Wrap Text
Provisional reviewed condensed results for the year ended 29 February 2016
MIDDLE EAST DIAMOND RESOURCES LIMITED
(formerly Sable Metals and Minerals Limited)
(Incorporated in the Republic of South Africa)
(Registration number: 2001/006539/06)
JSE share code: MED ISIN: ZAE000211876
(“MEDR” or “the company” or “the group”)
Provisional reviewed condensed results
for the year ended 29 February 2016
Group highlights
* BLA subscribed for 200 000 000 ordinary shares in the company for
4 cents per share for an aggregate amount of R8 000 000.
* Sable Metals and Minerals Limited changed its name to Middle East
Diamond Resources Limited following the subscription of shares.
* MEDR divested all of its liabilities in the company and Sable
Platinum Holdings Proprietary Limited to Sable Platinum Mining Limited.
* The group was successfully restructured including the buyback of the
shares held in Sable Platinum Mining Limited (SPM) by Sable Platinum
Holdings Proprietary Limited effectively divesting SPM from the group.
* MEDR is investigating the acquisition of various producing
diamond assets.
Corporate profile
Sable Metals and Minerals Limited changed its name to Middle East Diamond
Resources Limited (MEDR) following the conclusion of the transaction
whereby Broken Land Adventures (BLA) or its nominee, subscribed for
200 000 000 ordinary shares in the company for a consideration of 4 cents
per share for an aggregate amount of R8 000 000, subject to certain
condition precedents which were all met and approved at the general
meeting of shareholders that was held on 25 January 2016.
MEDR is to make acquisitions in the diamond mining sector and various
projects are being explored. A heads of agreement has been entered into
between Sable Platinum Holdings Proprietary Limited (SPH) (a MEDR
subsidiary) and Blain Capital Solutions Proprietary Limited (Blain
Capital) to acquire the Kamfersdam dumps and equipment on the farm
Roode Pan No. 70, Kimberley. This agreement is subject to the condition
that SPH is satisfied with its due diligence investigation. This
condition is to be fulfilled by 31 July 2016.
In terms of a scheme of arrangement between MEDR, SPH and Sable
Platinum Mining Ltd (SPM), MEDR and SPH transferred all their
liabilities to SPM and the shares of SPM were unbundled to the
shareholders of MEDR in certificated form. MEDR shareholders,
excluding BLA, therefore received the same number of certificated
shares in the unlisted entity, SPM. The disposal of a loan claim
by SPH to James Allan, a related party, for R100 000, and the offer
of a claw-back on this loan to the resulting SPM shareholders,
is part of this scheme.
Statement of financial position
as at 29 February 2016
29 February 28 February
2016 2015
Restated
Assets
Non-current assets 1 603 295 2 126 026
Property, plant and equipment - 238 993
Intangible assets 1 200 000 1 200 000
Investment in subsidiaries - -
Goodwill - -
Other financial assets 403 295 687 033
Current assets 613 831 284 879
Trade and other receivables 212 915 251 681
Cash and cash equivalents 400 916 33 198
Total assets 2 217 126 2 410 905
Equity and liabilities
Equity attributable to
equity holders (869 312) (11 348 997)
Stated capital 99 468 434 87 889 857
Share based payment reserve - 1 778 618
Accumulated loss (100 311 789) (100 928 894)
Non-controlling interest (25 957) (88 578)
Non-current liabilities - 11 348 562
Other financial liabilities - 6 545 980
Deferred finance charge - 3 704 944
Loan from director - 1 097 638
Current liabilities 3 086 438 2 411 340
Trade and other payables 3 086 438 1 444 251
Other financial liabilities - 967 089
Total equity and liabilities 2 217 126 2 410 905
Issued shares 435 126 517 227 911 808
Net asset value per share (cents) (0.19) (4.94)
Tangible net asset value per
share (cents) (0.47) (5.47)
Statement of comprehensive income
for the year ended 29 February 2016
29 February 28 February
2016 2015
Restated
Continuing operations
Revenue - -
Gross profit - -
Other income 7 523 397 2 092 182
Operating expenses (7 143 403) (4 889 592)
Operating profit/(loss) 379 993 (2 797 410)
Finance income - -
Finance costs (94 414) (114 123)
Profit/(loss) before taxation 285 580 (2 911 533)
Taxation - -
Loss from continuing operations 285 580 (2 911 533)
Profit/(loss) from discontinuing
operations 331 525 (12 425 744)
Profit/(loss) for the period 617 105 (15 337 277)
Profit/(loss) for the year
attributable to
Owners of the parent 617 105 (15 336 554)
Non-controlling interest - (723)
Profit/(loss) for the year 617 105 (15 337 277)
Headline loss reconciliation
Net profit/(loss) for the year 617 105 (15 336 554)
Less: profit on sale of
assets/liabilities (12 459 339) -
Less: Non controlling interest - (723)
Headline loss (11 842 235) (15 337 277)
Weighted average number of shares 247 727 422 206 406 866
Fully diluted WA number of shares 247 727 422 206 406 866
Earnings/(loss) per share (cents) 0.25 (7.43)
Diluted earnings/(loss) per
share (cents) 0.25 (7.43)
Headline loss per share (4.78) (7.43)
Diluted headline loss per share (4.78) (7.43)
Statement of changes in equity
Total attributable
to equity of the parent
Share
based
Stated payment Accumulated
capital reserve loss
Group
Balance at 1 March 2014 85 747 232 - (85 592 340)
Comprehensive loss for the year - - (15 336 554)
Issue of shares 12 142 625 - -
Share incentive scheme - 1 778 618 -
Balance at 1 March 2015 97 889 857 1 778 618 (100 928 894)
Familia loan restatement (10 000 000) - -
Balance at 1 March 2015
(restated) 87 889 857 1 778 618 (100 928 894)
Comprehensive income for the
year - - 617 105
Issue of shares 8 000 000 - -
Transactions with non
controlling interest - - -
Subscription costs capitalised (245 218) - -
IFRS 2 share incentive scheme
charge - 2 045 178 -
Transfer from share based
payment reserve 3 823 796 (3 823 796) -
Balance at 29 February 2016 99 468 434 - (100 311 789)
Total attributable
to equity of
the parent
Non
control-
ling Total
Total interest equity
Group
Balance at 1 March 2014 154 892 (87 855) 67 037
Comprehensive loss for the year (15 336 554) (723) (15 337 277)
Issue of shares 12 142 625 - 12 142 625
Share incentive scheme 1 778 618 - 1 778 618
Balance at 1 March 2015 (1 260 419) (88 578) (1 348 997)
Familia loan restatement (10 000 000) - (10 000 000)
Balance at 1 March 2015
(restated) (11 260 419) (88 578) (11 348 997)
Comprehensive income for the
year 617 105 - 617 105
Issue of shares 8 000 000 - 8 000 000
Transactions with non
controlling interest - 62 621 62 621
Subscription costs capitalised (245 218) - (245 218)
IFRS 2 share incentive scheme
charge 2 045 178 - 2 045 178
Transfer from share based
payment reserve - - -
Balance at 29 February 2016 (843 355) (25 957) (869 312)
Total attributable
to equity of the parent
Share
based
Stated payment Accumulated
capital reserve loss
Company
Balance at 1 March 2014 303 883 938 - (160 081 928)
Comprehensive loss for the year - - (95 370 023)
Issue of shares 12 142 625 - -
Share incentive scheme - 1 778 618 -
Balance at 1 March 2015 316 026 563 1 778 618 (255 451 951)
Familia loan restatement (10 000 000) - -
Balance at 1 March 2015
(restated) 306 026 563 1 778 618 (255 451 951)
Comprehensive loss for the
year - - (63 153 190)
Issue of shares 8 000 000 - -
Subscription costs capitalised (245 218) - -
IFRS 2 share incentive scheme
charge - 2 045 178 -
Transfer from share based
payment reserve 3 823 796 (3 823 796) -
Balance at 29 February 2016 317 605 140 - (318 605 141)
Total attributable
to equity of
the parent
Non
control-
ling Total
Total interest equity
Company
Balance at 1 March 2014 143 802 010 - 143 802 010
Comprehensive loss for the year (95 370 023) - (95 370 023)
Issue of shares 12 142 625 - 12 142 625
Share incentive scheme 1 778 618 - 1 778 618
Balance at 1 March 2015 62 353 230 - 62 353 230
Familia loan restatement (10 000 000) - (10 000 000)
Balance at 1 March 2015
(restated) 52 353 230 - 52 353 230
Comprehensive loss for the
year 63 153 190 - (63 153 190)
Issue of shares 8 000 000 - 8 000 000
Subscription costs capitalised (245 218) - (245 218)
IFRS 2 share incentive scheme
charge 2 045 178 - 2 045 178
Transfer from share based
payment reserve - - -
Balance at 29 February 2016 (1 000 000) - (1 000 000)
Statement of cash flows
29 February 28 February
2016 2015
Restated
Cash flows from operating activities
Cash used in operations (8 920 359) (12 619 551)
Finance costs (94 414) (114 123)
Net cash from operating activities (9 014 773) (12 733 674)
Cash flows from investing activities
Sale of plant and equipment 68 082 149 122
Proceeds from sale of subsidiary 5 -
Net cash disposed of in subsidiary (687 786) -
Proceeds from sale of disposed
subsidiary loan account 100 000 -
Increase in financial assets - (123 527)
Net cash from investing activities (519 699) 25 595
Cash flows from financing activities
Proceeds from shares issued 7 754 782 12 142 625
Payment for cession of liabilities (5 000 000) -
Proceeds from financial liabilities 7 397 518 -
Loan (repaid)/advanced from
related parties (55 000) 695 000
Loan repaid to director (195 111) (2 362)
Net cash from investing activities 9 902 189 12 835 263
Total cash movement for the year 367 717 127 184
Cash at the beginning of the year 33 198 (93 986)
Total cash at the end of year 400 915 33 198
Operations, markets and financial performance
Restatement of the results for the year ended 28 February 2015
The JSE advised the company that they had reviewed the 2015 integrated annual
financial statements (AFS) as part of an ongoing proactive monitoring review
process and disagreed with the board’s judgmental decision on the classification
of the Familia Asset Managers Proprietary Limited (Familia) subscription for
shares as equity. The opinion of the JSE was that this was not compliant with
IAS 32.25 and should be classified as a loan.
Management agreed to include this re-statement as per IAS 8 in the interim
results for the 6 months ended 31 August 2015 and the reviewed provisional
results for the year ended 29 February 2016. As a result of this the present
value of the liability of R10 million at June 2017 was calculated at R6 295 056
as of 28 February 2015.
Before the liability was ceded to SPM in terms of the scheme of arrangement
approved by shareholders on 25 January 2016, these amounts had been reported
as non-current liabilities in the restated AFS for February 2015 and the interim
results for August 2015.
Share capital at 28 February 2015 had been re-stated in order to account for
the R10 million received.
Restatement of the 2015 AFS had the following changes to the 2015 AFS
and the interim results for August 2015 and the comparatives for the
29 February 2016 full year results:
* Statement of financial position
– Share capital was reduced from R97 889 857 to R87 889 857;
– The present value of the Familia loan at 28 February 2015, R6 295 056
was reported as a non-current liability included in the reported
R6 545 980;
– The difference of R3 704 940 was classified as a deferred finance charge,
a liability for accounting purposes, which will be decreased with the
change in present value over time.
* Statement of comprehensive income
– There was no change to the 2015 statement of comprehensive income;
– The difference in the present value of the Familia loan at February
2015 up to the date of cession was taken to the deferred finance charge
on the statement of financial position; and
– Any residual in the deferred finance charge at the time of the cession
of the Familia loan to SPM was released to the statement of
comprehensive income and form part of the profit/loss on sale/cession of
liabilities to SPM as per the scheme of arrangement.
* Statement of changes in equity
– Equity attributable to shareholders declined by the R10 000 000 reduction
in the value of share capital.
* Statement of cash flows
– There was no change to the statement of cash flows.
Financial performance for the year ended 29 February 2016
As envisaged in the circular and approved by the shareholders on
25 January 2016, the group has achieved its objectives and has disposed of
various liabilities to SPM. The liabilities owing on 29 February 2016
are those arising from unpaid liabilities from the scheme of arrangement
and the accrual of expenditure incurred on its behalf by SPM.
Share capital has increased from the subscription of shares by BLA (net of
capitalised transaction costs). In addition, the full value of the share
based payment reserve resulting from the early vesting of the share options
(as approved at the meeting of 25 January 2016) has been transferred to share
capital amounting to R3 823 796.
The group has been restructured. SPM has repurchased its share capital from SPH
and from 25 January 2016 and no longer forms part of the group. On consolidation
this has created a significant profit on disposal of the subsidiary of
R85 190 232 for the group. This profit is included in profit from discontinued
operations in the statement of comprehensive income.
This has been negated by the loss on disposal of the loan claim in SPM by SPH
to James Allan, a related party, for R100 000 as part of the scheme. On
consolidation, the loss amounts to R79 629 014 which is included in profit
from discontinued operations in the statement of comprehensive income.
Both the profit on disposal of SPM subsidiary and the loss on the sale
of the SPM loan account effects the calculation of the headline loss and
the net asset value which has been adjusted accordingly.
The results of SPM as a subsidiary up to the date of the buyback has been
disclosed separately as losses from discontinuing operations, including the
profit on disposal and sale of the loan claim noted previously, in the
statement of comprehensive income.
Segment reporting
The group currently only operates in one segment relating to the
expenditure on platinum mineral rights retained by the group.
Basis of preparation
The group’s financial results for the year ended 29 February 2016
constitute a summary (prepared in accordance with the JSE Listings
Requirements, the South African Companies Act, 2008 as amended (the
Companies Act), and the recognition and measurement requirements of
International Financial Reporting Standards (IFRS) and the presentation
and disclosure requirements of IAS 34 and the SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee or its successor
of the group’s audited financial statements.
The accounting policies applied by the group in these summarised
consolidated financial statements are consistent with those applied
in the previous year. The financial results were prepared under
supervision of Eshaan Singh (BCompt).
This provisional report is extracted from the reviewed information, but is
not itself audited. The directors take full responsibility for the
preparation of the provisional report and for ensuring that the
financial information has been correctly extracted from the underlying
audited financial statements. A copy of the reviewed opinion is available
for inspection at the company’s registered office.
Looking forward
It has been a difficult year for the mining industry in general and for the
company. The company’s difficulty in raising capital is a significant and
substantial risk factor. The company has been renamed Middle East Diamond
Resources Limited and has support from Middle Eastern investors who have
undertaken to fund ongoing working capital and acquisitions in the
diamond sector.
Events after the reporting period
There were no events after the reporting period.
Going concern
The group and company continued to incur losses in the current year. The
annual financial statements will be prepared on the basis of accounting
policies applicable to a going concern. This basis presumes that funds will
be available to finance future operations and that the realisation of assets
and settlement of liabilities, contingent obligations and commitments, will
occur in the ordinary course of business.
MEDR is an exploration company not yet in a cash generating position
which is obliged to fund exploration through equity investments. The group is
currently exploring options available to it to enable it to raise further
capital in order to continue its exploration programme and to cover all
\general and administration costs. The group's future prospects and stability
rely on its ability to raise further capital for the ensuing year.
At 29 February 2016 the group had negative equity attributable to equity
holders of R843 355 respectively. The company incurred a net loss of
R63 153 190 and the group a profit of R617 105 for the year ended and,
as that date, the group's total liabilities, fairly valued, exceeded
its total assets by R869 312.
The group has a cash burn of approximately R450 000 per month and has been
successful in reducing this from about R1 million per month last year at
the time of the previous report.
In mitigation of the growing going concern, the group has done the following:
* implementation of the approved scheme of arrangement in terms of
Section 115 of the Companies Act, where the group has divested itself from
all historical liabilities;
* the specific issue of the 200,000,000 shares for cash;
* A heads of agreement has been entered into between SPH and Blain Capital
to acquire the Kamfersdam dumps and equipment on the farm Roode Pan No. 70,
Kimberley. A due diligence is currently in progress.
The group is currently in discussions with the Middle Eastern investors to inject
further cash into the group to cover general and administration costs. In the
interim agreement has been reached that this funding will be provided as a loan.
Further issue of shares during the next reporting period is also under review.
These measures are taken in anticipation of exploration projects being evaluated.
In the event that no further capital is raised, funding is not received and the
Blain Capital exploration project does not materialise, the group will cease
to be a going concern.
Changes to the board
During the reporting period, Sheikh Abdulla Khalfan Humaid Nasser
and Said Tinawi were appointed as non-executive directors effective
29 February 2016. Sheikh Abdulla Khalfan Humaid Nasser was appointed
as non-executive chairman and Mike Rogers, the then independent chairman,
was appointed as lead independent director.
Botha Schabort, René Hochreiter and Willie Thabe resigned as non-executive
directors effective, 31 August 2015, 7 March 2016 and 16 July 2016 respectively.
Eshaan Singh was appointed as part-time financial director on 31 August 2015.
The board welcomes Sheikh Abdulla Khalfan Humaid Nasser, Said Tinawi and
Eshaan Singh to the board and thanks Botha Schabort, Willie Thabe and
René Hochreiter for their time with the company and wishes them well
with their future endeavours.
Independent audit review
The condensed consolidated financial statements are prepared in
accordance with the requirements of the JSE Limited Listings Requirements
for provisional reports and the requirements of the Companies Act of
South Africa.
The Listings Requirements require provisional reports to be prepared in accordance
with the framework concepts and the measurement and recognition requirements of
International Financial Reporting Standards (IFRS) and the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by the Financial Reporting Standards Council and to
also, as a minimum, contain the information required by IAS 34 Interim
Financial Reporting.
The accounting policies applied in the preparation of the condensed
consolidated financial statements are in terms of IFRS and are consistent
with those applied in the previous consolidated annual financial statements.
For and on behalf of the board
James Allan Eshaan Singh
Chief executive officer Part-time financial director
Sandton
28 June 2016
Directors: Abdulla Khalfan Humaid Nasser (Chairman)*^+~,
Mike Rogers (Lead independent)*#, James Allan (Chief executive officer),
Eshaan Singh (Part-time financial director), David Levithan*, Mpho Mokgatlhe*#,
Charles Mostert*#, Said Tinawi*^~
* non-executive
# independent
^ Syrian
+ UAE National
~ not yet registered at the Companies and Intellectual Property
Commission (CIPC)
Company secretary: JUBA Statutory Services Proprietary Limited
Registered office: Block A, Kingsley Office Park, 85 Protea Road,
Chistlehurston, Sandton, 2196
Transfer secretaries: Computershare Investor Services Proprietary
Limited
Date: 28/06/2016 05:44:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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