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UNI
UNI
UNI - Universal Industries Corporation Limited - Audited results for the year
ended 31 December 2009
UNIVERSAL INDUSTRIES CORPORATION LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1996/004343/06)
(JSE code: UNI: ZAE000110664)
AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2009
- Revenue declined by 9% and headline earnings per share by 27%;
- Tangible net asset value per share increased by 33%;
- Strong balance sheet with R24 million cash on hand net of interest bearing
liabilities; and
- Export revenue grew by 16% to R126 million.
Consolidated Statement of Comprehensive Income
Year ended 31 December
Audited Audited
R`000 2009 2008
Revenue 587 072 648 188
Cost of goods sold (421 309) (462 165)
Gross profit 165 763 186 023
Other income 323 3 798
Operating expenses (93 148) (89 486)
Profit from operations 72 938 100 335
Interest received 16 863 7 982
Interest paid (16 693) (6 081)
Profit before taxation 73 108 102 236
Taxation (22 034) (28 600)
Profit attributable to the equity holders of the 51 074 73 636
parent
Other comprehensive income - -
Total comprehensive income attributable to the 51 074 73 636
equity holders of the parent
Number of shares in issue (`000) 448 419 448 912
Weighted average number of shares in issue (`000) 448 863 472 369
Basic and headline earnings per share (cents) 11,4 15,6
Distribution per share (cents) 3,0 3,0
Consolidated Statement of Financial Position
As at 31 December
Audited Audited
R`000 2009 2008
Assets
Non-current assets 211 946 210 676
Property, plant and equipment 18 563 15 041
Intangible assets 192 064 194 305
Deferred taxation assets 1 319 1 330
Current assets 331 046 386 061
Inventories 87 047 91 365
Trade and other receivables 133 622 153 427
Taxation receivable 28 5 693
Cash and cash equivalents 110 349 135 576
Total assets 542 992 596 737
Equity and liabilities
Capital and reserves 353 388 316 079
Share capital and premium 153 439 167 204
Accumulated profits 199 949 148 875
Non-current liabilities 68 803 87 342
Interest bearing liabilities 65 316 82 843
Deferred taxation liabilities 1 008 2 424
Operating lease liabilities 2 479 2 075
Current liabilities 120 801 193 316
Trade and other payables 96 257 88 472
Current portion of:
- interest bearing liabilities 20 714 14 956
- other financial liabilities 350 79 887
Taxation payable 3 480 10 001
Total equity and liabilities 542 992 596 737
Number of shares in issue (`000) 448 419 448 912
Net asset value per share (cents) 78,8 70,4
Tangible net asset value per share (cents) 36,0 27,1
Consolidated Statement of Cash Flows
Year ended 31 December
Audited Audited
R`000 2009 2008
Cash flows from operating activities 93 234 33 793
Cash generated by operations 111 785 65 245
Interest received 16 863 7 982
Interest paid (11 119) (1 100)
Taxation paid (24 295) (38 334)
Cash flows from investing activities (7 816) (5 369)
Additions to property, plant and equipment (8 010) (5 433)
Proceeds on disposal of property, plant and 194 64
equipment
Cash flows from financing activities (110 645) 57 680
Net interest bearing liabilities (repaid)/raised (11 769) 95 257
Net payment of other financial liabilities (85 111) (14 947)
Capital distribution paid to shareholders (13 467) -
Share buyback and expenses (298) (22 630)
(Decrease)/increase in cash and cash equivalents (25 227) 86 104
Cash and cash equivalents at beginning of year 135 576 49 472
Cash and cash equivalents at end of year 110 349 135 576
Consolidated Statement of Changes in Equity
Share Share Accumulated
capital premium profits Total
Audited R`000 R`000 R`000 R`000
Balances at 31 December 2007 5 189 829 75 239 265 073
Share buyback and expenses (1) (22 629) - (22 630)
Total comprehensive income for - - 73 636 73 636
the year
Balances at 31 December 2008 4 167 200 148 875 316 079
Capital distribution to - (13 467) - (13 467)
shareholders
Share buyback and expenses - (298) - (298)
Total comprehensive income for - - 51 074 51 074
the year
Balances at 31 December 2009 4 153 435 199 949 353 388
Segment Reporting
Year ended 31 December
Audited Audited
R`000 2009 2008
Revenue
- Refrigeration 291 870 310 064
- Baking Systems 295 202 338 124
587 072 648 188
Segment profit from operations
- Refrigeration 38 778 47 414
- Baking Systems 41 164 56 145
- Unallocated corporate expenses (7 004) (3 224)
Profit from operations 72 938 100 335
Net interest received 170 1 901
Profit before taxation 73 108 102 236
Capital commitments
- Refrigeration - -
- Baking Systems 5 358 -
5 358 -
COMMENTARY
TRADING ENVIRONMENT
The group operates as a major supplier of refrigeration and baking equipment to
the perishable foods industry encompassing the retail, wholesale and
manufacturing segments. Trading is primarily with the food retailers in SA and
to a lesser extent, Africa.
Improved trading during the second half of the year yielded a satisfactory
overall result for the year, despite the severe impact of the global economic
downturn on the group`s businesses, in particular during the first half of 2009.
This is demonstrated by headline earnings per share declining by 75% (2009: 1,3
cents vs 2008: 5,1 cents) at half year and by only 4% in the second six months
(2009: 10,1 cents vs 2008: 10,5 cents).
A pleasing feature of the current year`s performance has been the continued
growth in export revenue which totalled R126 million (and comprises 21% of total
revenue). This is particularly encouraging considering the international
economic slowdown and it validates the group`s continued emphasis on developing
other markets for our products.
Food retailers are still reporting satisfactory earnings which, coupled with
strong balance sheets, bodes well for continued investment in new outlets and
the upgrading of existing stores. However, the slowdown in retail property
development has impacted on the availability of new sites and new store roll-
outs will probably be limited until activity in the retail property market
improves.
The group has a significant installed base of products that has a useful life
estimated at between six and eight years. The ongoing replacement of product
already makes up a significant portion of the group`s revenue.
FINANCIAL RESULTS
Group revenue declined by 9% to R587 million (2008: R648 million) resulting in
profit after tax declining by 31% to R51 million (2008: R74 million). The
group`s operating margin declined in line with lower manufacturing volumes.
The group`s balance sheet remains strong with cash, net of interest bearing
liabilities, of R24 million at year end.
As a result of the difficult trading conditions experienced, the group`s focus
in 2009 was on protecting margins, controlling expenses and maximising cash
generation. By adopting this strategy:
- gross profit margins declined only slightly notwithstanding that our
operations are manufacturing entities with substantial fixed overheads where
declining volumes have a dramatic effect on cost recoveries and resultant
margins;
- sales and administration operating expenses grew only 4% year-on-year; and
through the aggressive management of our working capital, cash generated from
operations increased to R112 million (2008: R65 million).
REVIEW OF OPERATIONS
Refrigeration business
The business unit experienced a decline in volumes (revenue decreased by 6%) and
performed below budget with operating margins under pressure. Operating income
declined by 17% to R39 million (2008: R47 million).
The business invested some R6 million in new plant and equipment and
manufacturing ability and efficiency will be further enhanced through the
continued upgrading of selected items of plant and equipment in the future.
The international trend towards more environmentally friendly technologies and
the emphasis on improved energy efficiency of refrigeration products is
increasingly evident in SA. The refrigeration division has access to
international technology and continues to work closely with its customer base in
this regard. Over the past year a number of new installations, utilising some of
these technologies, were successfully installed with considerable energy savings
being achieved.
Historically exports have predominantly been through the supply to local
customers who have embarked on international operations. The African export
market was identified as a growth area and continued investment in resources is
starting to yield results with export revenue increasing to R42 million (2008:
R14 million).
Baking business
The baking systems business had a challenging year with revenue decreasing by
13% to R295 million (2008: R338 million). Operating income declined by 27% to
R41 million (2008: R56 million). Whilst the decline in revenue is disappointing,
management remains confident that this was due to prevailing economic conditions
and not the loss of market share.
Export revenue have always been a significant component of the business,
historically fluctuating between 25% and 35% of total revenue. For the year
under review export revenue amounted to 29%. Having invested in additional
resources to service the export market the business expects exports to improve
in 2010.
Marsden, the bakeware division supplying baking tins and pans, had a reasonable
year and is investing in a semi-automated plant that will increase production
capacity and efficiency to better service its customers.
By June 2010 Macadams will relocate to a new purpose built 17 000m2 factory that
will offer improved production flow and warehousing. The Marsden facility will
relocate to the same facility which should result in operational synergies and
cost savings.
PROSPECTS
The group`s trading recovered significantly towards the end of 2009 and business
sentiment seems to have improved but the short-term prospects of the global
economy remains difficult to assess. It would seem that the general consensus is
for a gradual recovery and therefore it may be some time before property
development and capital projects recover to the levels experienced in prior
years. Under the current circumstances management finds it difficult to predict
trading levels over the short term but remains confident that the group is well
positioned for growth when the economy fully recovers.
One of the reasons for listing was to expand the group through acquisitions. The
group`s cash on hand and borrowing capacity leaves it well positioned to
regularly evaluate and to capitalise on suitable acquisition opportunities.
CAPITAL COMMITMENTS
The group has committed capital of R5 million to the acquisition of new plant
and equipment and the relocation of the Macadams and Marsden factories. The
commitments will be funded from bank facilities and internal cash resources.
CHANGES TO CAPITAL STRUCTURE
In November 2009 Universal acquired 492 963 of its own shares at an average
price of 60 cents per share. These shares were cancelled resulting in the total
number of shares in issue decreasing to 448 418 999. Authority to continue with
share repurchases will be renewed at the annual general meeting and the board
will continue to evaluate this strategy.
DISTRIBUTION TO SHAREHOLDERS BY WAY OF A CAPITAL REDUCTION
The group has a dividend policy of annually distributing 25% of profits
attributable to equity holders. Approval was granted at the last annual general
meeting for distributions by way of a capital reduction and accordingly, the
board has declared a cash distribution from share premium, in lieu of an
ordinary dividend, of 3 cents per share.
The relevant dates are as follows:
Last day to trade cum the distribution Friday, 9 April 2010
Shares will commence trading ex the Monday, 12 April 2010
distribution on
Record date Friday, 16 April 2010
Distribution paid on Monday, 19 April 2010
Shares may not be dematerialised or rematerialised between Monday, 12 April 2010
and Friday, 16 April 2010.
BASIS OF PREPARATION
These annual financial results have been prepared in accordance with
International Financial Reporting Standards ("IFRS"), the requirements of IAS34,
the Listings Requirement of the JSE Limited and the Companies Act of South
Africa. The accounting policies used are consistent with those applied in the
previous financial year, except for the first time application of IAS1 (Revised)
and IFRS8. These standards deal with disclosure and have not impacted on the
results of the group.
AUDIT REPORT
These summarised financial results have been audited by Universal`s auditors,
PKF (Jhb) Inc, whose unqualified audit report is available for inspection at
Universal`s registered office.
ANNUAL REPORT
Shareholders are advised that the annual report containing the financial
statements will be posted on or before 31 March 2010.
IN APPRECIATION
Our business performed satisfactorily through the recessionary economic
conditions of 2009 largely due to the quality and dedication of our senior
management teams and staff. The Board extends its thanks to them for their
considerable efforts in producing an acceptable result in challenging times.
In closing we would also like to thank the non-executive directors for their
continued support and valuable contribution.
By order of the Board
G Khan D Paynter
Chairman Chief Executive Officer
8 March 2010
CORPORATE INFORMATION
Executive directors: D Paynter (CEO), I Morgan (CFO), J Martin, R Wilkes
Non-executive directors: G Khan (Chairman), C Brayshaw, W Brett, I Essa
(alternate to G Khan), A Levy
Registration number: 1996/004343/06
Registered address: 16 Precision Street, Kya Sand, Randburg
Postal address: PO Box 3667, Randburg, 2125
Telephone: 011 462 2130
Facsimile: 011 704 3257
Company secretary: Probity Business Services (Pty) Limited
Transfer secretaries: Link Market Services South Africa (Pty) Limited
Auditors: PKF (Jhb) Inc
Sponsor: Java Capital (Pty) Limited
Date: 08/03/2010 17:10:03 Produced by the JSE SENS Department.
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