| Thu 30 Sep 2010, 9:30 | | KIR - Kairos Industrial Holdings Limited - Abridged annual financial statements |
|
KIR
KIR
KIR - Kairos Industrial Holdings Limited - Abridged 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")
ABRIDGED ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2010
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
for the for the
year year
ended ended
28 Feb 28 Feb
(R`000) 2010 2009
Revenue 238 843 246 555
Cost of sales (266 168) (228 456)
Gross profit (27 325) 18 099
Other income and gains 1 767 686
Operating costs (61 980) (27 528)
Operating loss before accounting for the (87 538) (8 743)
following:
Investment revenue 3 785 3 908
Fair value adjustments 5 203 11 300
Finance cost (12 100) (10 600)
Loss before taxation (90 650) (4 135)
Taxation 1 346 2 552
- Normal 33 (262)
- Deferred 1 313 2 814
Net loss attributable to ordinary (89 304) (1 583)
shareholders
Gains on property revaluation 7 426 11 550
Taxation related to components of other
comprehensive income (1 873) (3 086)
(83 751) 6 881
Determination of headline loss
Loss after taxation (89 304) (1 583)
Profit on disposal of fixed assets 921 (95)
Fair value adjustment (5 203) (11 300)
Goodwill impairment 2 309 1 565
Headline loss (91 277) (11 413)
Number of shares on which loss per share is
based (000`s) 224 554 224 554
Basic loss per share (cents) (39.77) (0.70)
Headline loss per share (cents) (40.65) (5.08)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited Audited
as at as at
28 Feb 28 Feb
(R`000) 2010 2009
ASSETS
Non-current assets 96 479 85 391
Investment properties 28 913 23 000
Property plant and equipment 65 066 57 582
Goodwill - 2 309
Intangible assets 2 500 2 500
Mineral and exploration assets - -
Current assets 65 784 104 755
Inventories 33 860 47 853
Other financial assets - 91
Taxation 84
Trade and other receivables 27 249 51 547
Mineral and exploration assets 331 2 666
Cash and cash equivalents 4 260 2 598
TOTAL ASSETS 162 263 190 146
EQUITY AND LIABILITIES
Stated capital 200 741 200 741
Reserves 16 250 13 395
Accumulated loss (236 010) (149 404)
Total equity (19 019) 64 732
Non-current liabilities 44 216 18 644
Other financial liabilities 32 731 5 476
Instalment sale agreements 5 325 7 568
Deferred taxation 6 160 5 600
Current liabilities 137 066 106 770
Loan from shareholder - 745
Other financial liabilities 32 438 24 392
Current taxation payable 138
Instalment sale agreements 3 902 3 924
Trade and other payables 86 050 64 262
Provisions 6 248 4 573
Bank overdraft 8 428 8 736
TOTAL EQUITY AND LIABILITIES 162 263 190 146
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Audited Audited
for the for the
year year
ended ended
28 Feb 28 Feb
(R`000) 2010 2009
Cash (outflows)/inflows from operating (22 668) (1 642)
activities
Cash outflows from investment activities (6 393) (13 906)
Cash inflows from financing activities 31 031 4 908
Net movement in cash and cash equivalents 1 970 (10 640)
(Overdraft)/cash and cash equivalents
at beginning of the year (6 138) 4 502
(Overdraft)/cash and cash equivalents
at end of the year (4 168) (6 138)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Convertible
Stated Revaluation instruments
(R`000) capital reserve reserve
Balance at March 1,2008 200 741 5 615 460
Changes in equity
Total comprehensive income
(loss)
for the year - 8 464 -
Realisation of revaluation of - (242) -
assets sold
Realisation of revaluation
reserve
through use - (902) -
Total changes - 7 320 -
Balance at 01 200 741 12 935 460
March 2009
Changes in equity
Total comprehensive income
(loss)
for the year - 5 553 -
Realisation of revaluation of - (1 280) -
assets sold
Realisation of revaluation
reserve
through use - (1 418) -
Balance at February 28, 200 741 15 790 460
2010
Accumu-
Total lated Total
(R`000) reserves loss equity
Balance at March 1,2008 6 075 (148 965) 57 851
Changes in equity
Total comprehensive -
income (loss)
for the year 8 464 (1 583) 6 881
Realisation of (242) 242 -
revaluation of assets
sold
Realisation of
revaluation reserve
through use (902) 902 -
Total changes 7 320 (439) 6 881
Balance at 01 March 2009 13 395 (149 404) 64 732
Changes in equity
Total comprehensive
income (loss)
for the year 5 553 (89 304) (83 751)
Realisation of (1 280) 1 280 -
revaluation of assets
sold
Realisation of - -
revaluation reserve
through use (1 418) 1 418 -
Balance at February 28, 16 250 (236 070) (19 019)
2010
CONSOLIDATED SEGMENTAL REPORT
Property &
Brick Mining investment
(R`000) enterprises supplies divisions Group
2010
Revenue 29 907 208 936 - 238 843
Net (loss)/profit (2 120) (77 405) (8 013) (87 538)
before interest and
tax
Fair value 1 203 - 4 000 5 203
adjustment
Interest received 139 3 617 29 3 785
Finance cost (2 005) (9 798) (297) (12 100)
Income tax 1 919 - (573) 1 346
(expense)/credit
Net (loss)/profit (864) (83 586) (4 854) (89 304)
for the period
Segment assets 37 073 77 733 44 957 159 763
Intangible assets - 2 500 - 2 500
Total assets 37 073 80 233 44 957 162 263
Total liabilities 14 120 158 396 8 766 181 282
Depreciation and 2 324 2 550 76 4 950
amortisation
Capital expenditure 94 6 720 96 6 910
Property &
Brick Mining investment
(R`000) enterprises supplies divisions Group
2009
Revenue 35 187 210 216 1 152 246 555
Net (loss)/profit (9 693) 1 038 (88) (8 743)
before interest and
tax
Fair value adjustment - - 11 300 11 300
Interest received 236 2 690 982 3 908
Finance cost (1 579) (7 794) (1 227) (10
600)
Income tax 2 444 1 856 (1 748) 2 552
(expense)/credit
Net (loss)/profit (8 592) (2 210) 9 219 (1 583)
for the period
Segment assets 38 357 120 291 26 689 185 337
Intangible assets - 4 809 - 4 809
Total assets 46 611 111 785 31 750 190 146
Total liabilities 15 235 99 505 10 674 125 414
Depreciation and 4 048 1 761 81 5 890
amortisation
Capital expenditure 5 637 8 276 179 14 092
REVIEW OF ACTIVITIES
The company is an industrial holding company focusing on the provision of
supplies to the mining and construction industries.
Net loss for the group was R89,304 million (2009: R1,583 million loss), after
taxation.
The current year loss is primarily as a result of a provision for bad debt of
R24 million relating to the cancellation of the Medupi Contract in the group`s
subsidiary Brokrew Industrial (Proprietary) Limited and the reversal of a claim
against the debtor of R45 million. The directors considered these to be the
prudent measures until such time as the matter has been settled by arbitration.
GOING CONCERN
We draw attention to the fact that at 28 February 2010, the group had
accumulated losses of R236,010 million (2009: R149,404 million) and that the
group`s total liabilities exceeded its total assets by R19,019 million.
The annual financial statements have been 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.
Management of Brokrew Industrial (Proprietary) Limited took action to ensure the
continued existence of the company by enlisting the services of its designated
advisors, Bridge Capital to look to means of protecting the company and its
creditors. A creditors` restructuring proposal was formulated where an offer is
being made to the creditors to convert their debt to redeemable preference
shares with a coupon rate of 6% payable from 2013 through to 2016. At this stage
and almost without exception, most creditors are happy to accept this offer. The
majority of creditors have signed the agreement, which negates any fear of
smaller creditors filing for liquidation.
Simultaneous to this management have met with the two largest secured creditors
being the Industrial Development Corporation of South Africa Limited and Absa
Bank Limited and both parties have approved of the creditor`s proposal and
offered their support to the company.
During February 2010, when the contract with Kentz (Proprietary) Limited was
cancelled, the company amended the budget for the current financial year and
forecasts to 2016 to appraise the viability of the business. The company took a
prudent view to run standards product through to August 2010 and then to start
phasing in its old Specials business.
At present negotiations are in hand for a further revolving credit loan with the
Industrial Development Corporation of South Africa Limited of R20 million. This
will allow the company to step up its production in the Standards Division and
to erode the backlog of overdue orders which is in the region of R12 million. If
a risk period could be identified it would be the periods currently through to
December 2010. Thereafter management are confident that they will be able to
achieve very sizeable orders for the Specials Division which will bolster
profitability and cash flow.
Other factors include that Kairos Coal and Exploration (Proprietary) Limited is
exploiting three open cast coal reserves:
Eenzaamheid - Prospecting, drilling and the geological reports have been
completed and the company is now awaiting the mining permit which is anticipated
in September 2010.
Blesboklaagte - Prospecting, drilling and the geological reports have been
completed and the company is now awaiting the mining permit which is anticipated
in November 2010.
Uitspan Basin - Prospecting and drilling have taken place and the geological
reports have been completed. Application for a mining right has been lodged,
which if successful will only be received in 2013.
Management of Witbank Brickworks (1961) (Proprietary) Limited`s plans include an
agreement between Kairos Coal and Exploration (Proprietary) Limited and a third
party for the exploitation of 176 218 tons of coal on its property commencing
October 2010, as well as a significant reduction in production and overhead
expenses to reduce operating losses. A thermo char plant has been installed by a
third party on the property, subsequent to year end, which produces additional
heat to the brick production plant and will therefore assist in significantly
reducing energy costs for the company.
EVENTS AFTER THE REPORTING PERIOD
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.
DIVIDENDS
No dividends have been declared for the current financial year. The board will
review this policy as soon as the company returns to profitability.
AUDITORS
Moore Stephens FRRS Incorporated, Chartered Accountants (SA) ("Moore Stephens")
were appointed as auditors to the holding company and its subsidiaries and will
continue in office in accordance with section 270(2) of the Companies Act. The
audit services of SAB&T Chartered Accountants were terminated on 1 June 2010.
EXTRACTS FROM THE REPORT OF THE INDEPENDENT AUDITORS
Moore Stephens audited the Group`s condensed annual financial statements and
their audit report is available for inspection at the Company`s registered
office. The salient extracts of the audit report are set out below:
"EMPHASIS OF MATTER"
Moore Stephens report that the group has an accumulated loss of R236,010 million
(2009: R149,404 million) for the year ended 28 February 2010 and, as at that
date, the group`s total liabilities exceeded its total assets by R19,019
million.
These conditions indicate the existence of a material uncertainty which may cast
significant doubt in the group`s ability to continue as a going concern.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
Moore Stephens report that in accordance with their responsibilities in terms of
section 44(2) and 44(3) of the Auditing Profession Act, they have identified
certain unlawful acts or omissions committed by persons responsible for
management which constitute reportable irregularities in terms of the Auditing
Profession Act, and have reported such matters to the Independent Regulatory
Board of Auditors.
THE REPORTABLE IRREGULARITIES PERTAIN TO:
Value added taxation that was under declared in Brokrew Industrial (Proprietary)
Limited 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. Subsequent to the reporting of this irregularity, the bad debt
provision was reduced by a reversal of R45 million, as management remedied the
reportable irregularity by passing a credit note against the said invoice. As a
result, the reportable irregularity was rectified in entirety.
The group does not have an audit committee that consists of a minimum of two
independent non-executive directors, as required by section 269A(3) of the
Companies Act of South Africa, 1973."
BASIS OF PREPARATION
The audited consolidated annual 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). The accounting policies used
in the preparation of the annual results are consistent with those used in the
annual financial statements for the year ended 28 February 2009.
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the 22nd annual general meeting of members of Kairos
will be held at the Holiday Inn Garden Court, Pretorius Street, Hatfield,
Pretoria on Friday 22 October 2010 at 11h00.
WL van Deventer
Chief executive
WA Lombard
Group financial director
30 September 2010
Registered office
1111 Church Street, Hatfield 0083, Pretoria
P O Box 11328, Hatfield 0028, Pretoria
Tel: +27 (0) 12 342 1980 Fax: +27 (0) 12 3421976
E-mail: info@kairos.co.za
Sponsor
Bridge Capital Advisors (Pty) Limited
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
WWW.KAIROS.CO.ZA
Date: 30/09/2010 09:30:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
