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TFX - Top fix - Unaudited Interim Results for the six months ended 31 December

Release Date: 30/03/2012 16:55
Code(s): TFX
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TFX - Top fix - Unaudited Interim Results for the six months ended 31 December 2011 TOP FIX HOLDINGS LIMITED , (Registration number 2006/011359/06) JSE code: TFX ISIN: ZAE000088423 (Top fix or "the Company" or "the Group") CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 6 months ended 31 December Year ended
R`000 2011 2010 30 June 2011 Unaudited Unaudited Audited Revenue 172 534 178 048 315 651 Cost of sales (138 (116 (235 967) 584) 956) Gross profit 33 567 61 464 79 695 Net operating expenses (36 (44 (62 533) 160) 127) Operating profit (2 17 304 17 before impairments 966) 568 Impairment of (78 scaffolding equipment 922) - - Operating profit (81 17 304 17 before impairments 888) 568 Interest received 650 63 9 Interest paid (1 (1 (3 611) 967) 473) Profit/(loss) before (82 15 400 14 taxation 849) 104 Taxation (4 (4 (4 344) 344) 187) Profit/(loss) attributable to the equity holders of the parent (87 11 056 9 193) 917 Other comprehensive income - - - Total comprehensive (loss)/income attributable to the equity holders of (87 11 056 9 the parent 193) 917 Weighted average 203 182 203 182 203 shares in issue (`000) 182 Calculation of headline earnings Attributable (87 11 056 9 (loss)/earnings 193) 917 Impairment loss 78 922 - - Loss/(profit) on sale of property,plant and equipment (after 3 taxation) - 17 943 Headline (8 11 073 13 (loss)/earnings 271) 860 Earnings /diluted earnings per share (cents) (Loss)/earnings per share (42.9) 5.4 4.9 Headline earnings/(loss) per (4.1) 5.4 6.8 share
CONSOLIDATED STATEMENT OF FINANCIAL POSITION 6 months ended 31 December Year ended R`000 2011 2010 30 June 2011 Unaudited Unaudited Audited ASSETS Non-current assets 44 913 139 239 126 283 Property, plant and 27 458 124 269 109 equipment 741 Goodwill 13 980 13 980 13 980 Investment in joint 1 870 1 ventures 128 124 Deferred taxation 1 605 1 862 438 Current assets 71 481 70 136 70 846 Inventories 4 289 8 7 826 179 Trade and other 66 907 61 076 62 receivables 422 Bank and call deposits 1 285 234 245 Non-current assets 1 held for sale - - 780 TOTAL ASSETS 116 394 209 375 198 909 EQUITY AND LIABILITIES Capital and reserves 64 446 152 778 151 639 Non-current 1 864 8 1 liabilities 702 879 Interest bearing 1 517 3 1 liabilities 215 846 Deferred taxation 347 5 487 33 Current liabilities 50 084 47 895 45 391 Interest bearing 2 874 12 694 5 liabilities 956 Advances from joint ventures - 908 - Bank overdrafts and 23 929 13 358 18 invoice discounting 216 Trade and other 22 067 18 365 19 payables 174 Taxation payable 1 214 2 2 570 045
TOTAL EQUITY AND 116 394 209 375 198 LIABILITIES 909 Shares in issue (`000) 203 182 203 182 203 182 Net asset value per share (cents) 31.7 75.2 74.6 Net tangible asset value per share 24.8 68.3 67.8 (cents)
CONSOLIDATED STATEMENT OF CASH FLOWS 6 months ended 31 December Year ended R`000 2011 2010 30 June 2011
Unaudited Unaudited Audited Cash flow from (3 132) 4 991 9 812 operations Cash generated by 2 857 9 150 21 929 operations Interest received 650 63 9 Interest paid (1 611) (1 967) (3 473) Taxation paid (5 028) (2 255) (8 653) Cash flow from (130) (70) (1 832) investing activities Increase)/decrease in (747) 2 213 821 advances to joint ventures Net (proceeds on disposal of)/investment in property, plant and equipment 617 (2 283) (2 653)
Cash flow from financing activities Movement in loans (3 411) (5 102) (12 008) payable Decrease)/increase (6 673) (181) (4 028) cash resources Cash resources at (16 971) (12 943) (12 943) beginning of period Cash resources at end (23 644) (13 124) (16 971) of period
Cash resources (23 644) (13 124) (16 971) Bank and call deposits 285 234 1 245 Bank overdraft and (23 929) (13 358) (18 216) invoice discounting CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 6 months ended 31 December Year ended R`000 2011 2010 30 June 2011 Unaudited Unaudited Audited Equity at beginning of 151 639 141 722 141 period 722 Total comprehensive (87 193) 11 056 9 income for the period 917 Equity at end of 64 446 152 778 151 period 639 SEGMENT REPORTING 6 months ended 31 December Year ended
R`000 2011 2010 30 June 2011 Unaudited Unaudited Audited Revenue Personnel outsourcing 158 943 138 393 246 975 Total revenue 161 338 141 020 252 475
Internal (2 395) (2 (5 627) 500) Safety surveillance 6 262 6 11 710 733
Scaffolding 7 329 32 945 56 943 Total Group 172 534 178 048 315 651
Segment profit/(loss) from operations Operating (2 966) 17 304 17 profit/(loss) before 568 impairments Personnel outsourcing 13 543 16 520 29 051 Safety surveillance 2 062 2 2 160 948 Scaffolding (18 571) (1 (14 382) 430) Head office - 6 (1) Impairments Scaffolding (78 922) - -
Net interest (1 (3 (paid)/received (961) 904) 464) Personnel outsourcing (39) (31) 28
Safety surveillance (29) (64) 92 Scaffolding (893) (1 (3 966) 428)
Head office - 1 - Profit/(loss) before (82 849) 15 400 14 taxation 104 Personnel outsourcing 13 504 16 489 29 079 Safety surveillance 2 033 2 2 252 884
Scaffolding (98 386) (3 (17 348) 858) Head office - 7 (1)
CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2011 COMMENTARY ON THE GROUP`S RESULTS: Further to the SENS announcement of 23 March 2012, Group results for the six months ended 31 December 2011 reflect a headline loss per share of 4.1 cents, compared to headline earnings per share of 5,4 cents achieved for the comparative period to 31 December 2010. The continued recession in the South African construction sector has once again adversely affected the Scaffolding Division, resulting in a headline loss for the division of R19,4 million, after debtors provisions detailed below. In addition, in the light of the continued poor performance of the Scaffolding operation, an impairment of R78,9 million was raised against the division`s property, plant and equipment (predominantly access scaffolding). This resulted in an attributable loss for the period to 31 December 2012 of R87,2 million (42,9 cents per share) The impairment loss, on 8300 tons of access scaffolding, has been calculated using the following key assumptions relating to "fair value less costs to sell" (significant management estimate that could differ materially from actual results in future reporting period) - 60% sold as access scaffolding after refurbishment costs of R 1000 per ton - 40% sold as scrap at R 1500 per ton. Subsequent to 31 December 2011 a sale agreement has been reached for the division (see Acquisitions and Disposals). The directors of Top Fix have reassessed the recoverability of the debtors balance and increased the remaining provisions against debtors balances in dispute in the Scaffolding division from R10,6 million to R16,2 million. Net interest charges incurred in the current year were R1 million as compared to R1,9 million in the comparative period. Trade and other receivables increased from R62 million at 30 June 2011 to R67 million at 31 December 2011, the increase arising in the Personnel Outsourcing division. Despite the increased debtors balance, the Group achieved net cash generated by operations of R2,8 million for the six months to 31 December 2012. Scaffolding The Scaffolding Division reported an operating loss, before impairments of R18,6 million (see above for details of impairments and attributable losses of the Division). Subsequent to 31 December 2011 a sale of the operation has been proposed (see Acquisitions and Disposals). Personnel Outsourcing The Personnel Outsourcing division achieved an operating profit for the period of R13,5 million, representing a decline of 18% on those achieved for the six months ended 31 December 2011. Major maintenance programs undertaken by the division`s largest customers in the comparative period, not repeated on the same scale in the current period, as well as pressurized trading margins contributed towards the earnings decline. Contracts for international personnel placements in Mozambique continue and further international placements are actively being pursued. Safety Surveillance The Safety Surveillance division continues to perform well with an operating profit of R2.1 million, in line with that achieved for the six months ended 31 December 2010. ACQUISITIONS AND DISPOSALS Subsequent to 31 December 2011 an agreement has been entered whereby Mr BW Marais will acquire the entire issued share capital and Group loan accounts against the Scaffolding Division (Top Fix Scaffolding (Pty) Ltd and MBM Administration and Labour Brokers (Pty) Ltd) in exchange for 48 million Top Fix Holdings shares (to be cancelled) and a cash consideration of R5 million. As the disposal constitutes a disposal of the major part of the Group`s assets, it will be subject to shareholder approval by special resolution. Refer to the SENS announcement of 14 February 2012 for full details of the proposed transaction. In addition to impairment losses recognised in the current reporting period, a loss on the disposal of the Scaffolding Division is expected if the offer is accepted by shareholders. In addition the Group acquired a 51% stake in Talent Sourcing Consultancy in July 2011 for a consideration of R1,4 million. The effect of the acquisition on Group results is not material. CHANGES IN DIRECTORS Messrs. BW Marais and JA Barker resigned on 14 February 2012 and 27 February 2012 respectively to continue with the disposed Scaffolding operation. Mr Marias` position of Group Chief Executive has been assumed by executive director, Mr FF Goosen ans Ms SL Kemp (formerly Group Financial Manager) has assumed Mr Barker`s position as Group Financial Director. RELATED PARTY TRANSACTIONS An amount of R3,3 million is due by the Scaffolding Division to MBM Technical Services (Pty) Ltd, a company controlled by Mr. BW Marais. The loan bears interest at the prevailing prime overdraft rate plus 1% and is repayable on demand. R0,3 million in interest charges were raised against the loan during the current financial year and MBM Technical Services (Pty) Ltd has given the assurance that it will not withdraw this financing to the detriment of the Group`s ability to meet its other financial obligations. In addition, as detailed above, a sale of the Scaffolding Division to Mr Marais has been proposed subsequent to 31 December 2011. FUTURE PROSPECTS The shortage of skilled artisans experienced in Sub-Saharan Africa leave the Personnel Outsourcing division`s operations well placed to take advantage of organic growth opportunities. The Safety Surveillance division is expected to continue to operate well and contribute to Group profitability. The Group is focused on securing new contract business in all divisions. BASIS OF PREPARATION AND ACCOUNTING POLICIES The condensed consolidated provisional results for the six months ended 31 December 2011 ("reporting period") have been prepared in accordance with IAS 34: Interim Financial Reporting, as well as the AC 500 series of interpretations, on a historical cost basis and conform to International Financial Reporting Standards ("IFRS"). The accounting policies adopted for the reporting period are consistent with those applied in the financial statements for the Group for the year ended 30 June 2011. The reporting period announcement has been prepared in accordance with the disclosure requirements of the JSE Limited Listings Requirements and the Companies Act of South Africa. These results have not been audited or reviewed by the groups auditors The preparation of the financial statements has been supervised by Ms. SL Kemp, CA (SA). CAPITAL COMMITMENTS AND CONTINGENCIES The Group had no significant outstanding capital commitments or contingencies as at 30 June 2011. DIVIDEND DECLARATION In line with current Group policy, no dividend has been declared for the year. For and on behalf of the Board BT Ngcuka (Chairman) FF Goosen (Chief Executive) Date: 30 March 2012 Directors: BT Ngcuka* (Chairman); FF Goosen (CEO); SL Kemp (Financial Director); JJ Senekal*#; NN Sonjani*#; N de Waal* (* - non-executive) (# - independent) Secretary and Registered Office: MN Hattingh, 6 Topaz Street, Littleton Manor, Centurion 0157 Transfer Secretaries: Link Market Services South Africa (Pty) Ltd, 11 Diagonal Street, Johannesburg 2000 (PO Box 4844, Johannesburg 2001) Designated Advisor: Sasfin Capital, a division of Sasfin Bank Ltd Website: www.topfix.co.za Date: 30/03/2012 16:55:03 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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