| Mon 8 Jun 2009, 16:30 | | DLV - Dorbyl - Preliminary Group Results For The Year Ended 31 March 2009 |
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DLV
DLV
DLV - Dorbyl - Preliminary Group Results For The Year Ended 31 March 2009
Dorbyl Limited
(Incorporated in the Republic of South Africa)
(Company Registration Number: 1911/001510/06)
Share code: DLV ISIN Code: ZAE000002184
("the Company" or "the Group")
PRELIMINARY GROUP RESULTS FOR THE YEAR ENDED 31 MARCH 2009
Income Statement
Audited Audited
Year to Year to
March March
2009 2008
(restated)
R`000 R`000
Continuing operations:
Revenue 260 223 206 692
Cost of sales (257 539) (194 772)
Gross profit 2 684 11 920
Other operating income 9 657 903
Administrative expenses (58 210) (36 936)
Sales and distribution expenses (5 009) (3 939)
Other operating expenses
Loss on sale of controlling interest in - (16 717)
subsidiary
Employee benefit liabilities (7 909) 18 780
(raised)/reversed
Impairment of assets (31 809) -
Operating loss (90 596) (25 989)
Net finance income 2 088 17 995
Finance income 7 443 20 637
Finance costs (5 355) (2 642)
Share of loss of associate (5 741) -
Loss before taxation (94 249) (7 994)
Income tax relief/(expense) 7 221 (1 272)
Loss after taxation from continuing (87 028) (9 266)
operations
Discontinued operations:
Loss from discontinued operations, net of (172 817) (61 272)
taxation
Loss for the year (259 845) (70 538)
Attributable to:
Equity holders of the parent (237 932) (66 641)
Minority interest (21 913) (3 897)
Loss for the year (259 845) (70 538)
Cents Cents
Loss per share (cents)
Basic and diluted loss per share (701.4) (196.4)
Continuing operations (192.4) (15.4)
Discontinued operations (509.0) (181.0)
Headline and diluted loss per share (316.8) (143.9)
Continuing operations (128.5) 37.1
Discontinued operations (188.3) (181.0)
Dividends paid per ordinary share (cents) - 10
Final - year ended 31 March 2007 - 10
R`000 R`000
Headline loss reconciliation
Loss for the year (237 932) (66 641)
Adjusted for: 130 450 17 833
Loss/(profit) on disposal of plant, vehicles 56 (379)
and equipment
Loss on sale of controlling interest in - 16 717
subsidiary
Loss on discontinuance of operations - 1 495
Impairment of assets 129 139 -
Less: Minority interest (10 185) -
Impairment of investments 11 440 -
Income tax expense attributable to - -
adjustments
Headline loss (107 482) (48 808)
R`000 R`000
Depreciation and amortisation 19 383 22 586
Finance income 11 952 24 017
Interest received 7 274 17 803
Foreign exchange gains 4 678 6 214
Finance cost (12 618) (8 453)
Interest paid (1 363) (391)
Foreign exchange losses (11 043) (7 850)
Interest paid - other (212) (212)
Balance Sheet
Audited Audited
March March
2009 2008
R`000 R`000
ASSETS
Non-current assets 96 260 238 610
Property, plant and equipment 70 826 195 429
Investment in associates 25 434 43 181
Current assets 416 185 445 479
Inventories 34 992 166 364
Taxation receivable 974 -
Trade and other receivables 23 543 129 513
Cash and cash equivalents 51 431 149 602
Assets classified as held for sale 305 245 -
Total assets 512 445 684 089
EQUITY AND LIABILITIES
Total equity 285 392 445 327
Equity attributable to equity holders of the 265 128 401 043
parent
Minority interest 20 264 44 284
Non-current liabilities 26 652 27 325
Preference share capital 3 980 3 980
Employee benefits liability 22 672 15 819
Defered tax liabilities - 7 526
Current liabilities 200 401 211 437
Bank overdraft - 34 379
Trade and other payables 74 669 164 058
Employee benefits liability 1 360 11 444
Provisions 770 770
Taxation payable 205 786
Liabilities classified as held for sale 123 397 -
Total equity and liabilities 512 445 684 089
R`000 R`000
Capital commitments authorised 3 168 17 110
Authorised and contracted for 1 815 15 526
Authorised but not contracted for 1 353 1 584
Operating lease commitments 12 268 17 104
Operating lease receivables 195 917 31 965
Investments in associates 25 434 43 181
Net asset value per share (cents) 782 1 182
Acquisition of property, plant and equipment
Expansion 13 112 15 495
Replacement 13 718 25 182
Finished goods stated at net realizable value 2 137 8 828
Ordinary shares (000)
Issued - net of treasury shares 33 924 33 924
Weighted average number of shares - net of 33 924 33 924
treasury shares
Statement of Changes in Equity
Audited Audited
Year to Year to
March March
2009 2008
R000 R000
Balance at beginning of year 445 327 519 257
Revaluation of property, plant and equipment 102 017 -
Loss for the year (259 845) (70 538)
Dividends to shareholders (2 107) (3 392)
Balance at end of year 285 392 445 327
Cash Flow Statement
Audited Audited
Year to Year to
March March
2009 2008
R`000 R`000
Cash utilised by operations (30 610) (81 143)
Operating cash flow (98 428) (65 947)
Movement in working capital 64 258 (34 919)
Interest income 7 274 17 803
Interest expense (1 575) (603)
Income taxes (paid)/received (2 139) 2 523
Cash flows from investing activities (25 986) (60 151)
Proceeds on disposal of property, plant and 279 538
equipment
Acquisition of property, plant and equipment (26 830) (40 677)
Cash disposed on disposal of businesses and - (20 012)
subsidiaries
Decrease in investments in 565 -
subsidiaries/associates
Cash flows from financing activities - (3 392)
Dividends paid to equity holders - (3 392)
Dividends paid to minority interest - -
Net decrease in cash and cash equivalents (56 596) (144 686)
Cash and cash equivalents at beginning of year 115 223 259 909
Classified as held for sale (7 196) -
Cash and cash equivalents at end of year 51 431 115 223
Selected explanatory notes
Results
Trading conditions in the automotive industry were unsatisfactory during the
financial year. This trend deteriorated sharply following the global economic
downturn towards the end of 2008 and continued into early 2009. As a
consequence, losses incurred by the operations increased significantly.
In addition to the adverse market conditions, the following three technical
aspects impacted on the results for the year under review:
- A significant change in accounting policy as detailed below
- A major re-classification of several assets and liabilities as `held for
sale` because of the actions being undertaken by the Group
- The recognition of various closure related accruals and provisions.
The Group reflected an earnings loss attributable to equity holders for the year
of R237,9 million or 701,4 cents per share, which includes a loss of R172,8
million or 509,0 cents per share relating to businesses and assets held for sale
and expenses relating to prior discontinued operations.
Operationally, the main reasons for the deterioration in the results of the
continuing and discontinued operations were massive volume reductions and the
ongoing negative impact of global price pressures from automotive Original
Equipment Manufacturers (OEMs) preventing increased input costs from being fully
recoverable.
Given the changes in market conditions and in recognition of the initiatives
being undertaken, the Group`s properties are now viewed as separate cash
generating units, decoupled from their related operations, requiring
revaluations or impairments to be raised separately on properties and
operations.
The loss from continuing operations for the current year amounted to R87 million
and is in respect of the following business units and assets:
- Dorbyl Magnetto Wheels (Pty) Ltd (50% owned associate company)
- the Struandale property
- Univel Transmissions (Pty) Ltd (50% joint venture) #
- Head Office
(# Even though this operation will be closed during 2009, it has to be
classified as a continuing operation according to IFRS requirements, as only
assets held for sale can be classified as discontinuing operations).
The loss on discontinued operations of R172,8 million represents the net loss,
including impairments, of business units and properties for which disposal
agreements have already been entered into, or where negotiations are in progress
for their disposal.
The loss on discontinued operations and the re-classification of assets and
liabilities held for sale are in respect of the following business units and
assets:
- Dorbyl Automotive Systems - a division of Dorbyl Limited *
- Guestro Forging and Machining - a division of Dorbyl Limited
- Guestro Casting and Machining - a division of Dorbyl Limited
- Guestro Steering Gears (Pty) Limited (a unit of Forging and Machining)
- Pullmaflex Southern Africa (Pty) Limited* (a unit of Dorbyl Automotive
Systems)
- Dorbyl Precision Tools (Pty) Limited (aftermarket distribution company)
- Properties in Neave *, Uitenhage, Benoni and Rosslyn *.
(* In respect of these business units and assets, agreements were entered into
and the appropriate announcements made in compliance with the rules and
regulations of the JSE Limited).
The net cash position at R58,6 million is R56,6 million lower than the position
at 31 March 2008 mainly due to the operating losses and to limited essential
capital expenditure during the year.
Impairments, revaluations and change in accounting policy
In the interim results released on 24 November 2008, the impairment assessment
considered the interrelationship of the Group`s properties with the operations
as singular integrated cash-generating units, thus recognising the net
impairment only. As advised in the Trading Update released on 23 April 2009, the
significant losses per share now shown, are mainly as a result of the change in
the interrelationship between the Group`s properties and operations, thus
recognizing the impairments of the operations separately. As the Group`s
properties are now seen as separate cash generating units, a change in
accounting policy, in which the property revaluations are now being recognised
in a revaluation reserve directly in the balance sheet, was made at the end of
the financial year. In light of the current status of the Group, the Board
believes that this change in accounting policy will give the shareholders a more
informed indication of the net asset value. The net asset value per share at 31
March 2009, after allowing for the change in accounting policy, amounted to 782
cents per share.
The impairment and revaluation assessments reflect assumptions and judgements by
the management of Dorbyl concerning anticipated future outcomes. These
assumptions and judgements may or may not prove to be correct as there is
significant uncertainty in the current economic environment and should
accordingly be viewed with caution. These assessments do not consider the impact
of secondary tax on companies (STC) and do not include future corporate costs to
be incurred while implementing the various strategic actions. The corporate
actions being undertaken are not expected to result in any material income tax
or capital gains tax due the tax assessed losses and capital losses within the
relevant corporate entities.
Review of business units and assets
Shareholders are referred to various previous releases, wherein details were set
out of the various interventions and actions being taken in respect of the five
business units as well as the five properties owned by the Group.
The current status of the aforementioned interventions are summarised as
follows:
- The Dorbyl Automotive Systems business (28% of group turnover for the
financial year ending 31 March 2009) and the Rosslyn property. The disposals of
this business unit and the property were announced in October 2008 and December
2008 respectively. These disposals have not been finalised, pending the securing
of finance by the purchaser.
- Univel Transmissions (29% of group turnover for the financial year ending
31 March 2009). This business was classified as a continuing operation during
the year under review. It has since, after year-end, been agreed by the two
joint venture partners, GKN (Europe) and Dorbyl, that the business be closed
because it is not seen as a viable business.
- Guestro Forging and Machining (25% of group turnover for the financial year
ending 31 March 2009). After various interventions to first make this operation
profitable, negotiations are now at an advanced stage for the disposal of this
business unit.
- Dorbyl Magnetto Wheels. Dorbyl will retain its 50% interest in this
business.
- Guestro Castings and Machining (18% of group turnover for the financial
year ending 31 March 2009). To make this a viable business the operation has
been drastically restructured from a two shift to a one shift operation
retaining only those products with acceptable margins. Management are currently
negotiating with a number of parties for the sale of the business. The property
on which this operation is located, is also being evaluated with a view to
extract maximum value.
- Uitenhage property. Management are currently negotiating with a potential
buyer for the sale of the property.
- Struandale property. The future of this property is currently being
evaluated by the Board.
- Neave/Korsten property. This property has been sold for a consideration of
R36 million. The transaction was been approved by the shareholders at a general
meeting of shareholders held on
5 May 2009 and the proceeds will be received on transfer of the property into
the purchaser`s name.
In respect of the possible disposals, the appropriate announcements will be made
as and when required, in compliance with the rules and regulations of the JSE
Limited. The cautionary announcement renewed on 6 May 2009 is still effective.
Shareholders are accordingly advised to continue exercising caution when dealing
in their shares in Dorbyl Limited.
Changes in contingent liabilities since prior year
Possible claims from suppliers:
Suppliers to an operation within the Group could potentially institute claims
against the operation. No claims have been instituted by suppliers and nor the
validity or the amount of the possible claims could be confirmed at year-end.
Segmental reporting
The principal segments of the Group have been identified on a primary basis, by
the nature of the business and a secondary basis by geographical segment. The
basis is representative of the internal structure for management purposes.
Segmental operating income includes revenue and expenditure directly relating to
a business segment and excludes net financial costs/income and taxation.
Segmental assets and liabilities include assets and liabilities directly
relating to a business segment but exclude taxation related and interest bearing
assets and liabilities.
The primary segment during the year was only Automotive Manufacturing. In terms
of the geographical segment, Automotive Manufacturing is considered to be a
South African operation. Due to the fact that the whole business is considered
as one segment, no segmental reporting has been provided.
Subsequent events
No matters which are material to the financial affairs of the Company or the
Group have occurred between the balance sheet date and that of the approval of
the preliminary group results.
Basis of preparation and Audit Opinion
The preliminary financial statements have been prepared in accordance with the
recognition and measurement requirements of International Financial Reporting
Standards (IFRS), the presentation requirements of IAS34 Interim Financial
Reporting and the Companies Act of South Africa. Except for the change in
accounting policy referred to above, all other accounting policies are
consistent to those applied in the prior comparative year and in the financial
statements.
The unmodified audit reports of KPMG Inc. included in the financial statements
and on the summarised financial statements contained in this abridged report are
available for inspection at the company`s registered office.
Directorate
In the light of the various interventions described above which will result in
Dorbyl largely exiting the automotive industry, the Chairman of the Board, Mr J
Newbury, had indicated that as the role he would play in future has been
considerably diminished, he has decided in conjunction with the Board to retire
from the Board at the forthcoming Annual General Meeting scheduled to be held on
4 September 2009. The Board expresses its appreciation for the time he spent on
the affairs of the Company and wishes him well for the future. Mr J Magwaza,
currently an independent non-executive director, will replace Mr J Newbury as
Chairman.
DIVIDEND
In view of the adverse results for the year under review, no dividend has been
declared.
On behalf of the board
J E Newbury (Chairman) R F R?hrs (Chief Executive)
8 June 2009
Transfer secretaries:
Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg 2001
(P O Box 61051, Marshalltown, 2107)
Company secretary and registered office:
BD Bhikha
Lincoln Road, Industrial Sites, Benoni South, 1501
(PO Box 5500, Benoni South, 1502)
Directors: JE Newbury (Chairman)**, RF R?hrs (Group Chief Executive)*, JB
Magwaza**, PM Bester**, T van Wyk***, TA Morkel***, JW Dreyer***, B Wood*
* Executive director ** Independent non-executive directors
*** Non-executive director
Sponsor: PSG Capital (Proprietary) Limited
Building 8, Woodmead Office Park, 1 Woodmead Drive, Woodmead
(PO Box 987, Parklands, 2121)
Date: 08/06/2009 16:30:02 Produced by the JSE SENS Department.
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