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BWI
BWI
BWI - B & W Instrumentation and Electrical Limited - Reviewed consolidated
interim results for the six months ended 28 February 2010
B & W Instrumentation and Electrical Limited
Incorporated in the Republic of South Africa
(Registration number 2001/008548/06)
Share code: BWI ISIN: ZAE000098687
("B&W" or "the company" or "the group")
REVIEWED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED 28 FEBRUARY 2010
HIGHLIGHTS
* Gross profit margin 23.0%
* NPAT R30.9 million
* Revenue R248.6 million
* NAV 88.5 cents
* EPS 15.5 cents
* Interim dividend declared 2.5 cents
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Unaudited Audited
28 February 2010 28 February 2009 31 August
R`000 R`000 2009
R`000
ASSETS
Non-current assets 61 179 31 338 50 580
Property, plant
and equipment 31 853 12 904 27 362
Deferred tax 1 492 1 937 3 041
Goodwill 6 854 - -
Intangible assets 3 829 - -
Retention debtors 17 151 16 497 20 177
Current assets 276 879 297 909 331 442
Inventories 1 828 6 027 2 084
Loans to related - 111 -
parties
Trade and other 205 378 185 489 189 594
receivables
Cash and cash
equivalents 69 673 106 282 139 764
Total assets 338 058 329 247 382 022
EQUITY AND
LIABILITIES
Equity 177 021 136 068 156 064
Share capital 32 285 32 285 32 285
Retained income 144 653 103 783 123 771
Minority interest 83 * 8
Non-current 988 804 682
liabilities
Deferred tax 817 804 682
Finance lease 171
obligation
Current 160 049 192 375 225 276
liabilities
Loans from related
parties 18 4 753 1 030
Other financial 18 515 61 666 78 017
liabilities
Current tax 1 819 13 001 6 065
payable
Finance lease 171 - -
obligation
Trade and other 127 387 96 696 126 295
payables
Deferred tax 10 528 12 503 9 967
Provisions 1 611 3 756 3 902
Total equity and
liabilities 338 058 329 247 382 022
Number of ordinary
shares in issue 200 000 000 200 000 000 200 000
000
Net asset value
per ordinary share 88.5 68.0 78.0
(cents)
Net tangible asset
value per ordinary
share (cents) 83.2 68.0 78.0
*Less than R1 000
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
% Reviewed Unaudited six Audited
change six months to months to 12 months to
28 February 28 February 31 August
2010 2009 2009
R`000 R`000 R`000
Contract
revenue (8.3) 248 634 270 993 502 840
Cost of
contracts (191 493) (211 267) (397 062)
Gross profit (4.3) 57 141 59 726 105 778
Other income 3 278 * 1 279
Operating costs
(18 534) (15 614) (31 506)
Operating
profit (5.0) 41 885 44 112 75 551
Investment
revenue 2 575 4 926 7 750
Finance costs (21) (58) (386)
Profit before
taxation (9.3) 44 439 48 980 82 915
Taxation (13 482) (14 691) (23 631)
Profit after
taxation (9.7) 30 957 34 289 59 284
Equity holders
of the parent 30 882 34 289 59 276
Minority
interest 75 * 8
Adjustment for
headline
earnings - 236 236
Headline
earnings
attributable to
ordinary
shareholders 30 882 34 525 59 512
Weighted
average number
of ordinary
shares 200 000 000 200 000 000 200 000 000
Earnings per
ordinary share
cents) (9.7) 15.5 17.1 29.6
Diluted
earnings per
ordinary share
cents) (11.6) 15.1 17.1 29.6
Headline
earnings per
ordinary share
cents) (10.6) 15.4 17.3 29.8
Dividend per
share paid
(cents) 5.0 5.0 7.5
*Less than R1 000
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Treasury
Capital premium shares
R`000 R`000 R`000
Balance at 1 September
2008 2 38 986 (6 703)
Net profit for the period - - -
Dividends paid - - -
Balance at 28 February
2009 2 38 986 (6 703)
Issue of share capital - 4 566 -
Treasury shares - - (4 566)
Net profit for the period - - -
Dividends paid - - -
Balance at 31 August 2009 2 43 552 (11 269)
Net profit for the period - - -
Dividends paid - - -
Balance at 28 February
2010 2 43 552 (11 269)
*Less than R1 000
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
Distributa Minority Total
ble interest equity
reserve R`000 R`000
R`000
Balance at 1 September
2008 79 494 - 111 779
Net profit for the period 34 289 - 34 289
Dividends paid (10 000) - (10 000)
Balance at 28 February
2009 103 783 * 136 068
Issue of share capital - - 4 566
Treasury shares - - (4 566)
Net profit for the period 24 988 8 24 996
Dividends paid (5 000) - (5 000)
Balance at 31 August 2009 123 771 8 156 064
Net profit for the period 30 882 75 30 957
Dividends paid (10 000) - (10 000)
Balance at 28 February
2010 144 653 83 177 021
CONSOLIDATED CASH FLOW STATEMENT
Reviewed Unaudited Audited
six months six months 12 months
to 28 to 28 to
February February 31 August
2010 2009 2009
R`000 R`000 R`000
Cash flow from operating
activities 7 829 4 766 (14 387)
Cash flow from investing
activities (8 760) 889 (19 493)
Cash flow from financing
activities (69 160) (10 000) 63 017
(Decrease)/Increase in cash
and cash equivalents (70 091) (4 345) 29 137
Cash and cash equivalents at
the beginning of the period 139 764 110 627 110 627
Cash and cash equivalents at
the end of the period 69 673 106 282 139 764
SEGMENT REPORT
Reviewed six Group Madagascar Mozambique South
months to 28 R`000 R`000 R`000 Africa &
February 2010 Other
R`000
Contract revenue 248 634 41 787 70 582 136 265
Cost of contracts (191 493) (14 017) (66 049) (111 427)
Gross profit 57 141 27 770 4 533 24 838
Other income 3 278 680 - 2 598
Operating
expenses (18 534) (414) (86) (18 034)
Operating profit 41 885 28 036 4 447 9 402
Investment income 2 575 5 - 2 570
Finance costs (21) - - (21)
Profit before tax 44 439 28 041 4 447 11 951
Total assets 338 058 109 233 83 533 145 292
Total liabilities (161 037) (38 651) (61 693) (60 693)
COMMENTARY
COMMENTARY
Introduction
The directors of B&W are pleased to present the reviewed consolidated
interim results for the six months ended 28 February 2010 ("the interim
period"), which reflect growth on the prior six-month period ended 31 August
2009. This is a satisfactory achievement taking into account the tough
economic and market conditions during the interim period.
However, relative to the prior comparative period ended 28 February 2009
("the prior comparative period") revenue decreased to R248.6 million. This
resulted in a decrease in net profit after tax ("NPAT") and earnings per
share ("EPS"), respectively. The decline in these key performance indicators
is largely attributable to delays in a number of major projects in the wake
of the economic downturn.
The delayed projects are now scheduled for substantial completion prior to
B&W`s August 2010 year-end.
Basis of preparation
The accounting policies applied in the preparation of these reviewed
consolidated interim 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
audited annual financial statements for the previous year ended 31 August
2009. The consolidated interim 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 the JSE Limited.
The reviewed consolidated interim results for the period have been reviewed
by B&W`s auditors, Certified Master Auditors Inc. Their unqualified review
opinion is available for inspection at the company`s registered office.
SUBSEQUENT EVENTS
The board of directors is not aware of any material matters or circumstances
arising since the end of the interim period and up to the date of this report.
COMPARATIVE FIGURES
Certain comparative figures relating to the interim results of the prior
comparative period, have been reclassified to better comply with IFRS
disclosure requirements.
The reclassifications have either increased or (decreased) the line items
previously reported, and the impact is as follows:
Unaudited
28 February
2009
R`000
Statement of financial position
Deferred tax - non-current asset 1 937
Retention debtors - non-current asset 16 497
Trade and other receivables - current asset 13 837
Deferred tax - non-current liability (10 566)
Other financial liabilities - current asset 61 666
Trade and other payables - current asset (35 088)
Deferred tax - current liability 12 503
Provisions - current liability 3 756
Retained income 156
Foreign currency translation reserve (156)
Statement of comprehensive income
Investment revenue 156
Statement in changes in equity
Net profit for the period 156
Group profile
B&W is one of South Africa`s three leading niche providers of electrical
and instrumentation ("E&I") as well as specialist earthing, lightning
and surge protection services to the oil & gas, infrastructure,
industrial, utilities, mining, chemical and food & beverage industries
across sub-Saharan Africa. Services include equipment procurement, project
supervision, installation, post-installation commissioning and ongoing
maintenance.
Financial results
Revenue decreased from the prior comparative period by 8.3%. Gross profit
margins increased to 23.0%. Operating expenses amounted to R18.5 million
(which equates to 7.5% of revenue (February 2009: 5.8%) largely as a result
of the once-off costs of R3 million relating to the acquisition of the business
of Pontins (Proprietary) Limited ("Pontins").
Together these factors resulted in NPAT of R30.9 million February 2009:
R34.3 million) with EPS of 15.5 cents February 2009: 17.1 cents).
B&W maintained a positive cash balance of R69.7 million at the end of the
interim period, despite operating cash flow having been negatively affected
by an increase in book debts.
Acquisition
As previously announced, during the interim period B&W acquired the business
of Pontins, which specialises in the provision of earthing, lightning and
surge protection services and products to the industrial and commercial sectors.
Numerous synergies between the companies have already resulted in significant
benefits for the group, including complementary project participation by
Pontins who is generally involved towards the start, and B&W towards the end,
of a project.
The diluted EPS detailed in the consolidated statement of comprehensive income
is as a result of 4 373 959 B&W ordinary shares still to be issued at a price
of R1.44 per ordinary share, (being the closing price on the effective date
of 30 June 2009), which shares are the remaining portion of the purchase
consideration.
Pontins` results have been incorporated into these reviewed consolidated
interim financial results from the date of acquisition.
Prospects
It is anticipated that the second half of the financial year should be markedly
stronger than the first half, with certain significant delayed contracts having
been re-activated and expected to be substantially completed by August 2010.
B&W is therefore optimistic that targeted revenue and earnings for the full
financial year should be achieved.
Further supporting this, a notable improvement in sentiment during the latter
half of the interim period boosted market conditions and new orders to the
value of R180 million were secured by B&W. These contributed to an order book
of R595 million at the end of the interim period.
Analysis of the order pipeline shows that even though the effects of the
economic downturn are diminishing, it will be some time before the value of
industry contracts return to the levels seen in 2007/2008. B&W is proactively
taking steps to maintain its long-term growth strategy in the face of continued
contraction in the market.
Dividends
Company policy dictates the declaration of an annual dividend equating to 25%
of annual NPAT. In light of the cash-positive position, it has been decided that
an interim dividend of 2.5 cents per share (February 2009: 2.5 cents) be
declared. From time to time the board of directors will consider dividend cover
based on B&W`s cash flow, gearing and capital requirements. The dividend
will be financed out of B&W`s free cash flow.
The salient dates for the dividend are as follows:
Last day to trade
Shares cum dividend Friday, 14 May 2010
Shares trade ex dividend Monday, 17 May 2010
Record date Friday, 21 May 2010
Payment date Monday, 24 May 2010
No share certificates may be dematerialised or rematerialised between Monday,
17 May 2010 and Friday, 21 May 2010, both dates inclusive.
John Barrow Brian Harley
Chairman Managing Director
On behalf of the board
20 April 2010
Directors:
John Barrow (Chairman); Brian Harley (Managing Director); Danie Evert (Financial
Director); Johan Breedt; Tom Lombard; Ken Nel; Dean Nevay; Gary Swanepoel; Sam
Vilakazi; Wolf Wassermeier*; Jimmy Oosthuizen*; Unati Mabandla*.
*Non-executive director
Independent
Registered office:
139 Everfair Avenue, Randjesfontein, Midrand, 1685
PO Box 2506, Rivonia, 2128
Auditors:
Certified Master Auditors Inc.
Designated adviser:
Merchantec Capital
Transfer secretaries:
Computershare Investor Services (Proprietary) Limited
70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107
Company secretary:
CIS Company Secretaries (Proprietary) Limited
70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107
Investor relations:
Envisage Investor & Corporate Relations
Date: 20/04/2010 07:05:06 Produced by the JSE SENS Department.
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