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MTZ
MTZ
Matodzi - Unaudited interim results for the six months ended 30 September 2006
MATODZI RESOURCES LIMITED
(Incorporated in the Republic of South Africa)
Registration Number: 1933/004523/06
Share Code: MTZ & ISIN: ZAE000042412
("Matodzi" or "the Company" or "the Group")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006
ABRIDGED CONSOLIDATED Unaudited Reviewed Audited
INCOME six months restated Year ended
ended six months 31 March 2006
30 September ended
2006 30 September
2005
Notes R"000 R"000 R"000
Revenue 135 760 217 782 401 523
Total production costs (69 212) (137 075) (218 953)
Production costs (60 276) (118 158) (184 098)
Depreciation (7 435) (15 583) (28 185)
Other non cash (1 501) (3 334) (6 670)
operating expenses
Operating profit 66 548 80 707 182 570
Net finance costs 2 7 918 (29 556) (58 715)
Impairment of listed 3 - (16 886) (16 820)
investments
Fair value adjustment - - 1 001
of investment property
Profit on disposal of 682 897 - -
operation
Profit on 4 - - 181 143
restructuring of debt
General and (35 160) (5 887) (62 705)
administrative
expenses
Net profit/(loss) 5 722 203 28 378 226 474
before taxation
Income tax expense 6 (20 874) (30 262) (47 182)
Net profit/(loss) for 701 329 (1 884) 179 292
the period
Profit/(Loss)
attributable to:
Minority interest 399 620 29 826 48 614
Equity holders of the 301 709 (31 710) 130 678
parent
Earnings/(Loss) per 7
share - (cents)
Basic earnings/(loss) 81.4 (21.2) 86.6
- (cents)
Diluted 81.4 (8.8) 35.3
earnings/(loss) per
share - (cents)
Number of ordinary 370 547 286 149 262 157 370 547 286
shares in issue
Weighted average 370 547 286 149 262 157 150 887 597
number of shares in
issue
ABRIDGED CONSOLIDATED
CASH FLOW STATEMENTS Unaudited Reviewed Audited
six months restated Year ended
ended six months 31 March 2005
30 September ended
2006 30 September
2005
Notes R"000 R"000 R"000
Cash flow (utilised 5 962 58 073 105 386
in)/from operating
activities
Cash flow (utilised 877 400 (119 795) (113 393)
in)/from investing
activities
Cash flow (utilised (903 563) 63 530 (7 410)
in)/generated from
financing activities
Net (20 201) 1 808 (15 417)
(decrease)/increase in
cash and cash
equivalents
Cash and cash 20 355 58 566 58 566
equivalents at
beginning of the
period
Reclassification to 12 - - (22 794)
disposal group held
for sale
Cash and cash 154 60 374 20 355
equivalents at the end
of the period
STATEMENT OF Share Share Accumu- Equity Minority Total
CHANGES IN capital premium lated component interest R"000
EQUITY R"000 R"000 loss of R"000
R"000 preferenc
e shares
Balance 31 March 37 315 42 010 (362 104) 12 960 17 422 (252 397)
2004 (restated)
Shares issued 138 241 - - - 379
Net loss for the - - (31 710) - 29 826 (1 884)
period
Balance 30 37 453 42 251 (393 814) 12 960 47 248 (253 902)
September 2005
Shares issued 55 184 159 301 - (12 960) - 201 525
Net loss for the - - 162 388 - 18 788 181 176
period
Balance 31 March 92 637 201 552 (231 426) - 66 036 128 799
2006
Share issue - 7 - - - 7
costs over
provided
Disposal of - - - - (42 542) (42 542)
operation
Net loss for the - - 301 709 - 399 620 701 329
period
Balance 30 92 637 201 559 70 283 - 423 114 787 593
September 2006
1. BASIS OF PREPARATION
The consolidated results are prepared in accordance with International Financial
Reporting Standards ("IFRS"), specifically IAS34 on interim financial reporting,
and schedule 4 of the Companies Act, No 61 of 1973, as amended in South Africa,
and are consistent with those applied for the year ended 31 March 2006 and the
six months ended 30 September 2005.
The consolidated interim financial statements are prepared on the historical
cost basis, with the exception of certain financial instruments and investment
property which are measured at fair value.
Unaudited Reviewed Audited
six months restated Year-ended
ended six months 31 March
30 September ended 2006
2006 30 September R"000
R"000 2005
R"000
2 NET FINANCE COSTS
Interest received 22 562 3 837 11 703
Preference shares - "B" - (9 616) (23 417)
Preference shares
Preference shares - - (9 464) (19 339)
Witnigel Preference
shares
Interest on loans (14 644) (14 313) (27 662)
7 918 (29 556) (58 715)
3. IMPAIRMENT OF LISTED
INVESTMENTS
Investments
210 255 713 JCI ordinary - (16 886) (16 820)
shares at R0.16 (2005:
210 255 713 ordinary
shares at R0.16)
4 PROFIT ON RESTRUCTURING
OF DEBT
Profit on restructuring - - 181 143
of debt - Witnigel
Preference shares
- - 181 143
The effect of the
restructuring of the
Witnigel Preference
shares is the elimination
of R194 million of
external debt or the
Group. Resulting in a
gain for the Group on
consolidation of
R181million. Refer note
11.
5 PROFIT/(LOSS) FOR THE
PERIOD IS STATED AFTER
TAKING INTO ACCOUNT THE
FOLLOWING:
Depreciation (7 466) (15 853) (36 437)
Staff costs (4 523) (7 560) (14 794)
6 INCOME TAX EXPENSE
Current tax (19 979) - (11 579)
Current year (3 536) - (52 037)
Utilisation of prior year (16 443) - 40 458
losses
Deferred tax
Current year (895) (30 262) (35 603)
(20 874) (30 262) (47 182)
7 EARNINGS/(LOSS) PER SHARE
Attributable 301 709 (31 710) 130 678
profit/(loss) for the
year
Reconciliation between
attributable
profit/(loss) and
headline loss:
Attributable 301 709 (31 710) 130 678
profit/(loss)
Profit on disposal of (308 681) - -
operation
Profit on restructuring - - (181 143)
of debt of preference
shares
Headline earnings/(loss) (6 972) (31 710) (50 465)
Headline earnings/(loss) (4.6) (21.2) (86.7)
per share - (cents)
Weighted average number 370 547 286 149 262 157 150 887 597
of ordinary shares in
issue
Diluted number of 370 547 286 362 262 157 370 547 286
ordinary shares in issue
8 INVESTMENTS AND LOANS
RECEIVABLE
Listed investments 33 641 33 641 33 641
Unlisted investments - - -
Loans receivable 119 780 113 288 118 180
153 421 146 929 151 821
Directors" valuation of - -
unlisted investments
The directors believe
that as the unlisted
investments in White
Water Gold (Proprietary)
Limited is still in the
development stage, it
would be inappropriate to
attribute a value higher
than the nominal cost for
the investment.
The directors are
satisfied that the loans
are recoverable.
210 168 073 JCI ordinary
shares have been valued
at the price at which
they were suspended on
JSE Limited, R0.16 (2005:
210 168 073 at R0.16)
9 SHAREHOLDERS" INTEREST
Ordinary share capital
Authorised:
750 000 000 (2005: 250 187 500 62 500 187 500
000 000) ordinary shares
of 25 cents each
Issued:
364 487 286 (2005: 149 92 637 37 435 92 637
262 157) ordinary shares
of 25 cents each
Movements in issued share
capital
Total number of shares in 370 547 286 149 262 157 149 262 157
issue at beginning of
period
Shares issued to public - - 7 460 000
shareholders
Shares issued to JCI in - - 213 825 129
respect of the preference
share redemption
Total number of shares in 370 547 286 149 262 157 370 547 286
issue at end of period
Share premium
At beginning of the 201 552 42 010 42 010
period
Arising on shares issued 7 241 159 542
during the period
201 559 42 251 201 552
During the period under
review, the Company"s
authorized share capital
remained unchanged at 750
000 000 ordinary shares
of 25 cents each.
Unaudited Reviewed Audited
six months restated Year-ended
ended six months 31 March
30 September ended 2006
2006 30 September R"000
R"000 2005
R"000
10 EQUITY COMPONENT OF
PREFERENCE SHARES
At beginning of period - 12 960 12 960
Equity component - - (12 960)
transferred to share
premium on redemption
- 12 960 -
The Matodzi "B"
Preference shares were
considered a compound
financial instrument in
terms of IAS32 Financial
Instruments Presentation,
and in accordance with
this statement the equity
component was raised and
the 31 March 2005 year"s
profit on restructuring
of debt was adjusted.
11 INTEREST-BEARING
BORROWINGS AND LOANS
Loan payable 249 867 312 108 274 474
Preference shares - 356 298 -
249 867 668 406 274 474
Current portion of (249 867) (42 498) (227 701)
interest bearing
borrowings and loans
- 625 908 46 773
During the previous financial year Matodzi redeemed the 200 million "B"
Preference shares by the allotment and issue of 200 million new Matodzi ordinary
shares to JCI Investment Finance (Proprietary) Limited (a wholly-owned
subsidiary of JCI) at an issue price of 104 cents per new Matodzi share.
The Company acquired the 200 million Witnigel Preference shares from JCI by the
allotment and issue of 13.8 million new Matodzi ordinary shares at an issue
price of 96.4427 cents per Matodzi share. The effect of this transaction is the
elimination of R194 million of external debt for the Group. Resulting in a gain
for the Group on consolidation of R181million.
Letseng Investment Holdings South Africa (Pty) Limited ("Letseng Holdings")
repaid its loan to the Industrial Development Corporation of South Africa
Limited ("IDC") from the proceeds of a new facility granted by Investec Bank
Limited ("Investec"). The current balance of this loan is R200 002 109 and
became repayable in full upon the sale of Letseng Diamonds.
12 DISPOSAL GROUP HELD FOR SALE
The Group successfully disposed of its interest in Letseng Diamonds
(Proprietary) Limited (incorporated in Lesotho and it was a subsidiary of the
Group which was included in the consolidated financial statements of Letseng
Investment Holdings South Africa (Proprietary) Limited.
The effective date of the disposal was 1 July 2006.
Based on the requirements of IFRS 5 - Non-current Assets Held for Sale and
Discontinued Operations, the assets and liabilities attributable to Letseng
Diamonds have been disclosed as a disposal Group, and disclosed separately on
the balance sheet.
Assets and liabilities comprising the disposal group classified as held for sale
are as follows:
Unaudited Reviewed Audited
six months restated Year-ended
ended six months 31 March 2006
30 September ended R"000
2006 30 September
R"000 2005
R"000
Non-current assets - - 266 652
Property, plant and - - 201 116
equipment
Mining rights - - 65 536
Current assets - - 81 448
Inventory - - 43 959
Trade and other - - 14 290
receivables
Cash and cash equivalents - - 22 794
Current tax - - 405
Total assets classified - - 348 100
as held for sale
Non-current liabilities - - (78 714)
Provision - environmental - - (16 647)
provision
Deferred tax liabilities - - (62 067)
Current liabilities - - (42 565)
Trade and other payables - - (26 356)
Taxation - - (11 535)
Provision - leave and - - (4 674)
severance pay
Total liabilities - - (121 279)
classified as held for
sale
Net assets of disposal - - 226 821
group
In accordance with the requirements of IFRS 5, no comparative
information has been disclosed. The disposal is not a discontinued
operation as defined and therefore, the income statement has not
been restated to separately disclose the results of the disposal
group.
13 GOING CONCERN
Restructuring of the preference shares during the year ended 31 March 2006 has
restored the solvency position of the Group. The Group has also disposed of the
Letseng diamond mine and will settle all liabilities from the proceeds of the
disposal, and therefore the Group will be in a position to meet its obligations
as they fall due. Accordingly the directors continue to adopt the going concern
basis in the preparation of the interim financial statements.
14 SUBSEQUENT EVENTS
On 3 November 2006, the Company declared a cash payment to Matodzi shareholders
by way of a special dividend of 76 cents per Matodzi ordinary share from the
profits derived from the disposal of the Letseng diamond mine.
The loan of R249 867 000 as set out in note 11 was repaid in full on 24 October
2006.
15 DIRECTORATE
Subsequent to the last reporting date, the following directorate changes have
taken place:
Mr ME Mkwanazi resigned as a non-executive director with effect from 30 October
2006, and Messrs AR Nkuhlu and S Swana were appointed non-executive directors on
31 October 2006.
Directors currently in office are as follows:
Andrew Mlangeni - (Independent Non-Executive Chairman)
Sello Mashao Rasethaba - (Chief Executive Officer)
Peter Henry Gray - (Non-Executive)
Thabo Mosololi - (Non-Executive)
Andile Reeves Nkuhlu - (Non-Executive)
Sandile Swana - (Non-Executive)
COMMENTARY TO THE INTERIM RESULTS
HIGHLIGHTS
*Profit after taxation of R701 million
*Sale of the Letseng diamond mine successfully completed at a profit of R683-
million
*Earnings per share up 483% per cent at 81.4 cents
*Special cash dividend of R0.76 per share to be distributed on 27 November 2006
Post implementation of the Letseng disposal, the settlement of all Matodzi"s
long-term debt, and payment of the Letseng special cash distribution, Matodzi
will retain sufficient cash as well as ownership of the following assets:
Listed investments
210 168 073 ordinary JCI shares, constituting 9.5% of the issued share capital
of JCI. The value of Matodzi"s investment in JCI amounts to R33.6 million, based
on a share price of 16 cents per share ("cps"), which is the price at which JCI
shares were suspended on JSE.
New order prospecting rights
Matodzi has submitted applications to the Department of Minerals and Energy
("the DME") for the conversion of certain of its unused old order mineral rights
to new form prospecting permits. The portfolio of mineral rights includes
diamonds, gold, coal and other industrial minerals.
A 35% interest in White Water Gold (Proprietary) Limited ("WWG")
Matodzi previously owned gold rights covering the Nigel and Kimberley reefs in
which constitutes a "distal" part of the Witwatersrand Basin. In July 2006,
Matodzi concluded an agreement with White Water Limited, Covenant Mining and
Finance (SA) (Proprietary) Limited and WWG, whereby it sold these surface right
permits to WWG for a consideration of 35% of the issued share capital of WWG.
Furthermore, Matodzi will be a Black Economic Empowerment ("BEE") partner with a
30% interest in White Water Exploration (Proprietary) Limited, which intends to
acquire and explore additional ground-dip from WitNigel"s existing lease area.
Matodzi shall continue with its principal activities of sourcing and evaluating
investment opportunities in the resources sector and carry on as its main
activity, the exploitation of its mineral rights. The Company intends embarking
on new exploration projects and capitalising on the mineral rights that it
currently holds.
The nature of Matodzi"s business remains that of a mining investment company.
The strategy going forward is centred around.
The acquisition of a 56.7% stake held by JCI by a BEE company
Matodzi has been approached by several BEE companies which are interested in
acquiring the JCI stake. Shareholders will be informed should negotiations
and/or further development commence in this regard, between these parties and
JCI.
Prospecting, exploration and subsequent re-opening of the Witnigel gold mine
Matodzi together with Covenant Mining are looking at alternatives to develop the
former Witnigel Gold Mine.
Continued exploration of new Order Prospecting Rights
Matodzi is well positioned to take advantage of exploration opportunities which
exist in the current economic climate, and has been informally approached by
various prospective partners and investors that have shown an interest in
participating with the Company, both on a project and equity basis going
forward.
Partnership with other BEE partners
Matodzi is targeting emerging BEE recipients of new order prospecting rights.
Matodzi will jointly fund exploration programmes with these partners. This
business development and emerging BEE partnership programme will drive the
Company"s future growth.
For and on behalf of the board
Andrew Mlangeni Sello Mashao Rasethaba
Chairman Chief Executive Officer
30 November 2006 Johannesburg
Sponsor
Sasfin Capital
(A division of Sasfin Bank Limited)
Registered office:
28 Harrison Street
Johannesburg 2001
(PO Box 11165 Johannesburg 2000)
www.matodzi.co.za
Transfer secretaries:
Computershare Investor Services 2004 (Proprietary) Limited
70 Marshall Street, Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
Investor relations and communications advisors:
Zanenza Communications (Proprietary) Limited
No. 10 Ridgeview Office Park, 248 Kent Avenue, Randburg, 2194
Directors: A Mlangeni (Independent Non-Executive Chairman), SM Rasethaba (Chief
Executive Officer), PH Gray (Non-Executive), T Mosololi (Non-Executive),
AR Nkuhlu (Non-Executive), S Swana (Non-Executive).
Date: 29/11/2006 01:00:30 PM Produced by the JSE SENS Department
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