| Wed 14 Sep 2005, 12:42 | | Sallies Limited - Reviewed results for the year en |
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Sallies Limited - Reviewed results for the year ended 30 June 2005
SALLIES LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1903/001879/06
JSE Share Code: SAL
ISIN: ZAE000022588
Reviewed results for the year ended 30 June 2005
CO
OPERATIONAL IMPROVEMENTS NEGATED BY STRONG RAND AND ONEROUS CONTRACT
CONSOLIDATED INCOME STATEMENT
Reviewed Audited
R000 2005 2004
Revenue - mining 101 157 84 406
Cost of sales (102 921) (95 345)
Loss from mining operations (1 764) (10 939)
Administrative expenses (9 621) (8 988)
Amortisation of goodwill - (674)
Amortisation of mineral rights (2 310) (2 110)
Finance cost (1 974) (1 717)
Investment income 90 157
Profit on disposal of property,
plant and equipment 469 282
Net foreign exchange (loss)/gain (1 853) 5 316
Provision for onerous contract (9 366) -
Provision for dead freight (2 380) -
Provision for restoration (1 288) (485)
Unwinding of decommissioning
obligation (938) (45)
Net loss before taxation (30 935) (19 203)
Taxation - 3 643
Net loss for the year (30 935) (15 560)
Loss per share (cents)
Basic
undiluted (12.0) (10.3)
diluted (11.7) (9.8)
Headline
undiluted (12.2) (10.4)
diluted (11.9) (9.9)
Cash earnings
undiluted (7.6) (7.6)
diluted (7.4) (7.2)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Accum-
Share profit/ ulated
R000 capital premium (loss) Total
Balance at 30 June 2003 92 53 953 (6 352) 47 693
Shares issued during
the year 165 36 072 - 36 237
Issue costs - (1 115) - (1 115)
Net loss for the year - - (15 560) (15 560)
Balance at 30 June 2004 257 88 910 (21 912) 67 255
Net loss for period - - (30 935) (30 935)
Balance at 30 June 2005 257 88 910 (52 847) 36 320
CONSOLIDATED CASH FLOW STATEMENT
Reviewed Audited
R000 2005 2004
Net cash inflows from operating
activities (1 902) (14 922)
Cash surplus generated by
operations 920 (13 255)
Interest paid (2 912) (1 762)
Taxation paid - (62)
Investment income 90 157
Net cash outflows from investing
activities (7 648) (5 466)
Net additions to mine plant,
Equipment and buildings (8 492) (5 825)
Proceeds from disposals of plant and
Equipment 844 359
Net cash outflows/(inflows) from
financing activities 6 372 24 444
Long-term loans
repaid (172) (10 678)
Short-term facility raised 6 544 -
Rights Issue (net of costs) - 35 122
Net (decrease)/increase in cash and
Cash equivalents (3 178) 4 056
Cash and cash equivalents at
beginning of period (4 826) (8 882)
Cash and cash equivalents at end of
period (8 004) (4 826)
CONSOLIDATED BALANCE SHEET
Reviewed Audited
R000 2005 2004
ASSETS
Non-current assets 71 358 69 791
Goodwill 10 175 10 175
Property, plant and equipment 60 651 58 912
Accounts receivable 532 704
Current assets 27 149 38 036
Inventories 15 838 8 054
Accounts receivable 8 204 23 688
Taxation prepaid 2 858 2 858
Cash and cash equivalents 249 3 436
Total assets 98 507 107 827
EQUITY AND LIABILITIES
Capital and reserves 36 320 67 255
Share capital and premium 89 167 89 167
Accumulated loss (52 847) (21 912)
Non-current liabilities 11 823 9 701
Interest bearing debt 2 385 2 489
Provision for environmental
rehabilitation 3 838 1 612
Deferred taxation 5 600 5 600
Current liabilities 50 364 30 871
Bank overdraft 8 253 8 262
Accounts payable 23 771 20 111
Provisions 9 366 -
Current portion of interest
bearing debt 8 974 2 498
Total equity and liabilities 98 507 107 827
COMMENTS
Significant operational improvements at the Witkop mine were again negated by an
unfavourable exchange rate, which also exacerbated the burden imposed on the
company by the Honeywell supply agreement. At the interim stage of the year,
this agreement - which requires Sallies to sell about half of Witkop`s total
production at a substantial loss at current exchange rate levels - was defined
as an onerous contract in terms of South African GAAP. A provision of R22.7
million was made at that time for the projected loss to completion on the
contract. This has subsequently been reduced to R9.4 million in the light of
the weakening of the rand against the US dollar and resumed shipments to
Honeywell.
The pilot plant established at Witkop to investigate the feasibility of
extracting product from the fluorspar tailings dams at the mine has proven the
process. The relevant statutory applications have now been submitted and
commercial operation is dependent upon the necessary approvals.
An application for the conversion of the company`s existing `old order` mining
licence held over the Wintershoek deposit to a `new order` mining right has been
submitted to the Department of Mineral and Energy Affairs, as has an application
for a new order mining right for the Buffelshoek deposit, over which the company
holds mineral rights.
DIVIDEND
The board has not considered a distribution to shareholders for the year ended
30 June 2005.
PROSPECTS
The current Honeywell supply agreement will wind down towards the end of 2006.
Until that time, the company remains exposed to the exchange rate, requiring an
average of R6.50 to the US dollar to achieve modest profitability. In the
meantime the international market for fluorspar remains buoyant and management
continues to focus on further efficiency improvements and cost savings.
From a cash flow point of view, the company has managed to stay within its
banking limits. With the expectation that the Rand/US$ exchange rate will be
relatively stable during the new reporting period and with improved payment
terms negotiated with Honeywell and other strategies, the company does not
expect this position to change. Should the rand strengthen, however, Honeywell
has agreed to support the company with loan finance.
ACCOUNTING POLICIES
The group`s accounting policies conform to South African Statements of Generally
Accepted Accounting Practice. These policies are consistent with those applied
in the previous year except for the discontinuance of amortisation of goodwill
in accordance with AC128.
REVIEW OPINION
The financial information set out in the reviewed results has been reviewed by
the group`s auditors Ernst & Young and their modified review report is available
for inspection at the registered office of the company. They draw attention to
the fact that the group incurred a net loss of R30.9 million during the year and
this condition together with the group`s ability to generate sufficient cash
flows in the ordinary course of business to meet its operational and other
commitments, indicate the existence of a material uncertainty which may cast
significant doubt about the group`s ability to continue as a going concern.
DILUTED LOSS PER SHARE
Diluted losses per share have been calculated applying that a diluted average of
263 847 725 (2004 - 159 144 476) shares in issue, assuming that all the options
granted had been exercised with effect from the date they were granted.
On behalf of the Board
PH Flack
Chairman
14 September 2005
Johannesburg
Directors: PH Flack (Chairman), LB Robertson*, AD Moffat, JJ Geldenhuys, IJ
Marais* (*Executive)
Registered office: Farm Wintershoek, Zeerust, 2865 * (Private Bag X1315,
Zeerust, 2865)
Transfer secretaries: Computershare Investor Services 2004 (Pty) Ltd, 70
Marshall Street, Johannesburg, 2001 *(PO Box 61051, Marshalltown, 2107)
Investor and media relations: For further information contact Helen McKane on
Telephone +27 (11) 728 4701,Telefax +27 (11) 728 2547, e-mail: sallies@dpapr.com
Date: 14/09/2005 12:15:08 PM
