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FWD
FWD
FWD - Freeworld Coatings Limited - Unaudited interim results for the six
months ended 31 March 2011
FREEWORLD COATINGS LIMITED
(Incorporated in the Republic of South Africa)?
(Registration number 2007/021624/06)
Share code: FWD ISIN: ZAE000109450
("Freeworld Coatings", "the company" or "the Group")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2011
- Trading conditions remained difficult, as expected.
- Revenue maintained at similar levels.
- EBITDA excluding unusual items 9% lower.
- Well positioned for any economic upturn.
COMMENTARY
FREEWORLD COATINGS CEO, NAUMAN MALIK SAID:
"Trading conditions in the prevailing economic climate remained difficult in
the first half of the year as predicted. Excluding unusual items, our trading
performance was robust with the adjusted EBITDA being 9% lower on similar
turnover levels. With Freeworld Coatings now part of the Kansai Paint group,
we expect to utilize Kansai`s global experiences to introduce new
technologies and enter new markets, while continuing to invest in our strong
brands and focus on controlling costs."
Freeworld Coatings is a leader in the marketing and manufacture of Decorative
and Performance Coatings in all Southern African territories, with some
presence and export sales in other regions.
FINANCIAL REVIEW
Revenue from continuing operations at R1 385 million was marginally higher
than the comparative period, with earnings before interest, depreciation and
tax (`EBITDA`) excluding unusual items of R204 million being 9% down due to
particularly tough trading conditions in the Performance Coatings segment.
The reported EBITDA of R152 million was 32% lower due to the following
unusual items:
- Costs occasioned by the Kansai transaction of R20 million.
- IFRS 2 charge of R30 million on the second allocation of the Share
Appreciation Rights referred to in the Annual Report, approved in September
2008 and issued in February 2011.
Operating profit of R107 million was impacted by a higher depreciation and
amortisation charge, as a consequence of the capital expenditure program.
Net finance costs for the period amounted to R38 million and were 18% lower
due to the reduction in interest rates, as the bulk of our borrowings are
linked to JIBAR.
The taxation charge of R27 million translates into an effective tax rate,
excluding STC, of 36,8%, which compares adversely against the comparative
period`s 31,3% and the corporate tax rate of 28%, as there is limited tax
relief on the transaction costs.
Income from associates of R9 million was 24% higher than the comparative
period with improved results from DuPont Freeworld, which supplies coatings
to the motor manufacturers, and Valspar, which supplies can coatings,
compensating for lower powder coatings sales in the Akzo Nobel business.
Headline earnings per share at 24 cents were 50% lower than the comparative
period for the reasons stated above, with earnings per share at 18 cents
being 54% down.
Cash generated from operations at R68 million was 47% down on the comparative
period due to lower EBITDA and an increased investment in working capital.
Net cash used in investing activities totalled R80 million, and includes R67
million of capital expenditure and R22 million of intangibles.
Interest-bearing debt, net of cash, was 2% higher at R881 million and
translates into a debt/equity ratio of 29%, as against last March`s 32%.
DECORATIVE COATINGS SEGMENT
The Decorative Coatings segment performed well increasing revenue by 3%, with
EBITDA excluding unusual items at R148 million only marginally lower than the
comparative period. The Retail channel remained resilient, but consumers`
discretionary spend was adversely impacted and hence led to some product mix
changes. The Commercial sector remains under pressure due to the reduction in
building plans passed, and the ongoing delay in the flow through of South
Africa`s R800 billion infrastructural program. In addition, tight credit
conditions are also still holding back any significant redecoration of large
properties.
The African territories continued to perform well on the back of the
increased demand for commodities, and together with good export volumes
benefited the first half`s trading results.
PERFORMANCE COATINGS SEGMENT
The Performance Coatings segment`s revenues were 3% lower than the
comparative period with EBITDA declining by 33% to R42 million due to tough
market conditions, in South Africa and around the world. Reduced demand in
the automotive refinish sector compounded by product mix changes and
increased competitive pressures. Costs associated with the expansion of our
distribution footprint also impacted the results. Colourant Systems recorded
increased sales levels in South Africa, but was adversely affected by weaker
demand from its export customers in Australia and Europe.
DIVIDEND
The Board has decided not to pay an interim dividend.
EVENTS SUBSEQUENT TO THE YEAR-END
On 18 April 2011, the Competition Commission conditionally approved the
proposed merger of Kansai Paint Co., Ltd and Freeworld Coatings Limited.
Kansai accepted these conditions and declared its offer of R12 per share
unconditional in all respects. Kansai now holds 92,4% of the issued shares of
Freeworld.
On 28 April 2011, Messrs RM Godsell, MM Ngoasheng, DB Ntsebeza, PM Surgey and
Ms B Ngonyama resigned from the Board, with Messrs H Ishino, AJ Phillips, HM
Bharuka, S Kobayashi and NH Malik being appointed to the Board.
On 31 May 2011, the Australian business, which comprises the Glen Waverley
site and manufacturing assets together with the related employees, was sold.
On 3 June 2011, Mr AJ Lamprecht announced his retirement and resigned from
the Board, with Mr NH Malik being appointed as CEO in his stead. Following
his appointment, Mr Malik becomes an executive director on the Board.
OUTLOOK
Whilst the prevailing economic climate is expected to improve, it is subject
to a number of uncertainties. On the international front these include
sovereign debt problems in Europe and the possibility that commodity prices
could increase in response to tensions in the Middle East. These will
inevitably flow through to the local environment, which is also subject to
inflation pressures.
The Board is confident that Freeworld Coatings will continue to achieve
competitive performance in these challenging and uncertain economic
circumstances.
H Ishino NH Malik
Chairman Chief Executive Officer
On behalf of the board
ELA Chamberlain
Group Company Secretary
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
R`000 Share Foreign Net Cash Equity
capital currency actuarial flow Compensa-
and trans- gains/ hedge tion
premium lation (losses) reserve reserves
reserves on post-
retire-
ment
benefits
Balance at 1 2 583 409 (610) 847 (9 618) (21 697)
October 2009
Total - (5 547) - 2 572 -
comprehensive
income for the
period
Freeworld Coatings - - - - 1 029
Limited SARs
expense recognised
in equity
New shares issued 1 101 - - - -
during the period
Dividends on - - - - -
ordinary shares
Balance at 31 2 584 510 (6 157) 847 (7 046) (20 668)
March 2010
Total - (3 751) 659 3 272
comprehensive
income for the
period
Barloworld Limited - - - - (5 508)
Share
Option/Rights
expense recognised
in equity
Freeworld Coatings - - - - 2 907
Limited SARs
expense recognised
in equity
Purchase of - - - -
additional share
in subsidiary
Balance at 1 2 584 510 (9 908) 1 506 (3 774) (23 269)
October 2010
Total - (1 542) - 3 774 -
comprehensive
income for the
period
Barloworld Limited - - - - (1 132)
Share
Option/Rights
expense recognised
in equity
Freeworld Coatings - - - - 27 716
Limited SARs
expense recognised
in equity
Dividends on - - - - -
ordinary shares
Balance at 31 2 584 510 (11 450) 1 506 - 3 315
March 2011
R`000 Total Total Attribut- Non- Total
other retained able Con- equity
reserves income to trolling
Freeworld interest
Coatings
Limited
Share-
holders
Balance at 1 (31 078) 292 292 2 844 623 25 140 2 869 763
October 2009
Total (2 975) 80 069 77 094 2 280 79 374
comprehensive
income for the
period
Freeworld 1 029 - 1 029 - 1 029
Coatings Limited
SARs expense
recognised in
equity
New shares issued - - 1 101 - 1 101
during the period
Dividends on - (14 271) (14 271) (3 359) (17 630)
ordinary shares
Balance at 31 (33 024) 358 090 2 909 576 24 061 2 933 637
March 2010
Total 180 70 744 70 924 3 541 74 465
comprehensive
income for the
period
Barloworld (5 508) 3 668 (1 840) - (1 840)
Limited Share
Option/Rights
expense
recognised in
equity
Freeworld 2 907 - 2 907 - 2 907
Coatings Limited
SARs expense
recognised in
equity
Purchase of - (1 622) (1 622) (2 841) (4 463)
additional share
in subsidiary
Balance at 1 (35 445) 430 880 2 979 945 24 761 3 004 706
October 2010
Total 2 232 37 052 39 284 921 40 205
comprehensive
income for the
period
Barloworld (1 132) - (1 132) - (1 132)
Limited Share
Option/Rights
expense
recognised in
equity
Freeworld 27 716 - 27 716 - 27 716
Coatings Limited
SARs expense
recognised in
equity
Dividends on - (14 271) (14 271) (5 922) (20 193)
ordinary shares
Balance at 31 (6 629) 453 661 3 031 542 19 760 3 051 302
March 2011
SEGMENTAL REPORTING
For management purposes, the group is organised into two major operating
divisions, namely Decorative and Performance Coatings.
Decorative Coatings covers the architectural and decorative customer and
product segments describing products used primarily in the do it yourself
(`DIY`) and building/construction sectors of the coatings market. It covers
interior and exterior broad wall.
Performance Coatings describing high technology products used for
applications primarily in the construction, industrial and automotive
industries. Performance Coatings are typically utilised to safeguard against:
- chronic exposure to corrosive, caustic or acidic agents, chemical mixtures
or solutions;
- repeated exposure to high temperatures;
- exterior exposure of steel and non-ferrous metal structures;
- repeated heavy abrasion, including mechanical wear and repeated scrubbing
with industrial grade solvents, cleansers or scouring agents.
Information regarding the group`s reportable segments is presented below.
Six months ended 31 March 2011
Income statement Decora- Perform- Elimina- Total
R`000 tive ance tions Group
Coatings Coatings
Consolidated segment 987 709 443 710 (46 114) 1 385 305
revenue
Segment result
EBITDA before fair 105 591 43 993 1 361 150 945
value adjustments
Fair value 3 127 (2 237) - 890
adjustments
EBITDA after fair 108 718 41 756 1 361 151 835
value adjustments
Depreciation and (32 576) (12 442) - (45 018)
Amortisation
Segmental operating 76 142 29 314 1 361 106 817
profit
Finance costs (41 481)
Income from 3 188
investments
Income tax expense (26 821)
Profit after tax 41 703
Income from 8 505
associates
Profit for the period (12 235)
from discontinued
operations
Profit for the period 37 973
Attributable to (921)
minority shareholders
Attributable to 37 052
Freeworld Coatings
Limited shareholders
Financial position March 2011
R`000
Segmental total 3 870 722 838 150 (287 237) 4 421 635
assets
Segmental non (648 647) (260 069) 188 622 (720 094)
interest bearing
liabilities
Segmental net 3 222 075 578 081 (98 615) 3 701 541
operating assets
Segmental interest (982 344) (13 553) 98 615 (897 282)
bearing liabilities
Segmental cash and 16 126 - - 16 126
cash equivalents
Segmental net assets 2 255 857 564 528 - 2 820 385
Investment in 200 838
associates
Non-current assets 32 149
held for sale
Net assets 3 053 372
Six months ended 31 March 2010
Income statement Decora-tive Perform-ance Elimina- Total Group
R`000 Coatings Coatings tions
Consolidated segment 962 715 457 334 (42 056) 1 377 993
revenue
Segment result
EBITDA before fair value 175 234 64 508 (5 384) 234 358
adjustments
Fair value adjustments (8 119) (1 820) - (9 939)
EBITDA after fair value 167 115 62 688 (5 384) 224 419
adjustments
Depreciation and (28 765) (11 373) - (40 138)
Amortisation
Segmental operating 138 350 51 315 (5 384) 184 281
profit
Finance costs (52 734)
Income from investments 6 289
Income tax expense (43 696)
Profit after tax 94 140
Income from associates 6 872
Profit for the period (18 663)
from discontinued
operations
Profit for the period 82 349
Attributable to minority (2 280)
shareholders
Attributable to Freeworld 80 069
Coatings Limited
shareholders
Financial position March 2010
R`000
Segmental total assets 3 700 197 828 393 (224 873) 4 303 717
Segmental non interest (616 449) (227 780) 149 428 (694 801)
bearing liabilities
Segmental net operating 3 083 748 600 613 (75 445) 3 608 916
assets
Segmental interest (967 089) (33 192) 75 445 (924 836)
bearing liabilities
Segmental cash and cash 59 048 2 303 - 61 351
equivalents
Segmental net assets 2 175 707 569 724 - 2 745 431
Investment in associates 188 206
Non-current assets held -
for sale
Net assets 2 933 637
12 months ended 30 September 2010
Income statement Decora- Perform-ance Elimina- Total Group
R`000 tive Coatings tions
Coatings
Consolidated segment 1 933 430 911 097 (88 434) 2 756 093
revenue
Segment result
EBITDA before fair value 322 426 118 976 (2 116) 439 286
adjustments
Fair value adjustments (13 565) (3 671) (17 236)
EBITDA after fair value 308 861 115 305 (2 116) 422 050
adjustments
Depreciation and (60 143) (23 587) 0 (83 730)
Amortisation
Segmental operating 248 718 91 718 (2 116) 338 320
profit
Finance costs (100 679)
Income from investments 11 919
Income tax expense (72 774)
Profit after tax 176 786
Income from associates 16 370
Profit for the period (36 523)
from discontinued
operations
Profit for the period 156 633
Attributable to minority (5 819)
shareholders
Attributable to Freeworld 150 814
Coatings Limited
shareholders
Financial position September 2010
R`000
Segmental total assets 3 738 743 883 441 (276 973) 4 345 211
Segmental non interest (769 420) (198 754) 202 575 (765 599)
bearing liabilities
Segmental net operating 2 969 323 684 687 (74 398) 3 579 612
assets
Segmental interest (832 532) (66 510) 74 398 (824 644)
bearing liabilities
Segmental cash and cash 49 967 2 327 - 52 294
equivalents
Segmental net assets 2 186 758 620 504 - 2 807 262
Investment in associates 197 444
Non-current assets held -
for sale
Net assets 3 004 706
CONDENSED CONSOLIDATED
INCOME STATEMENT
for the six months ended 31 March
R`000 Notes Unaudited Unaudited Audited
6 months 6 months 12 months
March March September
2011 2010 2010
Continuing operations 1 385 305 1 377 993 2 756 093
Revenue
Earnings before interest, tax, 150 945 234 358 439 286
depreciation and amortisation
and fair value adjustments
Fair value adjustments 890 (9 939) (17 236)
Earnings before interest, tax, 151 835 224 419 422 050
depreciation and amortisation
(EBITDA)
Depreciation and amortisation (45 018) (40 138) (83 730)
Operating profit 106 817 184 281 338 320
Finance costs (41 481) (52 734) (100 679)
Income from investments 3 188 6 289 11 919
Profit before taxation 68 524 137 836 249 560
Income tax expense (26 821) (43 696) (72 774)
Profit after taxation 41 703 94 140 176 786
Income from associates 8 505 6 872 16 370
Profit for the period from 50 208 101 012 193 156
continuing operations
Discontinued operations
Loss for the period from 11 (12 235) (18 663) (36 523)
discontinued operations
Profit for the period 37 973 82 349 156 633
Attributable to:
Non-controlling interest 921 2 280 5 819
Equity holders of Freeworld 37 052 80 069 150 814
Coatings Limited
Earnings per share (basic and 8 18 39 74
diluted in cents)
CONDENSED CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
for the six months ended 31 March
R`000 Unaudited Unaudited Audited
6 months 6 months 12 months
March March September
2011 2010 2010
Profit for the year 37 973 82 349 156 633
Other comprehensive income
Movement on foreign currency (1 542) (5 547) (9 298)
translation reserve
Increase in fair value of hedging 3 774 2 572 8 116
instruments
Other comprehensive income for the 2 232 (2 975) (523)
period before tax
Total comprehensive income for the 40 205 79 374 153 838
period
Attributable to:
Non-controlling interest 921 2 280 5 819
Equity holders of Freeworld Coatings 39 284 77 094 148 019
Limited
Total comprehensive income for the 40 205 79 374 153 838
period
CONDENSED CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
as at 31 March
R`000 Unaudited Unaudited Audited
March March September
2011 2010 2010
Assets
Non-current assets 3 650 376 3 568 418 3 632 318
Property, plant and equipment 710 868 665 261 709 978
Goodwill 1 889 201 1 892 460 1 890 507
Intangible assets 794 101 785 174 785 432
Investment in associates 200 838 188 206 197 444
Finance lease receivables 1 047 33 -
Long term loans and receivables 11 264 7 421 17 153
Deferred taxation assets 43 057 29 863 31 804
Current assets 988 223 984 856 962 631
Inventories 468 197 428 974 457 213
Trade and other receivables 496 504 487 084 447 278
Taxation 7 396 7 447 5 846
Cash and cash equivalents 16 126 61 351 52 294
Non-current assets held for sale 32 149 - -
Total assets 4 670 748 4 553 274 4 594 949
Equity and liabilities
Capital and reserves
Share capital and premium 2 584 510 2 584 510 2 584 510
Other reserves (6 629) (33 024) (35 445)
Retained income 453 661 358 090 430 880
Equity attributable to shareholders 3 031 542 2 909 576 2 979 945
of Freeworld Coatings Limited
Non-controlling interest 19 760 24 061 24 761
Total equity 3 051 302 2 933 637 3 004 706
Non-current liabilities 876 144 908 207 906 183
Interest-bearing liabilities 597 335 632 729 638 308
Deferred taxation liabilities 252 393 250 192 251 709
Provisions 26 416 25 286 16 166
Current liabilities 737 486 711 430 684 060
Trade and other payables 430 255 407 767 471 808
Provisions 1 030 2 705 16 307
Current tax payable 5 905 8 851 9 609
Short term loans and bank overdrafts 300 296 292 107 186 336
Liabilities associated with non- 5 816 - -
current assets held for sale
Total equity and liabilities 4 670 748 4 553 274 4 594 949
CONDENSED CONSOLIDATED
CASH FLOW STATEMENT
for the six months ended 31 March
R`000 Unaudited Unaudited Audited
6 months 6 months 12 months
March March September
2011 2010 2010
Cash flows from operating
activities
Cash receipts from customers 1 503 300 1 366 896 2 791 378
Cash paid to employees and (1 435 329) (1 238 894) (2 399 779)
suppliers
Cash generated from operations 67 971 128 002 391 599
Finance costs (41 921) (54 179) (103 647)
Dividends received from 5 109 279 539
associates
Interest received 3 209 6 174 12 262
Income tax paid (43 084) (44 281) (75 086)
Cash flow from operations (8 716) 35 995 225 667
Dividends paid (including (20 193) (17 630) (17 628)
minority shareholders)
Cash (outflow)/inflow from (28 909) 18 365 208 039
operating activities
Cash flow from investing
activities
Proceeds on decrease in long 6 147 2 201 (4 076)
term financial assets
Acquisition of property, plant (67 126) (51 300) (131 179)
and equipment
Replacement capital expenditure (23 080) (38 051) (62 378)
Expansion capital expenditure (44 046) (13 249) (68 801)
Acquisition of intangible assets (21 960) (1 987) (15 691)
Proceeds on disposal of 2 694 2 892 7 898
property, plant and equipment
Net cash used in investing (80 245) (48 195) (150 545)
activities
Net cash (outflow)/inflow before (109 154) (29 830) 57 494
financing activities
Cash flows from financing
activities
VAT recovered on incorporation - 1 101 1 101
costs orginally utilised against
share premium
Increase in long term interest- (40 974) (35 124) (25 736)
bearing borrowings
Increase in short term interest- 113 960 86 750 (19 020)
bearing liabilities
Net cash used in financing
activities 72 986 52 726 (43 655)
Net (decrease)/increase in cash (36 168) 22 896 13 839
and cash equivalents
Cash and cash equivalents at 52 294 38 455 38 455
beginning of year
Cash and cash equivalents at end 16 126 61 351 52 294
of year
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
for the six months ended 31 March
1. STATEMENT OF COMPLIANCE
- This unaudited interim report has been prepared using accounting policies
compliant with International Financial Reporting Standards (IFRS), the AC 500
standards as issued by the Accounting Practices Board and is in compliance
with IAS 34 Interim Financial Reporting, the JSE Limited Listings
Requirements and the South African Companies Act.
2. ACCOUNTING POLICIES
The accounting policies and methods of computation used are consistent with
those applied in the preparation of the `annual financial statements for the
year ended 30 September 2010, except where the group has adopted new or
revised accounting standards` and interpretations of those standards.
The group has adopted the following revised accounting standards, amendments
and interpretations in the current period, which did not have an impact on
the reported results:
Conceptual Framework for Financial Reporting 2010
- IFRS 2 Share-based Payments (Amendments relating to group cash-settled
share-based payment transactions)
- IFRS 3 (amendment) Business Combinations (Measurement of non-controlling
interests, Transition requirements for contingent consideration from a
business combination that occurred before the effective date of the revised
IFRS, un-replaced and voluntarily replaced share-based payment awards)
- IAS 27 (amendment) Consolidated and separate financial statements
(Transition requirements for amendments made as a result of IAS 27 (as
amended in 2008))
- IAS 32 Financial instruments: Presentation (amendment relating to
classification on rights issues)
- IFRIC 19 Extinguishing financial liabilities with equity instruments
3. RELATED PARTY TRANSACTIONS
There has been no significant change in related party relationships since the
previous year.
Other than in the normal course of business, there have been no significant
transactions during the year.
4. Interim financial statements
The preparation of this unaudited interim financial statements for the
six months ended 31 March 2011 was supervised by the CFO, Mr DA Thomas
CA(SA).
5. SUPPLEMENTARY STATEMENT OF FINANCIAL POSITION AND INCOME STATEMENT
INFORMATION
R`000 Unaudited Unaudited Audited
March March September
2011 2010 2010
Net asset value per share (cents) 1 497 1 439 1 439
Weighted average number of shares 203 872 203 872 203 872
in issue (000`s)
Headline earnings per share 24 39 74
(basic and diluted in cents)
6. Other IAS34 disclosable items
IAS 34.17 Inventory written 2 437 938 4 983
down to net
realisable value
during the period
IAS 34.17 Impairment losses 502 - -
recognised on
intangible assets
IAS 34.17 Acquisitions of 67 230 51 300 131 180
items of property,
plant and equipment
IAS 34.17 Disposals of items (3 202) (3 026) (7 824)
of property, plant
and equipment
7. Earnings before interest, tax,
depreciation and amortisation
(EBITDA)
EBITDA includes the following
unusual items:
- costs occasioned by the Kansai 20 500 - -
transaction
- an IFRS 2 charge on the second 30 325 - -
allocation of the Share
Appreciation Rights referred to
in the 2010 Annual Report,
approved in September 2008 and
issued in February 2011
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
for the six months ended 31 March
R`000 Unaudited Unaudited Audited
6 months 6 months 12 months
March March September
2011 2010 2010
8. Earnings per share
8.1 Fully converted weighted
average number of shares
Weighted average number of 203 872 203 872 203 872
ordinary shares
Fully converted weighted 203 872 203 872 203 872
average number of shares
8.2 Earnings
Profit for the year from 37 052 80 069 150 814
continuing operations
attributable to equity
holders of Freeworld Coatings
Limited
Total earnings 37 052 80 069 150 814
Earnings per share (cents) 18 39 74
Basic and diluted
Weighted average number of 203 872 203 872 203 872
ordinary shares- basic
- diluted 208 047 203 872 204 186
Earnings per share - basic 18 39 74
and diluted (cents)
8.3 Headline earnings per share 24 48 74
Profit for the year from 49 288 98 732 187 337
continuing operations
attributable to Freeworld
Coatings Limited shareholders
Adjusted for the following
Impairment of 502 - -
intangible assets
- Loss on disposal of 25 - 12
intangible assets
- Loss/(profit) on 182 166 (75)
disposal of plant and
equipment and
intangible assets
- Impairment of - - 372
property, plant
and equipment
Tax effect of above (199) (35) (86)
Headline earnings 49 798 98 863 187 560
Weighted average number of 203 872 203 872 203 872
shares in issue for the year
- basic
- diluted 208 047 203 872 204 186
Headline earnings per share 24 48 74
- basic and diluted (cents)
9. Commitments
Capital expenditure commitments
to be incurred:
Contracted 14 848 23 799 21 767
Approved but not yet contracted 23 464 11 441 30 632
38 312 35 240 52 399
Operating lease commitments 57 913 44 716 48 869
Finance lease commitments - 455 319
10. Contingent liabilities
Guarantees to third parties
Customs and services 1 536 1 536 1 536
Bank overdrafts 6 000 6 000 6 000
Payment guarantees 4 839 13 988 14 583
12 375 21 524 22 119
Other
In terms of the Unbundling Agreement, Freeworld Coatings Limited has
guaranteed the first A$5 million of any environmental claim made on
Barloworld Limited by the purchaser of the Australian business for a
maximum period of eight years. An environmental insurance policy is in
place in this regards. This would give rise to a contingent asset and
contingent liability.
A decision from the Medical Schemes Appeal Board, upholding a decision by
the Registrar of Medical Schemes not to allow a change in the definition
of Employer to extend to "unbundled" employers within the rules of the
Barloworld Medical Scheme, may have an impact on the Freeworld Coatings
employees remaining as members of that fund. Freeworld Coatings in
conjunction with the Trustees of the Barloworld Medical Scheme, have
decided to take the Medical Schemes Appeal Board ruling on the definition
of "Employers" on review to the Hight Court. The Financial effects have
not been qualified as it is not practical to do so at this stage.
11. Non-current assets held for sale
The board has decided to divest its Australian operations and as at 31
March 2011 was in the process of finalising a sale and purchase
agreement.
As at the reporting date the following items were included in a draft
agreement for disposal to a third party.
R`000 Unaudited Unaudited Audited
March March September
2011 2010 2010
Property 32 149 - -
Employee entitlements (5 816) - -
12. Share appreciation rights granted
The second allocation of the Share Appreciation Rights, which was
approved by the remuneration committee on 22 September 2008, were issued
on 28 February 2011. The delay in issuing was caused by the Company being
in a closed period due to continued corporate action.
13. Corporate governance
The Group recognises the need to conduct its business with integrity,
transparency and equal opportunity and subscribes to the spirit of good
corporate governance as set out in the King II report. The Group is
currently in the process of reviewing and evaluating its compliance with
King III and a detailed programme has been adopted to ensure optimal
compliance.
14. Events after reporting date
Change in major shareholder
On 18 April 2011, the Competition Commission conditionally approved the
proposed merger of Kansai Paint Co., Ltd and Freeworld Coatings Limited.
Kansai accepted these conditions and declared its offer of R12 per share
unconditional in all respects. Kansai now holds 92,4% of the issued
shares of Freeworld.
Change in Directorate
On 28 April 2011, Messrs RM Godsell, MM Ngoasheng, DB Ntsebeza, PM Surgey
and Ms B Ngonyama resigned from the Board, with Messrs H Ishino, AJ
Philips, HM Bharuka, S Kobayashi and NH Malik being appointed to the
Board.
Australian divestment
On 31 May 2011 the Australian business, which comprises the Glen Waverley
site and manufacturing assets together with the related employees, was
sold.
Change in CEO
On 3 June 2011 Mr AJ Lamprecht announced his retirement and resigned from
the Board with Mr NH Malik being appointed CEO in his stead. Following
his appointment Mr NH Malik becomes an executive director on the Board.
The registered office of Freeworld Coatings: Balvenie, Kildrummy Office Park,
Umhlanga Drive, Paulshof 2056?(PostNet Suite 263, Private Bag X87, Bryanston
2021)
Directors: H Ishino* (Chairman), AJ Phillips (Vice Chairman), NH Malik
(Chief Executive Officer), S Kobayashi*, HM Bharuka$, E Links, NDB Orleyn,
DA Thomas
(*Japan), (Pakistan), ($India), (Australia)
Company Secretary: ELA Chamberlain
Transfer secretaries: Link Market Services South Africa Proprietary Limited
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 24/06/2011 14:08:01 Produced by the JSE SENS Department.
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