| Tue 30 Sep 2008, 14:34 | | AET - Alert - Reviewed Condensed Financial Results For The Year Ended |
|
AET
AET
AET - Alert - Reviewed Condensed Financial Results For The Year Ended
30 June 2008 and dividend declaration
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 43.0% to R807.1 million
- Headline earnings up 92.6% to R51.5 million
- Headline earnings per share up 80.9% to 20.8 cents
- Net tangible asset value up 49.0% to 58.7 cents
- Acquisition of General Steel business
- Maiden dividend declared of 3.0 cents
REVIEWED CONDENSED FINANCIAL RESULTS
FOR THE YEAR ENDED 30 JUNE 2008
Condensed Group Income Statements
Reviewed Audited Pro forma
12 months 8 months Unaudited
30 June 30 June 2007 12 months
2008 (1) 30 June 2007
R`000 R`000 R`000
Revenue 807 095 377 308 564 237
Gross profit 219 601 86 495 132 519
Other income 6 096 3 354 5 867
Operating costs (143 252) (64 919) (95 840)
Earnings before interest, 82 445 24 930 42 546
taxation, depreciation and
amortisation ("EBITDA")
Depreciation (5 339) (2 452) (3 652)
Profit before interest and 77 106 22 478 38 894
taxation
Loss on disposal of non- (82) (96) (96)
current assets
Net finance costs (4 055) (724) (1 118)
Profit before taxation 72 969 21 658 37 680
Taxation (21 535) (6 368) (11 019)
Earnings attributable to 51 434 15 290 26 661
ordinary shareholders
Reconciliation of headline
earnings:
Profit attributable to 51 434 15 290 26 661
ordinary shareholders
Loss on disposal of non- 59 69 69
current assets
Headline earnings 51 493 15 359 26 730
attributable to ordinary
shareholders
Weighted average shares in 247 846 183 156 200 000 231 630 137
issue on which earnings are
based
Fully diluted weighted 255 446 183 158 740 274 234 170 411
average shares in issue on
which earnings are based
Earnings per share (cents) 20.8 9.8 11.5
Headline earnings per share 20.8 9.8 11.5
(cents)
Fully diluted earnings per 20.0 9.5 11.3
share (cents)
Fully diluted headline 20.0 9.6 11.3
earnings per share (cents)
Note:
The Alert group results for the eight months ended 30 June 2007, after the
restructuring as defined in the prospectus dated 16 February 2007 ("the
prospectus"), which restructuring was effective from 1 November 2006.
Condensed Group Balance Sheets
Reviewed Audited
30 June 2008 30 June 2007
R`000 R`000
ASSETS
Non-current assets 102 992 69 198
Property, plant and 51 716 26 905
equipment
Goodwill 48 594 41 662
Other financial assets 709 228
Deferred taxation 1 973 403
Current assets 341 008 178 816
Inventories 194 499 81 010
Loans to joint ventures 9 857 3 157
Loans to managers and - 196
employees
Trade and other receivables 129 285 71 692
Cash and cash equivalents 7 367 22 761
Total assets 444 000 248 014
EQUITY AND LIABILITIES
Total shareholders` funds 194 302 138 194
Non-current liabilities 11 582 7 830
Other financial liabilities 11 582 6 715
Deferred taxation - 1 115
Current liabilities 238 116 101 990
Loans from joint ventures 1 485 1 454
Other financial liabilities 24 278 7 603
Current tax payable 17 977 6 372
Trade and other payables 102 483 84 465
Provisions 1 737 432
Bank overdraft 90 156 1 664
Total equity and 444 000 248 014
liabilities
Number of shares in issue 246 714 285 245 000 000
Number of shares including
share based payment 248 428 570 245 000 000
shares(1)
Fully diluted number of 256 028 570 252 600 000
shares in issue (2)
Net asset value per share 78.2 56.4
(cents)
Net tangible asset value 58.7 39.4
per share (cents)
Notes:
Included in the number of shares are 1 714 285 unissued shares which will be
issued in terms of the Steel Giant (Pty) Limited ("Steel Giant") transaction
within seven days after the June 2009 results have been determined.
The 7 600 000 ordinary shares issued to the Alert Share Incentive Scheme
have been treated as "treasury shares".
Condensed Group Statements of Changes in Equity
Reviewed Audited
12 months 8 months
30 June 2008 30 June 2007
R`000 R`000
Balance at beginning of period 138 194 -
Share issue 2 366 132 600
Total earnings 51 434 15 290
Share issue expenses (58) (2 096)
Acquisition share based 2 366 -
payment reserve
Treasury shares held by Alert - (7 600)
Steel Share
Share Incentive Scheme Trust
Balance at end of period 194 302 138 194
Condensed Group Cash Flow Statements
Reviewed Audited Pro forma
12 months 8 months Unaudited
30 June 30 June 12 months
2008 2007 30 June
R`000 R`000 2007
R`000
Cash flows from operating (86 994) 16 436 22 267
activities
Cash flow from investing (26 622) (18 967) (3 652)
activities
Cash flow from financing 9 730 23 628 31 033
activities
Net increase in cash and cash (103 886) 21 097 49 648
equivalents
Cash and cash equivalents at 21 097 - (28 550)
beginning of period
Cash and cash equivalents at (82 789) 21 097 21 097
end of period
Condensed Segmental Report
Reviewed Audited
12 months 8 months
June 2008 June 2007
R`000 R`000
Income Statements
Revenue
Retail 753 648 332 814
Reinforcing manufacturing 53 447 44 494
807 095 377 308
Profit before interest and taxation
Retail 71 448 18 345
Reinforcing manufacturing 5 658 4 133
77 106 22 478
Depreciation
Retail 5 313 2 421
Reinforcing manufacturing 26 31
5 339 2 452
Balance Sheets
Reportable segment assets
Retail 349 319 162 779
Reinforcing manufacturing 26 890 16 829
376 209 179 607
Reportable segment liabilities
Retail 127 980 87 655
Reinforcing manufacturing 12 100 9 160
140 080 96 815
Reconciliation of segmental assets
Total assets 444 000 248 014
Goodwill (48 594) (41 662)
Deferred taxation (1 972) (403)
Loans receivable (9 857) (3 385)
Loans to managers and employees - (196)
Cash and cash equivalents (7 368) (22 761)
Segmental assets 376 209 179 607
Reconciliation of segmental
liabilities
Current liabilities 238 116 101 991
Bank overdrafts (90 156) (1 664)
Current taxation liabilities (17 977) (6 372)
Loans payable (1 485) (3 854)
Non-current liabilities 11 582 7 830
Deferred taxation liabilities - (1 115)
Segmental liabilities 140 080 96 815
* Corporate segmental assets include the inter-segment eliminations of group
loans and receivables.
OVERVIEW
The directors of Alert are pleased to present the reviewed financial results
for the year ended 30 June 2008 ("the 2008 year"). The financial
performance of the group exceeded expectations as set out in the prospectus.
The 2007 unaudited pro forma financial results are presented for comparative
purposes.
Alert, through its operating subsidiaries, conducts business as retailers of
prime steel, building materials, plumbing and hardware products, operating
16 retail branches and 2 rebar (steel reinforcing bars used in concrete
structures) manufacturing plants in Polokwane and Pretoria.
Despite various challenges during the 2008 year, such as high interest
rates, rising fuel prices, blackouts, continued steel shortages and the
general tightening of conditions in the South African economy, the group
performed well. Alert secured good purchase prices on certain steel
products which impacted positively on overall profitability.
Although the steel industry was continuously challenged by the shortage of
steel during the 2008 year, Alert continued to procure and supply steel to
its customers and be more competitive, which increased overall
profitability. The procurement of higher volumes of steel also ensured
larger rebates for the group.
FINANCIAL RESULTS
Revenues increased by 43.0% to R807,1 million (2007: R564,2 million), which
was mainly driven by the significant increases experienced in steel prices
in the second half of the 2008 year and the inclusion of the Steel Giant
acquisition from 1 September 2007. Gross profit increased 65.7% to
R219,6 million (2007: R132.5 million) and gross profit margins increased to
27.2% (2007: 23.5%) also as a result of the increase in steel prices and
larger rebates.
Operating costs increased 49.5% to R143.3 million (2007: R95.8 million) as a
result of the higher fuel charges and the inclusion of the Steel Giant
acquisition. EBITDA increased 94.1% in the 2008 year to R82,5 million
(2007: R42,5 million) off the higher revenue base.
Headline earnings for the 2008 year increased 92.9% to R51,5 million (2007:
R26,7 million). Headline earnings per share increased 80.9% to 20.8 cents
(2007: 11.5 cents).
Due to various growth constraints experienced at the existing Distribution
Centre and Head Office of the group in East Lynne, Pretoria, an adjacent
property was acquired by the group during the 2008 year.
PROSPECTS
The group is continuing with its medium term strategy, which includes the re-
development and relocation of certain existing sites and the increase of its
product ranges. A new "Alert Build", which offers the group`s comprehensive
product offering, will be opened during November 2009 in Wonderboom.
The directors remain mindful of the economic constraints which the steel,
construction and retail industries face, such as; restricted electricity
supplies, volatile steel supplies and the effect of rising interest rates
on the consumer and anticipate that steel prices will stabilise and even
decrease during the next financial year. The directors are looking forward
to a prosperous 2009 year, as they believe that the market has adjusted
positively to the new steel pricing structures.
SUBSEQUENT EVENTS
Shareholders are referred to the announcement, dated 16 April 2008, relating
to the acquisition of the business of General Steel and the property owned
by Sovereign Park Benrose (Pty) Limited. The General Steel transaction
became unconditional during August 2008 when Competition Commission approval
was obtained.
The expected development costs for the development of the new Distribution
Centre and Head Office, which are expected to be completed by the end of
February 2009, will be approximately R45 million.
BUSINESS COMBINATIONS
Alert Steel acquired the businesses of Steel Giant (Pty) Limited ("Steel
Giant") with effect from 1 September 2007 for a consideration of R12
million. Steel Giant`s revenue and profit after tax, included in the
results presented above, was R109,9 million and R4,3 million, respectively.
Goodwill acquired on the acquisition was R6,9 million.
SHARE CAPITAL
Alert issued 1 714 785 shares during the 2008 year in terms of a partial
payment for the acquisition of the Steel Giant business.
BASIS OF PREPARATION OF THE AUDITED RESULTS
Statement of compliance
The condensed financial statements comprise a consolidated balance sheet at
30 June 2008, a consolidated income statement, consolidated statement of
changes in equity, summarized consolidated cash flow statement and segmental
report for the 12 months ended 30 June 2008. The condensed 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, the JSE Listing Requirements and the South African Companies Act.
The accounting policies applied for the year are consistent with those of
the previous year with the exception of the adoption of IFRS 7.
Basis of measurement
The financial statements have been prepared on the historic cost basis
except for certain financial instruments measured at fair value.
REVIEWED RESULTS
The auditors, RSM Betty & Dickson`s (Tshwane), have reviewed these results
and their unmodified review opinion is available for inspection at the
company`s registered office.
DIVIDEND POLICY
Having regard to the profits attained for the year ended 30 June 2008, the
board has reconsidered the company`s dividend policy and has resolved to
declare the company`s maiden dividend to shareholders of 3.0 cents per share
for the year ended 30 June 2008. The salient dates applicable to the
dividend are set out below:
Last day to trade cum dividend Friday, 14 November 2008
Trading commences ex dividend on Monday, 17 November 2008
Record date Friday, 21 November 2008
Payment on Monday, 24 November 2008
Share certificates may not be dematerialised or rematerialised between
Monday, 17 November 2008 and Friday, 21 November 2008, both days inclusive.
STATEMENT ON GOING CONCERN
The condensed group financial statement 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.
On behalf of the Board
WF Schalekamp WW Mentz
Managing Director Financial Director
30 September 2008
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 (Pty) Limited
Designated Adviser: Vunani Corporate Finance
Date: 30/09/2008 14:34:03 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.
