| Wed 11 Aug 2010, 16:48 | | UNI - Universal Industries Corporation Limited - Unaudited interim results for |
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UNI
UNI
UNI - Universal Industries Corporation Limited - Unaudited interim results for
the six months ended 30 June 2010
Universal Industries Corporation Limited
(Incorporated in the Republic of South Africa)
(Registration Number: 1996/004343/06)
("Universal" or "the group")
ISIN :ZAE000110664
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2010
- Revenue increased by 14%;
- HEPS increased by 177%; and
- Gearing (net of cash) 3%.
Consolidated Statement of Comprehensive Income
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 Jun 2010 30 Jun 2009 31 Dec 2009
R`000 R`000 R`000
Revenue 244 066 213 679 587 072
Cost of goods sold (186 105) (169 483) (421 309)
Gross profit 57 961 44 196 165 763
Other income 1 718 721 323
Operating expenses (35 932) (32 046) (93 148)
Profit from operations 23 747 12 871 72 938
Interest received 3 407 6 802 16 863
Interest paid (4 492) (9 925) (16 693)
Profit before taxation 22 662 9 748 73 108
Taxation (6 365) (3 771) (22 034)
Profit for the period 16 297 5 977 51 074
Other comprehensive income - - -
Total comprehensive income for the 16 297 5 977 51 074
period
Attributable to:
Equity holders of the parent 16 155 5 977 51 074
Minority interest 142 - -
16 297 5 977 51 074
Number of shares in issue (`000) 448 419 448 912 448 419
Weighted average number of shares in 448 419 448 912 448 863
issue (`000)
Earnings per share (cents)* 3,6 1,3 11,4
Headline earnings per share (cents)* 3,6 1,3 11,4
* There are no dilutionary instruments in issue.
Consolidated Statement of Financial Position
Unaudited Unaudited Audited
As at As at As at
30 Jun 2010 30 Jun 2009 31 Dec 2009
R`000 R`000 R`000
Assets
Non-current assets 230 308 208 478 211 946
Property, plant and equipment 26 215 13 754 18 563
Intangible assets 202 862 193 184 192 064
Deferred taxation 1 231 1 540 1 319
Current assets 315 792 342 081 331 046
Inventories 97 414 87 247 87 047
Trade and other receivables 123 142 101 593 133 622
Taxation prepaid 2 150 6 540 28
Bank and call deposits 93 086 146 701 110 349
Total assets 546 100 550 559 542 992
Equity and liabilities
Capital and reserves 356 233 308 597 353 388
Share capital and share premium 139 987 153 745 153 439
Accumulated profits 216 104 154 852 199 949
Equity attributable to the equity 356 091 308 597 353 388
holders of the parent
Minority interests 142 - -
Non-current liabilities 79 599 79 690 68 803
Interest bearing liabilities 61 776 76 025 65 316
Deferred taxation 984 1 522 1 008
Other financial liabilities 16 839 2 143 2 479
Current liabilities 110 268 162 272 120 801
Trade and other payables 85 539 76 853 96 257
Current portion of:
- interest bearing liabilities 19 757 16 791 20 714
- other financial liabilities 57 67 233 350
Taxation payable 801 1 395 3 480
Bank overdrafts 4 114 - -
Total equity and liabilities 546 100 550 559 542 992
Number of shares in issue (`000) 448 419 448 912 448 419
Net asset value per share (cents)* 79,4 68,7 78,8
Tangible net asset value per share 34,2 25,7 36,0
(cents)*
Consolidated Cash Flow Statement
Unaudited Unaudited Audited
Six months Six Year
months
ended ended ended
30 Jun 2010 30 Jun 31 Dec
2009 2009
R`000 R`000 R`000
Cash flows from operating activities 9 106 42 779 93 234
Cash generated by operations 21 294 60 239 111 785
Interest received 3 407 6 802 16 863
Interest paid (4 492) (9 925) (11 119)
Taxation paid (11 103) (14 337) (24 295)
Cash flows from investing activities (10 898) (628) (7 816)
Additions to property, plant and (4 586) (628) (7 816)
equipment
Acquisition of subsidiary and business (6 312) - -
Cash flows from financing activities (19 585) (31 026) (110 645)
Net interest bearing liabilities repaid (7 186) (4 982) (11 769)
Net other financial liabilities 1 053 (12 585) (85 111)
raised/(repaid)
Capital distribution to shareholders (13 452) (13 459) (13 467)
Share buy back and expenses - - (298)
(Decrease)/increase in cash resources (21 377) 11 125 (25 227)
Cash resources at beginning of period 110 349 135 576 135 576
Cash resources at end of period 88 972 146 701 110 349
Segment reporting
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 Jun 2010 30 Jun 2009 31 Dec
2009
R`000 R`000 R`000
Revenue 244 066 213 679 587 072
- Refrigeration 128 442 106 971 291 870
- Baking Systems 115 624 106 708 295 202
Segment profit from operations 23 747 12 871 72 938
- Refrigeration 9 492 6 979 38 778
- Baking Systems 14 487 6 716 41 164
- Unallocated corporate expenses (232) (824) (7 004)
Net interest (paid)/received (1 085) (3 123) 170
Profit before taxation 22 662 9 748 73 108
Consolidated Statement of Changes in Equity
Share Share Accumulated
capital premium profits
R`000 R`000 R`000
Balances as at 31 December 2008 4 167 200 148 875
Capital distribution to shareholders - (13 459) -
Total comprehensive income for the six - - 5 977
month period to 30 June 2009
Balances as at 30 June 2009 4 153 741 154 852
Share buy back and expenses - (306) -
Total comprehensive income for the six - - 45 097
month period to 31 December 2009
Balances as at 31 December 2009 4 153 435 199 949
Capital distribution to shareholders - (13 452) -
Total comprehensive income for the six - - 16 155
month period to 30 June 2010
Balances as at 30 June 2010 4 139 983 216 104
Total equity Minority Total
attributable interests equity
to the
equity
holders of
the parent
R`000 R`000 R`000
Balances as at 31 December 2008 316 079 - 316 079
Capital distribution to shareholders (13 459) - (13
459)
Total comprehensive income for the six 5 977 - 5 977
month period to 30 June 2009
Balances as at 30 June 2009 308 597 - 308 597
Share buy back and expenses (306) - (306)
Total comprehensive income for the six 45 097 - 45 097
month period to 31 December 2009
Balances as at 31 December 2009 353 388 - 353 388
Capital distribution to shareholders (13 452) - (13
452)
Total comprehensive income for the six 16 155 142 16 297
month period to 30 June 2010
Balances as at 30 June 2010 356 091 142 356 233
COMMENTARY
TRADING ENVIRONMENT
The group operates as a major supplier of refrigeration and baking equipment
to the perishable foods industry encompassing the retail, wholesale and
manufacturing segments. Trading is primarily with the food retailers in South
Africa and to a lesser extent, in Africa.
SA food retailers remain our most significant client base and it is
encouraging to see that they are still reporting reasonable results and all
remain in a sound financial position. This should allow for continued capital
expenditure on new as well as replacement equipment. However, the lack of
property development has impacted on the availability of new sites and
accordingly further store roll-outs will be limited until retail property
development recovers.
FINANCIAL RESULTS
When comparing the group`s financial results for the six months to 30 June
2010 ("current period") with the results for the six months to 30 June 2009
("prior period") it should be recognised that the prior period was an
extremely tough trading period where the group`s trading was severely impacted
by the financial crisis and global economic recession. It should also be noted
that the group`s trading levels have historically been seasonal with the
second half of the calendar year generating approximately 60% of revenue and
65% of operating income.
Group revenue increased by 14% and headline earnings per share by 177%
compared to the prior period. Operating profit margins also increased
compared to the prior period in line with increased sales volumes and a better
sales mix resulting in higher factory throughput. Exports, primarily into
Africa, comprised approximately 20% of revenue, in line with the prior period.
Cash on hand decreased from R110 million as at 31 December 2009 to R89
million, mainly due to the acquisition of Glacier Door Systems (Pty) Limited
("Glacier"), investment in plant and equipment and the capital distribution to
shareholders on 19 April 2010. In addition as a result of the increase in
trading levels additional funds have been absorbed into working capital.
The group continues to be largely ungeared (net of cash) at this time.
REVIEW OF OPERATIONS
Refrigeration businesses
The refrigeration businesses increased revenue by 20% compared to the prior
period (9% excluding the Glacier acquisition). The improvement in operating
margins resulted from the restructuring and cost saving initiatives introduced
in 2009 as well as the benefit of a relatively strong exchange rate on certain
input costs.
The business is investing some R5 million in expanding its manufacturing
capacity that will allow it to offer a wider range of products and to better
service its customers.
Baking business
The baking business increased revenue by 8% compared to the prior period.
Operating margins improved significantly as the business benefited from the
relative strength of the exchange rate and from an improved sales mix with
more internally manufactured product being sold.
The business successfully relocated to a new purpose built facility in May
2010 which now includes Marsden (the baking pan and tin manufacturing
division) which operated from a separate facility in the past. The integration
of Marsden offers many operational synergies and savings.
PROSPECTS
The first half of the year has traditionally been a difficult trading period
for the group. The economic recovery this year has been slow and is expected
to only gain momentum next year. Accordingly it may be some time before
property development and spending on capital projects recover. Under the
current uncertain conditions management finds it difficult to accurately
predict trading levels over the short term, but remains confident that the
group is well positioned for growth over the medium term.
ACQUISITIONS
Business and Catering Equipment (Pty) Limited ("BCE")
Universal advised in announcements dated 9 June and 29 July 2010 that it had
concluded an agreement to acquire all of the shares and claims on loan account
against BCE for a maximum purchase consideration of R224,2 million. BCE is
Southern Africa`s leading supplier of catering equipment, kitchen utensils,
industrial cookware and commercial kitchen appliances, also conducting
business throughout the rest of Africa and the Indian Ocean islands.
The acquisition will be funded by way of vendor funding, long-term bank
funding and available cash resources and facilities within the group.
The acquisition has not yet been implemented as it is still subject to various
conditions precedent including approval by Universal shareholders and the
relevant Competition Authority. For more information on the BCE acquisition
refer the announcements and the circular posted to shareholders on 29 July
2010.
Glacier
The group acquired a controlling interest in Glacier, effective from 1 March
2010. Glacier is a manufacturer of glass products, primarily glass doors used
in the refrigeration industry. Discussions are well advanced with Anthony, the
world`s leading manufacturer and supplier of these products, for a technology
and licence agreement that may allow the local manufacture of Anthony products
utilising Glacier`s plant and expertise.
The acquired business contributed revenue of R11 million and profit after tax
of less than R1 million during the current period. Had the acquisition been
effective from 1 January 2010 the contribution would have been R16 million to
revenue and profit after tax of less than R1 million.
Details of the acquisition are as follows (R`000):
Net assets acquired ("NAV") 7 787
Goodwill and intangible assets* 11 913
Total purchase consideration 19 700
Loans acquired 13 014
Net cash on acquisition 380
Net cash outflow for Universal 6 306
*to be allocated in terms of IFRS3 within the next 12 months.
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
Universal has adopted an annual distribution policy, thus no interim
distribution has been declared.
CAPITAL COMMITMENTS
The group has capital commitments of some R8 million for plant and equipment,
which will be financed from banking facilities and internal cash flow.
BASIS OF PREPARATION
The unaudited interim results have been prepared in accordance with
International Financial Reporting Standards ("IFRS") and comply with IAS34 -
Interim Financial Reporting, the AC500 series of interpretations, the listing
requirements of the JSE and the requirements of the Companies Act of South
Africa. The accounting policies used are consistent with those applied to the
audited financial statements for the year ended 31 December 2009. The group`s
interim results have not been audited or reviewed by the group`s auditors.
APPRECIATION
The Board extends its thanks to management, employees and the non-executive
directors for their ongoing efforts.
By order of the Board
G Khan D Paynter
Chairman Chief Executive Officer
11 August 2010
CORPORATE INFORMATION
Executive directors: D Paynter (CEO), I Morgan (CFO), J Martin, R Wilkes
Non-executive directors: G Khan (Chairman), C Brayshaw, W BrettI Essa
(alternate to G Khan), A Levy
Registration number: 1996/004343/06
Registered address: 16 Precision Street, Kya Sand, Randburg
Postal address: PO Box 3667, Randburg, 2125
Telephone: 011 462 2130
Facsimile: 011 704 3257
Company Secretary: Probity Business Services (Pty) Limited
Transfer Secretaries: Link Market Services (Pty) Limited
Auditors: PKF (Jhb) Inc
Sponsor: Java Capital
Date: 11/08/2010 16:48:03 Produced by the JSE SENS Department.
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