| Thu 16 Jul 2009, 9:00 | | ISB - Insimbi - Abridged Audited results: Year ended 28 February 2009 & Notice |
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ISB
ISB
ISB - Insimbi - Abridged Audited results: Year ended 28 February 2009 & Notice
of Annual General Meeting
INSIMBI REFRACTORY AND ALLOY SUPPLIES LTD
(Incorporated in the Republic of South Africa)
(Registration No: 2002/029821/06)
Share code: ISB & ISIN code: ZAE000116828
("Insimbi" or "the group")
ABRIDGED AUDITED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2009 AND NOTICE OF
ANNUAL GENERAL MEETING
The audited results for the year ended 29 February 2009 have been restated from
the reviewed results previously published, on 26 May 2009, due to reallocations
within certain balance sheet categories. However, the attributable earnings for
the period have not changed from the results previously published.
CONSOLIDATED INCOME STATEMENT
Audited Audited
12 months to 12 months to
28 February 29 February
2009 2008
R`000 R`000
Revenue 969 041 897 428
Cost of sales (828 847) (813 996)
----------- -----------
Gross profit 140 194 83 432
Other operating income 465 4 395
Administration expenses (25 239) (21 424)
Other operating expenses (28 484) (12 936)
----------- -----------
Operating profit 86 936 53 467
Interest received 525 190
Finance costs (11 275) (15 670)
----------- -----------
Profit before share of associated
company`s profit 76 186 37 987
Share of associated company`s profit (225) 1 449
Profit on disposal of associate company - 5 469
----------- -----------
Profit before taxation 75 961 44 905
Taxation (22 215) (18 346)
----------- -----------
Profit for the year 53 746 26 559
=========== ===========
Attributable to:
Equity holders of the parent 53 746 26 559
----------- -----------
EARNINGS & HEADLINE EARNINGS PER SHARE
Audited Audited
12 months to 12 months to
Headline earnings for the group have 28 February 29 February
been computed as follows: 2009 2008
R`000 R`000
Profit attributable to ordinary
shareholders 53 746 26 559
Adjusted for profit on sale of
property, plant and equipment (97) (142)
Adjusted for impairment of property, 595 -
plant and equipment
Adjusted for profit on disposal of
investment in associate company - (4 019)
------------ ------------
Headline earnings 54 244 22 398
============ ============
Number of shares on listing (000`s) 260 000 260 000
Basic and fully diluted:
Earnings per share (cents) 20,67 10,22
Headline earnings per share (cents) 20,86 8,61
CONSOLIDATED BALANCE SHEET
Audited Audited
As at 28 As at 29
February February
2009 2008
R`000 R`000
Assets
Non-Current Assets
Property, plant and equipment 19 394 10 897
Goodwill 39 938 29 938
Investment in subsidiaries - -
Investment in associates 75 -
Deferred tax 2 724 717
Other financial assets 8 -
----------- -----------
62 139 41 552
----------- -----------
Current Assets
Inventories 72 789 74 613
Trade and other receivables 89 976 105 227
Cash and cash equivalents 42 196 7 469
Other financial assets - 2 781
Amounts owing from group company 12 202 138
----------- -----------
217 163 190 228
----------- -----------
Total Assets 279 302 231 780
=========== ===========
Equity and Liabilities
Equity
Share capital 44 442 -
Reserves 78 -
Accumulated profit/(loss) 47 412 4 066
----------- -----------
91 932 4 066
----------- -----------
Non-Current Liabilities
Other financial liabilities 55 993 69 310
Nedbank loan 1 000 15 200
----------- -----------
56 993 84 510
----------- -----------
Current Liabilities
Trade and other payables 109 965 105 795
Bank Overdraft 8 348 575
Taxation 10 932 10 512
Other financial liabilities 1 132 26 322
----------- -----------
130 377 143 204
----------- -----------
Total Equity and Liabilities 279 302 231 780
=========== ===========
CONSOLIDATED CASH FLOW STATEMENT
Audited Audited
12 months to 12 months to
28 February 29 February
2009 2008
R`000 R`000
Cash flows from operating activities
Cash generated from operations 112 439 10 165
Investment revenue 525 190
Finance costs (11 275) (15 670)
Tax paid (23 799) (11 703)
Dividends paid (10 400) (87 904)
------------ ------------
Net cash from operating activities 67 490 (104 922)
------------ ------------
Cash flows from investing activities
Purchase of property, plant and (13 291) (3 960)
equipment
Sale of property, plant and equipment 967 752
Purchase of goodwill (10 000) -
Acquisition of businesses (including (300)
subsidiaries, joint venture and
associates)
Proceeds from the disposal of the - 10 356
investment in associate
Loans to group companies repaid (12 064) (138)
Sale of financial assets 2 773 -
------------ ------------
Net cash from investing activities (31 915) 7 010
------------ ------------
Cash flows from financing activities
Proceeds on share issue 44 442 -
Current portion of long term loan (25 546) 7 002
Long-term loans - shareholders - (2 863)
Long-term loans - Nedbank and other (27 517) 62 952
------------ ------------
Net cash financing activities (8 621) 67 091
------------ ------------
Total cash movement for the year 26 954 (30 821)
Cash at beginning of the year 6 894 37 715
------------ ------------
Total cash at the end of the year 33 848 6 894
============ ============
STATEMENT OF CHANGES IN EQUITY
Foreign
currency Accumu-
trans- lated
Share* Share lation profit/ Total
capital premium reserve (loss) equity
R`000 R`000 R`000 R`000 R`000
Group
Balance at 1 March 2007 - - - 65 411 65 411
Changes in equity
Attributable profit for - - - 26 559 26 559
the year
Dividends - - - (87 904) (87 904)
------- ------- -------- -------- --------
Total changes - - - (61 345) (61 345)
------- ------- -------- -------- --------
Balance at 1 March 2008 - - - 4 066 4 066
Changes in equity
Currency translation - - 78 - 78
differences recognised
directly in equity
Attributable profit for - - - 53 746 53 746
the year
Issue of shares - 44 442 - - 44 442
Dividends - - - (10 400) (10 400)
------- ------- -------- -------- --------
Total changes - 44 442 78 43 346 87 866
------- ------- -------- -------- --------
Balance at 28 February - 44 442 78 47 412 91 932
2009 ======= ======= ======== ======== ========
* Share capital equals 260 000 000 of 0,000025 cents each = R65,00.
SEGMENTAL REPORTING
A business segment is a group of assets and operations engaged in providing
products or services that are subject to risks and returns that are different
from those of other business segments.
A geographic segment is engaged in providing products or services within a
particular economic environment that is subject to risk and rewards that are
different from those of segments operating in other economic environments.
The group`s primary format for segment reporting is based on business segments.
This basis of the segment reporting is representative of the internal structure
used for management reporting.
Set out below is the revenue and gross margin by division.
Audited Audited
12 months to 12 months to
28 February 29 February
2009 2008
R`000 R`000
Revenue by division
Foundry 249 914 226 586
Non Ferrous 120 846 167 122
Refractory 21 971 22 237
Speciality 70 158 171 146
Steel 314 539 198 452
Rotary Kiln 96 912 43 388
Textiles 4 285 6 238
KZN 70 413 62 259
Other 20 003 -
------------ ------------
969 041 897 428
============ ============
Gross margin by division
Foundry 41 875 24 085
Non Ferrous 12 703 11 391
Refractory 3 501 2 697
Speciality 16 162 14 714
Steel 36 796 14 196
Rotary Kiln 11 604 5 999
Textiles (37) 2 040
KZN 13 845 8 310
Other 3 745 -
------------ ------------
140 194 83 432
============ ============
COMMENTARY
The directors of Insimbi are pleased to announce the audited results for the
year ended 28 February 2009.
1. Basis of Preparation
The audited abridged results have been presented in accordance with IAS 34 -
Interim Financial Reporting. The accounting policies adopted for purposes of
this report comply, and have been consistently applied in all material respects,
with International Financial Reporting Standards ("IFRS"). The same accounting
policies and methods of computation have been followed as compared to the prior
year ended 29 February 2008. The results have been audited by BDO Spencer
Steward (JHB), whose unqualified audit report is available for inspection at the
company`s registered office.
2. Review of activities
The company listed on the JSE Limited`s Alternative Exchange ("AltX") on 14th
March 2008.
During the year, Insimbi Alloy Supplies (Proprietary) Limited acquired the
remaining 20% of the shares in Insimbi Aluminium Alloys (Proprietary) Limited
for zero value and now holds 100% of the company. It also acquired an off the
shelf company called Twin River Trading 103 (Proprietary) Limited on 26th
November 2008 with the intention of creating a bulk commodity trading operation
in partnership with a Broad Based Black Economic Empowerment partner. This
company changed it`s name to Insimbi Bulk Commodities (Proprietary) Limited but
due to the sudden downturn in global demand for ores and bulk commodities, the
project was shelved until such time as the market changes, at which stage, the
project will be re-evaluated.
On 4th February 2009, the executive directors of the listed company disposed of
a collective 15 million shares (equivalent to 5.76% of the issued share
capital), to Mayibuye Capital (Proprietary) Limited, a Black Economic
Empowerment company with a long standing relationship with the group and it`s
directors. This deal was facilitated by Nedbank as well as the directors
themselves who provided interest free vendor funding to Mayibuye for the
acquisition of these shares.
Insimbi continues to operate mainly out of its offices in Johannesburg and
Durban but has also focused on establishing its brand in the new office in
Kitwe, Zambia. The group bought it`s agent in Cape Town in March 2009, including
land and buildings comprising warehousing and offices, in Atlantis. The
acquisition of the agent provides Insimbi with a greater presence in the Western
Cape as well as some diversity of products which it previously did not deal in.
3. Financial Review
The financial year under review can be summarised in four quarters. The first
two quarters showed exceptional revenue, margins and volumes; the third quarter
showed signs of changes in the market as commodity prices came under pressure
and in some sectors, volumes started to shrink. In the last quarter, commodity
prices dropped sharply and demand declined further in these sectors. Many
production facilities extended their annual shut down periods into late January
as the traditional three weeks shut down, in many cases, doubled. This naturally
also had a negative effect on production volumes.
Record revenue of R 584 million and Profit After Tax of R 39 million were
achieved in the first half of the financial year, resulting in an interim
dividend of four cents per share, declared in September 2008. This exceptional
performance continued into the third quarter before commodity prices started to
show signs of strain.
Despite difficult trading conditions experienced during the final three months
of the financial year, compounded by the traditional shut-downs over the festive
season being extended by many companies, the business adapted to prevailing
market conditions and managed to maintain margins.
The increase in the cash position was attributable to strong working capital
management and solid profitability.
Revenue for the year was up by 8% on the previous year and margins of 14.5% were
well above the 9.3% achieved in the previous financial year
Working capital is firmly under control. Inventory and receivable levels were
reduced from R 75 million to R 73 million and from R 105 million to R 90
million respectively .
The unexpected severity of the slow down in the last quarter, as a result of the
drop in demand and subsequently a decline in commodity prices, impacted
negatively on revised forecasts that were announced in September 2008. However,
this does not detract from the fact that Insimbi has had an excellent year and
showed strong earnings per share, headline earnings per share, net asset value
and cash flow growth compared to the previous financial year. In fact the year
ending February 2009 produced the best results in the group`s 40 year history.
4. Operational Review
High commodity prices coupled with high demand, which was partly as a result of
Government`s continued focus on infrastructure upgrades, had a positive impact
on the business in the first nine months of the financial year. Weaker exchange
rates also contributed additional revenues and margin boosts.
The new aluminium plant initially experienced a few difficulties and only came
into operation in July 2008. This was mainly due to an upgrade of the plant that
consisted of a substantial rehabilitation as well as the introduction of
additional furnaces and fuel sources. The delay in production will, however,
pay dividends in the medium to long term as the process of rehabilitation has
increased the expected capacity of the plant by 30% to 1 200 tons per month.
The slowdown in the global market has forced Insimbi to become more focused on
skills and efficiency. We continue to offer a complete package, incorporating
supply and service to our customers in the most effective way. Many exciting
opportunities have become apparent in various areas of the business and we
continue to expand our acquisitive vision by looking at each prospect on a case
by case basis.
5. Market and Prospects
It is clear that the current world crisis will have a much bigger impact on the
South African economy than originally anticipated. The diversification of
Insimbi, the potential of a political solution in Zimbabwe, and opportunities
that have arisen out of the current economic situation will ensure that Insimbi
continues to prosper in the next financial year. There is no doubt, however,
that the 2009/2010 financial year will be a much more challenging year that we
have experienced for some time. We are focused on ensuring that volumes and
margins are maintained while keeping cost growth to a minimum. To this end,
various marketing and cost cutting strategies have been implemented. We have
also retained very tight control over working capital and our cash flow is
evidence of the success we continue to have in this area. There are signs of a
slow recovery in the market but it remains very volatile.
The Group`s Chief Executive Officer is positive about the South African economy
as well as the regional markets and opportunities. He is confident that, with
the new leadership in Government, the continuous infrastructures spend and 2010
approaching fast, Insimbi will position itself to be an even bigger player in
the future.
6. Special resolutions
At the annual General Meeting of members held on 23 September 2008 it was
resolved that the directors be authorised to re-purchase up to 10% of the
company`s shares subject to certain conditions.
On 18 November 2008 Insimbi Bulk Commodities (Proprietary) Limited changed its
name from Twin River Trading 103 (Proprietary) Limited.
On 9 May 2008 Insimbi Aluminium Alloys (Proprietary) Limited changed its name
from Sugar Creek Trading 199 (Proprietary) Limited.
7. Additions through Business Combinations
Insimbi Aluminium Alloys` newly acquired secondary aluminium smelter which was
acquired for R17,0 million effective 1 March 2008, initially experienced a few
difficulties and only came into operation in June 2008. In terms of IFRS3, the
acquisition of these assets is seen as a business combination. This company
generated revenues of R46,8 million and a loss after tax of R4,4 million. This
was mainly due to the delays in start up as a result of upgrades to the plant
that consisted of a substantial rehabilitation as well as the introduction of
additional furnaces and fuel sources. With these upgrades and improved
processes, the production capacity has increased from 900mt to 1 200mt of
finished product per month. The delays in production will pay dividends in the
medium to long term as the process of rehabilitation has increased the expected
capacity of the plant by 30%.
The increase in non-current assets is as a result of the investment by the
group, in this secondary aluminium smelter. During the process of upgrading the
plant and equipment, one furnace was impaired.
The current global melt down and the dire state of the global automotive
industry has had a severe impact on the performance of this entity but
management are confident that, as a low cost producer of various aluminium
alloys, it is well placed to react to market conditions as they change.
8. Post balance sheet events
Insimbi Alloy Properties (Proprietary) Limited, a wholly owned subsidiary of
Insimbi Refractory and Alloy Supplies Limited, acquired land and buildings
comprising warehousing and office space in Atlantis, from it`s long standing
agent, Global Material South Africa (Proprietary) Ltd for an amount of R6 000
000 million in March 2009.
9. Directors
The directors of the company, all of whom are South African citizens, during the
year and as at the date of this report are as follows:
FBB Abdul Gany appointed 1 December 2008
CF Botha appointed 11 June 2004
F Botha appointed 11 June 2004
E P Liechti appointed 11 June 2004
G S Mahlati appointed 1 January 2009
R D Makkink appointed 17 June 2004, resigned 10 September 2008
LY Mashologu appointed 19 March 2008
DJ O`Connor appointed 11 June 2004
P J Schutte appointed 11 June 2004
LG Tessendorf appointed 29 July 2005
(alternate to CF Botha)
10. Authorised and issued capital
The authorized capital is 12 billion shares. Currently there are 260 million
shares in issue. A buy-back of 12 000 shares was effected on 15 December 2008.
These shares were not cancelled and are currently held as treasury shares.
11. Dividends
Interim (maiden) dividend Number 1 of 4 cents per share was declared on 29
September 2008 payable on 27 October 2008 to shareholders registered on 17
October 2008. The total payout was R10 400 000,00 (2008: Nil).
In addition, a final dividend Number 2 of 5 cents per share was declared on 4th
June 2009 payable on 22nd June 2009 to shareholders registered on 11th June
2009. The total payout was R13 000 000 (2008: Nil)
12. Litigation
There are no legal or arbitration proceedings, including any proceedings that
are pending or threatened, or which Insimbi or any of its subsidiaries is aware
and that may have or have had, in the 12-month period preceding the date of
issue of this annual report, a material effect on the financial position of
Insimbi or any of its subsidiaries.
13. Notice of Annual General Meeting
Notice is hereby given that the annual general meeting of Insimbi Refractory and
Alloy Supplies Limited will be held at 359 Crocker Road, Wadeville Ext 4,
Germiston on Friday 7 August 2009 at 12:00, to transact the business as stated
in the notice of annual general meeting included in the Annual Report which has
been posted to shareholders today.
By order of the Board
Pieter Jacobus Schutte
Chief Executive Officer
6 July 2009
Registered office: Stand 359 Crocker Road, Wadeville, Germiston, 1422
Company Secretary: Rene de Villiers
Directors: FBB Abdul Gany, F Botha, CF Botha, EP Liechti, PJ Schutte, LG
Tessendorf, , DJ O Connor*, GS Mahlati*, L Mashologu*
(* non executive)
Designated Advisor:
PricewaterhouseCoopers Corporate Finance (Proprietary) Limited
Transfer Secretaries:
Computershare Investor Services (Proprietary) Limited
16 July 2009
Date: 16/07/2009 09:00:01 Produced by the JSE SENS Department.
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