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ART
ART
ART - Argent Industrial Limited - Audited abridged results for the year
ended 31 March 2012 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 2012
AND NOTICE OF ANNUAL GENERAL MEETING
Financial Highlights
REVENUE R1.797 billion
OPERATING PROFIT R121.4 million
NET ASSET VALUE per share (cents) 1,426.2
GEARING 17.3%
EARNINGS BEFORE INTEREST, TAXATION, DEPRECIATION AND AMORTISATION "EBITDA"
R 157 million
The abridged financial statements are presented on a consolidated basis
INCOME STATEMENT Actual Actual
FOR THE YEAR ENDED 31 MARCH 2012 2012 2011
R 000
Revenue 1,797,206 1,754,867
Operating profit before finance costs 121,416 101,963
Finance income 952 1,245
Finance costs (36,107) (41,183)
Profit before taxation 86,261 62,025
Taxation 16,216 7,780
Profit for the year 70,045 54,245
Attributable to non-controlling interest 272 284
Attributable to owners of the parent 69,773 53,961
Basic earnings per share (cents) 76.2 59.0
Diluted earnings per share (cents) 74.5 57.2
Headline earnings per share (cents) 77.1 55.3
Diluted headline earnings per share (cents) 75.4 53.6
Dividends per share (cents) 7.0 4.0
SUPPLEMENTARY INFORMATION
Shares in issue (000)
- at end of period 91,540 91,540
- weighted average 91,540 91,413
- diluted weighted average 93,705 94,417
Cost of sales (R 000) 1,349,166 1,354,784
Depreciation and amortisation (R 000) 35,630 39,541
CALCULATION OF HEADLINE EARNINGS (R 000)
Earnings attributable to ordinary 69,773 53,961
shareholders
Loss/(profit) on disposal of property, 847 (3,395)
plant and equipment
Headline earnings attributable to ordinary 70,620 50,566
shareholders
STATEMENT OF COMPREHENSIVE INCOME Actual Actual
FOR THE YEAR ENDED 31 MARCH 2012 2012 2011
R 000
Profit for the year 70,045 54,245
OTHER COMPREHENSIVE INCOME FOR THE PERIOD,
NET OF TAX
Exchange differences on translating foreign 926 (2,056)
operations
Realisation of revaluation reserve (8,728) (5,119)
Reversal of revaluation reserve (41,809)
Change in tax rate on revaluation reserve (1,593)
Transfer of reserve to retained earnings 8,728
Impairment of property (783)
Total comprehensive income for the year 27,569 46,287
Attributable to equity holders of the
- Parent 27,297 46,003
- Non-controlling interest 272 284
27,569 46,287
STATEMENT OF FINANCIAL POSITION FOR THE Actual Actual
YEAR ENDED 31 MARCH 2012 2012 2011
R 000
ASSETS
Non-current assets
Property, plant and equipment 830,764 865,177
Intangibles 294,679 288,444
Long term loan 11,578 10,688
Deferred taxation 14,693 18,799
1,151,714 1,183,108
Current assets
Inventories 502,201 485,180
Trade and other receivables 346,231 355,008
Taxation 92
Bank balance and cash 287 257
848,719 840,537
Non-current assets held for sale 25,573
TOTAL ASSETS 2,000,433 2,049,218
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 451,129 451,129
Reserves 59,278 122,720
Retained earnings 795,116 708,946
Attributable to owners of the parent 1,305,523 1,282,795
Non-controlling interest 9,161 8,889
Total shareholders` funds 1,314,684 1,291,684
Non-current liabilities
Interest-bearing borrowings 144,854 216,903
Deferred taxation 72,378 75,228
217,232 292,131
Current liabilities
Trade and other payables 257,077 240,052
Taxation 193
Bank overdraft 129,290 136,278
Current portion of interest-bearing 81,957 89,073
borrowings
468,517 465,403
TOTAL EQUITY AND LIABILITIES 2,000,433 2,049,218
Net asset value per share (cents) 1,426.2 1,401.3
STATEMENT OF CASH FLOWS Actual Actual
FOR THE YEAR ENDED 31 MARCH 2012 2012 2011
R 000
Cash generated from operations 168,442 88,011
Finance costs (36,107) (41,183)
Finance income 952 1,245
Dividends paid (6,408) (3,662)
Normal taxation (paid)/refunded (2,012) 386
Cash flows from operating activities 124,867 44,797
Cash flows from investing activities (36,263) (46,523)
Cash flows from financing activities (81,586) (8,401)
Net increase/(decrease) in cash and cash 7,018 (10,127)
equivalents
Cash and cash equivalents at beginning of (136,021) (125,894)
year
Cash and cash equivalents at end of year (129,003) (136,021)
STATEMENT OF Share Share Employee Treasury Reval-
CHANGES IN capital premium Share shares uation
EQUITY FOR Incentive reserve
THE YEAR reserve
ENDED 31
MARCH 2012
R 000
Restated 4,825 540,818 11,413 (94,514) 124,397
balance at 31
March 2010
Share-based - - 2,732 - -
payments
Total - - - - (5,902)
comprehensive
income
Dividends - - - - - -
current
interim and
prior final
Less dividend - - - - -
on treasury
shares
Balance at 31 4,825 540,818 14,145 (94,514) 118,495
March 2011
Share-based - - 1,839 - -
payments
Transfer of - - (14,077) - -
reserve to
retained
earnings
Total - - - - (52,130)
comprehensive
Income
Dividends - - - - - -
current
interim
Less dividend - - - - -
on treasury
shares
Balance at 31 4,825 540,818 1,907 (94,514) 66,365
March 2012
STATEMENT OF Foreign Retained Total Non- Total
CHANGES IN Currency earnings attribut- controll-
EQUITY FOR trans- able to ing
THE YEAR lation owners of interest
ENDED 31 reserve the
MARCH 2012 parent
(continued)
R 000
Restated (7,864) 658,647 1,237,722 8,605 1,246,327
balance at 31
March 2010
Share-based - - 2,732 - 2,732
payments
Total (2,056) 53,961 46,003 284 46,287
comprehensive
income
Dividends - - (3,860) (3,860) - (3,860)
current
interim and
prior final
Less dividend - 198 198 - 198
on treasury
shares
Balance at 31 (9,920) 708,946 1,282,795 8,889 1,291,684
March 2011
Share-based - - 1,839 -
payments 1,839
Transfer - 14,077 - - -
of reserve to
retained
earnings
Total 926 78,501 27,297 272 27,569
comprehensive
income
Dividends - - (6,754) (6,754) - (6,754)
current
interim
Less dividend - 346 346 - 346
on treasury
shares
Balance at 31 (8,994) 795,116 1,305,523 9,161 1,314,684
March 2012
SEGMENTAL REVIEW Manufac- Steel Steel
turing trading trading/
retail
R 000
BUSINESS SEGMENTS
for the year ended 31 March 2012
Revenue from external sales 989,454 463,578 245,687
Profit/(loss) before taxation 69,485 22,831 (14,350)
Taxation
Profit for the year
for the year ended 31 March 2011
Revenue from external sales 967,865 446,258 264,076
Profit/(loss) before taxation 59,395 7,601 (11,920)
Taxation
Profit for the year
SEGMENTAL REVIEW Construc- Proper- Consoli-
(continued) tion ties dated
R 000
BUSINESS SEGMENTS
for the year ended 31 March 2012
Revenue from external sales 96,657 1,830 1,797,206
Profit/(loss) before taxation 2,460 5,835 86,261
Taxation 16,216
Profit for the year 70,045
for the year ended 31 March 2011
Revenue from external sales 76,523 145 1,754,867
Profit/(loss) before taxation 1,022 5,927 62,025
Taxation 7,780
Profit for the year 54,245
South Rest of Consoli-
Africa the world dated
GEOGRAPHICAL SEGMENTS
for the year ended 31 March 2012
Revenue from external sales 1,751,975 45,231 1,797,206
Profit before taxation 86,148 113 86,261
Taxation 16,216
Profit for the year 70,045
for the year ended 31 March 2011
Revenue from external sales 1,706,056 48,811 1,754,867
Profit before taxation 61,085 940 62,025
Taxation 7,780
Profit for the year 54,245
FINANCIAL OVERVIEW
Argent Industrial Limited produced a significantly better set of results for
the twelve months ended 31 March 2012. The results, although an improvement
on the same period last year, were heavily affected by the July strike
action in the steel, engineering and chemical industries that effectively
closed three quarters of the group`s operations for a period of three weeks.
The most significant improvement in the group as a whole is the better
performance of most of the manufacturing entities, particularly those
related to the retail and consumer markets.
Our balance sheet remains strong and appropriately capitalised with gearing
down to 17%.
OPERATIONS REVIEW
The improvement in the group`s performance was due to the improved margin in
manufacturing that was achieved through better sourcing of raw material from
both local and international mills, and through careful management of
operational expenses.
The group`s global sourcing policy has helped to improve margins in the
carbon steel, stainless steel and aluminium trading divisions. The steel
trading market remains competitive with narrow margins, due to being
overstocked at the trader level while being oversupplied by imports and the
local mills. The group`s spend on global sourcing of steel material has
more than doubled in 2012 and this was assisted by favourable international
prices and a relatively strong Rand. This strategy will continue in 2013,
whilst at the same time negotiating with local mills for competitive deals.
The government`s expected spend on infrastructural projects should
significantly boost the steel trading market in 2013.
Argent`s manufacturing companies performed well with the exception of
Excalibur Vehicle Accessories which remains a challenge. A new business
strategy has been implemented at Excalibur Vehicle Accessories, which should
see the company return to profits in 2013. The company has started to
diversify its business and has introduced new product lines that include
school and hospital furniture to take advantage of the government`s
committed expenditure in these areas, as well as pit latrine structures for
the low-cost housing market. The bigger manufacturing entities such as
Tricks Wrought Iron Services, Xpanda Security and Toolroom Services
continued with impressive performance and have strong order books for 2013.
Cedar Paint has secured the house brand paint supply for three large retail
groups in the country, while its own branded products are gaining
significant market share. Hendor Mining Supplies also produced very good
results, which would have been even better were it not for the protracted
mine closures, particularly at Impala Platinum.
The steel trading and distribution companies are based in the outlying
regions and are typically steel trading companies that also market all of
the other Argent brands from the same entity. These businesses, being
resellers, operate off low margins and as a result of being located in
remote areas, don`t have a strong economic base and are battling in the
current climate. A number of strategies have been implemented to make these
businesses more profitable, including right-sizing of the businesses and
focusing on specific products suited to the local area. These initiatives
are bearing fruit.
Megamix and Argent Industrial Engineering are seeing improved volumes in the
Western Cape, with an increase in work originating from the low-cost housing
market in particular. This market is still very competitive and margins are
under pressure. There has been a consolidation in the suppliers of ready-
mix and stone in the market in general, and this has resulted in a number of
suitors for this business that Argent is currently investigating.
OUTLOOK
The growth experienced in Argent`s companies in the past year has been
impressive and all signs are that this will be the trend for 2013. A number
of turnaround strategies that were initiated in 2012 are now starting to
show real signs of success and Argent looks forward to having all of its
loss-making businesses in 2012, turn to profit in 2013. The anticipated
infrastructure spend by the government will add further stimulus to the
steel trading and manufacturing entities and some of this is expected to
yield results in 2013, while most of it offers growth potential for 2014 and
beyond. Overall we expect that 2013 will show a continued growth trend for
Argent as margins improve and business volumes expand.
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 gross dividend of 6 cents per share for
the year ended 31 March 2012. Total ordinary dividends per share in respect
of the financial year to 31 March 2012 therefore amounts to 10 cents (2011 -
7 cents).
The following dates will apply to the abovementioned final dividend:
Last day to trade cum dividend: Friday, 7 September 2012
Trading ex dividend commences: Monday, 10 September 2012
Record date: Friday, 14 September 2012
Dividend payment date: Monday, 17 September 2012
Share certificates may not be dematerialised or re-materialised between
Monday, 10 September 2012 and Friday, 14 September 2012, both days
inclusive.
In determining the dividends tax (DT) of 15% to withhold in terms of the
Income Tax Act (No 58 of 1962) for those shareholders who are not exempt
from the DT, no secondary tax on companies (STC) credits have been utilised.
Shareholders who are not exempt from the DT will therefore receive a
dividend of 5.1 cents per share net of DT. The Company has 96 490 604
ordinary shares in issue and its income tax reference number is
9096/002/71/3.
The above dates are subject to change. Any changes will be released on SENS.
Where applicable, dividends in respect of certificated shares will be
transferred electronically to shareholders` bank accounts on the payment
date. In the absence of specific mandates, dividend cheques will be posted
to shareholders. Ordinary shareholders who hold dematerialised shares will
have their accounts at their CSDP or broker credited/updated on Monday, 17
September 2012.
BASIS OF PRESENTATION
The condensed financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS), the presentation and
disclosure requirements of IAS 34 - Interim Financial Reporting, AC 500 and
in compliance with the Companies Act of South Africa (No. 71 of 2008) and
the Listing Requirements of the JSE Limited. The accounting policies are
consistent with those of the previous financial period, except for the
adoption of improved, revised or new standards and interpretations. The
aggregate effect of these changes in respect of the year ended 31 March 2012
is nil. The condensed financial statements have been prepared under the
supervision of the Financial Director, Ms S.J. Cox CA (SA). Any reference to
future financial performance included in this announcement, has not been
reviewed or reported on by the Company`s auditors.
EVENTS AFTER THE REPORTING PERIOD
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.
GOING CONCERN
Shareholders are advised that the audited results for the year ended 31
March 2012 have been prepared on the going concern concept. This basis
presumes that funds will be available to finance future operations and that
the realisation of assets and settlement of liabilities, contingent
obligations and commitments will occur in the ordinary course of business.
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 2012, is expected to be posted to
shareholders on or about the 29 June 2012 ("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 Monday,
20 August 2012 at 14:00 to transact the business as stated in the notice of
Annual General Meeting circulated together with the Annual Report. The date
on which shareholders must be recorded as such in the share register to be
eligible to vote at the Annual General Meeting is Friday, 10 August 2012,
with the last day to trade being Thursday, 2 August 2012.
AUDIT OPINION
The auditors, Grant Thornton, have audited the group`s financial statements
for the year ended 31 March 2012 and their unqualified audit report is
available for inspection at the company`s registered office.
On behalf of the board
T.R. Hendry CA (SA)
Chief executive officer
Umhlanga Rocks
20 June 2012
Registered Office:
First floor, Ridge 63, 8 Sinembe Crescent, La Lucia Ridge Office Estate,
4019
Tel: +27 31 791 0061
Auditors
Grant Thornton
21 June 2012
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:
Mark du Toit
Directors:
MP Allen, MJ Antonic, Ms SJ Cox (Financial Director), PA Day (Independent
Non-executive), TR Hendry (Chief Executive Officer), Mrs JA Etchells (Non-
executive), AF Litschka, K Mapasa (Independent Non-executive), T
Scharrighuisen (Non-executive Chairman), D Smith, GK Youngman (Alternate)
Date: 21/06/2012 16:39:01 Produced by the JSE SENS Department.
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employees and agents accept no liability for (or in respect of) any direct,
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howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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