RNS Number:9218X
Dimension Resources Ld
28 June 2002
Dimension Resources Limited
Preliminary Statement for year ended 31 December 2001
Dimension Resources Limited ("Dimension") is the parent company for a group
quarrying and processing decorative stone in the Republic of South Africa. Its
products are primarily intended to be exported worldwide but are also sold in
South Africa.
Financial Results
The results for the year show a loss of £429 836 (2000: £487 471), but I am
pleased to record that the trend is towards an improvement in trading which
should result in a positive position in the near future.
The exclusive contracts with Antolini Luigi & Cie, one of the leading Italian
stone companies, were signed too late to result in sales in 2001. During the
middle part of that year granite was being sold under a contract with a South
African company, C J Petrow. This contract was initially for a period of six
months, but was expected to be renewed for a minimum of five years. In the event
CJ Petrow decided after a few months that it did not intend to continue with the
build up of its stone business and asked to be released from their contract.
Rather than using resources in enforcing the contract, the Company decided to
seek other markets with substantial international companies experienced in the
stone trade rather than local companies, and this strategy is beginning to show
positive results.
In previous years the unrealised difference on exchange between the Sterling and
Rand values of loans from the Company to its South African subsidiaries have
been dealt with as part of the year's results. In accordance with International
Accounting Standards these differences are now dealt with through the Statement
of Movement in Reserves, and the previous year has been restated accordingly.
The Rand suffered a sharp decline at the end of 2001, from which it has largely
recovered recently.
So far as the Balance Sheet is concerned, it is important to note that the Group
has substantial freehold property and equipment assets as well as its quarries.
It is free of debt other than a small overdraft facility and one capital lease
on a front end loader. In the current year it is intended to write down the
value at which the Group's quarries are carried in the Consolidated Balance
Sheet against the deferred Shares, thus bringing the net assets more into line
with market capitalisation of the Company.
Stone Quarries
Bowenite
The Group has signed an exclusive contract with Antolini Luigi & Cie, one of the
leading Italian stone companies, for the sale of Bowenite blocks. Deliveries
under this contract have built up more slowly than hoped, due primarily to the
necessity to remove large quantities of fractured material before satisfactory
blocks could be produced. The current production is satisfactory for both block
quality and colour, and this quarry is expected to be profitable in the future.
Antolini has confirmed that the bowenite has been well received wherever it has
been shown world wide, and is keen to see a rapid build up of production.
Coloured granites
The Group's properties in the Zwartmodder area of Namaqualand have deposits of a
number of coloured granites, and quarries have been established for gray ("Cape
Lotus"), brown ("Cape Autumn"), red ("Cape Red") and multicoloured ("Cape
Rainbow") granites. Production is currently being concentrated on Cape Autumn
and Cape Rainbow.
Cape Autumn has been shipped to a number of countries worldwide on a trial
basis. The board is confident that this material is of excellent quality as well
as being competitively priced.
Cape Rainbow is also the subject of an exclusive contract with Antolini. The
first blocks have been supplied to Italy for testing.
Coloured granites tend to have a long lead time before they are accepted and
specified by end users.
Rustenburg black granite
In January 2002, the Company announced that it had agreed to acquire a
Rustenburg Black granite quarry situated near Brits, North West Province, South
Africa. The initial purchase price is Rand 2 million, with up to an additional
Rand 2 million payable when certain production targets are met. This is expected
to be within six months of start up. The agreement is conditional, inter alia,
on the transfer of a valid mining licence to the Group. To date this licence has
not been received, but the vendor, who will also quarry the stone under contract
for the Group, believes this is imminent. He has already constructed roads and
other infrastructure as well as acquiring plant to enable operations to commence
as soon as possible.
Rustenburg Black granite is the best known of all granites traded and processed
in the world, and is internationally accepted and used. The material only occurs
in South Africa and some 95% of the production is exported from that country.
The Directors consider that access to such a deposit will greatly enhance the
Groups potential for profit, and, should there be continuing problems with the
mining licence referred to above, efforts will be made to secure an alternative
quarry.
Travertine
The Group has the rights to quarry a travertine deposit near Douglas in Northern
Cape Province. One quarry face has been opened and the material has been
satisfactorily tested. However, a decision was made to defer exploitation of
this quarry until it could be done using the cash flow from other quarries.
Marble
The area of Vredendal, where the processing plant is situated, is one of the few
in South Africa where marble occurs, and access to a marble deposit would
revolutionise the prospects for the factory. The Group has previously identified
Black marble deposits in the area, but environmental considerations have made
their exploitation impossible. However, an agreement has now been signed to
acquire both the surface and mineral rights over such a deposit, situated where
the Board believes that a mining licence may be obtained. The purchase price of
Rand 400,000 is only payable on the granting of a mining licence, and neither
the timing nor the outcome of the licence application is certain at this time.
Nevertheless, the Directors consider this to be a very positive development.
Processed stone
Vredendal plant
The processing plant comprises a freehold factory and offices of some 1,800
square metres on a site of over 18,000 square metres. The factory is fully
equipped for tile production, with an automated tile cutting line and facilities
for handling and cutting marble blocks. However, lack of a satisfactory source
of marble has meant that, in 2001 and previously, the factory has made losses.
These losses have now been eliminated as the plant has been cutting tiles for
the extension to Cape Town International Airport, where the flooring is Namaqua
marble tiles previously cut in the factory. Blocks of this material remain at
the factory, and orders are also in hand for local projects and for export to
West Africa. In the long term it is hoped that the black marble deposit referred
to above will provide full time work for the factory, but in the interim the
management is negotiating for a supply of other stone for processing.
Cape Town depot
The Group operates a warehouse with a showroom on the Airport Industrial Estate
at Cape Town. While sales from this depot remain at a low level, they have
increased each year, and are now running at above the break even point. The
products sold are produced at the factory, primarily tiles and headstones.
Board constitution
Vincent Panaia, who is a non executive director, retires at the Annual General
Meeting and does not intend to seek re-election. Vince has returned to the USA
from South Africa, and has taken up business interests there. The board will
then comprise myself as chairman, Steven Taylor as managing director, and Paolo
Giovannangeli. Paolo's company, Edilco for Stones SpA, is the Group's sales
agent in Italy, and he will not be receiving remuneration other than that
commission entitlement at present. I have previously confirmed that I will not
draw remuneration until the Group is shown to be operating profitably, and
remuneration due to me was waived up to 31 March 2000 and has been accrued but
remains unpaid since that date.
As and when the contract for the purchase of the Rustenburg black quarry is
completed, Stuart Frost will join the board as sales director. Stuart has long
experience of the stone business, including a period as a director of Marlin,
the leading South African granite quarrying company. He has recent experience in
selling Rustenburg Black, and will bring his private stone trading business into
the Group.
Annual General Meeting
The company's Annual General Meeting will be held on 13 August 2002. In
addition to the resolutions normally dealt with at an annual general meeting,
resolutions will be proposed to
re-organise the share capital. The reason for these resolutions is to allow the
Directors flexibility in issuing new shares should the market value of such
shares fall below 1p, which was the case earlier this year. It will be
necessary to issue new ordinary shares in connection with the acquisition of the
Rustenburg quarry.
Future prospects
The Board believes that the prospects for the Group are now better than at any
time since the Company's flotation. For the first time orders in hand exceed
production. Costs have been reduced and the Group now has contracts with major
stone companies for the supply of its products. The stone business is one which
develops slowly, but the actions taken by the Board, and in particular by Steve
Taylor, the managing director, over the past year should stand the company in
good stead for successful expansion in the future.
Finally I would like to thank all members of staff for their efforts through a
difficult period
Brian Moritz
(Chairman)
Dated 28 June 2002
Consolidated income statement
for the year ended 31 December 2001
2001 2000
GBP GBP
Turnover 184,463 98,391
Cost of sales 104,273 64,364
Gross profit 80,190 34,027
Administrative expenses (507,643) (545,381)
Operating loss (427,452) (511,354)
Interest receivable and similar income 7,910 28,099
Interest payable and similar charges (10,294) (4,216)
Amortisation of stone deposits - -
Net loss before taxation (429,836) (487,471)
Taxation - -
Net loss for the year (429,836) (487,471)
Earnings per share (pence) (0.53) (0.60)
Weighted average number of shares in issue 81,292,498 81,242,498
Consolidated balance sheet
at 31 December 2001
2001 2000
GBP GBP
ASSETS
Non-current assets 15,580,648 16,148,747
Tangible assets 1,240,213 1,743,773
Stone deposits 14,306,101 14,306,101
Pre-production costs 28,085 50,496
Investments 6,249 48,377
Current assets 417,261 637,321
Inventories 182,667 245,493
Trade and other receivables 48,100 55,596
Cash at bank and in hand 186,495 336,232
Total assets 15,997,909 16,786,068
EQUITY AND LIABILITIES
Shareholders' funds 15,393,395 16,542,840
Called up share capital 6,706,000 6,478,000
Share premium account 11,577,857 11,577,857
Profit and loss account -2,890,462 -1,513,017
Long-term liabilities 32,446 100,323
Foreign currency translation reserve 500,739 80,371
Creditors: amounts falling due within
one year 71,329 62,534
Trade and other payables 70,689 61,829
Provisions 640 705
Total equity and liabilities 15,997,909 16,786,068
NOTES
1. The financial information herein does not constitute statutory accounts.
The financial information has been extracted from the Company's 2001 statutory
financial statements upon which the auditors opinion is unqualified. The accounts have
been prepared in accordance with applicable accounting standards and under the
historical cost convention.
2. Copies of the annual report are being posted to shareholders and are available from
Grant Thornton, Grant Thornton House, Melton Street, Euston Square, London,
NW1 2EP.
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