| Tue 27 Oct 2009, 7:12 | | SAN - Sanyati - Unaudited interim results for the six months ended 31 august |
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SAN
SAN
SAN - Sanyati - Unaudited interim results for the six months ended 31 august
2009
Sanyati Holdings Limited
("Sanyati" or "the company" or "the group")
(Registration number 1988/002538/06)
Share code: SAN ISIN: ZAE000081055
UNAUDITED INTERIM RESULTS
FOR THE SIX MONTHS ENDED 31 AUGUST 2009
UP 42%
Revenue
UP 16%
Normalised HEPS of 12,07 cents
UP 26%
Net tangible asset value
DOWN 65%
Profit attributable to shareholders
CONDENSED CONSOLIDATED
STATEMENT OF FINANCIAL POSITION
As at As at As at
31 August 31 August 28 February
2009 2008 2009
R`000 R`000 R`000
Unaudited Reviewed Audited
ASSETS
Non-current assets 694 201 684 390 683 153
Property, plant and equipment 215 397 172 706 205 187
Goodwill 464 407 509 017 464 407
Investments 1 250 2 667 412
Deferred tax 13 147 - 13 147
Current assets 816 598 534 761 566 009
Inventories 12 428 8 756 11 150
Development property 90 457 69 357 59 239
Trade and other receivables 507 118 393 356 345 955
Cash and cash equivalents 92 763 2 091 60 222
Gross amount due from customers 113 832 61 201 89 443
Total assets 1 510 799 1 219 151 1 249 162
EQUITY AND LIABILITIES
Equity attributable to owners of
Sanyati
Total equity 723 345 713 806 709 530
Share capital and premium 547 869 560 628 547 869
Retained earnings 168 882 145 335 154 183
Share-based payment reserve 6 594 4 732 7 478
Fair value reserve - 3 111 -
Non-current liabilities 89 735 138 282 64 902
Long-term borrowings 66 397 94 545 32 978
Deferred taxation 23 338 22 292 23 338
Vendor liabilities - 21 445 8 586
Current liabilities 697 719 367 063 474 730
Trade and other payables 399 243 251 847 213 732
Bank overdraft 56 883 14 315 25 786
Current portion of vendor
liabilities 9 052 - 17 530
Gross amount due to customers 121 481 42 916 89 276
Current portion of interest-bearing
borrowings 81 791 14 212 95 825
Short-term provisions 3 354 18 774 1 460
Current tax payable 25 915 24 999 31 121
Total liabilities 787 454 505 345 539 632
Total equity and liabilities 1 510 799 1 219 151 1 249 162
CONDENSED CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2009 2008 2009
R`000 R`000 R`000
Unaudited Reviewed Audited
Revenue 1 149 332 808 905 1 543 041
Cost of sales (1 016 931) (698 887) (1 295 385)
Gross profit 132 401 110 018 247 656
Other income 5 348 1 856 928
Administration and
operating expenses (50 913) (46 187) (144 250)
Operating profit/EBITDA
before change in estimate 86 836 65 687 104 334
Depreciation (9 080) (7 571) (15 826)
Operating profit before
change in estimate 77 756 58 116 88 508
Changes in accounting estimates (50 245) - -
Operating profit before interest
and taxation 27 511 58 116 88 508
Interest received 14 446 7 559 12 068
Interest paid (21 543) (7 553) (19 425)
Profit before tax 20 414 58 122 81 151
Income tax expense (5 715) (16 274) (33 566)
Profit for the period from
continuing operations 14 699 41 848 47 585
Total comprehensive income
for the period 14 699 41 848 47 585
Basic earnings per share (cents) 3,73 12,58 13,33
Headline earnings per
share (cents) 3,78 13,18 23,33
Fully diluted headline earnings
per share (cents) 3,52 10,43 19,68
Normalised headline earnings
per share (cents) 12,97 13,18 23,33
Normalised fully diluted headline
earnings per share (cents) 12,07 10,43 19,68
Reconciliation between earnings
and headline earnings
Attributable earnings 14 699 41 848 47 585
Goodwill impairment - 2 000 35 706
Loss on disposal of property,
plant and equipment 267 - -
Tax adjustment (75) - -
Headline earnings 14 891 43 848 83 291
Reconciliation between earnings
and normalised headline earnings
Attributable earnings 14 699 41 848 47 585
Changes in accounting estimates 50 245 - -
Tax adjustment on changes in
accounting estimates (14 068) - -
Normalised earnings 50 876 41 848 47 585
Goodwill impairment - 2 000 35 706
Loss on disposal of property,
plant and equipment 267 - -
Tax adjustment (75) - -
Normalised headline earnings 51 068 43 848 83 291
CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2009 2008 2009
R`000 R`000 R`000
Unaudited Reviewed Audited
Cash generated by operations
before working capital changes 63 466 76 072 134 202
Changes in working capital (25 932) (25 303) 9 825
Cash generated by operations 37 534 50 769 144 027
Interest received 14 446 7 559 12 068
Interest paid (21 543) (7 553) (19 425)
Taxation paid (10 922) (9 322) (31 380)
Net cash flows from operating
activities 19 515 41 453 105 290
Cash flows from investing activities
Purchase of property, plant and
equipment (21 518) (30 994) (72 648)
Proceeds from sale of property,
plant and equipment 1 077 1 772 2 359
Decrease/(increase) in investments 47 (425) (1 830)
Net cash flow from investing
activities (20 394) (29 647) (72 119)
Cash flows from financing activities
Expenses paid, capitalised to
share premium - (36) -
Increase in interest-bearing
borrowings 19 387 15 673 35 719
Decrease in vendor liability (17 064) (41 899) (36 686)
Net cash flows from financing
activities 2 323 (26 262) (967)
Net increase/(decrease) in cash
and cash equivalents 1 444 (14 456) 32 204
Cash and cash equivalents at
beginning of period 34 436 2 232 2 232
Cash and cash equivalents at end
of period 35 880 (12 224) 34 436
SEGMENTAL REPORT
Revenue Revenue EBITDA EBITDA
Six months Six months Six months Six months
ended ended ended ended
31 August 31 August 31 August 31 August
2009 2008 2009 2008
R`000 R`000 R`000 R`000
Unaudited Reviewed Unaudited Reviewed
Civils 903 323 555 594 90 653 33 269
- Inland 195 042 91 567 18 718 2 294
- Coastal 318 690 265 330 25 740 11 618
- Central 279 845 137 329 37 492 17 808
- North 109 746 61 368 8 703 1 549
Specialist 265 976 305 159 (4 729) 30 666
- Buildings 59 546 97 642 (18 385) 3 152
- Road surfacing 124 183 89 084 4 375 8 653
- Piling 55 938 68 634 5 912 11 791
- Conform 26 177 48 106 2 767 6 933
- Property development 132 1 693 602 137
Corporate Services - - 912 1 752
Elimination of
intergroup (19 967) (51 848) - -
Total 1 149 332 808 905 86 836 65 687
SUPPLEMENTARY INFORMATION
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2009 2008 2009
Unaudited Reviewed Audited
Capital expenditure (R`000) 21 518 30 994 72 648
Weighted average number
of shares (`000) 393 687 332 629 357 063
Fully diluted number
of shares (`000) 423 098 420 218 423 098
Net tangible asset
value (NTAV) per share (cents) 61,2 48,4 68,7
Operating (EBITDA) margin (%) 7,6 8,1 6,8
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Treasury Shares to
capital premium shares be issued
R`000 R`000 R`000 R`000
Balance as at February 2008
(audited) 3 235 116 (21 000) 315 760
Total comprehensive income
for the period - - - -
Treasury share consolidation - 3 000 (3 000) -
Transfer of fair value reserve - - - -
Share issues and adjustments 1 256 858 - (238 869)
Balance as at 28 February
2009 (audited) 4 494 974 (24 000) 76 891
Total comprehensive income
for the period - - - -
Share issues and adjustments * 45 424 - (45 424)
Balance as at 31 August 2009
(unaudited) 4 540 398 (24 000) 31 467
Share-based Fair
payment value Retained Total
reserve reserve earnings equity
R`000 R`000 R`000 R`000
Balance as at February
2008 (audited) 2 353 3 111 103 487 638 830
Total comprehensive income
for the period - - 47 585 47 585
Treasury share consolidation - - - -
Transfer of fair value reserve - (3 111) 3 111 -
Share issues and adjustments 5 125 - - 23 115
Balance as at 28 February
2009 (audited) 7 478 - 154 183 709 530
Total comprehensive income
for the period - - 14 699 14 699
Share issues and adjustments (884) - - (884)
Balance as at 31 August
2009 (unaudited) 6 594 - 168 882 723 345
*Amounts less than R1 000.
COMMENTARY
INTRODUCTION
The six months ended 31 August 2009 was a period of consolidation and
restructure for the group. This period also heralded a change of guard at
Sanyati with the appointment of a new Chief Executive Officer, Malcolm Lobban,
and Chief Financial Officer, John Deeb.
The realignment and refocus of certain of the business units have also
culminated in certain divisional management changes and a more streamlined
reporting structure. The reassessment of these business units culminated in a
material revision of some of the accounting estimates that were previously made
at 28 February 2009. The impact of these changes to the accounting estimates is
dealt with below.
FINANCIAL REVIEW
During the period under review, revenue increased by 42,1% to R1 149,3 million
(2008: R808,9 million), resulting in an operating profit (EBITDA) of R86,8
million (2008: R65,7 million), 32,1% up on the previous period. Operating
margin decreased marginally to 7,6% (2008: 8,1%) for the group, mainly as a
result of the poor performance in the Buildings business.
The core Civils divisions` businesses, comprising Civils Inland (Gauteng),
Civils Coastal (KwaZulu-Natal), Civils Central (Free State and Northern Cape)
and Civils North (Mpumalanga), delivered impressive results despite increased
competition in the industry, with revenue increasing by 62,6% to R903,3 million
(2008: R555,6 million) and operating profit by 172,5% to R90,7 million (2008:
R33,3 million). The operating profit margin increased suitably to 10,0% from
6,0% in 2008.
The remaining revenue for the group came from the Specialist Contractors
businesses and amount to R266,0 million (2008: R305,2 million).
In the trading statement issued on 20 October 2009, it was highlighted that the
results for the period have been negatively impacted by approximately R50
million, which relates to changes in accounting estimates made in respect of
debtors, existing contracts and development properties as at 28 February 2009.
These changes in accounting estimates have been made in accordance with IAS 8
and are based on changes in circumstances upon which estimates were based,
together with the examination of new information regarding these original
estimates. The change of R50,2 million is made up as follows:
Impairment of properties - based on information now available, and due to a
change in circumstances, certain development properties held by the group were
held at values that were in excess of their net realisable value. Accordingly,
these properties were impaired by an amount of R5,7 million.
Debtors - again based on information now available, and due to a change in
circumstances, a more robust review of the debtors has revealed that the
provision for bad debts within the Buildings and Piling businesses as at 28
February 2009 needed to be revised. The value of the increase in provisions
amounts to R19,9 million.
Contracts - based on information now available a review of the contracts has
revealed that on certain contracts estimates made at 28 February 2009 in
respect of future contract revenues and costs to completion needed to be
revised. This was primarily within the Buildings, Piling, Civils North and
Civils Coastal businesses and amounts to R24,6 million.
Management of the balance sheet is of critical importance in the current
economic climate. In this regard, capital expenditure has been kept to a
minimum as certain plant and equipment is readily available for hire at
competitive rates. The total capital expenditure for the period amounted to
R21,5 million, which compares favourably to the R31,0 million spent in the
prior period. Working capital remains a key focus area and even though revenue
has increased by 42,1%, the increase in trade and other receivables has only
been 28,9%. The group still produced a positive cash flow from operating
activities of R19,5 million for the period in spite of the losses in the
Buildings business. Borrowings have increased by R19,4 million since 28
February 2009, primarily to fund the increase in the value of development
property. These borrowings will reduce going forward as a major development has
recently been completed and we are in the process of transferring ownership of
the sold units.
OPERATIONAL REVIEW
As previously stated, the core civil engineering businesses have performed
exceptionally well during the six months ended 31 August 2009 ("the period
under review"). The consolidated results were unfortunately impacted primarily
by the poor performance from the KwaZulu-Natal Buildings business.
The current order book as at 31 August 2009 stands at R1,8 billion of which
R0,6 billion will be carried over into the 2011 financial year.
Civils Inland
This division, operating in Gauteng, has shown a 113,0% increase in revenue to
R195,0 million (2008: R91,6 million) and an operating profit of R18,7 million
(2008: R2,3 million), translating into a satisfactory operating profit margin
of 9,6% (2008: 2,5%).
As has been previously reported, Civils Inland is a 15% joint venture partner
in the Gauteng Freeway Improvement Contractors Consortium ("GFIC"). GFIC was
awarded a R1,9 billion contract by SANRAL for the upgrade of the 18 km freeway
between the 14th Avenue and Buccleuch interchange. Work on this project is
progressing well. In addition, Civils Inland has completed the new taxiway at
OR Tambo International Airport, various projects within and around the Soccer
City Stadium as well as other 2010 related infrastructure projects.
Civils Coastal
This division reported a 20,1% increase in revenue from R265,3 million (2008)
to R318,7 million for the period. Operating profit rose by an impressive 121,6%
from R11,6 million (2008) to R25,7 million, primarily as a result of key
contracts including the eThekwini AC replacement water pipeline contract, the
R102 road construction project (an alternative road from the new King Shaka
International Airport to the N2) and the M41 road improvement contract from Mt
Edgecombe to Phoenix. This division`s operating margin is at 8,1% compared to
the previous period`s 4,4%.
In the prior year, contract work performed in Mpumalanga was included under
this division. This is now being reported separately as Civils North.
Civils Central
This division`s revenue was up 103,8% to R279,8 million (2008: R137,3 million)
and operating profit up 110,5% to R37,5 million from work done primarily in the
Free State and Northern Cape. An operating profit margin of 13,4% (2008: 13,0%)
was reported for the period.
The results have been positively impacted by work done on the N8 Bloemfontein
interchange, UMK mine infrastructure and the Intermodal taxi rank in the
Bloemfontein CBD. We have recently commenced with the 50 KVA upgrade of the 800
km Sishen- Saldanha railway line, an exciting project with highly innovative
engineering solutions provided to Spoornet.
Civils North
This division has shown a 78,8% increase in revenue to R109,7 million (2008:
R61,4 million), a 461,9% increase in operating profit to R8,7 million (2008:
R1,5 million) and an operating margin of 7,9% (2008: 2,5%) from work done
primarily in Mpumalanga.
Significant contracts have included the upgrading of the R40 from Nelspruit to
White River and the upgrading of access roads at the Steelpoort mine of
Xstrata.
Specialist Contractors
This division has shown a decline of 12,8% in revenue to R266,0 million (2008:
R305,2 million) and an operating loss of R4,7 million for the period.
The Specialist Contractors division includes the Buildings, Road Surfacing,
Piling, Conform and Property Development businesses.
The Piling business is a key niche player with significant potential to expand.
A key contract for this business has been the lateral support work done at the
Zuikerbosch pump station for Rand Water Board.
Conform, a concrete sliding business, is well positioned to benefit
significantly from an upturn in the mining industry and from future anticipated
Eskom projects. Performance was down during this period as a result of various
large-scale capital projects either being delayed or postponed and the mining
industry being negatively impacted by the low commodity prices.
The Road Surfacing business has been focused on a major contract for the
surfacing of the runways and other areas at the King Shaka International
Airport. The major challenge posed by this project for all concerned is meeting
the demanding completion deadlines.
The Property Development business is focused primarily on developments in
KwaZulu- Natal. As with most developers, they have been impacted by the current
slump in the property market. The Property Development business is not seen as
a core part of the group going forward.
The Buildings business in KwaZulu-Natal has been severely impacted by the slump
in the private sector market that accounted for the majority of the work. A
thorough review of this business has resulted in the replacement of the entire
management team, implementation of sound reporting systems and review
procedures and a renewed focus on specific projects going forward.
BEE
Sanyati remains a "Level 4" contributor in terms of the Department of Trade and
Industry`s BBBEE Code of Good Practice. When last audited, the group`s direct
BEE shareholding was 42,4%.
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 the JSE Limited
("JSE") Listings Requirements. Other than IAS 1 and IFRS 8, 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.
Consequently the comparative information has been restated for the new
disclosures as required in IAS 1 and IFRS 8.
DIRECTORATE CHANGES
On 1 May 2009, Malcolm Lobban was appointed as Chief Executive Officer and Rick
Jackson assumed the role of Chairman. On 1 August 2009, Marc Krouse resigned as
Group Financial Director and was replaced by John Deeb as an Executive Director
and Chief Financial Officer.
PROSPECTS
While the current market conditions have negatively impacted the construction
market as a whole, the markets within which Sanyati is active still represent
significant opportunities.
The current economic conditions have also led us to focus on our core business.
In addition, we are also concentrating on cash management and on ensuring that
our structures are as cost-effective as possible.
In addition to the confirmed order book shown above, the group tendered on
projects to the value of R741 million that are pending award.
We believe that Sanyati is well positioned to take advantage of the
opportunities going forward and remains committed to pushing the boundaries in
the delivery of life changing engineering solutions.
Malcolm Lobban John Deeb
Chief Executive Officer Chief Financial Officer
27 October 2009
Durban
CORPORATE INFORMATION
Sanyati Holdings Limited
("Sanyati" or "the company" or "the group")
(Registration number 1988/002538/06)
Share code: SAN ISIN: ZAE000081055
Directors: RD Jackson* (Chairman), MH Lobban (CEO), JJ Deeb (CFO), R Crowie*
HM Dlamini*, MR Gahagan*, N Khambule*, MJ Sangweni (*Non-executive)
Registered office: Hibiscus, Sanyati Park, 3 Abrey Road, Kloof, KwaZulu-Natal,
3610
PO Box 1055, Kloof, KwaZulu-Natal, 3640
Sponsor: Exchange Sponsors (2008) (Pty) Limited
Transfer secretaries: Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg, 2001
PO Box 61763, 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: 27/10/2009 07:12:01 Produced by the JSE SENS Department.
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