SKS TECHNOLOGIES GROUP LIMITED — Interim / Quarterly Report 2014

Feb 24, 2014

25 February 2014

Announcements Officer ASX Market Announcements ASX Limited Exchange Centre 20 Bridge Street SYDNEY NSW 2000

Stokes Limited - Finance report for the half-year ended 31 December 2013

I attach the following documents in relation to the half year ended 31 December 2013:

Appendix 4D – Half Year Report; and Half Year Financial Report, including the Directors' Report, Financial Report and Independent Auditor's Review Report.

The attached documents comprise the half year results information required by ASX Listing Rule 4.2A. The information should be read in conjunction with the Stokes Limited 2013 Annual Report.

The attached information will be posted to Goodman Fielder's website once released to the market.

Yours sincerely

Hemant Amin Company Secretary

Appendix 4D - Half Year Report for six months ended 31 December 2013

Results for announcement to the market

Name of entity		STOKES LIMITED
ABN		24 004 554 929
1	Reporting Period
Half Year Ended		31 December 2013
Previous Corresponding Reporting Period		31 December 2012

2 Results for announcement to the market

Revenue from ordinary activities	up	16%	to	7,428,178
Profit from ordinary activities after tax attributable tomembers	up	101%	to	13,170
Net profit for the period attributable to members	up	101%	to	13,170

		Amount per Security	Franked amountper Security
	Interim Dividend - Current period	Nil	Nil
	- Previous corresponding period	Nil	Nil
Final Dividend	- Current period	Nil	Nil
	- Previous corresponding period	Nil	Nil

No interim dividend has been declared for the half-year ending 31 December 2013.

Commentary on Result

The financial performance of the company has improved significantly compared to the previous corresponding period with sales reaching $7,428,178 (2012: $ 6,400,595) a 16% increase and a reported profit of $13,170 (2012: loss of $2,341,249 inclusive of restructuring costs and inventory write down or loss of $645,541 excluding restructuring costs and inventory write down) the first profit the company has reported in three and a half years.

The company's appliance parts division has now consolidated. The industrial division has undergone a dramatic turnaround and has added significant profit contribution to the group and the recently acquired appliance service division is performing above internal budgets.

Refer to interim Financial Report for the Half-Year ended 31 December 2013 for more information.

This half yearly financial report is to be read in conjunction with the most recent annual financial report.

3 Net tangible assets per security

	Current Period	PreviousCorresponding Period
Net tangible asset backing per ordinary security	$0.08	$0.06

4. Details of entities over which control has been gained or lost during the period: (item 4)

Control gained over entities

Name of entities (item 4.1)	-Not Applicable -
Date(s) of gain of control(item 4.2)
Contribution to consolidated profit (loss) from ordinaryactivities after tax by the controlled entities since thedate(s) in the current period on which control wasacquired (item 4.3)		$
Profit (loss) from ordinary activities after tax of thecontrolled entities for the whole of the previouscorresponding period (item 4.3)		$

Loss of control of entities

Name of entities (item 4.1)	-Not Applicable -
Date(s) of loss of control (item4.2)
Contribution to consolidated profit (loss) from ordinaryactivities after tax by the controlled entities to thedate(s) in the current period when control was lost(item 4.3).		$
Profit (loss) from ordinary activities after tax of thecontrolled entities for the whole of the previouscorresponding period (item 4.3)		$

5. Dividends (item 5)

	Date of payment	Total amount of dividend
Interim dividendyear ended 30 June 2013Final dividendyear ended 30 June 2013		Nil
		Nil

Amount per security

		Amount persecurity	Frankedamount persecurity at% tax	Amount persecurity offoreignsourceddividend
Total dividend:	Current year	Nil	Nil	Nil
	Previous year	Nil	Nil	Nil

Total dividend on all securities

Current period $A'000	PreviouscorrespondingPeriod - $A'000

Ordinary securities (each class separately) Nil Nil

plan

6. Details of dividend or distribution reinvestment plans in operation are described below (item 6):

-Not Applicable -
The last date(s) for receipt of election notices forparticipation in the dividend or distribution reinvestment

7. Details of associates and joint venture entities (item 7)

Name of associate or joint venture entity	%Securities held
- Not Applicable -

Aggregate share of profits (losses) of associates and joint venture entities

Group'sshareofassociates'andjointventure entities':	2013$	2012$
Profit (loss) from ordinary activities before tax
Income tax on ordinary activities
Net profit (loss) from ordinary activities aftertax
Adjustments
Share of net profit (loss) of associates andjoint venture entities

• 8. The financial information provided in the Appendix 4D is based on the half year condensed financial report (attached).
• 9. Independent review of the financial report (item 9)

The financial report has been independently reviewed. The financial report is not subject to a qualified independent review statement.

STOKES LIMITED and Controlled Entities

ABN 24 004 554 929

Interim Financial Report for the half-year ended 31 December 2013

The half-year financial report is to be read in conjunction with the Financial report for the year ended 30 June 2013

TABLE OF CONTENTS

Directors' Report	2
Auditor's Independence Declaration	3
Condensed Consolidated Statement of Comprehensive Income	5
Condensed Consolidated Statement of Financial Position	6
Condensed Consolidated Statement of Changes in Equity	7
Condensed Consolidated Statement of Cash Flows	8
Notes to the Financial Statements	9
Directors' Declaration	13
Independent Auditor's Review Report	14

Directors' Report

The directors present their report together with the condensed financial report of the consolidated entity consisting of Stokes Limited and the entities it controlled, for the half-year ended 31 December 2013 and independent review report thereon. This financial report has been prepared in accordance with Australian Accounting Standards.

Directors

The names of the company's directors in office during the half-year and until the date of this report are set out below. Each of the directors was in office for this entire period, unless otherwise stated.

Con Scrinis, Managing Director Greg Jinks, Executive Director Peter Jinks, Chairman

REVIEW AND RESULTS OF OPERATIONS

The Directors of Stokes Limited take great pleasure in reporting to you the substantial work and progress that has been made in the past six months to restructure and rebuild this great company.

A number of major milestones have been achieved and the company can now advise that it has completed the restructuring program on time and on budget and expects the full benefits to flow through in the 2014 calendar year.

The company has also continued to reduce costs with further redundancies and cost reductions that have had the effect of reducing fixed costs by 30%. We have also upgraded the company's enterprise resource planning systems, launched a new e-commerce website, and consolidated warehousing facilities as well as installing an experienced and motivated senior management team.

The financial performance of the company has improved significantly compared to the previous corresponding period with sales reaching $7,428,178 (2012: $6,428,178) a 16% increase and a reported profit of $13,170 (2012: loss of $2,341,249 inclusive of restructuring costs and inventory write down or loss of $645,541 excluding restructuring costs and inventory write down) the first profit the company has reported in three and a half years.

The company's appliance parts division has now consolidated. The industrial division has undergone a dramatic turnaround and has added significant profit contribution to the group and the recently acquired appliance service division is performing above internal budgets.

The company has also added a new technologies division with the introduction of LED lighting and an audiovisual products range. These two new product lines have started generating sales revenue with recent contract wins and we expect to continue to see the results of this work in the year ahead.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

Over the past six months we have completed the acquisitions of assets of two businesses (predominantly inventory) in the appliance parts and service division, which has resulted in the much-needed consolidation of the industry.

The company successfully raised $2,012,500 (2012: 2,340,128) via a placement to sophisticated investors in November 2013 and these funds have been deployed to complete the restructuring program and reduce debt.

Directors' Report (Cont'd)

AUDITOR'S INDEPENDENCE DECLARATION

A copy of the auditor's independence declaration as required under section 307C of the Corporation Act 2001 in relation to the review for the half-year is provided with this report on page 3.

Signed in accordance with a resolution of the directors.

Con Scrinis Director

Melbourne Date: 25 February 2014

Condensed Consolidated Statement of Comprehensive Income for the half-year ended 31 December 2013

		Half- year
	Notes	December2013	December2012
Revenue	2	7,428,178	6,400,594
Other income	2	73,773	157,558
Expenses
Cost of sales		(4,862,133)	(5,081,719)
Selling expense		(1,183,548)	(2,159,604)
Occupancy expense		(315,854)	(318,128)
Administration expense		(1,030,801)	(1,237,877)
Depreciation and amortisation		(29,450)	(34,603)
Borrowing costs		(66,995)	(67,470)
Total expenses		(7,488,781)	(8,899,401)
Profit/(loss) before income tax expense		13,170	(2,341,249)
Income tax expense		-	-
Profit/(loss) from continuing operations		13,170	(2,341,249)
Other comprehensive income for half-year		-	-
Total comprehensive income for half-year		13,170	(2,341,249)
Total comprehensive income attributable to members		13,170	(2,341,249)
Non-Controlling Interests		-	-
Total comprehensive income for half-year		13,170	(2,341,249)
Earnings per share for profit from continuing operationsattributable to equity holders of the parent entity:
Basic earnings per share (cents per share)		0.05	(10.0)
Diluted earnings per share (cents per share)		0.05	(10.0)
Earnings per share for profit attributable to the equityholders of the parent entity:
Basic earnings per share (cents per share)		0.05	(10.0)
Diluted earnings per share (cents per share)		0.05	(10.0)

Condensed Consolidated Statement of Financial Position as at 31 December 2013

	Notes	December2013	June2013
Current assets
Cash and cash equivalents		643,740	732,663
Trade and other Receivables		1,962,027	1,789,562
Inventories		2,385,646	1,792,222
Other		29,936	61,037
Total current assets		5,021,349	4,375,484
Non-current assets
Plant and equipment		378,666	231,664
Goodwill		199,486	199,486
Total Non-current assets		578,152	431,150
Total assets		5,599,501	4,806,634
Current liabilities
Trade and other Payables		1,584,618	1,520,352
Borrowings		770,500	1,261,984
Provision for restructuring		-	575,105
Provisions - Employee Entitlement		638,073	721,556
Total current liabilities		2,993,191	4,078,997
Non-current liabilities
Provisions - Employee Entitlement		70,975	110,805
Total non-current liabilities		70,975	110,805
Total Liabilities		3,064,166	4,189,802
Net assets		2,535,335	616,832
Equity
Contributed capital		10,426,352	8,521,019
Accumulated losses		(7,891,017)	(7,904,187)
Total equity		2,535,335	616,832

Condensed Consolidated Statement of Changes in Equity

Consolidated	Contributedequity	Accumulatedlosses	Totalequity
At 1 July 2012	6,321,134	(4,679,217)	1,641,917
Profit attributable to members of the Parent Entity	-	(2,341,249)	(2,341,249)
Capital raising costs for the share issue	(146,334)	-	(146,334)
Share issue during the period	2,340,128		2,340,128
At 31 December 2012	8,514,928	(7,020,466)	1,494,462

Half-year ended 31 December 2012

Half-year ended 31 December 2013

Consolidated	Contributedequity	Accumulatedlosses	Totalequity
At 1 July 2013	8,521,019	(7,904,187)	616,832
Profit attributable to members of the Parent Entity	-	13,170	13,170
Share issue during the period	2,012,500		2,012,500
Capital raising costs for the share issue	(107,167)	-	(107,167)
At 31 December 2013	10,426,352	(7,891,017)	2,535,335

Condensed Consolidated Statement of Cash Flows for the half-year ended 31 December 2013

		Half-year
	Notes	December2013	December2012
Cash flows from operating activities
Receipts from customers		8,060,993	7,574,456
Payments to suppliers and employees		(9,321,629)	(7,517,768)
Interest received		1,311	1,763
Interest paid		(66,995)	(67,470)
Net cash flows used in operating activities		(1,326,320)	(9,019)
Cash flows from investing activities
Payment for plant and equipment		(176,452)	(9,947)
Payment for Grimwood		-	(302,594)
Net cash flows used in investing activities		(176,452)	(312,541)
Cash flows from financing activities
Proceeds from share issue net of capital raising costs		1,905,333	2,193,794
Repayment of borrowings		(491,484)	(346,428)
Net cash provided by financing activities		1,413,849	1,796,700
Net increase/(decrease) in cash and cash equivalents		(88,923)	1,525,806
Cash and cash equivalents at beginning of year		732,663	116,322
Cash and cash equivalents at end of the year		643,740	1,642,128

Notes to the Half-Year Financial Statements

1. BASIS OF PREPARATION OF THE HALF-YEAR FINANCIAL REPORT

The half-year financial report does not include all notes of the type normally included within the annual financial statements and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial statements.

The half-year financial report should be read in conjunction with the annual financial statements of Stokes Limited for the year ended 30 June 2013.

It is also recommended that the half-year financial report be considered together with any public announcements made by Stokes Limited and its controlled entities during the half-year ended 31 December 2013 in accordance with the continuous disclosure obligations arising under the Corporations Act 2001.

Stokes Limited is a for-profit entity for the purpose of preparing the financial statements.

The half-year financial report was authorised for issue by the directors on 21 February 2014.

(a) Basis of accounting

This half-year financial report has been prepared in accordance with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001.

The half-year financial report has been prepared in accordance with the historical cost convention.

(b) Statement of significant accounting policies

The half year consolidated financial report has been prepared using the same accounting policies as used in the annual financial statements for the year ended 30 June 2013.

(c) Basis of consolidation

The group has applied AASB 10 retrospectively in accordance with the transition provisions. The group has determined that AASB 10 has no impact on the composition of the consolidated group. Therefore, no adjustments to any of the carrying amounts are required.

(d) Financial Risk Management

The consolidated entity's financial risk management objectives and policies are consistent with that disclosed in the consolidated financial statements for the year ended 30 June 2013.

Notes to the Half-Year Financial Statements

2. MATERIAL ITEMS OF INCOME AND EXPENSE

Profit / (loss) before income tax expense includes the following income items whose disclosure is relevant in explaining the financial performance of the entity:

	Consolidated
	December2013	December2012
Revenue
Revenue from services or sale of goods	7,428,178	6,400,594
Other income
Interest income	1,311	1,763
Damage - Litigation case	-	150,000
Other	72,462	5,795
	73,773	157,558

3. CONTINGENT ASSETS AND LIABILITIES

Since the last annual reporting date, there has been no material change in any contingent assets and liabilities.

4. ACQUISITION OF BUSINESS ASSETS

On 20 September 2013, the parent entity acquired the business assets (predominantly inventory) of ANZ Appliance Parts and Janda Electric Co, two Melbourne-based appliance parts and service businesses for a combined value of $50,000.

5. OPERATING SEGMENTS

Identification of reportable segments

The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors in assessing performance and determining the allocation of resources.

The Group is managed on the basis of products category and service offerings. Operating segments are therefore determined on the same basis

Reportable segments disclosed are based on aggregating operating segments where the segments are considered to have similar economic characteristics.

Types of services by segments are manufacturing and merchandise and distribution (appliance parts).

Assets and liabilities of the entity are used across all of the above operating segments and are not identified and allocated to each operating segment.

Notes to the Half-Year Financial Statements (Continued)

5. OPERATING SEGMENTS (Cont'd)

(a) SEGMENTS PERFORMANCE

December 2013	Manufacturing	Merchandisingand distribution	All othersegments	Total
Revenue
External sales	1,462,688	5,964,897	593	7,428,178
Other income	5,812	8,125	59,836	73,773
Total group revenue	1,468,500	5,973,022	60,429	7,501,951
Segment net profit before tax	470,068	492,692	(949,590)	13,170
Net profit before tax fromcontinuing operations	470,068	492,692	(949,590)	13,170

December 2012	Manufacturing	Merchandisingand distribution	All othersegments	Total
Revenue
External sales	1,503,402	4,897,192	-	6,400,594
Other income	-	1,763	155,795	157,558
Total group revenue	1,503,402	4,898,955	155,795	6,558,152
Segment net profit before taxAmounts not included in segmentresult but reviewed by Board	(736,852)-	91,311-	-(1,695,708)	(645,541)(1,695,708)
Net profit before tax fromcontinuing operations	(736,852)	91,311	(1,695,708)	(2,341,249)

6. DIVIDENDS PAID OR PROVIDED FOR ON ORDINARY SHARES

There were no dividends proposed or recognised during the half-year ended 31 December 2013.

7. CONTRIBUTED CAPITAL

	December2013	June2013
23,401,281 ordinary shares (June 2013: 23,401,281)	8,521,019	8,521,019
Placement of 5,750,000 ordinary shares	2,012,500	-
Cost of capital raising	(107,167)	-
29,151,281 ordinary shares (June 2013: 23,401,281)	10,426,352	8,521,019

Notes to the Half-Year Financial Statements (Continued)

8. SUBSEQUENT EVENTS

There were no matters or circumstances specific to Stokes Limited that have arisen since 31 December 2013 that have significantly affected or may significantly affect

• the Group's operation in future financial years or
• the results of those operation in future financial years or
• the Group's state of affairs in future financial years.

Directors' Declaration

The directors declare that the financial statements and notes set out on pages 5 to 12 in accordance with the Corporations Act 2001:

• (a) Comply with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001, and other mandatory professional reporting requirements; and
• (b) Give a true and fair view of the financial position of the consolidated entity as at 31 December 2013 and of its performance for the half-year ended on that date

In the directors' opinion there are reasonable grounds to believe that Stokes Limited will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of directors.

Con Scrinis Director

Date: 25 February 2014