| Thu 31 Mar 2011, 13:13 | | AND - Andulela Investment Holdings Limited - Audited results for the 18 months |
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AND
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AND - Andulela Investment Holdings Limited - Audited results for the 18 months
ended 31 December 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")
Audited results for the 18 months ended 31 December 2010
Audited
18 months ended
31 December 2010
(R`000)
Condensed consolidated statements of financial position
Notes
Assets
Non-current assets 452 739
Investment in associates 1 -
Property, plant and equipment 2.1 34 060
Goodwill 2.2 418 679
Current assets 26 068
Trade and other receivables 23 647
Cash at bank 2 421
Total assets 478 807
Equity and liabilities
Capital and reserves 379 178
Share capital and share premium 3 803 567
Accumulated loss (500 811)
Non-controlling interest 76 422
Non-current liabilities 81 892
Redeemable preference share capital 75 000
Deferred tax liability 6 892
Long-term loan -
Current liabilities 17 737
Taxation 1 292
Trade and other payables 16 445
Total equity and liabilities 478 807
Net asset value per share (cents) 7.66
Net tangible asset value per share (cents) (2.93)
Condensed consolidated statements of comprehensive income
Gross revenue 38 379
Loss from operations (3 003)
Investment income 8 412
Loss from associates (4 536)
Proportionate share of loss net of dividends (10 554)
Dividends received 6 018
Impairment of investment in associates -
Reversal of impairment of investment in associates 25 996
Impairment of goodwill on acquisition of subsidiaries 2.2 (219 536)
Finance costs (8 156)
Loss before taxation (200 823)
Taxation (6 497)
Loss and total comprehensive loss for the period (207 320)
Attributable to:
- Equity holders of Andulela Investment Holdings Limited (208 619)
- Non-controlling interest 1 299
Ordinary shares in issue (millions) 3 951
Weighted average number of ordinary shares in issue (millions) 2 790
Headline loss (15 016)
- Attributable net loss for the period (208 619)
- Add back: Impairment of investment in associates -
- Less: Reversal of impairment of investment in associates (25 996)
- Add back: Impairment of goodwill on acquisition of subsidiaries 219 536
- Add back: Loss on scrapping of property plant and equipment 62
Loss and diluted loss per ordinary share (cents) a (7.48)
Headline loss and diluted headline loss per ordinary share (cents) a (0.54)
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 2 789
566 500 (30 June 2009: 337 794 521).
Condensed consolidated statements of cash flows
Cash flows from:
Operating activities 2 410
Investing activities 8 800
Financing activities (9 316)
Change in cash and equivalents 1 894
Opening cash and equivalents 527
Closing cash and equivalents 2 421
Reviewed Audited
12 months ended Year ended
30 June 2010 30 June 2009
(R`000) (R`000)
Condensed consolidated statements of financial position
Assets
Non-current assets 453 781 171 975
Investment in associates - 171 975
Property, plant and equipment 35 103 -
Goodwill 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
Capital and reserves 383 718 86 558
Share capital and share premium 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 statements of comprehensive income
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
Impairment of investment in associates - (281 505)
Reversal of impairment of investment in associates 25 996 -
Impairment of goodwill on acquisition of subsidiaries(219 536) -
Finance costs (5 769) (5 182)
Loss before taxation (203 482) (287 658)
Taxation (975) -
Loss and 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: Impairment of investment in associates 281 505
- Less: Reversal of impairment of investment in
Associates (25 996) -
- Add back: Impairment of goodwill on acquis of subs 219 536 -
- Add back: Loss on scrapping of property plant & equipm - -
Loss and diluted loss per ordinary share (cents) a (20.29) (85.16)
Headline loss and 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 2 789
566 500 (30 June 2009: 337 794 521).
Condensed consolidated statements of cash flows
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
Audited Reviewed Audited
18 months ended 12 months ended Year ended
31 December 2010 30 June 2010 30 June 2009
(R`000) (R`000) (R`000)
Condensed consolidated statements of changes in equity
Opening balances 86 558 86 558 94 587
Net loss for the period (208 619) (204 741) (287 658)
Shares issued net of expenses 424 817 424 817 279 629
Non-controlling interest 76 422 77 084 -
Closing balances 379 178 383 718 86 558
Basis of preparation
The condensed consolidated interim financial information for the 18 months ended
31 December 2010 has been prepared in accordance with International Financial
Reporting Standards (IFRS) of the International Accounting Standards Board (in
particular 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 and regulations of the JSE Limited. The condensed
consolidated financial information should be read in conjunction with the annual
financial statements for the 18 months ended 31 December 2010, which have been
prepared in accordance with IFRS. The condensed consolidated interim financial
information is presented in South African rands, which is the group`s functional
currency. The accounting policies adopted are consistent with those of the
previous year, except for the following relevant IFRS, IFRIC interpretations,
Circulars and amendments thereto, adopted for the first time. These changes had
no significant impact on reported results other than giving rise to changes to
the terminology and presentation of relevant disclosure and revision to the
relevant accounting policies. No adjustments were necessary on the adoption of
Circular 3/2009.
(IAS 1 - Presentation of Financial statements; IFRS 3 - Business Combinations;
Circular 3/2009 - Headline earnings).
Notes to the condensed financial results
1. Investment in associates
Opening carrying value 450 000 450 000 450 000
Shares at cost 335 679 335 679 335 679
Loan receivable at acquisition 114 321 114 321 114 321
Loan receivable subsequent to acquisition b 20 978 20 978 12 730
Share of net loss from associate net of
dividends received (19 805) (19 805) (9 251)
Brought forward from prior year (9 251) (9 251) -
Current year (10 554) (10 554) (9 251)
- Share of associate loss - current year (4 536) (4536) (5 408)
- Less: Dividend received (6 018) (6018) (3 843)
Less: Impairment c (255 509) (255 509) (281 505)
Balance brought forward from prior year (281 505) (281 505) -
Impairment of investment in associates - - (281 505)
Reversal of impairment of investment in
Associates 25 996 25 996 -
Less: Disposal of associates,
controlling interest acquired (195 664) (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% up to 31 March
2010, and have no fixed terms of repayment. As of 1 April 2010, the loans are
interest-free.
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
Plant and machinery acquired through business
combinations 35 083 35 083 -
Additions 933 531 -
Depreciation (1 956) (511) -
Plant and machinery at carrying value 34 060 35 103 -
Intangible
2.2 Goodwill
Arising on acquisition of controlling interest
in subsidiary 638 215 638 215 -
Impairment of goodwill on acquisition (219 536) (219 536) -
Closing balance at period end 418 679 418 679 -
The goodwill has been impaired based on a valuation of the controlling interest
per a Competent Persons` Report.
3. Share capital and share premium
31 Dec 2010 30 June 2010 30 June 2009
No. of shares No. of shares No. of shares
3.1 Ordinary shares
of R0.01 each
Authorised
Opening balance 1 925 000 000 1 925 000 000 500 000 000
Increase 3 575 000 000 3 575 000 000 1 500 000 000
Converted to cumulative
redeemable preference shares - - (75 000 000)
Closing balance 5 500 000 000 5 500 000 000 1 925 000 000
Issued
Opening balance 419 000 000 419 000 000 134 000 000
Issued at a premium of
R0.1103 (2009: R0.99) 3 531 660 296 3 531 660 296 285 000 000
Closing balance 3 950 660 296 3 950 660 296 419 000 000
3.2 Share premium
Opening balance
Arising on issue of shares
at a premium R 0.1103 (2009: R0.99)
Share issue costs
Closing balance
Total ordinary share capital
and share premium
31 December 2010 30 June 2010 30 June 2009
(R`000) (R`000) (R`000)
3.1 Ordinary shares of R0.01 each
Authorised
Opening balance 19 250 19 250 5 000
Increase 35 750 35 750 15 000
Converted to cumulative
redeemable preference shares - - (750)
Closing balance 55 000 55 000 19 250
Issued
Opening balance 4 190 4 190 1 340
Issued at a premium of
R0.1103 (2009: R0.99) 35 317 35 317 2 850
Closing balance 39 507 39 507 4 190
3.2 Share premium
Opening balance 374 560 374 560 97 781
Arising on issue of shares
at a premium R0.1103 (2009: R0.99) 389 684 389 684 282 150
Share issue costs (183) (183) (5 371)
Closing balance 764 061 764 061 374 560
Total ordinary share
capital and share premium 803 567 803 567 378 750
Audited Reviewed Audited
18 months ended 12 months ended Year ended
31 December 2010 30 June 2010 30 June 2009
(R`000) (R`000) (R`000)
4. Business combinations
On 1 May 2010, the group acquired a controlling interest in Kilken Platinum
(Pty) Ltd ("Kilken") of 83.6% (previously 41.8%) through the combined holding of
subsidiaries Abalengani Mining Investments (Pty) Ltd ("AMI") and JB Platinum
Holdings (Pty) Ltd ("JBPH"). At acquisition, the previously held investment in
associates was fairly valued, based on the Competent Persons` Report.
The following table summarises the fair value of the cosideration paid for
Kilken and the fair value 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.
Equity instruments
issued in respect of
option exercised 425 000 425 000 -
Fair value of previously
held associate interests 195 664 195 664 -
Fair value of non
controlling interest 76 799 76 799 -
697 463 697 463 -
Fair value of net assets
acquired 59248 59 248 -
Property, plant and
equipment 35 083 35 083 -
Bank and cash 3766 3 766 -
Trade and other
receivables 35 344 35 344 -
Trade and other payables (14 945) (14 945) -
Goodwill arising on
acquisition of
controlling interest 638 215 638 215 -
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 a Competent Persons` Report valuation. Using the discounted cash flow
("DCF") approach, a DCF model was constructed and a fair (attributable) value
for Kilken was determined, using a real discount rate of 10.5% and an annual PGM
production rate of 20,578 ounces. Forecasted PGM metals prices and US$/ZAR
exchange rates were derived from a consensus forecast of reputable brokers.
Financial information in respect of the subsidiaries` investment in Kilken for
the eight months ended 31 December 2010
Summarised statement of Financial Position
Non-current assets 34 060 35 103 -
Current assets 25 717 28 666 -
Non-current liabilities (6 892) (5 635) -
Current liabilities (6 514) (7 030) -
Summarised statement of
Comprehensive Income
Revenue 38 379 9 588 -
Operating profit 9 509 2 376 -
Finance income 94 28 -
Profit before taxation 9 603 2 404
Taxation (3 786) (673) -
Profit for the eight months
ended 31 December 2010 5 817 1 731 -
Had the acquisition of the controlling interest occurred on 1 July 2009, the
acquired business would have contributed revenues of R108.3 million and net
profit of R24.4 million.
5. Material related party transactions
Purchases from related parties
- Tailing Technologies (Pty) Ltd 17 104 11 451 -
- GTS Technologies (Pty) Ltd 6 984 3 602 -
Admin and management fees paid to
related parties
- Jonah Capital (Pty) Limited 1 765 1 765 1 508
Consulting fees per agreement
- D N Rosen 3 165 3 165 2 475
Interest received on shareholders
loans
- Abalengani Mining Investments
(Pty) Limited 4 910 4 910 7 502
- JB Platinum Holdings (Pty)
Limited 3 357 3 357 5 228
Interest paid on working capital
loans
- Newshelf 1005 (Pty) Limited 447 447 -
- Jonah Capital (Pty) Limited 231 231 326
6. Segment reporting
No segmental reporting has been presented as the entity has no separately
reportable segments. It operates in one geographical location within South
Africa and there is no trading in foreign countries. The entity only derives
income from one customer.
Audit opinion
These results have been audited by the company`s auditors, BDO South Africa
Incorporated, whose unqualified audit opinion is available for inspection at the
company`s registered office.
Nature of the business
Andulela Investment Holdings Limited is an investment holding company. The
nature of the business of the group`s investment in subsidiaries and previously
held investment in associates is further detailed in the commentary below.
Going concern
The condensed financial information has 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 Nationality Change in appointment
M J Husain (Chairman)# South African Appointed as Chairman 26 February 2010
A Kaka (CEO) South African Appointed as CEO 26 February 2010
P C de Jager (CFO) South African Appointed 23 September 2008; Resigned
8 April 2010; Reappointed 25 October
2010
D A S Currie (CFO) South African Appointed 26 February 2010; Resigned
31 October 2010
G Rosenthal # South African Appointed 26 February 2010
P Vallet * South African Appointed 5 February 2006; Appointed
as Chairman 26 March 2009;
Resigned 26 February 2010
J P Barton-Bridges South African Appointed 23 September 2008; Appointed
as Interim CEO 26 March 2009;
Resigned 26 February 2010
S E Jonah * Ghanaian Appointed 23 September 2008; Stepped
down as Chairman 26 March 2009;
Resigned 26 February 2010
R K Jonah * Ghanaian Appointed 23 September 2008; Resigned
26 February 2010
D N Rosen * South African Appointed 18 January 2006; Retired by
rotation 11 February 2010
V D Rubin # South African Appointed 12 September 2007; 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 18 months to December 2010 reflect a period of significant change for
Andulela. With effect from 1 May 2010, as a result of the exercise of the AMI
and JBPH put options previously reported and detailed below, Andulela took
control of Abalengani Mining Investments (Pty) Ltd ("AMI") and JB Platinum
Holdings (Pty) Ltd ("JBPH"), resulting in an 83.6% (previously 41.8%)
controlling interest in Kilken Platinum (Pty) Ltd ("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 has resulted in an 18 month reporting period ending 31 December
2010.
Investment in subsidiaries and goodwill
As set out in the circular to shareholders dated 1 September 2008, the company
acquired 50% of the issued share capital in Abalengani Mining Investments (Pty)
Limited ("AMI") and JB Platinum Holdings (Pty) Limited ("JBPH") respectively to
gain a 41.8% effective stake in the sole investment held by AMI and JBPH, namely
Kilken Platinum (Pty) Limited ("Kilken"). As detailed in the circular of 1
September 2008 Andulela was granted a call option and Abalengani Platinum
Holdings (Pty) Limited ("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 equity") and JBPH ("JBPH option equity").
As announced on SENS on 29 October 2009, Abalengani Platinum issued a letter to
the company on 27 October 2009 exercising each of the put options granted to
Abalengani Platinum to sell the AMI option equity and the JBPH option equity to
the company.
On 1 May 2010, the group acquired the remaining 50% of shares in AMI and JBPH
and an effective controlling interest in Kilken of 83.6% (previously 41.8%). The
purchase consideration in respect of the options exercised, being an aggregate
of R425 million, was settled by the issue and allotment of 3 531 660 296
ordinary shares at a 30-day Volume Weighted Average Traded price of 12,034 cents
each on 4 May 2010, perfecting the put option transaction. At acquisition, the
previously held associates were fairly valued, based on a Competent Persons`
Report which gave rise to the goodwill on acquisition of the controlling
interest in the now wholly owned subsidiaries and the resulting impairment of
goodwill by an amount of R219,5 million.
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 results 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.
Preference dividends on the cumulative redeemable preference shares due to the
holder thereof (Newshelf) in the amount of R7.4 million were accrued and
expensed as finance costs in the current period in accordance with the rights
attaching to the preference shares. R2.1 million was paid towards the arrear
preference dividends owing and a cumulative arrears amount of R10.1 million
remains unpaid and is 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 financial statements of Andulela, net of an impairment of R219 million. 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 2010 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) Ltd.
The results of Kilken have been consolidated into the accounts of Andulela for
the period 1 May 2010 to 31 December 2010. The balance sheet and the results of
operations of Kilken for the eight months ending 31 December 2010 have been
summarised in note 4.
Events subsequent to the year-end
With reference to the announcement on SENS on 10 December 2010, Andulela will
acquire the entire issued share capital of, and all claims against Pro Roof
Steel Merchants (Pty) Limited ("PRSM"), a steel processing, distribution and
services group with six branches in South Africa, from The Rafik Mohamed Family
Trust. The purchase consideration of a maximum of R252 million and a minimum of
R168 million, based on the consolidated tangible net asset value ("NAV") of PRSM
and its subsidiaries, will be settled by the issue of a maximum of 630 million
and a minimum of 420 million Andulela shares, as the case may be, at an issue
price of 40 cents per share.
The transaction is conditional upon the fulfilment or waiver of certain
suspensive conditions as detailed in the announcement of 10 December 2010. The
effective date is expected to be no later than 30 May 2011. As at the date of
this report all the suspensive conditions have not been fulfilled.
With reference to a further announcement on SENS on 1 February 2011, Andulela or
its nominee will acquire the entire steel processing and distribution business,
including the assets and liabilities, of GIBB Steel (Pty) Limited (GIBB Steel)
indivisibly as a going concern.
A maximum transaction purchase consideration of R80 million will be based on the
net asset value ("NAV") of GIBB Steel at the anticipated effective date, and
will be settled by way of a maximum cash amount of R35 million and the balance
by way of the issue of a maximum of 112.5 million Andulela ordinary shares at an
issue price of 40 cents per share. The effective date NAV of GIBB Steel is
anticipated to be R50 million which will result in the share issue portion of
the purchase consideration to be around 37.5 million ordinary shares at an issue
price of 40 cents per share.
The transaction is conditional upon the fulfilment or waiver of certain
suspensive conditions as detailed in the announcement of 1 February 2011. As at
the date of this report all the suspensive conditions have not been fulfilled.
Restructuring review
As indicated in the interim results report for the 12 months ending 30 June
2010, 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 to
shareholders.
Appreciation
The board of Andulela thanks the outgoing directors for their valued service to
the company.
Annual General Meeting and Posting of Annual Report
The annual general meeting will be held on Tuesday 10 May at 16h00 at 106, 4th
Street, Parkmore, Sandton and the annual report will be posted to shareholders
today 31 March 2011.
For and on behalf of the board
M J Husain A Kaka
Independent non-executive Chairman Chief Executive Officer
Sandton
31 March 2011
Directors
Mohamed J Husain (Chairman); Ashruf Kaka (CEO); PC de Jager
(CFO); Graham Rosenthal (Independent non-executive)
Registered Office
108 4th Street, Parkmore, Sandton, 2196
Transfer Secretaries
Link Market Services (Pty) Limited
5th Floor, 11 Diagonal Street, Johannesburg, 2000
Company Secretary
J R Jones (Mrs)
Sponsor
Investec Bank Limited
Date: 31/03/2011 13:13:02 Produced by the JSE SENS Department.
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