Wrap Text
Abridged Unaudited Interim Consolidated Results for the six months ended 30 September 2018
Argent Industrial Limited
Registration number 1993/002054/06
(Incorporated in the Republic of South Africa)
Share code: ART ISIN code: ZAE000019188
(‘Argent’ or ‘the Group’ or ‘the Company’)
ABRIDGED UNAUDITED INTERIM CONSOLIDATED RESULTS FOR THE SIX MONTHS
ENDED 30 SEPTEMBER 2018
Financial Highlights
Headline earnings per share 50.4 cents
Gearing 3%
Net asset value per share 1 197.3 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 ended
30 Sept 30 Sept 31 Mar
2018 2017 2018
R 000 R 000 R 000
Revenue 858,817 940,819 1,828,407
Operating profit /(loss)before
finance costs 61,027 (246,068) (192,069)
Finance income 717 586 1,872
Finance costs (3,683) (7,245) (13,050)
Profit / (loss) before taxation 58,061 (252,727) (203,247)
Taxation (14,714) (10,952) 20,657
Profit / (loss) for the period 43,347 (263,679) (182,590)
Attributable to equity holders of the
- Parent 41,795 (264,283) (184,192)
- Non-controlling interest 1,552 604 1,602
43,347 (263,679) (182,590)
Basic earnings / (loss) per share
(cents) 49.9 (292.3) (205.2)
Diluted earnings / (loss) per share
(cents) 49.9 (292.3) (205.2)
Headline earnings per share (cents) 50.4 31.5 76.8
Diluted headline earnings per share
(cents) 50.4 31.5 76.8
Dividends per share (cents) (1) 10.0 11.0 21.0
1. Final dividend of 10 cents was
paid on 31 July 2018
Supplementary information
Shares in issue (000)
- at end of period 83,581 90,240 84,005
- weighted average 83,755 90,424 89,784
- diluted weighted average 83,755 90,424 89,784
Cost of sales (R 000) 655,015 738,102 1,424,962
Depreciation and amortisation (R 000) 11,942 15,049 25,066
Calculation of headline earnings
(R 000)
Earnings / (loss) attributable to
ordinary shareholders 41,795 (264,283) (184,192)
Loss on disposal of property, plant
and equipment 624 1,275 69,602
Impairment of property, plant and
equipment - 161,448 72,674
Impairment of intangible assets - 130,395 130,395
Total tax effects of adjustments (175) (357) (19,489)
Headline earnings attributable to
ordinary shareholders 42,244 28,478 68,990
Consolidated Statement of other Unaudited Unaudited Audited
Comprehensive Income or Loss for the six months six months year ended
period ended 30 Sept 30 Sept 31 Mar
2018 2017 2018
R 000 R 000 R 000
Profit / (loss) for the period 43,347 (263,679) (182,590)
Other comprehensive income for the
period
Items that may be reclassified
subsequently to profit and loss
Exchange differences on translating
foreign operations 7,149 1,399 (4,630)
Items that will not be reclassified
subsequently to profit and loss
Revaluation of land and buildings - - (39,903)
Tax effect of above transactions - - 11,648
Total other comprehensive income /
(loss) for the period 50,496 (262,280) (215,475)
Attributable to equity holders of the
- Parent 48,944 (262,884) (217,077)
- Non-controlling interest 1,552 604 1,602
50,496 (262,280) (215,475)
Consolidated Statement of Financial Unaudited Unaudited Audited
Position for the period ended At At at
30 Sept 30 Sept 31 Mar
2018 2017 2018
R 000 R 000 R 000
ASSETS
Property, plant and equipment 457,830 487,779 417,589
Intangible assets (2) 127,826 83,241 82,835
Long-term receivables 26,036 15,181 29,123
Deferred taxation - - 9,532
Non-current assets 611,692 586,201 539,079
Inventories 388,230 447,539 374,130
Trade and other receivables 302,741 298,962 318,263
Taxation - - 14
Bank balance and cash 44,479 61,368 87,918
Current assets 735,450 807,869 780,325
Non-current assets held for sale 23,288 - 23,288
TOTAL ASSETS 1,370,430 1,394,070 1,342,692
EQUITY AND LIABILITIES
Capital and reserves
Stated capital 420,120 446,033 421,789
Reserves 5,460 25,591 (1,839)
Retained earnings 575,119 476,566 541,795
Attributable to owners of the parent 1,000,699 948,190 961,745
Non-controlling interest 18,334 15,784 16,782
Total shareholders' funds 1,019,033 963,974 978,527
Interest-bearing borrowings 6,423 27,263 12,322
Long-term loans 1,663 - 1,659
Deferred tax 46,329 82,914 43,364
Non-current liabilities 54,415 110,177 57,345
Trade and other payables 223,588 204,226 194,606
Taxation 4,908 3,040 -
Bank overdraft 44,811 80,648 81,063
Current portion of interest-bearing
borrowings 23,675 32,005 31,151
Current liabilities 296,982 319,919 306,820
TOTAL EQUITY AND LIABILITIES 1,370,430 1,394,070 1,342,692
Net asset value per share (cents) 1,197.3 1,050.7 1,144.9
2. The group acquired the entire issued share capital of Fuel Proof Limited
("Fuel Proof") and Roll-Tec Safety Limited ("Roll-Tec") for a purchase
consideration of GBP 4 600 000 cash on 28 June 2018. The acquisition was to
grow its portfolio of companies and to expand internationally into the
United Kingdom.
The goodwill arising on acquisition is attributable to the anticipated
profitability of these businesses.
The fair value of assets and liabilities assumed were as follows:
Fuel
Roll-Tec Total
Proof
R 000 R 000 R 000
Property, plant and equipment 24,929 22,510 47,439
Inventory 24,199 - 24,199
Trade and other receivables 7,617 364 7,981
Bank balance and cash 10,965 101 11,066
Trade and other payables (9,937) (26,117) (36,054)
Deferred taxation liability (2,178) (2,094) (4,272)
Interest-bearing borrowings - (1,860) (1,860)
Goodwill / other intangible assets 30,282 13,437 43,719
Total purchase price and acquisition
costs 85,877 6,341 92,218
Deduct bank balance on acquisition (10,965) (101) (11,066)
Cash flow on acquisition net of cash
acquired 74,912 6,240 81,152
R 000
Revenue since acquisition date included in consolidated
results for period 42,820
Profit after tax (excluding foreign exchange adjustment) since
acquisition date included in consolidated results for period 3,281
Group revenue had the business combination been included for
the entire period 897,560
Group profit after tax (excluding foreign exchange adjustment)
had the business combination been included for the entire
period 47,209
Abridged Consolidated Statement of Unaudited Unaudited Audited
Cash Flows for the period ended six months six months year ended
30 Sept 30 Sept 31 Mar
2018 2017 2018
R 000 R 000 R 000
Cash generated from operations 113,880 113,758 198,836
Finance income 717 586 1,872
Finance costs (3,683) (7,245) (13,050)
Dividends paid (8,471) (10,074) (18,588)
Normal taxation paid (1,636) (3,185) (11,818)
Cash flows from operating activities 100,807 93,840 157,252
Cash flows from investing activities (91,094) (33,448) (32,345)
Cash flows from financing activities (16,900) (11,543) (49,923)
Net (decrease) / increase in cash and
cash equivalents (7,187) 48,849 74,984
Cash and cash equivalents at
beginning of period 6,855 (68,129) (68,129)
Cash and cash equivalents at end of
period (332) (19,280) 6,855
Consolidated Statement of Changes in Stated Treasury Employee
Equity for the period ended capital shares share
30 September 2018 incentive
reserve
R 000 R 000 R 000
Balance at 30 September 2017 –
unaudited 539,079 (93,046) 1,316
Share-based payments - - 506
Share buy-back (24,244) - -
Transfer of reserve to retained
earnings - - (1,382)
Total comprehensive income for the
period - - -
Dividends - - -
Less dividend on treasury shares - - -
Balance at 31 March 2018 514,835 (93,046) 440
Share-based payments - - 150
Share buy-back (1,669) - -
Total comprehensive income for the
period - - -
Dividends - - -
Less dividend on treasury shares - - -
Balance at 30 September 2018 513,166 (93,046) 590
Consolidated Statement of Changes in Revaluation Foreign Retained
Equity for the period ended reserve currency earnings
30 September 2018 translation
(continued) reserve
R 000 R 000 R 000
Balance at 30 September 2017 –
unaudited 36,323 (12,048) 476,566
Share-based payments - - -
Share buy-back - - -
Transfer of reserve to retained
earnings - 7,730 (6,348)
Total comprehensive income for the
period (28,255) (6,029) 80,091
Dividends - - (8,889)
Less dividend on treasury shares - - 375
Balance at 31 March 2018 8,068 (10,347) 541,795
Share-based payments - - -
Share buy-back - - -
Total comprehensive income for the
period - 7,149 41,795
Dividends - - (8,846)
Less dividend on treasury shares - - 375
Balance at 30 September 2018 8,068 (3,198) 575,119
Consolidated Statement of Changes Total Non- Total
in Equity for the period ended attributable controlling shareholders’
30 September 2018 to owners of interest funds
(continued) the parent
R 000 R 000 R 000
Balance at 30 September 2017 –
unaudited 948,190 15,784 963,974
Share-based payments 506 - 506
Share buy-back (24,244) - (24,244)
Transfer of reserve to retained
earnings - - -
Total comprehensive income for
the period 45,807 998 46,805
Dividends (8,889) - (8,889)
Less dividend on treasury shares 375 - 375
Balance at 31 March 2018 961,745 16,782 978,527
Share-based payments 150 - 150
Share buy-back (1,669) - (1,669)
Total comprehensive income for
the period 48,944 1,552 50,496
Dividends (8,846) - (8,846)
Less dividend on treasury shares 375 - 375
Balance at 30 September 2018 1,000,699 18,334 1,019,033
Segmental review Manufacturing Steel Properties Consolidated
trading
R 000 R 000 R 000 R 000
Business segments
for the six months
ended 30 September 2018
- unaudited
Revenue from external
sales 598,587 259,219 1,011 858,817
Profit before taxation 44,478 8,513 5,070 58,061
Taxation (14,714)
Profit for the period 43,347
Other information
Net assets 679,457 239,859 146,046 1,065,362
Capital expenditure 12,034 808 2,362 15,204
Depreciation /
amortisation 10,641 1,284 17 11,942
Finance costs * (1,694) (354) 5,731 3,683
Finance income 353 364 - 717
* 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.
Segmental review Manufacturing Steel Properties Consolidated
(continued) trading
R 000 R 000 R 000 R 000
Business segments
for the six months
ended 30 September 2017
- unaudited
Revenue from external
sales 623,543 316,810 466 940,819
Loss before taxation (172,592) (44,177) (35,958) (252,727)
Taxation (10,952)
Loss for the period (263,679)
Other information
Loss before taxation
per above (172,592) (44,177) (35,958) (252,727)
Impairment of
intangibles 127,842 2,553 - 130,395
Impairment of
property, plant and
equipment 68,049 48,630 44,769 161,448
Profit before
taxation and
impairments 23,299 7,006 8,811 39,116
Net assets 659,014 230,409 157,465 1,046,888
Capital expenditure 31,596 2,827 4,618 39,041
Depreciation /
amortisation 10,718 4,314 17 15,049
Finance costs * (2,616) 3,745 6,116 7,245
Finance income 586 - - 586
Segmental review Manufacturing Steel Properties Consolidated
(continued) trading
R 000 R 000 R 000 R 000
Business segments
for the six months
ended 31 March 2018 -
audited
Revenue from external
sales 1,251,892 575,816 699 1,828,407
Loss before taxation (148,311) (40,795) (14,141) (203,247)
Taxation 20,657
Loss for the year (182,590)
Other information
Loss before taxation
per above (148,311) (40,795) (14,141) (203,247)
Impairment of
intangibles 127,842 2,553 - 130,395
Impairment of
property, plant and
equipment 68,049 48,630 27,687 144,366
Profit before
taxation and
impairments 47,580 10,388 13,546 71,514
Net assets 613,597 257,742 141,020 1,012,359
Capital expenditure 50,174 3,057 24,410 77,641
Depreciation /
amortisation 20,462 4,571 33 25,066
Finance costs * (2,847) 3,482 12,415 13,050
Finance income 1,615 257 - 1,872
Segmental review South Africa Rest of the Consolidated
(continued) world
R 000 R 000 R 000
Geographical segments
for the six months ended
30 September 2018 - unaudited
Revenue from external sales 720,182 138,635 858,817
Profit before taxation 27,464 30,597 58,061
Taxation (14,714)
Profit for the period 43,347
Other information
Net assets 918,539 146,823 1,065,362
Capital expenditure 12,002 3,202 15,204
Depreciation / amortisation 9,098 2,844 11,942
Finance costs 3,859 (176) 3,683
Finance income 717 - 717
for the six months ended 30
September 2017 - unaudited
Revenue from external sales 846,247 94,572 940,819
(Loss) / profit before taxation (274,476) 21,749 (252,727)
Taxation (10,952)
Loss for the period (263,679)
Other information
Net assets 940,585 106,303 1,046,888
Capital expenditure 37,428 1,613 39,041
Depreciation / amortisation 14,066 983 15,049
Finance costs 7,288 (43) 7,245
Finance income 586 - 586
for the year ended 31 March 2018 –
audited
Revenue from external sales 1,647,685 180,722 1,828,407
(Loss) / profit before taxation (230,507) 27,260 (203,247)
Taxation 20,657
Loss for the year (182,590)
Other information
Net assets 893,299 119,060 1,012,359
Capital expenditure 72,460 5,181 77,641
Depreciation / amortisation 23,005 2,061 25,066
Finance costs 13,238 (188) 13,050
Finance income 1,872 - 1,872
Financial Overview
Argent Industrial Limited has had a successful six months despite a
difficult South African economy. The group achieved its objectives in that
it stabilised its local operations, grew its off-shore investments and
continued with its share buy-back programme.
Operations Review
Manufacturing
The division relative to the South African economy performed well and has
been enhanced by the group’s acquisition on 28 June 2018 of Fuel Proof
Limited (“Fuel Proof”) and Roll-Tec Safety Limited (“Roll-Tec”), based in
the United Kingdom. Fuel Proof is a manufacturer and trade supplier of
mobile and static bunded fuel storage and dispensing systems. Roll-Tec is a
specialist manufacturer of roll-over protection bars for construction
machinery as well as being the rental agent for Fuel Proof, renting out its
products into the European market.
The purchase consideration was an amount of GBP 4 600 000. This is based on
a maintainable before tax income of GBP 960 000 per annum. In terms of the
transaction agreement, the purchase consideration will be recalculated
twenty-four months after the effective date in that it will either reduce to
a minimum of GBP 4 080 000 or increase to a maximum of the
GBP 6 000 000.
The group has entered into a sale agreement for the sale of Parlance
Investments and the property situated at 107 Kotzenberg Street, Rosslyn,
Pretoria for an amount of R 2 million for the powder coating business and
R 7 million for the property. The transaction has a number of
conditions / hurdles, which allows the buyer to either withdraw or close the
deal by 31 March 2019.
Steel Trading
The groups two mild steel operations showed an improved R 7.9 million before
tax. The two aluminium and stainless-steel operations were just above break
even. Both divisions have showed signs of improvement in October and
November 2018. This is definitely an area that the group can improve on.
Properties
The group has the following properties for sale:
15 Vulcan Street, Klerksdorp Industrial, Klerksdorp - partially empty
property;
127-131 Terrace Road, Sebenza, Edenvale - empty property;
14-22 Wiltshire Road, Marian Industrial Estate, Pinetown - sale and lease
back;
13 Jack Pienaar Road, Germiston - sale and lease back;
9 Sprite Place, Pinetown - sale and lease back;
10 Aberdeen Road, Roodekop, Germiston - sale and lease back;
11 Barnsley Street, Benoni South, Benoni - sale and lease back; and
91 Concordia Road, Silverton, Pretoria - awaiting transfer.
The group is expecting to receive in the order of R 215 million for the
above properties of which R 24 million is awaiting transfer and R26,5
million is awaiting buyer bond approval.
The group will retain its two properties utilised by Megamix, based in Cape
Town and its property in Kansas City, utilised by New Joules Engineering
North America as well as the property that is occupied by Jetmaster
Johannesburg.
Share buy-back programme
Argent repurchased and cancelled 424 608 shares in the period under review
and will be repurchasing an additional R34 million worth of shares over the
next 3 months.
Outlook
The outlook remains positive. The group anticipates that even though
consumers are pressured, there is emerging confidence. Argent is also
encouraged by recent political changes in South Africa and believes that the
country is on the cusp of a much-needed confidence boost.
The year has started off in a much more positive vein with consumer and
business confidence increasing. There are signs of improvement in certain
sectors in which we operate and particularly mining and manufacturing are
benefiting from strengthening commodity prices.
Our businesses are sized optimally for current market conditions, both
locally and internationally and will now focus on balancing its returns on
investment, share price and net asset value in order to achieve shareholder
value and returns.
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.
Going concern
Shareholders are advised that the abridged unaudited results for the six-
month period ended 30 September 2018 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.
Dividend
No dividends were declared by the Board of Directors for the six-month
period ending 30 September 2018. Excess funds will be utilised for the share
buy-back programme.
On behalf of the board
TR Hendry CA (SA) Umhlanga Rocks
Chief Executive Officer 8 November 2018
Registered Office: First floor
Ridge 63
8 Sinembe Crescent
La Lucia Ridge Office Estate
4019
Tel: +27 (0) 31 791 0061
Auditors: SNG Grant Thornton (EY Lakhi as designated
auditor)
Sponsors: PSG Capital
Second floor, Building 3
11 Alice Lane
Sandhurst
Sandton
2196
Transfer Secretaries: Link Market Services South Africa
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,T Scharrighuisen(Non-executive Chairman)
Umhlanga
8 November 2018
Sponsor
PSG Capital
Date: 08/11/2018 12:25:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
