| Fri 30 Mar 2012, 17:50 | | AET - Alert Steel Holdings Limited - Alert Steel narrows loss as turnaround |
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AET
AET
AET - Alert Steel Holdings Limited - Alert Steel narrows loss as turnaround
strategy kicks in
ALERT STEEL HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2003/005144/06)
JSE code: AET
ISIN: ZAE000092847
("Alert Steel" or "company")
ALERT STEEL NARROWS LOSS AS TURNAROUND STRATEGY KICKS IN
Pretoria, 30 March 2012 - AltX-listed steel retailer Alert Steel reduced
its total headline loss by 73% to R18.4 million and its headline loss per
share by 93% to 2 cents per share year on year as efforts to restructure
and refocus the group started paying off.
Reporting today on the company`s results for the six months ended 31
December 2011, chief executive Johan du Toit said the group`s turnaround
strategy was proving successful in the face of a number of external
obstacles, including industrial action and stock shortages.
"Considering the steel and metalworkers strike that took place in July and
the supply problems created primarily by the force majeure at Arcellor
Mittal`s Newcastle plant from September to December, August was really the
only month in which we experienced normal trading conditions," he said.
Du Toit said these developments had a major impact on the company`s ability
to generate revenue, which reduced by 1% to R418 million, but it was able
to take advantage of increased prices and improved margins. As a result it
managed to achieve its targeted EBITDA with gross profit increasing by 38%
to R86 million. Operating costs were reduced by 9% to R97 million.
During the review period, Alert Steel disposed of Alert Steel Reinforcing
and the division of RSC Polokwane as going concerns to Murray & Roberts
Steel. At the same time, it acquired the remaining 50% shares in Alert
Steel Polokwane from Murray & Roberts Steel as well as all the shares in
Alert Steel North West.
Looking ahead, du Toit said the company`s working capital will be secured
through an estimated R120 million rights offer, partially underwritten by
its major shareholders for R58.5 million, which is expected to take place
before June this year. The rights offer will also introduce a major BEE
shareholder, who has also agreed to underwrite the rights offer for a
further value of R44 million.
Additionally, the company will embark on a second restructuring exercise
aimed at reducing costs at a head office level. Retrenchment costs of R5
million were expected to be incurred between April and May but would
realise a monthly saving of R1.2 million in salaries and another R500 000
in other operational expenses.
"With the cash injection from the rights offer, we expect a further
discount from our suppliers of around R750 000 and an interest saving of
approximately R700 000 per month. These measures, the fact that Arcellor
Mittal is back to full production, our ability to settle our creditors
within terms and obtain stock, as well as our ongoing rural container
deployment should put the company in a good position to capitalise on
future growth opportunities. We are therefore cautiously optimistic that
we`ll achieve our projected results for the 2013 financial period."
For further information call Johan du Toit, CEO Alert Steel, 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 advisor: QuestCo(Pty) Limited
Date: 30/03/2012 17:50:04 Produced by the JSE SENS Department.
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