| Fri 9 Oct 2009, 7:30 | | ISB - Insimbi - Unaudited Results For The six months ended 31 August 2009 and |
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ISB
ISB
ISB - Insimbi - Unaudited Results For The six months ended 31 August 2009 and
dividend announcement
INSIMBI REFRACTORY AND ALLOY SUPPLIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration No: 2002/029821/06)
Share code: ISB & ISIN code: ZAE000116828
("Insimbi" or "the company")
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2009 AND DIVIDEND
ANNOUNCEMENT
- Revenue of R305 million
- Gross profit of R38 million
- Cash generative with good cash management
- Effective working capital management
- Dividend declaration number three of 2c per share
"We are very pleased with our solid performance in this tough market. Our
diverse product portfolio and focus on effective management of our working
capital has stood us in good stead during the first half of the financial year.
While we expect the next half of the year to continue to be tough and market
recovery to be slower than originally thought Insimbi is well placed and ready
to take advantage of the upswing already evident in the economy," said Pieter
Schutte (Chief Executive Officer)
CONSOLIDATED INCOME STATEMENT FOR THE PERIOD ENDED 31 AUGUST 2009
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
31 August 31 August 29 February
2009 2008 2009
R`000 R`000 R`000
Revenue 305 159 584 110 969 041
Cost of sales (267 144) (498 964) (828 847)
--------- --------- ---------
Gross profit 38 015 85 146 140 194
Other operating income 535 595 465
Administration expenses (10 721) (21 882) (25 239)
Other operating expenses (12 100) (5 002) (28 484)
--------- --------- ---------
Operating profit 15 729 58 857 86 936
Interest received 569 - 525
Finance costs (4 954) (3 962) (11 275)
--------- --------- ---------
Profit before share of
associated company`s loss 11 344 54 895 76 186
Share of associated
company`s loss (75) (175) (225)
Minority share of subsidiary
- 807 -
--------- --------- ---------
Profit before taxation 11 269 55 527 75 961
Taxation (4 475) (16 379) (22 215)
--------- --------- ---------
Profit for the year 6 794 39 148 53 746
--------- --------- ---------
Attributable to:
Equity holders of the parent
6 794 39 148 53 746
Minority interest - - -
--------- --------- ---------
Unaudited Unaudited Audited
6 months 6 months 12 months
Headline earnings for the group to to to
have been computed as follows: 31 August 31 29 February
2009 August 2009
R`000 2008 R`000
R`000
Profit attributable to ordinary
shareholders 6 794 39 148 53 746
Adjusted for loss/(profit) on
sale of property, plant and
equipment 16 (21) (97)
Adjusted for impairment of
property, plant and equipment - - 595
--------- --------- ---------
Headline earnings 6 810 39 127 54 244
--------- --------- ---------
Number of shares (000`s) 260 000 260 000 260 000
Basic and fully diluted:
Earnings per share (cents) 2,61 15,06 20,67
Headline earnings per share
(cents) 2,62 15,05 20,86
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
As at 31 As at 31 As at 29
August August February
2009 2008 2009
R`000 R`000 R`000
Assets
Non-Current Assets
Property, plant and equipment 24 333 18 862 19 394
Goodwill 39 938 41 438 39 938
Investments in associates - - 75
Deferred tax 4 126 717 2 724
Other financial assets - - 8
--------- --------- ---------
68 397 61 017 62 139
--------- --------- ---------
Current Assets
Inventories 61 659 95 026 72 789
Trade and other receivables 80 815 188 178 89 976
Cash and cash equivalents 16 765 26 767 42 196
Other financial assets - 1 990 -
Amount owing by group company 14 731 13 970 12 202
---------173 --------- ---------217
970 325 931 163
--------- --------- ---------_
Total Assets 242 367 386 948 279 302
--------- --------- ---------
Equity and Liabilities
Equity
Share capital 44 442 45 956 44 442
Reserves 78 - 78
Accumulated profit 41 206 43 214 47 412
--------- --------- ---------
85 726 89 170 91 932
--------- --------- ---------
Non-Current Liabilities
Other financial liabilities 57 510 56 036 55 993
Nedbank loan - 18 000 1 000
--------- --------- ---------
57 510 74 036 56 993
--------- --------- ---------
Current Liabilities
Trade and other payables 90 543 202 465 109 965
Bank overdraft - - 8 348
Other financial liabilities 1 163 3 777 1 132
Taxation 7 425 17 500 10 932
--------- --------- ---------
99 131 223 742 130 377
--------- --------- ---------
Total Equity and Liabilities 242 367 386 948 279 302
--------- --------- ---------
CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
30 August 30 August 29 February
2009 2008 2009
R`000 R`000 R`000
Cash flow from operating
activities
Cash generated from 18 898 51 772 112 439
operations
Net interest paid (4 385) (5 540) (10 750)
Taxation paid (9 609) (9 391) (23 799)
Dividends paid (13 000) - (10 400)
--------- --------- ---------
Net cash from operating
activities (8 096) 36 841 67 490
--------- --------- ----------
Cash flow from investing
activities
Purchase of property, plant (7 439) (17 557) (13 291)
and equipment
Proceeds from disposal of
property, plant and equipment 72 678 967
Purchase of Goodwill - - (10 000)
Acquisition of businesses - - (300)
Movements in group company
loans (2 497) (13 025) (12 064)
Sale of financial assets - - 2 773
Share Buy Back (23) - -
Increase in Share Capital - 45 956 -
--------- --------- ----------
Net cash from investing
activities (9 887) 16 052 (31 915)
--------- --------- ---------_
Cash flows from financing
activities
Proceeds of share issue - - 44 442
Current portion of other
financial liabilities 383 - (25 546)
Other financial liabilities 517 (33 020) (27 517)
--------- --------- ---------
Net cash from financing
activities 900 (33 020) (8 621)
--------- --------- ---------
Net (decrease)/increase in
cash and cash equivalents (17 083) 19 873 26 954
Cash and cash equivalents at
the beginning of the year 33 848 6 894 6 894
--------- ---------- ---------
Total cash at the end of the
year 16 765 26 767 33 848
---------- --------- ---------
STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
6 months 6 months to 12 months
to 30 August to
30 2008 29
August R`000 February
2009 2009
R`000 R`000
Share capital* - - -
--------- --------- ---------
Share premium
Issue of shares 44 442 45 956 44 442
--------- --------- ---------
Foreign currency
translation reserve
Currency translation
differences 78 - 78
--------- --------- ---------
Retained earnings
At beginning of year 47 412 4 066 4 066
Net profit for the year 6 794 39 148 53 746
Dividends paid (13 000) (-) (10 400)
--------- --------- ---------
At end of year 41 206 43 214 47 412
--------- --------- ---------
Total Equity 85 726 89 170 91 932
--------- --------- ---------
* Share capital equals 260 000 000 of 0.000025cents each = R65
Condensed segmental report
Set out below is the revenue and gross margin by division.
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
31 31 29
August August February
2009 2008 2009
R`000 R`000 R`000
Revenue by division
Foundry 59 648 146 712 249 914
Non Ferrous 36 574 84 163 120 846
Refractory 8 678 12 319 21 971
Speciality 33 068 36 434 70 158
Steel 59 449 201 433 314 539
Rotary Kiln 47 745 54 051 96 912
Textiles 793 3 644 4 285
KZN 24 146 31 574 70 413
Cape Town 17 612 - -
Aluminum 15 086 13 780 18 274
Other 2 360 - 1 729
--------- --------- ---------
305 159 584 110 969 041
--------- --------- ---------
Gross margin by division
Foundry 5 696 25 446 41 875
Non Ferrous 3 037 9 067 12 703
Refractory 1 557 1 285 3 501
Speciality 5 325 8 520 16 162
Steel 4 718 24 862 36 796
Rotary Kiln 9 263 7 692 11 604
Textiles 35 (55) (37)
KZN 3 548 7 333 13 845
Cape Town 1 524 - -
Aluminum 674 996 2 802
Other 2 638 - 943
--------- --------- ---------
38 015 85 146 140 194
--------- --------- ---------
Income tax charge
Interim period income tax charge is accrued based on the estimated average
annual effective income tax rate of 28 per cent.
Commentary
Overview
In a tough trading environment, Insimbi produced a solid performance for the six
months ended 31 August 2009 with only the internal textile division showing a
gross loss. This can be mainly attributed to:
Resilient and diversified product portfolio
Effective working capital management
Efficient distribution and support systems
It is worth noting that due to the abnormal trading environment experienced last
year, which saw an exceptionally strong demand for commodities as well as high
prices to match, it is difficult to make a direct comparison between this period
and the comparative period last year.
Financial Performance
Group revenue for the period was R305 million. This strong performance was
achieved despite the significant slowdown in the market and can be attributed to
the company`s diverse portfolio and product offering which has seen it withstand
the brunt of the economic downturn.
With the drop in demand for commodities, volumes were under considerable strain
and had an adverse effect on margins in certain divisions, most notably the
steel and foundry divisions while other divisions showed some resilience and
even improved margins. A consolidated gross margin of R38 million was achieved
for the half year which is down from the R85 million during the same period last
year. The decrease in margins is largely a result of lower than average volumes
in the foundry, non-ferrous and steel divisions which were negatively impacted
by economic conditions. The acquisition of land and buildings comprising
warehousing and office space in Atlantis from the company`s long standing agent,
gave rise to the new division called Cape Town.
Consolidated operations and administration costs have decreased by R4 million to
R22.8 million. This can be largely attributed to the smooth performance of the
aluminum smelter which experienced a number of teething problems in the first
half of 2008 which required significant non-recurring repairs and maintenance
expenditure. Operating costs in general have been well controlled. Staff costs
remain consistent with the previous period and while no salary increases were
awarded during the period under review, no staff have been retrenched either.
This is to ensure that we have the necessary skills in place for the anticipated
improvement in economic conditions in the short to medium term.
Group operating profit for the period was R15.7 million, down from R58.9 million
the previous year. Although economic conditions were severe the company remained
profitable. This is testament to the strategy of the business, our strong brand
recognition and dedication from staff and management.
Insimbi achieved earnings and headline earnings per share of 2.61 cents and
2.62 cents per share respectively. Whilst this is a substantial drop from the
comparative period last year, it is in line with the market.
Over the past year working capital management has been a key focus for Insimbi.
The ability to respond quickly and adapt to changing market conditions has
ensured effective management of stock holding and the purchasing cycle. Through
strict credit controls the company has managed to lower its debtor`s days to 37
and stock days to 28. Cash flow remained healthy during the period with cash
generated from operations of R18.9 million, prior to any additional outflows.
Dividends totaling R13 million were paid out of this free cashflow Additional
outflows including taxation of R9.6 million (including STC of R1.3 million) and
a net interest charge of R4.3 million led to a net cash outflow from operating
activities of R8.1 million.
As a consequence of effective working capital management, there were no
provisions for doubtful debt during the period under review. Group debt was
reduced and a Nedbank loan of R18 million repaid in full.
Operational Review
Despite the tough market conditions, Insimbi has remained cash generative due
largely to the company`s diverse product offering, continued profitability and
attention to working capital. The aluminum smelter, which experienced some
teething problems last year, continues to operate in a subdued aluminium market
resulting from the extremely difficult automotive industry but the signs of
recovery are very positive and management remains optimistic on the future of
this operation. Revenue in the Specialty division remained robust at R33.1
million largely due to an increase in the product offering.
The steel, foundry and non-ferrous divisions were the worst affected by the
economic downturn and all three divisions experienced a slow down due to their
customer base operating on a three or four working day week for much of the
period under review. While it is expected that there will be some recovery in
these industries, the next 12 months will continue to be tough.
The Insimbi Group is committed to BBEEE and is currently working on balancing
its scorecard in all 7 areas under the revised codes. However, as the current
economic situation has demonstrated, it is paramount that any BBEEE deals are
sustainable and strategically sound for all parties involved. Insimbi Thermal
Insulation, the industrial heat resistant textile company, is a level 4
contributor in terms of the revised BBEEE codes.
We see positive signs of recovery in Zimbabwe and we remain optimistic about our
supply initiatives and offtake agreements with many Zimbabwean customers and
suppliers who have been severely effected over the past 5 years
Post balance sheet event
No material fact or circumstance existed post balance sheet date that affects
the results being reported.
Prospects
The tough trading conditions are expected to persist into the second half of the
financial year with demand and prices remaining subdued although we do believe
that there are definite signs of a sustainable and gradual recovery in our
markets across the board. Notwithstanding these tough conditions, Insimbi
remains focused on costs and working capital management and maintain a
comfortable level of debt.
As a group, we will continue to evaluate strategic acquisitions in various
industries which will bring synergies and added value to the group.
With the government infrastructure programme expected to last well beyond 2010
and Insimbi`s expanding export potential, ongoing organic growth and new product
development, the company is well positioned to benefit from an eventual upswing
in the economy.
Basis of preparation of the unaudited results
The interim consolidated financial results consist of an income statement,
balance sheet, statement of changes in equity, condensed cash flow and condensed
segment report for the period ended 31 August 2009. The interim financial
statements have been prepared in accordance with the Group`s accounting policies
what are consistent with the previous period. These comply with accounting
policies consistent with International Financial Reporting Standards and in
accordance with International Accounting Standard (IAS) 34 Interim Financial
Reporting.
Dividends
Notice is hereby given that Insimbi has declared an interim dividend (dividend
declaration 3) for the six months ended 31 August 2009 of 2 cents per share.
The salient dates applicable to the interim dividend are as follows:
Last day to trade "CUM" dividend 23 October 2009
First day to trade "EX" dividend 26 October 2009
Record date 30 October 2009
Payment date 2 November 2009
No share certificates will be dematerialized or rematerialised between Monday,
26 October 2009 and Friday, 30 October 2009, both days inclusive.
DJ O Connor P Schutte
Chairman Chief Executive Officer
9 October 2009
Registered office: Stand 359 Crocker Road, Wadeville, Germiston, 1422
Company Secretary: Rene de Villiers
Directors: FBB Abdul Gany, CF Botha, F Botha, EP Liechti, GS Mahlati*, LY
Mashologu*, PJ Schutte, LG Tessendorf, DJ O Connor*
(* non executive)
Designated Advisor: PricewaterhouseCoopers Corporate Finance (Proprietary)
Limited
Transfer Secretaries: Computershare Investor Services (Proprietary) Limited
Date: 09/10/2009 07:30:15 Produced by the JSE SENS Department.
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