Wrap Text
Condensed audited results for the year ended 30 June 2014, dividend announcement and notice of annual general meetin
ARB HOLDINGS LIMITED
(Registration number: 1986/002975/06)
Share code: ARH ISIN: ZAE000109435
(“ARB” or “the Company” or “the Group”)
CONDENSED AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2014, DIVIDEND
ANNOUNCEMENT AND NOTICE OF ANNUAL GENERAL MEETING
HIGHLIGHTS
• Revenue up 14% to R2,2 billion
• Operating profit up 27% to R203,0 million and operating margin
improved to 9.2%
• Headline earnings per share up 27% to 50,28 cents
• Annual dividend up 24% to 20,1 cents per share plus a special
dividend of 10,0 cents per share
• Ungeared with R197,6 million net cash on hand
BASIS OF PREPARATION
The condensed audited consolidated annual financial statements for the
year ended 30 June 2014 (“the year”) have been prepared in accordance
with International Financial Reporting Standards (“IFRS”), IAS 34
Interim Financial Reporting Standards, the SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee, the Financial
Reporting Pronouncements as issued by the Financial Reporting Standards
Council, the South African Companies Act, 71 of 2008, as amended and the
Listings Requirements of the JSE Limited. The accounting policies used
in the preparation of these results are consistent with those applied in
the prior year. During the current year the Group adopted those
standards and interpretations in issue and effective for the year. The
impact of adopting these new and amended standards and interpretations
has not had a significant impact on the Group’s accounting policies
adopted. The annual financial statements have been audited by PKF
Durban, whose unqualified audit opinion is available for inspection at
the Company’s registered office together with the financial statements
identified in the auditor’s report.
The audited annual financial statements have been prepared under the
supervision of the Financial Director, WR Neasham, CA(SA).
CONDENSED GROUP STATEMENTS OF COMPREHENSIVE INCOME
Audited Audited
year to year to
30 June 30 June
2014 2013
% Change R000’s R000’s
Revenue 14% 2 216 659 1 944 541
Cost of sales 1 689 709 1 519 421
Gross profit 24% 526 950 425 120
Other income 4 878 5 807
Operating expenses (328 798) (270 452)
Profit before interest and taxation 27% 203 030 160 475
Interest received 11 442 10 418
Interest paid (190) (971)
Profit before taxation 26% 214 282 169 922
Taxation 59 708 46 242
Profit for the year 25% 154 574 123 680
Revaluation of property, plant and
equipment (net of taxation) (457) 10 928
Total comprehensive income for the year 14% 154 117 134 608
Profit for the year attributable to: 25% 154 574 123 680
Minority interests 27% 36 383 28 550
Ordinary shareholders 24% 118 191 95 130
Total comprehensive income attributable to: 14% 154 117 134 608
Minority interests 27% 36 383 28 550
Ordinary shareholders 11% 117 734 106 058
Audited Audited
year to year to
30 June 30 June
2014 2013
% Change R000’s R000’s
Reconciliation between earnings
and headline earnings
Profit for the year attributable to
ordinary shareholders 24% 118 191 95 130
Less: Bargain purchase price (net of
minorities) - (2 167)
Less: Surplus on disposal of property,
plant and equipment (net of taxation) (31) (27)
Headline earnings attributable to ordinary
shareholders 27% 118 160 92 936
Ordinary shares in issue (000’s) 235 000 235 000
Weighted ordinary shares in issue (000’s) 235 000 235 000
Diluted ordinary shares in issue (000’s) 235 000 235 340
Basic earnings per share (cents) 24% 50.29 40.48
Diluted earnings per share (cents) 24% 50.29 40.42
Headline earnings per share (cents) 27% 50.28 39.55
Diluted headline earnings per share (cents) 27% 50.28 39.49
CONDENSED GROUP STATEMENTS OF FINANCIAL POSITION
Audited Audited
30 June 30 June
2014 2013
% Change R000’s R000’s
ASSETS
Non-current assets
Property, plant and equipment 205 525 193 621
Intangible assets 83 971 84 411
Deferred taxation 13 188 11 859
Current assets
Inventory 391 348 341 664
Trade and other receivables 341 924 311 679
Taxation overpaid 122 371
Cash resources 197 584 202 790
TOTAL ASSETS 1 233 662 1 146 395
EQUITY AND LIABILITIES
Equity and reserves
Share capital 24 24
Share premium 116 150 116 150
Revaluation reserve 60 100 60 557
Accumulated profit 536 122 479 501
Attributable to ordinary shareholders 9% 712 396 656 232
Minority interests 199 838 172 855
Total shareholders’ funds 10% 912 234 829 087
Non-current liabilities
Deferred taxation 34 127 37 893
Current liabilities
Vendor loan 18 2 259
Trade and other payables 284 118 275 045
Deferred lease payments 440 836
Taxation payable 2 725 1 238
Bank overdraft - 37
TOTAL EQUITY AND LIABILITIES 1 233 662 1 146 395
Ordinary shares in issue (000’s) 235 000 235 000
Net asset value per share (cents) 9% 303.15 279.25
Net tangible asset value per share (cents) 9% 275.94 252.42
CONDENSED GROUP STATEMENTS OF CASH FLOW
Audited Audited
year to year to
30 June 30 June
2014 2013
R000’s R000’s
Cash generated by trading 29% 214 511 165 838
Increase in net working capital (70 855) 31 318
Cash generated by operating activities 143 656 197 156
Interest received 11 442 10 418
Interest paid (190) (971)
Dividends paid (70 970) (38 695)
Taxation paid (62 176) (49 328)
Cash flows from operating activities 21 762 118 580
Cash flows from investing activities (24 690) (79 344)
Cash flows from financing activities (2 241) (15 853)
Decrease in cash resources (5 169) 23 383
Cash resources at beginning of year 202 753 179 370
Cash resources at end of year 197 584 202 753
CONDENSED GROUP STATEMENTS OF CHANGES IN EQUITY
Reva-
Share Share luation
Capital Premium Reserve
R000’s R000’s R000’s
Balance at 30 June 2012 (audited) 24 116 150 49 629
Total comprehensive income for the year - - 10 928
Dividends paid - - -
Balance at 30 June 2013 (audited) 24 116 150 60 557
Total comprehensive income for the year - - (457)
Dividends paid - - -
Balance at 30 June 2014 (audited) 24 116 150 60 100
Accumulated Minority
Profit Interests Total
R000’s R000’s R000’s
Balance at 30 June 2012 (audited) 416 566 150 805 733 174
Total comprehensive income for the year 95 130 28 550 134 608
Dividends paid (32 195) (6 500) (38 695)
Balance at 30 June 2013 (audited) 479 501 172 855 829 087
Total comprehensive income for the year 118 191 36 383 154 117
Dividends paid (61 570) (9 400) (70 970)
Balance at 30 June 2014 (audited) 536 122 199 838 912 234
CONDENSED GROUP SEGMENTAL REPORTS
Audited for the year ended 30 June 2014
Electrical Lighting Corporate
R000’s R000’s R000’s
Segment revenue 1 875 877 350 815 35 058
Profit before interest
and taxation 138 632 39 511 26 732
Segment assets 827 199 183 788 324 890
Segment liabilities 268 172 84 728 27 031
Net segment assets 559 027 99 060 297 859
Inter-
company
eliminations Total
R000’s R000’s
Segment revenue (45 091) 2 216 659
Profit before interest
and taxation (1 845) 203 030
Segment assets (102 215) 1 233 662
Segment liabilities (58 503) 321 428
Net segment assets (43 712) 912 234
Audited for the year ended 30 June 2013
Electrical Lighting Corporate
R000’s R000’s R000’s
Segment revenue 1 678 576 281 177 38 698
Profit before interest
and taxation 101 301 30 498 30 052
Segment assets 733 653 153 527 352 781
Segment liabilities 253 044 72 467 40 566
Net segment assets 480 609 81 060 312 215
Inter-
company
eliminations Total
R000’s R000’s
Segment revenue (53 910) 1 944 541
Profit before interest
and taxation (1 376) 160 475
Segment assets (93 566) 1 146 395
Segment liabilities (48 769) 317 308
Net segment assets (44 797) 829 087
COMMENTARY
The Board of ARB (“the Board”) is pleased to present the Group’s audited
results for the year ended 30 June 2014 (“the year”).
Market share gains and improved operational efficiencies in both the
Electrical and Lighting divisions ensured that the Group delivered
excellent results for the year.
Financial review
The Group achieved revenue of over R2 billion for the first time,
representing growth of 14% over the prior year. The revenue growth was
predominantly organic reflecting strong market share gains by both the
Electrical and Lighting divisions. Improved trading disciplines saw the
Group’s gross margin increase from 21.9% to 23.8%. Overheads were
reasonably well controlled across the Group and increased due to the
higher sales volumes as well as the first time inclusion of
Elektro Vroomen’s (acquired in January 2013) and CED’s (established in
May 2013) overheads for a full year. Operating profit increased by 27%
to R203,0 million resulting in an improvement in the Group’s operating
margin from 8.3% to 9.2%.
Net interest received increased despite the payment of annual and
special dividends totalling R71,0 million in September 2013.
Headline earnings per share increased by 27% to 50,28 cents (2013:
39,55 cents).
The Group’s operations remained strongly cash generative although at a
lower level than in the prior period due to a R70,9 million investment
in working capital in line with the increase in revenue. In the prior
year, cash generation was enhanced by the unwinding of Industrial Cable
Suppliers’ overstocked position inherited on the acquisition of that
business.
Net working capital increased slightly to 20.3% of revenue (2013:
19.5%). Inventory levels at year-end were slightly higher following a
strategic decision to increase the stock holding of selected fast-moving
cable products ahead of the NUMSA strike which threatened to disrupt
deliveries from our major cable suppliers. The trade receivables book
continues to be well managed in an increasingly challenging credit
environment.
Net capital expenditure for the period amounted to R24,7 million, a
large portion of which related to the construction of ARB Electrical’s
new Nelspruit premises (completed in January 2014) and the new
Rustenburg premises (commenced in April 2014).
The Group’s statement of financial position remains robust reflecting a
net asset value per share of 303,15 cents (2013: 279,25 cents) and a net
ungeared cash position of R197,6 million.
The Group’s after-tax return on average equity improved to 17.3% in the
current year from 15.4% in the prior year.
Divisional review
Electrical division (revenue up 12% and operating profit up 37%)
Despite a disappointing fourth quarter, full year revenue grew by 12% to
R1,88 billion (2013: R1,68 billion). Gross margins improved due to the
leveraging of trading and procurement efficiencies. Operating profits
increased by 37% to R138,6 million (2013: R101,3 million), improving the
Electrical division’s operating margin to 7.4% (2013: 6.0%).
Lighting division (revenue up 25% and operating profit up 30%)
Buoyed by the introduction of new product categories and key customer
gains, the Lighting division built on its strong first half performance
to grow full year revenues by 25% to R350,8 million (2013:
R281,2 million). Although gross margins were lower, tight cost control
resulted in the operating margin improving to 11.3% (2013: 10.8%).
Corporate division (revenue down 9% and operating profit down 11%)
The Corporate division represents the Group’s ungeared property
portfolio, the centralised treasury function and ARB IT Solutions (Pty)
Limited. Given the largely fixed nature of its revenue and overheads
(save for the non-recurring revenue relating to the implementation of
the Xact II ERP solution across the Electrical division, earned in the
prior period), the Corporate division’s results for the period were in
line with expectations.
During the year, the investments in ARB Electrical’s new branch premises
in Nelspruit and Rustenburg, referred to above, contributed to an
increase in the market value of the Group’s portfolio of 15 properties
to R163 million (2013: R155 million).
Corporate activity and expansion
Although acquisitions remain an integral part of the Group’s growth and
expansion strategy, no new corporate activity was undertaken during the
year as management focused on driving organic growth and leveraging
operational efficiencies.
Potential acquisitions continue to be evaluated but will only be
concluded if the Board is convinced of the strategic fit and merits of
such acquisitions and provided that the terms and structure of such
acquisitions are value accretive to ARB shareholders.
Prospects
The combination of continued labour unrest, a slow down in consumer
spending, moderating economic growth and subdued levels of fixed
investment activity suggests a continuation of the tough market
conditions experienced over the past few years.
Given these headwinds, the Group will maintain its focus on driving
operational efficiencies in its existing businesses as well as continue
to evaluate strategically aligned trading and distribution related
acquisitions.
The above prospects statements have not been reviewed or reported on by
the Company’s auditors.
Dividends
In view of the Group’s continued strong cash generation and its ungeared
balance sheet, the Board has resolved to declare a dividend of 20,1
cents per share (2013: 16,2 cents per share) for the year ended
30 June 2014, representing the maximum payout in terms of the Company’s
dividend policy. In addition, the Board has resolved to declare a
further special dividend of 10,0 cents per share in order to return
excess cash to shareholders.
The relevant dates for the dividends are as follows:
Event Date
Declaration date Tuesday, 19 August 2014
Last day to trade cum dividend Friday, 5 September 2014
Shares commence trading ex dividend Monday, 8 September 2014
Record date Friday, 12 September 2014
Payment date Monday, 15 September 2014
Share certificates may not be dematerialised or rematerialised between
Monday, 8 September 2014 and Friday, 12 September 2014, both days
inclusive.
In compliance with the JSE Listings Requirements, the following
additional information is disclosed:
1. the dividend and special dividend have been declared out of income
reserves;
2. the local dividend tax rate is 15%;
3. there are no Secondary Tax on Companies credits utilised against the
dividends;
4. the gross local dividend amount is 20,1 cents per share for
shareholders exempt from paying Dividends Tax;
5. the gross local special dividend amount is 10,0 cents per share for
shareholders exempt from paying Dividends Tax;
6. the net local dividend amount is 17,085 cents per share for
shareholders liable to pay Dividends Tax;
7. the net local special dividend amount is 8,500 cents per share for
shareholders liable to pay Dividends Tax;
8. the issued share capital of ARB is 235 000 000 ordinary shares of
0,01 cent each; and
9. ARB's income tax reference number is 9010/138/20/5.
Subsequent events
No significant events have occurred during the period between the
reporting date and the date of this announcement.
Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting of shareholders
of ARB will be held at 10:00 on Wednesday, 22 October 2014, at the
Company’s registered office located at 10 Mack Road, Prospecton, Durban.
The notice of Annual General Meeting is contained in the Integrated
Report which will be posted to shareholders by no later than
16 September 2014.
The record date, for purposes of determining which shareholders are
entitled to receive the notice of Annual General Meeting, is
5 September 2014.
The last day to trade and the record date, in order for shareholders to
be eligible to participate in and vote at the Annual General Meeting,
are 10 October 2014 and 17 October 2014, respectively.
Appreciation
We would like to acknowledge our management and staff, our fellow
directors as well as our valued customers, suppliers, business partners,
advisors and shareholders for their continued support.
For and on behalf of the Board
Alan R Burke Byron Nichles
Chairman Chief Executive Officer
20 August 2014
Directors: AR Burke (Chairman)*; ST Downes*>; JR Modise*; B Nichles
(Chief Executive Officer); WR Neasham (Financial Director);
RB Patmore*#; G Pretorius*>
*non-executive >independent #lead independent
Registered office: 10 Mack Road, Prospecton, Durban, 4110 (PO Box 26426,
Isipingo Beach, 4115)
Company secretary: M Louw, 11 Larch Nook, Zwartkop X4, Centurion, 0046
(PO Box 23305, Gezina, 0031)
Auditors: PKF Durban (audit partner: Tania Marti-Warren), 2nd Floor,
12 on Palm Boulevard, Gateway, 4319 (PO Box 1858, Durban, 4000)
Sponsor: Grindrod Bank Limited, 3rd Floor, Grindrod Towers, 8A Protea
Place, Sandton, Johannesburg, 2146 (PO Box 78011, Sandton, 2146)
Transfer secretaries: Computershare Investor Services (Pty) Ltd, Ground
Floor, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051,
Marshalltown, 2107)
Investor relations: Keyter Rech Investor Solutions CC, Fountain Grove
Office Park, No 5 2nd Road, Hyde Park, 2196 (PO Box 653078, Benmore,
2010)
Date: 20/08/2014 07:05:00 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.
Sharenet Sites 
