Wrap Text
Reviewed Condensed Consolidated Interim
Financial Results for the six months ended 31 August 2014
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 CONSOLIDATED INTERIM
FINANCIAL RESULTS
FOR THE SIX MONTHS ENDED 31 August 2014
CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
Restated
Reviewed reviewed Audited
six months six months year
ended ended ended
31 August 31 August Change 28 February
R000's Note(s) 2014 2013 % 2014
Revenue 177 027 165 313 7,1 327 510
Cost of sales (142 125) (116 948) (249 772)
Gross profit 34 902 48 365 (27,8) 77 738
Other income 455 421 1 720
Administration and other
operating expenses (14 472) (21 381) (30 225)
Depreciation and
amortisation (7 813) (17 490) (34 108)
Contribution from
operations 13 072 9 915 31,8 15 125
Impairments and fair value
adjustments – (5 275) (5 299)
Operating profit 13 072 4 640 9 826
Investment revenue 572 339 1 776
Finance costs (4 427) (6 695) (11 418)
Profit/(loss) before tax 9 217 (1 716) 184
Taxation (1 346) 2 254 4 723
Profit for the period 7 871 538 4 907
Total comprehensive
income for the period 7 871 538 4 907
Profit attributable to
Owners of the parent 7 959 122 4 413
Non-controlling interest (88) 416 494
7 871 538 4 907
Earnings per ordinary share
(cents) – Basic and diluted 1 4,9 0,1 2,8
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Restated
Reviewed reviewed Audited
31 August 31 August 28 February
R000's Note(s) 2014 2013 2014
Assets
Total non-current assets 242 983 260 560 245 089
Property, plant and equipment 3 201 432 220 741 205 872
Investment property 3 040 3 040 3 040
Intangible assets 2 504 2 672 2 609
Other financial assets 5 25 657 23 756 22 446
Deferred tax 10 350 10 351 11 122
Total current assets 76 823 83 269 81 417
Inventories 18 462 15 560 14 171
Trade and other receivables 56 610 48 633 51 737
Cash and cash equivalents 1 751 19 076 15 509
Total assets 319 806 343 829 326 506
Equity and liabilities
Total equity 145 789 129 487 137 933
Share capital 927 927 927
Share premium 256 959 256 959 256 959
Treasury shares 4 (10 050) (13 942) (9 962)
Net issued share capital 247 836 243 944 247 924
Share-based payment reserve 169 – 96
Accumulated loss (103 987) (116 237) (111 946)
Attributable to equity holders of parent 144 018 127 707 136 074
Non-controlling interest 1 771 1 780 1 859
Liabilities
Total non-current liabilities 103 043 143 909 126 327
Borrowings non-current portion 30 371 68 229 52 841
Provisions 19 920 25 009 18 521
Holding company loan 14 483 6 433 14 276
Deferred tax 38 269 44 238 40 689
Total current liabilities 70 974 70 433 62 246
Borrowings current-portion 23 895 13 104 16 582
Trade and other payables 36 888 36 466 36 736
Bank overdraft 9 174 19 275 8 181
Current tax payable 1 017 1 588 747
Total liabilities 174 017 214 342 188 573
Total equity and liabilities 319 806 343 829 326 506
Note to the statement of financial position:
Net asset value per share (cents) 88,2 80,1 83,3
Borrowings and overdraft 63 440 100 608 77 604
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed Reviewed Audited
six months six months year
ended ended ended
31 August 31 August 28 February
R000's 2014 2013 2014
Net cash inflow from operating activities 6 312 5 524 14 764
Net cash outflow from investing activities (6 024) (3 930) (5 557)
Net cash outflow from financing activities (15 039) (12 949) (13 035)
Net decrease in cash and cash equivalents and bank
overdrafts (14 751) (11 355) (3 828)
Cash and cash equivalents and bank overdrafts at the
beginning of the period 7 328 11 156 11 156
Cash and cash equivalents and bank overdrafts at
the end of the period (7 423) (199) 7 328
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Reviewed Reviewed Audited
six months six months year
ended ended ended
31 August 31 August 28 February
R000's 2014 2013 2014
Share capital 927 927 927
Share premium 256 959 256 959 256 959
Treasury shares (10 050) (13 942) (9 962)
Opening balance (9 962) (2 266) (2 266)
Consolidation of shares from Infrasors Empowerment
Trust – (11 676) (11 676)
Treasury shares buy back (88) – (810)
Treasury shares to be issued – – 4 790
Share-based payment reserve 169 – 96
Opening balance 96 –
Share-based payments 73 – 96
Accumulated loss (103 987) (116 237) (111 946)
Opening balance (111 946) (116 359) (116 359)
Profit for the period in total comprehensive income (a) 7 959 122 4 413
Non-controlling interest 1 771 1 780 1 859
Opening balance 1 859 1 364 1 365
(Loss)/profit for the period in total comprehensive
income (b) (88) 416 494
(Total comprehensive income/(loss) (a+b) 7 871 538 4 907)
Balance at end of the period 145 789 129 487 137 933
CONDENSED SEGMENT RESULTS
Dolomite
and
R000's Silica limestone Other Total
Reviewed six months ended 31 August
2014
Revenue from external customers 42 463 134 564 – 177 027
Inter-segment revenues 592 3 091 13 553 17 236
Depreciation and amortisation (1 938) (5 750) (125) (7 813)
(Loss)/contribution from operations (1 598) 20 939 (6 269) 13 072
(Loss)/profit before tax (1 955) 20 346 (9 174) 9 217
Additions to non-current assets 1 419 6 423 163 8 005
Assets 72 025 224 288 23 493 319 806
Liabilities 22 437 82 804 68 776 174 017
Restated reviewed six months ended
31 August 2013
Revenue from external customers 46 675 118 638 – 165 313
Inter-segment revenues – – 15 118 15 118
Depreciation and amortisation (6 605) (9 282) (1 603) (17 490)
Impairments and fair value adjustments (5 275) – – (5 275)
Contribution/(loss) from operations 2 152 12 456 (4 693) 9 915
(Loss)/profit before tax (3 852) 12 208 (10 072) (1 716)
Additions to non-current assets – 2 323 – 2 323
Assets 85 657 245 166 13 006 343 829
Liabilities 30 591 107 870 75 881 214 342
Audited year ended 28 February 2014
Revenue from external customers 90 725 236 785 – 327 510
Inter-segment revenues – – 33 985 33 985
Depreciation and amortisation (6 019) (26 319) (1 770) (34 108)
Impairments and fair value adjustments (5 299) – – (5 299)
Contribution/(loss) from operations 6 129 18 385 (9 389) 15 125
Profit/(loss) before tax 5 207 17 359 (22 382) 184
Additions to non-current assets 4 434 8 846 10 13 290
Assets 83 926 223 752 18 828 326 506
Liabilities 28 968 84 458 75 147 188 573
NOTES TO THE REVIEWED CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
Reviewed Reviewed Audited
six months six months year
ended ended ended
31 August 31 August 28 February
R000's 2014 2013 2014
1. Earnings per ordinary share ("EPS")
reconciliation: Basic and diluted
Net profit attributable to the owners of the parent 7 959 122 4 413
Total shares in issue (000's) 185 521 185 521 185 521
Treasury shares (000's) (22 304) (26 137) (22 231)
Net shares in issue (000's) 163 217 159 384 163 290
Weighted average number of shares in
issue (000's) 163 278 159 384 159 548
Earnings per ordinary share (cents) 4,9 0,1 2,8
2. Headline earnings per ordinary share ("HEPS")
reconciliation: Basic and diluted
Net profit attributable to the owners of the parent 7 959 122 4 413
(Profit)/loss on disposal of property, plant and
equipment (455) 721 1 946
Impairments and fair value adjustments – 5 275 5 299
Total adjustments (455) 5 996 7 245
Total tax effects of adjustments 127 (1 679) (2 028)
Headline earnings 7 631 4 439 9 630
Weighted average number of shares in issue
(000's) 163 278 159 384 159 548
Headline earnings per ordinary share "HEPS"
(cents) 4,7 2,8 6,0
3. Authorised capital expenditure
Incurred to date
– Property, plant and equipment 8 005 2 323 –
Not yet contracted for
– Property, plant and equipment 2 923 3 677 10 928
Total authorised capital expenditure 10 928 6 000 10 928
Number of shares
4. Movement of treasury shares
Opening balance 22 230 754 1 811 927 1 811 927
Consolidation of shares from Infrasors
Empowerment Trust – 24 325 348 24 325 348
Purchased during the period/year 73 219 – 883 479
Treasury shares to be issued – – (4 790 000)
Closing balance 22 303 973 26 137 275 22 230 754
5. Other financial assets
Opening balance 22 446 21 653 21 653
Investment in environmental insurance policies 650 551 2 449
Investment in guaranteed endowment policies 2 561 1 552 3 360
Payout and settlement of instalment sale liabilities – – (5 016)
Closing balance 25 657 23 756 22 446
Included in the above balance, is investments in environmental insurance policies of
R19 685 (Aug 2013: R15 686) (Feb 2014: R17 583) measured at fair value. The fair value of unquoted
unit trusts is derived using the adjusted net asset method. The adjusted net asset method determines
the fair value of the investment in the unit trust by reference to the fair value of the individual
assets and liabilities recognised in a unit trust's statement of financial position. The significant
inputs to the adjusted net asset method are the fair values of the individual assets and liabilities
whose fair value is derived from quoted market prices in active markets. The fair values are indirectly
derived from prices quoted in Level 1, and therefore included in Level 2 (within the IFRS 13 Fair Value
Measurement fair value hierarchy).
6. Related party transactions
Reviewed Reviewed Audited
six months six months year
ended ended ended
31 August 31 August 28 February
R000's 2014 2013 2014
Management and consulting fees paid to Afrimat
Limited 2 436 4 868 9 735
Sales to Afrimat group companies 3 088 1 735 6 590
Loan amount payable to Afrimat Limited 14 483 6 433 14 276
Interest paid to Afrimat Limited 771 41 791
Contributions made to the Infrasors Environmental
Rehabilitation Trust 650 389 1 039
Rent paid to director/shareholder controlled entity – 190 191
7.1 Reclassification – Statement of comprehensive income
Certain income and expense items included in the comparative figures of the statement of
comprehensive income have been reclassified. This is as a result of the alignment of classification
policies of the group with its holding company.
2013
As previously
R000's reported Restatement As restated
Revenue 164 540 773 165 313
Cost of sales (111 704) (5 244) (116 948)
Other net gains/(losses) 237 184 421
Administration and other operating expenses (25 668) 4 287 (21 381)
7.2 Reclassification – Statement of financial position
The group has retrospectively adjusted the recognition of certain deferred tax assets and deferred tax
liabilities as previously reported. This has resulted in the following:
- Deferred tax assets have been recognised on tax losses to the extent that it is probable that the
taxable profit will be available against which the tax losses will be utilised, at the reporting date.
Further detail is disclosed below:
2013
As previously
R000's reported Restatement As restated
Non-current assets
Deferred tax 206 10 145 10 351
Non-current liabilities
Deferred tax (34 093) (10 145) (44 238)
(33 887) – (33 887)
8. Borrowings
Reviewed Reviewed Audited
six months six months year
ended ended ended
31 August 31 August 28 February
R000's 2014 2013 2014
Total borrowings 54 266 81 333 69 423
Overdraft less cash and cash equivalents 7 423 199 (7 328)
Net debt 61 689 81 532 62 095
Net debt: equity ratio (%) 42,3 63,0 45,0
9. Events after reporting date
No material events after the reporting date have been identified.
10. Contingent liability
On 25 June 2013 SARS issued an adjusted income tax assessment claiming R9,7 million additional tax,
R7,2 million penalties and R2,4 million interest, relating to the activities of a subsidiary of Infrasors
for the tax years 2010, 2011 and 2012 based on the premise that the company is not a mining entity.
The company has submitted an appeal to SARS and is of the opinion that the activities are of a mining
nature. During an Alternative Dispute Resolution hearing ("ADR") held on 6 June 2014, SARS agreed
to waive the relevant penalties and interest. The company is in the process of obtaining a final ruling
from SARS regarding the treatment of income tax in the relevant subsidiary.
COMMENTARY
Basis of preparation
The reviewed condensed consolidated interim financial results ("the financial statements") for the six
months ended 31 August 2014 ("the period") have been prepared in accordance with and containing the
information required by IAS 34: Interim Financial Reporting, the SAICA Financial Reporting Guides as issued
by the Accounting Practices Committee, the JSE Listings Requirements and in the manner required by the
South African Companies Act. The accounting policies and method of computation applied in preparation of
the financial statements are in accordance with International Financial Reporting Standards ("IFRS") and are
consistent with those applied in the audited annual financial statements for the year ended 28 February 2014.
The reviewed condensed consolidated interim financial statements have been prepared under the supervision
of the Interim Financial Director, HP Verreynne BCompt (Hons) CA(SA).
Introduction
The financial results reflect the benefits for the group of the turnaround initiatives introduced offset by the
costs incurred to improve plant efficiencies, additional expenditures to meet mining requirements of the
Department of Mineral Resources and the impact of low processing yields and high cost increases in the
silica operations.
Financial results
Revenue for the period increased by 7,1% to R177,0 million (2013: R165,3 million). Contribution from
operations increased by 31,8% to R13,1 million (2013: R9,9 million) despite the lower gross profit generated.
The reduction in administration and operating expenses (mainly due to the decrease in management
fees charged by the holding company), following turnaround initiatives, as well as the impact of lower
depreciation and amortisation, exceeded the drop in gross profit. Lower depreciation, amortisation and
impairments are due to the large write offs of obsolete fixed assets and impairments in respect of Delf Sand
during the previous year. Profit after tax amounts to R7,9 million (2013: R0,5 million).
Net of cash on hand and overdraft decreased due to increased capital expenditures and part repayment of
the medium-term loan.The medium-term funding arrangement with Absa has been finalised.
Operational review
Activities in the Silica segment remained under pressure due to the declining high grade raw material
reserve at Delf Sand and the high increase in energy cost rates. Delf Sand obtained the shortfall in raw
materials from the Delf Cullinan silica deposit and transported the raw materials to the Delf Sand processing
plant – resulting in a sharp increase in transport costs with an adverse effect on margins. Furthermore, the
metal industry strike impacted sales volumes.
Dolomite and Limestone segment generated increased profits due to improved processing efficiencies and
higher selling prices.
The turnaround initiatives throughout the group are continuing with enhanced plant availability, improved
production throughput with higher sales margins being realised. These initiatives required increased
expenditures on maintenance of plant and equipment which were expensed during the period.
There has been no material change in the group's mineral reserves during the period.
Dividends
The group's directors have elected not to declare a dividend for the period ended 31 August 2014 (2013: Rnil)
and will reconsider this only once the group's borrowings have reduced to an acceptable level.
Prospects
The group expects to remain a leading supplier to the local construction and metallurgical markets.
Infrasors' key focus areas will remain on expanding volumes, further reducing costs, continually improving
efficiencies and developing the required skill level of our employees.
Auditor's review
The condensed consolidated interim financial statements for the period have been reviewed by the
company's auditor, Mazars Inc. The financial statements have been independently reviewed in compliance
with applicable requirements of the South African Companies Act. The auditor's report does not necessarily
report on all of the information contained in the financial statements. Shareholders are therefore advised
that in order to obtain a full understanding of the nature of the auditor's engagement they should obtain
a copy of the unmodified auditor's report together with the accompanying financial information from the
issuer's registered office. Their review was conducted in accordance with ISRE2410 "Review of interim
financial information performed by the independent auditor of the entity".
On behalf of the board
Mochele Noge Louis Loubser
Chairman Managing Director
5 November 2014
Centurion
ADMINSTRATIVE INFORMATION AT DATE OF THIS REPORT
Directors
M Noge# (Chairman), LR Loubser (Managing Director), HP Verreynne (Interim Financial Director),
JCP Bekker#, AJ van Heerden*, PFC Ying#
All of the above directors are South African and resident in South Africa.
* Non-executive director #Independent
Registered office
Lyttelton Dolomite Mine
Botha Avenue, Lyttelton, Centurion, 0157
(PO Box 14014, Lyttelton, 0140)
Sponsor
Bridge Capital Advisors (Pty) Limited
2nd Floor, 27 Fricker Road, Illovo, 2196
(PO Box 651010, Benmore, 2010)
Legal advisers and attorney
Webber Wentzel
10 Fricker Road, Illovo Boulevard, Johannesburg, 2196
(PO Box 6771, Marshalltown, 2107)
Auditors
Mazars Inc.
Mazars House, Railto Road, Grand Moorings Precinct
Century City, Cape Town, 7446
(PO Box 134, Century City, 7446)
Transfer secretaries
Link Market Services South Africa (Pty) Limited
13th Floor, Rennies House, 19 Ameshoff Street, Braamfontein, 2001
(PO Box 4844, Johannesburg, 2000)
Company secretary
M Swart
Tyger Valley Office Park No. 2, Corner Willie van Schoor Avenue and Old Oak Road, Tyger Valley, 7530
(PO Box 5278, Tyger Valley, 7536)
Date: 05/11/2014 04:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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