| Wed 13 Feb 2008, 11:31 | | Topfix Holdings Limited - Reviewed interim results |
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TFX: TFX - Topfix Holdings Limited - Reviewed r... 2/13/2008 5:00:02 PM
TFX - Topfix Holdings Limited - Reviewed results for the 6 months ended 31
December 2007
Top Fix Holdings Limited
(formerly Nutcreek Investments (Proprietary) Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2006/011359/06)
JSE code: TFX
ISIN: ZAE000088423
("Top Fix" or "the Company")
REVIEWED RESULTS FOR THE 6 MONTHS ENDED 31 DECEMBER 2007
INCOME STATEMENT
R'000 6 months ended 31 December Year ended
30 June
2007 2006 2007
Restated,
Reviewed Unreviewed Audited
Turnover 121,840 93,074 192,580
Cost of sales (74,143) (72,915) (141,326)
Gross profit 47,697 20,159 51,254
Net operating expenses 26,835 14,173 37,286
Operating profit 20,862 5,986 13,968
Interest paid (2,447) (23) (2,273)
Profit before taxation 18,415 5,963 11,695
Taxation (5,780) (977) (3,251)
Loss from associate (558) - -
Profit for the period 12,077 4,986 8,444
Shares in issue ('000) 185,000 185,000 185,000
Weighted average shares in issue
issue ('000)
- Basic 185,000 164,167 174,110
- Fully diluted 185,000 164,167 174,110
Earnings per share/headline earnings
per share (cents)
- Basic 6.5 3.0 4.8
- Fully diluted 6.5 3.0 4.8
BALANCE SHEETS
R'000 31 December 30 June
2007 2006 2007
Restated,
Reviewed Unreviewed Audited
ASSETS
Non-current assets 156,680 89,153 117,602
Property, plant and equipment 90,080 30,455 58,999
Goodwill 58,014 58,014 58,014
Associate investment 8,061 - -
Deferred taxation asset 525 684 589
Current assets 62,527 61,157 52,254
Inventories 93 1,714 1,710
Accounts receivable 62,130 40,706 48,683
Bank and call deposits 304 18,737 1,861
TOTAL ASSETS 219,207 150,310 169,856
EQUITY AND LIABILITIES
Shareholders' equity 118,108 102,509 106,031
Non-current liabilities 18,336 5,466 7,442
Interest bearing debt 11,152 2,984 4,163
Deferred taxation liability 7,184 2,482 3,279
Current liabilities 82,763 42,335 56,383
Interest bearing debt 36, 137 14,002 13,153
Accounts payable and provisions 38,135 19,954 34,584
Taxation 8,491 8,379 8,646
TOTAL EQUITY AND LIABILITIES 219,207 150,310 169,856
Net asset value per share (cents) 63.8 55.4 57.3
Net tangible asset value per share
(cents) 32.5 24.1 26.0
CONDENSED CASH FLOW STATEMENT
R'000 6 months ended 31 December Year ended
30 June
2007 2006 2007
Restated,
Reviewed Unreviewed Audited
Cash flow from operating
activities 15,930 3,632 19,544
Net Interest Paid (2,447) (23) (2,273)
Taxation paid (1,966) (437) (1,648)
Cash flow from operations 11, 517 3,172 15,623
Cash flow from investing
activities (43,047) (11,574) (41,153)
Investment in associate (8,210) - -
Movement in loans receivable - - 826
Net investment in property,
plant and equipment (34,837) (11,574) (41,979)
Cash flow from financing
activities 27,597 23,460 24,050
Shareholder funding - 23,397 23,461
Increase in interest bearing
liabilities 27,597 63 589
(Increase)/decrease in net
borrowings (3,933) 15,058 (1,480)
Opening net borrowings (9,804) (8,324) (8,324)
Closing net (borrowings)/cash (13,737) 6,734 (9,804)
Net (borrowings)/cash (13,737) 6,734 (9,804)
Bank and call deposits 304 18,737 1,861
Bank overdrafts and debtors
discounting (14,04 1) (12,003) (11,665)
STATEMENT OF CHANGES IN EQUITY
R'000 6 months ended 31 December Year ended
30 June
2007 2006 2007
Restated,
Reviewed Unreviewed Audited
Equity at beginning of period 106,031 74,126 74,126
Share issues - 23,397 23,461
Attributable profit for the
period 12,077 4,986 8,444
Equity at end of period 118,108 102,509 106,031
SEGMENT ANALYSIS
R'000 6 months ended 31 December Year ended
30 June
2007 2006 2007
Restated,
Reviewed Unreviewed Audited
Turnover
Scaffolding 54,288 26,177 51,307
Personnel outsourcing 65,547 64,626 136,845
Safety surveillance 3,411 3,679 7,284
Internal/head
office/consolidation (1,406) (1,408) (2,856)
Total Group 121,840 93,074 192,580
Operating income
Scaffolding 16,485 (1,940) (126)
Personnel outsourcing 4,509 6,772 12,999
Safety surveillance 367 1,155 1,544
Internal/head
office/consolidation (499) (1) (449)
Total Group 20,862 5,986 13,968
COMMENTARY ON THE GROUP'S RESULTS :
A significant improvement in operating results for the 2007/8 financial year
was predicted in the Group's results announcement for the year ended 30 June
2007. Results for the six months to 31 December 2007 have proved this
prediction correct. The Group's earnings of R12,1 million compare to restated
earnings for the six months to 31 December 2006 of R5 million and R8,4 million
for the full year, improvements of 142% and 44%, respectively.
Operating profit for the 6 months to 31 December 2007 at R21 million is more
than three times that achieved for the comparative period last year and nearly
50% up on the profit achieved for the full year to June 2007.
Delays in finalisation of the planned rights issue, as published in various
SENS announcements between October and December 2007, have led to interest
charges significantly higher than planned at R2,4 million, as high as the full
year charge for the year ended 30 June 2007. This is due to scaffolding capital
expansion continuing as planned, plus investment in the Robor Joint Venture all
of which was expected to be funded from the proceeds of the rights issue. As a
result, borrowings increased b y R28 million to 31 December 2007, most of
which will be repaid through the proceeds of the rights issue which is due to
be finalized in mid February 2008.
Scaffolding
Scaffolding was the star performer for the 6 month period with operating profit
of R16,5 million compared to losses generated in the previous year. These
results support capital expansion in this operation both in the current and
prior year, and also fully justify management's faith in the division.
Personnel Outsourcing
Personnel Outsourcing achieved exceptional results for the previous year
(including a fair value adjustment of R1 million). Operating profit for the 6
months at R4,5 million is in line with expectations, but compares to R5,7
million for the comparative period last year excluding the fair value
adjustment.
Safety Surveillance
Safety Surveillance achieved an operating profit of R0,4 million, down on the
previous year.
ACCOUNTS RECEIVABLE
Accounts receivable includes an amount of R 7,1 million, raised in previous
financial years, pertaining to under-recoveries on joint venture contracts,
where Top Fix Scaffolding provided personnel and the other partners provided
scaffolding equipment, which contracts expired around December 2006. Legal
opinion has been received stating that amounts in excess of this figure are
still due and payable, although this has been denied by the joint venture
partner. However, in the interest of prudence additional accruals were not
raised at 30 June 2007. The directors are of the opinion that at least the
amount raised in this regard will be recovered. The joint venture party has
agreed to an arbitration process o n the matter which will expedite
finalisation of the dispute.
JOINT VENTURE
As advised in the SENS announcements dated 13 June 2007 and 13 September 2007,
Top Fix Scaffolding has entered into a 50/50 joint venture with Robor
(Proprietary) Limited ("the joint venture") to set up a scaffolding manufacture
and hire operation. Top Fix's investment in this joint venture amounted to R8
million in accordance with the joint venture agreement.
RELATED PARTY TRANSACTIONS
During the year ended 30 June 2007 Mr BW Marais acquired a controlling interest
in an external company, from which an amount of R8,1 million was received for
the training of scaffolding personnel, who would remain in Top Fix's personnel
pool with an option for this company to draw scaffolders from the pool as
required. This revenue h as been deferred until such time as the option is
exercised and is disclosed under Accounts Payable and Provisions.
In addition, included in current liabilities under Interest Bearing Debt are
loans from Mr BW Marais and his affiliates amounting to R6,6 million and bear
interest at the prime overdraft rate plus 1%.
FUTURE PROSPECTS
In the light of current performance, the directors remain confident of at least
achieving the Pre-Listing Statement forecast of 13,5c per share in the 2008
financial year. Capital expansion in the Scaffolding division should ensure
that this operation improves on its first half results, and interest charges
should reduce significantly with the finalisation of the rights issue in
February 2008.
BASIS OF PREPARATION AND ACCOUNTING POLICIES:
The reviewed results for the six months ended 31 December 2007 have been
prepared in accordance with International Financial Reporting Standards and
IAS34. The financial information for the six months ended 31 December 2007 has
been prepared adopting the same accounting policies used in the most recent
annual financial statements.
RESTATEMENT OF COMPARATIVE RESULTS FOR THE 6 MONTHS TO 31 DECEMBER 2006.
In the profit announcement for the year ended 30 June 2007 it was stated that
in the interest of prudence, no accruals had been raised for certain amounts
considered due on joint venture contracts with competitors, which joint venture
contracts have now expired. Accruals which had been raised at 31 December 2006
have therefore been reversed in the comparative figures, in line with the
decision taken at year end. In addition year end figures re-allocated an
amount previously shown separately as a Fair Value Adjustment. This Fair Value
Adjustment has accordingly also been re-allocated for the December 2006
comparative.
The effect on earnings for the 6 months to December 2006 as previously reported
is as follows:
R'000 6 months to Reallocation Reversal 6 months
31 Dec of Fair of Joint to 31 Dec
2006 as Value Venture 2006
published Adjustment Accruals restated
Operating profit 10,747 2,083 (6,844) 5,986
Fair value
adjustment 3,435 (3,435) - -
Net Interest Paid (1,375) 1,352 - (23)
Profit before
taxation 12,807 - (6,844) 5,963
Taxation (2,962) - 1,985 (977)
Profit for the year 9,845 - (4,859) 4,986
Earnings per
share/headline
earnings
per share (cents)
- Basic and fully
diluted 6.0 - (3.0) 3.0
QUALIFIED REVIEW OPINION
These results have been reviewed by Top Fix's auditors, PKF (Jhb) Inc., and
their qualified review opinion is available for inspection at the company's
registered office.
The qualification to the review opinion is in respect of collectibility of the
debtor discussed under Accounts Receivable above, which if provided would
result in the following adjustments:
Reduction in Accounts Receivable by R6,2 million to R55,9 million,
Decrease in Deferred Taxation Liability by R1,8 million to R5,9 million,
Decrease in Shareholders Equity by R4,4 million to R 113,7 million, a
reduction in Opening Retained Income.
The qualified review opinion does not represent a qualification in respect of
the operating results for the 6 months ended 31 December 2007.
DIVIDEND DECLARATION:
In line with Group policy, no dividend has been declared for the year.
For and on behalf of the Board
BT Ngcuka (Chairman) BW Marais (Chief Executive)
Date: 13 February 2008
Directors:
BT Ngcuka* (Chairman); BW Marais (CEO); JA Barker (Financial Director);
KG Bodigelo*; FF Goosen; EMJ Groenewald; JJ Senekal*; PR Todd
(*non-executive)
Secretary and Registered Office:
MN Hattingh, 6 Topaz Street, Littleton Manor, Centurion 0157
Transfer Secretaries:
Link Market Services South Africa (Pty) Ltd, 11 Diagonal Street, Johannesburg
2000 (PO Box 4844, Johannesburg 2001)
Designated Advisor:
Ernst & Young Sponsors (Pty) Ltd, Wanderers Office Park, 52 Corlett Drive,
Illovo 2196 (PO Box 2322, Johannesburg 2000)
Website:
www/topfix.co.za
Date: 13/02/2008 17:00:01 Produced by the JSE SENS Department.
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