| Tue 4 Nov 2008, 7:07 | | SAN - Sanyati - Reviewed Interim Results For The Six Months Ended 31 August 2008 |
|
SAN
SAN
SAN - Sanyati - Reviewed Interim Results For The Six Months Ended 31 August 2008
Sanyati Holdings Limited
("Sanyati" or "the company")
(Registration number: 1988/002538/06)
Share code: SAN ISIN: ZAE000081055
REVIEWED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2008
SALIENT FEATURES:
- Profit attributable to shareholders up 83%
- Revenue up 104%
- HEPS of 13.18 cents up 51%
- Net tangible asset value up 385%
CONSOLIDATED BALANCE SHEET
As at As at As at
31 August 29 February 31 August
2008 2008 2007
R`000 R`000 R`000
Reviewed Audited Reviewed
ASSETS
Non-current assets 684 390 650 733 311 171
Property, plant and equipment 172 706 150 770 86 566
Investments 2 667 2 242 -
Goodwill 509 017 497 721 224 605
Current assets 534 761 447 278 326 204
Inventories 8 756 17 001 3 997
Work in progress 69 357 27 262 17 851
Trade and other receivables 393 356 372 528 231 246
Cash resources 2 091 17 685 52 496
Gross amount due from customers 61 201 12 802 20 614
Total assets 1 219 151 1 098 011 637 375
EQUITY AND LIABILITIES
Capital and reserves 713 806 638 830 257 702
Share capital and premium 560 628 529 879 187 658
Share-based payment reserve 4 732 2 353 -
Fair value reserve 3 111 3 111 3 111
Accumulated profits 145 335 103 487 66 933
Non-current liabilities 138 282 112 374 172 375
Deferred taxation 22 292 22 292 8 990
Vendor liabilities 21 445 21 957 134 475
Interest-bearing borrowings 94 545 68 125 28 910
Current liabilities 367 063 346 807 207 298
Trade and other payables 251 847 175 484 126 890
Bank overdraft 14 315 15 453 307
Current portion of vendor
liabilities - 58 887 2 000
Gross amount due to customers 42 916 41 505 23 816
Current portion of interest bearing
borrowings 14 212 24 959 5 957
Provisions 18 774 12 472 32 414
Taxation 24 999 18 047 15 914
Total equity and liabilities 1 219 151 1 098 011 637 375
Number of ordinary shares in issue 378 121 305 844 295 884
Weighted average number of shares 332 629 278 515 261 469
Net asset value (cents) 214,60 229,37 98,6
Net tangible asset value (cents) 61,57 50,66 12,7
CONSOLIDATED INCOME STATEMENT
Six months Year Six months
ended ended ended
31 August 29 February 31 August
2008 2008 2007
R`000 R`000 R`000
Reviewed Audited Reviewed
Revenue 808 905 1 002 458 396 169
Gross profit 110 018 213 189 67 164
Other income 1 856 3 789 4 480
Administration and operating
expenses (46 187) (124 500) (35 553)
EBITDA 65 687 92 478 36 091
Depreciation (7 571) (9 575) (4 813)
Profit before interest and taxation 58 116 82 903 31 278
Interest received 7 559 7 821 3 268
Interest paid (7 553) (5 231) (2 348)
Profit before taxation 58 122 85 493 32 198
Taxation (16 274) (26 078) (9 337)
Net profit for the period 41 848 59 415 22 861
Profit attributable to share holders 41 848 59 415 22 861
Weighted average shares 332 629 278 515 261 469
Earnings per share (cents) 12,58 21,33 8,74
Headline earnings per share (cents) 13,18 22,31 8,74
Dividend per share (cents) - - -
Diluted earnings per share (cents) 11,17 14,84 7,09
Diluted headline earnings per
share (cents) 11,70 12,52 7,25
Fully diluted earnings
per share (cents) 9,96 15,52 6,35
Fully diluted headline earning
per share (cents) 10,43 17,27 6,35
CONSOLIDATED CASH FLOW STATEMENT
Six months Year Six months
ended ended ended
31 August 29 February 31 August
2008 2008 2007
R`000 R`000 R`000
Reviewed Audited Reviewed
Cash generated/(utilised) by
operating activities
Cash generated/(utilised) from
operations 50 769 (41 324) 10 888
Interest received 7 559 7 821 3 268
Interest paid (7 553) (5 231) (2 348)
Taxation paid (9 322) (5 699) (2 584)
Net cash flows from operating
activities 41 453 (44 433) 9 224
Cash flows from investing
activities
Purchase of property, plant and
equipment (30 994) (122 571) (55 594)
Proceeds from sale of property,
plant and equipment 1 772 5 605 6 861
Purchase of investment property - (885) -
Acquisitions of businesses at net
amount - (89 961) (59 961)
Less deferred tax purchased - 2 640 -
Decrease/(increase) in investments (425) (1 922) 320
Net cash flow from investing
activities (29 647) (207 094) (108 374)
Cash flows from financing
activities
Issue of shares net of expenses - 103 083 103 083
Expenses paid, capitalised to
share premium (36) - -
Increase in interest-bearing
borrowings 15 673 80 812 19 140
Increase/(decrease) in vendor
liability (41 899) 51 644 10 896
Net cash flows from financing
activities (26 262) 235 539 133 119
Net increase/(decrease) in cash
and cash equivalents (14 456) (15 988) 33 969
Cash and cash equivalents at
beginning of the period 2 232 18 220 18 220
Cash and cash equivalents at end
of the period (12 224) 2 232 52 189
Reconciliation of headline
earnings per share
Basic earnings as per above 41 848 59 415 22 861
Impairment of goodwill 2 000 2 723 -
Headline earnings 43 848 62 138 22 861
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Fair value Share
reserve premium
R`000 R`000
Balance at 28 February 2006 3 186 -
Profit for the year - -
Share issue - 52 743
Realisation of non-distributable reserves (75) -
Balance at 28 February 2007 3 111 52 743
Profit for the year - -
Share issue - 161 373
Treasury shares consolidation - 21 000
Share adjustments - -
Balance at 29 February 2008 3 111 235 116
Share issues and adjustments - 207 983
Profit for the period - -
Balance at 31 August 2008 3 111 443 099
Treasury Accumulated
shares profits
R`000 R`000
Balance at 28 February 2006 - 19 826
Profit for the year - 24 171
Share issue - -
Realisation of non-distributable reserves - 75
Balance at 28 February 2007 - 44 072
Profit for the year - 59 415
Share issue - -
Treasury shares consolidation (21 000) -
Share adjustments - -
Balance at 29 February 2008 (21 000) 103 487
Share issues and adjustments - -
Profit for the period - 41 848
Balance at 31 August 2008 (21 000) 145 335
Share-based
Shares to payment
be issued reserve
R`000 R`000
Balance at 28 February 2006 - -
Profit for the year - -
Share issue - -
Realisation of non-distributable reserves - -
Balance at 28 February 2007 - -
Profit for the year - -
Share issue - -
Treasury shares consolidation - -
Share adjustments 315 760 2 353
Balance at 29 February 2008 315 760 2 353
Share issues and adjustments (177 235) 2 379
Profit for the period - -
Balance at 31 August 2008 138 525 4 732
Share capital Total
R`000 R`000
Balance at 28 February 2006 1 23 013
Profit for the year - 24 171
Share issue 1 52 744
Realisation of non-distributable reserves - -
Balance at 28 February 2007 2 99 928
Profit for the year - 59 415
Share issue 1 161 374
Treasury shares consolidation - -
Share adjustments - 318 113
Balance at 29 February 2008 3 638 830
Share issues and adjustments - 33 127
Profit for the period 1 41 849
Balance at 31 August 2008 4 713 806
Segmental Report
Building Civils Inland
Six months ended 31 August 2008 R`0 00 R`000
Sales to external customers 149 563 139 673
Inter-segment sales 18 406 -
Segment revenue 167 969 139 673
Gross profit 29 327 17 913
Other income 8 595 23
Operating expenses (14 989) (8 709)
EBITDA 22 932 9 227
Depreciation (1 092) (624)
Profit before interest and tax 21 841 8 603
Net finance cost (480) 3 972
Profit before tax 21 361 12 575
Taxation (5 981) (3 521)
Profit for the year 15 380 9 054
Capital expenditure 8 546 676
Segment assets 261 307 168 740
Segment liabilities (211 026) (89 859)
Civils Coastal Roads
Six months ended 31 August 2008 R`000 R`000
Sales to external customers 294 155 88 185
Inter-segment sales 32 543 899
Segment revenue 326 698 89 084
Gross profit 25 802 16 998
Other income 2 137 (835)
Operating expenses (14 771) (7 510)
EBITDA 13 168 8 652
Depreciation (1 220) (2 760)
Profit before interest and tax 11 948 5 892
Net finance cost (381) 441
Profit before tax 11 567 6 333
Taxation (3 239) (1 773)
Profit for the year 8 328 4 560
Capital expenditure 3 093 8 874
Segment assets 239 900 97 918
Segment liabilities (196 128) (53 129)
Engineering Holding
Central company
Six months ended 31 August 2008 R`000 R`000
Sales to external customers 137 329 -
Inter-segment sales - -
Segment revenue 137 329 -
Gross profit 19 978 -
Other income 535 15 720
Operating expenses (2 704) (13 969)
EBITDA 17 809 1 751
Depreciation (1 065) (810)
Profit before interest and tax 16 745 941
Net finance cost (1 710) (1 836)
Profit before tax 15 034 (895)
Taxation (4 210) 251
Profit for the year 10 825 (644)
Capital expenditure 6 136 3 669
Segment assets 135 994 616 127
Segment liabilities (39 144) (35 700)
Intercompany Group
elimination total
Six months ended 31 August 2008 R`000 R`000
Sales to external customers - 808 905
Inter-segment sales (51 848) -
Segment revenue (51 848) 808 905
Gross profit - 110 018
Other income (24 318) 1 856
Operating expenses 16 465 (46 187)
EBITDA (7 853) 65 687
Depreciation - (7 571)
Profit before interest and tax (7 853) 58 116
Net finance cost - 6
Profit before tax (7 853) 58 122
Taxation 2 199 (16 274)
Profit for the year (5 654) 41 848
Capital expenditure - 30 994
Segment assets (300 835) 1 219 151
Segment liabilities 119 641 (505 345)
Building Civils Inland
Six months ended 31 August 2007 R`000 R`000
Sales to external customers 73 783 80 574
Inter-segment sales 4 584 -
Segment revenue 77 367 80 574
Gross profit 22 980 15 709
Other income 1 047 -
Operating expenses (14 913) (6 864)
EBITDA 9 114 8 845
Depreciation (1 151) (437)
Profit before interest and tax 7 963 8 408
Net finance costs (161) 129
Profit before tax 7 802 8 537
Taxation (2 260) (2 587)
Profit for the period 5 542 5 950
Capital expenditure 7 479 9 751
Segment assets 131 848 86 806
Segment liabilities (126 194) (66 806)
Civils Coastal Roads
Six months ended 31 August 2007 R`000 R`000
Sales to external customers 183 776 59 036
Inter-segment sales 31 249 7 776
Segment revenue 215 025 66 812
Gross profit 14 833 12 235
Other income 2 029 868
Operating expenses (5 886) (5 028)
EBITDA 10 976 8 075
Depreciation (1 111) (2 037)
Profit before interest and tax 9 865 6 038
Net finance costs (241) (793)
Profit before tax 9 624 5 245
Taxation (2 915) (1 593)
Profit for the period 6 709 3 652
Capital expenditure 21 941 16 296
Segment assets 147 195 78 354
Segment liabilities (132 016) (74 701)
Holding company Intercompany Group
and other elimination total
Six months ended 31 August 2007 R`000 R`000 R`000
Sales to external customers - - 396 169
Inter-segment sales - (43 609) -
Segment revenue - (43 609) 396 169
Gross profit (1 391) 2 798 67 164
Other income 2 434 (1 898) 4 480
Operating expenses (1 388) (1 474) (35 553)
EBITDA (345) (574) 36 091
Depreciation (77) - (4 813)
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
Capital expenditure 127 - 55 594
Segment assets 433 413 (240 241) 637 375
Segment liabilities (149 635) 169 679 (379 673)
COMMENTARY
INTRODUCTION
The results of the group for the six-months ended 31 August 2008
("the period") reflect significant growth in all key performance
indicators compared with the six month period ended 31 August 2007
("the comparative period").
During the period the group`s order book was bolstered by a number of
profitable contract wins. During the previous financial year ended February
2008, Sanyati concluded the strategic acquisitions of Gauteng-based Ruthcon
Civil Contractors ("Ruthcon"), GEM Earthworks ("GEM") - which also operates in
Mpumalanga and the Eastern Cape - and Meyker Re-Teng Construction
("Meyker"), which operates predominantly in the Free State and Northern Cape
(collectively "the acquisitions"). The acquisitions successfully extended
Sanyati`s geographic footprint outside of KwaZulu-Natal and the benefits
began to be realised by the group during the period.
Following the acquisitions the group consolidated its operations and
streamlined Sanyati`s group structure into five key operating divisions,
namely, Building, Roads, Civils Inland, Civils Coastal and Engineering Central.
OPERATIONAL REVIEW
During the period Sanyati continued to participate in strong growth in the
construction sector. Through a successful strategy of geographic expansion the
group is now active in all nine provinces in South Africa as well as in Zambia.
This is reflected in the group revenue split by region with 48% being generated
in KwaZulu-Natal, 23% in the Free State, 7% in Gauteng, 7% in the Eastern Cape
and the remaining 15% collectively across the other regions. All divisions
performed exceptionally well and the group maintained a healthy operating
margin of 13,6% for the period despite the substantial increase in revenue.
The current order book at 1 September 2009 stands in excess of R2,1 billion,
approximately half of which will be carried over into the 2010 financial
year.
Civils Coastal
The largest division in the group, Civils Coastal, posted revenue of R326,0
million and net profit of R8,3 million. Although the majority of revenue is
generated in KwaZulu-Natal, the division has continued its expansion into
Mpumalanga and the Eastern Cape with the recent awards of a road contract to
the value of R120 million in Nelspruit and the Greenville road contract valued
at R115 million.
Work on the King Shaka International Airport is progressing well with
approximately R90 million revenue to be accounted for in the current financial
year to February 2009. The division has an order book in hand of almost R670
million and prospects for the remainder of the year are good. Civils Coastal is
well on track to continue its strong growth and meet its full year budget.
Civils Inland
This division recorded revenue of R139,0 million and net profit of R9 million.
Through Civils Inland, Sanyati Construction is a 15% joint venture partner in
the Gauteng Freeway Improvement Contractors` Consortium ("the consortium").
The consortium was awarded a R1,9 billion contract by SANRAL for the upgrade of
18 km of Gauteng freeways between 14th Avenue and the Buccleuch Interchange.
Work is progressing well with approximately R45 million revenue to accrue to
Civils Inland in the current financial year to February 2009.
Another major contract was awarded during the period for the construction of a
new taxi-way for the Airports Company of South Africa to the value of R90
million. Sanyati Construction Concrete Sliding, a specialist operation in the
division, again performed exceptionally well during the period recording
operating margins in excess of 20%. Civils Inland`s order book currently stands
at R408 million. The division will continue to focus on major roads and
concrete contracts in Gauteng and the North West Province.
Engineering Central
The division, based in Bloemfontein, specialises mainly in major road
construction and concrete works. For the period, Engineering Central re ported
revenue of R137,0 million and net profit of R10,8 million.
Through the division Sanyati Construction is a 40% joint venture partner in the
R250 million contract for the construction of Vodacom Park Soccer Stadium in
Bloemfontein. The group was also recently awarded a R200 million contract by
SANRAL for the upgrade of the road between Brandfort and Vetrivier. The
division`s niche telecommunications operation specialising in the installation
of fibre optic cables, contributed strongly to the 14,5% operating margin
achieved. Engineering Central has an order book to year-end of R600 million.
Promising prospects for infrastructure development will see the division
continue to focus on growth in the Free State and Northern Cape.
Building
The division includes Sanyati Building, Sanyati Piling & Geotechnical and
Sanprop, which together posted revenue of R167,0 million and net profit of
R15,38 million. Building benefited from the buoyant commercial and industrial
building market during the period with major contracts awarded for Richmond
Shopping Centre to the value of R45 million, Fischer Road Industrial Park worth
R40 million and the R60 million Royal Chundu Game Lodge in Zambia. All these
contracts are progressing well with completion expected in the current
financial year.
Building has a healthy order book of R185 million and is expected to meet the
targets set for the financial year ending February 2009.
Sanyati Piling is still predominantly KwaZulu-Natal based, but over the period
continued to show growth in Gauteng and established a presence in the Western
Cape.
Sanprop is currently busy with five commercial and industrial projects in
KwaZulu-Natal with an aggregate project value of R170 million. Most of these
projects will be completed during the second half of the current financial
year. With the slowdown in the residential construction market, Sanprop will
continue to focus on similar commercial and industrial projects in the KwaZulu
- Natal region.
Roads
The division specialises in supplying and laying asphalt and chip and spray
surfacing. Roads reported revenue of R89 million and net profit of R4,5
million. The major contract awarded during the period was for the asphalt
surfacing of the King Shaka International Airport to the value of R152 million.
Roads has identified Gauteng as a possible growth node and is focusing on
opportunities in this region. The division has an order book of R260 million
and good growth opportunities are in the pipeline.
FINANCIAL REVIEW
During the period group revenue increased 104% from the comparative period to
R809 million. The major driver of the exceptional growth was the inclusion of
the acquisitions for the full period. Profit attributable to shareholders grew
by 83% to R41,8 million. This translates into earnings per share (EPS) of 12,58
cents and headline earnings per share (HEPS) of 13,18 cents, a 50,8% increase
on the comparative period. The interim performance puts the group on track to
deliver projected revenue of R1,8 billion for the year to 28 February 2009.
EBITDA margins decreased slightly to 8,1% as a direct result of taking into
account all known and projected costs that may arise on future uncertainties.
The Directors have deemed it prudent to allow for these uncertainties until the
full impact of the current global financial crisis on the group has been
determined. Sanyati however remains confident of trading above its projected
EBITDA margin of 10% going forward.
The strong balance sheet reflects Sanyati`s continued growth. Current assets
have increased by 20% to R534 million and current liabilities by 5,2% to R367
million since 29 February 2008. Trade and other receivables includes an amount
of R87,0 million outstanding debtors retentions which are not immediately
recoverable. In line with the intention to increase capacity and Sanyati`s
plant replacement policy, R31 million was spent on capital expenditure during
the period. The significant increase in work in progress (WIP) is a direct
result of Sanprop, the property division, having several projects in the
pipeline. The first transfers in respect of these property projects are
scheduled to take place during January 2009.
Sanyati Construction generated R51 million cash flow from operations during the
period. This is a complete reversal of the R41 million utilised for the previous
year ended 29 February 2008. Further, the company settled R42 million in vendor
liabilities out of internal cash flow and only increased long-term liabilities
by R16 million. Debtors days decreased to 58,0 days from 66,9 days at the
previous year-end.
Goodwill has been valued on a discounted cash flow basis based on the projected
earnings of the acquisitions over the next three years. The directors will be
conducting an external valuation on this significant number on the balance
sheet for the year ending 28 February 2009.
Fully diluted earnings has been calculated taking into account all known shares
still to be issued in terms of payments due to vendors as a result of the
acquisitions.
BEE
Sanyati remains a "Level 4" contributor in terms of the Department of Trade and
Industry`s BBBEE Codes of Good Practice. When last audited the group`s direct
BEE shareholding was 42,39%. Sanyati remains committed to increasing BEE equity
at group level to 51% by the end of 2009 as previously stated.
OUTLOOK
Notwithstanding the recent global banking and financial markets crises, the
industries in which Sanyati operates locally and in Africa retain positive
prospects. Sanyati will carry forward into the 2010 financial year an order
book of approximately R1,1 billion. While there has been a slowdown in
"social" township infrastructure spending by local and district municipalities,
SANRAL and Eskom spend at present remain on track with significant contract
awards being received from these clients. This situation will, however, be
closely monitored in future.
The recent collapse of the Rand should have no adverse effect on group
operations as the only significant contract outside of South Africa, in Zambia,
is a Rand-denominated contract. However, the capital expansion and replacement
policy is currently under review to determine the impact of this currency
movement.
Sanyati`s share price has been negatively impacted by the decline in global
share markets in line with all industry peers. This is unlikely to have any
long-term effect on the group.
Sanyati is well poised to achieve significant growth going forward.
DIVIDEND
In line with group policy, no interim dividend has been declared for the
period.
BASIS OF PREPARATION
The condensed consolidated interim financial statements have been prepared in
accordance with IAS 34 - Interim Financial Reporting and JSE Listings
Requirements. 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.
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.
Rick Jackson Marc Krouse
CEO GFD
4 November 2008
CORPORATE INFORMATION
Directors: RD Jackson (CEO), MI Krouse (GFD), R Crowie*, HM Dlamini*, MR
Gahagan*, N Khambule*, 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
Sponsor: Exchange Sponsors (Pty) Limited
Transfer secretaries: Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107
Company secretary: Highway Corporate Services (Pty) Limited
Suites 13 - 17, Marwick Centre, Lucas Drive, Hillcrest, 3610
PO Box 1319, Hillcrest, 3650
www.sanyati.co.za
Date: 04/11/2008 07:07:18 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.
