crane group limited - asx · 3 crane group completed the acquisition of kbe, a leading australian...

Crane Group Limited ABN 91 008 410 302

13 February 2008

CRANE GROUP ANNOUNCES A 13% INCREASE

IN HALF YEAR PROFIT

Building and industrial products company Crane Group Limited today announced its financial results for the six months ended 31 December 2007. Highlights of the result include:

• A strong half year result with net profit after tax before significant items of $35.7 million, up 13.4% on the same period last financial year;

• Fully franked interim dividend of 35 cents per share, up 9.4% on last year;

• Recent acquisitions have been successfully bedded down and are performing well. Two new bolt-on acquisitions have been completed since December 2007; and

• The company reconfirms its guidance that net profit after tax before significant items for the full year is expected to be up approximately 15% to 20% on last year.

Crane Group Managing Director, Greg Sedgwick commented, “We are pleased with the result which was driven by strong earnings growth in our Tradelink and Iplex businesses that more than offset the forecast weaker earnings from Metals Distribution and CDNZ. This half saw positive contributions from each of the acquisitions undertaken since 30 June 2007 and also marked a return to profitability for our Crane Copper Tube business. As a result we have been able to increase our dividend to shareholders.” “Earnings before interest and tax (EBIT) before significant items was up 14.1% on the corresponding period last year”. “Good cash flow from operations and the share placement conducted in July 2007 have enabled us to maintain relatively conservative gearing levels whilst pursuing growth through both acquisitions and continued capital re-investment in Iplex and Tradelink”. The Crane Group Board has declared a fully franked interim dividend of 35 cents per share, up 9.4% from the 32 cents per share paid in the previous corresponding period. The Record Date for the interim dividend is 26 February 2008 and the dividend is payable on 20 March 2008. Crane Group’s Dividend Reinvestment Plan will operate in respect of this interim dividend. Financial Overview Revenue for the six months was $1,177 million. An increase of 8.9% on last year. EBIT before significant items was $64.9 million for the six months ended 31 December 2007, up 14.1% on last year. EBIT before significant items for continuing businesses was up 11.5% on the previous year. Earnings per share (before significant items) of 55.6 cents per share was up 4.7% on the previous corresponding period primarily reflecting the impact of the share placement in July 2007.

Level 14, 15 Blue Street North Sydney NSW 2060 Postal address Locked Bag 2125 North Sydney NSW 2059 Australia Tel 61 2 8923 3000 Fax 61 2 9954 5544 Website www.crane.com.au

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Crane Group invested $156 million in acquisitions during the period with the two major acquisitions being the Western Australian based pipelines business, Kingston Bridge Engineering (KBE) and Northern’s Plumbing Supplies (Northern’s), which operates a 21 store network in South Australia and Western Australia. New equity of $68 million was raised during the period through continued operation of the dividend reinvestment plan and from a $60 million placement to institutional investors. This helped to maintain gearing at relatively conservative levels notwithstanding the increase in debt as a result of the acquisitions undertaken. Net debt at 31 December 2007 stood at $306 million, representing gearing of 35% (measured as net debt to net debt plus equity). Net financing costs for the period were $14.0 million, up 31.4% on the corresponding period last year, reflecting the acquisition activity this period. Net capital expenditure for the period was $24 million, an increase of $7 million over last year, reflecting, in particular, investment in manufacturing capacity in Iplex and network development in Tradelink. Cash flow from operations of $66.6 million was up significantly on last year reflecting the strong operating result and good working capital management. Results by Division

For the six months to 31 December Segment Revenue Segment EBIT*

2007 $million

2006 $million

2007 $million

2006 $million

Iplex 400.6 324.6 42.4 33.8

Tradelink 443.2 393.5 17.2 12.2

CDNZ 221.1 225.5 9.1 9.9

Metals Distribution 123.8 143.5 6.3 10.7

Crane Copper Tube 74.8 73.1 2.2 (0.3)

Intercompany and unallocated (86.8) (80.0) (13.2) (8.9)

Total – continuing businesses 1,176.7 1,080.2 64.0 57.4

Metal – discontinued - - 0.9 (0.5)

Total 1,176.7 1,080.2 64.9 56.9

* Before significant items Iplex Revenue in Iplex for the six months to 31 December 2007 was $401 million, up 23% on the same period last year. Excluding acquisitions, sales grew by 17%. Iplex benefited from continued strong growth in Australian civil and water infrastructure markets. EBIT increased 26% to $42.4 million for the half year. Margins in the business remained solid despite continuing high PVC and PE resin prices. Iplex continued to participate in a number of large-scale water infrastructure projects in Australia during the period, including the Wimmera Mallee Pipeline Project in Victoria and the Western Corridor Recycled Water Project in South East Queensland. The Western Corridor contract is expected to conclude in March 2008. Iplex has been awarded the pipe supply for a further stage of the Wimmera Mallee project, which will extend the company’s involvement through until at least May 2008. Capital expenditure in Iplex totalled $14 million during the period and was focused on selective capacity expansion and productivity improvements.

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Crane Group completed the acquisition of KBE, a leading Australian provider of large diameter polyethylene pipe and fittings, on 31 August 2007. This business is trading well and contributed $2.5 million of EBIT for the four months to 31 December 2007. On 31 January 2008, Iplex completed the acquisition of ALM Industries (ALM). ALM is a Queensland based manufacturer of electrical cable cover, garden edging products and corrugated drainage pipe with annual sales of approximately $10 million. The acquisition will complement Iplex’s existing Key Plastics range of products and strengthen Key’s presence in the electrical market. Tradelink Tradelink’s business continued to improve during the last half. Revenue of $443 million represented an increase of 13% compared with the same period last year. Same store sales increased by 8%, with sales growth seen across all States except New South Wales. Active development of the Tradelink store network continued during the period, with the opening of two new branches, seven store refurbishments and the acquisition on 2 November 2007 of Northern’s, which added 21 stores to the network. There are currently 218 stores in the Tradelink network. Tradelink delivered EBIT of $17.2 million for the period, up by 41% over the previous corresponding period. EBIT margin grew from 3.1% to 3.9% as the benefits of a better product range, increased sales in Tradelink’s home brand, Raymor, targeted promotional programs and other improvements in supply chain management continued to reap benefits for the business. CDNZ A continuation of subdued housing and commercial market conditions in New Zealand saw revenue at CDNZ fall 2% to $221 million for the period. EBIT was $9.1 million for the period, down 9% on the previous year. Lower sales volumes and higher network costs were partly offset by better gross margins arising from increased sales of own brand and exclusive products. The business has taken measures to respond to the difficult trading environment and remains focused on the tight management of margin and network costs. On 1 February 2008, CDNZ completed the acquisition of Zip Plumbing, a three-branch plumbing distribution business in the Bay of Plenty with annual sales of approximately NZ$15 million. The acquisition provides CDNZ with improved network coverage in a growing part of the North Island market. Following the Zip acquisition, the CDNZ network comprises 126 stores. Metals Distribution As anticipated, Metals Distribution delivered a substantially lower result than the record achieved last year as falling world metal prices impacted both revenue and margins. Revenue of $124 million was 14% below the same period last year. EBIT of $6.3 million represented an EBIT margin of 5%, which was in line with expectations. The acquisition of the Central Queensland Stainless Steel business in September 2007 has increased the branch network by two locations and helped to increase market share in stainless steel. With metal prices likely to remain volatile in the short term, this business will be closely managed with a particular focus on maintaining return on funds employed. Crane Copper Tube This half marked a return to profitability for Crane Copper Tube. Revenue of $75 million was 2% higher than the same period last year driven in part by higher export demand. EBIT of $2.2 million for the period contrasts with the loss of $0.3 million incurred for the corresponding period last year. The business continues to work hard on improving both its product and service offering. The lean manufacturing programme progressively introduced over the past two years continues to provide benefits in both productivity and working capital efficiency.

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Safety Safety remains a strong focus for the Crane Group and improvements were made in all of the important safety measures monitored by the business during the period. The lost time injury frequency rate for Crane Group at 31 December 2007 was 3.9, a reduction of 80% since January 2004. Particular emphasis is being placed in this year’s safety programme on improving motor vehicle safety. Outlook Given the strong influence of the level of building activity on Crane Group’s businesses, the main risk to the full year earnings result is any weakening in the Australian and New Zealand housing markets. Earnings from water infrastructure projects for the second half of FY2008 are expected to be broadly in line with earnings achieved in the second half last year. Based on the strong first half result and an assumption that present market conditions will continue, Crane Group maintains its expectation that net profit before significant items for the full year will be up approximately 15% to 20% on last year.

Enquiries Contact

Crane Group Limited

Greg Sedgwick Mark Fitzgerald Managing Director Finance Director Ph 02 8923 3000 Ph 02 8923 3000

Media Matthew Horan Cato Counsel Ph 02 9360 6606 / 0403 934 958

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Financial Summary

For the six months to 31 December 2007 2006 % Change

Revenue ($m) 1,176.7 1,080.2 +8.9

Earnings before interest, tax, depreciation, amortisation and

significant items (EBITDA) ($m)

80.1 73.2 +9.4

Earnings before interest, tax and significant items (EBIT) ($m) 64.9 56.9 +14.1

Net financing costs ($m) (14.0) (10.6) +31.4

Share of profit of equity accounted investments ($m) 1.1 - -

Tax expense ($m) (16.0) (14.9) +7.5

Minority interests ($m) (0.3) 0.1 -

Net profit after tax before significant items ($m) 35.7 31.5 +13.4

Significant item gains/(losses) after tax and minority interests ($m) - 6.2 -

Net profit after tax ($m) 35.7 37.7 -5.4

Earnings per share before significant items (cents) 55.6 53.1 +4.7

Basic earnings per share (cents) 55.6 63.7 -12.7

Total dividend per share (cents – fully franked) 35 32 +9.4

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Crane Group Limited (ABN 91 008 410 302)

Appendix 4D

Half Yearly Financial Report

Half year ended 31 December 2007

RESULTS FOR ANNOUNCEMENT TO THE MARKET

______________________________________________________________________________ $000

Revenue - continuing operations up 8.9% to 1,176,679 - discontinued operations - - total up 8.9% to 1,176,679

Profit after tax and minority interests but beforesignificant items - continuing operations up 9.9% to 35,077 - discontinued operations 626 - total up 13.4% to 35,703

Significant items after tax and minority interests -

Total profit for the period down 5.4% to 35,703

Dividends on ordinary securities Amount per Franked amountsecurity per security

Interim dividend 35 cents 35 cents (at 30%)

Previous corresponding period - Interim 32 cents 32 cents (at 30%)

Record date for determining entitlements to thedividend 26 February 2008

Explanation of results Please refer to the attached Press Release and commentary for an explanation of the results.

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Crane Group Limited - Half yearly report

CRANE GROUP LIMITED AND ITS CONTROLLED ENTITIES

REPORT OF THE DIRECTORS

For the half year ended 31 December 2007

The directors present their report together with the consolidated financial report for the half year ended 31 December 2007 and the independent auditor’s review report thereon. 1. Directors and Company Secretary: The name of each of the directors and the Company Secretary

of the Company in office during or since the end of the half year are:

Leo E Tutt FCA FAIM FAICD Chairman since July 2002. Director (non-executive) since September 2001.

Greg L Sedgwick B Comm M Comm FAIM Managing Director (executive) since January 2004.

Mark I Fitzgerald B Comm FCPA Finance Director (executive) since August 2003.

Cecil R Stubbs BE Director (non-executive) since July 1998.

John B Harkness FCA FAICD Director (non-executive) since September 2000.

Robert D Fraser BEc LLB (Hons) Director (non-executive) since June 2004.

Janelle O’Reilly BEc LLB (Hons) General Counsel, Company Secretary since 30 May 2007.

2. Review of Operations A review of the operations of the consolidated entity for the half year and the results of those

operations is included in the attached commentary set out on pages 1 to 5. This commentary also forms part of the report of the directors.

3. Lead Auditor’s Independence Declaration The lead auditor’s independence declaration under Section 307C of the Corporations Act 2001 is set

out on page 24 and forms part of the report of the directors. 4. Rounding of Amounts The consolidated entity is of a kind referred to in ASIC Class order 98/100 dated 10 July 1998 and in

accordance with that Class Order, amounts in the financial report and report of the directors have been rounded off to the nearest thousand dollars, unless otherwise stated.

For and on behalf of the Board and signed in accordance with its resolution.

L E Tutt G L Sedgwick Chairman Managing Director

13 February 2008 Sydney, NSW

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Crane Group Limited

(ABN 91 008 410 302)

Consolidated Interim Financial Report

For the half year ended

31 December 2007

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The consolidated interim income statement is to be read in conjunction with the notes to the half year financial statements.

Continuing Operations

Discontinued Operations Total


Discontinued Operations Total

Note $000 $000 $000 $000 $000 $000

Revenue 1,176,679 - 1,176,679 1,080,168 - 1,080,168

Expenses (1,112,715) 971 (1,111,744) (1,022,788) (447) (1,023,235)

Result from operatingactivities 63,964 971 64,935 57,380 (447) 56,933

Financial income 841 - 841 915 - 915

Financial expense (14,820) - (14,820) (11,557) - (11,557)

Net financing costs (13,979) - (13,979) (10,642) - (10,642)

Share of profit of equity accounted investment 8 1,088 - 1,088 - - -

Profit / (loss) before tax 51,073 971 52,044 46,738 (447) 46,291

Income tax expense (15,996) (11) (16,007) (13,516) (61) (13,577)

Profit / (loss) after tax but before net gain on sale/closure of discontinued operations & minority interests 35,077 960 36,037 33,222 (508) 32,714

Loss / (profit) for the period attributable to minority interests - (334) (334) 5 68 73

35,077 626 35,703 33,227 (440) 32,787

Net gain on sale/closure of discontinued operations, net of tax & minority interests 5 - - - - 4,954 4,954

Profit for the period attributable to equity holders of Crane Group Limited 35,077 626 35,703 33,227 4,514 37,741

Earnings per security (EPS)

Basic EPS attributable to ordinary equity holders (cents per share) 54.6 1.0 55.6 56.1 7.6 63.7

Diluted EPS attributable to ordinary equity holders (cents per share) 53.6 1.0 54.6 55.0 7.5 62.5

Consolidated Interim Income StatementFor the half year ended 31 December 2007

2007 2006

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December 2007

June2007

Note $000 $000

21,945 51,394 321,953 322,999 353,586 308,920

6,757 6,887 704,241 690,200

3,698 3,115 8 17,363 60

235,256 196,811 6 317,622 232,167

32,218 34,194 606,157 466,347

1,310,398 1,156,547

321,426 303,994 80,889 52,267 34,281 40,506 13,385 21,530 20,275 23,671

470,256 441,968

247,339 199,845 17,744 17,005

- - 6,892 6,757

271,975 223,607

742,231 665,575

568,167 490,972

416,909 354,311 6,250 6,149

144,144 129,965 567,303 490,425

864 547 568,167 490,972 Total equity

ReservesRetained earnings

Minority interestsEquity attributable to equity holders of Crane Group Limited

Total liabilities

Net assets

EquityIssued capital

Loans and borrowings

Deferred tax liabilitiesProvisionsTotal non-current liabilities

Current tax liabilitiesProvisionsTotal current liabilities

Non-current liabilities

Total assets

Current liabilitiesPayablesLoans and borrowings

Property, plant and equipmentIntangible assetsDeferred tax assetsTotal non-current assets

Total current assets

Non-current assetsReceivablesInvestments

Employee benefits

Employee benefits

Consolidated Interim Balance SheetAs at 31 December 2007

Current assetsCash and cash equivalentsReceivablesInventoriesPrepayments

The consolidated interim balance sheet is to be read in conjunction with the notes to the half year financial statements.

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The consolidated statement of changes in equity is to be read in conjunction with the notes to the half year financial statements.

Consolidated Interim Statement of Changes in EquityReconciliation of movement in consolidated capital and reserves attributable to equity holders of Crane Group Limited.

Issued capital

Treasury shares

Foreign currency

translation reserve

Hedging reserve

Equity compensation

reserveTotal

reservesRetained earnings

Minority interests

Total equity

$000 $000 $000 $000 $000 $000 $000 $000 $000For the half year ended 31 December 2007Balance at 1 July 2007 362,738 (8,427) 4,663 (1,843) 3,329 6,149 129,965 547 490,972 Net movement in hedging reserve - - - 2,217 - 2,217 - - 2,217 Net profit for the period - - - - - - 35,703 334 36,037 Foreign currency difference on translation - - (3,002) (11) - (3,013) - (17) (3,030)Shares issued * 68,530 - - - - - - - 68,530 Share issue transaction costs after tax (774) - - - - - - - (774)Share based payments - (5,158) - - 897 897 - - (4,261)Dividends to shareholders - - - - - - (21,524) - (21,524)

Balance at 31 December 2007 430,494 (13,585) 1,661 363 4,226 6,250 144,144 864 568,167

For the half year ended 31 December 2006Balance at 1 July 2006 342,935 (7,466) (4,644) (137) 2,700 (2,081) 119,745 524 453,657 Net movement in hedging reserve - - - (1,372) - (1,372) - - (1,372)Net profit for the period - - - - - - 37,741 (73) 37,668 Foreign currency difference on translation - - 7,544 26 - 7,570 - 42 7,612 Shares issued * 9,428 - - - - - - - 9,428 Share based payments - (2,111) - - 490 490 (54) - (1,675)Dividends to shareholders - - - - - - (17,999) - (17,999)

Balance at 31 December 2006 352,363 (9,577) 2,900 (1,483) 3,190 4,607 139,433 493 487,319

* During the period the Company issued the following fully paid ordinary shares: (a) 500,879 shares at $17.03 per share pursuant to the Crane Group Limited Dividend Reinvestment Plan (DRP) from the Final 2007 dividend, amounting to $8.5 million (Final 2006 dividend: 877,049 shares at $10.75 per share, amounting to $9.4 million); and (b) 3,703,704 shares at $16.20 per share via private placement to institutional investors completed on 10 July 2007, amounting to $60.0 million.

Reserves

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2007 2006Note $'000 $'000

1,310,217 1,210,422 (1,243,659) (1,186,360)

66,558 24,062 804 894

(14,096) (10,979)(26,913) (15,858)

26,353 (1,881)

(24,051) (17,282)7 (128,292) (5,886)8 (16,215) -

- (4,902)- 11,986

40 423 6 (1,412) -

5,397 - 20 323

(164,513) (15,338)

80,878 16,439 (1,171) (1,686)

(11,655) - 59,226 - (5,158) (2,432)

(12,994) (8,571)109,126 3,750

(29,034) (13,469)

51,394 52,977 (415) 593

21,945 40,101

Acquisition of equity accounted investment

Foreign currency movements on cash

Dividends paid (net of reinvested dividends)Net cash inflow from financing activities

Net increase / (decrease) in cash held

Cash and cash equivalents at the beginning of the period

Payments related to sold / closed businesses

Proceeds from sale of non-current assets

Repayment of borrowings

Purchase of treasury shares

Other loans repaid / (extended)Net cash outflow from investing activities

Cash flows from financing activities

Proceeds from share issue (net of transaction costs)Business acquisition liabilities settled

Cash flows from operating activities

Cash receipts from customersCash payments to suppliers and employees

Consolidated Interim Statement of Cash FlowsFor the half year ended 31 December 2007

Payments for property, plant and equipmentAcquisition of subsidiaries and businesses (net of cash acquired)

Cash and cash equivalents at the end of the period

Loans extended to joint venture entityDevelopment expenditure

Proceeds from sale of assets related to closed businesses

Proceeds from borrowings

Net cash inflow from operating activities

Cash flows from investing activities

Cash generated from operationsInterest receivedInterest paidIncome taxes paid

The consolidated interim statement of cash flows is to be read in conjunction with the notes to the half year financial statements. F

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Condensed Notes to the Consolidated Interim Financial Statements Note 1: Statement of Significant Accounting Policies Reporting entity Crane Group Limited (the “Company”) is a company domiciled in Australia. The consolidated interim financial report is a general purpose financial report which has been prepared in accordance with AASB134: Interim Financial Reporting, and the Corporations Act 2001. The consolidated interim financial report of the Company as at and for the six months ended 31 December 2007 comprises the Company and its subsidiaries (together referred to as the “consolidated entity”) and the consolidated entity’s interests in associates and jointly controlled entities. The interim financial report is to be read in conjunction with the most recent annual financial report. This report must also be read in conjunction with any public announcements made by Crane Group Limited during the half year in accordance with the continuous disclosure obligations arising under the Corporations Act 2001. Statement of Compliance The consolidated interim financial report was approved for issue by the directors on 13 February 2008. Except as described below, the accounting policies applied by the consolidated entity in this consolidated interim financial report are the same as those applied by the consolidated entity in its consolidated financial report for the year ended 30 June 2007. Accounting estimates and judgements The preparation of the interim financial report required management to make judgements, estimates and assumptions that affect the application of accounting policies. The development, selection and disclosure of the consolidated entity’s critical accounting policies and estimates and the application of these policies and estimates are approved by the Audit and Risk Management Committee. These estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. In preparing this consolidated interim financial report, the significant judgements made by management in applying the consolidated entity’s accounting policies and the key sources of estimating uncertainty were the same as those that applied to the consolidated financial report for the year ended 30 June 2007. Rounding The consolidated entity is of a kind referred to in Class Order 98/100 issued by the Australian Securities and Investments Commission relating to rounding off of amounts in the financial report and the report of the directors. Unless otherwise stated, amounts have been rounded to the nearest thousand dollars.

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Note 2: Segment reporting


DiscontinuedOperations

TotalOperations

Metals Copper Inter-Segment

Business segments Iplex Tradelink CDNZ Distribution Tube Eliminations Total$000 $000 $000 $000 $000 $000 $000 $000 $000

Segment revenue 400,644 443,190 221,128 123,813 74,824 (86,920) 1,176,679 - 1,176,679

Segment result (a) 42,407 17,180 9,067 6,252 2,240 - 77,146 971 78,117

Unallocated items (13,182) - (13,182)

Profit / (loss) before financing costs, tax and minority interests 63,964 971 (b) 64,935

Net financing costs (13,979) - (13,979)

Share of profit of equity accounted investments 1,088 - - - - - 1,088 - 1,088

Income tax expense (a) (15,996) (11) (16,007)

Minority interests - (334) (334)

Net gain on sale/closure ofdiscontinued operations, net of tax - - - Profit for the period 35,077 626 35,703

(a) There were no significant items (before tax or tax related) during the half year ended 31 December 2007.

(b) The $971k result for the period relates to the release of un-used provisions.


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Note 2: Segment reporting (continued)


DiscontinuedOperations

TotalOperations

Metals Copper Inter-SegmentBusiness segments Iplex Tradelink CDNZ Distribution Tube Eliminations Total

$000 $000 $000 $000 $000 $000 $000 $000 $000

Segment revenue 324,595 393,468 225,503 143,455 73,102 (79,955) 1,080,168 - 1,080,168

Segment result (a) 33,751 12,153 9,938 10,739 (332) - 66,249 (447) 65,802

Unallocated items (8,869) - (8,869)

Profit / (loss) before financing costs, tax and minority interests 57,380 (447) 56,933

Net financing costs (10,642) - (10,642)

Share of profit of equity accounted investments - - - - - - - - -

Income tax expense (b) (13,516) (61) (13,577)

Minority interests 5 68 73

Net gain on sale/closure of discontinued operations, net of tax - 4,954 4,954 Profit for the period 33,227 4,514 37,741

(a) Includes significant items (losses) / gains - - - - - - - - -

(b) Includes significant item tax (expense) / benefit 1,307 - 1,307


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Note 2: Segment reporting (continued) Segment information is presented in respect of the consolidated entity’s business segments. The primary segment reporting format, business segments, is based on the consolidated entity’s management and internal reporting structure. The major products and services from which the segments derive revenue are: Segment Products and services Iplex Australasia’s largest producer of plastic pipe and fittings. It operates in Australia and

New Zealand and supplies pipeline solutions to the building products, civil/ infrastructure, irrigation, and telecommunications markets

Tradelink A leading Australian distributor of plumbing supplies and associated products Crane Distribution NZ (CDNZ) New Zealand’s leading trade-related wholesale merchant for plumbing, pipeline,

electrical and safety products Metals Distribution A distributor of copper, copper alloy, aluminium and stainless steel products to a wide

range of customers in the manufacturing industry Copper Tube A manufacturer and distributor of copper tube extrusions Discontinued – aluminium extrusions (business disposed in October 2005) – aluminium products and window components (business disposed in October 2005) – copper alloy rod and bar extrusions (closed December 2005) Unallocated items mainly comprise corporate expenses. Inter-segment pricing is determined on an arm’s length basis. Geographic segments The consolidated entity operates wholly in Australasia.

2007 2006Note 3: Dividends $000 $000

Dividends paid (fully franked at the 30% tax rate): Final 2007 dividend at 33.0 cents per ordinary share (Final 2006: 30.0 cents) * 21,514 17,989 Final 2007 dividend at 2.5 cents per preference share (Final 2006: 2.5 cents) 10 10

21,524 17,999

* The Final 2007 dividend on ordinary shares included amounts paid on 3,703,704 shares issued via private

placement to institutional investors on 10 July 2007.

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Note 3: Dividends (continued) Subsequent event

Since the end of the half year, the directors declared the following dividends: 2007 $000 Dividends declared (fully franked at the 30% tax rate): Interim 2008 dividend at 35.0 cents per ordinary share 22,993 Interim 2008 dividend at 2.5 cents per preference share 10 23,003 The financial effect of these dividends has not been brought to account in the consolidated entity financial statements for the half year ended 31 December 2007 and will be recognised in subsequent financial reports. The dividend plan in operation is the Crane Group Limited Dividend Reinvestment Plan. The last date for receipt of election notices for the dividend plan is 26 February 2008. Date the dividend is payable 20 March 2008 Record date to determine entitlements to the dividend (i.e. on the basis of registrable transfers by 5.00 pm if Securities are not CHESS approved or security holding balances established by 5.00pm or such later time permitted by SCH Business Rules if securities are CHESS approved) 26 February 2008


Discon-tinued Oper-

ations TotalContinuing Operations

Discon-tinued Oper-ations Total

$000 $000 $000 $000 $000 $000

Note 4: Significant items

included in profit after tax but beforenet gain on sale/closure of discontinuedoperations & minority interests are:

Income tax benefit from change of tax bases - - - (1,307) - (1,307)

2007 2006

Significant item losses / (gains)

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A discontinued operation is a component of the consolidated entity’s business that represents a separate major line of business. Net financing costs have not been allocated to discontinued operations. Cash flows relevant to the discontinued operations not already disclosed individually in the consolidated cash flow statement are cash flows used in operations of $137,000 (2006: Cash used of $602,000).

Note 6: Intangible assets December2007

June2007

$000 $000

Goodwill at cost 273,634 186,976 Accumulated impairment losses (775) (775)

272,859 186,201

Trade names at cost 22,814 23,121 Accumulated impairment losses (4,537) (4,672)

18,277 18,449 Development expenditure: System re-engineering and computer software at cost 51,295 50,108 Accumulated amortisation and impairment losses (24,809) (22,591)

26,486 27,517

317,622 232,167

Net movements during the current half year includeGoodwill

$'000Trade Names

$'000

DevelopmentExpenditure

$'000

Balance at 1 July 2007 186,201 18,449 27,517 Additions to development expenditure - - 1,412 Amortisation expense - - (2,312)Goodwill arising from business acquisitions (Note 7) 88,573 - - Foreign currency translation (1,915) (172) (131)Balance at 31 December 2007 272,859 18,277 26,486

2007 2006

$000 $000

Note 5: Discontinued operationsThe net gain on sale and loss on closure included in the profit after tax andminority interests of discontinued operations comprises:

Gain on sale of Consolidated Extrusion's property, plant and equipment - 6,858 Income tax (expense) - (1,904)Net gain on sale/closure of discontinued operations after tax - 4,954

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Note 7: Business acquisitions

Date Acquired Interest

Acquired

Cost of Acquisition

$000

Fair Value of Net Tangible Assets

Acquired $000

2007 During the current half year the consolidated entity acquired the businesses of: - KBE - Kingston Bridge Engineering Pty Limited and

Polymer Fusion Education Pty Limited (legal entities acquired)

- Plumbing stores by Tradelink - Other

31 August 2007

2 November 2007

28 September 2007

100%

100%

100%

96,978 31,480

1,075

30,550 9,822

625 129,533 40,997

Cost adjustments relating to prior period acquisitions 37 - 129,570 40,997

The above business acquisitions contributed $2.7 million to the group operating result between the dates of acquisition and 31 December 2007 (before interest and tax), the majority of which relates to KBE. The consolidated entity considers it impractical to determine the consolidated revenue or profit of the group had these business acquisitions all taken place at 1 July 2007 as these entities were privately owned and accounting policies were not consistent with those adopted by the consolidated entity.

* The initial accounting for business combinations effected during the half year can only be determined provisionally in accordance with accounting standards. Final accounting will be presented within one year from date of acquisition when a final assessment of the fair value of net assets acquired is completed.

** Goodwill arising on acquisition is attributable to the business value existing within the acquired businesses and

also the synergies expected to be achieved as a result of combining the existing businesses with the rest of the group.

Details of business acquisitions in aggregate are as follows:

Acquisition fair value

Book carrying value


Book carrying value


Book carrying value

Fair value of net assets acquired *Property, plant and equipment 26,264 18,902 2,554 2,301 28,818 21,203 Inventories 10,400 9,900 8,132 8,132 18,532 18,032 Other assets 19,480 19,480 517 517 19,997 19,997 Employee entitlements (251) (251) (756) (756) (1,007) (1,007)Other liabilities (25,343) (23,134) - - (25,343) (23,134)

30,550 24,897 10,447 10,194 40,997 35,091 Goodwill arising on acquisition ** 66,428 22,145 88,573

96,978 32,592 129,570

Cost of acquisitionCash purchase consideration 94,993 31,050 126,043 Cash costs related to the acquisitions 319 1,542 1,861 Deferred consideration 1,666 - 1,666

96,978 32,592 129,570

Cash outflow on acquisitionCash purchase consideration 94,993 31,050 126,043 Cash costs related to the acquisitions 319 1,542 1,861 Net current interest bearing liabilities / (cash) acquired 398 (10) 388

95,710 32,582 128,292

KBE $'000

Other$'000

Consolidated$'000

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Note 7: Business acquisitions (continued)

Date Acquired Interest

Acquired

Cost of Acquisition

$000

Fair Value of Net Tangible Assets

Acquired $000

2006 During the prior half year the consolidated entity acquired the businesses of.

- Hydro-tech Sanitar - Plumbing stores by Tradelink

1 November 2006

1 September 2006

100%

100%

6,253

525

1,228

150

6,778 1,378 Cost adjustments relating to prior period acquisitions (1,773) -

5,005 1,378

* Goodwill arising on acquisition is attributable to the business value existing within the acquired businesses and

also the synergies expected to be achieved as a result of combining the existing businesses with the rest of the group.

Details of business acquisitions in aggregate are as follows:


Book carrying value

Fair value of net assets acquiredProperty, plant and equipment 134 134 Inventories 1,587 1,587 Other assets 401 401 Employee entitlements (23) (23)Other liabilities (721) (721)

1,378 1,378 Goodwill arising on acquisition * 3,627

5,005

Cost of acquisitionCash purchase consideration 5,883 Cash costs related to the acquisitions 3 Non-cash acquisition costs (1,773)Deferred consideration 892

5,005

Cash outflow on acquisitionCash purchase consideration 5,883 Cash costs related to the acquisitions 3

5,886

Consolidated$'000

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Note 8: Equity accounted investments

Interest Investment carrying

amount Dividends received

December

2007 June 2007

December 2007

June 2007

December 2007

June 2007

Entity name and main activity % % $000 $000 $000 $000 Mitchell Water Australia Pty Limited 20.0 - 17,303 - - -

(Pipeline construction) Mitchell Water (Vic) Pty Limited 60.0 50.0 60 60 - -

(Pipeline construction) Iplex Asia Pte Limited 50.0 50.0 - - - -

(Plastic pipelines and fittings)

17,363 60 - - Crane acquired via its 100% owned subsidiary Iplex Pipelines Australia Pty Limited a 20% equity interest in Mitchell Water Australia Pty Limited on 31 July 2007. Mitchell Water Australia is involved in the construction of large diameter pipeline systems. Crane paid $16.215 million for the 20% equity interest in the entity. Crane’s 20% share of equity accounted investment profit after tax for the period totalled $1.088 million. Mitchell Water (Vic) Pty Ltd is a joint venture entity established on 3 July 2006 between Crane’s 100% owned subsidiary Iplex Pipelines Australia Pty Limited and Mitchell Water Australia Pty Limited. Due to the 20% investment acquired in Mitchell Water Australia Pty Limited during the half year, Crane now holds a 60% effective equity interest in Mitchell Water (Vic) Pty Ltd (50% directly and 10% indirectly). Iplex Asia Pte Limited is a dormant company.

Note 10: Contingent Liabilities There were no material changes in contingent liabilities since 30 June 2007.

Note 9: NTA backingDecember

2007June 2007

Net tangible asset backing per ordinary security $3.79 $4.19

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DIRECTORS’ DECLARATION

In the opinion of the directors of Crane Group Limited:

1. the financial statements and notes, set out on pages 6 to 21, are in accordance with the Corporations Act 2001, and:

(a) give a true and fair view of the financial position of the consolidated entity as at 31 December 2007 and of its performance for the half year ended on that date; and

(b) comply with Australian Accounting Standards AASB 134 Interim Financial Reporting, and the Corporations Regulations 2001; and

2. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of the directors.

L E Tutt G L Sedgwick Chairman Managing Director 13 February 2008 Sydney, NSW

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INDEPENDENT AUDITOR’S REVIEW REPORT TO THE MEMBERS OF CRANE GROUP LIMITED

We have reviewed the accompanying interim financial report of Crane Group Limited, which comprises the consolidated interim balance sheet as at 31 December 2007, income statement, statement of changes in equity and cash flow statement for the half-year ended on that date, a statement of accounting policies, other explanatory notes and the directors’ declaration set out on pages 8 to 22 of the consolidated entity comprising the company and the entities it controlled at the half-year’s end or from time to time during the half-year. Directors’ Responsibility for the Consolidated Interim Financial Report The directors of the company are responsible for the preparation and fair presentation of the interim financial report in accordance with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001. This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the interim financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor’s Responsibility Our responsibility is to express a conclusion on the interim financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of an Interim Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the interim financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 31 December 2007 and its performance for the half-year ended on that date; and complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As auditor of Crane Group Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of an interim financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the interim financial report of Crane Group Limited is not in accordance with the Corporations Act 2001, including:

(a) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2007 and of its performance for the half-year ended on that date; and

(b) complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

KPMG

K A Leighton Sydney, 13 February 2008 Partner

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LEAD AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001

TO THE DIRECTORS OF CRANE GROUP LIMITED I declare that, to the best of my knowledge and belief, in relation to the review for the half year ended 31 December 2007 there have been:

(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and

(ii) no contraventions of any applicable code of professional conduct in relation to the review.

KPMG

K A Leighton Sydney, 13 February 2008 Partner

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crane group limited - asx · 3 crane group completed the acquisition of kbe, a leading australian...

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