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AFG
AFG
Afgem - Modification to the Preliminary Results and Notice of AGM
Afgem Limited
(Incorporated in the Republic of South Africa)
Registration number 1998/007292/06
JSE code: AFG
ISIN: ZAE000067757
("Afgem" or "the Company")
MODIFICATIONS TO THE PRELIMINARY RESULTS AT 31 MARCH 2006 AND NOTICE OF ANNUAL
GENERAL MEETING
AUDITED RESULTS
With regard to the audited results for the twelve months ended 31 March 2006,
shareholders are advised that the annual financial statements were distributed
to shareholders on Friday, 29 September 2006 and contain the following material
modifications to the preliminary results, which were released on SENS on Monday,
3 July 2006.
Notes Audited Preliminary
Annual Results
Financial published
Statements on SENS Difference
Balance Sheet
Intangible Assets 1 50,573,621 53,447,270 (2,873,649)
Long term loans 2 - 7,289,847 (7,289,847)
Short term loans 2 7,241,849 168,002 7,073,847)
Deferred taxation 3 - (7,232,912) (7,232,912)
Royalties payable/
Provision for
Purchase price 4 (17,975,073) (32,500,000) (14,524,927)
Provision for
NUM claim 5 (800,000) - (800,000)
Income Statement
Management fees
received 6 3,000,000 - 3,000,000
Other income 7 992,290 - 992,290
Operating expenses 8 13,008,867 26,890,348 (13,881,481)
Loss for the year (8,845,054) (26,718,826) 17,873,772
The differences were as a result of:
1. Intangible Assets:
This difference is materially due to the reversal of the deferred taxation
liability mentioned in 3 below, and an adjustment in the impairment of the
goodwill of R3.2 million. In addition, the adjustments reflect in 4 and 8
below have had an impact on the previously disclosed amount.
2. Long term and short term loans:
Long term loans of R7,3 million were reclassified to short term loans as
the Company is now of the opinion that these loans will be repaid in the
short rather than long term.
Deferred taxation:
Previously a deferred taxation liability was raised on the goodwill arising from
the acquisition of the mining assets from Rex Mining Corporation Limited and Rex
Diamond Mining. This liability is not required and was subsequently reversed and
the revised results reflect such reversal.
Royalties payable/ Provision for Purchase price:
This change in classification of liability was made after the receipt of legal
advice on the purchase agreement entered into when acquiring the mining assets
of the Company. At the time of the acquisition of the mining assets the
expected revenues from diamond sales were such that 4% of diamond revenues over
the next 15 years (which formed a portion of the purchase price) would equate to
an approximate net present value of R32,5 million. Accordingly this was the
liability raised in the accounts of the Company. However production figures to
date from Simolotse Mine are not in line with these estimates and the liability
to Rex Mining in this regard has been restated downwards from an initially
reported R32,5 million to R18,0 million and the purchase price was accordingly
adjusted.
Provision for NUM claim:
The creation of a provision for a payment to the National Union of Mineworkers
due to a recent application on this union"s part of which the Company is one of
the respondents and that is set down for trial in the Labour Court on 13
November 2006.
Management fees received
Management fees were previously eliminated on consolidation whereas it was
received from a third party and this income has been reflected in the income
statement.
Other income
Other income previously disclosed as part of operating expenses.
Operating expenses
Operating expenses were affected by an error whereby a provision of R16 596 137
against a non performing subsidiary loan was not eliminated on consolidation.
The balance of the difference relates predominantly to the items discussed under
points 6 and 7 above.
Basis of presentation
The annual financial statements were prepared in terms of the International
Financial Reporting Standards ("IFRS") and were audited by Zeelie de Kock
Chartered Accountants (SA). Their unqualified audit report is available for
inspection at the Company"s registered office.
NOTICE OF THE ANNUAL GENERAL MEETING
Notice is hereby given that the sixth annual general meeting of shareholders of
the Company will be held at 10:00 in the Boardroom at the physical offices of
the Company, 10 Melrose Boulevard, Melrose Arch on Thursday 2 November 2006 to
transact the business as stated in the annual general meeting notice forming
part of the annual financial statements.
Melrose Arch
2 October 2006
Sponsor
Absa Capital - Corporate Finance
A Division of Absa Bank Limited
Date: 02/10/2006 03:24:05 PM Produced by the JSE SENS Department
