Byron Nichles, CEO of ARB Holdings, said the solid results, achieved despite challenging and competitive trading conditions, demonstrated the sustained growth potential of the company.
Revenue increased by a satisfactory 13% from R615 million for the previous comparable half-year to R693 million for the six months ended 31 December 2011. The increase in revenue was mainly due to volume growth as a result of gaining market share. The gross profit margin was maintained at a healthy 18.8% in light of a highly competitive market where margins continue to be placed under pressure.
ARB Electrical, the group's 74% held empowered electrical wholesaler, increased its operating profit by 15%. The strong trading performance was diluted by the transaction costs of approximately R1.5 million relating to the Eurolux acquisition. These costs, coupled with net interest received remaining relatively flat, resulted in headline earnings per share increasing by 4% to 15.7 cents (December 2010: 15.1 cents).
"We put a great deal of effort into cash management and this is reflected in the strong cash balance as at 31 December 2011 of R240 million. This allows us to pursue various acquisition opportunities. We have just completed the acquisition of a 60% interest in Eurolux, a leading importer and distributor of lamps, light fittings and ancillary electrical products, for R81 million and we are in negotiations pertaining to another strategic initiative;" commented Nichles.
ARB Connect, the initiative started in the last quarter of the previous financial year to penetrate the domestic and retail market, is in its start-up phase. The two satellite stores, opened in Bellville and Durban North, are showing positive potential and as soon as this concept is bedded down and refined, the selective roll-out of these stores would be considered to other parts of South Africa.
The group's net tangible asset value per share is 226.5 cents (December 2010: 206.1 cents). Net capital expenditure for the period amounted to approximately R3 million.
Nichles concluded: "We believe that we remain well positioned to pursue both organic and acquisition opportunities that will enhance shareholder value. We do not foresee macro-economic and trading conditions to improve in the short term and hence our strategy to drive ARB's continued growth through various acquisitive and organic initiatives. We are excited about the opportunities that Eurolux offers and its inclusion for the remainder of the financial year will contribute positively to the group's results."
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