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SA MINERAL RESOURCES CORPORATION LIMITED - REVIEWED ANNUAL RESULTS FOR THE YEAR
ENDED 30 JUNE 2004
Results for the year ended 30 June 2004
SA Mineral Resources Corporation Limited
Registration number 1993/000460/06
Incorporated in the Republic of South Africa
JSE share code: SAM
ISIN: ZAE000012019
(`Samroc` or `the company`)
REVIEWED ANNUAL RESULTS FOR THE YEAR ENDED 30 JUNE 2004
BALANCE SHEET
Group
30 June 30 June
2004 2003
Reviewed Audited
R`000 R`000
ASSETS
NON-CURRENT ASSETS
Plant and equipment 15 537 16 361
15 537 16 361
CURRENT ASSETS
Inventories 248 1 622
Accounts receivable 1 308 1 451
Cash and cash equivalents 128 86
1 684 3 159
TOTAL ASSETS 17 221 19 520
EQUITY AND LIABILITIES
CAPITAL AND RESERVES
Issued share capital 3 743 3 743
Share premium 27 152 27 152
Accumulated loss (24 226) (21
834)
6 669 9 061
NON-CURRENT LIABILITIES
Long term liabilities 6 242 5 307
Provision for environmental 445 405
rehabilitation
6 687 5 712
CURRENT LIABILITIES
Short term portion of long 2 308 2 308
term liabilities
Accounts payable 1 334 2 095
Provisions 223 344
3 865 4 747
TOTAL EQUITY AND 17 221 19 520
LIABILITIES
Net asset value per share 1.78 2.42
(cents per share)
Tangible net asset value 1.78 2.42
per share (cents per share)
INCOME STATEMENT
Group
30 June 30 June
2004 2003
(12 (18
months) months)
Reviewed Audited
R`000 R`000
REVENUE 12 604 14 045
Cost of sales 7 836 8 292
GROSS PROFIT 4 768 5 753
Other income - 4
Operating costs 6 038 8 812
OPERATING LOSS (1 270) (3 055)
Interest received 5 60
Interest paid (1 127) (1 666)
NET LOSS FOR THE YEAR (2 392) (4 661)
Loss per share (cents 0.64 1.37
per share)
Headline loss per share 0.64 1.37
(cents per share)
Shares in issue at year 374.27 374.27
end (million)
CASH FLOW STATEMENT
Group
30 June 30 June
2004 2003
(12 (18
months) months)
Reviewed Audited
R`000 R`000
CASH FLOW FROM
OPERATING ACTIVITIES
Cash generated 198 (4 317)
by/(utilized in)
operating activities
Interest received 5 60
Interest paid (1 086) (1 603)
Net cash from (883) (5 860)
operating activities
CASH FLOW FROM
INVESTING ACTIVITIES
Plant and equipment (10) (1 600)
acquired
Proceeds from disposal
of plant and equipment 10
Net cash used in (10) (1 590)
investing activities
CASH FLOW FROM
FINANCING ACTIVITIES
Capital raised 3 113
Long term liability 935 4 120
raised
Net cash generated by 935 7 233
financing activities
Increase/(decrease) in
cash and cash 42 (217)
equivalents
Cash and cash
equivalents at 86 303
beginning of year
Cash and equivalents 128 86
at end of year
CHANGES IN EQUITY
Group Share Share Accumulate Total
capital premium d loss R`000
R`000 R`000 R`000
Balance - 31 2 844 21 150 (17 173) 6 821
December 2001
Net loss for the 18 (4 661) (4 661)
month period
Shares issued 899 6 050 6 949
during period
Share issue (48) (48)
expenses
Balance 30 June 3 743 27 152 (21 834) 9 061
2003
Net loss for the (2 392) (2 392)
year
Balance 30 June 3 743 27 152 (24 226) 6 669
2004
COMMENTARY
The strength of the Rand virtually eliminated export business in the second half
of the year. This together with an erratic off-take from one of the major
customers resulted in the company experiencing a severe cash shortfall towards
the end of the year. Without the support of Golden Valley Mines Limited
(`GVM`), Samroc`s largest shareholder, the company would have been forced to
consider closure.
GVM has entered into an agreement with the Industrial Development Corporation
Limited (`IDC`) in terms of which GVM acquired all of the IDC`s loans to Samroc.
GVM has advised management that the agreement will become unconditional on the
payment of the final instalment of the purchase consideration due in the final
quarter of the calendar year. GVM is negotiating with Samroc to reschedule the
debt.
GREENHILLS PLANT
The cost of raw material at the Greenhills Plant increased well above inflation,
but management was able to counter the increase in costs by further streamlining
the process. Total sales for the year equalled 57% of plant capacity, though
production was not evenly spread throughout the year. Sales peaked during July
2003 when the plant was operating at full capacity.
MARKETING
Though several samples were exported during the year, Samroc remains
uncompetitive in the international market at the current level of the Rand.
Although customers appear to be satisfied with the company`s products, Samroc
can not compete internationally with cheaper products from China.
The local manganese sulphate powder market was also under pressure due to
cheaper imports from China. However, most of this market was recaptured by
Samroc. The manganous oxide and manganese sulphate solution sales were up by
43% and 18% respectively for the year. No material changes are expected in any
of these local markets during the coming year.
FINANCIAL
The company undertook a dramatic cost-cutting exercise in response to its cash
shortfall during the latter half of the year, which resulted in the closure of
the head office in Pretoria, the retrenchment of two staff members and certain
changes to the Board of Directors. Management is confident that the cost
cutting-exercise will result in annual cost savings of R1m.
The company remains under financial pressure, as the working capital position
weakened further during 2004 in the wake of the losses incurred. The strong
Rand has also forced the company to focus on its local market and temporarily
abandon its non-Rand based sales drive. The directors are confident that with
the continued support of GVM and Samroc`s two major customers, combined with the
reduced overhead cost structure, Samroc should significantly improve its
financial performance during 2005.
GOING CONCERN
Resulting from the cash shortfall the auditors have expressed a concern, by way
of an emphasis of matter in the review report, about the sustainability of the
business. The directors believe that once the current backlog of creditors have
been paid and the negotiations with GVM concluded successfully, it should be
possible to look at a capital restructuring of the company as it is their
opinion that the raison d`etre of the business remains.
ACCOUNTING POLICY
The accounts set out herein are prepared in accordance with South African
Statements of Generally Accepted Accounting Practice and are consistent with
Samroc`s accounting policies applied in the corresponding reporting period.
REVIEW OPINION
The financial information set out in these results has been reviewed by Samroc`s
auditors Moore Stephens MWM who issued a modified review opinion that the going
concern status of Samroc is subject to the continued support of its existing
major clients and that an affordable repayment schedule can be agreed between
GVM and Samroc, or alternatively, that a capital restructuring program for
Samroc be adopted. These matters indicate the existence of a material
uncertainty which may cast significant doubt about the group`s ability to
continue as a going concern. The modified review opinion is available for
inspection at the company`s registered office.
DIVIDEND
No dividend has been declared or recommended for this period.
For and on behalf of the Board
RJ Linnell AH Jonker
Chairman Managing Director
Johannesburg
14 October 2004
Directors: RJ Linnell (Chairman), AH Jonker (Managing), KJJ de Rooster*, BH
Christie**, SJ Farrell*** (*Belgian, **British, ***Australian)
Registered office: 7 West Street, Houghton
Registered postal address: PO Box 7798, Centurion 0046
Transfer secretaries: Ultra Registrars (Pty) Ltd, PO Box 4844, Johannesburg 2000
Company Secretary: EM Taylor
Date: 14/10/2004 12:00:16 PM
Produced by the JSE SENS Department
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