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ACE
ACE
ACE - Accentuate Limited - Audited results for the year ended 30 June 2010
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
Cash generated from operating activities of R14m
Final dividend of 2 cents per share bringing the total dividend paid to 4 cents
EBITDA increased to 8.6% of turnover
HEPS increased by 29% to 11.95 cents per share
Consolidated Financial Statements for the year ended 30 June 2010
Consolidated statement of financial position
Audited Audited
30 June 2010 30 June 2009
R`000 R`000
Assets
Non-current assets
Property plant and equipment 37 153 39 592
Goodwill 96 290 96 290
Intangible assets 2 440 2 387
Deferred taxation 3 512 3 317
139 395 141 586
Current assets
Inventories 46 994 48 034
Other financial assets 368 367
Current tax receivables
Operating lease asset 3 013 4 907
- 38
Trade and other receivables 57 230 50 942
Cash and cash equivalents 1 170 900
108 775 105 188
Total assets 248 170 246 774
Equity and liabilities
Equity
Equity Attributable to Equity Holders of
Parent
Capital and reserves
Share capital 124 916 125 075
Reserves 10 557 10 871
Retained earnings 43 984 33 584
179 457 169 530
Non-controlling interest
- 13
Total equity 179 457 169 543
Non-current liabilities
Other financial liabilities 14 500 20 446
Finance lease obligations 233 646
Deferred taxation 2 915 3 100
17 648 24 192
Current liabilities
Other financial liabilities `6 006 6 066
Finance lease obligations 433 533
Trade and other payables 37 304 39 196
Operating lease liability 1 040 588
Current tax payable 526 187
Bank overdraft 5 756 6 469
51 065 53 039
Total liabilities 68 713 77 231
Total equity and liabilities 248 170 246 774
Number of shares in issue 111 108 119 106 108 119
Net asset value per share (cents) 162 160
Tangible net asset value per share (cents) 73 67
Statement of comprehensive income
Audited Audited
30 June 2010 30 June 2009
R`000 R`000
Revenue 305 496 298 036
Cost of sales (151 524) (156 830)
Gross profit 153 972 141 206
Other income 1 189 4 118
Other operating expenses (129 005) (123 697)
Earnings before interest, tax, depreciation 26 133 21 627
and amortisation
Depreciation and amortisation (6 482) (5 181)
Profit before interest and taxation 19 651 16 446
Finance costs (4 069) (5 878)
Profit before tax 15 582 10 568
Income taxation expense (3 339) (1 118)
Profit for the year 12 243 9 450
Other comprehensive income for the period -
Gains and losses on property revaluation
Taxation related to components of other
comprehensive income 315 315
52 52
Other comprehensive income for the year net of 367 367
taxation
Attributable to:
Equity holders of the parent 12 610 9 816
Minority interest - -
Net profit for the year 12 610 9 816
Reconciliation of headline earnings
Net profit for the year 12 243 9 450
Adjusted for profit / (loss) on disposal of 73 (2)
property plant and equipment
Headline earnings attributable to the equity 12 170 9 452
holders of the parent
Weighted average number of shares in issue 101 843 234 101 625 172
Earnings per share (cents)
Earnings per share 12.02 9.30
Headline earnings per share 11.95 9.30
Interim dividends per share 2 -
Final dividend per share
2 -
Consolidated statement of cash flows
Audited Audited
30 June 2010 30 June 2009
R`000 R`000
Cash flows from operating activities
Cash generated from operations 19 366 11 572
Investment income 29 18
Taxation paid (1 434) (12 908)
Finance costs (4 069) (5 878)
Cash flows from operating activities 13 892 (7 196)
Cash flows from investing activities
Proceeds on sale of property plant and 1 486 325
equipment
Acquisition of property plant and equipment (4 092) (4 041)
Acquisition of intangible assets (1 416) (1 607)
Acquisition of business - (9 070)
Decrease in financial assets - 896
Cash flows from investing activities (4 022) (13 497)
Cash flows from financing activities
Reduction of share capital or buy-back of
shares
Repayment of shareholders loan (159) (350)
- (50)
Proceeds from other financial liabilities
Repayment of financial liabilities (6 008) 23 292
Finance lease repayments
(510) (171)
Dividends paid (2 210) (4 131)
Cash flows from financing activities (8 887) 18 590
Net increase in cash and cash equivalents 983 (2 103)
Cash and cash equivalents at the beginning of (5 569) (3 466)
the year
Cash and cash equivalents at the end of the (4 586) (5 569)
year
Statement of Changes in Equity
Attributable to equity holders of the
parent
Share Share Total Retained Total Minority Total
capital premium reserves income R`000 interest equity
R`000 R`000 R`000 R`000 R`000 R`000
Balance at 1 1 122 541 11 187 27 898 161 13 161
July 2008 627 640
Changes in
equity
Total (315) 9 816 9 501 9 501
comprehensive
income for
the year
Issue of 791 791 791
share capital
Purchase of (350) (350) (350)
own /
treasury
shares
Business 2 092 2 092 2 092
combinations
Dividends (4 131) (4 (4
131) 131)
Total changes 2 533 (315) 5 685 7 903 7 903
Balance at 1 1 125 074 10 872 33 583 169 13 169
July 2009 530 543
Total (315) 12 610 12 12 295
comprehensive 295
income for
the year
Share premium (4) (4) (4)
expenses
Purchase of (155) (155) (155)
own /
treasury
shares
Dividends (2 222) (2 (2
222) 222)
Changes in 13 13 (13)
ownership
interests
Total changes (159) (315) 10 388 9 914 9 914
Balance at 30 1 124 915 10 557 43 984 179 - 179
June 2010 457 457
Segment Report
Audited Audited Audited Audited Audited
30 June 30 June 30 June 2010 30 June 2010 30 June
2010 2010 R`000 R`000 2010
R`000 R`000 R`000
Infrastructure Environmental
Supplies Division Solutions
Division
Flooring Glass and Environmental Corporate Total
Aluminium Solutions and
eliminations
External sales 191 056 50 668 59 217 4 555 305 496
Gross profit 91 383 24 405 39 291 (1 107) 153 972
Results
Segment result 12 493 2 896 3 254 1 008 19 651
- (Profit before
interest and
tax)
Finance cost (1 099) (430) (1 579) (961) (4 069)
Segment 11 394 2 466 1 675 47 15 582
operating result
Income taxation (3 339)
expense
Profit / (loss) 12 243
from ordinary
activities
Other
information
Capital 2 217 941 870 4 028
expenditure
Depreciation and
amortisation
2 851 648 1 150 1 833 6 482
Balance sheet
Assets
Segment assets 101 939 33 836 24 625 87 770 248 170
Segment
liabilities
Consolidated (30 121) (13 104) (17 505) (7 983) (68 713)
total
liabilities
Audited Audited Audited Audited Audited
30 June 30 June 30 June 2009 30 June 2009 30 June
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
External sales 201 362 32 462 63 553 659 298 036
Gross profit 91 438 11 884 38 676 (792) 141 206
Results 8 279 395 6 779 993 16 446
Segment result -
(Profit before
interest and
tax)
Finance cost (2 060) (62) (2 556) (1 200) (5 878)
Segment 6 219 333 4 223 (207) 10 568
operating result
Income taxation (1 118)
expense
Profit / (loss) 9 450
from ordinary
activities
Other
information
Capital 2 048 490 1 305 3 843
expenditure
Depreciation and
amortisation 2 535 525 1 304 817 5 181
Balance sheet
Assets
Segment assets 100 081 25 627 26 911 94 155 246 774
Liabilities
Segment (36 483) (5 899) (22 085) (12 764) (77 231)
liabilities
INTRODUCTION
Accentuate is engaged in the manufacture 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. Greater transparency has been provided in the
segmental report to include a breakdown for Centurion Glass & Aluminium within
the Environmental Solutions Division.
THE OPERATING ENVIRONEMENT
Despite challenging macro-environment conditions, Accentuate remained fairly
resilient during the economic downturn of 2008/9 and into the present. This
bears testimony to the fact that the company is invested in sustainable sectors
of the infrastructure development economy.
Both within the global and domestic economy a number of factors continue to
contribute to tougher trading conditions. The global economic downturn has led
to a period of contraction in the private construction sector with an effective
decrease in demand for civil construction and the postponement and rescoping of
several projects commissioned by public enterprise.
Following a period of sustained growth in all sectors of the South African
construction industry, the global credit crunch exacerbated a drastic reduction
in private sector commercial investment. This combined with the cumulative
effects of numerous interest rate hikes and the introduction of the National
Credit Act, had a major impact on the ease with which credit is accessed and in
turn on private sector construction projects. This impacted seriously on a
number of market sectors in which Accentuate operates.
Much of the public sector infrastructure spend has over the past year been
diverted to 2010 soccer world cup projects including the stadiums, road and rail
infrastructure. In addition inefficiencies at local authority level have further
impacted on the delivery of much needed infrastructure in the areas of health
care, education and housing. Notwithstanding this and while repositioning itself
to take advantage of the opportunities that presented themselves, Accentuate has
delivered an acceptable set of results.
REVIEW OF OPERATIONS
Accentuate is pleased to announce that the restructuring efforts undertaken in
CGA and reposition of SAFIC have demonstrated their merit. Revenue across the
group increased to R305.5 million (2009: R298.0 million), couple with effective
cost of sales management, gross profit increased by 9% to R153.9 million from
R141.2 million in the prior year.
Infrastructure Supplies Division:
FloorworX
Revenue for the period amounted to R191 million (2009: R201 million) with an
operating profit in excess of R11 million (2009: R6 million). Year-on-year
volumes were slightly down as a result of the continued downturn in the
construction industry, but this was negated by the continued improvement in
margins resulting in a significant increase in profitability. Governments
recently announced commitments to continued infrastructure spend are extremely
encouraging, as they committed to allocate more than R8 billion to five major
hospitals across South Africa before 2014.
Centurion Glass & Aluminium (CGA)
Revenue increased 56% to just over R 50 million (2009: R32 million) and
operating profit was significantly higher at R2.5 million from R0.3 million in
2009. The division`s operating profit margin was 6.68% compared to 0.92% in the
prior year. The bulk of the revenue growth was attributable to increased volume
with the balance from supplying more expensive solutions (although still at
depressed margins). Margins remain under pressure due to market conditions.
Environmental Solutions Division:
SAFIC reported a revenue decline of R4.3 million to R59 million (2009: R64
million) and operating profit increase of R1.1 million to R2.6 million (2009:
negative R0.175 million) resulting in an improved margin of 6%.
Despite the decrease in revenue and volumes, SAFIC has managed to improve the
operating margin by reducing costs and will continue to focus on providing value
adding solutions to customers, clients and partners.
The division is proud of our cash generation in the group which was brought
about by strict working capital management. Efforts have been focused on the
extraction of profit from intergroup opportunities, namely the supply of
adhesive and cementations products to FloorworX, preparation of flooring and
floor maintenance after installation and the provision of window cleaning
services at project completion to CGA.
FINANCIAL RESULTS
The group achieved an attributable profit of R12.2 million (2009: R9.5 million)
for the year ended 30 June 2010. This is an increase of 30% on the previous
corresponding period. Despite competitive pressure in the market the group has
managed to grow gross profit to 50.4% (2009: 47.4%) of turnover. Turnover grew
to R305.5 million (2009: R298.0 million) for the year. EBITDA grew by 21% to
R26.1 million. Headline earnings per share increased 29% to 11.95 cents per
share ("cps) (2009: 9.30 cps), reflecting efforts within the group to maintain
margins at group level. Earnings per share increased 28% to 12.02 cps (2009:
9.30 cps). Stringent implementation of cash management and a drive to collect
outstanding timeous lead to cash flow from operating activities increasing
substantially to R13.9 million (2009: negative R7.2 million) was reported.
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 2010 or the financial position
at that date.
DIVIDEND DECLARATION
Notice is hereby given that a final dividend of 2 cps (2009: 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. An interim dividend of 2
cents per share was paid on 23 March 2010 bringing the total dividend to 4 cents
per share. 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 8 October 2010
Shares traded ex dividend Monday 11 October 2010
Record date Friday 15 October 2010
Payment date Monday 18 October 2010
No share certificates may be dematerialised or rematerialised between Monday 11
October 2010 and Friday 15 October 2010 both dates inclusive.
PROSPECTS
Public sector spending is expected to remain strong with between R160 billion
and R220 billion of Governments R864 billion public infrastructure budget
expected over the medium-term expenditure framework period. Most of this
expenditure will be directed towards the areas of health care, education and
transportation, areas in which Accentuate hold the specification for flooring
and are active within the glass and aluminium sectors. In addition Accentuate
has seen increased activity in the private sector with specific reference to
refurbishments and we remain cautiously optimistic in this regard. A number of
private sector opportunities outside of South Africa, have been secured by
FloorworX and this provides a solid hedge against public sector spending
volatility. We have seen tremendous growth in exploiting synergies within the
group and the supply of both adhesives and screeds from SAFIC to FloorworX is
already in operation and expected to make a meaningful contribution during the
next financial year. SAFIC also continues to make inroads into the institutional
market and has secured a number of impressive tenders that will see its
contribution towards group profitability increase dramatically and achieve the
objective of increasing annuity business within the division. The development of
a unique product and service offering within CGA remains a priority and will
ensure that business is secured at attractive and sustainable margins.
CHANGES TO THE BOARD
Lindiwe Gadd has been appointed to the board of directors as a non-executive
director with effect from 24 May 2010 with Dineo Bokaba her alternate director
effective the same date. Lindiwe replaces Mfanyana Salanje, who resigned from
the board on 24 May 2010 as a result of his resignation from Thebe Investment
Corporate ("Thebe"). Matsobane Khwinana, his alternative non-executive director
also resigned. The board of Accentuate wishes to thank both Mfanyana and
Matsobane for their support to Accentuate and welcome Lindiwe and Dineo and
looks forward to a long and valued working relationship.
During the year under review, CGA also underwent a management change. Wesley
Delport was appointed for an initial nine month period, as Financial Director,
working closely with Alex Kerrod, before taking over as Managing Director of
CGA. Alex remained an executive director at Accentuate until 1 July 2010, after
which time he fulfils a non-executive role.
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 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 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 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
16 September 2010
F C Platt A J Voogt
Chief Executive Officer Financial Director
CORPORATE INFORMATION
Non executive directors: M D C Motlatla
L Gadd
D Bokaba (Alternate)
A J Kerrod
Executive directors: F C Platt
A J Voogt
Dr. D E Platt
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: 22/09/2010 08:00:01 Produced by the JSE SENS Department.
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