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SCN
SCN
SCN - Schamin - Reviewed results for the year ended 31 March 2007 and dividend
declaration
SCHARRIG MINING LIMITED
Incorporated in the Republic of South Africa
Registration number 1992/001973/06
Share code: SCN ISIN code: ZAE000006474
("Schamin" or "the Company")
Reviewed results for the year ended 31 March 2007
- Revenue increased by 121% to R1,361 million (2006: R616,5 million)
- Operating profit up 96% to R297,4 million (2006: R151,9 million)
- Core EPS improved by 49,9% to 103,9 cents (2006: 69,3 cents)
- DPS increased by 41,7% to 17 cps (2006: 12 cps)
- Net asset value per share increased 95% to 468 cents
(2006: 240 cents)
- Debt to equity gearing decreased to 54% from 102%
(reported March 2006)
"It was a year of robust demand across our operating divisions and I am happy
with our performance across the lines of traditional operations and the
contributions from our new operations in exploration and opencast mining.
Additionally, we have laid a good platform for growth and we are excited about
the prospects and opportunities that lie ahead both in our core business and in
new business opportunities." - Robin Berry, COO, Scharrig Mining
Abridged Consolidated Income Statement
for the year ended 31 March 2007
Reviewed Audited
year ended year ended
31 March 31 March
2007 2006
R`000 R`000
Revenue 1 361 028 616 468
Operating profit before
finance charges 297 390 151 869
Finance charges 69 410 27 448
Net profit before taxation 227 980 124 421
Taxation 70 344 35 159
Net profit after taxation 157 636 89 262
Earnings attributable to
outside shareholders 8 389
Earnings attributable to
ordinary shareholders 149 247 89 262
Core earnings
per share (cents) 103,9 69,3
Headline earnings
per share (cents) 98,6 69,3
Dividend per share (cents)
Interim (Declared) 7,00 5,00
Final (Proposed) 10,00 7,00
17,00 12,00
Supplementary information
Shares in issue (000)
- at end of period 188 431 137 431
- weighted average for the year 151 352 128 814
Depreciation 138 960 123 311
Cost of sales 783 466 334 104
Amortisation of customer base 19 333
Foreign exchange adjustments (28 200)
Fair value adjustment on vendor
liabilities 9 753
Abridged Consolidated Balance Sheet
as at 31 March 2007
Reviewed at Audited at
31 March 31 March
2007 2006
R`000 R`000
ASSETS
Non-current assets
Property, plant and equipment 1 399 578 766 969
Intangible assets 38 667
Goodwill 193 827
Deferred taxation 1 115
Long term loans 17 820
1 651 007 766 969
Current assets
Inventories 137 752 29 140
Trade and other receivables 335 029 66 636
Bank balance and cash 158 562 23 640
631 343 119 416
2 282 350 886 385
EQUITY AND LIABILITIES
Share capital and premium 517 843 93 032
Reserves 363 737 237 339
Ordinary shareholders funds 881 580 330 371
Outside shareholders interests 90 784
Total shareholders funds 972 364 330 371
Non current liabilities
Long term borrowings 322 855 178 169
Deferred taxation 181 296 121 255
504 151 299 424
Current liabilities
Trade and other payables 260 180 73 394
Vendor finance 202 190
Current portion of long term
borrowings 309 353 183 175
Taxation 34 112 21
805 835 256 590
2 282 350 886 385
Net asset value per share (cents) 468 240
Abridged Consolidated Cash Flow Statement
for the twelve months ended 31 March 2006
Reviewed Audited
year year
ended ended
31 March 31 March
2007 2006
R`000 R`000
Cash generated from operations 330 963 273 065
Interest paid (69 410) (27 448)
Dividends paid (21 411) (11 897)
Taxation paid (5 083) (2 507)
Cash flows from operating
activities 235 059 231 213
Cash flows from investing (759 303) (283 871)
activities
Purchase of property, plant
and equipment (576 494) (329 448)
Disposal of property, plant
and equipment 19 190 45 577
Net movements on loans
receivable (17 820)
Purchase of investments (184 179)
Cash flows from financing 659 166 47 413
activities
Proceeds of share issue 424 811 654
Instalment sale obligations 234 355 46 759
Net increase in cash and cash
equivalents 134 922 (5 245)
Cash and cash equivalents at the
beginning of year 23 640 28 885
Cash and cash equivalents at the
end of year 158 562 23 640
Purchase of
investments Geosearch Benicon Total
Property, plant and
equipment 120 021 100 234 220 255
Inventory 26 967 23 765 50 732
Loans 211 211
Trade and other
receivables 121 361 28 495 149 856
Bank and cash 32 017 (4 259) 27 758
Long term liabilities (36 509) (36 509)
Deferred tax (8 769) (8 769)
Taxation (3 065) (3 065)
Trade and other
payables (130 706) (57 826) (188 532)
158 037 53 900 211 937
Less: Cash aquired 32 017 (4 259) 27 758
Net assets aquired 126 020 58 159 184 179
Segmental Analysis
for the year ended 31 March 2007
2007
Net profit Trade and
before tax other
Turnover and interest receivables
R`000 R`000 R`00
Opencast 913 956 216 658 148 404
mining
services
Exploration 293 254 72 199 152 592
drilling
Drilling and 42 264 408 4 252
blasting
Equipment 111 554 8 125 29 781
trading and
spares
1 361 028 297 390 335 029
Segmental Analysis (continued)
for the year ended 31 March 2007
2007
Trade and Property, Long
other plant and term
Inventory payables equipment liabilities
R`000 R`000 R`000 R`000
Opencast 59 359 99 903 1 188 301 295 936
mining
services
Exploration 33 758 146 902 150 055
drilling
Drilling and 4 553 59 491 26 919
blasting
Equipment 44 635 8 822 1 731
trading and
spares
137 752 260 180 1 399 578 322 855
Segmental Analysis (continued)
for the year ended 31 March 2007
2006
Net profit Trade
before tax and other
Turnover and interest receivables
R`000 R`000 R`000
Opencast 612 197 154 263 66 467
mining
services
Exploration
drilling
Drilling and
blasting
Equipment 4 271 (2 394) 169
trading and
spares
616 468 151 869 66 636
Segmental Analysis (continued)
for the year ended 31 March 2007
2006
Trade Property, Long
and other plant and term
Inventory payables equipment liabilities
R`000 R`000 R`000 R`000
Opencast 26 730 73 374 766 294 178 169
mining
services
Exploration
drilling
Drilling and
blasting
Equipment 2 410 20 675
trading and
spares
29 140 73 394 766 969 178 169
Segmental Analysis (continued)
for the year ended 31 March 2007
Audited Audited
year year
ended ended
31 March 31 March
2007 2006
R`000 R`000
Reconciliation
of
headline
earnings
Headline
earnings
attributed to
ordinary 149 247 89 262
shareholders
Adjust for
Amortisation 19 333
of customer
base
Fair value 14 030
adjustments on
vendor
liabilities
Foreign (19 173)
exchange
adjustment on
vendor
liabilities
14 190
Tax effect of 4 115
adjustment
10 075
Attributed to 2 015
outside
shareholders
Attributed to 8 060
ordinary
shareholders
Core earnings 157 307 89 262
Statement of Changes in Equity
for the year ended 31 March 2007
Treasury
Share Share Capital share
Capital Premium Reserve trust
R`000 R`000 R`000 R`000
Balance at 31 March 2005 1 374 100 055 6 076 (9 051)
Profit for the year ended
31 March 2006
Share options exercised 369
Dividend paid 285
Balance at 31 March 2006 1 374 100 055 6 076 (8 397)
Shares issued 510 432 315 (32 375)
Profit for the year ended
31 March 2007
Share options 1 133 23 873
Dividend paid 488
Balance at 31 March 2007 1 884 532 370 7 209 (16 411)
Statement of Changes in Equity (continued)
for the year ended 31 March 2007
Foreign Non-
exchange Accu- distri-
translation mulated butable
reserve profit reserve Total
R`000 R`000 R`000
Balance at 31 March 140 032 13 866 252 352
2005
Profit for the year
ended
31 March 2006 89 262 89 262
Share options 369
exercised
Dividend paid (11 897) (11 612)
Balance at 31 March 217 397 13 866 330 371
2006
Shares issued 400 450
Profit for the year
ended
31 March 2007 (2 264) 149 247 146 983
Share options 25 006
Dividend paid (21 718) (21 230)
Balance at 31 March (2 264) 344 926 13 866 881 580
2007
COMMENTS
FINANCIAL REVIEW
Revenue for the year to March 2007 increased by more than 100% on the
corresponding period to R1 361 028 million. Opencast mining services contributed
67.2 % of revenue or R914 million and exploration drilling R293.3 million or
21.6%.
The operating margin amounted to 21.9% (2006: 24.6%). Increased revenue was at a
lower than average margin due to the strategic Equipment and Spares Trading
business. Excluding this factor the operating margin amounted to 23.2%. Mix of
contracts and deferred escalation in return for longer term contracts accounted
for the remaining in the decline in margin.
Finance charges increased to R55.4 million (2006: R27.4 million), excluding
R14.0m accounted for as the interest for the deferred payment on the exploration
drilling business. This was on the back of increased Rand borrowings and higher
interest rates.
Taxation increased to R70.3 million (2006: R35.2 million) resulting from an
effective tax rate of 31% (2006: 28%) due to STC charges and foreign taxes.
Attributable earnings increased by 67.2% to R149.3 million and core earnings per
share increased by 49.9% to 103.9 cents.
A final dividend of 10 cents per share is proposed compared to 7 cents per share
last year for a total dividend of 17 cents per share (2006: 12 cents per share).
The debt to equity ratio decreased to 54% from 102% at 31 March 2006 following
the acquisition of Geosearch in particular.
STRATEGIC REVIEW AND OBJECTIVES
Mining Services
Our vision is to grow into the mining services company of choice across the
African continent. The company intends to realise this vision through organic
growth and by acquisition. Schamin is currently a leading open-cast coal mining
contractor in South Africa and through the acquisition of Geosearch in 2006 it
is also a leading exploration drilling company across Africa.
The company sought to achieve vertical integration in both upstream and
downstream businesses. This resulted in the acquisition of Geosearch.
Additionally, the company seeks to expand the mining services offering
horizontally in support of the core opencast business. This resulted in the
acquisition of JEF Drill and Blast and the recently announced acquisition of
Ritchie Crane Hire.
A further objective is to diversify and grow the business from the platform
established in coal, as seen recently by the acquisition of CCT which is a
springboard into hard rock (non-coal) opencast mining.
The objective to broaden the company`s footprint across Africa by developing
open cast services and shifting towards mining will be achieved through joint
venture partnerships or further acquisition opportunities.
Coal Mining Opportunities
Scharrig and Merafe Resources (Merafe) announced today the 50/50 joint venture
in Merafe Coal. The transaction, based on the maximisation of the combined
value of their respective existing coal resources in Mpumalanga, will provide
the platform for future growth opportunities in the sector. Merafe Coal will be
focused on coal mining and related services.
Further joint venture opportunities are currently being explored in anthracite
and coal through Scharrig Mining Limited. Scharrig has acquired Benicon coal
and its 60% share in Nkomati Anthracite and this operation has commenced
production.
OPERATING DIVISIONAL REVIEW
OPENCAST MINING
Abnormally high rainfall in April and May of 2006 resulted in operations being
below budget, however since then volumes increased and the performance has been
satisfactory for the remainder of the year.
Benicon open cast mining was acquired on 1st June 2006 and has therefore
contributed ten months of meaningful operational performance to these financial
results. Trading is aligned with expectations.
During the year Schamin set up their specialist drilling and blasting operation
as a standalone offering in support of open cast mining. This was further
supported by the acquisition of JEF Drill and Blasting effective from 1st April
2007. This operating division services all of Scharrig opencast mining and in
addition provides services to external clients.
The company will continue to drive it`s equipment replacement policy to optimise
fleet efficiencies and overall availability of parts.
EXPLORATION DRILLING
Transbor and Geosearch are both trading strongly as the demand for exploration
drilling services continues to be exceptionally strong across the continent.
Schamin has secured 100% of this business by buying all the remaining
outstanding shares in Geosearch and moving this holding to group level.
PROSPECTS
Although the company`s focus in the short term is to integrate the acquisitions
it has already concluded, it will continue to look at further opportunities that
are consistent with its growth
strategy. All of its acquisitions are trading well and the next focus will be to
deepen the mining services offering across the continent. Strategic
opportunities will also be considered where the company identifies significant
growth opportunities in mining.
BASIS OF PRESENTATION
Accounting policies adopted for purposes of this reporting period comply with
International Financial Reporting Standards ("IFRS"), as well as with applicable
legislation and are consistent with those adopted in the prior financial year.
DIRECTORATE
During the 12 months ended 31 March 2007 the following changes took place to the
board of directors.
APPOINTMENTS
Sir Sam Jonah was appointed as non-executive Chairman and Mr D C M Gihwala
assumed the role of Deputy Chairman of the Board. Mr. Robin Berry was appointed
to the board as an executive director and Chief Operating Officer.
DIVIDEND:
A final dividend of 10 cents (2006: 7 cents) per share has been declared by the
board in respect of the year ended 31 March 2007, payable on Monday, 27 August
2007 to those shareholders recorded in the register of the company at the close
of business on Friday, 24 August 2007.
The salient dates of the final dividend are as follows:
Last date to trade "cum" dividend Friday, 17 August 2007
Shares trade "ex" dividend Monday, 20 August 2007
Record date Friday, 24 August 2007
Payment date Monday, 27 August 2007
No dematerialisation or rematerialisation of shares may take place between
Monday, 20 August 2007 and Friday, 24 August 2007, both dates inclusive.
Audit opinion.
Our auditors, Siyabala Inc, have issued their opinion on Schamin`s statements
for the year ended 31 March 2007. They have issued an unmodified audit opinion.
A copy of their report is available for inspection at the company`s registered
office. These summarised financial statements have been derived from Schamin`s
financial statements and are consistent in all material respects with Schamin`s
financial statements.
On behalf of the board
Sir Sam Jonah
Non-executive Chairman
C Scharrighuisen
CEO, Managing Director
Boksburg
21 June 2007
Transfer Secretaries: Link Market Services South Africa (Pty) Limited
5th Floor, 11 Diagonal Street, Johannesburg, 2001
PO Box 4844 Johannesburg 2000 Tel (011) 832-2652
Sponsor
Sansara Independent Sponsor Services (Pty) Limited
Directors: Sir S Jonah* (Chairman), D C M Gihwala* (Deputy Chairman), C
Scharrighuisen (Managing), J Holland (Financial), T R Hendry*, Dr P Huysamer*, A
Joffe*,
R K Jonah*, C Moorcroft, T Scharrighuisen*, E H J Stoyell*
* Non-executive
Auditor
Siyabala Inc
Registered Address
28 Patrick Road, Jet Park, Boksburg 1459
PO Box 30194 Jet Park 1469 Tel (011) 397-3870
WEBSITE: www.scharrig.co.za
Date: 21/06/2007 08:32:37 Produced by the JSE SENS Department.
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