Accentuate reports R74.6m loss as CGA acquisition fails

JSE-listed flooring and chemicals manufacturer and distributor Accentuate on Friday reported a R74.6-million loss for the year ended June 30, down from a R12.2-million profit in the previous year. These results were much in the same vein as those delivered by a raft of other companies active in the local construction sector over the last month or two.

Accentuate’s revenue for the year was R250-million.

The company blamed difficult trading conditions in the construction and construction supply industries for the strong move into the red.

The company also noted that its acquisition of the glass and aluminium fitment business, Centurion Glass and Aluminium (CGA), had not met its strategic objectives and that it was disposing of CGA, which had seen a 40% decline in business over the year.

This had resulted in a R70.8-million impairment, which, after a profit of R8.8-million from continuing operations, culminated in a bottom line loss of R74.6-million for Accentuate.

“We acquired a business in CGA that has not lived up to our expectations and we are consequently disposing of it. The business we bought and the business we got was not the same animal,” said Accentuate CEO Fred Platt. “We cut 30% costs out of CGA, but we can’t see the industry turning in the next two years.”

While negotiations were underway for the sale of CGA, Platt was of the opinion that the warranties furnished in terms of the acquisition were not properly fulfilled by the vendors. The company was now taking legal steps against them, claiming R10.7-million, to enforce their guarantees.

Platt said the decline in construction activity had continued post the 2010 FIFA World Cup, failing to pick up any meaningful momentum in 2011.

Aggravating matters was the fact that the local construction industry had been experiencing “major infrastructure project bottlenecks”, which had resulted in contract award delays, fewer awards, fiercer competition for the limited amount of work available, as well as “huge pressure on margins”.