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BSS - BSI Steel Limited - Audited condensed financial results: year ended 31
March 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 15%
- HEPS up 69% to 8.6 cents
- NAV per share up to 68.5 cents
- Dividend paid November 2011 of 2.0 cents per share (November 2010 of 2.0 cents
per share)
AUDITED CONDENSED FINANCIAL RESULTS FOR THE YEAR ENDED
31 MARCH 2012
Condensed income statement
Audited Audited
year year
ended ended
31 March 2012 31 March 2011
R`000 R`000
Revenue 2 130 147 1 856 448
Gross profit 391 011 272 689
Other costs (266 560) (186 188)
Earnings before interest,
taxation, deprecation and
amortisation 124 451 86 501
("EBITDA")
Depreciation and (13 319) (11 161)
amortisation
Operating profit 111 132 75 340
Fair value adjustments (6) 7
Interest received 1 652 1 344
Interest paid (41 180) (34 564)
Profit before taxation 71 598 42 127
Taxation (10 724) (6 151)
Profit for the year 60 874 35 976
Profit attributable to ordinary
shareholders 60 646 35 976
Profit attributable to non-
controlling interest 228 -
60 874 35 976
Basic and diluted earnings
per share (cents) 8.6 5.1
Reconciliation of headline
earnings:
Profit attributable to ordinary
shareholders 60 646 35 976
Loss on disposal of property,
plant & equipment 21 160
Tax impact on adjustments (6) (44)
Headline earnings attributable
to ordinary shareholders(basic
and diluted) 60 661 36 092
Weighted average shares in 706 668 706 668
issue on which earnings are
based (000)
Headline earnings per share 8.6 5.1
(cents) (basic and diluted)
Dividend per share (cents) 2.0 2.0
Condensed statement of comprehensive income
Audited Audited
31 March 31 March
2012 2011
R`000 R`000 Profit for the
year 60 874 35 976
Other comprehensive income
Effects of cash flow hedges 266 2 159
Foreign currency translation
Reserve 16 266 (8 440)
Total comprehensive income 77 406 29 695
Condensed statement of financial position
Audited Audited
31 March 2012 31 March 2011
R`000 R`000
ASSETS
Non-Current Assets
Property, plant and 286 945 260 042
equipment
Goodwill 14 706 13 206
Intangible assets 16 396 13 331
Deferred taxation 2 196 1 335
320 243 287 914
Current Assets
Inventories 429 693 283 638
Trade and other receivables 530 412 376 856
Current tax receivable 1 925 2 695
Other financial assets - -
Cash and cash equivalents 51 798 40 656
1 013 828 703 845
Total assets 1 334 071 991 759
EQUITY AND LIABILITIES
Equity
Total shareholders` equity 483 650 417 769
Non-controlling interest 228 -
483 878 417 769
Non-Current Liabilities
Other financial liabilities 91 301 98 305
Deferred taxation 2 587 3 412
Provisions 6 828 -
100 716 101 717
Current Liabilities
Trade and other payables 293 063 222 202
Current tax payable 2 751 7 344
Other financial liabilities 27 617 23 464
Loans from shareholders 100 -
Bank overdraft 425 946 219 263
749 477 472 273
Total Liabilities 850 193 573 990
Total equity and liabilities 1 334 071 991 759
Capital commitments 25 000 1 145
Number of shares in issue 706 668 706 668
(000)
Net asset value per share 68.5 59.1
(cents)
Net tangible asset value per 64.1 55.4
share (cents)
Condensed statement of changes in equity
Audited Audited
31 March 31 March
2012 2011
R`000 R`000
Balance at beginning of year 417 769 399 949
Dividend paid (14 133) (14 133)
Share Based Payment 2 836 2 258
Total comprehensive income 77 178 29 695
Profit for the year 60 646 35 976
Effects of cash flow hedges 266 2 159
Foreign currency translation reserve 16 266 (8 440)
Attributable to ordinary 483 650 417 769
shareholders at end of year
Attributable to non-controlling
interest 228 -
Total equity 483 878 417 769
Condensed statement of cash flows
Audited Audited
31 March 31 March
2012 2011
R`000 R`000
Operating activity cash (135 703) 74 308
flows
Cash flows from operations (81 233) 117 837
Interest and taxation (54 470) (43 529)
Investing activity cash (42 075) (36 272)
flows
Financing activity cash (17 909) (25 925)
flows
Total cash movement for the (195 687) 12 111
year
Cash at beginning of period (178 607) (190 160)
Effect of exchange rate 146 (558)
movement on cash balances
Total cash at end of year (374 148) (178 607)
Condensed segment report
Audited Audited
31 March 31 March
2012 2011
R`000 R`000
Gross revenue
Stockists 657 683 591 550
Bulk Sales 595 539 578 090
Exporting 857 638 676 807
Other 19 287 10 001
2 130 147 1 856 448
Profit before interest and
taxation
Stockists 30 355 5 568
Bulk Sales 31 731 26 359
Exporting 68 665 48 513
Other (19 625) (5 093)
111 126 75 347
Total assets
Stockists 272 601 216 690
Bulk Sales 200 648 171 377
Exporting 458 979 276 914
Other 423 942 342 814
Eliminations (22 099) (16 036)
1 334 071 991 759
OVERVIEW
The directors of BSI are pleased to present the financial results for the year
ended 31 March 2012 ("the 2012 year").
The group operates in the steel and associated industries with strategically
located operations in South Africa, Mauritius, the Democratic Republic of the
Congo ("DRC"), Ghana, Mozambique, Zambia and Zimbabwe. BSI markets through
three distinct channels, being Stockists, Bulk sales and Exports; all of these
divisions are supported by a steel distribution and processing centre in
Gauteng.
The financial year was characterized by good upward momentum in steel demand and
business confidence in the first half, followed by a reversal of these trends in
the second half. Manufacturing and construction, which act as the two main
drivers of steel demand, have not established a predictable and sustainable
upward trend, and recovery remains patchy. The lumpy demand has made it
challenging to predict optimum stock levels. On a positive note, steel prices
have remained relatively stable over the period.
FINANCIAL RESULTS
The year ending 31 March 2012 was a year which has been tough for the steel
industry. While turnover rose 15% to R2.1bn (F2011 : R1.9bn), we are pleased
with our gross profit performance which increased by 43% to R391m (F2011 :
R273m). In addition we were able to lift our gross margins from 14.7% in F2011
to 18.3% in F2012, despite the challenging environment. This improvement was as
a result of the Group`s customer pedigree strategy which focused on increasing
income generation, as well as the higher retail margins generated by our roll-
out of mini-merchant branches.
The 43% increase in operating costs is the result of the combination of
increased activity in the growth strategy where infrastructure is being rolled
out in anticipation of future growth, and continuous improvements being
implemented within current operations. Management will look to reap the benefits
of these investments in the year ahead.
The group experienced buoyant trading conditions into the Christmas shut down
and were bullish on the future early into 2012. The slowdown at the beginning of
2012 left the group with excess stock levels at year end, which have since
reduced significantly.
The large increase in the debtor book reflects the cash flow squeeze experienced
by the industry at the beginning of the year. The Christmas shutdown followed by
a slow start to 2012 has caught many of our customers unprepared. The subsequent
months have improved this position but the industry remains tight. The directors
remain vigilant on credit control and the policy to transact with only insured
debtors remains.
The group continues to maximize the volume-based discounts available to it by
its suppliers. This has resulted in improved gross profits but simultaneously
increased the cost of finance which was required to fund the high stockholding
and debtors book. The group continues to enjoy good relationships with its
banking partners and has sufficient facilities to maintain the growth strategy.
DIVIDEND POLICY
We remain committed to paying a dividend in the second half of the year, as we
have done in the prior years.
BASIS OF PREPARATION
The results have been prepared containing the information required by IAS 34
Interim Financial Reporting, AC 500 standards as issued by the Accounting
Practices Board or its successor and are in accordance with the group`s
accounting policies, which comply with International Financial Reporting
Standards of the International Accounting Standards Board, the Companies Act of
2008 and the JSE Listings Requirements. They are consistent with those in the
prior year. The audited condensed financial results have been prepared by R
Vermaak (CA(SA)) under the supervision of JR Waller (BCompt Hons), the group
Financial Director and have been audited in compliance with any applicable
requirements of the Companies Act of 2008.
CHANGES TO THE BOARD
The following directors were appointed to the board during the year under
review: I A J Clark, non-executive director appointed on 2 February 2012; and
J S Govender, executive director appointed on 28 November 2011.
SUBSEQUENT EVENTS
No material change has taken place in the affairs of the group between the end
of the financial year and the date of this report. In terms of the SENS
announcement dated March 2012 the group has concluded the acquisition of Brown
MacFarlane Africa (Pty) Limited subject to the outstanding conditions precedent.
These conditions are expected to be fulfilled during July 2012.
PROSPECTS
BSI Steel remains vigilant on the prospects of a global pullback as a result of
the Eurozone crisis, but remains focused on its sustainable growth strategy.
This will be supported by our retail branch expansion in South Africa (4-5
branches per year), and our continued expansion into Africa (1-2 branches per
year).
We believe that our key differentiator will remain our ability to grow
profitably within Central and West Africa, as this is where we believe growth
prospects to be better and risks lowest. This is despite the obvious challenges
of dealing in Africa.
The drive to professionalize the business continues and this will not only
ensure our growth remains sustainable, but will also gain us access to a more
discerning customer group.
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.
AUDIT OPINION
The auditors, Deloitte & Touche, have issued their
opinion on the group`s financial statements for the year ended 31 March 2012.
The audit was conducted in accordance with International Standards on Auditing.
They have issued an unmodified opinion. These summarized provisional financial
statements have been derived from the group financial statements and are
consistent in all material respects, with the group financial statements. A
copy of their audit report is available for inspection at the company`s
registered office. Any reference to future financial performance included in
this announcement, has not been reviewed or reported on by the company`s
auditors.
By order of the Board
15 June 2012
G D G Mackenzie J R Waller
CEO Financial Director
CORPORATE INFORMATION
Chairman W L 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 S 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
15 June 2012
Johannesburg
Designated Advisor: Sasfin Capital (A division of Sasfin Bank Limited)
Date: 15/06/2012 16:20:01 Supplied by www.sharenet.co.za
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