| Thu 9 Feb 2012, 7:05 | | ARH - ARB - Unaudited interim results for the six months ended 31 December 2011 |
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ARH
ARH
ARH - ARB - Unaudited interim results for the six months ended 31 December 2011
ARB HOLDINGS LIMITED
(Registration number: 1986/002975/06)
Share code: ARH ISIN: ZAE000109435
("ARB" or "the company" or "the group")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2011
HIGHLIGHTS
* Revenue up 13%
* Operating profit up 8%
* Ungeared with R240 million cash on hand
* Acquisition of Eurolux completed
BASIS OF PREPARATION
The condensed unaudited consolidated interim financial statements for the six
months ended 31 December 2011 have been prepared in compliance with
International Financial Reporting Standards ("IFRS"), IAS34 - Interim Financial
Reporting, the AC500 series of interpretations, the South African Companies` Act
and the Listings Requirements of the JSE Limited. The accounting policies
applied are consistent with those applied in the annual financial statements for
the year ended 30 June 2011 and the six months ended 31 December 2010. The
condensed consolidated interim financial statements have not been audited or
reviewed by the group`s auditors.
The unaudited interim financial statements have been prepared under the
supervision of the Financial Director, WR Neasham, CA(SA).
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months 6 months year to
to 31 Dec to 31 Dec 30 June
2011 2010 2011
R000`s R000`s R000`s
Revenue 693 497 614 702 1 256 330
Cost of sales 562 939 500 008 1 021 499
Gross profit 130 558 114 694 234 831
Other income 2 812 1 123 1 730
Operating expenses (73 362) (60 474) 126 315
Profit before interest and taxation 60 008 55 343 110 246
Interest received 9 238 9 353 16 907
Interest paid (194) (70) (137)
Profit before taxation 69 052 64 626 127 016
Taxation 22 812 21 120 38 338
Profit for the period 46 240 43 506 88 678
Revaluation of property, plant and
equipment (net of taxation) - - 2 802
Total comprehensive income for the period 46 240 43 506 91 480
Profit for the period attributable to: 46 240 43 506 88 678
Non-controlling interest 9 354 8 092 16 662
Ordinary shareholders 36 886 35 414 72 016
Total comprehensive income attributable to: 46 240 43 506 91 480
Non-controlling interest 9 354 8 092 16 662
Ordinary shareholders 36 886 35 414 74 818
Unaudited Unaudited Audited
6 months 6 months year to
to 31 Dec 31 Dec 30 June
2011 2010 2011
R000`s R000`s R000`s
Reconciliation of headline earnings
Profit for the period attributable to
ordinary shareholders 36 886 35 414 72 016
Surplus on disposal of property, plant
and equipment (net of taxation) (24) - (7)
Headline earnings 36 862 35 414 72 009
Number of shares in issue (000`s)235 000 235 000 235 000
Weighted average number of shares (000`s) 235 000 235 000 235 000
Diluted number of shares (000`s) 235 480 235 480 235 480
Earnings per share (cents) 15,70 15,07 30,65
Diluted earnings per share (cents) 15,66 15,04 30,58
Headline earnings per share (cents) 15,69 15,07 30,64
Diluted headline earnings per share (cents) 15,65 15,04 30,57
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
31 Dec 31 Dec 30 June
2011 2010 2011
R000`s R000`s R000`s
ASSETS
Non-current assets
Property, plant and equipment 153 939 146 266 153 679
Intangible asset 756 465 593
Deferred taxation 2 489 3 061 2 223
Current assets
Inventory 189 325 191 752 170 242
Trade and other receivables 171 994 145 526 190 448
Deferred lease payments - 27 -
Taxation overpaid 95 822 617
Cash resources 240 348 186 857 265 534
TOTAL ASSETS 758 946 674 776 783 336
EQUITY AND LIABILTIES
Equity and reserves
Share capital 24 24 24
Share premium 116 150 116 150 116 150
Revaluation reserve 46 389 43 587 46 389
Accumulated profit 372 863 328 163 364 765
Attributable to ordinary shareholders 535 426 487 924 527 328
Non-controlling interest 100 041 87 655 96 225
Total shareholders` funds 635 467 575 579 623 553
Non-current liabilities
Deferred lease payments 296 156 118
Deferred taxation 20 517 19 584 20 657
Current liabilities
Trade and other payables 101 801 78 001 138 581
Deferred lease payments 18 - 37
Taxation payable 847 1 456 390
TOTAL EQUITY AND LIABILITIES 758 946 674 776 783 336
Number of shares in issue (000`s) 235 000 235 000 235 000
Net asset value per share (cents) 227,84 207,63 224,39
Net tangible asset value per share (cents) 226,46 206,12 223,20
CONDENSED GROUP STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
6 months 6 months year to
to 31 Dec to 31 Dec 30 June
2011 2010 2011
R000`s R000`s R000`s
Cash generated by operating activities 25 223 9 598 104 889
Interest received 9 238 9 353 16 907
Interest paid (194) (70) (137)
Dividends paid (34 326) (31 185) (31 185)
Taxation paid (18 807) (17 396) (34 653)
Secondary tax on companies paid (3 432) (3 019) (3 019)
Cash flows from operating activities (22 298) (32 719) 52 802
Cash flows from investing activities (2 888) (9 637) (16 481)
Cash flows from financing activities
Capital distribution from share premium - (31 725) (31 725)
Net decrease in cash resources (25 186) (74 081) 4 596
Cash resources at beginning of period 265 534 260 938 260 938
Cash resources at end of period 240 348 186 857 265 534
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Revalu-
Share Share ation
Capital Premium Reserve
R000`s R000`s R000`s
Balance at 30 June 2010 (audited) 24 147 875 43 587
Total comprehensive income for the period - - -
Dividends paid - - -
Reduction of share premium - (31 725) -
Balance at 31 December 2010 (unaudited) 24 116 150 43 587
Total comprehensive income for the period - - 2 802
Balance at 30 June 2011 (audited) 24 116 150 46 389
Total comprehensive income for the period - - -
Dividends paid - - -
Balance at 31 December 2011 (unaudited) 24 116 150 46 389
Non-
Accumu- Control-
lated ling
Profit Interest Total
R000`s R000`s R000`s
Balance at 30 June 2010 (audited) 319 774 83 723 594 983
Total comprehensive income for the period 35 414 8 092 43 506
Dividends paid (27 025) (4 160) (31 185)
Reduction of share premium - - (31 725)
Balance at 31 December 2010 (unaudited) 328 163 87 655 575 579
Total comprehensive income for the period 36 602 8 570 47 974
Balance at 30 June 2011 (audited) 364 765 96 225 623 553
Total comprehensive income for the period 36 886 9 354 46 240
Dividends paid (28 788) (5 538) (34 326)
Balance at 31 December 2011 (unaudited) 372 863 100 041 635 467
CONDENSED GROUP SEGMENT REPORT
Unaudited for the 6 months ended 31 December 2011
Elec-
Investment trical
and rental whole- IT
income saling services
R000`s R000`s R000`s
Segment revenue 33 523 693 766 2 602
Profit before taxation 31 533 52 942 340
Depreciation 1 236 1 242 17
Capital expenditure 2 970 861 163
Segment assets 340 271 491 494 3 341
Segment liabilities 70 696 105 347 460
Inter-
company
eliminations
and re-
allocations Total
R000`s R000`s
Segment revenue (36 394) 693 497
Profit before taxation (15 763) 69 052
Depreciation - 2 495
Capital expenditure - 3 994
Segment assets (76 160) 758 946
Segment liabilities (53 024) 123 479
Unaudited for the 6 months ended 31 December 2010
Elec-
Investment trical
and rental whole- IT
income saling services
R000`s R000`s R000`s
Segment revenue 26 761 615 527 2 236
Profit before taxation 29 485 46 570 412
Depreciation 848 1 128 25
Capital expenditure 8 861 1 229 12
Segment assets 320 300 420 769 2 410
Segment liabilities 60 536 82 657 347
Inter-
company
eliminations
and re-
allocations Total
R000`s R000`s
Segment revenue (29 822) 614 702
Profit before taxation (11 841) 64 626
Depreciation - 2 001
Capital expenditure - 10 102
Segment assets (68 703) 674 776
Segment liabilities (44 342) 99 198
Audited for the year ended 30 June 2011
Elec-
Investment trical
and rental whole- IT
income saling services
R000`s R000`s R000`s
Segment revenue 27 423 1 257 648 5 330
Profit before taxation 47 711 92 215 1 144
Depreciation 2 342 2 812 52
Capital expenditure 13 190 4 326 27
Segment assets 331 020 513 960 3 166
Segment liabilities 58 131 142 748 560
Inter-
company
eliminations
and re-
allocations Total
R000`s R000`s
Segment revenue (34 071) 1 256 330
Profit before taxation (14 054) 127 016
Depreciation - 5 206
Capital expenditure - 17 543
Segment assets (64 810) 783 336
Segment liabilities (41 656) 159 783
COMMENTARY
The board of ARB ("the board") is pleased to present the group`s interim results
for the six months ended 31 December 2011 ("the period").
ARB Electrical, the group`s 74% held empowered electrical wholesaler, increased
its operating profit by 15%. The strong trading performance was diluted by the
group`s transaction costs of approximately R1,5 million relating to the Eurolux
acquisition. These costs, coupled with net interest received remaining
relatively flat, resulted in headline earnings per share increasing by 4%.
Financial review
Despite the challenging and competitive trading conditions experienced during
the period, the group achieved revenue growth of 13% and maintained its gross
margin at 18,8%. Operating profit, after accounting for the Eurolux transaction
costs, increased by 8%.
Net interest received decreased only marginally despite shareholder payments
during the period of approximately R34 million and taxation paid of
approximately R22 million reflecting the group`s disciplined approach to cash
management.
Consistent with the prior period, the group`s effective tax rate was 33% due to
the payment of STC on dividends paid during the period.
Headline earnings per share grew by 4% to 15,69 cents (2010: 15,07 cents).
The group`s statement of financial position remains robust reflecting a net
tangible asset value per share of 226,46 cents (2010: 206,12 cents) and a net
ungeared cash position of R240 million.
Net working capital as a percentage of annualised revenue declined from 21% in
the prior period to 19%. Inventory days reduced despite the 13% growth in
revenue while trade receivables (net of VAT) were maintained at below 40 days.
Payable days (net of VAT) were maintained below 30 days as the group continued
to take advantage of early settlement discounts offered by its suppliers.
Net capital expenditure for the period amounted to approximately R3 million.
Corporate activity and expansion
The acquisition of a controlling interest in Eurolux (Pty) Limited ("Eurolux")
was the highlight for the period and represents a significant milestone in the
delivery of ARB`s long-term strategy to offer a diversified range of electrical
and related industrial products to a broad spectrum of industries and market
segments.
Acquisition of a controlling interest in Eurolux
The acquisition of a 60% controlling interest in Eurolux for a cash
consideration of R81 million was announced on 25 October 2011 and became
effective on 3 January 2012 ("the Effective Date"). ARB`s share of Eurolux`s
net tangible asset value as at the Effective Date was R33,3 million. The
purchase price allocation required in terms of IFRS 3 is currently being
finalised.
Founded in 1991, Eurolux is a leading importer and distributor of lamps, light
fittings and ancillary electrical products.
It is anticipated that the Acquisition will be earnings-enhancing and value-
creating for ARB shareholders from the outset.
ARB Connect
Although still in the startup phase, the first two ARB Connect stores opened in
the last quarter of the previous financial year have provided a strong
foundation for the continued penetration of the domestic and retail market
segments.
Reminder of cautionary announcement
In the pursuit to deliver sustainable earnings growth, management is committed
to growing the group organically as well through acquisitions. The strong
statement of financial position enables us to pursue opportunities which meet
the board`s strict evaluation criteria. In this regard shareholders are reminded
of the cautionary announcement dated 17 January 2012 and are advised to continue
to exercise caution when dealing in the company`s securities until a further
announcement is made.
Prospects
In the absence of any tangible evidence to suggest an improvement in the general
economy, the group continues to explore several opportunities, both organic and
acquisitive. Furthermore, the inclusion of Eurolux`s results from 3 January 2012
will contribute positively to the group results for the remainder of the current
financial year.
The above prospects statements have not been reviewed or reported on by the
company`s auditors.
Dividends
ARB`s policy is to distribute a single, annual dividend for the full year of up
to a maximum of 40% percent of net profit after taxation. In line with this
policy, no interim dividend has been declared.
Subsequent events
Save for the Eurolux acquisition becoming effective on 3 January 2012 and the
payment of the purchase price of R81 million on 16 January 2012, no significant
events have occurred in the period between the reporting date and the date of
this announcement.
Appreciation
We would like to acknowledge our management and staff for their hard work and
commitment, our fellow directors for their continued wise counsel and to our
valued customers, suppliers, business partners, advisors and shareholders for
their ongoing support.
For and on behalf of the Board.
Alan R Burke Byron Nichles
Chairman Chief Executive Officer
09 February 2012
Directors: AR Burke (Chairman)*; ST Downes*>; JR Modise*; WR Neasham (Financial
Director); B Nichles (Chief Executive Officer); RB Patmore*>#; G Pretorius*>; CC
Robertson
*non-executive >independent #lead independent director
Registered office: 10 Mack Road, Prospecton, Durban, 4110 (PO Box 26426,
Isipingo Beach, 4115)
Company secretary: WR Neasham CA(SA), 10 Mack Road, Prospecton, Durban, 4110 (PO
Box 26426, Isipingo Beach, 4115)
Auditors: PKF Durban, 12 on Palm Boulevard, Gateway, 4319 (PO Box 1858, Durban,
4000)
Sponsor: Grindrod Bank Limited, 1st Floor, Building Three, Commerce Square, 39
Rivonia Road, Sandhurst, 2196 (PO Box 78011, Sandton, 2146)
Transfer secretaries: Computershare Investor Services (Pty) Ltd, 70 Marshall
Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107)
Investor relations: Keyter Rech Investor Solutions CC, Fountain Grove, 5 2nd
Road, Hyde Park, 2196 (PO Box 653078, Benmore, 2010)
Date: 09/02/2012 07:05:01 Produced by the JSE SENS Department.
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