| Fri 16 Mar 2001, 0:00 | | Putco Limited - Interim Report And Dividend Announ |
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Putco Limited
Co. Reg. No. 1945/018672/06
Interim report and dividend announcement
The consolidated results of Putco Limited and its subsidiaries for the six
months ended 31 December 2000
Restated (8)
Unaudited Unaudited Audited
six months to six months to year to
31 December 31 December Change 30 June
R'000 Notes 2000 1999 % 2000
Income statement
Revenue - bus operations 1 374 864 343 228 9,2 682 133
- trading - 3 809 (100,0) 5 014
Total revenue 374 864 347 037 8,0 687 147
Cost of operating 2 348 387 326 328 6,8 664 542
Operating profit 26 477 20 709 27,9 22 605
Dividends 13 8 62,5 8
Interest received 397 1 049 (62,2) 2 503
Profit before finance costs
and taxation 26 887 21 766 23,5 25 116
Finance costs 2 175 945 130,2 1 702
Profit before taxation 24 712 20 821 18,7 23 414
Taxation 9 735 5 768 68,8 5 866
Profit from ordinary activities 14 977 15 053 (0,5) 17 548
Profit attributable to minorities 17 386 (95,6) 2 846
Earnings of shareholders 14 960 14 667 2,0 14 702
Headline earnings per share
(cents) 3 64,2 62,9 63,0
Earnings per share (cents) 56,6 55,5 55,6
Dividends per share (cents) 10,0 20,0 40,0
Summarised balance sheet
ASSETS
Non-current assets 191 566 150 800 187 080
Property, plant and equipment 188 092 148 427 183 248
Financial assets 3 474 2 373 3 832
Current assets 74 432 68 037 103 664
Inventory 41 976 43 129 40 797
Trade and other receivables 32 456 24 908 62 867
Total assets 265 998 218 837 290 744
Equity and liabilities
Equity, capital and reserves 110 357 103 909 101 119
Ordinary shareholders' interest 110 210 103 143 97 893
Minority interest 147 766 3 226
Non-current liabilities
Deferred taxation 11 043 13 908 13 124
Current liabilities 144 598 101 020 176 501
Trade and other payables 109 180 99 305 145 178
Net bank overdraft 4 35 418 1 715 31 323
Total equity and liabilities 265 998 218 837 290 744
Statement of changes in equity
Issued Non-
share distributable Retained
capital reserves profit Total
R'000 R'000 R'000 R'000
Balance at 30 June 1999 10 917 24 129 58 715 93 761
Net profit for the period 14 667 14 667
Dividends (5 285) (5 285)
Balance as at 31
December 1999 10 917 24 129 68 097 103 143
Net profit for the period 35 35
Realised surplus on sale
of property (3 078) 3 078 -
Transfer from non-distributable
reserve (38) 38 -
Dividends (5 285) (5 285)
Balance as at 30 June 2000 10 917 21 013 65 963 97 893
Net profit for the period 14 960 14 960
Dividends (2 643) (2 643)
Balance as at
31 December 2000 10 917 21 013 78 280 110 210
Unaudited Unaudited Audited
six months to six months to year to
31 December 31 December 30 June
R'000 2000 1999 2000
Cash flow statement
Cash receipts from customers 392 041 374 294 692 312
Cash paid to suppliers and employees (370 451) (345 695) (645 726)
Cash generated by operations 21 590 28 599 46 586
Investment income 397 1 049 2 511
Finance costs (2 175) (945) (1 702)
Taxation paid (3 686) (4 752) (11 068)
Dividends paid (5 285) (7 405) (12 684)
Dividends paid to outside shareholders (3 096) (720) (720)
Cash inflow from operating activities 7 745 15 826 22 923
Cash inflow/(outflow) in
investing activities (11 840) 5 130 (31 575)
Replacement of fixed assets (13 206) (3 933) (49 330)
Proceeds on disposal of fixed assets 1 008 8 903 13 790
Decreased/(Increased) investments 358 160 (1 299)
Proceeds on disposal of business - - 5 264
Net increase in cash and bank (4 095) 20 956 (8 652)
Cash and bank at beginning of period (31 323) (22 671) (22 671)
Cash and bank at end of period (35 418) (1 715) (31 323)
Notes
1. Includes R12 million additional payment due by government
for extending operation of the Soweto contract
2. Items included in cost of operating
profit on disposal of fixed assets (658) (8 812) (10 043)
Depreciation buses 6 586 5 974 11 353
Depreciation other assets 1 426 1 668 3 209
3. Headline earnings
Earnings of shareholders 14 960 14 667 14 702
Loss on disposal of assets
(other than buses) 8 (74) 503
Profit on disposal of business - - (4 958)
Provision for retrenchments 2 000 2 047 4 093
Tax effects - - -
Minorities' interest in profit on
disposal of business - - 2 316
16 968 16 640 16 656
4. Bank borrowing facilities have been
secured to the extent of R10 million
by notarial bond over the
company's buses
5. Number of shares in issue (000's) 26 425 26 425 26 425
6. Net asset value per share (cents) 417 390 370
7. Borrowing powers 181 880 175 577 166 526
8. Prior period figures have been restated for comparative
purposes, primarily as a consequence of the reduction in bus
depreciation and the change in accounting for retrenchment
provisions described in the June 2000 Annual Report
General review
Tenders
Our Boksburg and Greater Soweto operations went out on tender at the end of the
year and in February 2001, respectively. The implementation dates have,
however, been postponed from November till April in the case of Boksburg, and
till May in the case of Greater Soweto.
As reported previously we are discussing the financial and other implications
of these unplanned delays with the Department of Transport. We are confident
that an agreement will be finalised before the end of our current financial
year, and an appropriate provision has accordingly been raised.
We have been awarded Boksburg Tender GT 1187/2TM, for 37 buses. Tenders GT
1187/1 and 1187/3, for 10 buses each, have been awarded to other operators.
Putco has exercised its "right of first refusal" option within the tendered
contract rules. Numerous discussions and meetings have taken place regarding
this matter; however, no agreement was reached and the matter will be taken to
court to enforce this right, which is entrenched in agreements with Government,
as well as in the tender rules. We believe that Tenders 1 and 3 will also be
awarded to Putco.
Taxi recapitalisation
The Government's Taxi Recapitalisation programme has apparently been delayed
until further notice.
Fuel price
As previously stated the escalating price of diesel fuel is having a major
impact on our expenses. The price of diesel fuel increased by 85 cents a litre
from July through December 2000. After extensive discussions with our
passengers, transport committees and other relevant parties, we had no option
but to implement a fuel price fare increase (average 6%) on 1 November 2000, to
partially assist in covering the increased costs. The net change in the fuel
price added R10,3 million to our costs for the period July to December 2000.
(The diesel price has decreased from December 2000 to March 2001 by 45 cents
per litre.)
Bus safety programme
The company is determined to improve road safety and to clamp down on incidents
of unsafe driving. A new road safety programme has been launched to supplement
and build on our previous road safety initiatives. The increased emphasis on
road safety follows extensive efforts on the part of the company during the
last 12 months to improve vehicle and road safety. The new road safety
programme was discussed with our labour unions, our employees and our
passengers, and we obtained their support and co-operation.
The new programme includes additional measures to address driver selection,
driver training, medical fitness testing and driver attitude, as well as
operational control of driving time, driving habits and speed regulation. Other
actions include closer co-operation with traffic and road authorities towards
improving bus safety and road conditions.
Human resources
Specific measures were implemented to reduce the exposure of the company to
high cost increases in insured benefits and medical aid contributions. Insured
benefits were converted from a defined benefit to a defined contribution
arrangement and certain limits were introduced on company contributions to
medical schemes.
Employment equity
We are confident that the implementation of our employment equity plan is on
track. Steady progress has been made in our pursuit of equitable employment
ratios in the company. Women have been appointed in three job categories which
were previously held only by men. This includes the significant post of bus
driver/conductor where there are currently 20 women drivers and another 12 in
training. Our next Report to the Department of Transport is due in October 2001
Putco's name was incorrectly omitted by the Department of Labour in their first
published register of companies complying with the requirements of the
Employment Equity Act. We wish to advise that we had complied fully with all
the requirements. This omission was subsequently acknowledged and corrected by
the Department of Labour.
HR System
We are in the process of installing a new computer system, the HR Focus
integrated personnel and payroll system, which will enable us to meet the
increasingly complex recording and reporting requirements set by, inter alia,
SARS, the Employment Equity Act and the differing employment conditions arising
from the tendered contract system. We have reached the stage of performing test
runs, and plan "going live" on the new system in July 2001.
Passenger levels and other results
Passenger levels are down by 4,6%, as compared to the first six months of last
year, from 41,2 million to 39,3 million (the short-term taxi withdrawal in
Soshanguve increased our passenger carry in the previous year). The bus fleet
at the end of the year has reduced from 1 469 to 1 463, down by 0,4%. Revenue
increased from R343,2 million to R374,9 million for the six months, an increase
of 9,2%. The cost of operating increased from R326,3 million to R348,4 million,
an increase of 6,8%. Operating income, before interest and tax, increased from
R21,8 million to R26,9 million, an increase of 23,5%.
Operating fleet
The bus programme for the current financial year will cost approximately R21,3
million (2000: R61,3 million). This is in line with our plan to upgrade our
fleet to meet the tender requirements.
Capital commitments
The group has capital expenditure commitments at 31 December 2000 of R9,9
million (31 December 1999: R58,5 million). This relates to chassis purchases
and is mainly a timing difference.
Contingent tax liability
The claim by the South African Revenue Service in respect of expenditure
incurred on major body and chassis overhauls, which they disallowed for the
period from 1993 to 1999, has been satisfactorily resolved and the interest
levied has been waived. The effect of the settlement has negatively affected
the after-tax profit by R2,0 million, due to tax rate changes during this
period.
Future prospects
We previously stated that we would endeavour to adjust our approach and our
strategy to gain greater success with future tenders. We have participated in a
number of tenders for our own operations and new business during the period
under review. In analysing all the tenders that were submitted we are
optimistic that we will be awarded a significant number. We are continuing to
restructure the company and in this regard the senior management structure has
been altered as follows: Mr A Carleo will relinquish the post of CEO, which
will be filled by Mr EM Oldham, and Mr N Khena is appointed to the position of
Managing Director. These changes are effective from 1 July 2001. Steps are also
in progress to introduce an empowerment group, which will balance the equity of
the company among all the racial groupings of the country.
Internal restructuring to further improve competitiveness and reduce costs are
continuing, and a number of initiatives that include centralisation,
regionalisation and outsourcing certain support functions are being undertaken.
We will continue to pursue an optimum balance between the need to contain
costs, and the need to maintain professional standards and safety in all
spheres. It is imperative that a stable, sustainable and viable transport
infrastructure is maintained and addresses the needs of the passenger.
The "limbo syndrome" created around the bus industry is curtailing the capital
investment which is urgently needed to renew and upgrade the entire industry
infrastructure.
We are pleased to advise that the annual industry-wide (SARPBAC) wage
negotiations were successfully concluded on 6 March 2001.
The finalisation of the Boksburg and Greater Soweto tenders will greatly
improve the operating results of the company.
We expect that the profitability for the remainder of the year will continue.
Dividend
Your directors have decided to declare an interim dividend of 10 cents per
share (31 December 1999: 20 cents). This dividend will be paid on or about 20
April 2001, to shareholders registered on 6 April 2001.
A Carleo (Chairman and Chief Executive Officer)
EMRL Oldham (Managing Director)
13 March 2001
Registered office
Mimosa Park, Mimosa Way
Gallo Manor, Sandton
(Private Bag 3, Wendywood 2144)
Transfer secretaries
Mercantile Registrars Limited
8th Floor, 11 Diagonal Street, Johannesburg 2001
(PO Box 1053, Johannesburg 2000)
