Wrap Text
Reviewed provisional condensed consolidated financial statements for the year ended 31 December 2014
Andulela Investment Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1950/037061/06)
JSE share code: AND ISIN: ZAE000172870
(“Andulela” or “the Company” or “the Group”)
www.andulelaholdings.com
Reviewed provisional condensed consolidated financial statements
for the year ended 31 December 2014
24 March 2015
Condensed consolidated statement of financial position
Reviewed Audited
Year ended Year ended
31 December 31 December
2014 2013
Notes R’000 R’000
Assets
Non-current assets 749 394 759 127
Plant and equipment 1 308 444 318 301
Goodwill 2 418 679 418 679
Deferred tax asset 22 271 22 147
Current assets 261 885 256 732
Inventory 79 554 69 689
Trade and other receivables 158 588 147 828
Taxation 4 239 3 510
Cash and cash equivalents 19 504 35 705
Total assets 1 011 279 1 015 859
Equity and liabilities
Capital and reserves 440 993 454 050
Stated capital 3 976 114 976 114
Revaluation reserve 4 638 4 638
Cash flow hedge reserve 4 (54 295) (65 579)
Accumulated loss (546 905) (523 274)
Non-controlling interest 61 441 62 151
Non-current liabilities 213 938 277 296
Redeemable preference share
capital 10 000 18 361
Derivative financial
liabilities 4 70 343 92 554
Borrowings 5 79 750 111 650
Lease straightlining
accrual 17 274 14 580
Deferred tax liability 36 571 40 151
Current liabilities 356 348 284 513
Taxation 6 121 6 836
Trade and other payables 96 702 62 415
Redeemable preference share
capital 15 371 15 000
Derivative financial
liabilities 4 19 872 16 408
Borrowings 5 218 282 183 854
Total equity and
liabilities 1 011 279 1 015 859
Net asset value per share
(cents)* 433,06 459,66
Net tangible asset value per
share (cents)* 33,75 60,35
* A share consolidation of 50:1, which was approved by shareholders
on 27 February 2013 and became effective on 29 April 2013, has been
taken into account in the December 2013 comparative period.
Condensed consolidated statement of comprehensive income
Reviewed Audited
Year ended Year ended
31 December 31 December
2014 2013
Notes R’000 R’000
Gross revenue 1 095 190 902 528
Cost of sales (948 530) (711 288)
Gross profit 146 660 191 240
(Loss)/profit from
operations (6 222) 40 665
Investment income 1 756 3 092
Loss on scrapping of plant
and equipment 1 (5 133) –
Finance costs (25 358) (25 164)
(Loss)/profit before
taxation (34 957) 18 593
Taxation 9 059 (8 755)
Net (loss)/profit (25 898) 9 838
Other comprehensive income/
(loss) net of tax
Items that may be reclassified
subsequently
to profit or loss: 13 499 (20 964)
Gain/(loss) on accrual of
derivative cash flow hedge 4 18 748 (29 117)
Deferred tax reversal on
derivative cash flow hedge 4 (5 249) 8 153
Total comprehensive loss (12 399) (11 126)
Net (loss)/profit attributable to: (25 898) 9 838
– Equity holders of Andulela (23 630) 6 557
– Non-controlling interest (2 268) 3 281
Total comprehensive loss attri-
butable to: (12 399) (11 126)
– Equity holders of Andulela (12 346) (10 967)
– Non-controlling interest (53) (159)
Ordinary shares in issue (millions)* 87,64 87,64
Weighted average number of ordinary
shares in issue (millions)* 87,64 87,64
Headline (loss)/earnings (19 934) 6 194
– Attributable net (loss)/profit (23 630) 6 557
– Add back: Loss/gain on sale and
scrapping of plant and equipment
net of deferred taxation 3 696 (363)
(Loss)/earnings and diluted
(loss)/earnings per ordinary share
(cents)* (26,96) 7,48
Headline (loss)/earnings and
diluted headline (loss)/earnings
per ordinary share (cents)* (22,74) 7,07
Dividends per ordinary share (cents) – –
* The (loss)/earnings and the headline (loss)/earnings per ordinary
share are calculated by dividing the (loss)/earnings and the headline
(loss)/earnings by the weighted average number of ordinary shares in
issue during the year. The diluted (loss)/earnings and the diluted
headline (loss)/earnings per ordinary share are 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 year. Both the December 2014 and December 2013
ordinary shares in issue and weighted average number of shares in
issue, as well as the (loss)/earnings and the headline (loss)/earnings
per ordinary share, have been calculated after taking the share
consolidation of 50:1, which was approved by shareholders on
27 February 2013 and became effective on 29 April 2013, into account.
Condensed consolidated statement of cash flows
Reviewed Audited
Year ended Year ended
31 December 31 December
2014 2013
R’000 R’000
Cash flows from:
Operating activities 5 238 33 985
Investing activities (14 353) (9 121)
Financing activities (7 086) (18 680)
Change in cash and equivalents (16 201) 6 184
Opening cash and equivalents 35 705 29 521
Closing cash and equivalents 19 504 35 705
Condensed consolidated statement of changes in equity
Reviewed Audited
Year ended Year ended
31 December 31 December
2014 2013
R’000 R’000
Opening balances 454 051 470 906
Movements for the period:
– Net (loss)/profit for the year
attributable to equity holders of
Andulela (23 631) 6 557
– Cash flow hedge reserve net of
deferred tax 11 283 (17 524)
– Non-controlling interest (709) (5 888)
Closing balances 440 993 454 051
Notes to the reviewed provisional condensed consolidated financial
statements
Basis of preparation
The reviewed provisional condensed consolidated financial
statements are prepared in accordance with the the JSE Limited
Listings Requirements for provisional reports and the requirements of
the Companies Act of South Africa. The Listings Requirements require
provisional reports to be prepared in accordance with the framework
concepts and the measurement and recognition requirements of
International Financial Reporting Standards (IFRS) and the SAICA
Financial Reporting Guides as issued by the Accounting Practices
Committee and Financial Pronouncements as issued by the Financial
Reporting Standards Council and to also, as a minimum, contain the
information required by IAS 34 Interim Financial Reporting.
The accounting policies applied in the preparation of the provisional
condensed consolidated financial statements are in terms of IFRS and
consistent with those of the annual financial statements for the year
ended 31 December 2013. The directors take responsibility for the
preparation of the provisional condensed financial statements based
on the underlying financial information. These results were prepared
under the supervision of Pieter de Jager, the Group Chief Financial
Officer.
1. Plant and equipment
Reviewed Audited
Year ended Year ended
31 December 31 December
2014 2013
R’000 R’000
Opening balance 318 301 326 498
Additions 14 491 11 779
Disposals and loss on scrapping of
plant and equipment (5 269) (2 154)
Depreciation (19 079) (17 822)
Plant and equipment at carrying value 308 444 318 301
2. Goodwill
The goodwill of R418,7 million arose from the acquisition of the
remaining interests in Abalengani Mining Investments Proprietary
Limited (“AMI”) and JB Platinum Holdings Proprietary Limited
(“JBPH”) by the Company in 2010. AMI and JBPH respectively hold
49,63% and 33,96% in Kilken Platinum Proprietary Limited
(“Kilken”) as their only investments. The carrying amount as at
31 December 2014 has been tested for impairment and the Board is
satisfied that no impairment is required for the year ended
31 December 2014.
3. Stated capital
Reviewed Audited
Year ended Year ended
31 December 31 December
2014 2013
R’000 R’000
3.1 Ordinary shares
Authorised
220 000 000 ordinary shares of
no par value – –
Issued
87 644 836 ordinary shares of
no par value 976 114 976 114
4. Derivative financial liability
In 2012 Kilken entered into a hedge agreement for 30% of its cash
flow from the production revenue of platinum, palladium and gold in
favour of a financier in line with its funding requirements. The
hedge mitigates the cash flow risk related to commodity price
fluctuations and movements in the ZAR/USD exchange rate in order to
repay the funding facility to the financier.
In accordance with IAS 39, the cash flow hedge was recognised as a
hedging instrument at fair value for the first time in the statement
of financial position at 31 December 2012, without taking account of
any collateral held or other credit enhancements over the remainder
of the hedge contract term which started on 1 September 2012 and
will end on 30 September 2018.
For the year ended 31 December 2014, a R13,5 million gain (2013:
R20,9 million loss) after deferred tax has been recognised in other
comprehensive income and a decrease in the cash flow hedge reserve of
R11,3 million, net of non-controlling interests, in the statement of
financial position. The loss realised and netted off against the
revenue for the year was R18,1 million for the year ended
31 December 2014(2013: R11,2 million).
The fair value of the cash flow hedge is apportioned between current
and non-current liabilities depending on the remaining maturity
period of the derivative contract and its contractual cash flows.
The cash flow hedge cost will be accounted for as either a profit
or a loss as it becomes effective and the settlements are actually
made over the duration of the term of the hedge contract.
5. Borrowings
Total borrowings of the Group amounted to R298,0 million as at
31 December 2014 compared to R295,5 million as at 31 December 2013,
and can be summarised as follows:
Reviewed Audited
Year ended Year ended
31 December 31 December
2014 2013
R’000 R’000
Absa Bank Limited* 171 650 193 400
Reichmans Capital Proprietary Limited 96 278 72 352
Thunder Rate Investments Proprietary
Limited 29 474 29 121
The Rafik Mohamed Family Trust 630 630
Total borrowings 298 032 295 503
Less: Short-term borrowings 218 282 183 853
Non-current liabilities 79 750 111 650
* R60 million of the ABSA debt is a revolving credit facility
which is renewable annually. As at the date of these financial
statements, the discussions for the renewal of the facility are
still in progress.
6. Financial instruments
The following table shows the carrying amounts and fair values of
financial assets and financial liabilities, including their levels in
the fair value hierarchy for financial instruments measured at fair
value. It does not include fair value information for financial
assets and liabilities which are not measured at fair value if the
carrying amount approximates the fair value.
Carrying value 2014 – Reviewed
Loans Amor-
and receiv- tised Fair
ables cost value Total
R’000 R’000 R’000 R’000
Financial assets not
measured at fair value
Cash and cash
equivalents 19 504 19 504
Trade and other
receivables 154 353 154 353
Financial liabilities
measured at fair value
Derivative financial
instrument – cash
flow hedge* (90 215) (90 215)
Financial liabilities
not measured at fair
value
Preference shares (25 371) (25 371)
Borrowings (298 032) (298 032)
Trade and other
payables (94 771) (94 771)
Total 173 857 (418 174) (90 215) (334 532)
Carrying value 2013 – Reviewed
Loans Amor-
and receiv- tised Fair
ables cost value Total
R’000 R’000 R’000 R’000
Financial assets not
measured at fair value
Cash and cash
equivalents 35 705 35 705
Trade and other
receivables 146 223 146 223
Financial liabilities
measured at fair value
Derivative financial
instrument – cash
flow hedge* (108 962) (108 962)
Financial liabilities
not measured at fair value
Preference shares (33 361) (33 361)
Borrowings (295 503) (295 503)
Trade and other
payables (60 651) (60 651)
Total 181 928 (389 515)(108 962) (316 549)
* Derivative financial instrument – cash flow hedge: The fair
value of the derivative financial liability is a level 2 recurring
fair value measurement. The fair value of the cash flow hedge is
obtained directly from the service provider and is calculated as the
present value of the estimated future cash flows based on the
observable commodity prices and current exchange rates.
7. Material related-party transactions and balances
Reviewed Audited
Year ended Year ended
31 December 31 December
2014 2013
R’000 R’000
Sales to related parties (95 886) (65 387)
Purchases from related parties 80 388 27 580
Administration and management fees
paid to related parties 1 050 972
Interest received from related
parties (414) –
Preference dividends paid to related
parties 1 582 2 437
Rent expenses paid to related
parties 14 084 13 362
Trade receivables 20 611 11 941
Loan accounts – owing to related
parties (30 105) (29 752)
Cumulative redeemable preference
shares (25 371) (33 361)
Trade payables (2 986) (4)
8. Segment reporting
The Board is the Group’s chief operating decision-maker. Management
has determined the operating segments based on the information
reviewed by the Board for the purposes of allocating resources and
assessing performance. The Board considers the business from a
product perspective. The Group has two sources of income, namely
the production of platinum group metals (“PGMs”) at the Kilken
tailings treatment facility and the processing and distribution of
steel products by PRSM.
Reviewed Audited
Year ended Year ended
31 December 31 December
2014 2013
R’000 R’000
Tailings treatment facility 26 683 91 729
Steel processing plants 1 068 507 810 799
Total revenue 1 095 190 902 528
There are no sales between segments.
(Loss)/profit after tax
Tailings treatment facility (13 821) 19 994
Steel processing plants (6 783) (3 703)
Other unallocated (5 294) (6 453)
Total (loss)/profit after tax (25 898) 9 838
Reviewed Audited
Year ended Year ended
31 December 31 December
2014 2013
R’000 R’000
Assets
Tailings treatment facility 225 910 270 242
Steel processing plants 507 394 512 731
Inter-group eliminations (144 067) (197 387)
Reportable segment assets 589 237 585 586
Goodwill 418 679 418 679
Other unallocated assets of parent 3 364 11 593
Total assets 1 011 279 1 015 858
Liabilities
Tailings treatment facility 270 804 310 813
Steel processing plants 413 107 411 703
Inter-group eliminations (139 955) (194 327)
Reportable segment liabilities 543 956 528 189
Redeemable preference shares 25 371 33 361
Other unallocated liabilities 958 259
Total liabilities 570 286 561 809
Review conclusion
These reviewed provisional condensed consolidated financial
statements for the year ended 31 December 2014 have been reviewed
by BDO South Africa Incorporated, who expressed an unmodified
review conclusion. A copy of the auditor’s review report 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 information has been prepared on a going-concern basis.
Directorate
N Molope resigned as a non-executive director on 30 May 2014.
JHP Engelbrecht resigned as Chief Financial Officer on 30 June 2014
and PC de Jager was re-appointed in that position with effect from
1 July 2014. N Hadjee was appointed as an independent non- executive
director with effect from 1 July 2014. GR Rosenthal retired from the
Board with effect from 30 September 2014 and BW Smith was appointed
to the Board as an independent non-executive director and chairman of
the Audit, Risk and Compliance Committee and the Remuneration
Committee with effect from 1 October 2014. The current directors of
the Company at the date of this report are as follows:
Name Appointment
MJ Husain (Chairman)# 26 February 2010
A Kaka (CEO) 26 February 2010
PC de Jager (CFO) 1 July 2014
BW Smith# 1 October 2014
PE du Preez# 1 October 2011
NMS Hadjee# 1 July 2014
#Independent non-executive
Financial review
Andulela’s provisional results for the year ended 31 December 2014
reflect a headline loss of R19,9 million compared to a headline
profit of R6,2 million for the comparative year ended 31 December
2013. As a result of the extended platinum sector strike, discussed
in more detail below, Kilken posted its first-ever net loss after
tax since its acquisition in 2008 for the year ended
31 December 2014 in the amount of R13,8 million compared to a profit
of R20,0 million in 2013.
PRSM’s further strategic restructuring costs and a one-month strike
in the steel sector resulted in the loss after tax increasing from
R3,7 million for the year ended 31 December 2013 to R6,8 million for
the current year.
The strengthening of the Rand against the US Dollar and the
relatively higher average PGM pricing at the end of 2014 had an
overall positive effect on Kilken’s cash flow hedge position at
year-end, resulting in a gain after deferred tax of R13,5 million
being recognised against other comprehensive income. Kilken realised
a net hedge settlement loss totalling R18,1 million for the year
ended 31 December 2014 (2013: R11,2 million).
As a result of the business impact from the production interruptions
at Kilken, management continued to aggressively manage working
capital throughout the Group to preserve cash resources. The Group
retained a positive net cash position of R19,5 million for the
2014 year (2013: R35,7 million). Overall borrowing levels, however,
remained high at R298,0 million as at December 2014
(2013: R295,5 million) as a result of the aforementioned
production interruptions, with PRSM still being the main borrower,
having external debt of R266,5 million as at 31 December 2014
(2013: R281,2 million).
Notwithstanding cash constraints resulting from the production
interruptions caused by the strikes, Andulela managed to redeem
R8,0 million of its redeemable preference share capital
obligations during the year under review, reducing it to a balance of
R25,4 million. Furthermore, Andulela reached an agreement with the
holder of the preference shares (Newshelf 1005 Proprietary Limited)
to temporarily suspend preference share capital and dividend payments
from May 2014 until such time as Kilken attains a sustainable
positive cash flow from normal production. This will allow the Group
to optimally preserve its cash resources.
Kilken
The first six months of the 2014 financial year were marred by
unprecedented and violent industry-wide labour actions in the
platinum mining sector resulting in very limited PGM production and
tailings feed from the Amandelbult mine. There were no wage
disagreements with Kilken’s own workforce, but the labour strike
action at all the platinum producers had a severe impact on Kilken.
The effect of this was significantly reduced production, revenue
and profitability compared to 2013.
Kilken experienced a slow but steady ramp-up in production after the
strike in the second half of the year, however, it has not yet
reached the same production output volumes as in the 2013 comparative
period. Management anticipates that the ramp-up in production output
from the Amandelbult plant will continue to improve to the pre-strike
levels during the 2015 financial year.
Kilken’s attributable revenue decreased from R91,7 million for the
prior year ended December 2013 to R26,7 million for the current year
ended December 2014. This resulted in a net loss after tax of
R13,8 million for the current year compared to a profit after tax of
R20,0 million for the 2013 financial year. Kilken, however, still
managed to retain a positive cash balance of R14,1 million as at
31 December 2014 (2013: R21,3 million).
Throughout the strike period Kilken continued to service the full
interest and capital repayments of the term loan as well as its
contractual cash flow hedge settlements from cash reserves and
continues to service its obligations from normal operational cash
flows.
Following upon specialist advice, management introduced capital
expenditure acquisitions of various production control components,
which should result in the improvement of PGM recoveries.
PRSM
Pro Roof Steel Merchants Proprietary Limited and its subsidiaries
(“PRSM”) revenue for the year ended 31 December 2014 improved from
R810,8 million in 2013 to R1 068,5 million. Earnings before interest,
tax, depreciation, amortisation and impairments for the year improved
from R28,6 million in 2013 to R28,9 million in 2014, which improved
the cash inflow from operating activities to R25,8 million for the
2014 financial year compared to an outflow of R12,0 million for the
prior year.
The improvement in the earnings before interest, tax, depreciation
and amortisation is attributable to, inter alia, better overhead cost
recoveries through increased volume throughput of selected
high-demand product lines as well as improvements in production
efficiencies. The net loss after tax increased from R3,7 million in
2013 to R6,8 million in 2014 mainly due to increased non-cash flow
items such as depreciation and impairments. Included in the net
loss after tax are non-recurring restructuring and impairment costs
related to management’s ongoing strategic drive to improve
efficiencies and returns amounting to R5,1 million.
PRSM’s most significant working capital changes from the prior year
were:
i) Inventory and accounts receivable increased by 9,25% year-on-year
due to increased volume of production and trading.
ii) The Reichmans Capital facility increased by R23,9 million from
31 December 2013. However, total long-term loans reduced by
R38,6 million year-on-year.
Overall the domestic steel industry remains weak as a result of the
global slowdown and this is expected to continue in the short-term.
Management’s strategic planning and operational restructuring
continues to contribute towards PRSM’s overall improved cash flow
contribution and sustainability.
Events subsequent to the year-end
No events occurred subsequent to the year-end up to the date of this
announcement which could have a material effect on the results of the
Group or its subsidiaries.
Commitments
The Group had no outstanding capital commitments at
31 December 2014(2013: R2,3 million).
For and on behalf of the Board
Mohamed J Husain Ashruf Kaka
Independent Non-executive Chairman Chief Executive Officer
Sandton
24 March 2015
Registered Office
108 4th Street, Parkmore, Sandton 2196
Directors
MJ Husain# (Chairman), A Kaka (CEO), PC de Jager (CFO), BW Smith#,
PE du Preez#, NMS Hadjee#
#Independent non-executive
Company Secretary
H Kazi
Auditors
BDO South Africa Incorporated
Building C, Riverwalk Office Park
41 Matroosberg Road, Ashlea Gardens, Pretoria
Transfer Secretaries
Link Market Services Proprietary Limited
13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein
Sponsor
Java Capital, Redefine Place, 2 Arnold Road, Rosebank
Date: 24/03/2015 05:00:00 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 
