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Argent Industrial Limited - Audited Results for the year ended 31 March 2004
Argent Industrial Limited
Reg no 1993/002054/06
(Incorporated in the Republic of South Africa)
("The Group" or "The Company")
Share code: ART
ISIN: ZAE000019188
Audited Results for the year ended 31 March 2004
Financial Highlights
REVENUE UP -3%
ATTRIBUTABLE EARNINGS UP 46%
ATTRIBUTABLE EARNINGS per share UP 19%
HEADLINE EARNINGS UP 55%
HEADLINE EARNINGS per share UP 27%
GEARING 25.3%
Abridged Consolidated Audited Audited
Income Statement year ended year ended
for the year ended 31 March 2004 31 March 31 March
2004 2003
R 000
Revenue 604,639 621,381
Operating profit before financing 96,966 63,759
costs
Financing costs 15,703 9,089
Profit before taxation 81,263 54,670
Taxation 19,926 11,772
Profit after taxation 61,337 42,898
Earnings attributable to outside - 898
shareholders
Earnings attributable to ordinary 61,337 42,000
shareholders
Attributable earnings per share (cents) 99.1 83.1
Headline earnings per share (cents) 106.2 83.7
Dividends per share (cents) 18.0 17.0
Supplementary Information
Audited Audited
year ended year ended
31 March 31 March
2004 2003
Shares in issue (000)
- at end of period 67,090 58,308
- weighted average for the year 61,867 50,558
Interest received (R 000) 8,375 3,455
Cost of sales (R 000) 359,249 421,922
Depreciation & amortisation (R 000) 14,292 10,276
Profit on translation of foreign 1,475 2,301
operation (R 000)
Net loss on foreign exchange transaction 3,959 4,110
(R 000)
Calculation of Headline Earnings (R 000)
Earnings attributable to ordinary 61,337 42,000
shareholders
Goodwill amortisation 1,478 579
Profit on disposal of property, plant (395) (538)
and equipment
Loss on disposal of property, plant and 997 268
equipment
Discontinued operation 2,288 -
Headline earnings attributable to 65,705 42,309
ordinary shareholders
Abridged Consolidated Audited at Audited at
Balance Sheet 31 March 31 March
as at 31 March 2004 2004 2003
R 000
ASSETS
Non-current assets
Property, plant and equipment 110,642 95,290
Investment property 48,016 39,319
Intangibles 31,390 25,843
190,048 160,452
Current assets
Inventories 96,481 112,403
Trade and other receivables 134,415 156,381
Bank balance and cash 34,720 6,599
265,616 275,383
Total assets 455,664 435,835
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 117,046 104,855
Reserves 24,045 24,045
Retained earnings 124,390 73,688
Ordinary shareholders" funds 265,481 202,588
Minority interest - 4,722
Total shareholders" funds 265,481 207,310
Non-current liabilities
Interest-bearing borrowings 47,423 30,608
Deferred taxation 10,087 6,583
57,510 37,191
Current liabilities
Trade and other payables 100,270 165,200
Taxation 12,532 5,490
Current portion of interest-bearing 19,871 20,644
borrowings
132,673 191,334
Total equity and liabilities 455,664 435,835
Net asset value per share (cents) 395.7 347.4
Abridged Consolidated Audited Audited
Cash Flow Statement year ended year ended
for the year ended 31 March 2004 31 March 31 March
2004 2003
R 000
Cash generated from operations 76,443 41,714
Interest received 8,375 3,455
Interest paid (15,703) (9,089)
Dividends paid (10,635) (7,146)
Taxation paid (9,380) (5,993)
Cash flows from operating activities 49,100 22,941
Cash flows from investing activities (49,212) (84,110)
Cash flows from financing activities 28,233 57,275
Net increase / (decrease) in cash and 28,121 (3,894)
cash equivalents
Cash and cash equivalents at beginning 6,599 10,493
of year
Cash and cash equivalents at end of year 34,720 6,599
Statement of Share Share Treasury Re-valua- Reserve Retained Total
Changes in tion on
Equity
for the year capital premium shares reserve Sub- earnings
ended 31 March sidiary
2004
Acqui-
sition
R 000
Balance at 31 2,220 71,339 836 23,209 35,514 133,118
March 2002 as
previously
stated
Consolidation (907) 212 (695)
of share
incentive
trust
Balance at 31 2,220 71,339 (907) 836 23,209 35,726 132,423
March 2002
restated
Shares issued 695 32,312 (2,647) 30,360
Net treasury 1,843 1,843
movement
Profit for the 42,000 42,000
year ended 31
March 2003
Dividends - (4,212) (4,212)
interim
Less treasury 174 174
shares
Balance at 31 2,915 103,651 (1,711) 836 23,209 73,688 202,588
March 2003
Shares issued 439 28,016 (16,679) 11,776
Net treasury 415 415
movement
Profit for the 61,337 61,337
year ended 31
March 2004
Dividends - (11,286) (11,286)
current
interim and
prior final
Less treasury 651 651
shares
Balance at 31 3,354 131,667 (17,975) 836 23,209 124,390 265,481
March 2004
Restatement of comparatives
A recent ruling given by the GAAP Monitoring Panel has provided more clarity
regarding the consolidation of share incentive scheme trusts.
Consequently the Group has changed its accounting policy in respect of its
share incentive scheme trust ("share trust"). The share trust is now
consolidated to the extent that the Group issued share capital is under the
control of the Group. These shares are shown as treasury shares. The prior
year comparatives have been restated as follows:
As Adjustment Restated
previously
R" 000 stated
Balance Sheet
Employee share incentive 1,325 -1,325
scheme
Treasury shares 1,711 1,711
Retained earnings 73,302 386 73,688
(opening)
Number of shares
Shares in issue - 50,580 -22 50,558
weighted ("000)
Earnings per share
Attributable earnings per 83.0 0.1 83.1
share (cents)
Headline earnings per 83.6 0.1 83.7
share (cents)
Net asset value per share 349.7 -2.3 347.4
(cents)
Movement in share incentive scheme
The movement in the shares in the share incentive scheme
trust for the period under review can be
summarised as follows:
000 31 March 31 March
2004 2003
Opening balance 1,230 1,008
Purchases 5,148 1,025
Shares exercised -820 -803
Closing balance 5,558 1,230
Segment Report Revenue Results Revenue Results
for the year ended 31 Audited Audited Audited Audited
March 2004
Business Segments 31 March 31 March 31 March 31 March
2004 2004 2003 2003
R 000
Steel & Steel Related 482,929 72,599 377,013 50,513
Products
Non Steel Related 121,574 8,573 243,975 3,896
Properties 136 91 393 261
Total 604,639 81,263 621,381 54,670
COMMENTRY
Chief Executive"s Review
On behalf of the board of directors of Argent Industrial Limited, the audited
results for the year ended 31 March 2004 are hereby presented. The Group has
achieved outstanding results, even in certain industries where trading
conditions were reasonably difficult and margins under substantial pressure.
As usual, most companies in the Group performed admirably and the Group can
look upon the 2004 financial year as a successful one. The Group continues to
deliver outstanding shareholder value.
Salient Features
Attributable earnings increased by 46% to R 61,3 million (2003 - R42 million)
Headline earnings per share increased by 27% to 106,2 cents per share (2003 -
83,7 cents per share)
Revenue decreased by 3% to R 605 million (2003 - R 621 million)
Group gearing increased to 25,3% (2003 - 24,7%)
Divisional Performance
STEEL AND STEEL RELATED PRODUCTS.
The Group"s steel companies had a good year and in light of the recent steel
price increases, they will enjoy an excellent 2005 financial year.
Giflo Engineering had an exceptional year, achieving record turnover both
locally and internationally. Giflo has embarked on an expansion project which
will double its production capacity by December 2005. Giflo has acquired a
number of state-of-the-art machines and plans to become one of the world"s
leading automotive suppliers in its field.
Excalibur had an excellent year becoming both a supplier to Giflo Engineering
and a distributor of certain of Giflo"s products. Excalibur has increased its
after-market vehicle accessory range and will increase its market share in the
2005 financial year.
Without setting the world alight, Hendor Mining Supplies produced a very good
set of results for the 2004 financial year. Turnover was depressed during the
middle part of year mainly due to the weak gold price and strong rand-dollar
exchange rate. The early part of the 2004 calendar year has seen an
improvement, though, and turnover has improved to levels which are considered
more than adequate.
Jetmaster had an excellent year and is in prime position to have a record 2005
financial year. The company has set up a state-of-the-art research and
development department which allows it not only to design new products but
also to pre-test the gas emissions of the various products before sending the
units for approval by the relevant international gas authorities. Jetmaster
has already launched a number of new products in South Africa, Australia and
New Zealand. These products will give the company an edge over its competitors
and ensure an eventful 2005 financial year.
Phoenix Steel - Gauteng had a good year. The tube mill which was purchased in
January 2003 came into full production during the period under review. This
has had positive effects on margins and volumes. Phoenix supplies tube to all
of Argent" steel branches and exports tube to both Namibia and Botswana. A
second tube mill has been purchased which will be commissioned by July 2004.
Phoenix is currently expanding its warehousing facility which will increase
its stocking capacity by 20%. The expansion will be completed in October 2004.
Furthermore, Phoenix Steel Gauteng has diversified into medium and heavy
sections - an area that has not been focused on before. The Group believes
this to be a natural progression which should result in an increase in market
share. This, along with the advantages emanating from the Iscor price
increases will ensure that Phoenix has an outstanding 2005 financial year.
Phoenix Steel - East London had an excellent year. Besides selling steel into
the East London area, the company also supplied Giflo"s products to Daimler
Chrysler on a just-in-time basis. This process has proved very successful and
has allowed the Group to take its service levels one step further.
Phoenix Steel - Mpumalanga is now well-established and has completed its
second year of operation. The company has found its niche and the outlook for
2005 is very promising.
Phoenix Steel - Natal had a more than satisfactory year, but was hampered by
depressed demand for steel in KwaZulu Natal along with the inevitable pressure
on margins. Market share, however, was maintained during the year. The company
began the 2005 year with a flourish and the Iscor mill increases have helped
to push both turnover and margin levels to all-time highs. The Group expects
Phoenix Steel Natal to post record results for the 2005 financial year,
especially in light of the decision to move into the medium and heavy sections
market. The Group is actively looking for other ways to increase market share
in the KwaZulu Natal area via diversification into complementary product lines
and/or businesses.
Phoenix Steel - Port Elizabeth started trading in March 2004. The first two
months of the 2005 financial year produced promising results and the Group
believes that the new branch will be a success.
Despite a slow start to the 2004 financial year, Koch"s Cut and Supply had an
excellent last six months, leading to a solid overall performance for the
year despite considerable pressure on margins. This trend has since continued
and the company has produced turnovers well in excess of budget for the first
two months of the 2005 financial year. This is expected to continue during the
year and as a result the Group will invest in modernising certain machinery,
such as the plasma cutting, plate rolling and surface grinding facilities.
Koch"s is also in an excellent position to take advantage of the steel price
increases.
Argent Richards Bay had an improved year, but has not yet achieved the desired
levels of return. Significant changes have taken place right through the
operation and for the first time the company is in prime position to take
advantage of any opportunities which may present themselves. Turnover levels
have steadily been on the increase over the last six months.
The Group has converted Bavarian Metal Industries from a tipper manufacturer
into an in-house production facility. The company has therefore relinquished
its Meiller franchise on tipper hydraulics and now concentrates on forming
cold rolled sections, Jetmaster fabrication, steel profiling and general
fabrication.
NON STEEL RELATED PRODUCTS
N W N Automotive Precision Engineering had a slightly disappointing year, with
turnover lower than originally predicted. The company"s performance over the
last three months was, however, vastly improved and an all time record monthly
turnover was achieved in March 2004. This trend has unfortunately not carried
through to the start of the 2005 financial year. The industry as a whole is
generally very unpredictable and quiet at present. The company has tendered on
a number of large contracts and should receive the adjudications thereof
within the next month or two. Should some of these be awarded to the company,
turnover could vastly improve over the next two years.
New Joules Engineering North America had a disappointing first six months and
although the second six months showed improvement, the financial year was
still disappointing. The outlook for the 2005 financial year is promising as
two major clients have indicated that they intend modernising a total of three
railway shunting yards before December 2005.
Megamix and Villiersdorp Quarries had yet another good year. The current boom
in construction and development of approximately R800 million in the Strand
and Somerset West area will ensure that 2005 is another successful year.
Megamix has increased its concrete truck fleet by five units and has ordered a
32 metre pump truck, which will arrive in July 2004.
Barker Flynn Associates discontinued operations during the period under
review. The cost of this amounted to R 2.288 million.
BLACK ECONOMIC EMPOWERMENT
The Group entered into an agreement with Vuya! Resources (Pty) Ltd whereby
certain operations/opportunities would be placed with the company. Argent
Industrial Ltd has taken a stake of 20% in Vuya! Resources (Pty) Ltd.
Prospects
Although still somewhat hampered by the strong rand - dollar exchange rate in
terms of exports, the Group expects to continue its growth trend during the
2005 financial year. Significant efforts are being made to increase market
share in all of the Group"s subsidiaries. These efforts have already produced
very encouraging results both in terms of product and client diversification
strategies. Furthermore, the increase in local steel prices has produced
various opportunities within the Group"s steel companies. The Group has never
been stronger, partly as a result of the maturation of previous smaller
operations and the returns generated by both recent acquisitions and
greenfields projects. The Group expects the 2005 financial year to be a very
successful one indeed.
Dividend
A final dividend of 10 cents per share has been declared, payable on Monday 5
July 2004 to shareholders recorded in the register at close of business on
Friday 2 July 2004, being the record date in order to participate in such
dividend. The last day to trade cum div is Friday 25 June 2004. The share will
trade ex div Monday 28 June 2004.
Share certificates may not be dematerialised / rematerialised between Monday
28 June 2004 and Friday 2 July 2004, both dates inclusive
In accordance with Generally Accepted Accounting Practice Statement AC107, the
dividend of 10 cents per share proposed by the Directors has not been
reflected in the financial statements.
Accounting Policies
The financial statements for the year under review are prepared in accordance
with South African Statements of Generally Accepted Accounting Practice and
incorporate accounting policies which are consistent with those of the
previous year, other than AC107, as indicated above.
Audit Opinion
The Group"s Auditors, Etchells, James Kruger & Associates Inc. have issued
their opinion on the Group"s financial statements for the year ended 31 March
2004. A copy of their unqualified report is available for inspection at the
company"s registered office.
On behalf of the board
T.R. HENDRY CA (SA) Maraisburg
Chief Executive Officer 4 June 2004
Date: 03/06/2004 10:08:18 AM Supplied by www.sharenet.co.za
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