SENS Note - 08 November 2012

Infrasors interims for period ended 31 August 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")

 

Unaudited Condensed Consolidated Results

for the six months ended 31 August 2012

 

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Unaudited           Unaudited

six months ended    six months ended

31 August 2012      31 August 2011

Note               R000's              R000's

Revenue                                                             147 790             130 862

Turnover                                                            144 232             128 975

Cost of sales                                                      (112 228)            (91 507)

Gross profit                                                         32 004              37 468

Net administration and other operating expenses                     (16 976)            (15 458)

Depreciation and amortisation                                        (9 605)             (8 196)

Net finance costs                                                    (2 928)             (2 592)

Profit before tax                                                     2 495              11 222

Income tax expense                                                     (728)             (3 214)

Profit for the period                                                 1 767               8 008

Total comprehensive income for the period                             1 767               8 008

Analysis of profit and

total comprehensive income:

Attributable to the equity holders of

Infrasors at the end of the period                                     1 556             8 008

Attributable to non-controlling interest

at the end of the period                                                211                   –

Total profit and comprehensive income

for the period                                                         1 767             8 008

Earnings per share (cents) – Basic and diluted      2                    0,8               4,4

 

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Unaudited             Audited

as at               as at

31 August 2012    29 February 2012

R000's              R000's

Non-current assets                                                  624 551             610 229

Property, plant and equipment                                       352 306             340 825

Investment property                                                  98 333              98 089

Mineral rights                                                       92 464              92 464

Goodwill                                                                129                 129

Held to maturity investment                                          49 596              49 596

Other financial assets                                               19 676              16 569

Deferred tax assets                                                12   047              12 557

Current assets                                                     74   821              83 096

Inventories                                                        22   099              19 962

Trade and other receivables                                        43   779              46 068

Cash and cash equivalents                                           8   943              17 066

Total assets                                                      699   372             693 325

Capital and reserves

Total equity                                                        464 054            462 287

Issued capital                                                      255 620            255 620

Revaluation reserve                                                   6 150              6 150

Retained earnings                                                   200 159            198 603

Non-controlling interest                                              2 125              1 914

Non-current liabilities                                             170 364            173 212

Borrowings                                                           77 216             80 623

Environmental rehabilitation provision                               23 178             23 178

Deferred tax liabilities                                             69 970             69 411

Current liabilities                                                  64 954             57 826

Borrowings                                                           21 288             22 115

Trade and other payables                                             43 610             35 452

Current tax liabilities                                                  56                259

Total equity and liabilities                                        699 372            693 325

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

Unaudited           Unaudited

six months ended    six months ended

31 August 2012      31 August 2011

R000's              R000's

Cash inflow from operating activities                                  19 583              20 366

Cash outflow from investing activities                                (23 346)            (13 385)

Cash (outflow)/inflow from financing activities                        (4 360)                390

Net (decrease)/increase in cash and cash equivalents                   (8 123)              7 371

Cash and cash equivalents at the beginning of the period               17 066              17 044

Cash and cash equivalents at the end of the period                      8 943              24 415

 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Unaudited           Unaudited

six months ended    six months ended

31 August 2012      31 August 2011

R000's              R000's

Share capital                                                             918                 918

Share premium                                                         254 702             254 702

Revaluation reserve                                                     6 150               6 150

Retained income                                                       200 159             179 057

Balance at the beginning of the period                                198 603             171 049

Profit for the period in total comprehensive income                     1 556               8 008

Non-controlling interest                                                2 125                   –

Balance at the beginning of the period                                  1 914                   –

 

Profit for the period in total comprehensive income                     211                   –

Balance at the end of the period                                    464 054             440 827

 

CONDENSED SEGMENT RESULTS

Segmental information is presented in the condensed unaudited consolidated financial statements in respect to the

Group's business segments.

The business segmental 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. Segmental 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

31 August 2012

Turnover from external customers    46 230         98 002           –     144   232

Inter-segment revenues                   –              –       9 000       9   000

Profit/(loss) before tax             2 758          6 810      (7 073)      2   495

Total assets                       169 143        265 366     264 863     699   372

31 August 2011

Turnover from external customers    41 607         87 368           –     128   975

Inter-segment revenues                   –              –       7 200       7   200

Profit/(loss) before tax             5 210         11 538      (5 526)     11   222

Total assets                       105 698        247 086     288 591     641   375

 

MANAGEMENT COMMENTARY

Infrasors

Infrasors is a South Africa-based mining resources company developing, mining and beneficiating a spread of

minerals for the local 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 operation.

 

Financial and operation review

The subsidiaries Lyttelton Dolomite and Delf Silica had constrained performances but due to different pressures.

At Lyttelton Dolomite, output was hampered by factors influencing the metallurgical market and by maintenance

cost overruns on sections of the beneficiation plant. At the Delf Sand mine the operations are contending with

a declining reserve.

 

Revenue of the Group for the period under review improved to R147,8 million (2011: R130,9 million), an increase

of 12,9%. Total volumes sold for the Group reduced by 4 485 tons, a 0,5% decrease (2011: 1,9% increase).

The gross profit of the Group from operating activities for the period under review was R32,0 million

(2011: R37,4 million), a decrease of R5,4 million (14,4%).

 

The profit before tax of the Group for the period under review was R2,5 million (2011: R11,2 million), a decrease

of R8,7 million (77,7%), due to lower gross profit earnings, increased depreciation and increased finance costs.

Depreciation and amortisation increased as a result of the additions to property, plant and equipment acquired

compared to the corresponding period. Net finance cost increased to R2,9 million (2011: R2,6 million), as a

result of increased interest rates paid on borrowings.

 

Cash generated from operating activities remained steady at R19,6 million (2011: R20,4 million). The cash outflow

from investing activities increased to R23,3 million (2011: R13,4 million) as a result of mobile equipment

acquired, along with over burden removal and investment in endowment policies held for rehabilitation and for settlement

of instalment sale agreements. The net outflow of financing activities of R4,4 million (2011: inflow R0,4

million)was a result of payments made towards capital borrowings outstanding.

Trade and other payables increased due to higher amounts payable to sub-contractors owing to increased loading,

hauling, drilling and blasting costs resulting from increased production, which led to higher quantities of stock

piles of inventory on hand.

Silica             Dolomite           Limestone              Total

2012      2011      2012      2011      2012     2011       2012      2011

Tons sold     150 440   146 230   592 828   568 732   153 928   186 719   897 196   901 681

 

Lyttelton Dolomite

Lyttelton Dolomite increased its turnover by R10,6 million to R98,0 million (2011: R87,4 million) mainly as a

result

of annual price increases and also by a change in the sales mix and an increase in logistics revenue.

 

The output of dolomite from the Lyttelton Centurion mine increased by 24 096 tons, a 4,2% increase

(2011: 0,9% increase) mainly due to increased demand from the construction sector which compensated for the

decline in metallurgical sales due to a prolonged labour unrest experienced by a major metallurgical customer.

The Lyttelton Centurion mine experienced abnormal repair and maintenance costs which contributed to the gross

profit

reducing by R3,7 million from R24,8 million in 2011 to R21,1 million for the current six months ended 31 August

2012.

Similar maintenance costs and associated production downtime are not expected to be repeated during the second

half of the year ending 28 February 2013. Further cost reduction measures have been implemented.

 

The Marble Hall mine output reduced by 32 791 tons, a 17,6% decrease (2011: 3,2% increase), to 153 928 tons

(2011: 186 719 tons) mainly due to the curtailment of customers purchasing metallurgical products and the closure

of furnaces during the high Eskom winter tariff period. However, additional off-take has been secured as from

September 2012. The lost output was partially compensated by an increase in sales of powders. An additional

powder mill was commissioned at the Marble Hall mine, raising the milling capacity in order to meet increased

demand from the coal and agriculture sectors.

 

Delf Silica

 

Delf Silica increased turnover by R4,6 million from R41,6 million in 2011 to R46,2 million. The Delf Silica

volumes increased by 4 210 tons, a 2,9% increase (2011: 4,1% increase) to 150 440 tons (2011: 146 230 tons) mainly as a

result of improved sales at the Delf Silica Coastal operation.

Due to the reduction of the mining yield at the declining Delf Sand mine mineral reserve, it experienced

increased beneficiation costs resulting in reducing the gross profit by R4,4 million from R12,9 million in 2011, to R8,5

millionfor the current six months ended 31 August 2012. This was partially offset by improved profits from the Delf

Silica Coastal operation.

 

In line with the reducing yield of the Delf Sand mine deposit, cost-saving initiatives have been implemented in

order to reduce the beneficiation costs and maximise the current sales mix.

 

Prospects

The New Order Mining Right was granted and executed for the Lyttelton Centurion mine on 7 August 2012. Together

with the approval of expansion to the mining footprint area previously reported on and remodelling of the pit

layout,the dolomite resources have increased by 50,5% to 81,1 million tons from 53,9 million tons in 2011. This gives a

total life of mine of 50 years with the metallurgical component being 20 years.

As a result of the approval and execution of the New Order Mining Right and the associated increase in the

Mineral Resources and Mineral Reserves, the Lyttelton Centurion mine has initiated the Lyttelton 2 project as was

published in the SENS release on 16 August 2012. The project is aimed at increasing its production capacity and ensuring

that the mine positions itself to become a low-cost producer. This will allow the mine to take up future demand in the

local infrastructure development and will maximise its metallurgical grade component. The mine has seen steady

increase in demand from the local construction sector, albeit that there are few large construction projects

currently on the go.

 

The Marble Hall mine will have an increase in uptake of its metallurgical grade component in the next period

as a result of concluding off-take discussions. Exploratory work is continuing on the ore body. The mine remains

well-positioned to participate in the flue gas desulphurisation initiatives related to the energy sector and

therefore continues to firm up its reserves.

 

Delf Silica is experiencing increased demand by the foundry sector for its product as a result of the railway

infrastructure initiative by Transnet. However, supply from the greenfields project Delf Cullinan mine is being

delayed due to the lack of obtainment of timely environmental regulatory approvals. Relevant Department of Mineral

Resources and Department of Water Affair approvals have been obtained. The Group continues to work through

the environmental regulatory approvals for the Delf Cullinan mine and anticipates that mine development will

commence early 2013. The new mine is a replacement project for the existing Delf Sand mine and will result in

improved yields, increased beneficiation capacity and improved profit margins.

 

NOTES TO THE CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

 

1. Basis of preparation

The unaudited condensed consolidated financial statements for the six-month period ended 31 August 2012

have been prepared in accordance with and containing information required by International Accounting

Standard ("IAS") 34: Interim Financial Reporting, as well as the AC 500 series as issued by the Accounting

Practices Board, the Listings Requirements of the JSE Limited and the South African Companies Act, 71 of

2008, as amended. The unaudited 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 results of the interim period are not necessarily indicative of the results for the entire year,

and these unaudited financial statements should be read in conjunction with the audited financial statementsfor

the year ended 29 February 2012. The condensed consolidated financial statements for the six-month

period ended 31 August 2012 have not been audited nor reviewed.

 

The unaudited condensed consolidated financial statements were authorised for issue by the directors on

6 November 2012 for publication on 8 November 2012. The condensed consolidated financial statements

for the six-month period ended 31 August 2012 have been prepared by the Financial Director,

Mr M Potgieter, CA(SA).

 

The preparation of unaudited condensed consolidated financial statements requires the use of estimates and

assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets

and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts

of revenue and expenses during the reporting periods. Although these estimates are based on management's

best knowledge of current events and actions that the Group may undertake in the future, actual results may

differ from those estimates.

 

The accounting policies and methods of computation are in terms of International Financial Reporting

Standards and have been applied consistently by the Group to all periods presented in these unaudited condensed

consolidated financial statements. All comparative figures throughout this report relate to the corresponding

period of the prior year.

 

2.    Earnings per share ("EPS") reconciliation – Basic and diluted

EPS is based on the Group's profit for the six-month period ended 31 August 2012, divided by the weighted

average number of shares in issue during the six-month period and its comparative six-month period ended

31 August 2011.

Six months ended 31 August 2012              Six months ended 31 August 2011

Weighted                                     Weighted

average                                      average

number                                       number

Page 6

Infrasors SENS 071112

of shares          Earnings                    of shares            Earnings

Net profit        in issue         per share   Net profit        in issue           per share

R000's           000's             Cents       R000's           000's               Cents

1 556         183 709               0,8        8 008         183 709                 4,4

Headline earnings per share ("HEPS") reconciliation – Basic and diluted

HEPS is based on the Group's headline earnings divided by the weighted average number of shares in

issue during the six-month period ended 31 August 2012 and its comparative six-month period ended

31 August 2011.

Six months ended 31 August 2012        Six months ended 31 August 2011

Weighted                                Weighted

average                                 average

number     Headline                     number    Headline

Net    of shares    earnings            Net    of shares    earnings

profit     in issue   per share         profit     in issue   per share

R000's        000's       Cents         R000's        000's       Cents

Net profit                        1 556                                   8 008

Profit on sale of assets           (204)

Tax effect on headline

adjustments                           57

1 409       183 709        0,8           8 008     183 709       4,4

3.    Dividends

The directors have elected not to declare a dividend for the period ended 31 August 2012 (2011: R nil).

4.    Related party transactions

 

Unaudited          Unaudited

period ended       period ended

31 August 2012     31 August 2011

R000's             R000's

Product purchases between fellow subsidiary companies                 135                100

Management and consulting fees paid

to Infrasors Holdings Limited                                       9 000               7 200

Interest paid by subsidiaries to holding company                       74                 155

Contributions made to the Infrasors Environmental

Rehabilitation Trust                                                 519                  519

Rental recoveries from director controlled entity                    145                  131

Rent paid to Whirlprops 35 Proprietary Limited                       675                  385

 

5.   Subsequent events

No material subsequent events have been identified.

 

6.   Directorate and Company Secretary

Mochele Noge# (Chairman), Stephen Courtney* (Deputy Chairman),

Trevor Robinson (Chief Executive Officer), Marius Potgieter (Financial Director),

 

 

Chris Boulle#, Percy Ying#, Hugh Courtney*^^, Kerry Colley (Company Secretary).

 

All of the above directors are South African and resident in South Africa.

* Non-executive directors      # Independent non-executive directors ^^ alternate to Stephen Courtney

 

On behalf of the board

M Noge                                                        T Robinson

Chairman                                                      Chief Executive Officer

 

Johannesburg

8 November 2012

 

Sponsor                                                       Auditors

Sasfin Capital                                                Mazars

A division of Sasfin Bank Limited

 

Legal Advisers and Attorneys                                  Transfer Secretaries

HR Levin Attorneys Notaries and Conveyancers                  Link Market Services South Africa Proprietary Limited

 

VISIT US AT www.infrasors.co.za

"RESOURCES FOR GROWTH"

 

 

 

 

 

Date: 08/11/2012 04:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').

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