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BSS - BSI Steel Limited - Unaudited financial results: six months ended
30 September 2011
BSI Steel Limited
(Incorporated in the Republic of South Africa)
(Registration number 2001/023164/06)
(JSE code: BSS ISIN: ZAE000125134)
("BSI Steel" or "the group")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2011
Salient features
- Revenue up 12%
- EBITDA up 64%
- HEPS up 116%
- Net tangible asset value per share up 17% to 63 cents
- Dividend declared of 2 cents per share
Condensed income statements
Unaudited Unaudited Audited
6 months 6 months 12
30 30 months
September September 31 March
2011 2010 2011
R`000 R`000 R`000
Revenue 1 067 813 952 095 1 856
448
Gross profit 199 316 137 305 272 689
Other costs (117 889) (87 566) (186
188)
Earnings before interest, 81 427 49 739 86 501
taxation, depreciation and
amortisation ("EBITDA")
Depreciation (6 144) (5 033) (11 161)
Profit before interest and 75 283 44 706 75 340
taxation
(Loss)/Profit on disposal of 57 (262) -
assets
Fair value adjustments - - 7
Interest received 1 268 970 1 344
Interest paid (16 067) (19 895) (34 564)
Profit before taxation 60 541 25 519 42 127
Taxation (13 386) (3 975) (6 151)
Profit after taxation 47 155 21 544 35 976
Profit attributable to ordinary 46 980 21 544 35 976
shareholders
Profit attributable to minority 175 - -
shareholders
47 155 21 544 35 976
Reconciliation of headline
earnings:
Earnings attributable to 46 980 21 544 35 976
ordinary shareholders
Loss/(Profit) on disposal of (57) 262 160
assets
Tax impact of adjustments 16 (73) (44)
Headline earnings attributable 46 939 21 733 36 092
to ordinary shareholders
Weighted average shares in 706 668 706 668 706 668
issue on which earnings are
based (1)
Earnings per share (cents) 6.65 3.05 5.10
Headline earnings per share 6.64 3.08 5.11
(cents)
Dividend per share 2.00 2.00 2.00
Notes:
(1) The weighted average number of shares in issue for 30 September 2011
is based on the weighted number of shares held by the public during the
period under review.
Condensed statements of
comprehensive income
Unaudited Unaudited Audited
30 30 September 31 March
September 2010 2011
2011 R`000 R`000
R`000
Profit for the period 47 155 21 544 35 976
Other comprehensive
income
Cash flow hedges 296 2 387 2 159
Foreign currency 21 839 (6 057) (8 440)
translation reserve
Total comprehensive 69 290 17 874 29 695
income
Condensed statements of financial position
Unaudited Unaudited Audited
30 30 31 March
September September 2011
2011 2010 R`000
R`000 R`000
ASSETS
Non current assets
Property, plant and 266 161 255 751 260 042
equipment
Goodwill 13 956 13 442 13 206
Intangible assets 14 028 10 911 13 331
Deferred taxation 1 340 1 607 1 335
295 485 281 711 287 914
Current assets
Current tax receivable 4 662 959 2 695
Inventories 333 478 277 631 283 638
Other financial assets 4 381 1 -
Trade and other receivables 488 647 363 168 376 856
Cash and cash equivalents 64 731 17 011 40 656
895 899 658 770 703 845
Total assets 1 191 384 940 481 991 759
EQUITY AND LIABILITIES
Equity
Total shareholders` equity 473 799 404 752 417 769
Non-controlling interest 175 - -
473 974 404 752 417 769
Liabilities
Non-current liabilities
Other financial liabilities 89 395 111 045 98 305
Deferred tax 3 269 2 170 3 412
92 664 113 215 101 717
Current liabilities
Current tax payable 20 514 7 233 7 344
Other financial liabilities 23 042 19 876 23 464
Trade and other payables 338 714 194 093 222 202
Finance lease obligation - - -
Bank overdraft 242 476 201 312 219 263
624 746 422 514 472 273
717 410 535 729 573 990
Total equity and liabilities 1 191 384 940 481 991 759
Number of shares in issue 706 668 706 668 706 668
Net asset value per share 67.1 57.3 59.1
(cents)
Net tangible asset value per 63.1 53.8 55.4
share (cents)
Notes:
(1)The weighted average number of shares in issue for 30 September 2011
is based on the weighted number of shares held by the public during the
period under review.
Condensed statements of changes in equity
Unaudited Unaudited Audited
30 30 September 31 March
September 2010 2011
2011 R`000 R`000
R`000
Equity holders` interest
Balance at beginning of 417 769 399 949 399 949
period
Total comprehensive 69 115 17 874 29 695
income
Profit for the period 46 980 21 544 35 976
Hedging Instrument 296 2 387 2 159
Provision
Foreign currency 21 839 (6 057) (8 440)
translation reserve
Share Based Payment 1 048 1 062 2 258
Provision
Dividend Declared (14 133) (14 133) (14 133)
Balance at end of period 473 799 404 752 417 769
Non-controlling interest
Profit for the period 175 - -
Balance at end of period 175 - -
Total equity 473 974 404 752 417 769
Condensed cash flow statements
Unaudited Unaudited Audited
30 30 31 March
September September 2011
2011 2010 R`000
R`000 R`000
Cash flows from 35 577 30 020 74 308
operating activities
Cash flows from 52 045 57 740 117 837
operations
Interest and taxation (16 468) (27 720) (43 529)
Cash flow from investing (10 108) (23 983) (36 272)
activities
Cash flow from financing (23 833) 297 (25 925)
activities
Net increase in cash and 1 636 6 334 12 111
cash equivalents
Cash and cash (178 606) (190 160) (190 160)
equivalents at beginning
of period
Effect of exchange rate (775) (475) (558)
movement on cash
balances
Cash and cash (177 745) (184 301) (178 607)
equivalents at end of
period
Condensed segment report
Unaudited Unaudited Audited
30 30 31 March
September September 2011
2011 2010 R`000
R`000 R`000
Gross revenue
Stockists 343 113 353 743 591 550
Bulk Sales 296 534 272 208 578 090
Exporting 422 475 329 457 676 807
Other 5 691 (3 313) 10 001
1 067 813 952 095 1 856 448
Profit before interest
and taxation
Stockists 17 687 6 275 5 568
Bulk Sales 17 504 11 764 26 359
Exporting 46 449 27 963 48 513
Other (6 300) (1 558) (5 093)
75 340 44 444 75 347
Assets
Stockists 151 930 244 372 216 690
Bulk Sales 197 413 193 740 171 377
Exporting 399 192 234 749 276 914
Other 464 810 289 942 342 814
Eliminations (21 961) (22 322) (16 036)
1 191 384 940 481 991 759
OVERVIEW
The directors of BSI Steel are pleased to present the interim
financial results for the six months ended 30 September 2011
("the interim period").
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 Steel 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 were characterized by a fair
demand for steel, increases in the world steel price followed
by a weakening in the South African Rand in the latter stages.
FINANCIAL RESULTS
The directors are pleased with the performance of the group over the
last six months. The increase in revenue by 12% in a relatively flat
market is encouraging. The group continues to expand its operations both
organically and geographically which has assisted in this growth.
The planned growth strategy being rolled out by the group requires
investing in infrastructure and increasing working capital prior to the
rewards being reaped. Our continued expansion into Africa and our roll
out of retail outlets in South Africa will increase our cost as a
percentage of turnover, but will also result in improving overall
profitability. This has increased the ratio of operating cost to
turnover by 1% on the 2011 financial year. The increase in EBITDA by 64%
has allowed the group to continue on its growth path. The EBITDA
includes exchange rate gains achieved by the group from its trading into
the US dollar markets.
The group`s inventories have increased in line with turnover. The group
continues to manage its inventory closely maximizing the returns in the
various markets. During fluctuations in the steel price the group
ensures the exposure to inventory price risk is controlled. With a
conscious move to take on larger blue chip customers the debtor days
have moved out but continues to be closely controlled. Credit insurance
policies are in place to cover the group`s debtors.
Settlement discounts offered by the group`s suppliers are always taken
ensuring trade creditors remain up to date. The increase in trade
creditors is on the back of temporary extended terms being offered by
suppliers.
Adequate short term and long term banking facilities are available to
the group to allow it to continue with its planned growth strategy.
The weakening of the South African Rand against the US dollar has
resulted in the foreign currency translation reserve increasing by c R22
million. The exchange rate used at the end of September was R7.90 to the
US Dollar.
PROSPECTS
BSI Steel aspires to be the dominant force in steel distribution in Sub-
Saharan Africa., and will continue growing its geographic footprint and
adding new steel-related product lines into this expanding supply chain.
While cost control continues to be a major theme, significant investment
in people, systems and training will continue, to sustain the levels of
growth we will be achieving over the next five years.
The focus on Africa will remain, where we believe prospects are better
as a result of mining, oil and infrastructural development. We are well
positioned in a number of rapidly growing economies.
In South Africa we will concentrate on rolling out steel retail outlets
under the brand "BSI Express". These will capture a greater cash sale
component and aim to improve overall gross margins significantly.
DIVIDEND
The group declared a 2 cent per share ordinary dividend during the
review period, which was paid in October 2011.
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 group 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.
By order of the Board
11 November 2011
W L Battershill
Chairman
J R Waller
Financial Director
CORPORATE INFORMATION
Non executive directors: B M Khoza (Alternate - N M Anderson),
N G Payne; R G Lewis
Executive directors: W L Battershill, G D G Mackenzie, 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)
Date: 11/11/2011 13:32:01 Supplied by www.sharenet.co.za
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