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DORBYL LIMITED - INTERIM GROUP RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER
2003
DORBYL LIMITED
Incorporated in the Republic of South Africa
Company Registration number 1911/001510/06
Share code: DLV ISIN code: ZAE 000002184
INTERIM GROUP RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2003
GROUP INCOME STATEMENT
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
to to to
September September March
2003 2002 % 2003
R000 R000 Change R000
Revenue 977 491 1 768 814 (45) 2 927 750
- continuing operations 948 054 1 028 119 (8) 1 892 917
- discontinued 29 437 740 695 1 034 833
operations
Operating income/(loss) 55 965 103 437 (46) 143 785
- continuing operations 65 492 54 695 20 82 543
- discontinued (9 527) 48 742 61 242
operations
Finance income 19 852 8 723 26 088
Income - associates 217 7 436 7 695
Profit before 76 034 119 596 (36) 177 568
exceptional items
Exceptional items 33 548 139 692 133 695
Profit before taxation 109 582 259 288 (58) 311 263
Taxation (34 463) (36 302) (69 731)
Profit after taxation 75 119 222 986 (66) 241 532
Minority interest (4 828) (8 265) (12 339)
Preference dividends (106) (106) (212)
Earnings attributable to 70 185 214 615 (67) 228 981
ordinary shareholders
Earnings per share
(cents)
Earnings per share 211.9 649.5 (67) 692.0
Headline earnings per 118.5 234.3 (49) 289.5
share
Headline earnings per
share adjusted for
Secondary
Tax on Companies (STC) 118.5 238.6 (50) 356.4
relating to special
dividends
Dividends paid per share 50 108 (54) 658
(cents)
Final - year ended 31 50 80 80
March 2003 (2002)
Interim - period ended 50
30 September 2002
Special dividends - 28 528
Dividend cover - 2.4 2.9 2.2
headline earnings/normal
dividends (times)
Dividends declared per 30 50 50
share (cents)
Special dividend 100
declared per share
(cents)
Share capital repaid 26 472 472
August 2002 per ordinary
share (cents)
Exceptional items before 33 548 139 692 133 695
taxation
Profit on 33 524 136 822 128 504
disposal/discontinuation
of businesses
Impairment of assets - (1 922) (2 363)
Profit on disposal of 24 4 792 7 554
fixed property
Tax charge attributable (2 330) (2 724) (832)
to exceptional items
Headline earnings
reconciliation
Earnings per the income 70 185 214 615 228 981
statement
Adjusted for: (30 939) (137 204) (133 199)
Exceptional items (33 548) (139 692) (133 695)
Loss/(profit) on sale of 399 (341) (483)
other fixed assets
(33 149) (140 033) (134 178)
Tax charge attributable 2 210 2 826 977
to adjustments
Attributable to minority - 3 2
shareholders
Headline earnings 39 246 77 411 95 782
STC relating to special - 1 426 22 145
dividends
Headline earnings after 39 246 78 837 117 927
STC adjustment
Diluted earnings per
share
Dilution shares (000) 1 335 1 694 1 408
Earnings adjustment 797 1 018 1 703
Diluted earnings per 206.0 620.8 668.7
share (cents)
Diluted headline 116.2 225.8 282.6
earnings per share
(cents)
Operating income to net 26 38 27
operating assets (%)
Earnings to ordinary 19 50 34
shareholders" funds (%)
Additional financial
information
Depreciation 23 862 34 749 65 171
Finance income/(cost) 19 852 8 723 26 088
Interest received 30 096 37 233 60 046
Interest paid (10 244) (28 510) (33 958)
SEGMENTAL ANALYSIS
Unaudited Unaudited Audited
6 Months to 6 Months to 12 Months to
September September March
2003 2002 2003
R000 R000 R000
Revenue
Business Segment
Dorbyl Automotive 439 113 427 570 831 355
Technologies
Alpine Engineered 508 941 610 398 1 069 703
Products, Inc.
Discontinued operations 29 437 740 695 1 034 833
Corporate and - (9 849) (8 141)
consolidation
Total Revenue 977 491 1 768 814 2 927 750
Geographical Location
South African operations 365 836 840 579 1 355 864
- local
South African operations 102 714 261 617 440 412
- export
International operations 508 941 666 618 1 131 474
Total Revenue 977 491 1 768 814 2 927 750
Operating income
Business Segment
Dorbyl Automotive 11 163 23 598 32 332
Technologies
Alpine Engineered 52 596 49 351 73 471
Products, Inc.
Discontinued operations (9 527) 48 742 61 242
Corporate and 1 733 (18 254) (23 260)
consolidation
Total operating income 55 965 103 437 143 785
Geographical Location
South African operations 3 298 54 208 72 767
(including exports)
International operations 52 667 49 229 71 018
Total operating income 55 965 103 437 143 785
GROUP ABRIDGED BALANCE SHEET
Unaudited Unaudited Audited
September September March
2003 2002 2003
R000 R000 R000
EQUITY AND LIABILITIES
Capital and reserves 767 898 897 300 719 316
Ordinary shareholders" 720 574 856 829 676 471
funds
Preference share capital 3 980 3 980 3 980
Minority interest 43 344 36 491 38 865
Non-current liabilities 116 799 341 224 196 390
Deferred tax liabilities 7 120 5 157 5 468
Post retirement medical 45 998 45 439 45 998
aid obligations
Long-term borrowings 63 681 290 628 144 924
Current liabilities 335 444 457 476 472 505
Trade and other payables 335 444 457 476 400 043
Short-term borrowings - - 72 462
Total equity and 1 220 141 1 696 000 1 388 211
liabilities
ASSETS
Non-current assets 399 065 435 166 437 544
Fixed assets 325 837 355 100 365 368
Intangible assets 25 380 36 378 28 422
Investments and advances 1 212 554 660
- associates
Deferred tax assets 37 410 37 755 39 460
Other non-interest 9 226 5 379 3 634
bearing advances
Current assets 821 076 1 260 834 950 667
Inventories 166 438 247 704 249 539
Trade and other 233 815 363 608 294 662
receivables
Cash and cash 420 823 649 522 406 466
equivalents
Total assets 1 220 141 1 696 000 1 388 211
Additional financial
information
Net cash 357 142 358 894 189 080
Cash at bank, on deposit 355 473 304 697 351 466
and on hand
Interest bearing short- 65 350 344 825 55 000
term advances
Cash and cash 420 823 649 522 406 466
equivalents
Long-term borrowings (63 681) (290 628) (144 924)
Short-term borrowings - - (72 462)
Net operating assets 426 464 551 247 542 242
Total assets 1 220 141 1 696 000 1 388 211
Trade and other payables (335 444) (457 476) (400 043)
Deferred tax assets (37 410) (37 755) (39 460)
Cash and cash (420 823) (649 522) (406 466)
equivalents
Capital commitments 23 211 67 398 9 417
authorised
Contracted for 16 850 29 126 9 249
Not contracted for 6 361 38 272 168
Contingent liabilities 15 071 14 552 12 427
Debtors discounted with 2 769 6 487 4 025
recourse
Operating lease 5 903 6 756 5 903
guarantees
Other 6 399 1 309 2 499
Repurchase commitments of debtors discounted with recourse, where
the underlying securities exceed the outstanding debt, amounted to
R12 million at 30 September 2003 (31 March 2003 - R22 million).
Operating lease 152 428 157 229 143 261
commitments
Operating lease 183 470 159 002 154 956
receivables
Investments and advances 1 500 554 1 500
to associates at
valuation
Net asset value per 2 173 2 585 2 041
share (cents)
Unaudited Unaudited Audited
6 Months to 6 Months to 12 Months to
September September March
2003 2002 2003
R000 R000 R000
Capital expenditure
Replacement 14 581 20 224 45 819
Expansion 11 754 71 116 118 700
Ordinary shares (000)
Issued 33 160 33 145 33 151
Weighted average 33 120 33 042 33 091
STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
6 Months to 6 Months to 12 Months to
September September March
2003 2002 2003
R000 R000 R000
Balance at beginning of 676 471 831 423 831 423
period
Movement in translation (2 825) 743 (11 710)
reserves
Attributable earnings 70 185 214 615 228 981
for the period
Dividends (16 562) (35 684) (218 011)
Adjustment on first time (9 194)
adoption of AC 133
AC 133 cash flow hedge 3 739
reversals
Share capital purchased (1 322) (156 444) (156 444)
by subsidiary/repaid
Shares issued 82 2 176 2 232
Balance at end of period 720 574 856 829 676 471
GROUP CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 Months to 6 Months to 12 Months to
September September March
2003 2002 2003
R000 R000 R000
Net cash retained 61 078 119 481 (41 260)
from/(utilised by)
operations
Operating cash flow 77 504 127 208 193 390
Movement in working (2 326) 40 588 18 559
capital
Finance income 19 852 8 723 26 088
Taxation paid (17 284) (21 248) (61 074)
Dividends paid (16 668) (35 790) (218 223)
Net cash effect from 94 816 291 517 231 494
investing activities
Capital expenditure (26 335) (91 340) (164 519)
Disposals of fixed 1 162 10 293 18 327
assets
Disposals and 126 024 371 291 374 987
acquisitions of
businesses
(Decrease)/increase in (6 035) 1 273 2 699
advances
Net cash effect from (136 225) (221 517) (222 287)
financing activities
Decrease in minority (1 016) (3 815) (4 642)
interest
Net repayment of long- (133 969) (63 434) (63 433)
/short-term borrowings
Decrease in stated (1 240) (154 268) (154 212)
capital
Net cash 19 669 189 481 (32 053)
inflow/(outflow)
Foreign currency (5 312) (9 460) (30 982)
translation effect
Increase/(decrease) in 14 357 180 021 (63 035)
cash and cash
equivalents
Cash and cash 406 466 469 501 469 501
equivalents at beginning
of period
Cash and cash 420 823 649 522 406 466
equivalents at end of
period
commentary
The group"s performance during the six months ended 30 September 2003 was
impacted by three major factors compared to the corresponding period of the
previous year.
Firstly, the discontinued operations, which contributed some R49m in operating
profit last year, made no contribution in the current period.
Secondly, the effect of the disposals on the group"s turnover was that 63%
became foreign currency based, largely the US Dollar, adversely affecting the
translation of the Dollar earnings of the group"s subsidiaries based offshore.
Thirdly, the strength of the Rand severely eroded the profitability of the
exports of Dorbyl Automotive Technologies.
As was previously reported, the disposal of Global Roofing Solutions was
finalised during the period under review. In addition, Dorbyl Transport Products
was disposed of at approximately net asset value, being slightly less than R20m.
Both disposals were effective on 1 April 2003.
Results
The group"s prospects outlined in the Annual Report for the year ended 31 March
2003 stated that earnings were expected to decline due to the downsizing of the
group and the distribution to shareholders of a significant amount of the funds
generated from the disposals that had taken place. Additionally, the
anticipation of depressed USA and world economies and a strong Rand was likely
to adversely impact profitability.
As a result of these factors, turnover declined 45% to R977,5m while the
turnover in continuing businesses declined by 8%, being adversely influenced by
the strength of the Rand. This also distorted the comparison of Alpine"s
results, as, on a Dollar basis, Alpine"s turnover compared to the corresponding
period last year improved by 13%, while in Rand terms it showed a decline of
17%.
Though operating profit declined by 46% to R56m, Alpine performed very well,
lifting its operating profit in Dollar terms by 62% to $7,4m. Dorbyl Automotive
Technologies reflected an operating profit of R11,2m from continuing operations
and an operating loss of R9,5m from discontinued operations for the period.
Interest earnings were strong as the group still holds a significant amount of
cash realised from disposals, but the lower interest rates reduced this benefit.
The high level of corporate tax in the USA, and the fact that the losses
sustained by certain subsidiaries in the Automotive Technologies Division did
not generate any tax relief, have resulted in a high group tax rate.
Consequently, headline earnings declined by 49% to 118,5 cents per share when
compared to the corresponding period last year.
Exceptional profits after taxation amounted to R31,2m mainly due to the profit
realised on the disposal of the local Global Roofing Solutions Division.
Cash on Hand/Borrowings
The net cash position of the group improved by R168,1m to R357,1m at 30
September 2003, R126m of which was generated by the aforementioned disposals.
Good cash flows at Alpine and the stronger Rand have also reduced the level of
Alpine"s borrowings in Rand terms. A loan of R67,3m made by Dorbyl to Alpine has
facilitated a further reduction in Alpine"s external debt.
September 2003 March 2003
Net cash held by South African R384,6m R350,0m
operations*
Less: Alpine net borrowings (SA (R27,5m) (R160,9m)
Rand)*
Net cash R357,1m R189,1m
Alpine net borrowings (US Dollars)* $4,0m $20,4m
* excluding the inter-company loan of R67,3m ($9,7m)
Accounting Policies
The abridged financial statements have been prepared in accordance with South
African Statements of Generally Accepted Accounting Practice. These policies are
consistent with those applied in the most recent annual financial statements,
apart from the adoption of AC 133, "Financial instruments: recognition and
measurement," which requires that financial instruments be recorded at fair
market value.
Gains or losses for a period should be recognised in income, except in the case
of a designated cash flow hedging instrument where gains or losses are deferred
in equity. Application of AC 133 resulted in a write-off of R9,2 million, net of
deferred tax, against opening retained income. This amount was in respect of
interest rate hedging contracts relating to the Alpine long-term loan. The
application of AC 133 had no material effect on earnings for the six months
ended 30 September 2003 or the comparative periods.
DIVISIONAL REVIEW
Dorbyl Automotive Technologies
The much improved results of last year, achieved largely from high export
activity at good margins, could not be sustained in the environment of a
strengthened Rand. Volume and margins have deteriorated and, while there was
some improvement in local activity, it was insufficient to offset the adverse
effects of the strong Rand. Capital expenditure has however continued, on a
selective basis, in the expectation that the Rand will not maintain current
levels in the long term, thereby restoring the division"s ability to export at
satisfactory margins.
However, significant cost containment has taken place in the period and
retrenchments were unavoidable. In particular, it was necessary to close the
Commercial Wheel plant in Port Elizabeth at a cost of R6,5m, which was charged
to exceptional items.
Alpine
The lower interest rates in America stimulated building activity above
expectations. In addition, in a highly competitive market, Alpine increased its
market share. As a result, Alpine had a most successful six months and Dollar
operating profits improved by 62%. Good cash flows enabled a reduction in total
borrowings from $20,4m at 31 March 2003 to $13,7m as at 30 September 2003.
Prospects, Trading Update and Cautionary
The outlook for the next six months must take into consideration the fact that
activity levels will be seasonally lower at both Alpine and Dorbyl Automotive
Technologies, the former due to the cold weather conditions in America (that
significantly contain building activity), and both being affected by the
Christmas period shut-down.
Unless there is a significant weakening of the Rand to the Dollar, export
margins and the Rand value of foreign earnings will continue to be under severe
pressure. On the assumption that the Rand will not weaken materially and taking
to account the seasonal nature of the continuing businesses and lower interest
rates, profitability in the second half of the year can be expected to be
substantially lower than in the first half.
The above information has not been reviewed or reported on by the company"s
auditors. As a result, shareholders are advised to exercise caution when dealing
in Dorbyl shares until a further announcement is made.
Dividends
Special Dividend
As the Group has funds in excess of its future requirements, a special dividend
of R1,00 per share has been declared.
Interim Dividend No. 108
An interim dividend of 30 cents per ordinary share has been declared.
Salient Dates
The last date to trade "cum" the aforementioned dividends in order to
participate in those dividends will be Friday, 2 January 2004. The shares of
Dorbyl will commence trading "ex" the dividends from the commencement of
business on Monday, 5 January 2004 and the record date will be Friday, 9 January
2004. The dividends are payable on Monday, 12 January 2004.
No dematerialisation or rematerialisation of share certificates may take place
between Monday, 5 January 2004 and Friday, 9 January 2004, both days inclusive.
On behalf of the board.
N Phillips (Chairman)
WW Cooper (Group Chief Executive)
17 November 2003
Transfer secretaries:
Computershare Limited, Investor Services Division, 70 Marshall Street,
Johannesburg 2001 (P O Box 61051, Marshalltown, 2107)
Company secretary and registered office:
B D Bhikha, Dorbyl Ridge, 16 Jan Smuts Avenue, Parktown, 2193
Directors:
N Phillips (Chairman)*, WW Cooper (Group Chief Executive), WE Buhrmann*, RC
Duff, JB Magwaza*, D Orwin, EJ Vorster, T van Wyk*
*Non-executive
For more information visit our website: www.dorbyl.co.za
Date: 19/11/2003 05:20:18 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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