| Mon 17 Oct 2011, 8:01 | | AET - Alert Steel Holdings Limited - Alert Steel`s turnaround strategy starts |
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AET - Alert Steel Holdings Limited - Alert Steel`s turnaround strategy starts
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ALERT STEEL HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2003/005144/06)
JSE code: AET ISIN: ZAE000092847
("Alert Steel", "group" or "Alert")
ALERT STEEL`S TURNAROUND STRATEGY STARTS SHOWING RESULTS
Pretoria, 17 October 2011 - AltX listed steel retailer Alert Steel said that
its strategy of returning to its core business of retailing steel and steel
related products had resulted in a significant improvement in its performance
for the first three months of trading in the new financial year.
Reporting on its year end results today, chief executive Johan du Toit said
that the group had posted earnings before interest, taxation, depreciation
and amortisation (EBITDA) of R6.2 million (Q1 2010: loss of R15 million) and
a loss before tax of R1.5 million (Q1 2010: loss of R25.3 million) in the
first quarter of the 2012 financial year. Revenue for the three months was
R190.3 million (Q1 2010: R240.1 million).
Du Toit said the process of discontinuing certain non-core product lines and
the introduction of new ones aligned to the group`s strategy had resulted in
the erosion of the group`s current customer base which impacted on the sales
function at mostly the city branches. Subsequent to the year end, most of
the branches had made up the lost revenue from additional sales to existing
customers as well as the acquisition of new ones. Branches located in rural
areas where less affected by this development as most of these were already
solely supplying steel and steel-related products.
Revenue for the 2011 financial year reduced by 6% year on year to R769.9
million with a consequent after tax loss of R119.8 million. Gross profit
decreased by 23.9% to R135 million after making an additional provision for
R7 million for anticipated losses on disposing of the remaining inventory of
the discontinued lines. Headline loss per share increased from 25.5 cents to
41.0 cents.
Operating expenses decreased by 7% year on year to R203.7 million. These
expenses included exceptional items related to the restructure including
legal and circular costs of R3 million, branch closure and retrenchment costs
of R1.7 million, the settlement of onerous lease agreements of R5.3 million
and rebranding and revamping costs of R2.1 million.
During the financial year, Alert Steel disposed of certain operations of
Alert Steel North West and subsequently repurchased all the shares in Alert
Steel North West on 1 October 2011, which is now wholly-owned. In addition,
Alert Steel disposed of the operations of Alert Plumping and the RSC
Polokwane division, sold its shares in Alert Reinforcing and acquired all the
shares in Alert Steel Polokwane.
Du Toit said the raising of R50 million through a rights offer, concluded on
10 October 2011, as well as the restructuring of the group`s overdraft
facility with Nedbank into long-term loans had given the group the necessary
working capital to continue as a going concern.
"With the restructure behind us and our renewed focus on steel and steel-
related products, we have regained the lost revenue from discontinued lines
in the first three months of the new financial year by growing sales in new
product lines. We believe this trend is sustainable and, coupled with a
number of other strategic initiatives aimed at improving customer service
levels and increasing Alert`s positioning in the market, we are confident of
meeting and perhaps even exceeding our budgeted targets for the 2012
financial year," he said.
For further information call Johan du Toit on 082 416 8888
Issued by du Plessis Associates on behalf of Alert Steel Holdings Limited.
dPA contact Helen McKane Tel : +27 11 728 4701, Fax: +27 11 728 2547, Mobile:
082 330 2034 or e-mail: alertsteel@dpapr.com
website: www.alertsteel.co.za
Designated Adviser
QuestCo Sponsors (Pty) Limited
Date: 17/10/2011 08:01:07 Produced by the JSE SENS Department.
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