| Thu 8 May 2008, 8:00 | | IRA - Infrasors Holdings Limited - Condensed revie |
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IRA
IRA
IRA - Infrasors Holdings Limited - Condensed reviewed results for the year ended
29 February 2008
INFRASORS HOLDINGS LIMITED
(formerly Romador 123 (Proprietary) Limited)
(Incorporated in the Republic of South Africa)
(Registration number: 2007/002405/06)
Share code: IRA ISIN: ZAE000101507
("Infrasors")
CONDENSED REVIEWED RESULTS FOR THE YEAR ENDED 29 FEBRUARY 2008
INTRODUCTION
The directors of Infrasors are pleased to announce the Group`s maiden results as
a listed entity for the twelve months ended 29 February 2008. Infrasors listed
on 31 July 2007 on the Alternative Exchange of the JSE Limited.
The results include trading activities for the twelve month period ended 29
February 2008. Prior to the commencement of this period Infrasors was a dormant
company which on 1 March 2007 obtained effective control and the power to govern
the financial and operating policies of Lyttelton Dolomite (Pty) Ltd, Delf Sand
(Pty) Ltd, Infrabric (Pty) Ltd, and Pienaarspoort Ontwikkeling (Pty) Ltd. No
Group consolidated prior year comparative figures are therefore presented.
CONDENSED GROUP INCOME STATEMENT
Notes Reviewed
Twelve
months
ended
29 February
2008
R000`s
Revenue 237 027
Earnings before interest, taxes, depreciation and 6 122 937
amortisation ("EBITDA")
Net financing costs 2 717
Depreciation and amortisation (5 157)
Profit before taxation 120 497
Taxation (17 185)
Profit after taxation 103 312
Earnings per share (cents) 7 74.5
Headline earnings per share (cents) 7 44.6
Normalised earnings per share (cents) 7 46.0
Shares in issue (000`s) 177 590
Shares in issue - weighted average (000`s) (net of 138 649
treasury shares - 270 000)
CONDENSED GROUP BALANCE SHEET
Notes Reviewed
at 29
February
2008
R000`s
Non-current assets 404 907
Property, plant and equipment 253 452
Mining rights 72 500
Goodwill 16 949
Deferred tax 3 720
Other financial assets 58 286
Current assets 128 159
Cash resources 59 725
Other current assets 68 434
Total assets 533 066
Capital and reserves 355 527
Share capital and premium 252 215
Retained income 103 312
Non-current liabilities 60 782
Borrowings 9 247
Environmental rehabilitation provision 14 105
Deferred taxation 37 430
Current liabilities 116 757
Taxation payable 10 336
Vendor liabilities 72 587
Other current liabilities 33 834
Total equity and liabilities 533 066
Net asset value per share (cents) 8 200.5
Tangible net asset value per share (cents) 8 150.0
CONDENSED GROUP CASH FLOW STATEMENT
Reviewed
Twelve
months
ended
29 February
2008
R000`s
Cash generated from operations 55 199
Net interest received 2 717
Income tax paid (10 963)
Cash flows from operating activities 46 953
Cash flows from investing activities (237 650)
Cash flows from financing activities 248 277
Net movement in cash balances 57 580
Cash balances at beginning of period -
Cash balances acquired 2 145
Cash balances at end of period 59 725
CONDENSED GROUP STATEMENT OF CHANGES IN SHAREHOLDERS` EQUITY
Share Share Retained Total
capital premium income R000`s
R000`s R000`s R000`s
Balance at 1 March 2007 - - - -
Issue of share capital 650 - - 650
Private placement 239 262 878 - 263 117
Expenses written off against - (10 810) - (10 810)
share premium
Treasury shares (1) (741) - (742)
Profit after taxation - - 103 312 103 312
Balance at 29 February 2008 888 251 327 103 312 355 527
MANAGEMENT COMMENTARY
Infrasors is a South African resources holding company, mining and producing a
spread of base minerals for industry and construction. The company is expanding
and is well-positioned to seize the opportunities presented by South Africa`s
continuing infrastructural growth demand.
With an experienced management team, a proven track record, well-established and
recognised brands, empowerment credentials, a balanced business portfolio, and
proven financial performance, Infrasors intends further deepening its product
and service footprints by offering product solutions to customers in the
industrial, mining and construction sectors.
Infrasors` principal subsidiaries are:
* Lyttelton Dolomite, which is involved in quarrying and manufacturing
activities and supplies aggregate and metallurgical dolomite to industrial
and construction sectors.
* Delf Sand, which undertakes quarrying, milling, grinding, sorting and
manufacture of sand and silica products for the glass industry, the leisure
sector, foundries and building and construction sectors.
* Infrabric, which manufactures cement bricks, brick pavers and concrete
pavers for the construction industry; and
* Pienaarspoort, a flint silica and crushing plant project.
Financial review
Revenue for the period under review increased by R80.2 million or 51.1% compared
with the pro forma consolidated revenue for financial 2007 reported in the pre-
listing statement. EBITDA was R122.9 million, an increase of R47.3 million
(62.7%) over pro forma 2007. EBITDA includes an IFRS required adjustment in the
sum of R41.5 million in respect of purchase price allocation on the acquisitions
(see note 6). The principal reasons for the improved operating performance are:
* increased production and sales; and
* containment of operating costs.
Cash of R78.8 million was generated by operations before outflow from
investments in working capital of R23.6 million, tax of R11.0 million and net
finance income of R2.7 million.
Capital expenditure of R21.7 million was incurred in the 12 months under review,
reflecting the significant investment by the company in plant and infrastructure
in line with market demand. This capital expenditure was made up as follows:
* Lyttelton Dolomite - R2.2 million on plant expansion.
* Delf Sand - R10.0 million of which R4.5 million was plant and machinery and
R5.5 million on additions to the transport fleet;
* Infrabric - R8.0 million, plant and machinery R2 million and R6 million on
additions to the transport fleet;
Operational overview
During the 12 months ended 29 February 2008 the Group`s Health and Safety
programme continued to be effective and no major incidents, injuries or
fatalities occurred at any of the Group`s operations.
Pleasing operational performance was reported from both the Delf Sand and
Lyttelton Dolomite operations, with good progress made at the Pienaarspoort
project.
All of the Infrasors principal operations are geographically situated within a
50 kilometre radius 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.
Lyttelton Dolomite
Lyttelton Dolomite produced in excess of 1 million tonnes of dolomite from the
Lyttelton Dolomite operation during the period under review. (F2007 - 974 000
tonnes). At Marble Hall, production amounted to 218 000 tonnes (F2007 - 207
000).
The increases in production were as a result of the investment by Lyttelton
Dolomite of R2.2 million in plant expansion, which created additional production
capacity of approximately 30 000 tonnes per month in order to cope with
increased demand. Included in this was the supply into the Gautrain Bombela
contract, the full benefit of which will be reaped in F2009.
Lyttelton Dolomite contributed R116.5 million (F2007 - R88.5 million) to Group
revenue and R24.9 million (F2007 - R14.6 million) to profit before tax.
Delf Sand
Delf Sand produced 499 400 tonnes of silica during the period under review
(F2007 - 350 051) . The increase in tonnage is as a result of the commissioning
of a fourth dryer at the operation and an increase in the delivery fleet. Delf
Sand`s capital expenditure of R5.5 million was spent on new trucks and tankers
and R4.5 million in plant upgrades in F2008.
Delf Sand contributed R87.4 million (F2007 - R68.4 million) to Group revenue and
R35.2 million (F2007 - R17.1 million) to profit before tax.
Pienaarspoort Silica
An extensive drilling programme was completed at Pienaarspoort during the year,
together with laboratory analysis of drill samples. The programme confirmed the
existence and quality of the flint silica products in an economically viable
mining resource ideally suited for the requirements of the glass and foundry
industries.
Infrabric
During financial 2008 Infrabric expanded its plant capacity from 3.0 million
bricks per month to 7.0 million bricks per month to meet anticipated increased
demand. The company intends to further increase production to 9.2 million bricks
per month in the coming year. In F2008 Infrabric underperformed in terms of
production due to later commissioning of the new plant than originally estimated
and heavy rains in January and February 2008 delaying manufacturing. Infrabric
is the only Group company directly linked to the residential construction
industry. It experienced fluctuations due to heavy rains and load shedding which
impacted on demand and delivery times.
Infrabric produced 41.6 million bricks in F2008 and is experiencing an increased
demand for its products. It currently has a healthy order book which ensures all
of its production is pre-sold by several months. Infrabric has invested R6.0
million in additions to its transport fleet and R2.0 million on upgrading and
increasing capacity at its plant.
Corporate head office
Infrasors Holdings earned fee income on professional services to third parties
and net interest of R5.6 million on treasury management and realised profit
before tax of R12.5 million. It will continue to provide these services in
F2009.
Mining Assets, Mining Licenses and Mineral Reserves and Resources
In the cases of Lyttelton Dolomite, Delf Sand and Pienaarspoort, the Infrasors
Group is the outright owner of the land, mining rights and mineral reserves and
resources which make up the bulk of the raw materials utilised in the
manufacture and distribution of the Infrasors Group products.
Comprehensive Mineral Reserve and Resource statements prepared by an independent
competent person in terms of the SAMREC requirements will be included in the
F2008 Infrasors Annual Report.
Outlook - Infrasors Group
The short to medium term outlook for the Infrasors Group is positive as demand
for the Groups` products and services continues to grow robustly. In the medium
to long term Infrasors is well placed to grow its revenue as the strength of
demand relative to constrained supply continues. 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.
Outlook - Delf Sand
Capital expenditure of R27.3 million has been approved to further increase
capacity of monthly production of dry silica by 27.0%. An ongoing exploration
and mining development program at Delf Sand is expected to significantly
increase the confidence of in situ reserves and therefore further extend the
life of mine.
Outlook - Lyttelton Dolomite
Capital expenditure of R4.5 million has been approved to further increase
capacity of monthly production of dolomite by 18.2%.
During the second half of F2008 Lyttelton Dolomite commissioned a revised mining
plan which has resulted in an increase in inferred and probable mineral
resources and reserves from 13.9 million tonnes to 34.2 million tonnes and a
commensurate extension of the life of mine at current production rates from 11.7
years to 28.9 years. A competent persons report providing a mineral resources
and reserves statement will be included in the F2008 annual report.
At the Marble Hall mine introduction of its products to the broader Infrasors
customer base has resulted in increased sales of powder products which the Group
expects to continue in F2009. Marble Hall is also experiencing increased demand
for aggregate products due to a new road building programme in Marble Hall and
infrastructural developments of platinum mines in the area.
Outlook - Infrabric
The benefit of production efficiencies introduced at the end of F2008 will be
seen in F2009. Capital expenditure has been approved for the erection of new
cement silos and ash storage silos. The benefit from stronger sales and a
broader customer base established in F2008 should reach fuller optimisation in
F2009.
Outlook - Pienaarspoort Silica
The mining exploration program and laboratory analysis conducted at
Pienaarspoort during F2008 has confirmed expectations of the existence and
quality of the flint and amber silica products in an economically viable mining
resource ideally suited for the requirements of both the glass and foundry
industries.
It is anticipated that final bulk sampling and analysis by users will be
completed in the second quarter of calendar 2008, and that the Pienaarspoort
plant will be constructed and commissioned in the second half of the year.
Pienaarspoort is expected to commence production in January 2009.
Electricity supply
As a result of the load shedding electricity supply cuts throughout South
Africa, diesel generators have been installed at all the operations to provide
sufficient electricity to operating plants, and at head office to eliminate
downtime of professional staff. Production targets are therefore not expected to
be negatively affected, assuming a 10% reduction in electricity supply. The
electricity shortage experienced during the second half of F2008 did not reveal
any reduction in product demand from customers. Management has implemented a
strategy to review the situation regularly to ensure that any negative impacts
will be identified timeously to ensure prompt response.
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 12 months ended 29 February
2008 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 7 May 2008.
1.1 Statement of compliance
The condensed consolidated reviewed 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 and the South African Companies Act. The condensed
consolidated financial statements do not include all of the information required
for full financial statements and should be read in conjunction with the
consolidated annual financial statements for the year ended 29 February 2008.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognized 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.
1.2 Basis of preparation
Infrasors has adopted IFRS for the year ending 29 February 2008. The condensed
financial statements have been prepared in accordance with the Listing
Requirements of the JSE Limited.
2. Review of results
Mazars Moores Rowland has signed an unqualified review opinion on the condensed
consolidated financial statements, as required by the JSE. These financial
statements have been approved by the board and condensed for the purposes of
this report. The auditors have reviewed the condensed consolidated financial
statements. Both the auditors` opinion and the condensed consolidated 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 twelve 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 R5,50 per share.
5. BEE Shareholding
Pursuant to the listing the BEE shareholding in Infrasors is 30.8% consisting of
Lereko Investments (Pty) Ltd, the Infrasors Empowerment Trust, Afrilink
Investcorp (Pty) Ltd and a black director. The BEE shareholding was funded 82.1%
by vendor finance and 17.9% by the Company.
6. Acquisitions
Lyttelton Delf Sand Infrabric Total
Acquisition date 1 March 1 March 1 March
2007 2007 2007
Voting equity 100% 100% 100%
At acquisition values R000`s R000`s R000`s R000`s
Non-current assets 154 924 66 629 18 283 239 836
Current assets 49 628 12 936 1 412 63 976
Rehabilitation values (14 213) (1 295) - (15 508)
Borrowings - (12 737) (6 095) (18 832)
Current liabilities (67 820) (10 033) (1 830) (79 683)
Net asset value 122 519 55 500 11 770 189 789
Cost of acquisition 81 000 128 000 28 720 237 720
(maximum amount)
Excess recognised in income (41 519) - - (41 519)
statement (included in
EBITDA)
Intangible assets - 72 500 16 949 89 449
Cash paid 61 000 82 000 22 133 165 133
Profit before tax since 24 913 35 290 3 090 63 293
acquisition
Lyttelton Dolomite
The purchase price payable by Infrasors was the minimum R61.0 million and a
maximum of R81.0 million, all payable in cash. Subject to the achievement of
certain excess profits up to a further R10 000 000 value of Infrasors shares
would have been issued to the Lyttelton Dolomite vendors at the issue price in
terms of the pre-listing statement. Lyttelton Dolomite achieved a profit before
tax of R24.9 million which resulted in the purchase price being adjusted from
the maximum amount of R91.0 million to R81.0 million. The rehabilitation
provision was provisionally estimated at the interim results. The initial
accounting was completed before year end with the carrying amount of the
provision adjusted at acquisition date. Resulting in an adjusted excess on
acquisition of company.
Delf Sand Group
The purchase price payable by Infrasors is a maximum amount of R128.0 million of
which R 82.0 million is payable in cash and R46 .0 million is payable in a
mixture of cash and shares in the capital of Infrasors in such proportions as
the Delf Sand vendors shall determine making up the R46.0 million. The Delf Sand
Group achieved in excess of the minimum warranted PBT of R30.0 million and the
Delf Sand vendors elected for the R46 million to be paid in cash.
Infrabric
The purchase price payable by Infrasors is a maximum amount of R33.0 million,
discharged as follows:
* R22.1 million in cash upon closing date; and
* Pursuant to warranties of the production of 69 964 583 bricks for financial
2008 being achieved, an amount of up to a maximum of R11 067 000 is payable, in
accordance with the following formula:
A= B / 69 964 583 X 11 067 000
Where:
A= the amount payable; and
B= the actual number of bricks produced during the warranty period.
Infrabric manufactured 41.6 million bricks during the warranted period and the
total cost of acquisition was therefore reduced to R28.7 million, i.e. the
amount paid in terms of the warranties is R6.6 million.
7. Earnings per share ("EPS")
EPS is based on the Group`s profit for the year ended 29 February 2008, divided
by the weighted average number of shares in issue during the twelve-month
period.
Net Weighted Earnings
income average per
R000`s number of share
shares in Cents
issue
000`s
Basic earnings per share 103 312 138 649 74.5
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 12
month period ended 29 February 2008.
Basic earnings 103 312
Profit on acquisition of subsidiary (41 519)
Profit on disposal of property, plant (11)
and equipment
Headline earnings per share 61 782 138 649 44.6
Finance costs directly attributable to 2 029
acquisitions (once-off)
Normalised earnings per share 63 811 138 649 46.0
There are no factors at this reporting period which require the disclosure or
calculation of diluted earnings per share.
8 Net asset value ("NAV") per share
Ordinary share capital and reserves (R000`s) 355 527
Total number of shares in issue (000`s) (net of treasury 177 340
shares - 270 000)
NAV per share (cents) 200.5
Ordinary share capital and reserves (R000`s) 355 527
Intangible assets (mineral rights and goodwill) (89 449)
Tangible net asset value ("TNAV") (R000`s) 266 078
Total number of shares in issue (000`s) 177 340
TNAV per share (cents) 150.0
9 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.
Business Delf Sand Lyttel Infrabr Corpora Eliminat Consolidate
segments R 000`s ton ic te head ions d
Dolomi R 000`s office R 000`s R 000`s
te R 000`s
R
000`s
Segment revenue 87 407 116 23 728 21 300 (11 923) 237 027
515
Segment profit 35 290 24 913 3 090 12 525 44 679 120 497
before tax
Segment assets 182 752 193 45 728 344 977 (234 533 066
991 382)
Segment (32 580) (52 (44 (69 21 602 (177 539)
liabilities 768) 397) 396)
10. Related party transactions
10.1 Infrasors leases its head office located at Resource House, Three Seasons
Office Park 7 Spring Street, Rivonia from Whirlprops 35 (Pty) Ltd, a
company controlled by a director, HS Courtney. The existing lease contract
as referred to in the pre-listing statement of 19 July 2007 has been
amended to the square meterage occupied 800m2, leased at a rate of R82 per
m2 (with an annual escalation of 10%). The amended lease expires on 31
August 2012 and Infrasors has an option to renew it to 31 August 2017 (5
years). The rental charged is arms length and market related, and was
determined by an independent expert third party.
10.2 Other than as disclosed in note 10.1 above there were no significant
transactions with related parties.
11. Post balance sheet events
Subsequent to the year end the company entered into an agreement with ABSA
Bank Limited to secure loan facilities of up to R100 million. The
facilities are secured over freehold land and cession of Group bank
accounts. The facilities were arranged to:
* fund capital expenditure; and
* working capital requirements for growth.
12. Dividends
It is the Group`s policy to pay a single dividend annually and to retain a three
times dividend cover. Accordingly the company`s first annual dividend, payable
on Monday, 26 June 2008, for the year ended 29 February 2008, will be in the
amount of 12 cents per ordinary share, calculated as follows:
Profit after taxation (R000`s) 103 312
Less purchase price allocation excess over net asset (41 519)
values acquired (R000`s)
61 793
Dividend cover 3 times
Distributable dividend (R000`s) 20 598
Total number of shares in issue (000`s) 177 840
Dividend payable per share (cents) 12
Dividend payment details
Last day to trade cum dividend Friday, 23 May 2008
Trading ex dividend commences Monday, 26 May 2008
Record date Friday, 30 May 2008
Payment date Monday, 2 June 2008
Share certificates may not be dematerialised or rematerialised between Monday,
26 May 2008 and Friday, 30 May 2008, both dates inclusive. The certificated
register will be closed for this period.
13. Capital commitments
Capital expenditure to increase mining and production capacity amounting to
R80.6 million has been approved, but not yet contracted for.
14. Directors
The following directors were appointed in the 12 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 L Roets
Chairman* Chief Executive
VISIT US AT www.infrasors.co.za
"INFRASTRUCTURE BY INFRASORS, AN ASSET RICH GROWTH COMPANY"
Date: 08/05/2008 08:00:04 Produced by the JSE SENS Department.
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