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Samroc - Reviewed interim group results for the six months ended 31 December
2004 and Cautionary Announcement
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 interim group results for the six months ended 31 December 2004 and
Cautionary Announcement
BALANCE SHEET
(`000)
Reviewed Reviewed Audited
31 31 30 June
December December 2004
2004 2003
ASSETS
Non-current assets
- Property, plant and 15,145 16,044 15,537
equipment
Current assets 2,709 3,478 1,685
- Inventory 681 626 249
- Trade receivables 1,309 1,939 1,308
- Cash and cash 719 913 128
equivalents
Total assets 17,854 19,522 17,222
EQUITY AND LIABILITIES
Capital and reserves 6,672 8,458 6,669
- Share capital 3,743 3,743 3,743
- Share premium 27,152 27,152 27,152
- Accumulated loss (24,223) (22,437) (24,226)
Non-current liabilities 7,207 4,404 6,688
- Long-term liabilities 6,742 3,980 6,243
- Provision for 465 424 445
environmental
rehabilitation
Current liabilities 3,975 6,660 3,865
- Trade and other 1,667 2,288 1,557
payables
- Current portion of long- 2,308 4,372 2,308
term liabilities
Total equity and 17,854 19,522 17,222
liabilities
INCOME STATEMENT
(`000)
Reviewed Reviewed Audited
31 31 30 June
December December 2004
2004 2003
Revenue 7,139 7,905 12,604
Cost and expenses (6,623) (7,925) (13,875)
Profit / (loss) from 516 (20) (1,271)
operating activities
Net finance cost (513) (583) (1,121)
Profit / (loss) and
headline profit / (loss) 3 (603) (2,392)
for the period
CASH FLOW STATEMENT
(`000)
Reviewed Reviewed Audited
31 31 30 June
December December 2004
2004 2003
Net cash flow from 117 2,077 (883)
operating activities
Net cash flow from (26) (101) (10)
investing activities
Net cash flow from 500 (1,149) 935
financing activities
Net increase / (decrease) 591 827 42
in cash and cash
equivalents
Cash and cash equivalents 128 86 86
at beginning of period
Cash and cash equivalents 719 913 128
at end of period
Ordinary shares in issue 374,275 374,275 374,275
at end of period (`000)
Net asset value per share 1.78 2.26 1.78
(cents)
Net profit / (loss) per 0.00 (0.16) (0.64)
share (cents)
Headline profit / (loss) 0.00 (0.16) (0.64)
per share
CHANGES IN EQUITY
(`000)
Share Share Accumulat Total
capita premiu ed profit
l m /
(deficit)
Balance at 31 December 2003 3,743 27,152 (22,437) 8,458
Net loss for the period (1,789) (1,789)
January 2004 to June 2004
Balance as at 30 June 2004 3,743 27,152 (24,226) 6,669
Net profit for the period 3 3
July 2004 to 31 December 2004
Balance at 31 December 2004 3,743 27,152 (24,223) 6,672
COMMENTARY
The continued strengthening of the Rand again resulted in Samroc not being able
to enter the export market. Though the local market provided sufficient support
for a strong financial performance, Samroc suffered a major setback during
February 2005 when its major customer, Dow Agrosciences (`Dow`), closed its
plant in South Africa.
Golden Valley Mines Limited (`GVM`), Samroc`s largest shareholder, 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 completed the
agreement during February 2005 and the IDC is in the process of transferring all
securities to GVM. GVM has approached Samroc`s management with a possible
restructuring and they are currently consulting Samroc`s lawyers in this regard.
Shareholders will be informed and approached at the appropriate time. Part of
the restructuring proposal will involve a renegotiation of the terms of the IDC
loans acquired by GVM.
GREENHILLS PLANT
The plant performed according to design parameters during the period under
review. Various cost cutting initiatives, variable and fixed, are pursued to
lessen the impact of the Dow closure.
MARKETING
Dow`s Mangazeb plant closed due to overcapacity in the Dow group. The strong
rand contributed towards the high export cost of the locally manufactured
product. Sixty five percent of the Samroc sales volumes were allocated to Dow in
2004.
No significant changes in the local market are anticipated for the next six
months. Furthermore, no significant overseas sales can occur unless the rand
devalues to around R7.5 : 1 US$.
Sales volumes are expected to decrease by more than 50%, should the current
conditions prevail.
FINANCIAL
The company benefited substantially from the cost cutting exercise implemented
during the first half of 2004 and management is pleased to report a significant
improvement in Samroc`s financial results. However, the loss of Dow has placed
Samroc under renewed pressure and though the company is expected to break even
operationally on a cash basis, it is now critically dependent on the continued
financial support of GVM. A restructuring of the debt would, however, pave the
way for Samroc to actively pursue various acquisition opportunities that,
together with further organic growth and cost cutting opportunities, could
ensure the company`s continued financial improvement.
GOING CONCERN
The directors believe that the company remains a going concern, provided that a
capital restructuring could be agreed upon with GVM, as the operations should be
able to break even on a cash basis.
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 a capital restructuring program for
Samroc being 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.
DIVIDEND
No dividend has been declared or recommended for this period.
CAUTIONARY ANNOUNCEMENT
In view of the proposed restructure referred to above, Samroc shareholders are
advised to exercise caution in dealing in their Samroc shares until a further
announcement is made.
For and on behalf of the Board
RJ Linnell AH Jonker
Chairman Managing Director
Johannesburg
18 March 2005
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
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