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Kelgran Limited - Interim results for the six months ended 31 December 2004
Kelgran Limited
Dimension Stone Specialists
Incorporated in the Republic of South Africa
Registration Number 1975/004595/06
Code KLG
ISIN ZAE000003885
Interim results for the six months ended 31 December 2004
Income Statement for the six months ended 31 December 2004
6 Months 6 Months Year
31 Dec 04 31 Dec 03 30 Jun 04
R`000 R`000 R`000
Revenue - 111 257 182 501
Cost of sales - (133 027) (215 590)
Gross loss - (21 770) (33 089)
Other operating income - 345 83 634
Other operating expenses (973) (18 594) (100 742)
Operating loss (973) (40 019) (50 197)
Net finance costs - (5 828) (10 846)
Loss before taxation (973) (45 847) (61 043)
Taxation - - 66
Loss from ordinary activities (973) (45 847) (60 977)
Minority interest - - 113
Net loss attributable to ordinary (973) (45 847) (60 864)
shareholders
Reconciliation between basic loss
and headline loss:
Loss per income statement (973) (45 847) (60 864)
Loan account written off - - 4 985
Impairment of associate - - 16 398
Profit on dilution of ownership in - - (47 928)
subsidiary
Profit on sale of property, plant - (63) (123)
and equipment
- Gross amount - (90) (123)
- Tax - 27 -
Retrenchment costs - - 5 485
Headline loss (973) (45 910) (82 047)
Loss per share (cents)
- basic (1.0) (48.8) (64.7)
- diluted (1.0) (48.8) (64.7)
- headline (1.0) (48.8) (87.3)
Dividends paid per share(cents)
- interim - - -
- final - - -
Weighted average number of shares 94 034 94 034 94 034
(`000)
Number of shares in issue (`000) 94 034 94 034 94 034
Fully diluted number of shares 94 034 94 034 94 034
(`000)
Cash Flow Statement for the six months ended 31 December 2004
6 Months 6 Months Year
31 Dec 04 31 Dec 03 30 Jun 04
R`000 R`000 R`000
Cash flows utilised in operating
activities
Cash (utilised in)/generated by (1) 8 136 6 736
operations
Net finance costs - (5 828) (10 846)
Taxation (paid)/received - (73) 136
Net cash (outflow)/inflow from (1) 2 235 (3 974)
operating activities
Cash flows from investing activities
Purchase of property, plant and - (1 570) (2 581)
equipment
Proceeds on disposal of property, - 100 491
plant and equipment
Disposal of subsidiaries - - 69 496
Loans to contractors - 998 10 309
Net cash (outflow)/inflow from - (472) 77 715
investing activities
Net (decrease)/increase in cash and (1) 1 763 73 741
cash equivalents
Cash and cash equivalents at 144 (73 597) (73 597)
beginning of the period
Cash and cash equivalents at the end 143 (71 834) 144
of the period
Statement of Changes in Equity for the six months ended 31 December 2004
Retained
Non- earnings/(
Distribu- accumu-
Share Share table lated
capital premium reserves loss) Total
R`000 R`000 R`000 R`000 R`000
Balance at 1 July 1 881 71 572 6 065 8 908 88 426
2003
Net loss for the (45 847) (45 847)
period
Balance at 31 1 881 71 572 6 065 (36 939) 42 579
December 2003
Movements during the - - (187) (187)
period
Net loss for the (15 017) (15 017)
period
Balance at 30 June 1 881 71 572 5 878 (51 956) 27 375
2004
Net loss for the (973) (973)
period
Balance at 31 1 881 71 572 5 878 (52 929) 26 402
December 2004
Balance Sheet as at 31 December 2004
31 Dec 04 31 Dec 03 30 Jun 04
R`000 R`000 R`000
ASSETS
Non-current assets 27 300 54 575 27 300
Property, plant & equipment - 48 512 -
Deferred taxation - 128 -
Financial assets 27 300 - 27 300
Loans to contractors - 5 935 -
Current assets 143 122 200 144
Inventories - 84 239 -
Trade and other receivables - 27 961 -
Current portion of contractors` - 5 167 -
loans
Prepaid taxation - 488 -
Bank and cash 143 4 345 144
Total assets 27 443 176 775 27 444
EQUITY AND LIABILITIES
Capital and reserves 26 402 42 579 27 375
Minority interest - 427 -
Non-current liabilities - 14 681 -
Rehabilitation & closure cost - 13 248 -
obligations
Post-retirement medical benefits - 1 433 -
obligations
Current liabilities 1 041 119 088 69
Trade and other payables 1 041 42 909 69
Bank overdraft - 76 179 -
Total equity and liabilities 27 443 176 775 27 444
Net asset value per share (cents) 28.1 61.3 29.1
Comments
DISPOSAL OF CONTROL OF KELGRAN`S OPERATIONS
It was announced on 13 August 2003 that Kelgran had entered into a transaction
regarding the proposed disposal of Kelgran`s operations.
The agreement became binding, subsequent to the fulfilment of the last
suspensive conditions on 30 June 2004, at which date JVK S.r.l. obtained the
power to govern the operating and financial decisions of the Group. The
shareholding of Kelgran Investments (Pty) Ltd now consists of:JVK S.r.l. -
51%Kelgran Limited - 49%
In terms of the restructuring scheme, Kelgran Limited acquired a Put Option to
sell 49% of the equity in Kelgran Investments (Pty) Ltd to JVK S.r.l. after 12
months, for the greater of R30 million or the fair value of Kelgran Investments
(Pty) Ltd at the time of exercising the option.
This option has been valued at R27,3 million.
NATURE OF BUSINESS
Kelgran Limited has a 49% shareholding in Kelgran Investments (Pty) Ltd whose
subsidiaries mine granite on Group-owned and leased land. The major portion of
production is sold for export.
As these activities comprise an integrated operation, it is regarded as a single
primary business segment, on which all information is disclosed in this
announcement.
RESULTS
The associate`s revenue decreased by 32% from R111,3 million to R75,2 million,
mainly as a result of all sales done on a Free at Quarry basis (2003: 15% of
sales). Despite an increase in foreign currency prices to recover increases in
freight charges, the average Rand price received by the associate declined as a
result of the substantially stronger Rand. Sales volumes were 24% higher than
the corresponding six month period.
The associate incurred a loss before tax of R17,2 million for the six month
period compared to a loss of R19,7 million in the corresponding period of the
previous year. The investment in associate has been fully impaired.
Quarrying operations performed as expected during the period under review,
production volumes and cost are stable. Production was maintained at levels in
line with demand. Only the Rustenburg and African Red quarries were operational.
The operation at the factory was discontinued in December 2004 due to tiles and
products for the monument market not being able to compete internationally and
locally.
ACCOUNTING POLICIES
The interim results report has been prepared on a basis consistent with the
accounting policies applied in the prior year and in accordance with the South
African Statement of Generally Accepted Accounting Practice applicable to
interim financial reporting, and the requirements of the Companies Act in South
Africa.
PROSPECTS
In terms of the re-capitalisation agreement, JVK S.r.l. will manage the Kelgran
Investments Group, bringing quarry operations expertise to the fold, as well as
performing the marketing and distribution function for the export market.
Kelgran`s focus in the near term will be to consolidate after the restructuring
and ensure that production levels and cost are optimised to remain competitive
in the export market.
The Board of Directors is evaluating various options to broaden Kelgran
Limited`s activity base in view of its continued listing. Our sponsor has also
submitted proposals in this regard to the Board for their consideration.
RELATED PARTIES
In terms of the Agreement, JVK S.r.l. will purchase from the Kelgran Investment
Group or procure the purchase of, all granite produced at the Group`s
operational quarries which are suitable for the export market, up to the
production quantities agreed, on a Free at Quarry basis.
DIVIDEND
The Directors have resolved not to declare a dividend.
By order of the Board
VITTORIO DI CAPUA
Chief Executive Officer
31 March 2005
Registered Office:
Suite 3, Culross Court, 16 Culross Road, Bryanston, Sandton 2021
Transfer Secretaries:
Computershare Investor Services 2004 (Pty) 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 WykNon-executive Directors: Dato` Yap
Yong Seong* (Chairman), Dato` Murad Mohamed Hashim*, Yap Wee Keat* and Yap Wee
Chun*
*Malaysian
**Italian
Date: 30/03/2005 05:05:13 PM
Produced by the JSE SENS Department
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