| Thu 27 May 2004, 15:15 | | Group results for the year ended 31 March 2004 |
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Dorbyl - Group results for the year ended 31 March 2004
DORBYL LIMITED
(Registration no 1911/001510/06)
Share Code: DLV
Isin Code: ZAE00000218
(`Dorbly` or `the company`)
PRELIMINARY PROFIT STATEMENT
RESULTS
The overall decline in turnover of 36% was mainly attributable to the business
disposals in the prior year and the businesses sold and discontinued in the
current year. The turnover of continuing businesses decreased by 3% compared to
last year due to the strengthening of the Rand. Alpine reflected a 9% decrease
in Rand turnover (in Dollar terms, however, that operation showed an increase of
24%) and Dorbyl Automotive Technologies, a marginal decrease, as the stronger
Rand resulted in an 18% reduction in exports.
While the above decline in group turnover translated into a 24% decline in
operating profit (before exceptional profits) for the group as a whole,
excluding the disposals, the operating profit of continuing operations reflected
a 49% increase. Alpine performed very well, increasing operating profits in
Dollar terms by 137%, and by 69% in Rand terms. The local automotive division,
however, experienced an exceptionally difficult trading environment, with
reduced export margins, price pressures as a result of competitive imports and
an increase in local and raw material costs. Consequently, the operating income
of that division declined significantly.
Despite lower interest rates, interest earned increased when compared with last
year due to higher levels of cash on hand.
The tax charge was high, due mainly to the relatively high tax rate of the USA
operation. In addition, certain of the local subsidiaries generated tax losses
from which the group was not able to derive any tax relief. Secondary Tax on
Companies (STC) on both ordinary and the special dividends paid during the year
further exacerbated the high rate.
Headline earnings declined 31% to 199,3 cents per share. If the STC paid in
respect of the special dividends is excluded, headline earnings declined 41% to
211,8 cents per share.
Exceptional profits of R27m, were derived from business disposals and closures,
which also generated the high level of exceptional profits reflected in the
previous year.
CASH ON HAND/BORROWINGS
The net cash position of the group improved by R126m to R315m at 31 March 2004,
mainly due to the business sale proceeds of R127m. Dividends paid in the full
year amounted to R60m and capital expenditure amounted to R101m. A further
injection of $9,2m share capital into Alpine, together with strong operating
cash flows, enabled that operation to fully repay the ABSA UK loan just prior to
the year-end. The Dorbyl Limited guarantee in respect of that loan has
accordingly been cancelled.
The cash position at 31 March 2004 can be analysed as follows:-
March 2004 March 2003
Net cash held by South African operations R335,1m R350,0m
Less : Alpine net borrowings (SA Rand) (R20,0m) (R160,9m)
Net cash R315,1m R189,1m
Alpine net borrowings (US Dollars) $3,2m $20,4m
ACCOUNTING POLICIES AND AUDIT OPINION
The 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 in this year of AC133, `Financial instruments:
recognition and measurement,` which requires that financial instruments be
recorded at fair market value.
In terms of the application of AC 133, 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. This resulted in a
write-off of R9,2m, net of deferred tax, against opening retained income, and
was in respect of interest rate hedging contracts relating to the Alpine long-
term loan. The application of AC 133 increased earnings by R1,3m for the year
ended 31 March 2004. There was no effect on the comparative periods.
The financial statements have been audited by KPMG Inc., the auditors of the
Company, whose unqualified audit opinion is available for inspection at the
registered office of the Company.
PROPERTY disposal update
The disposal of the Isando property announced on 19 March 2004, has not yet been
finalised as the condition precedent relating to the purchaser obtaining finance
has not yet been met. The date for securing finance has been extended to 31 May
2004.
DIVISIONAL REVIEW
Building Products
Following the sale of the local Global Roofing Solutions Division at the
commencement of the year, the Building Products division is now represented
solely by `Alpine` in the USA. This operation had an excellent year, more than
doubling its profits in Dollar terms. Improving trends have been noted in the
Equipment and TrusSteel divisions, which underperformed last year. In
particular, connector sales improved during the final few months of the year.
While some of the growth was due to improved market share, there is concern that
recent sales may have been boosted in anticipation of steel price increases and
possible steel shortages. Some softening of demand could therefore result in the
early part of the new financial year.
Automotive Manufacturing
The Automotive Manufacturing division now consists of Dorbyl Automotive
Technologies (Guestro), as Dorbyl Transport Products was sold at the
commencement of the year. The division had a very difficult year as a result of
the strong Rand, which placed export margins under pressure while, in certain
circumstances, exports had to be discontinued. National motor vehicle sales
improved, but included a higher imported market share and the division`s local
sales actually declined slightly. These factors, and cost pressures generated by
the weak Rand that prevailed the previous year, resulted in a small loss for the
year.
PROSPECTS
The profitability of the group is strongly linked to the Dollar/Rand exchange
rate. Any weakening of the Rand will translate the Dollar earnings of Alpine
into higher Rand earnings and also improve export margins for Dorbyl Automotive
Technologies. While it is difficult to predict future exchange rate movements,
it is generally believed that some weakening of the Rand can be expected in the
medium term. In the interim, Dorbyl Automotive Technologies has taken the
difficult decision to close certain of its operations, and its cost base has
been reduced. This structural change will improve its viability in the new year.
Alpine, on the other hand, has benefited significantly from the lower offshore
interest rate structure, which stimulated building activity in the USA to record
levels. Some marginal `cooling off` in this regard is expected, particularly in
view of anticipated interest rate rises. Growth will, therefore, have to come
largely from continuing to increase market share.
FINAL DIVIDEND NO. 109
A final dividend of 50 cents per ordinary share has been declared. The last date
to trade `cum` the final dividend in order to participate in the final dividend
will be Friday, 18 June 2004. The shares of Dorbyl will commence trading `ex`
the final dividend from the commencement of business on Monday, 21 June 2004 and
the record date will be Friday, 25 June 2004. The final dividend is payable on
Monday, 28 June 2004.
No dematerialisation or rematerialisation of share certificates may take place
between Monday, 21 June 2004 and Friday, 25 June 2004, both days inclusive.
On behalf of the board
N Phillips (Chairman)
WW Cooper (Chief Executive)
27 May 2004
Transfer secretaries:
Computershare Investor Services Division (Pty) Limited, 70 Marshall Street,
Johannesburg 2001
(P O Box 62053, Marshalltown, 2107)
Company secretary and registered office:
BD Bhikha, Dorbyl Ridge, 16 Jan Smuts Avenue, Parktown, 2193
Directors:
N Phillips (Chairman)*, WW Cooper (Chief Executive), WE Buhrmann*, RC Duff, JB
Magwaza*, D Orwin, EJ Vorster, T van Wyk*. * Non-executive
Income Statement
Audited Audited
Year to Year to
March 2004 March 2003 %
R000 R000 Change
Revenue 1 879 670 2 927 750 (36)
- continuing operations 1 807 612 1 870 347 (3)
- discontinued operations 72 058 1 057 403
Operating income before 108 781 143 785 (24)
exceptional profit
- continuing operations 123 245 82 842 49
- discontinued operations (14 464) 60 943
Exceptional profit 27 242 133 695
Operating income 136 023 277 480
Net interest received 31 039 26 088
Income - associates 384 7 695
Profit before taxation 167 446 311 263 (46)
Taxation (70 352) (69 731)
Profit after taxation 97 094 241 532 (60)
Minority interest (8 048) (12 339)
Earnings attributable to 89 046 229 193 (61)
shareholders
Earnings per share (cents)
Earnings per share 268.5 692.0 (61)
Headline earnings per share 199.3 289.4 (31)
Headline earnings per share
before
Secondary Tax on Companies (STC) 211.8 356.4 (41)
on special dividends
Dividends paid per ordinary 180 658 (73)
share (cents)
Final - year ended 31 March 2003 50 80
(2002)
Interim - period ended 30 30 50
September 2003 (2002)
Special - 17 November 2003 100
Special - 26 August 2002 28
Special - 13 January 2003 500
Dividend cover - headline 2.5 2.2
earnings/normal dividends
(times)
Share capital repaid 26 August 472
2002 per ordinary share (cents)
Dividends declared per ordinary 50 50
share - final (cents)
Exceptional profit
Profit on 27 242 133 695
disposal/discontinuation of
businesses
Tax charge attributable to (7 944) (832)
exceptional profit
Headline earnings reconciliation
Earnings per the income 89 046 229 193
statement
Adjusted for: (23 097) (133 411)
Preference dividends (212) (212)
Exceptional profit (27 242) (133 695)
Surplus on sale of other fixed (5 125) (483)
assets
Tax charge attributable to 9 482 977
adjustments
Attributable to minority - 2
shareholders
Headline earnings 65 949 95 782
STC relating to special 4 145 22 145
dividends
Headline earnings before STC on 70 094 117 927
special dividends
Diluted earnings per share
Dilution shares (000) 1 335 1 408
Earnings adjustment 1 002 1 703
Diluted earnings per share 261.0 668.7
(cents)
Diluted headline earnings per 194.5 282.6
share (cents)
Operating income before 25 25
exceptional profit to net
operating assets (%)
Earnings to ordinary 13 34
shareholders` funds (%)
Additional financial information
Depreciation 53 618 65 171
Net write-down of inventory to 3 686 11 236
realisable value
Net interest received 31 039 26 088
Interest received 49 523 60 046
Interest paid (18 484) (33 958)
Cash Flow Statement
Audited Audited
Year to Year to
March 2004 March 2003
R000 R000
Net cash retained from/(utilised by) 90 103 (41 260)
operations
Operating cash flow 131 896 193 390
Movement in working capital 36 365 18 559
Net interest received 31 039 26 088
Taxation paid (49 423) (61 074)
Dividends paid (59 774) (218 223)
Net cash effect from investing activities 37 550 231 494
Capital expenditure (100 923) (164 519)
Disposals of fixed assets 10 048 18 327
Disposals of businesses 127 459 374 987
Decrease in advances 966 2 699
Net cash effect from financing activities (170 518) (222 287)
Decrease in minority interest (3 998) (4 642)
Net repayment of long-/short-term (164 126) (63 433)
borrowings
Decrease in stated capital (2 394) (154 212)
Net cash outflow (42 865) (32 053)
Foreign currency translation effect (6 157) (30 982)
Decrease in cash and cash equivalents (49 022) (63 035)
Cash and cash equivalents at beginning of 406 466 469 501
year
Cash and cash equivalents at end of year 357 444 406 466
Statement of Changes in Equity
Audited Audited
Year to Year to
March 2004 March 2003
R000 R000
Balance at beginning of year 676 471 831 423
Movement in translation reserves (19 599) (11 710)
Adjustment on first time adoption of AC (9 194)
133
AC 133 cash flow hedge reversals 5 125
Attributable earnings for the year 89 046 229 193
Ordinary dividends (59 562) (218 011)
Preference dividends (212) (212)
Share capital - purchased by (2 477) (156 444)
subsidiary/repaid
Shares issued 83 2 232
Balance at end of year 679 681 676 471
Balance Sheet
Audited Audited
March March
2004 2003
R000 R000
EQUITY AND LIABILITIES
Capital and reserves 726 709 719 316
Ordinary shareholders` funds 679 681 676 471
Preference share capital 3 980 3 980
Minority interest 43 048 38 865
Non-current liabilities 45 591 196 390
Deferred tax liabilities 4 107 5 468
Provisions 27 614 45 998
Long-term borrowings 13 870 144 924
Current liabilities 379 029 472 505
Trade and other payables 350 518 400 043
Short-term borrowings 28 511 72 462
Total equity and liabilities 1 151 329 1 388 211
ASSETS
Non-current assets 414 763 437 544
Fixed and intangible assets 383 525 393 790
Investments and advances - associates 1 035 660
Deferred tax assets 27 687 39 460
Other non-interest bearing advances 2 516 3 634
Current assets 736 566 950 667
Inventories 159 078 249 539
Trade and other receivables 220 044 294 662
Cash and cash equivalents 357 444 406 466
Total assets 1 151 329 1 388 211
Additional financial information
Net cash 315 063 189 080
Cash at bank, on deposit and on hand 285 162 351 466
Interest bearing short-term advances 72 282 55 000
Cash and cash equivalents 357 444 406 466
Long-term borrowings (13 870) (144 924)
Short-term borrowings (28 511) (72 462)
Net operating assets 443 367 581 702
Total assets 1 151 329 1 388 211
Trade and other payables (350 518) (400 043)
Cash and cash equivalents (357 444) (406 466)
Capital commitments authorised 32 134 9 417
Contracted for 24 612 9 249
Not contracted for 7 522 168
Contingent liabilities 2 015 12 427
Debtors discounted with recourse 2 006 4 025
Operating lease guarantees - 5 903
Other 9 2 499
Repurchase commitment on sale
contracts where underlying securities
exceed the outstanding commitment
amounted to R9 million at 31 March
2004 (2003 - R22 million)
Operating lease commitments 133 557 143 261
Operating lease receivables 155 685 154 956
Investments and advances to 1 500 1 500
associates at valuation
Net asset value per share (cents) 2 050 2 041
Audited Audited
Year to Year to
March 2004 March 2003
R000 R000
Capital expenditure
Expansion 65 576 118 700
Replacement 35 347 45 819
Ordinary shares (000)
Issued 33 160 33 151
Weighted average 33 091 33 091
Segmental Analysis
Audited Audited
Year to Year to
March 2004 March 2003
R000 R000
Revenue
Business Segment
Automotive Manufacturing 895 012 1 086 330
Midas - 175 197
Building Products 984 658 1 405 137
Engineering and Water Products - 269 227
Corporate and consolidation 0 (8 141)
Total Revenue 1 879 670 2 927 750
Geographical Location
South African operations - local 655 210 1 355 864
- export 239 802 440 412
International operations 984 658 1 131 474
Total Revenue 1 879 670 2 927 750
Operating income before exceptional
profit
Business Segment
Automotive Manufacturing (4 596) 45 220
Midas - 4 957
Building Products 117 216 94 753
Engineering and Water Products - 22 115
Corporate and consolidation (3 839) (23 260)
Total operating income before exceptional 108 781 143 785
profit
Geographical Location
South African operations (including (8 435) 72 767
exports)
International operations 117 216 71 018
Total operating income before exceptional 108 781 143 785
profit
For more information visit our website: www.dorbyl.co.za
Date: 27/05/2004 02:59:11 PM Produced by the JSE SENS Department
