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ACE
ACE
ACE - Accentuate - Condensed Reviewed Results For The 6 Months Ended 31 December
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")
HIGHLIGHTS
Gross margin increased to 52.4%
Cash generated from operating activities of R11.9 million
Interim dividend of 2 cents per share
EBITDA increased to 11% of turnover
Condensed Consolidated Financial Statements for the period ended 31 December
2009
Consolidated statement of financial position
Reviewed Audited Reviewed
6 months 12 months 6 months
ended ended ended
31 December 30 June 2009 31 December
2009 R`000 2008
R`000 R`000
Assets
Non-current
assets
Property 38 258 39 592 40 402
plant and
equipment
Goodwill 96 290 96 290 91 791
Intangible 3 089 2 387 5 552
assets
Deferred 3 318 3 317 2 827
taxation
140 955 141 586 140 572
Current
assets
Inventories 46 104 48 034 59 179
Trade and 57 024 56 254 43 598
other
receivables
Cash and cash 2 535 900 9 337
equivalents
105 663 105 188 112 114
Total assets 246 618 246 774 252 686
Equity and
liabilities
Capital and 177 969 169 530 168 875
reserves
Share capital 125 044 125 075 125 065
Reserves 10 871 10 871 10 919
Retained 42 054 33 584 32 891
earnings
Minority 13 13 13
interest
Total equity 177 982 169 543 168 888
Non-current 21 071 24 192 28 856
liabilities
Other 17 513 20 446 25 309
financial
liabilities
Finance lease 458 646 578
obligations
Deferred 3 100 3 100 2 969
taxation
Current 47 565 53 039 54 942
liabilities
Other 6 006 6 066 4 497
financial
liabilities
Finance lease 494 533 180
obligations
Trade and 35 989 39 196 30 371
other
payables
Deferred 623 588 654
operating
lease
liability
Current tax 2 427 187 1 309
payable
Bank 2 026 6 469 17 931
overdraft
Total equity 246 618 246 774 252 686
and
liabilities
Number of 111 108 119 106 108 119 106 108 119
shares in
issue
Net asset 160 160 159
value per
share (cents)
Tangible net 71 67 67
asset value
per share
(cents)
Statement of comprehensive income
Reviewed Audited Reviewed
6 months 12 months 6 months
ended ended ended
31 December 30 June 2009 31 December
2009 R`000 2008
R`000 R`000
Revenue 155 521 298 036 161 002
Cost of sales (73 984) (156 830) (79 090)
Gross profit 81 537 141 206 81 912
Other income 587 4 118 845
Other (65 011) (123 697) (67 438)
operating
expenses
Earnings 17 113 21 627 15 319
before
interest, tax,
depreciation
and
amortisation
Depreciation (3 191) (5 181) (2 369)
and
amortisation
Profit before 13 922 16 446 12 950
interest and
taxation
Finance costs (2 153) (5 878) (1 526)
Profit before 11 769 10 568 11 424
tax
Income (3 299) (1 118) (2 490)
taxation
expense
Profit for the 8 470 9 450 8 934
period
Other - - -
comprehensive
income for the
period
Total 8 470 9 450 8 934
comprehensive
income for the
period
Attributable
to:
Equity holders 8 470 9 450 8 934
of the parent
Minority - - -
interest
Net profit for 8 470 9 450 8 934
the period
Reconciliation
of headline
earnings
Net profit for 8 470 9 450 8 934
the period
Adjusted for (60) 2 -
profit /
(loss) on
disposal of
property plant
and equipment
Headline 8 410 9 452 8 934
earnings
attributable
to the equity
holders of the
parent
Weighted 101 980 738 101 625 172 100 563 266
average number
of shares in
issue
Earnings per
share (cents)
Earnings per 8.31 9.30 8.90
share
Diluted 8.31 9.30 8.60
earnings per
share
Headline 8.25 9.30 8.90
earnings per
share
Diluted 8.25 9.30 8.60
headline
earnings per
share
Dividends per 2.00 - -
share
Consolidated cash flow statement
Reviewed Audited Reviewed
6 months ended 12 months 6 months ended
31 December ended 31 December
2009 30 June 2009 2008
R`000 R`000 R`000
Cash flows
from operating
activities
Cash generated 13 157 11 572 (3 280)
from
operations
Investment 14 18
income
Taxation paid 929 (12 908) (10 050)
Expenses - - (4)
recognised
directly in
equity
Finance costs (2 153) (5 878) (1 526)
Cash flows 11 947 (7 196) (14 860)
from operating
activities
Cash flows
from investing
activities
Proceeds on 285 325 81
sale of
property plant
and equipment
Acquisition of (1 385) (4 041) (2 771)
property plant
and equipment
Acquisition of (1 362) (1 607) (1 014)
intangible
assets
Acquisition of - (9 070) (8 250)
business
(Increase) / (128) 896 -
decrease in
financial
assets
Cash flows (2 590) (13 497) (11 954)
from investing
activities
Cash flows
from financing
activities
Proceeds from - (350) (368)
issue of share
capital
(Decrease) / (3 053) 23 121 25 514
increase in
financial
liabilities
Increase / (226) (50) 690
(decrease) in
finance lease
liabilities
Dividends paid - (4 131) (4 151)
Cash flows (3 279) 18 590 21 685
from financing
activities
Net increase 6 078 (2 103) (5 129)
in cash and
cash
equivalents
Cash and cash (5 569) (3 466) (3 466)
equivalents at
the beginning
of the period
Cash and cash 509 (5 569) (8 595)
equivalents at
the end of the
period
Statement of Changes in Equity
Attributable to equity holders of the parent
Share Share Reserves Revaluat Retaine Total Minority Total
capita premium for own ion d R`000 interest equity
l R`000 shares reserve income R`000 R`000
R`000 R`000 R`000 R`000
Balance 1 122 541 139 11 048 27 898 161 13 161 640
at 30 627
June
2008
Changes
in
equity
Revaluat (315) 315
ion
surplus
recognis
ed
directly
to
equity
Deferred 51 51 51
tax on
revaluat
ion
surplus
Net (315) 366 51 51
income /
(expense
s)
recognis
ed
directly
in
equity
Profit 9 450 9 450 9 450
for the
period
Total (315) 9 816 9 501 9 501
recognis
ed
income
and
expenses
for the
period
Issue of 791 791 791
share
capital
Treasury (350) (350) (350)
shares
Business 2 092 2 092 2 092
combinat
ions
Dividend (4 131) (4 (4 131)
s 131)
Balance 1 125 074 139 10 733 33 583 169 13 169 543
at 30 530
June
2009
Profit 8 470 8 470 8 470
for the
period
Total 8 470 8 470 8 470
recognis
ed
income
and
expenses
for the
period
Issue of 2 000 2 000 2 000
share
capital
Treasury (2 031) (2 (2 031)
shares 031)
Balance 1 125 043 139 10 733 42 053 177 13 177 982
at 31 969
December
2009
Segment Report
Reviewed Reviewed Reviewed Reviewed Reviewed
31 Dec 31 Dec 31 Dec 2009 31 Dec 2009 31 Dec
2009 2009 R`000 R`000 2009
R`000 R`000 R`000
Infrastructure Environmental
Supplies Division Solutions
Division
Flooring Glass and Environmental Corporate Total
Aluminium Solutions and
eliminations
Revenue
External 97 961 27 354 28 706 1 500 155 521
sales
Intersegment - - 2 613 (2 613) -
sales
Total Segment 97 961 27 354 31 319 (1 113) 155 521
Revenue
Results
Segment 8 591 3 859 2 413 97 14 960
result before
depreciation,
amortisation
and
impairment
Depreciation (1 440) (294) (710) (747) (3 191)
and
amortisation
Segment 7 151 3 565 1 703 (650) 11 769
operating
result
Income (3 299)
taxation
expense
Profit / 8 470
(loss) from
ordinary
activities
Other
information
Capital 489 337 452 108 1 386
expenditure
Balance sheet
Assets
Segment 104 827 30 978 25 216 (10 693) 150 328
assets
Goodwill - - - 96 290 96 290
Consolidated 104 827 30 978 25 216 85 597 246 618
total assets
Liabilities
Segment 34 079 8 686 18 508 7 363 68 636
liabilities
Consolidated 34 079 8 686 18 508 7 363 68 636
total
liabilities
Reviewed Reviewed Reviewed Reviewed Reviewed
31 Dec 31 Dec 31 Dec 2008 31 Dec 2008 31 Dec
2008 2008 R`000 R`000 2008
R`000 R`000 R`000
Infrastructure Environmental
Supplies Division Solutions
Division
Flooring Glass and Environmental Corporate Total
Aluminium Solutions and
eliminations
Revenue
External 103 031 23 354 38 375 (3 758) 161 002
sales
Intersegment - - 662 (662) -
sales
Total Segment 103 031 23 354 39 037 (4 420) 161 002
Revenue
Results
Segment 8 316 1 562 3 915 - 13 793
result before
depreciation,
amortisation
and
impairment
Depreciation (828) (516) (1 025) - (2 369)
and
amortisation
Segment 7 488 1 046 2 890 - 11 424
operating
result
Income (2 490)
taxation
expense
Profit / 8 934
(loss) from
ordinary
activities
Other
information
Capital 2 513 - 258 - 2 771
expenditure
Balance sheet
Assets
Segment 98 721 27 869 214 758 (180 453) 160 895
assets
Goodwill - - - 91 791 91 791
Consolidated 98 721 27 869 214 758 (88 662) 252 686
total assets
Liabilities
Segment 34 756 9 379 84 226 (44 563) 83 798
liabilities
Consolidated 34 756 9 379 84 226 (44 563) 83 798
total
liabilities
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 Supplies Division and
Environmental Solutions Division.
The period under review has seen Accentuate return to the levels of
profitability seen before the hiatus in government spending experienced around
the 2009 general elections and as reported in the figures for the financial year
ended 30 June 2009. The period was characterised by a gradual increase in demand
over the months of July 2009 and August 2009 with an acceleration in demand over
the remaining four months culminating in an acceptable performance from all of
the divisions within Accentuate. Performance for the period already accounts
for 89.6% of the profit declared for the full year ended 30 June 2009 and
management is confident that the current financial year will see a return to the
levels of profitability that has become the hallmark of Accentuate over the past
three years.
The positive cash generation of the company coupled with the confidence that
management has in the sustainability of these earnings has resulted in the
declaration of an interim dividend of 2 cents per share.
REVIEW OF OPERATIONS
Infrastructure Supplies Division:
FloorworX
The 2010 financial year began with sluggish demand for flooring products as the
resumption of Government Infrastructure spending had not yet been seen. This was
a continuation of the trend that had impacted the performance of the company
during the latter part of the 2009 financial year. This trend was however
reversed during the latter part of August 2009 and resulted in increased demand
levels that culminated in record revenue months during October 2009 through to
December 2009.
Increased demand saw production capacity under pressure but the introduction of
a third shift alleviated the problem and service levels return to the standards
set within a very short period of time. Margin pressure eased off due to a
number of factors including increased pricing, reduced input costs and a
reduction in the price of diesel. Anticipated escalations in energy costs will
still however pose a major problem.
The integration of Interior Wooden Floors is almost complete. The restructuring
of this business has resulted in the closure of all the branches and the
integration of the business into the existing FloorworX infrastructure. Certain
lease costs are still being borne but the business should reach optimum
profitability by the 3rd quarter of 2010. Management is confident that the
business will become a profitable contributor to the performance of the group
within the next 12 months.
Centurion Glass & Aluminium (CGA)
The period under review saw CGA return to profitability and making a major
contribution towards the profitability of the group. 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. The full order book, which extends beyond the current financial year,
has already had the desired effect as far as the profitability of the division
is concerned. Although the full effect of the recovery has not yet come through
in this division, revenue has increased by 17% over the comparative period
resulting in a dramatic increase in profitability.
The full integration of CGA into Accentuate has been accomplished with the final
migration to the group`s ERP system being planned for April 2010.
Environmental Solutions Division:
SAFIC continued along its restructured trajectory and even though it has
operated within some of the most depressed sectors of the economy, those being
manufacturing and mining, it has still been able to present an acceptable set of
financial results. Although revenue was down over the corresponding period,
increased margins and effective overhead cost control have resulted in an
increase in profitability.
The continued exploitation of inter-group synergies have resulted in the
successful launch of an adhesive range manufactured for Floorworx and the
imminent launch of a floor screed. Ongoing research and development is focused
towards providing customers with a comprehensive range of flooring options
including adhesives, sub floors as well as maintenance products.
FINANCIAL RESULTS
Accentuate has seen demand for its products return to the levels last seen prior
to the election period in 2009. In addition to increased government
infrastructure spend; the company has also seen CGA return to a level where it
is making a meaningful contribution to the performance of the group. A focused
pricing strategy as well as effective procurement and the effect of falling
commodity prices have seen a recovery in the margins resulting in higher levels
of profitability.
The group achieved an attributable profit of R8.47 million (2008: R8.93 million)
for the six month period ended 31 December 2009. Accentuate recorded a profit
attributable to the equity holders of the group of R9.45 million for the
financial year ended 30 June 2009. Various initiatives embarked upon to recover
lost margin have proven successful with the gross profit of the group increasing
from 47.4% for the year ended 30 June 2009 to 52.4% for the 6 month period ended
31 December 2009. Earnings per share of 8.31 cents has been reported compared
with 9.30 cents per share (2008: 8.90 cents) for the financial year ended 30
June 2009 and headline earnings per share of 8.25 cents per share compared to
9.30 cents for the year to June 2009 and 8.90 cents per share for the previous
interim period.
Cash flow from operating activities of R11.95 million (2008: negative R14.86
million) was reported despite an additional investment in stock of R4 million by
CGA to execute the increased order book.
The board has approved the issue of 5 million shares to the share trust. These
shares were listed on 17 December 2009.
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 interim period ended 31 December 2009 or the
financial position at that date.
DIVIDEND DECLARATION
Notice is hereby given that an interim dividend of 2 cents per share (2008:
none) has been declared, payable to shareholders recorded in the register of the
company at the close of business on the record date appearing below. The
dividend will be financed out of current profits.
The salient dates applicable to the final dividend are as follows:
Last day to trade shares cum div Friday 12 March 2010
Shares traded ex dividend Monday 15 March 2010
Record date Friday 19 March 2010
Payment date Tuesday 23 March 2010
No share certificates may be dematerialised or rematerialised between Monday 15
March 2010 and Friday 19 March 2010 both dates inclusive.
PROSPECTS
Looking forward, management is cautiously optimistic regarding the future. The
product and service offerings that Accentuate offers, places 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. In addition to this, the group is currently
involved in both the planning and execution of a number of meaningful private
sector projects that we believe will ensure sustainable earnings for our
investors into the foreseeable future.
Accentuate is in the fortunate position where demand for glass and aluminium
offering is currently at levels exceeding those in 2008 with an order book at
100% of capacity for the remainder of this financial year. There is also 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 condensed consolidated financial statements comply with International
Accounting Standard 34 - Interim Financial Reporting, as well as with 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 revised IAS1 and
the new IFRS8 has been applied for the first time and has resulted in a change
in the presentation of the statements. The other accounting policies are
consistent with those applied in the financial statements for the year ended 30
June 2009.
AUDITORS` OPINION
The condensed consolidated financial results have been reviewed by Accentuate`s
auditors, PKF Pta Inc. Their unqualified review 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 have 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
24 February 2010
F C Platt A J Voogt
Chief Executive Officer Financial Director
CORPORATE INFORMATION
Non executive M D C Motlatla
directors: 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: 25/02/2010 08:00:02 Produced by the JSE SENS Department.
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