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Abridged Audited Group Annual Financial Statements for the Year Ended 28 February 2013
Chrometco Limited
(Incorporated in the Republic of South Africa)
(Registration number 2002/026265/06)
Share code: CMO
ISIN: ZAE00007020249
("Chrometco" or "the group")
ABRIDGED AUDITED GROUP ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 28
FEBRUARY 2013
ABRIDGED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited as
at Audited as at
28 Feb 2013 29 Feb 2012
R'000 R'000
ASSETS
Non-current assets 199 822 184 532
Tangible assets 31 52
Intangible assets 197 499 184 480
Deferred taxation 2 292
Current assets 31 752 38 606
Inventory 11 011 6 870
Trade and other receivables 973 126
Cash and cash equivalents 19 768 31 610
Total assets 231 574 223 138
EQUITY AND LIABILITIES
Capital and reserves 179 255 173 105
Stated capital 54 187 2
Share premium 35 485
Retained earnings 90 446 101 786
Non-controlling interest 34 622 35 832
Non-current liabilities 33 279 34 436
Deferred taxation 33 279 34 436
Current liabilities 19 040 15 597
Trade and other payables 15 547 12 499
Provisions 10 10
Taxation payable 3 483 3 088
Total equity and liabilities 231 574 223 138
Net asset value per share (cents) 87.47 93.61
Closing number of shares ('000) 204 929 184 929
Net asset value per share
- after conclusion of NKWE
transaction (cents) 159.05 -
Closing number of shares
- after conclusion of NKWE
transaction (‘000) 274 929 -
ABRIDGED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
for year for year
ended 28 ended 29
Feb 2013 Feb 2012
R'000 R'000
Revenue 1 553 619
Cost of sales (530) (314)
Gross profit 1 023 305
Gain on bargain purchase - 115 128
Change in measurement - VAT - (6 018)
Operating expenses (17 808) (10 520)
Net (loss) / profit before interest
and taxation (16 785) 98 895
Investment income 1 182 1 623
Finance charges - -
(Loss) / profit before taxation (15 603) 100 518
Taxation 3 054 (2 413)
(Loss) / Profit for the year (12 549) 98 105
Other comprehensive income - -
Taxation on other comprehensive
income - -
Total comprehensive (loss) / income
for the year (12 549) 98 105
(Loss) / Profit attributable to non
controlling interest (1 210) 350
Total comprehensive (loss) / income
for the year attributable to owners
of the company (11 339) 98 455
Reconciliation between (loss) /
earnings and head line (loss) /
earnings per share
Basic (loss) / earnings per share
(cents) (5,92) 53.24
Diluted earnings / (loss) per share
(cents) (4.33) 53.24
(Losses) / earnings attributable to
owners of the company (11 339) 98 455
Adjustments:
Gain on bargain purchase - (100 518)
Headline loss attributable to owners
of the company (11 339) (16 673)
Headline loss per share (cents) (5.92) (9.01)
Weighted average number of shares
(`000) 204 929 184 929
ABRIDGED CONSOLIDATED STATEMENT OF CASH
FLOWS
Audited for Audited for
year ended 28 year ended 29
Feb 2013 Feb 2012
R'000 R'000
Cash flows from operating
activities (11 042) (6 041)
Cash flows from investing
activities (800) (8)
Cash flows from financing
activities - -
Net movement in cash and
cash equivalents (11 842) (6 049)
Cash and cash equivalents at
the beginning of the period 31 610 37 659
Cash and cash equivalents at
the end of the period. 19 768 31 610
ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Stated Non
Capital Controlling
and Interest
Share Retained
Premium Earnings Total
R'000 R'000 R'000 R'000
Balance at 1 March 2011 35 487 - 3 330 38 817
Acquired through business
combination - 36 183 - 36 183
Non controlling interest’s
share of loss for the year - (350) - (350)
Comprehensive income for the
period - - 98 455 98 455
Balance at 29 February 2012 35 487 35 833 101 785 173 105
Balance at 1 March 2012 35 487 35 833 101 785 173 105
Effect of share based payments 18 700 - - 18 700
Non controlling interest’s
share of loss for the year - (1 210) - (1 210)
Comprehensive loss for the
period - - (11 339) (11 339)
Balance at 28 February 2013 54 187 34 623 90 446 179 256
COMMENTARY – Financial and operational overview.
1. The directors present the reviewed results for the year ended 28
February 2013
2. Basis of preparation
The accounting policies of the group comply in all material respects with
recognition and measurement criteria of International Financial Reporting
Standards (“IFRS”) and its interpretations adopted by the International
Accounting Standards Board (“IASB”) in issue and effective at 1 March 2012,
the SAICA Financial Reporting Guides as issued by the Accounting Practices
Committee and Financial Pronouncements as issued by Financial Reporting
Standards Council, as well as the presentation and disclosure requirements
of IAS 34 – Interim Financial Reporting, the JSE Limited Listings
Requirements and the Companies Act of South Africa. The accounting policies
and methods of measurement and recognition are consistent with those
applied in the financial period ended 29 February 2012.
The abridged audited group annual financial statements were prepared under
the supervision of the Financial Director, Mr T Scott (CA)SA.
3. Auditors' report
The Chrometco group's auditors, RSM Betty & Dickson (Johannesburg), have
audited these results. Their unmodified audit report is available for
inspection at the company's registered office during normal office hours.
4. Nature of business.
The company is involved in the mining and exploration of mineral resources
and the possible beneficiation thereof.
5. Gain on bargain purchase recognized in the prior period
Shareholders attention is drawn to the fact that net profit for the year
ended 29 February 2012 (prior period) includes the once off net fair value
gain (described as Gain on Bargain Purchase Price as required by IFRS) on
re-recognising the group’s subsidiaries in that year. The gain of R115.5m
was been calculated after adjusting for other assets and liabilities in the
subsidiaries, deferred capital gains tax on the gain and the minority
shareholders of 24% in the relevant companies. This gain had no effect on
Headline Earnings Per Share in that period.
6. Share based payments – acquisition of intangible assets
In November 2012, shareholders approved the acquisition of geological data
and a drill core from NKWE Platinum SA (Pty) Ltd (“NKWE”) and Realm
Resource Ltd (“Realm”) for a total purchase consideration of 20 million
ordinary shares. The fair value of the assets acquired in terms of this
phase of the transaction was determined at R18.7 million. The financial
effect of the transaction resulted in an R18.7 million increase in
intangible assets and stated capital.
It should be noted that the second phase of this transaction will result in
the company effectively acquiring the PGM mining rights on the Remainder
Extent of Rooderand for a further purchase consideration of 70 million
shares. This phase of the transaction is subject to the approval of the
Department of Mineral Resources in terms of section 102 of the Mineral
Petroleum and Resources Development Act.
7. Conversion of share capital
In December 2012, shareholders approved the adoption of the company’s
memorandum of incorporation as well as the conversion of the company’s
existing ordinary share capital (comprising 204 928 683 ordinary shares of
par value) to stated capital (comprising 204 928 683 ordinary shares of no
par value).
8. General review of operations.
During the period under review, the group focused its attention on the
following important issues:-
- In October of 2012, the company prepared and distributed a circular to
shareholders concerning the acquisition of geological data, drill core
and PGM prospecting rights from NKWE and Realm for a total purchase
consideration of 90 million shares. Shareholders approved the transaction
at a general meeting in November 2012. The acquisition assisted the group
in updating its in-situ chrome resource and resulted in (after applying a
20% fault loss) a total indicated chrome resource of 36.9 million tons
and a total inferred chrome resource of 18.7 million tons. Pursuant to
the updated resource estimation, the independently assessed fair value of
the group’s Rooderand project increased from R186 million to R384 million
during the period under review. In accordance with the requirements of
IFRS, the company does not measure recognised intangible assetson the
statement of financial position using a fair value model. Had the
intangible assets of the company been reflected at fair value on balance
sheet date, NAV per share at 28 February 2013 would have been 164 cents
per share.
Sale of MG4 chrome ore stockpiles at Rooderand;
Performing a detailed economic viability study on the viability of chrome
mining and beneficiation operations at Rooderand;
- Evaluation of alternatives relating to the Rooderand project;
- Updating the mineral resources and reserves statement, Competent Persons
Report and valuation of Rooderand;
- Consolidation of the PGM and chrome mining rights at Rooderand via
implementation of the NKWE/Realm transaction;
- Recovery of R10 million due from DCM Chrome in terms of the mining and
management agreement. DCMI Chrome is currently in liquidation.
Capital raising; and
- Optimisation of the allocation of capital resources.
9. Prospects
The group currently has a chrome mine in the North West province of the
Republic of South Africa. Upon the conclusion of the NKWE / Realm
transaction, the group will have consolidated PGM mining rights on the
Remainder Portion of Rooderand and accordingly will have PGM prospects in
addition to its existing chrome prospects.
The company is also interested in the exploration and beneficiation of
mineral resource opportunities in the Republic and elsewhere.
10. Changes to the board
The board welcomed the appointment of Mr. Richard Rossiter on 2 November
2012, and additionally the appointment of Mr. Ryan McConnachie (as
alternate to Mr. Rossiter) on 24 May 2013.
11. Dividends
No dividend has been declared for the period.
For and on behalf of the board of directors
PJ Cilliers
Managing Director
28 May 2013
Directors: JG Scott (Independent Non-executive Chairman), PJ Cilliers
(Managing Director), CS Seabrooke (independent non-executive), E Bramley
(Non-executive), IWS Collair (Independent non-executive), R Rossiter (Non-
executive), R McConnachie (Non-executive) TW Scott (Financial Director)
Designated Advisor: Sasfin Capital, a division of Sasfin Bank.
Company Secretary: CIS Company Secretaries (Pty) Ltd
Registered Office
70 Marshall Street
Johannesburg
(P.O.Box 3787, Dainfern. 2055)
www.chrometco.co.za
29 May 2013
Johannesburg
Designated Advisor
Sasfin Capital
A division of Sasfin Bank Limited
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