Statement on results for financial year 2000
Financial
The Toll Group has
posted another record result, with earnings before interest and tax (EBIT) growing
25% to $51.0 million in the year to 30 June 2000.
The Group's after tax earnings
jumped 34% to $40.4 million. The record earnings were based on a 5% increase
in revenues to $1.360 billion.
EBIT margin improved by over 19% to 3.75% for
the full year and is now over 50% higher than two years ago.
Group cashflows
for the year remained strong. Net debt fell to $18.5 million, reducing gearing
to 12% at June 2000, compared to 22% at June 1999.
Capital expenditure and investments
of $60.9 million for the year related mainly to equipment associated with new
contracts, the acquisition of Removals Australia and various property developments.
Return on equity of 25% reflects the company's selective approach to capital
expenditure and investments.
Group earnings per share improved 29% to 66 cents.
This represents a threefold increase in fully diluted EPS over the past 3 years.
The Group has declared a final dividend of 15 cents per share, up from 12 cents
last year. This reflects a full year dividend of 28 cents per share, an increase
of 27% over the previous year's 22 cents per share.
The final dividend will
be franked to 50% (50% in 1999) and will be paid on 29 September 2000 to shareholders
registered at 5:00pm 15 September 2000.
The company is examining the structure
of its dividend policy to optimise shareholder returns. As part of its capital
management program, the company's dividend reinvestment plan is expected to
be underwritten in respect of the final dividend.
Divisional Performances
Long
Distance
During February 2000, the former Specialised Division, including Refrigerated
Roadways, was incorporated into the Long Distance division.
Long Distance revenues
increased only marginally to $670 million. Increased revenues from Toll IPEC
were largely offset by planned lower revenues from the Refrigerated Roadways
interstate transport operations.
The Division posted a strong improvement in
earnings compared to the previous year and traded generally above expectations.
Toll Express and Toll SPD recorded solid results and have continued to make
excellent progress in cost control and asset utilisation.
The Toll IPEC result
was quite pleasing given its continuing integration into the Group and the very
competitive market conditions in the express parcel sector.
Both Toll Tasmania
and Edwards Transport contributed well to earnings. Both traded above the previous
year.
Refrigerated Roadways full-year result was disappointing, although non-recurring
restructure costs affected earnings. While still unsatisfactory, the result
was a significant improvement over the previous year and is moving in line with
plan.
Toll North
Toll North revenues were $334 million, an increase of 1.3%
over the previous year. The prolonged poor weather conditions throughout Queensland
and the Northern Territory and a continuing flat mining sector contributed to
the low revenue growth. Earnings were generally in accordance with plan.
Logistics
Revenues for the Logistics Group increased 9.5% to $326 million, benefiting
from new contracts won over the past 18 months.
This was a sound result and
an excellent improvement on the previous year. Earnings for Port Logistics and
the Automotive operations were particularly pleasing.
Toll Technologies
Toll
Technologies was established during February 2000 as the cornerstone of Toll's
e-commerce strategy.
It's investments in Removals Australia and the Australian
Wine Exchange have exceeded all expectations. Movinghome.com.au, acquired in
early July 2000, is also developing well.
Toll Technologies revenues of $29.3
million for the year reflected the incorporation of Removals Australia operations
from 1 February 2000 and the Centrelink logistics contract.
The integration
of Removals Australia has proceeded well. Progress in developing the business,
including new Internet-based software, has been very positive.
The rollout of
Toll's new Group-wide freight and operational system "TollWorks" is proceeding
in line with timetable and in accordance with budget. It has been in operation
in Toll Tasmania over the past two months and preparation for roll-out across
the company is well advanced.
The TollWorks system and "TollConnect", a range
of customer interface products, are allowing Toll to extract additional benefits
from business integration and further differentiate it's service to clients.
Finemore Takeover Bid
On 27 June 2000 the company announced the intention to
make a takeover bid for Finemore Holdings Ltd. The Bidder's Statement was despatched
to Finemore shareholders on 8 August. The bid was conditional on acquiring at
least 90% of Finemore shares and was due to close on 9 September 2000. Finemore
Directors recommended Toll's bid, in the absence of a higher offer.
On 1 September
2000, Toll gave notice of an extension for acceptance of the offer to 22 September
2000, and we have been encouraged by the level of acceptances received since
1 September 2000.
We believe that the bid price of $2.25 per fully paid share
represents full and fair value for the company.
Outlook
The rising fuel price
presents challenges for the company, the transport industry and our customers.
We are closely monitoring the situation and believe the higher costs can be
managed without materially affecting our financial performance.
In anticipation
of the economy remaining stable, the company is confident of delivering strong
growth in earnings and returns through the 2001 financial year.
Year 2000 and
GST projects, together with planning for the Sydney Olympics, have absorbed
considerable attention throughout the company. However, the company is committed
to continuing it's strategic direction and is maintaining its focus on delivering
value to shareholders.
Paul Little
Managing Director
Toll Holdings Limited.
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