ARGENT INDUSTRIAL LIMITED - Trading Statement and update regarding the restructuring of Argent

Trading Statement and update regarding the restructuring of Argent

Argent Industrial Limited
(Registration number 1993/002054/06)
(Incorporated in the Republic of South Africa)
Share Code: ART
ISIN: ZAE000019188
(“Argent” or “the company” or “the group”)

TRADING STATEMENT, UPDATE REGARDING THE RESTRUCTURING OF
ARGENT, DISPOSAL OF NON-CORE ASSETS AND CLOSURE OF NON-
PERFORMING OPERATIONS

Argent wishes to bring to the attention of shareholders the
effects of a substantial restructuring within the group.

The markets in which the group operates have been negatively
affected by the poor economic environment in South Africa over
the past number of years. Although the diversified nature of
the group was able to compensate for these negative influences
to some extent, management has thoroughly investigated various
alternatives to enhance the group’s performance and it has
therefore been decided to restructure the group in order to
ensure sustainably improved shareholder value in the medium-
to longer term. The restructuring has now been finalised and
will have a negative effect on the group’s earnings amounting
to approximately R259 million.

In terms of paragraph 3.4 (b) of the Listing Requirements of
the JSE Limited, companies are required to publish a trading
statement as soon as they are satisfied that there is a
reasonable degree of certainty that the financial results for
the next reporting period will differ by more than 20% from
those of the previous corresponding period.

Headline earnings per share for the year ended 31 March 2014
are expected to be between 6 and 23 cents per share compared
to 85.9 cents per share in the previous corresponding period.
The basic loss per share for the year ended 31 March 2014 is
expected to be between 213 and 229 cents compared to the basic
earnings per share of 83.2 cents in the previous corresponding
period.

The restructuring consisted of the following:
-   Impairments of R150.5 million in the underperforming
    automotive division.   The impairment was necessitated by
    the effects of continuing weak consumer demand, as well as
    the number of new entrants to our markets and a sharp
    increase in imported product which significantly reduced
    local content.
-   Property impairments of R38.3 million of which R32.5
    million relates to the group’s automotive factory which
    operates in the depressed area of Ga Rankuwa.
-   Impairments of R49.0 million to the investment in the
    highly competitive, overtraded, paint and aluminium
    division.
-   The closure and subsequent consolidation to Durban, Cape
    Town and Johannesburg of four loss-generating retail
    businesses in the Steel Trading and Retail division at a
    cost of R21.6 million.


In addition, the effects of labour strikes at various
customers and suppliers, including the current platinum
industry strike, are estimated to have cost the group R15.9
million.

It should be noted that the group, as part of the
restructuring, is in the process of selling 12 of its 22
existing properties, which are non-core, for an amount of
approximately R278.5 million. This positive offset is expected
to be realised in the financial year ended March 2015. The
board of directors of the company (“the board”) will assess
how these proceeds should be applied.

The board is confident that the above restructuring as well as
the property realisation will unlock value and enable the
group to focus on its core businesses of Manufacturing and
Trading.   These operations play to the group’s skills and
considerable experience and operate in the areas of potential
growth in the economy.

The group net asset value as at 31 March 2014, taking into
account the projected results as noted above, should be in the
range of 1130 to 1260 cents per share.

Should the aforementioned abnormal write-downs be excluded,
the decline in the group’s headline earnings per share and
earnings per share for the financial year to 31 March 2014
would have been less than 20% compared to the previous
financial year.

The above information has not been reviewed or reported on by
the company’s external auditors.   It is anticipated that the
audited results for the year ended 31 March 2014 are to be
published on SENS on or about 26 June 2014.


Umhlanga
9 May 2014

Sponsor: PSG Capital Proprietary Limited

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