Audited results for the year ended March 2004 - ARGENT Industrial

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Audited results for the year ended March 2004 - ARGENT Industrial Powered By Docstoc
					                                                                                              ARGENT Industrial Limited                   (Incorporated in the Republic of South Africa) (Registration number 1993/002054/06) Share code: ART ISIN: ZA E000019188 (“The Group” or “The Company”)




                                                                                                                                                                                                       Financial Highlights
                                                                                                                                                                                                         REVENUE                                                                                                                         -3%
                                                                                                                                                                                                         ATTRIBUTABLE EARNINGS                                                                                                           46%
                                                                                                                                                                                                         ATTRIBUTABLE EARNINGS per share                                                                                                 19%
                                                                                                                                                                                                         HEADLINE EARNINGS                                                                                                               55%
                                                                                                                                                                                                         HEADLINE EARNINGS per share                                                                                                     27%
                                                                                                                                                                                                         GEARING                                                                                                                       25.3%



        Audited Results                                                                                             for the year ended 31 March 2004
                                                                                                                                          Audited year ended          Audited year ended
                                                                                                                                                                                                                                 Restatement of comparatives
                                                                                                                                           31 March 2004               31 March 2003
                                                                                                                                                R 000                       R 000
                                                                                                                                                                                                   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
                                              Abridged Consolidated Income Statement                                                                                                               that the Group issued share capital is under the control of the Group. These shares are shown as treasury shares. The prior year comparatives have been
                                                                                                                                                                                                   restated as follows:
                                                                                 for the year ended 31 March 2004                                                                                  R 000
                                                                                                                                                                                                                                                                                                              As previously
                                                                                                                                                                                                                                                                                                                 stated
                                                                                                                                                                                                                                                                                                                                   Adjustment       Restated

                                    Revenue                                                                                                       604 639                   621 381
                                    Operating profit before financing costs                                                                        96 966                    63 759                Balance Sheet
   Argent - Richards Bay            Financing costs                                                                                                15 703                     9 089                Employee share incentive scheme                                                                                 1 325              (1 325)
                                    Profit before taxation                                                                                         81 263                    54 670                Treasury shares                                                                                                                     1 711            1 711
                                    Taxation                                                                                                       19 926                    11 772                Retained earnings (opening)                                                                                    73 302                 386           73 688
                                    Profit after taxation                                                                                          61 337                    42 898
                                    Earnings attributable to outside shareholders                                                                       -                       898                Number of shares
                                    Earnings attributable to ordinary shareholders                                                                 61 337                    42 000                Shares in issue - weighted ('000)                                                                              50 580                  (22)         50 558

                                    Attributable earnings per share (cents)                                                                           99.1                        83.1             Earnings per share
                                    Headline earnings per share (cents)                                                                              106.2                        83.7             Attributable earnings per share (cents)                                                                          83.0                  0.1             83.1
  Bavarian Metal Industries
                                    Dividends per share (cents)                                                                                       18.0                        17.0             Headline earnings per share (cents)                                                                              83.6                  0.1             83.7
                                                                                                                                                                                                   Net asset value per share (cents)                                                                               349.7                 (2.3)           347.4
                                    Supplementary Information
                                    Shares in issue (000)                                                                                                                                          Movement in share incentive scheme
                                    - at end of period                                                                                             67    090                 58   308              The movement in the shares in the share incentive scheme trust for the period under review can be summarised as follows:
                                    - weighted average for the year                                                                                61    867                 50   558
                                    Interest received (R 000)                                                                                       8    375                  3   455                                                                                                                                                 31 March         31 March
                                    Cost of sales (R 000)                                                                                         359    249                421   922              000                                                                                                                                  2004             2003
          Excalibur                 Depreciation & amortisation (R 000)                                                                            14    292                 10   276
                                    Profit on translation of foreign operation (R 000)                                                              1    475                  2   301              Opening balance                                                                                                                     1 230             1 008
                                    Net loss on foreign exchange transaction (R 000)                                                                3    959                  4   110              Purchases                                                                                                                           5 148             1 025
                                                                                                                                                                                                   Shares exercised                                                                                                                     (820)             (803)
                                    Calculation of Headline Earnings (R 000)                                                                                                                       Closing balance                                                                                                                     5 558             1 230
                                    Earnings attributable to ordinary shareholders                                                                 61 337                    42 000
                                    Goodwill amortisation                                                                                           1 478                       579
                                    Profit on disposal of property, plant and equipment                                                              (395)                     (538)                                                                            Commentary
      Giflo Engineering
                                    Loss on disposal of property, plant and equipment                                                                 997                       268
                                    Discontinued operation                                                                                          2 288                         -
                                    Headline earnings attributable to ordinary shareholders                                                        65 705                    42 309               Chief Executive's Review                                                            Argent Richards Bay had an improved year, but has not yet achieved the
                                                                                                                                                                                                  On behalf of the board of directors of Argent Industrial Limited, the audited       desired levels of return. Significant changes have taken place right through
                                                                                                                                                                                                  results for the year ended 31 March 2004 are hereby presented. The Group            the operation and for the first time the company is in prime position to take
                                                    Abridged Consolidated Balance Sheet                                                                                                           has achieved outstanding results, even in certain industries where trading          advantage of any opportunities which may present themselves. Turnover
                                                                                              as at 31 March 2004                                                                                 conditions were reasonably difficult and margins under substantial pressure.
                                                                                                                                                                                                  As usual, most companies in the Group performed admirably and the Group
                                                                                                                                                                                                                                                                                      levels have steadily been on the increase over the last six months.

                                                                                                                                                                                                  can look upon the 2004 financial year as a successful one. The Group                The Group has converted Bavarian Metal Industries from a tipper
  Hendor Mining Supplies            ASSETS                                                                                                                                                        continues to deliver outstanding shareholder value.                                 manufacturer into an in-house production facility. The company has
                                    Non-current assets                                                                                                                                                                                                                                therefore relinquished its Meiller franchise on tipper hydraulics and now
                                    Property, plant and equipment                                                                                 110    642                 95   290             Salient Features                                                                    concentrates on forming cold rolled sections, Jetmaster fabrication, steel
                                    Investment property                                                                                            48    016                 39   319             • Attributable earnings increased by 46% to R 61,3 million (2003 - R42              profiling and general fabrication.
                                    Intangibles                                                                                                    31    390                 25   843                 million)
                                                                                                                                                  190    048                160   452             • Headline earnings per share increased by 27% to 106,2 cents per share             NON STEEL RELATED PRODUCTS
                                    Current assets                                                                                                                                                    (2003 - 83,7 cents per share)
                                    Inventories                                                                                                    96    481                112   403             • Revenue decreased by 3% to R 605 million (2003 - R 621 million)                   N W N Automotive Precision Engineering had a slightly disappointing year,
                                    Trade and other receivables                                                                                   134    415                156   381             • Group gearing increased to 25,3% (2003 - 24,7%)                                   with turnover lower than originally predicted. The company's performance over
          Jetmaster                                                                                                                                                                                                                                                                   the last three months was, however, vastly improved and an all time record
                                    Bank balance and cash                                                                                          34    720                  6   599
                                                                                                                                                  265    616                275   383             Divisional Performance                                                              monthly turnover was achieved in March 2004. This trend has unfortunately
                                    Total assets                                                                                                  455    664                435   835                                                                                                 not carried through to the start of the 2005 financial year. The industry as a
                                                                                                                                                                                                  STEEL AND STEEL RELATED PRODUCTS                                                    whole is generally very unpredictable and quiet at present. The company has
                                    EQUITY AND LIABILITIES                                                                                                                                                                                                                            tendered on a number of large contracts and should receive the adjudications
                                    Capital and reserves                                                                                                                                          The Group's steel companies had a good year and in light of the recent steel        thereof within the next month or two. Should some of these be awarded to the
                                    Share capital and premium                                                                                     117 046                   104   855             price increases, they will enjoy an excellent 2005 financial year.                  company, turnover could vastly improve over the next two years.
                                    Reserves                                                                                                       24 045                    24   045
    Koch's Cut & Supply             Retained earnings                                                                                             124 390                    73   688             Giflo Engineering had an exceptional year, achieving record turnover both           New Joules Engineering North America had a disappointing first six months
                                    Ordinary shareholders' funds                                                                                  265 481                   202   588             locally and internationally. Giflo has embarked on an expansion project             and although the second six months showed improvement, the financial
                                    Minority interest                                                                                                   -                     4   722             which will double its production capacity by December 2005. Giflo has               year was still disappointing. The outlook for the 2005 financial year is
                                    Total shareholders' funds                                                                                     265 481                   207   310             acquired a number of state-of-the-art machines and plans to become one of           promising as two major clients have indicated that they intend modernising
                                                                                                                                                                                                  the world's leading automotive suppliers in its field.                              a total of three railway shunting yards before December 2005.
                                    Non-current liabilities
                                    Interest-bearing borrowings                                                                                    47 423                    30 608               Excalibur had an excellent year becoming both a supplier to Giflo                   Megamix and Villiersdorp Quarries had yet another good year. The current
                                    Deferred taxation                                                                                              10 087                     6 583               Engineering and a distributor of certain of Giflo's products. Excalibur has         boom in construction and development of approximately R800 million in the
                                                                                                                                                   57 510                    37 191               increased its after-market vehicle accessory range and will increase its            Strand and Somerset West area will ensure that 2005 is another successful
          Megamix                                                                                                                                                                                 market share in the 2005 financial year.                                            year. Megamix has increased its concrete truck fleet by five units and has
                                    Current liabilities
                                    Trade and other payables                                                                                      100    270                165   200                                                                                                 ordered a 32 metre pump truck, which will arrive in July 2004.
                                    Taxation                                                                                                       12    532                  5   490             Without setting the world alight, Hendor Mining Supplies produced a very
                                    Current portion of interest-bearing borrowings                                                                 19    871                 20   644             good set of results for the 2004 financial year. Turnover was depressed             Barker Flynn Associates discontinued operations during the period under
                                                                                                                                                  132    673                191   334             during the middle part of year mainly due to the weak gold price and strong         review. The cost of this amounted to R 2.288 million.
                                    Total equity and liabilities                                                                                  455    664                435   835             rand-dollar exchange rate. The early part of the 2004 calendar year has seen
                                                                                                                                                                                                  an improvement, though, and turnover has improved to levels which are               BLACK ECONOMIC EMPOWERMENT
                                    Net asset value per share (cents)                                                                                395.7                     347.4              considered more than adequate.                                                      The Group entered into an agreement with Vuya! Resources (Pty) Ltd
  New Joules Engineering                                                                                                                                                                                                                                                              whereby certain operations/opportunities would be placed with the
                                                                                                                                                                                                  Jetmaster had an excellent year and is in prime position to have a record           company. Argent Industrial Ltd has taken a stake of 20% in Vuya! Resources
      North America
                                           Abridged Consolidated Cash Flow Statement                                                                                                              2005 financial year. The company has set up a state-of-the-art research and         (Pty) Ltd.
                                                                                                                                                                                                  development department which allows it not only to design new products
                                                                                 for the year ended 31 March 2004                                                                                 but also to pre-test the gas emissions of the various products before sending       Prospects
                                                                                                                                                                                                  the units for approval by the relevant international gas authorities. Jetmaster     Although still somewhat hampered by the strong rand - dollar exchange rate
                                    Cash generated from operations                                                                                  76   443                 41   714             has already launched a number of new products in South Africa, Australia            in terms of exports, the Group expects to continue its growth trend during
                                    Interest received                                                                                                8   375                  3   455             and New Zealand. These products will give the company an edge over its              the 2005 financial year. Significant efforts are being made to increase
                                    Interest paid                                                                                                  (15   703)                (9   089)            competitors and ensure an eventful 2005 financial year.                             market share in all of the Group's subsidiaries. These efforts have already
                                    Dividends paid                                                                                                 (10   635)                (7   146)                                                                                                produced very encouraging results both in terms of product and client
     NWN Automotive
                                    Taxation paid                                                                                                   (9   380)                (5   993)            Phoenix Steel - Gauteng had a good year. The tube mill which was                    diversification strategies. Furthermore, the increase in local steel prices has
    Precision Engineering
                                    Cash flows from operating activities                                                                            49   100                 22   941             purchased in January 2003 came into full production during the period               produced various opportunities within the Group's steel companies. The
                                    Cash flows from investing activities                                                                           (49   212)               (84   110)            under review. This has had positive effects on margins and volumes.                 Group has never been stronger, partly as a result of the maturation of
                                    Cash flows from financing activities                                                                            28   233                 57   275             Phoenix supplies tube to all of Argent's steel branches and exports tube to         previous smaller operations and the returns generated by both recent
                                    Net increase / (decrease) in cash and cash equivalents                                                          28   121                 (3   894)            both Namibia and Botswana. A second tube mill has been purchased which              acquisitions and greenfields projects. The Group expects the 2005 financial
                                    Cash and cash equivalents at beginning of year                                                                   6   599                 10   493             will be commissioned by July 2004. Phoenix is currently expanding its               year to be a successful one.
                                    Cash and cash equivalents at end of year                                                                        34   720                  6   599             warehousing facility which will increase its stocking capacity by 20%. The
                                                                                                                                                                                                  expansion will be completed in October 2004. Furthermore, Phoenix Steel             Dividend
Phoenix Steel - East London                                                                                                                                                                       Gauteng has diversified into medium and heavy sections - an area that has           A final dividend of 10 cents per share has been declared, payable on
                                                               Statement of Changes in Equity                                                                                                     not been focused on before. The Group believes this to be a natural
                                                                                                                                                                                                  progression which should result in an increase in market share. This, along
                                                                                                                                                                                                                                                                                      Monday 5 July 2004 to shareholders recorded in the register at close of
                                                                                                                                                                                                                                                                                      business on Friday 2 July 2004, being the record date in order to participate
                                                                                 for the year ended 31 March 2004                                                                                 with the advantages emanating from the Iscor price increases will ensure            in such dividend. The last day to trade cum div is Friday 25 June 2004. The
                                                                                                                                                                                                  that Phoenix has an outstanding 2005 financial year.                                share will trade ex div on Monday 28 June 2004.
                                                                                                Share      Share         Treasury Revaluation Reserve on         Retained       Total
                                                                                                capital   premium         shares    reserve   subsidiary         earnings                         Phoenix Steel - East London had an excellent year. Besides selling steel into       Share certificates may not be dematerialised / rematerialised between
                                   R 000                                                                                                      acquisition                                         the East London area, the company also supplied Giflo's products to Daimler         Monday 28 June 2004 and Friday 2 July 2004 both dates inclusive
                                                                                                                                                                                                  Chrysler on a just-in-time basis. This process has proved very successful and
  Phoenix Steel - Gauteng
                                   Balance at 31 March 2002 as previously stated                2 220      71 339                      836        23 209         35 514       133 118             has allowed the Group to take its service levels one step further.                  In accordance with Generally Accepted Accounting Practice Statement
                                   Consolidation of share incentive trust                                                  (907)                                    212          (695)                                                                                                AC107, the dividend of 10 cents per share proposed by the Directors has
                                   Balance at 31 March 2002 restated                            2 220      71 339          (907)       836        23 209         35 726      132 423              Phoenix Steel - Mpumalanga is now well-established and has completed                not been reflected in the financial statements.
                                   Shares issued                                                  695      32 312        (2 647)                                              30 360              its second year of operation. The company has found its niche and the
                                   Net treasury movement                                                                  1 843                                                 1 843             outlook for 2005 is very promising.                                                 Accounting Policies
                                   Profit for the year ended 31 March 2003                                                                                       42 000       42 000                                                                                                  The financial statements for the year under review are prepared in
                                   Dividends - interim                                                                                                           (4 212)       (4 212)            Phoenix Steel - Natal had a more than satisfactory year, but was hampered           accordance with South African Statements of Generally Accepted Accounting
                                   Less treasury shares                                                                                                             174           174             by depressed demand for steel in KwaZulu Natal along with the inevitable            Practice and incorporate accounting policies which are consistent with those
Phoenix Steel - Mpumalanga         Balance at 31 March 2003                                     2 915     103 651        (1 711)       836        23 209         73 688      202 588              pressure on margins. Market share, however, was maintained during the               of the previous year.
                                   Shares issued                                                  439      28 016       (16 679)                                              11 776              year. The company began the 2005 year with a flourish and the Iscor mill
                                   Net treasury movement                                                                    415                                                   415             increases have helped to push both turnover and margin levels to all-time           Audit Opinion
                                   Profit for the year ended 31 March 2004                                                                                       61 337       61 337              highs. The Group expects Phoenix Steel Natal to post record results for the         The Group's Auditors, Etchells, James Kruger & Associates Inc. have issued
                                   Dividends - current interim and prior final                                                                                  (11 286)     (11 286)             2005 financial year, especially in light of the decision to move into the           their opinion on the Group's financial statements for the year ended
                                   Less treasury shares                                                                                                             651           651             medium and heavy sections market. The Group is actively looking for other           31 March 2004. A copy of their unqualified report is available for inspection
                                   Balance at 31 March 2004                                     3 354     131 667       (17 975)       836        23 209        124 390      265 481              ways to increase market share in the KwaZulu Natal area via diversification         at the company's registered office.
                                                                                                                                                                                                  into complementary product lines and/or businesses.
                                                                                                                                                                                                                                                                                      On behalf of the board
    Phoenix Steel - Natal
                                                                                         Segment Report                                                                                           Phoenix Steel - Port Elizabeth started trading in March 2004. The first two
                                                                                                                                                                                                  months of the 2005 financial year produced promising results and the                TR HENDRY CA (SA)
                                                                                 for the year ended 31 March 2004                                                                                 Group believes that the new branch will be a success.                               Chief Executive Officer

                                                                                                                        31 March    31 March                    31 March      31 March            Despite a slow start to the 2004 financial year, Koch's Cut and Supply had          Maraisburg
                                                                                                                          2004        2004                        2003          2003              an excellent last six months, leading to a solid overall performance for the        3 June 2004
                                   Business Segments                                                                    Revenue      Results                    Revenue        Results            year despite considerable pressure on margins. This trend has since
                                   R 000                                                                                 Audited     Audited                     Audited       Audited            continued and the company has produced turnovers well in excess of budget           Registered Office                  Transfer Secretaries:
Phoenix Steel - Port Elizabeth                                                                                                                                                                    for the first two months of the 2005 financial year. This is expected to            1316 Clubhouse Street              Ultra Registrars, 5th floor,
                                                                                                                                                                                                  continue during the year and as a result the Group will invest in modernising       Maraisburg, Roodepoort 1724        11 Diagonal Street, Johannesburg,2001
                                   Steel & Steel Related Products                                                      482 929      72 599                      377 013       50 513              certain machinery, such as the plasma cutting, plate rolling and surface            Tel: (011 474 2100)                (PO Box 4844, Johannesburg, 2000)
                                   Non Steel Related                                                                   121 574       8 573                      243 975        3 896              grinding facilities. Koch's is also in an excellent position to take advantage of
                                   Properties                                                                              136          91                          393          261              the steel price increases.                                                          Auditor:                           Sponsor:
                                                                                                                                                                                                                                                                                      Etchells James Kruger &
                                   Total                                                                               604 639      81 263                      621 381       54 670                                                                                                  Associates Inc.


                                 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 (Alt.Executive), D Smith (Alt Business Development), F Litschka (Non-Executive)

                                                                                     Website: www.argent.co.za                                                                           e-mail: argent3@argent.co.za

				
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