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Audited provisional consolidated financial results for the year ended 31 March 2015 and dividend declaration
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 down 1%
- HEPS down 59% to 2.1 cents
- NAV per share up to 96 cents
- Restructure completed
AUDITED PROVISIONAL CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR
ENDED 31 MARCH 2015 AND DIVIDEND DECLARATION
Summarised consolidated statement of profit and loss
Restated
Audited Audited
year year
ended ended
31 March 2015 31 March 2014
R`000 R`000
Revenue 3 248 046 3 290 269
Gross profit 475 453 520 227
Other costs (347 346) (366 900)
Earnings before interest,
taxation, depreciation and
amortisation 128 107 153 327
("EBITDA")
Depreciation and (28 820) (27 945)
amortisation
Operating profit 99 287 125 382
Income from equity accounted
investments (2 669) 945
Interest received 8 175 5 331
Interest paid (59 964) (59 937)
Profit before taxation 44 829 71 721
Taxation (23 341) (15 754)
Profit for the year from
Continuing operations 21 488 55 967
Loss from discontinued operations(*)(19 238) (19 154)
Profit for the year 2 250 36 813
Profit attributable to ordinary
shareholders 2 250 36 946
Profit attributable to non-
controlling interest - (133)
2 250 36 813
Basic and diluted earnings per share
(cents)- continued operations 3.1 8.0
Basic and diluted earnings per share
(cents) – discontinued operations (2.8) (2.7)
Total basic and diluted earnings per
Share 0.3 5.3
Reconciliation of headline
earnings:
Profit attributable to ordinary
shareholders 2 250 36 946
Loss on disposal of property,
plant and equipment 4 521 384
Fair value adjustment of property,
plant and equipment - (1 495)
Tax impact on adjustments (1 266) (107)
Realisation of foreign currency
translation reserve on discontinued
operations 9 090 -
Headline earnings attributable
to ordinary shareholders(basic
and diluted) 14 595 35 728
Weighted average shares in 701 810 702 020
issue on which earnings are
based (000)
Headline earnings per share 2.1 5.1
(cents) (basic and diluted)
(*) This represents the result of the discontinuation of the
Ghanaian operation during the year and includes R9 million
related to the realisation of the foreign currency translation
reserve
Summarised consolidated statement of other comprehensive income
Audited Audited
31 March 31 March
2015 2014
R`000 R`000
Profit for the year 2 250 36 813
Other comprehensive income – items
that may not be reclassified to
profit or loss
Property revaluation 9 271 -
Other comprehensive income – items
that may be reclassified to profit
or loss
Foreign currency translation
Reserve 51 699 37 458
Cash flow hedge 6 308 -
Total comprehensive income 69 528 74 271
Attributable to ordinary shareholders 69 528 74 404
Attributable to non controlling
Interest - (133)
Summarised consolidated statement of financial position
Audited Audited
31 March 2015 31 March 2014
R`000 R`000
ASSETS
Non-Current Assets
Property, plant and 378 879 392 746
equipment
Goodwill 14 706 14 706
Intangible assets 12 866 15 316
Investment in joint ventures 10 831 1 584
Other financial assets 6 986 -
Deferred taxation 8 799 13 052
433 067 437 404
Current Assets
Inventories 483 356 450 350
Loans to group companies 127 10 498
Other financial assets 7 757 -
Trade and other receivables 755 840 728 660
Current tax receivable 6 936 8 592
Cash and cash equivalents 55 822 65 689
1 309 838 1 263 789
Total assets 1 742 905 1 701 193
EQUITY AND LIABILITIES
Equity
Total shareholders` equity 674 820 620 044
Non-controlling interest (143) (143)
674 677 619 901
Non-Current Liabilities
Other financial liabilities 71 847 83 092
Deferred taxation 16 463 11 130
88 310 94 222
Current Liabilities
Trade and other payables 496 263 488 159
Current tax payable 10 120 6 899
Other financial liabilities 41 989 39 017
Bank overdraft 431 546 452 995
979 918 987 070
Total Liabilities 1 068 228 1 081 292
Total equity and liabilities 1 742 905 1 701 193
Capital commitments - -
Number of shares in issue 701 810 701 810
(000)
Net asset value per share 96.1 88.3
(cents)
Net tangible asset value per 92.2 84.1
share (cents)
Summarised consolidated statement of changes in equity
Audited Audited
31 March 31 March
2015 2014
R`000 R`000
Balance at beginning of year 620 044 545 799
Share based payment (662) 956
Dividends paid (14 090) -
Purchase of treasury shares - (1 115)
Total comprehensive income 69 528 74 404
Profit for the year 2 250 36 946
Foreign currency translation reserve 51 699 37 458
Cash flow hedge 6 308 -
Revaluation reserve 9 271 -
Attributable to ordinary 674 820 620 044
shareholders at end of year
Attributable to non-controlling
interest (143) (143)
Total equity 674 677 619 901
Summarised consolidated statement of cash flows
Audited Audited
31 March 31 March
2015 2014
R`000 R`000
Operating activity cash 46 471 93 089
flows
Cash flows from operations 109 638 160 355
Interest and taxation (63 167) (67 266)
Investing activity cash (11 880) (55 733)
flows
Financing activity cash (25 922) (28 994)
flows
Total cash movement for the 8 669 8 362
year
Cash at beginning of year (387 306) (399 101)
Effect of exchange rate 2 913 3 433
movement on cash balances
Total cash at end of year (375 724) (387 306)
Summarised consolidated segment report
Audited Audited
31 March 31 March
2015 2014
R`000 R`000
Net revenue
Stockists 749 190 985 257
Bulk Sales 1 285 846 947 120
Exporting 1 191 327 1 257 553
Other 21 683 100 339
3 248 046 3 290 269
Operating profit
Stockists 13 629 30 102
Bulk Sales 44 774 39 002
Exporting 39 734 79 207
Other 1 150 (22 929)
99 287 125 382
Total assets
Stockists 138 419 287 966
Bulk Sales 502 287 232 886
Exporting 530 553 524 255
Other 591 304 667 664
Eliminations (19 658) (11 578)
1 742 905 1 701 193
OVERVIEW
The directors of BSI are pleased to present the financial
results for the year ended 31 March 2015 ("the 2015 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"), 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 characterized by tough trading conditions
in South Africa and in export markets, especially Zimbabwe and
Zambia. Protracted violent strikes in the platinum and metal
industries during the year, together with electricity blackouts
in H2, severely impacted the demand for steel. This put pressure
on margins, although BSI managed to maintain tonnage output,
thus increasing market share in a declining market. The entire
business was restructured during the period, resulting in
material one-off costs due to business closures and
retrenchments. Whilst this eroded profitability, it resulted in
significantly reduced operating costs.
FINANCIAL RESULTS
Revenue remained relatively flat in comparison to the prior year
as continuing operations increased turnover to largely offset
the impact of discontinued operations, but with a 7% decline in
gross profit percentage, largely due to the effects of steel
price decreases in March, which continued into the early parts
of the 2016 financial year, and an impairment of R10 million on
the iron ore held in Sentinel Bridge.
The percentage of taxation to profit before tax of 52% in
comparison to 22% in the prior year is due to exceptional
foreign losses suffered during the year as a result of the local
currencies in Mozambique and Zambia weakening substantially. As
taxes are submitted within these countries in local currencies
these losses are treated as non-deductible for reporting
purposes.
Various loss making operations were closed during the financial
year which resulted in a projected monthly decrease of R8
million in operating expenses to come with no decline in tons
sold. Non-recurring costs incurred during the 2015 financial
year as follow,
Loss on disposal of plant and equipment 4 521
Loss on contract cancellations 7 309
Retrenchments 8 953
Inventory write downs 4 046
Impairment trade receivables 1 842
Realisation of translation reserve of discontinued
operations 9 090
Total restructuring adjustments 35 761
Trading losses discontinued/restructured operations 24 849
60 610
Tower Trade Group (TTG), in which BSI has a 45% shareholding was
also restructured during the year, resulting in significant non-
recurring costs, and a loss for the year. BSi accounted for R2.7
million of this loss, limited to it’s investment. TTG has
established joint venture operations with credible financial
partners in a number of European countries and in South Africa,
and has developed significant IT systems in support of its
operations. For the coming year TTG has budgeted to make a
profit roughly equal to its accumulated losses to date, and to
report meaningful profits thereafter.
A weaker South African Rand to the US Dollar at year end
increased equity by R52 million during the year.
Provision was made for imported inventory in transit at year end
to the value of R71 million which explains the apparent increase
in stock levels. Favorable payments terms were secured for
these imports. Orders from local vendors were lowered in
anticipation of the arrival of imported stock. We remain
committed to lowering the group stock levels substantially over
the months to come, notwithstanding the fact that the Group has
access to significant unutilized credit facilities.
The prior year figures have been restated due to:
a reclassification of R41 million from operating expenses to
cost of sales which did not impact the operating profit
disclosed in the prior year. This reclassification was made in
order to comply with IAS1;
the reclassification of losses incurred due to discontinued
operations in terms of IFRS5.
DIVIDEND
A dividend of 2 cents per share (1.7 cents per share net of
dividends tax) was paid in November 2014.
The Board of Directors has pleasure in announcing that a
dividend of 2 cents per ordinary share (gross) has been declared
for the year ended 31 March 2015. Dividends are subject to
Dividends Withholding Tax. In accordance with the provisions of
the JSE Listings Requirements, the following additional
information is disclosed.
the Dividend has been declared out of income reserves;
the local dividend tax rate is 15%;
the gross local dividend amount is 2 cents per ordinary share
for shareholders exempt from dividend tax;
the net local dividend amount is 1.7 cents per ordinary share
for shareholders liable to pay dividend tax;
the Company currently has 719 854 996 shares in issue; and
the Company’s income tax reference number is 9150236215.
The final dividend will be paid on Monday, 6 July 2015, to
shareholders recorded in the register of the Company at the
close of business on the record date being Friday, 3 July 2015.
The salient dates relating to the Dividend are as follows:
Last day to trade cum dividend Friday, 26 June
2015
Shares commence trading ex-dividend Monday, 29 June
2015
Record date Friday, 3 July 2015
Payment date of the Dividend Monday, 6 July 2015
Share certificates may not be dematerialised or rematerialised
between Monday, 29 June 2015 and Friday, 3 July 2015, both days
inclusive.
BASIS OF PREPARATION
The provisional summarized consolidated 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 summarized consolidated 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 these summary consolidated
annual 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 CJ Blackman (CA(SA)) under the
supervision of E Vermaak (CA(SA)), 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.
2015 2014
Level 1 Level 1
Loan and receivables 795 986 781 918
Financial assets, fair value through
profit and loss 6 883 -
Financial liabilities at amortised
Cost 932 289 1 014 646
Financial liabilities, fair value
Through profit and loss - 239
There have been no transfers between levels during the financial
year. The fair values approximate their carrying values.
CHANGES TO THE BOARD
With effect from 23 September 2014:
IAJ Clark resigned as a non-executive director;
K Paxton and E Vermaak were appointed as executive directors;
and
JR Waller changed from being an executive director to a non
executive director.
JR Waller resigned from the board with effect from 8 June 2015.
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
The strategy for the year ahead is run a tight ship and
capitalize on the more efficient platform we have in place.
The restructuring process absorbed a great deal of executive
energy during the last year. We are now in a position to focus
outward and reap the rewards. BSI has never been better placed
to deliver an optimal return to shareholders, within the
constraints of market conditions. Paradoxically, the tough
market provides ideal conditions for the new BSI to cement and
improve its position as a key player in the SA market.
Having established an efficient and effective operating
platform, our focus for F2016 will be on improving margin, with
less emphasis on tonnage growth. We are aiming at higher
profitability and cash generation.
STATEMENT ON GOING CONCERN
The summarized consolidated 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 unmodified
audit opinion on the consolidated annual financial statements
for the year ended 31 March 2015. The audit was conducted in
accordance with International Standards on Auditing. A copy of
their ISA 700 audit report and the consolidated annual financial
statements are available for inspection at the company’s
registered office. Deloitte & Touche have also issued an ISA
810 audit report confirming that these audited provisional
summarized consolidated financial statements have been derived
from the consolidated financial statements and are consistent in
all material respects, with the audited consolidated annual
financial statements. A copy of their ISA 810 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
11 June 2015
WL Battershill E Vermaak
Chairman and CEO Financial Director
CORPORATE INFORMATION
Chairman and CEO W L Battershill
Non executive directors: B M Khoza (Alternate - N M Anderson), N
G Payne; R G Lewis; J R Waller*
Executive directors: G D G Mackenzie, J S Govender, C Parry, K
Paxton, E Vermaak
* resigned with effect from 8 June 2015
Registered address: 46 Eden Park Drive, 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 Advisor: Sasfin Capital (A division of Sasfin Bank
Limited)
11 June 2015
Date: 11/06/2015 04:53:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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