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ART
ART
ART - Argent Industrial - Audited Provisional Results For The Year Ended
31 March 2009
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 PROVISIONAL RESULTS FOR THE YEAR ENDED 31 MARCH 2009
Financial Highlights
- Final ordinary dividend per share 9 cents
- Revenue Up 19.2%
- Operating profit Down -25.1%
- Net asset value per share 1373 cents Up 11.5%
- Gearing 29.9%
The provisional financial statements are presented on a consolidated basis
Income Statement Actual Restated
for the year ended 31 March 2009 2008
R 000
Revenue 1,949,368 1,635,983
--------------------------
Operating profit before financing costs 221,297 295,187
Financing costs 76,807 49,782
--------------------------
Profit before taxation 144,490 245,405
Taxation 26,616 43,268
--------------------------
Profit after taxation 117,874 202,137
Minority interest 901 2,283
--------------------------
Earnings attributable to ordinary shareholders 116,973 199,854
--------------------------
Attributable earnings per share (cents) 130.2 236.1
Headline earnings per share (cents) 126.8 231.0
Dividends per share (cents) 38.0 33.0
Supplementary information
Shares in issue (000)
- at end of period 91,157 88,798
- weighted average 89,845 84,635
Interest received (R 000) 26,893 30,089
Cost of sales (R 000) 1,448,049 1,101,333
Depreciation and amortisation (R 000) 34,435 23,983
Net profit on foreign exchange
transactions (R 000) 6,786 3,753
Calculation of headline earnings (R 000)
Earnings attributable to ordinary shareholders 116,973 199,854
Profit on disposal of property, plant and equipment - (7,502)
Loss on disposal of property, plant and equipment 390 213
Gain on acquisition of subsidiary (4,511) -
Amortisation of intangible assets 1,098 -
Impairment of property, plant and equipment - 2,979
--------------------------
Headline earnings attributable to ordinary
shareholders 113,950 195,544
--------------------------
Balance Sheet Actual Restated
for the year ended 31 March 2009 2008
R 000
ASSETS
Non-current assets
Property, plant and equipment 822,509 645,632
Intangibles 282,948 249,975
Long term loan 8,898 29,897
--------------------------
1,114,355 925,504
--------------------------
Current assets
Inventories 482,515 442,858
Trade and other receivables 355,163 408,823
Taxation 6,122 -
Bank balance and cash 347 383
--------------------------
844,147 852,064
--------------------------
--------------------------
TOTAL ASSETS 1,958,502 1,777,568
--------------------------
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 451,113 437,336
Reserves 141,820 58,486
Retained earnings 658,814 597,411
--------------------------
Ordinary shareholders` funds 1,251,747 1,093,233
Minority interest 8,529 11,956
--------------------------
Total shareholders` funds 1,260,276 1,105,189
--------------------------
Non-current liabilities
Interest-bearing borrowings 266,502 188,050
Deferred tax 60,341 36,044
--------------------------
326,843 224,094
--------------------------
Current liabilities
Trade and other payables 196,801 335,565
Taxation - 2,857
Bank overdraft 64,097 24,912
Current portion of interest-bearing borrowings 110,485 84,951
--------------------------
371,383 448,285
--------------------------
--------------------------
TOTAL EQUITY AND LIABILITIES 1,958,502 1,777,568
--------------------------
Net asset value per share (cents) 1,373.2 1,231.1
Cash Flow Statement Actual Restated
for the year ended 31 March 2009 2008
R 000
Cash generated from operations 141,515 220,385
Interest paid (76,807) (49,782)
Interest received 26,893 30,089
Dividends paid (34,191) (28,125)
Taxation paid (29,634) (43,451)
--------------------------
Cash flows from operating activities 27,776 129,116
Cash flows from investing activities (182,011) (334,162)
Cash flows from financing activities 115,014 166,245
--------------------------
Net decrease in cash and cash equivalents (39,221) (38,801)
Cash and cash equivalents at beginning of period (24,529) 14,272
--------------------------
Cash and cash equivalents at end of period (63,750) (24,529)
--------------------------
Statement of Changes in Share Share Employee Treasury Revaluation
Equity for the year ended capital premium share shares reserve
31 March 2009 incentive
reserve
R 000
Balance at 31 March 2007 4,023 271,622 5,126 (40,084) 48,076
---------------------------------------------------
As previously stated - - - - -
Prior year adjustments - - 5,126 - -
---------------------------------------------------
Shares issued 802 269,196 - - -
Net treasury movement - - - (68,223) -
Foreign currency translation
adjustment - - - - -
Revaluation of properties - - - - 1,498
Realisation of revaluation
reserve - - - - (973)
Share based payments - - 6,039 - -
Net profit for the period - - - - -
Dividends - current interim
and prior final - - - - -
Less dividend on treasury
shares - - - - -
---------------------------------------------------
Balance at 31 March 2008 4,825 540,818 11,165 (108,307) 48,601
Net treasury movement - - - 13,777 -
Foreign currency translation
adjustment - - - - -
Revaluation of properties - - - - 77,981
Share based payments - - 5,877 - -
Buy-back of minority share
in subsidiary - - - - -
Minority interest sold - - - - -
Net profit for the period - - - - -
Dividends - current interim
and prior final - - - - -
Less dividend on treasury
shares - - - - -
---------------------------------------------------
Balance at 31 March 2009 4,825 540,818 17,042 (94,530) 126,582
---------------------------------------------------
Statement of Changes in Equity Reserve on Retained Minority Total
for the year ended translation earnings interest ordinary
31 March 2009 of foreign shareholders`
operation funds
R 000
Balance at 31 March 2007 (906) 423,491 9,673 721,021
----------------------------------------------
As previously stated - 442,950 - 735,354
Prior year adjustments - (19,459) - (14,333)
----------------------------------------------
Shares issued - - - 269,998
Net treasury movement - - - (68,223)
Foreign currency translation
adjustment (374) - - (374)
Revaluation of properties - - - 1,498
Realisation of revaluation
reserve - 2,191 - 1,218
Share based payments - - - 6,039
Net profit for the period - 199,854 2,283 202,137
Dividends - current interim and
prior final - (30,928) - (30,928)
Less dividend on treasury shares - 2,803 - 2,803
----------------------------------------------
Balance at 31 March 2008 (1,280) 597,411 11,956 1,105,189
Net treasury movement - - - 13,777
Foreign currency translation
adjustment (524) - - (524)
Revaluation of properties - - - 77,981
Share based payments - - - 5,877
Buy-back of minority share in
subsidiary - (21,379) (12,940) (34,319)
Minority interest sold - - 8,612 8,612
Net profit for the period - 116,973 901 117,874
Dividends - current interim and
prior final - (36,666) - (36,666)
Less dividend on treasury shares - 2,475 - 2,475
----------------------------------------------
Balance at 31 March 2009 (1,804) 658,814 8,529 1,260,276
----------------------------------------------
Revenue Results Revenue Results
Segment Report for the actual actual restated restated
year ended 31 March 2009 2009 2008 2008
Business Segments
R 000
Steel trading 764,607 47,615 818,357 86,472
Automotive products 248,102 (4,817) 221,699 36,020
Manufacture of home and
office products 606,251 62,814 330,618 68,819
Fabricators 145,587 18,939 89,047 21,632
Non-steel related products 184,821 19,939 176,262 32,462
--------------------------------------------------
Total 1,949,368 144,490 1,635,983 245,405
--------------------------------------------------
ARGENT INDUSTRIAL LTD
Prior year adjustments - 2008
R`000 Previously Adjustment Adjustment Total Restated Notes
reported 2007 & 2008 adjust-
before ment
BALANCE SHEET
Current assets
Inventory 470,139 -20,187 -7,093 -27,280 442,859 1
Trade and other
recevables 409,138 -315 -315 408,823 2
------------------------------------------------------------
Reserves
Employee share
incentive reserve - 5,126 6,039 11,165 11,165 3
Retained earnings 602,996 -19,459 13,874 -5,585 597,411
------------------------------------------------------------
Non-current
liabilities
Deferred tax 64,492 -5,854 -22,594 -28,448 36,044 4
Interest bearing
borrowings -
reclassification 203,050 - -15,000 -15,000 188,050 5
------------------------------------------------------------
Current liabilities
Taxation 7,583 - -4,726 -4,726 2,857 6
Bank overdraft 9,912 - 15,000 15,000 24,912 5
------------------------------------------------------------
INCOME STATEMENT
Revenue -
reclassification
only 1,659,201 - -23,218 - 1,635,983 7
------------------------------------------------------------
Operating profit
before financing
costs 308,634 - -13,447 - 295,187
------------------------------------------------------------
Taxation 70,588 - -27,320 - 43,268
------------------------------------------------------------
Earnings
attributable to
ordinary
shareholders 185,980 - 13,874 - 199,854
------------------------------------------------------------
Notes
1 Stock write off in prior year
2 Change in estimate
3 Recognition of share based payments not accounted for in prior year
4 Deferred tax not accounted for on assessed losses in prior year
5 Reclassification of overnight facility to Bank and cash
6 Overprovision of current tax in prior year
7 Reclassification of discount allowed to Revenue
COMMENTARY
Financial Overview
In light of the current market conditions experienced in the industries in which
Argent operates as well as the effects of the global financial crisis, Argent
has produced an unavoidable below par set of results reflected by a 25% drop in
the Group`s operating profit to R 221 million. The Group`s steel trading and
automotive sectors have been hit the hardest. The main reason for the downturn
in the steel trading sector was the reduction of ex-mill input prices which saw
mild steel prices reducing by 24%, aluminium prices dropping by 21% and
stainless steel prices falling by 32%, all post September 2008. This resulted in
a loss of margin and write-down of inventory of R34,826 million to net
realizable value as required by IFRS.
A summary of the Group`s results are as follows:
- Revenue growth of 19.5% to R 1,949 million
- Operating profit decreased by 25.1% to R 221 million
- Operating margin at 11.3%
- Headline earnings down by 41.7% with headline earnings per share down 45.1%,
- Gearing contained to 29.9%
Operations Review
Steel trading
The Steel Trading division of the Group incorporates both Phoenix Steel and
Gammid Trading with both operations having branches in Johannesburg, Middelburg,
Durban, Richards Bay, Port Elizabeth, East London, George and Cape Town. The
Phoenix Steel Cape Town and George branches were both opened on 1 June 2009 and
will have a positive effect on the 2010 results. Although the steel division had
a rather robust first half it ended up with a decrease in turnover of 6.5% from
the previous year.
During the course of the financial year Gammid Johannesburg`s process facilities
were upgraded by adding a laser machine and press brake, while Gammid KwaZulu-
Natal`s production facilities were enhanced by a guillotine and press brake.
The Group purchased a 3,700 m2 warehouse in George which now incorporates the
previous Gammid George and the Group`s new Phoenix Steel mild steel merchanting
facility. The Group`s future capacity has also been increased by purchasing a
6,000m2 warehouse in Cape Town which will be used to house the current Gammid
Cape Town business as well as the Phoenix Steel operation. The new Cape Town
premises are situated on a 20,000 m2 stand which will ultimately be used to
expand the capacity in the future.
Manufacturing of home and office products
This sector performed satisfactorily mainly due to the strong growth obtained
from Cedar Paint, Castor & Ladder and the acquisition of Tricks Wrought Iron
Services as well as Burbage Iron Craft Limited.
The Group has completed the purpose built 12,300 m2 factory located in Roodekop,
Johannesburg for Toolroom Services, which will give the company an additional
40% capacity, enabling it to enter the heavy industrial shelving market. The
facility also boasts a fully automated powder coating and powder recycling line.
During the course of the year the Group incorporated Cedar Paint into the
Phoenix Steel Port Elizabeth facility and is in the process of including it into
the Gammid George operation. The Group purchased Tricks Wrought Iron Services
(Pty) Ltd with effect from 1 November 2008. This is a company based in KwaZulu-
Natal which specialises in palisade fencing, mezzanine flooring systems, the
manufacture of steel structures for rural toilet facilities and also exports
outdoor wrought iron and steel fences, gates and other products to Burbage Iron
Craft Limited and other distributors in the UK.
The Group purchased Burbage Iron Craft Limited (BIC), a company based in the UK,
with effect from 1 January 2009. B.I.C. specialises in the manufacture and
distribution of wrought iron and steel products to building material
wholesalers, DIY outlets and individual consumers via website sales. The company
not only manufactures its own products in the UK but also imports a range of
products from South Africa and China.
Subsequent to the end of the financial year Argent purchased the assets of
Barrier Angelucci (Pty) Ltd, a company which specialises in the manufacture and
distribution of roller shutter doors and the installation and safe modifications
of Automatic Teller Machines.
Fabricators
Both Koch`s Cut and Supply and Hendor Mining Supplies enjoyed successful years.
Hendor experienced a downturn in orders received towards the end of the
financial year, in line with the trend in the mining industry in general. Koch`s
Cut and Supply upgraded its rolling facilities by purchasing two HACO plate
rolling machines, one of which is capable of rolling 100 mm steel plate into a
pipe. In addition, they purchased a 600-ton, 4 metre press brake which will be
commissioned in July 2009.
Automotive products
This sector was easily the worst affected by the financial crisis and is the
only sector within the Group that has shown no real sign of improvement. In
spite of the downturn the Group has maintained its operational capacity and has
reduced working hours to reduce the operating costs.
Non-steel related products
Megamix and Villiersdorp Quarries both had satisfactory years and managed to
maintain order book levels albeit with slightly reduced margins. Megamix sold
45% of its holding in Villiersdorp Quarries to a BEE consortium on 11 February
2009 for the sum of R 8.6 million.
Allan Maskew has been adversely affected by the economic downturn and has seen
its sales in the earth moving and transport sectors halved. However, the company
has expanded its product range to incorporate rubber and polyurethane screens
and has invested in the order of R 3 million in injection moulding equipment and
the associated tooling to achieve this. In addition, Allan Maskew has invested
R 4.5 million to expand its toolmaking facilities by purchasing a CNC milling
machine and a CNC wire cutting machine.
Argent Industrial Investments, the Group`s property investment division has
continued to increase its holdings with the acquisition of further properties
for the Group`s Cape Town and George operations and is currently finalising the
acquisition of a property in Bloemfontein as well as one in Sebenza, Edenvale.
Acknowledgements
My sincere thanks and gratitude to all of Argent`s employees for their hard work
and commitment throughout the financial year. The plans and infrastructure that
they have put in place will give the Group a very strong competitive advantage
for many years to come.
Conclusion
The Group`s strategy for the 2010 financial year is to maintain operational
capacity and to increase its geographical footprint, whilst maintaining costs at
the same time.
Dividend
A final dividend of 9 cents has been declared, subsequent to 31 March 2009,
payable on Monday 27 July 2009 to shareholders, recorded in the register at
close of business on Friday 24 July 2009, being the record date in order to
participate in such dividend. The last day to trade cum-div is Friday 17 July
2009. The trade ex-div on Monday 20 July 2009.
Share certificates may not be dematerialised/materialised between Monday 20 July
2009 and Friday 24 July 2009, both days inclusive. Total ordinary dividends per
share in respect of the financial year to 31 March 2009 therefore amounts to
28 cents (2008: 36 cents)
Basis of presentation
The provisional summarised financial statements have been prepared in accordance
with International Financial Reporting Standards (IFRS), IAS 34 - Interim
Financial Reporting and in compliance with the Companies Act of South Africa of
1973 and the Listing Requirments of the JSE Limited. The accounting policies are
consistent with those of the previous financial period.
Audit opinion
The provisional summarised balance sheet as at 31 March 2009 and the related
provisional summarised consolidated income statement, statement of changes in
equity and cash flow statement for the year then ended have been audited by
Grant Thornton. Their unqualified audit report is available for inspection at
the registered office of the company.
On behalf of the Board
TR Hendry CA(SA) Umhlanga Rocks
Chief Executive Officer 29 June 2009
Registered Office:
First floor, Ridge 63, 8 Sinembe Crescent, La Lucia Ridge, 4019
Tel: +27 31 5847702
29 June 2009
Auditors
Grant Thornton
Sponsors
Investec Bank Ltd
Transfer secretaries:
Link Market Services South Africa, 5th floor, 11 Diagonal Street, Johannesburg,
2000
Directors:
MP Allen, MJ Antonnic, Ms SJ Cox, PA Day (Non-executive), JA Etchells
(Financial Director), TR Hendry (Chief Executive Officer), PH Lawson
(Non-executive), AF Litschka, K Mapasa (Non-executive), T Scharrighuisen
(Non-executive Chairman), D Smith, GK Youngman (Alternate)
Date: 29/06/2009 09:37:01 Produced by the JSE SENS Department.
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