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BWI - B & W Instrumentation and Electrical Limited - Reviewed consolidated
interim results for the six months ended 29 February 2012
B & W Instrumentation and Electrical Limited
Incorporated in the Republic of South Africa
(Registration number 2001/008548/06)
Share code: BWI
ISIN: ZAE000098687
("B&W" or "the company" or "the group")
Reviewed consolidated interim results for the six months ended 29 February
2012
Cash up R27 million
Order book R246 million
NPAT R296 000
EPS 0,1 cents
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Reviewed Reviewed Audited
29 February 28 February 31 August
2012 2011 2011
R`000 R`000 R`000
ASSETS
Non-current assets 54 977 64 000 53 388
Property, plant and equipment 28 782 35 801 32 543
Deferred tax 12 374 5 406 10 924
Goodwill 7 368 7 368 7 368
Intangible assets 2 128 2 978 2 553
Retention debtors 4 325 12 447 -
Current assets 256 881 352 447 365 301
Inventories 3 360 4 318 2 547
Loans to related parties - - 8 904
Other financial assets 3 567 3 525 3 567
Trade and other receivables 213 632 344 604 337 407
Cash and cash equivalents 36 322 - 12 876
Total assets 311 858 416 447 418 689
EQUITY AND LIABILITIES
Equity 180 512 207 782 180 318
Share capital 38 583 38 583 38 583
Foreign currency translation reserve 399 (144) 500
Retained income 140 987 169 052 140 776
Minority interest 543 291 459
Non-current liabilities 19 14 136 47
Deferred tax - 14 063 -
Finance lease obligation 19 73 47
Current liabilities 131 327 194 529 238 324
Loans from related parties 4 608 5 112 4 862
Financial liabilities 20 120 24 505 17 508
Current tax payable 15 874 13 424 17 042
Trade and other payables 39 227 105 034 136 877
Finance lease obligation 54 49 52
Directors` loans 6 326 5 329 7 823
Bank overdraft 43 692 32 718 47 329
Provisions 1 426 8 358 6 831
Total equity and liabilities 311 858 416 447 418 689
Number of ordinary shares in issue 204 373 959 204 373 959 204 373 959
Net asset value per share (cents) 88,3 101,7 88,2
Net tangible asset value per share (cents) 83,7 96,6 83,4
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Reviewed Reviewed Audited
six months six months 12 months
to to to
29 February 28 February 31 August
2012 2011 2011
R`000 R`000 R`000
Contract revenue 272 888 386 563 683 384
Cost of contracts (243 757) (342 749) (661 500)
Gross profit 29 131 43 814 21 884
Other income - 31 224
Operating expenses (23 275) (25 104) (45 714)
Operating profit 5 856 18 741 (23 606)
Investment revenue 5 40 40
Finance costs (2 413) (1 605) (3 619)
Profit before taxation 3 448 17 176 (27 185)
Taxation (3 152) (4 818) 11 429
Profit for the period 296 12 358 (15 756)
Other comprehensive income
Foreign currency translation reserve (101) (464) 187
Total comprehensive income 195 11 894 (15 569)
Profit attributable to:
Owners of the parent 211 12 279 (15 997)
Non-controlling interest 85 79 241
296 12 358 (15 756)
Total comprehensive income attributable to:
Owners of the parent 111 11 819 (15 997)
Non-controlling interest 84 75 241
195 11 894 (15 756)
Profit attributable to:
Owners of the parent 211 12 279 (15 997)
Adjustment for headline earnings - profit 33 (31) 170
on sale of property, plant
and equipment
Headline earnings attributable to ordinary 244 12 248 (15 827)
shareholders
Weighted average number of ordinary shares 204 373 959 204 373 959 204 373 959
in issue
Earnings per ordinary share (cents) 0,1 6,0 (7,8)
Headline earnings per ordinary share 0,1 6,0 (7,7)
(cents)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Treasury Foreign Distri- Minority Total
capital premium shares currency butable interest equity
R`000 R`000 R`000 trans- reserve R`000 R`000
lation R`000
reserve
R`000
Balance at 2 49 850 (11 269) 315 165 970 216 205 084
1 September 2010
Total - - - (459) 12 279 75 11 895
comprehensive
income for the
period
Dividends paid - - - - (9 197) - (9 197)
Balance at 2 49 850 (11 269) (144) 169 052 291 207 782
28 February 2011
Total - - - 644 168 (27 464)
comprehensive (28 276)
income for the
period
Balance at 2 49 850 (11 269) 500 140 776 459 180 318
31 August 2011
Total - - - (101) 211 84 195
comprehensive
income for the
period
Balance at 2 49 850 (11 269) 399 140 987 543 180 512
29 February 2012
CONSOLIDATED CASH FLOW STATEMENT
Reviewed Reviewed Audited
six months six months 12 months
29 February 28 February 31 August
2012 2011 2011
R`000 R`000 R`000
Cash generated from/(used in) 24 295 (77 704) (63 695)
operations
Interest income 5 40 40
Finance costs (2 413) (1 605) (3 619)
Tax paid (5 770) (1 260) (977)
Net cash from operating activities 16 117 (80 529) (68 251)
Purchase of property, plant and (817) (1 806) (2 168)
equipment
Sale of property plant and equipment 2 046 144 215
(Repayment) proceeds on loans from (1 497) 5 330 7 823
directors
Loans to related parties - 7 178 (1 975)
advanced/(repaid)
Proceeds from loans from group 8 648 - -
companies
Purchase of financial assets - (41) (83)
Net cash from investing activities 8 380 10 805 3 812
Proceeds from/(repayment of) financial 2 612 (24 712) (31 709)
liabilities
(Payments on)/inflow from finance lease (26) (167) (190)
Dividends paid - (9 197) (9 197)
Net cash from financing activities 2 586 (34 076) (41 096)
Total cash movement for the period 27 083 (103 800) (105 535)
Cash at the beginning of the period (34 453) 71 082 71 082
Total cash at end of the period (7 370) (32 718) (34 453)
SEGMENTAL REPORTING
Six months to 29 February 2012 South Foreign Total
Africa operations R`000
R`000 R`000
Profit and loss
Contract revenue 109 272 163 616 272 888
Contract costs (73 206) (170 551) (243 757)
Gross profit 36 066 (6 935) 29 131
Operating expenses (9 320) (13 955) (23 275)
Operating profit 26 746 (20 890) 5 856
Investment income 5 - 5
Finance costs (2 413) - (2 413)
Profit/(loss) before tax 24 338 (20 890) 3 448
Assets and liabilities
Total assets 242 132 69 726 311 858
Total liabilities (125 751) (5 595) (131 346)
Six months to 28 February 2011
Profit and loss
Contract revenue 202 556 184 007 386 563
Contract costs (214 695) (128 054) (342 749)
Gross profit (12 139) 55 953 43 814
Other income 31 - 31
Operating expenses (14 569) (10 535) (25 104)
Operating profit (26 677) 45 418 18 741
Investment income 40 - 40
Finance costs (1 605) - (1 605)
(Loss)/profit before tax (28 242) 45 418 17 176
Assets and liabilities
Total assets 283 854 132 593 416 447
Total liabilities (103 678) (104 987) (208 665)
COMMENTARY
Basis of preparation
The accounting policies applied in the preparation of these reviewed
consolidated interim financial statements, which are based on reasonable
judgments and estimates, are in accordance with International Financial
Reporting Standards ("IFRS") and are consistent with those applied in the
audited annual financial statements for the year ended 31 August 2011. The
reviewed consolidated interim financial statements as set out in this report
have been prepared in terms of IAS 34: Interim Financial Reporting, the
Companies Act, 2008 (Act 71 of 2008) and the Listings Requirements of JSE
Limited.
Review opinion
The consolidated interim financial results for the six months ended 29
February 2012 ("the period") have been reviewed by B&W`s auditors, Certified
Master Auditors Inc. Their unqualified review opinion is available for
inspection at the company`s registered office.
Introduction
Following a challenging 18 months, the directors are pleased to report that,
as previously undertaken to investors, the results for the period reflect a
pleasing improvement with a return to profitability. Healthier cash flow is
firmly on track, underpinned by a solid order book of R246 million at period-
end.
The group`s cash flow has stabilised and the company is expected to be cash
neutral by year-end. B&W has received final account resolution and handover
approval in respect of projects in Madagascar and Mozambique, further boosting
cash flow.
Group profile
B&W is one of South Africa`s top three niche providers of electrical and
instrumentation ("E&I") services as well as an earthing, lightning and surge
protection specialist. Clients range across the oil & gas, infrastructure,
industrial, utilities, mining, chemical and food & beverage industries in sub-
Saharan Africa. Specific services include equipment procurement, project
supervision, installation of the E&I system, post-installation commissioning
and ongoing maintenance.
Financial results
Revenue for the period was down 29,4% to R272,9 million from R386,6 million in
the comparative period. Following a year-end loss the group posted net profit
after tax of R296 000 translating into earnings per share ("EPS") of 0,1
compared to 6,0 cents in the comparable period and a loss per share of 7,8
cents at year-end. Cash on hand improved from a negative R34 million at year-
end to a negative R7 million.
Funding
The company continues to hold no long-term debt with only minimal short-term
debt. Short-term debt was further reduced during the period to return the
group to previous trading levels.
Operations
B&W continued to pursue growth in the oil & gas sector with a number of
contract wins in South Africa during the period. This sector is expected to
provide B&W with further growth opportunities going forward.
The group`s Small Projects division was initiated during the period and has
already successfully secured new contracts. B&W believes that there is
significant opportunity over the next four to six years to capitalise on
smaller E&I projects at acceptable margins, to assist in offsetting the impact
of delays in the award of larger projects.
Pontins delivered a strong performance again and is expected to continue
making a considerable contribution to group earnings in the six months ahead
to year-end.
Prospects
The general economy, and in particular the construction sector, is starting to
show signs of recovery. Prospects appear more promising than 18 months ago and
B&W is optimistic about the outlook for 2013/14. The group is currently in the
process of setting its five-year strategic plan.
BEE remains a focus area and to this end B&W is in discussions with possible
appropriate BEE partners.
While the group is continuing to explore new revenue streams, including
commercial and infrastructure projects, focus remains on South Africa and
Africa. The latter continues to offer good growth opportunity. Management is
positive regarding further expansion of B&W`s geographic footprint to drive
organic growth.
Renewable energy presents another growth area and B&W is currently in
discussions on potential contracts.
With cash flow constraints resolved and consolidation underway, the group`s
outlook remains positive.
Any general forecast information included in this commentary has not been
reviewed or reported on by the company`s auditors.
Directorate
Stephen Pinkney was appointed to the board of directors as an executive
director with effect from 24 June 2011. George Robertson was appointed as an
independent non-executive director and member of the B&W Audit Committee with
effect from 27 January 2012.
Johan Breedt and Sam Vilakazi resigned from the board as executive directors
with effect from 20 January 2012 and 24 February 2012, respectively. The board
thanks both Johan and Sam for their considerable contribution and wishes them
well in their future endeavours.
Dividend
In light of the cash position, no interim dividend has been declared. It
remains group policy to declare a final dividend at year-end of 25% of NPAT,
cash flow permitting.
Subsequent events
The board of directors is not aware of any material matters or circumstances
arising since the end of the period up to the date of this report.
John Barrow
Chairman
Brian Harley
Chief Executive Officer
On behalf of the board
23 April 2012
Directors
John Barrow* (Chairman); Brian Harley (CEO);
Danie Evert (Financial Director); George Robertson*;
Tom Lombard; Dean Nevay; Stephen Pinkney;
Gary Swanepoel; Wolf Wassermeier*;
Jimmy Oosthuizen*; Unati Mabandla*.
*Non-executive director
Independent
Registered office
42 Fourth Avenue, Alberton North, 1449
(PO Box 956, Alberton, 1450)
Designated Adviser
Merchantec Capital
Transfer secretaries
Computershare Investor Services (Proprietary) Limited
70 Marshall Street, Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
Company secretary
CIS Company Secretaries (Proprietary) Limited
70 Marshall Street, Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
Investor relations
Envisage Investor & Corporate Relations
Date: 23/04/2012 07:05:01 Supplied by www.sharenet.co.za
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