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PSC
PSC
Pasdec - Unaudited group interim results for the half year
ended 30 June 2006
PASDEC RESOURCES SA LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/004942/06)
Share code: PSC ISIN code: ZAE000023552
("Pasdec" or "the company")
Condensed group income statements for the six months ended 30 June 2006
Audited
Unaudited Unaudited IFRS
IFRS IFRS Year ended
30 June 30 June 31 December
2006 2005 2005
Notes R"000 R"000 R"000
CONTINUING
OPERATIONS
Revenue from sales 58,940 67,037 125,608
Operating profit 6,883 10,569 14,365
before exeptional
items
Exceptional items 1 (1,863) (3,835) (3,645)
Net profit before 5,020 6,734 10,720
interest and
taxation
Interest income 12 680 5,140
Interest expense (1,969) (735) (2,112)
Net profit before 3,063 6,679 13,748
taxation
Taxation charge (916) (3,111) (4,479)
Profit for the 2,147 3,568 9,269
period from
continuing
operations
DISCONTINUED
OPERATIONS
Revenue from sales 16,018 51,318 94,929
Operating loss (10,332) (12,372) (27,594)
before exeptional
items and
impairment losses
Exceptional items 1 (4,685) - (13,730)
Impairment losses 2 - - (30,182)
Net loss before (15,017) (12,372) (71,506)
interest and
taxation
Interest received - - 4
Interest expense (2,283) (5,321) (5,677)
Net loss before (17,300) (17,693) (77,179)
taxation
Taxation charge - (183) (5,501)
Loss for the period (17,300) (17,876) (82,680)
from discontinued
operations
Loss for the period
attributable
to ordinary (15,153) (14,308) (73,411)
shareholders
Loss per share (27.1) (25.6) (131.2)
(cents)
Earnings per share 3.8 6.4 16.6
from continuing
operations (cents)
Loss per share from (30.9) (32.0) (147.7)
discontinued
operations (cents)
Dividend per share - - -
(cents)
Number of shares in 55,964 55,964 55,964
issue
Note 1 -
Exceptional items
Continuing
operations
Legal costs and (1,863) (3,835) (3,645)
impairment of
claims receivable
being pursued
Discontinued
operations
Write-downs of - - (12,547)
inventories to net
realisable value
Retrenchments (4,685) - (1,183)
(4,685) - (13,730)
Note 2 - Impairment
losses
Discontinued
operations
Property, plant, - - (4,509)
equipment and
vehicles
Inventory - - (20,141)
Goodwill - - (5,532)
- - (30,182)
Note 3 - Headline
earnings/
(loss) per share
Loss attributable (15,153) (14,308) (73,411)
to ordinary
shareholders
Goodwill - - -
amortisation
Surplus on disposal - - (681)
of property, plant
and equipment and
closure of foreign
subsidary
Impairment of - - 10,141
goodwill and
property, plant and
equipment
Headline loss (15,153) (14,308) (63,951)
Headline loss per (27.1) (25.6) (114.3)
share (cents)
Headline Earnings 3.8 6.4 16.5
per share from
continuing
operations (cents)
Headline Loss per (30.9) (32.0) (130.8)
share from
discontinued
operations (cents)
There were no
dilutive equity
instruments in
issue.
Note 4 - Contingent liabilities
The group is defending a claim by a former director for various amounts,
the most significant of which is an amount of R25.5 million, against Pasdec
Resources SA Limited and Pasdec Automotive Technologies. The same former
director is pursuing a claim against the group for R0.8 million plus costs
and interest in the Labour Court of South Africa. The directors consider
the claims to have no substance. However, the ultimate outcome of the
matter cannot presently be determined and no provision for any liability
that may result has been made in the financial statements.
Segmental analysis for the six months ended 30 June 2006
Audited
Unaudited Unaudited IFRS
IFRS IFRS Year ended
30 June 30 June 31 December
2006 2005 2005
R"000 R"000 R"000
Revenue
Automotive 58,940 67,038 125,608
Electrical motors 16,018 51,317 94,929
74,958 118,355 220,537
Net loss before interest and
taxation
Automotive 5,070 7,214 14,151
Electrical motors (15,017) (12,372) (71,506)
Corporate (50) (481) (3,431)
(9,997) (5,639) (60,786)
Condensed group balance sheet as at 30 June 2006
Continuing Discontinued
Group Operations Operations
Unaudited Unaudited Unaudited
IFRS IFRS IFRS
30 June 30 June 30 June
2006 2006 2006
ASSETS
Non-current assets
Property, plant and 16,588 16,588 -
equipment
Intangible Assets - - -
Deferred taxation 26,868 26,868 -
43,456 43,456 -
Current assets
Inventories 37,512 32,320 5,192
Trade and other receivables 18,211 11,693 6,518
Cash and cash equivalents 187 139 48
Non-current assets held for
sale - property, plant and
equipment
11,113 - 11,113
67,023 44,152 22,871
Total assets 110,479 87,608 22,871
EQUITY AND LIABILITIES
Capital and reserves
Share capital 37,642
Share premium 80,982
Accumulated loss (194,477)
Non-distributable reserve 9,593
Total shareholders" equity (66,260)
LIABILITIES
Non-current liabilities
Subordinated shareholder"s 62,377 62,377 -
loans
Interest bearing debt 6,409 6,409 -
68,786 68,786 -
Current liabilities
Trade and other payables 54,093 30,130 23,963
Current portion of interest
bearing debt 2,782 1,558 1,224
Bank borrowings 51,078 10,470 40,608
107,953 42,158 65,795
Total liabilities 176,739 110,944 65,795
Total equity and 110,479
liabilities
Continuing Discontinued
Group Operations Operations
Audited Audited Audited
Unaudited IFRS IFRS IFRS
IFRS Year ended Year ended Year ended
30 June 31 December 31 December 31 December
2005 2005 2005 2005
ASSETS
Non-current
assets
Property, plant 37,878 17,427 17,427 -
and equipment
Intangible 5,532 - - -
Assets
Deferred 34,470 27,784 27,784 -
taxation
77,880 45,211 45,211 -
Current assets
Inventories 72,187 42,765 31,765 11,000
Trade and other 29,897 25,385 11,897 13,488
receivables
Cash and cash 27 440 378 62
equivalents
Non-current
assets held for
sale -
property, plant - 15,754 - 15,754
and equipment
102,111 84,344 44,040 40,304
Total assets 179,991 129,555 89,251 40,304
EQUITY AND
LIABILITIES
Capital and
reserves
Share capital 37,642 37,642
Share premium 80,982 80,982
Accumulated loss (179,324)
(120,221)
Non- 9,593 9,593
distributable
reserve
Total 7,996 (51,107)
shareholders"
equity
LIABILITIES
Non-current
liabilities
Subordinated 71,508 62,007 62,007 -
shareholder"s
loans
Interest bearing 12,180 6,975 6,975 -
debt
83,688 68,982 68,982 -
Current
liabilities
Trade and other 55,360 53,920 26,502 27,418
payables
Current portion
of interest
bearing debt 3,220 6,658 2,051 4,607
Bank borrowings 29,727 51,102 15,481 35,621
88,307 111,680 44,034 67,646
Total 171,995 180,662 113,016 67,646
liabilities
Total equity and 179,991 129,555
liabilities
Condensed group cash flow statements for the six months ended 30 June 2006
Audited
Unaudited Unaudited IFRS
IFRS IFRS Year ended
30 June 30 June 31 December
2006 2005 2005
R"000 R"000 R"000
CONTINUING OPERATIONS
Cash flows from operating
activities
Cash generated by operations 5,895 10,286 15,132
Changes in working capital 3,276 (7,101) (814)
Interest income 12 680 5,140
Interest expenses (1,969) (735) (2,112)
Net cash generated from 7,214 3,130 17,346
operating activities
Cash flows from investing
activities
Proceeds from sale of - 39 50
property
Purchase of new equipment (36) (6,389) (8,405)
Net cash utilised by (36) (6,350) (8,355)
investing activities
Cash flows from financing
activities
Net movement in shareholders 370 2,694 (6,808)
loans
Net movement in interest (1,059) 7,506 4,323
bearing debt
Net cash (utilised)/generated (689) 10,200 (2,485)
by financing activities
DISCONTINUED OPERATIONS
Cash flows from operating (7,417) (16,105) (38,331)
activities
Cash flows from investing 4,082 (3,891) (3,570)
activities
Cash flows from financing (3,383) 329 1,746
activities
Net cash utilised by (6,718) (19,667) (40,155)
discontinuing operations
Net decrease in cash and cash (229) (12,687) (33,649)
equivalents
Beginning of period cash and (50,662) (17,013) (17,013)
cash equivalents
Cash and cash equivalents at (50,891) (29,700) (50,662)
the end of the period
Condensed group statements of changes in equity for the six months ended 30
June 2006
Non-
Share Share Distribut- Accumu-
able lated
capital premium reserves loss Total
R"000 R"000 R"000 R"000 R"000
Half-year ended
30 June 2006
At 1 January 37,642 80,982 9,593
2006 - audited (179,324) (51,107)
IFRS
Loss for the - - - (15,153)
year (15,153)
At 30 June 2006 37,642 80,982 9,593
- unaudited IFRS (194,477) (66,260)
Half-year ended
30 June 2005
At 1 January 37,642 80,982 9,593 22,304
2005 - audited (105,913)
IFRS
Loss for the - - - (14,308)
year (14,308)
At 30 June 2005 37,642 80,982 9,593 7,996
- unaudited IFRS (120,221)
Year ended 31
December 2005
At 1 January 37,642 80,982 9,593 22,304
2005 - audited (105,913)
IFRS
Loss for the - - - (73,411)
year (73,411)
At 31 December
2005
- audited IFRS 37,642 80,982 9,593 (179,324) (51,107)
Comments on the unaudited group interim results
Results for the six months ended 30 June 2006
Supplementary notes to the consolidated interim financial statements
Basis of preparation
The interim results have been prepared and presented in accordance with IAS
34 - Interim financial reporting.
The accounting policies used in the preparation of these interim results
are consistent with those used in the annual financial statements for the
year ended 31 December 2005.
Business Activities
The Group"s core business activities are the manufacture of electrical
wiring harnesses for the automotive industry and the manufacture and
distribution of consumer and industrial electrical motors, flameproof
electrical motors for the mining industry, the distribution in the sub-
Saharan region of the full range of General Electric motors.
The Group experienced a temporary decrease in volumes for the first four
months of the year in the automotive sector due to model and engineering
changes at selective customers in the automotive sector. The reduction in
volumes coupled with an under-recovery of fixed overheads in this period
contributed to reduced profits. Pasdec forecasts stronger results in the
second half of 2006, after successful implementation of model and
engineering changes.
Disposal and closure plan
As detailed in the annual financial statements for the year ended 31
December 2005, Pasdec"s disposal and closure plan led the Board to resolve
in December 2005 to dispose of and/or close the electrical motor businesses
in accordance with a formalised plan. This entails a structured process of
disposal of the assets of the Group on a piecemeal basis in accordance with
the approved business plan.
As per the announcement dated 21 July 2006, the disposal and closure plan
has progressed since year-end with the following sale agreements having
been entered into:
- the disposal of 67.4% of the Pasdec"s shareholding in Pasdec
Automotive Technologies to Safika Investments and Lexshell 687 Investments
for a purchase consideration of R32.686m and R7.08m respectively;
- the disposal of the property held by Femco Properties (Brits) to
Shades Apart Investments 134 C.C. for a purchase consideration of R15m;
- the sale of the business assets of Femco Mining to Savcio Holdings for
a purchase consideration of R4.8m; and
- the disposal of the property held by Arambro Investments to Mr K
Moodley for a purchase consideration of R800 000.
The above transactions, excluding the Femco Mining transaction, have not
yet been approved/finalised and are thus not yet reflected in the results
presented above. Further disposal transactions are still being negotiated
and will progress, as mentioned in the cautionary announcement below.
In terms of the structured plan of the disposal of assets, the Directors
intend to settle all of Pasdec"s liabilities, including retrenchment and
closure costs to be incurred. It is expected that these measures will
drastically improve the financial position of Pasdec by utilising funds
generated from the transactions to settle liabilities and restore
profitability.
The closure of the electrical motor businesses and the successful
introduction of a BEE partner to the automotive division will positively
impact on Pasdec. Pasdec is confident of the continued growth and
profitability in the electrical wiring harness company during 2006 and
beyond.
Delisting
As was further announced on 4 September 2006, Pasdec intends to make an
application to the JSE for the delisting of the company from the Main
Board. Shareholders will be given the opportunity to vote on the above
transactions as well as the proposed termination of the listing. A circular
will be sent to shareholders within the next month, including a notice
convening a general meeting whereby shareholders may vote on the proposed
transactions and the proposed delisting.
Cautionary announcement
With reference to the cautionary announcement dated 4 September 2006,
shareholders are advised that the company is still involved in various
negotiations and, accordingly, should continue to exercise caution when
dealing in their securities until a further announcement is made.
Going concern
The ability of the Group to continue as a going concern, taking into
account the disposal and closure plans outlined above, and its ability to
realise its assets and discharge its liabilities in the ordinary course of
business is dependent on the following principal assumptions:
- The realisation of the assets of the electrical motors businesses at
their estimated fair values reflected in accordance with the disposal and
closure plan, principally inventories and properties.
- The continued agreed support of the plan by major creditors,
including the Group"s bankers.
- The continued support of the majority shareholder in the form of
subordinated interest-free shareholder"s loans and partial guarantees
provided on the Group"s banking facilities.
- The funds generated from the contemplated introduction of the BEE
partner in the Pasdec Automotive Technology business.
- The contingent liabilities referred to in the notes not giving rise to
subsequent liabilities.
The Directors believe that in the current circumstances these assumptions
are valid and achievable. Accordingly, the interim results are prepared on
the basis of accounting policies applicable to a going concern. In the
event of one or more of these principal assumptions not being achieved or
sustained this would give rise to a material uncertainty which may cast
significant doubt on the ability of the Group to continue as a going
concern and, therefore its ability to realise its assets and discharge its
liabilities in the ordinary course of business.
Review by auditors
In terms of paragraph 3.18 (b) of the JSE Listings Requirements, interim
reports have to be reviewed by the company"s auditors if there was an
emphasis of matter in the company"s last annual financial statements. This
interim report has not yet been reviewed by the company"s auditors. The
reviewed results will be published on SENS and in the press once the review
has been completed.
Directorate
The current directors of Pasdec Resources SA Limited are:
Non-Executive:
Dato" Hj. Abdul Rahim Mohd Ali*(Chairman) Majid Mohamad*,
Goh Song Han* *Malaysian
Executive:
Kevin Pather (Chief Executive Officer)
Date: 03/10/2006 05:18:11 PM Produced by the JSE SENS Department
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