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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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