ABRIDGED UNAUDITED INTERIM CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2018

Transcription

1 Argent Industrial Limited Registration number 1993/002054/06 (Incorporated in the Republic of South Africa) Share code: ART ISIN code: ZAE ( Argent or the Group or the Company ) ABRIDGED UNAUDITED INTERIM CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER Financial Highlights Headline earnings per share 50.4 cents Gearing 3% Net asset value per share cents The abridged unaudited financial statements are presented on a consolidated basis Consolidated Statement of Profit or Loss for the period ended 2017 Audited year ended 31 Mar Revenue 858, ,819 1,828,407 Operating profit /(loss)before finance costs 61,027 (246,068) (192,069) Finance income ,872 Finance costs (3,683) (7,245) (13,050) Profit / (loss) before taxation 58,061 (252,727) (203,247) Taxation (14,714) (10,952) 20,657 Profit / (loss) for the period 43,347 (263,679) (182,590) Attributable to equity holders of the - Parent 41,795 (264,283) (184,192) - Non-controlling interest 1, ,602 43,347 (263,679) (182,590) Basic earnings / (loss) per share (cents) 49.9 (292.3) (205.2) Diluted earnings / (loss) per share (cents) 49.9 (292.3) (205.2) Headline earnings per share (cents) Diluted headline earnings per share (cents) Dividends per share (cents) (1) Final dividend of 10 cents was paid on 31 July Supplementary information Shares in issue (000) - at end of period 83,581 90,240 84,005 - weighted average 83,755 90,424 89,784 - diluted weighted average 83,755 90,424 89,784 Cost of sales (R 000) 655, ,102 1,424,962 Depreciation and amortisation (R 000) 11,942 15,049 25,066

2 Calculation of headline earnings (R 000) Earnings / (loss) attributable to ordinary shareholders 41,795 (264,283) (184,192) Loss on disposal of property, plant and equipment 624 1,275 69,602 Impairment of property, plant and equipment - 161,448 72,674 Impairment of intangible assets - 130, ,395 Total tax effects of adjustments (175) (357) (19,489) Headline earnings attributable to ordinary shareholders 42,244 28,478 68,990 Consolidated Statement of other Comprehensive Income or Loss for the period ended 2017 Audited year ended 31 Mar Profit / (loss) for the period 43,347 (263,679) (182,590) Other comprehensive income for the period Items that may be reclassified subsequently to profit and loss Exchange differences on translating foreign operations 7,149 1,399 (4,630) Items that will not be reclassified subsequently to profit and loss Revaluation of land and buildings - - (39,903) Tax effect of above transactions ,648 Total other comprehensive income / (loss) for the period 50,496 (262,280) (215,475) Attributable to equity holders of the - Parent 48,944 (262,884) (217,077) - Non-controlling interest 1, ,602 50,496 (262,280) (215,475) Consolidated Statement of Financial Position for the period ended At At 2017 Audited at 31 Mar ASSETS Property, plant and equipment 457, , ,589 Intangible assets (2) 127,826 83,241 82,835 Long-term receivables 26,036 15,181 29,123 Deferred taxation - - 9,532 Non-current assets 611, , ,079 Inventories 388, , ,130 Trade and other receivables 302, , ,263 Taxation Bank balance and cash 44,479 61,368 87,918

3 Current assets 735, , ,325 Non-current assets held for sale 23,288-23,288 TOTAL ASSETS 1,370,430 1,394,070 1,342,692 EQUITY AND LIABILITIES Capital and reserves Stated capital 420, , ,789 Reserves 5,460 25,591 (1,839) Retained earnings 575, , ,795 Attributable to owners of the parent 1,000, , ,745 Non-controlling interest 18,334 15,784 16,782 Total shareholders' funds 1,019, , ,527 Interest-bearing borrowings 6,423 27,263 12,322 Long-term loans 1,663-1,659 Deferred tax 46,329 82,914 43,364 Non-current liabilities 54, ,177 57,345 Trade and other payables 223, , ,606 Taxation 4,908 3,040 - Bank overdraft 44,811 80,648 81,063 Current portion of interest-bearing borrowings 23,675 32,005 31,151 Current liabilities 296, , ,820 TOTAL EQUITY AND LIABILITIES 1,370,430 1,394,070 1,342,692 Net asset value per share (cents) 1, , , The group acquired the entire issued share capital of Fuel Proof Limited ("Fuel Proof") and Roll-Tec Safety Limited ("Roll-Tec") for a purchase consideration of GBP cash on 28 June. The acquisition was to grow its portfolio of companies and to expand internationally into the United Kingdom. The goodwill arising on acquisition is attributable to the anticipated profitability of these businesses. The fair value of assets and liabilities assumed were as follows: Fuel Proof Roll-Tec Total Property, plant and equipment 24,929 22,510 47,439 Inventory 24,199-24,199 Trade and other receivables 7, ,981 Bank balance and cash 10, ,066 Trade and other payables (9,937) (26,117) (36,054) Deferred taxation liability (2,178) (2,094) (4,272) Interest-bearing borrowings - (1,860) (1,860) Goodwill / other intangible assets 30,282 13,437 43,719 Total purchase price and acquisition costs 85,877 6,341 92,218 Deduct bank balance on acquisition (10,965) (101) (11,066) Cash flow on acquisition net of cash acquired 74,912 6,240 81,152

4 R 000 Revenue since acquisition date included in consolidated results for period 42,820 Profit after tax (excluding foreign exchange adjustment) since acquisition date included in consolidated results for period 3,281 Group revenue had the business combination been included for the entire period 897,560 Group profit after tax (excluding foreign exchange adjustment) had the business combination been included for the entire period 47,209 Abridged Consolidated Statement of Cash Flows for the period ended 2017 Audited year ended 31 Mar Cash generated from operations 113, , ,836 Finance income ,872 Finance costs (3,683) (7,245) (13,050) Dividends paid (8,471) (10,074) (18,588) Normal taxation paid (1,636) (3,185) (11,818) Cash flows from operating activities 100,807 93, ,252 Cash flows from investing activities (91,094) (33,448) (32,345) Cash flows from financing activities (16,900) (11,543) (49,923) Net (decrease) / increase in cash and cash equivalents (7,187) 48,849 74,984 Cash and cash equivalents at beginning of period 6,855 (68,129) (68,129) Cash and cash equivalents at end of period (332) (19,280) 6,855 Consolidated Statement of Changes in Equity for the period ended ember Stated capital Treasury shares Employee share incentive reserve Balance at ember 2017 unaudited 539,079 (93,046) 1,316 Share-based payments Share buy-back (24,244) - - Transfer of reserve to retained earnings - - (1,382) Total comprehensive income for the period Dividends Less dividend on treasury shares Balance at 31 March 514,835 (93,046) 440 Share-based payments Share buy-back (1,669) - - Total comprehensive income for the period Dividends Less dividend on treasury shares Balance at ember 513,166 (93,046) 590

5 Consolidated Statement of Changes in Equity for the period ended ember (continued) Revaluation reserve Foreign currency translation reserve Retained earnings Balance at ember 2017 unaudited 36,323 (12,048) 476,566 Share-based payments Share buy-back Transfer of reserve to retained earnings - 7,730 (6,348) Total comprehensive income for the period (28,255) (6,029) 80,091 Dividends - - (8,889) Less dividend on treasury shares Balance at 31 March 8,068 (10,347) 541,795 Share-based payments Share buy-back Total comprehensive income for the period - 7,149 41,795 Dividends - - (8,846) Less dividend on treasury shares Balance at ember 8,068 (3,198) 575,119 Consolidated Statement of Changes in Equity for the period ended ember (continued) Total attributable to owners of the parent Noncontrolling interest Total shareholders funds Balance at ember 2017 unaudited 948,190 15, ,974 Share-based payments Share buy-back (24,244) - (24,244) Transfer of reserve to retained earnings Total comprehensive income for the period 45, ,805 Dividends (8,889) - (8,889) Less dividend on treasury shares Balance at 31 March 961,745 16, ,527 Share-based payments Share buy-back (1,669) - (1,669) Total comprehensive income for the period 48,944 1,552 50,496 Dividends (8,846) - (8,846) Less dividend on treasury shares Balance at ember 1,000,699 18,334 1,019,033

6 Segmental review Manufacturing Steel trading Properties Consolidated R 000 Business segments for the ended ember - unaudited Revenue from external sales 598, ,219 1, ,817 Profit before taxation 44,478 8,513 5,070 58,061 Taxation (14,714) Profit for the period 43,347 Net assets 679, , ,046 1,065,362 Capital expenditure 12, ,362 15,204 Depreciation / amortisation 10,641 1, ,942 Finance costs * (1,694) (354) 5,731 3,683 Finance income * 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) Manufacturing Steel trading Properties Consolidated R 000 Business segments for the ended ember unaudited Revenue from external sales 623, , ,819 Loss before taxation (172,592) (44,177) (35,958) (252,727) Taxation (10,952) Loss for the period (263,679) Loss before taxation per above (172,592) (44,177) (35,958) (252,727) Impairment of intangibles 127,842 2, ,395 Impairment of property, plant and equipment 68,049 48,630 44, ,448 Profit before taxation and impairments 23,299 7,006 8,811 39,116 Net assets 659, , ,465 1,046,888 Capital expenditure 31,596 2,827 4,618 39,041 Depreciation / amortisation 10,718 4, ,049

7 Finance costs * (2,616) 3,745 6,116 7,245 Finance income Segmental review (continued) Manufacturing Steel trading Properties Consolidated R 000 Business segments for the ended 31 March - audited Revenue from external sales 1,251, , ,828,407 Loss before taxation (148,311) (40,795) (14,141) (203,247) Taxation 20,657 Loss for the year (182,590) Loss before taxation per above (148,311) (40,795) (14,141) (203,247) Impairment of intangibles 127,842 2, ,395 Impairment of property, plant and equipment 68,049 48,630 27, ,366 Profit before taxation and impairments 47,580 10,388 13,546 71,514 Net assets 613, , ,020 1,012,359 Capital expenditure 50,174 3,057 24,410 77,641 Depreciation / amortisation 20,462 4, ,066 Finance costs * (2,847) 3,482 12,415 13,050 Finance income 1, ,872 Segmental review (continued) South Africa Rest of the world Consolidated Geographical segments for the ended ember - unaudited Revenue from external sales 720, , ,817 Profit before taxation 27,464 30,597 58,061 Taxation (14,714) Profit for the period 43,347 Net assets 918, ,823 1,065,362 Capital expenditure 12,002 3,202 15,204 Depreciation / amortisation 9,098 2,844 11,942 Finance costs 3,859 (176) 3,683 Finance income for the ended 30

8 September unaudited Revenue from external sales 846,247 94, ,819 (Loss) / profit before taxation (274,476) 21,749 (252,727) Taxation (10,952) Loss for the period (263,679) Net assets 940, ,303 1,046,888 Capital expenditure 37,428 1,613 39,041 Depreciation / amortisation 14, ,049 Finance costs 7,288 (43) 7,245 Finance income for the year ended 31 March audited Revenue from external sales 1,647, ,722 1,828,407 (Loss) / profit before taxation (230,507) 27,260 (203,247) Taxation 20,657 Loss for the year (182,590) Net assets 893, ,060 1,012,359 Capital expenditure 72,460 5,181 77,641 Depreciation / amortisation 23,005 2,061 25,066 Finance costs 13,238 (188) 13,050 Finance income 1,872-1,872 Financial Overview Argent Industrial Limited has had a successful despite a difficult South African economy. The group achieved its objectives in that it stabilised its local operations, grew its off-shore investments and continued with its share buy-back programme. Operations Review Manufacturing The division relative to the South African economy performed well and has been enhanced by the group s acquisition on 28 June of Fuel Proof Limited ( Fuel Proof ) and Roll-Tec Safety Limited ( Roll-Tec ), based in the United Kingdom. Fuel Proof is a manufacturer and trade supplier of mobile and static bunded fuel storage and dispensing systems. Roll-Tec is a specialist manufacturer of roll-over protection bars for construction machinery as well as being the rental agent for Fuel Proof, renting out its products into the European market. The purchase consideration was an amount of GBP This is based on a maintainable before tax income of GBP per annum. In terms of the transaction agreement, the purchase consideration will be recalculated twenty-four months after the effective date in that it will either reduce to a minimum of GBP or increase to a maximum of the GBP The group has entered into a sale agreement for the sale of Parlance Investments and the property situated at 107 Kotzenberg Street, Rosslyn, Pretoria for an amount of R 2 million for the powder coating business and R 7 million for the property. The transaction has a number of conditions / hurdles, which allows the buyer to either withdraw or close the deal by 31 March 2019.

9 Steel Trading The groups two mild steel operations showed an improved R 7.9 million before tax. The two aluminium and stainless-steel operations were just above break even. Both divisions have showed signs of improvement in October and November. This is definitely an area that the group can improve on. Properties The group has the following properties for sale: 15 Vulcan Street, Klerksdorp Industrial, Klerksdorp - partially empty property; Terrace Road, Sebenza, Edenvale - empty property; Wiltshire Road, Marian Industrial Estate, Pinetown - sale and lease back; 13 Jack Pienaar Road, Germiston - sale and lease back; 9 Sprite Place, Pinetown - sale and lease back; 10 Aberdeen Road, Roodekop, Germiston - sale and lease back; 11 Barnsley Street, Benoni South, Benoni - sale and lease back; and 91 Concordia Road, Silverton, Pretoria - awaiting transfer. The group is expecting to receive in the order of R 215 million for the above properties of which R 24 million is awaiting transfer and R26,5 million is awaiting buyer bond approval. The group will retain its two properties utilised by Megamix, based in Cape Town and its property in Kansas City, utilised by New Joules Engineering North America as well as the property that is occupied by Jetmaster Johannesburg. Share buy-back programme Argent repurchased and cancelled shares in the period under review and will be repurchasing an additional R34 million worth of shares over the next 3 months. Outlook The outlook remains positive. The group anticipates that even though consumers are pressured, there is emerging confidence. Argent is also encouraged by recent political changes in South Africa and believes that the country is on the cusp of a much-needed confidence boost. The year has started off in a much more positive vein with consumer and business confidence increasing. There are signs of improvement in certain sectors in which we operate and particularly mining and manufacturing are benefiting from strengthening commodity prices. Our businesses are sized optimally for current market conditions, both locally and internationally and will now focus on balancing its returns on investment, share price and net asset value in order to achieve shareholder value and returns. 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

10 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. Going concern Shareholders are advised that the abridged unaudited results for the sixmonth period ended ember 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. Dividend No dividends were declared by the Board of Directors for the six-month period ending ember. Excess funds will be utilised for the share buy-back programme. On behalf of the board TR Hendry CA (SA) Umhlanga Rocks Chief Executive Officer 8 November Registered Office: Auditors: Sponsors: Transfer Secretaries: Company Secretary: First floor Ridge 63 8 Sinembe Crescent La Lucia Ridge Office Estate 4019 Tel: +27 (0) SNG Grant Thornton (EY Lakhi as designated auditor) PSG Capital Second floor, Building 3 11 Alice Lane Sandhurst Sandton 2196 Link Market Services South Africa 13th floor Rennies House 19 Ameshoff Street Johannesburg 2001 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,T Scharrighuisen(Non-executive Chairman)

11 Umhlanga 8 November Sponsor PSG Capital