| Wed 30 Sep 2009, 15:46 | | SFH - SA French - Reviewed Condensed Results For The Financial Year Ended |
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SFH
SFH
SFH - SA French - Reviewed Condensed Results For The Financial Year Ended
30 June 2009
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 group" or "the company")
REVIEWED CONDENSED RESULTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2009
CONDENSED GROUP INCOME STATEMENT Reviewed Audited
12 months 12 months
ended ended
30 June 2009 30 June 2008
R`000 R`000
Revenue 139 531 152 047
Cost of sales (119 147) (117 896)
Gross profit 20 384 34 151
Other income 9 875 842
Operating costs/expenses (30 768) (22 115)
Operating profit (509) 12 878
Investment revenue 1 707 983
Finance costs (14 064) (4 226)
(Loss)/Profit before taxation (12 866) 9 635
Taxation 2 571 (2 700)
(Loss)/Profit attributable to ordinary (10 295) 6 935
shareholders
Reconciliation of attributable earnings to
headline earnings
(Loss)/Profit attributable to ordinary (10 295) 6 935
shareholders
Loss/(Gain) on disposal of property, plant (918) 11
and equipment
Tax effect of the disposal of property, 257 (3)
plant and equipment
Headline (loss)/earnings attributable to (10 956) 6 943
ordinary shareholders
Number of shares in issue 166 375 689 165 000 000
Weighted average number of shares in issue 165 952 872 148 333 333
(Loss)/Earnings per share (cents) (6.20) 4.68
Headline (loss)/earnings per share (cents) (6.60) 4.68
CONDENSED GROUP BALANCE SHEET Reviewed Audited
30 June 2009 30 June 2008
R`000 R`000
ASSETS
Non-current assets 88 205 42 649
Property, plant and equipment 85 159 38 353
Other financial assets 1 482 4 296
Deferred tax 1 564 -
Current assets 124 4953 139 039
Inventories 103 656 108 758
Current tax receivable 529 39
Trade and other receivables 20 267 20 112
Cash and cash equivalents 43 10 130
Total assets 212 700 181 688
EQUITY AND LIABILITIES
Capital and reserves 53 407 64 976
Share capital 49 330 48 955
Revaluation reserve 162 162
Retained income 3 915 15 859
Minority interest * *
Non-current liabilities 33 911 22 080
Other financial liabilities 546 -
Installment sale agreements 33 365 20 908
Deferred tax - 1 172
Current liabilities 125 382 94 632
Loans from shareholders 11 901 9 568
Other financial liabilities 3 560 -
Current tax payable 165 1
Installment sale agreements 19 369 12 509
Operating lease liability 600 -
Trade and other payables 80 421 72 323
Bank overdraft 9 366 231
Total equity and liabilities 212 700 181 688
Number of shares in issue 166 375 689 165 000 000
Net asset value per share - (cents) 32.10 39.38
Net tangible asset value per share - 32.10 39.38
(cents)
* Less than R1 000
CONDENSED GROUP CASH FLOW STATEMENT Reviewed Audited
30 June 2009 30 June 2008
R`000 R`000
Net cash from operating activities 14 894 (40 816)
Net cash from investing activities (51 893) (19 550)
Net cash from financing activities 17 777 65 598
Total cash movement for the year (19 222) 5 232
Cash at the beginning of the year 9 899 4 667
Total cash at end of the year (9 323) 9 899
CONDENSED GROUP Share Share Revaluation Retained Total
STATEMENT OF CHANGES capital Premium reserve income equity
IN EQUITY R`000 R`000 R`000 R`000 R`000
Balance at 1 July 2007 1 150 - 162 8 923 10 236
Changes in equity - - - - -
Profit for the year - - - 6 935 6 935
Issue of shares 500 49 500 - - 50 000
Share issue costs - (2 195) - - (2 195)
Total changes 500 47 305 - 6 935 54 805
Balance at 30 June 1 650 47 305 162 15 859 64 976
2008
Changes in equity - - - - -
Loss for the year - - - (10 295) (10 295)
Capitalisation of 14 361 - - 375
dividend
Dividends - - - (1 650) (1 650)
Total changes 14 361 - (11 945) (11 570)
Balance at 30 June 1 664 47 666 162 3 915 53 407
2009
COMMENTARY
Introduction
The board of directors of SA French ("the directors") presents the reviewed
financial results of SA French for the twelve months ended 30 June 2009 ("the
period") which reflect a net asset value per share of 32.10 cents for the
period. This period has seen the global economy under pressure and in response
thereto, the directors have adhered to the core principle on which the company
was founded, that of providing exemplary service and support to its existing
customers, while winning new customers with innovative lifting solutions and
application engineering.
Group profile
SA French was founded by the current Chief Executive Officer, Quentin van Breda,
in 1982 and is the sole distributor of Potain tower cranes in sub-equatorial
Africa. In addition to its extended tenure 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 the Torgar brand of material and passenger hoists for which
it also holds extended distribution agreements for the sub-equatorial African
region. The company`s focus in the turbulent economic climate is on providing
quality service as well as ensuring cost savings to its existing clients, who in
turn will benefit from the company`s experience navigating numerous financial
slowdowns.
Auditor`s report
The group`s condensed annual financial statements for the year ended 30 June
2009 have been reviewed by the group`s auditors, RSM Betty & Dickson
(Johannesburg). The auditors` unmodified review report on the group`s condensed
annual financial statements is available for inspection at the company`s
registered office.
Extract from auditor`s report
"Emphasis of Matter
Without qualifying our conclusion, we draw attention to the reviewed condensed
results which indicates that the Company incurred a net loss of R10 295 000
during the year ended 30 June 2009. These conditions, along with other matters
as set forth in the results commentary, indicate the existence of an uncertainty
that may cast doubt about the Company`s ability to continue as a going concern."
Review of operations
Sales within the construction equipment supply industries, of broader
construction equipment, are largely dependent on a blend of business confidence
and order book size of the major players within the mining, construction and
industrial sectors. Notwithstanding the order book size of any of these firms in
the reporting period, the company has, like many of its compatriots within the
industry, felt the full impact of the tightening of credit by financial
institutions. Whether the lack of confidence followed the retraction of credit
or vice versa the result was that the period under consideration was difficult
to navigate. This saw a fundamental shift in many of the supply chain methods
generally employed within the industry.
This change in market dynamic resulted in a change of focus in SA French`s
business. In particular, SA French has experienced an increase in demand for
tower crane rentals as many of its clients seek to keep costs variable until
there is clarity on the direction of the markets and an easing of criteria for
granting credit by financial institutions. An increase in the rental of as
opposed to the sale of tower cranes has had an effect on SA French`s results.
Firstly, from a balance sheet perspective, SA French has made a significant
investment in its rental fleet. Secondly, from a revenue and profitability
perspective short-term profitability has been replaced by longer-term
prospective revenues from rentals.
In spite of the prevailing market sentiment, the period saw a number of
important milestones achieved by SA French on the African continent. These
include a contract for the supply, delivery and commissioning of two tower
cranes to be utilised in the construction of the condenser platform of the
Medupi power station in Lephalale. The larger of the two cranes, an MD1100, will
stand on rail and tower above the site with its 80 meter free standing hook
height and 80 meter reach, lifting 40 tons. The sale and commissioning and
subsequent dismantling of the first "luffing jib" tower crane in Africa to one
of the large listed construction companies, was a first for the company but by
no means the last of these types of crane to be seen in the country. SA French
also boasts the largest, newest rental fleet of tower and self erecting cranes
on the continent.
The branches in Cape Town and Durban have also established themselves as first
rate service centers by ensuring that, rental units and technical expertise are
on hand for construction projects such as the airport upgrades, complicated high
rise projects and rail station upgrades in Kwa-Zulu Natal and the Eastern and
Western Cape. The company`s seamless service to its clients across the country,
irrespective of the time or location, is its trademark and has resulted in
customer satisfaction levels in excess of 90% in all surveys conducted during
the reporting period.
Statement of going concern
The reviewed condensed financial statements for the year ended 30 June 2009,
have been prepared on the going concern basis.
The shift in SA French`s business towards a more capital intensive rental
business, together with the financial crisis has placed immense strain on the
group`s balance sheet. Capital reserves are limited and the board is addressing
this constraint by renegotiating credit arrangements with Potain and reducing
overheads. The directors are confident that these steps will enable the group to
manage its cash flows through this turbulence without resorting to the sale of
assets or the raising of fresh equity based funding.
Skills development
SA French is committed to the ongoing training and development of its staff and
the reporting period saw the company focusing on practical skills training for
its tower crane and hoist riggers as well as holding several safety seminars for
those working at height. In 2006 the Engineering Council of South Africa
conferred the status of Lifting Machinery Entity ("LME") on the company and it
has in turn under its auspices assisted its technicians to become registered as
Lifting Machinery Inspectors. SA French is the only LME working within the
industry and as such takes the lead in tower crane and hoist safety. In addition
its Chief Executive Officer is an active member of the steering committee tasked
with establishing a South African standard for the lifting industry. The number
of registered lifting machinery inspectors at SA French was raised by a further
five candidates during the period under review, making us one of the most
proficient lifting experts in the country.
Due to the industry demand for competent and reliable machine operators, a
decision was taken in 2008 to establish a Transport Education and Training
Authority ("TETA") accredited training facility that will enable the company to
provide training and certification requirements for its clients and third
parties. This certification was awarded to SA French by TETA during this
reporting period and we are proud to add yet another dimension to our list of
competencies and service offerings. This strategy will create another 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 of current and future legislation covering the safe operation of
lifting machinery.
Financial results
Increase in borrowings
Non-current liabilities increased from R26.2 million in June 2008 to R40.7
million in June 2009. This is largely attributed to the property, plant and
equipment used in the group`s rental business which is largely financed by
installment sales agreements. In turn this has resulted in increased finance
costs which have reduced earnings and headline earnings.
Segmental reporting
IAS 8 has not been early adopted. Management has not presented segment reporting
during the year under review as the company has only one operating segment.
Prospects
There are early indications that the regional stability within the SADC will
provide opportunities in both rental and sale of equipment in the Southern
African region particularly Mozambique and Botswana. The company will continue
to leverage its long term relationships with the listed construction and mining
entities in order to take advantage of upcoming infrastructural and development
projects. Within South Africa the company`s national footprint and seamless
service capabilities make it the supplier of choice to those that require
lifting machinery. This can be seen on the skyline of all major cities across
South Africa. Recent examples include hotel projects in and around OR Tambo,
Sandton, the Cape peninsula and on infrastructural projects like railway station
upgrades throughout the country.
Subsequent events
The directors are not aware of any material matter or circumstance arising since
the end of the financial year and up to the date of this report.
Dividend policy
No 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.
Certain prior year numbers have been reclassified to enhance comparability.
Directorate
LB Mophatlane and JC Prinsloo have tendered their resignations in this period
and LB Mophatlane will be replaced by J Fizelle as a non-executive director. The
company wishes to thank Mr. Mophatlane and Mr. Prinsloo for their contribution
to the board of directors of the company for the past period and wishes them
well in the future. We welcome Mr. Fizelle and look forward to his positive and
insightful comments in the period to come.
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.
On behalf of the board
Quentin van Breda Warwick van Breda
Chief Executive Officer Operations Director
30 September 2009
Directors:
QCA van Breda (Chief Executive Officer), W van Breda (Operations Director), JC
Prinsloo (Financial Director) MW Mashaba, JM Poluta* J Fizelle*
*non-executive
Company secretary
Warwick van Breda
131 Fitter Road
Spartan
Kempton Park, 1619
(PO Box 2144, Kempton Park, 1620)
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: 30/09/2009 15:46:01 Produced by the JSE SENS Department.
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