| Thu 1 Jul 2010, 7:09 | | KIR - Kairos Industrial - Reviewed Provisional Annual Financial Statements for |
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KIR
KIR
KIR - Kairos Industrial - Reviewed Provisional Annual Financial Statements for
the Year Ended 28 February 2010
KAIROS INDUSTRIAL HOLDINGS LIMITED
Incorporated in the Republic of South Africa
Registration number 1987/002927/06
Share code: KIR ISIN: ZAE000011284
("Kairos" or "the Group")
Registered office
1111 Church Street, Hatfield 0083, Pretoria
PO Box 11328, Hatfield 0028, Pretoria Tel: +27 (0) 12 342 1980 Fax: +27 (0) 12
342 1976 E-mail: info@kairos.co.za
Sponsor
Bridge Capital Advisors (Pty) Limited, 27 Fricker Road, Illovo Boulevard, Illovo
2196
Share transfer secretaries
Computershare Investor Services (Pty) Limited, 70 Marshall Street, Johannesburg
2001
Directors
VD Mazibuko (non-executive chairman), WL van Deventer (chief executive), JJ de W
Mulder, WA Lombard
Visit us at www.kairos.co.za
REVIEWED PROVISIONAL ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY
2010
OVERVIEW OF RESULTS
Shareholders were advised in the trading update and further cautionary
announcement on 17 June 2010 that the Group`s subsidiary, Brokrew Industrial
(Pty) Limited, ("Brokrew") had cancelled the Medupi Contract with its primary
contractor. As a result of this cancellation, the primary contractor had
withheld payments due on amounts invoiced for product delivered to site and
further invoicing for claims arising out of agreed changes to contractual
specifications. Consequently the Board has deemed it prudent to provide in full
for these outstanding invoiced amounts, which has had a R69 million adverse
effect on the Statement of Comprehensive income. It is against this background
that the preliminary, reviewed but unaudited results are presented.
Group consolidated revenue was R278 million was 12,92% up on that of the
previous year. The Group loss after taxation of R87 million was up R85,5
million on the previous year, primarily as a result of the provision for bad
debt of R69 million, noted above and partly due to the effects of the ongoing
recession. Financing costs for the year increased by 13,93% on the previous year
to R12,1 million due to increased funding required to service the Medupi
Contract.
Brick enterprises
The Group`s brick businesses which service niche markets in Gauteng and
Mpumalanga continue to make losses arising from poor sales. The effects of the
recession remain very evident and little or no new development is taking place
in the regions serviced by these businesses. However, both brick businesses are
geographically well positioned to take advantage of the expected developments
that will commence on the commissioning of the Kusile Power Station. This
project is currently behind schedule which continues to frustrate the
anticipated development.
Mining supplies
As discussed above the major contributor to the loss arose out of this division
of the Group with the provision of R69 million for doubtful debts. The core
business in this division comprises the mining ventilation and ducting division
which continues to perform well and ahead of budget. However as previously
reported, the operational contribution from this division has been eroded by the
losses arising from the special projects division, in which the Medupi Contract
was housed. Significant management time has been spent on refocusing this
business post the Medupi Contract cancellation and strategies are in place to
secure the division`s dominant position in the mining arena with full support
from all its major suppliers as well as its financiers.
Property and coal divisions
Kairos Coal & Exploration completed its coal mining venture on the first small
reserve successfully and the profitability of this project although small was
well in line with management`s expectations.
The effects of the above translate into a net loss after taxation of R87,1
million, which represents a loss per share of 38,8 cents, an increase of 38,7
cents from the previous loss of 0,07 cents.
Headline loss per share of 40,1 cents was up 35,0 cents on the previous loss per
share of 5,08 cents.
Auditors report
The external auditors, Moore Stephens FRRS Inc., have reviewed the Group`s
condensed provisional annual financial statements contained herein for the year
ended 28 February 2010. Copies of their unqualified review report are available
on request at the Company`s registered office.
Emphasis of matter
Without qualifying our opinion above, we draw your attention to the statement of
financial position, which indicates that the Group`s liabilities exceed the
assets with R22,61 million for the year ended 28 February 2010.
These conditions indicate the existence of a material uncertainty which may cast
significant doubt about the company`s ability to continue as a going concern.
Report on other legal and regulatory requirements
In accordance with our responsibilities in terms of sections 44(2) and 44(3) of
the Auditing Profession Act, we report that we have identified an unlawful act
or omission committed by persons responsible for the management of Kairos
Industrial Holdings and its Subsidiaries which constitute a reportable
irregularity in terms of the Auditing Profession Act, and have reported such
matter to the Independent Regulatory Board for Auditors.
The reportable irregularity pertains to Value Added Tax that was under declared
to the South African Revenue Services in respect of an invoice raised on the
Medupi Contract, because management had provided for the invoice in full as a
bad debt.
BASIS OF PREPARATION
The unaudited reviewed consolidated preliminary financial statements have been
prepared in accordance with International Financial Reporting Standards
("IFRS"), and in terms of IAS 34, and in compliance with the Listing
Requirements of the JSE Limited and the South African Companies Act (1973).
These accounting policies used in the preparation of these interim results are
consistent with those used in the annual financial statements for the year ended
28 February 2009.
DIVIDEND
The Board has resolved that no interim dividend will be declared.
PROSPECTS
Since the last quarter of calendar 2009, there have been numerous signs that the
worst of the economic recession is over. There are signs that the manufacturing
sector, which has in the past year been severely affected, is starting to post
improved results. Easing inflationary pressures and the declining interest rates
have also provided consumers with some relief as debt servicing costs have
resulted in improved levels of disposable income for households.
Considering the above, conditions should improve for the brick manufacturing
businesses for
the ensuing year. Recent increased activity on the Kusile Power Station should
provide certain development opportunities in which these business units will
participate.
The cancellation of the Medupi Contract will provide alternative opportunities
for Brokrew, allowing this division to capitalise on its long standing
relationships with the mining houses and the manufacture of specialised projects
for the mines. Increased activities in both the platinum and gold industries
augur well for the standards business and their current order book reflects
positively in regard to their performance in the new financial year.
The coal exploration division has completed prospecting on two further reserves
and is awaiting the relevant mining permits, whilst a third reserve is currently
being prospected.
The feasibility studies have been completed on the Group`s land earmarked for
township development. in Witbank. This development will comprise 600
residential, 13 light industrial and 1 business stand. Application for
proclamation and subdivision of the land is now being considered.
The outlook for residential housing in this area would appear to be good with
the commencement of the Kusilie Power Station and the Group will further benefit
through the supply of bricks to
this development.
CONTINGENCIES AND SUBSEQUENT EVENTS
Arising from the cancellation of the Medupi Contract, the primary contractor has
attempted to call up the performance bond and advance payment guarantee totaling
R50 million. The company, together with its insurers, is defending this action
vigorously.
For and on behalf of the board
WL van Deventer
Chief Executive
WA Lombard
Financial Director 01 July 2010
REVIEWED STATEMENT OF COMPREHENSIVE INCOME
(R`000) Reviewed Audited
for the for the
year ended year ended
28 Feb 2010 28 Feb 2009
Revenue 278 413 246 555
Cost of sales (263 213) (228 456)
Gross profit 15 200 18 099
Other income and gains 2 039 686
Operating costs (104 602) (27 528)
Operating loss (87 363) (8 743)
Investment revenue 8 857 3 908
Fair value adjustments 4 000 11 300
Finance cost (12 082) (10 600)
Loss before taxation (86 588) (4 135)
Taxation (544) 2 552
- Normal 16 (262)
- Deferred (560) 2 814
Loss for the year (87 132) (1 583)
Other comprehensive income
Gains and losses on property revaluation - 8 356
Taxation related to components of other
comprehensive income - (3 086)
Total comprehensive loss (87 132) 3 687
Determination of headline loss
Loss after taxation (87 132) (1 583)
Loss/Profit on disposal of fixed assets 1 169 (95)
Fair value adjustment (4 000) (11 300)
Goodwill impairment - 1 565
Headline loss (89 963) (11 413)
Number of shares on which loss per share is 224 554 224 554
based (000`s)
Headline loss per share (cents) (40,06) (5,08)
Loss per ordinary share (cents) (38,80) (0,70)
REVIEWED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(R`000) Reviewed Audited
for the for the
year ended year ended
28 Feb 2010 28 Feb 2009
ASSETS
Non-current assets 88 709 85 391
Investment properties 27 000 23 000
Property, plant and equipment 56 900 57 582
Goodwill 2 309 2 309
Intangible assets 2 500 2 500
Mineral and exploration assets - -
Current assets 72 944 104 755
Inventories 38 223 47 853
Other financial assets 17 91
Current tax receivable 69 -
Trade and other receivables 29 375 51 547
Mineral and exploration assets - 2 666
Cash and cash equivalents 4 260 2 598
Total assets 160 653 190 146
EQUITY AND LIABILITIES
Stated capital 200 741 200 741
Reserves 12 264 13 395
Accumulated loss (235 615) (149 404)
(Deficit)/equity (22 610) 64 732
Non-current liabilities 44 208 18 644
Other financial liabilities 32 723 5 476
Instalment sale agreements 5 325 7 568
Deferred taxation 6 160 5 600
Current liabilities 139 055 106 770
Loan from shareholder - 745
Other financial liabilities 32 451 24 392
Current taxation payable - 138
Instalment sale agreements 3 902 3 924
Trade and other payables 88 020 64 262
Provisions 6 254 4 573
Bank overdraft 8 428 8 736
Total equity and liabilities 160 653 190 146
Shares in issue (000`s) 224 554 224 554
Net asset value per share (cents) (10,07) 28,83
Net tangible asset value per share (cents) (12,21) 26,69
REVIEWED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
(R`000) Reviewed Audited
for the for the
year ended year ended
28 Feb 2010 28 Feb 2009
Cash outflows from operating activities (26 054) (1 642)
Cash outflows from investment activities (3 012) (13 906)
Cash inflows from financing activities 31 036 4 908
Net movement in cash and cash equivalents 1 970 (10 640)
(Overdraft)/cash and cash equivalents at (6 138) 4 502
beginning of the year
Overdraft and cash equivalents at end of (4 168) (6 138)
the year
REVIEWED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Revalua- Con- Total Accumu- Total
capital tion vertible reserves lated equity
R`000 reserve instru- R`000 Loss R`000
R`000 ments R`000
reserve
R`000
Group 200 741 5 615 460 6 075 (148 965) 57 851
Balance at
1 March 2008
Changes in
equity
Total - 8 464 - 8 464 (1 583) 6 881
comprehensive
loss for the
year
Realisation - (242) - (242) 242 -
of
revaluation
of assets
sold
Realisation - (902) - (902) 902 -
of
revaluation
reserve
through use
Total changes - 7 320 - 7 320 (439) 6 891
Balance at
1 March 2009 200 741 12 935 460 13 395 (149 404) 64 732
Changes in
equity
Total - - - - (87 132) (87 132)
comprehensive
loss for the
year
Realisation - (210) - (210) - (210)
of
revaluation
of assets
sold
Realisation - (921) - (921) 921 -
of
revaluation
reserve
through use
Total changes - (1 131) - (1 131) (86 211) (87 342)
Balance at
28 February 200 741 11 804 460 12 264 (235 615) (22 610)
2010
REVIEWED CONSOLIDATED SEGMENTAL REPORT
(R`000) Brick Mining Property & Group
enterprises supplies coal
divisions
2010
Turnover 29 907 240 343 8 163 278 413
Net
(loss)/profit
before interest (1 946) (85 196) (221) (87 363)
and tax
Fair value - - 4 000 4 000
adjustment
Interest 41 8 698 118 8 857
received
Finance cost (1 792) (10 007) (283) (12 082)
Income tax 46 - (590) (544)
(expense)/credit
Net (3 651) (86 505) 3 024 (87 132)
(loss)/profit
for the period
Segment assets 29 209 78 474 48 161 155 844
Intangible 4 809 4 809
assets
Total assets 29 209 83 283 48 161 160 653
Total 14 097 160 269 8 897 183 263
liabilities
Depreciation and 3 447 2 550 75 6 072
amortisation
Capital 94 6 678 149 6 921
expenditure
2009
Turnover 35 187 210 216 1 152 246 555
Net
(loss)/profit
before interest (9 693) 1 038 (88) (8 743)
and tax
Fair value - - 11 300 11 300
adjustment
Interest 236 2 690 982 3 908
received
Finance cost (1 579) (7 794) (1 227) (10 600)
Income tax 2 444 1 856 (1 748) 2 552
(expense)/credit
Net (8 592) (2 210) 9 219 (1 583)
(loss)/profit
for the period
Segment assets 38 357 120 291 26 689 185 337
Intangible - 4 809 - 4 809
assets
Total assets 46 611 111 785 31 750 190 146
Total 15 235 99 505 10 674 125 414
liabilities
Depreciation and 4 048 1 761 81 5 890
amortisation
Capital 5 637 8 276 179 14 092
expenditure
Date: 01/07/2010 07:09:38 Produced by the JSE SENS Department.
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