| Mon 18 Aug 2008, 17:10 | | UNI - Universal Industries Corporation - Unaudited Interim Results For The Six |
|
UNI
UNI
UNI - Universal Industries Corporation - Unaudited Interim Results For The Six
Months Ended 30 June 2008
Universal Industries Corporation Limited
(formerly Universal Food Systems (Proprietary) Limited)
(Incorporated in the Republic of South Africa)
(Registration Number: 1996/004343/06)
JSE code: UNI: ZAE000110664
("Universal" or "the group")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2008
Highlights
- Headline earnings per share increased by 21,4%*; and
- Export turnover increased by 41%*, which equates to 19% of total turnover.
* on a pro forma basis
CONSOLIDATED INCOME STATEMENT
six months ended
Unaudited Unaudited Pro
forma*
Jun 2008 Jun 2007 Jun 2007
R`000 R`000 R`000
Revenue 258 452 114 941 231 157
Cost of goods sold (193 119) (91 273) (176 954)
Gross profit 65 334 23 668 54 203
Other income 525 262 1 374
Operating expenses (30 359) (9 498) (26 227)
Profit from operations 35 499 14 432 29 349
Interest received 2 364 938 1 398
Interest paid (2 622) (96) (2 415)
Profit before taxation 35 241 15 275 28 332
Taxation (10 624) (4 429) (8 216)
Profit attributable to the equity holders of 24 617 10 846 20 116
the parent
Number of shares in issue (`000) 469 004 353 333# 480 000
Weighted average number of shares in issue 479 641 353 333# 480 000
(`000)
Basic earnings per share (cents) 5,1 3,1# 4,2
Basic headline earning per share (cents) 5,1 3,1# 4,2
* The pro forma results as disclosed in the listing prospectus.
# The actual number and weighted average number of shares in issue for the 2007
period was 195 shares. The earnings and net asset value per share were
calculated on the equivalent number of shares taking into account the sub-
division and capitalisation issue in November 2007.
CONSOLIDATED BALANCE SHEET
as at
Unaudited Unaudited Audited*
Jun 2008 Jun 2007 Dec 2007
R`000 R`000 R`000
Assets
Non-current assets 194 721 17 293 191 335
Property, plant and equipment 15 432 8 228 12 968
Deferred taxation 3 066 236 2 144
Goodwill 176 223 7 037 176 223
Listed investment - 1 792 -
Current assets 249 498 114 777 239 636
Inventories 99 809 32 862 73 795
Trade and other receivables 118 032 68 660 116 341
Taxation prepaid 1 101 28 28
Bank and call deposits 30 556 13 227 49 472
Total assets 444 219 132 070 430 971
Equity and liabilities
Capital and reserves 279 309 86 748 265 073
Share capital and share premium 179 453 2 142 189 834
Accumulated profits 99 856 84 606 75 239
Non-current liabilities 63 830 1 050 60 647
Interest bearing liabilities 763 1 050 1 009
Other financial liabilities 63 067 - 59 638
Current liabilities 101 080 44 272 105 251
Trade and other payables 95 419 38 790 76 518
Current portion of:
- interest bearing liabilities 686 2 149 1 533
- other financial liabilities - - 15 408
Taxation payable 4 975 3 333 11 792
Total equity and liabilities 444 219 132 070 430 971
Number of shares in issue (`000) 469 004 353 333# 480 000
Net asset value per share (cents) 59,6 24,6# 55,2
Tangible net asset value per share (cents) 21,3 22,5# 18,1
CONSOLIDATED CASH FLOW STATEMENT
six months ended
Unaudited Unaudited
Jun 2008 Jun 2007
R`000 R`000
Cash flows from operating activities 8 869 (10 569)
Cash generated/(absorbed) by operations 28 563 (1 803)
Interest received 2 364 938
Interest paid (2 622) (96)
Taxation paid (19 436) (9 608)
Cash flows from investing activities
Additions to property, plant and equipment (4 333) (353)
Cash flows from financing activities (23 453) (6 691)
Shareholders` loans repaid - (5 686)
Net repayment of interest bearing liabilities (1 093) (1 005)
Net repayment of other financial liabilities (11 979) -
Share buy back and expenses (10 381) -
Decrease in cash resources (18 916) (17 613)
Cash resources at beginning of period 49 472 30 840
Cash resources at end of period 30 556 13 227
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Accumulated
capital premium profits Total
R`000 R`000 R`000 R`000
Balances as at 31 December 2006 - 2 142 73 760 75 902
Profit for the six month period to - - 10 846 10 846
30 June 2007
Balances as at 30 June 2007 - 2 142 84 606 86 748
Share capitalisation 4 (4) - -
Issue of shares 1 189 999 - 190 000
Listing and share issue expenses - (2 308) - (2 308)
Profit for the six month period to - - 18 133 18 133
31 December 2007
Dividends paid - - (27 500) (27
500)
Balances as at 31 December 2007 5 189 829 75 239 265 073
Share buy back and expenses - (10 - (10
381) 381)
Profit for the six month period to - - 24 617 24 617
30 June 2008
Balances as at 30 June 2008 5 179 448 99 856 279 309
SEGMENT REPORTING
The six months ending 30 June 2007 comprised only the refrigeration businesses.
Refrigeration Baking Corporate Total
R`000 R`000 R`000 R`000
Turnover
- For the six months to 30 June 125 414 133 - 258 452
2008 (Actual) 039
- For the six months to 30 June 114 941 116 216 - 231 157
2007 (Pro forma*)
Segment profit from operations
- For the six months to 30 June 15 460 21 064 (1 025) 35 499
2008 (Actual)
- For the six months to 30 June 14 725 14 917 (293) 29 349
2007 (Pro forma*)
COMMENTARY
TRADING ENVIRONMENT
The group operates as a major supplier of refrigerated and baking equipment to
the perishable foods industry encompassing the retail, wholesale and
manufacturing segments. Trading is primarily exposed to food retailers in South
Africa and to a lesser extent, Africa.
Universal traded well during the period. Challenging economic conditions locally
and internationally due to various factors have resulted in a more difficult
trading environment than anticipated at the start of the financial year. Key
aspects which have impacted on operations include:
- inflationary pressure on the majority of our inputs including steel,
chemicals, plastics and labour;
- a slowdown in consumer spending as evident in declining retail sales;
- a lower SA GDP growth rate in the first half of the year and a reduced GDP
growth forecast for the remainder of 2008;
- tightening credit policies by the banks impacting on the availability of
funding for capital projects which are planned by our client base; and
- potential delays in capital projects caused by uncertainty surrounding
electricity supply and the significant deterioration in business confidence
and sentiment.
Despite these conditions management remains positive about Universal`s prospects
and will continue to search for growth opportunities.
FINANCIAL RESULTS
When analysing the results the:
- actual June 2008 column reflects the result of both the refrigeration and
baking businesses for the 6 month period
- actual June 2007 column reflects the result of only the refrigeration
businesses for the 6 month period as an unlisted entity;
- pro forma June 2007 column reflects the result of both the refrigeration
and baking businesses for the 6 month period as presented in the prospectus
of 20 November 2007, assuming the acquisition of the baking business and
listing was effective from 1 January 2007; and
- group has historically been seasonal with the second half of the calendar
year generating approximately 60% of revenue and 65% of operating income.
As the pro forma results form the appropriate basis for comparison, any
reference in the commentary to the prior period means the prior period pro forma
results.
The group increased turnover by 12% and headline earnings per share by 21,4%.
The improved operating profit margin is mainly attributable to a better product
mix with higher margin and internally manufactured product sold compared to the
prior period.
Notwithstanding the group generating operating income of R35 million the net
cash on hand decreased from R49 million as at 31 December 2007 to R31 million
mainly due to the following:
- an investment of some R8 million in working capital, primarily in stock;
- R15 million paid to the vendors of Macadams; and
- the buy back and cancellation of approximately 11 million shares for R9
million.
REVIEW OF OPERATIONS
Refrigeration businesses
The businesses performed slightly below budget reflecting minimal volume growth
and a marginal decline in operating margin. Cost inflation, and in particular,
steel, with price increases of nearly 80% since the beginning of the year, has
resulted in margin erosion. The businesses have taken measures to protect margin
through pre-emptive buying, product re-engineering and selling price increases.
The Cape Town based operation, Colcab, relocated to a new 17 000m2 factory in
February. The relocation was successful with a limited impact on production.
Anticipated efficiency and process improvements are not yet evident but are
being aggressively pursued. To ensure continued improvement in efficiency and
quality a further investment in plant and machinery of some R4 million was made
during the period.
Export sales initiatives into Africa continue in co-operation with the baking
business. Management are confident that additional investment in staff and
infrastructure will yield positive results over the medium term.
Baking business
The baking business had a good trading performance increasing revenue by 14,5%
and also substantially increased its operating margin. The improved margin is
attributed to product mix with more internally manufactured product being sold.
The business experienced less margin pressure than the refrigeration businesses
due to the negotiation of fixed prices with suppliers and the bulk importation
of steel and other items towards the end of last year.
The export department traded very well increasing revenue by 45% compared to the
prior period. Export sales comprised 35% of total sales (prior period 28%). The
business continues to invest in staff and resources to ensure its penetration
into more territories in the coming months.
The Food Service division, which started in the latter part of 2006, continues
to make good progress and increased sales significantly during this period.
With a cautious approach and limited resources dedicated to this division
management remain confident of this division becoming a significant driver of
growth.
PROSPECTS
The group remains cautiously optimistic that it will achieve its forecast
headline earnings of 15,4 cents per share for the 2008 financial year as
published in the prospectus at listing. This assumes that trading conditions do
not deteriorate further. For the reporting period the group has achieved 33% of
the forecasted headline earnings per share compared to 34% of the pro forma
headline earnings per share generated in the corresponding six months last year.
DIVIDENDS
As stated in the prospectus, Universal intends implementing, subject to
operational requirements, an annual distribution policy of 25% of profits
attributable to the equity holders at the conclusion of the 2008 financial year.
SHARE BUY BACK
Details of the buy back were announced on SENS on 26 June 2008. Universal
acquired approximately 11 million shares that are in the process of being
cancelled resulting in the ordinary shares in issue decreasing from 480 million
to 469 million. Authority to continue with share repurchases was renewed at the
annual general meeting and the board will continue to evaluate this option in
order to render value to shareholders.
BASIS OF PREPARATION
The unaudited interim results have been prepared in terms of International
Financial Reporting Standards ("IFRS") and comply with IAS34 - Interim Financial
Reporting. The accounting policies used are consistent with those applied to
the audited financial statements for the year ended 31 December 2007.
FAIR VALUE OF INTANGIBLE ASSETS
Universal acquired the business of Macadams effective 15 November 2007. As at
acquisition date the business had net tangible assets of R71 million with the
balance of the purchase price of R169 million accounted for as goodwill. The
identifiable intangible assets will be fair valued in terms of IFRS 3 before the
end of the current financial year.
DIRECTORATE
Following the passing away of Mr L Boyd, the deputy chairman Mr G Khan, has been
appointed as chairman of Universal.
APPRECIATION
The Board extends its thanks to management and employees for their ongoing
efforts.
By order of the Board
G Khan D Paynter
Chairman Chief Executive Officer
18 August 2008
CORPORATE INFORMATION
Executive directors: D Paynter (CEO), I Morgan (CFO)
Non-executive directors: G Khan (Chairman); C Brayshaw,
W Brett, A Esa, I Essa (Alternate to A Esa), A Levy
Registration number: 1996/004343/06
Registered address: 16 Precision Street, Kya Sand, Randburg
Postal address: PO Box 3667, Randburg, 2125
Telephone: 011 462 2130
Facsimile: 011 704 3257
Company Secretary: Probity Business Services (Pty) Limited
Transfer secretaries: Link Market Services South Africa (Pty) Limited
Auditors: PKF (Jhb) Inc.
Sponsor: Java Capital (Pty) Limited
Date: 18/08/2008 17:10:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
