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230911 Accentuate Limited CEO Fred Platt at the media lunch talking about their results released on sends this morning.photo by Simphiwe Mbokazi 453

Roy Cokayne

Difficult trading conditions in the construction and construction supply sectors and a R70.8 million impairment on a business acquired in 2007 pushed AltX-listed flooring and chemicals manufacturer and distributor Accentuate into a loss in the year to June.

The impairment relates to Centurion Glass and Aluminium (CGA), which it agreed to acquire in October 2007 at a cost of R75m.

Accentuate reported in March it was suing the vendors of CGA for R10.4m in damages arising from a breach of certain warranties provided when the CGA shares were acquired.

However, Accentuate chief executive Fred Platt said on Friday the group had discovered evidence of “certain subversive activity” during its recent dealings with the alleged misconduct, which was the basis of the warranty claim.

Platt said the group had interpreted this activity to be a means of preventing its legal claims and actions being processed and shareholders would be informed as the proceedings unfolded.

Accentuate has decided to dispose of CGA, which made a loss of R12.5m in the year to June.

Platt attributed the CGA loss and impairment to the inactivity in this sector and structural issues in the business that were not adequately identified and addressed by the previous management and vendors, which had impacted irreparably on the business’s profitability and sustainability.

He said the lack of activity within the construction sector led to CGA’s revenue reducing by almost 40 percent compared with the previous period.

Total fixed costs in CGA had been reduced by more than 30 percent and closer attention paid to rebuilding relationships with major contractors and brand building.

But Platt said Accentuate’s management believed the current state of the glass and aluminium industry would not recover substantially for at least the next two years, resulting in a position where at best the forecast would be a break-even scenario for CGA.

Platt said discussions regarding the disposal of CGA were taking place and the group was confident the disposal would be completed “in the not too distant future”.

Cash generated from the sale of CGA would be used for further expansion into the flooring and related market segments, he said.

Accentuate on Friday reported a loss a share from continuing operations of 59.53c in the year to June compared with earnings a share of 9.41c in the previous year.

Headline earnings a share from continuing operations dropped to 8.32c from 9.34c.

The total comprehensive loss for the year was R74.19m compared with a profit of R12.2m in the previous year.

Revenue declined marginally to R249.4m from R254.8m.

No dividend was declared.

Platt said the company’s core businesses, Floorworx and Safic, had performed well under extremely difficult market circumstances.

He said the construction industry was experiencing major infrastructure project bottlenecks, causing delays, a reduced number of contract awards, fierce competition and massive margin pressures, resulting in less than desirable trading conditions.

Accentuate shares rose 11.11 percent to 50c on Friday.