| Tue 31 Mar 2009, 17:29 | | SFH - S A French - Unaudited Condensed Results for the Six Months Ended |
|
SFH
SFH
SFH - S A French - Unaudited Condensed Results for the Six Months Ended
31 December 2008
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" or "the group")
UNAUDITED CONDENSED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2008
GROUP INCOME STATEMENT FOR THE SIX MONTHS ENDED 31 DECEMBER 2008
Unaudited Unaudited Audited
six months six 12 months
ended months ended
31 Decembe ended 30 June
r 2008 31 Decemb 2008
R`000 er 2008 R`000
R`000
Revenue 95 464 92 324 152 047
Cost of sales (82 245) (67 623) (117 896)
Gross profit 13 219 24 701 34 151
Other income 672 674 842
Operating expenses (11 370) (12 520) (22 115)
Operating profit 2 521 12 855 12 878
Investment revenue 256 372 983
Fair value adjustment on financial (1 600) - -
assets
Finance costs (6 331) (1 596) (4 226)
(Loss)/Profit before taxation (5 154) 11 631 9 635
Taxation 210 (3 266) (2 700)
(Loss)/Profit after taxation (4 944) 8 365 6 935
Reconciliation of attributable
losses/earnings to headline
(losses)/earnings:
(Loss)/Profit attributable to (4 944) 8 365 6 935
ordinary shareholders
Loss on disposal of property, - - 11
plant and equipment
Tax effect of the disposal of - - (3)
property, plant and equipment
Fair value adjustment on financial 1 600 - -
assets
Headline (losses)/earnings (3 344) 8 365 6 943
attributable to ordinary
shareholders
Number of shares in issue 166 375 165 000 165 000
689 000 000
Weighted average number of shares 165 114 121 316 148 333
in issue 641 667 333
(Losses)/Earnings per share (2.99) 6.90 4.68
(cents)
Headline (losses)/earnings per (2.03) 6.90 4.68
share (cents)
GROUP BALANCE SHEET AS AT 31 DECEMBER 2008
Unaudited Unaudited Audited
31 December 31 December 30 June
2007 2007 2008
R`000 R`000
R`000
ASSETS
Non-current assets 75 801 33 478 42 649
Property, plant and equipment 73 105 29 182 38 353
Other financial assets 2 696 4 296 4 296
Current assets 111 645 107 459 139 039
Inventories 81 959 63 643 108 758
Trade and other receivables 27 052 29 305 20 151
Cash and cash equivalents 2 634 14 511 10 130
Total assets 187 446 140 937 181 688
EQUITY AND LIABILITIES
Capital and reserves 58 757 66 406 64 976
Share capital 49 330 48 955 48 955
Revaluation reserve 162 162 162
Retained income 9 265 17 289 15 859
Minority interest * * *
Non-current liabilities 43 836 23 148 26 222
Instalment sale agreements 42 664 22 207 25 050
Deferred tax 962 941 1 172
Current liabilities 85 063 51 383 90 490
Loans from shareholders 12 411 - 9 568
Current tax payable 4 385 1 761 1
Instalment sale agreements 15 066 6 028 8 367
Trade and other payables 36 997 42 311 72 012
Provisions 544 1 283 311
Shareholders for dividends 1 273 - -
Bank overdraft 14 387 - 231
Total equity and liabilities 187 446 140 937 181 688
Number of shares in issue 166 375 689 165 000 000 165 000
000
Net asset value per share (cents) 35.32 40.25 39.38
Net tangible asset value per share 35.32 40.25 39.38
(cents)
*Less than R1 000
GROUP CASH FLOW STATEMENT FOR THE PERIOD ENDED 31 DECEMBER 2008
Unaudited Unaudited Audited
six months six months 12
ended ended months
31 December 31 December ended
2008 2007 30 June
R`000 R`000 2008
R`000
(Loss)/Profit before taxation (5 154) 11 631 9 635
Depreciation 3 407 1 805 4 414
Investment income (256) (372) (983)
Finance costs 6 331 1 596 4 226
Other non-operational adjustments (1 335) (1 225) 381
Changes in working capital (14 884) (48 291) (55
483)
Taxation paid (490) (2 003) (3 006)
Cash flow from operating (12 381) (36 859) (40
activities 816)
Cash flow cash from investing (36 430) (7 759) (19
activities 550)
Cash flow from financing 27 159 54 463 65 599
activities
Total cash movement for the period (21 652) 9 845 5 233
Cash at the beginning of the 9 899 4 666 4 666
period
Total cash at end of the period (11 753) 14 511 9 899
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED
31 DECEMBER 2008
Share Revaluation Retained Minority Total
capital reserve income interest equity
R`000 R`000 R`000 R"000 R`000
Balance as at 1 1 150 162 8 924 * 10 236
July 2007
Premium on issue of 50 000 - - - 50 000
shares
Listing expenses (2 195) - - - (2 195)
written off
Profit for the - - 8 365 - 8 365
period
Balance as at 31 48 955 162 17 289 * 66 406
December 2007
Loss for the period - - (1 430) - (1 430)
Balance as at 30 48 955 162 15 859 * 64 976
June 2008
Loss for the period - - (4 944) - (4 944)
Dividends declared - - (1 650) - (1 650)
Dividend 375 - - - 375
capitalised
Balance as at 31 49 330 162 9 265 * 58 757
December 2008
* Less than R1 000
COMMENTARY
Introduction
The directors of SA French ("directors") present the interim financial results
of SA French for the six months ended 31 December 2008 ("the interim period")
which reflects a net asset value per share of 35.32 cents for the period. This
period has seen the global economy under pressure and in response the
directors have adhered to the core principle on which the company was founded,
that of providing exemplary service, as well as adding value to its clients.
Group profile
SA French, founded by the current Chief Executive Officer Quentin van Breda,
is the sole distributor of Potain tower cranes in sub-equatorial Africa. In
addition to its 26 year track record as an agent for the largest tower crane
manufacturer in the world, the company offers complementary lifting solutions
in the form of Merlo telescopic handlers and self loading concrete mixers as
well as Saltec material and passenger hoists for which it also holds
distribution agreements for the sub-equatorial Africa region. The company
continues to focus on service in addition to providing lifting solutions to
its clients, rather than simply being a supplier.
Review of operations
Despite market negativity, the interim period saw a number of firsts for SA
French on the African continent. Highlights include a contract for the supply,
delivery and commissioning of two cranes to be utilised at the Medupi power
station. One of the cranes, the MD1100, will be the biggest crane in Africa,
making it a first, not only in South Africa, but for the continent. The sale
and commissioning of the first "luffing jib" tower crane in Africa to the
Aveng group (Grinaker-LTA East), to be used in the construction of a parkade
for Old Mutual in the Durban CBD is a first for the company. SA French can
also boast the largest rental fleet of tower and self erecting cranes on the
continent.
The group`s decision to establish additional branches in Cape Town and Durban
has meant that service, rental units and technical expertise are on hand for
projects such as the King Shaka Airport, The Pearls Dawn and Transnet station
upgrades in Kwa-Zulu Natal and various high value properties around the Cape
peninsula. The company`s seamless service to its clients across the country,
irrespective of the time or location, is a trademark of SA French and has
resulted in customer satisfaction levels in excess of 80% in all surveys
conducted during the interim period.
Skills development
SA French remains committed to the ongoing training and development of its
staff and the interim period saw the company focusing on practical skills
training for its tower crane and hoist riggers as well as holding several
safety seminars focused on those working at height. Due to the industry demand
for competent and reliable machine operators, a decision was taken to start an
in-house training school that will enable the company to provide for its own
training and recertification requirements as well as to sell these services to
its clients and third parties. This strategy will create a further income
stream for the group, while assuring that the level and competence of the
operators passing through the training division is creditable in terms of the
requirements for lifting machinery operators.
The number of registered lifting machinery inspectors at SA French was
increased to seven during the interim period, confirming that SA French, a
registered lifting machinery entity, is the most proficient lifting expert in
the country.
Financial results
Group revenue for the period was R95.46 million (2008: R92.32 million) while
operating profit decreased to R2.52 million from R12.86 million. Net loss
after tax was R4.94 million against the previous year profit of R8.37 million.
Headline losses of R3.34 million for the year translated into headline losses
per share of 2.03 cents compared to headline earnings per share of 6.90 cents
in 2008.
Increase in borrowings
The company`s non-current liabilities increased from R23.15 million in
December 2007 to R43.84 million in December 2008. This is largely attributed
to the increase in property, plant and equipment used in the group`s rental
business which is largely financed by instalment sale agreements. In turn this
has resulted in increased finance costs which have reduced earnings and
headline earnings.
The global financial uncertainty in 2008 affected many of SA French`s key
clients in its target industries, resulting in delays in awarding several
infrastructure projects to SA French. In addition, many construction companies
restricted or delayed capital expenditure projects, resulting in a decrease in
sales of tower cranes and allied lifting equipment.
This change in market dynamic has resulted in a change of focus for SA
French`s business. In particular, the demand for crane rentals has increased,
as many of the company`s clients prefer variable costs, until prospects
improve. The increase in the rental of cranes as opposed to the purchase
thereof, has had a material effect on SA French`s financial statements. As SA
French has made a significant investment in its rental fleet in order to
accommodate the demand for crane rentals, the company`s non-current assets and
liabilities have increased considerably, resulting in short-term revenue and
profits being replaced by longer-term revenue from rentals.
Segmental reporting
IAS 8 has not been early adopted and will be implemented on 1 January 2009.
Management has not presented segment reporting during the period under review.
Prospects
The group has firmly established itself as the premier supplier of tower
cranes to the South African market in both rental and sales. On the back of
its national footprint and unrivalled service, SA French has been consulted on
a number of technically challenging upcoming projects which are highly visible
and of strategic importance both provincially and nationally. As the
infrastructure spend comes into its own, SA French will be involved in the
construction of the Medupi and Kusile power stations as well as the
regeneration of the Kriel, Matla and Camden power stations between 2009 and
2014. A number of projects that had been put on hold because of the global
economic uncertainty have been re-tabled, with SA French having secured its
position as the primary supplier of cranes for certain of these ventures.
Subsequent events
The directors are not aware of any material matter or circumstances arising
since the end of the interim period and up to the date of this report.
Dividend policy
No interim dividend has been declared for the period.
Basis of preparation
The accounting policies applied in the preparation of these condensed
financial statements, which are based on reasonable judgments and estimates,
are in accordance with International Financial Reporting Standards ("IFRS")
and are consistent with those applied in the annual financial statements for
the year ended 30 June 2008. These condensed financial statements as set out
in this report have been prepared in terms of IAS 34 - Interim Financial
Reporting, the Companies Act, 1973 (Act 61 of 1973), as amended, and the
Listings Requirements of JSE Limited.
The interim results have not been audited or reviewed by the group`s auditors.
Directorate
Jabulani "Doctor" Xaba, an executive director of SA French, passed away
suddenly on Saturday, 21 February 2009. Jabulani made a great contribution to
the company and was admired by all who knew him for his knowledge and
charisma. The directors and employees of SA French will miss him and extend
their condolences to his family.
Appreciation
We thank our employees for their continued loyalty, hard work and commitment
which are much needed in the current global economic climate. Furthermore, we
thank our non-executive directors for their wise counsel and our stakeholders
for their consistent faith in the group. The authors of this report are also
the majority shareholders in SA French and are confident in the company`s
inherent value, as well as its future prospects.
On behalf of the board
Quentin van Breda Warwick van Breda
Chief Executive Officer Operations Director
31 March 2009
Directors:
QCA van Breda (Chief Executive Officer), W van Breda (Operations Director), JC
Prinsloo (Financial Director), MW Mashaba, LB Mophatlane*, JM Poluta*
*non-executive
Company secretary
Warwick van Breda (LLB)
Registered office
131 Fitter Road
Spartan
Kempton Park, 1619
(PO Box 2144, Kempton Park, 1620)
Designated Adviser
Merchantec (Proprietary) Limited
2nd Floor, North Block
Hyde Park Office Tower
Corner Sixth Road & Jan Smuts Avenue
Hyde Park, Johannesburg, 2196
(PO Box 41480, Craighall, 2024
Transfer secretaries
Computershare Investor Services (Proprietary) Limited
Ground Floor
70 Marshall Street
Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
Date: 31/03/2009 17:29:08 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.
