Wrap Text
Abridged Audited Results for the Year Ended
28 February 2018 and Notice of Annual General Meeting
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 2018 AND NOTICE OF ANNUAL GENERAL MEETING.
FINANCIAL INDICATORS
2018 2017 % change
Revenue (Rm) 3 491 803 1 342 526 160
Net Profit (Rm) 71 160 29 447 142
Cash generated from operations (Rm) 164 377 88 928 85
Operating profit (Rm) 127 831 54 433 135
Earnings per share (cents) 18,47 11,01 68
Headline earnings per share (cents) 18,45 10,87 70
ABRIDGED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Restated)
Audited Audited
12 months 12 months
to to
28 February 28 February
2018 2017
R'000 R'000
Revenue 3 491 803 1 342 526
Cost of sales (3 146 379) (1 156 693)
Gross profit 345 424 185 833
Other operating income 1 195 841
Other operating gains/(losses) (1 989) 508
Other operating expenses (216 799) (132 749)
Operating profit 127 831 54 433
Investment revenue 402 266
Income from equity accounted investments 2 532 543
Finance costs (30 836) (16 355)
Profit before taxation 99 929 38 887
Taxation (28 769) (9 440)
Profit for the year 71 160 29 447
Other comprehensive income
Items that will not be reclassified to profit or loss:
Gains on property revaluations (net of taxation) 23 316 -
Total comprehensive income for the year 94 476 29 447
Profit attributable to:
The owners of the parent 71 467 29 571
Non-controlling interest (307) (124)
Total comprehensive income attributable to:
Owners of the parent 94 783 29 571
Non-controlling interest (307) (124)
EARNINGS AND HEADLINE EARNINGS PER SHARE
Audited Audited
12 months 12 months
to to
28 February 28 February
2018 2017
R'000 R'000
Basic attributable earnings per share is
calculated by dividing the net profit attributable
to the ordinary equity holders of the parent by
the weighted number of ordinary shares outstanding
during the year.
Reconciliation of profit or loss for the year
to
basic earnings:
Profit for the year 71 160 29 447
Loss for the year attributable to
non-controlling interest 307 124
Profit for the year attributable to equity
holders of the parent 71 467 29 571
Reconciliation of weighted average number of shares:
Number of shares in issue at the end of the year 410 000 291 644
Less: Weighted number of treasury shares held
in a subsidiary (23 112) (22 962)
386 888 268 682
Headline earnings for the group have been
computed as follows:
Profit attributable to equity holders 71 467 29 571
- Profit on sale of property, plant and equipment (99) (365)
Headline earnings 71 368 29 206
Earnings per share (cents) 18,47 11,01
Headline earnings per share (cents) 18,45 10,87
Diluted earnings per share (cents) 17,73 10,37
Diluted headline earnings per share (cents) 17,71 10,24
ABRIDGED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Restated)
Audited Audited
12 months 12 months
to to
28 February 28 February
2018 2017
R'000 R'000
Assets
Non-current assets
Property, plant and equipment 270 514 239 095
Goodwill 107 591 107 591
Intangible assets 11 525 11 836
Investments in joint ventures 577 670
Deferred taxation 3 388 7 609
393 595 366 801
Current assets
Inventories 147 944 152 546
Trade and other receivables 293 643 275 792
Current taxation receivable 5 312 3 166
Cash and cash resources 32 408 29 848
479 307 461 352
Total assets 872 903 828 153
Equity and Liabilities
Equity
Share capital 196 704 196 704
Treasury shares (19 399) (18 215)
Reserves 47 108 22 483
Retained earnings 174 454 116 579
Non-controlling interest (565) (258)
398 302 317 293
Liabilities
Non-current liabilities
Loans from shareholders 2 275 2 491
Other financial liabilities - at amortised cost 166 202 210 811
Deferred taxation 28 966 26 083
197 443 239 385
Current Liabilities
Other financial liabilities - at fair value
through profit and loss 2 697 2 823
Other financial liabilities - at amortised cost 72 295 74 214
Trade and other payables 192 055 162 111
Bank overdraft 10 110 32 327
277 157 271 475
Total liabilities 474 600 510 860
Total equity and liabilities 872 902 822 153
ABRIDGED CONSOLIDATED STATEMENT OF CASH FLOWS
Audited Audited
12 months 12 months
to to
28 February 28 February
2018 2017
R'000 R'000
Cash flows from operating activities
Cash generated from operations 164 377 88 928
Interest income 402 266
Finance costs (30 836) (16 355)
Tax paid (32 064) (11 244)
Net cash from operating activities 101 879 61 595
Cash flows from investing activities
Purchase of property, plant and equipment (1 613) (10 373)
Sale of property, plant and equipment 559 1 430
Purchase of intangible assets - (922)
Business combination - (230 546)
Dividends from investment in joint venture 2 636 -
Net cash from/(utilised in) investing activities 1 582 (240 411)
Cash flows from financing activities
Repurchase of treasury shares (1 184) (4 056)
Proceeds from share issue - 96 262
Proceeds from other financial liabilities 4 500 95 613
Repayment of other financial liabilities (69 772) (6 672)
Repayment of shareholders loans (216) (1 169)
Proceeds from shareholders loans - 296
Dividends paid (12 283) (10 149)
Net cash from financing activities (78 955) 170 125
Total cash movement for the year 24 506 (8 691)
Effect of exchange rate movement on cash balances 271 (4 008)
Cash at the beginning of the year (2 479) 10 220
Total cash at end of the year 22 298 (2 479)
ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Restated)
Share Share Treasury
capital premium shares
R'000 R'000 R'000
Balance at 1 March 2016 - 44 442 (14 159)
Changes in equity
Profit for the year - - -
Other comprehensive income for the year - - -
Transactions with non-controlling interests - - -
Shares issued - 152 262 -
Purchase of own/treasury shares - - (4 056)
Dividends - - -
Total changes - 152 262 (4 056)
Balance at 28 February 2017 - 196 704 (18 215)
Changes in equity
Profit for the year - - -
Total comprehensive income for the year - - -
Purchase of own/treasury shares - - (1 184)
Dividends - - -
Total changes - - (1 184)
Balance at 28 February 2018 - 196 704 (19 399)
ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (cont)
Share
based
Revaluation payment Retained
reserve reserve income
R'000 R'000 R'000
Balance at 1 March 2016 21 503 - 100 251
Changes in equity
Profit for the year - 980 28 591
Total other comprehensive income for the year - - -
Transactions with non-controlling interests - - (2 114)
Purchase of own/treasury shares - - -
Dividends - - (10 149)
Total changes - 980 16 328
Balance at 28 February 2017 21 503 980 116 579
Changes in equity
Profit for the year - 1 309 70 158
Total comprehensive income for the year 23 316 - -
Purchase of own/treasury shares - - -
Dividends - - (12 283)
Total changes 23 316 1 309 57 875
Balance at 28 February 2018 44 819 2 289 174 454
ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (cont)
Non-
controlling Total
interest equity
R'000 R'000
Balance at 1 March 2016 (2 284) 149 789
Changes in equity
Profit for the year (124) 29 447
Total other comprehensive income for the year - -
Transactions with non-controlling interests 2 144 -
Shares issued - 152 262
Purchase of own/treasury shares - (4 056)
Dividends - (10 149)
Total changes 1 990 167 504
Balance at 28 February 2017 (258) 317 293
Changes in equity
Profit for the year (307) 71 160
Total comprehensive income for the year - 23 316
Purchase of own/treasury shares - (1 184)
Dividends - (12 283)
Total changes (307) 81 009
Balance at 28 February 2018 (565) 398 202
SEGMENT REPORT
Non- Refrac-
ferrous Ferrous tory Plastics Total
R'000 R'000 R'000 R'000 R'000
2018
Revenue
Sale of goods 2 878 575 431 902 104 600 72 533 3 487 610
Rendering of services 65 - 4 128 - 4 193
2 878 640 431 902 108 728 72 533 3 491 803
Cost of sales 2 612 114 390 126 94 610 49 529 3 146 379
Gross profit 266 526 41 776 14 118 23 004 345 424
Other income 1 195 - - - 1 195
Profit before operating
and
administration
expenses 267 721 41 776 14 118 23 004 346 619
Operating and
administration expenses
Communication 2 178 139 38 126 2 481
Employment costs 94 025 8 958 1 784 11 420 116 187
Motor vehicle expenses 16 848 4 415 147 965 22 375
Other expenses 45 963 1 834 474 5 217 53 488
Occupancy 15 870 2 464 - 5 923 24 527
174 884 17 810 2 443 23 651 218 788
Operating profit before
finance income 92 837 23 966 11 675 (647) 127 831
Non- Refrac-
ferrous Ferrous tory Plastics Total
R'000 R'000 R'000 R'000 R'000
Revenue
Sale of goods 1 002 402 174 818 109 694 50 808 1 337 722
Rendering of services 36 - 4 768 - 4 804
1 002 438 174 818 114 462 50 808 1 342 526
Cost of sales 867 900 153 903 100 454 34 436 1 156 693
Gross profit 134 538 20 915 14 008 16 372 185 833
Other income 1 349 - - - 1 349
Profit before operating
and administration
expenses 135 887 20 915 14 008 16 372 187 182
Operating and
administration expenses
Communication 1 244 93 50 147 1 534
Employment costs 49 925 3 624 2 744 8 144 64 437
Motor vehicle expenses 4 422 578 187 765 5 952
Other expenses 39 960 1 054 206 2 816 44 036
Occupancy 12 105 143 19 4 523 16 790
107 656 5 492 3 206 16 395 132 749
Operating profit before
finance income 28 231 15 423 10 802 (23) 54 433
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 considered a combination of factors, including geographical, product types
and managerial structure, to determine the operating and reporting 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. The management
Executive Committee assesses the performance of the operating
segments based on sales and
gross profit margin.
The main industries serviced by the Insimbi group are the foundry, steel, plastics and
refractory industries. The segments have been aggregated as such, as they operate in
the
same economic environment, the products are similar and are governed by the same
principles in terms of pricing and management structures.
COMMENTARY
The directors have pleasure in presenting their report on the activities of the company
and the group for the year ended 28 February 2018.
1. Basis of Preparation and Accounting Policies
The results for the year ended 28 February 2018 have been prepared in accordance with
International Financial Reporting Standards (IFRS), 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 2018 are consistent with those applied in the
consolidated financial statements for the year ended 28 February 2017. 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 2018. 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 or on our website, http://www.insimbi-iras.co.za.
These abridged financial statements have been prepared on a going concern basis, under
supervision of the Chief Executive Officer, Mr F Botha CA(SA) and the Chief Financial
Officer, Mr AJ de Wet CA(SA).
2. Review of activities
Insimbi provides the steel, aluminium, cement, foundry, plastics, paper and pulp
industries with resource-based commodities like ferrous and non-ferrous alloys, as well
as refractory materials, by integrating the supply, logistics and technical support
functions.
Insimbi continues to operate from premises in Johannesburg, Durban and Cape Town,
including the Amalgamated Metals Recycling ("AMR") group active from sites in Devland,
Booysens and Roodepoort on the West Rand. Insimbi has exported goods and materials across
the world, including South America (Argentina and Brazil), Australia, Middle East
(Bahrain, Israel and UAE), China and Asia (Hong Kong, India, Malaysia, Singapore and
Taiwan), elsewhere in Africa (Angola, Botswana, DRC, Ghana, Kenya, Malawi, Mozambique,
Namibia, Nigeria, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe), Europe (Germany,
Spain, Sweden and Switzerland) and the USA.
3. Financial Review
Insimbi has a had a respectable year, reaching revenue of R3,5 billion in the year
under
review with gross profit of R345 million, a margin of 9,9%. AMR delivered
significantly
more revenue than forecast, contributing 73% of the overall turnover of
the group, 56% of
the gross profit and 72% of the operating profit.
The "foundation" business of Insimbi, however, experienced a challenging year in the
steel
industry with local raw material supply having to be replaced by imports in a weak
Rand/US
Dollar exchange rate environment and requiring settlement in advance or on
delivery. The
local steel industry was also under pressure from cheaper import of
finished product from
the east and subdued spend on infrastructure and a sluggish economy.
The aluminium smelter business has seen a healthy 20,6% growth in turnover whilst the
plastics turnover grew by 29,6%. The plastics business expanded into the Western Cape
and
KwaZulu-Natal; however, it incurred some once-off setup costs.
Revenue increased 160% from R1,3 billion to R3,5 billion. Despite lower margins from the
recycling business gross profit increased from R185,8 million to R345,4 million. The
margins were depressed in the fourth quarter by a sharp decrease in the prices of
affected
commodities combined with a sudden and dramatic strengthening of the ZAR against
other
major currencies and so despite a comparable trading period in the second half of
the
year, lower margins impacted on the second half of the year's profitability.
Operating profit rose 135% from R54,4 million to R127,8 million, which reflects the
impact
of lower margins in the metal recycling business relative to the revenue growth.
Operating
expenses grew by 63,5% from R132,7 million to R216,8 million as a result of
the lower cost
base of the recycling operation. Employee costs constitutes 51,2% (2017:
53,9%) of
operating expenses and management is constantly reviewing this metric to ensure
our
ability to optimally deliver product to our clients.
Finance costs increased in line with expectations as a result of senior debt funding for
the acquisition of AMR in 2016. The group optimises finance costs through an internal
treasury function.
The land and buildings were revalued by an independent professional valuer at year-end,
resulting in an upward adjustment of R31,7 million. Other fixed asset additions amounted
to R20,4 million, which was mainly to the vehicle fleet.
4. Market and Prospects
Whilst we are looking forward to the positive impact on the local economy of the
interventions by government in attracting foreign investment, we expect trading
conditions
to remain challenging in the coming year. We will continue to monitor operating
expenses
and ensure we are able to maximise efficiencies and scale where appropriate.
The
diversification which the group has implemented over recent years combined with hard
work
and cost optimisation should ensure another successful financial outcome for 2019.
5. Special resolutions
No special resolutions were passed in the year under review.
6. Post balance sheet events
There have been no material post balance sheet events.
7. Directors
There have been a number of changes to the board of directors during the year under
review:
- Mr PJ Schutte resigned on 31 May 2017 and Mr F Botha was appointed the Chief Executive
Officer with effect from 1 June 2017;
- Mr CF Botha and EP Liechti resigned as directors on 31 May 2017;
- Mr B Craig resigned as chairperson on 8 December 2017 and as director on
15 December 2017;
- Mr RI Dickerson was appointed as chairperson on 8 December 2017; and
- Mr AJ de Wet was appointed on 16 October 2017.
8. Company secretary
Ms SK Saunders resigned with effect from 1 November 2017. Mr AJ de Wet performed the
function as interim Company Secretary until Mr TN Kgari was subsequently appointed on
1 April 2018. The Company Secretary fulfils no executive management function and is not
a
director. Mr. Kgari holds a BA Law and LLB degree, and is an admitted attorney. He was
previously employed in the role of company secretary by Land Bank, Industrial Development
Corporation, Legal Aid South Africa and MTN and has more than 12 years' experience in
that
role.
9. Authorised and issued share capital
There were no ordinary shares issued in the period under review.
10. Dividends
An interim dividend number 15 of 3 cents per share (2017: 1,5 cents) or R12 283 079
(2017: R3 898 384) was declared on 21 September 2017 for the half year ended
31 August
2017. The board has elected to retain this conservative approach and has opted
to declare
a final dividend number 16 of 3 cents per share (2017: nil cents) or
R12 265 896
(2017: R nil).
The board has confirmed by resolution that the solvency and liquidity test as contemplated
by the Companies Act, No. 71 of 2008, as amended, has been duly considered, applied and
satisfied. This is a dividend as defined in the Income Tax Act, 1962, and is payable from
income reserves. The South African dividend tax rate is 20,0%. The dividend payable to
shareholders who are subject to dividend tax and shareholders who are exempt from dividend
tax is 2,4 cents and 3,0 cents per share, respectively. The income tax number of the company
is 9078488153.
The total dividend payable in the year under review was therefore 6 cents per share or
R24 548 975 (2017: 1,5 cents per share or R 3 898 384).
11. Dividend dates
Last day to trade cum dividend Tuesday, 12 June 2018
Commence trading ex dividend Wednesday, 13 June 2018
Record date Friday, 15 June 2018
Payment date Monday, 18 June 2018
Shares certificates may not be dematerialised or rematerialised between Wednesday,
13 June and Friday, 15 June 2018, both dates inclusive.
12. Notice of Annual General Meeting
Notice is hereby given that the eleventh annual general meeting of Insimbi will be held
at Insimbi' s offices at Stand 359 Crocker Road, Wadeville, Extension 4, Germiston on
Tuesday, 3 July 2018 at 10:00, to transact the business as stated in the notice of
annual
general meeting included in the Integrated Annual Report which will be posted to
shareholders and on the Company's website today.
Lastly I would like to extend my gratitude to all our stakeholders, including our
shareholders, our customers, our suppliers and most importantly the Insimbi family
without all of whom we would not have achieved everything that we needed to achieve.
I would also like to thank my Exco and board members for their unwavering support since
I have taken over as CEO and I hope we are able to build on our relationships going
forward.
By order of the Board
Frederick Botha
Chief Executive Officer
Directors: F Botha (Chief Executive Officer)
AJ de Wet (Chief Financial Officer)
C Coombs
RI Dickerson* (Chairperson)
IP Mogotlane*
N Mwale*
CS Ntshingila*
(*non-executive)
Company Secretary: TN Kgari
Registered office: Stand 359 Crocker Road, Wadeville, Germiston, 1422
Website: www.insimbi-iras.co.za
Sponsor: Bridge Capital Advisors Proprietary Limited
Transfer Secretaries: Computershare Investor Services Proprietary Limited
Auditors: PricewaterhouseCoopers Inc.
29 May 2018
Date: 29/05/2018 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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