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Ist Group Limited - Reviewed Interim Results For The 6 Months Ended 31 August
Release Date: 14/10/2003 09:30:00 Code(s): IST
IST Group Limited - Reviewed Interim Results for the 6 months ended 31 August
2003
IST GROUP LIMITED
Reg no. 1998/011521/06
ISIN: ZAE000015798
Share code: IST
REVIEWED INTERIM RESULTS
for the 6 months ended 31 August 2003
* Record R420 million order intake for the period
* Focused drive to widen solution offering to existing clients
* Stronger results expected in the second half
CONSOLIDATED INCOME STATEMENT
6 months to 6 months to
31 August 31 August
2003 % 2002
R000 Reviewed Change Reviewed
Revenue 148 582 2.3 145 174
From continuing
operations 147 294 144 209
Other operating income 1 288 965
Cost of sales 113 519 112 422
Gross profit 35 063 32 752
Selling, administration
expenses and salaries 10 952 8 743
Earnings before
financing costs,
taxation, depreciation
and amortisation
("EBITDA") 24 111 0.4 24 009
Depreciation and
amortisation expenses 3 560 3 018
Operating profit 20 551 (2.1) 20 991
Interest received 1 965 1 434
Profit before financing
costs 22 516 22 425
Exchange losses (890) (763)
Exceptional item 500 (4 799)
Profit before taxation 22 126 16 863
Taxation (7 972) (6 428)
Profit after taxation 14 154 10 435
Attributable to outside
shareholders (456) (1 058)
Earnings 13 698 9 377
Calculation of Headline
Earnings
Earnings 13 698 9 377
Foreign loans written off (500) 4 799
Amortisation of goodwill 10 10
13 208 (6.9) 14 186
Earnings per consolidated
share (cents)
Basic 10.6c 35.9 7.8c
Diluted 9.4c 49.2 6.3c
Headline earnings per
consolidated share
Basic 10.2c (13.5) 11.8c
Diluted 9.1c (4.2) 9.5c
Consolidated issued shares
(weighted) (000) 129 524 120 687
Fully diluted shares
(000) 145 864 150 026
Net asset value per
consolidated share 103.4c 92.1c
Tangible net asset value
per consolidated share 89.7c 91.4c
CONSOLIDATED CASH FLOW STATEMENT
6 months to 6 months to
31 August 31 August
2003 2002
R000 Reviewed Reviewed
Cash flows from operating
activities
Cash receipts from customers 158 778 164 192
Cash paid to suppliers
and employees (171 246) (137 832)
Net cash from operating
activities (12 468) 26 360
Interest received 3 099 2 364
Interest paid (1 135) (930)
Dividends paid to group
shareholders (9 874) (7 473)
Tax paid (7 323) (4 803)
Net cash (outflow)/inflow
from operating activities (27 701) 15 518
Cash flows from investing
activities
Purchase of property,
plant and equipment (3 740) (5 028)
Purchase of investment
properties (1 989) (298)
Purchase of intangible assets (16 148) -
Receipts from non-current
investments 151 (13)
Disposal of property, plant
and equipment 1 136 116
Net cash (outflow)/inflow from
investing activities (20 590) (5 223)
Cash flows from financing
activities
Purchase of treasury shares (38) -
Cancellation of option (576) -
Issue of shares - share
option scheme 7 076 899
Proceeds from long-term
borrowings (799) (1 396)
Net cash inflow/(outflow)
from financing activities 5 663 (497)
Net increase/(decrease) in cash
and cash equivalents (42 628) 9 798
Cash and cash equivalents
at beginning of the period 79 663 53 851
Effects of exchange rate changes (785) (26)
Cash and cash equivalents at
end of the period 36 250 63 623
CONSOLIDATED BALANCE SHEET
At At At
31 August 31 August 28 February
2003 2002 2003
R000 Reviewed Reviewed Audited
ASSETS
Non-current assets 68 632 41 010 50 761
Property, plant
and equipment 36 444 32 395 36 227
Investment property 8 870 4 627 6 881
Intangible assets 17 737 911 2 321
Non-current
receivables 5 581 3 077 5 332
Current assets 121 726 152 146 157 475
Inventories 23 607 33 557 27 427
Trade and other
receivables 61 869 54 966 50 385
Cash and cash
equivalents 36 250 63 623 79 663
TOTAL ASSETS 190 358 193 156 208 236
EQUITY AND LIABILITIES
Capital and Reserves 133 942 111 201 123 715
Share capital 1 400 1 207 1 198
Share premium 79 841 74 472 73 005
Non-distributable
reserves 3 153 2 3 095
Retained earnings 49 548 35 520 46 417
Minority interest 4 285 3 155 3 829
Non-current
liabilities 7 217 5 077 5 605
Interest-bearing
borrowings 856 2 283 1 107
Deferred tax
liabilities 6 361 2 794 4 498
Current liabilities 44 914 73 723 75 087
Trade payables and
other liabilities 27 698 46 623 61 789
Advance receipts 14 571 18 061 9 008
Current tax
liabilities 645 6 381 1 859
Shareholders for
dividends 119 1 2
Current portion of
interest-bearing
borrowings 1 881 2 657 2 429
TOTAL EQUITY AND
LIABILITIES 190 358 193 156 208 236
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
6 months to 6 months to 12 months to
31 August 31 August 28 February
2003 2002 2003
R000 Reviewed Reviewed Audited
Share capital 1 400 1 207 1 198
Balance at beginning
of the period 1 198 1 181 1 181
Exercise of Coronation
FRM share options 195 26 -
Exercise of staff
share options 7 - 31
Shares repurchased not
cancelled i.t.o.
general authority - - (14)
Share premium 79 841 74 472 73 005
Balance at beginning
of the period 73 005 73 598 73 598
Exercise of Coronation
FRM share options 6 630 874 -
Exercise of staff
share options 244 - 1 071
Repurchase shares i.t.o
general authority (38) - (1 664)
Non-distributable
reserves 3 153 2 3 095
Balance at beginning
of the period 3 095 - -
Currency translation
differences 58 2 109
Revaluation reserve - - 2 986
Retained earnings 49 548 35 520 46 417
Balance at beginning
of the period 46 417 33 617 33 617
Net profit 13 698 9 377 22 293
Ordinary dividends (10 274) (7 617) (7 473)
Share Purchase Trust
dividends 283 143 -
Cancellation of
options (576) - (2 020)
Ordinary shareholders"
equity at end of the
period 133 942 111 201 123 715
SEGMENTAL REPORT
Revenue Segment Results
6 months 6 months 6 months 6 months
to to to to
31 August 31 August 31 August 31 August
R000 2003 2002 2003 2002
Mechanical 63 378 76 464 11 871 16 256
Electronics 85 204 68 710 9 405 8 758
Head office
and other - - 850 (8 151)
COMMENTS
Review of results
Delays in the awarding of major contracts and the continuing difficult trading
conditions in the engineering technology sector were in line with the group"s
expectations. Revenue growth was marginal but profit before tax rose and fully
diluted earnings per share was up by some 50%. Headline earnings per share
decreased slightly from 9.5 cents to 9.1 cents.
In line with the group"s growth strategy a strong drive to further develop and
improve the existing product offering to established clients has commenced. The
application of cash resources to a number of longer term projects has been
carefully managed, with the largest spend concentrated in the Mechanical group
of companies. Higher dividend payments and a 24% increase in taxation as a
result of STC also had a negative impact on the group"s cash resources, as did
the funding shortfall caused by the contract delays.
Inventory levels were lower than in the corresponding period in 2002 as a result
of improved inventory management as well as a reduced activity level in IST
Dynamics.
Review of operations
The operational highlight of this period was the exceptional order inflow with
the receipts totalling R420 million for the six month period. The R260 million
contract awarded to IST Nuclear by the Pebble Bed Modular Reactor Company for
the detailed design of three key systems for the PBMR demonstration plant
represents the largest single contract in the IST group"s history. It will be
executed over 42 months and is budgeted to generate additional revenue of some
R19 million in the latter half of the current calendar year.
The delays in the receipt of the PBMR contract and in the timing of a major
contract for IST Dynamics did however have a negative effect on the Mechanical
group"s revenue, which was 17% lower than in the corresponding period of the
previous year.
The Electronics group, on the other hand, had a strong first half, producing a
healthy growth in revenue of 24% over the previous year.
Dividend
It is IST"s policy to consider dividend payments at the end of its financial
year.
Accounting policies
The accounting policies and methods of computation applied are consistent with
those applied in the financial statements for the year ended 28 February 2003
and are in compliance with Statements of Generally Accepted Accounting Practice
of SA and in the manner required by the South African Companies Act 1973.
The financial information set out in this announcement has been reviewed, but
not audited, by PricewaterhouseCoopers Inc., whose review report is available
for inspection at the company"s registered office.
Corporate governance
The directors of IST Group Limited and its subsidiaries confirm their commitment
to the principles of openness, integrity and accountability as advocated in the
second King Report on Corporate Governance.
Prospects
All the delayed contracts have now been awarded and the group currently has a
healthy order book. In addition, the major product development expenditure has
largely been completed. The effect of this is that cash reserves will again
start to rise and the group"s marketing effort will be enhanced by the expanded
offering. IST should produce a stronger performance in the second half of the
year, and is expected to achieve earnings increase similar to that of last year.
The group continues its active pursuit of appropriate acquisition opportunities
and two prospective targets are currently in the final stages of evaluation.
Gary Morolo Harry Coetzee
Chairman Chief Executive
Pretoria 14 October 2003
Directors
G Morolo* (Chairman), L Robertson* (Deputy Chairman), H Coetzee (Group CEO), J
Blignaut*#, N Kuper*, A Moffat*, T Steyn, E Toerien, J Visagie
(* Non-executive director, Independent)
Transfer secretaries
Computershare Limited, 70 Marshall Street, Johannesburg 2001
Registered office
IST Building, 221 Garstfontein Road, Menlyn, Pretoria, 0145 * Tel: +27 12 426
7200, Fax: +27 12 348 9472, E-mail: ist@ist.co.za
www.istltd.com
Stakeholder and media relations
For further information contact Kathy du Plessis at Tel: +27 11 728 4701, Fax:
+27 11 728 2547, E-mail: ist@dpapr.com
Date: 14/10/2003 09:30:10 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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