| Tue 13 Nov 2007, 8:30 | | SAN - Sanyati - Reviewed Interim Results For The S |
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SAN
SAN
SAN - Sanyati - Reviewed Interim Results For The Six Months Ended
31 August 2007
Sanyati Holdings Limited
("Sanyati" or "the company")
(Registration no. 1988/002538/06)
Share code: SAN ISIN: ZAE000081055
REVIEWED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2007
- Up 102% Profit attributable to shareholders
- Up 52.5% HEPS
- Up 214% Cash on hand
- Up 105% Revenue
Consolidated balance sheet
As at As at As at
31 August 28 February 31 August
2007 2007 2006
R`000 R`000 R`000
Reviewed Audited Reviewed
ASSETS
Non-current assets 311 171 79 500 29 258
Property, plant and equipment 86 566 42 744 22 735
Investments - 320 1 800
Goodwill 224 605 36 436 4 723
Current assets 326 204 157 717 129 667
Inventories 3 997 1 794 9 134
Work in progress 17 851 12 220 24 663
Trade and other receivables 231 246 119 300 79 248
Cash and cash equivalents 52 496 19 701 16 622
Gross amount due from customers 20 614 4 702 -
Total assets 637 375 237 217 158 925
EQUITY AND LIABILITIES
Capital and reserves 257 702 99 928 67 763
Share capital and premium 187 658 52 745 33 438
Non-distributable reserves 3 111 3 111 3 111
Accumulated profits 66 933 44 072 31 214
Non-current liabilities 172 375 47 960 9 743
Deferred taxation 8 990 8 159 4 754
Vendor liabilities 134 475 29 200 -
Interest-bearing borrowings 28 910 10 601 4 989
Current liabilities 207 298 89 329 81 419
Trade and other payables 126 890 58 287 52 181
Bank overdraft 307 1 481 -
Current portion of vendor
liabilities 2 000 - -
Gross amount due to customers 23 816 12 158 12 844
Current portion of interest-bearing
borrowings 5 957 4 577 4 331
Provisions 32 414 3 664 1 489
Taxation payable 15 914 9 162 10 574
Total equity and liabilities 637 375 237 217 158 925
Number of ordinary shares in issue 295 884 227 048 215 000
Weighted average number of shares 261 469 207 307 197 310
Net asset value (cents) 98,6 48,2 34,3
Net tangible asset value (cents) 12,7 30,6 31,9
Consolidated income statement
Six months Six months
ended Year ended ended
31 August 28 February 31 August
2007 2007 2006
R`000 R`000 R`000
Reviewed Audited Reviewed
Revenue 396 169 379 596 192 544
Gross profit 67 164 55 933 29 531
Other income 4 480 6 150 6 682
Operating expenses (35 553) (23 985) (16 969)
EBITDA 36 091 38 098 19 244
Depreciation (4 813) (3 271) (2 717)
Profit before interest and
taxation 31 278 34 827 16 527
Net interest received/(paid) 920 (454) (594)
Profit before taxation 32 198 34 373 15 933
Taxation (9 337) (10 202) (4 620)
Net profit for the period 22 861 24 171 11 313
Profit attributable to
shareholders 22 861 24 171 11 313
Weighted average shares 261 469 207 307 197 310
Earnings per share (cents) 8,74 11,66 5,73
Headline earnings per share
(cents) 8,74 11,78 5,73
Dividend per share (cents) - - -
Diluted earnings per share 7,09 11,78 5,73
Consolidated statement of changes in equity
Share
capital and Treasury
NDR premium shares
R`000 R`000 R`000
Balance at 28 February 2006 3 186 1 -
Net profit for the period - - -
Share issue - 52 744 -
Realisation of non-distributable
reserves (75) - -
Balance at 28 February 2007 3 111 52 745 -
Net profit for the period - - -
Share issue - 134 913
Treasury shares consolidation - 21 000 (21 000)
Balance at 31 August 2007 3 111 208 658 (21 000)
Retained
income Total
R`000 R`000
Balance at 28 February 2006 19 826 23 013
Net profit for the period 24 171 24 171
Share issue - 52 744
Realisation of non-distributable
reserves 75 -
Balance at 28 February 2007 44 072 99 928
Net profit for the period 22 861 22 861
Share issue - 134 913
Treasury shares consolidation - -
Balance at 31 August 2007 66 933 257 702
Consolidated cash flow statement
Six months Six months
ended Year ended ended
31 August 28 February 31 August
2007 2007 2006
R`000 R`000 R`000
Reviewed Audited Reviewed
Cash generated/(utilised) by
operations
Cash generated/(utilised) from
operations 10 888 9 866 (4 497)
Interest received 3 268 1 020 529
Interest paid (2 348) (1 474) (1 123)
Taxation paid (2 584) (3 995) (406)
Net cash flows from operating
activities 9 224 5 417 (5 497)
Cash flows from investing
activities
Acquisition of property, plant
and equipment (55 594) (38 440) (16 406)
Proceeds from property, plant and
equipment 6 861 1 559 -
Goodwill acquired (188 169) (31 713) -
Decrease/(increase) in investments 320 11 (1 469)
Net cash flow from investing
activities (236 582) (68 583) (17 875)
Cash flows from financing
activities
Increase from shares 134 913 52 744 33 437
Decrease in shareholders` loans - (7 310) -
Increase in interest-bearing
borrowings 19 140 4 663 4 468
Increase in vendor liability 107 274 29 200 -
Net cash flows from financing
activities 261 328 79 297 37 905
Net increase in cash and cash
equivalents 33 969 16 131 14 533
Cash and cash equivalents at
beginning
of period 18 220 2 089 2 089
Cash and cash equivalents at end
of period 52 189 18 220 16 622
Segmental Report for the six month period ended 31 August 2007
Civils Civils
Building Inland Coastal Roads
Revenue
Sales to external
customers 72 783 80 574 183 776 59 036
Inter-segment
sales 4 584 - 31 249 7 776
Segment revenue 77 367 80 574 215 025 66 812
Results
Gross profit 22 980 15 709 14 833 12 235
Profit before interest
and tax 7 963 8 408 9 865 6 038
Net finance costs (161) 129 (241) (793)
Profit before tax 7 802 8 537 9 624 5 245
Taxation (2 260) (2 587) (2 915) (1 593)
Profit for the period 5 542 5 950 6 709 3 652
Depreciation 1 151 437 1 111 2 037
Capital expenditure 7 479 9 751 21 941 16 296
Segment assets 131 848 86 806 147 195 78 354
Segment liabilities 126 194 66 806 132 016 74 701
Holding Inter-
company company
and other elimination Total
Revenue
Sales to external
customers - - 396 169
Inter-segment
sales - (43 609) -
Segment revenue - (43 609) 396 169
Results
Gross profit (1 391) 2 798 67 164
Profit before interest
and tax (422) (574) 31 278
Net finance costs 1 986 - 920
Profit before tax 1 564 (574) 32 198
Taxation (148) 166 (9 337)
Profit for the period 1 416 (408) 22 861
Depreciation 77 - 4 813
Capital expenditure 127 - 55 594
Segment assets 433 413 (240 241) 637 375
Segment liabilities 149 635 (169 679) 379 673
Commentary
Introduction
The directors are pleased to present the results of the group for the six
months ended 31 August 2007 ("the period"), which reflect significantly
higher key performance indicators compared with the comparative six month
period ended 31 August 2006.
During the period the group`s order book was bolstered by a number of
profitable contract wins. Further, Sanyati concluded the strategic
acquisitions of Gauteng-based Ruthcon Civil Contractors ("Ruthcon") and GEM
Earthworks ("GEM") - which also operates in Mpumulanga and the Eastern Cape
("the acquisitions") - successfully extending its geographic footprint
outside of KwaZulu-Natal.
Following the acquisitions the group has consolidated its operations and
streamlined Sanyati`s group structure to result in four key operating
divisions: Building, Roads, Civils Inland and Civils Coastal (see
"Operational review").
Basis of preparation
The condensed consolidated interim financial statements have been prepared in
accordance with IAS 34 - Interim Financial Reporting. The accounting policies
applied in preparing these condensed consolidated interim financial
statements are consistent with those applied in the annual financial
statements at the previous year-end and comply with the statements of
International Financial Reporting Standards ("IFRS") and the South African
Companies Act.
Operational review
Following successful integration of the acquisitions (see "Acquisitions"
below), the group has an entrenched presence in five provinces across South
Africa as well as in Zambia. The majority of the group`s contracts (62%)
remains executed in KwaZulu-Natal, with Gauteng accounting for 22% and the
balance split over Mpumalanga, the Eastern Cape and Africa (specifically
Zambia).
Notwithstanding project delays caused by inclement weather conditions across
South Africa, all operations contributed positively to group earnings.
Building
The division includes Rusinga Building, Mega Pile and Sanprop, which together
posted revenue of R77,3 million and net profit of R5,5 million.
Rusinga Building`s R33 million contract to extend the private Hibiscus
Hospital in Port Shepstone, is on track.
Revenue at Sanprop was adversely affected by slower than expected sales at a
residential development in KwaZulu-Natal. Three office developments are in
the pipeline, the first already begun, the second set to begin at the end of
2007 and the third in the latter half of 2008. The company is continuing to
investigate further commercial and industrial projects.
Mega Pile, the group`s piling specialist acquired in 2006, exceeded
expectations and successfully established a presence in Gauteng. The Gauteng
operations are up and running with Mega Pile`s first R2 million contract, and
will be further supported by the delivery of plant specifically suited to
conditions in the region.
Roads
This division is made up of Brisk Asphalt ("Brisk"), and contributed
significantly to bottomline growth with revenue of R66,8 million generating
R3,7 million net profit. Notwithstanding external factors which impacted
negatively, the company performed well.
Civils Inland
This division comprises Ruthcon, which was the group`s key contributor to
profitability with net profit of R6 million off revenue of R80,6 million.
Construction on part of a Greg Norman international golf course development
is progressing well and the Irene Mall project is nearing completion. The
company was recently awarded a R59 million infrastructure contract in Gauteng
due for completion by the end of 2008, which leverages Ruthcon`s previous
expertise on similar projects and further extends its strong presence in the
private sector.
Civils Coastal
Civils Coastal comprises Afriscan Construction and GEM and posted revenue of
R215,0 million and net profit of R6,7 million.
Afriscan Construction performed exceptionally well and remains the group`s
key contributor to topline growth. Large-scale projects including the R117
million Barberton roads contract in Mpumalanga and the R52 million Umgeni
South Coast Pipeline project were the major drivers of the company`s growth.
As part of the Ilembe Consortium, in which Afriscan Construction holds a 10%
stake, the company has secured the R1,9 billion contract for the civil works
on the King Shaka International Airport with its direct revenue accumulating
to R190 million. Pending contracts at the date of this announcement valued at
R150 million should put Afriscan Construction well on track to meet budget
for the full year to February 2008.
At GEM work on the R75 million Gamtoos road rehabilitation contract continues
and is scheduled for completion in May 2008. GEM has further been awarded a
R25 million contract for civil infrastructure work in Polokwane.
Acquisitions
As previously announced on 20 March 2007 and subsequently at the previous
year-end Sanyati acquired Ruthcon for R150 million and GEM for R45 million,
as reflected above. The acquisitions have been well bedded down with both
companies contributing significantly to the group`s strong performance.
Financial review
During the period revenue more than doubled (105%) to R396,2 million from
R192,5 million in the previous comparative period. Profit attributable to
shareholders doubled (102%) to R22,9 million from R11,3 million. Headline
earnings per share increased 52,5% from 5,7 cents to 8,7 cents.
Cash on hand increased significantly from R16,6 million to R52,2 million.
As a result of the acquisitions of Mega Pile, Ruthcon, GEM and Hibiscus
Asphalt goodwill rose from R4,7 million to R224,6 million. Goodwill on
acquisitions arose due to the present value of future profits (cost of the
acquisition) exceeding the fair value of the identifiable assets and
liabilities of the subsidiary at the date of acquisition. The transactions
above were accounted for using the purchase method.
BEE
Following the issue of shares to select BEE investors to help fund the
acquisitions, Sanyati increased direct black shareholding from 26,6% to over
40%. This positions Sanyati at the forefront of the industry in terms of
black direct ownership. As a result Sanyati is a "Level 4" contributor in
terms of the Department of Trade & Industry`s BBBEE Codes of Good Practice.
Outlook
Geographical expansion and the strong performances of both the group`s
original businesses and acquisitions, supported by a promising project
pipeline, mean that Sanyati is well positioned to achieve its forecast profit
attributable to shareholders of R53 million for the year ending February
2008. The directors are confident that with 93% of the forecast order book
already in hand and imminent contract awards, the group will meet its
forecasts.
Robust industry conditions in the construction industry across the country
bode well for Sanyati`s prospects. Further, the recent award by the
Construction Industry Development Board ("CIDB") of a 9CE/GB rating will
enhance these prospects by widening the scope of projects as Sanyati is now
able to tender for projects of an unlimited value.
Dividend
In line with group policy, no interim dividend has been declared for the
period.
Review opinion
The interim financial results have been reviewed by Sanyati`s auditors, PKF
Durban. Their unqualified review report is available for inspection at the
company`s registered office.
Appreciation
We thank all our employees whose hard work and dedication have been integral
to the achievement of these results. We also extend our thanks to our
stakeholders, business partners and advisors for their ongoing support of the
group.
On behalf of the board
RD Jackson MI Krouse
CEO Financial Director
13 November 2007
Directors: RD Jackson (CEO), MI Krouse (Financial Director), T Ahier*,
R Crowie*, C Crowie*, RW Deacon, HM Dlamini*, M Flemming*, N Khambule*,
M O`Reilly, K Ramkissoon, AJ Rutherford, MJ Sangweni, (*Non-executive)
Registered office: Bridelia Sanyati Park, 3 Abrey Road, Kloof, KwaZulu-Natal,
3610. PO Box 1055 Kloof, KwaZulu-Natal, 3640
Designated Advisor: Exchange Sponsors (Pty) Limited
Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited,
70 Marshall Street, Johannesburg, 2001. PO Box 61763, Marshalltown, 2107
Company Secretary: Highway Corporate Services (Pty) Limited, Suites 13 - 17,
Marwick Centre, Lucas Drive, Hillcrest, 3610. PO Box 1319, Hillcrest, 3650
Date: 13/11/2007 08:30:01 Produced by the JSE SENS Department.
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