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Abridged Unaudited Interim Consolidated Results for the Six Months Ended 30 September 2017
Argent Industrial Limited
Registration number 1993/002054/06
(Incorporated in the Republic of South Africa)
Share code: ART ISIN code: ZAE000019188
(‘Argent’ or ‘the group’ or ‘the company’)
ABRIDGED UNAUDITED INTERIM CONSOLIDATED RESULTS FOR THE SIX MONTHS
ENDED 30 SEPTEMBER 2017
Financial Highlights
Headline earnings per share 31.5 cents
Gearing 6.1%
Net asset value per share 1 050.7 cents
Interim dividend per share 10 cents
The abridged unaudited financial statements are presented on a consolidated
basis
Consolidated Statement of Profit or Unaudited Unaudited Audited
Loss for the period ended six months six months year ended
30 Sept 30 Sept 31 Mar
2017 2016 2017
R 000 R 000 R 000
Revenue 940,819 940,122 1,849,127
Operating (loss) / profit before
finance costs (246,068) 60,328 105,985
Finance income 586 582 1,183
Finance costs (7,245) (7,549) (19,678)
(Loss) / profit before taxation (252,727) 53,361 87,490
Taxation (10,952) (14,514) (24,057)
(Loss) / profit for the period (263,679) 38,847 63,433
Attributable to equity holders of the
- Parent (264,283) 38,224 61,764
- Non-controlling interest 604 623 1,669
(263,679) 38,847 63,433
Basic (loss) / earnings per share
(cents) (292.3) 42.1 68.0
Diluted (loss) / earnings per share
(cents) (292.3) 42.1 68.0
Headline earnings per share (cents) 31.5 42.5 69.6
Diluted headline earnings per share
(cents) 31.5 42.5 69.6
Dividends per share (cents) (1) 11.0 9.0 19.0
1. Final dividend of 11 cents was
paid on 31 July 2017
Supplementary information
Shares in issue (000)
- at end of period 90,240 90,642 90,642
- weighted average 90,424 90,815 90,815
- diluted weighted average 90,424 90,815 90,815
Cost of sales (R 000) 738,102 727,978 1,416,572
Depreciation and amortisation (R 000) 15,049 16,053 32,635
Calculation of headline earnings
(R 000)
(Loss) / earnings attributable to
ordinary shareholders (264,283) 38,224 61,764
Loss on disposal of property, plant
and equipment 1,275 491 2,040
Impairment of property, plant and
equipment 161,448 - -
Impairment of intangible assets 130,395 - -
Total tax effects of adjustments (357) (137) (571)
Headline earnings attributable to
ordinary shareholders 28,478 38,578 63,233
Consolidated Statement of other Unaudited Unaudited Audited
Comprehensive Income or Loss for the six months six months year ended
period ended 30 Sept 30 Sept 31 Mar
2017 2016 2017
R 000 R 000 R 000
(Loss) / profit for the period (263,679) 38,847 63,433
Other comprehensive income for the
period
Items that may be reclassified
subsequently to profit and loss
Exchange differences on translating
foreign operations 1,399 (1,591) (7,483)
Total other comprehensive (loss) /
income for the period (262,280) 37,256 55,950
Attributable to equity holders of the
- Parent (262,884) 36,633 54,281
- Non-controlling interest 604 623 1,669
(262,280) 37,256 55,950
Consolidated Statement of Financial Unaudited Unaudited Audited
Position for the period ended At At at
30 Sept 30 Sept 31 Mar
2017 2016 2017
R 000 R 000 R 000
ASSETS
Property, plant and equipment 487,779 635,858 631,861
Intangible assets 83,241 214,891 213,693
Long term loan 15,181 16,411 14,971
Deferred taxation - - 7,432
Non-current assets 586,201 867,160 867,957
Inventories 447,539 528,860 488,641
Trade and other receivables 298,962 309,780 339,285
Bank balance and cash 61,368 371 30,894
Current assets 807,869 839,011 858,820
TOTAL ASSETS 1,394,070 1,706,171 1,726,777
EQUITY AND LIABILITIES
Capital and reserves
Stated capital 446,033 447,872 447,872
Reserves 25,591 29,847 24,177
Retained earnings 476,566 736,183 750,923
Attributable to owners of the parent 948,190 1,213,902 1,222,972
Non-controlling interest 15,784 11,834 15,180
Total shareholders' funds 963,974 1,225,736 1,238,152
Interest-bearing borrowings 27,263 48,807 36,509
Deferred tax 82,914 66,381 83,700
Non-current liabilities 110,177 115,188 120,209
Trade and other payables 204,226 243,319 235,257
Taxation 3,040 3,281 1,673
Bank overdraft 80,648 84,229 99,023
Current portion of interest-bearing
borrowings 32,005 34,418 32,463
Current liabilities 319,919 365,247 368,416
TOTAL EQUITY AND LIABILITIES 1,394,070 1,706,171 1,726,777
Net asset value per share (cents) 1,050.7 1,339.2 1,349.2
Abridged Consolidated Statement of Unaudited Unaudited Audited
Cash Flows for the period ended six months six months year ended
30 Sept 30 Sept 31 Mar
2017 2016 2017
R 000 R 000 R 000
Cash generated from operations 113,758 59,819 122,200
Finance income 586 582 1,183
Finance costs (7,245) (7,549) (19,678)
Dividends paid (10,074) (8,257) (17,057)
Normal taxation paid (3,185) (5,021) (6,468)
Cash flows from operating activities 93,840 39,574 80,180
Cash flows from investing activities (33,448) (76,444) (86,479)
Cash flows from financing activities (11,543) 37,952 23,110
Net increase in cash and cash
equivalents 48,849 1,082 16,811
Cash and cash equivalents at
beginning of period (68,129) (84,940) (84,940)
Cash and cash equivalents at end of
period (19,280) (83,858) (68,129)
Consolidated Statement of Changes in Stated Treasury Employee
Equity for the period ended capital shares share
30 September 2017 incentive
reserve
R 000 R 000 R 000
Balance at 30 September 2016 –
unaudited 540,918 (93,046) 1,079
Non-controlling interest on
acquisition of subsidiary - - -
Share-based payments - - 222
Total comprehensive income for the
period - - -
Dividends - - -
Less dividend on treasury shares - - -
Balance at 31 March 2017 540,918 (93,046) 1,301
Share-based payments - - 15
Share buy back (1,839) - -
Total comprehensive loss for the
period - - -
Dividends - - -
Less dividend on treasury shares - - -
Balance at 30 September 2017 539,079 (93,046) 1,316
Consolidated Statement of Changes in Revaluation Foreign Retained
Equity for the period ended reserve currency earnings
30 September 2017 translation
(continued) reserve
R 000 R 000 R 000
Balance at 30 September 2016 –
unaudited 36,323 (7,555) 736,183
Non-controlling interest on
acquisition of subsidiary - - -
Share-based payments - - -
Total comprehensive income for the
period - (5,892) 23,540
Dividends - - (9,533)
Less dividend on treasury shares - - 733
Balance at 31 March 2017 36,323 (13,447) 750,923
Share-based payments - - -
Share buy back - - -
Total comprehensive loss for the
period - 1,399 (264,283)
Dividends - - (10,486)
Less dividend on treasury shares - - 412
Balance at 30 September 2017 36,323 (12,048) 476,566
Consolidated Statement of Changes Total Non- Total
in Equity for the period ended attributable controlling shareholders’
30 September 2017 to owners of interest funds
(continued) the parent
R 000 R 000 R 000
Balance at 30 September 2016 –
unaudited 1,213,902 11,834 1,225,736
Non-controlling interest on
acquisition of subsidiary - 2,300 2,300
Share-based payments 222 - 222
Total comprehensive income for
the period 17,648 1,046 18,694
Dividends (9,533) - (9,533)
Less dividend on treasury shares 733 - 733
Balance at 31 March 2017 1,222,972 15,180 1,238,152
Share-based payments 15 - 15
Share buy back (1,839) - (1,839)
Total comprehensive loss for the
period (262,884) 604 (262,280)
Dividends (10,486) - (10,486)
Less dividend on treasury shares 412 - 412
Balance at 30 September 2017 948,190 15,784 963,974
Segmental review Manufacturing Steel Properties
trading
R 000 R 000 R 000
Business segments
for the six months ended 30
September 2017 - unaudited
Revenue from external sales 623,543 316,810 466
Loss before taxation (42,197) (44,177) (35,958)
Taxation
Loss for the period
Other information
Loss before taxation per above (42,197) (44,177) (35,958)
Impairment of property, plant,
equipment and intangibles 68,050 48,629 44,769
Profit before taxation and
impairments 25,853 4,452 8,811
Net assets 659,014 230,409 157,465
Capital expenditure 31,596 2,827 4,618
Depreciation / amortisation 10,718 4,314 17
Finance costs * (2,616) 3,745 6,116
Finance income 586 - -
* As per the group policy, finance costs and finance income derived from
primary banking is netted off. The company has net finance income and this
is distorting the segment for finance costs.
Segmental review (continued) Intangible Consolidated
assets
R 000 R 000
Business segments
for the six months ended 30 September 2017 -
unaudited
Revenue from external sales - 940,819
Loss before taxation (130,395) (252,727)
Taxation (10,952)
Loss for the period (263,679)
Other information
Loss before taxation per above (130,395) (252,727)
Impairment of property, plant,
equipment and intangibles 130,395 291,843
Profit before taxation and
impairments - 39,116
Net assets 1,046,888
Capital expenditure 39,041
Depreciation / amortisation 15,049
Finance costs * 7,245
Finance income 586
Segmental review Manufacturing Steel Automotive
trading
R 000 R 000 R 000
for the six months ended 30
September 2016 – unaudited
Revenue from external sales 512,549 325,050 56,152
Profit / (loss) before taxation 39,917 11,342 (5,422)
Taxation
Profit for the period
Other information
Net assets 739,944 299,697 47,181
Capital expenditure 15,383 2,796 1,847
Depreciation / amortisation 9,667 3,559 1,719
Finance costs * (3,288) 4,284 750
Finance income 510 - 72
Segmental review (continued) Watch list Properties Consolidated
R 000 R 000 R 000
for the six months ended 30
September 2016 – unaudited
Revenue from external sales 45,820 551 940,122
Profit / (loss) before taxation (185) 7,709 53,361
Taxation (14,514)
Profit for the period 38,847
Other information
Net assets 20,535 184,760 1,292,117
Capital expenditure 4,705 8,973 33,704
Depreciation / amortisation 972 136 16,053
Finance costs * 469 5,334 7,549
Finance income - - 582
Segmental review Manufacturing Steel Automotive
trading
R 000 R 000 R 000
for the year ended 31 March 2017 –
audited
Revenue from external sales 1,096,052 636,653 115,308
Profit / (loss) before taxation 59,810 21,794 (6,480)
Taxation
Profit for the year
Other information
Net assets 770,876 308,266 47,094
Capital expenditure 31,218 5,850 3,144
Depreciation / amortisation 21,420 7,613 3,449
Finance costs * (2,435) 9,237 1,437
Finance income 696 13 474
Segmental review (continued) Properties Consolidated
R 000 R 000
for the year ended 31 March 2017 – audited
Revenue from external sales 1,114 1,849,127
Profit / (loss) before taxation 12,366 87,490
Taxation (24,057)
Profit for the year 63,433
Other information
Net assets 188,184 1,314,420
Capital expenditure 8,234 48,446
Depreciation / amortisation 153 32,635
Finance costs * 11,439 19,678
Finance income - 1,183
Segmental review South Africa Rest of the Consolidated
world
R 000 R 000 R 000
Geographical segments
for the six months ended
30 September 2017 - unaudited
Revenue from external sales 846,247 94,572 940,819
(Loss) / profit before taxation (274,476) 21,749 (252,727)
Taxation (10,952)
Loss for the period (263,679)
Other information
Net assets 940,585 106,303 1,046,888
Capital expenditure 37,428 1,613 39,041
Depreciation / amortisation 14,066 983 15,049
Finance costs 7,288 (43) 7,245
Finance income 586 - 586
for the six months ended 30
September 2016 - unaudited
Revenue from external sales 856,316 83,806 940,122
Profit before taxation 42,462 10,899 53,361
Taxation (14,514)
Profit for the period 38,847
Other information
Net assets 1,210,874 81,243 1,292,117
Capital expenditure 31,714 1,990 33,704
Depreciation / amortisation 14,933 1,120 16,053
Finance costs 7,577 (28) 7,549
Finance income 582 - 582
for the year ended 31 March 2017 –
audited
Revenue from external sales 1,677,103 172,024 1,849,127
Profit before taxation 59,079 28,411 87,490
Taxation (24,057)
Profit for the year 63,433
Other information
Net assets 1,230,039 84,381 1,314,420
Capital expenditure 44,242 4,204 48,446
Depreciation / amortisation 30,166 2,469 32,635
Finance costs 19,732 (54) 19,678
Finance income 1,183 - 1,183
Financial Overview
Argent Industrial Limited has had a difficult first six months, caused on
the whole by a difficult and unpredictable South African economy. Headline
earnings as a result, decreased from 42.5 cents a share to 31.5 cents a
share.
Operations Review
Manufacturing
The groups three overseas companies have been the major contributor to this
sector, making a combined R21.7 million before tax.
The group is in the process of downsizing a number of South African
operations being Jetmaster, Gammid Cape, Gammid Johannesburg and Toolroom
Services (“Toolroom”). Both Gammid Johannesburg and Jetmaster will have to
relocate premises. In addition, we are moving Xpanda Security (“Xpanda”)
Johannesburg into the Toolroom premises (shared facility). This will reduce
the Toolroom footprint/ cost centre and allow us to increase our Xpanda
presence in Johannesburg and the greater northern regions.
The process has resulted in the retrenchment of 144 staff members at a cost
of R3.08 million and we are still to retrench another 100 people at an
estimated cost of R2.7 million.
Ongoing strikes and “go slow” labour actions have cost Toolroom an estimated
R2.6 million for the financial period under review.
Toolroom currently has 126 people on suspension awaiting the outcome of
disciplinary hearings. The labour disruptions in this company will affect
production until the December shut down.
Steel Trading
While not the easiest of business sectors in South Africa, the sector did
manage to make a positive contribution of R4.4 million before tax. The group
is in the process of downsizing Gammid Cape and Gammid Johannesburg and is
in the process of selling its two tube mills and related tooling for an
amount of R10 million. The groups stock levels held in this sector have
decreased from R249 million as of the 31 March 2017 to its current R216
million.
Impairments
Given the current South African economic climate, the group impaired
goodwill by an amount of R130.4 million. The remaining goodwill in Argent
comprises of R35 million for Xpanda and R45 million for OSA Door Parts and
Cannock Gates combined (both United Kingdom based).
We have impaired four of the Johannesburg properties by an amount of R44.7
million. Three of them due to receiving lower offers/ indicative offers and
Phoenix Steel Gauteng which was revalued along with the balance of the steel
sector assets.
As set out above, the closure of Sentech and the downsizing/ relocation of
the companies has resulted in an impairment of plant and equipment,
including a full valuation of the groups steel trading assets of R116.7
million.
The total impairment amounted to R291.8 million, which will reduce the group
yearly depreciation expense by R8.2 million.
Properties
The group is in the process of selling its Jetmaster property (Roodepoort,
Johannesburg) for an amount of R33.5 million and has attempted
unsuccessfully to sell its Xpanda Johannesburg property (Sebenza) via
auction. It will be relisted again in January 2018.
In addition, the Cedar Paints Klerksdorp property is under offer/ due
diligence, for an amount of R7.5 million.
Outlook
The outlook remains positive. The headline earnings for the six months,
adjusted for the retrenchments and Toolroom strike would have been 37.7
cents per share as compared to 31.50 cents per share.
The groups overseas operations have performed to expectation and it is the
groups intention to purchase an additional operation in the United Kingdom.
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.
Basis of Presentation
The abridged unaudited and unreviewed interim consolidated financial
statements were prepared in accordance with International Financial
Reporting Standards (IFRS), the presentation and disclosure requirements of
IAS 34 – Interim Financial Reporting, the SAICA Financial Reporting Guides
as issued by the Accounting Practices Committee, the Financial Reporting
Pronouncements as issued by the Financial Reporting Standards Council and in
compliance with the Companies Act of South Africa (Act No. 71 of 2008) and
the Listings Requirements of the JSE Limited. The accounting policies are
consistent with those of the previous annual financial statements, except
for the adoption of improved, revised or new standards and interpretations.
The aggregate effect of these changes in respect of the period ended 30
September is nil. The abridged unaudited and unreviewed interim consolidated
financial statements were prepared under the supervision of the Financial
Director, Ms SJ Cox CA (SA). Any reference to future financial performance
included in this announcement has not been reviewed or reported on by the
group’s auditors.
Dividend
Subsequent to 30 September 2017, an interim gross dividend of 10 cents per
share was approved and declared by the Board of Directors for the six-month
period ending 30 September 2017 from income reserves.
The following dates will apply to the abovementioned interim dividend:
Last day to trade cum dividend: Monday, 19 March 2018
Trading ex-dividend commences: Tuesday, 20 March 2018
Record date: Friday, 23 March 2018
Dividend payment date: Monday, 26 March 2018
Share certificates may not be dematerialised or rematerialised between
Tuesday, 20 March 2018, and Friday, 23 March 2018, both days inclusive.
In determining the dividends tax (DT) of 20% to withhold in terms of the
Income Tax Act (Act No. 58 of 1962), those shareholders who are not exempt
from the DT will therefore receive a dividend of 8.00 cents per share net of
DT. The company has 94 922 732 ordinary shares in issue and its income tax
reference number is 9096/002/71/3.
Ordinary shareholders who hold dematerialised shares will have their
accounts at their CSDP or broker credited/updated on Monday, 26 March 2018.
On behalf of the board
TR Hendry CA (SA) Umhlanga Rocks
Chief Executive Officer 13 November 2017
Registered Office: First floor
Ridge 63
8 Sinembe Crescent
La Lucia Ridge Office Estate
4019
Tel: +27 (0) 31 791 0061
Auditors: Grant Thornton (A Timol as designated auditor)
Sponsors: PSG Capital (Pty) Ltd
Second floor, Building 3
11 Alice Lane
Sandhurst
Sandton
2196
Transfer Secretaries: Link Market Services South Africa (Pty) Ltd,
13th floor
Rennies House
19 Ameshoff Street
Johannesburg
2001
Company Secretary: Jaco Dauth
Directors: CD Angus(Independent Non-executive),PA Christofides(Independent
Non-executive), Ms SJ Cox (Financial Director),TR Hendry (Chief Executive
Officer),AF Litschka,K Mapasa (Independent Non-executive),
T Scharrighuisen(Non-executive Chairman)
Date: 13/11/2017 10:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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