| Mon 1 Oct 2007, 15:11 | | IRA - Infrasors - Condensed Consolidated Reviewed |
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IRA
IRA
IRA - Infrasors - Condensed Consolidated Reviewed Results For The Six Months
Ended 31 August 2007
INFRASORS HOLDINGS LIMITED
(formerly Romador 123 (Pty) Limited)
(Incorporated in the Republic of South Africa)
(Registration number: 2007/002405/06)
Share Code on the JSE: IRA
ISIN: ZAE000101507
("Infrasors" or "the Group")
Condensed Consolidated Reviewed Results for the six months ended 31 August 2007
HIGHLIGHTS
* EBITDA of R44,2 million
* Normalised EPS of 24,6 cents
* Headline EPS of 23,2 cents; up 146,8% on pro forma F2007
* BEE shareholding in excess of 30,8%
* Lyttelton revenue up 38% and PBT up 114% on F2007 comparative period
* Delf revenue up 59% and PBT up 137% on F2007 comparative period
* Capex plans in place to increase tonnage throughput at Lyttelton and Delf, and
manufacturing output at Infrabric
* Good progress in project pipeline
INTRODUCTION
The directors of Infrasors are pleased to announce the Group`s maiden interim
results as a listed entity for the six months ended 31 August 2007. Infrasors
listed on 31 July 2007 on the Alternative Exchange of the JSE Limited.
The results include trading activities for the six month period ended 31 August
2007 as prior to the commencement of this period Infrasors was a dormant company
which on 1 March 2007 effectively obtained control and the power to govern the
financial and operating policies of Lyttelton Dolomite (Pty) Limited
("Lyttelton"), Delf Sand (Pty) Limited ("Delf Sand"), Infrabric (Pty) Limited
("Infrabric") and Pienaarspoort Ontwikkeling (Pty) Limited ("Pienaarspoort"). No
Group consolidated comparative figures are therefore presented.
VISIT US AT www.infrasors.co.za "INFRASTRUCTURE BY INFRASORS"
GROUP INCOME STATEMENT
Reviewed
Six months ended
31 August 2007
R000`s
Revenue 127 122
Earnings before interest, taxes, depreciation 44 172
and amortisation (EBITDA)
Net financing costs (3 010)
Depreciation and amortization (2 101)
Profit before taxation 39 061
Taxation (6 746)
Profit after taxation 32 315
Normalised earnings per share (cents) 24,6
Headline earnings per share (cents) 23,2
Earnings per share (cents) 23,3
Shares in issue (000`s) 177 839
Shares in issue - weighted average (000`s) 138 664
GROUP BALANCE SHEET
Reviewed
as at
31 August 2007
R000`s
Non-current assets 389 666
Property, plant and equipment 244 459
Intangible assets 87 304
Other financial assets 57 903
Current assets 121 555
Cash resources 65 055
Other current assets 56 500
Total assets 511 221
Capital and reserves 283 891
Share capital and premium 251 576
Retained income 32 315
Non-current liabilities 184 990
Borrowings 19 720
Other financial liabilities 85 707
Environmental rehabilitation provision 43 569
Deferred taxation 35 994
Current liabilities 42 340
Taxation payable 6 820
Other current liabilities 35 520
Total equity and liabilities 511 221
Tangible net asset value per share (cents) 110,5
Net asset value per share (cents) 159,6
GROUP CASH FLOW STATEMENT
Reviewed
Six months ended
31 August 2007
R000`s
Cash flows from operating activities 35 672
Cash flows from investing activities (225 225)
Cash flows from financing activities 252 463
Net movement in cash balances 62 910
Cash balances at beginning of period -
Cash balances acquired 2 145
Cash balances at end of period 65 055
GROUP STATEMENT OF CHANGES IN SHAREHOLDERS` EQUITY
Share capital Retained
and premium income Total
R000`s R000`s R000`s
Balance at 1 March 2007 - - -
Issue of share capital 266 159 - 266 159
Expenses written off against share (14 583) - (14 583)
premium
Profit after taxation - 32 315 32 315
Balance at 31 August 2007 251 576 32 315 283 891
INTRODUCTION
Infrasors is a holding company whose principal subsidiaries, Lyttelton, Delf
Group, Pienaarspoort and Infrabric, conduct mining and quarrying operations and
are manufacturers and suppliers of infrastructural products consisting primarily
of:
* aggregate stone products;
* aggregate slag;
* cement bricks;
* standard and coloured paving bricks;
* metallurgical grade dolomite;
* industrial sands;
* sands and stone dust;
* silica sands;
* building and construction sand; and
* golf course and recreational sand.
The Infrasors Group is divided into five principal business units as follows:
Business Description Location
Infrasors The corporate head office is Rivonia, Sandton
Holdings Limited responsible
for the Group`s strategy, risk
management and administration.
It is also the provider of
shared services across common
business functions such as
finance, IT and human resources,
centralised procurement, capital
expenditure, growth and
replacement projects.
Lyttelton Involved in quarrying and Lyttelton,
Dolomite (Pty) manufacturing activities, Pretoria
Limited supplying aggregate and and Marble Hall
metallurgical dolomite to the
market from both Lyttelton and
Marble Hall.
Delf Sand Activities include quarrying, Donkerhoek
milling, grinding, sorting and
the manufacture of sand and
silica products for the glass
industry, leisure sector,
foundries and building and
construction sectors.
Infrabric K&F Bricks Kempton Park
Manufacture cement bricks, brick
pavers and concrete products for
the construction industry.
Pienaarspoort Pienaarspoort silica project Pienaarspoort
Ontwikkeling Pty) crushing plant in progress.
Limited
Positional and operational synergies
All of the Infrasors operations are geographically situated to service the
Pretoria, Sandton, Fourways, Kempton Park, Midrand, Germiston, Alrode, and
Wadeville areas, where the principal infrastructural and industrial activities
of Gauteng take place. This enables the Infrasors team to implement operational
and managerial synergies across the product and service offerings and common
customer base. The implementation of the shared services is progressing well and
includes the establishment of a group management accounting function and a
centralised business development division.
Acquisitions
Infrabric T/A
Lyttelton Delf Sand K&F Bricks
Acquisition date 1 March 2007 1 March 2007 1 March 2007
Voting equity (%) 100 100 100
Cost of acquisition 91 000 128 000 33 200
(maximum amount) (R000`s)
Number of shares issued - - -
Cash paid (R000`s) 61 000 82 000 22 133
Profit since acquisition 15 949 20 416 5 573
(PAT) (R000`s)
OPERATIONAL REVIEW
Health and safety
In the six months ended 31 August 2007 the Group Health and Safety Program was
effective and no major accidents, injuries or fatalities occurred at any of the
Group operations.
Delf Sand
Delf started business in 1995 as a building and plaster sand supplier, mainly to
Pretoria and the surrounding development areas. In 1999 Delf recognised the
importance of quality alluvial silica sand products for the glass industry and
the strong demand from the foundry and glass industry.
Delf constructed a processing plant which produces graded silica products
conforming to international standards. This processing plant has enabled Delf to
become a leading alluvial silica sand supplier in South Africa.
Delf is currently mining at full capacity and has invested R5,8 million in new
trucks and tankers and other mobile plant in the first half of F2008.
Delf has enjoyed steady growth in the half year ended 31 August 2007. Delf`s
order book is outstripping supply, and consequently additional plant including a
blending facility has been commissioned which will increase manufacturing
capacity substantially. It is expected that the beneficial effects of the new
plant coming on stream will be realised in the second half of F2008. Delf
contributed R54,3 million (F2007 - R34,2 million) to Group revenue and R20,4
million (F2007 - R8,6 million) to profit before tax.
Pienaarspoort
Pienaarspoort consists of the remaining portion of Portion 55 of the farm
Pienaarspoort 339, JR Cullinan, in extent 641 hectares, where Delf is currently
quarrying sand. Expressions of interest have been received from the glass
industry with regard to the supply of glass making silica products for this
industry. The company will focus on glass making silica as well as expand the
product range to filter medium, recreational industry (golf), the adhesives
industry and paint filler pigment industry.
Pienaarspoort is an approved project of the Infrasors Group. The Pienaarspoort
property has been surveyed and is currently having its mineral reserves
evaluated. A competent person`s report in this regard will be included in the
F2008 annual report. Initial drilling and laboratory testing has confirmed that
the silica quartzite reserves present on the property will be ideally suited for
use in the glass industry. The results of the drilling and laboratory analysis
have shown a very high silica content with a low iron content which makes the
resource ideally suitable for clear and coloured glass manufacturing.
Capital Commitments - Pienaarspoort
On achievement of full production volumes of 800 000 tons per annum of silica
products will be produced together with 400 000 tons per annum of construction
aggregate. Capital expenditure to complete the Pienaarspoort project is
estimated at R50 million and production is expected to come on line in the
second half of F2009, which will be funded by project finance.
A feasibility study is currently being completed to ascertain the viability of
constructing a silica crushing operation and a Ventilex dryer at Pienaarspoort.
Management is currently optimistic that Pienaarspoort will add a substantial
contribution to the Infrasors Group in F2009 and become fully utilised
throughout F2010.
Lyttelton Dolomite
Lyttelton was established in 1938 and supplies metallurgical grade dolomite,
aggregate stone and sand to the building and construction industry as well as
the industrial market. Lyttelton`s head office is situated in Lyttelton,
Pretoria, whilst its business operations are situated in both Lyttelton and
Marble Hall.
The Lyttelton operations initially produced dolomite purely for metallurgical
purposes where it is used as a fluxing agent, and only later began to supply the
aggregate market, which has become a significant segment of Lyttelton`s
business. Today Lyttelton enjoys a substantial portion of the market share in
the metallurgical aggregate and powder markets and its products are all sold
locally.
The Marble Hall business was originally started in 1919 for the purpose of
cutting marble and burning lime in the production of cement powders. It was
further developed by establishing the relevant plants for the production of
stonedust, aggregate and powders for the industrial and construction markets.
Lyttelton`s customer base is widespread ranging from small individual cash
customers to large national mines, foundries and construction companies.
Lyttelton achieved a sound financial performance for the half year ended 31
August 2007. The profit before tax contribution from Lyttelton Dolomite was
R15,9 million (F2007 - R7,3 million) from a revenue base of R60,9 million (F2007
- R44,2 million). Lyttelton has recently secured a new contract to supply
aggregates to the Bombela Group for the Gautrain project and is experiencing a
growth in demand which is expected to increase throughput and revenues in the
second half of 2007.
Infrabric
The K&F Bricks business started in 2002, manufacturing a range of high quality
cement bricks from its premises in Kempton Park. Infrabric recently expanded its
plant capacity from 3 million bricks to 7 million bricks per month to meet
increased demand and intends to further increase production to 10 million bricks
per month. Infrabric uses quality slag to manufacture bricks and manufactures 7,
10 and 11 MPa bricks as well as standard and coloured pavers. Both brick plants
are now fully operational.
Infrabric experienced a strong increase in demand which it was unable to fully
meet in the early part of 2007 due to its limited delivery fleet capacity. In
July 2007 new brick delivery trucks were ordered and these have now been
commissioned and are on site, thus increasing delivery capacity by approximately
100 000 bricks per day. Infrabric has also increased its personnel to include
additional sales, marketing and delivery personnel and sales of bricks ex works,
where bricks are collected by customers who have their own vehicle fleets.
Infrabric contributed R11,9 million to Group revenue and R5,6 million to profit
for the period ended 31 August 2007.
Mining assets, mining licences and Mineral Resources
In the cases of Lyttelton, Delf and Pienaarspoort, the Infrasors Group is the
outright owner of the land, mining rights and Mineral Resources which make up
the bulk of the raw materials utilised in the manufacture and distribution of
the Infrasors Group products.
Comprehensive SAMREC compliant Mineral Resources statements prepared by an
independent competent person will be included in the F2008 Infrasors Annual
Report. Shareholders are invited to visit the Infrasors web site
www.infrasors.co.za which contains computer based three dimensional models of
the Infrasors Group Mineral Resources geological modelling and borehole test
results. The Competent Person is Mr Jacques Perold Pr. Sci. Nat (Msc ESPM)
NDSURM Data Metrics. In summary, the current life of mines, and Mineral
Resources of Lyttelton, Marble Hall, Delf and Pienaarspoort are available in the
pre-listing statement dated 16 July 2007, and on the Infrasors website.
Capital expenditure and life of mine - Lyttelton
Capital expenditure amounting to approximately R12 million has been approved to
enable the installation of a mobile secondary crushing and screening plant in
the Lyttelton quarry which will be funded by internal resources. This will
increase refined production capacity by approximately 50% per annum thus
substantially reducing production costs per unit. Infrasors has commissioned an
extended exploration programme together with a revised mine plan which will
enable the updating of Lyttelton`s competent person`s report ("CPR") and a life
of mine model by February 2008. Infrasors believes that this action will
substantially increase the life of mine model by extending the mine along its
western and southern boundaries and by additional recoveries due to alterations
in the mine plan.
The Lyttelton Sputnik plant had already undergone modifications and enhancements
enabling it to meet the additional throughput demand of approximately 10%
arising from the commencement of the Bombela contract (Gautrain).
Marble Hall: Infrasors has commissioned an exploration programme at Marble Hall
to further clarify the mineral reserves and investigate the possibility of
broadening the range of products which can be produced from the Marble Hall
reserves.
SEGMENTAL ANALYSIS
The Group`s business segments and segmental information presented in the
condensed consolidated reviewed results represents the primary basis of segment
reporting. The business segment reporting format reflects the Group`s management
and internal reporting structure. Inter segment transactions are concluded at
arm`s length terms and conditions.
Industrial and Aggregate
building sand products Bricks
Business segments R000`s R000`s R000`s
Segment revenue
- External customers 54 315 60 916 11 891
- Inter-segment - - -
Segment revenue 54 315 60 916 11 891
Segment profit before tax
- External 20 416 15 949 5 573
- Inter-segment - - -
Segment profit before tax 20 416 15 949 5 573
Segment assets 106 932 197 045 34 749
Segment liabilities (46 965) (55 937) (31 214)
Corporate Elimina- Consoli-
office tions dated
Business segments R000`s R000`s R000`s
Segment revenue
- External customers - - 127 122
- Inter-segment 10 000 (10 000) -
Segment revenue 10 000 (10 000) 127 122
Segment profit before tax
- External - - 41 938
- Inter-segment 7 318 (10 195) (2 877)
Segment profit before tax 7 318 (10 195) 39 061
Segment assets 368 125 232 630 474 221
Segment liabilities (107 124) 50 910 (190 330)
NOTES TO THE CONDENSED CONSOLIDATED REVIEWED FINANCIAL STATEMENTS
1. Significant accounting policies
Infrasors is a company domiciled in South Africa. The condensed consolidated
reviewed financial statements of Infrasors for the six months ended 31 August
2007 comprise the Company and its subsidiaries (together referred to as the
"Group").
The condensed consolidated reviewed financial statements were authorised for
issue by the directors on 28 September 2007.
1.1 Statement of compliance
The financial statements have been prepared in accordance with the recognition
and measurement requirements of International Financial Reporting Standards
("IFRS") and the presentation and disclosure requirements of IAS 34 - Interim
Financial Reporting and the South African Companies Act. The financial
statements do not include all the information required for full annual financial
statements and should be read in conjunction with the pre-listing statement
dated 16 July 2007.
1.2 Basis of preparation
The condensed consolidated reviewed financial statements are prepared on the
historical cost basis, except for financial instruments which are stated at fair
value, where applicable, in terms of IAS 32 - Financial Instruments: Disclosure
and Presentation and IAS 39 - Financial Instruments: Recognition and
Measurement.
The preparation of interim financial statements in conformity with IAS 34 -
Interim Financial Reporting requires management to make judgements, estimates
and assumptions that affect the application of policies and reported amounts of
assets and liabilities, income and expenses. The estimates and associated
assumptions are based on historical experience and various other factors that
are believed to be reasonable under the circumstances, the results of which form
the basis of making the judgements about carrying value of assets and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
The accounting policies have been applied consistently by Group companies and
have been applied consistently to all periods presented in these condensed
consolidated reviewed financial statements.
2. Review of results
Mazars Moores Rowland has signed an unqualified review opinion on the interim
financial statements, as required by the JSE. These financial statements have
been approved by the board and abridged for the purposes of this report. The
auditors have reviewed the abridged financial statements. Both the auditors`
opinion and the abridged interim financial statements are available for
inspection at the Company`s registered office as well as being posted on the
Company`s website.
3. Increase in authorised share capital
In the six months under review, the Company increased its authorised share
capital from 1 000 ordinary shares of 100 cents each to 2 000 000 000 ordinary
shares of 0,5 cents each.
4. Issue of shares by private placement
Infrasors listed on the JSE`s Alternative Exchange ("AltX") on 31 July 2007.
Infrasors offered 70 000 000 ordinary shares for subscription, of which 47 839
491 ordinary shares were placed at an offer price of R5,50 per share.
5. BEE shareholding
Pursuant to the listing the BEE shareholding in Infrasors is 30,8% consisting of
Lereko Investments (Pty) Limited, the Infrasors Empowerment Trust, Afrilink
Investcorp (Pty) Limited and a black director. The BEE shareholding was funded
82,1% by vendor finance and 17,9% by the Company.
6. Earnings per share ("EPS")
EPS is based on the Group`s profit for the six-month period ended 31 August
2007, divided by the weighted average number of shares in issue during the six-
month period.
Weighted average
number of Earnings
Net income shares in issue per share
R000`s 000`s cents
Basic earnings per share 32 315 138 664 23,3
Headline earnings reconciliation
Headline earnings per share is based on the Group`s headline
earnings divided by the weighted average number of shares in issue
during the six-month period ended 31 August 2007
Profit after taxation 32 315 138 664 -
Profit on disposal of (125) - -
property, plant and
equipment
Decrease in provisions (42) - -
Headline earnings per share 32 148 138 664 23,2
Finance costs directly 2 029 - -
attributable to
acquisitions (once-off)
Normalised earnings per 34 177 138 664 24,6
share
The are no factors at this reporting period which require the disclosure or
calculation of diluted earnings per share.
7. Net asset value ("NAV") per share
Reviewed
Six months ended
31 August 2007
Ordinary share capital and reserves (R000`s) 283 891
Total number of shares in issue (000`s) 177 839
NAV per share (cents) 159,6
Ordinary share capital and reserves (R000`s) 283 891
Intangible assets (87 304)
Tangible net asset value 196 587
Total number of shares in issue (000`s) 177 839
Fully diluted NAV per share (cents) 110,5
8. Post balance sheet events
There have been no fact or circumstance of a material nature that have occurred
between the accounting date and the date of this announcement.
9. Dividends
It is the Group`s policy to pay a single dividend annually and to retain a three
times dividend cover. Accordingly, no interim dividend has been declared.
10. Outlook
The short-term outlook for the Infrasors Group is positive as demands for the
Group`s products and services continue to grow robustly. Looking towards the
medium term, Infrasors is well placed to grow its revenue as the strength of
demand continues to grow relative to constrained supply. The capital expenditure
programmes and projects in place will extend capacity resulting in economies of
scale and reduced production costs per unit. Against this backdrop Infrasors is
confident that it will realise its growth prospects and increase assets and
earnings.
11. Directors
The following directors were appointed in the six-month period:
Popo Molefe (Chairman)*, Le Roux Roets, Francois Roets, Shaun Vorster, Stephen
Courtney, Chris Boulle*, Mochele Noge*, Dereck Alexander* (* non-
executive)
On behalf of the board
P Molefe Chairman*
L Roets Chief Executive
1 October 2007
Sponsor: Nedbank Capital
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