| Tue 25 Aug 2009, 9:00 | | ABU - A.B.E. Construction Chemicals Limited - Audited condensed financial |
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ABU
ABU
ABU - A.B.E. Construction Chemicals Limited - Audited condensed financial
results for the 12 months ended 31 May 2009, dividend declaration and notice of
Annual General Meeting
A.B.E. CONSTRUCTION CHEMICALS LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number: 1982/005383/07)
Share Code: ABU ISIN: ZAE000102059
("a.b.e." or "the company")
AUDITED CONDENSED FINANCIAL RESULTS FOR THE 12 MONTHS ENDED 31 MAY 2009,
DIVIDEND DECLARATION AND NOTICE OF ANNUAL GENERAL MEETING
HIGHLIGHTS
- 2 YEAR PROSPECTUS FORECASTS ACHIEVED
- REVENUE INCREASED BY 19% TO R263M
- OPERATING PROFIT INCREASED BY 22% TO R35.6M
- ATTRIBUTABLE EARNINGS INCREASED BY 20% TO R25.2M
- DIVIDEND INCREASED BY 18% TO 10 cents PER SHARE
CONDENSED INCOME STATEMENT
Figures in Rand 12 months 12 months
audited audited
31 May 2009 31 May 2008
Revenue 262,728,926 220,304,588
Cost of sales (162,574,217) (135,437,007)
Gross profit 100,154,709 84,867,581
Other income 2,270,800 9,395,634
Distribution costs (8,823,592) (8,440,769)
Administration expenses (10,258,810) (9,716,671)
Other expenses (47,786,105) (46,884,608)
Operating profit 35,557,002 29,221,167
Investment revenue 1,085,932 458,120
Finance charges (616,914) (528,277)
Profit before taxation 36,026,020 29,151,010
Taxation (10,845,914) (8,194,472)
Profit for the period 25,180,106 20,956,538
Attributable to:
Equity holders 25,180,106 20,956,538
Earnings per share
Basic and diluted basic earnings per share 25,2 21,7
(cents)
Headline and diluted headline earnings per 25,0 21,2
share (cents)
CONDENSED BALANCE SHEET
Figures in Rand 12 months 12 months
audited audited
31 May 2009 31 May 2008
Assets
NonCurrent Assets
Property, plant and equipment 40,329,282 38,353,045
40,329,282 38,353,045
Current Assets
Inventories 57,608,628 46,222,041
Trade and other receivables 42,366,997 43,201,761
Cash and cash equivalents 21,915,282 19,690,125
121,890,907 109,113,927
Total Assets 162,220,189 147,466,972
Equity and Liabilities
Equity
Share capital 1,000,000 1,000,000
Share premium 33,635,756 33,635,756
NonDistributable Reserve 16,247,404 16,373,995
Retained income 51,599,950 34,793,253
102,483,110 85,803,004
Liabilities
NonCurrent Liabilities
Financial liabilities 3,534,035 2,347,654
Deferred tax 2,728,840 2,463,232
Employee benefit liability 2,364,000 2,164,815
Provisions 15,000 219,000
8,641,875 7,194,701
Current Liabilities
Financial liabilities 2,232,651 1,832,327
Current tax payable 2,053,882 1,752,546
Trade and other payables 45,538,373 49,788,139
Employee benefit liability 38,900 82,793
Provisions 1,231,398 1,013,462
51,095,204 54,469,267
Total Liabilities 59,737,079 61,663,968
Total Equity and Liabilities 162,220,189 147,466,972
CONDENSED STATEMENT OF CHANGES IN EQUITY
Figures in Rand Share Share Nondistribu Retained Total
capital premium table income equity
reserves
Balance at 01 74 - 7,747,729 13,710,124 21,457,927
June 2007
Changes in
equity
Revaluation of - - 8,752,857 - 8,752,857
assets
Profit for the - - - 20,956,538 20,956,538
year
Issue of shares 26 34,999,974 - - 35,000,000
Capitalisation 999,900 (999,900) - - -
issue
Share issue - (364,318) - - (364,318)
expenses
Transfer to - - (126,591) 126,591 -
retained income
Balance at 01 1,000,000 33,635,756 16,373,995 34,793,253 85,803,004
June 2008
Changes in
equity
Profit for the - - - 25,180,106 25,180,106
year
Dividend Paid - - - (8,500,000) (8,500,000)
Transfer to - - (126,591) 126,591 -
retained income
Balance at 31 1,000,000 33,635,756 16,247,404 51,599,950 102,483,110
May 2009
CONDENSED CASH FLOW STATEMENT
Figures in Rand 12 months 12 months
audited audited
31 May 2009 31 May 2008
Cash generated from operations 23,518,221 29,893,317
Investment revenue 1,085,932 458,120
Finance costs (616,914) (528,277)
Tax paid (10,278,970) (7,287,881)
Net cash from operating 13,708,269 22,535,279
activities
Purchase of property, plant (4,828,301) (5,696,995)
and equipment
Proceeds on disposal/claims 545,124 708,764
for property, plant and
equipment
Net cash from investing (4,283,177) (4,988,231)
activities
Proceeds on share issue - 35,000,000
Share issue expenses - (364,318)
Proceeds/ (Repayment) of other 1,300,065 (75,344)
financial liabilities
Loans repaid to group - (1,748,325)
companies
Dividend paid (8,500,000) (35,000,000)
Net cash from financing (7,199,935) (2,187,987)
activities
Total cash movement for the 2,225,157 15,359,061
period
Cash at the beginning of the 19,690,125 4,331,064
period
Total cash at end of the 21,915,282 19,690,125
period
Segment analysis
Segment revenue 262,728,926 220,304,588 (7,825,354) (6,842,693)
external customers
Reconciling items for segment revenue to
external customers consist of:
Settlement discount (3,998,031) (3,364,869)
Rebates (3,827,323) (3,477,824)
TOTAL (7,825,354) (6,842,693)
South Africa Export
12 months 12 months 12 months 12 months
audited audited audited audited
31 May 2009 31 May 2008 31 May 2009 31 May 2008
Trade receivables 39,128,164 37,748,482 3,405,055 3,637,338
Segment revenue 244,929,714 205,640,439 25,624,566 21,506,842
external customers
Company Reconciling item
12 months 12 months 12 months 12 months
audited audited audited audited
31 May 2009 31 May 2008 31 May 2009 31 May 2008
Segment profit 36,026,020 29,151,010 (19,813,913) (18,659,953)
before tax
Reconciling items for segment profit before
tax consist of:
Head office (9.092,078) (7,928,999)
National
* Administration (3,955,912) (3,861,676)
* Warehouse (2,432,074) (2,448,842)
* Selling (5,417,574) (4,857,934)
* Sundry 614,707 507,655
Interest expense (616,914) (528,277)
Interest received 1,085,932 458,120
TOTAL (19,813,913) (18,659,953)
South Africa Export
12 months 12 months 12 months 12 months
audited audited audited audited
31 May 2009 31 May 2008 31 May 2009 31 May 2008
Segment profit 47,835,382 41,671,886 8,004,551 6,139,077
before tax
Company Reconciling Item
Business Activity 12 months 12 months 12 months 12 months
audited audited audited audited
31 May 2009 31 May 2008 31 May 2009 31 May 2008
Segment revenue 262,728,926 220,304,588 (7,825,354) (6,842,693)
External
customers
Segment gross 100,154,709 84,867,581 (11,511,275) (6,740,673)
profit
Resellers Construction Exports
Business 12 months 12 months 12 months 12 months 12 months 12
Activity audited audited audited audited audited months
31 May 31 May 31 May 31 May 31 May 2009 audited
2009 2008 2009 2008 31 May
2008
Segment 94,981,682 83,076,811 149,948,032 122,563,628 25,624,566 21,506,
revenue 842
External
customers
Segment 41,346,732 35,516,228 60,748,031 48,824,384 9,571,221 7,267,6
gross 42
profit
Sales by product category
12 months 12 months
audited audited
31 May 2009 31 May 2008
Waterproofing 140,743,118 120,173,431
General Construction 61,133,896 45,415,314
Silicone & Sealants 60,249,078 55,330,022
Other 8,428,188 6,228,514
Total 270,554,280 227,147,281
Reconciling item (7,825,354) (6,842,693)
Company 262,728,926 220,304,588
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The condensed financial report for the twelve months ended 31 May 2009 has
been prepared in compliance with the Listings Requirements of the JSE Limited
("the JSE"), International Financial Reporting Standards (IFRS) (in particular
International Accounting Standard 34: Interim Financial Reporting) and the
South African Companies Act, 1973, as amended. Except as otherwise disclosed,
the accounting policies applied in the presentation of the financial report
are consistent with those applied for the year ended 31 May 2008.
These condensed audited financial statements have been prepared in accordance
with the historic cost convention, except for certain financial instruments
which are stated at fair value and revaluation of property, and have been
audited by BDO Spencer Steward (KZN) Incorporated, whose unqualified audit
opinion is available for inspection at the company`s registered office.
The consolidated financial results are presented in rand, which is a.b.e.`s
functional and presentation currency.
SELECTED EXPLANATORY NOTES
1 Share capital
There were 100,000,000 ordinary shares of R1 each in issue for the full
year.
2. Earnings per share
The calculation of basic and diluted earnings per share is based on net
profit attributable to ordinary shareholders of R25,180,106 (2008:
R20,956,538) and a weighted average of 100,000,000 (2008: 96,750,000)
shares in issue throughout the year.
The calculation of headline and diluted headline earnings per share is based
on earnings of R25,033,152 (2008: R20,484,805) and a weighted average of
100,000,000(2008: 96,750,000) shares in issue throughout the year.
Basic and diluted earnings per share 25,2 cents 21,7 cents
Headline earnings per share 25,0 cents 21.2 cents
Reconciliation of total earnings to
headline earnings attributable to equity
holders:
Earnings attributable to ordinary 25,180,106 20,956,538
shareholders
Non-headline earnings
Insurance proceeds relating to flood - (6,529,054)
damage
Impairments due to flood damage - 6,034,209
Profit on sale of fixed assets (204,103) (159,951)
Tax effects of adjustments 57,149 183,063
Headline earnings 25,033,152 20,484,805
Number of Number of
Shares Shares
2009 2008
Reconciliation of weighted average number
of shares:
Shares at the beginning of the year 100,000,000 74
Share split - 7,326
Issue of shares for consideration in - 2,275
August 2008 - apportioned
Capitalisation issue - 96,740,325
Weighted average number of shares 100,000,000 96,750,000
3. Post financial year-end events
With the exception of the proposed dividend for 2009, the directors are
not aware of any material matter or circumstance arising since the end
of the financial year and the date of this announcement.
CORPORATE PROFILE
a.b.e. is an acronym for African Bitumen Emulsions. The company started
business as a supplier of bitumen to Natal Municipalities some 77 years ago.
Today a.b.e is a manufacturer and distributor of specialist construction
products in the following product categories:-
* Waterproofing
* Silicone and sealants
* General construction
* Industrial flooring
* Concrete repair
* Structural adhesives and coatings
* Specialist roofing materials
* Construction commodity products
The company`s products are used in residential, commercial, industrial and
infrastructure construction both in the new construction and building
maintenance industry.
The company owns well established brands and is the market leader in most of
the product categories.
When a.b.e. compiled its Prospectus prior to its listing on the Altx in August
2007 few could have envisaged the turmoil that would engulf so many sectors of
our economy.
We are however pleased to be able to report that in spite of this a.b.e.
succeeded in the delivery of the results envisaged in the Prospectus and has
continued its history of sustained growth.
Because of its wide range of specialist construction products a.b.e. was able
to take advantage of the many opportunities that the construction and building
maintenance industry had to offer over the past financial year.
FINANCIAL PERFORMANCE
REVENUE
Revenue increased by 19%.
Resellers Division
Due to the resilience of the brand resellers sales (35% of sales) increased
by 15% in spite of tough economic conditions in the building material supply
industry.
Consolidation of the national chain stores continued unabated and the strategy
of focusing on these key accounts, along with emphasis on brand and product
mix, were key to our success.
Construction Division
Construction Sales (55% of sales) increased by 22%.
Sales in this business segment almost reached R150 million for the first time.
This was due to growth within the building and construction industry, as
infrastructure spend continued unabated, coupled with an improvement in sales
to the building maintenance industry.
Export Division
Export Sales (10% of sales) grew by 19%.
Exports showed a pleasing growth in turnover and margins were maintained in
spite of declining markets in Sub-Sahara Africa.
TRADING MARGINS
Trading margins increased to 41,2% from 40,3% in 2008 whilst gross margins
declined to 38.1% from 38.5% due to inward transport costs.
The vast majority of a.b.e.`s products are based on raw materials associated
with the petroleum industry and the margins were achieved during the oil and
related chemical product cost turbulence by purchasing mechanisms and supplier
relationships which allowed a.b.e. to pass on raw material price adjustments
to the market timeously. Trust in the a.b.e. brand helped in the market
accepting the price adjustments that were necessary.
OPERATING PROFIT
Operating profit increased by 22%. Overhead costs within the company were
tightly contained below inflation and this helped offset the rise in transport
and warehousing costs experienced as a result of fuel price increases.
EARNINGS PER SHARE
2009 2008 Increase
Profit attributable to equity holders R25.2mil R20.9mil 20%
Basic and diluted basic earnings per 25,2cents 21,7cents 16%
share (2008: based on weighted average
of 96 750,000 shares in issue)
Headline and diluted headline earnings 25,0cents 21,2cents 18%
per share.(2008: based on weighted
average of 96750000 shares in issue)
Profit before tax grew by 24% (2008:31%) and was in line with the Prospectus
forecast.
The weighted average number of shares in issue increased by 3.3% which
impacted the reported earnings per share.
Profit after tax was marginally lower than the Prospectus forecast because of
the tax paid on the maiden dividend, which was not included in the Prospectus
forecast.
BALANCE SHEET
Finished goods stocks increased in line with revenue growth whilst raw material
stocks increased disproportionably because of a management decision to increase
the levels of raw material stock to avoid price volatility.
Strong management of trade receivables resulted in a net increase of only 4%
whilst revenue increased by 19%.
The return on capital employed was 32%.
CASH FLOW
The cash flow for the year was impacted by the raw material stock increases as
well as the R9.4 million dividend and resultant STC payout. Creditors returned
to reasonable levels. The company remains cash positive.
PROSPECTS
Resellers Division
There has been a slowdown in the demand for new residential properties.
However, the demand for maintenance products are generally not as affected by
the slowdown. New product ranges will be launched and additional market
sectors have been identified for expansion of the resellers customer base.
We anticipate that the coming year will show further consolidation in the
building supply industry as economic conditions deteriorate and the smaller
independent hardware outlets come under pressure.
We will continue the strategy of key account management, focusing on
improving distribution channels and we expect to grow sales in the coming
year.
Construction Division
This division can look forward to continued new build growth for the foreseeable
future, provided the government continues with its current and forecast
infrastructure growth projects and the resultant allied industrial growth
opportunities continue.
The building maintenance sector is expected to yield growth and will be a
focus area. The a.b.e. ranges of flooring, roofing, concrete repair and
waterproofing products are particularly suited and we anticipate growth in
this business during the coming year.
Export Division
In view of economic conditions in our major trading areas, we will seek to
maintain sales.
OPERATIONS
It is envisaged that the Durban site will be upgraded to increase storage
facilities and improve production and logistic efficiencies.
DIVIDENDS
As set out in the Prospectus dated 7 August 2007, the dividend policy, in the
absence of unforeseen circumstances and subject to future cash requirements,
is to declare a dividend based on a dividend cover of 2.5 times, payable
annually in September.
The directors are pleased to announce the declaration of a dividend of ten
cents (10c) per ordinary share.
The salient dates are as follows:
Last date to trade Friday, 11 September 2009
Shares to commence trading "ex" the Monday, 14 September 2009
dividend
Record date Friday, 18 September 2009
Payment date Monday, 21 September 2009
Share certificates may not be dematerialised or rematerialised between Monday,
14 September 2009 and Friday, 18 September 2009, both days inclusive.
Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting of shareholders will
be held at 14h30 on Thursday, 19 November 2009 in the Boardroom of the company,
101 Main Reef Road, Boksburg North, to transact the business stated in the
notice of the Annual General Meeting contained in the Annual Report, which
Annual Report is in the process of being prepared and which will be posted to
shareholders by no later than 31 August 2009.
For and on behalf of the Board
S P STACEY L F AVIS S K MOTA
CHIEF EXECUTIVE OFFICER FINANCIAL DIRECTOR CHAIRMAN
DURBAN
25 AUGUST 2009
CORPORATE INFORMATION
Directors: S K Mota* (Chairman), W R G Post*, S P Stacey, L F Avis, S Rault,
I Hague, R B Patmore*#, M G Meehan*#
*Non-executive
#Independent
Registered Address: 7 Wilcox Road, Isipingo, Kwazulu-Natal, 4110
Postal Address: P O Box 2353, Isipingo, Kwazulu-Natal, 4110
Telephone: 031 913 5400
Facsimile: 031 902 8861
Registration number: 1982/005383/06
Company Secretary: William Somerville
Legal Advisors: Shepstone & Wylie
Designated advisor: PSG Capital (Pty) Limited
Transfer Secretaries: Computershare Investor Services (Pty) Limited, 70
Marshall Street, Johannesburg, 2001
Date: 25/08/2009 09:00:02 Produced by the JSE SENS Department.
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