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SFB
SFB
SFB - Stefanutti & Bressan Holdings - Reviewed Group Interim Results
For The Six Months Ended 31 August 2007
STEFANUTTI & BRESSAN HOLDINGS LIMITED
("Stefanutti & Bressan" or "the company")
(Registration number 1996/003767/06)
Share code: SFB & ISIN: ZAE000101903
bridging your expectations
REVIEWED GROUP INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2007
- Revenue up 26%
- Operating profit up 45%
- EPS and HEPS up 37%
GROUP INCOME STATEMENT
Reviewed Unaudited Audited
6 months 6 months 12 months to
to to
31 August 31 August 28 February
2007 2006 2007
R`000 R`000 R`000
Revenue 1 100 308 871 639 1 688 652
Earnings before interest,
taxation and depreciation
(EBITDA) 91 192 58 097 84 483
Depreciation (13 350) (4 458) (14 150)
Operating profit 77 842 53 639 70 333
Investment income 12 862 3 861 12 779
Finance costs (9 713) (2 392) (7 822)
Share of profits from associate
company 1 132 - -
Profit before taxation 82 123 55 108 75 290
Taxation (24 840) (21 258) (38 041)
Profit for the period 57 283 33 850 37 249
Attributable to:
Equity holders of the company
55 311 33 657 36 275
Minority shareholders 1 972 193 974
57 283 33 850 37 249
Headline earnings
reconciliation
Profit after taxation
attributable to equity holders
of the company 55 311 33 657 36 275
Headline earnings 55 311 33 657 36 275
Weighted average shares in
issue 130 634 200 108 882 933 108 882 933
Diluted weighted average shares
in issue 135 970 022 108 882 933 108 882 933
Earnings per share (cents) 42,34 30,91 33,32
Diluted earnings per share
(cents) 40,68 30,91 33,32
Headline earnings per share
(cents) 42,34 30,91 33,32
Diluted headline earnings per
share (cents) 40,68 30,91 33,32
Headline earnings per share
excluding the cost of BEE
credentials (cents) 42,34 30,91 60,87
GROUP CASH FLOW STATEMENT
Reviewed Unaudited Audited
6 months 6 months 12 months to
to to
31 August 31 August 28 February
2007 2006 2007
R`000 R`000 R`000
Cash flows from operating
activities 158 656 39 501 93 428
Expenditure to maintain
operating capacity (86 894) (40 165) (63 290)
Expenditure for expansion (11 827) (5 022) (5 022)
Cash flows from investing
activities (98 721) (45 187) (68 312)
Cash flows from financing
activities 237 673 30 140 79 199
Net increase in cash for period
297 608 24 454 104 315
Cash at beginning of period 205 560 101 245 101 245
Net cash at end of period 503 168 125 699 205 560
GROUP BALANCE SHEET
Reviewed Unaudited Audited
at at at
31 August 31 August 28 February
2007 2006 2007
R`000 R`000 R`000
ASSETS
Non-current assets
Property, plant and equipment
260 895 132 143 151 084
Intangible assets 73 639 59 091 59 091
Deferred taxation 5 047 357 2 961
Current assets 996 662 447 894 573 319
Bank balances 503 168 126 883 217 518
Other current assets 493 494 319 932 355 789
Taxation - 1 079 12
Total assets 1 336 243 639 485 786 455
EQUITY AND LIABILITIES
Ordinary shareholders` interest
504 925 195 928 213 473
Minority shareholders` interest
4 182 1 560 2 210
Total equity 509 107 197 488 215 683
Non-current liabilities 87 732 50 068 55 674
Other financial liabilities 63 542 20 623 30 399
Deferred taxation 24 190 29 445 25 275
Current liabilities 739 404 391 929 515 098
Bank overdraft - 1 184 11 958
Other current liabilities 499 134 297 258 364 859
Provisions 185 223 69 046 112 268
Taxation 55 047 24 441 26 013
Total equity and liabilities 1 336 243 639 485 786 455
Total shares in issue 139 380 867 119 189 200 119 189 200
Net asset value per share
(cents) 362,26 164,38 179,10
Net tangible asset value per
share (cents) 309,43 114,81 129,53
SEGMENTAL REPORTING
Primary segments
31 August 2007 (R`000)
KwaZulu Western
Gauteng Natal Cape
Total assets 990 994 223 288 12 710
Total liabilities 506 760 201 396 17 079
Revenue 719 091 248 986 24 192
PAT before minorities 40 913 14 062 (1 760)
Depreciation 9 889 895 287
Outside
South Africa Total
Total assets 109 251 1 336 243
Total liabilities 101 901 827 136
Revenue 108 039 1 100 308
PAT before minorities 4 068 57 283
Depreciation 2 279 13 350
Secondary segments
31 August 2007 (R`000)
Revenue Total assets
Building and Piling 395 516 303 619
Civils, Earthworks & Mining 704 792 1 032 624
Total 1 100 308 1 336 243
ACQUISITION OF ECMP
Acquisition date 3 April 2007
Voting equity (%) 100
Cost of acquisition (R`000) 42 725
Number of shares issued -
Cash paid (R`000) 42 725
Profit after taxation since acquisition (R`000) 13 663
GROUP STATEMENT OF CHANGES IN EQUITY
Issued capital Share-based Foreign currency
and premium payments translation
reserve
R`000 R`000 R`000
Balance at 1 March 2006
Audited 121 234 - -
Premium on issue of
ordinary shares 5 022 - -
Impairment of land and
buildings - - -
Acquisition of minority
interest - - -
Net profit for the period - - -
Balance at 1 September
2006 Unaudited 126 256 - -
Premium on issue of
preference shares 60 000 - -
Net profit for the period - - -
Share buy back (8 311) - -
Revaluation of land and
buildings - - -
Translation of foreign
subsidiary - - (78)
Dividends paid - - -
Balance at 1 March 2007
Audited 177 945 - (78)
Premium on issue of
ordinary shares 349 937 - -
Less listing expenses
written off against share
premium account (9 000) - -
Less capital distribution
from share premium account (30 000) - -
Effect of consolidating
the S&B Share Incentive
Trust (61 850) - -
Employee share options - 2 054 -
Net profit for the period - - -
Dividends paid - - -
Balance at 31 August 2007
Reviewed 427 032 2 054 (78)
Revaluation Retained Minority
shareholder
surplus earnings interest Total
R`000 R`000 R`000 R`000
Balance at 1 March 2006
Audited 2 778 33 430 2 011 159 453
Premium on issue of
ordinary shares - - - 5 022
Impairment of land and
buildings (193) - - (193)
Acquisition of minority
interest - - (644) (644)
Net profit for the period - 33 657 193 33 850
Balance at 1 September
2006 Unaudited 2 585 67 087 1 560 197 488
Premium on issue of
preference shares - - - 60 000
Net profit for the period - 2 618 782 3 400
Share buy back - - - (8 311)
Revaluation of land and
buildings 986 - 103 1 089
Translation of foreign
subsidiary - - (235) (313)
Dividends paid - (37 670) - (37 670)
Balance at 1 March 2007
Audited 3 571 32 035 2 210 215 683
Premium on issue of
ordinary shares - - - 349 937
Less listing expenses
written off against share
premium account - - - (9 000)
Less capital distribution
from share premium account - - - (30 000)
Effect of consolidating
the S&B Share Incentive
Trust - - - (61 850)
Employee share options - - - 2 054
Net profit for the period - 55 311 1 972 57 283
Dividends paid - (15 000) - (15 000)
Balance at 31 August 2007
Reviewed 3 571 72 346 4 182 509 107
COMMENTARY
Introduction
The directors are pleased to present the maiden interim financial results of
the group for the six months ended 31 August 2007 ("the interim period"),
which reflect profitability in line with pre-listing forecasts and
significantly higher than the previous comparative period.
The period saw Stefanutti & Bressan list successfully on the JSE`s main board
on 3 August 2007. The share opened trade at a premium to the R12 a share in
the pre-listing private placement, giving the company a market capitalisation
on listing of R2,3 billion.
Basis of preparation
The reviewed consolidated interim financial statements for the six months
ended 31 August 2007 have been prepared in compliance with International
Accounting Standards (IAS 34: Interim Financial Reporting). The accounting
policies and method of measurement and recognition applied in preparation of
the consolidated interim financial statements are consistent with those
applied in the group`s annual financial statements for the year ended 28
February 2007, which comply with International Financial Reporting Standards
("IFRS").
Auditor`s review
The consolidated interim financial statements for the six months ended 31
August 2007 have been reviewed by the company`s auditors, Mazars Moores
Rowland. Their unmodified review opinion is available for inspection at the
company`s registered office. The comparative interim financial information
for the six months ended 31 August 2006 has not been audited or reviewed.
Group profile
Stefanutti & Bressan operates throughout Southern Africa with expertise
spanning concrete structures and rehabilitation, roads and earthworks, piling
and geotechnical services, mine residue disposal facilities (tailings dams),
open pit contract mining and building works. Its spectrum of projects ranges
across industrial and petrochemical plants, cooling towers for power
stations, mine infrastructure, dams, roads, bridges, water and effluent
treatment plants, township infrastructure and industrial, commercial and
select residential buildings. Following recent acquisitions (see `Post
balance sheet events` below) it has expanded its service offering to include
mechanical and electrical construction and marine construction expertise.
Review of operations
Concrete Structures
This division is well positioned to exploit buoyant market conditions.
Prospects are pleasing with a number of large contracts awarded recently.
Further large contracts are expected to be secured in the near future.
Roads, Earthworks and Mining
Roads and Earthworks performed well during the period and turnover for the
next year is expected to increase on the back of rising demand in this
sector. The good performance of the Mining division is expected to continue
in the light of buoyant conditions in the resource sector.
Piling
The Piling division has performed well with projects secured which will
continue well into the next financial period.
Building
This division has achieved results in line with expectations, with the
exception of two residential apartment contracts which have impacted
negatively on the division`s margins. One of these contracts is now complete
with the other nearing completion shortly.
Skills development
A new in-house skills training school is currently being established with
training expected to commence in early 2008. The selection of new bursary
students for 2008 is underway and progressing well.
Acquisition
During the period the company acquired 100% of the shareholding in
Environmental, Civil and Mining Projects (Pty) Limited ("ECMP") with effect
from 3 April 2007, for R42,7 million. ECMP is a civil engineering company
specialising in the management of mine residue disposal facilities and open
pit mining.
Post balance sheet events
As announced on 19 September 2007 Stefanutti & Bressan entered into two
agreements to acquire majority stakes in Skelton & Plummer and Civil &
Coastal Construction. Both transactions remain subject to certain conditions
precedent. The completion date is expected to be early December 2007. These
acquisitions are in line with the group`s pre-listing objective of expanding
its service offerings by diversifying further into complementary construction
niche markets.
Financial results
Results for the period are in line with forecasts. Group revenue increased by
26% to R1,1 billion (2006: R871,6 million) while operating profit increased
by 45% to R77,8 million (2006: R53,6 million). Net profit after tax was up
69% from R33,9 million in the previous comparative period, to R57,3 million.
Headline earnings of R55,3 million for the period translated into headline
earnings per share of 42,3 cents (2006: 30,9 cents).
The group`s operating profit margin has increased by 14,5% from 6,2% to 7,1%.
A share-based incentive scheme expense of R2 million is included in the
earnings, as required by IFRS 2: Share-Based Payments.
The cash reserves which have been accumulated will facilitate both organic
growth and current and future acquisitions.
Prospects
In light of buoyant market conditions prospects for the group remain
positive, and Stefanutti & Bressan is well positioned to capitalise on
expected government and parastatal infrastructure spend. The group is set to
benefit from planned transport infrastructure upgrades, including the
construction of new roads as well as upgrades such as the Gauteng Freeway
improvement project. Further demand is expected to be driven by Eskom`s
commitment to increase power capacity beyond 2020.
In addition the resource sector experiences continued expansion.
Petrochemical and industrial projects, traditionally Stefanutti & Bressan`s
strongest market sectors, are experiencing good growth.
The group`s order book currently stands at R3,0 billion.
In light of these factors and current performance, the directors are
confident of delivering results for the full year in line with forecasts set
out in the prospectus.
Dividend policy
No interim dividend has been declared for the period under review. A final
dividend will not be declared until the financial year ending February 2009.
Appreciation
We thank our employees for their continued loyalty, hard work and commitment
which culminated in the successful listing of the group on the JSE in August
this year and has further resulted in the strong interim performance
reflected in this report. We also thank our fellow directors for their wise
counsel and our stakeholders for their consistent faith in the group.
On behalf of the board
Biagino Stefanutti Willem Meyburgh
Executive Chairman Chief Executive Officer
12 November 2007
Directors:
Biagino Stefanutti (Executive Chairman); Willem Meyburgh (Chief Executive
Officer); Dermot Quinn# (Financial Director); Nomhle Canca*; Kevin
Eborall*; Mafika Mkwananzi*; Lemane Bridgman Sithole* (Alternate: Joseph
Fizelle)
* Non-executive director
# Irish
Registered office:
MRM Financial Services (Pty) Limited
MRM Office Park, 10 Village Road, Kloof, 3610
(PO Box 12394, Aston Manor, 1630)
Corporate advisor and sponsor:
Bridge Capital Advisors (Pty) Limited
2nd Floor, 27 Fricker Road, Illovo Boulevard, Illovo, 2196
(PO Box 651010, Benmore, 2010)
Transfer secretaries:
Computershare Investor Services 2004 (Pty) Limited
70 Marshall Street, Johannesburg, 2001
(PO Box 61763, Marshalltown, 2107)
Company secretary:
MRM Financial Services (Pty) Limited
MRM Office Park, 10 Village Road, Kloof, 3610
(PO Box 12394, Aston Manor, 1630)
www.stefanutti.co.za
Date: 12/11/2007 09:00:01 Produced by the JSE SENS Department.
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