v2 Report
SGL Speirs Group Limited

Commentary: 

Speirs Group Limited has three key operating divisions; Finance, Foods, Nutritionals. In a recent announcement to the exchange in response to a series of letters sent to companies with links to finance companies, Speirs outlined each of these businesses, and commented on the health of the Finance unit. They have indicated a shift in the finance business to focus solely on commercial and industrial lending, and have detailed their funding sources to provide some confidence in this time of upheaval in this sector.

As mentioned the key issues currently facing Speirs surround the finance industry and the global credit and liquidty issues. On the face of it Speirs Finance appears to be able to weather the conditions. However in their FY announcement it was revealed that exposures to Xpress Vehicle Rentals Limited would lead to losses between .8m and 1.6m. Meanwhile however the foods business appears to be running as per usual – as pointed out in the announcement though it is a seasonal business that makes its profits over the summer period. Also of interest is the nutritionals business which in essence is the joint venture with Massey University to commercialise the omega-3 technology.

In terms of current financial performance, the current year shows significant losses, especially compared with a modest profit last year; this is largely a result of the exposure to Xpress. There was a significant spike in the equity line due to reclassification of speirs perpetual bonds from liabilities to equity, the equity figure also increased as a result of the exercise of executive options; thus in terms of equity the company appears to be healthy – the spears bonds are more or less equivalent to preference shares due to their structure.

Thus, the balance sheet from a capital ratio perspective looks healthy, but obviously with the hit to profits other ratios such as interest coverage and liquidity have fallen off somewhat. Profitability ratios are more or less irrelevant – a loss is a loss. Looking forward the company should return to profitability in the 08 year –if- what has been seen to date is the full extent of the bad debt problems. The foods business remains healthy; however the nutritionals business is essentially a start-up. All of this makes for a rather interesting business combination; with two reasonably well established businesses and a start-up with interesting potential. It will be one to watch, but for reasons made clear above this company remains a relatively risky – and somewhat speculative proposition.

-by Callum Thomas

10-September-2007

Website:  http://www.speirs.co.nz/

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Financials 
 

Statement of Financial Performance
	2007	2006	2005	2004
Revenue
Sales	-	-	-	-
Interest received	27,740,000	26,920,000	28,105,000	29,320,000
Other	16,095,000	17,832,000	18,931,000	19,376,000
Total Revenue	43,835,000	44,752,000	47,036,000	48,696,000
Expenses
Cost of sales	18,309,000	19,121,000	18,839,000	18,734,000
Other expenses	5,524,000	2,240,000	4,318,000	5,961,000
EBITDA	20,002,000	23,391,000	23,879,000	24,001,000
Depreciation	2,221,000	2,250,000	2,645,000	3,443,000
Amortisation	-	255,000	343,000	360,000
EBIT	17,781,000	20,886,000	20,891,000	20,198,000
Interest expense	20,654,000	19,676,000	19,555,000	22,029,000
Taxation	(899,000)	368,000	367,000	(629,000)
NPAT	(1,974,000)	842,000	969,000	(1,202,000)
Statement of Financial Position
	2007	2006	2005	2004
Assets
Current Assets
Bank and cash	25,167,000	26,056,000	24,304,000	26,957,000
Receivables	250,979,000	238,168,000	236,454,000	261,117,000
Inventory	-	-	-	-
Other	-	-	-	-
Total Current Assets	276,146,000	264,224,000	260,758,000	288,074,000
Non Current Assets
Property Plant & Equipment	10,492,000	9,193,000	11,998,000	15,971,000
Investments	150,000	150,000	1,227,000	953,000
Goodwill and Intangibles	800,000	-	255,000	598,000
Other	10,358,000	6,498,000	2,812,000	2,476,000
Total Non Current Assets	21,800,000	15,841,000	16,292,000	19,998,000
Total Assets	297,946,000	280,065,000	277,050,000	308,072,000
Liabilities
Current Liabilities
Payables	3,595,000	2,394,000	2,698,000	2,944,000
Short term borrowings	115,880,000	88,712,000	75,962,000	87,388,000
Other	619,000	522,000	319,000	454,000
Total Current Liabilities	120,094,000	91,628,000	78,979,000	90,786,000
Non Current Liabilities
Long-term Borrowings	151,061,000	160,131,000	169,026,000	189,212,000
Other	2,741,000	16,583,000	19,070,000	18,839,000
Total Non Current Liabilities	153,802,000	176,714,000	188,096,000	208,051,000
Total Liabilities	273,896,000	268,342,000	267,075,000	298,837,000
Net Assets	24,050,000	11,723,000	9,975,000	9,235,000
Statement of Cashflows
	2007	2006	2005	2004
Cash flows from operating activities
Operating revenues	43,689,000	45,027,000	46,305,000	48,736,000
Operating expenses	38,632,000	41,704,000	39,819,000	40,964,000
	5,057,000	3,323,000	6,486,000	7,772,000
Cash flows from investing activities
Inflows	163,756,000	164,206,000	171,449,000	187,306,000
Outflows	182,445,000	172,426,000	148,415,000	194,952,000
	(18,689,000)	(8,220,000)	23,034,000	(7,646,000)
Cash flows from financing activities
Inflows	490,921,000	424,452,000	438,467,000	518,886,000
Outflows	473,575,000	422,223,000	470,197,000	513,820,000
	17,346,000	2,229,000	(31,730,000)	5,066,000
Net Increase (decrease)	3,714,000	(2,668,000)	(2,210,000)	5,192,000
Opening cash	12,481,000	15,149,000	17,359,000	12,167,000
Closing cash	16,195,000	12,481,000	15,149,000	17,359,000
	Analysis
Per share figures
Dividend/shares	0.02	0.07	0.04	0.09
NPAT/shares (EPS)	(0.18)	0.08	0.11	(0.14)
EBITDA/shares	1.85	2.27	2.73	2.75
Net Assets/shares	2.22	1.14	1.14	1.06
Profitability
ROA	-0.66%	0.30%	0.35%	-0.39%
Equity multiplier	12.4	23.9	27.8	33.4
ROE	-8.21%	7.18%	9.71%	-13.02%
ROavgE	-11.04%	7.76%	10.09%	-
Net profit margin	-4.50%	1.88%	2.06%	-2.47%
Liquidity
Net working capital	156,052,000	172,596,000	181,779,000	197,288,000
Current ratio	2.30	2.88	3.30	3.17
Quick ratio	2.30	2.88	3.30	3.17
Working capital ratio	0.52	0.62	0.66	0.64
Capital structure
Debt to equity	11.39	22.89	26.77	32.36
Interest coverage	0.86	1.06	1.07	0.92
Shares	10834576	10294576	8734576	8734576
Dividends paid	262000	699000	349000	786000
Dividend payout ratio	-13%	83%	36%	-65%
Growth rates
Revenue	-2.05%	-4.86%	-3.41%
EBITDA	-14.49%	-2.04%	-0.51%
NPAT	-334.44%	-13.11%	-180.62%
Total assets	6.38%	1.09%	-10.07%
Net assets	105.15%	17.52%	8.01%
g = (ROE*(1-DPR))	-9.30%	1.22%	6.22%	-21.53%
Other
Share price (14-August-07)	$            0.71	Avg 4 yr growth rate (NPAT)		-176.05%
Market cap	$    7,692,549	Cmpdg 4 yr growth rate (NPAT)		13.20%
Enterprise value (EV)	$281,588,549	Avg 4 yr growth rate (NA)		43.56%
EV/EBITDA	14.08	Cmpdg 4 yr growth rate (NA)		27.03%
P/E Ratio	-3.90
P/NA ratio	0.32
Dividend yield	3.41%
Earnings yield (E/P)	-26%

Company balance date: 31 March

Trading over the last year

 

Supplementary Information

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