ACE ACE ACE - Accentuate Limited - Reviewed results for the six months ended 31 December 2011 Accentuate Limited (Incorporated in the Republic of South Africa) (Registration number 2004/029691/06) Share code: ACE ISIN: ZAE000115986 ("Accentuate" or "the group" or "the company") REVIEWED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2011 HIGHLIGHTS - HEPS increase by 99% to 6.86 cents per share - Revenue up 12.21% - Successful disposal of Centurion Glass and Aluminium Consolidated Abridged Financial Statements for the six months ended 31 December 2011 Consolidated abridged statement of financial position Reviewed 6 months Audited Reviewed 6 months ended 31 December 30 June ended 31 December 2011 2011 2010 R`000 R`000 R`000 Assets Non-current assets 89 022 87 385 103 025 Property, plant and equipment 46 487 48 348 35 311 Goodwill 34 928 34 928 62 424 Intangible assets 729 1 169 1 778 Other financial assets 3 938 - - Deferred taxation 2 940 2 940 3 512 Current assets 109 069 95 022 107 490 Inventories 41 788 41 360 42 230 Other financial assets 6 186 368 368 Current tax receivables 4 092 2 647 3 115 Trade and other receivables 41 732 34 918 61 324 Cash and Bank 15 271 15 729 453 Assets of disposal group - 16 281 - Total assets 198 091 198 688 210 515 Equity and liabilities Equity Equity attributable to Equity holders of parent Capital and reserves Share capital 125 384 125 555 125 713 Reserves 23 924 23 924 10 557 Accumulated (loss) / earnings (27 175) (32 428) 11 433 122 133 117 051 147 703 Non-current liabilities Other financial liabilities 5 700 8 550 11 498 Finance lease obligations - - 432 Deferred taxation 5 247 5 247 2 915 10 947 13 797 14 845 Current liabilities Other financial liabilities 5 797 6 007 6 006 Finance lease obligations 160 269 292 Trade and other payables 30 380 31 999 34 488 Operating lease liability 973 794 427 Current tax payable 2 472 551 1 268 Cash and Bank 25 229 21 496 5 486 65 011 61 116 47 967 Liabilities of disposal group - 6 724 - Total equity and liabilities 198 091 198 688 210 515 Number of shares in issue 111 108 109 111 108 109 111 108 109 Net asset value per share (cents) 110 105 133 Tangible net asset value per share (cents) 78 73 75 Consolidated abridged statement of comprehensive income Reviewed 6 months Audited Reviewed 6 months ended 31 December 30 June 2011 ended 31 December 2011 R`000 2010 R`000 R`000 Revenue 143 341 249 390 127 744 Cost of sales (66 373) (113 556) (61 349) Gross profit 76 968 135 834 66 395 Other income 636 415 139 Other operating expenses (64 513) (114 351) (55 189) Earnings before interest, tax, depreciation and amortisation 13 091 21 898 11 345 Depreciation and amortisation (3 198) (6 435) (3 203) Goodwill impairment - (70 836) (33 866) Profit before interest and taxation 9 893 (55 373) (25 724) Interest received 125 - 4 Finance costs (909) (2 942) (1 642) Profit / (loss) before interest and tax 9 109 (58 315) (27 362) Income taxation expense (1 921) (3 738) (964) Profit / (loss) for the period from continuing operations 7 188 (62 053) (28 326) Profit / (loss) for the period from discontinuing operations (1 935) (12 554) (2 003) Profit / (loss) for the period 5 253 (74 607) (30 329) Other comprehensive income for the period net of taxation - 417 - Total comprehensive income / (loss) for the period Attributable to: 5 253 (74 190) (30 329) Equity holders of the parent 5 253 (74 190) (30 329) Reconciliation of headline earnings 5 253 (74 190) (30 329) Net profit / (loss) for the period 5 253 (74 607) (30 329) Adjusted for (profit) / loss on disposal of property, plant and equipment - 111 (20) Impairment of goodwill - 70 836 33 866 Loss on disposal group sold 2 247 - - Tax effect of adjustments (315) - - Headline earnings / (loss) attributable to the equity holders of the parent 7 185 (3 660) 3 517 Weighted average number of shares in issue 104 809 755 104 231 138 101 854 248 Earnings (loss) per share from continuing operations(cents) 6.86 (59.53) (27.81) Earnings / (loss) per share from Combined operations (cents) 5.01 (71.58) (29.78) Diluted earnings /(loss) per share (cents) 5.01 (71.58) (29.78) Headline earnings per share (cents) 6.86 (3.72) 3.45 Diluted headline earnings per share (cents) 6.86 (3.72) 3.45 Consolidated abridged statement of cash flows Reviewed 6 months ended Audited Reviewed 6 months 31 December 30 June ended 31 December 2011 2011 2010 R`000 R`000 R`000 Cash flows from operating activities 2 351 9 881 5 459 Cash generated from operations 4 164 15 667 7 469 Interest received 422 163 4 Taxation paid (1 326) (3 000) (323) Finance costs (909) (2 949) (1 691) Cash flows from investing activities (3 374) (2 623) (671) Proceeds on sale of property, plant and 4 384 563 equipment Acquisition of property, plant and equipment (878) (2 834) (1 220) Acquisition of intangible assets (42) (173) (14) Proceeds on sale of investments 20 - - Increase in financial assets Cash flow from discontinued operations (975) - - (1 503) - - Cash flows from financing activities (3 169) (8 438) (5 235) (Decrease) in financial liabilities (3 060) (6 002) (3 020) (Decrease) in finance lease liabilities (109) (228) (13) Dividends paid - (2 208) (2 202) Net decrease in cash and cash equivalents (4 192) (1 180) (447) Cash and cash equivalents at the beginning of (5 766) (4 586) (4 586) the period Cash and cash equivalents at the end of the period (9 958) (5 766) (5 033) Consolidated abridged statement of changes in equity Attributable to equity holders of the parent Share capital Share premium Reserves for R`000 R`000 own shares R`000 Balance at 1 July 2010 1 124 915 139 Total comprehensive loss for the period - - - Revaluation of property, plant and equipment - - - Share options exercised - 639 - Dividends - - - Balance at 30 June 2011 1 125 554 139 Total comprehensive income for the period - - - Purchase of own / - (171) - treasury shares Balance at 31 1 125 383 139 December 2011 Revaluation Retained reserve earnings / (loss) Total R`000 R`000 R`000 Balance at 1 July 2010 10 418 43 984 179 457 Total (354) (74 190) (74 544) comprehensive loss for the period Revaluation of 13 721 13 721 property, plant and equipment Share options exercised 639 Dividends (2 222) (2 222) Balance at 30 June 2011 23 785 (32 428) 117 051 5 253 5 253 Total comprehensive income for the period Purchase of own / (171) treasury shares Balance at 31 23 785 (27 175) 122 133 December 2011 Segment Report Reviewed Reviewed Reviewed 31 Dec 2011 31 Dec 2011 31 Dec 2011 R`000 R`000 R`000 Infrastructure Supplies Division Environmental Solutions Division Flooring Glass and Environmental Aluminium Solutions Discontinued Revenue External sales 105 603 6 286 32 689 Intersegment sales 3 392 Total segment 105 603 6 286 36 081 revenue Results Segment result 10 385 (1 935) 1 907 before depreciation and amortisation Depreciation and (1 889) - (691) amortisation Segment 8 496 (1 935) 1 216 operating result Discontinued operations Income taxation expense Profit from ordinary activities Other information Capital expenditure 463 - 379 Statement of financial position Assets Segment assets excluding goodwill 129 239 - 24 724 Goodwill 4 499 - - Consolidated 133 738 - 24 724 total assets Liabilities Segment liabilities 31 750 - 16 925 Consolidated 31 750 - 16 925 total liabilities Reviewed Reviewed 31 Dec 2011 31 Dec 2011 R`000 R`000 Corporate and Total eliminations Revenue External sales (1 237) 143 341 Intersegment sales (3 392) Total Segment (4 629) 143 341 Revenue Results Segment result 1 950 12 307 before depreciation, amortisation Depreciation and (618) (3 198) amortisation Segment 1 332 9 109 operating result Discontinued (1 935) operations Income taxation expense (1 921) Profit from ordinary activities 5 253 Other information Capital expenditure 78 920 Statement of Financial Positiont Assets Segment assets excluding goodwill 9 202 163 165 Goodwill 30 427 34 926 Consolidated 39 629 198 091 total assets Liabilities Segment liabilities 27 283 75 958 Consolidated 27 283 75 958 total liabilities Segment report Reviewed Reviewed Reviewed 31 Dec 2010 31 Dec 2010 31 Dec 2010 R`000 R`000 R`000 Infrastructure Supplies Division Environmental Solutions Division Flooring Glass and Environmental Aluminium Solutions Discontinued Revenue External sales 96 180 20 785 26 530 Intersegment sales 3 236 Total Segment 96 180 20 785 29 766 Revenue Results Segment result 6 413 (1 244) 1 766 before depreciation, amortisation Depreciation and (1 626) (404) (737) amortisation Segment 4 787 (1 648) 1 029 operating result Discontinued operations Income taxation expense (Loss) from ordinary activities Other information 512 446 127 Capital expenditure Statement of financial position Assets Segment assets excluding goodwill 97 328 37 162 24 007 Goodwill 4 499 - - Consolidated 101 827 37 162 24 007 total assets Liabilities Segment 27 633 19 429 16 905 liabilities Consolidated 27 633 19 429 16 905 total liabilities Reviewed Reviewed 31 Dec 2010 31 Dec 2010 R`000 R`000 Corporate and Total eliminations Revenue External sales (15 751) 127 744 Intersegment sales (3 236) Total segment (18 987) 127 744 revenue Results Segment result (31 094) (24 159) before depreciation and amortisation Depreciation and (436) (3 203) amortisation Segment (31 530) (27 362) operating result Discontinued (2 003) operations Income taxation expense (964) (Loss) from (30 329) ordinary activities Other information 135 1 220 Capital expenditure Statement of financial position Assets Segment assets excluding goodwill (10 406) 148 091 Goodwill 57 925 62 424 Consolidated 47 519 210 515 total assets Liabilities Segment liabilities (1 155) 62 812 Consolidated (1 155) 62 812 total liabilities Commentary INTRODUCTION Accentuate is a group of world-class companies serving the construction and infrastructure development markets in South Africa and essentially operates in two segments: an Infrastructure Supplies Division comprising of flooring and an Environmental Solutions Division which houses Safic, a specialist chemical blending business. The company is a market leader in the supply of products and services to both the public and private sectors in most floor covering materials with majority of the revenue contribution coming from this segment. The chemical blending business is positioning itself to become a significant supplier in the public and private sectors, through the supply of chemical cleaning and related products. Safic is also a manufacturer of screeding and products supplied to the flooring business and in this way the two segments of Accentuate extract intra- group synergies. HIGHLIGHTS The period under review has seen a dramatic turnaround within Accentuate Limited resulting in an increase in HEPS from 3.45 cents per share to 6.86 cents per share in December 2011. This as a result of effective strategic interventions coupled with increased activity within the market niche within which Accentuate operates. The reporting period also saw the following: - The effective disposal of CGA Fenestrations (Pty) Limited and minimising further losses associated with this division. - A return to the core competencies that brought Accentuate to the market. - Earnings per share increase to 5.01 cents from a loss of 29.78c for the corresponding period. - An exceptional performance by FloorworX. - General increase in activity within the sectors within which Accentuate operates. - Increased market share within the resilient flooring market while maintaining and even increasing margins. THE OPERATING ENVIRONMENT The interim reporting period ending 31 December 2011 are presented within the context of a macro-economic environment that has yet to show any significant activity within the industry. As mentioned in the results commentary for the year ended 30 June 2011, the construction and construction supply industries have seen a dramatic deterioration in demand in the post "world cup" period. Once again there has been no meaningful pick up in private project driven construction activity during the period under review. Generally the view from a macro-economic perspective remains largely negative. In addition to the relative weakness of private construction spend, South Africa still experiences a situation where national departments and provincial and local governments continue to hand back unspent capital budgets to Treasury. The multilev