Unaudited Interim Condensed Consolidated Results

Transcription

1 Interim Condensed Consolidated Results for the ended 30 September 2013 Registration number: 1993/002054/06 (Incorporated in the Republic of South Africa) ( the group or the company ) Share code: ART ISIN code: ZAE Financial Highlights Revenue up Gearing Net asset value per share Interim dividend per share 10.2% 10.2% cents 7 cents

2 The unaudited financial statements are presented on a consolidated basis. Condensed Consolidated Income Statement 30 Sept Sept 2012 Audited year ended 31 Mar 2013 Revenue Operating profit before finance costs Finance income Finance costs (12 708) (15 236) (30 125) Profit before taxation Taxation (3 815) (9 860) (21 660) Profit for the period Attributable to non-controlling interest (400) (80) (90) Attributable to owners of the parent Basic earnings per share (cents) Diluted earnings per share (cents) Headline earnings per share (cents) Diluted headline earnings per share (cents) Dividends per share (cents) Final dividend of 7 cents was paid on 7 October 2013 Supplementary information Shares in issue (000) at end of period weighted average diluted weighted average Cost of sales (R 000) Depreciation and amortisation (R 000) Calculation of headline earnings (R 000) Earnings attributable to ordinary shareholders Loss on disposal of property, plant and equipment Impairment of property, plant and equipment Impairment of intangible assets Total tax effects of adjustments (1 537) (305) (638) Headline earnings attributable to ordinary shareholders Condensed Consolidated Statement of Comprehensive Income 30 Sept Sept 2012 Audited year ended 31 Mar 2013 Profit for the period Other comprehensive income for the period Exchange differences on translating foreign operations (225) (222) 185 Revaluation decrease - (15 715) (27 969) Tax effect of above transactions Total comprehensive income for the period Attributable to equity holders of the Parent Non-controlling interest

3 Condensed Consolidated Statement of Financial Position at at Audited at 30 Sept Sept Mar 2013 Assets Property, plant and equipment Intangibles assets Long-term loan Non-current assets Inventories Trade and other receivables Bank balance and cash Current assets Non-current assets held for sale Total assets Equity and Liabilities Capital and reserves Share capital and premium Reserves Retained earnings Attributable to owners of the parent Non-controlling interest Total shareholders' funds Interest-bearing borrowings Deferred tax Non-current liabilities Trade and other payables Taxation Bank overdraft Current portion of interest-bearing borrowings Current liabilities Total equity and liabilities Net asset value per share (cents) Condensed Consolidated Statement of Cash Flows 30 Sept Sept 2012 Audited year ended 31 Mar 2013 Cash generated from operations Finance income Finance costs (12 708) (15 236) (30 125) Dividends paid - (5 537) (11 073) Normal taxation paid/(refunded) (3 008) (2 436) Cash flows from operating activities Cash flows from investing activities (22 849) (27 435) (69 997) Cash flows from financing activities (33 091) (35 941) (53 040) Net decrease in cash and cash equivalents (33 675) (6 607) (14 265) Cash and cash equivalents at beginning of period ( ) ( ) ( ) Cash and cash equivalents at end of period ( ) ( ) ( )

4 Consolidated Statement of Changes in Equity 30 September 2013 Employee share Foreign currency Total attributable to owners Noncontrolling Total Share Share Treasury incentive Revaluation translation Retained of the shareholders capital premium shares reserve reserve reserve earnings parent interest funds R 000 Balance at 30 September 2012 unaudited (94 514) (9 216) Share-based payments (749) (749) - (749) Total comprehensive income for the period (5 605) Dividends (5 789) (5 789) - (5 789) Less dividend on treasury shares Balance at 31 March (94 514) (8 809) Net treasury movement Share-based payments Total comprehensive income for the period (225) Balance at 30 September (94 277) (9 034) Segmental Review Steel trading/ Manufacturing Steel trading retail Construction Properties Consolidated Business segments for the ended 30 September 2013 unaudited Revenue from external sales Profit/(loss) before taxation (9 806) (846) Taxation (3 815) Profit for the period for the ended 30 September 2012 unaudited Revenue from external sales Profit/(loss) before taxation (2 842) (3 262) Taxation (9 860) Profit for the period for the year ended 31 March 2013 audited Revenue from external sales Profit/(loss) before taxation (9 261) Taxation (21 660) Profit for the year Rest of the South Africa world Consolidated Geographical segments for the ended 30 September 2013 unaudited Revenue from external sales Profit before taxation Taxation (3 815) Profit for the period for the ended 30 September 2012 unaudited Revenue from external sales Profit before taxation Taxation (9 860) Profit for the period for the year ended 31 March 2013 audited Revenue from external sales Profit before taxation Taxation (21 660) Profit for the year K [

5 Financial Overview Argent produced a good set of operational results for the ended 30 September The net results were negatively affected by various once-off write downs, strikes and foreign exchange differences which totalled R35.6 million. The group s balance sheet remains strong and appropriately capitalised, with gearing down to 10.2%.. Operations Review Steel Trading The group s steel trading divisions incorporate Phoenix Steel, Gammid Trading and Specialist Steel Profiles. Phoenix Steel, which trades and beneficiates mostly carbon steel products, showed a mixed bag of fortunes. Phoenix Steel Natal did very well, benefiting from group imports due to its close proximity to the harbour, which means no transport costs were incurred. Phoenix Steel Gauteng and Phoenix Steel Mpumalanga experienced the opposite, finding themselves uncompetitive and overstocked. This has now been corrected with Phoenix Steel Gauteng s stock having been reduced from a high of R131.5 million to the current R90 million. The outlook for both the Gauteng and Natal region is positive, with local demand on the increase. It is not the group s intention to expand its steel trading and, to this end, it will closely monitor the performance at its only remaining outlying branch, Phoenix Steel Mpumalanga. The group took a decision to close Phoenix Steel Richards Bay on 31 December 2013 due to poor performance over an extended period. The retrenchments have not been provided for, but will cost approximately R The building (net book value R5.8 million) and stock to the value of R6.6 million should be realised at full value. Gammid Trading, an aluminium and stainless steel trader, experienced a marginally improved, with all of the branches trading positively. The group s international supplier base has held it in good stead, albeit this sector of the market remains depressed. Specialist Steel Profiles, both a specialised steel importer and the group s import co-ordinator, had a very good, which was marred by a foreign exchange loss of R8.3 million. This was as a result of unhedged foreign currency imports to which the group is no longer exposed. Steel Trading/Retail The group s steel trading/retail division includes the following companies: Castor and Ladder KZN Gammid Cape Gammid George Paint and Ladders Klerksdorp Phoenix Steel Mpumalanga All of the above companies are essentially distributors of the group s brands, with the exception of Phoenix Steel Mpumalanga which also beneficiates steel. The margins in pure distribution are not very high, however, all the above companies are profitable, with the exception of Phoenix Steel Mpumalanga and Gammid George with borderline performance. The performance of these two companies is being closely monitored by the board of directors. Manufacturing This sector performed extremely well and is the current focus of the group. Allan Maskew is the only company in the sector which has not performed well. This is as a result of past management issues, coupled with a lower than expected order book. The new management team is working to improve performance and intends to have the company back on track by February Barrier Angelucci has been closed. This has resulted in the retrenchment of 28 people at a cost of R1 million, the write down of stock to the value of R2 million and a goodwill impairment of R4.5 million. Cannock Gates & Burbage Iron Craft, the group s UK subsidiaries, produced a great set of results for the six month period. The company will benefit from the current positivity in the UK economy, as well as being able to expand the products that it distributes on behalf of the group. Castor and Ladder has continued to grow from strength to strength as a result of an increased market share in both its ladders and pre-packaged castors. The company is also in the process of evaluating a number of automation options in order to streamline production and increase output. Cedar Paint has completed its roll-out into Pick n Pay and has managed to increase its basket of products supplied to the Massmart Group. The company has secured the distribution rights in South Africa for a number of USA-based Rustoleum paint products. This will make a straight contribution to the bottom line, without affecting production capacity. Excalibur Vehicle Accessories and Sentech Industries, the group s automotive component manufacturers, were adversely affected by the automotive sector strike. Both companies have increased their market share, with Excalibur increasing a number of Original Equipment parts as well as its presence in the after-market, and Sentech supplying New Joules Engineering North America with pre-machined retarder parts, something that was previously outsourced. The companies discontinued certain of their lower volume automotive product lines, which resulted in a stock write down of R19.3 million and retrenchment costs of R Hendor Mining Supplies is performing well and is showing one of the highest order books that it has had in the last three years. Jetmaster has a decent order book and a full new range of export products for the new year. The already successful export market will further be enhanced by the depreciation of the Rand. Koch s Cut and Supply Steel Centre experienced a good first. The company installed and commissioned a R3.1 million, 24 metre double bridge profiling and plasma machine which has given it a market edge in the supply of long precision profiles and more efficient nesting. New Joules Engineering North America experienced another record and currently has a very positive order book. The company received a letter of intent to supply retarders to the Russian Railing Confederation, subject to agreement on the payment terms. Toolroom Services and Atomic Office Equipment continue to perform strongly, with excellent turnover levels and margins. Toolroom has purchased and commissioned two new powder coating booths for R4.4 million. The two lines are expected to save sufficient powder to generate full payback in less than three years. Tricks Wrought Iron Services continues to perform well and has successfully entrenched itself into the low-cost housing window and door market. To this end, they have invested in three rolling machines which were imported from China and will be commissioned in February The company experienced a number of labour issues which eventually resulted in the dismissal of 221 employees. This resulted in a loss of production for the months of August and September. Production was fully restored in October 2013 with 30% less employees. Xpanda Security produced a good and has a brilliant order book. The company upgraded its powder coating facilities by investing R4.3 million in new equipment, which includes an automatic multi-colour line. Xpanda has taken over the Barrier Angelucci roller door facility in Johannesburg and will start manufacturing its own products alongside the Barrier ones from 1 February Xpanda will market and distribute both brands of roller doors. Construction Megamix and Argent Industrial Engineering have had an excellent. Megamix has a decent order book and is awaiting adjudication of an additional R28 million to run from February to August next year. The next rollout of forty six wind turbines is going up next door to its quarry, which has the company well placed to commence with the resultant R40 million worth of road, stone and cement work over the course of In addition, the quarry has submitted R2.1 million worth of road building material tenders for which it expects to receive orders in the new year. Properties The group has sold one of its properties in Johannesburg for R5.6 million. Transfer of the property, previously occupied by Barrier Angelucci, is expected to be completed latest January The extension of the Benoni property, occupied by Allan Maskew, has essentially been completed. Operational Management The group has made a number of management changes in order to streamline its trading operations and to expand and reinforce its branding division. Operational profits were affected by strikes in four of the group s divisions, which are estimated to have cost R7.2 million. As a result of the continuous county-wide strikes, the group has committed itself to an automation programme that will reduce the number of staff from the existing to by the end of 2015.

6 Calculation of normalised earnings R000: 30 Sept Sept 2012 Profit before taxation as reported Loss on disposal of property, plant and equipment Impairment of property, plant and equipment Argent Port Elizabeth closure Specialist Steel Profiles foreign exchange loss Barrier Angelucci closure/retrenchments Excalibur Vehicle Accessories and Sentech discontinued product lines Effect of country-wide strikes Normalised earnings Outlook The group is creating its core business around its branded manufacturing companies and will be focusing on the respective market shares and production automation of these operations. The group will continue to streamline its steel trading businesses and realise assets surplus to requirements, with the strategy of using the resultant cash flows to buy back its own shares. Basis of Presentation The unaudited condensed consolidated financial statements have been 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 (No. 71 of 2008) and the Listings Requirements of the JSE Limited. The accounting policies are consistent with those of the previous financial period, 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 unaudited condensed consolidated financial statements have been 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. Subsequent events No matters which are material to the financial affairs of the group have occurred between the statement of financial position date and the date of this report. Dividend An interim gross dividend of 7 cents per share has been declared subsequent to 30 September 2013 for the period ending 30 September The following dates will apply to the abovementioned interim dividend: Last day to trade cum dividend Thursday, 20 March 2014 Trading ex-dividend commences Monday, 24 March 2014 Record date Friday, 28 March 2014 Dividend payment date Monday, 31 March 2014 Share certificates may not be dematerialised or rematerialised between Monday, 24 March 2014 and Friday, 28 March 2014, both days inclusive. In determining the dividends tax (DT) of 15% to withhold in terms of the Income Tax Act (No 58 of 1962) for those shareholders who are not exempt from the DT, no secondary tax on companies (STC) credits have been utilised. Shareholders who are not exempt from the DT will therefore receive a dividend of 5.95 cents per share net of DT. The group has ordinary shares in issue and its income tax reference number is 9096/002/71/3. The above dates are subject to change. Any changes will be released on SENS. Where applicable, dividends in respect of certificated shares will be transferred electronically to shareholders bank accounts on the payment date. In the absence of specific mandates, dividend cheques will be posted to shareholders. Ordinary shareholders who hold dematerialised shares will have their accounts at their CSDP or broker credited/updated on Monday, 31 March On behalf of the board TR Hendry CA (SA) Umhlanga Rocks Chief Executive Officer 4 December 2013 Registered Office: First floor, Ridge 63, 8 Sinembe Crescent, La Lucia Ridge Office Estate, 4019 Tel: +27 (0) Auditors: Grant Thornton (D Nagar as designated auditor) Sponsors: PSG Capital (Pty) Ltd Transfer Secretaries: Link Market Services South Africa (Pty) Ltd, 13 th floor, Rennies House, 19 Ameshoff Street, Johannesburg 2001 Company Secretary: Jaco Dauth Directors: CD Angus (Independent Non-executive), Ms SJ Cox (Financial Director), PA Day (Independent Non-executive), TR Hendry (Chief Executive Officer), Mrs JA Etchells (Non-executive), AF Litschka, K Mapasa (Independent Non-executive) and T Scharrighuisen (Non-executive Chairman) Motor Component Manufacturers Phoenix Steel Group New Joules Engineering North America Inc. Hendor Mining Supplies Koch s Cut & Supply Steel Centre Barrier Angelucci