Your SlideShare is downloading. ×

RioZim Limited FY 2013 results

116

Published on

RioZim Limited FY 2013 results

RioZim Limited FY 2013 results

Published in: Investor Relations
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
116
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
0
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Introduction The company operated under challenging conditions characterised by lower revenue resulting from the 30% decline in international commodity prices and expensive financing costs. The disruption at Renco in January and February 2013 cost the company $4.5million in lost revenue and cash. Economic Overview The economy continues to operate sub-optimally mainly because of liquidity constraints and minimum foreign direct investments. This coupled with the lack of suitable lines of credit and a fragile banking sector resulted in limited economic activity. I would, however, like to acknowledge the support rendered by the banks in spite of the limited resources at their disposal. I would also like to acknowledge the support given by regional institutions such as Afrexim Bank who have continued to support the revival of the Zimbabwean economy. Corporates, however, continue to remain under pressure due to high interest rate burden which in the main averaged about 20% per annum. Inflation remained low at 0.33% on an annualised basis. The Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim Asset) document launched during the period under review has all the necessary and correct ingredients.What is urgently required is to put in place a serious implementation program. If Zim Asset is to be a success we need undoubted commitment on the part of the implementers. More importantly, we need to effectively re-engage the international community. The national gold output declined 6.02% after the closure of some mines due to unsustainably high extracting costs against the background of declining gold prices. RioZim has continued to focus on the cost cutting measures whose success has helped the company to continue operating. Financial Performance The Group’s revenue grew by 46% over last year and an operating profit of $2.1 million was recorded. This profit fell short of the $4.6million achieved in the comparative period mainly due to the decline in global metal prices. A net finance cost of $9.7 million (2012: $11.8 million) reversed the operating profit to a loss for the year of $4.7 million (2012: $5.5 million). Empress Nickel Refinery (ENR) recorded a growth in turnover of 132% from $34 million in 2012 to $79 million in 2013. The growth in revenue was largely driven by the change in the ENR business model from toll-refining to own production. This business unit has since become the largest exporter of beneficiated mineral products in Zimbabwe. The operation traded profitably in 2013 even though the margins were negatively affected by the high electricity tariffs and stop and start costs resulting from inconsistent liquid oxygen supply which was addressed by the purchase and installation of a new oxygen plant commissioned in November 2013. The new plant produces oxygen at a significant cost saving. The reverts project was concluded though at much lower revenues than anticipated due to falling metal prices. Renco achieved a slightly more than break-even operating profit. The decline in gold prices together with the disturbances experienced in the first quarter affected the momentum of this business even though the operation remains a strategic asset for the Group. The cost cutting measures that commenced in 2012 afforded the Renco business continuity in the face of collapsing gold prices. The decline in metal prices hampered the Group’s ability to service its debt at the rate that was planned. Bank facilities were renewed, even though capital repayments were made at a slower rate than expected by the financial institutions. An approach is being worked on that will provide a long lasting solution to all lenders. The performance of the Group’s associate, Murowa Diamonds (Private) Limited improved significantly on the back of a 24% increase in price per carat partially attributable to an improvement in quality. A share of profit from associate of $823 000 (2012: loss of $267 000) was posted. Outlook The company continues to pursue growth through increased productivity at lower cost. To this end $3.3million was invested in capital improvements, mainly at ENR, which were completed in the first quarter of 2014. As mentioned in my last report, a new mining operation based on the Cam & Motor ore bodies is on course with the design and manufacturing of the plant for the operation having commenced. The Engineering Procurement and Construction contract was recently signed and the company has every reason to believe that the operation will be on course to start production in the second half of 2014. Given that the mine was historically Zimbabwe’s largest gold producing mine, Cam & Motor should be an excellent addition to the Group’s operating portfolio. The Group’s restructuring is on course and the successful completion of this exercise will enable the Group to raise capital at subsidiary level whilst remaining an indigenous entity. The funds raised will be used to finance some of the Group’s exciting project pipeline. Sustainability RioZim Foundation launched a new platform for collaboration with government, business, the diplomatic community, donors, educational institutions and NGO’s to bring sustainable development to communities across Zimbabwe. Under a new Executive Director, the Foundation is uniquely placed to provide a bridge between communities and potential development partners. The RioZim Foundation’s vision continues to be to create, develop and promote collaborative sustainable development programs and make measurable social impact on the lives of the people in Zimbabwe. In 2014, the RioZim Foundation will build upon a 40 year legacy of hard work and success to forge strategic partnerships for the future. The Foundation aims to be the“Partner of Choice”in the implementation of development programs in education, food production and health in Zimbabwe. Directorate Dr S H S Makoni, Mr. T P B Mpofu and Mr. R M Tait resigned from the Board with effect from the 4th of December 2013. I would like to thank them for their immensely valuable contribution to the Group and wish them well in their future endeavors. I welcome to the board Mr. M T Sachak and Mr. L P Chihota who each add a wealth of experience and expertise. Appreciation I wish to extend my gratitude to the rest of the Board for their continued guidance, commitment and tireless effort in directing the company forward during what has proved to be a demanding financial year. I also wish to thank management, staff and other stakeholders for their selfless support during the period. E N Mushayakarara Board Chairman 20 March 2014 Directors’responsibility statement The Directors are required by the Companies Act (Chapter 24:03) to maintain adequate accounting records and are responsible for the content and integrity of the Group consolidated financial results and related information included in this report. It is their responsibility to ensure that the Group’s abridged financial results fairly present the state of affairs of the Group as at the end of financial year and the results of its operations and cash flows for the year then ended, in conformity with International Financial Reporting Standards (IFRS). Auditor’s Statement The abridged financial results should be read in conjunction with the complete set of financial statements for the year ended 31 December 2013, which have been audited by Ernst & Young Chartered Accountants (Zimbabwe) who have issued an unmodified audit opinion with an emphasis of matter paragraph on going concern. Chairman’s statement ABRIDGED statement of CHANGES IN EQUITY For the year ended 31 December 2013 Attributable to equity holders’of the parent Available Non- Share Share for sale Other Retained controlling Total capital premium reserve reserve earnings Total interests equity US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000 Balance as at 1 January 2012 425 500 - - 15 869 16 794 (310 ) 16 484 Loss for the year - - - - (5 512 ) (5 512 ) (11 ) (5 523 ) Other comprehensive income - - 123 - 540 663 - 663 Total comprehensive income - - 123 - (4 972 ) (4 849 ) (11 ) (4 860 ) Issued share capital 234 11 543 - - - 11 777 - 11 777 Convertible debentures - - - 133 - 133 - 133 Transaction costs - (443) - - - (443 ) - (443 ) Balance as at 31 December 2012 659 11 600 123 133 10 897 23 412 (321 ) 23 091 Loss for the year - - - - (4 561 ) (4 561 ) (104 ) (4 665 ) Other comprehensive income - - 12 - 1 407 1 419 - 1 419 Total comprehensive income - - 12 - ( 3 154 ) ( 3 142 ) ( 104 ) (3 246 ) - - Balance as at 31 December 2013 659 11 600 135 133 7 743 20 270 (425 ) 19 845 For the year ended 31 December 2013 2013 2012 US$000 US$000 Revenue 105 682 72 383 Cost of sales (84 402 ) (47 428 ) Gross Profit 21 280 24 955 Other income 2 361 518 Distribution and selling expenses ( 198 ) (1 718 ) Administrative expenses (21 338 ) (19 230 ) (Loss) / Gain on disposal of property, plant and equipment (1 ) 180 Write off of buildings - (66 ) Operating profit 2 104 4 639 Net Finance cost ( 9 749 ) ( 11 843 ) Finance revenue 127 27 Finance cost ( 9 876 ) ( 11 870 ) Share of profit / (loss) of associate 823 (267 ) Loss before Taxation ( 6 822 ) (7 471 ) Income tax credit 2 157 1 948 Loss for the Year ( 4 665 ) ( 5 523 ) Other comprehensive income Other comprehensive income to be reclassified to profit or loss in subsequent periods: Fair value gain on available -for- sale investment 15 129 Income tax effect on other comprehensive income (3 ) (6 ) Net other comprehensive income to be reclassified to profit or loss in subsequent periods 12 123 Other comprehensive income not to be reclassified to profit or loss: Re-measurement gains on defined benefit plans 1 407 540 Net other comprehensive income not to be reclassified to profit or loss in subsequent period 1 407 540 Total other comprehensive income for the year, net of tax 1 419 663 Total comprehensive loss ( 3 246 ) ( 4 860 ) Loss for the year attributable to: Owners of the parent (4 561 ) (5 512 ) Non-controlling interests (104 ) (11 ) (4 665 ) (5 523 ) Total comprehensive loss attributable to: Owners of the parent (3 142 ) (4 849 ) Non-controlling interests (104 ) (11 ) (3 246 ) (4 860 ) Loss per share (cents) Basic (8.55 ) (12.11) Diluted basic (8.55 ) (12.11) Headline (8.55 ) (12.36) As at 31 December 2013 2013 2012 US$000 US$000 Assets Non current assets Property, plant and equipment 5 34 941 34 566 Exploration, evaluation and development assets 6 14 238 13 540 Investment in associate company 5 842 5 019 Available for sale investments 193 147 Deferred tax assets 5 804 5 101 Total non-current assets 61 018 58 373 Current assets Inventories 7 52 928 43 010 Trade and other receivables 3 910 16 103 Derivative financial assets 1 375 - Cash and cash equivalents 669 1 034 Total current assets 58 882 60 147 Total assets 119 900 118 520 EQUITY LIABILITIES Shareholders’equity Share capital 659 659 Share premium 11 600 11 600 Available for sale reserves 135 123 Other reserves 133 133 Retained Earnings 7 743 10 897 Equity attributable to equity holders of the parent 20 270 23 412 Non-controlling interest ( 425 ) (321 ) Total equity 19 845 23 091 Non-current liabilities Interest bearing loans and borrowings 8 17 640 8 570 Provisions 154 119 Deferred tax liability 1 426 2 878 Employee benefit liability 230 1 501 Long term payable 4 611 4 611 Total non-current liabilities 24 061 17 679 Current liabilities Trade and other payables 44 863 32 941 Tax payable 282 282 Interest-bearing loans and borrowings 30 849 44 527 Total current liabilities 75 994 77 750 Total liabilities 100 055 95 429 Total equity and liabilities 119 900 118 520 ABRIDGED statement of comprehensive income ABRIDGED statement of FINANCIAL POSITION HEAD OFFICE RioZim Limited 1 Kenilworth Road, Highlands, Harare, Zimbabwe P O Box CY 1243, Causeway, or P O Box HG 900 Highlands, Harare, Zimbabwe Telephone: (04) 746141/9, 776085/91, 746089/95 Fax: 746228 Directors: E.N. Mushayakarara (Chairman), J.L Nixon (Deputy Chairman), A.S. Ndlovu (Chief Executive Officer)*, S. R. Beebeejaun, L. .P. Chihota, M.P. Mahlangu, K. Matsheza, A. F. Nhau, M. T. Sachak Executive Directors* RIOZIM LIMITED AUDITED ABRIDGED GROUP RESULTS FOR THE YEAR ENDED 31 DECEMBER 2013 (Incorporated in Zimbabwe on 29 August 1956 under registration number 607/56) Revenue increased $105.7m from $72.4m (2012) EBIDTA decreased $5.1m from $6.9m (2012) Operating profit decreased $2.1m from $4.6m (2012) Loss after tax decreased $4.7m from $5.5m (2012)
  • 2. Directors: E.N. Mushayakarara (Chairman), J.L Nixon (Deputy Chairman), A.S. Ndlovu (Chief Executive Officer)*, S. R. Beebeejaun, L. .P . Chihota, M.P. Mahlangu, K. Matsheza, A. F. Nhau, M. T. Sachak Executive Directors* For the year ended 31 December 2013 2013 2012 US$000 US$000 Cash flows from operating activities Operating profit 2 104 4 639 Adjustments to add/ (deduct) non-cash items: Depreciation 1 887 2 530 Amortisation on capital development 330 - Loss / (Gains) on disposal of property, plant and equipment 1 (180 ) Impairment of land and buildings - 66 Unrealised exchange gain (599 ) (165 ) Unrealised gain on fair value on derivative financial assets (1 375 ) - Working capital adjustments: Change in inventories (9 918 ) (16 176 ) Change in trade and other receivables 12 193 933 Change in trade and other payables 11 922 15 741 Net cash flows from operating activities 16 545 7 388 Cash flows from investing activities Investment in exploration, evaluation and development assets (1 028 ) (1 421 ) Acquisition of property, plant and equipment (2 262 ) (479 ) Purchase of investments (31 ) - Proceeds on disposal of property, plant and equipment 1 1 311 Interest received from investing activities 127 27 Net cash used in investing activities (3 193 ) (562 ) Cash flow from financing activities Proceeds from issue of shares - 11 776 Transaction costs on issue of shares - (443 ) Inflow from borrowings 1 574 12 219 Repayment of borrowings (6 182 ) (17 816 ) Interest paid (9 108 ) (11 870 ) Net cash used in financing activities (13 716 ) (6 134 ) Net (decrease) / increase in cash and cash equivalents (364) 692 Cash and cash equivalents, beginning of period 1 033 342 Cash and cash equivalents at 31 December 669 1 034 31 December 31 December 2013 2012 US$000 US$000 6. Exploration evaluation and development assets Carrying amount at 1 January 13 540 12 119 Additions 1 028 1 421 Amortisation ( 330) - Cost as at 31 December 14 238 13 540 7. Inventories Stores and consumables 3 771 4 544 Metals and minerals 45 165 38 466 Finished metals 3 992 - 52 928 43 010 8. Interest bearing loans borrowings Current Bank Loans 27 263 36 481 Debentures 3 034 1 550 Term loans 552 - Bank acceptance - 6 496 30 849 44 527 Non current Bank Loans 13 708 3 167 Debentures - 1 417 Term loans 3 932 3 986 17 640 8 570 Total 48 489 53 097 9. Operating segments Adjustments and Gold Base Metals eliminations Total $’000 $’000 $’000 $’000 Revenue 31 December 2013 27 012 78 656 14 105 682 31 December 2012 37 572 34 743 68 72 383 Depreciation and amortisation 31 December 2013 1 429 727 61 2 217 31 December 2012 1 470 727 333 2 530 Segment profit 31 December 2013 476 7 925 ( 6 297) 2 104 31 December 2012 8 514 4 354 ( 8 229) 4 639 Segment assets 31 December 2013 31 543 62 375 25 982 119 900 31 December 2012 34 302 60 133 24 085 118 520 Segments liabilities 31 December 2013 29 850 59 028 11 177 100 055 31 December 2012 25 788 51 794 17 847 95 429 Capital expenditure 31 December 2013 1 150 1 990 150 3 290 31 December 2012 868 91 941 1 900 10. Loss Per Share Basic Basic loss per share amounts are calculated by dividing the net loss for the year by the weighted average number of ordinary shares outstanding during the year excluding treasury shares. For the year ended 31 December 2013 1. General information RioZim Limited (‘the Company’) and its subsidiaries (together‘the Group’) is involved in mining and metallurgical operations in different locations in Zimbabwe. The Group has mining operations and a metallurgical plant. TheCompanyisalimitedliabilitycompanyincorporatedanddomiciledinZimbabwe. The address of its registered office is 1 Kenilworth Road, Newlands, Harare. The Company is listed on the Zimbabwe Stock Exchange. These abridged financial results were authorised for issue by the Board of Directors on the 20th of March 2014. 2. Basis of preparation The abridged financial results are presented in United States Dollars (US$), which is the functional currency of the parent company. They have been extracted from the full set of the consolidated financial statements which were prepared in accordance with the International Financial Reporting Standards (“IFRS”) and the International Financial Reporting Statements Interpretations Committee, (“IFRIC”) interpretations. In addition the financial statements were prepared in terms of Zimbabwe Stock Exchange (ZSE) listing rules and the Companies Act. The consolidated financial statements are based on statutory records that are maintained under the historical cost conventions as modified by measurement of certain financial assets at fair value. The abridged financial results do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group’s annual financial statements for the year ended 31 December 2013. 3. Significant accounting policies The abridged financial results have been prepared in accordance with the accounting policies adopted in the Group’s last annual financial statements. 4. Estimates When preparing the consolidated financial statements, management undertakes a number of judgments, estimates and assumptions about recognition and measurement of assets, equity, liabilities, income and expenses. The actual results may differ from the judgments, estimates and assumptions made by management. ABRIDGED statement of cASHFLOWS NOTES TO THE abridged FINANCIAL STATEMENTS 5. Property, plant and equipment Land and Plant and Capitalwork Motor Furniture buildings machinery inprogress vehicles and fittings Total US$000 US$000 US$000 US$000 US$000 US$000 Cost At 1 January 2012 28 232 14 471 - 1 827 314 44 844 Additions - 447 - - 32 479 Write off (103) - - - - (103) Disposals (3 055) - - (73) (10) (3 138) At 31 December 2012 25 074 14 918 - 1 754 336 42 082 Additions - 279 1 558 320 105 2 262 Disposals - - - (75) (9) (84) At 31 December 2013 25 074 15 197 1 558 1 999 432 44 260 Depreciation and impairment At 1 January 2012 1 708 3 714 - 1 357 253 7 032 Depreciation charge for the year 802 1 311 - 380 37 2 530 Write off (37) - - - - (37) Disposals (1 931) - - (71) (7) (2 009) At 31 December 2012 542 5 025 - 1 666 283 7 516 Depreciation charge for the year 492 1 258 - 103 34 1 887 Disposals - - - (75) (9) (84) At 31 December 2013 1 034 6 283 - 1 694 308 9 319 Net Book Value At 31 December 2013 24 040 8 914 1 558 305 124 34 941 At 31 December 2012 24 532 9 893 - 88 53 34 566 RioZim Limited 1 Kenilworth Road, Highlands, Harare, Zimbabwe P O Box CY 1243, Causeway, or P O Box HG 900 Highlands, Harare, Zimbabwe Telephone: (04) 746141/9, 776085/91, 746089/95 Fax: 746228 Diluted Diluted loss per share amounts are calculated by dividing the net loss attributable to the ordinary equity holders of the company after adjusting for impact of dilutive instruments. Headline Headline loss per share amounts are calculated by dividing the net loss attributable to the ordinary equity holders of the parent adjusted for profits, losses and items of a capital nature that do not form part of the ordinary activities of the Group. The following reflects the loss and share data used in the basic and diluted loss per share computations: 2013 2012 US$000 US$000 Loss attributable to equity holders of the parent for basic earnings (4 561 ) (5 512) Adjustment for headline earnings Loss/(gain) on disposal of property 1 (180) Write off of buildings - 66 Headline earnings (4 560 ) (5 626 ) Weighted average number of ordinary shares 53 363 45 536 Weighted average number of ordinary shares for basic earnings per share 53 363 45 536 Loss per share (cents) Basic (8.55 ) (12.11) Diluted basic (8.55 ) (12.11) Headline (8.55 ) (12.36) The Group has some convertible debentures that could potentially dilute the basic earn- ings per share in the future, but were not included in the calculation of diluted earnings per share because they are anti-dilutive for periods presented. There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of authorisation of these financial statements. 11. Share Capital 2013 2012 US$000 US$000 Authorised Shares 100 000 000 ordinary shares of US$0.01 each 1 000 1 000 1 Special Dividend Share of a nominal value of US$124 875.82 125 125 1 125 1 125 Issued Shares 000’s 000’s Shares issued and fully paid 53 363 53 363 There were no shares which were issued during the year 12. Dividends No dividends were declared. 13. Capital Commitements At the reporting date there were no capital commitements. 14. Going concern The Group has incurred losses as a result of high interest rates and has recorded a net loss for the year ended 31 December 2013 of $4.7 million (2012: $5.5 million). As at that date its current liabilities exceeded its current assets by $17.1 million (2012: $17.6 million) as a result of short term borrowings of $30.8 million ( 2012 :$44.5 million). These factors point to a material uncertainty on the Group’s ability to continue as a going concern and, therefore that it maybe unable to realise its assets and discharge its liabilities in the normal course of business. Directors assess the ability of the Group to continue as a going concern at the end of each financial year and believe that the Group is a going concern for the reasons identified below: The successful termination of the loss-making toll refining contract with Centametall in July 2012 is starting to bear some fruits as evidenced by the improvement in ENR profitability. The new oxygen plant that was installed during the year coupled with a long-term supply contract of matte, will stabilise the ENR operation. The oxygen plant will result in cost savings of approximately $300 thousand per month which will improve the profitability of the Group. The Group’s debt position marginally decreased from $53.1 million in December 2012 to $48.5 million. The average cost of debt also continues to reduce from 21% to 19% in 2013 through rate negotiations and restructuring of the loan facilities.The successful refinancing of the debt is expected to reduce interest costs by almost half and improve profitability. The Group is also in the process of re-opening Cam Motor mine which was a world class mine before it closed up in 1968 after producing 150 tonnes of gold. A plant is being designed and manufactured in China and the project is expected to be commissioned in the second half of 2014. The positive contribution of this operation is expected to strengthen the equity and net assets of the Group. Key creditors including financial institutions remain supportive through credit lines and shareholders remain strongly supportive of management’s efforts to improve productivity. The Group’s restructuring plan is now in its conclusion phases and will enable capital raise at subsidiary level and raise funds to retire debt. The directors therefore believe that the Group will continue to operate as a going concern and the preparation of these financial statements on a going concern basis is still appropriate.This basis assumes that the realisation of assets and settlement of liabilities will occur in the ordinary course of business. 15. Events after reporting date. There were no events that occurred after the reporting date that were material to require separate disclosure in these financial statements. RIOZIM LIMITED AUDITED ABRIDGED GROUP RESULTS FOR THE YEAR ENDED 31 DECEMBER 2013 (Incorporated in Zimbabwe on 29 August 1956 under registration number 607/56) HEAD OFFICE

×