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SCN
SCN
Scharrig Mining Limited - Audited Results for the year ended 31 March 2006
SCHARRIG MINING LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1992/01973/06)
Share Code: SCN & ISIN Code: ZAE000006474
("Schamin" or "the Company")
AUDITED RESULTS
for the year ended 31 March 2006
- HEADLINE EARNINGS PER SHARE - 49% TO 69.3 CENTS - FINAL DIVIDEND PROPOSED OF 7
CENTS PER SHARE - CASH FLOW FROM OPERATIONS UP 24% TO R272,3 MILLION - TOTAL
VOLUME EARTH MOVED UP 19% TO 73,9 MILLION CUBIC METRES
PRESENTATION TO SHAREHOLDERS
Shareholders and other interested parties are invited to join a conference call
with management at 10.30 am (SA time) on Thursday, 29 June 2006 to review the
results and prospects of the company.
The presentation is available for download from www.scharrig.co.za and dial-in
numbers are 0800 203 599 (toll-free in South Africa) or +27 11 535 3500.
ABRIDGED CONSOLIDATED BALANCE SHEET
as at 31 March 2006
Audited
Audited at restated at
31 March 31 March
2006 2005
R000 R000
ASSETS
Non-current assets
Property, plant and equipment 766 969 613 274
766 969 613 274
Current assets
Inventories 29 140 9 887
Trade and other receivables 66 636 57 188
Bank balance and cash 23 640 28 885
119 416 95 960
886 385 709 234
EQUITY AND LIABILITIES
Share capital and premium 93 032 92 378
Reserves 237 054 159 974
Total shareholders funds 330 086 252 352
Non-current liabilities
Long-term borrowings 178 169 146 326
Deferred taxation 121 255 88 149
299 424 234 475
Current liabilities
Trade and other payables 73 679 53 673
Current portion of long-term
borrowings 183 175 168 259
Taxation 21 475
256 875 222 407
886 385 709 234
Net asset value per share (cents) 240 184
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 March 2006
Audited
Audited restated
year ended year ended
31 March 31 March
2006 2005
R000 R000
Cash generated from operations 272 343 220 251
Interest paid (27 448) (33 472)
Dividends paid (12 182) (7 502)
Taxation paid (2 507) (54)
Cash flows from operating activities 230 206 179 223
Cash flows from investing activities (282 864) (254 355)
Cash flows from financing activities 47 413 87 095
Net increase in cash and
cash equivalents (5 245) 11 963
Cash and cash equivalents
at the beginning of year 28 885 16 922
Cash and cash equivalents
at the end of year 23 640 28 885
SEGMENTAL ANALYSIS
for the year ended 31 March 2006
2006 2005
Restated
Turnover Net profit Turnover Net profit
before before
taxation taxation
R000 R000 R000 R000
Coal Mining 612 197 126 821 562 803 86 270
Second-hand
equipment trading
and services 4 271 (2 400) 4 768 (3 763)
616 468 124 421 567 571 82 507
Audited
Audited restated
year year
ended ended
31 March 31 March
2006 2005
R000 R000
Reconciliation of
headline earnings
Earnings attributed
to ordinary
shareholders 89 262 57 841
Headline earnings
attributed to
ordinary
shareholders 89 262 57 841
RECONCILIATION BETWEEN IFRS AND SA GAAP
IFRS restated
year ended
31 March
R000 2005
IFRS equity impact
As previously reported SA GAAP 258 084
Change in accounting policy -
IAS 16 Restatement of accumulated depreciation to
reflect plant and equipment"s useful lives 2 912
IFRS 2 Share based payments (7 800)
Deferred tax adjustment on the restatements (844)
Restated - IFRS compliance 252 352
IFRS income statement impact
Net income after tax as previously reported SAGAAP 63 573
Change in accounting policy - IAS 16 Restatement
of accumulated depreciation to reflect plant and
equipment"s useful lives 2 912
IFRS 2 Share based payments (7 800)
Deferred tax adjustments on the restatements (844)
Net income after tax - IFRS compliance 57 841
ABRIDGED CONSOLIDATED INCOME STATEMENT
for the year ended 31 March 2006
Audited
Audited restated
year ended year ended
31 March 31 March
2006 2005
R000 R000
Revenue 616 468 567 571
Operating profit before finance
charges 151 869 115 979
Finance charges 27 448 33 472
Net profit before taxation 124 421 82 507
Taxation 35 159 24 666
Net profit after taxation 89 262 57 841
Earnings attributable to ordinary
shareholders 89 262 57 841
Attributable earnings per
share (cents) 69.3 46.6
Headline earnings per share (cents) 69.3 46.6
Dividend per share (cents)
Interim (Declared) 5.00 3.50
Final (Proposed) 7.00 4.00
12.00 7.50
Shares in issue (000)
- at end of year 137 431 137 431
- weighted average for the year 128 814 124 141
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2006
Treasury
Share Share Capital share
Capital Premuim Reserve trust
R000 R000 R000 R000
Restated balance
at 31 March 2004 1 227 84 380 (950)
Share issued 92 15 675 (9 520)
Profit for the
year ended
31 March 2005
Recognition of
share based
payments 6 076
Dividend paid 57
Share options
exercised 1 417
Balance at
31 March 2005 1 319 100 055 6 076 (8 996)
Profit for the
year ended
31 March 2006
Share options
exercised 369
Dividend paid 285
Balance at
31 March 2006 1 319 100 055 6 076 (8 342)
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2006
Non-
Retained distri-
earnings butable
Profit Reserve Total
R000 R000 R000
Restated balance
at 31 March 2004 89 693 13 866 188 216
Share issued 6 247
Profit for the
year ended
31 March 2005 57 841 57 841
Recognition of
share based
payments 6 076
Dividend paid (7 502) (7 445)
Share options
exercised 1 417
Balance at
31 March 2005 140 032 13 866 252 352
Profit for the
year ended
31 March 2006 89 262 89 262
Share options
exercised 369
Dividend paid (12 182) (11 897)
Balance at
31 March 2006 217 112 13 866 330 086
COMMENTS
FINANCIAL REVIEW
These results incorporate the effect of the conversion to International
Financial Reporting Standards ("IFRS"). Full disclosure of the impact of the
adoption of IFRS is included in this announcement.
Revenue increased by 9% on the corresponding period to R616.5 million. Improved
operating efficiencies enabled the group to improve its operating margin to
24.6% (2005: 20,4%). The company"s operations were adversely affected in
February and March by abnormally high rainfall experienced in its operating
areas.
Headline earnings per share increased by 49% to 69.3 cents.
Cash generated by operations for the year was R272,3 million (2005: R220.3
million) which equates to 211 cents per share (2005: 177 cents). Net asset
value per share has grown to 240 cents from 184 cents reported in March 2005.
Schamin"s debt to equity ratio has decreased to 102% from 113% at 31 March 2005.
STRATEGIC REVIEW AND OBJECTIVES
The company"s vision is to be a leading diversified mining services company that
has its roots in Africa. It intends to realise this vision through organic
growth and by acquisition.
Schamin is currently a leading open-cast coal mining contractor in
South Africa and will be one of the leading exploration drilling companies on
the African continent following the conclusion of the Transbor and Geosearch
acquisitions.
ACQUISITIONS AND EXPANSION OPPORTUNITIES
BENICON
The Competition Commission recently granted its unconditional approval for the
acquisition of the business of Benicon ("the Benicon acquisition"). Benicon is
trading ahead of expectations and is expected to make a meaningful contribution
to Schamin"s earnings going forward.
Shareholders are referred to the announcement dated 19 December 2005 which
illustrated that the Benicon acquisition would have increased Schamin"s headline
earnings per share for the six months ended 30 September 2005 by 7%.
TRANSBOR AND GEOSEARCH ACQUISITIONS
A circular to shareholders incorporating a notice of general meeting is
currently being prepared and will be posted to shareholders in early July 2006.
It is expected that a general meeting of Schamin shareholders will be held on or
about the 27th July 2006. Transbor and Geosearch are both trading strongly - the
demand for exploration drilling services continues to be exceptionally strong.
Shareholders are referred to the announcement dated 27 February 2006 which
illustrated that the financial effects of the Geosearch and Transbor
acquisitions would have increased Schamin"s headline earnings per share for the
six months ended 30 September 2005 by 25.8%.
SCHARRIG DRILL AND BLAST
Schamin has been approached to provide drilling and blasting services to its
client base. To meet this demand Schamin will invest approximately R42 million
in drilling equipment in the first quarter of the 2007 financial year. Schamin
has recruited the appropriate personnel to operate and manage the drill and
blast operations and expects the drill and blast operations to contribute to
profits in the 2007 financial year.
CAPITAL EXPENDITURE
The company invested a net amount of R282 million in capital equipment of which
R96 million was of replacement in nature. In March, a package of 12 new
articulated dump trucks, four dozers and one excavator became available. Given
the worldwide shortage of excavating equipment the company took the decision to
acquire the package, at a cost of R60 million.
The continued worldwide demand for mineral resources will continue to limit the
number of plant items that are available on the open market. Schamin believes
that by expanding its fleet it will continue to be well positioned to meet the
expected increased demand for its services.
PROSPECTS
Although the company"s focus in the short term is to bed down the acquisitions
it has or will shortly conclude, it will continue to look at opportunities that
are consistent with its growth strategy. All of its operations and proposed
acquisitions are trading well and are budgeting for improved operating
performances in the 2007 financial year.
BASIS OF PRESENTATION
The abridged financial statements have been prepared in terms of IFRS applicable
at 31 March 2006. In preparing these abridged financial statements for the year
ended 31 March 2006, certain accounting policy changes were applied to comply
with IFRS. The comparative year ended 31 March 2005 was restated to reflect
these adjustments. Reconciliations and descriptions of the effect of the
transition from SA GAAP to IFRS on the group"s equity and net profit are
provided below.
TRANSITIONAL ARRANGEMENTS
The group"s annual financial statements for the year ended 31 March 2006 will be
the first set of annual financial statements that comply with IFRS. The group
has applied IFRS 1 (First-time adoption of International Financial Reporting
Standards) in preparing these abridged financial statements. The group"s
transition date is 1 April 2004. The group"s opening balance sheet at that date
has been restated to reflect all existing IFRS statements expected to be
applicable on 31 March 2006.
THE FOLLOWING NEW ACCOUNTING POLICIES WERE APPLIED FOR IFRS REPORTING:
IAS 16 - Revaluation of residual values in plant and equipment
In calculating the depreciation charge, an entity reduces the total depreciable
amount of an asset by that asset"s residual value. Previously, under SA GAAP
the estimated residual value was fixed on recognition of the asset and was not
subject to reassessment. IAS 16 requires that the residual value of the asset
should be reassessed at each balance sheet date, with a resultant effect on the
depreciation charge already recognized. Annual increases in asset values result
in an annual upward adjustment of residual values.
IFRS2 - Share based payments
The adoption of IFRS 2 (Share based payments) requires that equity - settled
share based payment transactions be measured at fair value and the cost be
recognised as an expense in the income statement over the vesting period. In
accordance with the transitional provisions of IFRS2, the group has applied the
standard retrospectively to all share options granted after 7 November 2002 that
were univested as at 1 January 2005. The share options granted are valued with
reference to the market value of the share price and are expensed in the income
statement, with a corresponding amount being taken to an equity reserve. The
effect on previously reported retained earnings is disclosed in the statement of
changes in equity.
DIRECTORATE
During the 12 months ended 31 March 2006 the following changes took place to the
board of directors .
APPOINTMENTS
Messrs D C M Gihwala, R K Jonah, A Joffe and E H J Stoyell were appointed to the
board as non-executive directors.
Mr T Scharrighuisen retired as non-executive chairman and was replaced by Mr D C
M Gihwala as non-executive chairman.
DIVIDEND
A final dividend of 7 cents (2005: 4 cents) per share has been declared by the
board in respect of the year ended 31 March 2006, payable on Monday, 28 August
2006 to those shareholders recorded in the register of the company at the close
of business on Friday, 25 August 2006.
The salient dates of the final dividend are as follows:
Last date to trade "cum" dividend Friday, 18 August 2006
Shares trade "ex" dividend Monday, 21 August 2006
Record date Friday, 25 August 2006
Payment date Monday, 28 August 2006
No dematerialisation or rematerialisation of shares may take place between
Monday, 21 August 2006 and Friday, 25 August 2006, both dates inclusive.
Audit opinion
Our auditors, Siyabala Inc, have issued their opinion on Schamin"s statements
for the year ended 31 March 2006. They have issued an unmodified audit opinion.
A copy of their report is available for inspection at the company"s registered
office. These summarised financial statements have been derived from Schamin"s
financial statements and are consistent in all material respects with Schamin"s
financial statements.
On behalf of the board
D CM Gihwala
Non-executive Chairman
C Scharrighuisen
Managing Director
Boksburg
29 June 2006
Directors: D CM Gihwala* (Chairman), C Scharrighuisen (Managing),
J Holland (Financial), T R Hendry*, Dr P Huysamer*, A Joffe*, R K Jonah*, C
Moorcroft, T Scharrighuisen*, EHJ Stoyell* *Non-Executive
TRANSFER SECRETARIES
Ultra Registrars (Pty) Limited
5th Floor, 11 Diagonal Street
Johannesburg, 2001
(PO Box 4844
Johannesburg 2000)
Tel (011) 832-2652
REGISTERED ADDRESS
28 Patrick Road
Jet Park, Boksburg,1459
(PO Box 30194
Jet Park 1469)
Tel (011) 397-3870
Date: 29/06/2006 07:01:31 AM Produced by the JSE SENS Department
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