Wrap Text
Unaudited interim financial results for the six months ended 30 September 2015
Sephaku Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2005/003306/06)
Share code: SEP
ISIN: ZAE000138459
Unaudited interim financial results for the six months ended 30 September 2015
Sephaku Cement focuses on optimisation to improve the quality of earnings and Metier starts supplying concrete into the anchor
projects.
Sephaku Holdings Limited ("SepHold" or "the Company") hereby announces the group's unaudited financial results for the six months
ended 30 September 2015. SepHold, Metier Mixed Concrete Proprietary Limited ("Metier" or "the subsidiary") and Sephaku Cement
Proprietary Limited ("SepCem" or "the associate") are collectively referred to as the group.
Highlights
- Metier revenue increased by 14% to R461,4 million from R404,2 million in the comparative period ended 30 September 2014
- SepCem combined annualised capacity utilisation reaches steady state (80%) in May 2015
- SepCem interim EBITDA margin of 21% at a revenue of R1 billion for the period ended 30 June 2015*
- Group net earnings of R18,5 million compared to the loss of R3,7 million in the period ended 30 September 2014
- Net asset value increased from 392,60 cents per share in the period ended 30 September 2014 to 430,1 cents per share
Post period
As announced by Dangote Cement PLC on 26 October 2015, for the nine months ended 30 September 2015, SepCem recorded a cumulative
EBITDA margin of 23% and revenue of circa R1,7 billion. The SepCem third quarter results will be included in the SepHold final
audited financial results for the twelve months ending 31 March 2016*.
*SepCem has a December year-end as a subsidiary of Dangote Cement PLC
Financial review
The increase in group revenue to R461,4 million compared to R404,2 million for the previous interim period ended 30 September 2014
was largely due to the additional output from Metier's eleventh plant that commenced production in September 2014. The subsidiary
recorded an EBIT margin of 13% (R59,8 million) which is slightly lower than the 15% (2014: R62,6 million) recorded in the
comparative period. The reduction in the margin was mainly due to increased price competition as well as Metier management's astute
decision to cease supply into a significant government contract for a period of 6 weeks in the interim period due to inconsistent
payment.
SepHold's 36% interest in SepCem's operations for the interim period January 2015 to June 2015 resulted in an equity accounted loss
of R8,8 million compared to the loss of R9,3 million for period ended June 2014. The loss at SepCem was due to the six and half week
kiln downtime reported in the year end results during which there was limited product into the market. Nonetheless, we are pleased
to state that the plant has operated uninterrupted since production resumed in April and SepCem reached annualised steady state
capacity utilisation for both plants in May. The associate has continued to enhance its share of the market as confirmed by the R1
billion revenue at an EBITDA of 21% recorded for the six-months ended 30 June period.
Furthermore as stated in the Dangote Cement PLC results released on 26 October 2015 for the nine months ended 30 September 2015,
SepCem achieved a cumulative EBITDA of 23% and revenue of circa R1,7 billion. In SepCem's third quarter, which is not accounted for
by SepHold in the current interim reporting period, the associate achieved revenue of R650 million and an EBITDA of 26% for the
three months ending September 2015.
The group recorded an EBIT margin of R42,7 million (2014: R21,5 million) and a taxation expense of R13,2 million (2014: R14,3
million) essentially on the Metier income. The group net profit for the period was R18,5 million compared to the R3,7 million loss
recorded in the comparative period.
Operational review
Metier
The subsidiary entered the 2016 financial year with a robust order book having secured four anchor supply contracts ranging from
50,000m3 to 75,000m3. The ability to produce and supply specialised high-value concretes combined with the exceptional customer
service offering has enabled Metier to achieve superior margins.
SepCem
SepCem continued to advance its share of the market as confirmed by the associate's revenue for the period of R1 billion. The
pricing landscape has become dynamic and highly differentiated geographically resulting in downward pressure on margins. The
competitive landscape was fairly aggressive during the period under review with all producers focussing on improving efficiencies
and marketing efforts. During the interim period, SepCem adopted a defensive coastal strategy against imports in areas where it has
a natural competitive advantage resulting in approximately 20% of SepCem's volumes being sold into the KwaZulu-Natal (KZN) market.
The KZN province is the second largest market after Gauteng at circa 2.1 million tonnes per annum. The introduction of the ITAC
imposed tariffs has significantly reduced the imported volumes resulting in an increased demand for locally produced cement.
Outlook
In the short to medium term, SepCem will continue to focus on achieving high quality earnings by optimising the logistics
function between the plants and markets. SepCem will also focus on optimising the production efficiencies in order to reduce the
operating costs. Furthermore, an enhanced sales drive agenda will significantly improve the customer targeting efforts. These
processes will ensure that the associate achieves its targeted margins.
Metier will continue to maintain operational efficiency and improve its financial performance to increase earnings.
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL RESULTS
for the six months ended 30 September 2015
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 September 30 September 31 March
2015 2014 2015
Unaudited Unaudited Audited
R'000 R'000 R'000
Assets
Non-current assets 999 867 983 827 1 015 419
Current assets 234 522 166 358 204 070
Total assets 1 234 389 1 150 185 1 219 489
Equity and liabilities
Equity attributable to equity holders of the parent 865 415 747 818 844 720
Non-current liabilities 253 701 169 374 265 830
Current liabilities 115 273 232 993 108 939
Total liabilities 368 974 402 367 374 769
Total equity and liabilities 1 234 389 1 150 185 1 219 489
Net asset value per share (cents) 430,07 392,60 419,79
Tangible net asset value per share (cents) 315,76 270,53 304,86
Ordinary shares in issue 201 224 508 190 479 645 201 224 508
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
6 months ended 6 months ended 12 months ended
30 September 30 September 31 March
2015 2014 2015
Unaudited Unaudited Audited
R'000 R'000 R'000
Revenue 461 370 404 157 775 425
Cost of sales (274 101) (225 941) (434 431)
Gross profit 187 269 178 216 340 994
Other income 6 112 5 027 9 999
Operating expenses (141 899) (130 171) (263 204)
Operating profit 51 482 53 072 87 789
Investment income 3 243 1 366 2 168
Loss on contingent consideration - (22 222) (28 501)
(Loss)/profit from equity accounted investments (8 783) (9 318) 35 924
Finance costs (14 261) (12 356) (25 321)
Profit before taxation 31 681 10 542 72 059
Taxation (13 170) (14 278) (24 898)
Profit/(loss) for the period 18 511 (3 736) 47 161
Total comprehensive income/(loss) for the period 18 511 (3 736) 47 161
Basic earnings/(loss) per share (cents) 9,20 (1,96) 24,43
Diluted earnings/(loss) per share (cents) 8,87 (1,82) 23,59
Headline earnings/(loss) per share (cents) 9,12 (2,00) 24,43
Diluted headline earnings/(loss) per share (cents) 8,79 (1,85) 23,59
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 18 511 (3 736) 47 161
(Profit)/loss on sale of non-current assets (216) (91) 5
Total taxation effect of adjustments 61 25 (1)
Headline earnings/(loss) attributable to equity holders of the parent 18 356 (3 802) 47 165
Reconciliation of weighted average number of shares:
Basic weighted average number of shares 201 224 508 190 145 200 193 050 707
Diluted effect of share options 7 522 096 10 073 076 6 849 198
Contingent issuable shares - 5 555 556 -
Diluted weighted average number of shares 208 746 604 205 773 832 199 899 905
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
6 months ended 6 months ended 12 months ended
30 September 30 September 31 March
2015 2014 2015
Unaudited Unaudited Audited
R'000 R'000 R'000
Cash flows from operating activities 30 747 34 846 70 925
Cash flows from investing activities (9 323) (21 543) (26 777)
Cash flows from financing activities (12 500) (3 094) 765
Total cash movement for the period 8 924 10 209 44 913
Cash at beginning of period 70 914 26 001 26 001
Cash at end of period 79 838 36 210 70 914
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Total share Total Retained
Capital Reserves earnings Total equity
R'000 R'000 R'000 R'000
Balance at 31 March 2014 - Audited 585 573 17 625 144 526 747 724
Total comprehensive loss for the period - - (3 736) (3 736)
Issue of shares 1 561 - - 1 561
Employees' share option scheme - 1 690 579 2 269
Balance at 30 September 2014 - Unaudited 587 134 19 315 141 369 747 818
Total comprehensive income for the period - - 50 897 50 897
Issue of shares 43 993 - - 43 993
Employees' share option scheme - (3 630) 5 641 2 012
Balance at 31 March 2015 - Audited 631 127 15 685 197 907 844 720
Total comprehensive income for the period - - 18 511 18 511
Employees' share option scheme - 2 138 47 2 184
Balance at 30 September 2015 - Unaudited 631 127 17 823 216 465 865 415
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL RESULTS
Segment information
Ready-mixed Head office and
concrete consolidation Group totals
R'000 R'000 R'000
for the 6 months ended 30 September 2015 - Unaudited
Segment revenue - external revenue 461 370 - 461 370
Segment cost of sales (274 101) - (274 101)
Segment expenses (133 457) (8 442) (141 899)
Loss from equity-accounted investment - (8 783) (8 783)
Segment profit/(loss) after taxation 34 819 (16 308) 18 511
Taxation (13 652) 482 (13 170)
Interest received 2 897 346 3 243
Interest paid (14 260) (1) (14 261)
Depreciation and amortisation (15 417) (27) (15 444)
Segment assets 455 738 778 651 1 234 389
Investment in associate included in the above total segment assets - 643 530 643 530
Capital expenditure included in segment assets 10 693 36 10 729
Segment liabilities (365 834) (3 140) (368 974)
for the 6 months ended 30 September 2014 - Unaudited
Segment revenue - external revenue 404 157 - 404 157
Segment cost of sales (225 941) - (225 941)
Segment expenses (120 657) (9 514) (130 171)
Loss on contingent consideration - (22 222) (22 222)
Loss from equity-accounted investment - (9 318) (9 318)
Segment profit/(loss) after taxation 40 426 (44 162) (3 736)
Taxation (14 760) 482 (14 278)
Interest received 1 343 23 1 366
Interest paid (8 743) (3 613) (12 356)
Depreciation and amortisation (14 953) (1 723) (16 676)
Segment assets 290 660 859 525 1 150 185
Investment in associate included in the above total segment assets - 607 071 607 071
Capital expenditure included in segment assets 23 333 19 23 352
Segment liabilities (261 810) (140 557) (402 367)
The only commodity actively managed by Metier is ready-mixed concrete. The group does not rely on any single external customer or
group of entities under common control for 10% or more of the group's revenue as disclosed in the interim financial results. SepCem
is an associate of SepHold. No segment report has been presented for cement as the amounts attributable to cement have been included
in the "head office segment".
Basis of preparation
The condensed consolidated interim financial results for the six months ended 30 September 2015 ("interim reporting period") have
been prepared in accordance with IAS 34: Interim Financial Reporting, the requirements of the JSE Limited Listings Requirements, the
Companies Act, 2008, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and the Financial
Pronouncements as issued by the Financial Reporting Standards Council. The interim financial results are prepared in accordance with
International Financial Reporting Standards ("IFRS").
The results have been prepared on a historical cost basis, except for the measurement of land at revalued amounts.
The accounting policies for the interim reporting period are consistent with those applied in the annual financial statements for
the group for the year ended 31 March 2015.
The preparation of the interim financial results 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 the group's
auditors.
Statement of going concern
The interim financial results 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
There were no changes to the authorised or issued stated capital of the company during the interim reporting period under review.
Events after the interim reporting period
The directors are not aware of any material fact or circumstance arising between the end of the interim reporting period and the
date of this report that would require adjustments to or disclosure in the interim financial results.
The change of the company name of the associate, from Sephaku Cement Pty Ltd to Dangote Cement South Africa Pty Ltd, became in
effect on 27 October 2015.
Changes to the board
There were no changes to the board during the interim reporting period under review.
Change in the Company Secretary
Jennifer Bennette resigned as Company Secretary with effect from 31 August 2015 and Acorim Proprietary Limited was appointed as
Company Secretary of SepHold with effect from 1 September 2015.
Company information
Directors:
B Williams^ (chairman)
MG Mahlare^
PM Makwana^
MM Ngoasheng^
J Pitt^ ~
Dr. L Mohuba* (chief executive officer)
NR Crafford-Lazarus* (financial director)
RR Matjiu*
KJ Capes*
PF Fourie
*Executive ^Independent ~Alternate
Company secretary:
Acorim Proprietary Limited
Telephone: +27 11 325 6363
Registered office:
Southdowns Office Park
Ground floor, Block A
Cnr Karee and John Vorster Streets
Irene, X54, 0062
Telephone: +27 12 612 0210
Transfer secretaries:
Computershare Investor Services Proprietary Limited
70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2017
South Africa
Telephone: +27 11 380 5000
JSE sponsor:
Questco Proprietary Limited
Claudia Adamson, Telephone: +27 11 011 9209
Investor presentation webcast and conference call
A presentation audio webcast and conference call for analysts and investors will be held on Thursday, 5 November 2015 at 1000hs CAT.
The results presentation can also be downloaded from the Company website www.sephakuholdings.com.
The link to access the webcast is: http://themediaframe.eu/links/sephold151105.html
The dial-in details into the conference call are as follows:
Other Countries - International +27 11 535 3600 or +27 10 201 6800
South Africa - Cape Town 021 819 0900
South Africa - Durban 031 812 7600
South Africa - Johannesburg Neotel 011 535 3600
South Africa - Johannesburg Telkom 010 201 6800
South Africa toll free number 0800 203 599
A playback facility will be available for 30 days as follows:
International +27 11 305 2030
South Africa 011 305 2030
Code: 41110
On behalf of the board
Pretoria
Chief executive officer Financial director
Dr. Lelau Mohuba Neil Crafford-Lazarus
5 November 2015
Enquiries contact:
Sakhile Ndlovu
Sephaku Holdings
Investor Relations: 012 612 0210
Sponsor to Sephaku Holdings: Questco (Pty) Ltd
About Sephaku Holdings Limited
Sephaku Holdings Limited 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 Metier Mixed Concrete (Pty)
Ltd. The strategy of SepHold is to generate growth and realise value for shareholders through the production of cement and ready
mixed concrete in Southern Africa.
www.sephakuholdings.com
Date: 05/11/2015 08:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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