| Tue 30 Mar 2004, 17:08 | | Results for the six months ended 31 December 2003 |
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Kelgran Limited - Interim Results for the six months ended 31 December 2003 and
further cautionary announcement
KELGRAN LIMITED
Dimension Stone Specialists
Interim Results for the six months ended 31 December 2003 and further cautionary
announcement
Incorporated in the Republic of South Africa Registration Number 1975/004595/06
Code KLG
ISIN ZAE000003885Condensed Income Statement
6 Months 6 Months Year
31 Dec 03 31 Dec 02 30 Jun 03
R"000 R"000 R"000
Sales revenue 111 257 211 862 343 935
Gross (loss)/profit (21 770) 22 387 (23 611)
Other operating income 345 889 6 533
Other operating expenses (18 594) (18 544) (47 003)
Operating (loss)/profit before (40 019) 4 732 (64 081)
finance costs
Net finance costs (5 828) (2 147) (4 749)
(Loss)/profit before taxation (45 847) 2 585 (68 830)
Taxation - (1 664) (19 473)
(Loss)/profit after taxation (45 847) 921 (88 303)
Minority interest - - (94)
Net (loss)/profit attributable to (45 847) 921 (88 397)
ordinary shareholders
Reconciliation of headline
(loss)/earnings
Attributable to ordinary (45 847) 921 (88 397)
shareholders
Profit on sale of property, plant (90) (494) (594)
and equipment
Tax on the above 27 148 178
Headline (loss)/earnings (45 910) 575 (88 813)
Earnings per share (cents)
- basic (48,8) 1,0 (93,9)
- headline (48,8) 0,6 (93,9)
Dividends paid per share(cents)
- interim
- final
Weighted average number of shares 94 034 94 034 94 034
in issue (`000)
Number of shares in issue (`000) 94 034 94 034 94 034
Fully diluted number of shares in 94 034 94 034 94 034
issue (`000)
Condensed Cash Flow Statement
6 Months 6 Months Year
31 Dec 03 31 Dec 02 30 Jun 03
R"000 R"000 R"000
Cash flows from operating 2 235 (5 003) (15 500)
activities
Cash generated by operating 8 136 4 855 (2 148)
activities
Net finance costs (5 828) (2 147) (4 749)
Taxation paid (73) (7 711) (8 603)
Cash effects of investing (472) 2 729 7 899
activities
Purchase of property, plant and (1 570) (1 521) (1 855)
equipment
Proceeds on disposal of property, 100 574 2 735
plant and equipment
Loans to contractors 998 3 676 7 019
Cash effects of financing - - -
activities
Net increase/(decrease) in cash and 1 763 (2 274) (7 601)
cash equivalents
Cash and cash equivalents at (73 597) (65 996) (65 996)
beginning of the period
Cash and cash equivalents at end of (71 834) (68 270) (73 597)
the period
Condensed Balance Sheet
31 Dec 03 31 Dec 02 30 Jun 03
R"000 R"000 R"000
ASSETS
Non current assets 54 575 75 904 54 982
Property, plant and equipment 48 512 51 153 48 919
Deferred taxation 128 17 313 128
Loans to contractors 5 935 7 437 5 935
Current assets 122 199 250 752 192 473
Inventories 84 239 139 879 107 729
Trade receivables 16 886 73 786 57 372
Other receivables 11 075 25 559 12 858
Contractors" loans - current 5 167 8 006 6 165
portion
Prepaid taxation 488 - 749
Cash and cash equivalents 4 345 3 523 7 600
Total assets 176 774 326 656 247 455
EQUITY AND LIABILITIES
Capital and reserves 42 579 177 744 88 426
Minority shareholders" interest in 427 333 427
subsidiaries
Non-current liabilities 14 681 13 913 13 596
Rehabilitation & closure cost 13 248 12 555 12 203
obligation
Post-retirement medical benefits 1 433 1 358 1 393
obligation
Current liabilities 119 087 134 666 145 006
Trade payables 17 179 22 645 36 721
Other payables & accruals 25 730 40 176 26 754
Bank overdraft 76 179 - 66 197
Current tax liabilities - 52 334
Short-term borrowings - 71 793 15 000
Total equity and liabilities 176 774 326 656 247 455
Condensed Statement of Changes in Equity
Ordinary share capital
At the beginning of the period 1 881 1 881 1 881
Shares issued during the period - - -
At the end of the period 1 881 1 881 1 881
Share premium
At the beginning of the period 71 572 71 572 71 572
Share premium raised - - -
At the end of the period 71 572 71 572 71 572
Non-distributable reserves
At the beginning of the period 6 065 6 065 6 065
Movements during the period - - -
At the end of the period 6 065 6 065 6 065
Retained (loss)/earnings
At the beginning of the period 8 908 97 305 97 305
Net (loss)/profit for the period (45 847) 921 (88 397)
Dividends paid - - -
At the end of the period (36 939) 98 226 8 908
Capital and reserves 42 579 177 744 88 426
CommentsNATURE OF BUSINESSThe Group is engaged in the quarrying, marketing and
distribution of granite. As these activities comprise an integrated operation,
the Group regards this as a single primary business segment, on which all
information is disclosed in this announcement.
RESULTS Turnover decreased by 48 percent from R211,9 million to R111,3 million
during the six months under review, mainly as a result of the Rand strengthening
by 39 percent against the US Dollar since December 2002. The demand for granite
declined during the period under review, resulting in sales volumes being 19
percent lower than the corresponding period in the previous year, due to the
entry of newly established producers as well as aggressive pricing of comparable
or alternative materials.
In an attempt to minimise the outlay of working capital, more sales were
structured on a free at quarry basis instead of CIF basis resulting in the
turnover reflected, being lower.
The Group incurred a loss before tax of R45,8 million compared to profit before
tax of R2,6 million for the six months to 31 December 2002, partly due to lower
revenue being unable to sustain the fixed cost base and partly as a result of
the inventory being adjusted to net realisable values in line with the stronger
Rand.
The Barracuda tile factory performed below expectations mainly due to the
stronger Rand. The production section of the monumental products was fully
commissioned towards the end of 2003.
Capital expenditure for the period under review amounted to R1,6 million
compared to R1,5 million for the six months ended 31 December 2002.
Debt net of cash amounted to R71,8 million at 31 December 2003, increasing from
R68,3 million as at 31 December 2002. The net debt equity ratio was 168,7
percent (December 2002: 37,3 percent).
Bank guarantees given by the Group to third parties amounted to R6,8 million,
whilst contingencies totalled R0,7 million (R7,8 million and R0,7 million,
respectively as at 31 December 2002).
ACCOUNTING POLICIESThe accounting policies adopted in the preparation of the
financial statements are consistent with those used in the financial statements
for the six months ended 31 December 2002, with the exception of the adoption of
AC133: Financial Instruments: Recognition and Measurement, which became
effective for the year ended 30 June 2003.
PROSPECTSThe focus of the Group in the short term will be on greater synergy
between production and marketing, which is an essential part of managing working
capital. Additionally, Kelgran will focus on re-establishing the company"s
traditional markets with a view to restoring necessary sales.
The remainder of the year will present Kelgran with a serious challenge,
especially in view of the current Rand strength against major foreign
currencies, as well as sea freight increases of up to 100% to some destinations
in Europe.
DIVIDENDThe Directors have resolved not to declare a dividend.
PROPOSED DISPOSAL OF CONTROL OF KELGRAN"S OPERATIONS AND FURTHER CAUTIONARY
ANNOUNCEMENT
It was announced on 13 August 2003 that Kelgran had entered into a transaction
regarding the proposed disposal of control of Kelgran"s operations. A circular
to shareholders providing full details of the transaction was posted to
shareholders.
On 17 December 2003 a general meeting of Kelgran shareholders was held and the
shareholders voted in favour of the ordinary resolutions to approve:
The specific issue of shares for cash by Kelgran Investments (Pty) Ltd ("KI"), a
wholly owned subsidiary of Kelgran to JVK S.r.l. ("JVK") so as to result in JVK
holding 51% of the enlarged issued share capital of KI following the
implementation of the transaction;
The agreement dated 10 August 2003 and any addendum thereto entered into between
Kelgran, KI and JVK. In terms of this resolution specific approval was sought to
authorise Kelgran in terms of section 228 of the Companies Act, 1973 to sell
Kelgran"s entire interest in KI to JVK when the option granted by Kelgran to JVK
to acquire Kelgran"s entire interest in KI is exercised; and
That the directors be granted the authority to do all such things as may be
necessary to implement the abovementioned resolutions.
There are still outstanding conditions precedent relating to the transaction and
shareholders will be notified once these conditions precedent have been
fulfilled.
Until such time shareholders are advised to continue to exercise caution when
dealing in their Kelgran shares on the JSE.By order of the boardVittorio Di
CapuaChief Executive Officer 31 March 2004
Registered Office: 4 Homestead Avenue, Bryanston, Sandton 2196
Transfer Secretaries: Computershare Ltd, 70 Marshall Street, Johannesburg 2001
Sponsor: Bridge Capital Services (Pty) Ltd
Executive Directors: V di Capua** (Chief Executive Officer and Executive Deputy
Chairman), Dato" Choo Eng Guan* and FP van Wyk
Non-executive Directors: Dato" Yap Yong Seong* (Chairman), Dato" Murad Mohamed
Hashim*, Yap Wee Keat* and Yap Wee Chun*
*Malaysian ** Italian
Date: 30/03/2004 05:05:07 PM Produced by the JSE SENS Department
