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ARH - ARB - Unaudited interim results for the six months ended 31 December 2011

Release Date: 09/02/2012 07:05
Code(s): ARH
Wrap Text

ARH - ARB - Unaudited interim results for the six months ended 31 December 2011 ARB HOLDINGS LIMITED (Registration number: 1986/002975/06) Share code: ARH ISIN: ZAE000109435 ("ARB" or "the company" or "the group") UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2011 HIGHLIGHTS * Revenue up 13% * Operating profit up 8% * Ungeared with R240 million cash on hand * Acquisition of Eurolux completed BASIS OF PREPARATION The condensed unaudited consolidated interim financial statements for the six months ended 31 December 2011 have been prepared in compliance with International Financial Reporting Standards ("IFRS"), IAS34 - Interim Financial Reporting, the AC500 series of interpretations, the South African Companies` Act and the Listings Requirements of the JSE Limited. The accounting policies applied are consistent with those applied in the annual financial statements for the year ended 30 June 2011 and the six months ended 31 December 2010. The condensed consolidated interim financial statements have not been audited or reviewed by the group`s auditors. The unaudited interim financial statements have been prepared under the supervision of the Financial Director, WR Neasham, CA(SA). CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME Unaudited Unaudited Audited 6 months 6 months year to to 31 Dec to 31 Dec 30 June 2011 2010 2011
R000`s R000`s R000`s Revenue 693 497 614 702 1 256 330 Cost of sales 562 939 500 008 1 021 499 Gross profit 130 558 114 694 234 831 Other income 2 812 1 123 1 730 Operating expenses (73 362) (60 474) 126 315 Profit before interest and taxation 60 008 55 343 110 246 Interest received 9 238 9 353 16 907 Interest paid (194) (70) (137) Profit before taxation 69 052 64 626 127 016 Taxation 22 812 21 120 38 338 Profit for the period 46 240 43 506 88 678 Revaluation of property, plant and equipment (net of taxation) - - 2 802 Total comprehensive income for the period 46 240 43 506 91 480 Profit for the period attributable to: 46 240 43 506 88 678 Non-controlling interest 9 354 8 092 16 662 Ordinary shareholders 36 886 35 414 72 016 Total comprehensive income attributable to: 46 240 43 506 91 480 Non-controlling interest 9 354 8 092 16 662 Ordinary shareholders 36 886 35 414 74 818 Unaudited Unaudited Audited 6 months 6 months year to to 31 Dec 31 Dec 30 June
2011 2010 2011 R000`s R000`s R000`s Reconciliation of headline earnings Profit for the period attributable to ordinary shareholders 36 886 35 414 72 016 Surplus on disposal of property, plant and equipment (net of taxation) (24) - (7) Headline earnings 36 862 35 414 72 009 Number of shares in issue (000`s)235 000 235 000 235 000 Weighted average number of shares (000`s) 235 000 235 000 235 000 Diluted number of shares (000`s) 235 480 235 480 235 480 Earnings per share (cents) 15,70 15,07 30,65 Diluted earnings per share (cents) 15,66 15,04 30,58 Headline earnings per share (cents) 15,69 15,07 30,64 Diluted headline earnings per share (cents) 15,65 15,04 30,57 CONDENSED GROUP STATEMENT OF FINANCIAL POSITION Unaudited Unaudited Audited 31 Dec 31 Dec 30 June 2011 2010 2011 R000`s R000`s R000`s
ASSETS Non-current assets Property, plant and equipment 153 939 146 266 153 679 Intangible asset 756 465 593 Deferred taxation 2 489 3 061 2 223 Current assets Inventory 189 325 191 752 170 242 Trade and other receivables 171 994 145 526 190 448 Deferred lease payments - 27 - Taxation overpaid 95 822 617 Cash resources 240 348 186 857 265 534 TOTAL ASSETS 758 946 674 776 783 336 EQUITY AND LIABILTIES Equity and reserves Share capital 24 24 24 Share premium 116 150 116 150 116 150 Revaluation reserve 46 389 43 587 46 389 Accumulated profit 372 863 328 163 364 765 Attributable to ordinary shareholders 535 426 487 924 527 328 Non-controlling interest 100 041 87 655 96 225 Total shareholders` funds 635 467 575 579 623 553 Non-current liabilities Deferred lease payments 296 156 118 Deferred taxation 20 517 19 584 20 657 Current liabilities Trade and other payables 101 801 78 001 138 581 Deferred lease payments 18 - 37 Taxation payable 847 1 456 390 TOTAL EQUITY AND LIABILITIES 758 946 674 776 783 336 Number of shares in issue (000`s) 235 000 235 000 235 000 Net asset value per share (cents) 227,84 207,63 224,39 Net tangible asset value per share (cents) 226,46 206,12 223,20 CONDENSED GROUP STATEMENT OF CASH FLOWS Unaudited Unaudited Audited 6 months 6 months year to to 31 Dec to 31 Dec 30 June
2011 2010 2011 R000`s R000`s R000`s Cash generated by operating activities 25 223 9 598 104 889 Interest received 9 238 9 353 16 907 Interest paid (194) (70) (137) Dividends paid (34 326) (31 185) (31 185) Taxation paid (18 807) (17 396) (34 653) Secondary tax on companies paid (3 432) (3 019) (3 019) Cash flows from operating activities (22 298) (32 719) 52 802 Cash flows from investing activities (2 888) (9 637) (16 481) Cash flows from financing activities Capital distribution from share premium - (31 725) (31 725) Net decrease in cash resources (25 186) (74 081) 4 596 Cash resources at beginning of period 265 534 260 938 260 938 Cash resources at end of period 240 348 186 857 265 534 CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY Revalu- Share Share ation Capital Premium Reserve R000`s R000`s R000`s
Balance at 30 June 2010 (audited) 24 147 875 43 587 Total comprehensive income for the period - - - Dividends paid - - - Reduction of share premium - (31 725) - Balance at 31 December 2010 (unaudited) 24 116 150 43 587 Total comprehensive income for the period - - 2 802 Balance at 30 June 2011 (audited) 24 116 150 46 389 Total comprehensive income for the period - - - Dividends paid - - - Balance at 31 December 2011 (unaudited) 24 116 150 46 389 Non- Accumu- Control-
lated ling Profit Interest Total R000`s R000`s R000`s Balance at 30 June 2010 (audited) 319 774 83 723 594 983 Total comprehensive income for the period 35 414 8 092 43 506 Dividends paid (27 025) (4 160) (31 185) Reduction of share premium - - (31 725) Balance at 31 December 2010 (unaudited) 328 163 87 655 575 579 Total comprehensive income for the period 36 602 8 570 47 974 Balance at 30 June 2011 (audited) 364 765 96 225 623 553 Total comprehensive income for the period 36 886 9 354 46 240 Dividends paid (28 788) (5 538) (34 326) Balance at 31 December 2011 (unaudited) 372 863 100 041 635 467 CONDENSED GROUP SEGMENT REPORT Unaudited for the 6 months ended 31 December 2011 Elec-
Investment trical and rental whole- IT income saling services R000`s R000`s R000`s
Segment revenue 33 523 693 766 2 602 Profit before taxation 31 533 52 942 340 Depreciation 1 236 1 242 17 Capital expenditure 2 970 861 163 Segment assets 340 271 491 494 3 341 Segment liabilities 70 696 105 347 460 Inter- company
eliminations and re- allocations Total R000`s R000`s
Segment revenue (36 394) 693 497 Profit before taxation (15 763) 69 052 Depreciation - 2 495 Capital expenditure - 3 994 Segment assets (76 160) 758 946 Segment liabilities (53 024) 123 479 Unaudited for the 6 months ended 31 December 2010 Elec-
Investment trical and rental whole- IT income saling services R000`s R000`s R000`s
Segment revenue 26 761 615 527 2 236 Profit before taxation 29 485 46 570 412 Depreciation 848 1 128 25 Capital expenditure 8 861 1 229 12 Segment assets 320 300 420 769 2 410 Segment liabilities 60 536 82 657 347 Inter- company
eliminations and re- allocations Total R000`s R000`s
Segment revenue (29 822) 614 702 Profit before taxation (11 841) 64 626 Depreciation - 2 001 Capital expenditure - 10 102 Segment assets (68 703) 674 776 Segment liabilities (44 342) 99 198 Audited for the year ended 30 June 2011 Elec-
Investment trical and rental whole- IT income saling services R000`s R000`s R000`s
Segment revenue 27 423 1 257 648 5 330 Profit before taxation 47 711 92 215 1 144 Depreciation 2 342 2 812 52 Capital expenditure 13 190 4 326 27 Segment assets 331 020 513 960 3 166 Segment liabilities 58 131 142 748 560 Inter- company
eliminations and re- allocations Total R000`s R000`s
Segment revenue (34 071) 1 256 330 Profit before taxation (14 054) 127 016 Depreciation - 5 206 Capital expenditure - 17 543 Segment assets (64 810) 783 336 Segment liabilities (41 656) 159 783 COMMENTARY The board of ARB ("the board") is pleased to present the group`s interim results for the six months ended 31 December 2011 ("the period"). ARB Electrical, the group`s 74% held empowered electrical wholesaler, increased its operating profit by 15%. The strong trading performance was diluted by the group`s transaction costs of approximately R1,5 million relating to the Eurolux acquisition. These costs, coupled with net interest received remaining relatively flat, resulted in headline earnings per share increasing by 4%. Financial review Despite the challenging and competitive trading conditions experienced during the period, the group achieved revenue growth of 13% and maintained its gross margin at 18,8%. Operating profit, after accounting for the Eurolux transaction costs, increased by 8%. Net interest received decreased only marginally despite shareholder payments during the period of approximately R34 million and taxation paid of approximately R22 million reflecting the group`s disciplined approach to cash management. Consistent with the prior period, the group`s effective tax rate was 33% due to the payment of STC on dividends paid during the period. Headline earnings per share grew by 4% to 15,69 cents (2010: 15,07 cents). The group`s statement of financial position remains robust reflecting a net tangible asset value per share of 226,46 cents (2010: 206,12 cents) and a net ungeared cash position of R240 million. Net working capital as a percentage of annualised revenue declined from 21% in the prior period to 19%. Inventory days reduced despite the 13% growth in revenue while trade receivables (net of VAT) were maintained at below 40 days. Payable days (net of VAT) were maintained below 30 days as the group continued to take advantage of early settlement discounts offered by its suppliers. Net capital expenditure for the period amounted to approximately R3 million. Corporate activity and expansion The acquisition of a controlling interest in Eurolux (Pty) Limited ("Eurolux") was the highlight for the period and represents a significant milestone in the delivery of ARB`s long-term strategy to offer a diversified range of electrical and related industrial products to a broad spectrum of industries and market segments. Acquisition of a controlling interest in Eurolux The acquisition of a 60% controlling interest in Eurolux for a cash consideration of R81 million was announced on 25 October 2011 and became effective on 3 January 2012 ("the Effective Date"). ARB`s share of Eurolux`s net tangible asset value as at the Effective Date was R33,3 million. The purchase price allocation required in terms of IFRS 3 is currently being finalised. Founded in 1991, Eurolux is a leading importer and distributor of lamps, light fittings and ancillary electrical products. It is anticipated that the Acquisition will be earnings-enhancing and value- creating for ARB shareholders from the outset. ARB Connect Although still in the startup phase, the first two ARB Connect stores opened in the last quarter of the previous financial year have provided a strong foundation for the continued penetration of the domestic and retail market segments. Reminder of cautionary announcement In the pursuit to deliver sustainable earnings growth, management is committed to growing the group organically as well through acquisitions. The strong statement of financial position enables us to pursue opportunities which meet the board`s strict evaluation criteria. In this regard shareholders are reminded of the cautionary announcement dated 17 January 2012 and are advised to continue to exercise caution when dealing in the company`s securities until a further announcement is made. Prospects In the absence of any tangible evidence to suggest an improvement in the general economy, the group continues to explore several opportunities, both organic and acquisitive. Furthermore, the inclusion of Eurolux`s results from 3 January 2012 will contribute positively to the group results for the remainder of the current financial year. The above prospects statements have not been reviewed or reported on by the company`s auditors. Dividends ARB`s policy is to distribute a single, annual dividend for the full year of up to a maximum of 40% percent of net profit after taxation. In line with this policy, no interim dividend has been declared. Subsequent events Save for the Eurolux acquisition becoming effective on 3 January 2012 and the payment of the purchase price of R81 million on 16 January 2012, no significant events have occurred in the period between the reporting date and the date of this announcement. Appreciation We would like to acknowledge our management and staff for their hard work and commitment, our fellow directors for their continued wise counsel and to our valued customers, suppliers, business partners, advisors and shareholders for their ongoing support. For and on behalf of the Board. Alan R Burke Byron Nichles Chairman Chief Executive Officer 09 February 2012 Directors: AR Burke (Chairman)*; ST Downes*>; JR Modise*; WR Neasham (Financial Director); B Nichles (Chief Executive Officer); RB Patmore*>#; G Pretorius*>; CC Robertson *non-executive >independent #lead independent director Registered office: 10 Mack Road, Prospecton, Durban, 4110 (PO Box 26426, Isipingo Beach, 4115) Company secretary: WR Neasham CA(SA), 10 Mack Road, Prospecton, Durban, 4110 (PO Box 26426, Isipingo Beach, 4115) Auditors: PKF Durban, 12 on Palm Boulevard, Gateway, 4319 (PO Box 1858, Durban, 4000) Sponsor: Grindrod Bank Limited, 1st Floor, Building Three, Commerce Square, 39 Rivonia Road, Sandhurst, 2196 (PO Box 78011, Sandton, 2146) Transfer secretaries: Computershare Investor Services (Pty) Ltd, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107) Investor relations: Keyter Rech Investor Solutions CC, Fountain Grove, 5 2nd Road, Hyde Park, 2196 (PO Box 653078, Benmore, 2010) Date: 09/02/2012 07:05:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. 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