Wrap Text
Reviewed Condensed Provisional Consolidated financial Results for the year ended 28 February 2013
INFRASORS HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2007/002405/06)
Share Code on the JSE: IRA ISIN: ZAE000101507
("Infrasors", "the Company" or "the Group")
REVIEWED CONDENSED PROVISIONAL CONSOLIDATED FINANCIAL RESULTS
FOR THE YEAR ENDED 28 FEBRUARY 2013
Infrasors is a South African mining resources group
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Reviewed 2013 Audited 2012
Note R000's R000's
Revenue 290 003 279 261
Gross profit 61 172 81 333
Operating costs (51 531) (33 779)
Depreciation and amortisation (33 594) (16 986)
(Loss)/contribution from operations (23 953) 30 568
Fair value adjustments - 10 015
Impairments 1 (286 117) -
Operating (loss)/profit (310 070) 40 583
Net finance costs (6 601) (6 914)
(Loss)/profit before tax (316 671) 33 669
Taxation 13 952 (6 325)
(Loss)/profit attributable to shareholders (302 719) 27 344
Attributable to :
Equity holders of Infrasors (302 169) 27 554
Non-controlling interest (550) (210)
Total comprehensive (loss)/income for the year (302 719) 27 344
(Loss)/earnings per share (cents) – Basic and diluted 3 (164.5) 15.0
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed 2013 Audited 2012
Note R000's R000's
Non-current assets 299 763 610 229
Property, plant and equipment 1 260 148 340 825
Investment property 1 3 040 98 089
Mineral rights 1 2 690 92 464
Goodwill 1 - 129
Held-to-maturity investment 1 11 676 49 596
Other financial assets 21 653 16 569
Deferred tax 1, 2 556 12 557
Current assets 76 196 83 096
Inventories 16 859 19 962
Trade and other receivables 38 593 46 068
Cash and cash equivalents 20 744 17 066
Total assets 375 959 693 325
Capital and reserves
Total equity 153 418 462 287
Share capital 927 927
Share premium 256 959 256 959
Treasury shares (2 266) (2 266)
Net issued share capital 255 620 255 620
Revaluation reserve - 6 150
Retained (loss)/income (103 566) 198 603
Attributable to equity holders of parent 152 054 460 373
Non-controlling interest 1 364 1 914
Non-current liabilities 152 714 173 212
Borrowings long-term 6 81 903 80 623
Environmental rehabilitation provision 26 747 23 178
Deferred tax 1, 2 44 064 69 411
Current liabilities 69 827 57 826
Borrowings short-term 6 18 812 22 115
Trade and other payables 40 693 35 452
Bank overdraft 6 9 588 -
Current tax payable 734 259
Total liabilities 222 541 231 038
Total equity and liabilities 375 959 693 325
Note to the Statement of Financial Position:
- Net asset value per share (cents) 83.5 251.6
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed 2013 Audited 2012
R000's R000's
Cash inflows from operating activities 20 229 31 208
Cash outflows from investing activities (16 001) (38 455)
Cash (outflows)/inflows from financing activities (10 138) 7 269
Net increase/(decrease) in cash and cash equivalents (5 910) 22
Cash and cash equivalents at the beginning of the year 17 066 17 044
Cash and cash equivalents at the end of the year 11 156 17 066
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Reviewed 2013 Audited 2012
R000's R000's
Share capital 918 918
Share premium 254 702 254 702
Revaluation reserve - 6 150
Balance at beginning of year 6 150 6 150
Change in deferred tax rate (340) -
Loss on revaluation of land (7 151) -
Deferred tax on loss on revaluation of land 1 341 -
Retained (loss)/income (103 566) 198 603
Balance at the beginning of the year 198 603 171 049
Total comprehensive (loss)/income for the year (302 169) 27 554
Non-controlling interest 1 364 1 914
Balance at the beginning of the year 1 914 -
Non-controlling interest arising from business combination - 2 124
Total comprehensive loss for the year (550) (210)
Balance at end of the year 153 418 462 287
CONDENSED CONSOLIDATED SEGMENT REPORT
The business segment reporting format reflects the Group's management and internal reporting structure. The segments are
reported to the Group's management in terms of the nature of the minerals mined. Segment results include items directly
attributable to a segment as well as those that can be allocated on a reasonable basis.
Dolomite &
Silica limestone Other Total
R000's R000's R000's R000's
2013
Turnover from external customers 89 806 198 641 1 359 289 806
Inter-segment revenues - - 22 425 22 425
(Loss)/contribution from operations (11 556) 13 991 (26 388) (23 953)
(Loss) / profit before tax (141 085) 8 067 (183 653) (316 671)
Total assets 92 028 255 676 28 255 375 959
Total liabilities (53 248) (85 308) (83 985) (222 541)
2012
Turnover from external customers 85 661 185 205 3 314 274 180
Inter-segment revenues - - 16 845 16 845
Contribution/(loss) from operations 13 100 27 914 (10 446) 30 568
Profit before tax 12 155 27 711 (6 197) 33 669
Total assets 108 855 263 002 321 468 693 325
Total liabilities (46 905) (88 665) (95 468) (231 038)
COMMENTARY
Basis of preparation
The reviewed condensed provisional consolidated financial statements for the year ended 28 February 2013 ("year") have been
prepared in accordance with the recognition and measurement criteria of the International Financial Reporting Standards (IFRS),
the disclosure and presentation requirements of IAS 34: Interim Financial Reporting, SAICA Financial Reporting Guides as issued
by the Accounting Practices Committee and Financial Pronouncements as issued by Financial Reporting Standards Council, the
Listings Requirements of the JSE Limited and in the manner required by the South African Companies Act, Act no 71 of 2008, as
amended. The reviewed condensed consolidated financial statements have not been reviewed or audited in terms of the
Companies Act, 71 of 2008, as amended. The accounting policies and method of computation applied in preparation of the
financial statements are consistent with those applied in the audited annual financial statements for the year ended 29 February
2012, apart from reduced useful lives and residual amounts used in the calculation of the net carrying value of property, plant and
equipment.
The reviewed condensed provisional consolidated financial statements for the year were authorised for issue by the directors on
30 May 2013 for publication on 31 May 2013.
The reviewed condensed provisional consolidated financial statements for the year have been prepared under the supervision of
the Financial Director, M. Potgieter CA(SA).
Introduction
The reviewed condensed provisional consolidated financial results for the year ended 28 February 2013 reflect the tough local
trading conditions. The impact of the steel and transport industry strikes and scheduled shutdowns at certain customers due to
electricity shortages contributed to reduced sales volumes for the year. Additional costs were incurred throughout the Group,
including increased depreciation and amortisation as well as impairment of assets, which had a material impact on the profitability
of the Company.
A majority shareholding of 50.7% of the Company was acquired by Afrimat Limited ("Afrimat"), effective 1 March 2013.
Financial review
Revenue for the year increased by 3.8% to R290.0 million despite lower sales volumes. Gross profit reduced by 24.8% to
R61.2 million mainly as a result of increased repair and maintenance costs at Lyttelton Dolomite and reduced mining yields at Delf
Sand.
The loss attributable to shareholders amounted to R302.7 million mainly due to additional costs incurred, as follows:
Accelerated depreciation and amortisation >
- Depreciation and amortisation increased from R16.9 million in F2012 to R33.6 million in F2013 as a result of accelerated
depreciation recognised on old plant and equipment items due to its reduced economic life and lower realisable values, along
with increased amortisation recognised on mine development and mineral right assets.
Impairment of assets >
- Delf Sand silica mine is nearing the end of its economic live - impaired plant, equipment, mine development and mine
rehabilitation assets (R20.3 million);
- Pienaarspoort silica quartz mine project is suspended due to difficulties in obtaining environmental and other regulatory
approvals and the uncertainty of a viable market - impaired mineral rights and mine development assets (R97.3 million);
- Pienaarspoort township development project is suspended due to the rejection of the urban edge extension application by
the Tshwane municipality. An independent valuer now values the property as non-specialist agricultural land at R3.0 million.
The value of the property is further impaired by the suspension of the Pienaarspoort silica quartz mining project -
impaired investment property (R88.1 million);
- Delay in the Delf Cullinan silica mine project due to difficulty in obtaining regulatory approval, and the reduction in the
expected realisable value from the proposed mine - impaired mine development and mineral right assets associated with the
project (R33.1 million);
- Marble Hall mine expansion project is delayed due to difficulties in obtaining regulatory approvals and the reduced expected
realisable value from the proposed expansion - impaired mineral rights (R2.6 million);
- Held-to-maturity investment - Loan to Infrasors Empowerment Trust is reduced to the market value of the underlying shares
as the loan's recovery is doubtful due to reduced financial assistance to the trust (R43.4 million). The financial assets value
hierarchy thus moved from a level 3 to a level 1; and
- Obsolete plant and equipment items – impaired plant and equipment R1.3 million.
Derecognition of deferred tax assets >
- In certain unprofitable and dormant Group companies, deferred tax assets have been derecognised due to the unlikelihood of
sufficient future taxable profit in the short- to medium-term (R39.3 million).
Cash generated from operating activities decreased to R20.2 million (2012: R31.2 million) as a result of the reduced profitability
during the period. The cash outflow from investing activities reduced to R16.0 million (2012: R38.5 million) as a result of reduced
capital spending during the year. The net outflow of financing activities of R10.1 million (2012: R7.3 million inflow) was a
consequence of reduced borrowings at year-end due to payments of capital instalments to the amount of R15.6 million, and new
borrowings to the amount of R5.5 million to fund the Delf Cullinan mine.
Property, plant and equipment of R260.1 million (2012: R340.8 million) reduced as a result of significant impairments of land, mine
development assets, mine rehabilitation assets and equipment items and increased depreciation and amortisation. Additions to the
amount of R26.9 million (2012: R42.9 million) were incurred on land, equipment and mine development assets. Plant and
equipment at the end of its useful life were disposed and proceeds to the amount of R1.9 million were received.
Lower production volumes and stock write-downs on unsellable inventory to the extent of R1.4 million contributed to a lower
inventory balance to the amount of R16.9 million (2012: R19.9 million) at year-end.
Other financial assets of R21.6 million (2012: R16.6 million) increased due to the investment of R2.3 million in environment
rehabilitation insurance policies and the investment of R2.7 million in guaranteed endowment policies, to be used to settle
Wesbank installment sale liabilities.
The environment rehabilitation provision increased by R3.5 million to R26.7 million (2012: R23.2 million) as a result of cost inflation.
During the year Property, Plant and Equipment ("PPE") – Land, relating to the Lyttelton Dolomite mining area was reclassified and
transferred to PPE - Mining Assets in order to reflect a more accurate classification of assets. PPE – Land was reduced by
R95.1 million and Mining Assets increased by a similar amount. The Mining Assets will be amortised over the expected life of the
mine.
Operational review
Sales of industrial minerals were negatively influenced by the steel industry strike, client furnace shutdowns during the winter
months due to electricity shortages and an industry wide transport strike resulting in volumes sold into metallurgical sector being
lower for the year. Also, agreements between Eskom and smelter clients to shut down furnaces during the last quarter of the year
have reduced metallurgical sales and this is expected to continue into the first quarter of F2014. Abnormal repair and maintenance
costs incurred during the 1st half of the year affected Lyttelton Centurion operations. The Group was able to increase volumes sold
into the construction sector despite tighter trading conditions.
Sales of alluvial silica reduced as a result of the mining constraints experienced at the Delf Sand mine due to declining mining
yields from the depleting mineral reserve.
Auditors' review
Mazars, the Group's auditors, have reviewed the condensed provisional consolidated financial statements for the year. Their
unqualified review opinion is available for inspection at the Company's registered office. Their review was conducted in accordance
with the International Standard on Review Engagements 2410 – "Review of Interim Financial Information performed by the
independent auditor of the entity".
Appreciation
Mr. Trevor Robinson, the Group's CEO, announced his resignation effective 31 May 2013. The board wishes to thank him for his
contribution to Infrasors and wish him every success for his future endeavours.
Prospects
The Group is expected to remain a key supplier to the local construction and metallurgical markets and should in future also benefit
from current costs reduction initiatives and a renewed focus on marketing.
On behalf of the board
Mochele Noge Trevor Robinson
Chairman CEO
NOTES
1. Impairment of assets
Reviewed 2013 Audited 2012
R000's R000's
PPE - Land (22 279) -
PPE - Plant and equipment (8 645) -
PPE - Mining and mine development assets (29 369) -
PPE - Mine rehabilitation assets (5 253) -
Mineral rights (88 969) -
Investment property (88 108) -
Held-to-maturity investment (43 365) -
Goodwill (129) -
Total impairments (286 117) -
2. Deferred tax assets
In certain unprofitable and dormant Group companies, deferred tax assets to the amount of R39.3 million have been reversed due
to the unlikelihood of sufficient future taxable profit in the short- to medium-term.
3. Headline earnings per share ("HEPS") reconciliation - Basic and diluted
Reviewed 2013 Audited 2012
Net Weighted ave Earnings Net Weighted ave Earnings
profit shares in issue per share profit shares in issue per share
R000's 000's Cents R000's 000's Cents
Earnings per share (302 169) 183 709 (164.5) 27 554 183 709 15.0
Loss/(profit) on sale of assets 2 987 (122)
Impairments/(fair value 286 117 (10 015)
adjustments)
Tax effect on headline adjustments (70 668) 1 436
Headline earnings per share (83 733) 183 709 (45.6) 18 853 183 709 10.3
4. Dividends
The directors have elected not to declare a dividend for the year ended 28 February 2013 (2012: R nil).
5. Capital commitments
Approved capital expenditure to be funded from surplus cash and bank funding amounts to R6.0 million in order to replace and
maintain the existing beneficiation capacity.
6. Funding
As a result of the Group's reduced profitability during the year under review the Group breached covenants as stipulated by the
existing funding agreement with ABSA. ABSA have, on request of the majority shareholder Afrimat, agreed to continue with the
current funding arrangements for borrowings and overdraft facilities utilised to the amount of R9.6 million at year end, for a further
12-month period from 1 March 2013. The classification of long-term and short-term borrowings assumes that the current terms of
funding from ABSA will remain unchanged.
7. Related party transactions
Reviewed 2013 Audited 2012
R000's R000's
Contributions made to the Infrasors Environmental Rehabilitation Trust 1 072 1 038
Rent and fees paid to director managed company Whirlprops 35 Proprietary Limited 2 108 2 885
Rent recoveries received from director managed company Gioberti Investments 1 192 252
Proprietary Limited
8. Subsequent events
The following corporate event and changes to the board of directors occurred subsequent to 28 February 2013:
- On 1 March 2013 a majority shareholding of 50.7% of the issued shares of the Company was acquired by Afrimat Limited. As
a result, its respective CEO and financial director, Andries van Heerden and Hendrik Verreynne, were appointed as non-
executive directors on 4 March 2013;
- On 4 March 2013 Stephen Courtney, along with his alternate Hugh Courtney, resigned as non-executive directors;
- On 12 March 2013 Chris Boulle resigned as independent non-executive director and Kobie Bekker was appointed as
independent non-execuitive director and chairman of the Audit & Risk Committee;
- On 12 March 2013 Kerry Colley resigned as company secretary effective 31 May 2013. Pieter De Wit, the Afrimat company
secretary, was appointed as replacement;
- On 10 April 2013 Theunis de Bruyn, being a representative of a shareholder RE:CM and Calibre Limited, was appointed as
non-executive director; and
- On 16 May 2013 Trevor Robinson, the Group's CEO, announced his resignation effective 31 May 2013.
Directors
M Noge# (Chairman), TR Robinson (Chief Executive Officer) (resignation effective 31 May 2013), M Potgieter (Financial Director),
JCP Bekker# (appointed 12 March 2013), T de Bruyn* (appointed 10 April 2013, AJ van Heerden* (appointed 4 March 2013),
HP Verreynne* (appointed 4 March 2013), PFC Ying#
All of the above directors are South African and resident in South Africa.
* Non-executive directors # Independent non-executive directors
Company secretary
KA Colley (Company secretary) (resignation effective 31 May 2013),
[PGS de Wit (Company secretary) (appointment effective 1 June 2013)].
Registered office
Lyttelton Dolomite Mine,
Botha Avenue, Lyttelton, Centurion, 0157
(P.O. Box 14014, Lyttelton, 0140)
Sponsor Auditors
Sasfin Capital Mazars
A division of Sasfin Bank Limited 2nd Floor, Mazars House,
29 Scott Street, Waverley, 2000 5 St Davids Place, Parktown 2193
(P.O. Box 95104, Grand Park, 2051) (P.O. Box 6697, Johannesburg, 2000)
Legal Advisers and Attorney Transfer Secretaries
TG Fine Attorney Link Market Services South Africa Proprietary Limited
39 The Avenue, Gardens 13th Floor, Rennies House,
Norwood, Johannesburg, 2117 19 Ameshoff Street, Braamfontein, 2001
(P.O. Box 92047, Norwood, 2117) (P.O. Box 4844, Johannesburg, 2000)
VISIT US AT www.infrasors.co.za
31 May 2013
Johannesburg
Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)
Date: 31/05/2013 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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