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ARGENT Industrial Limited - Financial Report
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 2004
* Financial Highlights
* REVENUE UP 14.6%
* ATTRIBUTABLE EARNINGS UP 35.8%
* ATTRIBUTABLE EARNINGS per share UP 19.5%
* HEADLINE EARNINGS UP 35.8%
* HEADLINE EARNINGS per share UP 19.4%
* GEARING 23.8%
Abridged Consolidated Income Statement for the six months ended 30 September
2004
Unaudited Unaudited Audited
six months six months year ended
30-Sep-04 30-Sep-03 31-Mar-04
R`000
REVENUE 380,308 331,897 604,639
OPERATING PROFIT before
financing costs 59,009 45,353 96,966
FINANCING COSTS 4,535 6,093 15,703
PROFIT before taxation 54,474 39,260 81,263
TAXATION 14,018 8,381 19,926
PROFIT after taxation 40,456 30,879 61,337
EARNINGS ATTRIBUTABLE
to outside shareholders 1,098
EARNINGS ATTRIBUTABLE
to ordinary shareholders 40,456 29,781 61,337
Attributable earnings
per share (cents) 61.1 = 51.1 99.1
Headline earnings
per share (cents) 62 51.9 106.2
Dividends per share
(cents) 10 9 18
Supplementary Information
Shares in issue (000)
- at end of period 67,090 58,308 67,090
- weighted average 66,259 58,242 61,867
Interest received
(R 000) 1,254 2,197 8,375
Cost of sales (R 000) 222,840 203,952 359,249
Depreciation &
amortisation (R 000) 8,608 6,803 14,292
Calculation of Headline Earnings
Unaudited Unaudited Audited
six months six months year ended
30-Sep-04 30-Sep-03 31-Mar-04
R`000
Earnings attributable
to ordinary shareholders 40,456 29,781 61,337
Goodwill amortisation 828 651 1,478
Profit on disposal of
property, plant and
equipment -418 -262 -395
Loss on disposal of
property, plant and
equipment 184 55 997
Discontinued operation 2,288
Headline earnings
attributable to
ordinary shareholders 41,050 30,225 65,705
Abridged Consolidated Balance Sheet
for the six months ended 30 September 2004
Unaudited Unaudited Audited
six months six months year ended
30-Sep-04 30-Sep-03 31-Mar-04
R`000
ASSETS
Non-current assets
Property, plant and
equipment 135,592 100,181 110,642
Investment property 51,737 47,534 48,016
Intangibles 30,541 25,169 31,390
217,870 172,884 190,048
Current assets
Inventories 159,026 104,208 96,481
Trade and other
receivables 152,569 88,249 134,415
Bank balance and cash 12,653 67 34,720
324,248 192,524 265,616
TOTAL ASSETS 542,118 365,408 455,664
EQUITY AND LIABILITIES
Capital and reserves
Share capital and
premium 118,003 104,855 117,046
Reserves 24,045 24,045 24,045
Retained earnings 158,650 97,976 124,390
Ordinary shareholders`
funds 300,698 226,876 265,481
Minority interest 5,820
Total shareholders`
funds 300,698 232,696 265,481
Non-current liabilities
Interest-bearing
borrowings 46,929 44,412 47,423
Deferred tax 10,627 7,539 10,087
57,556 51,951 57,510
Current liabilities
Trade and other
payables 148,805 61,836 100,270
Taxation 10,320 4,549 12,532
Bank overdraft 1,277
Current portion of
interest-bearing
borrowings 24,739 13,099 19,871
183,864 80,761 132,673
TOTAL EQUITY AND
LIABILITIES 542,118 365,408 455,664
Net asset value per
share (cents) 448.2 389.1 395.7
Abridged Consolidated Cash Flow Statement
for the six months ended 30 September 2004
Unaudited Unaudited Audited
six months six months year ended
30-Sep-04 30-Sep-03 31-Mar-04
R`000
Cash generated from
operations 33,965 22,714 76,443
Interest paid -4,535 -6,093 -15,703
Interest received 1,254 2,198 8,375
Dividends paid -6,196 -5,142 -10,635
Taxation paid -15,690 -8,366 -9,380
Cash flows from
operating activities 8,798 5,311 49,100
Cash flows from
investing activities -36,196 -19,028 -49,212
Cash flows from
financing activitie 5,331 5,908 28,233
Net (decrease) increase
in cash and cash
equivalents -22,067 -7,809 28,121
Cash and cash
equivalents at
beginning of period 34,720 6,599 6,599
Cash and cash
equivalents at
end of period 12,653 -1,210 34,720
Statement of Changes in Equity
for the six months ended 30 September 2004
Share Share Treasury Revalu- Reserve Retained Total
Capital premium shares ation on subs- earnings
reserve idiary
acquisition
R`000
Balance at
30 September
2003 as
previously
stated 2,915 103,651 836 23,209 97,835 228,446
Consolidation
of share
incentive
trust -1,711 141 -1,570
Balance at
30 September
2003
restated 2,915 103,651 -1,711 836 23,209 97,976 226,876
Shares
issued 439 28,016 -16,679 11,776
Net treasury
movement 415 415
Net profit
for the period 31,556 31,556
Dividends -6,038 -6,038
Less treasury
shares 896 896
Balance at
31 March
2004 3,354 131,667 -17,975 836 23,209 124,390 265,481
Net treasury
movement 957 957
Net profit
for the period 40,456 40,456
Dividends -6,709 -6,709
Less treasury shares 513 513
Balance at
30 September
2004 3,354 131,667 -17,018 836 23,209 158,650 300,698
Segment Report
for the six months ended 30 September 2004
Business Segments
Revenue Results Revenue Results
Unaudited Unaudited Unaudited Unaudited
six months six months six months six months
ended ended ended ended
30-Sep-04 30-Sep-04 30-Sep-03 30-Sep-03
R`000
Steel & Steel
Related Products 333,880 48,186 279,959 35,761
Non Steel Related 46,365 5,944 51,874 3,103
Properties 63 344 64 396
Total 380,308 54,474 331,897 39,260
Restatement of comparatives
A recent ruling given by the GAAP Monitoring Panel has provided more clarity
regarding the consolidation of share incentive scheme trusts. Consequently the
Group has changed its accounting policy in respect of its share incentive scheme
trust (`share trust`). The share trust is now consolidated to the extent that
the Group issued share capital is under the control of the Group. These shares
are shown as treasury shares. The prior period comparatives have been restated
as follows:
As previously Adjustment Restated
stated
R`000
Balance Sheet
Employee share
incentive scheme 1,570 -1,570
Treasury shares 1,711 1,711
Retained earnings
(opening) 97,835 141 97,976
Number of shares
Shares in issue
- weighted (`000) 58,308 -66 58,242
Earnings per share
Attributable earnings
per share (cents) 51.1 0 51.1
Headline earnings
per share (cents) 51.8 0.1 51.9
Net asset value
per share (cents) 391.8 -2.7 389.1
Movement in share incentive scheme
The movement in the shares in the share incentive scheme trust for the period
under review can be summarised as follows:
R`000 30-Sep-04 30-Sep-03
Opening balance 1,229 1,400
Purchases 5,148 632
Shares exercised -1,273 -803
Closing balance 5,104 1,229
COMMENTARY
Chief Executive Officer`s Review
On behalf of the Board of Directors of Argent Industrial Limited, the unaudited
results for the six months ended 30 September 2004 are hereby presented.
Salient Review
Revenue increased by 14,6% to R380,3 million (2003 - R331,9 million)
Attributable earnings increased by 35,8% to R40,5 million
Attributable earnings per share increased by 19,5% to 61,1cents per share (2003
- 51,1 cents per share)
Headline earnings increased by 35,8% to R41,0 million (2003 - R30,2 million)
Headline earnings per share increased by 19,4% to 62,0 cents per share (2003 -
51,9 cents per share)
Gearing decreased to 23,8% (2003 - 24,7%)
GROUP PERFORMANCE
The Group had an excellent first six months and the trend will continue for the
remainder of the financial year.
DIVISIONAL PERFORMANCE
Steel and Steel Related Products
The Group`s steel merchants, operating under the Phoenix Steel banner, had an
excellent first six months and will further benefit from Ispat Iscor`s recent
price increases. Phoenix Steel - Gauteng commissioned its second tube mill and
will complete its building expansion in November 2004. Phoenix Steel - Natal
achieved remarkable results for the first six months, breaking its turnover
record month after month on the back of a substantial increase in demand and the
Ispat Iscor price increases. Two of the steel companies established by the
Group, Phoenix Steel - Mpumalanga and Phoenix Steel - Richards Bay are now
consistent contributors to the Group`s bottom line.
Hendor Mining, the Group`s underground mining scraper supplier, had an
impressive first six months. However, it will be adversely affected by Ispat
Iscor`s October/November increases until interim price increases are secured
from its customers. Hendor has managed to increase its market share and can look
forward to a more than acceptable financial year.
Bavarian Metal Industries had a satisfactory first six months. Being for the
most part an in-house manufacturer, the company has benefited from the upswing
in the Group`s activities.
Koch`s Cut and Supply had a very good first six months and should benefit from
the upswing in the steel prices over the next six months.
Giflo Engineering purchased an additional 10 000 square metres of land and now
has a footprint of 62 500 square metres of which 29 400 square metres is under
cover. During the period under review, Giflo commissioned its two new pipe
benders and will commission its electro polishing plant and new laser machine in
November 2004. Giflo`s local volumes continue to be satisfactory, while its
export book is in excess of USD 1 million.
Excalibur Vehicle Accessories had an excellent first six months and this trend
will continue through to the end of the current financial year. Excalibur opened
branches in both Port Elizabeth and Cape Town and is in the process of opening
one near the Gateway shopping centre in Umhlanga Ridge, Kwa-Zulu Natal.
Jetmaster had a fantastic first six months and allied with its product expansion
plans, should continue to go from strength to strength. Jetmaster managed to
increase its export market in Australia and New Zealand and will concentrate on
doing the same in the United Kingdom over the next six months. Jetmaster
launched a number of new products both in South Africa and internationally. The
Group will benefit from sales of the new product range during the balance of
the current financial year.
Non Steel Related
New Joules Engineering North America, the Group`s American based company had a
satisfactory first six months and is hoping to secure an order for USD 2.4
million in January 2005. New Joules concluded an agreement to purchase a
building in Kansas City for USD 570 000. The company plans on moving from its
existing leased premises to the purchased one in December 2004.
Megamix and Villiersdorp Quarries continue to take advantage of the current boom
in the construction and building sectors and are performing in line with
budgetary expectations.
Prospects
The continued increases in local steel prices, strengthening of the gold price,
low interest rates leading to additional personal disposal income as well as the
boom experienced in the local vehicle market has led to the Group posting a good
set of results for the period under review. There is no indication that these
trends will not continue over the next six months and the Group will continue to
take advantage of this situation. The rand-dollar exchange rates however,
continue to place strain on the Group`s export margins.
Dividend
A final dividend of 10 cents per share in respect of the year ended 31 March
2004 was paid during the period.
An interim dividend of 11 cents per share has been declared, subsequent to 30
September 2004, payable on Monday 24 January 2005 to shareholders recorded in
the register at close of business on Friday 21 January 2005, being the record
date in order to participate in such dividend. The last day to trade cum-div is
Friday 14 January 2005. The share will trade ex-div on Monday 17 January 2005.
Share certificates may not be dematerialised/rematerialised between Monday 17
January 2005 and Friday 21 January 2005, both days inclusive.
In accordance with Generally Accepted Accounting Practice Statement AC107, the
interim dividend of 11 cents per share proposed by the Directors has not been
reflected in the interim financial statements.
Accounting Policies
The financial statements for the period under review are prepared in accordance
with South African Statements of Generally Accepted Accounting Practice and
incorporate Accounting Policies which are consistent with those applied in the
preparation of the audited financial results for the previous period.
On behalf of the Board
T.R. Hendry CA (SA) MaraisburgChief Executive Officer 10 November 2004
Registered Office1316 Clubhouse Street, Maraisburg, Roodepoort, 1724Tel: (011
474 2100)
Auditor:Etchells James Kruger & Associates Inc.
Sponsor:
LCP Manhattan
Transfer Secretaries:Ultra Registrars, 5th floor, 11 Diagonal Street,
Johannesburg,2001(PO Box 4844, Johannesburg, 2000)
Directors:T Scharrighuisen (Non-Executive Chairman), TR Hendry (Chief Executive
Officer), Ms SJ Cox (Financial Director), PA Day (Non-Executive), MJ Antonic
(New Business Development), PH Lawson, GK Youngman (Alternate), D Smith, MP
Allen (Alternate), F Litschka (Non-Executive)
Date: 10/11/2004 09:37:57 AM
Produced by the JSE SENS Department
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