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Argent Industrial Limited - Unaudited Interim Results for the six-months ended
30 September 2002
Argent Industrial Limited
Reg no 1993/002054/06
(Incorporated in the Republic of South Africa)
("The Group")
Share Code :ART
ISIN Code: ZAE000019188
Unaudited Interim Results for the six-months ended 30 September 2002
Restatement of Audited Results for the year ended 31 March 2002 and Prior Year
Adjustments
Shareholders are warned to exercise caution until they have received the
restated 31 March 2002 report
REVENUE UP 89%
ATTRIBUTABLE EARNINGS UP 108%
HEADLINE EARNINGS per share UP 99%
Abridged Consolidated Balance Sheet
for the six months ended 30 September 2002
Audited
Unaudited year
at ended
30 Sept. 31 Mar.
Unaudited 2001 Audited 2002
Unaudited at as year ended as
at 30 Sept. previ- 31 Mar. previ-
30 Sept. 2001 ously 2002 ously
2002 Restated stated Restated stated
R000
ASSETS
Non-current
assets
Property, plant
and equipment 108 296 96 107 98 991 94 719*2 99 483
Intangibles 12 570 3 563 641 3 455*3 607
Employee share
incentive scheme 1 360 831 831 695 695
122 226 100 501 100 463 98 869 100 785
Current assets
Inventories 82 196 47 270 47 270 60 944 60 944
Trade and other
receivables 133 619 88 738 88 738 101 378 101 378
Bank balance
and cash 25 127 2 997 2 997 10 493 10 493
240 942 139 005 139 005 172 815 172 815
Total assets 363 168 239 506 239 468 271 684 273 600
EQUITY AND
LIABILITIES
Capital and
reserves
Share capital
and premium 89 309 73 559 5 129 73 559*4 5 125
Reserves 24 045 26 013 26 013 24 045 24 045
Accumulated
profits 52 949 26 936 94 935 35 514*5 105 468
Ordinary share-
holders` funds 166 303 126 508 126 077 133 118 134 638
Minority interest 4 744 3 905 3 905 3 824 3 824
Total share-
holders` funds 171 047 130 413 129 982 136 942 138 462
Non-current
liabilities
Long-term
borrowings 28 879 17 810 17 810 18 416 18 416
Deferred
taxation 3 867 3 161 3 593 3 624 4 094
32 746 20 971 21 403 22 040 22 510
Current
liabilities
Trade and other
payables 139 578 76 774 76 771 98 255 98 255
Taxation 1 761 971 935 3 902 3 828
Shareholders for
dividends 4 212 3 109 3 109 3 108 3 108
Current portion
of long-term
borrowings 13 824 7 268 7 268 7 437 7 437
159 375 88 122 88 083 112 702 112 628
Total equity and
liabilities 363 168 239 506 239 468 271 684 273 600
Net asset value
per share (cents) 315,8 284,9 283,9 299,8 303,2
Statement of
Changes in Equity
for the
six months
ended
30 September 2002
Reserve
on
subsi-
Revalu- diary Accu-
Share Share ation acqui- mulated
Capital Premium reserve sition profits Total
R000
Balance at
1 April 2001 2 024 999 2 804 23 209 87 653 116 689
Prior year
adjustment 65 436 (67 802)(2 366)
Restated balance
at 1 April 2001 2 024 66 435 2 804 23 209 19 851 114 323
Issue of share
capital 196 4 904 5 100
Net profit for
the period ended
30 September 2001 10 429 10 429
Dividends (3 344) (3 344)
Balance at 30
September 2001 2 220 71 339 2 804 23 209 26 936 126 508
Reversal of
revaluation of
properties (1 968) (1 968)
Net profit for
the period ended
31 March 2002 11 687 11 687
Dividends (3 109) (3 109)
Balance at
31 March 2002 2 220 71 339 836 23 209 35 514 133 118
Issue of share
capital 412 15 338 15 750
Net profit for
the period ended
30 September 2002 21 647 21 647
Dividends (4 212) (4 212)
Balance at 30
September 2002 2 632 86 677 836 23 209 52 949 166 303
Abridged
Consolidated
Income Statement
for the six
months ended 30
September 2002
Unaudited
six Audited
months year
ended ended
Unaudited Unaudited 30 Sept. Audited 31 Mar.
six six 2001 year 2002
months months as ended as
ended ended previ- 31 Mar. previ-
30 Sept. 30 Sept. ously 2002 ously
2002 2001 stated Restated stated
R000
Revenue 327 946 173 281 173 281 371 644 371 644
Operating profit
before finance
charges 29 027 14 198 14 395 31 860*1 34 012
Net finance charges 2 358 1 830 1 830 4 641 4 641
Net profit before
taxation 26 669 12 368 12 565 27 219 29 371
Taxation 4 102 1 257 1 257 4 502 4 502
Net profit after
taxation 22 567 11 111 11 308 22 717 24 869
Earnings
attributable to
outside share-
holders 920 682 682 601 601
Earnings
attributable to
ordinary share-
holders 21 647 10 429 10 626 22 116 24 268
Attributable
earnings per
share (cents) 48,0 24,4 24,8 50,2 55,1
Headline earnings
per share (cents) 48,8 24,5 24,8 51,3 55,8
Dividends per
share (cents) 8,0 7,0 7,0 14,0 14,0
Shares in
issue (000)
- at end of period 52 655 44 409 44 409 44 409 44 409
- weighted average
for the year 45 096 42 774 42 774 44 082 44 082
Calculation of
Headline Earnings
(R000)
Attributable
earnings 21 647 10 429 10 626 22 116 24 268
Adjustments for:
Goodwill
amortisation 311 75 150
Profit on disposal
of property, plant
and equipment (23) (23) (780) (780)
Loss on disposal of
property, plant
and equipment 47 1 126 1 126
Headline
adjustments 358 52 (23) 496 346
Headline earnings 22 005 10 481 10 603 22 612 24 614
Abridged Consolidated Cash Flow Statement for the six months ended 30 September
2002
Unaudited Unaudited
six months six months
ended ended
30 Sept. 30 Sept.
2002 2001
R000
Cash generated from operations 31 386 12 357
Interest paid (3 552) (3 034)
Interest received 1 194 1 204
Dividends paid (3 108) (2 664)
Taxation paid (4 933) (212)
Cash flows from operating activities 20 987 7 651
Cash flows from investing activities (38 953) (6 707)
Cash flows from financing activities 32 600 1 695
Net increase in cash and cash equivalents 14 634 2 639
Cash and cash equivalents
at beginning of year 10 493 358
Cash and cash equivalents
at end of year 25 127 2 997
Segment Report for the six months ended 30 September 2002
Turnover Turnover Results Results
unaudited unaudited unaudited unaudited
six months six months six months six months
ended ended ended ended
30 Sept. 30 Sept. 30 Sept. 30 Sept.
2002 2001 2002 2001
R000
Steel & Steel Related
Products 206 636 120 350 25 782 8 576
Project Management
& Materials Handling 120 981 52 592 654 3 541
Properties 329 339 233 251
Total 327 946 173 281 26 669 12 368
COMMENTARY
The Group once again produced a strong set of results for the six months ended
30 September 2002.
Salient features of the results
- Attributable earnings increased by 108% R21,6 million for the period under
review (2001 restated - R10,4 million)
- Headline earnings per share increased by 99% to 48,8 cents per share over the
same period (2001 restated - 24,5 cents per share)
- Group gearing increased to 25,0% (2001 restated - 19,3%)
Divisional Performance
Steel and Steel Related Products
The Group`s steel companies have had an excellent first six months. The ever
increasing local steel prices have increased the Group`s steel related turnover
which with the strength of the local economy has enabled us to maintain our
margins. Koch`s Cut and Supply has purchased an adjacent property on which we
plan to open a Laser Cutting facility.
During the period the Group acquired 100% of Jetmaster (Pty) Ltd. The fair value
of the assets acquired and liabilities assumed were as follows:
R000
Current assets 22 846
Non-current assets 1 644
Current liabilities (9 699)
Goodwill 9 457
Total purchase price 24 248
Deduct bank balance
on acquisition (3 159)
Cash flow on
acquisition net
of cash acquired 21 089
The synergies between Jetmaster and the Group ranges from steel supply,
manufacturing of goods that are currently out-sourced and providing a wider
distribution network. Jetmaster`s contribution for the periods results were
(Turnover - R8,7 million and a net profit before tax of R0,8 million.)
Bavarian Metal Industries have had a great first six months having benefited
from an excellent tipper body order book and better than expected steel
fabrication orders. The local steel price increase has had a negative effect on
Hendor Mining Supplies margins. Hendor has however secured increases from its
various customers, which will come into effect between November and December
2002. Giflo Engineering has had an exceptional year. The current building
expansion, which will increase Giflo`s manufacturing capacity by a third, will
be completed by December 2002. Giflo has doubled its exports and increased its
local market share. New Joules North America has fast tracked the start of the
year and is operating above budget. New Joules finalised its retractable
retarder system, which could result in it being one of the largest contributors
to the Group in our 2004 financial year.
Project Management and Materials Handling
Megamix has managed to double its turnover and profit for the six months under
review. We are of the opinion that the current levels of turnover can be
improved and will be expanding our concrete truck fleet in January 2004. Barker
Flynn Associates had a difficult six months due to the construction phase of the
Reductant Plant and the Slag Plant presently being built at Empangeni. Scope and
design changes resulted in delays with construction and problems with the
erection contractor on both plants put tremendous pressure on the Barker Flynn
Associates resources to complete the projects within the original time. This has
resulted in substantial claims for extra costs on both projects, which have been
submitted to the client for consideration. (All costs relating to the contract
have been written off in the current period.) The Kusasa phase 2 contracts were
commissioned on 31 October 2002. The rock phosphate-handling project for
Navitrade is proceeding within budget and on programme.
Restatement of Audited Results for the year ended 31 March 2002 and Prior Year
Adjustments
Following a review by the JSE Securities Exchange SA in conjunction with the
GAAP Monitoring Panel, the audited results in respect of the year ended 31 March
2002 had to be restated, primarily as a result of non-compliance by the Group
and the Company in certain circumstances with the latest Statements of GAAP, as
well as other items of non-disclosure. The details of the adjustments which are
summarised in this announcement, will be disclosed together with the revised
Cash Flow as well as other items of non-disclosure in detail in the restated
annual report for the year ended 31 March 2002.
Goodwill
The Group has adopted the following accounting policy, which will be fully
disclosed in the restated 31 March 2002 results:
- Statement AC 131 "Business Combinations" which became effective for periods
commencing on or after 1 January 2000. Goodwill arising on any new acquisitions
will be amortised according to the directors` assessment of the useful life of
this goodwill to a maximum of 20 years.
Goodwill of R65 436 000 previously written off against share premium in the 31
March 1996 results by way of a consolidation adjustment, will be written off
accumulated profits at 31 March 2002 by means of a prior year adjustment and
share premium reinstated as reflected in the Statement of Changes in Equity. The
directors are of the view that the above mentioned goodwill has been permanently
impaired and accordingly has no value and was written off against accumulated
profits.
Exchange rate adjustment on translation of the foreign operation
The reversal of R1 445 000 as a prior year adjustment in the 31 March 2001
results, was due to accounting for the profit on translation of the foreign
operations fixed assets through the income statement. As a foreign operation
(and not a foreign entity) as defined per Statement AC 112 "The effect of
changes in foreign exchange rates", no profit on translation should have arisen.
No foreign entities currently exist in the Group.
Amortisation of investment and owner occupied property
The Group has adopted AC 135 and AC 123 pertaining to amortisation of investment
and owner occupied property respectively, which has resulted in a prior year
adjustment of R 921 000 net of taxation of R1 317 000 against property, plant
and equipment.
Current adjustments to the 31 March 2002 results
Goodwill amounting to R2 998 000 previously written off against share premium
has been reinstated and the share premium adjusted accordingly. The reversal of
R1 757 000 was due to accounting for the profit on translation of the foreign
operations fixed assets through the income statement.
R245 000 pertaining to amortisation of investments and owner occupied property
has been adjusted against property, plant and equipment.
Neither of these current and prior year adjustments have any cash flow effect.
Fundamental error
The Company has had to correct a fundamental error of R66 792 000 in respect of
non-distributable reserves pertaining to its subsidiary companies which have
been reversed against inter company loan accounts. The error occurred in 1993
and has no effect on the Group`s accumulated profits and net asset value.
Restatement of the year ended 31 March 2002 audit report
A revised audit report has been issued together with the restated 31 March 2002
results with no change to the unqualified audit opinion. The audit report now
states that the Company and the Group complies with Statements of GAAP. The
revised unqualified audit report and restated 31 March 2002 results will be sent
to shareholders with the hard copy of the interim results, and is available for
inspection at the registered office.
Reconciliation`s of Restatement of Audited Results for the year ended 31 March
2002 and prior year adjustments: R000
*1 Operating profit before finance charges
as previously reported 34 012
Adjustments:
Reversal of exchange rate adjustment
on translation of foreign operation (1 757)
Amortisation of goodwill (150)
Amortisation of investment and owner
occupied property (245)
Operating profit before finance
charges restated 31 860
*2 Property, plant and equipment carrying
amount at end of year as previously reported 99 483
Reversal of exchange rate adjustment
on translation of foreign operation:
For year end 2002 (1 757)
For year end 2001 (1 445)
Amortisation of investment and owner
occupied property (245)
Prior years amortisation of investment
and owner occupied property (1 317)
Property, plant and equipment
carrying amount at end of year restated 94 719
*3 Intangibles carrying amount at end of
year as previously reported 607
Reversal of goodwill written off against
share premium 2 998
Amortisation of goodwill (150)
Intangibles carrying amount at
end of year restated 3 455
*4 Share capital and premium as
previously reported 5 125
Reversal of goodwill written off
against share premium 2 998
Prior years goodwill written off 65 436
Share capital and premium restated 73 559
*5 Accumulated profits as previously reported 105 468
Prior years goodwill written off (65 436)+
Amortisation of goodwill (150)
Amortisation of investment
and owner occupied property (245)
Prior years amortisation of
investment and owner occupied property (921)+
Reversal of exchange rate adjustment on
translation of foreign operation:
For year end 2002 (1 757)
For year end 2001 (1 445)+
Accumulated profits restated 35 514
The difference between the aggregate amount written off accumulated profits of
R921 000 and amount written off against property, plant and equipment R1 317 000
amounting to R396 000 pertains to deferred taxation on adjustment.
Prospects
We will continue to focus on export markets. The Group is properly geared to
deliver above average returns on shareholders equity and has a strong platform
for future growth.
Dividend
An interim dividend of 8 cents per share has been declared and is payable on
Monday 9 December 2002 to shareholders recorded, in the register at close of
business on Friday 6 December 2002, being the record date in order to
participate in such dividend. The last day to trade cum dividend is 29 November
2002. The shares will trade ex dividend on Monday 2 December 2002.
There will be no dematerialisation/rematerialisation of share certificates
between 2 December 2002 and 6 December 2002, both days inclusive.
On behalf of the board
T.R. HENDRY CA(SA) Germiston
Chief Executive Officer 12 November 2002
Notes
1. Basis of Accounting
The results have been prepared on the historical cost basis and in accordance
with South African Statements of GAAP. The accounting policies utilised for
purposes of preparing the interim results reflect the updated accounting
policies used in the restated audited 31 March 2002 results.
The Group has adopted the following accounting policy, which will be fully
disclosed in the restated 31 March 2002 results:
- Statement AC 135 "Investment Property" which became effective for periods
commencing on or after 1 April 2001. Investment and owner occupied property
excluding land, will be amortised according to the directors` assessment of the
useful life of the investment property to a maximum of 50 years.
2. Share Capital
Authorised share capital comprises 100 000 000 ordinary shares of 5 cents each.
Issued share capital comprises 52 655 423 ordinary shares of 5 cents each (2001
- 40 486 067 of 5 cents each).
The unissued shares are under the control of the directors of the company until
the next annual general meeting of shareholders.
8 246 279 were issued during the period at an average price of R1,91 per share
to finance the Jetmaster acquisition.
Directors: T. Scharrighuisen (Chairman), T.R. Hendry (Chief Executive
Officer), Ms. S.J. Cox (Financial Director), P.A. Day (Executive), M.J. Antonic
(New Business Development),
G.K. Youngman (Alt. Executive), D. Smith (Alt. New Business Development)
Registered Office:
13 Jack Pienaar Road
Germiston South
Extension 7
Germiston
1411
Tel:(011) 876-4000
(PO Box 14461, Wadeville 1422)
Transfer Secretaries:
Ultra Registrars
Ground Floor
11 Diagonal Street
Johannesburg, 2001
(PO Box 4844, Johannesburg 2000)
Company Secretary: Mrs N Glover
Auditor:
Etchells James Kruger
& Associates Inc.
Sponsor:
LPC Manhattan
LPC Manhattan Sponsors (Pty) Ltd
(Registration number 1999/024792/07)
Website: www.argent.co.za e-mail: argent3@argent.co.za
Date: 13/11/2002 08:45:03 AM Produced by the JSE SENS Department
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