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Unaudited condensed consolidated interim financial results for the six months ended 30 September 2013
Sephaku Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2005/003306/06)
Share code: SEP
ISIN: ZAE000138459
("Sephaku Holdings" or "the company" or "the group")
Unaudited condensed consolidated interim financial results for the six months ended 30 September 2013
Sephaku Holdings hereby provides a copy of its interim financial results for the period ended 30 September 2013, which are also available on the company's website,
www.sephakuholdings.co.za.
Commenting on the period under review, Dr Lelau Mohuba, chief executive officer said, "I am pleased with the results indicating our initial reporting period of
positive earnings and revenue as a result of the strategic acquisition of Metier. The group achieved revenue of R301,6 million from no revenue for the comparative
period in 2012. Metier is set to expand its market share in the lucrative Gauteng province in the next 12 to 18 months.
The significant construction progress at our associate company Sephaku Cement's plants has firmly positioned the company as a new entrant into the cement
manufacturing industry in South Africa since 1934. I would like to commend our highly experienced operational team for attaining to date the key milestones towards
starting cement production in January 2014."
KEY HIGHLIGHTS
- Operating profit of R33,8 million compared to the operating loss of R10,1 million for 2012
- Earnings before interest, taxation, depreciation and amortisation ("EBITDA") of R40,3 million compared to the loss before interest, taxation, depreciation and
amortisation of R9,8 million for 2012
- Headline earnings per share of 2,78 cents compared to headline loss per share of 5,69 cents for 2012
- Earnings of R6,3 million compared to the loss of R9,8 million for 2012
FINANCIAL REVIEW
The group attained its initial revenue of R301,6 million attributable to the consolidation of the financial results of the recently acquired Metier Mixed
Concrete (Pty) Ltd ("Metier" or "the subsidiary") for the full six-month period. Commensurately the group's operating profit increased by R43,8 million over the
last nine months to R33,8 million with the resultant EBITDA of R40,3 million compared to the R9,8 million loss for the six months ended 31 December 2012.
During the reporting period, the headline earnings per share increased from a loss of 5,69 cents for the six months ended 31 December 2012 to earnings of 2,78 cents
for the six months ended 30 September 2013. The wholly owned subsidiary, Metier, achieved an EBITDA of R55,1 million and earnings before interest and taxation of
R43,7 million resulting in an overall profit for the group. The subsidiary accrued finance charges of R5 million on the acquisition debt and R4,2 million on the
refinancing and expansion debt resulting in a profit after taxation of R24,5 million. Metier achieved a 2,4% increase in gross profit percentage for the six-month
reporting period.
Sephaku Cement (Pty) Ltd ("SepCem" or "the associate") had a loss of R15,8 million for the six-month period January to June 2013, of which R5,7 million (36%) was
equity accounted for in the group results. The loss is essentially due to non-capitalised expenditure including non-project overheads and marketing development costs
as the associate completes the construction phase. The corporate office had a loss of R12,5 million, of which R6,5 million were non-cash charges including the
imputed interest charge on the R125 million Metier obligation due in December 2014.
The resultant group profit after taxation for the interim period was R6,3 million.
OPERATIONAL REVIEW
Metier
In the period under review the subsidiary increased its concrete mixer fleet size and acquired another concrete boom pump in order to improve the value offer to its
clients. Concrete sales increased by 35% during the period with specialised concrete sales contributing 5%.
The subsidiary's core business is the manufacture and supply of quality ready mixed concrete to all market segments in South Africa. With its plant network in
KwaZulu-Natal and Gauteng, Metier is strategically positioned to capitalise on numerous opportunities in the next 12 months. Metier's product offering, which
includes high value concretes such as fibre reinforced, coloured, polished and durability concretes, has enabled the subsidiary to achieve above average margins.
Metier's fleet size, concrete pumping division and advanced production technology have enabled Metier to be efficient whilst offering unique value-added service
to its clients.
Sephaku Cement
The associate has made significant progress in attaining its goal to produce cement in the first quarter of 2014. The construction of the Delmas cement grinding
plant ("Delmas"), located in Mpumalanga with an expected production of 1,4 mtpa, was 85% complete by the end of the reporting period.
POST PERIOD
Delmas has been successfully connected to the Eskom substation on site. The electricity was connected to the Delmas primary electrical room in October 2013.
The distribution to the entire plant is expected to be completed by the end of November 2013. Delmas is still firmly on schedule and within budget to complete the
construction phase and is currently commissioning the plant as the final process before commercial production.
OUTLOOK
Construction at the integrated cement manufacturing plant, Aganang, close to Lichtenburg, is well advanced with initial production targeted for the second quarter
of the 2014 calendar year. Cement production at Delmas is targeted for January 2014.
CHANGES TO THE BOARD
On 29 July 2013 Kenneth John Capes was appointed as an executive director of the company. Jennifer Bennette has resigned as an alternate director to Rose Raisibe
Matjiu with effect from 21 August 2013, in order to maintain an arm's-length relationship between herself as company secretary and the board of directors.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 September 31 December 31 March
2013 2012 2013
Unaudited Unaudited Audited
R'000 R'000 R'000
Assets
Non-current assets 996 316 643 230 995 956
Current assets 125 132 21 985 98 594
Total assets 1 121 448 665 215 1 094 550
Equity and liabilities
Equity attributable to equity holders of the parent 752 605 664 313 740 525
Non-current liabilities 208 685 902 260 379
Current liabilities 160 158 - 93 646
Total equity and liabilities 1 121 448 665 215 1 094 550
Net asset value per share (cents) 398,21 386,70 394,10
Tangible net asset value per share (cents) 272,21 386,70 267,37
Ordinary shares in issue 188 998 646 171 790 732 187 901 843
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
6 months 6 months 9 months
ended ended ended
30 September 31 December 31 March
2013 2012 2013
Unaudited Unaudited Audited
R'000 R'000 R'000
Revenue 301 569 - 37 195
Cost of sales (167 744) - (21 574)
Gross profit 133 825 - 15 621
Other income 6 511 - 356
Operating expenses (106 575) (10 067) (35 825)
Operating profit/(loss) 33 761 (10 067) (19 848)
Investment income 855 510 820
(Loss)/profit from equity accounted investments (5 703) (226) 6 191
Finance costs (12 589) - (1 949)
Profit/(loss) before taxation 16 324 (9 783) (14 786)
Taxation (10 061) - (1 141)
Profit/(loss) for the period attributable to equity holders of the parent 6 263 (9 783) (15 927)
Other comprehensive loss for the period - (1 207) (1 208)
Total comprehensive income/(loss) for the period 6 263 (10 990) (17 135)
Total comprehensive income/(loss) attributable to:
Equity holders of the parent 6 263 (10 990) (17 135)
Basic earnings/(loss) per share (cents) 3,32 (5,69) (9,17)
Diluted earnings/(loss) per share (cents) 3,16 (5,13) (8,93)
Headline earnings/(loss) per share (cents) 2,78 (5,69) (9,20)
Diluted headline earnings/(loss) per share (cents) 2,64 (5,13) (8,96)
Reconciliation of basic earnings/(loss) to diluted
earnings/(loss) and headline earnings/(loss):
Basic earnings/(loss) and diluted earnings/(loss) from total
operations attributable to equity holders of the parent 6 263 (9 783) (15 927)
Profit on sale of non-current assets (1 031) - (50)
Headline earnings/(loss) attributable to equity holders
of the parent 5 232 (9 783) (15 977)
Reconciliation of weighted average number of shares:
Basic weighted average number of shares 188 456 030 171 790 732 173 613 522
Diluted effect of share options 9 589 283 18 923 470 4 646 656
Diluted weighted average number of shares 198 045 313 190 714 202 178 260 178
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
6 months 6 months 9 months
ended ended ended
30 September 31 December 31 March
2013 2012 2013
Unaudited Unaudited Audited
R'000 R'000 R'000
Cash flows from operating activities 17 667 (8 468) (22 089)
Cash flows from investing activities (15 815) 156 (96 972)
Cash flows from financing activities 11 948 591 116 770
Total cash movement for the period 13 800 (7 721) (2 291)
Cash at beginning of the period 22 338 24 629 24 629
Cash at end of the period 36 138 16 908 22 338
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Total
share Total Retained Total
capital reserves earnings equity
R'000 R'000 R'000 R'000
Balance at 30 June 2012 - Audited 500 035 10 295 162 293 672 623
Total comprehensive loss for the period - (1 207) (9 784) (10 991)
Employees share option scheme - 2 681 - 2 681
Balance at 31 December 2012 - Unaudited 500 035 11 769 152 509 664 313
Total comprehensive loss for the period - - (6 144) (6 144)
Issue of shares 80 556 - - 80 556
Employees share option scheme - 1 800 - 1 800
Balance at 31 March 2013 - Audited 580 591 13 569 146 365 740 525
Total comprehensive income for the period - - 6 263 6 263
Issue of shares 2 742 - - 2 742
Employees share option scheme - 2 487 588 3 075
Balance at 31 September 2013 - Unaudited 583 333 16 056 153 216 752 605
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL RESULTS
Ready mixed Head office and
concrete consolidation Group totals
Segment information for the 6 months ended 30 September 2013 R'000 R'000 R'000
Segment revenue - external revenue 301 569 - 301 569
Segment operating expenses (97 250) (9 325) (106 575)
Loss from equity accounted investment - (5 703) (5 703)
Segment profit/(loss) after taxation 24 483 (18 220) 6 263
Taxation (10 061) - (10 061)
Interest received 655 200 855
Interest paid (9 198) (3 391) (12 589)
Depreciation (11 383) - (11 383)
Segment assets 233 090 888 358 1 121 448
Capital expenditure included in segment assets 26 571 - 26 571
Segment liabilities (259 483) (109 360) (368 843)
for the 9 months ended 31 March 2013
Segment revenue - external revenue 37 195 - 37 195
Segment operating expenses (11 614) (24 211) (35 825)
Profit from equity accounted investment - 6 191 6 191
Segment profit/(loss) after taxation 1 995 (17 922) (15 927)
Taxation (1 141) - (1 141)
Interest received 168 652 820
Interest paid (1 394) (555) (1 949)
Depreciation (1 691) - (1 691)
Segment assets 197 356 897 194 1 094 550
Capital expenditure included in segment assets 5 145 - 5 154
Segment liabilities (248 232) (105 793) (354 025)
Due to the acquisition of Metier on 28 February 2013, the segment report for the current period would not be comparable with the other period presented.
The only commodity actively managed by Metier is ready mixed concrete. SepCem is an associate of Sephaku Holdings. No segment report has been presented for cement as
the amounts attributable to cement have been included in the "Head office" segment.
Due to the dilution of Sephaku Holdings' interest in SepCem and the unbundling of Sephaku Fluoride Ltd during prior reporting periods, no segment reporting has been
presented for the six months ended 31 December 2012.
BASIS of PREPARATION
The condensed consolidated interim financial results for the six months ended 30 September 2013 ("interim reporting period") have been prepared in accordance with
IAS 34: Interim Financial Reporting, the disclosure requirements of the JSE Limited Listings Requirements, the Companies Act No 71 of 2008, the SAICA financial
reporting guides as issued by the Accounting Practices Board and the Financial Pronouncements as issued by the Financial Reporting Standards Council and conform to
International Financial Reporting Standards ("IFRS").
The results have been prepared on a historical cost basis, except for the measurement of property at revalued amounts.
The accounting policies adopted for the interim reporting period are consistent with those applied in the annual financial statements for the group for the year
ended 31 March 2013.
The preparation of the financial statements has been supervised by NR Crafford-Lazarus CA(SA).
The financial information on which these interim period results are based has not been reviewed or reported on by Sephaku Holdings' auditors.
CHANGE OF FINANCIAL YEAR END
Shareholders are referred to the group's annual financial statements as contained in the annual report posted to shareholders on 30 August 2013, wherein the group
disclosed that, following the approval of shareholders on 11 January 2013, it had changed its financial year end from 30 June to 31 March. As such the comparative
interim reporting period is dated 31 December 2012.
STATEMENT ON GOING CONCERN
The financial statements for the interim reporting period have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes
that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments
will occur in the ordinary course of business.
STATED CAPITAL
1 096 803 ordinary shares were issued during the reporting period, resulting in the total number of ordinary shares issued at period end of 188 998 646 and total
stated capital of R583 332 623.
ACQUISITION OF METIER
On 28 February 2013 the group acquired 100% of Metier Mixed Concrete (Pty) Ltd as announced in the group's 2013 integrated report. As was previously reported and is
still the case as at interim reporting date, the final purchase price allocation has not yet been finalised, resulting in goodwill amounting to R238 137 854. It is
management's intention to complete this purchase price allocation within the measurement period of 12 months as permitted by IFRS 3. As part of the purchase
agreement, an element of the purchase consideration comprises a contingent consideration where the company will have a potential liability for the issue of
additional Sephaku Holdings shares to the sellers of Metier if the share price is below R9 per share on 1 December 2014. The additional shares to be issued would
be calculated by dividing R100 million by the share price. Management have, in conjunction with external valuers, assessed the likelihood and estimated that the
share price at measurement date of 1 December 2014 will bein excess of R9 per share, and therefore no further liability has been recorded on initial recognition or
as at 30 September 2013.
EVENTS AFTER THE INTERIM REPORTING PERIOD
The directors are not aware of any material fact or circumstance arising between the end of the financial period and the date of this announcement that would
require adjustments to or disclosure in the interim financial results.
On behalf of the board
Neil Crafford-Lazarus Lelau Mohuba
Financial director Chief executive officer
Company information
Directors
B Williams (Independent chairman),
Dr L Mohuba* (Chief executive officer)
NR Crafford-Lazarus* (Financial director)
RR Matjiu*, KJ Capes*, CRDW deBruin,
Dr D Twist, MM Ngoasheng, PF Fourie,
MG Mahlare (Independent), PM Makwana (Independent), JW Wessels#
*Executive #Alternate
Company secretary
Jennifer Bennette
Registered office
1st Floor, Hennops House
Riverside Office Park
1303 Heuwel Avenue
Centurion, 0157
Telephone: +27 12 684 6300
Transfer secretaries
Computershare Investor Services (Pty) Ltd
70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2017
South Africa
Telephone: +27 11 370 5000
JSE sponsor
QuestCo (Pty) Ltd
20 November 2013
Pretoria
____________________________________________________________________________________________________________________________________________________________________
For more information contact:
Sakhile Ndlovu Investor Relations Sephaku Holdings 012 622 9400
About Sephaku Holdings Ltd
Sephaku Holdings is a building and construction materials company with a portfolio of investments in the cement sector in South Africa. The company's core
investments are a 36% stake in Sephaku Cement (Pty) Ltd and 100% in the recently acquired Metier Mixed Concrete (Pty) Ltd. The strategy of Sephaku Holdings is to
generate growth and realise value for shareholders through the production of cement and ready mixed concrete in Southern Africa.
www.sephakuholdings.co.za
Date: 20/11/2013 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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