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AET - Alert Steel Holdings Limited - Trading Statement for the year ended 30

Release Date: 08/09/2011 12:15
Code(s): AET
Wrap Text

AET - Alert Steel Holdings Limited - Trading Statement for the year ended 30 June 2011 and CEO`s newsletter ALERT STEEL HOLDINGS LIMITED (Incorporated in the Republic of South Africa) (Registration number 2003/005144/06) JSE code: AET ISIN: ZAE000092847 ("Alert", "group" or "the company") TRADING STATEMENT FOR THE YEAR ENDED 30 JUNE 2011 AND CEO`S NEWSLETTER This is the first in what is intended to be a regular series of newsletters designed to keep our shareholders and others with an interest in the company informed about developments at Alert Steel in the intervals between our results reports. I hope you find it useful. Trading statement for the year ended 30 June 2011 In accordance with paragraph 3.4(b) of the JSE Limited Listings Requirements, companies are required to publish a trading statement as soon as they become reasonably certain that the financial results for the reporting period will differ by more than 20% from those of the previous corresponding period. Shareholders of Alert are therefore advised that the loss per share for the year ended 30 June 2011 is expected to be between 52.90 cents and 56.90 cents per share (2010: loss of 39.80 cents per share) and the headline loss per share for the year ended 30 June 2011 is expected to be between 45.70 cents and 49.70 cents per share (2010: loss of 25.50 cents per share). The information on which this trading statement is based has not been reviewed and reported on by Alert Steel`s auditors. Restructuring The restructuring process announced in March this year is progressing well and developments in this regard such as the redesigning of the group`s corporate identity and relaunching of our branches are explained more fully elsewhere in this newsletter. As previously announced a circular setting out the restructuring was posted to shareholders on 29 August and a rights offer circular will be posted to shareholders on 19 September. Operational update Trading conditions remained tough since we reported our interim results for the six months ended 31 December 2010. Recovery in the demand for steel remains depressed and our performance during the month of July was further impacted by the National Union of Metalworkers` (NUMSA) strike action, which considerably affected the supply of steel to our operations. The lower sales during June and July were not solely due to the industrial action over this period as the process of exiting non-core product lines and introducing new ones aligned to our core business also affected the sales function to some degree. The new product lines have seen significant growth in the past two months and we are very confident that these products will substantially contribute to the future growth of Alert. The launch of the Alert Express container project has also exceeded our expectations and will enhance the group`s market penetration. Group sales will have to improve continuously over the next few months to ensure that Alert sustains the turnaround budgeted results for 2012. To this effect, we have introduced customer satisfaction and employee relationship surveys to gather insights into the factors which matter most to our staff and our clients in a bid to help improve motivation and productivity as well as to assist us in improving our service standards. These surveys will be conducted by an independent research company and will be used to identify and promote areas of excellence, and to effect remedial measures where necessary. Branding changes and branch relaunches We decided to make a visual statement of the current transformation of the group through a redesign of our existing logo and the development of a new slogan. The design of the new logo picks up on the shape of a construction bolt which gives the feeling of strength and power. The bolt metaphor also highlights the key attributes of Alert Steel - strength, support, connectivity and reliability. The new slogan, strength through service, is intended to give a message that Alert Steel sells dependable products and is committed to providing great service. To complement the redesigned logo and to give effect to our strategy of refocusing on our core business, we relaunched our branches based in East Lynne Pretoria, Brits, Klerksdorp, Tshwane, Burgersfort, Lephalale, Polokwane, Tzaneen, Louis Trichardt, Thohoyandou, Mokopane, Lichtenburg, Wonderboom and Randfontein. We also used this exercise as an opportunity to explain to our customers the changes taking place within the group and to introduce our expanded product lines and new value added services. We have seen a marked improvement in revenue in the relaunched branches and anticipate that this will enhance the growth of the company substantially during the next few months. Expanded distribution network We have also identified an opportunity to significantly expand our distribution network through the deployment of small mobile retailing units in rural areas as well as areas where we currently have no presence. Known as the Alert Express container project, these retailing centres are converted shipping containers with a floor area of 36mSquared. One half of the floor space will be used to stock long length products while the other half will be used to stock steel related items and will also serve as the retail floor. The containers will stock all fast moving products as identified by the nearest Alert store and customers will also be able to place orders for items not carried. The first six containers have been commissioned in Maboloka near Brits; Zebediela near Mokopane; Lebowakgomo near Polokwane; Mofolo near Randfontein; Abbotspoort near Lephalale and Itsoseng near Lichtenburg. We intend to dispatch 50 Alert Express containers within the current financial year ending 30 June 2012 and each container is projected to sell approximately 24 tonnes of material per month. Prospects A recovery in the demand for steel looks likely to remain slow in the short term, as growth in the construction and manufacturing sectors, which accounts for some 75% of all the domestic steel produced, continues to stay muted. Looking ahead, we expect infrastructural growth in the sub-Saharan region to continue in the next five to ten years given that its population is expected to reach 340 million by 2020. We therefore believe that investors should take a long-term view of Alert Steel, as a well-managed African-based steel business with value-added propositions, a large geographic spread and a diversity of steel products, will therefore offer a relatively low risk investment. The return by the group to its core business will also enable us to take full advantage of any growth opportunities in the SADC region which will, in all possibility, arise in the medium to long term. In the meantime, we remain focused on our immediate strategic priorities, which are to continue with the restructuring process, optimise our existing businesses, drive efficiencies and keep costs down. Annual results The group`s results for the year ended 30 June 2011 will be released on SENS on or around 29 September 2011. There will be a presentation on the results in Johannesburg on the day they are published. If you would like to attend this presentation, please e-mail your details to our investor relations office at alertsteel@dpapr.com. Yours sincerely Johan du Toit Chief executive officer Pretoria 8 September 2011 Designated Adviser Vunani Corporate Finance Date: 08/09/2011 12:15:28 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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