RNS Number:3303J
GVM Metals Ltd
22 September 2006
GVM METALS LIMITED
Preliminary Final Results for the Year Ended 30 June 2006
GVM Metals Limited ("GVM" or "the Company") is pleased to announce its
preliminary final results for the year ended 30 June 2006. A full copy of the
financial report is available at the Company's website, www.gvm.com.au.
Highlights
* Revenue for 2006 was $32,340,604 (2005: $31,000,529) largely from the
NiMag business. At current exchange rates and nickel prices, NiMag is
expected to generate substantially higher operational cash flows over the
2006/07 financial year.
* Net cash generated from operating activities was $398,234 (2005:
$2,360,481).
* Earnings before interest, tax and depreciation was $1,245,403 (2005:
$2,774,567). The earnings before interest tax and depreciation, adjusted for
the AIM listing and share based payments was $2,200,938.
* Following the acquisition of a 49% interest in the Holfontein coal
project, GVM conditionally acquired a 74% interest in the Limpopo coal
project during the period under review. In August 2006, the company
announced the conditional merger of its coal interests with those of Motjoli
Ltd, its Holfontein J.V. partner. This transaction will result in GVM
holding 100% of the Holfontein project, 74% of the Limpopo Coal Project and
a 50% share in the Baobab coal project, which is located some 50kms south of
the Limpopo project.
* The Company is in an advanced stage of negotiation to acquire a further
coal interest in the Limpopo province of South Africa.
"GVM's strategic direction is firmly set towards becoming a major South African
coal producer over the next five years whilst continuing to develop its existing
and profitable metal processing business and seeking other mining opportunities"
said Managing Director Simon Farrell today. "The primary focus for the
forthcoming two years is to bring Holfontein into production and complete
feasibility studies for at least one of the Limpopo/Baobab coal projects and
position GVM as a major player in the re-awakening of the coal industry in South
Africa."
For more information contact:
Simon Farrell, Managing Director - GVM - +61 417 985 383 or +61 8 9322 6776
Leesa Peters - Conduit PR - +44(0) 20 7429 6606 / + 44 (0)781 215 9885
Olly Cairns - Corporate Synergy Plc - +44(0) 20 7448 4400
Directors' Report
Principal Activities
Whilst the principal trading activity of the Company and it controlled entities
("Consolidated Entity") is the manufacture and distribution of Nickel and
Magnesium alloys, the Company's primary focus is to expand its coal interests in
South Africa. Following the acquisition of a 49% interest in the Holfontein coal
project, GVM conditionally acquired a 74% interest in the Limpopo coal project
during the year. In August 2006, the company announced the conditional merger
of its coal interests with those of Motjoli Ltd, its Holfontein J.V. partner.
This transaction will result in GVM holding 100% of the Holfontein project, 74%
of the Limpopo Coal Project and a 50% share in the Baobab coal project, which is
located some 50kms south of the Limpopo project. The Company is in an advanced
stage of negotiation to acquire a further coal interest in the Limpopo province
of South Africa.
Results
Revenue for 2006 was $32,340,604 (2005: $31,000,529) and net cash generated from
operating activities was $398,234 (2005: $2,360,481). Earnings before interest
($669,044), tax ($566,732) and depreciation ($242,768) was $1,245,403 (2005:
$2,774,567). The 2006 results include a share based payment charge of $551,200
relating to share options issued to the company's directors on 28 June 2006 as
well as $404,335 in listing and marketing expenses relating to the Company's
successful listing on the Alternative Investment Market (AIM) in London during
the year. The earnings before interest tax and depreciation, adjusted for AIM
listing and share based payments is $2,200,938.
Nimag reported earnings before interest ($669,044), tax ($566,732) and
depreciation ($226,725) of $2,823,541.
The loss of the Consolidated Entity for the 2006 financial year after income tax
and minority interests was $587,011 (2005: Profit of $793,338).
Dividends
The Directors do not recommend payment of a dividend in respect of the financial
year ended 30 June 2006.
Review of Operations
During the year the operations of the Consolidated Entity included:
NiMag (Proprietary) Limited - manufacturing and distribution of nickel and
magnesium alloys;
Master Alloy Traders Limited - trading of minerals from South Africa;
SA Mineral Resources Corporation Limited - investment in mineral processing in
South Africa; and
Holfontein Coal Project - JV coal project based in South Africa.
Nimag (Proprietary) Limited ("NiMag")
NiMag began producing alloys in 1962.
Ductile iron (also called spheroidal graphite iron or nodular cast iron) was
discovered in the 1940s. The introduction of magnesium into the melt results in
nodular rather than flaky graphite in the resultant cast iron, giving the cast
iron properties approaching those of steel, while maintaining the advantages of
the casting process. The magnesium is usually added as a nickel alloy, making
it easier to add and contribute to product quality. NiMag still primarily
supplies the ductile iron market as a specialist supplier with a world market
share of about 35% in its core product line. 95% of sales are exported through
35 distributors world wide. Demand for NiMag's alloys is proportional with
world demand for ductile iron, principally for automotive parts and industrial
machinery. Demand for NiMag products has grown gradually to meet current
capacity of 400 tonnes per month (all products). Potential for expansion of the
core nickel-magnesium alloy product is presently limited by the size of end
markets. NiMag is increasing the penetration of a variety of other products
developed for alternative markets. NiMag produces approximately 500 tonnes of
cast and slit fibres which are used in reinforced concrete by domestic mining
and tunneling operations.
NiMag's competitive advantages include low electricity and labour costs. The
main input cost is locally sourced nickel raw material, which is matched with
sales to minimize nickel price exposure.
GVM acquired 74% of NiMag from a management group in January 2004. The
consideration was R37 Million ($A8 million) comprising R7.5 million in cash up
front, R20 million borrowed against the business and R9.5 million in vendor
finance. GVM retained the right to buy the balance of NiMag for R13 million
payable in GVM shares issued at $A0.40 each. It is intended that these shares
will be issued immediately on GVM's listing on the Johannesburg Stock Exchange
(JSE), which is expected to occur in the last quarter of 2006. When these
shares are issued, GVM will own 100% of NiMag.
Since GVM acquired the business, NiMag has broadly met or exceeded production
and sales budgets. However the strength of the Rand through the period has
inflated costs relative to the US dollar denominated sales. Despite the
difficult trading conditions imposed by the Rand's strength in 2005 and 2006,
NiMag traded profitably, contributing about $4,575,000 in surplus funds to
repayment of its acquisition costs. At the end of June 2006, GVM's remaining
acquisition loans comprised $2,342,000 in bank debt and $1,876,700 to the NiMag
vendors. The NiMag vendor loans will be repaid at the end of 2006.
Depreciation of the Rand and strengthening of Nickel prices since January 2006
has widened NiMag's profit margins. At current exchange rates and Nickel
prices, NiMag is expected to generate substantially higher operational cash
flows over the 2006/07 financial year.
Metal Alloy Traders Limited ("MATS")
MATS is incorporated in Jersey in the Channel Islands and it trades various
metals purchased from Nimag in South Africa.
SA Mineral Resources Corporation Limited ("Samroc")
Samroc is a Johannesburg Stock Exchange listed company which produces manganese
sulphate chemicals. During the latter half of 2005 GVM stated its intention to
dispose of its entire investment in Samroc and sold 15,000,000 shares in Samroc
at two South African cents per share during May 2006.
As a result of its intended disposal, the Samroc investment has been
reclassified as a Non-current Investment Held for Sale.
Holfontein Coal Project
Early in the second quarter of 2005, a 49% interest in the coal mining project "
Holfontein" was acquired with a Black Economic Empowerment ("BEE") partner,
Motjoli Resources (Pty) Ltd. The acquisition is subject to a number of
conditions, principally related to the size of the economically recoverable
tonnes as determined by independent experts.
The Old Order Prospecting Rights relating to the project were successfully
converted to New Order Prospecting Rights during the year (as required by the
South African Department of Minerals and Energy) and a drilling program is
currently underway to determine the economics of the project. The feasibility
study is expected to be completed by the end of the 2006 calendar year.
The Holfontein Coal Project is currently the subject of further negotiations as
discussed under Future Developments, Prospects and Business Strategies in this
report.
GMA Resources plc ("GMA")
The Company disposed of its entire investment in GMA during the year.
Review of Financial Position
Liquidity and funding
The net assets of the Consolidated Entity have decreased from $8,971,969 as at
30 June 2005 to $7,661,354 in 2006. This was mainly due to a negative exchange
movement of $1,369,241 in the translation of opening equity balances of
subsidiaries charged directly to equity. The Group also incurred $404,335 in
expenses related to its listing on the AIM and recorded a loss of $98,630
representing its share of Samroc's loss during the first half of the year, which
would not recur in future years. The Group raised approximately $895,000 during
the year from the issue of shares and repaid some $1,892,500 of debt. The Group
also raised #3,200,000 through the placing of shares during July 2006.
The Consolidated Entity's net working capital at year end was $1,628,543 whilst
interest bearing liabilities were $5,153,889.
Impact of legislation and other external requirements
From 1 July 2005 the Consolidated Entity is required to comply with Australian
equivalents to International Financial Reporting Standards (AIFRS) issued by the
Australian Accounting Standards Board. The impact of the resulting changes in
accounting policies are disclosed in Note 28 of the financial report.
There were no changes in environmental or other legislative requirements during
the year that have significantly impacted the results or operations of the
Consolidated Entity.
Future Developments, Prospects and Business Strategies
Proposed JSE listing
The Company successfully listed on AIM in December 2005 and completed a GBP 3.2
million (A$7.9 million) capital raising in July 2006. Under current South
African Reserve Bank requirements, it is difficult to acquire South African
assets from South African residents with shares if those shares are not listed
on the Johannesburg Stock Exchange (JSE). Following the conditional acquisition
of the Limpopo Coal project by the issuance of GVM shares and the subsequent
Motjoli transaction, it became necessary for GVM to seek a listing on the JSE,
which it hopes to obtain by the end of October 2006.
GVM believes that a JSE listing will assist the company to further expand its
mining interest in South Africa by allowing the Company to acquire assets by
means of share issue.
Conditional merger with the coal assets of Motjoli Resources
In August 2006, the company advised that it had conditionally acquired Motjoli's
51% interest in the Holfontein Coal Project, Motjoli's 50% interest in the
Baobab J.V. Coal Project and its 100% interest in three Limpopo prospecting
permits adjacent to those held by the Baobab J.V. The Baobab J.V. is some 50/
60km south of GVM's 74% owned Limpopo Coal Project.
GVM will hold - post closure of the Limpopo and Motjoli transactions - a very
substantial holding in what is widely regarded as South Africa's new coal
province.
Strategic direction
GVM's strategic direction is firmly set towards becoming a major South African
coal producer over the next five years whilst continuing to develop its existing
metal processing business and seeking other mining opportunities.
The primary focus for the forthcoming two years is to bring Holfontein into
production and complete feasibility studies for at least one of the Limpopo/
Baobab coal projects.
The combined Limpopo and Baobab Coal Projects comprise 23 prospecting leases
totalling 32,000 Hectares.
After 20 years of dormancy, the future for coal is very bright in South Africa.
GVM is determined to become a major player in the re-awakening of the coal
industry in South Africa
Changes in State of Affairs
Significant changes in the state of affairs of the Consolidated Entity during
the financial year were as follows:
* On 13 October 2005, the company consolidated its share capital in the
ratio of 1 share for every 10 shares previously held.
* On 31 October 2005, the Company issued 200,000 shares at an issue price of
25 cents per share to settle certain creditor balances;
* During February and March 2006 the company placed a total of 1,400,000
shares at an issue price of 25 cents per share, to raise total gross
proceeds of $350,000; and
* On 8 March 2006, the Company issued a total of 2,212,500 shares at an
issue price of 25 cents per share to settle certain creditor balances as
well as to acquire preference shares in Nimag (Pty) Limited.
Likely Developments
The Consolidated Entity will continue to expand its coal interests in South
Africa and is targeting the establishment of its first operating coal mine
within the next 18 to 24 months. It will also continue to pursue investment
opportunities both in the mining and metal processing industries in the
forthcoming year.
Events Subsequent to Balance Date
In July 2006, the Company successfully completed a share placement of 24,615,384
new ordinary shares which raised #3,200,000. These shares commenced trading on
the Alternative Investment Market of the London Stock Exchange ("AIM") on 13
July 2006.
On 22 August 2006 GVM announced that it has executed binding Heads of Agreement
with Motjoli Resources (Pty) Ltd (Motjoli) to acquire Motjoli's 51% interest in
the Holfontein Coal project, taking GVM's interest to 100%. Further, the Heads
of Agreement includes the acquisition of Motjoli's 50% interest in the Boabab
J.V. coal project and its 100% interest in three Limpopo prospecting licenses
adjacent to those held by the Boabab J.V.
The consideration payable for the Holfontein and Boabab J.V. interests is
34,863,226 ordinary shares plus a further 3,417,964 ordinary shares to be issued
on the grant of an export allocation to GVM at the Richards Bay Coal Terminal,
for a minimum of 100,000 metric tones of coal per annum.
Income Statements For the Year Ended 30 June 2006
Consolidated Entity Parent Entity
2006 2005 2006 2005
$ $ $ $
REVENUE 32,340,604 31,000,529 380,250 1,080,233
Changes in inventories of finished goods
and work in progress (367,491) 66,834 - -
Raw materials and consumables used (23,529,689) (22,480,207) - -
Consulting expenses (400,187) (413,652) (342,066) (306,257)
Employee expenses (3,516,128) (2,865,537) (970,187) (400,081)
Borrowing costs (669,044) (904,206) - (765)
Depreciation expenses (242,768) (366,226) (16,043) (19,013)
Office rental , outgoings and parking (204,865) (324,941) (60,385) (62,503)
Decrease/(increase) diminution in value (4,325) (442,265) (4,325) (419,035)
of investments
Loss on investments disposed of (40,197) - (40,197) -
Bad debt expense (1,159) - (1,159) -
Provision for non-recoverability of - (137,866) - (136,660)
loans
Other expenses from ordinary activities (2,932,530) (1,651,558) (658,856) (254,070)
Share of net profit/(losses) of
associate accounted for using the equity
method (98,630) 23,230 - -
Profit/(Loss) before income tax 333,591 1,504,135 (1,712,968) (518,151)
(expense)/benefit
Income tax expense / benefit (566,732) (323,535) - 400
Profit/(Loss) after tax (233,141) 1,180,600 (1,712,968) (517,751)
Outside equity interest (353,870) (387,262) - -
Net profit/(loss) attributable to
members of the parent entity (587,011) 793,338 (1,712,968) (517,751)
Basic earnings/(loss) per share (in (2.04) 3.22
cents)
Balance Sheets as at 30 June 2006
Consolidated Entity Parent Entity
2006 2005 2006 2005
$ $ $ $
CURRENT ASSETS
Cash assets 985,333 1,806,353 78,191 188,202
Receivables 6,374,684 5,714,592 722,916 680,652
Inventory 3,245,656 3,363,679 - -
TOTAL CURRENT ASSETS 10,605,673 10,884,624 801,107 868,854
NON CURRENT ASSETS
Receivables - - 4,522,652 4,556,736
Assets held for sale 94,596 222,806 - -
Intangibles 7,441,280 9,206,288 - -
Other financial assets 699,992 925,645 4,465,409 4,279,492
Property, plant and equipment 1,803,312 2,434,245 27,845 43,887
Deferred tax assets 36,669 26,886 - -
TOTAL NON CURRENT ASSETS 10,075,849 12,815,870 9,015,906 8,880,115
TOTAL ASSETS 20,681,522 23,700,494 9,817,013 9,748,969
CURRENT LIABILITIES
Payables 5,940,126 6,178,289 328,915 168,870
Interest bearing liabilities 2,451,628 2,016,220 - -
Provisions 125,790 99,986 212 1,254
Current tax liability 459,586 116,810 - -
TOTAL CURRENT LIABILITIES 8,977,130 8,411,305 329,127 170,124
NON CURRENT LIABILITIES
Payables 1,340,777 1,580,489 6,601,208 6,425,817
Interest bearing liabilities 2,702,261 4,736,731 - -
TOTAL NON CURRENT LIABILITIES 4,043,038 6,317,220 6,601,208 6,425,817
TOTAL LIABILITIES 13,020,168 14,728,525 6,930,335 6,595,941
NET ASSETS 7,661,354 8,971,969 2,886,678 3,153,028
EQUITY
Contributed equity 35,396,353 34,500,935 35,396,353 34,500,935
Reserves 426,521 1,244,562 687,645 136,445
Accumulated losses (30,666,656) (30,079,645) (33,197,320) (31,484,352)
TOTAL PARENT EQUITY INTEREST 5,156,218 5,665,852 2,886,678 3,153,028
OUTSIDE EQUITY INTEREST 2,505,136 3,306,117 - -
TOTAL EQUITY 7,661,354 8,971,969 2,886,678 3,153,028
Cash Flow Statements For the year ended 30 June 2006
Consolidated Entity Parent Entity
2006 2005 2006 2005
$ $ $ $
Cash flows from operating activities
Interest received 84,578 157,513 30,280 108,429
Cash receipts in the course of 31,482,520 30,072,218 312,266 929,224
operations
Interest paid (669,044) (904,206) - (765)
Payments to suppliers and employees (30,499,820) (26,965,044) (1,327,010) (1,075,284)
Net cash generated by /(used in) 398,234 2,360,481 (984,464) (38,396)
operating activities
Cash flows from investing activities
Payments for property, plant and (148,489) (245,253) - (9,443)
equipment
Proceeds from the sale of property, - 54,354 - 13,455
plant and equipment
Proceeds from sale of equity 226,511 849,480 226,511 849,480
investments
Payments for equity investments (47,576) (655,980) (47,576) (2,683,772)
Loans (made to)/from other entities - (594,050) 34,084 (712,813)
Net cash received on acquisition of
subsidiary - 257,743 - -
Net cash generated by / (used in)
investing activities 30,446 (333,706) 213,019 (2,543,093)
Cash flows from financing activities
Loans from controlled entities - - 175,391 -
Proceeds from issue of shares 543,750 1,050,950 543,750 1,031,684
Transaction costs from issue of shares (57,707) (19,265) (57,707) -
Loans from other entities - - - 1,618,587
Loans repaid to other entities (1,892,452) (2,798,037) - -
Net cash generated by financing
activities (1,406,409) (1,766,352) 661,434 2,650,271
Net increase/(decrease) in cash held (977,729) 260,423 (110,011) 68,782
Cash at beginning of financial year 1,027,493 767,070 188,202 119,420
Cash at end of financial year 49,764 1,027,493 78,191 188,202
Statements of Changes in Equity as at 30 June 2006
Ordinary Capital Foreign Share Accumulated Total Outside
share profits currency options losses Equity
capital reserve translation interests
reserve
$ $ $ $ $ $ $
Consolidated entity
Balance at 1
July 2005 34,500,935 136,445 1,108,117 - (30,079,645) 5,665,852 3,306,117
Shares issued
during the
year 953,125 - - - - 953,125 -
Capital
raising costs
incurred (57,707) - - - - (57,707) -
Adjustments
from
translation of
foreign
controlled
entities - - (1,369,241) - - (1,369,241) -
Share based
payments - - - 551,200 - 551,200 -
Loss
attributable
to members of
parent entity - - - - (587,011) (587,011) -
Loss
attributable
to minority
shareholders - - - - - - (353,870)
Minority
interest in
reserves - - - - - - 221,480
Preference
shares
acquired by
parent entity - - - - - - (668,591)
--------- -------- --------- -------- --------- --------- --------
Balance at 30
June 2006 35,396,353 136,445 (261,124) 551,200 (30,666,656) 5,156,218 2,505,136
--------- -------- --------- -------- --------- --------- --------
Parent entity
Balance at 1
July 2005 34,500,935 136,445 - - (31,484,352) 3,153,028 -
Shares issued
during the
year 953,125 - - - - 953,125 -
Transaction
costs (57,707) - - - - (57,707) -
Share based
payments - - - 551,200 - 551,200 -
Loss
attributable
to members of
parent entity - - - - (1,712,968) (1,712,968) -
Balance at 30
June 2006 35,396,353 136,445 - 551,200 (33,197,320) 2,886,678 -
Ordinary Capital Foreign Accumulated Total Outside
share capital profits currency losses Equity
reserve translation interests
reserve
$ $ $ $ $ $
Consolidated entity
Balance at 1
July 2004 33,469,250 136,445 599,872 (30,872,984) 3,332,583 2,690,827
Shares
issued
during the 1,050,950 - - - 1,050,950 -
year
Capital
raising
costs (19,265) - - - (19,265) -
incurred
Adjustments
from
translation
of
foreign
controlled - - 508,245 - 508,245 -
entities
Profit
attributable
to members
of - - - 793,339 793,339 -
parent
entity
Profit
attributable
to minority
shareholders - - - - - 387,262
Minority
interest in
reserves - - - - - 228,028
Balance at
30 34,500,935 136,445 1,108,117 (30,079,645) 5,665,852 3,306,117
June 2005
Parent entity
Balance at 1
July 2004 33,469,250 136,445 - (30,966,601) 2,639,094 -
Shares
issued
during the 1,050,950 - - - 1,050,950 -
year
Transaction
costs (19,265) - - - (19,265) -
Loss
attributable
to members
of - - - (517,751) (517,751) -
parent
entity
Balance at
30 34,500,935 136,445 - (31,484,352) 3,153,028 -
June 2005
Key notes to and forming part of the Financial Statements for the year ended 30
June 2006
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements are a general purpose financial report that has been prepared in accordance with Australian
Accounting Standards, Urgent Issues Group Interpretations, other authoritative pronouncements of the Australian
Accounting Standards Board and the Corporations Act 2001.
The financial report covers the economic entity of GVM Metals Limited and controlled entities, and GVM Metals Limited as
an individual parent entity. GVM Metals Limited is a listed public company, incorporated and domiciled in Australia.
The financial report of GVM Metals Limited and controlled entities, and GVM Metals Limited as an individual parent
entity comply with all Australian equivalents to International Financial Reporting Standards (AIFRS) in their entirety.
Consolidated Entity Parent Entity
2006 2005 2006 2005
$ $ $ $
2. REVENUE
Revenue from operating activities
Sale of goods 31,324,714 29,402,751 - -
Interest income 84,578 157,513 30,280 108,429
Other revenue 931,312 1,056,280 349,970 592,021
Revenue from outside operating activities
Profit from sale of equity investments - 366,328 - 366,328
Profit from sale of property, plant and equipment - 17,657 - 13,455
Total revenue from ordinary activities 32,340,604 31,000,529 380,250 1,080,233
3. Profit (LOSS) FROM ORDINARY ACTIVITIES
(a) Profit/(Loss) from ordinary activities before tax has been arrived at after charging/(crediting)
the following items:
Depreciation of:
- office furniture, fittings & 27,839 38,169 10,823 9,593
equipment
- leasehold improvements 5,220 9,420 5,220 9,420
- buildings 11,655 14,743 - -
- motor vehicle 37,469 48,019 - -
- plant & equipment 160,585 255,875 - -
242,768 366,226 16,043 19,013
Profit/(loss) on sale of property - 17,658 - 13,455
plant and equipment
Net foreign exchange gain/(loss) 539,096 221,491 - -
Amount set aside to/(reversed from)
provisions for:
- employee entitlements 25,804 (198,065) (1,041) 292
Borrowing costs - other 455,770 639,909 - 765
- related 213,274 264,297 - -
parties
Operating lease expenses 114,862 362,546 - -
Consolidated Entity Parent Entity
2006 2005 2006 2005
$ $ $ $
(b) Individually significant items included in profit/(loss) from ordinary activities before income tax
Profit/(loss) on
disposal of equity
investments (40,197) 366,328 (40,197) 366,328
Provision for
diminution in
value
of (4,325) (442,265) (4,325) (419,035)
Investments
Share-based
payments to
Directors (551,200) - (551,200) -
Provision for
non-recoverability
of loans - (137,866) - (136,660)
AIM Listing Costs (404,335) - (404,335) -
4. INCOME TAX EXPENSE AND DEFERRED TAX
a) Income tax expense
Current tax 581,107 400,514 - (400)
Deferred tax (14,375) (76,979) - -
Over provision in prior year - -
Aggregate income tax expense 566,732 323,535 - (400)
b) Numerical reconciliation of income tax
expense to prima facie tax payable
Profit /(loss) before income tax 333,591 1,504,135 (1,712,968) (518,151)
expense
Tax at the Australian rate of 30%
(2005: 30%)
100,077 451,240 (513,890) (155,325)
Tax effect of amounts which are not
deductible (taxable) in calculating
taxable income:
Net loss / (gain) on sale of shares 12,059 (109,898) 12,059 (109,898)
Provision for diminution in value 1,298 132,680 1,298 125,711
Provision for non-recovery of loans - 41,360 - 40,998
Share based payments 165,360 - 165,360 -
Sundry items - 53,836 5,933
Other temporary differences not
brought to account
287,938 (245,683) 335,173 92,181
Income tax expense 566,732 323,535 - (400)
c) Amounts recognised directly in equity
Aggregate current and deferred tax
arising in the reporting period and
not recognised in net profit or loss
but directly debited or credited to
equity
Net deferred tax - debited/ (credited)
directly to equity - - - -
- - - -
Deferred tax assets
The balance comprises temporary
differences attributable to:
Amounts recognised in profit or loss
Employee benefits 36,669 26,886 - -
Amounts recognised directly in equity - - - -
Net deferred tax assets 36,669 26,886 - -
Movements
Opening balance at 1 July 26,886 (50,093) - -
Charged to the income statement 14,375 76,979 - -
Exchange rate movement (4,592) - - -
Closing balance at 30 June 36,669 26,886 - -
The Company has approximately $11 million and $4.9 million in revenue and
capital losses respectively not brought to account as deferred tax benefits
because the directors do not believe it is appropriate to regard the utilisation
of the tax benefits as probable.
Consolidated Entity
2006 2005
$ $
5. (LOSS) / EARNINGS PER SHARE
Basic (loss) / profit per share
(cents per share) (2.04) 3.22
Weighted average number of ordinary shares used as the 28,795,026 24,607,956
denominator
As at 30 June 2006, there were 8,075,000 (2005: 57,210,000) options outstanding
over unissued capital exercisable at amounts ranging between $0.500 and $1.923
(2005: $0.923 and $1.923). Diluted EPS was not calculated for 2006 as the
company incurred a loss per share. During 2005 there was no dilutive potential
as the exercisable range of the options was substantially above market price.
Consolidated Entity Parent Entity
2006 2005 2006 2005
$ $ $ $
6. RECEIVABLES CURRENT
Receivable - associates 620,311 594,051 620,311 594,051
Provision for doubtful receivables - associate (38,804) (38,804) (38,804) (38,804)
Trade debtors 3,342,813 3,182,755 - -
Other debtors 3,128,224 2,654,450 819,269 803,265
Provision for doubtful receivables - other (677,860) (677,860) (677,860) (677,860)
6,374,684 5,714,592 722,916 680,652
NON CURRENT
Amounts receivable from controlled - - 5,121,200 5,155,284
entities
Provision for doubtful receivables - - (598,548) (598,548)
- - 4,522,652 4,556,736
Amounts receivable from controlled entities are interest free, unsecured and
with no fixed term for repayment.
7. ASSETS HELD FOR SALE (INVESTMENT IN ASSOCIATE)
Carrying value of investments at beginning of
year 222,806 525,270 - -
Disposal of shares during the year (29,580) - - -
Diminution in value of investment - (325,694) - -
Share of associate's net (loss) / profit (98,630) 23,230 - -
Carrying value at end of year 94,596 222,806 - -
The Company has a 26.18% interest in SA Mineral Resources Corporation Ltd
("SAMROC"), a resource company whose particular focus is the manufacture of
manganese chemicals. It owns the rights to a manganese deposit near Graskop,
Mpumalanga, South Africa and operates the Greenhills manganese chemical plant,
which is located adjacent to the mineral deposit.
SAMROC is listed on JSE Securities Exchange South Africa ("JSE"). The closing
price of SAMROC on JSE as at balance date was Rand 0.01, or $0.002. The
investment was previously disclosed as an Investment in Associate. GVM has
announced its intention to dispose of the investment and, therefore, the
investment has been reclassified as Assets Held for Sale. The share of
associate's net loss represents GVM's interest in the loss incurred by Samroc
from 1 July 2005 to 31 December 2005 on which date the investment was
reclassified.
8. OTHER FINANCIAL ASSETS
Available for Sale Financial Assets:
Investments:
Shares in other corporations listed on
Stock exchange at cost 89,151 429,660 1,694,703 2,280,960
Provision for diminution in value (69,688) (168,744) (1,482,014) (1,797,238)
At fair value 19,463 260,916 212,689 483,722
Shares in controlled entities at cost - - 11,864,731 11,423,582
Provision for diminution in value - - (8,292,540) (8,292,540)
- - 3,572,191 3,131,042
Shares in other corporations - at cost (1) 680,529 664,729 680,529 664,728
699,992 925,645 4,465,409 4,279,492
Market value of above investments listed on a 19,463 260,916 212,689 483,722
stock exchange as at 30 June 2006
(1) Shares in other corporations represent an initial payment of South African Rand 3 million ($646,183)
plus certain capitalised expenses for a 49% interest in the Holfontein Coal Project. The remainder of the
purchase consideration is payable as per note 21. The initial payment will be refunded in the event of the
project not proceeding to completion.
Shares in controlled entities are carried at cost. Refer to Note 24(a)
The fair value of unlisted available for sale financial assets cannot be reliably measured as variability in the
range of reasonable fair value estimates is significant. As a result, all unlisted investments are reflected at
cost.
Consolidated Entity Parent Entity
2006 2005 2006 2005
9. INTEREST BEARING LIABILITES
CURRENT LIABILITIES
Bank Overdraft 935,569 778,860 - -
Secured Loans 764,364 715,146 - -
Unsecured Loans 751,695 522,214 - -
2,451,628 2,016,220 - -
NON-CURRENT LIABILITIES
Secured Loans 1,577,292 2,440,174 - -
Unsecured Loans 1,124,969 2,296,557 - -
2,702,261 4,736,731 - -
Financial arrangements
The Consolidated Entity has the access to the
following lines of credit:
General banking facility/bank overdraft 1,318,764 1,374,100 - -
Term loan facility 3,767,897 3,926,000 - -
Forward exchange contract facility 3,767,897 3,926,000 - -
8,854,558 9,226,100 - -
Facilities utilised at reporting date
Bank Overdraft 935,569 778,860 - -
Secured Loans 2,341,656 3,155,320 - -
3,277,225 3,934,180 - -
Facilities not utilised at reporting date
Bank overdraft 383,195 595,240 - -
Forward exchange contract facility 3,767,897 3,926,000 - -
Term loan facility 1,426,241 770,680 - -
5,577,333 5,291,920 - -
Bank overdrafts, term facility and forward exchange contract facility
The various facilities described above are secured by:
- Unlimited cession of debtors;
- Registration of a first continuing covering mortgage bond over the farm
Steenkoppies Magaliesburg for an amount of $1,130,369 (R6,000,000) supported by
a cession of fire and Sasria policy;
- Registration of a general and special notarial bond over stock, plant
and equipment for an amount of $2,825,923 (R15,000,000) supported by a cession
of fire and Sasria policy;
- Unlimited suretyship by GVM Metals Ltd; and
- Limited suretyship by other shareholders to the amount of $542,954
(R2,882,000).
Secured Loans (ABSA Limited)
The loan is repayable in annual instalments which comprise capital and interest
of $1,016,961 (R5,398,029) with a final payment in March 2009. The loan bears
interest at 1% above the South African prime interest rate.
Unsecured Loans (Loans from minority interests in controlled entity)
The loans are unsecured and bore interest at a rate of 8.5% during the year
under review. $751,696 (R 3,990,000) is repayable on 13 December 2006 and the
balance will be repaid when funds are available and can be delayed to a maximum
of 5 years.
10. CONTRIBUTED EQUITY
(a) Issued and paid up capital
31,311,019 ordinary fully
paid shares (2005:27,498,519
ordinary fully paid shares -adjusted for
share consolidation) 35,396,353 34,500,935 35,396,353 34,500,935
35,396,353 34,500,935 35,396,353 34,500,935
2006 2006 2005 Number 2005
Number $ $
(b) Movements in contributed equity
Opening Balance 274,985,189 34,500,935 239,120,188 33,469,250
Capital raising
for working
capital at 2.5
cents per share - - 5,000,000 125,000
Capital raising
for investment
capital at 3.0
cents per share - - 30,865,001 925,950
10:1 Share
consolidation (247,486,802) - - -
Revised balance
post
consolidation 27,498,387 - -
Capital raising
for working
capital at 25
cents per share 3,812,500 953,125 - -
Capital raising
costs incurred (57,707) (19,265)
31,310,887 35,396,353 274,985,189 34,500,935
The Company has entered into an Option Agreement whereby GVM has a call option
granting it the right to acquire the remaining 26% of Nimag, for the total
consideration of 6.5 million shares in GVM @ 40 cents per share. Similarly, the
shareholders of the remaining 26% of Nimag have a put option granting them the
right to dispose of their holding in Nimag to GVM, for the consideration of 6.5
million shares in GVM @ 40 cents per share. The Option Agreement is subject to
certain terms and conditions. The option agreement was amended during the year
to take cognisance of the 10:1 share consolidation in GVM. The issuing of the
GVM shares is also subject to shareholder approval.
Consolidated Entity Parent Entity
2006 2005 2006 2005
$ $ $ $
11. NOTES TO THE STATEMENT OF CASHFLOWS
(a) Reconciliation of cash
For the purposes of the statements of cash flows, cash includes cash on hand and at bank and short term
deposits at call, net of outstanding bank overdrafts. Cash as at the end of the financial year as shown in
the statements of cash flows is reconciled to the related items in the statement of financial position.
Cash at Bank 985,333 1,806,353 78,191 188,202
Bank Overdraft (935,569) (778,860) - -
49,764 1,027,493 78,191 188,202
(b) Reconciliation of loss from ordinary activities after income tax to net cash used in operating activities
Profit/(Loss) from ordinary activities after
income tax (233,141) 1,180,600 (1,712,968) (517,751)
Add/(less) non- cash items:
Amounts set aside (reversed from) provisions (112,735) (184,960) (1,042) 292
Depreciation/amortisation of property, plant 242,768 366,226 16,043 19,013
and equipment
(Profit)/loss on disposal of property, plant - (17,658) - (13,455)
and equipment
(Profit)/loss on disposal of equity 40,197 (366,328) 40,197 (366,328)
investments
Diminution in value of investments 4,325 442,265 4,325 419,035
Provision for non-recoverability of loans - 137,866 - 136,660
Share of associates (profit) / loss 98,630 (23,230) - -
Share based payments 551,200 - 551,200 -
Change in assets and liabilities:
(Increase) in trade debtors (773,506) (386,313) (37,704) 200,543
and other receivables
(Increase)/Decrease in inventory 118,023 66,834 - -
Increase/(Decrease) in creditors 129,480 1,453,152 160,045 83,595
Increase/(Decrease) in Tax Payable, FITB,
PDIT 332,993 (307,973) (4,560) -
Net cash provided by / (used in) operating 398,234 2,360,481 (984,464) (38,396)
activities
(c) Non-cash investing and financing activities
The Parent entity acquired certain "B" Preference shares in Nimag from minority
shareholders during the year for a consideration of $441,151 of which $409,375
was settled by means of a share issue.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR FGGZLRZDGVZG
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