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ARGENT INDUSTRIAL LIMITED - Abridged Audited Consolidated Results For The Year Ended 31 March 2016 And Notice Of Annual General Meeting

Release Date: 29/06/2016 10:05
Code(s): ART     PDF:  
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Abridged Audited Consolidated Results For The Year Ended 31 March 2016 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" or “Argent”)

ABRIDGED AUDITED CONSOLIDATED RESULTS FOR THE YEAR ENDED 31 MARCH 2016 AND
NOTICE OF ANNUAL GENERAL MEETING

Financial Highlights
Revenue                                  R1.7 billion
Operating profit                         R91 million
Net asset value per share (cents)        1 302.2
Gearing                                  3.6%
Earnings before interest, taxation,
depreciation and amortisation “EBITDA”   R122.7 million

The abridged financial statements are presented on a consolidated basis

 Consolidated Statement of profit or loss         Audited        Audited
 for the year ended 31 March 2016                  2016           2015
 R 000
 Revenue                                          1,706,923      1,791,163
 Operating profit before finance costs               91,245         58,136
 Finance income                                       1,494          1,529
 Finance costs                                     (17,985)       (24,340)
 Profit before taxation                              74,754         35,325
 Taxation                                          (19,017)        (8,426)
 Profit for the year                                 55,737         26,899
 Attributable to equity holders of the
  - Parent                                           55,100         26,094
  - Non-controlling interest                            637            805
                                                     55,737         26,899

 Basic earnings per share (cents)                      60.1           28.5
 Diluted earnings per share (cents)                    60.1           28.5
 Headline earnings per share (cents)                   62.8           40.8
 Diluted headline earnings per share (cents)           62.8           40.8
 Dividends per share (cents)                           18.0           15.0

 SUPPLEMENTARY INFORMATION
 Shares in issue (000)
 - at end of period                                  91,202         91,808
 - weighted average                                  91,623         91,669
 - diluted weighted average                          91,623         91,669
 Cost of sales (R 000)                            1,320,083      1,398,847
 Depreciation and amortisation (R 000)               31,476         34,400

 CALCULATION OF HEADLINE EARNINGS (R 000)
 Earnings attributable to ordinary
 shareholders                                        55,100         26,094
 Loss on disposal of property, plant and
 equipment                                            1,635          8,711
 Impairment of property, plant and equipment          1,250          5,014
 Total tax effects of adjustments                      (458)        (2,439)
 Headline earnings attributable to ordinary
 shareholders                                        57,527         37,380
Consolidated Statement of other
                                                  Audited          Audited
Comprehensive Income for the year ended
                                                  2016              2015
31 March 2016
 R 000

Profit for the year                               55,737        26,899

Other comprehensive income for the period
Items that may be reclassified subsequently
to profit and loss
Exchange differences on translating foreign
operations                                        2,192          1,182

Items that will not be reclassified
subsequently to profit and loss
Revaluation of land and buildings                     -        (2,961)
Tax effect of above transactions                      -           534
Change in tax rate on revaluation reserve          (698)
Total other comprehensive income for the
year                                             57,231        25,654
Attributable to equity holders of the
 - Parent                                        56,594        24,849
 - Non-controlling interest                         637           805
                                                 57,231        25,654

Consolidated Statement of Financial           Audited       Audited
Position as at 31 March 2016                   2016          2015
R 000

ASSETS
Non-current assets
Property, plant and equipment                   621,273       641,355
Intangible assets                               176,298       172,866
Long term loan                                   15,931        14,621
Deferred taxation                                 9,278         8,082

                                                822,780       836,924
Current assets
Inventories                                     464,081       489,741
Trade and other receivables                     298,216       311,965
Taxation                                              -           596
Bank balance and cash                               351           196
                                                762,648       802,498

Non-current assets held for sale                        -      41,347
TOTAL ASSETS                                  1,585,428     1,680,769

EQUITY AND LIABILITIES
Capital and reserves
Stated capital                                  450,147       452,597
Reserves                                         31,289        29,705
Retained earnings                               706,216       667,847
Attributable to owners of the parent          1,187,652     1,150,149
Non-controlling interest                         11,211        10,574
Total shareholders' funds                     1,198,863     1,160,723

Non-current liabilities
Interest-bearing borrowings                      23,818        33,147
Deferred taxation                                68,067        55,127
                                                 91,885        88,274

Current liabilities
Trade and other payables                        188,603       250,574
Taxation                                          1,606             -
Bank overdraft                                   85,291       135,130
Current portion of interest-bearing
borrowings                                        19,180       46,068
                                                294,680       431,772

TOTAL EQUITY AND LIABILITIES                   1,585,428    1,680,769

Net asset value per share (cents)                1,302.2      1,252.8


Abridged Consolidated Statement of Cash          Audited         Audited
Flows for the year ended 31 March 2016            2016            2015
 R 000

Cash generated from operations                      102,127         128,699
Finance income                                        1,494           1,529
Finance costs                                       (17,985)        (24,340)
Dividends paid                                      (16,938)        (13,576)
Normal taxation paid                                 (5,769)         (7,514)
Cash flows from operating activities                 62,929          84,798
Cash flows from investing activities                 25,732           1,114
Cash flows from financing activities                (38,667)        (58,711)
Net increase in cash and cash equivalents            49,994          27,201
Cash and cash equivalents at beginning of
year                                              (134,934)       (162,135)
Cash and cash equivalents at end of year           (84,940)       (134,934)

                                                                        Employee
Consolidated Statement of Changes in                                      share
Equity for the year ended                   Stated         Treasury     incentive
31 March 2016                               capital         shares       reserve
                                             R 000           R 000         R 000

Balance at 31 March 2014                      545,643      (94,277)              516
Net treasury movement                               -         1,231                -
Share-based payments                                -             -              330
Transfer of reserve to retained
earnings                                            -             -              (6)
Total comprehensive income                          -             -                -
Dividends - current interim and prior
final                                               -             -                -
Less dividend on treasury shares                    -             -                -
Balance at 31 March 2015                      545,643      (93,046)              840
Net treasury movement                               -             -                -
Share-based payments                                -             -              297
Share buy back                                (2,450)             -                -
Transfer of reserve to retained
earnings                                            -             -             (207)
Total comprehensive income                          -             -                -
Dividends – current interim and prior
final                                               -             -                -
Less dividend on treasury shares                    -             -                -
Balance at 31 March 2016                     543,193      (93,046)               930

                                                          Foreign
Consolidated Statement of Changes in                     currency
Equity for the year ended               Revaluation     translation      Retained
31 March 2016 (continued)                 reserve         reserve        earnings
                                           R 000           R 000           R 000

Balance at 31 March 2014                     39,448        (9,338)         655,323
Net treasury movement                             -              -               -
Share-based payments                              -              -               -
Transfer of reserve to retained
earnings                                          -              -               6
Total comprehensive income                  (2,427)          1,182          26,094
Dividends - current interim and prior
final                                             -              -        (14,474)
Less dividend on treasury shares                  -              -             898
Balance at 31 March 2015                     37,021        (8,156)         667,847
Net treasury movement                             -              -               -
Share-based payments                              -              -               -
Share buy back                                    -              -               -
Transfer of reserve to retained
earnings                                          -              -             207
Total comprehensive income                    (698)          2,192          55,100
Dividends – current interim and prior
final                                             -              -        (17,296)
Less dividend on treasury shares                  -              -             358
Balance at 31 March 2016                     36,323        (5,964)         706,216

Consolidated Statement of Changes      Total
in Equity for the year ended        attributable        Non-               Total
31 March 2016                       to owners of    controlling        shareholders’
(continued)                          the parent       interest             funds
                                       R 000            R 000               R 000

Balance at 31 March 2014                1,137,315          9,769          1,147,084
Net treasury movement                       1,231              -              1,231
Share-based payments                          330              -                330
Transfer of reserve to retained
earnings                                       -               -                  -
Total comprehensive income                24,849             805             25,654
Dividends - current interim and
prior final                              (14,474)              -           (14,474)
Less dividend on treasury shares              898              -                898
Balance at 31 March 2015                1,150,149         10,574          1,160,723
Net treasury movement                           -              -                  -
Share-based payments                          297              -                297
Share buy back                            (2,450)              -            (2,450)
Transfer of reserve to retained
earnings                                       -               -                  -
Total comprehensive income                56,594             637             57,231
 Dividends – current interim and
 prior final                            (17,296)              -             (17,296)
 Less dividend on treasury shares            358              -                 358
 Balance at 31 March 2016              1,187,652         11,211           1,198,863

SEGMENTAL REVIEW
                                                      Steel
                                    Manufacturing    Trading      Automotive
                                        R 000         R 000         R 000
 Business Segments
 for the year ended 31 March 2016
 Revenue
 External sales                         1,015,193      545,981          94,204
 Inter-segment sales                      208,879      242,752          22,471
 Total revenue                          1,224,072      788,733         116,675

 Profit/(loss) before taxation:
 Segment results                           89,185     (16,097)         (3,454)
 Taxation                                       -            -               -
 Profit for the year                            -            -               -

 for the year ended 31 March 2015
 Revenue
 External sales                           954,443      567,710         202,123
 Inter-segment sales                      141,878      358,966          28,088
 Total revenue                          1,096,321      926,676         230,211

 Profit/(loss) before taxation:
 Segment results                           81,406       11,566        (64,879)
 Taxation                                      -           -                -
 Profit for the year                           -           -                -

SEGMENTAL REVIEW (CONTINUED)
                                     Watch List     Properties    Consolidated
                                       R 000           R 000         R 000
 Business Segments
 for the year ended 31 March 2016
 Revenue
 External sales                            50,627          918       1,706,923
 Inter-segment sales                       22,313       27,558
 Total revenue                             72,940       28,476

 Profit/(loss) before taxation:
 Segment results                          (5,381)       10,501          74,754
 Taxation                                       -            -        (19,017)
 Profit for the year                            -            -          55,737

 for the year ended 31 March 2015
 Revenue
 External sales                            65,740        1,147       1,791,163
 Inter-segment sales                       26,792       32,198
 Total revenue                             92,532       33,345

 Profit/(loss) before taxation:
 Segment results                          (4,151)       11,383          35,325
    Taxation                                  -             -           (8,426)
    Profit for the year                       -             -          26,899

                                            South        Rest of the
                                            Africa          world    Consolidated
                                            R 000           R 000       R 000
    Geographical segments
    for the year ended 31 March 2016
    Revenue from external sales             1,604,276        102,647     1,706,923
    Profit before taxation                     57,544         17,210        74,754
    Taxation                                                              (19,017)
    Profit for the year                                                     55,737

    for the year ended 31 March 2015
    Revenue from external sales             1,714,948         76,215     1,791,163
    Profit before taxation                     29,473          5,852        35,325
    Taxation                                                               (8,426)
    Profit for the year                                                     26,899


FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS

Financial assets and financial liabilities measured at fair value in the
statement of financial position are grouped into three levels of a fair
value hierarchy.

The three levels are defined based on the observability of significant
inputs to the measurement, as follows:

-    Level 1: quoted prices (unadjusted) in active markets for identical
     assets or liabilities;
-    Level 2: inputs other than quoted prices included within Level 1 that are
     observable for the asset or liability, either directly or indirectly;
-    Level 3: unobservable inputs for the asset or liability.

The following table sets out the group's assets and liabilities that are
measured and recognised at fair value:

    31 March 2016                            Level 1     Level 2   Level 3    Total
                                              R 000       R 000     R 000     R 000
    Recurring fair value measurements
    Financial liabilities:
    Forward exchange contracts                       -       308         -       308

    Total recurring financial liabilities            -       308         -       308

    31 March 2015                            Level 1     Level 2   Level 3    Total
                                              R 000       R 000     R 000     R 000
    Recurring fair value measurements
    Financial assets:
    Forward exchange contracts                       -     1,285         -     1,285

    Total recurring financial assets                 -     1,285         -     1,285

There have been no transfers between levels 1 and level 2 recurring fair
value measurements during 2015 and 2016.
The group's policy is to recognise transfers into and out of the different
fair value hierarchy levels at the date the event or change in circumstances
that caused the transfer occurred.

MEASUREMENT OF FAIR VALUE OF FINANCIAL INSTRUMENTS
The group’s finance team performs valuations of financial items for
financial reporting purposes, including Level 3 fair values, in consultation
with third party valuation specialists for complex valuations. Valuation
techniques are selected based on the characteristics of each instrument,
with the overall objective of maximising the use of market-based
information. The finance team reports directly to the financial director
(FD) and to the audit and risk committee. Valuation processes and fair value
changes are discussed among the audit and risk committee and the valuation
team at least every year, in line with the Group’s reporting dates. The
valuation techniques used for instruments categorised in Levels 2 and 3 are
described below.

FOREIGN CURRENCY FORWARD CONTRACTS (LEVEL 2)
The group’s foreign currency forward contracts are not traded in active
markets. These have been fair valued using observable forward exchange rates
and interest rates corresponding to the maturity of the contract. The
effects of non-observable inputs are not significant for foreign currency
forward contracts.

FINANCIAL OVERVIEW
Argent managed to successfully navigate through a somewhat interesting South
African economy. The focus on manufactured brands has created the
anticipated platform on which to expand, both locally and internationally.

The strategic restructuring of the group by consolidating its steel trading
division into 2 entities and the reduced exposure to the automotive sector
has had significant benefits and is a major contributor to the growth in
this year’s results.

OPERATIONS REVIEW

MANUFACTURING
This division performed well, given the parameters set by the South African
economy. The Xpanda brand continued its strong performance, which coupled
with the group’s diversification into school furniture, managed to lift the
sector contribution in the 2016 financial year. Both the group’s overseas
operations performed well and are well placed to continue the current trend.

STEEL TRADING
The slump in the steel market, coupled with the sudden drop in steel prices
cost the group an estimated R18 million. Price of steel started at an
average of R7,654 per ton in April 2015. The price gradually reduced from
April through to June settling at a low of R6,442.13 per ton (15.8%
decrease). The prices then started increasing from December 2015, which
happened to coincide with the implementation of import duties. The price
started at R6,537.13 per ton in January 2016 to R6,993.38 per ton in
February (6.98% increase), R7,480.88 per ton in March (6.97% increase) and
finally once again settling in April 2016 at R8,112.13 per ton (8.43%
increase). The average price of steel increased by a total of 24.10% for
January through to April 2016.

The benefit of this will reflect in the group’s 2017 results, however demand
still remains low.
The group is in the process of amalgamating its importing company Specialist
Steel Profiles (“SSP”) into Gammid Trading. The consolidation will save in
the order of R800,000 per year in operating costs and release approximately
R4 million steel stock into the group’s cash flow.

AUTOMOTIVE
The group’s reduced automotive sector is still under pressure from both
margin and order book.

WATCH LIST
Cedar Paint has managed to increase both its margin and its efficiencies.
The current loss for the year of R5.3 million includes a R2 million
allowance for both slow moving stock and discontinued packaging. The group
is in negotiations with an interested party however we will continue to work
on improving margins and market share. The company has managed to produce a
small profit for both April 2016 and May 2016.

PROPERTIES
During the current period, the group sold the Phoenix Steel Mpumalanga
property for R10.5 million, Gammid Cape property for R29.7 million, Gammid
George property for R4.7 million and the Giflo Engineering property for
R17.5 million. The Phoenix Steel Mpumalanga and Gammid George properties
where vacant and resulted in an additional impairment of R1.25 million. The
Gammid Cape property netted a loss of R1.172 million and the Giflo
Engineering property broke even.

OUTLOOK
The outlook for the group remains positive with the increased steel prices
assisting the one sector that is a concern to the group. The manufacturing
entities remain strong and with increased focus on exports being the driver
for this period, we expect to see growth in these businesses. Recent
restructuring in the paint business is seeing results in that the business
has turned to positive in the current 2 months.

The group is actively pursuing new business opportunities to extend the
manufacturing divisions business and is currently in negotiations to
purchase a manufacturer of overhead structural insulated warehouse doors.
The business is situated and operates predominantly in the United Kingdom.

DIVIDEND
The directors have declared and approved a   final gross dividend of 9 cents
per share for the year ended 31 March 2016   from income reserves. Total
ordinary dividends per share in respect of   the financial year to 31 March
2016 therefore amounts to 18 cents (2015 -   17 cents).

The following dates will apply to the abovementioned final dividend:

Last day to trade cum dividend:     Tuesday, 26 July 2016
Trading ex dividend commences:      Wednesday, 27 July 2016
Record date:                        Friday, 29 July 2016
Dividend payment date:              Monday, 1 August 2016

Share certificates may not be dematerialised or re-materialised between
Wednesday, 27 July 2016 and Friday, 29 July 2016, both days inclusive.

In determining the dividends tax (DT) of 15% to withhold in terms of the
Income Tax Act (No 58 of 1962) those shareholders who are not exempt from DT
will therefore receive a dividend of 7.65 cents per share net of DT. The
company has 95 724 800 ordinary shares in issue as at 29 June 2016 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, 1 August
2016.

BASIS OF PREPARATION
The abridged 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), as amended and the Listings Requirements of the JSE
Limited. The accounting policies are consistent with those of the previous
financial statements, except for the adoption of improved, revised or new
standards and interpretations. There is no aggregate effect of these changes
in respect of the year ended 31 March 2016. The abridged 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 material facts or circumstances have occurred between the accounting date
and the date of this report.

GOING CONCERN
Shareholders are advised that the audited results for the year ended 31
March 2016 have been prepared on the going concern concept. 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.

ABRIDGED FINANCIAL STATEMENTS AND NOTICE OF ANNUAL GENERAL MEETING
The abridged financial statements for the financial year ended
31 March 2016, is expected to be posted to shareholders on or about the 29
June 2016 (“the Abridged Financial Statements”). The annual report will be
available on the company’s website, www.argent.co.za on 29 June 2016.

Notice is hereby given that Argent’s Annual General Meeting (AGM) of
shareholders will be held in the company’s boardroom at First floor, Ridge
63, 8 Sinembe Crescent, La Lucia Ridge Office Estate, Umhlanga, on Monday, 5
September 2016 at 10:00 to transact the business as stated in the notice of
AGM circulated together with the condensed financial statements. The date on
which shareholders must be recorded as such in the share register to be
eligible to vote at the AGM is Friday, 26 August 2016, with the last day to
trade being Tuesday, 23 August 2016.



DIRECTORS
Mrs J.A. Etchells resigned on 16 May 2016 and Mr C.D. Angus was appointed as
her replacement.
AUDIT OPINION
The auditors, Grant Thornton (D Nagar as designated auditor), have audited
the group`s financial statements for the year ended 31 March 2016 and their
unqualified audit report is available for inspection at the company`s
registered office.

These abridged results are extracted from that audited information, but are
not in itself audited. The directors therefore take full responsibility for
the preparation of the abridged 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. 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      29 June 2016

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), AF
Litschka, K Mapasa (Independent Non-executive) and T Scharrighuisen (Non-
executive Chairman).

Date: 29/06/2016 10:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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