Wrap Text
Unaudited Interim Condensed Consolidated Results for the Six Month Ended 30 September 2014
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 MONTH
ENDED 30 SEPTEMBER 2014
Financial Highlights
Revenue down -8.4%
Headline earnings per share 28.9 cents
Headline earnings per share up 54.7%
Basic earnings per share 25.7 cents
Gearing 9.4%
Net asset value per share 1 269.3 cents
Interim dividend per share 8 cents
The unaudited financial statements are presented on a consolidated basis
Unaudited Unaudited Audited
six months six months year ended
Condensed Consolidated Income 30 Sept 30 Sept 31 Mar
Statement for the period ended 2014 2013 2014
R 000 R 000 R 000
Revenue 937,544 1,023,602 1,880,476
Operating profit before finance
costs and restructuring 43,196 29,601 79,303
Restructuring adjustments (263,460)
Operating profit before finance
costs 43,196 29,601 (184,157)
Finance income 557 451 987
Finance costs (13,310) (12,708) (27,246)
Profit before taxation 30,443 17,344 (210,416)
Taxation (6,697) (3,815) 17,359
Profit/(loss) for the period 23,746 13,529 (193,057)
Attributable to equity holders of
the
- Parent 23,525 13,129 (193,575)
- Non-controlling interest 221 400 518
23,746 13,529 (193,057)
Basic earnings/(loss) per share
(cents) 25.7 14.3 (211.4)
Diluted earnings/(loss) per share
(cents) 25.7 14.3 (211.4)
Headline earnings/(loss) per share
(cents) 28.9 18.7 14.6
Diluted headline earnings/(loss) per
share (cents) 28.9 18.7 14.6
Dividends per share (cents) (1) 7.0 7.0 14.0
1 Final dividend of 7 cents was paid on 27 October 2014
Supplementary information
Shares in issue (000)
- at end of period 91,540 91,540 91,540
- weighted average 91,540 91,540 91,561
- diluted weighted average 91,540 91,540 91,561
Cost of sales (R 000) 729,072 823,765 1,464,253
Depreciation and amortisation
(R 000) 17,791 18,670 38,388
Calculation of headline earnings
(R 000)
Earnings/(loss) attributable to
ordinary shareholders 23,525 13,129 (193,575)
(Profit)/loss on disposal of
property, plant and equipment 4,029 303 2,532
Impairment of property, plant and
equipment 685 96,413
Impairment of intangible assets 4,500 121,803
Total tax effects of adjustments (1,128) (1,537) (13,770)
Headline earnings attributable to
ordinary shareholders 26,426 17,080 13,403
Unaudited Unaudited Audited
Condensed Consolidated Statement of six months six months year ended
Other Comprehensive Income for the 30 Sept 30 Sept 31 Mar
period ended 2014 2013 2014
R 000 R 000 R 000
Profit/(loss) for the period 23,746 13,529 (193,057)
Other comprehensive income for the
period
Items that may be reclassified
subsequently to profit and loss
Exchange differences on translating
foreign operations 398 (225) (529)
Items that will not be reclassified
subsequently to profit and loss
Revaluation decrease (6,931)
Tax effect of above transactions 1,334
Total comprehensive income for the
period 24,144 13,304 (199,183)
Attributable to equity holders of
the
- Parent 23,923 12,904 (199,701)
- Non-controlling interest 221 400 518
24,144 13,304 (199,183)
Condensed Consolidated Statement of Unaudited Unaudited Audited
Financial Position for the period 30 Sept 30 Sept 31 Mar
ended 2014 2013 2014
R 000 R 000 R 000
ASSETS
Property, plant and equipment 711,548 839,261 726,018
Intangible assets 172,866 290,170 172,866
Long-term loan 14,034 12,973 13,477
Deferred taxation 13,686
Non-current assets 898,448 1,142,404 926,047
Inventories 466,701 530,790 471,353
Trade and other receivables 353,723 345,931 338,881
Taxation 1,472
Bank balance and cash 329 251 234
Current assets 822,225 876,972 810,468
Non-current assets held for sale 4,911 8,500
TOTAL ASSETS 1,725,584 2,019,376 1,745,015
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 451,744 451,366 451,366
Reserves 31,040 38,064 30,626
Retained earnings 679,140 873,354 655,323
Attributable to owners of the parent 1,161,924 1,362,784 1,137,315
Non-controlling interest 9,990 9,651 9,769
Total shareholders' funds 1,171,914 1,372,435 1,147,084
Interest-bearing borrowings 69,932 90,506 93,197
Deferred tax 50,607 70,868 59,598
Non-current liabilities 120,539 161,374 152,795
Trade and other payables 276,572 258,043 236,648
Taxation 393 159
Bank overdraft 115,764 177,194 162,369
Current portion of interest-bearing
borrowings 40,795 49,937 45,960
Current liabilities 433,131 485,567 445,136
TOTAL EQUITY AND LIABILITIES 1,725,584 2,019,376 1,745,015
Net asset value per share (cents) 1,269.3 1,488.7 1,242.4
Unaudited Unaudited Audited
six months six months year ended
Condensed Consolidated Statement of 30 Sept 30 Sept 31 Mar
Cash Flows for the period ended 2014 2013 2014
R 000 R 000 R 000
Cash generated from operations 94,368 37,530 102,780
Finance income 557 451 987
Finance costs (13,310) (12,708) (27,246)
Dividends paid 292 (13,216)
Normal taxation paid (3,633) (3,008) (5,690)
Cash flows from operating activities 78,274 22,265 57,615
Cash flows from investing activities (3,522) (22,849) (42,105)
Cash flows from financing activities (28,052) (33,091) (34,377)
Net increase/(decrease) in cash and
cash equivalents 46,700 (33,675) (18,867)
Cash and cash equivalents at
beginning of period (162,135) (143,268) (143,268)
Cash and cash equivalents at end of
period (115,435) (176,943) (162,135)
Consolidated Statement of Changes in
Equity for the period ended Share Share Treasury
30 September 2014 capital premium shares
R 000 R 000 R 000
Balance at 30 September 2013 –
unaudited 4,825 540,818 (94,277)
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 2014 4,825 540,818 (94,277)
Net treasury movement 378
Share-based payments
Total comprehensive income for the
period
Less dividend on treasury shares
Balance at 30 September 2014 4,825 540,818 (93,899)
Consolidated Statement of Changes in Employee Foreign
Equity for the period ended share currency
30 September 2014 incentive Revaluation translation
(continued) reserve reserve reserve
R 000 R 000 R 000
Balance at 30 September 2013 –
unaudited 2,053 45,045 (9,034)
Share-based payments 352
Transfer of reserve to retained
earnings (1,889)
Total comprehensive income for the
period (5,597) (304)
Dividends
Less dividend on treasury shares
Balance at 31 March 2014 516 39,448 (9,338)
Net treasury movement
Share-based payments 16
Total comprehensive income for the
period 398
Less dividend on treasury shares
Balance at 30 September 2014 532 39,448 (8,940)
Consolidated Statement
of Changes in Equity Total
for the period ended attributable Non- Total
30 September 2014 Retained to owners of controlling shareholders’
(continued) earnings the parent interest funds
R 000 R 000 R 000 R 000
Balance at 30
September 2013 –
unaudited 873,354 1,362,784 9,651 1,372,435
Share-based payments 352 352
Transfer of reserve to
retained earnings 1,889 0 0
Total comprehensive
income for the period (206,704) (212,605) 118 (212,487)
Dividends (13,508) (13,508) (13,508)
Less dividend on
treasury shares 292 292 292
Balance at 31 March
2014 655,323 1,137,315 9,769 1,147,084
Net treasury movement 378 378
Share-based payments 16 16
Total comprehensive
income for the period 23,525 23,923 221 24,144
Less dividend on
treasury shares 292 292 292
Balance at 30
September 2014 679,140 1,161,924 9,990 1,171,914
Steel
Segmental Review Manufacturing Trading Automotive
R 000 R 000 R 000
Business Segments
for the six months
ended 30 September 2014
- unaudited
Revenue from external sales 503,009 296,599 101,758
Profit/(loss) before taxation 26,912 10,889 (9,911)
Taxation
Profit for the period
Other information
Segment assets 739,935 426,896 157,833
Segment liabilities 108,534 139,073 64,632
Capital expenditure 7,039 1,671 1,572
Depreciation/amortisation 9,402 3,798 4,122
Finance costs * (425) 2,218 913
Finance income 557
* As per the group policy, finance costs and finance income derived from
primary banking is netted off. The company has net finance income and this
is distorting the segment for finance costs.
for the six months ended 30
September 2013 - unaudited
Revenue from external sales 521,519 368,435 101,122
Profit/(loss) before taxation 33,072 (6,422) (13,530)
Taxation
Profit for the period
Other information
Segment assets 878,769 482,100 240,865
Segment liabilities 95,238 256,824 24,618
Capital expenditure 19,063 1,490 5,497
Depreciation/amortisation 8,762 4,176 5,231
Finance costs * (3,165) 6,630 256
Finance income 451
for the year ended 31 March 2014
- audited
Revenue from external sales 967,076 657,920 192,255
Profit/(loss) before taxation 60,655 (2,451) (9,391)
Taxation
Loss for the period
Other information
Segment assets 733,929 414,479 163,738
Segment liabilities 157,701 124,122 54,039
Capital expenditure 31,815 3,993 9,335
Depreciation/amortisation 18,484 8,284 10,596
Finance costs 2,343 4,967 856
Finance income 987
Segmental Review Watch Restructuring
(continued) List Properties Adjustments Consolidated
R 000 R 000 R 000 R 000
Business Segments
for the six months
ended 30 September 2014
- unaudited
Revenue from external
sales 35,412 766 937,544
(Loss)/profit before
taxation (1,836) 4,389 30,443
Taxation (6,697)
Profit for the period 23,746
Other information
Segment assets 57,257 342,191 1,724,112
Segment liabilities 33,649 157,175 503,063
Capital expenditure 305 3,932 14,519
Depreciation/
amortisation 468 1 17,791
Finance costs * 1,152 9,452 13,310
Finance income 557
* As per the group policy, finance costs and finance income derived from
primary banking is netted off. The company has net finance income and this
is distorting the segment for finance costs.
for the six months
ended 30 September 2013
- unaudited
Revenue from external
sales 31,330 1,196 1,023,602
(Loss)/profit before
taxation (2,944) 7,168 17,344
Taxation (3,815)
Profit for the period 13,529
Other information
Segment assets 46,061 371,581 2,019,376
Segment liabilities 20,212 178,788 575,680
Capital expenditure 57 11,557 37,664
Depreciation/
amortisation 480 21 18,670
Finance costs * 371 8,616 12,708
Finance income 451
For the year ended 31
March 2014 - audited
Revenue from external
sales 60,747 2,478 1,880,476
(Loss)/profit before
taxation (6,078) 10,309 (263,460) (210,416)
Taxation 17,359
Loss for the period (193,057)
Other information
Segment assets 57,810 361,373 1,731,329
Segment liabilities 27,385 175,086 538,333
Capital expenditure 121 17,626 62,890
Depreciation/
amortisation 949 75 38,388
Finance costs 645 18,435 27,246
Finance income 987
South Rest of the
Africa world Consolidated
R 000 R 000 R 000
Geographical segments
for the six months ended 30
September 2014 - unaudited
Revenue from external sales 892,302 45,242 937,544
Profit before taxation 21,155 9,288 30,443
Taxation (6,697)
Profit for the period 23,746
Other information
Segment assets 1,671,309 52,803 1,724,112
Segment liabilities 497,143 5,920 503,063
Capital expenditure 14,145 374 14,519
Depreciation/amortisation 16,433 1,358 17,791
Finance costs 13,289 21 13,310
Finance income 557 557
for the six months ended 30
September 2013 – unaudited
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
Other information
Segment assets 1,972,716 46,660 2,019,376
Segment liabilities 567,428 8,252 575,680
Capital expenditure 36,413 1,251 37,664
Depreciation/amortisation 17,500 1,170 18,670
Finance costs 12,698 10 12,708
Finance income 451 451
for the year ended 31 March 2014 –
audited
Revenue from external sales 1,816,887 63,589 1,880,476
(Loss)/profit before taxation (216,577) 6,161 (210,416)
Taxation 17,359
Loss for the year (193,057)
Other information
Segment assets 1,695,188 36,141 1,731,329
Segment liabilities 517,803 20,530 538,333
Capital expenditure 60,854 2,036 62,890
Depreciation/amortisation 35,746 2,642 38,388
Finance costs 27,149 97 27,246
Finance income 987 987
FINANCIAL OVERVIEW
Argent Industrial Limited has benefited substantially from its restructuring
in the 2014 financial year and is on track to meet its stated objectives,
namely sustainable earnings and improved shareholder value.
OPERATIONS REVIEW
CALCULATION OF NORMALISED EARNINGS R 000 30 Sept 30 Sept
2014 2013
Profit before taxation as reported 30 443 17 344
Loss on disposal of property, plant and equipment 629 303
Impairment of plant and equipment - Automotive 3 400
Impairment of property, plant and equipment 685
Specialist Steel Profiles foreign exchange loss 8 300
Barrier Angelucci closure/retrenchments 7 500
Excalibur Vehicle Accessories and Sentech 20 100
Industries discontinued product lines
Effect of country-wide strikes 22 700 7 200
Provision for settlement of pending litigation 4 400
Sentech Industries retrenchments 1 983
Normalised Earnings 63 555 61 432
Manufacturing
This sector performed as planned despite performance being severely hampered
by the July strike action, which cost the sector an estimated R15.1 million.
The group planned for the expected strike, building up the required stock
levels but was however prevented from dispatching the stock. This resulted
in the sector still being stocked to capacity at the end of the strike
action which forced it into post-strike short time and resultant under-
recoveries. NUMSA prevented all of our operations from opening up during the
strike which included preventing salary-earning staff from entering the
various premises and included the intimidation of non-union members. The
group is on track with its planned staff reductions via its automation and
product import plans.
Steel trading
This sector performed well and performance was in line with expectations.
The July strike action cost the sector an estimated R1.5 million in profits.
Automotive
Despite showing a vast improvement on the previous six months, this sector
made a loss of R9.9 million. R6.1 million of the loss can be attributed to
the July strike action.
The breakdown of this sector is as follows:
Sentech Excalibur Vehicle Allan
Industries Accessories Maskew
R 000 R 000 R 000
Revenue from external sales 26 783 50 010 24 966
Loss before taxation (2 633) (4 963) (2 315)
Effect of the strike 878 3 815 1 446
Adjusted loss before taxation (1 755) (1 148) (869)
Net assets 25 665 62 408 5 128
Number of employees 173 311 105
Sentech Industries
The group is in the process of giving notice to the lower margin contracts
and is replacing these with a new supply contract from Tenneco. This
restructuring, which is in line with our focus on sustainable margin and
automation, will reduce the workforce by 81 employees. The cost of these
retrenchments has been provided for and is reflected in the calculation of
normalised earnings.
Excalibur Vehicle Accessories
The company’s new Phillips stove contract comes into effect in January 2015.
The monthly turnover is expected to start at R1.3 million, escalating to R2
million monthly. No additional staff is needed for this contract thanks to
the group’s focus on automation through the existing plan.
Allan Maskew
The company has continued to move its business away from the lower margin
original equipment market and into the high margin end user business.
WATCH LIST
Cedar Paint remains a concern due to on-going margin pressures. Thanks to
the outstanding efforts of the company’s management, the loss was reduced
from R2.9 million in the corresponding comparative period to R1.8 million.
The company will remain on the watch list while the group continues to
search for ways to improve margins or find a suitable solicitor.
PROPERTIES
The Group has sold the following properties during the reporting period:
- Gammid JHB in Johannesburg for R5 million to a related party;
- Atomic Office Equipment in Cape Town for R16 million which is at due
diligence stage and will be subject to a six year lease back agreement;
- Gammid Cape in Cape Town for R29.8 million which is at due diligence
stage and will in part be subject to a five year lease back agreement.
The following properties are for sale:
- Phoenix Steel Mpumalanga in Middelburg, which is currently vacant, for
R12.5 million;
- Gammid George in George, which is currently vacant, for R6 million.
The Board of Directors has had numerous discussions with various
stakeholders regarding the sale and leaseback of the remaining properties.
The consensus is that the sale is not in the best interests of the group.
The directors will revisit the current proposal and will also look at
expanding the property portfolio as a platform for a separate listing.
SEGMENT REVIEW
For the six
months ended Steel Watch
30 September Manufacturing Trading Automotive List Properties
2014 R 000 R 000 R 000 R 000 R 000
Revenue from
external sales 503 009 296 599 101 758 35 412 766
Profit/(loss)
before
taxation 26 912 10 889 (9 911) (1 836) 4 389
Net assets 631 401 287 823 93 201 23 608 185 016
For the six
months ended Steel Watch
30 September Manufacturing Trading Automotive List Properties
2013 R 000 R 000 R 000 R 000 R 000
Revenue from
external sales 521 519 368 435 101 122 31 330 1 196
Profit/(loss)
before
taxation 33 072 (6 422) (13 530) (2 944) 7 168
Net assets 783 531 225 276 216 247 25 849 192 793
OUTLOOK
The group’s strategic growth plan implemented in conjunction with last
year’s restructure is on track and has created a solid platform.
We will continue to consolidate our core business around our branded
manufacturing companies. Our main focus will continue to be production
automation, improving internal effectiveness and growing the market share of
our respective brands.
We are not expecting any labour-related action in the medium term as the
Industrial sector has signed a three-year wage agreement. A repeat of the
R22.7 million cost to the group from the July labour strike action is
therefore not expected in the next three years.
Our focus on automation is bearing fruit, as can be seen from increased
margins and the reduction of permanent staff from 2 774 to 2 538 people.
This excludes the planned staff reduction at Sentech Industries.
The key objective of the Board of Directors is to increase the number of
exports and offshore operations to further reduce exposure to South Africa’s
labour problems and currency fluctuations.
BASIS OF PRESENTATION
The unaudited interim condensed consolidated financial statements were
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 Accountants Council and in compliance with
the Companies Act of South Africa ( Act 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
interim condensed consolidated financial statements were 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
The group is currently involved in litigation where the applicant claimed
repayment of funds that had already been paid to a party related. Since the
outcome of the litigation is still pending, the group has made provision in
the amount of R4.4 million against this litigation.
No other 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 8 cents per share has been approved and
declared by the Board of Directors subsequent to 30 September 2014 for the
six months period ending 30 September 2014 from income reserves.
The following dates will apply to the abovementioned interim dividend:
Last day to trade cum dividend: Friday, 20 March 2015
Trading ex-dividend commences: Monday, 23 March 2015
Record date: Friday, 27 March 2015
Dividend payment date: Monday, 30 March 2015
Share certificates may not be dematerialised or rematerialised between
Monday, 23 March 2015 and Friday, 27 March 2015, 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 6.80 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.
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, 30 March
2015.
On behalf of the board
TR Hendry CA (SA)
Chief Executive Officer
Umhlanga Rocks
4 December 2014
Registered Office: First floor, Ridge 63, 8 Sinembe Crescent,
La Lucia Ridge Office Estate, 4019
Tel: +27 (0) 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 (Independent Non-executive), AF Litschka, K Mapasa
(Independent Non-executive) and T Scharrighuisen (Non-executive Chairman)
Date: 04/12/2014 04:55:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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