RNS Number:3275N
Mwana Africa PLC
06 December 2006
6 December 2006
Mwana Africa plc
Results for the 6 months to 30th September 2006
London, 6th December 2006 - The Board of Mwana Africa plc ("The Board"), the
pan-African resource company, is pleased to announce its unaudited interim
financial results for the six months to 30th September 2006.
Financial Highlights for the 6 month period
* Group turnover of #46.05 million
* Group profit before tax of #25.98 million (including #12.40 million of
interest, denominated in Zimbabwean dollars, earned on Zimbabwean cash
deposits)
* Group profit after tax and minority interests of #10.53 million
* Earnings per share (diluted) of 4.21p
* Positive cashflow from operations of #9.39 million
* Capital expenditure and financial investment of #12.65 million
* Cash, denominated in # or US$, at bank as at 30th September 2006 of #45
million
Commenting on the announcement, Kalaa Mpinga, Chief Executive Officer of Mwana
Africa, said:
"This half year we have begun to see the benefits of our persistent efforts to
sustain and develop our operations in Zimbabwe, in spite of significant economic
and operational difficulties. We will continue in our efforts to grow our nickel
and gold operations in Zimbabwe and to support their long term viability as we
are doing with the improvements to the life of the Trojan and Shangani mines.
"Our exploration and near production activities, in particular in the DRC, are
full of potential and we believe justify continued investment.
"We remain open to new opportunities across the whole continent of Africa and
believe that now is an exceptionally promising time to be operating in the
natural resources business in Africa."
David Fish, finance director, commented that:
"A significant proportion of the Group's profit after tax and minority interests
is earned in Zimbabwean dollars both through regulated conversion of US dollar
income into Zimbabwean dollars and interest earned on Zimbabwean dollar deposits.
"There are practical restrictions on converting Zimbabwean dollars into hard
currency and hence #13 million of cash, denominated in Zimbabwean dollars,
included in the balance sheet at 30th September 2006, cannot currently be
converted into hard currency or remitted out of Zimbabwe. However, Mwana has
received US$2.62 million from Bindura's interim dividend in the first half and
anticipates receiving a second interim dividend which was declared and is
payable to shareholders registered on the 8th December 2006 of a similar amount."
ENDS
Enquiries:
Kalaa Mpinga, CEO Tel. +44 207 654 5588
Oliver Baring, Executive Chairman
Mwana Africa plc
Tom Randell or Maria Suleymanova Tel. +44 207 653 6620
Merlin
Copies of this statement will be available on the Company's website,
www.mwanaafrica.com.
Chairman's Statement
It is now more than a year since the merger between African Gold and Mwana
Africa Holdings in September 2005 to create Mwana Africa plc. At this interim
stage the growth and development of our production assets and the integration of
our strategic acquisitions are both proceeding well. We are in the enviable
position of being able to build on an already strong position in the Democratic
Republic of the Congo where, directly and indirectly, we are one of the
country's largest exploration licence holders. Our production assets have in the
six months to 30th September 2006 also generated strong cashflows that mean for
the first time we have achieved a healthy operating profit and cashflow, mostly
from our nickel operation at Bindura.
Our strategy is to build a broad based African natural resources business with
both exploration and production assets and to grow this business across Africa
by developing existing assets and taking them to production as well as by
selected acquisitions. We look at all potential acquisitions or investment
proposals in the light of our strategy to have assets spread across a range of
commodities, low costs of production, develop close and trusted long term
partnerships, build and support a high quality management team that will
accommodate the growth of the business, and expand into new countries across the
African continent. The current opportunities in Africa are many and diverse and
as a result we can be highly selective about which we pursue.
The strong nickel price during the period supported a substantial increase in
profitability at Bindura Nickel Corporation ("BNC"). We received a first interim
dividend for US$2.62 million in the half year and a second interim dividend
payment has been declared of a similar amount. The strong cash flow has been
achieved in spite of the continuing challenges of a difficult operating
environment in Zimbabwe, where the managed exchange rate has mitigated against
the high nickel price and the cash held in Zimbabwe cannot currently be
converted to other currencies. The value of Mwana's 53% stake in BNC, quoted on
the Harare Stock Exchange, alone equates to a large part of the market
capitalisation of Mwana Africa plc.
The proposed acquisition of Gravity Diamonds is a significant step towards our
goal of creating a major integrated diamond exploration and production business.
This followed the earlier acquisition in May of a 20% stake in MIBA which
brought with it a significant attributable production of diamonds. We now intend
to engage with the Government of the DRC, which holds 80%, in returning
production to optimum capacity. Gravity's strong land position in the prolific
Kasai craton in the DRC supplements the attributable diamond production from
MIBA and Gravity's exploration team reinforces our experience in project
development and construction.
Progress on the Freda Rebecca expansion project has been slower than expected
mainly due to the bureaucracy of the Zimbabwe investment approval system,
sourcing materials and spares, and construction skills availability.
Commissioning of the new and refurbished tankage should start in second quarter
of 2007 with ramp up to 60,000 tons of ore and 4,000 ozs of gold per month.
In the DRC at Kilbolwe drilling is programmed to start in December with
completion in the first quarter.
In Ghana, we have almost completed the drilling at Banka and the results should
be available shortly. At Ahanta we are completing a reassessment of the new RC
drilling within the context of all of the existing historical data. At Konongo
we are examining all of our options against the background of the resource
report prepared by RSG.
Our # and US$ cash resources remain strong, supported by operational cashflow,
and we expect to soon be in a position to enter into a share buyback scheme if
we believe this is in the interests of shareholders.
On behalf of the Board I would like to express our gratitude to Hank Slack for
his service to the company prior to his resignation in October. We wish him all
the best with his business commitments in the US.
Oliver Baring
Executive Chairman
Consolidated profit and loss account
For the six months ended 30 September 2006
(Unaudited)
6 months 6 months Year ended
ended ended
30.09.2006 30.09.2005 31.03.2006
Note #000 #000 #000
-----------------------------------------------------------------------
Group Turnover 46,053 - 25,106
---------- ---------- --------
Continuing operations 46,053 - 17
Acquisitions - - 25,089
---------- ---------- --------
Cost of sales (29,819) - (12,908)
-----------------------------------------------------------------------
Gross profit 3 16,234 - 12,198
Administrative expenses (3,097) (334) (9,710)
-----------------------------------------------------------------------
Operating profit/(loss) 13,137 (334) 2,488
---------- ---------- --------
Continuing operations 13,137 (334) (1,772)
Acquisitions - - 4,260
---------- ---------- --------
Interest receivable and
similar income 3 13,254 - 225
Interest payable and
similar (409) - (948)
charges
-----------------------------------------------------------------------
Profit/(loss) on ordinary
activities before taxation 25,982 (334) 1,765
Tax on profit/(loss) on
ordinary activities (5,041) - (700)
-----------------------------------------------------------------------
Profit/(loss) on ordinary
activities after taxation 20,941 (334) 1,065
Minority interest (10,414) - (1,165)
-----------------------------------------------------------------------
Profit/(loss) for the
financial period 10,527 (334) (100)
-----------------------------------------------------------------------
Earnings per share
- Basic 4.46p (1.10p)* (0.11p)
- Diluted 4.21p (1.10p)* (0.11p)
-----------------------------------------------------------------------
For a complete understanding of the financial situation of the group, reference
should be made to note 3.
* Restated for the share consolidation as per note 4.
Consolidated balance sheet
As at 30 September 2006
(Unaudited)
6 months 6 months Year ended
ended ended
Note 30.09.2006 30.09.2005 31.03.2006
#000 #000 #000
-----------------------------------------------------------------------
Fixed assets
Intangible assets 13,213 6,668 12,980
Tangible assets 61,751 308 65,365
Investments 8,879 - -
-----------------------------------------------------------------------
83,843 6,976 78,345
-----------------------------------------------------------------------
Current assets
Stocks 8,333 1 8,773
Debtors 16,563 176 9,455
Short term deposits 3 10,884 - -
Cash at bank and in hand 3 47,687 45 14,311
----------------------------------------------------------------------
83,467 222 32,539
Creditors: amounts
falling (14,895) (779) (14,037)
due within one year
-----------------------------------------------------------------------
Net current assets 68,572 (557) 18,502
-----------------------------------------------------------------------
Total assets less current
liabilities 152,415 6,419 96,847
Provision for liabilities (4,919) - (3,356)
-----------------------------------------------------------------------
Total assets less
liabilities 147,496 6,419 93,491
-----------------------------------------------------------------------
Capital and reserves
Called up share capital 4 24,792 3,174 17,938
Share premium account 87,888 8,661 54,116
Profit and loss account 2,314 (5,416) (3,547)
-----------------------------------------------------------------------
114,994 6,419 68,507
Minority interest 32,502 - 24,984
-----------------------------------------------------------------------
Shareholders' funds - 147,496 6,419 93,491
equity
-----------------------------------------------------------------------
For a complete understanding of the financial situation of the group, reference
should be made to note 3.
Consolidated cash flow statement
For the six months ended 30 September 2006
(Unaudited)
6 months 6 months Year ended
ended ended
30.09.2006 30.09.2005 31.03.2006
#000 #000 #000
----------------------------------------------------------------------
Cash flow statement
Cash flow from operating
activities 9,391 (257) 4,000
Returns on investments and
servicing of finance 12,845 - (723)
Taxation (2,622) - (493)
Capital expenditure and
financial investment (12,654) (730) (4,414)
Acquisitions and disposals - - (4,366)
Dividends paid to minority
shareholders (1,319) - -
Management of liquid resources (10,884) - -
----------------------------------------------------------------------
Cash outflow before financing (5,243) (987) (5,996)
Financing 40,626 100 17,153
----------------------------------------------------------------------
Increase/(decrease) in cash
for the period 35,383 (887) 11,157
the period
---------------------=------------------------------------------------
Reconciliation of net cash
flow to movement in net funds
Increase/(decrease) in cash
for the period 35,383 (887) 11,157
----------------------------------------------------------------------
Movement in net funds for the
period 35,383 (887) 11,157
Net funds at the start of the
period 12,089 932 932
Translation differences 4 - -
----------------------------------------------------------------------
Net funds at the end of the
period 47,476 45 12,089
----------------------------------------------------------------------
For a complete understanding of the financial situation of the group, reference
should be made to note 3.
Consolidated statement of total recognised gains and losses
For the six months ended 30 September 2006
(Unaudited)
6 months 6 months Year ended
ended ended
30.09.2006 30.09.2005 31.03.2006
#000 #000 #000
---------------------------------------------------------------------
Profit/(Loss) for the period 10,527 (334) (100)
Net exchange differences on
the
retranslation of net (4,742) (21) 941
investments
---------------------------------------------------------------------
Total recognised gain/(loss)
for the period 5,785 (355) 841
---------------------------------------------------------------------
Reconciliation of movements in shareholders' funds
For the six months ended 30 September 2006
(Unaudited)
6 months 6 months Year ended
ended ended
30.09.2006 30.09.2005 31.03.2006
#000 #000 #000
--------------------------------------------------------------------
Profit/(Loss) for the period 10,527 (334) (100)
Credit in relation to
share-based payments 76 - 674
New share capital subscribed
(net of issue costs) 40,626 100 60,318
Net exchange differences on
the retranslation of net
investments (4,742) (21) 941
---------------------------------------------------------------------
Net addition to/(reduction in) 46,487 (255) 61,833
shareholders' funds
Opening shareholders' funds 68,507 6,674 6,674
---------------------------------------------------------------------
Closing shareholders' funds 114,994 6,419 68,507
---------------------------------------------------------------------
Notes to the interim financial report
For the six months ended 30 September 2006
(Unaudited)
1. GENERAL INFORMATION
These interim consolidated financial statements are for the six months ended 30
September 2006. The information for the year ended 31 March 2006 does not
constitute statutory accounts as defined in section 240 of the Companies Act
1985. A copy of the statutory accounts for that year, which were prepared under
UK Generally Accepted Accounting Principles (GAAP), has been delivered to the
Registrar of Companies. The auditor's report on those accounts was unqualified.
2. BASIS OF PREPARATION
The accounting policies applied in the preparation of this interim financial
report are consistent with the accounting policies and estimates applied in the
preparation of the Group's annual financial report for the year ended 31 March
2006. The interim financial report is to be read in conjunction with the Annual
Financial report for the year ended 31 March 2006 and any public announcements
made by the Company and its subsidiaries during the half-year.
3. CURRENCY EXPOSURE
3.1. The Zimbabwean economy currently experiences hyper inflation and is
managed under an official exchange rate which is fixed from time to time by the
Zimbabwean Reserve Bank. This has the effect of eroding both the Group's gross
profit margin and the buying power of cash balances held in Zimbabwean Dollars.
This is partly compensated for by very high interest rates earned on Zimbabwean
Dollar denominated cash balances. "Interest receivable and similar income"
includes #12.4m of interest earned on such Zimbabwean Dollar cash balances
during the six months under review.
Of the Group's #58.6m short term deposits and cash balances at the balance sheet
date, #13.4m was held in Zimbabwean Dollars. The remittance of cash from
Zimbabwe is subject to foreign exchange controls and the limited availability of
foreign exchange in the country.
The Zimbabwean interest received and cash balances were converted from
Zimbabwean Dollars into Sterling at the official exchange rate. The official
exchange rate is currently fixed at Zimbabwean Dollars 250: US Dollar 1.
3.2. The Group suffered a #6.3m exchange loss on the retranslation of its US
Dollar denominated assets into Sterling, of which #4.7m was attributable to the
majority shareholders and #1.6m to the minority shareholders. The retranslation
difference was debited directly to Reserves.
Notes to the interim financial report
For the six months ended 30 September 2006
(Unaudited)
4. CALLED UP SHARE CAPITAL
6 months 6 months Year ended
ended ended
30.09.2006 30.09.2005 31.03.2006
#000 #000 #000
---------------------------------------------------------------------
Authorised
276,500,000 ordinary
shares of
10 pence each (2005:
1,000,000,000 ordinary 27,650 10,000 27,650
shares of 1 pence)
---------------------------------------------------------------------
Allotted, called up and
fully paid
Opening balance
179,376,154
ordinary shares of 10
pence 17,938 3,124 3,124
each (2005: 312,397,889
shares
of 1 pence each)
Issued during the period,
prior - 50 50
to the share consolidation
(1)
Issued during the period
after 6,854 - 14,764
the share consolidation
---------------------------------------------------------------------
Closing balance
247,920,654
ordinary shares of 10
pence 24,792 3,174 17,938
each (2005: 317,397,889
shares of 1 pence each)
---------------------------------------------------------------------
(1) At an Extraordinary General meeting on 25 October 2005, the shareholders
approved a share consolidation. The share consolidation took effect following
the close of business on 25 October 2005, with shareholders receiving one new
ordinary share of 10p for every 10 existing shares of 1p held at the close of
business on 25 October 2005. Trading of the new ordinary shares of 10p commenced
on 26 October 2005.
Movements in Issued Share Capital
Issued price
Date Event # Number of shares
---------------------------------------------------------------------------
1 April 2006 Opening balance 179,376,154
21 April 2006 Exercise of share options 0.30 518,500
26 April 2006 Exercise of share options 0.39 1,099,000
2 May 2006 Placing for cash 0.63 66,900,000
20 June 2006 Exercise of share options 0.16 27,000
---------------------------------------------------------------------------
30 September 2006 Closing balance 247,920,654
---------------------------------------------------------------------------
Notes to the interim financial report
For the six months ended 30 September 2006
(Unaudited)
5. POST BALANCE SHEET EVENTS
On 17 November 2006 the Company announced, together with Gravity Diamonds
Limited, their proposed merger to create a new diamond exploration business.
This agreement follows the announcement in August 2006 that the Company acquired
a 14.99% stake in Gravity. The merger will be implemented by schemes of
arrangement whereby, through a cash offer, Mwana will offer Gravity shareholders
28 Australian cents for every Gravity share held or, through an equity
alternative, Mwana will offer Gravity shareholders 1 Mwana share for every 4
Gravity shares held.
The merger is subject to Gravity shareholders' and Australian Court approval and
should be completed by the end of the first quarter of 2007. The total value of
the transaction, including the shares already acquired, is expected to be
approximately #20m.
6. CONTINGENT LIABILITIES
There were no significant changes to Group's exposure to contingent liabilities
since 31 March 2006.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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