| Tue 29 Sep 2009, 16:43 | | AND - Andulela Investment Holdings Limited - Reviewed Results for the Financial |
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AND - Andulela Investment Holdings Limited - Reviewed Results for the Financial
Year Ended 30 June 2009
ANDULELA INVESTMENT HOLDINGS LIMITED
(Previously DNR Capital Limited)
(Incorporated in the Republic of South Africa)
(Registration number: 1950/037061/06)
Share code: AND & ISIN: ZAE000125894
("Andulela" or "the company")
REVIEWED RESULTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2009
Balance sheet
Reviewed Audited as
as at at
30 June 30 June
2009 2008
Notes (R`000) (R`000)
Assets
Non-current assets 171,974 85,000
Investment in associates 1 171,974 -
Other financial assets 2 - 85,000
Current assets 2,074 10,193
Trade and other receivables 1,546 -
Cash at bank 528 10,193
Total assets 174,048 95,193
Equity and liabilities
Capital and reserves 86,558 94,586
Share capital and share premium 378,750 99,121
Accumulated loss (292,192) (4,535)
Non-current liabilities 80,334 -
Redeemable preference share capital 75,000 -
Long term loan 3 5,334 -
Current liabilities 7,156 607
Trade and other payables 7,137 588
Taxation payable 19 19
Total equity and liabilities 174,048 95,193
Net asset value per share (cents) 20.7 70.6
Net tangible asset value per share (cents) 20.7 70.6
Income statement
Reviewed Audited
year ended year ended
30 June 30 June
2009 2008
(R`000) (R`000)
Gross revenue - -
Loss from operations (8,596) (5,958)
Investment income 13,033 3,078
Loss from associates (5,408) -
Proportionate share of loss net of (9,251) -
dividends
Dividends received 3,843 -
Impairment of investment in associates (281,505) -
Finance costs (5,182) -
Loss before taxation (287,658) (2,880)
Taxation - -
Net loss for the year (287,658) (2,880)
Ordinary shares in issue (millions) 419 134
Weighted average number of ordinary shares 338 82
in issue (millions)
Loss per ordinary share (cents) (a) (85.2) (3.5)
Headline loss per ordinary share (cents) (1.8) (3.5)
(a)/(b)
Dividends per ordinary share (cents) - -
(a) The loss and headline loss per ordinary share is calculated by dividing
the loss and headline loss by the weighted average number of ordinary
shares in issue during the year, which was 337 794 521 (2008: 81 671 233).
(b) The headline loss per ordinary share is calculated by excluding the
impairment of the carrying value relating to the investment in associates
of R281 504 788 from the attributable net loss for the current year (2008:
nil). The calculated headline loss for the year was R6 152 773 (2008: R2
880 145).
Abridged cash flow statement
Reviewed Audited
year ended year ended
30 June 30 June
2009 2008
(R`000) (R`000)
Cash flows from:
Operating activities 4,257 (2,600)
Investing activities (13,886) (85,033)
Financing activities (36) 97,722
Change in cash and equivalents (9,665) 10,089
Opening cash and equivalents 10,193 104
Closing cash and equivalents 528 10,193
Abridged statement of changes in equity
Opening balances 94,587 (1,313)
Net loss for the year (287,658) (2,880)
Shares issued net of expenses 279,629 98,780
Closing balances 86,558 94,587
Basis of preparation
The company has complied with International Financial Reporting Standards (IFRS)
for the financial year ended 30 June 2009. The accounting policies are
consistent with those used in the preparation of the prior year audited
financial statements. These financial results have been prepared in accordance
with the requirements of the JSE Listings Requirements with regard to
provisional and abridged results reports, including those relating to IAS 34:
Interim Financial Reporting.
Notes to the audited provisional financial results Reviewed Audited as
as at at
30 June 30 June
2009 2008
(R`000) (R`000)
1. Investment in associates 171,974 -
Opening balance of carrying value at cost 450,000 -
Shares at cost 335,679 -
Loans receivable as at acquisition (c) 114,321 -
Loans receivable subsequent to acquisition (d)
Share of loss from associates net of dividends (9,251) -
Less : Impairment (281,505) -
(c) The company acquired all of Jonah Mining (Pty) Limited`s claims on
the loan accounts against the associates as part of the terms of the
acquisition transaction.
(d) These loans represent the interest accrued from the date of
acquisition to the financial year end, which has not been paid. The
loans are unsecured, bear interest at prime bank overdraft rates less
1%, and have no fixed terms of repayment.
2. Other financial assets
Deposit - Acquisition of investment - 85,000
3. Long term loan
The loan from Jonah Capital (Pty) Limited is unsecured, bears interest
at prime overdraft rate and interest is payable quarterly in arrears.
The loan shall become repayable by no later than 30 June 2010.
Review opinion
These results have been reviewed by the company`s auditors, PKF (Jhb) Inc.,
whose unmodified review opinion is available for inspection at the company`s
registered office.
Nature of the business
The company is presently an investment holding company.
Going concern
The financial statements have been prepared on the going concern basis and the
company completed the reverse listing and acquisition of investment transaction
as detailed in the circular to shareholders dated 1 September 2008. The details
of the transaction is discussed in the directors` commentary below.
Directorate
The current directors of the company and changes in directorate during the year
under review and to the date of this report are as follows:
Name Change in appointment
P Vallet (Chairman)* Appointed 5 February 2006;
Appointed as Chairman 26 March 2009
J P Barton-Bridges (Interim Chief Appointed 23 September 2008;
Executive Officer) Appointed as Interim CEO 26 March 2009
P C de Jager (Chief Financial Appointed 23 September 2008
Officer)
S E Jonah * Appointed 23 September 2008;
Stepped down as Chairman 26 March 2009
R K Jonah * Appointed 23 September 2008
D N Rosen * Appointed 18 January 2006
V D Rubin # Appointed 12 September 2007
J Stalker Appointed 23 September 2008;
Resigned 23 March 2009
N L Herbert # Appointed 23 September 2008;
Resigned 23 December 2008
G M Geva Resigned 23 September 2008
J H Goldberg * Resigned 22 August 2008
S Medalie * Resigned 23 September 2008
* Non-executive; # Independent non-executive
Following the resignation of the CEO, Ian Stalker, on 23 March 2009, the
board appointed John Barton-Bridges as interim chief executive officer.
With effect from 26 March 2009 Sir Sam Jonah stepped down from his position
as non-executive chairman of Andulela due to his extensive overseas
commitments. He remains on the board of Andulela as a non-executive
director. Phillip Vallet, previously the deputy chairman, was appointed
chairman in place of Sir Sam Jonah.
Commentary
Introduction
During the year ended 30 June 2009 Andulela finalised the reverse listing and
acquisition of an effective 41.8% interest in Kilken Platinum (Pty) Limited
("Kilken"), a platinum group metals tailings retreatment operation, for a total
purchase consideration of R450 million.
The investment is held via a 50% shareholding in each of two associate
companies: Abalengani Mining Investments (Pty) Limited ("AMI") and JB Platinum
Holdings (Pty) Limited ("JBPH"). The remaining 50% shareholding in each of AMI
and JBPH is held by Abalengani Platinum (Pty) Limited ("Abalengani Platinum").
AMI and JBPH effectively own a combined 83.6% stake in Kilken, thus giving the
company an effective 41.8% stake in Kilken.
On 13 October 2008 the company recommenced trading in the "equity investment
instruments" sector of the JSE under the new name of "Andulela Investment
Holdings Limited".
Kilken
In November 2004 Kilken, a joint venture with BEE partner Imbani Minerals,
concluded a Sale of Tailings and Concentrate ("STC") agreement with Rustenburg
Platinum Mines ("RustPlat"). The Kilken joint venture purchases tailings from
RustPlat`s Amandelbult mine, processes the tailings and sells the resultant
concentrate and platinum group metals back to RustPlat. The STC agreement will
continue for so long as RustPlat produces tailings from the Amandelbult site
which is estimated to be for at least 50 years.
Financial review
The company acquired the investment in associates "cum" dividend from 1 January
2008. The equity accounted share of loss from associates for the period 1
October 2008 to 30 June 2009 is reflected in the income statement.
Expenses incurred by Kilken during the period 1 January 2008 to 30 June 2009 in
an amount of up to R8,4 million, have been disputed by the board of Andulela.
Legal counsel has been appointed to fully investigate this matter and to take
appropriate action. Had these expenses not been incurred, the share of losses
from associates would have been reduced and cash resources in the company would
have been increased by some R2,3 million.
At the reporting date dividends from the associate companies totalling R3,8
million had been partially received and the company has accrued for the portion
declared but only received after year end.
Preference dividends due to Jonah Mining (Pty) Limited totalling R4,8 million
have not been paid but have been accrued in the financial results for the year.
Carrying value of Kilken
The recent decline in the world commodity markets has had an adverse effect on
the projected sales revenue of Kilken and dividend distributions from the
investment.
In accordance with IAS and IFRS, management recognised an impairment of R281,5
million to the carrying value of the investment in Kilken in the income
statement to reflect fair value based on a valuation presented in a competent
person`s report dated 17 February 2009, which assumed a conservative forecast
average platinum price of US$995 per ounce for 2009.
Based on the recent improved performance of the platinum price, management
remains positive about the future dividend cash inflows from and overall
profitability of the investment in Kilken.
AMI and JBPH options
Andulela was granted a call option and Abalengani Platinum a put option over the
remaining 50% of the shares in, and all of Abalengani Platinum`s claims on loan
account against each of, AMI ("the AMI option") and JBPH ("JBPH option"), as
detailed in Andulela`s circular to shareholders issued on 1 September 2008.
If the AMI option and the JBPH option are exercised and the company acquires the
remaining 50% of the shares in, and all of Abalengani Platinum`s claims on loan
account against each of, AMI ("the AMI option equity") and JBPH, ("the JBPH
option equity") the company`s effective holding in Kilken will increase to
83.6%.
If the AMI option and the JBPH option are exercised, the purchase consideration
for the AMI option equity of R252 million at current values and the purchase
consideration of the JBPH option equity of R173 million at current values, may
be discharged by the company by the issue of new ordinary shares in the capital
of Andulela at an issue price equal to the volume weighted average traded price
at which the company`s ordinary shares traded on the JSE over the 30 trading
days prior to the date on which the AMI option and the JBPH option are
exercised. This may necessitate an increase in the company`s authorised share
capital.
If current market conditions prevail and the AMI option and the JBPH option are
exercised, Abalengani Platinum is expected to hold a significant majority of the
shares in issue in Andulela following the exercise of the AMI and JBPH options.
This would result in a change in control of the company.
Recent events
The exercise of the AMI option and JBPH option is conditional on Investec
releasing (to the reasonable satisfaction of the company) AMI and JBPH from
certain security arrangements. This condition to the exercise of the AMI option
and the JBPH option has not been fulfilled as at the date of publication of
these financial results.
Whilst the AMI option and JBPH option are available to be exercised during the
period which commenced on 1 May 2009 and which will end on 31 October 2009 (on
the terms set out in the circular dated 1 September 2008) and subject to the
fulfilment of the aforesaid condition, these terms are currently under
discussion between Abalengani Platinum and the company.
Jonah Capital (Pty) Limited has committed working capital of up to R6,5 million,
through an unsecured loan, bearing interest at prime bank overdraft rates and
which is repayable by no later than 30 June 2010.
Events subsequent to the year end
With reference to the AMI option and JBPH option shareholders are referred to
the SENS announcements dated 6 May, 18 June, 30 July and 14 September 2009 and
are advised to continue to exercise caution when dealing in their Andulela
shares, pending a further announcement on the outcome of the current
negotiations between the company and Abalengani Platinum.
Strategic review and outlook
Kilken is a low-cost producer of platinum group metals. Andulela acquired the
Kilken asset to participate in the positive growth outlook for platinum in the
long term. Market expectations are that platinum prices will strengthen and
world demand will increase in the medium to long term. During the year under
review, substantial capital expenditure was incurred by Kilken and production
was adversely effected. No further material capital expenditure is contemplated
by Kilken for the next financial year and it is anticipated that the company
will continue to receive regular dividend payments from the investment.
For and on behalf of the board
P Vallet J P Barton-Bridges
Non-Executive Chairman Interim Chief Executive Officer
Illovo
29 September 2009
Directors
P Vallet (Chairman)*, J P Barton-Bridges (Interim CEO), P C de Jager (CFO), S E
Jonah (Ghanaian)*, R K Jonah (Ghanaian)*, D N Rosen*, V D Rubin (*Non-
executive Independent non-executive)
Registered Office Company Secretary
2nd Floor, 28 Fricker Road, J R Jones (Mrs)
Illovo Boulevard, Sandton, 2196
Transfer Secretaries Sponsor
Link Market Services (Pty) Limited Java Capital (Pty) Limited
5th Floor, 11 Diagonal Street,
Johannesburg, 2000
Date: 29/09/2009 16:43:01 Produced by the JSE SENS Department.
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