| Thu 12 Nov 2009, 15:17 | | ART - Argent Industrial Limited - Unaudited Interim Results For The Six Months |
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ART
ART
ART - Argent Industrial Limited - Unaudited Interim Results For The Six Months
Ended 30 September 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
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2009
Financial Highlights
REVENUE R746,1 million
CASH GENERATED FROM OPERATIONS R120.2 million
NET ASSET VALUE PER SHARE 1360.8 cents
GEARING 29.8%
The unaudited financial statements are presented on a consolidated
basis
Unaudited Unaudited Audited
Condensed consolidated income six months six months year ended
statement for the period ended 30 Sept 2009 30 Sept 2008 31 Mar 2009
R 000
Revenue 746,099 1,070,063 1,949,368
----------------------------------------
Operating profit before financing costs 21,666 155,569 194,404
Finance income 12,294 11,425 26,893
Finance costs 32,682 32,900 76,807
----------------------------------------
Profit before taxation 1,278 134,094 144,490
Taxation (128) 38,038 26,616
----------------------------------------
Profit for the period 1,406 96,056 117,874
----------------------------------------
Attributable to Minority interest (132) 983 901
Attributable to owners of the parent 1,538 95,073 116,973
----------------------------------------
Attributable & diluted earnings per
share (cents) 1.7 107.1 130.2
Headline earnings per share (cents) 3.3 106.9 126.8
Dividends per share (cents) - 19.0 38.0
----------------------------------------
Supplementary information
Shares in issue (000)
- at end of period 91,157 88,798 91,157
- weighted average 91,157 88,798 89,845
Cost of sales (R 000) 575,802 758,126 1,448,049
Depreciation and amortisation (R 000) 19,997 15,635 34,435
Calculation of headline earnings (R 000)
Earnings attributable to ordinary
shareholders 1,538 95,073 116,973
Profit on disposal of property, plant
and equipment - (134) -
Loss on disposal of property, plant
and equipment 103 - 390
Gain on acquisition of subsidiary - - (4,511)
Amortisation of intangible assets 1,366 - 1,098
----------------------------------------
Headline earnings attributable to
ordinary shareholders 3,007 94,939 113,950
----------------------------------------
Condensed consolidated statement of Unaudited Unaudited Audited
comprehensive income for the period six months six months year ended
ended 30 Sept 2009 30 Sept 2008 31 Mar 2009
R 000
Profit for the period 1,406 96,056 117,874
Other comprehensive income for the
period, net of tax
Foreign currency translation reserve (4,595) 29 (524)
Fair value adjustments 14,338 77,981
----------------------------------------
Total comprehensive income for the
period (3,189) 110,423 195,331
----------------------------------------
Attributable to equity holders of the
- Parent (3,057) 109,440 194,430
- Minority interest (132) 983 901
----------------------------------------
(3,189) 110,423 195,331
----------------------------------------
Unaudited Unaudited Audited
Condensed consolidated statement of at at at
financial position as at 30 Sept 2009 30 Sept 2008 31 Mar 2009
R 000
ASSETS
Non-current assets
Property, plant and equipment 888,840 708,492 822,495
Intangibles 291,095 249,765 282,948
Long term loan 9,365 - 8,898
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1,189,300 958,257 1,114,341
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Current assets
Inventories 445,896 672,131 482,515
Trade and other receivables 308,921 421,574 355,163
Taxation 1,392 - 6,122
Bank balance and cash 276 307 347
----------------------------------------
756,485 1,094,012 844,147
----------------------------------------
TOTAL ASSETS 1,945,785 2,052,269 1,958,488
----------------------------------------
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 451,113 440,106 451,113
Reserves 137,215 61,688 141,810
Retained earnings 652,151 662,248 658,814
----------------------------------------
Attributable to owners of parent 1,240,479 1,164,042 1,251,737
Minority interest 8,397 - 8,529
----------------------------------------
Total shareholders` funds 1,248,876 1,164,042 1,260,266
----------------------------------------
Non-current liabilities
Interest-bearing borrowings 251,335 243,669 266,502
Deferred tax 58,315 67,423 60,337
----------------------------------------
309,650 311,092 326,839
----------------------------------------
Current liabilities
Trade and other payables 195,056 343,760 196,801
Taxation - 32,000 -
Bank overdraft 71,912 111,937 64,097
Current portion of interest-bearing
borrowings 120,291 89,438 110,485
----------------------------------------
387,259 577,135 371,383
----------------------------------------
----------------------------------------
TOTAL EQUITY AND LIABILITIES 1,945,785 2,052,269 1,958,488
----------------------------------------
Net asset value per share (cents) 1,360.8 1,310.9 1,373.2
Unaudited Unaudited Audited
Condensed consolidated statement of six months six months year ended
cash flows for the period ended 30 Sept 2009 30 Sept 2008 31 Mar 2009
R 000
Cash generated from operations 120,228 (32,706) 141,515
Interest paid (32,682) (32,900) (76,807)
Interest received 12,294 11,425 26,893
Dividends paid (8,201) (16,872) (34,191)
Taxation refunded (paid) 3,697 (10,690) (29,634)
----------------------------------------
Cash flows from operating activities 95,336 (81,743) 27,776
Cash flows from investing activities (97,861) (68,234) (182,011)
Cash flows from financing activities (5,361) 47,876 115,014
----------------------------------------
Net decrease in cash and cash
equivalents (7,886) (102,101) (39,221)
Cash and cash equivalents at beginning
of period (63,750) (9,529) (24,529)
----------------------------------------
Cash and cash equivalents at end of
period (71,636) (111,630) (63,750)
----------------------------------------
Consolidated statement of Share Share Employee Treasury Revaluation
Changes in Equity capital premium share shares reserve
for the six months ended incentive
30 September 2009 reserve
R 000
Balance at 31 March
2008 - audited 4,825 540,818 11,165 (108,307) 48,601
Net treasury movement - - - 2,770 -
Share based payments - - 2,938 - -
Buy back of minority share
in subsidiary - - - - -
Total comprehensive income
for the period - - - - 14,338
Dividends - - - - -
Less dividend on treasury
shares - - - - -
---------------------------------------------------
Balance at 30 September
2008 - unaudited 4,825 540,818 14,103 (105,537) 62,939
Net treasury movement - - - 11,007 -
Share based payments - - 2,939 - -
Minority interest sold - - - - -
Total comprehensive income
for the period - - - - 63,633
Dividends - - - - -
Less dividend on treasury
shares - - - - -
---------------------------------------------------
Balance at 31 March
2009 - audited 4,825 540,818 17,042 (94,530) 126,572
Total comprehensive income
for the period - - - - -
Dividends - - - - -
Less dividend on treasury
shares - - - - -
---------------------------------------------------
Balance at 30 September
2009 - unaudited 4,825 540,818 17,042 (94,530) 126,572
---------------------------------------------------
Consolidated statement of Reserve on Retained Minority Total ordinary
Changes in Equity translation earnings Interest shareholders`
for the six months ended of foreign funds
30 September 2009 operation
R 000
Balance at 31 March
2008 - audited (1,280) 597,411 11,956 1,105,189
Net treasury movement - - - 2,770
Share based payments - - - 2,938
Buy back of minority share
in subsidiary - (21,379) (12,939) (34,318)
Total comprehensive income
for the period 29 95,073 983 110,423
Dividends - (18,333) - (18,333)
Less dividend on treasury
shares - 1,461 - 1,461
---------------------------------------------------
Balance at 30 September
2008 - unaudited (1,251) 654,233 - 1,170,130
Net treasury movement - - - 11,007
Share based payments - - - 2,939
Minority interest sold - - 8,612 8,612
Total comprehensive income
for the period (553) 21,900 (83) 84,897
Dividends - (18,333) - (18,333)
Less dividend on treasury
shares - 1,014 - 1,014
---------------------------------------------------
Balance at 31 March
2009 - audited (1,804) 658,814 8,529 1,260,266
Total comprehensive income
for the period (4,595) 1,538 (132) (3,189)
Dividends - (8,684) - (8,684)
Less dividend on treasury
shares - 483 - 483
---------------------------------------------------
Balance at 30 September
2009 - unaudited (6,399) 652,151 8,397 1,248,876
---------------------------------------------------
Segmental review Local Local Local
Steel trading Automotive Manufacture
Products of home and
office products
R 000
For the six months ended
30 September 2009 - unaudited
Revenue from external sales 222,243 48,619 262,446
---------------------------------------------
Profit before interest and tax 14,285 (10,200) 13,686
Net financing costs - - -
---------------------------------------------
Profit before tax - - -
---------------------------------------------
Included in the above:
- Depreciation and amortisation - - -
---------------------------------------------
For the six months ended
30 September 2008 - unaudited
Revenue from external sales 462,291 119,717 304,864
---------------------------------------------
Profit before interest and tax 77,332 11,864 38,899
Net financing costs
---------------------------------------------
Profit before tax - - -
---------------------------------------------
Included in the above:
- Depreciation and amortisation - - -
---------------------------------------------
For the year ended 31 March
2009 - audited
Revenue from external sales 764,607 248,102 606,251
---------------------------------------------
Profit before interest and tax 64,262 4,549 68,941
Net financing costs - - -
---------------------------------------------
Profit before tax - - -
---------------------------------------------
Included in the above:
- Depreciation and amortisation - - -
---------------------------------------------
Local Local Rest of Total
the world
Fabricators Non-steel
related
products
R 000
For the six months ended
30 September 2009 - unaudited
Revenue from external sales 60,637 122,273 29,881 746,099
---------------------------------------------
Profit before interest and tax 3,261 1,367 (733) 21,666
Net financing costs - - - 20,388
---------------------------------------------
Profit before tax - - - 1,278
---------------------------------------------
Included in the above:
- Depreciation and amortisation - - - 19,997
---------------------------------------------
For the six months ended
30 September 2008 - unaudited
Revenue from external sales 81,883 85,035 16,273 1,070,063
---------------------------------------------
Profit before interest and tax 19,712 5,159 2,603 155,569
Net financing costs - - - 32,900
---------------------------------------------
Profit before tax - - - 122,669
---------------------------------------------
Included in the above:
- Depreciation and amortisation - - - 15,635
---------------------------------------------
For the year ended 31 March
2009 - audited
Revenue from external sales 145,587 147,608 37,213 1,949,368
---------------------------------------------
Profit before interest and tax 19,027 33,998 3,627 194,404
Net financing costs - - - 49,914
---------------------------------------------
Profit before tax - - - 144,490
---------------------------------------------
Included in the above:
- Depreciation and amortisation - - - 34,435
---------------------------------------------
Operational overview
The global financial crisis took a tremendous toll on Argent`s Steel and
Automotive sectors which had a material impact on the Group`s financial results
for the first six months of the financial year.
A summary of the Group`s results for the six months are as follows:
- Revenue decreased by 30.3% to R746.1 million
- Operational profit decreased by 86.1% to R21.7 million
- Headline earnings down by 96.9% with headline earnings per share down to
3.3 cents per share
- Gearing contained to 29%
Operational review
Steel Trading
The Group`s steel trading division incorporates both Phoenix Steel and Gammid
Trading.
Phoenix Steel, which trades and beneficiates both mild steel and cold rolled
products, had a very difficult six months with both market demand and margins
staying depressed throughout the period under review. However, this situation
has now improved significantly with both steel prices and market demand having
increased.
Gammid Trading, a specialist aluminium and stainless steel trader, suffered the
same market conditions with both demand and pricing being very depressed. The
company has experienced an improvement in both margins and demand and is
expecting a much improved second six months.
Manufacturing of Home and Office products
The sector performed satisfactorily with good results from most of its
divisions.
Cedar Paint experienced a good first six months and is confident that its growth
pattern will continue. The company opened branches in both Port Elizabeth and
George and moved its Cape Town manufacturing plant to bigger, Group-owned
premises managed by Gammid Cape Town.
Castor and Ladder held its own through the financial crisis and managed to
increase its market share by benefiting from the country`s current
infrastructure spend, such as significant orders from the Gautrain project.
Jetmaster`s sales were down in line with local consumer spend, but exports to
Australia, New Zealand and England remained buoyant. A new and innovative
"go-green" product that is a world leader in low emission levels and heat output
has been developed particularly for the United Kingdom market and the first two
containers have been exported. Sales have started to show a strong recovery in
the local market since the middle of the year and this trend is expected to
continue into and after the festive season.
Toolroom Services and Atomic Office Equipment felt the impact of the slower
consumer spend at the start of the financial year but showed a turnaround
starting in June `09 and both companies now boast full order books to March `10.
Toolroom Services moved into its new property in July `09 and production output
is currently at record levels, while it is expected to reach design capacity by
December `09.
Tricks Wrought Iron Services had a fantastic first six months which in part is
attributable to the country`s low cost housing roll out and the construction at
the new Durban airport and soccer stadium.
Burbage Iron Craft started the year off well but has seen a decrease in its
customers` demand . This is expected to improve mid 2010.
On 1 April 2009, the Group purchased the assets of Barrier Angelucci, investing
a total of R7.4 million, as well as acquiring a new building to house the
Barrier Angelucci operation. The company specialises in the manufacture and
distribution of roller shutter doors and the modification and installation of
automatic teller machines. Although the assets had to be relocated and the new
premises modified for its particular needs, management is confident that the
company will be a great fit for the Argent Group. The company contributed
positively to the results for the six months and the performance will improve
with time as the company is fully integrated into Argent.
Xpanda Security performed very well in both the local and export markets through
the economic downturn and has a full order book going forward. This can partly
be attributed to the fact that security barriers have become a basic necessity,
even in an economic downturn.
Fabricators
Koch`s Cut & Supply enjoyed a good first six months while Hendor Mining Supplies
has seen its first recent major increase in sales in October 2009, in line with
local mining activity.
Automotive Sector
This sector is still the worst affected by the financial crisis. Giflo
Engineering and All Lite are still running at turnover levels at around 25% of
2007 figures, while Sentech Industries and Excalibur Vehicle Accessories have
managed to increase their sales to 65% of their 2007 figures.
Due to substantial overhead reductions Argent is expecting good results for all
of these operations in the next six months, with the exception of Giflo, whose
results will only start to show real improvement in the first quarter of the
2011 financial year.
Non-Steel Related products
Megamix and Villiersdorp Quarries have seen a steady decline in margins over the
last six months. This has negatively affected operating profits, however the
order book is more than satisfactory and the additional batch plant in the Cape
Town harbour is expected to lift margins.
Allan Maskew is very much in the same position as the automotive division with
the bulk of its products destined for the transport and heavy earthmoving
industry. The company`s diversification into the mining industry via the
manufacture of the rubber and polyurethane screens is starting to pay off and
will result in the company enjoying a positive second six months even if the
traditional bulk of its business remains subdued.
New Joules Engineering has seen a decline in capital tenders but has a more than
a sufficient work load due to maintenance and replacement work.
Argent Industrial Investments continued to increase its property holdings with
the acquisition of an industrial property in Sebenza, Edenvale for R17.3 million
and the transfer of the Gammid Cape Town property at R26.6 million. The
building of the new Toolroom premises was completed during the period. The
proposed acquisition in Bloemfontein was put on hold until the Group`s
operational performance in the area improves.
Retrenchments
The Group reduced its total staff from 3,640 to 3,230 which was in part due to
the following retrenchments:
No. of staff Rands
Allan Maskew 16 266,004
Burbage Iron Craft 2 93,481
Excalibur 19 148,357
Giflo 208 2,486,669
Sentech 4 80,991
The Group is now correctly staffed and the above costs have been expensed.
Dividend
Due to the Group`s performance, the priority is to preserve liquidity and the
Board has therefore decided not to declare an interim dividend.
Outlook
The economy is showing signs of a recovery, and this is reflected in the overall
performance of the group improving since June `09. Some of the businesses have
shown strong resilience to the downturn in the economy with the likes of Xpanda
Security, Cedar Paint, Castor and Ladder and Toolroom Services all performing
very well and growing market share in the downturn. Although the automotive
sector produced a poor set of results, its market share has grown with a number
of competitors exiting the market. Overall Argent has taken this opportunity to
reduce stock levels and trim away inefficiencies in the businesses to ensure a
strong recovery when the market improves. The investment in new infrastructure
in Cape Town and George will increase the market share of all of the Group`s
businesses in these areas, while the introduction of Barrier Angelucci into
Argent will open up new markets and clients to the Group`s offerings. It is
fair to say that Argent has never before been so well positioned and prepared to
benefit from improved market conditions.
Basis of presentation and accounting policies
The condensed 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 Requirements of the JSE Limited. The accounting policies are
consistent with those followed in the preparation of the consolidated annual
financial statements for the year ended 31 March 2009, except where the group
has adopted new or revised accounting standards and interpretations of these
standards.
The group has adopted the following revised accounting standards, amendments and
interpretations in the current period, which did not have a material impact on
the reported results
- IAS 1 Revised Presentation of Financial Statements
- IFRS 8 - Operating Segments
The condensed interim financial statements have not been reviewed or audited by
the group`s auditors.
Subsequent events
No material change has taken place in the affairs of the group between the end
of the financial period and the date of this report.
Statement of Going Concern
The financial statements have been prepared on the going-concern basis since the
directors have every reason to believe that the company has adequate resources
in place to continue in operation for the foreseeable future.
On behalf of the Board
T.R. Hendry CA(SA) Umhlanga Rocks
Chief Executive Officer 12 November 2009
Registered Office: First floor, Ridge 63, 8 Sinembe Crescent,
La Lucia Ridge, 4019
Tel: +27 31 5847702
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 Antonic, 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: 12/11/2009 15:17:01 Produced by the JSE SENS Department.
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