| Tue 30 Mar 2004, 9:10 | | Report For The Six Months Ended 31 December 03 |
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Putco Limited - Reviewed Interim Report For The Six Months Ended 31 December
Release Date: 30/03/2004 07:00:01 Code(s): PTC
Putco Limited - Reviewed Interim Report for the six months ended 31 December
2003 and further cautionary announcement
Putco Limited
(Incorporated in the Republic of South Africa)
(Registration number 1945/018672/06)
Share code: PTC ISIN: ZAE000005716
("Putco" or "the Company")
Reviewed Interim Report for the six months ended 31 December 2003 and further
cautionary announcement
Income Statement
Six months ended Year ended
31 December Increase/ 30 June
(decrease) 2003
Rm % (Audited)
2003 2002
(Reviewed) (Unaudited)
Turnover - bus 465,1 433,9 7,2 894,1
operations
Cost of operating 413,3 398,1 3,8 827,8
Operating profit before 51,8 35,8 44,7 66,3
onerous contracts
Onerous contracts 3,6 3,3 17,1
reversal
Operating profit 55,4 39,1 41,7 83,4
Net finance costs 8,3 10,0 21,7
Profit before taxation 47,1 29,1 61,9 61,7
Taxation 15,1 9,7 19,8
Net income for the 32,0 19,4 64,9 41,9
period
Shares in issue 26,4 26,4 26,4
(weighted number)
(millions)
Headline earnings per 127,7 70,8 80,4 159,0
share (cents)
Ordinary earnings per 121,2 73,4 65,1 158,7
share (cents)
Ordinary dividend per 30,0 30,0 50,0
share (cents)
Dividend cover (times) 4,0 2,4 3,2
Determination of
headline earnings
Net income for the 32,0 19,4 41,9
period
Loss/(Profit) on 1,7 (0,7) 0,1
disposal of assets
Headline earnings 33,7 18,7 42,0
Notes:1. Property, plant and equipmentBased on a directors valuation, the
carrying value of the owner occupied properties were written down by R12,2
million as a reversal of previous revaluations. The Non Distributable Reserve
was reduced with R8,6 million being the after tax adjustment.
2.Accounting policiesThe interim results have been prepared in accordance with
South African Statements of Generally Accepted Accounting Practice. The
accounting policies are consistent with those applied in the last annual report.
Segmental ReportingNo segmental information is provided as the Group operates in
a single geographical region and a single line of business.
BALANCE SHEET
31 December 30 June
2003 2002 2003
Rm (Reviewed) (Unaudited) (Audited)
ASSETS
Non - current assets 356,3 310,9 327,8
Property, plant and equipment 349,5 305,3 325,1
Investments 6,8 3,0 2,7
Deferred taxation - 2,6 -
Current assets 117,5 100,2 154,2
Inventory 49,3 59,1 51,8
Trade and other receivables 52,5 41,1 56,7
Cash on call, at bank and on hand 15,7 - 45,7
Total assets 473,8 411,1 482,0
EQUITY AND LIABILITIES
Equity capital and reserves 137,9 105,9 122,4
Ordinary shareholders" interest 137,9 105,9 122,4
Non-current liabilities 156,4 143,6 145,7
Interest-bearing borrowings 87,5 71,6 72,6
Deferred taxation 2,3 - 5,9
Long term provisions 66,6 72,0 67,2
Current liabilities 179,5 161,6 213,9
Short-term borrowings 21,8 12,8 18,2
Provisions 76,3 79,0 95,8
Trade and other payables 69,5 54,4 90,3
Taxation 11,9 4,0 4,4
Net bank overdraft - 11,4 5,2
Total equity and liabilities 473,8 411,1 482,0
CAPITAL EXPENDITURE
- incurred 59,0 57,0 104,7
- contracted for 23,4 37,9 39,7
- authorised but not contracted for 0,5 2,6 4,3
RATIOS
Net asset value per share (cents) 522 401 463
Gearing ratio 1:0,8 1:0,9 1:0,8
Current asset ratio 1:1,5 1:1,6 1:1,4
COMMITMENTS AND CONTINGENT
LIABILITIES
Contingent Liabilities
- Recourse Agreement for the - 3,0 3,0
purchase of buses by joint venture
partners
- Performance guarantees 0,1 2,6 2,6
- Pledge of cash on call to secure 0,1 2,5 0,1
open ended guarantees
Bank borrowing facilities of R40 million were available to the company as at 31
December 2003
CASH FLOW STATEMENT
Six months ended Year ended
31 December 30 June
2003
Rm (Audited)
2003 2002
(Reviewed) (Unaudited)
Cash inflow/(outflow) from 17,7 (29,0) 61,2
operating activities
Net cash generated from operations 35,9 5,8 99,2
Investment income 2,7 1,0 5,0
Finance costs (5,5) (12,2) (13,2)
Taxation paid (7,5) (15,7) (16,6)
Dividends paid (7,9) (7,9) (13,2)
Investing activities (61,0) (54,6) (99,3)
Replacement of property, plant and (58,2) (57,0) (104,7)
equipment
Proceeds on disposal of plant, 1,3 0,4 3,0
equipment
(Increase)/Decrease in investments (4,1) 2,0 2,4
Financing activities 18,5 40,6 47,0
Net long-term liabilities advanced 14,9 36,0 37,0
Net short-term liabilities advanced 3,6 4,6 10,0
Net cash (outflow)/inflow (24,8) (43,0) 8,9
Net cash at beginning of period 40,5 31,6 31,6
Net cash/(overdraft) at end of the 15,7 (11,4) 40,5
period
STATEMENT OF CHANGES IN EQUITY
Share Non-
capital and distributable Distributable
premium reserves reserves Total
Rm Rm Rm Rm
Half year ended 31
December 2003
At 30 June 2003 10,9 20,4 91,1 122,4
Net income for the 32,0 32,0
period
Dividend paid (7,9) (7,9)
Reversal of previous (8,6) (8,6)
revaluation of
properties
At 31 December 2003 10,9 11,8 115,2 137,9
Half year ended 31
December 2002
At 30 June 2002, as 10,9 22,9 60,6 94,4
restated
Net income for the 19,4 19,4
period
Dividend paid (7,9) (7,9)
At 31 December 2002 10,9 22,9 72,1 105,9
General ReviewOur results for the first six months of this financial year are
good. Many of the Strategic Business Units have performed exceptionally well.
The improvement in profit has mainly been brought about by the more favourable
exchange rates, cost containment and the reduction in interest rates. A number
of our major cost items, namely fuel and spares, have not escalated as
previously expected and thus these reduced expenditures improved our bottom-line
performance. As part of our ongoing plan to evaluate and review our support
functions we have restructured our Chassis Shop, Engine/Gearbox facility and
Body Building Factory in line with our strategic requirements. This will further
improve our efficiencies in these areas.
We are experiencing a number of isolated labour strikes and passenger boycott
incidents in a few of our operations and joint ventures and this will have some
effect on the profitability of the Company for the second half of the financial
year, as compared to the first half.
Black Economic Empowerment (BEE)A number of cautionary notices have been issued
in the media regarding our BEE negotiations. We have now progressed a long way
towards reaching finality with the current BEE partners, Safika Holdings and DEC
(Disability Empowerment Concerns), and hope to conclude our negotiations and
fulfil all the statutory requirements related to a listed company as soon as
regulatory processes allow.
In terms of the proposed BEE transaction, a structure will be put in place that
will lead to a situation where the eventual black shareholding in Putco will be
in excess of 50% of the total issued shares and that will classify Putco as a
"black" company in terms of the Black Economic Empowerment Commission. The
directors are of the view that this will place Putco in a position where it can
compete for business on an equal footing with other empowerment companies.
Tendered/Negotiated ContractsPutco entered into discussions with the Department
of Transport (DOT) regarding the transformation, restructuring and empowerment
of the Company. The Company was requested to present a proposal to the DOT. The
basis of the proposal is to meet the Government"s macro policy objectives and
the Company"s strategic objectives. The proposal has been accepted and endorsed
in principle by the DOT, and a task-team will be set up to discuss the details.
We are confident that these negotiations will address many of the problems that
are currently being experienced by the bus industry and our Company, within the
tendered contract system.
Financial Results and Operational StatisticsTurnover increased from R 433,9
million to R 465,1 million compared to the relevant six months last year, an
increase of 7,2%. The cost of operating increased from R398,1 million to R413,3
million, an increase of 3,8%. Operating profit, before interest and tax,
increased from R39,1 million to R55,4 million, an increase of 41,7%. Headline
earnings per share increased from 70,8 cents to 127,7 cents per share.
Passenger levels decreased from 38,4 million to 36,2 million as at 31 December
2003. The bus fleet at 31 December 2003 was 1 375 as compared to 1 477 at the
end of the previous year.
Soweto Special PaymentThe agreement with the Department of Transport to partly
assist with the losses being incurred in our Soweto operation because of the
delay in finalising the tender process, has been extended up to the end of the
month following the month during which the routes are awarded through the
official tender process. This is not expected to take place before at least the
end of the financial year.
Cash FlowThe net cash outflow reflected for the period is as a result of the
early payment to some major creditors in December to take advantage of special
discounts offered by them, as well as a late receipt which was deposited early
in January 2004. The Company is currently operating in a positive cash position.
Operating FleetThe bus programme for the current financial year ending 30 June
2004 will cost approximately R92,8 million (2003: R103,3 million).
Future ProspectsThe sustainability of the performance of the Company will depend
on a number of factors, such as:- Future changes in the exchange rate and
interest rates,- Tendered or negotiated contracts being awarded to the Company,-
Success in empowering the Company, and- Government"s stance on BEE.
Bus PlanWe introduced 50 new buses into our fleet in the first half of the
financial year. We have decided to reduce the planned purchase of new buses from
50 to 26 for the second half of the year, until we have concluded our
empowerment transaction.
Wage NegotiationsThe 2004 SARPBAC (S.A. Road Passenger Bargaining Council) wage
negotiations have not as yet been concluded. A dispute was declared and referred
to mediation but the parties were unable to reach a mutually agreeable solution.
Discussions are continuing and all efforts are being directed towards avoiding
national strike action.
Board of DirectorsFollowing the resignation of Mr N Khena, Managing Director, on
31 December 2003, the Board of Directors was reconstituted. Dr JH de Loor was
appointed as Chairman of the Board, Mr A Carleo was appointed as CEO and Mr EM
Oldham was appointed as Managing Director. Mr FG Pisapia was appointed as a Non-
Executive Director.
Dividend DeclarationIn view of the pending BEE transaction, the directors have
regarded it prudent to declare an interim dividend of 20 cents (31 December
2002: 20 cents) per share in respect of the six-month period ended 31 December
2003, payable on Monday, 26 April 2004. The last day to trade to participate in
the dividend will be Friday, 16 April 2004, and the shares will commence
trading, ex-dividend, from the start of business on 19 April 2004, and the
record date will be 23 April 2004.
Shareholders may not dematerialise or rematerialise their shares between Monday,
19 April 2004 and Friday, 23 April 2004, both dates inclusive.
Review opinionThe results have been reviewed by Putco"s auditors, Ernst & Young,
Registered Accountants and Auditors, Chartered Accountants (SA), and their
unmodified review opinion is available for inspection at Putco"s registered
office.
Further Cautionary AnnouncementShareholders are referred to the cautionary
announcements previously published by the Company, the latest of which was
published in the daily press on 20 February 2004.
Negotiations with management and a Black Economic Empowerment Consortium, led by
Safika Holdings (Proprietary) Limited, are advancing. Such negotiations will, if
successfully concluded, result in the Company undergoing a significant
restructure. Based on the aforegoing, shareholders are advised to continue to
exercise caution when dealing in the company"s shares until a further
announcement is made.
JH de Loor (Chairman)A Carleo (CEO)EMRL Oldham (Managing Director)
24 March 2004Registered office: Transfer Secretaries5 Mimosa
Way, Mimosa Park Computershare Investor Services LtdGallo Manor,
Sandton 2194 70 Marshall Street, MarshalltownPrivate Bag 3
2001Wendywood, 2144
Company Secretary SponsorMs ASJ Nel
Ernst & Young Sponsors (Pty) Ltd
