Wrap Text
Abridged audited results for the year ended 28 February 2014, notice of annual general meeting and final dividend
INSIMBI REFRACTORY AND ALLOY SUPPLIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration No: 2002/029821/06)
(Income tax reference no: 9078/488/15/3)
Share code: ISB ISIN code: ZAE000116828
("Insimbi" or "the group" or “the company”)
ABRIDGED AUDITED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2014, NOTICE OF ANNUAL GENERAL MEETING AND FINAL DIVIDEND DECLARATION.
FINANCIAL INDICATORS
2014 2013 % change
Revenue (Rm) 939 828 13
Operating profit (Rm) 35 19 84
Profit before tax (Rm) 29 13 123
Attributable earnings (Rm) 20 8 150
Headline earnings (Rm) 21 8 163
Earnings per
share (cents) 8,21 3,13 162
Headline earnings
per share (cents) 8,38 3,15 166
Cash flow from
operations (Rm) 54 39 38
Dividends per
share (cents) 3.5 2 75
ABRIDGED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
12 months 12 months
to 28 February to 28 February
2014 2013
R’000 R’000
Revenue 938 980 828 315
Cost of sales (837 891) (744 741)
Gross profit 101 089 83 574
Other income 2 758 2 963
Operating expenses (68 484) (67 143)
Operating profit 35 363 19 394
Investment revenue 311 235
Finance costs (6 684) (6655)
Profit before taxation 28 990 12 974
Taxation (8 680) (4 065)
Profit for the year
from continuing operations 20 310 8 909
(Loss) from
discontinued operations - (1 208)
Profit for the year 20 310 7 701
Other comprehensive income:
Items that will be
reclassfied to profit
and loss:
Exchange differences on
translating foreign
operations (5) -
Items that will not be
reclassified to profit
and loss
Gain on property revaluation - 28 375
Taxation related to
components of other
comprehensive income 1 073 (7 945)
Total other
comprehensive income 1 068 20 430
Total comprehensive income 21 378 28 131
Total comprehensive income
attributable to:
Owners of the parent 21 358 28 359
Non-controlling interest 20 (228)
EARNINGS AND HEADLINE EARNINGS PER SHARE
Audited Audited
12 months 12 months
to 28 February to 28 February
2014 2013
R’000 R’000
Basic attributable earnings
per share are calculated by
dividing the net profit
attributable to the
shareholders by the number
of shares in issue during
the year.
Number of shares in issue at
the end of the year 260 000 260 000
Less: Weighted average number
of treasury shares held in a
subsidiary at the end of
the year (12 800) (6 890)
247 200 253 110
Headline earnings for
the group have been computed
as follows:
Profit attributable to
ordinary shareholders
– continuing operations 20 310 9 137
Profit attributable to
ordinary shareholders
– discontinued operations - (1 208)
Profit attributable to
ordinary shareholders 20 310 7 929
– Profit/(loss) on sale of
property, plant and equipment 407 (260)
– Impairment for goodwill - 300
Headline earnings for
the group 20 717 7 969
Basic and fully diluted:
Earnings per share from
continuing operations 8,21 3,61
Earnings per share from
discontinued operations - (0,48)
Earnings per share (cents) 8,21 3,13
Headline earnings per
share (cents) 8,38 3,15
No diluted earnings per share is reflected as there is no dilutive impact on the number of shares in issue.
ABRIDGED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited Audited
As at As at
28 February 28 February
2014 2013
R’000 R’000
Assets
Non-current assets
Property, plant and equipment 78 008 79 003
Intangible assets 42 154 40 741
Deferred tax 12 047 6 460
132 209 126 204
Current assets
Inventories 82 713 66 423
Derivative financial assets 556 -
Current tax receivable 2 059 2 145
Trade and other receivables 118 982 93 156
Cash and cash equivalents 48 985 33 469
253 295 195 193
Total assets 385 504 321 397
Equity and Liabilities
Equity
Share capital 44 442 44 442
Reserves 21 657 20 589
Retained income 64 011 46 169
Non controlling interest (208) (228)
Treasury shares (9 439) (4 591)
120 463 106 021
Liabilities
Non-current liabilities
Other financial liabilities 15 621 20 283
Deferred taxation 15 792 10 896
31 413 31 179
Current Liabilities
Other financial liabilities 57 239 64 839
Derivative financial
liabilities - 19
Current tax payable 767 255
Trade and other payables 173 193 119 061
Bank overdraft 2 429 23
233 628 184 197
Total liabilities 265 041 215 376
Total equity and liabilities 385 504 321 397
ABRIDGED CONSOLIDATED STATEMENT OF CASH FLOWS
Audited Audited
12 months 12 months
to 28 February to 28 February
2014 2013
R’000 R’000
Cash flows from
operating activities
Cash generated from
operations 52 567 38 518
Interest income 311 245
Finance costs (6 684) (6 662)
Tax paid (8 424) (6 235)
Net cash generated from
operating activities 37 770 25 866
Cash flows from investing
activities
Purchase of property,
plant and equipment (8 199) (21 344)
Sale of property, plant
and equipment 2 755 372
Intangible assets under
development (1 413) (1 435)
Net cash from/(utilised in)
investing activities (6 857) (22 407)
Cash flows from financing
activities
Repayment of other
financial liabilities (12 262) 3 477
Repurchase of treasury
shares (4 488) (2 387)
Dividends paid (2 448) (7 586)
Net cash from financing
activities (19 198) (6 496)
Total cash movement for
the year 11 715 (3 037)
Exchange gains / (losses)
on cash 1 395 -
Cash at the beginning of
the year 33 446 36 483
Total cash at end of
the year 46 556 33 446
ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Treasury
capital premium shares
R’000 R’000 R’000
Balance at 1 March 2012 – 44 442 (2 564)
Changes in equity
Total comprehensive income
for the year - - -
Purchase of own/treasury
shares – - (2 387)
Dividends – – -
Total changes – – –
Balance at 1 March 2013 – 44 442 (4 951)
Changes in equity
Profit for the year - - -
Total comprehensive
income for the year – – -
Purchase of own/treasury
shares – – (4 488)
Dividends – – -
Total changes – – (4 488)
Balance at 28 February 2014 – 44 442 (9 439)
ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (cont)
Foreign
currency
translation Revaluation Retained
reserves reserve income
R’000 R’000 R’000
Balance at 1 March 2012 159 20 430 45 826
Changes in equity
Total comprehensive income
for the year - - 7 929
Purchase of own/treasury
shares - -
Dividends – - (7 586)
Total changes - - 343
Balance at 1 March 2013 159 20 430 46 169
Changes in equity
Profit for the year - - 20 290
Total comprehensive income
for the year (5) 1 073 -
Purchase of own/treasury
shares - - -
Dividends – - (2 448)
Total changes (5) 1 073 17 842
Balance at
28 February 2014 154 21 503 64 011
Non-
controlling Total
Interest Equity
R’000 R’000
Balance at 1 March 2012 - 87 863
Changes in equity
Profit for the year (228) 7 701
Total comprehensive
income for the year - 20 430
Purchase of own/
treasury shares - (2 387)
Dividends - (7 586)
Total changes (228) 18 158
Balance at 1 March 2013 (228) 106 021
Changes in equity
Profit for the year 20 20 310
Total comprehensive
income for the year - 1 068
Purchase of own/
treasury shares - (4 488)
Dividends - (2 448)
Total changes 20 14 442
Balance at
28 February 2014 (208) 120 463
SEGMENT REPORT
Foundry Steel Refractory Total
2014 R’000 R’000 R’000 R’000
Revenue
Sale of goods 583 289 257 765 94 129 935 123
Commission 69 - 3 788 3 857
Cost of sales (511 473) (237 671) (88 747) (837 891)
Gross profit 71 825 20 094 9 170 101 089
Other income 2 758 - - 2 758
Profit before operating
and administration expenses 74 593 20 084 9 170 103 847
Operating and
administration expenses
Communication (1 096) (65) (31) (1 192)
Consulting and
professional fees - - - -
Depreciation and
amortisation (4 535) (2 311) - (6 846)
Employment costs (36 694) (2 250) (3 974) (42 918)
Motor vehicle expenses (1 290) (294) (216) (1 800)
Other expenses (10 838) (182) (209) (11 229)
Occupancy (4 496) (3) - (4 499)
Operating profit before
finance income 15 634 14 989 4 740 35 363
2013
Revenue
Sale of goods 521 330 222 700 81 106 825 136
Commission 257 – 2 922 3 179
521 587 222 700 84 028 828 315
Cost of sales (466 494) (201 908) (76 340) (744 741)
Gross profit 55 092 20 793 7 689 83 574
Other income 2 852 – 111 2 963
Profit before operating
and administration expenses 57 945 20 793 7 800 86 537
Operating and
administration expenses
Communication (1 044) (67) (32) (1 143)
Consulting and
professional fees (4 618) (826) (52) (5 496)
Depreciation and
amortisation (4 369) – (991) (5 360)
Employment costs (29 616) (1 504) (2 941) (34 061)
Motor vehicle expenses (1 585) (294) (173) (2 051)
Other expenses (12 863) (308) (335) (13 326)
Occupancy (5 706) – - (5 706)
(59 621) (2 999) (4 523) (67 143)
Operating profit before
finance income (1 677) 17 794 3 277 19 394
There is no disclosure of segment assets and liabilities as it is not possible to specifically allocate tangible assets and liabilities to specific segments.
Management has determined the operating segments based on the reports reviewed and this is supported by management reporting disciplines, which include monthly variance reporting. Insimbi’s performance is monitored continuously and issues arising are addressed at monthly management meetings that have board representation present.
Management considers the business from both a geographical and product management perspective. Management assesses the performance of the operating segments based on measures such as gross and operating profit.
COMMENTARY
The directors of Insimbi are pleased to announce the audited results for the year ended 28 February 2014.
1. Basis of Preparation and Accounting Policies
The results for the year ended 28 February 2014 have been prepared in accordance with International Financial Reporting Standards (“IFRS”), specifically IAS 34 Interim Financial Reporting and AC 500 Statements, and comply with the requirements of the Companies Act 71 of 2008 and the Listings Requirements of the JSE Limited. The principle accounting policies applied by the group in the abridged consolidated financial results for the year ended 28 February 2014 are consistent with those applied in the consolidated financial statements for the year ended 28 February 2013. These financial statements do not include all the information for full annual financial statements and should be read in conjunction with the consolidated financial statements for the year ended 28 February 2014. The results have been audited by PricewaterhouseCoopers Inc. Their unqualified audit report and the audited financial statements are available for inspection at the company’s registered office. These abridged financial statements have been prepared under the supervision of Fred Botha (CA) SA (Commercial and Financial Director).
2. Review of activities
Insimbi continues to operate out of our offices in Johannesburg, Durban, Atlantis and Kitwe and we are actively represented in the Democratic Republic of the Congo and Zimbabwe via our agents there. In addition, we continue to service most sub-Saharan and central African countries, as well as certain north, west and east African countries. We are also active in South America, Eastern Europe, certain Middle East countries and the UAE, Japan and Korea as well as India.
3. Financial Review
The year ending February 2014 was a very pleasing one and much more successful than we had originally anticipated after the extremely difficult financial year preceding. Our operating results reflect impressive growth in revenue, gross profit and ultimately, earnings and headline earnings per share
Group revenue increased by 13% (or R111 million) to R 939 million and headline earnings increased by 163% to R21 million, up from R8 million in the previous year, an increase of R13 million
Trading conditions locally were much improved on previous years and we were especially pleased by the performance in the second half of the financial year from September 2013 to February 2014, a period which in previous financial years since 2008, has proved to be extremely slow and challenging. The export market also showed signs of improvement as did growth into the rest of the African continent.
The group produced a gross profit of R101.1 million compared to R83.5 million in the previous year, an increase of 21%. Gross margins were also improved at 10,8% compared to 10,0% in the prev1ous year and is evidence of the improved market conditions and improving commodity prices experienced during the year.
Group consolidated net operating expenses were again well controlled throughout the period under review and were R68,5 million compared to
R67,1 million in the previous year, an increase of only 1.9%. I am very pleased with this, especially in light of the increases experienced in fuel and electricity during the year, it is evidence that increased revenues and gross profit do not necessarily imply a related increase in running costs of the group. Staff costs were increased in line with CPIX during the period.
Group operating profit for the period was R35.4 million compared to R19.4 million in the prev1ous financial year, an increase of 82.3% and profit for the year after tax was R20.3 million versus R7.7 million in the previous year, an increase of 163.7%.
Working capital and cash flow management remained a key focus area for the group's management and R52.9 million was generated from operations compared to R38.5 million in the previous year, an increase of R 14.4 million or 37%. Borrowings were in line with the previous year and finance costs of R6.7 million were incurred compared to R6.7 million in the prior period.
4. Market and Prospects
The Foundry Segment experienced more stable and sustainable trading conditions during the period under review mainly due to improved market conditions, less labour unrest in its sector and improved commodity prices. Revenues increased by 12% to R583 million in the year under review.
The Steel Segment also showed signs of improvement but it remains subdued although we are optimistic about the outlook for the next financial year. Revenues increased by 16% to R258 million during the period under review
The Refractory Segment also performed exceptionally well and revenues increased by 16% to R94 million during the year under review. Our reputation continues to grow and we had the privilege of being nominated as Afrisam Limited’s supplier of the year for 2013/14. We are still anxiously awaiting the roll-out of the planned infrastructure spend which has been spoken so much about over the last 3 to 4 years but we have still not seen any significant evidence of it. This inability of government to effectively spend budgets allocated to infrastructure on said projects, continues to dampen our results. This being said, we had a very pleasing year due to improved focus and market conditions generally. And we wait in anticipation of the promised and wide ranging infrastructure uplift.
This will have a very positive impact on our business.
Economic conditions in South Africa are still under pressure BUT we enter the 2015 financial year on a far stronger and more optimistic note than we approached the 2014 year with, last year.
Insimbi will continue to target All markets but with a special focus on Africa and emerging markets We have a diverse range of products on offering and with the operations and upgrades at both our secondary aluminium smelters in Johannesburg and Capet Town, the slow but potentially highly profitable product ranges developed by our subsidiary company, Insimbi Nano Milling, which will is focused on the micronisation of a completely new range of products for new target markets, and the constant addition of new products to our basket, I am confident that the group will continue to achieve satisfactory organic growth in years to come.
As for acquisitive growth opportunities, we continue to look for and carefully evaluate strategic targets and while we have not achieved the number of acquisitions we had hoped for, post listing, the few that we have achieved, have added value to the group’s results and we remain committed to this acquisition strategy.
5. Special resolutions
At the Annual General Meeting held on 23 August 2013, it was resolved that the directors be authorised to re-purchase up to 10% of the company shares subject to certain conditions.
6. Post balance sheet events
Subsequent to year end Nedbank Limited increased our Multi optional Facility by R10 million to R65 million, this amount has not been drawn down at date of this report. Nedbank Limited also approved the release of a first mortgage bond of R15 million registered over Stand 359 Crocker road, Wadeville ext 4.
7. Directors
The directors of the company, all of whom are South African citizens, during the year and as at the date of this report are as follows:
CF Botha
F Botha
GE Ferns – resigned 31 March 2014
EP Liechti
GS Mahlati
LY Mashologu
DJ O’Connor
PJ Schutte
8. Authorised and issued share capital
The authorised share capital is 12 billion shares. Currently there are 260 million shares in issue. Shares repurchased by a subsidiary and held in treasury amounted to 16 452 943 shares at year end, which is disclosed as a reduction of equity in the statement of changes in equity.
9. Dividends
Interim dividend number 8 of 1 cent per share was declared on
8 November 2013, payable on 9 December 2013 to shareholders registered on 6 December 2013. The total payout was R2 447 746 (2013: R5 047 109).
A final gross dividend of 2.5 cents per share has been approved and declared (2013: Rnil). A final gross dividend of 2.5 cents per share has been declared on 27 May 2014. There are 260 000 000 ordinary shares in issue at announcement date, of which 17 584 943 are held in treasury and the total dividend amount payable is R6 112 376 (2014 Interim Dividend: R2 455 746).
This is a dividend as defined in the Income Tax Act, 1962, and is payable from income reserves. The South African dividend tax (DT) rate is 15% and no credits in terms of secondary tax on companies have been utilised. The net amount payable to shareholders who are not exempt from DT is 2.125 cents per share, while it is 2.5 cents per share to those shareholders who are exempt from DT. The income tax reference number of the company is 9078488153.
The salient dates applicable to the interim dividend are as follows:
Last day to trade cum dividend Thursday, 12 June 2014
First day to trade ex dividend Friday, 13 June 2014
Record date Friday, 20 June 2014
Payment date Monday, 23 June 2014
10. Litigation
There are no legal or arbitration proceedings, including any proceedings that are pending or threatened, or which Insimbi or any of its subsidiaries is aware and that may have or have had, in the 12-month period preceding the date of issue of this annual report, a material effect on the financial position of Insimbi or any of its subsidiaries.
11. Notice of Annual General Meeting
Notice is hereby given that the annual general meeting of Insimbi Refractory and Alloy Supplies Limited will be held at 359 Crocker Road, Wadeville Ext 4, Germiston on Friday 22 August 2014 at 10:00, to transact the business as stated in the notice of annual general meeting included in the Annual Report which has been posted to shareholders today.
By order of the Board
Pieter Jacobus Schutte
Chief Executive Officer
Registered office:
Stand 359 Crocker Road, Wadeville, Germiston, 1422
Company Secretary:
K Holtzhausen
Directors:
F Botha
CF Botha
GE Ferns (Financial Director)
EP Liechti
PJ Schutte (Chief Executive Officer)
DJ O Connor* (Chairman)
GS Mahlati*
L Mashologu*
(* non-executive)
Sponsor:
Bridge Capital Advisors (Proprietary) Limited
Transfer Secretaries:
Computershare Investor Services (Proprietary) Limited
28 May 2014
Date: 28/05/2014 09:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.