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BSS
BSS
BSS - BSI Steel - Unaudited condensed financial results for the period ended 30
September 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 down 42%
- HEPS at 0,28 cents
- NAV per share 54.5 cents
- Cash flows from operating activities up 98%
UNAUDITED CONDENSED FINANCIAL RESULTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2009
Statement of comprehensive income
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 September 2009 30 September 2008 31 March 2009
R`000 R`000 R`000
Revenue 662 530 1 139 886 1 856
989
Gross profit before 85 884 280 076 359
014
exceptional items
Exceptional items(2) (8 256) - (51
444)
Gross profit 77 628 280 076 307
570
Other costs (61 560) (96 288) (146
873)
Earnings before interest,
taxation,
depreciation and amortisation 16 068 183 788 160
697
("EBITDA")
Depreciation and (4 567) (2 946) (7
194)
amortisation
Profit before interest and 11 501 180 842 153
503
taxation
(Loss)/Profit on disposal of assets (912) (66)
(65)
Interest received 499 628 1
358
Interest paid (9 647) (11 804) (29
355)
Profit before taxation 1 441 169 600 125
441
Taxation (232) (42 100) (25
129)
Profit for the year 1 209 127 500 100
312
Earnings per share (cents) 0.17 17.7
13.98
Reconciliation of headline
earnings:
Profit for the year 1 209 127 500 100
312
Profit on disposal of 912 66
65
property, plant and equipment
Tax impact on adjustments (127) (18)
(18)
Headline earnings (basic and 1 994 127 548 100
359
diluted)
Weighted average shares in 711 321 719 788 717
575
issue on which earnings are
based (000) (1)
Headline earnings per share 0.28 17.7
13.99
(cents) (basic and diluted)
Condensed statement of financial position
Unaudited Unaudited Audited
30 September 2009 30 September 2008 31 March 2009
R`000 R`000 R`000
ASSETS
Non-Current Assets
Property, plant and 204 527 142 402 193
427
equipment
Goodwill 13 442 13 442 13
442
Intangible assets 6 272 3 106 4
768
Deferred taxation 2 486 1 236 3
447
226 727 160 186 215 084
Current Assets
Inventories 189 292 389 509 244
758
Trade and other receivables 324 946 456 181 320
055
Current tax receivable 5 440 91 6
947
Other financial assets - 3 039
-
Cash and cash equivalents 52 501 9 224 35
088
572 179 858 044 606 848
Non-current assets held for - - 19
416
sale
Total assets 798 906 1 018 230 841
348
EQUITY AND LIABILITIES
Equity
Total shareholders` equity(3) 387 415 426 288 415
962
Non-Current Liabilities
Other financial liabilities 108 742 40 151 111
965
Deferred taxation 3 242 6 192 3
534
111 984 46 343 115 499
Current Liabilities
Finance lease obligation 432 - 1
202
Trade and other payables 121 677 199 099 165
854
Current tax payable 6 989 39 552 6
374
Other liabilities - 3 039
-
Other financial liabilities 14 182 12 457 10
597
Bank overdraft 156 227 291 452 119
736
299 507 545 599 303 763
Non-current liabilities held - - 6
124
for sale
Total Liabilities 411 491 591 942 425
386
Total equity and liabilities 798 906 1 018 230 841
348
Number of shares in issue 710 207 718 855 712
728
(000) (1)
Net asset value per share 54.5 59.3
58.4
(cents)
Net tangible asset value per 51.8 57.0
55.8
share (cents)
Notes:
The weighted average number of shares in issue for 30 September 2009 is
based on the weighted number of shares held by the public during the period
under review
Exceptional items amounting to R8,256 million relating to write downs of
inventory.
Due to the change in the Exchange rate between the South African Rand and the
US Dollar over the period the Foreign Currency Translation Reserve ("FCTR")
adjustment amounted to a decrease of R27,988 million in Total shareholders`
equity.
Condensed statement of changes in equity
Unaudited Unaudited Audited
30 September 30 September 31 March
2009 2008 2009
R`000 R`000 R`000
Balance at beginning of year 415 962 297 079 297
079
Profit for the year 1 209 127 500 100
312
Foreign currency translation (27 988) 2 888 22
539
reserve
Issue of shares - - 13
849
Purchase of treasury shares (1 768) (1 179) (13
849)
Revaluation of property - - 2
900
Purchase of own shares - - (6
868)
Attributable to ordinary 387 415 426 288 415
962
shareholders at end of year
Condensed statement of comprehensive income
Unaudited Unaudited Audited
30 September 30 September 31 March
2009 2008 2009
R`000 R`000 R`000
Profit for the period 1 209 127 500 100
312
Other comprehensive income
Revaluation of property - - 2
900
Foreign currency translation reserve (27 988) 2 888 22
539
Total comprehensive income (26 779) 130 388 125 751
Condensed cash flow statement
Unaudited Unaudited Audited
30 September 30 September 31 March
2009 2008 2009
R`000 R`000 R`000
Operating activity cash (2 875) (117 772) 90
653
flows
Cash flows from 9 470 147 556 164 301
operations
Changes in working (12 345) (265 328) (73 648)
capital
Investing activity cash (4 802) (43 649) (112
745)
flows
Financing activity cash (8 299) (7 488) 54
379
flows
Total cash movement for the (15 976) (168 909) 32
287
year
Cash at beginning of period (84 649) (113 517) (113
517)
Effect of exchange rate (3 101) 198 (3
418)
movement on cash balances
Total cash at end of year (103 726) (282 228) (84
648)
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, Zambia and Zimbabwe servicing 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.
Condensed segment report
Unaudited Unaudited Audited
30 September 30 September 31 March
2009 2008 2009
R`000 R`000 R`000
Gross revenue
Stockists 236 130 403 919 672
999
Bulk Sales 220 933 389 814 525
114
Exporting 204 940 358 136 634
312
Other 527 (11 983) 24
564
662 530 1 139 886 1 856 989
Profit before interest and
taxation
Stockists (9 722) 61 622 40
580
Bulk Sales 10 454 34 504 32
003
Exporting 8 392 85 437 81
787
Other 1 465 (787)
(932)
10 589 180 776 153 438
OVERVIEW
The directors of BSI are pleased to present the financial results for the
interim period ended 30 September 2009 ("the interim period").
The financial meltdown last year precipitated an unprecedented crash in world
steel prices of approximately 55% from July 2008 to April 2009 (CRU steel price
index). South African steel prices dropped rapidly from November 2008 to June
2009. The fall in steel prices eroded inventory valuations and reduced revenues,
the position being exacerbated by reduced volumes and the corresponding drop in
gross profit margin as trading conditions worsened. Despite these unprecedented
and extraordinary circumstances the Directors of BSi Steel are pleased to
announce that the group managed to achieve a modest profit for the period,
clearly demonstrating the resilience of the business.
The interim period was characterised by volatile trading conditions with ongoing
price decreases and subdued demand causing further losses in April and May.
Prices stabilized in June, with modest prices increases and improving volumes
during July. During August and September, volumes and margins normalized,
resulting in good profits for these two months.
For the 9 month period January to September 2009 v 2008, BSi tonnage dropped
26%, whilst Arcelor Mittal`s sales to the local market dropped 38%
FINANCIAL RESULTS
Having made a profit of R127 million in the first half of last year followed by
a loss of R27 million in the second half, we are please to show a profit of R1
million for the last six months. This was achieved off turnovers of R1 140
million, R717 million and R663 million respectively.
These results show that the group has held up well in the extreme conditions and
is well placed to take advantage of the recovery in the steel industry.
The strengthening of the South African Rand against the US Dollar had an adverse
impact on the balance sheet of the group. The Foreign Currency Translation
Reserve decreased by R27,989 million on consolidation of the foreign
subsidiaries. This amount is included under Reserves.
During the phase in which steel price decreases were prevalent, the Group
focused on lowering its inventory levels to mitigate further losses. The price
decreases have abated and a careful restocking process is under way. The group
has used the relatively stable conditions to concentrate on increasing
efficiencies throughout all divisions. The Debtors book has been closely
managed and, although the debtor days have moved out slowly, the Directors are
comfortable that together with the credit insurance in place the provisions
adequately cover the problem accounts.
The Group remains committed to obtaining all settlement discounts available by
ensuring the creditors are paid strictly on terms.
SHARE CAPITAL
In terms of its general authority, the group continues with its share buyback
program embarked during the 2009 year. At the end of September 2009, 9 647 519
shares had been repurchased and are treated as treasury shares. An amount of R8
671 851 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 company and
shareholders based on prevailing market circumstances.
SUBSEQUENT EVENTS
No material change has taken place in the affairs of the group between the
end of the financial period and the date of this report.
PROSPECTS
Despite the uncertain times and tumultuous period we have weathered, we are able
to discern some important fundamentals, which give us some insight to the
future. We have accordingly adapted our strategy to mitigate the risks and
exploit the opportunities we foresee. As the threat of a major financial
meltdown recedes, our profitability is once again driven by two key drivers,
namely; the world steel markets, influencing steel prices; and the Southern
African economy, influencing demand.
As at end May 2009, world steel prices bottomed out and by end September had
recovered some 20%. Our local mills lagged behind this trend, partly due to the
strong Rand. International steel mills remain marginal at current pricing levels
and continue to push for increases, which are being accepted reluctantly by most
world markets.
Chinese demand remains reasonably firm, and, alongside India, seem set for
steady off take next year, with United States of America expected to show modest
improvement. This information suggests that we can expect a much improved 2010
over 2009. The corollary of this is we expect steel prices to increase gradually
during next year, barring unforeseen circumstances. It is important to note that
further substantial steel prices drops are highly unlikely, as steel mills are
generally running at or below cost at current prices.
The SA economy continues to limp along, with no real signs of improvement
anticipated in the near future. The manufacturing sector is struggling, with
mining holding its own. The structural sector is buoyed by the infrastructural
spend, although private business development is very slow. On the brighter side,
we do not expect the situation to deteriorate for the rest of the financial
year, and our tonnages are normalizing. In fact, September and October volumes
are much improved. If the group maintains this momentum for the rest of the
financial year, we expect a significantly improved second half.
Profits for the year ending March 2010 are likely to be considerably lower than
last year. Whilst we remain focused on delivering the best possible result, we
are dedicating considerable effort to capitalizing on opportunities arising in
these tough times, as well as positioning ourselves for anticipated growth.
Systems and equipment at Klipriver are being bedded down to cater for increased
volumes and there are numerous initiatives taking place regarding the
introduction of new products, with an ongoing drive to grow our plate and
structural sections tonnages.
Acquisitions prospects are seen as the single most important opportunity for the
next 6 to 9 months. Difficult times provide the right environment to forge
alliances and consolidation within the SA steel industry. We anticipate
concluding some deals that will make a material difference to the future of BSi
Steel.
In conclusion, despite the tough year we are experiencing, the BSi Steel
leadership team remain very confident on the groups growth prospects over the
next 2 to 5 years, even if the Southern African economies only recover
marginally from the current low ebb.
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.
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 period ended 30 March 2009, except
for the changes which are described in the next paragraph.
NEW ACCOUNTING STANDARDS AND INTERPRETATIONS ADOPTED
During the period under review the Group has adopted the following accounting
standards and interpretations:
IAS 1 (Revised) Presentation of financial statements
IAS 23 (Revised) Borrowing costs
IFRS 8 Operating segments
The adoption of these accounting standards and interpretations had no material
impact on the financial results of the Group for the period ended 30 September
2009 and resulted in no changes to the Group`s accounting policies.
By order of the Board
9 November 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: 09/11/2009 07:05:04 Produced by the JSE SENS Department.
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