Wrap Text
UNAUDITED CONSOLIDATED FINANCIAL RESULTS
FOR THE SIX MONTH PERIOD ENDED 30 SEPTEMBER 2016
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
- Increase in NPAT of 22%
- HEPS 4.2 cents per share
- NTAV 102 cents per share
- Dividend paid on 15 August 2016; 2 cents per share
UNAUDITED CONSOLIDATED FINANCIAL RESULTS
FOR THE SIX MONTH PERIOD ENDED 30 SEPTEMBER 2016
Summarised statement of profit and loss
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 September 2016 30 September 2015 31 March 2016
Restated
R’000 R’000 R'000
Revenue 1 316 371 1 441 794 2 668 006
Gross profit 184 956 204 253 395 741
Other costs (120 569) (134 725) (226 530)
Earnings before interest,
taxation, depreciation and
amortisation (“EBITDA”) 64 387 69 528 169 211
Restructuring adjustments - (2 259) -
Depreciation and (11 683) (11 581) (22 885)
Amortisation
Profit before interest and 52 704 55 688 146 326
taxation
Income from equity accounted
Investments - - (36)
(Loss) on disposal of assets (33) (108) (1 428)
Interest received 5 991 5 884 34 350
Interest paid (18 321) (28 357) (51 476)
Impairment of iron ore - - (39 952)
Profit before taxation 40 341 33 107 87 784
Taxation (9 958) (5 770) (31 572)
Profit for the period from continuing
operations 30 383 27 337 56 212
Loss from discontinued
operations (*) (1 443) (7 224) (22 927)
Profit for the period 28 940 20 113 33 285
Profit attributable to ordinary
shareholders 28 940 20 113 33 285
Earnings per share (cents)- continued
operations 4.4 3.9 8.0
Earnings per share (cents – discontinued
operations (0.2) (1.0) (3.3)
Total earnings per share (cents) 4.2 2.9 4.7
Reconciliation of headline
earnings:
Earnings attributable to ordinary
shareholders 28 940 20 113 33 285
(Profit)/Loss on disposal of 33 (108) 1 428
property, plant and equipment
Tax impact of adjustments (9) 30 (400)
Realisation of foreign currency
translation reserve on discontinued
operations - 4 313 2 781
Headline earnings attributable to
ordinary shareholders(basic and
diluted) 28 964 24 348 37 094
Weighted average shares in 696 871 701 810 700 336
issue on which earnings are
based (000)
Headline earnings per share 4.2 3.5 5.3
(cents) (basic and diluted)
(*) This represents the result of the discontinuation of the Ghanaian operation
during the 2014 year.
Summarised statement of other comprehensive income
Unaudited Unaudited Audited
30 September 30 September 31 March
2016 2015 2016
R’000 R’000 R’000
Profit for the period 28 940 20 113 33 285
Other comprehensive income
Foreign currency translation reserve (23 079) 49 673 72 254
Cash flow hedge (3 205) (5 867) (12 342)
Total comprehensive income 2 656 63 919 93 197
Summarised consolidated statement of financial position
Unaudited Unaudited Audited
30 September 30 September 31 March
2016 2015 2016
Restated
R’000 R’000 R’000
ASSETS
Non-Current Assets
Property, plant and 321 352 358 052 331 644
equipment
Goodwill 14 706 14 706 14 706
Intangible assets 7 050 11 661 10 452
Investments in joint ventures 12 362 12 257 13 165
Loans to group companies 223 932 155 429 182 165
Deferred taxation 16 077 10 190 17 172
Other financial assets - 6 344 5 795
595 479 568 639 575 099
Current Assets
Inventories 438 056 404 425 377 998
Trade and other receivables 542 026 646 031 528 618
Current tax receivable 8 726 7 797 6 658
Other financial assets 4 250 14 439 827
Loans to group companies 163 144 14 290
Cash and cash equivalents 32 804 66 210 53 131
1 026 025 1 139 046 981 522
Non-current assets held for sale 28 698 - 28 698
Total assets 1 650 202 1 707 685 1 585 319
EQUITY AND LIABILITIES
Equity
Total shareholders’ equity 733 021 712 505 743 062
Non-controlling interest (143) (143) (143)
732 878 712 362 742 919
Liabilities
Non-Current Liabilities
Other financial liabilities 32 336 62 568 38 630
Deferred taxation 20 090 12 272 21 641
Other liabilities 119 207 77 085 85 821
171 633 151 925 146 092
Current Liabilities
Trade and other payables 454 200 516 132 428 467
Current tax payable 2 426 2 431 3 472
Other financial liabilities 38 211 32 635 43 967
Bank overdraft 245 895 292 200 214 502
740 732 843 398 690 408
Liabilities of disposal group 4 959 - 5 900
Total Liabilities 917 324 995 323 842 400
Total equity and liabilities 1 650 202 1 707 685 1 585 319
Number of shares in issue 696 871 701 810 700 336
(000)
Net asset value per share 105.2 101.5 106.1
(cents)
Net tangible asset value per 102.1 97.8 102.5
share (cents)
Summarised consolidated statement of changes in equity
Unaudited Unaudited Audited
30 September 30 September 31 March
2016 2015 2016
R’000 R’000 R’000
Equity holders’ interest
Balance at beginning of period 743 062 674 820 665 549
Profit for the period 28 940 20 113 33 285
Foreign currency translation (23 079) 49 673 72 254
reserve
Cash flow hedge (3 205) (5 867) (12 342)
Share based payment provision 1 309 422 418
Dividends paid (14 006) (14 090) (14 090)
Purchase of treasury shares - - (2 012)
Revaluation reserve - (12 566) -
Balance at end of period 733 021 712 505 743 062
Non-controlling interest
Balance at beginning of period (143) (143) (143)
Profit for the period - - -
Balance at end of period (143) (143) (143)
Total equity 732 878 712 362 742 919
Summarised consolidated statement of cash flows
Unaudited Unaudited Audited
30 September 30 September 31 March
2016 2015 2016
Restated
R’000 R’000 R’000
Operating activity cash (63 203) 216 110 252 456
flows
Cash flows from (36 356) 256 294 304 842
operations
Interest and taxation (26 847) (40 184) (52 386)
Investing activity cash 7 306 (161 971) (65 180)
flows
Financing activity cash 5 935 43 268 (23 242)
flows
Total cash movement for the (49 962) 97 407 164 034
period
Cash at beginning of period (161 371) (329 724) (329 724)
Effect of exchange rate (1 758) 6 327 4 319
movement on cash balances
Total cash at end of period (213 091) (225 990) (161 371)
Summarised consolidated segment report
Unaudited Unaudited Audited
30 September 30 September March
2016 2015 2016
Restated
R’000 R’000 R’000
Net revenue
SA Trading 808 344 920 132 1 608 050
Exporting 472 350 506 197 1 020 373
Other 35 677 15 465 39 583
1 316 371 1 441 794 2 668 006
Profit before interest and
taxation
SA Trading 38 018 14 753 44 110
Exporting 13 634 37 039 87 281
Other 1 019 3 788 13 507
52 671 55 580 144 898
Assets
SA Trading 491 858 518 078 425 411
Exporting 707 816 707 064 662 843
Other 467 501 506 468 518 308
Eliminations (16 973) (23 925) (21 243)
1 650 202 1 707 685 1 585 319
OVERVIEW
The interim financial results are presented for the six months ended 30 September
2016.
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 two distinct channels, being Bulk Sales and
Exporting.
The six months under review reflects the Group’s strategy of focusing on generating
a reasonable return on capital employed.
FINANCIAL RESULTS
The 6 months under review were characterised by gross profit margins of 16.5% on
average during the first 3 months, with a significant decrease in margin during the
latter part of the period, resulting in an overall gross profit margin of 14.1%,
very much in line with the comparative period. High stock levels at good pricing
gave rise to higher gross profit margins during the first few months despite a very
flat Southern African market. Due to steel price increases, revenue of R10,628 per
ton is reported in comparison to R9,382 for the prior period.
Continuous focus on operating costs resulted in a further decrease of 10.5% in
Other costs compared to the prior period. The exceptional drop in Interest paid
during the period relates to a vastly more competitive interest rate enjoyed on the
USD Trade Finance facility held with the Tower Trade Group. This resulted in an
increased profit before tax of 22% compared to the prior period.
The loss of R1.4 million from discontinued operations relates to an impairment of
withholding taxes due from the Ghanaian government which have not materialised.
A stronger ZAR against the USD at R13.99 compared to R14.88 as at 31 March 2016
resulted in a Foreign Currency Translation Reserve write back of R23.1 million.
High stock levels resulted in an increase in borrowings of R50 million during the
period, despite 180 day terms afforded by our import suppliers. The current stock
holding should drop to well below the R360m mark by 30 November due to a very
conservative buying strategy adopted during the past quarter which should result in
reduced borrowings for the period ahead.
The Non-current assets held for sale represents the fixed property in Richards Bay
which is actively being marketed at the moment.
During the past 6 months the Tower Trade Group has traded below budget but is
breaking even, with incremental growth from month to month, and is cash flow
positive at these levels. Initiatives are underway to improve this performance, but
without increasing the risk appetite. Recovery of a long outstanding debt via court
processes and/or insurance claims are progressing, but more slowly than
anticipated.
Full details of the failed iron ore trade are detailed in the Chairman’s report
contained in our F2016 Integrated Report. The Company has received an offer for
the iron ore and plant through the liquidator, which Sentinel Bridge and Greensill
Capital have accepted. As a result, no further impairment to Trade receivables has
been raised. The liquidator is currently working on closing the deal. Following
closure of the liquidation, the Company will take legal action against the survey
agent for losses incurred as a consequence of an inaccurate report they provided.
Likewise to the March 2016 results, restatements were made to the September 2015
results. The statement of financial position was amended as a result of the change
in accounting policy on Land and buildings to the cost model, along with a
reclassification of the trade facility previously contained in Bank overdraft to
Trade and other payables. The statement of profit and loss was restated in
relation to prior period results in order to reflect the discontinuation of the
Mozambican operations, in terms of IFRS5.
PROSPECTS
Management is mindful of the current economic malaise which has impacted the steel
industry in particular. Despite not operating in a glamorous industry, management
believes that the steel industry is of strategic importance for the whole of the
South African economy. There is a concerted effort by government to address some
of the challenges faced by primary steel makers and downstream manufacturers which
will be positive for all. Other countries and markets have seen the resurgence of
the steel industry as these measures have been adopted by their respective
governments.
In line with the overall strategy of reducing costs, the Company has continued to
drive the cost base down. There are several initiatives which will be triggered in
the second half of the financial year which will have a material effect in further
reducing costs. The Company is committed to being in the bottom quartile of cost
per ton steel operations, which is in line with international norms and relevant to
the market.
An aggressive approach to stock has been taken recently, and stockholdings are
decreasing significantly, in line with this strategy, and will improve the cash
flow of the group.
DIVIDEND DECLARATION
The policy of the company is to pay dividends once a year based on year end
results.
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
No changes during the period under review.
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 in accordance with and 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. The results are in accordance with
the Group’s accounting policies set out in the Integrated Annual Report for the
year ended 31 March 2016, 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 2 November 2016 for publication on 2 November 2016. The
summarised consolidated financial statements for the six month period ended 30
September 2016 have been prepared by the Financial Manager, Mr JB McGrath.
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
2 November 2016
C Parry E Vermaak
CEO CFO
CORPORATE INFORMATION
Chairman: 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: 02/11/2016 05:06:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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