JOHANNESBURG - Accentuate the AltX-listed flooring and chemicals manufacturer and distributor and water treatment solutions provider, is targeting to revive its export revenue.
Fred Platt, the chief executive of Accentuate, on Friday also confirmed it was continuing its efforts to recover about R75million it was defrauded of by a former financial director and the growing future importance of the company’s water treatment solutions.
Platt said historically at the peak exports to Africa contributed between 10 to 15percent of revenue, but the majority of this export business had tapered off with the decline in commodity and oil prices. The group’s export markets had largely been in Africa, but it was exploring other markets. “We have explored the US and we are exploring possibilities into Australia and other markets. But generally we haven’t been hugely successful and Africa has been the focus.
“We are concerned about the US as a market. We have explored it and it’s not looking positive. But other markets like Australia do hold promise and we will be exploring those, but we will predominantly be an African player,” he said. Platt said the company would ideally like exports to contribute about 25percent of total revenue, but admitted this was not easy to achieve and was probably a three-year project.
Louis Schreuder, a former financial director of Accentuate’s wholly-owned subsidiary FloorworX, was jailed for 18 years in November 2016 after being found guilty of almost 780 charges of fraud. FloorworX is a leading supplier of resilient and carpet flooring solutions and has a manufacturing facility and warehouse in East London.
Recover more
Platt said Accentuate had “pretty much recovered what was visible and we are aware of, but are obviously of the opinion that there is more and will recover more”. He said they had to date recovered a total of R10.5m, which included R1m from an insurance claim.
Platt said the group had put in place several internal measures to bolster the control environment, including strengthening the audit and risk committee, the appointment of Maarten Coetzee as chief financial officer, the engagement of PricwaterhouseCoopers as external auditor and new providers for both internal audit and company secretary services.
He said the group’s 2016/17 financial year had been a particularly challenging year.
Accentuate on Friday reported an 87percent slump in diluted earnings a share to 0.72c in the year to June from 5.73c in the previous year.
Revenue declined by 7percent to R300m from R322.7m.
Platt said revenue was severely affected by sluggish infrastructure expenditure and the recessionary environment experienced in the construction, manufacturing and mining sectors where Accentuate was strongly represented.
“We are confident that the government infrastructure spend will improve, but to offset what we foresee as another difficult six months ahead, we are taking remedial actions now, including a conscious reduction of inventories through a structured programme.
“Although this impacted profitability during the year, the benefits in terms of cash generation and rightsizing the East London facility are already visible,” he said.
Operating profit before finance costs improved to R2.86m from the R23.6m operating loss in the previous year. Gross margins reduced by R35.5m, largely because of the decline in sales volumes and the conscious decision to cut back on production to reduce inventories.
Other income increased by 412percent to R12.4m from R2.4m, largely due to the recognition of fraud recoveries.
Finance costs declined by 14percent to R2.4m from R2.8m, which was related directly to the reduction of inventory by R24m.
Shares in Accentuate closed unchanged on Friday at 63c.