| Mon 16 May 2011, 14:00 | | SAN - Sanyati Holdings Limited - Condensed consolidated audited results for the |
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SAN
SAN
SAN - Sanyati Holdings Limited - Condensed consolidated audited results for the
year ended 28 February 2011
SANYATI HOLDINGS LIMITED
Incorporated in the Republic of South Africa
Registration number: 1988/002538/06
Share code: SAN
ISIN code: ZAE000081055
("Sanyati" or "the Company" or "the Group"))
CONDENSED CONSOLIDATED AUDITED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2011
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
2011 2010
Audited Audited
(R`000) (R`000)
Continuing operations
Revenue 1 533 062 1 997 166
Contracting costs (1 355 497) (1 732 253)
Gross profit 177 565 264 913
Other income 4 923 3 459
Administrative and operating (108 492) (95 634)
expenses
Profit before depreciation, 73 996 172 738
change in estimates and
impairment
Depreciation (20 241) (20 143)
Profit before change in 53 755 152 595
estimates and impairment
Changes in accounting estimates - (50 245)
Profit before goodwill 53 755 102 350
impairment
Goodwill impairment (154 755) -
(Loss)/profit before interest (101 000) 102 350
and tax
Investment income 16 223 15 575
Interest expense (21 982) (14 792)
(Loss)/profit before taxation (106 759) 103 133
Taxation expense (13 659) (34 317)
(Loss)/profit from continuing (120 418) 68 816
operations
Discontinued operations
Loss from discontinued - (15 832)
operations (net of income tax)
(Loss)/ profit for the year (120 418) 52 984
Other comprehensive income - -
Total comprehensive (120 418) 52 984
(loss)/income for the year
Earnings per share from
continuing operations:
Basic (loss)/ earnings per (29.75) 17.44
share (cents)
Diluted (loss)/ earnings per (29.75) 16.97
share (cents)
Fully diluted (loss)/ earnings (26.71) 15.27
per share (cents)
Headline earnings per share 8.46 17.62
(cents)
Diluted headline earnings per 8.46 17.15
share (cents)
Fully diluted headline earnings 7.60 15.42
per share (cents)
Earnings per share from total
operations:
Basic (loss)/ earnings per (29.75) 13.43
share (cents)
Diluted (loss)/ earnings per (29.75) 13.07
share (cents)
Fully diluted (loss)/ earnings (26.71) 11.75
per share (cents)
Headline earnings per share 8.46 14.53
(cents)
Diluted headline earnings per 8.46 14.14
share (cents)
Fully diluted headline earnings 7.60 12.72
per share (cents)
Reconciliation between earnings
and headline earnings from
continuing operations:
Basic earnings from continuing (120 418) 68 816
operations
Impairment of goodwill 154 755 -
Fair value adjustment of (269) 1 020
investment property
Net loss/(profit) on sale of 190 (318)
assets
Headline earnings from 34 258 69 518
continuing operations
Reconciliation between earnings
and headline earnings from
total operations:
Basic earnings from total (120 418) 52 984
operations
Impairment of goodwill 154 755 -
Fair value of investment (269) 1 020
property
Net loss on sale of assets 190 628
Fair value adjustment of non- - 2 713
current assets held for sale
Headline earnings from total 34 258 57 345
operations
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
2011 2010
Audited Audited
(R`000) (R`000)
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 180 968 179 192
Investment property 2 508 2 135
Goodwill 349 703 504 458
Investment in associate 12 982 -
Deferred tax asset 19 787 20 008
Total non-current assets 565 948 705 793
CURRENT ASSETS
Inventory 63 959 85 649
Trade and other receivables 318 178 553 807
Gross amount due from customers 129 804 62 278
Tax assets 4 320 3 159
Cash and bank balances 3 510 68 391
Total current assets 519 771 773 284
Non-current assets classified 9 963 21 080
as held-for-sale
TOTAL ASSETS 1 095 682 1 500 157
EQUITY AND LIABILITIES
Total equity 648 047 766 808
NON-CURRENT LIABILITIES
Interest bearing borrowings 49 453 62 261
Deferred tax liabilities 54 584 45 691
Total non-current liabilities 104 037 107 952
CURRENT LIABILITIES
Trade and other payables 200 955 401 868
Gross amount due to customers 37 108 112 222
Current portion of interest 29 933 38 843
bearing borrowings
Vendor liabilities 16 731 38 318
Taxation 207 18 898
Bank overdrafts 53 852 3 933
Total current liabilities 338 786 614 082
Liabilities directly associated 4 812 11 315
with non-current assets
classified as held-for-sale
Total liabilities 447 635 733 349
TOTAL EQUITY AND LIABILITIES 1 095 682 1 500 157
SUPPLEMENTARY INFORMATION
2011 2010
Audited Audited
Capital expenditure (R`000) (16 705) (45 073)
Weighted average number of shares (`000) 404 798 394 645
Number of shares in issue (`000) 450 802 440 037
Diluted weighted average number of (`000) 404 798 405 410
shares in issue
Fully diluted number of shares (`000) 450 802 450 802
Net asset value (NAV) per share (cents) 143.8 174.3
Net tangible asset value (NTAV) per (cents) 66.2 59.6
share
Operating (EBITDA) margin (%) 4.8 8.6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
2011 2010
Audited Audited
(R`000) (R`000)
Cash flows from operating
activities
Cash generated from operations 74 824 109 065
before working capital changes
Changes in working capital (86 234) 7 391
Cash (utilised in)/ generated (11 410) 116 456
by operations
Net interest (paid)/received (5 759) 783
Taxation paid (24 397) (28 704)
Net cash (utilised (41 566) 88 535
in)/generated from operating
activities
Net cash utilised in investing (23 031) (26 463)
activities
Net cash utilised in financing (50 203) (32 050)
activities
Total cash movement for the (114 800) 30 022
year
Cash and cash equivalents at 64 458 34 436
the beginning of the year
Cash and cash equivalents at (50 342) 64 458
the end of the year
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Share Share
capital Shares Treasury Retained based Total
and to be payment
premium issued shares earnings reserve equity
(R`000) (R`000) (R`000) (R`000) (R`000) (R`000)
Balance at 1 494 978 76 891 (24 000) 154 183 7 478 709 530
March 2009
Total - - - 52 984 - 52 984
comprehensive
income for
the year
Share - (42 027) - - (649) (42 676)
adjustments
Share issue 46 970 - - - - 46 970
Treasury 12 220 - (12 220) - - -
share
consolidation
Balance at 1 554 168 34 864 (36 220) 207 167 6 829 766 808
March 2010
Total - - - (120 418) - (120 418)
comprehensive
loss for the
year
Share option - - - - 1 657 1 657
movement
Share issue 34 864 (34 864) - - - -
Balance at 28 589 032 - (36 220) 86 749 8 486 648 047
February 2011
SEGMENTAL ANALYSIS
Revenue Revenue Profit/ Profit/
(loss) (loss)
before before
goodwill goodwill
impairment impairment
and tax and tax
2011 2010 2011 2010
Audited Audited Audited Audited
R`000 R`000 R`000 R`000
Central 801 244 680 448 40 315 66 814
External revenue 742 888 680 448
Intersegment revenue 58 356 -
Coastal 477 834 737 678 22 483 7 689
External revenue 450 595 712 186
Intersegment revenue 27 239 25 492
North 272 552 495 203 10 328 48 202
External revenue 268 660 477 241
Intersegment revenue 3 892 17 962
Piling 43 219 85 303 (14 062) (10 187)
External revenue 40 879 71 671
Intersegment revenue 2 340 13 632
Conform 21 441 42 784 (6 706) 2 643
External revenue 18 046 22 742
Intersegment revenue 3 395 20 042
Properties 12 287 32 878 (4 362) (12 066)
External revenue 11 994 32 878
Intersegment revenue 293 -
Shared services - 38 792 - 38
External revenue - -
Intersegment revenue - 38 792
Intersegment (95 515) (115 920) - -
Goodwill impairment (154 755)
Total per statement of 1 533 062 1 997 166 (106 759) 103 133
comprehensive income
Overview of the Year
The challenging trading conditions already evident in the domestic construction
market last year continued to be experienced throughout this financial year. The
characteristics of an oversupply of construction capacity and the slow
turnaround in the adjudication and award of tenders continue to be dominant
factors in our industry.
The Group`s disappointing financial results were a direct consequence of this
difficult trading environment with headline earnings per share of 8.46 cents a
share (a reduction of 52% on the prior year). Turnover of R1.53b was 23% down on
the prior year. Our EBITDA margin of 4.8% (8.6% in the prior year) is similarly
a reflection of tight trading conditions and reduced volumes of activity.
The trading result of our core civil construction business was a reduction in
EBITDA of 40% on the prior year. The Sanyati North division was the poorest
performer as a result of its inability to secure sufficient contract
opportunities following completion of two major projects early in the financial
year and mobilization delays on the Medupi contract. The Coastal business was
severely impacted by the delay with the award of the Western Aqueduct project by
Ethekwini Municipality and the holding costs of key resources associated
therewith. Sanyati Central produced a very credible result in difficult trading
conditions.
The Specialist Contracting businesses were severely impacted by lack of activity
in their chosen markets resulting in an aggregate EBITDA loss of R14m for the 12
month period.
The reduction in activity levels called for decisive right sizing action and an
aggregate reduction of 260 permanent staff during the year. The total cost of
these retrenchments was R4.9m. Every effort has nevertheless been made to
retain core skills as a platform for future expansion.
During the year, the group acquired a 27% shareholding in Africa Pipe Industries
(Pty) Ltd a manufacturer of spiral welded steel pipe for R13.0 million. The
acquisition is in line with Sanyati`s strategy for expansion into the water
sector.
The Group`s net cash position deteriorated by the amount of R114.8m during the
year. This was primarily due to the investment in working capital of R86.2m and
the settlement of R22m of vendor liabilities.
The net increase in working capital of R86.2m was mainly due to a change in the
type of work undertaken this year as compared to the prior year as well as the
delay with payments on our Free State Roads project near Oliviershoek. We are
confident that this is a temporary situation brought about by a conscious
decision to source new opportunities in a changing environment. A certain number
of these new opportunities offer attractive margins but encompass negative cash
flow profiles in the initial stages of execution. We are confident that this
situation will be reversed in accordance with the underlying contracted payment
terms and as the project life cycles mature in the months ahead.
The Board`s decision to impair the carrying value of goodwill by the amount of
R155 million at 28 February 2011 was arrived at after consideration of both the
economic environment and the short, medium and long term prospects for Sanyati.
The goodwill impaired relates to the Sanyati Piling division (R30 million) and
the Sanyati North division (R125 million). This material impairment has resulted
in the Group incurring a fully diluted loss per share of 26.71 cents for the
period under review.
Looking ahead
The Group`s response to these realities has been to continue to drive our
efforts to reduce our dependence on traditional markets within South Africa. The
objective of identifying attractive opportunities in select countries outside of
South Africa is beginning to bear fruit. The other major objective of leveraging
our position in niche markets offering strong growth prospects within South
Africa has also received much attention during the year.
Positive progress in Uganda and Zambia, a growing business in the laying of
fiber optic cable in South Africa and beyond our borders, the Group`s recent
investment in the spiral welded steel pipe industry for the water distribution
market, new mining clients requiring broad infrastructural services and our
onsite performance and consequent extension of awards in the rail market all
bode well for the future of the Group. The Group`s order book at 28 February was
R866 million with imminent awards of R1 114 million and close prospects of a
further R1 740 million. The imminent awards and close prospects categories
include cross border projects with an aggregate value in excess of R1.6 billion.
The value of the specialist contractor businesses order books for the new
financial year are already equivalent to the entire turnover realised in the
previous 12 months.
BBBEE
Our focused and continued transformation efforts across the organization were
rewarded with our achievement of level 3 contributor status during the year. In
a recent independent review of all companies listed on the JSE Limited, Sanyati
was rated as the 28th most empowered company on the Exchange. A pleasing
statistic was the all important area of employment equity where we were adjudged
the position of 8th across all listed entities.
Board of Directors
Nhanhla Khambule and Hans Michael Dlamini both resigned as non executive
directors during the year, on 27 March 2010 and 25 May 2010, respectively.
John Deeb, the Group Financial Director, resigned at end of April 2011 to take
up a new position outside of South Africa. We thank John for his contribution to
the Group and wish him well for the future. We welcome Aleta Jovner to the
Board. She will assume her duties as the new Group Financial Director on 1 June
2011.
DIVIDENDS TO SHAREHOLDERS
The Board has decided that based on current market conditions, no dividend will
be declared for this financial year.
SUBSEQUENT EVENTS
Subsequent to the financial year end there have been no events other than the
change to the Board of directors, as disclosed above that may impact on the
operations of the Group.
BASIS OF PREPARATION
The audited results for the year ended 28 February 2011 have been prepared in
accordance with the framework concepts and the measurement and recognition
requirements of International Financial Reporting Standards ("IFRS")and the
AC500 standards as issued by the Accounting Practices Board, the South African
Companies Act, as amended and the JSE Listings Requirements and contain the
information required by IAS 34: Interim Financial Reporting and incorporates
responsible disclosure in line with the accounting philosophy of the Group. The
financial information presented above is based on appropriate accounting
policies that are in terms of IFRS and are consistent with those applied in the
prior period and are supported by responsible and prudent judgments and
estimates.
AUDIT OPINION
The Group`s auditors, PKF (Jhb) Inc., have audited the financial information and
their unqualified audit opinion is available for inspection at Sanyati`s
offices.
On behalf of the Board
Zohra Ebrahim Malcolm Lobban
Non-Executive Chairperson Chief Executive Officer
Bryanston 16 May 2011
CORPORATE INFORMATION
Sanyati Holdings Limited ("Sanyati" or "the company" or "the Group")
(Registration number 1988/002538/06) Share code: SAN ISIN: ZAE000081055
Directors: ZB Ebrahim (independent non-executive Chairperson), MH Lobban (Chief
Executive Officer), RM Crowie (non-executive director), MR Gahagan (independent
non-executive director) and LJ Fosu (independent non-executive director)
Registered office: 2nd Floor, Pin Oak House, Ballyoaks Office Park, 35
Ballyclare Drive,
Bryanston, 2191
Transfer secretaries: Computershare Investor Services (Pty) Limited, PO Box
61051,
Marshalltown, 2008
Sponsor: BDO Corporate Finance (Pty) Limited
www.sanyati.co.za
Date: 16/05/2011 14:00:01 Produced by the JSE SENS Department.
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