Wrap Text
Reviewed Condensed Consolidated Provisional Results
for the year ended 28 February 2015
Mine Restoration Investments Limited
Registration number: 1987/004821/06
Share code: MRI ISIN: ZAE000149951
(MRI or the Company)
www.minerestoration.co.za
29 May 2015
Reviewed Condensed Consolidated Provisional Results
for the year ended 28 February 2015
Condensed provisional consolidated
statement of comprehensive income
Reviewed Audited
28 February 28 February
R'000 2015 2014
Coal fines revenue 9 110 –
Cost of sales (3 824) –
Gross profit 5 286 –
Other income 33 105 36
Operating expenses (46 715) (61 966)
Operating loss (8 324) (61 930)
Investment revenue – 6
Finance cost (5 421) (6 156)
Loss before taxation (13 745) (68 080)
Taxation 4 683 7 833
Loss for the period (9 062) (60 247)
Other comprehensive income – –
Total comprehensive loss (9 062) (60 427)
(Loss)/profit attributable to:
Owners of the parent 5 345 (56 329)
Non-controlling interests (14 407) (3 918)
Total comprehensive (loss)/
profit attributable to:
Equity holders 5 345 (56 329)
Non-controlling interests (14 407) (3 918)
Basic earnings/(loss) per share
(cents) 0,74 (11,84)
Diluted earnings/(loss) per share
(cents) 0,73 (9,91)
Headline earnings/(loss) per share
(cents) (2,24) (3,94)
Diluted headline earnings/(loss)
per share (cents) (2,21) (3,30)
Weighted average number of shares
(‘000) 727 114 475 773
Diluted weighted average number of
shares in issue (‘000) 737 114 568 376
Condensed provisional consolidated
statement of financial position as at 28 February 2015
Reviewed Audited
28 February 28 February
R'000 2015 2014
Assets
Non-current assets 33 079 68 818
Property, plant and equipment 11 585 18 296
Intangible assets 21 384 46 453
Goodwill – 1 053
Deferred tax 111 3 016
Current assets 1 944 3 681
Trade and other receivables 1 349 696
Cash and cash equivalents 596 2 985
Total assets 35 023 72 499
Equity and Liabilities
Equity 24 330 16 076
Amount attributable to equity
holders 25 304 2 642
Non-controlling interest (973) 13 434
Liabilities
Non-current liabilities 6 036 55 333
Deferred tax 6 036 13 624
Other financial liabilities – 41 709
Current liabilities 4 657 1 090
Other financial liabilities 553 –
Trade and other payables 3 260 1 090
Deferred income 844 –
Total equity and liabilities 35 023 72 499
Condensed provisional consolidated
statement of changes in equity
for the year ended 28 February 2015
Share
Stated based
share Capital payment Retained
R’000 capital reserve reserve income
Balance at 28 February
2013 61 304 5 000 – (12 296)
Total comprehensive
loss for the period – – – (56 329)
Issue of shares on
reverse acquisition 5 463 – – –
Share issue expenses (500) – – –
Balance at 28 February
2014 66 267 5 000 – (68 625)
Total comprehensive
loss for the period – – – 5 345
Issue of additional
shares 16 757 – – –
Share based payment
charge – – 559 –
Balance at 28 February
2015 83 024 5 000 559 (63 280)
Amount Non-
attributable control-
to equity ling Total
R’000 holders interest equity
Balance at 28 February 2013 54 008 17 352 71 360
Total comprehensive loss for the
period (56 329) (3 918) (60 247)
Issue of shares on reverse
acquisition 5 463 – 5 463
Share issue expenses (500) – (500)
Balance at 28 February 2014 2 642 13 434 16 076
Total comprehensive loss for the
period 5 345 (14 407) (9 063)
Issue of additional shares 16 757 – 16 757
Share based payment charge 559 – 559
Balance at 28 February 2015 25 304 (973) 24 330
Condensed provisional consolidated
statement of cash flow for the year ended 28 February 2015
Reviewed Audited
28 February 28 February
R'000 2015 2014
Cash flows utilised in
operating activities
Cash utilised in operations (4 904) (8 026)
Interest income – 6
Finance costs adjustment for non-
cash flows – (655)
Taxation refunded/(paid) – (46)
Cash utilised in operating
activities (4 904) (8 721)
Cash flows from investing activities
Purchase of property, plant and
equipment (394) (7 777)
Net cash utilised in investing
activities (394) (7 777)
Cash flows from financing activities
Proceeds on raising of new share
capital 16 757 5 463
Share issue expenses – (500)
Proceeds from other financial
liabilities 553 14 206
Repayment of other financial
liabilities (14 401) –
Net cash available from financing
activities 2 909 19 169
Total cash movement for the year (2 389) 2 671
Cash and cash equivalents at the
beginning of the year 2 985 314
Cash and cash equivalents at the
end of the year 596 2 985
Notes to the reviewed provisional condensed results
for the year ended 28 February 2015
1. Basis of preparation
These condensed provisional consolidated financial statements have
been prepared by CH Gernandt (CFO) in accordance with IAS 34: Interim
Financial Reporting, International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board
(IASB), SAICA Financial Reporting Guides as issued by the Accounting
Practices Committee, the requirements of the South African Companies
Act and the JSE Listings Requirements.
The same accounting policies, presentation and measurement principles
have been followed in the preparation of the condensed report for the
year ended 28 February 2015 as were applied in the preparation of the
Group’s annual financial statements for the year ended
28 February 2014.
2. Financial review
The Group’s coal fines processing subsidiary, Octavovox Proprietary
Limited (Octavovox), commenced commercial operations and contributed
R9,1 million to the Group’s revenue for the period under review.
Despite operational challenges at the site, the Group reported profit
attributable to the parents of the Group for the year ended
28 February 2015 of R5,3 million resulting in an earnings of 0,74 cents
(2014: 11,84 cents (loss)) per ordinary share. Headline loss per share
for the year was 2,24 cents (2014: 3,94 cents). The weighted average
number of ordinary shares in issue for the period under review was
727 113 502 (2014: 475 772 957).
3. Auditor review conclusion
Grant Thornton, the Group’s independent reviewers, have reviewed the
condensed provisional consolidated financial statements for the year
ended 28 February 2015 and have issued a modified review conclusion
with the following emphasis of matter paragraph which in summary
states the following: Without qualifying our review conclusion, we
draw attention to the fact that the Group incurred a loss of
R9,1 million and has accumulated losses of R63,6 million. These
conditions indicate the existence of a material uncertainty that
may cast doubt about the Group’s ability to continue as a going
concern. The auditor’s review conclusion does not necessarily cover
all of the information contained in this announcement. Shareholders
are therefore advised that in order to obtain a full understanding
of the nature of the reviewer’s work they should obtain a copy of
that conclusion together with the accompanying financial information
from the registered office of the Company.
4. Other financial liabilities (non-current)
Development Bank of Southern Africa Limited (DBSA)
The Group had a R10 million loan from the DBSA at an interest rate
of 25% per annum. The capital amount and accrued interest was due
and payable on the implementation of the water reclamation project
provided that it occurred before July 2014. Because the water
reclamation project was not implemented before that date, the loan
together with interest is not repayable and the loan was cancelled,
with DBSA releasing security. The loan write off reflects in
“other income” in the statement of comprehensive income for the
period under review.
Afrasia Special Opportunities Fund Proprietary Limited (ASOF)
A loan was granted by ASOF to Octavovox, a subsidiary of MRI. The
loan was repayable on the anniversary of the advances and bore
interest between 2% and 2,5% per month. ASOF had an option to convert
the loan into MRI shares, which was exercised on 30 June 2014. The
loan plus capitalised interest was converted into shares of MRI at a
conversion rate of five cents per share. This conversion resulted in
the loan being settled in its entirety in the year under review.
Armadale Capital Plc (ACP)
A loan was granted by ACP to Mine Restoration Investments Limited
(MRI). The ACP loan was subordinated to the rights of ASOF and ACP
agreed to indemnify ASOF from possible losses under its secured loan
agreement.
The loan was repayable on the anniversary of the advances and bore
interest at prime interest rate plus 1%. ACP had a conversion option
to convert the loan into MRI shares, which was exercised on
30 June 2014. The loan plus capitalised interest was converted into
shares of MRI at a conversion rate of five cents per share. This
conversion resulted in the loan being settled in its entirety in
the year under review.
5. Dividends
No dividends were declared during the period under review.
6. Board
During the period under review, up to date of this report, the
following resignations and appointments of directors occurred:
Appointments
Carl-Heinz Gernandt (Financial director): 1 December 2014
Change of role
Anthon Meyer accepted the position of financial director as of
1 October 2013. With the appointment of Carl-Heinz Gernandt as f
inancial director, Mr A Meyer resumed his role as non-executive
to the Group.
Resignations
– Justin Lewis: 29 October 2014
– Anthon Meyer: 28 February 2015
Subsequent to the above changes to the board, Mr CH Gernandt has
given notice to resign as Group financial director with effect from 1
June 2015. The board thanks Carl for his valuable contribution during
his time with MRI. MRI shareholders will be informed once a suitable
replacement has been found.
The board is further pleased to announce the appointment of an
independent non-executive director, Mr Luc Albinski with effect from
1 June 2015.
Luc is managing partner of Vantage Mezzanine and a member of the
Fund’s investment committee. His primary responsibility is the
assessment, structuring, execution and post-transaction monitoring of
the mezzanine fund investments. Prior to Vantage, Luc established
Standard Bank’s mid- size private equity department in 2003, which
focused on executing mezzanine transactions in the mid-market as an
alternative to traditional private equity solutions. Thereafter, Luc
headed up Standard Bank’s mezzanine finance department where he
co-led several noteworthy transactions. These included providing
funding for the buy-out of the South
Africa subsidiary of Waco International and providing mezzanine funding for the De Beers empowerment
transaction.
Before joining Standard Bank, Luc spent time as a strategy consultant
with Bain & Co. in Paris (1992) and with Accenture in Johannesburg
(1993 – 94). After completing his MBA at INSEAD, he joined the
International Finance Corporation (IFC), a member of the World Bank
Group, in Washington DC. At the IFC, Luc spent time working on
advisory and investment projects in a diverse range of countries
including Brazil, Gabon, Poland, Romania, Bosnia and Moldova.
Luc returned to South Africa in 1998 and joined Brait, one of South
Africa’s leading private equity firms. As a deal executive, he was
responsible for investments in the building materials, logistics,
fine chemicals and luxury tourism sectors.
Luc subsequently spent two years in Poland as the founder and chief
executive officer of a start-up employee benefits firm before
returning to South Africa in 2002.
Luc has an MBA from the INSEAD Business School in Fontainebleau,
France. He studied for his undergraduate Economics degree at the
Institute for Political Studies in Paris.
The board welcomes Luc and looks forward to working with him.
The board, with effect from 1 June 2015, will consist of the
following directors:
– Quinton George: Non-executive chairman
– Richard Tait: Chief executive officer
– Chris Roed: Lead independent non-executive director
– Syd Caddy: Independent non-executive director
– Luc Albinski: Independent non-executive director
7. Operating segments
Coal
AMD fines
project processing Corporate Total
R’000
2015
Revenues – 9 110 – 9 110
Other income – 210 32 895 33 105
Loss before tax – (34 083) 20 338 (13 745)
Taxation – 5 765 (1 083) 4 682
Loss after tax – (28 318) 19 255 (9 063)
Interest paid – 195 5 226 5 421
Depreciation and
amortisation – 30 846 1 329 32 175
Total assets – 34 643 380 35 023
Total liabilities – (8 850) (1 844) (10 693)
2014
Revenues – – – –
Other income – 17 19 36
Loss before tax (56 143) (8 908) (3 029) (68 080)
Taxation 4 763 3 070 – 7 833
Loss after tax (51 380) (5 838) (3 029) (60 247)
Interest received – – 6 6
Interest paid 5 037 938 181 6 156
Depreciation and
amortisation 50 526 3 782 – 54 308
Total assets 1 133 70 059 1 307 72 499
Total liabilities (27 525) (28 453) (445) (56 423)
The MRI Group segmental analysis is based on the AMD and coal fines
processing projects. The coal fines processing plant was commissioned
in December 2013 and started generating revenue within the year under
review. The Group was reliant on one major customer in respect of the
coal fines processing project. The AMD project was fully impaired in
2014 as the Group has been unable to secure contracts to generate
revenue.
8. Changes in share capital
During the year, the Company issued 335 142 458 new shares with
proceeds of R16 757 122,90 in order to settle directors’ fees,
corporate advisory fees, the ACP loan and ASOF loan. The issue of
the shares and conversion of loans into equity was detailed in a
circular posted to MRI shareholders dated 16 May 2014.
9. Intangible assets
Accumulated
amortisation
and Carrying
R’000 Cost impairments value
2015
Rehabilitation and
processing rights 47 959 (27 381) 20 578
AMD project 45 082 (45 082) –
Intellectual property 2 000 (1 196) 804
Computer software 35 (35) –
95 076 (73 694) 21 382
2014
Rehabilitation and
processing rights 47 959 (3 366) 44 593
AMD project 45 082 (45 082) –
Intellectual property 2 000 (140) 1 860
Computer software 35 (35) –
95 076 (48 623) 46 453
Reconciliation
Opening Amorti- Impair-
R’000 balance sation ment Total
2015
Rehabilitation and
processing rights 44 593 (5 995)(18 020) 20 578
Intellectual property 1 860 (126) (930) 804
46 453 (6 121)(18 950) 21 382
2014
Rehabilitation and
processing rights 47 959 (3 366) 44 593
AMD project 42 452 (1 460)(40 992) –
Intellectual property 2 000 (140) – 1 860
Computer software 35 (35) – –
92 446 (5 001)(40 992) 46 453
Impairment test
Rehabilitation and processing rights, intellectual property,
goodwill and coal fines processing plant
The intangible asset for the rehabilitation and processing rights
was created as a result of the agreements with Leeuw Mining and
Exploration Proprietary Limited (LME) and Keaton Energy Holdings
Limited (Keaton). These agreements were signed with Octavovox and
give the MRI Group the right to construct a coal processing and
briquetting plant to process the coal fines. The Group was granted
the processing rights for a period of eight years, with an option to
renew for a further period of eight years.
The intention is to expand and implement solutions at other coal
producers, to diversify the Group’s project exposure. At the
financial year-end, the values of the intangible assets related to
the coal fines processing project were tested for impairment, due to
the delays in the project and changes in projections for the project.
The carrying values of these assets were compared with the estimated
value in use. The value in use was based on the discounted cash flows
from the sale of the screened fines from the LME site.
Based on the value in use calculations the carrying values exceed the
recoverable amounts and the directors are satisfied that an
impairment loss of R18 019 691,26 has been incurred.
10. Earnings per share
Basic earnings per share
Basic earnings per share is determined by dividing profit or loss
attributable to the ordinary equity holders of the parent by the
weighted average number of ordinary shares outstanding during the
period.
28 February 28 February
2015 2014
Basic (loss)/earnings per share
From operations (cents) 0,74 (11,84)
Basic earnings per share for the
MRI Group was based on earnings
(loss) 5 345 (56 329)
Weighted average number of ordinary
shares (‘000) 727 114 475 773
Diluted basic earnings/(loss) per share
From operations (cents) 0,73 (9,91)
Profit or loss for the period
attributable to equity holders
of the parent 5 345 (56 329)
Diluted weighted average number
of shares in issue (‘000) 737 114 568 376
The after tax effect of interest on profit or loss to calculate
diluted earnings per share has not been adjusted as it is
insignificant.
Basic earnings per share
Reconciliation of earnings to headline earnings attributable to
equity holders of the parent:
28 February 28 February
2015 2014
Headline loss per share (cents) (2,24) (3,94)
Reconciliation between earnings/
(loss) and headline earnings/(loss)
Basic earnings/(loss) (R’000) 5 345 (56 329)
Adjusted for:
Impairment of property, plant and
equipment (R’000) 3 123 –
Impairment DBSA loan (R’000) (32 729) –
Impairment of intangible assets and
goodwill (R’000) 10 708 49 062
Deferred tax on intangible assets
impaired (R’000) (2 703) (11 478)
Headline loss (R’000) (16 256) (18 745)
Weighted average number of shares
in issue (‘000) 727 114 475 773
Headline loss per share (cents) (2,24) (3,94)
Diluted weighted average number of
shares in issue (‘000) 737 114 568 376
Diluted headline loss per share
(cents) (2,21) (3,30)
The following factors contributed to the difference in the projected
financial results and financial results:
– The delay in full production of the coal briquetting and processing
project;
– The impairment of the DBSA loan;
– The impairment of intangible assets and goodwill; and
– The impairment of property, plant and equipment.
The weighted average number of shares for the purpose of diluted
earnings per share reconciles to the weighted average number of
shares used in the calculation of basic earnings per share as
follows:
28 February 28 February
R’000 2015 2014
Weighted number of shares used in
the calculation of basic earnings
per share 727 114 475 773
Shares options issued 10 000 92 603
Weighted average number of shares
used in the calculation of diluted
earnings per share 737 114 568 376
If the shares issued subsequent to the financial year-end, as
detailed in note 11, had been outstanding at the financial year-end
the number of shares outstanding would have increased by 21 428 570.
11. Events after the end of the reporting period
Acquisition of Octavovox
MRI increased its interest to 100% in its subsidiary Octavovox by
buying out minorities and issuing 21 428 570 MRI ordinary shares at
seven cents per share on 23 April 2015, which constituted 2,57% of
MRI’s issued shares at the time. The acquisition fell below the
categorisation threshold in terms of the JSE Listings Requirements.
12. Going concern
The financial period under review reflects a challenging financial
period. The post year-end results indicate an increase in revenues
and reduced operational losses for the period following the
commissioning and ramp-up of the coal fines project. The overall net
loss after tax for the full period under review was R9,1 million
and the cash flow forecasts prepared by the directors indicate that
the Company will require additional funding within the next 12 months
in order to meet its commitments as they fall due and to continue
funding the expenditure required to progress projects with near-term
cash generation potential. These conditions indicate the existence of
a material uncertainty which may cast doubt about the Company’s ability
to continue as a going concern. The board, however, remains confident
that the Company retains the continued support of its major shareholders
to provide additional funding should other sources not be forthcoming.
Though the board appreciates that formalised funding commitments have
not yet been secured, the directors have a reasonable expectation, having
regard to the current status and the future strategy of the Company,
that the Company has sufficient resources to continue as a going
concern and have therefore concluded that it is appropriate to prepare
the financial statements on a going concern basis. Accordingly, the
financial statements do not include the adjustments that would result
if the Company was unable to continue as a going concern.
29 May 2015
Johannesburg
Corporate information: Mine Restoration Investments Limited
Country of incorporation and domicilium South Africa
Registered Office: The Zone Business Lofts West, 31 Tyrwhitt Ave,
The Zone, Rosebank
PO Box 825, Irene, Pretoria 0062
Tel: +27 (011) 036 3100
Directors
Q George# (Chairman); R Tait (Chief executive officer); L Albinski,
C Roed*, S Caddy*
#Non-executive *Independent non-executives
Company Secretary: Neil Esterhuysen & Associates Inc.
Transfer Secretaries: Computershare Investor Services Proprietary Limited
70 Marshall Street, Marshalltown 2001
PO Box 61051, Marshalltown 2107
Auditor: Grant Thornton
Corporate Finance Adviser and Designated Adviser:
AfrAsia Corporate Finance Proprietary Limited
Date: 29/05/2015 09:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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