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ART - Argent Industrial Limited - Audited abridged results for the year ended 31

Release Date: 23/06/2011 16:30
Code(s): ART
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ART - Argent Industrial Limited - Audited abridged results for the year ended 31 March 2011 and Notice of Annual General Meeting ARGENT INDUSTRIAL LIMITED Reg no 1993/002054/06 (Incorporated in the Republic of South Africa) ("The group" or "the company") Share code: ART ISIN code: ZAE000019188 AUDITED ABRIDGED RESULTS FOR THE YEAR ENDED 31 MARCH 2011 AND NOTICE OF ANNUAL GENERAL MEETING FINANCIAL HIGHLIGHTS Revenue: R1.755 billion Operating profit: R101.9 million Net asset value per share (cents): 1,401.3 Gearing: 23.7% Earnings before interest, taxation, depreciation and amortisation "EBITDA": R142.7 million The abridged financial statements are presented on a consolidated basis INCOME STATEMENT Actual Restated FOR THE YEAR ENDED 31 MARCH 2011 2011 2010 R 000 Revenue 1,754,867 1,464,494 Operating profit before finance costs 101,963 46,528 Finance income 1,245 1,483 Finance costs (41,183) (42,544) Profit before taxation 62,025 5,467 Taxation 7,780 (3,874) Profit for the year 54,245 9,341 Attributable to non-controlling interest 284 76 Attributable to owners of the parent 53,961 9,265 Basic earnings per share (cents) 59.0 10.2 Headline earnings per share (cents) 55.3 11.9 Dividends per share (cents) 4.0 9.0 SUPPLEMENTARY INFORMATION Shares in issue (000) - at end of period 91,540 91,350 - weighted average 91,413 91,221 Cost of sales (R 000) 1,357,242 1,111,726 Depreciation and amortisation (R 000) 39,541 37,723 CALCULATION OF HEADLINE EARNINGS (R 000) Earnings attributable to ordinary 53,961 9,265 shareholders Profit on disposal of property, plant and (3,395) (1,264) equipment Impairment of property, plant and equipment 3,194 Total tax effects of adjustments (364) Headline earnings attributable to ordinary 50,566 10,831 shareholders
STATEMENT OF COMPREHENSIVE INCOME Actual Restated FOR THE YEAR ENDED 31 March 2011 2011 2010 R 000 Profit for the year 54,245 9,341 OTHER COMPREHENSIVE INCOME FOR THE PERIOD NET OF TAX Exchange differences on translating foreign (2,056) (6,060) operations Realisation of revaluation of properties (5,119) (2,185) Impairment of property (783) Total comprehensive income for the year 46,287 1,096 Attributable to equity holders of the - Parent 46,003 1,020 - Non-controlling interest 284 76 46,287 1,096
STATEMENT OF FINANCIAL POSITION FOR THE Actual Restated YEAR ENDED 31 MARCH 2011 2011 2010 R 000
ASSETS Non-current assets Property, plant and equipment 865,177 888,582 Intangibles 288,444 291,042 Long term loan 10,688 9,817 Deferred taxation 18,799 8,937 1,183,108 1,198,378
Current assets Inventories 485,180 472,068 Trade and other receivables 355,008 296,228 Taxation 92 1,730 Bank balance and cash 257 277 840,537 770,303 Non-current assets held for sale 25,573 TOTAL ASSETS 2,049,218 1,968,681 EQUITY AND LIABILITIES Capital and reserves Share capital and premium 451,129 451,129 Reserves 122,720 127,946 Retained earnings 708,946 658,647 Attributable to owners of the parent 1,282,795 1,237,722 Non-controlling interest 8,889 8,605 Total shareholders` funds 1,291,684 1,246,327
Non-current liabilities Interest-bearing borrowings 216,903 199,588 Deferred taxation 75,228 61,998 292,131 261,586
Current liabilities Trade and other payables 240,052 219,616 Bank overdraft 136,278 126,171 Current portion of interest-bearing 89,073 114,981 borrowings 465,403 460,768
TOTAL EQUITY AND LIABILITIES 2,049,218 1,968,681 Net asset value per share (cents) 1,401.3 1,354.9
STATEMENT OF CASH FLOWS Actual Restated FOR THE YEAR ENDED 31 MARCH 2011 2011 2010 R 000 Cash generated from operations 88,011 163,428 Finance costs (41,183) (42,544) Finance income 1,245 1,483 Dividends paid (3,662) (8,201) Normal taxation refunded 386 3,626 Cash flows from operating activities 44,797 117,792 Cash flows from investing activities (46,523) (114,811) Cash flows from financing activities (8,401) (65,125) Net decrease in cash and cash equivalents (10,127) (62,144) Cash and cash equivalents at beginning of (125,894) (63,750) period Cash and cash equivalents at end of period (136,021) (125,894) STATEMENT OF Share Share Employee Treasury Reval- CHANGES IN capital premium share shares uation EQUITY FOR incentive reserve THE YEAR reserve ENDED 31 MARCH 2011 R 000 Balance at 31 4,825 540,818 17,042 (94,530) 126,582 March 2009 As previously 4,825 540,818 17,042 (94,530) 126,582 stated Prior year - - - - - adjustments Net treasury - - - 16 - movement Share-based - - 1,087 - - payments Transfer of - - (6,716) - - reserve to retained earnings Total - - - - (2,185) comprehensive income Dividends - - - - - - current interim and prior final Less dividend - - - - - on treasury shares Restated 4,825 540,818 11,413 (94,514) 124,397 balance at 31 March 2010 Net treasury - - - - - movement Share-based - - 2,732 - - payments Transfer - - - - - of reserve to retained earnings Total - - - - (5,902) comprehensive income Dividends - - - - - - current interim Less dividend - - - - - on treasury shares Balance at 31 4,825 540,818 14,145 (94,514) 118,495 March 2011 STATEMENT OF Foreign Retained Non- Total CHANGES IN currency earnings controll- attribut- EQUITY FOR trans- ing able to THE YEAR lation interest owners of ENDED 31 reserve the parent MARCH 2011 (continued) R 000 Balance at 31 (1,804) 650,867 8,529 1,252,329 March 2009 As previously (1,804) 654,427 8,529 1,255,889 stated Prior year - (3,560) - (3,560) adjustments Net treasury - - - 16 movement Share-based - - - 1,087 payments Transfer of - 6,716 - - reserve to retained earnings Total (6,060) 9,265 76 1,096 comprehensive income Dividends - - (8,684) - (8,684) current interim and prior final Less dividend - 483 - 483 on treasury shares Restated (7,864) 658,647 8,605 1,246,327 balance at 31 March 2010 Net treasury - - - - movement Share-based - - - 2,732 payments Transfer - - - - of reserve to retained earnings Total (2,056) 53,961 284 46,287 comprehensive income Dividends - - (3,860) - (3,860) current interim Less dividend - 198 - 198 on treasury shares Balance at 31 (9,920) 708,946 8,889 1,291,684 March 2011 SEGMENT REPORT FOR THE Revenue Results Revenue Results YEAR ENDED 31 MARCH 2011 actual actual restated restated 2011 2011 2010 2010
Business Segments R 000
Business Steel trading 659,335 14,197 489,870 16,532 Automotive products 150,834 6,052 132,667 (29,018) Manufacture of home and 662,582 (4,363) 608,760 13,808 office products Fabricators 130,241 18,251 117,738 4,581 Non-steel related products 151,875 27,888 115,459 (436)
Total 1,754,867 62,025 1,464,494 5,467 Geographical South Africa 1,706,056 61,085 1,418,350 8,048 Rest of the world 48,811 940 46,144 (2,581) Total 1,754,867 62,025 1,464,494 5,467 PRIOR YEAR Note Pre- Adjust- Adjust- Total Re- ADJUSTMENTS viously ment ment adjust- stated reporte open- 2010 ment 31 d ing R 000 R 000 March R 000 balance 2010
1 April R 000 2009 R 000
Statement of financial position
Current assets Inventory 1 474,230 - (2,162) (2,162) 472,068 Trade and other 2 296,985 - (757) (757) 296,228 receivables Reserves Retained 3 664,521 (3,560) (2,314) (5,874) 658,647 earnings Current liabilities Trade and other 3 216,056 3,560 - 3,560 219,616 payables Non-current liabilities Deferred tax 62,603 - (605) (605) 61,998 Income statement Operating 49,447 - (2919) (2919) 46,528 profit before finance costs Taxation (3,269) - (605) (605) (3,874) Attributable to 11,579 - (2,314) (2,314) 9,265 owners of the parent Note 1. Inventory valuation error 2. Correction in other receivables 3. Reversal of negative goodwill previously recognised 4. As the adjustments made are not considered material, no disclosure of a third statement of financial position for the beginning of the earliest comparative period has been presented. FINANCIAL OVERVIEW Given Argent`s substantial involvement in the steel and automotive sectors and taking the group`s restructuring costs into account, Argent produced a satisfactory set of results for the financial year ended 31 March 2011. OPERATIONS REVIEW The group`s higher turnover levels did not do much to increase the operating income to historical levels due to the lower margins experienced by the steel trading operations and the dismal performance of Argent`s automotive companies. To enhance the performance of the group`s steel trading operations, Argent has adopted a global sourcing policy in that all steel used by the group is now sourced either locally or internationally with the ultimate sourcing decision based purely on price and availability. Almost overnight this strategy to reduce Argent`s reliance on local mills has lifted margins in the carbon steel, stainless steel and aluminium trading divisions. The group`s automotive sector has been restructured into a model that is more cost-effective, efficient and sustainable. The recent Japanese tsunami has created Original Equipment plant closures worldwide, including South Africa and this has adversely affected the first two months of the current financial year. The rest of the group`s operations performed in line with expectations and will continue to improve in line with the recovering global economy. A number of structural changes occurred during the financial year with the aim of such changes being to reduce the group`s overhead structure. The resultant monthly saving for the group of R941,015 has been achieved by implementing the changes listed below: - The closure of Phoenix Steel East London and the subsequent amalgamation with Argent Port Elizabeth - The closure of Jetmaster Cape and the ensuing incorporation of the company into Gammid Cape based in Epping - Excalibur Vehicle Accessories and Giflo Engineering have been amalgamated under the Excalibur brand which is now situated at the manufacturing facility based in Ga-Rankuwa - The combination of the Jetmaster warehouse and factory (previously located in Maraisburg and Industria respectively) into one operating facility now based in Roodepoort - The Life `n Leisure Umhlanga operation has now been incorporated into Castor & Ladder KZN. The above restructure cost the group R1,890,000 which included the retrenchment of 84 people, 41 of which were on short term contract. The group`s total number of employees was thus in part due to these retrenchments reduced from 3,416 to 3,172. These structural changes resulted in the group disposing of three properties from its property portfolio for a sum of R25,764,500 in the 2012 financial year. The R25,764,500 represents a R10,094,311 gain on cost, however as these properties are carried at revalued amounts, this gain will not be shown in profit and loss but reflected as a movement in equity as per International Financial Reporting Standards (IFRS). The group is currently looking forward to the opening of a Life `n Leisure shop in Canal Walk Mall, Cape Town and Clearwater Mall, Johannesburg in July 2011 and August 2011 respectively. The group currently has shops in both the Menlyn Park Shopping Centre, Pretoria and the Highveld Mall, Witbank which to date have proven to be a success. Argent Industrial Investments purchased a factory situated at 30 Coronation Road, Maitland, Cape Town for an amount of R12,700,000 on 9 March 2011. This property was previously leased by the group and houses Atomic Office Equipment. OUTLOOK Argent`s efficient management structure coupled with the group`s ability to respond proactively and swiftly to an ever changing economy without altering its transparent internal systems, trading ability, geographical footprint and manufacturing capacity, gives Argent an encouraging outlook for the 2012 financial year. ACKNOWLEDGEMENTS The ongoing and future success of the Argent group would not be possible without a dedicated, loyal and diligent workforce. I would therefore like to take this opportunity to express my gratitude and appreciation to each and every employee for your unwavering commitment and dedication. DIVIDEND The directors have declared a final dividend of 3 cents per share for the year ended 31 March 2011. Total ordinary dividends per share in respect of the financial year to 31 March 2011 therefore amounts to 7 cents (2010 - 9 cents). The following dates will apply to the abovementioned final dividend: Last day to trade cum dividend: Friday, 2 September 2011 Trading ex dividend commences: Monday, 5 September 2011 Record date: Friday, 9 September 2011 Dividend payment date: Monday, 12 September 2011 Share certificates may not be dematerialised or re-materialised between Monday, 5 September 2011 and Friday, 9 September 2011, both days inclusive. BASIS OF PRESENTATION The condensed financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), IAS 34 - Interim Financial Reporting, AC 500 and in compliance with the Companies Act of South Africa and the Listings Requirements of the JSE Limited. The accounting policies are consistent with those of the previous financial period. SUBSEQUENT EVENTS No matters which are material to the financial affairs of the group have occurred between the statement of financial position date and the date of this report. ANNUAL REPORT AND NOTICE OF ANNUAL GENERAL MEETING The annual report, including the group`s audited annual financial statements for the financial year ended 31 March 2011, is expected to be posted to shareholders on or about the 29 June 2011 ("the Annual Report"). Notice is hereby given that Argent`s Annual General Meeting of shareholders will be held in the Argent Industrial Limited Boardroom, First Floor, Ridge 63, 8 Sinembe Crescent, La Lucia Ridge Office Estate, Umhlanga, on Thursday, 29 September 2011 at 11:00 to transact the business as stated in the notice of Annual General Meeting circulated together with the Annual Report. AUDIT OPINION The auditors, Grant Thornton, have issued their opinion on the group`s financial statements for the year ended 31 March 2011. The audit was conducted in accordance with International Standards on Auditing. They have issued an unmodified opinion. These summarised financial statements have been derived from the group financial statements and are consistent in all material respects, with the group financial statements. A copy of their audit report is available for inspection at the company`s registered office. Any reference to future financial performance included in this announcement, has not been reviewed or reported on by the company`s auditors. On behalf of the board TR Hendry CA (SA) Chief executive officer Umhlanga Rocks. 23 June 2011 Registered Office: First floor, Ridge 63, 8 Sinembe Crescent, La Lucia Ridge Office Estate, 4019 Tel: +27 31 791 0061 Auditors Grant Thornton Sponsors PSG Capital (Pty) Ltd Transfer secretaries: Link Market Services South Africa (Pty) Ltd, 13th floor, Rennies House, 19 Ameshoff Street, Johannesburg, 2001 Company secretary: Ms Lindsay Grobler Directors: MP Allen, MJ Antonic, Ms SJ Cox (Financial Director), PA Day (Independent Non- executive), TR Hendry (Chief Executive Officer), PH Lawson (Independent Non- executive), AF Litschka, K Mapasa (Independent Non-executive), T Scharrighuisen (Non-executive Chairman), D Smith, GK Youngman (Alternate) Date: 23/06/2011 16:30:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). 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