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