Wrap Text
Reviewed Condensed Consolidated Provisional Financial Results for the year ended 28 February 2015
INFRASORS HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2007/002405/06)
Share Code on the JSE: IRA ISIN: ZAE 000101507
("Infrasors", "the company" or "the group")
REVIEWED CONDENSED
CONSOLIDATED PROVISIONAL
FINANCIAL RESULTS
FOR THE YEAR ENDED 28 FEBRUARY 2015
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
Reviewed Audited
28 February 28 February
2015 2014 %
Note R000's R000's Change
Revenue 337 274 327 510 3,0
Cost of sales (273 010) (249 772)
Gross profit 2 64 264 77 738 (17,3)
Other net gains/(losses) 266 1 720
Operating expenses (30 305) (30 225)
Depreciation and amortisation 3 (14 077) (34 108)
Contribution from operations 20 148 15 125 33,2
Impairments (1 555) (5 299)
Operating profit 18 593 9 826
Investment revenue 856 1 776
Finance costs (8 105) (11 418)
Profit before tax 11 344 184
Taxation 4 4 016 4 723
Profit for the year 15 360 4 907
Total comprehensive income for the year 15 360 4 907
Profit attributable to:
Owners of the parent 15 448 4 413
Non–controlling interest (88) 494
15 360 4 907
Earnings per ordinary share (cents) – basic and diluted 5 9,5 2,8 239,3
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Audited
28 February 28 February
2015 2014
Note R000's R000's
Assets
Total non–current assets 237 173 245 089
Property, plant and equipment 203 291 205 872
Investment property 3 040 3 040
Intangible assets 2 415 2 609
Other financial assets 9 11 808 22 446
Deferred tax 16 619 11 122
Total current assets 86 957 81 417
Inventories 12 744 14 171
Trade and other receivables 60 173 51 737
Other financial assets 9 727 –
Cash and cash equivalents 13 313 15 509
Total assets 324 130 326 506
Equity and liabilities
Total equity 150 154 137 933
Stated and share capital 247 704 927
Share premium – 256 959
Treasury shares (245) (9 962)
Net issued stated and share capital 247 459 247 924
Share–based payment reserve 243 96
Accumulated loss (97 548) (111 946)
Attributable to equity holders of parent 150 154 136 074
Non–controlling interest – 1 859
Liabilities
Total non–current liabilities 94 424 126 327
Borrowings non–current 11 20 661 52 841
Provisions 18 298 18 521
Holding company loan 17 165 14 276
Deferred tax 38 300 40 689
Total current liabilities 79 552 62 246
Borrowings current 11 18 438 16 582
Trade and other payables 52 404 36 736
Bank overdraft 8 341 8 181
Current tax payable 369 747
Total liabilities 173 976 188 573
Total equity and liabilities 324 130 326 506
Note to the statement of financial position:
Net asset value per share (cents) 92,1 83,3
Borrowings, holding company loan and overdraft 64 605 91 880
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed Audited
28 February 28 February
2015 2014
R000's R000's
Cash flows from operating activities
Cash generated from operations 39 069 26 687
Interest revenue 856 1 776
Finance costs (6 824) (9 469)
Tax paid (4 248) (4 230)
Net cash inflow from operating activities 28 853 14 764
Acquisition of property, plant and equipment (22 723) (13 290)
Proceeds on disposal of property, plant and equipment 10 132 8 526
Proceeds on disposal of financial assets 14 288 3 869
Purchase of financial assets (2 184) (4 662)
Net cash outflow from investing activities (487) (5 557)
Proceeds from borrowings 1 521 1 683
Repayment of borrowings (31 846) (32 974)
Loan advances from holding company 2 889 14 276
Acquisition of additional non–controlling interest (2 821) –
Purchase of treasury shares (245) (810)
Equity related cost on share cancellation (220) –
Proceeds on share issue – 4 790
Net cash outflow from financing activities (30 722) (13 035)
Net decrease in cash, cash equivalents and bank overdrafts (2 356) (3 828)
Cash, cash equivalents and bank overdrafts at the beginning of the year 7 328 11 156
Cash, cash equivalents and bank overdrafts at the end of the year 4 972 7 328
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Reviewed Audited
28 February 28 February
2015 2014
R000's R000's
Stated and share capital 247 704 927
Opening balance 927 927
Cancellation of treasury shares (111) –
Conversion to no-par value shares 246 888 –
Share premium – 256 959
Opening balance 256 959 256 959
Cancellation of treasury shares (9 851) –
Equity related costs (220) –
Conversion to no-par value shares (246 888) –
Treasury shares (245) (9 962)
Opening balance (9 962) (2 266)
Consolidation of shares from Infrasors Empowerment Trust – (11 676)
Cancellation of treasury shares 9 962 –
Purchase of treasury shares (245) (810)
Treasury shares to be issued (issued in current year) – 4 790
Share-based payment reserve 243 96
Opening balance 96 –
Share-based payments 147 96
Accumulated loss (97 548) (111 946)
Opening balance (111 946) (116 359)
Profit for the year in total comprehensive income (a) 15 448 4 413
Additional non-controlling interest acquired – Delf Silica Coastal
(Proprietary) Limited (1 050) –
Non-controlling interest – 1 859
Opening balance 1 859 1 365
(Loss)/profit for the year in total comprehensive income (b) (88) 494
Additional non-controlling interest acquired – Delf Silica Coastal
(Proprietary) Limited (1 771) –
Balance at end of the year 150 154 137 933
Total comprehensive income/(loss) included above (a+b) 15 360 4 907
NOTES TO THE REVIEWED CONDENSED CONSOLIDATED PROVISIONAL
FINANCIAL STATEMENTS
1. Segmental information
Dolomite and
Silica limestone Other Total
R000's R000's R000's R000's
Reviewed year ended 28 February 2015
Revenue from external customers 72 272 265 002 – 337 274
Inter-segment revenues 1 167 4 181 25 592 30 940
Cost of sales (70 613) (202 397) – (273 010)
Gross profit 1 659 62 605 – 64 264
Other net gains/(losses) 435 (169) – 266
Operating expenses (9 548) (11 655) (9 102) (30 305)
Depreciation and amortisation (2 897) (10 922) (258) (14 077)
(Loss)/contribution from operations (10 351) 39 859 (9 360) 20 148
Impairments (1 555) – – (1 555)
Operating profit (11 906) 39 859 (9 360) 18 593
(Loss)/profit before tax (12 448) 38 718 (14 926) 11 344
Additions to non-current assets 1 711 20 848 164 22 723
Assets 67 413 232 137 24 580 324 130
Liabilities 21 840 85 274 66 862 173 976
Audited year ended 28 February 2014
Revenue from external customers 90 725 236 785 – 327 510
Inter-segment revenues – – 33 985 33 985
Cost of sales (68 325) (181 447) – (249 772)
Gross profit 22 400 55 338 – 77 738
Other net gains/(losses) – 1 665 55 1 720
Operating expenses (10 252) (12 299) (7 674) (30 225)
Depreciation and amortisation (6 019) (26 319) (1 770) (34 108)
Contribution/(loss) from operations 6 129 18 385 (9 389) 15 125
Impairments (5 299) – – (5 299)
Operating profit 830 18 385 (9 389) 9 826
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
Reviewed Audited
28 February 28 February
2015 2014
R000's R000's
2. Gross profit 64 264 77 738
Reduction in gross profit is due to high costs incurred to transport raw
material from Delf Cullinan to Delf Sand's processing plant (following
the depletion of its silica resource), high increase in burning fuel
prices, increased costs to address backlog maintenance and plant
repairs and additional expenditures to meet mining requirements of
the Department of Mineral Resources.
3. Depreciation and amortisation
Depreciation 13 883 34 028
Amortisation 194 80
14 077 34 108
Lower depreciation charge is due to outsourcing of the Delf Sand
(Proprietary) Limited's transport fleet and the write off of fixed assets
no longer in use and the re-estimation of depreciation rates in the
previous year.
4. Taxation
Local income tax (3 870) (4 243)
Increase in deferred tax assets 4 852 8 949
Decrease in deferred tax liabilities 3 034 17
4 016 4 723
Tax reversal arose primarily due to the recognition of deferred tax
assets on assessed losses due to subsidiaries having recovered and
generating taxable profits in both the current and prior years.
5. Earnings per share reconciliation: Basic and diluted
Net profit attributable to the owners of the parent 15 448 4 413
Total shares in issue (000's) 163 290 185 521
Treasury shares (000's) (198) (22 231)
Net shares in issue (000's) 163 092 163 290
Weighted average number of shares in issue (000's) 163 194 159 548
Earnings per share (cents) 9,5 2,8
6. Headlines earnings per share reconciliation: Basic and diluted
Net profit attributable to the owners of the parent 15 448 4 413
(Profit)/loss on disposal of property, plant and equipment (266) 1 946
Impairments 1 555 5 299
Total adjustments 1 289 7 245
Total tax effects of adjustments (360) (2 028)
Headline earnings 16 377 9 630
Weighted average number of shares in issue (000's) 163 194 159 548
Headline earnings per ordinary share (cents) 10,0 6,0
7. Authorised capital expenditures
Not yet contracted for
- Property, plant and equipment 25 426 10 928
The capital expenditures will be funded by surplus cash and bank
financing.
Number of shares
2015 2014
8. Movement in number of treasury shares
Opening balance 22 230 754 1 811 927
Consolidation of shares from Infrasors Empowerment Trust – 24 325 348
Purchased during the year 197 500 883 479
Cancellation of treasury shares (22 230 754) –
Treasury shares to be issued (issued in current year) – (4 790 000)
Closing balance 197 500 22 230 754
Reviewed Audited
28 February 28 February
2015 2014
R000's R000's
9. Other financial assets
Non-current assets
At fair value through profit or loss - designated 11 808 17 583
Held-to-maturity – 4 863
22 446
Current assets
At fair value through profit or loss - designated – –
Held-to-maturity 727 –
727 –
Total other financial assets 12 535 22 446
At fair value through profit and loss
Opening balance 17 583 15 135
Investment in environmental insurance policies 1 023 775
Fair value adjustment 2 193 1 673
Payout of environmental insurance policies (8 991) –
Closing balance 11 808 17 583
The fair value of all equity securities is based on their current
bid prices in an active market, with changes in fair value being
recognised in ‘operating expenses' in the statement of profit or loss
and other comprehensive income.
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 of the fair value hierarchy.
Held-to-Maturity
Opening balance 4 863 6 518
Investment in guaranteed endowment policies 1 162 3 361
Settlement of Wesbank (Proprietary) Limited liability (5 298) (5 016)
Closing balance 727 4 863
10. Related parties
Management and consulting fees paid to Afrimat group companies 6 433 9 735
Sales to Afrimat group companies 1 469 6 590
Amount receivable from Afrimat group companies 1 633 2 465
Purchases from Afrimat group companies 6 344 293
Amount payable to Afrimat group companies 4 402 334
Loan amount payable to Afrimat Limited 17 165 14 276
Interest owing to Afrimat Limited 1 629 791
Rent paid to director/shareholder controlled entity – 191
Reviewed Audited
28 February 28 February
2015 2014
R000's R000's
11. Borrowings
Total borrowings 56 264 83 699
Overdraft less cash and cash equivalents (4 972) (7 328)
Net debt 51 292 76 371
Net debt : equity ratio 34,2% 55,4%
During the current year, excess cash reserves were utilised against
borrowings to further reduce the group's debt exposure.
12. Events after reporting date
No material events after the reporting date have been identified.
13. Contingent liability
Guarantees to the value of R27,6 million (2014: R25,2 million) by Lombards Insurance Group, R0,6
million (2014: R0,6 million) by ABSA Bank Limited and R2,7 million (2014: R2,7 million) by SIG
Guarantee Acceptances (Proprietary) Limited were supplied to various parties, including the Department
of Mineral Resources, Eskom and Chevron South Africa (Proprietary) Limited.
These guarantees are in respect of environmental rehabilitation and will only be payable in the event
of default by the group.
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 subsidiary is not a mining entity. The
subsidiary has submitted an objection to SARS and is of the opinion that the activities are of a mining
nature. The group is in the process of obtaining a final ruling from SARS regarding the treatment of
income tax in this subsidiary.
A contingent liability exists due to the uncertain timing of cash flows with regards to future local
economic development ("LED") commitments made to the Department of Mineral Resources in respect
of companies with mining rights. These commitments are dependent on the realisation of the future
agreed upon LED projects. Future commitments amount to R1,1 million (2014: R2,3 million). An accrual
has been raised in respect of commitments made up to the end of the financial year.
14. Conversion to no-par value shares
The share capital of the group has been converted to no-par value shares during the year under review.
COMMENTARY
Basis of preparation
The reviewed condensed consolidated provisional financial results ("the financial statements") for the
year ended 28 February 2015 ("year") contain, as a minimum, the information required by IAS 34
Interim Financial Reporting and have been prepared in accordance with the framework concepts and
measurement and recognition requirements of International Financial Reporting Standards ("IFRS"),
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 IFRS and are
consistent with those applied in the audited annual financial statements for the year ended 28 February 2014.
The reviewed condensed consolidated provisional financial statements have been prepared under the
supervision of the Interim Financial Director, HP Verreynne BCompt (Hons) CA (SA).
Financial results
The financial results reflect the benefits for the group of the turnaround initiatives introduced offset by the
costs incurred to improve plant efficiencies and productivity. Revenue for the year increased by 3,0% to
R337,3 million (2014: R327,5 million). Contribution from operations increased by 33,2% to R20,1 million
(2014: R15,1 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. Profit after tax amounts to R15,4 million (2014: R4,9 million).
Cash on hand, net of overdrafts decreased due to increased capital expenditure and increased repayments
on medium term loans.
Operational review
Activities in the Silica segment remained under pressure due to the depletion of high grade raw material
reserve at Delf Sand. 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 which resulted in a sharp increase in
transport costs – this led to reduced sales of low margin products. Furthermore, the metal industry strike
impacted sales volumes during the first half of the year.
Dolomite and Limestone segment increased profitability 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 year.
There has been no material change in the group's mineral reserves during the year.
Dividends
The group's directors have elected not to declare a dividend for the year ended 28 February 2015
(2014: 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 and
should further also benefit from production efficiency improvement initiatives.
Infrasors' key focus areas will remain on expanding volumes, further reducing costs, continually improving
efficiencies and developing the required skill level of its employees.
Auditor's Review
The condensed consolidated provisional financial statements for the year have been reviewed by the
company's auditor, Mazars. 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
20 May 2015
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 non-executive director
Registered office
Lyttelton Dolomite Mine
Botha Avenue, Lyttelton, Centurion, 0157
(PO Box 14014, Lyttelton, 0140)
Sponsor
Bridge Capital Advisors (Proprietary) Limited
2nd Floor, 27 Fricker Road, Illovo, 2196
(PO Box 651010, Benmore, 2010)
Auditors
Mazars
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 (Proprietary) 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: 20/05/2015 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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