| Tue 28 Sep 2010, 9:00 | | AND - Andulela Investment Holdings Limited - Reviewed interim results for the 12 |
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AND
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AND - Andulela Investment Holdings Limited - Reviewed interim results for the 12
months ended 30 June 2010
ANDULELA INVESTMENT HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1950/037061/06)
Share code: AND ISIN: ZAE000125894
("Andulela" or "the company")
Reviewed interim results for the 12 months ended 30 June 2010
Condensed consolidated statement of financial position
Reviewed Audited
12 months ended Year ended
30 June 2010 30 June 2009
Notes (R`000) (R`000)
ASSETS
Non-current assets
Investment in associates 1 - 171 975
Property, plant and equipment 2.1 35 103 -
Goodwill 2.2 418 679 -
Current assets 28 758 2 073
Trade and other receivables 26 683 1 546
Cash at bank 2 075 527
Total assets 482 540 174 048
EQUITY AND LIABILITIES
Equity 383 718 86 558
Share capital and share premium 3 803 567 378 750
Accumulated loss (496 933) (292 192)
Non-controlling interest 77 084 -
Non-current liabilities 80 635 80 334
Redeemable preference share capital 75 000 75 000
Deferred tax liability 5 635 -
Long-term loan - 5 334
Current liabilities 18 187 7 156
Taxation 3 607 19
Trade and other payables 14 580 7 137
Total equity and liabilities 482 540 174 048
Net asset value per share (cents) 7.76 20.66
Net tangible asset value per share (cents) (2.84) 20.66
Condensed consolidated statement of
comprehensive income
Reviewed Audited
12 months ended Year ended
30 June 2010 30 June 2009
(R`000) (R`000)
Gross revenue 9 588 -
Loss from operations (7 971) (8 597)
Investment income 8 334 13 033
Loss from associates (4 536) (5 407)
Proportionate share of loss net of dividends (10 554) (9 251)
Dividends received 6 018 3 843
Reversal of impairment/(impairment)
of investment in associates 25 996 (281 505)
Impairment of goodwill on
acquisition of controlling interest 2.2 (219 536) -
Finance costs (5 769) (5 182)
Loss before taxation (203 482) (287 658)
Taxation (975) -
Total comprehensive loss for the period (204 457) (287 658)
Attributable to:
- Equity holders of Andulela
Investment Holdings Limited (204 741) (287 658)
- Non-controlling interest 284 -
Ordinary shares in issue (millions) 3 951 419
Weighted average number of ordinary shares
in issue (millions) 1 009 338
Headline loss (11 201) (6 153)
- Attributable net loss for the period (204 741) (287 658)
- Add back: (Reversal of impairment)/
impairment of investments (25 996) 281 505
- Add back: Impairment of goodwill (219 536) -
Loss/diluted loss per ordinary share (cents) a (20.29) (85.16)
Headline loss/diluted headline loss
per ordinary share (cents) a (1.11) (1.82)
Dividends per ordinary share (cents) - -
a The loss and headline loss per ordinary share is calculated by dividing the
loss and headline loss attributable to shareholders of Andulela by the weighted
average number of ordinary shares in issue during the period, which was 1 009
222 680 (30 June 2009: 337 794 521).
Condensed consolidated statement of cash flows
Reviewed Audited
12 months ended Year ended
30 June 2010 30 June 2009
(R`000) (R`000)
Cash flows from:
Operating activities (8 285) (8 472)
Investing activities (409 650) (1 157)
Financing activities 419 483 (37)
Change in cash and equivalents 1 548 (9 666)
Opening cash and equivalents 527 10 193
Closing cash and equivalents 2 075 527
Condensed consolidated statement of changes in equity
Opening balances 86 558 94 587
Net loss for the period (204 741) (287 658)
Shares issued net of expenses 424 817 279 629
Non-controlling interest 77 084 -
Closing balances 383 718 86 558
Basis of preparation
The company has complied with International Financial Reporting Standards (IFRS)
as well as the AC 500 standards as issued by the Accounting Practices Board for
the 12 months ended 30 June 2010. These financial results have been prepared in
accordance with the Companies Act of South Africa and the JSE Listings
Requirements with regard to provisional and abridged results reports, including
those relating to IAS 34: Interim Financial Reporting. The accounting policies
adopted are consistent with those of the previous year, except for the adoption
of IAS 1: Presentation of Financial Statements and IFRS 3: Revised Business
Combinations. Changes to the terminology, format and content of the financial
statements have been applied.
Notes to the reviewed financial results
Reviewed Audited
12 months ended Year ended
30 June 2010 30 June 2009
(R`000) (R`000)
1. Investment in associates
Opening carrying value at cost 450 000 450 000
Shares at cost 335 679 335 679
Loan receivable at acquisition 114 321 114 321
Loan receivable subsequent to acquisition b 20 978 12 730
Share of net loss from associate net of dividends
received (19 805) (9 251)
Brought forward from prior year (9 251) -
Current year (10 554) (9 251)
- Share of associate loss - current year (4 536) (5 408)
- Less: Dividend received (6 018) (3 843)
Less: Impairment c (255 509) (281 505)
Balance brought forward from prior year (281 505) -
Current period reversal/(impairment) 25 996 (281 505)
Less: Disposal of associates, controlling interest
acquired (195 664) -
Carrying value - 171 975
b These loans represent the interest accrued and not paid on the acquisition
loans from the date of acquisition to the reporting date.
These loans are unsecured, bore interest at prime bank overdraft rates less 1%
(to 31 March 2010), and have no fixed terms of repayment.
C Based on fair value of investments as per Competent Persons` Report dated 29
January 2010.
2. Non-current assets
Tangible
2.1 Property, plant and equipment
Reviewed Audited
12 months ended Year ended
30 June 2010 30 June 2009
(R`000) (R`000)
Plant and machinery acquired through
business combinations 35 083 -
Additions 531 -
Depreciation (511) -
Plant and machinery at carrying value 35 103 -
Reviewed Audited
12 months ended Year ended
30 June 2010 30 June 2009
(R`000) (R`000)
Intangible
2.2 Goodwill
Arising on acquisition of controlling
interest in subsidiary 638 215 -
Impairment of goodwill on acquisition (219 536) -
Closing balance at period end 418 679 -
The goodwill has been impaired based on a valuation of the controlling interest
per the Competent Persons` Report.
3. Share capital and share premium
30 June 30 June
2010 2009
No. of shares No. of shares
3.1 Ordinary shares of R0.01 each
Authorised
Opening balance 1 925 000 000 500 000 000
Increase 3 575 000 000 1 500 000 000
Converted to cumulative
redeemable preference shares - (75 000 000)
Closing balance 5 500 000 000 1 925 000 000
Issued
Opening balance 419 000 000 134 000 000
Issued at a premium of R0.1103
(2009: R0.99) 3 531 660 296 285 000 000
Closing balance 3 950 660 296 419 000 000
30 June 30 June
2010 2009
(R`000) (R`000)
3.1 Ordinary shares of R0.01 each
Authorised
Opening balance 19 250 5 000
Increase 35 750 15 000
Converted to cumulative
redeemable preference shares - (750)
Closing balance 55 000 19 250
Issued
Opening balance 4 190 1 340
Issued at a premium of R0.1103 (2009: R0.99) 35 317 2 850
Closing balance 39 507 4 190
3.2 Share premium
Opening balance 374 560 97 781
Arising on issue of shares at a premium of R0.1103
(2009: R0.99) 389 684 282 150
Share issue costs (183) (5 371)
Closing balance 764 061 374 560
Total ordinary share capital and share premium 803 567 378 750
4. Business combinations
On 1 May 2010, the group acquired a controlling interest in Kilken Platinum
(Pty) Limited ("Kilken") of 83.6% (previously 41.8%). At acquisition, the
previously held associate was fairly valued, based on the Competent Persons`
Report.
The following table summarises the consideration paid for Kilken and the amounts
of the assets acquired and liabilities assumed, recognised at the acquisition
date, as well as the fair value at the acquisition date of the non-controlling
interest in Kilken.
Reviewed Audited
12 months ended Year ended
30 June 2010 30 June 2009
(R`000) (R`000)
Equity instruments issued in respect of
option exercised 425 000 -
Fair value of previously held associate interests 195 664 -
Fair value of non-controlling interest 76 799 -
697 463 -
Net assets acquired 59 248 -
Property, plant and equipment 35 083 -
Bank and cash 3 766 -
Trade and other receivables 35 344 -
Trade and other payables (14 945) -
Goodwill arising on acquisition of
controlling interest 638 215 -
The fair value of the consideration in respect of the option exercised was
settled by the issue and allotment of 3 531 660 296 ordinary shares at a Volume
Weighted Average Traded price of 12.034 cents each on 4 May 2010.
Acquisition related costs (included in the loss from operations in the Statement
of Comprehensive Income for the 12 months ended 30 June 2010) amounted to R0.5
million.
The fair value of the non-controlling interest in Kilken was determined on the
basis of the Competent Persons` Report valuation.
Financial information in respect of the subsidiaries` investment in Kilken for
the two months ended 30 June 2010
Reviewed Audited
12 months ended Year ended
30 June 2010 30 June 2009
(R`000) (R`000)
Summarised balance sheet (at 30 June 2010)
Non-current assets 35 103 -
Current assets 28 666 -
Non-cur rent liabilities (5 635) -
Current liabilities (7 030) -
Summarised results of operations (for the two
months ended 30 June 2010)
Revenue 9 588 -
Operating profit 2 376 -
Finance income 28 -
Profit before taxation 2 404 -
Taxation (673) -
Profit for the two months ended 30 June 2010 1 731 -
Had the acquisition of the controlling interest occurred on 1 July 2009, the
acquired business would have contributed revenues of R78.6 million and net
profit of R24.7 million.
5. Segment reporting
No segmental reporting has been presented as the entity has no separately
reportable segments. It operates in one geographical location and only derives
income from one customer.
Review opinion
These results have been reviewed by the company`s auditors, BDO South Africa
Incorporated, whose unmodified review opinion is available for inspection at the
company`s registered office.
Nature of the business
Andulela is an investment holding company that owns a controlling interest in
Kilken, a Platinum Group Metals ("PGM") tailing retreatment facility that
delivers PGM concentrate to Rustenburg Platinum Mines (Pty) Limited.
Going concern
The financial statements have been prepared on the going concern basis.
Directorate
The current directors of the company and changes in directorate during the
period under review and to the date of this report are as follows:
Name Change in appointment
M J Husain (Chairman) # Appointed as Chairman 26 February 2010
A Kaka (CEO) Appointed as CEO 26 February 2010
D A S Currie (CFO) Appointed 26 February 2010
G Rosenthal # Appointed 26 February 2010
P C de Jager (CFO) Resigned 7 April 2010
P Vallet * Resigned 26 February 2010
J P Barton-Bridges Resigned 26 February 2010
S E Jonah * Resigned 26 February 2010
R K Jonah * Resigned 26 February 2010
D N Rosen * Retired by rotation 11 February 2010
V D Rubin # Resigned 26 February 2010
* Non-executive # Independent non-executive
Pursuant to the acquisition by Newshelf 1005 (Pty) Limited ("Newshelf") of a
majority shareholding in the company, the board of directors was reconstituted
on 26 February 2010.
Commentary
Introduction
The 12 months to June 2010 reflect a period of significant change for Andulela.
With effect from 1 May 2010, as a result of the AMI and JBPH put options
previously reported and detailed below, Andulela took control of Abalengani
Mining Investments (Pty) Limited ("AMI") and JB Platinum Holdings (Pty) Limited
("JBPH"), resulting in an 83.6% (previously 41.8%) controlling interest in
Kilken Platinum (Pty) Limited ("Kilken"). Consequently, AMI, JBPH and Kilken
have been consolidated into the results of Andulela with effect from 1 May 2010.
Additionally, in order to align the reporting periods of the newly formed
Andulela Group, the year-ends of Andulela, AMI and JBPH have been changed to 31
December, which will result in an 18-month reporting period for the period
ending 31 December 2010.
AMI and JBPH options
On 27 October 2009, Abalengani Platinum Holdings (Pty) Limited ("APH"),
exercised each of the put options granted to it to sell the remaining 50% of the
issued share capital in and all of its claims on loan account against each of
AMI and JBPH (collectively, the "option equity").
As previously reported, Andulela elected to settle the purchase price of the
option equity, being in aggregate R425 million, by the way of allotment and
issue of ordinary shares in Andulela at an issue price equal to the volume
weighted average traded price ("VWAP") at which the shares traded on the JSE
over the 30 trading days immediately prior to which the option notice was
furnished to the company.
Pursuant to the special resolution approved at the AGM to increase the
authorised share capital of the company on 11 February 2010, the option equity
was settled by the issue and allotment of 3 531 660 296 ordinary Andulela shares
at a VWAP of 12.034 cents each on 4 May 2010, perfecting the put option
transaction.
Offer to minority shareholders
Newshelf 1005 (Pty) Limited ("Newshelf ") announced on SENS on 20 November 2009
that it had acquired 144 576 717 Andulela shares, equating to 34.51% of the
issued share capital of the company from Jonah Mining (Pty) Limited. The
abovementioned shares, together with the 144 575 374 shares that Newshelf
already owned, meant that at the time of the announcement, Newshelf owned a
combined 69.01% of the issued ordinary share capital of Andulela.
As Newshelf owned more than 35% of the company pursuant to the purchase of
Andulela shares from Jonah Mining (Pty) Limited, and in terms of the Securities
Regulation Code on Takeovers and Mergers, it was obliged to extend a mandatory
cash offer to the other shareholders of Andulela to acquire their shares.
The offer, at 12 cents per share, was made on 18 January 2010 and closed on 26
February 2010. Acceptances in respect of 68 611 593 (16.38%) Andulela shares
were received by Newshelf, increasing their shareholding to 357 763 684 shares
or 85.39% of the issued share capital of Andulela.
Financial review
For the period 1 July 2009 to 30 April 2010, the results of Kilken, AMI and JBPH
were equity-accounted as associate investments. From 1 May 2010, upon completion
of the put option transaction, the abovementioned companies were consolidated
into the accounts of Andulela.
The long-term liability of R5.3 million was repaid during the period and
replaced with a working capital facility of R5.0 million of which R2.3 million
had been utilised at the reporting date.
The preference dividends due to Newshelf totalling R5.1 million for the period
have not been paid, but have been accrued and expensed as finance costs in the
results for the period. Total preference dividends payable of R9.9 million are
included in current liabilities.
The value of Kilken has been recorded at fair value in terms of IFRS 3 for the
purpose of recording the business combination of AMI, JBPH and Kilken. As a
result of the business combination, goodwill of R419 million has been raised in
the accounts of Andulela, net of an impairment of R219 million and is further
detailed in notes 2 and 4. In accordance with IFRS, management will continue to
assess the fair value of the investment.
In accordance with IAS and IFRS, management recognised a reversal of impairment
of R26 million to the carrying value of the indirect investment in Kilken at 30
April to reflect the fair value of the investment based on a valuation presented
in the Competent Persons` Report dated 29 January 2010.
Kilken
Andulela owns an effective 83.6% stake in Kilken, a Platinum Group Metals
("PGM") tailings retreatment facility that delivers PGM concentrate to
Rustenburg Platinum Mines (Pty) Limited.
The results of Kilken have been consolidated into the accounts of Andulela for
the period 1 May 2010 to 30 June 2010. The balance sheet and the results of
operations of Kilken for the two months ended 30 June 2010 have been summarised
in note 4.
Restructuring review
Management have initiated a review of the newly formed group structure. The
review is expected to be completed before the next reporting period. The outcome
of the review and the initiatives implemented will be reported in the company`s
annual report.
Appreciation
The board of Andulela thanks the outgoing directors for their valued service to
the company.
For and on behalf of the board
M J Husain A Kaka
Independent non-executive Chairman Chief Executive Officer
Sandton
28 September 2010
Directors
Mohamed J Husain* (Chairman), Ashruf Kaka (CEO),
David Currie (CFO), Graham Rosenthal*
(*Independent non-executive)
Registered office
108, 4th Street, Parkmore, Sandton, 2196
Company secretary
J R Jones (Mrs)
Transfer secretaries
Link Market Services South Africa (Pty) Limited 5th Floor, 11 Diagonal Street,
Johannesburg, 2001
Sponsor
Investec Bank Limited
Date: 28/09/2010 09:00:01 Produced by the JSE SENS Department.
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