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ARGENT INDUSTRIAL LIMITED - Abridged Unaudited Interim Consolidated Results For The Six Months Ended 30 September 2016

Release Date: 17/11/2016 14:00
Code(s): ART     PDF:  
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Abridged Unaudited Interim Consolidated Results For The Six Months Ended 30 September 2016

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")

ABRIDGED UNAUDITED INTERIM CONSOLIDATED RESULTS FOR THE SIX MONTHS
ENDED 30 SEPTEMBER 2016

Financial Highlights

Revenue Up                           10.9%
Headline earnings per share          42.5 cents
Headline earnings per share up       26.8%
Basic earnings per share             42.1 cents
Basic earnings per share up          34.8%
Gearing                               6.8%
Net asset value per share         1 339.2 cents
Interim dividend per share             10 cents

The abridged unaudited financial statements are presented on a consolidated
basis

Consolidated Statement of Profit or        Unaudited         Unaudited     Audited
Loss for the period ended                  six months        six months      year
                                            30 Sept           30 Sept       ended
                                              2016              2015        31 Mar
                                                                             2016
                                              R 000            R 000         R 000

Revenue                                           940,122       847,610   1,706,923
Operating profit before finance costs             60,328         46,645      91,245
Finance income                                       582            626       1,494
Finance costs                                     (7,549)       (10,042)    (17,985)
Profit before taxation                            53,361         37,229      74,754
Taxation                                          (14,514)       (8,465)    (19,017)
Profit for the period                             38,847         28,764      55,737

Attributable to equity holders of the
 - Parent                                         38,224         28,666     55,100
 - Non-controlling interest                          623             98        637
                                                  38,847         28,764     55,737


Basic earnings per share (cents)                    42.1           31.2       60.1
Diluted earnings per share (cents)                  42.1           31.2       60.1
Headline earnings per share (cents)                 42.5           33.5       62.8
Diluted headline earnings per share
(cents)                                             42.5           33.5       62.8
Dividends per share (cents) (1)                      9.0            9.0       18.0

1. Final dividend of 9 cents was paid
on 1 August 2016
Supplementary information
Shares in issue (000)
- at end of period                          90,642         91,608      91,202
- weighted average                          90,815         91,799      91,623
- diluted weighted average                  90,815         91,799      91,623
Cost of sales (R 000)                      727,978        658,804   1,320,083
Depreciation and amortisation (R 000)       16,053         15,582      31,476

Calculation of headline earnings (R
000)
Earnings attributable to ordinary
shareholders                                38,224         28,666      55,100
Loss on disposal of property, plant
and equipment                                  491          1,147       1,635
Impairment of property, plant and
equipment                                        -          1,250       1,250
Total tax effects of adjustments              (137)          (321)       (458)
Headline earnings attributable to
ordinary shareholders                       38,578         30,742      57,527


Consolidated Statement of Other         Unaudited      Unaudited      Audited
Comprehensive Income                    six months     six months       year
for the period ended                     30 Sept        30 Sept        ended
                                           2016           2015         31 Mar
                                                                        2016
                                           R 000          R 000         R 000

Profit for the period                       38,847         28,764      55,737

Other comprehensive income for the
period
Items that may be reclassified
subsequently to profit and loss
Exchange differences on translating
foreign operations                          (1,591)         1,918       2,192

Items that will not be reclassified
subsequently to profit and loss
Change in tax rate on revaluation
reserve                                            -              -      (698)

Total other comprehensive income for
the period                                  37,256         30,682      57,231
Attributable to equity holders of the
 - Parent                                   36,633         30,584      56,594
 - Non-controlling interest                    623             98         637
                                            37,256         30,682      57,231

Consolidated Statement of Financial    Unaudited     Unaudited   Audited
Position for the period ended             at            at          at
                                        30 Sept       30 Sept     31 Mar
                                         2016          2015        2016
                                         R 000         R 000      R 000

ASSETS
Property, plant and equipment            635,858       637,267   621,273
Intangible assets (2)                    214,891       172,866   176,298
Long term loan                            16,411        15,242    15,931
Deferred taxation                              -             -     9,278

Non-current assets                       867,160       825,375   822,780

Inventories                              528,860       481,148   464,081
Trade and other receivables              309,780       276,565   298,216
Taxation                                       -           448         -
Bank balance and cash                        371           340       351
Current assets                           839,011       758,501   762,648

Non-current assets held for sale                 -       4,750         -

TOTAL ASSETS                           1,706,171     1,588,626 1,585,428


EQUITY AND LIABILITIES
Capital and reserves
Stated capital                           447,872       451,717   450,147
Reserves                                  29,847        31,637    31,289
Retained earnings                        736,183       696,513   706,216
Attributable to owners of the parent   1,213,902     1,179,867 1,187,652
Non-controlling interest                  11,834        10,672    11,211
Total shareholders' funds              1,225,736     1,190,539 1,198,863

Interest-bearing borrowings               48,807        11,828    23,818
Deferred tax                              66,381        52,767    68,067
Non-current liabilities                  115,188        64,595    91,885

Trade and other payables                 243,319       199,625   188,603
Taxation                                   3,281             -     1,606
Bank overdraft                            84,229        87,279    85,291
Current portion of interest-bearing
borrowings                                34,418        46,588    19,180
Current liabilities                      365,247       333,492   294,680

TOTAL EQUITY AND LIABILITIES           1,706,171     1,588,626 1,585,428

Net asset value per share (cents)        1,339.2       1,288.0   1,302.2
2. The group acquired the entire issued share capital of OSA Door Parts
Limited ("OSA") from Ensor Holding PLC for a purchase consideration of GBP 2
500 000 cash on 11 July 2016. The acquisition was to expand the group's
manufacturing brand division. The goodwill arising on the acquisition of
this business is attributable to the anticipated profitability of this
business.

The fair value of assets and liabilities assumed were as follows:

                                                                        R 000
Property, plant and equipment                                               932
Inventory                                                                 8,344
Trade and other receivables                                              15,498
Bank balance and cash                                                     5,813
Trade and other payables                                                (19,063)
Deferred taxation asset                                                      54
Goodwill/other intangible assets                                         38,908
Total purchase price and acquisition costs                               50,486
Deduct bank balance on acquisition                                       (5,813)
Cash flow on acquisition net of cash acquired                            44,673

Revenue since acquisition date included in consolidated
results for period                                                       21,347
Profit after tax (excluding foreign exchange adjustment)
since acquisition date included in consolidated results for
period                                                                    2,112
Group revenue had the business combination been included for
the entire period                                                       964,004
Group profit after tax (excluding foreign exchange
adjustment) had the business combination been included for
the entire period                                                        42,300


Abridged Consolidated Statement of                                      Audited
Cash Flows for the period ended          Unaudited        Unaudited
                                                                          year
                                         six months       six months
                                                                         ended
                                          30 Sept          30 Sept
                                                                         31 Mar
                                            2016             2015
                                                                          2016
                                             R 000          R 000         R 000

Cash generated from operations                  59,819        57,475     102,127
Finance income                                    582            626       1,494
Finance costs                                   (7,549)      (10,042)    (17,985)
Dividends paid                                  (8,257)             -    (16,938)
Normal taxation paid                            (5,021)       (2,398)     (5,769)
Cash flows from operating activities            39,574        45,661      62,929
Cash flows from investing activities         (76,444)         24,012      25,732
Cash flows from financing activities            37,952       (21,679)    (38,667)
Net increase in cash and cash
                                                1,082         47,994      49,994
equivalents
Cash and cash equivalents at beginning
                                            (84,940)      (134,934) (134,934)
of period
Cash and cash equivalents at end of
                                            (83,858)       (86,940)      (84,940)
period


Consolidated Statement of Changes in      Stated         Treasury       Employee
Equity for the period ended               capital         shares          share
30 September 2016                                                       incentive
                                                                         reserve
                                            R 000          R 000          R 000
Balance at 30 September 2015 -
unaudited                                   544,763        (93,046)          854
Share-based payments                              -              -           283
Share buy back                               (1,570)             -             -
Transfer of reserve to retained
earnings                                            -            -       (207)
Total comprehensive income for the
period                                              -            -             -
Dividends                                           -            -             -
Less dividend on treasury shares                    -            -             -
Balance at 31 March 2016                    543,193        (93,046)          930
Share-based payments                              -              -           149
Share buy back                               (2,275)             -             -
Total comprehensive income for the
period                                              -            -             -
Dividends                                           -            -             -
Less dividend on treasury shares                    -            -             -
Balance at 30 September 2016                540,918        (93,046)        1,079


Consolidated Statement of Changes in     Revaluation      Foreign       Retained
Equity for the period ended                reserve       currency       earnings
30 September 2016                                       translation
(continued)                                               reserve
                                            R 000          R 000          R 000
Balance at 30 September 2015 -
unaudited                                    37,021         (6,238)      696,513
Share-based payments                              -              -             -
Share buy back                                    -              -             -
Transfer of reserve to retained
earnings                                            -            -           207
Total comprehensive income for the
period                                         (698)           274        26,434
Dividends                                         -              -       (17,296)
Less dividend on treasury shares                    -            -           358
Balance at 31 March 2016                     36,323         (5,964)      706,216
Share-based payments                              -              -             -
Share buy back                                    -              -             -
Total comprehensive income for the
period                                              -       (1,591)       38,224
Dividends                                            -           -        (8,615)
Less dividend on treasury shares                     -           -           358
Balance at 30 September 2016                    36,323       (7,555)     736,183


Consolidated Statement of Changes       Total         Non-        Total
in Equity for the period ended       attributable controlling shareholders’
30 September 2016                    to owners of  interest       funds
(continued)                           the parent
                                        R 000            R 000             R 000
Balance at 30 September 2015 –
unaudited                              1,179,867          10,672           1,190,539
Share-based payments                         283               -                 283
Share buy back                            (1,570)              -              (1,570)
Transfer of reserve to retained
earnings                                         -             -                   -
Total comprehensive income for the
period                                    26,010             539              26,549
Dividends                                (17,296)              -             (17,296)
Less dividend on treasury shares             358               -                 358
Balance at 31 March 2016               1,187,652          11,211           1,198,863
Share-based payments                         149               -                 149
Share buy back                            (2,275)              -              (2,275)
Total comprehensive income for the
period                                    36,633             623              37,256
Dividends                                 (8,615)              -              (8,615)
Less dividend on treasury shares             358               -                 358
Balance at 30 September 2016           1,213,902          11,834           1,225,736

Segmental Review

                                     Manufacturing    Steel           Automotive
                                                     trading
                                        R 000            R 000             R 000
Business segments
for the six months ended
30 September 2016 - unaudited
Revenue from external sales               512,549        325,050             56,152
Profit / (loss) before taxation            39,917         11,342             (5,422)
Taxation
Profit for the period

Other information
  Net assets                              739,944        299,697             47,181
  Capital expenditure                      15,383          2,796              1,847
  Depreciation / amortisation               9,667          3,559              1,719
  Finance costs *                          (3,288)         4,284                750
  Finance income                              510              -                 72

* 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 2015 - unaudited
Revenue from external sales              504,448     269,412          48,579
Profit / (loss) before taxation           51,938     (15,924)           (977)
Taxation
Profit for the period

Other information
  Net assets                             689,430     279,347          45,877
  Capital expenditure                      9,637       1,345           3,831
  Depreciation / amortisation              9,746       3,508           1,805
  Finance costs *                         (2,867)      4,800           1,171
  Finance income                             626           -               -

for the year ended 31 March 2016 -
audited
Revenue from external sales            1,015,193     545,981          94,204
Profit / (loss) before taxation           89,185     (16,097)         (3,454)
Taxation
Profit for the year

Other information
  Net assets                             685,207     282,268          54,209
  Capital expenditure                     25,732       3,205           4,555
  Depreciation / amortisation             20,377       6,369           3,607
  Finance costs *                         (1,336)      5,808           2,038
  Finance income                           1,494           -               -


Segmental Review (continued)

                                     Watch list    Properties   Consolidated
                                       R 000         R 000         R 000
Business segments
for the six months ended
30 September 2016 - unaudited
Revenue from external sales              45,820          551         940,122
Profit / (loss) before taxation            (185)       7,709          53,361
Taxation                                                             (14,514)
Profit for the period                                                 38,847

Other information
  Net assets                             20,535      184,760       1,292,117
  Capital expenditure                     4,705        8,973          33,704
  Depreciation / amortisation               972          136          16,053
  Finance costs *                           469        5,334           7,549
  Finance income                              -            -             582

* 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 2015 - unaudited
Revenue from external sales                24,725         446        847,610
Profit / (loss) before taxation            (2,371)      4,563         37,229
Taxation                                                              (8,465)
Profit for the period                                                 28,764

Other information
  Net assets                               22,785      205,419     1,242,858
  Capital expenditure                         275        1,810        16,898
  Depreciation / amortisation                 523            -        15,582
  Finance costs *                             219        6,719        10,042
  Finance income                                -            -           626

for the year ended 31 March 2016 -
audited
Revenue from external sales                50,627          918     1,706,923
Profit / (loss) before taxation            (5,381)      10,501        74,754
Taxation                                                             (19,017)
Profit for the year                                                   55,737

Other information
  Net assets                               19,772      216,196     1,257,652
  Capital expenditure                         332        9,375        43,199
  Depreciation / amortisation               1,018          105        31,476
  Finance costs *                             442       11,033        17,985
  Finance income                                -            -         1,494

                                     South Africa    Rest of the Consolidated
                                                        world
                                        R 000          R 000        R 000
Geographical segments
for the six months ended
30 September 2016 - unaudited
Revenue from external sales               856,316        83,806       940,122
Profit before taxation                     42,462        10,899        53,361
Taxation                                                              (14,514)
Profit for the period                                                  38,847

Other information
  Net assets                            1,210,874        81,243     1,292,117
  Capital expenditure                      31,714         1,990        33,704
  Depreciation / amortisation              14,933         1,120        16,053
  Finance costs                             7,577           (28)        7,549
  Finance income                              582             -           582

for the six months ended 30
September 2015 - unaudited
Revenue from external sales               789,655        57,955       847,610
Profit before taxation                     16,919        20,310        37,229
Taxation                                                               (8,465)
Profit for the period                                                  28,764

Other information
  Net assets                            1,177,801        65,057     1,242,858
  Capital expenditure                      16,231           667        16,898
  Depreciation / amortisation              14,288         1,294        15,582
  Finance costs                            10,028          14        10,042
  Finance income                              626           -           626

for the year ended 31 March 2016 -
audited
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

Other information
  Net assets                            1,191,614      66,038     1,257,652
  Capital expenditure                      38,513       4,686        43,199
  Depreciation / amortisation              27,292       4,184        31,476
  Finance costs                            18,033         (48)       17,985
  Finance income                            1,494           -         1,494


Financial Overview
Argent Industrial Limited has had a successful six months despite a
difficult South African economy. The group continues to focus on its brands
both locally and internationally.

Operations Review
Manufacturing
The division relative to the South African economy performed well and has
been enhanced by the group’s acquisition of OSA Door Parts Limited (“OSA”).
OSA is a manufacturer and trade supplier of industrial sectional insulated
warehouse doors. The business is situated and predominantly operates in the
United Kingdom. The group incurred foreign exchange losses of R3.2 million
due to the drop in the exchange rate as at 30 September 2016. This is
expected to reverse in the next six months.

Steel Trading
All five of the group’s steel operations traded positively. The focus is to
further decrease the operating costs to improve the return. The group has
amalgamated its importing company, Specialist Steel Profiles into Gammid
Kzn. This will reduce this sections operating costs by R800 000 a year.

Automotive
The automotive sector was a total disappointment. The loss of R5,4 million
was attributable to inconsistent take off’s, project start up delays and
insufficient margins. To counter this, we have effective 1 October 2016,
received increases from our customers totalling R620 000 per month. There is
one additional price increase which has not as of yet, been finalised.

In addition to the price increases passed onto the customer, Sentech
Industries has also been investigating and implementing cost saving measures
and has actively been working on improving the efficiencies of the
manufacturing plant and processes.

Watch List
Cedar Paint through a combination of cost cutting and margin enhancing
exercises, has managed to almost breakeven. We still have buyers that have
expressed interest in the operation however no one has come forward with an
offer. We expect Cedar Paint to be profitable over the next six months.
Properties
There are no changes or expected changes in this division.

Outlook
The outlook remains positive. The group will continue to focus on its
exports and manufacturing operations whilst limiting its exposure to the
steel trading operations and correcting the automotive sector.

The group will continue repurchasing its own shares and have repurchased
560 227 shares in the period under review.

Basis of Presentation
The abridged unaudited and unreviewed interim 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 Standards 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 annual financial statements, 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 abridged unaudited and unreviewed interim 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.

Changes to the Board
Mr Patrick Day resigned as non-executive director of the company with effect
from 24 August 2016 and Mr. Panagiotis Christofides replaced him with
immediate effect.

Discontinuation of Dividend Payments by Cheque
In terms of the company’s Memorandum of Incorporation, the company secretary
was given the authority by the board to, where possible, arrange for payment
of dividends by means of electronic fund transfers (EFT) only. The company
has been experiencing an increase in cheque fraud pertaining to, specifically,
dividend cheque payments to certificated shareholders.       Fraud negatively
impacts the company and all shareholders.

With reference to the above and correspondence to certificated shareholders
dated 6 June 2013 and 1 August 2016 regarding the discontinuation of
dividend payments by cheque, you are advised that no more payments will be
made by cheque.

Dividend
Subsequent to 30 September 2016, an interim gross dividend of 10 cents per
share was approved and declared by the Board of Directors for the six month
period ending 30 September 2016 from income reserves.

The following dates will apply to the abovementioned interim dividend:
Last day to trade cum dividend:    Monday, 20 March 2017
Trading ex-dividend commences:     Wednesday, 22 March 2017
Record date:                       Friday, 24 March 2017
Dividend payment date:             Monday, 27 March 2017
Share certificates may not be dematerialised or rematerialised between
Wednesday, 22 March 2017, and Friday, 24 March 2017, both days inclusive.

In determining the dividends tax (DT) of 15% to withhold in   terms of the
Income Tax Act (Act No. 58 of 1962), those shareholders who   are not exempt
from the DT will therefore receive a dividend of 8.50 cents   per share net of
DT. The company has 95 324 800 ordinary shares in issue and   its income tax
reference number is 9096/002/71/3.

Ordinary shareholders who hold dematerialised shares will have their
accounts at their CSDP or broker credited/updated on Monday, 27 March 2017.

___________________________________________________________________________

On behalf of the board

TR Hendry CA (SA)         Umhlanga Rocks
Chief Executive Officer   17 November 2016

Registered Office:        First floor
                          Ridge 63
                          8 Sinembe Crescent
                          La Lucia Ridge Office Estate
                          4019
                          Tel: +27 (0) 31 791 0061
Auditors:                 Grant Thornton (A Timol as designated auditor)
Sponsors:                 PSG Capital (Pty) Ltd
                          First floor, Building 8
                          Inanda Greens Business Park
                          54 Wierda Road West
                          Sandton
                          2196
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),PA Christofides(Independent
Non-executive), Ms SJ Cox (Financial Director),TR Hendry (Chief Executive
Officer),AF Litschka,K Mapasa (Independent Non-executive),
T Scharrighuisen(Non-executive Chairman)

Date: 17/11/2016 02:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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