CAPE TOWN - Investment and property holding company ARB Holdings, which owns ARB Electrical Wholesalers and 50 percent of lights company Eurolux, lifted revenue only 4.5 percent to R1.42 billion in the six months to December 31 due to the continued lack of infrastructure projects.
The group foresees little or no improvement in the trading environment, given the low economic growth forecast for South Africa.
The lighting division’s turnover increased by 36.1 percent to R396 million due mainly to the inclusion of newly acquired Radiant.
Group operating profit increased by 16 percent to R106.3m (R91.6m) at an operating margin of 7.5 percent of revenue (6.8 percent).
The gross margin increased by 1.6 percent to 25.1 percent (23.5 percent). Expenditure grew only due to the inclusion of Radiant lighting and foreign exchange losses.
The group continues to be cash generative, and remains largely ungeared, other than for the IFRS 16 Right-Of-Use lease liabilities. Net cash on hand came to R84.9m (R147.8m), after payment of dividends of R62m (R109.3m).
Net interest received fell by 78.7 percent to R6.7m (R12.6m), with the interest expense recognition aspect of the IFRS 16 Right-Of-Use liability for the first time (R3.9m); investments over the last two years of R296m - mainly to the erection and fitting of the Lords View DC - the acquisition of Radiant Lighting (R96m) in the prior year, and improvements to the Radiant properties of R19.0m.
The latter expenditure represented significant rationalisation in the lighting division’s infrastructure footprint.
Investment in working capital increased by R98m, with the major portion of this being the annual payment of accounts payable due to the earlier Chinese New Year and more stock having to be imported and paid for earlier in the December season cycle.
In addition, Eurolux increased stock levels to improve service to chain stores.
Stock levels would be focus in this division in the second half due to depressed sales in this sector.
Earnings per share and headline earnings per share increased by 7.06 cents per share as a result of the IFRS fair value adjustment of a put option liability. This adjustment resulted in an increase in profit of R6m (2018: a reduction in profit of R10.6m),with the net effect of a year-on-year change of R16.6m.