The annual financial results for AltX-listed Accentuate Limited to end June show that the company, which is focused primarily on infrastructure development, has been quite resilient through the economic downturn.
Although turnover increased a modest 3% over the previous year to R306-million, attributable profit increased nearly 30% to R12,2-million. Headline Earnings Per Share were 29% higher at 11,95 cents a share.
A dividend of 2 cents a share has been declared for the second half. Together with the interim dividend of 2 cents a share, this brings the total dividend for the year to 4 cents a share.
Accentuate Limited CEO, Fred Platt, says recent trends in both the global and domestic economy had contributed to the tougher trading environment. This had led to a contraction in private sector construction activity, a decrease in demand for civil construction and the postponement or re-scoping of several State infrastructure projects.
In addition, the global credit crunch; the impact of numerous interest rate hikes and the introduction of the National Credit Act all impacted on the ease with which credit could be accessed and led a drastic reduction in private sector investment.
In the public sector, much of the available infrastructure spending was diverted to 2010 Soccer World Cup projects such as stadia and road and rail infrastructure while inefficiencies at the local authority level impacted on the slow delivery of health care, education and housing.
However, the good news, says Platt, is that public sector spending is expected to remain strong with some R160-billionn - R220-billion of the R864-billion earmarked for public infrastructure expected to be spent over the medium term. Most of this expenditure, he says, will be directed to areas of health care, education and transportation - areas in which Accentuate has a significant presence.
"Accentuate has also seen increased activity in the private sector and we remain cautiously optimistic in this regard. We have also secured a number of private sector opportunities outside of South Africa in the flooring sector and this should help provide us with a hedge against any volatility in the public sector."
Accentuate's flooring division, FloorworX, remains the largest contributor to group profits - although total revenues were marginally down on the previous year because of the dip in construction activity. However, margins were up resulting in a significant increase in divisional profitability. Platt says the division is well positioned to pick up flooring contracts from five news hospitals which are being planned across the country at a cost of R8-billion.
The Centurion Glass and Aluminium division had a much better year with revenues increasing some 56% over the previous year to R51-million and operating margins improving somewhat.
The environmental Solutions Division experienced a slight decline in revenues to R59m but tighter cost management and exploiting cross selling opportunities across the group, particularly in the floor sector, resulted in improved margins.
"We have seen tremendous growth in exploiting synergies within the group and the supply of both adhesives and screeds from SAFIC to FloorworX is already underway and is expected to make a meaningful contribution to revenues in the current financial year," concludes Platt.
