Press Release

Interim Results Impacted by Difficult Trading Conditions - 25/10/2010

• Revenue decreased by 17% to R855 million
• EBITDA decreased by 46% to R44 million
• Fully diluted HEPS from continuing operations increased by 48% to 4.8 cents
• Net tangible asset value per share increased by 10% to 64.8 cents

Introduction
Sanyati, a civil engineering group, has also felt the impact of the difficult trading conditions experienced by all the domestic construction companies over the last couple of months.

Malcolm Lobban, CEO of Sanyati, commented that: “Our results mirror the numerous challenges faced by the Group during the six months ended 31 August 2010. These challenges ranged from margin pressure, unprecedented delays in the awarding and mobilisation of key contracts to the rightsizing action undertaken by the Group.”

Notwithstanding these challenges faced by Sanyati, the Group achieved positive outcomes with the securing of a significant new order book of R950 million and a pipe line of imminent awards amounting to R87 million. Sanyati also indicated that the Group has a strong prospective order book of R1.8 billion as at 31 August 2010. “We stated that our aim was to focus on geographic diversification and to set-up niche contracting opportunities to counter the depressed construction market and we can report that good progress was made with achieving these aims,” stated Lobban.

Financial overview
The results of the Group’s continuing operations reported a decrease in revenue of 16.6% to R855.3 million for the period ended 31 August 2010 and a decline of 46.2% in earnings before interest, taxation, depreciation and amortisation (EBITDA) to R44.3 million. Major contributors to the decline in EBITDA included revenue and margin contraction, holding costs associated with delays in awards and mobilisation of contracts, retrenchment costs and a particularly difficult environment for the Group’s piling and concrete sliding businesses. As a result, Group EBITDA margin of 5.2% was materially below the 8.0% that was achieved in the comparative period to 31 August 2009. The Group’s operating profit before interest and taxation of R35.2 million was 47.8% higher than the result achieved to 31 August 2009. This must be seen in the light of the R50.2 million change in accounting estimate that was charged to income during the six months ended 31 August 2009.

Basic earnings per share (EPS) and fully diluted headline earnings per share (HEPS) for continuing operations increased by 58.7% and 48.0%, respectively, a satisfactory performance.

The statement of financial position reflects a 3.1% increase in total equity from R766.8 million as at 28 February 2010 to R790.2 million. Net interest-bearing borrowings as at 31 August 2010 amounted to R97.2 million, which translates into a more than acceptable net gearing ratio of 12.3%. Cash generated by operations, before working capital, was a credible R45.9 million. The net investment in working capital of R33.5 million during the period was not unexpected and was a consequence of a new mix of business together with the life cycle of certain key projects. Lobban said that: “We are also experiencing some delays with payment from certain public sector clients. Also impacting the Group’s cash flows was the payment of an amount of R20 million to the Meyker vendors (“agterskot” payment following delivery of post acquisition profit thresholds) and an aggregate of R21 million paid in accordance with existing instalment sale agreements.”

Operational review
Sanyati Central reported solid growth of 33.1% in revenue from R279.8 million (August 2009) to R372.5 million in this reporting period. Due to a low margin being realised on a major roads project due to be completed in December this year, delays on the mobilisation of a key contract as well as the challenging market conditions, EBITDA is down to R23.3 million with a resultant EBITDA margin of 6.3%.

Sanyati Coastal, which incorporates the KwaZulu-Natal building construction activity previously reported as part of Specialist Contractors, reported a decrease in revenue of 25.3% to R282.4 million and an EBITDA of R16.0 million was generated. A satisfactory EBITDA margin of 5.7% was achieved.

Primarily as a result of the delay with the mobilisation of a key contract coupled with the ongoing challenges of a highly competitive tender market,Sanyati North delivered disappointing results for the past six months. Revenue and EBITDA decreased by 47.2% to R161.0 million and 63.7% to R9.9 million, respectively. The EBITDA margin also decreased from 9.0% in the previous period to 6.2% for this reporting period.

Specialist Contractors, which include Sanyati Conform, Sanyati Piling & Geotechnical and Sanyati Properties, continued to be impacted by tough trading conditions. Combined revenue of R45.6 million and a loss before interest, taxation, depreciation and amortisation of R4.9 million were reported. Both Sanyati Conform and Sanyati Piling & Geotechnical have undertaken corrective action to rightsize the businesses. There is an ongoing drive for Sanyati Properties to convert its property assets into cash.

Prospects
Lobban said that: “The well publicised industry experience of unprecedented delays in both the award and mobilisation of contracts continues to represent a challenge for Sanyati. We nevertheless remain confident that the underlying fundamentals and initiatives undertaken by the Group will ensure medium and long term growth for the business.”

Telecommunications infrastructure spend, both in South Africa and the rest of Africa, by large corporate companies is gaining momentum, hence the diversification into the laying of fibre optic cables. Sanyati has also been able to secure new opportunities in mining infrastructure as well as design, construct and finance solutions for clients.

In September 2010, Sanyati acquired a strategic interest in Africa Pipe Industries (Pty Limited. This business is a world-class manufacturer of spiral steel pipe primarily for the water industry in South Africa and the Group is excited about the prospects of this investment.

Sanyati has a continued emphasis on strategic partnerships and alliances. The improved Level 3 Contributor BBBEE status achieved by Sanyati in June 2010 is testimony to Sanyati’s drive to be a “Partner of Choice”.

“The Group will continue to focus on cash management and the conversion of its pipeline of opportunities into a confirmed order book in the period ahead,” concludes Lobban.

Issued and released by: Keyter Rech Investor Solutions

Marlize Keyter (011) 447-5204 / 083 701 2021
Sheri Cohen (011) 447-7903 / 071 683 1888

Contact: Sanyati Holdings Limited

Malcolm Lobban (CEO) â€" 082 900 6569

John Deeb (CFO)

Tel: 0861 726 4653