| Wed 30 May 2012, 7:30 | | IRA - Infrasors Holdings Limited - Reviewed Condensed Consolidated Results for |
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IRA
IRA
IRA - Infrasors Holdings Limited - Reviewed Condensed Consolidated Results for
the year ended 29 February 2012
INFRASORS HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2007/002405/06)
Share code on the JSE: IRA ISIN: ZAE000101507
("Infrasors", "the Company" or "the Group")
REVIEWED CONDENSED CONSOLIDATED RESULTS
FOR THE YEAR ENDED 29 FEBRUARY 2012
Highlights:
Revenue up 14,7%
Gross profit up 16,0%
Sales tonnage up 9,7%
Net asset value up 7,1%
Lost time injury zero hours
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Reviewed Audited
year ended year ended
29 February 28 February
2012 2011
Note R000`s R000`s
Revenue 279 261 243 501
Gross profit 81 333 70 052
Net administration and other (33 779) (28 717)
operating expenses
Depreciation and amortisation (16 986) (13 563)
Net finance costs (6 914) (2 525)
Operating profit before fair value 23 654 25 247
adjustments
Fair value adjustments 4 10 015 13 239
Operating profit before tax 33 669 38 486
Income tax expense (6 325) (6 007)
Profit for the year 27 344 32 479
Loss for the year from discontinued - (3 388)
operations
Total profit for the year 27 344 29 091
Total comprehensive income for the 27 344 29 091
year
Analysis of profit and total
comprehensive income
Attributable to the equity holders 27 554 29 091
of Infrasors at the end of the year
Attributable to non-controlling (210) -
interest at the end of the year
Total profit and comprehensive 27 344 29 091
income for the year
Earnings/(loss) per share (cents) - 15,0 16,1
Basic and diluted
From continuing operations - Basic 15,0 18,0
and diluted
From discontinued operations - - (1,9)
Basic and diluted
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Audited
as at as at
29 February 28 February
2012 2011
Notes R000`s R000`s
Non-current assets 610 229 548 367
Property, plant and equipment 340 825 292 075
Investment property 5 98 089 87 483
Mineral rights 92 464 91 604
Goodwill 3 129 -
Held to maturity investment 49 596 46 949
Investment in associate - 7 000
Other financial assets 16 569 11 433
Deferred tax assets 12 557 11 823
Current assets 83 096 74 279
Inventories 19 962 17 016
Trade and other receivables 46 068 39 251
Cash and cash equivalents 17 066 17 044
Current tax receivable - 968
Total assets 693 325 622 646
Capital and reserves
Total equity 462 287 432 819
Issued share capital 255 620 255 620
Revaluation reserve 6 150 6 150
Retained earnings 198 603 171 049
Non-controlling interest 1 914 -
Non-current liabilities 173 212 138 237
Borrowings 80 623 63 798
Environmental rehabilitation 23 178 10 802
provision
Deferred tax liabilities 69 411 63 637
Current liabilities 57 826 51 590
Borrowings 22 115 22 724
Trade and other payables 35 452 28 842
Current tax payable 259 24
Total equity and liabilities 693 325 622 646
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed Audited
year ended year ended
29 February 28 February
2012 2011
R000`s R000`s
Cash inflows from operating activities 31 208 34 841
Cash outflows from investing activities (38 455) (44 223)
Cash inflows from financing activities 7 269 3 812
Net increase/(decrease) in cash and cash 22 (5 570)
equivalents
Cash and cash equivalents at the beginning 17 044 22 614
of the year
Cash and cash equivalents at the end of the 17 066 17 044
year
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Reviewed Audited
year ended year ended
29 February 28 February
2012 2011
R000`s R000`s
Share capital 918 918
Balance at the beginning of the year 918 865
Share capital movement on treasury shares - 15
sold
Issue of shares - 38
Share premium 254 702 254 702
Balance at the beginning of the year 254 702 246 850
Premium movement on treasury shares sold - 1 745
Issue of shares - 6 107
Revaluation reserve 6 150 6 150
Retained income 198 603 171 049
Balance at the beginning of the year 171 049 141 958
Profit for the year in total comprehensive 27 554 29 091
income
Non-controlling interest 1 914 -
Balance at the beginning of the year - -
Non-controlling interest arising from 2 124 -
business combination
Loss for the year in total comprehensive (210) -
income
Balance at the end of the year 462 287 432 819
CONDENSED SEGMENT RESULTS
Segment information is presented in the condensed reviewed consolidated
financial statements in respect to the Group`s business segments.
The business segment reporting format reflects the Group`s management and
internal reporting structure. The segments are reported to the Group`s
management in terms of the nature of the minerals mined. Segment results include
items directly attributable to a segment as well as those that can be allocated
on a reasonable basis.
Dolomite and
Silica limestone Other Total
R000`s R000`s R000`s R000`s
29 February 2012
Revenue from external 85 661 185 205 3 314 274 180
customers
Inter-segment revenues - - 16 845 16 845
Net profit before tax 12 155 27 711 (6 197) 33 669
Total assets 106 355 260 502 321 468 688 325
28 February 2011
Revenue from external 78 997 160 430 - 239 427
customers
Inter-segment revenues - - 7 241 7 241
Net profit before tax 9 800 25 450 3 236 38 486
Total assets 102 237 232 690 287 719 622 646
MANAGEMENT COMMENTARY
Infrasors
Infrasors is a South African mining resources company, mining, producing and
developing new mines for a spread of minerals for the industrial, mining and
construction sectors.
Its operations are conducted at its Lyttelton Centurion mine, Marble Hall mine,
Delf Sand mine and its Delf Silica Coastal mine in Tongaat. The Group is
currently focused on commissioning its proposed Delf Cullinan and Pienaarspoort
mines to serve the local silica markets.
Financial review
Revenue for the year under review was R279,3 million (2011: R243,5 million), an
increase of 14,7%, resulting from the realisation of additional plant capacity
created in the prior year. The gross profit from operating activities for the
year under review was R81,3 million (2011: R70,1 million), an increase of R11,2
million (16,0%). The operating profit before fair value adjustment for the year
under review was R23,7 million (2011: R25,2 million), a decrease of R1.5 million
(5.9%). Increases in electricity, fuel and payroll costs above inflation
resulted in higher operating expenses. An increase in depreciation occurred due
to the additional plant and equipment commissioned in the prior year to increase
production capacity. The analysis of turnover and operating profit before tax on
a segmented basis is detailed herein. Net finance cost increased to R6,9 million
(2011: R2,5 million) as a result of restructuring long term debt.
Cash generated from operating activities decreased from R34,8 million in 2011 to
R31,2 million as a result of the increase in trade receivables held, due to
increased sales from operations. The cash outflow from investing activities
reduced to R38,5 million (2011: R44,2 million) as a result of capital
expenditure incurred during the year. The balance of the increase in property,
plant and equipment is as a result of the acquisition of Spec Sand`s operation
and the unwinding of the investment in associate company. This reflects an
ongoing investment by the Group in plant infrastructure and mine development.
The net inflow of financing activities of R7,3 million (2011: R3,8 million) was
a result of financing plant and equipment procured and mine development of the
Cullinan project and restructuring of the long term debt.
The investment in associate was unwound during the year as a consequence of
concluding the exploration phase of the Cullinan and Pienaarspoort projects.
Other financial assets increased as a result of investments in endowment polices
held for rehabilitation purposes.
The rehabilitation provision increased as a result of the mine extensions
granted at both Lyttelton Centurion mine and the Delf Sand mine.
Operational review
Silica Dolomite
2012 2011 2012 2011
Tons sold 305 319 275 120 1 222 938 1 089 897
Limestone Total
2012 2011 2012 2011
Tons sold 360 006 356 779 1 888 263 1 721 796
Total volumes sold for the Group increased by 9,7%. Sales were however
influenced by the steel industry strike in July and August 2011 and furnace
shutdowns due to power constraints resulting in volumes sold into the
metallurgical sector being constant for the year. The Group was able to increase
its volumes sold into the construction sector despite tight trading conditions.
The sale of dolomite from the Lyttelton Centurion mine increased by 12,2% mainly
due to demand for its construction aggregate. The Marble Hall mine sales
remained constant. The decrease in metallurgical sales was taken up by an
increase in sales of construction aggregate at both its mines. The Group`s
milling capacity is being increased to meet expected demand.
Sales of alluvial silica increased by 11,0%. The sale of its core product to the
foundry industry remained steady and a healthy uptake was experienced at its
operation in KwaZulu-Natal in the second half of F2012 and is expected to
continue in the next financial year.
Regulatory approval was granted for the Lyttelton Centurion and Delf Sand mines,
to expand the mine footprints. Solid progress has been made in advancing the
regulatory approvals for the Delf Cullinan mine. Construction is anticipated to
commence in the second half of F2013. A review of the remaining regulatory
approvals is currently being undertaken for the Pienaarspoort Silica Quartz
deposit.
There have been no material changes in the Group`s mineral reserves during this
year.
No lost time injuries were recorded for the financial year in question.
Prospects
The Group is expected to continue to play a strategic role in the local
construction and metallurgical markets and should gain benefits from planned
infrastructure spend by both private and government sectors.
With the introduction of the alluvial silicia mine at Delf Cullinan, the Group
has positioned itself to play a bigger role in the Southern African silica
market, coupled with its initiative to enter the silica quartz market. With the
granting of the new order mining right at Lyttelton Centurion, further expansion
of the production capacity can now be pursued.
The Group`s principal assets Lyttelton and Delf Sand are both positioned to
benefit from increased production tonnages pursuant to:
(i) further expansion of the production capacity at Lyttelton Centurion mine;
(ii) increased production demand of the Lyttelton Marble Hall mine;
(iii) establishment of the alluvial silica mine at Delf Cullinan and access to
its reserves; and
(iv) increased market share in the Delf Silica Coastal mine in KwaZulu-Natal.
NOTES TO THE CONDENSED CONSOLIDATED REVIEWED FINANCIAL STATEMENTS
1. Basis of preparation
Infrasors is a company domiciled in South Africa. The reviewed condensed
consolidated financial statements of Infrasors for the year ended 29 February
2012 comprise the Company and its subsidiaries (together referred to as the
"Group").
The reviewed condensed consolidated financial statements were authorised for
issue by the directors on 24 May 2012 for publication on 30 May 2012. The
reviewed condensed consolidated financial statements for the year ended 29
February 2012 have been prepared by the Financial Director, Mr M Potgieter
CA(SA).
The reviewed condensed consolidated financial statements for the year have been
prepared in accordance with the framework concepts and contain the information
required by International Accounting Standard 34, Interim Financial Reporting,
the AC 500 standards issued by the Accounting Practices Board, and in compliance
with the Listings Requirements of the JSE Limited. The review of the reviewed
condensed consolidated financial statements has not been performed in terms of
the requirements of the South African Companies Act, 71 of 2008, as amended. The
reviewed condensed consolidated financial statements are prepared on the
historical cost basis, with the exception of certain financial instruments and
investment property which are measured at fair value. The reviewed condensed
consolidated financial statements should be read in conjunction with the audited
financial statements for the year ended 28 February 2011.
The accounting policies are in terms of International Financial Reporting
Standards ("IFRS") and the method of measurement and recognition applied in
preparation of the reviewed condensed consolidated results is consistent with
those applied in the Group`s audited annual financial statement for the previous
year ended 28 February 2011.
2. Review of results
Mazars, the Group`s auditors, have reviewed the condensed consolidated financial
statements. Their unqualified review opinion is available for inspection at the
Company`s registered office. Their review was conducted in accordance with the
International Standard on Review Engagements 2410 - Review of Interim Financial
Information Performed by the Independent Auditor of the Entity.
3. Delf Silica Coastal business combination
During the year, a new subsidiary company, Delf Silica Coastal (Pty) Limited,
was formed and acquired certain assets and assumed certain liabilities of a
silica mine and processing operation from Spec Sand CC. This operation was
merged with certain assets held by Delf Sand, known as the Delf Tongaat
processing facility. The resulting business will allow the Group to better serve
the clients in the KwaZulu-Natal area. The merged entity has been in operation
since 1 October 2011. Goodwill arose on acquisition in order to have access to
additional mining reserves required to expand the footprint in the KwaZulu-Natal
area.
Purchase price allocation summary Spec Sand
Acquisition date 1 October 2011
Voting equity of the Group 66,7%
At acquisition fair value R000`s
Property, plant and equipment (5 393)
Mineral rights (750)
Borrowings 2 659
Net asset value (3 484)
Less: Total consideration 3 613
Loan consideration payable 1 489
Fair value of shares issued by subsidiary 2 124
Goodwill on acquisition 129
Acquisition costs incurred included in net 45
administration and other operating expenses
Revenue since acquisition 1 October 2011 7 050
Net loss since acquisition 1 October 2011 (630)
It is impracticable to determine the revenue or the net profit for the combined
entity from the beginning of the financial reporting period, as the acquired
operations were integrated into existing operations from its acquisition date.
4. Fair value adjustments
Reviewed Audited
as at as at
29 February 28 February
2012 2011
Note R000`s R000`s
Loans receivable fair value - (17 324)
adjustment
Investment property fair value 5 10 015 30 563
adjustment
Total fair value adjustments 10 015 13 239
5. Investment property
It is the intention of the Group to dispose of land held as investment property
land held to a property developer when the land is established as a township. To
date the assessment phase and the development framework phase have been
completed. The consolidated findings were reported and published in the annual
report for the year ended 28 February 2011.
As part of completing the township establishment process, the property is
required to be included in the Tshwane Metropolitan Municipality urban edge, as
it was previously administered by the disestablished Nokeng municipality. During
the year under review an application to include the property as part of the
Tshwane Metropolitan spatial development programme was submitted. This will be
followed by the application for township establishment approval.
The valuation of the total project potential was performed by Mr Phil Randal-
Smith, an independent valuer. He conducted a valuation of the investment
property in F2010, on a "willing, able and informed seller and willing, able and
informed buyer" market basis for the fully completed project. The valuation,
which conforms to International Valuation Standards, was arrived at by reference
to market evidence of transaction prices for similar properties. Using this
valuation, the current fair value was based on the stage of completion method.
The stage of completion has been confirmed by the town and regional planners,
Hunter Theron Inc. The directors consider the valuation performed previously to
remain pertinent. The fair value of the investment property at 29 February 2012
amounts to R98,1 million (2011: R87,5 million) which results in a fair value
adjustment of R10,0 million (2011: R30,6 million). The Group`s investment
property is unencumbered.
Reviewed Audited
year ended year ended
29 February 28 February
2012 2011
Note R000`s R000`s
Opening fair value of investment (87 483) (56 780)
property
Costs capitalised to investment (591) (140)
property
Closing fair value of investment 98 089 87 483
property
Fair value adjustment on investment 4 10 015 30 563
property
6. Earnings per share ("EPS") reconciliation - Basic and diluted
EPS is based on the Group`s profit for the year ended 29 February 2012, divided
by the weighted average number of shares in issue during the year and its
comparative year ended 28 February 2011.
Basic and diluted
12 months ended
29 February 2012
Weighted
average Earnings
Net shares per
profit in issue share
R000`s 000`s Cents
Continued operations
Earnings per share 27 554 183 709 15,0
Discontinued operations
Earnings per share - 183 709 -
Earnings per share 27 554 183 709 15,0
(Profit)/loss on sale of assets (122) - -
Discontinued operations - - -
Fair value adjustments (10 015) - -
Tax effect on headline adjustments 1 436 - -
Headline earnings per share 18 853 183 709 10,3
From continuing operations 18 853 183 709 10,3
From discontinued operations - 183 709 -
12 months ended
28 February 2011
Weighted
average Earnings
Net shares per
profit in issue share
R000`s 000`s Cents
Continued operations
Earnings per share 32 479 180 940 18,0
Discontinued operations
Earnings per share (3 388) 180 940 (1,9)
Earnings per share 29 091 180 940 16,1
(Profit)/loss on sale of assets 186 - -
Discontinued operations 4 045 - -
Fair value adjustments (13 239) - -
Tax effect on headline adjustments 2 522 - -
Headline earnings per share 22 605 180 940 12,5
From continuing operations 23 081 180 940 12,8
From discontinued operations (476) 180 940 (0,3)
7. Dividends
The directors have elected not to declare a dividend for the year ended 29
February 2012 (2011: R nil).
8. Related party transactions
Reviewed Audited
year ended year ended
29 February 28 February
2012 2011
R000`s R000`s
Product purchases between fellow subsidiary 100 6 808
companies
Management and consulting fees paid to 16 845 7 200
Infrasors Holdings Limited
Interest paid by subsidiaries to holding 1 634 627
company
Contributions made to the Infrasors 1 038 1 898
Environmental Rehabilitation Trust
Rental recoveries from director controlled 252 -
entity
Net financial effect of unwinding in 10 800 -
investment in associate company
Rent and fees paid to Whirlprops 35 2 885 2 283
(Proprietary) Limited
9. Subsequent events
On 23 May 2012 Percy Ying was appointed as independent non-executive director
and Hugh Courtney was appointed as alternate director for Stephen Courtney. The
DMR approved the conversion of the old order mining right on the Lyttelton
Centurion mine, into a new order mining right. No other material subsequent
events have been identified.
10. Directorate and Company Secretary
Mochele Noge# (Chairman), Stephen Courtney* (Deputy Chairman), Trevor Robinson
(Chief Executive Officer), Marius Potgieter (Financial Director), Chris Boulle#,
P Ying# (appointed 23 May 2012), Hugh Courtney* (alternate to Stephen Courtney,
appointed 23 May 2012), Kerry Colley (Company Secretary).
All of the above directors are South African and resident in South Africa.
*Non-executive director #Independent non-executive director
Sponsor Auditors
Sasfin Capital Mazars
A division of Sasfin Bank Limited
Legal Advisers and Attorneys Transfer Secretaries
HR Levin Attorneys Notaries and Link Market Services South Africa
Conveyancers (Proprietary) Limited
On behalf of the board
M Noge T Robinson
Chairman Chief Executive Officer
VISIT US AT www.infrasors.co.za
"RESOURCES FOR GROWTH"
Johannesburg
29 May 2012
Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)
Date: 30/05/2012 07:30:01 Produced by the JSE SENS Department.
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