| Wed 27 Jun 2007, 11:30 | | ART - Argent - Audited results for the year ended |
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ART
ART
ART - Argent - Audited results for the year ended 31 March 2007
Argent Industrial Limited
Reg no 1993/002054/06
(Incorporated in the Republic of South Africa)
("The Group" or "The Company")
Share code: ART & ISIN code: ZAE000019188
AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 2007
Financial Highlights
REVENUE UP 29.6%
ATTRIBUTABLE EARNINGS UP 46.0%
ATTRIBUTABLE EARNINGS per share UP 35.3%
HEADLINE EARNINGS UP 30.7%
HEADLINE EARNINGS per share UP 21.2%
GEARING 27.1%
Abridged Consolidated Audited Audited
Income Statement year ended year ended
for the year ended 31 March 2007 31 Mar 2007 31 Mar 2006
R 000
Revenue 1,296,312 1,000,002
--------------------------
Operating profit before financing costs 243,386 162,486
Financing costs 25,929 17,608
--------------------------
Profit before taxation 217,457 144,878
Taxation 60,236 37,186
--------------------------
Earnings attributable to ordinary shareholders 157,221 107,692
--------------------------
Attributable earnings per share (cents) 199.4 147.4
Headline earnings per share (cents) 179.1 147.8
Dividends per share (cents) 29.0 25.0
Supplementary information
Shares in issue (000)
- at end of period 80,462 80,462
- weighted average 78,844 73,074
Interest received (R 000) 15,150 7,542
Cost of sales (R 000) 718,270 572,525
Depreciation (R 000) 18,835 13,634
Net profit (loss) on foreign exchange
transactions (R 000) 4,383 (446)
Calculation of headline earnings (R 000)
Earnings attributable to ordinary shareholders 157,221 107,692
Profit on disposal of property, plant and equipment (1,500) (137)
Profit on disposal of minority share in subsidiary (18,950) -
Loss on disposal of property, plant and equipment 396 461
Discontinued operation 4,063 -
--------------------------
Headline earnings attributable to ordinary
shareholders 141,230 108,016
--------------------------
Abridged Consolidated Audited Audited
Balance Sheet at at
for the year ended 31 March 2007 31 Mar 2007 31 Mar 2006
R 000
ASSETS
Non-current assets
Property, plant and equipment 449,175 357,351
Intangibles 113,785 113,940
Long term loan 28,623 -
--------------------------
591,583 471,291
--------------------------
Current assets
Inventories 332,618 233,324
Trade and other receivables 287,739 210,964
Bank balance and cash 14,272 44,536
--------------------------
634,629 488,824
--------------------------
--------------------------
TOTAL ASSETS 1,226,212 960,115
--------------------------
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 235,561 229,279
Reserves 70,379 73,196
Retained earnings 422,506 287,071
--------------------------
Ordinary shareholders` funds 728,446 589,546
Minority interest 9,673 -
--------------------------
Total shareholders` funds 738,119 589,546
--------------------------
Non-current liabilities
Interest-bearing borrowings 111,442 91,677
Deferred tax 44,730 42,652
--------------------------
156,172 134,329
--------------------------
Current liabilities
Trade and other payables 231,088 183,977
Taxation 11,972 7,182
Current portion of interest-bearing borrowings 88,861 45,081
--------------------------
331,921 236,240
--------------------------
--------------------------
TOTAL EQUITY AND LIABILITIES 1,226,212 960,115
--------------------------
Net asset value per share (cents) 936.2 806.8
Abridged Consolidated Audited Audited
Cash Flow Statement year ended year ended
for the year ended 31 March 2007 31 Mar 2007 31 Mar 2006
R 000
Cash generated from operations 96,224 140,846
Interest paid (25,929) (17,608)
Interest received 15,150 7,542
Dividends paid (21,786) (17,115)
Taxation paid (52,525) (37,422)
--------------------------
Cash flows from operating activities 11,134 76,243
Cash flows from investing activities (111,225) (182,633)
Cash flows from financing activities 69,827 105,735
--------------------------
Net decrease in cash and cash equivalents (30,264) (655)
Cash and cash equivalents at beginning of period 44,536 45,191
--------------------------
Cash and cash equivalents at end of period 14,272 44,536
--------------------------
Statement of
Changes in Share Share Treasury Revaluation Reserve Reserve Retained
Equity for capital premium shares reserve on on earnings
the year subsidiary translation
ended 31 acquisition of foreign
March 2007 operation
R 000
Balance at
31 March 2005
as restated 3,615 181,381 (14,258) 836 23,209 (210) 196,494
Shares
issued 408 90,241 - - - - -
Net
treasury
movement - - (32,108) - - - -
Foreign
currency
translation
adjustment - - - - - 54 -
Revaluation
of properties - - - 49,307 - - -
Net profit
for the
period - - - - - - 107,692
Dividends - - - - - - (18,529)
Less treasury
shares - - - - - - 1,414
------------------------------------------------------------------
Balance at
31 March
2006 4,023 271,622 (46,366) 50,143 23,209 (156) 287,071
Net treasury
movement - - 6,282 - - - -
Foreign
currency
translation
adjustment - - - - - (750) -
Revaluation
of properties - - - (2,067) - - -
Net profit for
the period - - - - - - 157,221
Dividends - - - - - - (23,334)
Less treasury
shares - - - - - - 1,548
------------------------------------------------------------------
Balance at
31 March 2007 4,023 271,622 (40,084) 48,076 23,209 (906) 422,506
------------------------------------------------------------------
Segment Report for the Revenue Results Revenue Results
year ended 31 March 2007 audited audited audited audited
Business Segments 31 Mar 2007 31 Mar 2007 31 Mar 2006 31 Mar 2006
R 000
Steel & Steel Related
Products 1,185,349 195,846 891,672 127,359
Non Steel Related 110,359 21,234 108,167 17,408
Properties 604 377 163 111
--------------------------------------------------
Total 1,296,312 217,457 1,000,002 144,878
--------------------------------------------------
Argent Industrial Limited has once again had an impressive year. The group
continued to achieve its mission of creating shareholder value with long term
sustainable growth.
STEEL AND STEEL RELATED PRODUCTS
The group`s steel division experienced a very good year and has the capacity,
infrastructure, personnel and machinery in place to continue its growth.
Phoenix Steel Gauteng has increased its own capacity by re-organising deliveries
from the various steel mills so that a significant amount of these deliveries
now take place direct to some of the outlying Phoenix Steel operations. The
company`s tube mills have increased overall margins and the process of upgrading
the second and third tube mills has begun. Due to the unforeseen increased
world-
wide demand for blanking lines and other equipment, the delivery of the Fagor
blanking line has been delayed and will only arrive in July 2007 and be
commissioned in August 2007. This will allow Phoenix Steel Gauteng and other in-
group merchants to enter markets they have been excluded from due to quality
issues on the existing machinery.
Phoenix Steel East London continues to perform above expectations. The group is
currently doubling the size of the warehouse which will increase its capacity
for the 2008 financial year and beyond.
Phoenix Steel Mpumalanga, while comfortably achieving its targeted turnover
levels, still needs to improve its overall margins. During the year under review
the company experienced an abnormal number of machinery breakdowns and due to
the company`s location the machinery suppliers could not provide satisfactory
service levels and reduce downtime. The group will be replacing the company`s
high definition plasma machines by January 2008 to improve the company`s ability
to service its customers on time.
Phoenix Steel Natal again had a very good year and in early April 2007 moved to
new premises which will give the company six times the stocking capability that
it had during the year under review. A new cut to length / blanking line has
been ordered from Fagor in Spain at a cost of R17 million and will be
commissioned in March 2008.
Phoenix Steel Port Elizabeth experienced a tough year and did not achieve its
targets for the 2007 financial year. A number of staff changes have taken place
and the group believes that the division will achieve its goals for the 2008
financial year.
Phoenix Steel Richards Bay enjoyed yet another solid year and the company is
extremely well run. Management is confident that the company`s growth and
profitability will continue.
Giflo Engineering had a more than satisfactory year but due to growth in both
its export and local markets it found itself operating at almost full capacity
for the second half of the 2007 financial year. This had a marginal negative
impact on the company`s margins and resulted in the company`s work-in-progress
climbing to a figure R18 million higher than it should have been. In order to
reduce the chances of this problem occurring again the group has purchased one
of Giflo`s suppliers, namely All Lite Steel Products, which performs the
majority of Giflo`s powder coating and E-coating. The purchase was effective 18
June 2007. In addition, Giflo has completed its new despatch area and has
implemented a new computer system which will improve its logistics performance.
Excalibur Vehicle Accessories, despite outgrowing its current premises,
performed well in the 2007 financial year and will be moving to its new premises
in July 2007. This property will increase the company`s capacity three-fold
which will also alleviate some of the pressure currently placed on Giflo, while
at the same time allowing Excalibur to diversify into various other aluminium
products.
Hendor Mining Supplies again enjoyed an excellent year and given the current
level of mining activity in Southern Africa, expects its success to continue.
Hendor also took over the property previously occupied by B.M.I. / Xpanda Steel
Centre during the year under review, which has resulted in increased production
capacity and has allowed it to diversify into the manufacture of certain other
steel products required by other companies in the group.
Sentech Industries, which started trading in September 2006, was born out of the
group`s purchase of the operational assets from a financially distressed
company. Sentech is an original equipment manufacturer to the automotive
industry, specialising in tube manipulation. The company is performing very well
and will be a meaningful contributor to the group in the 2008 financial year.
Jetmaster performed above expectations in terms of both its local and
international markets. The cold winter experienced in 2006 saw the company reach
record sales levels. The company has launched a number of new products ranging
from slow combustion stoves to portable barbeques to pizza ovens to low cost DIY
fireplaces. Jetmaster recently also opened a new outlet in the Highveld Mall in
Witbank along the same lines as its Menlyn Branch, while contracts sales to
middle income and top end developments continue to increase substantially.
Koch`s Cut and Supply surpassed expectations for the 2007 financial year and
produced brilliant results. The introduction of high-definition plasma
technology, upgrading the profile machines and the purchase of other machinery
over the past two years has certainly paid dividends. The company expects to
continue its good run of results and has increased its vehicle fleet in
anticipation.
Xpanda Security achieved another record breaking year and has proved to be an
excellent acquisition by Argent. Given the diversified nature of the company`s
product mix, further growth is almost guaranteed. In the 2008 financial year,
exports to Europe are expected to increase substantially while concerted efforts
are being made to increase market share in the customised security markets in
both the Western and Eastern Cape, and nationally in the roller shutter door
market.
Life `n Leisure Centre Cape Town had a satisfying year, growing sales of all
three of its products, namely Jetmaster, Excalibur and Xpanda. However, much
growth is still expected from this company, especially in terms of penetrating
the outlying areas of the Western Cape, which is currently a weakness of the
company.
Life `n Leisure Centre Umhlanga opened its doors in August 2006 and has
performed according to expectations. Much effort has been expended in creating
product awareness throughout Kwazulu Natal for the entire range of Jetmaster and
Excalibur products, while it also serves as a valuable showroom and sales centre
for Xpanda. The second half of the 2007 calendar year should prove to be a very
successful period.
NON STEEL RELATED PRODUCTS
New Joules Engineering North America had an excellent year and enters the new
financial year with an order book of USD 2.5 million. The company has expanded
its product range and is now offering a fully automated system which covers the
entire speed control of a railway marshalling yard. The system can either run
automatically or manually via remote control.
Megamix and Villiersdorp Quarries both had good years. Argent has also sold 30%
of both companies to a BEE concern, Vuya! Investments (Pty) Ltd, with effect
from 31 March 2007. It is expected that Megamix`s new BEE status will increase
its opportunities and allow the business to expand substantially in the Western
Cape.
During the second half of the 2007 financial year, the group decided to dispose
of NWN Automotive Precision Engineering at book value due to its marginal
contribution to the group, the lack of substantial turnover growth and the fact
that it didn`t fit in operationally with the rest of the group.
PROPERTIES
The book value of the group`s properties as at 31 March 2007 was R 249 million.
Subsequent to the 2007 financial year end the group sold the property occupied
by Excalibur Vehicle Accessories (1337 Spyker Crescent, Stormill Ext 2) for
R8.1 million and the premises previously occupied by Phoenix Steel Natal (17-19
Nipper Road, New Germany) for R7.3 million. In addition the group purchased the
property occupied by All Lite Steel Products (107 Kotzenberg Street, Rosslyn)
for R3.2 million.
The group is currently involved in construction activities at the following of
its properties:
Jetmaster (Johannesburg) - 1,200 square metre factory expansion
Phoenix Steel (East London) - 1,300 square metre warehouse expansion
Xpanda Security (Pinetown) - 1,400 square metre factory extension
Toolroom Services (Alberton) - 13,400 square metre new premises
Excalibur Vehicle Accessories (Krugersdorp) - 11,000 square metre factory
renovation.
PROSPECTS
The group is well on track to achieving its R2 billion annual turnover target by
the end of the 2009 financial year.
The group has made the following acquisitions post year end:
Allan Maskew (Pty) Ltd -effective 1 May 2007 - the company
specialises in the design, manufacture and
supply of industrial rubber components.
Atomic Office Equipment (Pty) Ltd -effective 1 June 2007 - the company
manufactures steel office furniture. The
company was purchased from the Bidvest Group.
All Lite Steel Products -effective 18 June 2007 - only the plant and
equipment of the company were purchased,
resulting in a new Argent division that
specialises in E-coating and powder coating
of automotive products.
Gammid Trading (Pty) Ltd -only subject to Competition Commission
approval (expected mid-July 2007). Gammid
is a countrywide merchant of stainless steel
and aluminium sheets , sections and profiles.
Argent has produced substantial returns for its shareholders over the past
number of years and will continue to perform in this way. The group has now
reached a level of maturity in terms of its infrastructure and logistics
capabilities and this will serve as the platform for future growth. The turnover
and profit growth of the group`s recent acquisitions has been very encouraging
and an increase in market share can still be expected from just about all of
Argent`s divisions. Confidence levels are still very high within the group,
especially in the run up to 2010.
DIVIDEND
A final dividend of 16 cents per share has been declared, subsequent to 31 March
2007, payable on Monday 23 July 2007 to shareholders recorded in the register at
close of business on Friday 20 July 2007, being the record date in order to
participate in such dividend. The last day to trade cum-div is Friday 13 July
2007. The share will trade ex-div on Monday 16 July 2007.
Share certificates may not be dematerialised / rematerialised between Monday 16
July 2007 and Friday 20 July 2007, both days inclusive.
ACCOUNTING POLICIES AND PRESENTATION
The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS) and in compliance with the Companies Act
of South Africa of 1973 and the Listing Requirements of the JSE Limited. The
accounting policies are consistent with those of the previous financial period.
AUDIT OPINION
Our auditors, Siyabala Inc, have issued their opinion on Argent`s statements for
the year ended 31 March 2007. A copy of their unmodified report is available for
inspection at the company`s registered office. These summarised financial
statements have been derived from Argent`s financial statements and are
consistent in all material respects with Argent`s financial statements.
On behalf of the Board
T.R. Hendry CA (SA) Maraisburg, Roodepoort
Chief Executive Officer 27 June 2007
Transfer secretaries:
Link Market Services South Africa (Pty) Limited
5th floor
11 Diagonal Street
Johannesburg, 2001
(P O Box 4844, Johannesburg, 2000)
Registered office:
1316 Clubhouse Street
Maraisburg
Roodepoort
1724
Tel +27 11 661 5900
Auditors:
Siyabala Inc.
Sponsor:
Sansara Independent Sponsor Services (Pty) Ltd
Directors: MP Allen, MJ Antonic, Ms SJ Cox (Financial Director), PA Day (Non
Executive), TR Hendry (Chief Executive Officer), PH Lawson, AF
Litschka, K Mapasa (Non Executive), T Scharrighuisen (Non Executive
Chairman), D Smith, GK Youngman (Alternate).
Date: 27/06/2007 11:30:10 Produced by the JSE SENS Department.
