Wrap Text
Unaudited consolidated financial results for the six month period ended 30 September 2015
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 9% on constant tonnage
- HEPS 3.5 cents per share
- NTAV 100 cents per share
- Dividend paid on 6 July 2015; 2 cents per share
- Significant improvement in working capital
UNAUDITED CONSOLIDATED FINANCIAL RESULTS
FOR THE SIX MONTH PERIOD ENDED 30 SEPTEMBER 2015
Summarised statement of profit and loss
Restated
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 September 2015 30 September 2014 31 March 2015
R’000 R’000 R'000
Revenue 1 505 173 1 655 366 3 248 046
Gross profit 207 780 261 262 475 453
Other costs (145 745) (176 236) (307 064)
Earnings before interest,
taxation,
Depreciation and amortisation 62 035 85 026 168 389
("EBITDA")
Restructuring adjustments (2 259) (21 152) (35 761)
Depreciation and (11 581) (18 146) (28 820)
Amortisation
Profit before interest and 48 195 45 728 103 808
taxation
Income from equity accounted
Investments - (1 640) (2 669)
(Loss) on disposal of assets (108) (83) (4 521)
Interest received 5 884 3 669 8 175
Interest paid (28 824) (32 859) (59 964)
Profit before taxation 25 147 14 815 44 829
Taxation (5 089) (3 410) (23 341)
Profit for the period from continuing
operations 20 058 11 405 21 488
Profit/(Loss) from discontinued
operations (*) 55 (9 836) (19 238)
Profit for the period 20 113 1 569 2 250
Profit attributable to ordinary
shareholders 20 113 1 839 2 250
Profit attributable to minority
shareholders - (270) -
20 113 1 569 2 250
Earnings per share (cents)- continued
operations 2.9 1.7 3.1
Earnings per share (cents – discontinued
operations - (1.4) (2.8)
Total earnings per share (cents) 2.9 0.3 0.3
Reconciliation of headline
earnings:
Earnings attributable to ordinary
shareholders 20 113 1 839 2 250
(Profit)/Loss on disposal of (108) 83 4 521
property, plant and equipment
Impairment of property, plant and
equipment - 2 863 -
Tax impact of adjustments 30 (1 159) (1 266)
Realisation of foreign currency
translation reserve on discontinued
operations 4 313 - 9 090
Headline earnings attributable to
ordinary shareholders(basic and
diluted) 24 348 3 626 14 595
Weighted average shares in 701 810 701 810 701 810
issue on which earnings are
based (000)
Headline earnings per share 3.5 0.5 2.1
(cents) (basic and diluted)
(*) This represents the result of the discontinuation of the Ghanaian operation
during the prior year. The Mozambican operation was also discontinued but the
figures are immaterial to the group.
Summarised statement of other comprehensive income
Unaudited Unaudited Audited
30 September 30 September 31 March
2015 2014 2015
R’000 R’000 R’000
Profit for the period 20 113 1 569 2 250
Other comprehensive income
Foreign currency translation reserve 49 673 18 994 51 699
Cash flow hedge (5 867) - 6 308
Property revaluation - - 9 271
Total comprehensive income 63 919 20 563 69 528
Summarised consolidated statement of financial position
Restated Restated
Unaudited Unaudited Audited
30 September 2015 30 September 2014 31 March 2015
R’000 R’000 R’000
ASSETS
Non-Current Assets
Property, plant and 377 385 376 437 378 879
equipment
Goodwill 14 706 14 706 14 706
Intangible assets 11 661 14 193 12 866
Investments in joint ventures 12 257 17 10 831
Deferred taxation 10 190 12 559 8 799
Other financial assets 6 344 - 6 986
432 543 417 912 433 067
Current Assets
Inventories 404 425 423 686 483 356
Trade and other receivables 646 031 789 185 755 840
Current tax receivable 7 797 13 976 6 936
Other financial assets 14 439 670 7 757
Loans to group companies 155 573 86 827 132 717
Cash and cash equivalents 66 210 106 926 55 822
1 294 475 1 421 270 1 442 428
Total assets 1 727 018 1 839 182 1 875 495
EQUITY AND LIABILITIES
Equity
Total shareholders’ equity 725 071 641 346 674 820
Non-controlling interest (143) (413) (143)
724 928 640 933 674 677
Liabilities
Non-Current Liabilities
Other financial liabilities 139 653 150 607 137 593
Deferred taxation 19 039 11 817 16 463
158 692 162 424 154 056
Current Liabilities
Trade and other payables 499 683 598 745 563 107
Current tax payable 2 431 2 375 10 120
Other financial liabilities 32 635 40 613 41 989
Bank overdraft 308 649 394 092 431 546
843 398 1 035 825 1 046 762
Total Liabilities 1 002 090 1 198 249 1 200 818
Total equity and liabilities 1 727 018 1 839 182 1 875 495
Number of shares in issue 701 810 701 810 701 810
(000)
Net asset value per share 103.3 91.3 96.1
(cents)
Net tangible asset value per 99.5 87.2 92.2
share (cents)
Summarised consolidated statement of changes in equity
Unaudited Unaudited Audited
30 September 30 September 31 March
2015 2014 2015
R’000 R’000 R’000
Equity holders’ interest
Balance at beginning of period 674 820 620 044 620 044
Profit for the period 20 113 1 839 2 250
Foreign currency translation 49 673 18 994 51 699
reserve
Cash flow hedge (5 867) - 6 308
Share based payment provision 422 469 (662)
Dividends paid (14 090) - (14 090)
Revaluation reserve - - 9 271
Balance at end of period 725 071 641 346 674 820
Non-controlling interest
Balance at beginning of period (143) (143) (143)
Profit for the period - (270) -
Balance at end of period (143) (413) (143)
Total equity 724 928 640 933 674 677
Summarised consolidated statement of cash flows
Unaudited Unaudited Audited
30 September 30 September 31 March
2015 2014 2015
R’000 R’000 R’000
Operating activity cash 245 661 86 697 46 471
flows
Cash flows from 285 845 127 816 109 638
operations
Interest and taxation (40 184) (41 119) (63 167)
Investing activity cash (161 971) 618 (11 880)
flows
Financing activity cash 43 268 9 657 (25 922)
flows
Total cash movement for the 126 958 96 972 8 669
period
Cash at beginning of period (375 724) (387 306) (387 306)
Effect of exchange rate 6 327 3 168 2 913
movement on cash balances
Total cash at end of period (242 439) (287 166) (375 724)
Summarised consolidated segment report
Unaudited Unaudited Audited
30 September 30 September 31 March
2015 2014 2015
R’000 R’000 R’000
Net revenue
Stockists 195 990 466 925 749 190
Bulk Sales 724 142 519 038 1 285 846
Exporting 569 576 640 296 1 191 327
Other 15 465 29 107 21 683
1 505 173 1 655 366 3 248 046
Profit before interest and
taxation
Stockists (595) 9 831 13 629
Bulk Sales 15 348 17 941 44 774
Exporting 29 546 34 299 39 734
Other 3 788 (16 426) 1 150
48 087 45 645 99 287
Assets
Stockists 102 216 298 026 138 419
Bulk Sales 415 862 247 211 502 287
Exporting 726 397 696 852 663 143
Other 506 468 615 881 591 304
Eliminations (23 925) (18 788) (19 658)
1 727 018 1 839 182 1 875 495
OVERVIEW
The interim financial results are presented for the six months ended 30 September
2015.
The Group Operates in the steel and associated industries with strategically
located operations in South Africa, the Democratic Republic of Congo, Mauritius,
and Zambia. BSI markets through three distinct channels, being Stockists, Bulk
Sales and Exporting.
The six months under review reflects the Group’s strategy of focusing on reducing
operating costs and improved working capital management.
FINANCIAL RESULTS
Tough trading conditions experienced during the past 6 months are evident in the
decrease in gross profit margin of 2% relative to the comparative prior period.
Exchange losses due to local currency devaluations in Zambia and Mozambique of
R17.7 million contributed to the decrease in gross profit margin.
The 9% decline in revenue is largely due to a significant decrease in steel prices.
159,785 Tons were sold during the reporting period in comparison to 162,721 in the
prior period despite the fact that discontinued operations accounted for 10,360
tons in the prior period, alongside a contracted market. We are therefore excited
to report a gain in market share.
The decrease in operating expenses of 17% in relation to the prior period is a
direct result of the extensive restructuring exercise undergone during 2015, in
anticipation of the downturn in the market. The recent closure of our Mozambican
operation due to the rapid devaluation of the Meticais alongside the closure of our
Klerksdorp operation are expected to bring about an approximate saving of a further
R2million per month in costs. Most of the Mozambican customers are to be serviced
directly from South Africa in future.
Losses due to the realisation of foreign currency translation reserves relating to
Mozambique and Ghana amounted to R4.3 million during the period under review and
were noted in calculating headline earnings. The ZAR to the USD weakened to
R13.81.
Improved stock and credit management resulted in decreased inventory levels, and
are aimed to decrease even further going forward without compromising on sales, as
well a much improved debtors book. This resulted in lowered cash borrowings and
improved finance costs followed.
The increase in Group company loan balances, Trade payables and Other financial
liabilities relate to loans to and funding via TTG. These amounts were previously
reflected on a net basis in terms of an offset agreement which we no longer believe
will be enforced. The comparatives to the statement of financial position have
been restated accordingly.
Likewise to the March 2015 results the prior period figures have been restated due
to a reclassification of R23 million from operating expenses to cost of sales. This
reclassification was made in order to comply with IAS1; as well as the
reclassification of losses incurred due to discontinued operations in terms of
IFRS5.
PROSPECTS
Prior to March 2015 we elected to close all loss-making operations. At the time we
elected to keep the Klerksdorp and Maputo outlets going, as we felt both had a
reasonable prospect of delivering fair returns. Regrettably the crash of the South
African mining sector and a significant depreciation in the Mozambique Meticais
destroyed all prospects and we decided to close both businesses and suffered the
inevitable costs associated with such closures.
The R17.7m foreign exchange losses incurred in Mozambique and Zambia were caused by
selling on credit in the local currency and buying in USD or ZAR. By the time we
collected the local currency from our debtor, the value collected was far lower in
USD terms than it was on the date of sale, thereby resulting in a foreign exchange
loss. It is illegal to sell on credit in USD in Mozambique, hence the decision to
close operations, however, in Zambia and the DRC, it is acceptable; all credit
sales throughout our African operations are now made in USD.
Had it not been for the foreign exchange losses, which have now been addressed we
would have shown a fair return in an extraordinarily tough market. This gives us
confidence that the new leaner business platform is capable of delivering much
improved profits going forward. We are also pleased that the closure of loss-making
businesses has not resulted in a drop in our tonnage. As a result, our net
operating cost per ton is significantly lower than F2015, which puts us in a very
strong position.
We continue to focus on discipline and efficiency going forward. We are confident
our business structure is sound and expect continued growth of our market share as
less efficient players regress under pressure.
BSI has a 45% interest in a trade finance company, TTG, which is accounted for as
an investment. As reported in our March 2015 results, TTG restructured during that
year and incurred a loss for the year, which BSI accounted for by impairing it’s
investment. TTG remains on track to report a profit for the year to March 2016
which should go a long way towards recouping its accumulated losses to date. A
meaningful profit is anticipated in the 2017 financial year.
DIVIDEND DECLARATION
No dividends were declared.
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
JS Govender and GDG Mackenzie resigned as executive directors on 17 July 2015 and
30 June 2015 respectively. Both have remained in the group as executives.
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 set out in the Integrated Annual Report for the year ended 31
March 2015, which comply with International Financial Reporting Standards, the
Companies Act, 71 of 2008 of South Africa as amended and the JSE Limited Listings
Requirements. The basis of preparation is consistent with that of the prior period.
The unaudited condensed consolidated financial statements were authorised for issue
by the directors on 4 November 2015 for publication on 4 November 2014. The
summarised consolidated financial statements for the six month period ended 30
September 2015 have been prepared by the Financial Director, Mrs E Vermaak.
Any reference to the future financial performance of the Group has not been
reviewed or reported on by the Group’s auditors.
By order of the Board
4 November 2015
W L Battershill E Vermaak
CHAIRMAN AND CEO CFO
CORPORATE INFORMATION
Chairman and CEO: WL Battershill
Non-executive directors: B M Khoza (Alternate - N M Anderson), N G Payne, R G Lewis
Executive directors: C Parry, K Paxton, E Vermaak
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: 04/11/2015 04:54:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
