AET - Alert Steel Holdings Limited - Trading Statement for the year ended 30
AET - Alert Steel Holdings Limited - Trading Statement for the year ended 30
June 2011 and CEO`s newsletter
ALERT STEEL HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2003/005144/06)
JSE code: AET ISIN: ZAE000092847
("Alert", "group" or "the company")
TRADING STATEMENT FOR THE YEAR ENDED 30 JUNE 2011 AND CEO`S NEWSLETTER
This is the first in what is intended to be a regular series of newsletters
designed to keep our shareholders and others with an interest in the company
informed about developments at Alert Steel in the intervals between our results
reports. I hope you find it useful.
Trading statement for the year ended 30 June 2011
In accordance with paragraph 3.4(b) of the JSE Limited Listings Requirements,
companies are required to publish a trading statement as soon as they become
reasonably certain that the financial results for the reporting period will
differ by more than 20% from those of the previous corresponding period.
Shareholders of Alert are therefore advised that the loss per share for the year
ended 30 June 2011 is expected to be between 52.90 cents and 56.90 cents per
share (2010: loss of 39.80 cents per share) and the headline loss per share for
the year ended 30 June 2011 is expected to be between 45.70 cents and 49.70
cents per share (2010: loss of 25.50 cents per share).
The information on which this trading statement is based has not been reviewed
and reported on by Alert Steel`s auditors.
The restructuring process announced in March this year is progressing well and
developments in this regard such as the redesigning of the group`s corporate
identity and relaunching of our branches are explained more fully elsewhere in
this newsletter. As previously announced a circular setting out the
restructuring was posted to shareholders on 29 August and a rights offer
circular will be posted to shareholders on 19 September.
Trading conditions remained tough since we reported our interim results for the
six months ended 31 December 2010. Recovery in the demand for steel remains
depressed and our performance during the month of July was further impacted by
the National Union of Metalworkers` (NUMSA) strike action, which considerably
affected the supply of steel to our operations. The lower sales during June and
July were not solely due to the industrial action over this period as the
process of exiting non-core product lines and introducing new ones aligned to
our core business also affected the sales function to some degree. The new
product lines have seen significant growth in the past two months and we are
very confident that these products will substantially contribute to the future
growth of Alert. The launch of the Alert Express container project has also
exceeded our expectations and will enhance the group`s market penetration.
Group sales will have to improve continuously over the next few months to ensure
that Alert sustains the turnaround budgeted results for 2012. To this effect,
we have introduced customer satisfaction and employee relationship surveys to
gather insights into the factors which matter most to our staff and our clients
in a bid to help improve motivation and productivity as well as to assist us in
improving our service standards. These surveys will be conducted by an
independent research company and will be used to identify and promote areas of
excellence, and to effect remedial measures where necessary.
Branding changes and branch relaunches
We decided to make a visual statement of the current transformation of the group
through a redesign of our existing logo and the development of a new slogan.
The design of the new logo picks up on the shape of a construction bolt which
gives the feeling of strength and power. The bolt metaphor also highlights the
key attributes of Alert Steel - strength, support, connectivity and reliability.
The new slogan, strength through service, is intended to give a message that
Alert Steel sells dependable products and is committed to providing great
To complement the redesigned logo and to give effect to our strategy of
refocusing on our core business, we relaunched our branches based in East Lynne
Pretoria, Brits, Klerksdorp, Tshwane, Burgersfort, Lephalale, Polokwane,
Tzaneen, Louis Trichardt, Thohoyandou, Mokopane, Lichtenburg, Wonderboom and
Randfontein. We also used this exercise as an opportunity to explain to our
customers the changes taking place within the group and to introduce our
expanded product lines and new value added services. We have seen a marked
improvement in revenue in the relaunched branches and anticipate that this will
enhance the growth of the company substantially during the next few months.
Expanded distribution network
We have also identified an opportunity to significantly expand our distribution
network through the deployment of small mobile retailing units in rural areas as
well as areas where we currently have no presence.
Known as the Alert Express container project, these retailing centres are
converted shipping containers with a floor area of 36mSquared. One half of the
floor space will be used to stock long length products while the other half will
be used to stock steel related items and will also serve as the retail floor.
The containers will stock all fast moving products as identified by the nearest
Alert store and customers will also be able to place orders for items not
carried. The first six containers have been commissioned in Maboloka near
Brits; Zebediela near Mokopane; Lebowakgomo near Polokwane; Mofolo near
Randfontein; Abbotspoort near Lephalale and Itsoseng near Lichtenburg.
We intend to dispatch 50 Alert Express containers within the current financial
year ending 30 June 2012 and each container is projected to sell approximately
24 tonnes of material per month.
A recovery in the demand for steel looks likely to remain slow in the short
term, as growth in the construction and manufacturing sectors, which accounts
for some 75% of all the domestic steel produced, continues to stay muted.
Looking ahead, we expect infrastructural growth in the sub-Saharan region to
continue in the next five to ten years given that its population is expected to
reach 340 million by 2020. We therefore believe that investors should take a
long-term view of Alert Steel, as a well-managed African-based steel business
with value-added propositions, a large geographic spread and a diversity of
steel products, will therefore offer a relatively low risk investment. The
return by the group to its core business will also enable us to take full
advantage of any growth opportunities in the SADC region which will, in all
possibility, arise in the medium to long term.
In the meantime, we remain focused on our immediate strategic priorities, which
are to continue with the restructuring process, optimise our existing
businesses, drive efficiencies and keep costs down.
The group`s results for the year ended 30 June 2011 will be released on SENS on
or around 29 September 2011. There will be a presentation on the results in
Johannesburg on the day they are published. If you would like to attend this
presentation, please e-mail your details to our investor relations office at
Johan du Toit
Chief executive officer
8 September 2011
Vunani Corporate Finance
Date: 08/09/2011 12:15:28 Produced by the JSE SENS Department.
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