Results reveal true state of Argent

A “difficult and unpredictable” South African economy hammered Argent Industrial in the interim period to September.

Apart from costs related to strikes and go-slow labour actions the purveyor of Jetmaster fireplaces and Xpanda Security brands was forced to impair goodwill of R130.4m, amid total impairments of R291.8m. These related to four properties in Johannesburg, including steel assets, amid the closure of the group’s Sentech automotive unit and the downsizing and relocation of associated companies.

Sentech’s impairments came after General Motors said recently it would cease making and selling Chevrolets in SA.

Argent’s headline earnings per share fell 26% from 42.5c to 31.5c in the six months as the group set about retrenching hundreds of staff at a cost of nearly R6m.

Anthony Clark, an analyst at Vunani Securities, said on Monday that headline earnings per share were in a “lower and fair range” of the recent update. “What these results detailed is what … investors have been crying out [about] for years,” he said. The results were a “true reflection” of Argent’s business and net asset value. “Management had blinkers on and were living in cloud cuckoo land for years,” he said.

At least Argent had “woken up and started to rationalise the sprawling spider’s web” that CEO Treve Hendry had created, Clark said. “These results clearly state he was lacking in his past … acquisitive vision, with many [assets] now having to be written down and the muchvaunted property assets also worth less than many were led to believe,” he said.

But Hendry said the outlook for the group remained positive. The overseas operations had “performed to expectation and it is the group’s intention to purchase an additional operation in the UK”.