Alert Steel said that its restructuring plans are paying off and the company is to continue as a going concern.
Mr Johan du Toit CEO of Alert Steel said that it will be a while, however, before the company returns to profitability. He added that "The remedial measures implemented over the last year have had a positive impact on Alert Steel's performance, but progress with the turnaround continued to be hampered by a number of external factors, including a deteriorating operating environment, industrial action and supply shortages."
The measures included the strategic selling and buying of assets and cost cutting.
Alert Steel narrowed its net loss to ZAR 73 million from ZAR 135.5 million the previous year.
Mr du Toit said he was happy with the cash flow situation. The group reported an increase in cash and cash equivalents of ZAR 90.6 million over the year to June 2012.
Alert Steel's directors evaluated the group's cash flow requirements for 2013.
Alert Steel said that "At present, even under the current market conditions, the earnings before tax, depreciation and amortization is covering the interest burden. This means that the group is not losing cash, even though it is not profitable. The directors' view is that the group has enough cash resources to meet its obligations as they fall due."
Alert Steel has faced difficult market conditions, including a lack of demand for steel. The company said it expected this trend to continue. This was aggravated by strikes at the company and within the mining and transportation sectors.
Alert Steel said "The directors' view is that market conditions will remain depressed for the duration of the 2013 financial year."
Various accounting errors were made in the previous year's financial statements. Alert blamed human error and circumstances beyond management's control. The effect of this error in the June 2011 financial statements was an understatement of the lease liability of ZAR 3.49 million.
Alert Steel also announced it was in dispute with a minority shareholder in Zimbabwe over the validity of its shareholding in the company.
It said that "Consequently, due to the uncertainty over whether Alert Steel had control over this entity at June 2011, a prior year adjustment has been made to deconsolidate this subsidiary."
Source - Business Day Live
(www.steelguru.com)
