METMAR LIMITED - Unaudited interim financial results for the six months ended 31 August 2014

Release Date: 28/10/2014 08:00
Code(s): MML
 
Wrap Text
Unaudited interim financial results for the six months ended 31 August 2014

METMAR LIMITED
Incorporated in the Republic of South Africa
(Registration number 1998/007269/06)
Share code: MML 
ISIN code: ZAE000078747 
(“Metmar” or “the Company” or “the Group”)

Unaudited interim financial results for the six months ended 31 August 2014

Highlights 
• Core trading business profitable in challenging market environment
• Sefateng Chrome project issued with Mining Right 
• Long-term chrome off-take agreement signed with Sefateng Chrome
• Shipment of manganese sinter from Kalagadi tolling commences
• Turnover up 11%
• Operating expenses down 4%


  Financial performance (See also divisional performance report hereunder)
  Description                                                                                  %    
                                                    Unit of     August     August       increase/   
                                                measurement       2014       2013      (decrease)   
  Volumes                                            Tonnes    336 350    321 197              5   
  Revenue                                               R’m    1 035,4      933,0             11   
  Gross margin                                            %        5,0        7,1            (30)  
  Trading margin (non-IFRS)^                              %        5,1        7,9            (35)  
  Operating expenses (excluding impairments)            R’m      (60,8)     (63,3)            (4)  
  EBITDA                                                R’m       11,1       29,9            (63)  
  Net impairments and fair value adjustments            R’m       (6,6)       7,5           (188)  
  Attributable loss per share                         Cents      (11,4)     (17,4)           (34)  
  Headline loss per share                             Cents      (22,5)     (11,0)           105   
  Closing net cash balance                              R’m       14,2       85,4            (83)  
  Total assets                                          R’m    1 386,2    1 597,3            (13)  
  Net asset value                                       R’m      410,5      600,2            (32)  
  ^Trading margin is calculated as gross margin less contract expenses (including contract finance costs 
  and realised gain/loss on forex) that are not cost of sales per IFRS.                                                       


Owing to commencement of sale of manganese sinter, turnover increased by 11%. A general decline in commodity prices
such as manganese and iron ore, which in the last 12 months have declined by 23% and 25% respectively, led to margin
contraction. A gross margin of 5% was achieved, which is 30% below the same period last year. This equates to a R15,2 million
decline in gross profit in absolute terms. Trading margin of 5,1% is lower than the 7,9% achieved in the previous
period due to the aforementioned drop in key commodity prices. 

Operating expenses declined by 4% to R60,8 million reflecting an effective cost containment strategy critical in the
midst of weak commodity prices. EBITDA of R11,1 million is 63% down from the previous period as a result of low gross
margins. 

Fair value adjustments relate to mark-to-market losses of R23,0 million arising from Alphamin Resources share price
decline from 39 CAD cents to 21 CAD cents and Afarak Group share price decline from 37 EUR cents to 31 EUR cents. The
investment in Afarak Group is non-core and its disposal is in progress.

An impairment reversal amounting to R29,6 million was implemented following the award of the mining right to Sefateng
Chrome. The recently signed off-take agreement will be valued at financial year end. 

Finance costs of R40,8 million, 6% up from the previous period, are expected to reduce in the second half as manganese
sinter sales become more regular. As a result of the above, the attributable loss for the period decreased by 34% to
R30,4 million, while headline loss increased to R60,1 million.

Divisional performance and prospects
The Group comprises two reportable segments which are trading and investments. 

Trading
The trading activities are further subdivided into Core trading and Kalagadi tolling project.


  Key area                                           Unit of     August    August             %    
                                                  measurement      2014      2013    (decrease)/   
                                                                                        increase   
  Core trading                                                                                     
  Revenue                                                 R’m     839,5     917,1             (8)  
  Gross margin                                              %       4,7       6,3            (25)  
  EBITDA                                                  R’m      21,1      33,7            (37)  
  Profit/(loss) before discontinued operations            R’m      11,1      (1,9)           684   
  Discontinued operations                                 R’m         -     (22,0)           100   
  Kalagadi tolling project                                                                         
  Revenue                                                 R’m     182,6         -            100   
  Gross margin                                              %       3,7         -            100   
  EBITDA                                                  R’m       3,1         -            100   
  Loss after tax                                          R’m     (13,0)        -           (100)  


Core trading
Core trading revenue decreased by 8% to R839,5 million. Volumes (excluding sinter) were 23% down on the prior year
mainly due to volume decreases in zinc, chrome and manganese ore, tin, coal, and iron ore volumes increased compared to the
prior period. 

Gross margins of 4,7% were 25% down as a result of unfavourable product mix and reduced prices in commodities such as
iron ore. 

Although EBITDA was down 37%, profit before discontinued operations was R11,1 million compared to a loss of R1,9
million in the previous year.

Tolling project
The Kalagadi tolling project made a loss of R13,0 million mainly due to high interest charges arising from financing
inventory. Manganese commodity prices decreased significantly over the period resulting in lower profit margins than
forecast. After solving numerous commissioning issues, the sinter plant is now stable and we expect higher production to
drive increased sales volumes in the second half, as well as decreasing inventory levels and finance charges. 

Investments

  Description               Unit of     August    August          %    
                         measurement      2014      2013    decrease   
  Operating expenses             R’m     (13,6)    (32,3)        (58)  
  Net finance charges            R’m      (6,1)     (8,2)        (26)  

Investments revenue was negative in the current year following the reversal of intercompany sales and profits with
Metmar Trading. Operating expenses are down 58% to R13,6 million and this trend is expected to continue into the second
half. 

Net finance costs have decreased by 26% and are expected to further decrease as coke breeze is consumed in the sinter
tolling project. 

Over the past two years various investments were impaired, and where uncertainties existed, non-core investments were
identified and transferred to non-current assets held for sale. Our investment portfolio is now streamlined to withstand
market fluctuations. 

The five core investments are: 
• Kalagadi Manganese (effective 4,6% interest - Manganese)
• Sefateng Chrome Mine (effective 19,9% interest - Chrome)
• Alphamin Resources (3,5% interest - Tin)
• FPT Minerals (26% interest - Container handling facility)
• Steelpoort Chrome Mines (51% interest - Chrome)

Core investments gained traction during the period. The signing of a long-term off-take agreement for chrome following
the award of a Mining Right to Sefateng Chrome will result in significant additional volumes going forward. The
off-take will require minimal cash investment from Metmar Trading to commence mining, as well as providing stability to future
trading volumes. 

FPT Minerals, a 26% held investment in a container handling facility located in Maputo, completed its commissioning in
January 2014 and material from Sefateng Chrome will fully utilise its current capacity of 30 000 tonnes per month. 

The Kalagadi Manganese sinter plant began production during the period. Commissioning issues have been addressed and
the plant is now running at a production level to match improving outbound logistics. Production volumes are expected to
be higher in the second half as the technical team fine tunes the production process. 

Alphamin Resources declared further drilling results which firmed up its resource status. An updated resource
statement is expected in the second half of the financial year. 

Steelpoort Chrome is currently completing an application for a water use licence which will be submitted in the
second half of the financial year. Upon award of this licence, Steelpoort Chrome will commence mining under its existing 
mining right and deliver chrome to Metmar as per the signed off-take agreement.

The process of disposing non-core assets gained momentum during the period. Most of the property, plant and equipment
previously disclosed as non-current assets held for sale were successfully disposed of during the period. All other
non-core investments are held at minimal investment balances, pending sale or conversion to cash-generating assets.

The appointment of Mr Rob Still as Chairman of the Company has further strengthened the board and enabled the removal
of acting positions. 

Metmar Trading China has been in operation since January 2014 allowing further upward integration for the company. Its
effectiveness is already benefiting the business through agents’ fees cost savings, increased access and interaction
with customers and quick turnaround times.

Our strategy over the last year has been and still is to refocus on Core trading activities. We will continue to take
further steps to clarify and expand our strategic intent as part of improving accountability and ownership. The key
areas of focus going forward are:
• Core trading
• Kalagadi tolling project
• Sefateng Chrome off-take
• Core investments including chrome, manganese, tin and container handling facility

We believe the business is appropriately resourced and structured to deliver on our strategy. The departure of Mr
Michael Golding comes after fulfilling his intentions of successfully trimming, restructuring and streamlining the
Investments business, which we believe is now better positioned to deliver on its objectives by the remaining investments team.

Directorate 
Our non-executive Chairman, Mr Rob Still, was appointed by the board on 1 May 2014. Luigi Matteucci stepped down
as an acting chairman of the Company and reverted back to his role as chairman of the audit and risk committee.
Subsequent to the period end Adv KD Moroka tendered her resignation as an independent non-executive director of the company, as
well as a member of the audit and risk committee of the board. This follows her decision to scale down on her
commitments, board positions and business activities. The board and the management of Metmar are grateful for her contribution and
take this opportunity to wish her all the best in her future endeavours.

Subsequent events
There are no major events subsequent to the period end that warrant being reported on.

Outlook 
Declining growth rates in China reflect a subdued commodity market. Chinese buyers have been opportunistic as
commodity prices have weakened during the period. Many mines and commodity trading companies are not sustainable at these
reduced commodity prices and hence natural attrition has prevailed which provides opportunities for the Company. 

Going forward we intend to continue ramping up and exploiting signed off-take agreements, deliver profits from the
sinter tolling agreement, reduce costs and seek diversified profitable opportunities.

  Condensed consolidated statements of financial position                                                                      
                                                          Note        Unaudited            Unaudited              Audited    
                                                                             at                   at                   at    
                                                                      31 August            31 August          28 February   
                                                                           2014                 2013                 2014   
                                                                          R’000                R’000                R’000   
  ASSETS                                                                                                                    
  Non-current assets                                                                                                        
  Property, plant and equipment                                          83 069               33 213               82 463   
  Goodwill and other intangible assets                                   48 222              102 207               48 222   
  Investment in associates                                   3           60 897               89 750               32 316   
  Other long-term financial assets                           4          213 395              211 409              230 521   
  Deferred tax                                                           12 461               18 864               23 238   
                                                                        418 044              455 443              416 760   
  Current assets                                                                                                            
  Inventories                                                           536 859              501 536              547 832   
  Other short-term financial assets                          4                -               44 132               28 436   
  Current tax receivable                                                      -                2 558                2 314   
  Trade and other receivables                                           361 630              474 395              512 541   
  Cash and cash equivalents                                  6           38 036               85 664               53 275   
                                                                        936 525            1 108 285            1 144 398   
  Non-current assets classified as held for sale             4           31 611               33 550                9 180   
  Total assets                                                        1 386 180            1 597 278            1 570 338   
  EQUITY AND LIABILITIES                                                                                                    
  Capital and reserves                                                  410 518              600 159              442 349   
  Non-current liabilities                                                                                                   
  Borrowings                                                              1 626               13 413                2 759   
  Other liabilities                                                           -                2 930                    -   
  Deferred tax liabilities                                               26 206               32 958               26 206         
                                                                                                                            
                                                                         27 832               49 301               28 965   
  Current liabilities                                                                                                       
  Trade and other payables                                   5          915 205              941 208            1 086 672   
  Current tax liabilities                                                 2 406                    -                5 947   
  Bank overdraft                                             6           23 790                  211                    6   
                                                                        941 401              941 419            1 092 625   
  Non-current liabilities classified as held for sale                     6 429                6 399                6 399   
  Total liabilities                                                     975 662              997 119            1 127 989   
  Total equity and liabilities                                        1 386 180            1 597 278            1 570 338   
  Net asset value per share (cents)                                      153,58               224,52               165,48   
  Net tangible asset value per share (cents)                             135,54               186,28               147,44   
  Number of shares in issue                                         267 306 552          267 306 552          267 306 552   

  Condensed consolidated statements of comprehensive income                                                                               
                                                                      Note         Unaudited             Unaudited              Audited    
                                                                               six months to         six months to              year to    
                                                                                   31 August             31 August          28 February    
                                                                                        2014                  2013                 2014   
                                                                                       R’000                 R’000                R’000   
  Continuing operations                                                                                                                   
  Revenue                                                                          1 035 430               933 015            2 097 435   
  Cost of sales                                                                     (984 139)             (866 518)          (1 962 293)   
  Gross profit                                                                        51 291                66 497              135 142   
  Other income                                                           7            13 968                12 574               20 748   
  Operating expenses                                                     8           (60 830)              (63 333)            (121 673)   
  Operating profit                                                                     4 429                15 738               34 217   
  Finance income                                                                       8 593                11 819               13 417   
  Impairment reversals/(loss)                                                         29 634                (4 171)            (155 372)   
  Fair value adjustments                                                             (23 032)               (3 319)              18 606   
  Loss from equity accounted investment                                               (1 053)               (6 379)             (12 245)   
  Finance costs                                                          9           (40 769)              (38 583)             (64 337)   
  Loss before taxation                                                               (22 198)              (24 895)            (165 714)   
  Taxation                                                              10            (8 518)               (1 908)               4 936   
  Loss for the period from continuing operations                                     (30 716)              (26 803)            (160 778)   
  Discontinued operations                                                                                                                 
  Loss before taxation                                                                     -               (22 528)             (20 348)   
  Taxation                                                                                 -                 1 244               (1 651)   
  Loss for the period from discontinued operations                       2                 -               (21 284)             (21 999)   
  Total                                                                                                                                   
  Loss before taxation                                                               (22 198)              (47 423)            (186 062)   
  Taxation                                                                            (8 518)                 (664)               3 285   
  Loss for the period                                                                (30 716)              (48 087)            (182 777)   
  Other comprehensive (loss)/income:                                                  (1 656)                3 696              (25 423)   
  Revaluations of investments and deferred tax on financial assets                         -                     -              (31 932)   
  Movement in foreign currency reserves                                               (1 656)                3 696                6 509   
                                                                                                                                          
  Total comprehensive loss for the period                                            (32 372)              (44 391)            (208 200)   
  Loss attributable to:                                                                                                                   
  Owners of the parent                                                               (30 418)              (46 625)            (162 729)   
  Non-controlling interests                                                             (298)               (1 462)             (20 048)   
                                                                                     (30 716)              (48 087)            (182 777)   
  Total comprehensive loss attributable to:                                                                                               
  Owners of the parent                                                               (32 074)              (42 929)            (182 777)   
  Non-controlling interests                                                             (298)               (1 462)             (25 423)   
                                                                                     (32 372)              (44 391)            (208 200)   
  Loss per share:                                                                                                                         
  Basic and diluted (cents)                                                            (11,4)                (17,4)               (60,9)   
  Headline (cents)                                                      11             (22,5)                (11,0)               (17,6)   
  Weighted average number of shares                                              267 306 552           267 306 552          267 306 552   

 Condensed consolidated statements of changes in equity
                                                  Share         Foreign          Re-    Acquisition      Share-      Retained           Non-        Total    
                                                capital        currency    valuation     of shares     holders’      earnings    controlling        equity   
                                                    and     translation      reserve        in sub-       loans         R’000      interests         R’000   
                                                 premium        reserve        R’000        sidiary       R’000                        R’000                 
                                                   R’000          R’000                       R’000                                                          
  Balance at 1 March 2013                        160 004          1 191       22 055        (27 547)     72 885       463 912        (48 098)      644 402   
  Total comprehensive loss for                         -          3 696            -              -                   (46 625)        (1 462)      (44 391)   
  the period                                                                                                                                                 
  Increase in shareholders' loans                      -              -            -              -         148             -              -           148   
  Balance at 31 August 2013                      160 004          4 887       22 055        (27 547)     73 033       417 287        (49 560)      600 159   
  Total comprehensive loss for the period              -            316      (24 059)             -                  (116 104)       (23 962)     (163 809)   
  Transfer of reserves into equity                     -              -       78 396              -                   (78 396)             -             -   
  Realisation of capital gain on investment            -              -            -              -       5 999             -              -         5 999   
  Movement in shareholders' loans                      -              -            -         (6 192)                        -          6 192             -   
  in subsidiaries                                                                                                                                            
  Balance at 28 February 2014                    160 004          5 203       76 392        (33 739)     79 032       222 787        (67 330)      442 349   
  Total comprehensive loss for the period              -        (1 656)            -              -                   (30 418)          (298)      (32 372)   
  Increase in shareholders' loans                      -              -            -              -         541             -              -           541   
  Balance at 31 August 2014                      160 004          3 547       76 392        (33 739)     79 573       192 369        (67 628)      410 518    

  Condensed consolidated statements of cash flows                                                                                   
                                                                        Note          Unaudited         Unaudited         Audited    
                                                                                  six months to     six months to         year to    
                                                                                      31 August         31 August     28 February   
                                                                                           2014              2013            2014   
                                                                                          R’000             R’000           R’000   
  Net cash used in operating activities                                                                                             
  Cash (used in)/generated from operations                                12             (4 934)          (11 434)         41 883   
  Net finance costs                                                                     (32 176)          (26 764)        (50 920)   
  Taxation (paid)/received                                                               (1 188)              445         (10 373)   
  Cash flows of held-for-sale/discontinued operation                                          -                 -           5 763   
  Net cash used in operating activities                                                 (38 298)          (37 753)        (13 647)   
  Net cash (used in)/generated from investing activities                                                                            
  Net expenditure on property, plant and equipment                                         (133)           (1 086)          6 821   
  Net movement in financial assets                                                            -            (3 809)              -   
  Business combinations                                                                       -                 -          (1 327)   
  Sale of businesses                                                      13                  -            66 537          66 537   
  Purchase of derivative financial instruments                                                -                 -          (6 078)   
  Investment in associates                                                                    -            (6 334)        (19 581)   
  Net cash (used in)/generated from investing activities                                   (133)           17 555          46 372   
  Net cash used in financing activities                                                                                            
  Net movement in financial liabilities                                                       -              (885)        (48 839)   
  Net movement in borrowings                                                             (1 133)           (6 081)         (5 937)   
  Increase in shareholder loans                                                             541                 -               -   
  Net cash used in financing activities                                                    (592)           (6 966)        (54 776)   
  Total cash movement for the period                                                    (39 023)           10 589         (22 051)   
  Cash/(overdraft) at the beginning of the period                                        53 269           (19 742)        (19 742)   
  Overdraft cancelled following discontinued operation                    13                  -            94 606          94 606   
  Cash from business combination                                                              -                 -             456   
  Cash and cash equivalents at the end of the period                       6             14 246            85 453          53 269   


  Notes to the unaudited interim financial statements
  1.    Basis of preparation
       The unaudited consolidated interim financial results have been prepared in accordance with, and containing the information 
       required by IAS 34 Interim Financial Reporting, International Financial Reporting Standards (IFRS), the SAICA Financial Reporting 
       Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting 
       Standards Council the South African Companies Act, as amended, and the JSE Listings Requirements.

       Except for the new standards adopted below, all accounting policies applied by the Group in the preparation of these condensed 
       consolidated interim financial statements are consistent with those applied by the Group in its consolidated financial statements 
       for the year ended 28 February 2014.                                                                                                  

       The Group has adopted the following new standards:
       Amendment to IFRS 2 - Share-Based Payments
       Amendment to IFRS 3 - Business Combinations
       Amendment to IFRS 8 - Operating Segments
       Amendment to IFRS 13 - Fair Value Measurements
       Amendments to IAS 16 - Property, Plant and Equipment
       Amendments to IAS 19 - Employee Benefits
       Amendments to IAS 24 - Related Party Disclosures
       Amendments to IAS 38 - Intangible Assets
       Amendments to IAS 40 - Investment Properties

       There was no material impact on the interim financial statements identified based on management’s assessment of these standards.   

                                                                                       Unaudited             Unaudited              Audited    
                                                                                   six months to         six months to              year to    
                                                                                       31 August             31 August          28 February    
                                                                                            2014                  2013                 2014   
                                                                                           R’000                 R’000                R’000    
  2.    Discontinued operations
        Revenue                                                                               -               176 952              182 268   
        Expenses                                                                              -             (171 588)            (176 877)   
        Profit before taxation                                                                -                 5 364                5 391   
        Taxation                                                                              -               (1 668)              (1 651)   
        Profit for the period from discontinued operations (before impairments)               -                 3 696                3 740   
        Profit on sale of discontinued operation                                              -                19 170               19 170   
        Impairment of goodwill and intangible assets (net of tax)                             -              (44 150)             (44 909)   
        Loss for the period from discontinued operations (after impairments)                  -              (21 284)             (21 999)   

  3.    Investment in associates                                                                                                             
        Sefateng Chrome Mine Proprietary Limited                                         28 799                61 851               61 851   
        Kivu Resources Limited (Registered in Mauritius)                                      -                32 810               26 476   
        FPT Mineral Terminal Limitada (Registered in Mozambique)                          3 517                 1 468                1 468   
                                                                                         32 316                96 129               89 795   
        Loss from associate - Sefateng Chrome Mine Proprietary Limited                    (667)                  (29)              (1 435)   
        Loss from associate - Kivu Resources Limited                                          -               (5 015)              (8 052)   
        Loss from associate - FPT Mineral Terminal Limitada                               (386)               (1 335)              (2 758)   
                                                                                         31 263                89 750               77 550   
        Loans to associate - Sefateng Chrome Mine Proprietary Limited                         -                     -                3 157   
        Loans to associate - Kivu Resources Limited                                           -                     -               11 617   
        Loans to associate - FPT Mineral Terminal Limitada                                    -                     -                4 807   
                                                                                         31 263                89 750               97 131   
        Reversal of impairment/(impairment) of associate - Sefateng Chrome Mine          29 634                     -             (34 774)   
        Impairment of associate - Kivu Resources Limited                                      -                     -             (30 041)   
                                                                                         60 897                89 750               32 316 
  
  4.    Other financial assets and non-current assets classified as held for sale                                                            
        Other long-term financial assets                                                                                                     
        Kalahari Resources Proprietary Limited                                          192 900               166 000              192 900   
        SA Metals Equity Proprietary Limited                                                  -                28 500                    -   
        Zimbabwe Alloys Chrome (Private) Limited                                              -                16 909                    -   
        Alphamin Resources Corp (Canada)                                                 20 495                     -               37 621   
        10 013 121 shares of CAD$0,21 each                                                                                                   
                                                                                        213 395               211 409              230 521   
        Other short-term financial assets                                                                                                    
        Alphamin Resources Corp (Canada)                                                      -                17 308                    -   
        9 884 606 shares of CAD$0,18 each                                                                                                    
        Afarak Group OYJ (Finland) (previously Ruukki Group Plc (Finland))                    -                26 824               28 436   
        5 211 916 listed shares of EUR0,38 each                                                                                              
                                                                                              -                44 132               28 436   
 
        Investment in Alphamin Resources Corporation options and shares as well as Afarak Group Plc shares are level 1 fair value measurements 
        since their fair value is determined from quoted prices in the active Toronto Stock Exchange and Helsinki Stock Exchange markets respectively.

        Other financial assets are classified as level 3 fair value measurements since its fair value determination is not based on observable 
        market data. Discounted cash flow valuation methods were used to determine fair value. An independent valuation was performed at 28 February 2014 
        year end for level 3 fair value measurements.                                                                

        No independent valuation of level 3 transactions was undertaken at the two interim reporting periods and the next independent valuation 
        will be undertaken for the financial year ending 28 February 2015.

        All financial assets are carried at fair value.

         Non-current assets classified as held for sale                                                                                      
         Property, plant and equipment                                                        -                 7 600                  100   
         Pering Base Metals Proprietary Limited                                           1 000                25 870                1 000   
         SA Metals Equity Proprietary Limited                                             8 000                     -                8 000   
         Intangible assets                                                                   80                    80                   80   
         Afarak Group OYJ (Finland) (previously Ruukki Group Plc (Finland))               22 531                     -                    -   
         5 211 916 listed shares of EUR0,31 each                                                                                             
                                                                                         31 611                33 550                9 180 
         The Company owns 20% of Pering Base Metals which owns a lead and zinc mining project. This project is not operational and seeks injection of 
         funding to purchase capital equipment and resume mining. The Company will not participate in further fund raising and is divesting from the 
         project in line with its strategy to refocus on core trading activities.                                                                

         The Company owns 20% of SA Metals Equity Proprietary Limited which runs a project to develop a pig iron recovery operation. This project is 
         up for disposal in line with our strategy to refocus on core trading activities and divest from projects which are unlikely to be cash 
         generative within the next 12 months.                                                                

         Afarak Group OYJ is non-core to the Company’s activities and is in the process of being disposed in the Helsinki Stock Exchange.

  5.     Trade and other payables                                                                                                             
         Trade and other payables                                                        229 713               226 290              231 955   
         Trade finance facilities                                                        685 492               714 918              854 717   
                                                                                         915 205               941 208            1 086 672   
  6.     Cash and cash equivalents                                                                                                            
         Cash and cash equivalents                                                        38 036                85 664               53 275   
         Less: Bank overdrafts                                                          (23 790)                 (211)                  (6)   
                                                                                          14 246                85 453               53 269   
  7.     Other income                                                                                                                         
         Includes:                                                                                                                            
         Profit on sale of 24 Sloane Street Properties Proprietary Limited                     -                 9 107                9 124   
         Rental income                                                                     3 018                     -                    -   
         Profit on foreign exchange                                                        8 185                     -                    -   
         Gain on disposal of property, plant and equipment                                   107                     4                    -   
         Other                                                                             2 658                 3 463               11 624   
                                                                                          13 968                12 574               20 748   
  8.     Operating expenses                                                                                                                   
         Consulting and professional fees                                                  2 826                 3 610                6 578   
         Depreciation                                                                      1 934                 2 945                6 217   
         Employee costs                                                                   28 732                29 616               56 638   
         Legal fees                                                                          732                 2 253                2 016   
         Operating lease charges                                                           1 110                 4 806                6 481   
         Repairs and maintenance                                                             928                 1 176                2 017   
         Travel and accommodation (local and overseas)                                     1 146                 2 156                4 752   
         Logistics and handling fees                                                       5 867                 3 502               23 240   
         Loss on foreign exchange                                                          4 758                 3 059                    -   
         Other                                                                            12 797                10 210               13 734   
                                                                                          60 830                63 333              121 673
  9.     Finance costs                                                                                                                        
         Includes:                                                                                                                            
         Contract interest                                                                33 517                19 944               22 978   
         Bank overdrafts                                                                   2 642                15 617                7 859   
         Financing effect on purchases and trade and other payables                        4 610                 3 022               33 500   
                                                                                          40 769                38 583               64 337   
  10.    Taxation                                                                                                                             
         Normal taxation                                                                   1 088                 2 405               18 134   
         Capital gains taxation                                                                -                 1 271                1 269   
         Deferred taxation                                                                 7 430               (1 768)             (24 339)   
                                                                                           8 518                 1 908              (4 936)   
  11.    Reconciliation of headline loss                                                                                                      
         Loss for the period                                                            (30 418)              (46 625)            (162 729)   
         Adjustments for:                                                                                                                     
         - Loss/(gain) on disposal of property, plant and equipment                         (77)                   117                1 106   
         - Gain on disposal of 24 Sloane Street Properties Proprietary Limited                 -               (7 892)              (7 892)   
         - Gain on disposal on West African Group Division                                     -              (19 170)             (19 170)   
         - Write-off of goodwill following discontinued operation                              -                     -               36 906   
         - Write-off of intangible assets (net of taxation and 
           non-controlling interest)                                                                                                 32 504   
         - Impairment of goodwill and intangibles (West African Group Division)                -                44 150                    -   
         - (Reversal)/impairment of associates                                          (29 634)                     -               64 815   
         - Impairment of property, plant and equipment                                         -                     -                3 574   
         - Impairment of non-current assets held for sale                                      -                     -                3 900   
         Headline loss                                                                  (60 129)              (29 420)             (46 986)   
         Headline (loss)/earnings per share (cents)                                       (22,5)                (11,0)               (17,6)   
         Weighted average number of shares in issue*                                 267 306 552           267 306 552          267 306 552   
         * Weighted average number of shares is equal to the number of shares in issue as at 31 August 2014.

  12.    Cash (utilised in)/generated from operations
         Loss before taxation                                                           (22 198)              (24 895)            (165 714)   
         Adjustments for:                                                                                                                     
         - Non-cash items                                                                 24 305                    26               (7 747)  
         - Net finance costs                                                              32 176                26 764               50 920   
         - Impairment (reversal)/loss                                                   (29 634)                 4 171              155 372   
         Changes in working capital:                                                                                                          
         - Inventories                                                                    10 973             (169 001)            (233 395)   
         - Trade and other receivables                                                   150 911             (124 244)            (144 758)   
         - Trade and other payables                                                    (171 467)               275 745              387 205   
                                                                                         (4 934)              (11 434)               41 883   

  13.    Disposal of West African Group (division of Metmar 
         Trading Proprietary Limited)                                                       
         Total net asset value                                                                  -                34 577               34 577   
         Gain on disposal of division                                                           -                19 170               19 170   
         Consideration received                                                                 -                53 747               53 747   
         Bank overdraft facility reduced division being sold                                    -                94 606               94 606   
         Net increase in cash and cash equivalents                                              -               148 353              148 353   
         Disposal of 24 Sloane Street Properties Proprietary Limited                                                                           
         - Trade and other receivables                                                                                1                    1   
         - Property, plant and equipment                                                                          3 642                3 642   
         - Current tax receivable                                                                                    51                   51   
         - Deferred tax                                                                                            (20)                 (20)   
         - Trade and other payables                                                                                 (8)                  (8)   
         Total net asset value                                                                                    3 666                3 666   
         Gain on disposal of 24 Sloane Street Properties Proprietary Limited                                      9 124                9 124   
         Consideration received                                                                                  12 790               12 790   
         Total consideration received                                                                            66 537               66 537   
         Write-off of goodwill and intangible assets                                                                                           
         - Goodwill                                                                             -                36 906               36 906   
         - Intangible assets                                                                    -                10 156               10 156   
         Total                                                                                  -                47 062               47 062   
         - Deferred tax on intangibles                                                          -               (2 912)              (2 153)   
         Net write-off of goodwill and intangibles                                              -                44 150               44 909   
  14.    Segment report
         In identifying its operating segments, management generally distinguishes investment in resource-based operations from the trading activities of the Group.

         The following factors have been used to identify reportable segments of the Group:
         - distinction between the investments and trading activities;
         - investment segment includes investment in equity, property, plant and equipment; and
         -  trading segment relates to the traditional core trading activities of the Group together with the resource-based activities emanating from 
         off-take agreements and arrangements in place as a result of investment in equity, property, plant and equipment.

         There has been no aggregation of the two segments identified as:
         - investments; and
         - trading.

                                                                                   Unaudited six months to 31 August 2014
         Segmental report - Group                                               Trading    Investment       Adjust-          Total   
                                                                                  R’000         R’000        ments           R’000   
                                                                                                         and elimi-                  
                                                                                                            nations                  
                                                                                                              R’000                  
          Segment revenues                                                    1 022 139     (105 635)       118 926      1 035 430   
          Finance costs                                                        (30 086)       (6 269)       (4 414)        (40 769)   
          Finance income                                                         8 386           201             6           8 593
          Depreciation, amortisation and impairments of                           (368)        28 661         (593)         27 700   
          non-financial assets                                                                                                       
                                                                              1 000 071      (83 042)       113 925      1 030 954   
          The totals presented for the Group’s operating segments reconcile
          to the entity’s key financial results as presented:                                                                        
          Segment revenues                                                    1 022 139     (105 635)       118 926      1 035 430   
          Other income                                                              811         2 024        11 133         13 968   
                                                                              1 022 950     (103 611)       130 059      1 049 398   
          Segment profit or (loss)                                                                                                      
          Segment operating profit/(loss)                                        19 085      (48 068)        33 412          4 429   
          Impairments                                                                 -        29 634             -         29 634   
          Fair value adjustments                                                      -      (18 813)       (4 219)       (23 032)   
          Finance costs                                                        (30 086)       (6 269)       (4 414)        (40 769)   
          Finance income                                                         8 386           201             6           8 593
          Discontinued operations                                                     -             -             -              -   
          Loss from equity accounted investment                                       -       (1 053)             -        (1 053)   
          Total (loss)/profit before taxation                                   (2 615)      (44 368)        24 785       (22 198)   
          Taxation                                                                  647         1 612      (10 777)        (8 518)   
          (Loss)/profit for the period                                          (1 968)      (42 756)        14 008       (30 716)   
          Segment assets                                                      1 175 754       767 218     (556 792)      1 386 180   
          Segment liabilities                                                   810 728       804 543     (639 609)        975 662   


                                                                                        Unaudited six months to 31 August 2013
         Segmental report - Group   (continued)                                 Trading    Investment       Adjust-          Total   
                                                                                  R’000         R’000        ments           R’000   
                                                                                                         and elimi-                  
                                                                                                            nations                  
                                                                                                              R’000                  
          Segment revenues                                                      917 143       113 641      (97 769)        933 015   
          Finance costs                                                        (27 487)       (9 996)       (1 100)       (38 583)   
          Finance income                                                         9 973         1 838             8          11 819
          Depreciation, amortisation and impairments of                         (1 484)       (1 461)      (47 062)       (50 007)   
          non-financial assets                                                                                                       
                                                                                898 145       104 022     (145 923)        856 244   
          The totals presented for the Group’s operating segments reconcile
          to the entity’s key financial results as presented:                                                                 
          Segment revenues                                                    1 094 095       113 641      (97 769)      1 109 967   
          Other income                                                           17 258         4 451       (9 135)         12 574   
                                                                              1 111 353       118 092     (106 904)      1 122 541   
          Segment profit or (loss)                                                                                                      
          Segment operating profit/(loss)                                        14 986        14 249      (13 497)         15 738   
          Impairments                                                                         (4 171)                      (4 171)   
          Fair value adjustments                                                (1 289)       (1 260)         (770)        (3 319)   
          Finance costs                                                        (27 487)       (9 996)       (1 100)       (38 583)   
          Finance income                                                         9 973         1 838             8          11 819
          Discontinued operations                                              (22 495)             -          (33)       (22 528)   
          Loss from equity accounted investment                                       -       (6 379)             -        (6 379)   
          Total (loss)/profit before taxation                                  (26 312)       (5 719)      (15 392)       (47 423)   
          Taxation                                                                2 426             -       (3 090)          (664)   
          (Loss)/profit for the period                                         (23 886)       (5 719)      (18 482)       (48 087)   
          Segment assets                                                        853 574       750 930       (7 226)      1 597 278   
          Segment liabilities                                                   561 953       754 745     (319 579)        997 119   
  

                                                                                        Audited year to 28 February 2014
         Segmental report - Group (continued)                                     Trading    Investment       Adjust-          Total   
                                                                                    R’000         R’000        ments           R’000   
                                                                                                           and elimi-                  
                                                                                                              nations                  
                                                                                                                R’000                  
          Segment revenues                                                      2 059 801       234 001     (196 367)      2 097 435   
          Finance costs                                                          (41 149)      (18 398)       (4 790)       (64 337)   
          Finance income                                                          10 035         3 373             9         13 417
          Depreciation, amortisation and impairments of                           (1 303)       (3 468)       (1 446)        (6 217)   
          non-financial assets                                                                                                         
                                                                                2 027 384       215 508     (202 594)      2 040 298   
          The totals presented for the Group’s operating segments reconcile
          to the entity’s key financial results as presented:               
          Segment revenues                                                      2 059 801       234 001     (196 367)      2 097 435   
          Other income                                                              8 212        14 318       (1 782)         20 748   
                                                                                2 068 013       248 319     (198 149)      2 118 183   
          Segment profit or (loss)                                                                                                        
          Segment operating profit/(loss)                                          80 737        46 172      (92 692)         34 217   
          Impairments                                                             (7 944)     (145 486)       (1 942)      (155 372)   
          Fair value adjustments                                                    8 792      (28 918)        38 732         18 606   
          Finance costs                                                          (41 149)      (18 398)       (4 790)       (64 337)   
          Finance income                                                          10 035         3 373             9         13 417
          Discontinued operations                                                (19 833)         (515)             -       (20 348)   
          Loss from equity accounted investment                                         -      (12 245)             -       (12 245)   
          Total (loss)/profit before taxation                                      30 638     (156 017)      (60 683)      (186 062)   
          Taxation                                                               (15 682)        15 346         5 272          4 936   
          (Loss)/profit for the period                                             14 956     (140 671)      (55 411)      (181 126)   
          Segment assets                                                        1 346 655       488 251     (264 568)      1 570 338   
          Segment liabilities                                                     979 661       685 520     (537 192)      1 127 989   
    
  15.    Corporate governance                             
        The Metmar Group complies with the Code of Good Corporate Practice and Conduct published in the King III Report on Corporate Governance.

  16.    Related party transactions                       
         During the period, the Company and its subsidiaries in the ordinary course of business, entered into various transactions with their 
         associates. These transactions were subject to terms that are no less favourable than those arranged with third parties.

R G Still                         D J EllwoodNon-executive Chairman            Chief Executive Officer

28 October 2014

These results may be viewed on the internet on http://www.metmar.co.za

Directors: R Still* (Chairman), L Matteucci*, DJ Ellwood (Chief Executive Officer), TI Borman**, 
PP Boshoff, D Earp*, GP Lotis, D Mashile-Nkosi**, SMS Nkosi (Chief Financial Officer)             
* Independent non-executive   ** Non-executive
Company Secretary: AC Swart
Sponsor: Nedbank Capital
Registered office: 25 Culross Road, corner Main and Culross, Bryanston, 2191 (PO Box 98549, Sloane Park, Bryanston 2152)
Transfer Secretaries: Computershare Investor Services Proprietary Limited(PO Box 61051, Marshalltown, 2107)
Auditors: EY
Date: 28/10/2014 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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