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ART
ART
ART - Argent Industrial Limited - Audited provisional results for the year ended
31 March 2010
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 2010
Financial Highlights
REVENUE R1,464 billion
OPERATING PROFIT R49.4 million
NET ASSET VALUE per share change (cents) 1,361.4
GEARING 25.1%
EARNINGS BEFORE INTEREST, TAXATION,
DEPRECIATION AND AMORTISATION "EBITDA" R87.2 million
The provisional financial statements are presented on a consolidated basis
Income Statement Actual Restated
for the year ended 31 March 2010 2009
R 000
Revenue 1,464,494 1,949,368
--------------------------
Operating profit before interest 49,447 189,222
Finance income 24,166 26,893
Finance costs 65,227 76,807
--------------------------
Profit before taxation 8,386 139,308
Taxation (3,269) 24,874
--------------------------
Profit for the year 11,655 114,434
Attributable to Minority interest 76 901
--------------------------
Attributable to owners of the parent 11,579 113,533
--------------------------
Attributable earnings per share (cents) 12.7 126.4
Headline earnings per share (cents) 14.4 123.0
Dividends per share (cents) 9.0 38.0
--------------------------
Supplementary information
Shares in issue (000)
- at end of period 91,350 91,157
- weighted average 91,221 89,845
Cost of sales (R 000) 1,111,726 1,453,231
Depreciation and amortisation (R 000) 37,723 34,435
Calculation of headline
earnings (R 000)
Earnings attributable to ordinary shareholders 11,579 113,533
Profit on disposal of property,
plant and equipment (1,264) -
Loss on disposal of property,
plant and equipment - 390
Impairment of property, plant and equipment 3,194 -
Gain on acquisition of subsidiary - (4,511)
Write-down of intangible assets - 1,098
Total tax effects of adjustments (364) -
--------------------------
Headline earnings attributable to
ordinary shareholders 13,145 110,510
--------------------------
Statement of Comprehensive Income Actual Restated
for the year ended 2010 2009
R 000
Profit for the year 11,655 114,434
Other comprehensive income for the
year, net of tax
Exchange differences on translating
foreign operations (6,060) (524)
Gains on property revaluations - 90,149
Realisation of revaluation of Properties (2,175) -
Income tax relating to components
of other comprehensive income - (12,168)
--------------------------
Total comprehensive income for
the year 3,420 191,891
--------------------------
Attributable to equity holders of the
- Parent 3,344 190,990
- Minority interest 76 901
--------------------------
3,420 191,891
--------------------------
Statement of Financial Position Actual Restated
for the year ended 31 March 2010 2009
R 000
ASSETS
Non-current assets
Property, plant and equipment 888,582 822,509
Intangibles 291,042 282,948
Long term loan 9,817 8,898
--------------------------
1,189,441 1,114,355
--------------------------
Current assets
Inventories 474,230 476,522
Trade and other receivables 296,985 354,799
Taxation 1,730 6,413
Bank balance and cash 277 347
--------------------------
773,222 838,081
--------------------------
TOTAL ASSETS 1,962,663 1,952,436
--------------------------
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 451,129 451,113
Reserves 127,946 141,820
Retained earnings 664,521 654,427
--------------------------
Ordinary shareholders` funds 1,243,596 1,247,360
Minority interest 8,605 8,529
--------------------------
Total shareholders` funds 1,252,201 1,255,889
--------------------------
Non-current liabilities
Interest-bearing borrowings 199,588 266,502
Deferred tax 53,666 58,662
--------------------------
253,254 325,164
--------------------------
Current liabilities
Trade and other payables 216,056 196,801
Bank overdraft 126,171 64,097
Current portion of interest-bearing
Borrowings 114,981 110,485
--------------------------
457,208 371,383
--------------------------
TOTAL EQUITY AND LIABILITIES 1,962,663 1,952,436
--------------------------
Net asset value per share (cents) 1,361.4 1,368.4
Statement of Cash Flows Actual Restated
for the year ended 31 March 2010 2009
R 000
Cash generated from operations 163,428 141,515
Interest paid (65,227) (76,807)
Interest received 24,166 26,893
Dividends paid (8,201) (34,191)
Taxation refunded (paid) 3,626 (29,634)
--------------------------
Cash flows from operating activities 117,792 27,776
Cash flows from investing activities (114,811) (182,011)
Cash flows from financing activities (65,125) 115,014
--------------------------
Net decrease in cash and cash Equivalents (62,144) (39,221)
Cash and cash equivalents at beginning
of period (63,750) (24,529)
--------------------------
Cash and cash equivalents at end
of period (125,894) (63,750)
--------------------------
Statement of Changes in Share Share Employee
Equity for the year ended capital premium share
31 March 2010 incentive
reserve
R 000
Balance at 31 March 2008 4,825 540,818 11,165
------------------------------------------
As previously stated 4,825 540,818 11,165
Prior year adjustments - - -
------------------------------------------
Net treasury movement - - -
Share based payments - - 5,877
Buy-back of minority share
in subsidiary - - -
Minority interest sold - - -
Total comprehensive income - - -
Dividends - current interim
and prior final - - -
Less dividend on treasury shares - - -
------------------------------------------
Balance at 31 March 2009 4,825 540,818 17,042
Net treasury movement - - -
Share based payments - - 1,087
Transfer of reserve to
Retained earnings - - (6,716)
Total comprehensive income - - -
Dividends - prior final - - -
Less dividend on treasury shares - - -
------------------------------------------
Balance at 31 March 2010 4,825 540,818 11,413
------------------------------------------
Statement of Changes in Treasury Revaluation Reserve on
Equity for the year shares reserve translation
Ended 31 March 2010 of foreign
operation
R 000
Balance at 31 March 2008 (108,307) 48,601 (1,280)
------------------------------------------
As previously stated (108,307) 48,601 (1,280)
Prior year adjustments - - -
------------------------------------------
Net treasury movement 13,777 - -
Share based payments - - -
Buy-back of minority
share in subsidiary - - -
Minority interest sold - - -
Total comprehensive income - 77,971 (524)
Dividends - current
interim and prior final - - -
Less dividend on
treasury shares - - -
------------------------------------------
Balance at 31 March 2009 (94,530) 126,572 (1,804)
Net treasury movement 16 - -
Share based payments - - -
Transfer of reserve to
Retained earnings - - -
Total comprehensive income - (2,175) (6,060)
Dividends - prior final - - -
Less dividend on treasury
shares - - -
------------------------------------------
Balance at 31 March 2010 (94,514) 124,397 (7,864)
------------------------------------------
Statement of Changes in Retained Minority Total
Equity for the year earnings interest ordinary
Ended 31 March 2010 shareholders`
funds
R 000
Balance at 31 March 2008 596,464 11,956 1,104,242
------------------------------------------
As previously stated 597,411 11,956 1,105,189
Prior year adjustments (947) - (947)
------------------------------------------
Net treasury movement - - 13,777
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
Total comprehensive income 113,533 901 191,881
Dividends - current
interim and prior final (36,666) - (36,666)
Less dividend on treasury shares 2,475 - 2,475
------------------------------------------
Balance at 31 March 2009 654,427 8,529 1,255,879
Net treasury movement - - 16
Share based payments - - 1,087
Transfer of reserve to
Retained earnings 6,716 - -
Total comprehensive income 11,579 76 3,420
Dividends - prior final (8,684) - (8,684)
Less dividend on treasury Shares 483 - 483
------------------------------------------
Balance at 31 March 2010 664,521 8,605 1,252,201
------------------------------------------
Segment Report for the Revenue Results Revenue Results
year ended 31 March actual actual restated restated
2010 2010 2009 2009
Business Segments
R 000
Business
Steel trading 594,559 16,627 764,607 42,433
Automotive products 132,667 (26,655) 248,102 (4,817)
Manufacture of Home and
office products 504,071 14,269 606,251 62,814
Fabricators 117,738 4,581 145,587 18,939
Non-steel related products 115,459 (436) 184,821 19,939
---------------------------------------------------
Total 1,464,494 8,386 1,949,368 139,308
---------------------------------------------------
Geographical
South Africa 1,418,350 10,968 1,912,155 135,681
Rest of the World 46,144 (2,581) 37,213 3,627
---------------------------------------------------
Total 1,464,494 8,386 1,949,368 139,308
---------------------------------------------------
Prior year Notes Previously Adjustment Adjustment
Restatements reported Opening 2009
balance
1 April
2008
R 000 R 000 R 000
Balance sheet
Current assets
Inventory 1 482,515 (811) (5,182)
Taxation 6,122 - 291
Trade and other Receivables 2 355,163 (364) -
---------------------------------------------------
Reserves
Retained earnings 658,814 (947) (3,440)
---------------------------------------------------
Non-current liabilities
Deferred tax 60,341 (228) (1,451)
---------------------------------------------------
Income statement
Operating profit
before financing costs 194,404 - (5,182)
Taxation 26,616 - (1,742)
---------------------------------------------------
Attributable to owners
of the parent 116,973 - (3,440)
---------------------------------------------------
Notes Total Restated
adjustment 31 March 2009
R 000 R 000
Balance sheet
Current assets
Inventory 1 (5,993) 476,522
Taxation 291 6,413
Trade and other Receivables 2 (364) 354,799
---------------------------------------------------
Reserves
Retained earnings (4,387) 654,427
---------------------------------------------------
Non-current liabilities
Deferred tax (1,679) 58,662
---------------------------------------------------
Income statement
Operating profit
before financing costs (5,182) 189,222
Taxation (1,742) 24,874
---------------------------------------------------
Attributable to owners
of the parent (3,440) 113,533
---------------------------------------------------
Notes
1. Stock valuation error
2. Correction in other receivables
3. As the adjustments made are not considered material no disclosure of a third
statement of financial position for the beginning of the earliest
comparative period has been presented.
Financial Overview
Argent`s below par set of results were unavoidable given the global decline in
the demand for steel and automotive products. Having seen its turnover fall by
a quarter, Argent did well to still show a profit without compromising its
geographical footprint and manufacturing capacity.
Steel Trading
The steel trading division had a very difficult financial year but managed to
emerge from it a much better operationally efficient entity. In addition, Argent
has set up strategic alliances with a number of international mild steel,
aluminium and stainless steel suppliers which has reduced the reliance on local
mills, especially those ones with mismanaged monopolies.
The Group purchased Specialised Steel Profiles with effect from 1 February 2010
for R6.495 million. The company is a Durban based importer and distributor of
cold rolled tubing and other profiles. This acquisition has allowed Argent to
improve its internal margins, while it has also enabled us to reassess the
products that we produce in our own mills, resulting in the Group importing part
of its existing product range and thus allowing our infrastructure to
concentrate on manufacturing higher margin products.
Manufacturing of Home and Office products
This division performed well given the economic conditions and most certainly
carried Argent through this difficult year.
The Group purchased the assets and liabilities of Barrier Angelucci (Pty) Ltd on
28 April 2009 for R 5.5 million. This business specialises in the upgrading and
installation of automated teller machines, safes, associated shop fitting and
related security systems used by banks while they also design, manufacture and
install industrial roller shutter doors. The Group moved the company into its
own premises in June 2009 and it is currently in the process of setting up a
country wide service network which once completed will be expanded into Africa.
Cedar Paints will commence its Pretoria capacity upgrade in October this year
as well as be improving its Cape Town plant to enable the manufacture of enamel
paints.
Fabrication
Both Hendor Mining Supplies and Koch`s Cut and Supply Steel Centre enjoyed a
satisfactory year with an improving trend which will most certainly continue
with Hendor especially reaping the benefits of a much improved mining sector.
Automotive Products
Argent`s four automotive products operations came under severe pressure this
year. However, given the state of the automotive industry, it is quite pleasing
that three of them, namely Excalibur Vehicle Accessories, Sentech Industries and
All Lite Steel Products are now running above breakeven levels while Giflo
Engineering is only expected to recover to a substantial degree in June 2011
when the new Ford T6 project goes into production.
Non Steel Related Products
The decline in the Western Cape construction industry led to a disappointing set
of results being posted by Megamix and Villiersdorp Quarries. The decline has
started to turn around and both companies are now running at what can be termed
as acceptable levels.
Allan Maskew`s expansion into the local rubber screen panel industry has proved
to be very successful and as such they will now be introducing their products to
the Australian and American markets. The company`s traditional business in the
mining sector has also started to pick up and the business is thus expected to
have a very good year.
New Joules Engineering has become a major player in the North American railroad
retarder market and although no new railroad yards are expected to come on line
in North America this year, the company has sufficient maintenance contracts in
place over existing units in the field to ensure it has a successful year.
Argent`s property investment division has continued to increase its holdings
with the acquisition of a property for Barrier Angelucci in Sebenza for R 17.3
million and one for Gammid Cape in Epping for R 26.6 million. The Group also
sold two smaller properties used by Jetmaster Cape and Gammid Cape to move the
operations to the new building purchased in Epping - Cape Town.
Retrenchments
Over the financial year, Argent reduced its total staff from 3,640 to 3,416
which in part was due to the following retrenchments
No. of staff Rands
Allan Maskew 16 266,004
BIC 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 in the
current year.
Acknowledgements
My sincere thanks and gratitude to all of Argent`s employees for their hard work
and dedication throughout a difficult year. The lessons learnt and the
operational efficiencies achieved will ensure a successful Argent for many years
to come.
Conclusion
The Group is very upbeat about the 2011 financial year and will use its low cost
structure, substantial geographic footprint and improved operational
efficiencies to benefit from the improved global and local economy.
Dividend
No dividend has been declared.
Total ordinary dividends per share in respect of the financial year to 31 March
2010 therefore amounts to 9 cents (2009 - 38 cents)
Basis of presentation
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 of the previous financial period, with the exception of
the adoption of the following new and amended standards and interpretations, in
response to changes to IFRS.
- IAS 1 - Presentation of Financial statements
- IAS 23 - Borrowing costs
- IFRS 2 - Share Based Payment - Amendment relating to vesting conditions and
cancellations
- IFRS 8 - Operating segments
Annual report
The annual report is expected to be posted to shareholders on or about the
29 June 2010.
Audit opinion
The provisional summarised consolidated statement of financial position as at
31 March 2010 and the related provisional summarised consolidated income
statement, statement of changes in equity and statement of cash flows 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
T.R. Hendry CA (SA) Umlhanga Rocks
Chief Executive Officer 15 June 2010
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: 15/06/2010 14:56:01 Produced by the JSE SENS Department.
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