| Wed 15 Oct 2008, 16:38 | | TFX - Top Fix - Reviewed Results For The Year Ended 30 June 2008 |
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TFX
TFX
TFX - Top Fix - Reviewed Results For The Year Ended 30 June 2008
TOP FIX HOLDINGS LIMITED
(Registration number 2006/011359/06)
JSE code: TFX
ISIN: ZAE000088423
("Top Fix" or "the Company" or "the Group")
REVIEWED RESULTS FOR THE YEAR ENDED 30 JUNE 2008
INCOME STATEMENT
Reviewed Restated
R`000 Year ended Year ended
30 June 30 June
2008 2007
Revenue 227 172 192 580
Cost of sales (142 806) (141 326)
Gross profit 84 366 51 254
Net operating expenses (59 293) (44 229)
Operating profit 25 073 7 025
Fair value adjustment 1 242 734
Interest received 2 767 586
Interest paid (6 353) (2 859)
Profit before taxation 22 729 5 486
Taxation (6 908) (1 450)
Profit for the year 15 821 4 036
Weighted average shares in issue (`000) 191 806 174 110
Earnings/headline earnings per share 8,2 2,3
(cents)
As previously stated - 4,8
Prior year adjustment - (2,5)
BALANCE SHEET
Reviewed Restated
R`000 30 June 30 June
2008 2007
ASSETS
Non-current assets 174 777 117 602
Property, plant and equipment 108 584 58 999
Goodwill 58 014 58 014
Loans receivable 7 746 -
Deferred taxation 433 589
Current assets 60 789 46 043
Inventories 2 755 1 710
Trade and other receivables 57 684 42 472
Bank and call deposits 350 1 861
TOTAL ASSETS 235 566 163 645
EQUITY AND LIABILITIES
Capital and reserves 156 964 101 623
Non-current liabilities 22 361 5 641
Interest bearing liabilities 17 823 4 163
Deferred taxation 4 538 1 478
Current liabilities 56 241 56 381
Interest bearing liabilities 8 958 1 488
Bank overdrafts and invoice discounting 15 410 11 665
Trade and other payables 27 039 34 598
Taxation payable 4 834 8 630
TOTAL EQUITY AND LIABILITIES 235 566 163 645
Shares in issue (`000) 203 182 185 000
Net asset value per share (cents) 77,3 54,9
As previously stated 57,3
Prior year adjustment (2,4)
Net tangible asset value per share 48,7 23,6
(cents)
As previously stated 26,0
Prior year adjustment (2,4)
CASH FLOW STATEMENT
Reviewed Restated
R`000 Year ended Year ended
30 June 30 June
2008 2007
Cash flow from operations (4 425) 15 622
Cash generated by operations 6 650 19 558
Interest received 2 767 586
Interest paid (6 353) (2 859)
Taxation paid (7 489) (1 663)
Cash flow from investing activities (61 482) (41 151)
Investment in new operations - 1
Investment in property, plant and (53 736) (41 978)
equipment
Movement in loans receivable (7 746) 826
Cash flow from financing activities 60 651 24 049
Proceeds of share issue 39 520 23 461
Movement in loans payable 21 131 588
Decrease in cash resources (5 256) (1 480)
Cash resources at beginning of year (9 804) (8 324)
Cash resources at end of year (15 060) (9 804)
Cash resources (15 060) (9 804)
Bank and call deposits 350 1 861
Bank overdraft and invoice discounting (15 410) (11 665)
STATEMENT OF CHANGES IN EQUITY
Reviewed Restated
R`000 Year ended Year ended
30 June 30 June
2008 2007
Equity at beginning of year 101 623 74 126
Share issues 39 520 23 461
Attributable profit for the year 15 821 4 036
Equity at end of year 156 964 101 623
Equity at end of year as previously 106 031
stated
Prior year adjustment (4 408)
Restated equity at end of year 101 623
SEGMENT ANALYSIS
Reviewed Restated
R`000 Year ended Year ended
30 June 30 June
2008 2007
Revenue
Scaffolding 97 199 51 307
Personnel outsourcing 122 737 133 989
Total revenue 125 572 136 845
Internal (2 835) (2 856)
Safety surveillance 7 236 7 284
Total Group 227 172 192 580
Operating profit
Scaffolding 16 883 (6 335)
Personnel outsourcing 7 500 12 265
Safety surveillance 1 452 1 544
Head office (762) (449)
Total Group 25 073 7 025
COMMENTARY ON THE GROUP`S RESULTS
Further to the Trading Statement published on SENS on 10 October 2008, the
Group reported earnings for the year ended 30 June 2008 of R15,8 million
which represents a decrease of 36% from the forecast earnings for the year
ended 30 June 2008 as previously disclosed in the pre-listing statement.
Despite the decrease in comparison to the forecast earnings for the year,
the results achieved for the year ended 30 June 2008 resulted in a 292%
increase in earnings from the year ended 30 June 2007.
Earnings for the year ended 30 June 2008 were negatively affected by
disputed debtors` balances. As at the date of this announcement the Group
has been negotiating finalisation of the disputed balances. As such the
directors of Top Fix have adopted a prudent approach, and in compliance with
International Financial Reporting Standards ("IFRS"), have raised a
provision against the amount in dispute. Normalised earnings excluding this
adjustment would have been R21,7 million or 11,3 cents per share. Second
half earnings were lower than the first half results due to the negative
impact of fuel price increases and the Eskom power crisis which delayed the
start of many projects.
Net interest charges, excluding adjustments required by IFRS (Circular 9 -
2006) reclassifying a portion of sales invoiced to receivables with extended
payment terms to interest income, are significantly higher than planned at
R5,5 million. This compares to a charge of R2,3 million for the prior year,
and a forecast charge of R2 million per the pre-listing statement. Delays in
finalisation of the rights offer to February 2008, as published on SENS, is
the main reason for this increase. The scaffolding expansion programme was
continued as planned with loan funding, subsequently repaid from the rights
offer proceeds.
R47,5 million of the total capital expansion was expended on scaffolding
equipment. R35,6 million of this was incurred prior to the finalisation of
the rights offer. Had this expenditure been delayed until after February
2008, the equivalent cost of this equipment would have been in excess of 50%
higher due to steel price increases.
A significant increase in accounts receivable, from R42 million last year to
R57 million at June 2008, is mainly responsible for the R21 million increase
in loan funding for the year.
Scaffolding
Scaffolding was the star performer for the year with operating profit of
R16,9 million compared to restated losses generated in the previous year of
R6,3 million. Excluding the debtors provision detailed above, an operating
profit of R25,9 million for the year would have resulted. These results
support the capital expansion in this operation in both the current and
prior year.
Personnel Outsourcing
Personnel Outsourcing achieved an operating profit for the year of R7,5
million, which is in line with expectations, but compares to R12,3 million
for last year.
Safety Surveillance
Safety Surveillance achieved an operating profit of R1,5 million, in line
with the previous year and expectations.
JOINT VENTURE
Top Fix Scaffolding 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 on loan account in accordance with the joint venture
agreement. By mutual agreement, this venture was terminated on 30 June 2008,
with the amount due on loan account to be repaid through the supply of
additional scaffolding equipment. The impact of the joint venture results on
Group earnings for the year was insignificant.
RELATED PARTY TRANSACTIONS
An amount of R8,9 million is due to MBM Technical Services (Proprietary)
Limited, a company controlled by Mr BW Marais. The amount was previously
held against deferred option agreements, now cancelled. The loan is
unsecured, currently interest free and is repayable on demand, subject to 12
months notice, which notice had not been given up to 30 June 2008.
Loans from Mr BW Marais and his affiliates amounting to R6,6 million which
bore interest at the prime overdraft rate plus 1% were made to the Group
during the year and were repaid in June 2008.
FUTURE PROSPECTS
The recent Scaffolding expansion programme and local shortage of skilled
artisans leave both the Scaffolding and Personnel Outsourcing operations
well placed to take advantage of opportunities in South Africa. The Group
therefore expects to achieve satisfactory results for the year to 30 June
2009.
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The reviewed results for the year ended 30 June 2008 have been prepared in
accordance with International Financial Reporting Standards, IAS34, the JSE
Listing Requirements and the Companies Act of South Africa. The financial
information for the year ended 30 June 2008 has been prepared adopting the
same accounting policies used in the most recent annual financial
statements.
CHANGE IN ESTIMATE
During the year the Group reassessed the estimated useful life of
scaffolding to 50 years from that previously used of 10 years for coastal
and 25 years for inland equipment. In addition revised estimates provide for
a scaffolding residual of 15% of the current price of new steel, against the
zero residual previously used. Had the previous estimates remained
unchanged, additional depreciation of R3,7 million would have been charged
to the income statement.
PRIOR YEAR ADJUSTMENT
Accounts receivable at 30 June 2007 included an amount of R7,1 million
pertaining to under-recoveries on joint venture contracts, where Top Fix
Scaffolding provided personnel and the other partners provided scaffolding
equipment, which contracts expired in December 2006. As at 30 June 2008, the
debtors` balance referred to above had still not been finalised. The
directors still intend to pursue recovery of this account, but have decided,
as per the SENS announcement of 29 August 2008, given the length of time
involved in the recovery process, and in compliance with IFRS to fully
impair the amount and restate the financial figures previously published.
This impairment was passed as a prior year adjustment and the restated
financial results for the year ended 30 June 2007, compared to the results
as previously published are:
Restated Previously
published
Attributable earnings (R`000) 4 036 8 443
Shareholders` equity (R`000) 101 623 106 031
Earning/headline earnings per share 2,3 4,8
(cents)
Net asset value per share (cents) 54,9 57,3
Tangible net asset value per share (cents) 23,6 26,0
CAPITAL COMMITMENTS AND CONTINGENCIES
The Group had no significant outstanding capital commitments or
contingencies as at 30 June 2008.
REVIEW OPINION
These results have been reviewed by Top Fix`s auditors, PKF (Jhb) Inc., and
their unqualified review opinion is available for inspection at the
Company`s registered office.
DIVIDEND DECLARATION:
In line with current 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: 15 October 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, Lyttelton Manor, Centurion 0157
Transfer Secretaries:
Link Market Services South Africa (Pty) Limited
11 Diagonal Street, Johannesburg 2000
(PO Box 4844, Johannesburg 2001)
Designated Advisor:
PSG Capital (Pty) Limited
Website:
www.topfix.co.za
Date: 15/10/2008 16:38:16 Produced by the JSE SENS Department.
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