| Fri 1 Aug 2008, 11:58 | | SFH - S A French Limited - Trading Update |
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SFH
SFH
SFH - S A French Limited - Trading Update
S A FRENCH LIMITED
Incorporated in the Republic of South Africa
(Registration number 1982/009174/06)
Share code: SFH & ISIN: ZAE000108890
("SA French" or "the company")
TRADING UPDATE
In terms of the Listings Requirements of JSE Limited, companies are required to
publish a trading statement as soon as they become reasonably certain that the
financial results for the period to be reported on will differ by more than 20%
from that of a profit forecast previously provided to the market in relation to
such period. Accordingly, a review of the financial results for the year ended
30 June 2008 by management has indicated that earnings per share and headline
earnings per share are expected to be between 66% and 73% lower than those
disclosed in the forecast included in the prospectus dated 29 October 2007
("prospectus"), equating to earnings per share of between 4 and 5 cents per
share for the year.
This translates into attributable profits for the year ended 30 June 2008 of
between R5.9 million and R7.4 million versus the prospectus estimates of R21.8
million. From a revenue perspective, SA French expects revenues for the year
ended 30 June 2008 to be R150 million versus prospectus estimates of R190
million.
Background:
The electricity supply crisis that hit South Africa in January 2008 caused
uncertainty for many of SA French`s key clients in the construction industry.
This resulted in delays in the awarding of several infrastructure projects and
construction companies responded by restricting or delaying capital expenditure
decisions such as the purchase of tower cranes.
This change in market dynamic resulted in a change of focus in SA French`s
business. In particular, SA French has experienced an increase in demand for
crane rentals as many of its clients seek to keep costs variable until there is
clarity on the power supply issue. An increase in the rental of instead of the
sale of tower cranes has had an effect on SA French`s financial statements.
Firstly, from a balance sheet perspective SA French has made a significant
investment in its rental fleet. Secondly, from a revenue and profitability
perspective short-term profitability has been replaced by longer-term revenues
from rentals.
As a result of the more predictable and reliable power supply experienced over
the last couple of months, SA French has seen more consistency in the demand for
its products, as evidenced by the paragraph below.
Significant transaction after year end:
SA French has concluded a contract for the sale, delivery and erection of two
tower cranes on a major infrastructure contract. The order equates to 25% of
annual turnover. These units will be delivered by March 2009. At the time of
release of this announcement, the client had issued a gagging order. Further
information will be released once the client has given approval.
With more certainty regained in the construction industry and long-term projects
that have been awarded, SA French is currently involved in negotiations
regarding several other large contracts, the outcome of which will be known by
the end of this quarter.
The financial information on which this trading statement is based has not been
reviewed or reported on by the company`s auditors. SA French`s financial results
are expected to be released on SENS on or about 30 September 2008.
Johannesburg
1 August 2008
Designated Adviser
Merchant Sponsors (Proprietary) Limited
Date: 01/08/2008 11:58:02 Produced by the JSE SENS Department.
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