Infrasors Final Results 2011

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 28 FEBRUARY 2011

Highlights:

Tons sold up 18,0%

Revenue up 15,1%

Profit from operating activities up 18,5%

Net asset value per share up 3,0%

CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME

		Reviewed	Audited
		year ended	year ended
		28 February	28 February
		2011	2010
	Note	R000’s	R000’s
Continuing operations
Revenue		243 501	211 479
Gross profit		70 052	62 260
Profit from operating activities		41 335	34 870
Depreciation and amortisation		(13 563)	(7 673)
Net finance costs		(2 525)	(4 723)
Profit before tax and separately disclosed items		25 247	22 474
Fair value adjustments	3	13 239	39 127
Profit before taxation		38 486	61 601
Income tax expense		(6 007)	(8 759)
Profit for the year from continuing operations		32 479	52 842
Discontinued operations
Loss for the year from discontinued operations	4	(3 388)	(22 800)
Profit for the year		29 091	30 042
Other comprehensive income
Net gain on revaluation of property, plant and equipment		–	6 150
Total comprehensive income for the year		29 091	36 192
Earnings/(loss) per share (cents) – basic and diluted	6	16,1	17,4
From continuing operations – basic and diluted		18,0	30,6
From discontinued operations – basic and diluted		(1,9)	(13,2)

CONDENSED GROUP STATEMENT OF FINANCIAL POSITION

		Reviewed	Audited
		as at	as at
		28 February	28 February
		2011	2010
	Note	R000’s	R000’s
Non-current assets		548 367	491 728
Property, plant and equipment		292 075	280 695
Mineral rights		91 604	72 500
Investments in associate		7 000	7 000
Investment property	3, 5	87 483	56 780
Deferred taxation		11 823	3 001
Held to maturity investment	3	46 949	64 273
Other financial assets		11 433	7 479
Current assets		74 279	84 776
Inventories		17 016	17 092
Cash and cash equivalents		17 044	22 610
Other current assets		40 219	45 074
Assets of discontinued operation		–	12 983
Total assets		622 646	589 487
Capital and reserves		432 819	395 823
Share capital and premium		255 620	247 715
Revaluation reserve		6 150	6 150
Retained income		171 049	141 958
Non-current liabilities		138 237	139 039
Borrowings		63 798	70 287
Environmental rehabilitation provision		10 802	13 657
Deferred taxation		63 637	55 095
Current liabilities		51 590	50 351
Borrowings		22 724	17 941
Taxation payable		24	1
Other current liabilities		28 842	32 409
Liabilities of discontinued operation		–	4 274
Total equity and liabilities		622 646	589 487
Net asset value per share (cents)		235,6	228,8
Net number of shares in issue 000’s		183 709	172 978

CONDENSED GROUP STATEMENT OF CASH FLOWS

	Reviewed	Audited
	year ended	year ended
	28 February	28 February
	2011	2010
	R000’s	R000’s
Cash flows from operating activities	34 841	26 240
Cash flows from investing activities	(44 223)	(30 416)
Cash flows from financing activities	3 812	(24 410)
Net decrease in cash and cash equivalents	(5 570)	(28 586)
Cash and cash equivalents at the beginning of the year	22 614	51 200
Cash and cash equivalents at the end of the year	17 044	22 614
Continuing operations
Cash and cash equivalents at the end of the year	17 044	22 610
Discontinued operations
Cash and cash equivalents at the end of the year	–	4

CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY

	Reviewed	Audited
	year ended	year ended
	28 February	28 February
	2011	2010
	R000’s	R000’s
Share capital	918	865
Balance at the beginning of the period	865	865
Share capital movement on treasury shares sold	15	–
Issue of shares	38	–
Share premium	254 702	246 850
Balance at the beginning of the period	246 850	246 850
Premium movement on treasury shares sold	1 745	–
Issue of shares	6 107	–
Revaluation reserve	6 150	6 150
Balance at beginning of period	6 150	–
Revaluation of property, plant and equipment included in total comprehensive income	–	6 150
Retained income	171 049	141 958
Balance at the beginning of the period	141 958	111 916
Profit for the year included in total comprehensive income	29 091	30 042
Balance at end of the period	432 819	395 823

SEGMENTED CONSOLIDATED RESULTS

		Dolomite &
	Silica	limestone	Other	Total
	R000’s	R000’s	R000’s	R000’s
28 February 2011
Turnover from external customers	78 997	160 430	–	239 427
Inter-segment revenues	–	–	7 241	7 241
Net profit before tax	9 800	25 450	3 236	38 486
Additions to non-current assets	21 070	12 459	380	33 909
28 February 2010
Turnover from external customers	73 817	133 232	–	207 049
Inter-segment revenues	–	–	11 772	11 772
Net profit before tax	13 858	20 210	27 533	61 601
Additions to non-current assets	12 749	21 325	117	34 191

Sales volumes

	Silica		Dolomite
	2011	2010	2011	2010
Tons sold	275 120	269 330	1 089 897	946 310

Sales volumes

	Limestone		Total
	2011	2010	2011	2010
Tons sold	356 779	243 175	1 721 796	1 458 815

MANAGEMENT COMMENTARY

Infrasors

Infrasors is a South African mining resources company, mining and beneficiating silica, dolomite and metamorphosed dolomite (limestone) products for the industrial, metallurgical, mining and construction sectors.

The principal Infrasors operations are:

– Lyttelton Dolomite incorporating two mining operations namely Lyttelton Centurion Mine, and Marble Hall Mine; and

– Delf Silica, with its Delf Sand Mine and its Delf Tongaat facility.

General review

Revenue for the period under review was R243,5 million (F2010: R211,5 million), profit from continuing operating activities was R41,3 million (F2010: R34,9 million), an increase of R6,4 million. The profit before taxation for continuing operations for the period under review was R38,5 million (F2010: R61,6 million).

Cash of R34,7 million (F2010: R38,6 million) was generated by operations, prior to net finance cost of R3,3 million (F2010: R6,9 million) and taxation refunds received of R3,6 million (F2010: tax paid R5,5 million), before outflow of investments of R43,5 million (F2010: R30,4 million), and inflow of financing activities of R2,9 million (F2010: R24,4 million).

Capital expenditure of R33,9 million (F2010: R34,2 million) was incurred in the year under review, reflecting an ongoing investment by the Group in plant infrastructure and development of mineral reserves.

Mining assets, mining licences and mineral reserves

New order prospecting rights in respect of the Cullinan alluvial silica resource and southern extensions to the Marble Hall limestone mine was executed during F2011.

Further drilling and prospecting of the Delf Silica and Cullinan ore bodies were concluded and the results reflect an increase to proved ore body of 0,9 million tons and an additional 8,2 million tons of probable alluvial silica respectively.

Drilling and prospecting of the Marble Hall southern extension resulted in an increase to ore bodies of 37,9 million probable limestone.

NOTES TO THE CONDENSED CONSOLIDATED REVIEWED FINANCIAL STATEMENTS

1. Significant accounting policies

Infrasors is a company domiciled in South Africa. The condensed consolidated reviewed financial statements of Infrasors for the year ended 28 February 2011 comprise the Company and its subsidiaries (together referred to as the “Group”).

The condensed consolidated reviewed financial statements were authorised for issue by the directors on 18 May 2011.

1.1 Basis of preparation

The reviewed condensed consolidated results have been prepared in accordance with the Framework concepts and the measurement and recognition requirements of the International Financial Reporting Standards (“IFRS”) and containing information required by the International Accounting Standards 34 – Interim Financial Reporting (“IAS 34”), the AC 500 Standards and in the manner required by the Companies Act and the JSE Limited Listings Requirements. The condensed consolidated reviewed financial statements do not include all of the information required for full financial statements and should be read in conjunction with the consolidated annual financial statements for the year ended 28 February 2011. The Company envisages posting the annual reports during August 2011.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

The accounting policies have been applied consistently by Group companies and have been applied consistently to all periods presented in these condensed consolidated reviewed financial statements.

2. Review of results

Mazars has signed an unqualified review opinion on the condensed consolidated financial statements, as required by the JSE Limited. These financial statements have been approved by the board and condensed for the purposes of this report. The auditors’ review opinion is available for inspection at the Company’s registered office.

3. Fair value adjustments
		Reviewed	Audited
		as at	as at
		28 February	28 February
		2011	2010
	Note	R000’s	R000’s
Loans receivable – Infrasors Empowerment Trust
Opening carrying value for the year		(64 273)	(64 273)
Closing carrying value for the year		46 949	64 273
Loans receivable fair value adjustment		(17 324)	–
Investment property fair value adjustment	5	30 563	39 127
Total fair value adjustments		13 239	39 127

The fair value of the loan receivable from the Infrasors Empowerment Trust has been assessed resulting in a
carrying value of R46,9 million according to the restructured terms and conditions of the existing loan agreement. The fair value, which was based on the calculation of the net present value of the loan, resulted in a negative fair value adjustment to the amount of R17,3 million.

4. Infrabric discontinued operations

The Infrabric operation was discontinued on 30 November 2009. The remaining assets held were impaired, dismantled and sold. This resulted in a loss on discontinued operation of R3,4 million.

5. Investment property

It is the intention of the Group to establish a township development and sell off the land which has been classified as Investment property for capital profits to property developers. The township establishment process consists of three consecutive phases, these being:

Phase I – Assessment Phase II – Preparation of the township development framework plan; and Phase III – Township establishment process.

Phase I and II have been completed. The board has given approval for Phase III to be executed.

Pursuant to the Phase II assessment phase “Preparation of the township development framework plan”, Infrasors appointed an independent valuator to provide a market valuation on the property, based on a “willing, able and informed seller and willing, able and informed buyer” market value methodology. The valuation of the Investment property at 28 February 2011 amounts to R87,5 million which results in a fair value adjustment of R30,5 million.

	Reviewed	Audited
	year ended	year ended
	28 February	28 February
	2011	2010
	R000’s	R000’s
Open carrying value Investment property	(56 780)	(17 535)
Costs capitalised to Investment properties	(140)	(118)
Investment property: Fair value on 28 February	87 483	56 780
Fair value adjustment on Investment properties	30 563	39 127

6. Earnings per share (“EPS”) and headline earnings per share (“HEPS”) reconciliation

Basic and diluted

	12 months ended
	28 February 2011
		Weighted
		average
		number	Earnings
		of shares	per
	Net 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
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)

 

	12 months ended
	28 February 2010
		Weighted
		average
		number	Earnings
		of shares	per
	Net profit	in issue	share
	R000’s	000’s	Cents
Continued operations
Earnings per share	52 842	172 978	30,6
Discontinued operations
Earnings per share	(22 800)	172 978	(13,2)
Earnings per share	30 042	172 978	17,4
Loss on sale of assets	3
Discontinued operations	23 383
Fair value adjustments	(39 127)
Tax effect on headline adjustments	10 832
Headline earnings per share	25 133	172 978	14,5
From continuing operations	24 673	172 978	14,2
From discontinued operations	460	172 978	0,3

7. Dividends

The directors have elected not to declare a dividend for the year ended 28 February 2011 in view of the current economic climate and the need for prudent capital preservation.

8. Related party transactions

	Reviewed	Audited
	year ended	year ended
	28 February	28 February
	2011	2010
	R000’s	R000’s
Products and services between fellow subsidiary companies	6 808	7 395
Management fees charged by Infrasors Holdings Limited	7 200	11 205
Interest paid by subsidiaries to holding company	627	566
Contributions to the Infrasors Environmental Rehabilitation Trust	1 898	1 370
Rent paid to Whirlprops 35 (Proprietary) Limited	643	550

9. Directors and officers

Mochele Noge* (appointed as Chairman 1 March 2011), Stephen Courtney* (appointed as Deputy Chairman 1 March 2011), Trevor Robinson (Chief Executive Officer), Marius Potgieter (Financial Director), Chris Boulle*, Popo Molefe* (resigned as director 28 February 2011), Dereck Alexander* (resigned as director 28 February 2011), David Nabarro*† (retired as director 22 October 2010), Kerry Colley (Company Secretary).

Unless indicated otherwise the directors are South African and reside in South Africa. *

Non-executive directors  † British

Sponsor	Auditors
Sasfin Capital A division of Sasfin Bank Limited	Mazars
Legal Advisers and Attorneys	Transfer Secretaries
HR Levin Attorneys Notaries and Conveyancers	Link Market Services South Africa (Proprietary) Limited
On behalf of the board
M Noge	T Robinson
Chairman	Chief Executive Officer

VISIT US AT www.infrasors.co.za