Winhold Limited FY 2013 results


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Winhold Limited FY 2013 results

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Winhold Limited FY 2013 results

  1. 1. v6 WINHOLD LIMITED STATEMENT OF RESULTS Preliminary audited consolidated results for the year ended 30 September 2013 Condensed Statement of Comprehensive Income Supporting information Year ended 30 Sept 2013 Continuing operations External revenue Operating profit Investment income Impairments Net finance costs Profit before taxation Taxation Share of associates PAT Profit for the period (continuing Ops) Year ended 30 Sept 2012 R000's 988 350 17 471 14 621 (15 982) 16 110 (1 415) 581 15 276 R000's 916 899 23 474 13 594 (4 500) (19 988) 12 580 (560) 804 12 824 Loss from discontinued operations (3 628) (24 045) Profit /(loss) for the year Other Comprehensive Income - actuarial income/(loss) defined benefit pension fund Total comprehensive income/(loss) for the year Attributable to non controlling interests Attributable to equity holders of the parent - Continuing Operations 11 648 (11 221) 1 682 13 330 (2 312) 15 642 18 204 (623) (11 844) (8 842) (3 002) 14 139 - Discontinued operations (2 562) (17 141) 30 Sept 2013 - Capital commitments at period end - Capital expenditure during the period - Total interest bearing borrowings - Total interest earning deposits - Net asset value per share (cents) - Total intangible assets - Tangible net asset value per share (cents) - Return on equity (%) - Return on assets (%) 6 095 6 629 147 090 6 196 203.77 19 541 188.20 4.2 2.0 30 Sept 2012 795 10 235 224 167 12 944 192.39 19 541 176.82 0.7 (1.7) Gundle API Condensed Statement of Changes in Equity Equity attributable to holders of the parent - Opening balance - Total comprehensive income for the year - Dividends paid - Change in minority holding Balance at the end of the year 241 464 15 642 (1 366) 255 740 253 550 (3 002) (9 084) 241 464 Chick Henderson Condensed Statement of Cash Flows Year ended Earnings and diluted earnings per share (cents) 11.1 (1.9) - Continuing Operations 13.1 11.8 - Discontinued operations (*) Headline and diluted headline earnings / share - Continuing Operations - Discontinued operations (*) Weighted average ordinary shares adjusted for treasury stock (000's) Total ordinary shares issued (000's) Total depreciation and amortisation EBITDA (continuing Operations) Reconciliation of headline earnings - Comprehensive income for the period - Reverse other comprehensive (loss)/income - Impairments - Profit on disposal of fixed assets - Taxation effects of the above Total headline earnings - Continuing Operations - Discontinued operations (*) (2.0) 8.6 10.6 (2.0) (13.7) 1.4 15.1 (13.7) 125 506 126 215 14 146 31 617 125 506 126 215 14 099 37 573 15 642 (1 682) (4 018) 774 10 716 13 278 (2 562) (3 002) 623 4 500 (375) 44 1 789 18 930 (17 141) 30 Sept 2013 Cash flow from Operating activities Cash flow from trading Changes in working capital Net finance costs Dividends from associates Taxation paid Dividends paid Cash flow from investing activities Proceeds from/ (investment in) fixed assets Realisation of assets held for sale Proceeds from loans receivable Cash flow from financing activities Interest bearing borrowings repaid Interest bearing loans raised Interest free borrowings raised Net increase / (decrease) in cash 30 Sept 2012 R000's R000's (14 053) 29 373 (23 849) (15 972) 393 (3 616) (382) 84 382 11 961 41 078 31 343 (27 000) (40 000) 13 000 43 329 398 19 115 13 820 (21 679) 639 (2 412) (9 085) 8 572 (6 795) 15 367 (17 798) (32 918) 12 983 2 137 (8 828) Conway Johnson (*) net of amount attributable to non controlling interests Condensed Statement of Financial Position Condensed Statement of Segment Results to 30 September Year ended 30 Sept 2013 R000's ASSETS Fixed assets Investments and Loans Intangible assets Deferred taxation Current assets - Inventory - Receivables - Bank and cash - Assets of disposal group EQUITY AND LIABILITIES Ordinary share capital and premium Retained earnings Equity attributable to owners of the parent Non controlling interests Total Equity Non current liabilities - Interest bearing - Interest free - Deferred taxation Current liabilities Interest bearing- Bank overdraft - Short term borrowings Liabilities of disposal group Interest free - Payables and provisions 30 Sept 2012 R000's 127 094 86 293 19 541 16 192 319 101 145 431 166 435 6 196 1 039 568 221 149 178 121 926 19 541 10 698 352 886 121 568 163 212 12 944 55 162 654 229 122 793 132 947 255 740 6 835 262 575 122 793 118 671 241 464 9 530 250 994 100 518 2 995 4 436 197 697 578 45 994 151 125 568 221 139 736 23 067 4 593 235 839 50 655 33 776 13 045 138 363 654 229 Flexible packaging 2013 2012 Flexible building 2013 2012 Trading 2013 2012 R000's R000's R000's R000's R000's Revenue External 299 147 247 134 189 279 154 556 499 924 - Inter segment 81 047 111 287 64 531 58 176 14 328 - Total 380 194 358 421 253 810 212 732 514 252 Depreciation 9 102 9 563 2 870 2 442 1 693 Impairments Investment income Profit before tax (&) (7 330) (4 979) 9 003 13 825 15 134 Loss Disc operations Capital expenditure 949 2 340 3 423 3 537 2 080 Total Assets 223 546 224 900 126 849 89 443 149 680 Total liabilities 125 746 121 464 71 108 50 340 83 682 Notes to the Segmental Analysis (&) 'Profit Before Tax' is stated before allocated management fees (1) The business segments have been reconstituted following the discontinuance and closure of the T&E Value Add Division. The comparative figures have been amended to improve comparability (2) The Flexible Packaging segment comprises the flexible Consumer and Industrial packaging divisions operated out of Germiston and Swaziland (3) The Flexible Building segment comprises the Flexible Construction and Agricultural Division and the GeoSynthetics dam lining divisions in Springs (4) The Trading Division comprises the Gundle and Inmins trading branches R000's 515 209 21 457 536 666 1 957 (4 500) 21 399 1 883 143 117 65 259 Props & Group 2013 2012 R000's R000's (159 906) (190 920) (159 906) (190 920) 481 184 14 621 13 594 (697) (17 665) (3 628) (24 045) 177 2 475 68 146 196 768 25 110 166 172
  2. 2. GROUP PROFILE Winhold Limited ("Winhold") is a holding company with its main investments being in its 74,9% owned subsidiaries Gundle and Inmins. Gundle comprises three divisions, the Industrial and Consumer Flexible Packaging Division with its factories in Germiston and Swaziland, the Flexible Building, Construction and Agricultural Division in Springs (including the Geosynthetics Dam Lining Division) and the Trading division with branches in the main coastal cities, Bloemfontein and Mbombela. Gundle manufactures polyethylene bags, construction sheeting, consumer and industrial packaging, agricultural film and dam linings and distributes to the agricultural, chemical, construction, food processing, industrial and consumer markets, as well as installing dam linings in sub-Sahara Africa. Inmins Trading comprises 19 strategically located operations servicing the mining and industrial sectors with a wide range of consumable and maintenance products, and includes divisions specialising in hose, mining pipe systems, chain and sprocket systems and conveyor belting. HEADLINE NUMBERS The Group returned to profitability this year after a disappointing 2012. Earnings were positive again as the negative effect of the discontinued operation was only 2,0 cents per share (2012 : loss 13,7cps) for the year. Earnings were enhanced by the profit on the sale of the properties occupied by the discontinued T & E division. The revenue of continued operations increased by 7,8%. Gundle increased its revenue by R90m (15,3%) but revenue of the continued operations of Inmins reduced by R18,6m ( 5,9%). The operating profit reduced by R6,0m (25,6%). Margins in the flexible plastics market were under severe pressure as the production over capacity in the market reported on last year continued to drive prices down while manufacturers chased volumes in order to recover overheads resulting in an inability, over several years, to pass full cost increases on to the market. The continued labour instability in the mining industry as well as cost reductions by the mines reduced the demand for mining consumables. MARKET CONDITIONS The union problems experienced by especially the platinum mines in the Rustenburg region and a declining gold price, continued during the first part of the financial year. Most of the mining groups have reported improved earnings during the past few months, which were mainly attributed to cost reductions and improved efficiencies. This resulted in lower demand for mining consumables and was reflected in the reduced revenue of Inmins. The weaker Rand impacted on the trading division's profitability as margins on imported items with local substitutes came under pressure. This is only a short term effect as most of the raw material commodity inputs into the Group's products are "import parity priced" and local costs will catch up with international products. The main commodity prices influencing the input costs of the Group are those of low density polyethylene ("LDPE") and steel. LDPE prices were, on average, 20% higher whilst steel increased by an average of 6,3% over the prior year. As noted above, production overcapacity in the flexible plastics market continued. Demand was satisfied by the remaining market capacity even after a major fire occurred at one of the country's largest plastic manufacturers in January 2013. Recent restructuring in the market has removed more of the overcapacity and margins in the industry should start to improve during 2014. The low barriers to entry in some of our plastic markets and the tendency of some of the smaller producers to produce below specification product, particularly for the construction and agricultural markets, put further pressure on the prices of commodity products. The steel market was affected by a force majeure at ArcelorMittal's Van Der Bijl Park plant, following on from a force Majeure at their Newcastle plant last year. This had an . effect on the supply of steel, but the depressed mining and construction sectors were largely able to absorb this with limited imports filling the gap in production PERFORMANCE Inmins : The revenue derived from the mining industry declined by 20%. Although margins in this market segment were higher than 2012, the reduced turnover and increased operating expenses lead to a reduction of profit before tax of R5,4m (62%). The operations servicing the industrial market managed to grow revenue by 8% while maintaining gross margins. Higher than inflation cost increases related to new premises and staff, limited the profit before tax growth to 2%. The weaker currency made certain of the imported products uncompetitive. The efforts to identify and source new products to distribute through Inmin's distribution network continued; however products with potentially high sales volumes at acceptable margins have not yet been secured. Analysis and assessment of a number of products is currently being done. The closure of the Value Add T & E division has been completed. The costs associated with this division are reflected in the Statements of Comprehensive Income as Discontinued operations. The sale of the T&E property was also successfully concluded and the proceeds were received during the reporting period. Inmins trades under a number of different names. Certain of the operations will be rebranded to the well-known "Conway Jonson" brand over the next year to enhance the corporate identity. Gundle : The flexible plastics market continued to suffer from the production overcapacity created over the last 3-5 years. Gundle revenue grew by 15,1%, volume increased by 4,1% and operating costs by 7,3%. However, average raw material prices increased by 20,2% compared to the previous period. This resulted in an operating income reduction of 17,6% and a 32,5% profit before tax decrease for 2013. Gundle GeoSynthetics, our geo-membrane supplier and installer, again made a good contribution to Gundle's bottom line even if the record performance of 2012 could not be repeated. Large dam lining projects in Africa were fewer and new competition entered this market segment. The Building and Agricultural flexible division continued its aggressive programme of new product development during the year to migrate the business into differentiated and higher margin products. New products such as patented termite proof underfloor sheeting and high quality flat roof sheeting were launched. The range of co-extruded builders sheeting and ceiling insulation products for the construction industry brought to market in the last 2 years contributed to Gundle API improving profits in a market in spite of recycled raw material being in short supply and below specification products being supplied by unscrupulous competitors at very low prices. We, together with other industry leaders are working with the SABS and the NRCS to ensure that all products sold in the market comply with the legal national standards. The Industrial and Consumer division operations in Germiston and Swaziland are most affected by the pressure on margins due to the overcapacity in the industry. Although revenue increased, it was on the back of lower margins. The Germiston loss reduced by 18,6%, but the Swaziland losses increased. Management has focussed on a strategy of changing the mix of product manufactured by these factories. The efforts over the last 2 years to increase the ratio of higher value-add products, mainly printed sheeting, tubing and bags, has started to yield results. Efficiency improvement and cost reduction is driven on an on-going basis. Labour and energy costs remain a challenge with little room to move. The technical team is working closely with key customers on "Gain/Share" projects in order to reduce their costs but at the same time increasing our profits. There has been some capacity rationalisation in this market in the second half of the year with some competitive capacity being withdrawn. Revenue of the Gundle trading branches increased marginally, but margins were lower as competition from small local manufacturers increased. Export sales improved and these lessons learnt will be used to grow sales in sub-Sahara Africa further. The sales team in Germiston has been strengthened, freeing up executive time to concentrate more on the growth of both the distribution branches and exports. Repi colourants : This division once again made a valuable contribution from a low cost base. Other major European manufacturers have recently increased their presence in South Africa, aggressively chasing market share. PROSPECTS Gundle is positioned to take advantage of the restructuring that took place in the flexible plastic market recently. New products and new customers which have been developed during the reporting period are expected to lead to the return to profitability of the Germiston and Swaziland operations.
  3. 3. Inmins : Recent press reports point to a recovery in the mining industry. Reclamation programs in the mines to avoid buying consumables cannot continue indefinitely and it is expected that our business with the mines will improve. Efforts are continuing to introduce new products to mining and industrial customers. The changes to the management teams at different levels have brought new insights and energy to the business and we are confident that we will be able to report some notable achievements in 2014. APPRECIATION The support from customers, suppliers, financial institutions and shareholders in a very difficult year is highly appreciated. The commitment of the management team and staff was once again noted. CAPITAL COMMITMENTS The amount of R6.0 million (2012: R0.8 million) reflected in the supplementary information, relates to plant upgrades (2012: plant upgrades and vehicles) for existing operations. BASIS OF PREPARATION AND AUDIT OPINION These condensed consolidated preliminary Group results have been prepared in accordance with the framework concepts and measurement recognition requirements of International Financial Reporting Standards ("IFRS") and the SAICA Financial Reporting Guidelines as issued by the Accounting Practices Committee and Financial Reporting Pronouncements issued by the Financial Reporting Standards and contain the information required by International Accounting Standard 34 (" IAS 34"),the Listings Requirements of the Johannesburg Stock Exchange ("the Listings Requirements") and comply with the South African Companies Act (2008). The accounting policies applied are consistent with those used in the prior year. The preparation of the preliminary financial information has been supervised by the CFO, Mr. GM Scrutton CA(SA). BDO South Africa Inc has audited the preliminary financial information and their unmodified report is available for inspection at the company's registered office. The Group Integrated Annual Report will be distributed to shareholders in December 2013. CORPORATE GOVERNANCE The Group subscribes to the value of good corporate governance and, where appropriate, is committed to continued implementation of the recommendations of the King III Report and the JSE Listings Requirements. The Group endeavours to continue to conduct its business in accordance with the principles of accountability, transparency and integrity. CONTINGENT LIABILITY, LITIGATION AND SUBSEQUENT EVENTS There is no material pending litigation and the directors are not aware of any material contingent liabilities or post balance sheet events between the balance sheet date and the date of this report. DIRECTORATE Mr D B Mostert and Mr P J Kruger left the board of directors on 28 February 2013. Subsequent to the year end Ms R Naidoo was appointed to the board of directors as the lead independent director, and to the Audit and Risk committee and the Remuneration & Nomination Committee on 1 November 2013. For and on behalf of the board WAR WENTELER W FOURIE NP MNXASANA Chairman Chief Executive Officer Audit Committee chairman Date : 25 November 2013 Winhold Limited (Share code : WNH, ISIN ZAE000033916) Registration number 1945/019679/06 Incorporated in the Republic of South Africa, 884 Linton Jones Street, Industries East, Germiston. +2711 345 9800. Directors : W A R Wenteler (Chairman) ‡,W Fourie (CEO), N P Mnxasana †‡, R Naidoo †‡,P C Nash‡, G M Scrutton (CFO): (‡non-executive), († independent) ; Company Secretary: G J O'Connor