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BSI STEEL LIMITED - Audited provisional results for the year ended 31 March 2014 and changes to the board

Release Date: 11/06/2014 17:50
Code(s): BSS     PDF:  
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Audited provisional results for the year ended 31 March 2014 and changes to the board

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 19%
- HEPS up 21% to 5.1 cents
- NAV per share up to 88 cents

AUDITED PROVISIONAL CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR
ENDED 31 MARCH 2014 AND CHANGES TO THE BOARD

Summarised consolidated statement of profit and loss
                                       Audited           Audited
                                         year              year
                                        ended             ended
                                31 March 2014     31 March 2013
                                        R`000             R`000
Revenue                              3 347 039         2 804 940
Gross profit                           563 205           468 014
Other costs                          (424 946)         (375 597)
Earnings before interest,
taxation, deprecation and
amortisation                           138 259            92 417
("EBITDA")
Depreciation and                      (27 945)          (20 974)
amortisation
Operating profit                       110 314            71 443
Income from equity accounted
investments                                945                  -
Interest received                        5 474             2 112
Interest paid                         (60 504)          (46 490)
Profit before taxation                  56 229            27 065
Taxation                              (19 416)             2 041
Profit for the year                     36 813            29 106
Profit attributable to ordinary
shareholders                            36 946            29 081
Profit attributable to non-
controlling interest                     (133)                25
                                       36 813            29 106
Basic and diluted earnings
per share (cents)                          5.3               4.1
Reconciliation of headline
earnings:
Profit attributable to ordinary
shareholders                           36 946             29 081
Loss on disposal of property,
plant & equipment                         384                364
Fair value adjustment of property,
plant and equipment                   (1 495)
Tax impact on adjustments               (108)              (102)
Headline earnings attributable
to ordinary shareholders(basic
and diluted)                           35 727             29 343

Weighted average shares in            702 020            706 447
issue on which earnings are
based (000)
Headline earnings per share               5.1                4.2
(cents) (basic and diluted)


Summarised consolidated statement of other comprehensive income


                                      Audited           Audited
                                     31 March          31 March
                                         2014              2013
                                        R`000             R`000
Profit for the year                    36 813            29 106
Other comprehensive income – items
that may be reclassified to profit
or loss
Foreign currency translation
Reserve                               37 458             39 655
Total comprehensive income            74 271             68 761
Attributable to ordinary shareholders 74 404             68 736
Attributable to non controlling
Interest                               (133)                 25



Summarised consolidated statement of financial position
                                    Audited             Audited
                                31 March 2014      31 March 2013
                                       R`000               R`000
ASSETS
Non-Current Assets
Property, plant and                   392 747            366 116
equipment
Goodwill                               14 706             14 706
Intangible assets                      15 316             17 805
Investment in joint ventures            1 584                  -
Deferred taxation                      13 051             18 342
                                      437 404            416 969
Current Assets
Inventories                           450 350            429 640
Loans to group companies               10 498                  -
Trade and other receivables           728 660            671 173
Current tax receivable                  8 592              3 354
Cash and cash equivalents              65 689             47 902
                                    1 263 789          1 152 069
Total assets                        1 701 193          1 569 038



EQUITY AND LIABILITIES
Equity
Total shareholders` equity            620 044            545 799
Non-controlling interest                 (143)               253
                                      619 901            546 052
Non-Current Liabilities
Other financial liabilities            83 093            107 648
Deferred taxation                      11 130              5 092
Provisions                                  -              5 511
                                       94 223            118 251
Current Liabilities
Trade and other payables              488 158            409 843
Current tax payable                     6 899              8 689
Other financial liabilities            39 017             39 101
Loans from shareholders                     -                100
Bank overdraft                        452 995            447 002
                                      987 069            904 735
Total Liabilities                   1 081 292          1 022 986
Total equity and liabilities        1 701 193          1 569 038

Capital commitments                         -                  -

Number of shares in issue             701 810            703 544
(000)
Net asset value per share                88.3               77.6
(cents)
Net tangible asset value per             84.1               73.0
share (cents)
Summarised consolidated statement of changes in equity
                                       Audited           Audited
                                      31 March          31 March
                                          2014              2013
                                         R`000             R`000
Balance at beginning of year           545 799           483 650
Share based payment                        956           (4 970)
Purchase of treasury shares            (1 115)           (1 617)
Total comprehensive income              74 404            68 736
Profit for the year                     36 946            29 081
Foreign currency translation reserve    37 458            39 655
Attributable to ordinary               620 044           545 799
shareholders at end of year
Attributable to non-controlling
interest                                 (143)               253
Total equity                           619 901           546 052


Summarised consolidated statement of cash flows
                                      Audited           Audited
                                     31 March          31 March
                                         2014              2013
                                        R`000             R`000
Operating activity cash                93 090            73 579
flows
Cash flows from operations            160 357           121 451
Interest and taxation                 (67 267)          (47 872)

Investing activity cash               (55 733)          (86 835)
flows
Financing activity cash               (28 995)          (11 903)
flows

Total cash movement for the             8 362           (25 159)
year
Cash at beginning of year            (399 101)         (374 148)
Effect of exchange rate                 3 433               207
movement on cash balances
Total cash at end of year            (387 306)         (399 100)



Summarised consolidated segment report
                                       Audited            Audited
                                      31 March           31 March
                                          2014               2013
                                         R`000              R`000
Net revenue
Stockists                              985 257            846 582
Bulk Sales                             947 120            775 906
Exporting                            1 314 323          1 035 495
Other                                  100 339            146 957
                                     3 347 039          2 804 940
Operating profit
Stockists                               30 102             11 764
Bulk Sales                              39 002             31 134
Exporting                               64 139             63 666
Other                                  (22 929)           (35 121)
                                       110 314             71 443
Total assets
Stockists                              287 966            248 376
Bulk Sales                             232 887            240 371
Exporting                              524 255            464 180
Other                                  667 664            617 673
Eliminations                           (11 579)            (1 562)
                                     1 701 193          1 569 038

OVERVIEW
The directors of BSI are pleased to present the financial
results for the year ended 31 March 2014 ("the 2014 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 and
Zambia. 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 characterised by reduced steel
consumption in the South African market, mainly due to the
uncertainty in the mining industry and struggling manufacturing
and construction sectors. The African markets were stable and
steel demand was steady.

The new trade finance venture established during the year is
performing in line with expectations. The recent decline in the
iron ore price casts doubt on the viability of the broking
business established during the year.

FINANCIAL RESULTS
The year ended 31 March 2014 was a year in which BSI Steel grew
turnover by 19% to R3.3bn (F2013: R2.8bn), not withstanding a
further decline in domestic steel consumption. Gross profit grew
in line with the growth in turnover.

The costs have been controlled during the year resulting in a
55% increase in the operating profit to R110 million (F2013: R71
million).

Growth in working capital was lower than the growth in turnover,
although the net interest charge of R55 million (F2013: R44
million) is an area which continues to receive attention.

Certain permanent differences resulted in an effective tax rate
of 34% and earning of 5.3 cents per share.

The gearing position improved slightly and we remain comfortably
within our funding facilities.

DIVIDEND POLICY
No dividend was declared. This will be reviewed in the next few
months.

BASIS OF PREPARATION
The provisional financial statements have been prepared in
accordance with the JSE Limited Listings Requirements (“Listings
Requirements”) for provisional reports and the requirements of
the Companies Act applicable to summary financial statements.
In terms of the Listings Requirements the provisional financial
statements are to be prepared in accordance with the conceptual
framework and the measurement and recognition requirements of
International Financial Reporting Standards (IFRS), the SAICA
Financial Reporting Guides as issued by the Accounting Practices
Committee, and also, as a minimum, to contain the information
required by IAS 34 Interim Financial Reporting. The accounting
policies applied in the preparation of the consolidated
financial statements from which the summary consolidated
financial statements were derived are in terms of IFRS and are
consistent with the accounting policies applied in the
preparation of the previous consolidated annual financial
statements except for the adoption of the revised IFRS 7
Financial instruments disclosures and IAS 12 Income Taxes. The
adoption of these revised standards has had no impact on the
financial statements. The provisional consolidated financial
results have been prepared by R Vermaak (CA(SA)) under the
supervision of JR Waller (BCompt Hons), the group Financial
Director.

FINANCIAL INSTRUMENTS
The fair values of financial instruments are determined by using
quoted prices in active markets for identical assets or
liabilities and therefore fall into the level 1 fair value
category as per IFRS 13.

CHANGES TO THE BOARD
Effective 11 June 2014 G D G Mackenzie stepped down as CEO and
Mr W L Battershill assumed the role of CEO. Mr Mackenzie remains
an executive director. Mr W R Teichmann resigned as an executive
director in October 2013.

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.

PROSPECTS
BSI has pursued a growth strategy for a number of years, which
included forays into new business arenas. Certain ventures have
proved viable, whist others have failed, resulting in severe
profit erosion and an overall poor bottom line performance.
Nevertheless, we have grown our tonnage and established what
produces profits and what does not.

Given that the market is likely to remain tough for some time,
it has been decided that BSI will consolidate operations and
focus on further improving profit making enterprises. Our
objective will be to maintain our tonnage off a significantly
reduced cost base. We are working towards higher profits,
reduced risk and better cash flow. We intend to improve our ROI
and increase dividend flow to our shareholders.

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 (“Deloitte”), have issued their
unmodified opinion on the group`s financial statements for the
year ended 31 March 2014. The audit was conducted in accordance
with International Standards on Auditing. A copy of Deloitte’s
ISA 700 audit report regarding the group’s financial statements
is available for inspection at the company’s registered office.
These audited 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 Deloitte’s unmodified ISA 810 audit report regarding these
summarised consolidated financial results 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
11 June 2014

W L Battershill                              J R Waller
Chairman and CEO                            Financial Director

CORPORATE INFORMATION
Chairman and CEO 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, 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 Advisor: Sasfin Capital (A division of Sasfin Bank
Limited)

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