| Wed 22 Jan 2003, 15:55 | | Hudaco - Audited Group Results For The Year Ended |
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Hudaco Industries Limited
Reg no 1985/004617/06
Share code HDC ISIN code ZAE000003273
AUDITED GROUP RESULTS FOR THE YEAR ENDED
30 November 2002
A network of specialised branches and independent distributors serves the
replacement part markets in Southern Africa`s primary and secondary industries
and domestic and commercial security service providers.
- Sales up 35% to R1,45 billion
- Headline EPS up 41% to R3,16
- Dividends up 40% to 105 cents per share
BEARINGS & TRANSMISSION PRODUCTS
ABES Technoseal
Importer and distributor of world-class oil seals, hydraulic, pneumatic and
rotary shaft seals.
Bearings International
The distribution of leading international brands of anti-friction bearings,
geared motors, belting, chain, hydraulics, pneumatics, seals and valves to the
manufacturing, mining, agricultural and automotive after-markets.
Belting Supply Services
Specialist suppliers of conveyor belting, power transmission products and
industrial hoses.
BEP Bestobell South Africa
Supplies internationally branded products and systems for the control and
monitoring of flow, temperature, pressure and moisture.
Bosworth
Market leaders in design and manufacture of conveyor pulleys, forge, heat
treatment and plate rolling.
Ernest Lowe ELCO
Quality automation solutions using world-class pneumatic and hydraulic products.
Mather + Platt
Distributors of Viking, Lowara and Mather + Platt pumps and spares.
Valard Bearings - specialising in repair and manufacture of white-metal
bearings.
Vivian Regina
Manufactures glass-fibre tissues for the glass-reinforced plastics,
waterproofing, lead acid battery and pipeline protection markets.
POWERED PRODUCTS
Deutz Dieselpower
Marketing and servicing of Deutz diesel engines and spares.
Rutherford
Sole distributor of Makita industrial power tools, Mercury and Mariner outboard
engines and accessories and survey and GPS equipment.
SECURITY EQUIPMENT
ES
Africa`s leading service provider of electronic security systems to the security
industry, through distribution, training and technical support.
Visionline
Distributor of closed-circuit television, access control, fire detection and
fibre-optic equipment.
AUTOMOTIVE PARTS
Angus-Hawken
Manufacturer of rotary shaft and pneumatic seals in NBR, Viton and Silicone
compounds.
Hudaco Friction
Manufacturers and distributors of quality passenger and commercial vehicle disc
pads and linings to vehicle manufacturers, replacement and export markets.
PHC Clutch
Distributes the Valeo brand of light and medium-duty clutches.
RESULTS
Hudaco has had another very good year. Businesses in the Bearings & Transmission
and Powered Products divisions produced results which were particularly strong.
The year also saw the Security Equipment division establish a presence in the
United Kingdom.
Sales of R1,45 billion for the year are up 35% on 2001. There are three main
reasons for the increase - real sales volumes were higher as Hudaco`s markets,
principally the mining and manufacturing sectors as well as the local market for
security equipment, recorded reasonable growth in the year. Two acquisitions,
Bauer Geared Motors and the forming of Elsec UK by the purchase of two existing
distributors contributed 7% to the increase. Thirdly, part of the 35% increase
in sales resulted from particularly steep price increases after the sharp
decline in the Rand at the beginning of 2002.
The operating profit margin rose from 9,3% to 9,8% contributing to a 42%
increase in operating profit to R142 million. Net financing costs increased from
R4,2 million to R7,5 million due, in part, to higher interest rates and a
reduction in cash balances after spending R22 million on acquisitions. A
slightly increased effective rate of taxation, and a reduction in profits
attributable to outside shareholders resulted in headline earnings increasing
43% from R63 million in 2001 to R89 million.
Headline earnings per share rose 41% to 315 cents. The final dividend of 76
cents brings total dividends this year to 105 cents per share, an increase of
40%.
BALANCE SHEET AND CASH FLOW
Total assets increased by R93 million to R782 million mainly because of the
investment of an additional R80 million in inventories and accounts receivable,
R29 million of which was from acquisitions. Acquisitions also added R31 million
to goodwill, of which R15 million will be paid to vendors only if pre-agreed
levels of sales or profitability are attained. The group`s 15% interest in Midas
Limited was sold for R19 million. DDPower, our diesel engines subsidiary, paid
out its surplus cash on hand as a special dividend in November 2002 which
resulted in a R20 million reduction in outside shareholders` interests while the
STC of R12 million on Hudaco`s share of the dividend is reflected as a deferred
tax asset. Cash flow per share of 194 cents was lower than earnings per share
following a 23% increase in working capital but net cash on hand at year-end
(cash balances less interest bearing debt) amounted to R56 million and gives the
group considerable internal resources for expansion.
PROSPECTS
Hudaco`s principal markets, the South African mining, manufacturing and security
industries are expected to record satisfactory growth in 2003. Further, the
Rand`s improved exchange rate will, if it continues, contribute to a lower rate
of inflation and lower interest rates which should impact favourably on consumer
spending and give further growth momentum to the South African economy. In
addition, Elsec UK will complete the consolidation of the two businesses
acquired into one distribution centre and start to make a contribution to
Hudaco`s profitability in the 2003 financial year.
Although the Rand`s strength may result in the loss of some of the 2002 price
driven sales growth another sound financial performance is expected in 2003 with
headline earnings per share increasing ahead of the rate of inflation.
DIVIDEND
Notice is hereby given that final dividend No 31 of 76 cents per share has been
declared in respect of the year ended 30 November 2002.
The last day to trade in order to participate in the dividend ("cum" the
dividend), will be Thursday, 13 March 2003. The share will commence trading "ex"
the dividend from the commencement of business on Friday, 14 March 2003 and the
record date will be Thursday, 20 March 2003. The dividend will be paid on
Monday, 24 March 2003. Share certificates may not be dematerialised between
Friday, 14 March 2003 and Thursday, 20 March 2003, both days inclusive.
AUDIT OPINION
Grant Thornton Kessel Feinstein have signed an unqualified audit opinion on the
financial statements for the year. These have been approved by the board and
abridged for purposes of this report. Both the auditors` opinion and the
financial statements are available for inspection at the company`s registered
office.
For and on behalf of the Board
PL Campbell (Chairman) SJ Connelly (Chief Executive)
21 January 2003
Transfer secretaries
Computershare Services Limited
PO Box 61051 Marshalltown 2107
Registered office
Hudaco Park 190 Barbara Road Elandsfontein 1406
Tel +27 11 345 8200 Fax +27 11 392 2740 E-mail info@hudaco.co.za
Directors
PL Campbell# (Chairman) SJ Connelly (Chief Executive) GE Gardiner
JB Gibbon# MS Jolly PG Joubert# A Keschner YKN Molefi# PM Poole #Non
executive
Secretary
RGL Arnestad
INCOME STATEMENT
30 Nov % 30 Nov
R million 2002 Change 2001
Turnover 1 451,3 35 1 073,4
- Continuing operations 1 378,4 28 1 073,4
- Acquisitions in 2002 72,9
Cost of sales 958,2 675,9
Gross profit 493,1 397,5
Operating expenses 351,0 297,4
Operating profit 142,1 42 100,1
- Continuing operations 142,3 42 100,1
- Acquisitions in 2002 (0,2)
Capital items written off 5,2 4,0
Profit before interest 136,9 96,1
Net finance costs 7,5 4,2
Profit before taxation 129,4 91,9
Taxation 43,8 28,3
Profit after taxation 85,6 63,6
Share of associate
company profits 2,0 1,7
Attributable to outside
shareholders (3,6) (6,8)
Profit attributable to
shareholders 84,0 58,5
Add back capital items 5,2 4,0
Headline earnings 89,2 43 62,5
Headline earnings per
share (cents) 315,7 41 224,1
Basic earnings per
share (cents) 297,1 209,7
Diluted earnings
per share (cents) 291,3 204,7
Distributions to
shareholders
- Per share (cents) 105,0 40 75,0
- Amount (Rm) 29,9 21,0
Shares in issue 28 490 28 018
- Total (000) 30 998 30 526
- Held by subsidiary (2 508) (2 508)
Weighted average
shares in issue
- Basic (000) 28 264 27 892
- Diluted (000) 28 835 28 586
BALANCE SHEET
30 Nov 30 Nov
R million 2002 2001
ASSETS
Non-current assets 108,9 89,0
Property, plant and equipment 45,0 39,6
Deferred taxation - net 17,0 4,2
Investment in associate 25,1
Goodwill 46,9 20,1
Current assets 672,9 600,2
Inventories 315,0 259,5
Accounts receivable 250,9 226,0
Bank deposits and balances 107,0 114,7
TOTAL ASSETS 781,8 689,2
EQUITY AND LIABILITIES
Equity 416,4 370,8
Shareholders` equity 396,0 332,6
Outside shareholders` interest 20,4 38,2
Non-current liabilities 69,8 55,1
Interest-bearing debt 50,6 50,9
Amounts due to vendors 19,2 4,2
Current liabilities 295,6 263,3
Accounts payable 249,9 234,3
Taxation 45,7 29,0
TOTAL EQUITY AND LIABILITIES 781,8 689,2
CASH FLOW STATEMENT
30 Nov 30 Nov
R million 2002 2001
Cash generated from trading 160,3 110,4
Cash applied to working capital (56,4) 21,5
Cash generated from operating
activities 103,9 131,9
Net finance costs (7,5) (4,2)
Taxation paid (41,6) (18,1)
Cash flow from operations 4,8 109,6
Cash dividends and capital
repayments (44,6) (17,0)
Net cash retained 10,2 92,6
Net investment in new
operations (2,6) (49,3)
Net investment in fixed assets (17,5) (9,0)
Net cash invested (20,1) (58,3)
CASH UTILISED (9,9) 34,3
Shareholder funding 1,8 0,8
Shares repurchased by
subsidiary company (0,1)
Foreign currency
translation effect 0,7
DECREASE IN NET CASH (7,4) 35,0
STATEMENT OF CHANGES IN EQUITY
30 Nov 30 Nov
R million 2002 2001
Equity at beginning of period 332,6 290,1
- As previously stated 332,6 281,0
- Change in accounting policy
(AC 107/AC 135) 9,1
Attributable profit for
the period 84,0 58,5
Capital transactions
and payments to shareholders (20,6) (16,0)
Share issues 2,0 0,7
Gain on translation of
foreign entities 0,6
Dividends and capital
repayments (23,2) (16,7)
Equity at the end of the
period 396,0 332,6
SUPPLEMENTARY INFORMATION
These results were prepared applying accounting policies which conform with
South African Statements of Generally Accepted Accounting Practice and are
consistent with those applied in the 2001 annual financial statements, except
for changes resulting from the mandatory application of the following new
accounting statements:
- AC 107, "Events after the balance sheet date", which requires that
distributions to shareholders and the related STC expense be recognised only
when declared. Previously distribution payments were recognised in the period to
which the distribution related.
- AC 135, "Investment property" which requires that owner-occupied property be
depreciated. Land and buildings were previously classified as investment
properties which were not depreciated.
The resulting restatement of opening reserves is reflected in the Statement of
Changes in Equity. These changes had an insignificant effect on the profit for
the 2001 year and they have therefore not been restated.
30 Nov 30 Nov
2002 2001
Average net operating
assets (NOA) (Rm) 376,1 320,0
Operating profit margin (%) 9,8 9,3
Average NOA turn (times) 3,9 3,4
Return on average NOA (%) 37,8 31,3
Depreciation (Rm) 13,3 11,0
Interest covered by
operating profit (times) 18,9 23,8
Gearing - net (%) nil nil
Net asset value per share (cents) 1 390 1 187
Capital expenditure (Rm)
- Spent during the year 19,0 11,7
- Budgeted for 2003 17,5
Net cash comprises (Rm) 56,4 63,8
- Bank call deposits and balances 107,0 114,7
- Interest-bearing debt - Non-current (50,6) (50,9)
Operating lease commitments
- Property (Rm) 35,4 27,4
Capital items written off (Rm) 5,2 4,0
Amortisation of goodwill 4,6 1,5
Loss on disposal of
investment in associate 2,4
Release of provision against loans (1,8)
Cost of closure of business 2,5
SEGMENT ANALYSIS
Turnover Operating profit Average net operating assets
30 Nov 30 Nov 30 Nov 30 Nov 30 Nov 30 Nov
R million 2002 2001 2002 2001 2002 2001
Bearings &
Transmission
Products 728,1 576,1 82,1 52,7 192,2 180,1
Powered Products 303,0 233,0 35,4 26,4 61,2 63,0
Security Equipment
(from March 2001) 276,7 126,3 13,3 11,5 84,4 34,9
Automotive Parts 148,4 135,7 10,3 11,5 57,4 56,1
Internal/Head
office (4,9) 2,3 1,0 (2,0) (19,1) (14,1)
Total Group 1 451,3 1 073,4 142,1 100,1 376,1 320,0
value-added distribution
These results are available on the Internet at www.hudaco.co.za
Date: 22/01/2003 03:00:00 PM Produced by the JSE SENS Department
