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ISB - INSIMBI - Press Release - Insimbi announces Stellar Maiden results,

Release Date: 30/09/2008 09:42
Code(s): ISB
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ISB - INSIMBI - Press Release - Insimbi announces Stellar Maiden results, dividend and revised forecast INSIMBI REFRACTORY AND ALLOY SUPPLIES LTD (Incorporated in the Republic of South Africa) (Registration No: 2002/029821/06) Share code: ISB & ISIN code: ZAE000116828 ("Insimbi" or "the company") INSIMBI ANNOUNCES STELLAR MAIDEN RESULTS, DIVIDEND AND REVISED FORECAST Monday, 29 September: AltX listed Insimbi Refractory and Alloy Supplies Ltd (Insimbi) today announced their maiden interim results for the six months ended 31 August 2008 since listing in March. "We are pleased with the solid performance shown in all areas of the business, especially given the difficult economic conditions locally and globally," says CEO, Pieter Schutte. Interim earnings are 3.5% higher at interim than the full year forecast of 14.54 cents per share as presented in the prelisting statement. A maiden interim dividend of 4c per share has been declared. Financial highlights: Revenue increased by 16.6% to R584m Gross Profit increased by 122.8% to R85m Operating Profit increased by 177% to R59m Profit before Taxation increased by 273% to R56m EPS based on pro forma 260 million shares increased by 904% to 15 cents HEPS increased by 910% to 15 cents Maiden Dividend of 4c per share Schutte attributed the company`s performance to the continued focus and growth of the infrastructure sector, the group`s focus on increasing margins across the board and continued efforts to introduce new and innovative product lines. The Rand`s performance against the US Dollar and sustainably higher prices for ferrous and non ferrous alloys globally due to higher demand mainly in India and China also contributed positively to the group`s performance. The increase in revenue was achieved despite production problems experienced by two of Insimbi`s major suppliers of pig iron and Ferro Manganese due to explosions at their production facilities earlier this year. The plants are due to come back on line by the end of the calendar year. Gross margins have almost doubled when compared to the comparative 2007 interim period, with the increase occurring predominantly as a result of good margins achieved on some strategic stocks purchased prior to major price hikes in 2008, and the introduction of new higher margin product lines. The operational divisions with the exception of the refractory division all performed above expectation. "The refractory division continues to face challenges as a result of its main customers being located in Zimbabwe," says Schutte. Prospects for Insimbi remain excellent with economists predicting acceleration in the infrastructure sector. Despite some softening of commodity prices generally, the prices of many ferrous and non ferrous alloys are still trading near their highs of earlier this year. The company is however not entirely reliant on favourable commodity prices as stock is held on a just in time basis and the risk of sudden movements in alloy prices is mitigated by the fact that Insimbi pre-sells as much as 70% to 80% of their purchases. Insimbi`s new industrial heat resistant textile company (Insimbi Thermal Insulation (Pty) Ltd), a 51% black employee owned business, has performed better than expectations, management looks forward to growth in the second half of the financial year, primarily driven by new contracts with new and existing customers and Eskom`s focus on upgrading it`s facilities. Insimbi`s aluminium plant is expected to soon be trading above budget despite some unexpected delays in the commissioning thereof. "With its capacity increased to 1,300 tons of output per month, we are confident that this plant will perform beyond our initial expectations and forecasts," says Schutte. Management continues to evaluate strategic acquisitions in various associated industries which will bring synergies and added value to the group. Insimbi`s revised forecast figures to 28 February 2009 have also been released. Forecast revenue and operating profit for the full year to 28 February 2009 are R1.1bn and R102m respectively. Insimbi expects the full year gross profit for 2009 to be R152m, 83% higher than the corresponding figures in February 2008, showing a strengthening of gross margins. Earnings per share of 25 cents is forecast for February 2009 versus listing forecast of 14.54 cents per share. -ENDS- Insimbi Refractory & Alloy Supplies Limited ticker: "ISB" Website: www.insimbi-alloys.co.za Further enquiries please contact: Pieter Schutte Insimbi 011 902 6930 Fred Botha Insimbi 011 902 6930 ChilliBush Investor Relations 011 646 7152 Michelle Doyle 082 784 1814 Nonhlanhla Moleya 083 564 1452 Notes to editors: Metallurg South Africa was founded in 1970 by the previous shareholder, Metallurg Europe Limited, a 100% subsidiary of Metallurg Incorporated. Initially, Metallurg South Africa`s offices were located in the centre of Johannesburg and warehousing was rented from Freight Services (Proprietary) Limited. In 1992, the operation was moved to its current premises in Wadeville. The Wadeville premises, which comprises approximately 9 000 m2 of offices and warehousing facilities are wholly-owned by Insimbi Properties. During the second half of 2003, the management of Metallurg South Africa entered into the first phase MBO with Metallurg South Africa. The first phase MBO received financial backing from Corfin, Corvest, and Tandem in the form of the sale shares, preference shares, Corvest claims, loan agreement and Tandem claims. Following the first phase MBO, Corfin, Corvest and Tandem effectively owned 67% of the company and the director shareholders and Langham Carter owned an effective 33%. In order to highlight the company`s new ownership, the director shareholders, Langham Carter, Corfin, Corvest and Tandem, decided to rebrand the company as Insimbi Alloy Supplies (Proprietary) Limited. Over the years, the core business of Insimbi expanded and today the company operates seven divisions which are based on industries and geographic locations, as follows: Refractory Division which services the steel industry`s refractory requirements; Speciality Division which services the welding and optical industries; Steel Division which services the steel industry`s raw material requirements; Foundry Division which services the foundry industry, both automotive and heavy; Non-Ferrous Division which services the aluminium industry; Rotary Division which services the cement industry`s refractory requirements; and KwaZulu-Natal Division which services the KwaZulu-Natal and Mozambique markets in all of the above products. The expansion of Insimbi`s core business has resulted in the strengthening of the company`s technical back up and product ranges into the following major manufacturing industries: iron and steel; ferrous and non-ferrous; aluminium smelters; foundries; copper mining; paper mills; sugar mills; and electro platers Insimbi also caters for the small niche suppliers and markets and has over time diversified into a number of different product lines and fields, namely: ceramic bricks/linings; aluminium alloy; chemicals; technical textiles; and kiln re-alignment and mechanical preventative services In April 2007, the director shareholders of Insimbi entered into the second phase MBO whereby the shareholding and funding of Insimbi was further restructured with the intention that, following the second phase MBO, the entire shareholding of the company would be held by the director shareholders. Insimbi was converted from a private company to a public company on 12 February 2008. On 27 January 2008, Insimbi Alloy Supplies acquired the plant and equipment, furniture and fittings and computers used by Future Alloys to conduct its aluminium alloys business for a purchase consideration of R17.0 million. Future Alloys manufactures aluminium alloys with its primary focus being on the production of the ADC12 grade of alloy. The business complements that of Insimbi Alloy Supplies and its smelting plant currently has excess capacity. The acquisition allows Insimbi Alloy Supplies to make use of Future Alloys` existing manufacturing facilities, while also offering Insimbi access to greater capacity. Insimbi listed on AltX on 14 March 2008. R48m was raised during the private placement. 30 September 2008 Date: 30/09/2008 09:42:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). 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