| Tue 21 Dec 2010, 17:16 | | CSP - Chemical Specialities Limited - Unaudited condensed consolidated interim |
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CSP
CSP
CSP - Chemical Specialities Limited - Unaudited condensed consolidated interim
results for the 6 months ended 30 September 2010
Chemical Specialities Limited
Incorporated in the Republic of South Africa
Registration Number 2005/039947/06
Share Code: CSP
ISIN: ZAE000109427
("Chemspec" or "the Company")
UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS FOR THE 6 MONTHS ENDED 30
SEPTEMBER 2010
RESULTS COMMENTARY
A loss of R46 780 415 was incurred in the six-month period to 30 September 2010
compared to a restated loss of R12 107 899 for the comparative period to 30
September 2009.
This translates to a loss of 14,04 cents per share for the six months ended 30
September 2010 compared to a restated loss of 3,91 cents per share for the
comparative period last year.
The loss was mainly as a result of lower turnover than expected because of the
delay in the full commissioning of the production facility at the Canelands
factory, inadequate stock levels and a longer lead time in recovering customers
lost during the period when the company could not supply sufficient finished
goods to meet customer needs.
In addition, overheads remain too high for the current size of the business and
the cost of finance was higher than expected because of higher levels of finance
being required to meet the cost of establishing the new manufacturing facility
and working capital.
Current trading position
With the completion of the consolidated state of the art manufacturing facility
at Canelands, there is an upward trend in turnover although still not to
acceptable levels.
The American operation remains stable with good prospects and the worldwide
operations in general should prosper from improved stock levels and overall
improvement in the management of these operations.
Improved finished good levels and marketing should also assist South African
operations in regaining market share.
Overhead costs remain too high and are currently being reviewed.
Financing and cash flow
The financing structure and cash flow of the business is also under review and
is likely to be restructured to meet future working capital requirements.
Insurance claim
A settlement of R20 million was agreed in respect of a portion of the insurance
claim resulting from the fire at Jaco Place. Negotiations continue regarding the
settlement of the remainder of the claim.
Capital expenditure
The group does not foresee any major capital expenditure being required.
Management
The previous Chief Executive Officer of the group has resigned and Bruce
MacKinnon who was Managing Director, has now become the Chief Executive Officer.
Dividend
No dividend has been declared for the interim period.
BR MacKinnon GE Ferns
Chief Executive Officer Group Financial Director
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Restated
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 September 30 September 31 March
Figures in Rand Notes 2010 2009 2010
ASSETS
Non-current assets
Plant and equipment 222 074 219 130 132 054 219 919 702
Intangible assets 19 171 723 16 241 158 19 044 056
Goodwill 23 978 154 23 082 219 23 135 704
Other financial assets 671 671 671
Deferred tax 18 193 856 1 737 920 764 926
283 418 623 171 194 022 262 865 059
Current assets
Inventories 97 436 680 93 585 535 85 038 026
Other financial assets - 2 456 343 -
Trade and other receivables 89 128 002 107 090 784 67 581 329
Receiver of revenue 13 411 - -
Cash and cash equivalents 4 189 044 4 362 258 3 557 696
190 767 137 207 494 920 156 177 051
Non-current assets
held for sale 4 - 128 882 154 -
Total assets 474 185 760 507 571 096 419 042 110
Restated
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 September 30 September 31 March
Figures in Rand Notes 2010 2009 2010
EQUITY AND LIABILITIES
Equity
Share capital 5 2 093 1 550 1 550
Share premium 5 207 631 647 115 021 345 115 021 345
Translation reserve (6 281 994) (4 916 855) (4 791 156)
Revaluation reserve 31 858 175 - 31 858 175
Retained income (37 469 605) 36 946 236 9 310 810
195 740 316 147 052 276 151 400 724
Liabilities
Non-current liabilities
Other financial liabilities 49 223 958 55 001 270 57 831 024
49 223 958 55 001 270 57 831 024
Current liabilities
Other financial liabilities 43 463 013 134 960 794 46 263 267
Trade and other payables 90 230 450 88 366 248 93 778 396
Receiver of revenue - - 317 840
Bank overdraft 95 528 023 82 190 508 69 450 859
229 221 486 305 517 550 209 810 362
Total liabilities 278 445 444 360 518 820 267 641 386
Total equity and liabilities 474 185 760 507 571 096 419 042 110
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL PERFORMANCE
Restated
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 September 30 September 31 March
Figures in Rand Notes 2010 2009 2010
Revenue 151 408 930 218 032 426 394 286 024
Cost of sales (106 828 792) (122 871 136) (223 509 466)
Gross profit 44 580 138 95 161 290 170 776 558
Other income 2 22 563 871 2 757 674 10 740 322
Operating expenses (119 920 008) (100 879 730) (216 132 222)
Operating loss (52 775 999) (2 960 766) (34 615 342)
Investment revenue 399 612 927 254 2 203 462
Finance costs (11 561 973) (15 655 344) (24 172 097)
Loss before taxation (63 938 360) (17 688 856) (56 583 977)
Taxation 17 157 945 5 580 957 16 840 652
Loss for the period (46 780 415) (12 107 899) (39 743 325)
Basic and diluted
loss per share (cents) 3 (14,04) (3,91) (12,82)
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Restated
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 September 30 September 31 March
Figures in Rand 2010 2009 2010
Loss for the period (46 780 415) (12 107 899) (39 743 325)
Other comprehensive income (1 490 838) (5 859 644) 26 124 230
Exchange differences on
translating foreign operations (1 490 838) (5 859 644) (5 733 945)
Revaluation of plant and equipment - - 44 247 465
Income tax relating to
comprehensive income - - (12 389 290)
Total comprehensive loss for
the year (48 271 253) (17 967 543) (13 619 095)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Retained
Figures in Rand capital premium income
Balance at 1 April 2009 1 550 115 021 345 49 054 135
Loss for the period (12 107 899)
Translation reserve
Balance at 30 September 2009 1 550 115 021 345 36 946 236
Revaluation of plant and equipment
Loss for the period (27 635 426)
Translation reserve
Balance at 31 March 2010 1 550 115 021 345 9 310 810
Issue of shares 543 97 670 646
Share issue expenses (5 060 344)
Loss for the period (46 780 415)
Translation reserve
Balance at 30 September 2010 2 093 207 631 647 (37 469 605)
Revaluation Translation
Figures in Rand reserve reserve Total
Balance at 1 April 2009 - 942 789 165 019 819
Loss for the period (12 107 899)
Translation reserve (5 859 644) (5 859 644)
Balance at 30 September 2009 - (4 916 855) 147 052 276
Revaluation of plant and equipment 31 858 175 31 858 175
Loss for the period (27 635 426)
Translation reserve 125 699 125 699
Balance at 31 March 2010 31 858 175 (4 791 156) 151 400 724
Issue of shares 97 671 189
Share issue expenses (5 060 344)
Loss for the period (46 780 415)
Translation reserve (1 490 838) (1 490 838)
Balance at 30 September 2010 31 858 175 (6 281 994) 195 740 316
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Restated
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 September 30 September 31 March
Figures in Rand 2010 2009 2010
Cash flows from operating
activities
Cash (utilised)/generated
from operations (73 680 236) 40 966 940 68 844 598
Investment revenue 399 612 927 254 2 203 462
Finance costs (11 561 973) (15 655 344) (24 172 097)
Taxation paid (504 840) (20 700) (395 042)
Net cash from operating
activities (85 347 437) 26 218 150 46 480 921
Cash flows from investing
activities
Acquisition of plant
and equipment (19 649 046) (25 915 710) (73 712 941)
Proceeds on sale of plant
and equipment 85 600 87 000
Acquisition of intangible assets (1 652 858) (2 628 722) (7 280 375)
Proceeds of financial assets 4 012 426 4 000 000
Proceeds on sale of non-current
assets held for sale 130 000 000
Net cash from investing
activities (21 301 904) (24 446 406) 53 093 684
Cash flows from financing
activities
Proceeds on share issue 92 610 845 - -
(Repayment)/proceeds of other
financial liabilities (11 407 320) 1 112 041 (84 755 733)
Net cash from financing
activities 81 203 525 1 112 041 (84 755 733)
Total cash movement for
the period (25 445 816) 2 883 785 14 818 872
Overdraft at the beginning
of the period (65 893 163) (80 712 035) (80 712 035)
Cash and cash equivalents at
the end of the period (91 338 979) (77 828 250) (65 893 163)
Reconciled as follows:
Cash and cash equivalents 4 189 044 4 362 258 3 557 696
Bank overdraft (95 528 023) (82 190 508) (69 450 859)
Cash and cash equivalents at
the end of the period (91 338 979) (77 828 250) (65 893 163)
CONDENSED CONSOLIDATED SEGMENT REPORT
Restated
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 September 30 September 31 March
Figures in Rand 2010 2009 2010
Segment revenues
Buy-ins 17 557 664 15 433 375 25 729 726
Automotive 103 773 501 127 110 804 227 337 096
Decorative 24 924 231 21 040 001 40 428 115
Industrial/Wood finish 50 193 870 65 229 964 122 836 178
Solvents 6 475 359 13 283 034 22 220 921
Other 107 952 - 795 076
Total of all segments 203 032 577 242 097 178 439 347 112
Eliminations of intercompany
revenue (51 623 647) (24 064 752) (45 061 088)
Consolidated revenue 151 408 930 218 032 426 394 286 024
External customers
South Africa 81 835 448 126 968 725 242 389 835
International 69 573 482 91 063 701 151 896 189
151 408 930 218 032 426 394 286 024
Segment result
Buy-ins (4 273 272) 637 912 (3 119 763)
Automotive (37 168 014) (2 023 854) (18 086 822)
Decorative (5 982 723) (553 248) (7 551 516)
Industrial/Wood finish (15 001 516) (1 739 340) (24 246 653)
Solvents (1 512 835) (278 990) (3 543 065)
Other - (43 493) (36 158)
Loss before taxation (63 938 360) (4 001 013) (56 583 977)
Taxation 17 157 945 (8 106 886) 16 840 652
Loss for the year (46 780 415) (12 107 899) (39 743 325)
Segment asset
Buy-ins 42 676 718 36 177 201 24 540 593
Automotive 241 834 738 268 321 924 216 830 414
Decorative 56 902 291 44 413 955 38 559 676
Industrial/Wood finish 118 546 440 130 618 470 117 159 144
Solvents 14 225 573 28 039 546 21 193 952
Other - - 758 331
Total of all segments 474 185 760 507 571 096 419 042 110
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. Basis of preparation
These condensed consolidated interim financial statements have been prepared in
accordance with IAS 34 - Interim Financial Reporting, International Financial
Reporting Standards (IFRS), the Companies Act of South Africa and the JSE
Limited Listings Requirements.
The accounting policies and methods of measurement, recognition and computation
applied in the preparation of these condensed consolidated interim financial
statements are consistent with those applied in the group`s most recent audited
annual financial statements for the year ended 31 March 2010.
The results for the period are not necessarily indicative of the results for the
entire year, and these condensed consolidated interim financial statements
should be read in conjunction with the audited annual financial statements for
the year ended 31 March 2010.
The preparation of these condensed consolidated interim financial statements
requires the use of estimates and assumptions that affect the values of assets
and liabilities at the reporting date, as well as the determination of income
and expenses during the reporting period. Although these estimates are based on
management`s best knowledge of current events and actions that the group may
undertake in the future, actual results may differ from these estimates.
The board acknowledges its responsibility for the preparation of these condensed
consolidated interim financial statements in accordance with IFRS, the Companies
Act of South Africa and the JSE Limited Listings Requirements.
Restated
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 September 30 September 31 March
Figures in Rand 2010 2009 2010
2. Other income
Other income comprises:
Profit/(loss) on sale of plant
and equipment - (43 493) 480 043
Insurance claim 17 543 859 -
Franchise fees 867 576 1 728 353 3 002 551
Foreign exchange gain/(loss) 355 775 (1 469 340)
Rental income 3 245 869 2 466 741 7 121 340
Other sundry income 550 792 75 413 136 388
22 563 871 2 757 674 10 740 322
Restated
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 September 30 September 31 March
Figures in Rand 2010 2009 2010
3. Basis and diluted loss
and headline loss per share
Basic and diluted loss per
share (cents) (14,04) (3,91) (12,82)
Basic and diluted headline
loss per share (cents) (14,04) (3,90) (12,95)
Total loss attributable to
equity holders (46 780 415) (12 107 899) (39 743 325)
Non-headline earnings
Add/(less) loss/(profit) on
sale of plant and equipment - 43 493 (480 043)
Total tax effect of adjustments - (12 613) 93 112
Headline loss (46 780 415) (12 077 019) (40 130 256)
Weighted average number of
ordinary shares in issue 333 127 968 310 000 000 310 000 000
4. Non-current assets held for sale
40 New Glasgow Road, Canelands - 128 882 154 -
Properties sold consist of:
Ervin 105, 106, 108, 109 and 205, Canelands Extension 6, KwaZulu-Natal, held
under Title Deed No. T23011/2008; and the remaining extent of portion 1171 and
the remaining extent of portion 1199 of the Farm Cotton Lands No. 1575, all held
under Title Deed No. T23012/2008.
All suspensive conditions of the sale agreement were met and the transfer was
completed on 16 February 2010.
The sale price was R130 000 000 (excluding VAT).
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Restated
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 September 30 September 31 March
Figures in Rand 2010 2009 2010
5. Changes in share capital and
share premium
Share capital 1 550 1 550 1 550
August 2010:
Rights issue 108 523 544 shares 543
2 093 1 550 1 550
Share premium: 115 021 345 115 021 345 115 021 345
August 2010:
Rights issue 108 523 544 shares 97 670 646
Less share issue expenses (5 060 344)
207 631 647 115 021 345 115 021 345
Reconciliation of issued share
capital
Total share capital in issue at
the beginning of the year 310 000 000 310 000 000 310 000 000
Rights issue 108 523 544 - -
Total share capital in issue at
the end of the year 418 523 544 310 000 000 310 000 000
6. Related party transactions
The property sale in note 4, non-current assets held for sale, is a related
party transaction as previously disclosed in the annual report.
There have been no significant changes in related party relationships since the
previous year or significant transactions during the year, other than in the
normal course of business.
Previously
reported Restated
Six months Six months
ended ended
30 September 30 September
Figures in Rand 2009 Restatement 2009
7. Restatement of comparatives
Insurance claim
Due to the delay in settlement
of the Jaco Place fire insurance
claim, as previously reported, the
accrual for the claim receivable
was derecognised.
The effects of the
derecognition are as follows:
Consolidated statement of
financial performance
Other income 55 606 488 (52 848 814) 2 757 674
Operating expenses (104 843 391) 3 963 661 (100 879 730)
Taxation (8 106 886) 13 687 843 5 580 957
Profit/(loss) for the period 23 089 411 (35 197 310) (12 107 899)
Consolidated statement of
financial position
Trade and other receivables 168 754 893 (61 664 109) 107 090 784
Trade and other payables (92 991 056) 4 624 808 (88 366 248)
Deferred tax (14 418 205) 16 156 125 1 737 920
Retained income 77 829 412 (40 883 176) 36 946 236
Decrease in basic and diluted
earnings per share (cents) - (11,35) -
Decrease in basic and diluted
headline earnings per share (cents) - (11,35) -
Verulam
21 December 2010
Designated Advisor
QuestCo Sponsors (Pty) Limited
Date: 21/12/2010 17:16:01 Produced by the JSE SENS Department.
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