Steven Joffe Board Member pic
Steven Brian Joffe
Chief Executive Officer


2020 was a challenging year. This was a year which included load shedding, water restrictions, a drought in many parts of South Africa, massive currency volatility and hardly any growth. It was also a year in which we saw previously giant construction companies go into business rescue, SA sovereign debt downgraded, rising government debt and rising unemployment. Though we are fortunate to have a business based in Singapore, trade tensions between America and China adversely affected that entire region.

The operations comprise:

  • ESG (Engineering Solutions Group) is a distributor of engineering products (bearings, belts, tools, electric motors, hydraulics), technical services and solutions.
  • CEG (Capital Equipment Group) is distributor of agricultural machinery, construction and earthmoving machinery, forklifts and related parts.
  • KAG (Kian Ann Group), based in Singapore, has a heavy machinery division and an automotive division.


Revenue for the Group decreased by 4% to R10.038 billion. Gross margin decreased as a result of additional stock provisions taken in response to revised sell-through rates. The Group has taken R1.102 billion in impairments in the context of the COVID19 pandemic, of which goodwill was R639 million, property was R196 million, and deferred tax assets were R71 million. Consequently, operating profit declined from R699 million to an operating loss of R312 million. The implementation of IFRS16 Leases had a negative impact of R12.76 million on the current year.

IFRS 16 added R44 million to the finance cost for the year and finance income fell as a result of the sale of FirstRand bonds. The proceeds on the sale of the bonds were used to redeem the preference shares held by Standard Bank.

Profit for the year fell from R229 million, to a loss of R673 million after the impairments. This is reflected in the basic loss per share of 712 cents and headline earnings per share of 58 cents.

Revenue for the ESG Group was down less than 1% on the prior year. Consumables amounted to 61% of revenue, and Engineering which includes value added to products, amounted to 39% of sales. ESG businesses in Africa and Europe are growing faster than South Africa and that trend is expected to continue.

Revenue for the CEG Group was down 3%. Agriculture and forestry accounted for 50% of the revenue, with construction accounting for 43% and material handling 7%. The cost of the operation is covered by the revenue stream from parts, services and rentals.

Revenue was down 20% year on year, mainly due to the China America impasse. Specifically, the year was characterised by sluggish coal mining in Indonesia and logging in Malaysia, affected by demand from China. The demand for spares followed suit. Heavy machinery accounted for 78% of revenue and automotive accounted for 22%.

Strategic focus and prospects Management focus will be on implementing the disposal of the CEG divisions to CNH Industrial. Attention will also be firmly on developing the BMG e-commerce platform, and the Oxygen Helmet and Ventilator project. The tool business will be restructured to eliminate costs, and the Kian Group business model will be re-evaluated strategically. Additionally, the Group will be guided by the principles of targeting lower gearing, driving operational performance on return on equity/assets and simplification of both the Group structure and Group reporting.

Please note that any forward looking statements in this announcement have not been reviewed nor audited by Group’s auditors.


Mr. Steven Joffe was appointed Group Chief Executive Officer effective 1 January 2020, following the resignation of Mr. Arnold Goldstone. Further changes to the Board effected after year end were announced on 30 April. Please refer to the SENS for details.


The Board has resolved not to declare further dividends until gearing levels improve. The normal dividend policy (of a total dividend cover ratio of 3.5 times at interim results adjusted to 2.75 times at year-end) will then resume.


The Board is once again highly appreciative to the executive management, the respective management teams of our businesses and most importantly all the staff, for the excellent commitment and performance in what can only be described as difficult and uncertain economic times.

The Board is confident that the Group will successfully face these challenges which include the COVID-19 pandemic, and will emerge stronger than ever.


The Directors take full responsibility for the preparation of the Summarised Audited Consolidated Results, and confirm that the financial information has been correctly extracted from the underlying Audited Annual Consolidated Financial Statements.


Ernst & young Inc. are the Group’s auditors and have issued an unmodified opinion on the Audited Annual Consolidated Financial Statements. A copy of the auditor’s report including the key audit matters is available for inspection at the Company’s registered office, together with the Audited Annual Consolidated Financial Statements identified in the auditor’s report, as well as on the Company’s website at This summarised report is extracted from the audited information, but is not itself audited.

The auditor’s report does not necessarily report on all of the information contained in this announcement. Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditor’s engagement they should obtain a copy of the auditor’s report together with the accompanying financial information from the issuer’s registered office.

On behalf of the Board

Steven Joffe

Chief Executive Officer

Nazlee Rajmohamed

Group Financial Director