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GUBB & INGGS LIMITED
("G&I" or "the company")
(Incorporated in the Republic of South Africa)
(Registration number 1916/001495/06)
JSE code: GUB ISIN code: ZAE000003208
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2002
CONSOLIDATED ABRIDGED INCOME STATEMENT
Half Year Half Year Year Ended
Ended Ended June
December December 2002
2002 2001
(Unaudited) (Unaudited) (Audited)
R"000 R"000 R"000
Revenue 199,835 172,773 426,203
Cost of sales 175,127 149,263 372,100
Gross profit 24,708 23,510 54,103
Other operating 375 2,727 11,221
income
25,083 26,237 65,324
Operating expenses 15,069 14,708 34,323
Results from 10,014 11,529 31,001
operating activities
Financing costs 9,314 6,259 15,427
Profit before 700 5,270 15,574
taxation
Taxation 39 773 3,971
Profit after taxation 661 4,497 11,603
Minority interest 215 232 (660)
Net profit for the 446 4,265 10,943
period
Shares issued (`000s) 2,031 2,031 2,031
Earnings per ordinary 22.0 210.0 538.8
share (cents)
Headline earnings per 22.0 210.0 538.8
share (cents)
Dividend per ordinary - - -
share (cents)
CONSOLIDATED ABRIDGED BALANCE SHEET
Half Year Year ended
Half Year Ended June
Ended December 2002
December 2001 (Audited)
2002 R"000
(Unaudited)
(Unaudited) R"000
R"000
Assets
Non current assets
Property plant & 33,916 31,304 29,534
equipment
Investment 17,670 14,512 13,300
properties
Unlisted investments 954 958 954
Deferred taxation - - 345
52,540 46,774 44,133
Current assets
Inventories 153,736 139,065 128,121
Trade & other 88,074 85,723 85,023
receivables
Bank balances - - 2,478
241,810 224,788 215,622
Total assets 294,350 271,562 259,755
Non-distributable 19,357 24,290 22,089
reserves
Distributable 82,580 75,456 82,134
reserves
Ordinary 103,229 101,038 105,515
shareholders"
interest
Outside 1,297 654 1,082
shareholders"
interest
104,526 101,692 106,597
Non current
liabilities
Deferred taxation 4,930 1,724 5,206
Long term 1,134 1,115 1,134
liabilities
6,064 2,839 6,340
Current liabilities
Trade & other 17,095 15,271 24,386
payables
Amount owing to 5,095 4,860 4,430
group companies
Bank overdrafts 161,570 146,900 118,002
183,760 167,031 146,818
Total equity and 294,350 271,562 259,755
liabilities
CONSOLIDATED CASH FLOW STATEMENT
Cash flows from Half year Year
operating activities Half year ended ended
ended December June
December 2001 2002
2002 (Unaudited) (Audited)
(Unaudited) R"000 R"000
R"000
Operating income before 8,894 15,365 36,098
working capital changes
(Increase) in working (32,173) (28,662) (8,569)
capital
Cash (utilised) (23,279) (13,297) 27,529
generated in operations
Financing costs (9,314) (6,259) (15,427)
Taxation paid (3,100) (708) (2,937)
Dividend paid - (711) (711)
Net cash inflow from (35,693) (20,975) 8,454
operating activities
Cash flows from
investing activities
Purchase of property, (6,554) (1,220) (675)
plant and equipment
(Additions to) disposal (4,370) - 1,212
of investment
properties
Proceeds from sale of 571 62 259
property, plant and
equipment
Net cash (10,353) (1,158) 796
(outflow)/inflow from
investing activities
Long-term liabilities - 15 4
raised
Loans repaid - - 4
Net (increase) decrease (46,046) (22,118) 9,258
in bank overdrafts and
short term loans
Bank overdrafts and (115,524) (124,782) (124,782)
short-term loans at
beginning of year
Bank overdrafts and (161,570) (146,900)
short-term loans at end (115,524)
of period
STATEMENT OF CHANGES IN EQUITY
Share Share Non- Accumulated
Capital Premium distributable Profit
R"000 R"000 Reserves R"000
R"000
Balance at 1 1,015 277 22,089 82,134
July 2002
Net profit for 446
the period
Deficit on (2,732)
translation of
foreign
subsidiaries
Deferred tax -
adjustment
Unaudited 1,015 277 19,357 82,580
Balance at 31
December 2002
BASIS OF PREPARATION
The interim and unaudited financial statements of the company have been prepared
in accordance with South African Statements of Generally Accepted Accounting
Practice, which policies have been applied consistently from prior years.
COMMENTARY
Looking back at our previous financial year ending June 2002, it would have been
difficult to imagine a more contrasting trading period than the one now under
review. Early last year a significant increase in wool prices, coupled with a
weak Rand, enabled your group to trade profitably despite the aftermath of 9/11
and a generally weakening world economy. At the same time your directors in
their last report did refer to the possibility that higher wool prices would
turn manufacturers away from wool to cotton and synthetics. Unfortunately this
development has now been confirmed and coupled with the sharp strengthening of
the Rand, is having a negative impact on your Group"s earnings this year.
World raw wool supply continued to decline and only the need to fill the
continuing over-capacity in world wool combing is keeping prices at levels which
manufacturers are as yet unable to follow. The result has been a poor demand for
Wool Tops, which will inevitably translate into short-time in the months ahead
as far as wool combing is concerned. Fortunately business for carbonised
products has not shown the same trend resulting in a satisfactory utilisation of
processing capacity.
Despite this negative scenario your directors can report that the various
capital expenditures in combing as well as into building extensions for our
property investment, as indicated in our previous report, have now been
completed. Further capex has been incurred in the purchase of the processing
machinery of Standard Wool S.A., a carbonising mill situated in Port Elizabeth,
which closed down earlier this year. It is hoped that in the long-term this
closure will have some benefit for your Group, although at present with the
current unfavourable market and exchange rate conditions, this is hardly
expected to make an early impact.
Unlike mohair, which seems to be competitively priced after recent declines and
is now experiencing a reasonable demand particularly for Adult hair, the wool
price is at present uncompetitive compared to cotton (6:1) and synthetics (5:1),
ratios which should historically be 4:1 and 3:1 respectively. Since the
beginning of 2003 wool prices have decreased in Australia and it remains to be
seen whether this adjustment is sufficient to encourage manufacturers to return
to wool. Unfortunately consumer confidence in the important textile consuming
countries, USA and Western Europe is decreasing and significant reductions have
been seen in demand for apparel clothing retail sales in these countries with
Germany, Italy and France, traditionally the strongest consumers, leading the
downward trend. With world wool supplies currently at a 50 year low,
uncertainties regarding the situation in Iraq affecting world economies
negatively, high interest rates and an over-value currently, your directors are
not optimistic as far as prospects for the current financial year are concerned
and no dividend will be declared.
On behalf of the board
JP Stucken HN Bonner
Chairman Executive Director
28 March 2003
Johannesburg
Sponsor
The Janus Corporation (Pty) Ltd
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