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IST GROUP LIMITED - RESULTS FOR THE 6 MONTHS ENDED 31 AUGUST 2004
IST GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/011521/06)
Share code: IST
ISIN: ZAE000015798
(`IST`)
RESULTS FOR THE 6 MONTHS ENDED 31 AUGUST 2004
CONSOLIDATED INCOME STATEMENT
6 MNTHS 6 MNTHS YEAR
TO TO ENDED
31 AUG % 31 AUG 29 FEB
2004 CHANGE 2003 2004
REVIEWED REVIEWED AUDITED
R R R
Revenue 177 159 19.2 148 582 323 491
From continuing
operations 176 135 147 294 320 207
Other operating
income 1 024 1 288 3 284
Cost of sales 143 616 113 518 265 767
Gross profit 33 543 35 064 57 725
Selling, administration
expenses and salaries 23 082 10 952 10 847
Earnings before
financing costs,
taxation, depreciation
and amortisation
(`EBITDA`) 10 461 (56.6) 24 112 46 878
Depreciation and
amortisation
expenses 5 006 3 561 7 569
Operating profit 5 455 (73.5) 20 551 39 309
Interest received 26 1 965 2 402
Profit before
financing costs 5 481 22 516 41 711
Exchange gains/(losses) 675 (890) (1 640)
Exceptional item 220 500 560
Profit before
taxation 6 376 22 126 40 631
Taxation (3 373) (7 972) (13 490)
Profit after taxation 3 003 14 154 27 141
Attributable to
outside shareholders (979) (456) (1 014)
Earnings 2 024 13 698 26 127
Calculation of
Headline Earnings
Earnings 2 024 13 698 26 127
Foreign Loans
written off (220) (500) (560)
Fair value gains
on investment
properties (731)
Amortisation of
Goodwill 34 10 31
1 838 (86.1) 13 208 24 867
Earnings per consolidated
share (cents)
Basic 1.4c (86.4) 10.6c 19.3c
Diluted 1.3c (85.9) 9.4c 17.2c
Headline earnings
per consolidated share
Basic 1.3c (87.2) 10.2c 18.4c
Diluted 1.2c (86.7) 9.1c 16.4c
Dividends per
consolidated share - - 8.0c
Consolidated
Issued Shares
(Weighted) 140 842 129 524 135 326
Fully Diluted
Shares 152 891 145 864 151 639
Net Asset Value
per Consolidated
Share 93.8c 103.4c 103.6c
Tangible Net
Asset Value per
Consolidated Share 58.0c 89.7c 70.4c
CONSOLIDATED BALANCE SHEET
AT AT AT
31 AUG 31 AUG 29 FEB
2004 2003 2004
REVIEWED REVIEWED AUDITED
R R R
ASSETS
Non-current assets 106 851 68 632 102 008
Property, plant
and equipment 40 945 36 444 40 353
Investment property 9 914 8 870 9 914
Intangible assets 50 433 17 737 46 345
Non-current
receivables 5 559 5 581 5 396
Current assets 100 471 121 726 132 616
Inventories 23 630 23 607 25 417
Trade and other
receivables 65 420 61 869 73 444
Current tax
liabilities 3 008 - 1 491
Cash and cash
equivalents 8 413 36 250 32 264
TOTAL ASSETS 207 322 190 358 234 624
EQUITY AND LIABILITIES
Capital and Reserves 132 108 132 827 142 524
Share capital 1 411 1 400 1 411
Share premium 80 064 79 841 80 005
Non-distributable
reserves 2 905 3 153 3 198
Retained earnings 47 728 48 433 57 910
Minority interest 5 415 4 285 4 843
Non-current
liabilities 7 411 7 217 7 982
Interest-bearing
borrowings 214 856 314
Deferred tax
liabilities 7 197 6 361 7 668
Current liabilities 62 388 46 029 79 275
Trade payables and
other liabilities 39 726 27 698 64 545
Billings in excess
of earnings 21 963 14 571 13 473
Current tax liabilities - 1 761 -
Shareholders for
dividends 68 119 68
Current portion of
interest-bearing
borrowings 631 1 880 1 189
TOTAL EQUITY AND
LIABILITIES 207 322 190 358 234 624
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
6 MNTHS 6 MNTHS 12 MNTHS
TO TO TO
31 AUG 31 AUG 29 FEB
2004 2003 2004
REVIEWED REVIEWED AUDITED
R R R
Share capital 1 411 1 400 1 411
Balance at beginning
of year 1 411 1 198 1 198
Issue of shares -
share option scheme - 202 213
Share premium 80 064 79 841 80 005
Balance at beginning
of year 80 005 73 005 73 005
Issue of shares -
share option scheme 59 6 873 7 037
Shares repurchase and
not cancellation
I.t.o general authority - (37) (37)
Non-distributable
reserves 2 905 3 153 3 198
Balance at beginning
of year 3 198 3 095 3 095
Currency translation
differences 148 58 68
Transferred to retained
earnings (441) - -
Deferred tax on
revaluation - - 35
Retained earnings 47 728 48 433 57 910
Balance at beginning
of year 57 910 46 417 46 417
Correction of
fundamental error - (1 115) (1 115)
Restated balance
at the beginning
of the year 57 910 45 302 45 302
Net profit 2 024 13 698 26 127
Ordinary dividends (11 265) (9 991) (9 991)
Cancellation of
options (1 529) (576) (3 061)
Transferred from
non-distributable
reserves 441 - -
Subsidiary
deregistered 147 - -
AC133 - Financial
instruments restated - - (467)
Ordinary shareholders`
equity at end
of year 132 108 132 827 142 524
CONSOLIDATED CASH FLOW STATEMENT
6 MTHS 6 MTHS 12 MTHS
TO TO TO
31 AUG 31 AUG 29 FEB
2004 2003 2004
REVIEWED REVIEWED REVIEWED
R R R
Cash flows from
operating activities
Cash receipts
from customers 192 648 158 778 322 117
Cash paid to
suppliers and
employees (188 667) (171 246) (282 899)
Net cash from
operating activities 3 981 (12 468) 39 218
Interest received 357 3 099 3 768
Interest paid (331) (1 135) (1 366)
Dividends paid to
group shareholders (11 266) (9 874) (10 058)
Tax paid (4 297) (7 323) (14 750)
Net cash flow
from operating
activities (11 556) (27 701) 16 812
Cash flows from
investing activities
Purchase of
property, plant
and equipment (3 609) (3 740) (8 781)
Purchase of
investment properties - (1 989) (1 989)
Acquisitions, net
of cash acquired - - (27 811)
Purchase of
intangible assets (6 264) (16 148) (28 110)
Receipts from
non-current
investments 176 151 151
Disposal of property
plant and equipment 94 1 136 1 438
Net cash (outflow)/
inflow from investing
activities (9 603) (20 590) (65 102)
Cash flows from
financing activities
Purchase of
treasury shares - (37) (37)
Cancellation of
option (1 529) (576) (3 061)
Issue of shares -
share option
scheme 59 7 075 7 250
Proceeds from
long-term
borrowings (657) (799) (2 033)
Net cash outflow
from financing
activities (2 127) 5 663 2 119
Net increase in
cash and cash
equivalents (23 286) (42 628) (46 171)
Cash and cash
equivalents at
beginning of year 32 264 79 663 79 663
Effects of exchange
rate changes (565) (785) (1 228)
Cash and cash
equivalents at end
of year 8 413 36 250 32 264
SEGMENTAL REPORT
Revenue Segment Results
6 months 6 months 6 months 6 months
to to to to
31 Aug 31 Aug 31 Aug 31 Aug
R000 2004 2003 2004 2003
Mechanical 78 063 63 378 1 072 11 871
Electronics 97 896 85 204 7 994 9 405
Head office
and other 175 - (2 690) 850
COMMENTS
In a trading update and cautionary announcement on 17 August 2004, shareholders
were advised that IST`s earnings for the six months to 31 August would be
substantially lower than those for the corresponding period in 2003 due to
continued difficult trading conditions and delays in the awarding of certain key
contracts.
While revenue for the period was up by 19% against the first half of 2003, this
was largely attributable to the sale of relatively low-margin services. The
cost of sales consequently increased, and the results were further impacted by
the delays referred to in the cautionary announcement, a loss in the Delkor
division, a significant increase in the headcount following last year`s
acquisitions, and the generally challenging operating environment. As
anticipated, there was therefore a substantial decline in earnings and headline
earnings per share.
Apart from Delkor, which suffered from a reduction in expenditure in the mining
sector, all the divisions recorded positive results but none met its target for
the six months. All are budgeting for an improvement in the second half of the
year but this is contingent upon the finalisation of major contracts. The
Pebble Bed Modular Reactor and other large prospective projects remain in the
pipeline.
On 27 September 2004, a majority of IST shareholders voted in favour of the
scheme of arrangement proposed by Manupont (Pty) Limited and on 5 October 2004
it was sanctioned by the High Court. With all other conditions precedent having
been fulfilled, IST`s listing on the JSE Securities Exchange will accordingly
be terminated on 30 October 2004.
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.
Gary Morolo, Chairman Harry Coetzee, Chief Executive
Pretoria
15 October 2004
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