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AET
AET
AET - Alert - Audited financial results for the eight months ended 30 June
2007
Alert Steel Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2003/005144/06)
(JSE code: AET & ISIN: ZAE000092847)
("Alert" or "the company" or "the group")
Highlights
Revenue up 42.3%
Attributable earnings up 88.8%
Headline earnings per share up 82.5%
Net tangible asset value up 73.6%
Acquisition of Steel Giant business
AUDITED FINANCIAL RESULTS FOR THE EIGHT MONTHS ENDED 30 JUNE 2007
Abridged income statements
Audited Pro forma Restated pro Pro forma
8 months Unaudited forma Unaudited
30 June 12 months Unaudited 12 months
2007 (1) 30 June 2007 12 months 30 June 2006 (2)
R`000 R`000 30 June 2006 R`000
(3)
R`000
Revenue 377 308 564 237 396 455 469 993
Gross profit 86 495 132 519 95 026 110 331
Other income 3 354 5 867 1 796 57
Operating costs (64 919) (95 840) (69 934) (80 954)
EBITDA 24 930 42 546 26 888 29 434
Depreciation (2 452) (3 652) (3 921) (3 921)
Profit before 22 478 38 894 22 967 25 513
interest and
taxation
Loss on disposal (96) (96) (67) (67)
of non-current
assets
Net interest paid (724) (1 118) (2 231) (2 143)
Profit before 21 658 37 680 20 669 23 303
taxation
Taxation (6 368) (11 019) (6 548) (7 321)
Profit after 15 290 26 661 14 121 15 982
taxation
Outside - - - (1 861)
shareholders`
interest
Earnings 15 290 26 661 14 121 14 121
attributable to
ordinary
shareholders
Reconciliation of
headline
earnings:
Profit 15 290 26 661 14 121 14 121
attributable to
ordinary
shareholders
Loss on disposal 69 69 34 34
of non-current
assets
Headline earnings 15 359 26 730 14 155 14 155
attributable to
ordinary
shareholders
Adjustment for (162) (162) - -
interest on share
incentive trust
Fully diluted 15 197 26 568 14 155 14 155
headline earnings
attributable to
ordinary
shareholders
Weighted average 156 200 000 231 630 137 225 000 000(4) 225 000 000(4)
shares in issue
on which earnings
are based
Fully diluted 158 740 274 234 170 411 225 000 000 225 000 000
weighted average
shares in issue
on which earnings
are based
Earnings per 9.8 11.5 6.3 6.3
share (cents)
Headline earnings 9.8 11.5 6.3 6.3
per share (cents)
Fully diluted 9.5 11.3 6.3 6.3
earnings per
share (cents)
Fully diluted 9.6 11.3 6.3 6.3
headline earnings
per share (cents)
Notes:
1. The Alert group results for the eight months ended 30 June 2007, after
the restructuring as defined in the detailed prospectus dated 16
February 2007 ("the detailed prospectus"), which was effective from 1
November 2006.
2. The aggregated pro forma unaudited results for 30 June 2006 have been
extracted from the detailed prospectus. The aggregated pro forma
unaudited results for 30 June 2007 have been compiled for investors to
provide comparative financial information on the basis that the group
restructuring was effective from 1 July 2006.
3. The results of Alert Steel Polokwane (Pty) Limited was treated as a
subsidiary in the 30 June 2006 aggregated pro forma unaudited results
in the detailed prospectus. The results of Alert Steel Polokwane (Pty)
Limited was however restated for the eight months ended 30 June 2007
and is treated as a joint venture and has also been adjusted for in
the restated pro forma unaudited results for 30 June 2007.
4. The pro forma weighted average number of shares in issue is based on
the sub-division and increase of the ordinary shares in issue into 225
000 000 ordinary shares as set out in the detailed prospectus.
Abridged balance sheets
Audited Restated Unaudited pro
30 June 2007 Unaudited pro forma after the
R`000 forma after consolidation
the adjustments
consolidation 30 June 2006 (1)
adjustments R`000
30 June 2006
(2)
R`000
ASSETS
Non-current assets 69 198 83 499 84 569
Property, plant and 26 905 29 183 30 070
equipment
Goodwill 41 662 54 027 54 027
Other financial assets 228 - -
Deferred taxation 403 289 472
Current assets 178 816 122 797 143 208
Inventories 81 010 52 949 63 015
Loans receivable 3 157 18 212 18 212
Loans to managers and 196 - -
employees
Trade and other 71 692 50 756 60 947
receivables
Cash and cash 22 761 880 1 034
equivalents
Total assets 248 014 206 296 227 777
EQUITY AND LIABILITIES
Ordinary shareholders` 138 194 105 000 105 000
funds
Minority interests (2) - - 7 983
Total shareholders` 138 194 105 000 112 983
funds
Non-current 7 830 12 729 12 764
liabilities
Other financial 6 710 11 971 12 006
liabilities
Operating lease 5 - -
liability
Deferred taxation 1 115 758 758
Current liabilities 101 990 88 567 102 030
Loans payable 1 454 - -
Other financial 7 603 4 773 5 207
liabilities
Current tax payable 6 372 3 621 3 671
Trade and other 84 465 50 409 60 264
payables
Provisions 432 334 389
Bank overdraft 1 664 29 430 32 499
Total equity and 248 014 206 296 227 777
liabilities
Number of shares in 245 000 000 225 000 000 225 000 000
issue
Fully diluted number 252 600 000 225 000 000 225 000 000
of shares in issue (3)
Net asset value per 56.4 46.7 46.7
share (cents)
Net tangible asset 39.4 22.7 22.7
value per share
(cents)
Notes:
1. The unaudited pro forma after consolidation adjustments column has
been extracted from the detailed prospectus.
2. Alert Steel Polokwane (Pty) Limited will be treated as a joint venture
in the restated unaudited pro forma after consolidation adjustments at
30 June 2006.
3. The 7 600 000 ordinary shares issued to the Alert Share Incentive
Scheme have been treated as "treasury shares".
Abridged statements of changes in equity
Audited Pro forma Pro forma
8 months Unaudited Unaudited
30 June 2007 12 months 12 months
R`000 30 June 30 June 2006
2007 R`000
R`000
Balance at beginning of - - --
period
Share issue 132 600 105 000 105 000
Total earnings after 15 290 - -
minorities
Share issue expenses (2 096) - -
Treasuray shares held by (7 600) - -
Alert Steel Share
Share Incentive Scheme
Trust
Balance at end of period 138 194 105 000 105 000
Abridged cash flow statements
Audited Pro forma Pro forma
8 months Unaudited Unaudited
ended 12 months 12 months
30 June 2007 30 June 30 June 2006
R`000 2007 R`000
R`000
Cash flows from operating 16 436 22 266 (1 606)
activities
Cash flow from investing (18 967) (3 652) (8 793)
activities
Cash flow from financing 23 628 31 033 (3 663)
activities
Net increase in cash and 21 097 49 647 (14 062)
cash equivalents
Cash and cash equivalents - (28 550) (17 403)
at beginning of period
Cash and cash equivalents 21 097 21 097 (31 465)
at end of period
OVERVIEW
The directors of Alert are pleased to present the audited financial results
for the eight months ended 30 June 2007 ("2007 financial results"),
subsequent to the group restructuring which was effective from 1 November
2006. The financial performance of the group for the 12 months ended 30
June 2007 ("2007 pro forma financial results") exceeded expectations as set
out in the detailed prospectus. The 2007 pro forma financial results are
presented for comparative purposes only.
Alert, through its operating subsidiaries, conducts business as retailers
of prime steel, building materials, plumbing and hardware products,
operating 12 retail branches and 2 rebar (steel reinforcing bars used in
concrete structures) manufacturing plants in Polokwane and Pretoria.
The financial results of the group are indicative of the increased economic
activity currently experienced in the industry, especially in the building
and construction industries, where Alert is predominantly active. This is
still an early indication of the significant opportunities in the domestic
market in the period leading up to the 2010 Soccer World Cup.
The domestic economy remained robust for the year, with recorded GDP growth
of 4.3%. The construction, mining and housing markets contributed
significantly to this growth. Although many economists predict a moderate
downturn in the global and domestic markets, the group anticipates further
increases in investment in middle and low cost housing, infrastructure
projects and major capacity expansion programmes in the power, water and
transportation sectors.
FINANCIAL RESULTS
Revenues increased by 42.3% to R564.2 million (2006: R396.5 million) in the
2007 pro forma financial results. Earnings before interest, taxation,
depreciation and amortisation ("EBITDA") grew by 58.2% in the 2007 pro
forma financial results to R42.5 million (2006: R26.9 million) off the
higher revenue base. This is largely attributable to an increase in steel
product demand primarily from the construction and building sectors.
Headline earnings for 2007 pro forma financial results increased 88.8% from
the previous period to R26.7 million (2006: R14.1 million). Headline
earnings per share increased 82.5% to 11.5 cents (2006: 6.3 cents).
PROSPECTS
The trading conditions will continue to be favourable for the group largely
driven by the continued growth in the construction, mining and housing
markets.
The group`s expansion strategy over the medium term includes the re-
development of certain existing sites and to increase their product ranges
as well as the acquisition and conversion of existing steel merchants. The
retail areas of two of the existing stores are currently increased with a
minimum of 4500m2. The group has also identified six new sites which
potentially can increase retail space with approximately 25 000 m2 over the
next 12 to 18 months.
At the end of 30 June 2007 the group had 14 stores (including rebar). With
the acquisition of Steel Giant (Pty) Limited ("Steel Giant"), the number of
stores of the group will increase to 18 stores which will have a positive
impact on revenue growth for the year ending 30 June 2008.
The Alert group is currently implementing a new information technology
system that will support and control the growth of the business.
SUBSEQUENT EVENTS
Shareholders are referred to the SENS announcement dated 22 August 2007
where it was announced that Alert entered into an agreement for the
acquisition of the Steel Giant business for a maximum purchase
consideration of R12 million ("Steel Giant transaction"). The Steel Giant
transaction is still conditional on the approval of the transaction by the
Competition Commission and shareholders will be advised once the
transaction becomes unconditional.
BASIS OF PREPARATION OF THE AUDITED RESULTS
Statement of compliance
The abridged financial statements comprise a consolidated balance sheet at
30 June 2007, a consolidated income statement, consolidated statement of
changes in equity and summarised consolidated cash flow statement for the
eight months ended 30 June 2007. The abridged financial statements have
been prepared in accordance with the recognition and measurement criteria
of International Financial Reporting Standards and the presentation and
disclosure requirements of IAS 34, Interim Financial Reporting.
Basis of measurement
The abridged financial statements have been prepared on the historic cost
basis except for certain financial instruments measured at fair value.
AUDITORS` REPORT
RSM Betty & Dickson`s (Tshwane), unqualified auditors` report on the
abridged financial statements contained in this report is available for
inspection at the company`s registered office.
SHARE CAPITAL
Alert has, through a private placement, placed 20 000 000 ordinary shares
at 100 cents per share to selected investors of Alert with the listing on
the JSE.
Prior to the date of listing on ALTX, an offer was made to the group`s
employees, to acquire shares in the company through the Alert Share
Incentive Trust. Employees have accepted 6 563 600 ordinary shares that
were offered by the Alert Share Incentive Trust.
DIVIDEND POLICY
In line with the group`s growth strategy, no dividend was declared for the
period.
On behalf of the Board
WF Schalekamp WW Mentz
Managing Director Financial Director
18 September 2007
CORPORATE INFORMATION
Non executive directors: E Dube (Chairman), OV Jevon
Executive directors: WF Schalekamp, WW Mentz
Registration number: 2003/005144/06
Registered address: 12 Gompou Street, East Lynne, 0186
Postal address: PO Box 29607, Sunnyside, 0132
Company secretary: M Pretorius
Telephone: (012) 800 0004
Facsimile: (012) 800 4661
Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited
Designated Adviser: Exchange Sponsors (Pty) Limited
Date: 19/09/2007 08:50:09 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.
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