To view the PDF file, sign up for a MySharenet subscription.

AND - Andulela Investment Holdings Limited - Reviewed condensed interim results

Release Date: 23/09/2011 07:05
Code(s): AND
Wrap Text

AND - Andulela Investment Holdings Limited - Reviewed condensed interim results for the six months ended 30 June 2011 ANDULELA INVESTMENT HOLDINGS LIMITED (Incorporated in the Republic of South Africa) (Registration number 1950/037061/06) Share code: AND ISIN: ZAE000125894 ("Andulela" or "the company") Reviewed condensed interim results for the six months ended 30 June 2011 Condensed consolidated statement of financial position Reviewed Reviewed Audited Six months Six months 18 months ended ended ended
30 June 30 June 31 December 2011 2010 2010 Notes (R`000) (R`000) (R`000) Assets Non-current assets Investment in associates 1 - - - Property, plant and equipment 2.1 32 570 35 103 34 060 Goodwill 2.2 418 679 418 679 418 679 Current assets 37 997 28 758 26 068 Trade and other receivables 35 659 26 683 23 647 Cash at bank 2 338 2 075 2 421 Total assets 489 246 482 540 478 807 Equity and liabilities Capital and reserves 385 118 383 718 379 178 Share capital and share premium 3 803 567 803 567 803 567 Accumulated loss (495 611) (496 933) (500 811) Non-controlling interest 77 162 77 084 76 422 Non-current liabilities 82 030 80 635 81 892 Redeemable preference share capital 75 000 75 000 75 000 Deferred tax liability 7 030 5 635 6 892 Current liabilities 22 098 18 187 17 737 Taxation 4 263 3 607 1 292 Trade and other payables 17 835 14 580 16 445 Total equity and liabilities 489 246 482 540 478 807 Net asset value per share (cents) 7.79 7.76 7.66 Net tangible asset value per share (cents) (2.80) (2.84) (2.93) Condensed consolidated statement of comprehensive income Gross revenue 43 320 9 588 38 379 Profit/(Loss) from operations 15 540 (3 446) (3 003) Investment income 47 2 466 8 412 Loss from associates - (6 664) (4 536) Proportionate share of loss net of dividends - (6 664) (10 554) Dividends received - - 6 018 Reversal of impairment of investment in associates - 4 435 25 996 Impairment of goodwill on acquisition of subsidiaries 2.2 - (219 536) (219 536) Finance costs (2 194) (2 614) (8 156) Profit/(Loss) before taxation 13 393 (225 359) (200 823) Taxation (5 829) (673) (6 497) Net profit/(loss) for the period 7 564 (226 032) (207 320) Attributable to: - Equity holders of Andulela Investment Holdings Limited 5 200 (226 316) (208 619) - Non controlling interest 2 364 284 1 299 Ordinary shares in issue (millions) 3 951 3 951 3 951 Weighted average number of ordinary shares in issue (millions) 3 951 1 009 2 790 Headline earnings/(loss) 5 200 (11 215) (15 017) - Attributable net profit/(loss) for the period 5 200 (226 316) (208 619) - Less: Reversal of impairment of investment in associates - (4 435) (25 996) - Add back: Impairment of goodwill on acquisition of subsidiaries - 219 536 219 536 - Add back: Loss on scrapping of property, plant and equipment - - 62 Earnings/(loss) and diluted earnings/(loss) per ordinary share (cents)(a) 0.13 (22.42) (7.48) Headline earnings/(loss) and diluted headline earnings/(loss) per ordinary share (cents)(a) 0.13 (1.11) (0.54) Dividends per ordinary share (cents) - - - (a) The earnings/(loss) and headline earnings/(loss) per ordinary share is calculated by dividing the earnings/(loss) and headline earnings/(loss) by the weighted average number of ordinary shares in issue during the period. Condensed consolidated statement of cash flows Cash flows from: Operating activities 4 042 (2 810) 2 410 Investing activities - (415 668) 8 800 Financing activities (4 125) 418 751 (9 316) Change in cash and equivalents (83) 273 1 894 Opening cash and equivalents 2 421 1 802 527 Closing cash and equivalents 2 338 2 075 2 421 Condensed consolidated statement of changes in equity Opening balances 302 756 108 133 86 558 Net profit/(loss) for the period 5 200 (226 316) (208 619) Shares issued net of expenses - 424 817 424 817 Non-controlling interest 77 162 77 084 76 422 Closing balances 385 118 383 718 379 178 Basis of preparation The condensed consolidated interim financial information for the six months ended 30 June 2011 has been prepared in accordance with International Financial Reporting Standards (IFRS) of the International Accounting Standards Board (in particular IAS 34, "Interim Financial Reporting"), the AC 500 standards as issued by the Accounting Practices Board or its successor, the South African Companies Act and the Listings Requirements of the JSE Limited. The condensed consolidated interim financial information is presented in South African rands, which is the group`s functional currency. The accounting policies adopted are consistent with those of the previous year. Notes to the reviewed condensed financial results Reviewed Reviewed Audited
Six months Six months 18 months ended ended ended 30 June 30 June 31 December 2011 2010 2010
(R`000) (R`000) (R`000) 1. Investment in associates Opening carrying value at cost - 450 000 450 000 Shares at cost - 335 679 335 679 Loan receivable at acquisition - 114 321 114 321 Loan receivable subsequent to acquisition(b) - 20 978 20 978 Share of net loss from associate net of dividends received - (19 805) (19 805) Brought forward from prior period - (9 251) (9 251) Current period - (10 554) (10 554) - Share of associate (loss) - current year - (4 536) (4 536) - Less: Dividend received - (6 018) (6 018) Less: Impairment(c) - (255 09) (255 509) - Balance brought forward from prior year - (281 505) (281 505) - Add: Current period reversal - 25 996 25 996 Less: Disposal of associates, controlling interest acquired - (195 664) (195 664) Carrying value - - - (b) These loans represent the interest accrued and not paid on the acquisition loans from the date of acquisition to the reporting date. These loans are unsecured, bore interest at prime bank overdraft rates less 1% up to 31 March 2010, and have no fixed terms of repayment. As of 1 April 2010, the loans are interest-free. (c)Based on fair value of investments as per competent persons` report dated 29 January 2010 and updated on 19 January 2011. 2. Non-current assets Reviewed Reviewed Audited Six months Six months 18 months ended ended ended
30 June 30 June 31 December 2011 2010 2010 (R`000) (R`000) (R`000) Tangible 2.1 Property, plant and equipment Opening balance 34 060 - - Plant and machinery acquired through business combinations - 35 083 35 083 Additions - 531 933 Depreciation (1 490) (511) (1 956) Plant and machinery at carrying value 32 570 35 103 34 060 Intangible 2.2 Goodwill Opening balance 418 679 - - Arising on acquisition of controlling interest in subsidiary - 638 215 638 215 Impairment of goodwill on acquisition - (219 536) (219 536) Closing balance at period end 418 679 418 679 418 679 The goodwill has been impaired based on a valuation of the controlling interest per the competent persons` report dated 29 January 2010 and updated on 19 January 2011. 3. Share capital and share premium Six months Six months 18 months ended ended ended
30 June 30 June 31 December 2011 2010 2010 No. of shares No. of shares No. of shares 3.1 Ordinary shares of R0.01 each Authorised 5 500 000 000 ordinary shares of R0.01 each Opening balance 5 500 000 000 1 925 000 000 1 925 000 000 Increase - 3 575 000 000 3 575 000 000 Authorised share capital at period end 5 500 000 000 5 500 000 000 5 500 000 000 Issued Opening balance 3 950 660 296 419 000 000 419 000 000 Issued at a premium of R0.1103 per share - 3 531 660 296 3 531 660 296 Closing balance 3 950 660 296 3 950 660 296 3 950 660 296 Six months Six months 18 months ended ended ended 30 June 30 June 31 December
2011 2010 2010 (R`000) (R`000) (R`000) 3.1 Ordinary shares of R0.01 each Authorised 5 500 000 000 ordinary shares of R0.01 each Opening balance 55 000 19 250 19 250 Increase - 35 750 35 750 Authorised share capital at period end 55 000 55 000 55 000 Issued Opening balance 39 507 4 190 4 190 Issued at a premium of R0.1103 per share - 35 317 35 317 Closing balance 39 507 39 507 39 507 Six months Six months 18 months
ended ended ended 30 June 30 June 31 December 2011 2010 2010 (R`000) (R`000) (R`000)
3.2 Share premium Opening balance 764 060 374 560 374 560 Issued at a premium of R0.1103 per share - 389 683 389 683 Share issue costs - (183) (183) Closing balance 764 060 764 060 764 060 Total ordinary share capital and share premium 803 567 803 567 803 567 4. Business combinations On 1 May 2010, the group acquired a controlling interest in Kilken Platinum (Pty) Limited ("Kilken") of 83.6% (previously 41.8%) through the combined holding of subsidiaries Abalengani Mining Investments (Pty) Limited ("AMI") and JB Platinum Holdings (Pty) Limited ("JBPH"). At acquisition, the previously held investment in associates was fairly valued, based on the competent persons` report. The following table summarises the fair value of the consideration paid for Kilken and the fair value of the assets acquired and liabilities assumed, recognised at the acquisition date, as well as the fair value at the acquisition date of the non-controlling interest in Kilken. Six months Six months 18 months
ended ended ended 30 June 30 June 31 December 2011 2010 2010 (R`000) (R`000) (R`000)
Equity instruments issued in respect of option exercised - 425 000 425 000 Fair value of previously held associate interests - 195 664 195 664 Fair value of non-controlling interest - 76 799 76 799 - 697 463 697 463 Fair value of net assets acquired - 59 248 59 248 Property, plant and equipment - 35 083 35 083 Bank and cash - 3 766 3 766 Trade and other receivables - 35 344 35 344 Trade and other payables - (14 945) (14 945) Goodwill arising on acquisition of controlling interest - 638 215 638 215 Financial information in respect of the subsidiaries` investment in Kilken Summarised statement of financial position Non-current assets 32 570 35 103 34 060 Current assets 37 622 28 666 25 717 Equity and reserves (50 879) (51 103) (46 371) Non-current liabilities (7 030) (5 635) (6 892) Current liabilities (12 283) (7 031) (6 514) Results of operations Revenue 43 320 9 588 38 379 Operating profit 20 201 2 376 9 509 Finance income 36 28 94 Profit before taxation 20 237 2 404 9 603 Taxation (5 829) (673) (3 786) Profit for the period 14 408 1 731 5 817 5. Material related party transactions Purchases from related parties - Tailing Technologies (Pty) Limited 7 525 5 373 17 104 - GTS Technologies (Pty) Limited 4 810 3 602 6 984 Administration and management fees paid to related parties - Jonah Capital (Pty) Limited - 686 1 765 Consulting fees per agreement - D N Rosen - 1 515 3 165 Interest received on shareholders` loans - Abalengani Mining Investments (Pty) Limited - 1 235 4 910 - JB Platinum Holdings (Pty) Limited - 1 178 3 357 Interest paid on working capital loans - Newshelf 1005 (Pty) Limited - 134 447 - Jonah Capital (Pty) Limited - - 231 6. Segment reporting No segmental reporting has been presented as the entity has no separately reportable segments. It operates in one geographical location and only derives income from one customer. Review opinion These results have been reviewed by the company`s auditors, BDO South Africa Inc., whose unmodified review opinion is available for inspection at the company`s registered office. Nature of the business The company is an investment holding company. Going concern The financial statements have been prepared on the going concern basis. Directorate The current directors of the company at date of this report are as follows: Name Date of appointment M J Husain (Chairman) # Appointed as Chairman 26 February 2010 A Kaka (CEO) Appointed as CEO 26 February 2010 P C de Jager (CFO) Appointed as CFO 25 October 2010 G Rosenthal # Appointed 26 February 2010 # Independent non-executive Commentary Introduction For the six months to 30 June 2011, the consolidated group results reflect normal operating earnings post the prior period impairment and transaction costs related to the acquisition of controlling stakes in Abalengani Mining Investments (Pty) Limited ("AMI") and JB Platinum Holdings (Pty) Limited ("JBPH"). The group`s attributable headline earnings rose to R5.2 million from the loss of R11.2 million and from the loss of R15.0 million reported for the periods ended 30 June 2010 and 31 December 2010 respectively due to stable and improved PGM production at Kilken coupled with stronger Platinum Group Metals ("PGM") prices. Financial review As at the reporting date Andulela had access to a working capital facility of R5.0 million which was renewed to the end of August 2011 and which was subsequently settled and is no longer required. Preference dividends on the cumulative redeemable preference shares due to the holder thereof (Newshelf) in the amount of R2.2 million were accrued and expensed as finance costs in the current period in accordance with the rights attaching to the preference shares. R2.5 million was paid towards the arrear preference dividends owing and the cumulative arrears amount to R9.8 million which is included in current liabilities. The value of Kilken is recorded at fair value in terms of IFRS 3 for the purpose of recording the business combination of AMI, JBPH and Kilken. As a result of the business combination, the group continues to carry goodwill of R419 million in the financial statements of Andulela. In accordance with IFRS, management will continue to assess the fair value of the investment. Having regard to the improved production and PGM prices over the last two quarters, management is confident of the improved fundamentals for the real value of the underlying investment in Kilken. Kilken Platinum Andulela owns an effective 83.6% stake in Kilken`s PGM tailings retreatment facility that deliver s PGM concentrate to Rustenburg Platinum Mines (Pty) Limited ("RPM"). A proactive maintenance and refurbishment regime has been implemented to improve efficiency and plant availability. These initiatives yielded the expected positive returns. Kilken`s PGM production improved by 41% for the six months to June 2011 compared to the comparative period in 2010 and by 10% compared to the 18 months ended 31 December 2010. This represents a marked improvement in constant production volumes with less unplanned stoppages. Management remains optimistic about the continued positive growth outlook for PGM`s for the foreseeable future. Events subsequent to the period end The improved production recoveries of Kilken for the period under review have continued for the period up to 31 August 2011. As at the date of this report, production for the eight months has already surpassed that of the 12 months to 31 December 2010 of the prior financial year by more than 34% with four months of production still left in the current year. With reference to the announcements on SENS, the last of which was dated 2 September 2011, Andulela concluded the transaction to acquire the entire issued share capital of, and all claims against Pro Roof Steel Merchants (Pty) Limited ("PRSM"), a steel processing, distribution and services group with six branches in South Africa, from both The Rafik Mohamed Family Trust and Pro Roof Steel Merchants (East London) (Pty) Limited. As at 30 August 2011 all the suspensive conditions were fulfilled and the effective date of the transaction is consequently 1 September 2011, from which date PRSM will be consolidated into the results of Andulela. The purchase consideration of a maximum of R252 million and a minimum of R168 million, based on the consolidated tangible net asset value ("NAV") of PRSM and its subsidiaries as at 31 August 2011, will be settled by the issue of a maximum of 630 million and a minimum of 420 million Andulela shares, at an issue price of 40 cents per share. The company is in the process of determining the effective date NAV, subsequent to which the number of purchase consideration shares will be calculated and issued to the Sellers. With reference to further announcements on SENS the last of which was dated 22 June 2011, Andulela or its nominee will acquire the entire steel processing and distribution business, including the assets and liabilities, of GIBB Steel (Pty) Limited ("GIBB Steel") indivisibly as a going concern. The maximum transaction purchase consideration of R95 million will be based on the tangible net asset value ("TNAV") of GIBB Steel at the anticipated effective date, and will be settled by way of a maximum cash amount of R35 million and the balance by way of the issue of the maximum of 150 million Andulela ordinary shares at an issue price of 40 cents per share. The effective date TNAV of GIBB Steel is anticipated to be R95 million. The transaction is conditional upon the fulfilment or waiver of certain suspensive conditions as detailed in the announcement of 1 February 2011. As at the date of this report all the suspensive conditions have not been fulfilled. Restructuring review As indicated in the annual report for the 18 months ending 31 December 2010, management have initiated a review of the newly formed group structure. The review is expected to be completed before the next reporting period. The outcome of the review and the initiatives implemented will be reported to shareholders. For and on behalf of the board M J Husain Independent Non-executive Chairman A Kaka Chief Executive Officer Sandton 20 September 2011 Directors Mohamed J Husain* (Chairman), Ashruf Kaka (CEO) Pieter de Jager (CFO), Graham Rosenthal* (*Independent non-executive) Registered office 108 4th Street, Parkmore, Sandton, 2196 Company secretary J R Jones (Mrs) Transfer secretaries Link Market Services (Pty) Limited 13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein Sponsor Java Capital 2 Arnold Road, Rosebank, Sandton, 2196 23 September 2011 Date: 23/09/2011 07:05:34 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

Share This Story