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Reviewed Provisional Group Annual Financial Statements for the Year Ended 29 February 2016
Chrometco Limited
(Incorporated in the Republic of South Africa)
(Registration number 2002/026265/06)
Share code: CMO
ISIN: ZAE00007020249
("Chrometco" or "the group")
REVIEWED PROVISIONAL GROUP ANNUAL FINANCIAL STATEMENTS FOR THE
YEAR ENDED 29 FEBRUARY 2016
Provisional condensed consolidated statement of financial position
Reviewed as Audited as
at at
Note 29 Feb 2016 28 Feb 2015
R'000 R'000
Assets
Non-current assets 284,761 187,599
Tangible assets 1,999 2,268
Intangible assets 9 279,755 183,752
Environmental 10
rehabilitation investments 3,007 1,579
Current assets 2,477 8,373
Trade and other receivables 792 1,039
Cash and cash equivalents 1,685 7,334
Total assets 287,238 195,972
Equity and liabilities
Capital and reserves 233,867 160,928
Stated capital 158,062 54,187
Retained earnings 49,960 74,539
Attributable to ordinary
shareholders 208,022 128,726
Non-controlling Interest 25,845 32,201
Non-current liabilities 53,041 33,865
Deferred taxation 49,010 30,964
Environmental 11
rehabilitation provision 4,032 2,902
Current liabilities 330 1,179
Trade and other payables 320 1,169
Provisions 10 10
Total equity and liabilities 287,238 195,972
Provisional condensed consolidated statement of comprehensive
income
Reviewed Audited
for the for the
year ended year ended
28 Feb
Note 29 Feb 2016 2015
R'000 R'000
Revenue 5 3,894 672
Cost of sales - -
Gross profit 3,894 672
Other income 6 317 1,102
Depreciation (88) (56)
Amortisation of intangible
assets (7,872) (6,873)
Operating expenses (9,046) (8,694)
Loss before interest and
taxation (12,794) (13,848)
Investment income 246 536
Finance costs (341) (157)
Loss before taxation 7 (12,890) (13,469)
Taxation 8 (18,046) (4,553)
Loss for the year (30,936) (18,022)
Other comprehensive income - -
Total comprehensive loss
for the year (30,936) (18,022)
Loss and total
comprehensive loss for the
year - -
attributable to:
Equity holders (24,579) (16,812)
Non-controlling interest (6,357) (1,210)
Basic earnings / (loss)
per share (cents) 13 (10.77) (8.20)
Diluted earnings / (loss)
per share (cents) 13 (10.77) (6.11)
Provisional condensed consolidated statement of cash flows
Audited
Reviewed for the
for the year ended
year ended 28 Feb
Note 29 Feb 2016 2015
R'000 R'000
Cash flows from operating
activities (4,221) (6,012)
Cash flows from investing
activities (1,428) (1,598)
Cash flows from financing
activities - -
Net (decrease)/increase in
cash and cash equivalents (5,649) (7,610)
Cash and cash equivalents at
beginning of year 7,334 14,943
Cash and cash equivalents at
end of year 1,685 7,334
Provisional condensed consolidated statement of changes in equity
Retained
earnings/ Non-
Stated (accumulated controlling
capital loss) interest Total
R'000 R'000 R'000 R'000
Balance at 1 March
2014 54,187 91,351 33,412 178,950
Total comprehensive
loss for the year - (16,812) (1,210) (18,022)
Balance at 1 March
2015 54,187 74,539 32,202 160,928
Total comprehensive
loss for the year - (24,579) (6,357) (30,936)
Issue of shares 103,875 - - 103,875
Balance at 29
February 2016 158,062 49,960 25,845 233,867
Commentary – Financial and operational overview.
1. The directors present the reviewed results for the year ended
29 February 2016.
2. Basis of preparation.
The provisional condensed reviewed group annual financial statements
for the year ended 29 February 2016 have been prepared in accordance
with the framework concepts and the recognition and measurement
criteria of International Financial Reporting Standards (“IFRS”) as
issued by the International Accounting Standards Board, the SAICA
Financial Reporting Guides as issued by the Accounting Practices
Committee, contains as a minimum information required by IAS 34 –
Interim Financial Reporting, the JSE Limited Listings Requirements
and the South African Companies Act, 71 of 2008, as amended. The
group accounting policies and methods of measurement and recognition
comply in all material respects with IFRS and are consistent with
those applied in the financial period ended 28 February 2015.
The accounting policies applied in the preparation of the
provisional consolidated financial statements from which the summary
consolidated financial statements were derived are in terms of IFRS
and are consistent with those accounting policies applied in the
preparation of the previous consolidated annual financial
statements.
The provisional condensed reviewed group annual financial
statements were prepared by the chief financial officer, Ms. E
Johnson.
3. Auditors report.
The modified review report issued on these provisional condensed
group annual financial statements by Chrometco group’s auditors,
Mazars, is available for inspection at the group's registered office
during normal office hours. The review report included an emphasis
of matter paragraph referring to the going concern note in the
provisional financial information. The group has incurred operating
losses for a number of years due to limited trading. The ability of
the group to fund operations in the foreseeable future is largely
dependent on the ability of the directors to arrange for alternative
sources of funding and the realisation of the income from potential
expansion opportunities as more fully described in the note
pertaining to going concern.
These conditions, along with the matters set forth in the notes to
the accompanying provisional financial information, indicate the
existence of a material uncertainty which may cast significant doubt
about the company’s ability to continue as a going concern.
4. Nature of business.
The group is involved in the exploration of mineral resources and
the possible beneficiation thereof. There has been no change to the
group’s mineral resources and reserves statement from the statement
presented in the prior year’s integrated annual report.
5. Revenue.
Revenue for the current year primarily comprises sales of chrome
ore. The group had an arrangement in terms of which a third party
extracted chrome ore from the Rooderand Mine, for which the group
was entitled to a variable price depending on grade. Revenue for the
year increased to R3.9 million (2015: R0.7 million). This amount
includes an amount of R2.5 million being a recovery of rehabilitation
expenditure from International Ferro Metals Limited (“IFM”).
6. Other income.
The group received approximately R0.3 million from the final
liquidation of DCM Chrome Proprietary Limited (“DCM”).
7. Loss for the year.
Net loss for the year is arrived at after taking the following items
into account:
Legal and professional fees of R1.2 million (2015: R2.3 million).
Legal fees relate to transaction costs in respect of the chrome
mining arrangements, BEE restructuring, as well as other ongoing
activities relating the group’s section 11 and section 102
applications with the Department of Mineral Resources (“DMR”).
Environmental rehabilitation cost of R0.97 million (2015: R0.45
million) relating to the increase in its environmental
rehabilitation provision.
8. Taxation.
A taxation charge of R18.0 million was recognized for the year
(2015: R4.6 million). No deferred tax asset is being recognized.
9. Intangible assets.
New order
mining Geological
right information
Rooderand Rooderand Total
R'000 R'000 R'000
Useful life 30 years 29 years
Carrying amount 1 March
2014 172,078 18,547 190,625
Cost 186,030 19,500 205,530
Accumulated
depreciation 13,952 953 14,905
Additions - - -
Amortisation 6,201 672 6,873
Disposals - - -
Carrying amount 1 March
2015 165,877 17,875 183,752
Cost 186,030 19,500 205,530
Accumulated
depreciation 20,153 1,625 21,778
Additions 103,875 - 103,875
Amortisation 7,200 672 7,872
Disposals - - -
Carrying amount 29
February 2016 262,552 17,203 279,755
Cost 289,905 19,500 309,405
Accumulated
depreciation 27,353 2,297 29,650
Refer note 15 for further information.
10. Environmental rehabilitation investment.
During the year, the group contributed approximately R1.5 million
to an environmental rehabilitation investment fund (managed by
Guardrisk Insurance Company Limited).
2016 2015
R’000 R'000
Balance at beginning of the year 1,579 478
Cash contributions to fund 1,483 1,474
Net investment management fees (55) (373)
Balance at the end of the year 3,007 1,579
11. Environmental rehabilitation provision.
During the year under review the group recognised a provision for
decommission costs and environmental rehabilitation relating to
surface mining activities at the Rooderand Chrome Mine.
2016 2015
R’000 R'000
Balance at beginning of the year 2,902 -
Decommissioning cost capitalized
to property, plant and equipment (180) 2,298
Increase in rehabilitation provision
for the period 969 447
Interest unwind on rehabilitation
provision 341 157
Balance at the end of the year 4,032 2,902
12. Net asset value per share.
2016 2015
Net asset value per share
attributable to equity holders (cents) 75.66 62.81
Closing number of shares ('000) 274,929 204,929
13. Reconciliation between loss and headline loss per share.
2016 2015
(Loss)/earnings attributable to equity
holders (24,579) (16,812)
Adjustments:
Profit on disposal of plant - -
Headline (loss)/profit attributable
to equity holders (24,579) (16,812)
Headline (loss)/profit per share (cents) (10.77) (8.20)
Diluted headline (loss)/profit
per share (cents) (10.77) (6.11)
Weighted average number of
shares (`000) 228,262 204,929
Potential ordinary shares
with dilutive effect - 70,000
Diluted weighted average number
of shares 228,262 274,929
14. Segment Information.
Segment information is not disclosed as the group is not yet
operational.
15. General review of operations.
In the third quarter of the 2013 financial year, Chrometco entered
into an agreement with Realm Resources Ltd and Nkwe Platinum SA
(Pty) Ltd to acquire geological data, drill cores and the platinum
group-metals (“PGM”) prospecting rights on the Remainder Portion of
Rooderand. The last and final condition to this transaction was
Section 102 approval by the DMR to grant the inclusion of the PGM
and Base Metals mining rights on the Remainder Portion of Rooderand
to the group’s existing mining right for chrome on that tenement.
This was successfully completed in the third quarter of the 2016
financial year, and in terms of the agreement, Chrometco issued a
further 70 million shares to Realm Resources Ltd and Nkwe Platinum
SA (Pty) Ltd, in equal quantities. Conclusion of this transaction
resulted in the addition of 4.5 million ounces of PGMs to the group's
mineral resource portfolio, which has been independently valued at
R103.9m.
16. Going Concern.
The group incurred operating losses for a few years due to prevailing
poor market conditions, which led to limited opportunities for
mining without increased risk. The ability of the Company to fund
operations in the foreseeable future is largely dependent on the
ability of the company to attract alternative sources of funding,
such as a new injection of cash, or to acquire cash generating
assets, while continuing to look for opportunities to extract cash
from the current assets.
17. Prospects.
The group currently has a chrome mine in the North West province of
the Republic of South Africa and has been focusing on the
consolidation of the PGM resources on its Rooderand chrome property
while simultaneously extracting value from its chrome resource. The
group is also interested in the exploration and beneficiation of
mineral related opportunities.
18. Changes to the board.
Mr. TW Scott resigned as financial director of the group on 30 May
2015. Mr. M Scott was appointed as financial director with effect
from 1 July 2015, and he resigned on 1 December 2015. Mr. R
McConnachie resigned as alternate director on 21 January 2016.
Ms. EM Johnson has been appointed as chief financial officer and
will fulfil the duties of the financial director as an interim
arrangement, as agreed with the JSE.
19. Dividends
No dividend has been declared for the period (2015: R nil).
Signed on behalf of the Board of Directors.
JG Scott PJ Cilliers
Chairman Managing Director
Johannesburg
31 May 2016
Directors:
JG Scott+ (Chairman), PJ Cilliers (MD), R Rossiter*, E Bramley*,
IWS Collair+,
* non-executive
+ independent non-executive
CORPORATE INFORMATION
Designated Advisor:
PSG Capital
Company Secretary:
The Green Board Company Secretaries
Registered Office
71 Van Beek Avenue
Glenanda
2091
Postal address
PO Box 758
Mondeor
2110
Auditors
Mazars
Date: 31/05/2016 05:25:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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