| Fri 29 Jun 2007, 8:57 | | HDC - Hudaco - Unaudited Interim Group Results: si |
|
HDC
HDC
HDC - Hudaco - Unaudited Interim Group Results: six months ended 31 May 2007
Hudaco Industries Limited
(Incorporated in the Republic of South Africa)
(Registration Number 1985/004617/06)
Share Code: HDC ISIN: ZAE000003273
("Hudaco" or "the company")
Hudaco - Unaudited Interim Group Results for the six months ended 31 May 2007
* HEPS up 44% to R2,55
* Interim dividend increased by 30% to 65c per share
* R100 million special dividend (R3,30 per share)
Hudaco is a South African group of companies engaged in the business of
importing and distributing branded industrial consumable products. Its customers
are mainly within the southern African manufacturing, mining, construction and
security industries.
Results
Sales of R993 million for the six months are up 25% on the comparable period
last year whilst operating profit of R115 million is up 44%.
Trading conditions in the Bearings and Power Transmission products division were
considerably better in the first half of 2007. The Rand`s weakness in the second
half of 2006 had made it possible to increase prices for the first time in many
years and the benefit flowed into these first half results. Furthermore, the up-
tick in project enquiries from mines and manufacturers in the second half of
last year translated into orders this year. The division increased sales 26% but
because overheads rose at a slower rate, it benefited from operational leverage
and grew operating profit by 77%, an excellent achievement.
The Powered products division had mixed fortunes. Demand for diesel engines and
spares was strong and also came with improved operational leverage. Increased
competition in the power tool market resulted in a lower gross profit margin.
The division increased sales 25% and operating profit 23%. The Security
equipment division with exposure to building activity and consumer spending
continued to enjoy good trading conditions in South Africa this half year. The
UK operation posted disappointing results but operational and product changes
bode well for a turnaround. The division increased sales 23% and operating
profit 22%.
Net interest received of R6 million (last year R2.5 million) and an unchanged
tax rate assisted the group to post a 44% increase in headline earnings per
share to 255 cents. The interim dividend has been increased by 30% to 65 cents
(last year - 50 cents).
The balance sheet is healthy. Although working capital at R495 million is R70
million above 2006 year end levels, a large part of the increase is due to
stocking up to cope with increased volume sales. The group traditionally also
stocks up at the half year in anticipation of the busier trading in the second
half of the year. Net cash on hand at the half year is R193 million, down R45
million from the 2006 financial year end.
BEE transaction
The company is in the process of finalising negotiations for the introduction of
a significant BEE shareholding which, if successfully concluded, may have a
material effect on the price of the company`s securities. Accordingly,
shareholders are advised to exercise caution when dealing in the company`s
securities until a full announcement is made.
Special dividend
The group remains committed to growth by acquisition but limited opportunities
and high asking prices have resulted in no meaningful successes since 2005
although the group has a small number of currently active opportunities which
may yet turn into acquisitions. Taking these and the short term cash bridging
requirements of our planned BEE transaction into account, the group still has
excess capital for its near and medium term requirements. The board has
therefore decided to pay a special dividend amounting to R100 million (R3,30 per
share).
Notice is hereby given that special dividend No.41 of R3,30 per share has been
declared. The last day to trade in order to participate in the dividend ("cum"
the dividend), will be Friday, 7 December 2007. The shares will commence trading
"ex" the dividend from the commencement of business on Monday, 10 December 2007
and the record date will be Friday, 14 December 2007. The dividend will be paid
on Tuesday, 18 December 2007. Share certificates may not be dematerialised or
rematerialised between Monday, 10 December 2007 and Friday, 14 December 2007,
both days inclusive.
Prospects
The group has good prospects. The medium-term outlook for the economy continues
to be positive with investment, both public and private, expected to replace
consumption as the engine of growth. There is evidence that spending on
infrastructure and additional power generation is starting. Furthermore, high
commodity prices support investment in mining projects if regulatory and
infrastructural impediments can be overcome. A surge in investment in these
areas will certainly benefit local manufacturers. Growth in the consumer side of
the economy appears to be weakening but with fixed investment comes job creation
which should support activity in this sector.
Headline earnings per share (before any special changes insert - IFRS 2 - which
may arise from the proposed BEE transaction) for the full year are expected to
be well ahead of last year but the rate of growth in the second half is unlikely
to match the 44% growth of the first half.
Dividend
Notice is hereby given that interim dividend No. 40 of 65 cents per share has
been declared in respect of the six months ended 31 May 2007. The last day to
trade in order to participate in the dividend ("cum" the dividend), will be
Friday, 5 October 2007. The shares will commence trading "ex" the dividend from
the commencement of business on Monday 8 October 2007 and the record date will
be Friday, 12 October 2007. The dividend will be paid on Monday, 15 October
2007. Share certificates may not be dematerialised or rematerialised between
Monday, 8 October 2007 and Friday, 12 October 2007 both days inclusive.
For and on behalf of the Board
PL Campbell (Chairman)
SJ Connelly (Chief executive)
28 June 2007
INCOME STATEMENT
SIX MONTHS ENDED YEAR ENDED
31 May % 31 May 30 Nov
R million 2007 change 2006 2006*
Turnover 992,6 25 792,8 1837,8
Cost of sales 628,4 490,0 1140,8
Gross profit 364,2 302,8 697,0
Operating expenses 248,8 222,4 462,5
Operating profit 115,4 44 80,4 234,5
Impairment of goodwill (9,6)
Profit before interest 115,4 80,4 224,9
Net finance revenue 6,4 2,5 7,1
Profit before taxation 121,8 82,9 232,0
Taxation 40,9 28,2 76,3
Profit after taxation 80,9 48 54,7 155,7
Attributable to shareholders of the group 76,7 45 52,7 149,9
Attributable to minorities 4,2 2,0 5,8
80,9 54,7 155,7
Headline earnings per share (cents) 255,1 44 176,9 532,5
Basic earnings per share (cents) 255,1 176,9 501,7
Diluted headline
earnings per share (cents) 248,6 172,0 519,0
Diluted earnings per share (cents) 248,6 172,0 488,9
Reconciliation to headline earnings
Profit attributable to shareholders 76,7 52,7 149,9
Adjusted for:
- Surplus on disposal of plant and
equipment after taxation (0,4)
- Impairment of goodwill 9,6
Headline earnings 76,7 45 52,7 159,1
Dividends
Per share (cents) 65,0 30 50,0 190,0
- Amount (Rm) 19,7 14,9 56,9
Shares in issue 30 250 29 891 29 993
- Total (000) 32 758 32 399 32 501
- Held by subsidiary company (000)(2 508) (2 508) (2 508)
Weighted average shares in issue
- Basic (000) 30 047 29 783 29 870
- Diluted (000) 30 834 30 636 30 652
CASH FLOW STATEMENT
SIX MONTHS ENDED YEAR ENDED
31 May 31 May 30 Nov
R million 2007 2006 2006*
CASH GENERATED FROM TRADING 123,6 87,7 248,5
APPLIED TO WORKING CAPITAL (68,3) (56,1) (62,6)
Cash generated from operating activities 55,3 31,6 185,9
Net interest received 6,4 2,5 8,1
Taxation paid (52,7) (32,7) (64,9)
Cash flow from operations 9,0 1,4 129,1
Dividends paid (42,0) (36,3) (54,2)
NET CASH APPLIED (33,0) (34,9) 74,9
Investment in new operations - net (8,0) (6,6) (11,3)
Investment in property, plant and
equipment - net (8,6) (8,6) (15,8)
NET CASH INVESTED (16,6) (15,2) (27,1)
Cash utilized (49,6) (50,1) 47,8
Shareholder funding 4,7 1,7 2,9
DECREASE IN NET CASH (44,9) (48,4) 50,7
STATEMENT OF CHANGES IN EQUITY
SIX MONTHS ENDED YEAR ENDED
31 May 31 May 30 Nov
R million 2007 2006 2006*
Equity at beginning of period 728,4 611,9 611,9
Difference on prior year adjustment 1,9
Attributable profit for the period 76,7 52,7 149,9
Increase in equity compensation reserve 2,2 0,8 3,0
Deferred gain on hedging instruments 1,3 2,6 0,2
Gain on translation of foreign entities 0,5 1,8 5,9
Share issues 4,7 1,7 2,9
Dividends (42,0) (30,4) (45,4)
Equity at the end of the period 771,8 643,0 728,4
BALANCE SHEET
31 May 31 May 30 Nov
R million 2007 2006 2006*
ASSETS
NON-CURRENT ASSETS 127,6 129,7 125,3
Property, plant and equipment 69,5 65,7 66,9
Deferred taxation - net 0,9 1,2
Goodwill 57,2 64,0 57,2
Current assets 1 029,2 871,7 1095,0
Inventories 517,3 407,3 451,9
Accounts receivable 318,4 280,4 354,7
Bank call deposits and balances 193,5 184,0 288,4
TOTAL ASSETS 1156,8 1001,4 1220,3
EQUITY AND LIABILITIES
EQUITY 797,2 662,9 749,9
Shareholders` equity 771,8 643,0 728,4
Minority interest 25,4 19,9 21,5
Non-current liabilities 10,1 6,3
Deferred taxation - net 0,2
Due to vendors - interest bearing 9,9 6,3
Current liabilities 359,6 328,4 464,1
Accounts payable 340,7 263,7 381,7
Interest bearing debt 50,0 50,0
Due to vendors - interest bearing 6,6 7,0 8,0
Taxation 12,3 7,7 24,4
TOTAL EQUITY AND LIABILITIES 1156,8 1001,4 1220,3
SUPPLEMENTARY INFORMATION
These results were prepared in terms of IAS 34, applying accounting policies
which conform to International Financial Reporting Standards (IFRS) which are
consistent with those applied in the previous financial year.
31 May 31 May 30 Nov
2007 2006 2006*
Average net operating assets (Rm) 584,7 530,5 545,4
Operating profit margin (%) 11,6 10,1 12,7
Average NOA turn (times - annualised) 3,4 3,0 3,4
Return on average NOA (% - annualised) 39,5 30,3 42,9
Interest covered by
operating profit (times) n/a n/a n/a
Gearing - net (%) nil nil nil
Net asset value per share (cents) 2 551 2 151 2 429
Capital expenditure
- Spent during the period (Rm) 10,6 9,2 18,1
- Budgeted for second half
of the year (Rm) 16,0 7,0
Operating lease commitments
- property (Rm) 50,4 48,0 36,9
Net cash comprises (Rm) 193,5 134,0 238,4
- Bank call deposits and balances 193,5 184,0 288,4
- Interest bearing debt (50,0) (50,0)
Segment analysis
Turnover
31 May % 31 May 30 Nov
R million 2007 change 2006 2006*
Bearings and power transmission products 569,5 26 453,1 1049,2
Powered products 250,7 25 199,9 477,0
Security equipment 172,6 23 139,9 312,6
Internal/head office (0,2) (0,1) (1,0)
Total Group 992,6 25 792,8 1837,8
Operating profit
31 May % 31 May 30 Nov
R million 2007 change 2006 2006*
Bearings and power transmission products 61,2 77 34,6 116,4
Powered products 45,5 23 36,9 98,5
Security equipment 18,9 22 15,5 35,8
Internal/head office (10,2) (6,6) (16,2)
Total Group 115,4 44 80,4 234,5
Average net operating assets
31 May 31 May 30 Nov
R million 2007 2006 2006*
Bearings and power transmission products 425,9 389,9 387,2
Powered products 95,7 78,2 79,4
Security equipment 79,0 75,3 77,1
Internal/head office (15,9) (12,9) 1,7
Total Group 584,7 530,5 545,4
*Audited
Transfer secretaries
Computershare Investor Services 2004 (Pty) Ltd
PO Box 61051 Marshalltown 2107
Registered office
Hudaco Park 190 Barbara Road Elandsfontein 1406
Tel +27 11 345 8200 Fax +27 11 392 2740 E-mail info@hudaco.co.za
Directors
PL Campbell# (Chairman) SJ Connelly (Chief Executive) GE Gardiner JB Gibbon#
YKN Molefi# PM Poole RT Vice#
# Independent non-executive
Secretary
RGL Arnestad
Bearings and Power Transmission products
ABES Technoseal - Distributor of oil and hydraulic seals.
Bearings International - Distributor of bearings, seals and transmission
products.
Belting Supply Services - Distributor of power transmission and conveyor belting
products and industrial hose.
Bosworth - Manufacturer of conveyor drive pulleys.
Ernest Lowe ELCO - Manufacturer and distributor of hydraulic and pneumatic
equipment.
HBC - Distributor of clutch kits.
Powermite - Distributor of electrical cabling, plugs and other related products.
Varispeed - Distributor of controllers, monitors and regulators of the speed of
standard AC motors.
Powered products
Deutz Dieselpower - Distributor of Deutz diesel engines and provider of after-
market services.
Rutherford - Distributor of power tools, outboard motors, survey equipment and
rivets.
Security equipment
Elvey Security Technologies - Distributor of intruder detection, closed circuit
television, access control and fibre-optic equipment.
Value-added distribution
Date: 29/06/2007 08:57:01 Produced by the JSE SENS Department.
