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ACE
ACE
ACE - Accentuate Limited - Audited results for the year ended 30 June 2009
Accentuate Limited
(Incorporated in the Republic of South Africa)
(Registration Number: 2004/029691/06)
Share Code: ACE
ISIN Code: ZAE000115986
("Accentuate" or "the group")
AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2009
SALIENT FEATURES
Revenue up 16%
Gross margin depressed from 54% to 47%
Earnings down 43%
Headline earnings per share down 53%
Consolidated balance sheet
30 June 30 June
2009 2008
Audited Audited
R`000 R`000
Assets
Property, plant and equipment 39 592 39 143
Goodwill 96 290 91 791
Intangible Assets 2 387 1 435
Deferred tax 3 317 2 731
141 586 135 100
Current Assets
Inventories 48 034 50 118
Trade and other Receivables 56 254 45 817
Cash and cash equivalents 900 11 660
105 188 107 595
Total assets 246 774 242 695
Equity and liabilities
Share capital 125 075 122 542
Reserves 10 871 11 186
Retained income 33 584 27 899
Minority interest 13 13
Capital and reserves 169 543 161 640
Liabilities
Non-current liabilities
Other financial liabilities 21 284 4 110
Deferred tax 3 100 3 509
24 384 7 619
Current liabilities
Other financial liabilities 6 066 217
Current tax payable 188 7 542
Operating lease liability 588 477
Trade and other payables 39 536 50 070
Bank overdraft 6 469 15 130
52 847 73 436
Total equity and liabilities 246 774 242 695
Number of shares in issue 106 108 105 408
119 119
Net asset value per share 160 153
(cents)
Tangible net asset value per 67 65
share (cents)
Consolidated income statement
Year ended Year ended
30 June 30 June
2009 2008
Audited Audited
R`000 R`000
Revenue 298 036 257 767
Gross profit 141 206 139 136
Other income 4 118 2 752
Operating costs (123 697) (116 796)
Earnings before 21 627 25 092
interest, tax,
depreciation and
amortization
Depreciation and (5 181) (4 021)
amortization
Profit before interest 16 446 21 071
and taxation
Net interest paid (5 878) (1 146)
Profit before taxation 10 568 19 925
Taxation (1 118) (3 215)
Net profit for the year 9 450 16 710
Reconciliation of
headline earnings
Profit attributable to 9 450 16 710
ordinary shareholders
Adjusted for (loss) / 2 (266)
profit on disposal of
property, plant and
equipment
Loss on sale of - 558
subsidiary
Headline earnings 9 452 17 002
attributable to
ordinary shareholders
Weighted average number 101 625 172 86 806 290
of shares in issue
Basic earnings per 9.30 19.25
share (cents)
Headline earnings per 9.30 19.59
share (cents)
Dividends paid (cents) - 4.00
Consolidated cash flow statement
Year ended Year ended
30 June 30 June 2008
2009 Audited
Audited R`000
R`000
Cash flows from operating (7 196) 14 915
activities
Cash generated from 11 572 21 716
operations
Interest received 18 343
Interest paid (5 878) (1 146)
Taxation paid (12 908) (5 998)
Cash flows from investing (13 497) (37 135)
activities
Acquisition of property, (4 041) (6 264)
plant and equipment
Proceeds on disposal of 325
property plant and equipment 476
Purchase of intangible assets (1 607) (856)
Proceeds from financial 896 -
assets
Sale of financial assets - 1 217
Disposal of subsidiary - (208)
(9 070)
Expenditure for expansion (31 500)
Subsidiaries acquired (9 070) (31 500)
Cash flows from financing 18 590 7 916
activities
Proceeds from other financial 23 121 -
liabilities
Share capital (350) 9 277
Movement in long term - (1 132)
liability
Dividends paid (4 131) -
Shareholder`s loans repaid (50) (229)
Cash flows for the year (2 103) (14 304)
Cash and cash equivalents at (3 466) 10 838
beginning of year
Cash and cash equivalents at (5 569) (3 466)
end of year
Consolidated statement of changes of equity
For the year ended 30 June 2009
Shar Share Total Rese Reval Reta Total Minori Total
e premiu share rves uatio ined attrib ty equity
capi m capit for n inco utable intere
tal al own reser me to st
R`000 R`000 shar ve equity
R`00 es / holder
0 Shar s of
e the
repu group
rcha /
se compan
rese y
rve
Balance at 1 1 122 122 139 11 27 161 13 161 640
July 2008 541 542 047 899 627
Changes in
equity
Revaluation (315) 315 0 0
surplus
recognised
directly to
retained
income
Deferred tax 51 51 51
on
revaluation
surplus
Profit for 9 9 450 9 450
the year 450
Total (315) 9 9 501 9 501
recognized 816
income and
expenses for
the year
Issue of 791 791 791 791
shares
Purchase of (350) (350) (350) (350)
own /
treasury
shares
Business 2 092 2 092 2 092 2 092
combinations
Dividends (4 (4 (4 131)
paid 131) 131)
Balances at 1 125 125 139 10 33 169 13 169 543
30 June 2009 074 075 732 584 530
Consolidated statement of changes of equity
For the year ended 30 June 2008
Shar Share Total Rese Reva Reta Total Mino Total
e premiu share rves luat ined attri rity equity
capi m capit for ion inco butab inte
tal al own rese me le to rest
R`000 R`000 shar rve equit
R`00 es / y
0 Shar holde
e rs of
repu the
rcha group
se /
rese compa
rve ny
Balance at 1 1 73 753 73 319 2 10 87 13 87 122
July 2007 754 163 873 109
Changes in
equity
Fair value 10 10 10 698
gains: Land 698 698
and buildings
Revaluation (315 315 - -
surplus )
recognised
directly to
retained
income
Deferred tax (1 (1 (1 498)
on 498) 498)
revaluation
surplus
Net income 8 315 9 200 9 200
(expenses 885
recognized
directly in
equity
Profit for 16 16 16 710
the year 710 710
Total 8 17 25 25 910
recognized 885 025 910
income and
expenses for
the year
Issue of 52 672 52 52 52 672
shares 672 672
Purchase of (3 (3 (3 (3 884)
own / 884) 884) 884)
treasury
shares
Business (180 (180) (180)
combinations )
Balances at 1 122 122 139 11 27 161 13 161 640
30 June 2008 541 542 047 899 627
Segment Report
For the year ended 30 June 2009
R`000 Environmental Infrastructural Elimination Combination
Solutions Development
Revenue 64 212 233 824 298 036
Operating 12 425 8 674 (4 653) 16 446
profit
Finance (3 756) (2 122) (5 878)
costs
Income taxes 318 (1 436) (1 118)
Profit for 4 335 5 115 9 450
the period
Segment 214 641 123 394 (91 261) 246 774
assets
Segment (75 768) (40 067) 38 604 (77 231)
liabilities
Capital 3 101 2 548 5 649
expenditure
Depreciation 2 121 3 060 5 181
and
amortisation
Segment Report
For the year ended 30 June 2008
R`000 Environmental Infrastructural Elimination Combination
Solutions Development
Revenue 73 381 191 592 (7 206) 257 767
Operating (175) 21 245 21 071
profit
Finance (653) (493) (1 146)
costs
Income taxes (5 910) 2 696 (3 215)
Profit for 16 710
the period
Segment 202 418 128 237 (176 537) 154 118
assets
Segment (69 882) (52 979) 38 590 (84 270)
liabilities
Capital 6 257 3 343 9 600
expenditure
Depreciation 1 438 2 583 4 021
and
amortisation
INTRODUCTION
Accentuate is engaged in the manufacturing and distribution of infrastructural
supplies and maintenance solutions including flooring, glass and aluminium,
chemical cleaning and related products and services. The group reports
segmentally across two divisions: Infrastructure Development and Environmental
Solutions.
The year in question was one of mixed fortunes with a dramatic turnaround in the
chemical division, whilst experiencing a slowdown in demand in the
infrastructure sectors specifically in the months from April to July 2009. This
culminated in results that are satisfactory under the current market conditions
but that clearly are down from the results that we have become accustomed from
Accentuate since its listing in 2006.
REVIEW OF OPERATIONS
Infrastructure Supplies:
The 2009 financial year began with demand for flooring products at levels not
seen before. The net effect was that Accentuate experienced record revenue
levels during the period July to December 2008. Margins were however under
pressure from the dramatic rise in commodity prices with specific reference to
petro-chemical inputs and diesel costs as well as an unbudgeted increase in
energy costs.
January and February 2009 saw the continuation on the trend but with much
improved margins and management was confident that realistic expectations would
be exceeded. March however presented a different set of challenges with a
dramatic slowdown in off take of our product offering; specifically in the area
of government infrastructure spend. Unfortunately this continued through the
final quarter with the full effect of both the public holidays and the elections
evident and increased demand was only seen towards the latter half of July.
The dramatic downturn in the aluminium market and the historical reliance on
sectors such as the motor showrooms impacted hugely on the ability of Centurion
Glass & Aluminium ("CGA") to contribute effectively towards the profitability of
the group. It soon became evident that the niche markets in which CGA had
operated effectively, had suddenly come under severe pressure and the strategy
of the organisation had to be adjusted in order to refocus the business into
those segments that were offering opportunities for growth. Much attention has
been placed on this area of the business as well as on managing the cost
structure with emphasis on effective and efficient management systems and some
management changes.
Last year we announced the purchase of Interior Wooden Floors for a total
consideration of R11 million. The business has been totally integrated into the
Accentuate business model.
Environmental Solutions:
SAFIC continued along its growth trajectory with constant growth in revenue
against a much reduced cost base resulting in a larger and more sustainable
contribution towards the group`s profitability. The dramatic increase in
commodity prices saw margins come under pressure but through a strategy of
effective procurement and cost control, margins were corrected within the second
half of the financial year.
FINANCIAL RESULTS
The group has achieved an attributable profit of R9.4m (2008: R16.7m) for the
year ended 30 June 2009. This is a decrease of 43% on the previous corresponding
period. Despite severe competitive pressure in the market the group has managed
to grow turnover from R257.7m in 2008 to R298m for the current year. The
competitive pressures and the pressures on all input costs have depressed
margins to 47.4% (2008: 54%) Various initiatives have been embarked upon to
recover lost margins. Earnings per share and headline earnings per share
decreased by 52% to 9.30 cents per share (2008: 19.25 and 19.59 cents per
share). The sharp down turn in the second half of the financial year caused the
provisional tax payments made in December 2008 to exceed the actual tax
liability that accrued for the same period. This had an impact on the cash flow
for the period. The board decided to refrain from declaring a dividend (2008: 4
cents per share) under the current tough trading conditions.
The directors are not aware of any matter or circumstance occurring between the
balance sheet date and the date of this report that materially affects the
results of the group for the year ended 30 June 2009 or the financial position
at that date.
PROSPECTS
Looking forward, management is confident that the interventions including cost
cutting and right sizing of the various business units within the Accentuate
stable have put the group in a position where it can effectively take advantage
of the opportunities that are presented in the infrastructure development plan
as presented by Government with emphasis on the upgrading and construction of
hospitals, clinics, schools and the public transport sectors.
We are in the fortunate position where the demand for our glass and aluminium
offering currently is at levels exceeding those in 2008 with an order book at
100% of capacity for the first nine months of the new financial year. We have
also seen a steady increase in demand for the chemical products offered by SAFIC
and we are confident that this trend will continue into the foreseeable future.
BASIS OF PREPARATION
The abridged report complies with International Accounting Standard 34 - Interim
Financial Reporting, as well as with Schedule 4 of the South African Companies
Act and disclosure requirements of the JSE Limited`s Listing Requirements. The
abridged report has been prepared using policies that comply with International
Financial Reporting Standards (IFRS). The accounting policies are consistent
with those applied in the financial statements for the year ended 30 June 2008.
AUDITORS` OPINION
The condensed consolidated annual financial results have been audited by
Accentuate`s auditors, PKF Pta Inc. Their unqualified audit report is available
for inspection at the company`s registered office.
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 has been set. The board would also like to thank its business partners,
advisors and suppliers, and most importantly the shareholders for their ongoing
support and faith in the group.
By order of the Board
9 September 2009
F C Platt A J Voogt
Chief Executive Officer Financial Director
CORPORATE INFORMATION
Non executive directors: M D C Motlatla
GM Salanje
MC Khwinana (Alternate)
Executive directors: F C Platt
A J Voogt
Dr. D E Platt
A J Kerrod
Registration number: 2004/029691/06
Registered address: 32 Steele Street
Steeledale
2197
Postal address: P.O. Box 1754
Alberton
1450
Company secretary: G W Delport
Telephone: 0860 4 72342
Facsimile: 0861 4 72342
Transfer secretaries: Computershare Investor Services
(Pty) Limited
Designated Adviser: Exchange Sponsors (2008) (Pty)
Limited
Date: 09/09/2009 07:05:11 Produced by the JSE SENS Department.
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