| Thu 1 Jul 2004, 16:58 | | results for the six months ended 31 May 04 |
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HUDACO - Unaudited interim group results for the six months ended 31 M
2004/07/01 16:00:01
HDC HUDACO - Unaudited interim group results for the six months ended 31 May 2004 Hudaco Industries Limited Reg no 1985/004617/06 Share code - HDC ISIN - ZAE000003273 * Sales decline 3% to R678 million * Headline EPS up 9% to 127 cents * Interim dividend up 9% to 35 cents A network of specialised branches and independent distributors serves the replacement part markets in southern Africa`s primary and secondary industries and security service providers. RESULTS Hudaco imports and distributes a wide range of branded industrial products, including bearings and power transmission equipment, diesel engines, power toolsand security systems. In this reporting period Hudaco`s Rand sales have been impacted by two factors: an increase in the real underlying demand for the products we sell and the decrease in selling prices resulting from the strengthening Rand exchange rate. Underlying demand held up in the first six months of 2004 with most market sectors increasing demand for our products. Notable exceptions were gold mines, sugar processors and manufacturers of goods for export where demand was a littlelower impacting mainly on our largest business, Bearings and Power Transmission Products. Demand was steady in the Powered and Security Products businesses although demand for power tools was well ahead of expectations. The persistently stronger than expected Rand led to lower average selling pricesthan last year and, notwithstanding the favourable trading conditions, resulted in a 3% reduction in Rand sales for the group. The operating profit margin improved from 7,9% last year to 8,4% this year and resulted in an improvement in operating profit over last years` level to R56,8 million. Net financing costs changed from an expense of R1,0 million to an income of R2,5 million this year. Headline earnings per share rose 9% to 127 cents and the interim dividend has been increased by 9% to 35 cents per share. Total assets declined by R44 million from November 2003, mainly due to a R25 million reduction in accounts receivable as a result of seasonal demand patternsusual for this time of year. Accounts payable reduced by R29 million from the 2003 year-end for similar reasons. Net cash on hand amounts to R96 million. PROSPECTS Trading conditions for the remainder of 2004 are expected to remain buoyant for most market sectors served by Hudaco and our industrial parts businesses, which account for 75% of our activity, should deliver a sound result in the second half. The Security and Automotive parts businesses should also continue to benefit from buoyant consumer spending. Our brake manufacturing business is receiving attention as it cannot compete at these exchange rates. The Rand has maintained its current strength for over a year and with prices currently 5 - 10% lower than last year we will be hard pressed to match 2003`s total Rand sales. With the positive outlook for the economy and provided the Rand does not strengthen further, headline earnings per share should match last year`s 365 cents per share which, given the price reductions of the past year, will be considered a satisfactory achievement. DIVIDEND Notice is hereby given that interim dividend No. 34 of 35 cents per share has been declared in respect of the six months ended 31 May 2004 (`the dividend`). The last day to trade in order to participate in the dividend (`cum` the dividend), will be Thursday, 5 August 2004. The share will commence trading `ex`the dividend from the commencement of business on Friday, 6 August 2004 and the record date will be Friday, 13 August 2004. The dividend will be paid on Monday,16 August 2004. Share certificates may not be dematerialised between Friday, 6 August 2004 and Friday, 13 August 2004, both days inclusive. For and on behalf of the Board PL Campbell (Chairman) SJ Connelly (Chief Executive) 30 June 2004 Income statement Year Six months ended ended 31 May % 31 May 30 Nov R million 2004 change 2003 2003* Turnover 678,4 (3) 701,2 1 476,9 Cost of sales 428,8 457,2 931,0 Gross profit 249,6 244,0 545,9 Operating expenses 185,6 181,1 369,1 EBITDA 64,0 1 62,9 176,8 Depreciation 7,2 7,2 13,6 Operating profit 56,8 2 55,7 163,2 Amortisation of goodwill 2,9 2,1 5,1 Profit before interest 53,9 53,6 158,1 Net finance revenue 2,5 (1,0) (0,7) Profit before taxation 56,4 52,6 157,4 Taxation 20,8 19,4 51,7 Profit after taxation 35,6 33,2 105,7 Attributable to outside shareholders 1,6 2,2 5,7 Profit attributable to shareholders 34,0 31,0 100,0 Headline earnings per share (cents) 126,5 9 115,6 365,0 Basic earnings per share (cents) 116,5 108,3 347,3 Diluted earnings per share (cents) 114,1 106,2 340,1 Reconciliation to headline earnings Profit attributable to shareholders 34,0 31,0 100,0 Add back amortisation of goodwill 2,9 2,1 5,1 Headline earnings 36,9 11 33,1 105,1 Distributions to shareholders - per share (cents) 35,0 9 32,0 122,0 - amount (Rm) 10,3 9,2 35,3 Shares in issue 29 372 28 868 29 003 - Total (000) 31 880 31 376 31 511 - Held by subsidiary company (000) (2 508) (2 508) (2 508) Weighted average shares in issue - Basic (000) 29 185 28 621 28 776 - Diluted (000) 29 806 29 199 29 388 BALANCE SHEET 31 May 31 May 30 Nov R million 2004 2003 2003* ASSETS Non-current assets 109,6 104,5 115,2 Property, plant and equipment 44,8 45,6 44,2 Deferred taxation - net 12,1 14,2 15,4 Goodwill 52,7 44,7 55,6 Current assets 674,4 599,3 712,5 Inventories 314,4 322,2 319,8 Accounts receivable 214,0 215,6 238,5 Bank deposits and balances 146,0 61,5 154,2 TOTAL ASSETS 784,0 703,8 827,7 EQUITY AND LIABILITIES Equity 493,6 420,6 481,4 Shareholders` equity 468,5 398,0 457,9 Outside shareholders` interest 25,1 22,6 23,5 Non-current liabilities 66,1 69,8 70,7 Interest-bearing debt 50,0 50,6 50,2 Amounts due to vendors 16,1 19,2 20,5 Current liabilities 224,3 213,4 275,6 Accounts payable 209,7 194,7 238,4 Taxation 14,6 18,7 37,2 TOTAL EQUITY AND LIABILITIES 784,0 703,8 827,7 *Audited CASH FLOW STATEMENT Year Six months ended ended 31 May 31 May 30 Nov R million 2004 2003 2003* Cash generated from trading 64,0 62,9 176,8 Cash released from working capital 1,6 (35,9) (11,1) Cash generated from operating activities 65,6 27,0 165,7 Net finance revenue 2,5 (1,0) (0,7) Taxation paid (40,1) (43,6) (56,7) Cash flow from operations 28,0 (17,6) 108,3 Cash dividends (26,4) (22,0) (33,7) Net cash generated 1,6 (39,6) 74,6 Investment in new operations - net (4,4) (17,0) Investment in plant and equipment (7,8) (7,7) (12,4) Net cash invested (12,2) (7,7) 29,4) CASH UTILISED (10,6) (47,3) 45,2 Shareholder funding 2,6 1,8 2,4 DECREASE IN NET CASH (8,0) (45,5) 47,6 STATEMENT OF CHANGES IN EQUITY Year Six months ended ended 31 May 31 May 30 Nov R million 2004 2003 2003* Equity at beginning of period 457,9 396,0 396,0 Application of AC133 at 1 December 2002 (6,9) (4,8) Attributable profit for the period 34,0 31,0 100,0 Deferred gain on hedging instruments 0,3 0,6 (1,1) Gain on translation of foreign entities 0,1 (2,5) (3,6) Share issues 2,6 1,8 2,5 Dividends paid (26,4) (22,0) (31,1) Equity at the end of the period 468,5 398,0 457,9 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 most recent annual financial statements. 31 May 31 May 30 Nov 2004 2003 2003* Average net operating assets (Rm) 402,9 424,3 423,5 Operating profit margin (%) 8,4 7,9 11,0 Average NOA turn (times - annualised) 3,4 3,3 3,5 Return on average NOA (% - annualised) 28,2 26,3 38,5 Interest covered by operating profit (times) n/a >15 >15 Gearing - net (%) nil nil nil Net asset value per share (cents) 1 595 1 379 1 579 Capital expenditure - spent during the year (Rm) 9,0 7,9 15,5 - budgeted for second half of the year (Rm) 10,6 11,2 Net cash comprises (Rm) 96,0 10,9 104,0 - Bank call deposits and balances 146,0 61,5 154,2 - Interest-bearing debt - Non-current (50,0) (50,6) (50,2) Operating lease commitments - property (Rm) 29,1 30,8 33,8 SEGMENT ANALYSIS Turnover 31 May % 31 May 30 Nov R million 2004 change 2003 2003* Bearings and Transmission Products 349,0 (6) 370,8 771,3 Powered Products 161,2 10 146,7 324,7 Security Equipment 111,4 111,5 232,7 Automotive Products 61,5 (16) 73,1 154,2 Internal/head office (4,7) (0,9) (6,0) Total Group 678,4 (3) 701,2 1 476,9 Operating profit 31 May % 31 May 30 Nov R million 2004 change 2003 2003* Bearings and Transmission Products 31,9 (10) 35,3 89,8 Powered Products 22,1 30 17,0 48,1 Security Equipment 7,1 (13) 8,2 21,7 Automotive Products (0,4) (121) 1,9 8,2 Internal/head office (3,9) (6,7) (4,6) Total Group 56,8 2 55,7 163,2 Average net operating assets 31 May 31 May 30 Nov R million 2004 2003 2003* Bearings and Transmission Products 222,5 209,3 218,8 Powered Products 67,8 74,1 69,1 Security Equipment 79,1 94,4 88,5 Automotive Products 64,5 59,6 60,7 Internal/head office (31,0) (13,1) (13,6) Total Group 402,9 424,3 423,5 Transfer secretaries Computershare Investor Services 2004 (Pty) Ltd 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# YKN Molefi# PM Poole #Independent non-executive Secretary RGL Arnestad BEARINGS AND TRANSMISSION PRODUCTS ABES TECHNOSEAL Importer and distributor of world-class oil seals, hydraulic, pneumatic and rotary shaft seals. BAUER Distributors of geared motors, frequency inverters and electric motors. BEARINGS INTERNATIONAL Distributors of leading international brands of anti-friction bearings and chainto the manufacturing, mining and agricultural markets. BELTING SUPPLY SERVICES Specialist suppliers of conveyor belting, power transmission products and industrial hoses. BEP BESTOBELL SOUTH AFRICA Distributors of fluid measurement and control products including valves, gaskets, insulation and instrumentation. 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 Valard Bearings - specialising in repair and manufacture of white-metal bearings. VARISPEED Specialist supplier of products that control, monitor and regulate the speed of standard AC motors. 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 ELVEY Distributor of intruder detection, closed-circuit television, access control andfibre-optic equipment.
