| Tue 26 Oct 2010, 14:00 | | KIR - Kairos Industrial Holdings Limited - Unaudited consolidated interim |
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KIR
KIR
KIR - Kairos Industrial Holdings Limited - Unaudited consolidated interim
results for the six months ended 31 August 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")
UNAUDITED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2010
OVERVIEW OF RESULTS
The results for the period under review continued to be adversely affected as a
result of the cancellation of the Medupi Contract and all costs relating to this
project have now been written off. Rationalisation and restructuring of the
Group is in its final stages and as a result revenue for the period decreased by
23,5% to R90,7 million with an increase to the operating loss of R29,6 million,
to R32,8 million. The major contributors to the loss for the period resulted
from R17,3 million work in progress and finished goods destined for Medupi,
being written off. The Group has suffered a major setback resulting from the
Medupi project and although the immediate trading future remains tough,
management are confident that the current restructuring and rationalisation of
the Group will contribute positively to the Group`s financial performance in the
near future.
However, one of the major challenges and constraints in achieving the current
business plan and meeting the financial objectives in the short to medium terms
is the securing of further working capital. The Group is in the process of
resolving this position with both its primary bankers and the Industrial
Development Corporation and solutions are being sought on various financing
structures. The Group`s order book remains sound, but the business will remain
under pressure until such time as the necessary working capital is secured.
The Group`s brick businesses which service niche markets in Gauteng and
Mpumalanga have managed to track budget in the period under review, but are
still being affected by the lack of confidence in the economy by the smaller
home builders and developers. The market for alterations and additions to
existing housing has traditionally been a good market for these businesses, but
the strict lending criteria of the banks continue to restrict this market.
Positive spin-off from the Kusile Power Station is expected for all forms of
development in the area once construction is in full swing. There has been no
mining by the coal operations in the last six months, but the prospecting
company continued to progress both its coal mining permits and mining right.
The effects of the above translate into a net loss after taxation of R37,5
million, which represents a loss per share of 16,69 cents, an increase of 13,19
cents from the previous loss of 3,50 cents.
Headline loss per share of 16,69 cents was up 13,18 cents on the previous loss
per share of 3,51 cents.
The financial information on which this interim statement is based has not been
reviewed or reported on by the company`s auditors.
BASIS OF PREPARATION
The unaudited consolidated interim financial statements have been prepared in
accordance with International Financial Reporting Standards ("IFRS"), and in
terms of IAS 34 - Interim Financial Reporting, the AC 500 standards as issued by
the Accounting Practice Board 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
2010.
EMPHASIS OF MATTER
The audit opinion for 28 February 2010 included an emphasis of matter where the
Group`s auditors drew attention to the statement of financial position which
indicated that the Group`s liabilities exceeded its assets, indicating the
existence of a material uncertainty which may cast doubt on the company`s
ability to continue as a going concern.
The statement of financial position for the current period under review
indicates that the Group`s liabilities exceed its assets by R56,5 million.
DIVIDEND
The Board has resolved that no interim dividend will be declared.
PROSPECTS
The Group has now refocused and strategies are in place to support a credible
business plan for the remainder of the financial year and the years to follow.
The order book for the Group remains encouraging but is reliant on the receipt
of additional working capital. As mentioned earlier, management is in advanced
stages of negotiation with its financiers and remain confident that a funding
mechanism will be secured to address the liquidity needs.
Once sufficient working capital is availed, Brokrew Industrial will be well
positioned to service its overdue order book and to comfortably maintain the
order inflow on its current order book. The company is well entrenched in the
mining industry and the increase in commodity prices is expected to reflect
positively on the overall financial performance of the business.
It is expected that market conditions in the brick manufacturing industry will
remain flat for the balance of the year. Gearing in this division has decreased
significantly and it is anticipated that there will be a small contribution to
the Group`s earnings line for the last six months of the year. However, until
such time as confidence returns to the domestic construction sector, performance
in this business will remain relatively flat.
Kairos Coal & Exploration continues to pursue its mining permits on two of its
reserves, the receipt thereof is expected imminently. Mining agreements are in
place for the immediate exploitation of one of these reserves and management are
confident that mining on the second reserve will also commence during the second
half of this financial year. A mining right for the third reserve is in
progress, however receipt thereof is only expected in 2013.
The Group has engaged in a new evaluation of its township development. However
these developments are of a longer term nature and the corresponding revenue
flows are not anticipated in the short term. The Board is cogniscant of the
risks associated with developments of this nature and will therefore proceed
cautiously, reviewing every alternative to ensure both revenues and profits are
maximised in the future.
For and on behalf of the board.
WL van Deventer WA Lombard
Chief Executive Financial Director
26 October 2010
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(R`000) Unaudited Unaudited Audited
for the for the for the
6 months 6 months 12 months
ended ended ended
31 Aug 31 Aug 28 February
2010 2009 2010
Revenue 90 651 118 422 238 843
Cost of sales (95 598) (105 191) (266 168)
Gross profit (4 947) 13 231 (27 325)
Other income 532 1 393 1 767
Operating costs (28 394) (17 870) (61 980)
Operating loss before accounting (32 809) (3 246) (87 538)
for the following:
Investment revenue 37 2 235 3 785
Fair value adjustments - - 5 203
Finance cost (4 691) (6 703) (12 100)
Loss before taxation (37 463) (7 714) (90 650)
Taxation (10) (140) 1 346
- Normal (10) (140) 33
- Deferred - - 1 313
Net loss for the period (37 473) (7 854) (89 304)
Other comprehensive income
Gains on property revaluation - - 7 426
Taxation related to components of - - (1 873)
other comprehensive income
Other comprehensive income for - - 5 553
the year net of taxation
Total comprehensive (loss)/income (37 473) (7 854) (83 751)
Reconciliation of headline loss
Loss after taxation (37 473) (7 854) (89 304)
Profit on disposal of fixed - (19) 921
assets/ reversal provision
Fair value adjustment - - (5 203)
Goodwill impairment - - 2 309
Headline loss (37 473) (7 873) (91 277)
Number of shares on which loss 224 554 224 554 224 554
per share is based (000`s)
Headline loss per share (cents) (16,69) (3,51) (40,65)
Loss per ordinary share (cents) (16,69) (3,50) (39,77)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(R`000) Unaudited Unaudited Audited
as at as at as at
31 Aug 31 Aug 28 February
2010 2009 2010
ASSETS
Non-current assets 93 468 83 922 96 479
Investment Properties 28 913 23 000 28 913
Property, plant and equipment 62 055 56 113 65 066
Patents and intangibles 2 500 2 500 2 500
Goodwill - 2 309 -
Current assets 38 797 100 779 65 784
Inventories 10 532 60 509 33 860
Other financial assets 87 385 -
Trade and other receivables 25 027 32 370 27 249
Mining and exploration assets 331 1 066 331
Taxation overpaid 54 72 84
Cash and cash equivalents 2 766 6 377 4 260
TOTAL ASSETS 132 265 184 701 162 263
EQUITY AND LIABILITIES
Stated capital and reserves (56 492) 56 878 (19 019)
Non-current liabilities 69 491 21 004 44 216
Other financial liabilities 59 066 7 655 32 731
Instalment sale agreements 4 265 7 367 5 325
Deferred taxation 6 160 5 982 6 160
Current liabilities 119 266 106 819 137 066
Other financial liabilities 30 237 11 832 32 438
Current taxation payable 10 214 -
Instalment sale agreements 8 184 4 048 3 902
Trade and other payables 66 571 68 998 86 050
Provisions 5 670 6 368 6 248
Bank overdraft 8 594 15 359 8 428
TOTAL EQUITY AND LIABILITIES 132 265 184 701 162 263
Weighted average shares (000`s)
Shares in issue (000`s) 224 554 224 554 224 554
Net asset value per share (cents) (25,16) 25,33 (8,47)
Net tangible asset value per (26,27) 23,19 (9,58)
share (cents)
ABRIDGED GROUP CASH FLOW STATEMENT
(R`000) Unaudited Unaudited Audited
for the for the for the
6 months 6 months 12 months
ended ended ended
31 Aug 31 Aug 28 Feb
2010 2009 2010
Cash inflows/(outflows) from (28 983) (3 272) (22 668)
operating activities
Cash outflows from investment (120) (1 674) (6 393)
activities
Cash inflows from financing 27 443 2 102 31 031
activities
Net movement in cash and cash (1 660) (2 844) 1 970
equivalents
(Overdraft)/Cash and cash
equivalents at beginning
of the period (4 168) (6 138) (6 138)
(Overdraft)/Cash and cash (5 828) (8 982) (4 168)
equivalents at end of the period
STATEMENT OF CHANGES IN EQUITY
(R`000) Stated Revalua- Convert- Total Accumu- Total
capital tion ible reserves lated equity
reserve instru- loss
ments
reserve
Balance as at 31 200 741 12 935 460 13 395 (157 258) 56 878
August 2009
Total - 5 553 - 5 553 (81 450) (75 897)
comprehensive
income (loss) for
the period
Realisation of - (1 280) - (1 280) 1 280 -
revaluation of
assets sold
Realisation of - (1 418) - (1 418) 1 418 -
revaluation
reserve through
use
Balance as at 28 200 741 15 790 460 16 250 (236 010) (19 019)
February 2010
Loss for the - - - - (37 473) (37 473)
period
Balance at 31 200 741 15 790 460 16 250 (273 483) (56 492)
August 2010
SEGMENTAL ANALYSIS
(R`000) Brick Mining Property & Group
Enter-prises supplies investment
divisions
Six months to August
2010
Turnover 15 039 75 612 - 90 651
Net (loss)/profit (298) (31 220) (1 291) (32 809)
before interest and tax
Interest received - 31 6 37
Finance cost (419) (4 190) (82) (4 691)
Income tax - - (10) (10)
(expense)/credit
Net (loss)/profit for (717) (35 379) (1 377) (37 473)
the period
Segment assets 49 280 48 489 31 996 129 765
Intangible assets - 2 500 - 2 500
Total assets 49 280 50 989 31 996 132 265
Total liabilities 11 377 169 255 8 125 188 757
Depreciation and 1 464 1 412 71 2 947
amortisation
Capital expenditure 96 160 26 282
(R`000) Brick Mining Property & Group
Enter-prises supplies investment
divisions
Six months to August
2009
Turnover 16 038 96 638 5 746 118 422
Net (loss)/profit (2 307) (2 634) 1 695 (3 246)
before interest and tax
Interest received 17 2 170 48 2 235
Finance cost (705) (5 834) (164) (6 703)
Income tax - - (140) (140)
(expense)/credit
Net (loss)/profit for (2 995) (6 298) 1 439 (7 854)
the period
Segment assets 48 185 114 132 17 575 179 892
Intangible assets - 4 809 - 4 809
Total assets 48 185 118 941 17 575 184 701
Total liabilities 18 991 99 323 9 511 127 825
Depreciation and 1 832 1 273 38 3 143
amortisation
Capital expenditure 94 1 580 - 1 674
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
Date: 26/10/2010 14:00:02 Produced by the JSE SENS Department.
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