Accéntuate Limited HY 2012 results

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Information about Accéntuate Limited HY 2012 results
Investor Relations

Published on March 20, 2014

Author: AfricanisCool

Source: slideshare.net

Description

Accéntuate Limited HY 2012 results

REVIEWED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2011 Accéntuate Limited (Incorporated in the Republic of South Africa) (Registration Number: 2004/029691/06) Share Code: ACE | ISIN Code: ZAE000115986 (“Accéntuate” or “the group” or “the company”) HIGHLIGHTS: • HEPS increase by 99% to 6.86 cents per share • Revenue up 12.21% • Successful disposal of Centurion Glass and Aluminium CONSOLIDATED ABRIDGED STATEMENT OF COMPREHENSIVE INCOME Revenue Cost of sales Gross profit Other income Other operating expenses Earnings before interest, tax, deprecia- tion and amortisation Depreciation and amortisation Goodwill impairment Profit /(loss) before interest and taxation Interest received Finance costs Profit / (loss) before interest and tax Income taxation expense Profit / (loss) for the period from continuing operations (Loss) for the period from discontinuing operations Profit Loss for the period Other comprehensive income for the period net of taxation Total comprehensive income / (loss) for the period Attributable to Equity holders of the parent Reconciliation of headline earnings Net profit / (loss) for the period Adjusted for (profit) / loss on disposal of property plant and equipment Impairment of goodwill Loss on disposal group sold Tax effect of adjustments Headline earnings / (loss) attributable to the equity holders of the parent Weighted average number of shares in issue Earnings / (loss) per share from continu- ing operations (cents) Earnings / (loss) per share from combined operations (cents) Diluted earnings / (loss) per share (cents) Headline earnings / (loss) per share (cents) Diluted headline earnings / (loss) per share (cents) 143 341 (66 373) 76 968 636 (64 513) 13 091 (3 198) - 9 893 125 (909) 9 109 (1 921) 7 188 (1 935) 5 253 - 5 253 5 253 5 253 5 253 - - 2 247 (315) 7 185 104 809 755 6.86 5.01 5.01 6.86 6.86 249 390 (113 556) 135 834 415 (114 351) 21 898 (6 435) (70 836) (55 373) - (2 942) (58 315) (3 738) (62 053) (12 554) (74 607) 417 (74 190) (74 190) (74 190) (74 607) 111 70 836 - - (3 660) 104 231 138 (59.53) (71.58) (71.58) (3.72) (3.72) 127 744 (61 349) 66 395 139 (55 189) 11 345 (3 203) (33 866) (25 724) 4 (1 642) (27 362) (964) (28 326) (2 003) (30 329) - (30 329) (30 329) (30 329) (30 329) (20) 33 866 - - 3 517 101 854 248 (27.81) (29.78) (29.78) 3.45 3.45 COMMENTARY INTRODUCTION Accéntuateisagroupof world-classcompaniesservingtheconstructionandinfrastructuredevelopmentmarketsinSouthAfricaandessentiallyoperatesintwosegments:anInfrastructureSuppliesDivisioncomprising of flooringandanEnvironmentalSolutionsDivisionwhichhousesSafic,aspecialistchemicalblendingbusiness.Thecompanyisamarketleaderinthesupplyof productsandservicestoboththepublicandprivatesectorsin mostfloorcoveringmaterialswithmajorityoftherevenuecontributioncomingfromthissegment.Thechemicalblendingbusinessispositioningitselftobecomeasignificantsupplierinthepublicandprivatesectors,through thesupplyof chemicalcleaningandrelatedproducts.Saficisalsoamanufacturerof screedingandproductssuppliedtotheflooringbusinessandinthiswaythetwosegmentsof Accéntuateextractintra-groupsynergies. CONSOLIDATED ABRIDGED STATEMENT OF FINANCIAL POSITION Audited 12 months ended 30 June 2011 R ‘000 Assets Non-current assets Property plant and equipment Goodwill Intangible assets Other financial assets Deferred taxation Current assets Inventories Other financial assets Current tax receivables Trade and other receivables Cash and Bank Assets of disposal group Total assets Equity and liabilities Equity Equity Attributable to Equity Holders of Parent Capital and reserves Share capital Reserves Accumulated (loss) / earnings Non-current liabilities Other financial liabilities Finance lease obligations Deferred taxation Current liabilities Other financial liabilities Finance lease obligations Trade and other payables Operating lease liability Current tax payable Cash and Bank Liabilities of disposal group Total equity and liabilities Number of shares in issue Net asset value per share (cents) Tangible net asset value per share (cents) 89 022 46 487 34 928 729 3 938 2 940 109 069 41 788 6 186 4 092 41 732 15 271 - 198 091 125 384 23 924 (27 175) 122 133 5 700 - 5 247 10 947 5 797 160 30 380 973 2 472 25 229 65 011 - 198 091 111 108 109 110 78 Reviewed 6 months ended 31 December 2011 R ‘000 87 385 48 348 34 928 1 169 - 2 940 95 022 41 360 368 2 647 34 918 15 729 16 281 198 688 125 555 23 924 (32 428) 117 051 8 550 - 5 247 13 797 6 007 269 31 999 794 551 21 496 61 116 6 724 198 688 111 108 109 105 73 Reviewed 6 months ended 31 December 2010 R ‘000 103 025 35 311 62 424 1 778 - 3 512 107 490 42 230 368 3 115 61 324 453 - 210 515 125 713 10 557 11 433 147 703 11 498 432 2 915 14 845 6 006 292 34 488 427 1 268 5 486 47 967 - 210 515 111 108 109 133 75 Audited 12 months ended 30 June 2011 R ‘000 Reviewed 6 months ended 31 December 2011 R ‘000 Reviewed 6 months ended 31 December 2010 R ‘000 CONSOLIDATED ABRIDGED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2011

CONSOLIDATED ABRIDGED STATEMENT OF CASH FLOWS Cash flows from operating activities Cash generated from operations Interest received Taxation paid Finance costs Cash flows from investing activities Proceeds on sale of property plant and equipment Acquisition of property plant and equipment Acquisition of intangible assets Proceeds on sale of investments Increase in financial assets Cash flow from discontinued operations Cash flows from financing activities (Decrease) in financial liabilities (Decrease) in finance lease liabilities Dividends paid Net decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period 2 351 4 164 422 (1 326) (909) (3 374) 4 (878) (42) 20 (975) (1 503) (3 169) (3 060) (109) - (4 192) (5 766) (9 958) 5 459 7 469 4 (323) (1 691) (671) 563 (1 220) (14) - - - (5 235) (3 020) (13) (2 202) (447) (4 586) (5 033) Reviewed 6 months ended 31 December 2011 R’000 Reviewed 6 months ended 31 December 2010 R’000 Audited 12 months ended 30 June 2011 R’000 9 881 15 667 163 (3 000) (2 949) (2 623) 384 (2 834) (173) - - - (8 438) (6 002) (228) (2 208) (1 180) (4 586) (5 766) CONSOLIDATED ABIRDGED STATEMENT OF CHANGES OF EQUITY Attributable to equity holders of the parent Share Capital R ‘000 Balance at 1 July 2010 Total comprehensive loss for the period Revaluation of property, plant and equipment Share options exercised Dividends Balance at 30 June 2011 Total comprehensive income for the period Purchase of own / treasury shares Balance at 31 December 2011 1 - - - - 1 - - 1 Share Premium R ‘000 124 915 - - 639 - 125 554 - (171) 125 383 Reserves for own shares R ‘000 139 - - - - 139 - - 139 Revaluation Reserve R ‘000 10 418 (354) 13 721 - - 23 785 - - 23 785 Retained Earnings / (loss) R ‘000 43 984 (74 190) - - (2 222) (32 428) 5 253 - (27 175) Total R ‘000 179 457 (74 544) 13 721 639 (2 222) 117 051 5 253 (171) 122 133 HIGHLIGHTS The period under review has seen a dramatic turnaround within Accéntuate resulting in an increase in HEPS from 3.45 cents per share to 6.86 cents per share in December 2011. This as a result of effective strategic interventions coupled with increased activity within the market niche within which Accéntuate operates. The reporting period also saw the following: • The effective disposal of CGA Fenestrations (Pty) Ltd and minimising further losses associated with this division; • A return to the core competencies that brought Accéntuate to the market; • Earnings per share increase to 5.01 cents from a loss of 29.78c for the corresponding period; • An exceptional performance by FloorworX; • General increase in activity within the sectors within which Accéntuate operates; and • Increased market share within the resilient flooring market while maintaining and even increasing margins. THE OPERATING ENVIRONMENT The interim reporting period ending 31 December 2011 are presented within the context of a macro-eco- nomic environment that has yet to show any significant activity within the industry. As mentioned in the results commentary for the year ended 30 June 2011, the construction and construction supply industries have seen a dramatic deterioration in demand in the post “world cup” period. Once again there has been no meaningful pick up in private project driven construction activity during the period under review. Gen- erally the view from a macro-economic perspective remains largely negative. In addition to the relative weakness of private construction spend, South Africa still experiences a situation where national depart- ments and provincial and local governments continue to hand back unspent capital budgets to Treasury. The multilevel government commission was unveiled last year in an effort to deal with what the State recognises as the current lack of coordination and integrated planning surrounding key infrastructure projects, as well as poor or delayed project execution. There is much current debate around the state of government infrastructure spend and although government has indicated that infrastructural funding is available, the lack of capacity, at especially provincial and local government levels is still to a large degree, impeding the delivery thereof. In the public and private sectors, access to finance in the current economic climate remains a serious constraint. From the above, it is evident that Accéntuate is still operating within a largely depressed macro-economic environment. The company has experienced a significant increase in demand in a number of areas of government infrastructure spend, particularly classrooms for the Education Department as well as hos- pitals, clinics and residences for the Department of Health. In addition to this, a significant increase in refurbishment activity across a number of sectors of the market is coming through. Management is proud to announce a very acceptable set of financial results under what can only be termedtobeverydifficultmarketandoperatingconditions.Inreturningtoitscorecompetencies,Accéntu- ate has experienced a turnaround strategy delivering on its promises and management remain confident that the company will be in a position to provide sustainable organic and sound acquisitory growth over the short and medium term in order to deliver on the promises made to the market upon listing in 2006. Disposal of CGA As indicated in our results announcement for the year ending June 2011, Management embarked on a process of disposing of CGA Fenestrations (Pty) Ltd. The reason for this disposal was that CGA had not delivered on either of the strategic imperatives that motivated the original acquisition and in addition to this; the business required a disproportionate amount of management time and resources. At this time a commitment was made that the disposal of this business would be concluded without delay and that wherever possible no additional losses relating to the disposal of this company are anticipated. The disposal of CGA was concluded and announcements in this regard were published on SENS. The effective date of the transaction is 1 September 2011 and the financial results presented include the trading results of CGA Fenestrations (Pty) Ltd up and until the 31 August 2011. Management would like to take this opportunity of thanking Wesley Delport, Managing Director of CGA for his hard work and loyalty to Accéntuate and wish him and his team all the best for the future. Operational review The strategic interventions implemented at a divisional level of Accéntuate are starting to deliver the anticipated results with an exceptional performance from FloorworX within a generally depressed market and encouraging progress within the Safic stable towards the achievement of the strategy embarked on during the past three years. In line with the original strategic direction of the organization, management has aligned its efforts in order to leverage off the dominant position that FloorworX has within the resilient flooring market and to expand both its product offering and its footprint in the Southern African market. The period under review has thus been one of repositioning and refocusing the organisation along the original vision that brought Accéntuate to the market in 2006. Management is confident that with the disposal of CGA and a focus on the identified core competencies, Accéntuate can now put the difficulties experienced behind us and focus on what is an exciting purpose and direction for Accéntuate. The extraction of value creating synergies between FloorworX and Safic continue to progress and inter- company trade is becoming increasingly significant. The vinyl adhesive manufactured by Safic and distrib- uted by FloorworX continues to grow as is the range of cementatious screeds. Much emphasis continues to be placed on exploring and extracting these synergies and expansion of this collaboration is envisaged into the future. The volatility in the local currency has impacted negatively on the ability to plan effectively with large swings in the Rand against the major global currencies having been experienced. This has also had the effect of fluctuating commodity input prices in both the flooring and chemical business units. The weaker Rand during the period under review has however had some positive impact on export sales into the African continent as many of the products sold into these markets are essentially US Dollar denominated commodities. Generally operational efficiency has increased significantly and this coupled with slightly better margins within the flooring sector, contributed to a significantly better set of financial results for the group as a whole. FINANCIAL RESULTS Management is pleased with the rise in revenue by 12% to R143 million (2010: R128 million), driven primarily by increased project work in both segments and a slight increase in annuity income for Safic. The six months ended 31 December 2011 saw Accéntuate return to profitability with net profit for the period increasing to R5 million from a loss of R30 million in the comparable period. This shift is largely due to the curtailment of losses from CGA since the sale of the business. The result is an increase in headline earnings per share from 3.45 cents per share to 6.86 cents per share. The trading results relating to CGA Fenestrations for the two months ended 31 August 2011 equates to a net trading loss of R1.9 million. Once again the Infrastructure Suppliers Divisions contributed strongly to overall revenue of the Group,

with FloorworX contributing 74% to total revenue. This is almost 10% higher than the comparable period. Net margins for FloorworX are up from 5% to 8% of revenue. Within this segment a small contribution from CGA is still recognised for two months, amounting to R6 million. This revenue will not occur into the future due to the conclusion of the sale of CGA on 1 September 2011. The remaining 25% of revenue was brought in by Safic and amounts to R36 million up from R29 million in the previous period. The rise in revenue is attributable to increased annuity income and project work. The profitability has increased by 18% against the comparable period. The directors are not aware of any matter or circumstance occurring between the balance sheet date and the date of this report that materially affects the results of the group for the period ended 31 December 2011 or the financial position at that date. Accéntuate management find it prudent, at this stage, not to declare an interim dividend. Cash flow re- mains constrained due to working capital requirements by FloorworX to support increased activity, and the inability to grant inter-related entities financial assistance as the special resolution was voted down by shareholders at the annual general meeting. PROSPECTS Although it is anticipated that the macro-environment within which Accéntuate operates will remain chal- lenging in the second half of the financial year, management is confident that the dominant position it holds within the niche in which it operates will offer the necessary protection in order to ensure that Ac- céntuate continues to deliver an acceptable set of results for the full year through to June 2012. The focus of the business going forward remains expanding both our product range into a well-estab- lished customer base as well as expanding the geographical distribution footprint. This will be achieved through collaboration with leading global players within the floor coverings market. Other focus areas include the maintenance of margins through effective pricing, cost control and productivity initiatives as well as minimizing the effect of currency fluctuations, the rise in commodity prices and rampant energy escalations. The outlook for the flooring division remains generally positive and management is confident that the mo- mentum currently being seen will continue through the next half and well into the 2012/13 financial year. Safic will continue its focus on building strong annuity income streams in the institutional markets and through extraction between group companies and the Thebe invested companies. Expansion within the construction chemical sector is also envisaged. Africa remains a major potential market for the products and services offered by Accéntuate and focused attention will be paid to expanding our distribution presence on the continent. SEGMENT REPORT December 2011 Revenue External sales Intersegment sales Total Segment Revenue Results Segment result before depreciation, amortisation Depreciation and amortisation Segment operating result Discontinued operations Income taxation expense Profit from ordinary activities Other information Capital expenditure Statement of Financial Positiont Assets Segment assets excluding goodwill Goodwill Consolidated total assets Liabilities Segment liabilities Consolidated total liabilities Reviewed 31 Dec 2011 R ‘000 Flooring Reviewed 31 Dec 2011 R’000 Reviewed 31 Dec 2011 R’000 Environmental Solutions Reviewed 31 Dec 2011 R’000 Corporate and eliminations Reviewed 31 Dec 2011 R’000 Total Infrastructure Supplies Division Environmental Solutions Division 105 603 - 105 603 10 385 (1 889) 8 496 - - 463 129 239 4 499 133 738 31 750 31 750 6 286 - 6 286 (1 935) - (1 935) - - - - - - - 32 689 3 392 36 081 1 907 (691) 1 216 - - 379 24 724 - 24 724 16 925 16 925 (1 237) (3 392) (4 629) 1 950 (618) 1 332 - - 78 9 202 30 427 39 629 27 283 27 283 143 341 - 143 341 12 307 (3 198) 9 109 (1 935) (1 921) 5 253 920 163 165 34 926 198 091 75 958 75 958 Glass and Aluminium - Discontinued SEGMENT REPORT December 2010 Revenue External sales Intersegment sales Total Segment Revenue Results Segment result before depreciation, amortisation Depreciation and amortisation Segment operating result Discontinued operations Income taxation expense (Loss) from ordinary activities Other information Capital expenditure Statement of Financial Position Assets Segment assets excluding goodwill Goodwill Consolidated total assets Liabilities Segment liabilities Consolidated total liabilities Reviewed 31 Dec 2010 R ‘000 Flooring Reviewed 31 Dec 2010 R’000 Glass and Aluminium - Discontinued Reviewed 31 Dec 2010 R’000 Environmental Solutions Reviewed 31 Dec 2010 R’000 Corporate and eliminations Reviewed 31 Dec 2010 R’000 Total Infrastructure Supplies Division Environmental Solutions Division 96 180 - 96 180 6 413 (1 626) 4 787 - - 512 97 328 4 499 101 827 27 633 27 633 20 785 - 20 785 (1 244) (404) (1 648) - - 446 37 162 - 37 162 19 429 19 429 26 530 3 236 29 766 1 766 (737) 1 029 - - 127 24 007 - 24 007 16 905 16 905 (15 751) (3 236) (18 987) (31 094) (436) (31 530) - - 135 (10 406) 57 925 47 519 (1 155) (1 155) 127 744 - 127 744 (24 159) (3 203) (27 362) (2 003) (964) (30 329) 1 220 148 091 62 424 210 515 62 812 62 812

Government infrastructure has started to impact positively on the results and activity within Accéntuate and even limited spend in the areas of education and healthcare has a significant impact on the perform- ance of FloorworX and Accéntuate. Positive government spending within the areas of healthcare and education will have a material impact on the profitability of FloorworX. Accéntuate’s growth strategy includes both targeted organic growth within predetermined market segments as well as targeted acquisitions that meet our stringent criteria for growth that is earnings enhancing. LITIGATION STATEMENT As announced in the final results for the year ended June 2011, Accéntuate instituted legal proceedings against vendors of the CGA business for the breach of warranties. During recent dealings with the alleged misconduct, which is the basis of our warranty claim, we discovered evidence of certain subversive activity which we have interpreted to be a means of preventing our legal claims and actions being processed. Shareholders will be informed as the proceeding unfolds. BASIS OF PREPARATION The reviewed abridged consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”), and in terms of IAS 34 – Interim Financial Reporting, the AC 500 standards as issued by the Accounting Practice Board and in compliance with the Listings Requirements of the JSE Limited and the South African Companies Act 71 of 2008. The accounting policies and method of measurement and recognition applied in preparation of these reviewed condensed consolidated interim financial statements are consistent with those applied in the audited annual financial state- ments for the period ended 30 June 2011. The reviewed condensed consolidated interim financial statements have been prepared by the Financial Director, AJ Voogt CA(SA). REVIEW OPINION The reviewed abridged consolidated financial statements for the six months ended 31 December 2011 have been reviewed by Accéntuate’s auditors PKF Gauteng Inc. The review was conducted in accordance with ISRE 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”. Their review report is available for inspection at the company’s registered office. CHANGES TO THE BOARD Mr A Voogt has resigned as Financial Director from 24 January 2012. The Board, through the appropriate sub committees, has already begun a review process for new candidates and Mr Voogt has also committed himself to ensuring a smooth transition and handover once his successor has been appointed. The Board wishes to thank Mr Voogt for his leadership and significant contribution he has made, and wishes him every success with his career. APPRECIATION I would like to take this opportunity to thank the Executive team for their absolute dedication, loyalty and hard work displayed during what can only be described as an extremely challenging year. The support received from the Chairman and the Non-executive Directors enabled us to concentrate on the vision that we hold for this great organization notwithstanding the fact that we have been unable to remunerate them. We would also like to take this opportunity to thank our customers and suppliers without whom we will not exist. The faith that our shareholders have shown in us and the loyalty and support of our employees have ultimately ensured that we can address the necessary issues in order to position Accéntuate for growth within the years ahead. By order of the Board 23 February 2012 FC Platt Chief Executive Officer AJ Voogt Financial Director CORPORATE INFORMATION Non executive directors: Executive directors: Registration number: Registered address: Postal address: Company secretary: Telephone: Facsimile: Transfer secretaries: Designated Adviser: M D C Motlatla R Patmore L Gadd D Molefe (Alternate) E Ratshikhopha F C Platt A J Voogt Dr. D E Platt 2004/029691/06 32 Steele Street Steeledale 2197 P.O. Box 1754 Alberton 1450 P S Dayah (011) 406 4100 (011) 688 5210 Computershare Investor Services (Pty) Limited Bridge Capital Advisors (Pty) Ltd

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