Andulela profit up on ‘excellent results’ by subsidiary

INVESTMENT group Andulela reported a turnaround on Monday, recording a profit of R5.6m for the six months to June after a headline loss of R8.4m last year.

Andulela attributed the turnaround to “excellent results” from subsidiary Kilken.

Andulela’s companies operate in the mining industry, and Andulela holds an effective interest of 83.6% in Kilken, which in turn has a 70% interest in the Kilken-Imbani joint venture. The venture processes tailings from Rustenburg Platinum Mines (RPM), extracts the platinum group metal concentrate, and sells it to RPM at market-related prices.

“Over the last six months Kilken’s revenue increased by 21% due to improved processing of the tailings and an increase in average production volumes of 13.4% in platinum group metal concentrate per month, compared to the comparable period last year,” said Andulela.

Overall, Kilken increased its profit after tax for the six months to June by 25%. During the period, Kilken renegotiated certain suppliers service contracts, which became effective in July.

Andulela said that the contracts “should contribute to increased profits from this company”.

Andulela’s other subsidiary, PRSM, reduced its loss from R12m to R6.3m for the six months to June.

Andulela said PRSM operations had suffered because of unplanned stoppages at its main steel supplier, which had resulted in inventory shortages and then in excess inventory levels when the supplier cleared its back-orders.

Andulela said that as a result of an unplanned shutdown by PRSM’s main supplier — due to severe damage at its Vanderbijlpark plant — a number of industry players, including PRSM, had imported additional material to deal with the resultant inventory shortage.

“This, together with the supplier clearing its back-orders, resulted in the industry and PRSM having a substantial oversupply and consequently inventory being sold at or below cost,” Andulela said.

PRSM’s Polokwane operation was closed, while the KwaZulu-Natal operation was scaled down to a distribution centre.

The Nelspruit operation was sold in March, resulting in improved profit margins for PRSM and contributing to the reduction of the loss after tax, said Andulela.

The group said it had entered into negotiations for the disposal of its interest in PRSM.