JSE-listed Accéntuate saw a 53% year-on-year increase in its headline earnings per share (HEPS) to 5.75c for the six months ended December 31, 2015, while normalised HEPS showed an increase of 63%.
Accéntuate CEO Fred Platt noted at a media briefing that, while cash flow remained somewhat under pressure, the company had a programme in place to focus on cash generation, as with cost reduction. He added that the board had also deemed it prudent to not declare an interim dividend.
“The slowdown in the local economy, coupled with rand weakness, continues to affect the private- and public-construction environments, as well as the industrial and mining sectors, these being significant markets in which the group operates,” noted Platt.
Nevertheless, the company’s turnover increased 1.5% to R173-million for the six-month period, while gross profit increased by 2.2% on the back of a slight increase in the gross margin.
“I am pleased that our concerted effort to contain costs resulted in a 2% reduction in operating expenses and allowed operating profit to increase by 46% to R10.8-million. This is a number we are proud to deliver to our shareholders,” said Platt.
Meanwhile, Accéntuate’s flooring division FloorworX contributed 80% of group revenue, with divisional revenue remaining fairly flat, increasing 1.5% to R137.6-million.
FloorworX increased operating profit by 47% to almost R7.5-million in the six months to December 31, owing to its gross margin maintenance and stringent cost management.
The group’s environmental solutions for business, which comprise its Safic operations, contributed the remaining 20% of group revenue. The division’s flat revenue at R39.2-million was countered by production efficiencies and a gross-margin improvement, together with tight control of operating costs, which caused operating profit to increase some 44% to R1-million.
Accéntuate’s water treatment business Ion Exchange Safic was a water treatment business that comprised a partnership between Accéntuate, Safic and Ion Exchange India.
Platt indicated that countrywide drought conditions had intensified the company’s focus on water and that Ion Exchange was a specialist in the water treatment sector. He said the partnership continued to build the necessary capacity, adding that discussions were taking place on some significant projects while it continued to expand its customer base for recurring business.
Platt pointed out that the challenging macroeconomic trading conditions would continue for the foreseeable future, adding that the local government elections might have a negative impact on government spending during the last quarter of the financial year.
“However, all the trading entities within the group are well positioned and focused on expanding their customer base and product offerings.”
Platt further indicated that difficult trading conditions provided an opportunity to expand market share and possibly acquire suitable businesses at reasonable prices.
“We feel that the group is poised to extract value from expansion within the water treatment sector and, together with the diversification we have in place and stringent cost control, the group remains cautiously optimistic that it will deliver acceptable returns,” he concluded.