| Mon 17 Oct 2005, 17:23 | | Messina Limited - Reviewed interim results for the |
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Messina Limited - Reviewed interim results for the six months ended 30 June 2005
MESSINA LIMITED
(Registration number 1950/035912/06)
Share Code: MES
ISIN: ZAE000004438
("Messina" or "the company")
REVIEWED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2005
Restated
6 Months 6 Months
30 June 2005 30 June 2004
Reviewed Unaudited
R"000 R"000
Group Abridged Balance Sheet
as at 30 June 2005
ASSETS
Non-current assets 1 012 350 1 077 667
- Property, plant and equipment 293 623 312 004
- Mining assets and development costs 713 380 759 313
- Investments 5 347 6 350
Current Assets 106 823 57 388
- Inventories 11 952 18 137
- Receivables and pre-payments 44 970 39 123
- Cash and cash equivalents 49 901 128
1 119 173 1 135 055
EQUITY AND LIABILITIES
Capital and reserves ( 29 149) 269 549
- Share capital 10 035 10 035
- Share premium 442 384 442 384
- Non-distributable reserve 2 002 2 002
- Accumulated loss (483 570) (184 872)
Non-current liabilities 572 111 452 560
- Ultimate shareholder"s loan 510 829 115 661
- Interest-bearing borrowings 4 083 327 325
- Environmental obligation 10 609 9 574
- Loan from fellow subsidiary 46 590 -
Current liabilities 576 211 412 946
- Trade and other payables 82 794 108 776
- Provisions 6 298 6 612
- Current portion of long-term borrowings 487 119 109 105
- Bank overdraft - 188 453
1 119 173 1 135 055
Group Abridged Income Statement
For the period ended 30 June 2005
6 Months 6 Months
30 June 2005 30 June 2004
Reviewed Unaudited
R"000 R"000
Revenue 165 179 112 776
Cost of sales (145 258) (127 880)
Gross profit /(loss) 19 921 (15 104)
Other operating income 851 6 575
Distribution costs (3 169) (3 398)
Administration expenses (23 657) (18 731)
Other operating expenses (138 582) (67 372)
Loss from operations (144 636) (98 030)
Net financing costs (69 251) (41 226)
Loss before tax (213 887) (139 256)
Taxation (50) -
Net loss for the period (213 937) (139 256)
Earnings per share (cents) (1066) (694)
Headline earnings per share (cents) (1066) (697)
Ordinary shares in issue 20 069 656 20 069 656
Weighted average number
of shares for the period 20 069 656 20 069 656
Reconciliation of headline earnings
Earnings per share
attributable to shareholders (1066) (694)
Net loss attributable to shareholders (213 937) (139 256)
Profit on disposal of assets (83) (656)
Headline earnings (214 020) (139 912)
Headline earnings per share (cents) (1066) (697)
Statement of Changes in Equity
For the period ended 30 June 2005
Share capital Share premium Accumulated loss
R"000 R"000 R"000
Balance at 1 January
2004 10 035 442 384 (45 616)
Loss for the period - - (139 256)
Balance at 30 June 2004 10 035 442 384 (184 872)
Loss for the period - - (84 761)
Balance at 31 December
2004 10 035 442 384 (269 633)
Loss for the period - - (213 937)
Balance at 30 June 2005 10 035 442 384 ( 483 570)
Non-distributable
reserves Total equity and
(Capital redemption)
reserves
R"000 R"000
Balance at 1 January 2004 2 002 408 805
Loss for the period - ( 139 256)
Balance at 30 June 2004 2 002 269 549
Loss for the period - ( 84 761)
Balance at 31 December 2004 2 002 184 788
Loss for the period - (213 937)
Balance at 30 June 2005 2 002 ( 29 149)
Group Abridged Cash Flow Statement
For the period ended 30 June 2005
6 Months 6 Months
30 June 2005 30 June 2004
Reviewed Unaudited
R"000 R"000
Cash in/(out)flows from operating activities (2 553) (52 508)
Changes in working capital 596 16 732
Finance income 193 105
Finance cost (69 444) (41 331)
Net cash flow from operating activities (71 208) (77 002)
Cash outflows for investment activities (23 178) (19 336)
Cash inflows for financing activities 137 889 23 964
Net increase /(decrease) in cash and cash
equivalents 43 503 (72 374)
Cash and cash equivalents at beginning of
period 6 398 (115 951)
Cash and cash equivalents at end of period 49 901 (188 325)
NOTES TO THE INTERIM RESULTS
Overview
We regret to report that during the period under review four of our employees
were fatally injured in the course of their duties. Subsequent to that we have
initiated aggressive visible safety leadership programme to ensure that we can
operate without any serious injuries to our employees.
At the Messina Platinum Voorspoed Shaft a total of 18 696 ounces of platinum (42
273 ounces of 5PGE plus gold) was produced from 400 806 tonnes milled. This is
an improvement of 7% and 22% respectively compared with the corresponding
reporting period of the previous year.The average head grade for the period was
3.7 grams per tonne (5PGEs + Au) and the plant recoveries were 88.9%.
The results for the half year reflect an earnings loss and a headline earnings
loss of 1066 cents per share. This is primarily due to the continued strength of
the Rand and production results being below expectations.
During the period under review, Lonmin Plc ("Lonmin") (a company registered in
England and Wales and listed on London and Johannesburg Stock Exchanges),
through its wholly-owned Canadian subsidiary, Lonmin Investments Canada Inc.,
offered to acquire all the outstanding shares in Southern Platinum Corp.
("Southern Platinum") the then owner of 91,5% of the issued share capital of
Messina Limited.This offer was accepted and the acquisition of 100% of Southern
Platinum was completed on 29 June 2005.
Lonmin took over the management of the mine on 15 June 2005 and provided a
guarantee for the refinancing of debt facilities to repay existing facilities
and all overdue creditors. Since the take-over, a number of operational changes
have been made to the stoping and development operations to ensure a safe and
steady build up of production. Some of these changes include a safer mining
method that combines conventional and mechanised mining methods out of diagonal
raises that are developed at 25 degrees, a focus on quality ore production,
improved safety standards for travelling ways, and numerous training programmes.
We have also implemented a continuous improvement programme based on the 6 Sigma
methodology and a number of projects have already started.
The Group incurred a net loss for the period ended 30 June 2005 of R 213.9
million (30 June 2004: R 139.3 million) and as of that date its total
liabilities exceeded its total assets by R 29.1 million. Lonmin has provided a
letter of support and as mentioned above provided a guarantee for the
refinancing of the debt facilities to repay existing facilities and all overdue
creditors. Accordingly, the financial statements are prepared on the basis of
accounting policies applicable to a going concern.
Messina has a strike length of 23 kilometres and an attributable PGM resource
base of 20 million ounces (5PGE+Au) to a depth of 1,000 metres. The current
mining operations at Messina cover a strike length of 4 kilometres. Over the
next 18 months, Messina plans to re-engineer these operations to change the
mining method to long hole stoping. Production from Messina is targeted to
increase from the current 45,000 ounces of platinum per annum to 75,000 ounces
of platinum for the financial year to September 2007. Capital expenditure over
the next three years to achieve this level of production will be around
US$63million.
In compliance with the JSE Limited Listings Requirements, Messina has prepared
its consolidated financial statements in accordance with International Financial
Reporting Standards ("IFRS") for the six months ended 30 June 2005.
The changes as a result of adopting IFRS are noted under the heading below
"First time adoption of IFRS". The major effect on Messina"s financial
statements of adopting IFRS relates to the accounting policy for property, plant
and equipment.
With effect from 15 June 2005, Messina adopted the accounting policies of the
Lonmin Group. In adopting these accounting policies, the most significant
changes resulted in the restatement of the opening accumulated loss by R 29.1
million.
R"000
Write-off of exploration cost capitalised under previous
policy 29 090
Taxation thereon -
Net adjustment 29 090
As a result of Lonmin"s successful offer, Dr CMH Jennings (Chairman) and Messrs
PC Evans, TC Dawson and LJ Fox resigned as directors of the company on 15 June
2005. Mr RR Mphahlele remained as a director.
Messrs BA Mills (Chairman), AG Ross (CEO), IP Farmer, JF Grimbeek and JN
Robinson were appointed as directors on 15 June 2005.
At the annual general meeting of the company held on 1 August 2005 all six of
the remaining directors were re-elected.
Mr R B Shead was appointed as a non-executive independent director of the
company on 6 September 2005, and Mr JR Sanders was appointed a non-executive
director of the company on 13 September 2005.
The company"s former secretary, Mr MA Kritzinger, also resigned on 15 June 2005
and was replaced by Mr P McElligott - and the company"s registered office
address was changed to that stated below.
The financial year end of the company has been changed to 30 September and the
current financial period will therefore be for the nine months from 1 January
2005 to 30 September 2005.
The auditors of the company were changed during August 2005 from
PricewaterhouseCoopers Inc. to KPMG Inc., who are the Lonmin Group auditors.
The group"s auditors, KPMG Inc. have reviewed the interim results and their
report is available for inspection at the company"s registered office.
Post balance sheet date events
There were no significant post balance sheet date events.
First-time adoption of IFRS
The date of transition to IFRS for Messina as at 1 January 2005, including
comparative results, and therefore, as required by IFRS, Messina"s opening
balance sheet as at 1 January 2005 has been restated to reflect all existing
IFRS statements expected to be applicable at 30 September 2005. Messina has
adopted the following transitional arrangements.
(i) Property, plant and equipment
Messina has applied the provisions of IAS 16 - Property, plant and equipment,
which requires that the Group perform an annual review and assessment of the
useful life of its assets, depreciation method and residual values at the end of
each financial year.Thus, the depreciable amount of property, plant and
equipment is its cost less its residual value. Where items of property, plant
and equipment comprise individual components for which different depreciation
methods are used, each component is accounted for separately. Previous
individual components were not separately identified and no residual values were
used in determining the depreciable amount of the component. The adoption of IAS
16 has resulted in an increase in the depreciation charge of R11.2 million for
the six-month period ended 30 June 2005 (Six months ended 30 June 2004: R10.3
million). Certain items to the amount of R 181.2 million that were previously
classified as mining assets and development costs were re-classified as
property, plant and equipment.
(ii) Mining assets and development costs.
In adopting IAS 16, a number of assets previously included under mining assets
have been reclassified as property, plant and equipment (refer to (i) above).
This resulted in a decrease in the amortisation charge of R3.0 million for the
period ended 30 June 2005 (period ended 30 June 2004: R2.3 million)
Reconciliation between IFRS and SA GAAP
Reference R"000
Accumulated loss - 1 January 2004 - SA GAAP (42 252)
IFRS adjustments
- Property, plant and equipment (i) 122 089
- Mining assets and development costs (ii) (125 453)
Accumulated loss - 1 January 2004 - IFRS (45 616)
Net loss after tax - 30 June 2004 - SA GAAP (131 252)
IFRS adjustments
- Property, plant and equipment (i) (6 933)
- Mining assets and development costs (ii) (1 071)
Accumulated loss - 30 June 2004 - IFRS (184 872)
Net loss after tax - 31 December 2004 - SA GAAP (77 149)
IFRS adjustments
- Property, plant and equipment (i) 13 352
- Mining assets and development costs (ii) (20 964)
Accumulated loss - 31 December 2004 - IFRS (269 633)
Accumulated loss - 30 June 2005 - IFRS (483 570)
The effect of the above adjustments on net profit after tax is as follows:
6 Months 6 Months
30 June 2005 30 June 2004
R"000 R"000
Net loss after tax - SA GAAP (205 661) (131 251)
IFRS Adjustments
- Property, plant and equipment (11 242) (10 282)
-Mining assets and development costs 2 966 2 277
Net loss after tax - IFRS (213 937) (139 256)
For and on behalf of the Board.
BA Mills AG Ross
Chairman CEO
17 October 2005
Directors : BA Mills (Chairman) (American), *AG Ross (CEO), J F Grimbeek
(Chief Operating Officer), *JN Robinson (Chief Financial
Officer), *IP Farmer, RR Mphahlele +, *JR Sanders+, RB Shead+
(*British +Non-executive)
Secretary and registered office Transfer secretaries
P McElligott Computershare Investor Services
Northdowns 2004 (Pty)
Limited
17 Georgian Crescent 70 Marshall Street
Bryanston 2152 Johannesburg Johannesburg 2001
(PO Box 98811, Sloane Park 2152) (PO Box 61051, Marshalltown
2107)
Date: 17/10/2005 05:23:11 PM Produced by the JSE SENS Department
