Argent Industrial Limited · JSE:ART
Argent Industrial — Investor Day (June 2008)
23 slides from Argent Industrial's investor day presentation, Jun 27, 2008
Slide 1: Argent Industrial Limited Group Visit
Argent Industrial Limited Group Visit 27 June 2008
Slide 2: Argent's Results - 2008
Argent’s Results - 2008 Operating profit up 37.6% to R308.7m Gearing contained to 26.2% (down 4%) Operating margin up 8% to 18.6% HEPS 204.2c up 17.4% Headline earnings up 34.2% Cash generated by operations increased by Revenue growth of 28% to R1 659m R47 727m to R143 951m
Slide 3: 2008 SWOT
2008 SWOT Strengths Weaknesses Steel trading - sales up 42%, margins up 116% Automotive profits down 22% High steel stockpile levels (R150m) Consumer spend reduced Gearing contained at 26% Higher operating costs – labour, fuel, raw materials Existing infrastructure – properties, vehicles, plant & Au
Slide 4: Audited Results for the Year Ended 31 March 2008
Argent Industrial Limited Reg no 1993/002054/06 (Incorporated in the Republic of South Africa) ("The Group" or "The Company") Share code : ART ISIN code : ZAE000019188 AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 2008 Financial Highlights REVENUE UP 28.0% 29.6% ATTRIBUTABLE EARNINGS UP 34.5% 28.4% AT
Slide 5: Abridged Consolidated Balance Sheet
Abridged Consolidated Audited Audited Balance Sheet at at for the year ended 31 March 2008 31 Mar 2008 31 Mar 2007 R 000 ASSETS Non-current assets Property, plant and equipment 645,713 449,175 Intangibles 249,975 113,785 Long term loan 29,897 28,623 925,585 591,583 Current assets Inventories 470,138
Slide 6: Statement of Changes in Equity and Business Segments
Statement of Changes in Equity Share Share Treasury Revaluation Reserve on Retained for the year ended capital premium shares reserve translation earnings 31 March 2008 of foreign operation R 000 Balance at 31 March 2006 4,023 271,622 (46,366) 50,143 (156) 307,515 Shares issued Net treasury movement
Slide 7: Argent's segmented results
Argent’s segmented results Contribution to Contribution to Contribution to Contribution to Turnover Profit Before PBT 2007 PBT 2008 TO 2007 TO 2008 Growth Tax Growth Steel Trading 23% 39% 45% 50% 42% 116% Automotive 23% 14% 17% 13% 2% -22% Home & Office 32% 27% 22% 20% 18% 9% Fabricators 8% 8% 6% 5%
Slide 8: Argent's Business Strategy
Argent’s Business Strategy Market-leading steel trading, fabrication and value adding businesses STRATEGY EXECUTION • Own the Value Chain through vertical integration • Businesses actively & successfully managed • Optimize Focal Points: • Autonomous, focused business units •Cashflow Management • Foc
Slide 9: Argent Group Companies
Argent Group Companies Argent Industrial Limited Steel Trading Automotive Home & Office Fabricators Non-steel Phoenix Steel Giflo Engineering Hendor Mining Allan Maskew Koch’s Cut & Supply Steel Centre All-Lite Megami Steel Products x atomic OFFICE EQUIPMENT New Joules North America TO R832.1m TO R2
Slide 10: Argent Directors Responsibilities
Argent Directors Responsibilities CEO – Treve Hendry Financial Director – Sue Cox Donovan Smith Marc Antonic Gavin Mark Allen Fred Litschka Treve Hendry Youngman atomic Phoenix Steel Phoenix Steel Phoenix Steel OFFICE EQUIPMENT Giflo Engineering Gauteng Mpumalanga Natal Allan Maskew Cape Gauteng Pho
Slide 11: Vertical integration example – Jetmaster
Vertical integration example – Jetmaster Maximising Margin! Phoenix Steel Phoenix Steel Phoenix Steel Jetmaster Factory • Steel acquired from Mittal • Steel cut & sized to spec • Transfer to Jetmaster • Fireplace manufactured • Buying power – rebate • Value add - Margin • Own transport • Quality & d
Slide 12: Steel Trading Analysis
Steel Trading Analysis • Facts: – 37.5% of the steel (by volume) traded by Phoenix is sold internally to Argent’s Manufacturing businesses – Phoenix adds value and margin to its steel trading by: • Manufacturing tube – up to 25% mark-up • End-forming tube to customer needs – up to 30% mark-up • Cutt
Slide 13: Steel – Phoenix Steel
Steel • Phoenix Steel – The foundation of the Group is Steel – Steel creates network & infrastructure to launch other businesses – Steel is the key raw material for the other businesses products – Because of Phoenix’s buying power, the manufacturing businesses are more competitive – 10 to15% additio
Slide 14: Steel – Gammid
Steel • Gammid – Trader in Stainless Steel and Aluminium – 4 current branches and 4 new outlets with Phoenix – Biggest distributor of 200 series SS – Will integrate with Phoenix Steel infrastructure – Significant opportunity for Revenue and Earnings growth – Biggest retailer of aluminum for Hulamin
Slide 15: Steel – Branches and Forecast
Steel • Phoenix Steel branches: – Johannesburg, Middelburg, Durban, Richards Bay, Port Elizabeth, and East London • Gammid Branches: – Cape Town, George, Durban and Johannesburg • Forecast: – Outlook bullish due to: • Higher Steel Prices • Current US$300 higher import parity • Greater demand than su
Slide 16: Automotive
Automotive • Giflo – Excellent management! – Servicing all motor manufacturers – Exports growing rapidly through New Joules • Sentech – Performing well now – High tech manufacturing facility – Monopoly in EC • Excalibur – Niche aluminum manufacturer – 90% market share • All Lite – Biggest automotive
Slide 17: Home and Office
• Jetmaster Home and Office – A Top Brand in SA – Increased penetration into contractors market – Exports to Australia, NZ and UK • Xpanda – Gaining significant market share – Exports to Mauritius, Canada, Spain and UK • Toolroom Services – Dominant market position – New building in Roodekop 16 000m
Slide 18: Fabricators
Fabricators • Hendor Mining – Manufactures mining scrapers for Deep Mines – Manufactures screens for mines – Dominant market player • Koch's Cut & Supply – Metal fabricator to Industry in KZN • Outlook – Positive due to high spend on infrastructure development and buoyant mining & resources sector
Slide 19: Non-Steel
Non-Steel • New Joules – North America – Manufacturers & distributors of rail retarders – Maintenance contracts for all installations – Distributor of automotive products in the US from Giflo – Now Yard design - turnkey solution • Megamix – Supplier of concrete and crushed stone in the Western Cape
Slide 20: Paint and Ladders
Paint and Ladders Acquisition • Turnover – around R240m • Ladder contribution – just over 50% • Net Margin – 7 to 10% • Ladder Contribution - more than 60% • Paid multiple of 6 for Ladders & 3 for Paint • Process to be concluded mid-March Paint • Paint - 80% decorative; 20% industrial • Industrial p
Slide 21: Growth Projection
Growth Projection Argent Revenue Growth Forecast 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Financial Year HEPS 400 350 300 250 200 150 100 50 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 200
Slide 22: Argent Asset Portfolio
Argent Asset Portfolio – Philosophy to own all properties – Property portfolio value over R300million (R3.20 per share) – 25 properties in the portfolio – Argent owns & runs its own distribution network through its subsidiaries – Are over 340 trucks in the fleet servicing all areas of Southern Afric
Slide 23: In summary...
In summary... – Argent is highly diversified and vertically integrated – Businesses range from bulk steel trading, to trading in high value products with the final consumer – Value and margin is captured in the Group through effective vertical integration in Steel, Stainless Steel, Aluminium, Concre