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DLV
DLV
Dorbyl - Interim group results for the six months ended 30 September 2006
Dorbyl Limited
Incorporated in the Republic of South Africa
Company registration number 1911/001510/06
Share code: DLV & ISIN: ZAE000002184
INTERIM GROUP RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006
ABRIDGED INCOME STATEMENT
Unaudited Unaudited Audited
6 Months to 6 Months to
30 September 30 September
2006 2005
12 Months
to
31 March
% 2006
R000 R000 Change R000
Continuing
operations:
Revenue 474 036 519 183 (9) 986 016
Operating profit
before impairment of
assets, provision
for benefit funds
and restructuring
and retrenchment
costs
7 934 12 189 (35) 25 334
Impairment of assets - (54 916) (55 029)
Provision for - (15 000) (15 000)
benefit funds
Restructuring and (21 103) - -
retrenchment costs
Operating loss (13 169) (57 727) (44 695)
Net financial income 10 505 18 136 27 361
Financial income 15 290 18 512 (17) 32 842
Financial costs (4 785) (376) (5 481)
Share of profit of 209 251 340
associate
Loss before taxation (2 455) (39 340) 94 (16 994)
Income Tax - normal (1 521) (8 324) (11 619)
and deferred
Income Tax - (414) (111 145) (111 110)
Secondary Tax on
Companies
Loss after taxation
from continuing
operations
(4 390) (158 809) 97 (139 723)
Profit after
taxation from
discontinued
operations (refer
below for analysis)
- 33 237 (100) 33 237
Profit on sale of
discontinued
operations, net of 4 402 696 613 700 643
taxation
Profit for the 12 571 041 594 157
period
Attributable to:
Equity holders of (3 192) 566 815 585 912
the company
Minority interest 3 204 4 226 8 245
12 571 041 594 157
Earnings per share
(cents)
Basic (9.4) 1,696.9 (101) 1,741.6
(loss)/earnings per
share
Continuing (22.4) (488.7) 95 (439.8)
operations
Discontinued 13.0 2,185.6 (99) 2,181.4
operations
Headline (27.3) (223.6) 88 (176.1)
(loss)/earnings per
share
Continuing (27.3) (323.1) 92 (274.9)
operations
Discontinued - 99.5 (100) 98.8
operations
Headline
(loss)/earnings per
share before
Secondary
Tax on Companies (27.3) 106.5 (126) 151.6
(STC) on special
dividends
Continuing (27.3) 7.0 (490) 52.8
operations
Discontinued - 99.5 (100) 98.8
operations
Dividends paid per 10 2 665 2 675
ordinary share
(cents)
Final - year ended 10 65 65
31 March 2006 (2005)
Interim - period 10
ended 30 September
2005
Special - 29 August 2 600 2 600
2005
Dividend cover -
headline earnings
before STC on
special
dividend/normal
dividends (times)
- 1.6 2.0
Dividends declared
per
ordinary share 10 10 10
(cents)
Headline earnings
reconciliation
(Loss)/earnings (3 192) 566 815 585 912
attributable to
equity holders
Adjusted for: (6 059) (641 506) (645 174)
Profit on sale of (4 402) (698,245)
discontinued (700,361)
operations
Impairment of - 54,916 55,029
property, plant and
equipment
(Profit)/loss on
sale of property,
plant and equipment (1 657) 191 620
Tax charge - 1 632 (462)
attributable to
adjustments
Headline loss (9 251) (74 691) (59 262)
STC relating to - 110,253 110,253
special dividends
Headline
(loss)/earnings
before
STC on special (9 251) 35 562 50 991
dividends
Depreciation and 11 270 20 139 35 028
amortisation
Financial income 15 290 18 512 32 842
Interest received 11 106 18 512 29 853
Foreign exchange 4 184 - 2 989
gains
Financial costs (4 785) (376) (5 481)
Interest paid (52) (142) (2 554)
Foreign exchange (4 627) (128) (2 715)
losses
Preference dividends (106) (106) (212)
Discontinued
operations
Revenue - 383 695 383 695
Operating income - 51 693 51 693
Financial income - 1 1
Profit before - 51 694 51 694
taxation
Income Tax - (18 457) (18 457)
Profit after - 33 237 33 237
taxation
Attributable to:
Equity holders of - 33 237 33 237
the company
Minority interest - - -
- 33 237 33 237
ABRIDGED BALANCE SHEET
Unaudited Unaudited Audited
30 September 30 September 31 March
2006 2005 2006
R000 R000 R000
ASSETS
Non-current assets 219 765 234 521 217 836
Property, plant and 212 263 210 523 212 113
equipment
Investments and advances 1 451 1 415 1 200
- associate
Deferred tax assets 6 051 19 516 4 523
Other non-interest - 67 -
bearing advances
Interest bearing advances - 3 000 -
Current assets 606 178 616 225 576 333
Inventories 132 532 110 459 94 188
Trade and other 129 813 147 734 122 826
receivables
Cash and cash equivalents 343 833 358 032 359 319
Total assets 825 943 850 746 794 169
EQUITY AND LIABILITIES
Total equity 508 446 493 382 512 104
Ordinary shareholders" 457 673 447 317 464 568
funds
Minority interest 50 773 46 065 47 536
Non-current liabilities 43 449 42 892 40 468
Deferred tax liabilities 13 268 12 302 10 287
Preference share capital 3 980 3 980 3 980
Provisions 26 201 26 610 26 201
Current liabilities 274 048 314 472 241 597
Trade and other payables 254 048 314 472 217 549
Provisions 20,000 - 24,048
Total equity and 825 943 850 746 794 169
liabilities
Capital commitments 6 737 7 717 5 737
authorised
Contracted for 6 585 7 442 5 737
Not contracted for 152 275 -
Operating lease 22 345 19 032 25 458
commitments
Operating lease 12,594 - 1 128
receivables
Investments and advances 1 451 1 500 1 200
to associate at valuation
Net asset value per share 1 349 1 319 1 369
(cents)
Unaudited Unaudited Audited
6 Months to 6 Months to 12 Months to
30 September 30 September 31 March
2006 2005 2006
R000 R000 R000
Additions to property,
plant and equipment
Expansion 3 797 15 996 29 438
Replacement 10 475 15 846 22 487
Ordinary shares (000)
Issued (excluding 33 924 33 924 33 924
Treasury shares)
Weighted average 33 924 33 402 33 643
(excluding Treasury
shares)
ABRIDGED CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 Months to 6 Months to 12 Months to
30 September 30 September 31 March
2006 2005 2006
R000 R000 R000
Net cash utilised by (5 681) (913 695) (873 823)
operations
Operating cash flow 846 69 118 110 848
Movement in working (11 453) 20 480 12 505
capital
Net financial income 10 505 18 137 27 362
Taxation paid (2 187) (117 918) (117 633)
Dividends paid (3 392) (903 512) (906 905)
Net cash effect from (9 805) 931 978 895 807
investing activities
Additions to property, (14 272) (31 842) (51 925)
plant and equipment
Disposals of fixed assets 4 509 169 6 017
Disposals of businesses - 966 675 941 675
(Decrease)/increase in (42) (3 024) 40
advances
Net cash effect from - 10 174 8 479
financing activities
Decrease in minority - (37) (2 457)
interest
Net repayment of - (1 257) (532)
long/short-term
borrowings
Increase in stated - 11,468 11,468
capital
Net cash (outflow)/inflow (15 486) 28 457 30 463
Foreign currency - (2 063) (2 782)
translation effect
(Decrease)/increase in (15 486) 26 394 27 681
cash and cash equivalents
Cash and cash equivalents 359 319 331 638 331 638
at beginning of period
Cash and cash equivalents 343 833 358 032 359 319
at end of period
STATEMENT OF CHANGES IN EQUITY
Stated Non - Retained
distributable earnings
reserves R000
R000
capital
net of
treasury
shares
R000
Balance at 1 April 2005 (220) (35,076) 769,094
Transfers from retained 251 (251)
earnings
Transfers affecting retained 25,096
earnings
Direct movement in reserves 13,652
Profit for the period 566,815
Shares issued 11,468
Ordinary and special dividends
(903,512)
Balance at 30 September 2005 11,248 3,923 432,146
Transfers to retained earnings (1,160) 1,160
Direct movement in reserves 1,548
Profit for the period 19,097
Ordinary dividends (3,394)
Balance at 1 April 2006 11,248 4,311 449,009
(Loss)/profit for the period (3,192)
Direct movement in reserves (311) -
Ordinary dividends (3,392)
Balance at 30 September 2006 11,248 4,000 442,425
STATEMENT OF CHANGES IN EQUITY
Ordinary Total
Minority equity
interest R000
R000
shareholders
equity
R000
Balance at 1 April 2005 733,798 41,876 775,674
Transfers from retained - -
earnings
Transfers affecting retained 25,096 25,096
earnings
Direct movement in reserves 13,652 (37) 13,615
Profit for the period 566,815 4,226 571,041
Shares issued 11,468 11,468
Ordinary and special dividends (903,512) (903,512)
Balance at 30 September 2005 447,317 46,065 493,382
Transfers to retained earnings - -
Direct movement in reserves 1,548 (91) 1,457
Profit for the period 19,097 4,019 23,116
Ordinary dividends (3,394) (2,457) (5,851)
Balance at 1 April 2006 464,568 47,536 512,104
(Loss)/profit for the period (3,192) 3,204 12
Direct movement in reserves (311) 33 (278)
Ordinary dividends (3,392) (3,392)
Balance at 30 September 2006 457,673 50,773 508,446
SEGMENTAL ANALYSIS
Unaudited Unaudited Audited
6 Months to 6 Months to 12 Months to
30 September 30 September 31 March
2006 2005 2006
R000 R000 R000
Revenue
Continuing operations
Automotive Manufacturing 474 036 519 183 986 016
Discontinued operations
Building Products - 383 695 383 695
Total Revenue 474 036 902 878 1 369 711
Operating profit/(loss)
Continuing operations
Automotive Manufacturing 15 327 (31 368) (8 981)
Automotive Manufacturing 15 327 23 548 46 048
before impairment of
assets
Impairment of assets - (54 916) (55 029)
Corporate and (28 496) (26 359) (35 714)
consolidation
Corporate and
consolidation before
provision for benefit (7 393) (11 359) (20 714)
funds
Provision for benefit - (15 000) (15 000)
funds
Restructuring and (21 103) - -
retrenchment costs
Total continuing (13 169) (57 727) (44 695)
operations
Discontinued operations
Building Products - 51 693 51 693
Total operating (13 169) (6 034) 6 998
(loss)/profit
Financial Results
The Group reflected an earnings loss for the six month period of R3,2
million or 9,4 cents per share. The loss attributable to continuing
operations amounted to R7,6 million or 22,4 cents due in the main to an
abnormal charge of R21,1 million in respect of retrenchment costs/provisions
resulting from the decision to downsize the corporate head office in
Parktown. The lease will expire at end March 2007 and the head office will
relocate to much smaller premises.
If one excludes the abnormal items mentioned above, headline earnings for
the continuing operations would have been 17,0 cents per share, compared to
a loss of 323,1 cents per share for the corresponding period. Turnover for
the period declined by 9% to R474 million, mainly due to the strength of the
Rand at the start of the year negatively impacting export sales values and
local pricing levels as physical volumes were largely unchanged. Continuing
industry pressure on prices adversely impacted margins and the profitability
of most of the operations during the period.
Net financial income (including forex profits and losses) amounted to R10,5
million for the six months compared to R18,1 million for the corresponding
six months last year. Non - recurring interest earned on the proceeds from
the disposal of Alpine, prior to the distribution of the special dividend,
had made a significant contribution to last year"s figure.
The profit on sale of discontinued operations of R4,4 million represents a
favourable adjustment to the provision for bonuses that was raised in
respect of the sale of Alpine.
The net cash position of R343,8 million at 30 September 2006 is R15,5
million lower than the position at 31 March 2006.
Basis of preparation and accounting policies
The results for the six months ended 30 September 2006 have been prepared in
accordance with International Financial Reporting Standards (IFRS), are
consistent with the prior comparative period and comply with IAS 34 -
Interim Financial Reporting.
Review of operations
The Group"s activities are now concentrated largely on the motor industry,
producing automotive components for the automotive manufacturers and the
aftermarket, locally and abroad.
The increasing trend by automotive manufacturers to source automotive
components on a world wide basis has resulted in strong price pressures with
a concomitant adverse effect on profitability. It has been recognised that
costs have to be cut back further and efficiencies improved in order to
remain competitive. The current downsizing of some 80% of the corporate head
office staff in Parktown and the relocation of this facility will assist in
this regard. Already almost all the functions previously carried out in
Parktown have been relocated to the divisional central services office in
Port Elizabeth.
The Group"s profitability is also being adversely impacted by the cessation
by manufacturers of certain product lines as a result of the phasing out of
various vehicle models, and a delay in the commencement in the supply of the
replacement product for new models. This temporary situation will improve,
but it is also necessary to aggressively keep abreast of new technologies to
secure ongoing business. Strong focus is being placed on ensuring that the
Group"s manufacturing facilities remain aligned with the needs of the
automotive manufacturers. In this regard it should be noted that in many
cases to achieve proper economies of scale it is necessary to supply greater
volumes than demanded by the local market. In this regard the recent
weakening of the Rand will enhance these possibilities.
Encouragingly the motor industry continues to grow and is providing
opportunities for expansion. However, it is envisaged that investment, both
in additional capacity and new technologies will be required to participate
in this growth. Further, it is envisaged that a determined effort will be
made to investigate the expansion of the Group"s technology and product
range.
Dorbyl Pension and Provident Funds
The Financial Services Board (FSB) has approved the surplus apportionment
proposal as originally submitted in regard to the Provident Fund.
In regard to the Pension Fund, however, the valuation was rejected by the
FSB and its decision has been taken on appeal. The amount in dispute is R40
million inclusive of interest, which has not been provided for. This is in
addition to the Group"s exposure to the deficit expected in the Pension Fund
after the distribution of the surplus. The current provision in respect of
this deficit remains at R15 million.
Prospects
The Group is actively engaged in both restructuring and the development of
its future strategy. The marginal operating profitability of current
operations is not expected to improve in this financial year.
Resignation of director
Pursuant to the downsizing of the corporate head office referred to above,
and in compliance with rule 3.59(b) of the Listing Requirements of the JSE
Limited, notice is hereby given that Mr Derek Orwin, Financial Director of
Dorbyl, will retire and, consequently, resign as a director of Dorbyl with
effect from 30 November 2006. He will however be available in a consulting
capacity thereafter. The Board wishes to thank Mr Orwin for his efforts and
contribution to the Group and wishes him well.
DIVIDEND NO. 114
An interim dividend of 10 cents per ordinary share has been declared. The
last date to trade "cum" the interim dividend in order to participate in the
interim dividend will be Friday, 5 January 2007. The shares of Dorbyl will
commence trading "ex" the interim dividend from the commencement of business
on Monday, 8 January 2007 and the record date will be Friday, 12 January
2007. The interim dividend is payable on Monday, 15 January 2007.
No dematerialisation or rematerialisation of share certificates may take
place between Monday, 8 January 2007 and Friday, 12 January 2007, both days
inclusive.
On behalf of the board
N Phillips (Chairman)
RF Rohrs (Chief Executive)
23 November 2006
Sponsor
PSG Capital Limited
Registrars:
Computershare Investor Services 2004 (Pty) Limited, 70 Marshall Street,
Johannesburg 2001 (P O Box 61051, Marshalltown, 2107)
Company secretary and registered office:
BD Bhikha Dorbyl Ridge, 16 Jan Smuts Avenue, Parktown, 2193
Directors:
N.Phillips (Chairman)*, R.F.Rohrs (Chief Executive)
W.E. Buhrmann*, J.B.Magwaza*, D.Orwin, T. van Wyk*
* non-executive
Date: 23/11/2006 04:00:20 PM Produced by the JSE SENS Department
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