| Mon 22 Jun 2009, 7:24 | | BSS - BSI Steel Limited - Audited condensed financial results: year ended 31 |
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BSS
BSS
BSS - BSI Steel Limited - Audited condensed financial results: year ended 31
March 2009
BSI Steel Limited
(formerly BSI (SA) 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
- Revenue up 29.7%
- Headline earnings up 1% to R100,3 million
- EPS down 0,9 cents to 14.0 cents
- NAV per share up 41.4% to 58.4 cents
AUDITED CONDENSED FINANCIAL RESULTS
FOR THE YEAR ENDED 31 MARCH 2009
Condensed income statement
Audited Audited
year year
ended ended
31 March 2009 31 March 2008
R`000 R`000
Revenue 1 856 989 1 432 302
Gross profit before 359 014 297 034
exceptional items
Exceptional items(2) (51 444) -
Gross profit 307 570 297 034
Other costs (146 938) (136 259)
Earnings before interest,
taxation,
deprecation and amortisation 160 632 160 775
("EBITDA")
Depreciation and (7 194) (6 341)
amortisation
Profit before interest and 153 438 154 434
taxation
Interest received 1 358 1 487
Interest paid (29 355) (22 387)
Profit before taxation 125 441 133 534
Taxation (25 129) (34 167)
Profit for the year 100 312 99 367
Earnings per share (cents) 13.98 15.05
Reconciliation of headline
earnings:
Profit for the year 100 312 99 367
Profit on disposal of 65 (1 307)
property, plant & equipment
Tax impact on adjustments (18) 366
Headline earnings (basic and 100 359 98 426
diluted)
Weighted average shares in 717 575 660 174
issue on which earnings are
based (000) (1)
Headline earnings per share 14.0 14.9
(cents) (basic and diluted)
Note:
1) The sub-division and increase in share capital, which includes the
acquisition of the minorities, has been applied retrospectively in
the earnings per share and headline earnings per share valuations of
the comparative.
2) During the second half of the year the company recorded exceptional
charges amounting to R51,4 million related to write downs of
inventory.
Condensed balance sheet
Audited Audited
31 March 2009 31 March 2008
R`000 R`000
ASSETS
Non-Current Assets
Property, plant and 193 427 103 082
equipment
Goodwill 13 442 13 442
Intangible assets 4 768 1 527
Deferred taxation 3 447 2 860
215 084 120 911
Current Assets
Inventories 244 758 188 440
Trade and other receivables 320 055 380 314
Current tax receivable 6 947 1 337
Other financial assets - 838
Cash and cash equivalents 35 088 26 236
606 848 597 165
Non-current assets held for 19 416 -
sale
Total assets 841 348 718 076
EQUITY AND LIABILITIES
Equity
Total shareholders` equity 415 962 297 079
Non-Current Liabilities
Other financial liabilities 111 965 43 836
Deferred taxation 3 534 6 102
115 499 49 938
Current Liabilities
Finance lease obligation 1 202 1 990
Trade and other payables 165 854 188 314
Current tax payable 6 374 23 669
Other liabilities - 1 202
Other financial liabilities 10 597 16 131
Bank overdraft 119 736 139 753
303 763 371 059
Non-current liabilities held 6 124 -
for sale
Total Liabilities 425 387 420 997
Total equity and liabilities 841 348 718 076
Number of shares in issue 712 728 719 855
(000) (1)
Net asset value per share 58.4 41.3
(cents)
Net tangible asset value per 55.8 39.2
share (cents)
Condensed statement of changes in equity
Audited Audited
31 March 31 March
2009 2008
R`000 R`000
Balance at beginning of year 297 079 61 996
Profit for the year 100 312 99 367
Foreign currency translation 22 539 5 664
reserve
Issue of shares 13 849 127 384
Purchase of treasury shares (13 849) (1 920)
Listing expenses - (1 164)
Revaluation of property 2 900 5 752
Purchase of own shares (6 868) -
Attributable to ordinary 415 962 297 079
shareholders at end of year
Condensed cash flow statement
Audited Audited
31 March 31 March
2009 2008
R`000 R`000
Operating activity cash 90 653 (98 420)
flows
Cash flows from 164 301 (63 814)
operations
Changes in working (73 648) (34 606)
capital
Investing activity cash (112 745) (71 184)
flows
Financing activity cash 54 379 161 272
flows
Total cash movement for the 32 287 (8 332)
year
Cash at beginning of period (113 517) (105 321)
Effect of exchange rate (3 418) 136
movement on cash balances
Total cash at end of year (84 648) (113 517)
Condensed segment report
Audited Audited
31 March 31 March
2009 2008
R`000 R`000
Gross revenue
Stockists 672 999 510 844
Bulk Sales 525 114 452 260
Exporting 634 312 453 087
Other 24 564 16 111
1 856 989 1 432 302
Profit before interest and
taxation
Stockists 40 580 41 239
Bulk Sales 32 003 40 723
Exporting 81 787 67 073
Other (932) 5 399
153 438 154 434
Total assets
Stockists 202 187 283 340
Bulk Sales 119 713 183 879
Exporting 245 188 161 873
Other 277 927 60 908
Eliminations (9 791) 28 075
835 224 718 075
OVERVIEW
The directors of BSI Steel Limited ("BSI") are pleased to present the
financial results for the year ended 31 March 2009 ("the 2009 year").
The BSI group of companies operates in the steel and associated industries
with strategically located operations in South Africa, the Democratic Republic
of the Congo ("DRC"), Mauritius 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 its steel
processing operations.
The year under review covers a period of unprecedented volatility in world
steel markets. During the first half of the year there was very strong demand
for steel which resulted in a steep increase in the local steel price by as
much as 75%. The second half saw the collapse of the financial markets which
all but dried up the demand for steel. The resulting precipitous drop in the
world steel price caught the world steel industry off guard.
FINANCIAL RESULTS
It is against this backdrop that the directors are pleased to report that
headline earnings increased by 2% to R100.3 million (2008: R98.4 million)
with an increase in revenue of 29.7% to R1 857 million (2008: R1 432
million). This was 5.8% up on the forecast supplied at date of listing.
Due to the sharp decrease in world steel prices in the second half of the
2009 year, the group wrote down its inventories to the levels allowed by
IFRS. These write downs amounted to R51,4 million. These write downs,
together with the tight trading conditions in second half, are reflected in
the drop in gross profit margin. The gross profit margin for the year ended
at 16.5% (2008: 20.7%).
Operating costs were closely controlled throughout the 2009 year. Operating
costs, as a percentage of turnover, reduced to 7.9% for the 2009 year (2008:
9.5%).
The Klipriver expansion project was completed at the end of the 2009 year
which now allows the group to maximise its in-house synergies. The successful
move of the processing facility and the consolidation of the Isando and
Alrode operations into Klipriver has been completed. The investment into the
processing facility is aimed at providing customers with exceptional service
and quality standards for customers. The cash investment in infrastructure
totalled R113 million during the 2009 year (2008: R54 million) with further
capital commitments of R14 million.
During the 2009 year the South African operations also successfully completed
their conversion to new computer software which will greatly improve their
effectiveness and efficiency. The software implementation will be rolled out
into the subsidiaries in Africa during the 2010 financial year.
Cash generated for the year amounted to R32 million (2008: cash utilised R8
million). This reflects tight management of cash flow during the down turn in
the industry. The group continues to maintain good relationships with its
bankers and has adequate approved facilities in place, last reviewed April
2009. Group borrowings were R243 million at the end of the 2009 year (2008:
R200 million), with 50% thereof being long term in nature (2008: 70%). The
increase in borrowings was to fund capital purchases.
SHARE CAPITAL
During the year the company increased its existing authorised ordinary share
capital from R10 000 divided into 1 000 000 000 ordinary shares of 0.001 cent
to R100 000 divided into 10 000 000 000 ordinary shares of 0.001 cent each by
the creation of 9 000 000 000 ordinary shares of 0.001 cent each.
At a general meeting of the shareholders held on 26 March 2009, the directors
were authorised to repurchase 17 620 232 ordinary shares with a par value of
0.001 cent each at an average price of 89.5 cents per share (R15.7 million of
which R1.9 million relate to the previous financial year) from the BSI Share
Incentive Trust and to cancel such shares.
In terms of its general authority, the group embarked on a share buyback
program during the 2009 year. At the end of the 2009 year 7 126 845 shares
had been repurchased and are treated as treasury shares in the above results.
An amount of R6 867 726 was expended in this regard.
DIVIDEND POLICY
We remain committed to either paying a dividend and, or, repurchasing shares.
The Board will decide which process best serves the interest of the
shareholders based on prevailing market circumstances.
BASIS OF PREPARATION
This condensed report complies with IAS 34 - Interim Financial Reporting, the
South African Companies Act and the JSE Listing Requirements. The condensed
report has been prepared using accounting policies that comply with IFRS.
The accounting policies and methods of computation are consistent with those
applied in the financial statements for the year ended 31 March 2008.
SUBSEQUENT EVENTS
No material change has taken place in the affairs of the group between the
end of the financial year and the date of this report.
PROSPECTS
Despite the widespread sense of doom and gloom in the global economy, the
directors believe the tough times present BSi with some excellent
opportunities. The new Klipriver operation provides a much needed platform to
grow the business for many years, with relatively low future capex
requirements.
The group`s 5-point growth program remains unchanged, albeit with a shift of
emphasis from last year:
Organic growth remains central to the growth program. Relative to other
growth initiatives, it provides the group with the lowest risk and highest
return
New products and services are an extension of organic growth. Adding new
products to the marketing platform will be relatively simple to achieve. This
includes ongoing growth in structural sections and plate, with the addition
of corrugated roofing, slit strip and blanks during the forthcoming year.
The processing plant bears special mention; as it is the intention to
increase the gorup`s value proposition through increasing the capacity and
variety of the processing equipment. The RBI cut-to-length line and the
refurbished slitting line and batch blanking line have been installed. The
three new roofing lines will be installed in June/July 2009, followed by the
new 2000 x 6mm cut-to-length line in Sept/Oct 2009. The additional capacity
and new processes will provide the tools to support an ongoing growth
campaign, both in existing and new lines.
Geographic - the directors continue to drive geographic growth, aiming at
increasing the US dollar based earnings. The new operation in Mauritius
provides a platform to grow the US dollar balance sheet. An operation in
Zimbabwe was opened on 1 May 2009 and will continue to increase the direct
export trading markets.
Acquisitions - the directors believe that the climate for successful
acquisitions is likely to prevail for at least 12 months. Price expectations
will moderate significantly from previous unrealistic highs. Companies
offering geographic diversity, a synergistic fit, good management and a
proven profit record will be targeted and special attention will be paid to
their performance during these tough trading conditions.
BBBEE - the group is now compliant - with a level 7 rating. It is the
intention to improve this rating to level 4 over the next three to four
years. This growth drive will be for new business, where the group was
previously unable to quote BBBEE sensitive buyers and markets.
Directorate
The following changes were made to the Board:
WL Battershill 1 April 2009 - stepped down as joint CEO, but remains as
Group Chairman
GDG Mackenzie 1 April 2009 - appointed Group CEO (previously joint
CEO).
The remaining Board members retain their positions
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.
AUDIT OPINION
The independent auditors, Deloitte & Touche, have issued their
opinion on the group`s financial statements for the year ended 31
March 2009. The audit was conducted in accordance with International
Standards on Auditing. They have issued an unmodified opinion. A
copy of their audit report is available for inspection at the
company`s registered office. The condensed financial statements have
been derived from the group financial statements and are consistent
in all material respects with the group financial statements.
By order of the Board
19 June 2009
W L Battershill J R Waller
Chairman Financial Director
CORPORATE INFORMATION
Non executive directors: B M Khoza (Alternate - N M
Anderson), N G Payne (Alternate - R G Lewis)
Executive directors: W L Battershill, G D G Mackenzie, C Parry, W
R Teichmann, J R Waller
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
(Pty) Limited
Designated Adviser: Vunani Corporate Finance
Date: 22/06/2009 07:24:01 Produced by the JSE SENS Department.
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