 757 7,133
Net funds at start of period 8,084 319 319
Effect of foreign exchange rate 353 - 632
changes
Net funds at end of period 5,323 1,076 8,084
Notes
1. Accounting Policy
The results for the half year ended 31st March 2004 and the balance sheet
as at that date, which are unaudited, have been prepared on the basis of
accounting policies adopted for the year to 30th September 2003, and comply
with International Accounting Standards and Luxembourg law.
2. Profit/(Loss) Per Share
Profit/(Loss) per share is based on the result attributable to members and
the 1,864,026 shares in issue.
3. Segmental Analysis
The segmental analysis of turnover and operating profit is as follows:-
Half years ended 31st March Year ended 30th
September
2003 2002 2003
US$000 US$000 US$000
Revenue Result Revenue Result Revenue Result
Iodine development -
Chile
- (25) - (132) - (82)
Head office,
projects and other
* - (192) - (142) - (305)
- (217) - (274) - (387)
Dividend from
subsidiary
- - 65
Interest received
and other income
78 1 11
Exchange
gains/(losses)
292 (25) 89
Exceptional item
- 1,408 10,108
Profit before tax
153 1,110 9,886
* The current period includes costs of US$45,000 in connection with potential
acquisitions.
4. The exceptional item in the previous year was the profit on disposal of the
tangible fixed assets of Minera Falcon de Chile SCM in Chile and in the
comparable period includes the receipt of US$1,300,000 non-refundable
option over those assets of and the fair value adjustment to market value
of the investment in Falcon Gold Zimbabwe Limited.
5. There was no capital expenditure authorised but not contracted, and none
contracted at 31st March 2004 (2003 - same)
Registered Office
6 rue Adolphe Fischer,
L-1520, Luxembourg
22 June 2004
Date: 24/06/2004 07:00:14 AM
Produced by the JSE SENS Department
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