Sluggish infrastructure spend and the recessionary environment in the construction, manufacturing and mining sectors negatively impacted on JSE-listed Accéntuate’s results for the financial year ended June 30.
The company’s revenue decreased by 7% to R300-million.
“While trading conditions remained difficult, and highlighted the challenges present in the South African macroeconomy, these conversely presented us with a unique opportunity to examine our current operations, interrogate our strategic focus and ensure a control environment that is conducive to growth,” CEO Fred Platt said on Friday.
He added that the group had put several internal measures in place to bolster the control environment, including strengthening the audit and risk committee, the appointment of Maarten Coetzee as CFO, the engagement of PwC as external auditor, and new providers for both internal audit and company secretarial services, to position Accéntuate for growth going forward.
“We are confident that 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,” he noted.
Finance costs decreased by 14% from R2.8-million in the previous year to R2.4-million and related directly to the reduction of inventory by R24-million because of a conscious effort to improve working capital management.
Management’s efforts to improve working capital management, resulted in a R19.5-million reduction of the overdraft balance with ABSA to R8.5-million during the financial year.
Gross margins reduced by R35.5-million mainly because of the decline in sales volume and the decision to cut back on production to reduce inventories.
“Our focus on reducing operating costs resulted in a saving of approximately R15-million.”
No dividend was declared.
OUTLOOK
“Although 2016/17 has been a particularly challenging year from a market perspective, we remain positive that macroeconomic factors will eventually turn more positive into 2018,” Platt said.
With a strong control environment, strategies to ensure sustainability and cost-cutting initiatives in place, the group says it is well positioned to implement its growth objectives.
“This will, however, be in an economic environment hampered by poor growth and a political overhang,” he said.