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Unaudited Interim results for the six months ended 30 September 2013
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")
UNAUDITED CONDENSED FINANCIAL RESULTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2013
Salient features
- Revenue up 29%
- EBITDA up 109%
- HEPS up 208%
- NTAV 83 cents per share
Condensed income statement
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 September 2013 30 September 2012 31 March 2013
R`000 R`000 R’000
Revenue 1 773 284 1 370 378 2 804 940
Gross profit 316 977 220 163 468 014
Other costs (221 017) (174 196) (375 233)
Earnings before interest,
taxation,
depreciation and amortisation 95 960 45 967 92 781
("EBITDA")
Depreciation and (13 451) (9 219) (20 974)
amortisation
Profit before interest and 82 509 36 748 71 807
taxation
(Loss)/Profit on disposal of assets (369) (112) (364)
Interest received 2 074 775 2 112
Interest paid (31 432) (24 250) (46 490)
Profit before taxation 52 782 13 161 27 065
Taxation 8 487 1 186 (2 041)
Profit for the year 44 295 14 347 29 106
Profit attributable to ordinary
shareholders 44 297 14 491 29 081
Profit attributable to minority
shareholders (2) (144) 25
44 295 14 347 29 106
Earnings per share (cents) 6.3 2.1 4.1
Reconciliation of headline
earnings:
Earnings attributable to ordinary
shareholders 44 297 14 491 29 081
(Profit)/Loss on disposal of 368 112 364
property, plant & equipment
Tax impact of adjustments (103) (31) (102)
Headline earnings attributable to
ordinary shareholders(basic and
diluted) 44 562 14 572 29 343
Weighted average shares in 702 020 706 668 706 447
issue on which earnings are
based (000) (1)
Headline earnings per share 6.4 2.1 4.2
(cents) (basic and diluted)
Note:
1) The weighted average number of shares in issue for 30 September 2013 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
2013 2012 2013
R`000 R`000 R’000
Profit for the period 44 295 14 347 29 106
Other comprehensive income
Foreign currency translation reserve 24 012 12 947 39 655
Total comprehensive income 68 307 27 294 68 761
Condensed statement of financial position
Unaudited Unaudited Audited
30 September 2013 30 September 2012 31 March 2013
R`000 R`000 R’000
ASSETS
Non-Current Assets
Property, plant and 377 303 350 437 366 116
equipment
Goodwill 14 706 14 706 14 706
Intangible assets 16 412 18 473 17 805
Investments in joint ventures 3 - -
Deferred taxation 16 940 9 936 18 342
425 364 393 552 416 969
Current Assets
Inventories 452 788 349 606 429 640
Trade and other receivables 689 366 619 540 671 173
Current tax receivable 3 127 2 970 3 354
Other financial assets 6 978 - -
Cash and cash equivalents 80 597 93 464 47 902
1 232 856 1 065 580 1 152 069
Total assets 1 658 220 1 459 132 1 569 038
EQUITY AND LIABILITIES
Equity
Total shareholders` equity 613 470 511 449 545 799
Non-controlling interest 251 84 253
613 721 511 533 546 052
Liabilities
Non-Current Liabilities
Other financial liabilities 97 332 106 798 107 648
Deferred taxation 8 094 4 795 5 092
Provisions 6 755 6 829 5 511
112 181 118 422 118 251
Current Liabilities
Trade and other payables 552 785 358 254 409 843
Current tax payable 12 525 1 250 8 689
Other financial liabilities 40 612 47 007 39 101
Loans from shareholders 100 100 100
Bank overdraft 326 296 422 566 447 002
932 318 829 177 904 735
Total Liabilities 1 044 499 947 599 1 022 986
Total equity and liabilities 1 658 220 1 459 132 1 569 038
Number of shares in issue 701 810 706 668 703 544
(000) (1)
Net asset value per share 87.4 72.4 77.6
(cents)
Net tangible asset value per 83.0 67.7 73.0
share (cents)
Condensed statement of changes in equity
Unaudited Unaudited Audited
30 September 30 September 31 March
2013 2012 2013
R`000 R`000 R’000
Equity holders’ interest
Balance at beginning of year 545 799 483 650 483 650
Profit for the period 44 297 14 491 29 081
Foreign currency translation 24 012 12 947 39 655
reserve
Purchase of treasury shares (1 115) - (1 617)
Share based payment provision 477 361 (4 970)
Balance at end of period 613 470 511 449 545 799
Non-controlling interest
Balance at beginning of period 253 228 228
Profit for the period (2) (144) 25
Balance at end of period 251 84 253
Total equity 613 721 511 533 546 052
Condensed cash flow statement
Unaudited Unaudited Audited
30 September 30 September 31 March
2013 2012 2013
R`000 R`000 R’000
Operating activity cash 188 409 111 948 73 579
flows
Cash flows from 216 312 139 730 121 451
operations
Interest and taxation (27 903) (27 782) (47 872)
Investing activity cash (26 954) (64 067) (86 835)
flows
Financing activity cash (11 395) (2 216) (11 903)
flows
Total cash movement for the 150 060 45 665 (25 159)
period
Cash at beginning of period (399 100) (374 148) (374 148)
Effect of exchange rate 3 341 (619) 207
movement on cash balances
Total cash at end of period (245 699) (329 102) (399 100)
Condensed segment report
Unaudited Unaudited Audited
30 September 30 September 31 March
2013 2012 2013
R`000 R`000 R’000
Gross revenue
Stockists 511 757 427 305 846 582
Bulk Sales 504 674 360 233 775 906
Exporting 686 068 508 640 1 035 495
Other 70 785 74 200 146 957
1 773 284 1 370 378 2 804 940
Profit before interest and
taxation
Stockists 18 338 6 113 11 764
Bulk Sales 20 295 15 369 31 134
Exporting 42 273 37 368 63 666
Other 1 234 (22 214) (35 121)
82 140 36 636 71 443
Assets
Stockists 299 182 226 021 248 376
Bulk Sales 208 935 178 126 240 371
Exporting 525 368 488 683 464 180
Other 630 612 602 491 617 673
Eliminations (5 877) (36 189) (1 562)
1 658 220 1 459 132 1 569 038
OVERVIEW
The interim financial results are presented for the six months ended 30 September
2013.
The Group operates in the steel and associated industries with strategically
located operations in South Africa, the Democratic Republic of the Congo, Ghana,
Mauritius, Mozambique, Switzerland, Zimbabwe and Zambia. 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 focusing on improving gross margins and managing operating costs – this
has borne fruit in the first half of the current financial year.
FINANCIAL RESULTS
The directors are pleased to report that the group’s strategy to consolidate around
investments made over the last 18 months has resulted in a 29% increase in
turnover, and an improved gross margin. This increased growth continues to right
size the business as it takes advantage of the economies of scale provided by the
infrastructure investment of the previous few years. There were no acquisitions
during the period under review with all growth being organic.
The operating cost-base of the Group continues to reduce as a percentage of
turnover, notwithstanding significant increases in transport costs and electricity.
We expect further improvements in this area as management continues to focus on
reducing cost, without compromising customer satisfaction.
Managing working capital remains an area of focus. The Group’s policy of insuring
aspects of its debtors book has continued through the period under review. Trading
conditions have required that the Group remains vigilant and our immediate goal is
to reduce the number of debtor days below 65.
During the period, the Group increased its stockholding to protect customers from
the erratic supply from the steel mills. As we look forward to a more stable supply
regime over the next six months, current stock levels will reduce and will result
in corresponding savings in handling and finance costs.
The Group continues to enjoy good relationships with its bankers who are integral
to our working capital management.
PROSPECTS
BSI will continue its strategy of reducing operating costs per tonne, while growing
in a more measured and controlled manner. In addition, working capital management
will remain a priority, to ensure an improved balance sheet and to further reduce
finance costs. Whilst the Arcelor Mittal furnace breakdown caused huge distortions
in supply and demand in the market this year, we are seeing a slow normalisation
and the market will stabilise over the next 6 months. This will enable BSI to
pursue growth in the bottom-line through improved efficiencies off a higher
turnover.
The next 6 months up until the SA Elections may be volatile; however there is a
growing confidence that the world economy will continue improving through 2014 and
2015. Steel demand and steel prices are expected to firm continually over this
period. The African markets to which BSI is exposed will grow their GDPs 5-10%, and
the construction sector in South Africa is showing strong signs of a cyclical
upswing after 3 years of low growth. BSI is confident that after many years of
market-outperformance from a volume and market share point of view, it can use its
position to exploit these opportunities in South Africa and Africa to improve
returns for shareholders. This exercise will be conducted in a prudent manner in
order to ensure that all our operations deliver strong returns on investment while
continuing to grow organically.
Market conditions for the steel industry have been extremely challenging over the
last 12 months, and it is a reflection on the BSI Group that it has been able to
maintain profitability through these trying times. There is growing confidence that
the lessons learnt within this recessionary environment will be invaluable for the
Group, when conditions inevitably improve, going into the next 2-3 years.
The Group has extensive knowledge of global commodity markets and supply chains. We
are exploring ways to exploit this knowledge on a low risk, non capital-intensive
basis.
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. Mr W R Teichmann
resigned as a director of the Company on 30 October 2013.
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, SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee and Financial Pronouncements as issued by the
Financial Reporting Standards Council and are in accordance with the Group’s
accounting policies, which comply with International Financial Reporting Standards,
the Companies Act, 71 of 2008 as amended and the JSE Limited Listings 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 7 November 2013 for publication on 7 November 2013. The
condensed consolidated financial statements for the six month period ended 30
September 2013 have been prepared by the Financial Director, Mr J R Waller.
By order of the Board
7 November 2013
G D G Mackenzie J R Waller
CEO FD
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*, J R Waller*,
* British
Registered address: 46 Eden Park Drive, Murrayfield Park, Mkondeni,
Pietermaritzburg 3201
Postal address: P O Box 101096, Scottsville, 3209
Company secretary: S J Hackett
Telephone: (033) 846 2208
Facsimile: (033) 846 2233
Transfer secretaries: Computershare Investor Services(Pty) Limited
Designated Adviser: Sasfin Capital (A division of Sasfin Bank Limited)
Date: 07/11/2013 02:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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