| Thu 17 Nov 2011, 10:44 | | ASO - Austro Group Limited - Audited financial results for the year ended |
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ASO
ASO
ASO - Austro Group Limited - Audited financial results for the year ended
31 August 2011
AUSTRO GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2001/029771/06)
Share code: ASO ISIN: ZAE000090882
("the Group")
AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 31 AUGUST 2011
SUMMARY
Revenue
R387,1 million
Net profit for the year
R6,4 million
Cash generated from operations
R66,0 million
Cash dividends and capital distributions per share
4,0 cents
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
31 August 2011 31 August 2010
R`000 R`000
Revenue 387,102 401,943
Cost of sales (258,271) (242,655)
Gross profit 128,831 159,288
Operating income 1,877 6,430
Operating expenses (133,479) (129,082)
(Loss)/profit from operations (2,771) 36,636
Interest received 6,804 8,559
Interest paid (3,942) (11,538)
Profit before taxation 91 33,657
Taxation income/(expense) 6,348 (10,527)
Net profit for the year 6,439 23,130
Other comprehensive income for the year - -
Total comprehensive income for the year 6,439 23,130
Earnings per share (cents) 1.5 5.4
Headline earnings per share (cents) 1.6 5.2
Dividends per share (cents) 2.0 4.0
Capital distribution declared out of 2.0 -
share premium (cents)
Reconciliation of earnings to headline
earnings:
Net profit for the year 6,439 23,130
Net loss/(profit) on disposal of plant 239 (1,047)
and equipment
Tax effect thereon (33) 147
Headline earnings 6,645 22,230
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited Audited
31 August 2011 31 August 2010
R`000 R`000
Assets
Non-current assets 276,959 273,403
Plant and equipment 38,018 43,597
Goodwill 229,742 229,742
Loans receivable 482 -
Deferred taxation 8,717 64
Current assets 304,347 372,160
Inventories 177,869 254,053
Trade and other receivables 76,025 75,160
Taxation receivable 1,465 557
Cash and cash equivalents 48,988 42,390
Total assets 581,306 645,563
Equity and liabilities
Capital and reserves 517,110 545,705
Share capital 4 4
Share premium 295,697 322,103
Accumulated profits 221,409 223,598
Non-current liabilities - 3,805
Interest free liabilities - 3,426
Deferred taxation - 379
Current liabilities 64,196 96,053
Current portion of interest free 3,426 3,426
liabilities
Trade and other payables 60,662 62,730
Taxation payable 108 4,629
Bank overdraft - 25,268
Total equity and liabilities 581,306 645,563
Number of shares in issue 395,693,678 431,413,384
Weighted average number of shares 419,758,013 431,413,384
Net asset value per share (cents) 130.7 126.5
Tangible net asset value per share 72.6 73.2
(cents)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Audited Audited
31 August 2011 31 August 2010
R`000 R`000
Cash flows from operating activities 65,980 120,894
Cash generated by operations 79,859 150,392
Interest received 6,804 8,559
Interest paid (3,942) (11,538)
Dividends paid (8,628) (17,257)
Taxation paid (8,113) (9,262)
Cash flows from investing activities (4,282) (965)
Cash flows from financing activities (29,832) (5,395)
Net increase in cash and cash 31,866 114,534
equivalents
Cash and cash equivalents at beginning 17,122 (97,412)
of year
Cash and cash equivalents at end of 48,988 17,122
year
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Audited Audited
31 August 2011 31 August 2010
R`000 R`000
Share capital and share premium 295,701 322,107
Balance at beginning of year 322,107 322,107
Share premium reduction due to share (18,492) -
buy back
Share premium reduction due to capital (7,914) -
distribution declared out of share
premium
Accumulated profits 221,409 223,598
Balance at beginning of year 223,598 217,725
Total comprehensive income for the year 6,439 23,130
Dividends declared (8,628) (17,257)
Total capital and reserves 517,110 545,705
CONDENSED SEGMENTAL ANALYSIS
Audited Audited Audited
Revenue Revenue Profit/(loss)
before tax
31 August 2011 31 August 2010 31 August 2011
R`000 R`000 R`000
Power 250,904 268,427 9,175
Gross 251,199 285,632 9,470
Intersegment (295) (17,205) (295)
Wood 136,198 133,516 (9,084)
Gross 136,198 143,237 (9,084)
Intersegment - (9,721) -
Total 387,102 401,943 91
Audited Audited Audited
Profit before tax Net assets Net assets
31 August 2010 31 August 2011 31 August 2010
R`000 R`000 R`000
Power 32,102 427,171 439,490
Gross 49,307 - -
Intersegment (17,205) - -
Wood 1,555 89,939 106,215
Gross 11,276 - -
Intersegment (9,721) - -
Total 33,657 517,110 545,705
COMMENTARY
INTRODUCTION
Austro Group Limited is listed in the Industrial Engineering sector and
Industrial Machinery subsector of the JSE Limited. The Group`s core
strategy is to offer leading and established global brands to large
manufacturing, commercial, construction, mining and other groups in the
infrastructural sector. This offering is complemented by unsurpassed
service and technical support.
The Group has two distinct and focused businesses:
- the production, supply, installation and rental of generators and related
components such as industrial engines, marine engines, alternators,
switchgear and components to the market, including the generator
manufacture and supply industry; and
- the distribution of industrial aluminium, plastics and woodworking
machinery, tooling and edging together with the relevant after-sales and
technical services.
Group structure:
New Way Power (Pty) Limited ("Power") housing the energy and power related
interests of the Group.
Austro Wood (Pty) Limited ("Wood") housing the woodworking and related
interests of the Group.
The core of these businesses has been in existence for over 30 years. The
entities are wholly owned.
RESULTS OVERVIEW
FINANCIAL REVIEW
The Group delivered disappointing results, in part due to a number of costs
discussed in more detail below.
Consolidated statement of comprehensive income
The year ended 31 August 2011 saw revenue contract by 3,7% in what was a
very internally focused year for the Group. Despite the relatively small
decline in revenue, the 2011 year shows a 72% decrease in earnings per
share, primarily due to the costs mentioned.
A deferred tax asset of R8,7 million has been raised, primarily to
recognise that the Group will benefit from the utilisation of tax losses
available in the holding company and Austro Wood (Pty) Ltd. Accordingly the
statement of comprehensive income incorporates a deferred tax credit of R9
million.
Consolidated statement of financial position and consolidated statement of
cash flows
A continued focus on inventory levels and the tidying up of some legacy
business units during the year means that the Group`s statement of
financial position remains robust.
A reduction of R76,2 million in inventory levels was achieved during the
year, allowing the Group to utilise R18,5 million to buy back shares and
over and above this to increase cash and cash equivalents by R31,9 million.
The Group currently has no debt to service.
An interim cash capital distribution of 2 cents per share was paid on 18
July 2011. No final dividend or cash capital distribution has been
declared.
SUBSEQUENT EVENTS
The group acquired the business of EdgePro (Pty) Limited and EdgePro Natal
(Pty) Limited (without acquiring shares in either of these companies),
effective 1 September 2011. The JSE issued a ruling that these acquisitions
did not need to be aggregated in terms of section 9 of the listings
requirements and accordingly no announcement was made on SENS. Only
inventory and fixed assets were acquired. The total purchase consideration
for these businesses was R10 026 198 settled in cash. These acquisitions
were made in support of Austro Wood`s strategy, allowing the Wood Division
to supply edging to existing and new customers.
The company executed share repurchases in late August 2011 for a total of
400 755 shares. As the settlement date for each of these trades is after 26
August 2011 (the last Friday of the month and the date at which the share
register used for purposes of this report was produced), these trades are
disclosed as a subsequent event.
OPERATING REVIEW
Power
The division`s 6,5% deterioration in revenue is largely due to the Quad
activities, where revenue fell by 45,5%. The year saw the manager of this
business unit leave the Group and Quad`s business relocated to New Way`s
Alberton premises where its future direction will be determined by New
Way`s management team. Neptune`s revenue fell by 5,5% primarily as a result
of tough competition. The balance of the division saw revenue fall by 0,5%.
Profit before tax in the division fell by 71% to R9,2 million (2010: R32,1
million). Inventory in the former Quad business unit was impaired by R11,1
million. This impairment alone accounts for almost half of the
deterioration in performance. Other negative items include a significant
bad debt provision, a warranty claim and inventory impairments in New Way,
these items in aggregate amounting to R4,7 million.
Wood
Despite a 2,0% increase in revenue the Wood division saw an extensive
decline in performance, reporting a loss before taxation of R9,1 million
(2010: profit of R1,6 million). Much of this deterioration in performance
may be explained by a relatively small number of large items, including
retrenchment costs of R2 million and inventory impairments of R3,2 million.
Foreign exchange gains in 2010 became foreign exchange losses in 2011, the
swing amounting to almost R 1 million.
A number of the items mentioned as well as some costs not mentioned are
seen as an investment in the division`s future. The inventory impairments,
for example, were costs incurred in recognition of the reality that some of
the division`s inventory would be difficult to sell. Essentially
initiatives have therefore been taken to clean up the statement of
financial position. In addition costs have been incurred in consultancy
fees, training, strategic workshops and other activities fundamental in
developing a new strategy for this division.
PROSPECTS
The 2012 year is set to be a year of far greater external focus for both
divisions. In the Power division there are firm plans to extend sales to
countries outside of South Africa and strategies to generate new sales or
cost savings utilising the assets of the former Quad business unit as a
more integrated component of New Way.
The Wood division`s edging business acquisitions mentioned under subsequent
events will contribute to revenue in the coming year, without the addition
of significant fixed costs. The division`s key account strategy and a
number of initiatives designed to increase the relative significance of the
tools and service divisions are expected to create a more sustainable base
for recurring revenue into future years.
It is evident from the preceding narrative that there were a number of
items impacting the group`s performance in 2011 that are for the most part
unlikely to be repeated and certainly unlikely to be repeated at the same
magnitude in 2012. The group is well positioned to take advantage of an
economic recovery should one occur as there is considerable surplus
operational capacity available in both divisions.
BASIS OF PREPARATION
These condensed consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards ("IFRS"),
Interim Financial Reporting (IAS34), AC500 Series of Interpretations, the
Listing Requirements and the requirements of the Companies Act of South
Africa. The accounting policies applied are consistent with those applied
in the prior year. These condensed consolidated financial statements have
been audited by PKF (Jhb) Inc. and their unqualified audit report is
available for inspection at the companies registered office.
These condensed consolidated financial statements have been prepared by
Tania Le Roux (CA) SA under the supervision of Philip Sigsworth (CA) SA.
CHANGES TO THE BOARD OF DIRECTORS
During the period RE Moss resigned from the Board of Directors and Philip
Sigsworth and Charles Jacobs were appointed.
By order of the Board
AJ Phillips P Sigsworth
Chairman Group Financial Director
Johannesburg
14 November 2011
Non-executive directors:
AJ Phillips* (Chairman)
DS Brouze
GS Nzalo*
U Schackermann* (German)
(* Independent)
Executive directors:
JO Freed
JR Freed (Alt JO Freed)
C Jacobs
P Sigsworth
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
17 November 2011
Sponsor:
Java Capital
Visit our website: www.austrogrouplimited.com
Date: 17/11/2011 10:44:01 Produced by the JSE SENS Department.
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