| Tue 20 May 2008, 9:00 | | SAN - Sanyati - Audited Condensed Annual Results F |
|
SAN
SAN
SAN - Sanyati - Audited Condensed Annual Results For The Year Ended
29 February 2008
SANYATI HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1988/002538/06)
JSE Share code: SAN & ISIN: ZAE000081055
("Sanyati" or "the Company")
AUDITED CONDENSED ANNUAL RESULTS FOR THE YEAR ENDED 29 FEBRUARY 2008
HIGHLIGHTS
Revenue up 164,1%
HEPS of 22,31 cents up 89,4%
Profit attributable to shareholders up 145,8%
Successful acquisitions and restructuring
Attainment of highest CIDB rating
CONDENSED CONSOLIDATED BALANCE SHEET
As at As at
29 February 28 February
2008 2007
R`000 R`000
Audited Audited
ASSETS
Non-current assets 650 733 79 500
Property, plant and equipment 150 770 42 744
Investments 2 242 320
Goodwill 497 721 36 436
Current assets 447 278 157 717
Inventories 17 001 1 794
Work in progress 27 262 12 220
Accounts receivable 372 528 119 300
Cash and cash equivalents 17 685 19 701
Gross amount due from customers 12 802 4 702
Total assets 1 098 011 237 217
EQUITY AND LIABILITIES
Capital and reserves 638 830 99 928
Share capital and premium 529 879 52 745
Share based payment reserve 2 353 -
Non-distributable reserves 3 111 3 111
Accumulated profits 103 487 44 072
Non-current liabilities 112 374 18 760
Deferred taxation 22 292 8 159
Vendor liabilities 21 957 -
Interest-bearing borrowings 68 125 10 601
Current Liabilities 346 807 118 529
Accounts payable 175 484 58 287
Bank overdraft 15 453 1 481
Current portion of vendor liabilities 58 887 29 200
Gross amount due to customers 41 505 12 158
Current portion of interest-bearing 24 959 4 577
borrowings
Provisions 12 472 3 664
Taxation payable 18 047 9 162
Total equity and liabilities 1 098 011 237 217
Number of ordinary shares in issue 305 844 227 048
Weighted average number of shares 278 515 207 307
Net asset value per share (cents) 229.37 48.2
Net tangible asset value per share 50.66 30.6
(cents)
CONDENSED CONSOLIDATED INCOME STATEMENT
For the year For the year
ended ended
29 February 28 February
2008 2007
R`000 R`000
Audited Audited
Revenue 1 002 458 379 596
Gross profit 213 189 55 933
Other income 3 789 6 150
Operating expenses (124 500) (23 985)
EBITDA 92 478 38 098
Depreciation (9 575) (3 271)
Profit before interest and taxation 82 903 34 827
Net interest received/(paid) 2 590 (454)
Profit before taxation 85 493 34 373
Taxation (26 078) (10 202)
Net profit for the period 59 415 24 171
Headline earnings reconciliation:
Basic earnings 59 415 24 171
Impairment of goodwill 2 723 -
Headline earnings 62 138 24 171
Weighted average shares 278 515 207 307
Earnings per share (cents) 21.33 11.66
Headline earnings per share (cents) 22.31 11.78
Diluted earnings per share (cents) 14.84 11.78
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
NDR Share Treasury Retained Shares Share Total
R`000 Capital Shares income To be based R`000
R`000 R`000 R`000 issued payment
reserve
Balance at 3 186 1 - 19 826 - - 23 013
28 February
2006
Net profit - - - 24 171 - - 24 171
for the year
Share Issue - 52 744 - - - - 52 744
Realisation (75) - - 75 - - -
of non-
distributabl
e reserves
Balance at 3 111 52 745 - 44 072 - - 99 928
28 February
2007
Net profit - - - 59 415 - - 59 415
for the
period
Share Issue - 161 374 - - - - 161 374
Treasury - 21 000 (21 000) - - - -
shares
consolidatio
n
Shares to be - - - - 315 760 2 353 318 113
issued
adjustments
Balance at 3 111 235 119 (21 000) 103 487 315 760 2 353 638 830
29 February
2008
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the year For the year
ended ended
29 February 28 February
2008 2007
R`000 R`000
Audited Audited
Cash generated/(utilised) from (41 324) 9 866
operations
Interest received 7 821 1 020
Interest paid (5 231) (1 474)
Taxation paid (5 699) (3 995)
Net cash flows from operating (44 433) 5 417
activities
Cash flows from investing
activities
Acquisition of property, (122 571) (38 440)
plant and equipment
Proceeds from property, 5 605 1 559
plant and equipment
Increase in investment property (885) -
Acquisition of goodwill at net (464 008) (31 713)
amount
Less deferred tax purchased 2 640 -
Decrease/(increase) in investments (1 922) 11
Net cash flow from investing (581 141) (68 583)
activities
Cash flows from financing
activities
Increase from shares 477 130 52 744
Decrease in shareholders loans - (7 310)
Increase in interest-bearing 80 812 4 663
borrowings
Increase in short term liabilities - -
Increase in vendor liability 51 644 29 200
Net cash flows from financing 609 586 79 297
activities
Net decrease in cash and cash (15 988) 16 131
equivalents
Cash and cash equivalents 18 220 2 089
at beginning of year
Cash and cash equivalents at end of 2 232 18 220
year
SEGMENT REPORT
29 February 2008
Building Civils Civils Inland Roads
R`000 Coastal R`000 R`000
R`000
Revenue
Sales to 184 527 420 991 221 770 173 063
external
customers
Inter- 2 501 82 265 - 3 138
segment
sales
Segment 187 028 503 256 221 770 176 201
revenue
Results
Gross profit 54 958 74 141 43 235 41 135
Profit 15 137 37 231 27 707 12 885
before
interest
and taxation
Net finance (344) 204 - (283)
costs
Profit 15 481 37 027 27 707 13 168
before
taxation
Taxation (4 406) (10 591) (7 974) (3 742)
Profit for 11 075 26 436 19 733 9 426
the year
Depreciation 4 584 2 846 932 589
Capital 20 658 71 072 11 071 16 308
expenditure
Segment 177 443 312 664 97 812 103 238
assets
Segment (185 728) (210 336) (55 678) (100 055)
liabilities
Table continued
Holding Inter-company Total
company eliminated and other
R`000 R`000
Revenue
Sales to 2 107 - 1 002 458
external
customers
Inter-segment - (87 904) -
sales
Segment 2 107 (87 904) 1 002 458
revenue
Results
Gross profit 2 107 (2 387) 213 189
Profit before (7 634) (2 423) 82 903
interest and
taxation
Net finance (2 167) - (2 590)
costs
Profit before (5 467) (2 423) 85 493
taxation
Taxation 635 - (26 078)
Profit for (4 832) (2 423) 59 415
the year
Depreciation 624 - 9 575
Capital 4 306 - 123 415
expenditure
Segment 640 455 (233 601) 1 098 011
assets
Segment (87 469) (180 085) (459 181)
liabilities
COMMENTARY
Introduction
In its 20th year of operation and second as a company listed on the JSE,
Sanyati has posted strong financial results for the year ended 29 February
2008 ("the year") which reflect significantly higher profitability.
With the acquisitions during the year of Ruthcon Civil Contractors
("Ruthcon"), GEM Earthworks ("GEM"), Meyker Construction (Pty) Limited and
Meyker Re Teng Construction (Pty) Limited (collectively "the Meyker Group"),
Sanyati extended its geographical footprint into all provinces in South
Africa as well as into Zambia and Botswana. The acquisition of the Meyker
Group further saw Sanyati enter the niche growth market of telecommunications
infrastructure through a well established operator.
Following the successful integration of the acquisitions, the group undertook
a significant restructuring of operations to ensure a more streamlined
structure.
Basis of preparation
The audited condensed consolidated annual financial statements have been
prepared in accordance with International Financial Reporting Standards
("IFRS"), IAS 34 and the South African Companies Act. The accounting policies
applied in preparing these audited condensed consolidated annual financial
statements are consistent with those applied in the audited annual financial
statements at the company`s previous year-end.
Audit opinion
The condensed consolidated annual financial results have been audited by
Sanyati`s auditors, PKF Durban. Their unqualified audit report is available
for inspection at the company`s registered office.
Operational review
The restructuring of the group has incorporated existing and newly-acquired
businesses under a single branded identity. All businesses are now owned by
Sanyati`s wholly-owned subsidiary Sanyati Civil Engineering and Construction
(Pty) Limited ("Sanyati Construction") and are Sanyati-branded, entrenching
consolidation of the group and furthering brand awareness.
The restructuring has further resulted in Sanyati achieving the highest
Construction Industry Development Board (CIDB) rating - 9 CE/GB/SJ/SB/EE -
allowing the group to tender on all size contracts in South Africa and
distinguishing it amongst its competitors. The improved rating will expose
the group to a greater scope of opportunities through the ability to tender
for major larger-scale commissions.
Building
The division posted revenue of R184,5 million and net profit of R11,1
million. Incorporating Rusinga, Sanprop and Megapile, Building continues to
show sustainable growth with strong growth prospects. Major building
contracts currently in progress include Richmond Shopping Centre (for
Sakhisizwe Holdings), Mtatha Shopping Centre (for Sanlam Properties),
Hibiscus Hospital extensions in Port Shepstone and the Zambia River Lodge
(for Orient Hotels). Piling and Geotechnical is currently involved in major
contracts in respect of the Bridge City development in Durban as well as the
Knysna Shopping Centre. Recently completed contracts include the new Liberty
Life Building in Umhlanga as well as the Sinaba Stadium in Daveyton.
Civils Coastal
Civils Coastal generated revenue of R420,9 million and net profit of R26,4
million. The division, which comprises the integrated operations of
Afriscan, Deroma Structures and GEM, is currently in the process of
completing the Barbeton to Bulembu Road (R125 million), the Greenville Access
Road (R104 million) in Eastern Cape and the Ethekwini Water Supply upgrade
project (R150 million). Work is also progressing well on King Shaka
International Airport (R190 million) where the division is a 10% partner in
the Illembe Construction joint venture.
Civils Inland
This division posted revenue of R221,8 million and net profit of R19,7
million. Civils Inland, as a joint venture partner with WBHO, was recently
awarded a contract to the value of R2,3 billion (of which Sanyati`s 15% share
amounts to approximately R350 million) for the upgrade of the Gauteng road
infrastructure in the SANRAL programme. Further, Phase II of the Eye Of
Africa Golf Course development as well Monaghan Farm outside of Brits are
progressing well.
Roads
The division posted revenue of R173,1 million generating R9,4 million net
profit. Sanyati Roads has recently secured the surfacing contract for the
King Shaka International Airport to the value of R175 million over the next
two years. Work is currently being completed on a 55 000 ton asphalting
contract in the Durban Harbour for Portnet, in addition to the Department of
Transport and Ethekwini annual supply contracts currently in progress.
Acquisitions
As previously announced on 20 March 2007 Sanyati acquired Ruthcon for R150
million and GEM for R45 million during the year. The acquisitions have been
fully integrated with both companies contributing significantly to the
group`s strong performance. The acquisitions became unconditional on 8 April
2007 and have been included in these annual financial results for an 11 month
period.
Further to announcements on 4 December 2007, 13 December 2007 and 21 January
2008 Sanyati acquired the entire issued share capital in the Meyker Group for
a maximum purchase consideration of R220 million. All conditions precedent
have been met and the acquisition concluded effective 17 January 2008, with
the Meyker Group included in these annual financial results for one month
effectively. The Meyker Group is a civil engineering and construction group
operating in the Free State, Northern Cape, Northern Province and Botswana,
with a specialist focus on telecommunications infrastructure. The acquisition
is in line with Sanyati`s strategy to expand regionally beyond its
traditional KwaZulu-Natal base and to maximise exposure to infrastructure
expansion country-wide and in Africa.
Financial review
During the year revenue almost trebled to R1 billion (164%) compared to
R379,6 million in the previous year, which was 4,9% ahead of the revised
forecasts published in May 2007 following conclusion of the Ruthcon and GEM
acquisitions. Organic growth accounted for 74% of the increase in revenue,
in large part due to Megapile being fully consolidated and Rusinga Building`s
growth in turnover. Profit attributable to shareholders more than doubled
(145,8%) to R59,4 million from R24,2 million, 12% ahead of forecasts.
Headline earnings per share increased 89,4% from 11,78 cents to 22,31 cents,
22,4% ahead of forecasts.
The group invested R122,6 million in capital assets to further increase its
investment in property, plant and equipment by 252,7% to R151 million. This
is as a result of the assets acquired following the acquisitions as well as
additional investment to expand capacity in several of its operations.
BEE
Following the issue of shares to select BEE investors to help fund the
acquisitions, Sanyati`s black shareholding currently stands at 43%. In
addition the board has been restructured to further boost black
representation. The group is therefore well-positioned to meet its target of
majority BEE ownership by the end of 2009.
Sanyati is currently a `Level 4` contributor in terms of the Department of
Trade & Industry`s BBBEE Codes of Good Practice.
Skills & training
Sanyati is cognisant of the skills shortage facing the industry and has
recently opened a training centre in KwaZulu-Natal aimed at equipping
existing employees as well as learners with the necessary skills. Employing
an aggressive training strategy the group expects this will help alleviate
the skills pressure.
Directorate
Post year-end as announced on 20 March 2008 Sanyati restructured its board of
directors in order to ensure a more streamlined board with majority black
representation. The restructuring is in line with the company`s strategy to
become majority black-owned by 2009. The reduction in board members from
thirteen to seven will also enhance efficiency and accelerate decision-making
processes.
K Ramkissoon, M O`Reilly and R Deacon, executive directors of Sanyati,
resigned with effect from 15 March 2008 to take up executive positions on the
board of directors of Sanyati Construction in line with their
responsibilities as managing directors of subsidiaries. In addition non-
executive directors T Ahier, M Fleming and C Crowie, resigned from the board
with effect from 15 March 2008. The board of Sanyati would like to thank them
for the contribution they have made to the company.
Prospects
Notwithstanding negative business sentiment, rising inflation and increasing
interest rates the construction industry in Southern Africa continues to
demonstrate robust growth opportunity.
Sanyati is well placed to benefit from government`s considerable
infrastructure spend which is expected to continue for at least the next six
to eight years. Projections by the South African Federation of Civil
Engineering Contractors (SAFCEC) indicate that current industry conditions
are expected to continue until 2014 and beyond.
Sanyati is presently involved in many of the larger civil engineering
projects either in joint ventures or as the main contractor. These include
the King Shaka International airport in KwaZulu-Natal, the 2010 Soccer World
Cup Bloemfontein stadium, an Eskom power supply contract in Braamhoek, the
Gautrain and several SANRAL roads contracts. Having achieved the highest CIDB
registration the group is well positioned to take advantage of future
infrastructure spend by government and parastatals. In addition, through the
Meyker Group acquisition Sanyati will capitalise on escalating spend on
telecommunications infrastructure.
Sanyati is also involved in private and public sector building and civil
engineering projects across Africa including in Botswana, Zambia and Rwanda,
where growth prospects look strong.
The order book stands currently at R2,0 billion, with R1,4 billion or 78% of
projected turnover relating to the current year ahead to February 2009,
indicating that the group is well on track to achieve budgeted turnover of
approximately R1,8 billion which will be a record for Sanyati. A number of
high value contracts currently being negotiated are set to assist in reaching
this goal. The R600 million balance will roll-over into the year ending
February 2010.
Dividend
In line with group policy, no dividend has been declared for the year.
Appreciation
We recognise the invaluable contribution of all our management and employees
whose sheer hard work has been a key driver of the group`s strong
performance, and we thank them. We also extend our thanks to our business
partners, advisors and suppliers for their support and our fellow directors
for their insight and counsel. Finally thank you to our stakeholders for
their faith in the group.
RD Jackson MI Krouse
CEO Financial Director
On behalf of the board.
20 May 2008
Directors: RD Jackson (CEO), MI Krouse (Financial Director), R Crowie*, HM
Dlamini*
, N Khambule*
, AJ Rutherford, MJ Sangweni (*Non-executive
independent)
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 (Pty) Limited, 70
Marshall Street, Johannesburg, 2001 (PO Box 61501, Marshalltown, 2107)
Company secretary: Highway Corporate Services (Pty) Limited Suites 13 - 17,
Marwick Centre, Lucas Drive, Hillcrest, 3610
Investor relations: Envisage Investor & Corporate Relations
Date: 20/05/2008 09:00:05 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
