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ANDULELA INVESTMENT HOLDINGS LTD - Reviewed condensed interim results for the six months ended 30 June 2012

Release Date: 26/09/2012 16:55
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Reviewed condensed interim results for the six months ended 30 June 2012

ANDULELA INVESTMENT HOLDINGS LIMITED
(Previously DNR Capital Limited)
(Incorporated in the Republic of South Africa)
(Registration number: 1950/037061/06)
Share code: AND ISIN code: ZAE000125894
(Andulela or the company)


REVIEWED CONDENSED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2012


CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
                                                         Reviewed    Reviewed        Audited
                                                         6 months    6 months           Year
                                                            ended       ended          ended
                                                           30 June     30 June   31 December
                                                             2012        2011           2011
                                                 Notes      R000        R000           R000
ASSETS

Non-current assets                                        820 775     451 249        827 686
Plant and equipment                                1.1    401 403      32 570        409 007
Deferred tax asset                                            693                        
Goodwill                                                  418 679     418 679        418 679

Current assets                                            372 658      37 997        278 437
Inventory                                                  85 616                    54 906
Trade and other receivables                               214 240      35 659        165 276
Cash and cash equivalents                                  72 802       2 338         58 255

Total assets                                             1 193 433    489 246      1 106 123

EQUITY AND LIABILITIES

Capital and reserves                                      571 408     385 118        584 601
Share capital and share premium                     2     976 114     803 567        976 114
Revaluation reserve                                         4 638                     4 638
Accumulated loss                                         (484 993)   (495 611)     (476 618)
Non controlling interest                                   75 649      77 162         80 467

Non-current liabilities                                   329 742      82 030        308 468
Redeemable preference share capital                        53 081      75 000         60 000
Deferred tax liability                                     73 694       7 030         78 676
Other financial liabilities                               202 967                   169 792

Current liabilities                                       292 283      22 098        213 054
Taxation                                                    3 102       4 263          2 048
Redeemable preference share capital                        13 647                    15 000
Other financial liabilities                                70 664                    87 627
Trade and other payables                                  204 870      17 835        108 379

Total equity and liabilities                             1 193 433    489 246      1 106 123

Net asset value per share (cents)                            11,34       7,05          11,53
Net tangible asset value per share (cents)                    3,34      (0,96)          3,53


CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                                           Reviewed    Reviewed        Audited
                                                           6 months    6 months           Year
                                                              ended       ended          ended
                                                             30 June     30 June   31 December
                                                               2012        2011           2011
                                                              R000       R000          R000
Gross revenue                                               693 691      43 320        542 788
Cost of sales                                              (611 361)    (14 360)     (403 524)
Gross profit                                                 82 330      28 961        139 264
Profit from operations                                        1 014      15 540         59 681
Investment income                                               355          47            452
                                                              1 369      15 587         60 133
Finance costs                                                (9 372)     (2 194)        (9 735)
(Loss)/profit before taxation                                (8 003)     13 393         50 398
Taxation                                                      1 132      (5 829)      (17 794)
Net (loss)/profit for the period/year                        (6 871)      7 564         32 604
Other comprehensive income net of tax for the
period/year                                                                             4 637
Gains on revaluation of plant and equipment                                             6 441
Deferred tax charge on revaluation of plant and
equipment                                                                             (1 804)

Total comprehensive (loss)/income for the period/year        (6 871)      7 564         37 241
Net (loss)/profit for the period/year attributable to:       (6 871)      7 564         32 603
 Equity holders of Andulela Investment Holdings Limited     (8 373)      5 200         24 954
 Non controlling interest                                    1 502       2 364          7 649

Total comprehensive (loss)/income for the period/year 
attributable to:                                 	     (6 871)      7 564         37 241
 Equity holders of Andulela Investment Holdings Limited     (8 373)      5 200          28 831
 Non-controlling interest                                    1 502       2 364          8 410

Ordinary shares in issue (millions)                           4 371       3 951          4 371
Weighted average number of ordinary shares in
issue (millions)                                              4 371       3 951          4 091
Headline (loss)/earnings and attributable net
(loss)/profit for the period/year                            (8 373)      5 200          24 954

(Loss)/earnings per ordinary share (cents)*                   (0,19)        0,13          0,61
Diluted (loss)/earnings per ordinary share (cents)*           (0,19)        0,13          0,61
Headline (loss)/earnings per ordinary share (cents)*          (0,19)        0,13          0,61
Diluted headline (loss)/earnings per ordinary share
(cents)*                                                      (0,19)        0,13          0,61
Dividends per ordinary share (cents)                                                       

* The (loss)/earnings and the headline (loss)/earnings per ordinary share is calculated by dividing the (loss)/earnings
and the headline (loss)/earnings by the weighted average number of ordinary shares in issue during the period/year.
The diluted (loss)/earnings and the diluted headline (loss)/earnings per ordinary share is calculated by dividing the
diluted (loss)/earnings and the diluted headline (loss)/earnings by the weighted average number of ordinary shares in
issue and issuable during the period/year.


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                           Reviewed    Reviewed        Audited
                                                           6 months    6 months           Year
                                                              ended       ended          ended
                                                             30 June     30 June    31 December
                                                              2012        2011           2011
                                                             R000       R000          R000
Cash flows from:
Operating activities                                         19 586       4 042          5 861
Investing activities                                         (7 290)                  (79 185)
Financing activities                                          2 251      (4 125)       129 158
Change in cash and equivalents                               14 547         (83)        55 834
Opening cash and equivalents                                 58 255       2 421          2 421
Closing cash and equivalents                                 72 802       2 338         58 255


CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
                                                           Reviewed    Reviewed        Audited
                                                           6 months    6 months           Year
                                                              ended       ended          ended
                                                             30 June     30 June    31 December
                                                              2012        2011           2011
                                                             R000       R000          R000
Opening balances                                           584 600     302 756        379 178
Movements for the period/year:
 Net (loss)/profit for the period/year                     (8 374)      5 200         24 954
 Shares issued                                                                        167 914
 Vendor shares                                                                         4 633
 Revaluation net of deferred tax                                                       3 877
 Non-controlling interest                                  (4 817)      77 162         4 044
Closing balances                                           571 409      385 118       584 600


NOTES TO THE REVIEWED PROVISIONAL CONDENSED CONSOLIDATED FINANCIAL RESULTS

Basis of preparation
The interim condensed consolidated financial information for the six months ended 30 June 2012 has been presented
in accordance with the framework concepts and the measurement and recognition requirements of International
Financial Reporting Standards (IFRS), the information required by IAS 34, Interim Financial Reporting, the AC 500
standards as issued by the Accounting Practices Board or its successor, requirements of the South African Companies
Act, as amended and the JSE Limited Listings Requirements. The condensed consolidated interim financial
information is presented in South African rands, which is the groups functional currency. The results have been
prepared in accordance with the accounting policies of the company that are in terms of IFRS and that are consistent
with those accounting policies of the previous financial year. These results were prepared under the supervision of
Pieter de Jager, the Group Chief Financial Officer.

                                                           Reviewed    Reviewed        Audited
                                                           6 months    6 months           Year
                                                              ended       ended          ended
                                                             30 June     30 June    31 December
                                                              2012        2011           2011
                                                             R000        R000           R000
1.     Non-current assets
       Tangible
1.1    Plant and equipment
       Opening balance                                     409 007      34 060         34 060
       Plant and machinery acquired through business
       combinations                                                                    379 462
       Revaluation of plant and equipment                                               6 441
       Additions                                             7 291                       801
       Depreciation                                        (14 895)     (1 490)       (11 757)
       Plant and machinery at carrying value               401 403      32 570        409 007
 
                                                              			 
							            Number of shares
                                                           Reviewed    Reviewed        Audited
                                                           6 months    6 months           Year
                                                              ended       ended          ended
                                                             30 June     30 June     31 December
                                                              2012        2011           2011
                                                              000         000            000
2.     Share capital and share premium


2.1    Ordinary shares of R0,01 each

       Authorised
       There was no change to the authorised share
       capital which remained at 5 500 000 000 ordinary
       shares of R0,01 each representing R55 million
       
       Issued
       Opening balance                                   4 382 242   3 950 660       3 950 660
       Issued at a premium of R0,39 per share                                        420 000
       Vendor shares issuable at a premium of R0,39 per
       share                                                                          11 582
       Closing balance                                   4 382 242   3 950 660       4 382 242

                                                         
							  Reviewed    Reviewed        Audited
                                                          6 months    6 months           Year
                                                             ended       ended          ended
                                                            30 June     30 June    31 December
                                                              2012        2011           2011
                                                             R000        R000           R000
       Authorised
       There was no change to the authorised share
       capital which remained at 5 500 000 000 ordinary
       shares of R0,01 each representing R55 million
       Issued
       Opening balance                                      43 822      39 506         39 506
       Issued at a premium of R0,39 per share                                           4 200
       Vendor shares issuable at a premium of R0,39 per
       share                                                                            116
       Closing balance                                      43 822      39 506         43 822


                                                          Reviewed    Reviewed        Audited
                                                          6 months    6 months           Year
                                                             ended       ended          ended
                                                            30 June     30 June    31 December
                                                              2012        2011           2011
                                                             R000       R000          R000
2.2    Share premium
       Opening balance                                     932 292     764 061        764 061
       Issued at a premium of R0,39 per share                                         163 800
       Vendor shares issuable at a premium of R0,39 per
       share                                                                          4 517
       Share issue costs                                                                (86)
       Closing balance                                     932 292     764 061        932 292
       
       Total ordinary share capital and share premium      976 114     803 567        976 114

3.     Related party transactions and balances
       Sales
        E-Tile (Pty) Limited                              (14 857)                  (15 714)
        Changing Tides 74 (Pty) Limited                    (6 408)                   (2 039)
        Pro Steel International Trading (Pty) Limited      (3 996)                   (3 153)
        Help-U-Build (Pty) Limited                         (4 210)                   (4 217)
        Mixshelf 1119 CC                                      (81)                     (217)
       Purchases
        Tailing Technologies (Pty) Limited                  7 711        7 525        16 341
        GTS Technologies (Pty) Limited                      7 934        4 810        15 449
        Help-U-Build (Pty) Limited                              5                         
        Pro Steel International Trading (Pty) Limited         354                       217
        E-Tile (Pty) Limited                                4 559                     1 296
        Mono Steel Works                                       93                        49
       Administration and management fees paid
       Akzam Management Services(Pty) Limited                 450                     1 005
       Rent expenses
        Sheerprops 97 (Pty) Limited                         6 991                     7 056
        Wideprops 1087 CC                                   2 277                     2 899
        Changing Tides 74 (Pty) Limited                     3 275                     2 147
        Normarc Investments                                   170                        71
       Trade receivables
        Changing Tides 74 (Pty) Limited                     6 097                       474
        E-Tile (Pty) Limited                                2 488                     3 773
        Pro Steel International Trading (Pty) Limited       1 071                       990
        Help-U-Build (Pty) Limited                            931                     2 064
        Mixshelf 1119 CC                                       90                       247
        Mono Steel Works                                      584                         
       Loan accounts owed
        The Rafik Mohamed Trust                              (647)                     (647)
        Thunder Rate Investments(Pty) Limited             (37 442)                  (36 940)
       Trade payables
        Euro Tile (Pty) Limited                              (848)                      (46)
        Pro Steel International Trading (Pty) Limited         (91)                        
        Help-U-Build (Pty) Limited                             (6)                        
        Mono Steel Works                                      (15)                        
        Mixshelf 1119 CC                                                            (1 099)
        Tailing Technologies (Pty) Limited                 (1 598)                   (1 424)

4. Segment reporting
The strategic steering committee is the groups chief operating decision-maker. Management has determined the
operating segments based on the information reviewed by the strategic steering committee for the purposes of
allocating resources and assessing performance. The strategic steering committee considers the business from a
product perspective. The group has two sources of income namely, the production of Platinum Group Metals (PGM)
by a tailings retreatment operation, and the processing and distribution of steel products.


                                                          Reviewed    Reviewed        Audited
                                                          6 months    6 months           Year
                                                             ended       ended          ended
                                                            30 June     30 June   31 December
                                                              2012        2011           2011
                                                             R000       R000          R000
       Revenue
       Tailings retreatment                                 44 946      43 320        123 560
       Steel processing                                    648 745                   419 228
       Total revenue                                       693 691      43 320        542 788
       
       (Loss)/profit after tax
       Tailings retreatment                                 11 738      14 408         46 638
       Steel processing                                    (12 043)                   (2 890)
       Other unallocated                                    (6 566)     (6 844)       (11 145)
       Total (loss)/profit aft tax                          (6 871)      7 564         32 603
       
       Assets
       Tailings retreatment                                 73 589      70 192         87 202
       Steel processing                                    694 621                   598 838
       Other unallocated                                   425 223     419 05         420 083
       Total assets                                      1 193 433     489 245      1 106 123
       
       Liabilities
       Tailings retreatment                                 31 912      19 313         16 183
       Steel processing                                    537 569                   429 095
       Other unallocated                                    52 544      84 815         76 245
       Total liabilities                                   622 025     104 128        521 523


Review opinion
These results have been reviewed by the companys auditors, BDO South Africa Incorporated, whose unmodified
review opinion is available for inspection at the companys registered office.

Nature of the business
The company is an investment holding company.

Going concern
The financial information has 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
MJ Husain (Chairman)#	Appointed as Chairman 26 February 2010
A Kaka (CEO)          	Appointed as CEO 26 February 2010
PC de Jager (CFO)      	Appointed as CFO 25 October 2010
GR Rosenthal#	        Appointed 26 February 2010
PE du Preez#            Appointed 1 October 2011
I Kajee         	Appointed 1 October 2011
CWN Molope#             Appointed 1 July 2012

#  Independent non-executive


COMMENTARY

Introduction

The consolidated group results for the six months ended 30 June 2012 resulted in an attributable headline loss of R8,4
million compared to a profit of R5,2 million for the comparable six month period ended 30 June 2011 and a full year
profit of R25 million reported for the year ended 31 December 2011. The most significant impact on the group results
for the six months ended 30 June 2012 was the net loss after tax of Pro Roof Steel Merchants (Pty) Limited and its
subsidiaries (PRSM), a steel processing and distribution group acquired on 1 September 2011. The continued decline
in world steel prices and the still depressed construction industry weighed heavily on the steel processing groups
results.

Management is committed to its continued programme of rationalising overhead costs and the reduction of the
production cost per ton in PRSM to yield positive net returns.


Financial review

There was an improvement in the groups cash generation from operating activities to R19,6 million for the six
months compared to R5,9 million for the year ended 31 December 2011. The group further maintained a net asset
value per share at 11,34 cents compared to 11,53 cents as reported for the year ended 31 December 2011 despite the
headline loss for the period.

The steel processing operations yielded positive cash earnings before interest, tax and depreciation, adjusted for the
effect of lease smoothing (IAS 17), of R6,7 million and a cash loss after interest of R0,6 million, with depreciation and
finance costs being the most significant drivers contributing to PRSMs loss after tax.

The PGM tailings retreatment operation of Kilken Platinum (Pty) Limited through its Joint Venture with Imbani
Minerals (Kilken) continues to perform well and contributed significantly to the groups results.

For the current six months preference share dividends on the cumulative redeemable preference shares due to the
holder thereof (Newshelf 1005 (Pty) Limited), in the amount of R2,5 million were accrued and expensed as finance
costs, in accordance with the rights attaching to the preference shares. As at 30 June 2012 there were no arrear
preference dividends. With reference to the announcement on SENS dated 14 February 2012, the holder of the
preference shares and the company agreed that the preference shares shall be redeemed on an orderly basis over an
extended five year period. The company redeemed R8,3 million preference share capital for the six months under
review from positive operational cash flows and remains well ahead of minimum capital redemption payments.


Kilken Platinum

Andulela owns an effective 83,6% stake in Kilkens PGM tailings retreatment facility that delivers PGM concentrate
to Rustenburg Platinum Mines (Pty) Limited.

Kilkens PGM production recoveries improved by 16% for the six months to 30 June 2012 compared to the same six
month period in 2011. This underscores managements constant drive for improvement in production recovery
volumes with less unplanned stoppages. The Atomaer high shear reactor technology in the froth flotation process
continues to contribute significantly to the improved production recoveries.

We have experienced softer platinum prices globally for the past four to five months which impacted Kilkens net
profit performance. This resulted in a profit after tax for Kilken of R11,7 million for the period under review
compared to R14,4 million for the comparable period ended 30 June 2011. The improvement in PGM pricing to a four
month high around the $1 600/oz level at the date of this report and Kilkens continued improvement of production
recoveries are encouraging for the short and medium term outlook.

Kilken continues to be a profitable and low cost PGM producer which is a valuable cash generative asset for the group
and management remains optimistic about the continued positive growth outlook for the PGM market in the medium
to long term.

Management assessed the goodwill for impairment in terms of IAS 36 and concluded that there were no indicators of
impairment.


Pro Roof Steel Merchants

Although we are witnessing a lack of stability in the steel market which has prevailed longer than anticipated and are
still in the midst of a world and domestic economic downturn, there is still significant consolidation needed and
implementation of planned restructuring to be effected to maximise returns when the economy recovers. As mentioned
in the introduction the continued decline in world steel prices and the depressed construction industry are heavily
impacting on the steel processing groups results.

Management is confident that the planned restructuring and reduction of costs should enable PRSM to contribute
positively to the profitability of the group notwithstanding its lack of profitability in the current financial year. The
restructuring includes but is not limited to a detailed review of the less profitable outlying branches with the focus on
consolidating bulk manufacturing and processing to the best extent possible.


Events subsequent to the period end

All outstanding vendor shares in terms of the acquisition of PRSM were issued on 7 July 2012.

The group restructured its long term debt with effect from 7 July 2012 whereby Kilken Platinum entered into a term
loan and overdraft facility agreement in the total amount of R205 million for a five year period. As a result of the loan
agreement, Kilken has hedged 30% of its production. A new wholly owned subsidiary of Kilken Platinum was formed
to act as an investment vehicle and on-lent to PRSM. PRSM utilised the inter-group funding to reduce its existing debt
exposure. We believe that the new structure of the funding coupled with the aggressive rationalisation of overhead
costs will afford PRSM the necessary platform to better utilise its working capital.


Commitments

Capital commitments contracted by PRSM amounted to an estimated R4,9 million.



For and on behalf of the board


Mohamed J Husain                          Ashruf Kaka
Independent Non-executive Chairman        Chief Executive Officer

Sandton
26 September 2012

Directors
Mohamed J Husain# (Chairman)
Ashruf Kaka (CEO)
Pieter C de Jager (CFO)
Graham R Rosenthal#
Pieter E du Preez#
Ismail Kajee
Nosipho Molope#

# Independent non-executive

Registered office
108 4th Street, Parkmore
Sandton 2196

Company secretary
Joan R Jones

Transfer secretaries
Link Market Services (Pty) Limited
13th Floor, Rennie House
19 Ameshoff Street, Braamfontein

Sponsor
Java Capital
2 Arnold Road, Rosebank
Sandton 2196
Date: 26/09/2012 04:55:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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 information disseminated through SENS.

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