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ABU
ABU
ABU - a.b.e. Construction Chemicals - Financial Results For The 6 Months
Ended 30 November 2007
a.b.e. CONSTRUCTION CHEMICALS LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number 1982/005383/07)
Share code : ABU ISIN: ZAE000102059
("a.b.e." or "the company")
FINANCIAL RESULTS FOR THE 6 MONTHS ENDED 30 NOVEMBER 2007
Highlights
- Attributable earnings up by 21%
- Assets are up by 26%
- Cash reserves increased by R3 million from May 2007 to R7.5 million
- Listing on ALTX on 17 August 2007
INCOME STATEMENT
Notes Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 November 30 November 31 May 2007
2007 2006
R`000 R`000 R`000
Revenue 110,377 100,744 191,290
Cost of sales (68,053) (62,696) (119,252)
Gross profit 42,324 38,048 72,038
Other income 344 443 1,456
Distribution costs (2,871) (2,285) (4,725)
Administration expenses (4,763) (4,513) (9,258)
Other expenses (20,296) (19,515) (36,995)
Operating profit 14,738 12,178 22,516
Investment revenue 125 3 18
Finance costs (247) (127) (291)
Profit before taxation 14,616 12,054 22,243
Taxation (4,239) (3,496) (6,422)
Profit for the period 10,377 8,558 15,821
Attributable to:
Equity holders of a.b.e. 10,377 8,558 15,821
Construction Chemicals
Limited
Earnings per share
- Basic and diluted 1,2 10,37 8,55 15,82
basic earnings per share
(cents)
- Headline and 10,22 8,49 15,62
diluted headline
earnings per share
(cents)
- Weighted average 1 100 000 100 000 100 000
number of shares in
issue
BALANCE SHEET
Notes Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 November 30 November 31 May
2007 2006 2007
R`000 R`000 R`000
Assets
Non-Current Assets 28,235 22,914 25,348
Property, plant and 28,235 22,909 25,348
equipment
Investment in subsidiary - 5 -
Current Assets 96,501 76,446 67,177
Inventories 37,769 30,311 30,118
Loan to group company - - 62
Trade and other receivables 51,197 44,478 32,666
Cash and cash equivalents 7,535 1,657 4,331
Total Assets 124,736 99,360 92,525
Equity and Liabilities
Equity 66,457 16,392 21,458
Share capital 1 1,000 - -
Share Premium 33,621 - -
Non-Distributable Reserves 7,748 7,833 7,748
Retained income 24,088 8,559 13,710
Liabilities
Non-Current Liabilities 6,680 5,334 7,044
Other financial liabilities 2,819 1,201 2,564
Retirement benefit 2,515 2,468 2,647
obligation
Deferred tax 1,346 1,665 1,646
Provisions - - 187
Current Liabilities 51,599 77,634 64,023
Loans from group company 4 - 36,997 36,811
Other financial liabilities 1,101 1,067 1,130
Current tax payable 5,474 4,739 935
Trade and other payables 43,649 32,302 24,252
Provisions 1,375 2,529 895
Total Liabilities 58,279 82,968 71,067
Total Equity and 124,736 99,360 92,525
Liabilities
STATEMENT OF CHANGES IN EQUITY
Notes Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 November 30 November 31 May 2007
2007 2006
R`000 R`000 R`000
Opening balance as 21,458 40,635 40,635
previously reported
Shares issued during 999 -
period
Share Premium 33,621 - -
Attributable earnings 10,378 8,558 15,822
Dividends paid - - (35,000)
Movement in Non- - - (85)
distributable reserve
Movement in Retained - (32,802) 85
Income
Closing balance 66,456 16,391 21,457
Comprising
Share capital 1,000 - -
Share Premium 33,621 - -
Retained earnings 24,088 8,558 13,710
Non-distributable 7,747 7,833 7,747
reserve
Total Shareholders` 66,456 16,391 21,457
equity
CASH FLOW STATEMENT
Notes Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 November 30 November 31 May 2007
2007 2006
R`000 R`000 R`000
Cash flow from
operating activities
Cash generated from 9,112 4,211 18,352
operations
Interest income 125 3 18
Finance cost (247) (128) (291)
Tax paid - - (6,749)
Net cash from operating 8,990 4,086 11,330
activities
Cash flows from
investing activities
Purchase of property, (3,981) (906) (4,493)
plant and equipment
Disposal of property, 158 63 219
plant and equipment
Net cash from investing (3,823) (843) (4,274)
activities
Cash flows from
financing activities
Proceeds on share issue 34,621 - 72
Proceeds/(repayment of 226 (591) 716
other financial
liabilities)
Loans repaid to group (36,811) (6,591) (9,037)
companies
Net cash from financing (1,964) (7,182) (8,321)
activities
Total cash movements 3,203 (3,939) (1,265)
Cash at the beginning 4,331 5,596 5,596
of the period
Total cash at the end 7,534 1,657 4,331
of the period
SEGMENTAL ANALYSIS
Reportable Segments
Geographical Area
Company
30 Nov 2007 30 Nov 2006 31 May 2007
R`000 R`000 R`000
Segment Revenue
- external 110,377 100,744 191,291
customers
Segment Profit 14,616 12,055 22,244
Interest 247 128 291
expense
Trade 50,570 43,217 31,010
receivables
Reconciling Item
30 Nov 2007 30 Nov 2006 31 May 2007
R`000 R`000 R`000
Segment Revenue
- external (3,232) (2,829) (5,116)
customers
Segment Profit (7,000) (5,309) (15,271)
Interest 122 125 291
expense
Trade (945) (793) (555)
receivables
South Africa
30 Nov 2007 30 Nov 2006 31 May 2007
R`000 R`000 R`000
Segment Revenue
- external 102,139 91,106 174,509
customers
Segment Profit 18,622 13,801 30,608
Interest
expense
Trade 44,833 38,491 28,117
receivables
Export
30 Nov 30 Nov 2006 31 May 2007
2007 R`000 R`000
R`000
Segment Revenue
- external 11,470 12,467 21,898
customers
Segment Profit 2,994 3,563 6,907
Interest
expense
Trade 6,682 5,519 3,448
receivables
Business Activity
Company
30 Nov 2007 30 Nov 2006 31 May 2007
R`000 R`000 R`000
Segment Revenue
- external 110,377 100,744 191,291
customers
Segment Profit 42,324 38,048 72,038
Reconciling Item
30 Nov 2007 30 Nov 2006 31 May 2007
R`000 R`000 R`000
Segment
Revenue (3,232) (2,829) (5,116)
- external
customers
Segment Profit (3,718) (4,476) (7,864)
Resellers
30 Nov 2007 30 Nov 2006 31 May 2007
R`000 R`000 R`000
Segment Revenue
- external 44,371 39,123 74,899
customers
Segment Profit 19,329 17,267 32,466
Construction
30 Nov 2007 30 Nov 2006 31 May 2007
R`000 R`000 R`000
Segment Revenue
- external 57,768 51,983 99,610
customers
Segment Profit 23,182 20,475 39,051
Export
30 Nov 2007 30 Nov 2006 31 May 2007
R`000 R`000 R`000
Segment Revenue
- external 11,470 12,467 21,898
customers
Segment Profit 3,531 4,782 8,385
Sales by Product Category
30 Nov 30 Nov 2006 31 May 2007
2007 R`000 R`000
R`000
Waterproofing 58,318 54,877 102,506
General 18,029 16,970 32,440
Construction
Silicone & 29,503 24,607 46,819
Sealants
Other 7,759 7,119 14,642
Total 113,609 103,573 196,407
Reconciling Item (3,232) (2,829) (5,116)
Company 110,377 100,744 191,291
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The condensed interim financial report for the six months ended 31 November 2007
has been prepared in compliance with the Listings Requirements of the JSE
Limited, International Financial Reporting Standards (IFRS) (in particular
International Accounting Standard 34 Interim Financial Reporting) and the South
African Companies Act, 1973, as amended.
Except as otherwise disclosed, the accounting policies applied in the
presentation of the interim financial report are consistent with those applied
for the year ended 31 May 2007 and the 6 months ended 30 November 2006.
These condensed consolidated interim financial statements have been prepared in
accordance with the historic cost convention except for certain financial
instruments which are stated at fair value.
The consolidated interim financial results are presented in rand, which is
a.b.e.`s functional and presentation currency.
SELECTED EXPLANATORY NOTES
1. Share capital
We have assumed the weighted average number of shares to be 100 million
throughout the current and comparative period (for purposes of comparison
as the private placing comprised a sale by shareholders to select investors
with no cash injection into the company and thus no effect on the issued
share capital).
2. Earnings per ordinary share
The calculation of basic earnings per share is based on net profit
attributable to ordinary shareholders of R10,377,622 (2006: R8,558,613) and
weighted average of 100 million shares in issue .
The calculation of headline earnings per share is based on earnings of
R10,219,125 (2006: R8,495,682) and a weighted average of 100 million shares
in issue.
Reconciliation between earnings and headline earnings:
Basic Earnings R 10,377,622 R 8,558,613
Less: Profit on sale of fixed R (158,497) R (62,931)
assets
Headline Earnings R 10,219,125 R 8,495,682
3. Post balance sheet events
No event which is material to the understanding of this report has occurred
between the financial period and the date of this report.
4. Loans from group companies
The loan from the group company has been repaid in full from the proceeds
of the sale of shares to black economic empowerment ("BEE") shareholders in
a vendor financed deal prior to listing on ALTX.
COMMENTARY
COMPANY PROFILE
Established in 1932 a.b.e. has grown in both size and diversity to become a
major supplier of specialist products to the building, civil engineering and
building maintenance industries supplying product directly to its customers
through its national branch network as well as through builders` merchants ,
hardware stores and distributors. a.b.e. has manufacturing plants in
Johannesburg (Boksburg) and Durban (Isipingo).
In addition to local manufacturing, a.b.e. is the distributor for a number of
leading multi-national manufacturers of specialised construction products.
A BEE shareholder acquired 26% of a.b.e. on 1 June 2007 and a.b.e. listed on
ALTx on 17th August 2007.
FINANCIAL RESULTS
* REVENUE
Increased during the period by 10% from R100m to R110m.
* OPERATING PROFIT
Grew by 21% reflecting the effectiveness of continued cost management.
* ATTRIBUTABLE EARNINGS
Profit after tax improved by 21.2% from R8.5m to R10.3m
* CASHFLOW FROM OPERATING ACTIVITIES
Cash reserves increased by R3.2 million from May 2007 to R7.5 million.
OPERATIONAL REVIEW
Resellers
Turnover increased by 13,4% in line with forecasts (as published in the
prospectus). This growth resulted from the continued growth in the housing
market and the addition of several new product lines. The continued
consolidation of the building materials industry gives us the opportunity to
further improve in the 2nd half of the year.
Construction
Although turnover increased by 11,1% on the prior period the increase was less
than anticipated due to the infrastructure spend not being at anticipated
levels. We expect this to be compensated for in the second half of the year.
a.b.e. continues to pursue additional products and markets and expects it`s new
range of roofing products will contribute to sales well into the future.
Exports
Although turnover is slightly down on last year it is in line with forecasts.
The strength of the rand has impacted margins in the period.
PROSPECTS
Second half profits will be lower than the first half which is taken into
account in the preparation of our budgets and forecasts. Whilst we are somewhat
concerned about the impact of the latest inflation figures and the high interest
rate the long term outlook remains positive and we expect some improvement in
the rate of sales growth for the second half.
DIVIDEND
No interim dividend will be paid, however, no change to the stated dividend
policy as per the prospectus is anticipated.
CORPORATE ACTIVITY
Whilst our primary growth this period has been organic, a.b.e. successfully
listed on ALTX in August 2007. The company was well received by the investor
community with the private placing being substantially oversubscribed.
For and on behalf of the Board
W R G Post S P Stacey
Chairman Managing Director
Johannesburg
18 February 2008
Registered office:
7 Wilcox Road
Isipingo
KwaZulu Natal 4110
Transfer Secretaries:
Computershare Investor Services 2004 (Pty) Limited
70 Marshall Street
Johannesburg 2001
Directors:
W R G Post* (Chairman)
L F Avis
S K Mota*
S Rault
S P Stacey
*Non-executive
Designated advisor:
PSG Capital (Pty) Limited
Date: 18/02/2008 12:29:01 Produced by the JSE SENS Department.
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