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INSIMBI REFRACTORY & ALLOY SUP LTD - Abridged Audited Results for the year Ended 28 February 2015, Notice of Annual General Meeting and Final Dividend

Release Date: 27/05/2015 09:00
Code(s): ISB     PDF:  
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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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