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SA Mineral Resources Corporation Limited - Results for the year ended 30 June
2005
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 2005
BALANCE SHEET
Group
30 June 30 June
2005 2004
Reviewed Audited
R"000 R"000
ASSETS
NON-CURRENT ASSETS
Plant and equipment 14 784 15 537
14 784 15 537
CURRENT ASSETS
Inventories 316 248
Accounts receivable 1 958 1 308
Cash and cash equivalents 1 188 128
3 462 1 684
TOTAL ASSETS 18 246 17 221
EQUITY AND LIABILITIES
CAPITAL AND RESERVES
Issued share capital 3 743 3 743
Share premium 27 152 27 152
Accumulated loss (23 867) (24
226)
7 028 6 669
NON-CURRENT LIABILITIES
Long term liabilities 8 933 6 242
Provision for environmental 486 445
rehabilitation
9 419 6 687
CURRENT LIABILITIES
Short term portion of long - 2 308
term liabilities
Accounts payable 1 663 1 334
Provisions 136 223
1 799 3 865
TOTAL EQUITY AND 18 246 17 221
LIABILITIES
Net asset value per share 1.88 1.78
(cents per share)
Tangible net asset value 1.88 1.78
per share (cents per share)
INCOME STATEMENT
Group
30 June 30 June
2005 2004
(12 (12
months) months)
Reviewed Audited
R"000 R"000
REVENUE 14 208 12 604
Cost of sales 8 130 7 836
GROSS PROFIT 6 078 4 768
Other income 18 -
Operating costs 5 239 6 038
OPERATING PROFIT (LOSS) 857 (1 270)
Interest received 4 5
Interest paid (502) (1 127)
NET PROFIT (LOSS) FOR 359 (2 392)
THE YEAR
Profit/(Loss) per share 0.1 (0.64)
(cents per share)
Headline profit/(loss) 0.1 (0.64)
per share (cents per
share)
Shares in issue at year 374.27 374.27
end (millions)
CASH FLOW STATEMENT
Group
30 June 30 June
2005 2004
(12 (12
months) months)
Reviewed Audited
R"000 R"000
CASH FLOW FROM
OPERATING ACTIVITIES
Cash generated
by/(utilized in) 1 237 198
operating activities
Interest received 4 5
Interest paid (502) (1 086)
Net cash flow from 739 (883)
operating activities
CASH FLOW FROM
INVESTING ACTIVITIES
Plant and equipment (81) (10)
acquired
Proceeds from disposal 18
of plant and equipment
Net cash used in (63) (10)
investing activities
CASH FLOW FROM
FINANCING ACTIVITIES
Long term liability 2 957 935
raised (2 575)
Short term liabilities
repaid
Net cash generated by 382 935
financing activities
Increase/(decrease) in
cash and cash 1 058 42
equivalents
Cash and cash
equivalents at 128 86
beginning of year
Cash and equivalents 1 186 128
at end of year
CHANGES IN EQUITY
Group Share Share Accumulat Total
capital premium ed loss R"000
R"000 R"000 R"000
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
Net profit for the 359 359
year
Balance 30 June 3 743 27 152 (23 867) 7 028
2005
COMMENTARY
The continued strength of the Rand prevented Samroc from doing export business
during the year. Samroc"s major local customer, Dow Chemicals, closed one of
its operations in South Africa during February 2005, significantly affecting
turnover. However, the restructuring undertaken during 2004 allowed the business
to remain profitable despite losing this major customer.
The company"s only remaining major customer, Namzinc, suspended purchases during
May 2005 in order to conduct tests on the company"s products. Initial
indications are that Samroc"s product is well within the customer"s
specifications. However, the delay is causing severe cash flow strain.
Discussions are being held with Namzinc regarding the suspended orders and
clarity on the matter is expected early in October 2005. It is expected that
regular orders from Namzinc will resume at the end of the year.
Despite problems experienced in the market, management remains positive and
various corporate opportunities are being investigated.
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. Management have negotiated a 0% increase with raw material
suppliers for the remaining of the year. The plant is producing product to a
high specification and its reduced cost structure is bringing it close to being
competitive again in its European market.
MARKETING
The local manganese sulphate powder market was initially under pressure due to
cheaper imports from China. However, most of this market was recaptured by
Samroc. The local manganese sulphate market sales have increased due to consumer
preference for sulphate in preference to the oxide. No material volume changes
are expected in the combined sales of the sulphate and oxide.
Samroc has sold several containers in the European market at premium prices.
Although some sales will continue it is not anticipated to increase
significantly.
FINANCIAL
The company was able to report a profit despite difficulties with its major
customers as reported above. This was mainly due to the cost cutting exercise
during 2004 and the reduction in the interest charge. The company also managed
to significantly improve its working capital position. However, the suspension
of purchases by Namzinc is impacting the working capital post the balance sheet
date. Should the outcome of discussions with Namzinc not be as expected by
Management, an announcement will be made regarding further steps to be taken.
GOING CONCERN
Resulting from the product concerns relating to the company"s only remaining
major client, 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 if the concerns can be addressed timeously the business
could maintain its profit success of the last year. However, the going concern
would be under threat if the matter is not resolved.
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 an emphasis of matter opinion that the
going concern status of Samroc is subject to the timeous resumption of off-take
by the company"s remaining major client. A copy of this opinion is available for
inspection at the company"s registered office.
DISPOSAL BY DIRECTORS AND CAUTIONARY RENEWAL
It was reported on SENS on 13 September 2005 that GVM Metals Limited, a company
registered in Australia and listed on the Australian Stock Exchange, had signed
an agreement dated 8 September 2005 to dispose of its holding of 113 000 000
ordinary shares in Samroc, representing 30% of the issued share capital of
Samroc ("the disposal"). The purchase consideration payable is R1 130 000,
equating to 1 cent per Samroc share. The disposal is conditional, inter alia,
upon the satisfactory outcome of a due diligence investigation by the purchaser
by not later than 25 October 2005. Messrs R Linnell and S Farrell who are
directors of Samroc, are directors of GVM Metals Limited and as such have an
indirect interest in the Samroc shares disposed of.
In addition, further to the cautionary announcement released on SENS on 12
September 2005, Samroc shareholders are advised that discussions are still
taking place which, if successfully concluded, may have an effect on the price
of the company"s shares. Accordingly, Samroc shareholders are advised to
continue to exercise caution when dealing in their Samroc shares until a further
announcement is made.
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
30 September 2005
Directors: RJ Linnell (Chairman), AH Jonker (Managing), KJJ de Rooster*, BH
Christie**, SJ Farrell*** (*Belgian, **British, ***Australian)
Registered office: Nimag House, Pinewood Office Park, Riley Road, Woodmead
Registered postal address: PO Box 7798, Centurion 0046
Transfer secretaries: Ultra Registrars (Pty) Ltd, PO Box 4844, Johannesburg 2000
Company Secretary: EM Taylor
Date: 30/09/2005 05:46:50 PM Produced by the JSE SENS Department
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