TIDMFLOR

RNS Number : 9286O

Fluormin PLC

17 October 2012

Fluormin plc

("Fluormin" or the "Company")

PRELIMINARY RESULTS

FOR THE YEAR ENDED 30 JUNE 2012

LONDON, UK -- (Marketwire - 17 October 2012)

Fluormin Plc (AIM: FLOR) is pleased to announce the preliminary results for the consolidated entity (referred to hereafter as the "Group") consisting of Fluormin Plc ("Fluormin" or the "Company") and the entities it controlled at the end of, or during, the year ended 30 June 2012 as well as the Company Statement of Financial Position and Company Statement of Cashflows.

Highlights and accomplishments during the financial year

- successfully disposed of its Tunisian lead and zinc assets in August 2011 to subsidiaries of Glencore International AG ("Glencore") for GBP6.3m (US$10.2m);

- secured off-take agreements with subsidiaries of Glencore for any fluorspar subsequently produced at those Tunisian assets;

- successfully completed the admission process commencing trading on AIM on 15 September 2011;

- completed the Sallies Limited ("Sallies) and Kenya Fluorspar Company Limited ("KFC") acquisitions;

- completed the regulatory process of bidding for the minority shareholding and debenture holding in Sallies in December 2011 and January 2012 respectively; and

- subsequently disposed of its minority KFC interest for GBP8.5m (US$14m) realising a profit of approximately GBP7.1m (US$10.7m).

Recent activity

- The Company successfully disposed of its Buffalo Fluorspar Project ("Buffalo") for the aggregate consideration of ZAR 10m (GBP0.74m). Buffalo has been on care and maintenance since 2008 with no plans to reopen; and

- The Company has placed its Witkop mine on care and maintenance, following further weakness in the fluorspar market. Despite an improvement in the Company's operational performance and significant cost reductions, the prevailing price for acid grade fluorspar has fallen below current operating costs. Having met with trade union representatives in South Africa it was concluded to place the mine on care and maintenance with effect from the close of business on 12 October 2012. Recommencement of operations will be contemplated when the fluorspar industry enters into a more favourable price environment.

Financials

The Company remains well funded with cash and receivables at the reporting date of GBP13.2m (US$20.7m). The balance includes restricted cash of GBP1.4m (US$2.2m) and GBP4.2m (US$6.5m) cash consideration due from the sale of the Company's 20% interest in KFC, which is due to be received on or before 30 November 2012.

The strong cash position has been achieved through a combination of fundraisings and strategic asset disposals. The Company raised approximately GBP4.5m through subscriptions to new investors and management in the period, whilst approximately GBP14.8m (US$24.2m) was received through the disposal of the Tunisian base metal assets and 20% interest in KFC.

For the year ended 30 June 2012 the Group recorded a profit after tax of GBP3.5m, compared to a loss of GBP2.8m for the year ended 30 June 2011. Net assets of the Group increased from GBP6m as at 30 June 2011 to GBP22.4m as at 30 June 2012.

The operating loss for the year ended 30 June 2012 includes an impairment charge of GBP8.2m.

Mark Bolton, Company CEO, commented:

"The year ended 30 June 2012, and subsequently to the date of this report, witnessed a period of transformation and challenge for the Company. Despite the many highlights and accomplishments achieved by the Company and its employees in the period, these have been overshadowed somewhat by the recent decision to place the Witkop mine on care and maintenance. However, in the current economic environment, it was concluded that this was the only defensible strategy for the Company at this time. Recommencement of operations will be contemplated when the fluorspar industry enters into a more favourable price environment. By keeping the mine on care and maintenance the Company is seeking to minimize both the cost and challenges associated with restarting operations at Witkop at such time as the Fluorspar market improves."

About Fluormin Plc

Fluormin is a producer of acid grade fluorspar, an industrial mineral widely used in the chemical and aluminum industries for the making of products such as HFCs (Hydrofluorocarbons used as refrigerant gases like Freon (TM)) and aluminum fluoride.

Contact Information

 
 
Fluormin plc 
 
Mark Bolton, Chief Executive Officer  +44 (0) 20 7034 7150 
                                       mbolton@fluormin.com 
 
  Westhouse Securities 
 
Martin Davison                        +44 (0) 20 7601 6100 
                                       martin.davison@westhousesecurities.com 
 

Consolidated income statement

For the year ended 30 June 2012

 
                                          Notes      2012     2011 
                                                  GBP'000  GBP'000 
 
Continuing Operations 
Revenue                                            20,802        - 
Cost of sales                                    (18,165)        - 
Gross profit                                        2,637        - 
 
Exploration expenses                                    -    (116) 
Impairment charge                                 (8,163)        - 
Administrative expenses                           (7,361)  (2,614) 
Operating loss                                   (12,887)  (2,730) 
 
Other income                                        9,158        - 
 
Finance costs                                       (296)        - 
Finance income                                        184       61 
Share in loss of joint venture                      (314)      (4) 
                                                 --------  ------- 
Loss before taxation                              (4,155)  (2,673) 
 
Taxation                                            1,536        - 
Loss for the period from continuing 
 operations                                       (2,619)  (2,673) 
                                                 --------  ------- 
 
Discontinued Operations 
Profit for the period from discontinued 
 operations                                 2       6,093    (123) 
 
Profit / (loss) for the year                        3,474  (2,796) 
                                                 ========  ======= 
 
Profit / (loss) attributable to: 
 Owners of Fluormin Plc                             3,604        - 
 Non-controlling interest                           (130)        - 
                                                 --------  ------- 
                                                    3,474  (2,796) 
                                                 ========  ======= 
 
Earnings / (loss) per share (pence) 
 
Continuing operations 
Basic                                       3      (5.25)  (15.31) 
Diluted                                     3      (5.25)  (15.31) 
 
Discontinued operations 
Basic                                       3       12.86   (0.70) 
Diluted                                     3       11.73   (0.70) 
 
Continuing and discontinued operations 
Basic                                       3        7.61  (16.01) 
Diluted                                     3        6.48  (16.01) 
 

Consolidated statement of comprehensive income

For the year ended 30 June 2012

 
                                         2012     2011 
                                      GBP'000  GBP'000 
 
Profit / (loss) for the period          3,474  (2,796) 
 
Exchange differences on translation   (1,662)        - 
 
Total comprehensive income / (loss) 
 for the period                         1,812  (2,796) 
                                      -------  ------- 
 
 
Profit / (loss) attributable to: 
 Owners of Fluormin Plc                 2,107        - 
 Non-controlling interest               (295)        - 
                                      -------  ------- 
                                        1,812  (2,796) 
                                      =======  ======= 
 

Consolidated and company statement of financial position

Company Registration Number: 5146673

As at 30 June 2012

 
                                    Notes         Group              Company 
                                                2012      2011     2012      2011 
                                             GBP'000   GBP'000  GBP'000   GBP'000 
Non-current assets 
Intangible assets                     4            -         -        -         - 
Property, plant and equipment                  8,105        38        -         1 
Available-for-sale investments                     -         -        -         - 
Investment property                               43         -        -         - 
Other investments                              1,408       776    2,048     1,087 
Interest in joint venture                          -       311        -         - 
                                           ---------  --------  -------  -------- 
 
  Total non-current assets                     9,556     1,125    2,048     1,088 
                                           ---------  --------  -------  -------- 
 
Current assets 
Inventories                                    4,435         -        -         - 
Trade and other receivables                    6,416        89      116        81 
Loans to affiliated companies                  1,281     3,864   10,702     3,819 
Cash and cash equivalents                      7,666     1,280    7,420     1,277 
                                           ---------  --------  -------  -------- 
 
  Total current assets                        19,798     5,233   18,238     5,177 
                                           ---------  --------  -------  -------- 
 
Current liabilities 
Trade and other payables                     (2,204)     (382)    (537)     (374) 
Borrowings                                     (162)         -        -         - 
                                           ---------  --------  -------  -------- 
 
  Total current liabilities                  (2,366)     (382)    (537)     (374) 
                                           ---------  --------  -------  -------- 
 
Net current assets                            17,432     4,851   17,701     4,803 
                                           =========  ========  =======  ======== 
 
Non-current liabilities 
Provisions                                   (3,841)         -        -         - 
Deferred tax liability                         (779)         -        -         - 
                                           ---------  --------  -------  -------- 
 
  Total non-current liabilities              (4,620)         -        -         - 
                                           ---------  --------  -------  -------- 
 
Net assets                                    22,368     5,976   19,749     5,891 
                                           =========  ========  =======  ======== 
 
Equity 
Share capital                         5        8,380     3,805    8,380     3,805 
Share premium account                            724    12,199      724    12,199 
Reserves                                     (1,360)       862      580       862 
Retained earnings /(loss)                     14,579  (10,890)   10,065  (10,975) 
                                           ---------  --------  -------  -------- 
Capital and reserves attributable 
 to the owners of Fluormin 
 Plc                                          22,323     5,976   19,749     5,891 
 
Non-controlling interests                         45         -        -         - 
 
Total equity                                  22,368     5,976   19,749     5,891 
                                           =========  ========  =======  ======== 
 

Consolidated statement of changes in equity

For the year ended 30 June 2012

 
                                 Attributable to the owners of Fluormin 
                                                   Plc 
                       ---------------------------------------------------------- 
 
                            Share       Share                  Retained             Non-controlling      Total 
                          capital     premium     Reserves     earnings     Total         interests     equity 
                          GBP'000     GBP'000      GBP'000      GBP'000   GBP'000           GBP'000    GBP'000 
 
 Balance at 
  1 July 2011               3,805      12,199          862     (10,890)     5,976                 -      5,976 
 Profit / 
  (loss) for 
  the year                      -           -            -        3,604     3,604             (130)      3,474 
 Foreign exchange               -           -      (1,497)            -   (1,497)             (165)    (1,662) 
 Total comprehensive 
  income for 
  the year                      -           -      (1,497)        3,604     2,107             (295)      1,812 
 
 Issue of 
  equity share 
  capital                   4,575       9,996            -            -    14,571                 -     14,571 
 Share issue 
  costs                         -        (14)            -            -      (14)                 -       (14) 
 Cancellation 
  of share 
  premium account               -    (21,457)            -       21,457         -                 -          - 
 Share based 
  payment expense               -           -          126            -       126                 -        126 
 Options lapsed 
  or cancelled                  -           -        (408)          408         -                 -          - 
 Adjustment 
  on change 
  on non-controlling 
  interest                      -           -        (443)            -     (443)             2,143      1,700 
 Elimination 
  of non-controlling 
  interest                      -           -            -            -         -           (1,803)    (1,803) 
 Balance at 
  30 June 2012              8,380         724      (1,360)       14,579    22,323                45     22,368 
                       ==========  ==========  ===========  ===========  ========  ================  ========= 
 

For the year ended 30 June 2011

 
                                 Attributable to the owners of Fluormin 
                                                   Plc 
                       ---------------------------------------------------------- 
 
                            Share       Share                  Retained             Non-controlling      Total 
                          capital     premium     Reserves     earnings     Total         interests     equity 
                          GBP'000     GBP'000      GBP'000      GBP'000   GBP'000           GBP'000    GBP'000 
 
 Balance at 
  1 July 2010               1,079       7,441           48      (8,094)       474                 -        474 
 Loss for 
  the year                      -           -            -      (2,796)   (2,796)                 -    (2,796) 
 Total comprehensive 
  income for 
  the year                      -           -            -      (2,796)   (2,796)                 -    (2,796) 
 
 Issue of 
  equity share 
  capital                   2,726       4,758            -            -     7,484                 -      7,484 
 Share based 
  payment expense               -           -          814            -       814                 -        814 
 Balance at 
  30 June 2011              3,805      12,199          862     (10,890)     5,976                 -      5,976 
                       ==========  ==========  ===========  ===========  ========  ================  ========= 
 

Consolidated and company statement of cash flows

For the year ended 30 June 2012

 
                                                   Group             Company 
                                                  2012     2011     2012     2011 
                                               GBP'000  GBP'000  GBP'000  GBP'000 
 
Net cash used in operating 
 activities before taxation                    (3,688)  (5,760)  (4,090)  (5,710) 
Taxation                                           310        -        -        - 
                                             ---------  -------  -------  ------- 
Net cash used in operating 
 activities after taxation                     (3,378)  (5,760)  (4,090)  (5,710) 
 
Investing activities 
Payments to acquire subsidiary 
 undertaking, net of cash 
 acquired                               6      (3,865)        -        -        - 
Payments for property, plant 
 and equipment                                 (1,220)      (1)        -      (1) 
Payments for restricted investments            (1,114)        -        -        - 
Loans to related parties                         (886)        -  (8,070)        - 
Investment in affiliated 
 companies                                           -  (1,079)        -  (1,079) 
Proceeds from sale of subsidiary 
 undertaking                                     6,329        -    6,329        - 
Proceeds from sale of property, 
 plant and equipment                               556        -        -        - 
Proceeds from sale of investment 
 property                                           64        -        -        - 
Proceeds from sale of investments                4,166        -                 - 
Repayment of loans by related 
 parties                                           341        -    2,303        - 
Other income                                         -        -       67        - 
Dividend received                                  577        -    4,743        - 
Interest received                                  184      175       65      129 
Net cash from / (used in) 
 investing activities                            5,132    (905)    5,437    (951) 
 
Financing activities 
Proceeds on issue of share 
 capital                                         4,586    7,484    4,586    7,484 
Share issue costs                                 (14)        -     (14)        - 
Interest paid                                    (164)        -        -        - 
                                             ---------  -------  -------  ------- 
Net cash from / (used in) 
 financing activities                            4,408    7,484    4,572    7,484 
 
Net increase in cash and 
 cash equivalents                                6,162      819    5,919      823 
 
Cash and cash equivalents 
 at the beginning of the year                    1,280      461    1,277      454 
Effects of exchange rate 
 changes on cash and cash 
 equivalents                                       224        -      224        - 
 
Cash and cash equivalents 
 at the end of the year                          7,666    1,280    7,420    1,277 
                                             =========  =======  =======  ======= 
 
 

Notes to the Accounts

   1.             Basis of preparation 

This announcement has been prepared in accordance with the Group's accounting policies, which in turn are in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU") applied in accordance with the Companies Act 2006.

IFRS is subject to amendment and interpretation by the International Accounting Standards Board ("IASB") and the IFRS Interpretations Committee and there is an ongoing process of review and endorsement by the European Commission. The accounting policies comply with each IFRS that is mandatory for accounting periods ended 30 June 2012.

The financial information is presented in pounds sterling, prepared on a historical cost basis and, unless otherwise stated and rounded to the nearest thousand. The financial information set out in this announcement does not comprise the Group's statutory accounts for the years ended 30 June 2012 or 30 June 2011.

The financial information for the year ended 30 June 2011 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified and did not contain a statement under either Section 498 (2) or Section 498 (3) of the Companies Act 2006 and did not include references to any matters to which the auditor drew attention by way of emphasis.

The statutory accounts for the year ended 30 June 2012 have not yet been delivered to the Registrar of Companies, nor have the auditors yet reported on them. This preliminary announcement does not constitute statutory accounts under section 435 of the Companies Act 2006.

   2.             Discontinued operations 
   (a)           Description 

On 11 August 2011 the Company entered into a share purchase agreement with Glencore International AG ("Glencore"), whereby it sold the entire issued share capital of HMH Fluor Limited ("HMH") and High Marsh Services ("HMS") to Zullma Corporation, the entire issued share capital of European Industrial Base Metals Limited ("EIBM") to Strongest Network Corporation and the entire issued share capital of North African Mining and Minerals Limited ("NAMM") to Nager Business Inc. for an aggregate consideration of US$10.2m (subject to an adjustment amount pursuant to the terms and conditions of the share purchase agreement).

As a result of the share purchase agreement, Fluormin also entered into offtake agreements with HMH, EIBM and NAMM and Glencore provided a guarantee to the Fluormin in respect of performance under the off take agreements. Financial information relating to the discontinued operation for the period to the date of disposal is set out below.

   (b)          Financial performance and cash flow information 

The financial performance and cash flow information presented are for the two months ended 31 August 2011 (2012 column) and the year ended 30 June 2011:

 
                                           2012     2011 
                                        GBP'000  GBP'000 
 
Revenue                                       -        - 
Expenses                                  (180)    (123) 
                                        -------  ------- 
Loss from operations                      (180)    (123) 
Taxation                                      -        - 
                                        -------  ------- 
Loss after taxation from discontinued 
 operations                               (180)    (123) 
                                        =======  ======= 
 
 
Gain on sale of subsidiary before taxation    6,273  - 
Taxation                                          -  - 
                                              ----- 
Gain on sale of subsidiaries after taxation   6,273  - 
                                              ===== 
 
 
Profit from discontinued operations   6,093  - 
                                      ===== 
 
 
Net cash outflow from operating activities   (180)  - 
Net cash inflow from investing activities    6,329  - 
                                             ----- 
Net increase in cash generated               6,149  - 
                                             ===== 
 
   (c)           Details of the sale of the subsidiary undertaking 
 
                                        2012     2011 
                                     GBP'000  GBP'000 
 
Consideration received: 
Cash                                   6,329        - 
Carrying amount of net assets sold      (56) 
                                     -------  ------- 
Gain on sale before taxation           6,273        - 
Taxation                                   -        - 
                                     -------  ------- 
Gain on sale after taxation            6,273        - 
                                     =======  ======= 
 

The carrying amount of assets and liabilities as at date of sale (11 August 2011) were:

 
                                11 August 
                                     2012 
                                  GBP'000 
 
Property, plant and equipment          37 
Other receivables                       6 
Cash and cash equivalents              17 
                                --------- 
                                       60 
Accruals                              (4) 
                                --------- 
Net assets                             56 
                                ========= 
 
   3.             Earnings / (loss) per share 
   (a)           Basic earnings / (loss) per share 
 
                                            2012     2011 
                                           pence    pence 
 
From continuing operations attributable 
 to the ordinary equity holders of the 
 Company                                  (5.25)  (15.31) 
From discontinued operation                12.86   (0.70) 
                                          ------  ------- 
Total basic earnings / (loss) per share 
 attributable to the ordinary equity 
 holders of the Company                     7.61  (16.01) 
                                          ======  ======= 
 
   (b)          Diluted earnings / (loss) per share 
 
                                            2012     2011 
                                           pence    pence 
 
From continuing operations attributable 
 to the ordinary equity holders of the 
 Company                                  (5.25)  (15.31) 
From discontinued operation                11.73   (0.70) 
                                          ------  ------- 
Total basic earnings / (loss) per share 
 attributable to the ordinary equity 
 holders of the Company                     6.48  (16.01) 
                                          ======  ======= 
 
   (c)           Reconciliation of earnings / (loss) used in calculating earnings / (loss) per share 
 
                                             2012     2011 
                                          GBP'000  GBP'000 
 
Basic and diluted earnings / (loss) 
 per share 
Profit / (loss) attributable to the 
 ordinary equity holders of the Company 
 used in calculating basic earnings per 
 share: 
From continuing operations                (2,489)  (2,673) 
From discontinued operation                 6,093    (123) 
                                          -------  ------- 
                                            3,604  (2,796) 
                                          -------  ------- 
 
   (d)          Weighted average number of shares used as the denominator 
 
                                                         2012        2011 
 
Number of shares 
Weighted average number of ordinary 
 shares for the purposes of basic earnings 
 / (loss) per share                                47,390,308  17,467,212 
Number of dilutive shares under option              4,552,666   4,801,333 
                                             ----------------  ---------- 
Weighted average number of ordinary 
 shares for the purposes of dilutive 
 earnings / (loss) per share                       51,942,974  22,268,545 
                                             ================  ========== 
 

The calculation of diluted earnings per share assumes conversion of all potentially dilutive ordinary shares, all of which arise from share options. A calculation is performed to determine the number of share options that are potentially dilutive based on the number of shares that could have been acquired at fair value, considering the monetary value of the subscription rights attached to outstanding share options. Share options in issue during the year ended 30 June 2011 decrease the loss per share for the year end and as such are deemed anti-dilutive. Therefore, the diluted loss per share is the same as the basic loss per share for 2011.

* At the General Meeting held on 31 August 2011, shareholders approved the consolidation of the former ordinary shares into ordinary shares on a 1 for 25 basis.

   4.             Intangible assets - Group 
 
                            Mining Rights  Goodwill    Total 
                                  GBP'000   GBP'000  GBP'000 
 
Cost 
At 1 July 2010                          -         -        - 
Additions                               -         -        - 
Disposals                               -         -        - 
                            -------------  --------  ------- 
At 30 June 2011                         -         -        - 
Acquisition of subsidiary           6,466     2,672    9,138 
Disposals                               -         -        - 
                            -------------  --------  ------- 
At 30 June 2012                     6,466     2,672    9,138 
                            =============  ========  ======= 
 
Accumulated amortisation 
 and impairment 
At 1 July 2010                          -         - 
Impairment charge                       -         - 
                            -------------  --------  ------- 
At 30 June 2011                         - 
Amortisation                        (232)         -    (232) 
Impairment charge                 (5,776)   (2,387)  (8,163) 
Exchange differences                (458)     (285)    (743) 
                            -------------  --------  ------- 
At 30 June 2012                   (6,466)   (2,672)  (9,138) 
                            =============  ========  ======= 
 
Net Book Value 
At 30 June 2012                         -         -        - 
                            =============  ========  ======= 
 
At 30 June 2011                         -         -        - 
                            =============  ========  ======= 
 

Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (CGUs) that are expected to benefit from that business combination identified according to operating segments. Mining Rights and Goodwill have been calculated and initially recognised as part of the acquisition of Sallies.

The recoverable amount of the CGU is based on fair value of the net identifiable assets as at reporting date. As at the reporting date it was determined that the fair value of the net identifiable assets of Sallies equated to their approximate cost, with the exception of the property, plant and equipment.

The fair value of the property, plant and equipment has been determined based on an independent valuation conducted by Pretoria Demolition and Excavating Contractors in March 2012. The valuation was based on the demolishing and dismantling of the structures of the Group's Witkop mine in Zeerust, South Africa and the value of the material and/or structures in the open market. Factors that were taken into consideration for the disposal of the materials and structures including the location of the mine, similar sales in the past and the prices that were paid and the feasibility to locate different structures.

As at 30 June 2012, the Mining Rights and Goodwill have been fully impaired. The impairment decision reflects the reduction in fair value of the net identifiable assets of Sallies as at 30 June 2012, in light of the operational challenges at the Witkop mine and the weaker outlook for Fluorspar prices, which has led to it being placed on care and maintenance.

None of the Mining Rights or Goodwill is expected to be tax deductible.

   5.             Share capital 
 
                                            2012     2011 
                                         GBP'000  GBP'000 
 
Allotted, called up and fully paid 
634,129,513 ordinary shares of GBP0.06 
 each                                          -    3,805 
                                         =======  ======= 
 
55,865,722 ordinary shares of GBP0.15 
 each                                      8,380        - 
                                         =======  ======= 
 

The Company has one class of ordinary shares which carry no right to fixed income.

During the course of the year, the movement in the called up, allotted and fully paid share capital was as follows:

 
                                       Number  Nominal value 
                             Note      ('000)        GBP'000 
 
Balance as at 1 July 2011             634,129          3,805 
Shares issued: 
 August 2011                           40,000            240 
 
                                      674,129          4,045 
 
Share consolidation           (i)   (647,164)              - 
 
                                       26,965          4,045 
Shares issued: 
 September 2011                        27,063          4,060 
 December 2011                          1,735            260 
 January 2012                             103             15 
 
Balance as at 30 June 2012             55,866          8,380 
                                    =========  ============= 
 
   (i)        Share consolidation 

At the General Meeting held on 31 August 2011, shareholders approved the consolidation of the former ordinary shares into ordinary shares on a 1 for 25 basis.

In this financial year 69m (2011: 454m pre-share consolidation) ordinary shares were issued.

   6.             Business combination 
   (a)           Summary of acquisition 

On 31 August 2011 the Company acquired 66.93% of the issued share capital of Sallies Limited, increasing its aggregate shareholding to 78.29%. On the same day it also acquired 57.83% of the Sallies debentures in issue, marking the Company's strategic shift to the Fluorspar industry.

Details of the purchase consideration, the net assets acquired and goodwill relating to the initial acquisition is as follows:

 
                                                       GBP'000 
 
Purchase consideration: 
 Cash paid                                                   - 
 Share based consideration                               7,196 
Acquisition-date fair value of the previously 
 held equity interest                                      856 
Plus: 
 Loan to Rubio Investments 391 (Proprietary) Limited     3,012 
 Net gain on acquisition of debentures *                 1,222 
 
Fair value of consideration transferred                 12,286 
                                                       ======= 
 

* The net gain on acquisition of debentures has arisen due to the fair value of Fluormin Plc shares issued being less than the fair value of the debentures purchased at acquisition date.

The assets and liabilities recognised as a result of the acquisition are as follows:

 
                                                  Fair value 
                                                     GBP'000 
 
Investment properties                                    116 
Mining rights                                          6,466 
Property, plant and equipment                          8,577 
Restricted investment                                    364 
Inventories                                            4,344 
Accounts receivable                                    2,569 
Cash                                                   1,370 
Convertible loan                                     (1,745) 
Provision for environmental rehabilitation           (4,231) 
Portion of unsecured unsubordinated convertible 
 debentures                                          (5,677) 
Deferred tax liability                               (2,005) 
Trade and other payables                             (1,339) 
Provisions - other                                     (263) 
Current portion of long-term loans                      (71) 
                                                  ---------- 
 
Net identifiable assets acquired                       8,475 
 
Plus: 
Liability element of debentures acquired               3,283 
 
Less: 
Non-controlling interest                             (2,144) 
 
Net assets acquired                                    9,614 
                                                  ========== 
 

As a result of the above acquisition goodwill of GBP2,672k has been recognised. The goodwill is attributable to the Witkop mine and essentially relates to a premium paid for exposure to the fluorspar market. It will not be deductible for tax purposes.

Subsequently, on 19 December 2011, the Company acquired the remaining 21.71% of the issued share capital of Sallies for a total consideration of GBP3,956k, resulting in the elimination of the above noted non-controlling interest. The consideration comprised of a share based component of GBP954k (1,735,995 shares issued) and a cash component of GBP3,002k (refer to note (b) below).

Furthermore, on 23 January 2012, pursuant to the unconditional mandatory offer to Sallies debenture holders, the Company acquired a further 39.16% of the Sallies debentures for a total consideration of GBP2,292k, increasing its aggregate debenture holding to 96.99%. The consideration comprised of a share based component of GBP59k (102,950 shares issued) and a cash component of GBP2,233 (refer to note (b) below).

Acquired receivables

The fair value of acquired trade receivables was GBP1,566k. The gross contractual amount for trade receivables due approximated the fair value and is expected to be collectible.

Acquired property, plant and equipment

The fair value of the property, plant and equipment of GBP8,577k was based on an independent valuation conducted by Pretoria Demolition and Excavating Contractors in March 2012. The valuation was based on the demolishing and dismantling of the structures of the Group's Witkop mine in Zeerust, South Africa and the value of the material and/or structures in the open market. Factors that were taken into consideration for the disposal of the materials and structures including the location of the mine, similar sales in the past and the prices that were paid and the feasibility to locate different structures.

Non-controlling interests

The Company has elected to recognise the non-controlling interest at share of net assets for the initial acquisition on 31 August 2011. However, as noted above the non-controlling interest was subsequently eliminated on 19 December 2011 following the acquisition of the entire issued share capital of Sallies Limited.

Revenue and profit contribution

The acquired business contributed revenues of GBP20,802k and a net loss of GBP1,532k to the group for the period from 1 September 2011 to 30 June 2012.

If the acquisition of Sallies Limited had been completed on the first day of the financial year, group revenues for the period would have been GBP24,936k and group loss attributable to equity holders of the parent would have been GBP1,995k.

   (b)           Mandatory offer - cash outflow 
 
                                                GBP'000 
 
Outflow of cash to acquire subsidiary, net of 
 cash acquired: 
 
Cash consideration - paid on 19 December 2011     3,002 
Cash consideration - paid on 23 January 2012      2,233 
                                                ------- 
Total cash consideration                          5,235 
 
Less: Balances acquired 
Cash                                            (1,370) 
                                                  3,865 
                                                ------- 
 
Outflow of cash - investing activities            3,865 
                                                ======= 
 

Acquisition-related costs

Acquisition-related costs of GBP684k are included in other expenses in profit or loss and in operating cash flows in the statement of cash flows.

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR UBVORUWARAAA

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