Wrap Text
Audited results for the year ended 30 June 2013
Accentuate Limited
(Incorporated in the Republic of South Africa)
(Registration Number: 2004/029691/06)
Share Code: ACE ISIN Code: ZAE000115986
www.accentuateltd.co.za
("Accentuate" or "the group")
AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2013
Highlights
- Solid performances from continuing operations
- EPS up 16,6% to 8,38 cents per share
- Revenue maintained at R284 million
- Attributable profit up 18% to R8,8 million
Abridged Consolidated Financial Statements for the year ended 30 June 2013
Abridged Consolidated Statement of Financial Position
Audited Audited
30 June 30 June
2013 2012
R'000 R'000
Assets
Non-current assets 86 119 87 401
Property, plant and equipment 45 302 45 078
Goodwill 34 928 34 928
Intangible assets 531 535
Other financial assets 2 041 4 057
Deferred taxation 3 317 2 803
Current assets 101 268 115 206
Inventories 51 965 44 522
Other financial assets 4 953 4 378
Current tax receivable 2 770 1 377
Trade and other receivables 41 192 43 220
Cash and cash equivalents 388 21 709
Total assets 187 387 202 607
Equity and Liabilities
Total equity 134 550 125 235
Share capital 126 382 126 077
Reserves 22 215 23 139
Accumulated loss (14 047) (23 981)
Non-current liabilities 4 791 7 049
Other financial liabilities - 2 850
Deferred taxation 4 791 4 199
Current liabilities 48 046 70 323
Other financial liabilities 2 850 5 700
Current tax payable 1 333 385
Operating lease liability 2 139 1 718
Trade and other payables 32 284 38 315
Bank overdraft 9 440 24 205
-
Total liabilities 52 837 77 372
Total equity and liabilities 187 387 202 607
Number of shares in issue 111 108 119 111 108 119
Net asset value per share (cents) 121 113
Tangible net asset value per share (cents) 89 81
Abridged Consolidated Statement of Comprehensive Income
Audited Audited
30 June 30 June
2013 2012
R'000 R'000
Revenue 284 213 282 671
Cost of sales (135 219) (133 940)
Gross profit 148 994 148 731
Other income 431 1 525
Operating expenses excluding depreciation and
amortisation (130 762) (127 386)
Earnings before interest, tax, depreciation and
amortisation 18 663 22 870
Depreciation and amortisation (3 536) (6 260)
Profit before interest and tax 15 127 16 610
Finance costs (1 909) (2 297)
Profit before tax 13 218 14 313
Income tax (3 991) (4 345)
Profit after tax 9 227 9 968
Share of loss in associated company (400) -
Profit for the period from continuing operations 8 827 9 968
Loss for the period from discontinued operations - (2 488)
Profit for the year attributable to equity holders
of the parent 8 827 7 480
Weighted average number of shares in issue 105 335 517 104 103 060
Earnings Ratios (cents):
Earnings per share 8,38 7,19
Loss per share from discontinued operations - (2,39)
Diluted earnings per share 8,38 7,13
Diluted loss per share from discontinued
operations - (2,37)
Headline earnings per share 8,41 9,79
Headline earnings per share from continuing
operations 8,41 9,47
Headline earnings per share from discontinued
operations - 0,32
Diluted headline earnings per share 8,41 9,66
Reconciliation of headline earnings:
Profit for the year 8 827 7 480
Adjusted for:
Loss on disposal of discontinued operation - 2 824
Loss/(Profit) on sale of property, plant and
equipment 36 (161)
Tax effect of adjustments (10) 45
Headline earnings attributable to equity holders
of the parent 8 853 10 188
Abridged Consolidated Statement of Changes in Equity
Audited Audited
30 June 2013 30 June 2012
Capital and reserves opening balance 125 236 117 052
Total comprehensive income for the period 8 827 7 480
Share options exercised 305 625
Deferred tax on revaluation surplus 182 182
Repurchase of shares - (103)
Capital and reserves closing balance 134 550 125 236
Abridged Consolidated Statement of Cash Flows
Audited Audited
30 June 2013 30 June 2012
Cash flow from operating activities 1 580 7 719
Cash flow from investing activities (2 741) 1 306
Cash flow from financing activities (5 395) (5 754)
Net (decrease)/increase in cash and cash equivalents (6 556) 3 271
Cash and cash equivalents at beginning of the period (2 496) (5 767)
Cash and cash equivalents at the end of the period (9 052) (2 496)
Segmental Report
Audited Audited Audited Audited Audited
30 June 2013 30 June 2013 30 June 2013 30 June 2013 30 June 2013
R'000 R'000 R'000 R'000 R'000
Corporate Total
Flooring Environmental Water and Continuing
Solutions Treatment Eliminations Operations
Total sales 223 830 66 574
Less: inter-segmental sales - (6 477)
Revenue 223 830 60 097 286 284 213
Gross profit 107 736 40 972 286 148 994
Operating profit before depreciation and
amortisation 14 626 1 733 2 304 18 663
Depreciation and amortisation (2 286) (1 028) (222) (3 536)
Segment operating result 12 340 705 2 082 15 127
Share of loss in associated company (400) (400)
Segmental assets 140 418 24 432 22 537 187 387
Segmental liabilities 23 833 17 706 11 299 52 838
Capital expenditure 2 515 1 118 225 3 858
Audited Audited Audited Audited Audited
30 June 2013 30 June 2013 30 June 2013 30 June 2013 30 June 2013
R'000 R'000 R'000 R'000 R'000
Corporate Total
Flooring Environmental and Continuing Discontinued
Solutions Eliminations Operations Operations
Total sales 217 305 70 858 29 814 6 286
Less: inter-segmental sales (6 800) (28 506)
Revenue 217 305 64 058 1 308 282 671 6 286
Gross profit 106 647 40 776 1 308 148 731 3 272
Operating profit before depreciation and
amortisation 18 531 3 784 555 22 870 (2 488)
Depreciation and amortisation (3 842) (1 390) (1 028) (6 260) -
Segment operating result 14 689 2 394 (473) 16 610 (2 488)
Segmental assets 139 953 25 950 36 704 202 607 -
Segmental liabilities 35 950 18 242 23 180 77 372 -
Capital expenditure 1 593 744 95 2 432 -
REVIEW OF PERFORMANCE
SUMMARY
Macroeconomic conditions remain challenging within the domestic market and more specifically in
the construction and related supply sectors of the economy. These challenges included the low
levels of GDP growth experienced during the first six months of 2013, a lack of government
spending on infrastructure, reduced activity in the mining and related industries as well as
currency volatility. Despite this, the Group has produced steady results and continued to make
good progress on implementing many aspects of its agreed strategy.
Revenue for the year under review was flat at R284,2 million. Attributable profit for the period of
R8,8 million shows an 18,0% increase on the R7,5 million reported in 2012. Earnings per share of
8,38 cents per share increased by 16,6 %.
FloorworX retained a healthy market position and will benefit once consistent government
infrastructure spending in education and healthcare resumes. Safic has undergone intensive
restructuring, the results of which are not present in this set of results, but the impact is evident
within the organisation and the first couple of months in the new financial year have been
extremely encouraging. The partnership in water treatment with ION Exchange is gaining traction
with projects underway in which chemicals, technology and equipment are being supplied.
FLOORING DIVISION
This segment comprises the FloorworX business and remains the major contributor to Group
revenue.
FloorworX performed extremely well in the first half of the financial year. However, being the
largest player within the local market does result in the organisation being affected by economic
cycles. The lack of momentum in government spend in the second half of the financial year,
coupled with delays in some government projects, resulted in reduced demand for locally
produced floor coverings with a resultant reduction in both revenue as well as manufacturing
recoveries. Although we are confident that this is a temporary situation given the social pressure to
address the infrastructure shortfall, it impacted negatively on the FloorworX results during the last
quarter of the financial year.
The wood and laminate division continued to grow with the introduction of the Luxury Vinyl Plank
showing significant potential. Strengthening relationships with global suppliers of floor coverings
remains central to our strategy of remaining a major supplier in the resilient flooring market
segment in southern Africa.
Under these challenging trading conditions the flooring division delivered satisfactory results.
Revenue for the period under review increased by 3,0 % to R223,8 million. The impact of certain
government projects being awarded but not implemented resulted in product being manufactured
but then having to be held in stock. The deterioration of the rand also impacted negatively on the
production and operating costs.
ENVIRONMENTAL SOLUTIONS DIVISION
This segment comprises the Safic businesses.
The division continues to make good progress with the implementation of its revised strategy
targeted at increasing the recurring contract based income, widening the customer base and
diversifying into more specialised chemical products. This has resulted in an increased gross
margin percentage despite the sales reducing from R64,1 million to R60,1 million. The
appointment of a highly experienced sales director in January 2013 has given further momentum
to this process. Despite a significant investment in additional sales and marketing staff, cost
reductions in other areas have resulted in total costs only increasing by 4,9%. Recent successes
further entrench the view that this division is on track to produce much improved results.
Safic continues to supply the adhesive and cementitious products to FloorworX, and is looking at
expanding the range of products it manufactures for both the flooring and water treatment
businesses.
Achievements during the year included sustainable growth in the areas of institutional and
commercial applications, the introduction of the globally renowned Cleanfix machine range as well
as unique environmentally friendly technologies for engine and parts cleaning from SRI in France.
Safic has been appointed as the exclusive distributor within the SADC region for both Cleanfix and
SRI.
Challenges continued with the depressed levels of activity within Safic's traditional mining and
heavy engineering markets, the relatively high cost of petro-chemical derivative raw material
inputs, currency fluctuations and the increase in energy, water and distribution costs.
WATER TREATMENT DIVISION
This comprises the ION Exchange Safic water treatment business, which is a partnership with ION
Exchange India, that is equity accounted by the Group as an associated company.
ION Exchange Safic is now well positioned to provide a comprehensive range of water treatment
technologies into the southern African market and a number of successes have been achieved
over the year. These include the supply of drinking water and water recycling plants, the supply of
various products resulting in significant process improvements, and the supply of effluent
treatment chemicals and equipment which have significantly reduced penalties applied by local
municipalities. Due to initial set up costs and a large amount of marketing, as anticipated the
business has recorded a loss in its first year of operation.
The company is on track to become a significant supplier within the water treatment market. The
unique ability to design and implement solutions that bring together the proprietary design,
equipment and chemicals offered by ION Exchange have placed the partnership in a position
where it is being considered as a supplier to some significant water treatment projects.
PROSPECTS
Although the economic outlook for South Africa remains generally subdued, we are confident that
the pressure for increased government expenditure in the area of infrastructure will lead to
increased investment in both healthcare and education. These are critical areas for South Africa
and indications are that government spend in these departments, albeit erratic, is set to increase.
The effect that the upcoming elections will have on the economy is of concern, but generally
management remains cautiously optimistic in this regard.
The repositioning of Safic and the implementation of its targeted segmental strategy is already
showing results and should see a more meaningful contribution from the cleaning chemicals
business to the Group's results in the coming year. Although the demand from the mining sector
for the products supplied by Safic is not anticipated to improve much in the near future, the
diversification and focus on other market segments will ensure growth and more annuity income.
ION Exchange Safic is well positioned to take advantage of the significant opportunities that exist
within the broad water treatment market, which has welcomed another supplier in this sector.
There are some immediate opportunities being pursued in the mining, heavy industry and effluent
treatment areas while some larger water related infrastructural opportunities will be evaluated and
targeted according to capacity and risk appetite.
ACQUISITIONS AFTER YEAR END
Suntups
Accentuate recently announced the acquisition of Suntups Wooden Flooring for a total purchase
consideration estimated to be R7,7 million. The effective date was 1 September 2013 and the
purchase will be settled by way of an issue of Accentuate ordinary shares.
Suntups is a privately owned business with a well-established customer base and has become the
largest supplier of engineered wooden flooring in South Africa. Main markets supplied include
heavy traffic floor areas in offices, shopping centres and gyms as well as the up market private
residential sector. The business also supplies specialised wood for use in decking. The Suntups
business will compliment and expand the range of flooring products which FloorworX has on offer.
Degrachem
The assets and liabilities of Degrachem, a business principally involved in the supply of specialty
metal treatment products, was purchased by Safic (Pty) Ltd with effect from 1 September 2013.
The purchase will be settled by way of an issue of Accentuate ordinary shares. This business is
being inculcated into the Safic business operations.
Estimated fair value of assets acquired and liabilities assumed
Degrachem Suntups Total
Property, plant and equipment 667 304 971
Inventories 375 6 243 6 618
Trade and other receivables 802 404 1 206
Trade and other payables 657 532 1 189
Total identifiable net assets 1 187 6 419 7 606
Goodwill and intangible assets 1 813 1 300 3 113
Estimated purchase price 3 000 7 719 10 719
Estimated ordinary shares in
Accentuate Ltd to be issued 3 658 537 7 828 456 11 486 993
Goodwill and intangible assets arising from the acquisitions consists largely of the synergies and
economies of scale expected from combining the operations of the entities, the know-how and market
knowledge of the management, and certain agency and distribution agreements.
DIVIDEND
The Accéntuate board deems it prudent not to declare a dividend. There are potential business
opportunities currently being investigated which could require investment. The group also has
certain constraints on its cash management and funding arrangements as a result of the special
resolutions not having been passed at the annual general meeting.
GOING CONCERN
The board of directors is satisfied that, after taking into account the current banking facilities, its
utilisation thereof and the budgeted profits and cash flows, the working capital available to the
group will be sufficient to meet its requirements for the next 12 months.
CONTINGENT LIABILITY
There are non-executive directors' fees of R1,1 million payable subject to approval of the required
special resolution.
BASIS OF PREPARATION
The abridged consolidated annual financial results have been prepared in accordance with the
measurement and recognition requirements of International Financial Reporting Standards
("IFRS"), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee
and Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council.
These results contain the information required by IAS 34: Interim Financial reporting, and comply
with the JSE Listings Requirements and the Companies Act.
The financial statements are based on appropriate accounting policies and methods of
computation which have been consistently applied with those in the audited financial statements
for the previous year and which are supported by reasonable and prudent judgments and
estimates.
The annual financial statements were prepared under the supervision of the chief financial officer,
Chris Povall (CA)(SA).
UNQUALIFIED INDEPENDENT AUDITOR'S OPINION
The abridged consolidated financial statements for the year ended 30 June 2013 have been
audited by the group's auditors, Mazars (Gauteng) Inc. (previously known as PKF (Gauteng) Inc.).
Their unqualified audit report is available for inspection at the company's registered office.
APPRECIATION
The board would like to take this opportunity to thank the various management teams for their
loyalty and dedication towards the achievement of the objectives that have been set. The board
would also like to thank all the customers, partners, advisors, suppliers and most importantly, the
shareholders for their ongoing support and faith.
25 September 2013
CORPORATE INFORMATION
Non executive directors:
MDC Motlatla (chairman)
RB Patmore
NE Ratshikhopha
D Molefe
PS Kriel (alternate)
Executive directors:
FC Platt
DE Platt
CJ Povall
Registered address:
32 Steele Street
Steeledale
2197
Postal address:
P.O. Box 1754
Alberton
1450
Company secretary:
PS Dayah
E-mail:
pdayah@accent.co.za
Telephone:
(011) 406 4100
Facsimile:
(086) 509 3246
Website:
www.accentuateltd.co.za
Transfer secretaries:
Computershare Investor Services (Pty) Limited
Designated Adviser:
Bridge Capital Advisors (Pty) Ltd
Disclaimer
This announcement may contain certain forward-looking statements concerning Accéntuate's
operations, business strategy, financial conditions, growth plans and expectations. These
statements include, without limitation, those concerning the economic outlook, business climate
and changes in the market. Such views involve both known and unknown risks, assumptions,
uncertainties and important factors that could materially influence the actual performance of the
group. No assurance can be given that these will prove to be correct and no representation or
warranty, expressed or implied, is given as to the accuracy or completeness of such views
contained in this announcement.
Date: 26/09/2013 07:40:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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