ADG GLOBAL SUPPLY LIMITED ABN 16 082 341 197 For the Financial Year ended 30 June 2013 This Preliminary Final Report is provided to the Australian Securities Exchange (ASX) under ASX Listing Rule 4.3A. Current Reporting Period: Financial Year ended 30 June 2013 Previous Corresponding Period: Financial Year ended 30 June 2012 Page 1
Revenue and Net Profit/(Loss) NOTE MOVEMENT CHANGE % AMOUNT $ 000 Revenue from ordinary activities Up/Down 5% 79,374 Earnings before interest and taxation Loss from ordinary activities after tax attributable to members Net loss attributable to members Up/Down 130% (916) Up/Down 154% (940) Up/Down 154% (940) Note (a) excludes interest income Dividends (Distributions) AMOUNT PER SECURITY FRANKED AMOUNT PER SECURITY Final Dividend Interim Dividend Record date for determining entitlements to the dividend: Final dividend Not Applicable Interim dividend Not Applicable Brief Explanation of Revenue, Net Profit and Dividends (Distributions) ADG Global Supply Limited s earnings before interest and taxation for the year ended June 2013 is a loss of $0.9 million (2012: profit $3.0 million), with net loss after tax of $0.9 million (2012: profit $1.8 million). Revenue for the 2013 financial year was $79.4 million (2012: $83.7 million) with gross profit of $10.9 million (2012: $13.2 million). ADG has declared dividend of $nil for 2013 (2012:$ nil) See accompanying announcement for a further explanation of the results. Page 2
Details Relating to Dividends (Distributions) Final Dividend Interim Dividend Total 2013 2012 2013 2012 2013 2012 DATE DIVIDEND PAYABLE AMOUNT PER SECURITY AMOUNT PER SECURITY OF FOREIGN SOURCED DIVIDEND Total Dividend (distribution) per security (interim plus final) 2013 2012 Ordinary securities Interim and final dividend (distribution) on all securities 2013 2012 Ordinary securities TOTAL Any other disclosures in relation to dividends (distributions): N/A Page 3
Net Tangible Assets per Security Interim and final dividend (distribution) on all securities 2013 2012 Net tangible assets per security (cents per share) 4.32 4.51 Control gained over entities having a material effect Not applicable Compliance Statement This preliminary report has been prepared based on the accounts and are in the process of being audited. SIGNED: Company Secretary DATE: 29 August 2013 Page 4
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2013 NOTES 30 JUNE 2013 $ 000 30 JUNE 2012 $ 000 Revenue 79,374 83,682 Other income 10 34 Expenses from continuing operations Raw materials and consumables used (68,498) (70,444) Employee benefits expense (7,862) (6,392) Depreciation and amortisation expense (551) (285) Other expenses (3,389) (3,560) Finance costs (475) (414) (Loss)/profit from operations before income tax (1,391) 2,621 Income tax benefit/(expense) 451 (869) (Loss)/profit from operations after tax (940) 1,752 Net (loss)/profit attributable to the members of ADG Global Supply Limited (940) 1,752 (Loss)/profit from operations after tax (940) 1,752 Other comprehensive income Cash flow hedges: 41 (38) o Gain/(Loss) taken to equity o Foreign currency translation reserve 195 5 Other comprehensive income for the period (net of tax) 236 (33) Total Comprehensive Income attributable to the members of ADG Global Supply Limited Total Comprehensive Income attributable to the members of ADG Global Supply Limited (704) 1,719 (704) 1,719 Earnings per share (cents per share) basic; for profit for the year 5 (0.38) 0.79 diluted; for profit for the year 5 (0.38) 0.79 Dividends paid per share (cents per share) The statement of comprehensive income is to be read in conjunction with the accompanying explanatory notes to the consolidated financial statements Page 5
STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2013 NOTES 30 JUNE 2013 30 JUNE 2012 $ 000 $ 000 ASSETS Current Assets Cash and cash equivalents 2A 2,895 1,434 Trade and other receivables 14,298 23,170 Inventories 9,230 5,721 Income tax receivable 123 Other assets 1,087 2,380 Total Current Assets 27,633 32,705 NonCurrent Assets Deferred tax asset 584 362 Property, plant and equipment 1,115 326 Intangible assets 8,099 8,209 Total NonCurrent assets 9,798 8,897 TOTAL ASSETS 37,431 41,602 LIABILITIES Current liabilities Trade and other payables 8,134 16,440 Income tax payable 637 Interestbearing loans and borrowings 3 5,049 2,509 Provisions 443 436 Total Current Liabilities 13,626 20,022 NonCurrent Liabilities Interest bearing loans and borrowings 3 3,179 3,200 Provisions 88 65 Total NonCurrent Liabilities 3,267 3,265 TOTAL LIABILITIES 16,893 23,287 NET ASSETS 20,538 18,315 EQUITY Contributed equity 4 18,399 15,468 Options valuation reserve 402 406 Cashflow hedge reserve (41) Foreign exchange translation reserve 200 5 Retained earnings 1,537 2,477 TOTAL EQUITY 20,538 18,315 Page 6
STATEMENT OF CASHFLOWS FOR THE YEAR ENDED 30 JUNE 2013 NOTES 30 June 2013 30 June 2012 $ 000 $ 000 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers 88,245 71,496 Payments to suppliers and employees (88,790) (75,173) Interest received 10 39 Interest paid (475) (414) Payments for income tax (553) Net cash flows used in operating activities 2B (1,563) (4,052) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of business (1,198) (366) Proceeds from sale of property, plant and equipment 55 Purchase of property, plant and equipment (1,052) (155) Purchase of intangible assets (231) (111) Net cash flows used in investing activities (2,426) (632) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares 3,090 Transactions costs relating to issue of shares (net) (159) (28) Net proceeds from borrowings 2,519 1,333 Net cash flows from financing activities 5,450 1,305 Net increase / (decrease) in cash and cash equivalents 1,461 (3,379) Cash and cash equivalents at beginning of year 1,434 4,813 Cash and cash equivalents at end of the year 2,895 1,434 RECONCILIATION OF CASH Cash at bank and in hand 2,895 1,434 2,895 1,434 Page 7
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2013 Contribut ed equity Options valuation reserve Cashflow hedge reserve Foreign Retained exchange earnings / translation (cumulative reserve losses) Total Equity Note $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 At 1 July 2011 15,301 158 (3) 725 16,181 Profit for the year 1,752 1,752 Other comprehensive loss (38) for the period (net of tax) (38) Total comprehensive (38) income/(loss) for the period 1,752 1,714 Transactions with owners, in their capacity as owners Equity Consolidation Issue of ordinary shares Transaction costs on (28) ordinary shares issued (28) Net Value of options issued 248 /cancelled during the year 248 Foreign exchange gain on business acquisition 5 5 Deferred tax on share issue costs incurred in the 195 195 prior year At 30 June 2012 15,468 406 (41) 5 2,477 18,315 At 1 July 2012 15,468 406 (41) 5 2,477 18,315 Loss for the year (940) (940) Other comprehensive income for the period (net 41 41 of tax) Total comprehensive 41 income/(loss) for the period (940) (899) Transactions with owners, in their capacity as owners Issue of ordinary shares 3,090 3,090 Transaction costs on (159) ordinary shares issued (159) Net value of options issued/cancelled during the (4) (4) period Foreign exchange gain 195 195 At 30 June 2013 18,399 402 200 1,537 20,538 Page 8
1. Basis of Preparation This Preliminary Final Report has been prepared in accordance with ASX Listing Rule 4.3A and the disclosure requirements of ASX Appendix 4E. As such, the consolidated preliminary final report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide a full understanding of the financial performance and financial position as the full financial report. It is recommended that the consolidated preliminary final report be considered together with any public announcements made by the Company in accordance with the continuous disclosure obligations of the Australian Securities Exchange Listing Rules. The accounting policies adopted and methods of computation have been consistently applied in this consolidated preliminary final report as compared to all previous years unless stated below. Rounding Off of Amounts The Company is a Company of the kind referred to in ASIC Class Order 98/100, dated 10 July 1998, and in accordance with that Class Order amounts in the Directors report and the financial statements are rounded off to the nearest thousand dollars unless otherwise indicated. Going Concern The financial statements have been prepared on the going concern basis, which confirms that the consolidated entity will be able to continue as a going concern, and contemplates continuity of normal business activities and the realisation of assets and discharge of liabilities in the normal course of business. As disclosed in the financial statements, the consolidated entity incurred a net loss after tax of $0.94 million and had net cash outflows from operating activities of $1.56 million. Notwithstanding the above, the Directors believe that it is reasonably foreseeable that the consolidated entity will continue as a going concern and that it is appropriate to adopt the going concern basis in the preparation of the financial report, after consideration of the following pertinent mitigating factors: o The consolidated entity is forecasting to trade both profitably and cash flow positively in the next 12 months, resulting in a reduction of inventory levels; o The consolidated entity is able to continue reducing operational cost levels to enable it to meet its ongoing commitments and will undertake further cost saving initiatives, within the next 12 months; and o The ability of the company to issue additional equity, pursuant to the Corporations Act 2001. Page 9
2. CASH FLOW INFORMATION A) Cash and cash equivalents 2013 $000 2012 $000 Cash at bank and in hand 2,895 1,434 2,895 1,434 B) Reconciliation of net profit after tax to net cash flows from operations Reconciliation of net profit after tax to the net cash flows from operations 30 JUNE 2013 30 JUNE 2012 $ 000 $ 000 Net (loss)/profit after taxation (940) 1,752 ADJUSTMENTS FOR: Depreciation and amortisation 551 285 Options valuation expense (3) 235 Net loss on disposal of property, plant and equipment 1 5 CHANGES IN ASSETS AND LIABILITIES (Increase) in inventories (3,509) (1,110) Decrease/(increase) in trade and other receivables 8,871 (12,186) Decrease/(increase) in other assets 1,292 (1,729) Decrease/(increase) in intangibles (58) (Increase)/decrease in net deferred income tax assets (223) 575 (Decrease)/increase in tax provision (762) 294 (Decrease)/increase in trade and other payables (6,871) 7,755 Increase in provisions 30 130 Net cash flows used in operating activities (1,563) (4,052) Page 10
3. INTEREST BEARING LOANS AND BORROWINGS Interest bearing loans and borrowings are comprised of the following: CURRENT 2013 2012 $ 000 $ 000 Commercial bill secured (a) 400 400 Commercial bill secured (b) 2,000 1,200 Trade Facility secured (c) Asset purchase facility (d) 2,499 150 909 5,049 2,509 NONCURRENT Commercial bill secured (a) Asset purchase facility (d) 2,800 379 3,200 3,179 3,200 8,228 5,709 At 30 June 2013, the Consolidated Entity owed $5.2 million (2012: $4.8 million) to ANZ Bank in the form of commercial bills. The principal terms of the commercial bills are as follows: (a) Commercial bill secured Maturity date: The commercial bills are reviewed annually. The whole of the debt is subject to a fixed repayment rate of $100,000 per quarter. Termination date: 30 June 2015. Interest rate: At 30 June 2013, the debt was subject to an interest rate of 2.87% per annum (2012: 3.66%). Security: The commercial bills are secured via a first charge over the assets of the Consolidated Entity. Covenants: Net profit before tax greater than zero for July, August, September 2013. Interest cover ratio of >2.5times EBIT calculated quarterly from Q2 FY2014. (b) Commercial bill secured Maturity date: Not before the review date of 31 October 2013. Interest rate: At 30 June 2013, the debt was subject to an interest rate of 2.86% per annum (2012: 3.62%). Security: Covenants: The commercial bills are secured via a first charge over the assets of the Consolidated Entity. as per (a) above Page 11
3. INTEREST BEARING LOANS AND BORROWINGS (CONTINUED) (c) Trade Facility secured Maturity date: Not before the review date of 31 October 2013. Interest rate: At 30 June 2013 the debt was subject to an interest rate of 2.35% per annum. (2012: 2.27%) Security: Covenants: The trade facility is secured via a first charge over the assets of the Consolidated Entity. as per (a) above. The trade facility has been accounted for under AASB 139 Financial Instruments Recognition & Measurement using the effective interest method. (d) Asset purchase facility Maturity date: 30 November 2017. Interest rate: Security: Covenants: At 30 June 2013 the debt was subject to an interest rate of 7.06% per annum. The facility is secured over the specified assets. N/A The trade facility has been accounted for under AASB 139 Financial Instruments Recognition & Measurement using the effective interest method. Page 12
4. CONTRIBUTED EQUITY Ordinary shares Fully paid ordinary shares carry one vote per share and carry the right to dividends. 2013 2012 NUMBER NUMBER ORDINARY SHARES Issued and fully paid 287,956,218 224,049,400 MOVEMENT IN ORDINARY SHARES ON THE ISSUE DATE NUMBER $000 At 1 July 2012 30/06/2012 224,049,400 15,468 Issue of shares under Employee Share Plan (Note a) Issue of shares under Employee Share Plan (Note a) 13/07/2012 2,225,000 20/12/2012 5,500,000 Share placement (Note b) 08/02/2013 34,700,000 1,908 Share placement (Note b) 04/04/2013 21,481,818 1,182 Share issuance cost (159) Closing number of securities 287,956,218 18,399 Note a: Issue of shares under Employee Share Plan Following the approval of the Company s Employee Share Plan at the Company s Annual General Meeting on 30 November 2010 (resolution 7), and also the approvals of resolutions 8 and 9 of the same meeting, the Company has, during the year ended 30 June 2013, issued a total of 7,725,000 ordinary shares to participating employees. The above shares were issued in accordance with the terms and conditions of the Company s Employee Share Plan, resolutions 7, 8 and 9 of the Company s Annual General Meeting on 30 November 2010 and the offer documents issued to each participating employee. The shares issued are fully paid via an interest free limited recourse loan to employees, repayable by Senior Management Team in 5 years. The plan is accounted for as an insubstance option plan, with the contractual life of each option equivalent to the estimated loan life. Repayment of the loan constitutes exercise of the option, with the exercise price being the remaining loan balance per share. The share issue above is subject to a 2 year minimum tenure performance condition and the repayment of the loans. Until both conditions are satisfied the shares will remain in a holding lock maintained by the Company s Registry which prevents the shares from being traded. The Company also maintains a lien over the shares issued until each condition has been met. Page 13
Note b: Share Placement On the 8 th February 2013, the Company issued 34,700,000 ordinary shares under a share placement to participating investors at 5.5 cents per share. On the 4 th April 2013, the Company issued 21,481,818 ordinary shares under a share placement to participating investors at 5.5 cents per share. 5. EARNINGS PER SHARE Basic earnings per share amounts are calculated by dividing the net profit for the year attributable to ordinary shareholders of the parent entity by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share amounts are calculated by dividing the net profit for the year attributable to ordinary shareholders of the parent entity by the weighted average number of ordinary shares outstanding during the year (adjusted for the effects of dilutive options). The following reflects the income and share data used in the total operations basic and diluted earnings per share computations: Net (loss) / profit attributable to ordinary shareholders for basic earnings per share 2013 2012 $ 000 $ 000 (940) 1,752 Effect of dilutive equity instruments Net (loss) / profit attributable to ordinary shareholders for diluted earnings per share Weighted average number of ordinary shares for basic earnings per share NUMBER OF SHARES (940) 1,752 NUMBER OF SHARES 247,708,354 222,825,356 Effect of dilution: Adjusted weighted average number of ordinary shares for diluted earnings per share 247,708,354 222,825,356 Weighted average number of converted, lapsed or cancelled potential ordinary shares included in diluted earnings per share There have been no other transactions involving ordinary shares or potential ordinary shares since the reporting date and before the completion of these financial statements. Page 14
6. SEGMENT INFORMATION Products and services from which reportable segments derive their revenues The operating businesses are organised and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. Industrial Products includes products that are manufactured and distributed by the Company including safety, MRO (maintenance, repairs & operations), drilling equipment & fluids and off theroad tyres. Global Procurement is a service which assists clients with purchasing and supply of a range of goods and capital equipment to site. Supply Chain covers a comprehensive range of logistics, incountry support, freight forwarding, project logistics services. Transfer prices between operating segments are set at an armslength basis in a manner similar to transactions with third parties. The following tables present revenue and results information and certain assets and liabilities information regarding operating segments. INDUSTRIAL PRODUCTS GLOBAL PROCUREMENT SUPPLY CHAIN TOTAL $ 000 $ 000 $ 000 $ 000 YEAR ENDED 30 JUNE 2013 Revenue Sales to external customers 31,917 32,633 14,824 79,374 Other revenues from external customers 10 Total segment revenue 31,917 32,633 14,824 79,384 Result Loss before tax and finance costs (916) Finance costs (475) Loss before income tax (1,391) Income tax benefit 451 Net loss for the year (940) Assets and liabilities Segment assets 14,209 9,865 528 24,602 Unallocated assets 12,829 Total assets 37,431 Segment liabilities 1,427 5,917 515 7,859 Unallocated liabilities 9,034 Total liabilities 16,893 Page 15
INDUSTRIAL PRODUCTS GLOBAL PROCUREMENT SUPPLY CHAIN TOTAL $ 000 $ 000 $ 000 $ 000 YEAR ENDED 30 JUNE 2012 Revenue Sales to external customers 40,268 31,274 12,140 83,682 Other revenues from external customers 34 Total segment revenue 40,268 31,274 12,140 83,716 Result Profit before tax and finance costs 3,035 Finance costs (414) Profit before income tax 2,621 Income tax expense (869) Net profit for the year 1,752 Assets and liabilities Segment assets 17,107 8,178 616 25,901 Unallocated assets 15,701 Total assets 41,602 Segment liabilities 3,988 3,363 545 7,896 Unallocated liabilities 15,391 Total liabilities 23,287 Page 16