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Audited consolidated results for the year ended 31 March 2013 and Notice of Annual General Meeting
Argent Industrial Limited
Registration number 1993/002054/06
(Incorporated in the Republic of South Africa)
Share code: ART ISIN code: ZAE000019188
("the group" or "the company")
AUDITED CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED 31 MARCH 2013
AND NOTICE OF ANNUAL GENERAL MEETING
Financial Highlights
REVENUE R1.85 billion
OPERATING PROFIT R126.2 million
NET ASSET VALUE PER SHARE (cents) 1,474.4
GEARING 12.8%
EARNINGS BEFORE INTEREST, TAXATION,
DEPRECIATION AND AMORTISATION ("EBITDA") R162 million
The condensed financial statements are presented on a consolidated basis
Consolidated Income Statement Audited Audited
for the year ended 31 March 2013 2013 2012
R 000
Revenue 1,850,430 1,797,206
Operating profit before finance costs 126,233 121,416
Finance income 1,824 952
Finance costs (30,125) (36,107)
Profit before taxation 97,932 86,261
Taxation 21,660 16,216
Profit for the year 76,272 70,045
Attributable to non-controlling interest 90 272
Attributable to owners of the parent 76,182 69,773
Basic earnings per share (cents) 83.2 76.2
Diluted earnings per share (cents) 83.2 74.5
Headline earnings per share (cents) 85.9 77.1
Diluted headline earnings per share (cents) 85.9 75.4
Dividends per share (cents) 12.0 7.0
Supplementary information
Shares in issue (000)
- at end of period 91,540 91,540
- weighted average 91,540 91,540
- diluted weighted average 91,540 93,705
Cost of sales (R 000) 1,364,725 1,349,166
Depreciation and amortisation (R 000) 35,772 35,630
Calculation of headline earnings (R 000)
Earnings attributable to ordinary shareholders 76,182 69,773
Loss on disposal of property, plant and
equipment 1,641 847
Impairment of property, plant and equipment 799 -
Headline earnings attributable to ordinary
shareholders, net of tax 78,622 70,620
Consolidated Statement of Comprehensive Income Audited Audited
for the year ended 31 March 2013 2013 2012
R 000
Profit for the year 76,272 70,045
Other comprehensive income for the period
Exchange differences on translating foreign
operations 185 926
Realisation of revaluation reserve (7,554) (9,642)
Reversal of revaluation of reserve (20,415) (55,723)
Change in tax rate on revaluation reserve - (1,593)
Transfer of reserve to retained earnings - 8,728
Tax effect of above transactions 6,649 14,828
Total comprehensive income for the year 55,137 27,569
Attributable to equity holders of the
- Parent 55,047 27,297
- Non-controlling interest 90 272
55,137 27,569
Consolidated Statement of Financial Position Audited Audited
for the year ended 31 March 2013 2013 2012
R 000
ASSETS
Non-current assets
Property, plant and equipment 820,390 830,764
Intangibles 294,671 294,679
Long-term loan 12,496 11,578
Deferred taxation 6,617 14,693
1,134,174 1,151,714
Current assets
Inventories 542,949 502,201
Trade and other receivables 369,522 346,231
Bank balance and cash 348 287
912,819 848,719
Non-current assets held for sale 14,793 -
TOTAL ASSETS 2,061,786 2,000,433
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 451,129 451,129
Reserves 38,270 59,278
Retained earnings 860,225 795,116
Attributable to owners of the parent 1,349,624 1,305,523
Non-controlling interest 9,251 9,161
Total shareholders' funds 1,358,875 1,314,684
Non-current liabilities
Interest-bearing borrowings 111,656 144,854
Deferred taxation 74,798 72,378
186,454 217,232
Current liabilities
Trade and other payables 308,454 257,077
Taxation 2,272 193
Bank overdraft 143,616 129,290
Current portion of interest-bearing borrowings 62,115 81,957
516,457 468,517
TOTAL EQUITY AND LIABILITIES 2,061,786 2,000,433
Net asset value per share (cents) 1,474.4 1,426.2
Condensed Consolidated Statement of Cash Flows Audited Audited
for the year ended 31 March 2013 2013 2012
R 000
Cash generated from operations 150,582 168,442
Finance income 1,824 952
Finance costs (30,125) (36,107)
Dividends paid (11,073) (6,408)
Normal taxation paid (2,436) (2,012)
Cash flows from operating activities 108,772 124,867
Cash flows from investing activities (69,997) (36,263)
Cash flows from financing activities (53,040) (81,586)
Net (decrease)/increase in cash and cash
equivalents (14,265) 7,018
Cash and cash equivalents at beginning of year (129,003) (136,021)
Cash and cash equivalents at end of year (143,268) (129,003)
Consolidated Statement of Changes in Share Share Treasury
Equity for the year ended capital premium shares
31 March 2013 R 000 R 000 R 000
Balance at 31 March 2011 4,825 540,818 (94,514)
Share-based payments - - -
Transfer of reserve to retained
earnings - - -
Total comprehensive income - - -
Dividends – current interim and prior
final - - -
Less dividend on treasury shares - - -
Balance at 31 March 2012 4,825 540,818 (94,514)
Share-based payments - - -
Total comprehensive income - - -
Dividends – current interim and prior
final - - -
Less dividend on treasury shares
Balance at 31 March 2013 4,825 540,818 (94,514)
Consolidated Statement of Changes in Employee Foreign
Equity for the year ended share currency
31 March 2013 (continued) incentive Revaluation translation
reserve reserve reserve
R 000 R 000 R 000
Balance at 31 March 2011 14,145 118,495 (9,920)
Share-based payments 1,839 - -
Transfer of reserve to retained
earnings (14,077) - -
Total comprehensive income - (52,130) 926
Dividends – current interim and prior
final - - -
Less dividend on treasury shares - - -
Balance at 31 March 2012 1,907 66,365 (8,994)
Share-based payments 127 - -
Total comprehensive income - (21,320) 185
Dividends – current interim and prior
final - - -
Less dividend on treasury shares
Balance at 31 March 2013 2,034 45,045 (8,809)
Consolidated Statement Total
of Changes in Equity attributable Non- Total
for the year ended Retained to owners of controlling shareholders’
31 March 2013 (cont.) earnings the parent interest funds
R 000 R 000 R 000 R 000
Balance at 31 March 2011 708,946 1,282,795 8,889 1,291,684
Share-based payments - 1,839 - 1,839
Transfer of reserve to
retained earnings 14,077 - - -
Total comprehensive
income 78,501 27,297 272 27,569
Dividends – current
interim and prior final (6,754) (6,754) - (6,754)
Less dividend on
treasury shares 346 346 - 346
Balance at 31 March 2012 795,116 1,305,523 9,161 1,314,684
Share-based payments - 127 - 127
Total comprehensive
income 76,182 55,047 90 55,137
Dividends – current
interim and prior final (11,578) 11,578) - (11,578)
Less dividend on
treasury shares 505 505 - 505
Balance at 31 March 2013 860,225 1,349,624 9,251 1,358,875
Segmental Review
Steel
Steel trading/
Manufacturing trading retail
R 000 R 000 R 000
Business Segments
for the year ended 31 March 2013
Revenue from external sales 1,054,312 459,572 250,857
Profit/(loss) before taxation 91,261 7,768 (9,261)
Taxation
Profit for the period
for the year ended 31 March 2012
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 year ended 31 March 2013
Revenue from external sales 83,668 2021 1,850,430
Profit/(loss) before taxation 2,028 6,136 97,932
Taxation 21,660
Profit for the period 76,272
for the year ended 31 March 2012
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 year ended 31 March 2013
Revenue from external sales 1,800,739 49,691 1,850,430
Profit before taxation 94,857 3,075 97,932
Taxation 21,660
Profit for the year 76,272
for the year ended 31 March 2012
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 (“the group”) produced an improved set of results
for the year ended 31 March 2013. The balance sheet remains strong and
appropriately capitalised with gearing down to 12.8%. The reliance on
imports due to sporadic and unreliable local supply has, however, resulted
in the group’s stock levels being unacceptably high.
Operations Review
The manufacturing divisions dominated profit contributions to the group for
the year, with the steel divisions contributing strongly in the final three
months.
Steel Trading
The group’s steel trading divisions incorporate Phoenix Steel, Gammid
Trading and Specialist Steel Profiles.
Phoenix Steel, which trades and beneficiates carbon steel products, operated
in an over traded and contained market. The focus on imports paid handsome
dividends, particularly in the second half of the financial year when supply
from Mittal's Vanderbijlpark works ceased as a result of a fire.
Gammid Trading, specialising in the trading of stainless steel and aluminium
products, experienced the challenges of a depressed market. However, the
focus on imports and centralised buying helped improve overall results and
has enabled the company to achieve advantageous positioning in an ever-
changing market.
Specialist Steel Profiles, a focused importing company, took over the role
of Group Centralised Buying. With strong international ties and the benefits
of consolidated buying power, it has enabled the group to be in an
advantageous position to best serve the motor industry and the increasing
number of markets where local suppliers battle to remain competitive.
Steel trading/retail
The group’s steel trading retail divisions include the following companies:
Castor and Ladder KZN
Gammid Cape
Gammid George
Paint and Ladder Klerksdorp
Phoenix Steel Mpumalanga
Phoenix Steel Richards Bay
The above companies distribute the group’s various brands and Phoenix Steel
Mpumalanga and Phoenix Steel Richards Bay also beneficiate steel. All of
these companies traded profitably, with the exception of Gammid Cape which
has been restructured to focus primarily on steel trading.
During the course of the year, the group closed its Argent Port Elizabeth
branch. This resulted in the retrenchment of 71 people at a cost of R1 039
241 and a stock write-down of R6 758 000.
Manufacturing
This sector performed exceedingly well. Good results were achieved by all
its divisions, with the exception of Barrier Angelucci and Sentech
Industries.
All-Lite Steel Products was incorporated into Excalibur in July 2012.
Allan Maskew experienced the detrimental effects of the mining strikes in
the first half, but managed to pull back strongly in the last six months,
finishing with a decent order book.
Barrier Angelucci. The loss of a contract with a leading bank was the main
contributing factor behind the underperformance. As a result, 23 people were
retrenched at a cost of R836 860. All efforts are being made to ensure that
we are well positioned when the next major bank contract is tendered. Focus
was moved to other banks with a resultant growth in market share and a more
positive outlook.
Cannock & Burbage Iron Craft experienced an acceptable year. The company is
now also distributing the group’s automotive parts and Jetmaster products.
Castor & Ladder has continued to retain its market position, with new growth
being experienced in the fast-moving consumer goods (FMCG) sector. It has
taken good advantage of the benefits of imports and centralised buying.
Cedar Paint has continued to grow from strength to strength and now supplies
the majority of the country’s leading retailers. Margins in this sector are
low and remain a concern.
Excalibur Vehicle Accessories recorded a profit for the reporting period.
This was particularly pleasing considering the abnormal effect that the
strikes in September had on Original Equipment Manufacturers.
At Sentech Industries, management inefficiencies and the unearthing of fraud
to the value of at least R723 459 led to the dismissal of the general
manager. The matter has been handed over to the local authorities. A
reduction of work levels, resulting from changes in the motor industry, led
to the retrenchment of 19 people at a cost of R618 885. A new management
team with adequate experience has been put in place and we believe there
will be positive growth from this company in the next reporting period.
Hendor Mining Supplies was severely hampered by the mining strikes and
effectively closed for seven weeks during the first six months of this year.
The order book is now adequate and the company is back on track.
Jetmaster is benefiting from its past restructuring and performing well. The
company has completed its new slow combustion fire range, which has been
approved in the UK, 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 difficulties following the
departure of the previous senior management, but is back at its traditional
volume levels. The company will be investing R6.4 million in a new twin
bridged 42 metre plasma/profile machine, as well as an upgrade of the
related cranes and two of its older profile machines.
New Joules Engineering North America experienced its best trading period
ever and has an exciting order book. The company now supplies its product to
Turkmenistan and has done presentations to the Russian Railing
Confederation, with promising prospects.
Toolroom Services and Atomic Office Equipment are performing very profitably
and both have excellent order books. Toolroom will be investing R5.2 million
in a new automated powder coating facility. This will greatly improve
efficiencies by reducing down-time in colour changing and the amount of lost
powder.
Tricks Wrought Iron Services performed exceptionally, with diversification
into the pallet industry and manhole covers. Factories have also been
established within the group in Port Elizabeth, Cape Town and Garankuwa.
There will be expenditure of R8.6 million in the new financial year on plant
automation.
Xpanda Security delivered good results in both the local and export markets
and successfully increased its presence in the country’s large retail
stores. The company will be investing R9.7 million in a new, more efficient,
powder coating facility and also a plant upgrade.
Construction
Megamix and Argent Industrial Engineering delivered a profit for the period
under review and expect to do the same in the year ahead. The construction
industry in the Western Cape remains a challenge, although the convenient
situation of our quarry argues well for business from the various wind farm
sites.
Properties
The group sold its Argent Port Elizabeth property for R15.25 million. The
property has been lodged and we expect transfer before the end of June 2013.
We are still awaiting the proceeds of the Jetmaster property sale of
R17.3 million. This was expected to be resolved before March 2013, however
it is now a matter of a court case with the Johannesburg City Council.
The group sold the Hendor property for R7.5 million. Payment has been
received and the property has been transferred.
The group purchased a warehouse in Klerksdorp for R6.5 million. Transfer was
concluded on 23 October 2012. It is currently under lease and we will take
owner occupation on 1 January 2014.
We are in the process of expanding the group’s existing Benoni BMI property
in order to accommodate Allan Maskew. Occupation took place in May 2013.
Allan Maskew previously leased a building from Growth Point. The cost of
renovations to date amounts to R13.4 million.
Outlook
The group's future remains very positive and all efforts are being
concentrated on improving its overall trading margins. The quest for margin
has resulted in the group becoming more orientated towards manufacturing
rather than trading.
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 gross dividend of 7 cents per share for
the year ended 31 March 2013. Total ordinary dividends per share in respect
of the financial year to 31 March 2013 therefore amounts to 13 cents (2012 -
10 cents).
The following dates will apply to the abovementioned final dividend:
Last day to trade cum dividend: Friday, 27 September 2013
Trading ex dividend commences: Monday, 30 September 2013
Record date: Friday, 4 October 2013
Dividend payment date: Monday, 7 October 2013
Share certificates may not be dematerialised or re-materialised between
Monday, 30 September 2013 and Friday, 4 October 2013, 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 5.95 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,
7 October 2013.
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, the SAICA
Financial Reporting Guides as issued by the Accounting Practices Committee,
the Financial Reporting Pronouncements as issued by the Financial Reporting
Standards Council and in compliance with the Companies Act of South Africa
(No. 71 of 2008) and the Listing 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
year ended 31 March 2013 is nil. The condensed financial statements have
been prepared under the supervision of the Financial Director, Ms SJ Cox CA
(SA). Any reference to future financial performance included in this
announcement has not been reviewed or reported on by the company's auditors.
Events after the reporting period
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.
Going concern
Shareholders are advised that the audited results for the year ended
31 March 2013 have been prepared on the going concern basis. This basis
presumes that funds will be available to finance future operations and that
the realisation of assets and settlement of liabilities, contingent
obligations and commitments will occur in the ordinary course of business.
Condensed Annual Financial Statements and Notice of Annual General Meeting
The condensed annual financial statements, including the group’s audited
annual financial statements for the financial year ended 31 March 2013, is
expected to be posted to shareholders on or about the 27th of June 2013 (“the
condensed annual financial statements”).
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 Tuesday,
20 August 2013, at 14:00 to transact the business as stated in the notice of
annual general meeting circulated together with the condensed annual
financial statements. The date on which shareholders must be recorded as
such in the share register to be eligible to vote at the annual general
meeting is Thursday, 8 August 2013, with the last day to trade being
Thursday, 1 August 2013.
Audit opinion
The auditors, Grant Thornton (D Nagar as designated auditor), have audited
the group’s financial statements for the year ended 31 March 2013 and their
unqualified audit report is available for inspection at the company’s
registered office.
These condensed results are extracted from audited information, but are not
in itself audited. The directors therefore take full responsibility for the
preparation of the condensed results and that the financial information has
been correctly extracted from the underlying financial statements.
The auditor’s report does not necessarily cover all of the information
contained in this announcement/financial report. Shareholders are therefore
advised that in order to obtain a full understanding of the nature of the
auditor’s work, they should obtain a copy of that report, together with the
accompanying financial information from the registered office of the
company.
On behalf of the board
TR Hendry CA (SA) Umhlanga Rocks
Chief executive officer 26 June 2013
Registered office:
First floor, Ridge 63, 8 Sinembe Crescent, La Lucia Ridge Office Estate,
4019
Tel: +27 31 791 0061
Auditors
Grant Thornton (D Nagar as designated auditor)
Sponsor: 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
Mr MP Allen, Mr CD Angus (independent non-executive), Ms SJ Cox (financial
director), Mr PA Day (independent non-executive), Mr TR Hendry (chief
executive officer), Mrs JA Etchells (non-executive), Mr AF Litschka, Mr K
Mapasa (independent non-executive), Mr T Scharrighuisen (non-executive
chairman).
Date: 26/06/2013 02:41:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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