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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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