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ISB
ISB
ISB - Insimbi - Abridged audited results: Year ended 28 February 2010 & Notice
of annual general meeting
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 group")
ABRIDGED AUDITED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2010 AND NOTICE OF
ANNUAL GENERAL MEETING
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
12 months to 12 months to
28 February 28 February
2010 2009
Restated
R`000 R`000
Revenue 611 631 969 674
Cost of sales (534 854) (826 990)
----------- -----------
Gross profit 76 777 142 684
Other operating income 1 205 465
Other operating expenses (30 093) (28 255)
Administration expenses (21 092) (31 265)
----------- -----------
Operating profit 26 797 83 629
Investment revenue 1 087 525
Finance costs (10 142) (11 275)
----------- -----------
Profit before taxation 17 742 72 879
Taxation (7 100) (21 289)
----------- -----------
Profit for the year 10 642 51 590
Other comprehensive income:
Currency translation differences 56 78
----------- -----------
Other comprehensive income for the year 56 78
net of tax ----------- -----------
Total comprehensive income for the year 10 698 51 668
=========== ===========
Attributable to:
Equity holders 10 698 51 668
----------- -----------
EARNINGS & HEADLINE EARNINGS PER SHARE
Audited Audited
12 months to 12 months to
Headline earnings for the group have 28 February 28 February
been computed as follows: 2010 2009
Restated
R`000 R`000
Profit attributable to ordinary
shareholders 10 698 51 668
Adjusted for loss/profit) on sale of
property, plant and equipment 22 (97)
Adjusted for impairment of property, - 595
plant and equipment ------------ ------------
Headline earnings 10 720 52 166
============ ============
Number of shares in issue 260 000 260 000
Less: Treasury shares held in a (342) (12)
subsidiary at the end of the year ------------ ------------
259 658 259 988
============ ============
Basic and fully diluted:
Earnings per share (cents) 4,12 19,87
Headline earnings per share (cents) 4,13 20,06
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited Audited
As at 28 As at 28
February February
2010 2009
Restated
R`000 R`000
Assets
Non-Current Assets
Property, plant and equipment 23 277 19 394
Goodwill 39 938 39 938
Investment in subsidiaries - -
Deferred tax 4 180 2 724
----------- -----------
67 395 62 056
----------- -----------
Current Assets
Inventories 54 883 75 834
Other financial assets 453 -
Taxation 283 -
Trade and other receivables 101 570 89 369
Cash and cash equivalents 27 177 42 196
----------- -----------
184 366 207 399
----------- -----------
Total Assets 251 761 269 455
=========== ===========
Equity and Liabilities
Equity
Share capital and premium 44 442 44 442
Reserves 134 78
Retained earnings 28 598 36 156
Treasury Shares (238) (8)
----------- -----------
72 936 80 668
----------- -----------
Liabilities
Non-Current Liabilities
Borrowings 42 222 55 993
----------- -----------
42 222 55 993
----------- -----------
Current Liabilities
Current portion of borrowings 32 174 10 127
Taxation 6 094 10 153
Trade and other payables 98 335 112 161
Other financial liabilities - 353
----------- -----------
136 603 132 794
----------- -----------
Total Liabilities 178 825 188 787
----------- -----------
Total Equity and Liabilities 251 761 269 455
=========== ===========
Net asset value per share (cents) 28.09 31.02
Tangible net asset value per 12.71 15.67
share(cents)
CONSOLIDATED STATEMENT OF CASH FLOWS
Audited Audited
12 months to 12 months to
28 February 28 February
2010 2009
Restated
R`000 R`000
Cash flows from operating activities
Cash generated from operations 24 907 111 807
Investment revenue 1 087 525
Finance costs (10 142) (11 275)
Tax paid (12 898) (23 653)
------------ ------------
Net cash generated from operating 2 954 77 404
activities ------------ ------------
Cash flows from investing activities
Purchase of property, plant and (8 060) (13 291)
equipment
Sale of property, plant and equipment 240 967
Purchase of businesses - (10 000)
Purchase of treasury shares (230) (8)
------------ ------------
Net cash utilized in investing (8 050) (22 332)
activities ------------ ------------
Cash flows from financing activities
Proceeds on share issue - 44 442
Decrease in long term borrowings (13 771) (18 669)
Increase/(decrease) in current portion 24 504 (34 391)
of borrowings
Dividends paid (18 200) (19 500)
------------ ------------
Net cash utilized in financing (7 467) (28 118)
activities ------------ ------------
Total cash movement for the year (12 563) 26 954
Cash at beginning of the year 33 848 6 894
------------ ------------
Total cash at the end of the year 21 285 33 848
============ ============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share* Share Treasury Retained Total
capital premium shares Reserves earnings equity
R`000 R`000 R`000 R`000 R`000 R`000
Group
Balance at 1 March - - - - 4 066 4 066
2008
Changes in equity
Comprehensive
income
-Profit for the - - - - 53 746 53 746
year
-Currency - - - - 78
translation 78
differences
Issue of shares - 44 442 - - - 44 442
Dividends - - - - (10 400) (10 400)
Purchase of shares - - (8) - - (8)
by subsidiary ------- ------- ------- -------- -------- --------
Total changes - 44 442 (8) 78 43 346 87 858
------- ------- ------- -------- -------- --------
Balance at 28 - 44 442 (8) 78 47 412 91 924
February 2009 as
previously reported
Prior year - - - - (2 156) (2 156)
adjustment - profit
for the year
Prior year - - - - (9 100) (9 100)
adjustment - equity ------- ------- ------- ------- ------- -------
Restated balance at - 44 442 (8) 78 36 156 80 668
28 February 2009
Changes in equity
Comprehensive
income
-Profit for the - - - - 10 642 10 642
year
-Currency - - - - 56
translation 56
differences
Dividends - - - - (18 200) (18 200)
Purchase of shares - - (230) - - (230)
by subsidiary ------- ------- ------- -------- -------- --------
Total changes - - (230) 56 (7 558) (7 732)
------- ------- ------- -------- -------- --------
Balance at 28 - 44 442 (238) 134 28 598 72 936
February 2010 ======= ======= ======= ======== ======== ========
* Share capital equals 260 000 000 of 0,000025 cents each = R65,00. Shares
repurchased by a subsidiary and held in treasury amount to 341 700 (2009: 12
000) at year end which are disclosed as a reduction of equity.
SEGMENTAL REPORTING
Set out below is the revenue and operating profit before finance income by
segment.
Audited Audited
12 months to 12 months to
28 February 28 February
2010 2009
R`000 R`000
Revenue by division
Foundry 122 670 249 914
Steel 153 530 314 539
Non Ferrous 63 941 120 846
Rotary Kiln 74 789 96 912
Refractory 15 562 21 971
Textiles 7 708 4 892
Speciality 50 914 70 158
KZN 47 722 70 413
Cape Town 43 688 -
Mechanical 16 735 -
Aluminium 13 271 -
Other 1 101 20 003
------------ ------------
611 631 969 648
============ ============
Operating profit before finance income
by division
Foundry 9 763 38 887
Steel 10 137 36 419
Non Ferrous 11 129 11 265
Rotary Kiln 8 186 9 782
Refractory 20 2 118
Textiles (970) (603)
Speciality 7 551 14 824
KZN 4 076 10 831
Cape Town 3 642 -
Mechanical 3 497 -
Aluminium (4 967) -
Other (26 472) (40 386)
------------ ------------
25 592 83 187
============ ============
There is no disclosure of segment assets and liabilities as it is not possible
to specifically allocate tangible assets and liabilities to specific segments.
Management has determined the operating segments based on the reports reviewed
and this is supported by management reporting disciplines, which include monthly
variance reporting. Insimbi`s performance is monitored continuously and issues
arising are addressed at monthly management meetings that have board
representation present.
Management considers the business from both a geographical and product
management perspective. Management assesses the performance of the operating
segments based on measures such as gross and operating profit.
All operating segments except for the Aluminium segment, form part of the
Insimbi Alloy Supplies (Proprietary) Limited cash generating unit.
COMMENTARY
The directors of Insimbi are pleased to announce the audited results for the
year ended 28 February 2010.
1. Basis of Preparation and Accounting Policies
The results for the year ended 28 February 2010 have been prepared in accordance
with International Financial Reporting Standards ("IFRS"), specifically IAS 34
Interim Financial Reporting and AC 500 Statements, and comply with the
requirements of the Companies Act and the Listings Requirements of the JSE
Limited. Except for the adoption of the new and revised accounting standards,
the principle accounting policies applied by the group in the abridged
consolidated financial results for the year ended 28 February 2010 are
consistent with those applied in the consolidated financial statements for the
year ended 28 February 2009. The results have been audited by
PricewaterhouseCoopers Inc. Their unqualified audit report and the audited
financial statements are available for inspection at the company`s registered
office.
The format of the financial statements presented has been revised to bring it in
line with the revisions to IAS 1 Presentation of Financial Statements. The group
also adopted IFRS 8 Operating Segments which requires that the segments
presented are consistent with those used internally by management to make
operating decisions. Comparative information has been restated where necessary.
The adoption of these standards and amendments did not impact the group`s
financial results.
Prior year results were restated and reclassified and a summary of the
adjustments are as follows:
A foreign exchange contract asset amounting to R2.8million, recognised in the
financial year 2008, was not reversed and has now been expensed within profit
for the financial year 2009;
A dividend paid in the financial year 2009 was previously accounted for as a
loan receivable (R9.1million asset). The treatment has been corrected and
R9.1million has been adjusted for against retained earnings as a dividend;
An investment in Insimbi Thermal Insulations (Proprietary) Limited was
incorrectly treated as an associate investment. The investment should have been
fully consolidated and is now treated as a wholly owned subsidiary and
consolidated from the financial year 2009. This has resulted in a net adjustment
of R154,000 against retained earnings; and
Reclassification adjustments amounting to R10.1 million have been made to the
balance sheet of financial year 2009. The adjustments relate mainly to the
reclassification of bank borrowings and non - current liabilities.
2. Review of activities
Insimbi acquired land and buildings comprising warehouse and office space for an
amount of R 6 680 000 on 1 March 2009. The rationale behind this acquisition was
to strengthen the Insimbi brand and presence in the Western Cape and the
location of the property, comprising warehouse and office space in Atlantis, is
strategically place to service our larger customers in Saldanha, Atlantis and
Riebeek West.
3. Financial Review
The slow down in commodity prices and volumes as a result of the global economic
recession continued throughout the year under review. This was especially
noticeable in the steel, aluminium and foundry industries where volumes
decreased due to lower production levels. As expected, the financial year ended
28 February 2010 proved to be one of the most challenging periods in Insimbi`s
40 year history and while EPS and HEPS were down on the previous period by 79.2%
and 79.4% respectively, management is satisfied that the company remained
profitable during the recessionary climate which prevailed throughout the period
and no impairment of intangible and tangible assets were required. Operating and
administrative costs were well controlled and were 13.6%(R8.3 million) lower
than the previous period.
4. Market and Prospects
The recovery in the markets that Insimbi anticipated in the final financial
quarter of the year ended 28 February 2010, did not materialise. However, there
have been very clear and promising signs that this recovery is now underway and
in particular, we have seen the reports and forecasts by the larger South
African steel producers and automotive manufacturers recently, which lend
support to this.
Certainly commodity prices in many cases, have doubled when compared to the
beginning of our financial period just ended and we are cautiously optimistic
that a sustainable recovery is underway in almost all of our target markets.
Exports have also started picking up.
The diversification of our product and service offering continues to add to our
revenues and profitability and this diversity have also provided Insimbi with
some resilience during the difficult year behind us.
5. Special resolutions
At the Annual General Meeting held on 23 September 2009, it was resolved that
the directors be authorised to re-purchase up to 10% of the company shares
subject to certain conditions.
6. Post balance sheet events
Insimbi acquired the fixed assets and business of Metalloy Fibres (Proprietary)
Limited, previously a wholly owned subsidiary of Nimag (Proprietary) Limited,
itself a wholly owned subsidiary of Coal of Africa Limited, for an amount of
R1,0 million, effective 1 March 2010. This operation has been divisionalised
into Insimbi Alloy Supplies (Proprietary) Limited. It produces steel fibres and
sells these, along with polypropylene fibres, into the concrete industry for
specialised applications mainly in the infrastructure arena.
7. 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
CF Botha
F Botha
E P Liechti
G S Mahlati
LY Mashologu
DJ O`Connor
P J Schutte
LG Tessendorf (alternate to CF Botha)
8. Authorised and issued capital
The authorized capital is 12 billion shares. Currently there are 260 million
shares in issue. Shares repurchased by a subsidiary and held in treasury
amounted to 341 700 shares at year end, which is disclosed as a reduction of
equity in the statement of changes in equity.
9. Dividends
Interim dividend Number 3 of 2 cents per share was declared on 9 October 2009,
payable to shareholders registered on 26 October 2009. The total payout was R5
200 000,00 (2009: R10 400 000,00).
No final dividend has been declared (2009: R13 000 000,00)
10. 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.
11. 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 9 July 2010 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
19 May 2010
Registered office: Stand 359 Crocker Road, Wadeville, Germiston, 1422
Company Secretary: FBB Abdul Gany (acting)
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
28 May 2010
Date: 28/05/2010 09:00:02 Produced by the JSE SENS Department.
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