Wrap Text
Unaudited Interim Condensed Consolidated Results for the six months ended 30 September 2013
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")
UNAUDITED INTERIM CONDENSED CONSOLIDATED RESULTS FOR THE SIX MONTHS
ENDED 30 SEPTEMBER 2013
Financial Highlights
Revenue up 10.2%
Gearing 10.2%
Net asset value per share 1 488.7 cents
Interim dividend declared per share 7 cents
The unaudited financial statements are presented on a consolidated basis
Condensed Consolidated Income Unaudited Unaudited Audited
Statement for the period ended six months six months year ended
30 Sept 30 Sept 31 Mar
2013 2012 2013
R 000 R 000 R 000
Revenue 1,023,602 929,263 1,850,430
Operating profit before finance
costs 29,601 66,958 126,233
Finance income 451 449 1,824
Finance costs (12,708) (15,236) (30,125)
Profit before taxation 17,344 52,171 97,932
Taxation (3,815) (9,860) (21,660)
Profit for the period 13,529 42,311 76,272
Attributable to non-controlling
interest (400) (80) (90)
Attributable to owners of the parent 13,129 42,231 76,182
Basic earnings per share (cents) 14.3 46.1 83.2
Diluted earnings per share (cents) 14.3 45.1 83.2
Headline earnings per share (cents) 18.7 47.0 85.9
Diluted headline earnings per share
(cents) 18.7 45.9 85.9
Dividends per share (cents)(1) 7.0 6.0 12.0
(1) Final dividend of 7 cents was paid on 7 October 2013
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 91,540 93,705 91,540
Cost of sales (R 000) 823,765 704,598 1,364,725
Depreciation and amortisation
(R 000) 18,670 17,768 35,772
Calculation of headline earnings
(R 000) - - -
Earnings attributable to ordinary
shareholders 13,129 42,231 76,182
Loss on disposal of property, plant
and equipment 303 1,088 2,279
Impairment of property, plant and
equipment 685 - 799
Impairment of intangible assets 4,500 - -
Total tax effects of adjustments (1,537) (305) (638)
Headline earnings attributable to
ordinary shareholders 17,080 43,014 78,622
Condensed Consolidated Statement of Unaudited Unaudited Audited
Comprehensive Income for the period six months six months year ended
ended 30 Sept 30 Sept 31 Mar
2013 2012 2013
R 000 R 000 R 000
Profit for the period 13,529 42,311 76,272
Other comprehensive income for the
period - - -
Exchange differences on translating
foreign operations (225) (222) 185
Revaluation decrease - (15,715) (27,969)
Tax effect of above transactions - - 6,649
Total comprehensive income for the
period 13,304 26,374 55,137
Attributable to equity holders of
the
- Parent 12,904 26,294 55,047
- Non-controlling interest 400 80 90
13,304 26,374 55,137
Condensed Consolidated Statement of Unaudited Unaudited Audited
Financial Position for the period 30 Sept 30 Sept 31 Mar
ended 2013 2012 2013
R 000 R 000 R 000
ASSETS
Property, plant and equipment 839,261 819,441 820,390
Intangible assets 290,170 294,675 294,671
Long-term loan 12,973 12,039 12,496
Non-current assets 1,142,404 1,126,155 1,127,557
Inventories 530,790 462,105 542,949
Trade and other receivables 345,931 379,498 369,522
Bank balance and cash 251 314 348
Current assets 876,972 841,917 912,819
Non-current assets held for sale - - 14,793
TOTAL ASSETS 2,019,376 1,968,072 2,055,169
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 451,366 451,129 451,129
Reserves 38,064 44,217 38,270
Retained earnings 873,354 831,811 860,225
Attributable to owners of the parent 1,362,784 1,327,157 1,349,624
Non-controlling interest 9,651 9,241 9,251
Total shareholders' funds 1,372,435 1,336,398 1,358,875
Interest-bearing borrowings 90,506 119,649 111,656
Deferred tax 70,868 62,312 68,181
Non-current liabilities 161,374 181,961 179,837
Trade and other payables 258,043 238,962 308,454
Taxation 393 1,185 2,272
Bank overdraft 177,194 135,924 143,616
Current portion of interest-bearing
borrowings 49,937 73,642 62,115
Current liabilities 485,567 449,713 516,457
TOTAL EQUITY AND LIABILITIES 2,019,376 1,968,072 2,055,169
Net asset value per share (cents) 1,488.7 1,449.8 1,474.4
Condensed Consolidated Statement of Unaudited Unaudited Audited
Cash Flows for the period ended six months six months year ended
30 Sept 30 Sept 31 Mar
2013 2012 2013
R 000 R 000 R 000
Cash generated from operations 37,530 75,715 150,582
Finance income 451 449 1,824
Finance costs (12,708) (15,236) (30,125)
Dividends paid - (5,537) (11,073)
Normal taxation (paid) / refunded (3,008) 1,378 (2,436)
Cash flows from operating activities 22,265 56,769 108,772
Cash flows from investing activities (22,849) (27,435) (69,997)
Cash flows from financing activities (33,091) (35,941) (53,040)
Net decrease in cash and cash
equivalents (33,675) (6,607) (14,265)
Cash and cash equivalents at
beginning of period (143,268) (129,003) (129,003)
Cash and cash equivalents at end of
period (176,943) (135,610) (143,268)
Consolidated Statement of Changes in Share Share Treasury
Equity for the period ended capital premium shares
30 September 2013 R 000 R 000 R 000
Balance at 30 September 2012 -
unaudited 4,825 540,818 (94,514)
Share-based payments - - -
Total comprehensive income for the
period - - -
Dividends - - -
Less dividend on treasury shares - - -
Balance at 31 March 2013 4,825 540,818 (94,514)
Net treasury movement - - 237
Share-based payments - - -
Total comprehensive income for the
period - - -
Balance at 30 September 2013 4,825 540,818 (94,277)
Consolidated Statement of Changes in Equity for the period ended
30 September 2013(continued)
Employee Foreign
share currency
incentive Revaluation translation
reserve reserve reserve
R 000 R 000 R 000
Balance at 30 September 2012 -
unaudited 2,783 50,650 (9,216)
Share-based payments (749) - -
Total comprehensive income for the
period - (5,605) 407
Dividends - - -
Less dividend on treasury shares - - -
Balance at 31 March 2013 2,034 45,045 (8,809)
Net treasury movement - - -
Share-based payments 19 - -
Total comprehensive income for the
period - - (225)
Balance at 30 September 2013 2,053 45,045 (9,034)
Consolidated Statement of Changes in Equity for the period ended 30
September 2013 (continued)
Total
attributable Non- Total
Retained to owners of controlling shareholders’
earnings the parent interest funds
R 000 R 000 R 000 R 000
Balance at 30
September 2012 –
unaudited 831,811 1,327,157 9,241 1,336,398
Share-based payments - (749) - (749)
Total comprehensive
income for the period 33,951 28,753 10 28,763
Dividends (5,789) (5,789) - (5,789)
Less dividend on
treasury shares 252 252 - 252
Balance at 31 March
2013 860,225 1,349,624 9,251 1,358,875
Net treasury movement - 237 - 237
Share-based payments - 19 - 19
Total comprehensive
income for the period 13,129 12,904 400 13,304
Balance at 30
September 2013 873,354 1,362,784 9,651 1,372,435
Segmental Review
Steel
Steel trading/
Manufacturing trading retail
R 000 R 000 R 000
Business Segments
for the six months ended 30
September 2013 - unaudited
Revenue from external sales 563,024 278,994 120,601
Profit / (loss) before taxation 19,979 (9,806) (846)
Taxation
Profit for the period
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 year ended 31 March 2013
- audited
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 year
Segmental Review (continued)
Construction Properties Consolidated
R 000 R 000 R 000
Business Segments
for the six months ended 30
September 2013 - unaudited
Revenue from external sales 59,786 1,197 1,023,602
Profit / (loss) before taxation 3,086 4,931 17,344
Taxation (3,815)
Profit for the period 13,529
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 year ended 31 March 2013
- audited
Revenue from external sales 83,668 2,021 1,850,430
Profit / (loss) before taxation 2,028 6,136 97,932
Taxation (21,660)
Profit for the year 76,272
Geographical segments for the six months ended 30 September 2013 - unaudited
South Rest of the
Africa Africa Consolidated
R 000 R 000 R 000
Revenue from external sales 989,654 33,948 1,023,602
Profit before taxation 10,638 6,706 17,344
Taxation (3,815)
Profit for the period 13,529
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 year ended 31 March 2013 -
audited
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
FINANCIAL OVERVIEW
Argent produced a good set of operational results for the six months ended
30 September 2013. The net results were negatively affected by various once-
off write downs, strikes and foreign exchange differences which totalled
R35.6 million.
The group’s balance sheet remains strong and appropriately capitalised, with
gearing down to 10.2%.
OPERATIONS REVIEW
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,
showed a mixed bag of fortunes. Phoenix Steel Natal did very well,
benefiting from group imports due to its close proximity to the harbour,
which means no transport costs were incurred. Phoenix Steel Gauteng and
Phoenix Steel Mpumalanga experienced the opposite, finding themselves
uncompetitive and overstocked. This has now been corrected with Phoenix
Steel Gauteng’s stock having been reduced from a high of R131.5 million to
the current R90 million. The outlook for both the Gauteng and Natal region
is positive, with local demand on the increase. It is not the group’s
intention to expand its steel trading and, to this end, it will closely
monitor the performance at its only remaining outlying branch, Phoenix Steel
Mpumalanga. The group took a decision to close Phoenix Steel Richards Bay on
31 December 2013 due to poor performance over an extended period. The
retrenchments have not been provided for, but will cost approximately
R513,000. The building (net book value R5.8 million) and stock to the value
of R6.6 million should be realised at full value.
Gammid Trading, an aluminium and stainless steel trader, experienced a
marginally improved six months, with all of the branches trading positively.
The group’s international supplier base has held it in good stead, albeit
this sector of the market remains depressed.
Specialist Steel Profiles, both a specialised steel importer and the group’s
import co-ordinator, had a very good six months, which was marred by a
foreign exchange loss of R8.3 million. This was as a result of unhedged
foreign currency imports to which the group is no longer exposed.
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
All of the above companies are essentially distributors of the group’s
brands, with the exception of Phoenix Steel Mpumalanga which also
beneficiates steel. The margins in pure distribution are not very high,
however, all the above companies are profitable, with the exception of
Phoenix Steel Mpumalanga and Gammid George with borderline performance. The
performance of these two companies is being closely monitored by the board
of directors.
MANUFACTURING
This sector performed extremely well and is the current focus of the group.
Allan Maskew is the only company in the sector which has not performed well.
This is as a result of past management issues, coupled with a lower than
expected order book. The new management team is working to improve
performance and intends to have the company back on track by February 2014.
Barrier Angelucci has been closed. This has resulted in the retrenchment of
28 people at a cost of R1 million, the write down of stock to the value of
R2 million and a goodwill impairment of R4.5 million.
Cannock Gates and Burbage Iron Craft, the group’s UK subsidiaries, produced
a great set of results for the six month period. The company will benefit
from the current positivity in the UK economy, as well as being able to
expand the products that it distributes on behalf of the group.
Castor & Ladder has continued to grow from strength to strength as a result
of an increased market share in both its ladders and pre-packaged castors.
The company is also in the process of evaluating a number of automation
options in order to streamline production and increase output.
Cedar Paint has completed its roll-out into Pick ‘n Pay and has managed to
increase its basket of products supplied to the Massmart Group. The company
has secured the distribution rights in South Africa for a number of USA-
based Rustoleum paint products. This will make a straight contribution to
the bottom line, without affecting production capacity.
Excalibur Vehicle Accessories and Sentech Industries, the group’s automotive
component manufacturers, were adversely affected by the automotive sector
strike. Both companies have increased their market share, with Excalibur
increasing a number of Original Equipment parts as well as its presence in
the after-market, and Sentech supplying New Joules Engineering North America
with pre-machined retarder parts, something that was previously outsourced.
The companies discontinued certain of their lower volume automotive product
lines, which resulted in a stock write down of R19.3 million and
retrenchment costs of R800,000.
Hendor Mining Supplies is performing well and is showing one of the highest
order books that it has had in the last three years.
Jetmaster has a decent order book and a full new range of export products
for the new year. The already successful export market will further be
enhanced by the depreciation of the Rand.
Koch’s Cut and Supply Steel Centre experienced a good first six months. The
company installed and commissioned a R3.1 million, 24 metre double bridge
profiling and plasma machine which has given it a market edge in the supply
of long precision profiles and more efficient nesting.
New Joules Engineering North America experienced another record six months
and currently has a very positive order book. The company received a letter
of intent to supply 2,000 retarders to the Russian Railing Confederation,
subject to agreement on the payment terms.
Toolroom Services and Atomic Office Equipment continue to perform strongly,
with excellent turnover levels and margins. Toolroom has purchased and
commissioned two new powder coating booths for R4.4 million. The two lines
are expected to save sufficient powder to generate full payback in less than
three years.
Tricks Wrought Iron Services continues to perform well and has successfully
entrenched itself into the low-cost housing window and door market. To this
end, they have invested in three rolling machines which were imported from
China and will be commissioned in February 2014. The company experienced a
number of labour issues which eventually resulted in the dismissal of 221
employees. This resulted in a loss of production for the months of August
and September. Production was fully restored in October 2013 with 30% less
employees.
Xpanda Security produced a good six months and has a brilliant order book.
The company upgraded its powder coating facilities by investing R4.3 million
in new equipment, which includes an automatic multi-colour line. Xpanda has
taken over the Barrier Angelucci roller door facility in Johannesburg and
will start manufacturing its own products alongside the Barrier ones from
1 February 2014. Xpanda will market and distribute both brands of roller
doors.
CONSTRUCTION
Megamix and Argent Industrial Engineering have had an excellent six months.
Megamix has a decent order book and is awaiting adjudication of an
additional R28 million to run from February to August next year. The next
rollout of forty six wind turbines is going up next door to its quarry,
which has the company well placed to commence with the resultant R40 million
worth of road, stone and cement work over the course of 2014. In addition,
the quarry has submitted R2.1 million worth of road building material
tenders for which it expects to receive orders in the new year.
PROPERTIES
The group has sold one of its properties in Johannesburg for R5.6 million.
Transfer of the property, previously occupied by Barrier Angelucci, is
expected to be completed latest January 2014. The extension of the Benoni
property, occupied by Allan Maskew, has essentially been completed.
OPERATIONAL MANAGEMENT
The group has made a number of management changes in order to streamline its
trading operations and to expand and reinforce its branding division.
Operational profits were affected by strikes in four of the group’s
divisions, which are estimated to have cost R7.2 million. As a result of the
continuous county-wide strikes, the group has committed itself to an
automation programme that will reduce the number of staff from the existing
2,894 to 2,400 by the end of 2015.
Calculation of normalised earnings – R000: 30 Sept 2013 30 Sept 2012
Profit before taxation as reported 17,344 52,171
Loss on disposal of property, plant and
equipment 303 1,088
Impairment of property, plant and equipment 685
Argent Port Elizabeth closure - 1,039
Specialist Steel Profiles foreign exchange loss 8,300 -
Barrier Angelucci closure/retrenchments 7,500 563
Excalibur Vehicle Accessories and Sentech
discontinued product lines 20,100 -
Effect of country-wide strikes 7,200 -
Normalised earnings 61,432 54,861
OUTLOOK
The group is creating its core business around its branded manufacturing
companies and will be focusing on the respective market shares and
production automation of these operations. The group will continue to
streamline its steel trading businesses and realise assets surplus to
requirements, with the strategy of using the resultant cash flows to buy
back its own shares.
BASIS OF PRESENTATION
The unaudited condensed consolidated 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 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 is nil. The unaudited condensed
consolidated 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 group’s auditors.
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 7 cents per share has been declared subsequent
to 30 September 2013 for the six months period ending 30 September 2013.
The following dates will apply to the above-mentioned interim dividend:
Last day to trade cum dividend Thursday, 20 March 2014
Trading ex-dividend commences Monday, 24 March 2014
Record date Friday, 28 March 2014
Dividend payment date Monday, 31 March 2014
Share certificates may not be dematerialised or rematerialised between
Monday, 24 March 2014 and Friday, 28 March 2014, 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 group 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,
31 March 2014.
ON BEHALF OF THE BOARD
TR Hendry CA (SA) Umhlanga Rocks
Chief Executive Officer 4 December 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)
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:
Jaco Dauth
DIRECTORS:
CD Angus (Independent Non-executive), Ms SJ Cox (Financial Director), PA Day
(Independent Non-executive), TR Hendry (Chief Executive Officer), Mrs JA
Etchells (Non-executive), AF Litschka, K Mapasa (Independent Non-executive)
and T Scharrighuisen (Non-executive Chairman).
Date: 04/12/2013 02:24:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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