| Thu 12 Feb 2009, 13:25 | | TFX - Top Fix Holdings - Unaudited Results For The 6 Months Ended |
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TFX - Top Fix Holdings - Unaudited Results For The 6 Months Ended
31 December 2008
TOP FIX HOLDINGS LIMITED
(Registration number 2006/011359/06)
JSE code: TFX ISIN: ZAE000088423
("the group")
UNAUDITED RESULTS FOR THE 6 MONTHS ENDED 31 DECEMBER 2008
INCOME STATEMENT
Year ended
6 months ended 31 December 30 June
R`000 2008 2007 2008
Unaudited Reviewed Audited
Revenue 162,739 121,840 227,172
Cost of sales (109,457) (74,143) (142,806)
Gross profit 53,282 47,697 84,366
Net operating expenses (34,860) (26,835) (59,293)
Operating profit 18,422 20,862 25,073
Fair value adjustment - - 1,242
Interest received 1,711 207 2,767
Interest paid (3,005) (2,654) (6,353)
Profit before taxation 17,127 18,415 22,729
Taxation (4,873) (5,780) (6,903)
Loss from associate - (558) -
Profit for the period 12,254 12,077 15,826
Weighted average shares in issue (`000) 203,182 185,000 191,806
Earnings /headline earnings per share
(cents) 6.0 6.5 8.3
BALANCE SHEET
31 December 30 June
R`000 2008 2007 2008
Unaudited Reviewed Audited
ASSETS
Non-current assets 175,150 156,680 174,777
Property, plant and equipment 116,827 90,080 108,584
Goodwill 58,014 58,014 58,014
Investment in associate - 8,061 -
Loans receivable - - 7,746
Deferred taxation 309 525 433
Current assets 78,909 56,318 60,789
Inventories 1,486 93 2,755
Trade and other receivables 76,987 55,921 57,684
Bank and call deposits 436 304 350
TOTAL ASSETS 254,059 212,998 235,566
EQUITY AND LIABILITIES
Capital and reserves 169,224 113,700 156,970
Non-current liabilities 21,899 16,535 22,361
Interest bearing liabilities 7,655 11,152 9,843
Interest free liability 7,980 - 7,980
Deferred taxation 6,264 5,383 4,538
Current liabilities 62,936 82,763 56,235
Interest bearing liabilities 17,301 22,096 8,940
Interest free liabilities - - 18
Bank overdrafts and invoice discounting 6,319 14,041 15,410
Trade and other payables 31,514 38,135 27,038
Taxation payable 7,802 8,491 4,829
TOTAL EQUITY AND LIABILITIES 254,059 212,998 235,566
Shares in issue (`000) 203,182 185,000 203,182
Net asset value per share (cents) 83.3 61.5 77.3
Net tangible asset value per share
(cents) 54.7 30.1 48.7
CASH FLOW STATEMENT
Year ended
6 months ended 31 December 30 June
R`000 2008 2007 2008
Unaudited Reviewed Audited
Cash flow from operations 6,359 11,517 3,555
Cash generated by operations 7,704 15,930 14,630
Interest received 1,711 207 2,767
Interest paid (3,005) (2,654) (6,353)
Taxation paid (51) (1,966) (7,489)
Cash flow from investing activities (3,337) (43,047) (61,483)
Investment in new operations - (8,210) -
Net investment in property, plant and
equipment (3,337) (34,837) (53,737)
Movement in loans receivable - - (7,746)
Cash flow from financing activities 6,155 27,597 52,672
Net share issue proceeds - - 39,521
Movement in loans payable 6,155 27,597 13,151
Decrease cash resources 9,177 (3,933) (5,256)
Cash resources at beginning of period (15,060) (9,804) (9,804)
Cash resources at end of period (5,883) (13,737) (15,060)
Cash resources (5,883) (13,737) (15,060)
Bank and call deposits 436 304 350
Bank overdraft and invoice discounting (6,319) (14,041) (15,410)
STATEMENT OF CHANGES IN EQUITY
Year ended
6 months ended 31 December 30 June
R`000 2008 2007 2008
Unaudited Reviewed Audited
Equity at beginning of period 156,970 101,623 101,623
Net share issue proceeds - - 39,521
Attributable profit for the period 12,254 12,077 15,826
Equity at end of period 169,224 113,700 156,970
SEGMENT ANALYSIS
Year ended
6 months ended 31 December 30 June
R`000 2008 2007 2008
Unaudited Reviewed Audited
Revenue
Scaffolding 52,792 54,288 97,199
Personnel outsourcing 106,383 64,141 122,737
Total revenue 108,156 65,547 125,572
Internal (1,773) (1,406) (2,835)
Safety surveillance 3,564 3,411 7,236
Total Group 162,739 121,840 227,172
Operating profit
Scaffolding 9,767 16,485 16,883
Personnel outsourcing 8,621 4,509 7,500
Safety surveillance (30) 367 1,452
Head office 64 (499) (762)
Total Group 18,422 20,862 25,073
COMMENTARY ON THE GROUP`S RESULTS
The Group achieved earnings for the 6 months ended 31 December 2008 of R12,3
million, in line with those achieved for the corresponding period last year.
This is despite the negative impact of the global economic crisis which
occurred in the second half of 2008.
The Group recorded earnings per share of 6 cents per share for the 6 months to
31 December 2008, based on 203,18 million weighted average number of shares in
issue as a result of a rights issue concluded in February 2008. Group earnings
per share for the comparative interim period was 6,5 cents per share based on
185 million weighted average number of shares in issue.
The 33% increase in revenue for the six months to December 2008 is due to
growth in the Personnel Outsourcing division as detailed below. This division
operates at significantly lower gross profit margins than the Scaffolding
division, hence the reduction in gross profit margin from 39% achieved for the
interim period ended 31 December 2007 to 33% for the interim period ended 31
December 2008.
Although operating profit, at R18,4 million, is lower than the R20,9 million
achieved in the 6 months to December 2007, reduced net interest charges of R1,3
million (December 2007: R2,4 million) and lower taxation charges resulted in
the unchanged earnings performance as noted above.
A significant increase in accounts receivable, from R57 million at 30 June 2008
to R77 million at 31 December 2008 is mainly due to contracts recently secured
in the Energy Generation sector (new power stations) and rapid expansion in
maintenance of merchandised mining equipment in the coal industry (existing
power stations and exports), which contracts are expected to continue for over
a year, with resultant higher working capital requirements.
The implementation of proper client payment procedures took longer than
anticpated, but procedures are now in place for payment according to
contractual obligations.
Recovery procedures are continuing against a former partner in a scaffolding
joint venture agreement dissolved in November 2006 and large debtors, still
currently outstanding, that were recorded at 30 June 2008. As noted in previous
financial announcements these debtors` balances have been impaired and any
recoveries thereon will result in additional attributable earnings to the
Group.
Despite the increase in the debtors balance, the Group achieved a net cash
inflow from operations of R6,4 million for the current interim financial
period.
Scaffolding
Scaffolding remains the Group`s highest profit contributor. The division`s
operating profit of R9,8 million for the 6 months to 31 December 2008 compares
to R15,6 million for the 6 months to 31 December 2007, and R16,9 million for
the year ended 30 June 2008. The Eskom power crisis, the high fuel price and
the global economic crisis experienced in the second half of 2008, which
resulted in curtailment of many previously planned building projects, have
adversely affected the performance of this division. Notwithstanding the above,
the interim performance to 31 December 2008 still compares favourably to the
performance for the year ended 30 June 2008.
Personnel Outsourcing
Personnel Outsourcing achieved an operating profit for the interim period to 31
December 2008 of R8,6 million, compared to interim profits of R4,5 million to
31 December 2007. This is also 15% higher than the R7,5 million achieved for
the year ended 30 June 2008. Contracts in the power generation sector (new
power stations) and maintenance of mechanical mining equipment in the coal
mining industry (existing power stations and exports) grew considerably and
contributed significantly to the performance in the personnel outsourcing
division.
Safety Surveillance
Safety Surveillance broke even for the 6 months ended 31 December 2008,
compared to an operating profit of R0,4 million for the comparable period last
year. Negotiations are in progress with the operation`s major customer with
regard to price escalations on standing contracts which will restore
profitability for the financial year. In addition, due to the timing of the
division`s business contracts, the second half of the financial year generates
higher profits than those of the first six months.
RELATED PARTY TRANSACTIONS
An amount of R7,9 million is due by the Group to MBM Technical Services
(Proprietary) Limited, a company controlled by Mr BW Marais. The loan is
unsecured, currently interest free and is repayable on demand, subject to 12
months notice, which notice had not been given at 31 December 2008. In
addition, this company has advanced a further R9,7 million to the Group, which
bears interest at the prime overdraft rate and is repayable on demand.
Loans of R7,7 million due to the Group on the dissolution of the joint venture
agreement with Robor (Pty) Ltd at 30 June 2008 were settled through the supply
of scaffolding equipment at market related prices.
FUTURE PROSPECTS
Although there is a downturn in private sector building activity, which impacts
on construction, and the demand for access scaffolding, management remains
positive for this business in the future. Finance Minister Trevor Manuel`s
announcement that infrastructure spend will continue supports this view. The
South African Public Sector remains set to spend in excess of R600 billion on
capital projects over the next three years. This includes expenditure on
infrastructure for a number of public enterprises namely Eskom, Transnet, the
Central Energy Fund and the Airports Company of South Africa.
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 ended 30 June 2009.
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The results for the 6 months ended 31 December 2008 have been prepared in
accordance with International Financial Reporting Standards, IAS 34, the JSE
Listing Requirements and the Companies Act of South Africa. The financial
information for the 6 months ended 31 December 2008 has been prepared adopting
the same accounting policies used in the most recent annual financial
statements.
CHANGE IN ESTIMATE
During the previous year, but after publication of the interim results to
December 2007, the Group reassessed the estimated useful life of scaffolding to
50 years from that previously used of 10 years for coastal equipment and 25
years for inland equipment. In addition revised estimates provide for a
scaffolding residual value of 15% of the current price of new steel, against
the zero residual value previously used. Had this change in estimate been
applied to the 6 months ended 31 December 2007, the depreciation charge for
that period would have been reduced by R0,6 million.
CAPITAL COMMITMENTS AND CONTINGENCIES
The Group had no significant outstanding capital commitments or contingencies
as at 31 December 2008.
DIVIDEND DECLARATION
In line with current Group policy, no dividend has been declared for the period.
For and on behalf of the Board
BT Ngcuka (Chairman) BW Marais (Chief Executive)
Date: 12 February 2009
Directors:
BT Ngcuka* (Chairman); BW Marais (CEO); JA Barker (Financial Director);
KG Bodigelo*; FF Goosen; 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:
PSG Capital (Pty) Limited
Website:
www.topfix.co.za
Date: 12/02/2009 13:25:02 Produced by the JSE SENS Department.
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