| Wed 14 Nov 2001, 0:00 | | Dorbyl Limited - Interim Group Results For The Six |
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DORBYL LIMITED
Incorporated in the Republic of South Africa
Company registration number 1911/001510/06
Share code: DLV ISIN Code: ZAE000002184
Interim group results for the six months ended 30 September 2001
Group Income Statement
Unaudited Unaudited Audited
6 Months to 6 Months to 12 Months to
September September March
2001 2000 % 2001
R000 R000 Change R000
Revenue 2 239 295 2 463 177 (9) 4 641 679
- continuing
operations 2 170 352 2 071 304 5 4 031 344
- discontinued
operations 68 943 391 873 610 335
Operating income 74 239 120 032 (38) 124 824
- continuing
operations 67 788 123 805 (45) 143 274
- discontinued
operations 6 451 (3 773) (18 450)
Finance cost (13 169) (15 636) (30 273)
Income - associates 15 301 4 995 11 167
Profit before
exceptional items 76 371 109 391 (30) 105 718
Exceptional items (4 712) (13 411) (51 911)
Profit before taxation 71 659 95 980 (25) 53 807
Taxation (17 184) (27 431) (1 809)
Profit after taxation 54 475 68 549 (21) 51 998
Minority interest (6 665) (6 592) (13 316)
Preference dividends (106) (106) (212)
Earnings attributable
to ordinary
shareholders 47 704 61 851 (23) 38 470
Ordinary dividends (23 794) (27 165) (50 941)
Surplus/(deficit)
for the period 23 910 34 686 (12 471)
Earnings per
share (cents)
Earnings per share 140.4 182.1 (23) 113.3
Headline earnings
per share 150.5 205.7 (27) 203.2
Dividends per
share (cents) 70 80 (13) 150
Final - year ended
31 March 2001 (2000) 70 80 80
Interim - period ended
30 September 2000 70
Dividend cover -
headline earnings 2.1 2.6 1.4
Exceptional items
before taxation (4 712) (13 411) (51 911)
Loss on the disposal
and discontinuation
of businesses (4 464) (12 646) (49 054)
Loss on disposal of
fixed property (248) (765) (2 857)
Tax relief attributable
to exceptional items 334 2 624 17 339
Headline earnings
reconciliation
Earnings per the
income statement 47 704 61 851 38 470
Adjusted for : 3 437 8 017 30 545
Exceptional items 4 712 13 411 51 911
Amortisation
of goodwill 249 - -
Surplus on sale
of other fixed assets (1 700) (1 091) (2 273)
3 261 12 320 49 638
Tax charge/(relief)
attributable
to adjustments 176 (2 297) (16 657)
Attributable to minority
shareholders - (2 006) (2 436)
Headline earnings 51 141 69 868 69 015
Diluted earnings
per share
Dilution shares (000) 2 136 1 971 2 300
Earnings adjustment 1 315 1 154 3 042
Diluted earnings
per share (cents) 135.7 175.3 114.5
Diluted headline
earnings per
share (cents) 145.2 197.7 198.7
Operating income
to net operating
assets (%) 16 21 13
Earnings to ordinary
shareholders' funds (%) 11 14 5
Additional financial
information
Depreciation 35 880 39 996 79 155
Finance cost (13 169) (15 636) (30 273)
Interest received 4 721 8 001 12 200
Interest paid (17 890) (23 637) (42 473)
Capital expenditure
Replacement 24 049 21 255 42 766
Expansion 27 296 18 028 40 598
Ordinary shares (000)
Issued 33 994 33 965 33 976
Weighted average 33 986 33 960 33 964
Segmental Analysis
Unaudited Unaudited Audited
6 Months to 6 Months to 12 Months to
September September March
2001 2000 2001
R000 R000 R000
Revenue
Business Segment
Automotive manufacturing 431 742 701 552 1 266 315
Midas 465 399 473 731 914 579
Metals trading 473 004 432 922 802 389
Building products 586 971 554 422 1 036 973
Engineering and
water products 316 892 351 332 672 387
Corporate and
consolidation (34 713) (50 782) (50 964)
Total Revenue 2 239 295 2 463 177 4 641 679
Geographical Location
South African
operations - local 1 597 268 1 780 985 3 337 266
South African
operations - export 155 914 180 208 401 847
International
operations 486 113 501 984 902 566
Total Revenue 2 239 295 2 463 177 4 641 679
Operating income
Business Segment
Automotive manufacturing (2 587) 18 595 17 154
Midas 10 835 18 628 28 361
Metals trading 17 068 17 065 29 024
Building products 31 389 40 751 13 990
Engineering and
water products 20 027 29 621 42 007
Corporate and
consolidation (2 493) (4 628) (5 712)
Total operating income 74 239 120 032 124 824
Geographical Location
South African
operations
(including exports) 53 998 86 392 121 716
International operations 20 241 33 640 3 108
Total operating income 74 239 120 032 124 824
Group Abridged Balance Sheet
Unaudited Unaudited Audited
September September March
2001 2000 2001
R000 R000 R000
EQUITY AND LIABILITIES
Capital and reserves 946 809 959 788 911 826
Ordinary
shareholders' funds 869 614 888 934 838 316
Preference share capital 3 980 3 980 3 980
Minority interest 73 215 66 874 69 530
Non-current liabilities 314 768 332 270 283 198
Deferred tax liabilities 14 504 9 419 5 028
Retirement benefit
obligation 50 500 50 500 50 500
Long term borrowings 249 764 272 351 227 670
Current liabilities 838 087 990 377 845 842
Trade and other payables 749 139 845 571 767 343
Short term borrowings 88 948 144 806 78 499
Total equity and
liabilities 2 099 664 2 282 435 2 040 866
ASSETS
Non-current assets 555 124 537 319 514 829
Fixed and intangible
assets 460 548 490 993 442 587
Investments and advances -
associates
(see note below) 41 372 35 184 30 297
Deferred tax assets 46 248 5 128 34 857
Other non-interest
bearing advances 6 956 6 014 7 088
Current assets 1 544 540 1 745 116 1 526 037
Inventories 540 966 668 978 534 737
Trade and other
receivables 630 021 779 646 733 204
Cash and cash
equivalents 373 553 296 492 258 096
Total assets 2 099 664 2 282 435 2 040 866
Additional financial
information
Net (cash)/borrowings (34 841) 120 665 48 073
Long term borrowings 249 764 272 351 227 670
Short term borrowings 88 948 144 806 78 499
Cash and cash
equivalents (373 553) (296 492) (258 096)
Net operating assets 930 724 1 135 244 980 570
Total assets 2 099 664 2 282 435 2 040 866
Trade and other
payables (749 139) (845 571) (767 343)
Deferred tax assets (46 248) (5 128) (34 857)
Cash and cash
equivalents (373 553) (296 492) (258 096)
Capital commitments
authorised 26 580 9 907 55 795
Contracted for 23 903 9 381 19 741
Not contracted for 2 677 526 1 332
Purchase of business -
Stalcor (30% share) - - 34 722
Contingent liabilities 45 464 13 794 41 129
Debtors discounted
with recourse 4 781 12 577 1 533
Operating lease
guarantees 27 562 - 27 840
Other 13 121 1 217 11 756
Operating lease
commitments 463 747 452 802 468 055
Investments and
advances to associates
at valuation 88 673 65 649 59 086
Net asset value
per share (cents) 2 558 2 617 2 467
Note: Investments and advances to associates include an equity accounted
finance company.
Repurchase commitments of that company amounted to R29 million at 30
September 2001 (March 2001 - R31 million).
Statement of Changes in Equity
Unaudited Unaudited Audited
6 Months to 6 Months to 12 Months to
September September March
2001 2000 2001
R000 R000 R000
Balance at beginning
of period 838 316 857 611 857 611
Movement in
translation reserves 7 152 (3 491) (7 112)
Attributable earnings
for the period 47 704 61 851 38 470
Dividends (23 794) (27 165) (50 941)
Increase in
stated capital 236 128 288
Balance at end of period 869 614 888 934 838 316
Group Cash Flow Statement
Unaudited Unaudited Audited
6 Months to 6 Months to 12 Months to
September September March
2001 2000 2001
R000 R000 R000
Net cash inflow from
operating activities 118 021 29 220 10 554
Operating cash flow 105 155 145 918 141 534
Movement in
working capital 63 392 (34 343) 2 310
Finance cost (13 169) (15 636) (30 273)
Taxation paid (13 459) (39 450) (51 864)
Dividends paid (23 898) (27 269) (51 153)
Net cash effect from
investing activities (14 963) (19 763) 92 109
Capital expenditure (51 345) (39 283) (83 364)
Disposals of fixed assets 8 370 7 526 13 850
Disposals and
acquisitions of
businesses 25 506 12 755 160 901
Decrease/(increase)
in advances 2 506 (761) 722
Net cash effect from
financing activities (4 004) 65 075 (72 654)
Decrease in minority
interest (2 485) (3 288) (7 267)
Net (repayment of)/
proceeds from
long/short term borrowings (1 755) 68 235 (65 675)
Increase in stated capital 236 128 288
Net cash inflow 99 054 74 532 30 009
Foreign currency
translation effect 16 403 8 561 14 688
Increase in cash and
cash equivalents 115 457 83 093 44 697
Cash and cash equivalents
at beginning of period 258 096 213 399 213 399
Cash and cash equivalents
at end of period 373 553 296 492 258 096
note
The principal accounting policies as set out in the Group's 2001 annual
report have been consistently applied in the period under review. September
2000 comparatives have been adjusted for the effects of accounting policy
changes adopted at March 2001. The effects on attributable earnings for the
period are not material.
Results
Group turnover for the six month period to 30 September 2001 remained fairly
static, representative of the flat trading conditions. The strikes in the
local automotive and tyre industries, and the subdued trading in September
after the terrorist attacks in the USA, also adversely affected sales. To
further compound the position, margin reductions were necessary in order to
defend market share, which resulted in a marked decline in operating income
compared to the first six months of last year. Following the
closure/disposal of a number of loss making operations during the latter
half of last year, earnings have however improved when compared to the final
six months of that year.
While there was a further reduction in the interest charge relevant to the
South African operations, the improvement was partly offset by the increase
in the interest charge relevant to the Alpine operations offshore, due to
the ongoing deterioration in the Rand/Dollar exchange rate. Nevertheless,
the interest charge at R13,2m is R2,5m favourable compared to the equivalent
period last year. The tax charge is R10m lower than the first six months of
last year and is in line with expectations.
Income from associate companies is higher than the equivalent period last
year due to the disposal of certain investments that were generating losses
or low returns. There has also been a significant improvement in the
profitability of the investments held within the Engineering division.
As a result of the decline in operating income, partly offset by the
increase in income from associates and a lower tax charge, headline earnings
per share decreased by 27% compared to the equivalent period last year.
Disposals and Acquisitions
The only acquisition was the purchase of the 30% minority interest in
Stalcor.
The major disposal during the six month period was the Water Solutions
operation, which disposal is subject to Competition Commission approval.
This operation, which was disposed of at a capital profit of R6,3m, was
regarded as non core. Firstpro, an automotive component manufacturer, was
also sold, but at a loss of R3,8m. Other minor interests in associate
companies involved in the motor industry were also disposed of. Offshore,
Alpine disposed of its small German operation at a loss of R1,4m.
Apart from the above exceptional items, the only other significant item
related to the write-off of the remaining outstanding debt of R5,1m due in
respect of last year's disposal of Cutmaster Steel.
Cash on Hand/Borrowings
The net cash position at the end of the period of R35m, was due to the
disposal of the Water Solutions division for a consideration of R50m. The
cash position would have been better, had it not been for the weakness of
the Rand/Dollar exchange rate, which added R24,2m to the Alpine net
borrowings (which in Dollar terms actually declined by $4,2m). The ongoing
disposal of non core operations locally will further improve the cash
position in South Africa and as this cash cannot be used to repay offshore
borrowings due to exchange control restrictions, consideration will be given
to returning surplus funds to shareholders.
Divisional Comment
1. Automotive Manufacturing
This segment of the group consists of Dorbyl Automotive Technologies and
Dorbyl Transport Products. These operations have experienced a difficult
period, being adversely affected by the slow down in the American Automotive
Industry, the strikes at the plants of the local vehicle manufacturers,
followed by further strikes in the tyre industry, and the continued low
activity in the bus and trailer industry. While there was an expectation
that the local Metro Transport Council in Gauteng would place a large order
for buses locally, the total order was placed offshore. Exports have notably
declined during the period, due to the slow down of the American economy in
particular. Numerous other export opportunities have however been
successfully realised and the major part of the group's capital expenditure
will be in support of this export initiative.
2. Building Products
The building products division includes Alpine, USA and Global Roofing
Solutions locally. Alpine is currently experiencing mixed fortunes, with
equipment sales being particularly hard-hit by the economic slow down in the
USA (which gained significant momentum after 11 September) and Europe. While
Connector sales have largely been maintained, the overall profitability has
declined when compared to the first six months of last year. Cost cutting
and rationalisation has improved the prospects of the operation for the next
six months when compared to the losses it made in the final six months of
last year. The local Global Roofing Solution operations are generating
satisfactory returns.
3. Engineering and Water Products
This operation continues to find trading conditions difficult, but has
managed to improve its order book slightly. Superior returns on capital
employed continue to be generated by this division. The main concern at
present is the Structural Products operation where demand for
telecommunication masts has fallen off significantly. The Water Solutions
division produced satisfactory returns until its disposal.
4. Midas
Margins continued to decline in this operation and profitability suffered as
a result.
5. Metals Trading
This segment comprises Baldwins, being two processing operations at Isando
and Vanderbijlpark and Stalcor, the Stainless Steel and Aluminium Trading
operation. While Baldwins improved its performance, the operation at Isando
still fails to provide an adequate return. Stalcor has noted increasing
pressure on margins as a result of competitively priced imported product.
The recent weakness in the Rand should provide some relief in this regard.
Amendments to Legislation
Proposed and published changes to legislation relating to Pension and
Provident Funds surpluses, Medical Aid Schemes, Labour Relations and Capital
Gains Tax could cumulatively have a materially detrimental affect on
profitability in future. It is expected that the labour intensive
manufacturing industry will be worst affected and this could well lead to
further job losses.
Prospects
Levels of demand are particularly erratic at present and, while it is
generally expected that there will be further softening, it is difficult to
predict the extent. The weakening of the Rand could however be beneficial
for export earnings.
Despite the above and provided no further deterioration in the present
turbulent conditions occurs, it is still anticipated that the results for
the second six months will be such that the full year's results will be
comparable to those of the previous year.
The Group is intending to continue to reduce the diversity of its activities
wherever it can, and, while cash flow will improve, earnings could be
affected.
Interim Dividend No. 103
An interim dividend of 70 cents (2000 - 70 cents) per ordinary share has
been declared. The last date to trade "cum" the dividend in order to
participate in the dividend will be Friday, 4 January 2002. The shares of
Dorbyl will commence trading "ex" the dividend from the commencement of
business on Monday, 7 January 2002 and the record date will be Friday, 11
January 2002. The dividend is payable on Monday, 14 January 2002.
No dematerialisation or rematerialisation of share certificates may take
place between Friday, 28 December 2001 and Friday, 11 January 2002, both
days inclusive.
On behalf of the board
N Phillips (Chairman) W W Cooper (Group Chief Executive)
14 November 2001
Transfer secretaries:
Mercantile Registrars Limited, 11 Diagonal Street, Johannesburg, 2001, P O
Box 1053, Johannesburg, 2000
Secretary and registered office:
B D Bhikha, Dorbyl Ridge, 16 Jan Smuts Avenue, Parktown, 2193
Directors:
N Phillips (Chairman), W W Cooper (Group Chief Executive),
W E B hrmann, M J Gouws, J B Magwaza, D Orwin, E J Vorster,
T van Wyk.
For more information visit our website:www.dorbyl.co.za
