Wrap Text
Reviewed provisional group results for the year 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: 28/09/2012 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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