| Tue 27 Nov 2007, 8:42 | | BSS - BSI (SA) Limited - Unaudited financial resul |
|
BSS
BSS
BSS - BSI (SA) Limited - Unaudited financial results: six months ended
30 September 2007
BSI (SA) Limited
(Incorporated in the Republic of South Africa)
(Registration number 2001/023164/06)
(JSE code: BSS & ISIN: ZAE000107371)
("BSI" or "the company")
Highlights
- Revenue up 57%
- Attributable earnings for six months up 135% to R39,5 million
- Earnings per share up 33%
- Headline earnings per share up 33%
- Net tangible asset value per share up 126%
- Listed on ALTX on 24 October 2007
INTERIM RESULTS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2007
Abridged income statements
Unaudited Unaudited Audited
6 months 6 months 12 months
30 September 30 September 31 March
2007 2006 2007
R`000 R`000 R`000
Revenue 636 903 406 018 876 903
Gross Profit 105 791 55 653 118 918
Other income 274 489 3 286
Other costs (37 999) (20 686) (64 605)
Earnings before interest, 68 066 35 456 57 599
taxation, depreciation and
amortisation ("EBITDA")
Depreciation (1 904) (909) (1 636)
Profit before interest and 66 162 34 547 55 963
taxation
(Loss)/Profit on disposal of (120) - 1 903
assets
Fair value adjustment on - - 1 688
Investment property
Interest received 402 202 1 194
Interest paid (12 650) (4 265) (12 979)
Profit before taxation 53 794 30 484 47 769
Taxation (14 320) (8 406) (14 239)
Profit after taxation 39 474 22 078 33 530
Minority interests - (5 310) (8 491)
Earnings attributable to 39 474 16 768 25 039
ordinary shareholders
Reconciliation of headline
earnings:
Earnings attributable to 39 474 16 768 25 039
ordinary shareholders
Loss/(Profit) on disposal of 120 - (1 903)
assets
Fair value adjustment on - - (1 688)
Investment property
Headline earnings attributable 39 594 16 768 21 448
to ordinary shareholders
Pro forma weighted average 616 854 996 351 113 600 351 113 600
shares in issue on which
earnings are based (1)
Pro forma earnings per share 6.4 4.8 7.1
(cents)
Pro forma headline earnings per 6.4 4.8 6.1
share (cents)
Notes:
The pro forma weighted average number of shares in issue for 30 September
2007 is based on the sub division and increase of the ordinary shares in
issue into 616 854 996 ordinary shares in issue on the last practical
date as set out in paragraphs 24.3.2.1 and 24.3.2.2 of the detailed
prospectus dated 15 October 2007 ("the detailed prospectus").
Abridged balance sheets
Unaudited Unaudited Audited
30 30 31 March
September September 2007
2007 2006 R`000
R`000 R`000
ASSETS
Non current assets
Property, plant and 69 712 28 420 39 099
equipment
Goodwill 12 305 3 773 3 773
Deferred taxation 3 289 4 685 3 114
Current assets 471 019 298 709 308 458
Current tax receivable 581 - 286
Inventories 154 024 55 129 90 533
Non-current assets held for - 1 000 3 000
resale
Derivative financial 2 478 50 516 5 726
instruments
Trade and other receivables 303 681 170 772 185 755
Cash and cash equivalents 10 255 21 292 23 158
Total assets 556 325 335 587 354 444
EQUITY AND LIABILITIES
Equity
Share capital 1 1 1
Reserves 1 474 2 375 1 474
Retained income 99 995 51 067 60 522
Liability for the purchase 24 860 - -
of minorities
Foreign currency translation (960) - -
reserve
Total ordinary shareholders` 125 370 53 443 61 997
equity
Minority interests - 14 691 18 622
Total shareholders` equity 125 370 68 134 80 619
Liabilities
Non-current liabilities
Borrowings 21 510 18 486 15 143
Deferred tax 2 696 2 595 -
Current liabilities 406 749 246 372 258 682
Loans from shareholders 1 584 9 125 8 358
Current tax payable 18 382 10 670 9 619
Borrowings 1 722 818 1 458
Derivative financial 2 552 45 839 5 759
instruments
Trade and other payables 165 641 76 546 105 009
Vendors 36 253 - -
Bank overdraft 180 615 103 374 128 479
Total equity and liabilities 556 325 335 587 354 444
Number of shares in issue 616 854 616 854 616 854 996
996 996
Net asset value per share 20.3 8.6 10.1
(cents)
Net tangible asset value per 18.3 8.1 9.4
share (cents)
Notes:
(1) The pro forma weighted average number of shares in issue for 30
September 2007 is based on the sub division and increase of the
ordinary shares in issue into 616 854 996 ordinary shares in issue
on the last practical date as set out in the detailed prospectus.
Abridged statements of changes in equity
Unaudited Unaudited Audited
30 September 30 September 31 March
2007 2006 2007
R`000 R`000 R`000
Balance at beginning of 61 996 37 694 37 694
period
Total earnings after 39 474 16 768 25 039
minorities
Revaluation - (313) 380
Dividends - (705) (1 117)
Liability for minority 24 860 - -
purchase
Currency translation (960) - -
differences
Balance at end of 125 370 53 444 61 996
period
Abridged cash flow statements
Unaudited Unaudited Audited
30 30 31 March
September September 2007
2007 2006 R`000
R`000 R`000
Cash flows from (51 571) (3 346) (13 986)
operating activities
Cash flows from 47 576 26 723 38 606
operations
Changes in working (99 147) (30 069) (52 592)
capital
Cash flow from investing (15 729) (14 320) (22 957)
activities
Cash flow from financing (576) 5 327 1 364
activities
Net increase in cash and (67 876) (12 339) (35 579)
cash equivalents
Cash and cash (105 322) (69 743) (69 743)
equivalents at beginning
of period
Cash and cash (173 198) (82 082) (105 322)
equivalents at end of
period
Abridged segment report
Unaudited Unaudited Audited
30 30 31 March
September September 2007
2007 2006 R`000
R`000 R`000
Gross revenue
Stockists 250 047 135 386 299 302
Bulk Sales 189 311 161 074 334 556
Exporting 190 535 109 093 237 707
Other 6 432 465 5 338
636 325 406 018 876 903
Profit before interest
and taxation
Stockists 24 186 11 503 23 303
Bulk Sales 15 373 13 311 23 127
Exporting 28 172 6 847 10 624
Other (1 689) 2 886 6 650
66 042 34 547 63 704
OVERVIEW
The directors of BSI are pleased to present the interim financial results
for the six months ended 30 September 2007 ("the interim period"). BSI
listed on 24 October 2007 on the JSE Limited (JSE) and raised R100
million new capital through the private placement.
The BSI group of companies operates in the steel and associated
industries with strategically located operations in South Africa,
Democratic Republic of the Congo ("DRC") and Zambia to service the
Southern African markets. BSI markets through three distinct channels,
being Stockists, Bulk sales and Exports; all of these divisions are
supported by our steel processing operations.
From Jan to Sept 2007, South African ("SA") based operations, excluding
exports, achieved a 25,2% increase in tonnage attributable to organic
growth. The South African Iron & Steel Institute ("SAISI") reported a
1,6% increase in volumes, Jan to Sept 2007, versus the same period in
2006.
The headline earnings of BSI, for the interim period, more than doubled
compared to the previous interim period and one of the reasons is the
successful acquisitions of its agencies based in Zambia and the DRC with
effect from 1 April 2007. At the same date the minority shareholding in
the subsidiaries of BSI were purchased through the issuing of BSI shares.
FINANCIAL RESULTS
Headline earnings attributable to ordinary shareholders has increased by
136% to R39,6 million (2006: R16,8 million).
Revenue increased during the interim period by 57% to R636,9 million
(2006: R406 million). Organic growth accounted for 41% of this growth,
with the acquisitions accounting for the balance.
Gross profit margin increased to 16,6% for 2007 (2006: 13,7%). This
however falls short on the forecast of 18,7% due to a decrease in steel
prices and a slowdown in the consumption of steel during the interim
period. Volumetric and settlement discounts are included in gross profit
and no longer disclosed as sundry income. Operating costs have been
closely controlled and are at 6% of turnover, compared to the previous
year`s 7,4%. Interest paid has increased in line with the growth in the
local operations, and is above forecast due to the higher than expected
growth in revenue and increases in the prime overdraft rate.
Cash flow for the interim period reflects the growth achieved. A net
increase in working capital of R99 million, together with the investing
activities of R15 million, has been funded out of profits and interest
bearing debt. Group borrowings closed at R173 million for the interim
period. On listing the group raised R100 million of which R38,5 million
has been earmarked for the acquisition of the agencies with the balance
to be utilized for capital equipment and working capital.
BUSINESS COMBINATIONS
BSI acquired the remaining 30% of the issued share capital in Discount
Steel KZN, the remaining 25% of the issued share capital of Garrison
Steel, the remaining 35% of the issued share capital in Discount Steel
Africa and the remaining 30% of the issued share capital of Discount
Steel Trading. In addition to the above, Discount Steel Africa acquired
the agencies entire issued share capital of Discount Steel Zambia which
in turn acquired the entire issued share capital of Discount Steel
Lubumbashi.
PROSPECTS
The introduction of structural steel sections and plate to BSI`s product
range has proved successful and ongoing growth in these sectors is
anticipated.
BSI remains focused on organic growth as this presents the lowest risk
and highest return. Additional funding will facilitate an increase in
stockholding and additional products to support this strategy.
Opportunity exists to rationalise the steel industry through the
consolidation of midsized steel distributors; BSI continues to explore
suitable acquisition opportunities in this regard. Acquisitions are also
being considered to increase BSI`s geographic footprint.
BSI`s new Meyerton development will provide an important platform for
future growth over the next five years and promises some excellent
synergism between the various divisions. This facility will consolidate
the Gauteng based operations, including Garrison Steel (stockist),
Shearcut (processing plant) and Discount Steel Africa (exports).
The market consumption in South Africa is anticipated to increase during
the second half of the financial year. The expected infrastructural
spend seems to be accelerating which will stimulate steel consumption.
Provided the Rand does not appreciate beyond R6.50 to the USD, steel
prices should increase during the last quarter of the financial year.
However should the Rand continue to strengthen, import opportunities may
materialise. BSI is well placed to capitalise on either scenario.
BSI is confident that the forecasted headline earnings and earnings per
share for the year, as stated in the detailed prospectus, will be met.
HUMAN CAPITAL
Staff remains the single most valued asset in BSI.
BSI is very pleased to report that the staff participated in the Initial
Public Offering and this has resulted in the staff owning a significant
stake in the company. This ensures BSI has a totally focused and
committed team.
BSI provides employment for 321 people
BSI remains fully committed to their BEE program in the interests of the
country. The introduction of the new BEE partners, in conjunction with
the holistic BEE program is aimed at continually improving the BEE status
of BSI. BSI`s BEE audit awaits the BEE rating of ArcelorMittal.
SUBSEQUENT EVENTS
BSI listed on the ALTx on the 24 October 2007
SHARE CAPITAL
Through the listing on the JSE, BSI placed 100 000 000 ordinary shares,
at 100 cents per share, with selected investors through a private
placement.
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 Share Incentive
Trust. On 24 October 2007 employees accepted 1 920 232 BSI ordinary
shares issued to the BSI Share Incentive Trust.
DIVIDEND POLICY
Initially all earnings generated by the company will be utilized to fund
future growth and development. It is the intention of the company to
reconsider its dividend policy once the company has achieved mature
growth and periodically thereafter to take account of prevailing
circumstances and future cash requirements.
BASIS OF PREPARATION
These results have been prepared in accordance with IAS 34 (Interim
Financial Reporting). The accounting policies used to prepare these
interim financial statements are consistent with those applied in the
prior interim period and at previous year-end and are in accordance with
International Financial Reporting Standards.
These consolidated interim financial statements incorporate the financial
statements of the company and its subsidiaries. The results of
subsidiaries are included from the effective date of acquisition. All
significant transactions and balances between group enterprises are
eliminated on consolidation.
This announcement has been prepared in accordance with the Listings
Requirements of the JSE.
By order of the Board
27 November 2007
W L Battershill J R Waller
Chief Executive Officer Chief Financial Officer
CORPORATE INFORMATION
Non executive directors: N G Payne, E G Dube
Executive directors: W L Battershill, G D G Mackenzie, J R Waller
Registration number: 2001/023164/06
Registered address: Murrayfield Park, Mkondeni, Pietermaritzburg 3201
Postal address: P O Box 101096, Scottsville, 3209
Company secretary: S J Hackett
Telephone: (033) 846 2208
Facsimile: (033) 346 0870
Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited
Designated Adviser: Exchange Sponsors (Pty) Limited
Date: 27/11/2007 08:42:00 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.
