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MINE RESTORATION INVESTMENTS LIMITED - Provisional Audited Summarised Consolidated Annual Financial Results For The Year Ended 28 February 2020

Release Date: 12/05/2021 07:10
Code(s): MRI     PDF:  
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Provisional Audited Summarised Consolidated Annual Financial Results For The Year Ended 28 February 2020

Mine Restoration Investments Limited
(Incorporated in the Republic of South Africa)
(Registration number 1987/004821/06)
Share Code: MRI
ISIN Code: ZAE000164562
("MRI", “the Company" or “the group”)


Provisional Audited Summarised Consolidated Annual Financial Results
For The Year Ended 28 February 2020


The Board of Directors of MRI (”the Board”) is pleased to announce
the audited summarised consolidated annual financial results for the
year ended 28 February 2020 with restatement of prior year results
as detailed in note 8 (“Results”).

SUMMARISED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

                                Audited 12-  Audited 12-
                                  months to    months to
                                   February     February
                                       2020         2019
                                              (Restated)
                                      R’000        R’000
Revenue                                   -            -
Cost of Sales                             -            -
Other income                            660          110
Operating expenses                  (2 900)      (6 536)
Impairments                               -            -
Operating loss                      (2 240)      (6 426)
Investment revenue                        -            -
Finance cost                        (2 932)      (1 756)
Loss before taxation                (5 172)      (8 182)
Taxation                                  -            -
Loss for the period                 (5 172)      (8 182)
Other comprehensive income                -            -
Total comprehensive loss            (5 172)      (8 182)
Loss attributable to:
Owners of the parent                (5 173)      (8 216)
Non-controlling interests                 1           34
Total comprehensive loss
attributable to:
Equity holders                      (5 173)      (8 216)
Non-controlling interests                 1           34

Basic loss per share                 (0.60)      (0.95)

Diluted loss per share               (0.60)      (0.95)

                                    863 053      863 053
Weighted average number of
shares in issue (‘000)
Diluted    weighted    average
number of shares in issue
(‘000)                               863 053       863 053


SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

                                    Audited 28    Audited 28
                                      February      February
                                          2020          2019
                                                  (Restated)
                                        R’000          R’000
Assets
Current Assets
Trade and other receivables               136              -
Cash and cash equivalents                   1            107
                                          137            107
Total Assets                              137            107

Equity and Liabilities
Equity
Amount attributable to     equity    (21 270)      (16 097)
holders
Non-Controlling Interest                 (31)          (32)
                                     (21 301)      (16 129)

Liabilities
Current Liabilities
Other financial liabilities            16 727        14 000
Trade and other payables                4 698         2 236
Bank overdraft                             13             -
                                       21 438        16 236
Total Equity and Liabilities              137           107

SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

                      Share   Capital   Equity due   Accumulated          Amount          Non-     Total
                    capital   Reserve    to change          loss    attributable   Controlling    equity
                                                in                     to Equity      Interest
                                         ownership                       Holders
                     R’000      R’000        R’000         R’000           R’000        R’000      R’000
Balance   at   01
March 2018           85 020     5 000      (2 459)       (95 442)        (7 881)          (66)   (7 947)
Total
comprehensive
loss    for   the
period                   -          -                    (8 216)         (8 216)          (34)   (8 182)

Prior
period errors                                                (50)           (50)             -      (50)
Balance   at  01
March 2019           85 020     5 000      (2 459)     (103 658)        (16 097)          (32)   (16 129)

Total
comprehensive
loss    for   the
period                   -          -            -       (5 173)         (5 173)             1   (5 172)
Release on Non-
Controlling
Interest       on
share purchase           -          -            -              -              -             -          -
Issue of shares          -          -            -              -              -             -          -
Balance   at   28
February 2020        85 020     5 000      (2 459)     (108 831)        (21 270)          (31)   (21 301)
     
SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS

                                           Audited       Audited
                                         12-months     12-months
                                                to            to
                                          February      February
                                              2020          2019
                                                      (Restated)
                                             R’000         R’000
     Cash flows from operating
     activities                               (23)       (2 396)
     Cash flows from investing
     activities                               (96)       (2 838)
     Cash flows from financing
     activities                                  -         5 290

     Total cash movement for the
     period                                  (119)            56
     Cash and cash equivalents at the
     beginning of the period                   107            51
     Cash and cash equivalents at end
     of the period                            (12)           107


     COMMENTARY

1.   BASIS OF PREPARATION

     These Results are extracted from audited consolidated annual
     financial statements but no separate audit opinion is provided for
     these summarised consolidated financial results. The directors take
     full responsibility for the preparation of this report and confirm
     that the financial information has been correctly extracted from the
     underlying financial statements.

     The Results have been prepared in accordance with the measurement
     and recognition requirements of International Financial Reporting
     Standards (IFRS) and its interpretations adopted by the Accounting
     Standards Board (IASB) in issue and effective for the Group at
     28 February 2020 and the SAICA financial report guides as issued by
     the Accounting Practices Committee and Financial Reporting
     Pronouncements as issued by the Financial Reporting Standards
     Council. These results are presented in accordance with IAS 34 –
     Interim Financial Reporting and comply with the Listings
     Requirements of the Johannesburg Stock Exchange Limited (“JSE”) and
     the Company’s Act of South Africa 2008. These Results do not
     include all the information required for full annual statements and
     should be read in conjunction with the consolidated annual
     financial statements as at and for the year ended 28 February 2020.
     Notwithstanding the insolvency of the Company and the fact that it
     has limited activity, the directors are satisfied that the group
     will still be able to settle its obligations and realise its assets
     as measured in terms of IFRS as applicable to going concern.

     The audited consolidated financial statements have been prepared
     using accounting policies that comply with IFRS and which are
     consistent with those applied in the preparation of the audited
     financial statements for the year ended 28 February 2019, except for
     the adoption of IFRS 16 Leases.

     These Results were prepared under the supervision of MJ Miller the
     Chairman of the Company.

     Shareholders are advised that the information contained in        the
     announcement is also available at:
     https://senspdf.jse.co.za/documents/2021/jse/isse/mri/ye20.pdf


2.   FINANCIAL RESULTS AND FUTURE PROSPECTS

     MRI operated as a cash shell throughout the current financial year.
     The Board focused on reducing all corporate costs whilst pursuing
     the acquisition of Langpan Mining Co Proprietary Limited
     (“Langpan”). The Board has satisfied themselves that the group is
     in a position to continue as a going concern and that it has access
     to sufficient borrowing facilities to meet its foreseeable cash
     requirements.

     On 10 October 2019, the group announced on SENS that it had entered
     into a share purchase agreement with the shareholders of Langpan,
     in terms of which the Vendors would dispose of their entire
     shareholding (100%) in Langpan for an aggregate purchase
     consideration of R550 million, to be settled through the issue by
     MRI of 137 500 000 000 shares to the Vendors (“Langpan
     Transaction”).

     The advent of the novel coronavirus created significant uncertainty
     in global capital and commodity markets. In order to protect the
     group and the Langpan Transaction, the transaction stakeholders
     approved a restructure of the underlying transaction to mitigate
     any uncertainty. The Board reviewed the revised structure and found
     the Langpan Transaction to have the same commercial merits as
     before. This prompted the Board to sign a refreshed purchase
     agreement, on essentially the same terms and conditions as before,
     on 13 August 2020.

     The Board is confident that the acquisition of Langpan will
     recapitalise the Company and allow for the Company’s successful
     reinstatement on the Alternative Exchange of the JSE.

3.   HEADLINE LOSS PER SHARE (“HLPS”)

     Reconciliation of losses to headline losses attributable to equity
     holders of the parent:



                                        Audited 12-  Audited 12-
                                          months to    months to
                                           February     February
                                                      (Restated)
                                               2020         2019
     Loss per share (cents)                  (0.60)       (0.95)
     Diluted loss per share
     (cents)                                 (0.60)       (0.95)
     Headline loss per share
     (cents)                                 (0.60)       (0.95)
     Diluted headline loss per
     share                                   (0.60)       (0.95)

     HLPS Calculation
     (Loss)/profit for the period
     (R’000)                                (5 172)      (8 182)

     Impairment of intangible
     assets and goodwill                          -              -
     Impairment of property, plant
     and equipment                                -              -
     Deferred tax on impairments
     of assets                                    -              -

     Headline loss                          (5 172)      (8 182)

     Weighted average number of
     shares in issue (‘000)                 863 053      863 053
     Actual number of shares in
     issue (‘000)                           863 053      863 053

4.   CHANGES IN SHARE CAPITAL

     Since the last reporting period there have been no changes in issued
     share capital.

5.   EVENTS AFTER THE END OF THE REPORTING PERIOD

Langpan Transaction:

Due to the advent effects of the coronavirus on the global markets,
the Board reviewed the revised structure and found the transaction
to have the same commercial merits as before. This prompted the
Board to sign a refreshed purchase agreement, on essentially the
same terms and conditions as before, on 13 August 2020.

Reportable Irregularity:

On 9 July 2020, the previous auditors BDO South Africa Incorporated
(“BDO”) notified the Board about a possible reportable irregularity
("RI") relating to the "possibility of trading recklessly and the
allegations made against some directors". On 20 August 2020, BDO
notified the Board that an RI had been raised on 7 August 2020 and
that the reported particulars of the irregularity had been reported
to Independent Regulatory Board for Auditors ("IRBA"). The RI
relating to the director's contraventions of the Companies Act 71
of 2008 (the "Companies Act") was found to be consistent with the
reportable irregularity continuing. In order to remedy the RI, the
Board dismissed the implicated directors and appointed new
directors to bolster the Board's governance credentials.

Directorate Changes:

   • On 24 July 2020 Richard Tait and Quinton George resigned as
     directors.
   • On 13 August 2020, the Board appointed Mahlatsi Movundlela and
     Thato Makgolane as independent non-executive directors.
   • On 28 August 2020, Syd Caddy and Chris Roed resigned as
     directors.
   • On 31 October 2020 Ulrich Bester resigned as Financial
     Director.

With effect from 1 November 2020:

   • George Sebulela was appointed as the lead independent
     director.
   • Michael Miller changed his role from Chief Executive Officer
     to non-executive Chairman.
   • Mahlatsi Movundlela had been appointed as Chief Executive
     Officer.
   • Thato Makgolane had been appointed as Financial Director.

  Additionally, Board subcommittees were also reconstituted as
  follows:

    -  Combined Audit and Risk Committee: George Sebulela (Chair),
       Alistair Collins and Michael Miller.
    -  Remuneration and Nomination Committee: Alistair Collins
       (Chair), George Sebulela and Michael Miller.
    -  Social and Ethics Committee Alistair Collins (Chair), George
       Sebulela and Michael Miller.

The Company is in the process of evaluating its board and
committees and following the annual general meeting (“AGM”), will
be looking to include additional independent members to strengthen
the governance structures of the Company.

     Call for Shareholder Meeting:

     On 16 September 2020, the Board received a demand notice from a
     shareholder holding 17.38% of the Company’s issued share capital,
     calling for shareholders meeting in terms of section 61(3) of the
     Companies Act. The purported reason for the shareholder meeting
     was, inter alia, to re-appoint the dismissed directors, to
     terminate the appointments of the entire Board and to prevent the
     terms of the Langpan Transaction being put to the shareholders for
     their consideration in the normal course.

     In order to protect the interests of the group, its shareholders,
     creditors and the Langpan Transaction, the Board entered into a
     commercial settlement agreement with the abovementioned shareholder
     and the dismissed directors. The settlement agreement comprised the
     following material outcomes:

     - The Board had agreed to the insertion of a resolution in terms of
       section 75(7)(b)(i) of the Companies Act to be included notice of
       AGM forming part of the annual report, pertaining to the Langpan
       transaction.

     - The shareholder had agreed to sell its 17.38% shareholding in the
       group to an independent third party.
       On 28 October 2020, the call for the shareholders meeting was
       unconditionally withdrawn.

     Disposal of Dormant Subsidiaries:

     MRI disposed of its entire interest in Western Utilities
     Corporation Proprietary Limited, Octavovox Proprietary Limited and
     Prodiflex Coal Proprietary Limited to an independent third party as
     part of an exercise to clean up its corporate structure. These
     disposals fell below the categorisation thresholds of the JSE
     Listing Requirements and consequently, were not required to be
     announced.

6.   OTHER FINANCIAL LIABILITIES

     In early 2017, an angel investor re-capitalised the Company, through
     a subordinated debt facility with a balance of R9,17 million at 28
     February 2019, in order to settle claims, cover working capital and
     transaction related costs for the Langpan Transaction, providing
     support so as to maintain the Company’s solvency and to ensure that
     the Company is able to continue operating as a going concern. This
     support had been maintained throughout the period under review.

     The remaining increase in other financial liabilities relates to trade
     payables in the ordinary course of business including interest
     charges.

7.   OTHER FINANCIAL ASSETS

     With respect to the Langpan Transaction, as at 28 February 2020 R3,71
     million has been provided on an unsecured short term debt basis to
     the target to cover transactional related expenses.

8.   PRIOR PERIOD RESTATEMENTS

     The financial results contain a prior year adjustment and therefore,
     the comparative balances differ from those previously reported. The
     restatement resulted in a R50,000 increase in the period loss. Details
     of the restatements are as follows:

     Director fees of R297,200 were incorrectly recognised in the prior
     period and were reversed. Further, a correction totaling R344,799 in
     legal fees was applied as the amounts were previously recognized in
     incorrect periods. Lastly, interest income amounting to R100,395 was
     not accounted for in the 2019 financial period and is now included.


                                         2019 – as        2019      Change
                                        Previously    Restated
                                          Reported
                                             R’000       R’000       R’000
     Statement of Financial Position
     Trade and other payables                2 186       2 236        (50)
     Accumulated loss                    (103 608)   (103 658)        (50)

     Statement of Loss and Other
     Comprehensive Income

     Other Operating Expenses              (6 376)     (6 536)       (160)
     Other Income                              (-)         110         110
                                           (6 376)     (6 426)        (50)


9.   AUDITOR’S OPINION

     During the period under review, the Company changed its independent
     auditor from BDO to Ngubane & Co (Jhb) Inc.

     The group’s independent auditor has audited the consolidated
     financial statements for the year ended 28 February 2020, from which
     the Results have been extracted, and have issued an unqualified
     opinion. The auditor’s report contained the following emphasis of
     matter paragraph relating to a material uncertainty related to the
     Company’s going concern:

     “We draw attention to Note 22 of the consolidated financial
     statements, which indicates that the group incurred a net loss of
     R5.2 million during the year ended 29 February 2020 and, as of that
     date, the group’s total liabilities exceeded its total assets by
     R21 million. As stated in Note 22, these events, and conditions,
     indicate that a material uncertainty exists that may cast
     significant doubt on the group’s ability to continue
     as a going concern. Our opinion is not modified in respect of this
     matter.”

     A copy of the auditor's report is available for inspection on the
     Company’s website at www.minerestoration.co.za/sens-
     announcements/and at the Company's registered office.


10. GOING CONCERN

   The financial period under review reflects a challenging financial
   period, with a net loss after tax of R5 million (prior year R8
   million) and the group’s total liabilities exceeding its assets by
   R21 million. The directors are confident that the acquisition of
   Langpan will adequately recapitalise the Company ensuring the
   successful reinstatement of MRI onto the JSE Alternative Exchange.
   The Board remains confident that the Company retains the continued
   support of its major shareholders to provide additional funding
   should other sources not be forthcoming.

   The Board has a reasonable expectation, having regard to the
   current status and the future strategy of the Company, that the
   Company will have 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.

11. DIVIDENDS

   No dividend was declared for the year ended 28 February 2020 (2019:
   Nil).

CORPORATE INFORMATION

Postal address: PO Box 866, Rivonia, 2128

Registered and Physical address: Lower Ground Floor Block F,
Pinmill, 164 Katherine Street, Sandton, Gauteng, 2196

Tel no:+27 (0) 11 036 3100
Fax no:+27 (0) 86 654 6818
Web: www.minerestoration.co.za

Board of Directors: G Sebulela*, A Collins*, MJ Miller#
(Chairman), MM Movundlela (CEO), TA Makgolane (FD).
(#Non-Executive, * Independent Non-Executive)

Company Secretary: Neil Esterhuysen & Associates Inc

Transfer Secretaries: Computershare Investor Services (Pty)
Limited, Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196, PO
Box 61051, Marshalltown 2107

Auditor: Ngubane & Co (JHB) Inc.


Johannesburg
12 May 2021

Designated Adviser
Merchantec Capital

Date: 12-05-2021 07:10:00
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