| Mon 22 Nov 2010, 15:15 | | ASO - Austro Group - Reviewed financial results for the year ended 31 August |
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ASO
ASO
ASO - Austro Group - Reviewed financial results for the year ended 31 August
2010
AUSTRO GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2001/029771/06)
Share code: ASO ISIN: ZAE000090882
("the Group")
REVIEWED FINANCIAL RESULTS FOR THE YEAR ENDED 31 AUGUST 2010
SUMMARY
RevenueR401,9 million
Profit from operationsR36,6 million
Cash generated from operations R120,9 million
Cash dividendsper share 4,0 cents
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Reviewed Restated
31 August 31 August
2010 2009
R`000 R`000
Revenue 401 943 580 519
Cost of sales (242 655) (343 925)
Gross profit 159 288 236 594
Other operating income 6 430 2 465
Operating expenses (129 082) (151 019)
Profit from operations 36 636 88 040
Interest received 8 567 8 123
Interest paid (11 546) (24 766)
Profit before taxation 33 657 71 397
Taxation expense (10 527) (27 692)
Net profit for the year 23 130 43 705
Other comprehensive income for the - -
year
Total comprehensive income for the 23 130 43 705
year
Earnings per share (cents) 5,4 10,1
Headline earnings and diluted 5,2 10,0
headline earnings per share (cents)
Dividends per share (cents) 4,0 2,0
Reconciliation of earnings to
headline earnings:
Net profit for the year 23 130 43 705
Net (profit)/loss on disposal of (1 047) (504)
property, plant and equipment
Tax effect thereon 147 141
Headline earnings 22 230 43 342
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Restated Restated
31 August 31 August 31 August
2010 2009 2008
R`000 R`000 R`000
Assets
Non-current assets 273 403 281 819 290 093
Property, plant and 43 597 51 064 55 760
equipment
Goodwill 229 742 229 742 228 029
Deferred taxation 64 1 013 6 304
Current assets 372 160 412 972 559 365
Inventories 254 053 336 110 414 416
Trade and other 75 160 70 773 142 354
receivables
Taxation receivable 557 3 856 136
Cash resources 42 390 2 233 2 459
Total assets 645 563 694 791 849 458
Equity and liabilities
Capital and reserves 545 705 539 832 505 433
Share capital 4 4 4
Share premium 322 103 322 103 308 003
Shares to be issued - - 14 778
Accumulated profits 223 598 217 725 182 648
Non-current liabilities 3 805 10 812 9 061
Long-term liability - - 1 370 3 453
interest bearing
Long-term liability - 3 426 6 851 4 613
interest free
Deferred taxation 379 2 591 995
Current liabilities 96 053 144 147 334 964
Current portion of long- - 600 559
term liability -
interest bearing
Current portion of long- 3 426 3 426 15 534
term liability -
interest free
Trade and other payables 62 730 35 076 201 486
Provisions - - 1 394
Taxation payable 4 629 5 400 42 993
Bank overdraft 25 268 99 645 72 998
Total equity and 645 563 694 791 849 458
liabilities
Number of shares in 431 413 384 431 413 384 425 927 491
issue
Weighted average number 431 413 384 431 413 384 428 220 774
of shares
Net asset value per 126,5 125,1 118,0
share (cents)
Tangible net asset value 73,2 71,9 65,1
per share (cents)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed Restated
31 August 31 August
2010 2009
R`000 R`000
Cash flows from operating activities 120 894 (5 632)
Cash generated by operations 150 392 81 758
Interest received 8 559 8 123
Interest paid (11 538) (24 766)
Dividends paid (17 257) (8 628)
Taxation paid (9 262) (62 119)
Cash flows from investing activities (965) (5 292)
Cash flows from financing activities (5 395) (15 949)
Net increase/(decrease) in cash 114 534 (26 873)
resources
Cash resources at beginning of year (97 412) (70 539)
Cash resources at end of year 17 122 (97 412)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Reviewed Restated
31 August 31 August
2010 2009
R`000 R`000
Share capital and share premium 322 107 322 107
Balance at beginning of year 322 107 322 785
Issued during year - 14 757
Movement in shares to be issued - (14 778)
reserve
Share issue expenses - (657)
Accumulated profits 223 598 217 725
Balance at beginning of year 217 725 182 648
Total comprehensive income for the 23 130 43 705
year
Dividends declared (17 257) (8 628)
Total capital and reserves 545 705 539 832
CONDENSED SEGMENTAL ANALYSIS
Revenue Profit before tax Net assets
Reviewed Restated Reviewed Restated Reviewed Restated
31 31 31 31 31 31
August August August August August August
2010 2009 2010 2009 2010 2009
R`000 R`000 R`000 R`000 R`000 R`000
Power 268 426 422 501 32 102 78 249 439 490 411 439
Gross 285 631 425 750 49 307 81 498 - -
Intersegment (17 205) (3 249) (17 205) (3 249) - -
Wood 133 517 158 018 1 555 (6 852) 106 215 128 393
Gross 143 238 153 365 11 276 (11 504) - -
Intersegment (9 721) 4 653 (9 721) 4 652 - -
Total 401 943 580 519 33 657 71 397 545 705 539 832
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 highlight was the elimination of all significant debt on the balance
sheet and cash generated by operating activities of R120,9 million.
Consolidated statement of comprehensive income
Revenue decreased from R580,5 million to R401,9 million. This was mainly
due to the effect of the depressed economy.
Profit from operations decreased by 58,4% to R36,6 million (2009: R88,0
million) as a result of the sharp reduction in revenues in the Power
Division.
Earnings per share decreased to 5,4 cents per share (2009: 10,1 cents per
share) while headline earnings per share decreased to 5,2 cents per share
(2009: 10,0 cents per share).
Consolidated statement of financial position
A significant improvement was made to the balance sheet in this period.
Group gearing reduced to 5,3% (2009: 20,0%). The Group`s inventory has
reduced by R82,1 million to R254,1 million at the period ended
31 August 2010. This has been a specific area of management focus.
Trade receivables are being maintained at acceptable levels.
The Group currently has no debt to service.
After an interim dividend of 2 cents per share, an equal final dividend
has been declared subsequent to the year-end.
Condensed consolidated statement of cash flows
Due to specific management focus, during the period under review,
the Group generated cash of R120,9 million (2009: R(5,6) 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 period`s financial results.
Based on Senior Counsel advice an agreement entered into between HT Heye
and other related parties 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).
The agreement provides for an additional payment based on the average
share price at 30 September 2009. The liability will be settled in
three equal instalments, the first payment was made in 2010.
R`000 Goodwill Liability
interest
free
31 August 2008
Closing balance previously stated 221 110 -
Adjustment 2008 6 919 6 919
Closing balance restated 228 029 6 919
31 August 2009
Closing balance previously stated 219 465 -
Adjustment 2008 6 919 6 919
Closing balance restated 226 384 6 919
Adjustment 2009 3 358 3 358
Closing balance restated 229 742 10 277
During the current year it was determined that Secondary Tax on Companies
(STC) to the value of R2,9 million should have been recorded in the books of
the company prior to the listing; but had not been accounted for previously.
The amount is not recoverable from the vendors as previously stated in the
interim results and has therefore been charged to taxation.
R`000 Taxation Accumulated
payable profits
31 August 2008
Closing balance previously stated 40 018 185 623
Adjustment 2008 2 975 (2 975)
Closing balance restated 42 993 182 648
31 August 2009
Closing balance previously stated 2 425 220 700
Adjustment 2008 2 975 (2 975)
Closing balance restated 5 400 217 725
SUBSEQUENT EVENTS
There have been no material events subsequent to the year-end that
have not been reflected in the financial statements for that period.
OPERATING REVIEW
Power
Revenue decreased by 36,5% to R268,4 million (2009: R422,5 million).
This Division contributed 66,8% to Group revenue (2009: 72,8%).
New Way, the supplier and manufacturer of generator sets, industrial
diesel engines and related components, experienced a slow start, but
has a reasonable order book going forward.
Neptune, the generator rental business, continues to produce reasonable
results due to the Gauteng operation now being profitable, and an
improvement in the Cape Town operations in the second half of the year.
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 forecasts.
This Division contributed 33,2% (2009: 27,2%) to Group revenue. Revenue
decreased by 15,5% to R133,5 million (2009: R158,0 million).
The Division`s focus on asset management resulted in a reduction of working
capital in excess of R22 million.
Within the Division the KZN and Gauteng operations showed a good improvement
and efforts made to improve the performance of the Cape Town Operations, are
proving successful.
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 in the Power Division the consolidation of its Gauteng
operations into one facility in Alberton, which will result in efficiencies
in warehousing, manufacturing and logistics, is progressing well.
Neptune`s Gauteng operation which started operating in late 2008 has
increased 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,
due to its lower cost and asset base.
It is anticipated that market growth will remain relatively flat in the
forthcoming year. The Wood Division has identified a range of new products
which it will introduce during the course of the year. Cost containment will
remain a major focus in the current year.
CASH DIVIDEND DISTRIBUTION
A final dividend of 2,0 cents per share for the period ended 31 August 2010,has
been declared subsequent to the year-end. The total dividends to be paid out of
the current year`s earnings are 4,0 cents per share.
The salient dates in respect of the dividend are as follows
Last day to trade cum dividend on Thursday, 9 December 2010
Trading ex dividend commences on Friday, 10 December 2010
Record date on Friday, 17 December 2010
Payment of dividend on Monday, 20 December 2010
Shareholders may not dematerialise or rematerialise their Austro shares
between Friday, 10 December 2010 and Friday, 17 December 2010.
BASIS OF PREPARATION
These consolidated results have been prepared in accordance with
International Financial Reporting Standards ("IFRS"), Interim Financial
Reporting (IAS34), AC500 series of interpretations, the JSE Listing
requirements and comply with the South African Companies Act (1973), as
amended. The accounting policies applied are consistent with those
applied in the prior year, except for the adoption of IFRS8 - Operating
Segments and IAS1 Revised. These consolidated annual financial results
have been reviewed by PKF (Jhb) Inc. Their unqualified review opinion is
available for inspection at Austro Group Limited`s registered address.
CHANGES TO THE BOARD OF DIRECTORS
During the period JA Bennie resigned from the Board of Directors.
Philip Sigsworth has been appointed in his stead with effect from
24 November 2010.
By order of the Board
AJ Phillips U Schackermann
Chairman Chairman of Audit Committee
Johannesburg
22 November 2010
Non-executive directors:
AJ Phillips* (Chairman)
DS Brouze
GS Nzalo*
U Schackermann* (German)
(* Independent)
Executive directors:
JO Freed (Alt JR Freed)
RE Moss
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
Visit our website: www.austrogrouplimited.com
Date: 22/11/2010 15:15:02 Produced by the JSE SENS Department.
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