To view the PDF file, sign up for a MySharenet subscription.

ARGENT INDUSTRIAL LIMITED - Unaudited interim condensed consolidated results for the six month ended 30 September 2012

Release Date: 07/11/2012 13:54
Code(s): ART     PDF:  
Wrap Text
Unaudited interim condensed consolidated results for the six month
ended 30 September 2012

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

UNAUDITED INTERIM CONDENSED CONSOLIDATED RESULTS FOR THE SIX MONTH
ENDED 30 SEPTEMBER 2012

Financial Highlights
Revenue up                        1.7%
Headline earnings per share       47.0 cents
Headline earnings per share up    10.3%
Basic earnings per share          46.1 cents
Gearing                           14.5%
Net asset value per share         1 449.8 cents
Interim dividend per share        6 cents

The unaudited financial statements are presented on a consolidated basis

                                           Unaudited      Unaudited     Audited
Condensed Consolidated Income             six months     six months   year ended
Statement for the period ended              30 Sept       30 Sept       31 Mar
                                             2012           2011         2012
                                             R 000          R 000        R 000

Revenue                                     929,263       913,565     1,797,206
Operating profit before finance
costs                                        66,958        66,170       121,416
Finance income                                  449           405           952
Finance costs                               (15,236)      (18,793)      (36,107)
Profit before taxation                       52,171        47,782        86,261
Taxation                                      9,860         9,104        16,216
Profit for the period                        42,311        38,678        70,045
Attributable to non-controlling
interest                                         80           115           272
Attributable to owners of the parent         42,231        38,563        69,773

Basic earnings per share (cents)                  46.1       42.1           76.2
Diluted earnings per share (cents)                45.1       40.8           74.5
Headline earnings per share (cents)               47.0       42.6           77.1
Diluted headline earnings per share
(cents)                                           45.9       41.2           75.4
Dividends per share (cents) -
interim                                            6.0        4.0            4.0
Dividends per share (cents) - final                                          3.0
Dividends per share (cents) - total                6.0        4.0            7.0

Supplementary information
Shares in issue (000)
- at end of period                       91,540       91,540       91,540
- weighted average                       91,540       91,540       91,540
- diluted weighted average               93,705       94,544       93,705
Cost of sales (R 000)                   704,598      708,819    1,349,166
Depreciation and amortisation
(R 000)                                  17,768       18,281       35,630

Calculation of headline earnings
(R 000)
Earnings attributable to ordinary
shareholders                             42,231       38,563       69,773
Loss on disposal of property, plant
and equipment                             1,088          595          847
Total tax effects of adjustments           (305)        (167)
Headline earnings attributable to
ordinary shareholders                    43,014       38,991       70,620


                                      Unaudited     Unaudited     Audited
Condensed Consolidated Statement of   six months   six months   year ended
Comprehensive Income for the period     30 Sept      30 Sept       31 Mar
ended                                    2012          2011         2012
                                         R 000         R 000        R 000

Profit for the period                    42,311       38,678       70,045

Other comprehensive income for the
period, net of tax
Exchange differences on translating
foreign operations                         (222)       1,015          926
Realisation of revaluation reserve                    (8,728)      (8,728)
Reversal of revaluation reserve         (15,715)        (782)     (41,809)
Change in tax rate on revaluation
reserve                                                            (1,593)
Transfer of reserve to retained
earnings                                                             8,728

Total comprehensive income for the
period                                   26,374       30,183       27,569
Attributable to equity holders of
the
 - Parent                                26,294       30,068       27,297
 - Non-controlling interest                  80          115          272
                                         26,374       30,183       27,569




                                       Unaudited    Unaudited     Audited
Condensed Consolidated Statement of         at          at           at
Financial Position                      30 Sept     30 Sept       31 Mar
for the period ended                      2012        2011         2012
                                          R 000       R 000        R 000

ASSETS
Property, plant and equipment            819,441      873,616      830,764
Intangibles                              294,675      296,017      294,679
Long-term loan                            12,039       11,125       11,578

Non-current assets                     1,126,155    1,180,758    1,137,021

Inventories                              462,105      447,537      502,201
Trade and other receivables              379,498      384,667      346,231
Bank balance and cash                        314          333          287
Current assets                           841,917      832,537      848,719

TOTAL ASSETS                           1,968,072    2,013,295    1,985,740


EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium                451,129      451,129      451,129
Reserves                                  44,217      115,146       59,278
Retained earnings                        831,810      752,833      795,116
Attributable to owners of the parent   1,327,156    1,319,108    1,305,523
Non-controlling interest                   9,241        9,004        9,161
Total shareholders' funds              1,336,397    1,328,112    1,314,684

Interest-bearing borrowings              119,649      182,492      144,854
Deferred tax                              62,312       62,670       57,685
Non-current liabilities                  181,961      245,162      202,539

Trade and other payables                 238,963      202,481      257,077
Taxation                                   1,185          341          193
Bank overdraft                           135,924      153,071      129,290
Current portion of interest-bearing
borrowings                                73,642       84,128       81,957
Current liabilities                      449,714      440,021      468,517

TOTAL EQUITY AND LIABILITIES           1,968,072    2,013,295    1,985,740

Net asset value per share (cents)        1,449.8      1,441.0      1,426.2




                                        Unaudited    Unaudited     Audited
Condensed Consolidated Statement of    six months   six months   year ended
Cash Flows for the period ended          30 Sept      30 Sept      31 Mar
                                         2012           2011          2012
                                         R 000          R 000         R 000

Cash generated from operations            75,715        55,348        168,442
Finance income                               449           405            952
Finance costs                            (15,236)      (18,793)       (36,107)
Dividends paid                            (5,537)       (2,746)        (6,408)
Normal taxation refunded/(paid)            1,378          (342)        (2,012)
Cash flows from operating activities      56,769        33,872        124,867
Cash flows from investing activities     (27,435)       (8,812)       (36,263)
Cash flows from financing activities     (35,941)      (41,777)       (81,586)
Net (decrease)/increase in cash and
cash equivalents                          (6,607)      (16,717)         7,018
Cash and cash equivalents at
beginning of period                     (129,003)     (136,021)      (136,021)
Cash and cash equivalents at end of
period                                  (135,610)     (152,738)      (129,003)


Consolidated Statement of Changes in
Equity for the period ended              Share          Share      Treasury
30 September 2012                       capital        premium      shares
                                          R 000          R 000       R 000
Balance at 30 September 2011 -
unaudited                                   4,825      540,818       (94,514)
Share-based
payments
Transfer of reserve to retained
earnings
Total comprehensive income for the
period
Dividends
Less dividend on treasury shares
Balance at 31 March 2012                    4,825      540,818       (94,514)
Share-based payments
Total comprehensive income for the
period
Dividends
Less dividend on treasury shares
Balance at 30 September 2012                4,825      540,818       (94,514)




Consolidated Statement of Changes in    Employee    Revaluation      Foreign
Equity for the period ended               share       reserve       currency
30 September 2012                      incentive                  translation
(continued)                              reserve                     reserve
                                           R 000       R 000         R 000
Balance at 30 September 2011 -
unaudited                                  15,066     108,985        (8,905)
Share-based
payments                                      918
Transfer of reserve to retained
earnings                                  (14,077)
Total comprehensive income for the
period                                                (42,620)          (89)
Dividends
Less dividend on treasury shares
Balance at 31 March 2012                    1,907      66,365        (8,994)
Share-based payments                          876
Total comprehensive income for the
period                                                (15,715)         (222)
Dividends
Less dividend on treasury shares
Balance at 30 September 2012                2,783      50,650        (9,216)


Consolidated Statement     Retained       Total        Non-        Total
of Changes in Equity for   earnings   attributable controlling shareholders’
the period ended                      to owners of   interest      funds
30 September 2012                      the parent
(continued)
                             R 000        R 000       R 000          R 000
Balance at 30 September
2011 - unaudited           752,833     1,319,108        9,004      1,328,112
Share-based
payments                                     918                        918
Transfer of reserve to
retained earnings            6,007        (8,070)                    (8,070)
Total comprehensive
income for the period       39,938        (2,771)         157        (2,614)
Dividends                   (3,859)       (3,859)                    (3,859)
Less dividend on
treasury shares                197           197                         197
Balance at 31 March 2012   795,116     1,305,523        9,161      1,314,684
Share-based payments                         876                         876
Total comprehensive
income for the period       42,231        26,294           80         26,374
Dividends                   (5,789)       (5,789)                    (5,789)
Less dividend on
treasury shares                252           252                        252
Balance at 30 September
2012                       831,810     1,327,156        9,241      1,336,397




Segmental Review
The Group has changed the structure of its internal organisation and has as
such restated its prior period figures for 30 September 2011.
                                                                       Steel
                                                       Steel          trading/
                                     Manufacturing    trading         retail
                                         R 000           R 000          R 000
Business Segments
for the six months ended
30 September 2012 - unaudited
Revenue from external sales              540,789         221,047       125,094
Profit/(loss) before taxation             53,552          (2,842)       (3,262)
Taxation
Profit for the period
for the six months ended
30 September 2011 - unaudited
Revenue from external sales              490,263         250,359       123,290
Profit/(loss) before taxation             36,853          14,883        (9,688)
Taxation
Profit for the period
for the year ended 31 March 2012 -
audited
Revenue from external sales              989,454         463,578       245,687
Profit/(loss) before taxation             69,485          22,831       (14,350)
Taxation
Profit for the year

Segmental Review
(continued)                          Construction    Properties     Consolidated
                                         R 000          R 000           R 000
Business Segments
for the six months ended
30 September 2012 - unaudited
Revenue from external sales               41,468            865         929,263
Profit/(loss) before taxation                 68          4,655          52,171
Taxation                                                                  9,860
Profit for the period                                                    42,311
for the six months ended
30 September 2011 - unaudited
Revenue from external sales               48,688            965         913,565
Profit/(loss) before taxation                401          5,333          47,782
Taxation                                                                  9,104
Profit for the period                                                    38,678
for the year ended 31 March 2012 -
audited
Revenue from external sales               96,657          1,830       1,797,206
Profit/(loss) before taxation              2,460          5,835          86,261
Taxation                                                                 16,216
Profit for the year                                                      70,045




                                        South       Rest of the
                                       Africa          world    Consolidated
                                         R 000          R 000       R 000
Geographical segments
for the six months ended
30 September 2012 - unaudited
Revenue from external sales              900,636       28,627      929,263
Profit before taxation                    45,490        6,681       52,171
Taxation                                                             9,860
Profit for the period                                               42,311
for the six months ended
30 September 2011 - unaudited
Revenue from external sales              905,078        8,487      913,565
Profit before taxation                    45,011        2,771       47,782
Taxation                                                             9,104
Profit for the period                                               38,678
for the year ended 31 March 2012 -
audited
Revenue from external sales            1,751,975       45,231    1,797,206
Profit before taxation                    86,148          113       86,261
Taxation                                                            16,216
Profit for the year                                                 70,045


FINANCIAL OVERVIEW
Argent Industrial Limited (hereafter referred to as “the Group”) produced a
better set of results for the six months ended 30 September 2012. The
financial results, although an improvement on the same period last year,
were badly affected by the August/September strike action in the transport
and mining industries. The Group has continued with its cost-cutting
exercise which included the closure of Argent Port Elizabeth.

The Group’s balance sheet remains strong and appropriately capitalised with
gearing down to 14.5%.

OPERATIONS REVIEW
The Group’s operating profit was affected by country-wide strikes, this time
in the mining and transport sectors. This, coupled with the depressed steel
trading market, had a negative effect on the results. This was offset by
strong performances by the Group’s manufacturing companies, which continue
to deliver results ahead of the curve.

STEEL TRADING
The Group’s steel trading divisions incorporate Phoenix Steel, Gammid
Trading and Specialist Steel Profiles.

Phoenix Steel, which trades and beneficiates mostly carbon steel products,
operated in a very depressed and contained market during the period under
review. The Group focused on managing stock levels and implementing cost
reduction measures which have made the steel operations much easier to
manage in terms of working capital and a more focused and aligned strategy.

Gammid Trading, an aluminium and stainless steel trader, experienced another
difficult six months with both demand and pricing pressures. Gammid’s
results are, however, continuously improving as a direct result of global
sourcing and entering niche markets with more stringent quality
requirements.

Specialist Steel Profiles, traditionally a purely specialist steel importer,
has taken over the full buying role of the Group’s steel, aluminium and
stainless steel requirements, from both local and international sources. The
company has strong international ties and now also has the benefit of the
Group’s local buying power behind it. It is critical that the Group has full
access to both international and local markets. By virtue of the stringent
quality requirements set by sectors like the motor industry, imports remain
key to sustainable supply as traditional local suppliers like Mittal,
Columbus and Hulamin battle to remain competitive. The importing of
stainless steel and aluminium products remains crucial to the Group as local
mills have been forced to narrow their manufactured product ranges to remain
profitable.

STEEL TRADING/RETAIL
The Group’s steel trading/retail division includes the following companies:
- Castor and Ladder KZN
- Gammid Cape
- Gammid George
- Paint and Ladders Klerksdorp
- Phoenix Steel Mpumalanga
- Phoenix Steel Richards Bay

All of the above are essentially distributors for the Group’s brands with
the exception of Phoenix Steel Mpumalanga and Phoenix Steel Richards Bay
which also beneficiate steel. The margins in pure distribution are not very
high, however, all the above companies are profitable with the exception of
Gammid Cape which has recently been restructured to focus more on the steel,
stainless steel and aluminium markets in the Western Cape.

During the course of the period under review, the Group closed the Argent
Port Elizabeth branch. The closure resulted in the retrenchment of 71 people
at a cost of R1 039 241. The majority of the stock has been re-distributed
to other companies in the Group for resale.

MANUFACTURING
This sector performed extremely well, with good results achieved by all of
its divisions with the exception of Barrier Angelucci.

All Lite Steel Products was incorporated into Excalibur Vehicle Accessories
in July 2012 and is no longer a separate entity.

Allan Maskew was, with the exception of Hendor Mining Supplies, the hardest
hit by the strikes, both from a supply and customer point of view. The
company’s present order book is in excess of two month’s turnover so it is
expecting an improved performance over the next six months.

Barrier Angelucci is the only company that did not perform well in this
sector. The under-performance was due to the company losing an ATM roll out
contract from one of the country’s leading banks. Every effort is being made
to ensure that the company is in the running for the next tender award from
that same bank. In the meantime our market share with all the other major
South African banks has increased and the company has a positive outlook for
the remainder of the year. The company retrenched 21 staff at a cost of
R563 460 during the period.

Cannock Gates & Burbage Iron Craft, the Group’s U.K. subsidiaries, produced
a very satisfactory set of results for the six month period. The company is
now also distributing the Group’s automotive parts as well as Jetmaster fire
places throughout the United Kingdom.

Castor and Ladder continues to hold its own and is making in-roads into the
Fast Moving Consumer Goods market. The company has benefitted from SSP’s
importing capabilities in that it can now import certain components and
products which it was previously unable to do due to volumetric constraints.
Cedar Paint has continued to increase its market share and mature as a
business and now supplies product to the majority of the country’s leading
retailers.

Excalibur Vehicle Accessories and Sentech Industries, the Group’s automotive
component manufacturers, both recorded a profit for the reporting period, a
marked improvement on previous poor results in a very difficult sector. Both
companies were abnormally affected by the transport sector strikes in that
all the Original Equipment Manufacturers were shut at one point or another
in September, some for a few weeks at a time.

Hendor Mining Supplies was severely hampered by the platinum and gold mining
strikes and was effectively closed for seven weeks of the first six months
of this year. The company is still very profitable, however, and the order
book is now full and production is back on track.

Jetmaster is benefiting from its past restructuring and is performing to
expectations. The company has completed its new slow combustion wood
fireplace range which has been approved in the U.K., Australia and New
Zealand. Product development will now focus on the ever increasing overseas
gas heating market.

Koch’s Cut and Supply Steel Centre experienced a rather turbulent few months
as the company underwent a complete top management overhaul, which was done
to ensure the long-term sustainability of the business. Sales and margin
levels are both improving steadily and the company will be back to its
traditional profitability levels before the end of the financial year.

New Joules Engineering North America has just experienced its best six month
period ever and is currently sitting with a very impressive order book. The
company has received an order for the supply of its products into
Turkmenistan and there are promising signs that significant business will
result from a number of presentations made to the Russian Railing
Confederation.

Toolroom Services and Atomic Office Equipment continue to perform strongly
at excellent turnover levels and strong margins. Order books are currently
strong entering what is usually a very busy season.

Tricks Wrought Iron Services continues to perform in excess of all
expectations and has managed to not only diversify its business into steel
pallets and man hole covers but has also set up factories within the Group
in Port Elizabeth, Cape Town and Ga-Rankuwa.

Xpanda Security produced better results for the six months under review than
it has in many years. Performance was strong in both the local and export
markets and the company has also managed to significantly increase its
presence in the country’s large retailers through continuous new product
development.

CONSTRUCTION
Megamix and Argent Industrial Engineering broke even for the reporting
period. Although order levels are higher for the second half of the
financial year, the outlook for the construction industry in the Western
Cape remains conservative.

PROPERTIES
The Group is in the process of selling its property that was formerly
occupied by Argent Port Elizabeth and hopes to conclude the sale by the end
of November 2012. In light of the repairs that need to be done to the
building and the fact that the property is now standing empty, a prudent
decision was made to write back the revaluation surplus of R6 803 875.

The Group is still awaiting the proceeds of the former Jetmaster property
sale in the sum of R17.3 million. This is expected to be resolved before the
end of March 2013.

The Group has purchased a warehouse in Klerksdorp for R6.5 million. The
property, which will be utilised by Paint and Ladders Klerksdorp, was
transferred on 23 October 2012.

We are in the process of extending a property in Benoni that is owned by the
Group in order to accommodate Allan Maskew which will take occupation in
March 2013. Allan Maskew currently leases a property. Due to the fit-for-
purpose nature of the renovations, the board has taken the decision of
writing back the revaluation surplus of R1 930 487 and will re-evaluate the
situation once the renovation and extension is complete.

The revaluation surplus of R11 680 528 pertaining to the property currently
occupied by Phoenix Steel Gauteng has also been written back. The property
is currently surrounded by a number of vacant buildings and the Directors
are of the opinion that the write back will leave the Group with a far more
accurate valuation at this point in time.

OUTLOOK
Despite still facing many obstacles especially in the steel and automotive
industries as well as the volatile labour environment in South Africa, the
board is firmly of the belief that the Group’s future outlook continues to
be very positive and assures shareholders that everything possible is being
done to improve overall trading margins and market share.

BASIS OF PRESENTATION
The condensed financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS), the presentation and
disclosure requirements of IAS 34 - Interim Financial Reporting, AC 500 and
in compliance with the Companies Act of South Africa (No. 71 of 2008) and
the Listings Requirements of the JSE Limited. The accounting policies are
consistent with those of the previous financial period, except for the
adoption of improved, revised or new standards and interpretations. The
aggregate effect of these changes in respect of the period ended 30
September 2012 is nil. The condensed financial statements have been prepared
under the supervision of the Financial Director, Ms S.J. Cox CA (SA). Any
reference to future financial performance included in this announcement, has
not been reviewed or reported on by the Group's auditors.

These financial statements incorporate the financial statements of the
company and all its subsidiaries over which it has operational and financial
control.

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.

DIVIDEND
An interim gross dividend of 6 cents per share has been declared, subsequent
to 30 September 2012 for the six month period ending 30 September 2012.

The following dates will apply to the abovementioned interim dividend:

Last day to trade cum dividend    Friday,   30 November 2012
Trading ex dividend commences     Monday,    3 December 2012
Record date                       Friday,    7 December 2012
Dividend payment date             Monday,   10 December 2012

Share certificates may not be dematerialised or re-materialised between
Monday, 3 December 2012 and Friday, 7 December 2012, both days inclusive.

In determining the dividends tax (DT) of 15% to withhold in terms of the
Income Tax Act (No. 58 of 1962) for those shareholders who are not exempt
from the DT, no secondary tax on companies (STC) credits have been utilised.
Shareholders who are not exempt from the DT will therefore receive a
dividend of 5.1 cents per share net of DT. The Company has 96 490 604
ordinary shares in issue and its income tax reference number is
9096/002/71/3.

The above dates are subject to change. Any changes will be released on SENS.
Where applicable, dividends in respect of certificated shares will be
transferred electronically to shareholders' bank accounts on the payment
date. In the absence of specific mandates, dividend cheques will be posted
to shareholders. Ordinary shareholders who hold dematerialised shares will
have their accounts at their CSDP or broker credited/updated on Monday, 10
December 2012.

ON BEHALF OF THE BOARD
T.R. Hendry CA (SA)               Umhlanga Rocks
Chief Executive Officer           7 November 2012

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: Mark du Toit

DIRECTORS:
M.P. Allen, M.J. Antonic, Ms S.J. Cox (Financial Director),
P.A. Day (Independent Non-executive), T.R. Hendry (Chief Executive Officer),
Mrs J.A. Etchells (Non-executive), A.F. Litschka, K. Mapasa (Independent
Non-executive), T. Scharrighuisen (Non-executive Chairman), G.K. Youngman
(Alternate)

Date: 07/11/2012 01:54:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

Share This Story