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ART
ART
ART - Argent Industrial Limited - Audited abridged results for the year ended 31
March 2011 and Notice of Annual General Meeting
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 ABRIDGED RESULTS FOR THE YEAR ENDED 31 MARCH 2011 AND NOTICE OF ANNUAL
GENERAL MEETING
FINANCIAL HIGHLIGHTS
Revenue: R1.755 billion
Operating profit: R101.9 million
Net asset value per share (cents): 1,401.3
Gearing: 23.7%
Earnings before interest, taxation, depreciation and amortisation "EBITDA":
R142.7 million
The abridged financial statements are presented on a consolidated basis
INCOME STATEMENT Actual Restated
FOR THE YEAR ENDED 31 MARCH 2011 2011 2010
R 000
Revenue 1,754,867 1,464,494
Operating profit before finance costs 101,963 46,528
Finance income 1,245 1,483
Finance costs (41,183) (42,544)
Profit before taxation 62,025 5,467
Taxation 7,780 (3,874)
Profit for the year 54,245 9,341
Attributable to non-controlling interest 284 76
Attributable to owners of the parent 53,961 9,265
Basic earnings per share (cents) 59.0 10.2
Headline earnings per share (cents) 55.3 11.9
Dividends per share (cents) 4.0 9.0
SUPPLEMENTARY INFORMATION
Shares in issue (000)
- at end of period 91,540 91,350
- weighted average 91,413 91,221
Cost of sales (R 000) 1,357,242 1,111,726
Depreciation and amortisation (R 000) 39,541 37,723
CALCULATION OF HEADLINE EARNINGS (R 000)
Earnings attributable to ordinary 53,961 9,265
shareholders
Profit on disposal of property, plant and (3,395) (1,264)
equipment
Impairment of property, plant and equipment 3,194
Total tax effects of adjustments (364)
Headline earnings attributable to ordinary 50,566 10,831
shareholders
STATEMENT OF COMPREHENSIVE INCOME Actual Restated
FOR THE YEAR ENDED 31 March 2011 2011 2010
R 000
Profit for the year 54,245 9,341
OTHER COMPREHENSIVE INCOME FOR THE PERIOD
NET OF TAX
Exchange differences on translating foreign (2,056) (6,060)
operations
Realisation of revaluation of properties (5,119) (2,185)
Impairment of property (783)
Total comprehensive income for the year 46,287 1,096
Attributable to equity holders of the
- Parent 46,003 1,020
- Non-controlling interest 284 76
46,287 1,096
STATEMENT OF FINANCIAL POSITION FOR THE Actual Restated
YEAR ENDED 31 MARCH 2011 2011 2010
R 000
ASSETS
Non-current assets
Property, plant and equipment 865,177 888,582
Intangibles 288,444 291,042
Long term loan 10,688 9,817
Deferred taxation 18,799 8,937
1,183,108 1,198,378
Current assets
Inventories 485,180 472,068
Trade and other receivables 355,008 296,228
Taxation 92 1,730
Bank balance and cash 257 277
840,537 770,303
Non-current assets held for sale 25,573
TOTAL ASSETS 2,049,218 1,968,681
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 451,129 451,129
Reserves 122,720 127,946
Retained earnings 708,946 658,647
Attributable to owners of the parent 1,282,795 1,237,722
Non-controlling interest 8,889 8,605
Total shareholders` funds 1,291,684 1,246,327
Non-current liabilities
Interest-bearing borrowings 216,903 199,588
Deferred taxation 75,228 61,998
292,131 261,586
Current liabilities
Trade and other payables 240,052 219,616
Bank overdraft 136,278 126,171
Current portion of interest-bearing 89,073 114,981
borrowings
465,403 460,768
TOTAL EQUITY AND LIABILITIES 2,049,218 1,968,681
Net asset value per share (cents) 1,401.3 1,354.9
STATEMENT OF CASH FLOWS Actual Restated
FOR THE YEAR ENDED 31 MARCH 2011 2011 2010
R 000
Cash generated from operations 88,011 163,428
Finance costs (41,183) (42,544)
Finance income 1,245 1,483
Dividends paid (3,662) (8,201)
Normal taxation refunded 386 3,626
Cash flows from operating activities 44,797 117,792
Cash flows from investing activities (46,523) (114,811)
Cash flows from financing activities (8,401) (65,125)
Net decrease in cash and cash equivalents (10,127) (62,144)
Cash and cash equivalents at beginning of (125,894) (63,750)
period
Cash and cash equivalents at end of period (136,021) (125,894)
STATEMENT OF Share Share Employee Treasury Reval-
CHANGES IN capital premium share shares uation
EQUITY FOR incentive reserve
THE YEAR reserve
ENDED 31
MARCH 2011
R 000
Balance at 31 4,825 540,818 17,042 (94,530) 126,582
March 2009
As previously 4,825 540,818 17,042 (94,530) 126,582
stated
Prior year - - - - -
adjustments
Net treasury - - - 16 -
movement
Share-based - - 1,087 - -
payments
Transfer of - - (6,716) - -
reserve to
retained
earnings
Total - - - - (2,185)
comprehensive
income
Dividends - - - - - -
current
interim and
prior final
Less dividend - - - - -
on treasury
shares
Restated 4,825 540,818 11,413 (94,514) 124,397
balance at 31
March 2010
Net treasury - - - - -
movement
Share-based - - 2,732 - -
payments
Transfer - - - - -
of reserve to
retained
earnings
Total - - - - (5,902)
comprehensive
income
Dividends - - - - - -
current
interim
Less dividend - - - - -
on treasury
shares
Balance at 31 4,825 540,818 14,145 (94,514) 118,495
March 2011
STATEMENT OF Foreign Retained Non- Total
CHANGES IN currency earnings controll- attribut-
EQUITY FOR trans- ing able to
THE YEAR lation interest owners of
ENDED 31 reserve the parent
MARCH 2011
(continued)
R 000
Balance at 31 (1,804) 650,867 8,529 1,252,329
March 2009
As previously (1,804) 654,427 8,529 1,255,889
stated
Prior year - (3,560) - (3,560)
adjustments
Net treasury - - - 16
movement
Share-based - - - 1,087
payments
Transfer of - 6,716 - -
reserve to
retained
earnings
Total (6,060) 9,265 76 1,096
comprehensive
income
Dividends - - (8,684) - (8,684)
current
interim and
prior final
Less dividend - 483 - 483
on treasury
shares
Restated (7,864) 658,647 8,605 1,246,327
balance at 31
March 2010
Net treasury - - - -
movement
Share-based - - - 2,732
payments
Transfer - - - -
of reserve to
retained
earnings
Total (2,056) 53,961 284 46,287
comprehensive
income
Dividends - - (3,860) - (3,860)
current
interim
Less dividend - 198 - 198
on treasury
shares
Balance at 31 (9,920) 708,946 8,889 1,291,684
March 2011
SEGMENT REPORT FOR THE Revenue Results Revenue Results
YEAR ENDED 31 MARCH 2011 actual actual restated restated
2011 2011 2010 2010
Business Segments
R 000
Business
Steel trading 659,335 14,197 489,870 16,532
Automotive products 150,834 6,052 132,667 (29,018)
Manufacture of home and 662,582 (4,363) 608,760 13,808
office products
Fabricators 130,241 18,251 117,738 4,581
Non-steel related products 151,875 27,888 115,459 (436)
Total 1,754,867 62,025 1,464,494 5,467
Geographical
South Africa 1,706,056 61,085 1,418,350 8,048
Rest of the world 48,811 940 46,144 (2,581)
Total 1,754,867 62,025 1,464,494 5,467
PRIOR YEAR Note Pre- Adjust- Adjust- Total Re-
ADJUSTMENTS viously ment ment adjust- stated
reporte open- 2010 ment 31
d ing R 000 R 000 March
R 000 balance 2010
1 April R 000
2009
R 000
Statement of
financial
position
Current assets
Inventory 1 474,230 - (2,162) (2,162) 472,068
Trade and other 2 296,985 - (757) (757) 296,228
receivables
Reserves
Retained 3 664,521 (3,560) (2,314) (5,874) 658,647
earnings
Current
liabilities
Trade and other 3 216,056 3,560 - 3,560 219,616
payables
Non-current
liabilities
Deferred tax 62,603 - (605) (605) 61,998
Income
statement
Operating 49,447 - (2919) (2919) 46,528
profit before
finance costs
Taxation (3,269) - (605) (605) (3,874)
Attributable to 11,579 - (2,314) (2,314) 9,265
owners of the
parent
Note
1. Inventory valuation error
2. Correction in other receivables
3. Reversal of negative goodwill previously recognised
4. 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
Given Argent`s substantial involvement in the steel and automotive sectors and
taking the group`s restructuring costs into account, Argent produced a
satisfactory set of results for the financial year ended 31 March 2011.
OPERATIONS REVIEW
The group`s higher turnover levels did not do much to increase the operating
income to historical levels due to the lower margins experienced by the steel
trading operations and the dismal performance of Argent`s automotive companies.
To enhance the performance of the group`s steel trading operations, Argent has
adopted a global sourcing policy in that all steel used by the group is now
sourced either locally or internationally with the ultimate sourcing decision
based purely on price and availability. Almost overnight this strategy to reduce
Argent`s reliance on local mills has lifted margins in the carbon steel,
stainless steel and aluminium trading divisions.
The group`s automotive sector has been restructured into a model that is more
cost-effective, efficient and sustainable. The recent Japanese tsunami has
created Original Equipment plant closures worldwide, including South Africa and
this has adversely affected the first two months of the current financial year.
The rest of the group`s operations performed in line with expectations and will
continue to improve in line with the recovering global economy.
A number of structural changes occurred during the financial year with the aim
of such changes being to reduce the group`s overhead structure. The resultant
monthly saving for the group of R941,015 has been achieved by implementing the
changes listed below:
- The closure of Phoenix Steel East London and the subsequent amalgamation with
Argent Port Elizabeth
- The closure of Jetmaster Cape and the ensuing incorporation of the company
into Gammid Cape based in Epping
- Excalibur Vehicle Accessories and Giflo Engineering have been amalgamated
under the Excalibur brand which is now situated at the manufacturing facility
based in Ga-Rankuwa
- The combination of the Jetmaster warehouse and factory (previously located in
Maraisburg and Industria respectively) into one operating facility now based in
Roodepoort
- The Life `n Leisure Umhlanga operation has now been incorporated into Castor &
Ladder KZN.
The above restructure cost the group R1,890,000 which included the retrenchment
of 84 people, 41 of which were on short term contract. The group`s total number
of employees was thus in part due to these retrenchments reduced from 3,416 to
3,172.
These structural changes resulted in the group disposing of three properties
from its property portfolio for a sum of R25,764,500 in the 2012 financial year.
The R25,764,500 represents a R10,094,311 gain on cost, however as these
properties are carried at revalued amounts, this gain will not be shown in
profit and loss but reflected as a movement in equity as per International
Financial Reporting Standards (IFRS).
The group is currently looking forward to the opening of a Life `n Leisure shop
in Canal Walk Mall, Cape Town and Clearwater Mall, Johannesburg in July 2011 and
August 2011 respectively. The group currently has shops in both the Menlyn Park
Shopping Centre, Pretoria and the Highveld Mall, Witbank which to date have
proven to be a success.
Argent Industrial Investments purchased a factory situated at 30 Coronation
Road, Maitland, Cape Town for an amount of R12,700,000 on 9 March 2011. This
property was previously leased by the group and houses Atomic Office Equipment.
OUTLOOK
Argent`s efficient management structure coupled with the group`s ability to
respond proactively and swiftly to an ever changing economy without altering its
transparent internal systems, trading ability, geographical footprint and
manufacturing capacity, gives Argent an encouraging outlook for the 2012
financial year.
ACKNOWLEDGEMENTS
The ongoing and future success of the Argent group would not be possible without
a dedicated, loyal and diligent workforce. I would therefore like to take this
opportunity to express my gratitude and appreciation to each and every employee
for your unwavering commitment and dedication.
DIVIDEND
The directors have declared a final dividend of 3 cents per share for the year
ended 31 March 2011. Total ordinary dividends per share in respect of the
financial year to 31 March 2011 therefore amounts to 7 cents (2010 - 9 cents).
The following dates will apply to the abovementioned final dividend:
Last day to trade cum dividend: Friday, 2 September 2011
Trading ex dividend commences: Monday, 5 September 2011
Record date: Friday, 9 September 2011
Dividend payment date: Monday, 12 September 2011
Share certificates may not be dematerialised or re-materialised between Monday,
5 September 2011 and Friday, 9 September 2011, both days inclusive.
BASIS OF PRESENTATION
The condensed financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS), IAS 34 - Interim Financial
Reporting, AC 500 and in compliance with the Companies Act of South Africa and
the Listings Requirements of the JSE Limited. The accounting policies are
consistent with those of the previous financial period.
SUBSEQUENT EVENTS
No matters which are material to the financial affairs of the group have
occurred between the statement of financial position date and the date of this
report.
ANNUAL REPORT AND NOTICE OF ANNUAL GENERAL MEETING
The annual report, including the group`s audited annual financial statements for
the financial year ended 31 March 2011, is expected to be posted to shareholders
on or about the 29 June 2011 ("the Annual Report").
Notice is hereby given that Argent`s Annual General Meeting of shareholders will
be held in the Argent Industrial Limited Boardroom, First Floor, Ridge 63, 8
Sinembe Crescent, La Lucia Ridge Office Estate, Umhlanga, on Thursday, 29
September 2011 at 11:00 to transact the business as stated in the notice of
Annual General Meeting circulated together with the Annual Report.
AUDIT OPINION
The auditors, Grant Thornton, have issued their opinion on the group`s financial
statements for the year ended 31 March 2011. The audit was conducted in
accordance with International Standards on Auditing. They have issued an
unmodified opinion. These summarised financial statements have been derived
from the group financial statements and are consistent in all material respects,
with the group financial statements. A copy of their audit report is available
for inspection at the company`s registered office. Any reference to future
financial performance included in this announcement, has not been reviewed or
reported on by the company`s auditors.
On behalf of the board
TR Hendry CA (SA)
Chief executive officer
Umhlanga Rocks.
23 June 2011
Registered Office:
First floor, Ridge 63, 8 Sinembe Crescent, La Lucia Ridge Office Estate, 4019
Tel: +27 31 791 0061
Auditors
Grant Thornton
Sponsors
PSG Capital (Pty) Ltd
Transfer secretaries:
Link Market Services South Africa (Pty) Ltd, 13th floor, Rennies House, 19
Ameshoff Street, Johannesburg, 2001
Company secretary:
Ms Lindsay Grobler
Directors:
MP Allen, MJ Antonic, Ms SJ Cox (Financial Director), PA Day (Independent Non-
executive), TR Hendry (Chief Executive Officer), PH Lawson (Independent Non-
executive), AF Litschka, K Mapasa (Independent Non-executive), T Scharrighuisen
(Non-executive Chairman), D Smith, GK Youngman (Alternate)
Date: 23/06/2011 16:30:01 Produced by the JSE SENS Department.
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