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DLV
DLV
Dorbyl Limited - Preliminary Group Results for the Year Ended 31 March 2006
DORBYL LIMITED
(COMPANY REGISTRATION 1911/001510/06)
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
SHARE CODE: DLV
ISIN CODE: ZAE000002184
PRELIMINARY GROUP RESULTS FOR THE YEAR ENDED 31 MARCH 2006
Abridged Income statement
Audited Audited
Year to Year to
March 2006 March 2005
restated %
R000 R000 Change
Continuing operations:
Revenue 986 016 915 604
8
Operating income before
impairment of assets and
provision
for benefit funds 25 334 15 617
62
Impairment of assets ( 55 029) ( 741)
Provision for benefit ( 15 000) -
funds
Operating (loss)/income ( 44 695) 14 876
Net financial income 27 361 22 883
20
Financial income 32 842 25 820
Financial costs ( 5 481) ( 2 937)
Income - associate 340 415
Profit before taxation ( 16 994) 38 174
(145)
Taxation ( 122 729) ( 17 398)
(Loss)/profit after (139 723) 20 776
taxation from continuing (773)
operations
Profit after taxation 33 237 78 899
from discontinued (58)
operations (refer below
for analysis)
Profit/(loss) on sale of 700 643 ( 22 799)
discontinued operations,
net of taxation
Profit for the year 594 157 76 876
Attributable to:
Equity holders of the 585 912 71 628
parent
Minority interest 8 245 5 248
594 157 76 876
Earnings per share
(cents)
Basic (loss)/earnings per 1,741.6 217.0
share 703
Continuing operations (439.8) 47.0
(1,035)
Discontinued operations 2,181.4 170.0
1,183
Diluted basic 1,741.6 213.9
(loss)/earnings per share 714
Continuing operations (439.8) 46.4
(1,048)
Discontinued operations 2,181.4 167.5
1,202
Headline (loss)/earnings (176.1) 280.7
per share (163)
Continuing operations (274.9) 41.7
(759)
Discontinued operations 98.8 239.0
(59)
Headline earnings per
share before Secondary
Tax on Companies 151.6 280.7
(STC) on special (46)
dividends
Continuing operations 52.8 41.7
27
Discontinued operations 98.8 239.0
(59)
Dividends paid per 2 675 85
ordinary share (cents)
Final - year ended 31 65 50
March 2005 (2004)
Interim - period ended 10 35
30 September 2005 (2004)
Special - 29 August 2 600
2005
Dividend cover - headline
earnings before STC on
special
dividend/ normal 2.0 3.3
dividends (times)
Dividends declared per
ordinary share (cents)
subsequent
to year end 10 35
Headline earnings
reconciliation
Earnings per the income 585 912 71 628
statement
Adjusted for : (645 174) 21 045
(Profit)/loss on sale of (700 361) 22,719
discontinued operations
Impairment of fixed 55 029 -
assets
Loss/(profit) on sale of 620 (2 546)
other fixed assets
Tax charge attributable ( 462) 684
to adjustments
Attributable to minority - 188
shareholders
Headline (loss)/earnings (59 262) 92 673
STC relating to special
dividends 110,253 -
Headline earnings before 50 991 92 673
STC on special dividends
Depreciation and 35 028 53 910
amortisation
Discontinued operations
Revenue 383 695 1 146 364
Operating income 51 693 119 068
Financial income 1 1 424
Financial costs - ( 880)
Profit before taxation 51 694 119 612
Taxation ( 18 457) ( 40 713)
Profit after taxation 33 237 78 899
Attributable to:
Equity holders of the 33 237 79 228
parent
Minority interest - ( 329)
33 237 78 899
Abridged Balance sheet
Audited Audited
March March
2006 2005
restated
R000 R000
ASSETS
Non-current assets 217 836 274 760
Property, plant and 212 113 256 824
equipment
Investment in associate 1 200 1 191
Deferred tax assets 4 523 16 729
Other advances 16
-
Current assets 576 333 874 610
Inventories 94 188 105 752
Trade and other 122 826 108 029
receivables
Assets classified as 340 925
held for sale -
Cash and cash 359 319 319 904
equivalents
Total assets 794 169 1 149 370
EQUITY AND LIABILITIES
Total equity 512 104 775 674
Equity attributable to 464 568 733 798
equity holders of the
parent
Minority interest 47 536 41 876
Non-current liabilities 40 468 40 345
Deferred tax 10 287 9 402
liabilities
Preference share 3 980 3 980
capital
Provisions 26 201 26 963
Current liabilities 241 597 333 351
Trade and other 217 549 197 391
payables and provisions
Provisions 24 048 15 500
Liabilities classified 120 460
as held for sale -
Total equity and 794 169 1 149 370
liabilities
Additional financial
information
Net assets held for
sale
ASSETS
Property, plant and 89 120
equipment
Intangible assets 52 830
Inventories 86 341
Trade and other 100 900
receivables
Cash and cash 11 734
equivalents
Total assets 340 925
LIABILITIES
Deferred tax 6 740
liabilities
Interest bearing loans
and borrowings 9,196
Trade and other 99 784
payables
Short - term borrowings 4 740
Total liabilities 120 460
Capital commitments 5 737 19 151
authorised
Contracted for 5 737 18 986
Not contracted for 165
-
Contingent liabilities 200 2 108
Debtors discounted - 1 908
with recourse
Other 200 200
Repurchase commitment on sale
contracts where underlying securities
exceed the outstanding
commitment amounted to
R0,4 million at 31
March 2006 (2005- R4
million)
Operating lease 25 458 85 766
commitments
Operating lease 22 109
receivables 1,128
Investments and
advances to associate
at valuation 1 200 1 500
Net asset value per 1 369 2 223
share (cents)
Audited Audited
Year to Year to
March 2006 March 2005
R000 R000
Capital expenditure
Expansion 29 438 49 147
Replacement 22 487 61 095
Ordinary shares (000)
Issued (excluding 33 924 33 014
Treasury shares)
Weighted average 33 643 33 014
(excluding Treasury
shares)
Abridged cash flow
statement
Audited Audited
Year to Year to
March 2006 March 2005
restated
R000 R000
Net cash (utilised (873 823) 50 243
by)/retained from
operations
Operating cash flow 110 848 178 836
Movement in working 12 505 (76 987)
capital
Net financial income 27 362 23 427
Taxation paid (117 633) (46 971)
Dividends paid (906 905) (28 062)
Net cash effect from 895 807 (40 283)
investing activities
Capital expenditure (51 925) (110 242)
Disposals of fixed 6 017 3 113
assets
Disposals of 941 675 64 313
businesses
Increase in advances 40 2 533
Net cash effect from 8 479 (35 705)
financing activities
Decrease in minority (2 457) (7 332)
interest
Net repayment of ( 532) (28 373)
long/short - term
borrowings
Increase in stated 11 468 -
capital
Net cash 30 463 (25 745)
inflow/(outflow)
Foreign currency (2 782) ( 61)
translation effect
Increase/(decrease) in 27 681 (25 806)
cash and cash
equivalents
Cash and cash 331 638 357 444
equivalents at
beginning of year
Cash and cash 359 319 331 638
equivalents at end of
year
Segmental analysis
Audited Audited
Year to Year to
March 2006 March 2005
restated
R000 R000
Revenue
Continuing operations
Automotive 986 016 915 604
Manufacturing
Discontinued operations
Automotive 58 640
Manufacturing -
Building Products 383 695 1087 724
Total Revenue 1 369 711 2 061 968
Geographical Location
South African 789 045 776 976
operations - local
South African 196 971 197 268
operations - export
International 383 695 1 087 724
operations
Total Revenue 1 369 711 2 061 968
Operating income/(loss)
Continuing operations
Automotive ( 8 981) 35 040
Manufacturing
Automotive 46 048 35 781
Manufacturing before
impairment of assets
Impairment of assets ( 55 029) ( 741)
Corporate and ( 35 714) ( 20 163)
consolidation
Corporate and ( 20 714) ( 20 163)
consolidation before
provision for benefit
funds
Provision for benefit (15 000) -
funds
Total continuing ( 44 695) 14 877
operations
Discontinued operations 51 693 119 067
Automotive - (2 768)
Manufacturing
Building Products 51 693 121 835
Total operating income 6 998 133 944
Geographical Location
South African ( 44 695) 12 109
operations
International 51 693 121 835
operations
Total operating income 6 998 133 944
RECONCILIATION OF MOVEMENT IN CAPITAL AND RESERVES - for the year ended
31 March
Share Non - Retained Minority Total
Ordinary
capital Distri- earnings Share- interest equity
butable holders
reserves equity
R000 R000 R000 R000 R000 R000
Balance 31 (220) (38,601) 718,502 679 681 43,048 722,729
March 2004 -
as previously
stated
Adjustments
on adoption of
IFRS
- IAS 16 (659) ( 659) (659)
- Property
plant and
equipment
- IAS 38 (49) ( 49) (49)
- Intangible
assets
Property , 15,059 15 059 3,704 18,763
plant and
equipment
Straight (7,136) (7 136) (7,136)
lining of
leases
Balance 31 (220) 725,717 686,896 46,752 733,648
March 2004 - (38,601)
as restated
Net movement
not recognised
in
the income - ( 913) ( 189) (1 102) - (1 102)
statement
Direct (1 102) (1 102) (1,102)
movements in
reserves
Transfers 189 ( 189) - -
to retained
earnings
Transfers 4 438 4 438 4,438
affecting
retained
earnings
Profit for - - 71 628 71 628 5 248 76,876
the year -
restated
Profit for 69 933 69 933 75,114
the year - as 5,181
previously
reported
Adjustments - -
on adoption of
IFRS
- IAS 16 ( 660) ( 660) (660)
- Property
plant and
equipment
- IAS 38 ( 94) ( 94) (94)
- Intangible
assets
Property , 255 255 67 322
plant and
equipment
Straight 2 194 2 194 2,194
lining of
leases
Change in (5,595) (5,595)
holding in and
disposal of
minorities
Dividends to (28 062) (28 062) (4,529) (32,591)
shareholders
Balance 31 ( 220) (35 076) 769 094 733 798 41 876 775 674
March 2005 -
as restated
Net movement
not recognised
in
the income 14 292 908 15 200 ( 128) 15 072
statement
Direct 15 200 15 200 (128) 15,072
movements in
reserves
Transfers ( 908) 908 - -
to retained
earnings
Transfers 25 095 25 095 25,095
affecting
retained
earnings
Profit for 585 912 585 912 8,245 594,157
the year
Issue of 11 468 11 468 11,468
share capital
Dividends to (906 905) (906 (2,457)
shareholders 905) (909,362)
Balance 31 11 248 4 311 449 009 464 568 47 536 512 104
March 2006
PRELIMINARY PROFIT STATEMENT
REVIEW OF OPERATIONS
The most important development during the year was the disposal of Alpine
Engineered Products Inc. (Alpine) in July 2005, which realised a significant
profit on disposal and resulted in earnings improving by 703% (ie earnings
increased from 217 cents per share to 1741,6 cents per share).
Reviewing the operating results of the continuing operations (basically
Dorbyl Automotive Technologies and the Head Office), turnover increased by
8% and operating income increased by 62%, prior to taking into account an
impairment of group assets of R55 million and an abnormal R15 million
provision for a shortfall in the benefit funds. After taking account of
these two items, an operating loss of R44,7 million was reported.
While net financial income benefited to some extent from the proceeds
received from the sale of Alpine, this was for a limited period only as the
proceeds were distributed shortly after receipt in the form of a special
dividend. Nevertheless this non-recurring benefit amounted to some R8
million and, after tax, contributed some 17 cents per share to the earnings
line. As a result of the above benefit, net financial income, despite lower
interest rates, increased by 20 % when compared to last year.
The distribution of the proceeds received on the sale of Alpine resulted in
Secondary Tax on Companies (STC) of R110 million, which increased the tax
charge attributable to continuing operations significantly to R123 million.
As a result, the loss after taxation from continuing operations was R140
million, reflecting the adverse impact of both the STC of R110 million and
the impairment of R55 million.
The profit after tax from discontinued operations (basically the Alpine
operations until date of sale) amounted to R33,2 million (2005 - R78,9
million).
The profit on the sale of discontinued operations (basically Alpine), net of
taxation, amounted to R698 million. This enabled the group to declare a
special dividend of R26 per share. However, the STC payable on that dividend
adversely affected headline earnings per share, which declined by 163% from
the previous year. Excluding this STC charge, headline earnings would have
declined by 46 %, being adversely affected by the discontinuation of the
Alpine earnings early in the financial year, as Alpine"s profits constituted
a major portion of the earnings of the previous year.
With regard to the Management Participation Scheme referred to in both the
relevant circular to shareholders relating to the disposal of Alpine dated
18 June 2005 and the interim profit statement, the exceptional profit
realised on the disposal of Alpine materially increased the performance
bonuses potentially due to executive directors in terms of the scheme.
Against the exceptional profit of R748 million, an amount of R50 million has
been set aside for this purpose. Amounts previously paid in terms of this
scheme were included in "Directors Remuneration" in previous annual reports,
and further payments made in terms of this scheme will be similarly
disclosed.
CASH ON HAND/BORROWINGS
The net cash position of R359 million at 31 March 2006 is R39 million higher
than the R320 million at 31 March 2005.
BEE PARTNER
As has been reported recently in the press, the group is currently
investigating the possible introduction of a BEE partner and the Standard
Merchant Bank has been tasked to assist the group in this regard.
DORBYL PENSION & PROVIDENT FUNDS
The Trustees of both the Dorbyl Pension and Provident Funds have finalised
their proposals in regard to the Surplus Apportionment and these have been
submitted to the Financial Services Board (FSB) for consideration. In terms
of those submissions, the provision of R15 million reported on in the
September 2005 interim profit statement was adequate to meet the only
identified exposure, being the shortfall of R7 million that will exist in
the Pension Fund after the apportionment of the surplus.
With reference to the Pension Fund, the FSB has raised certain matters which
it requires to be satisfactorily explained or resolved before it can approve
the scheme. The need for a further provision of a maximum of some R27
million could result. The Fund"s professional advisers believe that adequate
explanations can be furnished, but it is difficult to predict the final
outcome. No further provision has been raised.
In regard to the Provident Fund, the former member representative has
advised the FSB that he believed it was inappropriate to allocate a share of
the surplus to Dorbyl as the group had participated in the surplus in the
past via contribution holidays. Should this view prevail, notwithstanding
that all the Trustees supported the scheme, the group could have a maximum
liability of some R15 million to the Provident Fund. Conversely, Dorbyl
could be awarded a greater share of the surplus. The FSB has, as yet, not
expressed a view in this regard, and no provision has been raised.
BASIS OF PREPARATION, ACCOUNTING POLICIES AND AUDIT OPINION
The group has adopted International Financial Reporting Standards (IFRS) for
the year ended 31 March 2006. The financial statements for the year ended 31
March 2006 is the group"s first consolidated IFRS compliant financial
statements and hence IFRS 1 (first time adoption of IFRS) has been applied.
All comparative information where applicable, has been restated to comply
with the new accounting standards.
The following IFRS standards have impacted on group accounting policies and
the disclosure of the group"s results:
* IAS 16 - Property, plant and equipment. The residual values and useful
lives of major items of property, plant and equipment have been
assessed and where applicable, depreciation has been adjusted. In
addition, the anticipated cost of rehabilitation and restoration of
property was accounted for in the cost of fixed assets. However, after
considering the previous accounting standard (SA GAAP), in this regard,
it was decided that the revisions of useful lives were required in
terms of this policy. The adjustments to depreciation were consequently
treated as a prior year adjustment.
* IFRS2 - Share-based payments. The group has elected not to apply the
provisions of IFRS 2 to shares granted before 7 November 2002.
* IFRS5 - Non-current assets held for sale and discontinued operations.
The assets and liabilities of Alpine have been disclosed separately as
at 31 March 2005.
* IAS38 - Intangibles. In terms of the policy, trademarks are now
amortised.
In addition to the above, the accounting treatment for lease rentals has
been changed due to a change in the South African interpretation of IAS 16.
Escalations in operating lease rentals are now charged to the income
statement on a straight line basis over the period of the lease.
The effects of the above accounting policy changes are detailed in the
"Reconciliation of movement of Capital and Reserves". Apart from the initial
adjustments effected at 1 April 2004, which are detailed below, the
remaining adjustments processed through the income statements in subsequent
periods were not material.
Initial adjustments at 1 April 2004 were as follows;
Adjustments
IFRS Plant and Lease
Rm Equipment Rm
Rm
Write up of plant and equipment
(fixed and intangible assets) 2.4 27.3
Provision for
restoration/rehabilitation (3.4)
(Other payables)
Provision for additional lease (11,2)
expense (Other payables)
Provision for additional lease 1,0
revenue (other receivables) 0,4 (8.6) 3,1
Deferred taxation (3.7)
Minority shareholder share
Net effect on Equity (0,6) 15.0 (7,1)
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.
PROSPECTS
While certain of the Dorbyl Automotive Technologies (DAT) operations are
expected to provide satisfactory results, others, particularly those that
are closely linked to the Rand exchange rates such as the wheels operation,
are unlikely to do so. A strong Rand continues to create difficult
conditions for DAT"s operations, both from an export and import replacement
perspective. The phasing out of certain models and delays in the
introduction of new models by OEM"s are also having an adverse effect on
activity levels, but it is expected that there will be less disruption in
this regard during the coming year.
DIVIDEND NO. 113
A final dividend of 10 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, 23 June 2006. The shares of Dorbyl will commence
trading "ex" the final dividend from the commencement of business on Monday,
26 June 2006 and the record date will be Friday, 30 June 2006. The final
dividend is payable on Monday, 3 July 2006.
No dematerialisation or rematerialisation of share certificates may take
place between Monday, 26 June 2006 and Friday, 30 June 2006, both days
inclusive.
On behalf of the board
N Phillips (Chairman)
WW Cooper (Chief Executive)
30 May 2006
Date: 30/05/2006 02:29:29 PM Produced by the JSE SENS Department
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