Wrap Text
Interims for 6 month period ended 30 September 2012
BSI STEEL LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2001/023164/06)
(JSE code: BSS ISIN: ZAE000125134)
("BSI" or "the company" or "the group")
SALIENT FEATURES
- Revenue up 28%
- EBITDA down 44%
- HEPS down 69%
- Positive cash flow movements of R45 million
- NTAV 67 cents per share
UNAUDITED CONDENSED FINANCIAL RESULTS FOR THE PERIOD ENDED 30 SEPTEMBER 2012
Condensed income statement
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 September 2012 30 September 2011 31 March 2012
R`000 R`000 R’000
Revenue 1 370 378 1 067 813 2 130 147
Gross profit 220 163 199 316 391 011
Other costs (174 196) (117 889) (266 560)
Earnings before interest,
taxation,
depreciation and amortisation 45 967 81 427 124 451
("EBITDA")
Depreciation and (9 219) (6 144) (13 319)
amortisation
Profit before interest and 36 748 75 283 111 132
taxation
(Loss)/Profit on disposal of assets (112) 57 -
Fair value adjustment - - (6)
Interest received 775 1 268 1 652
Interest paid (24 250) (16 067) (41 180)
Profit before taxation 13 161 60 541 71 598
Taxation 1 186 (13 386) (10 724)
Profit for the year 14 347 47 155 60 874
Profit attributable to ordinary
shareholders 14 491 46 980 60 646
Profit attributable to minority
shareholders (144) 175 228
14 347 47 155 60 874
Earnings per share (cents) 2.05 6.65 8.60
Reconciliation of headline
earnings:
Earnings attributable to ordinary
shareholders 14 491 46 980 60 646
(Profit)/Loss on disposal of 112 (57) 21
property, plant & equipment
Tax impact of adjustments (31) 16 (6)
Headline earnings attributable to
ordinary shareholders(basic and
diluted) 14 572 46 939 60 661
Weighted average shares in 706 668 706 668 706 668
issue on which earnings are
based (000) (1)
Headline earnings per share 2.06 6.64 8.60
(cents) (basic and diluted)
Dividend per share - 2.00 2.00
Note:
1) The weighted average number of shares in issue for 30 September 2012 is
based on the weighted number of shares held by the public during the period
under review
Condensed statement of comprehensive income
Unaudited Unaudited Audited
30 September 30 September 31 March
2012 2011 2012
R`000 R`000 R’000
Profit for the period 14 347 47 155 60 874
Other comprehensive income
Effects of cash flow hedges - 296 266
Foreign currency translation reserve 12 947 21 839 16 266
Total comprehensive income 27 294 69 290 77 406
Condensed statement of financial position
Unaudited Unaudited Audited
30 September 2012 30 September 2011 31 March 2012
R`000 R`000 R’000
ASSETS
Non-Current Assets
Property, plant and 350 437 266 161 286 945
equipment
Goodwill 14 706 13 956 14 706
Intangible assets 18 473 14 028 16 396
Deferred taxation 9 936 1 340 2 196
393 552 295 485 320 243
Current Assets
Inventories 349 606 333 478 429 693
Trade and other receivables 619 540 488 647 530 412
Current tax receivable 2 970 4 662 1 925
Other financial assets - 4 381 -
Cash and cash equivalents 93 464 64 731 51 798
1 065 580 895 899 1 013 828
Total assets 1 459 132 1 191 384 1 334 071
EQUITY AND LIABILITIES
Equity
Total shareholders` equity 511 449 473 799 483 650
Non-controlling interest 84 175 228
511 533 473 974 483 878
Liabilities
Non-Current Liabilities
Other financial liabilities 106 798 89 395 91 301
Deferred taxation 4 795 3 269 2 587
Provisions 6 829 - 6 828
118 422 92 664 100 716
Current Liabilities
Trade and other payables 358 254 338 714 293 063
Current tax payable 1 250 20 514 2 751
Other financial liabilities 47 007 22 942 27 617
Loans from shareholders 100 100 100
Bank overdraft 422 566 242 476 425 946
829 177 624 746 749 477
Total Liabilities 947 599 717 410 850 193
Total equity and liabilities 1 459 132 1 191 384 1 334 071
Number of shares in issue 706 668 706 668 706 668
(000) (1)
Net asset value per share 72.4 67.1 68.5
(cents)
Net tangible asset value per 67.7 63.1 64.1
share (cents)
Condensed statement of changes in equity
Unaudited Unaudited Audited
30 September 30 September 31 March
2012 2011 2012
R`000 R`000 R’000
Equity holders’ interest
Balance at beginning of year 483 650 417 769 417 769
Profit for the period 14 491 46 980 60 646
Foreign currency translation 12 947 21 839 16 266
reserve
Hedging instrument provision - 296 266
Share based payment provision 361 1 048 2 836
Dividend declared - (14 133) (14 133)
Balance at end of period 511 449 473 799 483 650
Non-controlling interest
Balance at beginning of period 228 - -
Profit for the period (144) 175 228
Balance at end of period 84 175 228
Total equity 511 533 473 974 483 878
Condensed cash flow statement
Unaudited Unaudited Audited
30 September 30 September 31 March
2012 2011 2012
R`000 R`000 R’000
Operating activity cash 111 948 35 577 (135 703)
flows
Cash flows from 139 730 52 045 (81 233)
operations
Interest and taxation (27 782) (16 468) (54 470)
Investing activity cash (64 067) (10 108) (42 075)
flows
Financing activity cash (2 216) (23 833) (17 909)
flows
Total cash movement for the 45 665 1 636 (195 687)
period
Cash at beginning of period (374 148) (178 606) (178 607)
Effect of exchange rate (619) (775) 146
movement on cash balances
Total cash at end of period (329 102) (177 745) (374 148)
Condensed segment report
Unaudited Unaudited Audited
30 September 30 September 31 March
2012 2011 2012
R`000 R`000 R’000
Gross revenue
Stockists 427 305 343 113 657 683
Bulk Sales 360 233 296 534 595 539
Exporting 508 640 422 475 857 638
Other 74 200 5 691 19 287
1 370 378 1 067 813 2 130 147
Profit before interest and
taxation
Stockists 6 113 17 687 30 355
Bulk Sales 15 369 17 504 31 731
Exporting 37 368 46 449 68 665
Other (22 214) (6 300) (19 625)
36 636 75 340 111 126
Assets
Stockists 226 021 151 930 272 601
Bulk Sales 178 126 197 413 200 648
Exporting 488 683 399 192 458 979
Other 602 491 464 810 423 942
Eliminations (36 189) (21 961) (22 099)
1 459 132 1 191 384 1 334 071
OVERVIEW
The interim financial results are presented for the six months ended 30 September
2012.
The group operates in the steel and associated industries with strategically
located operations in South Africa, the Democratic Republic of the Congo (“DRC”),
Ghana, Mauritius, Mozambique, Zimbabwe and Zambia to service the Sub Saharan
African markets. BSI markets through three distinct channels, being Stockists,
Bulk sales and Exports; all of these divisions are supported by our steel
processing operations.
The six months under review reflects the continued roll out of the group's growth
strategy within a depressed market.
FINANCIAL RESULTS
The directors are pleased with the growth performance of the group over the last
six months, especially as the 28% increase in revenue was achieved in a market
where domestic steel consumption contracted around 6%. The acquisitions of Brown
Macfarlane Africa Limited and the Klerksdorp branch of Alert Steel were
successfully integrated into the group, and together with the organic growth in all
businesses, helped achieve the growth recorded.
The planned expansion of the operating platform has increased the operating costs
ahead of the expected future growth in turnover. The depressed market conditions
have made the rollout of the distribution platform more challenging from a
financial performance point of view. This investment will deliver good returns in
the medium term but needed to be made aggressively to give critical mass to a more
measured roll-out going forward.
The increase in Trade Receivables comes as a result of both acquisitions and
organic growth. The group continues to utilize credit insurance to secure its
debtors book.
During the period, the group rationalized its stockholding to limit the risk of
price volatility and to improve its cash position. After accounting for the two
acquisitions, the group improved its cash flow position by R45 million. The group
continues to enjoy good relationships with its bankers.
PROSPECTS
BSI remains a growth company and its strategy has been to aggressively grow volumes
and expand its distribution network throughout South Africa and the rest of Africa.
This strategy has put the business under pressure in the context of a contracted
steel market, certainly within South Africa, where the Group’s volume growth
relative to a contracting market has been in excess of 30%. Our strategy will now
evolve to one of growing the top line at a more measured pace while focusing in the
short and medium term on using our improved market positioning to substantially
grow the bottom line.
The integration of the newly-acquired Brown MacFarlane into BSI Steel Plate
Solutions has had challenges but is now starting to make a solid bottom line
contribution and this division is expected to be an excellent performer for the
group into the future.
The mini-merchant expansion is now at six BSI Steel Express branches which are
performing in line with expectations, and the focus will be to secure their
positive overall contribution to the group before embarking on further expansion.
The strategy of expanding into Africa has moved to West Africa with an initial
investment in Accra, Ghana which is expected to start contributing to bottom line
into 2013.
DIVIDEND POLICY
At the half year, no dividend is declared or proposed.
SUBSEQUENT EVENTS
No material change has taken place in the affairs of the group between the end of
the financial period and the date of this report.
DIRECTORATE
There were no changes to the Board during the interim period.
STATEMENT ON GOING CONCERN
The financial statements have been prepared on the going-concern basis since the
directors have every reason to believe that the company has adequate resources in
place to continue in operation for the foreseeable future.
BASIS OF PREPARATION
The results have been prepared containing the information required by IAS 34
Interim Financial Reporting, AC 500 and are in accordance with the group’s
accounting policies, which comply with International Financial Reporting Standards,
the Companies Act, 2008 of South Africa and the JSE listing requirements. The
basis of preparation is consistent with that in the prior year.
The unaudited condensed consolidated financial statements were authorised for issue
by the directors on 8 November 2012 for publication on 8 November 2012. The
condensed consolidated financial statements for the six month period ended 30
September 2012 have been prepared by the Financial Director, Mr J R Waller.
By order of the Board
8 November 2012
G D G Mackenzie J R W Waller
CEO CFO
CORPORATE INFORMATION
Chairman : WL Battershill
Non-executive directors: I A J Clark, B M Khoza (Alternate - N M Anderson),
N G Payne; R G Lewis
Executive directors: G D G Mackenzie, J Govender, C Parry, W R Teichmann, J R
Waller,
Registered address: Murrayfield Park, Mkondeni,
Pietermaritzburg 3201
Postal address: P O Box 101096, Scottsville, 3209
Company secretary: S J Hackett
Telephone: (033) 846 2208
Facsimile: (033) 346 0870
Transfer secretaries: Computershare Investor Services (Pty) Limited
Designated Adviser: Sasfin Capital (A division of Sasfin Bank Limited)
Johannesburg
8 November 2012
Date: 08/11/2012 04:07:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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