Wrap Text
Unaudited Condensed Interim Results for the six months ended 30 September 2014
MONTAUK HOLDINGS LIMITED
Incorporated in the Republic of South Africa
Registration number: 2010/017811/06
Share code: MNK
ISIN: ZAE000197455
("Montauk" or "the Company" or "the Group")
UNAUDITED CONDENSED INTERIM RESULTS
for the six months ended 30 September 2014
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
30 September 30 September 31 March
2014 2013 2014
$'000 $'000 $'000
ASSETS
Non-current assets 75 940 155 997 75 403
Property plant and equipment 46 129 48 031 44 654
Goodwill - 9 819 -
Interest in associates and joint ventures - 39 179 -
Other financial assets - 5 378 -
Intangibles 27 144 51 649 29 063
Deferred taxation - 110 -
Long-term receivables 2 667 1 831 1 686
Current assets 16 762 54 217 13 728
Other 6 701 13 722 4 987
Bank balances and deposits 10 061 40 495 8 741
Non-current assets held for sale 125 677 - 123 080
Total assets 218 379 210 214 212 211
EQUITY AND LIABILITIES
Equity 151 243 150 115 145 522
Equity attributable to equity holders
of the parent 124 347 124 273 120 070
Non-controlling interest 26 896 25 842 25 452
Non-current liabilities 6 374 27 260 6 150
Long-term borrowings - 21 250 -
Other 6 374 6 010 6 150
Current liabilities 55 197 32 839 39 154
Non-current liabilities held for sale 5 565 - 21 385
Total equity and liabilities 218 379 210 214 212 211
Net asset carrying value per share (cents) 92 92 89
UNAUDITED CONSOLIDATED INCOME STATEMENT
% Unaudited Unaudited Audited
change 30 September 30 September 31 March
2014 2013 2014
$'000 $'000 $'000
Revenue -5.2% 15 478 16 325 31 956
Expenses (13 643) (12 108) (25 515)
EBITDA -56.5% 1 835 4 217 6 441
Depreciation and amortisation (5 602) (5 349) (10 882)
Operating profit (3 767) (1 132) (4 441)
Investment income - 1 4
Finance costs (22) (658) (916)
Profit before taxation 111.8% (3 789) (1 789) (5 353)
Taxation - - -
Profit for the year from
continuing operations (3 789) (1 789) (5 353)
Discontinued operations 6 662 (8 148) (10 829)
Profit for the year 2 873 (9 937) (16 182)
Attributable to:
Equity holders of the parent 3 376 (7 347) (12 933)
Non-controlling interest (503) (2 590) (3 249)
2 873 (9 937) (16 182)
UNAUDITED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
Unaudited Unaudited Audited
30 September 30 September 31 March
2014 2013 2014
$'000 $'000 $'000
Profit for the year 2 873 (9 937) (16 182)
Other comprehensive income:
Items that may be reclassified subsequently
to profit or loss
Foreign currency translation differences (1 685) (7 124) (2 050)
Total comprehensive income 1 188 (17 061) (18 232)
Attributable to:
Equity holders of the company 1 786 (14 527) (18 572)
Non-controlling interest (597) (2 534) 340
1 188 (17 061) (18 232)
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
30 September 30 September 31 March
2014 2013 2014
$'000 $'000 $'000
Balance at beginning of year 145 522 166 312 166 312
Current operations
Total comprehensive income 1 188 (17 061) (18 232)
Acquisition of subsidiary - 864 864
Disposal of subsidiaries 4 533 - -
Effects of changes in holding - - (3 242)
Dividends - - (180)
Balance at end of year 151 243 150 115 145 522
RECONCILIATION OF HEADLINE EARNINGS
Unaudited Unaudited Audited
six months ended six months ended year ended
30 September 14 30 September 13 31 March 2014
% $'000 $'000 $'000
change Gross Net Gross Net Gross Net
Earnings attributable to
equity holders of the parent -145.9% 3 376 (7 347) (12 933)
IAS 16 losses (gains) on disposal
of plant and equipment - - - - 3 3
IAS 36 impairment of assets - - - - 2 520 2 016
IAS 27 profit from disposal/
part disposal of subsidiary (7 434) (7 434) - - - -
Remeasurements included in
equity-accounted earnings of
associates and joint ventures - - - - 4 911 3 325
Headline profit -44.8% (4 058) (7 347) (7 589)
Basic earnings per share (cents)
Earnings -145.9% 2.50 (5.43) (9.56)
Continuing operations (2.43) 0.59 (3.96)
Discontinued operations 4.93 (6.02) (5.60)
Headline earnings -44.8% (3.00) (5.43) (5.62)
Continuing operations (2.43) 0.59 (3.97)
Discontinued operations (0.57) (6.02) (1.66)
Weighted average number of shares
in issue ('000) 135 256 135 256 135 256
Actual number of shares in issue
at end of year
(net of treasury shares) ('000) 135 256 135 256 135 256
Diluted earnings per share (cents)
Earnings -145.9% 2.50 (5.43) (9.56)
Continuing operations (2.43) 0.59 (3.96)
Discontinued operations 4.93 (6.02) (5.60)
Headline earnings -44.8% (3.00) (5.43) (5.62)
Continuing operations (2.43) 0.59 (3.97)
Discontinued operations (0.57) (6.02) (1.66)
Diluted weighted average number
of shares in issue ('000) 135 256 135 256 135 256
* Restated
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
30 September 30 September 31 March
2014 2013 2014
$'000 $'000 $'000
Cash flows from operating activities (2 524) 7 598 10 717
Cash flows from investing activities (11 288) 328 334
Cash flows from financing activities 18 647 1 829 7 290
(Decrease)/increase in cash and cash equivalents 4 835 9 755 18 341
Cash and cash equivalents
At beginning of year 48 845 32 996 32 996
Foreign exchange differences (1 443) (2 256) (2 492)
At end of year 52 237 40 495 48 845
Cash in disposal groups held for sale 42 175 - 40 104
Bank balances and deposits 10 062 40 495 8 741
Cash and cash equivalents 52 237 40 495 48 845
SEGMENTAL ANALYSIS
Unaudited Unaudited Audited
30 September 30 September 31 March
2014 2013 2014
$'000 $'000 $'000
Revenue
Natural gas 15 478 16 325 31 956
EBITDA
Natural gas 1 835 4 217 6 441
Profit before tax
Natural gas (3 789) (1 789) (5 353)
Headline earnings
Media and broadcasting 30 151 (653)
Natural gas (3 789) (1 789) (5 350)
Other (299) (5 709) (1 586)
Total (4 058) (7 347) (7 589)
NOTES
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The results for the six months ended 30 September 2014 have been prepared in accordance
with International Financial Reporting Standards ("IFRS"), the disclosure requirements
of IAS 34, the SAICA Financial Reporting Guides as issued by the Accounting Practices
Committee, the requirements of the South African Companies Act, 2008, and the Listings
Requirements of the JSE Limited. The accounting policies applied by the group in the
preparation of these condensed consolidated interim financial statements are consistent
with those applied by the group in its consolidated financial statements as at and for
the year ended 31 March 2014. As required by the JSE Limited Listings Requirements,
the group reports headline earnings in accordance with Circular 2/2013: Headline Earnings
as issued by the South African Institute of Chartered Accountants.
These financial statements were prepared under the supervision of the financial director,
Mr SF McClain (CPA).
DISCONTINUED OPERATIONS AND DISPOSAL GROUPS HELD FOR SALE
During the period under review, the Group disposed of its 80% interest in Longkloof
Limited, which consisted of various offshore media investments, to Sabido Investments
Proprietary Limited. The results of these operations have been included in discontinued
operations in the current and prior periods.
Following the announcement by the Company's parent company, Hosken Consolidated
Investments Limited ("HCI"), during March 2014 that it will unbundle and list its
natural gas interests, the Company entered into an agreement with a wholly owned
subsidiary of HCI for the sale of its diversified investments in Australia and its 19.9%
in Impact Oil and Gas. The results of these operations have consequently been reclassified
to discontinued operations in the income statement and its assets and liabilities
reclassified to disposal groups held for sale in the statement of financial position.
The disposal groups held for sale, as disclosed in the statement of financial position,
relate to the assets and liabilities of the Group's remaining media and other operations,
which were disposed of during October 2014 in terms of the above agreement.
RESULTS
GROUP INCOME STATEMENT
Revenues for the six months ended 30 September 2014 contain $10.0 million related to
high-btu gas and associated environmental attribute sales and $5.2 million related to
sales of electricity and associated environmental attributes.
Expenses contain net gains of $1.3 million related to short-term gains resulting from
the Company's natural gas and electric commodity hedging programme.
Profit from discontinued operations includes $7.4 million investment surplus on the
sale of the Group's interest in Longkloof Limited.
GROUP STATEMENT OF FINANCIAL POSITION AND CASH FLOW
The assets and liabilities disclosed in statement of financial position, excluding
disposal group assets and liabilities, consist mainly of items associated with the
Group's natural gas operations.
Current liabilities contain $50 million of short-term borrowings owing to HCI group
companies that were settled prior to the Company's unbundling by HCI.
Cash flow from operating activities contain changes in working capital of $3.9 million.
Included in cash flow from investing activities is $36.7 million received on the sale of
Longkloof, cash of $34.1 million invested in associate entities of which $33.3 million
in Impact Oil and Gas and $6 million invested in property, plant and equipment. Net
borrowings of $18.6 million were raised inter alia for the purchase of the Group's
interest in Impact Oil and Gas.
COMMENTARY
The Company's results from its natural gas operations are heavily influenced by the
current market price for natural gas and electricity in the markets served, the price
associated with the accompanying environmental attribute and the volumes produced.
Overall revenue from the Company's high-btu facilities increased 3.9% for the six months
ended 30 September 2014 over the same period in the prior year. The average market
price for natural gas in the US increased approximately 13% for the six months ended
30 September 2014 over the comparable six-month period in 2013. In addition, overall
volumes produced increased 5.4% for the six months ended 30 September 2014 compared to
2013. The lower than expected overall growth in revenue from the Company's high-btu
facilities for the six months ended 30 September 2014 as compared to the prior year
is a result of the Company's not realising revenue for the cellulosic RINs generated
from the two high-btu facilities that have entered into contracts beginning in the
quarter ended 30 September 2014 to produce RINs resulting from the high-btu gas being
used as a vehicle fuel under the US EPA's RFS II program. The delay in realising the
environmental attribute revenue from these facilities is a result of the US EPA's delay
in issuing the 2014 volume obligations under the RFS II programme. The volume obligations
were required to be published in November of 2013, but given the developing market for
producing cellulosic RINs the EPA has delayed issuance of the obligations until the
available supply can be quantified. The EPA has indicated that the expectation is to
publish the 2014 volume requirements in early 2015, along with the corresponding 2015
volume requirements. The establishment of the volume obligations is expected to compel
obligated parties to begin actively purchasing cellulosic RINs that should result in
the establishment of a market price for the cellulosic RINs and will allow the
realisation of the RINs that have been and will continue to be produced. Market price
indications of cellulosic RIN value remain strong, however, until the volume obligations
are released and the parties required to purchase the RINs begin transacting the
realisable value of the RINs in inventory and to be produced cannot be determined.
Revenue from the Company's electric generation facilities decreased 20% for the six months
ended 30 September 2014 over the comparable period for the prior year despite a 1.7%
increase in electric production over the same period in the prior year. The decrease is
a result of a 13% decrease in the average price realised on the Company's electric
production primarily due to the expiration of an above market fixed price contract one of
the Company's electric generation facilities on 31 May 2014 as well as a $0.5 million
reduction in revenues incurred as a result of the inability to meet required minimum
production levels under the expired contract.
Expenses increased 12.7% for the six months ended 30 September 2014 as compared to the
same period in the prior year primarily as a result of the timing of scheduled major
maintenance events. Gains recognised from the Company's hedging programmes also decreased
by $0.5 million for the six months ended 30 September 2014 as compared to the same period
in 2013 due to the timing of changes experienced in natural gas pricing in the US.
In November 2014, the Company executed a purchase agreement to acquire three additional
high-btu facilities. The purchase is contingent upon the seller satisfying certain
conditions precedent to closing which is expected to occur in February of 2015. The
purchase price for the facilities is expected to be $4.6 million in cash, including
closing costs and working capital and the assumption of existing debt of approximately
$6.5 million. The acquisition is expected to contribute positively to the after tax
profit of the Company.
CHANGES IN DIRECTORATE
During the period under review the following changes in directorate occurred:
DR Herrman Appointed 31 August 2014
SF McClain Appointed 31 August 2014
MH Ahmed Resigned 1 May 2014; Appointed 31 August 2014
MA Jacobson Appointed 31 August 2014
NB Jappie Appointed 31 August 2014
BS Raynor Appointed 31 August 2014
A van der Veen Appointed 31 August 2014
TG Govender Appointed 1 May 2014; Resigned 31 August 2014
MJA Golding Resigned 1 May 2014
JG Ncgobo Resigned 1 May 2014
VE Mphande Resigned 1 May 2014
Y Shaik Resigned 1 May 2014
DIVIDEND TO SHAREHOLDERS
The directors have resolved not to declare an interim dividend.
For and on behalf of the board of directors
JA Copelyn DR Herrman SF McClain
Chairman Chief Executive Officer Chief Financial Officer
Cape Town
19 December 2014
Directors: JA Copelyn (Chairman)*; DR Herrman (Chief Executive Officer)#; SF McClain
(Chief Financial Officer)#; MH Ahmed*; MA Jacobson*##; NB Jappie*; BS Raynor*#;
A van der Veen* *Non-Executive #United States of America ##Australia
Company secretary: HCI Managerial Services Proprietary Limited
Registered office: Suite 801, 76 Regent Road, Sea Point, Cape Town, 8005. PO Box 5251, Cape Town, 8000
Transfer secretaries: Computershare Investor Services Proprietary Limited
70 Marshall Street, Johannesburg, 2001. PO Box 61051, Marshalltown, 2107
Sponsor: Investec Bank Limited
www.hci.co.za
Date: 19/12/2014 03:00:00 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.
Sharenet Sites 
