Wrap Text
Provisional Unreviewed Condensed Consolidated Results for year ended 28 February 2019
Chrometco Limited
(Incorporated in the Republic of South Africa)
(Registration number 2002/026265/06)
Share code: CMO
ISIN: ZAE007020249
("Chrometco" or "the Group")
PROVISIONAL UNREVIEWED CONDENSED CONSOLIDATED RESULTS FOR YEAR ENDED 28
FEBRUARY 2019
Commentary
Dear shareholder
Although marred by the low chrome price, the Group’s results indicate
significant improvement in the year’s results compared to the prior year.
The Group’s revenue increased by 288% to R1.31 billion and generated cash
from operating activities of R252m (2018: R89.1m). This was primarily
attributable to recognition of the Black Chrome Operations for a full
current financial year compared to seven months during the year ended 28
February 2018, as a consequence of the Black Chrome Operation acquisition
recognition in July 2017.
Additionally, the Black Chrome Operations’ production was significantly
ramped up to steady state average 90,000 tonnes per month by February 2019.
The Group is planning on maintaining the current levels of production for
the forthcoming financial year.
The consequential revenue growth was marred by a decrease in the chrome
price toward the later part of the year ended 28 February 2019.
Condensed consolidated statement of financial position
Unreviewed Audited as
as at 28 at 28 Feb
Feb 2019 2018
R'000 R'000
ASSETS
Non-current assets 1,062,512 1,129,337
Tangible assets 6 975,051 962,653
Intangible assets - 15,857
Goodwill 40,465 40,465
Other financial assets 35,421 82,844
Deferred taxation asset 3,524 21,722
Environmental rehabilitation 8,051 5,796
obligation investments
Current assets 418,324 355,722
Trade and other receivables 46,430 24,470
Inventory 112,776 164,088
Cash and cash equivalents 45,611 34,885
Non-current assets held-for-sale 7 213,507 132,279
Total assets 1,480,836 1,485,059
EQUITY AND LIABILITIES
Capital and reserves 561,993 515,206
Stated capital 388,512 388,512
Accumulated losses (65,188) (49,607)
Attributable to equity owners of 323,324 338,905
the parent
Non-controlling interest 238,669 176,301
Non-current liabilities 304,540 570,726
Deferred taxation liability 110,201 139,368
Borrowings 8 97,016 331,364
Other financial liabilities 42,666 53,053
Finance lease liability 32,287 34,961
Environmental rehabilitation provision 22,370 11,980
Current liabilities 614,303 399,127
Trade and other payables 390,545 232,555
Cash and cash equivalents – current 97,634 85,547
liability
Borrowings 22,282 -
Finance lease liability 59,814 44,508
Non-current liabilities held-for-sale 7 44,028 36,517
Total equity and liabilities 1,480,836 1,485,059
Condensed consolidated statement of comprehensive income
Audited as
Unreviewed as at 28 Feb
at 28 Feb 2019 2018
R'000 R'000
Revenue 10 1,307,564 336,764
Cost of sales (1,062,856) (254,015)
Gross profit 244,708 82,749
Depreciation and amortisation (168,439) (46,953)
Other income 10,875 10,897
Other expenses (99,236) (19,844)
Salaries (56,997) (16,833)
Professional fees (19,712) (7,186)
Maintenance expenses (1,224) (2,870)
Impairments 11 (8,738) (153,530)
Income from discontinued operation 4,441 -
Gain on bargain purchase - 9,923
Loss before interest and tax (94,322) (143,648)
Investment income 1,274 8,337
Finance charges (36,492) (15,479)
Loss before tax (129,540) (150,790)
Taxation 16,334 39,435
Loss for the year (113,206) (111,355)
Other comprehensive income - -
Total comprehensive loss for the year (113,206) (111,355)
Attributable to:
Owners of the parent (45,435) (79,323)
Non-controlling interest (67,771) (32,031)
Basic loss per share (cents) (2.05) (9.58)
Diluted loss per share (cents) (2.05) (9.58)
Headline loss per share (cents) 12 (1.86) (1.56)
Condensed consolidated statement of cash flows
Unreviewed Audited
as at 28 as at 28
Feb 2019 Feb 2018
R'000 R'000
Cash flows from operating
activities
Cash utilised by operations and 256,010 87,046
exploration activities
Operating profit before working 98,000 36,570
capital changes
Working capital changes 158,010 50,476
Interest received - 4,695
Finance cost - -
Tax paid (3,709) (2,663)
Net inflow from operating activities 252,301 89,078
Cash flows from investing activities
Property, plant and equipment (147,630) (114,855)
additions
Increase in environmental (3,260) (2,152)
rehabilitation obligation funds
Cash obtained as part of - 16,118
acquisitions
Loans funded (2,957) (8,166)
Net cash outflows from investing (153,847) (109,054)
activities
Cash flows from financing activities
Shares issued - 5,188
Group loan repayment - (3,000)
Finance lease payments (76,040) (17,489)
Borrowings - settled on acquisition - (5,514)
Repayment of borrowings (38,446) (12,431)
Settlement of other financial (23,396) -
liabilities
Borrowings obtained 25,058 -
Drawdown on bank facility 13,009 -
Net cash outflow from financing (99,815) (33,246)
activities
Net decrease in cash and cash (1,361) (53,222)
equivalents
Cash and cash equivalents at (50,662) 2,560
beginning of year
Cash and cash equivalents at end of (52,023) (50,662)
year
Condensed consolidated statement of changes in equity
Stated (Accumulate Non- Total
capital d loss)/ controlling
retained interest
earnings
R'000 R'000 R'000 R'000
Opening balance 1
March 2017 158,062 29,716 21,239 209,017
Shares issued
230,450 - - 230,450
Acquisition of
subsidiary with non- - - 132,702 132,702
controlling
interests
Onicastar 54,391 54,391
Non-controlling
interest share of - - (32,031) (32,031)
loss for the year
Total comprehensive
loss for the year - (79,323) - (79,323)
Balance at 28
February 2018 388,512 (49,607) 176,301 515,206
-
Non-controlling
interest share of - - (67,771) (67,771)
loss for the year
Total comprehensive
loss for the year - (45,435) - (45,435)
Transaction with
shareholders: - - 167,218 167,218
Conversion of
borrowings to loans
Transactions with a
shareholder: change - 29,854 (37,079) (7,225)
in share holding
-
Balance at 28 388,512 (65,188) 238,669 561,993
February 2019
1. Nature of business
The Group is a mining and exploration group, which focuses on Chrome mining
in South Africa.
2. The provisional condensed consolidated financial statements for the year
ended 28 February 2019 have been prepared by the Group’s financial reporting
team, supervised by Chrometco’s Chief Financial Officer, Mr. Marcel Naude
CA(SA) and approved by the Chrometco’s board of directors.
3. Basis of preparation
The provisional condensed consolidated annual financial statements for the
year ended 28 February 2019 have been prepared in accordance with the
framework concepts and the recognition and measurement criteria of
International Financial Reporting Standards (“IFRS”) as issued by the
International Accounting Standards Board, the SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee, contains as a minimum
information required by IAS 34 – Interim Financial Reporting, the Financial
Reporting Pronouncements as issued by the Financial Reporting Accountants
Council, the JSE Limited Listings Requirements and the South African
Companies Act, 71 of 2008, as amended.
The accounting policies and methods of computation applied in the preparation
of the condensed consolidated financial statements are in terms of IFRS and
are consistent with those applied in the previous consolidated annual
financial statements, except for the following new and revised accounting
standards and amendments to standards became effective and had no significant
impact on the Group’s financial statements:
IFRS 9 Financial Instruments (New standard):
On 1 March 2018, the Group adopted IFRS 9, which replaces the provisions of
IAS 39 Financial Instruments: Recognition and Measurement that relate to the
recognition, classification and measurement of financial assets and financial
liabilities, derecognition of financial instruments, impairment of financial
assets and hedge accounting. The adoption of the new "expected credit loss"
impairment model under IFRS 9, as opposed to an incurred credit loss model
under IAS 39, had a negligible impact on the carrying amounts of the Group’s
financial assets given the short maturity of accounts receivables and the
negligible historical level of customer default. The Group does not apply
hedge accounting and the new rules for hedge accounting also have no impact.
IFRS 15 Revenue from Contracts with Customers (New standard):
On 1 March 2018, the Group adopted IFRS 15, which requires that revenue from
contracts with customers be recognised upon the transfer of control over
goods or services to the customer. The recognition of revenue upon transfer
of control to the customer is consistent with the revenue recognition policy
as set out in the Annual Financial Report dated 28 February 2018, as the
condition is generally satisfied when title transfers to the customer. As
such, on adoption, this requirement under IFRS 15 resulted in no impact to
the Group’s financial statements as the timing of revenue recognition on
Chrome sales is unchanged.
4. Provisional
The condensed consolidated financial statements for the period ended 28
February 2019 have not been reviewed or audited. The condensed consolidated
financial statements presented in this SENS announcement do not include the
information required pursuant to paragraph 16A(j) of IAS 34.
5. Going concern
The provisional condensed consolidated financial statements have been
prepared on the basis of accounting policies applicable to a going concern.
This basis presumes that funds will be available to finance future operations
and that the realisation of assets and settlement of liabilities, contingent
obligations and commitments will occur in the ordinary course of business.
6. Tangible assets
Mining Mobile Other Total
assets mining
vehicles
Cost 839,936 190,967 31,989 1,062,892
Accumulated (70,918) (18,126) (11,195) (100,239)
depreciation
Carrying amount 28 769,018 172,841 20,794 962,653
February 2018
Additions 141,512 89,039 4,585 235,136
Disposals - (115) (21) (136)
Change in estimate 9,649 - - 9,649
relating to
environmental
rehabilitation
provision
Depreciation (110,722) (53,292) (3,758) (167,772)
Transfer to assets (64,479) - - (64,479)
held-for-sale
Cost 926,618 279,820 35,557 1,241,995
Accumulated (181,640) (71,347) (13,957) (266,944)
depreciation
Carrying amount 28 744,978 208,473 21,600 975,051
February 2019
7. Non-current assets held-for-sale
The group continues to actively explore options to dispose of the Rooderand
operation. An offer of purchase was submitted to the owners and it is
probable that a sale will be finalised within 12 months. Impairment of R5.1
million (R120.5 million in 2018) was recognised to write down the Rooderand
operation to the lower of its carrying amount and its fair value less costs
to sell.
Plans to dispose of non-mining assets were finalised during the 2019
financial year. The sale of these assets is expected to occur within 12
months and hence these assets have been classified as held-for-sale in the
financial statements. These assets are carried at the lower of carrying
amount and fair value less costs to sell.
The following assets are included in the disposal group held-for-sale:
Unreviewed Audited as
as at 28 at 28
February February
2019 2018
R'000 R'000
Assets included
Non-current assets 213,507 132,279
Net intangible assets 149,028 132,279
Intangible assets 157,766 252,814
Impairment (8,738) (120,535)
Non-mining property plant and
equipment 64,479 -
Liabilities included
Non-current liabilities 44,028 36,517
Deferred tax 29,339 27,643
Environmental rehabilitation
obligation 14,033 8,874
Other 656 -
8. Borrowings
Borrowings roll forward
Unreviewed as Audited as
at 28 February at 28
2019 February
2018
R'000 R'000
Opening balance: 331,364 330,977
Interest incurred 8,728 11,513
Loans obtained from related parties 25,058
Repayments (38,446) -
Loan settlement upon acquisition of (80,332) -
Sail Resources
Loan acquired as part of transactions 27,731 -
with shareholders
Change in estimate 12,413 (11,126)
Transaction with IDC shareholder (167,218) -
Closing Balance 119,298 331,364
- Non-current 97,016 331,364
- Current 22,282 -
9. Transaction with shareholders
Conversion of IDC loan
As disclosed in the circular dated 30 May 2017, R 67.2 million of the
borrowings owed to the Industrial Development Corporation were
capitalized to stated capital of UWR and R100.0 million was converted
into preference shares. These transactions have been recorded as
transactions with shareholder. Consequently, these transactions
increased the non-controlling interest relating to the minority owners
of UWR.
Conversion of IDC loan:
Unreviewed
as at 28
February
2019
R'000
Conversion of loan to UWR stated capital (67,218)
Conversion of loan to UWR preference (100,000)
shares
Total Converted loans (Note 8) (167,218)
On 18 July 2017, the Group obtained effective control of Umnotho
weSizwe Resources (Pty) Ltd (UWR) through a management agreement. On 18
May 2018, the final suspensive conditions of Black Chrome Operations
transaction were completed, and consequently the management agreement
lapsed and legal ownership of UWR was obtained by the Group. These
conditions resulted in the conversion of the IDC loan and the
acquisition of the assets and liabilities of Sail Resources.
Inclusion of the Sail Resources assets and liabilities
As part of the transaction with shareholders, the Sail Resources
assets and liabilities have been included in the Group and included
in the assets of Sail Resources was a loan receivable from the Group
which was previously reported as a related party loan before the
transaction. In the current period, ownership was obtained of the
Sail Resources assets and liabilities. This constitutes an
acquisition of assets and liabilities and is not recognised as a
business combination. The loans previously recognised of R80.3
million were eliminated on consolidation and additional borrowings of
R28.3 million were acquired as part of the transaction.
Sail Resources on acquisition:
Unreviewed as
at 28 February
2019
R'000
Other financial assets 80,373
Sail Resources loan to UWR 80,332
Other 41
Other financial liabilities (51,533)
Trade and other receivables 1
Deferred taxation liability 13
Borrowings (Note 8) (27,731)
Trade and other payables (10)
Net assets (1,113)
10. Revenue
Disaggregation of revenue:
Unreviewed Unreviewed
as at 28 as at 28
February February
2019 2018
R'000 R'000
Export sales 1,262,609 322,810
Local sales 44,955 13,954
1,307,564 336,764
11. Impairments
Unreviewed Audited as
as at 28 at 28
February February
2019 2018
R'000 R'000
Impairment on non-current assets 5,062 -
held-for-sale
Impairment on other financial assets 3,676 32,995
Impairment on intangible assets - 120,535
Total impairments 8,738 153,530
12. Headline loss per share and diluted headline loss
per share
Unreviewed Audited as
as at 28 at 28
February February
2019 2018
R'000 R'000
Loss after taxation attributable (45,435) (79,323)
to equity holders of the Group
Gain on bargain purchase - (9,923)
Impairment, net of tax 4,044 74,925
Other impairment 5,617 -
Tax thereon (1,573) -
Change in estimate - 1,403
Headline loss (41,391) (12,918)
Weighted average number shares 2,219,634 828,182
in issue
Diluted weighted average number shares in 2,219,634 828,182
issue
Headline loss per share (cents) (1.86) (1.56)
Diluted headline loss per share (1.86) (1.56)
(cents)
12.1 Weighted average number of
shares
Audited as
Unreviewed
as at 28 at 28 Feb
2018
Feb 2019
000 000
Shares in issue at the beginning 1,172,429 274,929
of the year
Weighted average shares issued during the 1,047,205 553,253
year
Potential ordinary shares with dilutive - -
effect
Diluted weighted average number 2,219,634 828,182
of shares
Closing number of shares 2,542,429 1,172,429
13. Related party transactions
13.1 Related party transactions
Audited as
Unreviewed
at 28 Feb
as at 28
2018
Feb 2019
R’000 R’000
Sales to BBA Resources Pte Ltd 1,218,424 322,810
13.2 Related party balances
Unreviewed Unreviewed
as at 28 as at 28
Feb 2019 Feb 2018
R’000 R’000
Loan receivable from Sail Resources - 50,119
Pty Ltd
Loan payable to:
Sail Resources Pty Ltd - (78,879)
25 Sunninghill Office Park (8,632) -
Sunninghill Offices 07 (4,283) -
Calculated Property Investments (9,367) -
These loans bear interest at prime interest rate and is repayable by
31 July 2019. Extension of the facility is subject to an annual
review on 31 July.
Accounts payable to BBA Resources Pte (283,716) (122,257)
Ltd
Amounts owed to (included in Other
financial liabilities):
BBA Resources Pte Ltd (37,250) (50,476)
Sail Logistics Pty Ltd (1,694) (1,552)
Sail Mining CC (3,721) (1,026)
The related party transactions note as per the 28 February 2018 Annual
Financial Report has been restated, to include the Other financial
liabilities disclosed above, as identified through the JSE proactive
monitoring process.
The balance owing to BBA Resources Pte Ltd bears no interest. While the loan
has no fixed terms of repayment, it will not be repaid within 12 months from
28 February 2019.
14. Going concern
As at 28 February 2019, the Group’s current liabilities exceeded its current
assets by R185.9m (2018: R43.4m) and during the year ended the Group generated
cash from operating activities of R263.5m (2018: R89.1m).
The directors believe that the cash generated by its operations in the
ordinary course of business and the remaining funding facility of R 70.0
million will enable the Group to continue to meet its current obligations as
they fall due.
Chrome is predominantly sold in US dollars, and while the majority of the
Group’s operational costs are denominated in rand, the Group’s results and
financial condition will be impacted if there is a material change in average
chrome price and/or US dollar exchange rate.
15. Mineral Reserves and Mineral Resources
There have been no published changes to the Mineral Reserves and Mineral
Resources, as disclosed in the Annual Financial Report dated 28 February
2018.
16. Dividends
No dividend has been declared or paid for the period (28 Feb 2018: R nil).
17. Changes to the Board
During the year, Mr Namir Waisberg resigned as an executive director of the
company.
Signed on behalf of the Board of Directors
Marcel Naude CA(SA)
Chief Financial officer
Johannesburg
31 May 2019
Directors:
BL Sibiya+ (Chairman), MC Naude (CFO), NP Thomas+,
LJ Jordaan+
+ independent non-executive
CORPORATE INFORMATION
Designated Advisor:
PSG Capital
Company Secretary:
Acorim Secretarial and Governance
Registered Office
Unit 25 Sunninghill Office Park
4 Peltier Drive
Sunninghill
Gauteng
2196
Postal address
PO Box 1553
Kelvin
2054
Date: 31/05/2019 03:59:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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