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Trading Statement and Update
Argent Industrial Limited
(Registration number 1993/002054/06)
(Incorporated in the Republic of South Africa)
Share Code: ART
ISIN: ZAE000019188
(“Argent” or “the company” or “group”)
TRADING STATEMENT AND UPDATE
In terms of paragraph 3.4 (b) of the Listings Requirements of
the JSE Limited, companies are required to publish a trading
statement as soon as they are satisfied that there is a
reasonable degree of certainty that the financial results for
the next reporting period will differ by more than 20% from
those of the previous corresponding period.
Headline earnings per share for the 6 months ended 30 September
2017 are expected to be between 21.4% and 41.4% lower at 24.87
and 33.36 cents per share than the 42.48 cents per share
reported for the previous corresponding period.
Loss per share for the 6 months ended 30 September 2017 are
expected to be between 790% and 810% lower at a loss of 290.44
cents per share and a loss of 298.86 cents per share than the
42.09 cents earnings per share reported for the previous
corresponding period.
The group has closed Sentech Industries (“Sentech”) and is in
the process of downsizing Jetmaster, Toolroom Services
(“Toolroom”), Gammid Cape and Gammid Johannesburg. This has
enabled us to sell the Jetmaster and Xpanda Security (“Xpanda”)
Johannesburg buildings. In addition, the group will be disposing
of its Johannesburg based tube mill operation and will be
selling its Klerksdorp building. To date 144 staff have been
retrenched, with a further reduction of another 100 people. This
restructuring was required to ensure the group remains resilient
in the expected turbulent times that South Africa will be facing
in the short to medium term. The group will, on the positive, be
expanding its foot print in the United Kingdom and repurchasing
its own shares.
Normal trading income has been affected by R3.1 million in
retrenchment costs relating to 144 staff incorporating the
closure of Sentech and retrenchments at Toolroom, Atomic Office
Equipment and Paint & Ladders Klerksdorp. In addition, the group
has lost in the order of R2.6 million in both labour “go-slow”
and strikes at Toolroom.
The group has impaired four of its Johannesburg based industrial
properties by an amount of R44.7 million. An offer on one of the
properties has been accepted for an amount of R33.5 million,
another has been listed for auction in November with a reserve
price of R21 million, and a third property is under due
diligence for an amount of R 7.5 million.
The selling of the first two properties will enable Jetmaster to
occupy part of the current Gammid Johannesburg premises, thereby
reducing the size of Gammid Johannesburg and improving both
companies cost base. In addition, Xpanda Johannesburg will
occupy part of the Toolroom building which will reduce the size
of Toolroom and grow the Xpanda Johannesburg operation.
The above consolidation as well as the closure of Sentech and
downsizing of Gammid Cape, has resulted in an impairment of
plant and equipment of R74.7 million. The group has in addition
had its steel trading and processing equipment valued, which
resulted in an impairment of R41.9 million. The impairment will
reduce the group yearly depreciation expense by R8.2 million.
Furthermore, given the current South African economic climate,
the group impaired goodwill by an amount of R130.4 million. The
remaining goodwill in Argent comprises R35 million for Xpanda
and R45 million for OSA Door Parts and Cannock Gates combined
(both United Kingdom based).
The cash position of the group has improved dramatically in the
last six months and will be further enhanced with the
restructuring and downsizing mentioned above.
The excess funds held in South Africa will be utilised by the
group to repurchase its shares in terms of the authorisation
given by the shareholders at the annual general meeting held on
30 August 2017. The authority to repurchase is limited to 20% in
aggregate, of the companies issued share capital at the time the
authority was granted. Shares already repurchased and cancelled
under this authority amounts to 324 876 shares.
The group will be utilising its off-shore balance sheet and
financial resources to acquire an additional operation in the
United Kingdom. Shareholders will be updated in due course.
The above information has not been reviewed or reported on by
the company’s external auditors. It is anticipated that the
results for the six months ended 30 September 2017 are to be
published on SENS on or about 14 November 2017.
Umhlanga
1 November 2017
Sponsor: PSG Capital Proprietary Limited
Date: 01/11/2017 10:42:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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