Wrap Text
Unaudited Interim Results for the Six Months Ended 31 August 2020
Mine Restoration Investments Limited
Incorporated in the Republic of South Africa
(Registration number: 1987/004821/06)
Share Code: MRI
ISIN Code: ZAE000164562
("MRI" or “the Company" or “the Group”)
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2020
The board of directors of MRI (“the Board”) hereby presents the
interim results of MRI for the six months ended 31 August 2020.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited 12-
six months six months months to
to August to August 29 February
2020 2019 2020
R’000 R’000 R’000
Revenue - - -
Cost of Sales - - -
Other income 386 - 660
Operating expenses (1 201) (1 918) (2 900)
Operating loss (815) (1 918) (2 240)
Investment revenue - 401 -
Finance cost (1 540) (1 341) (2 932)
Loss before taxation (2 355) (2 858) (5 172)
Taxation - - -
Loss for the period (2 355) (2 858) (5 172)
Other comprehensive income - - -
Total comprehensive loss (2 355) (2 858) (5 172)
(Loss) attributable to:
Owners of the parent (2 355) (2 858) (5 173)
Non-controlling interests - - 1
Total comprehensive loss
attributable to:
Equity holders (2 355) (2 858) (5 173)
Non-controlling interests - - 1
Basic loss per share (0.27) (0.33) (0.60)
Diluted loss per share (0.27) (0.33) (0.60)
Weighted average number of
shares in issue (‘000) 863 053 863 053 863 053
Diluted weighted average
number of shares in issue
(‘000) 863 053 863 053 863 053
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
as at as at as at
31 August 31 August 29 February
2020 2019 2020
R’000 R’000 R’000
Assets
Current Assets
Trade and other receivables 538 - 136
Cash and cash equivalents 27 - 1
565 - 137
Total Assets 565 - 137
Equity and Liabilities
Equity
Amount attributable to equity 85 020 (18 906) (21 270)
holders
Non-Controlling Interest (108 247) (32) (31)
(23 227) (18 938) (21 301)
Liabilities
Current Liabilities
Cash and cash equivalents - 1 13
Other financial liabilities 18 103 15 342 16 727
(note 5)
Trade and other payables 5 689 3 595 4 698
(note 5)
23 792 18 938 21 438
Total Equity and Liabilities 565 - 137
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Capital Equity due Retained Amount Non- Total
capital Reserve to change earnings attributable to Controlling equity
in Equity Holders Interest
ownership
R’000 R’000 R’000 R’000 R’000 R’000
Balance at 28
February 2018 85 020 5 000 (2 459) (95 442) (7 881) (66) (7 947)
Total
comprehensive
loss for the
period - - (8 216) (8 216) 34 (8 182)
Balance at 28
February 2019
85 020 5 000 (2 459) (103 608) (16 047) (32) (16 079)
Adjustments
Prior period
Errors
(50) (50) (50)
Balance at 28
February 2019 as
restated 85 020 5 000 (2 459) (103 658) (16 097) (32) (16 129)
Total
comprehensive
loss for the
period - - (5 173) (5 173) 1 (5 172)
Balance at 28
February 2020 85 020 5 000 (2 459) (108 831) (21 270) (31) (21 301)
Total
comprehensive
loss for the
period - - (2 355) (2 355) - (2 355)
Balance at 31
August 2020 85 020 5 000 (2 459) (111 186) (23 625) (31) (23 656)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
six months six months 12-months
to August to August to
2020 2019 February
2020
R’000 R’000 R’000
Cash flows from operating
activities (4) (108) (23)
Cash flows from investing
activities - - (96)
Cash flows from financing
activities 43 - -
Total cash movement for the
period 39 (108) (119)
Cash and cash equivalents at the
beginning of the period (12) 107 107
Cash and cash equivalents at end
of the period (27) (1) (12)
COMMENTARY
1. BASIS OF PREPARATION
These condensed consolidated unaudited interim financial statements
have been prepared by Thato Makgolane, the Financial Director of the
Company, in accordance with IAS 34: Interim Financial Reporting, the
framework concepts and the recognition requirements of International
Financial Reporting Standards (“IFRS”), the SAICA Financial Reporting
Guides as issued by the Accounting Standards Committee and Financial
Reporting Pronouncements issued by the Financial Reporting Standards
Council, the requirements of the South African Companies Act,
2008 (Act 71 of 2008), as amended (“Companies Act”), and the Listings
Requirements of the JSE Limited (“JSE”).
The financial statements have been prepared using accounting policies
that comply with IFRS and which are consistent with those applied in
the preparation of the audited financial statements for the year ended
29 February 2020.
These condensed consolidated interim financial statements have not
been reviewed by the Company’s external auditor.
2. FINANCIAL RESULTS AND FUTURE PROSPECTS
For the perio under review, MRI operated as a cash shell and
continues to do so in the current financial year. The Board focused
on reducing all corporate costs whilst pursuing the acquisition of
Langpan Mining Co Proprietary Limited (“Langpan”). The Board has
satisfied themselves that the Group is in a position to continue as
a going concern and that it has access to sufficient borrowing
facilities to meet its foreseeable cash requirements.
On 10 October 2019, the Group announced on SENS that it had entered
into a share purchase agreement with the shareholders of Langpan, in
terms of which the vendors would dispose of their entire shareholding
(100%) in Langpan for an aggregate purchase consideration of R550
million, to be settled through the issue by MRI of 137 500 000 000
shares to the Vendors (“Langpan Transaction”).
The advent of the novel coronavirus created significant uncertainty
in global capital and commodity markets. In order to protect the Group
and the Langpan Transaction, the transaction stakeholders approved a
restructure of the underlying transaction to mitigate any
uncertainty. The Board reviewed the revised structure and found the
Langpan Transaction to have the same commercial merits as before.
This prompted the Board to sign a refreshed purchase agreement, on
essentially the same terms and conditions as before, on 13 August
2020.
The Board is confident that the acquisition of Langpan will
recapitalise the Company and allow for the successful reinstatement
of the Company’s listing on the Alternative Exchange of the JSE.
3. HEADLINE LOSS PER SHARE (“HLPS”)
Reconciliation of losses to headline losses attributable to equity
holders of the parent:
Unaudited Unaudited Audited
six months six months 12-months to
to August to August February
2020 2019 2020
Loss per share (cents) (0.27) (0.33) (0.60)
diluted loss per share
(cents) (0.27) (0.33) (0.60)
Headline loss per share
(cents) (0.27) (0.33) (0.60)
Diluted headline loss per
share (0.27) (0.33) (0.60)
HLPS Calculation
(Loss) for the period (2 355) (2 858) (5 172)
Impairment of intangible -
assets and goodwill - -
Impairment of property, plant
and equipment - - -
Deferred tax on impairments
of assets - - -
Headline loss (2 355) (2 858) (5 172)
Weighted average number of
shares in issue (‘000) 863 053 863 053 863 053
Actual number of shares in
issue (‘000) 863 053 863 053 863 053
4. CHANGES IN SHARE CAPITAL
Since the last reporting period there have been no changes in issued
share capital.
5. OTHER FINANCIAL ASSETS AND LIABILITIES
On 1 September 2018, the Board entered into an unsecured loan facility
with Langpan, with a balance of R3.3 million as at 31 August 2019.
The repayment of this loan facility will contribute to the working
capital requirements of the Company. The Board took the decision to
fully impair the loan in the 2019 financial year and as such the loan
remains fully impaired at 31 August 2020. As at 31 August 2020, the
Langpan loan balance was R4.0 million.
In early 2018, an angel investor re-capitalised the Company, through
a subordinated debt facility with a balance of R12.0 million at
31 August 2020, in order to settle claims and provide support so as
to maintain the Company’s solvency and to ensure that the Company is
able to continue operating as a going concern. The balance of
R6.1 million of the other financial liabilities relates to syndicated
loans.
The remaining increase in other financial liabilities relates to trade
payables in the ordinary course of business. Trade and Other Payables
of R6.1 million relates to amounts owed to various service providers
including legal, accounting and other fees. The amount has been
subsequently reduced, and the Company remains in continuous
engagements with the creditors on a settlement plan.
6. CHANGES TO THE BOARD
During the reporting period, the following changes were made to the
Board.
• On 24 July 2020, the Board terminated the appointments of
Richard Tait and Quinton George.
• On 13 August 2020, the Board appointed Mahlatsi Movundlela and
Thato Makgolane as Independent Non-Executive Chairman and
Independent Non-Executive Director, respectively.
• On 28 August 2020, Syd Caddy and Chris Roed resigned as
Directors.
Subsequent to the period under review, the following Board changes
took place:
• On 31 October 2020, Ulrich Bester resigned as Financial
Director.
• On 1 November 2020, George Sebulela was appointed Lead
Independent Non-Executive Director.
• On 1 November 2020, the Board appointed Michael Miller as Non-
Executive Chairman.
• On 1 November 2020, Mahlatsi Movundlela and Thato Makgolane
were appointed Chief Executive Officer and Financial Director,
respectively.
• On 14 June 2021, George Sebulela resigned as the Lead
Independent Non-Executive director.
Additionally, following the resignation of George Sebulela on
14 June 2021, the Board subcommittees were also reconstituted, with
effect from 14 June 2021 as follows:
- Combined Audit and Risk Committee: Alistair Collins (Chair)
and Michael Miller.
- Remuneration and Nomination Committee: Alistair Collins
(Chair) and Michael Miller.
- Social and Ethics Committee Alistair Collins (Chair) and
Michael Miller.
Before his resignation, George Sebulela (formely lead independent)
was a member of all three committees. The Company is in the process
of evaluating its Board and committees and is in the process of
appointing additional Board members to close the gap left by George
Sebulela’s resignation and bolster our overall Board structure.
7. GOING CONCERN
The financial period under review reflects a challenging financial
period, with a net loss of R2.4 million. The directors are of the
opinion that the Company will require additional funding within the
next 12 months in order to meet its commitments as they fall due,
with no revenue generating operations.
These conditions indicate the existence of material uncertainty which
may cast doubt about the Company’s ability to continue as a going
concern. In light of the Company entering into the share purchase
agreement with Langpan, the Board remains confident that the Company
retains the continued support of its major shareholders and creditors
to provide additional funding should other sources not be forthcoming.
The Board is currently engaging with the JSE around the remaining
legislative and regulatory requirements for the Langpan Transaction.
The date on which this process is anticipated to be completed will
be announced on SENS in due course. The completion of the Langpan
Transaction will create additional revenue streams for the Company
and thus will further strengthen the going concern assumption.
The directors have a reasonable expectation, having regard to the
current status and the future strategy of the Company, that the
Company will have sufficient resources to continue as a going concern
and have therefore concluded that it is appropriate to prepare the
financial statements on a going concern basis. Accordingly, the
financial statements do not include the adjustments that would result
if the Company were unable to continue as a going concern.
8. EVENTS AFTER THE END OF THE REPORTING PERIOD
Investors have subordinated their claims and provided support in order
to maintain the Company’s solvency and ability to continue operating
as a going concern.
On 9 July 2020, BDO South Africa Incorporated (“BDO”) notified the
Board about a possible reportable irregularity (“RI”) relating to the
“possibility of trading recklessly and the allegations made against
some directors”. On 20 August 2020, BDO notified the Board that an
RI had been raised on 7 August 2020 and that the reported particulars
of the irregularity had been reported to Independent Regulatory Board
for Auditors (“IRBA”). The RI relating to the director’s
contraventions of the Companies Act was found to be consistent with
the reportable irregularity continuing. In order to remedy the RI,
the Board dismissed the implicated directors and appointed new
directors to bolster the Board’s governance credentials.
As a direct result of the RI and Langpan Transaction, on
16 September 2020, the Board received a demand notice from a 17.38%
shareholder, calling for shareholders meeting in terms of section
61(3) of the Companies Act. The purpose of the shareholder meeting
was to re-appoint the dismissed directors, and to terminate the
appointments of the entire Board. The stated aim of the requested
changes to the Board was to prevent the Langpan Transaction from going
ahead and the rights issue being put to the shareholders for their
consideration in the normal course. In light of this particular
shareholder being center to the RI and the Langpan Transaction, the
Board was of the view that the demand was frivolous and vexatious and
thus did not proceed in the calling of the meeting.
In order to protect the interests of the Company, its shareholders,
creditors and the Langpan Transaction, the Board has entered into a
commercial settlement agreement, on 27 October 2020 with the
abovementioned shareholder and the dismissed directors. The
settlement agreement entails the following material outcomes:
• The Board has approved the insertion of a resolution in terms
of section 75(7)(b)(i) of the Companies Act to be included in
the circular(s) pertaining to the Langpan Transaction.
• The shareholder has agreed to sell its 17.38% shareholding in
the Company to an independent third party.
• On 28 October 2020, the call for the shareholders meeting was
unconditionally withdrawn.
On 29 September 2020, MRI’s then auditor BDO notified the Board about
a possible RI relating to (i.) the late release of the 31 August 2019
unaudited interim annual financial statements for the six months ended
31 August 2019 (“Interims 2019”), (ii.) the late release of the annual
financial statements for the year ended 29 February 2020 (“AFS 2020”)
and (iii.) the late release of the 29 February 2020 notice of annual
general meeting. On 2 November 2020, MRI was notified by the Companies
and Intellectual Property Commission (“CIPC”) that on 23 October 2020
BDO had issued the second report to CIPC confirming that a RI was
continuing.
On 14 October 2020, the Board terminated BDO’s external audit
services. On 14 December 2021 the Board appointed Ngubane and Company
(JHB)Incorporated as the Company’s external auditor.
On 29 October 2020, the Company released the Interims 2019. On
30 April 2021, the Company’s auditors and Board signed off the AFS
2020. On 18 June 2021, the Company held its Annual General Meeting
for the year ended 29 February 2020(“AGM”) whereby the Board obtained
99,95% shareholder approval for proposed resolutions. The release of
the Interims 2019, the signing off of the AFS 2020 and the successful
conduct of the AGM has nullified the RI’s, raised by BDO, noted above.
The Board is pleased to confirm that it is currently in the process
of completing the annual financial statements for the year ended
28 February 2021 and thus will advise shareholders accordingly.
Subsequent to 31 August 2021, the Langpan loan has significantly
reduced, with the loan balancing sitting at approximately R1.1 million
as at 28 February 2021. Taking this into account, as part of the audit
process the Company will consider the impairment provision at
28 February 2021 and potentially reverse it.
DIVIDENDS
No dividend was declared for the interim financial period ended
31 August 2020 (2019: Nil).
ANNOUNCEMENT
This announcement is also available at:
https://senspdf.jse.co.za/documents/2021/jse/isse/mri/interims20.pdf
M Miller M Movundlela
Non-executive Chairman Chief Executive Officer
CORPORATE INFORMATION
Postal address: PO Box 866, Rivonia, 2128
Registered and Physical address: Lower Ground Floor Block F,
Pinmill, 164 Katherine Street, Sandton, Gauteng, 2196
Tel no:+27 (0) 11 036 3100
Fax no:+27 (0) 86 654 6818
Web: www.minerestoration.co.za
Board of Directors: A Collins*, MJ Miller# (Chairman), MM
Movundlela (CEO), TA Makgolane (FD).
(#Non-Executive, * Independent Non-Executive)
Company Secretary: Neil Esterhuysen & Associates Inc
Transfer Secretaries: Computershare Investor Services Proprietary
Limited, Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196, Private
Bag X9000, Saxonwold, 2132
Auditor: Ngubane & Co (JHB) Inc.
Johannesburg
7 July 2021
Designated Adviser
Merchantec Capital
Date: 07-07-2021 05:38:00
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