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Abridged Audited Results for the year Ended 28 February 2015, 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 2015,
NOTICE OF ANNUAL GENERAL MEETING AND FINAL DIVIDEND DECLARATION.
FINANCIAL INDICATORS
2015 2014 % change
Revenue (Rm) 958 939 2
Gross Profit (Rm) 112 101 11
Operating profit (Rm) 40 35 14
Profit before tax (Rm) 33 29 14
Attributable earnings (Rm) 26 20 30
Headline earnings (Rm) 27 21 29
Earnings before
interest, tax, depreciation
and amortisation (Rm) 47 42 11
Earnings per share (cents) 10,88 8,37 30
Headline earnings per
share (cents) 11,27 8,55 32
Dividends per
share (cents) 4 3.5 14
NAV per share (cents) 57 50 14
ABRIDGED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited Restated audited
12 months to 12 months to
28 February 2015 28 February 2014
R’000 R’000
Revenue 958 016 938 980
Cost of sales (846 114) (837 891)
Gross profit 111 902 101 089
Other income 1 246 2 758
Operating
expenses (72 926) (68 503)
Operating profit 40 222 35 344
Investment revenue 251 314
Finance costs (7 026) (6 684)
Profit before taxation 33 447 28 974
Taxation (7 666) (8 680)
Profit for the year 25 781 20 294
Profit attributable to:
The owners of the parent 26 094 20 274
Non-controlling interest (313) 20
Other comprehensive income:
Items that will be
reclassified to profit
and loss:
Exchange differences on
translating foreign
operations (154) (5)
Items that will not be
reclassified to profit
and loss:
Gain on property
revaluation - -
Taxation related to
components of other
comprehensive income - 1 073
Total other comprehensive
income (154) 1 068
Total comprehensive
income 25 940 21 378
Total comprehensive
income attributable to:
Owners of the parent 26 094 21 358
Non-controlling interest (313) 20
EARNINGS AND HEADLINE EARNINGS PER SHARE
Audited Restated audited
12 months to 12 months to
28 February 2015 28 February 2014
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 (22 982) (17 800)
237 018 242 200
Headline earnings for
the group have been
computed as follows:
Profit attributable to
ordinary shareholders –
continuing operations 25 781 20 294
Profit attributable to
ordinary shareholders –
discontinued operations - -
Profit attributable to
ordinary shareholders 25 781 20 310
– Profit/(loss) on sale
of property, plant
and equipment 941 407
Headline earnings for
the group 26 722 20 717
Basic and fully diluted:
Earnings per share from
continuing operations 10,88 8,37
Earnings per share from
discontinued operations - -
Earnings per share
(cents) 10,88 8,37
Headline earnings per
share (cents) 11,27 8,55
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 Restated audited Restated audited
As at As at As at
28 February 28 February 28 February
2015 2014 2013
R’000 R’000 R’000
Assets
Non-current assets
Property, plant
and equipment 78 146 78 008 79 003
Goodwill 35 638 35 638 35 638
Intangible assets 8 414 6 516 5 103
Deferred taxation 12 228 12 047 6 460
134 426 132 209 126 604
Current assets
Inventories 86 454 82 713 66 423
Trade and other
receivables 132 356 118 982 93 156
Derivative financial
assets 1 137 556 -
Current taxation
receivable 303 2 059 2 145
Cash and cash
equivalents 27 899 49 090 33 580
248 149 253 400 195 304
Total assets 382 575 385 609 321 508
Equity and Liabilities
Equity
Share capital 44 442 44 442 44 442
Treasury shares (14 766) (13 439) (8 951)
Reserves 21 503 21 657 20 589
Retained income 81 492 65 061 47 169
Non controlling
interest (1 508) (1 195) (899)
131 163 116 526 102 350
Liabilities
Non-current liabilities
Other financial
liabilities 14 022 15 621 20 283
Deferred taxation 13 592 15 792 10 896
27 614 35 413 31 179
Current Liabilities
Preference shares - 3 999 3 768
Other financial
liabilities 58 095 57 239 64 839
Current tax payable 4 677 767 255
Trade and other
payables 160 873 173 236 119 094
Bank overdraft 153 2 429 23
223 798 233 670 187 979
Total liabilities 251 412 269 083 219 158
Total equity and
liabilities 382 575 385 609 321 508
ABRIDGED CONSOLIDATED STATEMENT OF CASH FLOWS
Audited Restated audited
12 months to 12 months to
28 February 28 February
2015 2014
R’000 R’000
Cash flows from
operating activities
Cash generated from
operations 17 288 52 567
Interest income 251 311
Finance costs (7 167) (6 684)
Tax paid (4 381) (8 424)
Net cash generated
from operating
activities 5 991 37 770
Cash flows from
investing activities
Purchase of property,
plant and equipment (4 682) (8 199)
Sale of property,
plant and equipment 217 2 755
Intangible assets
under development (1 757) (1 413)
Net cash from/
(utilised in)
investing activities (6 222) (6 857)
Cash flows from
financing activities
Repayment of other
financial liabilities (4 042) (12 262)
Repurchase of treasury
shares (1 327) (4 488)
Dividends paid (9 663) (2 448)
Settlement of
preference share
liability (3 999) -
Net cash from
financing activities (19 031) (19 198)
Total cash movement
for the year (19 262) 11 715
Exchange gains/
(losses) on cash 346 1 395
Cash at the beginning
of the year 46 662 33 552
Total cash at end of
the year 27 746 46 662
ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Treasury
capital premium shares
R’000 R’000 R’000
Balance at
1 March 2013 as
previously reported - 44 442 (4 951)
Effect of restatement - - (4 000)
Restated balance at
1 March 2013 – 44 442 (8 951)
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
1 March 2014 – 44 442 (13 439)
Changes in equity
Profit for the year - - -
Total comprehensive
income for the year - - -
Purchase of own/
treasury shares - - (1 327)
Dividends - - -
Total changes - - (1 327)
Balance at
28 February 2015 - 44 442 (14 766)
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 2013 as
previously reported
Effect of restatement
Restated 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
1 March 2014 154 21 503 64 011
Changes in equity
Profit for the year - - 26 094
Total comprehensive
income for the year (154) - -
Purchase of own/
treasury shares - - -
Dividends - - (9 663)
Total changes (154) - 16 431
Balance at
28 February 2015 - 21 503 81 492
ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (cont)
Non controlling Total
Interest Equity
R’000 R’000
Balance at
1 March 2013
as previously reported (228) 106 021
Effect of restatement (671) (3 671)
Restated balance
at 1 March 2013 (899) 102 350
Changes in equity
Profit for the year (296) 20 044
Total comprehensive
income for the year - 1 068
Purchase of own/
treasury shares - (4 488)
Dividends - (2 448)
Total changes (296) 14 176
Balance at
1 March 2014 (1 195) 116 526
Changes in equity
Profit for the year (313) 25 781
Total comprehensive
income for the year - (154)
Purchase of own/
treasury shares - (1 327)
Dividends - (9 663)
Total changes (313) 14 637
Balance at
28 February 2015 (1 508) 131 163
SEGMENT REPORT
Foundry Steel Refractory Total
2015 R’000 R’000 R’000 R’000
Revenue
Sale of goods 729 128 134 952 90 204 954 284
Commission 77 - 3 655 3 731
729 205 134 952 93 859 958 016
Cost of sales (644 132) (115 677) (86 305) (846 114)
Gross profit 85 072 19 275 7 554 111 902
Other income 1 246 - - (1 246)
Profit before operating
and administration
expenses 86 318 19 275 7 554 111 148
Operating and
administration expenses
Communication (1 085) (56) (65) (1 207)
Employment costs (40 244) (2 166) (3 497) (45 908)
Motor vehicle expenses(1 117) (251) (238) (1 607)
Other expenses (11 492) (6 132) (259) (17 883)
Occupancy (6 321) - - (6 321)
Operating profit
before finance
income 26 059 10 670 3 495 40 222
2014
Revenue
Sale of goods 583 289 257 765 94 129 935 123
Commission 69 - 3 788 3 857
583 298 257 765 97 917 938 980
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)
Employment costs (36 694) (2 250) (3 974) (42 918)
Motor vehicle expenses(1 290) (294) (216) (1 800)
Other expenses (15 373) (2 493) (209) (18 075)
Occupancy (4 496) (3) - (4 499)
Operating profit
before finance income 15 634 14 989 4 740 35 363
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 2015.
1. Basis of Preparation and Accounting Policies
The results for the year ended 28 February 2015 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 2015
are consistent with those applied in the consolidated financial statements for the year ended
28 February 2014. 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 2015. 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
Insimbi is reporting a solid performance for the year under review and again the year can be
divided into two halves with the first half having to deal with the NUMSA strike and the second
half exposed to much better trading conditions, I am very pleased to announce a much improved set
of results compared to the previous financial year.
Group revenue increased by a small margin of 2% – or from R939 million to R958 million. The small
increase in sales value can be attributed to the negative impact of the NUMSA strike. But a
surprisingly good performance during the short month of December had a positive impact on
overall performance.
The group produced a gross profit of R112 million compared to the R101,1 million in the previous
financial year – an increase of 10,7%. Gross margins were slightly better at 11,7%, compared to
the 10,8% of the previous year. As stated before, a weaker Rand assisted the company to improve
margins and profits slightly, but there was also an increase in business in certain segments,
together with an expansion in the total basket of products. A continued focus on margins was
also a big driver towards better performance.
Group consolidated net operating expenses increased by 6,5% but are still very well controlled
throughout the financial year, and totaled R72,9 million, compared to R68,5 million in the previous
year and I am very pleased given the increases experienced in fuel and electricity costs during
the year. Staffing costs were well controlled and increased costs were in line with CPIX.
As always, our ability to manage our working capital and cash flow remained a key focus point
for the group, and proved to be invaluable in trading, particularly with the devaluation of
the Rand in relation to product imports. Cash and cash resources decreased by R18,9 million
mainly due to the timing of the financial year end which fell on a Saturday and which resulted
in some debtors taking advantage of this and paying their accounts only on the Monday 2 March,
which resulted in an increase in debtors of R13,4 million. Stock also increased by R3,7 million
and creditors decreased by R12,5 million compared to an increase of R54 million in the previous
financial year.
4. Market and Prospects
The continued low infrastructure spend, together with the inability by ESKOM to stabilise
the electricity supply, will have a negative impact not only on international investment
but also on local production facilities. Already we are seeing production plants being closed
and relying on imports. The economic conditions in South Africa will remain under pressure as
long as there is reluctance from the public and private sectors to work together for a better
South Africa if Government can’t supply the essentials to operate production facilities.
The current business environment will remain challenging and I believe that the 2015/2016
financial year will continue to have its challenges but also opportunities and Insimbi is
prepared and equipped to embrace these in order to have another prosperous financial year.
We will continue to service the South African market to the best of our ability, but at the
same time focus on emerging markets. The global economy in a number of countries around the
world is undermined by a high level of unpredictability. Chinese economy growth for 2015 is
expected to slow down and together with the financial problems in the Eurozone may have a
negative impact on commodity demand and pricing.
The recent announcement by DTI that they will be placing tariffs on imported cement is very
good news for the Cement industry and hopefully this will boost local production, we can only
hope that similar initiatives are made to combat cheap steel imports which are adversely
effecting our local steel producers.
Cash flow and working capital will be under pressure due to higher imports but I believe
that our management skills in controlling all of these will assist us in stocking the correct
quality and quantity of products but at the same time continuously look for alternative or
additional products that strategically expand our product range As for acquisitive growth
opportunities, we continue to look for and carefully evaluate strategic targets that will
benefit the group.
5. Special resolutions
The following special resolutions were passed during the year under review:
• At the annual general meeting held on 22 August 2014, it was resolved that the directors be
authorised to re-purchase up to 10% of the company shares subject to certain conditions.
• At the general meeting held on 13 March 2015, it was resolved that the company be authorised
as a specific approval, to repurchase 5,000,000 Insimbi shares which formed part of the
TP Hentiq acquisition.
6. Post balance sheet events
In negotiations before year-end an offer to purchase Portion 1 of Erf 360, Wadeville in
extent 2800m2 (two thousand eight hundred square meters) and remaining extent of Erf 360,
Wadeville in extent 2800m2 (two thousand eight hundred square meters) for a consideration of
R14 million excluding VAT was submitted and accepted. The transfer is expected to be completed
within the first three months of the new financial year.
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
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 18 589 748 shares at year end,
which is disclosed as a reduction of equity in the statement of changes in equity.
9. Dividends
Interim dividend number 10 of 1.5 cents per share was declared on 13 November 2014, payable on
15 December 2014 to shareholders registered on 12 December 2014. The total payout was
R3 622 482 (2014: 2 447 746 ).
A Final gross dividend of 2.5 cents per share has been declared on 27 May 2015. There are
260 000 000 ordinary shares in issue at announcement date, of which 23 724 748 are held in
treasury and the total dividend amount payable is R5 906 881 (2014 Final Dividend: R 6 052 752).
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%. 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, 11 June 2015
First day to trade ex dividend Friday, 12 June 2015
Record date Friday, 19 June 2015
Payment date Monday, 22 June 2015
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 Thursday 25 June 2015 at
12:00, 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 (Financial Director)
CF Botha
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
27 May 2015
Date: 27/05/2015 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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