TIDMMDM
RNS Number : 5960U
MDM Engineering Group Ltd
04 December 2013
MDM Engineering Group Limited
("MDM" or the "Company")
Interim Financial Results for the six months ended 30 September
2013
MDM Engineering Group Limited (AIM: MDM), the minerals process
and project management company focused on the mining industry, is
pleased to announce its interim results for the six month period
ended 30 September 2013.
Highlights:
-- Strong cash position of US$32.0 million (2012: US$20.1 million) with negligible gearing;
-- Revenue of US$53.6 million (2012: US$78.9 million);
-- Pre-tax profit of US$5.0 million (2012: US$8.1million);
-- Basic earnings per share of US8.70 cents per share (2012: US 15.94 cents);
-- Interim dividend of US4.35 cents per share (2012: US 8.00 cents);
-- Special dividend of US3.65 cents per share (2012: Nil) over and above the interim dividend;
-- Continued commitment to pay 50% of after-tax profits as a dividend to shareholders; and
-- Strong pipeline for continued growth at both feasibility and project levels.
MDM's Chief Executive Officer, Mr. Martin Smith commented:
"I am very pleased that MDM has produced solid results for the
six months ended 30 September 2013 despite the industry suffering a
difficult year. We have a high-quality order book continuing
through from FY2013 into FY2014 with large projects in execution,
contributing to revenue and associated profits. The flagship
project for MDM in FY2014 is African Barrick Gold's ("ABG")
Bulyanhulu project in Tanzania which is due for completion in the
first quarter 2014 calendar year.
During the first half of FY 2014, MDM saw a continuous demand
for its services through multiple enquiries for study work and
smaller brown-fields execution projects, with a high success rate
in securing these opportunities. Our safety record remains a high
priority for MDM and we are proud to have achieved a Lost Time
Injury Frequency Rate of 0.15, well below the industry norm of
0.25".
Financial Review
The gross profit margin for the first half is 19.9%,which is
4.1% lower than the gross profit margin of 24.0% for the full year
ending 31 March 2013. MDM recorded a profit before tax of US$5.0
million for the first half of FY2014, which represents a 38%
decrease from the comparable period's profit before tax of
US$8.1million. This decrease is primarily a result of cashflow from
the Bulyanhulu project being timed to peak during the next half
year, and the lower workload since 31 March 2013 following the
completion of the Tharisa 3.6 million tonne per annum ("Mtpa")
chrome and platinum project in FY2013.
The cash balance, since year end, has reduced by US$2.60 million
to US$32.0 million, which is primarily associated with the movement
of working capital between debtors and creditors and the full year
2013 dividend payment.
The MDM Board continues to believe that the Company has a robust
business model, generates strong cash flow from operations and is
well positioned with a growing project pipeline during the 2014
financial year. The MDM Board is pleased to declare an interim cash
dividend of US 8.00 cents per share, which includes the special
dividend of US 3.65 cents per share, payable on 22 January 2014 to
all shareholders on the register on 13 December 2013. The interim
dividend will have an ex-dividend date of 11 December 2013. The
special dividend is as a result of MDM's strong cash position and
the anticipated increase in the forward project pipeline.
Detailed Operational Review
Highlights for the half year period ending September 2013:
In the first half of FY2014, MDM continued the execution of four
projects secured in FY2013. These include the Bulyanhulu gold
project for ABG in Tanzania, the Namoya gold project for Banro in
the Democratic Republic of the Congo ("DRC"), the Kalagadi Umtu
manganese project for Kalahari Resources in the Republic of South
Africa and the DSF phosphate project for Foskor in South Africa.
These projects are scheduled for completion in calendar year
2014.
MDM has also been successful in securing the execution of the
GoGold Resources silver and gold tailings project in Parral,
Mexico. Currently MDM has started the earthworks on site with most
of the engineering and procurement underway. This project is very
important for MDM as it demonstrates the Company's capability
outside of Africa. MDM expects, on completion of this project in
2014, to enter into more project negotiations in this region.
MDM has also completed studies which it anticipates will result
in on-going work that may lead to early execution projects,
including: the Gold One Sibanye West Rand Tailings Retreatment gold
project and the BRPM Royal Bafokeng platinum project.
Outlook for the balance of FY2014:
The outlook for the second half of FY2014 is expected to be
profitable and in-line with market expectations with some of the
larger projects due for completion before year-end.
Further to those projects highlighted above, MDM is currently
working on the following:
Anglo Gold Ashanti ("AGA"), completion of MWS Uranium Plant,
South Africa
The AGA completion of the MWS Uranium Plant is the continuation
of a project (built by MDM), which was suspended by First Uranium
before it was sold to AGA. The project includes the de-mothballing
and completion of the plant which was about 90% built in 2009. The
plant is on-track for commissioning in 2013.
Harmony, Kalgold plant upgrade, South Africa
MDM is responsible for the engineering and procurement of the
planned upgrade alongside the brown-fields modifications together
with Harmony's in-house construction teams, with the technical
assistance from MDM.
Gold Fields International, Tarkwa CIL upgrade, Ghana
This project was originally one of the large projects targeted
by MDM, but after completing the early design and initial
earthworks on site in 2012, the project was suspended in the first
quarter of 2013 due to the decline in the prevailing gold price.
MDM, however, is currently working with the client on a reduced
scale brown-fields plant modification to improve its
throughput.
Early works on various execution projects
MDM has been successful in securing two further execution
contracts with key clients for smaller expansion projects for
existing facilities. These smaller expansion projects are
approximately US$15 million in value.
Pre-Feasibility Studies ("PFS") and Bankable Feasibility Studies
("BFS"):
MDM is involved in various studies which have the potential to
develop into execution projects in the short to medium term. These
studies include:
Gold One / Sibanye, West Rand Tailings Retreatment Project
("WRTRP"), South Africa
MDM completed the PFS in September 2013 to determine a viable
strategy. The study concluded that the company should proceed in
stages over the next few years to reclaim various historical
tailings deposits in the most economical way and redeposit them
into a new mega tailings dam. MDM continues to work with the client
on this strategy.
Royal Bafokeng, BRPM 250 ktpm Merensky upgrade, South Africa
Located in the North West region of South Africa, this project
involves upgrading an existing platinum processing plant to cater
for an increase in throughput and capability to handle different
ore reefs. Currently, a Definitive Feasibility Study ("DFS")
together with a PFS study will be undertaken with early brown-field
execution work anticipated to commence in 2014.
Hummingbird Resources, Dugbe project, Liberia
MDM was appointed lead consultant for Hummingbird's DFS and
Front End Engineering and Design ("FEED") in July 2013. The project
is currently on track for completion by the end of 2014. MDM also
managed to secure the project funding support from the Department
of Trade and Industry ("DTI") in South Africa.
Ivanhoe, Kipushi Rehabilitation and Re-development Project,
DRC
MDM won the scoping study contract for Ivanhoe's zinc project in
August 2013. Currently metallurgical test work is taking place at
Mintek and MDM anticipates proceeding to the next project phase in
the near future.
Further studies
MDM continues to work on other smaller studies for potential
projects located in the African region.
Outlook:
The current subdued commodities market and the weak gold price
has resulted in a reduction of capital spending on new projects and
rather optimising current operations. This means MDM will look to
focus more on using its specialist know-how and experience to
improve recoveries for clients on their existing facilities. MDM
has a number of large projects in its pipeline, but its main focus
for the short-to-medium-term will be on the smaller scale
operations.
Enquiries:
MDM Engineering Group Limited Tel: +27 11 993-4300
Martin Smith (CEO)
George Bennett (Executive Director)
Canaccord Genuity Limited Tel: +44 (0) 207 523 8000
NOMAD and Broker
Neil Elliot
Chris Fincken
Joe Weaving
Tavistock Communications Tel: +44 (0) 207 920 3150
Financial Public Relations and
Investor Relations
Emily Fenton
Jos Simson
About MDM:
MDM Engineering Group Limited is a minerals process and project
management company focused on the mining industry. The Company
provides a wide range of services from preliminary and final
feasibility studies, through to plant design, construction and
commissioning. To date, the Company's clients have largely been
junior and mid-tier mining corporations with operations in
Africa.
The MDM Engineering core technical team has a 25 year track
record of completing a wide range of studies and execution projects
across a variety of minerals, including precious metals, base
metals, ferrous and non-ferrous metals, uranium and diamonds.
The Company has adopted an approach to project execution based
on an open-book Engineering, Procurement, and Construction
Management "EPCM" or "cost-plus" basis and on a Engineering,
Procurement and Construct ("EPC") basis. With a core focus on
Africa, MDM Engineering is setting the benchmark standard for best
practice in the mining services industry through its commitment to
providing the highest quality services and actively engaging with
clients to ensure maximum transparency.
www.mdm-engineering.com
Financial Statements
Consolidated statement of Financial Position
Unaudited Unaudited
30 September 30 September 31 March
2013 2012 2013
Notes US$ US$ US$
Assets
Non-current assets 969 221 2 383 266 1 678 105
Property, plant and equipment 623 048 865 417 808 527
Intangible asset 16 500 26 351 20 716
Deferred tax 329 673 1 491 498 848 862
============= ============= =============
Current assets 48 446 322 51 723 117 59 701 399
Trade and other receivables 3 14 505 946 30 304 835 24 191 154
Income tax receivable 1 920 973 539 490 912 317
Cash and cash equivalents 4 32 019 403 20 878 792 34 597 928
============= ============= =============
Total assets 49 415 543 54 106 383 61 379 504
============= ============= =============
Equity and liabilities
Capital and reserves attributable
to equity holders of the
parent 23 249 191 24 271 161 27 702 689
Share capital 5 374 591 374 591 374 591
Treasury shares 6 (177 276) (177 276) (177 276)
Foreign currency translation
reserve 7 (2 933 952) 462 979 (1 426 625)
Accumulated profit 25 985 828 23 610 867 28 931 999
============= ============= =============
Non-current liabilities 506 063 44 548 940 503
Deferred tax liability 484 111 - 910 011
Interest bearing liability 8 21 952 44 548 30 492
============= ============= =============
Current liabilities 25 660 289 29 790 674 32 736 312
Trade and other payables 9 17 010 490 11 985 616 15 292 052
Gross amounts due to customers 10 4 399 718 15 090 953 12 106 883
Current portion of interest
bearing liability 8 14 309 19 211 17 809
Provisions 11 1 182 420 915 271 3 228 852
Income tax payable 3 053 352 1 779 623 2 090 716
============= ============= =============
Total equity and liabilities 49 415 543 54 106 383 61 379 504
============= ============= =============
Consolidated statement of profit for the six months ended 30 September
2013
Unaudited Unaudited
six months six months Year
ended Ended ended
30 September 30 September 31 March
2013 2012 2013
Notes US$ US$ US$
Revenue 53 593 743 78 859 448 137 198 843
(104 238
Cost of sales (42 947 474) (65 624 110) 909)
============== ============== =============
Gross profit 10 646 269 13 235 338 32 959 934
Operating expenses (6 430 415) (5 838 990) (13 606 648)
Other income 406 180 440 339 549 490
============== ============== =============
Operating profit 4 622 034 7 836 687 19 902 776
Investment income 12 401 372 227 096 498 511
Financial expense 13 (1 903) (4 565) (10 736)
============== ============== =============
Profit before taxation 14 5 021 503 8 059 218 20 390 551
Taxation 15 (1 762 849) (2 088 316) (6 239 609)
Profit for the period /year
attributable to equity holders
of the parent 3 258 654 5 970 902 14 150 942
============== ============== =============
Earnings per share:
Basic earnings per share
- US cents 16 8.70 15.94 37.78
Diluted earnings per share
- US cents 16 8.54 15.67 36.99
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE
INCOME
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013
Profit for the period / year 3 258 654 5 970 902 14 150 942
Other comprehensive income
(all recyclable upon disposal
of subsidiaries)
Exchange rate losses on translation
of foreign operations (1 507 327) (841 756) (2 731 360)
Total comprehensive income for
the period / year attributable
to equity holders of the parent 1 751 327 5 129 146 11 419 582
============== ============ ==============
Consolidated statement of changes in equity for the six months ended
30 September 2013
Share capital Foreign currency Retained Treasury Total
translation Earnings Shares
reserve
US$ US$ US$ US$ US$
Balance at 1 April 2012 374 591 1 304 735 19 464 881 (177 276) 20 966 931
Profit for the period - - 5 970 902 - 5 970 902
Foreign currency translation
differences - (841 756) - - (841 756)
Total comprehensive income
attributable to equity holders
of the parent - (841 756) 5 970 902 - 5 129 146
================================= ============= ================ =========== ========= ===========
Share option charge - - 122 958 - 122 958
Dividends paid - - (1 947 874) - (1 947 874)
Balance at 30 September 2012 374 591 462 979 23 610 867 (177 276) 24 271 161
================================= ============= ================ =========== ========= ===========
Balance at 1 October 2012 374 591 462 979 23 610 867 (177 276) 24 271 161
Profit for the period - - 8 180 040 - 8 180 040
Foreign currency translation
differences - (1 889 604) - - (1 889 604)
Total comprehensive income
attributable to equity holders
of the parent - (1 889 604) 8 180 040 - 6 290 436
================================= ============= ================ =========== ========= ===========
Share option charge - - 139 634 - 139 634
Dividends paid - - (2 998 542) - (2 998 542)
Balance at 31 March 2013 374 591 (1 426 625) 28 931 999 (177 276) 27 702 689
================================= ============= ================ =========== ========= ===========
Balance at 1 April 2013 374 591 (1 426 625) 28 931 999 (177 276) 27 702 689
Profit for the period - - 3 258 654 - 3 258 654
Foreign currency translation
differences - (1 507 327) - - (1 507 327)
Total comprehensive income
attributable to equity holders
of the parent - (1 507 327) 3 258 654 - 1 751 327
================================= ============= ================ =========== ========= ===========
Share option charge - - 137 677 - 137 677
Dividends paid - - (6 342 502) - (6 342 502)
Balance at 30 September 2013 374 591 (2 933 952) 25 985 828 (177 276) 23 249 191
================================= ============= ================ =========== ========= ===========
Consolidated statement of cash flows for the six months ended 30
September 2013
Unaudited Unaudited
six months six months Year
Ended Ended ended
30 September 30 September 31 March
2013 2012 2013
Notes US$ US$ US$
Cash flows from operating activities 7 102 901 (4 973 573) 14 907 904
============= ============= ============
Cash generated / (utilized) by
operations 17 7 102 901 (4 973 573) 14 907 904
============= ============= ============
Cash flows from investing activities 343 359 (102 849) (22 337)
============= ============= ============
Acquisition of property, plant
and equipment (56 110) (325 380) (510 112)
Net interest received 399 469 222 531 487 775
============= ============= ============
Cash flows from financing activities (6 354 542) (1 962 679) (4 976 679)
============= ============= ============
Dividends paid (6 342 502) (1 947 874) (4 946 416)
Long term loans repaid (12 040) (14 805) (30 263)
============= ============= ============
Net increase / (decrease) in
cash and cash equivalents 1 091 718 (7 039 101) 9 908 888
Foreign exchange differences (3 670 243) (1 200 422) (4 429 275)
Cash and cash equivalents at
start of the period / year 34 597 928 29 118 315 29 118 315
============= ============= ============
Cash and cash equivalents at
end of period / year 32 019 403 20 878 792 34 597 928
============= ============= ============
Notes to the Interim Results
NOTES TO THE FINANCIAL STATEMENTS
1.General information
MDM Engineering Group Ltd ("the Company") is a company
incorporated in the British Virgin Islands. The Company and its
subsidiaries ("the Group") are involved in minerals process
engineering and project management. The principal operations are
currently based in South Africa. Services include preliminary and
final (bankable and definitive) feasibility studies, through to
plant design, construction and commissioning.
The individual financial statements of the Group companies are
presented in the currencies of the primary economic environment in
which they operate. For the purpose of the consolidated financial
statements, the results and financial position of the Group are
presented in US dollars (US$).
2.Accounting policies
Basis of preparation
These condensed consolidated interim results have been prepared
in accordance with International Financial Reporting Standard
("IFRS") IAS 34 Interim Financial Reporting. They do not constitute
the Group's financial statements and have not been reviewed or
audited by the Company's auditors.
These interim results should be read in conjunction with the
consolidated financial statements of the Group as at and for the
year ended 31 March 2013 which were prepared under International
Financial Reporting Standards, as adopted by the European Union,
and have been reported on by the Company's auditors. The auditors'
report was unmodified.
The interim results were approved by a duly appointed and
authorised committee of the Board of Directors on 2 December
2013.
Going concern
The directors regularly review cash flow forecasts of the Group
to determine whether the Group has sufficient cash reserves to meet
the future working capital requirements. When compared to last
year, the Group's current order book is at similar levels to that
of the previous year at the same time.
The Group still continues to see many requests for proposal and
tenders from various commodities, despite this current difficult
time experienced in the resources sector.
The forecasting of the business and cash flow numbers do require
a set of assumptions and carries certain risks in that those
studies and projects are included in the forecasting in
anticipation of their being awarded. Clearly, should these not
eventuate then the forecast numbers for a given year will be
different.
The Board of directors are of the opinion that the Group, using
actual secured studies and projects, will have the necessary cash
resources to meet the current working capital requirements. The
consolidated financial statements are prepared on the assumption
that the Group is a going concern on the basis that the directors
are satisfied that sufficient financial resources will be available
to meet the Group's current and foreseeable working capital
needs.
Standards in issue, not yet effective
There have been no changes to accounting policies as a result of
standards and interpretations that became effective for this
accounting period. Any standards and interpretations that have been
issued but are not yet effective, and that are available for early
application, have not been applied by the Group in these financial
statements. Application of these Standards and Interpretations is
not expected to have a material effect on the financial statements
in the future.
Critical accounting estimates and judgments
Estimates and judgments are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances.
The Company makes estimates, assumptions and significant
judgments concerning the future. The resulting accounting estimates
will, by definition, seldom equal the related actual results. The
estimates and judgments that have a significant risk of causing a
material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below.
Accounting for long term contracts
The Company makes estimates and judgments concerning the future,
particularly as regards long term contract profit taking,
provision, arbitrations and claims. The resulting accounting
estimates can, by definition, only approximate the actual results.
Estimates and judgments are continually evaluated and are based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances.
Share-based payments
The Group issues equity-settled share-based payments.
Equity-settled share-based payments are measured at fair value at
the date of the grant. The fair value and the vesting period uses
management assumptions in their calculation.
While management believes the assumptions used are appropriate,
a change in the assumptions used would impact the results of the
Group.
Consolidation policy
The consolidated financial statements combine the financial
statements of the individual entities comprising the Group.
The effects of all transactions between entities in the Group
have been eliminated in full and the consolidated financial
statements have been prepared using uniform accounting policies for
like transactions and other events in similar circumstances.
Subsidiaries are all entities over which the Group has the power
to govern the financial and operating policies so as to obtain
benefit from their activities. Subsidiaries are fully consolidated
from the date on which control is transferred until the date that
the control ceases.
The purchase method of accounting is used to account for the
acquisition of subsidiaries by the Group.
Revenue recognition
Revenue for services rendered is recognised as services are
rendered. Revenue is not recognised when it cannot be measured
reliably or where there are significant uncertainties regarding the
recovery of the consideration due, associated costs or continuing
management involvement with the services rendered.
Construction contracts
A construction contract is a contract specifically negotiated
for the construction of an asset or a combination of assets that
are closely interrelated or interdependent in terms of their
design, technology and functions, or their ultimate purpose or use.
Contract costs are recognised when incurred. When the outcome of
the construction contract cannot be estimated reliably, contract
revenue is recognised only to the extent of the contract expenses
incurred that are likely to be recoverable. When the outcome of a
construction contract can be estimated reliably and it is probable
that the contract will be profitable, contract revenue is
recognised using the percentage of completion method. When it is
probable that the total contract costs will exceed total contract
revenue, the expected loss is recognised as an expense
immediately.
The Group uses the 'percentage of completion method' to
determine the appropriate revenue to recognise in a given period.
The stage of completion is measured with reference to the contract
costs incurred up to the reporting date as a percentage of total
estimated costs for each contract.
The Group presents as an asset the gross amounts due from
customers for contract work for all contracts in progress for which
costs incurred plus recognised profits (less recognised losses)
exceed progress billings. Progress billings not yet paid by
customers and retentions are included in trade and other
receivables.
The Group presents as a liability (excess billings over work
done) the gross amounts due to customers for contract work for all
contracts in progress for which progress billings exceed costs
incurred plus recognised profits (less recognised losses).
Leases
A distinction is made between finance leases which transfer from
the lessor to the lessee substantially all the risks and rewards
incidental to ownership of the leased asset and operating leases
under which the lessor retains substantially all the risks and
rewards. Where an asset is acquired by means of a finance lease,
the fair value of the leased property or the present value of
minimum lease payments, if lower, is established as an asset at the
beginning of the lease term.
A corresponding liability is also established and each lease
payment is apportioned between the finance charge and the reduction
of the outstanding liability. Operating lease rental expense is
recognised as an expense on a straight line basis over the lease
term, or on a systematic basis more representative of the time
pattern of the user's benefit.
Taxation
The tax expense for the period comprises current and deferred
tax. Tax is recognised in the income statement, except to the
extent that it relates to items recognised in other comprehensive
income or directly in equity. In this case the tax is also
recognised in other comprehensive income or directly in equity,
respectively.
Deferred tax is provided using the liability method on temporary
differences at the balance sheet date between the tax bases of
assets and liabilities and their carrying amounts for financial
reporting purposes. Deferred tax is determined using tax rates
enacted or substantively enacted at the balance sheet date and are
expected to apply when the related deferred tax liability is
settled. Deferred tax assets are recognised only to the extent that
it is probable that future taxable profits will be available
against which the temporary differences can be utilised.
Deferred tax liabilities are recognised for all taxable
temporary differences, except in respect of taxable temporary
differences associated with investments in subsidiaries where the
timing of the reversal of the temporary differences can be
controlled and it is probable that the temporary differences will
not reverse in the foreseeable future.
Unrecognised deferred tax assets are reassessed at each balance
sheet date and are recognised to the extent that it has become
probable that future taxable profit will allow the deferred tax
asset to be recovered.
Deferred tax assets and deferred tax liabilities are offset if a
legally enforceable right exists to set off current income tax
assets against current income tax liabilities and the deferred
taxes relate to the same taxable entity and the same taxation
authority.
Impairment of assets
The Group assesses at each balance sheet date whether there is
any indication that any of its assets have been impaired. If such
indication exists, the asset's recoverable amount is estimated and
compared to its carrying value.
Impairment losses are immediately recognised as an expense in
the income statement, unless the relevant asset is carried at a
revalued amount in which case the impairment loss is treated as a
revaluation decrease. A reversal of an impairment loss is
recognised immediately in the income statement, unless the relevant
asset is carried at a revalued amount, in which case the reversal
of the impairment loss is treated as a revaluation increase.
Translation of foreign currency transactions
Transactions in foreign currencies on initial recognition in the
functional currency are recorded by applying to the foreign
currency amount the spot exchange rate at the date of the
transaction. At each balance sheet date:
(a) foreign currency monetary items are reported using the
closing rate; and
(b) non-monetary items which are measured in terms of historical
cost in a foreign currency are translated using the exchange rate
at the date of the transaction.
Exchange differences arising on the settlement of monetary items
or on translating monetary items at rates different from those at
which they were initially translated during the period are
recognised in the income statement in the period in which they
arise.
Translation of the financial statements of foreign
operations
The following procedures are used in translating the results and
financial position of the entity from its functional currency to
the presentation currency:
(a) assets and liabilities at the closing rate at the balance
sheet date;
(b) income and expense items at exchange rates at the dates of
the transactions; and
(c) all resulting exchange differences recognised as a separate
component of equity.
Exchange differences arising on a monetary item that forms part
of the net investment in a foreign operation are recognised
initially in a separate component of equity and recognised in
profit or loss on disposal of the net investment.
Trade and other receivables
Trade receivables, loans and other receivables that have fixed
or determinable payments that are not quoted in an active market
are classified as loans and receivables. Loans and receivables are
measured at amortised cost using the effective interest method,
less any impairments. Interest income is recognised by applying the
effective interest rate, except for short-term receivables when the
recognition of interest would be immaterial.
Property, plant and equipment
These assets are stated at cost and are depreciated on the
straight-line basis at annual rates considered appropriate to
reduce book values to estimated residual values over the remaining
useful lives as follows:
Computer equipment - 33.3%
Furniture and fittings - 16.67%
Leasehold improvements - over period of lease
Motor vehicles - 20%
Office equipment - 20%
Plant and equipment - 20%
Residual values and useful economic lives are reassessed on an
annual basis.
Intangible assets
Intangible assets are stated at cost less accumulated
amortisation and any possible impairment losses. The intangible
asset is amortised over 10 years on the straight line method and
charged to the income statement.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and other
short-term highly liquid investments that are convertible to a
known amount of cash.
Trade and other payables
Trade accounts, notes payable, other payables and accrued
liabilities represented the principal amounts outstanding at
balance sheet date plus, where applicable, any accrued
interest.
Short-term employee benefits
Short term employee benefits are employee benefits (other than
termination benefits and equity compensation benefits) which fall
due wholly within 12 months after the end of the period in which
employee services are rendered. They comprise wages, salaries,
social security obligations, short-term compensation absences,
profit sharing and bonuses payable within 12 months and
non-mandatory benefits such as medical care, housing, car, and
service goods.
The undiscounted amount of short-term employee benefits expected
to be paid is recognised as an expense.
Share-based payment arrangements
Goods or services received or acquired in a share-based payment
transaction are recognised as an increase in equity if the goods or
services were received in an equity-settled share-based payment
transaction or as a liability if the goods and services were
acquired in a cash settled share-based payment transaction.
For equity-settled share-based transactions, goods or services
received are measured directly at the fair value of the goods or
services received provided this can be estimated reliably.
If a reliable estimate cannot be made the value of the goods or
services is determined indirectly by reference to the fair value of
the equity instrument granted. The Black - Scholes model is used in
the determination of the fair value at the date of measurement for
equity-settled share-based transactions.
Transactions with employees and others providing similar
services are measured by reference to the fair value at grant date
of the equity instrument granted and are charged to the income
statement over the vesting period of the equity instrument.
Provisions
Provisions are recognised in the balance sheet when there is a
present legal or constructive obligation as a result of a past
event and it is probable that an outflow of economic benefits will
be required to settle the obligation and a reliable estimate can be
made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the
balance sheet date, taking into account the risks and uncertainties
surrounding the obligation.
Segmental Reporting
IFRS 8 Operating Segments requires operating segments to be
identified on the basis of internal reports about components of the
Group that are regularly reviewed by the chief operating decision
maker in order to allocate resources to the segments and to assess
their performance.
Unaudited Unaudited
30 September 30 September 31 March
2013 2012 2013
US$ US$ US$
3 Trade and other receivables
Trade receivables 14 014 289 30 043 883 23 182 244
Prepayments 83 054 151 310 150 884
Other 408 603 109 642 858 026
------------- ------------- -----------
14 505 946 30 304 835 24 191 154
------------- ------------- -----------
Provision for impairment
of debtors
Opening balance 124 801 - -
Provided for in the year - - 124 801
Translation difference - - -
------------- ------------- -----------
Closing balance 124 801 - 124 801
------------- ------------- -----------
Trade receivables ageing
Current trade receivables 8 235 350 9 496 866 11 604 191
Amounts in 30 to 60 days 761 894 7 446 932 2 116 913
Amounts in 60 to 90 days 550 259 7 364 742 1 650 210
Amounts in 90 days + 4 466 786 5 735 343 7 810 930
------------- ------------- -----------
Total 14 014 289 30 043 883 23 182 244
------------- ------------- -----------
4 Cash and cash equivalents
Bank balances 17 818 819 7 319 270 18 965 514
Short term deposits 14 193 102 13 545 256 15 621 960
Cash on hand 7 482 14 266 10 454
============= ============= ===========
32 019 403 20 878 792 34 597 928
============= ============= ===========
Included in the cash and cash equivalents is a restricted
amount of US$5 032 979 (Sept 2012: $1 537 828; Mar 2013:
$4 966 046) which is placed as a guarantee with various financial
institutions against which either performance or retention
bonds are issued on certain projects.
Cash and cash equivalents are held in
the following currencies:
Australian dollars 1 412 11 672 1 264
British pounds 1 715 9 483 1 150
Euro 1 216 12 802 515
South African rands 18 916 497 15 784 437 25 641 216
United States dollars 13 039 533 5 053 909 8 907 985
Other 59 030 6 489 45 798
------------ ----------- -----------
32 019 403 20 878 792 34 597 928
------------ ----------- -----------
Unaudited Unaudited
30 September 30 September 31 March
2013 2012 2013
US$ US$ US$
5 Share capital
Authorised
200 000 000 ordinary shares
of USD 0.01 cents each 2 000 000 2 000 000 2 000 000
Issued
37 459 107 ordinary shares
of USD 0.01 each issued and
fully paid 374 591 374 591 374 591
Reconciliation of the number
of shares outstanding: Number Number Number
Opening balance 37 459 107 37 459 107 37 459 107
Shares issued - - -
============= ============= ===========
Closing balance 37 459 107 37 459 107 37 459 107
============= ============= ===========
6 Treasury shares 177 276 177 276 177 276
======== ======== ========
At the annual general meeting held on 4(th) November 2008
the Group was authorised to purchase its own shares. In March
2009 the Group bought back a total of 200 000 shares at a
price of 62 pence per share. These shares are currently held
as treasury shares.
7 Foreign currency translation
reserve
Opening balance (1 426 625) 1 304 735 1 304 735
Translation loss for the period
/ year (1 507 327) (841 756) (2 731 360)
------------ ---------- ------------
Closing balance (2 933 952) 462 979 (1 426 625)
============ ========== ============
The translation reserve comprises all foreign exchange differences
arising on the translation of the financial statements of
foreign operations that do not have a US$ functional currency.
8 Interest bearing
liability
Instalment sales: 21 952 44 548 30 492
=========== =========== ===========
Amount owing 36 261 63 759 48 301
Less: amount payable within
1 year included in current
liabilities (14 309) (19 211) (17 809)
=========== =========== ===========
The instalment sales bear interest at South African prime
bank overdraft rate, plus a margin. These rates are currently
at 8.5%.
The loans are secured by motor vehicles with a book value
of US$101 243. The loans are repayable in monthly installments
of US$1 609, exclusive of interest.
Due in less than 1
year 14 309 19 211 17 809
Due later than one year but
not later than 5 years 21 952 44 548 30 492
Total interest bearing
liability 36 261 63 759 48 301
========= ========= =========
Unaudited Unaudited
30 September 30 September 31 March
2013 2012 2013
US$ US$ US$
9 Trade and other payables
Trade payables 8 199 521 8 713 303 8 568 377
Other payables 1 947 522 478 555 1 021 016
Accruals 6 863 447 2 793 758 5 702 659
============= ============== =============
17 010 490 11 985 616 15 292 052
============= ============== =============
10 Gross amounts due to customers
Gross amounts due to
customers 4 399 718 15 090 953 12 106 883
============= ============== =============
Amounts due from contract
customers included in trade
and other receivables 3 039 206 20 564 262 7 957 262
Amounts due to contract
customers (4 399 718) (15 090 953) (12 106 883)
------------- -------------- -------------
(1 360 512) 5 473 309 (4 149 621)
============= ============== =============
Contract costs incurred plus
recognized profits to date 40 294 664 121 435 800 25 698 538
Less: cash received (115 962
from customers (41 655 176) 491) (29 848 159)
------------- -------------- -------------
(1 360 512) 5 473 309 (4 149 621)
============= ============== =============
Gross amounts due to customers represents the excess of amounts
billed, less costs incurred to date, plus profit recognized
under IAS 11.
11 Provisions
Opening balance 3 228 852 815 620 815 620
Provided for the period
/ year 944 418 968 301 4 052 975
Unused amounts reversed (960 668) (286 270) -
Utilised for the period
/ year (1 921 316) (547 096) (1 396 402)
Translation difference (108 866) (35 284) (243 341)
============ ========== ============
Closing balance 1 182 420 915 271 3 228 852
============ ========== ============
Provisions are a combination between bonuses and contingencies.
Bonuses consist of company and project bonuses. Contingency
is the provision as required during the 12 month defects
and liability period after the completion of a project.
12 Investment income
Interest income 401 372 227 096 498 511
========== ========== ==========
13 Financial expense
Interest expense 1 903 4 565 10 736
========== ========== ==========
14 Profit before taxation
Profit before taxation is
stated after charging:
Amortisation 2 573 3 046 5 874
Auditors remuneration 73 639 - 165 573
Consulting fees 111 001 51 733 154 325
Depreciation 175 684 146 336 338 682
Net exchange rate differences 186 566 (95 274) (231 622)
Operating lease expenses 285 893 243 290 495 611
Provision for bad debts - - 124 801
Share based payments 137 677 122 958 262 592
Total employee costs 3 655 489 3 247 889 6 791 734
Unaudited Unaudited
6 months 6 months
ended ended
30 September 30 September 31 March
2013 2012 2013
US$ US$ US$
15 Taxation
- current 1 283 474 2 471 157 4 947 102
- deferred 107 005 (382 841) 1 141 936
- dividend tax on companies 363 707 - -
- withholding tax payable 8 663 - 150 571
. 1 762 849 2 088 316 6 239 609
============= ============= ==========
16 Basic and diluted earnings per
share
Basic earnings per share is based on the Group's net profit for
the period / year attributable to equity shareholders divided
by the weighted average number of ordinary shares in issue during
the period / year.
Net profit attributable to equity 14 150
holders 3 258 654 5 970 902 942
14 150
Basic earnings 3 258 654 5 970 902 942
Basic weighted number of ordinary 37 459
shares 37 459 107 37 459 107 107
Diluted weighted number of ordinary 38 257
shares 38 142 834 38 102 865 482
Basic earnings per share (US cents) 8.70 15.94 37.78
Diluted earnings per share (US
cents) 8.54 15.67 36.99
Reconciliation of basic weighted average number of ordinary shares
to diluted weighted average number of ordinary shares:
Basic weighted average number 37 459
of ordinary shares 37 459 107 37 459 107 107
Dilutive effect of weighted average
share options 683 727 643 758 798 375
============= ============= ===========
Diluted weighted average number 38 257
of ordinary shares 38 142 834 38 102 865 482
============= ============= ===========
At 30 September 2013 there were 4 533 666 (30 Sept 2012: 3 765
166; 31 Mar 2013: 3 765 166) share options in issue which could
have a potential diluted effect on the base profit per share
in the future.
Unaudited Unaudited
6 months 6 months
ended ended
30 September 30 September 31 March
2013 2012 2013
US$ US$ US$
17 Note to the cash flow statement
Cash generated / (utilised) by
operations
20 390
Profit before taxation 5 021 503 8 059 218 551
Depreciation and amortisation 178 257 149 382 344 556
Exchange rate differences 186 566 (95 274) (231 622)
Provisions (16 250) 682 031 4 052 975
Share based payments 137 677 122 958 262 592
Net interest received (399 469) (222 531) (487 775)
(3 957
Taxation paid (693 208) (1 642 137) 560)
============= ============= ==========
20 373
4 415 076 7 053 647 717
(5 465
Working capital changes 2 687 825 (12 027 220) 813)
Trade and other receivables 9 685 208 (5 181 277) 932 404
Income tax receivable (1 008 656) (125 360) -
(8 189
Trade and other payables 1 718 438 (11 495 876) 440)
Gross amounts due
to customers (7 707 165) 4 775 293 1 791 223
============= ============= ==========
Cash generated / (utilised) by 14 907
operations 7 102 901 (4 973 573) 904
============= ============= ==========
18 Segmental reporting
The following information is given about the Group's reportable
segments:
IFRS 8 Operating Segments requires operating segments to be identified
on the basis of internal reports about components of the Group
that are regularly reviewed by the chief operating decision maker
in order to allocate resources to the segments and to assess
their performance.
The Group has only one business segment and this is the supply
of engineering services.
Geographic information:
Revenue
93 774
Republic of South Africa 8 522 733 69 650 251 281
13 958
Democratic Republic of Congo 2 409 397 6 374 224 335
Ghana 1 164 366 1 384 350 3 694 485
Mexico 1 202 583 - -
25 771
Tanzania 40 294 664 1 450 624 742
137 198
Total 53 593 743 78 859 449 843
------------- ------------- -----------
Non-current assets:
The amounts of non-current assets in each of the foreign entities
are not material and therefore not disclosed.
Major customers:
During the current period / year there were only two customers
that accounted for more than 10% of the revenue:
79 692
Customer A 132 403 63 250 957 556
25 771
Customer B 40 294 664 1 450 624 742
------------- ------------- -----------
Unaudited Unaudited
6 months 6 months
ended ended
30 September 30 September 31 March
2013 2012 2013
US$ US$ US$
19 Exchange rates
The exchange rates used in converting the financial information
of subsidiaries from the functional currency of ZAR to the presentation
currency are as follows:
Period / year end rate 10.1012 8.2222 9.2521
Period / year average rate 9.7147 8.2066 8.5116
This information is provided by RNS
The company news service from the London Stock Exchange
END
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