| Mon 25 May 2009, 16:00 | | IRA - Infrasors - Condensed Consolidated Reviewed Results for the Year |
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IRA
IRA
IRA - Infrasors - Condensed Consolidated Reviewed Results for the Year
Ended 28 February 2009
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 YEAR ENDED 28 FEBRUARY 2009
GROUP INCOME STATEMENT
Reviewed Reviewed
year ended year ended
28 Feb 2009 29 Feb 2008
Note R000`s R000`s
Revenue 250 328 245 574
Turnover 239 717 237 027
Cost of sales (167 918) (137 643)
Gross profit 71 799 99 384
Earnings before interest, taxes, 46 688 81 418
depreciation and amortisation
(EBITDA)
Purchase price allocation excess - 41 519
over net asset value acquired
Net financing costs 256 2 717
Depreciation (7 955) (5 157)
Profit before taxation 38 989 120 497
Taxation (8 911) (17 185)
Net profit for the year 30 078 103 312
Earnings per share (cents) 3 17.0 74.5
Diluted earnings per share (cents) 3 17.0 74.5
GROUP BALANCE SHEET
Reviewed Reviewed
as at as at
28 February 29 February
Note 2009 2008
R000`s R000`s
Non-current assets 454 172 404 907
Property, plant and equipment 288 672 253 452
Intangible assets 89 449 89 449
Deferred tax 171 3 720
Other financial assets 75 880 58 286
Current assets 111 970 128 159
Cash and cash equivalents 51 200 59 725
Inventory 16 240 14 744
Other current assets 44 530 53 690
Total assets 566 142 533 066
Capital and reserves 359 630 355 527
Share capital and premium 247 715 252 215
Retained income 111 915 103 312
Non-current liabilities 156 307 60 782
Borrowings 6 98 809 9 247
Environmental rehabilitation 14 030 14 105
provision
Deferred taxation 43 468 37 430
Current liabilities 50 205 116 757
Taxation payable 1 976 10 336
Vendor liabilities - 72 587
Other current liabilities 48 229 33 834
Total equity and liabilities 566 142 533 066
Net asset value per share (cents) 4 207.9 200.2
GROUP CASH FLOW STATEMENT
Reviewed Reviewed
year ended year ended
28 February 29 February
2009 2008
R000`s R000`s
Cash flows from operating activities 45 119 46 953
before dividends
Less: Dividends paid (21 208) -
Cash inflow from operating 23 911 46 953
activities
Cash outflow from investing (56 960) (237 650)
activities
Cash inflow from financing 24 524 248 277
activities
Net movement in cash and cash equivalents (8 525) 57 580
for the period
Cash and cash equivalents at the beginning 59 725 -
of the period
Cash balances acquired - 2 145
Cash and cash equivalents at the end 51 200 59 725
of the period
GROUP STATEMENT OF CHANGES IN SHAREHOLDERS` EQUITY
Reviewed Reviewed
year ended Year ended
28 February 29 February
Note 2009 2008
R000`s R000`s
Balance at beginning of period 355 527 -
Issue of shares - 263 767
Listing expenses - (10 810)
Treasury shares acquired (4 500) (742)
Net profit 30 078 103 312
Net dividends paid 5 (21 208) -
Deferred tax on rehabilitation (267) -
investments held
Balance at end of the period 359 630 355 527
SEGMENTAL ANALYSIS
Reviewed Reviewed
year ended year ended
28 February 29 February
2009 2008
R000`s R000`s
Segment turnover
Sand - External 93 519 87 407
Aggregate - External 116 484 116 515
Bricks - External 32 499 23 728
Other - Internal 7 425 13 048
Other - External - 10 000
Eliminations (10 210) (13 671)
Total 239 717 237 027
Segment profit before tax
Sand 22 332 36 359
Aggregate 19 127 28 703
Bricks 4 196 3 751
Other 2 457 21 568
Sub total 48 112 90 381
Investment revenue 10 243 7 911
Central administration costs (9 379) (14 120)
Finance costs (9 987) (5 194)
Purchase price allocation over net asset - 41 519
acquired
Profit before tax 38 989 120 497
MANAGEMENT COMMENTARY
Infrasors
Infrasors is a South African holding company, mining and beneficiating a
spread of base minerals for the industrial and construction sectors.
The principal subsidiaries and activities of Infrasors are:
- Lyttelton Dolomite, in mining and beneficiation activities, supplies
aggregate and metallurgical dolomite; Delf Sand, in mining and
beneficiation activities, supplies high quality alluvial silica products
to the foundries, glass industry and the leisure sector;
- Infrabric manufactures cement stock and maxi bricks;
- Pienaarspoort, a crushing plant project for silica flint; 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, human
resources, centralised procurement, capital expenditure, and growth and
replacement projects.
Financial review
Despite the economic climate curtailing most mining operations locally and
globally, Infrasors continues to generate positive cash flows from its
operating activities and the Group remains cash generative, profitable and
solvent.
Turnover for the period under review was R239,7 million. EBITDA was R46,7
million, a decrease of R34,7 million over the previous corresponding period.
Turnover remained constant due mainly to annual inflationary price increases.
Demand decreased in certain segments of the market. Consequently additional
downstream beneficiation was required resulting in a change of product mix and
entry into lower margin markets. Overall the Group experienced pressure on
margins due to cost increases which could not be passed on due to a softening
of market demand.
Cash of R55.7 million was generated by operations before payment of tax of
R10.7 million net finance income of R0.2 million and dividend distribution of
R21.2 million.
Capital expenditure of R43.2 million was incurred in the 12 months under
review. This capital expenditure was made up as follows:
- Lyttelton Dolomite - R11.5 million of which R8.0 million was on plant
expansion, and R3.5 million was on its mobile equipment fleet;
- Delf Sand - R24.4 million of which R14.4 million was plant and machinery,
R6.6 million for the Cullinan Farm and R3.4 million on additions to the
transport fleet and mobile equipment;
- Pienaarspoort - R3.5 million of mining assets;
- Infrabric - R2.5 million, plant and machinery R0.9 million and R1.6
million on additions to the transport fleet and mobile equipment; and
- Head office - R1.3 million on continuous power supply, security system,
computer network and sundry office improvements.
The principal reasons for the decline in earnings compared to the previous
corresponding period are as follows:
- Lyttelton Dolomite experienced a drop in demand for metallurgical
dolomite which was partly set off by an increase in demand for aggregate
dolomite products.
- Lyttelton Dolomite was partially inoperable in the 2 months of November
2008 and January 2009 due to a labour dispute, and a subsequent fly rock
blasting incident.
- Delf experienced a softening of demand for certain products and reduced
sales in the foundry, leisure, building and construction industry
sectors.
- Infrabric experienced a slow-down in demand from the residential
construction sector and the RDP housing contractors and has consequently
reduced production to a single shift.
- Steep cost escalations in fuel, transport and labour had to be absorbed,
hence diminishing operating margins across the Group.
- The tax charge for the period ended 28 February 2009 includes a charge
for Secondary Tax on Companies in respect of dividends declared and paid
in June 2008.
- The denominator used in calculating earnings per share in F2009 is fully
diluted and based on 171 131 000 shares in issue whilst the denominator
used in F2008 was the weighted average number of shares in issue of 138
649 000.
The Group has sufficient cash and other net working capital to fund its
activities for the foreseeable future and does not anticipate the need to
raise any additional funds.
Operational review
Health and safety
The Group remains committed to achieving a work environment that is one
hundred percent fatality- and injury-free. Despite the implementation and
policing of industry standard codes of practice, the following incidents
regrettably occurred:
- A fatality during the strike in November 2008; and
- A fatality in December 2008 during a security related incident.
A controlled explosion causing fly-rock occurred at Lyttelton Dolomite in
February 2009.
Under the guidance of a panel of mining experts, and in conjunction with the
Department of Minerals and Energy ("DME"), a detailed investigation was
conducted by independent mining industry professionals from industry who have
made recommendations based on their findings of the incident. Mining
procedures have been consequently modified to include pre-blast investigation
of the geological competency of the rock and blasting procedures were adjusted
accordingly to reduce the risk of fly rock associated with blasting together
with ongoing continuous operational audit and review of each blast.
Following a presentation to the Chief Inspector of Mines (DME) on the
corrective action measures that have been put in place, the DME permitted
mining activities to re-commence.
Lyttelton Dolomite
Lyttelton Dolomite produced 922 863 tons of dolomite from the Lyttelton
Dolomite operation during the period under review. (F2008 - 1 068 000 tons).
At Marble Hall, production amounted to 204 999 tons (F2008 - 218 000).
During the year Lyttelton Dolomite invested R8.0 million in plant expansion,
which has created an additional production capacity of approximately 30 000
tons per month in order to meet with increased demand.
A capital expenditure programme of R15 million has been approved to further
increase production capacity by a further 40 000 tons per month. The plant
expansion is expected to be completed and fully operational by September 2009
in order to satisfy increased demand from the aggregate industry.
Lyttelton Dolomite contributed R116.5 million (F2008 - R116.5 million) to
Group turnover and R19.1 million (F2007 - R24.9 million) to profit before tax.
During F2009 Lyttelton Dolomite completed a revised mining plan which resulted
in an increase in inferred and probable mineral resources and reserves from
13.9 million tons to 45.6 million tons and a commensurate extension of the
life of mine at current production rates from 11.7 years to 36.95 years. A
summarised updated Competent Persons` mineral resources and reserves statement
will be included in the 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 continued during F2009. Marble Hall also experienced increased demand
for aggregate products due to a new road building programme in Marble Hall and
infrastructural developments of platinum mines in the area.
Delf Sand
Delf Sand sold 337 130 tons of silica in the period under review (F2008 - 399
300 tons) a reduction of 15.6% in volume in comparison to the previous period.
In the first half of F2009 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 and plaster sand. In the second half of
F2009 foundry closures and short shifts have had a knock on effect on demand
for Delf`s products. The recreational sand demand was also weak in the period,
but is expected to firm up as the summer season begins.
Delf Sand contributed R93.5 million (F2008 - R87.4 million) to Group turnover,
an increase of R6.1 million and contributed R20.5 million (F2008 - R35.2
million) to Group profit before tax.
The principal causes of the decrease in profit at Delf Sand for F2009 were as
follows:
- Sharp increase in transport fuel costs and bunker fuel costs used in
production, could not be passed on in price increases resulting in
pressure on operating margins.
- Steep increases in payroll costs.
- Softening of demand for certain product and reduced sales in the building
and construction, and foundry sectors.
- Increase in maintenance costs.
- One day strikes and mid-week public holidays during F2009 disrupted
supply and off-take by customers.
Delf completed the commissioning and installation of the 5th dryer which came
into full production in the second half of F2009. This resulted in more
economic burning fuel usage and a reduction in production costs per ton,
together with increased production beneficiation efficiencies. Dryers 1 to 4
have been systematically reconditioned during the second half of F2009.
Consequently more efficient cost effective drying and greater production
capacity is expected during F2010 at a reduced cost per ton.
Delf Sand`s core customers in foundry and related industries continue to off-
take product at a steady, albeit reduced level. Demand from the building
industry remains soft in current economic conditions. Demand in the glass and
foundry industries are driven by local and global economic conditions which
are currently uncertain.
Capital expenditure of R14.4 million was incurred to further increase capacity
of monthly production of dry silica at the existing Delf Sand operation.
Capital expenditure of R3.4 million was spent on mobile equipment and
transport vehicles.
A new property, Cullinan, adjacent to Delf, of some 600 hectares was acquired
for R6.6 million in F2009. Pursuant to a desk top study and geological survey,
Delf expects Cullinan to add to the quality and quantity of the alluvial
silica. The company submitted all the relevant documentation to the regulatory
authorities (including principally the DME) in support of its prospecting and
exploration license application.
Based upon initial desk top analysis and geological surveys the available
alluvial silica appears to be of better quality and could be mined at lower
costs due to the ease of access to the product and limited plant requirements
to mine the product. The reserve acquired is also expected to increase the
production capacity of alluvial silica and extend the life of Delf.
Pienaarspoort Silica
As reported in Infrasors F2008 year end results, an extensive drilling
programme, together with laboratory analysis of drill samples was completed at
Pienaarspoort during the year. 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 completed its feasibility study and has submitted all the
relevant documentation to the 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.
Upon commencing production, Pienaarspoort is expected to 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 with interested parties,
the plant should be commissioned and implemented during F2010.
Infrabric
Infrabic produced 51.2 million bricks in F2009 (F2008 - 41.6 million) and
contributed R32.5 million (F2008 - R23.7 million) to Group turnover, an
increase of R8.8 million. Profits from operations were R4.2 million (F2008-
R3.8 million).
Pursuant to the slowdown in the housing and building market there has been a
softening in the price of cement bricks. Infrabric reduced its monthly
production from 5.9 million bricks per month to 4.3 million to compensate for
the reduced demand and is the only Group company directly linked to the
residential construction industry.
Infrabric invested R1.6 million in additions to its mobile production fleet
and R0.9 million on upgrading and increasing capacity at its screening and
production plants.
The benefit of production efficiencies and reduced cost structures implemented
during F2009 will bear fruit during F2010. No further capital expansion is
expected in F2010.
Mining Assets, Mining Licenses and Mineral Reserves
In the cases of Lyttelton, Delf, Pienaarspoort and Cullinan, 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
mining and production of the Infrasors group base minerals.
The Lyttelton mine and Marble Hall mine have completed and submitted the
necessary applications for conversions to new order mining licenses. Cullinan
has submitted its application to the DME for exploration and prospecting
rights.
Delf Sand has been granted a new order mining license on Portion 55 of
Pienaarspoort, 339 JR.
Pienaarspoort has completed and submitted to the DME its application for a new
order mining licence.
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 18 years experience in Industrial Minerals and
Resource Modelling.
Outlook - Infrasors Group
The anticipated downturn in the South African economy and global financial
instability has resulted in a slowdown in demand by Infrasors` key clients in
industry and construction. Such circumstances have had a knock-on effect
impacting on production demand and off take at Infrasors` mines.
Infrasors` principal subsidiaries, Lyttelton Dolomite, Delf Sand and Infrabric
continue to be profitable, solvent, cash generative and fully operational. The
businesses are well managed, fully capitalised and financially healthy. The
Group balance sheet at 28 February 2009 has net assets in excess of 207 cents
per share and is conservatively geared with a low level of borrowings.
Pressure on operating margins has lessened in calendar 2009 due to the
softening oil price compared to the year under review. Whilst demand for the
Group`s products and services has fluctuated in certain industries pursuant to
the economic downturn, Infrasors` overall position as a producer and supplier
of base minerals and materials remains essential to its customers and the end
users.
Outlook - Lyttelton Dolomite
Lyttelton is currently operating at full capacity which it will extend in
F2010, and has a healthy order book into 2010 underpinned by construction
activity leading up to the World Cup and Government spend on infrastructural
upgrades.
Outlook - Delf Sand
Delf is operating at approximately 65% capacity whilst the slow-down in
foundry activity, building and leisure continues. Delf continues to make a
concerted effort to expand its product offering into other industry sectors.
Outlook - Pienaarspoort
Upon licencing, commissioning of the plant and ramp up to full production,
Pienaarspoort is expected to 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, the project should be commissioned and implemented
during F2010 .
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 and marginally to Group profitability.
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 28 February 2009 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 20 May 2009.
Basis of preparation
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 International Accounting
Standards 34 ("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 28 February 2009. The Company envisage posting the annual
reports around the end of July 2009.
The estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised 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.
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.
3. Earnings per share ("EPS")
EPS is based on the Group`s profit for the twelve month period ended 28
February 2009, divided by the weighted average number of shares in issue
during the twelve-month period.
Net Weighted average Earnings
profit number of shares per share
R000`s in issue Cents
000`s
Earnings 30 078 177 131 17.0
Diluted earnings 30 078 177 131 17.0
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 28 February 2009
Net profit 30 078
Less net sale of assets (66)
Add net movement in provisions 1 041
Headline earnings 31 053 177 131 17.5
Diluted headline earnings 31 053 177 131 17.5
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
year ended
28 February
2009
Ordinary share capital and reserves (R000`s) 359 630
Total number of shares in issue (net of treasury shares 172 985
of 4 854 727) (000`s)
NAV per share (cents) 207.9
Ordinary share capital and reserves (R000`s) 359 630
Intangible assets (89 449)
Tangible net asset value 270 181
Total number of shares in issue (net of treasury shares 172 985
of 4 854 727) (000`s)
Tangible NAV per share (cents) 156.2
5. Related party transactions
Reviewed
year ended
28 February
2009
Purchases between fellow subsidiary companies
Delf Sand purchased from Pienaarspoort 4 330
Purchases from related parties are made at normal market
prices
Management fees paid to Infrasors Holdings Limited
Management fees were paid for services rendered in the 7 400
areas of administration and technical advice, based on the
apportioned time spent
Interest paid by subsidiaries to Holding company
Infrabric 1 093
Delf Sand 685
Donations made to Infrasors Environmental Rehabilitation
Trust
Lyttelton Dolomite 852
Dividends received by subsidiary company
Infrasors Management Services 132
Rent paid to Whirlprops 35
Infrasors Holdings Limited 475
6. Dividends
The directors have elected not to declare a dividend for F2009 in view of
the current economic climate and the need for prudent capital
preservation policies.
7. Increase in borrowings
As part of the financing requirements to commence with the installation
of the plant at the Pienaarspoort project, the Group secured a notarial
bond to the value of R100 million.
Property held in the subsidiaries Delf Sand (Proprietary) Limited and
Lyttelton Dolomite (Proprietary) Limited were provided as security and
the facility accrues interest at an effective interest rate of prime less
2 %. The terms of the bond are fixed bi-annual capital and interest re-
payments over a period of 60 months. Interest is accrued monthly.
8. Directorate and administration
Directors
Le Roux Roets (Chief Executive 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)
All of the above directors are South African and resident in South Africa
Kerry Colley
(Company Secretary)
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.
Pursuant to the expiration of his service contract, Francois Roets has
tendered his resignation as Chief Operating Officer ("COO") from the Infrasors
board, effective 25 May 2009. At the board meeting on 20 May 2009, Frans
Liebenberg (managing director of Lyttelton Dolomite) was appointed as COO
replacing Francois Roets. The board wishes to thank Francois for his input and
wishes him well in his future endeavours.
Designated adviser
Sasfin Capital
Auditors
Mazars Moores Rowland
Legal Advisers and Attorneys
HR Levin Attorneys Notaries and Conveyancers
Transfer Secretaries
Link Market Services South Africa
(Proprietary) Limited
On behalf of the board
P Molefe
Chairman
L Roets
Chief Executive
Date: 25/05/2009 16:00:01 Produced by the JSE SENS Department.
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