CSR Still De-Merging, Alesco Warns Of Loss

  It was nice of CSR Ltd to tell those shareholders who had bothered to buy and read The Australian Financial Review, that the proposed split of the company would a while in coming and there wouldn't be an announcement at yesterday's annual meeting in Sydney.The company's CEO, Jerry Maycock revealed the longer than expected timeline for the de-merger in an interview with the AFR.Not all shareholders would have bought the paper, but on the other hand, warming up the crowd ahead of the performance, was also a way of informing shareholders in other states that the biggest event in recent years for them was still some way off.In fact it's will be a couple of months before shareholders find out what the proposed splitting of the company means.So no & #160;update on the structure and demerger was given to shareholders at the meeting, with Mr & #160;Maycock saying there was still a lot of work ahead of the board.All we know that it will be a sugar arm, and a building products arm.And that it is planned the demerger will be completed by March 2010.In the meantime, apart from the sparring at the AGM with 5% shareholder, GPG, shareholders heard that & #160;2010 underlying earnings could be slightly higher than last year, despite difficult market conditions for its products.CSR said its forecast for annual earnings before interest and tax (EBIT) assumed similar earnings outcomes for its building product and property units. & quot;On current assumptions, we believe there is a reasonable prospect that group EBIT (pre-significant items) will be slightly higher than last year, & quot; Mr & #160;Maycock told shareholders yesterday.Mr Maycock said while market conditions in the first half of fiscal 2010 remained challenging CSR was operating well within its banking covenants over its & #36;1.2 billion of debt (How that will be apportioned between the two new groups of the company, will be one of the key decisions for the board to make and will influence valuations & quot;Assuming no substantial change to current market conditions, expect similar earnings in building products and property, & quot; he said.He said & #160;there were early signs of an improving landscape for the company. & quot;Growth in sugar earnings (are) expected to outweigh slightly lower aluminium earnings. & quot;World sugar prices have been at the highest level for three years or more on fears of a shortfall from IndiaCSR in May reported a 17 % drop & #160;in fiscal 2009 EBIT to & #36;320.1 million, as weak building and & #160;commercial property markets and a significant fall in the price of aluminium hit hard.Mr Maycock outlined the major points being worked on regarding the management included:Determination of the appropriate capital structure for the two companiesLegal, tax and operational mechanics for separating the businessesDue diligence to confirm adequate provisions for CSR's asbestos and any other contingent liabilitiesFinalisation of board and management of two companiesDetermination of brand strategyProgress towards regulatory and statutory approvals.CSR shares rose 8.5 cents or 5.6% yesterday to & #36;1.605............................................................................. & #160;Sydney-based building products group, Alesco & #160;has warned shareholders to expect & #160;a 31% fall in full year profit and a loss after asset impairment charges are taken into account..In a statement to the ASX Thursday evening, Alesco (ALS) said full year EBITA before significant items & #160;is expected to be approximately & #36;85 million, & quot;representing a decrease of 31% from the previous year. & quot; & quot;Taking significant items into account, which include a & #36;70 million impairment charge, Alesco is expecting to report a post tax loss of approximately & #36;13 million, & quot; directors warned in the statement.They said the figures were preliminary and subject to finalisation by auditors and the board before the release of the full year report on July 28. Alesco balances on May 31.Alesco reported a 16% fall in operating profit for the six months to November and suspended dividend as it sought to renegotiate its debts with its banks.Directors repeated the decision, revealed in May, that they had decided to resume paying a dividend, which would be set at the board meeting later this month. & quot;This result includes eleven month's trading from the Scientific & #38; Medical division which was sold on 30 April 2009. Earnings per share before amortisation and significant items & #160;is expected to be approximately 48 cents per share, a decline of 43% compared to the prior year. & quot; & quot;In response to the challenging external environment there has been a substantial rationalisation of the Company's businesses during the year, resulting in approximately & #36;21 million (after tax) in restructuring and other costs being charged in the year ended 31 May 2009. & quot;These costs include costs associated with the closure of the Robinhood manufacturing plant in Auckland, the reduced scale of the B & #38;D manufacturing operations in Auckland, Marathon Tyres' exit from the Hankook wholesale tyre business and redundancies associated with a reduction in the group's overall workforce. & quot;The full year results will also include approximately & #36;60 million profit after tax resulting from the sale of the Scientific & #38; Medical division, including net foreign exchange effects. & quot;In addition, a post-tax charge of & #36;10 million has been incurred associated with the closure of interest rate swaps resulting from the reduced debt levels following the sale of this division. & quot;The Company is currently reviewing the carrying value of its intangible assets (which consists mostly of goodwill) and, subject to finalisation, expects to incur an impairment charge of & #36;70 million in the FY2009 financial results. & quot;This charge would relate in its entirety to the Water Products & #38; Services division with no impairment charges in relation to the other cash generating units within the group. & quot;Alesco has a strong balance sheet following the sale of the Scientific & #38; Medical division at 30 April 2009 and the cancellation of the interim dividend. & quot;As at 31 May 2009 the group had net debt of approximately & #36;160 million (down from & #36;333.9 million at the half-year) equating to gearing (on a net debt to net debt plus book equity basis) of 23%.Alesco has sound and cash generative businesses and the Board is confident that Alesco is well positioned in the current challenging environment. & quot;As previously announced to the market, it is the Board's intention to resume paying dividends. The quantum of the dividend will be determined at the July Board meeting when the full-year results are finalised, & quot; the company said. & #160; & #160;  

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