| Wed 19 May 2010, 17:00 | | ASO - Austro Group Limited - Unaudited consolidated interim financial results |
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ASO
ASO
ASO - Austro Group Limited - Unaudited consolidated interim financial results
for the six months ended 28 February 2010
AUSTRO GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2001/029771/06)
Share code: ASO ISIN: ZAE000090882
("the Group")
UNAUDITED CONSOLIDATED INTERIM FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 28
FEBRUARY 2010
SUMMARY
Revenue R192,2 million
Operating profit R19,8 million
Headline earnings per share 2,9 cents
Interim dividend per share 2,0 cents
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended
Unaudited Unaudited Audited
28 February 28 February 31 August
2010 2009 2009
R`000 R`000 R`000
Revenue 192 219 315 381 580 519
Cost of sales (112 655) (182 533) (343 925)
Gross profit 79 564 132 848 236 594
Other operating income 1 426 1 011 2 465
Operating expenses (61 204) (89 875) (151 019)
Profit from operations 19 786 43 984 88 040
Interest received 5 008 3 858 8 123
Interest paid (7 537) (11 644) (24 766)
Profit before taxation 17 257 36 198 71 397
Taxation expense (4 944) (11 144) (27 692)
Total comprehensive income for the 12 313 25 054 43 705
period
Number of shares in issue 431 413 384 431 413 384 431 413 384
Weighted average number of shares 431 413 384 431 413 384 431 413 384
Earnings per share (cents) 2,9 5,7 10,1
Headline earnings per share 2,9 5,7 10,0
(cents)
Dividend per share (cents) 2,0 - 2,0
Reconciliation of earnings to
headline earnings:
Total comprehensive income for the 12 313 25 054 43 705
period
Net (profit)/loss on disposal of 42 (524) (1)
property, plant and equipment
Taxation effect thereon (6) 117 -
Headline earnings 12 349 24 647 43 704
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at
Unaudited Unaudited Audited
28 February 28 February 31 August
2010 2009 2009
R`000 R`000 R`000
Assets
Non-current assets 277 687 290 360 282 026
Property, plant and equipment 46 823 52 861 51 064
Goodwill and other intangibles 229 742 230 643 229 949
Deferred taxation 1 122 6 856 1 013
Current assets 392 941 482 291 416 972
Loans receivable 31 222 - -
Inventories 285 756 390 058 336 110
Trade and other receivables 71 471 92 233 74 773
Taxation receivable 2 600 - 3 856
Cash resources 1 892 - 2 233
Total assets 670 628 772 651 698 998
Equity and liabilities
Capital and reserves 546 492 524 813 542 807
Share capital 4 4 4
Share premium 322 103 322 760 322 103
Accumulated profits 224 385 202 049 220 700
Non-current liabilities 9 550 14 750 10 949
Long-term liabilities - interest - 3 467 1 370
bearing
Long-term liabilities - interest 6 851 10 694 6 988
free
Deferred taxation 2 699 589 2 591
Current liabilities 114 586 233 088 145 242
Current portion of long-term - - 600
liabilities - interest bearing
Current portion of long-term 3 426 - 3 496
liabilities - interest free
Trade and other payables 41 079 87 388 39 076
Amount owing for purchase of - 8 228 -
subsidiaries
Shareholders for dividends - 8 437 -
Taxation payable 1 139 44 394 2 425
Bank overdraft 68 942 84 641 99 645
Total equity and liabilities 670 628 772 651 698 998
Net asset value per share (cents) 126,7 121,6 125,8
Tangible net asset value per share 73,4 68,2 72,5
(cents)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended
Unaudited Unaudited Audited
28 February 28 February 31 August
2010 2009 2009
R`000 R`000 R`000
Cash flows from operating 64 113 (7 035) (5 632)
activities
Cash generated by operations 80 245 7 639 81 758
Interest received 5 008 3 858 8 123
Interest paid (7 537) (11 644) (24 766)
Dividends paid (8 628) (191) (8 628)
Taxation paid (4 975) (6 697) (62 119)
Cash flows from investing (31 780) (2 081) (5 292)
activities
Cash flows from financing (1 971) (4 986) (15 949)
activities
Net increase/(decrease) in cash 30 362 (14 102) (26 873)
resources
Cash resources at beginning of (97 412) (70 539) (70 539)
period
Cash resources at end of period (67 050) (84 641) (97 412)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended
Unaudited Unaudited Audited
28 February 28 February 31 August
2010 2009 2009
R`000 R`000 R`000
Share capital and share premium 322 107 322 764 322 107
Balance at beginning of period 322 107 322 785 322 785
Issued during the period - 14 757 14 757
Movement in shares to be issued - (14 778) (14 778)
reserve
Share issue expenses - - (657)
Accumulated profits 224 385 202 049 220 700
Balance at beginning of period 220 700 185 623 185 623
Total comprehensive income for the 12 313 25 054 43 705
period
Dividends declared (8 628) (8 628) (8 628)
Total capital and reserves 546 492 524 813 542 807
CONDENSED SEGMENTAL ANALYSIS
Revenue (external) Profit before tax
28 February 28 February 28 February 28 February
2010 2009 2010 2009
R`000 R`000 R`000 R`000
Power 121 145 227 316 12 918 34 418
Gross 127 447 235 343 19 220 42 445
Intersegment (6 302) (8 027) (6 302) (8 027)
Wood 71 074 88 065 4 339 1 780
Gross 80 795 102 282 14 060 15 997
Intersegment (9 721) (14 217) (9 721) (14 217)
Total 192 219 315 381 17 257 36 198
Net assets
28 February 28 February
2010 2009
R`000 R`000
Power 419 525 212 311
Gross
Intersegment
Wood 126 967 312 502
Gross
Intersegment
Total 546 492 524 813
COMMENTARY
INTRODUCTION
Austro Group Limited is listed in the Support Services sector of the JSE
Limited. The Group is a supplier of specialised and quality branded industrial
equipment to corporate, commercial and infrastructure markets in South and
southern Africa. The Group services clients ranging from heavy industrial,
mining and construction groups to wholesalers, retailers, manufacturers and
individuals.
The Group has two distinct and focused business offerings - the production,
supply and rental of generators and related components such as industrial
engines, alternators and switchgear to the generator manufacture and supply
industry and the distribution of professional woodworking equipment and
tooling.
Group structure:
New Way Power (Pty) Limited housing the energy and power related interests of
the Group.
Austro Wood (Pty) Limited housing the woodworking and related interests of the
Group.
The core of these businesses have been in existence for over 30 years.
RESULTS OVERVIEW
FINANCIAL REVIEW
The Group delivered moderate results considering the effect of the depressed
economy on the Power Division and the lower than expected demand for
woodworking equipment in anticipation of the 2010 World Cup.
The first half of the 2009 year saw an inhouse show and sale in the Woodworking
Division and the Power Division was still capitalising on the rolling blackouts
that occurred during that year.
Consolidated statement of comprehensive income
Revenue decreased from R315,4 million to R192,2 million. This was mainly due to
the effect of the depressed economy on the Power Division and the fact that in
the previous year the decline in volumes due to the economy occurred in the
second half of the year.
Profit from operations decreased by 54,9% to R19,8 million (2009: R43,9
million) as a result of the sharp reduction in revenues in the Power Division.
Earnings per share decreased to 2,9 cents per share (2009: 5,8 cents per share)
while headline earnings per share also decreased to 2,9 cents per share (2009:
5,7 cents per share).
Consolidated statement of financial position
A significant improvement was made to the balance sheet in this period.
Group gearing reduced to 15,0% (2009: 20,1%). The Group`s inventory has reduced
by R104,3 million to R285,8 million at the period ended 28 February 2010. This
has been a specific area of management focus. Debtors collections have shown a
significant improvement with trade receivables being maintained at acceptable
levels.
The Group is confident that it can comfortably service its limited debt.
The focus of the Group on asset management during the period has resulted in a
strong balance sheet and has allowed a interim dividend per share of 2,0 cents
to be declared.
Condensed consolidated statement of cash flows
Due to specific management focus, during the period under review, the Group
generated cash of R64,1 million (2009: R(7,0) million). Levels of inventory
showed a significant reduction over the period and trade receivables and trade
payables were carefully managed.
RETROSPECTIVE RESTATEMENT
With reference to the annual report for the year ended 31 August 2009, the
contingent liability has been resolved and dealt with by way of restatement of
the prior year periods.
Based on Senior Counsel advice an agreement entered into between HT Heye and
the Group in respect of the acquisition of Neptune Plant Hire (Pty) Limited has
now been implemented and the resultant liability has been recognised. The
agreement is so closely related to the acquisition that the effect of this has
been recognised in terms of IFRS 3 (Business Combinations). In terms of the
agreement a condition of payment was created based on an average share price at
30 September 2009. The liability will be repaid in three equal instalments
starting in the current financial year.
R`000 Goodwill Liability
interest free
31 August 2008
Closing balance previously stated 221 110 -
Adjustment 6 919 6 919
Closing balance restated 228 029 6 919
28 February 2009
Closing balance previously stated 219 949 -
Adjustment 2008 6 919 6 919
Closing balance restated 226 868 6 919
Adjustment 2009 3 775 3 775
Closing balance restated 230 643 10 694
31 August 2009
Closing balance previously stated 219 465 -
Adjustment 2008 6 919 6 919
Closing balance restated 226 384 6 919
Adjustment 2009 3 565 3 565
Closing balance restated 229 949 10 484
During the current year it was determined that Secondary Tax on Companies (STC)
to the value of R4 million which should have been recorded in the books of the
company prior to the listing had never been accounted for previously. The
amount may be recoverable from the vendors.
R`000 Trade and other Trade and other
receivables payables
31 August 2008
Closing balance previously stated 142 354 202 045
Adjustment 4 000 4 000
Closing balance restated 146 354 206 045
28 February 2009
Closing balance previously stated 88 233 83 388
Adjustment 4 000 4 000
Closing balance restated 92 233 87 388
31 August 2009
Closing balance previously stated 70 773 35 076
Adjustment 4 000 4 000
Closing balance restated 74 773 39 076
SUBSEQUENT EVENTS
There have been no material events subsequent to the end of the interim period
that have not been reflected in the financial statements for that period.
OPERATING REVIEW
Power
Revenue decreased by 46,7% to R121,1 million (2009: R227,3 million). This
Division contributed 63,0% to Group revenue (2009: 72,1%).
New Way, the supplier and manufacturer of generator sets, industrial diesel
engines and related components, experienced a slow start, but has a strong
order book for the second half of the year.
Neptune, the generator rental business, continues to produce reasonable results
due to the Gauteng operation now being profitable, but the Cape Town operation
has seen a decline in volumes.
Good progress has been made to maximise the synergies between New Way and Quad
and Quinlec. Quad manufactures electrical panels and soundproof enclosures,
while Quinlec specialises in the installation and maintenance of generators as
well as compliance certifications. Quad is now producing the majority of panels
and soundproof enclosures for the generators sold by New Way.
Wood
While the economic slowdown has impacted this Division, the benefits of the
restructuring and resultant cost reductions made in the previous year are now
being felt with the operating profit being in line with expectations.
This Division contributed 37,0% (2009: 27,9%) to Group revenue. Revenue
decreased by 19,3% to R71,0 million (2009: R88,1 million).
Within the Division the KZN and Gauteng operations showed a good improvement
and efforts are being made to improve the performance of the Cape Town
Operations.
PROSPECTS
The Group has completed its consolidation process and is attempting to maximise
the synergies to be gained from the various divisions. The Group has been
restructured with all Power interests being housed in one entity, New Way Power
(Pty) Limited and the Wood interests in Austro Wood (Pty) Limited.
In addition the Power Division is in the process of consolidating four of its
Gauteng operations into one facility in Alberton which will result in
efficiencies in warehousing, manufacturing and logistics.
Neptune`s Gauteng operation which started operating in late 2008 is increasing
market share and beginning to produce profits.
The restructuring of the Gauteng and KZN operations has placed the Wood
Division in a good position to benefit from an upturn in the economy and the
order book in the Power Division has improved.
DIVIDEND DISTRIBUTION
Shareholders are advised that an interim cash dividend of 2,0 cents per share
has been declared.
The salient dates in respect of the dividend are 2010
as follows
Last day to trade cum dividend on Friday, 4 June 2010
Trading ex dividend commences on Monday, 7 June 2010
Record date Friday, 11 June 2010
Payment of dividend on Monday, 14 June 2010
Shareholders may not dematerialise or rematerialise their shares between
Monday, 7 June 2010 and Friday, 11 June 2010, both dates inclusive.
BASIS OF PREPARATION
The annual results have been prepared in accordance with IAS 34 (Interim
Financial Reporting). The accounting policies applied in preparing these annual
financial statements are consistent with those applied in the prior year and
are in accordance with International Financial Reporting Standards. This
announcement was prepared in accordance with the listings requirements of the
JSE Limited and the Companies Act. These unaudited results have not been
reviewed or audited by Austro Group Limited`s auditors PKF (JHB) Inc.
CHANGES TO THE BOARD OF DIRECTORS
During the period W Hauser resigned from the Board of Directors.
By order of the Board
AJ Phillips JA Bennie
Chairman Group Financial Director
Johannesburg
19 May 2010
Non-executive directors:
AJ Phillips* (Chairman), DS Brouze, GS Nzalo*
U Schackermann* (German)
(* Independent)
Executive directors:
JA Bennie, JO Freed, JR Freed (Alt JO Freed), RE Moss
Registration number: 2001/029771/06
Business/registered address:
1125 Leader Road, Stormill Ext 4, Roodepoort, Johannesburg
Business postal address:
PO Box 1914, Florida, Johannesburg
Company secretary:
Probity Business Services (Proprietary) Limited
Transfer secretaries:
Computershare Investor Services (Proprietary) Limited
Sponsor:
Java Capital (Proprietary) Limited
Visit our website: www.austrogrouplimited.com
Date: 19/05/2010 17:00:01 Produced by the JSE SENS Department.
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