| Fri 11 Jun 2010, 13:06 | | 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 2010
BSi Steel 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 22.61%
- Headline earnings per share down 11.14 cents to 2.86 cents
- NAV per share 56.6 cents
- Total assets increase by 15.49% to R972million
AUDITED CONDENSED FINANCIAL RESULTS FOR THE YEAR ENDED
31 MARCH 2010
Condensed income statement
Audited Audited
year year
ended ended
31 March 2010 31 March 2009
R`000 R`000
Revenue 1 437 068 1 856 989
Gross profit before 202 561 359 014
exceptional items
Exceptional items(1) (8 256) (51 444)
Gross profit 194 305 307 570
Other costs (137 507) (146 938)
Earnings before interest,
taxation, deprecation and
amortisation 56 798 160 632
("EBITDA")
Depreciation and (9 286) (7 194)
amortisation
Profit before interest and 47 512 153 438
taxation
Profit/(loss)on disposals of assets 7 868 -
Interest received 1 423 1 358
Interest paid (23 808) (29 355)
Profit before taxation 32 995 125 441
Taxation (7 035) (25 129)
Profit for the year 25 960 100 312
Earnings per share (cents) 3.66 13.98
(basic and diluted)
Reconciliation of headline
earnings:
Profit for the year 25 960 100 312
Profit on disposal of non-current
assets held for sale (7 868) -
Profit on disposal of 30 65
property, plant & equipment
Tax impact on adjustments 2 195 (18)
Headline earnings (basic and 20 317 100 359
diluted)
Weighted average shares in 709 393 717 575
issue
(000)
Headline earnings per share 2.86 13.99
(cents) (basic and diluted)
Note:
During the first half of the year the company recorded exceptional charges
amounting to R8.26 million (2009: R51,44 million) related to write downs of
inventory.
Condensed statement of comprehensive income
Audited Audited
31 March 31 March
2010 2009
R`000 R`000
Profit for the year 25 960 100 312
Other comprehensive income
Revaluation of property - 2 900
Realisation of property revaluation (10 056)
Taxation 1 273
Net Realisation of property revaluation(8 783) -
Effects of cash flow hedges (2 425) -
Foreign currency translation reserve (28 009) 22 539
Total comprehensive income (13 257) 125 751
Condensed Statement of Financial Position
Audited Audited
31 March 2010 31 March 2009
R`000 R`000
ASSETS
Non-current assets
Property, plant and 240 888 193 427
equipment
Goodwill 13 442 13 442
Intangible assets 9 357 4 768
Deferred taxation 1 607 3 447
265 294 215 084
Current assets
Inventories 296 320 244 758
Trade and other receivables 386 495 320 055
Current tax receivable 242 6 947
Other financial assets 2 -
Cash and cash equivalents 23 294 35 088
706 353 606 848
Non-current assets held for - 19 416
sale
Total assets 971 647 841 348
EQUITY AND LIABILITIES
Equity
Total shareholders` equity 399 949 415 962
Non-current liabilities
Other financial liabilities 114 248 111 965
Deferred taxation 2 724 3 534
116 972 115 499
Current liabilities
Finance lease obligation - 1 202
Trade and other payables 209 791 165 854
Current tax payable 11 753 6 374
Other liabilities - -
Other financial liabilities 19 728 10 597
Bank overdraft 213 454 119 736
454 726 303 763
Non-current liabilities held - 6 124
for sale
Total liabilities 571 698 425 386
Total equity and liabilities 971 647 841 348
Number of shares in issue 706 668 712 728
(000)
Net asset value per share 56.6 58.4
(cents)
Net tangible asset value per 53.4 55.8
share (cents)
Condensed statement of changes in equity
Audited Audited
31 March 31 March
2010 2009
R`000 R`000
Balance at beginning of year 415 962 297 079
Profit for the year 25 960 100 312
Foreign currency translation (28 009) 22 539
reserve
Issue of shares - 13 849
Share based payment 1 366 -
Purchase of treasury shares - (13 849)
Hedging Instrument (2 425) -
Realisation of revaluation of
property (8 783) 2 900
Purchase of own shares (4 122) (6 868)
Attributable to ordinary 399 949 415 962
shareholders at end of year
Condensed cash flow statement
Audited Audited
31 March 31 March
2010 2009
R`000 R`000
Operating activity cash (50 830) 90 653
flows
Cash flows from operations (34 268) 164 301
Changes in working capital (16 562) (73 648)
Investing activity cash (48 923) (112 745)
flows
Financing activity cash (2 603) 54 379
flows
Total cash movement for the (102 356) 32 287
year
Cash at beginning of period (84 648) (113 517)
Effect of exchange rate (3 156) (3 418)
movement on cash balances
Total cash at end of year (190 160) (84 648)
Condensed segment report
Audited Audited
31 March 31 March
2010 2009
R`000 R`000
Gross revenue
Stockists 510 466 672 999
Bulk sales 451 418 525 114
Exporting 474 839 634 312
Other 345 24 564
1 437 068 1 856 989
Profit before interest and
taxation
Stockists (11 239) 40 580
Bulk sales 25 392 32 003
Exporting 28 609 81 787
Other 12 618 (932)
55 380 153 438
Total assets
Stockists 274 621 202 187
Bulk sales 167 049 119 713
Exporting 350 853 250 184
Other 287 344 319 198
Eliminations (108 220) (49 934)
971 647 841 348
Total capital expenditure
Stockists 1 026 5 187
Bulk sales 58 113
Exporting 3 334 7 117
Other 64 233 101 380
68 651 113 797
OVERVIEW
The directors of BSi Steel Limited ("BSi") are pleased to present the financial
results for the year ended 31 March 2010 ("F2010").
The BSi group of companies operates in the steel and associated industries with
strategically located operations in South Africa, Mozambique, the Democratic
Republic of the Congo, Zimbabwe, 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 and value-adding operations.
The year under review covers a period of continued volatility in world steel
markets precipitated by the financial crisis. During the first half of F2010,
steel prices dropped on average R2 000 per tonne in line with falling
international steel prices, and negatively influenced by a strengthening Rand.
In addition, SA steel consumption declined 25-30% on prior year on the back of
poor performance in the construction and manufacturing sectors (collectively
representing 75% of total steel demand). BSi however managed to maintain sales
tonnages (F2010 - 195 000t; F2009 - 200 000t) representing a significant out-
performance of the market. This growth in market share has been part of a
repositioning exercise giving us greater volumes and therefore better average
costs across a wider product range, resulting in improved overall efficiencies
going forward.
FINANCIAL RESULTS
The combination of falling prices, declining demand and a strengthening Rand
made for an extremely challenging environment in F2010, and in this context we
are pleased with our resilient performance.
The strong finish to the year has allowed the group to report earnings of R26.0
million (2009:R100.3 million). The recovery of the gross profit margin from the
interim results to finish at 14.1% (2009:19.3%)and the continued control over
operating costs has made this possible. The operating costs were down R9.4
million on the previous year to R137.5 million.
The increase in inventories and trade receivables on the previous year reflects
the increase in the operating activity when compared with the slowdown of a year
ago.
The movement in the exchange rate between the US dollar and the South African
Rand over the period (2010 R7.39:2009 R9.72) has resulted in a decrease in the
consolidated reserves as reported in ZAR by R28 million. Any weakening in the
Rand from the R7.39 level will begin to reverse this position.
Our investments in processing, central warehousing and distribution capacity as
well the bedding down of our IT platform were completed in F2010, and these
distractions are now behind us. We believe these investments will give us
significant capacity and efficiency advantages in the years ahead, as we expand
our geographic footprint.
SHARE CAPITAL
In terms of its general authority, the group continues with its share buyback
program authorised during the 2009 year. During F2010 year 6 060 430 (2009:7 126
845) shares were repurchased and are treated as treasury shares in the above
results. An amount of R4 121 946 (2009:R6 867 726) was expended in this regard.
DIVIDEND POLICY
We remain committed to paying a dividend during F2011 providing the market
conditions remain reasonably stable. The payment date will be reviewed when the
June trading figures are availible and it is possible to take a forward view of
trading conditions.
BASIS OF PREPARATION
This condensed report has beed prepared in accordance with IAS 34 - Interim
Financial Reporting, the South African Companies Act and the JSE Listing
Requirements. The condensed report has been prepared in accordance with the
framework concepts and the measurements and recognition requirements of IFRS and
the AC500 standards as issued by the Accounting Practice Board or its
successors.
The accounting policies and methods of computation are consistent with those
applied in the financial statements for the year ended 31 March 2009.
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
World steel prices dropped during May 2010, following a strong rally from
January this year. Current world demand is fair, although Europe is under
pressure due to the EU financial turmoil. At the time of print, we believe
prices have bottomed out and are likely to firm during Q3 on the back of iron
ore and coking coal increases.
SA steel increases lagged the world rally and were modest in comparison. Current
SA prices are close to import parity prices, with the Rand at around the
7.75:USD1 level. Some products may be marginally above import parity; however,
any adjustment down is likely to be marginal. There is no prospect of dramatic
price drops for the foreseeable future, as mills are struggling to cover costs
at these levels. Price drops of more than 10% would only be possible following a
dramatic drop in iron ore and coking coal prices.
It is difficult to forecast future demand in SA, as we are receiving mixed
signals from the market. Based on our experience this year to date, we see
ongoing demand as moderate. It is our belief that SA steel consumption will
increase around 10% off the poor 2009 tonnage.
Whilst BSi remains committed to ongoing sustainable growth, such growth will be
tempered slightly, as we shift our focus to maximising efficiencies and
profitability. Strict cash management and stock control measures will ensure we
remain resilient and well positioned to take advantage of an upward swing in
demand and pricing.
Our key growth components this year will be through organic growth, new
products, new overland outlets and acquisitions. We are expecting to announce
the outcome of current acquisitive negotiations in the near future.
Whilst the profit made for F2010 is modest in comparison to prior years
(F2009:R100 million; F2008:R99 million), it must be seen in context. Not only
did we deal with the worst conditions in living memory, we made operational and
capacity investments, in a challenging environment that will give great returns
in the years to come.
Having had a good start to the year we look forward to a materially improved
performance on the prior year.
DIRECTORATE
There were no changes to the Board during the year.
R G Lewis became a non-executive member, previously an alternate to N G Payne.
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 2010.
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
11 June 2010
W L Battershill J R Waller
Chairman Financial Director
CORPORATE INFORMATION
Non executive directors: B M Khoza (Alternate - N M Anderson),
N G Payne, 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: 11/06/2010 13:06:03 Produced by the JSE SENS Department.
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