| Wed 29 Oct 2008, 9:00 | | IRA - Infrasors - Condensed Consolidated Reviewed Results For The Six Months |
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IRA
IRA
IRA - Infrasors - Condensed Consolidated Reviewed Results For The Six Months
Ended 31 August 2008
Infrasors Holdings 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
2008
Reviewed Reviewed Audited
GROUP INCOME STATEMENT Six month Six month year
ended ended ended
Note 31 August 31 August 29 Feb
2008 2007 2008
R000`s R000`s R000`s
Revenue 154 136 135 122 245 574
Turnover 136 494 127 122 237 027
Cost of sales 86 386 75 201 137 643
Gross profit 50 108 51 921 99 384
Earnings before interest, 35 769 44 172 81 418
taxes, depreciation and
amortisation (EBITDA)
Purchase price allocation - - 41 519
excess over net asset value
acquired
Net financing costs 3 420 (3 010) 2 717
Depreciation and (3 324) (2 101) (5 157)
amortisation
Profit before taxation 35 865 39 061 120 497
Taxation (10 793) (6 746) (17 185)
Net profit 25 072 32 315 103 312
Earnings per share (cents) 3 14.2 23.3 74.5
Diluted earnings per share 3 14.2 23.3 74.5
(cents)
Headline earnings per share 3 14.2 23.2 44.6
(cents)
Diluted headline earnings 3 14.2 23.2 44.6
per share (cents)
Number of shares in issue 175 966 177 839 177 590
(net of treasury shares)
(000`s)
Weighted average number of 177 201 138 649 138 649
shares in issue (000`s)
GROUP BALANCE SHEET Reviewed Reviewed Audited
as at as at as at
31 August 31 August 29
Note 2008 2007 February
R000`s R000`s 2008
R000`s
Non-current assets 419 356 389 666 404 907
Property, plant and 270 520 244 459 253 452
equipment
Intangible assets 89 449 87 304 89 449
Deferred tax 537 - 3 720
Other financial assets 58 850 57 903 58 286
Current assets 104 132 121 555 128 159
Cash resources 16 494 65 055 59 725
Other current assets 87 638 56 500 68 434
Total assets 523 488 511 221 533 066
Capital and reserves 355 814 283 891 355 527
Share capital and premium 248 638 251 576 252 215
Retained income 107 176 32 315 103 312
Non-current liabilities 109 810 184 990 60 782
Borrowings 58 991 19 720 9 247
Other financial liabilities 1 570 85 707 -
Environmental rehabilitation 14 141 43 569 14 105
provision
Deferred taxation 35 108 35 994 37 430
Current liabilities 57 864 42 340 116 757
Taxation payable 15 869 6 820 10 336
Vendor liabilities - - 72 587
Other current liabilities 41 995 35 520 33 834
Total equity and liabilities 523 488 511 221 533 066
Net asset value per share 4 202.2 159.6 200.2
(cents)
Tangible net asset value per 4 151.4 110.5 149.8
share (cents)
GROUP CASH FLOW STATEMENT Reviewed Reviewed Audited
Six month Six month year
ended ended ended
31 August 31 August 29
2008 2007 February
R000`s R000`s 2008
R000`s
Cash flows from operating 32 879 35 672 46 953
activities before dividends
Less: Dividends distributed (21 208) - -
Cash flows from operating 11 671 35 672 46 953
activities
Cash flows from investing (35 707) (225 225) (237 650)
activities
Cash flows from financing (19 195) 252 463 248 277
activities
Net movement in cash and cash (43 231) 62 910 57 580
equivalents for the period
Cash and cash equivalents at the 59 725 - -
beginning of the period
Cash balances acquired - 2 145 2 145
Cash and cash equivalents at 16 494 65 055 59 725
the end of the period
Reviewed Reviewed Audited
GROUP STATEMENT OF CHANGES Six month Six month Year
IN SHAREHOLDERS` EQUITY ended ended ended
Note 31 August 31 August 29
2008 2007 February
R000`s R000`s 2008
R000`s
Balance at beginning of 355 527 - -
period
Issue of shares - 266 159 263 767
Listing expenses - (14 583) (10 810)
Treasury shares (3 577) - (742)
Net profit 25 072 32 315 103 312
Net dividends declared 6 (21 208) - -
Balance at end of period 355 814 283 891 355 527
SEGMENTAL ANALYSIS (note 1) Reviewed Reviewed Audited
Six month Six month year ended
ended ended 29
31 August 31 August February
2008 2007 2008
R000`s R000`s R000`s
Segment turnover
Sand - External 46 252 54 315 87 407
Aggregate - External 70 357 60 916 116 515
Bricks - External 19 885 11 891 23 728
Other - Internal 3 750 10 000 13 048
Other - External - - 10 000
Eliminations (3 750) (10 000) (13 671)
Total 136 494 127 122 237 027
Segment profit before tax
Sand 13 893 21 123 36 359
Aggregate 19 220 15 520 28 703
Bricks 6 596 6 101 3 751
Other (1 535) 6 386 21 568
Sub-Total 38 174 49 130 90 381
Investment revenue 6 253 897 7 911
Central administration costs and (5 729) (7 060) (14 120)
directors salaries
Finance costs (2 833) (3 906) (5 194)
Purchase price allocation over net - - 41 519
asset acquired
Profit before tax 35 865 39 061 120 497
Segment assets
Sand 188 429 106 932 182 752
Aggregate 203 228 197 045 193 991
Bricks 48 505 34 749 45 728
Other 342 657 368 125 344 977
Eliminations (259 331) (195 630) (234 382)
Total 523 488 511 221 533 066
Segment liabilities
Industrial Sand 22 836 30 165 15 912
Aggregate products 23 559 54 340 28 013
Bricks 45 164 29 770 44 397
Other 10 997 26 672 27 347
Total 102 556 140 947 115 669
Deferred tax liability 35 108 35 994 37 429
Taxation payable 15 869 6 820 10 336
Environmental rehabilitation 14 141 43 569 14 105
provision
Total segment liabilities 167 674 227 330 177 539
Note 1:
MANAGEMENT COMMENTARY
Infrasors
Infrasors is a South African holding company, mining and beneficiating a
spread of base minerals for industry and construction.
The principal Infrasors subsidiaries are:
- Lyttelton Dolomite, which is involved in mining and beneficiation
activities and supplies aggregate and metallurgical dolomite to industrial
and construction sectors;
- Delf Sand, which undertakes mining and beneficiation, milling, grinding,
sorting and manufacture of metallurgical sand and silica products for the
glass - industry, the leisure sector, foundries and building and
construction sectors;
- Infrabric, manufacture cement bricks;
- Pienaarspoort, a flint silica and crushing plant project; and
- Corporate head office, which is responsible for 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.
Financial review
Turnover for the period under review increased by R9.4 million, or 7.4%,
compared to the first half of F2008. Profit before taxes was R35.9 million, a
decrease of R3.2 million, compared to the first half of F2008. The analysis
of turnover and profit before tax on a segmented basis is detailed herein.
Cash of R32.9 million was generated by operations (F2008 - R35.7 million),
before outflow of investments of R35.7 million (F2008 - R225.2 million), and
outflow of financing activities of R19.2 million (F2008 - R252.5 million).
Capital expenditure of R20.4 million was incurred in the six months under
review, reflecting an ongoing investment by the group in plant infrastructure
and development of mineral reserves. The capital expenditure was made up as
follows:
R000`s
Lyttelton Dolomite 4 700
Delf Sand 11 342
Infrabric 2 072
Pienaarspoort 1 347
Corporate Office 929
Total 20 390
Operational review
Health and safety
During the 6 months ended 31 August 2008, the Group`s Health and Safety
programme continued to be effective and no major incidents or fatalities
occurred at any of the Group`s operations.
Lyttelton Dolomite
Lyttelton Dolomite produced 695 407 tons of dolomite from the Lyttelton
Dolomite operation during the 6 months under review (F2008 - 782 030 tons).
At the Marble Hall operation, production amounted to 169 567 tons (F2008 - 99
564 tons).
Lyttelton`s turnover was R70.4 million, an increase of R9.4 million, or 15.0%
over the comparative first half of F2008. Lyttelton`s profit before tax was
R20 million, an increase of R4 million or 25.5% over the comparative first
half of F2008.
The increase in profit at Lyttelton was a result of the improved efficiency
after commissioning of the Pluto plant. The Pluto plant has resulted in
improved production efficiency and lowered production costs per ton. Due to
continuing increases in demand and a new off-take agreement with customers,
the Board has decided to invest in a further R15 million in a third phase
plant at Lyttelton to increase production by a further 40 000 tons per month.
This plant should be completed and fully operational by July 2009.
Lyttelton and Marble Hall mines continue to have healthy demand and back
order for their production which outstrips and outweighs production capacity.
Delf Sand
Delf Sand sold 182 000 tons of silica in the period under review (comparative
F2008 - 224 000 tons) a reduction of 18.7% in volume in comparison to the
previous period. Delf Sand experienced steady demand in the foundry and
industrial sand sectors which make up the bulk of its business, but weakening
demand in building sand (down by 33%) and plaster sand (down 51%). The
recreational sand demand was also weak in the period (down 50%), but is
expected to firm up as the summer season begins.
Delf Sand contributed R46.3 million (F2008 - R54.3 million) to Group
turnover, a decrease of R8.1 million or 14.8% and contributed R13.3 million
(F2008 - 20.4 million) to Group profit before tax, a decrease of 34.6%.
The principal causes of the decrease in profit at Delf Sand in the first half
of F2009 were as follows:
- Sharp increase in transport fuel costs, which could not immediately be
passed on in price increases.
- Sharp increase in bunker fuel costs used in production which could not
immediately be passed on in price increases.
- Increases in wages and salary costs.
- Softening of demand for certain product and reduced sales in the
building and construction sectors.
- Increase in maintenance costs.
- One day strikes and mid-week public holidays in the period have
disrupted supply and off-take by customers.
Delf has completed the commissioning and installation of the 5th dryer which
will come into production in the second half of calendar year 2008 (October
2008). This will result in more economic fuel usage and a reduction in
production costs per ton, together with increased production beneficiation
efficiencies.
Pienaarspoort Silica
As reported in Infrasors F2008 year end results 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 flint silica products in an economically viable mining
resource ideally suited for the requirements of the glass and foundry
industries.
Pienaarspoort has now completed its feasibility study and has submitted all
the relevant documentation to the regulatory authorities (including
principally the Department of Mineral and Energy (DME)) in support of its
mining license application. Capital has been approved and is available to
commence the establishment of the Pienaarspoort mine and plant once the
license is granted. Indications have been received from industry that off-
take agreements on production would be welcomed once production commences.
Infrabric
Infrabic produced 35.6 million bricks in the first half of F2009 and
contributed R19.9 million (F2008 - R11.9 million) to Group turnover, an
increase of R8 million, or 67.2%.
Pursuant to the slowdown in the housing and building market there has been a
softening in the price of cement bricks. Infrabric continues to produce 5.9
million bricks per month and is the only Group company directly linked to the
residential construction industry.
Corporate Office
Infrasors Holdings earned fee income on professional services of R3.8 million
(F2008 - R10 million) and net interest of R3.4 million (F2008 - R3.4 million)
on treasury management.
Mining Assets, Mining Licenses and Mineral Reserves
In the cases of Lyttelton, Delf 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.
The Lyttelton mine and Marble Hall mine have completed the necessary
applications for conversions to new order mining licenses. These will be
submitting to the DME in due course.
Delf Sand has been granted a new order mining license on Portion 55 of
Pienaarspoort, 339JR.
Pienaarspoort has completed and submitted to the DME its application for a
new order mining licence.
Additional property in extent approximately 600 hectares has been acquired
giving rise to an additional silica mining activity to come on stream in
F2010.
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 reserves geological modelling and borehole
test results by competent person Mr. Jacques Perold PR Sci Nov (Msc ESPM)
NDSURM Data Metrics. Jacques has 17 years experience in Industrial Minerals
and Resource Modelling.
Outlook - Infrasors Group
The Infrasors Group anticipates earnings and profits in the second half of
F2009 to remain positive and in line with the first half performance given
stable market conditions. However, the anticipated downturn in the South
African economy and global financial instability may result in a slowdown in
demand by Infrasors` key clients in industry and construction. Such
circumstances would have a knock-on effect impacting on production demand and
off take at Infrasors` mines.
In the long term Infrasors is well placed to grow its revenue and profits as
capital expenditure projects designed to expand production and reduce unit
costs per ton mined and beneficiated at Lyttelton and Delf are implemented
and Pienaarspoort is brought into production.
Outlook - Lyttelton Dolomite
Capital expenditure of R15 million has been approved to establish a third
phase of production capacity and increased throughput by 40 000 tons per
month upon reaching full production. Demand at both Lyttelton and Marble Hall
mines continue to be higher than production capacity.
Outlook - Delf Sand
Delf Sand`s core customers in foundry and related industries continue to off-
take product with steady demand. The second half of F2009 usually has an
increase in seasonal demand due to the leisure industry. Demand for the
building industry remains soft in current economic conditions. Demand in the
glass and foundry industries is driven by local and global economic
conditions which are currently uncertain.
Delf Sand`s commissioning of its 5th dryer will reduce production costs per
ton in the second half of F2009.
Outlook - Pienaarspoort
Upon commencing production, Pienaarspoort will make a material contribution
towards Group revenues and profit. Subject to the successful and prompt
completion and granting of the relevant mining license and the conclusion of
economically viable off take agreements should be commissioned and
implemented in calendar year 2009.
Outlook - Infrabric
In the current construction industry there has been a softening in price and
slowdown in building activities, which impacts on Infrabric`s profitability.
Infrabric is expected to continue to contribute approximately 15% of Group
turnover.
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 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 28 October 2008.
1.1 Basis of preparation
The condensed consolidated interim financial statements have been
prepared in accordance with IAS 34 Interim Financial Reporting and
in compliance with the South African Companies Act, 1973. The
condensed consolidated reviewed interim financial statements are
prepared on the historical cost basis, with the exception of
certain financial instruments which are measured at fair value. The
results of the interim period are not necessarily indicative of the
results for the entire year, and these reviewed financial
statements should be read in conjunction with the audited financial
statements for the year ended 29 February, 2008.
The preparation of condensed consolidated reviewed interim
financial statements requires the use of estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
condensed consolidated reviewed interim financial statements and
the reported amounts of revenue and expenses during the reporting
periods. Although these estimates are based on management`s best
knowledge of current events and actions that the Group may
undertake in the future, actual results may differ from those
estimates.
The accounting policies have been applied consistently by Group
companies 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
condensed interim financial statements. These financial statements have
been approved by the board and condensed for the purposes of this
report. The auditors have reviewed the condensed financial statements.
Both the auditors` opinion and the condensed interim financial
statements are available for inspection at the Company`s registered
office as well as being posted on the company`s website.
3. Earnings per share ("EPS")
EPS is based on the Group`s profit for the six month period ended 31
August 2008, divided by the weighted average number of shares in issue
during the six-month period.
Net Weighted average Earnings
profit number of shares per share
R000`s in issue Cents
000`s
Earnings per share 25 072 175 960 14.2
Diluted earnings per share 25 072 175 960 14.2
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 6
month period ended 31 August 2008
Net profit 25 072 175 960 14.2
Sale of assets (74) 175 960 (0.0)
Tax effect on sale of asset 21 175 960 0.0
Headline earnings per share 25 019 175 960 14.2
Diluted headline earnings per 25 019 175 960 14.2
share
4. Net asset value ("NAV") per share
The net asset value per share is the value of the Group`s assets, less
the sum of the value of its liabilities, divided by the number of shares
in issue.
Reviewed
6 months ended
31 August 2008
Ordinary share capital and reserves (R000`s) 355 814
Total number of shares in issue (net of treasury 175 966
shares of 1 873 000) (000`s)
NAV per share (cents) 202.2
Ordinary share capital and reserves (R000`s) 355 814
Intangible assets 89 449
Tangible net asset value 266 365
Total number of shares in issue (net of treasury 175 966
shares of 1 873 000) (000`s)
Tangible NAV per share (cents) 151.4
5. Dividends
It is the Group`s policy to pay a single dividend annually and to retain
a three times dividend cover. The company`s first dividend was paid on
Monday, 26 June 2008, for the year ended 29 February 2008. The dividend
was in the amount of 12 cents per ordinary share.
Dividend declared (R000`s) 21 340
Treasury share dividends received (132)
Net dividends declared 21 208
6. Directorate and administration
Directors
Le Roux Roets (Chief Executive Officer)
Francois Roets (Chief Operating Officer)
Stephen Courtney (Commercial Director)
Popo Molefe (Non-Executive Chairman)
Chris Boulle (Independent Non-Executive Director)
Mochele Noge (Independent Non-Executive Director)
Dereck Alexander (Independent Non-Executive Director)
Kerry Colley (Company Secretary)
All of the above directors are South African and resident in South Africa
On 28 October 2008 the board accepted the resignation of Shaun Vorster as
financial director. Shaun has been suffering from ill health and has been
reassigned to operational duties at a group subsidiary company.
The board has appointed Marius Potgieter, B. Com, M.Com (Fin), CA (SA) as the
acting Chief Financial Officer, pending a permanent appointment in the
position of the Group Financial Director.
Marius commenced employment with Infrasors in 2007 and is currently the Group
financial controller. He served his articles with Deloitte & Touche and
qualified as a chartered accountant in 2006.
Designated advisor Auditors
Sasfin Capital Mazars Moores Rowland
Legal Advisers and Attorneys Transfer Secretaries
HR Levin Attorneys Notaries and Link Market Services South Africa
Conveyancers (Proprietary) Limited
On behalf of the board
P Molefe L Roets
Chairman* Chief Executive
VISIT US AT www.infrasors.co.za
"INFRASTRUCTURE BY INFRASORS"
Date: 29/10/2008 09:00:03 Produced by the JSE SENS Department.
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