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Audited Results for the year ended 30 June 2015
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" or "the company")
AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2015
Highlight: Normalised earnings per share up 27%
Summarised Audited Consolidated Financial Statements for the year ended 30 June 2015
SUMMARISED AUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
30 June 30 June
2015 2014
R'000 R'000
Revenue 318 609 308 101
Cost of sales (154 138) (147 297)
Gross profit 164 471 160 804
Other income 1 840 1 876
Other operating expenses (156 832) (153 131)
Operating profit 9 479 9 549
Finance costs (2 485) (2 101)
Share of loss from associate - -
Profit before tax 6 994 7 448
Taxation (2 283) (2 308)
Profit for the year 4 711 5 140
Other comprehensive income for the year:
Net effect of revaluation of property - 5 480
Total comprehensive income attributable to owners of 4 711 10 620
the parent
Earnings per share (cents) 3,97 4,48
Diluted earnings per share (cents) 3,97 4,46
Notes to the statement of comprehensive income:
Headline earnings per share (cents) 3,97 4,46
Diluted headline earnings per share (cents) 3,97 4,45
Normalised earnings per share (cents) 5,07 4,00
Diluted normalised earnings per share (cents) 5,07 3,98
Number of shares:
- Weighted average number of shares 118 628 531 114 635 975
- Diluted weighted average number of shares 118 628 531 115 111 585
Reconciliation of headline and normalised earnings (R'000):
Profit for the year attributable to ordinary shareholders 4 711 5 140
Profit on disposal of property, plant and equipment - net of taxation (1) (22)
Headline earnings for the year attributable to ordinary shareholders 4 710 5 118
Adjustment for directors' fees if recorded in the correct period - net of taxation 1 302 (532)
Normalised earnings 6 012 4 586
SUMMARISED AUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited Audited
30 June 2015 30 June 2014
R'000 R'000
ASSETS
Non-current assets 92 468 94 249
Property plant and equipment 50 845 52 576
Goodwill 36 963 36 963
Intangible assets 1 816 1 864
Deferred taxation 2 844 2 846
Current assets 138 370 147 043
Inventories 76 280 76 018
Trade and other receivables 55 515 54 086
Other financial assets 4 530 7 175
Taxation receivables 1 875 2 173
Cash and bank 170 7 591
Total assets 230 838 241 292
EQUITY AND LIABILITIES
Total equity 157 562 152 379
Share capital 136 993 136 710
Reserves 22 632 22 830
Accumulated loss (2 063) (7 161)
Non-current liabilities 9 354 9 389
Deferred taxation 9 354 9 389
Current liabilities 63 922 79 524
Trade and other payables 35 731 45 612
Other financial liabilities - 390
Operating lease liability 2 387 2 559
Current tax payables 1 236 758
Short-term borrowings 24 568 30 205
Total liabilities 73 276 88 913
Total equity and liabilities 230 838 241 292
Number of shares in issue 124 048 757 123 704 022
Net asset value per share (cents) 127 123
Tangible net asset value per share (cents) 96 92
SUMMARISED AUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Audited Audited
30 June 2015 30 June 2014
R'000 R'000
Capital and reserves – opening balance 152 379 134 550
Profit for the year 4 711 5 140
Other comprehensive income - 5 480
Shares issued for acquisition of assets 283 10 328
Net transfer of reserves - (3 156)
Share-based payment expense 189 37
Capital and reserves – closing balance 157 562 152 379
Comprising:
Share capital and share premium 136 993 136 710
Reserves 22 632 22 830
Accumulated loss (2 063) (7 161)
Total equity 157 562 152 379
SUMMARISED AUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
Audited Audited
30 June 2015 30 June 2014
R'000 R'000
Net cash flow from operating activities (407) (6 629)
Net cash flow from investing activities (1 377) (4 083)
Net cash flow from financing activities - (2 850)
Net decrease in cash and cash equivalents (1 784) (13 562)
Cash and cash equivalents at beginning of the year (22 614) (9 052)
Cash and cash equivalents at end of the year (24 398) (22 614)
SEGMENT REPORT
Audited Audited Audited Audited Audited
30 June 2015 30 June 2015 30 June 2015 30 June 2015 30 June 2015
30 June 2015 R'000 R'000 R'000 R'000 R'000
Environmental Water Corporate and
Flooring Solutions Treatment Eliminations Group
Total sales 250 578 74 943
Less: inter-segmental sales (6 912)
Revenue 250 578 74 943 (6 912) 318 609
Gross profit 121 854 42 617 164 471
Operating profit 6 452 1 287 1 740 9 479
Finance costs (214) (1 112) (1 159) (2 485)
Profit before tax 6 238 175 581 6 994
Share of profit /(loss) from associate 0 0
Other information
Capital expenditure 3 367 371 131 3 869
Depreciation and amortisation 3 801 1 131 267 5 199
Segment assets 169 992 29 140 31 706 230 838
Segment liabilities 36 342 19 445 17 489 73 276
Audited Audited Audited Audited Audited
30 June 2014 30 June 2014 30 June 2014 30 June 2014 30 June 2014 30 June 2014
R'000 R'000 R'000 R'000 R'000
Environmental Water Corporate and
Flooring Solutions Treatment Eliminations Group
Total sales 238 956 75 519 -
Less: inter-segmental sales (6 374)
Revenue 238 956 75 519 (6 374) 308 101
Gross profit 117 645 43 159 - 160 804
Operating profit 6 605 697 2 247 9 549
Finance costs (124) (1 096) (881) (2 101)
Profit /(loss) before tax 6 481 (399) 1 366 7 448
Share of loss from associate 0 0
Other information
Capital expenditure 3 819 2 617 74 6 510
Depreciation and amortisation 3 964 2 489 71 6 524
Segment assets 175 076 32 413 33 803 241 292
Segment liabilities 46 056 22 919 19 941 88 916
REVIEW OF PERFORMANCE
INTRODUCTION AND BACKGROUND TO THE RESULTS
Accentuate produced an encouraging performance despite a number of challenges that the group
had to face during the year under review. The year was notable for each quarter having distinct
characteristics as far as challenges and opportunities were concerned. The group had to contend
with ongoing currency volatility and lacklustre activity within both the private and public sector
construction environment and the industrial sector. Increased regularity and duration of load-
shedding impacted negatively across the operations.
The first quarter began with a metal industry strike lasting the whole of July, which affected both
demand from customers and manufacturing volumes, and resulted in a major shortfall against
budgeted results. The second quarter saw increased demand and much better recoveries resulting
from higher production throughput, which led to a reasonable set of results for the half year. A slow
start to the third quarter was surprisingly followed by an all-time record production and sales
month in March 2015. Unfortunately this momentum did not continue for the balance of the
financial year, with economic activity across all sectors tailing off noticeably during the fourth
quarter.
The High Court vindicated the group's interpretation and actions relating to the 2013 annual
general meeting ("AGM"), which allowed for the payment of most of the fees owing to the non-
executive directors and the adoption of the Memorandum of Incorporation (MOI). All the directors'
fees owing up to 30 June 2014 were paid and expensed in the year under review.
Turnover for the year increased by 3,4% to R318,6 million and gross profit increased by 2,3% to
R164,5 million. The continued focus on cost containment limited the increase in operating expenses
to 2,4%, which included the directors' fees of R1,8 million for the 2012, 2013 and 2014 years
referred to above. Operating profit of R9,5 million was only marginally lower than the previous
years. Headline earnings per share of 3,97 cents were 11% less, attributable mainly to the arrear
directors' fees and the increase in the weighted average number of shares.
To give shareholders a better understanding of the true comparative performance of the group, we
have reported "Normalised earnings per share" which reflects the earnings if the directors'
fees had been expensed in the correct year to which they actually related. The normalised result
shows an increase in earnings per share of 27% for the 2014/15 year.
FLOORING BUSINESS
The FloorworX business operations contributed 79% of the group revenue.
Considering the impact of the macro economy during the period under review, Floorworx showed
its resilience in weathering major challenges, emerging stronger and more focused than ever
before.
Factors that impacted negatively on the division's performance included the month-long metal
industry strike in July 2014 that stopped production at the East London plant, sluggish domestic
demand, extreme volatility in currencies and the impact of load-shedding on production efficiencies
and recoveries. The effect of load-shedding was felt beyond the manufacturing process, adversely
impacting production planning, procurement, inventories and customer demand. Management
responded to these challenges by focusing on costs, flexible work practices as well as exploring
additional markets for the supply of domestically-manufactured products.
The final phase of the integration of the Suntups acquisition was successfully implemented and this
business has become a valuable part of the comprehensive product range offered by FloorworX. We
remain confident that this sector will become an increasingly significant contributor to the
profitability of the group. Other strategic initiatives included the introduction of a corporate carpet
tile range that is progressing well.
Overall revenue increased by 4,9% to R251 million, while margins were placed under pressure due
to the factors highlighted above. However, effective cost containment and a strong focus within this
business resulted in operating profit being only marginally lower than the previous year.
The dedicated management team ensured that FloorworX further entrenched its leadership
position within the resilient flooring market during the period under review.
ENVIRONMENTAL SOLUTIONS BUSINESS
This comprises the Safic business operations and contributed 21% of the group revenue.
Safic showed encouraging progress in the turnaround strategy, despite having to deal with a
number of challenges. These included the spillover of the platinum sector strike, the metal industry
strike, currency volatility and load-shedding.
Safic has for some time been pursuing a strategy to focus on sustainable, recurring business within
the commercial market segments as well as increasing the range of more specialised chemical
products utilised in production process. As a result, there has been a shift to a more targeted,
professional and sustainable marketing approach.
This strategy is showing rewards as demonstrated by the fact that while volumes sold to the
division's traditional markets such as mining, engineering and manufacturing reduced during the
period under review, the increased sales in the newer markets ensured Safic's performance was
more sustainable and resilient. This bodes well for the business going forward.
The Degrachem acquisition has been effectively bedded down and we are particularly pleased with
the results, notwithstanding the fact that this area of business was severely exposed to the NUMSA
strike in July 2014. This entry into the specialty metal treatment sector also provides a base for
further expansion into the related process chemical markets.
The provision of screeds and adhesives to FloorworX, as well as sales of related maintenance
products and equipment, continue to show good growth and places the Accéntuate group in the
unique position where it can supply a comprehensive range of flooring solutions, including
preparation and maintenance products and equipment.
Although Safic's revenue declined marginally to R74,9 million and margins were under pressure,
operating profit almost doubled due to very effective cost containment and efficiency improvement
measures.
The provision of water treatment chemicals and solutions to Safic customers remains a great
opportunity, and the Ion Exchange joint venture delivers technical back-up that provides the basis
for sustained growth in this area of the business. A greater marketing focus, increased contract
based business, process chemical supply, and the return of traditional markets to some form of
normality will see Safic increase its contribution to the performance of the group.
WATER TREATMENT BUSINESS
This comprises the Ion Exchange Safic water treatment business, which is a partnership between
Accéntuate, Safic and Ion Exchange India. The business is equity accounted by the group as an
associate.
As mentioned in previous announcements, water is increasingly becoming a major area of focus
within the domestic economy. The joint venture with India's leading water solutions company, Ion
Exchange India, provides Accentuate with a unique strategic platform for securing a number of
lucrative water treatment and infrastructure projects in South Africa. The year has seen a number of
exciting developments, including the awarding of a number of sizable contracts as well as a focus on
building the necessary capacity to deal with the projects envisaged as and when they are awarded.
Although this area of the business is still in its early stages, management remains of the opinion that
this has the potential to become a major contributor towards the growth and profitability of
Accentuate in the future.
UPDATE ON SHAREHOLDING
Post the financial year end, on 27 August 2015, Accentuate informed the market that Trustee Board
Investments ("TBI") had acquired a 25,23% interest in Accentuate. The Company welcomes TBI as a
shareholder and looks forward to a constructive and mutually beneficial relationship with TBI. This
marks a pivotal moment for Accéntuate, as the Company enters an era in which the vast majority of
shareholders are fully aligned to the strategy and vision which management and the board have for
the Group.
PROSPECTS
The difficult economic conditions are not expected to ease in the foreseeable future. However, all
the trading entities within the group remain focused on expanding their customer base and product
offerings, and are well poised to take advantage of every possible opportunity to increase revenue
and profitability. The group continues to assess possible acquisitions which fit in with the approved
strategy, and with the support of the shareholders, it will be able to implement a number of key
initiatives which are planned.
CHANGES TO THE BOARD OF DIRECTORS
Dineo Molefe resigned as non-executive director and chairperson of the audit and risk committee
with effect from 1 July 2014. The board wishes to thank Dineo for the valuable contributions made
during her tenure. At the same time Pieter Kriel, who acted as Dineo's alternate director, was
appointed as a non-executive director of Accéntuate.
On 1 August 2014 Andile Mjamekwana was appointed as an alternate director to Pieter Kriel. Andile
has a strong investment banking and accounting background, which will see Andile contributing
positively to the growth of Accéntuate, particularly when it comes to the targeting and assessment
of potential acquisitions. The board has appointed Andile as chairman of the audit and risk
committee.
Malesela Motlatla resigned from the board on 7 March 2015 due to reaching the mandatory
retirement age of 75 years, having served as Chairman of the company from June 2006 until his
retirement. The board extends its gratitude to Dr. Motlatla for the contributions and guidance he
provided to the group with his principled leadership.
Ralph Patmore, who was the lead independent director of Accentuate, was appointed as
independent non-executive Chairman on 27 May 2015.
DIVIDEND
The Accéntuate board deems it prudent not to declare a dividend.
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 no contingent liabilities in the group.
BASIS OF PREPARATION
The abridged summarised audited consolidated financial statements are prepared in accordance
with the requirements of the JSE Listings Requirements for abridged reports, the requirements of
the Companies Act applicable to summary financial statements, the framework concepts and the
measurement and recognition requirements of International Financial Reporting Standards (IFRS)
and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, and
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 summarised
consolidated financial statements were derived, are in terms of International Financial Reporting
Standards and are consistent with the accounting policies applied in the preparation of the previous
consolidated annual financial statements.
There are no significant matters arising since the end of the year under review.
The summarised audited consolidated financial statements were prepared under the supervision of
the chief financial officer, Chris Povall CA (SA).
UNQUALIFIED AUDIT OPINION
The auditors, Mazars (Gauteng) Inc., have issued their unmodified opinion on the Group's
consolidated annual financial statements for the year ended 30 June 2015. A copy of the auditor's
report together with a copy of the audited financial statements is available for inspection at the
Company's registered office.
These summary audited consolidated financial statements have been derived from the Group's
consolidated annual financial statements. The contents of this announcement are extracted from
audited information, although the announcement is not itself audited. The directors take full
responsibility for the preparation of the abridged report and the financial information has been
correctly extracted from the underlying consolidated annual financial statements.
The auditor's report does not necessarily report on all the information contained in this
announcement. Shareholders are therefore advised that, in order to obtain a full understanding of
the nature of the auditor's engagement, they should obtain a copy of the auditor's report together
with the accompanying financial information from 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.
28 September 2015
CORPORATE INFORMATION
Non-executive directors:
RB Patmore (Chairman)
NE Ratshikhopha
PS Kriel
A Mjamekwana (alternate)
Executive directors:
FC Platt (Chief Executive Officer)
CJ Povall (Chief Financial Officer)
DE Platt
Registered address:
Accentuate Business Park
32 Steele Street
Steeledale
2197
Postal address:
P.O. Box 1754
Alberton
1450
Company secretary:
PS Dayah
pdayah@accent.co.za
Telephone:
011 406 4100
Facsimile:
086 509 3246
Website:
www.accentuateltd.co.za
Email:
info@accent.co.za
Twitter:
@AccentuateLtd
Facebook:
www.facebook.com/AccentuateLtd
Transfer secretaries:
Computershare Investor Services (Pty) Limited
Designated Adviser:
Bridge Capital Advisors (Pty) Ltd
Attorneys:
Fullard Mayer Morrison
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: 28/09/2015 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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