| Tue 12 Aug 2008, 10:00 | | ABU - A.B.E. Construction Chemicals Limited - Audited abridged financial results |
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ABU
ABU
ABU - A.B.E. Construction Chemicals Limited - Audited abridged financial results
for the 12 months ended 31 May 2008
A.B.E. CONSTRUCTION CHEMICALS LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number 1982/005383/06)
Share code : ABU ISIN: ZAE000102059
("a.b.e." or "the company")
AUDITED ABRIDGED FINANCIAL RESULTS FOR THE 12 MONTHS ENDED 31 MAY 2008
HIGHLIGHTS
- ATTRIBUTABLE EARNINGS INCREASED BY 32% TO R20,9M
- CASH ON HAND INCREASED FROM R4.3 TO R19.7M
- OPERATING PROFIT INCREASED BY 30% TO R29.2M
- REVENUE INCREASED BY 15% TO R220,3M
- DIVIDEND DECLARED OF 8,5 CENTS PER SHARE
- EXCEEDED FORECAST HEADLINE EARNINGS PER SHARE BY 3%
INCOME STATEMENT
Figures in Rand 12 months 12 months
audited audited
31 May 2008 31 May 2007
Revenue 220,304,588 191,290,792
Cost of sales (135,437,007) (119,252,344)
Gross profit 84,867,581 72,038,448
Other income 9,395,634 3,978,833
Distribution costs (8,440,769) (7,248,278)
Administration expenses (9,716,671) (9,258,000)
Other expenses (46,884,608) (36,994,583)
Operating profit 29,221,167 22,516,420
Investment revenue 458,120 18,977
Finance charges (528,277) (291,424)
Profit before taxation 29,151,010 22,243,973
Taxation (8,194,472) (6,422,106)
Profit for the period 20,956,538 15,821,867
Attributable to:
- Equity holders 20,956,538 15,821,867
Earnings per share
- Basic and diluted basic earnings per share 21,7 791,1
(cents)
- Headline and diluted headline earnings per 21,2 781,0
share (cents)
Weighted average number of shares in issue 96,750,000 2,000,000
Pro forma earnings and headline earnings per
share (extracted from the prospectus dated 7
August 2007)
- Pro forma basic and diluted basic earnings per 15.8
share (cents)
- Pro forma headline and diluted headline 15.6
earnings per share (cents)
The pro forma earnings and headline earnings per share is extracted from
a.b.e.`s prospectus dated 7 August 2007 and is provided for illustrative
purposes only to provide information on the 2007 comparative year.
BALANCE SHEET
Figures in Rand 12 months 12 months
audited audited
31 May 2008 31 May 2007
Assets
Non Current Assets 38,353,045 25,348,183
Property, plant and equipment 38,353,045 25,348,183
Current Assets 109,113,927 67,177,077
Inventories 46,222,041 30,117,035
Loan to group company - 62,794
Trade and other receivables 43,201,761 32,666,184
Cash and cash equivalents 19,690,125 4,331,064
Total Assets 147,466,972 92,525,260
Equity and Liabilities
Equity 85,803,004 21,457,927
Share capital 1,000,000 74
Share premium 33,635,756 -
Non Distributable Reserves 16,373,995 7,747,729
Retained income 34,793,253 13,710,124
Liabilities
Non Current Liabilities 7,277,494 7,044,454
Other financial liabilities 2,347,654 2,564,115
Deferred tax 2,463,232 1,646,815
Provisions 2,466,608 2,833,524
Current Liabilities 54,386,474 64,022,879
Loan from group company - 36,811,119
Other financial liabilities 1,832,327 1,129,634
Current tax payable 1,752,546 934,992
Trade and other payables 49,788,139 24,252,170
Provisions 1,013,462 894,964
Total Liabilities 61,663,968 71,067,333
Total Equity and Liabilities 147,466,972 92,525,260
STATEMENT OF CHANGES IN EQUITY
Figures in Rand Share Share premium Non Retained Total equity
capital distributab income
le reserves
Balance at 01 2 7,833,067 32,802,919 40,635,988
June 2006
Changes in
equity
Profit for the 15,821,867 15,821,867
year
Issue of shares 72 72
Transfer to (85,338) 85,338 -
retained income
Dividends (35,000,000) (35,000,000)
Total changes 72 (85,338) (19,092,795) (19,178,061)
Balance at 01 74 7,747,729 13,710,124 21,457,927
June 2007
Changes in
equity
Revaluation of 8,752,857 8,752,857
assets
Profit for the 20,956,538 20,956,538
year
Issue of shares 26 34,999,974 35,000,000
Capitalisation 999,900 (999,900) -
issue
Share issue (364,318) (364,318)
expenses
Transfer to (126,591) 126,591 -
retained
earnings
Balance at 31 1,000,000 33,635,756 16,373,995 34,793,253 85,803,004
May 2008
CASH FLOW STATEMENT
Figures in Rand 12 months 12 months
audited audited
31 May 2008 31 May 2007
Cash flows from operating activities
Cash generated from operations 29,893,317 18,352,879
Investment revenue 458,120 18,977
Finance costs (528,277) (291,424)
Tax paid (7,287,881) (6,749,486)
Net cash from operating activities 22,535,279 11,330,946
Cash flows from investing activities
Purchase of property, plant and equipment (5,696,995) (4,493,467)
Proceeds on disposal/claims for property, plant 708,764 218,797
and equipment
Net cash from investing activities (4,988,231) (4,274,670)
Cash flows from financing activities
Proceeds on share issue 35,000,000 72
Share issue expenses (364,318)
Proceeds/(Repayment) of other financial (75,344) 715,847
liabilities
Loans repaid to group companies (1,748,325) (9,037,510)
Dividends paid (35,000,000)
Net cash from financing activities (2,187,987) (8,321,591)
Total cash movement for the period 15,359,061 (1,265,315)
Cash at the beginning of the period 4,331,064 5,596,379
Total cash at end of the period 19,690,125 4,331,064
SEGMENTAL ANALYSIS
Factors taken into to account in identifying the entity`s reportable segments
includes the geographical area in which the segment operates and its main
business sectors. This is consistent with the manner in which internal
information is disclosed to management in order to allocate resources to the
segment and assess its performance. Individual operating segments have not been
aggregated into a single operating segment where the individual operating
segments exhibit similar longterm financial performance and economic
characteristics. Each reportable segment derives its revenue from the sale of
the same products of which have been described below.
Management do not separate fixed assets of the business into reportable segments
as they are separated into different areas based on their geographic location.
Reportable segments
Geographical Area
Company Reconciling item
12 months 12 months 12 months 12 months
audited audited audited audited
31 May 2008 31 May 2007 31 May 2008 31 May 2007
Trade receivables 40,257,310 31,010,300 (1,128,510) (798,360)
Segment revenue 220,304,588 191,290,792 (6,842,693) (5,115,398)
external customers
Reconciling items for segment revenue to external
customers consist of:
Settlement discount (3,364,869) (3,008,539)
Rebates (3,477,824) (2,106,859)
TOTAL (6,842,693) (5,115,398)
South Africa Export
12 months 12 months 12 months 12 months
audited audited audited audited
31 May 2008 31 May 2007 31 May 2008 31 May 2007
Trade receivables 37,748,482 29,057,426 3,637,338 2,751,234
Segment revenue 205,640,439 174,500,018 21,506,842 21,906,172
external customers
Company Reconciling item
12 months 12 months 12 months 12 months
audited audited audited audited
31 May 2008 31 May 2007 31 May 2008 31 May 2007
Segment profit 29,151,010 22,243,973 (18,659,953) (17,172,433)
Reconciling items for segment profit consist
of:
Head office (7,928,999) (6,958,190)
National
Administration (3,861,676) (3,810,421)
Warehouse (2,448,842) (1,859,224)
Selling (4,857,934) (4,568,694)
Sundry 507,655 296,543
Interest expense (528,277) (291,424)
Interest received 458,120 18,977
TOTAL (18,659,953) (17,172,433)
South Africa Export
12 months 12 months 12 months 12 months
audited audited audited audited
31 May 2008 31 May 2007 31 May 2008 31 May 2007
Segment profit 41,671,886 32,509,823 6,139,077 6,906,583
Business Activity
Company Reconciling item
12 months 12 months 12 months 12 months
audited audited audited audited
31 May 2008 31 May 2007 31 May 2008 31 May 2007
Segment revenue 220,304,588 191,290,792 (6,842,693) (5,115,398)
External customers
Segment gross profit 84,867,581 72,038,448 (6,740,673) (7,863,288)
Resellers Construction
12 months 12 months 12 months 12 months
audited audited audited audited
31 May 2008 31 May 2007 31 May 2008 31 May 2007
Segment 83,076,811 74,925,795 122,563,628 99,574,223
revenue
External
customers
Segment 35,516,228 32,467,869 48,824,384 39,043,387
gross profit
Export
12 months 12 months
audited audited
31 May 2008 31 May 2007
Segment revenue 21,506,842 21,906,172
External customers
Segment gross profit 7,267,642 8,390,480
Sales by product category
12 months 12 months
audited audited
31 May 2008 31 May 2007
Waterproofing 120,173,431 102,505,887
General Construction 45,415,314 32,440,415
Silicones & Sealants 55,330,022 46,818,591
Other 6,228,514 14,641,297
Total 227,147,281 196,406,190
Reconciling item (6,842,693) (5,115,398)
Company 220,304,588 191,290,792
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The abridged financial report for the twelve months ended 31 May 2008 has been
prepared in compliance with the Listings Requirements of the JSE Limited,
International Financial Reporting Standards (IFRS) and (in particular)
International Accounting Standard 34 Interim Financial Reporting) and the
Companies Act, No. 61 of 1973 (as amended). With the exception of IFRS7, the
accounting policies applied in the presentation of the financial results are
consistent with those applied for the year ended 31 May 2007.
These abridged audited financial statements have been prepared in accordance
with the historic cost convention except for certain financial instruments which
are stated at fair value and the revaluation of land and buildings.
SELECTED EXPLANATORY NOTES
1. Earnings per share
The calculation of basic and diluted earnings per share is based on net profit
attributable to ordinary shareholders of R20,956,538 (2007: R15,821,867) and a
weighted average of 96,750,000 (2007: 2,000,000) shares in issue throughout the
year.
The calculation of headline and diluted headline earnings per share is based on
earnings of R20,484,805 (2007: R15,619,245) and a weighted average of 96,750,000
(2007: 2,000,000) shares in issue throughout the year.
Basic and diluted earnings per share 21,7 cents 791,09 cents
Headline earnings per share 21,2 cents 780,96 cents
Reconciliation of total earnings to headline
earnings attributable to equity holders:
Earnings attributable to ordinary shareholders 20,956,538 15,821,867
Non-headline earnings
Insurance proceeds relating to flood damage (6,529,054) -
Impairments due to flood damage 6,034,209 -
Profit on sale of fixed assets (159,951) (202,622)
Tax effects of adjustments 183,063 -
Headline earnings 20,484,805 15,619,245
Number of Number of
Shares Shares
2008 2007
Reconciliation of weighted average number of
shares:
Shares at the beginning of the year 74 2
Issue on 31 May 2007 - 72
Weighted average number of shares 2007 - 2
Share split 7,326 198
Issue of shares for consideration in August - 2,275 -
apportioned
Capitalisation Issue 96,740,325 1,999,800
Weighted average number of shares 96,750,000 2,000,000
2. 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.
COMPANY PROFILE
History
a.b.e. was established in 1932 in Durban as a supplier of bitumen to
municipalities in KwaZulu-Natal. For a period of time it was owned jointly by
Shell and Murray & Roberts and in 1986 became a wholly-owned subsidiary of
Murray & Roberts. In 1996 Murray & Roberts sold 50% of a.b.e. to Chemserve.
In 1997 Steelwood Africa (Pty) Ltd acquired 50% of a.b.e. from Murray & Roberts
and the remaining 50% from Chemserve in 1999. In 2007 Steelwood disposed of its
shareholding in a.b.e. to its shareholders who listed the company.
BEE Shareholders
Auburn Avenue Trading 31 (Pty) Ltd, a BEE company, acquired a 26% shareholding
in a.b.e. with effect from 12 July 2007 prior to listing on the 17 August 2007.
Listing
a.b.e. listed on the Alternative Exchange of the JSE on 17 August 2007 with a
Share Capital of 100 000 000 ordinary shares after a private placing of 37 000
000 shares.
Review of Activities
The company is a manufacturer and distributor of specialist high performance
products to the building, civil engineering and building maintenance industry
either directly through its branch network or through its reseller`s channel of
builder`s merchants and hardware stores. With a staff compliment of 235 people
the company has manufacturing plants in Johannesburg (Boksburg) and in Durban
and has a national footprint with branches in major centres as well as
distributors and agents in rural areas and most English speaking African
countries. A range of the company`s products are manufactured under license in
Pakistan and Mauritius.
OPERATIONAL REVIEW
Resellers
The sale of products through the primary retailers to the domestic construction
and DIY sector of the industry was below expectations at 10.5% growth, as a
result of the interest rate hikes and the resultant slowdown in this sector.
Construction
The sale of products to the commercial, building and civil engineering
infrastructure markets as well as the building maintenance industry exceeded
expectations at 23% sales growth.
Exports
Export sales were static which was in line with expectations given the slowdown
in the economies of most of a.b.e.`s export markets.
GROWTH PROSPECTS
Resellers
It is expected that the continued national consolidation of primary retailers in
the building materials supply industry will continue to offer opportunities to
the resellers distribution channel. a.b.e.`s national footprint is likely to
benefit the company in this regard. If interest rates ease, a.b.e. expects the
domestic renovations and DIY sector to improve in the year forward.
Construction
a.b.e. expects that the ongoing and escalating spend in the infrastructure and
building maintenance sectors will yield good growth in this segment.
The company also anticipates that its new product offering in the roof covering
market will bear fruit in the near future in both the maintenance and new build
markets.
General
a.b.e. intends adding further product lines to the current product basket
through product line extensions, acquisition of existing brands and continuing
pursuing strategic technology agreements with its current European partners.
BALANCE SHEET
Working capital (inventories, accounts receivable and accounts payable) at
R39.6m have only increased marginally over last year at R38.5m.
Cash on hand has increased to R19.7m from R4.3m last year as a result of focus
on working capital and costs. Of the cash, R8.5m is committed to a divided and
R.85m to the STC thereon.
DIVIDENDS
As set out in the Prospectus, the divided policy of a.b.e., in the absence of
unforeseen circumstances and subject to future cash requirements, is to declare
a dividend based on a dividend cover of 2.5 times, payable annually in
September.
The directors are pleased to announce the declaration of a maiden dividend of
eight and a half cents (8.5c) per ordinary share. Salient dates in respect of
the dividend are as follows:
Last date to trade "cum" dividend Friday, 12 September 2008
Shares trade "ex" dividend Monday, 15 September 2008
Record date Friday, 19 September 2008
Payment date Monday, 22 September 2008
No dematerialisation or rematerialisation of share certificates may take place
between Monday, 15 September 2008 and Friday, 19 September 2008, both dates
inclusive.
ISIPINGO SITE FLOOD
Further to the SENS announcement on 20 March 2008, the directors advise that the
material loss claim has been agreed by Insurers and substantially settled. Total
proceeds included in other income for 2008 was R6,529,054 and total expenses and
impairments relating thereto totalled R6,034,208.
GUARANTEES AND CONTINGENT LIABILITIES
The total contingent liabilities of the company in respect of guarantees by the
bank amount to R551,000 (2007:R551,000). Guarantees are issued in respect of due
performance of contracts by third parties. The directors are of the opinion that
any loss is improbable and it is not anticipated that any material liabilities
will arise.
AUDIT OPINION
The results for the period ended 31 May 2008 have been audited by the company`s
auditors, BDO Spencer Steward (KZN) Inc., and their unqualified audit report is
available for inspection at the company`s registered office.
NOTICE OF ANNUAL GENERAL MEETING AND MAILING OF ANNUAL REPORT
Shareholders are advised that the annual report for the financial year ended 31
May 2008 will be mailed in due course. This report will contain the notice and
related details of the annual general meeting of shareholders. Additional
announcements regarding the date, time and venue of the annual general meeting
of shareholders will be announced on SENS.
For and on behalf of the Board
S K MOTA L F AVIS
CHAIRMAN FINANCIAL DIRECTOR
DURBAN
12 AUGUST 2008
CORPORATE INFORMATION
Directors: S K Mota* (Chairman), W R G Post*, S P Stacey, L F Avis, S Rault
*Non-executive
Registered Address:7 Wilcox Road, Isipingo, Kwazulu-Natal, 4110
Postal Address: P O Box 23053, Isipingo, Kwazulu-Natal, 4110
Telephone: 031 913 5400
Faxsimile: 031 902 8861
Registration number: 1982/005383/06
Company Secretary: Lawrence Frederick Avis
Auditors: BDO Spencer Steward (KZN) Inc.
Designated advisor: PSG Capital (Pty) Limited
Transfer Secretaries: Computershare Investor Services 2004 (Pty) Limited
Date: 12/08/2008 10:00:02 Produced by the JSE SENS Department.
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employees and agents accept no liability for (or in respect of) any direct,
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