Wrap Text
Unaudited Results for the Year Ended 30 June 2017
Accéntuate Limited
(Incorporated in the Republic of South Africa)
(Registration Number: 2004/029691/06)
Share Code: ACE ISIN Code: ZAE000115986
www.accentuateltd.co.za
("Accéntuate" or "the group" or "the company")
UNAUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2017
Summarised Unaudited Consolidated Financial Statements for the year ended 30 June 2017
UNAUDITED SUMMARISED Restated
CONSOLIDATED STATEMENT OF 30 June 30 June
COMPREHENSIVE INCOME 2017 2016
R '000 R '000
Revenue 300 026 322 714
Cost of sales (173 453) (160 648)
Gross profit 126 573 162 066
Other income 12 384 2 420
Other operating expenses (136 099) (151 088)
Impairment loss on goodwill - (36 963)
Operating profit/(loss) before finance costs 2 858 (23 565)
Investment income 145 -
Finance costs (2 420) (2 817)
Profit/(loss) before tax 583 (26 382)
Taxation 334 (3 056)
Profit/(loss) for the period 917 (29 438)
Other comprehensive income/(loss): 7 323 (386)
Transfer of revaluation reserve (350) (386)
Asset revaluation surplus 7 673 -
- Gross revaluation surplus 9 402 -
- Deferred Tax (1 729) -
Total comprehensive income/(loss) for the period 8 240 (29 824)
Earnings/(loss) per share (cents) 0,70 (24,77)
Diluted earnings/(loss) per share (cents) 0,69 (22,44)
Net asset value per share (cents) 102 98
Notes to the statement of comprehensive
income:
Headline earnings/(loss) per share (cents) 0,74 6,32
Diluted headline earnings/(loss) per share (cents) 0,72 5,73
Number of shares:
- Weighted average number of shares 130 405 641 118 852 355
- Diluted weighted average number of shares 133 302 612 131 175 083
- Number of shares in issue 134 048 757 124 048 757
Reconciliation of headline and normalised
earnings (R'000):
Profit/(loss) for the year attributable to ordinary
shareholders 917 (29 438)
(Profit)/loss on disposal of property, plant and equip-
ment - net of taxation 45 (9)
Impairment of goodwill - 36 963
Headline earnings for the year attributable to
ordinary shareholders 962 7 516
Restated
UNAUDITED SUMMARISED 30 June 30 June
CONSOLIDATED STATEMENT OF 2017 2016
CHANGES IN EQUITY R'000 R'000
Capital and reserves – opening balance 116 506 144 879
Correction of error in equity (721) -
Profit/(loss) for the year 917 (29 438)
Shares issued for cash 7 500 -
Asset revaluation surplus 7 673 -
Share options exercised - 957
Share-based payment expense 681 108
Capital and reserves – closing balance 132 556 116 506
UNAUDITED SUMMARISED Restated
CONSOLIDATED STATEMENT 30 June 30 June
OF FINANCIAL POSITION 2017 2016
R'000 R'000
ASSETS
Non-current assets 58 885 54 279
Property plant and equipment 54 339 50 191
Goodwill - -
Intangible assets 1 500 1 663
Deferred taxation 3 046 2 425
Current assets 130 567 148 242
Inventories 80 157 104 147
Trade and other receivables 47 266 37 201
Other financial assets 1 726 1 913
Taxation receivable 1 217 4 800
Cash and bank 201 181
Total assets 189 452 202 521
EQUITY AND LIABILITIES
Total equity 132 556 116 506
Share capital 147 613 137 950
Reserves 27 614 22 020
Accumulated loss (43 686) (43 798)
Share based payment reserve 1 015 334
Non-current liabilities 6 613 7 312
Deferred taxation 6 613 7 312
Current liabilities 50 283 78 703
Other financial liabilities 579 -
Finance lease obligation 127 -
Trade and other payables 38 761 48 007
Operating lease liability 1 530 2 252
Current tax payables 500 84
Bank overdraft 8 786 28 360
Total liabilities 56 896 86 015
Total equity and liabilities 189 452 202 521
UNAUDITED SUMMARISED
CONSOLIDATED STATEMENT OF CASH FLOWS
30 June 30 June
2017 2016
R'000 R'000
Cash flow from operating activities 12 477 (3 705)
Cash flow from investing activities (510) (1 032)
Cash flow from financing activities 7 627 956
Net increase/decrease in cash and cash equivalents 19 594 (3 781)
Cash and cash equivalents at beginning of the year (28 179) (24 398)
Cash and cash equivalents at end of the year (8 585) (28 179)
SEGMENT REPORT
30 June 2017 30 June 2017 30 June 2017 30 June 2017 30 June 2017
R'000 R'000 R'000 R'000
Environmental Corporate and
Flooring Solutions Eliminations Consolidated
Total sales 232 999 67 489 9 086 309 574
Less: inter-segmental sales - (5 428) (4 120) (9 548)
Revenue 232 999 62 061 4 966 300 026
Gross profit 93 908 39 746 (7 081) 126 573
Operating profit/(loss) 3 447 (2 379) 1 790 2 858
Finance costs (1 270) (1 240) 235 (2 275)
Profit/(loss) before tax 2 177 (3 619) 2 025 583
Share of profit /(loss) from associate - - - -
Other information
Capital expenditure 1 133 130 333 1 596
Depreciation and amortisation 3 325 1 123 164 4 612
Segment assets 165 359 24 798 (705) 189 452
Segment liabilities 31 450 16 838 8 608 56 896
SEGMENT REPORT
30 June 2016 Restated Restated Restated Restated
30 June 2016 30 June 2016 30 June 2016 30 June 2016
R'000 R'000 R'000 R'000
Environmental Corporate and
Flooring Solutions Eliminations Group
Total sales 254 839 74 094 - 328 933
Less: inter-segmental sales - - (6 219) (6 219)
Revenue 254 839 74 094 (6 219) 322 714
Gross profit 120 831 41 235 - 162 066
Operating profit/(loss) (2 587) (22 213) 1 235 (23 565)
Finance costs (719) (1 005) (1 093) (2 817)
Profit/(loss) before tax (3 306) (23 218) 142 (26 382)
Share of profit/(loss) from associate - - - -
Other information
Capital expenditure 2 789 841 105 3 735
Depreciation and amortisation 3 317 884 267 4 468
Impairment of goodwill 13 462 23 501 - 36 963
Segment assets 178 558 31 312 (7 349) 202 521
Segment liabilities 50 398 20 597 15 020 86 015
INTRODUCTION TO THE RESULTS
The year under review has highlighted several challenges in the macro-economy while presenting Accéntuate
with a unique opportunity to examine its current operations, interrogate its strategic focus and to ensure
a control environment that is conducive to growth.
Revenue was severely impacted by sluggish infrastructure spend and the recessionary environment experienced
in the construction, manufacturing and mining sectors in which Accéntuate is strongly represented.
A major focus on sustainability and cost control has seen Accéntuate emerge leaner, with greater focus
and better positioned to take advantage of the many opportunities that are currently presenting themselves.
LITIGATION STATEMENT
The legal proceedings against the former Financial director of FloorworX (Pty) Limited, Mr Louis Schreuder,
relating to fraud amounting to R70 million over 10 years has resulted in him being convicted and he currently
is serving a prison sentence of 18 years. The court granted a confiscation order to Accéntuate Limited that
resulted in proceeds of R1 million from an auction of the personal effects of Mr Schreuder. Subsequent to the
financial year end, Accéntuate Limited was also granted a court order of R9,7 million which has been recognised
as other income in the financial statements for the year ended 30 June 2017. In addition an insurance
claim amounting to R1 million has been received and contributed to the fraud recoveries.
RESTATEMENT OF THE PRIOR YEAR RESULTS
The results for the year ended 30 June 2016 have been restated for the inclusion of an impairment loss on
goodwill that was not recognised in prior years amounting to R36,9 million. The restatement results from the
correction of an error due to the exclusion of head office management fees from impairment calculations in
previous years. The year ended 30 June 2016 represents the earliest period in which the restatement can
practically be determined.
REVIEW OF PERFORMANCE
Revenue for the year declined by 7,0% to R300,0 million (2016: R322,7 million), impacted by lower sales in
both the FloorworX and Safic businesses. Gross profit reduced by R35,5 million and the gross profit margin
from 50,2% to 42,2%, mainly as a result of the mentioned decline in sales.
Other income increased by 412% to R12,4 million (2016: R2,4 million) mainly as a result of the recognition
of fraud recoveries relating to the court order granted amounting to R9,7 million.
A focus on the reduction of operating costs continues and an amount of approximately R15 million was
saved through this initiative.
Finance costs reduced by 14% from R2,8 million in the previous year to R2,4 million in the
current year and relates directly to the reduction of inventory by R24 million as a result of a conscious
effort by management to improve working capital management. The overdraft balance with ABSA Bank has reduced
by R19,5 million to R8,8 million during the financial year.
FLOORING BUSINESS (100% OWNED)
The FloorworX business operations contributed 78% of group sales.
Revenue of R232,9 million was down by 8,6% compared to the previous year and the gross margin
reduced to 40,3% from 47,4%. The reduction in gross profit was caused by lower sales and a fixed
production cost element. Other income has increased due to the fraud recoveries that have been recognised,
amounting to R9,7 million, after a court order was granted to confiscate the assets of Mr. Schreuder.
FloorworX ended the period with an operating profit of R3,4 million compared to a loss of R2,6 million
in the previous year.
ENVIRONMENTAL SOLUTIONS BUSINESS (100% OWNED)
This comprises the Safic business operations and contributed 22% of group sales.
Market conditions remained extremely challenging during this financial year. Revenue was down
8,9% at R67,5 million (2016: R74,1million), contributing to an operating loss of R2,4 million
(2016: R22,2 million). The gross margin percentage increased by 3,2% to 58,9% mainly due to a
conscious effort by management to reduce manufacturing cost.
PENTAFLOOR ACQUISITION
The acquisition of the shares in Pentafloor (Pty) Limited was concluded after 30 June 2017. Pentafloor,
a leading supplier in the access flooring market in South Africa, was purchased for a consideration
of R40 million. The purchase price will initially be settled with R16 million in cash and R4 million
in shares. The remaining settlement will be incurred in a combination of shares and cash as agreed
over the earn out period of two years.
This acquisition provides Accéntuate with a product category in flooring that is not currently in
its repertoire and will add significantly to the overall business positioning. Access flooring is
used in commercial developments to meet the requirement of underfloor infrastructure and cabling.
The Pentafloor business is complementary to Accéntuate's FloorworX division and will add to the
depth of management.
Aside from natural synergies that can be extracted, Accéntuate will benefit from exposure to the
growing access flooring market.
Pentafloor was started in 2005 by Bianca and
Larry Shakinovsky and has grown significantly
over the years. It owns several key brands, namely Lafarge Access Flooring,
Solidfeel and Pentafloor Access Flooring, as well as other internationally
recognised brands in the industry.
SUBSEQUENT EVENTS
The Pentafloor acquisition was approved by the Accéntuate Limited board subsequent
to the financial year end of the company. Adjustments to the financial
statements are not required for this event and the required disclosures have
been made where required in the Integrated Annual Report.
Subsequent to the financial year end, the High Court in Grahamstown granted a
realisation order in terms of the Prevention of Organised Crime Act in respect of
known assets under the control of the curator amounting to R9,7 million, which
directs the curator to dispose of those assets and to pay the proceeds thereof
to the company as recompense to the victim of the fraud that was committed by
the Mr Louis Schreuder. The financial statements of Accéntuate Limited have
been adjusted to reflect these recoveries.
GENERAL ISSUE OF SHARES FOR CASH
In terms of the resolution approved at the annual general meeting, the board of directors
("the board") authorised the issue of 10 million additional shares at 75 cents per share
to service the increased working capital requirements at the beginning of the financial year.
These shares were allotted and subscribed for on 7 July 2016. As previously mentioned
management focused on working capital reduction and succeeded in reducing inventory
by R24 million.
STRATEGIC POSITIONING
Accéntuate has indicated its ambition for sustainable growth within identified
sectors, these being flooring, chemicals and water and to execute this ambitious
plan, a number of focused initiatives have been implemented during the
2016/2017 financial year, which include:
- Control environment
A focused attempt on strengthening the control environment has resulted
in a strengthened audit and risk committee, the appointment of
Maarten Coetzee as the group chief financial officer, PricewaterhouseCoopers Inc.
as external auditors, Prozilog (Pty) Limited as internal
auditors and Juba Statutory Services (Pty) Limited as company secretaries.
These appointments will ensure a solid control environment.
- Strengthening of the balance sheet
This has included the conscious reduction of inventories through a structured programme.
Although this impacted the profitability of the organisation across the year,
the benefits in terms of cash generation and rightsizing of the manufacturing facility
in East London, are already visible. In addition to this, debt has been restructured
and additional funding raised through a share issue for cash.
- Transformation
Economic transformation and the inclusion of previously disadvantaged
groups within the management and equity environment remains a key
developmental priority for Accéntuate. A number of initiatives in this regard
during the year under review are being considered and include both
gender and ethnic diversity. Accéntuate is also committed to improving its
black economic ownership structure. This has long been an investment
priority and to truly transform, Accéntuate must ensure an adequate empowerment holding.
- Support for a chemical expansion strategy
The chemical industry continues to hold opportunity and Accéntuate remains
focused on leveraging off existing manufacturing capabilities. In addition to
the traditional markets served, several complementary market sectors have
been identified and will form part of our core expansion strategy.
- Implementation of a clear water strategy
Water remains core to the strategic direction of the organisation and this
culminated in the establishment of a SADC-based joint venture with Asia's
leading total water management company Ion Exchange India. Much time
has been spent on developing the value chain and establishment of the
strategic partnerships that would ensure the implementation of a comprehensive
total water management strategy.
PROSPECTS
Although 2016/2017 has been a particularly challenging year from a market
perspective, we remain positive that macro-economic factors will eventually turn
more positive into 2018. With a strong control environment in place, strategies
have been interrogated to ensure sustainability and cost-saving initiatives are
maintained. This positions Accéntuate positively for implementation of its set
ambitious growth objectives. The economic environment may be hampered by
poor growth and a political overhang going forward.
We are confident that these interventions embarked on during the year will
ensure a strong and sustainable base on which the company can execute its
expansion and diversified growth strategies.
BOARD CHANGES
On 2 February 2017 Accéntuate announced the appointment of Maarten Coetzee
as chief financial officer with effect from 1 February 2017. Ockert Goosen
was appointed as an alternate director to Thys du Preez with effect from
17 November 2016. Ockert is a chartered accountant with an MBA degree and
has twenty-five years' experience in investment banking, asset management,
structured and corporate finance, securitisation, treasury, and managing collective
investment schemes.
DIVIDEND
The board deems it prudent not to declare a dividend.
GOING CONCERN
The board 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 summary consolidated financial statements are prepared in accordance
with the requirements of the JSE Limited Listings Requirements for preliminary
reports, and the requirements of the Companies Act applicable to summary
financial statements. The Listings Requirements require preliminary reports to
be prepared in accordance with 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 Financial Pronouncements as issued by the Financial
Reporting Standards Council and to also, as a minimum, 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
International Financial Reporting Standards and are consistent with those accounting
policies applied in the preparation of the previous consolidated annual
financial statements.
This summarised report is extracted from audited information, but is not itself
audited. The annual financial statements were audited by PricewaterhouseCoopers Inc.,
who expressed an unmodified opinion thereon. The audited annual financial statements
and the auditor's report thereon are available for inspection at the company's registered office.
The directors take full responsibility for the preparation of the preliminary report
and that the financial information has been correctly extracted from the underlying
annual financial statements.
The unaudited condensed consolidated results for the year were prepared under
the supervision of MJ Coetzee CA (SA). They were approved by the board
on 28 September 2017.
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 2017
CORPORATE INFORMATION
Non-executive directors: RB Patmore (Chairman) Telephone: 011 406 4100
NE Ratshikhopha Facsimile: 086 509 3246
PS Kriel Website: www.accentuateltd.co.za
MM du Preez Email: info@accent.co.za
A Mjamekwana (Alternate) Twitter: @AccentuateLtd
OJ Goosen (Alternate) Facebook: www.facebook.com/AccentuateLtd
Transfer secretaries: Computershare Investor Services (Pty)
Executive directors: FC Platt (Chief Executive Officer) Limited
MJ Coetzee (Chief Financial Officer) Designated adviser: Bridge Capital Advisors (Pty) Limited
DE Platt Attorneys: Fullard Mayer Morrison
Investor relations: Keyter Rech Investor Solutions
Registered address: Accéntuate Business Park
32 Steele Street
Steeledale
2197
Postal address: P.O. Box 1754
Alberton
1450
Company secretary: Juba Statutory Services (Pty) Limited
Represented by Sirkien van Schalkwyk
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: 29/09/2017 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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