| Mon 30 May 2005, 17:14 | | Mathomo - Abridged group results for the 17 months |
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Mathomo - Abridged group results for the 17 months ended 28 February 2005 and
renewal of cautionary announcement
Mathomo Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1995/004783/06)
Share code: MTO ISIN: ZAE000037214
(`Mathomo` or `the Company` or `the Group`)
Abridged Group Results For The 17 Months Ended 28 February 2005
and Renewal of Cautionary Announcement
ABRIDGED CONSOLIDATED INCOME STATEMENT
Reviewed Reviewed Audited
17 months ended Period ended Year ended
28 February 30 September 30 September
2005 2004 2003
R000`s R000`s R000`s
Revenue 402 753 295 484 271 034
Operating profit before
finance costs 6 480 5 915 21 389
Net finance costs (10 813) (6 405) (8 092)
Interest received 289 274 1 459
Interest paid (8 993) (5 257) (7 831)
Preference dividend (2 109) (1 422) (1 720)
Net (loss) profit before
exceptional items (4 333) (490) 13 297
Exceptional items 2 056 2 056 197
Net (loss) profit before
taxation (2 277) 1 566 13 494
Taxation (3 584) (3 576) (259)
(Loss) Profit attributable
to ordinary shareholders (5 861) (2 010) 13 235
Reconciliation of net(loss)
profit for the period to
headline (deficit)earnings:
Net (loss) profit for the
period (5 861) (2 010) 13 235
Add back exceptional items:
Recoveries from previously
discontinued operations - - (197)
Profit on sale of trademark (1 363) (1 363) -
Closure of the Freezerwear
factory 624 624 -
Headline (loss) earnings (6 600) (2 749) 13 038
Number of shares in issue 47 179 214 47 179 214 47 179 214
Weighted number of shares
in issue 47 179 214 47 179 214 47 179 214
Headline (loss) earnings
per share (cents) (14,0) (5,8) 27,6
(Loss) profit per share
(cents) (12,4) (4,3) 28,1
ABRIDGED CONSOLIDATED BALANCE SHEET
Reviewed Reviewed Audited
17 months ended Period ended Year ended
28 February 30 September 30 September
2005 2004 2003
R000`s R000`s R000`s
Assets
Non-current assets 17 951 18 807 16 485
Property 10 071 10 072 9 650
Plant and equipment 7 880 8 735 6 835
Current assets 93 561 98 385 98 289
Inventories 46 332 48 278 52 049
Accounts receivable 47 229 50 107 46 240
Total assets 111 512 117 192 114 774
Equity and Liabilities
Capital and reserves 8 439 12 290 14 300
Ordinary share capital 472 472 472
Share premium 122 763 122 763 122 763
Non distributable reserve 2 325 2 325 2 325
Accumulated loss (117 121) (113 270) (111 260)
Non-current liabilities 21 539 22 751 34 663
Interest bearing liabilities 1 539 2 751 4 663
Preference shares 20 000 20 000 30 000
Current liabilities 81 534 82 151 65 811
Accounts payable 35 625 44 596 39 681
Bank overdrafts 37 707 32 834 25 179
Interest bearing
liabilities 1 495 435 738
Taxation 6 707 4 286 213
Total equity and
liabilities 111 512 117 192 114 774
Net asset value per
share (cents) 17,9 26,0 30,3
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
Reviewed Reviewed Audited
17 months ended Period ended Year ended
28 February 30 September 30 September
2005 2004 2003
R000`s R000`s R000`s
Cash generated from
operating activities 5 945 9 455 9 001
Cash utilised in investing
activities (6 106) (4 895) (835)
Cash (utilised in)generated from
financing activities (12 367) (12 215) 1 617
Net movement in cash (12 528) (7 655) 9 783
Net cash resources at beginning
of the period (25 179) (25 179) (34 962)
Net cash resources at end
of the period (37 707) (32 834) (25 179)
ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Reviewed Reviewed Audited
17 months ended Period ended Year ended
28 February 30 September 30 September
2005 2004 2003
R000`s R000`s R000`s
Balance at beginning
of the period 14 300 14 300 1 065
(Loss) profit for the
period (5 861) (2 010) 13 235
Balance at end of the
period 8 439 12 290 14 300
SEGMENTAL ANALYSIS
Distribution
of PPE Retail Other Total
R000`s R000`s R000`s R000`s
Revenue 2005: 17 months 314 684 88 069 - 402 753
Revenue 2004: 12 months 230 932 64 552 - 295 484
Revenue 2003: 12 months 201 495 69 539 - 271 034
Operating profit before
finance cost 2005:17 months 3 499 7 154 (4 173) 6 480
Operating profit before
finance cost 2004:12 months 3 912 5 537 (3 534) 5 915
Operating profit before
finance cost 2003:12 months 16 936 4 735 (282) 21 389
ACCOUNTING POLICIES
The consolidated abridged financial statements for the 17-month period ended
28 February 2005 are prepared in accordance with the South African Statements
of Generally Accepted Accounting Practice (`SA GAAP`) applicable to interim
financial reporting (AC 127). The accounting policies used are consistent in
all material respects with those used in the annual financial statements for
the year ended 30 September 2003 for Mathomo.
These results have been reviewed by Deloitte & Touche and their review report
is available for inspection at the company`s registered office. The report
draws attention to the existence of a material uncertainty which may cast
significant doubt about company`s ability to continue as a going concern. In
this regard, attention is drawn to the comments by directors under the heading
`Going Concern` below. The relevant extract from the review report of Deloitte &
Touche reads as follows: `Without qualifying our opinion, we draw attention to
the paragraph in the directors` report on this matter. The company incurred a
loss of R5.9 million for the period. This condition, along with other matters
set forth in the directors` report, indicate the existence of a material
uncertainty, which may cast significant doubt about the company`s ability to
continue as a going concern.`
INTRODUCTION
During the period under review, the Group continued its restructuring process.
The board decided to make certain management and structural changes to
reposition the business and its thrusts. The focus is on the financial and
operational structures of the Group, and their effective functioning and
delivery.
These changes are having the desired effect and the board continues with its
efforts to make each of the business units profitable in the near term.
OPERATIONAL REVIEW
The Group consists of the following businesses:
- Alsafe - the distributor of personal protective equipment and clothing
(`PPE`);
- Select PPE - the onsite supplier of PPE;
- M Stores - the workplace retailer; and
- Select Corporate - the supplier of corporate gifts and apparel.
All the businesses worked in a challenging market, that resulted in pressure
on our margins throughout the reporting period. We have focused on sourcing
competitively priced merchandise and this is proving to be beneficial to the
Group.
Restructuring steps have been taken, including the closure of the Freezerware
factory in Cape Town and the CMT operation in Durban, resulting in significant
retrenchments.
FINANCIAL OVERVIEW
Vigorous steps have been taken to improve working capital management.
The range of inventory carried has been reviewed, and this focus has led to a
more pro-active and demand driven approach being taken to source and carry
product. Attention has also been given to the management of credit and the
collection of our debtors` book. This is yielding positive results.
We are also pleased with the terms extended to us by our suppliers and
bankers. We are mindful of our obligations to them and are working to continue
to reduce our short-term obligations.
The Group recorded an operating profit of R6,5 million for the period. This
compares to R21 million for the year ended 30 September 2003. As discussed
above, the decline is due to difficult trading conditions together with
certain once-off restructuring and reorganisation costs.
Net finance costs include a provision for R3 million in respect of interest on
unpaid income tax, currently in dispute with the South African Revenue
Services (`SARS`). Interest paid for the 17-month period amounts to R7,9
million. This compares to R8,1 million for the year ended 30 September 2003.
The Group recorded a net loss of R5,9 million for the period (2003: profit of
R13,2 million).
In our preliminary report for the 12 months ended 30 September 2004 we drew
attention to the taxation issues we were engaged on with SARS. The matter is
still subject to negotiation and the directors are engaged in consultation
with the appropriate experts. However, we have adopted a cautious stance and
to the extent that revised income tax assessments have been received, tax has
been fully provided for in the period under review.
A deferred tax asset on the estimated tax loss has not been raised presently
and this shall be reviewed once the matter has been resolved with SARS.
Exceptional items
2004 2003
R000`s R000`s
Recoveries from previously discontinued operations 693 197
Profit on sale of trademarks 1 363 -
2 056 197
DEBT REDUCTION PROGRAMME
The debt reduction plan was set out in our 2003 Annual Report. Further
successes have been achieved in effecting the debt reduction and the progress
made in the period under review was the redemption of R10 million of
preference share capital in the period under review out of existing Group cash
resources.
The Group continues to examine methods of furthering the repayment of debt and
the restructuring of its balance sheet and activities. Further announcements
in this regard will be made in due course.
RESULTS OF MANDATORY OFFER TO MINORITIES OF MATHOMO (`THE OFFER`) AND CHANGE
IN MATHOMO`S FINANCIAL YEAR-END
During the period under review, the Mineworkers Investment Company (Pty)
Limited (`MIC`) made an offer to all the remaining shareholders of Mathomo.
MIC has increased its holding to 58,63% of the issued share capital of
Mathomo.
CHANGE OF FINANCIAL YEAR-END
Due to Mathomo becoming a subsidiary of MIC which has a reporting year-end of
28 February, the year-end of the Group was changed to be co-terminous with
that of MIC.
DIVIDENDS
No interim dividend has been declared for the period under review
(2003: R nil).
GOING CONCERN
Over the past year, the Mathomo directors have implemented a restructuring
programme in order to restore certain divisions to profitability and to
strengthen the Group`s financial position. The effects of the restructuring
process continue to yield positive results. Accordingly, the directors believe
the Group to be a going concern and have therefore adopted the going concern
basis in preparing these financial statements.
During the period under review, the directors initiated discussions with the
Group`s bankers. The support of the Group`s bankers has been secured with a
further undertaking by the directors to reduce the level of excess inventory
by R10 million within the next year and to restore the unprofitable business
units to profitability. Directors are confident that the restructuring plans
already put in place will yield positive results and will enable the Group to
meet its obligations to the Group`s bankers and creditors.
PROSPECTS
The Group continues to face considerable challenges. The repositioning is
achieving expected results.
Overall economic growth in our economy remains positive. The mining industry
has been in a cyclical downturn brought about by the strong currency which has
impacted our businesses.
Over the past year, much progress was made improving the focus and size of our
business. Market conditions have gradually improved and we expect that better
execution and greater operating efficiencies in the Group will continue to
drive margin expansion and revenue growth.
Cautionary announcement
As previously announced, the Group is engaged in discussions which may have a
material impact on the share price. Shareholders are advised to continue to
exercise caution in trading their shares.
By order of the board
A P Nkuna L Matuson
Chairman Chief Executive Officer
Johannesburg
30 May 2005
Sponsor
JAVA CAPITAL
Date: 30/05/2005 05:09:43 PM
Produced by the JSE SENS Department
