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Interim results

30 November 2009

MDM Engineering Group Limited (AIM:MDM) ("MDM Engineering" or "MDM") is pleased to announce its unaudited interim results for the six months ended 30 September 2009. MDM Engineering is an African-focused engineering and project management company which provides a range of value added services to the mining industry, including project evaluation, process engineering, design and project management. 

Highlights

Financial

• Revenue of US$22.44 million (2008: US$17.33m) 
• Gross profit of US$7.24 million (2008: US$8.85m) 
• Profit before taxation of US$5.05 million (2008: US$6.81m) 
• Cash and cash equivalents of US$13.37 million (2008: US$13.76m) 
• Basic earnings per share of US 9.96 cents per share (2008: US 13.16 cents) 
• Interim dividend of US 3.75 cents (2008: US 3.75 cents) 
• Strong balance sheet with negligible gearing 
• Dividend cover of 2.66 times 

Operational

• Project value under execution at period end of US$338 million 
• Continued focus on cost containment and improvement in operational efficiencies 
• Awarded four studies and two execution projects since the financial year end 
• Good prospects of additional execution projects maturing in the near term across multiple resources
• Carefully directed marketing, specifically targeting junior to mid-cap mining companies, and business development initiative expected to result in a number of new opportunities to expand the order book in 2010 

MDM Engineering Chairman, Bill Nairn commented:

"The effect of the global credit crisis, depressed commodity prices and the resultant delays and suspensions of a number of mining projects in the latter part of 2008 had a direct impact on MDM's first half performance. However, no downturn is permanent and while the global economy has not yet fully emerged from the crisis, there are signs of an improvement in the resources sector. This is evidenced by the strengthening in commodity prices experienced over the last few months, resulting in numerous expressions of interest received by MDM for project related work, and by the award to MDM of two execution projects and four studies in the period since the year end."

Gross profit margin for the period was 32.1% against a gross profit margin of 46.4% for the year to 31 March 2009 and 51.0% for the corresponding period in the prior year. The reduction in gross margin reflects the lower levels of projects under execution in the period. This was due to the downturn experienced in late 2008, with many projects cancelled and/or postponed. In addition, margins on some new execution projects were restructured in return for a reduction in risk exposure to MDM. Higher site costs incurred by MDM on behalf of our clients also had a dilutive effect on the reported gross profit margins; these costs are shown in the revenue number as they are recovered from the client but are also recorded in the cost of sales. 

The increase in the other income from the previous reporting period was due to the fluctuations that have been experienced in the South African Rand and the Euro against the US dollar.

The Group still maintains a strong financial position, with substantial cash reserves and positive free cash flows placing MDM in a strong position to capitalise on opportunities as the resources sector recovers.

The Group's current workload ensures its highly experienced technical team will be fully utilised well into the next financial year and the combination of increased requests for studies together with good near-term execution prospects bodes well for the Group's profit growth performance. 

MDM continues to provide premium value adding services to its clients, establishing itself as a market leader in the junior and mid-cap mining space in Africa and seeks to reward its stakeholders for their support and belief in MDM Engineering and its business model. MDM has in the past had a very high success rate of converting studies into execution projects.  

The Board believes that MDM Engineering has a robust business model, is financially sound and is well positioned to continue growing its business during the current global economic crisis; due to its positive cash balances, execution pipeline and solid growth prospects it has decided to maintain the interim dividend at US 3.75c, payable on the 31st December 2009, to all shareholders registered as at the 11th December 2009.

In addition, to announcing the interim results, it is with regret that we also announce the resignation of Grant Lowman from his post as Chief Executive Officer (CEO) of MDM Engineering, to pursue other interests.  

Grant has agreed to stay on as CEO of the Group until such time as a new incumbent has been identified and appointed. The Group anticipates making an appointment during the last quarter of the 2010 financial year. Furthermore, once the new CEO has taken up the role, Grant has agreed to remain available in a consulting capacity to ensure a smooth and seamless handover.

MDM would like to thank Grant for the contributions he has made during his tenure and we wish him all the best in his future career.

For further information: 

MDM Engineering Group Limited

Grant Lowman (Chief Executive)
Tel: +27 (0) 79 525 9997

Dominique de la Roche (Finance Director) 
+27 83 307 8953 

George Bennett (Executive Director)
Tel: +27 (0) 82 652 8526

Numis Securities Limited

John Harrison (Nominated Adviser) 
Tel: +44 (0) 207 260 1000

James Black (Corporate Broker) 
Tel: +44 (0) 207 260 1000

Pelham PR

Chelsea Hayes
Tel : +44 (0) 207 7337 1500

Operational Review

The tough trading conditions of 2008 continued into 2009, and it was only towards the latter part of the six month period that it was possible to see a slight easing in market conditions. Our industry has by no means fully recovered from the effects of the global crisis, but there are certain indications of late that signal an improvement in sentiment and prospects.

MDM's target market has historically been mainly African based projects. MDM has, however, received a number of requests to provide services in other parts of the world, and we are examining a number of these opportunities. 

The reimbursable EPCM contracting model continues to serve MDM and its clients well, with MDM able to contain and sometimes reduce the cost of plant and equipment for our clients, both as a result of value engineering and the strength and depth of our relationships with the supplier industry. Our staff remained at full utilisation during the period and we were fortunate enough to be in a position which required us to hire skills to accommodate the workload.

MDM has weathered what we believe to be the worst part of the storm, as evidenced by the strong cash position which the Group has successfully preserved. MDM is ideally placed to benefit from the recovery in commodity markets, particularly in the southern African markets in which it specialises, as new execution projects are brought on line.

Execution Projects

MDM has been involved in three execution projects during the period.

The First Uranium Corporation Chemwes Gold and Uranium plant progressed well during the period. The gold plant was commissioned during August and the uranium plant will be commissioned during the first quarter of calendar year 2010.

The First Uranium Corporation Chemwes Phase 2 project was taken into execution in July and is proceeding well.

The Kalagadi Resources Manganese Umtu project proceeded into early execution phase via a FEED (Front End Engineering and Design). This is expected to be completed during the last quarter of calendar 2009. The project is gaining momentum and increased site activity is anticipated during first calendar quarter of 2010.

Safety

Safety is a core focus for MDM and we are extremely proud to have achieved in excess of 1,8 million man-hours on site with zero lost time incidents over the six month period. To date, MDM has achieved in excess of 6,4 million hours with only 5 lost time incidents.

Feasibility Studies

An important indication of MDM's future work is the study pipeline. MDM worked on seven studies during the period under review, with the following studies started during the period:

Rand Uranium - Cooke Uranium Project

The scoping study will explore the economic viability of reprocessing medium grade gold and uranium tailings and the retreatment of the concentrate at a new plant as supplementary feed.

Central African Mining Exploration Company (Camec) - Estima Coal Project

MDM was awarded the contract for the pre-feasibility study ("PFS") for Camec's coal project in Mozambique. The scope of work for the PFS will see MDM providing the process plant and infrastructure design as well as the related capital and operating cost estimates.

Mantra Resources - Mkuju River Uranium Project

MDM was awarded the PFS by Mantra Resources on its Mkuju River uranium project in Tanzania. The scope of work for the PFS will see MDM managing the inputs from various consultants as well as the owner's team, in addition to providing the process plant and infrastructure design as well as the capital and operating cost estimates for these. 

Goldfields Ltd - West Wits Tailings Facility

MDM is one of the companies that has been awarded the contract for the Feasibility Study (FS) for Goldfields Limited's West Wits Tailings Facility at Driefontein in South Africa. Work has commenced and is expected to be completed during the first calendar quarter of 2010.

MDM's increasing expertise in uranium coupled with active marketing across a range of commodities has resulted in a healthy flow of new studies and many expressions of interest.

MDM was working on a wide range of projects and studies at the time of the global financial crisis, a number of which were suspended for various reasons. We maintain close contact with these clients and remain confident that these projects will be reactivated and that MDM will play a major role in these projects. 

The MDM Team

MDM has created a culture that allows every person to develop to the best of their ability, and a working model that allows for the best synergies across a diverse range of personalities and skills. We have taken advantage of the softening labour market to hand pick individuals to bolster our skills in certain areas and to accommodate our growing workload. 

The six months under review has not been without its challenges and the result is a credit to the MDM team for their dedication and hard work. 

Outlook

The effects of the global financial crisis has by no means worked its way through the system and MDM is likely to feel the effects for some time to come.

MDM has, however structured its response to this crisis as a challenge to be overcome and has initiated operational and cost optimisation exercises, commercial systems review and increased marketing and new business development strategies.

MDM does not approach the market randomly or sporadically; it aims to nurture key relationships with the objective of adding value to clients, which has resulted in a large percentage of repeat business. MDM is therefore pleased to have a healthy execution pipeline in place, with good near-term prospects in both execution work and studies.

  MDM ENGINEERING GROUP LTD

CONSOLIDATED BALANCE SHEET

AT 30 SEPTEMBER 2009

			Unaudited	Unaudited
			30 September	30 September	31 March
			2009	2008	2009
		Notes	US$	US$	US$
Assets
Non-current assets			2 145 036	932 855	1 384 450
Property, plant and equipment			570 233	482 527	457 442
Intangible asset			49 494	50 113	40 687
Deferred tax			1 525 309	400 215	886 321
Current assets			27 589 726	19 864 692	21 039 146
Trade and other receivables			14 218 495	6 105 118	7 071 832
Cash and cash equivalents		3	13 371 231	13 759 574	13 967 314
Total assets			29 734 762	20 797 547	22 423 596
Equity and liabilities
Capital and reserves			20 609 906	14 663 438	15 989 992
Share capital		4	374 591	374 591	374 591
Share premium		5	2 721 775	6 924 225	5 516 210
Treasury shares		6	(177 276)	-	(177 276)
Foreign currency translation reserve		7	1 770 731	(649 742)	(1 417 287)
Accumulated profit			15 920 085	8 014 364	11 693 754
Non-current liabilities			24 300	20 007	31 280
Interest bearing liabilities		8	24 300	20 007	31 280
Current liabilities			9 100 556	6 114 102	6 402 324
Trade and other payables			3 607 230	2 366 386	4 014 597
Current portion of interest bearing liabilities		8	32 953	16 846	24 488
Provisions			1 622 286	1 553 471	687 945
Income tax payable			3 838 087	2 177 399	1 675 294
Total equity and liabilities			29 734 762	20 797 547	22 423 596

  

MDM ENGINEERING GROUP LTD CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2009
		Unaudited six months ended	Unaudited six months ended	Year ended
		30 September	30 September	31 March
		2009	2008	2009
	Notes	US$	US$	US$
Revenue		22 439 252	17 334 919	35 916 889
Cost of sales		(15 201 266)	(8 486 748)	(19 252 389)
Gross profit		7 237 986	8 848 171	16 664 500
Operating expenses		(2 756 196)	(2 000 389)	(6 206 283)
Other income		613 898	(386 998)	265 572
Profit from operations		5 095 688	6 460 784	10 723 789
Financial income	9	363 752	378 517	894 834
Financial expense	10	(408 145)	(25 805)	(38 062)
Profit before taxation	11	5 051 295	6 813 496	11 580 561
Taxation	12	(1 319 256)	(1 986 290)	(3 741 039)
Net profit for the period/year		3 732 039	4 827 206	7 839 522
Basic earnings per share - US cents	13	9.96	13.16	21.15
Diluted earnings per share - US cents	13	9.08	12.04	19.32
STATEMENT OF COMPREHENSIVE  INCOME FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2009
Profit for the period/year		3 732 039	4 827 206	7 839 522
Other comprehensive income
Exchange differences (gains)/losses		(612 675)	674 233	923 713
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD/YEAR		(612 675)	674 233	923 713

  

MDM ENGINEERING GROUP LTD

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2009

			Share capital		Share premium		Foreign currency translation reserve		Accumulated profit		Treasury  shares		Total
			US$		US$		US$		US$		US$		US$
Balance at 1 April 2008			340 090		1 335 130		(335 174)		3 187 158		-		4 527 204
Profit for the period			-		-		-		4 827 206		-		4 827 206
Foreign currency translation differences			-		-		(314 568)		-		-		(314 568)
Dividends paid			-		(1 498 364)		-		-		-		(1 498 364)
Issue of share capital			34 501		9 734 865		-		-		-		9 769 366
Issue costs			-		(2 647 406)		-		-		-		(2 647 406)
Balance at 30 September 2008			374 591		6 924 225		(649 742)		8 014 364		-		14 663 438
Profit for the period									3 012 316				3 012 316
Foreign currency translation differences							(767 545)						(767 545)
Issue costs			-		(3 160)		-		-		-		(3 160)
Share option charge			-		-		-		667 074		-		667 074
Treasury shares			-		-		-		-		(177 276)		(177 276)
Dividends paid			-		(1 404 855)		-		-		-		(1 404 855)
Balance at 31 March 2009			374 591		5 516 210		(1 417 287)		11 693 754		(177 276)		15 989 992
Balance at 1 April 2009			374 591		5 516 210		(1 417 287)		11 693 754		(177 276)		15 989 992
Profit for the period			-		-		-		3 732 039		-		3 732 039
Foreign currency translation differences			-		-		3 188 018		-		-		3 188 018
Share option charge			-		-		-		494 292		-		494 292
Dividends paid			-		(2 794 435)		-		-		-		(2 794 435)
Balance at 30 September 2009			374 591		2 721 775		1 770 731		15 920 085		(177 276)		20 609 906

  

MDM ENGINEERING GROUP LTD

CONSOLIDATED CASH FLOW STATEMENT

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2009

		Unaudited six months  ended	Unaudited six months  ended	Year ended
		30 September	30 September	31 March
		2009	2008	2009
	Notes	US$	US$	US$
Cash flows from operating activities		(924 738)	3 229 012	5 786 240
Cash generated by operations	14	(924 738)	3 229 012	5 786 240
Cash flows from investing activities		(131 916)	675 746	1 132 080
(Acquisition)/Disposal of property, plant and equipment		(87 523)	323 034	275 308
Net interest (paid)/received		(44 393)	352 712	856 772
Cash flows from financing activities		(2 792 950)	5 022 445	3 419 243
Net proceeds received on shares issued		-	8 577 769	9 769 366
Costs directly related to issue of shares		-	(1 455 809)	(2 650 566)
Purchase of treasury shares		-	-	(177 276)
Dividends paid		(2 794 435)	(1 498 364)	(2 903 219)
Long term loans raised/(repaid)		1 485	(601 151)	(619 062)
Net (decrease)/increase in cash and cash equivalents		(3 849 604)	8 927 203	10 337 563
Foreign exchange differences		3 253 521	(314 568)	(1 517 188)
Cash and cash equivalents at the start of the period/year		13 967 314	5 146 939	5 146 939
Cash and cash equivalents at end of the period/year		13 371 231	13 759 574	13 967 314

  

NOTES TO THE INTERIM RESULTS

 

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.

 

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 2009 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 unqualified.

 

The interim results were approved by a duly appointed and authorised committee of the Board of Directors on 30th November 2009.

The Group has adopted IAS 1 (Revised) - Presentation of Financial Statements and IFRS 8 - Operating Segments, for the first time in these Interim Results.

 

Critical accounting estimates and judgements

Estimates and judgements 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 Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions 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 Group makes estimates and assumptions 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 judgement 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.

A joint venture is an entity over which the Group has joint control. Joint control is the contractually agreed sharing of control over an entity, and exists only when the strategic financial and operating decisions relating to the activity require the unanimous consent of the parties sharing control. The joint venture is proportionally consolidated from the date on which control is transferred, until date that the control is ceased. The group's share of the assets, liabilities, income and expenses of the joint venture are included on a line by line basis with similar items in the financial statements. 

 

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.

 

Revenue on contracts is recognised as revenue by reference to the stage of completion of contracts at balance sheet date. The stage of completion is based on the actual work performed on the contract at the balance sheet date.

 

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 charge for current tax is based on the results for the year as adjusted for items which are non-deductible or disallowed. It is calculated using tax rates that have been enacted by the balance sheet date.

 

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of taxable profit. In principle, deferred tax liabilities are recognised for all taxable temporary differences, and deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from Goodwill or from the initial recognition (other than a business combination) of other assets and liabilities in a transaction, which affects neither tax nor accounting profit.

 

Deferred tax is calculated at the rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted by the balance sheet date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax is charged or credited to the income statement, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also recorded within equity, or where they arise from the initial accounting for a business combination. 

  

In a business combination, the tax effect is taken into account in calculating goodwill or in determining the excess of the acquirer's interest in the net fair value of the acquirer's identifiable assets, liabilities and contingent liabilities over the cost of the business combination.

 

The carrying amount of the deferred tax assets are reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. 

 

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. A reversal of an impairment loss is recognised immediately in the income statement, unless the relevant asset is carried as 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

(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:

Buildings	-	5%
Computer equipment	-	33.33%
Furniture and fittings	-	16.67%
Leasehold improvements	-	50%
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 and 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.

 

Segmental analysis

The Group has only one business segment and this is the supply of engineering services. Geographically more than 95% of the work has been performed in South Africa therefore no segmental analysis is provided.

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.

 

 

  

		Unaudited six months ended 30 September 2009	Unaudited six months ended 30 September 2008	Year ended 31 March 2009
		US$	US$	US$
3	Cash and cash equivalents
	Bank balances	578 615	331 717	3 921 851
	Short term deposits	12 784 353	13 422 587	10 038 252
	Cash on hand	8 263	5 270	7 211
		13 371 231	13 759 574	13 967 314
	Restricted cash	4 243 736	3 868 568	4 594 175
	Included in the cash and cash equivalents are restricted amounts which are placed as performance guarantees with financial institutions against the Group's current execution projects. Cash and cash equivalents are held in the following currencies:
	AUS Dollars (AUS $: US$ = 1.1338)	305 705	13 999	45 576
	Euro's (Euro: US$ =  0.6835)	1 125 621	5 882 652	3 808 375
	British pounds (GBP: US$ =  0.6248)	48 696	162 834	-
	South African Rand (ZAR: US$ = 7.4083)	11 354 944	5 562 082	8 891 233
	US Dollars	536 265	2 138 007	1 222 130
		13 371 231	13 759 574	13 967 314
4	Share capital
	Authorised
	200 000 000 ordinary shares of US 0.01  cents each	2 000 000	2 000 000	2 000 000
	Issued
	37 459 107 ordinary shares of US 0.01 issued and fully paid	374 591	374 591	374 591
	Reconciliation of the number of shares outstanding:
	Opening balance	37 459 107	34 009 107	34 009 107
	Shares issued	-	3 450 000	3 450 000
	Closing balance	37 459 107	37 459 107	37 459 107
5	Share premium
	Opening balance	5 516 210	1 335 130	1 335 130
	Proceeds on shares issued	-	8 543 268	9 734 865
	Expenses on shares issued	-	(1 455 809)	(2 650 566)
	Dividends paid	(2 794 435)	(1 498 364)	(2 903 219)
	Closing balance	2 721 775	6 924 225	5 516 210
	The share premium represents the amount above the par value less any costs associated with the shares issued and any dividends paid.
	Under the BVI Business Companies Act 2004 ("the Act") and the memorandum and articles of association of the Company, the share premium can, subject to the solvency requirements of the Act, be used for distribution purposes. The Group has chosen to apply the share premium to dividend payments made in the year.
		Unaudited six months  ended 30 September 2009	Unaudited six months  ended 30 September 2008	Year ended 31 March 2009
6	Treasury shares	US$	US$	US$
	Opening balance	177 276	-	-
	Additions	-	-	177 276
	Closing balance	177 276	-	177 276
	At the annual general meeting held on 4th 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	(1 417 287)	(335 174)	(335 174)
	Translation profit /(loss) for the period/year	3 188 018	(314 568)	(1 082 113)
	Closing balance	1 770 731	(649 742)	(1 417 287)
	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 liabilities
	Instalment sales:
		24 300	20 007	31 280
	Amount owing	57 253	36 853	55 768
	Less: amount payable within 1 year included in current liabilities	(32 953)	(16 846)	(24 488)
		24 300	20 007	31 280
	The instalment sales bear interest at South African prime bank overdraft rate, plus a margin. These rates currently range from 10.5% to 12.275% depending on the structure of the agreement.
	The loans are secured by motor vehicles with a book value of US$89 225. The loans are repayable in monthly instalments of US$3 241, inclusive of interest.
	Due in less than 1 year	32 953	16 846	24 488
	Due later than one year but not later than 5 years	24 300	20 007	31 280
	Total interest bearing liabilities	57 253	36 853	55 768

 

		Unaudited six months ended 30 September 2009 US$	Unaudited six months ended 30 September 2008 US$	Year ended 31 March 2009 US$
9	Net financing income
	Interest income	363 752	378 517	894 834
10	Net financing expense
	Interest expense	408 145	25 805	38 062
11	Profit before taxation
	Profit before taxation is stated after charging:
	Amortisation	3 078	3 213	5 638
	Consulting fees	24 710	18 620	38 376
	Depreciation	101 893	54 107	125 862
	Operating lease expenses	153 294	125 180	221 594
	Total employee costs	1 541 634	1 355 442	3 024 067
	Share based payments	494 292	-	667 074
	Exchange rate differences	7 193	676 247	923 713
	And after crediting:
	Exchange rate differences	(619 868)	(2 014)	-
12	Taxation
	South African normal:
	current	1 660 104	2 120 228	4 463 806
	deferred	(340 848)	(133 938)	(722 767)
		1 319 256	1 986 290	3 741 039
13	Basic and diluted earnings per share
	Basic earnings per share is based on the Group's net profit for the year/period attributable to equity shareholders divided by the weighted average number of ordinary shares in issue during the year/period.
	Net profit attributable to equity holders	3 732 039	4 827 206	7 839 522
	Basic earnings	3 732 039	4 827 206	7 839 522
	Basic weighted number of ordinary shares	37 459 107	36 671 607	37 062 121
	Diluted weighted number of ordinary shares	41 086 955	40 087 607	40 578 985
	Basic earnings per share (US cents)	9.96	13.16	21.15
	Diluted earnings per share (US cents)	9.08	12.04	19.32
	Reconciliation of basic weighted average number of ordinary shares to diluted weighted average number of ordinary shares:
	Basic weighted average number of ordinary shares	37 459 107	36 671 607	37 062 121
	Dilutive effect of weighted average share options	3 627 848	3 416 000	3 516 864
	Diluted weighted average number of ordinary shares	41 086 955	40 087 607	40 578 985
		Unaudited six months  ended 30 September 2009	Unaudited six months  ended 30 September 2008	Year ended 31 March 2009
		US$	US$	US$
14	Note to the cash flow statement
	Cash generated by operations:
	Profit before taxation	5 051 295	6 813 496	11 580 561
	Depreciation and amortisation	104 971	57 320	131 500
	Provisions	934 341	-	829 966
	Share based payments	494 292	-	667 074
	Net interest paid/(received)	44 393	(352 712)	(856 772)
	Taxation paid	-	(1 556 558)	(4 402 240)
		6 629 292	4 961 546	7 950 089
	Working capital changes	(7 554 030)	(1 732 534)	(2 163 849)
	Trade and other receivables	(7 146 663)	(3 651 682)	(4 618 396)
	Trade and other payables	(407 367)	1 919 148	2 454 547
	Cash generated by operations	(924 738)	3 229 012	5 786 240
15	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	7.4083	8.1345	9.6266
	Period/year average rate	8.1217	7.7804	8.8684

 

 

 

 

 

ENDIR BGBDBUUDGGCR