| Mon 24 Oct 2011, 16:00 | | SAN - Sanyati Holdings Limited - Unaudited interim results for the six months |
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SAN
SAN
SAN - Sanyati Holdings Limited - Unaudited interim results for the six months
ended 31 August 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")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2011
CONDENSED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2011 2010 2011
% change R`000 R`000 R`000
CONTINUING OPERATIONS
Revenue (10,9) 762 117 855 335 1 533 062
Contracting costs (679 107) (758 424) (1 355 497)
Gross profit 83 010 96 911 177 565
Other income 3 134 4 063 4 923
Administrative and
operating expenses (53 784) (56 634) (108 492)
Profit before depreciation
(EBITDA) (27,0) 32 360 44 340 73 996
Depreciation (12 434) (9 113) (20 241)
Operating profit before
goodwill impairment (43,4) 19 926 35 227 53 755
Goodwill impairment - - (154 755)
Income from associate 1 119 - -
Operating profit/(loss)
before interest and
taxation (40,3) 21 045 35 227 (101 000)
Interest income 6 126 2 046 16 223
Interest expense (8 463) (6 967) (21 982)
Profit/(loss) before tax (38,3) 18 708 30 306 (106 759)
Tax expense (5 238) (8 486) (13 659)
Profit/(loss) for the period
from continuing operations(38,3) 13 470 21 820 (120 418)
DISCONTINUED OPERATIONS
Profit from discontinued
operations (net of income tax) - 461 -
Profit/(loss) for the period 13 470 22 281 (120 418)
Other comprehensive income - - -
Total comprehensive income/
(loss) for the period (39,5) 13 470 22 281 (120 418)
Earnings per share from
continuing operations (cents)
Basic earnings/(loss) per
share (40) 3,29 5,46 (29,75)
Diluted earnings/(loss)
per share (34) 3,29 4,95 (29,75)
Fully diluted earnings/
(loss)per share (38) 2,99 4,84 (26,71)
Headline earnings per share (43) 3,09 5,42 8,46
Diluted headline
earnings per share (37) 3,09 4,91 8,46
Fully diluted headline
earnings per share (42) 2,81 4,81 7,60
Earnings per share from total
operations (cents)
Basic earnings/(loss) per
share (41) 3,29 5,57 (29,75)
Diluted earnings/(loss)
per share (35) 3,29 5,05 (29,75)
Fully diluted earnings/
(loss) per share (40) 2,99 4,94 (26,71)
Headline earnings per share (44) 3,09 5,53 8,46
Diluted headline
earnings per share (38) 3,09 5,02 8,46
Fully diluted headline
earnings per share (43) 2,81 4,91 7,60
Reconciliation between
earnings from
continuing operations
and headline earnings from
continuing operations
Profit/(loss) for the period 13 470 21 820 (120 418)
Impairment of goodwill - - 154 755
(Profit)/loss on
disposal of property,
plant and equipment (1 121) (211) 264
Fair value adjustment - - (373)
Tax adjustment 314 59 30
Headline earnings from
continuing operations 12 663 21 668 34 258
Reconciliation between
earnings and headline earnings
Profit/(loss) for the period 13 470 22 281 (120 418)
Impairment of goodwill - - 154 755
(Profit)/loss on disposal
of property, plant and
equipment (1 121) (211) 264
Fair value adjustment - - (373)
Tax adjustment 314 59 30
Headline earnings 12 663 22 129 34 258
CONDENSED CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
Unaudited Unaudited Audited
As at As at As at
31 August 31 August 28 February
2011 2010 2011
R`000 R`000 R`000
ASSETS
Non-current assets 565 496 712 819 565 948
Property, plant and equipment 173 027 184 919 180 968
Investment property 2 508 2 135 2 508
Goodwill 349 703 504 458 349 703
Investment in associate 14 102 - 12 982
Deferred tax 26 156 21 307 19 787
Current assets 655 111 665 560 519 771
Inventories 59 540 74 491 63 959
Trade and other receivables 457 827 443 368 322 498
Gross amount due from customers 108 831 96 217 129 804
Cash and cash equivalents 28 913 51 484 3 510
Non-current assets classified as held
for sale 8 523 11 634 9 963
TOTAL ASSETS 1 229 130 1 390 013 1 095 682
EQUITY AND LIABILITIES
Total equity 662 351 790 216 648 047
Share capital and premium 552 812 552 812 552 812
Share-based payment reserve 9 320 7 956 8 486
Accumulated profits 100 219 229 448 86 749
Non-current liabilities 104 658 100 670 104 037
Interest-bearing borrowings 38 467 48 535 49 453
Deferred taxation 66 191 52 135 54 584
Current liabilities 458 411 492 952 338 786
Trade and other payables 318 322 333 030 201 162
Gross amount due to customers 18 373 59 808 37 108
Bank overdraft 81 188 45 950 53 852
Current portion of vendor liabilities 15 501 18 028 16 731
Current portion of interest-bearing
borrowings 25 027 36 136 29 933
Liabilities directly associated with
non-current assets classified as
held for sale 3 710 6 175 4 812
Total liabilities 566 779 599 797 447 635
TOTAL EQUITY AND LIABILITIES 1 229 130 1 390 013 1 095 682
SUPPLEMENTARY INFORMATION
Unaudited Unaudited Audited
As at As at As at
31 August 31 August 28 February
2011 2010 2011
Capital expenditure (R`000) 4 516 5 505 16 705
Number of shares in issue (`000) 409 803 409 803 409 803
Weighted average number of
shares (`000) 409 803 399 875 404 798
Diluted number of shares (`000) 409 803 440 875 404 798
Fully diluted number of
shares (`000) 450 803 450 803 450 803
Net tangible asset value
(NTAV) per share (cents) 76,3 64,8 73,7
Operating (EBITDA) margin (%) 4,2 5,2 4,8
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Share capital Share-based
and payment Accumulated Total
premium reserve profits equity
R`000 R`000 R`000 R`000
Balance as at 28
February 2010* 552 812 6 829 207 167 766 808
Total comprehensive income
for the period - - 22 281 22 281
Share based payments - 1 127 - 1 127
Balance as at 31
August 2010** 552 812 7 956 229 448 790 216
Total comprehensive loss
for the period - - (142 699) (142 699)
Share based payments - 530 - 530
Balance as at 28
February 2011* 552 812 8 486 86 749 648 047
Total comprehensive income
for the period - - 13 470 13 470
Share based payments - 834 - 834
Balance as at 31
August 2011** 552 812 9 320 100 219 662 351
*Audited **Unaudited
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2011 2010 2011
R`000 R`000 R`000
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated by operations before
working capital changes 32 072 45 896 74 824
Changes in working capital (14 880) (33 476) (86 234)
Cash generated from/(utilised in)
operations 17 192 12 420 (11 410)
Net interest paid (2 337) (4 921) (5 759)
Taxation received/(paid) 3 367 (19 377) (24 397)
Cash generated from/(utilised in)
operating activities 18 222 (11 878) (41 566)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and
equipment (4 516) (5 505) (16 705)
Proceeds from sale of property,
plant and equipment 2 585 468 5 132
Proceeds on disposal of non-current
assets held for sale - (146) 1 524
Increase in investments - - (12 982)
Cash utilised in investing activities (1 931) (5 183) (23 031)
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in interest-bearing borrowings(15 892) (16 709) (23 512)
Decrease in vendor liabilities (1 230) (20 290) (21 982)
Decrease in liabilities associated with
non-current assets held for sale (1 102) (4 864) (4 709)
Cash utilised in financing activities (18 224) (41 863) (50 203)
Net decrease in cash and cash
equivalents (1 933) (58 924) (114 800)
Cash and cash equivalents at
beginning of period (50 342) 64 458 64 458
Cash and cash equivalents at end of
period (52 275) 5 534 (50 342)
SEGMENTAL REPORT
Unaudited Unaudited Unaudited Unaudited
Revenue Revenue EBITDA EBITDA
Six months Six months Six months Six months
ended ended ended ended
31 August 31 August 31 August 31 August
2011 2010 2011 2010
R`000 R`000 R`000 R`000
Coastal 209 403 282 408 6 298 15 995
External revenue 170 872 282 408
Intersegment revenue 38 531 -
Central 399 348 372 505 17 018 23 335
External revenue 367 226 372 505
Intersegment revenue 32 122 -
North 174 383 160 997 6 455 9 946
External revenue 161 878 156 454
Intersegment revenue 12 505 4 543
Piling 46 315 28 661 2 199 (1 593)
External revenue 39 697 27 972
Intersegment revenue 6 618 689
Conform 24 401 11 345 (413) (1 684)
External revenue 16 311 10 404
Intersegment revenue 8 090 941
Properties 6 253 5 592 803 (1 659)
External revenue 6 133 5 592
Intersegment revenue 120 -
Intersegmental revenue (97 986) (6 173) - -
Total external revenue 762 117 855 335 32 360 44 340
COMMENTARY
Introduction
The Group`s results for the six months ended 31 August 2011 continued to be
impacted by margin pressure in the traditional domestic markets with the roads
market being especially competitive. The Group saw a welcome return to
profitability in the Piling business and an overall positive contribution from
Specialist Contractors was reported for this period. Notwithstanding the
challenging operational conditions, the Group`s stated strategy of achieving
geographical as well as target market diversification is well on track and the
Group was particularly successful in growing the order book to R1,6 billion at
31 August 2011.
Financial overview
Revenue was R762,1 million, down 10,9% from R855,3 million for the comparative
period ended 31 August 2010 and a decline of 27,0% in earnings before
interest, taxation, depreciation and amortisation (EBITDA) to R32,4 million
from R44,3 million for the corresponding interim period. The major contributor
to the decline in EBITDA was margin contraction on certain roads projects
substantially completed by Sanyati Central and Sanyati Coastal at 31 August
2011.
The Group`s operating profit before interest and taxation (R21,0 million
versus R35,2 million) was 40,3% lower than the result achieved to 31 August
2010. Basic earnings per share (EPS) and fully diluted headline earnings per
share (HEPS) decreased by similar percentages to 3,3 cents and 2,8 cents,
respectively.
The statement of financial position reflects a 2,2% increase in shareholders`
equity from R648,0 million as at 28 February 2011 to R662,4 million as at 31
August 2011. Net interest-bearing borrowings as at 31 August 2011 amount to
R135,0 million, which translates into a net gearing ratio of 20,4%.
Total capital expenditure for the six months amounted to R4,5 million compared
to R5,5 million spent over the 2010 interim period.
Cash generated by operations (before working capital changes) was R32,1
million. The increase in working capital funding of R14,9 million during the
period was primarily a result of the on-going payment delay from the Free
State Government - an issue which we expect to be resolved with payment before
the calendar year end.
Operational review
Sanyati Central
Sanyati Central delivered revenue growth of 7,2% to R399,3 million (31 August
2010: R372,5 million) with EBITDA of R17,0 million (margin of 4,3%). The
deterioration in the margin reflects the difficult conditions in the domestic
roads market. A highlight in the period was the successful completion of the
50kva re-electrification project for Transnet.
The major areas of activity included the completion of the Sishen-Saldanha
line for Transnet, significant contract mining work at the UMK Mine in the
Northern Cape and various fibre optic cable laying projects in South Africa,
Zambia and Zimbabwe.
Sanyati Coastal
Sanyati Coastal reported disappointing results with revenue down 25,9% to
R209,4 million from R282,4 million (August 2010) and EBITDA of R6,3 million,
significantly lower than the August 2010 EBITDA of R16,0 million.
The market in KwaZulu-Natal is regarded as the most challenging in South
Africa. Ongoing work on the N11 Bergville/Ladysmith SANRAL project, pipeline
and sundry civil work for Richards Bay Minerals, the successful execution of a
fibre optic project for Plessey and multiple small water projects currently
underway constituted the projects for this business unit.
Sanyati North
The Sanyati North business showed a welcome improvement in the top line result
with revenue increasing by 8,3% to R174,4 million (August 2010: R161,0
million) and we were successful in securing the award of our first roads
contract in Zambia in July 2011. EBITDA nevertheless decreased by 35,1% to
R6,5 million, a reflection of the competitive situation in our traditional
domestic markets.
Sanyati North`s main areas of activity included ongoing civils work at Medupi
for Eskom, two roads contracts for the Roads Agency Limpopo, completion of the
Mooi Plaas road near Barberton, Mpumalanga and a number of mining
infrastructure projects.
Specialist Contractors
Encouraging turnaround was reported by all three businesses with Sanyati
Conform reporting revenue growth of 115,1% to R24,4 million (August 2010:
R11,3 million) and an EBITDA loss of R0,4 million (August 2010: EBITDA loss of
R1,7 million). Sanyati Piling & Geotechnical increased revenue by 61,6% to
R46,3 million (August 2010: R28,7 million) and EBITDA of R2,2 million (August
2010: EBITDA loss of R1,6 million). Conform was successful in securing two
contracts in Zimbabwe in the platinum industry.
Changes to the board of directors
The only change to the board during this period was the appointment of Aleta
Jovner as Chief Financial Officer effective 1 June 2011.
Dividend
No interim dividend has been declared for the six months ended 31 August 2011,
in line with Sanyati`s current dividend policy.
Prospects
Sanyati expects the traditional civil construction market in South Africa
(e.g. roads and earthworks) to remain competitive in the short to medium term.
Our well-publicised strategy of geographical diversification and simultaneous
focus on less traded and more specialised target markets in South Africa and
the rest of Africa therefore remains relevant.
On the geographical diversification front, a Zambian platform has been
established where the Group is currently executing three projects with an
aggregate value of R280 million. Our new entity in Zimbabwe has been
established with reputable local partners and we have secured private sector
work on the mines and in the telecoms industry. This business is well
positioned for the major national roads projects expected to be awarded in the
near term. We remain hopeful that the delays caused by funding difficulties in
Uganda will soon be resolved and that we will successfully conclude road
contracts in that country.
Sanyati has made sound progress in its chosen target markets of rail, mining,
telecommunications and water. The Group has commenced a new project for the
Passenger Rail Agency and also secured a five year rail maintenance contract
with the Richards Bay Coal Terminal. A notable achievement was the award of a
five year mining contract by UMK mining valued in excess of R700 million.
The Group`s strategic investment of a 27% stake in Africa Pipe Industries is
performing in line with expectations and with the significant value of
prospects, a second mill in Mokopane is under consideration. The water
industry remains a key focus area with good prospects in KwaZulu-Natal as well
as the water infrastructure requirements for the major platinum expansion
programmes in the Limpopo Province.
In addition to the order book, Sanyati had imminent awards of R928 million and
close prospects of R1,5 billion at 31 August 2011.
Basis of preparation
The condensed consolidated interim financial statements have been prepared in
accordance with IAS 34 - Interim Financial Reporting, the AC500 Standards as
issued by the Accounting Practices Board and the JSE Limited Listings
Requirements. The accounting policies applied in preparing these condensed
consolidated interim financial statements are consistent with those applied in
the annual financial statements of the previous year end and comply with the
statements of International Financial Reporting Standards (IFRS) and the South
African Companies Act.
The condensed consolidated interim financial statements have not been audited
or reviewed by the Group`s auditors.
Preparation of the unaudited interim results
The unaudited interim financial statements have been prepared under the
supervision of the Chief Financial Officer, A Jovner, B.Com (Hons), CA(SA).
On behalf of the Board
Malcolm Lobban Aleta Jovner
Chief Executive Officer Chief Financial Officer
Bryanston 24 October 2011
Sanyati Holdings Limited ("Sanyati" or "the company" or "the Group")
Registration number: 1988/002538/06 JSE code: SAN ISIN: ZAE000081055
Directors
ZB Ebrahim** (Chairperson), MH Lobban (Chief Executive Officer),
A Jovner (Chief Financial Officer), RM Crowie*, MR Gahagan**, LJ Fosu**
* Non-Executive ** Independent Non-Executive
Registered office
2nd Floor, Pin Oak House, Ballyoaks Office Park, 35 Ballyclare Drive,
Bryanston, 2191
Sponsor
BDO Corporate Finance
(a division of BDO South Africa Advisory Services (Pty) Ltd)
Transfer secretaries
Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg, 2001; PO Box 61051, Marshalltown, 2008
Company Secretary
Highway Corporate Services (Pty) Ltd
14 Hillcrest Office Park, 2 Old Main Road, Hillcrest, 3610
PO Box 1319, Hillcrest, 3650
A copy of the presentation to investors will be available on
www.sanyati.co.za
Date: 24/10/2011 16:00:02 Produced by the JSE SENS Department.
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