Flooring infrastructure and chemicals group, Accentuate Limited (ACE) , returned to profitability for the six months ending December 2011 - after incurring significant losses for the year ended in June 2011.
The group turned in a net profit of R5.2m for the period compared with a loss of R30.3m for the previous comparable period, with turnover for the period up 12.2% to R143m.
Headline earnings per share increased by 99% to 6.86 cents from a loss of 3.72 cents per share and earnings per share were up 107% from 3.45 cents a share to 7.16 cents.
What boosted Accentuate's performance was an “exceptional'' result from the flooring division, FloorworX, in what CEO Fred Platt described as a “generally depressed” market. FloorworX's revenues for the period were up around 10% to R106m. FloorworX's margins were up too - from 5% to 8%. The division now contributes around 74% of the group's revenue.
Platt said the turnaround was also assisted by the stemming of the cash hemorrhage from loss-making subsidiary Centurion Glass and Aluminium (CGA) which was disposed of in September last year for R9.5m.
CGA, which manufactures and installs purpose-made aluminium windows for the construction industry, was bought by Accentuate in 2007 but the business failed to live up to its earnings expectations. Accentuate has subsequently instituted legal proceedings against the vendors of the business for breach of their warranties.
Said Platt: “We are confident that with the disposal of CGA and a renewed focus of our core competencies, Accentuate can now put the difficulties experienced behind it and focus on an exciting new purposes and direction for the company.”
Meanwhile, Platt noted that the company continued to operate in a lacklustre macro-economic environment. The construction sector, he said, remained depressed with no meaningful pick up in private project-driven construction activity and sporadic public sector infrastructure spending.
He said while he was encouraged by Government's renewed commitment to infrastructure spending in President Zuma's “State of the Nation” address, the lack of capacity at provincial and local government level was still impeding infrastructure delivery.
According to Platt, FloorworX has noticed a recent acceleration in infrastructure spending on classrooms for the Education Department and hospitals, clinics and residences for the Department of Health, which augurs well for the future. “Even a limited increase in spending in these areas has a significant impact on the performance of FloorworX and Accentuate,” he said.
The Environmental Solutions Division also turned in an improved performance. Revenue from this division was up 21.5% over the previous comparable period to R36m.
Platt said the improvement was due to increased annuity income for the division, an increase in project work and an improved ability to cross-sell additional projects into FloorworX. He said encouraging progress was being made towards the achievement of the strategic objectives envisaged for the division.
While the second half of the financial year was likely to remain challenging for the group, Platt said he was confident that the dominant position held by the group in the markets it operated in “will ensure that the company will continue to deliver acceptable results for the full 2012 financial year”. - I-Net Bridge