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Summarised audited consolidated results for the year ended 30 June 2015, dividend announcement and notice of AGM
ARB Holdings Limited
(Registration number: 1986/002975/06)
Share code: ARH
ISIN: ZAE000109435
('ARB' or 'the Company' or 'the Group')
Summarised audited consolidated results
for the year ended 30 June 2015, dividend announcement
and notice of Annual General Meeting
Salient features
- Headline earnings per share down 0,6% to 49,99 cents
- Annual dividend unchanged at 20,1 cents per share plus a special dividend of
10,0 cents per share
- Ungeared with R226,8 million net cash on hand
BASIS OF PREPARATION
The summarised audited consolidated annual financial statements for the year ended
30 June 2015 ('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 requirements of the Companies Act of South Africa, and the JSE Listings
Requirements.
The accounting policies used in the preparation of these results are in terms of IFRS
and are consistent, in all material respects, with those applied in prior years and
except for the first time adoption of the new and amended standards, are consistent
with those applied in the previous annual financial statements for the year ended
30 June 2014. 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 following new standards were adopted during the period:
- Amendment to IFRS 2 - Amendments to the definitions of all performance, service,
vesting and market conditions
- Amendment to IFRS 3 - Measurement requirements of contingent considerations and
amendments to scope regarding formation of joint arrangement
- Amendment to IFRS 8 - Judgements made to the aggregation criteria and certain
reconciliations
- Amendments to IFRS 13 - Measurement of short term receivables
- Amendments to IAS 16 - Proportionate restatement of accumulated depreciation
- Amendments to IAS 24 - Definition and disclosure requirements for key management
of personnel
- Amendments to IAS 40 - Clarify the interrelationship between IFRS 3 and IAS 40
These summarised financial statements have been derived from the consolidated financial
statements for the year ended 30 June 2015 which have been audited by PKF Durban, whose
unqualified audit opinion on these consolidated financial statements is available for
inspection at the Company's registered office, together with the financial statements
which will be utilised in preparation of the integrated report for circulation to the
shareholders together with the notice for the Annual General Meeting. This summarised
report is extracted from audited information, but is not itself audited.
The auditor's report does not necessarily cover all of the information included in this
announcement. The directors take full responsibility for the preparation of these
summarised audited consolidated financial results for the year ended 30 June 2015
and for ensuring that the financial information has been correctly extracted from
the underlying audited annual financial statements.
The audited annual financial statements have been prepared under the supervision of
the Acting Financial Director, WR Neasham, CA(SA).
Summarised Group statements of comprehensive income
Audited Audited
year to year to
30 June 30 June
% 2015 2014
Change R000's R000's
Revenue (3%) 2 150 764 2 216 659
Cost of sales 1 633 459 1 689 709
Gross profit (2%) 517 305 526 950
Other income 4 061 4 878
Operating expenses (324 839) (328 798)
Profit before interest and taxation (3%) 196 527 203 030
Interest received 15 175 11 442
Interest paid (95) (190)
Profit before taxation (1%) 211 607 214 282
Taxation (58 481) (59 708)
Profit for the year (1%) 153 126 154 574
Revaluation of property, plant and
equipment (net of taxation) 10 202 (457)
Total comprehensive income for the year 6% 163 328 154 117
Profit for the year attributable to: (1%) 153 126 154 574
Minority interests (2%) (35 667) (36 383)
Ordinary shareholders (1%) 117 459 118 191
Total comprehensive income attributable to: 6% 163 328 154 117
Minority interests (2%) (35 667) (36 383)
Ordinary shareholders 8% 127 661 117 734
Audited Audited
year to year to
30 June 30 June
% 2015 2014
Change R000's R000's
Reconciliation between earnings and
headline earnings
Profit for the year attributable to ordinary
shareholders (1%) 117 459 118 191
Less: Loss/(surplus) on disposal of property,
plant and equipment (net of taxation and minorities) 12 (31)
Headline earnings attributable to ordinary
shareholders (1%) 117 471 118 160
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) 235 000 235 000
Basic earnings per share (cents)* (1%) 49,98 50,29
Headline earnings per share (cents)* (1%) 49,99 50,28
* There are no dilutive instruments in issue.
Summarised Group statements of financial position
Audited Audited
30 June 30 June
% 2015 2014
Change R000's R000's
ASSETS
Non-current assets
Property, plant and equipment 221 672 205 525
Intangible assets 83 659 83 971
Deferred taxation 8 149 13 188
Current assets
Inventory 387 973 391 348
Trade and other receivables 351 345 341 924
Taxation overpaid 200 122
Deferred lease payments 328 -
Cash resources 226 780 197 584
Total assets 1 280 106 1 233 662
EQUITY AND LIABILITIES
Equity and reserves
Share capital 24 24
Share premium 116 150 116 150
Revaluation reserve 70 302 60 100
Accumulated profit 582 846 536 122
Attributable to ordinary shareholders 8% 769 322 712 396
Minority interests 216 489 199 838
Total shareholders' funds 8% 985 811 912 234
Non-current liabilities
Deferred taxation 38 626 34 127
Deferred lease payments 981 -
Current liabilities
Vendor loan - 18
Trade and other payables 252 185 284 118
Deferred lease payments 11 440
Taxation payable 2 492 2 725
Total equity and liabilities 1 280 106 1 233 662
Ordinary shares in issue (000's) 235 000 235 000
Net asset value per share (cents) 8% 327,37 303,15
Net tangible asset value per share (cents) 10% 302,44 275,94
Summarised Group statements of cash flow
Audited Audited
30 June 30 June
% 2015 2014
Change R000's R000's
Cash generated by trading (3%) 208 271 214 511
Increase in net working capital (37 979) (70 855)
Cash generated by operating activities 19% 170 292 143 656
Interest received 15 175 11 442
Interest paid (95) (190)
Dividends paid (89 751) (70 970)
Taxation paid (52 470) (62 176)
Cash flows from operating activities 43 151 21 762
Cash flows from investing activities (13 937) (24 690)
Cash flows from financing activities (18) (2 241)
Increase/(decrease) in cash resources 29 196 (5 169)
Cash resources at beginning of year 197 584 202 753
Cash resources at end of year 226 780 197 584
Summarised Group statements of changes in equity
Reva-
Share Share luation
capital premium reserve
R000's R000's R000's
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
Total comprehensive income for the year - - 10 202
Dividends paid - - -
Balance at 30 June 2015 (audited) 24 116 150 70 302
Summarised Group statements of changes in equity
Accumulated Minority
profit interests Total
R000's R000's R000's
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
Total comprehensive income for the year 117 459 35 667 163 328
Dividends paid (70 735) (19 016) (89 751)
Balance at 30 June 2015 (audited) 582 846 216 489 985 811
Summarised Group segmental reports
Audited for the year ended 30 June 2015
Electrical Lighting Corporate
R000's R000's R000's
Segment revenue 1 740 585 425 499 38 219
Profit before interest and taxation 122 676 43 800 30 051
Segment assets 805 412 239 195 374 101
Segment liabilities 211 318 121 629 56 238
Net segment assets 594 094 117 566 317 863
Inter-
company
eliminations Total
R000's R000's
Segment revenue (53 539) 2 150 764
Profit before interest and taxation - 196 527
Segment assets (138 602) 1 280 106
Segment liabilities (94 890) 294 295
Net segment assets (43 712) 985 811
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
Commentary
The board of directors of ARB ('the Board') is pleased to present the Group's audited
results for the year.
The Lighting Division continued to achieve market share gains while the Electrical
Division has shown resilience in the continued challenging trading environment.
Both divisions continue to review and improve operational efficiencies to ensure
that the Group is able to sustain its earnings.
Financial review
The Group revenue declined 3,0% to R2,15 billion. The decline in revenue was as a
result of a decline in the Electrical Division's turnover, attributable to the lack
of infrastructure spend and Eskom's funding challenges which have affected the sales
of its overhead line division, particularly in the Eastern Cape and KwaZulu-Natal
regions. The Lighting Division continues to show strong market share gains.
The trading margin remains under pressure in both divisions. At Group level it
improved from 23,8% to 24,1% due to the higher margin contributed by the Lighting
Division. Overheads continue to be well controlled and there was no year on year
growth in overheads.
Operating profit declined by 3,2% to R196,5 million, resulting in an operating margin
of 9,1% compared to 9,2% for the prior year.
Net interest received continued to increase despite the payment of annual and special
dividends totalling R89,75 million in September 2014.
Headline earnings per share decreased marginally by 0,6% to 49,99 cents
(2014: 50,28 cents).
The Group's operations remained strongly cash generative.
Net working capital increased to 22,7% of revenue (2014: 20,3%) but is still within
the Group's targeted range of 20% to 25% of turnover. The Electrical Division took
steps to reduce their inventory levels in line with the inventory policy which has
been established to limit possible inventory losses in a volatile copper price
environment. The Lighting Division is currently overstocked, partially as a result
of the delayed offtake by a newly contracted customer. Steps are being taken to manage
these inventory levels within the Group's parameters. The trade receivables book
continued to be well managed in an increasingly challenging credit environment. The
Lighting Division had credit insurance on its trade receivables throughout the period,
while the Electrical Division insured its trade receivables with effect from 1 May 2015.
Net capital expenditure for the period amounted to R13,9 million (2014: R24,7 million),
of which R5,1 million was utilised to complete the construction of the new Electrical
Division's Rustenburg premises (construction commenced in April 2014).
The Group's statement of financial position remained robust reflecting a net asset
value per share of 327,37 cents (2014: 303,15 cents) and a net ungeared cash position
of R226,8 million (2014: R197,6 million).
The Group's after-tax return on average equity in the current year is now 15,9%, slightly
lower than the 17,3% achieved in the prior year.
Divisional review
Electrical Division (revenue down 7,2% and operating profit down 11,5%)
This division has battled significant headwinds with the dearth of major infrastructure
projects, and the lack of significant capital expenditure by Eskom in the rural
electrification programme. Full year revenue declined 7,2% to R1,74 billion (2014:
R1,88 billion). Gross margins improved due to the leveraging of trading and procurement
efficiencies. Operating profits decreased by 11,5% to R122,7 million (2014: R138,6 million).
The Electrical Division reflected an operating margin of 7,0% (2014: 7,4%).
Lighting Division (revenue up 21,3% and operating profit up 10,9%)
The introduction of new product categories and the focus on key customer gains enabled
the Lighting Division to maintain its strong first half performance and grow full year
revenues by 21,3% to R425,5 million (2014: R350,8 million). Given the competitive
environment and the volatile exchange rate, gross margins were lower. Overheads increased
due to the delay in the issue of Letters of Authority ('LOAs') by the National Regulator
of Compliance Specifications ('NRCS'), and employee cost increases incurred due to the
growth in market share. As a result, the operating margin reduced to 10,3% (2014: 11,3%).
Corporate Division (revenue up 9,0% and operating profit up 12,4%)
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 the Corporate Division's results for the period were in line
with expectations.
The market value of the Group's portfolio of 16 properties is valued at R181 million
(2013: R163 million), of which one site situated in Polokwane, is currently undeveloped
land.
Corporate activity and expansion
While no new corporate activity was undertaken during the year, acquisitions remain an
integral part of the Group's growth and expansion strategy.
Potential acquisitions have been and will continue to be evaluated. In evaluating
acquisition opportunities the Board considers the strategic fit and merits of each
opportunity and is guided by the principle that the terms and structure of any
acquisitions should be value accretive to ARB shareholders.
Prospects
The combination of moderating economic growth, the subdued levels of fixed investment
activity and the unresolved challenges relating to Eskom suggests a continuation of the
tough market conditions experienced over the past few years.
Given these headwinds, the Group will maintain its focus on optimising operational
efficiencies in its existing businesses as well as continuing to evaluate
strategically-aligned trading and distribution-related acquisitions.
The above prospects statements have not been reviewed or reported on by the Company's
independent external 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 (2014: 20,1 cents
per share) for the year ended 30 June 2015, 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:
Declaration date - Thursday, 20 August 2015
Last day to trade cum dividend - Friday, 4 September 2015
Shares commence trading ex dividend - Monday, 7 September 2015
Record date - Friday, 11 September 2015
Payment date - Monday, 14 September 2015
Share certificates may not be dematerialised or rematerialised between Monday,
7 September 2015 and Friday, 11 September 2015, 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 20,10000 cents per share for shareholders exempt
from paying Dividends Tax;
5. the gross local special dividend amount is 10,00000 cents per share for shareholders
exempt from paying Dividends Tax;
6. the net local dividend amount is 17,08500 cents per share for shareholders liable to
pay Dividends Tax;
7. the net local special dividend amount is 8,50000 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.
Changes to the Board
As previously announced on SENS on 13 February 2015, William (Billy) Neasham was appointed
as the Group's Chief Executive Officer and Jacob Modise resigned as a non-executive director
of the Board following his appointment as Chairman of NERSA.
The Board also announced the appointment of Grant Scrutton CA(SA), as the Group Financial
Director with effect from 1 October 2015.
Gerrit (Boel) Pretorius will be retiring from the Board at the forthcoming Annual General
Meeting.
Subsequent events
No significant events have occurred during the period between the reporting date and the
date of this announcement that require additional disclosure or adjustment to the
financial statements.
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 Thursday, 12 November 2015, at the Company's registered office located
at 10 Mack Road, Prospecton, Durban. The notice of Annual General Meeting will be
contained in the integrated report which will be posted to shareholders by no later
than 28 September 2015.
The record date, for purposes of determining which shareholders are entitled to receive
the notice of Annual General Meeting, will be 16 September 2015.
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, will be 30 October 2015 and
6 November 2015, 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
Chairman
William (Billy) Neasham
Chief Executive Officer
20 August 2015
Directors:
AR Burke (Chairman)*
ST Downes*+
RB Patmore*#
WR Neasham (CEO and Acting Financial Director)
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, 4th 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: 21/08/2015 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.
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